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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-K





(Mark One)

|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2009

or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission File Number: 000-20867





PARK BANCORP, INC.

(Exact name of Registrant as specified in its charter)







|                                                                        |  |                                                   
|----------------------------------------------------------------------- |  | --------------------------------------------------
|Delaware (State or other jurisdiction of incorporation or
organization) |  | 36-4082530 (I.R.S. Employer Identification Number)

5400 South Pulaski Road

Chicago, Illinois 60632

(Address of principal executive offices)

(Registrants telephone number, including area code): (773) 582-8616





Securities registered pursuant to Section 12(b) of the Act:



|                                         |  |                                          
|---------------------------------------- |  | -----------------------------------------
|Title of each class                      |  | Name of each exchange on which registered
|Common Stock, $0.01, par value per share |  | Nasdaq Capital Market                    

Securities registered pursuant to Section 12(g) of the Act: None





Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes   ̈    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.    Yes   ̈    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   ̈    No   ̈

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of large accelerated filer, accelerated
filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  |  ̈  (do not check if a smaller reporting company) |  | Smaller Reporting Company |  | x

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

The aggregate market value of the registrants outstanding common stock
held by non-affiliates was approximately $6,101,000 based on the closing price of the common stock of $9.81 per share on June 30, 2009.

As of March 22, 2010, the Registrant had outstanding 1,192,174 shares of common stock.

DOCUMENTS INCORPORATED
BY REFERENCE

Selected portions of the definitive Proxy Statement for the Registrants Annual Meeting of Stockholders to be held on
May 18, 2010 are incorporated into Part III.









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PARK BANCORP, INC.

2009 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS



|         |  |          |  |                                                                                                           |  |   
|-------- |  | -------- |  | --------------------------------------------------------------------------------------------------------- |  | --
|PART I.  |  |          |  |                                                                                                          
|         |  | Item 1.  |  | Business                                                                                                  |  | 4 
|         |  |          |  | General                                                                                                   |  | 4 
|         |  |          |  | Market Area and Competition                                                                               |  | 4 
|         |  |          |  | Lending Activities                                                                                        |  | 5 
|         |  |          |  | Investment Activities                                                                                     |  | 14
|         |  |          |  | Sources of Funds                                                                                          |  | 16
|         |  |          |  | Subsidiary Activities                                                                                     |  | 18
|         |  |          |  | Employees                                                                                                 |  | 18
|         |  |          |  | Supervision and Regulation                                                                                |  | 18
|         |  |          | 
|         |  | Item 1A. |  | Risk Factors                                                                                              |  | 26
|         |  |          | 
|         |  | Item 1B. |  | Unresolved Staff Comments                                                                                 |  | 30
|         |  |          | 
|         |  | Item 2.  |  | Properties                                                                                                |  | 30
|         |  |          | 
|         |  | Item 3.  |  | Legal Proceedings                                                                                         |  | 31
|         |  |          | 
|         |  | Item 4.  |  | (Removed and Reserved)                                                                                    |  | 31
|         |  |         
|PART II. |  |          |  |                                                                                                          
|         |  | Item 5.  |  | Market for Companys Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 31
|         |  |          | 
|         |  | Item 6.  |  | Selected Consolidated Financial Data and Other Data                                                       |  | 32
|         |  |          | 
|         |  | Item 7.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                     |  | 34
|         |  |          |  | Overview and Recent Developments                                                                          |  | 34
|         |  |          |  | Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995                          |  | 34
|         |  |          |  | Average Statement of Financial Condition                                                                  |  | 36
|         |  |          |  | Rate/Volume Analysis                                                                                      |  | 37
|         |  |          |  | Comparison of Financial Condition at December 31, 2009 and December 31, 2008                              |  | 37
|         |  |          |  | Comparison of Operating Results for the Years Ended December 31, 2009 And 2008                            |  | 38
|         |  |          |  | Liquidity and Capital Resources                                                                           |  | 40
|         |  |          |  | Critical Accounting Policies                                                                              |  | 41
|         |  |          |  | Commitments                                                                                               |  | 43
|         |  |          |  | Impact of Inflation and Changing Prices                                                                   |  | 44

(Table of Contents
continued on following page)



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|          |  |             |  |                                                                                                |  |   
|--------- |  | ----------- |  | ---------------------------------------------------------------------------------------------- |  | --
|          |  | Item 7A.    |  | Quantitative and Qualitative Disclosures About Market Risk                                     |  | 44
|          |  |             | 
|          |  | Item 8.     |  | Financial Statements and Supplementary Data                                                    |  | 46
|          |  |             | 
|          |  | Item 9.     |  | Changes in and Disagreements with Accountants on Accounting Financial Disclosure               |  | 46
|          |  |             | 
|          |  | Item 9A(T). |  | Controls and Procedures                                                                        |  | 46
|          |  |             | 
|          |  | Item 9B.    |  | Other Information                                                                              |  | 47
|          |  |            
|PART III. |  |             |  |                                                                                               
|          |  | Item 10.    |  | Directors, Executive Officers and Corporate Governance                                         |  | 47
|          |  |             | 
|          |  | Item 11.    |  | Executive Compensation                                                                         |  | 48
|          |  |             | 
|          |  | Item 12.    |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |  | 48
|          |  |             | 
|          |  | Item 13.    |  | Certain Relationships and Related Transactions, and Director Independence                      |  | 49
|          |  |             | 
|          |  | Item 14.    |  | Principal Accounting Fees and Services                                                         |  | 49
|          |  |            
|PART IV.  |  |             |  |                                                                                               
|          |  | Item 15.    |  | Exhibits and Financial Statement Schedules                                                     |  | 50
|          |  |             | 
|          |  |             |  | Signatures                                                                                     |  | 51



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PART I



|ITEM 1. | BUSINESS
|------- | --------

General

Park Bancorp, Inc. (the Company) was incorporated under the laws of the state of
Delaware in 1996, as the holding company for Park Federal Savings Bank (Bank), our banking subsidiary, and PBI Development Corporation (PBI), which conducted real estate development activities. The Bank, which was organized
as a mutual savings and loan association and has been operating since 1921, formed the holding company in connection with its conversion from a mutual to a stock savings institution. The Bank is engaged in the business of retail banking, with
operations conducted through its main office and three branch offices located in Chicago and Westmont, Illinois. We also engaged in residential real estate development through our subsidiary, GPS Development Corporation (GPS). The real
estate development subsidiaries are inactive.

The Bank attracts retail deposits from the general public in the areas surrounding its offices
and invests those deposits, together with funds generated from operations and other borrowings, primarily in fixed-rate, one-to-four-family residential mortgage loans and securities. The Bank makes, on a limited basis, investments in multi-family
mortgage, commercial real estate, construction, land, and consumer loans. The Banks revenues are derived principally from interest on its loans and securities. The Banks primary sources of funds are deposits, advances from the Federal
Home Loan Bank (FHLB), securities sold under repurchase agreements, and principal and interest payments on loans and securities.

Market Area and Competition

The Bank is a community-oriented savings bank. The Banks primary
deposit gathering area is concentrated in the communities surrounding its offices, while its lending activities primarily include areas throughout Cook, DuPage, and Will Counties in Illinois.

The Banks market area is both an urban and suburban area with the manufacturing industry as the major industrial group, followed by the services
sector, and then the wholesale/retail sector. The Banks Chicago offices are located in diverse communities, which have a high percentage of customers of various ethnic backgrounds. Management of the Bank believes that its urban communities
served by its Chicago offices are stable, residential neighborhoods of predominantly one-to-four-family residences and low to middle income families. The Banks Westmont office is located in DuPage County, which consists predominantly of middle
to upper income families.



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The officers and directors of the Bank maintain relationships with area contractors and real estate agents,
which enable them to continually monitor the trends in housing construction and real estate sales in the Banks primary market areas. In addition, the Bank obtains information on real estate sales on a periodic basis through public records and
is aware of a decline in the real estate market within its lending area due to the current economic environment. The Banks competition for loans comes principally from other savings institutions, mortgage banking companies, and commercial
banks. Its most direct competition for deposits has historically come from savings institutions, commercial banks, and credit unions. In addition, the Bank faces increasing competition for deposits and other financial products from nonbank
institutions such as brokerage firms and insurance companies in such areas as short-term money market funds, corporate and government securities funds, mutual funds, and annuities.

Lending Activities

General.The Banks loan portfolio
consists primarily of conventional first mortgage loans secured by one-to-four-family residences. At December 31, 2009, the Bank had total gross loans of $148.1 million, of which $96.7 million were one-to-four family residential mortgage loans,
or 65.27% of the Banks total gross loans. The remainder of the portfolio consists of $17.8 million of multi-family mortgage loans, or 12.04% of total gross loans; $13.6 million of commercial real estate loans, or 9.20% of total gross
loans; $6.0 million of construction and land loans, or 4.05% of total gross loans; and consumer and other loans of $14.0 million, or 9.44% of total gross loans. The Bank had no loans held for sale at December 31, 2009.

Loan Approval Procedures and Authority. The Board of Directors establishes the lending policies of the Bank and delegates lending authority and
responsibility to the Executive Committee, a management committee of the Bank. All real estate loans must be approved by the Executive Committee. The maximum loan amount is $500,000 unless approved by the Board of Directors. Pursuant to Office of
Thrift Supervision (OTS) regulations, loans to one borrower cannot exceed 15% of the Banks unimpaired capital and surplus without regulatory notification. The Bank has no loans to one borrower that are in excess of regulatory
limits.

All table dollar amounts throughout the Form 10-K are in thousands except share and per share data.



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The following table sets forth the composition of the Banks loan portfolio in dollar amounts and as a
percentage of the portfolio at the dates indicated.



|                                   |  |                 |         |   |                 |        |   |        |   |         |                 |  |        |        |  |   |                 |   |  |        |   |  |                 |         |   |        |        |   |                 |   |         |   |  |        |  
|---------------------------------- |  | --------------- | ------- | - | --------------- | ------ | - | ------ | - | ------- | --------------- |  | ------ | ------ |  | - | --------------- | - |  | ------ | - |  | --------------- | ------- | - | ------ | ------ | - | --------------- | - | ------- | - |  | ------ | -
|                                   |  | At December 31, |        
|                                   |  | 2009            |         |   | 2008            |        |   | 2007   |   |         | 2006            |  |        | 2005   | 
|                                   |  | Amount          |         |   | Percentof Total |        |   | Amount |   |         | Percentof Total |  |        | Amount |  |   | Percentof Total |   |  | Amount |   |  | Percentof Total |         |   | Amount |        |   | Percentof Total |  
|Real estate                        |  |                 |         |   |                 |        |   |        |   |         |                 |  |        |        |  |   |                 |   |  |        |   |  |                 |         |   |        |        |   |                 |   |         |   |  |        |  
|Residential                        |  |                 |         |   |                 |        |   |        |   |         |                 |  |        |        |  |   |                 |   |  |        |   |  |                 |         |   |        |        |   |                 |   |         |   |  |        |  
|One-to-four- family                |  | $               | 96,677  |   |                 | 65.27  | % |        | $ | 92,829  |                 |  | 65.90  | %      |  | $ | 86,427          |   |  | 58.08  | % |  | $               | 87,417  |   |        | 57.41  | % |                 | $ | 89,904  |   |  | 53.69  | %
|Multi-family                       |  |                 | 17,832  |   |                 | 12.04  |   |        |   | 19,338  |                 |  | 13.73  |        |  |   | 23,882          |   |  | 16.05  |   |  |                 | 22,748  |   |        | 14.94  |   |                 |   | 27,939  |   |  | 16.68  |  
|Commercial                         |  |                 | 13,626  |   |                 | 9.20   |   |        |   | 13,549  |                 |  | 9.62   |        |  |   | 12,782          |   |  | 8.59   |   |  |                 | 16,494  |   |        | 10.83  |   |                 |   | 18,145  |   |  | 10.84  |  
|Construction and land              |  |                 | 6,005   |   |                 | 4.05   |   |        |   | 5,358   |                 |  | 3.80   |        |  |   | 9,542           |   |  | 6.41   |   |  |                 | 13,371  |   |        | 8.78   |   |                 |   | 14,585  |   |  | 8.71   |  
|                                   |  |                 |         |   |                 |        |   |        |   |        
|Consumer and other                 |  |                 | 13,981  |   |                 | 9.44   |   |        |   | 9,788   |                 |  | 6.95   |        |  |   | 16,176          |   |  | 10.87  |   |  |                 | 12,239  |   |        | 8.04   |   |                 |   | 16,879  |   |  | 10.08  |  
|                                   |  |                 |         |   |                 |        |   |        |   |         |                 |  |        |        |  |   |                 |   |  |        |   |  |                 |         |   |        |        |   |                 |   |         |   |  |        |  
|                                   |  |                 |         |   |                 |        |   |        |   |        
|Total gross loans                  |  |                 | 148,121 |   |                 | 100.00 | % |        |   | 140,862 |                 |  | 100.00 | %      |  |   | 148,809         |   |  | 100.00 | % |  |                 | 152,269 |   |        | 100.00 | % |                 |   | 167,452 |   |  | 100.00 | %
|                                   |  |                 |         |   |                 |        |   |        |   |         |                 |  |        |        |  |   |                 |   |  |        |   |  |                 |         |   |        |        |   |                 |   |         |   |  |        |  
|                                   |  |                 |         |   |                 |        |   |        |   |        
|Undisbursed portion of loans       |  |                 | (2,191  | ) |                 |        |   |        |   | (1,287  | )               |  |        |        |  |   | (1,857          | ) |  |        |   |  |                 | (3,083  | ) |        |        |   |                 |   | (5,918  | ) |  |        |  
|Net deferred loan origination fees |  |                 | (155    | ) |                 |        |   |        |   | (220    | )               |  |        |        |  |   | (275            | ) |  |        |   |  |                 | (373    | ) |        |        |   |                 |   | (457    | ) |  |        |  
|                                   |  |                 |         |   |                 |        |   |        |   |        
|Allowance for loan losses          |  |                 | (2,851  | ) |                 |        |   |        |   | (775    | )               |  |        |        |  |   | (640            | ) |  |        |   |  |                 | (637    | ) |        |        |   |                 |   | (2,368  | ) |  |        |  
|                                   |  |                 |         |   |                 |        |   |        |   |         |                 |  |        |        |  |   |                 |   |  |        |   |  |                 |         |   |        |        |   |                 |   |         |   |  |        |  
|                                   |  |                 |         |   |                 |        |   |        |   |        
|Total loans, net                   |  | $               | 142,924 |   |                 |        |   |        | $ | 138,580 |                 |  |        |        |  | $ | 146,037         |   |  |        |   |  | $               | 148,176 |   |        |        |   |                 | $ | 158,709 |   |  |        |  
|                                   |  |                 |         |   |                 |        |   |        |   |         |                 |  |        |        |  |   |                 |   |  |        |   |  |                 |         |   |        |        |   |                 |   |         |   |  |        |  



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Loan Maturity.The following table shows the contractual maturity of the Banks gross loans at
December 31, 2009. The table does not include principal prepayments.



|                                    |  |                    |        |              |   |            |  |                     |        |                  |   |                 |  |   |        |  |   |        
|----------------------------------- |  | ------------------ | ------ | ------------ | - | ---------- |  | ------------------- | ------ | ---------------- | - | --------------- |  | - | ------ |  | - | -------
|                                    |  | Real Estate Loans 
|                                    |  | One-to-Four-Family |        | Multi-Family |   | Commercial |  | ConstructionandLand |        | ConsumerandOther |   | TotalGrossLoans
|Amounts due                         |  |                    |        |              |   |            |  |                     |        |                  |   |                 |  |   |        |  |   |        
|One year or less                    |  | $                  | 85     |              | $ | 7,041      |  | $                   | 2,700  |                  | $ | 5,183           |  | $ | 6,150  |  | $ | 21,159 
|                                    |  |                    |        |              |   |            |  |                     |        |                  |   |                 |  |   |        |  |   |        
|More than one year to three years   |  |                    | 203    |              |   | 2,263      |  |                     | 574    |                  |   | 157             |  |   | 1,915  |  |   | 5,112  
|More than three years to five years |  |                    | 911    |              |   | 2,382      |  |                     | 880    |                  |   | 516             |  |   | 2,859  |  |   | 7,548  
|More than five years to ten years   |  |                    | 11,277 |              |   | 1,679      |  |                     | 5,795  |                  |   |                |  |   | 85     |  |   | 18,836 
|More than ten years                 |  |                    | 84,201 |              |   | 4,467      |  |                     | 3,677  |                  |   | 149             |  |   | 2,972  |  |   | 95,466 
|                                    |  |                    |        |              |   |            |  |                     |        |                  |   |                 |  |   |        |  |   |        
|                                    |  |                    |        |              |   |           
|Total due after December 31, 2010   |  |                    | 96,592 |              |   | 10,791     |  |                     | 10,926 |                  |   | 822             |  |   | 7,831  |  |   | 126,962
|                                    |  |                    |        |              |   |            |  |                     |        |                  |   |                 |  |   |        |  |   |        
|                                    |  |                    |        |              |   |           
|Total gross loans                   |  | $                  | 96,677 |              | $ | 17,832     |  | $                   | 13,626 |                  | $ | 6,005           |  | $ | 13,981 |  | $ | 148,121
|                                    |  |                    |        |              |   |            |  |                     |        |                  |   |                 |  |   |        |  |   |        

The following table sets forth at December 31, 2009 the dollar
amount of total gross loans contractually due after December 31, 2010 and whether such loans have fixed interest rates or adjustable interest rates.



|                      |  |                             |         |            |   |        |  |   |        
|--------------------- |  | --------------------------- | ------- | ---------- | - | ------ |  | - | -------
|                      |  | Due After December 31, 2010
|                      |  | Fixed                       |         | Adjustable |   | Total 
|Real estate loans     |  |                             |         |            |   |        |  |   |        
|Residential           |  |                             |         |            |   |        |  |   |        
|One-to-four-family    |  | $                           | 88,081  |            | $ | 8,511  |  | $ | 96,592 
|Multi-family          |  |                             | 10,791  |            |   |       |  |   | 10,791 
|Commercial            |  |                             | 10,926  |            |   |       |  |   | 10,926 
|Construction and land |  |                             | 673     |            |   | 149    |  |   | 822    
|Consumer and other    |  |                             | 4,858   |            |   | 2,973  |  |   | 7,831  
|                      |  |                             |         |            |   |        |  |   |        
|                      |  |                             |        
|Total gross loans     |  | $                           | 115,329 |            | $ | 11,633 |  | $ | 126,962
|                      |  |                             |         |            |   |        |  |   |        

Origination and Purchase of Loans. The Banks mortgage
lending activities are conducted through its home office and three branch offices. Although the Bank may originate adjustable-rate mortgage loans, the substantial majority of the Banks loan originations are fixed-rate mortgage loans. While the
Bank retains for its portfolio all of the mortgage loans that it originates, the Bank may, in the future, sell mortgage loans that it originates depending on market conditions and the financial condition of the Bank. The Bank has purchased loans or
participated in loans originated by other institutions based upon the Banks investment needs and market opportunities.



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The following table sets forth the Banks loan originations, purchases, and principal repayments for
the periods indicated:



|                                    |  |                                 |         |   |      |   |         |      |  |   |         |  
|----------------------------------- |  | ------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                    |  | For the Year Ended December 31, |        
|                                    |  | 2009                            |         |   | 2008 |   |         | 2007 | 
|Beginning balance, net              |  | $                               | 138,580 |   |      | $ | 146,037 |      |  | $ | 148,176 |  
|Loans originated                    |  |                                 |         |   |      |   |         |      |  |   |         |  
|One-to-four-family                  |  |                                 | 13,119  |   |      |   | 22,094  |      |  |   | 12,298  |  
|Multi-family                        |  |                                 | 1,330   |   |      |   | 780     |      |  |   | 3,516   |  
|Commercial                          |  |                                 | 2,067   |   |      |   | 3,337   |      |  |   | 538     |  
|Construction and land               |  |                                 | 1,289   |   |      |   | 1,492   |      |  |   | 3,858   |  
|Consumer                            |  |                                 | 2,057   |   |      |   | 1,588   |      |  |   | 1,520   |  
|                                    |  |                                 |         |   |      |   |         |      |  |   |         |  
|Total loans originated              |  |                                 | 19,862  |   |      |   | 29,291  |      |  |   | 21,730  |  
|Loans participations                |  |                                 | 1,240   |   |      |   | 1,718   |      |  |   | 4,846   |  
|                                    |  |                                 |         |   |      |   |         |      |  |   |         |  
|                                    |  |                                 | 21,102  |   |      |   | 31,009  |      |  |   | 26,576  |  
|                                    |  |                                 |        
|Principal payments                  |  |                                 | (13,618 | ) |      |   | (38,172 | )    |  |   | (27,951 | )
|Transfer to real estate owned       |  |                                 | (160    | ) |      |   | (729    | )    |  |   | (1,987  | )
|Change in allowance for loan losses |  |                                 | (2,076  | ) |      |   | (135    | )    |  |   | (3      | )
|Change in undisbursed loan funds    |  |                                 | (904    | ) |      |   | 570     |      |  |   | 1,226   |  
|                                    |  |                                 |         |   |      |   |         |      |  |   |         |  
|                                    |  |                                 |        
|Ending balance, net                 |  | $                               | 142,924 |   |      | $ | 138,580 |      |  | $ | 146,037 |  
|                                    |  |                                 |         |   |      |   |         |      |  |   |         |  

One-to-Four-Family Mortgage Lending. The Bank offers mortgage loans secured by one-to-four-family residences located
in the Banks primary market area. Loan applications are obtained by the Banks loan officers through their contacts with the local real estate industry, customers, and members of the local communities. The Banks policy is to
originate one-to-four-family residential mortgage loans in amounts up to 80% of the lower of the appraised value or the selling price of the property securing the loan and up to 95% of the appraised value or selling price if private mortgage
insurance is obtained. The residential mortgage loans originated by the Bank are for maturity terms of up to 30 years.

The Bank offers
adjustable rate mortgage (ARM) loans as a means of reducing its exposure to changes in interest rates. However, the volume and types of ARM loans originated by the Bank have been affected by such market factors as the level of interest
rates, competition, consumer preferences, and the availability of funds. In recent years, the Bank has not originated a significant amount of ARM loans as compared to its originations of fixed-rate loans. ARM loans pose credit risks different from
the risks inherent in fixed rate loans, primarily because as interest rates rise, the underlying payments of the borrower rise, thereby increasing the potential for default. The ARM loans currently offered by the Bank do not provide for initial deep
discount teaser interest rates. Although the Bank will continue to offer ARM loans, there can be no assurance that in the future the Bank will be able to originate a sufficient volume of ARM loans to constitute a significant portion of
the Banks loan portfolio.

Multi-Family Lending. The Bank originates multi-family mortgage loans secured by properties located in
the Banks primary market area. The amount of multi-family loans originated by the Bank depends upon market conditions.



8



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##### Table of Contents

Pursuant to the Banks current underwriting policies, a multi-family mortgage loan may be made in an
amount up to 80% of the appraised value of the underlying property. In addition, the Bank generally requires a debt service ratio of 120%. Properties securing a multi-family loan are appraised by an independent appraiser. Title and property
insurance are required on all multi-family loans.

The Banks underwriting policies require that the borrower be able to demonstrate
strong management skills and the ability to maintain the property for current rental income. The borrower is required to present evidence of the ability to repay the mortgage and a satisfactory credit history. In making its assessment of the
creditworthiness of the borrower, the Bank reviews the financial statements and the employment and credit history of the borrower as well as other related documentation. Loans secured by multi-family residential properties generally involve a
greater degree of risk than one-to-four-family residential mortgage loans. Because payments on loans secured by multi-family properties are often dependent on successful operation or management of the properties, repayment of such loans may be
subject to a greater extent to adverse conditions in the real estate market or the economy. The Bank seeks to minimize these risks through its underwriting policies, which require such loans to be qualified at origination on the basis of the
propertys income and debt coverage ratio.

Commercial Real Estate Lending. The Bank originates commercial real estate loans that
are generally secured by properties used for business purposes such as small office buildings or retail facilities located in its primary market areas. The Banks underwriting procedures provide that commercial real estate loans may be made in
amounts up to the lesser of 80% of the appraised value of the property or the sales price. The Bank has generally required that the properties securing commercial real estate loans have debt service coverage ratios of at least 120%.

Loans secured by commercial real estate properties are generally larger and involve a greater degree of risk than one-to-four-family residential mortgage
loans. Because payments on loans secured by commercial real estate properties are often dependent on successful operation or management of the properties, repayment of such loans is subject to adverse conditions in the real estate market or the
economy. The Bank seeks to minimize these risks through its underwriting standards, which require such loans to be qualified on the basis of the propertys income and debt service ratio.

Construction and Land Lending. The Bank originates construction and land loans in its primary market areas. The Banks construction loans
primarily are made to finance development of one-to-four-family residential properties. These loans are primarily fixed-rate loans with maturities of one year or less. The Banks policies provide that construction loans may be made in amounts
up to 80% of the appraised value of the property for construction of one-to-four-family residences. The Bank requires an independent appraisal of the property. Loan proceeds are disbursed in increments as construction progresses and as regular
inspections warrant. Land loans generally do not exceed 75% of the actual cost or current appraised value of the property at the date of origination, whichever is less.



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Construction lending may be viewed as involving a greater degree of risk than one-to-four family mortgage
lending. The repayment of the construction loan is, to a great degree, dependent upon the successful and timely completion of the construction of the subject property. Construction delays or the financial impairment of the builder may further impair
the borrowers ability to repay the loan.

Consumer and Other Lending. The Banks consumer and other loans generally consist
of home equity lines of credit, automobile loans, second mortgage loans, loans secured by deposits, commercial lines of credit secured by real estate, and participations purchased.

The Bank invests in loan participations from other financial institutions in its primary market area. At December 31, 2009, the Bank had $7.8 million in loan participations serviced by others,
totaling 5.25% of the gross loan portfolio. The Bank may invest in loan participations to supplement reduced loan demand, as needed. Loan participations must meet the same underwriting criteria as loans originated by the Bank.

Delinquencies and Classified Loans. The Board of Directors and management perform a monthly review of all loans sixty days or more past due. The
procedures taken by the Bank with respect to delinquencies vary depending on the nature of the loan and period of delinquency. The Bank sends the borrower a written notice of nonpayment after the loan is first past due. If the loan is not brought
current and it becomes necessary to take legal action, which occurs after a loan is delinquent at least 60 days, the Bank may commence foreclosure proceedings. If a foreclosure action is instituted and the loan is not brought current, paid in full,
or refinanced before the foreclosure sale, the real property securing the loan is foreclosed upon and sold.

Federal regulations and the
Banks Classification of Assets Policy require that the Bank utilize an internal asset classification system as a means of reporting problem and potential problem loans. The Bank has incorporated the OTS internal asset classifications as a part
of its credit monitoring system. The Bank currently classifies problem and potential problem loans as Substandard, Doubtful, or Loss assets, depending upon the severity of the delinquency status or repayment
capacity of the borrower. The likelihood of collection on the loan declines with each classification, and loans classified as Loss are those considered uncollectible and of such little value that their continuance as loans
without the establishment of a specific loss allowance is not warranted. Loans that do not currently expose the Bank to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are designated
Special Mention.

The Banks Executive Committee reviews and classifies the Banks loans monthly and reports the results
of its review to the Board of Directors. The Bank classifies loans in accordance with the management guidelines described above. At December 31, 2009, the Bank had loans, net of undisbursed funds, classified as Special Mention of
$5.6 million and $11.3 million of loans classified as Substandard. No loans were classified as Doubtful or Loss.

Nonaccrual and Past-Due Loans. The following table sets forth information regarding nonaccrual loans, and other real estate owned (REO). It is the policy of the Bank to cease accruing interest on loans 90 days or more
past due unless management determines all principal and interest due on the loan will be collected in the future.



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|                                             |  |                 |        |      |   |       |  |      |       |      |   |       |  |   |      
|-------------------------------------------- |  | --------------- | ------ | ---- | - | ----- |  | ---- | ----- | ---- | - | ----- |  | - | -----
|                                             |  | At December 31,
|                                             |  | 2009            |        | 2008 |   | 2007  |  | 2006 |       | 2005
|Nonaccrual loans                             |  |                 |        |      |   |       |  |      |       |      |   |       |  |   |      
|Residential real estate                      |  |                 |        |      |   |       |  |      |       |      |   |       |  |   |      
|One-to-four-family                           |  | $               | 5,892  |      | $ | 780   |  | $    | 190   |      | $ | 461   |  | $ | 448  
|Multi-family                                 |  |                 | 1,155  |      |   |      |  |      |      |      |   |      |  |   | 3,355
|Commercial                                   |  |                 | 3,472  |      |   |      |  |      |      |      |   | 1,835 |  |   | 941  
|Construction and land                        |  |                 | 486    |      |   |      |  |      |      |      |   |      |  |   |     
|Consumer and other                           |  |                 | 323    |      |   |      |  |      |      |      |   | 45    |  |   |     
|                                             |  |                 |        |      |   |       |  |      |       |      |   |       |  |   |      
|Total nonaccrual loans                       |  |                 | 11,328 |      |   | 780   |  |      | 190   |      |   | 2,341 |  |   | 4,744
|Total past due over 90 days still on accrual |  |                 |       |      |   |      |  |      |      |      |   |      |  |   |     
|                                             |  |                 |        |      |   |       |  |      |       |      |   |       |  |   |      
|Total non-performing loans                   |  |                 | 11,328 |      |   | 780   |  |      | 190   |      |   | 2,341 |  |   | 4,744
|REO                                          |  |                 | 1,611  |      |   | 1,874 |  |      | 2,449 |      |   | 2,261 |  |   | 132  
|                                             |  |                 |        |      |   |       |  |      |       |      |   |       |  |   |      
|                                             |  |                 |        |      |  
|Total non-performing assets                  |  | $               | 12,939 |      | $ | 2,654 |  | $    | 2,639 |      | $ | 4,602 |  | $ | 4,876
|                                             |  |                 |        |      |   |       |  |      |       |      |   |       |  |   |      

At December 31, 2009, there were 14 loans totaling $2.0 million
that were 60 to 89 days delinquent and is still accruing interest.

The Bank had $3.6 million in troubled debt restructured loans at
December 31, 2009, of which $588,000 were classified as nonperforming and are included in one-to-four-family nonaccrual loans in the table above. The remaining $3.0 million of the troubled debt restructured loans are classified as performing
and consist of the following: $2.3 million in one-to-four-family loans, $414,000 in multi-family loans, and $267,000 in commercial loans. There were no troubled debt restructured loans at December 31, 2008.

Allowance for Loan Losses. The allowance for loan losses is established through a provision for loan losses based on managements evaluation of
the loan portfolio, its classifications of individual loans, and the general economy. The allowance for loan losses is maintained at an amount management considers appropriate to cover probable incurred losses on loans receivable. The allowance is
based upon a number of factors, including current economic conditions, actual loss experience, and industry trends. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Banks
allowance for loan losses. Such agencies may require the Bank to make additional provisions for loan losses based upon information available at the time of the review. The Bank will continue to monitor and modify the allowance for loan losses as
conditions dictate.

The following table sets forth activity in the Banks allowance for loan losses for the years set forth in the
table.



|                             |  |                 |       |   |      |   |     |      |  |   |      |   |  |      |        |   |  |   |       |  
|---------------------------- |  | --------------- | ----- | - | ---- | - | --- | ---- |  | - | ---- | - |  | ---- | ------ | - |  | - | ----- | -
|                             |  | At December 31, |      
|                             |  | 2009            |       |   | 2008 |   |     | 2007 |  |   | 2006 |   |  | 2005 |       
|Balance at beginning of year |  | $               | 775   |   |      | $ | 640 |      |  | $ | 637  |   |  | $    | 2,368  |   |  | $ | 1,374 |  
|Provision for loan losses    |  |                 | 2,222 |   |      |   | 184 |      |  |   | 75   |   |  |      | 249    |   |  |   | 997   |  
|Charge-offs                  |  |                 |       |   |      |   |     |      |  |   |      |   |  |      |        |   |  |   |       |  
|One-to-four-family           |  |                 | (95   | ) |      |   | (36 | )    |  |   | (8   | ) |  |      |       |   |  |   |      |  
|Multi-family                 |  |                 |      |   |      |   |    |      |  |   | (27  | ) |  |      | (1,615 | ) |  |   |      |  
|Commercial                   |  |                 |      |   |      |   |    |      |  |   |     |   |  |      | (437   | ) |  |   |      |  
|Consumer and other           |  |                 | (51   | ) |      |   | (14 | )    |  |   | (37  | ) |  |      | (5     | ) |  |   | (3    | )
|                             |  |                 |       |   |      |   |     |      |  |   |      |   |  |      |        |   |  |   |       |  
|Total charge-offs            |  |                 | (146  | ) |      |   | (50 | )    |  |   | (72  | ) |  |      | (2,057 | ) |  |   | (3    | )
|Recoveries                   |  |                 |      |   |      |   | 1   |      |  |   |     |   |  |      | 77     |   |  |   |      |  
|                             |  |                 |       |   |      |   |     |      |  |   |      |   |  |      |        |   |  |   |       |  
|                             |  |                 |       |   |     
|Balance at end of year       |  | $               | 2,851 |   |      | $ | 775 |      |  | $ | 640  |   |  | $    | 637    |   |  | $ | 2,368 |  
|                             |  |                 |       |   |      |   |     |      |  |   |      |   |  |      |        |   |  |   |       |  



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##### Table of Contents

|                                                                       |  |       |   |  |       |   |  |        |   |  |       |   |  |       |  
|---------------------------------------------------------------------- |  | ----- | - |  | ----- | - |  | ------ | - |  | ----- | - |  | ----- | -
|                                                                       |  | 2009  |   |  | 2008  |   |  | 2007   |   |  | 2006  |   |  | 2005  |  
|Net charge-offs to average gross loans outstanding                     |  | 0.10  | % |  | 0.03  | % |  | 0.05   | % |  | 1.24  | % |  |      | %
|                                                                       |  |       |   |  |      
|Allowance for loan losses as a percent of gross loans receivable       |  | 1.92  |   |  | 0.55  |   |  | 0.43   |   |  | 0.43  |   |  | 1.41  |  
|                                                                       |  |       |   |  |      
|Allowance for loan losses as a per- cent of total non-performing loans |  | 25.17 |   |  | 99.36 |   |  | 336.84 |   |  | 27.21 |   |  | 49.92 |  
|                                                                       |  |       |   |  |      
|Non-performing loans as a percent of gross loans receivable(1)         |  | 7.65  |   |  | 0.55  |   |  | 0.13   |   |  | 1.54  |   |  | 2.83  |  
|                                                                       |  |       |   |  |      
|Non-performing assets as a percentage of total assets(1)               |  | 5.92  |   |  | 1.21  |   |  | 1.20   |   |  | 2.03  |   |  | 2.04  |  



|(1) | Non-performing assets consist of non-performing loans and REO. Non-performing loans consist of nonaccrual loans and loans over 90 days past due still
on accrual.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

The following table sets forth the amount of the Banks allowance for loan losses by type, the percent
of allowance for loan losses by type to total allowance, and the percent of gross loans by type to total gross loans in each of the categories listed at the dates indicated.



|                                |  |                 |       |                                      |        |   |                                             |        |   |        |      |                                      |  |        |                                             |  |        |        |  |                                      |     |  |                                             |   |  |        |   |                                      |   |     |                                             |        |   |        |        |                                      |  |   |                                             |  |       |   |  |        |  
|------------------------------- |  | --------------- | ----- | ------------------------------------ | ------ | - | ------------------------------------------- | ------ | - | ------ | ---- | ------------------------------------ |  | ------ | ------------------------------------------- |  | ------ | ------ |  | ------------------------------------ | --- |  | ------------------------------------------- | - |  | ------ | - | ------------------------------------ | - | --- | ------------------------------------------- | ------ | - | ------ | ------ | ------------------------------------ |  | - | ------------------------------------------- |  | ----- | - |  | ------ | -
|                                |  | At December 31, |      
|                                |  | 2009            |       |                                      | 2008   |   |                                             | 2007   |   |        | 2006 |                                      |  | 2005   |                                            
|                                |  | Amount          |       | Percent ofAllowanceto TotalAllowance |        |   | Percent ofGrossLoans inEachCategoryto Total |        |   | Amount |      | Percent ofAllowanceto TotalAllowance |  |        | Percent ofGrossLoans inEachCategoryto Total |  |        | Amount |  | Percent ofAllowanceto TotalAllowance |     |  | Percent ofGrossLoans inEachCategoryto Total |   |  | Amount |   | Percent ofAllowanceto TotalAllowance |   |     | Percent ofGrossLoans inEachCategoryto Total |        |   | Amount |        | Percent ofAllowanceto TotalAllowance |  |   | Percent ofGrossLoans inEachCategoryto Total | 
|One-to-four-family              |  | $               | 2,026 |                                      | 71.05  | % |                                             | 65.27  | % |        | $    | 529                                  |  | 68.26  | %                                           |  | 65.90  | %      |  | $                                    | 319 |  | 49.85                                       | % |  | 58.08  | % |                                      | $ | 139 |                                             | 21.82  | % |        | 57.41  | %                                    |  | $ | 217                                         |  | 9.16  | % |  | 53.69  | %
|Multi-family                    |  |                 | 102   |                                      | 3.57   |   |                                             | 12.04  |   |        |      | 108                                  |  | 13.93  |                                             |  | 13.73  |        |  |                                      | 47  |  | 7.34                                        |   |  | 16.05  |   |                                      |   | 68  |                                             | 10.67  |   |        | 14.94  |                                      |  |   | 1,576                                       |  | 66.56 |   |  | 16.68  |  
|Commercial                      |  |                 | 94    |                                      | 3.31   |   |                                             | 9.20   |   |        |      | 48                                   |  | 6.19   |                                             |  | 9.62   |        |  |                                      | 63  |  | 9.84                                        |   |  | 8.59   |   |                                      |   | 174 |                                             | 27.32  |   |        | 10.83  |                                      |  |   | 369                                         |  | 15.58 |   |  | 10.84  |  
|Construction and land           |  |                 | 491   |                                      | 17.21  |   |                                             | 4.05   |   |        |      | 14                                   |  | 1.81   |                                             |  | 3.80   |        |  |                                      | 40  |  | 6.25                                        |   |  | 6.41   |   |                                      |   | 127 |                                             | 19.94  |   |        | 8.78   |                                      |  |   | 90                                          |  | 3.80  |   |  | 8.71   |  
|Consumer and other              |  |                 | 138   |                                      | 4.86   |   |                                             | 9.44   |   |        |      | 76                                   |  | 9.81   |                                             |  | 6.95   |        |  |                                      | 171 |  | 26.72                                       |   |  | 10.87  |   |                                      |   | 129 |                                             | 20.25  |   |        | 8.04   |                                      |  |   | 116                                         |  | 4.90  |   |  | 10.08  |  
|                                |  |                 |       |                                      |        |   |                                             |        |   |        |      |                                      |  |        |                                             |  |        |        |  |                                      |     |  |                                             |   |  |        |   |                                      |   |     |                                             |        |   |        |        |                                      |  |   |                                             |  |       |   |  |        |  
|Total allowance for loan losses |  | $               | 2,851 |                                      | 100.00 | % |                                             | 100.00 | % |        | $    | 775                                  |  | 100.00 | %                                           |  | 100.00 | %      |  | $                                    | 640 |  | 100.00                                      | % |  | 100.00 | % |                                      | $ | 637 |                                             | 100.00 | % |        | 100.00 | %                                    |  | $ | 2,368                                       |  | 100.0 | % |  | 100.00 | %
|                                |  |                 |       |                                      |        |   |                                             |        |   |        |      |                                      |  |        |                                             |  |        |        |  |                                      |     |  |                                             |   |  |        |   |                                      |   |     |                                             |        |   |        |        |                                      |  |   |                                             |  |       |   |  |        |  



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##### Table of Contents

Investment Activities

The investment policies of the Company and the Bank as established by the Board of Directors attempt to provide and maintain liquidity, generate a favorable
return on investments without incurring undue interest rate and credit risk, and complement the Banks lending activities. The policies provide the authority to invest in government agency and sponsored enterprises securities, mortgage-backed
securities, corporate bonds, municipal securities, and equity securities.

Investments in mortgage-backed securities involve a risk that
actual prepayments will be greater than estimated prepayments over the life of the security, which may require adjustments to the amortization of any premium or accretion of any discount relating to such instruments, thereby reducing or increasing,
respectively, the net yield on such securities. There is also reinvestment risk associated with the cash flows from such securities. In addition, the market value of debt securities may be adversely affected by changes in interest rates.

All government sponsored enterprises securities held at December 31, 2009 are callable at the option of the issuer, which also presents prepayment
risk to the Company.

The following table sets forth information regarding the carrying amount and fair values of the Companys
securities at the dates indicated.



|                                 |  |                 |        |           |   |               |  |           |        |               |   |           |  |   |        |  |   |       
|-------------------------------- |  | --------------- | ------ | --------- | - | ------------- |  | --------- | ------ | ------------- | - | --------- |  | - | ------ |  | - | ------
|                                 |  | At December 31,
|                                 |  | 2009            |        | 2008      |   | 2007         
|                                 |  | AmortizedCost   |        | FairValue |   | AmortizedCost |  | FairValue |        | AmortizedCost |   | FairValue
|Available for sale               |  |                 |        |           |   |               |  |           |        |               |   |           |  |   |        |  |   |       
|Government sponsored enterprises |  | $               | 16,981 |           | $ | 16,762        |  | $         | 25,091 |               | $ | 25,326    |  | $ | 11,804 |  | $ | 11,937
|Corporate                        |  |                 | 5,010  |           |   | 5,095         |  |           | 4,089  |               |   | 3,816     |  |   |       |  |   |      
|Municipal                        |  |                 | 502    |           |   | 512           |  |           |       |               |   |          |  |   |       |  |   |      
|Mortgage-backed residential      |  |                 |        |           |   |               |  |           |        |               |   |           |  |   |        |  |   |       
|FNMA (1)                         |  |                 | 4,167  |           |   | 4,228         |  |           | 5,526  |               |   | 5,432     |  |   | 8,910  |  |   | 8,931 
|FHLMC (2)                        |  |                 | 2,398  |           |   | 2,467         |  |           | 3,102  |               |   | 3,070     |  |   | 4,477  |  |   | 4,527 
|GNMA (3)                         |  |                 | 1,020  |           |   | 1,042         |  |           | 1,230  |               |   | 1,189     |  |   | 1,667  |  |   | 1,668 
|Equity (4)                       |  |                 | 4,493  |           |   | 4,672         |  |           | 4,762  |               |   | 4,762     |  |   | 6,708  |  |   | 6,719 
|                                 |  |                 |        |           |   |               |  |           |        |               |   |           |  |   |        |  |   |       
|                                 |  |                 |        |           |   |              
|Total available for sale         |  | $               | 34,571 |           | $ | 34,778        |  | $         | 43,800 |               | $ | 43,595    |  | $ | 33,566 |  | $ | 33,782
|                                 |  |                 |        |           |   |               |  |           |        |               |   |           |  |   |        |  |   |       



|(1) | Federal National Mortgage Association.
|--- | --------------------------------------

|(2) | Federal Home Loan Mortgage Corporation.
|--- | ---------------------------------------

|(3) | Government National Mortgage Association.
|--- | -----------------------------------------

|(4) | $4,647 is invested in a mutual fund that invests primarily in private label securities backed by or representing an interest in mortgages or domestic residential
housing or manufactured housing, with additional investments in U.S. government agency securities. The remaining investment of $25 consists of an investment in the common stock of one financial institution.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



14



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##### Table of Contents

The table below sets forth certain information regarding the carrying amount, weighted average yields, and
contractual maturities of the Companys securities as of December 31, 2009. All of the Companys securities are classified as available for sale. Securities not due at a single maturity date, primarily mortgage-backed and equity
securities, are shown in the total column only.



|                                 |  |                      |       |                      |                                 |   |                |                                  |                      |  |                    |                |  |                      |       |  |                |   |                      |   |       |                |      |                      |  |   |        |  |      |  
|-------------------------------- |  | -------------------- | ----- | -------------------- | ------------------------------- | - | -------------- | -------------------------------- | -------------------- |  | ------------------ | -------------- |  | -------------------- | ----- |  | -------------- | - | -------------------- | - | ----- | -------------- | ---- | -------------------- |  | - | ------ |  | ---- | -
|                                 |  | At December 31, 2009 |      
|                                 |  | One Year or Less     |       |                      | More than OneYear to Five Years |   |                | More than FiveYears to Ten Years |                      |  | More thanTen Years |                |  | Total                |      
|                                 |  | CarryingAmount       |       | WeightedAverageYield |                                 |   | CarryingAmount |                                  | WeightedAverageYield |  |                    | CarryingAmount |  | WeightedAverageYield |       |  | CarryingAmount |   | WeightedAverageYield |   |       | CarryingAmount |      | WeightedAverageYield | 
|Government sponsored enterprises |  | $                    |      |                      |                                | % |                | $                                | 992                  |  | 1.38               | %              |  | $                    | 5,995 |  | 3.85           | % |                      | $ | 9,775 |                | 4.32 | %                    |  | $ | 16,762 |  | 3.98 | %
|Corporate                        |  |                      | 1,006 |                      | 7.82                            |   |                |                                  | 4,089                |  | 4.41               |                |  |                      |      |  |               |   |                      |   |      |                |     |                      |  |   | 5,095  |  | 5.08 |  
|Municipal                        |  |                      |      |                      |                                |   |                |                                  |                     |  |                   |                |  |                      | 512   |  | 4.05           |   |                      |   |      |                |     |                      |  |   | 512    |  | 4.05 |  
|Mortgage-backed residential      |  |                      |       |                      |                                 |   |                |                                  |                      |  |                    |                |  |                      |       |  |                |   |                      |   |       |                |      |                      |  |   |        |  |      |  
|FNMA                             |  |                      |      |                      |                                |   |                |                                  |                     |  |                   |                |  |                      |      |  |               |   |                      |   |      |                |     |                      |  |   | 4,228  |  | 2.88 |  
|FHLMC                            |  |                      |      |                      |                                |   |                |                                  |                     |  |                   |                |  |                      |      |  |               |   |                      |   |      |                |     |                      |  |   | 2,467  |  | 3.44 |  
|GNMA                             |  |                      |      |                      |                                |   |                |                                  |                     |  |                   |                |  |                      |      |  |               |   |                      |   |      |                |     |                      |  |   | 1,042  |  | 3.39 |  
|Equity                           |  |                      |      |                      |                                |   |                |                                  |                     |  |                   |                |  |                      |      |  |               |   |                      |   |      |                |     |                      |  |   | 4,672  |  | 3.72 |  
|                                 |  |                      |       |                      |                                 |   |                |                                  |                      |  |                    |                |  |                      |       |  |                |   |                      |   |       |                |      |                      |  |   |        |  |      |  
|                                 |  |                      |       |                      |                                 |   |                |                                  |                      | 
|Total securities                 |  | $                    | 1,006 |                      | 7.82                            | % |                | $                                | 5,081                |  | 3.82               | %              |  | $                    | 6,507 |  | 3.87           | % |                      | $ | 9,775 |                | 4.32 | %                    |  | $ | 34,778 |  | 3.92 | %
|                                 |  |                      |       |                      |                                 |   |                |                                  |                      |  |                    |                |  |                      |       |  |                |   |                      |   |       |                |      |                      |  |   |        |  |      |  

All government sponsored enterprise securities are callable at the option of the issuing agency. Callable rate FHLB advances
totaled $28.0 million at December 31, 2009. The Company has call risk on both the investing and borrowing positions.



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Sources of Funds

General. Deposits, loan payments, cash flows generated from operations, and FHLB advances are the primary sources of the funds used in lending,
investing, and for other general purposes.

Deposits. The Bank offers a variety of deposit accounts with a range of interest rates and
terms. The Banks deposits consist of passbook savings, NOW accounts, money market accounts, and certificates of deposit. The flow of deposits is influenced significantly by general economic conditions, changes in money market rates, prevailing
interest rates, and competition. At December 31, 2009, the Bank had $62.5 million of certificate accounts maturing in a year or less. The Banks deposits are obtained predominantly from the areas surrounding its banking offices. The Bank
relies primarily on customer service and competitive rates to attract and retain these deposits.

At December 31, 2009, the Bank had
$33.7 million in certificate accounts in amounts of $100,000 or more maturing as follows:



|                               |  |        |        |                     |      |  
|------------------------------ |  | ------ | ------ | ------------------- | ---- | -
|Maturity Period                |  | Amount |        | WeightedAverageRate |     
|Three months or less           |  | $      | 10,095 |                     | 3.54 | %
|Over three through six months  |  |        | 4,474  |                     | 2.37 |  
|Over six through twelve months |  |        | 7,252  |                     | 1.87 |  
|Over twelve months             |  |        | 11,883 |                     | 2.87 |  
|                               |  |        |        |                     |      |  
|                               |  |       
|Total                          |  | $      | 33,704 |                     | 2.78 | %
|                               |  |        |        |                     |      |  



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The following table sets forth the distribution of the Banks deposit accounts for the years indicated.



|                              |  |              |         |                 |        |   |        |      |                 |  |        |        |  |                 |         |  |        |  
|----------------------------- |  | ------------ | ------- | --------------- | ------ | - | ------ | ---- | --------------- |  | ------ | ------ |  | --------------- | ------- |  | ------ | -
|                              |  | December 31, |        
|                              |  | 2009         |         |                 | 2008   |   |        | 2007 |                
|                              |  | Amount       |         | Percent ofTotal |        |   | Amount |      | Percent ofTotal |  |        | Amount |  | Percent ofTotal |        
|Passbook accounts             |  | $            | 29,382  |                 | 19.51  | % |        | $    | 27,459          |  | 19.95  | %      |  | $               | 28,594  |  | 20.88  | %
|Money market savings accounts |  |              | 12,357  |                 | 8.20   |   |        |      | 8,084           |  | 5.87   |        |  |                 | 8,426   |  | 6.15   |  
|NOW accounts                  |  |              | 9,573   |                 | 6.36   |   |        |      | 8,500           |  | 6.18   |        |  |                 | 8,773   |  | 6.40   |  
|Non-interest-bearing accounts |  |              | 6,810   |                 | 4.52   |   |        |      | 6,152           |  | 4.47   |        |  |                 | 5,707   |  | 4.17   |  
|                              |  |              |         |                 |        |   |        |      |                 |  |        |        |  |                 |         |  |        |  
|Total transaction accounts    |  |              | 58,122  |                 | 38.59  |   |        |      | 50,195          |  | 36.47  |        |  |                 | 51,500  |  | 37.60  |  
|                              |  |              |         |                 |        |  
|Certificate accounts          |  |              |         |                 |        |   |        |      |                 |  |        |        |  |                 |         |  |        |  
|0.00% to 0.99%                |  |              | 652     |                 | 0.43   |   |        |      |                |  |       |        |  |                 | 50      |  | 0.04   |  
|1.00% to 1.99%                |  |              | 28,593  |                 | 18.98  |   |        |      | 2,519           |  | 1.83   |        |  |                 |        |  |       |  
|2.00% to 2.99%                |  |              | 29,425  |                 | 19.54  |   |        |      | 18,243          |  | 13.25  |        |  |                 | 267     |  | 0.19   |  
|3.00% to 3.99%                |  |              | 25,079  |                 | 16.65  |   |        |      | 41,271          |  | 29.98  |        |  |                 | 21,960  |  | 16.03  |  
|4.00% to 4.99%                |  |              | 8,611   |                 | 5.72   |   |        |      | 22,294          |  | 16.20  |        |  |                 | 28,080  |  | 20.50  |  
|5.00% to 5.99%                |  |              | 140     |                 | 0.09   |   |        |      | 3,127           |  | 2.27   |        |  |                 | 35,117  |  | 25.64  |  
|                              |  |              |         |                 |        |   |        |      |                 |  |        |        |  |                 |         |  |        |  
|Total certificate accounts    |  |              | 92,500  |                 | 61.41  |   |        |      | 87,454          |  | 63.53  |        |  |                 | 85,474  |  | 62.40  |  
|                              |  |              |         |                 |        |   |        |      |                 |  |        |        |  |                 |         |  |        |  
|Total deposits                |  | $            | 150,622 |                 | 100.00 | % |        | $    | 137,649         |  | 100.00 | %      |  | $               | 136,974 |  | 100.00 | %
|                              |  |              |         |                 |        |   |        |      |                 |  |        |        |  |                 |         |  |        |  

The following table presents, by various rate categories, the amount of certificate accounts outstanding at the dates
indicated and the periods to maturity of the certificate accounts outstanding at December 31, 2009.



|                     |  |                                           |        |             |   |             |  |             |       |                  |   |       |  |   |       |  |   |       
|-------------------- |  | ----------------------------------------- | ------ | ----------- | - | ----------- |  | ----------- | ----- | ---------------- | - | ----- |  | - | ----- |  | - | ------
|                     |  | Period to Maturity from December 31, 2009
|                     |  | Less than1 Year                           |        | 1 to2 Years |   | 2 to3 Years |  | 3 to4 Years |       | More than4 Years |   | Total
|Certificate accounts |  |                                           |        |             |   |             |  |             |       |                  |   |       |  |   |       |  |   |       
|0.00% to 0.99%       |  | $                                         | 652    |             | $ |            |  | $           |      |                  | $ |      |  | $ |      |  | $ | 652   
|1.00% to 1.99%       |  |                                           | 24,530 |             |   | 4,063       |  |             |      |                  |   |      |  |   |      |  |   | 28,593
|2.00% to 2.99%       |  |                                           | 15,084 |             |   | 12,120      |  |             | 1,646 |                  |   |      |  |   | 575   |  |   | 29,425
|3.00% to 3.99%       |  |                                           | 16,204 |             |   | 1,611       |  |             | 21    |                  |   | 1,322 |  |   | 5,921 |  |   | 25,079
|4.00% to 4.99%       |  |                                           | 5,869  |             |   | 1,198       |  |             | 646   |                  |   | 898   |  |   |      |  |   | 8,611 
|5.00% to 5.99%       |  |                                           | 117    |             |   | 23          |  |             |      |                  |   |      |  |   |      |  |   | 140   
|                     |  |                                           |        |             |   |             |  |             |       |                  |   |       |  |   |       |  |   |       
|                     |  |                                           |        |             |   |            
|Total                |  | $                                         | 62,456 |             | $ | 19,015      |  | $           | 2,313 |                  | $ | 2,220 |  | $ | 6,496 |  | $ | 92,500
|                     |  |                                           |        |             |   |             |  |             |       |                  |   |       |  |   |       |  |   |       



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Borrowings. Although deposits are the Banks primary source of funds, the Banks policy has
been to utilize borrowings, such as advances from the FHLB.

The Bank obtains advances from the FHLB upon the security of its capital stock in
the FHLB of Chicago and a portion of its mortgage loans. Such advances are made pursuant to several different credit programs, each of which has its own interest rate and range of maturities. The maximum amount that the FHLB will advance to member
institutions fluctuates in accordance with the policies of the OTS and the FHLB. There were $40.0 million of FHLB advances outstanding at December 31, 2009, which carry interest rates ranging from 2.58% to 4.88% and mature on various dates
through October 2018. Advances totaling $28.0 million were subject to certain call options by the FHLB. If FHLB advances are called, the Company generally has the ability to refinance them, although the interest rates on new advances may be higher.

The Companys borrowings also include collateralized borrowings through securities sold under repurchase agreements. The Company
maintains physical control over the securities.

Information concerning securities sold under agreements to repurchase is summarized as
follows:



|                                          |  |      |       |   |      |   |       |      |  |   |       |  
|----------------------------------------- |  | ---- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                          |  | 2009 |       |   | 2008 |   |       | 2007 | 
|Balance at year end                       |  | $    | 2,600 |   |      | $ | 3,239 |      |  | $ | 3,234 |  
|Maximum month-end balance during the year |  |      | 3,239 |   |      |   | 3,239 |      |  |   | 3,234 |  
|Average balance during the year           |  |      | 2,901 |   |      |   | 3,235 |      |  |   | 3,228 |  
|Average interest rate at year end         |  |      | 3.11  | % |      |   | 3.92  | %    |  |   | 3.97  | %
|Average interest rate during the year     |  |      | 3.29  | % |      |   | 3.96  | %    |  |   | 3.97  | %

Subsidiary
Activities

The Company has engaged in the business of purchasing unimproved land for development into residential subdivisions of
primarily single-family lots through its wholly owned subsidiaries, PBI and GPS. There were no gains or losses on the sales of real estate held for development for the years ended December 31, 2009 and 2008, as the subsidiaries were inactive.

Employees

At December 31, 2009, the Company had 60 full-time equivalent employees. None of the Companys employees are represented by any collective bargaining group. Management considers its relationship with employees to be excellent.

SUPERVISION AND REGULATION

Banking is a highly regulated industry. The Company and the Bank are subject to numerous laws and regulations and supervision and examination by various regulatory agencies. Certain of the regulatory
requirements that are or will be applicable to us are described below. This description is not intended to be a complete explanation of such statutes and regulations and their effect on us and is qualified in its entirety by reference to the actual
statutes and regulations. These statutes and regulations may change in the future, and we cannot predict what effect these changes, if made, will have on our operations.

The Bank is subject to extensive regulation, examination and supervision by the Office of Thrift Supervision (OTS), as its primary federal regulator, and the Federal Deposit Insurance
Corporation



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(the FDIC), as the insurer of its deposits. The Bank is also a member of the Federal Home Loan Bank (the FHLB) of Chicago and may be subject to examination by the FHLB of
Chicago. The Banks deposit accounts are insured up to applicable limits by the FDICs Deposit Insurance Fund. The Bank must file reports with the OTS and the FDIC concerning its activities and financial condition, in addition to obtaining
regulatory approvals prior to entering into certain transactions, such as mergers with, or acquisitions of, other financial institutions. The OTS and, under certain circumstances, the FDIC perform periodic examinations to evaluate the Banks
safety and soundness and compliance with various regulatory requirements. This regulatory structure is intended primarily for the protection of customers, the insurance fund and depositors. The regulatory structure also gives the regulatory
authorities extensive discretion with respect to their supervisory and enforcement activities and examination policies, including policies governing the classification of assets and the establishment of adequate loan loss reserves for regulatory
purposes. Any change in such policies, whether by the OTS, the FDIC or Congress, could have a material adverse impact on us and our operations.

The Bank entered into a Supervisory Agreement (the Agreement) with the OTS effective February 26, 2007. The Agreement provides that the Bank will take a number of actions including, but not limited to, (1) adherence to
certain regulatory compliance standards; (2) preparation of an updated three-year business plan; (3) adoption of policies and procedures relating to the preparation and filing of suspicious activities reports; (4) adoption of revised
policies for the classification of assets, loan underwriting, and allowance for loan and lease losses; (5) board of director monitoring and preparation of a resolution plan for certain real estate owned property; and (6) the establishment
of a board committee which will oversee corrective action relating to the recent OTS examination report, third-party reviews, and internal and external audits.

In July 2008, the Bank received notice from the OTS supplementing the February 2007 Agreement. The notification received in 2008 is typically delivered at the execution of a Supervisory Agreement, and
requires the Bank to obtain OTS approval for any capital distribution, including payment of a dividend from the Bank to the Company. The Bank received approval from the OTS for a $1.0 million dividend from the Bank to the Company in 2008.

The agreement will remain in effect until terminated, modified, or suspended in writing by the OTS. Failure to comply with the agreement
could result in the initiation of formal enforcement action by the OTS.

The Company, as a savings and loan holding company, is required to
file certain reports with, are subject to examination by and otherwise must comply with the rules and regulations of the OTS.

Regulation
of Federal Savings Institutions

Business Activities. Federal law and regulations, primarily the Home Owners Loan Act and the
regulations of the OTS, govern the activities of federal savings institutions such as the Bank. These laws and regulations delineate the nature and extent of the activities in which federal savings institutions may engage. In particular, certain
lending authority for federal savings institutions with respect to commercial, nonresidential real property loans and consumer loans is limited to a specified percentage of an institutions capital or assets.

Branching. Federal savings institutions are authorized to establish branch offices in any state or states of the United States and its territories,
subject to the approval or non-objection, as applicable, of the OTS.



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Capital Requirements. The OTS capital regulations require federal savings institutions to meet three
minimum capital standards: a 1.5% tangible capital to adjusted total assets ratio, a 4% core capital to adjusted total assets ratio (leverage ratio) (3% for institutions receiving the highest examination rating), and an 8% risk-based
capital ratio. In addition to the above ratios, the prompt corrective action standards discussed below also establish, in effect, certain minimum ratios, which, if not met, will result in supervisory actions.

The risk-based capital standard requires federal savings institutions to maintain a Tier 1, or core, capital to risk-weighted assets ratio
of at least 4% and a total capital to risk-based assets ratio of at least 8%. Risk-weighted assets include the following: all assets (including certain off-balance-sheet assets), certain recourse obligations, and direct credit substitutes,
multiplied by a risk-weight factor of 0% to 100%, which is assigned by the OTS capital regulation based on the risks believed to be inherent in each type of asset. Core capital is defined as common stockholders equity (including retained
earnings), certain non-cumulative perpetual preferred stock and related surplus, minority interests in equity accounts of consolidated subsidiaries, non-withdrawable accounts and pledged deposits meeting certain criteria and a certain amount of
remaining goodwill; less certain intangible assets, certain servicing rights, certain credit-enhancing interest-only strips and certain investments in certain subsidiaries. The components of supplementary capital include certain permanent capital
instruments, certain maturing capital investments, allowances for loan and lease losses (limited to a maximum of 1.25% of risk-weighted assets), and up to 45% of unrealized gains on available-for-sale equity securities with readily determinable fair
market values. Overall, the amount of supplementary capital included as part of total capital cannot exceed 100% of core capital.

The OTS
also has authority to establish individual minimum capital requirements in appropriate cases upon a determination that an institutions capital level is or may become inadequate in light of particular circumstances. At December 31, 2009,
the Bank met each of these capital requirements.

Prompt Corrective Regulatory Action. The OTS is required to take certain supervisory
actions against institutions that do not meet certain minimum capital ratios, the severity of which depends upon the institutions degree of undercapitalization. Generally, a savings institution that has a total risk-based capital ratio of less
than 8%, a Tier 1 risk-based capital ratio of less than 4%, or a leverage ratio of less than 4% (or less than 3% for institutions with the highest examination rating) is considered to be undercapitalized. A savings institution that
has a total risk-based capital ratio of less than 6%, a Tier 1 risk-based capital ratio of less than 3%, or a leverage ratio of less than 3% is considered to be significantly undercapitalized. A savings institution that has a ratio
of tangible equity to total assets equal to or less than 2% is deemed to be critically undercapitalized. Subject to a narrow exception, the OTS is required to appoint a receiver or conservator within specified time frames for an
institution that is critically undercapitalized. If an institution receives notice that it is undercapitalized, significantly undercapitalized, or critically undercapitalized, the institution must file
a capital restoration plan with the OTS within 45 days of the receipt of such notice. Compliance with the capital restoration plan must be guaranteed by the parent holding company. In addition, numerous mandatory supervisory actions become
immediately applicable to an undercapitalized institution, including, but not limited to, increased monitoring by regulators and restrictions on growth, capital distributions and expansion. Significantly undercapitalized and
critically undercapitalized institutions are subject to more extensive mandatory regulatory actions. The OTS could also take any one of a number of discretionary supervisory actions, including the issuance of a capital directive and the
replacement of senior executive officers and directors.

Loans to One Borrower. Federal law provides that savings institutions
generally are subject to the limits on loans to one borrower applicable to national banks. A savings institution may not make a



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loan or extend credit, if not fully secured, to a single or related group of borrowers in excess of 15% of its unimpaired capital and surplus. An additional amount may be lent or extended, equal
to 10% of the institutions unimpaired capital and surplus, if such additional amount is fully secured by readily marketable collateral.

Standards for Safety and Soundness. As required by statute, the federal banking agencies have adopted interagency guidelines prescribing standards for safety and soundness. The guidelines set forth the safety and soundness standards
that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired. If the OTS determines that a savings institution fails to meet any standard prescribed by the guidelines, the
OTS may require the institution to submit an acceptable plan to achieve compliance with the standard. The Bank has not received any notice that it has failed to meet any standard prescribed by the guidelines.

Limitation on Capital Distributions. OTS regulations impose limitations upon all capital distributions by a savings institution, including cash
dividends, payments to repurchase its shares, and payments to stockholders of another institution in a cash-out merger. Under the regulations, an application to and the prior approval of the OTS is required before the institution makes any capital
distribution if the institution does not meet the criteria for expedited treatment of applications under OTS regulations (i.e., generally, examination and Community Reinvestment Act ratings in the two highest categories); if the total
capital distributions for the calendar year exceed net income for that year plus the amount of retained net income for the preceding two years; if the institution would be undercapitalized following the distribution; or if the distribution would
otherwise be contrary to a statute, regulation, agreement with the OTS or condition imposed by the OTS. If an application is not required, the institution must still provide prior notice to the OTS of the capital distribution if the institution
meets certain criteria (e.g., if the institution is a subsidiary of a holding company). If the Banks capital were to fall below its regulatory requirements or the OTS notified the Bank of necessary increased supervision, its ability to make
capital distributions could be restricted. In addition, the OTS could prohibit a proposed capital distribution that would otherwise be permitted by the regulations if the OTS determined that such distribution would constitute an unsafe or unsound
practice.

Qualified Thrift Lender Test. Federal law requires savings institutions to meet a qualified thrift lender test. Under the
test, a savings institution is required to either qualify as a domestic building and loan association under the Internal Revenue Code or maintain at least 65% of its portfolio assets (total assets less: (i) specified
liquid assets up to 20% of total assets; (ii) intangibles, including goodwill; and (iii) the value of property used to conduct business) in certain qualified thrift investments in at least nine months out of each twelve-month
period. Qualified thrift investments primarily consist of residential mortgages and related investments, including certain mortgage-backed securities.

A savings institution that fails the qualified thrift lender test is subject to certain operating restrictions, such as restrictions on investments, activities and branching. As of December 31, 2009,
the Bank maintained 94.6% of its portfolio assets in qualified thrift investments and, therefore, met the qualified thrift lender test.

Transactions with Related Parties. Federal law limits the Banks authority to extend credit to, and engage in certain other transactions (collectively, covered transactions) with, affiliates (e.g., any
company that controls or is under common control with an institution, including the Company and its non-savings institution subsidiary). The aggregate amount of covered transactions with any individual affiliate is limited to 10% of the unimpaired
capital and surplus of the savings institution.



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The aggregate amount of covered transactions with all affiliates is limited to 20% of the savings
institutions unimpaired capital and surplus. Loans and other specified transactions with affiliates are required to be secured by collateral in an amount and of a type described in federal law. The purchase of low-quality assets from
affiliates is permitted only under certain circumstances. Transactions with affiliates must be on terms and under circumstances that are at least as favorable to the institution as those prevailing at the time for comparable transactions with
non-affiliates. In addition, savings institutions are generally prohibited from lending to any affiliate that is engaged in activities that are not permissible for bank holding companies; and no savings institution may purchase the securities of any
affiliate other than a subsidiary.

The Banks authority to extend credit to its executive officers, directors and stockholders that own,
control or have the power to vote more than 10% of any class of the institutions voting stock (insiders), as well as entities affiliated with such persons, is limited. The Bank is restricted both in the individual and the aggregate
amount of loans it may make to insiders based, in part, on the Banks capital position and the requirement that the Bank follow certain board approval procedures. Such loans must be made on terms substantially the same as those offered to
non-insiders and not involve more than the normal risk of repayment. There is an exception for loans made pursuant to a benefit or compensation program that is widely available to all employees of the institution and does not give preference to
insiders over other employees. Certain additional restrictions apply to loans or extensions of credit to executive officers.

Enforcement. The OTS has primary enforcement responsibility over federal savings institutions and has the authority to bring actions against the institution and all institution-affiliated parties, including stockholders, attorneys,
appraisers, and accountants who knowingly or recklessly participate in wrongful action likely to have an adverse effect on an insured institution. Formal enforcement action may range from the issuance of a capital directive or cease and desist order
to removal of officers and/or directors or termination of deposit insurance. An insured institution or institution-affiliated party may also be assessed civil money penalties and/or criminal penalties for certain violations.

Assessments. Federal savings institutions must pay assessments to the OTS to fund its operations. The general assessments, paid on a semiannual
basis, are based upon the savings institutions size, condition, and complexity of business.

Insurance of Deposit Accounts. Under
FDIC laws and regulations, FDIC-insured institutions, such as the Bank, are required to pay deposit insurance premiums based on the risk they pose to the Deposit Insurance Fund (DIF). The FDIC has authority to raise or lower assessment
rates on insured deposits in order to achieve statutorily required reserve ratios in the insurance funds and to impose special additional assessments. Each depository institution is assigned to one of three capital groups: well
capitalized, adequately capitalized, or undercapitalized. Within each capital group, institutions are assigned to one of three supervisory subgroups: A (institutions with few minor weaknesses); B
(institutions demonstrating weaknesses that, if not corrected, could result in significant deterioration of the institution and increased risk of loss to the DIF); and C (institutions that pose a substantial probability of loss to the
DIF unless effective corrective action is taken). Accordingly, there are nine combinations of capital groups and supervisory subgroups to which varying assessment rates would be applicable. An institutions assessment rate depends on the
capital category and supervisory category to which it is assigned.

In October, 2008, the FDIC published a restoration plan to reestablish the
DIF to the statutory required minimum percentage of deposits, and the FDIC has amended the restoration plan from time to time thereafter. As part of the restoration plan, the FDIC increased risk-based assessment rates and may continue to do so. In
November 2009, the FDIC approved a final rule that required insured institutions to prepay their estimated quarterly risk-based assessments for all of 2010, 2011 and 2012.



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During 2009, the Bank paid deposit insurance premiums in the aggregate amount of $1.6 million, which
included regular quarterly assessments, a special assessment which was applicable to all insured institutions, and $1.2 million in prepaid deposit insurance assessments through 2012.

Pursuant to the 2008 Emergency Economic Stabilization Act (described more fully below), the maximum deposit insurance on individual accounts was increased from $100,000 to $250,000 until December 31,
2013. The FDIC may terminate an institutions deposit insurance upon a finding that the institution has engaged in unsafe or unsound practices, is in an extremely unsafe or unsound condition, or has violated any applicable law, regulation,
rule, order or condition imposed by the FDIC or the OTS. We do not know of any practice, condition or violation that might lead to termination of the Banks deposit insurance.

FDIC Temporary Liquidity Guarantee Program.In October 2008, the FDIC announced the Temporary Liquidity Guarantee Program (TLGP) to strengthen confidence and encourage liquidity in the
banking system. The program is comprised of two components: the Transaction Account Guarantee Program (TAGP) and the Debt Guarantee Program (DGP).

Transaction Account Guarantee Program. Pursuant to the TAGP, the FDIC will fully insure, without limit, qualifying transaction accounts held at qualifying depository institutions through
June 30, 2010 (extended from December 31, 2009 provided the institution did not previously opt out of the TAGP). Qualifying transaction accounts include non-interest-bearing transaction accounts, Interest on Lawyers Trust Accounts (IOLTAs)
and NOW accounts with interest rates less than 0.5 percent. The FDIC assessed a fee equal to 10 basis points on transaction account deposit balances in excess of the $250,000 insured limit. During the six-month extension period in 2010, the fee
assessment increased to 15 basis points, 20 basis points or 25 basis points, based on an institutions risk category. The Bank is participating in the TAGP.

Debt Guarantee Program.Pursuant to the DGP, eligible entities were permitted to issue FDIC-guaranteed senior unsecured debt up to 125 percent of the entitys senior unsecured debt outstanding
as of September 30, 2008. The Company did not issue any guaranteed debt under the DGP.

Federal Home Loan Bank (FHLB) System. The
Bank is a member of the FHLB of Chicago. The FHLB system consists of twelve regional Federal Home Loan Banks. The FHLB provides a central credit facility primarily for member institutions. The Bank, as a member of the FHLB of Chicago, is required to
acquire and hold shares of capital stock in the FHLB in an amount at least equal to 1.0% of the aggregate principal amount of its unpaid loans, or 5% of its aggregate amount of outstanding advances (borrowings) from the FHLB, whichever is greater.
The Bank was in compliance with this requirement with an investment in FHLB stock at December 31, 2009, of $5.4 million.

The Federal
Home Loan Banks are required to provide funds for the resolution of insolvent thrifts and to contribute funds for affordable housing programs. These requirements could reduce the amount of dividends that the Federal Home Loan Banks pay to their
members and could also result in the Federal Home Loan Banks imposing a higher rate of interest on advances to their members. In 2007, the FHLB of Chicago terminated its dividend, and we cannot predict when that dividend will be resumed. The
elimination of the dividend has reduced our net interest income. If interest on future Federal Home Loan Bank advances were increased, our net interest income would likely also be reduced.



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Community Reinvestment Act. Under the Community Reinvestment Act, as implemented by OTS regulations,
a savings institution has a continuing and affirmative obligation consistent with safe and sound operations to help meet the credit needs of its entire community, including low- and moderate-income neighborhoods. The Community Reinvestment Act does
not establish specific lending requirements or programs for financial institutions, nor does it limit an institutions discretion to develop the types of products and services that it believes are best suited to its particular community,
consistent with the safe and sound operations. The Community Reinvestment Act requires the OTS, in connection with its examination of a savings institution, to assess the institutions record of meeting the credit needs of its community and to
take such record into account in its evaluation of certain applications by the institution.

The Community Reinvestment Act requires public
disclosure of an institutions Community Reinvestment Act examination rating and requires the OTS to provide a written evaluation of a banks Community Reinvestment Act performance utilizing a four-tiered descriptive rating system. The
Bank received an outstanding rating as a result of its most recent Community Reinvestment Act assessment.

Liquidity. A
federal savings institution is required to maintain a sufficient amount of liquid assets to ensure its safe and sound operation.

Prohibitions Against Tying Arrangements. Federal savings institutions are prohibited, subject to certain exceptions, from extending credit or offering any other service, or fixing or varying the consideration for such extension of
credit or service, on the condition that the customer obtain some additional service from the institution or its affiliates or not obtain services of a competitor of the institution.

Privacy Requirements. Federal laws and regulations govern an institutions treatment of nonpublic personal information with respect to an institutions consumers. Generally, the law
requires an institution to provide notice to consumer customers about its privacy policies and practices, permits an institution to disclose nonpublic personal information about consumer customers to nonaffiliated third parties only under certain
conditions, and requires an institution to provide consumer customers with a method and reasonable opportunity to opt out before the institution discloses any of the consumer customers information to certain nonaffiliated third
parties.

Anti-Money Laundering and the Bank Secrecy Act. Under the Bank Secrecy Act (BSA), a financial institution is
required to have systems in place to detect certain transactions, based on the size and nature of the transaction. Financial institutions are generally required to report cash transactions involving more than $10,000 to the United States Treasury.
In addition, financial institutions are required to file suspicious-activity reports for transactions that involve more than $5,000 and that the financial institution knows, suspects or has reason to suspect involve illegal funds, are designed to
evade the requirements of the BSA or have no lawful purpose.

The USA PATRIOT Act of 2001 (the PATRIOT Act), which amended the
BSA, contains anti-money laundering and financial transparency laws, as well as enhanced information collection tools and enforcement mechanisms for the U.S. government. PATRIOT Act provisions include the following: standards for verifying customer
identification when opening accounts; rules to promote cooperation among financial institutions, regulators and law enforcement; and due diligence requirements for financial institutions that administer, maintain or manage certain bank accounts.



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The Bank is subject to BSA and PATRIOT Act requirements. The OTS carefully reviews an institutions
compliance with these requirements when examining an institution and considers the institutions compliance when evaluating an application submitted by an institution. The OTS may require an institution to take various actions to ensure that it
is meeting the requirements of these acts.

Consumer Protection Laws. The Bank is subject to numerous consumer protection laws and
regulations, such as the following: the Truth-In-Lending Act; the Home Mortgage Disclosure Act of 1975; the Equal Credit Opportunity Act; the Fair Credit Reporting Act of 1978; and rules and regulations of the various federal agencies charged with
the responsibility of implementing such federal laws.

Savings and Loan Holding Company Regulation

General. The Company is a savings and loan holding company within the meaning of federal law. As such, the Company is registered with the OTS and is
subject to OTS regulations, examinations, supervision and reporting requirements. In addition, the OTS has enforcement authority over the Company and its subsidiaries. Among other things, this authority permits the OTS to restrict or prohibit
activities that are determined to be a serious risk to the Bank.

Restrictions Applicable to Savings and Loan Holding Companies.
According to federal law and OTS regulations, savings and loan holding companies may engage only in certain activities. Activities permissible for savings and loan holding companies include: (1) acquiring control of a savings association;
(2) furnishing or performing management services for a subsidiary savings association of such holding company; (3) holding, managing or liquidating assets owned or acquired from a savings association subsidiary of such holding company;
(4) holding or managing properties used or occupied by a savings association subsidiary of such holding company; and (5) any activity approved by the Federal Reserve Board for a bank holding company or financial holding company or
previously approved by the OTS for multiple savings and loan holding companies.

In 1999, the Gramm-Leach-Bliley Act (GLB Act) was
enacted, which, among other things, established a comprehensive framework to permit affiliations among commercial banks, insurance companies and securities firms. The GLB Act also prohibited new unitary savings and loan holding companies from
engaging in nonfinancial activities or affiliating with nonfinancial entities. Unitary savings and loan holding companies in existence or with applications filed with the OTS on or before May 4, 1999, such as the Company, however, retained
their authority under the prior law. All other unitary savings and loan holding companies are limited to financially related activities permissible for bank holding companies. The GLB Act also prohibited non-financial companies from acquiring
grandfathered unitary savings and loan association holding companies.

Federal law prohibits a savings and loan holding company from directly
or indirectly, or through one or more subsidiaries, acquiring more than 5% of a savings association or a savings and loan holding company without prior written approval of the OTS. Federal law also prohibits a savings and loan holding company from
acquiring more than 5% of a company engaged in activities other than those authorized for savings and loan holding companies by federal law or acquiring or retaining control of a depository institution that is not insured by the FDIC. In evaluating
applications by savings and loan holding companies to acquire savings institutions, the OTS must consider the financial and managerial resources and future prospects of the company and institution involved, the effect of the acquisition on the risk
to the insurance funds, the convenience and needs of the community and competitive factors.



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The OTS is prohibited from approving any acquisition that would result in a multiple savings and loan
holding company controlling savings institutions in more than one state, unless the laws of the state of the target savings institution specifically permit such acquisitions. The states vary in the extent to which they permit interstate savings and
loan holding company acquisitions.

The Company does not believe that the GLB Act has had thus far, or will have in the near future, a
material adverse affect upon its operations in the near term. However, to the extent the GLB Act permits banks, securities firms, and insurance companies to affiliate, the financial services industry may experience further consolidation. This could
result in a growing number of larger financial institutions that offer a wider variety of financial services than the Company currently offers and that can aggressively compete in the markets the Company currently serves.

Acquisition of Control. Under the federal Change in Bank Control Act, a notice must be submitted to the OTS if any person (including a company), or
group acting in concert, seeks to acquire control of a savings and loan holding company or savings institution. An acquisition of control can occur upon the acquisition of 10% or more of the voting stock of a savings and loan
holding company or savings institution or in a manner otherwise defined by the OTS. Under the Change in Bank Control Act, the OTS has 60 days from the filing of a complete notice to act, taking into consideration certain factors, including the
financial and managerial resources of the acquirer and the antitrust effects of the acquisition. Any company that acquires control would then be subject to regulation as a savings and loan holding company.

2008 Emergency Economic Stabilization Act

On October 3, 2008, the U.S. Congress enacted the Emergency Economic Stabilization Act (EESA). EESA authorized the Secretary of the U.S. Department of the Treasury to purchase up to $700 billion in troubled assets from
qualifying financial institutions pursuant to the Troubled Asset Relief Program (TARP). On October 14, 2008, the U.S. Department of the Treasury (Treasury), pursuant to its authority under EESA, announced the CPP.
Pursuant to the CPP, qualifying public financial institutions may issue senior preferred stock to the Treasury in an amount not less than 1% of the institutions risk-weighted assets and not more than 3% of the institutions risk-weighted
assets or $25 billion, whichever is less. Financial institutions participating in the CPP must agree and comply with certain restrictions, including restrictions on dividends, stock redemptions and repurchases, and executive compensation. Finally,
Treasury may unilaterally amend any provision of the CPP to comply with changes in applicable federal statutes. Neither the Company nor the Bank is participating in the CPP.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

Our business, operating
results and financial condition are subject to various risks and uncertainties, including, without limitation, those set forth below, any of which could cause our actual results to vary materially from recent results or from our anticipated future
results. Set forth below are certain risk factors which we believe to be relevant to an understanding of our business. You should carefully consider the risks and uncertainties described below together with all of the information included in this
report, including our consolidated financial statements and related notes for the year ended December 31, 2009. The risks and uncertainties described below are not the only risks and uncertainties we face. Additional risks and uncertainties not
presently known or that are currently deemed immaterial also may have a material adverse effect on our business, operating results and financial condition.



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Continued adverse conditions in the U.S. economy, and in particular the greater Chicago area, could have
a material adverse effect on our business and results of operations.

Over the past two years, the strength of the U.S. economy in general
and the strength of the economy in the Chicago area in particular has declined. A sustained deterioration in national or local economic conditions could result in, among other things, a continuation in the deterioration of our credit quality or a
reduced demand for credit, including a resultant effect on our loan portfolio and allowance for loan losses. These factors could result in even higher delinquencies and greater charge-offs in future periods, which would materially adversely affect
our business, financial condition and results of operations. Continued, sustained weakness in business and economic conditions generally or in the Chicago-area markets has and may continue to cause a decrease in the demand for loans and other
products and services that we offer and/or an increase in the number of borrowers or other counterparties who become delinquent, file for protection under bankruptcy laws or default on their loans or other obligations to us.

An increase in the number of delinquencies, bankruptcies or defaults would result in a higher level of non-performing assets, net charge-offs, provision for
loan losses, and valuation adjustments on loans held for sale, which would materially adversely affect our business, financial condition and results of operations.

Current and further deterioration in the housing market could cause continued increases in delinquencies and non-performing assets, including loan charge-offs, and further depress our income and
growth.

As we have experienced during 2009, the volume and credit quality of our one-to-four family and multi-family residential
mortgages and loans may decrease during economic downturns as a result of, among other things, a decrease in real estate values, an increase in unemployment, decreased or nonexistent housing price appreciation or increases in interest rates. These
factors could reduce our earnings and consequently our financial condition because borrowers may not be able to repay their loans, the value of the collateral securing our loans and the quality of our loan portfolio may decline and customers may not
want or need our products and services.

Any of these scenarios could cause an increase in delinquencies and non-performing assets, require us
to charge off a higher percentage of our loans, increase substantially our provision for losses on loans, or make fewer loans, which would reduce income.

Our allowance for loan losses may be insufficient to absorb losses in our loan portfolio.

Lending money is a substantial part of our business. Every loan we make carries a certain risk of non-payment. This risk is affected by, among other things:



| |  |  | the credit risks posed by the particular borrower;
| | - |  | --------------------------------------------------



| |  |  | changes in economic and industry conditions;
| | - |  | --------------------------------------------



| |  |  | the duration of the loan; and
| | - |  | -----------------------------



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| |  |  | in the case of a collateralized loan, the changes and uncertainties as to the future value of the collateral, including a decline in real estate value.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------

We maintain an allowance for loan losses which management believes is sufficient to absorb probable incurred credit losses
inherent in our loan portfolio. See Item 1.BusinessLending ActivitiesAllowance for Loan Losses. The allowance for loan losses represents our estimate of probable losses in the portfolio at each balance sheet date
and is supported by all available and relevant information. As a percentage of gross loans, the allowance was 1.92% at December 31, 2009. Over the past year, we substantially increased our allowance as a percentage of gross loans based on
managements analysis of our credit quality, including a significant increase in non-performing loans, a decrease in real estate values in our lending markets and other factors. Our regulators review the adequacy of our allowance and, through
the examination process, have authority to compel us to increase our allowance even if we believe it is adequate. We cannot predict whether our regulators would ever compel us to increase our allowance. Although we believe our loan loss allowance is
adequate to absorb probable incurred losses in our loan portfolio, the allowance may not be adequate. If our actual loan losses exceed the amount that is anticipated, our earnings could suffer.

High loan-to-value ratios on a portion of our residential mortgage loan portfolio exposes us to greater risk of loss.

Many of our residential mortgage loans are secured by liens on mortgage properties in which the borrowers have little or no equity because of the recent
decline in home values in our market area. Residential loans with high loan-to-value ratios will be more sensitive to declining property values than those with lower combined loan-to-value ratios and, therefore, may experience a higher incidence of
default and severity of losses. In addition, if the borrowers sell their homes, such borrowers may be unable to repay their loans in full from the sale proceeds. As a result, these loans may experience higher rates of delinquencies, defaults and
losses.

If our investments in real estate are not properly valued or sufficiently reserved to cover actual losses, or if we are required
to increase our valuation reserves, our earnings could be reduced.

We obtain updated valuations in the form of appraisals and broker
price opinions when a loan has been foreclosed and the property taken in as real estate owned, and at certain other times during the assets holding period. Our net book value (NBV) in the loan at the time of foreclosure and
thereafter is compared to the updated market value of the foreclosed property less estimated selling costs (fair value). A charge-off is recorded for any excess in the assets NBV over its fair value. If our valuation process is incorrect,
the fair value of our investments in real estate may not be sufficient to recover our NBV in such assets, resulting in the need for additional charge-offs. Additional material charge-offs to our investments in real estate could have a material
adverse effect on our financial condition and results of operations.

In addition, bank regulators periodically review our real estate owned
and may require us to recognize further charge-offs. Any increase in our charge-offs, as required by such regulators, may have a material adverse effect on our financial condition and results of operations.

We may be adversely affected by interest rate changes.

Our operating results are largely dependent on our net interest income. Fluctuations in interest rates may significantly affect our net interest income, which is the difference between the interest income



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earned on earning assets, usually loans and investment securities, and the interest expense paid on deposits and borrowings. The interest rate environment over the last two years has continued to
compress our net interest margin. Also, if market rates increase, we expect our net interest margin to continue to decrease. We are unable to predict fluctuations in interest rates, which are affected by factors including: monetary policy of the
Federal Reserve, inflation or deflation, recession, unemployment rates, money supply and instability in domestic and foreign financial markets.

We may not be able to access sufficient and cost-effective sources of liquidity necessary to fund our requirements.

We depend
on access to a variety of funding sources to provide sufficient liquidity to meet our commitments and business needs and to accommodate the transaction and cash management needs of our customers, including funding current loan commitments.
Currently, our primary sources of liquidity are our customers deposits, as well as Federal Home Loan Bank advances, amortization and prepayment of loans, maturities of investment securities and other short-term investments, and earnings and
funds provided from operations.

Across the banking industry, access to liquidity has tightened in the form of reduced borrowing lines and/or
increased collateral requirements. To the extent our balance sheet (customer deposits and principal reductions on loans and securities) is not sufficient to fund our liquidity needs, we rely on alternative funding sources, which may be more
expensive than organic sources. In the past, the Federal Home Loan Banks have provided cost-effective and convenient liquidity to many community banks, such as the Bank. However, current economic conditions have created earnings and capital
challenges for some of the Federal Home Loan Banks that could limit (or preclude) their ability to provide adequate liquidity.

Increases
in deposit insurance premiums and special FDIC assessments will hurt our earnings.

Beginning in late 2008, the economic environment
caused higher levels of bank failures, which dramatically increased FDIC resolution costs and led to a significant reduction in the Deposit Insurance Fund. As a result, the FDIC has significantly increased the initial base assessment rates paid by
financial institutions for deposit insurance. The base assessment rate was increased by seven basis points (seven cents for every $100 of deposits) for the first quarter of 2009. Effective April 1, 2009, initial base assessment rates were
changed to range from 12 basis points to 45 basis points across all risk categories with possible adjustments to these rates based on certain debt-related components. These increases in the base assessment rate have increased our deposit insurance
costs and negatively impacted our earnings. In addition, in May 2009, the FDIC imposed a special assessment on all insured institutions due to recent bank and savings association failures. The emergency assessment amounts to five basis points on
each institutions assets minus Tier 1 capital as of June 30, 2009, subject to a maximum equal to 10 basis points times the institutions assessment base. Our FDIC deposit insurance expense for the year ended December 31, 2009
was $412,000, including the special assessment of $101,000 recorded in June 2009 and paid on September 30, 2009.

In addition, the FDIC
may impose additional emergency special assessments, of up to five basis points per quarter on each institutions assets minus Tier 1 capital if necessary to maintain public confidence in federal deposit insurance or as a result of
deterioration in the Deposit Insurance Fund reserve ratio due to institution failures.



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We will incur additional expenses managing real estate acquired through foreclosure.

We have foreclosed and continue to foreclose on the property securing certain non-performing loans in our portfolio. These foreclosures may result in
charge-offs and other expenses for items such as property management and legal fees, which will have a negative affect on future earnings. Future impairments may also occur if real estate values continue to decline.

Our future success is dependent on our ability to compete effectively in the highly competitive banking industry.

We face substantial competition in all phases of our operations from a variety of different competitors. Our future growth and success will depend on our
ability to compete effectively in this highly competitive environment. We compete for loans and deposits in our geographic markets with other commercial banks, thrifts, credit unions and brokerage firms operating in the markets we serve. Many of our
competitors offer products and services which we do not, and many have substantially greater resources, name recognition and market presence that benefit them in attracting business. In addition, larger competitors may be able to price loans and
deposits more aggressively than we do. Also, technological advances and the continued growth of internet-based banking and financial services have made it possible for non-depositary institutions to offer a variety of products and services
competitive with certain areas of our business. Some of the financial institutions and financial services organizations with which we compete are not subject to the same degree of regulation as is imposed on bank holding companies, savings and loan
holding companies, federally insured, state-chartered banks, federal savings banks, thrifts and national banks. As a result, these nonbank competitors have certain advantages over us in accessing funding and in providing various products and
services.

Changes in our accounting policies or in accounting standards could materially affect how we report our financial results and
condition.

From time to time, the Financial Accounting Standards Board and the SEC change the financial accounting and reporting
standards that govern the preparation of our financial statements. These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to
apply a new or revised standard retroactively, resulting in the restatement of prior period financial statements.



|ITEM 1B. | UNRESOLVED STAFF COMMENTS
|-------- | -------------------------

Not
applicable.



|ITEM 2. | PROPERTIES
|------- | ----------

The
Company is located and conducts its business at the Banks main office at 5400 South Pulaski Road, Chicago, Illinois 60632. In addition to the main office, the Bank has three branch locations at 2740 West 55thStreet, Chicago, Illinois, 1835 West 47thStreet, Chicago, Illinois and 21 East Ogden Avenue, Westmont,
Illinois 60559. The Company owns all four of its offices. The Company believes that the current facilities are adequate to meet its present and immediately foreseeable needs.



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|ITEM 3. | LEGAL PROCEEDINGS
|------- | -----------------

The Company and the
Bank are not involved in any pending proceedings other than the legal proceedings occurring in the ordinary course of business. Such legal proceedings in the aggregate are believed by management to be immaterial to the Companys business,
financial condition, consolidated results of operations or cash flows.



|ITEM 4. | (REMOVED AND RESERVED)
|------- | ----------------------

PART II



|ITEM 5. | MARKET FOR COMPANYS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|------- | ---------------------------------------------------------------------------------------------------------

The Companys common stock is traded on the The NASDAQ Capital Market under the symbol PFED. The Company had 482 stockholders of record at
March 15, 2010. The table below shows the reported high and low sales price of the common stock and dividends declared during the periods indicated in 2009 and 2008.



|               |  |      |      |      |   |                   |  |      |   |     |   |                   |  |   |       |  |   |     
|-------------- |  | ---- | ---- | ---- | - | ----------------- |  | ---- | - | --- | - | ----------------- |  | - | ----- |  | - | ----
|               |  | 2009 |      | 2008
|               |  | High |      | Low  |   | DividendsDeclared |  | High |   | Low |   | DividendsDeclared
|First quarter  |  | $    | 4.94 |      | $ | 3.00              |  | $    |  |     | $ | 26.97             |  | $ | 18.60 |  | $ | 0.18
|Second quarter |  |      | 9.95 |      |   | 4.02              |  |      |  |     |   | 20.39             |  |   | 15.01 |  |   | 0.13
|Third quarter  |  |      | 9.79 |      |   | 5.21              |  |      |  |     |   | 20.40             |  |   | 10.20 |  |   | 0.09
|Fourth quarter |  |      | 6.10 |      |   | 3.21              |  |      |  |     |   | 18.00             |  |   | 5.00  |  |   |    

Dividend Policy

The Companys Board of Directors has the authority to declare dividends on the Companys common stock, subject to statutory and
regulatory requirements. During 2009, the Company did not declare any dividends on its common stock. The payment of dividends in the future, if any, would depend upon a number of factors, including capital requirements, the Companys financial
condition and results of operations, tax considerations, statutory and regulatory limitations and general economic conditions. Special cash dividends, stock dividends or returns of capital may, to the extent permitted by OTS policy and regulations,
be paid in addition to, or in lieu of, regular cash dividends. Also, pursuant to the Supervisory Agreement entered into by the Bank with the OTS, the Bank must obtain the prior approval of the OTS for any capital distributions, including the payment
of a dividend from the Bank to the Company. See Supervision and Regulation.

Any dividends that the Company pays in the future may
depend, in part, upon receipt of dividends from the Bank, because the Company generally has no source of income other than dividends from the Bank, earnings from the investment of proceeds from the sale of shares of common stock, and interest
payments with respect to the loan to the employee stock ownership plan. A regulation of the OTS imposes limitations on capital distributions by savings institutions. See Supervision and RegulationRegulation of Federal Savings
InstitutionsLimitation on Capital Distributions.



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Issuer Repurchases of Equity Securities

The Companys Board of Directors approved the repurchase by the Company of up to 50,000 shares of its common stock pursuant to a repurchase program that was publicly announced on July 31, 2008.
No shares were repurchased during 2009 and 43,682 shares remain available for repurchase under the program.



|ITEM 6. | SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
|------- | ----------------------------------------------

The following tables set forth selected historical financial and other data of the Company for the periods and at the dates indicated. The information should be read in conjunction with the Consolidated Financial Statements and Notes
thereto of the Company contained elsewhere herein.

Selected Financial Data



|                                            |  |                                       |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |        
|------------------------------------------- |  | ------------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | -------
|                                            |  | At or for the year ended December 31,
|                                            |  | 2009                                  |         |   | 2008 |   |         | 2007 |  |   | 2006    |   |  | 2005
|Total assets                                |  | $                                     | 218,613 |   |      | $ | 219,600 |      |  | $ | 220,052 |   |  | $    | 227,189 |   |  | $ | 239,468
|Cash and cash equivalents                   |  |                                       | 11,975  |   |      |   | 8,859   |      |  |   | 15,443  |   |  |      | 15,293  |   |  |   | 5,193  
|Securities available for sale               |  |                                       | 34,778  |   |      |   | 43,595  |      |  |   | 33,782  |   |  |      | 40,017  |   |  |   | 50,137 
|Loans receivable, net(1)                    |  |                                       | 142,924 |   |      |   | 138,580 |      |  |   | 146,037 |   |  |      | 148,176 |   |  |   | 158,709
|Deposits                                    |  |                                       | 150,622 |   |      |   | 137,649 |      |  |   | 136,974 |   |  |      | 142,928 |   |  |   | 149,004
|Securities sold under repurchase agreements |  |                                       | 2,600   |   |      |   | 3,239   |      |  |   | 3,234   |   |  |      | 3,227   |   |  |   | 3,222  
|FHLB advances                               |  |                                       | 39,985  |   |      |   | 48,860  |      |  |   | 46,139  |   |  |      | 47,208  |   |  |   | 53,499 
|Stockholders equity                        |  |                                       | 22,948  |   |      |   | 26,866  |      |  |   | 30,277  |   |  |      | 29,120  |   |  |   | 29,902 
|Interest income                             |  |                                       | 10,217  |   |      |   | 11,452  |      |  |   | 11,990  |   |  |      | 12,298  |   |  |   | 13,265 
|Interest expense                            |  |                                       | 5,190   |   |      |   | 6,039   |      |  |   | 6,457   |   |  |      | 6,436   |   |  |   | 5,826  
|Net interest income                         |  |                                       | 5,027   |   |      |   | 5,413   |      |  |   | 5,533   |   |  |      | 5,862   |   |  |   | 7,439  
|Provision for loan losses                   |  |                                       | 2,222   |   |      |   | 184     |      |  |   | 75      |   |  |      | 249     |   |  |   | 997    
|Non-interest income                         |  |                                       | 618     |   |      |   | 563     |      |  |   | 793     |   |  |      | 652     |   |  |   | 794    
|Non-interest expense                        |  |                                       | 7,375   |   |      |   | 9,185   |      |  |   | 6,602   |   |  |      | 6,411   |   |  |   | 6,449  
|Income tax expense (benefit)                |  |                                       | 323     |   |      |   | (1,026  | )    |  |   | (234    | ) |  |      | (146    | ) |  |   | 157    
|Net income (loss)                           |  |                                       | (4,275  | ) |      |   | (2,367  | )    |  |   | (117    | ) |  |      |        |   |  |   | 630    



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Selected Financial Ratios and Other Data



|                                                                  |  |                                       |    |  |        |    |  |        |    |  |       |   |  |       |  
|----------------------------------------------------------------- |  | ------------------------------------- | -- |  | ------ | -- |  | ------ | -- |  | ----- | - |  | ----- | -
|                                                                  |  | At or for the Year Ended December 31, |   
|                                                                  |  | 2009                                  |    |  | 2008   |    |  | 2007   |    |  | 2006  |   |  | 2005  |  
|Performance ratios:                                               |  |                                       |    |  |        |    |  |        |    |  |       |   |  |       |  
|Return on average assets                                          |  | (1.91                                 | )% |  | (1.06  | )% |  | (0.05  | )% |  |      | % |  | 0.25  | %
|Return on average equity                                          |  | (16.43                                | )  |  | (8.15  | )  |  | (0.38  | )  |  |      |   |  | 2.06  |  
|Average equity to average assets                                  |  | 11.62                                 |    |  | 12.99  |    |  | 13.92  |    |  | 12.70 |   |  | 12.02 |  
|Net interest rate spread(2)                                       |  | 2.41                                  |    |  | 2.49   |    |  | 2.55   |    |  | 2.53  |   |  | 2.97  |  
|Net interest margin(3)                                            |  | 2.55                                  |    |  | 2.72   |    |  | 2.78   |    |  | 2.74  |   |  | 3.15  |  
|Efficiency ratio(4)                                               |  | 130.65                                |    |  | 153.70 |    |  | 104.36 |    |  | 98.42 |   |  | 78.33 |  
|Non-interest expense to average assets                            |  | 3.29                                  |    |  | 4.11   |    |  | 3.00   |    |  | 2.75  |   |  | 2.53  |  
|                                                                  |  |                                       |    |  |       
|Asset quality ratios:                                             |  |                                       |    |  |        |    |  |        |    |  |       |   |  |       |  
|Non-performing loans as a percent of gross loans receivable(6)    |  | 7.65                                  | %  |  | 0.55   | %  |  | 0.13   | %  |  | 1.54  | % |  | 2.83  | %
|Non-performing assets as a percentage of total assets(5)          |  | 5.92                                  |    |  | 1.21   |    |  | 1.20   |    |  | 2.03  |   |  | 2.04  |  
|Allowance for loan losses as a percent of gross loans receivable  |  | 1.92                                  |    |  | 0.55   |    |  | 0.43   |    |  | 0.43  |   |  | 1.41  |  
|Allowance for loan losses as a percent of non-performing loans(6) |  | 25.17                                 |    |  | 99.36  |    |  | 336.84 |    |  | 27.21 |   |  | 49.92 |  
|                                                                  |  |                                       |    |  |       
|Other data:                                                       |  |                                       |    |  |        |    |  |        |    |  |       |   |  |       |  
|Number of full service offices                                    |  | 4                                     |    |  | 4      |    |  | 3      |    |  | 3     |   |  | 3     |  



|(1) | The allowance for loan losses at December 31, 2009, 2008, 2007, 2006, and 2005 was $2,851, $775, $640, $637, and $2,368, respectively.
|--- | --------------------------------------------------------------------------------------------------------------------------------------



|(2) | The net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of
interest-bearing liabilities.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | The net interest margin represents net interest income as a percent of average interest-earning assets.
|--- | -------------------------------------------------------------------------------------------------------



|(4) | The efficiency ratio represents non-interest expense as a percent of net interest income before the provision for loan losses and non-interest income.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | Non-performing assets consist of non-performing loans and REO.
|--- | --------------------------------------------------------------



|(6) | Non-performing loans consist of all loans over 90 days or more past due and all other nonaccrual loans.
|--- | -------------------------------------------------------------------------------------------------------



33



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##### Table of Contents

|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Overview and Recent Developments

The Companys results of operations depend primarily on its net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets, consisting
primarily of loans, investment securities, mortgage-backed securities and other interest-earning assets (primarily cash and cash equivalents), and the interest we pay on our interest-bearing liabilities, consisting primarily of savings accounts,
checking accounts, time deposits and FHLB advances. The Companys results of operations also are affected by its provisions for loan losses, non-interest income and non-interest expense. Non-interest income currently consists primarily of
service charge income, earnings on bank-owned life insurance, gains and losses on the sale of securities and miscellaneous other income. Non-interest expense currently consists primarily of salaries and employee benefits, real estate or investment
securities impairment charges, occupancy, data processing, professional fees, and other operating expenses. The Companys results of operations also may be affected significantly by general and local economic and competitive conditions, changes
in market interest rates, governmental policies and actions of regulatory authorities.

Throughout 2008 and 2009, and continuing into 2010,
there have been severe disruptions in the mortgage, credit and housing markets, both locally and nationally. These disruptions have had a significant negative impact on real estate and related industries, which has led to decreases in commercial and
residential real estate sales, construction and property values. We have experienced a reduction in demand for new loans and an increase in the amount of non-performing loans compared to year end 2008. At December 31, 2009, non-performing loans
represented 7.65% of gross loans, compared to 0.55% at December 31, 2008. Also, the decreased demand for new residential mortgage loans and the increase in non-performing loans has resulted in a contraction of our net interest rate spread and
net interest margin and the need to increase the provision for loan losses compared to 2008. Should the housing market and economic conditions in the Chicago-area stagnate or continue to deteriorate, it will continue to have a material negative
effect on the Companys business and results of operation

Safe Harbor Statement Under the Private Securities
Litigation Reform Act of 1995

This report contains certain forward-looking statements within the meaning of Section 27a of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in
the Private Securities Litigation Reform Act of 1995, as amended, and is including this statement for purposes of invoking these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans,
strategies and expectations of the Company, are generally identifiable 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 future plans or strategies is inherently uncertain and actual results may differ from those predicted. The Company undertakes no obligation to update these forward-looking statements
in the future unless required to do so under the federal securities laws. Factors that could have a



34



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material adverse effect on the operations and future prospects of the Company and its wholly owned subsidiaries include, but are not limited to, changes in: interest rates; the economic health of
the local real estate market; general economic conditions; legislative/regulatory provisions; monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality or composition of
the loan and securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in the Companys market area; and accounting principles, policies, and guidelines. These risks and uncertainties should be
considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.



35



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##### Table of Contents

Average Statement of Financial Condition

The following table sets forth certain information relating to the Companys Average Statement of Financial Condition and reflects the average yield on
assets and average cost of liabilities for the years ended December 31, 2009, 2008, and 2007. The yields and costs are derived by dividing interest income or expense by the average balance of assets or liabilities, respectively, for the years
shown. Average balances are derived from average month-end balances. Management does not believe that the use of average monthly balances instead of average daily balances has caused any material differences in the information presented. Average
balances of loans receivable include loans on which the Bank has discontinued accruing interest. Loan yields include fees which are considered adjustments to yields.



|                                                                               |  |                         |         |   |          |   |                   |      |      |                |  |   |          |   |                   |   |        |                |      |   |          |   |                   |   |  |   |        |  |      |  
|------------------------------------------------------------------------------ |  | ----------------------- | ------- | - | -------- | - | ----------------- | ---- | ---- | -------------- |  | - | -------- | - | ----------------- | - | ------ | -------------- | ---- | - | -------- | - | ----------------- | - |  | - | ------ |  | ---- | -
|                                                                               |  | Year Ended December 31, |        
|                                                                               |  | 2009                    |         |   | 2008     |   |                   | 2007 |     
|                                                                               |  | AverageBalance          |         |   | Interest |   | AverageYield/Cost |      |      | AverageBalance |  |   | Interest |   | AverageYield/Cost |   |        | AverageBalance |      |   | Interest |   | AverageYield/Cost |  
|Assets                                                                         |  |                         |         |   |          |   |                   |      |      |                |  |   |          |   |                   |   |        |                |      |   |          |   |                   |   |  |   |        |  |      |  
|Interest-earnings asset                                                        |  |                         |         |   |          |   |                   |      |      |                |  |   |          |   |                   |   |        |                |      |   |          |   |                   |   |  |   |        |  |      |  
|Securities, net(1)                                                             |  | $                       | 36,611  |   |          | $ | 1,515             |      | 4.14 | %              |  |   | 36,059   |   |                   |   | 1,636  |                | 4.54 | % |          | $ | 28,472            |   |  | $ | 1,309  |  | 4.60 | %
|Loans receivable(2)                                                            |  |                         | 140,371 |   |          |   | 8,391             |      | 5.98 |                |  |   | 142,233  |   |                   |   | 9,128  |                | 6.42 |   |          |   | 144,276           |   |  |   | 9,556  |  | 6.62 |  
|Mortgage-backed securities, net(1)                                             |  |                         | 8,534   |   |          |   | 299               |      | 3.50 |                |  |   | 12,321   |   |                   |   | 496    |                | 4.03 |   |          |   | 17,382            |   |  |   | 690    |  | 3.97 |  
|Interest-earning deposits and other investments                                |  |                         | 11,919  |   |          |   | 12                |      | 0.10 |                |  |   | 8,093    |   |                   |   | 192    |                | 2.37 |   |          |   | 8,823             |   |  |   | 435    |  | 4.93 |  
|                                                                               |  |                         |         |   |          |   |                   |      |      |                |  |   |          |   |                   |   |        |                |      |   |          |   |                   |   |  |   |        |  |      |  
|Total interest-earning assets                                                  |  |                         | 197,435 |   |          |   | 10,217            |      | 5.17 |                |  |   | 198,706  |   |                   |   | 11,452 |                | 5.76 |   |          |   | 198,953           |   |  |   | 11,990 |  | 6.03 |  
|                                                                               |  |                         |         |   |          |   |                   |      |      |                |  |   |          |   |                   |   |        |                |      |   |          |   |                   |   |  |   |        |  |      |  
|Non-interest-earning assets                                                    |  |                         | 26,573  |   |          |   |                   |      |      |                |  |   | 24,818   |   |                   |   |        |                |      |   |          |   | 21,277            |   |  |   |        |  |      |  
|                                                                               |  |                         |         |   |          |   |                   |      |      |                |  |   |          |   |                   |   |        |                |      |   |          |   |                   |   |  |   |        |  |      |  
|                                                                               |  |                         |         |   |          |   |                   |      |     
|Total assets                                                                   |  | $                       | 224,008 |   |          |   |                   |      |      |                |  | $ | 223,524  |   |                   |   |        |                |      |   |          | $ | 220,230           |   |  |   |        |  |      |  
|                                                                               |  |                         |         |   |          |   |                   |      |      |                |  |   |          |   |                   |   |        |                |      |   |          |   |                   |   |  |   |        |  |      |  
|                                                                               |  |                         |         |   |          |   |                   |      |     
|Liabilities and stockholders equity                                           |  |                         |         |   |          |   |                   |      |      |                |  |   |          |   |                   |   |        |                |      |   |          |   |                   |   |  |   |        |  |      |  
|Interest-bearing liabilities                                                   |  |                         |         |   |          |   |                   |      |      |                |  |   |          |   |                   |   |        |                |      |   |          |   |                   |   |  |   |        |  |      |  
|Passbook accounts                                                              |  | $                       | 29,118  |   |          |   | 139               |      | 0.48 |                |  |   | 28,909   |   |                   |   | 183    |                | 0.63 |   |          | $ | 29,552            |   |  |   | 226    |  | 0.76 |  
|Money market savings accounts                                                  |  |                         | 10,108  |   |          |   | 157               |      | 1.55 |                |  |   | 8,556    |   |                   |   | 191    |                | 2.23 |   |          |   | 8,133             |   |  |   | 316    |  | 3.89 |  
|NOW accounts                                                                   |  |                         | 9,162   |   |          |   | 38                |      | 0.41 |                |  |   | 8,894    |   |                   |   | 50     |                | 0.56 |   |          |   | 15,950            |   |  |   | 48     |  | 0.30 |  
|Certificate accounts                                                           |  |                         | 93,074  |   |          |   | 3,057             |      | 3.28 |                |  |   | 86,816   |   |                   |   | 3,598  |                | 4.14 |   |          |   | 84,480            |   |  |   | 3,886  |  | 4.60 |  
|                                                                               |  |                         |         |   |          |   |                   |      |      |                |  |   |          |   |                   |   |        |                |      |   |          |   |                   |   |  |   |        |  |      |  
|Total deposits                                                                 |  |                         | 141,462 |   |          |   | 3,391             |      |      |                |  |   | 133,175  |   |                   |   | 4,022  |                |      |   |          |   | 138,115           |   |  |   | 4,476  |  |      |  
|FHLB advances and other borrowings                                             |  |                         | 46,855  |   |          |   | 1,799             |      | 3.84 |                |  |   | 51,376   |   |                   |   | 2,017  |                | 3.93 |   |          |   | 47,370            |   |  |   | 1,981  |  | 4.18 |  
|                                                                               |  |                         |         |   |          |   |                   |      |      |                |  |   |          |   |                   |   |        |                |      |   |          |   |                   |   |  |   |        |  |      |  
|Total interest-bearing liabilities                                             |  |                         | 188,317 |   |          |   | 5,190             |      | 2.76 |                |  |   | 184,551  |   |                   |   | 6,039  |                | 3.27 |   |          |   | 185,485           |   |  |   | 6,457  |  | 3.48 |  
|                                                                               |  |                         |         |   |          |   |                   |      |      |                |  |   |          |   |                   |   |        |                |      |   |          |   |                   |   |  |   |        |  |      |  
|Non-interest-bearing liabilities                                               |  |                         | 9,666   |   |          |   |                   |      |      |                |  |   | 9,937    |   |                   |   |        |                |      |   |          |   | 4,083             |   |  |   |        |  |      |  
|                                                                               |  |                         |         |   |          |   |                   |      |      |                |  |   |          |   |                   |   |        |                |      |   |          |   |                   |   |  |   |        |  |      |  
|Total liabilities                                                              |  |                         | 197,983 |   |          |   |                   |      |      |                |  |   | 194,488  |   |                   |   |        |                |      |   |          |   | 189,568           |   |  |   |        |  |      |  
|Stockholders equity                                                           |  |                         | 26,025  |   |          |   |                   |      |      |                |  |   | 29,036   |   |                   |   |        |                |      |   |          |   | 30,662            |   |  |   |        |  |      |  
|                                                                               |  |                         |         |   |          |   |                   |      |      |                |  |   |          |   |                   |   |        |                |      |   |          |   |                   |   |  |   |        |  |      |  
|                                                                               |  |                         |         |   |          |   |                   |      |     
|Total liabilities and stockholders equity                                     |  | $                       | 224,008 |   |          |   |                   |      |      |                |  | $ | 223,524  |   |                   |   |        |                |      |   |          | $ | 220,230           |   |  |   |        |  |      |  
|                                                                               |  |                         |         |   |          |   |                   |      |      |                |  |   |          |   |                   |   |        |                |      |   |          |   |                   |   |  |   |        |  |      |  
|Net interest income                                                            |  |                         |         |   |          | $ | 5,027             |      |      |                |  |   |          |   |                   | $ | 5,413  |                |      |   |          |   |                   |   |  | $ | 5,533  |  |      |  
|                                                                               |  |                         |         |   |          |   |                   |      |      |                |  |   |          |   |                   |   |        |                |      |   |          |   |                   |   |  |   |        |  |      |  
|Net interest rate spread(3)                                                    |  |                         |         |   |          |   |                   |      | 2.41 | %              |  |   |          |   |                   |   |        |                | 2.49 | % |          |   |                   |   |  |   |        |  | 2.55 | %
|Net interest margin(4)                                                         |  |                         |         |   |          |   |                   |      | 2.55 | %              |  |   |          |   |                   |   |        |                | 2.72 | % |          |   |                   |   |  |   |        |  | 2.78 | %
|Ratio of average interest-earning assets to average interest-bearing liability |  |                         | 104.84  | % |          |   |                   |      |      |                |  |   | 107.67   | % |                   |   |        |                |      |   |          |   | 107.26            | % |  |   |        |  |      |  



|(1) | Includes unamortized discounts and premiums.
|--- | --------------------------------------------



|(2) | Amount is net of deferred loan origination fees, undisbursed loan funds, unamortized discounts, and allowance for loan losses and includes
non-performing loans.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Net interest rate spread represents the difference between the yield on average interest-earning assets and the average cost of interest-bearing
liabilities.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------





|(4) | Net interest margin represents net interest income divided by average interest-earning assets.
|--- | ----------------------------------------------------------------------------------------------



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##### Table of Contents

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 interest income and interest expense during the years 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 (iii) the net change. The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due
to volume and the changes due to rate.



|                                                |  |                            |      |   |                            |   |        |     |  |   |        |   |  |      |      |   |     |   |      |   |  |   |      |  
|----------------------------------------------- |  | -------------------------- | ---- | - | -------------------------- | - | ------ | --- |  | - | ------ | - |  | ---- | ---- | - | --- | - | ---- | - |  | - | ---- | -
|                                                |  | 2009 Compared to 2008      |      |   | 2008 Compared to 2007      |  
|                                                |  | Increase (Decrease) Due to |      |   | Increase (Decrease) Due to |  
|                                                |  | Volume                     |      |   | Rate                       |   |        | Net |  |   | Volume |   |  | Rate |      |   | Net |  
|Interest earned on                              |  |                            |      |   |                            |   |        |     |  |   |        |   |  |      |      |   |     |   |      |   |  |   |      |  
|Securities, net                                 |  | $                          | 25   |   |                            | $ | (146   | )   |  | $ | (121   | ) |  | $    | 349  |   |     | $ | (22  | ) |  | $ | 327  |  
|Loans receivable, net                           |  |                            | (120 | ) |                            |   | (617   | )   |  |   | (737   | ) |  |      | (138 | ) |     |   | (290 | ) |  |   | (428 | )
|Mortgage-backed securities, net                 |  |                            | (152 | ) |                            |   | (45    | )   |  |   | (197   | ) |  |      | (201 | ) |     |   | 7    |   |  |   | (194 | )
|Interest-earning deposits and other investments |  |                            | 91   |   |                            |   | (271   | )   |  |   | (180   | ) |  |      | (36  | ) |     |   | (207 | ) |  |   | (243 | )
|                                                |  |                            |      |   |                            |   |        |     |  |   |        |   |  |      |      |   |     |   |      |   |  |   |      |  
|Total interest-earning assets                   |  |                            | (156 | ) |                            |   | (1,079 | )   |  |   | (1,235 | ) |  |      | (26  | ) |     |   | (512 | ) |  |   | (538 | )
|                                                |  |                            |      |   |                            |   |        |     |  |   |        |   |  |      |      |   |     |   |      |   |  |   |      |  
|                                                |  |                            |      |   |                            |  
|Interest expense on                             |  |                            |      |   |                            |   |        |     |  |   |        |   |  |      |      |   |     |   |      |   |  |   |      |  
|Passbook savings accounts                       |  |                            | 1    |   |                            |   | (45    | )   |  |   | (44    | ) |  |      | (5   | ) |     |   | (38  | ) |  |   | (43  | )
|Money market savings accounts                   |  |                            | 34   |   |                            |   | (68    | )   |  |   | (34    | ) |  |      | 16   |   |     |   | (141 | ) |  |   | (125 | )
|NOW accounts                                    |  |                            | 1    |   |                            |   | (13    | )   |  |   | 12     |   |  |      | (22  | ) |     |   | 24   |   |  |   | 2    |  
|Certificate accounts                            |  |                            | 259  |   |                            |   | (800   | )   |  |   | (541   | ) |  |      | 106  |   |     |   | (394 | ) |  |   | (288 | )
|FHLB advances and other borrowings              |  |                            | (176 | ) |                            |   | (42    | )   |  |   | (218   | ) |  |      | 155  |   |     |   | (119 | ) |  |   | 36   |  
|                                                |  |                            |      |   |                            |   |        |     |  |   |        |   |  |      |      |   |     |   |      |   |  |   |      |  
|Total interest-bearing liabilities              |  |                            | 119  |   |                            |   | (968   | )   |  |   | (849   | ) |  |      | 250  |   |     |   | (668 | ) |  |   | (418 | )
|                                                |  |                            |      |   |                            |   |        |     |  |   |        |   |  |      |      |   |     |   |      |   |  |   |      |  
|                                                |  |                            |      |   |                            |  
|Change in net interest income                   |  | $                          | (275 | ) |                            | $ | (111   | )   |  | $ | (386   | ) |  | $    | (276 | ) |     | $ | 156  |   |  | $ | (120 | )
|                                                |  |                            |      |   |                            |   |        |     |  |   |        |   |  |      |      |   |     |   |      |   |  |   |      |  

Comparison of Financial Condition at December 31, 2009 and December 31, 2008

Total assets at December 31, 2009 were $218.6 million compared to $219.6 million at December 31, 2008, a decrease of $1.0
million. Cash and cash equivalents increased $3.1 million to $12.0 million at December 31, 2009 from $8.9 million at December 31, 2008. The increase was due to increased liquidity from the decrease in securities available for sale in 2009.
Securities available for sale decreased $8.8 million to $34.8 million at December 31, 2009 from $43.6 million at December 31, 2008. The decrease in securities available for sale was due to calls made on the securities from the issuers. A
portion of the liquidity generated in 2009 was used to fund growth in the loan portfolio. During 2009, loans receivable, net, increased $4.3 million to $142.9 million from $138.6 million in 2008, primarily due to loan originations being greater than
repayments during 2009. Other assets increased $800,000 at December 31, 2009 to $3.3 million from $2.5 million at December 31, 2008 primarily due to $1.2 million of prepaid FDIC assessments. The prepaid amount will be used to fund FDIC
assessments over the next three years.



37



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##### Table of Contents

Total liabilities at December 31, 2009 were $195.7 million compared to $192.7 million at
December 31, 2008. Deposits increased $13.0 million to $150.6 million at December 31, 2009 from $137.6 million at December 31, 2008. During 2009, certificates of deposit and money market accounts increased $5.0 million and $4.3
million, respectively, as the Bank priced these products to generate more liquidity while still managing its interest rate risk. Advances from the Federal Home Loan Bank decreased $8.9 million to $40.0 million at December 31, 2009 from $48.9
million at December 31, 2008. The Bank maintained sufficient liquidity levels to allow these advances to mature without renewal.

Stockholders equity at December 31, 2009 decreased $4.0 million to $22.9 million compared to $26.9 million at December 31, 2008. Book value at December 31, 2009 was $19.25 per share. The decrease in stockholders
equity from December 31, 2008 was primarily attributable to the net loss of $4.3 million for the year, offset by an increase in accumulated other comprehensive income due to a favorable change in the fair value of securities available for sale,
net of tax, of $272,000.

Comparison of Operating Results for the Years Ended December 31, 2009 and 2008

General

Net loss was $4.3
million for the year ended December 31, 2009, compared to a $2.4 million net loss for 2008. The $1.9 million increase in net loss was primarily due to a $2.1 million increase in the provision for loan losses during 2009 and a $1.3 million
decrease in the income tax benefit, offset by a $1.8 million decrease in non-interest expense.

Net Interest Income

Interest income in 2009 was $10.2 million, compared to $11.5 million in 2008. Average yield on interest-earning assets decreased to 5.17% in 2009, compared
to 5.76% in 2008, while average interest-earning assets decreased $1.3 million during 2009 from 2008. The decreases were due to the continued low interest rate environment during 2009 and an increase in foregone interest income of $657,000 on
non-performing loans from 2008 to 2009.

Interest expense in 2009 was $5.2 million compared to $6.0 million in 2008. The decrease in interest
expense is due to a 51 basis point decrease in the average cost of interestbearing liabilities, partially offset by a $3.8 million increase in average interest-bearing liabilities from 2008.

Net interest income in 2009 was $5.0 million compared to $5.4 million in 2008. The net interest rate spread and net interest margin was 2.41% and 2.55%,
respectively, in 2009 compared to 2.49% and 2.72%, respectively, in 2008.



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##### Table of Contents

Provision for Loan Losses

Management establishes provisions for loan losses, which are charged to operations, at a level management believes is appropriate to absorb probable incurred credit losses in the loan portfolio. In
evaluating the level of the allowance for loan losses, management considers 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,
estimated value of any underlying collateral, peer group information, and prevailing economic conditions. Management increased the weighting of the delinquency factor in the allowance calculation due to the rise in delinquencies during 2009 and the
increase in non-performing assets. 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.

The provision for loan losses was $2.2 million and $184,000 in 2009 and 2008, respectively. The provision for loan losses increased significantly in 2009
primarily due to an increase in specific allocations on impaired loans. Allocations on impaired loans resulted from loan modifications considered to be troubled debt restructurings in 2009, and an increase in impaired loans that are individually
evaluated for probable incurred losses. Impaired loans were significantly impacted by declining real estate values collateralizing these loans.

The Companys exposure to real estate values will impact future provisions for loan losses. At December 31, 2009, impaired loans individually evaluated for allowance allocations totaled $9.9 million of which approximately 44.0%
were in one-to-four-family loans, 12.0% were in multi-family loans, 35.0% were in commercial real estate loans and 9.0% were in construction and land loans. Of the $9.9 million in impaired loans, $7.5 million or 76.0% were with four borrowers, an
investment company that owns multiple single family properties, a commercial real estate investor, a multi-family real estate investor and a single family real estate developer. Of the total impaired loans, $5.4 million required specific allocations
of $1.9 million due to loss exposure from collateral deficiencies. Should real estate values continue to decline in 2010, additional allocations and provisions for loan losses will be required.

In addition to the $9.9 million of impaired loans individually for allowance allocations, the Company also has other problem loans that are being monitored,
including $5.6 million of loans classified as special mention due to potential credit weakness. Of these special mention loans, approximately 11.0% were in one-to-four-family loans, 37.0% were in multi-family loans, 23.0% were in commercial real
estate loans, 13.0% were in construction and land loans and 16.0% were consumer and other lines of credit loans secured by real estate. Management monitors these loans closely to mitigate losses.

Management assesses the allowance for loan losses on a quarterly basis and makes provisions for loan losses as necessary in order to maintain the adequacy
of the allowance. While management uses available information to recognize losses on loans, future loan loss provisions may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their
examination process, periodically review the allowance for loan losses and may require us to recognize additional provisions based on their judgment of information available to them at the time of their examination. The allowance for loan losses as
of December 31, 2009 is maintained at a level that represents managements best estimate of inherent losses in the loan portfolio, and such losses were both probable and reasonably estimable.



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Non-interest Income

Non-interest income in 2009 was $618,000 compared to $563,000 in 2008. The change was primarily due to an increase in revenue generated from a lease executed during the second quarter of 2009 by a tenant
at the Banks 47th Street office. Based on the terms of the lease, the Company expects $22,800 of annual rental income in future periods.

Non-interest Expense

Non-interest expense in 2009 was $7.4 million compared to $9.2 million in 2008, a decrease of $1.8
million. During 2009 the Company incurred $268,000 in other-than-temporary impairment losses on its securities portfolio compared to $1.7 million in 2008. The other-than-temporary impairment losses on its mutual fund investment and equity securities
portfolio were $178,000 and $90,000 in 2009 compared to $1.5 million and $211,000 in 2008, respectively. Real estate owned impairment and expenses were $528,000 in 2009 compared to $1.2 million in 2008; the decrease in real estate owned impairment
and expenses was the result of a $1.0 million writedown on the carrying value of two commercial properties in 2008 with no further writedowns in 2009.

These decreases in non-interest expense were offset by an increase in FDIC premiums and regulatory assessments of $343,000, to $516,000 in 2009 from $173,000 in 2008. The increase was the result of a $101,000 FDIC special assessment during
2009 and the overall increase in assessment rates charged by the FDIC.

Income Taxes

A $323,000 income tax expense was recognized in 2009 compared to the income tax benefit of $1.0 million recognized in 2008. The income tax expense was due to
the pre-tax loss in 2009 being offset by a deferred tax asset valuation allowance. The Company recognized a deferred tax asset valuation allowance in 2009 due to uncertainty that deferred tax assets may not be fully realized. Factors that the
Company considered when recording the valuation allowance included that the Company reported a net loss in the previous three years, FDIC assessments are expected to increase non-interest expense in future periods, and the uncertainty regarding
further operating losses as a result of an increase in non-performing assets. If the Company determines that the deferred tax assets will more likely than not be realized in future periods, the Company will make an adjustment to the valuation
allowance by reducing the provision for income taxes.

Liquidity and Capital Resources

The Companys primary sources of funds are deposits, principal and interest payments on loans and securities, proceeds from maturities and calls of
securities, FHLB advances, and securities sold under repurchase agreements. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly



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influenced by general interest rates, economic conditions, and competition. The Bank maintains a liquidity ratio substantially above the regulatory requirement. This requirement, which may be
varied at the direction of the OTS depending upon economic conditions and deposit flows, is based upon a percentage of deposits and short-term borrowings. We are required to have enough cash flow in order to maintain sufficient liquidity to ensure a
safe and sound operation. We maintain cash flows above the minimum level believed to be adequate to meet the requirements of normal operations, including potential deposit outflows.

The Companys cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash from operating activities were
$(2.3) million, $(1.2) million, and $1.3 million in 2009, 2008, and 2007, respectively. Net cash from investing activities consisted primarily of disbursements for loan originations and the purchase of securities, offset by principal collections on
loans, proceeds from maturing securities and paydowns on mortgage-backed securities. Net cash from investing activities was $2.1 million, $(8.1) million, and $6.6 million, in 2009, 2008 and 2007, respectively. Net cash from financing activities
consisted primarily of the activity in deposit accounts, FHLB borrowings, and securities sold under repurchase agreements in addition to the purchase of treasury stock. The net cash from financing activities was $3.3 million, $2.7 million, and
$(7.7) million, in 2009, 2008, and 2007, respectively.

At December 31, 2009, the Bank exceeded all of the regulatory requirements to be
well capitalized with a Tier 1 (core) capital level of $21.8 million, or 10.1% of adjusted total assets, which is above the required level of $10.8 million, or 5.0%; and total risk-based capital of $22.8 million, or 17.9% of risk-weighted assets,
which is above the required level of $12.7 million, or 10.0%.

The Banks most liquid assets are cash and short-term investments. The
levels of these assets are dependent on the Banks operating, financing, lending, and investing activities during any given period. At December 31, 2009, cash and short-term investments totaled $12.0 million. The Bank has other sources of
liquidity if a need for additional funds arises, including the repayment of loans and mortgage-backed securities. The Bank may also utilize FHLB advances or the sale of securities available for sale as a source of funds. At December 31, 2009
the Bank had outstanding FHLB advances of $40.0 million and had the capacity available to borrow an additional $10.7 million, if needed.

Critical Accounting Policies

Allowance for Loan Losses: The allowance for loan losses is a valuation allowance for probable
incurred credit losses, increased by the provision for loan losses and decreased by charge-offs, net of recoveries. Management estimates the allowance balance required using past loss experience, economic conditions, information about specific
borrower situations including their financial position and collateral values, and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in managements judgment,
should be charged off. Loan losses are charged off against the allowance when management believes that the uncollectibility of a loan balance is confirmed. The allowance consists of specific and general components. The specific component relates to
loans that are individually classified as impaired. The general component covers loans that are not impaired, and is based on historical loss experience adjusted for current factors.



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There are many factors affecting the allowance for loan losses; some quantitative, while others require
qualitative judgment. Although management believes its process for determining the allowance adequately considers all potential factors that could potentially result in credit losses, the process includes subjective elements and may be susceptible
to significant change. To the extent actual outcomes differ from management estimates, additional provisions for credit losses could be required that could adversely affect earnings or financial position in future periods. Management is monitoring
credit risk trends and the impact on the allowance for loan losses analysis.

Securities Available For Sale: Securities available for
sale are carried at the estimated fair value. Unrealized gains and losses on securities available for sale are included as a separate component of stockholders equity, net of deferred income taxes. The fair value of certain securities is less
than amortized cost. When management believes the decline in fair values below the cost represents an other-than-temporary impairment, the loss is recognized on the income statement.

The fair value of certain equity securities was less than amortized cost during 2009. Management believed it could no longer forecast a recovery within a reasonable holding period for these investments,
the unrealized losses were deemed to be other-than-temporary, and the losses were recognized through earnings. Unrealized losses on the remaining securities have not been recognized into income because the issuers of these securities are of high
credit quality, management does not have the intent to sell these securities and more likely than not the Company will not be required to sell these securities at a loss, and the decline in fair value is largely due to current market conditions.

Real Estate Owned: Real estate acquired through foreclosure and similar proceedings is carried at the lower of cost or fair value at
the date of foreclosure less estimated costs to sell. If the fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Losses on disposition, including expenses incurred in connection with the disposition, are
charged to operations. Operating costs after acquisition are expensed. Management is monitoring the values of its real estate owned properties.

Income Taxes:The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been
included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between financial statements and the tax basis of assets and liabilities using enacted tax rates in effect for the
year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records net deferred tax assets to the extent the assets will more likely than not be realized. In determining the possible realization of
deferred tax assets, the Company considers future taxable income and tax planning strategies that, if necessary, would be implemented to accelerate taxable income into periods in which the ability to utilize the deferred tax assets would expire.



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A valuation allowance is established to reduce the deferred tax asset to the level at which it is more
likely than not that the tax asset or benefits will be realized. In the event that the Company determines that it would be able to realize deferred tax assets, the Company would make an adjustment to the valuation allowance by reducing the
provision for income taxes.

Commitments

At December 31, 2009, the Bank had outstanding commitments to originate mortgage loans of $1.8 million, as compared to $1.3 million at December 31, 2008. The Bank anticipates that it will have
sufficient funds available to meet its current loan origination commitments. Certificate accounts that are scheduled to mature in less than one year from December 31, 2009 totaled $62.5 million. Management expects that a substantial portion of
the maturing certificate accounts will be renewed at the Bank. However, if these deposits are not retained, the Bank may utilize FHLB advances or raise interest rates on deposits to attract new funds, which may result in higher levels of interest
expense and affect the Companys level of earnings.



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The following tables disclose contractual obligations and commitments of the Company as of December 31,
2009:



|                                               |  |       |         |                 |   |             |  |             |        |              |   |        |  |   |       
|---------------------------------------------- |  | ----- | ------- | --------------- | - | ----------- |  | ----------- | ------ | ------------ | - | ------ |  | - | ------
|                                               |  | Total |         | Less Than1 Year |   | 1  3 Years |  | 4  5 Years |        | After5 Years
|Time deposits                                  |  | $     | 92,500  |                 | $ | 62,456      |  | $           | 21,328 |              | $ | 8,716  |  | $ |      
|Securities sold under agreements to repurchase |  |       | 2,600   |                 |   |            |  |             |       |              |   | 2,600  |  |   |      
|FHLB advances                                  |  |       | 39,985  |                 |   | 3,185       |  |             | 4,000  |              |   | 4,800  |  |   | 28,000
|                                               |  |       |         |                 |   |             |  |             |        |              |   |        |  |   |       
|Total contractual cash obligations             |  | $     | 135,085 |                 | $ | 65,641      |  | $           | 25,328 |              | $ | 16,116 |  | $ | 28,000
|                                               |  |       |         |                 |   |             |  |             |        |              |   |        |  |   |       



|                       |  |                       |       |                 |   |             |  |             |   |             |   |   |  |   |  
|---------------------- |  | --------------------- | ----- | --------------- | - | ----------- |  | ----------- | - | ----------- | - | - |  | - | -
|                       |  | TotalAmountsCommitted |       | Less Than1 Year |   | 1  3 Years |  | 4  5 Years |   | Over5 Years
|Loans in process       |  | $                     | 2,191 |                 | $ | 2,191       |  | $           |  |             | $ |  |  | $ | 
|Unused lines of credit |  |                       | 4,114 |                 |   | 4,114       |  |             |  |             |   |  |  |   | 
|Loan commitments       |  |                       | 1,761 |                 |   | 1,761       |  |             |  |             |   |  |  |   | 
|                       |  |                       |       |                 |   |             |  |             |   |             |   |   |  |   |  
|Total commitments      |  | $                     | 8,066 |                 | $ | 8,066       |  | $           |  |             | $ |  |  | $ | 
|                       |  |                       |       |                 |   |             |  |             |   |             |   |   |  |   |  

Impact of Inflation and Changing Prices

The impact of inflation is reflected in the increased cost of operations. Unlike industrial companies, nearly all of the assets and
liabilities of the Company are monetary in nature. As a result, interest rates have a greater impact on the Companys performance than do the effects of general levels of inflation. Interest rates do not necessarily move in the same direction
or to the same extent as the price of goods and services.



|ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- | ----------------------------------------------------------

The Banks interest rate sensitivity is monitored by management through the use of a model that estimates the change in net portfolio value (NPV) over a range of interest rate scenarios.
NPV is the present value of expected cash flows from assets, liabilities, and off-balance-sheet contracts. An NPV Ratio, in any interest rate scenario, is defined as the NPV in that scenario divided by the market value of assets in the same
scenario. The Sensitivity Measure is the decline in the NPV Ratio, in basis points, caused by a 2% increase or decrease in rates, whichever produces a larger decline. The higher an institutions Sensitivity Measure is, the greater its exposure
to interest rate risk is considered to be. The OTS has incorporated an interest rate risk component into its regulatory capital rule. Under the rule, an institution whose sensitivity measure exceeds 2% would be required to deduct an interest rate
risk component in calculating its total capital for purposes of the risk-based capital requirement. As



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of December 31, 2009, the Banks sensitivity measure, as measured by the OTS, resulting from a 200 basis point increase in interest rates was (20)% and would result in a $6.1 million
decrease in the NPV of the Bank. Accordingly, increases in interest rates would be expected to have a negative impact on the Banks operating results. The NPV Ratio sensitivity measure is below the threshold at which the Bank could be required
to hold additional risk-based capital under OTS regulations.

Certain shortcomings are inherent in the methodology used in the above interest
rate risk measurements. Modeling changes in NPV require the making of certain assumptions that may tend to oversimplify the manner in which actual yields and costs respond to changes in market interest rates. First, the models assume that the
composition of the Banks interest sensitive assets and liabilities existing at the beginning of a period remain constant over the period being measured. Second, the models assume that a particular change in interest rates is reflected
uniformly across the yield curve regardless of the duration to maturity or repricing of specific assets and liabilities. Third, the model does not take into account the impact of the Banks business or strategic plans on the structure of
interest-earning assets and interest-bearing liabilities. Accordingly, although the NPV measurement provides an indication of the Banks interest rate risk exposure at a particular point in time, such measurement is not intended to and does not
provide a precise forecast of the effect of changes in market interest rates on the Banks net interest income and will differ from actual results. The results of this modeling are monitored by management and presented to the Board of Directors
quarterly.

The following tables show the NPV and projected change in the NPV of the Bank at December 31, 2009 and 2008 assuming an
instantaneous and sustained change in market interest rates of 300, 200 and 100, basis points.

Interest Rate Sensitivity of
Net Portfolio Value (NPV)

December 31, 2009



|                |  |                     |        |          |                           |         |          |  |     |           |  |       |        |  |         
|--------------- |  | ------------------- | ------ | -------- | ------------------------- | ------- | -------- |  | --- | --------- |  | ----- | ------ |  | --------
|                |  | Net Portfolio Value |        |          | NPV as a % ofPV of
Assets
|Change in Rates |  | $ Amount            |        | $ Change |                           |         | % Change |  |     | NPV Ratio |  |       | Change
|+300 bp         |  | $                   | 20,016 |          | $                         | (10,344 | )        |  | (34 | )%        |  | 9.32  | %      |  | (384) bp
|+200 bp         |  |                     | 24,259 |          |                           | (6,101  | )        |  | (20 | )         |  | 10.99 |        |  | (216) bp
|+100 bp         |  |                     | 27,890 |          |                           | (2,471  | )        |  | (8  | )         |  | 12.33 |        |  | (82) bp 
|0 bp            |  |                     | 30,360 |          |                           |        |          |  |    |           |  | 13.15 |        |  |        
|-100 bp         |  |                     | 30,671 |          |                           | 311     |          |  | 1   |           |  | 13.13 |        |  | (2) bp  
|-200 bp         |  |                     | N/A    |          |                           | N/A     |          |  | N/A |           |  | N/A   |        |  | N/A     
|-300 bp         |  |                     | N/A    |          |                           | N/A     |          |  | N/A |           |  | N/A   |        |  | N/A     



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December 31, 2008



|                |  |                     |        |          |                           |        |          |  |     |           |  |       |        |  |         
|--------------- |  | ------------------- | ------ | -------- | ------------------------- | ------ | -------- |  | --- | --------- |  | ----- | ------ |  | --------
|                |  | Net Portfolio Value |        |          | NPV as a % ofPV of
Assets
|Change in Rates |  | $ Amount            |        | $ Change |                           |        | % Change |  |     | NPV Ratio |  |       | Change
|+300 bp         |  | $                   | 17,342 |          | $                         | (8,708 | )        |  | (33 | )%        |  | 8.18  | %      |  | (326) bp
|+200 bp         |  |                     | 21,427 |          |                           | (4,623 | )        |  | (18 | )         |  | 9.83  |        |  | (161) bp
|+100 bp         |  |                     | 24,462 |          |                           | (1,588 | )        |  | (6  | )         |  | 10.96 |        |  | (48) bp 
|0 bp            |  |                     | 26,051 |          |                           |       |          |  |    |           |  | 11.44 |        |  |        
|-100 bp         |  |                     | 25,034 |          |                           | (1,016 | )        |  | (4  | )         |  | 10.89 |        |  | (55) bp 
|-200 bp         |  |                     | N/A    |          |                           | N/A    |          |  | N/A |           |  | N/A   |        |  | N/A     
|-300 bp         |  |                     | N/A    |          |                           | N/A    |          |  | N/A |           |  | N/A   |        |  | N/A     

The Bank and the Company do not
maintain any securities for trading purposes. The Bank and the Company do not currently engage in trading activities or use derivative instruments in a material amount to control interest rate risk. In addition, interest rate risk is the most
significant market risk affecting the Bank and the Company. Other types of market risk, such as foreign currency exchange risk and commodity price risk, do not arise in the normal course of the Companys business activities and operations.



|ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|------- | -------------------------------------------

See Index to Financial Information on page F-1.



|ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|------- | ------------------------------------------------------------------------------------

Not applicable.



|ITEM 9A(T). | CONTROLS AND PROCEDURES
|----------- | -----------------------

The Company
maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Companys reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed,
summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms, and that such information is accumulated and communicated to the Companys management, including its Chief Executive
Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period
covered by this report, we carried out an evaluation, under the supervision, and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures as contemplated by Exchange Act Rule 13a-15. Based upon, and as of the date of that evaluation, the Chief Executive Officer and Chief Financial Officer



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concluded that the Companys disclosure controls and procedures are effective, in all material respects, in timely alerting them to material information relating to the Company (and its
consolidated subsidiaries) required to be included in the periodic reports the Company is required to file and submit to the SEC under the Exchange Act.

The management of Park Bancorp, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting. Park Bancorp, Inc.s internal control over financial reporting
is a process designed under the supervision of the Companys Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Companys
financial statements for external reporting purposes in accordance with United States generally accepted accounting principles.

Park Bancorp,
Inc.s management assessed the effectiveness of the Companys internal control over financial reporting as of December 31, 2009 based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)
in Internal Control-Integrated Framework. Based on that assessment, management determined that, as of December 31, 2009, the Companys internal control over financial reporting is effective, based on those criteria.

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

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in the Companys internal control over financial reporting during the Companys fiscal quarter ended December 31, 2009,
that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.



|ITEM 9B. | OTHER INFORMATION
|-------- | -----------------

None

PART III



|ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|-------- | ------------------------------------------------------



| | (a) | Directors. The information required in response to this item regarding directors of the Company will be contained in the Companys definitive Proxy Statement
(the Proxy Statement) for its Annual Meeting of Stockholders to be held on May 18, 2010 under the caption Election of DirectorsInformation with Respect to the Nominees, Continuing Directors and Certain Executive
Officers, Corporate Governancemeetings of the Board of Directors and Committees of the Board of Directors, and Section 16(A) Beneficial Ownership Reporting Compliance and are incorporated herein by reference.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | (b) | Executive Officers of the Company. The information required in response to this item regarding executive officers of the Company will be contained in the Companys
definitive proxy statement under the caption Election of DirectorsInformation with Respect to the Nominees, Continuing Directors and Certain Executive Officers and is incorporated herein by reference.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | The Company has adopted a Code of Ethics as required by the NASDAQ listing standards and the rules of the SEC. The Code of Ethics applies to all of the Companys
directors, officers, including the Companys Chief Executive Officer and Chief Financial Officer, and employees. The Code of Ethics is available at no charge upon written request to the Companys Chief Financial Officer.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ITEM 11. | EXECUTIVE COMPENSATION
|-------- | ----------------------

The information
required in response to this item will be contained in the Proxy Statement under the captions Compensation Discussion and Analysis, Directors Compensation, Summary Compensation Table, Executive
Compensation, and Executive Compensation  Compensation Committee Report. 



|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS MATTERS
|-------- | -----------------------------------------------------------------------------------------------

The information required in response to this item will be contained in the Proxy Statement under the captions Security Ownership of Certain Beneficial
Owners, Directors and Executive Officers and Election of Directors  Information with Respect to the Nominees, Continuing Directors and Certain Executive Officers and is incorporated herein by reference.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table provides information, as of December 31, 2009, relating to equity compensation plans of the Company pursuant to which equity securities are authorized for issuance.



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|                                                                        |  |                                                                                             |  |                                                                             |       |                                                                                                                                         |       
|----------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------- | ----- | --------------------------------------------------------------------------------------------------------------------------------------- | ------
|Plan category                                                           |  | Number of securitiesto be issued uponexercise of outstandingoptions, warrants andrights (a) |  | Weighted-averageexercise price ofoutstanding options,warrants and rights(b) |       | Number of securitiesremaining available forfuture issuance underequity compensationplans (excludingsecurities reflected incolumn (a)(c)
|Equity compensation plans approved (stock options) by security holders: |  |                                                                                             |  |                                                                             |       |                                                                                                                                         |       
|                                                                        |  |                                                                                             | 
|1997 Stock Option Plan(1)                                               |  | 28,737                                                                                      |  | $                                                                           | 22.95 |                                                                                                                                         |      
|                                                                        |  |                                                                                             | 
|2003 Incentive Compensation Plan                                        |  | 44,500                                                                                      |  |                                                                             | 4.80  |                                                                                                                                         | 79,320
|                                                                        |  |                                                                                             | 
|Equity compensation plans not approved by security holders              |  | N/A                                                                                         |  |                                                                             | N/A   |                                                                                                                                         | N/A   
|                                                                        |  |                                                                                             |  |                                                                             |       |                                                                                                                                         |       
|                                                                        |  |                                                                                             | 
|Total                                                                   |  | 73,237                                                                                      |  | $                                                                           | 11.92 |                                                                                                                                         | 79,320
|                                                                        |  |                                                                                             |  |                                                                             |       |                                                                                                                                         |       



|(1) | The right to grant awards under the plan terminated in February 2007.
|--- | ---------------------------------------------------------------------



|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|-------- | -------------------------------------------------------------------------

The information required in response to this item will be contained in the Proxy Statement under the caption Transactions with Related Persons, Corporate Governance  Meetings of the
Board of Directors and Committees of the Board of Directors and Corporate Governance  Director Independence and is incorporated herein by reference.



|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|-------- | --------------------------------------

The information required in response to this item will be contained in the Proxy Statement under the caption, Principal Accountant Firm Fees and is incorporated herein by reference.



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PART IV



|ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|-------- | ------------------------------------------



|(a) | Documents filed as part of this report:
|--- | ---------------------------------------



| | 1,2 | Financial Statements and Schedules
| | --- | ----------------------------------

See Index to Financial Information on page F-1.



| | 3 | Exhibits
| | - | --------

See Exhibit Index on
page i, which is incorporated herein by reference.



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized on the 31stday of March 2010.



PARK BANCORP, INC.By:

/s/ David A. RemijasDavid A. RemijasChairman of the Board, and Chief Executive Officer


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



|                                      |  |  |  |                                                                                                          |  |               
|------------------------------------- |  |  |  | -------------------------------------------------------------------------------------------------------- |  | --------------
|Name                                  |  |  |  | Title                                                                                                    |  | Date          
|                                      |  |  | 
|/s/ David A. Remijas                  |  |  |  | Chairman of the Board, and Chief Executive Officer (principal executive officer)                         |  | March 31, 2010
|David A. Remijas                      |  |  |  |                                                                                                         
|                                      |  |  |  |                                                                                                         
|                                      |  |  | 
|/s/ Victor E. Caputo Victor E. Caputo |  |  |  | Treasurer , Chief Financial Officer (principal financial and accounting officer) and Corporate Secretary |  | March 31, 2010
|                                      |  |  | 
|/s/ Richard J. Remijas, Jr.           |  |  |  | President, Chief Operating Officer and Director                                                          |  | March 31, 2010
|Richard J. Remijas, Jr.               |  |  |  |                                                                                                         
|                                      |  |  | 
|/s/ Allen H. Koranda                  |  |  |  | Director                                                                                                 |  | March 31, 2010
|Allen H. Koranda                      |  |  |  |                                                                                                         
|                                      |  |  | 
|/s/ Robert W. Krug                    |  |  |  | Director                                                                                                 |  | March 31, 2010
|Robert W. Krug                        |  |  |  |                                                                                                         
|                                      |  |  | 
|/s/ John J. Murphy                    |  |  |  | Director                                                                                                 |  | March 31, 2010
|John J. Murphy                        |  |  |  |                                                                                                         
|                                      |  |  | 
|/s/ Victor H. Reyes                   |  |  |  | Director                                                                                                 |  | March 31, 2010
|Victor H. Reyes                       |  |  |  |                                                                                                         
|                                      |  |  | 
|/s/ Paul Shukis                       |  |  |  | Director                                                                                                 |  | March 31, 2010
|Paul Shukis                           |  |  |  |                                                                                                         



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PARK BANCORP, INC.

Chicago, Illinois

CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009, 2008, and 2007

INDEX TO FINANCIAL INFORMATION



|                                                        |  |    
|------------------------------------------------------- |  | ---
|REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |  | F-2
|                                                        | 
|CONSOLIDATED FINANCIAL STATEMENTS                       |  |    
|                                                        | 
|CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION          |  | F-3
|                                                        | 
|CONSOLIDATED STATEMENTS OF OPERATIONS                   |  | F-4
|                                                        | 
|CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY         |  | F-5
|                                                        | 
|CONSOLIDATED STATEMENTS OF CASH FLOWS                   |  | F-7
|                                                        | 
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS              |  | F-9



F-1



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##### Table of Contents

LOGO

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

Park Bancorp, Inc.

Chicago, Illinois

We have audited the
accompanying consolidated statements of financial condition of Park Bancorp, Inc. as of December 31, 2009 and 2008, and the related consolidated statements of operations, stockholders equity, and cash flows for each of the three years in
the period ended December 31, 2009. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these 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 financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audit 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 Company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. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall 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 financial position of Park Bancorp,
Inc. as of December 31, 2009 and 2008, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2009 in conformity with U.S. generally accepted accounting principles.



LOGOCrowe Horwath LLP


Oak Brook, Illinois

March 29, 2010



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##### Table of Contents

PARK BANCORP, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

December 31, 2009 and 2008

(In thousands, except share and per share data)







|                                                                                                              |  |      |         |   |      |   |         |  
|------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                                                                              |  | 2009 |         |   | 2008 |  
|ASSETS                                                                                                        |  |      |         |   |      |   |         |  
|Cash and due from banks                                                                                       |  | $    | 2,867   |   |      | $ | 3,138   |  
|Federal funds sold                                                                                            |  |      | 4,164   |   |      |   | 3,244   |  
|                                                                                                              |  |      |         |   |      |   |         |  
|Interest-bearing deposits with other financial institutions                                                   |  |      | 4,944   |   |      |   | 2,477   |  
|Total cash and cash equivalents                                                                               |  |      | 11,975  |   |      |   | 8,859   |  
|Securities available for sale                                                                                 |  |      | 34,778  |   |      |   | 43,595  |  
|Loans receivable, net of allowance of $2,851 and $775                                                         |  |      | 142,924 |   |      |   | 138,580 |  
|Federal Home Loan Bank stock, at cost                                                                         |  |      | 5,423   |   |      |   | 5,423   |  
|Premises and equipment, net                                                                                   |  |      | 9,445   |   |      |   | 9,625   |  
|Accrued interest receivable                                                                                   |  |      | 924     |   |      |   | 1,139   |  
|Bank-owned life insurance                                                                                     |  |      | 8,282   |   |      |   | 7,975   |  
|Real estate owned                                                                                             |  |      | 1,611   |   |      |   | 1,874   |  
|Other assets                                                                                                  |  |      | 3,251   |   |      |   | 2,530   |  
|                                                                                                              |  |      |         |   |      |   |         |  
|Total assets                                                                                                  |  | $    | 218,613 |   |      | $ | 219,600 |  
|                                                                                                              |  |      |         |   |      |   |         |  
|                                                                                                              |  |     
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                          |  |      |         |   |      |   |         |  
|Liabilities                                                                                                   |  |      |         |   |      |   |         |  
|Deposits                                                                                                      |  |      |         |   |      |   |         |  
|Non-interest-bearing                                                                                          |  | $    | 6,810   |   |      | $ | 6,152   |  
|Interest-bearing                                                                                              |  |      | 143,812 |   |      |   | 131,497 |  
|                                                                                                              |  |      |         |   |      |   |         |  
|Total deposits                                                                                                |  |      | 150,622 |   |      |   | 137,649 |  
|Securities sold under repurchase agreements                                                                   |  |      | 2,600   |   |      |   | 3,239   |  
|Advances from borrowers for taxes and insurance                                                               |  |      | 1,859   |   |      |   | 2,051   |  
|Federal Home Loan Bank advances                                                                               |  |      | 39,985  |   |      |   | 48,860  |  
|Accrued interest payable                                                                                      |  |      | 190     |   |      |   | 365     |  
|Other liabilities                                                                                             |  |      | 409     |   |      |   | 570     |  
|                                                                                                              |  |      |         |   |      |   |         |  
|Total liabilities                                                                                             |  |      | 195,665 |   |      |   | 192,734 |  
|Commitments and contingent liabilities (Note 13)                                                              |  |      |        |   |      |   |        |  
|                                                                                                              |  |     
|Stockholders equity                                                                                          |  |      |         |   |      |   |         |  
|Preferred stock, $.01 par value per share, authorized 1,000,000 shares; none issued and outstanding           |  |      |        |   |      |   |        |  
|Common stock, $.01 par value per share; authorized, 9,000,000 shares; issued 2,914,028; outstanding 1,192,174 |  |      | 29      |   |      |   | 29      |  
|Additional paid-in capital                                                                                    |  |      | 32,097  |   |      |   | 32,118  |  
|Retained earnings                                                                                             |  |      | 21,828  |   |      |   | 26,103  |  
|Treasury stock, 1,721,854 shares, at cost                                                                     |  |      | (31,043 | ) |      |   | (31,043 | )
|Unearned ESOP shares                                                                                          |  |      | (99     | ) |      |   | (205    | )
|Accumulated other comprehensive income (loss)                                                                 |  |      | 136     |   |      |   | (136    | )
|                                                                                                              |  |      |         |   |      |   |         |  
|Total stockholders equity                                                                                    |  |      | 22,948  |   |      |   | 26,866  |  
|                                                                                                              |  |      |         |   |      |   |         |  
|                                                                                                              |  |     
|Total liabilities and stockholders equity                                                                    |  | $    | 218,613 |   |      | $ | 219,600 |  
|                                                                                                              |  |      |         |   |      |   |         |  





See accompanying notes.



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##### Table of Contents

PARK BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31, 2009, 2008, and 2007

(In thousands, except share and
per share data)







|                                                            |  |      |        |   |      |   |        |      |  |   |        |  
|----------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                            |  | 2009 |        |   | 2008 |   |        | 2007 | 
|Interest income                                             |  |      |        |   |      |   |        |      |  |   |        |  
|Loans receivable                                            |  | $    | 8,391  |   |      | $ | 9,128  |      |  | $ | 9,556  |  
|Securities                                                  |  |      | 1,814  |   |      |   | 2,132  |      |  |   | 1,999  |  
|Interest-bearing deposits with other financial institutions |  |      | 12     |   |      |   | 192    |      |  |   | 435    |  
|                                                            |  |      |        |   |      |   |        |      |  |   |        |  
|                                                            |  |      | 10,217 |   |      |   | 11,452 |      |  |   | 11,990 |  
|                                                            |  |      |       
|Interest expense                                            |  |      |        |   |      |   |        |      |  |   |        |  
|Deposits                                                    |  |      | 3,391  |   |      |   | 4,022  |      |  |   | 4,476  |  
|Federal Home Loan Bank advances and other borrowings        |  |      | 1,799  |   |      |   | 2,017  |      |  |   | 1,981  |  
|                                                            |  |      |        |   |      |   |        |      |  |   |        |  
|                                                            |  |      | 5,190  |   |      |   | 6,039  |      |  |   | 6,457  |  
|                                                            |  |      |        |   |      |   |        |      |  |   |        |  
|Net interest income                                         |  |      | 5,027  |   |      |   | 5,413  |      |  |   | 5,533  |  
|                                                            |  |      |       
|Provision for loan losses                                   |  |      | 2,222  |   |      |   | 184    |      |  |   | 75     |  
|                                                            |  |      |        |   |      |   |        |      |  |   |        |  
|                                                            |  |      |       
|Net interest income after provision for loan losses         |  |      | 2,805  |   |      |   | 5,229  |      |  |   | 5,458  |  
|                                                            |  |      |       
|Non-interest income                                         |  |      |        |   |      |   |        |      |  |   |        |  
|Net gain (loss) on sales of securities                      |  |      |       |   |      |   | (9     | )    |  |   | 74     |  
|Service charge income                                       |  |      | 242    |   |      |   | 240    |      |  |   | 227    |  
|Net gain (loss) on sales of real estate owned               |  |      |       |   |      |   | (3     | )    |  |   | 162    |  
|Earnings on bank-owned life insurance                       |  |      | 307    |   |      |   | 296    |      |  |   | 286    |  
|Other operating income                                      |  |      | 69     |   |      |   | 39     |      |  |   | 44     |  
|                                                            |  |      |        |   |      |   |        |      |  |   |        |  
|                                                            |  |      | 618    |   |      |   | 563    |      |  |   | 793    |  
|                                                            |  |      |       
|Non-interest expense                                        |  |      |        |   |      |   |        |      |  |   |        |  
|Compensation and benefits                                   |  |      | 3,360  |   |      |   | 3,295  |      |  |   | 3,255  |  
|Occupancy and equipment                                     |  |      | 945    |   |      |   | 941    |      |  |   | 782    |  
|Deposit insurance premiums and regulatory assessments       |  |      | 516    |   |      |   | 173    |      |  |   | 188    |  
|Data processing services                                    |  |      | 249    |   |      |   | 245    |      |  |   | 227    |  
|Advertising                                                 |  |      | 150    |   |      |   | 190    |      |  |   | 69     |  
|Professional fees                                           |  |      | 368    |   |      |   | 439    |      |  |   | 302    |  
|Low income housing investment (gains) losses                |  |      | (36    | ) |      |   | (6     | )    |  |   | 80     |  
|Real estate owned impairment and expenses                   |  |      | 528    |   |      |   | 1,233  |      |  |   | 816    |  
|Loss on equity securities impairment                        |  |      | 268    |   |      |   | 1,712  |      |  |   | 168    |  
|Other operating expenses                                    |  |      | 1,027  |   |      |   | 963    |      |  |   | 715    |  
|                                                            |  |      |        |   |      |   |        |      |  |   |        |  
|                                                            |  |      | 7,375  |   |      |   | 9,185  |      |  |   | 6,602  |  
|                                                            |  |      |        |   |      |   |        |      |  |   |        |  
|                                                            |  |      |       
|Loss before income taxes                                    |  |      | (3,952 | ) |      |   | (3,393 | )    |  |   | (351   | )
|                                                            |  |      |       
|Income tax expense (benefit)                                |  |      | 323    |   |      |   | (1,026 | )    |  |   | (234   | )
|                                                            |  |      |        |   |      |   |        |      |  |   |        |  
|                                                            |  |      |       
|Net loss                                                    |  | $    | (4,275 | ) |      | $ | (2,367 | )    |  | $ | (117   | )
|                                                            |  |      |        |   |      |   |        |      |  |   |        |  
|Basic earnings per share                                    |  | $    | (3.63  | ) |      | $ | (2.02  | )    |  | $ | (0.10  | )
|Diluted earnings per share                                  |  | $    | (3.63  | ) |      | $ | (2.02  | )    |  | $ | (0.10  | )





See accompanying notes.



F-4



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##### Table of Contents

PARK BANCORP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

Years ended December 31, 2009, 2008, and 2007

(In thousands, except share and
per share data)







|                                                           |  |             |    |                          |   |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |                            |   |  |   |        |   |  |   |      |  
|---------------------------------------------------------- |  | ----------- | -- | ------------------------ | - | ---------------- |  | - | ------------- | - |  | ------------------ | ------- | - | ------------------------------------------ | - | ---- | ------------------------ |  | - | -------------------------- | - |  | - | ------ | - |  | - | ---- | -
|                                                           |  | CommonStock |    | AdditionalPaid-inCapital |   | RetainedEarnings |  |   | TreasuryStock |   |  | UnearnedESOPShares |         |   | AccumulatedOtherComprehensiveIncome (Loss) |   |      | TotalStockholdersEquity |  |   | ComprehensiveIncome (loss) |  
|Balance at January 1, 2007                                 |  | $           | 28 |                          | $ | 29,033           |  | $ | 29,898        |   |  | $                  | (29,056 | ) |                                            | $ | (436 | )                        |  | $ | (347                       | ) |  | $ | 29,120 |   |  |   |      |  
|                                                           |  |             |    |                          |   |                  |  |  
|Comprehensive income                                       |  |             |    |                          |   |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |                            |   |  |   |        |   |  |   |      |  
|Net loss                                                   |  |             |   |                          |   |                 |  |   | (117          | ) |  |                    |        |   |                                            |   |     |                          |  |   |                           |   |  |   |        |   |  | $ | (117 | )
|Change in fair value of securities available for sale, net |  |             |   |                          |   |                 |  |   |              |   |  |                    |        |   |                                            |   |     |                          |  |   |                            |   |  |   | 489    |   |  |   | 489  |  
|                                                           |  |             |    |                          |   |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |                            |   |  |   |        |   |  |   |      |  
|Total comprehensive income                                 |  |             |    |                          |   |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   | 489                        |   |  |   |        |   |  | $ | 372  |  
|                                                           |  |             |    |                          |   |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |                            |   |  |   |        |   |  |   |      |  
|                                                           |  |             |    |                          |   |                  |  |  
|Cash dividends declared ($0.72 per share)                  |  |             |   |                          |   |                 |  |   | (843          | ) |  |                    |        |   |                                            |   |     |                          |  |   |                           |   |  |   | (843   | ) |  |   |      |  
|                                                           |  |             |    |                          |   |                  |  |  
|Stock-based compensation                                   |  |             |   |                          |   | 24               |  |   |              |   |  |                    |        |   |                                            |   |     |                          |  |   |                           |   |  |   | 24     |   |  |   |      |  
|                                                           |  |             |    |                          |   |                  |  |  
|Purchase of 46,299 shares of treasury stock                |  |             |   |                          |   |                 |  |   |              |   |  |                    | (1,504  | ) |                                            |   |     |                          |  |   |                           |   |  |   | (1,504 | ) |  |   |      |  
|                                                           |  |             |    |                          |   |                  |  |  
|Exercise of 145,519 stock options, including tax benefits  |  |             | 1  |                          |   | 2,748            |  |   |              |   |  |                    |        |   |                                            |   |     |                          |  |   |                           |   |  |   | 2,749  |   |  |   |      |  
|                                                           |  |             |    |                          |   |                  |  |  
|ESOP shares earned                                         |  |             |   |                          |   | 240              |  |   |              |   |  |                    |        |   |                                            |   | 119  |                          |  |   |                           |   |  |   | 359    |   |  |   |      |  
|                                                           |  |             |    |                          |   |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |                            |   |  |   |        |   |  |   |      |  
|                                                           |  |             |    |                          |   |                  |  |  
|Balance at December 31, 2007                               |  | $           | 29 |                          | $ | 32,045           |  | $ | 28,938        |   |  | $                  | (30,560 | ) |                                            | $ | (317 | )                        |  | $ | 142                        |   |  | $ | 30,277 |   |  |   |      |  





(Continued)



F-5



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##### Table of Contents

PARK BANCORP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

Years
ended December 31, 2009, 2008, and 2007

(In thousands, except share and per share data)







|                                                           |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |                            |   |  |   |        |   |  |   |        |  
|---------------------------------------------------------- |  | ----------- | -- | ------------------------ | - | ------ | ---------------- |  | - | ------------- | - |  | ------------------ | ------- | - | ------------------------------------------ | - | ---- | ------------------------ |  | - | -------------------------- | - |  | - | ------ | - |  | - | ------ | -
|                                                           |  | CommonStock |    | AdditionalPaid-inCapital |   |        | RetainedEarnings |  |   | TreasuryStock |   |  | UnearnedESOPShares |         |   | AccumulatedOtherComprehensiveIncome (Loss) |   |      | TotalStockholdersEquity |  |   | ComprehensiveIncome (loss) |  
|Balance at January 1, 2008                                 |  | $           | 29 |                          | $ | 32,045 |                  |  | $ | 28,938        |   |  | $                  | (30,560 | ) |                                            | $ | (317 | )                        |  | $ | 142                        |   |  | $ | 30,277 |   |  |   |        |  
|                                                           |  |             |    |                          |   |        |                  | 
|Comprehensive income (loss)                                |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |                            |   |  |   |        |   |  |   |        |  
|Net loss                                                   |  |             |   |                          |   |       |                  |  |   | (2,367        | ) |  |                    |        |   |                                            |   |     |                          |  |   |                           |   |  |   | (2,367 | ) |  | $ | (2,367 | )
|Change in fair value of securities available for sale, net |  |             |   |                          |   |       |                  |  |   |              |   |  |                    |        |   |                                            |   |     |                          |  |   | (278                       | ) |  |   | (278   | ) |  |   | (278   | )
|                                                           |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |                            |   |  |   |        |   |  |   |        |  
|Total comprehensive income (loss)                          |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |                            |   |  |   |        |   |  | $ | (2,645 | )
|                                                           |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |                            |   |  |   |        |   |  |   |        |  
|                                                           |  |             |    |                          |   |        |                  | 
|Cash dividends declared ($0.40 per share)                  |  |             |   |                          |   |       |                  |  |   | (468          | ) |  |                    |        |   |                                            |   |     |                          |  |   |                           |   |  |   | (468   | ) |  |   |        |  
|                                                           |  |             |    |                          |   |        |                  | 
|Purchase of 21,805 shares of treasury stock                |  |             |   |                          |   |       |                  |  |   |              |   |  |                    | (483    | ) |                                            |   |     |                          |  |   |                           |   |  |   | (483   | ) |  |   |        |  
|                                                           |  |             |    |                          |   |        |                  | 
|ESOP shares earned                                         |  |             |   |                          |   | 73     |                  |  |   |              |   |  |                    |        |   |                                            |   | 112  |                          |  |   |                           |   |  |   | 185    |   |  |   |        |  
|                                                           |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |                            |   |  |   |        |   |  |   |        |  
|                                                           |  |             |    |                          |   |        |                  | 
|Balance at December 31, 2008                               |  |             | 29 |                          |   | 32,118 |                  |  |   | 26,103        |   |  |                    | (31,043 | ) |                                            |   | (205 | )                        |  |   | (136                       | ) |  |   | 26,866 |   |  |   |        |  
|                                                           |  |             |    |                          |   |        |                  | 
|Comprehensive income (loss)                                |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |                            |   |  |   |        |   |  |   |        |  
|Net loss                                                   |  |             |   |                          |   |       |                  |  |   | (4,275        | ) |  |                    |        |   |                                            |   |     |                          |  |   |                           |   |  |   | (4,275 | ) |  | $ | (4,275 | )
|Change in fair value of securities available for sale, net |  |             |   |                          |   |       |                  |  |   |              |   |  |                    |        |   |                                            |   |     |                          |  |   | 272                        |   |  |   | 272    |   |  |   | 272    |  
|                                                           |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |                            |   |  |   |        |   |  |   |        |  
|Total comprehensive income (loss)                          |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |                            |   |  |   |        |   |  | $ | (4,003 | )
|                                                           |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |                            |   |  |   |        |   |  |   |        |  
|                                                           |  |             |    |                          |   |        |                  | 
|Stock-based compensation                                   |  |             |   |                          |   | 23     |                  |  |   |              |   |  |                    |        |   |                                            |   |     |                          |  |   |                           |   |  |   | 23     |   |  |   |        |  
|                                                           |  |             |    |                          |   |        |                  | 
|ESOP shares earned                                         |  |             |   |                          |   | (44    | )                |  |   |              |   |  |                    |        |   |                                            |   | 106  |                          |  |   |                           |   |  |   | 62     |   |  |   |        |  
|                                                           |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |                            |   |  |   |        |   |  |   |        |  
|                                                           |  |             |    |                          |   |        |                  | 
|Balance at December 31, 2009                               |  | $           | 29 |                          | $ | 32,097 |                  |  | $ | 21,828        |   |  | $                  | (31,043 | ) |                                            | $ | (99  | )                        |  | $ | 136                        |   |  | $ | 22,948 |   |  |   |        |  
|                                                           |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |                            |   |  |   |        |   |  |   |        |  





See accompanying notes.



F-6



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##### Table of Contents

PARK BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended
December 31, 2009, 2008, and 2007

(In thousands)







|                                                                        |  |      |         |   |      |   |         |      |  |   |         |  
|----------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                        |  | 2009 |         |   | 2008 |   |         | 2007 | 
|Cash flows from operating activities                                    |  |      |         |   |      |   |         |      |  |   |         |  
|Net loss                                                                |  | $    | (4,275  | ) |      | $ | (2,367  | )    |  | $ | (117    | )
|Adjustments to reconcile net loss to net cash from operating activities |  |      |         |   |      |   |         |      |  |   |         |  
|Net premium amortization on securities                                  |  |      | 24      |   |      |   | 54      |      |  |   | 19      |  
|Dividend reinvestments                                                  |  |      |        |   |      |   | (139    | )    |  |   | (317    | )
|Net (gain) loss on sales of securities                                  |  |      |        |   |      |   | 9       |      |  |   | (74     | )
|Loss on equity securities impairment                                    |  |      | 268     |   |      |   | 1,712   |      |  |   | 168     |  
|Real estate owned impairment                                            |  |      | 291     |   |      |   | 1,014   |      |  |   | 305     |  
|Net (gain) loss on sales of real estate owned                           |  |      |        |   |      |   | 3       |      |  |   | (162    | )
|Earnings on bank-owned life insurance                                   |  |      | (307    | ) |      |   | (296    | )    |  |   | (286    | )
|Provision for loan losses                                               |  |      | 2,222   |   |      |   | 184     |      |  |   | 75      |  
|Depreciation                                                            |  |      | 459     |   |      |   | 439     |      |  |   | 331     |  
|Deferred loan fees                                                      |  |      | (65     | ) |      |   | (55     | )    |  |   | (98     | )
|ESOP expense                                                            |  |      | 62      |   |      |   | 185     |      |  |   | 359     |  
|Stock-based compensation expense                                        |  |      | 23      |   |      |   |        |      |  |   | 24      |  
|Net change in accrued interest receivable                               |  |      | 215     |   |      |   | (254    | )    |  |   | 102     |  
|Net change in other assets                                              |  |      | (860    | ) |      |   | (1,016  | )    |  |   | 1,130   |  
|Net change in accrued interest payable                                  |  |      | (175    | ) |      |   | (120    | )    |  |   | 32      |  
|Net change in other liabilities                                         |  |      | (161    | ) |      |   | (539    | )    |  |   | (240    | )
|                                                                        |  |      |         |   |      |   |         |      |  |   |         |  
|Net cash from operating activities                                      |  |      | (2,279  | ) |      |   | (1,186  | )    |  |   | 1,251   |  
|                                                                        |  |      |        
|Cash flows from investing activities                                    |  |      |         |   |      |   |         |      |  |   |         |  
|Net change in loans                                                     |  |      | (6,661  | ) |      |   | 6,599   |      |  |   | 175     |  
|Maturities, paydowns and calls of securities available for sale         |  |      | 28,383  |   |      |   | 18,083  |      |  |   | 18,790  |  
|Purchases of securities available for sale                              |  |      | (19,447 | ) |      |   | (30,317 | )    |  |   | (11,881 | )
|Proceeds form sales of securities available for sale                    |  |      |        |   |      |   | 364     |      |  |   | 272     |  
|Expenditures for premises and equipment                                 |  |      | (279    | ) |      |   | (3,081  | )    |  |   | (2,429  | )
|Proceeds from sales of real estate owned                                |  |      | 132     |   |      |   | 287     |      |  |   | 1,656   |  
|                                                                        |  |      |         |   |      |   |         |      |  |   |         |  
|Net cash from investing activities                                      |  |      | 2,128   |   |      |   | (8,065  | )    |  |   | 6,583   |  





(Continued)



F-7



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##### Table of Contents

PARK BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2009, 2008, and 2007

(In thousands)







|                                                              |  |      |         |   |      |   |        |      |  |   |         |  
|------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------ | ---- |  | - | ------- | -
|                                                              |  | 2009 |         |   | 2008 |   |        | 2007 | 
|Cash flows from financing activities                          |  |      |         |   |      |   |        |      |  |   |         |  
|Net change in deposits                                        |  | $    | 12,973  |   |      | $ | 675    |      |  | $ | (5,954  | )
|Net change in securities sold under repurchase agreements     |  |      | (639    | ) |      |   | 5      |      |  |   | 7       |  
|Net change in advances from borrowers for taxes and insurance |  |      | (192    | ) |      |   | 217    |      |  |   | (270    | )
|Stock options exercised                                       |  |      |        |   |      |   |       |      |  |   | 2,749   |  
|Dividends paid to stockholders                                |  |      |        |   |      |   | (468   | )    |  |   | (843    | )
|Purchases of treasury stock                                   |  |      |        |   |      |   | (483   | )    |  |   | (1,504  | )
|FHLB advances                                                 |  |      | 4,800   |   |      |   | 12,000 |      |  |   | 13,391  |  
|Repayment of FHLB advances                                    |  |      | (13,675 | ) |      |   | (9,279 | )    |  |   | (14,460 | )
|Change in other borrowings                                    |  |      |        |   |      |   |       |      |  |   | (800    | )
|                                                              |  |      |         |   |      |   |        |      |  |   |         |  
|Net cash from financing activities                            |  |      | 3,267   |   |      |   | 2,667  |      |  |   | (7,684  | )
|                                                              |  |      |         |   |      |   |        |      |  |   |         |  
|                                                              |  |      |        
|Net change in cash and cash equivalents                       |  |      | 3,116   |   |      |   | (6,584 | )    |  |   | 150     |  
|                                                              |  |      |        
|Cash and cash equivalents at beginning of year                |  |      | 8,859   |   |      |   | 15,443 |      |  |   | 15,293  |  
|                                                              |  |      |         |   |      |   |        |      |  |   |         |  
|                                                              |  |      |        
|Cash and cash equivalents at end of year                      |  | $    | 11,975  |   |      | $ | 8,859  |      |  | $ | 15,443  |  
|                                                              |  |      |         |   |      |   |        |      |  |   |         |  
|                                                              |  |      |        
|Supplemental disclosures of cash flow information             |  |      |         |   |      |   |        |      |  |   |         |  
|Cash paid during the year for                                 |  |      |         |   |      |   |        |      |  |   |         |  
|Interest                                                      |  | $    | 5,365   |   |      | $ | 6,159  |      |  | $ | 6,425   |  
|Non-cash activity                                             |  |      |         |   |      |   |        |      |  |   |         |  
|Loans transferred to real estate owned                        |  |      | 160     |   |      |   | 729    |      |  |   | 1,987   |  





See accompanying notes.



F-8



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009, 2008, and 2007

(Table amounts in thousands, except share
and per share data)





NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation: The accompanying consolidated financial statements include the accounts of Park Bancorp, Inc. (the Company) and its wholly owned subsidiaries, Park Federal Savings Bank (the
Bank) and PBI Development Corporation (PBI), an inactive entity, which conducts real estate development activities. The Bank has two inactive wholly owned subsidiaries: GPS Corporation, which conducts limited insurance
activities, and GPS Development Corp. (GPS), which conducts real estate development activities. All significant intercompany transactions and balances are eliminated in consolidation.

Business: The primary business of the Company is the ownership of the Bank. Through the Bank, the Company is engaged in the business of retail
banking, with operations conducted through its main office and three branches, located in Chicago and Westmont, Illinois. The Companys exposure to credit risk is significantly affected by changes in the economy in these market areas. The
Companys revenues primarily arise from interest income from retail lending activities and investments.

Use of Estimates: The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. The collectibility of loans, fair value of assets and liabilities, prepayment of
mortgage-backed securities, and realization of deferred tax assets are particularly subject to change.

Securities: Securities are
classified as available for sale when management may decide to sell those securities in response to changes in market interest rates, liquidity needs, changes in yields on alternative investments, and for other reasons. Securities available for sale
are carried at fair value. Unrealized gains and losses on securities available for sale are included as a separate component of stockholders equity, net of deferred income taxes. Realized gains and losses on disposition are based on the net
proceeds and the adjusted amortized cost of the securities sold, using the specific identification method. Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-yield
method without anticipating prepayments, except for mortgage-backed securities where prepayments are anticipated.

Management evaluates
securities for other-than-temporary impairment (OTTI) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.





(Continued)

F-9



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)



Loans Receivable: Loans receivable are stated at unpaid principal balances, less the
allowance for loan losses and deferred loan origination fees and costs.

Allowance for Loan Losses: The allowance for loan
losses is a valuation allowance for probable incurred credit losses, increased by the provision for loan losses and decreased by charge-offs, net of recoveries. Management estimates the allowance balance required using past loss experience, economic
conditions, information about specific borrower situations including their financial position and collateral values, and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan
that, in managements judgment, should be charged off. Loan losses are charged off against the allowance when management believes that the uncollectibility of a loan balance is confirmed.

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general
component covers loans that are not impaired, and is based on historical loss experience adjusted for current factors.

Impaired Loans:
A loan is considered impaired when, based on current information and events, it is probable we will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Loans, for
which the terms have been modified, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired. Factors considered by management in determining impairment include payment
status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.

Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances
surrounding the loan and the borrowers, including the length of the delay, the reasons for the delay, the borrowers prior payment history and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured by
the fair value method on a loan-by-loan basis except for smaller balance homogeneous loans which are collectively evaluated for impairment.

When a loan is identified as impaired, we measure the impairment based on the present value of expected future cash flows, discounted at the loans effective interest rate, except when the source of repayment for the loan is the
operation or liquidation of the collateral. In these cases we use an observable market price or current fair value of the collateral, less selling costs.





(Continued)

F-10



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)



If we determine that the value of the impaired loan is less than the recorded investment in the loan, we
recognize impairment through an allowance allocation or a charge-off to the allowance.

Loan Interest Income: Interest on loans is
accrued over the term of the loans based upon the principal outstanding. Management reviews loans delinquent 90 days or more to determine if loans should be placed on nonaccrual. Interest accrued but not received for loans delinquent 90 days or more
is reversed against interest income. The carrying values of impaired loans are periodically adjusted to reflect cash payments, revised estimates of future cash flows, and increases in the present value of expected cash flows due to the passage of
time. Cash payments representing interest income are reported as such. Other cash payments are reported as reductions in carrying value, while increases or decreases due to changes in estimates of future payments and due to the passage of time are
reported as adjustments to the provision for loan losses.

Loan Origination Fees: Loan origination fees, net of certain direct loan
origination costs, are deferred and recognized over the contractual life of the loan using the level-yield method without anticipating prepayments.

Federal Home Loan Bank (FHLB) Stock: The Bank is a member of the FHLB system. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts.
FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.

Premises and Equipment: Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed
using the straight-line method over the estimated useful lives of the assets. Buildings and related components have useful lives ranging from 5 to 40 years and furniture, fixtures, and equipment have useful lives ranging from 3 to 7 years.

Real Estate Owned: Real estate acquired through foreclosure and similar proceedings is carried at the lower of cost or fair value at
the date of foreclosure less estimated costs to sell. If the fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Losses on disposition, including expenses incurred in connection with the disposition, are
charged to operations. Operating costs after acquisition are expensed.





(Continued)

F-11



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)



FDIC Insurance: In 2009, the Company prepaid the estimated FDIC insurance premiums that will be
assessed in 2010, 2011, and 2012. The prepaid FDIC insurance premiums are included in other assets on the consolidated statement of financial condition. The prepaid FDIC insurance premium was $1,194,000 as of December 31, 2009.

Bank-Owned Life Insurance: The Company has purchased life insurance policies on certain key executives. Bank-owned life insurance is
recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

Repurchase Agreements: Substantially all repurchase agreement liabilities represent amounts advanced by various customers. Securities are pledged to
cover those liabilities, which are not covered by federal deposit insurance.

Income Taxes: Income tax expense is the total of the
current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets
and liabilities computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

A tax position is recognized as a benefit only if it is more likely than not that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest
amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the more likely than not test, no tax benefit is recorded.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense. Penalties and interest related to tax matters were
insignificant in 2009 and 2008.

Employee Stock Ownership Plan: The cost of shares issued to the employee stock ownership plan
(ESOP) but not yet allocated to participants is presented in the consolidated statement of financial condition as a reduction of stockholders equity. Compensation expense is recorded based on the market price of the shares as they
are committed to be released for allocation to participant accounts. The difference between the market price and the cost of shares committed to be released is recorded as an adjustment to additional paid-in capital. Dividends on allocated ESOP
shares are recorded as a reduction of retained earnings; dividends on unallocated ESOP shares are reflected as a reduction of debt and accrued interest.





(Continued)

F-12



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)



Shares are considered outstanding for earnings per share calculations as they are committed to be
released; unallocated shares are not considered outstanding.

Stock Compensation: Compensation cost is recognized for stock awards
issued to employees, based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options. Compensation cost is recognized over the required service period, generally defined as
the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award.

Cash Flows: For the purpose of this statement, cash and cash equivalents are defined to include the Companys cash on hand, demand balances, interest-bearing deposits with other financial
institutions, and investments in certificates of deposit with maturities of less than three months. Net cash flows are reported for customer loan and deposit transactions, repurchase agreements, advances from borrowers for taxes and insurance, and
short-term line of credit borrowings.

Comprehensive Income (Loss): Comprehensive income (loss) consists of net income (loss) and the
unrealized gains and losses on securities available for sale, net of taxes, which is also recognized as a separate component of stockholders equity.

Earnings Per Share: Basic earnings per share is based on net income (loss) divided by the weighted average number of shares outstanding during the period, including allocated and
committed-to-be-released ESOP shares, and unvested restricted stock awards that are considered participating securities. Diluted earnings per share shows the dilutive effect, if any, of additional common shares issuable under stock options.

Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as
liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there now are such matters that will have a material effect on the financial statements.

Loan Commitments and Related Financial Instruments: Financial instruments include off-balance sheet credit instruments, such as commitments to make
loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded
when they are funded.





(Continued)

F-13



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)



Fair Values of Financial Instruments: Fair values of financial instruments are estimated using
relevant market information and other assumptions, as more fully disclosed in a separate footnote. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors,
especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates.

Operating Segments: While the chief decision-makers monitor the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Company-wide
basis. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.

Reclassifications: Some items in the prior year financial statements were reclassified to conform to the current year presentation.

Adoption of New Accounting Standards: In February 2008, the FASB issued guidance that delayed the effective date of fair value guidance for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or
disclosed at fair value on a recurring basis (at least annually) to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. Except for additional disclosures in the notes to the financial statements,
adoption of this guidance did not impact the Company.

In June 2008, the FASB issued guidance that addresses whether instruments granted in
share-based payment transactions are participating securities prior to vesting and, therefore, included in the earnings allocation in computing earnings per share (EPS) under the two-class method. Unvested share-based payment awards that
contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of EPS pursuant to the two-class method. This guidance is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years. Upon adoption of this guidance in 2009, the Company began including unvested restricted stock award shares in the computation of basic
EPS. There were no restricted stock awards outstanding in the previous periods presented.

In April 2009, the FASB amended existing guidance
for determining whether impairment is other-than-temporary for debt securities. The guidance requires an entity to assess whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss
position before recovery of its amortized cost basis. If either of these criteria is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For securities that do not meet the aforementioned
criteria, the amount of impairment is split into two components as follows: 1) OTTI related to other factors, which is recognized in other comprehensive income and 2) OTTI related to credit loss, which must be recognized in the income statement. The
credit loss is defined as the difference between the





(Continued)

F-14



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)



present value of the cash flows expected to be collected and the amortized cost basis. Additionally, disclosures about other-than-temporary impairments for debt and equity securities were
expanded. This guidance is effective for interim and annual reporting periods ending after June 15, 2009. The effect of adopting this new guidance did not have a material impact on the Companys financial statements. All OTTI recognized is
on equity securities.





(Continued)

F-15



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)



In April 2009, the FASB issued guidance that emphasizes that the objective of a fair value measurement
does not change even when market activity for the asset or liability has decreased significantly. Fair value is the price that would be received for an asset sold or paid to transfer a liability in an orderly transaction (that is, not a forced
liquidation or distressed sale) between market participants at the measurement date under current market conditions. When observable transactions or quoted prices are not considered orderly, then little, if any, weight should be assigned to the
indication of the asset or liabilitys fair value. Adjustments to those transactions or prices should be applied to determine the appropriate fair value. The guidance, which is applied prospectively, is effective for interim and annual
reporting periods ending after June 15, 2009. The effect of adopting this new guidance did not have a material impact on the Companys financial statements.

On July 1, 2009, the FASBs GAAP Codification became effective as the sole authoritative source of U.S. GAAP. This codification, The FASB Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting Principles, reorganizes current GAAP for nongovernmental entities into a topical index to facilitate accounting research and to provide users additional assurance that they have referenced all related literature
pertaining to a given topic. Existing GAAP prior to the Codification was not altered in compilation of the GAAP Codification. This Statement is effective for all interim and annual periods ending after September 15, 2009.

NOTE 2 - SECURITIES AVAILABLE FOR SALE

Securities are summarized as follows:



|                                 |  |               |        |                      |   |                       |  |   |           |   |  |   |       
|-------------------------------- |  | ------------- | ------ | -------------------- | - | --------------------- |  | - | --------- | - |  | - | ------
|                                 |  | AmortizedCost |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | FairValue
|December 31, 2009                |  |               |        |                      |   |                       |  |   |           |   |  |   |       
|Government sponsored enterprises |  | $             | 16,981 |                      | $ | 33                    |  | $ | (252      | ) |  | $ | 16,762
|Corporate                        |  |               | 5,010  |                      |   | 97                    |  |   | (12       | ) |  |   | 5,095 
|Municipal                        |  |               | 502    |                      |   | 10                    |  |   |          |   |  |   | 512   
|Equity                           |  |               | 4,493  |                      |   | 179                   |  |   |          |   |  |   | 4,672 
|Mortgage-backed residential      |  |               | 7,585  |                      |   | 152                   |  |   |          |   |  |   | 7,737 
|                                 |  |               |        |                      |   |                       |  |   |           |   |  |   |       
|                                 |  |               |        |                     
|                                 |  | $             | 34,571 |                      | $ | 471                   |  | $ | (264      | ) |  | $ | 34,778
|                                 |  |               |        |                      |   |                       |  |   |           |   |  |   |       





(Continued)

F-16



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 2 - SECURITIES AVAILABLE FOR SALE (Continued)



|                                 |  |               |        |                      |   |                       |  |   |           |   |  |   |       
|-------------------------------- |  | ------------- | ------ | -------------------- | - | --------------------- |  | - | --------- | - |  | - | ------
|                                 |  | AmortizedCost |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | FairValue
|December 31, 2008                |  |               |        |                      |   |                       |  |   |           |   |  |   |       
|Government sponsored enterprises |  | $             | 25,091 |                      | $ | 240                   |  | $ | (5        | ) |  | $ | 25,326
|Corporate                        |  |               | 4,089  |                      |   |                      |  |   | (273      | ) |  |   | 3,816 
|Equity                           |  |               | 4,762  |                      |   |                      |  |   |          |   |  |   | 4,762 
|Mortgage-backed residential      |  |               | 9,858  |                      |   | 9                     |  |   | (176      | ) |  |   | 9,691 
|                                 |  |               |        |                      |   |                       |  |   |           |   |  |   |       
|                                 |  |               |        |                     
|                                 |  | $             | 43,800 |                      | $ | 249                   |  | $ | (454      | ) |  | $ | 43,595
|                                 |  |               |        |                      |   |                       |  |   |           |   |  |   |       

Securities with unrealized losses at year-end 2009 and 2008 by length
of time that individual securities have been in a continuous loss position, are as follows:



|                                 |           |                     |                |  |                   |           |   |                |   |       |           |   |                |   |  |   |        |  |   |      |  
|-------------------------------- | --------- | ------------------- | -------------- |  | ----------------- | --------- | - | -------------- | - | ----- | --------- | - | -------------- | - |  | - | ------ |  | - | ---- | -
|                                 |           | Less than 12 Months |                |  | 12 Months or More |           |   | Total          |  
|                                 | FairValue |                     | UnrealizedLoss |  |                   | FairValue |   | UnrealizedLoss |   |       | FairValue |   | UnrealizedLoss |  
|December 31, 2009                |           |                     |                |  |                   |           |   |                |   |       |           |   |                |   |  |   |        |  |   |      |  
|Government sponsored enterprises |           | $                   | 13,748         |  | $                 | (252      | ) |                | $ |      |           | $ |               |   |  | $ | 13,748 |  | $ | (252 | )
|Corporate                        |           |                     |               |  |                   |          |   |                |   | 991   |           |   | (12            | ) |  |   | 991    |  |   | (12  | )
|                                 |           |                     |                |  |                   |           |   |                |   |       |           |   |                |   |  |   |        |  |   |      |  
|                                 |           |                     |                |  |                   |          
|Total temporarily impaired       |           | $                   | 13,748         |  | $                 | (252      | ) |                | $ | 991   |           | $ | (12            | ) |  | $ | 14,739 |  | $ | (264 | )
|                                 |           |                     |                |  |                   |           |   |                |   |       |           |   |                |   |  |   |        |  |   |      |  
|                                 |           |                     |                |  |                   |          
|December 31, 2008                |           |                     |                |  |                   |           |   |                |   |       |           |   |                |   |  |   |        |  |   |      |  
|Government sponsored enterprises |           | $                   | 990            |  | $                 | (5        | ) |                | $ |      |           | $ |               |   |  | $ | 990    |  | $ | (5   | )
|Corporate                        |           |                     | 3,816          |  |                   | (273      | ) |                |   |      |           |   |               |   |  |   | 3,816  |  |   | (273 | )
|Mortgage-backed residential      |           |                     | 4,099          |  |                   | (69       | ) |                |   | 4,029 |           |   | (107           | ) |  |   | 8,128  |  |   | (176 | )
|                                 |           |                     |                |  |                   |           |   |                |   |       |           |   |                |   |  |   |        |  |   |      |  
|                                 |           |                     |                |  |                   |          
|Total temporarily impaired       |           | $                   | 8,905          |  | $                 | (347      | ) |                | $ | 4,029 |           | $ | (107           | ) |  | $ | 12,934 |  | $ | (454 | )
|                                 |           |                     |                |  |                   |           |   |                |   |       |           |   |                |   |  |   |        |  |   |      |  

The Company recognized impairment losses of $178,000 and $1.5 million for the years ended December 31, 2009 and 2008,
respectively related to its investment in a mutual fund. Also, the Company recognized impairment losses of $90,000 and $211,000 for the years ended December 31, 2009 and 2008, respectively on financial institution equity securities. Management
believed it could no longer forecast a recovery within a reasonable holding period for these investments, the unrealized losses were deemed to be other-than-temporary, and the losses were recognized through earnings. The fair value of the mutual
fund investment and financial institution equity security with prior impairment losses is $4,647,000 and $25,000, respectively, as of December 31, 2009. The mutual fund investment has an unrealized gain of $179,000, and the financial
institution equity security has no unrealized gain or loss, as of December 31, 2009.





(Continued)

F-17



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 2 - SECURITIES AVAILABLE FOR SALE (Continued)



Unrealized losses on the above remaining securities have not been recognized into income because the
issuers of these securities are of high credit quality, management does not have the intent to sell these securities and more likely than not the Company will not be required to sell these securities at a loss, and the decline in fair value is
largely due to current market conditions. The $252,000 unrealized loss on government sponsored enterprise debt securities represents 1.8% of the amortized cost. The securities have been at an unrealized loss position for less than twelve months. The
Companys management believes that the fair value of the remaining securities will recover in the future as the securities approach maturity and as current market conditions improve.

Contractual maturities of securities at December 31, 2009 are listed below. Securities not due at a single maturity date, primarily mortgage-backed and
equity securities, are shown separately.



|                            |  |               |        |            |   |       
|--------------------------- |  | ------------- | ------ | ---------- | - | ------
|                            |  | AmortizedCost |        | Fair Value
|Due within one year         |  | $             | 1,004  |            | $ | 1,006 
|Due one to five years       |  |               | 5,006  |            |   | 5,081 
|Due five years to ten years |  |               | 6,503  |            |   | 6,507 
|Due after ten years         |  |               | 9,980  |            |   | 9,775 
|                            |  |               |        |            |   |       
|                            |  |               | 22,493 |            |   | 22,369
|Equity                      |  |               | 4,493  |            |   | 4,672 
|Mortgage-backed residential |  |               | 7,585  |            |   | 7,737 
|                            |  |               |        |            |   |       
|                            |  |              
|                            |  | $             | 34,571 |            | $ | 34,778
|                            |  |               |        |            |   |       

Securities with a carrying value of $9.0 million and $9.1 million at
December 31, 2009 and 2008, respectively, were pledged to secure securities sold under repurchase agreements and public deposits as required or permitted by law.

Sales of securities are summarized as follows:



|                      |  |                                |   |      |   |     |      |  |   |    
|--------------------- |  | ------------------------------ | - | ---- | - | --- | ---- |  | - | ---
|                      |  | For the Year EndedDecember 31,
|                      |  | 2009                           |   | 2008 |   |     | 2007
|Proceeds from sales   |  | $                              |  |      | $ | 364 |      |  | $ | 272
|Gross realized gains  |  |                                |  |      |   | 5   |      |  |   | 74 
|Gross realized losses |  |                                |  |      |   | (14 | )    |  |   |   





(Continued)

F-18



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 3 - LOANS RECEIVABLE

The Company grants mortgages and installment loans to and obtains deposits from customers located primarily in Cook, DuPage, and Will Counties, Illinois. Substantially all loans are secured by specific
items of collateral, primarily residential real estate and consumer assets.

Loans receivable are summarized as follows at year end:



|                                   |  |      |         |   |      |   |         |  
|---------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                   |  | 2009 |         |   | 2008 |  
|Mortgage loans                     |  |      |         |   |      |   |         |  
|Principal balances                 |  |      |         |   |      |   |         |  
|One-to-four-family residential     |  | $    | 96,677  |   |      | $ | 92,829  |  
|Multi-family residential           |  |      | 17,832  |   |      |   | 19,338  |  
|Commercial, construction, and land |  |      | 19,631  |   |      |   | 18,907  |  
|                                   |  |      |         |   |      |   |         |  
|                                   |  |      | 134,140 |   |      |   | 131,074 |  
|Undisbursed portion of loans       |  |      | (2,191  | ) |      |   | (1,287  | )
|Net deferred loan origination fees |  |      | (155    | ) |      |   | (220    | )
|                                   |  |      |         |   |      |   |         |  
|Total mortgage loans               |  |      | 131,794 |   |      |   | 129,564 |  
|Consumer loans                     |  |      | 6,204   |   |      |   | 4,738   |  
|Participations and loans purchased |  |      | 7,777   |   |      |   | 5,050   |  
|Allowance for loan losses          |  |      | (2,851  | ) |      |   | (775    | )
|                                   |  |      |         |   |      |   |         |  
|                                   |  |     
|                                   |  | $    | 142,924 |   |      | $ | 138,580 |  
|                                   |  |      |         |   |      |   |         |  

A summary of activity in the allowance for loan losses follows:



|                          |  |      |       |   |      |   |     |      |  |   |     |  
|------------------------- |  | ---- | ----- | - | ---- | - | --- | ---- |  | - | --- | -
|                          |  | 2009 |       |   | 2008 |   |     | 2007 | 
|Beginning balance         |  | $    | 775   |   |      | $ | 640 |      |  | $ | 637 |  
|Provision for loan losses |  |      | 2,222 |   |      |   | 184 |      |  |   | 75  |  
|Recoveries                |  |      |      |   |      |   | 1   |      |  |   |    |  
|Loans charged off         |  |      | (146  | ) |      |   | (50 | )    |  |   | (72 | )
|                          |  |      |       |   |      |   |     |      |  |   |     |  
|                          |  |      |      
|Ending balance            |  | $    | 2,851 |   |      | $ | 775 |      |  | $ | 640 |  
|                          |  |      |       |   |      |   |     |      |  |   |     |  





(Continued)

F-19



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 3 - LOANS RECEIVABLE(Continued)



The Company had no impaired loans that were individually evaluated for allowance for loan loss
allocations at December 31, 2008. Impaired loans individually evaluated for allowance for loan loss allocations at December 31, 2009 were as follows:



|                                                                    |  |   |      
|------------------------------------------------------------------- |  | - | -----
|Year-end loans with no allocated allowance for loan losses          |  | $ | 4,491
|Year-end loans with allocated allowance for loan losses             |  |   | 5,422
|                                                                    |  |   |      
|                                                                    | 
|Total                                                               |  | $ | 9,913
|                                                                    |  |   |      
|                                                                    | 
|Amount of the allowance for loan losses allocated to impaired loans |  | $ | 1,896
|Average of impaired loans during the year                           |  |   | 4,107

Interest income recognized on
impaired loans was insignificant during 2009.

There was $725,000 of loans with terms that were modified in troubled debt restructurings, with
allocated allowance for loan losses of $89,000 as of December 31, 2009 included in impaired loans above. The Company has not committed additional funds to customers whose loans are classified as troubled debt restructurings.

Nonperforming loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and loans individually classified as
impaired. Nonperforming loans were as follows:



|                                             |  |              |        |      |   |    
|-------------------------------------------- |  | ------------ | ------ | ---- | - | ---
|                                             |  | December 31,
|                                             |  | 2009         |        | 2008
|Loans past due over 90 days still on accrual |  | $            |       |      | $ |   
|Nonaccrual loans                             |  |              | 11,328 |      |   | 780

Loans to executive officers, directors,
and their related companies and individuals totaled approximately $716,000 and $637,000 at December 31, 2009 and December 31, 2008, respectively.





(Continued)

F-20



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 4 - PREMISES AND EQUIPMENT

Premises and equipment consist of the following:



|                              |  |              |        |   |      |   |        |  
|----------------------------- |  | ------------ | ------ | - | ---- | - | ------ | -
|                              |  | December 31, |       
|                              |  | 2009         |        |   | 2008 |  
|Cost                          |  |              |        |   |      |   |        |  
|Land                          |  | $            | 1,891  |   |      | $ | 1,891  |  
|Buildings and improvements    |  |              | 8,643  |   |      |   | 8,670  |  
|Furniture and fixtures        |  |              | 2,001  |   |      |   | 1,695  |  
|                              |  |              |        |   |      |   |        |  
|Total cost                    |  |              | 12,535 |   |      |   | 12,256 |  
|Less accumulated depreciation |  |              | (3,090 | ) |      |   | (2,631 | )
|                              |  |              |        |   |      |   |        |  
|                              |  |             
|                              |  | $            | 9,445  |   |      | $ | 9,625  |  
|                              |  |              |        |   |      |   |        |  

NOTE 5 - REAL ESTATE OWNED

Real estate owned activity was as follows:



|                       |  |      |       |   |      |   |        |  
|---------------------- |  | ---- | ----- | - | ---- | - | ------ | -
|                       |  | 2009 |       |   | 2008 |  
|Beginning of year      |  | $    | 1,874 |   |      | $ | 2,449  |  
|Transferred from loans |  |      | 160   |   |      |   | 729    |  
|Sales                  |  |      | (132  | ) |      |   | (290   | )
|Write-downs            |  |      | (291  | ) |      |   | (1,014 | )
|                       |  |      |       |   |      |   |        |  
|                       |  |     
|End of year            |  | $    | 1,611 |   |      | $ | 1,874  |  
|                       |  |      |       |   |      |   |        |  

Operating expenses related to real estate owned was $237,000 and $219,000 during 2009 and 2008.

NOTE 6 - DEPOSITS

Certificate of deposit
accounts with balances of $100,000 or more totaled $33,704,000 at December 31, 2009 and $24,852,000 at December 31, 2008.

At
December 31, 2009, scheduled maturities of certificates of deposit are as follows:



|     |  |   |       
|---- |  | - | ------
|2010 |  | $ | 62,456
|2011 |  |   | 19,015
|2012 |  |   | 2,313 
|2013 |  |   | 2,220 
|2014 |  |   | 6,496 
|     |  |   |       
|     | 
|     |  | $ | 92,500
|     |  |   |       





(Continued)

F-21



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 7 - FEDERAL HOME LOAN BANK ADVANCES

At year end, advances from the FHLB were as follows:



|                                                                                  |  |      |        |   |      |   |        |  
|--------------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                                                                  |  | 2009 |        |   | 2008 |  
|Maturities February 2010 through October 2018, at fixed rates from 2.58% to 4.88% |  | $    | 39,985 |   |      | $ | 48,860 |  
|                                                                                  |  |      |        |   |      |   |        |  
|                                                                                  |  |     
|Average interest rate                                                             |  |      | 3.76   | % |      |   | 3.79   | %

The Company may incur a penalty if the
advances are repaid prior to their maturity dates. Advances totaling $28.0 million are callable quarterly in whole or in part by the FHLB.

The Company maintains a collateral pledge agreement covering advances whereby the Company has agreed to at all times keep on hand, free of all other pledges, liens, and encumbrances, fully disbursed, whole first mortgages on improved
residential property not more than 90 days delinquent, aggregating no less than 133% of the outstanding advances from the FHLB.

Maturities
are as follows:



|           |  |   |       
|---------- |  | - | ------
|2010       |  | $ | 3,185 
|2011       |  |   | 4,000 
|2013       |  |   | 4,800 
|Thereafter |  |   | 28,000
|           |  |   |       
|           | 
|           |  | $ | 39,985
|           |  |   |       

NOTE 8 - EMPLOYEE BENEFIT PLANS

401(k) Savings Plan

The Bank
maintains a 401(k) plan covering substantially all employees. The plan allows participant salary deferrals into the plan along with a matching contribution provided by the Bank. Contributions to the 401(k) plan are made at the discretion of the
Board of Directors and charged to expense annually. Total contributions to the plan were $81,000, $71,000, and $74,000, for 2009, 2008, and 2007, respectively.

Supplemental Executive Retirement Plan

The Bank maintained a non-qualified
supplemental executive retirement plan (SERP) covering certain officers and highly compensated employees. There was no SERP expense in 2009, 2008, or 2007 because the plan was frozen as of January 1, 2006. In 2008, the Board of
Directors approved the SERP to be terminated. As a result of the plan termination, $451,000 of the accrued benefit was paid in 2008. The remaining $78,000 accrued benefit was paid in 2009.





(Continued)

F-22



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 8 - EMPLOYEE BENEFIT PLANS (Continued)



Employee Stock Ownership Plan

The Bank established an ESOP for the benefit of substantially all employees. The ESOP borrowed $2,160,990 from the Company in 1996 and used those funds to
acquire 216,099 shares of the Companys stock at $10 per share.

Shares purchased by the ESOP are allocated to ESOP participants based on
principal repayments made by the ESOP on the loan from the Company. The loan is secured by shares purchased with the loan proceeds and will be repaid by the ESOP with funds from the Banks discretionary contributions to the ESOP and earnings on
ESOP assets. Principal payments are scheduled to occur over a 15-year period. However, in the event the Banks contributions exceed the minimum debt service requirements, additional principal payments will be made.

During 2009, 2008, and 2007, 10,561, 11,230, and 11,898, shares of stock, with an average fair value of $5.82, $16.53, and $30.26, per share were committed
to be released, resulting in ESOP compensation expense of $62,000, $185,000, and $359,000, respectively. There was no increase in ESOP shares as of December 31, 2009 and an increase of 3,377 shares as of December 31, 2008 as a result of
shares being purchased with dividends received on allocated shares during 2008. ESOP shares were reduced by 27,016, and 2,265 as of December 31, 2009 and 2008, respectively, because of terminations. Shares held by the ESOP at December 31,
2009 and 2008 are as follows:



|                                 |  |      |         |      |   |        
|-------------------------------- |  | ---- | ------- | ---- | - | -------
|                                 |  | 2009 |         | 2008
|Allocated shares                 |  |      | 159,576 |      |   | 176,031
|Unallocated shares               |  |      | 9,892   |      |   | 20,453 
|                                 |  |      |         |      |   |        
|                                 |  |     
|Total ESOP shares                |  |      | 169,468 |      |   | 196,484
|                                 |  |      |         |      |   |        
|                                 |  |     
|Fair value of unallocated shares |  | $    | 32      |      | $ | 92     
|                                 |  |      |         |      |   |        

Stock Option Plans

The Company adopted a stock option plan in 1997 under the terms of which 270,144 shares of the Companys common stock were reserved for issuance. All
options granted become exercisable over a five-year period from the date of grant. All options granted expire ten years from the date of grant. At December 31, 2009, there were no stock options available to be issued under the 1997 Plan.





(Continued)

F-23



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 8 - EMPLOYEE BENEFIT PLANS (Continued)



The Company adopted an Incentive Compensation Plan during 2003 under the terms of which 100,000 shares
of the Companys common stock were reserved for issuance. Of the shares authorized for issuance under the plan, up to 40,000 may be issued with respect to awards of restricted stock and restricted units and up to 40,000 may be issued pursuant
to stock options under which the exercise price was less than the fair market value (but not less than 50% of the fair market value) of a share of common stock on the date the award was granted. In addition, as required by Code Section 162(m),
the plan includes a limit of 50,000 shares of common stock as the maximum number of shares that may be subject to awards made to any one individual.

As of December 31, 2009, there were 79,320 shares available for future grants, of which up to 35,000 shares may be available for future restricted stock awards under the 2003 Plan.

The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model. Expected volatilities are
based on historical volatilities of the Companys common stock. The Company used historical data to estimate option exercise and post-vesting termination behavior. The expected term of options granted is based on historical data and represents
the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in
effect at the time of the grant.

The fair value of options granted was determined using the following weighted-average assumptions as of the
grant date:



|                                |  |         |   |  |         |   |  |      |  
|------------------------------- |  | ------- | - |  | ------- | - |  | ---- | -
|                                |  | 2009    |   |  | 2008    |   |  | 2007 |  
|Risk-free interest rate         |  | 2.85    | % |  | 3.37    | % |  |     | %
|Expected term                   |  | 7 years |   |  | 7 years |   |  |     |  
|Expected stock price volatility |  | 87      | % |  | 16      | % |  |     |  
|Dividend yield                  |  |        | % |  | 3.27    | % |  |     | %





(Continued)

F-24



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 8 - EMPLOYEE BENEFIT PLANS (Continued)



A summary of the activity in the stock option plan for 2009 follows:



|                                             |  |         |   |  |                              |       |                                         |     |                         |   |  
|-------------------------------------------- |  | ------- | - |  | ---------------------------- | ----- | --------------------------------------- | --- | ----------------------- | - | -
|                                             |  | Shares  |   |  | WeightedAverageExercisePrice |       | WeightedAverageRemainingContractualTerm |     | AggregateIntrinsicValue
|Outstanding at beginning of year             |  | 49,057  |   |  | $                            | 20.04 |                                         |     |                         |   |  
|                                             |  |         |   | 
|Granted                                      |  | 43,000  |   |  |                              | 4.20  |                                         |     |                         |   |  
|Exercised                                    |  |        |   |  |                              |      |                                         |     |                         |   |  
|Expired                                      |  | (18,820 | ) |  |                              | 15.44 |                                         |     |                         |   |  
|                                             |  |         |   |  |                              |       |                                         |     |                         |   |  
|                                             |  |         |   | 
|Outstanding and expected to vest at year end |  | 73,237  |   |  | $                            | 11.92 |                                         | 7.2 |                         | $ | 
|                                             |  |         |   |  |                              |       |                                         |     |                         |   |  
|                                             |  |         |   | 
|Options exercisable at year end              |  | 28,737  |   |  | $                            | 22.95 |                                         | 3.0 |                         | $ | 
|                                             |  |         |   |  |                              |       |                                         |     |                         |   |  

Information related to the stock option plan during each year follows:



|                                               |  |      |      |      |   |      |  |   |      
|---------------------------------------------- |  | ---- | ---- | ---- | - | ---- |  | - | -----
|                                               |  | 2009 |      | 2008 |   | 2007
|Intrinsic value of options exercised           |  | $    |     |      | $ |     |  | $ | 2,545
|Cash received from option exercises            |  |      |     |      |   |     |  |   | 2,334
|Tax benefit realized from option exercises     |  |      |     |      |   |     |  |   | 415  
|Weighted average fair value of options granted |  |      | 3.24 |      |   | 2.99 |  |   |     

As of December 31,
2009, there was $130,000 of total unrecognized compensation costs related to nonvested stock options granted under the 2003 Plan. The cost is expected to be recognized over the remaining weighted-average vesting period of 2.0 years.

Restricted Stock Awards

The Company
granted 5,000 shares of its common stock on April 21, 2009. The grant price was $5.68. Under the terms of the agreement, 20% of the restricted shares will vest each year. The fair value of the stock award at the grant date was $28,000, which is
being amortized over the five year vesting period. Amortization expense was $9,000 in 2009. In 2009, no shares vested, thus 5,000 shares are nonvested at year-end.





(Continued)

F-25



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 9 - EARNINGS (LOSS) PER SHARE

The following table presents a reconciliation of the components used to compute basic and diluted earnings (loss) per share for 2009, 2008, and 2007. Diluted earnings per share reflect potential dilution
from outstanding stock options, using the treasury stock method. Due to the Companys net loss in 2009, 2008, and 2007, all stock options were excluded from the computation of diluted loss per share.



|                                                           |  |      |           |   |      |   |           |      |  |   |           |  
|---------------------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                                           |  | 2009 |           |   | 2008 |   |           | 2007 | 
|Basic earnings (loss) per share                            |  |      |           |   |      |   |           |      |  |   |           |  
|Net income (loss) available to common stockholders         |  | $    | (4,275    | ) |      | $ | (2,367    | )    |  | $ | (117      | )
|Weighted average common shares outstanding                 |  |      | 1,179,229 |   |      |   | 1,172,311 |      |  |   | 1,181,466 |  
|                                                           |  |      |           |   |      |   |           |      |  |   |           |  
|                                                           |  |      |          
|Basic earnings (loss) per share                            |  | $    | (3.63     | ) |      | $ | (2.02     | )    |  | $ | (0.10     | )
|                                                           |  |      |           |   |      |   |           |      |  |   |           |  
|                                                           |  |      |          
|Diluted earnings (loss) per share                          |  |      |           |   |      |   |           |      |  |   |           |  
|Net income (loss) available to common stockholders         |  | $    | (4,275    | ) |      | $ | (2,367    | )    |  | $ | (117      | )
|Weighted average common shares outstanding                 |  |      | 1,179,229 |   |      |   | 1,172,311 |      |  |   | 1,181,466 |  
|Dilutive effect of stock options                           |  |      |          |   |      |   |          |      |  |   |          |  
|                                                           |  |      |           |   |      |   |           |      |  |   |           |  
|Average common shares and dilutive potential common shares |  |      | 1,179,229 |   |      |   | 1,172,311 |      |  |   | 1,181,466 |  
|                                                           |  |      |           |   |      |   |           |      |  |   |           |  
|                                                           |  |      |          
|Diluted earnings (loss) per share                          |  | $    | (3.63     | ) |      | $ | (2.02     | )    |  | $ | (0.10     | )
|                                                           |  |      |           |   |      |   |           |      |  |   |           |  

NOTE 10 - REGULATORY CAPITAL

The Bank is subject to regulatory capital requirements administered by federal regulatory agencies. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of
assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet various capital requirements can
initiate regulatory action. Management believes as of December 31, 2009, the Bank met all minimum capital adequacy requirements to which it is subject.





(Continued)

F-26



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 10 - REGULATORY CAPITAL (Continued)



The prompt corrective action regulations provide five classifications, including well capitalized,
adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to
accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and plans for capital restoration are required.

At year end, the Banks actual capital levels and minimum required levels were as follows:



|                                                 |  |        |        |       |                                              |   |        |                                                                                |        |  |     |        |  |       |        |  |      |  
|------------------------------------------------ |  | ------ | ------ | ----- | -------------------------------------------- | - | ------ | ------------------------------------------------------------------------------ | ------ |  | --- | ------ |  | ----- | ------ |  | ---- | -
|                                                 |  | Actual |        |       | Minimum Requiredfor CapitalAdequacy Purposes |   |        | Minimum Requiredto Be WellCapitalizedUnder Prompt CorrectiveAction Regulations |       
|                                                 |  | Amount |        | Ratio |                                              |   | Amount |                                                                                | Ratio  |  |     | Amount |  | Ratio |       
|2009                                             |  |        |        |       |                                              |   |        |                                                                                |        |  |     |        |  |       |        |  |      |  
|Total capital (to risk-weighted assets)          |  | $      | 22,799 |       | 17.9                                         | % |        | $                                                                              | 10,196 |  | 8.0 | %      |  | $     | 12,744 |  | 10.0 | %
|Tier 1 (core) capital (to risk weighted assets)  |  |        | 21,844 |       | 17.1                                         |   |        |                                                                                | 5,098  |  | 4.0 |        |  |       | 7,647  |  | 6.0  |  
|Tier 1 (core) capital (to adjusted total assets) |  |        | 21,844 |       | 10.1                                         |   |        |                                                                                | 8,674  |  | 4.0 |        |  |       | 10,843 |  | 5.0  |  



|                                                 |  |        |        |       |                                              |   |        |                                                                                |        |  |     |        |  |       |        |  |      |  
|------------------------------------------------ |  | ------ | ------ | ----- | -------------------------------------------- | - | ------ | ------------------------------------------------------------------------------ | ------ |  | --- | ------ |  | ----- | ------ |  | ---- | -
|                                                 |  | Actual |        |       | Minimum Requiredfor CapitalAdequacy Purposes |   |        | Minimum Requiredto Be WellCapitalizedUnder Prompt CorrectiveAction Regulations |       
|                                                 |  | Amount |        | Ratio |                                              |   | Amount |                                                                                | Ratio  |  |     | Amount |  | Ratio |       
|2008                                             |  |        |        |       |                                              |   |        |                                                                                |        |  |     |        |  |       |        |  |      |  
|Total capital (to risk-weighted assets)          |  | $      | 26,326 |       | 19.6                                         | % |        | $                                                                              | 10,745 |  | 8.0 | %      |  | $     | 13,432 |  | 10.0 | %
|Tier 1 (core) capital (to risk-weighted assets)  |  |        | 25,551 |       | 19.0                                         |   |        |                                                                                | 5,379  |  | 4.0 |        |  |       | 8,069  |  | 6.0  |  
|Tier 1 (core) capital (to adjusted total assets) |  |        | 25,551 |       | 11.7                                         |   |        |                                                                                | 8,735  |  | 4.0 |        |  |       | 10,919 |  | 5.0  |  

The Bank at
December 31, 2009 and 2008 was categorized as well capitalized. Management is not aware of any conditions or events since the most recent notification that would change the Banks category.

Federal regulations require the Qualified Thrift Lender (QTL) test, which mandates that approximately 65% of assets be maintained in
housing-related finance and other specified areas. If the QTL test is not met, limits are placed on growth, branching, new investments, and FHLB advances or the Bank must convert to a commercial bank charter. Management believes that this test is
met.





(Continued)

F-27



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 11 - REGULATORY AGREEMENT

The Bank entered into a Supervisory Agreement (the Agreement) with the Office of Thrift Supervision (OTS) effective February 26, 2007. The Agreement provides that the Bank
will take a number of actions including, but not limited to, (1) adherence to certain regulatory compliance standards; (2) preparation of an updated three-year business plan; (3) adoption of policies and procedures relating to the
preparation and filing of suspicious activities reports; (4) adoption of revised policies for the classification of assets, loan underwriting, and allowance for loan and lease losses; (5) board of director monitoring and preparation of a
resolution plan for certain real estate owned property; and (6) the establishment of a board committee which will oversee corrective action relating to the recent OTS examination report, third-party reviews, and internal and external audits.

In July 2008, the Bank received notice from the OTS supplementing the February 2007 Agreement. The notification received in 2008 is typically
delivered at the execution of a Supervisory Agreement, and requires the Bank to obtain OTS approval for any capital distribution, including payment of a dividend from the Bank to the Holding Company. The Bank received approval from the OTS for a
$1.0 million dividend from the Bank to the Holding Company in 2008. No such dividends were made during 2009.

The agreement will remain in
effect until terminated, modified, or suspended in writing by the OTS. Failure to comply with the agreement could result in the initiation of formal enforcement action by the OTS.

NOTE 12 - INCOME TAXES

Income tax (benefit) expense consists of the following:



|                             |  |      |        |   |      |   |        |      |  |   |      |  
|---------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ---- | -
|                             |  | 2009 |        |   | 2008 |   |        | 2007 | 
|Current expense (benefit)    |  | $    | (1,015 | ) |      | $ |       |      |  | $ | 90   |  
|Deferred expense (benefit)   |  |      | (563   | ) |      |   | (1,365 | )    |  |   | (324 | )
|Valuation allowance          |  |      | 1,901  |   |      |   | 339    |      |  |   |     |  
|                             |  |      |        |   |      |   |        |      |  |   |      |  
|                             |  |      |       
|Income tax expense (benefit) |  | $    | 323    |   |      | $ | (1,026 | )    |  | $ | (234 | )
|                             |  |      |        |   |      |   |        |      |  |   |      |  

Due to interest income earned on certain U.S. government agency securities, there was no state income tax expense in 2009,
2008, or 2007. The state of Illinois does not tax interest earned on such securities.





(Continued)

F-28



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 12 - INCOME TAXES(Continued)



The federal income tax expense differs from the amounts determined by applying the statutory federal
income tax rate of 34% to income before income taxes as a result of the following items:



|                                          |  |        |        |   |            |       |    |        |   |        |            |  |       |        |  |   |            |   |  |       |   
|----------------------------------------- |  | ------ | ------ | - | ---------- | ----- | -- | ------ | - | ------ | ---------- |  | ----- | ------ |  | - | ---------- | - |  | ----- | --
|                                          |  | 2009   |        |   | 2008       |       |    | 2007   |  
|                                          |  | Amount |        |   | Percentage |       |    | Amount |   |        | Percentage |  |       | Amount |  |   | Percentage |  
|Income tax computed at the statutory rate |  | $      | (1,344 | ) |            | (34.0 | )% |        | $ | (1,153 | )          |  | (34.0 | )%     |  | $ | (119       | ) |  | 34.0  | % 
|ESOP expense                              |  |        | 21     |   |            | 0.5   |    |        |   | 20     |            |  | 0.6   |        |  |   | 82         |   |  | 23.3  |   
|Bank-owned life insurance                 |  |        | (104   | ) |            | (2.6  | )  |        |   | (101   | )          |  | (3.0  | )      |  |   | (97        | ) |  | (27.6 | ) 
|Low income housing credits                |  |        | (117   | ) |            | (3.0  | )  |        |   | (117   | )          |  | (3.5  | )      |  |   | (117       | ) |  | (33.3 | ) 
|Valuation allowance                       |  |        | 1,901  |   |            | 48.1  |    |        |   | 339    |            |  | 10.0  |        |  |   |           |   |  |      |   
|Other items, net                          |  |        | (34    | ) |            | (0.9  | )  |        |   | (14    | )          |  | (0.4  | )      |  |   | 17         |   |  | 4.8   |   
|                                          |  |        |        |   |            |       |    |        |   |        |            |  |       |        |  |   |            |   |  |       |   
|                                          |  |        |        |   |            |      
|                                          |  | $      | 323    |   |            | 8.1   | %  |        | $ | (1,026 | )          |  | (30.2 | )%     |  | $ | (234       | ) |  | (70.0 | )%
|                                          |  |        |        |   |            |       |    |        |   |        |            |  |       |        |  |   |            |   |  |       |   

Prior to 1997, the Bank had qualified under provisions of the Internal Revenue Code that allowed it to deduct from taxable
income a provision based on a percentage of taxable income, which differed from the provision charged to income. The amount of deferred tax liabilities not recorded approximates $1,121,000, and would be recorded if this deduction is reversed.

Deferred tax assets (liabilities) are comprised of the following at year end:



|                                                 |  |      |        |   |      |   |       |  
|------------------------------------------------ |  | ---- | ------ | - | ---- | - | ----- | -
|                                                 |  | 2009 |        |   | 2008 |  
|Deferred loan fees                               |  | $    | 53     |   |      | $ | 75    |  
|ESOP and Supplemental Retirement Plan expense    |  |      | 14     |   |      |   | 58    |  
|Unrealized loss on securities available for sale |  |      |       |   |      |   | 69    |  
|Bad debt deduction                               |  |      | 970    |   |      |   | 264   |  
|Loss on security impairment                      |  |      | 730    |   |      |   | 639   |  
|Write-down of REO property                       |  |      | 525    |   |      |   | 448   |  
|Low income housing and other tax credits         |  |      | 468    |   |      |   | 405   |  
|Net operating loss carryforward                  |  |      |       |   |      |   | 351   |  
|Other                                            |  |      | 55     |   |      |   |      |  
|                                                 |  |      |        |   |      |   |       |  
|Total deferred tax assets                        |  |      | 2,815  |   |      |   | 2,309 |  
|                                                 |  |     
|Unrealized gain on securities available for sale |  |      | (70    | ) |      |   |      |  
|FHLB stock dividends                             |  |      | (333   | ) |      |   | (333  | )
|Depreciation                                     |  |      | (172   | ) |      |   | (135  | )
|Other                                            |  |      |       |   |      |   | (25   | )
|                                                 |  |      |        |   |      |   |       |  
|Total deferred tax liabilities                   |  |      | (575   | ) |      |   | (493  | )
|Valuation allowance                              |  |      | (2,240 | ) |      |   | (339  | )
|                                                 |  |      |        |   |      |   |       |  
|                                                 |  |     
|Net deferred tax asset                           |  | $    |       |   |      | $ | 1,477 |  
|                                                 |  |      |        |   |      |   |       |  





(Continued)

F-29



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 12 - INCOME TAXES(Continued)



Realization of deferred tax assets is dependent upon generating sufficient taxable income to obtain
benefit from the reversal of net deductible temporary differences and utilization of tax credit carryforwards. In assessing the realization of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of
the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income, including tax planning strategies, during the periods in which those temporary differences
become deductible. Based on forecasted earnings and available tax strategies, a valuation allowance to reflect managements estimate of the temporary deductible differences that may expire prior to their utilization has been recorded at year
end 2009 and 2008.

Current taxes receivable, included in other assets on the consolidated balance sheet, totaled approximately $1,282,000 and
$267,000 at December 31, 2009 and 2008. The current receivable represents recoverable federal income taxes from net operating loss carrybacks.

The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of the state of Illinois. The Company is no longer subject to examination by taxing authorities for years before 2006.

NOTE 13 - COMMITMENTS

The Company 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 consist of standby letters of credit and commitments to make loans and fund loans
in process.

The Companys exposure to credit loss in the event of nonperformance by the other party to these financial instruments is
represented by the contractual amount of these instruments. The Company follows the same credit policy to make such commitments as is followed for those loans recorded on the statement of financial condition.





(Continued)

F-30



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 13 - COMMITMENTS (Continued)



The contractual amount of financial instruments with off-balance-sheet risk at year end is summarized as
follows:



|                           |  |      |       |      |   |      
|-------------------------- |  | ---- | ----- | ---- | - | -----
|                           |  | 2009 |       | 2008
|Commitments to make loans: |  |      |       |      |   |      
|Fixed                      |  | $    | 1,540 |      | $ | 1,253
|Adjustable                 |  |      | 221   |      |   |     
|Unused lines of credit     |  |      | 4,114 |      |   | 4,987
|Letters of credit          |  |      | 20    |      |   | 201  
|Loans in process           |  |      | 2,191 |      |   | 1,287

The fixed rate loan commitments at
December 31, 2009 have terms of up to 60 days and rates in the range of 4.875% to 8.0%.

Since certain commitments to make loans and fund
loans in process may expire without being used, the amounts above do not necessarily represent future cash commitments. No losses are anticipated as a result of these transactions.

NOTE 14 - FAIR VALUE

Fair value is the exchange price that would be received for an asset
or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to
measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity
has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices
such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entitys own assumptions about the assumptions that market
participants would use in pricing and asset or liability.





(Continued)

F-31



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 14 - FAIR VALUE (Continued)



Assets and Liabilities Measured on a Recurring Basis

The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or
matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities relationship to other
benchmark quoted securities (Level 2 inputs).

Assets and liabilities measured at fair value on a recurring basis are summarized below:



|                                                   |  |       |        |                                                            |   |                                           |  |                                        |        |  |   |  
|-------------------------------------------------- |  | ----- | ------ | ---------------------------------------------------------- | - | ----------------------------------------- |  | -------------------------------------- | ------ |  | - | -
|                                                   |  |       |        | Fair Value Measurements Using                             
|                                                   |  | Total |        | Quoted Prices inActive Marketsfor IdenticalAssets(Level 1) |   | SignificantOtherObservableInputs(Level 2) |  | SignificantUnobservableInputs(Level 3)
|Securities available for sale at December 31, 2009 |  |       |        |                                                            |   |                                           |  |                                        |        |  |   |  
|Government sponsored enterprises                   |  | $     | 16,762 |                                                            | $ |                                          |  | $                                      | 16,762 |  | $ | 
|Corporate                                          |  |       | 5,095  |                                                            |   |                                          |  |                                        | 5,095  |  |   | 
|Municipal                                          |  |       | 512    |                                                            |   |                                          |  |                                        | 512    |  |   | 
|Equity                                             |  |       | 4,672  |                                                            |   | 4,647                                     |  |                                        | 25     |  |   | 
|Mortgage-backed residential                        |  |       | 7,737  |                                                            |   |                                          |  |                                        | 7,737  |  |   | 
|                                                   |  |       |        |                                                            |   |                                           |  |                                        |        |  |   |  
|                                                   |  |       |        |                                                           
|                                                   |  | $     | 34,778 |                                                            | $ | 4,647                                     |  | $                                      | 30,131 |  | $ | 
|                                                   |  |       |        |                                                            |   |                                           |  |                                        |        |  |   |  
|Securities available for sale at December 31, 2008 |  |       |        |                                                            |   |                                           |  |                                        |        |  |   |  
|Government sponsored enterprises                   |  | $     | 25,326 |                                                            | $ |                                          |  | $                                      | 25,326 |  | $ | 
|Corporate                                          |  |       | 3,816  |                                                            |   |                                          |  |                                        | 3,816  |  |   | 
|Municipal                                          |  |       |       |                                                            |   |                                          |  |                                        |       |  |   | 
|Equity                                             |  |       | 4,762  |                                                            |   | 4,647                                     |  |                                        | 115    |  |   | 
|Mortgage-backed residential                        |  |       | 9,691  |                                                            |   |                                          |  |                                        | 9,691  |  |   | 
|                                                   |  |       |        |                                                            |   |                                           |  |                                        |        |  |   |  
|                                                   |  |       |        |                                                           
|                                                   |  | $     | 43,595 |                                                            | $ | 4,647                                     |  | $                                      | 38,948 |  | $ | 
|                                                   |  |       |        |                                                            |   |                                           |  |                                        |        |  |   |  





(Continued)

F-32



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 14 - FAIR VALUE (Continued)



Assets and Liabilities Measured on a Non-Recurring Basis

The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent real estate appraisals. These
appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the
comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

The fair value of real estate owned is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales
and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3
classification of the inputs for determining fair value.

Assets and liabilities measured at fair value on a non-recurring basis are
summarized below:



|                    |  |         |       |                                                            |   |                                           |  |                                        |   |  |   |      
|------------------- |  | ------- | ----- | ---------------------------------------------------------- | - | ----------------------------------------- |  | -------------------------------------- | - |  | - | -----
|                    |  |         |       | Fair Value Measurements Using                             
|                    |  | Balance |       | Quoted Prices inActive Marketsfor IdenticalAssets(Level 1) |   | SignificantOtherObservableInputs(Level 2) |  | SignificantUnobservableInputs(Level 3)
|December 31, 2009   |  |         |       |                                                            |   |                                           |  |                                        |   |  |   |      
|Impaired loans, net |  | $       | 3,526 |                                                            | $ |                                          |  | $                                      |  |  | $ | 3,526
|Real estate owned   |  |         | 1,611 |                                                            |   |                                          |  |                                        |  |  |   | 1,611
|                    |  |         |       |                                                           
|December 31, 2008   |  |         |       |                                                            |   |                                           |  |                                        |   |  |   |      
|Real estate owned   |  | $       | 1,874 |                                                            | $ |                                          |  | $                                      |  |  | $ | 1,874

Impaired loans, which are measured
primarily for impairment using the fair value of collateral or the present value of future cash flows, were $9,913,000 at December 31, 2009. These loans had a specific allowance allocation of $1,896,000 at December 31, 2009. Impaired loans
totaling $5,422,000 at December 31, 2009 were carried at fair value as a result of the aforementioned specific allowance allocation at year-end. The remaining $4,491,000 of impaired loans were carried at cost at December 31, 2009, as the
fair value of the collateral exceeded the cost basis of each respective loan. Changes in specific allowance allocations during 2009 on impaired loans carried at fair value at December 31, 2009 resulted in an additional provision for loan losses
of $1,896,000.





(Continued)

F-33



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 14 - FAIR VALUE (Continued)



Other real estate owned carried at fair value was $1,611,000 at December 31, 2009. Declines in the
value of other real estate owned that is carried at fair value at December 31, 2009 resulted in a write-down of $256,000 during 2009.

The carrying amount and estimated fair value of financial instruments at year end are as follows:



|                                                |  |                |         |   |                     |   |         |                |  |   |                     |   |  |   |         |  
|----------------------------------------------- |  | -------------- | ------- | - | ------------------- | - | ------- | -------------- |  | - | ------------------- | - |  | - | ------- | -
|                                                |  | 2009           |         |   | 2008                |  
|                                                |  | CarryingAmount |         |   | EstimatedFair Value |   |         | CarryingAmount |  |   | EstimatedFair Value |  
|Financial assets                                |  |                |         |   |                     |   |         |                |  |   |                     |   |  |   |         |  
|Cash and cash equivalents                       |  | $              | 11,975  |   |                     | $ | 11,975  |                |  | $ | 8,859               |   |  | $ | 8,859   |  
|Securities available for sale                   |  |                | 34,778  |   |                     |   | 34,778  |                |  |   | 43,595              |   |  |   | 43,595  |  
|Loans receivable, net                           |  |                | 142,924 |   |                     |   | 144,831 |                |  |   | 138,580             |   |  |   | 140,240 |  
|FHLB stock                                      |  |                | 5,423   |   |                     |   | NA      |                |  |   | 5,423               |   |  |   | NA      |  
|Accrued interest receivable                     |  |                | 924     |   |                     |   | 924     |                |  |   | 1,139               |   |  |   | 1,139   |  
|                                                |  |                |         |  
|Financial liabilities                           |  |                |         |   |                     |   |         |                |  |   |                     |   |  |   |         |  
|Deposits with no fixed maturity dates           |  | $              | (58,122 | ) |                     | $ | (58,122 | )              |  | $ | (50,195             | ) |  | $ | (50,195 | )
|Deposits with fixed maturity dates              |  |                | (92,500 | ) |                     |   | (93,487 | )              |  |   | (87,454             | ) |  |   | (87,753 | )
|Securities sold under repurchase agreements     |  |                | (2,600  | ) |                     |   | (2,600  | )              |  |   | (3,239              | ) |  |   | (3,239  | )
|Advances from borrowers for taxes and insurance |  |                | (1,859  | ) |                     |   | (1,859  | )              |  |   | (2,051              | ) |  |   | (2,051  | )
|FHLB advances                                   |  |                | (39,985 | ) |                     |   | (42,855 | )              |  |   | (48,860             | ) |  |   | (54,265 | )
|Accrued interest payable                        |  |                | (190    | ) |                     |   | (190    | )              |  |   | (365                | ) |  |   | (365    | )

The methods and assumptions used to
estimate fair value are described as follows:

Carrying amount is the estimated fair value for cash and cash equivalents, accrued interest
receivable and payable, demand deposits, short-term debt, short-term securities sold under agreements to repurchase, advance payments from borrowers, and variable rate loans or deposits that reprice frequently and fully. The fair value of securities
available for sale is based on the methods described previously in this note. For fixed rate loans or deposits and for variable rate loans or deposits with infrequent repricing or repricing limits, fair value is based on discounted cash flows using
current market rates applied to the estimated life and credit risk. The fair value of FHLB advances is based on current rates for similar financing. It was not practicable to determine the fair value of FHLB stock due to restrictions placed on its
transferability. The fair value of off-balance-sheet items, based on the current fees or cost that would be charged to enter into or terminate such arrangements, is immaterial.





(Continued)

F-34



---

##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 15 - OTHER COMPREHENSIVE INCOME (LOSS)

Other comprehensive income components and related taxes were as follows:



|                                                                        |  |      |      |   |      |   |        |      |  |   |      |  
|----------------------------------------------------------------------- |  | ---- | ---- | - | ---- | - | ------ | ---- |  | - | ---- | -
|                                                                        |  | 2009 |      |   | 2008 |   |        | 2007 | 
|Unrealized holding gains (losses) on securities available for sale      |  | $    | 144  |   |      | $ | (2,142 | )    |  | $ | 648  |  
|Less reclassification adjustments for gains (losses) recorded in income |  |      | (268 | ) |      |   | (1,721 | )    |  |   | (94  | )
|                                                                        |  |      |      |   |      |   |        |      |  |   |      |  
|Net unrealized gains (losses)                                           |  |      | 412  |   |      |   | (421   | )    |  |   | 742  |  
|Tax effect                                                              |  |      | (140 | ) |      |   | 143    |      |  |   | (253 | )
|                                                                        |  |      |      |   |      |   |        |      |  |   |      |  
|                                                                        |  |      |     
|Other comprehensive income (loss)                                       |  | $    | 272  |   |      | $ | (278   | )    |  | $ | 489  |  
|                                                                        |  |      |      |   |      |   |        |      |  |   |      |  

The following is a summary of the accumulated other comprehensive income balances, net of tax:



|                                                           |  |                   |      |   |                     |   |                   |  |   |    
|---------------------------------------------------------- |  | ----------------- | ---- | - | ------------------- | - | ----------------- |  | - | ---
|                                                           |  | Balanceat12/31/08 |      |   | CurrentPeriodChange |   | Balanceat12/31/09
|Unrealized gains (losses) on securities available for sale |  | $                 | (136 | ) |                     | $ | 272               |  | $ | 136
|                                                           |  |                   |      |   |                     |   |                   |  |   |    
|                                                           |  |                   |     
|Total                                                      |  | $                 | (136 | ) |                     | $ | 272               |  | $ | 136
|                                                           |  |                   |      |   |                     |   |                   |  |   |    





(Continued)

F-35



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 16 - PARENT COMPANY FINANCIAL STATEMENTS

Presented below are the condensed statements of financial condition, statements of operations, and statements of cash flows for Park Bancorp, Inc.

CONDENSED STATEMENTS OF FINANCIAL CONDITION

December 31, 2009 and 2008



|                                                 |  |      |        |      |   |       
|------------------------------------------------ |  | ---- | ------ | ---- | - | ------
|                                                 |  | 2009 |        | 2008
|ASSETS                                           |  |      |        |      |   |       
|Cash and cash equivalents                        |  | $    | 431    |      | $ | 633   
|Securities available for sale                    |  |      | 25     |      |   | 115   
|ESOP loan                                        |  |      | 142    |      |   | 283   
|Investment in bank subsidiary                    |  |      | 21,980 |      |   | 25,414
|Investment in real estate development subsidiary |  |      | 1      |      |   | 1     
|Accrued interest receivable and other assets     |  |      | 382    |      |   | 449   
|                                                 |  |      |        |      |   |       
|                                                 |  |     
|Total assets                                     |  | $    | 22,961 |      | $ | 26,895
|                                                 |  |      |        |      |   |       
|                                                 |  |     
|LIABILITIES AND STOCKHOLDERS EQUITY             |  |      |        |      |   |       
|Liabilities                                      |  |      |        |      |   |       
|Accrued expenses and other liabilities           |  | $    | 13     |      | $ | 29    
|Stockholders equity                             |  |      | 22,948 |      |   | 26,866
|                                                 |  |      |        |      |   |       
|                                                 |  |     
|Total liabilities and stockholders equity       |  | $    | 22,961 |      | $ | 26,895
|                                                 |  |      |        |      |   |       





(Continued)

F-36



---

##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 16 - PARENT COMPANY FINANCIAL STATEMENTS (Continued)



CONDENSED STATEMENTS OF OPERATIONS

For the years ended December 31, 2009, 2008, and 2007



|                                                                                       |  |      |        |   |      |   |        |      |  |   |      |  
|-------------------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ---- | -
|                                                                                       |  | 2009 |        |   | 2008 |   |        | 2007 | 
|Operating income                                                                       |  |      |        |   |      |   |        |      |  |   |      |  
|Dividends from subsidiaries                                                            |  | $    |       |   |      | $ | 1,000  |      |  | $ |     |  
|Gains on sales of securities                                                           |  |      |       |   |      |   | 5      |      |  |   | 74   |  
|Interest income                                                                        |  |      |        |   |      |   |        |      |  |   |      |  
|Securities (including dividends)                                                       |  |      | 6      |   |      |   | 16     |      |  |   | 27   |  
|Loans                                                                                  |  |      |       |   |      |   |       |      |  |   | 52   |  
|ESOP loan                                                                              |  |      | 20     |   |      |   | 31     |      |  |   | 41   |  
|Interest-bearing deposits                                                              |  |      |       |   |      |   |       |      |  |   | 21   |  
|                                                                                       |  |      |        |   |      |   |        |      |  |   |      |  
|Total operating income                                                                 |  |      | 26     |   |      |   | 1,052  |      |  |   | 215  |  
|                                                                                       |  |      |       
|Operating expenses                                                                     |  |      |        |   |      |   |        |      |  |   |      |  
|Interest on borrowings                                                                 |  |      |       |   |      |   | 10     |      |  |   | 4    |  
|Loss on security impairment                                                            |  |      | 90     |   |      |   | 211    |      |  |   |     |  
|Other expenses                                                                         |  |      | 353    |   |      |   | 369    |      |  |   | 298  |  
|                                                                                       |  |      |        |   |      |   |        |      |  |   |      |  
|Total operating expenses                                                               |  |      | 443    |   |      |   | 590    |      |  |   | 302  |  
|                                                                                       |  |      |        |   |      |   |        |      |  |   |      |  
|                                                                                       |  |      |       
|Income (loss) before income taxes and equity in undistributed earnings of subsidiaries |  |      | (417   | ) |      |   | 462    |      |  |   | (87  | )
|                                                                                       |  |      |       
|Income tax expense (benefit)                                                           |  |      | 68     |   |      |   | (183   | )    |  |   | (34  | )
|                                                                                       |  |      |        |   |      |   |        |      |  |   |      |  
|                                                                                       |  |      |       
|Income (loss) before equity in undistributed earnings of subsidiaries                  |  |      | (485   | ) |      |   | 645    |      |  |   | (53  | )
|                                                                                       |  |      |       
|Dividends in excess of subsidiary earnings                                             |  |      | (3,790 | ) |      |   | (3,012 | )    |  |   | (64  | )
|                                                                                       |  |      |        |   |      |   |        |      |  |   |      |  
|                                                                                       |  |      |       
|Net loss                                                                               |  | $    | (4,275 | ) |      | $ | (2,367 | )    |  | $ | (117 | )
|                                                                                       |  |      |        |   |      |   |        |      |  |   |      |  





(Continued)

F-37



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 16 - PARENT COMPANY FINANCIAL STATEMENTS (Continued)



CONDENSED STATEMENT OF CASH FLOWS

For the years ended December 31, 2009, 2008, and 2007



|                                                                        |  |      |        |   |      |   |        |      |  |   |        |  
|----------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                                        |  | 2009 |        |   | 2008 |   |        | 2007 | 
|Cash flows from operating activities                                    |  |      |        |   |      |   |        |      |  |   |        |  
|Net loss                                                                |  | $    | (4,275 | ) |      | $ | (2,367 | )    |  | $ | (117   | )
|Adjustments to reconcile net loss to net cash from operating activities |  |      |        |   |      |   |        |      |  |   |        |  
|Gain on sale of securities available for sale                           |  |      |       |   |      |   | (5     | )    |  |   | (74    | )
|Loss on security impairment                                             |  |      | 90     |   |      |   | 211    |      |  |   |       |  
|Dividends in excess of subsidiary earnings                              |  |      | 3,790  |   |      |   | 3,012  |      |  |   | 64     |  
|Change in                                                               |  |      |        |   |      |   |        |      |  |   |        |  
|Other assets                                                            |  |      | 68     |   |      |   | 7      |      |  |   | (394   | )
|Other liabilities                                                       |  |      | (16    | ) |      |   | 13     |      |  |   | (39    | )
|                                                                        |  |      |        |   |      |   |        |      |  |   |        |  
|Net cash from operating activities                                      |  |      | (343   | ) |      |   | 871    |      |  |   | (560   | )
|                                                                        |  |      |       
|Cash flows from investing activities                                    |  |      |        |   |      |   |        |      |  |   |        |  
|Sale of securities available for sale                                   |  |      |       |   |      |   | 114    |      |  |   | 272    |  
|Net change in loans receivable                                          |  |      |       |   |      |   |       |      |  |   | 914    |  
|Payment received on ESOP loan                                           |  |      | 141    |   |      |   | 141    |      |  |   | 142    |  
|                                                                        |  |      |        |   |      |   |        |      |  |   |        |  
|Net cash from investing activities                                      |  |      | 141    |   |      |   | 255    |      |  |   | 1,328  |  
|                                                                        |  |      |       
|Cash flows from financing activities                                    |  |      |        |   |      |   |        |      |  |   |        |  
|Other borrowings                                                        |  |      |       |   |      |   | 500    |      |  |   |       |  
|Repayment of other borrowings                                           |  |      |       |   |      |   | (500   | )    |  |   | (800   | )
|Stock options exercised                                                 |  |      |       |   |      |   |       |      |  |   | 2,749  |  
|Purchase of treasury stock                                              |  |      |       |   |      |   | (483   | )    |  |   | (1,504 | )
|Dividends paid to stockholders                                          |  |      |       |   |      |   | (468   | )    |  |   | (843   | )
|                                                                        |  |      |        |   |      |   |        |      |  |   |        |  
|Net cash from financing activities                                      |  |      |       |   |      |   | (951   | )    |  |   | (398   | )
|                                                                        |  |      |        |   |      |   |        |      |  |   |        |  
|                                                                        |  |      |       
|Net change in cash and cash equivalents                                 |  |      | (202   | ) |      |   | 175    |      |  |   | 370    |  
|                                                                        |  |      |       
|Cash and cash equivalents at beginning of year                          |  |      | 633    |   |      |   | 458    |      |  |   | 88     |  
|                                                                        |  |      |        |   |      |   |        |      |  |   |        |  
|                                                                        |  |      |       
|Cash and cash equivalents at end of year                                |  | $    | 431    |   |      | $ | 633    |      |  | $ | 458    |  
|                                                                        |  |      |        |   |      |   |        |      |  |   |        |  





(Continued)

F-38



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##### Table of Contents

PARK BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009,
2008, and 2007

(Table amounts in thousands, except share and per share data)







NOTE 17 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)



|                  |  |                |       |                   |   |                  |  |   |                        |   |  |                               |       |   |  |   |       |  
|----------------- |  | -------------- | ----- | ----------------- | - | ---------------- |  | - | ---------------------- | - |  | ----------------------------- | ----- | - |  | - | ----- | -
|                  |  | InterestIncome |       | NetInterestIncome |   | NetIncome (Loss) |  |   | EarningsPer ShareBasic |   |  | EarningsPer ShareFullyDiluted |      
|2009              |  |                |       |                   |   |                  |  |   |                        |   |  |                               |       |   |  |   |       |  
|First quarter     |  | $              | 2,697 |                   | $ | 1,318            |  | $ | (563                   | ) |  | $                             | (.48  | ) |  | $ | (.48  | )
|Second quarter    |  |                | 2,640 |                   |   | 1,281            |  |   | (585                   | ) |  |                               | (.50  | ) |  |   | (.50  | )
|Third quarter     |  |                | 2,417 |                   |   | 1,143            |  |   | (540                   | ) |  |                               | (.46  | ) |  |   | (.46  | )
|Fourth quarter(1) |  |                | 2,464 |                   |   | 1,286            |  |   | (2,587                 | ) |  |                               | (2.19 | ) |  |   | (2.19 | )
|                  |  |                |       |                   |  
|2008              |  |                |       |                   |   |                  |  |   |                        |   |  |                               |       |   |  |   |       |  
|First quarter     |  | $              | 2,870 |                   | $ | 1,248            |  | $ | (37                    | ) |  | $                             | (0.03 | ) |  | $ | (0.03 | )
|Second quarter(2) |  |                | 2,833 |                   |   | 1,302            |  |   | (359                   | ) |  |                               | (0.31 | ) |  |   | (0.31 | )
|Third quarter(3)  |  |                | 2,903 |                   |   | 1,414            |  |   | (834                   | ) |  |                               | (0.71 | ) |  |   | (0.71 | )
|Fourth quarter(4) |  |                | 2,846 |                   |   | 1,449            |  |   | (1,137                 | ) |  |                               | (0.97 | ) |  |   | (0.97 | )



|(1) | The net loss increased in the fourth quarter due to a $1.9 million provision for loan losses. The provision for loan losses is due to an increase in impaired loans in
the process of foreclosure, of which the loan balance exceeds the estimated fair value of the collateral, less costs to sell.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The net loss increased in the second quarter due to an other-than-temporary loss of $476 on the Companys mutual fund investment.
|--- | ---------------------------------------------------------------------------------------------------------------------------------

|(3) | The net loss increased in the third quarter due to a $417 decline in the estimated value of the Companys other real estate owned. The other-than-temporary loss of
the Companys mutual fund investment in the third quarter was similar to the loss in the second quarter.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | The net loss increased in the fourth quarter due to a $597 further decline in the estimated value of the Companys other real estate owned. The
other-than-temporary loss of the Companys mutual fund investment in the fourth quarter was similar to the losses in the second and third quarter.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





F-39



---

##### Table of Contents

PARK BANCORP, INC. AND SUBSIDIARIES

EXHIBIT INDEX

Park Bancorp, Inc.

Form 10-K for Fiscal Year Ended

December 31, 2009



|      |  |                                                                                                                                                                                                                        
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1   |  | Certificate of Incorporation of Park Bancorp, Inc. (incorporated by reference to Exhibit 3.1 to Park Bancorps Registration Statement No. 333-4380)                                                                    
|      | 
|3.2   |  | Bylaws of Park Bancorp, Inc. (incorporated by reference to Exhibit 3.2 to Park Bancorps Registration Statement No. 333-4380)                                                                                          
|      | 
|3.3   |  | Federal Stock Charter and Bylaws of Park Federal Savings Bank (incorporated by reference to Exhibit 2.1 to Park Bancorps Registration Statement No. 333-4380)                                                         
|      | 
|4.1   |  | Specimen Stock Certificate of Park Bancorp, Inc. (incorporated by reference to Exhibit 4.1 to Park Bancorps Registration Statement No. 333-4380)                                                                      
|      | 
|10.1* |  | Form of Park Federal Savings Bank Employee Stock Ownership Plan (incorporated by reference to Exhibit 10.1 to Park Bancorps Registration Statement No.
333-4380)                                                      
|      | 
|10.2* |  | ESOP Loan Commitment Letter and ESOP Loan Documents (incorporated by reference to Exhibit 10.2 to Park Bancorps Registration Statement No. 333-4380)                                                                  
|      | 
|10.3* |  | Form of Employment Agreements between Park Federal Savings Bank and Park Bancorp, Inc. and certain executive officers (incorporated by reference to Exhibit 10.3 to Park
Bancorps Registration Statement No. 333-4380)
|      | 
|10.4* |  | Form of Proposed Park Federal Savings Bank Employee Severance Compensation Plan (incorporated by reference to Exhibit 10.4 to Park Bancorps Registration Statement No.
333-4380)                                      
|      | 
|10.5* |  | Park Federal Savings Bank Supplemental Executive Retirement Plan (incorporated by reference to Exhibit 10.5 to Park Bancorps Registration Statement No.
333-4380)                                                     
|      | 
|10.6* |  | Park Bancorp, Inc. 1997 Stock-Based Incentive Plan (incorporated by reference to Exhibit 99.1 to Park Bancorps Registration Statement No. 333-33103)                                                                  
|      | 
|10.7* |  | Park Bancorp, Inc. 2003 Incentive Plan (incorporated by reference to Appendix A of Park Bancorp, Inc. Proxy Statement for the Annual Meeting of Stockholders in
2003)                                                  
|      | 
|21.1  |  | List of Subsidiaries                                                                                                                                                                                                   
|      | 
|23.0  |  | Consent of Independent Registered Public Accounting Firm                                                                                                                                                               
|      | 
|31.1  |  | Rule 13(a)-14(a) Certification (Chief Executive Officer)                                                                                                                                                               
|      | 
|31.2  |  | Rule 13(a)-14(a) Certification (Chief Financial Officer)                                                                                                                                                               
|      | 
|32.1  |  | Section 1350 Certification (Chief Executive Officer)                                                                                                                                                                   
|      | 
|32.2  |  | Section 1350 Certification (Chief Financial Officer)                                                                                                                                                                   



|* | Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K pursuant to Item 14(c) of Form 10-K.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------



i