SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-KSB

|                                                                                           
|-------------------------------------------------------------------------------------------
|xANNUAL REPORT PURSUANT TO SECTION 13
  OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|For the Fiscal Year Ended December 31, 2007                                                
|OR                                                                                         
|oTRANSITION REPORT PURSUANT TO SECTION
  13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|For the transition period from _________________ to _________________                      

Commission File Number: 000-51078

| |                                                | 
| | ---------------------------------------------- | 
| | Lincoln Park Bancorp                           | 
| |                                                | 
| | (Name of Small Business Issuer in its Charter) | 

|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Federal                                                        |  | 61-1479859                             
|                                                               |  |                                        
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification Number)
|                                                               |  |                                        
|31 Boonton Turnpike, Lincoln Park, New Jersey                  |  | 07035                                  
|                                                               |  |                                        
|(Address of Principal Executive Office)                        |  | (Zip Code)                             

|                                                           
|-----------------------------------------------------------
|(973) 694-0330                                             
|                                                           
|(Issuers Telephone Number Including Area Code)            
|                                                           
|Securities Registered Pursuant to Section 12(b) of the Act:
|                                                           
|None                                                       
|                                                           
|                                                           
|Securities Registered Pursuant to Section 12(g) of the Act:
|                                                           
|Common Stock, par value $0.01 per share                    
|                                                           
|(Title of Class)                                           

Check
whether the issuer is not required to file reports pursuant to Section 13 or
15(d) of the Exchange Act. o

Check
whether the issuer: (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past twelve months (or for such shorter
period that the Registrant was required to file reports) and (2) has been
subject to such requirements for the past 90 days.

(1) YES x.          NO
o.

(2) YES x.          NO
o.

Check
if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendments to this Form 10-KSB. o

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

The
Registrants revenues for the fiscal year ended December 31, 2007 were $5.5
million.

As
of March 24, 2008, there were 1,825,845 shares issued and outstanding of the
Registrants Common Stock, including 999,810 shares owned by Lincoln Park
Bancorp, MHC. The aggregate value of the voting stock held by non-affiliates of
the Registrant, computed by reference to the closing price of the Common Stock
as of March 24, 2008 was $4.3 million.

DOCUMENTS
INCORPORATED BY REFERENCE

|   |                                                                         
|-- | ------------------------------------------------------------------------
|1. | Portions of
  Annual Report to Stockholders (Parts II and IV)           
|   |                                                                         
|2. | Proxy
  Statement for the 2008 Annual Meeting of Stockholders (Part III)

Transition
Small Business Disclosure Format (Check One):
YES o               NO x.

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PART I

|        |         
|------- | --------
|ITEM 1. | Business

Forward Looking Statements

This
Annual Report contains certain forward-looking statements which may be
identified by the use of words such as believe, expect, anticipate,
should, planned, estimated and potential.  Examples of forward-looking statements
include, but are not
limited to, estimates with respect to our financial condition, results of
operations and business that are subject to various factors which could cause
actual results to differ materially from these estimates and most other
statements that are not historical in nature.
These factors include, but are not limited to, general and local
economic conditions, changes in interest rates, deposit flows, demand for
mortgage, and other loans, real estate values, competition, changes in
accounting principles, policies, or guidelines, changes in legislation or
regulation, and other economic, competitive, governmental, regulatory, and
technological factors affecting our operations, pricing products and services.

Lincoln Park Bancorp, MHC

Lincoln
Park Bancorp, MHC is the federally chartered mutual holding company parent of
Lincoln Park Bancorp.  Lincoln Park
Bancorp, MHC is not currently engaged in any business other than holding the
majority of the voting stock of Lincoln Park Bancorp.  The executive offices of Lincoln Park Bancorp, MHC, are located
at 31 Boonton Turnpike, Lincoln Park, New Jersey 07035, and its telephone
number is (973) 694-0330.  Lincoln Park
Bancorp, MHC is subject to comprehensive regulation and examination by the
Office of Thrift Supervision.

Lincoln Park Bancorp

Lincoln
Park Bancorp is a federally chartered corporation which was organized in 2004
as part of the mutual holding company reorganization of Lincoln Park Savings
Bank.  Our principal asset is our
investment in Lincoln Park Savings Bank.
We are a majority owned subsidiary of Lincoln Park Bancorp, MHC.  In connection with the reorganization, which
was completed on December 16, 2004, we sold 851,690 shares of our common stock
and issued 999,810 shares to our mutual holding company parent.  The net proceeds from our stock offering
totaled $7.8 million.  At December 31,
2007, Lincoln Park Bancorp had consolidated assets of $102.7 million, deposits
of $65.0 million and stockholders equity of $13.1 million.  Lincoln Park Bancorp is subject to
comprehensive regulation and examination by the Office of Thrift Supervision.

Lincoln Park Savings Bank

General

Lincoln
Park Savings Bank (Lincoln Park Savings) is a New Jersey chartered savings
bank headquartered in Lincoln Park, New Jersey.  Lincoln Park Savings was originally founded in 1923.  In connection with and prior
to the mutual
holding company reorganization, Lincoln Park Savings Bank completed its conversion
from a New Jersey chartered savings and loan association to a New Jersey
chartered savings bank.  LPS Investment
Company is the Banks wholly owned subsidiary.
LPS Investment Company was recently formed as an operating subsidiary of
the Bank for the purpose of investing in stocks, bonds, mortgages, and other
securities, limited to the types of securities in which the Bank is authorized
to invest.  Lincoln Park Savings
conducts business from its main office located at 31 Boonton Turnpike in Lincoln
Park, New Jersey.  The telephone number
at its main office is (973) 694-0330.
In March 2007, Lincoln Park Savings entered into an agreement to
purchase a branch office located in Montville, New Jersey.  The purchase price of $830,000 is inclusive
of land, building, furniture and fixtures, as well as approximately $3.2
million in deposits.  The sale closed on
July 13, 2007.

Our
principal business activity is the origination of mortgage loans secured by
one- to four-family residential real estate and consumer loans consisting
primarily of home equity loans and home equity lines of credit.  We also originate loans secured by
multi-family and commercial real estate and, to a lesser extent, construction
loans, and small business loans and lines of credit.  We also invest in mortgage-backed and investment securities.  We offer a
variety of deposit accounts,
including demand deposits, savings and club accounts and certificates of
deposit.  We emphasize personal and
efficient service for our customers.  Lincoln
Park Savings is subject to comprehensive regulation and examination by the
Commissioner of Banking and Insurance of the State of New Jersey and the
Federal Deposit Insurance Corporation, and we are a member of the Federal Home
Loan Bank system.

2

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Market Area

We
primarily serve communities located in Morris and Passaic Counties, New
Jersey.  Our primary market area is
concentrated in the Borough of Lincoln Park and in contiguous towns in Morris
and Passaic Counties.  During the past
several years, the population and number of households in Morris and Passaic
Counties have increased moderately.  Our
market area is characterized by a high proportion of single family and two- to
four-family houses.  This market has a
diverse economy with a large number of small and medium-size business
establishments as well as corporate headquarters for Fortune 500
companies.  The market area also serves
as a bedroom community for nearby New York City as well as other nearby
suburban areas in northern New Jersey and downstate New York.

Competition

We
face intense competition within our market area both in making loans and
attracting deposits.  Morris and Passaic
Counties have a high concentration of financial institutions, including large
money center and regional banks, community banks and credit unions.  Some of our competitors offer products and
services that we currently do not offer, such as trust services and private
banking.  As of December 31, 2007, our
market share of deposits represented less than 1% of deposits in each of Morris
and Passaic Counties.

Our
competition for loans and deposits comes principally from commercial banks,
savings institutions, mortgage banking firms and credit unions.  We face additional competition for deposits
from short-term money market funds, brokerage firms, mutual funds and insurance
companies.  Our primary focus is to
build and develop profitable customer relationships across all lines of
business while maintaining our role as a community bank.

Lending Activities

Our principal
lending activity has been the origination of first mortgage loans for the
purchase or refinancing of one- to four-family residential real property.  We have historically retained all loans that
we originate, although we will occasionally enter into loan
participations.  One- to four-family
residential real estate mortgage loans represented $46.6 million, or 63.7% of
our total loan portfolio at December 31, 2007.
Consumer loans totaled $22.9 million, or 31.3% of the total loan
portfolio at December 31, 2007, and consisted primarily of home equity loans
and home equity lines of credit.  We
also offer multi-family and commercial real estate loans and to a lesser extent
construction loans.  Commercial real
estate loans totaled $1.7 million, or 2.4% of the total loan portfolio at
December 31, 2007.  On a limited basis,
we originate consumer loans that are not secured by real estate, including
automobile loans, deposit account loans and unsecured personal loans and lines
of credit and small business term loans and lines of credit.

3

---



Loan
Portfolio Composition.The following table sets forth the composition of our loan
portfolio by type of loan as of the dates indicated.

|                            |  |                        |        |         |  |        |   |         |        |   |  |        |  
|--------------------------- |  | ---------------------- | ------ | ------- |  | ------ | - | ------- | ------ | - |  | ------ | -
|                            |  | At December 31,        |       
|                            |  |                        |       
|                            |  | 2007                   |        | 2006    | 
|                            |  |                        |        |         | 
|                            |  | Amount                 |        | Percent |  | Amount |   | Percent |       
|                            |  |                        |        |         |  |        |   |         |       
|                            |  | (Dollars in Thousands) |       
|                            |  |                        |        |         |  |        |   |         |        |   |  |        |  
|Real estate loans:          |  |                        |        |         |  |        |   |         |        |   |  |        |  
|One- to four-family         |  | $                      | 46,584 |         |  | 63.71  | % | $       | 43,659 |   |  | 64.73  | %
|Multi-family                |  |                        | 841    |         |  | 1.15   |   |         | 857    |   |  | 1.27   |  
|Commercial                  |  |                        | 1,721  |         |  | 2.35   |   |         | 1,913  |   |  | 2.84   |  
|Construction/ Land          |  |                        | 388    |         |  | 0.54   |   |         | 437    |   |  | 0.65   |  
|                            |  |                        |        |         |  |        |   |         |        |   |  |        |  
|Total real estate loans     |  |                        | 49,534 |         |  | 67.75  |   |         | 46,866 |   |  | 69.49  | %
|                            |  |                        |        |         |  |        |   |         |        |   |  |        |  
|                            |  |                        |        |         |  |        |   |         |        |   |  |        |  
|Consumer loans:             |  |                        |        |         |  |        |   |         |        |   |  |        |  
|Passbook or certificate     |  |                        | 51     |         |  | 0.07   |   |         | 59     |   |  | 0.09   | %
|Home equity lines of credit |  |                        | 4,749  |         |  | 6.49   |   |         | 5,304  |   |  | 7.86   |  
|Home equity                 |  |                        | 17,642 |         |  | 24.13  |   |         | 14,489 |   |  | 21.49  |  
|Automobile                  |  |                        | 155    |         |  | 0.21   |   |         | 218    |   |  | 0.32   |  
|Personal secured            |  |                        | 123    |         |  | 0.17   |   |         | 394    |   |  | 0.58   |  
|Personal unsecured          |  |                        | 175    |         |  | 0.24   |   |         | 88     |   |  | 0.13   |  
|Overdraft line of credit    |  |                        | 24     |         |  | 0.03   |   |         | 27     |   |  | 0.04   |  
|                            |  |                        |        |         |  |        |   |         |        |   |  |        |  
|Total consumer loans        |  |                        | 22,919 |         |  | 31.34  |   |         | 20,579 |   |  | 30.51  | %
|                            |  |                        |        |         |  |        |   |         |        |   |  |        |  
|                            |  |                        |        |         |  |        |   |         |        |   |  |        |  
|Commercial business loans   |  |                        | 666    |         |  | 0.91   |   |         |       |   |  |       |  
|                            |  |                        |        |         |  |        |   |         |        |   |  |        |  
|                            |  |                        |        |         |  |        |   |         |        |   |  |        |  
|Total loans                 |  |                        | 73,119 |         |  | 100.00 | % |         | 67,445 |   |  | 100.00 | %
|                            |  |                        |        |         |  |        |   |         |        |   |  |        |  
|                            |  |                        |        |         |  |        |   |         |        |   |  |        |  
|Less:                       |  |                        |        |         |  |        |   |         |        |   |  |        |  
|Loans in process            |  |                        |       |         |  |        |   |         |       |   |  |        |  
|Allowance for loan losses   |  |                        | 187    |         |  |        |   |         | 136    |   |  |        |  
|Deferred loan (costs), net  |  |                        | (153   | )       |  |        |   |         | (142   | ) |  |        |  
|                            |  |                        |        |         |  |        |   |         |        |   |  |        |  
|                            |  |                        | 34     |         |  |        |   |         | (6     | ) |  |        |  
|                            |  |                        |        |         |  |        |   |         |        |   |  |        |  
|Total loans receivable, net |  | $                      | 73,085 |         |  |        |   | $       | 67,451 |   |  |        |  
|                            |  |                        |        |         |  |        |   |         |        |   |  |        |  

4

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Maturity of Loan Portfolio.  The following
table shows the remaining
contractual maturity of our loans at December 31, 2007.  Mortgages which have adjustable interest
rates or that have balloon repayment features are shown as maturing in the
periods during which the contract is due. The table does not include the effect
of possible prepayments or due on sale clauses.

|                              |  |                        |        |              |   |                        |  |                      |       |          |   |                       |  |       |        |  |   |     |  |   |        | 
|----------------------------- |  | ---------------------- | ------ | ------------ | - | ---------------------- |  | -------------------- | ----- | -------- | - | --------------------- |  | ----- | ------ |  | - | --- |  | - | ------ | 
|                              |  | One- to four-
  family |        | Multi-family |   | Commercial real estate |  | Construction/
  Land |       | Consumer |   | Commercial
  Business |  | Total |       
|                              |  |                        |        |              |   |                        |  |                      |       |          |   |                       |  |       |       
|                              |  | (In Thousands)         |       
|                              |  |                        |        |              |   |                        |  |                      |       |          |   |                       |  |       |        |  |   |     |  |   |        | 
|One year or less              |  | $                      |       |              | $ |                       |  | $                    |      |          | $ | 270                   |  | $     | 337    |  | $ | 518 |  | $ | 1,125  | 
|                              |  |                        |        |              |   |                        |  |                      |       |          |   |                       |  |       |        |  |   |     |  |   |        | 
|After one year:               |  |                        |        |              |   |                        |  |                      |       |          |   |                       |  |       |        |  |   |     |  |   |        | 
|More than one to three years  |  |                        | 198    |              |   |                       |  |                      |      |          |   | 118                   |  |       | 500    |  |   |    |  |   | 816    | 
|More than three to five years |  |                        | 110    |              |   |                       |  |                      |      |          |   |                      |  |       | 2,149  |  |   |    |  |   | 2,259  | 
|More than five to ten years   |  |                        | 1,453  |              |   | 52                     |  |                      | 564   |          |   |                      |  |       | 2,929  |  |   |    |  |   | 4,998  | 
|More than ten to twenty years |  |                        | 14,059 |              |   | 108                    |  |                      | 247   |          |   |                      |  |       | 12,440 |  |   | 148 |  |   | 27,002 | 
|More than twenty years        |  |                        | 30,764 |              |   | 681                    |  |                      | 910   |          |   |                      |  |       | 4,564  |  |   |    |  |   | 36,919 | 
|                              |  |                        |        |              |   |                        |  |                      |       |          |   |                       |  |       |        |  |   |     |  |   |        | 
|Total due after one year      |  |                        | 46,584 |              |   | 841                    |  |                      | 1,721 |          |   | 118                   |  |       | 22,582 |  |   | 148 |  |   | 71,994 | 
|                              |  |                        |        |              |   |                        |  |                      |       |          |   |                       |  |       |        |  |   |     |  |   |        | 
|Total due                     |  | $                      | 46,584 |              | $ | 841                    |  | $                    | 1,721 |          | $ | 388                   |  | $     | 22,919 |  | $ | 666 |  | $ | 73,119 | 
|                              |  |                        |        |              |   |                        |  |                      |       |          |   |                       |  |       |        |  |   |     |  |   |        | 

Fixed-
and Adjustable-Rate Loan Schedule. The following table sets forth at
December 31, 2007, the dollar amount of all fixed-rate and adjustable-rate
loans due after December 31, 2008.
Adjustable- and floating-rate loans are included based on contractual maturities.

|                       |  |                             |        |            |   |        |  |   |        | 
|---------------------- |  | --------------------------- | ------ | ---------- | - | ------ |  | - | ------ | 
|                       |  | Due After December 31, 2008 |       
|                       |  |                             |       
|                       |  | Fixed                       |        | Adjustable |   | Total  | 
|                       |  |                             |        |            |   |        | 
|                       |  | (In Thousands)              |       
|                       |  |                             |        |            |   |        |  |   |        | 
|One- to four-family    |  | $                           | 34,370 |            | $ | 12,214 |  | $ | 46,584 | 
|Multi-family           |  |                             | 270    |            |   | 571    |  |   | 841    | 
|Commercial real estate |  |                             | 564    |            |   | 1,157  |  |   | 1,721  | 
|Construction/Land      |  |                             | 118    |            |   |       |  |   | 118    | 
|Consumer               |  |                             | 17,963 |            |   | 4,619  |  |   | 22,582 | 
|Commercial business    |  |                             | 148    |            |   |       |  |   | 148    | 
|                       |  |                             |        |            |   |        |  |   |        | 
|                       |  |                             |        |            |   |        |  |   |        | 
|Total loans            |  | $                           | 53,433 |            | $ | 18,561 |  | $ | 71,994 | 
|                       |  |                             |        |            |   |        |  |   |        | 

5

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One- to Four-Family Residential
Loans. Our
primary lending activity consists of the origination of one- to four-family
residential mortgage loans that are primarily secured by properties located in
Morris and Passaic Counties.  At
December 31, 2007, approximately $46.6 million, or 63.7% of our loan portfolio,
consisted of one- to four-family residential loans.  Generally, one- to four-family residential mortgage loans are
originated in amounts up to 80% of the appraised value of the property.  However, we make first mortgage loans and
second mortgage loans when we are the first lien holder with a loan-to-value
ratio up to 89% for properties secured by one- to four-family residences
located in our community reinvestment designated area.  Private mortgage insurance is not required
on loans with a loan-to-value ratio in excess of 80% in conjunction with this
program.  Fixed-rate loans are
originated for terms of 15, 20, 25 and 30 years.  At December 31, 2007, our largest loan secured by one- to four-family
real estate had a principal balance of $694,000 and was secured by a
single-family residence.  This loan was
performing in accordance with its terms.

We
originate our fixed-rate loans in conformity with Freddie Mac guidelines.  However, our policy has been to retain in
portfolio the fixed-rate loans we originate.

We
also offer adjustable-rate mortgage loans for one- to four-family properties
with an interest rate based on the United States Treasury index.  The interest rates on these loans adjust
annually or every three years from the outset of the loan or adjust annually
after a five-, seven- or ten-year initial fixed rate period.  We originated $392,000 of adjustable-rate
one- to four-family residential loans during the year ended December 31,
2007.  Our adjustable rate-mortgage
loans provide for maximum rate adjustments of 200 basis points per adjustment,
with a lifetime maximum rate of 600 basis points above the initial interest
rate.  Our adjustable rate mortgage
loans amortize over terms of up to 40 years.

Adjustable-rate
mortgage loans decrease the risk associated with changes in market interest
rates by periodically repricing, but involve other risks because, as interest
rates increase, the underlying payments by the borrower increase, thus
increasing the potential for default by the borrower.  At the same time, the marketability of the underlying collateral
may be adversely affected by higher interest rates.  Upward adjustment of the contractual interest rate is also
limited by the maximum periodic and lifetime interest rate adjustments
permitted by our loan documents, and therefore, is potentially limited in
effectiveness during periods of rapidly rising interest rates.  At December 31, 2007, $12.2 million or 26.2%
of our one- to four-family residential loans had adjustable rates of interest.

All
one- to four-family residential mortgage loans that we originate include
due-on-sale clauses, which give us the right to declare a loan immediately
due and payable in the event that, among other things, the borrower sells or
otherwise disposes of the real property subject to the mortgage and the loan is
not repaid.

Regulations
limit the amount that a savings institution may lend relative to the appraised
value of the real estate securing the loan, as determined by an appraisal of
the property at the time the loan is originated.  For all loans, we utilize outside independent appraisers approved
by the board of directors.  All
borrowers are required to obtain title insurance.  We also require homeowners insurance and fire and casualty
insurance and, where circumstances warrant, flood insurance on properties
securing real estate loans.

Commercial and Multi-Family Real
Estate Loans. At December 31, 2007, $1.7 million, or
2.4% of our total loan portfolio consisted of commercial real estate loans
secured by mixed use properties (properties combining residential and
commercial space), office buildings and other commercial properties. We have
generally originated adjustable rate commercial real estate loans with interest
rates that adjust every five years based upon the five year Federal Home Loan
Bank of New York advance rate, and which amortize over periods up to 25 years.  The maximum loan-to-value ratio of our
commercial real estate loans is 75%.  We
expanded our product base in December of 2006 to offer commercial real estate
loans with three and five year interest rate adjustments with rates tied to
either the Wall Street Journal Prime Rate or the three or five year treasury
securities, which amortize over periods up to 20 years.  We also introduced fixed rate commercial
real estate loans with maximum amortized terms of 15 years and a limited
Interest Only Mortgage with rates adjusting every 6 months tied to the Wall
Street Journal Prime, with a maximum amortized term of 10 years and a maximum
loan to value ratio of 60%.  At December
31, 2007, we had nine commercial real estate loans with an average outstanding
balance of $191,000.  At December 31,
2007, all of our loans secured by commercial real estate were performing in
accordance with their terms. All
commercial real estate loans are secured by properties located within Northern New Jersey.

6

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Loans
secured by multi-family real estate (other than mixed use properties listed
above) totaled approximately $841,000 or 1.2%, of the total loan portfolio at
December 31, 2007.  Multi-family real
estate loans generally are secured by rental properties, including walk-up
apartments.  At December 31, 2007, we
had four multi-family loans with an average principal balance of $210,000, and
the largest multi-family real estate loan had a principal balance of
$571,000.  Two of our multi-family loans
represent participation interests in loans originated by the New Jersey Thrift
Institutions Community Investment Corporation.
These participation interests are secured by low and moderate income
multi-family properties located in Wayne Township and in Paterson, New
Jersey.  As of December 31, 2007, all of
our loans secured by multi-family real estate loans were performing in
accordance with their terms.
Multi-family real estate loans generally are offered with interest rates
that adjust after three to five years and are tied to either the FHLB of New
York advance rate, the Prime Rate as published in the Wall Street Journal or
the three or five year treasury securities. Adjustable rate multi-family loans
are originated for terms of up to 20 to 25 years, and fixed rate multi-family
loans are originated on a limited basis and are for terms up to 15 years.

We
consider a number of factors in originating commercial and multi-family real
estate loans.  We evaluate the
qualifications and financial condition of the borrower (including credit
history), profitability and expertise, as well as the value and condition of
the mortgaged property securing the loan.
When evaluating the qualifications of the borrower, we consider the
financial resources of the borrower, the borrowers experience in owning or managing
similar property and the borrowers payment history with us and other financial
institutions.  In evaluating the
property securing the loan, the factors we consider include the net operating
income of the mortgaged property before debt service and depreciation, the debt
service coverage ratio (the ratio of net operating income to debt service) to
ensure that it is at least 130% of the monthly debt service, and the ratio of
the loan amount to the appraised value of the mortgaged property.  Commercial and multi-family real estate
loans are originated in amounts up to 75% of the appraised value of the
mortgaged property securing the loan.
All commercial and multi-family real estate loans are appraised by
outside independent appraisers approved by the board of directors.  Personal guarantees are often obtained from
commercial and multi-family real estate borrowers.  We generally do not originate commercial and multi-family real
estate loans secured by industrial properties.

Loans
secured by commercial and multi-family real estate generally are larger than
one- to four-family residential loans and involve greater credit risk.  Commercial and multi-family real estate
loans often involve large loan balances to single borrowers or groups of
related borrowers.  Repayment of these
loans depends to a large degree on the results of operations and management of
the properties securing the loans or the businesses conducted on such property,
and may be affected to a greater extent by adverse conditions in the real
estate market or the economy in general.
Accordingly, the nature of these loans makes them more difficult for
management to monitor and evaluate.

Consumer Loans. We are authorized to make
loans for a variety
of personal and consumer purposes.  As
of December 31, 2007, consumer loans totaled $22.9 million, or 31.4% of our
total loan portfolio.  Our consumer
loans consist primarily of home equity loans and home equity lines of
credit.  Our procedure for underwriting
consumer loans includes an assessment of the applicants credit history and
ability to meet existing obligations and payments of the proposed loan, as well
as an evaluation of the value of the collateral security, if any.

The
largest component of our consumer loans consists of home equity loans and home
equity lines of credit which totaled $22.4 million, or 30.6% of our total loan
portfolio, as of December 31, 2007.
Home equity loans and home equity lines of credit are generally made for
owner-occupied homes, and are secured by first or second mortgages on
residences.  Home equity loans may have
a term of up to 20 years, and are originated at a fixed rate of interest.  Home equity lines of credit are revolving
lines of credit and have adjustable rates of interest.  We offer home equity loans and lines of
credit up to $350,000.  At December 31,
2007, our home equity loans had an average balance of $77,000and our home
equity lines of credit had an average credit limit of $32,000. Generally home
equity loans and lines of credit have a maximum loan to value ratio of 80%
(including any senior lien on the collateral property), although we will
originate such loans with a loan-to-value ratio up to 89% within our community
reinvestment designated area, provided Lincoln Park Savings has the first lien
on the property securing the loan.  We
currently offer home equity lines of credit for a period of up to 20 years, and
generally at rates tied to the prime interest rate as published in The Wall Street Journal.

7

---



Automobile
loans accounted for $155,000 of our consumer loans at December 31, 2007.  Our automobile loans generally have terms
that do not exceed five years and carry a
fixed rate of interest.  Generally,
automobile loans are made in amounts up to 85% of the purchase price on new
vehicles, and up to 80% of the National Automobile Dealers Association retail
value on used vehicles.  Collision and
comprehensive insurance is required on all automobile loans.  We require a lien on the title to the
vehicle securing the loan.

We
make loans secured by deposit accounts up to 90% of the amount of the available
deposit balance.  We also make personal
loans and overdraft lines of credit that are not secured by any
collateral.  We have the authority to
make other consumer loans that may or may not be secured.

Consumer
loans generally entail greater risk than residential loans, particularly in the
case of loans that are unsecured or are secured by assets that tend to
depreciate in value, such as automobiles.  In these cases, repossessed collateral for a defaulted consumer
loan may not provide an adequate source of repayment for the outstanding loan,
and the remaining value often does not warrant further substantial collection
efforts against the borrower.

Construction/Land Loans. At December 31,
2007, we had no construction loans.  At
December 31, 2007, we had $388,000 in land loans. We currently offer
adjustable-rate and fixed-rate residential construction loans for the
construction of owner-occupied, single-family residences. These loans
generally are offered to borrowers who have a contract for construction of a
single family residence on property they own at the time of the loan
origination.  Construction loans
generally have terms of nine months to one year, but typically are structured
to become permanent mortgage loans once construction is completed.  During the construction period, construction
loans require the payment of interest only.
Construction loans will generally be made in amounts up to 80% of the
appraisal value of the property.  Funds
are disbursed in accordance with a schedule reflecting the completion of
portions of the project.

Construction
loans generally have greater credit risk than one- to four-family residential mortgage
loans.  The risk of loss on a
construction loan depends upon the accuracy of the initial estimate of the
value of the property at completion of construction compared to the estimated
cost of construction.  If the estimated
cost of construction is inaccurate, we may have to advance funds beyond the
original amount committed in order to protect the value of the property.

Other Loans. We have authority to make
secured and unsecured
commercial business loans, and have closed four commercial loans to local small
businesses.  We anticipate that
commercial business lines of credit, as well as other commercial business
loans, will continue to grow over the next several years as we increase our
marketing of these products. At December 31, 2007, our largest business
line of credit consisted of a $418,000 loan secured by a one- to-four- family
dwelling unit.

Origination and Servicing of
Loans. Loan origination
activities are concentrated in our primary market area of Morris and Passaic
Counties, New Jersey.  New loans are
generated primarily from walk-in customers, customer referrals, and other
parties with whom we do business, and from the efforts of directors and
employees and advertising.  Loan
applications are underwritten and processed at our main office.  We service all loans that we originate.

We
have not been an active purchaser or seller of loans.  In 2003, we sold a participation interest in a portion of a loan
where the total loan principal exceeded our loans to one borrower limit.  We retained the servicing of the loan.  Similarly, we will
occasionally purchase a
participation interest in loans originated by other financial institutions.

8

---



The
following table shows our loan origination purchases, sales and repayment
activities for the periods indicated.

|                               |  |                          |        |      |   |        |  
|------------------------------ |  | ------------------------ | ------ | ---- | - | ------ | -
|                               |  | Years Ended December 31, |       
|                               |  |                          |       
|                               |  | 2007                     |        | 2006 |  
|                               |  |                          |        |      |  
|                               |  | (In Thousands)           |       
|                               |  |                          |        |      |   |        |  
|Beginning of period            |  | $                        | 67,451 |      | $ | 66,383 |  
|                               |  |                          |        |      |   |        |  
|                               |  |                          |        |      |   |        |  
|Originations by Type:          |  |                          |        |      |   |        |  
|Real estate mortgage:          |  |                          |        |      |   |        |  
|One- to four-family            |  |                          | 7,270  |      |   | 7,425  |  
|Multi-family                   |  |                          |       |      |   | 585    |  
|Commercial                     |  |                          |       |      |   | 555    |  
|Construction                   |  |                          |       |      |   |       |  
|Consumer:                      |  |                          |        |      |   |        |  
|Passbook or certificate        |  |                          | 115    |      |   | 12     |  
|Home equity lines of credit    |  |                          | 4,320  |      |   | 5,928  |  
|Home equity                    |  |                          | 6,572  |      |   | 4,503  |  
|Automobile                     |  |                          | 75     |      |   | 86     |  
|Personal secured/unsecured     |  |                          | 81     |      |   | 872    |  
|Overdraft line of credit       |  |                          | 110    |      |   | 97     |  
|Commercial Business            |  |                          | 1,000  |      |   |       |  
|                               |  |                          |        |      |   |        |  
|Total loans originated         |  |                          | 19,543 |      |   | 20,063 |  
|                               |  |                          |        |      |   |        |  
|                               |  |                          |        |      |   |        |  
|Purchases:                     |  |                          |        |      |   |        |  
|Total purchases                |  |                          |       |      |   |       |  
|                               |  |                          |        |      |   |        |  
|                               |  |                          |        |      |   |        |  
|Sales:                         |  |                          |        |      |   |        |  
|Total sales                    |  |                          |       |      |   |       |  
|                               |  |                          |        |      |   |        |  
|                               |  |                          |        |      |   |        |  
|Principal repayments           |  |                          | 13,822 |      |   | 18,973 |  
|                               |  |                          |        |      |   |        |  
|Total reductions               |  |                          | 13,822 |      |   | 18,973 |  
|                               |  |                          |        |      |   |        |  
|                               |  |                          |        |      |   |        |  
|Increase in other items,
  net |  |                          | (87    | )    |   | (22    | )
|                               |  |                          |        |      |   |        |  
|Net increase                   |  |                          | 5,634  |      |   | 1,068  |  
|                               |  |                          |        |      |   |        |  
|                               |  |                          |        |      |   |        |  
|Ending balance                 |  | $                        | 73,085 |      | $ | 67,451 |  
|                               |  |                          |        |      |   |        |  

Loan Approval Procedures and
Authority.  The loan
approval process is intended to assess the borrowers ability to repay the
loan, the viability of the loan, and the adequacy of the value of the property
that will secure the loan.  To assess
the borrowers ability to repay, we review the employment and credit history
and information on the historical and projected income and expenses of
mortgagors.  All loans up to $200,000
may be approved by certain of our officers pursuant to delegated loan approval
authority or by our Loan Committee. Our Loan Committee consists of two
directors, the President, and the Vice President of Lending.  The President and/or one Director and Vice
President of Lending have a combined lending authority up to $100,000.  The Vice President of Lending and an
Assistant Vice President have a combined lending authority of up to $50,000.  Three of the four members of the Loan
Committee may approve loans up to $200,000.
All loans in excess of $200,000 must be approved by the board of
directors.  In addition, the board of
directors ratifies all loans approved by management.

We
require appraisals of all real property securing loans.  Appraisals are performed by independent
licensed appraisers.  All appraisers are
approved by the board of directors annually.
We require fire and extended coverage insurance in amounts at least
equal to the principal amount of the loan.

Non-performing and Problem Assets

Lincoln
Park Savings commences collection efforts when a loan becomes 11 days past due
with system generated reminder notices. Subsequent late charge and delinquent
notices are issued and the account is monitored on a regular basis thereafter.
Personal, direct contact with the borrower is attempted early in the collection
process as a courtesy reminder and later to determine the reason for the
delinquency and to safeguard Lincoln Park Savings collateral. When a loan is more
than 60 days past due, the credit file is reviewed and, if deemed necessary,
information is updated or confirmed and collateral re-evaluated.  We make every effort to contact the borrower
and develop a plan of repayment to cure the delinquency.  All loans 30 days past due and greater are
reported to the board of directors. Upon direction of the board of directors,
if no repayment plan is in process, the file is referred to counsel for the
commencement of foreclosure or other collection efforts.

9

---



Loans
are placed on non-accrual status when they are contractually 90 days or more
delinquent.  When loans are placed on
non-accrual status, unpaid accrued interest is fully reserved, and further
income is recognized only to the extent received.  Loans are removed from non-accrual status when their delinquency
status is reduced to less than 90 days.

Non-performing Loans. At
December 31, 2007, $431,000 or 0.59% of our total loans were non-performing
loans.

Non-performing Assets.  The table below
sets forth the amounts and
categories of our non-performing assets at the dates indicated.  Delinquent loans that are 90 days or more
past due are generally considered non-performing assets.  During the periods presented, we did not
have any troubled debt restructurings.

|                                                        |  |                        |      |      |   |      |  
|------------------------------------------------------- |  | ---------------------- | ---- | ---- | - | ---- | -
|                                                        |  | At December 31,        |     
|                                                        |  |                        |     
|                                                        |  | 2007                   |      | 2006 |  
|                                                        |  |                        |      |      |  
|                                                        |  | (Dollars in Thousands) |     
|Non-accruing loans:                                     |  |                        |      |      |   |      |  
|One- to four-family                                     |  | $                      | 431  |      | $ | 41   |  
|Multi-family                                            |  |                        |     |      |   |     |  
|Commercial real estate                                  |  |                        |     |      |   | 117  |  
|Construction                                            |  |                        |     |      |   |     |  
|Consumer  Home equity loans                            |  |                        |     |      |   |     |  
|Commercial business                                     |  |                        |     |      |   |     |  
|                                                        |  |                        |      |      |   |      |  
|Total                                                   |  |                        | 431  |      |   | 158  |  
|                                                        |  |                        |      |      |   |      |  
|                                                        |  |                        |      |      |   |      |  
|Accruing loans delinquent
  90 days or more:            |  |                        |      |      |   |      |  
|One- to four-family                                     |  |                        |     |      |   |     |  
|Multi-family                                            |  |                        |     |      |   |     |  
|Commercial real estate                                  |  |                        |     |      |   |     |  
|Construction                                            |  |                        |     |      |   | 3⁄4    |  
|Consumer  Passbook or Certificate                      |  |                        |     |      |   | 3⁄4    |  
|Commercial business                                     |  |                        |     |      |   |     |  
|                                                        |  |                        |      |      |   |      |  
|Total                                                   |  |                        |     |      |   | 3⁄4    |  
|                                                        |  |                        |      |      |   |      |  
|                                                        |  |                        |      |      |   |      |  
|Foreclosed assets                                       |  |                        |     |      |   |     |  
|                                                        |  |                        |      |      |   |      |  
|                                                        |  |                        |      |      |   |      |  
|Total non-performing assets                             |  | $                      | 431  |      | $ | 158  |  
|                                                        |  |                        |      |      |   |      |  
|Total as a percentage of total assets                   |  |                        | 0.42 | %    |   | 0.17 | %
|                                                        |  |                        |      |      |   |      |  
|Total as a percent of total loans                       |  |                        | 0.59 | %    |   | 0.23 | %
|                                                        |  |                        |      |      |   |      |  
|Allowance for loan loss related to non-performing loans |  | $                      | 39   |      | $ | 1    |  
|                                                        |  |                        |      |      |   |      |  

For
the years ended December 31, 2007 and 2006, gross interest income which would
have been recorded had our non-accruing loans been current in accordance with
their original terms amounted to approximately $24,000 and $17,000,
respectively.  Interest income recognized on these loans for the years
ended December 31, 2007 and 2006, was approximately $10,000 and $15,000,
respectively.

Other Loans of Concern. At December 31,
2007, we had
2 single-family loans with an aggregate balance of $372,000, and 2 consumer
loans with an aggregate balance of $21,000, with respect to which known
information about the possible credit problems of the borrowers or the cash
flows of the security properties have caused management to have some doubts as
to the ability of the borrowers to comply with repayment terms of the loans and
which may result in such loans being classified as non-performing.  These loans, which are over 30 days but less
than 60 days delinquent, are placed on Lincoln Park Savings watch list and are
closely monitored.

10

---



Delinquent Loans. The
following table sets forth our loan delinquencies by type, by amount and by percentage
of type at the dates indicated.

|                                  |  |                        |   |                            |   |                 |   |                            |   |                 |   |                            |   |                 |   |                            |   |      |   |  |   |  |   |      |  
|--------------------------------- |  | ---------------------- | - | -------------------------- | - | --------------- | - | -------------------------- | - | --------------- | - | -------------------------- | - | --------------- | - | -------------------------- | - | ---- | - |  | - |  | - | ---- | -
|                                  |  | At December 31, 2007   |   | At December 31, 2006       |  
|                                  |  |                        |   |                            |  
|                                  |  | 60-89 Days             |   | 90 Days or More            |   | 60-89 Days      |   | 90 Days or More            |  
|                                  |  |                        |   |                            |   |                 |   |                            |  
|                                  |  | Number of Loans        |   | Principal Balance of Loans |   | Number of Loans |   | Principal Balance of Loans |   | Number of Loans |   | Principal Balance of Loans |   | Number of Loans |   | Principal Balance of Loans |  
|                                  |  |                        |   |                            |   |                 |   |                            |   |                 |   |                            |   |                 |   |                            |  
|                                  |  | (Dollars in Thousands) |  
|Real estate mortgage:             |  |                        |   |                            |   |                 |   |                            |   |                 |   |                            |   |                 |   |                            |   |      |   |  |   |  |   |      |  
|One- to four-family               |  |                        |  |                            | $ |                |   |                            | 2 |                 | $ | 246                        |   |                 | 1 |                            | $ | 205  |   |  | 1 |  | $ | 41   |  
|Multi-family                      |  |                        |  |                            |   |                |   |                            |  |                 |   |                           |   |                 |  |                            |   |     |   |  |  |  |   |     |  
|Commercial                        |  |                        |  |                            |   |                |   |                            |  |                 |   |                           |   |                 |  |                            |   |     |   |  | 1 |  |   | 117  |  
|Construction                      |  |                        |  |                            |   |                |   |                            |  |                 |   |                           |   |                 |  |                            |   |     |   |  |  |  |   |     |  
|                                  |  |                        |   |                            |   |                 |   |                            |   |                 |   |                            |   |                 |   |                            |   |      |   |  |   |  |   |      |  
|Total real estate loans           |  |                        |  |                            |   |                |   |                            | 2 |                 |   | 246                        |   |                 | 1 |                            |   | 205  |   |  | 2 |  |   | 158  |  
|                                  |  |                        |   |                            |   |                 |   |                            |   |                 |   |                            |   |                 |   |                            |   |      |   |  |   |  |   |      |  
|                                  |  |                        |   |                            |   |                 |   |                            |   |                 |   |                            |   |                 |   |                            |   |      |   |  |   |  |   |      |  
|Consumer:                         |  |                        |   |                            |   |                 |   |                            |   |                 |   |                            |   |                 |   |                            |   |      |   |  |   |  |   |      |  
|Passbook or certificate           |  |                        |  |                            |   |                |   |                            |  |                 |   |                           |   |                 | 1 |                            |   | 7    |   |  | 3⁄4 |  |   | 3⁄4    |  
|Home equity lines of credit       |  |                        |  |                            |   |                |   |                            | 1 |                 |   | 185                        |   |                 | 3⁄4 |                            |   | 3⁄4    |   |  |  |  |   |     |  
|Home equity                       |  |                        |  |                            |   |                |   |                            |  |                 |   |                           |   |                 | 1 |                            |   | 75   |   |  |  |  |   |     |  
|Automobile                        |  |                        |  |                            |   |                |   |                            |  |                 |   |                           |   |                 | 3⁄4 |                            |   | 3⁄4    |   |  |  |  |   |     |  
|Personal unsecured                |  |                        |  |                            |   |                |   |                            | 2 |                 |   | 22                         |   |                 | 3⁄4 |                            |   | 3⁄4    |   |  |  |  |   |     |  
|Overdraft line of credit          |  |                        |  |                            |   |                |   |                            |  |                 |   |                           |   |                 |  |                            |   |     |   |  |  |  |   |     |  
|                                  |  |                        |   |                            |   |                 |   |                            |   |                 |   |                            |   |                 |   |                            |   |      |   |  |   |  |   |      |  
|Total other loans                 |  |                        |  |                            |   |                |   |                            | 3 |                 |   | 207                        |   |                 | 2 |                            |   | 82   |   |  | 3⁄4 |  |   | 3⁄4    |  
|                                  |  |                        |   |                            |   |                 |   |                            |   |                 |   |                            |   |                 |   |                            |   |      |   |  |   |  |   |      |  
|Total delinquent loans            |  |                        |  |                            | $ |                |   |                            | 5 |                 | $ | 453                        |   |                 | 3 |                            | $ | 287  |   |  | 2 |  | $ | 158  |  
|                                  |  |                        |   |                            |   |                 |   |                            |   |                 |   |                            |   |                 |   |                            |   |      |   |  |   |  |   |      |  
|                                  |  |                        |   |                            |   |                 |   |                            |   |                 |   |                            |   |                 |   |                            |   |      |   |  |   |  |   |      |  
|Delinquent loans to total
  loans |  |                        |   |                            |   |                | % |                            |   |                 |   | 0.62                       | % |                 |   |                            |   | 0.43 | % |  |   |  |   | 0.23 | %
|                                  |  |                        |   |                            |   |                 |   |                            |   |                 |   |                            |   |                 |   |                            |   |      |   |  |   |  |   |      |  

11

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Classified
Assets. Federal
and state regulations and our Asset Classification Policy provide that
loans and other assets of lesser quality should be classified as substandard,
doubtful or loss assets. An asset is considered substandard if it is
inadequately protected by the current net worth and paying capacity of the
obligor or of the collateral pledged, if any. Substandard assets include
those characterized by the distinct possibility that we will sustain some
loss if the deficiencies are not corrected. Assets classified as doubtful
have all of the weaknesses inherent in those classified substandard, with the
added characteristic that the weaknesses present make collection or
liquidation in full, on the basis of currently existing facts, conditions, and
values, highly questionable and improbable. Assets classified as loss are
those considered uncollectible and of such little value that their
continuance as assets without the establishment of a specific loss reserve is not
warranted. We classify an asset as special mention if the asset has a
potential weakness that warrants managements close attention. While such
assets are not impaired, management has concluded that if the potential
weakness in the asset is not addressed, the value of the asset may deteriorate,
adversely affecting the repayment of the asset.

We
are required to establish general allowances for loan losses in an amount
deemed prudent by management for loans classified substandard or doubtful, as well
as for other problem loans. General allowances represent loss allowances which
have been established to recognize the inherent losses associated with lending
activities, but which, unlike specific allowances, have not been allocated to
particular problem assets. When we classify problem assets as loss, we are
required either to establish a specific allowance for losses equal to 100% of
the amount of the asset so classified or to charge off such amount. Our
determination as to the classification of our assets and the amount of our
valuation allowances is subject to review by federal and state regulators which
can order the establishment of additional general or specific loss allowances.

On
the basis of managements review of our assets, at December 31, 2007 we had
classified assets totaling $686,000, consisting of $661,000 classified as
substandard and $25,000 classified as doubtful. The substandard assets consist
of 3 non-accrual loans totaling $431,000, secured by single-family residential
properties, and a corporate bond that has sub-investment grade rating. The
$25,000 market depreciation portion of the corporate bond is classified as
doubtful, while the $230,000 remaining portion of the corporate bond is
classified as substandard. The corporate bond will mature in January 2011 and
has not yet missed an interest payment. Management expects the corporate bond
to be paid in full upon maturity. At December 31, 2007, none of our assets were
classified as loss.

At
December 31, 2007, we had classified $393,000 of our mortgage and consumer
loans as special mention. These loans consist of one mortgage loan secured by
single-family residential property, one consumer loan secured by real estate,
one consumer loan secured by an automobile, and one unsecured loan.

The
loan portfolio is reviewed on a regular basis to determine whether any loans
require classification in accordance with applicable regulations. Not all
classified assets constitute non-performing assets.

Allowance for Loan
Losses

Our
allowance for loan losses is maintained at a level necessary to absorb loan
losses which are both probable and reasonably estimable. Management, in
determining the allowance for loan losses, considers the losses inherent in its
loan portfolio and changes in the nature and volume of loan activities, along
with general economic and real estate market conditions. We utilize a two-tier
approach: (1) identification of impaired loans and establishment of specific
loss allowances on such loans; and (2) establishment of general valuation
allowances on the remainder of our loan portfolio. We maintain a loan review
system, which allows for a periodic review of our loan portfolio and the early
identification of potential impaired loans. Such system takes into
consideration, among other things, delinquency status, size of loans, type and
market value of collateral and financial condition of the borrowers. Specific
loan loss allowances are established for identified losses based on a review of
such information. A loan evaluated for impairment is considered to be impaired
when, based on current information and events, it is probable that we will be
unable to collect all amounts due according to the contractual terms of the
loan agreement. All loans identified as impaired are evaluated independently.
We do not aggregate such loans for evaluation purposes. Loan impairment is
measured based on the present value of expected future cash flows discounted at
the loans effective interest rate or, as a practical expedient, at the loans
observable market price or the fair value of the collateral if the loan is
collateral dependent. General loan loss allowances are based upon a combination
of factors including, but not limited to, actual loan loss experience, composition
of the loan portfolio, current economic conditions and managements judgment. The allowance
is increased through provisions charged against current earnings and recoveries
of previously charged-off loans. Loans which are determined to be uncollectible
are charged against the allowance. While management uses available information
to recognize probable and reasonably estimable loan losses, future loss
provisions may be necessary based on changing economic conditions. Payments
received on impaired loans are applied first to accrued interest receivable and
then to principal. The allowance for loan losses as of December 31, 2007 is
maintained at a level that represents managements best estimate of losses
inherent in the loan portfolio, and such losses were both probable and
reasonably estimable. This estimation is inherently subjective as it requires
estimates and assumptions that are susceptible to significant revisions as more
information becomes available. Although we believe that we have established the
allowance at a level to absorb probable and estimable losses, future additions
to the allowance for loan losses may be necessary if economic and other
conditions in the future differ substantially from the current operating
environment.

12

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In
addition, federal and state regulators, as an integral part of their
examination process, periodically review our allowance for loan losses. Such
agencies may require that we recognize additions to the allowance based on
their judgments of information available to them at the time of their
examination.

Allowance
for Loan Losses. The
following table analyzes changes in the allowance for the periods presented. We
had no recoveries during the periods presented.

|                                                                                    |  |                                        |      |      |   |      |  
|----------------------------------------------------------------------------------- |  | -------------------------------------- | ---- | ---- | - | ---- | -
|                                                                                    |  | At or For the Years Ended December 31, |     
|                                                                                    |  |                                        |     
|                                                                                    |  | 2007                                   |      | 2006 |  
|                                                                                    |  |                                        |      |      |  
|                                                                                    |  | (Dollars in Thousands)                 |     
|                                                                                    |  |                                        |     
|Balance at beginning of period                                                      |  | $                                      | 136  |      | $ | 159  |  
|                                                                                    |  |                                        |      |      |   |      |  
|                                                                                    |  |                                        |      |      |   |      |  
|Total charge-offs                                                                   |  |                                        |     |      |   | (1   | )
|                                                                                    |  |                                        |      |      |   |      |  
|Total recoveries                                                                    |  |                                        |     |      |   |     |  
|                                                                                    |  |                                        |      |      |   |      |  
|                                                                                    |  |                                        |      |      |   |      |  
|Net charge-offs                                                                     |  |                                        |     |      |   | (1   | )
|Provision (credited) charged to operations                                          |  |                                        | 51   |      |   | (22  | )
|                                                                                    |  |                                        |      |      |   |      |  
|Ending balance                                                                      |  | $                                      | 187  |      | $ | 136  |  
|                                                                                    |  |                                        |      |      |   |      |  
|                                                                                    |  |                                        |      |      |   |      |  
|Ratio of non-performing assets to total assets at the end of
period                 |  |                                        | 0.38 | %    |   | 0.17 | %
|                                                                                    |  |                                        |      |      |   |      |  
|                                                                                    |  |                                        |      |      |   |      |  
|Ratio of net charge-offs during the period to loans outstanding
during
  the period |  |                                        | 0.00 | %    |   | 0.00 | %
|                                                                                    |  |                                        |      |      |   |      |  
|                                                                                    |  |                                        |      |      |   |      |  
|Ratio of net charge-offs during the period to non-performing
assets                 |  |                                        | 0.00 | %    |   | 0.07 | %
|                                                                                    |  |                                        |      |      |   |      |  

13

---



Allocation
of Allowance for Loan Losses. The following table
presents an analysis of the allocation of the allowance for loan losses at the
dates indicated. The allocation of the allowance to each category is not
necessarily indicative of future loss in any particular category and does not restrict
the use of the allowance to absorb losses in other categories.

|                            |  |                               |     |                          |   |                                                  |  |                               |        |                          |   |                                                  |  |   |        |  |  |        |  
|--------------------------- |  | ----------------------------- | --- | ------------------------ | - | ------------------------------------------------ |  | ----------------------------- | ------ | ------------------------ | - | ------------------------------------------------ |  | - | ------ |  |  | ------ | -
|                            |  | At December 31,               |    
|                            |  |                               |    
|                            |  | 2007                          |     | 2006                     |  
|                            |  |                               |     |                          |  
|                            |  | Amount of Loan Loss Allowance |     | Loan Amounts by Category |   | Percent of Loans in Each Category to Total Loans |  | Amount of Loan Loss Allowance |        | Loan Amounts by Category |   | Percent of Loans in Each Category to Total Loans | 
|                            |  |                               |     |                          |   |                                                  |  |                               |        |                          |   |                                                  | 
|                            |  | (Dollars in Thousands)        |    
|                            |  |                               |    
|Real estate mortgage:       |  |                               |     |                          |   |                                                  |  |                               |        |                          |   |                                                  |  |   |        |  |  |        |  
|One- to four-family         |  | $                             | 91  |                          | $ | 46,584                                           |  |                               | 63.71  | %                        | $ | 66                                               |  | $ | 44,096 |  |  | 65.38  | %
|Multi-family                |  |                               | 4   |                          |   | 841                                              |  |                               | 1.15   |                          |   | 4                                                |  |   | 857    |  |  | 1.27   |  
|Commercial                  |  |                               | 9   |                          |   | 1,721                                            |  |                               | 2.35   |                          |   | 10                                               |  |   | 1,913  |  |  | 2.84   |  
|Construction                |  |                               | 2   |                          |   | 388                                              |  |                               | 0.53   |                          |   |                                                 |  |   |       |  |  | 0.00   |  
|Consumer:                   |  |                               |     |                          |   |                                                  |  |                               |        |                          |   |                                                  |  |   |        |  |  |        |  
|Passbook or certificate     |  |                               |    |                          |   | 51                                               |  |                               | 0.07   |                          |   |                                                 |  |   | 59     |  |  | 0.09   |  
|Home equity                 |  |                               | 44  |                          |   | 17,642                                           |  |                               | 24.13  |                          |   | 36                                               |  |   | 14,489 |  |  | 21.49  |  
|Home equity lines of credit |  |                               | 30  |                          |   | 4,749                                            |  |                               | 6.49   |                          |   | 13                                               |  |   | 5,304  |  |  | 7.86   |  
|Automobile                  |  |                               | 1   |                          |   | 155                                              |  |                               | 0.21   |                          |   | 2                                                |  |   | 218    |  |  | 0.32   |  
|Personal secured/unsecured  |  |                               | 3   |                          |   | 298                                              |  |                               | 0.41   |                          |   | 5                                                |  |   | 482    |  |  | 0.71   |  
|Overdraft line of credit    |  |                               |    |                          |   | 24                                               |  |                               | 0.03   |                          |   |                                                 |  |   | 27     |  |  | 0.04   |  
|Commercial Business         |  |                               | 3   |                          |   | 666                                              |  |                               | 0.91   |                          |   |                                                 |  |   |       |  |  |       |  
|                            |  |                               |     |                          |   |                                                  |  |                               |        |                          |   |                                                  |  |   |        |  |  |        |  
|Total                       |  | $                             | 187 |                          | $ | 73,119                                           |  |                               | 100.00 | %                        | $ | 136                                              |  | $ | 67,445 |  |  | 100.00 | %
|                            |  |                               |     |                          |   |                                                  |  |                               |        |                          |   |                                                  |  |   |        |  |  |        |  

Each
quarter, management evaluates the total balance of the allowance for loan
losses based on several factors that are not loan specific, but are reflective
of the inherent losses in the loan portfolio. This process includes, but is not
limited to, a periodic review of loan collectibility in light of historical
experience, the nature and volume of loan activity, conditions that may affect
the ability of the borrower to repay, the underlying value of collateral, if
applicable, and economic conditions in our immediate market area. First, we group
loans by delinquency status. All loans 90 days or more delinquent are evaluated
individually, based primarily on the value of the collateral securing the loan.
Specific loss allowances are established as required by this analysis. All
loans for which a specific loss allowance has not been assigned are segregated
by type and a loss allowance is established by using loss experience data and
managements judgment concerning other matters it considers significant. The
allowance is allocated to each category of loan based on the results of the
above analysis.

Investments

Our
investment portfolio at December 31, 2007 consisted of $15.7 million in United
States Government agency securities, $1.1 million of corporate bonds, $566,000
of municipal bonds, $858,000 in mortgage-backed securities, $521,000 in equity
securities, $4.1 million in collateralized mortgage obligations,
$1.2 million in Federal Home Loan Bank of New York stock and $1.4 million
in other interest-earning assets, consisting of regular and term deposits at
other financial institutions. Our investment policy objectives are to maintain
liquidity within the guidelines established by the board of directors. Our
policy is to invest only in securities with an investment grade rating at the
time of purchase. In addition, the market value of all securities and the
credit rating of all non-U.S. Government issues are monitored monthly to
determine whether any other than temporary losses exist.

Investments
in mortgage-backed securities involve a risk that actual payments will be
greater or less than the prepayment rate estimated at the time of purchase,
which may require adjustments to the amortization of any premium or
acceleration of any discount relating to such interests, thereby affecting the
net yield on our securities. We periodically review current prepayment speeds
to determine whether prepayment estimates require modification that could cause
amortization or accretion adjustments.

CMOs
are debt securities issued by a special-purpose entity that aggregates pools of
mortgages and mortgage-backed securities and creates different classes of
securities with varying maturities and amortization schedules, as well as a
residual interest, with each class possessing different risk characteristics.
The cash flows from the underlying collateral are generally divided into
tranches or classes that have descending priorities with respect to the
distribution of principal and interest cash flows, while cash flows on
pass-through mortgage-backed securities are distributed pro rata to all
security holders. All of the CMOs in our investment portfolio are rated AAA
by at least one of the major investment securities rating services.

14

---



Although
corporate bonds may offer higher yields than U.S. Government or agency
securities of comparable duration, corporate bonds also have a higher risk of
default due to possible adverse changes in the credit-worthiness of the issuer.
At December 31, 2007, one of our corporate bonds in the aggregate amount of
$255,000 had been downgraded to non-investment grade ratings. This corporate
bond will mature in January 2011 and has not yet missed an interest payment.
Management expects this corporate bond to be paid in full upon maturity.

All
of our $15.7 million of U.S. Government agency securities at December 31, 2007
were step-up securities. These securities require the issuer to pay increased
interest rates in the future according to pre-determined schedules and
formulas. Our portfolio currently contains securities that provide for various
interest rate increases at various repricing intervals. At December 31, 2007,
the repricing periods ranged from every year to every five years, and the
interest rate adjustments ranged from 1⁄4 of 1% per adjustment to 4% per
adjustment. In addition, these securities are callable at the option of the
issuers. Although designed to protect the investor in a rising rate
environment, the rate increases on these securities may not keep pace with
rising interest rates in a rapidly rising interest rate environment. In
addition, because of the call feature, the securities may be called by the
issuer at a time when Lincoln Park Savings is not able to reinvest the proceeds
of the called security at a rate comparable to what it was earning on the
security.

We
also invest in mortgage-backed securities, all of which are guaranteed by the
United States Government or agencies or government sponsored enterprises. At
December 31, 2007, our mortgage-backed securities portfolio totaled $858,000,
or 0.83% of total assets, and consisted of $401,000 in fixed-rate securities,
and $457,000 in adjustable rate securities guaranteed by Ginnie Mae, Fannie Mae
or Freddie Mac.

The
following table sets forth the carrying value of our securities portfolio at
the dates indicated. The carrying value represents fair value for available for
sale securities, and amortized cost for held to maturity securities.

|                                          |  |                        |        |            |  |            |   |            |        |  |  |        |  
|----------------------------------------- |  | ---------------------- | ------ | ---------- |  | ---------- | - | ---------- | ------ |  |  | ------ | -
|                                          |  | At December 31,        |       
|                                          |  |                        |       
|                                          |  | 2007                   |        | 2006       | 
|                                          |  |                        |        |            | 
|                                          |  | Book Value             |        | % of Total |  | Book Value |   | % of Total |       
|                                          |  |                        |        |            |  |            |   |            |       
|                                          |  | (Dollars in Thousands) |       
|Investment securities available for sale: |  |                        |        |            |  |            |   |            |        |  |  |        |  
|U.S. Government agencies                  |  | $                      | 999    |            |  | 3.94       | % | $          | 1,962  |  |  | 8.31   | %
|Corporate bonds                           |  |                        |       |            |  |           |   |            |       |  |  |       |  
|Mortgage-backed securities                |  |                        | 62     |            |  | 0.24       |   |            | 84     |  |  | 0.36   |  
|Collateralized mortgage obligations       |  |                        |       |            |  |           |   |            |       |  |  |       |  
|Municipal Bonds                           |  |                        |       |            |  |           |   |            | 347    |  |  | 1.47   |  
|Equity Securities                         |  |                        | 460    |            |  | 1.81       |   |            | 181    |  |  | 0.77   |  
|                                          |  |                        |        |            |  |            |   |            |        |  |  |        |  
|Total                                     |  |                        | 1,521  |            |  | 6.02       |   |            | 2,574  |  |  | 10.91  |  
|                                          |  |                        |        |            |  |            |   |            |        |  |  |        |  
|                                          |  |                        |        |            |  |            |   |            |        |  |  |        |  
|Investment securities held to maturity:   |  |                        |        |            |  |            |   |            |        |  |  |        |  
|U.S. Government agencies                  |  |                        | 14,749 |            |  | 58.13      |   |            | 15,633 |  |  | 66.25  |  
|Corporate bonds                           |  |                        | 1,054  |            |  | 4.15       |   |            | 1,155  |  |  | 4.90   |  
|Municipal bonds                           |  |                        | 566    |            |  | 2.23       |   |            | 566    |  |  | 2.40   |  
|Mortgage-backed securities                |  |                        | 796    |            |  | 3.14       |   |            | 981    |  |  | 4.16   |  
|Collateralized mortgage obligations       |  |                        | 4,077  |            |  | 16.07      |   |            |       |  |  |       |  
|                                          |  |                        |        |            |  |            |   |            |        |  |  |        |  
|Total                                     |  |                        | 21,242 |            |  | 83.72      |   |            | 18,335 |  |  | 77.71  |  
|                                          |  |                        |        |            |  |            |   |            |        |  |  |        |  
|                                          |  |                        |        |            |  |            |   |            |        |  |  |        |  
|Other interest-earning assets:            |  |                        |        |            |  |            |   |            |        |  |  |        |  
|Interest-earning deposits                 |  |                        | 1,121  |            |  | 4.42       |   |            | 1,372  |  |  | 5.81   |  
|Federal funds sold                        |  |                        |       |            |  |           |   |            |       |  |  |       |  
|Term deposits                             |  |                        | 295    |            |  | 1.16       |   |            | 190    |  |  | 0.81   |  
|FHLB stock                                |  |                        | 1,195  |            |  | 4.71       |   |            | 1,122  |  |  | 4.76   |  
|                                          |  |                        |        |            |  |            |   |            |        |  |  |        |  
|                                          |  |                        | 2,611  |            |  | 10.29      |   |            | 2,684  |  |  | 11.38  |  
|                                          |  |                        |        |            |  |            |   |            |        |  |  |        |  
|Total                                     |  | $                      | 25,374 |            |  | 100.00     | % | $          | 23,593 |  |  | 100.00 | %
|                                          |  |                        |        |            |  |            |   |            |        |  |  |        |  

15

---



The
following table sets forth the composition of our mortgage-backed securities at
the dates indicated.

|                                             |  |                        |     |            |  |            |   |            |     |  |  |        |  
|-------------------------------------------- |  | ---------------------- | --- | ---------- |  | ---------- | - | ---------- | --- |  |  | ------ | -
|                                             |  | At December 31,        |    
|                                             |  |                        |    
|                                             |  | 2007                   |     | 2006       | 
|                                             |  |                        |     |            | 
|                                             |  | Book Value             |     | % of Total |  | Book Value |   | % of Total |    
|                                             |  |                        |     |            |  |            |   |            |    
|                                             |  | (Dollars in Thousands) |    
|Mortgage-backed securities held to maturity: |  |                        |     |            |  |            |   |            |     |  |  |        |  
|Ginnie Mae                                   |  | $                      | 363 |            |  | 45.60      | % | $          | 474 |  |  | 48.32  | %
|Freddie Mac                                  |  |                        | 12  |            |  | 1.51       |   |            | 16  |  |  | 1.63   |  
|Fannie Mae                                   |  |                        | 421 |            |  | 52.89      |   |            | 491 |  |  | 50.05  |  
|                                             |  |                        |     |            |  |            |   |            |     |  |  |        |  
|Total                                        |  | $                      | 796 |            |  | 100.00     | % | $          | 981 |  |  | 100.00 | %
|                                             |  |                        |     |            |  |            |   |            |     |  |  |        |  

|                                               |  |                        |    |            |  |            |   |            |    |  |  |        |  
|---------------------------------------------- |  | ---------------------- | -- | ---------- |  | ---------- | - | ---------- | -- |  |  | ------ | -
|                                               |  | At December 31,        |   
|                                               |  |                        |   
|                                               |  | 2007                   |    | 2006       | 
|                                               |  |                        |    |            | 
|                                               |  | Book Value             |    | % of Total |  | Book Value |   | % of Total |   
|                                               |  |                        |    |            |  |            |   |            |   
|                                               |  | (Dollars in Thousands) |   
|Mortgage-backed securities available for sale: |  |                        |    |            |  |            |   |            |    |  |  |        |  
|Ginnie Mae                                     |  | $                      | 62 |            |  | 100.00     | % | $          | 84 |  |  | 100.00 | %
|Freddie Mac                                    |  |                        |   |            |  |           |   |            |   |  |  |       |  
|Fannie Mae                                     |  |                        |   |            |  |           |   |            |   |  |  |       |  
|                                               |  |                        |    |            |  |            |   |            |    |  |  |        |  
|Total                                          |  | $                      | 62 |            |  | 100.00     | % | $          | 84 |  |  | 100.00 | %
|                                               |  |                        |    |            |  |            |   |            |    |  |  |        |  

|                                                                                   |  |                        |       |            |  |            |   |            |   |  |  |        |  
|---------------------------------------------------------------------------------- |  | ---------------------- | ----- | ---------- |  | ---------- | - | ---------- | - |  |  | ------ | -
|                                                                                   |  | At December 31,        |      
|                                                                                   |  |                        |      
|                                                                                   |  | 2007                   |       | 2006       | 
|                                                                                   |  |                        |       |            | 
|                                                                                   |  | Book Value             |       | % of Total |  | Book Value |   | % of Total |  
|                                                                                   |  |                        |       |            |  |            |   |            |  
|                                                                                   |  | (Dollars in Thousands) |      
|Other mortgage-backed securities held to maturity                                  |  |                        |       |            |  |            |   |            |   |  |  |        |  
|Collateralized mortgage obligations issued or
guaranteed by FNMA,
  FHLMC, or GNMA |  | $                      | 2,992 |            |  | 73.39      | % | $          |  |  |  |       |  
|All other collateralized
  mortgage obligations                                    |  |                        | 1,085 |            |  | 26.61      |   |            |  |  |  |       |  
|                                                                                   |  |                        |       |            |  |            |   |            |   |  |  |        |  
|Total                                                                              |  | $                      | 4,077 |            |  | 100.00     | % | $          |  |  |  | 100.00 | %
|                                                                                   |  |                        |       |            |  |            |   |            |   |  |  |        |  

16

---



The
composition and maturities of the investment securities portfolio as of
December 31, 2007, excluding Federal Home Loan Bank of New York stock, are
indicated in the following table. Maturities are based upon on the final
contractual payment dates, and do not reflect the impact of prepayments or
early redemptions that may occur. State and municipal securities yields have
not been adjusted to a tax-equivalent basis.

|                                    |  |                        |     |                                |      |               |  |                                |       |                             |      |                                |  |            |       |                                |      |            |  |                                |        |              |      |   |  |   |        |  |      |   |  |   |        | 
|----------------------------------- |  | ---------------------- | --- | ------------------------------ | ---- | ------------- |  | ------------------------------ | ----- | --------------------------- | ---- | ------------------------------ |  | ---------- | ----- | ------------------------------ | ---- | ---------- |  | ------------------------------ | ------ | ------------ | ---- | - |  | - | ------ |  | ---- | - |  | - | ------ | 
|                                    |  | At December 31, 2007   |     |                                |     
|                                    |  |                        |     |                                |     
|                                    |  | Less Than 1 Year       |     | 1 to 5 Years                   |      | 5 to 10 Years |  | Over 10 Years                  |       | Total Investment Securities |     
|                                    |  |                        |     |                                |      |               |  |                                |       |                             |     
|                                    |  | Book Value             |     | Weighted Average Interest Rate |      | Book Value    |  | Weighted Average Interest Rate |       | Book Value                  |      | Weighted Average Interest Rate |  | Book Value |       | Weighted Average Interest Rate |      | Book Value |  | Weighted Average Interest Rate |        | Market Value |     
|                                    |  |                        |     |                                |      |               |  |                                |       |                             |      |                                |  |            |       |                                |      |            |  |                                |        |              |     
|                                    |  | (Dollars in Thousands) |    
|                                    |  |                        |     |                                |      |               |  |                                |       |                             |      |                                |  |            |       |                                |      |            |  |                                |        |              |     
|Available for Sale:                 |  |                        |     |                                |      |               |  |                                |       |                             |      |                                |  |            |       |                                |      |            |  |                                |        |              |      |   |  |   |        |  |      |   |  |   |        | 
|                                    |  |                        |     |                                |      |               |  |                                |       |                             |      |                                |  |            |       |                                |      |            |  |                                |        |              |      |   |  |   |        |  |      |   |  |   |        | 
|Equity                              |  | $                      | 522 |                                | 0.00 | %             |  | $                              |      |                             |      | %                              |  | $          |      |                                |      | %          |  | $                              |       |              |      | % |  | $ | 522    |  |      | % |  | $ | 459    | 
|U.S. Government agencies            |  |                        |    |                                |      |               |  |                                |      |                             |      |                                |  |            | 500   |                                | 4.00 |            |  |                                | 500    |              | 5.00 |   |  |   | 1,000  |  | 4.50 |   |  |   | 1,000  | 
|Corporate bonds                     |  |                        |    |                                |      |               |  |                                |      |                             |      |                                |  |            |      |                                |      |            |  |                                |       |              |      |   |  |   |       |  |     |   |  |   |       | 
|Municipal bonds                     |  |                        |    |                                |      |               |  |                                |      |                             |      |                                |  |            |      |                                |      |            |  |                                | 61     |              | 6.09 |   |  |   | 61     |  | 6.09 |   |  |   | 62     | 
|Mortgage-backed securities          |  |                        |    |                                |      |               |  |                                |      |                             |      |                                |  |            |      |                                |      |            |  |                                |       |              |      |   |  |   |       |  |      |   |  |   |       | 
|                                    |  |                        |     |                                |      |               |  |                                |       |                             |      |                                |  |            |       |                                |      |            |  |                                |        |              |      |   |  |   |        |  |      |   |  |   |        | 
|                                    |  |                        |     |                                |      |               |  |                                |       |                             |      |                                |  |            |       |                                |      |            |  |                                |        |              |      |   |  |   |        |  |      |   |  |   |        | 
|Total available for sale            |  | $                      | 522 |                                | 0.00 | %             |  | $                              |      |                             | 0.00 | %                              |  | $          | 500   |                                | 4.00 | %          |  | $                              | 561    |              | 5.12 | % |  | $ | 1,583  |  | 3.08 | % |  | $ | 1,521  | 
|                                    |  |                        |     |                                |      |               |  |                                |       |                             |      |                                |  |            |       |                                |      |            |  |                                |        |              |      |   |  |   |        |  |      |   |  |   |        | 
|                                    |  |                        |     |                                |      |               |  |                                |       |                             |      |                                |  |            |       |                                |      |            |  |                                |        |              |      |   |  |   |        |  |      |   |  |   |        | 
|Held to Maturity:                   |  |                        |     |                                |      |               |  |                                |       |                             |      |                                |  |            |       |                                |      |            |  |                                |        |              |      |   |  |   |        |  |      |   |  |   |        | 
|                                    |  |                        |     |                                |      |               |  |                                |       |                             |      |                                |  |            |       |                                |      |            |  |                                |        |              |      |   |  |   |        |  |      |   |  |   |        | 
|U.S. Government agencies            |  | $                      |    |                                |      | %             |  | $                              | 1,500 |                             | 4.83 | %                              |  | $          | 4,265 |                                | 4.79 | %          |  | $                              | 8,984  |              | 4.83 | % |  | $ | 14,749 |  | 4.82 | % |  | $ | 14,759 | 
|Corporate bonds                     |  |                        | 100 |                                | 6.00 |               |  |                                | 254   |                             | 7.20 |                                |  |            | 450   |                                | 5.25 |            |  |                                | 250    |              | 4.00 |   |  |   | 1,054  |  | 5.49 |   |  |   | 1,030  | 
|Municipal bonds                     |  |                        |    |                                |      |               |  |                                |      |                             |      |                                |  |            | 185   |                                | 4.25 |            |  |                                | 381    |              | 4.12 |   |  |   | 566    |  | 4.16 |   |  |   | 571    | 
|Collateralized Mortgage Obligations |  |                        |    |                                |      |               |  |                                |      |                             |      |                                |  |            |      |                                |     |            |  |                                | 4,077  |              | 5.92 |   |  |   | 4,077  |  | 5.92 |   |  |   | 3,965  | 
|Mortgage-backed securities          |  |                        |    |                                |      |               |  |                                |      |                             |      |                                |  |            | 12    |                                | 8.28 |            |  |                                | 784    |              | 6.03 |   |  |   | 796    |  | 6.06 |   |  |   | 789    | 
|                                    |  |                        |     |                                |      |               |  |                                |       |                             |      |                                |  |            |       |                                |      |            |  |                                |        |              |      |   |  |   |        |  |      |   |  |   |        | 
|                                    |  |                        |     |                                |      |               |  |                                |       |                             |      |                                |  |            |       |                                |      |            |  |                                |        |              |      |   |  |   |        |  |      |   |  |   |        | 
|Total held to maturity              |  | $                      | 100 |                                | 6.00 | %             |  | $                              | 1,754 |                             | 5.17 | %                              |  | $          | 4,912 |                                | 4.82 | %          |  | $                              | 14,476 |              | 5.17 | % |  | $ | 21,242 |  | 5.09 | % |  | $ | 21,114 | 
|                                    |  |                        |     |                                |      |               |  |                                |       |                             |      |                                |  |            |       |                                |      |            |  |                                |        |              |      |   |  |   |        |  |      |   |  |   |        | 
|                                    |  |                        |     |                                |      |               |  |                                |       |                             |      |                                |  |            |       |                                |      |            |  |                                |        |              |      |   |  |   |        |  |      |   |  |   |        | 
|Total securities                    |  | $                      | 622 |                                | 1.00 | %             |  | $                              | 1,754 |                             | 5.17 | %                              |  | $          | 5,412 |                                | 4.74 | %          |  | $                              | 15,037 |              | 5.17 | % |  | $ | 22,825 |  | 4.95 | % |  | $ | 22,635 | 
|                                    |  |                        |     |                                |      |               |  |                                |       |                             |      |                                |  |            |       |                                |      |            |  |                                |        |              |      |   |  |   |        |  |      |   |  |   |        | 

17

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The
following table shows securities purchase, sale and repayment activities of Lincoln Park Savings for the periods
indicated.

|                      |  |                          |        |      |   |      |  
|--------------------- |  | ------------------------ | ------ | ---- | - | ---- | -
|                      |  | Years Ended December 31, |       
|                      |  |                          |       
|                      |  | 2007                     |        | 2006 |  
|                      |  |                          |        |      |  
|                      |  | (In Thousands)           |       
|Available
  for Sale: |  |                          |        |      |   |      |  
|Purchases:            |  |                          |        |      |   |      |  
|Adjustable-rate       |  | $                        |       |      | $ |     |  
|Fixed-rate            |  |                          | 417    |      |   | 87   |  
|                      |  |                          |        |      |   |      |  
|Total purchases       |  |                          | 417    |      |   | 87   |  
|                      |  |                          |        |      |   |      |  
|                      |  |                          |        |      |   |      |  
|Sales:                |  |                          |        |      |   |      |  
|Adjustable-rate       |  |                          |       |      |   |     |  
|Fixed-rate            |  |                          | (412   | )    |   | (24  | )
|                      |  |                          |        |      |   |      |  
|Total sales           |  |                          | (412   | )    |   | (24  | )
|                      |  |                          |        |      |   |      |  
|                      |  |                          |        |      |   |      |  
|Principal repayments  |  |                          | (1,022 | )    |   | (530 | )
|Other items, net      |  |                          | (36    | )    |   | 38   |  
|                      |  |                          |        |      |   |      |  
|Net decrease          |  | $                        | (1,053 | )    | $ | (429 | )
|                      |  |                          |        |      |   |      |  

|                        |  |                          |        |      |   |        |  
|----------------------- |  | ------------------------ | ------ | ---- | - | ------ | -
|                        |  | Years Ended December 31, |       
|                        |  |                          |       
|                        |  | 2007                     |        | 2006 |  
|                        |  |                          |        |      |  
|                        |  | (In Thousands)           |       
|Held to
  Maturity:     |  |                          |        |      |   |        |  
|Purchases:              |  |                          |        |      |   |        |  
|Adjustable-rate         |  | $                        |       |      | $ |       |  
|Fixed-rate              |  |                          | 4,158  |      |   | 1,000  |  
|                        |  |                          |        |      |   |        |  
|Total purchases         |  |                          | 4,158  |      |   | 1,000  |  
|                        |  |                          |        |      |   |        |  
|                        |  |                          |        |      |   |        |  
|Sales:                  |  |                          |        |      |   |        |  
|Adjustable-rate         |  |                          |       |      |   |       |  
|Fixed-rate              |  |                          |       |      |   |       |  
|                        |  |                          |        |      |   |        |  
|Total sales             |  |                          |       |      |   |       |  
|                        |  |                          |        |      |   |        |  
|                        |  |                          |        |      |   |        |  
|Principal repayments    |  |                          | (1,172 | )    |   | (1,482 | )
|Other items, net        |  |                          | (78    | )    |   |       |  
|                        |  |                          |        |      |   |        |  
|Net increase (decrease) |  | $                        | 2,908  |      | $ | (482   | )
|                        |  |                          |        |      |   |        |  

Sources of Funds

General. Deposits
have traditionally been the primary source of funds for use in lending and
investment activities. We also use borrowings, primarily FHLB advances, to
supplement cash flow needs, lengthen the maturities of liabilities for interest
rate risk purposes and to manage the cost of funds. In addition, funds are
derived from scheduled loan payments, investment maturities, loan prepayments,
retained earnings and income on earning assets. While scheduled loan payments
and income on earning assets are relatively stable sources of funds, deposit
inflows and outflows can vary widely and are influenced by prevailing interest
rates, market conditions and levels of competition.

Deposits.Our deposits are generated primarily from residents within our
primary market area. We offer a selection of deposit instruments, including
demand deposits consisting of non-interest bearing and NOW accounts, passbook
savings, statement savings and club accounts, and fixed-term certificates of
deposit. Deposit account terms vary, with the principal differences being the
minimum balance required, the amount of time the funds must remain on deposit
and the interest rate. We do not accept brokered deposits.

Interest
rates paid, maturity terms, service fees and withdrawal penalties are
established on a periodic basis. Deposit rates and terms are based primarily on
current operating strategies and market rates, liquidity requirements, rates
paid by competitors and growth goals. Personalized customer service and
long-standing relationships with customers are relied upon to attract and
retain deposits.

18

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The
flow of deposits is influenced significantly by general economic conditions,
changes in money market and other prevailing interest rates and competition.
The variety of deposit accounts offered allows us to be competitive in
obtaining funds and responding to changes in consumer demand. Based on
experience, we believe that our deposits are relatively stable. However, the
ability to attract and maintain deposits, and the rates paid on these deposits,
have been and will continue to be significantly affected by market conditions.
At December 31, 2007, $39.2 million, or 4.72% of our deposit accounts were
certificates of deposit, of which $36.1 million have maturities of one year or
less.

Deposits. The
following table sets forth the dollar amount of deposits in the various types
of deposit programs we offered as of the dates indicated.

|                            |  |                        |        |         |  |                       |   |         |      |         |   |                       |  |  |        |   |  |      |  
|--------------------------- |  | ---------------------- | ------ | ------- |  | --------------------- | - | ------- | ---- | ------- | - | --------------------- |  |  | ------ | - |  | ---- | -
|                            |  | At December 31,        |       
|                            |  |                        |       
|                            |  | 2007                   |        | 2006    | 
|                            |  |                        |        |         | 
|                            |  | Balance                |        | Percent |  | Weighted Average Rate |   | Balance |      | Percent |   | Weighted Average Rate | 
|                            |  |                        |        |         |  |                       |   |         |      |         |   |                       | 
|                            |  | (Dollars in Thousands) |       
|                            |  |                        |        |         |  |                       |   |         |      |         |   |                       |  |  |        |   |  |      |  
|Non-interest-bearing demand |  | $                      | 2,054  |         |  | 3.16                  | % |         |     | %       | $ | 769                   |  |  | 1.33   | % |  |     | %
|Interest-bearing demand     |  |                        | 12,114 |         |  | 18.65                 |   |         | 2.24 |         |   | 11,087                |  |  | 19.17  |   |  | 2.13 |  
|Savings and club            |  |                        | 11,616 |         |  | 17.88                 |   |         | 1.01 |         |   | 13,182                |  |  | 22.79  |   |  | 1.01 |  
|Certificate of deposit      |  |                        | 39,183 |         |  | 60.31                 |   |         | 4.72 |         |   | 32,806                |  |  | 56.71  |   |  | 4.62 |  
|                            |  |                        |        |         |  |                       |   |         |      |         |   |                       |  |  |        |   |  |      |  
|Total deposits              |  | $                      | 64,967 |         |  | 100.00                | % |         | 3.50 | %       | $ | 57,844                |  |  | 100.00 | % |  | 3.26 | %
|                            |  |                        |        |         |  |                       |   |         |      |         |   |                       |  |  |        |   |  |      |  

The
following table sets forth the deposit activities for the periods indicated.

|                                          |  |                          |        |      |   |        |  
|----------------------------------------- |  | ------------------------ | ------ | ---- | - | ------ | -
|                                          |  | Years Ended December 31, |       
|                                          |  |                          |       
|                                          |  | 2007                     |        | 2006 |  
|                                          |  |                          |        |      |  
|                                          |  | (Dollars in Thousands)   |       
|                                          |  |                          |        |      |   |        |  
|Beginning of period                       |  | $                        | 57,844 |      | $ | 54,367 |  
|Net deposits increase                     |  |                          | 4,939  |      |   | 2,002  |  
|Interest credited on deposit accounts     |  |                          | 2,184  |      |   | 1,475  |  
|                                          |  |                          |        |      |   |        |  
|Ending balance                            |  | $                        | 64,967 |      | $ | 57,844 |  
|                                          |  |                          |        |      |   |        |  
|Percent increase from beginning of period |  |                          | 12.32  | %    |   | 6.40   | %

The
following table indicates the amount of certificates of deposit as of December
31, 2007, by time remaining until maturity.

|                          |  |                      |        |                                 |   |                                |  |                                   |       |                    |   |       |  |   |       |  |   |        | 
|------------------------- |  | -------------------- | ------ | ------------------------------- | - | ------------------------------ |  | --------------------------------- | ----- | ------------------ | - | ----- |  | - | ----- |  | - | ------ | 
|                          |  | Three months or less |        | Over three months to six months |   | Over six months to nine months |  | Over nine months to twelve months |       | Over twelve months |   | Total | 
|                          |  |                      |        |                                 |   |                                |  |                                   |       |                    |   |       | 
|                          |  | (In Thousands)       |       
|Certificate
  of deposit: |  |                      |        |                                 |   |                                |  |                                   |       |                    |   |       |  |   |       |  |   |        | 
|                          |  |                      |        |                                 |   |                                |  |                                   |       |                    |   |       |  |   |       |  |   |        | 
|Less than
  $100,000      |  | $                    | 8,316  |                                 | $ | 12,984                         |  | $                                 | 3,312 |                    | $ | 1,736 |  | $ | 2,840 |  | $ | 29,188 | 
|$100,000 or
  more        |  |                      | 3,454  |                                 |   | 5,586                          |  |                                   | 533   |                    |   | 204   |  |   | 218   |  |   | 9,995  | 
|                          |  |                      |        |                                 |   |                                |  |                                   |       |                    |   |       |  |   |       |  |   |        | 
|Total                     |  | $                    | 11,770 |                                 | $ | 18,570                         |  | $                                 | 3,845 |                    | $ | 1,940 |  | $ | 3,058 |  | $ | 39,183 | 
|                          |  |                      |        |                                 |   |                                |  |                                   |       |                    |   |       |  |   |       |  |   |        | 

19

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The
following table presents, by rate category, our certificate of deposit accounts
as of the dates indicated.

|                                |  |                        |        |         |  |        |   |         |        |  |  |        |  
|------------------------------- |  | ---------------------- | ------ | ------- |  | ------ | - | ------- | ------ |  |  | ------ | -
|                                |  | At December 31,        |       
|                                |  |                        |       
|                                |  | 2007                   |        | 2006    | 
|                                |  |                        |        |         | 
|                                |  | Amount                 |        | Percent |  | Amount |   | Percent |       
|                                |  |                        |        |         |  |        |   |         |       
|                                |  | (Dollars in Thousands) |       
|Certificate of deposit
  rates: |  |                        |        |         |  |        |   |         |        |  |  |        |  
|1.00% - 1.99%                   |  | $                      |       |         |  |       | % | $       |       |  |  |       | %
|2.00% - 2.99%                   |  |                        |       |         |  |       |   |         | 47     |  |  | 0.14   |  
|3.00% - 3.99%                   |  |                        | 3,558  |         |  | 9.08   |   |         | 7,791  |  |  | 23.75  |  
|4.00% - 4.99%                   |  |                        | 15,294 |         |  | 39.03  |   |         | 10,221 |  |  | 31.16  |  
|5.00% - 5.99%                   |  |                        | 20,331 |         |  | 51.89  |   |         | 14,747 |  |  | 44.95  |  
|6.00% - 6.99%                   |  |                        |       |         |  |       |   |         |       |  |  |       |  
|                                |  |                        |        |         |  |        |   |         |        |  |  |        |  
|Total                           |  | $                      | 39,183 |         |  | 100.00 | % | $       | 32,806 |  |  | 100.00 | %
|                                |  |                        |        |         |  |        |   |         |        |  |  |        |  

The
following table presents, by rate category, the remaining period to maturity of
certificate of deposit accounts outstanding as of December 31, 2007.

|                 |  |                |        |                   |   |                   |  |              |     |       |   |     |  |   |        | 
|---------------- |  | -------------- | ------ | ----------------- | - | ----------------- |  | ------------ | --- | ----- | - | --- |  | - | ------ | 
|                 |  | Maturity Date  |       
|                 |  |                |       
|                 |  | 1 Year or Less |        | Over 1 to 2 Years |   | Over 2 to 3 Years |  | Over 3 Years |     | Total |  
|                 |  |                |        |                   |   |                   |  |              |     |       |  
|                 |  | (In Thousands) |       
|Interest
  rate: |  |                |        |                   |   |                   |  |              |     |       |   |     |  |   |        | 
|1.00% - 1.99%    |  | $              |       |                   | $ |                  |  | $            |    |       | $ |    |  | $ |       | 
|2.00% - 2.99%    |  |                |       |                   |   |                  |  |              |    |       |   |    |  |   |       | 
|3.00% - 3.99%    |  |                | 2,695  |                   |   | 737               |  |              | 64  |       |   | 62  |  |   | 3,558  | 
|4.00% - 4.99%    |  |                | 13,099 |                   |   | 1,698             |  |              | 308 |       |   | 189 |  |   | 15,294 | 
|5.00% - 5.99%    |  |                | 20,331 |                   |   |                  |  |              |    |       |   |    |  |   | 20,331 | 
|6.00% - 6.99%    |  |                |       |                   |   |                  |  |              |    |       |   |    |  |   |       | 
|                 |  |                |        |                   |   |                   |  |              |     |       |   |     |  |   |        | 
|Total            |  | $              | 36,125 |                   | $ | 2,435             |  | $            | 372 |       | $ | 251 |  | $ | 39,183 | 
|                 |  |                |        |                   |   |                   |  |              |     |       |   |     |  |   |        | 

Borrowings. We may obtain advances from the
Federal
Home Loan Bank of New York upon the security of the common stock we own in the
Federal Home Loan Bank and our qualifying residential mortgage loans and
mortgage-backed securities, provided certain standards related to
creditworthiness are met. These advances are made pursuant to several credit
programs, each of which has its own interest rate and range of maturities. Federal
Home Loan Bank advances are generally available to meet seasonal and other
withdrawals of deposit accounts and to permit increased lending. Using FHLB
advances is a significant part of our operating strategy. As of December 31,
2007, we had FHLB advances in the amount of $23.6 million, which represented
26.31% of total liabilities. As a member of the Federal Home Loan Bank of New
York, Lincoln Park Savings can currently borrow additional funds up to
approximately $14.5 million from the Federal Home Loan Bank.

The
following table sets forth certain information regarding FHLB advances for the
periods indicated. We had no other material borrowings during the periods.

|                                  |  |                                        |        |      |   |        |  
|--------------------------------- |  | -------------------------------------- | ------ | ---- | - | ------ | -
|                                  |  | At or For the Years Ended December 31, |       
|                                  |  |                                        |       
|                                  |  | 2007                                   |        | 2006 |  
|                                  |  |                                        |        |      |  
|                                  |  | (Dollars in Thousands)                 |       
|                                  |  |                                        |       
|Maximum
  balance:                |  |                                        |        |      |   |        |  
|FHLB
  advances                   |  | $                                      | 23,552 |      | $ | 27,975 |  
|                                  |  |                                        |        |      |   |        |  
|Average
  Balance:                |  |                                        |        |      |   |        |  
|FHLB
  advances                   |  | $                                      | 21,971 |      | $ | 25,802 |  
|                                  |  |                                        |        |      |   |        |  
|Weighted
  average interest rate: |  |                                        |        |      |   |        |  
|FHLB
  advances                   |  |                                        | 4.18   | %    |   | 4.24   | %

20

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The
contractual maturities of FHLB advances at December 31, 2007, are as follows:

|                                 |  |                          |        |                         |      |   | 
|-------------------------------- |  | ------------------------ | ------ | ----------------------- | ---- | - | 
|                                 |  | Amount                   |        | Weighted
  Average Rate |     
|                                 |  |                          |        |                         |     
|                                 |  | (Dollars
  in Thousands) |       
|Within one year                  |  | $                        | 13,120 |                         | 4.08 | % | 
|After one through five years     |  |                          | 8,731  |                         | 4.23 |   | 
|After five through fifteen years |  |                          | 1,701  |                         | 4.72 |   | 
|                                 |  |                          |        |                         |      |   | 
|Total                            |  | $                        | 23,552 |                         | 4.18 | % | 
|                                 |  |                          |        |                         |      |   | 

Subsidiary Activities

Lincoln
Park Bancorp has one subsidiary, Lincoln Park Savings. Lincoln Park Savings
wholly owned subsidiary is LPS Investment Company. LPS Investment Company was
recently formed as an operating subsidiary of the Bank for the purpose of
investing in stocks, bonds, mortgages, and other securities, limited to the
types of securities in which the Bank is authorized to invest.

Personnel

As
of December 31, 2007, we had 16 full-time employees and 7 part-time employees.
Our employees are not represented by any collective bargaining group.
Management believes that we have good relations with our employees.

FEDERAL AND STATE TAXATION

Federal Taxation

General. Lincoln
Park Bancorp and Lincoln Park Savings are subject to federal income taxation in
the same general manner as other corporations, with some exceptions discussed
below. Lincoln Park Savings tax returns have not been audited during the past
five years. The following discussion of federal taxation is intended only to summarize
certain pertinent federal income tax matters and is not a comprehensive
description of the tax rules applicable to Lincoln Park Bancorp or Lincoln Park
Savings.

Method of Accounting. For
federal income tax purposes, Lincoln Park Savings currently reports its income
and expenses on the accrual method of accounting and uses a tax year ending
December 31 for filing its federal income tax returns.

Bad Debt Reserves. Prior
to the Small Business Protection Act of 1996 (the 1996 Act), Lincoln Park Savings
was permitted to establish a reserve for bad debts and to make annual additions
to the reserve. These additions could, within specified formula limits, be
deducted in arriving at our taxable income. Lincoln Park Savings was required
to use the specific charge-off method in computing its bad debt deduction
beginning with its 1996 federal tax return. Savings institutions were required
to recapture any excess reserves over those established as of December 31, 1987
(base year reserve). Lincoln Park Savings had approximately $730,000 of
reserves subject to recapture.

Taxable Distributions and Recapture. Prior
to the 1996 Act, bad debt reserves created prior to January 1, 1988 were
subject to recapture into taxable income should Lincoln Park Savings fail to meet
certain thrift asset and definitional tests. Federal legislation has eliminated
these thrift related recapture rules.

At
December 31, 2007, our total federal pre-1988 base year reserve was
approximately $730,000. However, under current law, pre-1988 base year reserves
remain subject to recapture should Lincoln Park Savings make certain
non-dividend distributions, repurchase any of its stock, pay dividends in
excess of tax earnings and profits, or cease to maintain a bank charter.

Alternative Minimum Tax. The
Internal Revenue Code of 1986, as amended (the Code) imposes an alternative
minimum tax (AMT) at a rate of 20% on a base of regular taxable income plus
certain tax preferences (alternative minimum taxable income or AMTI). The
AMT is payable to the extent such AMTI is in excess of an exemption amount and
the AMT exceeds the regular income tax. Net operating losses can offset no more
than 90% of AMTI. Certain payments of alternative minimum tax may be used as
credits against regular tax liabilities in future years. Lincoln Park Savings
has not been subject to the alternative minimum tax and has no such amounts
available as credits for carryover.

21

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Net Operating Loss Carryovers. A
financial institution may carry back net operating losses to the preceding two
taxable years and forward to the succeeding 20 taxable years. At December 31,
2007, Lincoln Park Savings had no net operating loss carryforwards for federal
income tax purposes.

Corporate Dividends-Received Deduction. Lincoln
Park Bancorp may exclude from its income 100% of dividends received from
Lincoln Park Savings as a member of the same affiliated group of corporations.
The corporate dividends-received deduction is 80% in the case of dividends
received from corporations with which a corporate recipient does not file a
consolidated return, and corporations which own less than 20% of the stock of a
corporation distributing a dividend may deduct only 70% of dividends received
or accrued on their behalf.

State Taxation

New Jersey
State Taxation. Lincoln Park Savings files New Jersey
Corporation Business tax returns. Generally, the income of savings institutions
in New Jersey, which is calculated based on federal taxable income, subject to
certain adjustments, is subject to the New Jersey Corporation Business tax.
Lincoln Park Savings is not currently under audit with respect to its New
Jersey income tax returns and Lincoln Park Savings state tax returns have not
been audited for the past five years.

Under
New Jersey legislation, a taxpayer, including Lincoln Park Savings, will pay
the greater of 9% of its taxable income or the Alternate Minimum Assessment
(AMA). There are two methods of calculating the AMA, the gross profits method
and the gross receipts method. The taxpayer has the option of choosing either
of these methods, but once an election is made, the taxpayer must use the same
method for the next four years. Under the gross receipts method, the tax is
calculated by multiplying the gross receipts by the applicable factor, which
ranges from 0.139% to 0.4%. Under the gross profits method, the tax is
calculated by multiplying the gross profits by the applicable factor, which
ranges from 0.28% to 0.8%. The AMA for an affiliated group consisting of five
or more members may not exceed $20.0 million. The AMA for tax years beginning
after June 30, 2006, shall be zero.

New
Jersey income tax law does not allow for a taxpayer to file a tax return on a
combined or consolidated basis with another member of the affiliated group
where there is common ownership. However, if the taxpayer cannot demonstrate by
clear and convincing evidence that the tax filing discloses the true earnings
of the taxpayer on its business carried on in the State of New Jersey, the New
Jersey Director of the Division of Taxation may, at the directors discretion,
require the taxpayer to file a consolidated return of the entire operations of
the affiliated group or controlled group, including its own operations and
income.

REGULATION

General

Lincoln
Park Savings is a New Jersey chartered savings bank. Its deposit accounts are
insured up to applicable limits by the Federal Deposit Insurance Corporation
under the Savings Association Insurance Fund (the SAIF). Lincoln Park Savings
is subject to extensive regulation, examination and supervision by the
Commissioner of the New Jersey Department of Banking and Insurance as the
issuer of its charter, and by the Federal Deposit Insurance Corporation as the
deposit insurer. Lincoln Park Savings must file reports with the New Jersey
Commissioner and the Federal Deposit Insurance Corporation concerning its
activities and financial condition, and it must obtain regulatory approval
prior to entering into certain transactions, such as mergers with, or
acquisitions of, other depository institutions and opening or acquiring branch
offices. The New Jersey Commissioner and the Federal Deposit Insurance
Corporation conducts periodic examinations to assess Lincoln Park Savings
compliance with various regulatory requirements. This regulation and supervision
establishes a comprehensive framework of activities in which a savings bank can
engage and is intended primarily for the protection of the deposit insurance
fund and depositors and not for the purpose of protecting stockholders. The
regulatory structure also gives the regulatory authorities extensive discretion
in connection with their supervisory and enforcement activities and examination
policies, including policies with respect to the classification of assets and
the establishment of adequate loan loss reserves for regulatory purposes. Prior
to the conversion of Lincoln Park Savings from a New Jersey savings and loan
association to a New Jersey savings bank, Lincoln Park Savings was subject to
examination and supervision by the Office of Thrift Supervision.

22

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Lincoln
Park Bancorp is a federal corporation, and Lincoln Park Bancorp, MHC is a
federal mutual holding company. Lincoln Park Bancorp and Lincoln Park Bancorp,
MHC are required to file certain reports with, and otherwise comply with the
rules and regulations of the Office of Thrift Supervision.

Any
change in such laws and regulations, whether by the New Jersey Commissioner,
the Federal Deposit Insurance Corporation, the Office of Thrift Supervision or
through legislation, could have a material adverse impact on Lincoln Park
Savings and Lincoln Park Bancorp and their operations and stockholders.

New Jersey Banking Regulation

Activity
Powers. Lincoln Park Savings derives its lending,
investment and other activity powers primarily from the applicable provisions
of the New Jersey Banking Act and its related regulations. Under these laws and
regulations, savings banks, including Lincoln Park Savings, generally may
invest in:

| |     |                                                                                                                                                         
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | real estate
  mortgages;                                                                                                                                
| |     |                                                                                                                                                         
| | (2) | consumer and
  commercial loans;                                                                                                                        
| |     |                                                                                                                                                         
| | (3) | specific
  types of debt securities, including certain corporate debt securities and
  obligations of federal, state and local governments and agencies;
| |     |                                                                                                                                                         
| | (4) | certain
  types of corporate equity securities; and                                                                                                     
| |     |                                                                                                                                                         
| | (5) | certain
  other assets.                                                                                                                                 

A
savings bank may also invest pursuant to a leeway power that permits
investments not otherwise permitted by the New Jersey Banking Act. Leeway
investments must comply with a number of limitations on the individual and
aggregate amounts of leeway investments. Lincoln Park Savings does not
currently have any leeway investments. A savings bank may also exercise trust
powers upon approval of the New Jersey Commissioner. Lincoln Park Savings
currently does not have trust powers. New Jersey savings banks may exercise
those powers, rights, benefits or privileges authorized for national banks or
out-of-state banks or for federal or out-of-state savings banks or savings
associations, provided that before exercising any such power, right, benefit or
privilege, prior approval by the New Jersey Commissioner by regulation or by
specific authorization is required. The exercise of these lending, investment
and activity powers are limited by federal law and the related regulations. See
Federal Banking RegulationActivity Restrictions on State-Chartered Banks
below.

Loans-to-One-Borrower
Limitations. With certain specified exceptions, a New
Jersey chartered savings bank may not make loans or extend credit to a single
borrower and to entities related to the borrower in an aggregate amount that
would exceed 15% of the banks capital funds. A savings bank may lend an
additional 10% of the banks capital funds if secured by collateral meeting the
requirements of the New Jersey Banking Act. Lincoln Park Savings currently
complies with applicable loans-to-one-borrower limitations.

Dividends.
Under the New Jersey Banking Act, a stock savings bank may declare and pay a
dividend on its capital stock only to the extent that the payment of the
dividend would not impair the capital stock of the savings bank. In addition, a
stock savings bank may not pay a dividend unless the savings bank would, after
the payment of the dividend, have a surplus of not less than 50% of its capital
stock, or the payment of the dividend would not reduce the surplus. Federal law
may also limit the amount of dividends that may be paid by Lincoln Park
Savings. See Federal Banking RegulationPrompt Corrective Action below.

23

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Minimum
Capital Requirements. Regulations of the New Jersey
Commissioner impose on New Jersey chartered depository institutions, including
Lincoln Park Savings, minimum capital requirements similar to those imposed by
the Federal Deposit Insurance Corporation on insured state banks. See Federal
Banking RegulationCapital Requirements.

Examination
and Enforcement. The New Jersey Department of Banking
and Insurance may examine Lincoln Park Savings whenever it deems an examination
advisable. The Department examines Lincoln Park Savings at least every two
years. The New Jersey Commissioner may order any savings bank to discontinue
any violation of law or unsafe or unsound business practice and may direct any
director, officer, attorney or employee of a savings bank engaged in an
objectionable activity, after the Commissioner has ordered the activity to be
terminated, to show cause at a hearing before the Commissioner why such person
should not be removed.

Federal Banking Regulation

Capital
Requirements. Federal Deposit Insurance Corporation
regulations require banks to maintain minimum levels of capital. The Federal
Deposit Insurance Corporation regulations define two tiers, or classes, of
capital.

Tier
1 capital is comprised of the sum of:

| |                                                       |                                                                                                                                                                                       
| | ----------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ·                                                     | common
  stockholders equity, excluding the unrealized appreciation or depreciation,
  net of tax, from available for sale securities;                                               
| |                                                       |                                                                                                                                                                                       
| | ·                                                     | non-cumulative
  perpetual preferred stock, including any related retained earnings; and                                                                                              
| |                                                       |                                                                                                                                                                                       
| | ·                                                     | minority
  interests in consolidated subsidiaries minus all intangible assets, other
  than qualifying servicing rights and any net unrealized loss on marketable
  equity securities.
| |                                                       |                                                                                                                                                                                       
| | The
  components of Tier 2 capital currently include:
| |                                                       |                                                                                                                                                                                       
| | ·                                                     | cumulative
  perpetual preferred stock;                                                                                                                                               
| |                                                       |                                                                                                                                                                                       
| | ·                                                     | certain
  perpetual preferred stock for which the dividend rate may be reset
  periodically;                                                                                          
| |                                                       |                                                                                                                                                                                       
| | ·                                                     | hybrid
  capital instruments, including mandatory convertible securities;                                                                                                             
| |                                                       |                                                                                                                                                                                       
| | ·                                                     | term
  subordinated debt;                                                                                                                                                             
| |                                                       |                                                                                                                                                                                       
| | ·                                                     | intermediate
  term preferred stock;                                                                                                                                                  
| |                                                       |                                                                                                                                                                                       
| | ·                                                     | allowance
  for possible loan losses; and                                                                                                                                             
| |                                                       |                                                                                                                                                                                       
| | ·                                                     | up to 45% of
  pretax net unrealized holding gains on available for sale equity securities
  with readily determinable fair market values.                                            

Allowance for
possible loan losses includible in Tier 2 capital is limited to a maximum of
1.25% of risk-weighted assets. Overall, the amount of Tier 2 capital that may
be included in total capital cannot exceed 100% of Tier 1 capital. The Federal
Deposit Insurance Corporation regulations establish a minimum leverage capital
requirement for banks in the strongest financial and managerial condition, with
a rating of 1 (the highest examination rating of the Federal Deposit Insurance
Corporation for banks) under the Uniform Financial Institutions Rating System,
of not less than a ratio of 3.0% of Tier 1 capital to total assets. For all
other banks, the minimum leverage capital requirement is 4.0%, unless a higher
leverage capital ratio is warranted by the particular circumstances or risk
profile of the depository institution.

24

---



The
Federal Deposit Insurance Corporation regulations also require that banks meet
a risk-based capital standard. The risk-based capital standard requires the
maintenance of a ratio of total capital, which is defined as the sum of Tier 1
capital and Tier 2 capital, to risk-weighted assets of at least 8% and a ratio
of Tier 1 capital to risk-weighted assets of at least 4%. In determining the
amount of risk-weighted assets, all assets, plus certain off balance sheet
items, are multiplied by a risk-weight of 0% to 100%, based on the risks the
Federal Deposit Insurance Corporation believes are inherent in the type of
asset or item.

The
federal banking agencies, including the Federal Deposit Insurance Corporation,
have also adopted regulations to require an assessment of an institutions
exposure to declines in the economic value of a banks capital due to changes
in interest rates when assessing the banks capital adequacy. Under such a risk
assessment, examiners will evaluate a banks capital for interest rate risk on
a case-by-case basis, with consideration of both quantitative and qualitative
factors. According to the agencies, applicable considerations include:

| |   |                                                                    
| | - | -------------------------------------------------------------------
| | · | the quality
  of the banks interest rate risk management process; 
| |   |                                                                    
| | · | the overall
  financial condition of the bank; and                 
| |   |                                                                    
| | · | the level of
  other risks at the bank for which capital is needed.

Institutions
with significant interest rate risk may be required to hold additional capital.
The agencies also issued a joint policy statement providing guidance on
interest rate risk management, including a discussion of the critical factors
affecting the agencies evaluation of interest rate risk in connection with
capital adequacy.

The
Federal Deposit Insurance Corporation adopted regulations, effective April 1,
2002, establishing minimum regulatory capital requirements for equity
investments in non-financial companies. The regulations apply a series of marginal
capital charges that range from 8% to 25% depending upon the size of the
aggregate equity investment portfolio of the banking organization relative to
its Tier 1 capital. The capital charge would be applied by making a deduction,
which would be based on the adjusted carrying value of the equity investment
from the organizations Tier 1 capital. We do not believe this capital
requirement will have a material adverse effect upon our operations. However,
we will have to take this requirement into consideration should we, at some
point in the future, decide to invest in non-financial companies.

The
following table shows our leverage ratio, our Tier 1 risk-based capital ratio,
and our total risk-based capital ratio, at December 31, 2007, under the Federal
Deposit Insurance Corporation capital requirements:

|                                     |  |                         |       |                        |       |        |  |         |       |        |       |         |  |   |       |  |       |   | 
|------------------------------------ |  | ----------------------- | ----- | ---------------------- | ----- | ------ |  | ------- | ----- | ------ | ----- | ------- |  | - | ----- |  | ----- | - | 
|                                     |  | As of December 31, 2007 |       | To be Well Capitalized |       | Excess | 
|                                     |  |                         |       |                        |       |        | 
|                                     |  | Historical
  Capital    |       | Percent of
  Assets(1) |       | Amount |  | Percent |       | Amount |       | Percent | 
|                                     |  |                         |       |                        |       |        |  |         |       |        |       |         | 
|                                     |  | (Dollars in Thousands)  |      
|                                     |  |                         |       |                        |       |        |  |         |       |        |       |         |  |   |       |  |       |   | 
|Regulatory
  Tier 1 leverage capital |  | $                       | 9,580 |                        | 9.60  | %      |  | $       | 4,992 |        | 5.00  | %       |  | $ | 4,588 |  | 4.60  | % | 
|Tier 1
  risk-based capital          |  |                         | 9,580 |                        | 17.22 |        |  |         | 3,338 |        | 6.00  |         |  |   | 6,242 |  | 11.22 |   | 
|Total
  risk-based capital           |  |                         | 9,767 |                        | 17.55 |        |  |         | 5,564 |        | 10.00 |         |  |   | 4,203 |  | 7.55  |   | 

|    |                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) | For purposes
  of calculating Regulatory Tier 1 leverage capital, assets are based on
  adjusted average leverage assets. In calculating Tier 1 risk based capital
  and total risk-based capital, assets are based on total risk-weighted assets.

As
the table shows, as of December 31, 2007, Lincoln Park Savings was considered
well capitalized under Federal Deposit Insurance Corporation guidelines.

Activity
Restrictions on State-Chartered Banks. Section 24 of
the Federal Deposit Insurance Act, as amended, (FDIA) which was added by the
FDIC Improvement Act of 1991 (FDIC Improvement Act), generally limits the
activities and investments of state-chartered Federal Deposit Insurance
Corporation insured banks and their subsidiaries to those permissible for
national banks and their subsidiaries, unless such activities and investments
are specifically exempted by Section 24 of the FDIA or consented to by the
Federal Deposit Insurance Corporation.

25

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Before
making a new investment or engaging in a new activity that is not permissible
for a national bank or otherwise permissible under Section 24 of the FDIA, an
insured bank must seek approval from the Federal Deposit Insurance Corporation
to make such investment or engage in such activity. The Federal Deposit
Insurance Corporation will not approve the activity unless the bank meets its
minimum capital requirements and the Federal Deposit Insurance Corporation
determines that the activity does not present a significant risk to the Federal
Deposit Insurance Corporation insurance funds. Certain activities of
subsidiaries that are engaged in activities permitted for national banks only
through a financial subsidiary are subject to additional restrictions.

The
Gramm-Leach-Bliley Act (Gramm-Leach) permits a state-chartered savings bank
to engage, through financial subsidiaries, in any activity in which a national
bank may engage through a financial subsidiary and on substantially the same
terms and conditions. In general, Gramm-Leach permits a national bank that is
well-capitalized and well-managed to conduct, through a financial subsidiary,
any activity permitted for a financial holding company other than insurance
underwriting, insurance investments, real estate investment or development or
merchant banking. The total assets of all such financial subsidiaries may not
exceed the lesser of 45% of the banks total assets or $50 billion. The bank
must have policies and procedures to assess the financial subsidiarys risk and
protect the bank from such risk and potential liability, must not consolidate
the financial subsidiarys assets with the banks and must exclude from its own
assets and equity all equity investments, including retained earnings, in the
financial subsidiary. State chartered savings banks may retain subsidiaries in
existence as of March 11, 2000 and may engage in activities that are not
authorized under Gramm-Leach; otherwise, Gramm-Leach will preempt all state
laws regarding the permissibility of certain activities for state chartered
banks if such state law is in conflict with the provisions of Gramm-Leach (with
the exception of certain insurance activities), regardless of whether the state
law would authorize broader or more restrictive activities. Although Lincoln
Park Savings meets all conditions necessary to establish and engage in
permitted activities through financial subsidiaries, it has not yet determined
whether or the extent to which it will seek to engage in such activities.

Federal
Home Loan Bank System. Lincoln Park Savings is a
member of the FHLB system, which consists of twelve regional FHLBs, each
subject to supervision and regulation by the Federal Housing Finance Board
(FHFB). The FHLB provides a central credit facility primarily for member
thrift institutions as well as other entities involved in home mortgage
lending. It is funded primarily from proceeds derived from the sale of
consolidated obligations of the FHLBs. It makes loans to members (i.e.,
advances) in accordance with policies and procedures, including collateral
requirements, established by the respective boards of directors of the FHLBs.
These policies and procedures are subject to the regulation and oversight of
the FHFB. All long-term advances are required to provide funds for residential
home financing. The FHFB has also established standards of community or
investment service that members must meet to maintain access to such long term
advances. Lincoln Park Savings, as a member of the FHLB of New York, is required
to purchase and hold shares of capital stock in that FHLB in an amount at least
equal to the greater of (i) 1% of the aggregate principal amount of its unpaid
mortgage loans, home purchase contracts and similar obligations at the
beginning of each year; (ii) 0.3% of its assets; or (iii) 5% (or such greater
fraction as established by the FHLB) of its advances from the FHLB as of
December 31, 2003. Pursuant to Gramm-Leach, the foregoing minimum share
ownership requirements will be replaced by regulations to be promulgated by the
FHFB. Gramm-Leach specifically provides that the minimum requirements in
existence immediately prior to adoption of Gramm-Leach shall remain in effect
until such regulations are adopted. Lincoln Park Savings is in compliance with
these requirements.

Enforcement.The Federal Deposit Insurance Corporation has
extensive enforcement authority over insured savings banks, including Lincoln
Park Savings. This enforcement authority includes, among other things, the
ability to assess civil money penalties, to issue cease and desist orders and
to remove directors and officers. In general, these enforcement actions may be
initiated in response to violations of laws and regulations and to unsafe or
unsound practices.

The
Federal Deposit Insurance Corporation is required, with some exceptions, to
appoint a receiver or conservator for an insured state bank if that bank is
critically undercapitalized. For this purpose, critically undercapitalized
means having a ratio of tangible capital to total assets of less than 2%. The
Federal Deposit Insurance Corporation may also appoint a conservator or
receiver for a state bank on the basis of the institutions financial condition
or upon the occurrence of certain events, including:

| |   |                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------
| | · | insolvency,
  or when the assets of the bank are less than its liabilities to depositors
  and others;

26

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| |   |                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                
| | · | substantial
  dissipation of assets or earnings through violations of law or unsafe or
  unsound practices;                                                                                                                    
| |   |                                                                                                                                                                                                                                
| | · | existence of
  an unsafe or unsound condition to transact business;                                                                                                                                                            
| |   |                                                                                                                                                                                                                                
| | · | likelihood
  that the bank will be unable to meet the demands of its depositors or to pay
  its obligations in the normal course of business; and                                                                              
| |   |                                                                                                                                                                                                                                
| | · | insufficient
  capital, or the incurring or likely incurring of losses that will deplete
  substantially all of the institutions capital with no reasonable prospect of
  replenishment of capital without federal assistance.

Insurance
of Deposit Accounts. Deposit
accounts at Lincoln Park Savings are insured by the Federal Deposit Insurance
Corporation up to a maximum of $100,000 per separately insured depositor and up
to a maximum amount of $250,000 for self-directed retirement accounts. Lincoln
Park Savings deposits, therefore, are subject to Federal Deposit Insurance
Corporation deposit insurance assessments. The Federal Deposit Insurance
Corporation has adopted a risk-based system for determining deposit insurance
assessments.

The
Federal Deposit Insurance Corporation regulations assess insurance premiums based on an
institutions risk. Under this assessment system, the Federal Deposit Insurance Corporation evaluates the risk of each
financial institution based on its supervisory rating, its financial ratios,
and its long-term debt issuer rating. The rates for nearly all of the financial
institution industry vary between five and seven cents for every $100 of
domestic deposits. The assessment to be paid during the year ending December
31, 2007 will be offset by a credit
from the Federal Deposit Insurance Corporation to Lincoln Park Savings of
$28,000. Federal law requires the Federal Deposit Insurance Corporation to
establish a deposit reserve ratio for the deposit insurance fund of between
1.15% and 1.50% of estimated deposits. The Federal Deposit Insurance
Corporation has designated the reserve ratio for the deposit insurance fund
through the first quarter of 2008 at 1.25% of estimated insured deposits.

Effective
March 31, 2006, the Federal Deposit Insurance Corporation merged the Bank
Insurance Fund and the Savings Association Insurance Fund into a single fund
called the Deposit Insurance Fund. In addition to the Federal Deposit Insurance
Corporation assessments,
the Financing Corporation (FICO) is authorized to impose and collect, with
the approval of the Federal Deposit Insurance Corporation, assessments for
anticipated payments, issuance costs and custodial fees on bonds issued by the
FICO in the 1980s to recapitalize the Federal Savings and Loan Insurance
Corporation. The bonds issued by the FICO are due to mature in 2017 through
2019. For the quarter ended December 31, 2007, the annualized FICO assessment
was equal to 1.14 basis points for each $100 in domestic deposits maintained at
an institution.

Transactions
with Affiliates of Lincoln Park Savings. Transactions
between an insured bank, such as Lincoln Park Savings, and any of its
affiliates is governed by Sections 23A and 23B of the Federal Reserve Act. An
affiliate of a bank is any company or entity that controls, is controlled by or
is under common control with the bank. Currently, a subsidiary of a bank that
is not also a depository institution generally is not treated as an affiliate
of the bank for purposes of Sections 23A and 23B, but the Federal Reserve
Board has proposed a comprehensive regulation implementing Sections 23A and
23B, which would establish certain exceptions to this policy.

Section 23A:

| |   |                                                                                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | limits the
  extent to which the bank or its subsidiaries may engage in covered
  transactions with any one affiliate to an amount equal to 10% of such banks
  capital stock and retained earnings, and limits all such transactions with
  all affiliates to an amount equal to 20% of such capital stock and retained
  earnings; and
| |   |                                                                                                                                                                                                                                                                                                                                            
| | · | requires
  that all such transactions be on terms that are consistent with safe and
  sound banking practices.                                                                                                                                                                                                                             

27

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The
term covered transaction includes the making of loans, purchase of assets,
issuance of guarantees and other similar types of transactions. Further, most
loans by a bank to any of its affiliates must be secured by collateral in
amounts ranging from 100 to 130 percent of the loan amounts. In addition, any
covered transaction by a bank with an affiliate and any purchase of assets or
services by a bank from an affiliate must be on terms that are substantially
the same, or at least as favorable to the bank, as those that would be provided
to a non-affiliate.

In
addition, provisions of the BHCA prohibit extensions of credit to a banks
insiders and their related interests by any other institution that has a
correspondent banking relationship with the bank, unless such extension of
credit is on substantially the same terms as those prevailing at the time for
comparable transactions with other persons and does not involve more than the
normal risk of repayment or present other unfavorable features.

Prohibitions
Against Tying Arrangements. Banks are subject to the
prohibitions of 12 U.S.C. Section 1972 on certain tying arrangements. A
depository institution is prohibited, subject to some exceptions, from
extending credit to or offering any other service, or fixing or varying the
consideration for such extension of credit or service, on the condition that
the customer obtain some additional service from the institution or its
affiliates or not obtain services of a competitor of the institution.

Privacy
Standards. Effective July 1, 2001, financial
institutions, such as Lincoln Park Bancorp and Lincoln Park Savings, became
subject to Federal Deposit Insurance Corporation regulations implementing the
privacy protection provisions of Gramm-Leach. These regulations require Lincoln
Park Bancorp and Lincoln Park Savings to disclose their privacy policy,
including identifying with whom they share non-public personnel information
to customers at the time of establishing the customer relationship and annually
thereafter.

The
regulations also require Lincoln Park Bancorp and Lincoln Park Savings to
provide their customers with initial and annual notices that accurately reflect
its privacy policies and practices. In addition, Lincoln Park Bancorp and
Lincoln Park Savings are required to provide their customers with the ability
to opt-out of having Lincoln Park Bancorp and Lincoln Park Savings share their
non-public personal information with unaffiliated third parties before they can
disclose such information, subject to certain exceptions. The implementation of
these regulations has not had a material adverse effect on Lincoln Park Bancorp
and Lincoln Park Savings. Gramm-Leach also provides for the ability of each
state to enact legislation that is more protective of consumers personal
information. Currently there are a number of privacy bills pending in the New
Jersey legislature. No action has been taken on any of these bills, and we
cannot predict whether any of them will become law or what impact, if any,
these bills will have if enacted into law.

On
February 1, 2001, the Federal Deposit Insurance Corporation and other federal
banking agencies adopted guidelines establishing standards for safeguarding
customer information to implement certain provisions of Gramm-Leach. The
guidelines describe the agencies expectations for the creation, implementation
and maintenance of an information security program, which would include
administrative, technical and physical safeguards appropriate to the size and
complexity of the institution and the nature and scope of its activities. The
standards set forth in the guidelines are intended to insure the security and
confidentiality of customer records and information, protect against any
anticipated threats or hazards to the security or integrity of such records and
protect against unauthorized access to or use of such records or information
that could result in substantial harm or inconvenience to any customer. We
implemented the guidelines prior to their effective date of July 1, 2001 and
such implementation did not have a material adverse effect on our operations.

Uniform
Real Estate Lending Standards. Under the FDIA, the
federal banking agencies adopted uniform regulations prescribing standards for
extensions of credit that are secured by liens on interests in real estate or
made for the purpose of financing the construction of a building or other
improvements to real estate. Under the joint regulations adopted by the federal
banking agencies, all insured depository institutions must adopt and maintain
written policies that establish appropriate limits and standards for extensions
of credit that are secured by liens or interests in real estate or are made for
the purpose of financing permanent improvements to real estate. These policies
must establish loan portfolio diversification standards, prudent underwriting
standards, including loan-to-value limits, that are clear and measurable, loan
administration procedures, and documentation, approval and reporting
requirements. The real estate lending policies must reflect consideration of
the Interagency Guidelines for Real Estate Lending Policies that have been
adopted by the federal bank regulators.

28

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The
Interagency Guidelines, among other things, require a depository institution to
establish internal loan-to-value limits for real estate loans that are not in
excess of the following supervisory limits:

| |   |                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | for loans
  secured by raw land, the supervisory loan-to-value limit is 65% of the value
  of the collateral;                                                                                                             
| |   |                                                                                                                                                                                                                           
| | · | for land
  development loans, or loans for the purpose of improving unimproved property
  prior to the erection of structures, the supervisory limit is 75%;                                                              
| |   |                                                                                                                                                                                                                           
| | · | for loans
  for the construction of commercial, multi-family or other non-residential
  property, the supervisory limit is 80%;                                                                                           
| |   |                                                                                                                                                                                                                           
| | · | for loans
  for the construction of one- to four-family residential properties, the supervisory
  limit is 85%; and                                                                                                       
| |   |                                                                                                                                                                                                                           
| | · | for loans
  secured by other improved property, for example, farmland, completed
  commercial property and other income-producing property including non-owner
  occupied, one- to four-family property, the limit is 85%.

Although
no supervisory loan-to-value limit has been established for owner-occupied,
one- to four-family and home equity loans, the Interagency Guidelines state
that for any such loan with a loan-to-value ratio that equals or exceeds 90% at
origination, an institution should require appropriate credit enhancement in
the form of either mortgage insurance or readily marketable collateral.

Lincoln
Park Savings has established, however, internal loan-to-value limits for real
estate loans that are more stringent than the maximum limits currently imposed
under federal law.

Community
Reinvestment Act and Fair Lending Laws. All Federal Deposit Insurance Corporation
insured institutions have a responsibility under the Community Reinvestment Act
and related regulations to help meet the credit needs of their communities,
including low- and moderate-income neighborhoods. In connection with its
examination of a state chartered savings bank, the Federal Deposit Insurance
Corporation is required to assess the institutions record of compliance with
the Community Reinvestment Act. Among other things, the current Community
Reinvestment Act regulations replace the prior process-based assessment factors
with a new evaluation system that rates an institution based on its actual
performance in meeting community needs. In particular, the current evaluation
system focuses on three tests:

| |   |                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | a lending
  test, to evaluate the institutions record of making loans in its service
  areas;                                                                                                                   
| |   |                                                                                                                                                                                                                  
| | · | an
  investment test, to evaluate the institutions record of investing in
  community development projects, affordable housing, and programs benefiting
  low or moderate income individuals and businesses; and
| |   |                                                                                                                                                                                                                  
| | · | a service
  test, to evaluate the institutions delivery of services through its
  branches, ATMs and other offices.                                                                                             

An
institutions failure to comply with the provisions of the Community
Reinvestment Act could, at a minimum, result in regulatory restrictions on its
activities. We received an outstanding Community Reinvestment Act rating in our
most recently completed federal examination, which was conducted by the Office
of Thrift Supervision in March 2004.

In
addition, the Equal Credit Opportunity Act and the Fair Housing Act prohibit
lenders from discriminating in their lending practices on the basis of
characteristics specified in those statutes. The failure to comply with the
Equal Credit Opportunity Act and the Fair Housing Act could result in
enforcement actions by the Federal Deposit Insurance Corporation, as well as
other federal regulatory agencies and the Department of Justice.

29

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Safety
and Soundness Standards. Pursuant to the requirements
of FDIA, as amended by the Riegle Community Development and Regulatory
Improvement Act of 1994, each federal banking agency, including the Federal
Deposit Insurance Corporation, has adopted guidelines establishing general
standards relating to internal controls, information and internal audit
systems, loan documentation, credit underwriting, interest rate exposure, asset
growth, asset quality, earnings, compensation, fees and benefits. In general,
the guidelines require, among other things, appropriate systems and practices
to identify and manage the risks and exposures specified in the guidelines. The
guidelines prohibit excessive compensation as an unsafe and unsound practice
and describe compensation as excessive when the amounts paid are unreasonable
or disproportionate to the services performed by an executive officer,
employee, director, or principal stockholder.

In
addition, the Federal Deposit Insurance Corporation adopted regulations to
require a bank that is given notice by the Federal Deposit Insurance
Corporation that it is not satisfying any of such safety and soundness
standards to submit a compliance plan to the Federal Deposit Insurance
Corporation. If, after being so notified, a bank fails to submit an acceptable
compliance plan or fails in any material respect to implement an accepted
compliance plan, the Federal Deposit Insurance Corporation may issue an order
directing corrective and other actions of the types to which a significantly
undercapitalized institution is subject under the prompt corrective action
provisions of FDIA. If a bank fails to comply with such an order, the Federal
Deposit Insurance Corporation may seek to enforce such an order in judicial
proceedings and to impose civil monetary penalties.

Prompt
Corrective Action. The FDIC Improvement Act also
established a system of prompt corrective action to resolve the problems of
undercapitalized institutions. The Federal Deposit Insurance Corporation, as
well as the other federal banking regulators, adopted regulations governing the
supervisory actions that may be taken against undercapitalized institutions.
The regulations establish five categories, consisting of well capitalized,
adequately capitalized, undercapitalized, significantly undercapitalized
and critically undercapitalized. The Federal Deposit Insurance Corporations
regulations define the five capital categories as follows:

An
institution will be treated as well capitalized if:

| |                                                                          |                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ·                                                                        | its ratio of
  total capital to risk-weighted assets is at least 10%;                                                                                                                                             
| |                                                                          |                                                                                                                                                                                                                   
| | ·                                                                        | its ratio of
  Tier 1 capital to risk-weighted assets is at least 6%; and                                                                                                                                         
| |                                                                          |                                                                                                                                                                                                                   
| | ·                                                                        | its ratio of
  Tier 1 capital to total assets is at least 5%, and it is not subject to any
  order or directive by the Federal Deposit Insurance Corporation to meet a
  specific capital level.                  
| |                                                                          |                                                                                                                                                                                                                   
| | An
  institution will be treated as adequately capitalized if:        
| |                                                                          |                                                                                                                                                                                                                   
| | ·                                                                        | its ratio of
  total capital to risk-weighted assets is at least 8%; or                                                                                                                                           
| |                                                                          |                                                                                                                                                                                                                   
| | ·                                                                        | its ratio of
  Tier 1 capital to risk-weighted assets is at least 4%; and                                                                                                                                         
| |                                                                          |                                                                                                                                                                                                                   
| | ·                                                                        | its ratio of
  Tier 1 capital to total assets is at least 4% (3% if the bank receives the
  highest rating under the Uniform Financial Institutions Rating System) and it
  is not a well-capitalized institution.
| |                                                                          |                                                                                                                                                                                                                   
| | An
  institution will be treated as undercapitalized if:              
| |                                                                          |                                                                                                                                                                                                                   
| | ·                                                                        | its total
  risk-based capital is less than 8%; or                                                                                                                                                                
| |                                                                          |                                                                                                                                                                                                                   
| | ·                                                                        | its Tier 1
  risk-based capital is less than 4%; and                                                                                                                                                              
| |                                                                          |                                                                                                                                                                                                                   
| | ·                                                                        | its leverage
  ratio is less than 4% (or less than 3% if the institution receives the
  highest rating under the Uniform Financial Institutions Rating System).                                                   
| |                                                                          |                                                                                                                                                                                                                   
| | An
  institution will be treated as significantly undercapitalized if:
| |                                                                          |                                                                                                                                                                                                                   
| | ·                                                                        | its total
  risk-based capital is less than 6%;                                                                                                                                                                   
| |                                                                          |                                                                                                                                                                                                                   
| | ·                                                                        | its Tier 1
  capital is less than 3%; or                                                                                                                                                                          
| |                                                                          |                                                                                                                                                                                                                   
| | ·                                                                        | its leverage
  ratio is less than 3%.                                                                                                                                                                             

30

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An
institution that has a tangible capital to total assets ratio equal to or less
than 2% would be deemed to be critically undercapitalized.

The
severity of the action authorized or required to be taken under the prompt
corrective action regulations increases as a banks capital decreases within
the three undercapitalized categories. All banks are prohibited from paying
dividends or other capital distributions or paying management fees to any
controlling person if, following such distribution, the bank would be
undercapitalized. The Federal Deposit Insurance Corporation is required to
monitor closely the condition of an undercapitalized bank and to restrict the
growth of its assets. An undercapitalized bank is required to file a capital
restoration plan within 45 days of the date the bank receives notice that it is
within any of the three undercapitalized categories, and the plan must be
guaranteed by any parent holding company. The aggregate liability of a parent
holding company is limited to the lesser of:

| |   |                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | an amount
  equal to five percent of the banks total assets at the time it became
  undercapitalized, or                                                                                                         
| |   |                                                                                                                                                                                                                     
| | · | the amount
  that is necessary (or would have been necessary) to bring the bank into
  compliance with all capital standards applicable with respect to such bank as
  of the time it fails to comply with the plan.

If
a bank fails to submit an acceptable plan, it is treated as if it were
significantly undercapitalized. Banks that are significantly or critically
undercapitalized are subject to a wider range of regulatory requirements and
restrictions.

The
Federal Deposit Insurance Corporation has a broad range of grounds under which
it may appoint a receiver or conservator for an insured depository bank. If one
or more grounds exist for appointing a conservator or receiver for a bank, the
Federal Deposit Insurance Corporation may require the bank to issue additional
debt or stock, sell assets, be acquired by a depository bank holding company or
combine with another depository bank. Under the FDIA, the Federal Deposit
Insurance Corporation is required to appoint a receiver or a conservator for a
critically undercapitalized bank within 90 days after the bank becomes
critically undercapitalized or to take such other action that would better
achieve the purposes of the prompt corrective action provisions. Such
alternative action can be renewed for successive 90-day periods. However, if
the bank continues to be critically undercapitalized on average during the
quarter that begins 270 days after it first became critically undercapitalized,
a receiver must be appointed, unless the Federal Deposit Insurance Corporation
makes certain findings, including that the bank is viable.

Loans to a Banks Insiders

Federal
Regulation. A banks loans to its executive officers,
directors, any owner of 10% or more of its stock (each, an insider) and any of
certain entities affiliated with any such person (an insiders related
interest) are subject to the conditions and limitations imposed by Section
22(h) of the Federal Reserve Act and the Federal Reserve Boards Regulation O
thereunder. Under these restrictions, the aggregate amount of the loans to any
insider and the insiders related interests may not exceed the
loans-to-one-borrower limit applicable to national banks, which is comparable
to the loans-to-one-borrower limit applicable to Lincoln Park Savings loans.
See New Jersey Banking RegulationLoans-to-One Borrower Limitations. All
loans by a bank to all insiders and insiders related interests in the aggregate
may not exceed the banks unimpaired capital and unimpaired surplus. With
certain exceptions, loans to an executive officer, other than loans for the
education of the officers children and certain loans secured by the officers
residence, may not exceed the lesser of (1) $100,000 or (2) the greater of
$25,000 or 2.5% of the banks unimpaired capital and surplus. Regulation O also
requires that any proposed loan to an insider or a related interest of that
insider be approved in advance by a majority of the board of directors of the
bank, with any interested directors not participating in the voting, if such
loan, when aggregated with any existing loans to that insider and the insiders
related interests, would exceed either (1) $500,000 or (2) the greater of
$25,000 or 5% of the banks unimpaired capital and surplus. Generally, such
loans must be made on substantially the same terms as, and follow credit
underwriting procedures that are not less stringent than, those that are
prevailing at the time for comparable transactions with other persons.

31

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An
exception is made for extensions of credit made pursuant to a benefit or
compensation plan of a bank that is widely available to employees of the bank
and that does not give any preference to insiders of the bank over other
employees of the bank.

In
addition, provisions of the BHCA prohibit extensions of credit to a banks
insiders and their related interests by any other institution that has a
correspondent banking relationship with the bank, unless such extension of
credit is on substantially the same terms as those prevailing at the time for
comparable transactions with other persons and does not involve more than the
normal risk of repayment or present other unfavorable features.

New Jersey Regulation. Provisions of the New Jersey
Banking Act impose conditions and limitations on the liabilities to a savings
bank of its directors and executive officers and of corporations and
partnerships controlled by such persons that are comparable in many respects to
the conditions and limitations imposed on the loans and extensions of credit to
insiders and their related interests under Regulation O, as discussed above.
The New Jersey Banking Act also provides that a savings bank that is in
compliance with Regulation O is deemed to be in compliance with such provisions
of the New Jersey Banking Act.

Federal Reserve System

Under
Federal Reserve Board regulations, Lincoln Park Savings is required to maintain
non-interest-earning reserves against its transaction accounts. Lincoln Park
Savings is in compliance with these requirements. Because required reserves
must be maintained in the form of either vault cash, a non-interest-bearing
account at a Federal Reserve Bank or a pass-through account as defined by the
Federal Reserve Board, the effect of this reserve requirement is to reduce
Lincoln Park Savings interest-earning assets.

Internet Banking

Technological
developments are significantly altering the ways in which most companies,
including financial institutions, conduct their business. The growth of the
Internet is prompting banks to reconsider business strategies and adopt
alternative distribution and marketing systems. The federal bank regulatory
agencies have conducted seminars and published materials targeted to various
aspects of internet banking, and have indicated their intention to reevaluate
their regulations to ensure that they encourage banks efficiency and
competitiveness consistent with safe and sound banking practices. We cannot
assure you that the bank regulatory agencies will adopt new regulations that
will not materially affect any of our internet operations or restrict any such
further operations.

The USA PATRIOT Act

In
response to the events of September 11th, the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001, or the USA PATRIOT Act, was signed into law on
October 26, 2001. The USA PATRIOT Act gives the federal government new powers
to address terrorist threats through enhanced domestic security measures,
expanded surveillance powers, increased information sharing, and broadened
anti-money laundering requirements. By way of amendments to the Bank Secrecy
Act, Title III of the USA PATRIOT Act takes measures intended to encourage
information sharing among bank regulatory agencies and law enforcement bodies.
Further, certain provisions of Title III impose affirmative obligations on a
broad range of financial institutions, including banks, thrifts, brokers,
dealers, credit unions, money transfer agents and parties registered under the
Commodity Exchange Act.

Among
other requirements, Title III of the USA PATRIOT Act imposes the following
requirements with respect to financial institutions:

| |  |   |                                                                                                                                                                                                                                                                                                                                                                                             
| |  | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | · | Pursuant to
  Section 352, all financial institutions must establish anti-money laundering
  programs that include, at minimum: (i) internal policies, procedures, and
  controls; (ii) specific designation of an anti-money laundering compliance
  officer; (iii) ongoing employee training programs; and (iv) an independent
  audit function to test the anti-money laundering program.
| |  |   |                                                                                                                                                                                                                                                                                                                                                                                             
| |  | · | Section 326
  of the Act authorizes the Secretary of the Department of Treasury, in
  conjunction with other bank regulators, to issue regulations that provide for
  minimum standards with respect to customer identification at the time new
  accounts are opened.                                                                                                                      

32

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| |  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | · | Section 312
  of the Act requires financial institutions that establish, maintain,
  administer, or manage private banking accounts or correspondence accounts in
  the United States for non-United States persons or their representatives
  (including foreign individuals visiting the United States) to establish
  appropriate, specific, and, where necessary, enhanced due diligence policies,
  procedures, and controls designed to detect and report money laundering.
| |  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | · | Financial
  institutions are prohibited from establishing, maintaining, administering or
  managing correspondent accounts for foreign shell banks (foreign banks that
  do not have a physical presence in any country), and will be subject to
  certain record keeping obligations with respect to correspondent accounts of
  foreign banks.                                                                                                                                 
| |  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | · | Bank
  regulators are directed to consider a holding companys effectiveness in
  combating money laundering when ruling on Federal Reserve Act and Bank Merger
  Act applications.                                                                                                                                                                                                                                                                                              

The
federal banking agencies have implemented regulations pursuant to the USA
PATRIOT Act. These regulations require financial institutions to adopt the
policies and procedures contemplated by the USA PATRIOT Act.

Lincoln
Park Savings has adopted the policies and programs required by the USA PATRIOT
Act, and has taken steps to implement and enforce those policies and programs.
The policies adopted by Lincoln Park Savings relate to such matters as Bank
Secrecy Act, customer identification, and anti-money laundering compliance.
Lincoln Park Savings from time to time reviews and updates its USA PATRIOT Act
and other regulatory compliance programs to ensure that all applicable
regulatory requirements are being satisfied. See Recent Regulatory
Developments.

Sarbanes-Oxley Act of 2002

On
July 30, 2002, the President signed into law the Sarbanes-Oxley Act of
2002 (the Act), which implemented legislative reforms intended to address
corporate and accounting fraud. In addition to the establishment of a new
accounting oversight board that will enforce auditing, quality control and
independence standards and will be funded by fees from all publicly traded companies,
the Act places certain restrictions on the scope of services that may be
provided by accounting firms to their public company audit clients. Any
non-audit services being provided to a public company audit client will require
preapproval by the companys audit committee. In addition, the Act makes
certain changes to the requirements for partner rotation after a period of
time. The Act requires chief executive officers and chief financial officers,
or their equivalent, to certify to the accuracy of periodic reports filed with
the Securities and Exchange Commission, subject to civil and criminal penalties
if they knowingly or willingly violate this certification requirement. In
addition, under the Act, counsel will be required to report evidence of a material
violation of the securities laws or a breach of fiduciary duty by a company to
its chief executive officer or its chief legal officer, and, if such officer
does not appropriately respond, to report such evidence to the audit committee
or other similar committee of the board of directors or the board itself.

Under
the Act, longer prison terms will apply to corporate executives who violate
federal securities laws; the period during which certain types of suits can be
brought against a company or its officers is extended; and bonuses issued to
top executives prior to restatement of a companys financial statements are now
subject to disgorgement if such restatement was due to corporate misconduct.
Executives are also prohibited from insider trading during retirement plan
blackout periods, and loans to company executives (other than loans by
financial institutions permitted by federal rules and regulations) are
restricted. In addition, a provision directs that civil penalties levied by the
Securities and Exchange Commission as a result of any judicial or
administrative action under the Act be deposited to a fund for the benefit of
harmed investors. The Federal Accounts for Investor Restitution provision also
requires the Securities and Exchange Commission to develop methods of improving
collection rates. The legislation accelerates the time frame for disclosures by
public companies, as they must immediately disclose any material changes in
their financial condition or operations. Directors and executive officers must
also provide information for most changes in ownership in a companys
securities within two business days of the change.

33

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The
Act also increases the oversight of, and codifies certain requirements relating
to audit committees of public companies and how they interact with the
companys registered public accounting firm. Audit Committee members must be
independent and are absolutely barred from accepting consulting, advisory or
other compensatory fees from the issuer. In addition, companies must disclose
whether at least one member of the committee is a financial expert (as such
term is defined by the Securities and Exchange Commission) and if not, why not.
Under the Act, a companys registered public accounting firm is prohibited from
performing statutorily mandated audit services for a company if such companys
chief executive officer, chief financial officer, comptroller, chief accounting
officer or any person serving in equivalent positions had been employed by such
firm and participated in the audit of such company during the one-year period
preceding the audit initiation date. The Act also prohibits any officer or
director of a company or any other person acting under their direction from
taking any action to fraudulently influence, coerce, manipulate or mislead any
independent accountant engaged in the audit of the companys financial
statements for the purpose of rendering the financial statements materially
misleading. The Act also requires the Securities and Exchange Commission to
prescribe rules requiring inclusion of any internal control report and
assessment by management in the annual report to shareholders. The Act requires
the companys registered public accounting firm that issues the audit report to
attest to and report on managements assessment of the companys internal
controls.

We
anticipate that we will incur additional expense in complying with the
provisions of the Act and the regulations that have been promulgated to
implement the Act. Those expenses could have a material impact on our results
of operations or financial condition.

Holding Company Regulation

General. Federal law
allows a state savings bank, such as Lincoln Park Savings, that qualifies as a
Qualified Thrift Lender, discussed below, to elect to be treated as a savings
association for purposes of the savings and loan company provisions of the Home
Owners Loan Act. Such election results in its holding company being regulated
as a savings and loan holding company by the Office of Thrift Supervision
rather than as a bank holding company by the Federal Reserve Board. Lincoln
Park Bancorp and Lincoln Park Bancorp, MHC have made such election.

Lincoln
Park Bancorp, MHC and Lincoln Park Bancorp are nondiversified savings and loan
holding companies within the meaning of the Home Owners Loan Act. As such,
Lincoln Park Bancorp, MHC and Lincoln Park Bancorp are registered with the
Office of Thrift Supervision and are subject to Office of Thrift Supervision
regulations, examinations, supervision and reporting requirements. In addition,
the Office of Thrift Supervision has enforcement authority over Lincoln Park
Bancorp and Lincoln Park Bancorp MHC, and their subsidiaries. Among other
things, this authority permits the Office of Thrift Supervision to restrict or
prohibit activities that are determined to be a serious risk to the subsidiary
savings institution. As federal corporations, Lincoln Park Bancorp and Lincoln
Park Bancorp, MHC are generally not subject to state business organization
laws.

Permitted Activities.
Pursuant to Section 10(o) of the Home Owners Loan Act and Office of Thrift
Supervision regulations and policy, a mutual holding company and a federally
chartered mid-tier holding company such as Lincoln Park Bancorp may engage in
the following activities: (i) investing in the stock of a savings association;
(ii) acquiring a mutual association through the merger of such association into
a savings association subsidiary of such holding company or an interim savings
association subsidiary of such holding company; (iii) merging with or acquiring
another holding company, one of whose subsidiaries is a savings association;
(iv) investing in a corporation, the capital stock of which is available for
purchase by a savings association under federal law or under the law of any
state where the subsidiary savings association or associations share their home
offices; (v) furnishing or performing management services for a savings
association subsidiary of such company; (vi) holding, managing or liquidating
assets owned or acquired from a savings subsidiary of such company; (vii)
holding or managing properties used or occupied by a savings association
subsidiary of such company; (viii) acting as trustee under deeds of trust; (ix)
any other activity (A) that the Federal Reserve Board, by regulation, has
determined to be permissible for bank holding companies under Section 4(c) of
the Bank Holding Company Act of 1956, unless the Director, by regulation,
prohibits or limits any such activity for savings and loan holding companies;
or (B) in which multiple savings and loan holding companies were authorized (by
regulation) to directly engage on March 5, 1987; (x) any activity permissible
for financial holding companies under Section 4(k) of the Bank Holding Company
Act, including securities and insurance underwriting; and (xi) purchasing,
holding, or disposing of stock acquired in connection with a qualified stock
issuance if the purchase of such stock by such savings and loan holding company
is approved by the Director. If a mutual holding company acquires or merges
with another holding company, the holding company acquired or the holding
company resulting from such merger or acquisition may only invest in assets and
engage in activities listed in (i) through (xi) above, and has a period of two
years to cease any nonconforming activities and divest of any nonconforming
investments.

34

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The
Home Owners Loan Act prohibits a savings and loan holding company, including Lincoln
Park Bancorp and Lincoln Park Bancorp, MHC, directly or indirectly, or through
one or more subsidiaries, from acquiring more than 5% of another savings
institution or holding company thereof, without prior written approval of the
Office of Thrift Supervision. It also prohibits the acquisition or retention
of, with certain exceptions, more than 5% of a nonsubsidiary company engaged in
activities other than those permitted by the Home Owners Loan Act; or
acquiring or retaining control of an institution that is not federally insured.
In evaluating applications by holding companies to acquire savings
institutions, the Office of Thrift Supervision must consider the financial and
managerial resources, future prospects of the company and institution involved,
the effect of the acquisition on the risk to the insurance fund, the
convenience and needs of the community and competitive factors.

The Office of Thrift Supervision is
prohibited from approving any acquisition that would result in a multiple
savings and loan holding company controlling savings institutions in more than
one state, subject to two exceptions: (i) the approval of interstate
supervisory acquisitions by savings and loan holding companies, and (ii) the
acquisition of a savings institution in another state if the laws of the state
of the target savings institution specifically permit such acquisitions. The
states vary in the extent to which they permit interstate savings and loan
holding company acquisitions.

Waivers of Dividends by Lincoln Park
Bancorp, MHC. Office of Thrift Supervision regulations
require Lincoln Park Bancorp, MHC to notify the Office of Thrift Supervision of
any proposed waiver of its receipt of dividends from Lincoln Park Bancorp. The
Office of Thrift Supervision reviews dividend waiver notices on a case-by-case
basis, and, in general, does not object to any such waiver if the mutual
holding companys board of directors determines that such waiver is consistent
with such directors fiduciary duties to the mutual holding companys members
and the dividend waiver is not detrimental to the safe and sound operation of
the subsidiary savings bank. In addition, as a condition to its approval of the
reorganization the Federal Deposit Insurance Corporation has required that (i)
any dividends waived by Lincoln Park Bancorp, MHC must be retained by Lincoln
Park Bancorp or Lincoln Park Savings and segregated, earmarked or otherwise
identified in the books and records of Lincoln Park Bancorp or Lincoln Park
Savings, (ii) the amount of waived dividends will be taken into account in any
valuation of Lincoln Park Savings and factored into the calculation used in
establishing a fair and reasonable basis for exchanging shares in any
subsequent conversion of Lincoln Park Bancorp, MHC to stock form, and (iii) any
waived dividends shall not be available for payment to, or the value thereof
transferred to, minority stockholders, by any means, including through dividend
payments or on liquidation. The plan of reorganization also provides that if
Lincoln Park Bancorp, MHC converts to stock form in the future, to the extent
required by applicable state or federal law, regulation or policy, the benefit
to minority stockholders of any waived dividends would reduce the percentage of
the converted companys shares of common stock issued to minority stockholders
in connection with a conversion transaction. We anticipate that Lincoln Park
Bancorp, MHC will waive dividends paid by Lincoln Park Bancorp.

Conversion of Lincoln Park Bancorp,
MHC to Stock Form. Office of Thrift Supervision
regulations permit Lincoln Park Bancorp, MHC to convert from the mutual form of
organization to the capital stock form of organization. There can be no
assurance when, if ever, a conversion transaction will occur. In a conversion
transaction a new holding company would be formed as the successor to Lincoln
Park Bancorp (the New Holding Company), Lincoln Park Bancorp, MHCs corporate
existence would end, and certain depositors of Lincoln Park Savings would
receive the right to subscribe for additional shares of the New Holding
Company. In a conversion transaction, each share of common stock held by
stockholders other than Lincoln Park Bancorp, MHC (minority stockholders)
would be automatically converted into a number of shares of common stock of the
New Holding Company determined pursuant an exchange ratio described in the plan
of reorganization that ensures that minority stockholders own the same
percentage of common stock in the New Holding Company as they owned in Lincoln
Park Bancorp immediately prior to the conversion transaction, subject only (if
required by applicable federal or state law, regulation or policy) to any
adjustment necessary to reflect the benefit to minority stockholders of the waiver
of dividends by Lincoln Park Bancorp, MHC and any assets held by Lincoln Park
Bancorp, MHC (other than common stock of Lincoln Park Bancorp) and to reflect
the receipt of cash in lieu of fractional shares. Under Office of Thrift
Supervision regulations, minority stockholders would not be diluted because of
any dividends waived by Lincoln Park Bancorp, MHC (and waived dividends would
not be considered in determining an appropriate exchange ratio), in the event
Lincoln Park Bancorp, MHC converts to stock form. The total number of shares
held by minority stockholders after a conversion transaction also would be
increased by any purchases by minority stockholders in the stock offering
conducted as part of the conversion transaction.

35

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Federal Securities Laws

Lincoln
Park Bancorp common stock is registered with Securities and Exchange Commission
under the Securities Exchange Act of 1934. Lincoln Park Bancorp is subject to
the information, proxy solicitation, insider trading restrictions and other
requirements under the Securities Exchange Act of 1934.

Lincoln
Park Bancorp common stock held by persons who are affiliates (generally
officers, directors and principal stockholders) of Lincoln Park Bancorp may not
be resold without registration or unless sold in accordance with certain resale
restrictions. If Lincoln Park Bancorp meets specified current public
information requirements, each affiliate of Lincoln Park Bancorp is able to
sell in the public market, without registration, a limited number of shares in
any three-month period.

Regulatory Developments

On
July 30, 2004, Lincoln Park Savings entered into a Stipulation and Consent to
Issuance of an Order of Assessment of Civil Money Penalties with the Office of
Thrift Supervision. The Stipulation was based upon findings by the Office of
Thrift Supervision of certain weaknesses by Lincoln Park Savings in
implementing policies and procedures relating to Bank Secrecy Act compliance.
Specifically, the Office of Thrift Supervision advised that Lincoln Park
Savings had failed to implement the independent testing component of the Bank
Secrecy Act compliance program required by Office of Thrift Supervision
regulations. Pursuant to the Stipulation and the related Order of Assessment of
Civil Money Penalties, Lincoln Park Savings agreed to pay to the Office of
Thrift Supervision a penalty in the amount of $10,000. Lincoln Park Savings
also retained an independent accounting firm to perform a compliance consulting
review for Lincoln Park Savings. That firm has presented its compliance
consulting report to the Board of Directors, and the Board has adopted certain
changes in the compliance program as recommended in the report. These changes
include additional training of bank personnel in Bank Secrecy Act related
matters, and implementing new policies and procedures in Bank Secrecy Act
compliance, including the proper preparation of currency transaction reports.

In
addition, in connection with the Boards authorization of the execution of the
Stipulation and Order, the Board adopted resolutions at the request of the
Office of Thrift Supervision providing that Lincoln Park Savings will implement
an appropriate written Bank Secrecy Act compliance program, that it will take
actions to ensure that the compliance program is managed by a qualified officer
and that involved bank personnel receive appropriate training, that it will
independently test the compliance program on no less than a semi-annual basis
and that the compliance officer will report to the Board and the Board will
review and evaluate the compliance program on no less than a quarterly basis.

Lincoln
Park Savings has taken the following steps to implement the recommendations of
the compliance consulting report and the foregoing resolutions. Lincoln Park
Savings has obtained a new records management register to facilitate compliance
with the record keeping requirements applicable to the sale of monetary
instruments. In addition, new procedures have been adopted to ensure the proper
completion of currency transaction reports. Further, the president has been
designated as the manager of our Bank Secrecy Act compliance program, and in
that role has been monitoring the new register on a regular basis. Under the
presidents oversight properly trained personnel are responsible for reviewing
all currency transaction reports for accuracy prior to filing. Officers of the
Bank have attended Bank Secrecy Act compliance courses and have scheduled
training sessions for our staff regarding Bank Secrecy Act compliance,
including specifically the use of the new records management register and the
proper completion of currency transaction reports. In addition, the Board of
Directors plans to monitor and evaluate our Bank Secrecy Act compliance program
on a quarterly basis. We have also retained an independent accounting firm to
perform an independent assessment of our Bank Secrecy Act compliance program on
an annual basis.

36

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|        |                        
|------- | -----------------------
|ITEM 2. | Description of Property

The
following table provides certain information with respect to our office as of
December 31, 2007:

|                                                           |  |                 |       |                 |  |                                     |      |  |  |   |         | 
|---------------------------------------------------------- |  | --------------- | ----- | --------------- |  | ----------------------------------- | ---- |  |  | - | ------- | 
|Location                                                   |  | Leased or Owned |       | Year
  Acquired |  | Net
  Book Value of Real
  Property |     
|                                                           |  |                 |       |                 |  |                                     |     
|                                                           |  |                 |       |                 |  |                                     |      |  |  |   |         | 
|Main Office: 31 Boonton Turnpike Lincoln Park, NJ 07035    |  |                 | Owned |                 |  |                                     | 1963 |  |  | $ | 706,387 | 
|                                                           |  |                 |       |                 |  |                                     |      |  |  |   |         | 
|Montville Branch 193 Changebridge Road Montville, NJ 07045 |  |                 | Owned |                 |  |                                     | 2007 |  |  | $ | 753,872 | 

The
net book value of our premises, land and equipment was approximately $1.6
million at December 31, 2007.

For
information regarding the Companys investment in mortgages and
mortgage-related securities, see Item 1. Business herein.

|        |                  
|------- | -----------------
|ITEM 3. | Legal Proceedings

Lincoln
Park Savings has, on September 13, 2007, been served with a Summons and Complaint
in the matter of Donald Hom v. Lincoln Park Savings Bank and The Board of
Directors of Lincoln Park Savings Bank, Superior Court of New Jersey, Law
Division, Morris County, Docket No., MRS-L-1548-07. The complaint by Donald
Hom, former President and CEO of Lincoln Park Savings, alleges an
employment-related claim pursuant to the New Jersey Conscientious Employee
Protection Act ( N.J.S. 34:19-1 et seq.) The complaint has been referred
to special counsel for Lincoln Park Savings for defense.

Except
as noted above, neither the Company nor the Bank is involved in any pending
legal proceedings other than routine legal proceedings occurring in the
ordinary course of business, which involve amounts in the aggregate believed by
management to be immaterial to the financial condition of the Company and the
Bank.

|        |                                                    
|------- | ---------------------------------------------------
|ITEM 4. | Submission of Matters to a Vote of Security Holders

No
matters were submitted to a vote of stockholders during the fourth quarter of
the year under report.

PART II

|        |                                                                                                          
|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 5. | Market for Common Equity, Related Stockholder Matters and Small
  Business Issuer Purchases of Securities

(a)      Our
common stock is traded on the OTC Electronic Bulletin Board under the symbol
LPBC. Lincoln Park Bancorp, MHC owns 999,810 shares, or 54.0% of our
outstanding common stock. The approximate number of holders of record of
Lincoln Park Bancorps common stock as of March 25, 2008 was 222. Certain
shares of Lincoln Park Bancorp are held in nominee or street name and
accordingly, the number of beneficial owners of such shares is not known or
included in the foregoing number. The following table presents quarterly market
information for Lincoln Park Bancorps common stock for the two-year period
ended December 31, 2007. Lincoln Park Bancorp began trading on the Electronic
Bulletin Board on December 24, 2004. The following information was provided by
the Electronic Bulletin Board.

37

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|                                   |  |      |       |     |   |           |  |   |      | 
|---------------------------------- |  | ---- | ----- | --- | - | --------- |  | - | ---- | 
|Fiscal Period                      |  | High |       | Low |   | Dividends | 
|                                   |  |      |       |     |   |           | 
|Quarter
  ended March 31, 2006     |  | $    | 10.10 |     | $ | 8.85      |  | $ | 0.05 | 
|Quarter
  ended June 30, 2006      |  |      | 10.05 |     |   | 9.50      |  |   | 0.00 | 
|Quarter
  ended September 30, 2006 |  |      | 9.70  |     |   | 9.10      |  |   | 0.00 | 
|Quarter
  ended December 31, 2006  |  |      | 9.48  |     |   | 8.75      |  |   | 0.00 | 
|Quarter
  ended March 31, 2007     |  |      | 10.00 |     |   | 8.65      |  |   | 0.00 | 
|Quarter
  ended June 30, 2007      |  |      | 9.00  |     |   | 8.36      |  |   | 0.00 | 
|Quarter
  ended September 30, 2007 |  |      | 8.50  |     |   | 7.30      |  |   | 0.00 | 
|Quarter
  ended December 31, 2007  |  |      | 8.00  |     |   | 6.00      |  |   | 0.00 | 

Dividend
payments by Lincoln Park Bancorp are dependent primarily on dividends it
receives from Lincoln Park Savings Bank, because Lincoln Park Bancorp will have
no source of income other than dividends from Lincoln Park Savings Bank,
earnings from the investment of proceeds from the sale of shares of common
stock retained by Lincoln Park Bancorp, and interest payments with respect to
Lincoln Park Bancorps loan to the Employee Stock Ownership Plan. New Jersey
law imposes limitations on dividends by New Jersey stock savings banks. See
RegulationNew Jersey Banking RegulationDividends.

Set forth below is information as of
December 31, 2007 regarding equity compensation plans. Other than the
ESOP, Lincoln Park Bancorp does not have any equity compensation plans that
were not approved by its stockholders.

|                                                         |  |                                                                                         |     |                                   |   |                                                                        |     |        |     | 
|-------------------------------------------------------- |  | --------------------------------------------------------------------------------------- | --- | --------------------------------- | - | ---------------------------------------------------------------------- | --- | ------ | --- | 
|Plan                                                     |  | Number of securities to be 
  issued upon exercise of 
  outstanding options and rights |     | Weighted average
  exercise price |   | Number of securities 
  remaining available for 
  issuance under plan |    
|                                                         |  |                                                                                         |     |                                   |   |                                                                        |    
|Equity compensation plans
  approved by stockholders     |  | 90,225                                                                                  | (1) |                                   | $ | 8.83                                                                   | (2) | 36,787 | (3) | 
|Equity compensation plans
  not approved by stockholders |  |                                                                                        |     |                                   |   |                                                                       |     |       |     | 
|                                                         |  |                                                                                         |     |                                   |   |                                                                        |     |        |     | 
|Total                                                    |  | 90,225                                                                                  | (1) |                                   | $ | 8.83                                                                   | (2) | 36,787 | (3) | 
|                                                         |  |                                                                                         |     |                                   |   |                                                                        |     |        |     | 

|                                                                                                                                                             
|-------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                             
|(1)   Includes
  23,205 shares of restricted stock and 67,020 options to purchase shares of
  common stock awarded under the 2005 Plan.                      
|                                                                                                                                                             
|(2)   Relates
  to 67,020 outstanding stock options.                                                                                                         
|                                                                                                                                                             
|(3)   Includes
  13,084 shares of restricted stock available for future issuance and 23,703
  options to purchase shares of common stock under the 2005 Plan.

In
addition, reference is made to the Market for Common Stock section of Lincoln
Park Bancorps 2007 Annual Report to Stockholders, which is incorporated herein
by reference.

| |     |                                                                                                      
| | --- | -----------------------------------------------------------------------------------------------------
| | (b) | Not applicable.                                                                                      
| |     |                                                                                                      
| | (c) | During the
  fourth quarter of 2007, the Company repurchased shares of its common stock as
  follows:

|                 |  |                          |  |                                 |   |                        |  |                                                                                     |  |  |        |  | 
|---------------- |  | ------------------------ |  | ------------------------------- | - | ---------------------- |  | ----------------------------------------------------------------------------------- |  |  | ------ |  | 
|Period           |  | # of Shares 
  Purchased |  | Average Price Paid 
  Per Share |   | Total Shares Purchased |  | Maximum Number of Shares that may still
  be purchased under the repurchase program | 
|                 |  |                          |  |                                 |   |                        |  |                                                                                     | 
|                
|Oct. 1  Oct. 31 |  | 6,200                    |  |                                 | $ | 8.05                   |  | 12,410                                                                              |  |  | 29,370 |  | 
|Nov. 1  Nov. 30 |  | 13,245                   |  |                                 |   | 7.55                   |  | 25,655                                                                              |  |  | 16,125 |  | 
|Dec. 1  Dec. 31 |  |                         |  |                                 |   |                       |  | 25,655                                                                              |  |  | 16,125 |  | 
|                 |  |                          |  |                                 |   |                        |  |                                                                                     |  |  |        |  | 



|        |                                                                                        
|------- | ---------------------------------------------------------------------------------------
|ITEM 6. | Managements Discussion and Analysis of
  Financial Condition and Results of Operations

The
Managements Discussion and Analysis of Financial Condition and Results of
Operations section of Lincoln Park Bancorps 2007 Annual Report to
Stockholders is incorporated herein by reference. For off-balance sheet
arrangements, see Note 14 of the Notes to Consolidated Financial Statements
within the Annual Report.

38

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|        |                     
|------- | --------------------
|ITEM 7. | Financial Statements

The
consolidated financial statements included in Lincoln Park Bancorps 2007
Annual Report to Stockholders are incorporated herein by reference.

|        |                                                                                       
|------- | --------------------------------------------------------------------------------------
|ITEM 8. | Changes In and Disagreements With
  Accountants on Accounting and Financial Disclosure

None.

|             |                        
|------------ | -----------------------
|ITEM 8A. (T) | Controls and Procedures

(a)     
Evaluation of disclosure controls and procedures.

Under
the supervision and with the participation of our management, including our
Chief Executive Officer and Chief Financial Officer, we evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of
1934) as of the end of the period covered by this report. Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that, as of the end of the period covered by this report, our disclosure
controls and procedures were effective to ensure that information required to
be disclosed in the reports that the Company files or submits under the
Securities Exchange Act of 1934, is recorded, processed, summarized and
reported, within the time periods specified in the SECs rules and forms.

(b)     
Managements Report on Internal Control over Financial Reporting

The management of the Company is responsible for establishing and
maintaining adequate internal control over financial reporting. The Companys
internal control system is a process designed to provide reasonable assurance
to the management and
board of directors regarding the preparation and fair presentation of published
consolidated financial statements.

The Companys internal control over financial reporting includes
policies and procedures that pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect transactions and disposition
of assets; provide reasonable assurances that transactions are recorded as
necessary to permit preparation of consolidated financial statements in
accordance with U.S. generally accepted accounting principles, and that
receipts and expenditures are being made only in accordance with authorizations
of management and the directors of the Company; and provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition,
use or disposition of the Companys assets that could have a material effect on
our consolidated financial statements.

All internal control systems, no matter how well designed, have inherent limitations. Therefore,
even those systems determined to be effective can provide only reasonable
assurance with respect to consolidated financial statement preparation and
presentation. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

The Companys management assessed the effectiveness of internal
control over financial reporting as of December 31, 2007. In making this assessment,
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission in Internal Control-Integrated Framework. Based on its
assessment, management believes that, as of December 31, 2007, the Companys
internal control over financial reporting is effective based on those criteria.

This annual report does not include an attestation report of the
Companys registered public accounting firm regarding internal control over
financial reporting. Managements report was not subject to attestation by the
Companys registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only
managements report in this annual report.

|                                      |                        
|------------------------------------- | -----------------------
|David G. Baker                        | Nandini S. Mallya      
|President and Chief Executive Officer | Chief Financial Officer

39

---



(c)      Changes in internal control.

There has been
no change in the Companys internal control over financial reporting during the
Companys fourth quarter of fiscal year 2007 that has materially affected, or
is reasonably likely to materially affect, the Companys internal control over
financial reporting.

|         |                  
|-------- | -----------------
|ITEM 8B. | Other Information

None.

PART III

|        |                                                                                                                                        
|------- | ---------------------------------------------------------------------------------------------------------------------------------------
|ITEM 9. | Directors, Executive Officers, Promoters, Control Persons and
  Corporate Governance; Compliance with Section 16(a) of the Exchange Act

Lincoln
Park Bancorp has adopted a Code of Ethics that applies to Lincoln Park
Bancorps principal executive officer, principal financial officer, principal
accounting officer or controller or persons performing similar functions. The
Code of Ethics may be accessed on Lincoln Park Bancorps website at www.lincoln
parksavings.com. The Code of Ethics was also filed as Exhibit 14 to Lincoln
Park Bancorps Form 10-KSB for the year ended December 31, 2004.

Information
concerning Directors and executive officers of Lincoln Park Bancorp is
incorporated herein by reference from our definitive Proxy Statement (the
Proxy Statement), specifically the section captioned Proposal IElection of
Directors. Information concerning corporate governance matters is incorporated
herein by reference from our Proxy Statement, specifically the section
captioned Proposal I  Election of Directors.

|         |                       
|-------- | ----------------------
|ITEM 10. | Executive Compensation

Information
concerning executive compensation is incorporated herein by reference from our
Proxy Statement, specifically the section captioned Proposal I  Election of
Directors.

|         |                                                                                                 
|-------- | ------------------------------------------------------------------------------------------------
|ITEM 11. | Security Ownership of Certain Beneficial
  Owners and Management and Related Stockholder Matters

Information
concerning security ownership of certain owners and management is incorporated
herein by reference from our Proxy Statement, specifically the sections
captioned Voting Securities and Principal Holders Thereof and Proposal I 
Election of Directors.

|         |                                                                           
|-------- | --------------------------------------------------------------------------
|ITEM 12. | Certain Relationships and Related
  Transactions and Director Independence

Information
concerning relationships and transactions, and director independence, is
incorporated herein by reference from our Proxy Statement, specifically the
sections captioned Transactions with Certain Related Persons and Board
Independence, respectively.

40

---



|         |         
|-------- | --------
|ITEM 13. | Exhibits

|     |                                                                                                                                                                                                                                                                |                                                             
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------
|(a)  | Financial
  Statements                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                |                                                             
|     | (A)                                                                                                                                                                                                                                                            | Management
  Responsibility Statement                       
|     |                                                                                                                                                                                                                                                                |                                                             
|     | (B)                                                                                                                                                                                                                                                            | Report of
  Independent Registered Public Accounting Firm   
|     |                                                                                                                                                                                                                                                                |                                                             
|     | (C)                                                                                                                                                                                                                                                            | Consolidated
  Statements of Financial Condition            
|     |                                                                                                                                                                                                                                                                |                                                             
|     | (D)                                                                                                                                                                                                                                                            | Consolidated
  Statements of Income                         
|     |                                                                                                                                                                                                                                                                |                                                             
|     | (E)                                                                                                                                                                                                                                                            | Consolidated
  Statements of Changes In Stockholders Equity
|     |                                                                                                                                                                                                                                                                |                                                             
|     | (F)                                                                                                                                                                                                                                                            | Consolidated
  Statements of Cash Flows                     
|     |                                                                                                                                                                                                                                                                |                                                             
|     | (G)                                                                                                                                                                                                                                                            | Notes to
  Consolidated Financial Statements                
|     |                                                                                                                                                                                                                                                               
|(b)  | Financial Statement
  Schedules                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                               
|(c)  | Exhibits                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                               
|3.1  | Charter of
  Lincoln Park Bancorp*                                                                                                                                                                                                                            
|    
|3.2  | Bylaws of
  Lincoln Park Bancorp*                                                                                                                                                                                                                             
|    
|4    | Form of Common
  Stock Certificate of Lincoln Park Bancorp*                                                                                                                                                                                                   
|    
|10.1 | Employee
  Stock Ownership Plan*                                                                                                                                                                                                                              
|    
|10.2 | Lincoln Park
  Bancorp 2005 Stock-Based Incentive Plan****                                                                                                                                                                                                    
|    
|10.3 | Lincoln Park
  Bancorp Director Retirement Plan**                                                                                                                                                                                                             
|    
|13   | Annual
  Report to Stockholders                                                                                                                                                                                                                               
|    
|14   | Code of
  Ethics***                                                                                                                                                                                                                                           
|    
|21   | Subsidiaries
  of Registrant*                                                                                                                                                                                                                                 
|    
|23   | Consent of
  Beard Miller Company LLP                                                                                                                                                                                                                         
|    
|31.1 | Certification
  of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities
  Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the
  Sarbanes-Oxley Act of 2002                                                            
|    
|31.2 | Certification
  of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities
  Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the
  Sarbanes-Oxley Act of 2002                                                            
|    
|32   | Certification
  of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.
  Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002                                                                           
|     |                                                                                                                                                                                                                                                               
|    
|*    | Incorporated
  by reference to the Registration Statement on Form SB-2 of Lincoln Park
  Bancorp (file no. 333-116639), originally filed with the Securities and
  Exchange Commission on June 18, 2004.                                                      
|    
|**   | Incorporated
  by reference to the Current Report on Form 8-K of Lincoln Park Bancorp (file
  no. 000-51078), filed with the Securities and Exchange Commission on March
  15, 2006.                                                                          
|    
|***  | Incorporated
  by reference to the Annual Report on Form 10-KSB of Lincoln Park Bancorp
  (file no. 000-51078), filed with the Securities and Exchange Commission on
  March 30, 2005.                                                                        
|    
|**** | Incorporated
  by reference to the definitive proxy statement of Lincoln Park Bancorp (file
  no. 000-51078) for the special meeting of stockholders held on December 22,
  2005, as filed with the Securities and Exchange Commission on November 22,
  2005.

41

---



|         |                                       
|-------- | --------------------------------------
|ITEM 14. | Principal Accountant Fees and Services

Information
concerning principal accountant fees and services is incorporated herein by
reference from our Proxy Statement, specifically the section captioned
Proposal II-Ratification of Appointment of Independent Registered Public
Accounting Firm.

42

---



SIGNATURES

Pursuant
to the requirements of Section 13 of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

|      |                  |  |     |                                         | 
|----- | ---------------- |  | --- | --------------------------------------- | 
|      |                  |  |     | LINCOLN PARK BANCORP                    | 
|      |                  |  |     |                                         | 
|Date: | March 26,
  2008 |  | By: | /s/ David G.
  Baker                    | 
|      |                  |  |     |                                         | 
|      |                  |  |     | David G.
  Baker                        | 
|      |                  |  |     | President
  and Chief Executive Officer | 
|      |                  |  |     | (Duly
  Authorized Representative)      | 

Pursuant
to the requirements of the Securities Exchange of 1934, this report has been
signed by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.

|                      |  |                                 |  |                | 
|--------------------- |  | ------------------------------- |  | -------------- | 
|Signatures            |  | Title                           |  | Date           | 
|                      |  |                                 |  |                | 
|                      |  |                                 |  |                | 
|/s/ David G. Baker    |  | President and Chief
  Executive |  | March 26, 2008 | 
|                      |  | Officer (Principal Executive    |  |                | 
|David G. Baker        |  | Officer), Director              |  |                | 
|                      |  |                                 |  |                | 
|/s/ Nandini Mallya    |  | Vice President and
  Treasurer  |  | March 26, 2008 | 
|                      |  | (Principal Financial and        |  |                | 
|Nandini Mallya        |  | Accounting Officer)             |  |                | 
|                      |  |                                 |  |                | 
|/s/ Stanford Stoller  |  | Chairman of the Board and       |  | March 26, 2008 | 
|                      |  | Director                        |  |                | 
|Stanford Stoller      |  |                                 |  |                | 
|                      |  |                                 |  |                | 
|/s/ Henry Fitschen    |  | Director                        |  | March 26, 2008 | 
|                      |  |                                 |  |                | 
|Henry Fitschen        |  |                                 |  |                | 
|                      |  |                                 |  |                | 
|/s/ John F. Feeney    |  | Director                        |  | March 26, 2008 | 
|                      |  |                                 |  |                | 
|John F. Feeney        |  |                                 |  |                | 
|                      |  |                                 |  |                | 
|/s/ Edith M. Perrotti |  | Director                        |  | March 26, 2008 | 
|                      |  |                                 |  |                | 
|Edith M. Perrotti     |  |                                 |  |                | 

---