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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q





QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2010





PARK BANCORP, INC.

(Exact name of registrant as specified in its charter)





0-20867

(Commission File Number)

Delaware

(State of incorporation)

36-4082530

(IRS Employer Identification No.)

5400 South Pulaski Road, Chicago, Illinois

(Address of Principal Executive Offices)

60632

(ZIP Code)

(773) 582-8616

(Registrants telephone number, including area code)





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

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

Indicated by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting company. See the definition of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈ |  | Accelerated filer         |  |  ̈
|                        |  |   | 
|Non-accelerated filer   |  |  ̈ |  | Smaller Reporting Company |  | x

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

As of August 16, 2010, the Registrant had outstanding 1,193,174 shares of common stock.









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TABLE OF CONTENTS



|                                                                                              |  |     
|--------------------------------------------------------------------------------------------- |  | ----
|                                                                                              |  | Page
|PART I  FINANCIAL INFORMATION                                                                |  | 2   
|                                                                                              | 
|Item 1. Financial Statements                                                                  |  | 2   
|                                                                                              | 
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 13  
|                                                                                              | 
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                            |  | 16  
|                                                                                              | 
|Item 4. Controls and Procedures                                                               |  | 17  
|                                                                                              | 
|PART II  OTHER INFORMATION                                                                   |  | 18  
|                                                                                              | 
|Item 1. Legal Proceedings                                                                     |  | 18  
|                                                                                              | 
|Item 1A. Risk Factors                                                                         |  | 18  
|                                                                                              | 
|Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 18  
|                                                                                              | 
|Item 3. Defaults Upon Senior Securities                                                       |  | 19  
|                                                                                              | 
|Item 4. [Removed and Reserved]                                                                |  | 19  
|                                                                                              | 
|Item 5. Other Information                                                                     |  | 19  
|                                                                                              | 
|Item 6. Exhibits                                                                              |  | 19  
|                                                                                              | 
|SIGNATURES                                                                                    |  | 20  



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

This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements may be identified by the use of words such as believe, expect, anticipate, should, planned, estimated, and
potential. These forward-looking statements relate to, among other things, expectations of the business environment in which the Company operates, projections of future performance, perceived opportunities in the market, potential future
credit experience, and statements regarding the Companys strategies. These forward-looking statements are based upon current management expectations and may, therefore, involve risks and uncertainties. The Companys actual results,
performance, or achievements may differ materially from those suggested, expressed, or implied by forward-looking statements as a result of a wide variety or range of factors including, but not limited to: interest rate fluctuations; economic
conditions in the Companys primary market area; deposit flows; demand for residential, construction/land development, commercial real estate, consumer, and other types of loans; our ability to manage our growth, levels of our non-performing
assets and other loans of concern; real estate values; success of new products; competitive conditions between banks and non-bank financial service providers; regulatory and accounting changes; the implementation of the Dodd-Frank Wall Street Reform
and Consumer Protection Act; success of new technology; technological factors affecting operations; costs of technology; pricing of products and services; and other risks detailed from time to time in our filings with the Securities and Exchange
Commission. Any of the forward-looking statements that we make in this Form 10-Q and in the other public statements we make may turn out to be wrong because of the inaccurate assumptions we might make, because of the factors illustrated above or
because of other factors that we cannot foresee. Because of these and other uncertainties, our actual future results may be materially different from those expressed in any forward looking statements made by or on behalf of the Company. Therefore,
these factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. The Company undertakes no responsibility to update or revise any forward-looking statements unless required
to do so under the federal securities laws.



1



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##### Table of Contents

PART I  FINANCIAL INFORMATION



|Item 1. | Financial Statements.
|------- | ---------------------

PARK BANCORP, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(In thousands of dollars, except share data)

(Unaudited)



|                                                                                                                                                |  |               |         |   |                   |   |         |  
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | - | ----------------- | - | ------- | -
|                                                                                                                                                |  | June 30, 2010 |         |   | December 31, 2009 |  
|Assets                                                                                                                                          |  |               |         |   |                   |   |         |  
|Cash and due from banks                                                                                                                         |  | $             | 2,228   |   |                   | $ | 2,867   |  
|Federal funds sold                                                                                                                              |  |               | 8,100   |   |                   |   | 4,164   |  
|Interest-bearing deposits with other financial institutions                                                                                     |  |               | 3,101   |   |                   |   | 4,944   |  
|                                                                                                                                                |  |               |         |   |                   |   |         |  
|Total cash and cash equivalents                                                                                                                 |  |               | 13,429  |   |                   |   | 11,975  |  
|                                                                                                                                                |  |              
|Securities available for sale                                                                                                                   |  |               | 31,624  |   |                   |   | 34,778  |  
|Loans receivable, net of allowance of $3,848 and $2,851                                                                                         |  |               | 140,647 |   |                   |   | 142,924 |  
|Federal Home Loan Bank stock, at cost                                                                                                           |  |               | 5,423   |   |                   |   | 5,423   |  
|Premises and equipment, net                                                                                                                     |  |               | 9,212   |   |                   |   | 9,445   |  
|Accrued interest receivable                                                                                                                     |  |               | 840     |   |                   |   | 924     |  
|Bank-owned life insurance                                                                                                                       |  |               | 8,437   |   |                   |   | 8,282   |  
|Real estate owned                                                                                                                               |  |               | 2,077   |   |                   |   | 1,611   |  
|Other assets                                                                                                                                    |  |               | 2,428   |   |                   |   | 3,251   |  
|                                                                                                                                                |  |               |         |   |                   |   |         |  
|Total assets                                                                                                                                    |  | $             | 214,117 |   |                   | $ | 218,613 |  
|                                                                                                                                                |  |               |         |   |                   |   |         |  
|                                                                                                                                                |  |              
|Liabilities and Stockholders Equity                                                                                                            |  |               |         |   |                   |   |         |  
|Liabilities                                                                                                                                     |  |               |         |   |                   |   |         |  
|Non-interest bearing deposits                                                                                                                   |  | $             | 6,752   |   |                   | $ | 6,810   |  
|Interest bearing deposits                                                                                                                       |  |               | 139,872 |   |                   |   | 143,812 |  
|                                                                                                                                                |  |               |         |   |                   |   |         |  
|Total deposits                                                                                                                                  |  |               | 146,624 |   |                   |   | 150,622 |  
|                                                                                                                                                |  |              
|Securities sold under repurchase agreements                                                                                                     |  |               | 2,600   |   |                   |   | 2,600   |  
|Advances from borrowers for taxes and insurance                                                                                                 |  |               | 1,706   |   |                   |   | 1,859   |  
|Federal Home Loan Bank advances                                                                                                                 |  |               | 40,870  |   |                   |   | 39,985  |  
|Accrued interest payable                                                                                                                        |  |               | 175     |   |                   |   | 190     |  
|Other liabilities                                                                                                                               |  |               | 407     |   |                   |   | 409     |  
|                                                                                                                                                |  |               |         |   |                   |   |         |  
|Total liabilities                                                                                                                               |  |               | 192,382 |   |                   |   | 195,665 |  
|                                                                                                                                                |  |              
|Stockholders Equity                                                                                                                            |  |               |         |   |                   |   |         |  
|Preferred stock, $.01 par value, 1,000,000 shares authorized; none issued and outstanding                                                       |  |               |        |   |                   |   |        |  
|Common stock, $.01 par value, 9,000,000 shares authorized; 2,914,028 shares issued; 1,193,174 and 1,192,174 shares outstanding in
2010 and 2009 |  |               | 29      |   |                   |   | 29      |  
|Additional paid-in capital                                                                                                                      |  |               | 32,088  |   |                   |   | 32,097  |  
|Retained earnings                                                                                                                               |  |               | 20,098  |   |                   |   | 21,828  |  
|Treasury stock, at cost, 1,720,854 and 1,721,854 shares held in 2010 and 2009                                                                   |  |               | (31,025 | ) |                   |   | (31,043 | )
|Unearned ESOP shares                                                                                                                            |  |               | (49     | ) |                   |   | (99     | )
|Accumulated other comprehensive income                                                                                                          |  |               | 594     |   |                   |   | 136     |  
|                                                                                                                                                |  |               |         |   |                   |   |         |  
|Total stockholders equity                                                                                                                      |  |               | 21,735  |   |                   |   | 22,948  |  
|                                                                                                                                                |  |               |         |   |                   |   |         |  
|Total liabilities and stockholders equity                                                                                                      |  | $             | 214,117 |   |                   | $ | 218,613 |  
|                                                                                                                                                |  |               |         |   |                   |   |         |  

See accompanying notes to consolidated financial statements.



2



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PARK BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of dollars, except share data)

(Unaudited)



|                                                            |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|----------------------------------------------------------- |  | -------------------------- | ------ | - | ------------------------ | - | ----- | ---- |  | - | ------ | - |  | - | ------ | -
|                                                            |  | Three Months EndedJune 30, |        |   | Six Months EndedJune 30, |  
|                                                            |  | 2010                       |        |   | 2009                     |   |       | 2010 |  |   | 2009   |  
|Interest income                                             |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Loans receivable                                            |  | $                          | 2,067  |   |                          | $ | 2,119 |      |  | $ | 4,208  |   |  | $ | 4,255  |  
|Securities                                                  |  |                            | 286    |   |                          |   | 517   |      |  |   | 601    |   |  |   | 1,076  |  
|Interest-bearing deposits with other financial institutions |  |                            | 2      |   |                          |   | 4     |      |  |   | 5      |   |  |   | 6      |  
|                                                            |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Total                                                       |  |                            | 2,355  |   |                          |   | 2,640 |      |  |   | 4,814  |   |  |   | 5,337  |  
|                                                            |  |                            |        |  
|Interest expense                                            |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Deposits                                                    |  |                            | 534    |   |                          |   | 892   |      |  |   | 1,130  |   |  |   | 1,788  |  
|Federal Home Loan Bank advances and other borrowings        |  |                            | 402    |   |                          |   | 467   |      |  |   | 798    |   |  |   | 950    |  
|                                                            |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Total                                                       |  |                            | 936    |   |                          |   | 1,359 |      |  |   | 1,928  |   |  |   | 2,738  |  
|                                                            |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|                                                            |  |                            |        |  
|Net interest income                                         |  |                            | 1,419  |   |                          |   | 1,281 |      |  |   | 2,886  |   |  |   | 2,599  |  
|                                                            |  |                            |        |  
|Provision for loan losses                                   |  |                            | 869    |   |                          |   | 130   |      |  |   | 1,313  |   |  |   | 160    |  
|                                                            |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|                                                            |  |                            |        |  
|Net interest income after provision for loan losses         |  |                            | 550    |   |                          |   | 1,151 |      |  |   | 1,573  |   |  |   | 2,439  |  
|                                                            |  |                            |        |  
|Noninterest income                                          |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Gain on the sale of loans                                   |  |                            | 2      |   |                          |   |      |      |  |   | 2      |   |  |   |       |  
|Loss on the sale of real estate owned                       |  |                            | (5     | ) |                          |   |      |      |  |   | (5     | ) |  |   |       |  
|Service fee income                                          |  |                            | 68     |   |                          |   | 55    |      |  |   | 119    |   |  |   | 113    |  
|Earnings on bank-owned life insurance                       |  |                            | 79     |   |                          |   | 77    |      |  |   | 156    |   |  |   | 151    |  
|Other operating income                                      |  |                            | 10     |   |                          |   | 35    |      |  |   | 19     |   |  |   | 43     |  
|                                                            |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Total noninterest income                                    |  |                            | 154    |   |                          |   | 167   |      |  |   | 291    |   |  |   | 307    |  
|                                                            |  |                            |        |  
|Noninterest expense                                         |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Compensation and benefits                                   |  |                            | 833    |   |                          |   | 866   |      |  |   | 1,668  |   |  |   | 1,714  |  
|Occupancy and equipment expense                             |  |                            | 256    |   |                          |   | 197   |      |  |   | 527    |   |  |   | 426    |  
|Professional fees                                           |  |                            | 76     |   |                          |   | 83    |      |  |   | 173    |   |  |   | 215    |  
|Loss on impairment of equity securities                     |  |                            |       |   |                          |   | 55    |      |  |   |       |   |  |   | 233    |  
|Real estate owned impairment and expenses                   |  |                            | 78     |   |                          |   | 88    |      |  |   | 199    |   |  |   | 351    |  
|Federal deposit insurance expenses                          |  |                            | 87     |   |                          |   | 222   |      |  |   | 176    |   |  |   | 240    |  
|Other operating expenses                                    |  |                            | 449    |   |                          |   | 413   |      |  |   | 851    |   |  |   | 803    |  
|                                                            |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Total noninterest expense                                   |  |                            | 1,779  |   |                          |   | 1,924 |      |  |   | 3,594  |   |  |   | 3,982  |  
|                                                            |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|                                                            |  |                            |        |  
|Loss before income taxes                                    |  |                            | (1,075 | ) |                          |   | (606  | )    |  |   | (1,730 | ) |  |   | (1,236 | )
|Income tax benefit                                          |  |                            |       |   |                          |   | (21   | )    |  |   |       |   |  |   | (88    | )
|                                                            |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Net (loss)                                                  |  | $                          | (1,075 | ) |                          | $ | (585  | )    |  | $ | (1,730 | ) |  | $ | (1,148 | )
|                                                            |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|                                                            |  |                            |        |  
|Basic (loss) per share                                      |  | $                          | (.90   | ) |                          | $ | (.50  | )    |  | $ | (1.46  | ) |  | $ | (.98   | )
|Diluted (loss) per share                                    |  | $                          | (.90   | ) |                          | $ | (.50  | )    |  | $ | (1.46  | ) |  | $ | (.98   | )

See accompanying notes to
consolidated financial statements.



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PARK BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of dollars)

(Unaudited)



|                                                                        |  |                          |        |   |      |   |         |  
|----------------------------------------------------------------------- |  | ------------------------ | ------ | - | ---- | - | ------- | -
|                                                                        |  | Six Months EndedJune 30, |       
|                                                                        |  | 2010                     |        |   | 2009 |  
|Cash Flows From Operating Activities                                    |  |                          |        |   |      |   |         |  
|Net loss                                                                |  | $                        | (1,730 | ) |      | $ | (1,148  | )
|Adjustments to reconcile net loss to net cash from operating activities |  |                          |        |   |      |   |         |  
|Net premium (discount) amortization on securities                       |  |                          | 18     |   |      |   | 18      |  
|Gain/loss on sales of loans                                             |  |                          | (2     | ) |      |   |        |  
|Loss on security impairment                                             |  |                          |       |   |      |   | 233     |  
|Write-down of real estate owned property                                |  |                          | 27     |   |      |   | 291     |  
|Loss on sales of real estate owned                                      |  |                          | 5      |   |      |   |        |  
|Earnings on bank-owned life insurance, net                              |  |                          | (156   | ) |      |   | (151    | )
|Provision for loan losses                                               |  |                          | 1,313  |   |      |   | 160     |  
|Depreciation                                                            |  |                          | 245    |   |      |   | 219     |  
|Stock based compensation                                                |  |                          | 34     |   |      |   | 5       |  
|ESOP compensation expense                                               |  |                          | 25     |   |      |   | 30      |  
|Net change in:                                                          |  |                          |        |   |      |   |         |  
|Accrued interest receivable                                             |  |                          | 84     |   |      |   | 48      |  
|Accrued interest payable                                                |  |                          | (15    | ) |      |   | (80     | )
|Other assets                                                            |  |                          | 823    |   |      |   | 44      |  
|Other liabilities                                                       |  |                          | (2     | ) |      |   | 32      |  
|                                                                        |  |                          |        |   |      |   |         |  
|Net cash from operating activities                                      |  |                          | 669    |   |      |   | (299    | )
|                                                                        |  |                         
|Cash Flows From Investing Activities                                    |  |                          |        |   |      |   |         |  
|Net change in loans                                                     |  |                          | (177   | ) |      |   | (434    | )
|Proceeds from sales of loans                                            |  |                          | 226    |   |      |   |        |  
|Purchase of securities available for sale                               |  |                          | (5,000 | ) |      |   | (17,447 | )
|Maturities and calls of securities available for sale                   |  |                          | 8,000  |   |      |   | 20,035  |  
|Principal repayments on mortgage-backed securities                      |  |                          | 595    |   |      |   | 1,439   |  
|Purchase of premises and equipment                                      |  |                          | (12    | ) |      |   | (114    | )
|Proceeds from the sale of real estate owned                             |  |                          | 419    |   |      |   |        |  
|                                                                        |  |                          |        |   |      |   |         |  
|Net cash from investing activities                                      |  |                          | 4,051  |   |      |   | 3,479   |  
|                                                                        |  |                         
|Cash Flows From Financing Activities                                    |  |                          |        |   |      |   |         |  
|Net change in deposits                                                  |  |                          | (3,998 | ) |      |   | 12,455  |  
|Net change in securities sold under repurchase agreements               |  |                          |       |   |      |   | (500    | )
|Net change in advances from borrowers for taxes and insurance           |  |                          | (153   | ) |      |   | (46     | )
|Federal Home Loan Bank advances                                         |  |                          | 1,500  |   |      |   |        |  
|Repayments of Federal Home Loan Bank advances                           |  |                          | (615   | ) |      |   | (5,878  | )
|                                                                        |  |                          |        |   |      |   |         |  
|Net cash from financing activities                                      |  |                          | (3,266 | ) |      |   | 6,031   |  
|                                                                        |  |                          |        |   |      |   |         |  
|                                                                        |  |                         
|Net change in cash and cash equivalents                                 |  |                          | 1,454  |   |      |   | 9,211   |  
|Cash and cash equivalents at beginning of period                        |  |                          | 11,975 |   |      |   | 8,859   |  
|                                                                        |  |                          |        |   |      |   |         |  
|Cash and cash equivalents at end of period                              |  | $                        | 13,429 |   |      | $ | 18,070  |  
|                                                                        |  |                          |        |   |      |   |         |  
|                                                                        |  |                         
|Supplemental disclosures of cash flow information                       |  |                          |        |   |      |   |         |  
|Cash paid during the period for interest                                |  | $                        | 1,943  |   |      | $ | 2,818   |  
|Non-cash activity                                                       |  |                          |        |   |      |   |         |  
|Loans transferred to real estate owned                                  |  |                          | 917    |   |      |   | 17      |  

See accompanying notes
to consolidated financial statements.



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PARK BANCORP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

Six months ended June 30, 2010 and 2009

(In thousands of dollars, except share data)

(Unaudited)



|                                                                           |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |      |   |  |   |        |  
|-------------------------------------------------------------------------- |  | ----------- | -- | ------------------------ | - | ------ | ---------------- |  | - | ------------- | - |  | ------------------ | ------- | - | ------------------------------------------ | - | ---- | ------------------------ |  | - | ---- | - |  | - | ------ | -
|2009                                                                       |  | CommonStock |    | AdditionalPaid-inCapital |   |        | RetainedEarnings |  |   | TreasuryStock |   |  | UnearnedESOPShares |         |   | AccumulatedOtherComprehensiveIncome (Loss) |   |      | TotalStockholdersEquity | 
|                                                                           |  |             |    |                          |   |        |                 
|Balance at January 1, 2009                                                 |  | $           | 29 |                          | $ | 32,118 |                  |  | $ | 26,103        |   |  | $                  | (31,043 | ) |                                            | $ | (205 | )                        |  | $ | (136 | ) |  | $ | 26,866 |  
|Net loss                                                                   |  |             |   |                          |   |       |                  |  |   | (1,148        | ) |  |                    |        |   |                                            |   |     |                          |  |   |     |   |  |   | (1,148 | )
|Change in fair value of securities available for sale, net of income taxes |  |             |   |                          |   |       |                  |  |   |              |   |  |                    |        |   |                                            |   |     |                          |  |   | 118  |   |  |   | 118    |  
|                                                                           |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |      |   |  |   |        |  
|Total comprehensive (loss)                                                 |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |      |   |  |   | (1,030 | )
|Stock based compensation                                                   |  |             |   |                          |   | 5      |                  |  |   |              |   |  |                    |        |   |                                            |   |     |                          |  |   |     |   |  |   | 5      |  
|ESOP shares earned                                                         |  |             |   |                          |   | (23    | )                |  |   |              |   |  |                    |        |   |                                            |   | 53   |                          |  |   |     |   |  |   | 30     |  
|                                                                           |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |      |   |  |   |        |  
|Balance at June 30, 2009                                                   |  | $           | 29 |                          | $ | 32,100 |                  |  | $ | 24,955        |   |  | $                  | (31,043 | ) |                                            | $ | (152 | )                        |  | $ | (18  | ) |  | $ | 25,871 |  
|                                                                           |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |      |   |  |   |        |  
|                                                                           |  |             |    |                          |   |        |                 
|2010                                                                       |  | CommonStock |    | AdditionalPaid-inCapital |   |        | RetainedEarnings |  |   | TreasuryStock |   |  | UnearnedESOPShares |         |   | AccumulatedOtherComprehensiveIncome (Loss) |   |      | TotalStockholdersEquity | 
|                                                                           |  |             |    |                          |   |        |                 
|Balance at January 1, 2010                                                 |  | $           | 29 |                          | $ | 32,097 |                  |  | $ | 21,828        |   |  | $                  | (31,043 | ) |                                            | $ | (99  | )                        |  | $ | 136  |   |  | $ | 22,948 |  
|Net loss                                                                   |  |             |   |                          |   |       |                  |  |   | (1,730        | ) |  |                    |        |   |                                            |   |     |                          |  |   |     |   |  |   | (1,730 | )
|Change in fair value of securities available for sale, net of income taxes |  |             |   |                          |   |       |                  |  |   |              |   |  |                    |        |   |                                            |   |     |                          |  |   | 458  |   |  |   | 458    |  
|                                                                           |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |      |   |  |   |        |  
|Total comprehensive (loss)                                                 |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |      |   |  |   | (1,272 | )
|Stock based compensation                                                   |  |             |   |                          |   | 34     |                  |  |   |              |   |  |                    |        |   |                                            |   |     |                          |  |   |     |   |  |   | 34     |  
|Transfer 1,000 treasury shares for vested RRP shares                       |  |             |   |                          |   | (18    | )                |  |   |              |   |  |                    | 18      |   |                                            |   |     |                          |  |   |     |   |  |   |       |  
|ESOP shares earned                                                         |  |             |   |                          |   | (25    | )                |  |   |              |   |  |                    |        |   |                                            |   | 50   |                          |  |   |     |   |  |   | 25     |  
|                                                                           |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |      |   |  |   |        |  
|Balance at June 30, 2010                                                   |  | $           | 29 |                          | $ | 32,088 |                  |  | $ | 20,098        |   |  | $                  | (31,025 | ) |                                            | $ | (49  | )                        |  | $ | 594  |   |  | $ | 21,735 |  
|                                                                           |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |      |   |  |   |        |  

See accompanying notes to consolidated financial statements.



5



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##### Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(table amounts in thousands of dollars, except share data)

Note 1  Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of Park Bancorp, Inc. (the Company) and its
wholly owned subsidiaries, Park Federal Savings Bank (the Bank) and PBI Development Corporation (PBI), an inactive entity, and the Banks subsidiaries, GPS Corporation which conducts limited insurance activities, and GPS
Development Corporation (GPS) which conducts real estate development activities, as of June 30, 2010 and December 31, 2009 and for the three and six month periods ended June 30, 2010 and 2009. Significant intercompany
accounts and transactions have been eliminated in consolidation.

The accompanying unaudited interim consolidated financial
statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain disclosures required by accounting principles generally accepted in the United States of America are not included herein. These
interim statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Companys 2009 Annual Report on Form 10-K filed with the Securities and Exchange Commission. The December 31,
2009 balance sheet presented herein has been derived from the audited financial statements included in the Companys 2009 Annual Report on Form 10-K filed with the Securities and Exchange Commission, but does not include all disclosures
required by accounting principles generally accepted in the United States of America.

Interim statements are subject to
possible adjustment in connection with the annual audit of the Company for the year ending December 31, 2010. In the opinion of management of the Company, the accompanying unaudited interim consolidated financial statements reflect all
adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the consolidated financial position and consolidated results of operations for the periods presented.

The results of operations for the six months ended June 30, 2010 are not necessarily indicative of the results to be expected for
the full year. In preparing the unaudited financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those estimates.
Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, the carrying value of securities, and the valuation of real estate owned acquired in connection with
foreclosures or in satisfaction of loans.

Certain amounts in the unaudited consolidated financial statements for prior
periods have been reclassified to conform to the current unaudited financial statement presentation. All financial information in the following tables is in thousands of dollars, except shares and per share data.

Adoption of New Accounting Standards

In June 2009, the FASB issued a Statement regarding Accounting for the Transfer of Financial Assets which removes the concept of a special
purpose entity (SPE) and removes the exception from applying guidance regarding Consolidation of Variable Interest Entities to qualifying SPEs. It limits the circumstances in which a transferor derecognizes a financial asset. The
statement amends the requirements for the transfer of a financial asset to meet the requirements for sale accounting. The statement is effective for all interim and annual periods beginning after November 15, 2009. The effect of
adopting this new guidance did not have a material impact on the Companys financial statements.

In June 2009, the FASB
issued a Statement regarding requiring an enterprise to perform an analysis to determine whether the enterprises variable interest gives it a controlling financial interest in the variable interest entity. The statement is effective for all
interim and annual periods beginning after November 15, 2009. The effect of adopting this new guidance did not have a material impact on the Companys financial statements.

In January 2010, the FASB issued guidance requiring increased fair value disclosures. There are two components to the increased
disclosure requirements set forth in the update: (1) a description of, as well as the disclosure of, the dollar amount of transfers in or out of level one or level two (2) in the reconciliation for fair value measurements using significant
unobservable inputs (level 3), a reporting entity should present separately information about purchases, sales, issuances and settlements (that is, gross amounts shall be disclosed as opposed to a single net figure). Increased disclosures regarding
the transfers in or out of level one and two are required for interim and annual periods beginning after December 15, 2009. The adoption of this portion of the standard did not have a material impact on the Companys financial statements.
Increased disclosures regarding the level three fair value reconciliation are required for fiscal years beginning after December 15, 2010.



6



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##### Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

June 30, 2010

(table amounts in thousands of dollars, except share data)



Note 2  Earnings (Loss) Per Share

The following table presents a reconciliation of the components used to compute basic and diluted earnings (loss) per share for the three
and six month periods ended June 30, 2010 and 2009. Due to the Companys net loss in 2010 and 2009, all stock options were considered anti-dilutive and thus were excluded from the computation of diluted loss per share.



|                                                           |  |                                |           |   |                              |   |           |                                |  |   |                              |   |  |   |           |  
|---------------------------------------------------------- |  | ------------------------------ | --------- | - | ---------------------------- | - | --------- | ------------------------------ |  | - | ---------------------------- | - |  | - | --------- | -
|                                                           |  | Three MonthsEnded June 30,2010 |           |   | Six MonthsEnded June 30,2010 |   |           | Three MonthsEnded June 30,2009 |  |   | Six MonthsEnded June 30,2009 |  
|Basic (loss) per share                                     |  |                                |           |   |                              |   |           |                                |  |   |                              |   |  |   |           |  
|Net (loss) as reported                                     |  | $                              | (1,075    | ) |                              | $ | (1,730    | )                              |  | $ | (585                         | ) |  | $ | (1,148    | )
|Weighted average common shares outstanding                 |  |                                | 1,190,551 |   |                              |   | 1,188,939 |                                |  |   | 1,176,644                    |   |  |   | 1,174,211 |  
|                                                           |  |                                |           |   |                              |   |           |                                |  |   |                              |   |  |   |           |  
|Basic (loss) per share                                     |  | $                              | (.90      | ) |                              | $ | (1.46     | )                              |  | $ | (.50                         | ) |  | $ | (.98      | )
|                                                           |  |                                |           |   |                              |   |           |                                |  |   |                              |   |  |   |           |  
|                                                           |  |                                |           |  
|Diluted (loss) per share                                   |  |                                |           |   |                              |   |           |                                |  |   |                              |   |  |   |           |  
|Net (loss) as reported                                     |  | $                              | (1,075    | ) |                              | $ | (1,730    | )                              |  | $ | (585                         | ) |  | $ | (1,148    | )
|Weighted average common shares outstanding                 |  |                                | 1,190,551 |   |                              |   | 1,188,939 |                                |  |   | 1,176,644                    |   |  |   | 1,174,211 |  
|Dilutive effect of stock options                           |  |                                |          |   |                              |   |          |                                |  |   |                             |   |  |   |          |  
|                                                           |  |                                |           |   |                              |   |           |                                |  |   |                              |   |  |   |           |  
|Average common shares and dilutive potential common shares |  |                                | 1,190,551 |   |                              |   | 1,188,939 |                                |  |   | 1,176,644                    |   |  |   | 1,174,211 |  
|                                                           |  |                                |           |   |                              |   |           |                                |  |   |                              |   |  |   |           |  
|Diluted (loss) per share                                   |  | $                              | (.90      | ) |                              | $ | (1.46     | )                              |  | $ | (.50                         | ) |  | $ | (.98      | )
|                                                           |  |                                |           |   |                              |   |           |                                |  |   |                              |   |  |   |           |  

Note 3  Securities Available For Sale

Securities are summarized as follows:



|                                 |  |               |        |                      |   |                       |  |   |           |   |  |   |       
|-------------------------------- |  | ------------- | ------ | -------------------- | - | --------------------- |  | - | --------- | - |  | - | ------
|                                 |  | AmortizedCost |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | FairValue
|June 30, 2010                    |  |               |        |                      |   |                       |  |   |           |   |  |   |       
|Government sponsored enterprises |  | $             | 14,971 |                      | $ | 104                   |  | $ | (29       | ) |  | $ | 15,046
|Municipal                        |  |               | 503    |                      |   | 30                    |  |   |          |   |  |   | 533   
|Corporate                        |  |               | 4,005  |                      |   | 103                   |  |   | (13       | ) |  |   | 4,095 
|Equity                           |  |               | 4,494  |                      |   | 248                   |  |   | (6        | ) |  |   | 4,736 
|Mortgage-backed-residential      |  |               | 6,987  |                      |   | 227                   |  |   |          |   |  |   | 7,214 
|                                 |  |               |        |                      |   |                       |  |   |           |   |  |   |       
|                                 |  |               |        |                     
|                                 |  | $             | 30,960 |                      | $ | 712                   |  | $ | (48       | ) |  | $ | 31,624
|                                 |  |               |        |                      |   |                       |  |   |           |   |  |   |       
|                                 |  |               |        |                     
|                                 |  | AmortizedCost |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | FairValue
|December 31, 2009                |  |               |        |                      |   |                       |  |   |           |   |  |   |       
|Government sponsored enterprises |  | $             | 16,981 |                      | $ | 33                    |  | $ | (252      | ) |  | $ | 16,762
|Corporate                        |  |               | 5,010  |                      |   | 97                    |  |   | (12       | ) |  |   | 5,095 
|Municipal                        |  |               | 502    |                      |   | 10                    |  |   |          |   |  |   | 512   
|Equity                           |  |               | 4,493  |                      |   | 179                   |  |   |          |   |  |   | 4,672 
|Mortgage-backed-residential      |  |               | 7,585  |                      |   | 152                   |  |   |          |   |  |   | 7,737 
|                                 |  |               |        |                      |   |                       |  |   |           |   |  |   |       
|                                 |  |               |        |                     
|                                 |  | $             | 34,571 |                      | $ | 471                   |  | $ | (264      | ) |  | $ | 34,778
|                                 |  |               |        |                      |   |                       |  |   |           |   |  |   |       



7



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##### Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

June 30, 2010

(table amounts in thousands of dollars, except share data)



Note 3  Securities Available For Sale (Continued)



Securities with unrealized losses at June 30, 2010 and December 31, 2009 by
length of time that individual securities have been in a continuous loss position, are as follows:



|                                 |  |                     |        |                |                   |      |           |       |                |       |  |           |     |                |  |   |        |  |   |      |  
|-------------------------------- |  | ------------------- | ------ | -------------- | ----------------- | ---- | --------- | ----- | -------------- | ----- |  | --------- | --- | -------------- |  | - | ------ |  | - | ---- | -
|                                 |  | Less than 12 Months |        |                | 12 Months or More |      |           | Total |               
|                                 |  | FairValue           |        | UnrealizedLoss |                   |      | FairValue |       | UnrealizedLoss |       |  | FairValue |     | UnrealizedLoss | 
|June 30, 2010                    |  |                     |        |                |                   |      |           |       |                |       |  |           |     |                |  |   |        |  |   |      |  
|Government sponsored enterprises |  | $                   |       |                |                   |     |           |       |                | 971   |  |           | (29 | )              |  |   | 971    |  | $ | (29  | )
|Corporate                        |  |                     |       |                |                   |     |           |       |                | 989   |  |           | (13 | )              |  |   | 989    |  |   | (13  | )
|Equity                           |  |                     | 19     |                |                   | (6   | )         |       |                |      |  |           |    |                |  |   | 19     |  |   | (6   | )
|                                 |  |                     |        |                |                   |      |           |       |                |       |  |           |     |                |  |   |        |  |   |      |  
|                                 |  |                     |        |                |                   |     
|Total temporarily impaired       |  | $                   | 19     |                | $                 | (6   | )         |       | $              | 1,960 |  | $         | (42 | )              |  | $ | 1,979  |  | $ | (48  | )
|                                 |  |                     |        |                |                   |      |           |       |                |       |  |           |     |                |  |   |        |  |   |      |  
|                                 |  |                     |        |                |                   |     
|December 31, 2009                |  |                     |        |                |                   |      |           |       |                |       |  |           |     |                |  |   |        |  |   |      |  
|Government sponsored enterprises |  | $                   | 13,748 |                | $                 | (252 | )         |       | $              |      |  | $         |    |                |  | $ | 13,748 |  | $ | (252 | )
|Corporate                        |  |                     |       |                |                   |     |           |       |                | 991   |  |           | (12 | )              |  |   | 991    |  |   | (12  | )
|                                 |  |                     |        |                |                   |      |           |       |                |       |  |           |     |                |  |   |        |  |   |      |  
|                                 |  |                     |        |                |                   |     
|Total temporarily impaired       |  | $                   | 13,748 |                | $                 | (252 | )         |       | $              | 991   |  | $         | (12 | )              |  | $ | 14,739 |  | $ | (264 | )
|                                 |  |                     |        |                |                   |      |           |       |                |       |  |           |     |                |  |   |        |  |   |      |  

On a quarterly basis, management makes an assessment to determine whether there have been any events or
economic circumstances to indicate that any security in its securities available for sale portfolio on which there is an unrealized loss is impaired on an other-than-temporary basis. We consider many factors including the severity and duration of
the impairment, our intent to not sell securities with an unrealized loss or be required to sell securities with an unrealized loss, recent events specific to the issuer or industry, and for debt securities, external credit ratings and recent
downgrades. Securities on which there is an unrealized loss that is deemed to be other-than-temporary are written to fair value, with the write-down recorded as a realized loss in loss on impairment of securities. For the six months
ended June 30, 2010 and 2009, the Company had impairment losses of $0 and $233,000, respectively.

At June 30, 2010,
the government enterprises portfolio was backed by securities issued by the Federal Home Loan Mortgage Corporation (FHLMC), the Federal National Mortgage Association (FNMA), the Federal Home Loan Bank (FHLB) and
the Federal Farm Credit Bureau (FFCB). The Municipal portfolio consists of an investment grade taxable municipal bond due October, 2015. The Corporate portfolio includes investment grade medium term notes issued by financial services
companies maturing between February, 2011 and October, 2012. We hold an equity security which is an investment in another financial institution; the loss is less than six months at this time. We have taken an impairment charge on the security in the
past. We had two securities that have been in a continuous loss position for twelve months or more, an FHLMC security rated Aaa with a fair value of $971,000 and a corporate note from a financial institution which is rated A2 with a fair value of
$989,000. Management has reviewed these securities and believes no impairment charge is required for these securities at June 30, 2010.

The impairment charge in 2009 was related primarily to our investment in a mutual fund which since that time has increased in value by
$248,000, which is included in other comprehensive income, since a write up in value through earnings is not permitted under accounting standards.

Contractual maturities of securities at June 30, 2010 are listed below. Securities not due at a single maturity date, primarily
mortgage-backed and equity securities, are shown separately.



|                            |  |               |        |            |   |       
|--------------------------- |  | ------------- | ------ | ---------- | - | ------
|                            |  | AmortizedCost |        | Fair Value
|Due within one year         |  | $             | 1,991  |            | $ | 2,032 
|Due one to five years       |  |               | 2,014  |            |   | 2,064 
|Due five years to ten years |  |               | 4,503  |            |   | 4,577 
|Due after ten years         |  |               | 10,971 |            |   | 11,001
|                            |  |               |        |            |   |       
|                            |  |               | 19,479 |            |   | 19,674
|                            |  |              
|Equity                      |  |               | 4,494  |            |   | 4,736 
|Mortgage-backed-residential |  |               | 6,987  |            |   | 7,214 
|                            |  |               |        |            |   |       
|                            |  |              
|                            |  | $             | 30,960 |            | $ | 31,624
|                            |  |               |        |            |   |       

Securities with a carrying value of $8.0 million and
$9.0 million at June 30, 2010 and December 31, 2009, respectively, were pledged to secure securities sold under repurchase agreements and public deposits as required or permitted by law.

There were no security sales for the six months ended June 30, 2010 or 2009.



8



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##### Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

June 30, 2010

(table amounts in thousands of dollars, except share data)



Note 4  Loans

The Company originates mortgage and installment loans to customers located primarily in Cook, DuPage and Will counties, Illinois.
Substantially all loans are secured by specific items of collateral, primarily residential real estate and consumer assets.

Loans receivable are summarized as follows at the period end:



|                                   |  |               |         |   |                   |   |         |  
|---------------------------------- |  | ------------- | ------- | - | ----------------- | - | ------- | -
|                                   |  | June 30, 2010 |         |   | December 31, 2009 |  
|One-to-four-family residential     |  | $             | 96,079  |   |                   | $ | 96,677  |  
|Multi-family residential           |  |               | 16,819  |   |                   |   | 17,832  |  
|Commercial                         |  |               | 13,898  |   |                   |   | 13,626  |  
|Construction and land              |  |               | 5,386   |   |                   |   | 6,005   |  
|Consumer loans                     |  |               | 6,666   |   |                   |   | 6,204   |  
|Participations and loans purchased |  |               | 6,904   |   |                   |   | 7,777   |  
|                                   |  |               |         |   |                   |   |         |  
|Total loans, gross                 |  |               | 145,752 |   |                   |   | 148,121 |  
|Undisbursed portion of loans       |  |               | (1,086  | ) |                   |   | (2,191  | )
|Net deferred loan origination fees |  |               | (171    | ) |                   |   | (155    | )
|Allowance for loan losses          |  |               | (3,848  | ) |                   |   | (2,851  | )
|                                   |  |               |         |   |                   |   |         |  
|Total loans, net                   |  | $             | 140,647 |   |                   | $ | 142,924 |  
|                                   |  |               |         |   |                   |   |         |  

During the quarter, the Bank participated in the Federal Home Loan Banks MPFXtra program. This program
is designed for financial institutions to generate liquidity and promote mortgage lending. Under this program the Bank sold a one-to-four-family residential loan in the amount of $224,000 and generated a $2,000 gain on the sale. This loan was sold
with recourse, the Federal Home Loan Bank has the right to return the loan if underwriting guidelines do not meet their standards. Management intends to continue with this program to the extent that future loan originations meet the guidelines for
the program.

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



|                          |  |                          |       |   |      |   |     |  
|------------------------- |  | ------------------------ | ----- | - | ---- | - | --- | -
|                          |  | Six Months EndedJune 30, |      
|                          |  | 2010                     |       |   | 2009 |  
|Beginning balance         |  | $                        | 2,851 |   |      | $ | 775 |  
|Provision for loan losses |  |                          | 1,313 |   |      |   | 160 |  
|Recoveries                |  |                          | 2     |   |      |   |    |  
|Loans charged off         |  |                          | (318  | ) |      |   | (34 | )
|                          |  |                          |       |   |      |   |     |  
|Ending balance            |  | $                        | 3,848 |   |      | $ | 901 |  
|                          |  |                          |       |   |      |   |     |  

Impaired loans, including troubled debt restructurings, were $11.1 million and $ 9.9 million as of
June 30, 2010 and December 31, 2009, respectively. The allocated allowance for impaired loans was $2.6 million and $1.9 million for June 30, 2010 and December 31, 2009, respectively, on $9.8 million and $5.4 million of these
impaired loans.

There was $1.0 million and $725,000 of loans with terms that were modified in troubled debt restructurings,
with allocated allowance for loan losses of $121,000 and $89,000, respectively as of June 30, 2010 and December 31, 2009 included in impaired loans above. The Company has not committed additional funds to customers whose loans are
classified as troubled debt restructurings.

Non-performing loans were as follows:



|                                             |  |               |        |                   |   |       
|-------------------------------------------- |  | ------------- | ------ | ----------------- | - | ------
|                                             |  | June 30, 2010 |        | December 31, 2009
|Loans past due over 90 days still on accrual |  | $             |       |                   | $ |      
|Nonaccrual loans                             |  |               | 12,567 |                   |   | 11,328

Nonaccrual loans
include smaller balance homogeneous loans that are collectively evaluated for impairment and loans individually classified as impaired.



9



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##### Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

June 30, 2010

(table amounts in thousands of dollars, except share data)



Note 5  Income Taxes

Realization of deferred tax assets is dependent upon generating sufficient future taxable income to utilize the deferred tax assets, and
for net operating losses or other tax credits, prior to their expiration. Based on forecasted earnings and available tax strategies, a valuation allowance to reflect managements estimate of the temporary deductible differences that may expire
prior to their utilization has been recorded since the first quarter of 2009. In making this determination, management considered all evidence currently available, both positive and negative, including forecasts of future income, applicable tax
planning strategies, and assessments of the current and future economic and business conditions. Positive evidence includes the Companys ability to carry-back losses to prior years and other tax planning strategies that, if needed, would
enable the Company to realize deferred tax assets associated with capital loss carryforwards. Negative evidence includes the cumulative losses in the current year and the immediately preceding fiscal year, the generally downward economic and
business trends, the volatility of earnings in the current economic environment relative to additions to the provision for loan losses and the fact the Company has a three year cumulative loss for financial reporting purposes.

During the six months ended June 30, 2010, the Company continued to recognize a full valuation allowance against net deferred taxes
recognized from operating losses. On a quarterly basis, the Company will determine whether this valuation allowance is necessary and whether the allowance should be adjusted based on then available evidence.

To the extent that the Company has a three year cumulative loss for financial reporting purposes, projections of future taxable income
are generally not permitted to be utilized in determining that a valuation allowance related to deferred tax assets is not necessary. Therefore, the effective tax rate or benefit in future quarters may be higher or lower than expected due to future
adjustments to the valuation allowance associated with deferred tax assets.

Note 6  Employee Benefit Plans

Employee Stock Ownership Plan

The Bank established an ESOP for the benefit of substantially all employees. The ESOP borrowed $2.2 million from the Company in 1996 and
used those funds to acquire 216,099 shares of the Companys stock at $10 per share.

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



|                                 |  |              |         |                  |   |        
|-------------------------------- |  | ------------ | ------- | ---------------- | - | -------
|                                 |  | June 30,2010 |         | December 31,2009
|Allocated shares                 |  |              | 164,522 |                  |   | 159,576
|Unallocated shares               |  |              | 4,946   |                  |   | 9,892  
|                                 |  |              |         |                  |   |        
|                                 |  |             
|Total ESOP shares                |  |              | 169,468 |                  |   | 169,468
|                                 |  |              |         |                  |   |        
|                                 |  |             
|Fair value of unallocated shares |  | $            | 21      |                  | $ | 32     
|                                 |  |              |         |                  |   |        

Stock Option Plans

The Company adopted an Incentive Compensation Plan during 2003, which is in addition to the original stock option plan of 1997, of the
shares authorized for issuance under the plan, up to 40,000 may be issued with respect to awards of restricted stock and restricted units and up to 40,000 may be issued pursuant to stock options under which the exercise price was less than the fair
market value (but not less than 50% of the fair market value) of a share of common stock on the date the award was granted. In addition, as required by Internal Revenue Code Section 162(m), the plan includes a limit of 50,000 shares of common
stock as the maximum number of shares that may be subject to awards made to any one individual.



10



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##### Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

June 30, 2010

(table amounts in thousands of dollars, except share data)



Note 6  Employee Benefit Plans (Continued)



As of June 30, 2010 and December 31, 2009, there were 79,320 shares available
for future grants, of which up to 35,000 shares may be available for future restricted stock awards under the 2003 Plan. The table below is a summary of the status of all options under the 1997 and 2003 plans.



|                                                      |  |        |  |                              |       |                                         |     |                         |   |  
|----------------------------------------------------- |  | ------ |  | ---------------------------- | ----- | --------------------------------------- | --- | ----------------------- | - | -
|                                                      |  | Shares |  | WeightedAverageExercisePrice |       | WeightedAverageRemainingContractualTerm |     | AggregateIntrinsicValue
|Outstanding at January 1, 2010                        |  | 73,237 |  | $                            | 11.92 |                                         |     |                         |   |  
|                                                      |  |        |  |                             
|Granted                                               |  |       |  |                              |      |                                         |     |                         |   |  
|Exercised                                             |  |       |  |                              |      |                                         |     |                         |   |  
|Expired                                               |  |       |  |                              |      |                                         |     |                         |   |  
|                                                      |  |        |  |                              |       |                                         |     |                         |   |  
|                                                      |  |        |  |                             
|Outstanding and expected to vest at December 31, 2010 |  | 73,237 |  | $                            | 11.92 |                                         | 6.7 |                         | $ | 
|                                                      |  |        |  |                              |       |                                         |     |                         |   |  
|                                                      |  |        |  |                             
|Options exercisable at June 30, 2010                  |  | 29,737 |  | $                            | 22.95 |                                         | 2.9 |                         | $ | 
|                                                      |  |        |  |                              |       |                                         |     |                         |   |  

As of June 30, 2010 and December 31, 2009,
there was $96,000 and $130,000, respectively, of total unrecognized compensation costs related to nonvested stock options granted under the 2003 Plan. The cost is expected to be recognized over the remaining weighted-average vesting period of 2.0
years.

Restricted Stock Awards

The Company granted 5,000 shares of its common stock on April 21, 2009. The grant price was $5.68. Under the terms of the agreement,
20% of the restricted shares will vest each year. The fair value of the stock award at the grant date was $28,000 which is being amortized over the five year vesting period. Amortization expense was $4,000 and $1,200 for the six months ended
June 30, 2010 and 2009, respectively. At June 30, 2010, there were 4,000 shares nonvested with 1,000 shares vesting during the period.

Note 7  Fair Value of Assets and Liabilities

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

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

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

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

Assets and Liabilities Measured on a Recurring Basis

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



11



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##### Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

June 30, 2010

(table amounts in thousands of dollars, except share data)



Note 7  Fair Value of Assets and Liabilities (Continued)



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



|                                 |  |         |        |                                                             |   |                                            |  |                                        |        |  |   |  
|-------------------------------- |  | ------- | ------ | ----------------------------------------------------------- | - | ------------------------------------------ |  | -------------------------------------- | ------ |  | - | -
|                                 |  |         |        | Fair Value Measurements Using                              
|                                 |  | Balance |        | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   | Significant OtherObservableInputs(Level 2) |  | SignificantUnobservableInputs(Level 3)
|                                 |  |         |        |                                                            
|Assets:                          |  |         |        |                                                             |   |                                            |  |                                        |        |  |   |  
|                                 |  |         |        |                                                            
|June 30, 2010                    |  |         |        |                                                             |   |                                            |  |                                        |        |  |   |  
|Government sponsored enterprises |  | $       | 15,046 |                                                             | $ |                                           |  | $                                      | 15,046 |  | $ | 
|Corporate                        |  |         | 4,095  |                                                             |   |                                           |  |                                        | 4,095  |  |   | 
|Municipal                        |  |         | 533    |                                                             |   |                                           |  |                                        | 533    |  |   | 
|Equity                           |  |         | 4,736  |                                                             |   | 4,717                                      |  |                                        | 19     |  |   | 
|Mortgage-backed residential      |  |         | 7,214  |                                                             |   |                                           |  |                                        | 7,214  |  |   | 
|                                 |  |         |        |                                                             |   |                                            |  |                                        |        |  |   |  
|                                 |  |         |        |                                                            
|                                 |  | $       | 31,624 |                                                             | $ | 4,717                                      |  | $                                      | 26,907 |  | $ | 
|                                 |  |         |        |                                                             |   |                                            |  |                                        |        |  |   |  
|                                 |  |         |        |                                                            
|December 31, 2009                |  |         |        |                                                             |   |                                            |  |                                        |        |  |   |  
|Government sponsored enterprises |  | $       | 16,762 |                                                             | $ |                                           |  | $                                      | 16,762 |  | $ | 
|Corporate                        |  |         | 5,095  |                                                             |   |                                           |  |                                        | 5,095  |  |   | 
|Municipal                        |  |         | 512    |                                                             |   |                                           |  |                                        | 512    |  |   | 
|Equity                           |  |         | 4,672  |                                                             |   | 4,647                                      |  |                                        | 25     |  |   | 
|Mortgage-backed residential      |  |         | 7,737  |                                                             |   |                                           |  |                                        | 7,737  |  |   | 
|                                 |  |         |        |                                                             |   |                                            |  |                                        |        |  |   |  
|                                 |  |         |        |                                                            
|                                 |  | $       | 34,778 |                                                             | $ | 4,647                                      |  | $                                      | 30,131 |  | $ | 
|                                 |  |         |        |                                                             |   |                                            |  |                                        |        |  |   |  

The Companys mutual fund investment, classified
as an equity security, is determined using Level 1 inputs. All other equity securities and the other segments of the securities portfolio are determined using Level 2 inputs.

Assets Measured on a Non-Recurring Basis

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

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



|                    |  |         |       |                                                             |   |                                            |  |                                        |   |  |   |      
|------------------- |  | ------- | ----- | ----------------------------------------------------------- | - | ------------------------------------------ |  | -------------------------------------- | - |  | - | -----
|                    |  |         |       | Fair Value Measurements Using                              
|                    |  | Balance |       | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   | Significant OtherObservableInputs(Level 2) |  | SignificantUnobservableInputs(Level 3)
|                    |  |         |       |                                                            
|Assets:             |  |         |       |                                                             |   |                                            |  |                                        |   |  |   |      
|                    |  |         |       |                                                            
|June 30, 2010       |  |         |       |                                                             |   |                                            |  |                                        |   |  |   |      
|Impaired loans, net |  | $       | 7,203 |                                                             | $ |                                           |  | $                                      |  |  | $ | 7,203
|Real estate owned   |  |         | 2,077 |                                                             |   |                                           |  |                                        |  |  |   | 2,077
|                    |  |         |       |                                                            
|December 31, 2009   |  |         |       |                                                             |   |                                            |  |                                        |   |  |   |      
|Impaired loans, net |  | $       | 3,526 |                                                             | $ |                                           |  | $                                      |  |  | $ | 3,526
|Real estate owned   |  |         | 1,611 |                                                             |   |                                           |  |                                        |  |  |   | 1,611

Impaired loans, which
are measured primarily for impairment using the fair market value of collateral or the present value of future cash flows, were $9.8 million, with an allowance for loan losses of $2.6 million at June 30, 2010, compared to $5.4 million with an
allowance for loan losses of $ 1.9 million at December 31, 2009. Changes in specific allowance allocations during the six months ended June 30, 2010 on impaired loans carried at fair value resulted in an additional provision for loan
losses of $907,000.

Real estate owned, which is carried at lower of cost or fair value, was written down to a fair value of
$2.1 million as of June 30, 2010. An impairment charge of $27,000 was included in earnings for the six months ended June 30, 2010, the related property was sold during the second quarter of 2010 with an additional loss of $5,000.



12



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##### Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

June 30, 2010

(table amounts in thousands of dollars, except share data)



Note 7  Fair Value of Assets and Liabilities (Continued)



The carrying amount and estimated fair value of financial instruments, not previously
presented, are as follows:



|                                                |  |                |         |   |                    |   |         |                |  |   |                    |   |  |   |         |  
|----------------------------------------------- |  | -------------- | ------- | - | ------------------ | - | ------- | -------------- |  | - | ------------------ | - |  | - | ------- | -
|                                                |  | June 30, 2010  |         |   | December 31, 2009  |  
|                                                |  | CarryingAmount |         |   | EstimatedFairValue |   |         | CarryingAmount |  |   | EstimatedFairValue |  
|Financial assets                                |  |                |         |   |                    |   |         |                |  |   |                    |   |  |   |         |  
|Cash and cash equivalents                       |  | $              | 13,429  |   |                    | $ | 13,429  |                |  | $ | 11,975             |   |  | $ | 11,975  |  
|Loans receivable, net*                          |  |                | 140,647 |   |                    |   | 142,518 |                |  |   | 142,924            |   |  |   | 144,831 |  
|FHLB stock                                      |  |                | 5,423   |   |                    |   | NA      |                |  |   | 5,423              |   |  |   | NA      |  
|Accrued interest receivable                     |  |                | 840     |   |                    |   | 840     |                |  |   | 924                |   |  |   | 924     |  
|                                                |  |                |         |  
|Financial liabilities                           |  |                |         |   |                    |   |         |                |  |   |                    |   |  |   |         |  
|Deposits with no fixed maturity dates           |  | $              | (57,723 | ) |                    | $ | (57,723 | )              |  | $ | (58,122            | ) |  | $ | (58,122 | )
|Deposits with fixed maturity dates              |  |                | (88,901 | ) |                    |   | (90,070 | )              |  |   | (92,500            | ) |  |   | (93,487 | )
|Securities sold under repurchase agreements     |  |                | (2,600  | ) |                    |   | (2,600  | )              |  |   | (2,600             | ) |  |   | (2,600  | )
|Advances from borrowers for taxes and insurance |  |                | (1,706  | ) |                    |   | (1,706  | )              |  |   | (1,859             | ) |  |   | (1,859  | )
|FHLB advances                                   |  |                | (40,870 | ) |                    |   | (44,597 | )              |  |   | (39,985            | ) |  |   | (42,855 | )
|Accrued interest payable                        |  |                | (175    | ) |                    |   | (175    | )              |  |   | (190               | ) |  |   | (190    | )



|* | Includes impaired loans
|- | -----------------------

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

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



|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations.
|------- | --------------------------------------------------------------------------------------

Executive Summary

The following discussion compares the financial condition of Park Bancorp, Inc. (Company) and its wholly owned subsidiaries,
Park Federal Savings Bank (Bank) and PBI Development Corporation, an inactive entity, and the Banks subsidiaries, GPS Corporation, which conducts limited insurance activities, and GPS Development Corporation (GPS) which
conducts real estate development activities, at June 30, 2010 to its financial condition at December 31, 2009 and the results of operations for the three and six months ended June 30, 2010 to the same periods in 2009. This discussion
should be read in conjunction with the interim financial statements and footnotes included herein.

Financial Condition

Total assets at June 30, 2010 decreased $4.5 million or 2.1% to $214.1 million from $218.6 million
at December 31, 2009. An increase of $1.5 million in cash and cash equivalents primarily in Federal funds sold, was offset by decreases of $3.2 million in securities available for sale and $2.3 million in loans receivable, net during the six
month period ended June 30, 2010 were the primary reasons for the change from December 31, 2009.

The securities
portfolio is primarily government sponsored enterprise debt securities and residential mortgage-backed securities issued by government sponsored enterprises. The total portfolio decreased $3.2 million from December 31, 2009 to June 30,
2010 primarily as a result of $8.6 million in debt security maturities and calls, partially offset by $5.0 million in securities purchases and a $458,000 increase in the market value of existing investments.

Loans receivable, net decreased $2.3 million to $140.6 million at June 30, 2010 from $142.9 million
at December 31, 2009. During the period, loan originations and advances were $7.6 million, which were offset by loan repayments and payoffs of $7.9 million, a net increase in allowance for loan losses of $1.0 million and transfers to real
estate owned of $917,000.

The allowance for loan loss was $3.8 million at June 30, 2010 compared to $2.9 million at
December 31, 2009, while nonperforming loans were $12.6 million and $11.3 million for the comparable periods. The establishment of the allowance for loan losses is determined based on general factors such as the economy, charge-off history,
geographic loan concentrations, underwriting, management and staff turnover and specific reserves required due to anticipated losses on certain loans. During the first six months of 2010, the factor for historical charge-offs was increased due to
the average charge-off experience of the Company over the last eighteen to twenty-four months. The other general factors remained the same compared to December 31, 2009. The portion of the allowance that pertains to these general factors at
June 30, 2010 was $1.3 million or 0.95% of total loans, excluding those designated as specific, with the remaining $2.5 million pertaining to specific loans which represents 23.05% of the identified loans. The Company believes that the increase
in the allowance for loan losses is consistent with the performance of the loan portfolio during the six months ended June 30, 2010 and the related credit risks affecting the portfolio. Approximately 49.5% of the Companys nonperforming
loans are one-to-four family loans. Approximately 40.0% of the nonperforming one-to-four family loans were related to rental investment properties owned by investment companies controlled by two individuals. Multi-family, commercial, construction
and land loans, and consumer loans represent approximately 17.0%, 25.4%, 5.8% and 2.3%, respectively, of the nonperforming loans at June 30, 2010. At June 30, 2010, 91.9% of the nonperforming commercial loans pertain to one borrower.



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##### Table of Contents

Real estate owned (REO) increased to $2.1 million at June 30, 2010 from
$1.6 million at December 31, 2009 predominately due to $917,000 in loans transferred into REO and a property sale of $424,000, which generated a $5,000 loss during the quarter. The values of the properties in the Companys REO inventory
were written-down $27,000 as a result of a decline in property values during the first six months of 2010. Based on recent appraisals and sales contract negotiations, management believes the properties are recorded at fair value less cost to sell as
of June 30, 2010.

The following table sets forth information regarding nonaccrual loans and other real estate owned at
the dates indicated. It is the policy of the Bank to cease accruing interest on loans more than 90 days past due.



|                                        |  |               |        |                   |   |       
|--------------------------------------- |  | ------------- | ------ | ----------------- | - | ------
|                                        |  | June 30, 2010 |        | December 31, 2009
|Nonaccrual loans                        |  |               |        |                   |   |       
|One-to-four-family                      |  | $             | 6,213  |                   | $ | 5,892 
|Multi-family                            |  |               | 2,135  |                   |   | 1,155 
|Commercial                              |  |               | 3,480  |                   |   | 3,472 
|Construction and land                   |  |               | 733    |                   |   | 486   
|Consumer and other                      |  |               | 6      |                   |   | 323   
|                                        |  |               |        |                   |   |       
|Total nonaccrual loans                  |  |               | 12,567 |                   |   | 11,328
|Loans past due 90 days still on accrual |  |               |       |                   |   |      
|                                        |  |               |        |                   |   |       
|Total nonperforming loans               |  |               | 12,567 |                   |   | 11,328
|Real estate owned                       |  |               | 2,077  |                   |   | 1,611 
|                                        |  |               |        |                   |   |       
|Total nonperforming assets              |  | $             | 14,644 |                   | $ | 12,939
|                                        |  |               |        |                   |   |       

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



|                                |  |               |       |                                         |                   |   |                                             |        |   |        |   |                                         |  |        |                                             |  |        |  
|------------------------------- |  | ------------- | ----- | --------------------------------------- | ----------------- | - | ------------------------------------------- | ------ | - | ------ | - | --------------------------------------- |  | ------ | ------------------------------------------- |  | ------ | -
|                                |  | June 30, 2010 |       |                                         | December 31, 2009 |  
|                                |  | Amount        |       | Percentageof Allowanceto TotalAllowance |                   |   | Percentage ofGross Loans toTotal GrossLoans |        |   | Amount |   | Percentageof Allowanceto TotalAllowance |  |        | Percentage ofGross Loans toTotal GrossLoans | 
|One-to-four-family              |  | $             | 2,590 |                                         | 67.31             | % |                                             | 65.92  | % |        | $ | 2,026                                   |  | 71.05  | %                                           |  | 65.27  | %
|Multi-family                    |  |               | 96    |                                         | 2.48              |   |                                             | 11.54  |   |        |   | 102                                     |  | 3.57   |                                             |  | 12.04  |  
|Commercial                      |  |               | 507   |                                         | 13.18             |   |                                             | 9.54   |   |        |   | 94                                      |  | 3.31   |                                             |  | 9.20   |  
|Construction and land           |  |               | 480   |                                         | 12.47             |   |                                             | 3.69   |   |        |   | 491                                     |  | 17.21  |                                             |  | 4.05   |  
|Consumer and other              |  |               | 175   |                                         | 4.56              |   |                                             | 9.31   |   |        |   | 138                                     |  | 4.86   |                                             |  | 9.44   |  
|                                |  |               |       |                                         |                   |   |                                             |        |   |        |   |                                         |  |        |                                             |  |        |  
|Total allowance for loan losses |  | $             | 3,848 |                                         | 100.00            | % |                                             | 100.00 | % |        | $ | 2,851                                   |  | 100.00 | %                                           |  | 100.00 | %
|                                |  |               |       |                                         |                   |   |                                             |        |   |        |   |                                         |  |        |                                             |  |        |  

Total liabilities at June 30, 2010 were $192.4 million, a decrease of $3.3 million, or 1.7%, compared
to $195.7 million at December 31, 2009. The change was due primarily to a decrease in deposits of $4.0 million, or 2.7%, from December 31, 2009 offset by an increase of $885,000, or 2.2%, in Federal Home Loan Bank advances during the six
months ended June 30, 2010. The Company continued to follow its interest rate risk strategy and allowed higher rate deposits to mature, which were partially replaced by lower costing advances from the Federal Home Loan Bank.

Stockholders equity decreased $1.2 million or 5.3% to $21.7 million at June 30, 2010 from $22.9 million at December 31,
2009. The decrease was primarily attributable to the net loss for the six months ended June 30, 2010 of $1.7 million offset by an increase of $458,000 in accumulated other comprehensive income (loss) due to an increase in the market value of
investments included in securities available for sale.



14



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##### Table of Contents

Results of Operations

The net loss for the quarter ended June 30, 2010 was $1.1 million, an increase of $490,000 from the net loss of $585,000 for the
comparable quarter in 2009. The change was due to an increase in net interest income of $138,000 and a decrease in noninterest expense of $145,000, offset by an increase in the provision for loan loss of $739,000, a decrease in noninterest income of
$13,000 and a decrease in the income tax benefit of $21,000. The net loss for the six months ended June 30, 2010 was $1.7 million, a decrease of $582,000 from the net loss recorded for the same period in 2009.

Net interest income for the quarter ended June 30, 2010 increased $138,000, or 10.8%, to $1.4 million from $1.3 million for the
comparable quarter in 2009. The average yield on interest-earning assets decreased 29 basis points to 4.99% for the quarter ended June 30, 2010 from 5.28% for the same period in 2009, while average interest-earning assets decreased $11.2
million during the same time period. The average yield decreased partially as a result of foregone interest on nonaccrual loans of approximately $162,000 during the quarter ended June 30, 2010. Also, the average yield on interest-earning assets
decreased due to the decline in the average yield on adjustable rate investments and lower reinvestment rates in the securities available for sale portfolio. The average cost of interest-bearing liabilities decreased 81 basis points to 2.04% from
2.85% for the quarters ended June 30, 2010 and 2009, respectively. Average interest-bearing liabilities decreased $7.5 million during the second quarter of 2010 compared to the second quarter of 2009. The interest rate spread increased 52 basis
points to 2.95% for the quarter ended June 30, 2010 from 2.43% for the comparable quarter in 2009 while the net interest margin increased to 3.01% from 2.56% for the same period. The increases in the interest rate spread and margin were
primarily due to the repricing of maturing certificates of deposit at lower interest rates.

Net interest income for the six
months ended June 30, 2010 increased $287,000, or 11.0%, to $2.9 million from $2.6 million for the comparable period in 2009. The average yield on interest-earning assets decreased 30 basis points to 5.08% for the six months ended June 30,
2010 from 5.38% for the same period in 2009, while average interest-earning assets decreased $8.9 million during the same time period. The average yield decreased partially as a result of foregone interest on nonaccrual loans of approximately
$297,000. Also, the average yield on interest-earning assets decreased due to the decline in the average yield on adjustable rate investments and lower reinvestment rates in the securities available for sale portfolio. The average cost of
interest-bearing liabilities decreased 79 basis points to 2.10% from 2.89% for the six months ended June 30, 2010 and 2009, respectively. Average interest-bearing liabilities decreased $5.9 million during the first six months of 2010 compared
to the first six months of 2009. The interest rate spread increased 49 basis points to 2.98% from 2.49% while the net interest margin increased to 3.04% from 2.62% for the six months ended June 30, 2010 compared to the same period in 2009. The
increases in the interest rate spread and margin were primarily due to the repricing of maturing certificates of deposit at lower interest rates.

Management establishes provisions for loan losses, which are charged to operations, at a level management believes is appropriate to
absorb probable incurred credit losses in the loan portfolio. In evaluating the level of the allowance for loan losses, management considers historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse
situations that may affect the borrowers ability to repay, estimated value of any underlying collateral, peer group information, and prevailing economic conditions. This evaluation is inherently subjective, as it requires estimates that are
susceptible to significant revision as more information becomes available or as future events change. Based on managements estimates, an $869,000 provision for loan loss was established for the quarter ended June 30, 2010 compared to
$130,000 for the same quarter in 2009. The provision consists of $728,000 for loans specifically identified as having a loss potential and $141,000 for the remaining loan population. The loan loss provision was $1.3 million and $160,000 for the six
months ended June 30, 2010 and 2009, respectively. The provision for the six months ended June 30, 2010 consisted of $907,000 for loans specifically identified as having a loss potential and $406,000 for the remaining loan population. The
increase in the loan loss provision is the combined result of an increase in impaired loans, a decrease in the fair value of underlying collateral and an increase in the general allocations of dollars consistent with the increase in nonperforming
loans during the quarter and six months ended June 30, 2010.

Management assesses the allowance for loan losses on a
quarterly basis and makes provisions for loan losses as necessary in order to maintain the allowance. While management uses available information to recognize losses on loans, future loan loss provisions may be necessary based on changes in economic
conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses and may require us to recognize additional provisions based on their judgment of information
available to them at the time of their examination. The allowance for loan losses as of June 30, 2010 is maintained at a level that represents managements best estimate of incurred losses in the loan portfolio, and such losses were both
probable and reasonably estimable.

Noninterest income decreased $13,000 to $154,000 for the quarter ended June 30, 2010
compared to $167,000 for the quarter ended June 30, 2009. This decrease was the result of a rental adjustment recorded in the second quarter of 2009 with no similar adjustment occurring in 2010, offset by an increase in service fee income.
Noninterest income decreased $16,000 to $291,000 for the six months ended June 30, 2010 from $307,000 for the same period in 2009. The decrease was primarily due to the rental adjustment described above, offset by a slight increase in service
fee income for the six month period.



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Noninterest expense decreased $145,000 to $1.8 million for the quarter ended June 30,
2010 from $1.9 million for the corresponding three month period in 2009. The decrease for the quarter was primarily the result of no security impairments recognized during the second quarter of 2010 compared to a $55,000 impairment loss recognized
in the same period of 2009, as well as a decrease of $135,000 in FDIC insurance expense compared to the 2009 period when a $101,000 special assessment was recognized. These decreases in noninterest expense were offset by a $59,000 increase in
occupancy and equipment expense for the second quarter due primarily to increases in real estate taxes and depreciation on new computer hardware and software. Noninterest expense decreased $338,000 to $3.6 million for the six months ended
June 30, 2010 from $4.0 million for the corresponding period in 2009. The decrease was primarily the result of no security impairments recognized during the first six months of 2010 compared to a $233,000 impairment recognized during the same
period of 2009 and a decrease of $152,000 in REO related losses and expenses.

There was no federal income tax benefit
recorded for the three or six months ended June 30, 2010 compared to a tax benefit of $21,000 and $88,000 recorded for the three and six months ended June 30, 2009, respectively. The change in the income tax benefit for the three and six
month periods was attributable to the deferred tax asset valuation allowance which was established in 2009. The Company began recognizing a deferred tax asset valuation allowance, due to uncertainty as to whether the deferred tax assets would be
fully utilized in future periods, during the first quarter of 2009.

Liquidity and Capital Resources

The Companys primary sources of funds are deposits, principal and interest payments on loans and securities, proceeds from
maturities and calls of securities, FHLB advances, and securities sold under repurchase agreements. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are
greatly influenced by general interest rates, economic conditions, and competition. The Banks most liquid assets are cash and short-term investments. The levels of these assets are dependent on the Banks operating, financing, lending,
and investing activities during any given period. Management believes the Bank maintains sufficient liquidity to ensure a safe and sound operation.

The Companys cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities,
and financing activities. Net cash provided by (used in) operating activities were $669,000 and $(299,000) for the six months ended June 30, 2010 and 2009, respectively. Net cash from investing activities consisted primarily of disbursements
for loan originations and the purchase of securities, offset by principal collections on loans, and proceeds from maturing securities, and repayments on mortgage-backed securities. Net cash provided by (used in) investing activities were
$4.1 million and $3.5 million for the six months ended June 30, 2010 and 2009, respectively. Net cash from financing activities consisted primarily of the activity in deposit accounts, FHLB borrowings, and securities sold under
repurchase agreements. The net cash provided by (used in) financing activities was $(3.3) million and $6.0 million for the six months ended June 30, 2010 and 2009, respectively.

At June 30, 2010, the Bank exceeded all of its regulatory capital requirements with a Tier 1 (core) capital level of $20.4 million,
or 9.54% of adjusted total assets, which is above the required level of $8.5 million, or 4.0%; and total risk-based capital of $21.6 million, or 17.26% of risk-weighted assets, which is above the required level of $10.0 million, or 8.0%.
Accordingly, the Bank was categorized as well capitalized at June 30, 2010. Management is not aware of any conditions or events since the most recent notification that would change the Banks category.

A notification from the Office of Thrift Supervision (OTS) received in July 2008, remains in effect as of June 30, 2010.
The notification received in 2008 is typically delivered at the execution of a Supervisory Agreement, and requires the Bank to obtain OTS approval for any capital distribution, including payment of a dividend from the Bank to the Holding Company.
Management believes future dividend requests, if necessary, will be approved given the Banks current capital levels. The agreement will remain in effect until terminated, modified, or suspended in writing by the OTS. Failure to comply with the
agreement could result in the initiation of formal enforcement action by the OTS.

At June 30, 2010, the Bank had
outstanding commitments to originate mortgage loans of $883,000, commitments under unused lines of credit of $2.6 million and undisbursed portions of construction loans of $1.1 million. The Bank anticipates that it will have sufficient funds
available to meet its current loan origination commitments. Certificate accounts that are scheduled to mature in less than one year from June 30, 2010 totaled $49.0 million. Management expects that a substantial portion of the maturing
certificate accounts will be renewed at the Bank. However, if a substantial portion of these deposits is not retained, the Bank may utilize FHLB advances or raise interest rates on deposits to attract new accounts, which may result in higher levels
of interest expense.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk.
|------- | -----------------------------------------------------------

The Banks interest rate sensitivity is monitored by management through the use of a model which estimates the change in net
portfolio value (NPV) over a range of interest rate scenarios. NPV is the present value of expected cash flows from assets, liabilities, and off-balance-sheet contracts. An NPV Ratio, in any interest rate scenario, is defined as the NPV in that
scenario divided by the market value of assets in the same scenario. The Sensitivity Measure is the decline in the NPV Ratio, in basis points, caused by a 2% increase or decrease in rates, whichever produces a larger decline. The higher an
institutions Sensitivity Measure is, the greater its exposure to interest rate risk is considered to be. The OTS has incorporated an interest rate risk component into its regulatory capital rule. Under the rule, an institution whose
sensitivity measure exceeds 2% would be required to deduct an interest rate risk component in calculating its total capital for purposes of the risk-based capital requirement. As of March 31, 2010, the latest date for which information is
available, the Banks sensitivity measure, as measured by the OTS, resulting from a 200 basis point increase in interest rates was (17)% and would result in a $5.1 million decrease in the NPV of the Bank. Accordingly, increases in interest
rates would be expected to have a negative impact on the Banks operating results. The NPV Ratio sensitivity measure is below the threshold at which the Bank could be required to hold additional risk-based capital under OTS regulations.



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Certain shortcomings are inherent in the methodology used in the above interest rate risk
measurements. Modeling changes in NPV requires the making of certain assumptions that may tend to oversimplify the manner in which actual yields and costs respond to changes in market interest rates. First, the models assume that the composition of
the Banks interest sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured. Second, the models assume that a particular change in interest rates is reflected uniformly across the
yield curve regardless of the duration to maturity or repricing of specific assets and liabilities. Third, the model does not take into account the impact of the Banks business or strategic plans on the structure of interest-earning assets and
interest-bearing liabilities.

Accordingly, although the NPV measurement provides an indication of the Banks interest
rate risk exposure at a particular point in time, such measurement is not intended to, and does not provide a precise forecast of, the effect of changes in market interest rates on the Banks net interest income and will differ from actual
results. The results of this modeling are monitored by management and presented to the Board of Directors quarterly.

The
following table shows the NPV and projected change in the NPV of the Bank at March 31, 2010, the latest date for which information is available, assuming an instantaneous and sustained change in market interest rates of 100, 200 and 300 basis
points and a decline of 100 basis points. Due to the current economic conditions and level of interest rates, a 200 and 300 basis point decline would not apply.

Interest Rate Sensitivity of Net Portfolio Value (NPV)



|                |  |                     |        |          |                           |        |          |  |     |           |  |       |        |  |      |    
|--------------- |  | ------------------- | ------ | -------- | ------------------------- | ------ | -------- |  | --- | --------- |  | ----- | ------ |  | ---- | ---
|                |  | Net Portfolio Value |        |          | NPV as a % of PV ofAssets |       
|Change in Rates |  | $ Amount            |        | $ Change |                           |        | % Change |  |     | NPV Ratio |  |       | Change | 
|+ 300 bp        |  | $                   | 20,199 |          | $                         | (8,896 | )        |  | (31 | )%        |  | 9.62  | %      |  | (329 | )bp
|+ 200 bp        |  |                     | 24,035 |          |                           | (5,060 | )        |  | (17 | )         |  | 11.14 |        |  | (177 | )bp
|+ 100 bp        |  |                     | 27,186 |          |                           | (1,910 | )        |  | (7  | )         |  | 12.30 |        |  | (61  | )bp
|0 bp            |  |                     | 29,095 |          |                           |       |          |  |    |           |  | 12.91 |        |  |     |    
| 100 bp        |  |                     | 28,898 |          |                           | (197   | )        |  | (1  | )         |  | 12.69 |        |  | (22  | )bp
| 200 bp        |  |                     | N/A    |          |                           | N/A    |          |  | N/A |           |  | N/A   |        |  | N/A  |    
| 300 bp        |  |                     | N/A    |          |                           | N/A    |          |  | N/A |           |  | N/A   |        |  | N/A  |    

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

Management has not yet completed the computation of NPV as of June 30, 2010, but estimates that the results
would not be materially different than those presented above.



|Item 4. | Controls and Procedures.
|------- | ------------------------

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

As of the end of the period covered by this report, we carried out an evaluation, under the supervision, and with the participation of
our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as contemplated by Exchange Act Rule 13a-15. Based upon, and as of the date
of that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures are effective, in all material respects, in timely alerting them to material information relating to the
Company (and its consolidated subsidiaries) required to be included in the periodic reports the Company is required to file and submit to the SEC under the Exchange Act.

There was no change in the Companys internal control over financial reporting that occurred during the Companys fiscal
quarter ended June 30, 2010, that materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.



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PART II  OTHER INFORMATION



|Item 1. | Legal Proceedings.
|------- | ------------------

From
time to time, we may be party to various legal proceedings arising in the normal course of our business. Since we act as a depository of funds, we may also be named as a defendant in various lawsuits (such as garnishment proceedings) involving
claims to the ownership of funds in particular accounts. We are not a party to any legal proceedings that we currently believe will have, individually or in the aggregate, a material adverse effect on our business, results of operations, financial
condition or cash flows.



|Item 1A. | Risk Factors.
|-------- | -------------

In
addition to the other information set forth in this report, you should carefully consider the risk factors discussed in response to Item 1A to Part I in our Annual Report on Form 10-K for the year ended December 31, 2009, which could
materially affect our business, financial condition or future results. Except as set forth below, there have been no material changes from the risk factors as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2009.

We are highly regulated and may be adversely affected by changes in banking laws, regulations, and regulatory practices,
including the actions being taken by the U.S. government in response to the recent financial crises.

We are subject to
extensive supervision, regulation and examination by the OTS and by the FDIC, the insurer of the Banks deposits. This regulation and supervision governs the activities in which we may engage and are intended primarily for the protection of the
deposit insurance fund administered by the FDIC and our clients and depositors rather than our shareholders. This regulatory structure gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement
activities and examination policies to address not only compliance with applicable laws and regulations (including laws and regulations governing consumer credit, and anti-money laundering and anti-terrorism laws), but also capital adequacy, asset
quality and risk management ability and performance, earnings, liquidity, and various other factors. As part of this regulatory structure, we are subject to policies and other guidance developed by the regulatory agencies with respect to capital
levels, the timing and amount of dividend payments, the classification of assets and the establishment of adequate loan loss reserves for regulatory purposes.

Under this structure, the regulatory agencies have broad discretion to impose restrictions and limitations on our operations if they
determine, among other things, that our operations are unsafe or unsound, fail to comply with applicable law or are otherwise inconsistent with laws and regulations or with the supervisory policies of these agencies. This supervisory framework could
materially impact the conduct, growth and profitability of our operations. Any failure on our part to comply with current laws, regulations, other regulatory requirements or safe and sound banking practices or concerns about our financial condition,
or any related regulatory sanctions or adverse actions against us, could increase our costs or restrict our ability to operate our business and result in damage to our reputation.

On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), a sweeping
financial reform bill, was signed into law. This new law will result in a number of new regulations that potentially could impact community banks. The act includes, among other things, provisions establishing a Bureau of Consumer Financial
Protection, which will have broad authority to develop and implement rules regarding most consumer financial products; provisions affecting corporate governance and executive compensation at all publicly traded companies; provisions that would
broaden the base for FDIC insurance assessments and permanently increase FDIC deposit insurance to $250,000; and new restrictions on how mortgage brokers and loan originators may be compensated. The Dodd-Frank Act also eliminates the OTS, and
transfers supervisory authority for all previous OTS-regulated savings banks, like the Bank, to the Office of the Comptroller of the Currency, and for all savings and loan holding companies, such as Park Bancorp, Inc. to the Federal Reserve. These
provisions, or any other aspects of current proposed regulatory or legislative changes to laws applicable to the financial industry, if enacted or adopted, may impact the profitability of our business activities or change certain of our business
practices, including our ability to offer new products, obtain financing, attract deposits, make loans and achieve satisfactory interest spreads, and could expose us to additional expenses, including increased compliance expenses. These changes also
may require us to invest significant management attention and resources to make any necessary changes to our business in order to comply, and could therefore also materially adversely affect our business, financial condition and results of
operations.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds.
|------- | ------------------------------------------------------------

Issuer Repurchases of Equity Securities

The Companys Board of Directors approved the repurchase by the Company of up to 50,000 shares of its common stock pursuant to a
repurchase program that was publicly announced on July 31, 2008. No shares were repurchased in the first six months of 2010 under the program. A total of 43,682 shares remain available for repurchase under the program.



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|Item 3. | Defaults Upon Senior Securities.
|------- | --------------------------------

None.



|Item 4. | [Removed and Reserved.]
|------- | -----------------------



|Item 5. | Other Information.
|------- | ------------------

None.



|Item 6. | Exhibits.
|------- | ---------



|(a) | Exhibits.
|--- | ---------



|     |  |                                                                                                                                                                                                                        
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Rule 13(a)-14(a) Certification (Chief Executive Officer) (attached as an exhibit and incorporated herein by reference).                                                                                                
|     | 
|31.2 |  | Rule 13(a)-14(a) Certification (Chief Financial Officer) (attached as an exhibit and incorporated herein by reference).                                                                                                
|     | 
|32.1 |  | Certification Pursuant to 18 U.S.C. Section 1350, as adopted to Section 906 of the Sarbanes-Oxley Act of 2002 from the Companys Chief Executive Officer (attached as
an exhibit and incorporated herein by reference).
|     | 
|32.2 |  | Certification Pursuant to 18 U.S.C. Section 1350, as adopted to Section 906 of the Sarbanes-Oxley Act of 2002 from the Companys Financial Officer (attached as an
exhibit and incorporated herein by reference).      



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SIGNATURES

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



|                      |  |                                      
|--------------------- |  | -------------------------------------
|                      |  | PARK BANCORP, INC.                   
|                      | 
|Date: August 16, 2010 |  | /S/    DAVID A.
REMIJAS              
|                      |  | David A. Remijas                     
|                      |  | Chairman and Chief Executive Officer 
|                      | 
|Date: August 16, 2010 |  | /S/    VICTOR E.
CAPUTO              
|                      |  | Victor E. Caputo                     
|                      |  | Treasurer and Chief Financial Officer



20