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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
September 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 November 15, 2010, the Registrant had outstanding 1,193,174 shares of common stock.









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TABLE OF CONTENTS



|                               |  |                                                                                       |    |      |    | 
|------------------------------ |  | ------------------------------------------------------------------------------------- | -- | ---- | -- | 
|                               |  |                                                                                       |    | Page |   
|                               | 
|PART I  FINANCIAL INFORMATION |  |                                                                                       | 4  |     
|                               |  |                                                                                      
|Item 1.                        |  | Financial Statements                                                                  |    |      | 4  | 
|                               |  |                                                                                      
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations |    |      | 16 | 
|                               |  |                                                                                      
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                            |    |      | 20 | 
|                               |  |                                                                                      
|Item 4.                        |  | Controls and Procedures                                                               |    |      | 21 | 
|                               | 
|PART II  OTHER INFORMATION    |  |                                                                                       | 22 |     
|                               |  |                                                                                      
|Item 1.                        |  | Legal Proceedings                                                                     |    |      | 22 | 
|                               |  |                                                                                      
|Item 1A.                       |  | Risk Factors                                                                          |    |      | 22 | 
|                               |  |                                                                                      
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |    |      | 22 | 
|                               |  |                                                                                      
|Item 3.                        |  | Defaults Upon Senior Securities                                                       |    |      | 22 | 
|                               |  |                                                                                      
|Item 4.                        |  | [Removed and Reserved]                                                                |    |      | 22 | 
|                               |  |                                                                                      
|Item 5.                        |  | Other Information                                                                     |    |      | 22 | 
|                               |  |                                                                                      
|Item 6.                        |  | Exhibits                                                                              |    |      | 22 | 
|                               | 
|SIGNATURES                     |  |                                                                                       | 23 |     



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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.



3



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PART I  FINANCIAL INFORMATION



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

PARK BANCORP, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(In thousands of dollars,
except share data)

(Unaudited)



|                                                                                                                                                |  |                    |         |   |                   |   |         |  
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | ----------------- | - | ------- | -
|                                                                                                                                                |  | September 30, 2010 |         |   | December 31, 2009 |  
|Assets                                                                                                                                          |  |                    |         |   |                   |   |         |  
|Cash and due from banks                                                                                                                         |  | $                  | 2,706   |   |                   | $ | 2,867   |  
|Federal funds sold                                                                                                                              |  |                    | 13,699  |   |                   |   | 4,164   |  
|Interest-bearing deposits with other financial institutions                                                                                     |  |                    | 3,105   |   |                   |   | 4,944   |  
|                                                                                                                                                |  |                    |         |   |                   |   |         |  
|Total cash and cash equivalents                                                                                                                 |  |                    | 19,510  |   |                   |   | 11,975  |  
|                                                                                                                                                |  |                   
|Securities available for sale                                                                                                                   |  |                    | 29,533  |   |                   |   | 34,778  |  
|Loans receivable, net of allowance of $3,941 and $2,851                                                                                         |  |                    | 138,430 |   |                   |   | 142,924 |  
|Federal Home Loan Bank stock, at cost                                                                                                           |  |                    | 5,423   |   |                   |   | 5,423   |  
|Premises and equipment, net                                                                                                                     |  |                    | 9,114   |   |                   |   | 9,445   |  
|Accrued interest receivable                                                                                                                     |  |                    | 744     |   |                   |   | 924     |  
|Bank-owned life insurance                                                                                                                       |  |                    | 8,516   |   |                   |   | 8,282   |  
|Real estate owned                                                                                                                               |  |                    | 2,233   |   |                   |   | 1,611   |  
|Other assets                                                                                                                                    |  |                    | 1,904   |   |                   |   | 3,251   |  
|                                                                                                                                                |  |                    |         |   |                   |   |         |  
|Total assets                                                                                                                                    |  | $                  | 215,407 |   |                   | $ | 218,613 |  
|                                                                                                                                                |  |                    |         |   |                   |   |         |  
|                                                                                                                                                |  |                   
|Liabilities and Stockholders Equity                                                                                                            |  |                    |         |   |                   |   |         |  
|Liabilities                                                                                                                                     |  |                    |         |   |                   |   |         |  
|Non-interest bearing deposits                                                                                                                   |  | $                  | 6,066   |   |                   | $ | 6,810   |  
|Interest bearing deposits                                                                                                                       |  |                    | 141,476 |   |                   |   | 143,812 |  
|                                                                                                                                                |  |                    |         |   |                   |   |         |  
|Total deposits                                                                                                                                  |  |                    | 147,542 |   |                   |   | 150,622 |  
|                                                                                                                                                |  |                   
|Securities sold under repurchase agreements                                                                                                     |  |                    | 2,600   |   |                   |   | 2,600   |  
|Advances from borrowers for taxes and insurance                                                                                                 |  |                    | 2,317   |   |                   |   | 1,859   |  
|Federal Home Loan Bank advances                                                                                                                 |  |                    | 40,979  |   |                   |   | 39,985  |  
|Accrued interest payable                                                                                                                        |  |                    | 166     |   |                   |   | 190     |  
|Other liabilities                                                                                                                               |  |                    | 673     |   |                   |   | 409     |  
|                                                                                                                                                |  |                    |         |   |                   |   |         |  
|                                                                                                                                                |  |                   
|Total liabilities                                                                                                                               |  |                    | 194,277 |   |                   |   | 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                                                                                                                      |  |                    | 32,092  |   |                   |   | 32,097  |  
|Retained earnings                                                                                                                               |  |                    | 19,373  |   |                   |   | 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                                                                                                                            |  |                    | (25     | ) |                   |   | (99     | )
|Accumulated other comprehensive income                                                                                                          |  |                    | 686     |   |                   |   | 136     |  
|                                                                                                                                                |  |                    |         |   |                   |   |         |  
|                                                                                                                                                |  |                   
|Total stockholders equity                                                                                                                      |  |                    | 21,130  |   |                   |   | 22,948  |  
|                                                                                                                                                |  |                    |         |   |                   |   |         |  
|                                                                                                                                                |  |                   
|Total liabilities and stockholders equity                                                                                                      |  | $                  | 215,407 |   |                   | $ | 218,613 |  
|                                                                                                                                                |  |                    |         |   |                   |   |         |  

See accompanying notes to consolidated financial statements.



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PARK BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of dollars, except share data)

(Unaudited)



|                                                            |  |                                 |       |   |                                |   |       |      |  |   |        |   |  |   |        |  
|----------------------------------------------------------- |  | ------------------------------- | ----- | - | ------------------------------ | - | ----- | ---- |  | - | ------ | - |  | - | ------ | -
|                                                            |  | Three Months EndedSeptember 30, |       |   | Nine Months EndedSeptember 30, |  
|                                                            |  | 2010                            |       |   | 2009                           |   |       | 2010 |  |   | 2009   |  
|Interest income                                             |  |                                 |       |   |                                |   |       |      |  |   |        |   |  |   |        |  
|Loans receivable                                            |  | $                               | 2,076 |   |                                | $ | 2,017 |      |  | $ | 6,284  |   |  | $ | 6,272  |  
|Securities                                                  |  |                                 | 251   |   |                                |   | 397   |      |  |   | 852    |   |  |   | 1,473  |  
|Interest-bearing deposits with other financial institutions |  |                                 | 4     |   |                                |   | 3     |      |  |   | 9      |   |  |   | 9      |  
|                                                            |  |                                 |       |   |                                |   |       |      |  |   |        |   |  |   |        |  
|Total                                                       |  |                                 | 2,331 |   |                                |   | 2,417 |      |  |   | 7,145  |   |  |   | 7,754  |  
|                                                            |  |                                 |       |  
|Interest expense                                            |  |                                 |       |   |                                |   |       |      |  |   |        |   |  |   |        |  
|Deposits                                                    |  |                                 | 496   |   |                                |   | 836   |      |  |   | 1,619  |   |  |   | 2,624  |  
|Federal Home Loan Bank advances and other borrowings        |  |                                 | 399   |   |                                |   | 438   |      |  |   | 1,197  |   |  |   | 1,388  |  
|                                                            |  |                                 |       |   |                                |   |       |      |  |   |        |   |  |   |        |  
|Total                                                       |  |                                 | 895   |   |                                |   | 1,274 |      |  |   | 2,816  |   |  |   | 4,012  |  
|                                                            |  |                                 |       |   |                                |   |       |      |  |   |        |   |  |   |        |  
|                                                            |  |                                 |       |  
|Net interest income                                         |  |                                 | 1,436 |   |                                |   | 1,143 |      |  |   | 4,329  |   |  |   | 3,742  |  
|                                                            |  |                                 |       |  
|Provision for loan losses                                   |  |                                 | 273   |   |                                |   | 198   |      |  |   | 1,586  |   |  |   | 358    |  
|                                                            |  |                                 |       |   |                                |   |       |      |  |   |        |   |  |   |        |  
|                                                            |  |                                 |       |  
|Net interest income after provision for loan losses         |  |                                 | 1,163 |   |                                |   | 945   |      |  |   | 2,743  |   |  |   | 3,384  |  
|                                                            |  |                                 |       |  
|Noninterest income                                          |  |                                 |       |   |                                |   |       |      |  |   |        |   |  |   |        |  
|Gain on the sale of loans                                   |  |                                 | 6     |   |                                |   |      |      |  |   | 8      |   |  |   |       |  
|Loss on the sale of real estate owned                       |  |                                 |      |   |                                |   |      |      |  |   | (5     | ) |  |   |       |  
|Service fee income                                          |  |                                 | 67    |   |                                |   | 60    |      |  |   | 186    |   |  |   | 173    |  
|Earnings on bank-owned life insurance                       |  |                                 | 78    |   |                                |   | 77    |      |  |   | 234    |   |  |   | 228    |  
|Other operating income                                      |  |                                 | 10    |   |                                |   | 12    |      |  |   | 29     |   |  |   | 55     |  
|                                                            |  |                                 |       |   |                                |   |       |      |  |   |        |   |  |   |        |  
|Total noninterest income                                    |  |                                 | 161   |   |                                |   | 149   |      |  |   | 452    |   |  |   | 456    |  
|                                                            |  |                                 |       |  
|Noninterest expense                                         |  |                                 |       |   |                                |   |       |      |  |   |        |   |  |   |        |  
|Compensation and benefits                                   |  |                                 | 810   |   |                                |   | 826   |      |  |   | 2,478  |   |  |   | 2,540  |  
|Occupancy and equipment expense                             |  |                                 | 234   |   |                                |   | 207   |      |  |   | 761    |   |  |   | 633    |  
|Professional fees                                           |  |                                 | 97    |   |                                |   | 82    |      |  |   | 270    |   |  |   | 297    |  
|Loss on impairment of equity securities                     |  |                                 |      |   |                                |   |      |      |  |   |       |   |  |   | 233    |  
|Real estate owned impairment and expenses                   |  |                                 | 465   |   |                                |   | 68    |      |  |   | 664    |   |  |   | 419    |  
|Federal deposit insurance expenses                          |  |                                 | 88    |   |                                |   | 82    |      |  |   | 264    |   |  |   | 322    |  
|Other operating expenses                                    |  |                                 | 355   |   |                                |   | 369   |      |  |   | 1,213  |   |  |   | 1,172  |  
|                                                            |  |                                 |       |   |                                |   |       |      |  |   |        |   |  |   |        |  
|Total noninterest expense                                   |  |                                 | 2,049 |   |                                |   | 1,634 |      |  |   | 5,650  |   |  |   | 5,616  |  
|                                                            |  |                                 |       |   |                                |   |       |      |  |   |        |   |  |   |        |  
|                                                            |  |                                 |       |  
|Loss before income taxes                                    |  |                                 | (725  | ) |                                |   | (540  | )    |  |   | (2,455 | ) |  |   | (1,776 | )
|Income tax benefit                                          |  |                                 |      |   |                                |   |      |      |  |   |       |   |  |   | (88    | )
|                                                            |  |                                 |       |   |                                |   |       |      |  |   |        |   |  |   |        |  
|Net (loss)                                                  |  | $                               | (725  | ) |                                | $ | (540  | )    |  | $ | (2,455 | ) |  | $ | (1,688 | )
|                                                            |  |                                 |       |   |                                |   |       |      |  |   |        |   |  |   |        |  
|                                                            |  |                                 |       |  
|Basic (loss) per share                                      |  | $                               | (.61  | ) |                                | $ | (.46  | )    |  | $ | (2.06  | ) |  | $ | (1.43  | )
|Diluted (loss) per share                                    |  | $                               | (.61  | ) |                                | $ | (.46  | )    |  | $ | (2.06  | ) |  | $ | (1.43  | )

See accompanying notes to
consolidated financial statements.



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PARK BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of dollars)

(Unaudited)



|                                                                        |  |                                |         |   |      |   |         |  
|----------------------------------------------------------------------- |  | ------------------------------ | ------- | - | ---- | - | ------- | -
|                                                                        |  | Nine Months EndedSeptember 30, |        
|                                                                        |  | 2010                           |         |   | 2009 |  
|Cash Flows From Operating Activities                                    |  |                                |         |   |      |   |         |  
|Net loss                                                                |  | $                              | (2,455  | ) |      | $ | (1,688  | )
|Adjustments to reconcile net loss to net cash from operating activities |  |                                |         |   |      |   |         |  
|Net premium amortization on securities                                  |  |                                | 1       |   |      |   | 52      |  
|Gain on sales of loans                                                  |  |                                | (8      | ) |      |   |        |  
|Loss on security impairment                                             |  |                                |        |   |      |   | 233     |  
|Write-down of real estate owned property                                |  |                                | 277     |   |      |   | 291     |  
|Loss on sales of real estate owned                                      |  |                                | 5       |   |      |   |        |  
|Earnings on bank-owned life insurance, net                              |  |                                | (234    | ) |      |   | (228    | )
|Provision for loan losses                                               |  |                                | 1,586   |   |      |   | 358     |  
|Depreciation                                                            |  |                                | 358     |   |      |   | 290     |  
|Stock based compensation                                                |  |                                | 52      |   |      |   | 13      |  
|ESOP compensation expense                                               |  |                                | 35      |   |      |   | 50      |  
|Net change in:                                                          |  |                                |         |   |      |   |         |  
|Accrued interest receivable                                             |  |                                | 180     |   |      |   | 231     |  
|Accrued interest payable                                                |  |                                | (24     | ) |      |   | (81     | )
|Other assets                                                            |  |                                | 1,347   |   |      |   | 209     |  
|Other liabilities                                                       |  |                                | 264     |   |      |   | (53     | )
|                                                                        |  |                                |         |   |      |   |         |  
|Net cash from operating activities                                      |  |                                | 1,384   |   |      |   | (323    | )
|                                                                        |  |                               
|Cash Flows From Investing Activities                                    |  |                                |         |   |      |   |         |  
|Net change in loans                                                     |  |                                | 1,089   |   |      |   | (4,329  | )
|Proceeds from sales of loans                                            |  |                                | 504     |   |      |   |        |  
|Purchase of securities available for sale                               |  |                                | (12,996 | ) |      |   | (17,447 | )
|Maturities and calls of securities available for sale                   |  |                                | 18,790  |   |      |   | 25,808  |  
|Purchase of premises and equipment                                      |  |                                | (27     | ) |      |   | (165    | )
|Proceeds from the sale of real estate owned                             |  |                                | 419     |   |      |   | 6       |  
|                                                                        |  |                                |         |   |      |   |         |  
|Net cash from investing activities                                      |  |                                | 7,779   |   |      |   | 3,873   |  
|                                                                        |  |                               
|Cash Flows From Financing Activities                                    |  |                                |         |   |      |   |         |  
|Net change in deposits                                                  |  |                                | (3,080  | ) |      |   | 11,392  |  
|Net change in securities sold under repurchase agreements               |  |                                |        |   |      |   | (639    | )
|Net change in advances from borrowers for taxes and insurance           |  |                                | 458     |   |      |   | 391     |  
|Federal Home Loan Bank advances                                         |  |                                | 3,000   |   |      |   | 2,800   |  
|Repayments of Federal Home Loan Bank advances                           |  |                                | (2,006  | ) |      |   | (10,535 | )
|                                                                        |  |                                |         |   |      |   |         |  
|Net cash from financing activities                                      |  |                                | (1,628  | ) |      |   | 3,409   |  
|                                                                        |  |                                |         |   |      |   |         |  
|                                                                        |  |                               
|Net change in cash and cash equivalents                                 |  |                                | 7,535   |   |      |   | 6,959   |  
|Cash and cash equivalents at beginning of period                        |  |                                | 11,975  |   |      |   | 8,859   |  
|                                                                        |  |                                |         |   |      |   |         |  
|Cash and cash equivalents at end of period                              |  | $                              | 19,510  |   |      | $ | 15,818  |  
|                                                                        |  |                                |         |   |      |   |         |  
|                                                                        |  |                               
|Supplemental disclosures of cash flow information                       |  |                                |         |   |      |   |         |  
|Cash paid during the period for interest                                |  | $                              | 2,840   |   |      | $ | 4,093   |  
|Non-cash activity                                                       |  |                                |         |   |      |   |         |  
|Loans transferred to real estate owned                                  |  |                                | 1,323   |   |      |   | 18      |  

See accompanying notes
to consolidated financial statements.



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PARK BANCORP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

Nine months ended September 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                                                                   |  |             |   |  |                          |   |       |                  |  |   | (1,688        | ) |  |                    |        |   |                                            |   |     |                          |  |   |     |   |  |   | (1,688 | )
|Change in fair value of securities available for sale, net of income taxes |  |             |   |  |                          |   |       |                  |  |   |              |   |  |                    |        |   |                                            |   |     |                          |  |   | 361  |   |  |   | 361    |  
|                                                                           |  |             |    |  |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |      |   |  |   |        |  
|Total comprehensive (loss)                                                 |  |             |    |  |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |      |   |  |   | (1,327 | )
|Stock based compensation                                                   |  |             |   |  |                          |   | 13     |                  |  |   |              |   |  |                    |        |   |                                            |   |     |                          |  |   |     |   |  |   | 13     |  
|ESOP shares earned                                                         |  |             |   |  |                          |   | (29    | )                |  |   |              |   |  |                    |        |   |                                            |   | 79   |                          |  |   |     |   |  |   | 50     |  
|                                                                           |  |             |    |  |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |      |   |  |   |        |  
|Balance at September 30, 2009                                              |  | $           | 29 |  |                          | $ | 32,102 |                  |  | $ | 24,415        |   |  | $                  | (31,043 | ) |                                            | $ | (126 | )                        |  | $ | 225  |   |  | $ | 25,602 |  
|                                                                           |  |             |    |  |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |      |   |  |   |        |  
|                                                                           |  |             |    |  |                          |   |       
|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                                                                   |  |             |   |  |                          |   |       |                  |  |   | (2,455        | ) |  |                    |        |   |                                            |   |     |                          |  |   |     |   |  |   | (2,455 | )
|Change in fair value of securities available for sale, net of income taxes |  |             |   |  |                          |   |       |                  |  |   |              |   |  |                    |        |   |                                            |   |     |                          |  |   | 550  |   |  |   | 550    |  
|                                                                           |  |             |    |  |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |      |   |  |   |        |  
|Total comprehensive (loss)                                                 |  |             |    |  |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |      |   |  |   | (1,905 | )
|Stock based compensation                                                   |  |             |   |  |                          |   | 52     |                  |  |   |              |   |  |                    |        |   |                                            |   |     |                          |  |   |     |   |  |   | 52     |  
|Transfer 1,000 treasury shares for vested RRP shares                       |  |             |   |  |                          |   | (18    | )                |  |   |              |   |  |                    | 18      |   |                                            |   |     |                          |  |   |     |   |  |   |       |  
|ESOP shares earned                                                         |  |             |   |  |                          |   | (39    | )                |  |   |              |   |  |                    |        |   |                                            |   | 74   |                          |  |   |     |   |  |   | 35     |  
|                                                                           |  |             |    |  |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |      |   |  |   |        |  
|Balance at September 30, 2010                                              |  | $           | 29 |  |                          | $ | 32,092 |                  |  | $ | 19,373        |   |  | $                  | (31,025 | ) |                                            | $ | (25  | )                        |  | $ | 686  |   |  | $ | 21,130 |  
|                                                                           |  |             |    |  |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                          |  |   |      |   |  |   |        |  

See accompanying notes to consolidated financial statements.



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##### Table of Contents



NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 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 September 30, 2010 and
December 31, 2009 and for the three and nine month periods ended September 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 nine months ended September 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.

Newly Issued But Not Yet Effective Accounting Standards

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 guidance. First, the dollar amount of transfers in or out of Levels 1 or 2 must be described and disclosed. Second, in the reconciliation for fair value measurements using significant unobservable inputs (Level 3), a
reporting entity must present separately information about purchases, sales, issuances and settlements (that is, gross amounts must be disclosed as opposed to a single net figure). Increased disclosures regarding the transfers in or out of Levels 1
and 2 are required for interim and annual periods beginning after December 15, 2009. Increased disclosures regarding the Level 3 fair value reconciliation are required for fiscal years beginning after December 15, 2010.



8



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##### Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

SEPTEMBER 30, 2010

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





In July 2010, the
FASB issued an additional disclosure requirement regarding credit quality and the allowance for credit losses. The new disclosures will require significantly more information about credit quality in a financial institutions
portfolio. Although this statement addresses only disclosures and does not seek to change recognition or measurement, the disclosure represents a meaningful change in practice. The new disclosure requirement affects loans, trade accounts
receivable, notes receivable, credit cards, leveraged leases, direct financing leases, and sales-type leases. It requires two levels of disaggregation for disclosure: portfolio segment and class of financing receivable, such as commercial,
consumer or residential loans. The disclosures as of the end of a reporting period are effective for annual and interim reporting periods ending on or after December 15, 2010. The disclosures about activity that occurs during a reporting
period are effective for interim and annual reporting periods beginning on or after December 15, 2010. These disclosure requirements are not expected to have a material impact on the Company.

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 nine month periods ended September 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 
MonthsEndedSeptember 30,2010 |           |   | Nine MonthsEndedSeptember 
30,2010 |   |           | Three 
MonthsEndedSeptember 30,2009 |  |   | Nine MonthsEndedSeptember 
30,2009 |  
|Basic (loss) per share                                     |  |                                     |           |   |                                    |   |           |                                     |  |   |                                    |   |  |   |           |  
|Net (loss) as reported                                     |  | $                                   | (725      | ) |                                    | $ | (2,455    | )                                   |  | $ | (540                               | ) |  | $ | (1,688    | )
|Weighted average common shares outstanding                 |  |                                     | 1,192,255 |   |                                    |   | 1,190,057 |                                     |  |   | 1,182,031                          |   |  |   | 1,177,395 |  
|                                                           |  |                                     |           |   |                                    |   |           |                                     |  |   |                                    |   |  |   |           |  
|Basic (loss) per share                                     |  | $                                   | (.61      | ) |                                    | $ | (2.06     | )                                   |  | $ | (.46                               | ) |  | $ | (1.43     | )
|                                                           |  |                                     |           |   |                                    |   |           |                                     |  |   |                                    |   |  |   |           |  
|                                                           |  |                                     |           |  
|Diluted (loss) per share                                   |  |                                     |           |   |                                    |   |           |                                     |  |   |                                    |   |  |   |           |  
|Net (loss) as reported                                     |  | $                                   | (725      | ) |                                    | $ | (2,455    | )                                   |  | $ | (540                               | ) |  | $ | (1,688    | )
|Weighted average common shares outstanding                 |  |                                     | 1,192,255 |   |                                    |   | 1,190,057 |                                     |  |   | 1,182,031                          |   |  |   | 1,177,395 |  
|Dilutive effect of stock options                           |  |                                     |          |   |                                    |   |          |                                     |  |   |                                   |   |  |   |          |  
|                                                           |  |                                     |           |   |                                    |   |           |                                     |  |   |                                    |   |  |   |           |  
|Average common shares and dilutive potential common shares |  |                                     | 1,192,255 |   |                                    |   | 1,190,057 |                                     |  |   | 1,182,031                          |   |  |   | 1,177,395 |  
|                                                           |  |                                     |           |   |                                    |   |           |                                     |  |   |                                    |   |  |   |           |  
|Diluted (loss) per share                                   |  | $                                   | (.61      | ) |                                    | $ | (2.06     | )                                   |  | $ | (.46                               | ) |  | $ | (1.43     | )
|                                                           |  |                                     |           |   |                                    |   |           |                                     |  |   |                                    |   |  |   |           |  

Note 3  Securities Available For Sale

Securities are summarized as follows:



|                                 |  |               |        |  |                      |   |     |                       |  |   |           |   |  |   |        | 
|-------------------------------- |  | ------------- | ------ |  | -------------------- | - | --- | --------------------- |  | - | --------- | - |  | - | ------ | 
|                                 |  | AmortizedCost |        |  | GrossUnrealizedGains |   |     | GrossUnrealizedLosses |  |   | FairValue |  
|September 30, 2010               |  |               |        |  |                      |   |     |                       |  |   |           |   |  |   |        | 
|Government sponsored enterprises |  | $             | 13,005 |  |                      | $ | 74  |                       |  | $ | (2        | ) |  | $ | 13,077 | 
|Municipal                        |  |               | 502    |  |                      |   | 47  |                       |  |   |          |   |  |   | 549    | 
|Corporate                        |  |               | 4,005  |  |                      |   | 93  |                       |  |   | (9        | ) |  |   | 4,089  | 
|Equity                           |  |               | 4,494  |  |                      |   | 299 |                       |  |   | (3        | ) |  |   | 4,790  | 
|Mortgage-backed-residential      |  |               | 6,771  |  |                      |   | 257 |                       |  |   |          |   |  |   | 7,028  | 
|                                 |  |               |        |  |                      |   |     |                       |  |   |           |   |  |   |        | 
|                                 |  |               |        | 
|                                 |  | $             | 28,777 |  |                      | $ | 770 |                       |  | $ | (14       | ) |  | $ | 29,533 | 
|                                 |  |               |        |  |                      |   |     |                       |  |   |           |   |  |   |        | 



9



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##### Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

SEPTEMBER 30, 2010

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



|                                 |  |               |        |  |                      |   |     |                       |  |   |           |   |  |   |        | 
|-------------------------------- |  | ------------- | ------ |  | -------------------- | - | --- | --------------------- |  | - | --------- | - |  | - | ------ | 
|                                 |  |               |        | 
|                                 |  | 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 | 
|                                 |  |               |        |  |                      |   |     |                       |  |   |           |   |  |   |        | 

Securities with unrealized losses at September 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 |  
|September 30, 2010               |  |                     |        |  |                   |   |      |           |  |   |                |  |  |           |     |   |                |   |        |  |  |   |      |  
|Government sponsored enterprises |  | $                   | 1,005  |  |                   | $ | (2   | )         |  | $ |               |  |  | $         |    |   |                | $ | 1,005  |  |  | $ | (2   | )
|Corporate                        |  |                     |       |  |                   |   |     |           |  |   | 993            |  |  |           | (9  | ) |                |   | 993    |  |  |   | (9   | )
|Equity                           |  |                     |       |  |                   |   |     |           |  |   | 22             |  |  |           | (3  | ) |                |   | 22     |  |  |   | (3   | )
|                                 |  |                     |        |  |                   |   |      |           |  |   |                |  |  |           |     |   |                |   |        |  |  |   |      |  
|                                 |  |                     |        |  |                   |  
|Total temporarily impaired       |  | $                   | 1,005  |  |                   | $ | (2   | )         |  | $ | 1,015          |  |  | $         | (12 | ) |                | $ | 2,020  |  |  | $ | (14  | )
|                                 |  |                     |        |  |                   |   |      |           |  |   |                |  |  |           |     |   |                |   |        |  |  |   |      |  
|                                 |  |                     |        |  |                   |  
|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. The amount of the OTTI recognized in earnings depends on whether
the Company intends to sell the security or whether it is more likely than not the Company will be required to sell the security before recovery of its amortized cost basis, less any current-period credit loss. If the Company intends to sell or it
is more likely than not it will be required to sell the security before recovery of its amortized cost basis, less any current-period credit loss, the OTTI is recognized in earnings in an amount equal to the entire difference between the
investments amortized cost basis and its fair value at the balance sheet date. If the Company does not intend to sell the security and it is not more likely than not that the Company will be required to sell the security before recovery of its
amortized cost basis, less any current-period loss, the OTTI is separated into the amount representing the credit loss and the amount related to all other factors. The amount of the total OTTI related to the credit loss is determined based on
the present value of cash flows expected to be collected and is recognized in earnings. The amount of the total OTTI related to other factors is recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis
less the portion of the OTTI recognized in earnings becomes the new amortized cost basis of the investment. For the nine months ended September 30, 2010 and 2009, the Company had impairment losses of $0 and $233,000, respectively.

At September 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 has been in a continuous loss position for twelve months. We have taken an impairment charge on the security in the past. During the nine month period, market value of this security has
fluctuated and is currently at an unrealized loss of $3,500 which has improved from an unrealized loss of $6,000 at June 30, 2010. We had one security that has been in a continuous loss position for twelve months or more, a corporate note from
a financial institution which is rated A2 with a fair value of $993,000 and a maturity date of February 2012. The decline in fair value is less than 1% of the amortized book value of the security. Management has reviewed these securities and
believes no impairment charge is required for these securities at September 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 $299,000, which is included in other comprehensive income, since a write up in value through earnings is not permitted under accounting
standards.



10



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##### Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

SEPTEMBER 30, 2010

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





Contractual
maturities of securities at September 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         |  | $             | 1,992  |  |            | $ | 2,018  | 
|Due one to five years       |  |               | 3,019  |  |            |   | 3,075  | 
|Due five years to ten years |  |               | 9,502  |  |            |   | 9,615  | 
|Due after ten years         |  |               | 2,999  |  |            |   | 3,007  | 
|                            |  |               |        |  |            |   |        | 
|                            |  |               | 17,512 |  |            |   | 17,715 | 
|                            |  |              
|Equity                      |  |               | 4,494  |  |            |   | 4,790  | 
|Mortgage-backed-residential |  |               | 6,771  |  |            |   | 7,028  | 
|                            |  |               |        |  |            |   |        | 
|                            |  |              
|                            |  | $             | 28,777 |  |            | $ | 29,533 | 
|                            |  |               |        |  |            |   |        | 

Securities with a carrying value of $8.0 million and $9.0 million at September 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 nine months ended September 30, 2010 or 2009.

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:



|                                   |  |                    |         |   |                   |   |         |  
|---------------------------------- |  | ------------------ | ------- | - | ----------------- | - | ------- | -
|                                   |  | September 30, 2010 |         |   | December 31, 2009 |  
|One-to-four-family residential     |  | $                  | 96,748  |   |                   | $ | 96,677  |  
|Multi-family residential           |  |                    | 15,756  |   |                   |   | 17,832  |  
|Commercial                         |  |                    | 14,272  |   |                   |   | 13,626  |  
|Construction and land              |  |                    | 4,006   |   |                   |   | 6,005   |  
|Consumer loans                     |  |                    | 6,553   |   |                   |   | 6,204   |  
|Participations and loans purchased |  |                    | 6,233   |   |                   |   | 7,777   |  
|                                   |  |                    |         |   |                   |   |         |  
|Total loans, gross                 |  |                    | 143,568 |   |                   |   | 148,121 |  
|Undisbursed portion of loans       |  |                    | (1,021  | ) |                   |   | (2,191  | )
|Net deferred loan origination fees |  |                    | (176    | ) |                   |   | (155    | )
|Allowance for loan losses          |  |                    | (3,941  | ) |                   |   | (2,851  | )
|                                   |  |                    |         |   |                   |   |         |  
|Total loans, net                   |  | $                  | 138,430 |   |                   | $ | 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 $280,000 and generated a $6,000 gain on the sale. This loan was sold
with recourse, therefore the Federal Home Loan Bank has the right to return the loan to the Bank if underwriting guidelines do not meet their standards. Year-to-date, the Bank has sold two loans totaling $504,000 and generated $8,000 in gains on the
sales. Management intends to continue with this program to the extent that future loan originations meet the guidelines for the program.



11



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##### Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

SEPTEMBER 30, 2010

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





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



|                          |  |                                |       |   |      |   |       |  
|------------------------- |  | ------------------------------ | ----- | - | ---- | - | ----- | -
|                          |  | Nine Months EndedSeptember 30, |      
|                          |  | 2010                           |       |   | 2009 |  
|Beginning balance         |  | $                              | 2,851 |   |      | $ | 775   |  
|Provision for loan losses |  |                                | 1,586 |   |      |   | 358   |  
|Recoveries                |  |                                | 2     |   |      |   |      |  
|Loans charged off         |  |                                | (498  | ) |      |   | (45   | )
|                          |  |                                |       |   |      |   |       |  
|Ending balance            |  | $                              | 3,941 |   |      | $ | 1,088 |  
|                          |  |                                |       |   |      |   |       |  

Impaired loans, including troubled debt restructurings, were $10.5 million and $ 9.9 million as of
September 30, 2010 and December 31, 2009, respectively. The allocated allowance for impaired loans was $2.5 million and $1.9 million for September 30, 2010 and December 31, 2009, respectively, on $9.6 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 $120,000 and $89,000, respectively as of September 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:



|                                             |  |                    |        |  |                   |   |        | 
|-------------------------------------------- |  | ------------------ | ------ |  | ----------------- | - | ------ | 
|                                             |  | September 30, 2010 |        |  | December 31, 2009 |  
|Loans past due over 90 days still on accrual |  | $                  |       |  |                   | $ |       | 
|Nonaccrual loans                             |  |                    | 13,521 |  |                   |   | 11,328 | 

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

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 nine months ended September 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.



12



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##### Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

SEPTEMBER 30, 2010

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





|                                 |  |                   |         |  |                  |   |         | 
|-------------------------------- |  | ----------------- | ------- |  | ---------------- | - | ------- | 
|                                 |  | September 30,2010 |         |  | December 31,2009 |  
|Allocated shares                 |  |                   | 166,995 |  |                  |   | 159,576 | 
|Unallocated shares               |  |                   | 2,473   |  |                  |   | 9,892   | 
|                                 |  |                   |         |  |                  |   |         | 
|                                 |  |                  
|Total ESOP shares                |  |                   | 169,468 |  |                  |   | 169,468 | 
|                                 |  |                   |         |  |                  |   |         | 
|                                 |  |                  
|Fair value of unallocated shares |  | $                 | 11      |  |                  | $ | 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 shares
may be issued with respect to awards of restricted stock and restricted units and up to 40,000 shares 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.

As of September 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 |                                         |  |  | 6.4                     |  |  | $ |  | 
|                                                      |  |        |        |  |                              |   |       |                                         |  |  |                         |  |  |   |   | 
|                                                      |  |        |        | 
|Options exercisable at September 30, 2010             |  |        | 29,737 |  |                              | $ | 22.37 |                                         |  |  | 2.5                     |  |  | $ |  | 
|                                                      |  |        |        |  |                              |   |       |                                         |  |  |                         |  |  |   |   | 

As of September 30, 2010 and December 31, 2009, there was $85,000 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 3.9 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 $6,700 and $5,900 for the nine months ended September 30, 2010 and 2009, respectively. At September 30,
2010, there were 4,000 shares nonvested with 1,000 shares vesting during the nine month 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.



13



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##### Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

SEPTEMBER 30, 2010

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





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).



14



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##### Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

SEPTEMBER 30, 2010

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





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



|                                 |  |         |                                                             |  |                               |                                            |       |  |                                        |   |        |  |  |   |   | 
|-------------------------------- |  | ------- | ----------------------------------------------------------- |  | ----------------------------- | ------------------------------------------ | ----- |  | -------------------------------------- | - | ------ |  |  | - | - | 
|                                 |  | Balance |                                                             |  | Fair Value Measurements Using |                                           
|                                 |  |         | Quoted Prices inActive Markets forIdentical Assets(Level 1) |  |                               | Significant OtherObservableInputs(Level 2) |       |  | SignificantUnobservableInputs(Level 3) |  
|                                 |  |         |                                                             | 
|Available for Sale Securities    |  |         |                                                             |  |                               |                                            |       |  |                                        |   |        |  |  |   |   | 
|                                 |  |         |                                                             | 
|September 30, 2010               |  |         |                                                             |  |                               |                                            |       |  |                                        |   |        |  |  |   |   | 
|Government sponsored enterprises |  | $       | 13,077                                                      |  |                               | $                                          |      |  |                                        | $ | 13,077 |  |  | $ |  | 
|Corporate                        |  |         | 4,089                                                       |  |                               |                                            |      |  |                                        |   | 4,089  |  |  |   |  | 
|Municipal                        |  |         | 549                                                         |  |                               |                                            |      |  |                                        |   | 549    |  |  |   |  | 
|Equity                           |  |         | 4,790                                                       |  |                               |                                            | 4,768 |  |                                        |   | 22     |  |  |   |  | 
|Mortgage-backed residential      |  |         | 7,028                                                       |  |                               |                                            |      |  |                                        |   | 7,028  |  |  |   |  | 
|                                 |  |         |                                                             |  |                               |                                            |       |  |                                        |   |        |  |  |   |   | 
|                                 |  |         |                                                             | 
|                                 |  | $       | 29,533                                                      |  |                               | $                                          | 4,768 |  |                                        | $ | 24,765 |  |  | $ |  | 
|                                 |  |         |                                                             |  |                               |                                            |       |  |                                        |   |        |  |  |   |   | 
|                                 |  |         |                                                             | 
|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:



|                    |  |         |                                                             |  |                               |                                            |   |  |                                        |   |   |  |  |   |       | 
|------------------- |  | ------- | ----------------------------------------------------------- |  | ----------------------------- | ------------------------------------------ | - |  | -------------------------------------- | - | - |  |  | - | ----- | 
|                    |  | Balance |                                                             |  | Fair Value Measurements Using |                                           
|                    |  |         | Quoted Prices inActive Markets forIdentical Assets(Level 1) |  |                               | Significant OtherObservableInputs(Level 2) |   |  | SignificantUnobservableInputs(Level 3) |  
|                    |  |         |                                                             | 
|Assets:             |  |         |                                                             |  |                               |                                            |   |  |                                        |   |   |  |  |   |       | 
|                    |  |         |                                                             | 
|September 30, 2010  |  |         |                                                             |  |                               |                                            |   |  |                                        |   |   |  |  |   |       | 
|Impaired loans, net |  | $       | 7,118                                                       |  |                               | $                                          |  |  |                                        | $ |  |  |  | $ | 7,118 | 
|Real estate owned   |  |         | 2,233                                                       |  |                               |                                            |  |  |                                        |   |  |  |  |   | 2,233 | 
|                    |  |         |                                                             | 
|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 $9.6 million, with an allowance for loan losses of $2.5 million at September 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 nine months ended September 30, 2010 on impaired loans carried at fair value resulted in an additional provision
for loan losses of $975,000.



15



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##### Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

SEPTEMBER 30, 2010

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





Real estate owned,
which is carried at lower of cost or fair value, was written down to a fair value of $2.2 million as of September 30, 2010. An impairment charge of $277,000 was included in earnings for the nine months ended September 30, 2010, the related
property was sold during the second quarter of 2010 with an additional loss of $5,000.

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



|                                                |  |                    |         |   |                    |   |         |                |  |   |                    |   |  |   |         |  
|----------------------------------------------- |  | ------------------ | ------- | - | ------------------ | - | ------- | -------------- |  | - | ------------------ | - |  | - | ------- | -
|                                                |  | September 30, 2010 |         |   | December 31, 2009  |  
|                                                |  | CarryingAmount     |         |   | EstimatedFairValue |   |         | CarryingAmount |  |   | EstimatedFairValue |  
|Financial assets                                |  |                    |         |   |                    |   |         |                |  |   |                    |   |  |   |         |  
|Cash and cash equivalents                       |  | $                  | 19,510  |   |                    | $ | 19,510  |                |  | $ | 11,975             |   |  | $ | 11,975  |  
|Loans receivable, net*                          |  |                    | 138,430 |   |                    |   | 140,281 |                |  |   | 142,924            |   |  |   | 144,831 |  
|FHLB stock                                      |  |                    | 5,423   |   |                    |   | NA      |                |  |   | 5,423              |   |  |   | NA      |  
|Accrued interest receivable                     |  |                    | 744     |   |                    |   | 744     |                |  |   | 924                |   |  |   | 924     |  
|                                                |  |                    |         |  
|Financial liabilities                           |  |                    |         |   |                    |   |         |                |  |   |                    |   |  |   |         |  
|Deposits with no fixed maturity dates           |  | $                  | (57,338 | ) |                    | $ | (57,338 | )              |  | $ | (58,122            | ) |  | $ | (58,122 | )
|Deposits with fixed maturity dates              |  |                    | (90,204 | ) |                    |   | (91,873 | )              |  |   | (92,500            | ) |  |   | (93,487 | )
|Securities sold under repurchase agreements     |  |                    | (2,600  | ) |                    |   | (2,600  | )              |  |   | (2,600             | ) |  |   | (2,600  | )
|Advances from borrowers for taxes and insurance |  |                    | (2,317  | ) |                    |   | (2,317  | )              |  |   | (1,859             | ) |  |   | (1,859  | )
|FHLB advances                                   |  |                    | (40,979 | ) |                    |   | (45,418 | )              |  |   | (39,985            | ) |  |   | (42,855 | )
|Accrued interest payable                        |  |                    | (166    | ) |                    |   | (166    | )              |  |   | (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
September 30, 2010 to its financial condition at December 31, 2009 and the results of operations for the three and nine months ended September 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 September 30, 2010 decreased $3.2 million or 1.5% to $215.4 million from $218.6 million at
December 31, 2009. An increase of $7.5 million in cash and cash equivalents primarily in Federal funds sold, was offset by decreases of $5.2 million in securities available for sale and $4.5 million in loans receivable, net during the nine
month period ended September 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 $5.2 million from December 31, 2009 to
September 30, 2010 primarily as a result of $18.8 million in debt security maturities and calls, partially offset by $13.0 million in securities purchases and a $550,000 increase in the market value of existing investments. The excess funds of
$5.8 million were invested in Federal funds sold.



16



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##### Table of Contents



Loans receivable, net
decreased $4.5 million to $138.4 million at September 30, 2010 from $142.9 million at December 31, 2009. During the period, loan originations and advances were $15.0 million, which were offset by $17.1 million of loan repayments and
payoffs, net of $500,000 in net charge offs, a net increase in allowance for loan losses of $1.1 million and transfers to real estate owned of $1.3 million.

The allowance for loan loss was $3.9 million at September 30, 2010 compared to $2.9 million at December 31, 2009, while nonperforming loans were $13.5 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, the Banks management and staff turnover and
specific reserves required due to anticipated losses on certain loans. During the first nine 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 September 30, 2010 was $1.4 million or 1.08% of total loans, excluding
those designated as specific, with the remaining $2.5 million pertaining to specific loans which represents 23.78% 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 nine months ended September 30, 2010 and the related credit risks inherent in the portfolio. Approximately 54.4% of the Companys nonperforming loans are one-to-four family loans. Approximately 33.7% 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 12.3%,
26.4%, 6.8% and 0.1%, respectively, of the nonperforming loans at September 30, 2010. At September 30, 2010, 89.8% of the nonperforming commercial loans pertain to one borrower. Total nonperforming loans as a percentage of total gross
loans were 9.42% at September 30, 2010 compared to 7.65% at December 31, 2009.

Real estate owned (REO)
increased to $2.2 million at September 30, 2010 from $1.6 million at December 31, 2009 predominately due to $1.3 million 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 $277,000 as a result of a decline in property values during the first nine 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 September 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.



|                                        |  |                    |        |  |                   |   |        | 
|--------------------------------------- |  | ------------------ | ------ |  | ----------------- | - | ------ | 
|                                        |  | September 30, 2010 |        |  | December 31, 2009 |  
|Nonaccrual loans                        |  |                    |        |  |                   |   |        | 
|One-to-four-family                      |  | $                  | 7,360  |  |                   | $ | 5,892  | 
|Multi-family                            |  |                    | 1,667  |  |                   |   | 1,155  | 
|Commercial                              |  |                    | 3,561  |  |                   |   | 3,472  | 
|Construction and land                   |  |                    | 913    |  |                   |   | 486    | 
|Consumer and other                      |  |                    | 20     |  |                   |   | 323    | 
|                                        |  |                    |        |  |                   |   |        | 
|Total nonaccrual loans                  |  |                    | 13,521 |  |                   |   | 11,328 | 
|Loans past due 90 days still on accrual |  |                    |       |  |                   |   |       | 
|                                        |  |                    |        |  |                   |   |        | 
|Total nonperforming loans               |  |                    | 13,521 |  |                   |   | 11,328 | 
|Real estate owned                       |  |                    | 2,233  |  |                   |   | 1,611  | 
|                                        |  |                    |        |  |                   |   |        | 
|Total nonperforming assets              |  | $                  | 15,754 |  |                   | $ | 12,939 | 
|                                        |  |                    |        |  |                   |   |        | 



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##### Table of Contents



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.



|                                |  |                    |       |  |                                         |  |        |                                             |  |  |        |   |  |                                         |       |  |                                             |  |        |   |  |  |        |  
|------------------------------- |  | ------------------ | ----- |  | --------------------------------------- |  | ------ | ------------------------------------------- |  |  | ------ | - |  | --------------------------------------- | ----- |  | ------------------------------------------- |  | ------ | - |  |  | ------ | -
|                                |  | September 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              |  | $                  | 2,700 |  |                                         |  | 68.49  | %                                           |  |  | 67.39  | % |  | $                                       | 2,026 |  |                                             |  | 71.05  | % |  |  | 65.27  | %
|Multi-family                    |  |                    | 92    |  |                                         |  | 2.33   |                                             |  |  | 10.98  |   |  |                                         | 102   |  |                                             |  | 3.57   |   |  |  | 12.04  |  
|Commercial                      |  |                    | 508   |  |                                         |  | 12.90  |                                             |  |  | 9.94   |   |  |                                         | 94    |  |                                             |  | 3.31   |   |  |  | 9.20   |  
|Construction and land           |  |                    | 474   |  |                                         |  | 12.04  |                                             |  |  | 2.79   |   |  |                                         | 491   |  |                                             |  | 17.21  |   |  |  | 4.05   |  
|Consumer and other              |  |                    | 167   |  |                                         |  | 4.24   |                                             |  |  | 8.90   |   |  |                                         | 138   |  |                                             |  | 4.86   |   |  |  | 9.44   |  
|                                |  |                    |       |  |                                         |  |        |                                             |  |  |        |   |  |                                         |       |  |                                             |  |        |   |  |  |        |  
|Total allowance for loan losses |  | $                  | 3,941 |  |                                         |  | 100.00 | %                                           |  |  | 100.00 | % |  | $                                       | 2,851 |  |                                             |  | 100.00 | % |  |  | 100.00 | %
|                                |  |                    |       |  |                                         |  |        |                                             |  |  |        |   |  |                                         |       |  |                                             |  |        |   |  |  |        |  

Total liabilities at September 30, 2010 were $194.3 million, a decrease of $1.4 million, or 0.7%,
compared to $195.7 million at December 31, 2009. The change was due primarily to a decrease in deposits of $3.1 million, or 2.0%, from December 31, 2009 offset by an increase of $994,000, or 2.5%, in Federal Home Loan Bank advances and an
increase in advances from borrowers for taxes and insurance of $458,000, or 24.6%, during the nine months ended September 30, 2010. Deposits decreased as 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 $1.8 million, or 7.9%, to $21.1 million at September 30, 2010 from $22.9 million at
December 31, 2009. The decrease was primarily attributable to the net loss for the nine months ended September 30, 2010 of $2.5 million offset by an increase of $550,000 in accumulated other comprehensive income due to an increase in the
market value of investments included in securities available for sale.

Results of Operations

The net loss for the quarter ended September 30, 2010 was $725,000, an increase of $185,000 from the net loss of $540,000 for the
comparable quarter in 2009. The change was due to increases in the provision for loan loss of $75,000 and noninterest expense of $415,000, of which $245,000 represented an impairment charge on a real estate owned property, offset by increases in net
interest income of $293,000 and noninterest income of $12,000. The net loss for the nine months ended September 30, 2010 was $2.5 million, an increase of $767,000 from the net loss recorded for the same period in 2009.

Net interest income for the quarter ended September 30, 2010 increased $293,000, or 25.6%, to $1.4 million from $1.1 million for the
comparable quarter in 2009. The average yield on interest-earning assets decreased 92 basis points to 4.92% for the quarter ended September 30, 2010 from 5.84% for the same period in 2009, while average interest-earning assets decreased $9.3
million during the same time period. The average yield decreased partially as a result of foregone interest on nonaccrual loans of approximately $91,000 during the quarter ended September 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 116 basis points to 1.94%
from 3.10% for the quarters ended September 30, 2010 and 2009, respectively. Average interest-bearing liabilities decreased $8.0 million during the third quarter of 2010 compared to the third quarter of 2009. The interest rate spread increased
24 basis points to 2.98% for the quarter ended September 30, 2010 from 2.74% for the comparable quarter in 2009 while the net interest margin increased to 3.03% from 2.84% for the same period. The increases in the interest rate spread and
margin were primarily due to the repricing of all deposit products at lower interest rates.

Net interest income for the nine
months ended September 30, 2010 increased $587,000, or 15.7%, to $4.3 million from $3.7 million for the comparable period in 2009. The average yield on interest-earning assets decreased 73 basis points to 5.02% for the nine months ended
September 30, 2010 from 5.75% for the same period in 2009, while average interest-earning assets decreased $9.9 million during the same time period. The average yield decreased partially as a result of foregone interest on nonaccrual loans of
approximately $389,000. 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 121 basis points to 2.04% from 3.25% for the nine months ended September 30, 2010 and 2009, respectively. Average interest-bearing liabilities decreased $6.5 million during the first nine months of 2010
compared to the first nine months of 2009. The interest rate spread increased 48 basis points to 2.98% from 2.50% while the net interest margin increased to 3.04% from 2.65% for the nine months ended September 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.



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Management establishes
provisions for loan losses, which are charged to operations, to maintain the allowance for loan losses 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, a $273,000 provision for loan loss was established for the quarter ended September 30, 2010 compared to $198,000 for the same quarter in 2009. The provision consists of $68,000 for loans specifically
identified as having a loss potential and $205,000 for the remaining general loan population. The loan loss provision was $1.6 million and $358,000 for the nine months ended September 30, 2010 and 2009, respectively. The provision for the nine
months ended September 30, 2010 consisted of $975,000 for loans specifically identified as having a loss potential and $625,000 for the remaining general 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 nine months ended September 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 September 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 increased $12,000 to $161,000 for the quarter ended September 30, 2010 compared to $149,000 for the quarter ended
September 30, 2009. The increase was primarily due to a $6,000 gain on the sale of a loan during the quarter and a $7,000 increase in service fee income. Noninterest income decreased $4,000 to $452,000 for the nine months ended
September 30, 2010 from $456,000 for the same period in 2009.

Noninterest expense increased $415,000 to $2.0 million for
the quarter ended September 30, 2010 from $1.6 million for the corresponding three month period in 2009. The increase for the quarter was primarily the result of a $397,000 increase in real estate owned and impairment expenses. This increase
was the result of a $250,000 writedown in value on one property in the portfolio with the remaining increase due to general increases in expenses for the maintenance of properties held in real estate owned. Noninterest expense increased $34,000 to
$5.7 million for the nine months ended September 30, 2010 from $5.6 million for the corresponding period in 2009. The increase was primarily the result of an increase in real estate owned and impairment expenses of $245,000 during the first
nine months of 2010 offset by a decrease of $233,000 in losses on impairment of equity securities as there were no charges during the nine months ended September 30, 2010.

There was no federal income tax benefit recorded for the three or nine months ended September 30, 2010 compared to a tax benefit of
$0 and $88,000 recorded for the three and nine months ended September 30, 2009, respectively. The change in the income tax benefit for the three and nine 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 Resource

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 $1.4 million and $(323,000) for the nine months ended September 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 $7.8 million and $3.9 million for the nine months ended September 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 $(1.6) million and $3.4 million for the nine months ended
September 30, 2010 and 2009, respectively.



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At September 30,
2010, the Bank exceeded all of its regulatory capital requirements with a Tier 1 (core) capital level of $19.7 million, or 9.17% of adjusted total assets, which is above the required level of $8.6 million, or 4.0%; and total risk-based capital of
$21.2 million, or 17.36% of risk-weighted assets, which is above the required level of $9.8 million, or 8.0%. Accordingly, the Bank was categorized as well capitalized at September 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, which was received subsequent to the Bank entering into a Supervisory Agreement with the OTS in February 2007, remains in effect as of September 30, 2010. The notification requires the Bank
to obtain OTS approval for any capital distribution, including the payment of a dividend from the Bank to the Company. Management believes future dividend requests, if necessary, will be approved given the Banks current capital levels. The
agreement and subsequent notification 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 September 30, 2010, the Bank had outstanding commitments to originate mortgage loans of $1.1 million, commitments under unused
lines of credit of $1.4 million and undisbursed portions of construction loans of $852,000. The Bank anticipates that it will have sufficient funds available to meet its current loan origination commitments. In addition, the Bank has a commitment to
purchase $1.0 million of mortgage-backed securities during October 2010. Certificate accounts that are scheduled to mature in less than one year from September 30, 2010 totaled $52.4 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 June 30, 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 (7)% and would result in a $2.2 million decrease in the NPV of the Bank. Accordingly, increases in interest rates would be expected to have a negative impact on the Banks operating results. The NPV
Ratio sensitivity measure is below the threshold at which the Bank could be required to hold additional risk-based capital under OTS regulations.

Certain shortcomings are inherent in the methodology used in the above interest rate risk measurements. Modeling changes in NPV 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 June 30, 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.



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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        |  | $                   | 23,808 |  |                           | $ | (5,104 | )        |  |  | (18       | )% |  |        | 11.04 | % |  |  | (165 | )bp
|+ 200 bp        |  |                     | 26,747 |  |                           |   | (2,165 | )        |  |  | (7        | )  |  |        | 12.12 |   |  |  | (57  | )bp
|+ 100 bp        |  |                     | 28,690 |  |                           |   | (222   | )        |  |  | (1        | )  |  |        | 12.76 |   |  |  | 6    | bp 
|0 bp            |  |                     | 28,912 |  |                           |   |       |          |  |  |          |    |  |        | 12.69 |   |  |  |     |    
| 100 bp        |  |                     | 27,751 |  |                           |   | (1,162 | )        |  |  | (4        | )  |  |        | 12.10 |   |  |  | (59  | )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 September 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, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and
forms, and that such information is accumulated and communicated to the Companys management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision, and with the participation of
our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as contemplated by Exchange Act Rule 13a-15. Based upon, and as of the date
of that evaluation, the Chief Executive Officer and Chief Financial Officer 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 September 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 and Item 1A
to Part II in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, which could materially affect our business, financial condition or future results. 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 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2010.



|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 nine months of 2010 under the
program. A total of 43,682 shares remain available for repurchase under the program.



|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: November 15, 2010 |  |  |  | /S/    DAVID A.
REMIJAS              
|                        |  |  |  | David A. Remijas                     
|                        |  |  |  | Chairman and Chief Executive Officer 
|                        |  | 
|Date: November 15, 2010 |  |  |  | /S/    VICTOR E.
CAPUTO              
|                        |  |  |  | Victor E. Caputo                     
|                        |  |  |  | Treasurer and Chief Financial Officer



23