PARKE BANCORP, INC.

                               2006 ANNUAL REPORT

<PAGE>

                               PARKE BANCORP, INC.
                               2006 ANNUAL REPORT

                                TABLE OF CONTENTS

                                                                            Page

Section One
Letter to Shareholders.........................................................1

Selected Financial Data........................................................3

Management's Discussion and Analysis of
     Financial Condition and Results of Operations.............................4

Market Prices and Dividends...................................................16

Section Two
Report of Independent Registered Public Accounting Firm........................1

Consolidated Financial Statements..............................................2

Notes to Consolidated Financial Statements.....................................9

Corporate Information.........................................................32

                              --------------------

Parke Bancorp,  Inc. (the  "Company") may from time to time make written or oral
"forward-looking  statements,"  including  statements  contained  in this Annual
Report and in other  communications  by the Company which are made in good faith
pursuant to the "safe harbor"  provisions of the Private  Securities  Litigation
Reform  Act  of  1995.  These  forward-looking   statements  involve  risks  and
uncertainties,  such as statements of the Company's plans, objectives, estimates
and  intentions  that are subject to change based on various  important  factors
(some of which are beyond the Company's control).  The following factors,  among
others,  could cause the Company's  financial  performance to differ  materially
from the plans, objectives,  expectations, estimates and intentions expressed in
such  forward-looking  statements;  the strength of the United States economy in
general and the  strength of the local  economies  in which the  Company's  bank
subsidiary,  Parke Bank,  conducts  operations;  the effects of, and changes in,
trade,  monetary and fiscal policies and laws,  including interest rate policies
of the Board of Governors of the Federal  Reserve  System,  inflation,  interest
rate, market and monetary fluctuations; the timely development of and acceptance
of new products and services of Parke Bank and the  perceived  overall  value of
these  products and services by customers,  including the features,  pricing and
quality  compared to  competitors'  products and services;  the  willingness  of
customers  to  substitute  competitors'  products  and services for Parke Bank's
products and services;  the success of Parke Bank in gaining regulatory approval
of its products and services,  when required; the impact of changes in financial
services'  laws and  regulations  (including  laws  concerning  taxes,  banking,
securities  and  insurance);  technological  changes;  acquisitions;  changes in
consumer  spending and saving habits;  and the success of Parke Bank at managing
these risks.

<PAGE>



                      [LETTERHEAD OF PARKE BANCORP, INC.]

To Our Shareholders:

2006 was another  record year of growth and profit for Parke  Bancorp.  The year
was pivotal in many ways  including the opening of our first full service branch
in  Philadelphia.  There  also  were many new  hurdles  that  faced the  banking
industry;  such as continued  Federal Reserve  increases in interest rates,  the
continued compression of the net interest margin and the dramatic decline of the
real estate market.  The commitment of our Board of Directors,  management  team
and employees  was evident in facing these  challenges by continuing to focus on
our business plan. This dedication resulted in over a 32% increase in net income
to $4.6  million,  or $1.40 per share,  and asset growth of 21% to $360 million.
Parke  Bancorp's  return on assets and return on equity grew to 1.41% and 15.68%
respectively  for the full year ended  December 31, 2006.  The continued  strong
growth of our bank  provided the  opportunity  to enhance  shareholder  value by
issuing a $.20 per share cash dividend in 2006.

The opening of our full service branch in  Philadelphia  helped support  deposit
growth for the bank of $58 million,  a 25% increase  from a year  earlier.  Paul
Palmieri is a Senior Vice  President  and is  responsible  for our  Philadelphia
division.  Paul has done a great  job  growing  our loans  and  deposits  in the
Philadelphia   area  and   continues  to  focus  on   developing   new  business
relationships  in the community.  Parke Bancorp's  deposit base expansion helped
fund the growth in our loan  portfolio,  which grew by 20% to $310 million.  The
growth in our real estate loan portfolio was particularly noteworthy considering
the nationwide decline in real estate  development.  David  Middlebrook,  Senior
Vice  President  and Senior Loan  Officer,  is credited  with the success in the
sustained  quality  and  growth  of our loan  portfolio.  The  continued  growth
reflects  the   expertise   and   experience  of  our  loan  officers  and  loan
administration  personnel.  Construction lending has been and continues to be an
important  part of Parke  Bancorp's  business  plan.  Although new  construction
lending  slowed  in 2006,  construction  loan  repayments  remained  strong.  We
continue to  carefully  monitor the real estate  markets in our lending area and
pursue opportunities that match our lending expertise.

Our  primary  commitment  continues  to be quality  customer  service,  making a
"Return to Better Banking" more than a bi-line,  it is our bank's promise to our
customers.  Betty  Milavsky,  a Senior  Vice  President,  continues  to focus on
innovative  technology  and bank products  that provide our customers  with "one
stop"  banking.  Betty  is  spearheading  new  internet  products  that  will be
introduced  in 2007,  including  on-line bill paying and remote check  capturing
services.  Today's  technology  provides  our  customers  with the same  banking
conveniences of the nation's  largest banks,  combined with  "hometown"  quality
personal service.

1
<PAGE>

We are proud to have a new member on our Senior  Management team,  Robert Kuehl,
our Senior Vice  President and Chief  Financial  Officer.  Parke Bancorp is very
fortunate to have  someone with Bob's  qualifications  and  experience  join our
organization. He has extensive experience and expertise in all facets of finance
and  accounting,  in addition to bank  acquisition  and SEC expertise at a money
center bank,  larger regional bank and various  community banks. The addition of
Bob to Parke  Bancorp  further  supports  management's  ability to face upcoming
regulatory and market  challenges while taking  advantage of opportunities  that
will become available as our bank continues to grow.

The continued turmoil in the Mideast, oil price volatility, increased regulatory
requirements and other  geopolitical  uncertainties  combine to make forecasting
the economic future of our country and specifically our markets difficult. There
are indications, according to area pundits, that the real estate market may have
"bottomed  out"  within our  regional  market,  which could be good news for our
local  economy.  There  are also  conflicting  indicators  on the  direction  of
interest rates.  It appears that recent  inflation news may redirect the Federal
Reserve's previous  indication of lowering interest rates. There continues to be
increased  competition  from banking and non-banking  sources,  including unfair
advantages enjoyed by credit unions. While these challenges are daunting, we are
confident that the talent and commitment of our directors, management and staff,
combined  with the strong  locations  of our branch  network  will enable  Parke
Bancorp to face the volatility and uncertainty of the market place.

Our ongoing  commitment  to, and focus on, our  business  plan will assist us in
meeting these challenges and sustain our growth while providing the best banking
services  and products in the  Delaware  Valley area,  as we continue to enhance
shareholder value.

/S/ C.R. Chuck Pennoni             /s/ Vito S. Pantilione

C.R. "Chuck" Pennoni               Vito S. Pantilione
Chairman                           President and Chief Executive Officer



                                                                               2
<PAGE>

                            SELECTED FINANCIAL DATA
                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
                                                At or for the Year Ended December 31,
                                        --------------------------------------------------------
                                         2006         2005        2004       2003         2002
                                         ----         ----        ----       ----         ----
<S>                                     <C>         <C>         <C>         <C>         <C>
BALANCE SHEET DATA:
Assets.............................     $359,997    $297,810    $224,339    $174,004    $130,903
Loans Receivable, Net..............     $306,044    $255,461    $185,986    $144,078    $ 93,762
Securities--Available for Sale.....     $ 24,530    $ 22,023    $ 24,043    $ 14,323    $ 22,903
Securities--Held to Maturity.......     $  2,431    $  2,406    $    548    $    779    $    250
Cash and Cash Equivalents..........     $ 11,261    $  4,380    $  1,802    $  4,267    $  7,540
Deposits...........................     $289,929    $232,056    $179,585    $142,447    $107,548
Borrowings ........................     $ 34,851    $ 35,967    $ 20,379    $ 10,340    $  4,949
Stockholders' Equity...............     $ 30,709    $ 27,193    $ 22,829    $ 19,993    $ 17,628

OPERATIONS DATA:
Interest Income......................   $ 25,475    $ 17,336    $ 11,766    $  9,444    $  6,612
Interest Expense ....................     12,022       6,684       3,746       3,182       2,960
                                        --------    --------    --------    --------    --------
Net Interest Income .................     13,453      10,652       8,020       6,263       3,651
Provision for Loan Losses ...........        940       1,180         825         923         298
                                        --------    --------    --------    --------    --------
Net Interest Income after ...........
   Provision for Loan Losses ........     12,513       9,472       7,194       5,340       3,153
Non-Interest Income .................        857         896         861         799         488
Non-Interest Expense ................      5,827       4,544       3,589       2,837       2,079
                                        --------    --------    --------    --------    --------
Income Before Income Taxes ..........      7,543       5,824       4,466       3,282       1,562
Income Tax Expense ..................      2,919       2,330       1,744       1,279         620
                                        --------    --------    --------    --------    --------
Net Income...........................   $  4,624    $  3,494    $  2,722    $  2,002    $    942
                                        ========    ========    ========    ========    ========

SELECTED FINANCIAL RATIOS:
Equity to Assets ....................       8.54%      10.96%      10.77%      12.27%      10.49%
Book Value/Common Share..............   $  10.65    $   9.79    $   8.75    $   7.77    $   7.06
Cash Dividends declared per Share....   $    .20    $   --      $   --      $   --      $   --
Basic Income per Common Share........   $   1.64    $   1.30    $   1.05    $    .80    $    .66
Diluted Income per Common Share......   $   1.40    $   1.10    $    .87    $    .71    $    .65
Return on Average Assets ............       1.41%       1.35%       1.45%       1.33%       0.94%
Return on Average Equity ............      15.68%      13.91%      13.24%      10.72%       7.20%
Net Interest Margin .................       4.25%       4.33%       4.58%       4.40%       3.84%
Non-Interest Expense/Average
   Assets ...........................       1.77%       1.76%       1.91%       1.88%       2.07%
Non-Interest Income/Average
   Assets ...........................       0.26%       0.35%       0.46%       0.52%       0.49%
Non-Performing Loans/Loans(1) .......        .30%        .77%       0.17%       0.54%       1.13%
Allowance for Loan
   Losses/Loans(1) ..................       1.45%       1.38%       1.39%       1.54%       1.40%
Dividend Payout Patio ...............      12.20%         --          --          --          --
<FN>
__________
(1) Total loans before allowance for loan losses
</FN>
</TABLE>

3
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATION

FORWARD LOOKING STATEMENTS

     The  Company  may from time to time make  written or oral  "forward-looking
statements",  including  statements  contained in the Company's filings with the
Securities and Exchange Commission (including the Proxy Statement and the Annual
Report on Form 10-K, including the exhibits), in its reports to stockholders and
in other  communications  by the  Company,  which are made in good  faith by the
Company.

     These forward-looking  statements involve risks and uncertainties,  such as
statements  of the  Company's  plans,  objectives,  expectations,  estimates and
intentions, which are subject to change based on various important factors (some
of which are beyond the Company's control). The following factors, among others,
could cause the Company's  financial  performance to differ  materially from the
plans,  objectives,  expectations,  estimates and  intentions  expressed in such
forward-looking statements: the strength of the United States economy in general
and the strength of the local  economies in which the Bank conducts  operations;
the effects of, and changes in,  trade,  monetary and fiscal  policies and laws,
including  interest  rate  policies  of the Board of  Governors  of the  Federal
Reserve System, inflation, interest rates, market and monetary fluctuations; the
timely  development  of and  acceptance of new products and services of the Bank
and the  perceived  overall  value of these  products  and  services  by  users,
including the features,  pricing and quality  compared to competitors'  products
and services;  the impact of changes in financial services' laws and regulations
(including  laws   concerning   taxes,   banking,   securities  and  insurance);
technological  changes;  changes in consumer spending and saving habits; and the
success of the Bank at managing  the risks  resulting  from these  factors.  The
Company cautions that the listed factors are not exclusive.

OVERVIEW

     The Company's  results of operations are dependent  primarily on the Bank's
net interest income,  which is the difference between the interest income earned
on its interest-earning  assets, such as loans and securities,  and the interest
expense  paid  on  its  interest-bearing   liabilities,  such  as  deposits  and
borrowings. The Bank also generates non-interest income such as service charges,
BOLI income and other fees. The Bank's  non-interest  expenses primarily consist
of employee compensation and benefits,  occupancy expenses,  marketing expenses,
data processing costs and other operating expenses.  The Bank is also subject to
losses from its loan portfolio if borrowers fail to meet their obligations.  The
Bank's results of operations are also significantly affected by general economic
and  competitive  conditions,  particularly  changes in market  interest  rates,
government policies and actions of regulatory agencies.

     The  Company  recorded  net income of $4.6  million,  or $1.40 per  diluted
share, $3.5 million,  or $1.10 per diluted share, and $2.7 million, or $0.87 per
diluted share, for 2006, 2005 and 2004, respectively,  Pre-tax earnings amounted
to $7.5 million for 2006, $5.8 million for 2005 and $4.5 million for 2004.

     Total  assets of $360.0  million at December  31, 2006  increased  by $61.2
million,  or 20.8%,  reflecting  continued  strong loan growth for the  Company.
Total loans increased by $51.5 million, or 19.9%, and investment securities grew
by $2.5 million,  or 10.4%,  during the past year.  This strong asset growth was
funded  primarily by deposit  growth of $57.9  million,  or 24.9% as  borrowings
declined slightly during 2006. The Company continues to expand its balance sheet
primarily   through  the   generation  of  loan  growth  through  its  effective
development of new and existing business relationships.


                                                                               4
<PAGE>

Total capital  increased  $3.5 million,  or 12.9%,  during the past year and the
first cash dividend was paid out by the Company with a special  one-time payment
of $0.20 per share in December of 2006.

     The principal objective of this financial review is to provide a discussion
and  an  overview  of  our  consolidated  financial  condition  and  results  of
operations.  This discussion should be read in conjunction with the accompanying
financial statements and related notes.


5
<PAGE>

     COMPARATIVE  AVERAGE  BALANCES,  YIELDS AND RATES. The following table sets
forth for the periods indicated the Company's average volume of interest-earning
assets and interest-bearing liabilities and average yields and rates. Changes in
net interest  income from period to period result from increases or decreases in
the volume and mix of interest-earning assets and interest-bearing  liabilities,
increases or  decreases in the average  rates earned and paid on such assets and
liabilities  and the  availability  of  particular  sources  of  funds,  such as
non-interest-bearing deposits.
<TABLE>
<CAPTION>

                                                                              FOR THE YEAR ENDED
                                              ----------------------------------------------------------------------------------
                                                  DECEMBER 31, 2006           DECEMBER 31, 2005          DECEMBER 31, 2004
                                              -------------------------   ---------------------------  -------------------------
                                              AVERAGE   INCOME/  YIELD/   AVERAGE    INCOME/   YIELD/  AVERAGE   INCOME/  YIELD/
                   (DOLLARS IN THOUSANDS)     BALANCE   EXPENSE   RATE    BALANCE    EXPENSE   RATE    BALANCE   EXPENSE   RATE
                                              -------   -------   ----    -------    -------   ----    -------   -------   ----
<S>                                           <C>       <C>       <C>     <C>        <C>       <C>    <C>       <C>       <C>
ASSETS:

Loans (net of deferred costs/fees)(1)........ $286,691  $23,992   8.4%    $219,217   $16,108   7.3%   $154,764  $10,978   7.1%
Investment securities........................   26,774    1,341   5.0%      24,276     1,159   4.8%     17,219      750   4.4%
Federal funds sold...........................    2,856      142   5.0%       2,107        69   3.3%      3,044       38   1.3%
                                              --------  -------           --------   -------          --------  -------
     Total interest-earning assets...........  316,321  $25,475   8.1%     245,600   $17,336   7.1%    175,027  $11,766   6.7%
                                              ========  =======           ========   =======          ========  =======

Allowance for loan losses....................   (4,051)                     (3,009)                     (2,280)
Other assets.................................   16,267                      15,322                      14,802
                                              --------                    --------                    --------
     Total assets............................ $328,537                    $257,913                    $187,549
                                              ========                    ========                    ========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-bearing deposits:
   Regular savings deposits.................. $ 28,991  $ 1,012   3.5%    $ 29,200   $   797   2.7%   $ 22,160  $   464   2.1%
   NOW & money market savings................   26,568      751   2.8%      23,729       416   1.8%     28,511      477   1.7%
   Time deposits.............................  188,040    8,469   4.5%     138,587     4,599   3.3%     91,104    2,584   2.8%
                                              --------  -------           --------   -------          --------  -------
     Total interest-bearing deposits.........  243,599   10,232   4.2%     191,516     5,812   3.0%    141,775    3,525   2.5%

Borrowed funds...............................   34,321    1,790   5.2%      22,376       872   3.9%     10,272      221   2.2%
                                              --------  -------           --------   -------          --------  -------
     Total interest-bearing liabilities......  277,920  $12,022   4.3%     213,892   $ 6,684   3.1%    152,047  $ 3,746   2.5%
                                                        =======                      =======                    =======
Non-interest-bearing demand deposits.........   18,174                      16,946                      13,422

Other liabilities............................    2,957                       1,948                       1,520

Stockholders' equity.........................   29,486                      25,127                      20,559
                                              --------                    --------                    --------
     Total liabilities and
     stockholders' equity.................... $328,537                    $257,913                    $187,549
                                              ========                    ========                    ========

Interest rate spread (average yield
   less average rate)........................                     3.8%                         4.0%                       4.2%
Net interest income (interest income
   less interest expense)....................           $13,453                      $10,652                    $ 8,020
                                                        =======                      =======                    =======
Net interest margin (net interest income/
   average interest-earning assets)..........                     4.3%                         4.3%                       4.6%
<FN>

________________
(1)  Non-accrual  loans and loan fees,  which are not material,  are included in
     the calculation of average balances.
</FN>
</TABLE>


                                                                               6
<PAGE>

RETURN ON EQUITY AND ASSETS
<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                       ---------------------------
                                                        2006       2005       2004
                                                       ------     ------     -----
<S>                                                     <C>        <C>        <C>
Return on average assets ......................         1.41%      1.35%      1.45%
Return on average equity ......................        15.68%     13.91%     13.24%
Dividend payout ratio .........................        12.2%       0          0
Average equity to average assets ratio ........         8.97%      9.74%     10.96%
</TABLE>

         RATE/VOLUME ANALYSIS. For each category of interest-earning  assets and
interest-bearing liabilities, information is provided on changes attributable to
(i) changes in volume (i.e.,  changes in volume  multiplied by the old rate) and
(ii)  changes in rate (i.e.,  changes in rate  multiplied  by old  volume).  For
purposes  of this table,  changes  attributable  to both rate and volume,  which
cannot be segregated,  have been allocated  proportionately to the change due to
volume and the change due to rate.
<TABLE>
<CAPTION>

                                                           YEAR'S ENDED DECEMBER 31,
                                 -------------------------------------------------------------------------------
                                           2006 VS. 2005                              2005 VS. 2004
                                     VARIANCE DUE TO CHANGES IN                VARIANCE DUE TO CHANGES IN
                                 ------------------------------------      -------------------------------------
                                                               NET                                       NET
                                 AVERAGE       AVERAGE      INCREASE/      AVERAGE       AVERAGE      INCREASE/
                                 VOLUME          RATE      (DECREASE)      VOLUME          RATE       (DECREASE)
                                 ------          ----      ----------      ------          ----       ----------
<S>                           <C>            <C>           <C>          <C>            <C>           <C>
Interest Income:
   Loans (net of deferred
     costs/fees)............  $ 4,957,960    $ 2,926,537   $ 7,884,497  $ 4,576,187    $   554,203   $ 5,130,390
   Investment securities....      119,245         62,843       182,088      310,506         98,651       409,157
   Federal funds sold.......       24,494         48,352        72,846      (12,182)        42,891        30,709
                              -----------    -----------   -----------  -----------    -----------   -----------

Total interest income.......    5,101,699      3,037,732     8,139,431    4,874,512        695,744     5,570,256
                              -----------    -----------   -----------  -----------    -----------   -----------
Interest Expense:
   Deposits.................    1,580,733      2,838,798     4,419,530    1,243,516      1,044,265     2,287,781
   Borrowed funds...........      465,230        453,813       919,044      266,290        383,751       650,041
                              -----------    -----------   -----------  -----------    -----------   -----------

Total interest expense......    2,045,963      3,292,611     5,338,574    1,509,806      1,428,016     2,937,822
                              -----------    -----------   -----------  -----------    -----------   -----------

Net interest income.........  $ 3,055,736    $  (254,879)  $ 2,800,857  $ 3,364,706    $  (732,272)  $ 2,632,434
                              ===========    ===========   ===========  ===========    ===========   ===========
</TABLE>

CRITICAL ACCOUNTING POLICIES

         ALLOWANCE  FOR  LOSSES  ON  LOANS.  The  allowance  for loan  losses is
established  as losses are  estimated to have  occurred  through a provision for
loan losses.  Loans that are determined to be uncollectible  are charged against
the allowance account,  and subsequent  recoveries,  if any, are credited to the
allowance.  When evaluating the adequacy of the allowance,  an assessment of the
loan portfolio will typically  include  changes in the composition and volume of
the loan portfolio,  overall portfolio quality and past loss experience,  review
of  specific  problem  loans,  current  economic  conditions  which  may  affect
borrowers'  ability  to repay,  and other  factors  which  may  warrant  current
recognition.  Such periodic assessments may, in management's  judgment,  require
the Company to recognize additions or reductions to the allowance.

7
<PAGE>

OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

     NET INTEREST  INCOME/MARGINS.  The Company's  primary source of earnings is
net  interest  income,   which  is  the  difference  between  income  earned  on
interest-earning  assets, such as loans and investment securities,  and interest
expense  incurred  on  interest-bearing   liabilities,   such  as  deposits  and
borrowings,  The level of net  interest  income is  determined  primarily by the
average level of balances  ("volume") and the market rates  associated  with the
interest-earning assets and interest-bearing liabilities.

     Net interest income amounted to $13.5 million for 2006,  which  represented
an increase of $2.8 million, or 26.3%, above the level of $10.7 million in 2005.
The 2005 results  reflected  an increase of $2.6  million,  or 32.8%,  above the
level of $8.0 million in 2004.  The increases for both years were mainly related
to the growth in average interest-earning assets, primarily loans.

     Interest income in 2006, which amounted to $25.5 million, increased by $8.1
million,  or 47.0%,  due to an  increase in average  interest-earning  assets of
$70.7  million  year-over-year  coupled  with an increase in the level of market
interest  rates  during  2006.  Average  loans,  which  represented  the largest
component of the change in average  interest-earning  assets, increased by $67.4
million,  or 30.8%, during 2006 and increased by $64.5 million, or 41.7%, during
2005.  Interest  expense for 2006 amounted to $12.0  million and increased  $5.3
million, or 79.9%, resulting from increased average interest-bearing liabilities
of $64.0 million  year-over-year  coupled with an increase in the interest rates
paid for both deposits and borrowed funds and a greater  concentration of higher
cost time  deposits  within the retail  deposit base.  Average  interest-bearing
deposits  amounted to $243.6 million in 2006 and increased by $52.1 million,  or
27.2%,  from the  average  in 2005 of $191.5  million.  The  change  in  average
interest-bearing  deposits in 2005 amounted to $49.7 million,  which resulted in
an increase of 35.1% from the average in 2004.

     The key  performance  measure for net interest  income is the "net interest
margin",  which  represents  net  interest  income  divided by  interest-earning
assets.  The  Company's  net  interest  income is  affected  by loan and deposit
pricing, the mix of earning assets and deposit products and the impact of market
interest  rates on  borrowings.  The net interest  margin was 4.25% for 2006, as
compared  to 4.34%  for 2005 and  4.60%  for  2004.  During  2006,  the yield on
interest-earning assets increased 100 basis points to 8.1%, while the rates paid
for interest-bearing  liabilities  increased by 120 basis points to 4.3%. During
2005, the yield on average  interest-earning  assets increased to 7.1% from 6.7%
in 2004, while the cost of  interest-bearing  liabilities  increased by 60 basis
points to 3.1% from 2.5%.

     The  provision  for loan losses is a charge to earnings in the current year
to maintain an allowance at a level  management  has  determined  to be adequate
based upon the risk of the loan  portfolio,  current  charge-off  experience and
other factors related to credit quality.  The provision for loan losses amounted
to $940,000,  $1.2 million and $825,000 for 2006,  2005 and 2004,  respectively.
Loan  charge-offs  amounted  to $2,500  for 2006 and  reflected  a decline  from
$227,000 in 2005 and $461,000 in 2004.

     NONINTEREST  INCOME.  Noninterest  income is  principally  derived from fee
income from loan  services,  service fees on  deposits,  BOLI  (Bank-Owned  Life
Insurance)  income  and  gains/losses  on the  sale  of  investment  securities.
Noninterest  income was  $856,644  in 2006 as  compared  to $896,367 in 2005 and
$860,986 in 2004.

     Service  charges on deposit  accounts,  which amounted to $146,209 in 2006,
declined $38,516,  or 20.9%,  from $184,725 in 2005.  Service charges on deposit
accounts  amounted  to  $243,501  in 2004.  The  decline  in 2006 was  primarily
attributed to the loss of a large commercial lockbox customer.

     Other fee income of $710,435 in 2006  declined  slightly  from  $720,882 in
2005 and increased from $609,596 in 2004.  This decline was mainly  attributable
to a reduction of $14,285 in BOLI income which amounted to $172,211 in 2006, due
to the surrender of a life insurance policy. The major

                                                                               8
<PAGE>

component  of other income is loan fees,  which  consist of "exit fees" that are
charged on  construction  loans if the builder  sells the property  prior to the
completion  of the  construction  project.  Exit fees are intended to discourage
construction  borrowers from starting projects and "flipping out" of the project
or selling before it is completed.

     There were no gains or losses on the sale of securities  during 2006, while
the sale of securities amounted to a loss of $9,240 in 2005 and a gain of $7,889
in 2004.

     NONINTEREST  EXPENSE.  Noninterest  expense of $5.8  million  reflected  an
increase of $1.3 million, or 28.2%, above the level of $4.5 million in 2005. The
year over year change was comprised of increases in  compensation  and benefits,
occupancy and other  operating  expenses,  which were  primarily  related to the
continued growth of the Company.  Noninterest  expense for 2004 amounted to $3.6
million.

     Compensation  and  benefits  expense  for  2006 of $2.8  million  increased
$686,912,  or 32.9%,  during 2006 and  $518,030,  or 33.1%,  during  2004.  This
increase was comprised of higher  benefits  expense,  routine  salary  increases
coupled with increased  staffing  associated with the opening of a new branch in
center city  Philadelphia in 2006 and a new loan production office in Millville,
New Jersey.  Occupancy,  equipment and data processing  expense amounted to $1.1
million in 2006 versus  $960,059 in 2005 and  $957,588  in 2004.  The  resulting
$125,643 year over year increase was primarily related to incremental  occupancy
costs  associated with the new branch  facility and loan  production  office and
increased  costs for data  processing  related  to pricing  and higher  activity
levels.

     Professional services amounted to $680,750,  $738,307 and $290,226 in 2006,
2005 and 2004,  respectively.  The  decline  during  2006 was  mainly due to the
absence of the holding company reorganization  expenses, which occurred in 2005.
The nonrecurring  holding company  reorganization  expenses in 2005 coupled with
additional legal expenses  contributed to the increase in professional  services
expense above 2004's level.

     Other operating expense of $1.0 million increased $554,732 during 2006. The
increase was comprised of office supplies,  shareholder expenses, and travel and
entertainment,  which were all related to the Company's expansion and growth. In
addition  an  accrual  for  the  anticipated  settlement  of  litigation  and  a
normalized  level of loan  servicing  costs  relative to 2005  accounted for the
balance of the increase.  The litigation  accrual related to loans  participated
with other banks in previous years that were subsequently  impaired and resulted
in loan  charge-offs.  Other operating expense of $473,244 in 2005 declined from
$599,116 in 2004 primarily due mainly to a decline in loan servicing  costs from
the previous year.

     INCOME TAXES. Income tax expense amounted to $2.9 million, $2.3 million and
$1.7 million for 2006, 2005 and 2004,  respectively,  resulting in effective tax
rates of 38.7%, 40.0% and 39.1% for the respective years.

FINANCIAL CONDITION AT DECEMBER 31, 2006 AND DECEMBER 31, 2005

     Total assets at December 31, 2006 amounted to $360.0  million,  compared to
$297.8 million at December 31, 2005,  resulting in an increase of $62.2 million,
or 20.9%.  This  increase  was driven  primarily  by loan  growth as the Company
continued to expand through  business  development of new and existing  business
relationships.

     Total loans at December 31, 2006 were $310.6 million,  which represented an
increase  of $51.5  million,  or 19.9%  above  the level of  $259.0  million  at
December 31, 2005.  Growth  occurred in all loan categories with commercial loan
growth of $45.9 million, or 19.5 %, representing the majority of the loan growth
for 2006.  Investment  securities amounted to $26.5 million at December 31, 2006
versus  $24.4

9

<PAGE>

million at December 31, 2005.  The  allowance  for loan losses  amounted to $4.5
million at December 31, 2006 compared to $3.6 million at December 31, 2005.  The
year over year increase of $937,192 primarily corresponded to the loan growth in
2006.

     At December 31, 2006, total deposits amounted to $289.9 million,  resulting
in deposit growth of $57.9 million, or 24.9% from the December 31, 2005 level of
$232.1 million. All deposit categories experienced growth in 2006 except savings
accounts  and  there  was a  greater  concentration  of  time  deposits  due  to
attractive rates paid on certificates of deposit.

     Borrowings,  which  included  Federal Home Loan Bank  Advances,  repurchase
agreements and subordinated debentures amounted to $34.9 million at December 31,
2006 and declined slightly from $36.0 million at December 31, 2005.

     Shareholders'  equity was $30.7 million at December 31, 2006 an increase of
$3.5 million,  or 12.9%,  from $27.2  million at December 31, 2005.  Earnings of
$4.6 million and the exercise of warrants and stock  options  accounted  for the
increase  and were  partially  offset  by the  purchase  of  treasury  stock and
investment portfolio losses included in other comprehensive income.

LOAN QUALITY

     The  Company  attempts  manage  to the  risk  characteristics  of its  loan
portfolio  through  various  control  processes,  such as credit  evaluation  of
borrowers,   establishment   of  lending  limits  and   application  of  lending
procedures,  including the holding of adequate collateral and the maintenance of
compensating balances.  However, the Company seeks to rely primarily on the cash
flow of its borrowers as the  principal  source of  repayment.  Although  credit
policies are designed to minimize risk,  management  recognizes that loan losses
will occur and the amount of these losses will  fluctuate  depending on the risk
characteristics  of the loan portfolio as well as general and regional  economic
conditions.

     The allowance  for loan losses  represents a reserve for losses in the loan
portfolio. The adequacy of the allowance for loan loss is evaluated periodically
based on a review  of all  significant  loans,  with a  particular  emphasis  on
non-accruing  loans;  past due and other loans that management  believes require
special attention.

     For significant  problem loans,  management's review consists of evaluation
of the  financial  strengths  of the  borrower  and the  guarantor,  the related
collateral, and the effects of economic conditions. General reserves against the
remaining loan  portfolio are based on analysis of historical  loan loss ratios,
loan charge-offs,  delinquency trends,  previous collection experience,  and the
risk rating on each  individual  loan along with an assessment of the effects of
external economic conditions.

     The Company had  approximately  $788,000 in non-accruing  loans at December
31,  2006 as  compared to $1.9  million at  December  31,  2005 and  $241,000 at
December 31, 2004. The decline in non-accruing loans was mainly  attributable to
two large loans no longer being carried as loans on the Company's  balance sheet
but  rather  as   Real-Estate   Owned  (REO).   This  change  in  balance  sheet
classification  was the  result  of the  foreclosure  in 2006 of these two large
delinquent  loans  from the  previous  year and the Bank  ultimately  owning the
collateral  associated with these two loans,  which is currently  valued at $1.7
million. Nonperforming loans, expressed as a percentage of total loans, declined
to 0.3% at December 31, 2006,  compared to 0.8% at December 31, 2005 and 0.1% at
December 31, 2004.

                                                                              10
<PAGE>

     The  provision  for loan losses is a charge to earnings in the current year
to maintain an allowance at a level  management  has  determined  to be adequate
based upon the factors noted above.  The  provision for loan losses  amounted to
$940,000, $1.2 million and $825,000 for 2006, 2005 and 2004, respectively.  Loan
charge-offs amounted to $2,500 for 2006 and reflected a decline from $227,000 in
2005 and $461,000 in 2004.

     At December  31,  2006,  the  allowance  for loan losses was $4.5  million,
compared to $3.6  million at December  31, 2005 and $2.6 million at December 31,
2004, which represents an increase of $937,000,  or 26.2%, during 2006 and a net
increase of $953,000,  or 36.4%,  during 2005.  The growth in the  allowance was
primarily driven by the growth in the loan portfolio.

     The following table summarizes the allowance activities:
<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                     -------------------------------------------------
                                                          2006             2005               2004
                                                     -------------     -------------     -------------

<S>                                                  <C>               <C>               <C>
Allowance for loan losses, beginning of year .....   $   3,573,812     $   2,620,651     $   2,256,070
Loans charged off ................................          (2,500)         (227,001)         (460,743)
Recoveries .......................................              --                --                --
Provision for loan losses ........................         939,692         1,180,162           825,324
                                                     -------------     -------------     -------------
Allowance for loan losses, end of year ...........   $   4,511,004     $   3,573,812     $   2,620,651
                                                     =============     =============     =============
Loans (net of deferred costs/fees)
   period-end balance ............................   $ 310,555,306     $ 259,035,088     $ 188,606,990
                                                     =============     =============     =============
Allowance as percentage of period-end loan balance            1.45%             1.38%             1.39%
                                                     =============     =============     =============

</TABLE>
     Management's  judgment as to the level of losses on existing loans is based
upon its  internal  review of the loan  portfolio,  including an analysis of the
borrowers'  current  financial  position,   the  consideration  of  current  and
anticipated   economic  conditions  and  their  potential  effects  on  specific
borrowers.  In determining the collectability of certain loans,  management also
considers  the  fair  value  of  any  underlying  collateral.  There  can  be no
assurances that  charge-offs in future periods will not exceed the allowance for
loan losses or that additional  increases in the allowance will not be required.
In addition a separate analysis of the loan loss reserve is conducted  quarterly
by an independent third party vendor.

INTEREST RATE SENSITIVITY AND LIQUIDITY

     Interest rate  sensitivity is an important  factor in the management of the
composition and maturity  configurations  of earning assets and funding sources.
The primary  objective  of  asset/liability  management  is to ensure the steady
growth of our primary  earnings  component,  net interest  income.  Net interest
income can fluctuate with  significant  interest rate  movements.  To lessen the
impact of  interest  rate  movements,  management  endeavors  to  structure  the
statement of financial condition so that re-pricing opportunities exist for both
assets and liabilities in roughly  equivalent  amounts at approximately the same
time intervals.  Imbalances in these  re-pricing  opportunities  at any point in
time constitute interest rate sensitivity.

     The measurement of our interest rate  sensitivity,  or "gap," is one of the
principal techniques used in asset/liability management.  Interest sensitive gap
is the dollar  difference  between  assets and  liabilities  that are subject to
interest-rate  pricing within a given time period,  including both floating rate
or adjustable rate instruments and instruments that are approaching maturity.

11
<PAGE>

     Our  management  and the Board of  Directors  oversee  the  asset/liability
management  function  through  the  asset/liability  committee  of the Board and
meeting periodically to monitor and manage the statement of financial condition,
control interest rate exposure,  and evaluate our pricing strategies.  The asset
mix of the statement of financial condition is continually evaluated in terms of
several  variables:  yield,  credit  quality,  appropriate  funding  sources and
liquidity.  Management  of the  liability  mix of the balance  sheet  focuses on
expanding the various funding sources.

     In theory,  interest rate risk can be  diminished by  maintaining a nominal
level of interest rate  sensitivity.  In practice,  this is made  difficult by a
number of factors including cyclical variation in loan demand, different impacts
on interest-sensitive assets and liabilities when interest rates change, and the
availability  of  funding  sources.  Accordingly,  we  undertake  to manage  the
interest-rate  sensitivity  gap by adjusting  the  maturity of and  establishing
rates on the earning asset  portfolio and certain  interest-bearing  liabilities
commensurate with management's  expectations  relative to market interest rates.
Management  generally  attempts  to  maintain a balance  between  rate-sensitive
assets and  liabilities  as the exposure  period is  lengthened  to minimize our
overall interest rate risk.

     RATE SENSITIVITY  ANALYSIS.  The interest rate  sensitivity  position as of
December 31, 2006 is presented in the table below.  Assets and  liabilities  are
scheduled  based on maturity or  re-pricing  data except for mortgage  loans and
mortgage-backed  securities that are based on prevailing prepayment  assumptions
and core deposits which are based on core deposits  exhibiting general stability
and being spread fairly evenly over a seven year time  horizon.  The  difference
between  rate-sensitive  assets and  rate-sensitive  liabilities or the interest
rate  sensitivity  gap, is shown at the bottom of the table.  As of December 31,
2006, our interest  sensitive  assets exceeded  interest  sensitive  liabilities
within a one year period by $3.9 million, or 0.19% of total assets.

<TABLE>
<CAPTION>
                                                        AS OF DECEMBER 31, 2006
                               ---------------------------------------------------------------------------
                                              OVER 3
                                              MONTHS     OVER 1 YEAR  OVER 3 YEARS   OVER 5 YEARS
                               3 MONTHS       THROUGH      THROUGH      THROUGH         THROUGH
                               OR LESS       12 MONTHS     3 YEARS      5 YEARS        30 YEARS     TOTAL
                               -------       ---------     -------      -------        --------     -----
                                                             (Dollars in thousands)
<S>                             <C>           <C>           <C>           <C>           <C>      <C>
Interest-earning assets:
   Loans ..................   $ 152,937    $  22,257     $  68,110     $  61,494    $   5,757    $ 310,555
   Investment securities ..       5,402        3,081         8,110         2,654        7,714       26,961
   Federal funds sold .....       5,077           --            --            --           --        5,077
                              ---------    ---------     ---------     ---------    ---------    ---------
   Total interest-earning
     assets ...............   $ 163,416    $  25,338     $  76,220     $  64,148    $  13,471    $ 342,593
                              =========    =========     =========     =========    =========    =========
Interest-bearing
   liabilities:
   Regular savings
     deposits(1) ..........   $   7,201    $   7,995     $  21,307     $   4,434    $   4,434    $  45,371
   NOW & money market
     savings deposits .....       1,426        1,326         3,542         1,770        1,770        9,834
   Time deposits ..........      42,534      117,248        43,214        13,440           --      216,436
   Borrowed funds .........       2,928        4,204         9,520        17,507          692       34,851
                              ---------    ---------     ---------     ---------    ---------    ---------
   Total interest-bearing
     liabilities ..........   $  54,089    $ 130,773     $  77,583     $  37,151    $   6,896    $ 306,492
                              =========    =========     =========     =========    =========    =========

Interest rate sensitive gap   $ 109,327    $(105,435)    $  (1,363)    $  26,997    $   6,575    $  36,101

Cumulative interest rate
   gap ....................   $ 109,327    $   3,892     $   2,529     $  29,526    $  36,101    $      --

Ratio of rate sensitive
   assets to
   rate-sensitive
   liabilities ............        3.02%        0.19%         0.98%         1.73%        1.95%        1.12%
</TABLE>

                                                                              12
<PAGE>

     Liquidity  describes  our ability to meet the  financial  obligations  that
arise out of the ordinary course of business.  Liquidity addresses the Company's
ability to meet deposit  withdrawals  on demand or at contractual  maturity,  to
repay borrowings as they mature,  and to fund current and planned  expenditures.
Liquidity is derived from  increased  repayment and income from  earning-assets.
Our loan to deposit  ratio was 107.1%,  111.6% and 105.0% at December  31, 2006,
December 31, 2005 and December 31, 2004,  respectively.  Funds received from new
and existing  depositors  provided a large  source of liquidity  during 2006 and
2005.  The Company seeks to rely  primarily on core  deposits from  customers to
provide  stable and  cost-effective  sources of funding to support local growth.
The Bank also  seeks to  augment  such  deposits  with  longer  term and  higher
yielding  certificates  of deposit.  To the extent that retail  deposits are not
adequate  to  fund  customer  loan  demand,  liquidity  needs  can be met in the
short-term  funds  market.  Longer  term  funding  requirements  can be obtained
through  advances from the Federal Home Loan Bank  ("FHLB").  As of December 31,
2006, the Bank maintained  lines of credit with the FHLB totaling $35.5 million,
of which $24.4 million was outstanding at December 31,2006.

     As of  December  31,  2006,  the  Bank's  investment  securities  portfolio
included $10.1 million of  mortgage-backed  securities that provide  significant
cash flow each month. The majority of the investment  portfolio is classified as
available for sale, is readily  marketable,  and is available to meet  liquidity
needs. The Bank's  residential real estate portfolio  includes loans,  which are
underwritten to secondary market criteria,  and provide an additional  source of
liquidity.   Presently  the  mortgage  portfolio  is  pledged  to  the  FHLB  as
collateral. Management is not aware of any known trends, demands, commitments or
uncertainties  that are  reasonably  likely  to result in  material  changes  in
liquidity.

OFF-BALANCE SHEET ARRANGEMENTS

     The Bank is a party to financial instruments with off-balance sheet risk in
the normal  course of business  to meet the  financing  needs of its  customers.
These  financial  instruments  include  commitments to extend credit and standby
letters of credit.  These instruments  involve, to varying degrees,  elements of
credit  risk in excess of the  amount  recognized  in the  consolidated  balance
sheet. The contract or notional amounts of these instruments  reflect the extent
of the Bank's involvement in these particular classes of financial  instruments.
The Bank's exposure to credit loss in the event of  nonperformance  by the other
party to the financial  instruments for commitments to extend credit and standby
letters of credit is represented by the  contractual or notional amount of those
instruments.  The Bank uses the same credit  policies in making  commitments and
conditional obligations as they do for on-balance sheet instruments.

     Commitments  to extend credit are  agreements to lend to a customer as long
as  there  is no  violation  of  any  condition  established  in  the  contract.
Commitments  generally have fixed expiration dates or other termination  clauses
and may require  payment of a fee. Since many of the commitments are expected to
expire without being drawn upon, the total commitment amounts do not necessarily
represent  future  cash   requirements.   The  Bank  evaluates  each  customer's
credit-worthiness on a case-by-case basis. The amount of collateral obtained, if
deemed  necessary  upon  extension of credit,  is based on  management's  credit
evaluation.   Collateral  held  varies  but  may  include  accounts  receivable,
inventory,   property,  plant  and  equipment  and  income-producing  commercial
properties. As of December 31, 2006, 2005 and 2004, commitments to extend credit
amounted to  approximately  $117.3  million,  $101.8  million and $70.4 million,
respectively.

     Standby letters of credit are conditional commitments issued by the Bank to
guarantee  the  performance  of a customer  to a third  party.  The credit  risk
involved in issuing  letters of credit is essentially  the same as that involved
in extending  loan  facilities to customers.  As of December 31, 2006,  2005 and
2004,  standby letters of credit with customers were $7.2 million,  $4.5 million
and $2.5 million, respectively.

13
<PAGE>

     The Bank does not issue or hold derivative  instruments  with the exception
of loan commitments and standby letters of credit.  These instruments are issued
in the ordinary course of business to meet customer  needs.  Commitments to fund
fixed-rate loans were immaterial at December 31, 2006. Variable-rate commitments
are generally  issued for less than one year and carry market rates of interest.
Such  instruments are not likely to be affected by annual rate caps triggered by
rising interest rates.  Management  believes that off-balance  sheet risk is not
material to the results of operations or financial condition.

IMPACT OF INFLATION AND CHANGING PRICES

     The consolidated financial statements and notes presented elsewhere in this
Annual  Report  have  been  prepared  in  accordance  with  generally   accepted
accounting  principles,  which require the measurement of financial position and
operating results in terms of historical dollars without  considering the change
in the relative  purchasing  power of money over time and due to inflation.  The
impact of inflation is reflected in the increased cost of our operations. Unlike
most industrial companies, nearly all of our assets are monetary in nature. As a
result,  market interest rates have a greater impact on our 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.

RECENT ACCOUNTING PRONOUNCEMENTS

     In June 2006, the FASB issued Interpretation ("FIN") No.48,  Accounting for
Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109. FIN No.
48  prescribes  a  recognition  threshold  and  measurement  attribute  for  the
financial  statement  recognition  and  measurement  of a tax position  taken or
expected to be taken in a tax return,  and provides  guidance on  derecognition,
classification,   interest  and  penalties,   accounting  in  interim   periods,
disclosure,  and transition.  FIN No. 48 is effective for fiscal years beginning
after  December 15, 2006.  The Company does not expect that the adoption of this
interpretation will have a material impact on its financial position, results of
operation and cash flows.

     In September  2006,  the FASB issued SFAS No. 157, Fair Value  Measurements
("SFAS No. 157"). This Statement defines fair value, establishes a framework for
measuring fair value in generally accepted  accounting  principles,  and expands
disclosures about fair value measurements. SFAS No. 157 does not require any new
fair value measurements,  but provides enhanced guidance to other pronouncements
that require or permit assets or liabilities to be measured at fair value.  This
Statement  is  effective  for  financial  statements  issued  for  fiscal  years
beginning after November 15, 2007, and interim  periods within those years.  The
Company is  currently  evaluating  the  impact of SFAS No. 157 on its  financial
statements.

     In September 2006, the FASB issued SFAS No. 158, Employers'  Accounting for
Defined  Benefit Pension and Other  Postretirement  Plans - an amendment of FASB
Statements No. 87, 88, 106 and 132(R) ("SFAS No.158").  This Statement  requires
an employer to  recognize  the  overfunded  or  underfunded  status of a defined
postretirement  plan as an asset or  liability  in its  statement  of  financial
position and to recognize changes in that funded status in the year in which the
changes  occur  through   comprehensive  income.  SFAS  No.  158  also  requires
measurement of the funded status of a plan as of the date of the fiscal year-end
statement of financial position.  Requirements for the recognition of the funded
status of a defined  postretirement plan and to provide the required disclosures
were  effective  for the Company as of December 31,  2006.  The  requirement  to
measure  plan  assets  and  benefit  obligations  as of the  date of the  fiscal
year-end  financial  statements  is  effective  for fiscal  years  ending  after
December 15, 2008.  The Company's  adoption of the  recognition  and  disclosure
requirements  as of  December  31,  2006 did not have a  material  impact on its
financial position, results of operation and cash flows.

                                                                              14
<PAGE>

     In February  2007,  the FASB issued SFAS No. 159, The Fair Value Option for
Financial  Assets and  Financial  Liabilities  - Including  an amendment of FASB
Statement  No. 115 ("SFAS No. 159" or  "Standard").  SFAS No. 159  provides  all
entities with an option to report selected  financial  assets and liabilities at
fair value. The objective of SFAS No. 159 is to improve  financial  reporting by
providing  entities  with the  opportunity  to mitigate  volatility  in earnings
caused by measuring related assets and liabilities differently without having to
apply the complex provisions of hedge accounting.  The Standard also establishes
presentation  and  disclosure  requirements  designed to facilitate  comparisons
between companies that choose different measurement attributes for similar types
of  assets  and  liabilities.   SFAS  No.  159  does  not  eliminate  disclosure
requirements included in other accounting  standards.  The Standard is effective
for the Company on January 1, 2008.  Early  adoption is permitted  under certain
conditions.  The Company is currently  evaluating  the impact of SFAS No. 159 on
its financial statements.

                             STOCK PERFORMANCE GRAPH

     Set forth below is a  performance  graph for the Common  Stock for the five
fiscal  years ended  December  31,  2006.  The  performance  graph  compares the
cumulative  total return on the Company's  Common Stock with (i) the  cumulative
total  return  on stocks  listed  on the  Nasdaq  Capital  Market,  and (ii) the
cumulative total return of Nasdaq Stocks-  Commercial Banks (banks with the same
SIC code as the Company) listed on the Nasdaq Capital Market. Comparisons assume
the  investment of $100 as of November 21, 2002,  the date the Company's  common
stock became listed for quotation on Nasdaq.  The  respective  cumulative  total
returns are computed with the  reinvestment  of dividends at the frequency  with
which dividends, if applicable, were paid during the period.

     There can be no assurance that the Company's future stock  performance will
be the same or similar to the historical  stock  performance  shown in the graph
below.  The Company neither makes nor endorses any predictions as to stock price
performance.  The Stock Price Performance Graph shall not be deemed incorporated
by reference by any general  statement  incorporating  by reference  this Annual
Report into any filing under the  Securities  Act of 1933, as amended,  or under
the Securities  Exchange Act of 1934, as amended,  except to the extent that the
Company specifically  incorporates this information by reference,  and shall not
otherwise be deemed "filed" under such Acts.

                                                                              15
<PAGE>

                   PARKE BANCORP INC STOCK PRICE PERFORMANCE

      [Line graph shown here with the plot points as shown in table below]



<TABLE>
<CAPTION>

                            NOV-02       DEC-02       DEC-03        DEC-04        DEC-05        DEC-06
                            ------       ------       ------        ------        ------        ------
<S>                         <C>           <C>          <C>           <C>           <C>          <C>
 PARKE BANCORP              100.0         94.4         155.5         209.0         222.4        233.0
 NASDAQ COMPOSITE           100.0         90.4         136.2         148.7         151.9        167.6
 NASDAQ BANK                100.0         99.7         132.6         150.7         147.8        168.2
</TABLE>


                           MARKET PRICES AND DIVIDENDS

GENERAL

     The  Company's  or the Bank's  common stock has been traded in the over the
counter  market and listed on the Nasdaq Capital Market under the trading symbol
of "PKBK"  since it  commenced  trading  upon  completion  of the Bank's  public
offering on November 26, 2002.  The following  table reflects high and low sales
prices as reported on www.nasdaq.com  during each quarter of the last two fiscal
years.  The quotations  reflect  inter-dealer  prices,  without retail  mark-up,
markdown or commission and may not represent actual transactions. Prices reflect
a 20% stock dividend paid in April 2006.

16
<PAGE>

                   2005                     HIGH                      LOW
-----------------------------------  ---------------------  --------------------
1st Quarter                                $16.17                   $13.88
2nd Quarter                                $14.04                   $12.42
3rd Quarter                                $16.66                   $12.71
4th Quarter                                $18.09                   $15.00

                   2006                     HIGH                      LOW
-----------------------------------  ---------------------  --------------------
1st Quarter                                $24.10                   $16.00
2nd Quarter                                $24.98                   $19.55
3rd Quarter                                $20.82                   $17.30
4th Quarter                                $19.59                   $16.59

     The number of  stockholders of record of common stock as of March 22, 2007,
was  approximately  410. This does not reflect the number of persons or entities
who held stock in nominee or "street" name through various  brokerage  firms. At
March 22, 2007, there were 2,873,860 shares of our common stock outstanding. The
Company paid a one-time special cash dividend of $0.20 per share on December 22,
2006 to shareholders of record on December 12, 2006.

     Holders of the  Company's  common stock are  entitled to receive  dividends
when,  and if  declared  by the  Board  of  Directors  of out of  funds  legally
available therefor. The timing and amount of future dividends will be within the
discretion  of the  Board of  Directors  and  will  depend  on the  consolidated
earnings,  financial  condition,  liquidity,  and  capital  requirements  of the
Company and its subsidiaries,  applicable governmental regulations and policies,
and other  factors  deemed  relevant by the Board.  The Company  paid a one-time
special cash dividend of $0.20 per share on December 22, 2006 to shareholders of
record on December 12, 2006.

     The Company's ability to pay dividends is substantially  dependent upon the
dividends  it receives  from the Bank.  Under  current  regulations,  the Bank's
ability to pay dividends is restricted as follows.

     Under  the New  Jersey  Banking  Act of 1948,  a bank may  declare  and pay
dividends  only if after  payment of the dividend the capital  stock of the bank
will be unimpaired  and either the bank will have a surplus of not less than 50%
of its capital  stock or the payment of the dividend  will not reduce the bank's
surplus.

     The Federal  Deposit  Insurance  Act  generally  prohibits  all payments of
dividends by any insured bank that is in default of any  assessment to the FDIC.
Additionally,  because the FDIC may  prohibit a bank from  engaging in unsafe or
unsound  practices,  it is possible  that under certain  circumstances  the FDIC
could claim that a dividend payment  constitutes an unsafe or unsound  practice.
The New Jersey  Department  of Banking and  Insurance has similar power to issue
cease and desist  orders to  prohibit  what might  constitute  unsafe or unsound
practices. The payment of dividends may also be affected by other factors (e.g.,
the  need  to  maintain   adequate   capital  or  to  meet  loan  loss   reserve
requirements).


                                                                              17
<PAGE>

McGLADREY & PULLEN
Certified Public Accountants


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



Directors and Shareholders
Parke Bancorp, Inc.
Sewell, New Jersey


We have  audited the  consolidated  balance  sheets of Parke  Bancorp,  Inc. and
Subsidiaries  as of  December  31,  2006 and 2005 and the  related  consolidated
statements of income, shareholders' equity, and cash flows for each of the three
years in the period ending December 31, 2006. 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.  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 Parke Bancorp, Inc.
and  Subsidiaries  as of December  31,  2006 and 2005,  and the results of their
operations and their cash flows for each of the three years in the period ending
December  31,  2006,  in  conformity  with U.S.  generally  accepted  accounting
principles.

As discussed in Note 1 to the  consolidated  financial  statements,  the Company
adopted  Statement  of Financial  Accounting  Standards  No. 123R,  "Share-Based
Payment,"  effective  January  1, 2006 and  Statement  of  Financial  Accounting
Standards No. 158, "Employer's  Accounting for Defined Benefit Pension and other
Postretirement Plans" in 2006.

/s/ McGladrey & Pullen

Blue Bell, Pennsylvania
March 28, 2007

                                       1
<PAGE>

PARKE BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2006 AND 2005
<TABLE>
<CAPTION>
                                                                 2006             2005
------------------------------------------------------------------------------------------
<S>                                                         <C>              <C>
ASSETS

Cash and due from banks                                     $   6,183,916    $   4,377,196
Federal funds sold                                              5,076,895            2,840
                                                            ------------------------------
    CASH AND CASH EQUIVALENTS                                  11,260,811        4,380,036
                                                            ------------------------------

Investment securities available for sale, at market value      24,530,067       22,022,944
Investment securities held to maturity, at amortized cost
(market value 2006 - $2,425,629; 2005 - $2,322,985)             2,430,958        2,405,841
                                                            ------------------------------
    TOTAL INVESTMENT SECURITIES                                26,961,025       24,428,785
                                                            ------------------------------


Restricted stock, at cost                                       1,492,800        1,348,900

Loans                                                         310,555,306      259,035,088
Less:  allowance for loan losses                               (4,511,004)      (3,573,812)
                                                            ------------------------------
    TOTAL NET LOANS                                           306,044,302      255,461,276
                                                            ------------------------------

Bank premises and equipment, net                                3,431,794        3,079,876
Accrued interest receivable and other assets                   10,806,039        9,111,571
                                                            ------------------------------
                                                            $ 359,996,771    $ 297,810,444
                                                            ==============================
(Continued)
</TABLE>

                                       2
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (CONTINUED)
DECEMBER 31, 2006 AND 2005
<TABLE>
<CAPTION>

                                                                                2006             2005
----------------------------------------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
  Deposits
<S>                                                                             <C>              <C>
    Noninterest-bearing demand                                                  $  18,287,577    $  17,918,339
    Interest-bearing                                                              271,641,283      214,137,969
                                                                                ------------------------------
      TOTAL DEPOSITS                                                              289,928,860      232,056,308

  Borrowed funds                                                                      100,000        5,082,500
  Federal Home Loan Bank advances                                                  24,441,370       20,574,360
  Subordinated debentures                                                          10,310,000       10,310,000
  Accrued interest payable and other accrued liabilities                            4,507,381        2,593,949
                                                                                ------------------------------
      TOTAL LIABILITIES                                                           329,287,611      270,617,117
                                                                                ------------------------------

Commitments and Contingencies (Notes 7 and 15)

Shareholders' Equity
  Common stock,
    $.10 par value, 10,000,000 shares authorized;
    2,884,937and 2,317,364 shares issued
    at December 31, 2006 and 2005, respectively                                       288,494          231,736
  Preferred stock,
    1,000,000 shares authorized; no shares issued and outstanding                          --               --
  Additional paid-in capital                                                       21,153,220       20,511,410
  Retained earnings                                                                10,847,763        6,787,118
  Accumulated other comprehensive loss                                               (420,250)        (286,296)
  Treasury stock  (61,842 shares in 2006 and 2,380 shares in 2005), at cost        (1,160,067)         (50,641)
                                                                                ------------------------------
      TOTAL SHAREHOLDERS' EQUITY                                                   30,709,160       27,193,327
                                                                                ------------------------------

                                                                                $ 359,996,771    $ 297,810,444
                                                                                ==============================
</TABLE>

See Notes to Consolidated Financial Statements.

                                       3
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
<TABLE>
<CAPTION>
                                                           2006           2005            2004
-------------------------------------------------------------------------------------------------
<S>                                                     <C>            <C>             <C>

Interest and Dividend Income
  Interest and fees on loans                            $ 23,992,705   $ 16,108,210    $ 10,977,820
  Interest and dividends on securities                     1,341,093      1,159,004         749,847
  Interest on federal funds sold                             141,677         68,830          38,121
                                                        -------------------------------------------
    TOTAL INTEREST AND DIVIDEND INCOME                    25,475,475     17,336,044      11,765,788
                                                        -------------------------------------------

Interest Expense
  Interest on deposits                                    10,232,017      5,812,487       3,524,706
  Interest on borrowings                                   1,790,512        871,468         221,427
                                                        -------------------------------------------
    TOTAL INTEREST EXPENSE                                12,022,529      6,683,955       3,746,133
                                                        -------------------------------------------

      Net interest income                                 13,452,946     10,652,089       8,019,655

Provision for Loan Losses                                    939,692      1,180,162         825,324
                                                        -------------------------------------------
      Net interest income after provision for
        loan losses                                       12,513,254      9,471,927       7,194,331
                                                        -------------------------------------------

Noninterest Income
  Service charges on deposit accounts                        146,209        184,725         243,501
  Other fee income                                           710,435        720,882         609,596
  Net gain (loss) on the sale of securities                     --           (9,240)          7,889
                                                        -------------------------------------------
    TOTAL NONINTEREST INCOME                                 856,644        896,367         860,986
                                                        -------------------------------------------

Noninterest Expenses
  Compensation and benefits                                2,772,213      2,085,301       1,567,271
  Occupancy, equipment and data processing                 1,085,702        960,059         957,588
  Marketing and business development                         260,517        287,318         175,258
  Professional services                                      680,750        738,307         290,226
  Other operating expenses                                 1,027,976        473,244         599,116
                                                        -------------------------------------------

    TOTAL NONINTEREST EXPENSES                             5,827,158      4,544,229       3,589,459
                                                        -------------------------------------------

Income Before Income Tax Expense                           7,542,740      5,824,065       4,465,858

Income Tax Expense                                         2,919,060      2,329,644       1,744,100
                                                        -------------------------------------------
    NET INCOME                                          $  4,623,680   $  3,494,421    $  2,721,758
                                                        ===========================================
Net Income Per Common Share:
  Basic                                                 $       1.64   $       1.30    $       1.05
                                                        ===========================================
  Diluted                                               $       1.40   $       1.10    $       0.87
                                                        ===========================================

Weighted Average Shares Outstanding:
  Basic                                                    2,813,464      2,697,514       2,582,483
                                                        ===========================================
  Diluted                                                  3,304,612      3,173,107       3,118,637
                                                        ===========================================

</TABLE>

See Notes to Consolidated Financial Statements.


                                       4
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
<TABLE>
<CAPTION>

                                                                                 Accumulated
                                                    Additional                       Other                        Total
                                          Common      Paid-In        Retained   Comprehensive    Treasury     Shareholders'
                                           Stock      Capital        Earnings   Income (Loss)     Stock          Equity
----------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>       <C>             <C>           <C>           <C>            <C>
Balance, December 31, 2003               $178,623  $19,185,352     $   570,939   $   57,693    $         -    $19,992,607
Stock options and warrants exercised        2,696      241,490               -            -              -        244,186
20% common stock dividend                  36,237      (36,740)              -            -              -           (503)
Comprehensive income:
Net income                                      -            -       2,721,758            -              -      2,721,758
Change in net unrealized gain on
  securities available for sale,
  net of reclassification
  adjustment and tax effects                    -            -               -     (128,897)             -       (128,897)
                                                                                                              -----------
Total comprehensive income                                                                                      2,592,861
                                         --------------------------------------------------------------------------------
Balance, December 31, 2004                217,556   19,390,102       3,292,697      (71,204)             -     22,829,151
Stock options and warrants exercised       14,180    1,121,308               -            -              -      1,135,488
Treasury stock purchased (2,380 shares)         -            -               -            -        (50,641)       (50,641)
Comprehensive income:
Net income                                      -            -       3,494,421            -              -      3,494,421
Change in net unrealized loss on
  securities available for sale, net
  of reclassification adjustment
  and tax effects                               -            -               -     (215,092)             -       (215,092)
                                                                                                              -----------
Total comprehensive income                                                                                      3,279,329
                                         --------------------------------------------------------------------------------

Balance, December 31, 2005                231,736   20,511,410       6,787,118     (286,296)       (50,641)    27,193,327
Stock options and warrants exercised        9,515      656,432               -            -              -        665,947
Stock compensation                              -       37,350               -            -              -         37,350
20% common stock dividend                  47,243      (51,972)              -            -              -         (4,729)
Treasury stock purchased (59,462 shares)        -            -               -            -     (1,109,426)    (1,109,426)
Cash dividends paid ($0.20 per share)           -            -        (563,035)           -              -       (563,035)
Net income                                      -            -       4,623,680            -              -      4,623,680
Change in net unrealized loss on
  securities available for sale, net
  of  reclassification adjustment
  and tax effects                               -            -               -       72,653              -         72,653
Adjustment to initially apply FASB
  statement No. 158, net of tax                 -            -               -     (206,607)             -       (206,607)
                                                                                                              -----------
Total comprehensive income                                                                                      4,489,726
                                         --------------------------------------------------------------------------------
Balance, December 31, 2006               $288,494  $21,153,220     $10,847,763   $ (420,250)   $(1,160,067)   $30,709,160
                                         ================================================================================
</TABLE>

See Notes to Consolidated Financial Statements.

                                        5
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
<TABLE>
<CAPTION>
                                                                           2006             2005              2004
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>               <C>              <C>
Cash Flows from Operating Activities
  Net income                                                               $  4,623,680      $  3,494,421     $  2,721,758
  Adjustments to reconcile net income to
    net cash provided by operating activities:
  Depreciation and amortization                                                 279,319           264,105          251,482
  Provision for loan losses                                                     939,692         1,180,162          825,324
  Stock compensation                                                             37,350                 -                -
  Realized losses (gains) on sales of securities                                      -             9,240           (7,889)
  Net (accretion) amortization of purchase premiums
    and discounts on securities                                                 (19,614)          (72,795)           2,995
  Deferred income tax benefit                                                  (531,591)         (387,382)         (45,972)
  Changes in operating assets and liabilities:
  Increase in accrued interest receivable and other assets                     (573,579)         (932,172)        (717,345)
  Increase in accrued interest payable and other accrued liabilities          1,569,091         1,048,274          321,277
                                                                           -----------------------------------------------
      NET CASH PROVIDED BY OPERATING ACTIVITIES                               6,324,348         4,603,853        3,351,630
                                                                           -----------------------------------------------

Cash Flows from Investing Activities
  Purchases of investment securities held to maturity                                 -        (1,854,018)               -
  Purchases of investment securities available for sale                      (5,063,958)       (5,559,000)     (15,054,401)
  Purchases of restricted stock                                                (143,900)         (284,700)        (566,900)
  Proceeds from sales of investment securities available for sale             1,000,000         5,092,055        1,071,509
  Proceeds from maturities of investment securities available for sale                -                 -        2,000,000
  Principal payments on mortgage-backed securities                            1,172,421         2,187,681        2,304,558
  Net increase in loans                                                     (51,522,718)      (70,655,099)     (42,733,402)
  Purchases of bank premises and equipment                                     (631,237)          (96,802)        (259,248)
                                                                           -----------------------------------------------
      NET CASH USED IN INVESTING ACTIVITIES                                 (55,189,392)      (71,169,883)     (53,237,884)
                                                                           -----------------------------------------------

Cash Flows from Financing Activities
  Proceeds from exercise of stock options and warrants                          665,947         1,135,488          243,683
  Purchase of treasury stock                                                 (1,109,426)          (50,641)               -
  Cash dividends paid                                                          (567,764)                -                -
  Proceeds from borrowings                                                   27,934,835        27,652,500       18,850,000
  Repayment of borrowings                                                   (29,050,325)      (12,064,366)      (8,811,397)
  Net increase in interest-bearing deposits                                  57,503,314        50,513,402       33,923,365
  Net increase in noninterest-bearing deposits                                  369,238         1,957,895        3,215,135
                                                                           -----------------------------------------------
      Net cash provided by financing activities                              55,745,819        69,144,278       47,420,786
                                                                           -----------------------------------------------
      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                        6,880,775         2,578,248       (2,465,468)

Cash and Cash Equivalents, January 1,                                         4,380,036         1,801,788        4,267,256
                                                                           -----------------------------------------------
Cash and Cash Equivalents, December 31,                                    $ 11,260,811      $  4,380,036     $  1,801,788
                                                                           ===============================================

Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest on deposits and borrowed funds                                  $ 11,247,627      $  5,992,826     $  3,681,682
                                                                         ===============================================
Income taxes                                                             $  3,510,000      $  2,466,000     $  2,179,000
                                                                         ===============================================
See Notes to Consolidated Financial Statements.

</TABLE>

                                       6
<PAGE>

PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1.   DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business: Parke Bancorp, Inc. ("Parke Bancorp") is a bank holding
-----------------------
company headquartered in Sewell, New Jersey. Through subsidiaries, Parke Bancorp
provides individuals,  corporations and other businesses,  and institutions with
commercial and retail banking services,  principally  loans and deposits.  Parke
Bancorp  was  incorporated  in  January  2005 under the laws of the State of New
Jersey for the sole purpose of becoming  the holding  company of Parke Bank (the
"Bank").

Parke Bank (the "Bank") is a commercial  bank,  which was incorporated on August
25, 1998, and commenced operations on January 28, 1999. The Bank is chartered by
the New Jersey  Department  of Banking and  Insurance and insured by the Federal
Deposit  Insurance  Corporation.  The Bank maintains its principal office at 601
Delsea Drive,  Washington  Township,  New Jersey,  and three  additional  branch
office locations, one at 501 Tilton Road, Northfield, New Jersey, one at 567 Egg
Harbor Road,  Washington Township,  New Jersey, and one at 1610 Spruce Street in
Philadelphia,  Pennsylvania.  In addition, the Bank has a loan production office
in Millville, New Jersey.

The   accounting  and  financial   reporting   policies  of  Parke  Bancorp  and
Subsidiaries (the "Company") conform to accounting principles generally accepted
in the United  States of America  ("GAAP") and to general  practices  within the
banking  industry.  The policies that  materially  affect the  determination  of
financial position, results of operations and cash flows are summarized below.

Principles of Consolidation:  The accompanying consolidated financial statements
---------------------------
include the accounts of Parke Bancorp,  Inc. and its  wholly-owned  subsidiaries
Parke Bank, Parke Capital Markets and Farm Folly, Inc. Parke Capital Trust I and
Parke Capital Trust II are  wholly-owned  subsidiaries  but are not consolidated
because  they  do not  meet  the  requirements.  All  significant  inter-company
balances and transactions have been eliminated.

Investment  Securities:  Investment  securities are classified  under one of the
----------------------
following  categories:  "held to maturity" and accounted for at historical cost,
adjusted for accretion of discounts and amortization of premiums; "available for
sale" and accounted for at fair market value,  with unrealized  gains and losses
reported as a separate  component of  shareholders'  equity;  or  "trading"  and
accounted for at fair market value, with unrealized gains and losses reported as
a component of net income. The Company does not hold trading securities.

At December 31, 2006 and 2005, the Company held investment securities that would
be held for indefinite periods of time,  including securities that would be used
as part of the Company's  asset/liability  management strategy and possibly sold
in response to changes in interest rates, prepayments and similar factors. These
securities are classified as "available for sale" and are carried at fair value,
with any temporary  unrealized gains or losses reported as a separate  component
of other comprehensive income, net of the related income tax effect.

Also,  at  December  31,  2006 and 2005,  the Company  reported  investments  in
securities that were carried at cost,  adjusted for  amortization of premium and
accretion  of  discount.  The  Company  has the intent and ability to hold these
investment securities to maturity considering all reasonably  foreseeable events
or conditions. These securities are classified as "held to maturity."

Declines in the fair value of individual available for sale and held to maturity
securities  below their cost that are other than temporary result in write-downs
of the individual securities to their fair value, and the losses are included in
noninterest  income in the  statements  of  operations.  Factors  affecting  the
determination of whether an other-than-temporary impairment has occurred include
a downgrading of the security by rating agency,  a significant  deterioration in
the financial condition of the issuer, the length of time a security has been in
a loss  position,  or that  management  would not have the intent and ability to
hold a security  for a period of time  sufficient  to allow for any  anticipated
recovery in fair value.

                                       7
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT  ACCOUNTING  POLICIES
        (CONTINUED)

Investment Securities (Continued): The amortization of premiums and accretion of
--------------------------------
discounts over the contractual lives of the related  securities,  are recognized
in interest  income using the interest  method.  Gains and losses on the sale of
such securities are accounted for using the specific identification method.

Restricted Stock:  Restricted stock includes  investments in the common stock of
----------------
the  Federal  Home Loan Bank of New York  ("FHLBNY")  and the  Atlantic  Central
Bankers Bank for which no market exists and, accordingly, is carried at cost.

Loans:  The  Company  makes  commercial,  real  estate  and  consumer  loans  to
-----
customers.  A substantial  portion of the loan portfolio is represented by loans
in the Southern New Jersey and Philadelphia,  Pennsylvania  markets. The ability
of the  Company's  debtors to honor their  contracts is dependent  upon the real
estate and general  economic  conditions in this area. Loans that management has
the intent and ability to hold for the  foreseeable  future or until maturity or
pay-off  generally are reported at their  outstanding  unpaid principal  amount,
adjusted for charge-offs, the allowance for loan losses and any deferred fees or
costs on  originated  loans.  Interest  income on loans is  recognized as earned
based  on  contractual   interest  rates  applied  to  daily  principal  amounts
outstanding.

Loans-Nonaccrual:  Loans are  placed on  nonaccrual  status  and the  accrual of
----------------
interest  income  ceases when a default of  principal  or interest  exists for a
period of ninety days except when, in management's  judgment,  the collection of
principal and interest is reasonably  anticipated (i.e. the loan is well secured
and in the process of  collection).  Interest  receivable  on  nonaccrual  loans
previously credited to income is reversed, and subsequently recognized as income
only as received if the collection of principal is reasonably assured. Loans are
returned  to  accrual  status  when  all  the  principal  and  interest  amounts
contractually  due are  brought  current  and  future  payments  are  reasonably
assured.

Loans-Restructured:  Restructured  loans are those  loans  whose terms have been
------------------
modified because of deterioration in the financial  condition of the borrower to
provide for a reduction  of either  interest or principal or an extension of the
payment period.

Concentration  of Credit Risk: The Company's  loans are generally to diversified
-----------------------------
customers  in Southern  New Jersey and the  Philadelphia  area of  Pennsylvania.
Loans to general building contractors,  general merchandise stores, restaurants,
motels, warehouse space, and real estate ventures (including construction loans)
constitute a majority of commercial loans. The  concentrations of credit by type
of loan are set forth in Note 4. Generally,  loans are  collateralized by assets
of the borrower and are expected to be repaid from the  borrower's  cash flow or
proceeds from the sale of selected assets of the borrower.

Loan Fees:  Loan fees and direct costs  associated  with loan  originations  are
---------
netted and deferred.  The deferred amount is recognized as an adjustment to loan
interest  over the term of the related  loans using the  interest  method.  Loan
brokerage  fees,  which  represent  commissions  earned for  facilitating  loans
between borrowers and other Company's, are recorded in income as earned.

Allowance for Loan Losses:  The allowance for loan losses is maintained  through
-------------------------
charges to the  provision  for loan losses in the  Statement of Income as losses
are estimated to have occurred  through a provision for loan losses.  Loans that
are  determined  to be  uncollectible  are charged  against the  allowance,  and
subsequent recoveries,  if any, are credited to the allowance.  The allowance is
an amount that management  believes will be adequate to absorb  estimated losses
relating to specifically  identified loans, as well as probable credit losses in
the balance of the loan portfolio,  based on an evaluation of  collectability of
existing loans and prior loss  experience.  When  evaluating the adequacy of the
allowance, an assessment of the loan portfolio will typically include changes in
the composition and volume of the loan portfolio,  overall portfolio quality and
past loss  experience,  review  of  specific  problem  loans,  current  economic
conditions which may affect borrowers' ability to repay, and other factors which
may warrant current recognition.  Such periodic assessments may, in management's
judgment,  require the  Company to  recognize  additions  or  reductions  to the
allowance.

                                       8
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT  ACCOUNTING  POLICIES
        (CONTINUED)

Allowance for Loan Losses (Continued):  Various regulatory agencies periodically
-------------------------------------
review the adequacy of the  Company's  allowance  for loan losses as an integral
part of their  examination  process.  Such  agencies  may require the Company to
recognize  additions or reductions to the allowance based on their evaluation of
information available to them at the time of their examination. It is reasonably
possible that the above factors may change significantly and, therefore,  affect
management's determination of the allowance for loan losses in the near term.

A loan is considered  impaired when, based on current information and events, it
is probable that the Company will be unable to collect the scheduled payments of
principal or interest  when due according to the  contractual  terms of the loan
agreement.  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 borrower,  including the length of the delay,  the
reasons for the delay,  the borrower's  prior payment record,  and the amount of
the  shortfall in relation to the  principal  and interest  owed.  Impairment is
measured  on a loan by loan basis for  commercial  loans by either  the  present
value of expected future cash flows  discounted at the loans effective  interest
rate, the loan's obtainable market price, or the fair value of the collateral if
the loan is collateral dependent.

Large groups of smaller balance homogeneous loans are collectively evaluated for
impairment.  Accordingly,  the Company does not separately  identify  individual
consumer and residential loans for impairment disclosures.

Interest  Rate Risk:  The  Company is  principally  engaged in the  business  of
-------------------
attracting  deposits from the general public and using these deposits,  together
with other borrowed and brokered funds, to make commercial, commercial mortgage,
residential  mortgage,  and consumer loans,  and to invest in overnight and term
investment  securities.  Inherent in such  activities is interest rate risk that
results from  differences in the maturities  and re-pricing  characteristics  of
these assets and liabilities. For this reason, management regularly monitors the
level of interest rate risk and the potential impact on net income.

Bank Premises and Equipment: Bank premises and equipment are stated at cost less
---------------------------
accumulated depreciation and amortization.  Depreciation is computed and charged
to expense using the straight-line method over the estimated useful lives of the
assets,  generally three to seven years. Leasehold improvements are amortized to
expense over the shorter of the term of the  respective  lease or the  estimated
useful  life of the  improvements,  generally  terms  ranging  from ten to forty
years.

Income Taxes:  The amount  provided for federal  income taxes is based on income
------------
reported for consolidated financial statement purposes.

Deferred taxes are provided on a liability  method  whereby  deferred tax assets
are  recognized  for  deductible   temporary   differences  and  operating  loss
carryforwards  and deferred tax liabilities are recognized for taxable temporary
differences.  Temporary  differences  are the  difference  between the  reported
amounts of assets and liabilities  and their tax bases.  Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management,  it is more
likely than not that some  portion or all of the deferred tax assets will not be
realized.  Deferred tax assets and  liabilities  are adjusted for the effects of
changes in tax laws and rates on the date of enactment.  Realization of deferred
tax assets is dependent on generating sufficient taxable income in the future.

                                       9

<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT  ACCOUNTING  POLICIES
        (CONTINUED)

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  and  disclosure  of  contingent  assets and
liabilities  at the date of the  financial  statements  and reported  amounts of
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.  Material  estimates that are particularly  susceptible to
significant  change in the near term include the  allowance  for loan losses and
the valuation of deferred income taxes.

Comprehensive  Income:  Comprehensive  income  consists  of net income and other
---------------------
gains and losses affecting  shareholders'  equity that, under GAAP, are excluded
from net income,  including  unrealized  gains and losses on available  for sale
securities and gains or losses,  prior service costs or credits,  and transition
assets or obligations  associated with pension or other postretirement  benefits
that have not been recognized as components of net periodic benefit cost.

At December  31,  2006,  2005 and 2004,  accumulated  other  comprehensive  loss
consisted of the following:
<TABLE>
<CAPTION>
                                                                   2006           2005            2004
                                                               ------------------------------------------
<S>                                                              <C>           <C>              <C>
Unrealized gains (losses) on available for sale securities
  (net of tax of $142,428, $190,857, and $47,470)              $ (213,643)     $ (286,296)      $ (71,204)
Minimum pension liability (net of tax of $137,737)               (206,607)              -               -
                                                               ------------------------------------------
                                                               $ (420,250)     $ (286,296)      $ (71,204)
                                                               ==========================================
</TABLE>

In September  2006, the Financial  Accounting  Standards  Board ("FASB")  issued
Statement No. 158, "Employers'  Accounting for Defined Benefit Pension and Other
Postretirement Plans," which amends Statement No. 87, "Employers' Accounting for
Pensions,"  Statement  No.  88,  "Employers'   Accounting  for  Settlements  and
Curtailments of Defined  Benefit  Pension Plans and for  Termination  Benefits,"
Statement No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions,"  Statement  No. 132 (revised  2003),  "Employers'  Disclosures  about
Pensions  and  Other  Postretirement  Benefits,"  and other  related  accounting
literature.

Statement  No.  158  requires  an  employer  to  recognize  the   overfunded  or
underfunded  status of a defined  benefit  postretirement  plan as an asset or a
liability in the  statement of  financial  position and to recognize  changes in
that funded status through  comprehensive  income in the year the changes occur.
This  Statement also requires an employer to measure the funded status of a plan
as of the date of the employer's year-end statement of financial  position.  The
Company   adopted  the  funded  status   recognition   and  related   disclosure
requirements  of Statement  No. 158 as of December  31,  2006,  and measured the
funded status of their defined benefit plans as of that date,  which resulted in
the Company recording a liability of $344,344 as of December 31, 2006,  relating
to a Supplemental  Executive Retirement Plan ("SERP") (Note 11). The adoption of
Statement No. 158 did not materially affect the Company's  financial position or
results of operations.

                                       10
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT  ACCOUNTING  POLICIES
       (CONTINUED)

Comprehensive  Income (Continued):  The components of other comprehensive income
--------------------------------
and related tax effects relating to the unrealized gains and losses on available
for sale securities is as follows:
<TABLE>
<CAPTION>
                                                                                2006           2005            2004
                                                                             -----------------------------------------
<S>                                                                          <C>            <C>             <C>
Unrealized holding gains (losses) on available for sale securities           $ 121,082      $ (367,719)     $ (206,939)
Reclassification adjustment for net losses (gains) realized in income                -           9,240          (7,889)
                                                                             -----------------------------------------
Net unrealized gains (losses)                                                  121,082        (358,479)       (214,828)
Tax effect                                                                     (48,429)        143,387          85,931
                                                                             -----------------------------------------
     Net-of-tax amount                                                       $  72,653      $ (215,092)     $ (128,897)
                                                                             =========================================
</TABLE>

Earnings  Per Common  Share:  Basic  earnings  per common  share is  computed by
---------------------------
dividing net income by the weighted average number of common shares  outstanding
during the period.  Diluted  earnings  per common share  considers  common stock
equivalents  (when dilutive)  outstanding  during the period such as options and
warrants  outstanding.  Both basic and diluted  earnings per share  computations
give retroactive  effect to stock dividends declared in 2006 (Note 13). Earnings
per common share have been computed  based on the  following for 2006,  2005 and
2004:
<TABLE>
<CAPTION>
                                                                                2006           2005            2004
                                                                            ------------------------------------------
<S>                                                                         <C>             <C>             <C>
Net income                                                                  $4,623,680      $3,494,421      $2,721,758
                                                                            ==========================================

Average number of common shares outstanding                                  2,813,464       2,697,514       2,582,483
Effect of dilutive options                                                     491,148         475,593         536,154
                                                                            ------------------------------------------
Average number of common shares outstanding used
  to calculate diluted earnings per common share                             3,304,612       3,173,107       3,118,637
                                                                            ==========================================
</TABLE>


Statement  of Cash  Flows:  Cash  and  cash  equivalents  include  cash on hand,
-------------------------
balances  due from  banks  and  federal  funds  sold.  For the  purposes  of the
statement of cash flows, changes in loans and deposits are shown on a net basis

Stock-Based  Employee  Compensation:  At  December  31,  2006  the  Company  had
-----------------------------------
stock-based employee  compensation plans, which are described more fully in Note
13.  Prior to January 1, 2006 the  Company  accounted  for those plans under the
recognition  and  measurement  provisions of APB Opinion No. 25,  Accounting for
Stock  Issued to  Employees,  and related  Interpretations,  as permitted by the
Financial  Accounting Standards Board ("FASB") Statement No. 123, Accounting for
Stock-Based   Compensation.   No  stock-based  employee  compensation  cost  was
recognized in the  Statement of Income during the years ended  December 31, 2005
and 2004 as all options granted under those plans had an exercise price equal to
the market value of the underlying common stock on the date of grant.  Effective
January 1, 2006, the Company  adopted the fair value  recognition  provisions of
FASB    Statement    No.    123(R),     Share-Based    Payment,     using    the
modified-prospective-transition  method.  The following  table  illustrates  the
effect on net income and earnings per share for 2005 and 2004 if the Company had
applied the fair value  recognition  provisions of Statement 123 to  stock-based
employee  compensation.  For purposes of this proforma disclosure,  the value of
the options is estimated using  Black-Scholes  option-pricing  model. Both basic
and diluted  calculations give retroactive effect to stock dividends declared in
2006.

                                       11
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT  ACCOUNTING  POLICIES
        (CONTINUED)

Stock-Based Employee Compensation (Continued):
----------------------------------------------
<TABLE>
<CAPTION>
                                                          2005            2004
                                                        --------------------------
<S>                                                     <C>             <C>
Net income, as reported                                 $3,494,421      $2,721,758

Deduct total stock-based compensation expense
  determined under the fair value method for all
  awards, net of related tax effects                      (670,000)        (41,000)
                                                        --------------------------
Pro forma net income                                    $2,824,421      $2,680,758
                                                        ==========================

Earnings per share:
Basic:
  As reported                                                $1.30           $1.05
  Pro forma                                                  $1.05           $1.04
Diluted:
  As reported                                                $1.10           $0.87
  Pro forma                                                  $0.89           $0.86
</TABLE>

All outstanding  stock options as of January 1, 2006 were fully vested (in prior
years,  all options  vested upon  issuance),  thus no  compensation  expense was
recognized during the year ended December 31, 2006 for such options. The Company
uses the  Black-Scholes  option  pricing model to estimate the fair value of any
stock-based awards in 2006.

Under the modified  prospective  transition  method,  the Company is required to
recognize  compensation  cost for 1) all share-based  payments granted prior to,
but not  vested as of,  January  1,  2006  based on the  grant  date fair  value
estimated in accordance with the original provisions of SFAS 123; and 2) for all
share-based payments granted on or after January 1, 2006 based on the grant date
fair value  estimated  in  accordance  with SFAS 123R.  In  accordance  with the
modified prospective method, the Company has not restated prior period results.

Recent Issued  Accounting  Pronouncements:  In July 2006,  FASB  published  FASB
-----------------------------------------
Interpretation  No. 48,  "Accounting for Uncertainty in Income Taxes and Related
Interpretation  Issues" ("FIN 48"). FIN 48 prescribes a comprehensive  model for
how a company should recognize,  measure, present, and disclose in its financial
statements uncertain tax positions that the company has taken or expects to take
on a tax return (including a decision whether to file or not to file a return in
a particular  jurisdiction.)  According  to the terms of FIN 48, the  financials
will reflect  expected future tax  consequences of such positions  presuming the
taxing  authorities  full knowledge of the position and all relevant facts,  but
without time values. The Company will be required to adopt the provisions of FIN
48 as of the beginning of its first annual period that begins after December 15,
2006, which will be the year ending December 31, 2007. The adoption of FIN 48 is
not expected to have a material impact on the Company.

In September 2006, the FASB issued Statement No. 157, "Fair Value Measurements."
Statement No. 157 defines fair value, establishes a framework for measuring fair
value under GAAP, and expands  disclosures about fair value measures.  Statement
No. 157 is effective for fiscal years  beginning  after November 15, 2007,  with
early adoption encouraged. The provisions of Statement No. 157 are to be applied
on a prospective basis, with the exception of certain financial  instruments for
which retrospective  application id required.  The adoption of Statement No. 157
is not expected to materially affect the Company's financial position or results
of operations.

                                       12
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT  ACCOUNTING  POLICIES
        (CONTINUED)

Recent Issued Accounting Pronouncements  (Continued): In February 2007, the FASB
----------------------------------------------------
issued  Statement  No.  159,  "The Fair Value  Option for  Financial  Assets and
Financial  Liabilities." Statement No. 159 permits entities to choose to measure
many  financial  instruments  and certain other items at fair value that are not
currently required to be measured at fair value.  Statement No. 159 is effective
for fiscal  years  beginning  after  November  15,  2007,  with  early  adoption
permitted  provided the entity also elects to apply the  provisions of Statement
No. 157. The Company is currently  evaluating  the impact,  if any, of Statement
No. 159 on the Company's financial position and results of operations.


NOTE 2.   CASH AND DUE FROM BANKS

The Company  maintains  various deposit accounts with other banks to meet normal
funds transaction requirements, to satisfy deposit reserve requirements,  and to
compensate  other  banks  for  certain  correspondent  services.  Management  is
responsible  for  assessing  the credit  risk of its  correspondent  banks.  The
withdrawal or usage  restrictions  of these  balances did not have a significant
impact on the operations of the Company as of December 31, 2006, because reserve
requirements were covered by vault cash.


NOTE 3.   INVESTMENT SECURITIES

The Company's investment securities as of December 31, 2006 were as follows:

<TABLE>
<CAPTION>
                                                                    Gross          Gross
                                                   Amortized      Unrealized     Unrealized       Market
                                                      Cost          Gains          Losses         Value
                                                   ---------------------------------------------------------

Available For Sale
------------------
<S>                                               <C>             <C>             <C>           <C>
U.S. Government sponsored entities                $ 6,484,892     $      -        $ 69,112      $ 6,415,780
Corporates                                          8,348,575       34,667         177,792        8,205,450
Mortgage-backed securities                         10,052,671       34,629         178,463        9,908,837
                                                  ---------------------------------------------------------
Total securities available for sale               $24,886,138     $ 69,296        $425,367      $24,530,067
                                                  =========================================================

Held to Maturity
----------------
Municipals                                        $ 2,430,958     $ 36,783        $ 42,112      $ 2,425,629
                                                  =========================================================
</TABLE>

                                       13
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE 3.   INVESTMENT SECURITIES (CONTINUED)

The Company's investment securities as of December 31, 2005 were as follows:
<TABLE>
<CAPTION>
                                                                    Gross          Gross
                                                   Amortized      Unrealized     Unrealized       Market
                                                      Cost          Gains          Losses         Value
                                                   ---------------------------------------------------------
Available For Sale
------------------
<S>                                               <C>              <C>             <C>           <C>
U.S. Government sponsored entities                $ 6,533,381     $    60       $ 331,051       $ 6,202,390
Corporates                                          6,317,394      13,047          14,143         6,316,298
Stock                                                 500,000           -               -           500,000
Mortgage-backed securities                          9,149,322      13,671         158,737         9,004,256
                                                  ---------------------------------------------------------
    Total securities available for sale           $22,500,097     $26,778       $ 503,931       $22,022,944
                                                  =========================================================

Held to Maturity
----------------
Municipals                                        $ 2,405,841     $     -       $  82,856       $ 2,322,985
                                                  =========================================================
</TABLE>


The  amortized  cost and  estimated  market value of  investment  securities  at
December 31, 2006 by contractual maturities are shown below. Expected maturities
may differ from contractual  maturities for  mortgage-backed  securities because
the mortgages  underlying the  securities  may be called or prepaid  without any
penalties;  therefore,  these  securities  are  not  included  in  the  maturity
categories in the following maturity summary.
<TABLE>
<CAPTION>
                                                       Available For Sale                Held to Maturity
                                                 -------------------------------------------------------------
                                                    Amortized      Market         Amortized         Market
                                                      Cost          Value            Cost            Value
                                                 -------------------------------------------------------------
<S>                                               <C>             <C>              <C>             <C>
Maturing within one year                         $  1,000,000    $    999,060      $         -     $         -
Maturing after one year but within five years       3,019,048       2,988,920          544,898         523,957
Maturing after five years, but within ten years     1,000,000       1,000,000                -               -
Maturing after ten years                            9,814,419       9,633,250        1,886,060       1,901,672
                                                 -------------------------------------------------------------
                                                   14,833,467      14,621,230        2,430,958       2,425,629
Mortgage-backed securities                         10,052,671       9,908,837                -               -
                                                 -------------------------------------------------------------
     Total securities                            $ 24,886,138    $ 24,530,067      $ 2,430,958     $ 2,425,629
                                                 =============================================================
</TABLE>

Gross realized gains on the sale of investment  securities  were $53,770 in 2005
and $8,044 in 2004.  Gross realized losses on the sale of investment  securities
were  $63,010  in 2005  and  $155 in 2004.  There  were no  sales of  investment
securities in 2006.

As of December 31, 2006, approximately  $14,272,000 of investment securities are
pledged as collateral for borrowed funds (Note 9). In addition,  securities with
a carrying value of $461,000 were pledged to secure public  deposits at December
31, 2006.

As of December 31, 2005, approximately  $13,273,000 of investment securities are
pledged as collateral for borrowed funds (Note 9). In addition,  securities with
a carrying value of $478,595 were pledged to secure public  deposits at December
31, 2005.

                                       14
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 3.   INVESTMENT SECURITIES (CONTINUED)

The fair value of securities with  unrealized  losses by length of time that the
individual  securities  have been in a continuous  loss position at December 31,
2006, are as follows:
<TABLE>
<CAPTION>
                                             Continuous Unrealized Losses       Continuous Unrealized Lossess
                                             Existing for Less Than 12 Months   Existing for More Than 12 Months
                                             ------------------------------------------------------------------
                                                                Unrealized                          Unrealized
                                              Market Value        Losses        Market Value          Losses
                                             ------------------------------------------------------------------
<S>                                            <C>                <C>           <C>                <C>
Available For Sale
------------------
U.S. Government sponsored entities             $1,497,550         $ 2,450       $ 3,918,230        $ 66,662
Corporates                                        746,250           2,344           836,000         175,448
Mortgage-backed securities                        190,765          10,095         4,636,105         168,368
                                               ------------------------------------------------------------
                                                2,434,565          14,889         9,390,335         410,478

Held to Maturity
----------------
Municipals                                              -               -         1,760,444          42,112
                                               ------------------------------------------------------------
   Total temporarily impaired securities       $2,434,565         $14,889       $11,150,779        $452,590
                                               ============================================================
</TABLE>



Management  does not believe any individual  unrealized  loss as of December 31,
2006 represents an other-than-temporary impairment. A total of 23 securities are
included in the continuous  unrealized portion, of which 21 are in the available
for sale category.  The unrealized  losses on these securities are primarily due
to changes in general  market  interest  rates.  The  Company  believes  it will
collect all amounts  contractually due on these securities as it has the ability
to hold these  securities until the fair value is at least equal to the carrying
value. Should the impairment become other-than-temporary,  the carrying value of
the  investment  will be reduced  and the  unrealized  loss be  recorded  in the
statement of income.

The fair value of securities with  unrealized  losses by length of time that the
individual  securities  have been in a continuous  loss position at December 31,
2005 are as follows:
<TABLE>
<CAPTION>
                                             Continuous Unrealized Losses      Continuous Unrealized Lossess
                                             Existing for Less Than 12 Months  Existing for More Than 12 Months
                                             ------------------------------------------------------------------
                                                                Unrealized                       Unrealized
                                              Market Value        Losses        Market Value       Losses
                                             ---------------------------------------------------------------
<S>                                            <C>                <C>           <C>                <C>
Available For Sale
------------------
U.S. Government sponsored entities            $ 3,427,330        $ 56,051       $2,275,000        $275,000
Corporates                                        513,200          12,991          746,318           1,152
Mortgage-backed securities                      6,225,181         158,132          153,736             605
                                              ------------------------------------------------------------
                                               10,165,711         227,174        3,175,054         276,757
Held to Maturity
----------------
Municipals                                      1,799,287          68,499          523,698          14,357
                                              ------------------------------------------------------------
   Total temporarily impaired securities      $11,964,998        $295,673       $3,698,752        $291,114
                                              ============================================================
</TABLE>


                                       15
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 4.   LOANS

The composition of net loans as of December 31, 2006 and 2005 are as follows:

                                                   2006            2005
                                                 ----------------------------

Commercial                                       $281,819,002   $ 236,013,459
Residential real estate                            22,192,502      18,482,968
Consumer                                            7,004,513       5,053,908
                                                 ----------------------------
Total loans                                       311,016,017     259,550,335
Less: allowance for loan losses                    (4,511,004)     (3,573,812)
Less: net deferred loan fees                         (460,711)       (515,247)
                                                 ----------------------------
     Net loans                                   $306,044,302   $ 255,461,276
                                                 ============================


At  December  31,  2006 and 2005,  approximately  $22,896,000  and  $16,358,000,
respectively,  of residential real estate and consumer loans were pledged to the
FHLBNY on borrowings (Note 9).


NOTE 5.   LOANS TO RELATED PARTIES

In the normal  course of  business,  the Company has granted  loans to officers,
directors and their affiliates (related parties).  In the opinion of management,
the terms of these loans,  including interest rates and collateral,  are similar
to those prevailing for comparable  transactions with other customers and do not
involve more than a normal risk of collectability.

An analysis of the activity of such related  party loans for 2006 and 2005 is as
follows:


                                                     2006            2005
                                                 ----------------------------

Balance, beginning of year                       $ 12,347,626    $ 10,325,629
Advances                                           10,175,662       5,619,948
Less: repayments                                   (2,242,004)     (3,597,951)
                                                 ----------------------------
Balance, end of year                             $ 20,281,284    $ 12,347,626
                                                 ============================

                                       16
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE 6.   ALLOWANCE FOR LOAN LOSSES

An analysis of the allowance for loan losses for 2006 and 2005 is as follows:
<TABLE>
<CAPTION>
                                                   2006            2005             2004
                                                  --------------------------------------------
<S>                                               <C>             <C>              <C>
Balance, beginning of year                        $ 3,573,812     $ 2,620,651      $ 2,256,070
Provision for loan losses                             939,692       1,180,162          825,324
Charge offs                                            (2,500)       (227,001)        (460,743)
Recoveries                                                  -               -                -
                                                  --------------------------------------------
Balance, end of year                              $ 4,511,004     $ 3,573,812      $ 2,620,651
                                                  ============================================
</TABLE>

Information  about impaired  loans and nonaccrual  loans as of and for the years
ended December 31, 2006 and 2005 is as follows:
<TABLE>
<CAPTION>
                                                                   2006             2005

<S>                                                               <C>                <C>
Impaired loans with a valuation allowance                         $ 2,207,817      $   511,211
Impaired loans without a valuation allowance                          161,733                -
                                                                  ----------------------------
Total impaired loans                                              $ 2,369,550      $   511,211
                                                                  ============================
Related allowance for loan losses for impaired loans              $   403,997      $    60,181
                                                                  ============================
Nonaccrual loans                                                  $   788,804      $ 1,935,000
                                                                  ============================

Loans past due ninety days or more and still
  accruing interest                                               $   267,150      $   665,000
                                                                  ============================

Average monthly balance of impaired loans
  (based on month-end balances)                                   $ 1,255,000      $   457,000
                                                                  ============================
Interest income recognized on cash basis
  on impaired loans                                               $    71,791      $    36,914
                                                                  ============================
</TABLE>


Interest  income of $51,000,  $66,000 and  $64,000  would have been  recorded on
non-accrual  loans had those loans paid in accordance  with their original terms
in 2006, 2005 and 2004, respectively.


                                       17
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE 7.   BANK PREMISES AND EQUIPMENT

A  summary  of the  cost  and  accumulated  depreciation  of Bank  premises  and
equipment as of December 31, 2006 and 2005 is as follows:

                                                       2006            2005
                                                  ---------------------------

Land                                              $   470,000    $    470,000
Building and improvements                           3,006,764       2,587,564
Furniture and equipment                               986,213         873,017
                                                  ---------------------------
Total premises and equipment                        4,462,977       3,930,581
Less: accumulated depreciation
  and amortization                                 (1,031,183)       (850,705)
                                                  ---------------------------
   Premises and equipment, net                    $ 3,431,794     $ 3,079,876
                                                  ===========================



Depreciation  expense  was  $279,319 in 2006,  $264,105 in 2005 and  $251,482 in
2004.

The  Company  has  non-cancelable  operating  lease  agreements  related  to its
Northfield and Philadelphia branch offices.  The term of the Northfield lease is
for 10 years through March 2011 with two 5-year renewal options. The term of the
Philadelphia lease is for 10 years through June 2016. The Company is responsible
for its  pro-rata  share of real estate  taxes,  and all  insurance,  utilities,
maintenance and repair costs for the benefit of the branch offices.  The Company
also has a month to month lease for a loan production  office in Millville,  New
Jersey.  In addition,  the Company  leases  certain  computer  software under an
operating  lease expiring 2008. At December 31, 2006, the required future rental
payments under these leases are as follows:


               Year Ending December 31,
               ------------------------

                        2007                            $  251,000
                        2008                               248,000
                        2009                               113,000
                        2010                               114,000
                        2011                               125,000
                      Thereafter                           326,000
                                                        ----------
               Total minimum lease payments             $1,117,000
                                                        ==========


Rent expense was approximately  $225,000 in 2006,  $176,000 in 2005 and $165,000
in 2004.


                                       18
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 8.   DEPOSITS

Deposits at December 31, 2006 and 2005 consisted of the following:

                                                       2006            2005
                                                 ----------------------------

Demand deposits, noninterest-bearing             $ 18,287,577    $ 17,918,339
Demand deposits, interest-bearing                   9,834,053      22,371,195
Savings deposits                                   45,371,156      38,823,726
Time deposits of $100,000 or more                 130,555,474      95,282,066
Other time deposits                                85,880,600      57,660,982
                                                 ----------------------------
     Total deposits                              $289,928,860   $ 232,056,308
                                                 ============================


Time deposits included brokered deposits totaling approximately  $87,585,000 and
$67,159,000 at December 31, 2006 and 2005, respectively.

Scheduled  maturities  of  certificates  of deposit at December  31, 2006 are as
follows:

               Year Ending December 31,
               ------------------------

                        2007                            $159,782,005
                        2008                              27,994,857
                        2009                              15,218,886
                        2010                               9,548,833
                        2011                               3,891,493
                                                        ------------
                                                        $216,436,074
                                                        ============


Deposits from related parties totaled approximately $8,229,000 and $5,740,000 at
December 31, 2006 and 2005, respectively.


NOTE 9.   BORROWINGS

An analysis of borrowings as of December 31, 2006 and 2005 is as follows:
<TABLE>
<CAPTION>
                                                                             2006                         2005
                                                                  -------------------------------------------------
                                              Maturity Date         Amount          Rate         Amount        Rate
-------------------------------------------------------------------------------------------------------------------
<S>                                          <C>                   <C>              <C>       <C>             <C>
Borrowed funds:

Federal Home Loan Bank -                    January 2007           $ 100,000        5.39%     $ 1,000,000     3.05%
  repurchase agreements                     December 2006                  -            -       1,100,000     3.33%

Other - repurchase agreements               January 2006                   -            -         982,500     3.99%
                                            February 2006                  -            -       1,000,000     4.33%
                                            March 2006                     -            -       1,000,000     4.49%
                                                                   ---------                  -----------
                                                                   $ 100,000                  $ 5,082,500
                                                                   =========                  ===========
</TABLE>




                                       19
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE 9.   BORROWINGS (CONTINUED)

<TABLE>
<CAPTION>
                                                                             2006                         2005
                                                                  -------------------------------------------------
                                              Maturity Date         Amount          Rate         Amount        Rate
-------------------------------------------------------------------------------------------------------------------
<S>                                          <C>                   <C>              <C>       <C>             <C>
Federal Home Loan Bank  Advances
                                            January 2006           $          -            -    $  6,610,000     4.08%
                                            February 2006                     -            -         250,000     4.52%
                                            March 2006                        -            -         250,000     4.61%
                                            April 2006                        -            -       1,000,000     4.46%
                                            June 2006                         -            -         250,000     4.78%
                                            October 2006                      -            -       1,000,000     4.70%
                                            December 2006                     -            -       1,750,000     4.05%
                                            January 2007              2,296,883        5.42%         464,360     4.73%
                                            March 2007                  500,000        5.40%               -         -
                                            April 2007                1,000,000        5.43%               -         -
                                            May 2007                  1,862,000        5.44%               -         -
                                            August 2007                 500,000        5.38%               -         -
                                            December 2007               750,000        4.92%         750,000     4.92%
                                            April 2008                  500,000        5.36%               -         -
                                            June 2008                   750,000        3.89%         750,000     3.89%
                                            December 2008             1,000,000        5.14%               -         -
                                            December 2008             1,000,000        4.97%       1,000,000     4.97%
                                            April 2009                  500,000        5.36%               -         -
                                            June 2009                 4,000,000        4.07%       4,000,000     4.07%
                                            July 2009                 1,500,000        5.75%               -         -
                                            April 2010                  500,000        5.41%               -         -
                                            December 2010             1,000,000        5.05%       1,000,000     5.05%
                                            September 2011            5,400,000        5.10%               -         -
                                            December 2015             1,382,487        5.19%       1,500,000     5.19%
                                                                   ------------                 ------------
                                                                   $ 24,441,370                 $ 20,574,360
                                                                   ============                 ============

Subordinated debentures - capital trusts    November 2035          $  5,155,000        7.03%    $  5,155,000     6.04%
                                            November 2035             5,155,000        6.25%       5,155,000     6.25%
                                                                   ------------                 ------------
                                                                   $ 10,310,000                 $ 10,310,000
                                                                   ============                 ============
</TABLE>


At December  31,  2006,  the Company had a  $35,474,000  line of credit from the
FHLBNY, of which $24,441,370 was outstanding at December 31, 2006.

Certain  investment  securities  (Note 3),  loans (Note 4), and FHLBNY stock are
pledged as collateral for borrowings.

                                       20

<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 9.   BORROWINGS (CONTINUED)

Subordinated  Debentures - Capital  Trusts:  On August 23, 2005,  Parke  Capital
Trust I, a Delaware  statutory  business trust and a wholly-owned  Subsidiary of
the Company,  issued  $5,000,000  of variable  rate capital  trust  pass-through
securities to investors.  The variable interest rate re-prices  quarterly at the
three-month  LIBOR plus 1.66% and was 7.03% at December 31, 2006.  Parke Capital
Trust I purchased  $5,155,000  of variable rate junior  subordinated  deferrable
interest  debentures from the Company.  The debentures are the sole asset of the
Trust. The terms of the junior subordinated debentures are the same as the terms
of the  capital  securities.  The  Company  has also  fully and  unconditionally
guaranteed  the  obligations  of the Trust  under the  capital  securities.  The
capital  securities are redeemable by the Company on or after November 23, 2010,
at par, or earlier if the deduction of related interest for federal income taxes
is prohibited, classification as Tier 1 Capital is no longer allowed, or certain
other  contingencies  arise. The capital  securities must be redeemed upon final
maturity of the  subordinated  debentures  on  November  23,  2035.  Proceeds of
approximately  $4,200,000  were  contributed to paid-in capital at the Bank. The
remaining $800,000 was retained at the Company for future use.

On August 23, 2005, Parke Capital Trust II, a Delaware  statutory business trust
and  a   wholly-owned   Subsidiary   of  the  Company,   issued   $5,000,000  of
fixed/variable   rate  capital  trust  pass-through   securities  to  investors.
Currently, the interest rate is fixed at 6.25%. The fixed/variable interest rate
re-prices  quarterly at the three-month LIBOR plus 1.66% beginning  November 23,
2010.  Parke  Capital  Trust II  purchased  $5,155,000  of variable  rate junior
subordinated deferrable interest debentures from the Company. The debentures are
the sole asset of the Trust. The terms of the junior subordinated debentures are
the same as the terms of the capital securities.  The Company has also fully and
unconditionally  guaranteed  the  obligations  of the Trust  under  the  capital
securities.  The capital  securities  are  redeemable by the Company on or after
November 23, 2010, at par, or earlier if the  deduction of related  interest for
federal  income  taxes is  prohibited,  classification  as Tier 1 Capital  is no
longer allowed,  or certain other  contingencies  arise. The capital  securities
must be redeemed upon final maturity of the subordinated  debentures on November
23, 2035.  Proceeds of  approximately  $4,200,000  were  contributed  to paid-in
capital at the Bank.  The  remaining  $800,000  was  retained at the Company for
future use.

The  subordinates  debentures  are  classified as  liabilities  in the Company's
consolidated  balance  sheet at December  31, 2006 but a majority was allowed as
Tier I Capital for regulatory capital purposes (Note 12).

NOTE 10.   INCOME TAXES

The net deferred tax asset,  which is included in "accrued  interest  receivable
and other assets" at December 31, 2006 and 2005, includes the following:


                                                      2006            2005
                                                  ---------------------------

Deferred tax assets                               $ 2,278,528     $ 1,676,004
Deferred tax liabilities                             (451,664)       (470,039)
                                                  ---------------------------
     Net deferred tax asset                       $ 1,826,864     $ 1,205,965
                                                  ===========================

                                       21
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 10.   INCOME TAXES (CONTINUED)

Income tax expense for 2006, 2005 and 2004 consisted of the following:
<TABLE>
<CAPTION>
                                                   2006            2005             2004
                                                  --------------------------------------------
<S>                                                 <C>             <C>              <C>
Current tax expense:
  Federal                                           $ 2,599,297     $ 2,092,771      $ 1,357,072
  State                                                 851,354         624,255          433,000
                                                    --------------------------------------------
                                                      3,450,651       2,717,026        1,790,072
Deferred tax (benefit)                                 (531,591)       (387,382)         (45,972)
                                                   ---------------------------------------------
  Income tax expense                                $ 2,919,060     $ 2,329,644      $ 1,744,100
                                                   =============================================
</TABLE>

The components of the net deferred tax asset, which is included in other assets,
are as follows:
<TABLE>
<CAPTION>
                                                                   2006             2005

<S>                                                               <C>              <C>
Allowance for loan losses                                         $ 1,745,393      $ 1,354,558
Deferred loan costs                                                  (167,614)        (213,276)
Securities available for sale                                         142,428          190,857
Minimum pension liability                                             137,737                -
Other                                                                 (31,080)        (126,174)
                                                                  ----------------------------
                                                                  $ 1,826,864      $ 1,205,965
                                                                  ============================
</TABLE>

A reconciliation  of the Company's  effective income tax rate with the statutory
Federal rate for 2006, 2005 and 2004 is as follows:
<TABLE>
<CAPTION>
                                                      2006            2005             2004
                                                  --------------------------------------------
<S>                                               <C>             <C>              <C>
Tax expense at statutory rate (35%)               $ 2,639,959     $ 2,038,423      $ 1,563,050
Permanent differences and other, net                  (93,511)          3,513          (39,564)
State income taxes, net of Federal tax benefit        448,039         345,949          265,272
Benefit of income taxed at lower rates                (75,427)        (58,241)         (44,658)
                                                  --------------------------------------------
                                                  $ 2,919,060     $ 2,329,644      $ 1,744,100
                                                  ============================================
</TABLE>

NOTE 11.   RETIREMENT PLANS

Supplemental Executive Retirement Plan: The Company has a Supplemental Executive
Retirement  Plan  ("SERP")  covering  certain  members  of  management.  The net
periodic SERP pension cost was approximately  $230,000 in 2006, $246,000 in 2005
and $207,000 in 2004.  The unfunded  benefit  obligation,  which was included in
"accrued interest payable and other liabilities",  was approximately  $1,179,000
at December 31, 2006 and $894,000 at December 31, 2005.

                                       22
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 11.   RETIREMENT PLANS (CONTINUED)

Supplemental  Executive  Retirement Plan (Continued):  The benefit obligation at
----------------------------------------------------
December 31, 2006 was calculated as follows:


Benefit obligation, December 31, 2005             $   894,235
Service cost                                          152,730
Interest cost                                          53,495
(Gain) loss                                            78,395
                                                  -----------
Benefit obligation, December 31, 2006             $ 1,178,855
                                                  ===========


The net periodic pension cost for 2006 was calculated as follows:

Service cost                                        $ 152,730
Interest cost                                          53,495
Prior service cost recognized                          24,176
                                                    ---------
                                                    $ 230,401
                                                    =========


Simple  IRA  Plan:  The  Company  has a simple  IRA Plan (the  "Plan")  covering
-----------------
substantially  all  employees.  The Company is required to  contribute 2% of the
employees'   eligible  salary  to  the  Plan.  All  Company   contributions  are
immediately  vested.  Plan expense  amounted to  approximately  $38,000 in 2006,
$33,000 in 2005 and $22,000 in 2004.


NOTE 12.   REGULATORY MATTERS

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

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require Parke Bancorp and the Bank to maintain  minimum  amounts and ratios (set
forth in the  following  table) of total and Tier I capital  (as  defined in the
regulations)  to  risk-weighted  assets (as defined),  and of Tier I capital (as
defined) to average assets (as defined). Management believes, as of December 31,
2006 and  2005,  that  Parke  Bancorp  and the Bank  meet all  capital  adequacy
requirements to which they are subject.

As of December 31, 2006 and 2005, Parke Bancorp and the Bank were categorized as
"well-capitalized"  under the regulatory framework for prompt corrective action.
There are no  conditions  or events  since  December  31,  2006 that  management
believes have changed Parke Bancorp and Parke Bank's capital category.


                                       23
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 12.   REGULATORY MATTERS (CONTINUED)

Capital Ratios (Continued):  Parke Bancorp and the Bank's actual capital amounts
--------------------------
and ratios as of  December  31,  2006 and 2005 are  presented  in the  following
tables:
<TABLE>
<CAPTION>
                                                                                      To Be Well-Capitalized
                                                                 For Capital          Prompt Under Corrective
                                           Actual              Adequacy Purposes          Action Provisions
                                   --------------------------------------------------------------------------
PARKE BANCORP, INC.                Amount       Ratio        Amount        Ratio        Amount       Ratio
                                   --------------------------------------------------------------------------
As of December 31, 2006
(amounts in thousands)
----------------------

<S>                                 <C>         <C>           <C>           <C>          <C>          <C>
Total Risk Based Capital            $ 45,347    14.8%         $ 24,499      8%           $ 30,624     10%
(to Risk Weighted Assets)

Tier I Capital                      $ 39,599    12.9%         $ 12,249      4%           $ 18,374      6%
(to Risk Weighted Assets)

Tier I Capital                      $ 39,599    11.0%         $ 14,054      4%           $ 17,568      5%
(to Average Assets)

<CAPTION>
                                                                                      To Be Well-Capitalized
                                                                 For Capital          Prompt Under Corrective
                                          Actual               Adequacy Purposes          Action Provisions
                                   --------------------------------------------------------------------------
PARKE BANCORP, INC.                Amount       Ratio        Amount        Ratio        Amount       Ratio
                                   --------------------------------------------------------------------------
As of December 31, 2005
(amounts in thousands)
----------------------
<S>                                 <C>         <C>           <C>           <C>          <C>          <C>
Total Risk Based Capital            $ 40,737    15.6%         $ 20,856      8%           $ 26,070     10%
(to Risk Weighted Assets)

Tier I Capital                      $ 34,349    13.2%         $ 10,428      4%           $ 15,642      6%
(to Risk Weighted Assets)

Tier I Capital                      $ 34,349    12.1%         $ 11,370      4%           $ 14,212      5%
(to Average Assets)
</TABLE>

                                       24
<PAGE>

PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 12.   REGULATORY MATTERS (CONTINUED)

Capital Ratios (Continued):
---------------------------
<TABLE>
<CAPTION>
                                                                                      To Be Well-Capitalized
                                                                 For Capital          Prompt Under Corrective
                                         Actual               Adequacy Purposes          Action Provisions
                                   --------------------------------------------------------------------------
PARKE BANK                         Amount       Ratio        Amount        Ratio        Amount       Ratio
                                   --------------------------------------------------------------------------
<S>                                 <C>         <C>           <C>           <C>          <C>          <C>
As of December 31, 2006
(amounts in thousands)
----------------------

Total Risk Based Capital            $ 44,405    14.5%         $ 24,499      8%           $ 30,624     10%
(to Risk Weighted Assets)

Tier I Capital                      $ 40,569    13.3%         $ 12,249      4%           $ 18,374      6%
(to Risk Weighted Assets)

Tier I Capital                      $ 40,569    11.6%         $ 14,054      4%           $ 17,568      5%
(to Average Assets)

<CAPTION>
                                                                                      To Be Well-Capitalized
                                                                 For Capital          Prompt Under Corrective
                                        Actual                Adequacy Purposes          Action Provisions
                                   --------------------------------------------------------------------------
PARKE BANK                         Amount       Ratio        Amount        Ratio        Amount       Ratio
                                   --------------------------------------------------------------------------
<S>                                 <C>         <C>           <C>           <C>          <C>          <C>
As of December 31, 2005
(amounts in thousands)
----------------------

Total Risk Based Capital            $ 39,416    15.1%         $ 20,825      8%           $ 26,031     10%
(to Risk Weighted Assets)

Tier I Capital                      $ 36,158    13.9%         $ 10,413      4%           $ 15,618      6%
(to Risk Weighted Assets)

Tier I Capital                      $ 36,158    12.7%         $ 11,370      4%           $ 14,213      5%
(to Average Assets)
</TABLE>


NOTE 13.   SHAREHOLDERS' EQUITY

Reorganization:  Parke Bancorp was  incorporated in 2005 for the sole purpose of
--------------
becoming the holding  company of the Bank.  Parke Bancorp  recognized the assets
and liabilities  transferred at the carrying amounts in the accounts of the Bank
as of June 1, 2005, the effective date of the  reorganization.  The accompanying
consolidated  financial  statements  are  presented as if the exchange of shares
occurred  as of January  1,  2004.  Pursuant  to the Plan of  Acquisition,  each
outstanding share of Parke Bank was converted  automatically by operation of law
into one share of Parke  Bancorp.  Parke  Bancorp had no  activity  prior to the
competition  of this  reorganization.  Parke  Bancorp  is  authorized  to  issue
10,000,000  shares of common  stock,  par  value  $0.10 per share and  1,000,000
shares of serial  preferred  stock,  par value  $0.10  per  share.  Options  and
warrants outstanding under the Bank's various Plans were converted automatically
by  operation  of law into  options and  warrants  to  purchase  shares of Parke
Bancorp on the same terms and conditions.

Common Stock  Dividend:  In April 2006 and December  2004 the Company paid a 20%
----------------------
common stock dividend to shareholders  (2006 - 472,430 shares and 2004 - 362,363
shares).  All share and per share information have been retroactively  adjusted.
In December 2006, the Company paid a $.20 cash dividend to shareholders.

                                       25
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE 13.   SHAREHOLDERS' EQUITY (CONTINUED)

Treasury Stock:  During 2006 and 2005, the Company  repurchased 59,462 and 2,380
--------------
shares of the Company's common stock.

Stock Options and Warrants:  In 1999, 2002 and 2003, the  shareholders  approved
--------------------------
the Company's Employee Stock Option Plans and in 2005 the shareholders  approved
the Company's  Directors and Employee  Stock Option Plan (the "Plans") The Plans
are "non-qualified"  stock option plans. Reserved for issuance upon the exercise
of options granted or to be granted by the Board of Directors is an aggregate of
524,466  shares of common  stock.  All options  issued  under the Plans  through
December 31, 2005 were fully vested upon  issuance.  All  directors  and certain
officers and employees of the Company have been granted options under the Plans.
All stock option amounts and prices included in the following  discussions  have
been adjusted for stock dividends.

Option  awards are granted  with an exercise  price equal to the market price of
the Company's stock at the date of the grant.  Options awarded prior to December
31, 2006 vested upon  issuance and options  issued in 2006  generally  vest over
four to five years. All options issued have 10 year contractual terms.

At December 31, 2006,  there were 147,688  shares  available for grant under the
Plans.

Prior to January 1, 2006, the Company accounted for its Plans in accordance with
Accounting  Principles Board Opinion No. 25 and related  interpretations and the
disclosure-only  provisions of FASB No. 123.  Accordingly,  no compensation cost
has been recognized for the Plan in 2005 or 2004.  Compensation  cost that would
have been  recognized  using the fair value method  pursuant to FASB No. 123, if
the Bank had so elected,  would have been  approximately  $1,117,000 in 2005 and
$68,000 in 2004.  Effective  January 1, 2006, the Company  adopted FAS 123R. The
method  of  determining  pro-forma  compensation  cost  for  2005  and  2004 and
compensation  expense in 2006 was based on certain  assumptions,  including  the
past trading ranges of the Bank's stock,  volatility of 25-33%,  expected option
lives of 5-7 years,  risk-free interest rate of 4-5%, and no expected payment of
dividends. Compensation expense recognized during 2006 amounted to $37,000.

A summary of option activity under the Plan as of December 31, 2006, and changes
during the year ended December 31, 2006, is presented below:
<TABLE>
<CAPTION>
                                                                            Weighted-
                                                            Weighted-        Average
                                                             Average        Remaining        Aggregate
                                                            Exercise       Contractual       Intrinsic
               Options                      Shares           Price             Term            Value
------------------------------------------------------------------------------------------------------
<S>                                             <C>              <C>           <C>            <C>
Outstanding at January 1, 2006                  330,968          $ 13.23

Granted                                          18,000          $ 19.00

Exercised                                          (720)         $ 16.04

Expired/terminated                                    -          $     -
                                                -------
Outstanding at December 31, 2006                348,248          $ 13.52       7.2         $ 1,365,000
                                                =======                        =======================
Exercisable at December 31, 2006                334,348          $ 13.32       7.4         $ 1,378,000
                                                =======                        =======================
</TABLE>

                                       26
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 13.   SHAREHOLDERS' EQUITY (CONTINUED)

Stock Options and Warrants  (Continued):  The  weighted-average  grant-date fair
--------------------------------------
value of options granted during the years 2006,  2005 and 2004 was $7.16,  $5.69
and $4.56,  respectively.  The total intrinsic value of options exercised during
the years 2006, 2005 and 2004 was $3,000, $140,000 and $10,000, respectively.

A summary of the status of the  Company's  nonvested  shares as of December  31,
2006 and changes during the year ended December 31, 2006 is as follows:

                                                            Weighted-
                                                             Average
                                                           Grant-Date
           Nonvested Shares                 Shares         Fair Value
--------------------------------------------------------------------------------
Nonvested at January 1, 2006                    -           $  $ -

Granted                                    18,000           $ 7.34

Vested                                     (4,500)          $ 7.34

Forfeited                                       -           $    -
                                       ----------
Nonvested at December 31, 2006             13,500           $ 7.34
                                       ==========



At December 31, 2006, there was $92,000 of total unrecognized  compensation cost
relating to nonvested  share-based  compensation  arrangements granted under the
Plans. That cost is expected to be recognized over a weighted-average  period of
3 years. The total fair value of shares vested during 2006 was $30,000.

In connection with the Company's  initial stock offering in 1998,  warrants were
issued.  These  warrants have an exercise price of $6.32 per share and expire in
2008. During 2006, 2005 and 2004,  warrants  exercised were 94,419,  122,156 and
25,586,   respectively.   At  December  31,  2006,   541,000  warrants  remained
unexercised.


NOTE 14.   OTHER RELATED PARTY TRANSACTIONS

A member of the Board of  Directors  is a principal  of a  commercial  insurance
agency that provides all the insurance coverage for the Company. The cost of the
insurance  was  approximately  $88,000 in 2006,  $98,000 in 2005 and $102,000 in
2004.  An insurance  agency  owned by another  Board  Member  provides  employee
benefits (medical insurance, life insurance, and disability insurance). The cost
of these  employee  benefits  totaled  $286,000  in 2006,  $284,000  in 2005 and
$197,000 in 2004.


                                       27
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE 15.   COMMITMENTS AND CONTINGENCIES

The Company has entered into an  employment  contract  with the President of the
Company, which provides for continued payment of certain employment salaries and
benefits in the event of a change in control, as defined.

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  include  commitments to extend credit and standby
letters of credit.  These instruments  involve, to varying degrees,  elements of
credit  risk in excess of the  amount  recognized  in the  consolidated  balance
sheet. The contract or notional amounts of these instruments  reflect the extent
of  the  Company's   involvement  in  these  particular   classes  of  financial
instruments.   The   Company's   exposure   to  credit  loss  in  the  event  of
nonperformance  by the other party to the financial  instruments for commitments
to extend credit and standby letters of credit is represented by the contractual
or  notional  amount of those  instruments.  The  Company  uses the same  credit
policies  in  making  commitments  and  conditional  obligations  as they do for
on-balance sheet instruments.

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally  have fixed  expiration  dates or other  termination  clauses  and may
require  payment of a fee. Since many of the  commitments are expected to expire
without  being  drawn  upon,  the total  commitment  amounts do not  necessarily
represent  future cash  requirements.  The  Company  evaluates  each  customer's
credit-worthiness on a case-by-case basis. The amount of collateral obtained, if
deemed  necessary  upon  extension of credit,  is based on  management's  credit
evaluation.   Collateral  held  varies  but  may  include  accounts  receivable,
inventory,   property,  plant  and  equipment  and  income-producing  commercial
properties.  As of December  31,  2006 and 2005,  commitments  to extend  credit
amounted to approximately $117,266,000 and $101,815,000, respectively.

Standby letters of credit are conditional  commitments  issued by the Company to
guarantee  the  performance  of a customer  to a third  party.  The credit  risk
involved in issuing  letters of credit is essentially  the same as that involved
in extending  loan  facilities to  customers.  As of December 31, 2006 and 2005,
standby  letters  of credit  with  customers  were  $7,158,000  and  $4,536,000,
respectively.

The Company does not issue or hold derivative  instruments with the exception of
loan commitments and standby letters of credit.  These instruments are issued in
the ordinary  course of business to meet  customer  needs.  Commitments  to fund
fixed-rate loans were immaterial at December 31, 2006. Variable-rate commitments
are generally  issued for less than one year and carry market rates of interest.
Such  instruments are not likely to be affected by annual rate caps triggered by
rising interest rates.  Management  believes that off-balance  sheet risk is not
material to the results of operations or financial condition.

In the normal  course of  business,  there are  outstanding  various  contingent
liabilities  such as claims and legal  action,  which are not  reflected  in the
financial  statements.  In the opinion of  management,  no  material  losses are
anticipated as a result of these actions or claims.


NOTE 16.   FAIR VALUE OF FINANCIAL INSTRUMENTS

The  Company  discloses  estimated  fair  values for its  significant  financial
instruments. Because no market exists for a significant portion of the Company's
financial  instruments,  fair value  estimates are based on judgments  regarding
future   expected   loss   experience,   current   economic   conditions,   risk
characteristics  of  various  financial  instruments  and other  factors.  These
estimates  are  subjective  in nature and involve  uncertainties  and matters of
significant judgment and therefore cannot be determined with precision.  Changes
in assumptions could significantly affect the estimates.

                                       28
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 16.   FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

The  following  fair  value  estimates,  methods  and  assumptions  were used to
estimate the fair value of each class of significant financial instruments,  for
which it is practical to estimate that value:

Cash and Cash  Equivalents:  The carrying  amount of cash and federal funds sold
--------------------------
approximates fair value.

Investment  Securities:  The fair value of  investment  securities is based upon
----------------------
quoted market prices or dealer quotes.

Restricted Stock: The carrying value of restricted stock approximates fair value
----------------
based on redemption provisions.

Loans:  Fair values are estimated for portfolios of loans with similar financial
-----
characteristics.  Loans are segregated by type such as  commercial,  residential
mortgage and other consumer. Each loan category is further segmented into groups
by fixed and adjustable rate interest terms and by performing and non-performing
categories.

The fair  value of  performing  loans is  typically  calculated  by  discounting
scheduled cash flows through their estimated  maturity,  using estimated  market
discount  rates that reflect the credit and interest  rate risk inherent in each
group of loans. The estimate of maturity is based on contractual  maturities for
loans  within  each  group,  or on  the  Company's  historical  experience  with
repayments for each loan classification,  modified as required by an estimate of
the effect of current economic conditions.

Fair value for nonperforming  loans is based on the discounted value of expected
future cash flows, discounted using a rate commensurate with the risk associated
with the  likelihood  of  repayment  and/or  the fair  value of  collateral  (if
repayment of the loan is collateral dependent).

For all loans,  assumptions  regarding the  characteristics  and  segregation of
loans, maturities,  credit risk, cash flows, and discount rates are judgmentally
determined using specific borrower and other available information.

Accrued Interest  Receivable and Payable:  The fair value of interest receivable
----------------------------------------
and payable is estimated to approximate the carrying amounts.

Deposits:  The fair value of deposits  with no stated  maturity,  such as demand
--------
deposits,  checking accounts, savings and money market accounts, is equal to the
carrying  amount.  The fair  value of  certificates  of  deposit is based on the
discounted value of contractual cash flows, where the discount rate is estimated
using the rates currently offered for deposits of similar remaining maturities.

Borrowings:  The fair value of  borrowings is based on the  discounted  value of
----------
estimated cash flows. The discounted rate is estimated using the rates currently
offered for similar advances.

Off-Balance Sheet Instruments:  Since the majority of the Company's  off-balance
-----------------------------
sheet instruments consist of non fee-producing,  variable rate commitments,  the
Company has determined they do not have a distinguishable fair value.

                                       29
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 16.   FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

Off-Balance  Sheet  Instruments  (Continued):  The  following  table  summarizes
--------------------------------------------
carrying amounts and fair values for financial instruments at December 31, 2006:


                                              Carrying Value      Fair Value
                                              --------------------------------
Financial Assets:
  Cash and cash equivalents                    $ 11,260,811    $ 11,260,811
  Investment securities                          26,961,025      26,955,780
  Restricted stock                                1,492,800       1,492,800
  Loans, net                                    306,044,302     304,778,644
  Accrued interest receivable                     2,095,179       2,095,179

Financial Liabilities:
  Demand deposits and savings deposits         $ 73,492,786    $ 73,492,786
  Time deposits                                 216,436,074     219,133,994
  Borrowings                                     34,851,370      34,235,825
  Accrued interest payable                        1,848,612       1,848,612


The following table  summarizes  carrying  amounts and fair values for financial
instruments at December 31, 2005:

                                                Carrying Value    Fair Value
                                                ----------------------------
Financial Assets:
  Cash and cash equivalents                      $ 4,380,036     $ 4,380,036
  Investment securities                           24,428,785      24,345,929
  Restricted stock                                 1,348,900       1,348,900
  Loans, net                                     255,461,276     252,907,849
  Accrued interest receivable                      1,545,443       1,545,443

Financial Liabilities:
  Demand deposits and savings deposits          $ 79,113,260    $ 79,113,260
  Time deposits                                  152,943,048     154,935,630
  Borrowings                                      35,966,860      35,966,860
  Accrued interest payable                         1,073,713       1,073,713


                                       30
<PAGE>
PARKE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE 17.   QUARTERLY FINANCIAL DATA (UNAUDITED)

The following  represents  summarized  unaudited quarterly financial data of the
Company which, in the opinion of management,  reflects  adjustments  (comprising
only normal recurring accruals) necessary for fair presentation.
<TABLE>
<CAPTION>
                                                                    Three Months Ended
                                                -------------------------------------------------------------------
                                                 December 31,      September 30,        June 30,          March 31,
                                                -------------------------------------------------------------------
<S>                                             <C>               <C>                <C>                <C>
2006
----

Interest income                                 $ 6,994,565       $ 6,752,958        $ 6,158,455        $ 5,569,497
Interest expense                                  3,541,705         3,240,908          2,825,928          2,413,988
Net interest income                               3,452,860         3,512,050          3,332,527          3,155,509
Provision for loan losses                           165,692           211,000            328,000            235,000
Income before income tax expense                  1,859,565         2,022,282          1,861,210          1,799,683
Income tax expense                                  649,240           805,600            740,000            724,220
Net income                                        1,210,325         1,216,682          1,121,210          1,075,463

Net income per common share:
  Basic                                         $      0.43       $      0.43        $      0.40        $      0.39
  Diluted                                       $      0.37       $      0.37        $      0.33        $      0.33

2005

Interest income                                 $ 5,098,380       $ 4,434,368        $ 4,106,809        $ 3,696,487
Interest expense                                  2,092,613         1,810,909          1,515,232          1,265,201
Net interest income                               3,005,767         2,623,459          2,591,577          2,431,286
Provision for loan losses                           374,000           298,005            276,023            232,134
Income before income tax expense                  1,624,981         1,481,502          1,499,565          1,218,017
Income tax expense                                  655,994           592,100            595,550            486,000
Net income                                          968,987           889,402            904,015            732,017

Net income per common share:
  Basic                                         $      0.35       $      0.33        $      0.34        $      0.28
  Diluted                                       $      0.30       $      0.28        $      0.29        $      0.23
</TABLE>


                                       31
<PAGE>
                              CORPORATE INFORMATION

                               PARKE BANCORP, INC
                                601 Delsea Drive
                          Washington Township, NJ 08080
                                 (856) 256-2500
                                www.parkebank.com


            BOARD OF DIRECTORS (PARKE BANK AND PARKE BANCORP, INC.)
<TABLE>
<CAPTION>

<S>                                                                           <C>
   Celestino R. ("Chuck") Pennoni                                                         Thomas Hedenberg
Chairman of the Board of Directors                                            Vice Chairman of the Board of Directors

                                            Vito S. Pantilione
                              President, Chief Executive Officer and Director

     Fred G. Choate                            Daniel J. Dalton                           Arret F. Dobson
         Director                                 Director                                   Director

  Edward Infantolino                          Anthony J. Jannetti                         Jeffrey H. Kripitz
         Director                                 Director                                     Director

     Richard Phalines                          Jack C. Sheppard, Jr.                        Ray H. Tresch
         Director                                 Director                                    Director

                                                            Victor Fabietti
                                           CPA/Special Consultant to the Board of Directors


                                                    ______________________________

                                                        PARKE BANCORP OFFICERS

         Vito S. Pantilione                          Robert A. Kuehl                    David O. Middlebrook
                 President and                    Senior Vice President and                Senior Vice President and
          Chief Executive Officer            Chief Financial Officer             Corporate Secretary


                                                    _______________________________



  TRANSFER AGENT & REGISTRAR                INDEPENDENT AUDITORS                        SPECIAL COUNSEL
Registrar and Transfer Company              McGladrey & Pullen, LLP                   Malizia Spidi & Fisch
      10 Commerce Dr.                          512 Township Line Road                  901 New York Avenue, N.W.
     Cranford, NJ  07016                    One Valley Square, Suite 250                    Suite 210 East
                                               Blue Bell, PA  19422                   Washington, D.C.  20001

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                               OFFICERS

<S>                                                                             <C>
             Vito S. Pantilione                                                               Robert A. Kuehl
President and Chief Executive Officer                                           Senior Vice President and Chief Financial Officer

          David O. Middlebrook                                                               Elizabeth A. Milavsky
 Senior Vice President, Senior Loan Officer                                                  Senior Vice President

         Paul E. Palmieri                                                                     James S. Talarico
Senior Vice President, Philadelphia Region                                                       Vice President

              John J. Murphy                                                                  Milton H. Witte
                  Treasurer                                                                    Vice President

            Allen M. Bachman                                                                Kathleen A. Conover
         Assistant Vice President                                                        Assistant Vice President

            Dolores M. Calvello                                                             Claire R. Piccini
        Assistant Vice President                                                         Assistant Treasurer

            Mark A. Prater                                                                     Mary Ann Seal
        Assistant Vice President                                                           Assistant Vice President

             Evette M. Snyder
        Assistant Vice President

                                                  -------------------------------------
                                                              BRANCHES


   NORTHFIELD OFFICE                                 MAIN OFFICE                             KENNEDY OFFICE
        501 Tilton Road                           601 Delsea Drive                              567 Egg Harbor Road
    Northfield, NJ  08225                   Washington Township, NJ  08080               Washington Township, NJ  08080
       (609) 646-6677                              (856) 256-2500                               (856) 582-6900

                  PHILADELPHIA OFFICE                                      MILLVILLE LOAN PRODUCTION OFFICE
                   1610 Spruce Street                                           411 North High Street
                    Philadelphia, PA  19103                                      Millville, NJ  08332
                     (215) 772-1113                                                (856) 825-9111


                                                  -------------------------------------



                                               PARKE BANK PARKE CAPITAL MARKETS             PARKE CAPITAL TRUST I
       601 Delsea Drive                               601 Delsea Drive                   PARKE CAPITAL TRUST II
Washington Township, NJ  08080                  Washington Township, NJ  08080             601 Delsea Drive
        (856) 256-2500                                 (856) 256-2500                 Washington Township, NJ  08080
                                                                                            (856) 256-2500
</TABLE>