**PARKE BANCORP, INC.**

 

2007            ANNUAL REPORT TO SHAREHOLDERS

 

 

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PARKE            BANCORP, INC.

2007            ANNUAL REPORT TO SHAREHOLDERS

 

TABLE            OF CONTENTS

 

 

| **Section One**                                                                                                        |   |   |
|------------------------------------------------------------------------------------------------------------------------|--------|--------|
|                                                                                                                   |   | Page   |
| 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                                                                                            |   | 17     |
|                                                                                                                   |   |   |
|                                                                                                                   |   |   |
| **Section Two**                                                                                                        |   |   |
|                                                                                                                   |   |   |
| Report of Independent Registered Public Accounting                            Firm                                     |   | 1      |
|                                                                                                                   |   |   |
| Consolidated Financial Statements                                                                                      |   | 2      |
|                                                                                                                   |   |   |
| Notes to Consolidated Financial Statements                                                                             |   | 7      |
|                                                                                                                   |   |   |
| Corporate Information                                                                                                  |   | 36     |

 

_____________________________

 

 

 

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;            increased competition from both banks and non-banks; legal and regulatory developments;            technological changes; mergers and acquisitions; changes in consumer spending and            saving habits; and the success of Parke Bank at managing these risks.

 

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To Our            Shareholders:

 

Parke Bancorp posted another year of record earnings as Net Income            improved to $5.9 million, an increase of 28%. Earnings per share increased to $1.63 on            a fully diluted basis. This accomplishment becomes even more noteworthy when reviewing            the economic turbulence in 2007 and the coinciding decline in profits in the banking            industry. Our financial results position the Company as one of the top five banks in            the country for return on equity, which was 17.17%, for banks under $1 billion in            assets and one of the top two banks under $500 million in assets, while our return on            assets was 1.41%. Parke Bancorp’s assets grew to $461 million as of December 31,            2007, a 28% increase from the end of the previous year. The growth of the Company was            again supported by a 32% increase in our loan portfolio from $311 million as of the end            of 2006 to $408 million at December 31, 2007. The primary source of funding for the            loans was an increase in our deposits to $379 million, a 31% increase year over year.            Our Company continued to be one of the top banks in the nation in the control of            expenses with a cost efficiency ratio of 39%, a clear indication of the hard work and            dedication of our employees.

 

The            U. S. economy has recently been rocked with a severe decline in the residential real            estate market and the coinciding skyrocketing of residential mortgage foreclosures. The            credit markets worldwide experienced billions of dollars in portfolio write downs for            their sub prime mortgage investments, further crippling the liquidity and credit            availability in the nation. The write downs in turn created a rippling effect through            the financial and credit markets causing significant market illiquidity and impediments            to economic growth and price stability. While the Treasury Department initiated a            stimulus package that Congress approved and the Federal Reserve dramatically reduced            fed funds rates by 300 basis points, the illiquidity persists and the number of            troubling economic indicators continues to increase.

 

The            combination of the credit market malaise and the numerous negative economic indicators            has prompted the Federal Reserve to take corrective monetary action in an attempt to            head off a possible recession. Interest rates are expected to further decline in a            continued effort to support an economy that many economists believe is already in a            recession. Based on the continued illiquidity of the credit markets, the Fed’s            move does not yet appear to have stabilized the market. Additional pressure has been            added to the credit markets by the recent bailout of Bear Stearns who was acquired by J            P Morgan with federal government assistance.

 

The            dramatic reduction in interest rates has negatively impacted the Company’s and            much of the banking industry’s spread and net interest margin. The interest rates            on a significant segment of our loan portfolio that is prime-based was immediately            reduced while the interest rates paid on deposits have declined much more slowly,            thereby reducing the Company’s net interest income. We have taken steps to reduce            our cost of funds by adding alternative funding sources at very competitive pricing.            These moves will hopefully equate to a stabilized interest margin and net interest            income but will also be dependent upon the Federal Reserve’s future interest rate            adjustments.

 

1

 

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We            opened a new Loan Production Office in 2007 in Havertown, PA to focus on the attractive            suburban Philadelphia market. This is a very strong market with a dense high income            population and many small to midsize businesses. We are in the process of identifying            potential locations in this market area to open a full service branch. The constantly            changing dynamics in the banking industry coupled with the currently troubled real            estate market and economy makes it very important to carefully and strategically expand            our bank’s branch network. We continue to consider attractive retail locations            that are either contiguous to or within our existing geographic footprint. Park            Bank’s branch network is critical to our success with our Northfield branch,            which opened in 2003, surpassing $100 million in deposits and our recently opened            Philadelphia branch approaching close to $40 million in deposits in 2007.

 

The            uninterrupted growth and financial strength of Parke Bancorp is dependent on the            continued hard work and support of our Board of Directors, the quality and hard work of            our staff and the implementation of new products and state of the art technology that            provides our customers the best banking services in the industry. We recently            implemented branch capture for our retail branches that will add to our efficiency            while providing improved funds availability for our retail customers. This technology            includes “remote” or “merchant capture” which provides our new            and existing customers with the capability of processing their check deposits in their            office or store without the need of going to one of our retail branches. The successful            implementation and marketing of this new technology will provide us with lower cost            funding.

 

As            we approach our 10 year anniversary, 2008 will be our most challenging year.            Fortunately, challenges provide opportunity. The continued consolidation in the banking            industry combined with many banks in the region experiencing financial uncertainty has            provided our Company with new prospects for talented lenders and retail banking            personnel. In addition the possibility of accelerated growth exists through a merger or            acquisition with an area bank that may view the current banking environment as the time            to join a bank with the strength and vision of Parke Bancorp.

 

We            want to thank our shareholders for their continued support during the past year.            Despite our strong financial performance during 2007, our stock price was negatively            impacted by the overall dismal performance of the banking sector. We are cautiously            optimistic that the economic stimulus package recently enacted by Congress combined            with the Federal Reserve’s efforts to provide the market with liquidity and lower            interest rates will provide the economy with the tools to regain sustained growth. The            members of our board, management team and staff will continue to focus on the            implementation of our business plan and control costs to further enhance shareholder            value.

 

 

 

 

| /s/C.R. “Chuck” Pennoni                                   | /s/Vito S. Pantilione                                                                 |
|-----------------------------------------------------------------------|--------------------------------------------------------------------------------------------|
| C.R. “Chuck”                            Pennoni

Chairman | Vito S.                            Pantilione 

President and Chief Executive Officer |

 

 

2

 

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**SELECTED FINANCIAL DATA**

**(Dollars in thousands, except per share data)**

 

|                                                                           |   | At or for the Year Ended December 31, |    |
|--------------------------------------------------------------------------------|--------|---------------------------------------|---------|
|                                                                           |   | 2007                                  |    |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
| **BALANCE SHEET DATA:**                                                        |   | (Amounts in thousands)                |    |
| Assets                                                                         |   | $                                     | 460,795 |   |   | $ | 359,997 |   |   | $ | 297,810 |   |   | $ | 224,339 |   |   | $ | 174,004 |   |
| Loan Receivables, Net                                                          |   | $                                     | 402,683 |   |   | $ | 306,044 |   |   | $ | 255,461 |   |   | $ | 185,986 |   |   | $ | 144,078 |   |
| Securities-Available for Sale                                                  |   | $                                     | 29,782  |   |   | $ | 24,530 |   |   | $ | 22,023 |   |   | $ | 24,043 |   |   | $ | 14,323 |   |
| Securities-Held to Maturity                                                    |   | $                                     | 2,456   |   |   | $ | 2,431 |   |   | $ | 2,406 |   |   | $ | 548 |   |   | $ | 779 |   |
| Cash and Cash Equivalents                                                      |   | $                                     | 9,178   |   |   | $ | 11,261 |   |   | $ | 4,380 |   |   | $ | 1,802 |   |   | $ | 4,267 |   |
| Deposits                                                                       |   | $                                     | 379,480 |   |   | $ | 289,929 |   |   | $ | 232,056 |   |   | $ | 179,585 |   |   | $ | 142,447 |   |
| Borrowings                                                                     |   | $                                     | 40,322  |   |   | $ | 34,851 |   |   | $ | 35,967 |   |   | $ | 20,379 |   |   | $ | 10,340 |   |
| Stockholders' Equity                                                           |   | $                                     | 36,417  |   |   | $ | 30,709 |   |   | $ | 27,193 |   |   | $ | 22,829 |   |   | $ | 19,993 |   |
|                                                                           |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **OPERATIONS DATA:**                                                           |   | (Amounts in thousands)                |    |
| Interest Income                                                                |   | $                                     | 33,186  |   |   | $ | 25,476 |   |   | $ | 17,336 |   |   | $ | 11,766 |   |   | $ | 9,444 |   |
| Interest Expense                                                               |   |                                  | 17,595  |   |   |   | 12,023 |   |   |   | 6,684 |   |   |   | 3,746 |   |   |   | 3,182 |   |
| Net Interest Income                                                            |   |                                  | 15,591  |   |   |   | 13,453 |   |   |   | 10,652 |   |   |   | 8,020 |   |   |   | 6,262 |   |
| Provision for Loan Losses                                                      |   |                                  | 1,161   |   |   |   | 940 |   |   |   | 1,180 |   |   |   | 825 |   |   |   | 923 |   |
| Net interest Income after Provision for Loan                            Losses |   |                                  | 14,430  |   |   |   | 12,513 |   |   |   | 9,472 |   |   |   | 7,195 |   |   |   | 5,339 |   |
| Non-Interest Income                                                            |   |                                  | 1,491   |   |   |   | 857 |   |   |   | 896 |   |   |   | 861 |   |   |   | 799 |   |
| Non-Interest Expense                                                           |   |                                  | 6,325   |   |   |   | 5,827 |   |   |   | 4,544 |   |   |   | 3,589 |   |   |   | 2,837 |   |
| Income Before Income Taxes                                                     |   |                                  | 9,596   |   |   |   | 7,543 |   |   |   | 5,824 |   |   |   | 4,467 |   |   |   | 3,301 |   |
| Income Tax Expense                                                             |   |                                  | 3,744   |   |   |   | 2,919 |   |   |   | 2,330 |   |   |   | 1,744 |   |   |   | 1,279 |   |
| Net Income                                                                     |   | $                                     | 5,852   |   |   | $ | 4,624 |   |   | $ | 3,494 |   |   | $ | 2,723 |   |   | $ | 2,022 |   |
|                                                                           |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **PER SHARE DATA:**                                                            |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic Income per Common Share                                                  |   | $                                     | 1.85    |   |   | $ | 1.49 |   |   | $ | 1.18 |   |   | $ | 0.95 |   |   | $ | 0.73 |   |
| Diluted Income per Common Share                                                |   | $                                     | 1.63    |   |   | $ | 1.27 |   |   | $ | 1.00 |   |   | $ | 0.79 |   |   | $ | 0.65 |   |
| Book Value/Common Share                                                        |   | $                                     | 11.39   |   |   | $ | 9.68 |   |   | $ | 8.90 |   |   | $ | 7.95 |   |   | $ | 7.06 |   |
| Cash Dividends Declared per Share                                              |   | $                                     | — |   |   | $ | 0.18 |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |
|                                                                           |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **PERFORMANCE RATIOS:**                                                        |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Return on Average Assets                                                       |   |                                  | 1.41    | % |   |   | 1.41 | % |   |   | 1.35 | % |   |   | 1.45 | % |   |   | 1.33 | % |
| Return on Average Equity                                                       |   |                                  | 17.17   | % |   |   | 15.68 | % |   |   | 13.91 | % |   |   | 13.24 | % |   |   | 10.72 | % |
| Net Interest Margin                                                            |   |                                  | 3.88    | % |   |   | 4.25 | % |   |   | 4.34 | % |   |   | 4.58 | % |   |   | 4.40 | % |
| Efficiency ratio1                                                         |   |                                  | 38.7    | % |   |   | 40.7 | % |   |   | 39.4 | % |   |   | 40.4 | % |   |   | 40.2 | % |
|                                                                           |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **CAPITAL RATIOS:**                                                            |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity to Assets                                                               |   |                                  | 7.91    | % |   |   | 8.54 | % |   |   | 10.96 | % |   |   | 10.77 | % |   |   | 12.27 | % |
| Dividend Payout ratio                                                          |   |                                  | — |   |   |   | 12.20 | % |   |   | — |   |   |   | — |   |   |   | — |   |
| Tier 1 Capital (Risk Weighted)2                                           |   |                                  | 11.1    | % |   |   | 13.3 | % |   |   | 13.9 | % |   |   | 12.2 | % |   |   | 13.7 | % |
| Total Risk Based Capital2                                                 |   |                                  | 12.4    | % |   |   | 14.5 | % |   |   | 15.1 | % |   |   | 13.4 | % |   |   | 14.9 | % |
|                                                                           |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **ASSET QUALITY RATIOS:**                                                      |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-Performing Loans/Loans3                                               |   |                                  | 0.20    | % |   |   | 0.34 | % |   |   | 1.00 | % |   |   | 0.16 | % |   |   | 0.54 | % |
| Allowance for Loan Losses/Loans3                                          |   |                                  | 1.40    | % |   |   | 1.45 | % |   |   | 1.38 | % |   |   | 1.39 | % |   |   | 1.54 | % |
| Allowance for Loan Losses / Non-Performing                            Loans    |   |                                  | 709.1   | % |   |   | 571.9 | % |   |   | 137.5 | % |   |   | 886.3 | % |   |   | 192.5 | % |

 

**____________________________________________________________________________________________**

 

| 1 Efficiency ratio for 2007 excludes insurance                            reimbursements - See Management's Discussion and Analysis |
|------------------------------------------------------------------------------------------------------------------------------------------|
| 2 Ratios are calculated using Parke Bank's                            Capital                                                       |
| 3 Total loans before allowance for loan                            losses                                                           |

 

 

3

 

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**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, Bank Owned Life            Insurance 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 $5.9 million, or $1.63 per diluted            share, $4.6 million, or $1.27 per diluted share, $3.5 million, or $1.00 per diluted            share, for 2007, 2006 and 2005, respectively. Pre-tax earnings amounted to $9.6 million            for 2007, $7.5 million for 2006 and $5.8 million for 2005.

 

4

 

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Total assets of $460.8 million at December 31, 2007 increased by $100.8            million, or 28.0%, reflecting continued strong loan growth for the Company. Total loans            amounted to $408.4 million at year end 2007 resulting in an increase of $97.8 million,            or 31.5%, and investment securities grew by $5.3 million, or 19.6% during the past            year. This strong asset growth was funded primarily by deposit growth of $89.6 million,            or 30.9% coupled with an increase of $5.6 million, or 15.7%, in borrowings during 2007.            The Company continues to expand its balance sheet primarily through the generation of            loan growth through its effective business development of new and existing business            relationships and the addition of the Philadelphia branch in the previous year. Total            capital at December 31, 2007 amounted to $36.4 million and increased $5.7 million, or            18.6%, during the past year.

 

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 as well as statistical information included in            the Proxy Statement.

 

5

 

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***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.

 

|                                                                                                 |   | For the years ended                        |
|------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|
|                                                                                                 |   | December 31, 2007                          |   | December 31, 2006 |   | December 31, 2005 |
|                                                                                                 |   | Average                                    |   |   | Income/ |   |   | Yield/ |   | Average |   |   | Income/ |   |   | Yield/ |   | Average |   |   | Income/ |   |   | Yield/ |
|                                                                                                 |   | Balance                                    |   |   | Expense |   |   | Rate |   | Balance |   |   | Expense |   |   | Rate |   | Balance |   |   | Expense |   |   | Rate |
| Assets                                                                                               |   | (Amounts in thousands, except percentages) |
| Loans (net of deferred costs/fees)1                                                             |   | $                                          | 365,884 |   |   | $ | 31,232 |   |   | 8.54 | % |   | $ | 286,691 |   |   | $ | 23,993 |   |   | 8.37 | % |   | $ | 219,217 |   |   | $ | 16,108 |   |   | 7.35 | % |
| Investment securities                                                                                |   |                                       | 31,267 |   |   |   | 1,708 |   |   | 5.46 | % |   |   | 26,774 |   |   |   | 1,341 |   |   | 5.01 | % |   |   | 24,276 |   |   |   | 1,159 |   |   | 4.77 | % |
| Federal funds sold and cash equivalents                                                              |   |                                       | 4,788 |   |   |   | 246 |   |   | 5.15 | % |   |   | 2,856 |   |   |   | 142 |   |   | 4.97 | % |   |   | 2,107 |   |   |   | 69 |   |   | 3.27 | % |
| Total interest-earning assets                                                                        |   |                                       | 401,939 |   |   | $ | 33,186 |   |   | 8.26 | % |   |   | 316,321 |   |   | $ | 25,476 |   |   | 8.05 | % |   |   | 245,600 |   |   | $ | 17,336 |   |   | 7.06 | % |
|                                                                                                 |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan loss                                                                              |   |                                       | (5,098 | ) |   |   |   |   |   |   |   |   |   | (4,051 | ) |   |   |   |   |   |   |   |   |   | (3,009 | ) |   |   |   |   |   |   |   |
| Other assets                                                                                         |   |                                       | 18,201 |   |   |   |   |   |   |   |   |   |   | 16,267 |   |   |   |   |   |   |   |   |   |   | 15,322 |   |   |   |   |   |   |   |   |
| Total assets                                                                                         |   | $                                          | 415,042 |   |   |   |   |   |   |   |   |   | $ | 328,537 |   |   |   |   |   |   |   |   |   | $ | 257,913 |   |   |   |   |   |   |   |   |
|                                                                                                 |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and Shareholders' Equity                                                                 |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOWs                                                                                                 |   | $                                          | 8,685 |   |   | $ | 165 |   |   | 1.90 | % |   | $ | 9,911 |   |   | $ | 153 |   |   | 1.54 | % |   | $ | 11,023 |   |   | $ | 150 |   |   | 1.36 | % |
| Money markets                                                                                        |   |                                       | 26,080 |   |   |   | 1,136 |   |   | 4.36 | % |   |   | 16,657 |   |   |   | 599 |   |   | 3.59 | % |   |   | 12,706 |   |   |   | 266 |   |   | 3.59 | % |
| Savings                                                                                              |   |                                       | 27,774 |   |   |   | 1,038 |   |   | 3.74 | % |   |   | 28,991 |   |   |   | 1,012 |   |   | 3.49 | % |   |   | 29,200 |   |   |   | 797 |   |   | 2.73 | % |
| Time deposits                                                                                        |   |                                       | 155,284 |   |   |   | 7,909 |   |   | 5.09 | % |   |   | 111,666 |   |   |   | 5,018 |   |   | 4.49 | % |   |   | 77,802 |   |   |   | 2,572 |   |   | 3.31 | % |
| Brokered CDs                                                                                         |   |                                       | 100,097 |   |   |   | 5,172 |   |   | 5.17 | % |   |   | 76,374 |   |   |   | 3,450 |   |   | 4.52 | % |   |   | 60,785 |   |   |   | 2,027 |   |   | 3.33 | % |
| Total interest-bearing deposits                                                                      |   |                                       | 317,920 |   |   |   | 15,420 |   |   | 4.85 | % |   |   | 243,599 |   |   |   | 10,232 |   |   | 4.20 | % |   |   | 191,516 |   |   |   | 5,812 |   |   | 3.03 | % |
| Borrowings                                                                                           |   |                                       | 39,502 |   |   |   | 2,175 |   |   | 5.51 | % |   |   | 34,321 |   |   |   | 1,791 |   |   | 5.22 | % |   |   | 22,376 |   |   |   | 872 |   |   | 3.90 | % |
| Total interest-bearing liabilities                                                                   |   |                                       | 357,422 |   |   | $ | 17,595 |   |   | 4.92 | % |   |   | 277,920 |   |   | $ | 12,023 |   |   | 4.33 | % |   |   | 213,892 |   |   | $ | 6,684 |   |   | 3.12 | % |
|                                                                                                 |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest bearing demand deposits                                                                 |   |                                       | 19,591 |   |   |   |   |   |   |   |   |   |   | 18,174 |   |   |   |   |   |   |   |   |   |   | 16,946 |   |   |   |   |   |   |   |   |
| Other liabilities                                                                                    |   |                                       | 3,957 |   |   |   |   |   |   |   |   |   |   | 2,957 |   |   |   |   |   |   |   |   |   |   | 1,948 |   |   |   |   |   |   |   |   |
| Shareholder's equity                                                                                 |   |                                       | 34,072 |   |   |   |   |   |   |   |   |   |   | 29,486 |   |   |   |   |   |   |   |   |   |   | 25,127 |   |   |   |   |   |   |   |   |
| Total liabilities and shareholders' equity                                                           |   | $                                          | 415,042 |   |   |   |   |   |   |   |   |   | $ | 328,537 |   |   |   |   |   |   |   |   |   | $ | 257,913 |   |   |   |   |   |   |   |   |
|                                                                                                 |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                                                                  |   |                                       |   |   |   | $ | 15,591 |   |   |   |   |   |   |   |   |   | $ | 13,453 |   |   |   |   |   |   |   |   |   | $ | 10,652 |   |   |   |   |
|                                                                                                 |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate spread (average yield less average                            rate)                    |   |                                       |   |   |   |   |   |   |   | 3.34 | % |   |   |   |   |   |   |   |   |   | 3.72 | % |   |   |   |   |   |   |   |   |   | 3.94 | % |
|                                                                                                 |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest margin (net interest income/average                            interest-earning assets) |   |                                       |   |   |   |   |   |   |   | 3.88 | % |   |   |   |   |   |   |   |   |   | 4.25 | % |   |   |   |   |   |   |   |   |   | 4.34 | % |
|                                                                                                 |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

 

1Non-accrual loans are included in the calculation of average            balances.

 

6

 

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***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.

 

|                               |   | Years ended December 31,   |   |
|------------------------------------|--------|----------------------------|--------|
|                               |   | 2007 vs. 2006              |   | 2006 vs. 2005 |   |
|                               |   |                       |   |   |   |   |   |   |   |   |   |   |   |
|                               |   | Variance due to changes in |   | Variance due to changes in |   |
|                               |   |                       |   |   |   | Net |   |   |   |   |   | Net |   |
|                               |   | Average                    |   | Average |   | Increase/ |   | Average |   | Average |   | Increase/ |   |
|                               |   | Volume                     |   | Rate |   | (Decrease) |   | Volume |   | Rate |   | (Decrease) |   |
|                               |   | (Amounts in thousands)     |   |
| Interest Income:                   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans (net of deferred costs/fees) |   | $                          | 6,627  |   | $ | 612 |   | $ | 7,239 |   | $ | 4,958 |   | $ | 2,927 |   | $ | 7,885 |   |
| Investment securities              |   |                       | 225    |   |   | 142 |   |   | 367 |   |   | 119 |   |   | 63 |   |   | 182 |   |
| Federal funds sold                 |   |                       | 96     |   |   | 8 |   |   | 104 |   |   | 25 |   |   | 48 |   |   | 73 |   |
|                               |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest income              |   |                       | 6,948  |   |   | 762 |   |   | 7,710 |   |   | 5,102 |   |   | 3,038 |   |   | 8,140 |   |
|                               |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Expense:                  |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                           |   |                       | 3,309  |   |   | 1,879 |   |   | 5,188 |   |   | 1,581 |   |   | 2,839 |   |   | 4,420 |   |
| Borrowed funds                     |   |                       | 270    |   |   | 114 |   |   | 384 |   |   | 465 |   |   | 454 |   |   | 919 |   |
|                               |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest expense             |   |                       | 3,579  |   |   | 1,993 |   |   | 5,572 |   |   | 2,046 |   |   | 3,293 |   |   | 5,339 |   |
|                               |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                |   | $                          | 3,369  |   | $ | (1,231 | ) | $ | 2,138 |   | $ | 3,056 |   | $ | (255 | ) | $ | 2,801 |   |

 

 

**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.

 

**Operating Results for the Years Ended December 31, 2007, 2006 and            2005**

 

***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.

 

7

 

----

Net interest income amounted to $15.6 million for 2007, which            represented an increase of $2.1 million, or 15.9%, above the level of $13.5 million in            2006. This was driven mainly by the growth in commercial loans and partially offset by            lower yields associated with the 100 basis point decline in the prime rate experienced            in the last four months of the year in response to the Federal Reserve lowering the fed            funds rate and the generally more costly time deposits. The 2006 results reflected an            increase of $2.8 million, or 26.3%, above the level of $10.7 million in 2005 due            principally to the growth in average interest-earning assets, primarily            loans.

 

Interest income in 2007 of $33.2 million was $7.7 million, or 30.3%,            above the level of 2006 due to an increase in average interest-earning assets of $85.6            million, or 27.1% coupled with a 21 basis point increase on the yield on those assets.            This increase in interest-earning assets, which is comprised primarily of loans,            occurred despite the 100 basis point decline in the prime rate during the latter part            of 2007 as noted above. Interest income in 2006 of $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 and 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 in both years, increased by $79.2 million, or 27.6%,            and by $67.4 million, or 30.8%, during 2007 and 2006, respectively.

 

Interest expense in 2007 amounted to $17.6 million resulting in an            increase of $5.6 million, or 46.4%, above the prior year’s level due to an            increase in average interest-bearing liabilities of $79.5 million, or 28.6%, and an            increase in the rate paid on those interest-bearing liabilities of 59 basis points from            the prior year. Interest rates paid for all retail and brokered deposits increased year            over year as rates paid on short term funding remained relatively high compared to the            movement of market interest rates. Interest expense of $12.0 million in 2006 increased            by $5.3 million, or 79.9%, resulting from increased average interest-bearing            liabilities year-over-year of $64.0 million, or 29.9%, 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 $317.9 million in 2007 and increased by $74.3 million, or 30.5%,            from the level of $243.6 million in 2006 which increased by $52.1 million, or 27.2%,            from the average in 2005.

 

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 3.88% for 2007 as            compared to 4.25% for 2006 and 4.34% for 2005. During 2007, the yield on            interest-earning assets increased 21 basis points to 8.26%, while the rates paid for            interest-bearing liabilities increased by 59 basis points to 4.92%. During 2006, the            yield on average interest-earning assets increased 99 basis points to 8.05%, while the            cost of interest-bearing liabilities increased by 121 basis points to 4.33%.

 

***Provision for Loan            Losses*****.**The provision for            loan losses amounted to $1.2 million, $940 thousand and $1.2 million for 2007, 2006 and            2005, respectively. The provision was directly attributable to the growth in loans            during all three years and management’s assessment of required allowances within            the portfolio. The level of nonaccrual loans amounted to $805 thousand at December 31,            2007; $789 thousand at December 31, 2006 and $1.9 million at December 31,            2005.

 

***Noninterest Income*****.**Noninterest incomeis 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 $1.5 million            in 2007 versus $857 thousand in 2006 and $896 thousand in 2005.

 

8

 

----

Service charges on deposit accounts, which amounted to $160 thousand in            2007, increased by $14 thousand, or 11.0%, from the previous year due to an increase in            the number of customers and related transaction accounts. Service charges of $146            thousand in 2006, declined $39 thousand, or 21.01%, from $185 thousand in 2005. The            decline in 2006 was primarily attributed to the loss of a large commercial lockbox            customer.

 

Loan fees and BOLI income of $448 thousand in 2007 declined from $588            thousand and $597 thousand in 2006 and 2005, respectively. Loan fees 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. These loan fees, which are variable            in nature and are dependent upon the borrower, amounted to $265 thousand, $416 thousand            and $411 thousand in 2007, 2006 and 2005, respectively. In addition, BOLI income of            $183 thousand in 2007 increased modestly from $172 thousand in 2006 after experiencing            a slight decline from $186 thousand in 2005 due to the surrender of a life insurance            policy.

 

Other miscellaneous fee income, which includes ATM fees, debit card            fees, early CD withdrawal penalties, rental income and other miscellaneous income,            amounted to $693 thousand in 2007 and $123 thousand in both 2006 and 2005. The increase            of $570 thousand during 2007 from the previous year primarily represented insurance            reimbursements associated with repossessed asset expense from previous            years.

 

There was a gain on the sale of other real estate owned during 2007 that            amounted to $205 thousand. There was a loss on the sale of securities of $15 thousand            in 2007, no gains or losses on the sale of securities during 2006, while the sale of            securities amounted to a loss of $9 thousand in 2005.

 

***Noninterest Expense***. Noninterest            expense, which amounted to $6.3 million, reflected an increase of $498 thousand, or            8.5%, above the level of $5.8 million in 2006. The year over year change was mainly            comprised of increases in compensation and benefits, occupancy, equipment costs and            other operating expenses, which were primarily related to the continued growth of the            Company. Noninterest expense for 2005 amounted to $4.5 million.

 

Compensation and benefits expense for 2007 of $3.1 million increased            $345 thousand, or 12.4% during 2007 and $687 thousand, or 32.9%, during 2006 due to            routine salary increases, higher benefits expense and increased staff. The staff            increases were primarily associated with the opening of a new branch in center city            Philadelphia in the second half of 2006 and a new loan production office in Havertown,            Pennsylvania in the fall of 2007. Occupancy, equipment and data processing expense            amounted to $1.1 million in 2007 versus $1.0 million in 2006 and $858 thousand in 2005.            The resulting $104 thousand increase year over year was primarily related to            incremental occupancy and equipment costs associated with the new Philadelphia branch            facility and Havertown loan production office and increased costs for data processing            related to pricing increases and higher activity levels for deposit and loan            operations.

 

Marketing and business development amounted to $270 thousand, $260            thousand and $287 thousand for 2007, 2006 and 2005, respectively.

 

9

 

----

Professional services amounted to $682 thousand, $681 thousand and $738            thousand in 2007, 2006 and 2005, respectively. The increase in professional expenses            associated with Sarbanes Oxley compliance for fiscal year 2007 amounted to $35,000 and            was entirely offset by lower legal expenses during the past year. The decline during            2006 was mainly due to the absence of the holding company reorganization expenses of            Parke Bancorp, Inc., which occurred in 2005.

 

Other operating expense of $1.1 million in 2007 increased $35 thousand            above the level of $1.1 million recorded in 2006. The increase was associated with            higher Federal Deposit Insurance Corporation (FDIC) expense of $70 thousand attributed            to an increase in assessment rates for member banks in July of 2007 as well as            increases in directors’ fees and travel and entertainment costs. These expenses            were partially offset by the lower level of litigation settlement costs in 2007            relative to the previous year. Other operating expenses in 2006 increased by $524            thousand from the 2005 level due to the litigation settlement costs associated with            loan participations with other banks in previous years that were subsequently impaired            and a more normalized level of loan servicing costs in 2006 relative to 2005.            Additionally, increases in shareholder expense, office supplies and travel and            entertainment related to the Company’s expansion and growth contributed to the            increased expense level in 2006 above the 2005 level.

 

***Income Taxes***. Income tax expense            amounted to $3.7 million, $2.9 million and $2.3 million for 2007, 2006 and 2005,            respectively, resulting in effective tax rates of 39.0%, 38.7% and 40.0% for the            respective years.

 

**Financial Condition at December 31, 2007 and December 31,            2006**

 

Total assets at December 31, 2007 amounted to $460.1 million compared to            $360.0 million at December 31, 2006, resulting in an increase of $100.8 million, or            28.0%. This increase was driven primarily by loan growth as the Company continued to            expand through business development of new and existing business relationships and the            added benefit of the Philadelphia retail branch.

 

Total loans at December 31, 2007 were $408.4 million and represented an            increase of $97.8 million, or 31.5% form the level of $310.6 million at December 31,            2006. Growth occurred in all loan categories due to strong business development and the            addition of the Philadelphia branch with commercial loan growth of $82.5 million, or            29.3%, representing the majority of the loan growth for 2007. Commercial loans, which            are comprised mainly of commercial real estate and construction loans totaled $364.3            million at December 31, 2007. Investment securities amounted to $32.2 million at            December 31, 2007 compared to $27.0 million at December 31, 2006. The allowance for            loan losses amounted to $5.7 million, or 1.40% of total gross loans at December 31,            2007 and increased by $1.2 million from the level of $4.5 million, or 1.45%, of total            gross loans at December 31, 2006 primarily attributable to the loan growth during            2007.

 

At December 31, 2007, total deposits amounted to $379.5 million            resulting in deposit growth of $89.6 million, or 30.9% from the December 31, 2006 level            of $289.9 million. Increases in time deposits of $69.3 million and money market            accounts of $11.4 million accounted for the majority of the change from year-end 2006            to year-end 2007.

 

Borrowings, which included Federal Home Loan Bank Advances, repurchase            agreements and subordinated debentures amounted to $40.2 million at December 31, 2007,            increased by $5.5 million from the level at December 31, 2006 due to an increase in            repurchase agreements of $5.0 million and the new issuance of Trust Preferred            securities, which were partially offset by a decline of $5.8 million in short term            Federal Home Loan Bank Advances.

 

10

 

----

Shareholders’ equity was $36.4 million at December 31, 2007 an            increase of $5.7 million, or 18.6%, from $30.7 million at December 31, 2006. Earnings            of $5.9 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 and pension liability adjustments included in other comprehensive            income.

 

**Loan            Quality**

 

The Company attempts to manage 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 an            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 $805 thousand in non-accruing loans at            December 31, 2007, which amounted to a modest increase from the level of $789 thousand            at December 31, 2006. The Company’s Real-Estate Owned (REO), which is included in            Other Assets on the Company’s Consolidated Balance Sheets, declined from $1.2            million at December 31, 2006 to zero at December 31, 2007. This reduction was entirely            attributed to the sale of the REO property in the second quarter of 2007 that resulted            in a pre-tax gain of $205 thousand. Nonperforming loans, as expressed as a percentage            of total loans, declined to 0.2% at December 31, 2007 compared to 0.3% at December 31,            2006.

 

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 $1.2 million,            $940 thousand, and $1.2 million for 2007, 2006 and 2005, respectively. Net loan            charge-offs amounted to a recovery of $34 thousand in 2007, charge-offs of $3 thousand            in 2006 and reflected a decline from charge-offs of $227 thousand in 2005.

 

At December 31, 2007, the allowance for loan losses was $5.7 million as            compared to $4.5 million at December 31, 2006 and $3.6 million at December 31, 2005,            which represents increases of $1.2 million and $937 thousand during 2007 and 2006,            respectively. The growth in the allowance was primarily driven by the growth in the            loan portfolio.

 

 

11

 

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The following table summarizes the allowance activities:

 

|                                                                             |   | Years ended December 31,                   |    |
|----------------------------------------------------------------------------------|--------|--------------------------------------------|---------|
|                                                                             |   | 2007                                       |    | 2006 |   | 2005 |   |
|                                                                             |   | (Amounts in thousands, except percentages) |    |
| Allowance for loan losses, beginning of year                                     |   | $                                          | 4,511   |   | $ | 3,574 |   | $ | 2,621 |   |
| Loans charged off                                                                |   |                                       | (200    | ) |   | (3 | ) |   | (227 | ) |
| Recoveries                                                                       |   |                                       | 234     |   |   | — |   |   | — |   |
| Provision for loan losses                                                        |   |                                       | 1,161   |   |   | 940 |   |   | 1,180 |   |
| Allowance for loan losses, end of year                                           |   | $                                          | 5,706   |   | $ | 4,511 |   | $ | 3,574 |   |
|                                                                             |   |                                       |    |   |   |   |   |   |   |   |
| Loans (net of deferred costs/fees) period-end                            balance |   | $                                          | 408,389 |   | $ | 310,555 |   | $ | 259,035 |   |
|                                                                             |   |                                       |    |   |   |   |   |   |   |   |
| Allowance as percentage of period-end loan                            balance    |   |                                       | 1.40    | % |   | 1.45 | % |   | 1.38 | % |

 

 

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 balance sheet 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.

 

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 balance sheet, control interest rate exposure,            and evaluate our pricing strategies. The asset mix of the balance sheet 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.

 

12

 

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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, 2007 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, which are based on prevailing            prepayment assumptions and expected maturities and recent retention experience of core            deposits. 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, 2007, our interest sensitive liabilities exceeded interest sensitive            assets within a one year period by $21.6 million, or 4.7 %, of total assets.

 

|                                                                                    |   | As of December 31, 2007                    |    |
|-----------------------------------------------------------------------------------------|--------|--------------------------------------------|---------|
|                                                                                    |   |                                       |    |   | Over 3 |   |   | Over 1 |   |   | Over 3 |   |   | Over 5 |   |   |   |   |
|                                                                                    |   |                                       |    |   | Months |   |   | Year |   |   | Years |   |   | Years |   |   |   |   |
|                                                                                    |   | 3 Months                                   |    |   | Through |   |   | Through 3 |   |   | Through 5 |   |   | Through |   |   |   |   |
|                                                                                    |   | of Less                                    |    |   | 12 Months |   |   | Years |   |   | Years |   |   | 30 Years |   |   | Total |   |
|                                                                                    |   | (Amounts in thousands, except percentages) |    |
| Interest-earning assets:                                                                |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                                                                                   |   | $                                          | 208,588 |   |   | $ | 29,744 |   |   | $ | 42,394 |   |   | $ | 117,451 |   |   | $ | 10,212 |   |   | $ | 408,389 |   |
| Investment securities                                                                   |   |                                       | 500     |   |   |   | 1,081 |   |   |   | 4,160 |   |   |   | 5,404 |   |   |   | 21,093 |   |   |   | 32,238 |   |
| Federal funds sold and cash equivalents                                                 |   |                                       | 4,554   |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 4,554 |   |
|                                                                                    |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest-earning assets                                                           |   | $                                          | 213,642 |   |   | $ | 30,825 |   |   | $ | 46,554 |   |   | $ | 122,855 |   |   | $ | 31,305 |   |   | $ | 445,181 |   |
|                                                                                    |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                                           |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Regular savings deposits                                                                |   | $                                          | 4,453   |   |   | $ | 4,146 |   |   | $ | 5,528 |   |   | $ | 11,056 |   |   | $ | 5,528 |   |   | $ | 30,711 |   |
| NOW and money market deposits                                                           |   |                                       | 7,513   |   |   |   | 8,990 |   |   |   | 11,988 |   |   |   | 14,326 |   |   |   | 2,339 |   |   |   | 45,156 |   |
| Retail time deposits                                                                    |   |                                       | 32,133  |   |   |   | 119,817 |   |   |   | 3,744 |   |   |   | 3,039 |   |   |   | — |   |   |   | 158,733 |   |
| Brokered time deposits                                                                  |   |                                       | 34,429  |   |   |   | 51,191 |   |   |   | 30,979 |   |   |   | 10,412 |   |   |   | — |   |   |   | 127,011 |   |
| Borrowed funds                                                                          |   |                                       | 33      |   |   |   | 3,349 |   |   |   | 10,638 |   |   |   | 12,357 |   |   |   | 13,945 |   |   |   | 40,322 |   |
|                                                                                    |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest-bearing liabilities:                                                     |   | $                                          | 78,561  |   |   | $ | 187,493 |   |   | $ | 62,877 |   |   | $ | 51,190 |   |   | $ | 21,812 |   |   | $ | 401,933 |   |
|                                                                                    |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate sensitive gap                                                             |   | $                                          | 135,081 |   |   | $ | (156,668 | ) |   | $ | (16,323 | ) |   | $ | 71,665 |   |   | $ | 9,493 |   |   | $ | 43,248 |   |
|                                                                                    |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative interest rate gap                                                            |   | $                                          | 135,081 |   |   | $ | (21,587 | ) |   | $ | (37,910 | ) |   | $ | 33,755 |   |   | $ | 43,248 |   |   | $ | — |   |
|                                                                                    |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio of rate-sensitive assets to rate-sensitive                            liabilities |   |                                       | 271.94  | % |   |   | 16.44 | % |   |   | 74.04 | % |   |   | 240.00 | % |   |   | 143.52 | % |   |   | 110.76 | % |

 

 

13

 

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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 107.6%, 107.1% and 111.6% at December 31, 2007, December 31, 2006 and            December 31, 2005, respectively. Funds received from new and existing depositors            provided a large source of liquidity during 2007 and 2006. 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.

 

Brokered deposits are a more volatile source of funding than core            deposits and do not increase the deposit franchise of the Bank. In a rising rate            environment, the Bank may be unwilling or unable to pay a competitive rate. To the            extent that such deposits do not remain with the Bank, they may need to be replaced            with borrowings which could increase the Bank’s cost of funds and negatively            impact its interest rate spread, financial condition and results of operation. To            mitigate the potential negative impact associated with brokered deposits, the Bank            joined Promontory Interfinancial Network during 2007 to secure an additional            alternative funding source. Promontory, which was founded in part by a former            Controller of the Currency and a former Federal Reserve Vice Chairman, provides the            Bank an additional source of external funds through their weekly CDARS settlement            process. The rates paid are generally less expensive than brokered deposits and can be            obtained within one day versus the normal seven to ten days for brokered deposits. At            December 31, 2007, the Bank’s CDARS deposits included within the brokered deposit            total amounted to $38.1 million. 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, 2007, the Bank maintained lines of            credit with the FHLB totaling $37.4 million.

 

As of December 31, 2007, the Bank’s investment securities            portfolio included $17.5 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.

 

14

 

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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, 2007, 2006 and 2005,            commitments to extend credit amounted to approximately $129.7 million, $117.3 million            and $101.8 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, 2007, 2006 and 2005, standby letters of            credit with customers were $7.3 million, $7.2 million and $4.5 million,            respectively.

 

Loan commitments and standby letters of credit are issued in the            ordinary course of business to meet customer needs. Commitments to fund fixed-rate            loans were immaterial at December 31, 2007. 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.

 

The following table sets forth information regarding the Bank’s            contractual obligations and commitments as of December 31, 2007.

 

|                          |   | Payments Due by Period                   |    |
|-------------------------------|--------|------------------------------------------|---------|
|                          |   | (Amounts in thousands)                   |    |
|                          |   | Less than                                |    |   |   |   |   | More than |   |   |   |
|                          |   | 1 year                                   |    | 1-3 years |   | 4-5 years |   | 5 years |   | Total |   |
|                          |   |                                     |    |   |   |   |   |   |   |   |   |
| Retail time deposits          |   | $                                        | 151,950 |   | $ | 5,039 |   | $ | 1,744 |   | $ | — |   | $ | 158,733 |   |
| Brokered time deposits        |   |                                     | 87,230  |   |   | 37,020 |   |   | 2,761 |   |   | — |   |   | 127,011 |   |
| Borrowed funds                |   |                                     | 3,250   |   |   | 12,000 |   |   | 5,400 |   |   | 19,672 |   |   | 40,322 |   |
| Operating lease obligations   |   |                                     | 214     |   |   | 252 |   |   | 221 |   |   | 231 |   |   | 918 |   |
| Total contractual obligations |   | $                                        | 242,644 |   | $ | 54,311 |   | $ | 10,126 |   | $ | 19,903 |   | $ | 326,984 |   |
|                          |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                          |   | Amount of Commitments Expiring by Period |    |
|                          |   | Less than                                |    |   |   |   |   | More than |   |   |   |
|                          |   | 1 year                                   |    | 1-3 years |   | 4-5 years |   | 5 years |   | Total |   |
|                          |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loan commitments              |   | $                                        | 38,879  |   | $ | — |   | $ | — |   | $ | — |   | $ | 38,879 |   |
| Lines of credit               |   |                                     | 61,876  |   |   | 10,573 |   |   | 862 |   |   | 17,490 |   |   | 90,801 |   |
| Total commitments             |   | $                                        | 100,755 |   | $ | 10,573 |   | $ | 862 |   | $ | 17,490 |   | $ | 129,680 |   |

 

 

15

 

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**Impact of Inflation and Changing Prices**

 

The consolidated financial statements and notes presented elsewhere in            this Proxy Statement 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.

 

**STOCK PERFORMANCE GRAPH**

 

Set forth below is a performance graph for the Common Stock for the most            recent five fiscal years ended December 31. 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.

 

16

----

 

 

----

 

 

 

|                 | **Dec-03** | **Dec-04** | **Dec-05** | **Dec-06** | **Dec-07** |
|----------------------|------------|------------|------------|------------|------------|
| **Parke Bancorp**    | -7.1%      | 24.8%      | 32.8%      | 39.2%      | 56.3%      |
| **NASDAQ Composite** | 2.3%       | 11.6%      | 14.0%      | 25.8%      | 39.2%      |
| **NASDAQ Bank**      | 1.6%       | 15.4%      | 13.2%      | 28.8%      | 3.2%       |

 

**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 Stock 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 bid 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 10%            stock dividend paid in April 2007.

             

The Stock Price Performance Graph shall not be deemed incorported 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.

 

17

 

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| **2007**    |   | **High** |   | **Low** |   |
|-------------|--------|----------|--------|---------|--------|
|        |   |     |   |    |   |   |   |
| 1st Quarter |   | $        | 16.72  |    | $      | 14.69 |   |
| 2nd Quarter |   | $        | 17.75  |    | $      | 15.65 |   |
| 3rd Quarter |   | $        | 17.85  |    | $      | 15.77 |   |
| 4th Quarter |   | $        | 17.80  |    | $      | 14.20 |   |
|        |   |     |   |    |   |   |   |
| **2006**    |   | **High** |   | **Low** |   |
|        |   |     |   |    |   |   |   |
| 1st Quarter |   | $        | 21.91  |    | $      | 14.55 |   |
| 2nd Quarter |   | $        | 22.71  |    | $      | 17.77 |   |
| 3rd Quarter |   | $        | 18.93  |    | $      | 15.73 |   |
| 4th Quarter |   | $        | 17.81  |    | $      | 15.08 |   |

 

 

The number of stockholders of record of common stock as of            March 14, 2008, was approximately 385. This does not reflect the number of persons            or entities who held stock in nominee or “street” name through various            brokerage firms. At March 14, 2008, there were 3,231,734 shares of our common            stock outstanding. The Company paid a one-time special cash dividend of $0.18/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 out of funds legally            available therefore. 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’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).

 

18

 

----

**MANAGEMENT’S REPORT ON INTERNAL CONTROL**

**OVER FINANCIAL REPORTING**

 

Management is responsible for establishing and maintaining adequate            internal control over financial reporting, as such term is defined in Exchange Act Rule            13a- 15(f). The Company’s internal control over financial reporting includes            those policies and procedures that (i) pertain to the maintenance of records that, in            reasonable detail, accurately and fairly reflect the transactions and dispositions of            the assets of the Company; (ii) provide reasonable assurance that transactions are            recorded as necessary to permit preparation of financial statements in accordance with            generally accepted accounting principles, and that receipts and expenditures of the            Company are being made only in accordance with authorization of management and            directors of the Company; and (iii) provide reasonable assurance regarding prevention            or timely detection of unauthorized acquisition, use, or disposition of the            Company’s assets that could have a material effect on the financial            statements.

 

Internal control over financial reporting is designed to provide            reasonable assurance regarding the reliability of financial reporting and the            preparation of financial statements prepared for external purposes in accordance with            generally accepted accounting principles. Because of inherent limitations, internal            control over financial reporting may not prevent or detect misstatements. Also,            projections of any evaluation of effectiveness to future periods are subject to the            risk that controls may become inadequate because of changes in conditions, or that the            degree of compliance with the policies and procedures may deteriorate.

 

Under supervision and with the participation of management, including            our principal executive officer and principal financial officer, we conducted an            evaluation of the effectiveness of our internal control over financial reporting based            on the framework in*Internal Control- Integrated            Framework*issued by the Committee of Sponsoring Organizations            of the Treadway Commission. Based on our evaluation under the framework in*Internal Control- Integrated Framework,*management concluded that our internal control over financial reporting            was effective as of December 31, 2007.

 

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

 

 

| /s/Vito S. Pantilione                                     |   | /s/Robert A. Kuehl                                                                            |
|-----------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------|
| Vito S. Pantilione

President and Chief Executive Officer |   | Robert A. Kuehl

Senior Vice President and Chief Financial                            Officer |

 

 

19

 

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**McGladrey & Pullen**

Certified Public Accountants

 

 

 

 

 

**Parke Bancorp, Inc. and Subsidiaries**

 

 

Consolidated Financial Report

December 31, 2007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    McGladrey & Pullen, LLP is a member firm of RSM            International –

    an affiliation of separate and independent legal            entities.

 

----

**Parke Bancorp, Inc. and Subsidiaries**

 

 

**Contents**

 

|                                                                               |   |
|------------------------------------------------------------------------------------|--------|
| Report of Independent                            Registered Public Accounting Firm | 1      |
|                                                                               |   |
| Financial                            Statements                                    |   |
|                                                                               |   |
| Consolidated Balance                            Sheets                             | 2      |
| Consolidated Statements of                            Income                       | 4      |
| Consolidated Statements of                            Shareholders’ Equity   | 5      |
| Consolidated Statements of                            Cash Flows                   | 6      |
| Notes to Consolidated                            Financial Statements              | 7      |

 

 

 

----

**McGladrey & Pullen**

Certified Public Accountants

 

***Report of            Independent Registered Public Accounting Firm***

 

 

To the            Board of Directors and Shareholders

Parke            Bancorp, Inc.

 

We            have audited the consolidated balance sheets of Parke Bancorp, Inc. and Subsidiaries            (the “Company”) as of December 31, 2007 and 2006 and the related            consolidated statements of income, shareholders’ equity, and cash flows for each            of the three years in the period ended December 31, 2007. 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, 2007 and 2006, and the results of their operations and their cash            flows for each of the three years in the period ended December 31, 2007, in conformity            with U.S. generally accepted accounting principles.

 

We            were not engaged to examine management’s assertion about the effectiveness of            Parke Bancorp, Inc. and Subsidiaries’ internal control over financial reporting            as of December 31, 2007 included in the accompanying Management’s Report on            Internal Control Over Financial Reporting and, accordingly we do not express an opinion            thereon.

 

As            discussed in Note 1 to the consolidated financial statements, the Company adopted            Statement of Financial 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            24, 2008

 

    McGladrey & Pullen, LLP is a member firm of RSM            International –

    an affiliation of separate and independent legal            entities.

1

 

----

**Parke Bancorp, Inc. and Subsidiaries**

 

**Consolidated Balance Sheets**

**December 31, 2007 and 2006**

**(Amounts in thousands, except share data)**

 

 

|                                                                                 |   |   | **2007**    |   |   | 2006    |   |
|--------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|---------|--------|
|                                                                                 |   |   |        |   |   |    |   |
| **Assets**                                                                           |   |   |        |   |   |    |   |
|                                                                                 |   |   |        |   |   |    |   |
| Cash and due from banks                                                              |   | **$**  | **4,624**   |   | $      | 6,184   |   |
| Federal funds sold and cash equivalents                                              |   |   | **4,554**   |   |   | 5,077   |   |
| **Cash and cash equivalents**                                                        |   |   | **9,178**   |   |   | 11,261  |   |
|                                                                                 |   |   |        |   |   |    |   |
| Investment securities available for sale, at market                            value |   |   | **29,782**  |   |   | 24,530  |   |
| Investment securities held to maturity, at amortized                            cost |   |   |        |   |   |    |   |
| (market value 2007 - $2,410; 2006 - $2,426)                                          |   |   | **2,456**   |   |   | 2,431   |   |
| **Total investment securities**                                                      |   |   | **32,238**  |   |   | 26,961  |   |
|                                                                                 |   |   |        |   |   |    |   |
| Restricted stock, at cost                                                            |   |   | **1,473**   |   |   | 1,493   |   |
|                                                                                 |   |   |        |   |   |    |   |
| Loans                                                                                |   |   | **408,389** |   |   | 310,555 |   |
| Less: allowance for loan losses                                                      |   |   | **(5,706**  | **)**  |   | (4,511  | )      |
| **Total net loans**                                                                  |   |   | **402,683** |   |   | 306,044 |   |
|                                                                                 |   |   |        |   |   |    |   |
| Bank owned life insurance                                                            |   |   | **4,815**   |   |   | 4,632   |   |
| Bank premises and equipment, net                                                     |   |   | **3,217**   |   |   | 3,432   |   |
| Accrued interest receivable                                                          |   |   | **2,633**   |   |   | 2,095   |   |
| Other assets                                                                         |   |   | **4,558**   |   |   | 4,079   |   |
|                                                                                 |   |   |        |   |   |    |   |
|                                                                                 |   | **$**  | **460,795** |   | $      | 359,997 |   |

 

 

(continued)

 

2

 

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**Parke Bancorp, Inc. and Subsidiaries**

 

**Consolidated Balance Sheets (Continued)**

**December 31, 2007 and 2006**

**(Amounts in thousands, except share data)**

 

 

|                                                                                                                                                                                  |   | **2007** |        |   | 2006   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|-------------|--------|--------|--------|
|                                                                                                                                                                                  |   |     |        |   |   |   |   |   |
| **Liabilities and Shareholders' Equity**                                                                                                                                              |   |     |        |   |   |   |   |   |
|                                                                                                                                                                                  |   |     |        |   |   |   |   |   |
| Liabilities                                                                                                                                                                           |   |     |        |   |   |   |   |   |
| Deposits                                                                                                                                                                              |   |     |        |   |   |   |   |   |
| Noninterest-bearing demand                                                                                                                                                            |   | **$**    | **17,869**  |   |   | $      | 18,288 |   |
| Interest-bearing                                                                                                                                                                      |   |     | **361,611** |   |   |   | 271,641 |   |
| **Total deposits**                                                                                                                                                                    |   |     | **379,480** |   |   |   | 289,929 |   |
|                                                                                                                                                                                  |   |     |        |   |   |   |   |   |
| Federal Home Loan Bank borrowings                                                                                                                                                     |   |     | **21,919**  |   |   |   | 24,541 |   |
| Other borrowed funds                                                                                                                                                                  |   |     | **5,000**   |   |   |   | — |   |
| Subordinated debentures                                                                                                                                                               |   |     | **13,403**  |   |   |   | 10,310 |   |
| Accrued interest payable                                                                                                                                                              |   |     | **1,991**   |   |   |   | 1,849 |   |
| Other accrued liabilities                                                                                                                                                             |   |     | **2,585**   |   |   |   | 2,659 |   |
| **Total liabilities**                                                                                                                                                                 |   |     | **424,378** |   |   |   | 329,288 |   |
|                                                                                                                                                                                  |   |     |        |   |   |   |   |   |
| Commitments and Contingencies (Notes 7 and                            15)                                                                                                             |   |     |        |   |   |   |   |   |
|                                                                                                                                                                                  |   |     |        |   |   |   |   |   |
| Shareholders' Equity                                                                                                                                                                  |   |     |        |   |   |   |   |   |
| Preferred stock,                                                                                                                                                                      |   |     |        |   |   |   |   |   |
| 1,000,000 shares authorized; no shares issued and                            outstanding                                                                                              |   |     | **—** |   |   |   | — |   |
| Common stock,                                                                                                                                                                         |   |     |        |   |   |   |   |   |
| $.10 par value, 10,000,000 shares authorized; 3,307,569                            and 2,884,937 shares issued at December 31, 2007 and 2006,                            respectively |   |     | **331**     |   |   |   | 288 |   |
| Additional paid-in capital                                                                                                                                                            |   |     | **26,798**  |   |   |   | 21,153 |   |
| Retained earnings                                                                                                                                                                     |   |     | **11,897**  |   |   |   | 10,848 |   |
| Accumulated other comprehensive loss                                                                                                                                                  |   |     | **(790**    | **)**  |   |   | (420 | ) |
| Treasury stock (110,061 shares in 2007 and 61,842 shares                            in 2006), at cost                                                                                 |   |     | **(1,819**  | **)**  |   |   | (1,160 | ) |
| **Total shareholders' equity**                                                                                                                                                        |   |     | **36,417**  |   |   |   | 30,709 |   |
|                                                                                                                                                                                  |   |     |        |   |   |   |   |   |
|                                                                                                                                                                                  |   | **$**    | **460,795** |   |   | $      | 359,997 |   |

 

See            Notes to Consolidated Financial Statements.

 

3

 

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**Parke Bancorp, Inc. and Subsidiaries**

 

**Consolidated Statement of Income**

**Years Ended December 31, 2007, 2006 and 2005**

**(Amounts in thousands, except share data)**

 

 

|                                                                                                     |   | **2007** |            | 2006   |   | 2005      |   |
|----------------------------------------------------------------------------------------------------------|--------|----------|-----------------|--------|--------|-----------|--------|
|                                                                                                     |   |     |            |   |   |      |   |   |   |   |
| Interest and Dividend Income                                                                             |   |     |            |   |   |      |   |   |   |   |
| Interest and fees on loans                                                                               |   | **$**    | **31,232**      |   | $      | 23,993    |   | $ | 16,108 |   |
| Interest and dividends on securities                                                                     |   |     | **1,708**       |   |   | 1,341     |   |   | 1,159 |   |
| Interest on federal funds sold and cash                            equivalents                           |   |     | **246**         |   |   | 142       |   |   | 69 |   |
| **Total interest and dividend income**                                                                   |   |     | **33,186**      |   |   | 25,476    |   |   | 17,336 |   |
| Interest Expense                                                                                         |   |     |            |   |   |      |   |   |   |   |
| Interest on deposits                                                                                     |   |     | **15,420**      |   |   | 10,232    |   |   | 5,812 |   |
| Interest on borrowings                                                                                   |   |     | **2,175**       |   |   | 1,791     |   |   | 872 |   |
| **Total interest expense**                                                                               |   |     | **17,595**      |   |   | 12,023    |   |   | 6,684 |   |
| Net interest income                                                                                      |   |     | **15,591**      |   |   | 13,453    |   |   | 10,652 |   |
| Provision for Loan Losses                                                                                |   |     | **1,161**       |   |   | 940       |   |   | 1,180 |   |
| Net interest income after provision for loan                            losses                           |   |     | **14,430**      |   |   | 12,513    |   |   | 9,472 |   |
| Noninterest Income                                                                                       |   |     |            |   |   |      |   |   |   |   |
| Loan fees                                                                                                |   |     | **265**         |   |   | 416       |   |   | 411 |   |
| Gain on sale of other real estate owned                                                                  |   |     | **205**         |   |   | —   |   |   | — |   |
| Bank owned life insurance income                                                                         |   |     | **183**         |   |   | 172       |   |   | 186 |   |
| Service charges on deposit accounts                                                                      |   |     | **160**         |   |   | 146       |   |   | 185 |   |
| Net (loss) on the sale of securities                                                                     |   |     | **(15**         | **)**  |   | —   |   |   | (9 | ) |
| Other miscellaneous fee income                                                                           |   |     | **693**         |   |   | 123       |   |   | 123 |   |
| **Total noninterest income**                                                                             |   |     | **1,491**       |   |   | 857       |   |   | 896 |   |
| Noninterest Expense                                                                                      |   |     |            |   |   |      |   |   |   |   |
| Compensation and benefits                                                                                |   |     | **3,117 ** |   |   | 2,772     |   |   | 2,085 |   |
| Occupancy and equipment                                                                                  |   |     | **745 **   |   |   | 665       |   |   | 575 |   |
| Data processing                                                                                          |   |     | **376**         |   |   | 349       |   |   | 283 |   |
| Marketing and business development                                                                       |   |     | **270**         |   |   | 260       |   |   | 287 |   |
| Professional services                                                                                    |   |     | **682**         |   |   | 681       |   |   | 738 |   |
| Other operating expenses                                                                                 |   |     | **1,135**       |   |   | 1,100     |   |   | 576 |   |
| **        Total                            noninterest expense** |        |          | **6,325**       |        |        | 5,827     |        |  | 4,544 |  |
| Income Before Income Tax Expense                                                                         |        |          | **9,596**       |        |        | 7,543     |        |  | 5,824 |  |
| Income Tax Expense                                                                                       |        |          | **3,744**       |        |        | 2,919     |        |  | 2,330 |  |
| **Net income**                                                                                           |   | **$**    | **5,852**       |   | $      | 4,624     |   | $ | 3,494 |   |
| Net Income Per Common Share:                                                                             |   |     |            |   |   |      |   |   |   |   |
| Basic                                                                                                    |   | **$**    | **1.85**        |   | $      | 1.49      |   | $ | 1.18 |   |
| Diluted                                                                                                  |   | **$**    | **1.63**        |   | $      | 1.27      |   | $ | 1.00 |   |
| Weighted Average Shares Outstanding:                                                                     |   |     |            |   |   |      |   |   |   |   |
| Basic                                                                                                    |   |     | **3,156,114**   |   |   | 3,094,810 |   |   | 2,967,265 |   |
| Diluted                                                                                                  |   |     | **3,593,682**   |   |   | 3,635,073 |   |   | 3,490,418 |   |

 

See            Notes to Consolidated Financial Statements.

 

4

 

----

**Parke Bancorp, Inc. and Subsidiaries**

 

**Consolidated Statement of Shareholders’ Equity**

**Years Ended December 31, 2007, 2006 and 2005**

**(Amounts in thousands, except share data)**

 

 

|                                                                                                                                          |   |   |    |   |            |   |       |     |   |   | Accumulated   |   |   |     |     |   |                |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|-----------------|--------|------------|----------|--------|--------|---------------|--------|--------|----------|----------|--------|---------------------|--------|
|                                                                                                                                          |   |   |    |   |            |   |       |     |   |   | Other         |   |   |     |     |   | Total               |   |
|                                                                                                                                          |   | Common |    |   | Additional      |   |       | Retained |   |   | Comprehensive |   |   | Treasury |     |   | Shareholders’ |   |
|                                                                                                                                          |   | Stock  |    |   | Paid-In Capital |   |       | Earnings |   |   | Income (Loss) |   |   | Stock    |     |   | Equity              |   |
|                                                                                                                                          |   |   |    |   |            |   |       |     |   |   |          |   |   |     |     |   |                |   |
| Balance, December 31, 2004                                                                                                                    |   | $      | 218     |   |            | $      | 19,390     |     |   | $      | 3,293         |   |   | $        | (71      | )      |                | $      | — |   |   | $ | 22,830 |   |
| Stock options and warrants exercised                                                                                                          |   |   | 14      |   |            |   | 1,121      |     |   |   | —       |   |   |     | —  |   |                |   | — |   |   |   | 1,135 |   |
| Treasury stock purchased (2,380 shares)                                                                                                       |   |   | — |   |            |   | —    |     |   |   | —       |   |   |     | —  |   |                |   | (51 | ) |   |   | (51 | ) |
| Comprehensive income:                                                                                                                         |   |   |    |   |            |   |       |     |   |   |          |   |   |     |     |   |                |   |   |   |   |   |   |   |
| Net income                                                                                                                                    |   |   | — |   |            |   | —    |     |   |   | 3,494         |   |   |     | —  |   |                |   | — |   |   |   | 3,494 |   |
| Change in net unrealized loss on securities available                            for sale, net of reclassification adjustment and tax effects |   |   | — |   |            |   | —    |     |   |   | —       |   |   |     | (215     | )      |                |   | — |   |   |   | (215 | ) |
| Total comprehensive income                                                                                                                    |   |   |    |   |            |   |       |     |   |   |          |   |   |     |     |   |                |   |   |   |   |   | 3,279 |   |
| Balance, December 31, 2005                                                                                                                    |   | $      | 232     |   |            | $      | 20,511     |     |   | $      | 6,787         |   |   | $        | (286     | )      |                | $      | (51 | ) |   | $ | 27,193 |   |
| Stock options and warrants exercised                                                                                                          |   |   | 9       |   |            |   | 657        |     |   |   | —       |   |   |     | —  |   |                |   | — |   |   |   | 666 |   |
| Stock compensation                                                                                                                            |   |   | — |   |            |   | 37         |     |   |   | —       |   |   |     | —  |   |                |   | — |   |   |   | 37 |   |
| 20% common stock dividend                                                                                                                     |   |   | 47      |   |            |   | (52        | )        |   |   | —       |   |   |     | —  |   |                |   | — |   |   |   | (5 | ) |
| Treasury stock purchased (59,462 shares)                                                                                                      |   |   | — |   |            |   | —    |     |   |   | —       |   |   |     | —  |   |                |   | (1,109 | ) |   |   | (1,109 | ) |
| Cash dividends paid ($0.18 per share)                                                                                                         |   |   | — |   |            |   | —    |     |   |   | (563          | )      |   |     | —  |   |                |   | — |   |   |   | (563 | ) |
| Adjustment to initially apply FASB Statement No. 158,                            net of tax                                                   |   |   | — |   |            |   | —    |     |   |   | —       |   |   |     | (207     | )      |                |   | — |   |   |   | (207 | ) |
| Net income                                                                                                                                    |   |   | — |   |            |   | —    |     |   |   | 4,624         |   |   |     | —  |   |                |   | — |   |   |   | 4,624 |   |
| Change in net unrealized loss on securities available                            for sale, net of tax                                         |   |   | — |   |            |   | —    |     |   |   | —       |   |   |     | 73       |   |                |   | — |   |   |   | 73 |   |
| Total comprehensive income                                                                                                                    |   |   |    |   |            |   |       |     |   |   |          |   |   |     |     |   |                |   |   |   |   |   | 4,697 |   |
| Balance, December 31, 2006                                                                                                                    |   | $      | 288     |   |            | $      | 21,153     |     |   | $      | 10,848        |   |   | $        | (420     | )      |                | $      | (1,160 | ) |   | $ | 30,709 |   |
| Stock options and warrants exercised                                                                                                          |   |   | 14      |   |            |   | 842        |     |   |   | —       |   |   |     | —  |   |                |   | — |   |   |   | 856 |   |
| Stock compensation                                                                                                                            |   |   | — |   |            |   | 33         |     |   |   | —       |   |   |     | —  |   |                |   | — |   |   |   | 33 |   |
| 10% common stock dividend                                                                                                                     |   |   | 29      |   |            |   | 4,770      |     |   |   | (4,803        | )      |   |     | —  |   |                |   | — |   |   |   | (4 | ) |
| Treasury stock purchased (42,035 shares)                                                                                                      |   |   | — |   |            |   | —    |     |   |   | —       |   |   |     | —  |   |                |   | (659 | ) |   |   | (659 | ) |
| Net income                                                                                                                                    |   |   | — |   |            |   | —    |     |   |   | 5,852         |   |   |     | —  |   |                |   | — |   |   |   | 5,852 |   |
| Change in net unrealized loss on securities available                            for sale, net of reclassification adjustment and tax effects |   |   | — |   |            |   | —    |     |   |   | —       |   |   |     | (307     | )      |                |   | — |   |   |   | (307 | ) |
| Pension liability adjustments, net of tax                                                                                                     |   |   | — |   |            |   | —    |     |   |   | —       |   |   |     | (63      | )      |                |   | — |   |   |   | (63 | ) |
| Total comprehensive income                                                                                                                    |   |   |    |   |            |   |       |     |   |   |          |   |   |     |     |   |                |   |   |   |   |   | 5,482 |   |
|                                                                                                                                          |   |   |    |   |            |   |       |     |   |   |          |   |   |     |     |   |                |   |   |   |   |   |   |   |
| **Balance, December 31, 2007**                                                                                                                |   | **$**  | **331** |   |            | **$**  | **26,798** |     |   | **$**  | **11,897**    |   |   | **$**    | **(790** | **)**  |                | **$**  | **(1,819** | **)** |   | **$** | **36,417** |   |

 

See            Notes to Consolidated Financial Statements.

 

5

 

----

**Parke Bancorp, Inc. and Subsidiaries**

 

**Consolidated Statement of Cash Flows**

**Years Ended December 31, 2007, 2006 and 2005**

**(Amounts in thousands)**

 

|                                                                                                     |   | **2007** |         |   | 2006   |   |    | 2005   |   |
|----------------------------------------------------------------------------------------------------------|--------|----------|--------------|--------|--------|--------|---------|--------|--------|
|                                                                                                     |   |     |         |   |   |   |    |   |   |
| Cash Flows from Operating Activities                                                                     |   |     |         |   |   |   |    |   |   |   |   |   |
| Net income                                                                                               |   | **$**    | **5,852**    |   |   | $      | 4,624   |   |   | $ | 3,494 |   |
| Adjustments to reconcile net income to                                                                   |   |     |         |   |   |   |    |   |   |   |   |   |
| net cash provided by operating activities:                                                               |   |     |         |   |   |   |    |   |   |   |   |   |
| Depreciation and amortization                                                                            |   |     | **301**      |   |   |   | 279     |   |   |   | 264 |   |
| Provision for loan losses                                                                                |   |     | **1,161**    |   |   |   | 940     |   |   |   | 1,180 |   |
| Stock compensation                                                                                       |   |     | **33**       |   |   |   | 37      |   |   |   | — |   |
| Bank owned life insurance                                                                                |   |     | **(183**     | **)**  |   |   | (172    | )      |   |   | (186 | ) |
| Supplemental executive retirement plan                                                                   |   |     | **285**      |   |   |   | 230     |   |   |   | 246 |   |
| Gain on sale of other real estate owned                                                                  |   |     | **(205**     | **)**  |   |   | — |   |   |   | — |   |
| Realized losses on sales of securities                                                                   |   |     | **15**       |   |   |   | — |   |   |   | 9 |   |
| Net (accretion) amortization of purchase premiums and                            discounts on securities |   |     | **(69**      | **)**  |   |   | (20     | )      |   |   | (73 | ) |
| Deferred income tax benefit                                                                              |   |     | **(569**     | **)**  |   |   | (531    | )      |   |   | (387 | ) |
| Changes in operating assets and liabilities:                                                             |   |     |         |   |   |   |    |   |   |   |   |   |
| Increase in accrued interest receivable and other                            assets                      |   |     | **(1,282**   | **)**  |   |   | (402    | )      |   |   | (745 | ) |
| (Decrease) increase in accrued interest payable and                            other accrued liabilities |   |     | **(324**     | **)**  |   |   | 1,339   |   |   |   | 1,112 |   |
| **Net cash provided by operating                            activities**                                 |   |     | **5,015**    |   |   |   | 6,324   |   |   |   | 4,914 |   |
|                                                                                                     |   |     |         |   |   |   |    |   |   |   |   |   |
| Cash Flows from Investing Activities                                                                     |   |     |         |   |   |   |    |   |   |   |   |   |
| Purchases of investment securities held to                            maturity                           |   |     | **—**  |   |   |   | — |   |   |   | (1,854 | ) |
| Purchases of investment securities available for                            sale                         |   |     | **(12,646**  | **)**  |   |   | (5,064  | )      |   |   | (5,559 | ) |
| Redemption (purchases) of restricted stock                                                               |   |     | **20**       |   |   |   | (144    | )      |   |   | (285 | ) |
| Proceeds from sales of investment securities available                            for sale               |   |     | **985**      |   |   |   | 1,000   |   |   |   | 5,092 |   |
| Proceeds from maturities of investment securities                            available for sale          |   |     | **4,050**    |   |   |   | — |   |   |   | — |   |
| Principal payments on mortgage-backed                            securities                              |   |     | **1,877**    |   |   |   | 1,173   |   |   |   | 2,188 |   |
| Investment in trust preferred stock                                                                      |   |     | **(93**      | **)**  |   |   | — |   |   |   | (310 | ) |
| Proceeds from sale of other real estate owned                                                            |   |     | **1,780**    |   |   |   | — |   |   |   | — |   |
| Net increase in loans                                                                                    |   |     | **(98,200**  | **)**  |   |   | (51,523 | )      |   |   | (70,655 | ) |
| Purchases of bank premises and equipment                                                                 |   |     | **(86**      | **)**  |   |   | (631    | )      |   |   | (97 | ) |
| **Net cash used in investing activities**                                                                |   |     | **(102,313** | **)**  |   |   | (55,189 | )      |   |   | (71,480 | ) |
|                                                                                                     |   |     |         |   |   |   |    |   |   |   |   |   |
| Cash Flows from Financing Activities                                                                     |   |     |         |   |   |   |    |   |   |   |   |   |
| Proceeds from exercise of stock options and                            warrants                          |   |     | **856**      |   |   |   | 666     |   |   |   | 1,135 |   |
| Purchase of treasury stock                                                                               |   |     | **(659**     | **)**  |   |   | (1,109  | )      |   |   | (51 | ) |
| Cash dividends paid                                                                                      |   |     | **(4**       | **)**  |   |   | (568    | )      |   |   | — |   |
| Net decrease in Federal Home Loan Bank short term                            borrowings                  |   |     | **(5,862**   | **)**  |   |   | (3,248  | )      |   |   | (1,890 | ) |
| Proceeds from Federal Home Loan Bank advances                                                            |   |     | **4,500**    |   |   |   | 8,400   |   |   |   | 6,250 |   |
| Payments of Federal Home Loan Bank advances                                                              |   |     | **(1,260**   | **)**  |   |   | (3,285  | )      |   |   | (1,064 | ) |
| Net (decrease) increase in other short term                            borrowings                        |   |     | **—**  |   |   |   | (2,983  | )      |   |   | 1,983 |   |
| Proceeds from other long term borrowings                                                                 |   |     | **5,000**    |   |   |   | — |   |   |   | — |   |
| Proceeds from issuance of subordinated                            debentures                             |   |     | **3,093**    |   |   |   | — |   |   |   | 10,310 |   |
| Net increase in interest-bearing deposits                                                                |   |     | **89,970**   |   |   |   | 57,503  |   |   |   | 50,513 |   |
| Net (decrease) increase in noninterest-bearing                            deposits                       |   |     | **(419**     | **)**  |   |   | 370     |   |   |   | 1,958 |   |
| **Net cash provided by financing                            activities**                                 |   |     | **95,215**   |   |   |   | 55,746  |   |   |   | 69,144 |   |
|                                                                                                     |   |     |         |   |   |   |    |   |   |   |   |   |
| **Increase (decrease) in cash and cash                            equivalents**                          |   |     | **(2,083**   | **)**  |   |   | 6,881   |   |   |   | 2,578 |   |
|                                                                                                     |   |     |         |   |   |   |    |   |   |   |   |   |
| Cash and Cash Equivalents, January 1,                                                                    |   |     | **11,261**   |   |   |   | 4,380   |   |   |   | 1,802 |   |
|                                                                                                     |   |     |         |   |   |   |    |   |   |   |   |   |
| Cash and Cash Equivalents, December 31,                                                                  |   | **$**    | **9,178**    |   |   | $      | 11,261  |   |   | $ | 4,380 |   |
|                                                                                                     |   |     |         |   |   |   |    |   |   |   |   |   |
| Supplemental Disclosure of Cash Flow                            Information:                             |   |     |         |   |   |   |    |   |   |   |   |   |
| Cash paid during the year for:                                                                           |   |     |         |   |   |   |    |   |   |   |   |   |
| Interest on deposits and borrowed funds                                                                  |   | **$**    | **17,453**   |   |   | $      | 11,248  |   |   | $ | 5,993 |   |
| Income taxes                                                                                             |   | **$**    | **4,714**    |   |   | $      | 3,510   |   |   | $ | 2,466 |   |

 

See            Notes to Consolidated Financial Statements.

 

6

 

----

**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

 

**Note 1. Description of Business and Summary of Significant Accounting            Policies**

 

Description of Business: Parke Bancorp,            Inc. (the “Company”) 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 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 redefining its            target market the Bank opened a loan production office in Havertown, Pennsylvania            during the third quarter of 2007 and closed the loan production office in Millville,            New Jersey during the first quarter of 2008.

 

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, Parke Capital Trust II and Parke Capital Trust III            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, 2007 and 2006, 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, 2007 and 2006, 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.”

 

7

 

----

**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

 

**Note 1. Description of Business and Summary of Significant Accounting            Policies (continued)**

 

Investment Securities (continued): 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 a            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.

 

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 unamortized 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.

 

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 companies, are recorded in income as            earned.

 

8

 

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**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

 

**Note 1. Description of Business and Summary of Significant Accounting            Policies (continued)**

 

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. 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 collectibility 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.

 

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. 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. Factors considered by            management when evaluating impaired loans include payment status, collateral value, and            the probability of collecting scheduled principal and interest payments when due.            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 evaluate            individual consumer and residential loans for impairment.

 

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.

 

9

 

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**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

 

**Note 1. Description of Business and Summary of Significant Accounting            Policies (continued)**

 

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: 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.

 

The            Company adopted the Financial Accounting Standards Board Interpretation 48 as of            January 1, 2007, as required, and determined that the adoption did not have a material            impact on the Company’s financial position or results of operation. The Company            did not recognize any interest or penalties related to income tax during the year ended            December 31, 2007 and did not accrue interest or penalties as of December 31, 2007. The            Company does not have an accrual for uncertain tax positions as of December 31, 2007,            as deductions taken and benefits accrued are based on widely understood administrative            practices and procedures and are based on clear and unambiguous tax law. Tax returns            for all years 2004 and thereafter are subject to further examination by tax            authorities.

 

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.

 

Segment Reporting:The Company operates one            reportable segment of business, “community banking”. Through its community            banking segment, the Company provides a broad range of retail and community banking            services.

 

Reclassifications:Certain items in the            2006 and 2005 financial statements have been reclassified to conform to the 2007            presentation.

 

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.

 

10

 

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**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

 

**Note 1. Description of Business and Summary of Significant Accounting            Policies (continued)**

 

Comprehensive Income (continued): At            December 31, 2007, 2006 and 2005, accumulated other comprehensive loss consisted of the            following:

 

|                                                                                                                      |   | 2007                   |   |   | 2006   |   |   | 2005 |   |
|---------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|--------|--------|--------|------|--------|
|                                                                                                                      |   | (Amounts in thousands) |   |
| Unrealized gains (losses) on available for sale                            securities (net of tax of $346, $142 and $191) |   | $                      | (521   | )      |   | $      | (213   | )    |   | $ | (287 | ) |
| Minimum pension liability (net of tax of $180 and                            $138)                                        |   |                   | (269   | )      |   |   | (207   | )    |   |   | — |   |
|                                                                                                                      |   | $                      | (790   | )      |   | $      | (420   | )    |   | $ | (287 | ) |

 

 

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 $344,000 as of            December 31, 2006, relating to a Supplemental Executive Retirement Plan            (“SERP”) (Note 11). The total unfunded liability as of December 31, 2007            was $450,000. The adoption of Statement No. 158 did not materially affect the            Company’s financial position or results of operations.

 

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:

 

|                                                                                          |   | 2007                   |   |   |   | 2006   |   |    |   | 2005   |   |
|-----------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|--------|--------|--------|---------|--------|--------|--------|
|                                                                                          |   | (Amounts in thousands) |   |
| Unrealized holding gains (losses) on available for sale                            securities |   | $                      | (524   | )      |   |   | $      | 121     |   |   |   | $ | (367 | ) |
| Reclassification adjustment for net losses realized in                            income      |   |                   | 15     |   |   |   |   | — |   |   |   |   | 9 |   |
| Net unrealized gains (losses)                                                                 |   |                   | (509   | )      |   |   |   | 121     |   |   |   |   | (358 | ) |
| Tax effect                                                                                    |   |                   | 202    |   |   |   |   | (48     | )      |   |   |   | 143 |   |
| Net-of-tax amount                                                                             |   | $                      | (307   | )      |   |   | $      | 73      |   |   |   | $ | (215 | ) |

 

 

11

 

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**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

 

**Note 1. Description of Business and Summary of Significant Accounting            Policies (continued)**

 

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 2007 and 2006 (Note            13). Earnings per common share have been computed based on the following for 2007, 2006            and 2005:

 

|                                                                                                                       |   | 2007      |   | 2006      |   | 2005      |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|-----------|--------|-----------|--------|-----------|--------|
| Average number of common shares outstanding                                                                                |   | 3,156,114 |   | 3,094,810 |   | 2,967,265 |   |
| Effect of dilutive options                                                                                                 |   | 437,568   |   | 540,263   |   | 523,153   |   |
|                                                                                                                       |   |      |   |      |   |      |   |
| Average number of common shares outstanding used to                            calculate diluted earnings per common share |   | 3,593,682 |   | 3,635,073 |   | 3,490,418 |   |

 

 

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, 2007 and 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            Accounting Principles Board 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 year            ended December 31, 2005 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 if the Company had applied the fair value            recognition provisions of Statement 123 to stock-based employee compensation. For            purposes of this pro forma disclosure, the value of the options is estimated using the            Black-Scholes option-pricing model. Both basic and diluted calculations give            retroactive effect to stock dividends declared in 2007 and 2006.

 

12

 

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**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

 

**Note 1. Description of Business and Summary of Significant Accounting            Policies (continued)**

 

 

|                                                                                                                                                                                  |   |                                                                        |   | 2005   |   |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|--------|--------|--------|--------|--------|
|                                                                                                                                                                                  |   | (Amounts in thousands, except per share                            amounts) |   |
|                                                                                                                                                                                  |   |                                                                        |   |   |   |   |   |
| Net income, as reported                                                                                                                                                               |   |                                                                        |   | $      | 3,494  |   |   |   |
|                                                                                                                                                                                  |   |                                                                        |   |   |   |   |   |   |
| Deduct total stock-based compensation expense determined                            under the fair value method for all awards, net of related tax                            effects |   |                                                                        |   |   | (670   | )      |   |   |
| Pro forma net income                                                                                                                                                                  |   |                                                                        |   | $      | 2,824  |   |   |   |
|                                                                                                                                                                                  |   |                                                                        |   |   |   |   |   |   |
|                                                                                                                                                                                  |   |                                                                        |   |   |   |   |   |   |
| Earnings per share:                                                                                                                                                                   |   |                                                                        |   |   |   |   |   |   |
| Basic:                                                                                                                                                                                |   |                                                                        |   |   |   |   |   |   |
| As reported                                                                                                                                                                           |   |                                                                        |   | $      | 1.18   |   |   |   |
| Pro forma                                                                                                                                                                             |   |                                                                        |   | $      | 0.95   |   |   |   |
| Diluted:                                                                                                                                                                              |   |                                                                        |   |   |   |   |   |   |
| As reported                                                                                                                                                                           |   |                                                                        |   | $      | 1.00   |   |   |   |
| Pro forma                                                                                                                                                                             |   |                                                                        |   | $      | 0.81   |   |   |   |
|                                                                                                                                                                                       |        |                                                                             |        |        |        |        |        |  |  |  |

 

 

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 subsequently recognized            for these options. The Company uses the Black-Scholes option pricing model to estimate            the fair value of any stock-based awards granted after 2005.

 

Under the modified prospective transition method, the Company was            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 did not restate prior period results.

 

Recently Issued Accounting Pronouncements:            In June 2006, the Financial Accounting Standards Board (“FASB”) issued            Interpretation (“FIN”) No. 48, “Accounting for Uncertainty in Income            Taxes-an interpretation of FASB 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. In            addition, it provides guidance on derecognition, classification, interest and            penalties, accounting in interim periods, disclosure and transition. The Company            adopted FIN No. 48 effective January 1, 2007 and it did not have a material impact on            the Company’s financial position, results of operations or cash flows.

 

13

 

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**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

 

**Note 1. Description of Business and Summary of Significant Accounting            Policies (continued)**

 

Recently Issued Accounting Pronouncements            (continued): In September 2006, FASB issued Statement of            Financial Accounting Standards (“SFAS”) No. 157, “Fair Value            Measurements”. This Statement defines fair value, establishes a framework for            measuring fair value in generally accepted accounting principle, 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. In February 2008, the FASB staff issued            FSP 157-2 delaying the effective date of this standard for non-financial assets and            non-financial liabilities to be effective for fiscal years beginning after November 15,            2008 (January 1, 2009). The Company is currently assessing the potential effect of SFAS            No. 157 on its financial position, results of operations and cash flows.

 

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 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. This 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. SFA No. 159 does not eliminate disclosure requirements included            in other accounting standards. The Standard is effective for the Company on January 1,            2008. The Company is currently evaluating whether to elect, if at all, this option and            the impact of SFAS No. 159 on its financial statements.

 

**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, 2007 or 2006, because reserve requirements were covered by vault            cash.

 

14

 

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**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

 

**Note 3. Investment Securities**

 

The            Company’s investment securities as of December 31, 2007 were as            follows:

 

|                                |   |                   |   |   |   | Gross      |   |    |   | Gross      |   |   |    |   |   |
|-------------------------------------|--------|------------------------|--------|--------|--------|------------|--------|---------|--------|------------|--------|--------|---------|--------|--------|
|                                |   | Amortized              |   |   |   | Unrealized |   |    |   | Unrealized |   |   |    | Market |   |
|                                |   | Cost                   |   |   |   | Gains      |   |    |   | Losses     |   |   |    | Value  |   |
|                                |   | (Amounts in thousands) |   |
| Available For Sale                  |   |                   |   |   |   |       |   |    |   |       |   |   |    |   |   |   |   |   |   |
| U.S. Government sponsored entities  |   | $                      | 5,486  |   |   |       | $      | 13      |   |       |   | $      | — |   |   |   | $ | 5,499 |   |
| Corporates                          |   |                   | 7,278  |   |   |       |   | 17      |   |       |   |   | (454    | )      |   |   |   | 6,841 |   |
| Mortgage-backed securities          |   |                   | 17,885 |   |   |       |   | 131     |   |       |   |   | (574    | )      |   |   |   | 17,442 |   |
| Total securities available for sale |   | $                      | 30,649 |   |   |       | $      | 161     |   |       |   | $      | (1,028  | )      |   |   | $ | 29,782 |   |
|                                |   |                   |   |   |   |       |   |    |   |       |   |   |    |   |   |   |   |   |   |
| Held to Maturity                    |   |                   |   |   |   |       |   |    |   |       |   |   |    |   |   |   |   |   |   |
| Municipals                          |   | $                      | 2,456  |   |   |       | $      | — |   |       |   | $      | (46     | )      |   |   | $ | 2,410 |   |

 

 

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

 

|                                |   |                   |   |   |   | Gross      |   |    |   | Gross      |   |   |   |   |   |
|-------------------------------------|--------|------------------------|--------|--------|--------|------------|--------|---------|--------|------------|--------|--------|--------|--------|--------|
|                                |   | Amortized              |   |   |   | Unrealized |   |    |   | Unrealized |   |   |   | Market |   |
|                                |   | Cost                   |   |   |   | Gains      |   |    |   | Losses     |   |   |   | Value  |   |
|                                |   | (Amounts in thousands) |   |
| Available For Sale                  |   |                   |   |   |   |       |   |    |   |       |   |   |   |   |   |   |   |   |   |
| U.S. Government sponsored entities  |   | $                      | 6,485  |   |   |       | $      | — |   |       |   | $      | (69    | )      |   |   | $ | 6,416 |   |
| Corporates                          |   |                   | 8,348  |   |   |       |   | 35      |   |       |   |   | (178   | )      |   |   |   | 8,205 |   |
| Mortgage-backed securities          |   |                   | 10,053 |   |   |       |   | 34      |   |       |   |   | (178   | )      |   |   |   | 9,909 |   |
| Total securities available for sale |   | $                      | 24,886 |   |   |       | $      | 69      |   |       |   | $      | (425   | )      |   |   | $ | 24,530 |   |
|                                |   |                   |   |   |   |       |   |    |   |       |   |   |   |   |   |   |   |   |   |
| Held to Maturity                    |   |                   |   |   |   |       |   |    |   |       |   |   |   |   |   |   |   |   |   |
| Municipals                          |   | $                      | 2,431  |   |   |       | $      | 37      |   |       |   | $      | (42    | )      |   |   | $ | 2,426 |   |

 

 

The            amortized cost and estimated market value of investment securities at December 31, 2007            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.

 

15

 

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**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

 

**Note 3. Investment Securities (continued)**

 

 

|                                                                       |   | Available For Sale     |   |   |   | Held to Maturity |   |
|----------------------------------------------------------------------------|--------|------------------------|--------|--------|--------|------------------|--------|
|                                                                       |   | Amortized              |   |   |   | Market           |   |   |   | Amortized |   |   |   | Market |   |
|                                                                       |   | Cost                   |   |   |   | Value            |   |   |   | Cost |   |   |   | Value |   |
|                                                                       |   | (Amounts in thousands) |   |
| Maturing within one year                                                   |   | $                      | 500    |   |   |             | $      | 500 |   |   |   | $ | — |   |   |   | $ | — |   |
| Maturing after one year but within five years                              |   |                   | 1,512  |   |   |             |   | 1,509 |   |   |   |   | 544 |   |   |   |   | 534 |   |
| Maturing after five years, but within ten                            years |   |                   | 2,986  |   |   |             |   | 2,999 |   |   |   |   | — |   |   |   |   | — |   |
| Maturing after ten years                                                   |   |                   | 7,766  |   |   |             |   | 7,332 |   |   |   |   | 1,912 |   |   |   |   | 1,876 |   |
|                                                                       |   |                   | 12,764 |   |   |             |   | 12,340 |   |   |   |   | 2,456 |   |   |   |   | 2,410 |   |
| Mortgage-backed securities                                                 |   |                   | 17,885 |   |   |             |   | 17,442 |   |   |   |   | — |   |   |   |   | — |   |
| Total securities                                                           |   | $                      | 30,649 |   |   |             | $      | 29,782 |   |   |   | $ | 2,456 |   |   |   | $ | 2,410 |   |

 

 

Gross realized gains on the sale of investment securities were $54,000            in 2005. Gross realized losses on the sale of investment securities were $15,000 in            2007 and $63,000 in 2005. There were no sales of investment securities in            2006.

 

As            of December 31, 2007, approximately $10.4 million of investment securities are pledged            as collateral for borrowed funds (Note 9). In addition, securities with a carrying            value of $404,000 were pledged to secure public deposits at December 31,            2007.

 

As            of December 31, 2006, approximately $14.3 million 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.

 

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, 2007, are as            follows:

 

 

|                                  |   | Continuous Unrealized    |    |   |   | Continuous Unrealized  |   |
|---------------------------------------|--------|--------------------------|---------|--------|--------|------------------------|--------|
|                                  |   | Losses Existing for Less |    |   |   | Losses Existing for 12 |   |
|                                  |   | Than 12 Months           |    |   |   | Months or More         |   |
|                                  |   | Market                   |    |   |   | Unrealized             |   |   |   | Market |   |   |   | Unrealized |   |
|                                  |   | Value                    |    |   |   | Losses                 |   |   |   | Value |   |   |   | Losses |   |
|                                  |   | (Amounts in thousands)   |    |
| Available For Sale                    |   |                     |    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government sponsored entities    |   | $                        | — |   |   |                   | $      | — |   |   |   | $ | — |   |   |   | $ | — |   |
| Corporates                            |   |                     | 953     |   |   |                   |   | (45 | ) |   |   |   | 1,853 |   |   |   |   | (409 | ) |
| Mortgage-backed securities            |   |                     | 3,804   |   |   |                   |   | (439 | ) |   |   |   | 4,318 |   |   |   |   | (135 | ) |
|                                  |   |                     | 4,757   |   |   |                   |   | (484 | ) |   |   |   | 6,171 |   |   |   |   | (544 | ) |
| Held to Maturity                      |   |                     |    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Municipals                            |   |                     | 643     |   |   |                   |   | (16 | ) |   |   |   | 1,767 |   |   |   |   | (30 | ) |
| Total temporarily impaired securities |   | $                        | 5,400   |   |   |                   | $      | (500 | ) |   |   | $ | 7,938 |   |   |   | $ | (574 | ) |

 

 

16

 

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**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

 

**Note 3. Investment Securities (continued)**

 

Management does not believe any individual unrealized loss as of            December 31, 2007 represents an other-than-temporary impairment. A total of 23            securities are included in the continuous unrealized portion, of which 20 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 will 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, 2006 are as            follows:

 

|                                  |   | Continuous Unrealized    |    |   |   | Continuous Unrealized  |   |
|---------------------------------------|--------|--------------------------|---------|--------|--------|------------------------|--------|
|                                  |   | Losses Existing for Less |    |   |   | Losses Existing for 12 |   |
|                                  |   | Than 12 Months           |    |   |   | Months or More         |   |
|                                  |   | Market                   |    |   |   | Unrealized             |   |   |   | Market |   |   |   | Unrealized |   |
|                                  |   | Value                    |    |   |   | Losses                 |   |   |   | Value |   |   |   | Losses |   |
|                                  |   | (Amounts in thousands)   |    |
| Available For Sale                    |   |                     |    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government sponsored entities    |   | $                        | 1,498   |   |   |                   | $      | (2 | ) |   |   | $ | 3,918 |   |   |   | $ | (67 | ) |
| Corporates                            |   |                     | 746     |   |   |                   |   | (3 | ) |   |   |   | 836 |   |   |   |   | (175 | ) |
| Mortgage-backed securities            |   |                     | 191     |   |   |                   |   | (10 | ) |   |   |   | 4,636 |   |   |   |   | (168 | ) |
|                                  |   |                     | 2,435   |   |   |                   |   | (15 | ) |   |   |   | 9,390 |   |   |   |   | (410 | ) |
| Held to Maturity                      |   |                     |    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Municipals                            |   |                     | — |   |   |                   |   | — |   |   |   |   | 1,760 |   |   |   |   | (42 | ) |
| Total temporarily impaired securities |   | $                        | 2,435   |   |   |                   | $      | (15 | ) |   |   | $ | 11,150 |   |   |   | $ | (452 | ) |

 

 

**Note 4. Loans**

 

The            composition of net loans as of December 31, 2007 and 2006 are as follows:

 

|                            |   | 2007                   |    |   | 2006   |   |
|---------------------------------|--------|------------------------|---------|--------|--------|--------|
|                            |   | (Amounts in thousands) |    |
| Commercial                      |   | $                      | 364,267 |   |   | $      | 281,819 |   |
| Residential real estate         |   |                   | 26,579  |   |   |   | 22,192 |   |
| Consumer                        |   |                   | 17,923  |   |   |   | 7,005 |   |
| Less: net deferred loan fees    |   |                   | (380    | )      |   |   | (461 | ) |
| Total loans                     |   |                   | 408,389 |   |   |   | 310,555 |   |
| Less: allowance for loan losses |   |                   | (5,706  | )      |   |   | (4,511 | ) |
| Net loans                       |   | $                      | 402,683 |   |   | $      | 306,044 |   |

 

At            December 31, 2007 and 2006, approximately $27.0 million and $22.9 million,            respectively, of residential real estate and consumer loans were pledged to the FHLBNY            on borrowings (Note 9).

 

17

 

----

 

 

 

**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

             

**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 collectibility.

 

An            analysis of the activity of such related party loans for 2007 and 2006 is as            follows:

 

|                       |   | 2007                   |   | 2006   |   |
|----------------------------|--------|------------------------|--------|--------|--------|
|                       |   | (Amounts in thousands) |   |
| Balance, beginning of year |   | $                      | 20,281 |   | $      | 12,347 |   |
| Advances                   |   |                   | 5,545  |   |   | 10,176 |   |
| Less: repayments           |   |                   | (8,163 | )      |   | (2,242 | ) |
| Balance, end of year       |   | $                      | 17,663 |   | $      | 20,281 |   |

 

 

**Note 6. Allowance for Loan Losses**

             

An            analysis of the allowance for loan losses for 2007, 2006 and 2005 is as            follows:

 

|                       |   | 2007                   |   | 2006   |   | 2005    |   |
|----------------------------|--------|------------------------|--------|--------|--------|---------|--------|
|                       |   | (Amounts in thousands) |   |
| Balance, beginning of year |   | $                      | 4,511  |   | $      | 3,574   |   | $ | 2,621 |   |
| Provision for loan losses  |   |                   | 1,161  |   |   | 940     |   |   | 1,180 |   |
| Charge offs                |   |                   | (200   | )      |   | (3      | )      |   | (227 | ) |
| Recoveries                 |   |                   | 234    |   |   | — |   |   | — |   |
| Balance, end of year       |   | $                      | 5,706  |   | $      | 4,511   |   | $ | 3,574 |   |

 

Information about impaired loans and nonaccrual loans as of and for the            years ended December 31, 2007 and 2006 is as follows:

 

 

|                                                                                          |   |   |   |                   |    |   |   |   |   |
|-----------------------------------------------------------------------------------------------|--------|--------|--------|------------------------|---------|--------|--------|--------|--------|
|                                                                                          |   |   |   |                   | 2007    |   |   | 2006   |   |
|                                                                                          |   |   |   | (Amounts in thousands) |    |
| Impaired loans with a valuation allowance                                                     |   |   |   | $                      | — |   | $      | 2,208  |   |
| Impaired loans without a valuation                                allowance                   |   |   |   |                   | 1,996   |   |   | 162    |   |
| Total impaired loans                                                                          |   |   |   | $                      | 1,996   |   | $      | 2,370  |   |
|                                                                                          |   |   |   |                   |    |   |   |   |   |
| Related allowance for loan losses for impaired                                loans           |   |   |   | $                      | — |   | $      | 404    |   |
|                                                                                          |   |   |   |                   |    |   |   |   |   |
| Nonaccrual loans                                                                              |   |   |   | $                      | 805     |   | $      | 789    |   |
|                                                                                          |   |   |   |                   |    |   |   |   |   |
| Loans past due ninety days or more and still                                accruing interest |   |   |   | $                      | — |   | $      | 267    |   |
|                                                                                          |   |   |   |                   |    |   |   |   |   |
| Average monthly balance of impaired loans                                                     |   |   |   | $                      | 2,441   |   | $      | 1,255  |   |
|                                                                                          |   |   |   |                   |    |   |   |   |   |
| Interest income recognized on cash basis on impaired                                loans     |   |   |   | $                      | 96      |   | $      | 72     |   |
|                                                                                               |        |        |        |                        |         |        |        |        |        |  |  |  |  |  |  |  |  |

 

18

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**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

 

**Note 6. Allowance for Loan Losses (continued)**

 

Nonaccrual loans and loans past due ninety days or more and still            accruing interest are included in impaired loans. Interest income of $66,000, $51,000            and $66,000 would have been recorded on non-accrual loans had those loans paid in            accordance with their original terms in 2007, 2006 and 2005, respectively.

**Note 7. Bank Premises and Equipment**

 

A            summary of the cost and accumulated depreciation and amortization of Bank premises and            equipment as of December 31, 2007 and 2006 is as follows:

 

|                           |   | 2007                   |   |   |   | 2006   |   |
|--------------------------------|--------|------------------------|--------|--------|--------|--------|--------|
|                           |   | (Amounts in thousands) |   |
| Land                           |   | $                      | 470    |   |   |   | $      | 470 |   |
| Building and improvements      |   |                   | 3,025  |   |   |   |   | 3,007 |   |
| Furniture and equipment        |   |                   | 964    |   |   |   |   | 986 |   |
| Total premises and equipment   |   |                   | 4,459  |   |   |   |   | 4,463 |   |
| Less: accumulated depreciation |   |                   |   |   |   |   |   |   |   |
| and amortization               |   |                   | (1,242 | )      |   |   |   | (1,031 | ) |
| Premises and equipment, net    |   | $                      | 3,217  |   |   |   | $      | 3,432 |   |

 

Depreciation and amortization expense was $301,000, $279,000, and            $264,000 in 2007, 2006 and 2005, respectively.

             

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, 2007, the            required future rental payments under these leases are as follows:

 

|   |   | Years Ending December 31,     |   |   |   | Amounts in thousands |   |   |   |
|--------|--------|-------------------------------|--------|--------|--------|----------------------|--------|--------|--------|
|   |   |                          |   |   |   |                 |   |   |   |
|   |   | 2008                          |   |   |   | $                    | 214    |   |   |   |
|   |   | 2009                          |   |   |   |                 | 137    |   |   |   |
|   |   | 2010                          |   |   |   |                 | 115    |   |   |   |
|   |   | 2011                          |   |   |   |                 | 126    |   |   |   |
|   |   | 2012                          |   |   |   |                 | 95     |   |   |   |
|   |   | Thereafter                    |   |   |   |                 | 231    |   |   |   |
|   |   | Total minimum lease payments: |   |   |   | $                    | 918    |   |   |   |

 

Rent            expense was approximately $ 234,000 in 2007, $211,000 in 2006 and $155,000 in            2005.

 

19

 

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**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

             

**Note 8. Deposits**

 

Deposits at December 31, 2007 and 2006 consisted of the            following:

 

|   |                                       | 2007   |                   |   |   | 2006   |   |
|--------|--------------------------------------------|--------|------------------------|--------|--------|--------|--------|
|   |                                       |   | (Amounts in thousands) |   |
|   | Demand deposits, noninterest—bearing | $      | 17,869                 |   |   |   | $      | 18,288 |   |
|   | Demand deposits, interest—bearing    |   | 12,993                 |   |   |   |   | 9,834 |   |
|   | Money market deposits                      |   | 32,163                 |   |   |   |   | 20,738 |   |
|   | Savings deposits                           |   | 30,711                 |   |   |   |   | 24,633 |   |
|   | Time deposits of $100,000 or more          |   | 71,717                 |   |   |   |   | 53,596 |   |
|   | Other time deposits                        |   | 87,016                 |   |   |   |   | 75,255 |   |
|   | Brokered time deposits                     |   | 127,011                |   |   |   |   | 87,585 |   |
|   | Total deposits                             | $      | 379,480                |   |   |   | $      | 289,929 |   |

 

Scheduled maturities of certificates of deposit at December 31, 2007 are            as follows:

 

|   |   | Year Ending December 31, |   |   |   | Amounts in Thousands |    |   |   |
|--------|--------|--------------------------|--------|--------|--------|----------------------|---------|--------|--------|
|   |   |                     |   |   |   |                 |    |   |   |
|   |   | 2008                     |   |   |   | $                    | 239,180 |   |   |   |
|   |   | 2009                     |   |   |   |                 | 33,113  |   |   |   |
|   |   | 2010                     |   |   |   |                 | 8,946   |   |   |   |
|   |   | 2011                     |   |   |   |                 | 3,637   |   |   |   |
|   |   | 2012                     |   |   |   |                 | 868     |   |   |   |
|   |   |                     |   |   |   | $                    | 285,744 |   |   |   |

 

Deposits from related parties totaled approximately $11,789,000 and            $8,229,000 at December 31, 2007 and 2006, respectively.

 

20

 

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**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

 

**Note            9. Borrowings**

 

An            analysis of borrowings as of December 31, 2007 and 2006 is as follows:

 

|   |                                                                            |   |                |   | 2007                                                            |    |     | 2006    |   |
|--------|---------------------------------------------------------------------------------|--------|---------------------|--------|-----------------------------------------------------------------|---------|----------|---------|--------|
|   |                                                                            |   |                |   |                                                            |    | Weighted |    |   |   |   | Weighted |   |
|   |                                                                            |   | Maturity Date       |   |                                                            |    | Average  |    |   |   |   | Average |   |
|   |                                                                            |   | or Range            |   | Amount                                                          |    | Rate     |    |   | Amount |   | Rate |   |
|   |                                                                            |   |                |   | (Amounts in thousands, except                            rates) |    |
|   | Borrowed funds:                                                                 |   |                |   |                                                            |    |     |    |   |   |   |   |   |   |   |
|   | Federal Home Loan Bank — repurchase                            agreements |   | January 2007        |   | $                                                               | — |     | — |   |   | $ | 100 |   | 5.39 | % |
|   |                                                                            |   |                |   |                                                            |    |     |    |   |   |   |   |   |   |   |
|   | Other repurchase agreements                                                     |   | Five to ten years   |   | $                                                               | 5,000   |     | 4.61    | %      |   | $ | — |   | — |   |
|   |                                                                            |   |                |   |                                                            |    |     |    |   |   |   |   |   |   |   |
|   | Federal Home Loan Bank Advances                                                 |   | Less than one year  |   | $                                                               | 3,250   |     | 4.83    | %      |   | $ | 6,909 |   | 5.37 | % |
|   |                                                                            |   | One to three years  |   |                                                            | 12,000  |     | 4.96    | %      |   |   | 9,250 |   | 4.68 | % |
|   |                                                                            |   | Three to five years |   |                                                            | 5,400   |     | 5.10    | %      |   |   | 6,900 |   | 5.12 | % |
|   |                                                                            |   | Five to ten years   |   |                                                            | 1,269   |     | 5.17    | %      |   |   | 1,382 |   | 5.19 | % |
|   |                                                                            |   | Totals:             |   | $                                                               | 21,919  |     |    |   |   | $ | 24,441 |   |   |   |
|   |                                                                            |   |                |   |                                                            |    |     |    |   |   |   |   |   |   |   |
|   | Subordinated debentures — capital                            trusts       |   | November 2035       |   | $                                                               | 5,155   |     | 6.68    | %      |   | $ | 5,155 |   | 7.03 | % |
|   |                                                                            |   | November 2035       |   |                                                            | 5,155   |     | 6.25    | %      |   |   | 5,155 |   | 6.25 | % |
|   |                                                                            |   | September 2037      |   |                                                            | 3,093   |     | 6.49    | %      |   |   | — |   |   |   |
|   |                                                                            |   | Totals:             |   | $                                                               | 13,403  |     |    |   |   | $ | 10,310 |   |   |   |
|   |                                                                            |   |                |   |                                                            |    |     |    |   |   |   |   |   |   |   |

 

At            December 31, 2007, the Company had a $37.4 million line of credit from the FHLBNY, of            which $21.9 million was outstanding at December 31, 2007.

 

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

 

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            6.675% at December 31, 2007. 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 $955,000 was            retained at the Company for future use.

 

21

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**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

 

**Note            9. Borrowings (continued)**

 

Subordinated Debentures – Capital Trusts            (continued): 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 $955,000 was retained at the Company for future            use.

 

On            June 21, 2007, Parke Capital Trust III, a Delaware statutory business trust and a            wholly-owned Subsidiary of the Company, issued $3,000,000 of variable rate capital            trust pass-through securities to investors. The variable interest rate re-prices            quarterly at the three-month LIBOR plus 1.50% and was 6.49063% at December 31, 2007.            Parke Capital Trust III purchased $3,093,000 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 December 15, 2012, 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            September 15, 2037. The proceeds were contributed to paid-in capital at the            Bank.

 

**Note 10. Income Taxes**

 

The            net deferred tax asset, which is included in other assets at December 31, 2007 and            2006, includes the following:

 

|                     |   | 2007                   |   |   |   | 2006   |   |
|--------------------------|--------|------------------------|--------|--------|--------|--------|--------|
|                     |   | (Amounts in thousands) |   |
| Deferred tax assets      |   | $                      | 3,126  |   |   |   | $      | 2,279 |   |
| Deferred tax liabilities |   |                   | (484   | )      |   |   |   | (452 | ) |
| Net deferred tax asset   |   | $                      | 2,642  |   |   |   | $      | 1,827 |   |

 

22

             

----

**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

             

**Note 10. Income Taxes (continued)**

 

Income tax expense for 2007, 2006 and 2005 consisted of the            following:

 

|                   |   | 2007                   |   |   |   | 2006   |   |   |   | 2005   |   |
|------------------------|--------|------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                   |   | (Amounts in thousands) |   |
| Current tax expense:   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                |   | $                      | 3,358  |   |   |   | $      | 2,599  |   |   |   | $ | 2,093 |   |
| State                  |   |                   | 955    |   |   |   |   | 851    |   |   |   |   | 624 |   |
|                   |   |                   | 4,313  |   |   |   |   | 3,450  |   |   |   |   | 2,717 |   |
| Deferred tax (benefit) |   |                   | (569   | )      |   |   |   | (531   | )      |   |   |   | (387 | ) |
| Income tax expense     |   | $                      | 3,744  |   |   |   | $      | 2,919  |   |   |   | $ | 2,330 |   |

 

The            components of the net deferred tax asset are as follows:

 

|                          |   |   |   |   |   | 2007                   |   |   |   | 2006   |   |
|-------------------------------|--------|--------|--------|--------|--------|------------------------|--------|--------|--------|--------|--------|
|                          |   |   |   |   |   | (Amounts in thousands) |   |
| Allowance for loan losses     |   |   |   |   |   | $                      | 2,283  |   |   |   | $      | 1,745 |   |
| Deferred loan costs           |   |   |   |   |   |                   | (114   | )      |   |   |   | (167 | ) |
| Securities available for sale |   |   |   |   |   |                   | 346    |   |   |   |   | 142 |   |
| Minimum pension liability     |   |   |   |   |   |                   | 180    |   |   |   |   | 138 |   |
| Other                         |   |   |   |   |   |                   | (53    | )      |   |   |   | (31 | ) |
|                          |   |   |   |   |   | $                      | 2,642  |   |   |   | $      | 1,827 |   |

 

A            reconciliation of the Company’s effective income tax rate with the statutory            federal rate for 2007, 2006 and 2005 is as follows:

 

|                                                                      |   | 2007                   |   |   |   | 2006   |   |   |   | 2005   |   |
|---------------------------------------------------------------------------|--------|------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                      |   | (Amounts in thousands) |   |
| Tax expense at statutory rate (35%)                                       |   | $                      | 3,358  |   |   |   | $      | 2,640  |   |   |   | $ | 2,038 |   |
| Benefit of income taxed at lower rates (1%)                               |   |                   | (96    | )      |   |   |   | (75    | )      |   |   |   | (58 | ) |
| Permanent differences and other, net                                      |   |                   | (88    | )      |   |   |   | (94    | )      |   |   |   | 4 |   |
| State income taxes, net of Federal tax                            benefit |   |                   | 570    |   |   |   |   | 448    |   |   |   |   | 346 |   |
|                                                                      |   | $                      | 3,744  |   |   |   | $      | 2,919  |   |   |   | $ | 2,330 |   |

 

The            Company adopted the Financial Accounting Standards Board Interpretation 48 as of            January 1, 2007, as required, and determined that the adoption did not have a material            impact on the Company’s financial position or results of operation. The            Company’s policy is to recognize interest and penalties associated with            unrecognized tax liabilities within income tax expense in the Statement of Income. The            Company did not recognize any interest or penalties related to income tax during the            year ended December 31, 2007 and did not accrue interest or penalties as of December            31, 2007. The Company does not have an accrual for uncertain tax positions as of            December 31, 2007, as deductions taken and benefits accrued are based on widely            understood administrative practices and procedures and are based on clear and            unambiguous tax law. Tax returns for all years 2004 and thereafter are subject to            further examination by tax authorities.

 

23

             

----

**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

             

**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            $285,000 in 2007, $230,000 in 2006 and $246,000 in 2005. The unfunded benefit            obligation, which was included in other accrued liabilities, was approximately            $1,569,000 at December 31, 2007 and $1,179,000 at December 31, 2006.

 

The            benefit obligation at December 31, 2007 and December 31, 2006 was calculated as            follows:

 

|                            |   | 2007                   |   |   |   | 2006   |   |
|---------------------------------|--------|------------------------|--------|--------|--------|--------|--------|
|                            |   | (Amounts in thousands) |   |
|                            |   |                   |   |   |   |   |   |   |   |
| Benefit obligation, January 1   |   | $                      | 1,179  |   |   |   | $      | 894 |   |
| Service cost                    |   |                   | 180    |   |   |   |   | 153 |   |
| Interest cost                   |   |                   | 72     |   |   |   |   | 53 |   |
| (Gain) loss                     |   |                   | 138    |   |   |   |   | 79 |   |
|                            |   |                   |   |   |   |   |   |   |   |
| Benefit obligation, December 31 |   | $                      | 1,569  |   |   |   | $      | 1,179 |   |

 

The            net periodic pension cost for 2007 and 2006 was calculated as follows:

 

|                          |   | 2007                   |   |   |   | 2006   |   |
|-------------------------------|--------|------------------------|--------|--------|--------|--------|--------|
|                          |   | (Amounts in thousands) |   |
|                          |   |                   |   |   |   |   |   |   |   |
| Service cost                  |   | $                      | 180    |   |   |   | $      | 153 |   |
| Interest cost                 |   |                   | 72     |   |   |   |   | 53 |   |
| (Gain) loss                   |   |                   | 9      |   |   |   |   | — |   |
| Prior service cost recognized |   |                   | 24     |   |   |   |   | 24 |   |
|                          |   |                   |   |   |   |   |   |   |   |
|                          |   | $                      | 285    |   |   |   | $      | 230 |   |

 

The            discount rate used in determining the actuarial present value of the projected benefit            obligation was 5.5% for both 2007 and 2006. The expected rate of compensation increase            was 4.0% for both 2007 and 2006.

 

Simple IRA Plan: The Company had a simple            IRA Plan (the “Plan”) covering substantially all employees. The Company was            required to contribute 2% of the employees’ eligible salary to the Plan. All            Company contributions are immediately vested. Plan expense amounted to approximately            $44,000 in 2007, $38,000 in 2006 and $33,000 in 2005.

 

In            January 2008, the Company eliminated the simple IRA Plan and replaced it with a 401K            Plan. Under the new Plan, the Company is required to contribute 3% of all qualifying            employees’ eligible salary to the Plan.

 

24

             

----

**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

             

**Note 12. Regulatory Matters**

 

Capital Ratios: Parke Bancorp (on a            consolidated basis) 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, 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 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, 2007 and 2006, that the Bank meet            all capital adequacy requirements to which they are subject.

 

As            of December 31, 2007 and 2006, the Bank was categorized as            “well-capitalized” under the regulatory framework for prompt corrective            action. There are no conditions or events since December 31, 2007 that management            believes have changed the Bank’s capital category.

 

To            be categorized as well capitalized, the Bank must maintain minimum total risk based,            Tier 1 risk based, and Tier 1 leverage ratios as set forth in the following            tables.

 

|                      |   |   |   |   |              |   |   | To Be Well-Capitalized  |   |
|---------------------------|--------|--------|--------|--------|-------------------|--------|--------|-------------------------|--------|
|                      |   |   |   |   | For Capital       |   |   | Prompt Under Corrective |   |
|                      |   | Actual |   |   | Adequacy Purposes |   |   | Action Provisions       |   |
| **Parke Bank**            |   | Amount |   | Ratio  |              |   | Amount |                    | Ratio  |   |   | Amount |   | Ratio |   |
|                      |   |   |   |   |              |   |   |                    |   |   |   |   |   |   |   |   |   |   |
| As of December 31, 2007   |   |   |   |   |              |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Amounts in thousands)    |   |   |   |   |              |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      |   |   |   |   |              |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Risk Based Capital  |   | $      | 55,583 |   | 12.39             | %      |   |                    | $      | 35,885 |   | 8 | % |   |   | $ | 44,856 |   | 10 | % |   |
| (to Risk Weighted Assets) |   |   |   |   |              |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      |   |   |   |   |              |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier I Capital            |   | $      | 49,975 |   | 11.14             | %      |   |                    | $      | 17,942 |   | 4 | % |   |   | $ | 26,913 |   | 6 | % |   |
| (to Risk Weighted Assets) |   |   |   |   |              |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      |   |   |   |   |              |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier I Capital            |   | $      | 49,975 |   | 11.19             | %      |   |                    | $      | 17,867 |   | 4 | % |   |   | $ | 22,334 |   | 5 | % |   |
| (to Average Assets)       |   |   |   |   |              |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |

 

 

 

 

 

25

----

**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

             

**Note 12. Regulatory Matters (continued)**

 

Capital Ratios (continued):

 

|                      |   |   |   |              |   |   | To Be Well-Capitalized  |   |   |
|---------------------------|--------|--------|--------|-------------------|--------|--------|-------------------------|--------|--------|
|                      |   |   |   | For Capital       |   |   | Prompt Under Corrective |   |   |
|                      |   | Actual |   | Adequacy Purposes |   |   | Action Provisions       |   |   |
| **Parke Bank**            |   | Amount |   | Ratio             |   | Amount |                    | Ratio  |   |   | Amount |   | Ratio |   |
| As of December 31, 2006   |   |   |   |              |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| (Amounts in thousands)    |   |   |   |              |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Total Risk Based Capital  |   | $      | 44,405 |              | 14.50  | %      |                    | $      | 24,499 |   | 8 | % |   |   | $ | 30,624 |   | 10 | % |   |   |
| (to Risk Weighted Assets) |   |   |   |              |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      |   |   |   |              |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier I Capital            |   | $      | 40,569 |              | 13.25  | %      |                    | $      | 12,249 |   | 4 | % |   |   | $ | 18,374 |   | 6 | % |   |   |
| (to Risk Weighted Assets) |   |   |   |              |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      |   |   |   |              |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier I Capital            |   | $      | 40,569 |              | 11.55  | %      |                    | $      | 14,054 |   | 4 | % |   |   | $ | 17,568 |   | 5 | % |   |   |
| (to Average Assets)       |   |   |   |              |   |   |                    |   |   |   |   |   |   |   |   |   |   |

 

 

**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, 2005. 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 completion 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 2007 and            April 2006 the Company paid a 10% and 20% common stock dividend, respectively to            shareholders (2007 – 287,249 shares and 2006 – 472,430 shares). All share            and per share information has been retroactively adjusted. In December 2006, the            Company paid a $.20 cash dividend to shareholders.

 

Treasury Stock: During 2007 and 2006, the            Company repurchased 42,035 and 59,462, respectively, shares of the Company’s            common stock.

 

Stock Options: 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 576,913 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.

 

26

 

----

**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

 

**Note 13. Shareholders’ Equity (continued)**

 

Stock Options (continued): Option awards            are granted with an exercise price equal to the market price of the Company’s            stock at the date of the grant. In 2007, there were no options awarded. Options issued            in 2006 generally vest over four to five years. Options awarded prior to December 31,            2005 vested upon issuance. All options issued have 10 year contractual            terms.

 

At            December 31, 2007, there were 162,457 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. 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. Effective January 1, 2006,            the Company adopted FAS 123R. The method of determining pro-forma compensation cost for            2005 and compensation expense in 2006 and 2007 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 2007 and 2006 amounted to            $33,000 and $37,000, respectively.

 

The            following table summarizes stock option activity for the year ended December 31, 2007.            The information presented has been adjusted to account for the 10% stock dividend            declared and paid in 2007.

 
|                             |   |    |   |     |   | Weighted    |   |            |   |
|----------------------------------|--------|---------|--------|----------|--------|-------------|--------|-----------------|--------|
|                             |   |    |   | Weighted |   | Average     |   |            |   |
|                             |   |    |   | Average  |   | Remaining   |   |            |   |
|                             |   |    |   | Exercise |   | Contractual |   | Aggregate       |   |
| Options                          |   | Shares  |   | Price    |   | Life        |   | Intrinsic Value |   |
|                             |   |    |   |     |   |        |   |            |   |
| Outstanding at January 1, 2007   |   | 383,073 |   |     | $      | 12.29       |   |            |   |   |   |   |   |   |   |
| Granted                          |   | — |   |     | $      | —     |   |            |   |   |   |   |   |   |   |
| Exercised                        |   | (35,231 | )      |     | $      | 8.95        |   |            |   |   |   |   |   |   |   |
| Expired/terminated               |   | (8,327  | )      |     | $      | 15.22       |   |            |   |   |   |   |   |   |   |
| Outstanding at December 31, 2007 |   | 339,515 |   |     | $      | 12.66       |   |            |   | 6.4 |   |   | $ | 1,746,000 |   |
|                             |   |    |   |     |   |        |   |            |   |   |   |   |   |   |   |
| Exercisable at December 31, 2007 |   | 329,615 |   |     | $      | 12.52       |   |            |   | 6.3 |   |   | $ | 1,740,000 |   |

 

27

----

**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

 

**Note 13. Shareholders’ Equity (continued)**

 

Stock Options (continued): The following            table summarizes stock option activity for the year ended December 31, 2006. The            information presented has been adjusted to account for the stock dividends declared and            paid in 2007 and 2006.

 

|                             |   |    |   |   |     |    | Weighted    |   |   |            |   |
|----------------------------------|--------|---------|--------|--------|----------|---------|-------------|--------|--------|-----------------|--------|
|                             |   |    |   |   | Weighted |    | Average     |   |   |            |   |
|                             |   |    |   |   | Average  |    | Remaining   |   |   |            |   |
|                             |   |    |   |   | Exercise |    | Contractual |   |   | Aggregate       |   |
| Options                          |   | Shares  |   |   | Price    |    | Life        |   |   | Intrinsic Value |   |
|                             |   |    |   |   |     |    |        |   |   |            |   |   |   |   |   |
| Outstanding at January 1, 2006   |   | 364,065 |   |   | $        | 12.03   |        |   |   |            |   |   |   |   |   |   |   |
| Granted                          |   | 19,800  |   |   | $        | 17.10   |        |   |   |            |   |   |   |   |   |   |   |
| Exercised                        |   | (792    | )      |   | $        | 14.58   |        |   |   |            |   |   |   |   |   |   |   |
| Expired/terminated               |   | — |   |   | $        | — |        |   |   |            |   |   |   |   |   |   |   |
| Outstanding at December 31, 2006 |   | 383,073 |   |   | $        | 12.29   |        |   | 7.3    |            |   |   |   |   | $ | 1,365,000 |   |
|                             |   |    |   |   |     |    |        |   |   |            |   |   |   |   |   |   |   |
| Exercisable at December 31, 2006 |   | 368,223 |   |   | $        | 12.11   |        |   | 7.2    |            |   |   |   |   | $ | 1,378,000 |   |

 

The            following table summarizes stock option activity for the year ended December 31, 2005.            The information presented has been adjusted to account for the stock dividends declared            and paid in 2007 and 2006.

 

|   |                             |   |    |   |   | Weighted            |   |
|--------|----------------------------------|--------|---------|--------|--------|---------------------|--------|
|   |                             |   |    |   |   | Average             |   |
|   | Options                          |   | Shares  |   |   | Exercise Price |   |
|   |                             |   |    |   |   |                |   |
|   | Outstanding at January 1, 2005   |   | 176,044 |   |   |                | $      | 7.11 |   |   |
|   | Granted                          |   | 215,820 |   |   |                | $      | 15.53 |   |   |
|   | Exercised                        |   | (475    | )      |   |                | $      | 8.04 |   |   |
|   | Expired/terminated               |   | (27,324 | )      |   |                | $      | 8.02 |   |   |
|   | Outstanding at December 31, 2005 |   | 364,065 |   |   |                | $      | 12.02 |   |   |
|   |                             |   |    |   |   |                |   |   |   |   |
|   | Exercisable at December 31, 2005 |   | 364,065 |   |   |                | $      | 12.02 |   |   |

 

 

28

----

**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

 

**Note 13. Shareholders’ Equity (continued)**

 

Stock Options (continued):Stock options            outstanding and exercisable at December 31, 2007:

 

| Options Outstanding      |   | Options Exercisable |    |
|--------------------------|--------|---------------------|---------|
|                     |   |                |    |   |   |   |   |   |   |   |   |
|                     |   |                |    | Weighted- |   |   |   |   |   |   |   |
|                     |   |                |    | Average |   | Weighted |   |   |   | Weighted |   |
|                     |   |                |    | Remaining |   | Average |   |   |   | Average |   |
|                     |   | Number              |    | Contractual |   | Exercise |   | Number |   | Exercise |   |
| Range of Exercise Prices |   | Outstanding         |    | Life |   | Price |   | Outstanding |   | Price |   |
|                     |   |                |    |   |   |   |   |   |   |   |   |
| $5.74                    |   |                | 55,321  |   |   |   | 1.4 years |   |   | $ | 5.74 |   |   | 55,321 |   |   | $ | 5.74 |   |
| $5.74 - $8.03            |   |                | 54,370  |   |   |   | 5.1 years |   |   | $ | 7.34 |   |   | 54,370 |   |   | $ | 7.34 |   |
| $11.36                   |   |                | 7,207   |   |   |   | 6.3 years |   |   | $ | 11.36 |   |   | 7,207 |   |   | $ | 11.36 |   |
| $13.64 - $17.27          |   |                | 222,617 |   |   |   | 8.0 years |   |   | $ | 15.72 |   |   | 212,717 |   |   | $ | 15.65 |   |
|                     |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                     |   |                | 339,515 |   |   |   | 6.4 years |   |   | $ | 12.66 |   |   | 329,615 |   |   | $ | 12.52 |   |

 

 

Stock options outstanding and exercisable at December 31,            2006:

 

| Options Outstanding      |   | Options Exercisable |    |
|--------------------------|--------|---------------------|---------|
|                     |   |                |    |   |   |   |   |   |   |   |   |
|                     |   |                |    | Weighted- |   |   |   |   |   |   |   |
|                     |   |                |    | Average |   | Weighted |   |   |   | Weighted |   |
|                     |   |                |    | Remaining |   | Average |   |   |   | Average |   |
|                     |   | Number              |    | Contractual |   | Exercise |   | Number |   | Exercise |   |
| Range of Exercise Prices |   | Outstanding         |    | Life |   | Price |   | Outstanding |   | Price |   |
|                     |   |                |    |   |   |   |   |   |   |   |   |
| $5.74                    |   |                | 56,628  |   |   |   | 2.4 years |   |   | $ | 5.74 |   |   | 56,628 |   |   | $ | 5.74 |   |
| $5.74                    |   |                | 29,558  |   |   |   | 5.4 years |   |   | $ | 5.74 |   |   | 29,558 |   |   | $ | 5.74 |   |
| $8.03 - $11.36           |   |                | 62,059  |   |   |   | 6.6 years |   |   | $ | 8.61 |   |   | 62,059 |   |   | $ | 8.61 |   |
| $13.67 - $17.27          |   |                | 234,828 |   |   |   | 9.0 years |   |   | $ | 15.68 |   |   | 219,978 |   |   | $ | 15.57 |   |
|                     |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                     |   |                | 383,073 |   |   |   | 7.3 years |   |   | $ | 12.30 |   |   | 368,223 |   |   | $ | 12.10 |   |

 

 

The            weighted-average grant-date fair value of options granted during the years 2006 and            2005 was $6.67 and $5.17, respectively. The total intrinsic value of options exercised            during the years 2007, 2006 and 2005 was $275,000, $3,000 and $140,000,            respectively.

 

29

----

**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

 

**Note 13. Shareholders’ Equity (continued)**

 

Stock Options (continued):A summary of the            status of the Company’s nonvested shares as of December 31, 2007 and changes            during the year ended December 31, 2007 is as follows:

 

|                           |   |    |   | Weighted-       |    |
|--------------------------------|--------|---------|--------|-----------------|---------|
|                           |   |    |   | Average Grant-  |    |
| Nonvested Shares               |   | Shares  |   | Date Fair Value |    |
|                           |   |    |   |            |    |
| Nonvested at January 1, 2007   |   | 14,850  |   | $               | 6.67    |   |
| Granted                        |   | — |   | $               | — |   |
| Vested                         |   | (4,950  | )      | $               | 6.67    |   |
| Forfeited                      |   | — |   | $               | — |   |
|                           |   |    |   |            |    |   |
| Nonvested at December 31, 2007 |   | 9,900   |   | $               | 6.67    |   |

 

At            December 31, 2007, there was $62,000 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 2007 was $33,000.

 

Warrants:In connection with the            Company’s initial stock offering in 1998, warrants were issued. After stock            dividends, these warrants have a current exercise price of $5.75 per share and expire            in 2008. During 2007, 2006 and 2005, warrants exercised were 99,153, 103,861 and            134,372 respectively. At December 31, 2007, 495,764 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 $95,000 in 2007, $88,000 in 2006 and $98,000 in 2005. 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            $357,000 in 2007, $286,000 in 2006 and $284,000 in 2005.

             

**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.

 

30

----

**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

             

**Note 15. Commitments and Contingencies (continued)**

 

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, 2007 and 2006,            commitments to extend credit amounted to approximately $129.7 million and $117.3            million, 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, 2007 and 2006, standby            letters of credit with customers were $7.3 million and $7.2 million            respectively.

 

Loan            commitments and standby letters of credit are issued in the ordinary course of business            to meet customer needs. Commitments to fund fixed-rate loans were immaterial at            December 31, 2007. 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.

 

The            following 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, due from banks, and federal funds sold approximates fair            value.

 

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

             

31

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**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

             

**Note 16. Fair Value of Financial Instruments            (continued)**

 

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 or borrowings.

 

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.

 

32

----

**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

             

**Note 16. Fair Value of Financial Instruments            (continued)**

 

The            following table summarizes carrying amounts and fair values for financial instruments            at December 31, 2007:

 

|                                 |   | Carrying Value         |    | Fair Value |   |
|--------------------------------------|--------|------------------------|---------|-----------------|--------|
|                                 |   | (Amounts in thousands) |    |
| Financial Assets:                    |   |                   |    |            |   |   |   |
| Cash and cash equivalents            |   | $                      | 9,178   |            | $      | 9,178 |   |
| Investment securities                |   |                   | 32,238  |            |   | 32,192 |   |
| Restricted stock                     |   |                   | 1,473   |            |   | 1,473 |   |
| Loans, net                           |   |                   | 402,683 |            |   | 402,958 |   |
| Accrued interest receivable          |   |                   | 2,633   |            |   | 2,633 |   |
|                                 |   |                   |    |            |   |   |   |
| Financial Liabilities:               |   |                   |    |            |   |   |   |
| Demand deposits and savings deposits |   | $                      | 93,736  |            | $      | 93,736 |   |
| Time deposits                        |   |                   | 285,744 |            |   | 287,204 |   |
| Borrowings                           |   |                   | 40,322  |            |   | 41,628 |   |
| Accrued interest payable             |   |                   | 1,991   |            |   | 1,991 |   |

 

The            following table summarizes carrying amounts and fair values for financial instruments            at December 31, 2006:

 

|                                 |   | Carrying Value         |    | Fair Value |   |
|--------------------------------------|--------|------------------------|---------|-----------------|--------|
|                                 |   | (Amounts in thousands) |    |
| Financial Assets:                    |   |                   |    |            |   |   |   |
| Cash and cash equivalents            |   | $                      | 11,261  |            | $      | 11,261 |   |
| Investment securities                |   |                   | 26,961  |            |   | 26,956 |   |
| Restricted stock                     |   |                   | 1,493   |            |   | 1,493 |   |
| Loans, net                           |   |                   | 306,044 |            |   | 304,779 |   |
| Accrued interest receivable          |   |                   | 2,095   |            |   | 2,095 |   |
|                                 |   |                   |    |            |   |   |   |
| Financial Liabilities:               |   |                   |    |            |   |   |   |
| Demand deposits and savings deposits |   | $                      | 73,493  |            | $      | 73,493 |   |
| Time deposits                        |   |                   | 216,436 |            |   | 219,134 |   |
| Borrowings                           |   |                   | 34,851  |            |   | 34,236 |   |
| Accrued interest payable             |   |                   | 1,849   |            |   | 1,849 |   |

 

33

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**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated 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.

 

|                             |   | Three Months Ended                                                           |   |          |   |
|----------------------------------|--------|------------------------------------------------------------------------------|--------|---------------|--------|
|                             |   | December 31,                                                                 |   | September 30, |   | June 30, |   | March 31, |   |   |   |
|                             |   | (Amounts in thousands, except per share                            amounts)) |   |          |   |
| 2007                             |   |                                                                         |   |          |   |   |   |   |   |   |   |
|                             |   |                                                                         |   |          |   |   |   |   |   |   |   |
| Interest income                  |   | $                                                                            | 8,647  |          | $      | 8,962 |   | $ | 8,158 |   | $ | 7,419 |   |   |   |
| Interest expense                 |   |                                                                         | 4,797  |          |   | 4,554 |   |   | 4,364 |   |   | 3,880 |   |   |   |
| Net interest income              |   |                                                                         | 3,850  |          |   | 4,408 |   |   | 3,794 |   |   | 3,539 |   |   |   |
| Provision for loan losses        |   |                                                                         | 265    |          |   | 186 |   |   | 210 |   |   | 500 |   |   |   |
| Income before income tax expense |   |                                                                         | 2,373  |          |   | 2,683 |   |   | 2,454 |   |   | 2,086 |   |   |   |
| Income tax expense               |   |                                                                         | 908    |          |   | 1,055 |   |   | 972 |   |   | 809 |   |   |   |
| Net income                       |   |                                                                         | 1,465  |          |   | 1,628 |   |   | 1,482 |   |   | 1,277 |   |   |   |
|                             |   |                                                                         |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Net income per common share:     |   |                                                                         |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Basic                            |   | $                                                                            | 0.45   |          | $      | 0.52 |   | $ | 0.47 |   | $ | 0.41 |   |   |   |
| Diluted                          |   | $                                                                            | 0.41   |          | $      | 0.45 |   | $ | 0.41 |   | $ | 0.36 |   |   |   |
|                             |   |                                                                         |   |          |   |   |   |   |   |   |   |   |   |   |   |
| 2006                             |   |                                                                         |   |          |   |   |   |   |   |   |   |   |   |   |   |
|                             |   |                                                                         |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                  |   | $                                                                            | 6,995  |          | $      | 6,753 |   | $ | 6,158 |   | $ | 5,570 |   |   |   |
| Interest expense                 |   |                                                                         | 3,542  |          |   | 3,241 |   |   | 2,826 |   |   | 2,414 |   |   |   |
| Net interest income              |   |                                                                         | 3,453  |          |   | 3,512 |   |   | 3,332 |   |   | 3,156 |   |   |   |
| Provision for loan losses        |   |                                                                         | 166    |          |   | 211 |   |   | 328 |   |   | 235 |   |   |   |
| Income before income tax expense |   |                                                                         | 1,860  |          |   | 2,022 |   |   | 1,861 |   |   | 1,800 |   |   |   |
| Income tax expense               |   |                                                                         | 649    |          |   | 806 |   |   | 740 |   |   | 724 |   |   |   |
| Net income                       |   |                                                                         | 1,211  |          |   | 1,216 |   |   | 1,121 |   |   | 1,076 |   |   |   |
|                             |   |                                                                         |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Net income per common share:     |   |                                                                         |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Basic                            |   | $                                                                            | 0.39   |          | $      | 0.39 |   | $ | 0.36 |   | $ | 0.35 |   |   |   |
| Diluted                          |   | $                                                                            | 0.33   |          | $      | 0.34 |   | $ | 0.30 |   | $ | 0.30 |   |   |   |

 

34

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**Parke Bancorp, Inc. and Subsidiaries**

 

**Notes to Consolidated Statements**

             

 

**Note            18. Parent Company Only Financial Statements**

 

Condensed financial information of the parent company only is presented            in the following two tables:

 

|                                       |   |   |   | December 31,           |   |
|--------------------------------------------|--------|--------|--------|------------------------|--------|
|                                       |   |   |   | 2007                   |   |   |   | 2006 |   |
|                                       |   |   |   | (Amounts in thousands) |   |
| **Assets:**                                |   |   |   |                   |   |   |   |   |   |   |   |
| Cash                                       |   |   |   | $                      | 55     |   |   |   | $ | 70 |   |
| Investments in subsidiaries                |   |   |   |                   | 52,366 |   |   |   |   | 42,241 |   |
| Total assets                               |   |   |   | $                      | 52,421 |   |   |   | $ | 42,311 |   |
|                                       |   |   |   |                   |   |   |   |   |   |   |   |
| **Liabilities and Shareholders' Equity:**  |   |   |   |                   |   |   |   |   |   |   |   |
| Subordinated debentures                    |   |   |   | $                      | 13,403 |   |   |   | $ | 10,310 |   |
| Other liabilities                          |   |   |   |                   | 80     |   |   |   |   | 70 |   |
| Shareholders' equity                       |   |   |   |                   | 38,938 |   |   |   |   | 31,931 |   |
| Total liabilities and shareholders' equity |   |   |   | $                      | 52,421 |   |   |   | $ | 42,311 |   |

 

 

**Statement of Income**

 

|                                                                      |   |   |   | Years ended December 31, |                   |
|---------------------------------------------------------------------------|--------|--------|--------|--------------------------|------------------------|
|                                                                      |   |   |   | 2007                     |                   |   |   | 2006 |   |   |   | 2005 |   |
|                                                                      |   |   |   |                     | (Amounts in thousands) |   |
| Income:                                                                   |   |   |   |                     |                   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends from bank subsidiary                                            |   |   |   | $                        | 950                    |   |   |   | $ | 1,875 |   |   |   | $ | — |   |
|                                                                      |   |   |   |                     |                   |   |   |   |   |   |   |   |   |   |   |   |
| Expense:                                                                  |   |   |   |                     |                   |   |   |   |   |   |   |   |   |   |   |   |
| Interest on subordinated debentures                                       |   |   |   |                     | 797                    |   |   |   |   | 652 |   |   |   |   | 214 |   |
| Other expenses                                                            |   |   |   |                     | 178                    |   |   |   |   | 1 |   |   |   |   | — |   |
|                                                                      |   |   |   |                     | 975                    |   |   |   |   | 653 |   |   |   |   | 214 |   |
|                                                                      |   |   |   |                     |                   |   |   |   |   |   |   |   |   |   |   |   |
| Income before income taxes                                                |   |   |   |                     | (25                    | ) |   |   |   | 1,222 |   |   |   |   | (214 | ) |
| Provision for income taxes (benefit)                                      |   |   |   |                     | —                |   |   |   |   | — |   |   |   |   | (86 | ) |
| Equity in undistributed income of                            subsidiaries |   |   |   |                     | 6,826                  |   |   |   |   | 4,624 |   |   |   |   | 3,623 |   |
|                                                                      |   |   |   |                     |                   |   |   |   |   |   |   |   |   |   |   |   |
| Net Income                                                                |   |   |   | $                        | 6,801                  |   |   |   | $ | 5,846 |   |   |   | $ | 3,495 |   |

 

35

----

 

 

| **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.)** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                             |   |   |
| 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, NW |
| Cranford, NJ  07016                                                                                                                                                                                                                                                                                                                    | One Valley Square, Suite 250 | Suite 210 East |
|                                                                                                                                                                                                                                                                                                                                             | Blue Bell, PA  19422 | Washington, D.C.  20001 |
|                                                                                                                                                                                                                                                                                                                                                  |  |  |  |  |  |  |

 

36

----

| **PARKE BANK**                             |
|--------------------------------------------|
|                                       |   |
| **Officers**                               |
|                                       |   |
| 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                           | Mary Kay Shea |
| Senior Vice President, Philadelphia Region | Vice President and Controller |
|                                       |   |
| James S. Talarico                          | Milton H. Witte |
| Vice President                             | Vice President |
|                                       |   |
| John J. Murphy                             | Allen M. Bachman |
| Treasurer                                  | Assistant Vice President |
|                                       |   |
| Kathleen A. Conover                        | Dolores M. Calvello |
| Assistant Vice President                   | Assistant Vice President |
|                                       |   |
| Gil Eubank                                 | Mark A. Prater |
| Assistant Vice President                   | Assistant Vice President |
|                                       |   |
| Mary Ann Seal                              | Evette M. Snyder |
| Assistant Vice President                   | 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 |
|                                       |   |   |
| **Philadelphia Office**                    | **Havertown Loan Production Office** |
| 1610 Spruce Street                         | 614 Darby Road – 2nd Floor |
| Philadelphia, PA  19103          | Havertown, PA  19083 |
| (215) 722-1113                             | (610) 449-4017 |
|                                       |   |
|                                       |   |
|                                       |   |   |
|                                       |   |   |
| 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 | PARKE CAPITAL TRUST III |
| (856) 256-2500                             | (856) 256-2500 | 601 Delsea Drive |
|                                       |   | Washington Township, NJ  08080 |
|                                       |   | (856) 256-2500 |
|                                            |  |  |  |

 

37