EXHIBIT 13

PORTIONS OF ANNUAL REPORT TO STOCKHOLDERS

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LINCOLN
PARK BANCORP

2007 Annual Report to Stockholders

Table of Contents

|                                                                                        |   
|--------------------------------------------------------------------------------------- | --
|Letter to Stockholders                                                                  | 2 
|                                                                                        |   
|Selected Consolidated Financial Information and
Other
  Data                            | 3 
|                                                                                        |   
|Managements Discussion and Analysis of
Financial
  Condition and Results of Operations | 5 
|                                                                                        |   
|Report of Independent Registered Public Accounting
  Firm                               | 16
|                                                                                        |   
|Consolidated Financial Statements                                                       | 17
|                                                                                        |   
|Directors and Executive Officers                                                        | 58
|                                                                                        |   
|Stockholder Information                                                                 | 59
|                                                                                        |   
|Market Information                                                                      | 60

Visit our website at www.lincolnparksavings.com

1

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|(LP LINCOLN PARK BANCORP LOGO)
|------------------------------

31 Boonton Turnpike, Lincoln Park, New Jersey 07035
973-694-0330 FAX 973-694-3114www.lincolnparksavings.com

Dear Shareholders,

The Board of Directors and I provide for you, our
shareholders, the 2007 annual report of Lincoln Park Bancorp.

The banking industry found 2007 to be a difficult
year, and we at Lincoln Park Savings found it challenging as well. Although we
managed to avoid many of the problems our bigger competitors experienced due to
our conservative approach to lending and investing, our profitability suffered
as well. While our loan portfolio grew modestly in 2007, up from $67,451,000 in
2006 to $73,085,000 in 2007, and our interest income increased from $4,965,000
to $5,326,000, our interest expense increased from $2,576,000 in 2006 to
$3,122,000 in 2007. This coupled with the down real estate market made for a
challenging environment. We experienced an increase in our percentage of
non-performing loans, which amounted to 0.42% of total assets at December 31,
2007 compared to 0.17% of total assets at December 31, 2006.

There were some milestones in 2007. On July 16, 2007
we opened our second branch on Changebridge Road in Montville Township.
Utilizing capital from our public offering we were able to purchase this former
branch of GSL Savings. We also instituted a stock buy back program in 2007 and
repurchased 25,655 shares of stock at a cost of $199,900.

We also had some modest success in rolling out our new
commercial loan products booking over $1,000,000 in loans in 2007. Our internet
banking product was new for 2007 as well with over 247 customers signing up to
utilize this product.

We look forward to 2008 as the Federal Reserve has
taken bold steps that will help the banking industry by reducing substantially
the cost of funds. This, with anticipated growth in our commercial loan
business, will help position us well in the coming year.

The Board of Directors, management and our staff thank
you for your commitment to our Bank and look forward to 2008.

|                   | 
|------------------ | 
|Sincerely,         | 
|                   | 
|-s- David G. Baker | 
|                   | 
|David G. Baker     | 
|President & CEO    | 

2

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LINCOLN
PARK BANCORP

SELECTED CONSOLIDATED FINANCIAL INFORMATION AND OTHER DATA

The following tables set
forth selected consolidated financial and other data of Lincoln Park Bancorp at
and for the periods indicated. The selected data has been derived in part from
the audited consolidated financial statements of Lincoln Park Bancorp. The
following information is only a summary, and should be read in conjunction with
the consolidated financial statements and notes presented elsewhere in the
Annual Report.

|                                     |  |                        |         |      |   |        |  |   |        | 
|------------------------------------ |  | ---------------------- | ------- | ---- | - | ------ |  | - | ------ | 
|                                     |  | At December
  31,     
|                                     |  |                       
|                                     |  | 2007                   |         | 2006 |   | 2005  
|                                     |  |                        |         |      |   |       
|                                     |  | (Dollars in Thousands)
|Selected
  Financial Condition Data: |  |                        |         |      |   |        |  |   |        | 
|                                     |  |                        |         |      |   |        |  |   |        | 
|Total assets                         |  | $                      | 102,665 |      | $ | 93,970 |  | $ | 93,958 | 
|Loans receivable, net (1)            |  |                        | 73,085  |      |   | 67,451 |  |   | 66,383 | 
|Cash and cash equivalents            |  |                        | 2,502   |      |   | 2,601  |  |   | 2,316  | 
|Term deposits                        |  |                        | 295     |      |   | 190    |  |   | 581    | 
|Securities available for sale        |  |                        | 1,521   |      |   | 2,574  |  |   | 3,002  | 
|Securities held to maturity          |  |                        | 21,243  |      |   | 18,335 |  |   | 18,817 | 
|Deposits                             |  |                        | 64,967  |      |   | 57,844 |  |   | 54,367 | 
|FHLB advances                        |  |                        | 23,552  |      |   | 21,978 |  |   | 25,534 | 
|Stockholders equity                 |  |                        | 13,146  |      |   | 13,244 |  |   | 13,388 | 

|    |                                                                             
|--- | ----------------------------------------------------------------------------
|   
|(1) | Net of loans in process,
  allowance for loan losses and deferred loan fees.

|                                                                  |  |                                                   |       |      |   |       |   |   |       | 
|----------------------------------------------------------------- |  | ------------------------------------------------- | ----- | ---- | - | ----- | - | - | ----- | 
|                                                                  |  | Years
  Ended December 31,                       
|                                                                  |  |                                                  
|                                                                  |  | 2007                                              |       | 2006 |   | 2005 
|                                                                  |  |                                                   |       |      |   |      
|                                                                  |  | (Dollars
  in Thousands,
  Except Per Share Data)
|Selected
  Operations Data:                                       |  |                                                   |       |      |   |       |   |   |       | 
|                                                                  |  |                                                   |       |      |   |       |   |   |       | 
|Total interest income                                             |  | $                                                 | 5,325 |      | $ | 4,965 |   | $ | 4,418 | 
|Total interest expense                                            |  |                                                   | 3,122 |      |   | 2,576 |   |   | 1,722 | 
|                                                                  |  |                                                   |       |      |   |       |   |   |       | 
|Net interest income                                               |  |                                                   | 2,203 |      |   | 2,389 |   |   | 2,696 | 
|Provision for (recovery of) loan losses                           |  |                                                   | 51    |      |   | (22   | ) |   | 6     | 
|                                                                  |  |                                                   |       |      |   |       |   |   |       | 
|Net interest income after provision for (recovery of) loan
losses |  |                                                   | 2,152 |      |   | 2,411 |   |   | 2,690 | 
|Non-interest income                                               |  |                                                   | 145   |      |   | 134   |   |   | 100   | 
|Non-interest expenses                                             |  |                                                   | 2,235 |      |   | 2,042 |   |   | 1,843 | 
|Income taxes                                                      |  |                                                   | 2     |      |   | 189   |   |   | 370   | 
|                                                                  |  |                                                   |       |      |   |       |   |   |       | 
|Net income                                                        |  | $                                                 | 60    |      | $ | 314   |   | $ | 576   | 
|                                                                  |  |                                                   |       |      |   |       |   |   |       | 
|Net income per
share                                              |  | $                                                 | 0.03  |      | $ | 0.18  |   | $ | 0.32  | 
|                                                                  |  |                                                   |       |      |   |       |   |   |       | 

3

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|                                                                          |  |  |                   |   |      |        |      |  |        |  
|------------------------------------------------------------------------- |  |  | ----------------- | - | ---- | ------ | ---- |  | ------ | -
|                                                                          |  |  | At
  December 31,
|                                                                          |  |  |                  
|                                                                          |  |  | 2007              |   | 2006 |        | 2005
|                                                                          |  |  |                   |   |      |        |     
|                                                                          |  |  |                   |   |      |        |      |  |        |  
|Selected Financial Ratios and Other Data:                                 |  |  |                   |   |      |        |      |  |        |  
|                                                                          |  |  |                   |   |      |        |      |  |        |  
|Performance Ratios:                                                       |  |  |                   |   |      |        |      |  |        |  
|Return on average assets (ratio of net income to average total
  assets)  |  |  | 0.06              | % |      | 0.33   | %    |  | 0.65   | %
|Return on average equity                                                  |  |  | 0.45              |   |      | 2.37   |      |  | 4.40   |  
|Net yield on average interest-earning assets                              |  |  | 5.57              |   |      | 5.37   |      |  | 5.09   |  
|Net interest rate spread (1)                                              |  |  | 1.82              |   |      | 2.15   |      |  | 2.78   |  
|Average interest-earning assets to average interest-bearing
  liabilities |  |  | 114.77            |   |      | 115.77 |      |  | 116.30 |  
|Non-interest expense to average assets                                    |  |  | 2.27              |   |      | 2.15   |      |  | 2.06   |  
|Efficiency ratio                                                          |  |  | 95.17             |   |      | 80.94  |      |  | 65.92  |  
|                                                                          |  |  |                   |   |      |        |      |  |        |  
|Capital
  Ratios:                                                         |  |  |                   |   |      |        |      |  |        |  
|Average equity to average total assets                                    |  |  | 13.45             |   |      | 13.97  |      |  | 14.65  |  
|Tier 1 leverage ratio                                                     |  |  | 9.45              |   |      | 10.37  |      |  | 10.70  |  
|Tier 1 risk-based ratio                                                   |  |  | 16.95             |   |      | 19.06  |      |  | 19.26  |  
|Total risk-based capital ratio                                            |  |  | 17.29             |   |      | 19.33  |      |  | 19.58  |  
|                                                                          |  |  |                   |   |      |        |      |  |        |  
|Asset
  Quality Ratios:                                                   |  |  |                   |   |      |        |      |  |        |  
|Net charge-offs to average nonperforming assets                           |  |  | 0.06              |   |      | 0.07   |      |  | 0.81   |  
|Net charge-offs to average loans outstanding                              |  |  |                  |   |      |       |      |  | 0.01   |  
|Allowance for loan losses to gross loans outstanding                      |  |  | 0.26              |   |      | 0.20   |      |  | 0.24   |  
|Nonperforming loans to total assets                                       |  |  | 0.42              |   |      | 0.17   |      |  | 0.30   |  
|Nonperforming assets to total assets                                      |  |  | 0.42              |   |      | 0.17   |      |  | 0.30   |  
|                                                                          |  |  |                   |   |      |        |      |  |        |  
|Other Data:                                                               |  |  |                   |   |      |        |      |  |        |  
|Number of full-service offices                                            |  |  | 2                 |   |      | 1      |      |  | 1      |  

|    |                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) | Represents the difference
  between the average yield on interest-earning assets and the average cost of
  interest-bearing liabilities.

4

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LINCOLN PARK BANCORP AND SUBSIDIARY
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

Lincoln
Park Bancorp (the Company) is the stock holding company of Lincoln Park
Savings Bank (the Bank), and LPS Investment Company is the wholly owned
subsidiary of the Bank.  The Company is
headquartered in Lincoln Park, New Jersey and its principal business currently
consists of the operations of the Bank.
Lincoln Park Bancorp, MHC, a mutual holding company formed in connection
with the Banks conversion to stock form and reorganization into the holding
company form of organization, which was consummated on December 16, 2004, owns
54.0% of the Companys outstanding common stock at December 31, 2007. The
Banks results of operations are dependent primarily on net interest income,
which is the difference between the income earned on its loan and securities
portfolios and its cost of funds, consisting of the interest paid on deposits
and borrowings. Results of operations are also affected by the Banks
non-interest income and expenses.  The
Banks non-interest income consists primarily of fees and other service
charges.  The Banks non-interest
expenses principally consist of salaries and employee benefits, occupancy and
equipment expenses, and other expenses. Results of operations are also
significantly affected by general economic and competitive conditions,
particularly changes in interest rates, government policies, and actions of
regulatory authorities.  Future changes
in applicable law, regulations, or government policies may materially impact
the Bank.

Forward-Looking Statements

The
Companys Annual Report and Form 10-KSB contain certain forward-looking
statements which are based on certain assumptions and describe future plans,
strategies, and expectations of the Company. These forwarding-looking
statements are generally identified by use of the words believe, expect,
intend, anticipate, estimate, project, or similar expressions.  The Companys
ability to predict results or
the actual effect of the future plans or strategies is inherently
uncertain.  Factors which could have a
material adverse effect on the operations of the Company and subsidiary include,
but are not limited to, changes in: interest rates, general economic
conditions, legislative/regulatory changes, monetary and fiscal policies of the
U. S. Government, including policies of U. S. Treasury and the Federal Reserve
Board, the quality and composition of loan and securities portfolios, demand
for loan products, deposit flows, competition, demand for financial services in
the Companys market area and accounting principles and guidelines. The risks
and uncertainties should be considered in evaluating forward-looking statements
and undue reliance should not be placed on such statements.  The Company does not undertake  and
specifically disclaims obligation  to publicly release the result of any
revisions which may be made to any forward-looking statements to reflect events
or circumstances after the date of such statements or to reflect the occurrence
of anticipated or unanticipated events.

Critical Accounting Policies

We
consider accounting policies involving significant judgments and assumptions by
management that have, or could have, a material impact on the carrying value of
certain assets or on income to be critical accounting policies.  Material estimates that are particularly
susceptible to significant changes relate to the determination of the allowance
for loan losses.

5

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LINCOLN PARK BANCORP AND SUBSIDIARY
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Determining
the amount of the allowance for loan losses necessarily involves a high degree
of judgment.  We review the level of the
allowance on a quarterly basis, at a minimum, and establish the provision for
loan losses based on the composition of the loan portfolio, delinquency levels,
loss experience, economic conditions, and other factors related to the collectibility
of the loan portfolio. We establish provision for loan losses, which is charged
to operations, at a level necessary to absorb known and inherent losses that
are both probable and reasonably estimable at the date of the consolidated
financial statements.  In evaluating the
level of the allowance for loan losses, we consider historical loss experience,
the types of loans and the amount of loans in the loan portfolio, adverse
situations that may affect the borrowers ability to repay, the estimated value
of any underlying collateral, peer group information, and prevailing economic
conditions.  This evaluation is
inherently subjective as it requires estimates that are susceptible to
significant revision as more information becomes available or as future events
change. We used the same methodology and generally similar assumptions in
assessing the allowance for both years.
The level of the allowance is based on estimates, and the ultimate
losses may vary from the estimates. We have allocated the allowance among
categories of loan types as well as classification status at each period-end
date.  Assumptions and allocation
percentages based on loan types and classification status have been
consistently applied.  Non-performing
loans are assigned a higher percentage of allowance allocation.

Although
we believe that we use the best information available to establish the
allowance for loan losses, future additions to the allowance may be necessary
based on estimates that are susceptible to change as a result of changes in
economic conditions and other factors. In addition, the regulatory agencies, as
an integral part of their examination process, periodically review our
allowance for loan losses.  Such
agencies may require us to recognize adjustments to the allowance based on
their judgments about information available to it at the time of their
examinations.

6

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LINCOLN PARK BANCORP AND SUBSIDIARY
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Comparison of Financial Condition at December 31, 2007 and
2006

Our
total assets increased by $8.7 million or 9.25%, to $102.7 million at December
31, 2007 from $94.0 million at December 31, 2006.  During the year ended December 31, 2007, the level of cash and
cash equivalents decreased by $99,000, or 3.81%, to $2.5 million at December
31, 2007 from $2.6 million at December 31, 2006.  Term deposits increased $105,000 or 55.26% to $295,000 at
December 31, 2007 when compared with $190,000 at December 31, 2006.  The decrease in cash and cash equivalents
was a result of normal operating activities of the Bank.  The increase in term deposits resulted from
purchases of four certificates of deposit totaling $397,000, offset by
maturities totaling $297,000.

Securities
available for sale decreased $1.1 million or 40.89% to $1.5 million at December
31, 2007 when compared with $2.6 million at December 31, 2006.  The decrease in securities available for
sale resulted primarily from sales, maturities, calls and repayments.  During the year ended December 31, 2007,
purchases of securities available for sale amounted to $417,000, which was
offset by sales of $413,000, calls of $1,000,000, and principal repayments of
$22,000.  Securities held to maturity
increased $2.9 million or 15.86% to $21.2 million at December 31, 2007 when
compared with $18.3 million at December 31, 2006.  During the year ended December 31, 2007,
purchases of securities held to maturity amounted to $4.2 million which offset
maturities, calls, and repayments of $1.2 million.  Loans receivable amounted to $73.1 million and $67.5 million at
December 31, 2007 and 2006, respectively, representing an increase of $5.6
million or 8.35%.  Such increase
was primarily the result of loan originations totaling $19.5 million, which
exceeded repayments totaling $13.8 million.

Other
assets increased $360,000 or 100.56% to $718,000 at December 31, 2007 from
$358,000 at December 31, 2006.  The
increase was primarily due to changes in taxes payable, deferred tax accounts,
and a disbursement to an attorney in the amount of $270,000 for a loan that was
originated but not closed as of December 31, 2007.

Total deposits increased
$7.1 million or 12.31% to $64.9 million at December 31, 2007 from $57.8 million
at December 31, 2006.  The increase in
deposits was due to a management decision to be more competitive with deposit
rates and an increase of $3.5 million with the purchase of the Montville
branch.  Advances from the FHLB
increased $1.6 million or 7.16% to $23.6 million at December 31, 2007 when
compared with $22.0 million at December 31, 2006.

Other
liabilities increased $59,000 or 10.80% to $601,000 at December 31, 2007 when
compared to $543,000 at December 31, 2006.
The increase was primarily due to increases in accrued expenses
for the directors retirement plan and accrued audit and accounting fees.

Stockholders
equity totaled $13.1 million and $13.2 million at December 31, 2007 and
December 31, 2006, respectively, reflecting net income of $60,000, and
the amortization of $87,000 for the ESOP, the restricted stock, and stock
options  for the twelve months ended
December 31, 2007.  The Company also
purchased $200,000 of its common stock at an average price of $7.79, which is
reflected as treasury stock in the stockholders section of the Statement of
Condition.

7

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LINCOLN PARK BANCORP AND SUBSIDIARY
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Comparison of Operating Results for the Years Ended December 31,
2007 and 2006

General. Net income decreased $254,000, or
80.88%, to $60,000 for the year ended December 31, 2007, from $314,000 for the
year ended December 31, 2006.  The
decrease in net income reflects increases in interest expense on deposits and
non-interest expenses, and an increase of $74,000 in provision for loan losses,
partially offset by increases in total interest income and non-interest income,
and  decreases in interest expense on
borrowed money and income taxes.

Interest Income. Interest income increased
by $361,000 to $5.3 million for the year ended December 31, 2007, from $5.0
million for the year ended December 31, 2006.
The increase in interest income was due to increases of $298,000 in
interest income from loans and $62,000 in interest income on securities.  The increase in interest income resulted
from an increase of $3.1 million or 3.34% in average balance of
interest-earning assets to $95.6 million during the year ended December 31,
2007 when compared to $92.5 million during the year ended December 31, 2006,
along with an increase of twenty basis points in the yield on interest-earning
assets from 5.37% in 2006 to 5.57% in 2007.

Interest
income from loans receivable increased $298,000, or 7.76%, to $4.1 million for
the year ended December 31, 2007, from $3.8 million for the year ended December
31, 2006.  The increase was due to a
$4.0 million or 5.88% increase in the average balance of loans receivable to
$71.7 million in 2007 from $67.7 million in 2006 and an increase in the average
yield to 5.78% in 2007 from 5.68% in 2006.

Interest
income on securities, including available for sale and held to maturity,
increased $62,000, or 5.86% to $1.1 million for the year ended December 31,
2007.  This was primarily due to an
increase in the average yield of taxable securities to 5.28% in 2007 from 4.93%
in 2006.   The average balance on tax
exempt securities decreased $356,000 or 38.6% to $566,000 in 2007 from $922,000
in 2006.  The average yield on tax exempt
securities increased to 5.30% from 3.90% in 2006.

Interest
income on other interest-earning assets remained unchanged at $57,000 for the
years ending December 31, 2007 and 2006.
The average balance of other interest-earning assets decreased by
$484,000 to $2.6 million in 2007 from $3.1 million in 2006, and the yield
increased to 2.18% in 2007 from 1.84% in 2006.

8

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LINCOLN PARK BANCORP AND SUBSIDIARY
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Comparison of Operating Results for the Years Ended December
31, 2007 and 2006  (Contd.)

Interest Expense. Total interest expense
increased $546,000, or 21.2%, to $3.1 million for 2007 from $2.6 million for
2006.  The increase in interest expense
resulted from a $3.4 million increase in the average balance on total interest
bearing liabilities to $83.3 million in 2007 from $79.9 million in 2006, along
with an increase of 53 basis points in the cost of interest bearing liabilities
to 3.75% in 2007 from 3.22% in 2006.

Interest
expense on deposits increased $704,000 to $2.2 million in 2007 from $1.5
million in 2006.  The increase
during 2007 resulted from an increase in the average cost of interest-bearing
deposits to 3.55% in 2007 from 2.73% in 2006, along with an increase in the
average balance of interest-bearing deposits to $61.4 million in 2007 from
$54.1 million in 2006. The
average balance of interest-bearing demand accounts increased $254,000 or 2.10%
to $12.1 million in 2007 from $11.8 million in 2006.  The average balance of savings and club accounts decreased $2.4
million, or 16.2%, to $12.3 million for the year ended December 31, 2007 from
$14.7 million for the year ended December 31, 2006.    The average balance of certificates of deposit
increased $9.3 million or 33.9% to $36.9 million in 2007 from $27.6 million in
2006.

The
interest expense on borrowed money decreased $159,000 to $942,000 in 2007 from
$1.1 million in 2006.  The decrease
during 2007 was due to a decrease of $3.8 million in the average balance of
borrowed money to $22.0 million in 2007 from $25.8 million in 2006, partially
offset by an increase in the average cost of borrowed money to 4.29% in 2007
from 4.26% in 2006, reflecting an increase in market interest rates during
2007.

Net Interest Income. Net interest income
decreased $186,000, or 7.8%, to $2.2 million for 2007 from $2.4 million for
2006. Our net interest rate spread was 1.82% and 2.15% during the years ended
December 31, 2007 and 2006, respectively.

Provision for (Recovery of) Loan Losses.
Based on our evaluation of the factors mentioned above we had a provision of
$51,000 for the year ended December 31, 2007, as compared to a recovery of
$22,000 for the year ended December 31, 2006.
We used the same methodology and generally similar assumptions in
assessing the allowance for both years.
The allowance for loan losses was $187,000, or 0.26% of total loans
outstanding at December 31, 2007, as compared with $136,000, or 0.20% of total
loans outstanding at December 31, 2006.
The level of the allowance is based on estimates, and the ultimate
losses may vary from the estimates.

9

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LINCOLN PARK BANCORP AND SUBSIDIARY
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Comparison of Operating Results for the Years Ended December
31, 2007 and 2006  (Contd.)

Non-interest Income. Non-interest income
totaled $145,000 for the year ended December 31, 2007, as compared to $134,000
for the year ended December 31, 2006.
The increase in the 2007 period resulted primarily from an increase of
$15,000 in fees and service charges, an increase of $6,000 in gain on
sales of securities available for sale offset by a decrease of $9,000 in
miscellaneous income.  The decrease in
miscellaneous income was due to a reversal of an accrual of supervisory fees
and assessment expense for the year ending December 31, 2006.  The reversal was because of a change in the
methodology of assessing supervisory fees by the New Jersey Department of
Banking.

Non-interest Expenses. Non-interest
expenses for the years ended December 31, 2007 and 2006 were $2.2 million and
$2.0 million, respectively, reflecting an increase of $193,000 or
9.44%.  Salaries and employee benefits
increased $128,000 or 14.92% to $983,000 from $855,000, primarily as a result
of an increase in full time personnel in general and also to staff the
Montville Branch.  Occupancy expense increased $33,000 or 30.0%
to $143,000 from $110,000,  due to increases
in costs of repairs and maintenance and also expenses related to the purchase
of the Montville Branch.   Equipment
expenses increased $54,000 or 21.7% to $301,000 from $247,000, primarily due to
purchases, upgrading and maintenance of software and other equipment.   Advertising expense increased $14,000 or
31.20% to $59,000 from $45,000.  The
increase was primarily due to expenses related to promoting the Montville Branch.  Miscellaneous non-interest expenses
decreased $35,000 or 4.59% to $742,000 from $777,000, mainly due to a reduction
in director fees expense.

Income Tax Expense. The provision for
income taxes totaled $2,000 and $189,000 in 2007 and 2006, respectively.  The decrease in the provision for income
taxes is primarily due to our reduced income before taxes of $62,000 in 2007
compared with $503,000 in 2006.

10

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LINCOLN PARK BANCORP AND SUBSIDIARY
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Average Balance Sheet

The
following table presents, at the date and for the periods indicated, the total
dollar amount of interest income from average interest earning assets and the
resultant yields, as well as the interest expense on average interest-bearing
liabilities, expressed both in dollars and rates.  No tax equivalent adjustments were made.  All average balances are monthly average
balances.  Non-accruing loans have been
included in the table as loans carrying a zero yield.  The amortization of loan fees is included in computing interest
income; however, such fees are not material.

|                                                                 |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|---------------------------------------------------------------- |  | ---------------------- | ------- | ----------------------- |  | --------------------------- | - | --------------------- | ------ | ----------- | - | --------------------------- |  | --------------------- | ---- | ----------- | - | ------ | - | - | ----- |  |  | ---- | -
|                                                                 |  | At December 31, 2007   |         | Year Ended
December 31, | 
|                                                                 |  |                        |         |                         | 
|                                                                 |  |                        |         |                         |  | 2007                        |   | 2006                  |       
|                                                                 |  |                        |         |                         |  |                             |   |                       |       
|                                                                 |  | Outstanding
Balance    |         | Yield/
  Cost           |  | Average
Outstanding Balance |   | Interest
Earned/ Paid |        | Yield/
Cost |   | Average
Outstanding Balance |  | Interest
Earned/ Paid |      | Yield/
Cost |  
|                                                                 |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |  
|                                                                 |  | (Dollars
in Thousands) |        
|                                                                 |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|Interest-earning assets:                                         |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|Loans receivable (1)                                             |  | $                      | 73,085  |                         |  | 5.88                        | % | $                     | 71,706 |             | $ | 4,144                       |  |                       | 5.78 | %           | $ | 67,726 |   | $ | 3,846 |  |  | 5.68 | %
|Taxable securities (2)(3)                                        |  |                        | 22,198  |                         |  | 6.13                        | % |                       | 20,744 |             |   | 1,095                       |  |                       | 5.28 | %           |   | 20,795 |   |   | 1,026 |  |  | 4.93 | %
|Tax-exempt securities(2)                                         |  |                        | 566     |                         |  | 4.15                        | % |                       | 566    |             |   | 30                          |  |                       | 5.30 | %           |   | 922    |   |   | 36    |  |  | 4.39 | %
|Other interest-earning assets                                    |  |                        | 2,611   |                         |  | 5.08                        | % |                       | 2,613  |             |   | 57                          |  |                       | 2.18 | %           |   | 3,097  |   |   | 57    |  |  | 1.84 | %
|                                                                 |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|Total interest-earning assets                                    |  |                        | 98,460  |                         |  | 5.84                        | % |                       | 95,629 |             |   | 5,326                       |  |                       | 5.57 | %           |   | 92,540 |   |   | 4,965 |  |  | 5.37 | %
|                                                                 |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|                                                                 |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|Non-interest-earning assets                                      |  |                        | 4,205   |                         |  |                             |   |                       | 3,042  |             |   |                             |  |                       |      |             |   | 2,249  |   |   |       |  |  |      |  
|                                                                 |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|                                                                 |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|Total assets                                                     |  | $                      | 102,665 |                         |  |                             |   | $                     | 98,671 |             |   |                             |  |                       |      |             | $ | 94,789 |   |   |       |  |  |      |  
|                                                                 |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|                                                                 |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|Interest-bearing liabilities:                                    |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|Interest-bearing deposits:                                       |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|Demand                                                           |  | $                      | 12,114  |                         |  | 2.24                        | % | $                     | 12,080 |             |   | 306                         |  |                       | 2.53 | %           | $ | 11,826 |   |   | 262   |  |  | 2.22 | %
|Savings and club                                                 |  |                        | 11,616  |                         |  | 1.01                        | % |                       | 12,323 |             |   | 124                         |  |                       | 1.02 | %           |   | 14,698 |   |   | 148   |  |  | 1.01 | %
|Certificates of deposit                                          |  |                        | 39,183  |                         |  | 4.78                        | % |                       | 36,950 |             |   | 1,750                       |  |                       | 4.74 | %           |   | 27,606 |   |   | 1,066 |  |  | 3.86 | %
|Borrowed money                                                   |  |                        | 23,552  |                         |  | 4.18                        | % |                       | 21,971 |             |   | 942                         |  |                       | 4.29 | %           |   | 25,802 |   |   | 1,100 |  |  | 4.26 | %
|                                                                 |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|Total interest-bearing liabilities                               |  |                        | 86,465  |                         |  | 3.75                        | % |                       | 83,324 |             |   | 3,122                       |  |                       | 3.75 | %           |   | 79,932 |   |   | 2,576 |  |  | 3.22 | %
|                                                                 |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|                                                                 |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|Non-interest-bearing liabilities:                                |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|Non-interest-bearing demand                                      |  |                        | 2,054   |                         |  |                             |   |                       | 1,236  |             |   |                             |  |                       |      |             |   | 1,104  |   |   |       |  |  |      |  
|Other                                                            |  |                        | 1,000   |                         |  |                             |   |                       | 835    |             |   |                             |  |                       |      |             |   | 509    |   |   |       |  |  |      |  
|                                                                 |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|                                                                 |  |                        | 3,054   |                         |  |                             |   |                       | 2,071  |             |   |                             |  |                       |      |             |   | 1,613  |   |   |       |  |  |      |  
|                                                                 |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|Total liabilities                                                |  |                        | 89,519  |                         |  |                             |   |                       | 85,395 |             |   |                             |  |                       |      |             |   | 81,545 |   |   |       |  |  |      |  
|                                                                 |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|                                                                 |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|Equity                                                           |  |                        | 13,146  |                         |  |                             |   |                       | 13,276 |             |   |                             |  |                       |      |             |   | 13,244 |   |   |       |  |  |      |  
|                                                                 |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|Total liabilities and equity                                     |  | $                      | 102,665 |                         |  |                             |   | $                     | 98,671 |             |   |                             |  |                       |      |             | $ | 94,789 |   |   |       |  |  |      |  
|                                                                 |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|Net interest income                                              |  |                        |         |                         |  |                             |   |                       |        |             | $ | 2,204                       |  |                       |      |             |   |        |   | $ | 2,389 |  |  |      |  
|                                                                 |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|Interest rate spread (4)                                         |  |                        |         |                         |  | 2.09                        | % |                       |        |             |   |                             |  |                       | 1.82 | %           |   |        |   |   |       |  |  | 2.15 | %
|                                                                 |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|Net interest margin (5)                                          |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       | 2.30 | %           |   |        |   |   |       |  |  | 2.58 | %
|                                                                 |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|Net interest-earning assets                                      |  | $                      | 11,995  |                         |  |                             |   | $                     | 12,305 |             |   |                             |  |                       |      |             | $ | 12,608 |   |   |       |  |  |      |  
|                                                                 |  |                        |         |                         |  |                             |   |                       |        |             |   |                             |  |                       |      |             |   |        |   |   |       |  |  |      |  
|Ratio of interest-earning assets to interest-bearing
liabilities |  |                        | 1.14    | x                       |  |                             |   |                       | 1.15   | x           |   |                             |  |                       |      |             |   | 1.16   | x |   |       |  |  |      |  

|    |                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) | Loans receivable are net of the allowance for loan
  losses.                                                                                     
|    |                                                                                                                                                  
|(2) | Includes both available for sale and held to
  maturity securities.                                                                              
|    |                                                                                                                                                  
|(3) | Includes stock in Federal Home Loan Bank of New
  York.                                                                                          
|    |                                                                                                                                                  
|(4) | Net interest rate spread represents the difference
  between the yield on interest-earning assets and the cost of interest-bearing
  liabilities.
|    |                                                                                                                                                  
|(5) | Net interest margin represents net interest income
  as a percentage of interest-earning assets.                                                 

11

---



LINCOLN PARK BANCORP AND SUBSIDIARY
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Rate/Volume Analysis

The
following table presents the extent to which changes in interest rates and
changes in the volume of interest-earning assets and interest-bearing
liabilities have affected the Banks interest income and interest expense
during the periods indicated.
Information is provided in each category with respect to: (i) changes
attributable to changes in volume (changes in volume multiplied by prior rate);
(ii) changes attributable to changes in rate (changes in rate multiplied by
prior volume); and the net change.  The
changes attributable to the combined impact of volume and rate changes have
been allocated on a proportional basis between changes in volume and rate.

|                                |  |                            |      |                           |   |      |   |   |      |  
|------------------------------- |  | -------------------------- | ---- | ------------------------- | - | ---- | - | - | ---- | -
|                                |  | Year
Ended December 31,    |     
|                                |  |                            |     
|                                |  | 2007 vs.
2006              |     
|                                |  |                            |     
|                                |  | Increase/(Decrease)
Due to |      | Total
Increase
(Decrease) |  
|                                |  |                            |      |                           |  
|                                |  | Volume                     |      | Rate                      |   |      |  
|                                |  |                            |      |                           |   |      |  
|                                |  | (Dollars in Thousands)     |     
|                                |  |                            |      |                           |   |      |   |   |      |  
|Interest income:                |  |                            |      |                           |   |      |   |   |      |  
|Loans receivable                |  | $                          | 229  |                           | $ | 69   |   | $ | 298  |  
|Taxable securities              |  |                            | (8   | )                         |   | 76   |   |   | 68   |  
|Tax-exempt securities           |  |                            | (13  | )                         |   | 7    |   |   | (6   | )
|Other interest-earning assets   |  |                            | (10  | )                         |   | 10   |   |   |     |  
|                                |  |                            |      |                           |   |      |   |   |      |  
|                                |  |                            |      |                           |   |      |   |   |      |  
|Total interest income           |  |                            | 198  |                           |   | 162  |   |   | 360  |  
|                                |  |                            |      |                           |   |      |   |   |      |  
|                                |  |                            |      |                           |   |      |   |   |      |  
|Interest expense:               |  |                            |      |                           |   |      |   |   |      |  
|Interest-bearing deposits:      |  |                            |      |                           |   |      |   |   |      |  
|Demand                          |  |                            | 6    |                           |   | 38   |   |   | 44   |  
|Savings and club accounts       |  |                            | (25  | )                         |   | 1    |   |   | (24  | )
|Certificates of deposits        |  |                            | 409  |                           |   | 275  |   |   | 684  |  
|Borrowed money                  |  |                            | (166 | )                         |   | 8    |   |   | (158 | )
|                                |  |                            |      |                           |   |      |   |   |      |  
|                                |  |                            |      |                           |   |      |   |   |      |  
|Total interest expense          |  |                            | 224  |                           |   | 322  |   |   | 546  |  
|                                |  |                            |      |                           |   |      |   |   |      |  
|                                |  |                            |      |                           |   |      |   |   |      |  
|Net change in interest
  income |  | $                          | (26  | )                         | $ | (160 | ) | $ | (186 | )
|                                |  |                            |      |                           |   |      |   |   |      |  

12

---



LINCOLN PARK BANCORP AND SUBSIDIARY
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management of Market Risk

General.  The majority of our assets and
liabilities
are monetary in nature.  Consequently,
our most significant form of market risk is interest rate risk.  Our assets, consisting primarily of mortgage
loans, have longer maturities than our liabilities, consisting primarily of
deposits.  As a result, a principal part
of our business strategy is to manage interest rate risk and reduce the
exposure of our net interest income to changes in market interest rates.  Our full board of directors is responsible
for evaluating the interest rate risk inherent in our assets and liabilities,
for determining the level of risk that is appropriate, given our business
strategy, operating environment, capital, liquidity and performance objectives,
and for managing this risk consistent with the guidelines approved by the board
of directors.  Senior management
monitors the level of interest rate risk and reports to the board of directors
on a regular basis with respect to our asset/liability policies and interest
rate risk position.

We
have emphasized the origination of fixed-rate mortgage loans for retention in
our portfolio in order to maximize our net interest income.  We accept increased exposure to interest
rate fluctuations as a result of our investment in such loans.  In a period of rising interest rates, our
net interest rate spread and net interest income may be negatively
affected.  In addition, we have sought
to manage and mitigate our exposure to interest rate risks in the following
ways:

| |   |                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We maintain moderate
  levels of short-term liquid assets.
  At December 31, 2007, our short-term liquid assets totaled $2.6
  million;                                                                                                                                                                                                                                           
|
| |  | We originate for portfolio
  adjustable-rate mortgage loans.  At
  December 31, 2007, our adjustable-rate mortgage loans totaled $13.2 million;                                                                                                                                                                                                                                   
|
| |  | We attempt to increase the
  maturity of our liabilities as market conditions allow.  In particular, in recent years, we have
  emphasized intermediate- to long-term FHLB advances as a source of
  funds.  At December 31, 2007, we had
  $22.6 million of FHLB advances with terms to maturity of between one and ten
  years; and                                             
|
| |  | We invest in securities
  with step-up rate features providing for increased interest rates prior to
  maturity according to a pre-determined schedule and formula.  However, these step-up rates may not keep
  pace with rising interest rates in the event of a rapidly rising rate
  environment.  In addition, these
  investments may be called at the option of the issuer.

Net Portfolio Value.  The Company utilizes an
outside vendor to prepare the computation of amounts by which the net present
value of the Companys cash flow from assets, liabilities and off-balance sheet
items (the Companys net portfolio value or NPV) would change in the event of
a range of assumed changes in market interest rates.  The vendor provides the Company with an interest rate sensitivity
report of net portfolio value.  The
vendors simulation model uses a discounted cash flow analysis and an
option-based pricing approach to measuring the interest rate sensitivity of net
portfolio value.  The model estimates the
economic value of each type of asset, liability and off-balance sheet contract
under the assumption that the yield curve increases or decreases
instantaneously by 200 basis points.  A
basis point equals one-hundredth of one percent, and 100 basis points equal one
percent.  An increase in interest rates
from 3% to 5% would mean, for example, a 200 basis point increase in the
Change in Interest Rates column below.
The vendor provides us the results of the interest rate sensitivity
model, which is based on information we provide to them to estimate the
sensitivity of our net portfolio.

13

---



LINCOLN PARK BANCORP AND SUBSIDIARY
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The
table below sets forth, as of December 31, 2007, the latest date for which the
vendor has provided Lincoln Park Savings an interest rate sensitivity report of
net portfolio value and the estimated changes in our net portfolio value that
would result from the designated instantaneous changes in the yield curve.

|                                        |                 |                        |                    |                                                                |                   |        |           |     |                        |  |       |   |  |      |                | 
|--------------------------------------- | --------------- | ---------------------- | ------------------ | -------------------------------------------------------------- | ----------------- | ------ | --------- | --- | ---------------------- |  | ----- | - |  | ---- | -------------- | 
|                                        |                 | Net Portfolio Value    |                    | Net Portfolio Value as a Percentage
of Present Value of Assets |                  
|Change in
Interest Rates
(basis points) |                 |                        |                    |                                                                |                  
|                                        | Estimated
  NPV |                        | Amount of
  Change |                                                                | Percent of Change |        | NPV Ratio |     | Change in Basis Points | 
|                                        |                 |                        |                    |                                                                |                   |        |           |     |                        |  |      
|                                        |                 | (Dollars in Thousands) |                   
|                                        |                 |                        |                    |                                                                |                   |        |           |     |                        |  |       |   |  |      |                | 
|+200                                    |                 | $                      | 11,996             |                                                                | $                 | (3,229 | )         | (21 | )%                     |  | 12.70 | % |  | (239 | ) basis points | 
|0                                       |                 |                        | 15,225             |                                                                |                   |       |           |    |                        |  | 15.09 | % |  |     | basis points   | 
|-200                                    |                 |                        | 16,762             |                                                                |                   | 1,537  |           | 10  | %                      |  | 15.80 | % |  | 71   | basis points   | 

The table above indicates that at December
31, 2007, in the event of a 200 basis point decrease in interest rates, we
would experience a 10% increase in net portfolio value.  In the event of a 200 basis point increase
in interest rates, we would experience a 21% decrease in net portfolio
value.

Certain
shortcomings are inherent in the methodology used in the above interest rate
risk measurement.  Modeling changes in
net portfolio value require making certain assumptions that may or may not
reflect the manner in which actual yields and costs respond to changes in
market interest rates.  In this regard,
the net portfolio value table presented assumes that the composition of our
interest-sensitive assets and liabilities existing at the beginning of a period
remains constant over the period being measured and assumes that a particular
change in interest rates is reflected uniformly across the yield curve
regardless of the duration or repricing of specific assets and liabilities.  Accordingly, although the net portfolio
value table provides an indication of our interest rate risk exposure at a
particular point in time, such measurements are not intended to and do not
provide a precise forecast of the effect of changes in market interest rates on
its net interest income and will differ from actual results.

Liquidity and Capital Resources

The
Bank is required to maintain levels of liquid assets sufficient to ensure the
Banks safe and sound operation.
Liquidity is the ability to meet current and future financial
obligations of a short-term nature.  The
Bank adjusts its liquidity levels in order to meet funding needs for deposit
outflows, payment of real estate taxes from escrow accounts on mortgage loans,
repayment of borrowings, when applicable, and loan funding commitments.  The Bank also adjusts its liquidity level as
appropriate to meet its asset/liability objectives.

The
Banks primary sources of funds are deposits, amortization and prepayments of
loans and mortgage-backed securities principal, FHLB advances, maturities of
investment securities and funds provided from operations.  While scheduled loan and mortgage-backed
securities amortization and maturing investment securities are a relatively
predictable source of funds, deposit flow and loan and mortgage-backed
securities prepayments are greatly influenced by market interest rates,
economic conditions and competition.

14

---



LINCOLN PARK BANCORP AND SUBSIDIARY
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources  (Continued)

The
Banks liquidity, represented by cash and cash equivalents, is a product of its
operating, investing and financing activities.

The
primary sources of investing activity are lending and the purchase of
securities.  Net loans amounted to $73.1
million and $67.5 million at December 31, 2007 and 2006, respectively.  Securities available for sale totaled $1.5
million and $2.6 million at December 31, 2007 and 2006, respectively.  Securities held to maturity totaled $21.2
million and $18.3 million at December 31, 2007 and 2006, respectively.  In addition to funding new loan production
and securities purchases through operating and financing activities, such
activities were funded by principal repayments on existing loans and
mortgage-backed securities.

Liquidity
management is both a daily and long-term function of business management.  Excess liquidity is generally invested in
short-term investments, such as federal funds and interest-bearing
deposits.  If the Bank requires funds
beyond its ability to generate them internally, borrowing agreements exist with
the FHLB which provide an additional source of funds.  At December 31, 2007, advances from the FHLB amounted to $23.6
million, and an additional $14.5 million borrowings are still available at the
FHLB.

The
Bank anticipates that it will have sufficient funds available to meet its
current loan commitments.  At December
31, 2007, the Bank has outstanding commitments to originate loans of $1,026,000.
Certificates of deposit scheduled to mature in one year or less at
December 31, 2007, totaled $36.1 million.
Management believes that, based upon its experience and the Banks
deposit flow history, a significant portion of such deposits will remain with
the Bank.

We
are subject to various regulatory capital requirements administered by the
Federal Deposit Insurance Corporation, including a risk-based capital
measure.  The risk-based capital
guidelines include both a definition of capital and a framework for calculating
risk-weighted assets by assigning balance sheet assets and off-balance sheet
items to board risk categories.  At
December 31, 2007, we exceeded all of our regulatory capital requirements.  We are considered well capitalized under
regulatory guidelines.

Contractual Obligations and Off-Balance Sheet Arrangements

In
the normal course of business, the Bank enters into off-balance sheet
arrangements consisting of commitments to fund mortgage loans and lines of
credit secured by real estate.  For more
information regarding these commitments, see Note 15 of the Notes to
Consolidated Financial Statements.

Effect of Inflation and Changing Prices

The
consolidated financial statements and related consolidated financial data
presented in this report have been prepared in accordance with accounting
principles generally accepted in the United States of America, which require
the measurement of financial position and operating results in terms of
historical dollars without considering the change in the relative purchasing
power of money over time due to inflation.
The primary impact of inflation on our operations is reflected in
increased operating costs.  Unlike most
industrial companies, virtually all the assets and liabilities of a financial
institution are monetary in nature.  As
a result, interest rates generally have a more significant impact on a
financial institutions performance than do general levels of inflation.  Interest rates do not necessarily move in
the same direction or to the same extent as the prices of goods and services.

15

---



BMC LOGO

REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
Lincoln Park Bancorp and Subsidiary
Lincoln Park, New Jersey

We
have audited the accompanying consolidated statements of financial condition of
Lincoln Park Bancorp and Subsidiary (the Corporation) as of December 31,
2007 and 2006, and the related consolidated statements of income, changes in
stockholders equity, and cash flows for the years then ended.  These consolidated financial statements are
the responsibility of the Corporations management.  Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States).  Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement.  The Corporation
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.
Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Corporations internal control over financial
reporting.  Accordingly, we express no
such opinion.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Lincoln Park Bancorp and Subsidiary as of December 31, 2007 and 2006, and
the consolidated results of their operations and their cash flows for the years
then ended, in conformity with accounting principles generally accepted in the
United States of America.

As
discussed in Notes 13, the Corporation changed its method of accounting for
Defined Benefit Pension and Other Postretirement Plans in 2006.

-s- Beard Miller Company LLP

Beard Miller Company LLP
Pine Brook, New Jersey
March 25, 2008

16

---



|                                           
|-------------------------------------------
|LINCOLNPARK BANCORP AND SUBSIDIARY         
|                                           
|CONSOLIDATEDSTATEMENTS OFFINANCIALCONDITION

|                                                                                                                                                                                          |  |              |             |      |   |            |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ----------- | ---- | - | ---------- | -
|                                                                                                                                                                                          |  | December 31, |            
|                                                                                                                                                                                          |  |              |            
|                                                                                                                                                                                          |  | 2007         |             | 2006 |  
|                                                                                                                                                                                          |  |              |             |      |  
|ASSETS                                                                                                                                                                                    |  |              |             |      |   |           
|                                                                                                                                                                                         
|Cash and amounts
  due from depository institutions                                                                                                                                       |  | $            | 1,380,443   |      | $ | 1,228,459  |  
|Interest-bearing
  deposits                                                                                                                                                               |  |              | 1,121,100   |      |   | 1,372,050  |  
|                                                                                                                                                                                          |  |              |             |      |   |            |  
|                                                                                                                                                                                          |  |              |             |      |   |            |  
|Cash and Cash Equivalents                                                                                                                                                                 |  |              | 2,501,543   |      |   | 2,600,509  |  
|                                                                                                                                                                                          |  |              |             |      |   |            |  
|Term deposits                                                                                                                                                                             |  |              | 295,347     |      |   | 189,771    |  
|Securities
  available for sale                                                                                                                                                           |  |              | 1,521,150   |      |   | 2,573,628  |  
|Securities held
  to maturity (estimated fair value 2007 $21,113,423; 2006  $17,890,013)                                                                                                  |  |              | 21,242,614  |      |   | 18,334,915 |  
|Loans receivable,
  net of allowance for loan losses 2007
  $187,000; 2006 $136,000                                                                                                       |  |              | 73,084,652  |      |   | 67,450,821 |  
|Premises and
  equipment                                                                                                                                                                  |  |              | 1,584,437   |      |   | 851,357    |  
|Federal Home
  Loan Bank of New York stock                                                                                                                                                |  |              | 1,194,700   |      |   | 1,121,400  |  
|Interest
  receivable                                                                                                                                                                     |  |              | 522,535     |      |   | 489,495    |  
|Other                                                                                                                                                                                     |  |              | 718,462     |      |   | 358,258    |  
|                                                                                                                                                                                          |  |              |             |      |   |            |  
|Total
  Assets                                                                                                                                                                            |  | $            | 102,665,440 |      | $ | 93,970,154 |  
|                                                                                                                                                                                          |  |              |             |      |   |            |  
|                                                                                                                                                                                          |  |              |             |      |   |            |  
|LIABILITIES
  AND STOCKHOLDERS EQUITY                                                                                                                                                    |  |              |             |      |   |           
|                                                                                                                                                                                         
|Deposits:                                                                                                                                                                                 |  |              |             |      |   |            |  
|Non-interest
  bearing deposits                                                                                                                                                           |  | $            | 2,054,395   |      | $ | 768,473    |  
|Interest bearing
  deposits                                                                                                                                                               |  |              | 62,912,303  |      |   | 57,075,421 |  
|                                                                                                                                                                                          |  |              |             |      |   |            |  
|Total Deposits                                                                                                                                                                            |  |              | 64,966,698  |      |   | 57,843,894 |  
|                                                                                                                                                                                          |  |              |             |      |   |            |  
|Advances from
  Federal Home Loan Bank of New York                                                                                                                                        |  |              | 23,552,000  |      |   | 21,978,331 |  
|Advance payments
  by borrowers for taxes and insurance                                                                                                                                   |  |              | 399,439     |      |   | 360,771    |  
|Other                                                                                                                                                                                     |  |              | 601,459     |      |   | 542,848    |  
|                                                                                                                                                                                          |  |              |             |      |   |            |  
|Total
  Liabilities                                                                                                                                                                       |  |              | 89,519,596  |      |   | 80,725,844 |  
|                                                                                                                                                                                          |  |              |             |      |   |            |  
|                                                                                                                                                                                          |  |              |             |      |   |            |  
|STOCKHOLDERS EQUITY                                                                                                                                                                      |  |              |             |      |   |            |  
|                                                                                                                                                                                         
|Preferred stock;
  no par value; 1,000,000 shares authorized; none issued or outstanding                                                                                                  |  |              |            |      |   |           |  
|Common stock;
  $0.01 par value; 5,000,000 shares authorized; 1,851,500 shares issued;
  1,825,845 outstanding at December 31, 2007; 1,851,500 shares outstanding at
  December 31, 2006. |  |              | 18,515      |      |   | 18,515     |  
|Paid-in capital                                                                                                                                                                           |  |              | 7,557,515   |      |   | 7,484,694  |  
|Retained
  earnings                                                                                                                                                                       |  |              | 6,307,376   |      |   | 6,252,608  |  
|Treasury stock;
  25,655 and 0 shares, at cost                                                                                                                                            |  |              | (199,900    | )    |   |           |  
|Unearned ESOP
  shares                                                                                                                                                                    |  |              | (327,501    | )    |   | (346,861   | )
|Accumulated
  other comprehensive loss                                                                                                                                                    |  |              | (210,161    | )    |   | (164,646   | )
|                                                                                                                                                                                          |  |              |             |      |   |            |  
|                                                                                                                                                                                          |  |              |             |      |   |            |  
|Total
  Stockholders Equity                                                                                                                                                              |  |              | 13,145,844  |      |   | 13,244,310 |  
|                                                                                                                                                                                          |  |              |             |      |   |            |  
|                                                                                                                                                                                          |  |              |             |      |   |            |  
|Total
  Liabilities and Stockholders Equity                                                                                                                                              |  | $            | 102,665,440 |      | $ | 93,970,154 |  
|                                                                                                                                                                                          |  |              |             |      |   |            |  

|                                               
|-----------------------------------------------
|See notes to consolidated financial statements.
|                                               
|17                                             

---



|                                 
|---------------------------------
|LINCOLNPARK BANCORP ANDSUBSIDIARY
|                                 
|CONSOLIDATEDSTATEMENTS OFINCOME  

|                                                                    |  |                            |           |      |   |           |  
|------------------------------------------------------------------- |  | -------------------------- | --------- | ---- | - | --------- | -
|                                                                    |  | Years
  Ended December 31, |          
|                                                                    |  |                            |          
|                                                                    |  | 2007                       |           | 2006 |  
|                                                                    |  |                            |           |      |  
|INTEREST INCOME                                                     |  |                            |           |      |   |           |  
|                                                                    |  |                            |           |      |   |           |  
|Loans, including
  fees                                             |  | $                          | 4,144,138 |      | $ | 3,845,732 |  
|Securities                                                          |  |                            | 1,124,611 |      |   | 1,062,363 |  
|Other
  interest-earning assets                                     |  |                            | 56,924    |      |   | 56,937    |  
|                                                                    |  |                            |           |      |   |           |  
|Total
  Interest Income                                             |  |                            | 5,325,673 |      |   | 4,965,032 |  
|                                                                    |  |                            |           |      |   |           |  
|                                                                    |  |                            |           |      |   |           |  
|INTEREST EXPENSE                                                    |  |                            |           |      |   |           |  
|                                                                    |  |                            |           |      |   |           |  
|NOW and money
  market                                              |  |                            | 306,114   |      |   | 261,640   |  
|Savings and club                                                    |  |                            | 123,770   |      |   | 148,062   |  
|Certificates of
  deposit                                           |  |                            | 1,750,027 |      |   | 1,066,422 |  
|Borrowings                                                          |  |                            | 942,338   |      |   | 1,099,983 |  
|                                                                    |  |                            |           |      |   |           |  
|Total
  Interest Expense                                            |  |                            | 3,122,249 |      |   | 2,576,107 |  
|                                                                    |  |                            |           |      |   |           |  
|                                                                    |  |                            |           |      |   |           |  
|Net
  Interest Income                                               |  |                            | 2,203,424 |      |   | 2,388,925 |  
|                                                                    |  |                            |           |      |   |           |  
|PROVISION FOR (RECOVERY OF) LOAN LOSSES                             |  |                            | 51,401    |      |   | (22,384   | )
|                                                                    |  |                            |           |      |   |           |  
|                                                                    |  |                            |           |      |   |           |  
|Net
  Interest Income after Provision for (Recovery of) Loan Losses |  |                            | 2,152,023 |      |   | 2,411,309 |  
|                                                                    |  |                            |           |      |   |           |  
|                                                                    |  |                            |           |      |   |           |  
|NON-INTEREST  INCOME                                                |  |                            |           |      |   |           |  
|                                                                    |  |                            |           |      |   |           |  
|Fees and service
  charges                                          |  |                            | 103,045   |      |   | 88,451    |  
|Gain on calls of
  term deposits and securities held to maturity    |  |                            |          |      |   | 500       |  
|Gain on sales of
  securities available for sale                    |  |                            | 15,256    |      |   | 9,612     |  
|Other                                                               |  |                            | 26,587    |      |   | 35,513    |  
|                                                                    |  |                            |           |      |   |           |  
|Total Non-Interest Income                                           |  |                            | 144,888   |      |   | 134,076   |  
|                                                                    |  |                            |           |      |   |           |  
|                                                                    |  |                            |           |      |   |           |  
|NON-INTEREST EXPENSES                                               |  |                            |           |      |   |           |  
|                                                                    |  |                            |           |      |   |           |  
|Salaries and
  employee benefits                                    |  |                            | 982,727   |      |   | 855,109   |  
|Occupancy
  expense of premises                                     |  |                            | 142,879   |      |   | 109,903   |  
|Equipment                                                           |  |                            | 301,072   |      |   | 247,474   |  
|Advertising                                                         |  |                            | 59,487    |      |   | 45,340    |  
|Federal
  insurance premium                                         |  |                            | 7,037     |      |   | 6,973     |  
|Other                                                               |  |                            | 741,770   |      |   | 777,431   |  
|                                                                    |  |                            |           |      |   |           |  
|Total Non-Interest Expenses                                         |  |                            | 2,234,972 |      |   | 2,042,230 |  
|                                                                    |  |                            |           |      |   |           |  
|                                                                    |  |                            |           |      |   |           |  
|Income before Income Taxes                                          |  |                            | 61,939    |      |   | 503,155   |  
|                                                                    |  |                            |           |      |   |           |  
|INCOME TAXES                                                        |  |                            | 1,901     |      |   | 189,163   |  
|                                                                    |  |                            |           |      |   |           |  
|                                                                    |  |                            |           |      |   |           |  
|Net
  Income                                                        |  | $                          | 60,038    |      | $ | 313,992   |  
|                                                                    |  |                            |           |      |   |           |  
|NET INCOME PER SHARE - BASIC                                        |  | $                          | 0.03      |      | $ | 0.18      |  
|                                                                    |  |                            |           |      |   |           |  
|                                                                    |  |                            |           |      |   |           |  
|WEIGHTED AVERAGE NUMBER OF COMMON
  SHARES OUTSTANDING :            |  |                            |           |      |   |           |  
|BASIC                                                               |  |                            | 1,784,454 |      |   | 1,792,115 |  
|                                                                    |  |                            |           |      |   |           |  
|NET INCOME PER COMMON SHARE:                                        |  |                            |           |      |   |           |  
|DILUTED                                                             |  | $                          | 0.03      |      | $ | 0.17      |  
|                                                                    |  |                            |           |      |   |           |  
|WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:               |  |                            |           |      |   |           |  
|DILUTED                                                             |  |                            | 1,784,912 |      |   | 1,794,648 |  
|                                                                    |  |                            |           |      |   |           |  

|                                               
|-----------------------------------------------
|See notes to consolidated financial statements.
|                                               
|18                                             

---



|                                     
|-------------------------------------
|LINCOLN PARK
  BANCORP AND SUBSIDIARY
|                                     

|                                                                                                    |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  
|--------------------------------------------------------------------------------------------------- |  | -------------- | ------ | ----------------- | - | ------------------- | - | ------------------------ | --------- | ---------------- | - | ------------------------------------------ | - | ----- | -------- | - | - | -------- | - | - | ---------- | -
|                                                                                                    |  | Common
  Stock |        | Paid-in
  Capital |   | Retained
  Earnings |   | Unearned
  ESOP
  Shares |           | Treasury
  Stock |   | Accumulated
  Other
  Comprehensive
  Loss |   | Total |         
|                                                                                                    |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |         
|BALANCE-DECEMBER 31, 2005                                                                           |  | $              | 18,515 |                   | $ | 7,776,418           |   | $                        | 5,982,726 |                  | $ | (366,220                                   | ) | $     |         |   | $ | (23,901  | ) | $ | 13,387,538 |  
|                                                                                                    |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  
|                                                                                                    |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  
|Comprehensive income:                                                                               |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  
|Net income                                                                                          |  |                |        |                   |   |                     |   |                          | 313,992   |                  |   |                                            |   |       |          |   |   |          |   |   | 313,992    |  
|Other comprehensive income:                                                                         |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  
|Realized gain on sale of securities available for
sale, net of
  deferred income taxes of $3,851    |  |                |       |                   |   |                    |   |                          |          |                  |   |                                           |   |       |         |   |   | (5,761   | ) |   |            |  
|Unrealized holding gain on securities available for
sale, net of
  deferred income taxes of $15,440 |  |                |       |                   |   |                    |   |                          |          |                  |   |                                           |   |       |         |   |   | 23,102   |   |   | 17,341     |  
|                                                                                                    |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  
|                                                                                                    |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  
|Total Comprehensive Income                                                                          |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   | 331,333    |  
|                                                                                                    |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  
|                                                                                                    |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  
|Adjustment to initially apply FASB No. 158, net of
deferred income
  taxes of $105,390              |  |                |       |                   |   |                    |   |                          |          |                  |   |                                           |   |       |         |   |   | (158,086 | ) |   | (158,086   | )
|Purchase of restricted Stock                                                                        |  |                |       |                   |   | (355,778            | ) |                          |          |                  |   |                                           |   |       |         |   |   |          |   |   | (355,778   | )
|Restricted stock earned                                                                             |  |                |       |                   |   | 30,095              |   |                          |          |                  |   |                                           |   |       |         |   |   |         |   |   | 30,095     |  
|Stock options                                                                                       |  |                |       |                   |   | 33,959              |   |                          |          |                  |   |                                           |   |       |         |   |   |         |   |   | 33,959     |  
|Dividends paid                                                                                      |  |                |       |                   |   |                    |   |                          | (40,882   | )                |   |                                           |   |       |         |   |   |         |   |   | (40,882    | )
|ESOP shares committed to be released                                                                |  |                |       |                   |   |                    |   |                          | (3,228    | )                |   | 19,359                                     |   |       |         |   |   |         |   |   | 16,131     |  
|                                                                                                    |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  
|                                                                                                    |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  
|BALANCE-DECEMBER 31, 2006                                                                           |  |                | 18,515 |                   |   | 7,484,694           |   |                          | 6,252,608 |                  |   | (346,861                                   | ) |       |         |   |   | (164,646 | ) |   | 13,244,310 |  
|                                                                                                    |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  
|Comprehensive income:                                                                               |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  
|Net income                                                                                          |  |                |        |                   |   |                     |   |                          | 60,038    |                  |   |                                            |   |       |          |   |   |          |   |   | 60,038     |  
|Other comprehensive income:                                                                         |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  
|Realized gain on sale of securities available for
sale, net of
  deferred income taxes of $6,102    |  |                |        |                   |   |                     |   |                          |          |                  |   |                                            |   |       |          |   |   | (9,154   | ) |   |            |  
|Unrealized holding loss on securities available for
sale, net of
  deferred income taxes $10,506    |  |                |       |                   |   |                    |   |                          |          |                  |   |                                           |   |       |         |   |   | (45,776  | ) |   |            |  
|                                                                                                    |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  
|Directors reitirement plan, net of deferred
taxes of $3,766                                        |  |                |       |                   |   |                    |   |                          |          |                  |   |                                           |   |       |         |   |   | 9,415    |   |   | (45,515    | )
|                                                                                                    |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  
|Total Comprehensive Income                                                                          |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   | 14,523     |  
|                                                                                                    |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  
|                                                                                                    |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  
|ESOP shares committed to be released                                                                |  |                |       |                   |   |                    |   |                          | (5,270    | )                |   | 19,360                                     |   |       |         |   |   |         |   |   | 14,090     |  
|                                                                                                    |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  
|Restricted stock earned                                                                             |  |                |       |                   |   | 35,894              |   |                          |          |                  |   |                                           |   |       |         |   |   |         |   |   | 35,894     |  
|                                                                                                    |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  
|Stock options                                                                                       |  |                |       |                   |   | 36,927              |   |                          |          |                  |   |                                           |   |       |         |   |   |         |   |   | 36,927     |  
|                                                                                                    |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  
|Treasury stock purchased (25,655 shares)                                                            |  |                |       |                   |   |                    |   |                          |          |                  |   |                                           |   |       | (199,900 | ) |   |         |   |   | (199,900   | )
|                                                                                                    |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  
|                                                                                                    |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  
|BALANCE-DECEMBER 31, 2007                                                                           |  | $              | 18,515 |                   | $ | 7,557,515           |   | $                        | 6,307,376 |                  | $ | (327,501                                   | ) | $     | (199,900 | ) | $ | (210,161 | ) | $ | 13,145,844 |  
|                                                                                                    |  |                |        |                   |   |                     |   |                          |           |                  |   |                                            |   |       |          |   |   |          |   |   |            |  

|                                                 
|-------------------------------------------------
|See
  notes to consolidated financial statements.
|                                                 
|19                                               

---



|                                    
|------------------------------------
|LINCOLN PARK
 BANCORP AND SUBSIDIARY
|                                    

|                                                                                    |  |                          |             |      |   |             |  
|----------------------------------------------------------------------------------- |  | ------------------------ | ----------- | ---- | - | ----------- | -
|                                                                                    |  | Years Ended December 31, |            
|                                                                                    |  |                          |            
|                                                                                    |  | 2007                     |             | 2006 |  
|                                                                                    |  |                          |             |      |  
|CASH FLOWS FROM
OPERATING ACTIVITIES                                                |  |                          |             |      |   |             |  
|                                                                                   
|Net income                                                                          |  | $                        | 60,038      |      | $ | 313,992     |  
|Adjustments to reconcile net income to net cash
provided by operating
  activities: |  |                          |             |      |   |             |  
|Depreciation of premises and equipment                                              |  |                          | 73,491      |      |   | 67,693      |  
|Amortization and accretion, net                                                     |  |                          | 108,981     |      |   | 33,551      |  
|Gain on sale of securities available for
sale                                       |  |                          | (15,256     | )    |   | (9,612      | )
|Gain on calls of term deposits and securities held
to maturity                      |  |                          |            |      |   | (500        | )
|Provision for (recovery of) loan losses                                             |  |                          | 51,401      |      |   | (22,384     | )
|Increase in interest receivable                                                     |  |                          | (33,040     | )    |   | (41,323     | )
|(Increase) decrease in other assets                                                 |  |                          | (321,555    | )    |   | 4,876       |  
|Increase in accrued interest payable                                                |  |                          | 799         |      |   | 15,600      |  
|Deferred income taxes (benefit)                                                     |  |                          | (39,241     | )    |   | (25,728     | )
|Increase (decrease) in other liabilities                                            |  |                          | 66,183      |      |   | (15,753     | )
|ESOP shares committed to be released                                                |  |                          | 14,090      |      |   | 16,131      |  
|Restricted stock earned                                                             |  |                          | 35,894      |      |   | 30,095      |  
|Stock options                                                                       |  |                          | 36,927      |      |   | 33,959      |  
|                                                                                    |  |                          |             |      |   |             |  
|                                                                                    |  |                          |             |      |   |             |  
|Net Cash Provided by Operating
Activities                                           |  |                          | 38,712      |      |   | 400,597     |  
|                                                                                    |  |                          |             |      |   |             |  
|                                                                                    |  |                          |             |      |   |             |  
|CASH FLOWS FROM
INVESTING ACTIVITIES                                                |  |                          |             |      |   |             |  
|                                                                                   
|Purchases of term deposits                                                          |  |                          | (397,000    | )    |   |            |  
|Proceeds from maturities and calls of term
deposits                                 |  |                          | 297,000     |      |   | 396,000     |  
|Purchases of securities available for
sale                                          |  |                          | (417,172    | )    |   | (87,418     | )
|Proceeds from maturities and calls of securities
available for sale                 |  |                          | 1,000,000   |      |   | 500,000     |  
|Principal repayments on securities available for
sale                               |  |                          | 21,680      |      |   | 29,611      |  
|Proceeds from sales of securities available for
sale                                |  |                          | 412,297     |      |   | 24,298      |  
|Purchases of securities held to maturity                                            |  |                          | (4,157,913  | )    |   | (1,000,000  | )
|Proceeds from maturities and calls of securities
held to maturity                   |  |                          | 984,615     |      |   | 1,210,500   |  
|Principal repayments on securities held to
maturity                                 |  |                          | 187,710     |      |   | 271,796     |  
|Net increase in loans receivable                                                    |  |                          | (5,721,473  | )    |   | (1.082.697  | )
|Additions to premises and equipment                                                 |  |                          | (806,571    | )    |   | (35.202     | )
|Purchase of Federal Home Loan Bank of New York
stock                                |  |                          | (377,500    | )    |   | (367.050    | )
|Redemption of Federal Home Loan Bank of New York
stock                              |  |                          | 304,200     |      |   | 510,150     |  
|                                                                                    |  |                          |             |      |   |             |  
|                                                                                    |  |                          |             |      |   |             |  
|Net Cash Provided by (Used in) Investing
Activities                                 |  |                          | (8,670,127  | )    |   | 369,988     |  
|                                                                                    |  |                          |             |      |   |             |  
|                                                                                    |  |                          |             |      |   |             |  
|CASH FLOWS FROM
FINANCING ACTIVITIES                                                |  |                          |             |      |   |             |  
|                                                                                   
|Net increase in deposits                                                            |  |                          | 7,120,012   |      |   | 3,469,819   |  
|Proceeds of advances from the Federal Home Loan
Bank of New York                    |  |                          | 68,400,000  |      |   | 87,900,000  |  
|Repayments of advances from the Federal Home Loan
Bank of New York                  |  |                          | (66,826,331 | )    |   | (91,455,399 | )
|Increase (decrease) in advance payments by
borrowers for taxes and
  insurance      |  |                          | 38,668      |      |   | (4,014      | )
|Dividends paid                                                                      |  |                          |            |      |   | (40,882     | )
|Purchase of restricted stock                                                        |  |                          | (199,900    | )    |   | (355,778    | )
|                                                                                    |  |                          |             |      |   |             |  
|                                                                                    |  |                          |             |      |   |             |  
|Net Cash (Used in) Provided by Financing
Activities                                 |  |                          | 8,532,449   |      |   | (486,254    | )
|                                                                                    |  |                          |             |      |   |             |  
|                                                                                    |  |                          |             |      |   |             |  
|Net (Decrease) Increase in Cash and Cash
Equivalents                                |  |                          | (98,966     | )    |   | 284,331     |  
|                                                                                    |  |                          |             |      |   |             |  
|CASH ANDCASHEQUIVALENTS  BEGINNING                                                 |  |                          | 2,600,509   |      |   | 2,316,178   |  
|                                                                                    |  |                          |             |      |   |             |  
|                                                                                    |  |                          |             |      |   |             |  
|CASH ANDCASHEQUIVALENTS  ENDING                                                    |  | $                        | 2,501,543   |      | $ | 2,600,509   |  
|                                                                                    |  |                          |             |      |   |             |  
|                                                                                    |  |                          |             |      |   |             |  
|SUPPLEMENTARYCASHFLOWSINFORMATION                                                   |  |                          |             |      |   |             |  
|Income taxes paid                                                                   |  | $                        | 52,774      |      | $ | 483,797     |  
|                                                                                    |  |                          |             |      |   |             |  
|                                                                                    |  |                          |             |      |   |             |  
|Interest paid                                                                       |  | $                        | 3,121,450   |      | $ | 2,560,487   |  
|                                                                                    |  |                          |             |      |   |             |  

|                                                 
|-------------------------------------------------
|See
  notes to consolidated financial statements.
|                                                 
|20                                               

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|                                  
|----------------------------------
|LINCOLN PARK BANCORPAND SUBSIDIARY
|                                  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

Business

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The primary
  business of Lincoln Park Bancorp (the Company) is the ownership and
  operation of Lincoln Park Savings Bank (the Savings Bank). The Savings Bank
  was founded in 1923 and is a New Jersey chartered institution primarily
  serving the counties of Morris and Passaic. The Savings Banks business
  consists principally of obtaining deposits from the general public in our
  market area and using those funds to originate loans, primarily residential
  mortgage loans, and purchase securities.

Basis of Consolidated Financial Statement
Presentation

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The
  consolidated financial statements include the accounts of Lincoln Park
  Bancorp (the Company) and its wholly owned subsidiary, Lincoln Park Savings
  Bank (the Bank) and the Banks wholly owned subsidiary 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. The Companys business is conducted
  principally through the Bank. All significant inter-company accounts and
  transactions have been eliminated in consolidation.                                                                                                                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | The
  consolidated financial statements of the Company have been prepared in
  conformity with accounting principles generally accepted in the United States
  of America (GAAP). In preparing the consolidated financial statements,
  management is required to make estimates and assumptions that affect the
  reported amounts of assets and liabilities as of the dates of the statements
  of financial condition and revenues and expenses for the periods then ended.
  Actual results could differ significantly from those estimates. A material
  estimate that is particularly susceptible to significant change relates to
  the determination of the allowance for loan losses. Management believes that
  the allowance for loan losses appropriately reflects loan losses which are
  probable and estimable at each period reported. While management uses
  available information to recognize losses on loans, future additions to the
  allowance for loan losses may be necessary based on changes in economic
  conditions in the market area.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | In addition,
  various regulatory agencies, as an integral part of their examination
  process, periodically review the Savings Banks allowance for loan losses.
  Such agencies may require the Savings Bank to recognize additions to the
  allowance based on their judgments about information available to them at the
  time of their examination.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

Cash and Cash Equivalents

| |                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Cash and
  cash equivalents include cash and amounts due from depository institutions
  and interest-bearing deposits having original maturities of three months or
  less.

Securities Available for Sale and Held to
Maturity

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Investments
  in debt securities over which there exists a positive intent and ability to
  hold to maturity are classified as held-to-maturity securities and reported
  at amortized cost. Debt and equity securities that are bought and held
  principally for the purpose of selling them in the near term are classified
  as trading securities and reported at fair value, with unrealized holding
  gains and losses included in earnings. The Company holds no trading
  securities.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Debt and
  equity securities not classified as trading securities nor as
  held-to-maturity securities are classified as available for sale securities
  and reported at fair value, with unrealized holding gains or losses, net of
  applicable deferred income taxes, reported in the accumulated other
  comprehensive income (loss) component of stockholders equity.                                                                                                                   

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|                                  
|----------------------------------
|LINCOLN PARK BANCORPAND SUBSIDIARY
|                                  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)

Securities Available for Sale and Held to
Maturity (Continued)

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On a
  quarterly basis, the Company makes an assessment to determine whether there
  have been any events or economic circumstances to indicate that a security on
  which there is an unrealized loss is impaired on an other-than-temporary
  basis. The Company considers many factors including the severity and duration
  of the impairment; the intent and ability of the Company to hold the security
  for a period of time sufficient for a recovery in value; recent events
  specific to the issuer or industry; and for debt securities, external credit
  ratings and recent downgrades. Securities on which there is an unrealized loss
  that is deemed to be other-than temporary are written down to fair value with
  the write-down recorded as a realized loss.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | Premiums and
  discounts on all securities are amortized/accreted to maturity using the
  interest method. Interest and dividend income on securities, which includes
  amortization of premiums and accretion of discounts, is recognized in the
  financial statements when earned. Gains or losses on sales are recognized
  based on the specific identification method.                                                                                                                                                                                                                                                                                                                                                                                                        

Loans Receivable

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Loans receivable
  are carried at unpaid principal balances plus net deferred loan origination
  costs, less the allowance for loan losses. Interest with respect to loans
  other than nonaccrual loans is accrued on the principal amount outstanding
  and credited to interest income as earned using the interest method. Loan
  origination fees and certain direct loan origination costs are deferred and
  amortized to interest income as an adjustment of yield over the contractual
  lives of the related loans. Recognition of interest by the accrual method is
  generally discontinued when interest or principal payments are ninety days or
  more in arrears on a contractual basis, or when other factors indicate that
  the collection of such amounts is doubtful. At the time a loan is placed on nonaccrual
  status, an allowance for uncollected interest is recorded in the current
  period for previously accrued and uncollected interest. Interest on such
  loans, if appropriate, is recognized as income when payments are received. A
  loan is returned to accrual status when interest or principal payments are no
  longer ninety days or more in arrears on a contractual basis and factors
  indicating doubtful collectibility no longer exist.

Allowance for Loan Losses

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | An allowance
  for loan losses is maintained at a level considered necessary to absorb loan
  losses inherent in the loan portfolio. The allowance is decreased by loan
  charge-offs, increased by subsequent recoveries of loans previously charged
  off, and then adjusted, via either a charge or credit to operations, to an
  amount determined by management to be necessary. Loans, or portions thereof,
  are charged off when, after collection efforts are exhausted, they are
  determined to be uncollectible. Management of the Savings Bank, in
  determining the allowance for loan losses, considers the losses inherent in
  its loan portfolio and changes in the nature and volume of its loan
  activities, along with the general economic and real estate market
  conditions. The Savings Bank utilizes 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 its loan portfolio. The Savings Bank maintains a loan review system which
  allows for a periodic review of its loan portfolio and the early
  identification of potential impaired loans. Such system takes into
  consideration, among other things, delinquency status, size of loans, types
  of collateral and financial condition of the borrowers.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Specific loan
  loss allowances are established for identified loans based on a review of
  such information and/or appraisals of the underlying collateral. 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. Although management
  believes that necessary specific and general                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

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22

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|                                  
|----------------------------------
|LINCOLN PARK BANCORPAND SUBSIDIARY
|                                  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)

Allowance for Loan Losses (Continued)

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | allowances
  for loan losses are established, actual losses are dependent upon future
  events and, as such, further additions to the level of specific and general
  loan loss allowances may be necessary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Impaired
  loans are 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. A loan evaluated for
  impairment is deemed to be impaired when, based on current information and
  events, it is probable that the Savings Bank 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. The Savings Bank does not
  aggregate such loans for evaluation purposes. Payments received on impaired
  loans are applied first to accrued interest receivable and then to principal.
  The Savings Bank did not have, during the periods covered in the consolidated
  financial statements, any loans deemed to be impaired.

Goodwill

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Goodwill at
  December 31, 2007, totaled $52,500 and consists of goodwill acquired in the
  branch acquisition completed by the Company in July 2007. The Company plans
  to test goodwill during the fourth quarter of each year for impairment, or
  more frequently if certain indicators are present or changes in circumstances
  suggest that impairment may exist. The Company plans to utilize a two-step
  approach. The first step requires a comparison of the carrying value of the
  reporting unit to the fair value of the unit. The Company will estimate the
  fair value of the reporting unit through internal analyses and/or external
  valuation, which utilizes an income approach based on the present value of
  future cash flows. If the carrying value of the reporting unit exceeds its
  fair value, the Company will perform the second step of the goodwill
  impairment test to measure the amount of impairment loss, if any. The second
  step of the goodwill impairment test compares the implied fair value of a
  reporting units goodwill with its carrying value. The implied fair value of
  goodwill is determined in the same manner that the amount of goodwill
  recognized in a business combination is determined. The Company allocates the
  fair value of the reporting unit to all of the assets and liabilities of that
  unit, including intangible assets, as if the reporting unit had been acquired
  in a business combination. Any excess of the value of a reporting unit over
  the amounts assigned to its assets and liabilities is the implied fair value
  of goodwill.

Concentration of Risk

| |                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------
| | The Savings
  Banks lending activity is concentrated in loans secured by real estate
  located in the State of New Jersey.

Transfers of Financial Assets

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Transfers of
  financial assets, including loan and loan participation sales, are accounted
  for as sales when control over the assets has been surrendered. Control over
  transferred assets is deemed to be surrendered when (1) the assets have been
  isolated from the Bank, (2) the transferee obtains the right (free of
  conditions that constrain it from taking advantage of that right) to pledge
  or exchange the transferred assets, and (3) the Bank does not maintain
  effective control over the transferred assets through an agreement to
  repurchase them before their maturity.

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23

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|                                  
|----------------------------------
|LINCOLN PARK BANCORPAND SUBSIDIARY
|                                  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)

Premises and Equipment

| |                                                                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Land is
  carried at cost. Building, building improvements and furniture, fixtures and
  equipment are carried at cost, less accumulated depreciation. Depreciation
  charges are computed on the straight-line method over the following estimated
  useful lives:

|                                    |  |  |         | 
|----------------------------------- |  |  | ------- | 
|                                    |  |  | Years   | 
|                                    |  |  |         | 
|                                    |  |  |         | 
|Building                            |  |  | 30 - 50 | 
|Building
  improvements             |  |  | 5 - 25  | 
|Furniture,
  fixtures and equipment |  |  | 3 - 7   | 

| |                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Significant
  renovations and additions are charged to the property and equipment account.
  Maintenance and repairs are charged to expense in the period incurred.

Interest-Rate Risk

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Savings
  Bank is principally engaged in the business of attracting deposits from the
  general public and using these deposits, together with other funds, to make
  loans secured by real estate and to purchase securities.                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | The
  potential for interest-rate risk exists as a result of the generally shorter
  duration of the Savings Banks interest-sensitive liabilities compared to the
  generally longer duration of its interest-sensitive assets. In a rising rate
  environment, liabilities will reprice faster than assets, thereby reducing
  net interest income. For this reason, management regularly monitors the
  maturity structure of the Savings Banks interest-earning assets and
  interest-bearing liabilities in order to measure its level of interest-rate
  risk and to plan for future volatility.

Advertising Costs

| |                                                                                                
| | -----------------------------------------------------------------------------------------------
| | The Company
  follows the policy of charging the costs of advertising to expense as
  incurred.

Income Taxes

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company
  and the Savings Bank file a consolidated federal income tax return. Income
  taxes will be allocated based on the contribution of income to the consolidated
  income tax return. Separate state income tax returns will be filed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Federal and
  state income taxes have been provided on the basis of reported income. The
  amounts reflected on the tax returns differ from these provisions due
  principally to temporary differences in the reporting of certain items for
  financial reporting and income tax reporting purposes. The tax effect of
  these temporary differences is accounted for as deferred taxes applicable to
  future periods. Deferred income tax expense or benefit is determined by
  recognizing deferred tax assets and liabilities for the estimated future tax
  consequences attributable to differences between the financial statement
  carrying amounts of existing assets and liabilities and their respective tax bases.
  Deferred tax assets and liabilities are measured using enacted tax rates
  expected to apply to taxable income in the years in which those temporary
  differences are expected to be recovered or settled. The effect on deferred
  tax assets and liabilities of a change in tax rates is recognized in earnings
  in the period that includes the enactment date. The realization of deferred
  tax assets is assessed and a valuation allowance provided, when necessary,
  for that portion of the asset which is not likely to be realized.

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24

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|                                  
|----------------------------------
|LINCOLN PARK BANCORPAND SUBSIDIARY
|                                  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)

| |                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Management
  believes, based upon current facts, that it is more likely than not that
  there will be sufficient taxable income in future years to realize all
  deferred tax assets.

Stock-Based Compensation Plans

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company
  has two stock-related compensation plans, including stock option and
  restricted stock plans. Through December 31, 2005, the Company accounted for
  its stock option and employee stock purchase plans using the intrinsic value
  method set forth in Accounting Principles Board Opinion No. 25, Accounting
  for Stock Issued to Employees, (APB No. 25) and related interpretations
  for these plans. Under APB No. 25, generally, when the exercise price of the
  Companys stock options equaled the market price of the underlying stock on
  the date of the grant, no compensation expense was recognized. The Company
  adopted SFAS No. 123R, using the modified-prospective transition method,
  beginning on January 1, 2006 and, therefore, began to expense the fair value
  of all options over their remaining vesting periods to the extent the options
  were not fully vested as of the adoption date and began to expense the fair
  value of all share-based compensation granted subsequent to December 31,
  2005, over its requisite service periods.                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | SFAS No.
  123R also requires the benefits of realized tax deductions in excess of
  previously recognized tax benefits on compensation expense to be reported as
  a financing cash flow rather than an operating cash flow, as previously
  required. In accordance with Staff Accounting Bulletin (SAB) No. 107, the
  Company classified share-based compensation for employees to correspond with
  the same line item as the cash compensation paid to employees, and share
  based compensation to directors to correspond with miscellaneous non-interest
  expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Options vest
  over a five year period for directors and a seven year period for officers.
  Compensation expense recognized for all options is recognized over the
  awards respective requisite service periods. The fair values relating to all
  options granted were estimated using the Black-Scholes option pricing model.
  Expected volatilities are based on historical volatility of our stock and
  other factors, such as implied market volatility. We used historical exercise
  data based on the age at grant of the option holder to estimate the options
  expected term, which represents the period of time that the options granted
  are expected to be outstanding. We anticipated the future option holding
  periods to be similar to the historical option holding periods. The risk-free
  rate for periods within the contractual life of the option is based on the
  U.S. Treasury yield curve in effect at the time of grant. We recognize
  compensation expense for the fair values of these awards, which have graded
  vesting, on a straight-line basis over the requisite service period of the
  awards.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Restricted
  shares vest over a five year period for directors and a seven year period for
  officers. The fair value of restricted shares under the Companys restricted
  stock plans is determined by the product of the number of shares granted and
  the grant date market price of the Companys common stock. The fair value of
  restricted shares is expensed on a straight-line basis over the requisite
  service period of the awards.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

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25

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|                                  
|----------------------------------
|LINCOLN PARK BANCORPAND SUBSIDIARY
|                                  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)

Other Comprehensive Income

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company
  records in accumulated comprehensive income (loss), net of related deferred
  income taxes, unrealized gains and losses on available for sale securities
  and the prior service cost of the Directors Retirement Plan (DRP) that has
  not yet been recognized in expense. Realized gains and losses, if any, are
  reclassified to non-interest income upon the sale of the related securities
  or upon the recognition of a security impairment loss. A portion of the prior
  service cost of the DRP is recorded in expense annually.

Off-Balance Sheet Financial Instruments

| |                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In the
  ordinary course of business, the Company has entered into off-balance-sheet
  financial instruments consisting of commitments to extend credit. Such
  financial instruments are recorded in the consolidated statement of financial
  condition when they are funded.

Net Income per Common Share

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Basic net income per share is computed by
  dividing net income available to common shareholders by the weighted average
  number of shares of common stock outstanding during the year, adjusted for
  unearned shares of the ESOP. Diluted income per share is calculated by
  dividing net income by the weighted average number of shares of common stock
  and common stock equivalents outstanding decreased by the number of common
  shares that are assumed to be repurchased with the proceeds from the exercise
  of the common stock equivalents (treasury stock method) along with the
  assumed tax benefit from the exercise of non-qualified options.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | These purchases were assumed to have been
  made at the average market price of the common stock. The following table
  shows the calculation of both basic and diluted earnings per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

| |                                                         |  |                          |           |      |   |           | 
| | ------------------------------------------------------- |  | ------------------------ | --------- | ---- | - | --------- | 
| |                                                         |  | Years Ended December 31, |          
| |                                                         |  |                          |          
| |                                                         |  | 2007                     |           | 2006 |  
| |                                                         |  |                          |           |      |  
| | Net Income                                              |  | $                        | 60,038    |      | $ | 313,992   | 
| |                                                         |  |                          |           |      |   |           | 
| |                                                         |  |                          |           |      |   |           | 
| | Basic
  weighted average shares outstanding             |  |                          | 1,784,454 |      |   | 1,792,115 | 
| | Plus: Common
  stock equivalents                        |  |                          | 458       |      |   | 2,533     | 
| |                                                         |  |                          |           |      |   |           | 
| | Diluted
  weighted average number of shares outstanding |  |                          | 1,784,912 |      |   | 1,794,648 | 
| |                                                         |  |                          |           |      |   |           | 
| |                                                         |  |                          |           |      |   |           | 
| | Earnings per
  share:                                   |  |                          |           |      |   |           | 
| | Basic                                                   |  | $                        | 0.03      |      | $ | 0.18      | 
| |                                                         |  |                          |           |      |   |           | 
| | Diluted                                                 |  | $                        | 0.03      |      | $ | 0.17      | 
| |                                                         |  |                          |           |      |   |           | 

---

26

---



|                                  
|----------------------------------
|LINCOLN PARK BANCORPAND SUBSIDIARY
|                                  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2  BRANCH ACQUISITION

| |                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On July 16, 2007, the Savings Bank acquired
  the Montville, New Jersey branch location of another New Jersey savings
  institution. The Savings Bank acquired the building and furnishings and
  deposits of the location which totaled approximately $756,000 and $3,501,000,
  respectively. In connection with the acquisition, the Savings Bank recorded
  $52,500 in goodwill.

NOTE 3 - TERM DEPOSITS

| |                                    |  |              |         |      |   |         | 
| | ---------------------------------- |  | ------------ | ------- | ---- | - | ------- | 
| |                                    |  | December 31, |        
| |                                    |  |              |        
| |                                    |  | 2007         |         | 2006 |  
| |                                    |  |              |         |      |  
| |                                    |  |              |         |      |   |         | 
| | Due within
  one year              |  | $            | 295,347 |      | $ | 99,000  | 
| | Due after
  one through five years |  |              |        |      |   | 90,771  | 
| |                                    |  |              |         |      |   |         | 
| |                                    |  |              |         |      |   |         | 
| |                                    |  | $            | 295,347 |      | $ | 189,771 | 
| |                                    |  |              |         |      |   |         | 

---

27

---



|                                          
|------------------------------------------
|LINCOLN PARK BANCORP AND SUBSIDIARY       
|                                          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|NOTE 4 - SECURITIES AVAILABLE FOR SALE    

|                                   |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 
|---------------------------------- |  | ------------------- | --------- | -------------------------- | - | --------------------------- |  | ---------------- | ------ |  | - | --------- | 
|                                   |  | December 31,
  2007 |          
|                                   |  |                     |          
|                                   |  | Amortized
  
  Cost |           | Gross
  Unrealized
  Gains |   | Gross
  Unrealized
  Losses |  | Carrying
  Value |       
|                                   |  |                     |           |                            |   |                             |  |                  |       
|                                   |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 
|U.S. Government
  Agencies:        |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 
|Due after five
  through ten years |  | $                   | 500,000   |                            | $ |                            |  | $                | 470    |  | $ | 499,530   | 
|Due after ten
  years              |  |                     | 500,000   |                            |   | 45                          |  |                  |       |  |   | 500,045   | 
|                                   |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 
|                                   |  |                     | 1,000,000 |                            |   | 45                          |  |                  | 470    |  |   | 999,575   | 
|                                   |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 
|                                   |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 
|Equity
  securities                |  |                     | 521,331   |                            |   | 22,169                      |  |                  | 83,682 |  |   | 459,818   | 
|                                   |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 
|Mortgage-backed
  securities:      |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 
|Due after ten
  years              |  |                     | 61,296    |                            |   | 522                         |  |                  | 61     |  |   | 61,757    | 
|                                   |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 
|                                   |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 
|                                   |  | $                   | 1,582,627 |                            | $ | 22,736                      |  | $                | 84,213 |  | $ | 1,521,150 | 
|                                   |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 

|                                   |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 
|---------------------------------- |  | ------------------- | --------- | -------------------------- | - | --------------------------- |  | ---------------- | ------ |  | - | --------- | 
|                                   |  | December 31,
  2006 |          
|                                   |  |                     |          
|                                   |  | Amortized
  Cost    |           | Gross
  Unrealized
  Gains |   | Gross
  Unrealized
  Losses |  | Carrying
  Value |       
|                                   |  |                     |           |                            |   |                             |  |                  |       
|                                   |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 
|U.S. Government
  Agencies:        |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 
|Due after one
  through five years |  | $                   | 500,000   |                            | $ |                            |  | $                | 5,000  |  | $ | 495,000   | 
|Due after five
  through ten years |  |                     | 500,000   |                            |   |                            |  |                  | 15,000 |  |   | 485,000   | 
|Due after ten
  years              |  |                     | 1,000,000 |                            |   |                            |  |                  | 18,000 |  |   | 982,000   | 
|                                   |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 
|                                   |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 
|                                   |  |                     | 2,000,000 |                            |   |                            |  |                  | 38,000 |  |   | 1,962,000 | 
|                                   |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 
|Equity
  securities                |  |                     | 151,189   |                            |   | 30,157                      |  |                  | 619    |  |   | 180,727   | 
|                                   |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 
|Mortgage-backed
  securities:      |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 
|Due after ten
  years              |  |                     | 82,730    |                            |   | 900                         |  |                  |       |  |   | 83,630    | 
|                                   |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 
|Municipal bonds:                   |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 
|Due after one
  through five years |  |                     | 250,671   |                            |   |                            |  |                  | 920    |  |   | 249,751   | 
|Due after five
  through ten years |  |                     | 100,000   |                            |   |                            |  |                  | 2,480  |  |   | 97,520    | 
|                                   |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 
|                                   |  |                     | 350,671   |                            |   |                            |  |                  | 3,400  |  |   | 347,271   | 
|                                   |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 
|                                   |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 
|                                   |  | $                   | 2,584,590 |                            | $ | 31,057                      |  | $                | 42,019 |  | $ | 2,573,628 | 
|                                   |  |                     |           |                            |   |                             |  |                  |        |  |   |           | 

At December 31, 2007 and 2006, all
mortgage-backed securities held in the available for sale portfolio were issued
by the Government National Mortgage Association (GNMA).

|  
|--
|  
|  
|28

---



|                                                  
|--------------------------------------------------
|LINCOLN PARK BANCORP AND SUBSIDIARY               
|                                                  
|                                                  
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        
|                                                  
|NOTE 4 - SECURITIES AVAILABLE FOR SALE (CONTINUED)

The age of unrealized losses and the fair value of
related securities available for sale are as follows:

|                             |  |                       |         |                       |   |              |  |                     |           |              |   |                     |  |   |           |  |   |        | 
|---------------------------- |  | --------------------- | ------- | --------------------- | - | ------------ |  | ------------------- | --------- | ------------ | - | ------------------- |  | - | --------- |  | - | ------ | 
|                             |  | Less
  than 12 Months |         | More
  than 12 Months |   | Total        | 
|                             |  |                       |         |                       |   |              | 
|                             |  | Fair
  Value          |         | Unrealized
  Losses   |   | Fair
  Value |  | Unrealized
  Losses |           | Fair
  Value |   | Unrealized
  Losses | 
|                             |  |                       |         |                       |   |              |  |                     |           |              |   |                     | 
|                             |  |                       |         |                       |   |              |  |                     |           |              |   |                     |  |   |           |  |   |        | 
|December
  31, 2007:         |  |                       |         |                       |   |              |  |                     |           |              |   |                     |  |   |           |  |   |        | 
|U.S. Government
  Agencies   |  | $                     |        |                       | $ |             |  | $                   | 499,530   |              | $ | 470                 |  | $ | 499,530   |  | $ | 470    | 
|Equity
  securities          |  |                       | 334,860 |                       |   | 83,325       |  |                     | 4,510     |              |   | 357                 |  |   | 339,370   |  |   | 83,682 | 
|Mortgage-backed
  Securities |  |                       | 15,312  |                       |   | 61           |  |                     |          |              |   |                    |  |   | 15,312    |  |   | 61     | 
|                             |  |                       |         |                       |   |              |  |                     |           |              |   |                     |  |   |           |  |   |        | 
|                             |  |                       |         |                       |   |              |  |                     |           |              |   |                     |  |   |           |  |   |        | 
|                             |  | $                     | 350,172 |                       | $ | 83,386       |  | $                   | 504,040   |              | $ | 827                 |  | $ | 854,212   |  | $ | 84,213 | 
|                             |  |                       |         |                       |   |              |  |                     |           |              |   |                     |  |   |           |  |   |        | 
|                             |  |                       |         |                       |   |              |  |                     |           |              |   |                     |  |   |           |  |   |        | 
|December
  31, 2006:         |  |                       |         |                       |   |              |  |                     |           |              |   |                     |  |   |           |  |   |        | 
|U.S. Government
  Agencies   |  | $                     |        |                       | $ |             |  | $                   | 1,962,025 |              | $ | 38,000              |  | $ | 1,962,025 |  | $ | 38,000 | 
|Equity
  securities          |  |                       |        |                       |   |             |  |                     | 9,112     |              |   | 619                 |  |   | 9,112     |  |   | 619    | 
|Mortgage-backed
  Securities |  |                       |        |                       |   |             |  |                     |          |              |   |                    |  |   |          |  |   |       | 
|Municipal bonds              |  |                       | 249,748 |                       |   | 920          |  |                     | 97,515    |              |   | 2,480               |  |   | 347,263   |  |   | 3,400  | 
|                             |  |                       |         |                       |   |              |  |                     |           |              |   |                     |  |   |           |  |   |        | 
|                             |  |                       |         |                       |   |              |  |                     |           |              |   |                     |  |   |           |  |   |        | 
|                             |  | $                     | 249,748 |                       | $ | 920          |  | $                   | 2,068,652 |              | $ | 41,099              |  | $ | 2,318,400 |  | $ | 42,019 | 
|                             |  |                       |         |                       |   |              |  |                     |           |              |   |                     |  |   |           |  |   |        | 

Management does not believe that any individual
unrealized loss at December 31, 2007 and 2006, represents an
other-than-temporary impairment. The unrealized losses at December 31,
2007 are related to one security issued by a U.S. government agency, one
mortgage-backed security, and sixteen equity securities, and are due to changes
in market conditions. Management has the intent and the Company has the ability
to hold the securities reflected in the above table for a time necessary to recover
amortized cost.

During the year ended December 31, 2007, sales of securities available
for sale amounted to $412,000. The realized gain on securities available for
sale was $9,154, net of deferred income taxes of $6,102. During the year ended
December 31, 2006, sales of securities available for sale amounted to $24,298.
The realized gain on securities available for sale was $5,761, net of deferred
income taxes of $3,851.

|  
|--
|  
|  
|29

---



|                                   
|-----------------------------------
|LINCOLN PARK BANCORP AND SUBSIDIARY
|                                   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - SECURITIES HELD TO MATURITY

|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|-------------------------------------- |  | ----------------- | ---------- | -------------------------- | - | --------------------------- |  | -------------------- | ------- |  | - | ---------- | 
|                                       |  | December 31, 2007 |           
|                                       |  |                   |           
|                                       |  | Carrying 
  Value |            | Gross
  Unrealized
  Gains |   | Gross
  Unrealized
  Losses |  | Estimated Fair Value |        
|                                       |  |                   |            |                            |   |                             |  |                      |        
|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|U.S. Government Agencies:              |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|Due after one through five years       |  | $                 | 1,500,000  |                            | $ | 340                         |  | $                    |        |  | $ | 1,500,340  | 
|Due after five years through ten years |  |                   | 4,265,385  |                            |   | 1,790                       |  |                      | 2,924   |  |   | 4,264,251  | 
|Due after ten years                    |  |                   | 8,983,716  |                            |   | 18,340                      |  |                      | 7,707   |  |   | 8,994,349  | 
|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|                                       |  |                   | 14,749,101 |                            |   | 20,470                      |  |                      | 10,631  |  |   | 14,758,940 | 
|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|Corporate bonds:                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|Due within one year                    |  |                   | 99,659     |                            |   | 1,222                       |  |                      |        |  |   | 100,881    | 
|Due after one year through five years  |  |                   | 254,398    |                            |   |                            |  |                      | 24,398  |  |   | 230,000    | 
|Due after five years through ten years |  |                   | 450,000    |                            |   | 727                         |  |                      |        |  |   | 450,727    | 
|Due after ten years                    |  |                   | 250,000    |                            |   |                            |  |                      | 1,673   |  |   | 248,327    | 
|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|                                       |  |                   | 1,054,057  |                            |   | 1,949                       |  |                      | 26,071  |  |   | 1,029,935  | 
|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|Mortgage-backed securities:            |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|Due within one year                    |  |                   | 276        |                            |   | 6                           |  |                      |        |  |   | 282        | 
|Due after one year through five years  |  |                   | 270        |                            |   | 7                           |  |                      |        |  |   | 277        | 
|Due after five through ten years       |  |                   | 12,046     |                            |   | 323                         |  |                      |        |  |   | 12,369     | 
|Due after ten years                    |  |                   | 783,823    |                            |   | 6,243                       |  |                      | 14,016  |  |   | 776,050    | 
|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|                                       |  |                   | 796,415    |                            |   | 6,579                       |  |                      | 14,016  |  |   | 788,978    | 
|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|Municipal bonds:                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|Due after five through ten years       |  |                   | 185,000    |                            |   | 4,005                       |  |                      |        |  |   | 189,005    | 
|Due after ten years                    |  |                   | 380,680    |                            |   | 3,007                       |  |                      | 2,106   |  |   | 381,581    | 
|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|                                       |  |                   | 565,680    |                            |   | 7,012                       |  |                      | 2,106   |  |   | 570,586    | 
|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|Collateralized Mortgage Obligations    |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|Less than one year                     |  |                   |           |                            |   |                            |  |                      |        |  |   |           | 
|Due after one through five years       |  |                   |           |                            |   |                            |  |                      |        |  |   |           | 
|Due after five through ten years       |  |                   |           |                            |   |                            |  |                      |        |  |   |           | 
|Due after ten years                    |  |                   | 4,077,361  |                            |   | 4,511                       |  |                      | 116,888 |  |   | 3,964,984  | 
|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|                                       |  |                   | 4,077,361  |                            |   | 4,511                       |  |                      | 116,888 |  |   | 3,964,984  | 
|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 
|                                       |  | $                 | 21,242,614 |                            | $ | 40,521                      |  | $                    | 169,712 |  | $ | 21,113,423 | 
|                                       |  |                   |            |                            |   |                             |  |                      |         |  |   |            | 

|  
|--
|  
|  
|30

---



|                                   
|-----------------------------------
|LINCOLN PARK BANCORP AND SUBSIDIARY
|                                   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - SECURITIES HELD TO MATURITY (CONTINUED)

|                                       |  |                   |            |                            |   |                             |  |                         |         |  |   |            | 
|-------------------------------------- |  | ----------------- | ---------- | -------------------------- | - | --------------------------- |  | ----------------------- | ------- |  | - | ---------- | 
|                                       |  | December 31, 2006 |           
|                                       |  |                   |           
|                                       |  | Carrying 
  Value |            | Gross
  Unrealized
  Gains |   | Gross
  Unrealized
  Losses |  | Estimated 
  Fair Value |        
|                                       |  |                   |            |                            |   |                             |  |                         |        
|                                       |  |                   |            |                            |   |                             |  |                         |         |  |   |            | 
|U.S. Government Agencies:              |  |                   |            |                            |   |                             |  |                         |         |  |   |            | 
|Due after one year through five years  |  | $                 | 500,000    |                            | $ |                            |  | $                       | 8,505   |  | $ | 491,495    | 
|Due after five years through ten years |  |                   | 4,350,000  |                            |   |                            |  |                         | 79,492  |  |   | 4,270,508  | 
|Due after ten years                    |  |                   | 10,782,757 |                            |   | 2,544                       |  |                         | 308,050 |  |   | 10,477,251 | 
|                                       |  |                   |            |                            |   |                             |  |                         |         |  |   |            | 
|                                       |  |                   |            |                            |   |                             |  |                         |         |  |   |            | 
|                                       |  |                   | 15,632,757 |                            |   | 2,544                       |  |                         | 396,047 |  |   | 15,239,254 | 
|                                       |  |                   |            |                            |   |                             |  |                         |         |  |   |            | 
|                                       |  |                   |            |                            |   |                             |  |                         |         |  |   |            | 
|Corporate bonds:                       |  |                   |            |                            |   |                             |  |                         |         |  |   |            | 
|Due within one year                    |  |                   | 100,000    |                            |   |                            |  |                         | 22      |  |   | 99,978     | 
|Due after one year through five years  |  |                   | 354,923    |                            |   | 1,793                       |  |                         | 13,150  |  |   | 343,566    | 
|Due after five years through ten years |  |                   | 200,000    |                            |   |                            |  |                         | 14,000  |  |   | 186,000    | 
|Due after ten years                    |  |                   | 500,000    |                            |   |                            |  |                         | 13,653  |  |   | 486,347    | 
|                                       |  |                   |            |                            |   |                             |  |                         |         |  |   |            | 
|                                       |  |                   |            |                            |   |                             |  |                         |         |  |   |            | 
|                                       |  |                   | 1,154,923  |                            |   | 1,793                       |  |                         | 40,825  |  |   | 1,115,891  | 
|                                       |  |                   |            |                            |   |                             |  |                         |         |  |   |            | 
|                                       |  |                   |            |                            |   |                             |  |                         |         |  |   |            | 
|Mortgage-backed securities:            |  |                   |            |                            |   |                             |  |                         |         |  |   |            | 
|Due within one year                    |  |                   | 149        |                            |   | 4                           |  |                         |        |  |   | 153        | 
|Due after one year through five years  |  |                   | 2,244      |                            |   | 47                          |  |                         |        |  |   | 2,291      | 
|Due after five years through ten years |  |                   | 4,592      |                            |   | 132                         |  |                         |        |  |   | 4,724      | 
|Due after ten years                    |  |                   | 974,520    |                            |   | 5,854                       |  |                         | 21,258  |  |   | 959,116    | 
|                                       |  |                   |            |                            |   |                             |  |                         |         |  |   |            | 
|                                       |  |                   |            |                            |   |                             |  |                         |         |  |   |            | 
|                                       |  |                   | 981,505    |                            |   | 6,037                       |  |                         | 21,258  |  |   | 966,284    | 
|                                       |  |                   |            |                            |   |                             |  |                         |         |  |   |            | 
|                                       |  |                   |            |                            |   |                             |  |                         |         |  |   |            | 
|Municipal bonds:                       |  |                   |            |                            |   |                             |  |                         |         |  |   |            | 
|Due after ten years                    |  |                   | 565,730    |                            |   | 6,003                       |  |                         | 3,149   |  |   | 568,584    | 
|                                       |  |                   |            |                            |   |                             |  |                         |         |  |   |            | 
|                                       |  |                   |            |                            |   |                             |  |                         |         |  |   |            | 
|                                       |  | $                 | 18,334,915 |                            | $ | 16,377                      |  | $                       | 461,279 |  | $ | 17,890,013 | 
|                                       |  |                   |            |                            |   |                             |  |                         |         |  |   |            | 

At
December 31, 2007 and 2006, all mortgage-backed securities in the held to
maturity portfolio were issued by GNMA, the Federal National Mortgage
Association (FNMA) or the Federal Home Loan Mortgage Corporation (FHLMC).

|  
|--
|  
|  
|31

---



|                                   
|-----------------------------------
|LINCOLN PARK BANCORP AND SUBSIDIARY
|                                   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - SECURITIES HELD TO MATURITY (CONTINUED)

The age of
unrealized losses and the fair value of related securities held to maturity are
as follows:

|                                    |  |                     |           |                     |   |              |  |                      |            |              |   |                      |  |   |            |  |   |         | 
|----------------------------------- |  | ------------------- | --------- | ------------------- | - | ------------ |  | -------------------- | ---------- | ------------ | - | -------------------- |  | - | ---------- |  | - | ------- | 
|                                    |  | Less than 12 Months |           | More than 12 Months |   | Total        | 
|                                    |  |                     |           |                     |   |              | 
|                                    |  | Fair
  Value        |           | Unrealized Losses   |   | Fair
  Value |  | Unrealized 
  Losses |            | Fair
  Value |   | Unrealized 
  Losses | 
|                                    |  |                     |           |                     |   |              |  |                      |            |              |   |                      | 
|                                    |  |                     |           |                     |   |              |  |                      |            |              |   |                      |  |   |            |  |   |         | 
|December 31, 2007:                  |  |                     |           |                     |   |              |  |                      |            |              |   |                      |  |   |            |  |   |         | 
|U.S. Government Agencies            |  | $                   |          |                     | $ |             |  | $                    | 3,494,991  |              | $ | 10,631               |  | $ | 3,494,991  |  | $ | 10,631  | 
|Collateralized Mortgage Obligations |  |                     | 2,444,424 |                     |   | 116,888      |  |                      |           |              |   |                     |  |   | 2,444,424  |  |   | 116,888 | 
|Corporate bonds                     |  |                     |          |                     |   |             |  |                      | 478,328    |              |   | 26,071               |  |   | 478,328    |  |   | 26,071  | 
|Mortgage-backed Securities          |  |                     |          |                     |   |             |  |                      | 298,955    |              |   | 14,016               |  |   | 298,955    |  |   | 14,016  | 
|Municipal bonds                     |  |                     | 99,007    |                     |   | 993          |  |                      | 98,887     |              |   | 1,113                |  |   | 197,894    |  |   | 2,106   | 
|                                    |  |                     |           |                     |   |              |  |                      |            |              |   |                      |  |   |            |  |   |         | 
|                                    |  |                     |           |                     |   |              |  |                      |            |              |   |                      |  |   |            |  |   |         | 
|                                    |  | $                   | 2,543,431 |                     | $ | 117,881      |  | $                    | 4,371,161  |              | $ | 51,831               |  | $ | 6,914,592  |  | $ | 169,712 | 
|                                    |  |                     |           |                     |   |              |  |                      |            |              |   |                      |  |   |            |  |   |         | 
|                                    |  |                     |           |                     |   |              |  |                      |            |              |   |                      |  |   |            |  |   |         | 
|December 31, 2006:                  |  |                     |           |                     |   |              |  |                      |            |              |   |                      |  |   |            |  |   |         | 
|U.S. Government Agencies            |  | $                   | 990,310   |                     | $ | 9,690        |  | $                    | 14,011,309 |              | $ | 386,357              |  | $ | 15,001,619 |  | $ | 396,047 | 
|Corporate bonds                     |  |                     | 99,978    |                     |   | 22           |  |                      | 914,848    |              |   | 40,803               |  |   | 1,014,826  |  |   | 40,825  | 
|Mortgage-backed securities          |  |                     |          |                     |   |             |  |                      | 408,650    |              |   | 21,258               |  |   | 408,650    |  |   | 21,258  | 
|Municipal bonds                     |  |                     |          |                     |   |             |  |                      | 96,851     |              |   | 3,149                |  |   | 96,851     |  |   | 3,149   | 
|                                    |  |                     |           |                     |   |              |  |                      |            |              |   |                      |  |   |            |  |   |         | 
|                                    |  |                     |           |                     |   |              |  |                      |            |              |   |                      |  |   |            |  |   |         | 
|                                    |  | $                   | 1,090,288 |                     | $ | 9,712        |  | $                    | 15,431,658 |              | $ | 451,567              |  | $ | 16,521,946 |  | $ | 461,279 | 
|                                    |  |                     |           |                     |   |              |  |                      |            |              |   |                      |  |   |            |  |   |         | 

Management
does not believe that any individual unrealized loss at December 31, 2007
and 2006, represents an other-than-temporary impairment. At December 31,
2007, the unrealized losses on securities other than corporate bonds are
related to six securities issued by U.S. government agencies, two securities
issued by a municipal government, two mortgage-backed securities, and eighteen
collateralized mortgage obligations. The unrealized losses on corporate bonds
at December 31, 2007 relate to two investment grade securities having a
weighted average coupon rate of 5.61% and a weighted average maturity of
approximately seven years. Management believes that all unrealized losses are
due to changes in interest rates. Management has the intent and the Company has
the ability to hold the securities reflected in the above table for a time
necessary to recover amortized cost. There were no sales of securities held to
maturity during the year ended December 31, 2007 and 2006. Securities held
to maturity with a carrying value of $39,000 and 41,000 at December 31,
2007 and 2006, respectively, were pledged to secure public funds on deposits.

|  
|--
|  
|  
|32

---



|                                     
|-------------------------------------
|LINCOLN
  PARK BANCORP AND SUBSIDIARY
|                                     

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

NOTE 6 - LOANS RECEIVABLE

|                             |  |              |            |      |   |            |  
|---------------------------- |  | ------------ | ---------- | ---- | - | ---------- | -
|                             |  | December
31, |           
|                             |  |              |           
|                             |  | 2007         |            | 2006 |  
|                             |  |              |            |      |  
|                             |  |              |            |      |   |            |  
|Real estate mortgage:        |  |              |            |      |   |            |  
|One-to-four
  family         |  | $            | 46,583,577 |      | $ | 43,658,682 |  
|Multi-family                 |  |              | 841,289    |      |   | 857,315    |  
|Commercial                   |  |              | 1,721,082  |      |   | 1,913,269  |  
|Land                         |  |              | 387,655    |      |   | 436,965    |  
|                             |  |              |            |      |   |            |  
|                             |  |              |            |      |   |            |  
|                             |  |              | 49,533,603 |      |   | 46,866,231 |  
|                             |  |              |            |      |   |            |  
|                             |  |              |            |      |   |            |  
|Commercial business          |  |              | 665,763    |      |   |           |  
|                             |  |              |            |      |   |            |  
|                             |  |              |            |      |   |            |  
|Consumer:                    |  |              |            |      |   |            |  
|Passbook or
  certificate    |  |              | 51,351     |      |   | 59,309     |  
|Home equity line
  of credit |  |              | 4,748,645  |      |   | 5,304,328  |  
|Home equity                  |  |              | 17,642,350 |      |   | 14,489,090 |  
|Automobile                   |  |              | 155,016    |      |   | 217,771    |  
|Personal secured             |  |              | 123,113    |      |   | 394,025    |  
|Personal
  unsecured         |  |              | 174,885    |      |   | 87,734     |  
|Overdraft line
  of credit   |  |              | 23,993     |      |   | 26,744     |  
|                             |  |              |            |      |   |            |  
|                             |  |              |            |      |   |            |  
|                             |  |              | 22,919,353 |      |   | 20,579,001 |  
|                             |  |              |            |      |   |            |  
|                             |  |              |            |      |   |            |  
|Total
  Loans                |  |              | 73,118,719 |      |   | 67,445,233 |  
|                             |  |              |            |      |   |            |  
|                             |  |              |            |      |   |            |  
|Deferred loan costs, net     |  |              | 153,133    |      |   | 141,588    |  
|Allowance for loan losses    |  |              | (187,000   | )    |   | (136,000   | )
|                             |  |              |            |      |   |            |  
|                             |  |              |            |      |   |            |  
|                             |  |              | (33,867    | )    |   | 5,588      |  
|                             |  |              |            |      |   |            |  
|                             |  |              |            |      |   |            |  
|                             |  | $            | 73,084,852 |      | $ | 67,450,821 |  
|                             |  |              |            |      |   |            |  

Nonaccrual loans totaled approximately $431,000 and
$158,000 at December 31, 2007 and 2006, respectively.  Interest income recognized on these loans
for the years ended December 31, 2007 and 2006, was approximately $10,000
and $15,000, respectively.  Had these
loans been performing in accordance with their original terms, interest income
for the years ended December 31, 2007 and 2006, would have been approximately
$24,000 and $17,000, respectively.  The
Savings Bank is not committed to lend additional funds to the borrowers whose
loans have been placed on nonaccrual status.

---

33

---



|                                     
|-------------------------------------
|LINCOLN
  PARK BANCORP AND SUBSIDIARY
|                                     

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

NOTE 6 - LOANS RECEIVABLE (CONTINUED)

The Savings Bank grants
loans to its officers and directors and to their associates.  Related party loans are made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with unrelated persons and
do not involve more than normal risk of collectibility.  The activity, with respect to loans to
directors, officers and associates of such persons, is as follows:

|                                        |  |                            |       |      |   |       |  
|--------------------------------------- |  | -------------------------- | ----- | ---- | - | ----- | -
|                                        |  | Years
  Ended December 31, |      
|                                        |  |                            |      
|                                        |  | 2007                       |       | 2006 |  
|                                        |  |                            |       |      |  
|                                        |  | (In
  Thousands)           |      
|                                        |  |                            |       |      |   |       |  
|Balance - beginning                     |  | $                          | 2,877 |      | $ | 3,575 |  
|Loans originated                        |  |                            | 1,054 |      |   | 257   |  
|Collections of
  principal              |  |                            | (671  | )    |   | (360  | )
|Loans to persons
  no longer associated |  |                            |      |      |   | (595  | )
|                                        |  |                            |       |      |   |       |  
|                                        |  |                            |       |      |   |       |  
|Balance - ending                        |  | $                          | 3,260 |      | $ | 2,877 |  
|                                        |  |                            |       |      |   |       |  

The following is an analysis of the allowance for loan
losses:

|                                                      |  |                            |         |      |   |         |  
|----------------------------------------------------- |  | -------------------------- | ------- | ---- | - | ------- | -
|                                                      |  | Years
  Ended December 31, |        
|                                                      |  |                            |        
|                                                      |  | 2007                       |         | 2006 |  
|                                                      |  |                            |         |      |  
|                                                      |  |                            |         |      |   |         |  
|Balance - beginning                                   |  | $                          | 136,000 |      | $ | 158,000 |  
|Provision charged
  (recovery credited) to operations |  |                            | 51,401  |      |   | (22,384 | )
|Loans charged
  off                                   |  |                            | (401    | )    |   | (116    | )
|                                                      |  |                            |         |      |   |         |  
|                                                      |  |                            |         |      |   |         |  
|Balance - ending                                      |  | $                          | 187,000 |      | $ | 136,000 |  
|                                                      |  |                            |         |      |   |         |  

NOTE 7 - PREMISES AND EQUIPMENT

|                                  |  |              |           |      |   |           |  
|--------------------------------- |  | ------------ | --------- | ---- | - | --------- | -
|                                  |  | December 31, |          
|                                  |  |              |          
|                                  |  | 2007         |           | 2006 |  
|                                  |  |              |           |      |  
|                                  |  |              |           |      |   |           |  
|Land                              |  | $            | 745,224   |      | $ | 82,881    |  
|                                  |  |              |           |      |   |           |  
|                                  |  |              |           |      |   |           |  
|Buildings and improvements        |  |              | 1,440,622 |      |   | 1,346,746 |  
|Accumulated depreciation          |  |              | (725,587  | )    |   | (692,323  | )
|                                  |  |              |           |      |   |           |  
|                                  |  |              |           |      |   |           |  
|                                  |  |              | 715,035   |      |   | 654,423   |  
|                                  |  |              |           |      |   |           |  
|                                  |  |              |           |      |   |           |  
|Furniture, fixtures and equipment |  |              | 834,001   |      |   | 783,648   |  
|Accumulated depreciation          |  |              | (709,823  | )    |   | (669,595  | )
|                                  |  |              |           |      |   |           |  
|                                  |  |              |           |      |   |           |  
|                                  |  |              | 124,178   |      |   | 114,053   |  
|                                  |  |              |           |      |   |           |  
|                                  |  |              |           |      |   |           |  
|                                  |  | $            | 1,584,437 |      | $ | 851,357   |  
|                                  |  |              |           |      |   |           |  

---

34

---



|                                     
|-------------------------------------
|LINCOLN
  PARK BANCORP AND SUBSIDIARY
|                                     

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

NOTE 8 - INTEREST RECEIVABLE

|                                                                               |  |              |         |      |   |         | 
|------------------------------------------------------------------------------ |  | ------------ | ------- | ---- | - | ------- | 
|                                                                               |  | December 31, |        
|                                                                               |  |              |        
|                                                                               |  | 2007         |         | 2006 |  
|                                                                               |  |              |         |      |  
|                                                                               |  |              |         |      |   |         | 
|Loans, net of
  allowance for uncollectible interest 2007 $22,400 2006  $9,500 |  | $            | 322,427 |      | $ | 298,779 | 
|Securities                                                                     |  |              | 199,956 |      |   | 190,613 | 
|Other
  interest-earning assets                                                |  |              | 152     |      |   | 103     | 
|                                                                               |  |              |         |      |   |         | 
|                                                                               |  |              |         |      |   |         | 
|                                                                               |  | $            | 522,535 |      | $ | 489,495 | 
|                                                                               |  |              |         |      |   |         | 

NOTE 9 - DEPOSITS

|                        |  |                         |   |        |   |                         |  |        |   |  |   |            | 
|----------------------- |  | ----------------------- | - | ------ | - | ----------------------- |  | ------ | - |  | - | ---------- | 
|                        |  | December
  31,          |  
|                        |  |                         |  
|                        |  | 2007                    |   | 2006   |  
|                        |  |                         |   |        |  
|                        |  | Weighted
  Average Rate |   | Amount |   | Weighted
  Average Rate |  | Amount |  
|                        |  |                         |   |        |   |                         |  |        |  
|                        |  |                         |   |        |   |                         |  |        |   |  |   |            | 
|Demand:                 |  |                         |   |        |   |                         |  |        |   |  |   |            | 
|Non-interest
  bearing  |  | 0.00                    | % |        | $ | 2,054,395               |  | 0.00   | % |  | $ | 768,473    | 
|NOW and money
  market  |  | 2.24                    |   |        |   | 12,112,535              |  | 2.13   |   |  |   | 11,087,471 | 
|                        |  |                         |   |        |   |                         |  |        |   |  |   |            | 
|                        |  |                         |   |        |   |                         |  |        |   |  |   |            | 
|                        |  | 1.76                    |   |        |   | 14,166,930              |  | 1.99   |   |  |   | 11,855,944 | 
|                        |  |                         |   |        |   |                         |  |        |   |  |   |            | 
|Savings and club        |  | 1.01                    |   |        |   | 11,616,644              |  | 1.01   |   |  |   | 13,182,249 | 
|                        |  |                         |   |        |   |                         |  |        |   |  |   |            | 
|Certificates of deposit |  | 4.69                    |   |        |   | 39,183,124              |  | 4.62   |   |  |   | 32,805,701 | 
|                        |  |                         |   |        |   |                         |  |        |   |  |   |            | 
|                        |  |                         |   |        |   |                         |  |        |   |  |   |            | 
|                        |  | 3.50                    | % |        | $ | 64,966,698              |  | 3.26   | % |  | $ | 57,843,894 | 
|                        |  |                         |   |        |   |                         |  |        |   |  |   |            | 

At December 31, 2007 and 2006, certificates of
deposit of $100,000 or more totaled approximately $9,999,000 and $7,365,000,
respectively.  Individual deposits in
excess of $100,000 may not be insured by the Federal Deposit Insurance
Corporation.

The scheduled maturities of certificates of deposit
were as follows (in thousands):

|                              |  |              |        |      |   |        | 
|----------------------------- |  | ------------ | ------ | ---- | - | ------ | 
|                              |  | December 31, |       
|                              |  |              |       
|                              |  | 2007         |        | 2006 |  
|                              |  |              |        |      |  
|                              |  |              |        |      |   |        | 
|One year of less              |  | $            | 36,124 |      | $ | 28,347 | 
|After one year to three years |  |              | 2,807  |      |   | 4,130  | 
|After three years             |  |              | 252    |      |   | 329    | 
|                              |  |              |        |      |   |        | 
|                              |  |              |        |      |   |        | 
|                              |  | $            | 39,183 |      | $ | 32,806 | 
|                              |  |              |        |      |   |        | 

---

35

---



|                                     
|-------------------------------------
|LINCOLN
  PARK BANCORP AND SUBSIDIARY
|                                     

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

NOTE 10 - ADVANCES FROM FEDERAL HOME
LOAN BANK OF NEW YORK (FHLB)

|                                   |  |                         |   |        |   |                         |  |        |   |  |   |            | 
|---------------------------------- |  | ----------------------- | - | ------ | - | ----------------------- |  | ------ | - |  | - | ---------- | 
|                                   |  | December
  31,          |  
|                                   |  |                         |  
|                                   |  | 2007                    |   | 2006   |  
|                                   |  |                         |   |        |  
|                                   |  | Weighted
  Average Rate |   | Amount |   | Weighted
  Average Rate |  | Amount |  
|                                   |  |                         |   |        |   |                         |  |        |  
|                                   |  |                         |   |        |   |                         |  |        |   |  |   |            | 
|Within one year                    |  | 4.08                    | % |        | $ | 13,120,057              |  | 5.12   | % |  | $ | 6,500,000  | 
|After one but within two years     |  | 3.69                    |   |        |   | 2,823,285               |  | 3.75   |   |  |   | 8,580,694  | 
|After two but within three years   |  | 4.19                    |   |        |   | 400,313                 |  | 3.,47  |   |  |   | 2,948,251  | 
|After three but within four years  |  | 4.24                    |   |        |   | 1,215,869               |  | 4.19   |   |  |   | 568,418    | 
|After four but within five years   |  | 4.59                    |   |        |   | 4,291,146               |  | 4.24   |   |  |   | 1,515,000  | 
|After five but within six years    |  | 4.03                    |   |        |   | 781,368                 |  |       |   |  |   |           | 
|After six but within seven years   |  |                        |   |        |   |                        |  | 4.03   |   |  |   | 899,364    | 
|After seven but within eight years |  |                        |   |        |   |                        |  |       |   |  |   |           | 
|After eight years                  |  | 5.31                    |   |        |   | 919,963                 |  | 5.31   |   |  |   | 966,605    | 
|                                   |  |                         |   |        |   |                         |  |        |   |  |   |            | 
|                                   |  |                         |   |        |   |                         |  |        |   |  |   |            | 
|                                   |  | 4.18                    | % |        | $ | 23,552,000              |  | 4.24   | % |  | $ | 21,978,331 | 
|                                   |  |                         |   |        |   |                         |  |        |   |  |   |            | 

At December 31, 2007, none of the above advances
were subject to early call or redemption features.

At December 31, 2007 and 2006, the advances were
secured by a pledge of the Savings Banks investment in the capital stock of
the FHLB and a blanket assignment of the Savings Banks unpledged qualifying
mortgage loans in the amount of $37.8 million.
At December 31, 2007,  $14.5
million in additional borrowings are still available from the FHLB.

NOTE 11 - REGULATORY CAPITAL

The Savings Bank is subject to various regulatory
capital requirements administered by the various banking agencies.  Failure to meet minimum capital requirements
can initiate certain mandatory, and possibly additional discretionary, actions
by regulators that, if undertaken, could have a direct material effect on the
Savings Bank.  Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the
Savings Bank must meet specific capital guidelines that involve quantitative
measures of the Savings Banks assets, liabilities, and certain
off-balance-sheet items as calculated under regulatory accounting
practices.  The Savings Banks capital
amounts and classifications are also subject to qualitative judgments by the
regulators about components, risk weightings and other factors.

---

36

---



|                                     
|-------------------------------------
|LINCOLN
  PARK BANCORP AND SUBSIDIARY
|                                     

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

NOTE 11 - REGULATORY CAPITAL
(CONTINUED)

Quantitative measures established by regulation to
ensure capital adequacy require the Savings Bank to maintain minimum amounts
and ratios of Total risk-based capital and Tier 1 capital (as defined in the
regulations) to risk-weighted assets (as defined), and of Tier 1 capital to
adjusted total assets (as defined).  The
following tables present a reconciliation of capital per GAAP and regulatory
capital and information as to the Savings Banks capital levels.

|                                                 |  |                |       |      |   |       | 
|------------------------------------------------ |  | -------------- | ----- | ---- | - | ----- | 
|                                                 |  | December 31,   |      
|                                                 |  |                |      
|                                                 |  | 2007           |       | 2006 |  
|                                                 |  |                |       |      |  
|                                                 |  | (In Thousands) |      
|                                                 |  |                |       |      |   |       | 
|GAAP capital                                     |  | $              | 9,499 |      | $ | 9,393 | 
|Unrealized loss on securities available for sale |  |                |      |      |   | 24    | 
|Other comprehensive loss - DRP                   |  |                | 149   |      |   | 158   | 
|Goodwill                                         |  |                | (52   | )    |   |      | 
|Unrealized loss on equity securities             |  |                | (16   | )    |   |      | 
|                                                 |  |                |       |      |   |       | 
|Core and tangible capital                        |  |                | 9,580 |      |   | 9,575 | 
|General valuation allowance                      |  |                | 187   |      |   | 136   | 
|                                                 |  |                |       |      |   |       | 
|                                                 |  |                |       |      |   |       | 
|Total Regulatory Capital                         |  | $              | 9,767 |      | $ | 9,711 | 
|                                                 |  |                |       |      |   |       | 

|                                                   |  |                        |       |                                 |       |                                                                    |  |       |        |        |      |       |  |   |        |  |   |      |  
|-------------------------------------------------- |  | ---------------------- | ----- | ------------------------------- | ----- | ------------------------------------------------------------------ |  | ----- | ------ | ------ | ---- | ----- |  | - | ------ |  | - | ---- | -
|                                                   |  | Actual                 |       | For
  Capital Adequacy Purposes |       | To be
  Well Capitalized under Prompt Corrective Action Provisions
|                                                   |  |                        |       |                                 |       |                                                                   
|                                                   |  | Amount                 |       | Ratio                           |       | Amount                                                             |  | Ratio |        | Amount |      | Ratio
|                                                   |  |                        |       |                                 |       |                                                                    |  |       |        |        |      |      
|                                                   |  | (Dollars in Thousands) |      
|                                                   |  |                        |       |                                 |       |                                                                    |  |       |        |        |      |       |  |   |        |  |   |      |  
|As of
  December 31, 2007                          |  |                        |       |                                 |       |                                                                    |  |       |        |        |      |       |  |   |        |  |   |      |  
|Total risk-based capital (to risk-weighted
assets) |  | $                      | 9,767 |                                 | 17.55 | %                                                                  |  | $     | 34,451 |        | 38.0 | %     |  | $ | 35,564 |  | 3 | 10.0 | %
|Tier 1 capital (to risk-weighted assets)           |  |                        | 9,580 |                                 | 17.22 |                                                                    |  |       | 32,226 |        | 34.0 |       |  |   | 33,338 |  | 3 | 6.0  |  
|Tier 1 capital (to average assets)                 |  |                        | 9,580 |                                 | 9.60  |                                                                    |  |       | 33,994 |        | 34.0 |       |  |   | 34,992 |  | 3 | 5.0  |  
|                                                   |  |                        |       |                                 |       |                                                                    |  |       |        |        |      |       |  |   |        |  |   |      |  
|As of
  December 31, 2006                          |  |                        |       |                                 |       |                                                                    |  |       |        |        |      |       |  |   |        |  |   |      |  
|Total risk-based capital (to risk-weighted
assets) |  | $                      | 9,711 |                                 | 19.33 | %                                                                  |  | $     | 34,019 |        | 38.0 | %     |  | $ | 35,024 |  | 3 | 10.0 | %
|Tier 1 capital (to risk-weighted assets)           |  |                        | 9,575 |                                 | 19.06 |                                                                    |  |       | 32,010 |        | 34.0 |       |  |   | 33,015 |  | 3 | 6.0  |  
|Tier 1 capital (to average assets)                 |  |                        | 9,575 |                                 | 10.37 |                                                                    |  |       | 33,692 |        | 34.0 |       |  |   | 34,615 |  | 3 | 5.0  |  

As of August 28, 2006, the most recent notification
from its regulators, the Savings Bank was categorized as well-capitalized under
the regulatory framework for prompt corrective action.  There are no conditions existing or events
which have occurred since notification that management believes have changed
the institutions category.

---

37

---



|                                     
|-------------------------------------
|LINCOLN
  PARK BANCORP AND SUBSIDIARY
|                                     

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

NOTE 12 - INCOME TAXES

The Savings Bank qualifies as a thrift
institution under the provisions of the Internal Revenue Code and,
therefore, must calculate its bad debt deduction using either the
experience or the specific charge off method.  Retained earnings at
December 31, 2007 and 2006, includes approximately $730,000 of such
bad debt, for which income taxes have not been provided.  If such
amount is used for purposes other than for bad debt losses, including
distributions in liquidation, it will be subject to income tax at the
then current rate.

Effective January 1, 2007,
the Company adopted the provisions of FASB Interpretation No. 48, Accounting
for Uncertainty in Income Taxes.  The
Interpretation provides clarification on accounting for uncertainty in income
taxes recognized in an enterprises financial statements in accordance with
FASB No. 109, Accounting for Income Taxes.
The Interpretation prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return, and also provides
guidance on derecognition, classification, interest and penalties, accounting
in interim periods, disclosure and transition.
As a result of the Companys evaluation of the implementation of FIN 48,
no significant income tax uncertainties were identified.  Therefore, the Company recognized no
adjustment for unrecognized income tax benefits for the year ended December 31,
2007.  Our policy is to recognize
interest and penalties on unrecognized tax benefits in income taxes expense in
the Consolidated Statement of Income.
The Company did not recognize any interest and penalties for the year
ended December 31, 2007.  The tax years
subject to examination by the taxing authorities are the years ended December
31, 2006, 2005, 2004 and 2003.

In May 2007, the FASB issued
FASB Staff Position (FSP) FIN 48-1, Definition of Settlement in FASB
Interpretation No. 48 (FSP FIN 48-1).
FSP FIN 48-1 provides guidance on how to determine whether a tax
position is effectively settled for purposes of recognizing previously
unrecognized tax benefits.  FSP FIN 48-1
is effective retroactively to January 1, 2007.
The implementation of this standard did not have a material impact on
our consolidated financial position or results of operations.

The components of income taxes are summarized as follows:

|                                       |  |                            |         |      |   |         |  
|-------------------------------------- |  | -------------------------- | ------- | ---- | - | ------- | -
|                                       |  | Years
  Ended December 31, |        
|                                       |  | 2007                       |         | 2006 |  
|                                       |  |                            |         |      |  
|                                       |  |                            |         |      |   |         |  
|Current income tax expense:            |  |                            |         |      |   |         |  
|Federal                                |  | $                          | 34,437  |      | $ | 169,485 |  
|State                                  |  |                            | 6,705   |      |   | 45,406  |  
|                                       |  |                            |         |      |   |         |  
|                                       |  |                            |         |      |   |         |  
|                                       |  |                            | 41,142  |      |   | 214,891 |  
|                                       |  |                            |         |      |   |         |  
|                                       |  |                            |         |      |   |         |  
|Deferred income tax expense (benefit): |  |                            |         |      |   |         |  
|Federal                                |  |                            | (30,085 | )    |   | (19,486 | )
|State                                  |  |                            | (9,156  | )    |   | (6,242  | )
|                                       |  |                            |         |      |   |         |  
|                                       |  |                            |         |      |   |         |  
|                                       |  |                            | (39,241 | )    |   | (25,728 | )
|                                       |  |                            |         |      |   |         |  
|                                       |  |                            |         |      |   |         |  
|                                       |  | $                          | 1,901   |      | $ | 189,163 |  
|                                       |  |                            |         |      |   |         |  

---

38

---



|                                     
|-------------------------------------
|LINCOLN
  PARK BANCORP AND SUBSIDIARY
|                                     

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

NOTE 12 - INCOME TAXES (CONTINUED)

The tax effects of existing temporary differences that
give rise to significant portions of the deferred income tax assets and
deferred income tax liabilities are as follows:

|                                                   |  |              |         |      |   |         | 
|-------------------------------------------------- |  | ------------ | ------- | ---- | - | ------- | 
|                                                   |  | December 31, |        
|                                                   |  |              |        
|                                                   |  | 2007         |         | 2006 |  
|                                                   |  |              |         |      |  
|                                                   |  |              |         |      |   |         | 
|Deferred income tax assets:                        |  |              |         |      |   |         | 
|Allowance for
  loan losses                        |  | $            | 70,960  |      | $ | 62,566  | 
|Deferred loan
  fees and costs                     |  |              | 1,139   |      |   | 1,497   | 
|Unrealized loss
  on securities available for sale |  |              |        |      |   | 4,404   | 
|Benefit plans                                      |  |              | 38,032  |      |   | 23,087  | 
|Stock compensation plans                           |  |              | 27,520  |      |   | 19,009  | 
|DRP  other
  comprehensive loss                   |  |              | 99,116  |      |   | 105,390 | 
|                                                   |  |              |         |      |   |         | 
|                                                   |  |              | 236,767 |      |   | 215,953 | 
|                                                   |  |              |         |      |   |         | 
|                                                   |  |              |         |      |   |         | 
|Deferred income tax liabilities:                   |  |              |         |      |   |         | 
|Depreciation                                       |  |              | 66,850  |      |   | 72,622  | 
|Capitalized
  interest                             |  |              | 7,232   |      |   | 9,795   | 
|Unrealized gain
  on securities available for sale |  |              | 14      |      |   |        | 
|Goodwill                                           |  |              | 586     |      |   |        | 
|                                                   |  |              |         |      |   |         | 
|                                                   |  |              | 74,682  |      |   | 82,417  | 
|                                                   |  |              |         |      |   |         | 
|                                                   |  |              |         |      |   |         | 
|Net
  Deferred Tax Assets Included in Other Assets |  | $            | 162,085 |      | $ | 133,536 | 
|                                                   |  |              |         |      |   |         | 

---

39

---



|                                     
|-------------------------------------
|LINCOLN
  PARK BANCORP AND SUBSIDIARY
|                                     

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

NOTE 12 - INCOME TAXES (CONTINUED)

The following table presents a reconciliation between
the reported income taxes and the income taxes which would be computed by
applying the normal federal income tax rate of 34% to income before income
taxes:

|                                                                      |  |                            |         |      |   |         |  
|--------------------------------------------------------------------- |  | -------------------------- | ------- | ---- | - | ------- | -
|                                                                      |  | Years
  Ended December 31, |        
|                                                                      |  | 2007                       |         | 2006 |  
|                                                                      |  |                            |         |      |  
|                                                                      |  |                            |         |      |   |         |  
|Federal income tax expense                                            |  | $                          | 21,059  |      | $ | 171,073 |  
|Increases (reductions) in income taxes resulting
  from:              |  |                            |         |      |   |         |  
|New Jersey
  corporate business tax, net of federal income tax effect |  |                            | (1,617  | )    |   | 25,848  |  
|Tax exempt
  income                                                   |  |                            | (7,451  | )    |   | (9,364  | )
|Surtax                                                                |  |                            | (11,750 | )    |   |        |  
|Other items, net                                                      |  |                            | 1,660   |      |   | 1,606   |  
|                                                                      |  |                            |         |      |   |         |  
|                                                                      |  |                            |         |      |   |         |  
|Effective
  Income Tax                                                |  | $                          | 1,901   |      | $ | 189,163 |  
|                                                                      |  |                            |         |      |   |         |  
|                                                                      |  |                            |         |      |   |         |  
|Effective income
  tax rate                                           |  |                            | 3.07    | %    |   | 37.6    | %
|                                                                      |  |                            |         |      |   |         |  

NOTE 13 - BENEFIT PLANS

ESOP

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Effective upon the consummation of the Savings
  Banks reorganization, an ESOP was established for all eligible employees who
  had completed a twelve-month period of employment with the Savings Bank and
  at least 1,000 hours of service and had attained the age of 21.  The ESOP used $387,193 in proceeds from a
  term loan obtained from the Company to purchase 34,068 shares of Company
  common stock.  The term loan principal
  is payable over twenty equal annual installments through December 31,
  2024.  Interest on the term loan is at
  a rate per annum equal to prime.  Each
  year, the Savings Bank intends to make discretionary contributions to the
  ESOP which will be equal to principal and interest payments required on the
  term loan.  The loan is further paid
  down by the amount of dividends paid, if any, on the common stock owned by
  the ESOP.
| | Shares purchased with the loan proceeds are
  initially pledged as collateral for the term loan and are held in a suspense
  account for future allocation among participants.  Contributions to the ESOP and shares released from the suspense
  account will be allocated among the participants on the basis of
  compensation, as described by the Plan, in the year of allocation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

---

40

---



|                                          
|------------------------------------------
|LINCOLN PARK BANCORP AND SUBSIDIARY       
|                                          
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 - BENEFIT PLANS (CONTINUED)

ESOP (Continued)

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The ESOP is accounted for in accordance with
  Statement of Position 93-6 Accounting for Employee Stock Ownership Plans,
  which was issued by the American Institute of Certified Public
  Accountants.  Accordingly, the ESOP
  shares pledged as collateral are reported as unearned ESOP shares in the
  consolidated statements of financial condition.  As shares are committed to be released from collateral, the
  Savings Bank reports compensation expense equal to the current market price
  of the shares, and the shares become outstanding for basic net income per
  common share computations.  ESOP
  compensation expense was $14,090 and $16,131 for the years ended
  December 31, 2007 and 2006, respectively.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | The ESOP shares were as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|                                |  |                |         |      |   |         | 
|------------------------------- |  | -------------- | ------- | ---- | - | ------- | 
|                                |  | December
  31, |        
|                                |  |                |        
|                                |  | 2007           |         | 2006 |  
|                                |  |                |         |      |  
|                                |  |                |         |      |  
|Shares committed to be released |  |                | 5,253   |      |   | 3,549   | 
|Unreleased shares               |  |                | 28,815  |      |   | 30,519  | 
|                                |  |                |         |      |   |         | 
|                                |  |                |         |      |   |         | 
|Total
  ESOP Shares             |  |                | 34,068  |      |   | 34,068  | 
|                                |  |                |         |      |   |         | 
|                                |  |                |         |      |   |         | 
|Fair value of unreleased shares |  | $              | 172,890 |      | $ | 286,879 | 
|                                |  |                |         |      |   |         | 

Stock-Based
Incentive Plan

| |                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Companys shareholders approved the Stock-Based
  Incentive Plan at a special shareholders meeting held on December 22,
  2005. The types of awards that may be granted under the Plan are Stock
  Options and Restricted Stock Awards.

Restricted
Stock Awards

| |                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Restricted Stock Awards under the Stock-Based
  Incentive Plan are granted in the form of whole shares of Company common
  stock, and vest in five annual installments (20% annually from date of grant)
  to outside directors, and seven annual installments (14.3% annually from date
  of grant) to officers.  The Restricted
  Stock awards become fully vested upon the death or disability of the
  holder.
| |                                                                                                                                                                                                                                                                                                                                                                                                                   
| | The following is a summary of the status of the
  Companys restricted shares for the years ended December 31, 2007 and 2006.                                                                                                                                                                                                                                                                                     

|                                   |  |                     |        |                                            |   |                     |  |                                            |        |                           |   |      |  |  |        |  
|---------------------------------- |  | ------------------- | ------ | ------------------------------------------ | - | ------------------- |  | ------------------------------------------ | ------ | ------------------------- | - | ---- |  |  | ------ | -
|                                   |  |                     |        |                                            |   |                     |  |                                           
|                                   |  | Directors           |        | Employees                                  |   |                     |  |                                           
|                                   |  |                     |        |                                            |   |                     |  |                                           
|                                   |  | Restricted
  shares |        | Weighted
  Average
  Grant Date Fair Value |   | Restricted
  shares |  | Weighted
  Average
  Grant Date Fair Value |        | Total
  Restricted Shares |  
|                                   |  |                     |        |                                            |   |                     |  |                                            |        |                           |  
|                                   |  |                     |        |                                            |   |                     |  |                                            |        |                           |  
|Non-vested as of December 31, 2005 |  |                     | 13,605 |                                            | $ | 8.90                |  |                                            | 5,100  |                           | $ | 8.90 |  |  | 18,705 |  
|Granted during 2006                |  |                     |       |                                            |   |                    |  |                                            | 3,000  |                           |   | 9.12 |  |  | 3,000  |  
|Forfeited during 2006              |  |                     |       |                                            |   |                    |  |                                            | (1,500 | )                         |   | 8.90 |  |  | (1,500 | )
|Vested during 2006                 |  |                     | (2,725 | )                                          |   | 8.90                |  |                                            | (590   | )                         |   | 9.00 |  |  | (3,315 | )
|                                   |  |                     |        |                                            |   |                     |  |                                            |        |                           |   |      |  |  |        |  
|Non-vested as of December 31, 2006 |  |                     | 10,880 |                                            |   | 8.90                |  |                                            | 6,010  |                           |   | 9.00 |  |  | 16,890 |  
|Granted during 2007                |  |                     |       |                                            |   |                    |  |                                            | 3,000  |                           |   | 7.00 |  |  | 3,000  |  
|Forfeited during 2007              |  |                     |       |                                            |   |                    |  |                                            |       |                           |   |     |  |  |       |  
|Vested during 2007                 |  |                     | (2,720 | )                                          |   | 8.90                |  |                                            | (1,384 | )                         |   | 8.37 |  |  | (4,104 | )
|                                   |  |                     |        |                                            |   |                     |  |                                            |        |                           |   |      |  |  |        |  
|Non-vested as of December 31, 2007 |  |                     | 8,160  |                                            | $ | 8.90                |  |                                            | 7,626  |                           | $ | 8.33 |  |  | 15,786 |  
|                                   |  |                     |        |                                            |   |                     |  |                                            |        |                           |   |      |  |  |        |  

|  
|--
|  
|41

---



|                                   
|-----------------------------------
|LINCOLN PARK BANCORP AND SUBSIDIARY
|                                   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 - BENEFIT PLANS (CONTINUED)

Restricted
Stock Awards (Continued)

| |                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------
| | At December 31, 2007, expected future compensation
  to be amortized from restricted stock awards was $143,000.

Stock
Options

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Stock Options granted under the Stock-Based
  Incentive Plan may be either options that qualify as incentive stock options
  as defined in Section 422 of the Internal Revenue Code of 1986, as amended,
  or non-statutory options.  Options
  granted to outside directors and officers will be exercisable on a cumulative
  basis in equal installments over 5 years for outside directors and 7 years
  for officers commencing one year after the grant date.  All options granted become fully vested
  upon the death or disability of the holder.
  All options expire ten years from the grant date.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | A summary of stock option activity and related
  information is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

|                    |  |                              |         |                             |  |                                         |  |   |      | 
|------------------- |  | ---------------------------- | ------- | --------------------------- |  | --------------------------------------- |  | - | ---- | 
|                    |  | Number of
  Option 
  Shares |         | Range of
  Exercise
  Price |  | Weighted
  Average 
  Exercise 
  Price | 
|                    |  |                              |         |                             |  |                                         | 
|                    |  |                              |         |                             |  |                                         | 
|December 31, 2005   |  |                              | 66,520  |                             |  | $8.90                                   |  | $ | 8.90 | 
|                    |  |                              |         |                             |  |                                         |  |   |      | 
|Options granted     |  |                              | 7,500   |                             |  | $9.00                                   |  | $ | 9.00 | 
|Options
  exercised |  |                              |        |                             |  |                                        |  |   |     | 
|Options
  cancelled |  |                              | (10,000 | )                           |  | $8.90                                   |  | $ | 8.90 | 
|                    |  |                              |         |                             |  |                                         |  |   |      | 
|December 31, 2006   |  |                              | 64,020  |                             |  | $8.90  $9.00                           |  | $ | 8.91 | 
|                    |  |                              |         |                             |  |                                         |  |   |      | 
|                    |  |                              |         |                             |  |                                         |  |   |      | 
|Options granted     |  |                              | 3,000   |                             |  | $7.00                                   |  | $ | 7.00 | 
|Options exercised   |  |                              |        |                             |  |                                        |  |   |     | 
|Options cancelled   |  |                              |        |                             |  |                                        |  |   |     | 
|                    |  |                              |         |                             |  |                                         |  |   |      | 
|December
  31, 2007 |  |                              | 67,020  |                             |  | $7.00  $9.00                           |  | $ | 8.83 | 
|                    |  |                              |         |                             |  |                                         |  |   |      | 

| |                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------
| | During the years ended December 31, 2007 and 2006,
  The Company recorded $36,927 and $33,959, respectively of stock option
  expense.

|  
|--
|  
|42

---



|                                   
|-----------------------------------
|LINCOLN PARK BANCORP AND SUBSIDIARY
|                                   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 - BENEFIT PLANS (CONTINUED)

Stock
Options (Continued)

| |                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The weighted average grant date fair value of the
  options granted during the years ended December 31, 2007 and 2006 was $2.49
  and $3.06 respectively, following the underlying assumptions.

|                                                 |  |              |           |      |   |           |  
|------------------------------------------------ |  | ------------ | --------- | ---- | - | --------- | -
|                                                 |  | December 31, |          
|                                                 |  |              |          
|                                                 |  | 2007         |           | 2006 |  
|                                                 |  |              |           |      |  
|Weighted average grant-date fair value per share |  | $            | 2.49      |      | $ | 3.06      |  
|Expected common stock dividend yield             |  |              |          | %    |   |          | %
|Expected volatility                              |  |              | 24.62     | %    |   | 19.28     | %
|Expected option life                             |  |              | 7.0 years |      |   | 7.0 years |  
|Risk-free interest rate                          |  |              | 3.67      | %    |   | 4.52      | %

|                                                                                                                                                                              |                                                                                                                                                                                                                                      
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                              | The expected volatility was based on historical
  volatility.  The risk-free interest
  rates for periods within the contractual life of the awards were based on the
  U.S. Treasury yield curve in effect at the time of the grant.
|                                                                                                                                                                              |                                                                                                                                                                                                                                      
|                                                                                                                                                                              | The expected life was based on historical exercise
  experiences.  The dividend yield
  assumption was based on the Banks expectation of dividend payouts.                                                                          
|                                                                                                                                                                              |                                                                                                                                                                                                                                      
|A summary of the status of the Companys non-vested
  options as of December 31, 2006, and the changes during the twelve months
  ended December 31, 2007 is presented below:

|                                   |  |                     |         |                                                |   |      | 
|---------------------------------- |  | ------------------- | ------- | ---------------------------------------------- | - | ---- | 
|                                   |  | Number of 
  Shares |         | Weighted 
  Average 
  Grant Date
  Fair Value |  
|                                   |  |                     |         |                                                |  
|                                   |  |                     |         |                                                |   |      | 
|Non-vested at
  December  31, 2006 |  |                     | 54,002  |                                                | $ | 3.34 | 
|                                   |  |                     |         |                                                |   |      | 
|Granted                            |  |                     | 3,000   |                                                | $ | 2.49 | 
|Vested                             |  |                     | (11,090 | )                                              | $ | 3.35 | 
|                                   |  |                     |         |                                                |   |      | 
|                                   |  |                     |         |                                                |   |      | 
|Non-vested at December
  31, 2007  |  |                     | 45,912  |                                                | $ | 3.28 | 
|                                   |  |                     |         |                                                |   |      | 

Expected future compensation expense relating to the
45,912 non-vested options outstanding at December 31, 2007 is $147,574, over a
weighted average period of 8.2 years.
The total fair value of shares vested during the year ended December 31,
2007 was $66,534.

|  
|--
|  
|  
|43

---



|                                   
|-----------------------------------
|LINCOLN PARK BANCORP AND SUBSIDIARY
|                                   

NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13
- BENEFIT PLANS (CONTINUED)

Stock
Options (Continued)

The following table summarizes information about stock
options outstanding and exercisable at December 31, 2007.

|                    |  |                      |        |                             |  |                                                              |  |                                       |  |                      |   |                                       |  |                                                              |        |  |   |      |  |     |  | 
|------------------- |  | -------------------- | ------ | --------------------------- |  | ------------------------------------------------------------ |  | ------------------------------------- |  | -------------------- | - | ------------------------------------- |  | ------------------------------------------------------------ | ------ |  | - | ---- |  | --- |  | 
|Options Outstanding |  | Options Exercisable  |       
|                    |  |                      |       
|Year                |  | Number
  Outstanding |        | Range of
  Exercise
  Price |  | Weighted
  Average
  Remaining
  Contractual
  Life in Years |  | Weighted
  Average
  Exercise
  Price |  | Number
  Exercisable |   | Weighted
  Average
  Exercise
  Price |  | Weighted
  Average
  Remaining
  Contractual
  Life in Years |       
|                    |  |                      |        |                             |  |                                                              |  |                                       |  |                      |   |                                       |  |                                                              |       
|2006                |  |                      | 64,020 |                             |  | $8.90-$9.00                                                  |  | 8.3                                   |  |                      | $ | 8.91                                  |  |                                                              | 10,018 |  | $ | 8.90 |  | 8   |  | 
|                    |  |                      |        |                             |  |                                                              |  |                                       |  |                      |   |                                       |  |                                                              |        |  |   |      |  |     |  | 
|2007                |  |                      | 3,000  |                             |  | $7.00                                                        |  | 10                                    |  |                      | $ | 7.00                                  |  |                                                              | 11,090 |  | $ | 8.91 |  | 8.2 |  | 
|                    |  |                      |        |                             |  |                                                              |  |                                       |  |                      |   |                                       |  |                                                              |        |  |   |      |  |     |  | 
|                    |  |                      |        |                             |  |                                                              |  |                                       |  |                      |   |                                       |  |                                                              |        |  |   |      |  |     |  | 
|                    |  |                      | 67,020 |                             |  | $7.00-$9.00                                                  |  | 8.2                                   |  |                      | $ | 8.83                                  |  |                                                              | 21,108 |  | $ | 8.91 |  | 8.2 |  | 
|                    |  |                      |        |                             |  |                                                              |  |                                       |  |                      |   |                                       |  |                                                              |        |  |   |      |  |     |  | 

At December 31, 2007, the intrinsic value of stock options outstanding
and stock options exercisable amounted to $0 and $0, respectively.  At and for the year ended December 31, 2007,
there were 21,108 stock options outstanding that would have an anti-dilutive
effect on outstanding shares if exercised.

|  
|--
|  
|  
|44
|  

---



|                                   
|-----------------------------------
|LINCOLN
PARK
BANCORP AND
SUBSIDIARY
|                                   

NOTES TO CONSOLIDATED
        FINANCIAL STATEMENTS

NOTE 13 -
BENEFIT PLANS
        (CONTINUED)

Director Retirement Plan (DRP)

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Effective March 1, 2006, the Savings Bank
                    implemented the DRP. This plan is a non-contributory defined benefit pension
                    plan covering all the directors meeting eligibility requirements as specified
                    in the plan document. The DRP is accounted for under SFAS 132 and SFAS 158. The
                    following table sets forth the funded status of the DRP at December 31, 2007
                    and December 31, 2006, and components of net periodic expense for the year then
                    ended:

|                                                                                    |  |              |         |      |   |         |  
|----------------------------------------------------------------------------------- |  | ------------ | ------- | ---- | - | ------- | -
|                                                                                    |  | December 31, |        
|                                                                                    |  |              |        
|                                                                                    |  | 2007         |         | 2006 |  
|                                                                                    |  |              |         |      |  
|Benefit Obligation - beginning                                                      |  | $            | 318,976 |      | $ |        |  
|Plan amendments (Plan inception)                                                    |  |              |        |      |   | 304,672 |  
|Service cost                                                                        |  |              | 9,764   |      |   | 16,937  |  
|Interest cost                                                                       |  |              | 19,536  |      |   | 14,600  |  
|Actuarial loss (gain)                                                               |  |              | 13,027  |      |   | (17,233 | )
|                                                                                    |  |              |         |      |   |         |  
|                                                                                    |  |              |         |      |   |         |  
|Benefit Obligation - ending                                                         |  | $            | 361,303 |      | $ | 318,976 |  
|                                                                                    |  |              |         |      |   |         |  
|                                                                                    |  |              |         |      |   |         |  
|Funded Status  Accrued liability included in other
                    liabilities |  | $            | 361,303 |      | $ | 318,976 |  
|                                                                                    |  |              |         |      |   |         |  
|                                                                                    |  |              |         |      |   |         |  
|Discount Rate                                                                       |  |              | 6.500   | %    |   | 6.125   | %
|                                                                                    |  |              |         |      |   |         |  
|Net periods pension expense:                                                        |  |              |         |      |   |         |  
|Service Cost                                                                        |  | $            | 9,764   |      | $ | 16,937  |  
|Interest Cost                                                                       |  |              | 19,536  |      |   | 14,600  |  
|Amortization of unrecognized prior service liability                                |  |              | 28,716  |      |   | 23,930  |  
|                                                                                    |  |              |         |      |   |         |  
|                                                                                    |  |              |         |      |   |         |  
|Total pension expense included in Other Non-Interest
                    Expenses   |  | $            | 58,016  |      | $ | 55,467  |  
|                                                                                    |  |              |         |      |   |         |  
|                                                                                    |  |              |         |      |   |         |  
|Discount Rate                                                                       |  |              | 6.125   | %    |   | 5.75    | %

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | At December 31, 2007, $247,787 ($148,671 net
                    of $99,116 of related deferred income tax assets) and December 31, 2006,
                    $263,476 ($158,086 net of $105,390 of related deferred tax assets) in prior
                    service cost reflected in the above table has been recorded in Accumulated
                    Other Comprehensive Loss. Approximately $28,716 of that amount is expected to
                    be included in pension expense in 2008.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | Benefit payments, which reflect expected
                    future service as appropriate, are expected to be paid for the years ended
                    December 31, as follows:                                                                                                                                                                                                                                                                                                                  

|            |  |   |         | 
|----------- |  | - | ------- | 
|2008        |  | $ |        | 
|2009        |  |   | 6,577   | 
|2010        |  |   | 9,338   | 
|2011        |  |   | 11,784  | 
|2012        |  |   | 15,081  | 
|2013  2017 |  |   | 178,332
|            |  |   |         | 
|            |  | $ | 221,112 | 
|            |  |   |         | 

|  
|--
|  
|  
|45
|  

---



|                                   
|-----------------------------------
|LINCOLN
PARK
BANCORP AND
SUBSIDIARY
|                                   

NOTES TO CONSOLIDATED
        FINANCIAL STATEMENTS

NOTE 14 -
OTHER NON-INTEREST
        EXPENSES

|                                 |  |                          |         |      |   |         | 
|-------------------------------- |  | ------------------------ | ------- | ---- | - | ------- | 
|                                 |  | Years Ended December 31, |        
|                                 |  |                          |        
|                                 |  | 2007                     |         | 2006 |  
|                                 |  |                          |         |      |  
|                                
|Directors compensation          |  | $                        | 222,900 |      | $ | 260,350 | 
|Legal                            |  |                          | 80,763  |      |   | 121,789 | 
|Auditing and accounting services |  |                          | 109,356 |      |   | 100,992 | 
|Stationery and printing          |  |                          | 46,061  |      |   | 59,593  | 
|Other                            |  |                          | 282,690 |      |   | 234,707 | 
|                                 |  |                          |         |      |   |         | 
|                                 |  |                          |         |      |   |         | 
|                                 |  | $                        | 741,770 |      | $ | 777,431 | 
|                                 |  |                          |         |      |   |         | 

NOTE 15-COMMITMENTS
        AND CONTINGENCIES

The Savings Bank is a party to financial instruments with
        off-balance-sheet risk in the normal course of business to meet the financing needs of its
        customers. These financial instruments primarily include commitments to extend credit. The
        Savings Banks exposure to credit loss in the event of nonperformance by the other
        party to the financial instrument for commitments to extend credit is represented by the
        contractual amount of those instruments. The Savings Bank uses the same credit policies in
        making commitments and conditional obligations as it does for on-balance-sheet
        instruments.

The Savings Banks outstanding commitments were as
        follows:

|                          |  |                |       |      |   |       | 
|------------------------- |  | -------------- | ----- | ---- | - | ----- | 
|                          |  | December 31,   |      
|                          |  |                |      
|                          |  | 2007           |       | 2006 |  
|                          |  |                |       |      |  
|                          |  | (In Thousands) |      
|                          |  |                |      
|To originate loans:       |  |                |       |      |   |       | 
|Construction              |  | $              | 350   |      |   |      | 
|Fixed rate mortgage       |  |                |      |      | $ | 454   | 
|Adjustable rate mortgage  |  |                | 515   |      |   |      | 
|Home equity line          |  |                | 158   |      |   | 455   | 
|Consumer                  |  |                | 3     |      |   |      | 
|                          |  |                |       |      |   |       | 
|To fund lines of credit:  |  |                |       |      |   |       | 
|Home equity               |  |                | 8,835 |      |   | 8,690 | 
|Overdraft                 |  |                | 84    |      |   | 77    | 
|                          |  |                |       |      |   |       | 
|To fund letters of credit |  |                | 49    |      |   |      | 

At December 31, 2007, fixed rate mortgage commitments
        were at interest rates of 5.74% to 6.125%; construction loan commitments were at an
        interest rate of 8.25%; adjustable rate mortgage commitments were at interest rates of
        6.00% to 7.00%; and lines of credit commitments had initial rates ranging from 5.99% to
        prime minus 1.0%.

|  
|--
|  
|  
|46
|  

---



|                                   
|-----------------------------------
|LINCOLN
PARK
BANCORP AND
SUBSIDIARY
|                                   

NOTE 15-COMMITMENTS
        AND CONTINGENCIES
        (CONTINUED)

Undisbursed funds from approved lines of credit, unless
        they are specifically cancelled by notice to or from the Savings Bank, represent firm
        commitments available to the respective borrowers on demand. The interest rates charged on
        funds disbursed under the homeowners equity lending program range from the prime
        rate minus 1.00% to 2.00% above the prime rate. Funds drawn on the unsecured credit reserve
        program are assessed interest at a rate of 16%.

Commitments to extend credit are agreements to lend to a
        customer as long as there is no violation of any condition established in the contract.
        Commitments generally have fixed expiration dates or other termination clauses and may
        require payment of a fee. Since many of the commitments are expected to expire without
        being drawn upon, total commitment amounts do not necessarily represent future cash
        requirements. The Savings Bank evaluates each customers creditworthiness on a
        case-by-case basis. The amount of collateral obtained, if deemed necessary by the Savings
        Bank upon extension of credit, is based on managements credit evaluation of the
        counterparty. Collateral held varies but primarily includes residential real estate
        properties.

At December 31, 2007, the Savings Bank had issued two
        standby letters of credit to Montville Township in the amounts of $22,600 and $26,000. The
        letters were issued as a guarantee against possible future improvements required by the
        municipality with regard to the site plan waiver granted to the Bank for its Montville
        branch.

The Savings Bank also has, in the normal course of
        business, commitments for services and supplies. Management does not anticipate losses on
        any of these transactions.

The Company and the Savings Bank, from time to time, may
        be party to litigation which arises primarily in the ordinary course of business. In the
        opinion of management, the ultimate disposition of such litigation should not have a
        material effect on the consolidated financial statements.

|  
|--
|  
|  
|47
|  

---



|                                   
|-----------------------------------
|LINCOLN
PARK
BANCORP AND
SUBSIDIARY
|                                   

NOTES TO CONSOLIDATED
        FINANCIAL STATEMENTS

NOTE
        16-ESTIMATED FAIR
        VALUE OF FINANCIAL
        INSTRUMENTS

The fair value of a financial instrument is defined as
        the amount at which the instrument could be exchanged in a current transaction between
        willing parties, other than a forced or liquidation sale. Significant estimations were used
        for the purposes of this disclosure. Estimated fair values have been determined using the
        best available data and estimation methodology suitable for each category of financial
        instruments. Fair value estimates, methods and assumptions are set forth below for the
        financial instruments.

Cash and Cash Equivalents and Interest Receivable

| |                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The carrying amounts for cash and cash
                    equivalents and interest receivable approximate fair value because they mature
                    in three months or less.

Securities

| |                                                                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The fair value of securities, both available
                    for sale and held to maturity, are based on quoted market or dealer prices, if
                    available. If quoted market or dealer prices are not available, fair value is
                    estimated using quoted market prices for similar securities.

Loans Receivable

| |                                                                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Fair value is estimated by discounting future
                    cash flows, using the current rates at which similar loans would be made to
                    borrowers with similar credit ratings and for the same remaining maturities, of
                    such loans.

Restricted Equity Securities

| |                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Federal law requires a member institution of
                    the Federal Home Loan Bank system to hold restricted stock of the institution
                    according to a predetermined formula. The restricted stock is carried at
                    cost.

Deposits

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The fair value of demand deposit, passbook
                    and club accounts is equal to the amount payable on demand at the reporting
                    date. The fair value of certificates of deposit is estimated using rates
                    currently offered for deposits of similar remaining maturities. The fair value
                    estimates do not include the benefit that results from the low-cost funding
                    provided by deposit liabilities compared to the cost of borrowing funds in the
                    market.

Term Deposits and Advances from Federal Home Loan Bank
        of New York

| |                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Fair value is estimated using rates currently
                    offered for assets and liabilities of similar remaining maturities, or when
                    available, quoted market prices.

Commitments to Extend Credit

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The fair value of commitments is estimated
                    using the fees currently charged to enter into similar agreements, taking into
                    account the remaining terms of the agreements and the present creditworthiness
                    of the counterparties. For fixed-rate loan commitments, fair value also
                    considers the difference between current levels of interest rates and the
                    committed rates.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | As of December 31, 2007 and 2006, the fair
                    value of the commitments to extend credit were not considered to be
                    material.                                                                                                                                                                                                                                                                                                               

---

48

---



|                                   
|-----------------------------------
|LINCOLN
PARK
BANCORP AND
SUBSIDIARY
|                                   

NOTES TO CONSOLIDATED
        FINANCIAL STATEMENTS

NOTE 16 -ESTIMATED
        FAIR VALUE OF FINANCIAL
        INSTRUMENTS (CONTINUED)

The carrying values and estimated fair values of
        financial instruments were as follows:

|                                                     |  |                                    |        |                                |   |                                    |  |                                |        |  |   |        | 
|---------------------------------------------------- |  | ---------------------------------- | ------ | ------------------------------ | - | ---------------------------------- |  | ------------------------------ | ------ |  | - | ------ | 
|                                                     |  | December 31,                       |       
|                                                     |  |                                    |       
|                                                     |  | 2007                               |        | 2006                           |  
|                                                     |  |                                    |        |                                |  
|                                                     |  | Carrying
                    Value |        | Fair
                    Value |   | Carrying
                    Value |  | Fair
                    Value |       
|                                                     |  |                                    |        |                                |   |                                    |  |                                |       
|                                                     |  | (In Thousands)                     |       
|                                                     |  |                                    |       
|Financial assets:                                    |  |                                    |        |                                |   |                                    |  |                                |        |  |   |        | 
|Cash and cash equivalents                            |  | $                                  | 2,502  |                                | $ | 2,502                              |  | $                              | 2,601  |  | $ | 2,601  | 
|Term deposits                                        |  |                                    | 295    |                                |   | 295                                |  |                                | 190    |  |   | 190    | 
|Securities available for sale                        |  |                                    | 1,521  |                                |   | 1,521                              |  |                                | 2,574  |  |   | 2,574  | 
|Securities held to maturity                          |  |                                    | 21,243 |                                |   | 21,113                             |  |                                | 18,335 |  |   | 17,890 | 
|Loans receivable, net                                |  |                                    | 73,085 |                                |   | 74,307                             |  |                                | 67,451 |  |   | 67,392 | 
|Federal Home Loan Bank of New York stock             |  |                                    | 1,195  |                                |   | 1,195                              |  |                                | 1,121  |  |   | 1,121  | 
|Interest receivable                                  |  |                                    | 523    |                                |   | 523                                |  |                                | 489    |  |   | 489    | 
|                                                     |  |                                    |        |                                |   |                                    |  |                                |        |  |   |        | 
|Financial liabilities:                               |  |                                    |        |                                |   |                                    |  |                                |        |  |   |        | 
|Deposits                                             |  |                                    | 64,967 |                                |   | 60,936                             |  |                                | 57,844 |  |   | 57,897 | 
|Advances from the Federal Home Loan Bank of New York |  |                                    | 23,552 |                                |   | 23,772                             |  |                                | 21,978 |  |   | 22,017 | 

The fair value estimates are made at a discrete point in
        time based on relevant market information and information about the financial instruments.
        Because no market exists for a significant portion of the financial instruments, fair value
        estimates are based on judgments regarding future expected loss experience, current
        economic conditions, risk characteristics of various financial instruments, and other
        factors. These estimates are subjective in nature and involve uncertainties and matters of
        significant judgment and, therefore, cannot be determined with precision. Changes in
        assumptions could significantly affect the estimates.

In addition, fair value estimates are based on existing
        on-and-off balance sheet financial instruments, without attempting to estimate the value of
        anticipated future business, and exclude the value of assets and liabilities that are not
        considered financial instruments. Other significant assets and liabilities that are not
        considered financial assets and liabilities include premises and equipment. In addition,
        the tax ramifications related to the realization of the unrealized gains and losses can
        have a significant effect on fair value estimates and have not been considered in any of
        the estimates.

Finally, reasonable comparability between financial
        institutions may not be likely due to the wide range of permitted valuation techniques and
        numerous estimates which must be made given the absence of active secondary markets for
        many of the financial instruments. This lack of uniform valuation methodologies introduces
        a greater degree of subjectivity to these estimated fair values.

---

49

---



|                                   
|-----------------------------------
|LINCOLN PARK BANCORP AND SUBSIDIARY
|                                   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17 - ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive loss
included in stockholders equity are as follows:

|                                                       |  |                  |      |      |   |      |  
|------------------------------------------------------ |  | ---------------- | ---- | ---- | - | ---- | -
|                                                       |  | December 31,     |     
|                                                       |  |                  |     
|                                                       |  | 2007             |      | 2006 |  
|                                                       |  |                  |      |      |  
|                                                       |  | (In
  Thousands) |     
|                                                       |  |                  |      |      |   |      |  
|Net unrealized
  loss on securities available for sale |  | $                | (61  | )    | $ | (11  | )
|Tax effect                                             |  |                  |     |      |   | 4    |  
|                                                       |  |                  |      |      |   |      |  
|Net of tax
  amount                                    |  |                  | (61  | )    |   | (7   | )
|                                                       |  |                  |      |      |   |      |  
|                                                       |  |                  |      |      |   |      |  
|Pension amounts
  under SFAS No. 158                   |  |                  | (248 | )    |   | (263 | )
|Tax effect                                             |  |                  | 99   |      |   | 105  |  
|                                                       |  |                  |      |      |   |      |  
|Net of tax
  amount                                    |  |                  | (149 | )    |   | (158 | )
|                                                       |  |                  |      |      |   |      |  
|                                                       |  |                  |      |      |   |      |  
|Accumulated
  other comprehensive loss                 |  | $                | (210 | )    | $ | (165 | )
|                                                       |  |                  |      |      |   |      |  

The components of other comprehensive income and their
related tax effects are presented in the following table:

|                                                                 |  |                            |     |      |   |    |  
|---------------------------------------------------------------- |  | -------------------------- | --- | ---- | - | -- | -
|                                                                 |  | Years
  Ended December 31, |    
|                                                                 |  |                            |    
|                                                                 |  | 2007                       |     | 2006 |  
|                                                                 |  |                            |     |      |  
|                                                                 |  | (In
  Thousands)           |    
|                                                                 |  |                            |     |      |   |    |  
|Unrealized
  holding gains (losses) available for sale:          |  |                            |     |      |   |    |  
|Unrealized
  holding gains (losses) arising during the year      |  | $                          | (35 | )    | $ | 38 |  
|Reclassification
  adjustment for gains included in net income   |  |                            | (15 | )    |   | (9 | )
|                                                                 |  |                            |     |      |   |    |  
|Net unrealized gains
  (losses) on securities available for sale |  |                            | (50 | )    |   | 29 |  
|                                                                 |  |                            |     |      |   |    |  
|                                                                 |  |                            |     |      |   |    |  
|Defined benefit
  pension plan:                                  |  |                            |     |      |   |    |  
|Pension gain                                                     |  |                            | (13 | )    |   |   |  
|Prior service
  cost                                             |  |                            | 28  |      |   |   |  
|                                                                 |  |                            |     |      |   |    |  
|Net change in
  defined benefit pension plan accrued expense     |  |                            | 15  |      |   |   |  
|                                                                 |  |                            |     |      |   |    |  
|Other
  comprehensive income (loss) before taxes                 |  |                            | (35 | )    |   | 29 |  
|Tax effect                                                       |  |                            | (10 | )    |   | 12 |  
|                                                                 |  |                            |     |      |   |    |  
|Other
  comprehensive (loss) income                              |  | $                          | (45 | )    | $ | 17 |  
|                                                                 |  |                            |     |      |   |    |  
|                                                                

|  
|--
|  
|  
|50

---



|                                   
|-----------------------------------
|LINCOLN PARK BANCORP AND SUBSIDIARY
|                                   

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18 - PARENT ONLY FINANCIAL INFORMATION

The following are the condensed financial statements
for Lincoln Park Bancorp (Parent company only):

STATEMENTS OF FINANCIAL CONDITION

|                                             |  |              |            |      |   |            | 
|-------------------------------------------- |  | ------------ | ---------- | ---- | - | ---------- | 
|                                             |  | December 31, |           
|                                             |  |              |           
|                                             |  | 2007         |            | 2006 |  
|                                             |  |              |            |      |  
|                                             |  |              |            |      |   |            | 
|Assets                                       |  |              |            |      |   |            | 
|Cash and due from banks                      |  | $            | 445,422    |      | $ | 752,220    | 
|Term deposits                                |  |              | 99,000     |      |   | 99,000     | 
|Securities available for sale                |  |              | 375,757    |      |   | 180,727    | 
|Securities held to maturity                  |  |              | 2,383,626  |      |   | 2,444,692  | 
|Loan receivable from the Savings Bank        |  |              | 356,959    |      |   | 366,527    | 
|Interest receivable                          |  |              | 33,401     |      |   | 33,745     | 
|Investment in subsidiary                     |  |              | 9,499,132  |      |   | 9,392,868  | 
|Other assets                                 |  |              | 178        |      |   | 12,912     | 
|                                             |  |              |            |      |   |            | 
|                                             |  |              |            |      |   |            | 
|Total
  Assets                               |  | $            | 13,193,475 |      | $ | 13,282,691 | 
|                                             |  |              |            |      |   |            | 
|                                             |  |              |            |      |   |            | 
|Liabilities and
Stockholders
  Equity       |  |              |            |      |   |            | 
|Other liabilities                            |  | $            | 47,631     |      | $ | 38,381     | 
|Stockholders equity                         |  |              | 13,145,844 |      |   | 13,244,310 | 
|                                             |  |              |            |      |   |            | 
|                                             |  |              |            |      |   |            | 
|Total
  Liabilities and Stockholders Equity |  | $            | 13,193,475 |      | $ | 13,282,691 | 
|                                             |  |              |            |      |   |            | 

|  
|--
|  
|  
|51

---



|                                   
|-----------------------------------
|LINCOLN PARK BANCORP AND SUBSIDIARY
|                                   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18 - PARENT ONLY FINANCIAL INFORMATION
(CONTINUED)

|                                                                              |  |                            |         |      |   |         |  
|----------------------------------------------------------------------------- |  | -------------------------- | ------- | ---- | - | ------- | -
|STATEMENTS
  OF INCOME                                                       
|                                                                             
|                                                                              |  | Years
  Ended December 31, |        
|                                                                              |  |                            |        
|                                                                              |  | 2007                       |         | 2006 |  
|                                                                              |  |                            |         |      |  
|                                                                              |  |                            |         |      |  
|Dividend from
  Bank                                                          |  | $                          |        |      | $ | 350,000 |  
|Interest income                                                               |  |                            | 192,280 |      |   | 174,946 |  
|Non-interest
  income                                                         |  |                            | 18,541  |      |   | 9,616   |  
|                                                                              |  |                            |         |      |   |         |  
|Total income                                                                  |  |                            | 210,821 |      |   | 534,562 |  
|                                                                              |  |                            |         |      |   |         |  
|Non-interest
  expenses                                                       |  |                            | 138,433 |      |   | 161,683 |  
|                                                                              |  |                            |         |      |   |         |  
|                                                                              |  |                            |         |      |   |         |  
|Income
  before Income Tax and Equity in Undistributed Earnings of Subsidiary |  |                            | 72,388  |      |   | 372,879 |  
|                                                                              |  |                            |         |      |   |         |  
|Income tax                                                                    |  |                            | 13,916  |      |   | 4,072   |  
|                                                                              |  |                            |         |      |   |         |  
|                                                                              |  |                            |         |      |   |         |  
|Income before Equity
in Undistributed Earnings of Subsidiary                  |  |                            | 58,472  |      |   | 368,807 |  
|                                                                              |  |                            |         |      |   |         |  
|Equity in
  undistributed earnings (loss) of subsidiary                       |  |                            | 1,566   |      |   | (54,815 | )
|                                                                              |  |                            |         |      |   |         |  
|                                                                              |  |                            |         |      |   |         |  
|Net
  Income                                                                  |  | $                          | 60,038  |      | $ | 313,992 |  
|                                                                              |  |                            |         |      |   |         |  

|  
|--
|  
|  
|52

---



|                                   
|-----------------------------------
|LINCOLN PARK BANCORP AND SUBSIDIARY
|                                   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18 - PARENT ONLY FINANCIAL INFORMATION
(CONTINUED)

|                                                                                    |  |                            |          |      |   |          |  
|----------------------------------------------------------------------------------- |  | -------------------------- | -------- | ---- | - | -------- | -
|STATEMENTS
  OF CASH FLOWS                                                          | 
|                                                                                    | 
|                                                                                    |  | Years
  Ended December 31, |         
|                                                                                    |  |                            |         
|                                                                                    |  | 2007                       |          | 2006 |  
|                                                                                    |  |                            |          |      |  
|                                                                                    |  |                            |          |      |   |          |  
|Cash
  Flows from Operating Activities                                              |  |                            |          |      |   |          |  
|Net income                                                                          |  | $                          | 60,038   |      | $ | 313,992  |  
|Adjustments to
  reconcile net income to net cash provided by operating activities: |  |                            |          |      |   |          |  
|Decrease in
  interest receivable                                                   |  |                            | 344      |      |   | 729      |  
|Increase in
  other liabilities                                                     |  |                            | 14,327   |      |   | 13,901   |  
|Gain on sale of
  securities available for sale                                     |  |                            | (18,387  | )    |   | (9,612   | )
|Decrease
  (increase) in other assets                                               |  |                            | 19,456   |      |   | (12,913  | )
|Equity in
  undistributed (earnings) loss in subsidiary                             |  |                            | (1,566   | )    |   | 54,815   |  
|                                                                                    |  |                            |          |      |   |          |  
|                                                                                    |  |                            |          |      |   |          |  
|Net
  Cash Provided by Operating Activities                                         |  |                            | 74,212   |      |   | 360,912  |  
|                                                                                    |  |                            |          |      |   |          |  
|                                                                                    |  |                            |          |      |   |          |  
|Cash
  Flows from Investing Activities                                              |  |                            |          |      |   |          |  
|Purchases of
  term deposits                                                        |  |                            | (297,000 | )    |   |         |  
|Proceeds from
  maturities of term deposits                                         |  |                            | 297,000  |      |   | 396,000  |  
|Purchases of
  securities available for sale                                        |  |                            | (317,172 | )    |   | (87,418  | )
|Proceeds from
  sales of securities available for sale                              |  |                            | 65,428   |      |   | 24,298   |  
|Principal
  repayments on securities held to maturity                               |  |                            | 61,066   |      |   | 95,656   |  
|Decrease in loan
  receivable from Savings Bank                                     |  |                            | 9,568    |      |   | 9,826    |  
|                                                                                    |  |                            |          |      |   |          |  
|                                                                                    |  |                            |          |      |   |          |  
|Net
  Cash (Used in) Provided by Investing Activities                               |  |                            | (181,110 | )    |   | 438,362  |  
|                                                                                    |  |                            |          |      |   |          |  
|                                                                                    |  |                            |          |      |   |          |  
|Cash
  Flows from Financing Activities                                              |  |                            |          |      |   |          |  
|Cash dividends
  paid                                                               |  |                            |         |      |   | (40,882  | )
|Purchase of
  treasury stock                                                        |  |                            | (199,900 | )    |   |         |  
|Purchase of
  restricted stock                                                      |  |                            |         |      |   | (355,778 | )
|                                                                                    |  |                            |          |      |   |          |  
|                                                                                    |  |                            |          |      |   |          |  
|Net
  Cash Used in Financing Activities                                             |  |                            | (199,900 | )    |   | (396,660 | )
|                                                                                    |  |                            |          |      |   |          |  
|                                                                                    |  |                            |          |      |   |          |  
|Net
  (Decrease) Increase in Cash and Cash Equivalents                              |  |                            | (306,798 | )    |   | 402,614  |  
|                                                                                    |  |                            |          |      |   |          |  
|Cash
  and Cash Equivalents - Beginning                                             |  |                            | 752,220  |      |   | 349,606  |  
|                                                                                    |  |                            |          |      |   |          |  
|                                                                                    |  |                            |          |      |   |          |  
|Cash
  and Cash Equivalents - Ending                                                |  | $                          | 445,422  |      | $ | 752,220  |  
|                                                                                    |  |                            |          |      |   |          |  

|  
|--
|  
|  
|53

---



|                                   
|-----------------------------------
|LINCOLN PARK BANCORP AND SUBSIDIARY
|                                   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 19 - QUARTERLY FINANCIAL DATA (UNAUDITED)

|                                                                 |  |                                                          |           |                 |   |                      |  |                     |           |   |   |           |  
|---------------------------------------------------------------- |  | -------------------------------------------------------- | --------- | --------------- | - | -------------------- |  | ------------------- | --------- | - | - | --------- | -
|                                                                 |  | Quarter Ended                                            |          
|                                                                 |  |                                                          |          
|                                                                 |  | March 31,
  2007                                         |           | June 30,
  2007 |   | September 30,
  2007 |  | December 31,
  2007 |          
|                                                                 |  |                                                          |           |                 |   |                      |  |                     |          
|                                                                 |  | (In Thousands, Except for Share and Per
  Share Amounts) |          
|                                                                 |  |                                                          |           |                 |   |                      |  |                     |           |   |   |           |  
|Interest income                                                  |  | $                                                        | 1,256     |                 | $ | 1,316                |  | $                   | 1,361     |   | $ | 1,394     |  
|Interest expense                                                 |  |                                                          | 728       |                 |   | 763                  |  |                     | 806       |   |   | 827       |  
|                                                                 |  |                                                          |           |                 |   |                      |  |                     |           |   |   |           |  
|                                                                 |  |                                                          |           |                 |   |                      |  |                     |           |   |   |           |  
|Net Interest Income                                              |  |                                                          | 528       |                 |   | 553                  |  |                     | 555       |   |   | 567       |  
|                                                                 |  |                                                          |           |                 |   |                      |  |                     |           |   |   |           |  
|Provision for loan losses                                        |  |                                                          | 7         |                 |   | 44                   |  |                     |          |   |   |          |  
|                                                                 |  |                                                          |           |                 |   |                      |  |                     |           |   |   |           |  
|                                                                 |  |                                                          |           |                 |   |                      |  |                     |           |   |   |           |  
|Net Interest Income after Provision for
  Loan Losses            |  |                                                          | 521       |                 |   | 509                  |  |                     | 555       |   |   | 567       |  
|                                                                 |  |                                                          |           |                 |   |                      |  |                     |           |   |   |           |  
|Non-interest income                                              |  |                                                          | 32        |                 |   | 39                   |  |                     | 42        |   |   | 32        |  
|Non-interest expenses                                            |  |                                                          | 504       |                 |   | 525                  |  |                     | 596       |   |   | 609       |  
|                                                                 |  |                                                          |           |                 |   |                      |  |                     |           |   |   |           |  
|                                                                 |  |                                                          |           |                 |   |                      |  |                     |           |   |   |           |  
|Income (loss) before Income
Taxes                                |  |                                                          | 49        |                 |   | 23                   |  |                     | 1         |   |   | (10       | )
|                                                                 |  |                                                          |           |                 |   |                      |  |                     |           |   |   |           |  
|Income taxes (benefit)                                           |  |                                                          | 14        |                 |   | 7                    |  |                     | (12       | ) |   | (6        | )
|                                                                 |  |                                                          |           |                 |   |                      |  |                     |           |   |   |           |  
|                                                                 |  |                                                          |           |                 |   |                      |  |                     |           |   |   |           |  
|Net Income (loss)                                                |  | $                                                        | 35        |                 | $ | 16                   |  | $                   | 13        |   | $ | (4        | )
|                                                                 |  |                                                          |           |                 |   |                      |  |                     |           |   |   |           |  
|                                                                 |  |                                                          |           |                 |   |                      |  |                     |           |   |   |           |  
|Net income (loss) per common share-basic                         |  | $                                                        | 0.02      |                 | $ | 0.01                 |  | $                   | 0.01      |   | $ | (0.01     | )
|                                                                 |  |                                                          |           |                 |   |                      |  |                     |           |   |   |           |  
|                                                                 |  |                                                          |           |                 |   |                      |  |                     |           |   |   |           |  
|Weighted average number of common shares
  outstanding - basic   |  |                                                          | 1,788,080 |                 |   | 1,788,506            |  |                     | 1,788,362 |   |   | 1,772,945 |  
|                                                                 |  |                                                          |           |                 |   |                      |  |                     |           |   |   |           |  
|                                                                 |  |                                                          |           |                 |   |                      |  |                     |           |   |   |           |  
|Net income (loss) per common share-diluted                       |  | $                                                        | 0.02      |                 | $ | 0.01                 |  | $                   | 0.01      |   | $ |          |  
|                                                                 |  |                                                          |           |                 |   |                      |  |                     |           |   |   |           |  
|                                                                 |  |                                                          |           |                 |   |                      |  |                     |           |   |   |           |  
|Weighted average number of common shares
  outstanding - diluted |  |                                                          | 1,789,315 |                 |   | 1,788,506            |  |                     | 1,788,362 |   |   | 1,773,111 |  
|                                                                 |  |                                                          |           |                 |   |                      |  |                     |           |   |   |           |  

|  
|--
|  
|  
|54

---



|                                   
|-----------------------------------
|LINCOLN PARK BANCORP AND SUBSIDIARY
|                                   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 19 - QUARTERLY FINANCIAL DATA (UNAUDITED)
(CONTINUED)

|                                                                           |  |                                                          |           |               |   |                       |  |                     |           |   |   |           |  
|-------------------------------------------------------------------------- |  | -------------------------------------------------------- | --------- | ------------- | - | --------------------- |  | ------------------- | --------- | - | - | --------- | -
|                                                                           |  | Quarter Ended                                            |          
|                                                                           |  |                                                          |          
|                                                                           |  | March 31, 2006                                           |           | June 30, 2006 |   | September 30, 
  2006 |  | December 31,
  2006 |          
|                                                                           |  |                                                          |           |               |   |                       |  |                     |          
|                                                                           |  | (In Thousands, Except for Share and Per
  Share Amounts) |          
|                                                                           |  |                                                          |           |               |   |                       |  |                     |           |   |   |           |  
|Interest income                                                            |  | $                                                        | 1,182     |               | $ | 1,232                 |  | $                   | 1,258     |   | $ | 1,293     |  
|Interest expense                                                           |  |                                                          | 559       |               |   | 627                   |  |                     | 676       |   |   | 715       |  
|                                                                           |  |                                                          |           |               |   |                       |  |                     |           |   |   |           |  
|                                                                           |  |                                                          |           |               |   |                       |  |                     |           |   |   |           |  
|Net Interest Income                                                        |  |                                                          | 623       |               |   | 605                   |  |                     | 582       |   |   | 578       |  
|                                                                           |  |                                                          |           |               |   |                       |  |                     |           |   |   |           |  
|Provision for loan losses                                                  |  |                                                          | 3         |               |   |                      |  |                     | (1        | ) |   | (25       | )
|                                                                           |  |                                                          |           |               |   |                       |  |                     |           |   |   |           |  
|                                                                           |  |                                                          |           |               |   |                       |  |                     |           |   |   |           |  
|Net Interest Income after Provision for
  Loan Losses                      |  |                                                          | 620       |               |   | 605                   |  |                     | 583       |   |   | 603       |  
|                                                                           |  |                                                          |           |               |   |                       |  |                     |           |   |   |           |  
|Non-interest income                                                        |  |                                                          | 33        |               |   | 24                    |  |                     | 30        |   |   | 46        |  
|Non-interest expenses                                                      |  |                                                          | 514       |               |   | 476                   |  |                     | 533       |   |   | 518       |  
|                                                                           |  |                                                          |           |               |   |                       |  |                     |           |   |   |           |  
|                                                                           |  |                                                          |           |               |   |                       |  |                     |           |   |   |           |  
|Income before Income Taxes                                                 |  |                                                          | 139       |               |   | 153                   |  |                     | 80        |   |   | 131       |  
|                                                                           |  |                                                          |           |               |   |                       |  |                     |           |   |   |           |  
|Income taxes                                                               |  |                                                          | 53        |               |   | 58                    |  |                     | 27        |   |   | 51        |  
|                                                                           |  |                                                          |           |               |   |                       |  |                     |           |   |   |           |  
|                                                                           |  |                                                          |           |               |   |                       |  |                     |           |   |   |           |  
|Net Income                                                                 |  | $                                                        | 86        |               | $ | 95                    |  | $                   | 53        |   | $ | 80        |  
|                                                                           |  |                                                          |           |               |   |                       |  |                     |           |   |   |           |  
|                                                                           |  |                                                          |           |               |   |                       |  |                     |           |   |   |           |  
|Net income per common share - basic and
  diluted                          |  | $                                                        | 0.05      |               | $ | 0.05                  |  | $                   | 0.03      |   | $ | 0.04      |  
|                                                                           |  |                                                          |           |               |   |                       |  |                     |           |   |   |           |  
|                                                                           |  |                                                          |           |               |   |                       |  |                     |           |   |   |           |  
|Weighted average number of common shares
  outstanding - basic and diluted |  |                                                          | 1,819,490 |               |   | 1,794,046             |  |                     | 1,783,985 |   |   | 1,784,413 |  
|                                                                           |  |                                                          |           |               |   |                       |  |                     |           |   |   |           |  
|                                                                           |  |                                                          |           |               |   |                       |  |                     |           |   |   |           |  
|Net income per common share  diluted                                      |  | $                                                        | 0.05      |               | $ | 0.05                  |  | $                   | 0.03      |   | $ | 0.04      |  
|                                                                           |  |                                                          |           |               |   |                       |  |                     |           |   |   |           |  
|                                                                           |  |                                                          |           |               |   |                       |  |                     |           |   |   |           |  
|Weighted average number of common shares
  outstanding - diluted           |  |                                                          | 1,824,558 |               |   | 1,798,922             |  |                     | 1,786,067 |   |   | 1,784,413 |  
|                                                                           |  |                                                          |           |               |   |                       |  |                     |           |   |   |           |  

|  
|--
|  
|  
|55

---



|                                   
|-----------------------------------
|LINCOLN PARK BANCORP AND SUBSIDIARY
|                                   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 20 - RECENT ACCOUNTING PRONOUNCEMENTS

FAS 157

In September 2006, the FASB
issued SFAS Statement No. 157, Fair Value Measurements, which defines fair
value, establishes a framework for measuring fair value under GAAP, and expands
disclosures about fair value measurements. FASB Statement No. 157 applies to
other accounting pronouncements that require or permit fair value measurements.
The new guidance is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and for interim periods within those fiscal
years. We are currently evaluating the potential impact, if any, of the
adoption of SFAS Statement No. 157 on our consolidated financial condition,
results of operations and cash flows.

FSP 157  b

In December 2007, the FASB
issued proposed FASB Staff Position (FSP) 157-b, Effective Date of FASB
Statements No. 157, that would permit a one-year deferral in applying the
measurement provision of Statement No. 157 to non-financial assets and
non-financial liabilities (non-financial items) that are not recognized or disclosed
at fair value in an entitys financial statements on a recurring basis (at
least annually). Therefore, if the change in fair value of a non-financial item
is not required to be recognized or disclosed in the financial statements on an
annual basis or more frequently, the effective date of application of Statement
157 to that item is deferred until fiscal years beginning after November 15,
2008 and interim periods within those fiscal years. This deferral does not
apply, however, to an entity that applies Statement 157 in interim or annual
financial statements before proposed FSP 157-b is finalized. The Company is
currently evaluating the impact, if any, that the adoption of FSP 157-b will
have on the Companys operating income or net earnings.

SAB 109

Staff Accounting Bulletin
No. 109 (SAB 109), Written Loan Commitments Recorded at Fair Value Through
Earnings expresses the views of the staff regarding written loan commitments
that are accounted for at fair value through earnings under generally accepted
accounting principles. To make the staffs views consistent with current
authoritative accounting guidance, the SAB revises and rescinds portions of SAB
No. 105, Application of Accounting Principles to Loan Commitments.
Specifically, the SAB revises the SEC staffs views on incorporating expected
net future cash flows related to loan servicing activities in the fair value
measurement of a written loan commitment. The SAB retains the staffs views on
incorporating expected net future cash flows related to internally-developed
intangible assets in the fair value measurement of a written loan commitment.
The staff expects registrants to apply the views in Question 1 of SAB 109 on a
prospective basis to derivative loan commitments issued or modified in fiscal
quarters beginning after December 15, 2007. The Company does not expect SAB 109
to have a material impact on its consolidated financial statements.

|  
|--
|  
|  
|56

---



|                                   
|-----------------------------------
|LINCOLN PARK BANCORP AND SUBSIDIARY
|                                   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 20 - RECENT ACCOUNTING PRONOUNCEMENTS
(CONTINUED)

SAB 110

Staff Accounting Bulletin
No. 110 (SAB 110) amends and replaces Question 6 of Section D.2 of Topic 14,
Share-Based Payment, of the Staff Accounting Bulletin series. Question 6 of
Section D.2 of Topic 14 expresses the views of the staff regarding the use of
the simplified method in developing an estimate of expected term of plain
vanilla share options and allows usage of the simplified method for share
option grants prior to December 31, 2007. SAB 110 allows public companies which
do not have historically sufficient experience to provide a reasonable estimate
to continue use of the simplified method for estimating the expected term of
plain vanilla share option grants after December 31, 2007. SAB 110 is
effective January 1, 2008. The Company does not expect SAB 110 to have a
material impact on its financial statements.

FASB Statement No. 141 (R)

FASB Statement No. 141 (R)
Business Combinations was issued in December of 2007. This Statement establishes
principles and requirements for how the acquirer of a business recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed, and any noncontrolling interest in the acquiree. The
Statement also provides guidance for recognizing and measuring the goodwill
acquired in the business combination and determines what information to
disclose to enable users of the financial statements to evaluate the nature and
financial effects of the business combination. The guidance will become
effective as of the beginning of a companys fiscal year beginning after
December 15, 2008. This new pronouncement will impact the Companys accounting
for business combinations completed beginning January 1, 2009.

EITF 06-11

In June 2007, the Emerging
Issues Task Force (EITF) reached a consensus on Issue No. 06-11, Accounting
for Income Tax Benefits of Dividends on Share-Based Payment Awards (EITF
06-11). EITF 06-11 stats that an entity should recognize a realized tax
benefit associated with dividends on non-vested equity shares, non-vested
equity share units and outstanding equity share options charged to retained
earnings as an increase in additional paid in capital. The amount recognized in
additional paid in capital should be included in the pool of excess tax
benefits available to absorb potential future tax deficiencies on share-based
payment awards. EITF 06-11 should be applied prospectively to income tax
benefits of dividends on equity-classified share-based payment awards that are
declared in fiscal years beginning after December 15, 2007. The Company expects
that EITF 06-11 will not have an impact on its consolidated financial
statements.

|  
|--
|  
|  
|57

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|                                   
|-----------------------------------
|LINCOLN PARK BANCORP AND SUBSIDIARY
|                                   

DIRECTORS AND EXECUTIVE OFFICERS

|                      |                                                                
|--------------------- | ---------------------------------------------------------------
|Directors            
|                      |                                                                
|Stanford Stoller     
|                      | Chairman of the Board                                          
|                      | Principal Consultant in
  the Insurance Industry Sector of IBM 
|                      |                                                                
|Edith M. Perrotti    
|                      | Vice Chairperson of the
  Board                                
|                      | Retired, former Senior
  Vice President of Lincoln Park Savings
|                      |                                                                
|David G. Baker       
|                      | Part owner of Lincoln Park
  Hardware                          
|                      |                                                                
|John F. Feeney       
|                      | Attorney at Law, Feeney
  & Dixon, L.L.P.                      
|                      |                                                                
|Henry
  Fitschen     
|                      | Public
  Accountant                                            
|                      |                                                                
|Advisory Director    
|                      |                                                                
|William H.
  Weisbrod
|                      | Senior Vice
  President-Investments with Wachovia Securities   
|                      |                                                                
|Executive Officers   
|                      |                                                                
|David G. Baker       
|                      | President and Chief
  Executive Officer                        
|                      |                                                                
|Nandini S. Mallya    
|                      | Vice President, Treasurer,
  and Chief Financial Officer       
|                      |                                                                
|Nancy M. Shaw        
|                      | Vice President and
  Corporate Secretary                       

|  
|--
|  
|  
|58

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|                                   
|-----------------------------------
|LINCOLN PARK BANCORP AND SUBSIDIARY
|                                   

STOCKHOLDER INFORMATION

|                                                                                           
|-------------------------------------------------------------------------------------------
|Annual Meeting                                                                             
|The Annual Meeting of
  Stockholders will be held at the Lincoln Park PAL Community Center,
|10 Boonton Turnpike,
  Lincoln Park, New Jersey on May 1, 2008 at 10:00 A.M.               
|                                                                                           
|Stock Listing                                                                              
|Over-the-Counter Bulletin
  Board under the symbol LPBC                                  
|                                                                                           
|Counsel                                                                                    
|Feeney & Dixon, L.L.P.                                                                     
|512 Newark Pompton
  Turnpike                                                              
|Pompton Plains, New Jersey
  07444                                                         
|                                                                                           
|Special Counsel                                                                            
|Luse Gorman Pomerenk &
  Schick, P.C.                                                      
|5335 Wisconsin Avenue, NW                                                                  
|Suite 400                                                                                  
|Washington, DC 20015                                                                       
|                                                                                           
|Independent Registered Public Accounting Firm                                              
|Beard Miller Company LLP                                                                   
|55 US Highway 46 West                                                                      
|Pine Brook, New Jersey
  07058                                                             
|                                                                                           
|Transfer Agent and Registrar                                                               
|Registrar and Transfer
  Company                                                           
|10 Commerce Drive                                                                          
|Cranford, New Jersey 07016                                                                 
|(800) 368-5948                                                                             

Please contact our transfer
agent directly for assistance in changing your address, elimination of
duplicate mailing, transferring stock, or replacing lost, stolen or destroyed
stock certificates.

Annual Report on Form 10-KSB
A copy of the Companys Form
10-KSB for the fiscal year ended December 31, 2007, as filed with the
Securities and Exchange Commission, is available without charge to stockholders
by written request to the Company. It may also be accessed on our website at: www.lincolnparksavings.com

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|LINCOLN PARK BANCORP AND SUBSIDIARY
|                                   

MARKET INFORMATION

The Companys Common Stock
is traded on the Over-the-Counter Bulletin Board under the symbol LPBC.

The following table sets
forth the range of the high and low prices of the Companys Common Stock for
each quarterly period during the last two fiscal years. Prices are inter-dealer
prices, without retail mark-up, mark-down or commission and may not necessarily
represent actual transactions. The Company paid a special cash dividend of $.05
per share on March 16, 2006 to stockholders of record as of March 2, 2006.

|                   |  |      |       |     |   |           |  |   |     | 
|------------------ |  | ---- | ----- | --- | - | --------- |  | - | --- | 
|Quarter Ended      |  | High |       | Low |   | Dividends | 
|                   |  |      |       |     |   |           | 
|                   |  |      |       |     |   |           |  |   |     | 
|March 31, 2006     |  | $    | 10.10 |     | $ | 8.85      |  | $ | .05 | 
|                   |  |      |       |     |   |           |  |   |     | 
|June 30, 2006      |  | $    | 10.05 |     | $ | 9.50      |  |   |    | 
|                   |  |      |       |     |   |           |  |   |     | 
|September 30, 2006 |  | $    | 9.70  |     | $ | 9.10      |  |   |    | 
|                   |  |      |       |     |   |           |  |   |     | 
|December 31, 2006  |  | $    | 9.48  |     | $ | 8.75      |  |   |    | 
|                   |  |      |       |     |   |           |  |   |     | 
|March 31, 2007     |  | $    | 10.00 |     | $ | 8.65      |  |   |    | 
|                   |  |      |       |     |   |           |  |   |     | 
|June 30, 2007      |  | $    | 9.00  |     | $ | 8.36      |  |   |    | 
|                   |  |      |       |     |   |           |  |   |     | 
|September 30, 2007 |  | $    | 8.50  |     | $ | 7.30      |  |   |    | 
|                   |  |      |       |     |   |           |  |   |     | 
|December 31, 2007  |  | $    | 8.00  |     | $ | 6.00      |  |   |    | 

As of December 31, 2007, there
were 1,825,845 shares of Lincoln Park Bancorp common stock outstanding.

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