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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, 2008





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   ̈

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



|                        |  |   |  |                         |  |  
|----------------------- |  | - |  | ----------------------- |  | -
|Large accelerated filer |  |  ̈ |  | Accelerated filer       |  |  ̈
|                        |  |   | 
|Non-accelerated filer   |  |  ̈ |  | Small reporting company |  | x

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

As of November 7, 2008, the Registrant had outstanding 1,192,174 shares of common stock.









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PARK BANCORP, INC.

Form 10-Q Quarterly Report

Index



|                               |  |                                                                                       |  |     
|------------------------------ |  | ------------------------------------------------------------------------------------- |  | ----
|                               |  |                                                                                       |  | Page
|PART I - Financial Information
|                               |  |                                                                                      
|Item 1                         |  | Financial Statements                                                                  |  | 1   
|                               |  |                                                                                      
|Item 2                         |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 9   
|                               |  |                                                                                      
|Item 3                         |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 14  
|                               |  |                                                                                      
|Item 4T                        |  | Controls and Procedures                                                               |  | 15  
|                              
|PART II - Other Information   
|                               |  |                                                                                      
|Item 1                         |  | Legal Proceedings                                                                     |  | 16  
|                               |  |                                                                                      
|Item 1A                        |  | Risk Factors                                                                          |  | 16  
|                               |  |                                                                                      
|Item 2                         |  | Changes in Securities                                                                 |  | 17  
|                               |  |                                                                                      
|Item 3                         |  | Defaults Upon Senior Securities                                                       |  | 17  
|                               |  |                                                                                      
|Item 4                         |  | Submission of Matters to a Vote of Securities Holders                                 |  | 17  
|                               |  |                                                                                      
|Item 5                         |  | Other Information                                                                     |  | 17  
|                               |  |                                                                                      
|Item 6                         |  | Exhibits                                                                              |  | 18  
|                               | 
|SIGNATURES                     |  | 19                                                                                   

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

This report contains certain forward-looking statements within the meaning of Section 27a of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Park Bancorp, Inc. (the Company) intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995, as amended, and is including this statement for purposes of these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are
generally identifiable by use of the words such as believe, expect, intend, anticipate, estimate, project, or similar expressions. The Companys ability to predict results
or the actual effect of future plans or strategies is inherently uncertain. Factors that could have a material adverse effect



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



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ITEM 1  FINANCIAL STATEMENTS

Park Bancorp, Inc. and Subsidiaries

Consolidated Statements of
Financial Condition

(In thousands of dollars, except share data)

(Unaudited)



|                                                                                          |  |                   |         |   |                  |   |         |  
|----------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                          |  | September 30,2008 |         |   | December 31,2007 |  
|ASSETS                                                                                    |  |                   |         |   |                  |   |         |  
|Cash and due from banks                                                                   |  | $                 | 3,054   |   |                  | $ | 2,104   |  
|Federal funds sold                                                                        |  |                   | 2,165   |   |                  |   | 11,542  |  
|Interest-bearing deposit accounts with other financial institutions                       |  |                   | 2,315   |   |                  |   | 1,797   |  
|                                                                                          |  |                   |         |   |                  |   |         |  
|Total cash and cash equivalents                                                           |  |                   | 7,534   |   |                  |   | 15,443  |  
|                                                                                          |  |                  
|Securities available for sale                                                             |  |                   | 45,738  |   |                  |   | 33,782  |  
|Loans receivable, net of allowance of $733 and $640                                       |  |                   | 140,117 |   |                  |   | 146,037 |  
|Federal Home Loan Bank stock, at cost                                                     |  |                   | 5,423   |   |                  |   | 5,423   |  
|Premises and equipment, net                                                               |  |                   | 9,576   |   |                  |   | 6,983   |  
|Accrued interest receivable                                                               |  |                   | 1,138   |   |                  |   | 885     |  
|Bank-owned life insurance                                                                 |  |                   | 7,900   |   |                  |   | 7,679   |  
|Real estate owned                                                                         |  |                   | 2,471   |   |                  |   | 2,449   |  
|Other assets                                                                              |  |                   | 2,301   |   |                  |   | 1,371   |  
|                                                                                          |  |                   |         |   |                  |   |         |  
|Total assets                                                                              |  | $                 | 222,198 |   |                  | $ | 220,052 |  
|                                                                                          |  |                   |         |   |                  |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                      |  |                   |         |   |                  |   |         |  
|LIABILITIES                                                                               |  |                   |         |   |                  |   |         |  
|Non-interest bearing deposits                                                             |  | $                 | 6,482   |   |                  | $ | 5,707   |  
|Interest bearing deposits                                                                 |  |                   | 131,529 |   |                  |   | 131,267 |  
|                                                                                          |  |                   |         |   |                  |   |         |  
|Total deposits                                                                            |  |                   | 138,011 |   |                  |   | 136,974 |  
|                                                                                          |  |                  
|Securities sold under repurchase agreements                                               |  |                   | 3,239   |   |                  |   | 3,234   |  
|Advances from borrowers for taxes and insurance                                           |  |                   | 2,386   |   |                  |   | 1,834   |  
|Federal Home Loan Bank advances                                                           |  |                   | 48,455  |   |                  |   | 46,139  |  
|Other borrowings                                                                          |  |                   | 500     |   |                  |   |        |  
|Accrued interest payable                                                                  |  |                   | 545     |   |                  |   | 485     |  
|Other liabilities                                                                         |  |                   | 1,273   |   |                  |   | 1,109   |  
|                                                                                          |  |                   |         |   |                  |   |         |  
|Total liabilities                                                                         |  |                   | 194,409 |   |                  |   | 189,775 |  
|                                                                                          |  |                  
|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        |  |                   | 29      |   |                  |   | 29      |  
|Additional paid-in capital                                                                |  |                   | 32,120  |   |                  |   | 32,045  |  
|Retained earnings                                                                         |  |                   | 27,236  |   |                  |   | 28,938  |  
|Treasury stock, 1,721,854 and 1,700,049 shares, at cost                                   |  |                   | (31,043 | ) |                  |   | (30,560 | )
|Unearned ESOP shares                                                                      |  |                   | (233    | ) |                  |   | (317    | )
|Accumulated other comprehensive income (loss)                                             |  |                   | (320    | ) |                  |   | 142     |  
|                                                                                          |  |                   |         |   |                  |   |         |  
|Total stockholders equity                                                                |  |                   | 27,789  |   |                  |   | 30,277  |  
|                                                                                          |  |                   |         |   |                  |   |         |  
|Total liabilities and stockholders equity                                                |  | $                 | 222,198 |   |                  | $ | 220,052 |  
|                                                                                          |  |                   |         |   |                  |   |         |  

See accompanying notes to consolidated financial statements.



1.



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Park Bancorp, Inc. and Subsidiaries

Consolidated Statements of Income

(In thousands of dollars, except share data)

(Unaudited)



|                                                     |  |                                 |        |   |                                |   |       |      |  |   |        |   |  |   |       |  
|---------------------------------------------------- |  | ------------------------------- | ------ | - | ------------------------------ | - | ----- | ---- |  | - | ------ | - |  | - | ----- | -
|                                                     |  | Three Months EndedSeptember 30, |        |   | Nine Months EndedSeptember 30, |  
|                                                     |  | 2008                            |        |   | 2007                           |   |       | 2008 |  |   | 2007   |  
|Interest income                                      |  |                                 |        |   |                                |   |       |      |  |   |        |   |  |   |       |  
|Loans receivable                                     |  | $                               | 2,266  |   |                                | $ | 2,339 |      |  | $ | 6,905  |   |  | $ | 7,137 |  
|Securities                                           |  |                                 | 618    |   |                                |   | 550   |      |  |   | 1,512  |   |  |   | 1,539 |  
|Other interest-bearing deposits                      |  |                                 | 19     |   |                                |   | 69    |      |  |   | 189    |   |  |   | 302   |  
|                                                     |  |                                 |        |   |                                |   |       |      |  |   |        |   |  |   |       |  
|Total                                                |  |                                 | 2,903  |   |                                |   | 2,958 |      |  |   | 8,606  |   |  |   | 8,978 |  
|                                                     |  |                                 |        |  
|Interest expense                                     |  |                                 |        |   |                                |   |       |      |  |   |        |   |  |   |       |  
|Deposits                                             |  |                                 | 952    |   |                                |   | 1,116 |      |  |   | 3,136  |   |  |   | 3,359 |  
|Federal Home Loan Bank advances and other borrowings |  |                                 | 537    |   |                                |   | 494   |      |  |   | 1,506  |   |  |   | 1,488 |  
|                                                     |  |                                 |        |   |                                |   |       |      |  |   |        |   |  |   |       |  
|Total                                                |  |                                 | 1,489  |   |                                |   | 1,610 |      |  |   | 4,642  |   |  |   | 4,847 |  
|                                                     |  |                                 |        |   |                                |   |       |      |  |   |        |   |  |   |       |  
|Net interest income                                  |  |                                 | 1,414  |   |                                |   | 1,348 |      |  |   | 3,964  |   |  |   | 4,131 |  
|                                                     |  |                                 |        |  
|Provision for loan losses                            |  |                                 | 120    |   |                                |   |      |      |  |   | 135    |   |  |   |      |  
|                                                     |  |                                 |        |   |                                |   |       |      |  |   |        |   |  |   |       |  
|Net interest income after provision for loan losses  |  |                                 | 1,294  |   |                                |   | 1,348 |      |  |   | 3,829  |   |  |   | 4,131 |  
|                                                     |  |                                 |        |  
|Noninterest income                                   |  |                                 |        |   |                                |   |       |      |  |   |        |   |  |   |       |  
|Gain (loss) on sale of securities                    |  |                                 | (9     | ) |                                |   |      |      |  |   | (9     | ) |  |   | 74    |  
|Gain (loss) on sale of real estate owned             |  |                                 | (3     | ) |                                |   | 78    |      |  |   | (3     | ) |  |   | 162   |  
|Service fee income                                   |  |                                 | 66     |   |                                |   | 56    |      |  |   | 177    |   |  |   | 174   |  
|Earnings on bank-owned life insurance                |  |                                 | 77     |   |                                |   | 73    |      |  |   | 221    |   |  |   | 216   |  
|Other operating income                               |  |                                 | 12     |   |                                |   | 10    |      |  |   | 31     |   |  |   | 34    |  
|                                                     |  |                                 |        |   |                                |   |       |      |  |   |        |   |  |   |       |  
|Total noninterest income                             |  |                                 | 143    |   |                                |   | 217   |      |  |   | 417    |   |  |   | 660   |  
|                                                     |  |                                 |        |  
|Noninterest expense                                  |  |                                 |        |   |                                |   |       |      |  |   |        |   |  |   |       |  
|Compensation and benefits                            |  |                                 | 880    |   |                                |   | 805   |      |  |   | 2,507  |   |  |   | 2,458 |  
|Occupancy and equipment expense                      |  |                                 | 298    |   |                                |   | 198   |      |  |   | 674    |   |  |   | 600   |  
|Loss on security impairment                          |  |                                 | 496    |   |                                |   |      |      |  |   | 972    |   |  |   |      |  
|Loss on real estate owned impairment                 |  |                                 | 417    |   |                                |   |      |      |  |   | 417    |   |  |   |      |  
|Real estate owned expense                            |  |                                 | 54     |   |                                |   | 122   |      |  |   | 229    |   |  |   | 354   |  
|Other operating expenses                             |  |                                 | 600    |   |                                |   | 372   |      |  |   | 1,447  |   |  |   | 1,156 |  
|                                                     |  |                                 |        |   |                                |   |       |      |  |   |        |   |  |   |       |  
|Total noninterest expense                            |  |                                 | 2,745  |   |                                |   | 1,497 |      |  |   | 6,246  |   |  |   | 4,568 |  
|                                                     |  |                                 |        |   |                                |   |       |      |  |   |        |   |  |   |       |  
|Income (loss) before income taxes                    |  |                                 | (1,308 | ) |                                |   | 68    |      |  |   | (2,000 | ) |  |   | 223   |  
|                                                     |  |                                 |        |  
|Income tax expense (benefit)                         |  |                                 | (474   | ) |                                |   | (7    | )    |  |   | (770   | ) |  |   | (16   | )
|                                                     |  |                                 |        |   |                                |   |       |      |  |   |        |   |  |   |       |  
|Net income (loss)                                    |  | $                               | (834   | ) |                                | $ | 75    |      |  | $ | (1,230 | ) |  | $ | 239   |  
|                                                     |  |                                 |        |   |                                |   |       |      |  |   |        |   |  |   |       |  
|Basic earnings (loss) per share                      |  | $                               | (.71   | ) |                                | $ | .06   |      |  | $ | (1.05  | ) |  | $ | .20   |  
|Diluted earnings (loss) per share                    |  | $                               | (.71   | ) |                                | $ | .06   |      |  | $ | (1.05  | ) |  | $ | .20   |  
|Comprehensive income (loss)                          |  | $                               | (1,031 | ) |                                | $ | 329   |      |  | $ | (1,692 | ) |  | $ | 516   |  
|                                                     |  |                                 |        |   |                                |   |       |      |  |   |        |   |  |   |       |  

See accompanying notes to consolidated financial statements.



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Park Bancorp, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands of dollars)

(Unaudited)



|                                                                                 |  |                                |         |   |      |   |        |  
|-------------------------------------------------------------------------------- |  | ------------------------------ | ------- | - | ---- | - | ------ | -
|                                                                                 |  | Nine Months EndedSeptember 30, |        
|                                                                                 |  | 2008                           |         |   | 2007 |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                             |  |                                |         |   |      |   |        |  
|Net income (loss)                                                                |  | $                              | (1,230  | ) |      | $ | 239    |  
|Adjustments to reconcile net income (loss) to net cash from operating activities |  |                                |         |   |      |   |        |  
|Net premium amortization on securities                                           |  |                                | 39      |   |      |   | 13     |  
|(Gain) loss on sale of securities                                                |  |                                | 9       |   |      |   | (74    | )
|Loss on security impairment                                                      |  |                                | 972     |   |      |   |       |  
|Loss on real estate owned impairment                                             |  |                                | 417     |   |      |   |       |  
|(Gain) loss on sale of real estate owned                                         |  |                                | 3       |   |      |   | (162   | )
|Earnings on bank-owned life insurance, net                                       |  |                                | (221    | ) |      |   | (216   | )
|Provision for loan loss                                                          |  |                                | 135     |   |      |   |       |  
|Depreciation                                                                     |  |                                | 303     |   |      |   | 252    |  
|ESOP compensation expense                                                        |  |                                | 159     |   |      |   | 286    |  
|Stock option expense                                                             |  |                                |        |   |      |   | 18     |  
|Net change in:                                                                   |  |                                |         |   |      |   |        |  
|Accrued interest receivable                                                      |  |                                | (253    | ) |      |   | (23    | )
|Accrued interest payable                                                         |  |                                | 60      |   |      |   | 57     |  
|Other assets                                                                     |  |                                | (690    | ) |      |   | 1,022  |  
|Other liabilities                                                                |  |                                | 56      |   |      |   | (368   | )
|                                                                                 |  |                                |         |   |      |   |        |  
|Net cash provided by operating activities                                        |  |                                | (241    | ) |      |   | 1,044  |  
|                                                                                 |  |                               
|CASH FLOWS FROM INVESTING ACTIVITIES                                             |  |                                |         |   |      |   |        |  
|Net change in loans                                                              |  |                                | 5,056   |   |      |   | 3,542  |  
|Purchase of securities available for sale                                        |  |                                | (28,317 | ) |      |   | (9,981 | )
|Maturities and calls of securities available-for-sale                            |  |                                | 9,820   |   |      |   | 3,340  |  
|Principal repayments on mortgage-backed securities                               |  |                                | 4,455   |   |      |   | 3,929  |  
|Proceeds from sale of securities available-for-sale                              |  |                                | 364     |   |      |   | 272    |  
|Proceeds from sale of real estate owned                                          |  |                                | 287     |   |      |   | 1,656  |  
|Purchase of premises and equipment                                               |  |                                | (2,896  | ) |      |   | (1,501 | )
|                                                                                 |  |                                |         |   |      |   |        |  
|Net cash used in investing activities                                            |  |                                | (11,231 | ) |      |   | 1,257  |  
|                                                                                 |  |                                |         |   |      |   |        |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                             |  |                                |         |   |      |   |        |  
|Net change in deposits                                                           |  |                                | 1,037   |   |      |   | (7,165 | )
|Net change in securities sold under repurchase agreements                        |  |                                | 5       |   |      |   |       |  
|Net change in advances from borrowers for taxes and insurance                    |  |                                | 552     |   |      |   | 403    |  
|Federal Home Loan Bank advances                                                  |  |                                | 9,000   |   |      |   | 8,391  |  
|Repayments of Federal Home Loan Bank Advances                                    |  |                                | (6,684  | ) |      |   | (9,666 | )
|Net change in other borrowings                                                   |  |                                | 500     |   |      |   | (800   | )
|Stock options exercised                                                          |  |                                |        |   |      |   | 2,748  |  
|Purchase of treasury stock                                                       |  |                                | (483    | ) |      |   | (1,504 | )
|Dividends paid                                                                   |  |                                | (364    | ) |      |   | (636   | )
|                                                                                 |  |                                |         |   |      |   |        |  
|Net cash provided by financing activities                                        |  |                                | 3,563   |   |      |   | (8,229 | )
|                                                                                 |  |                                |         |   |      |   |        |  
|Net change in cash and cash equivalents                                          |  |                                | (7,909  | ) |      |   | (5,928 | )
|Cash and cash equivalents at beginning of period                                 |  |                                | 15,443  |   |      |   | 15,293 |  
|                                                                                 |  |                                |         |   |      |   |        |  
|Cash and cash equivalents at end of period                                       |  | $                              | 7,534   |   |      | $ | 9,365  |  
|                                                                                 |  |                                |         |   |      |   |        |  
|Supplemental disclosures of cash flow information                                |  |                                |         |   |      |   |        |  
|Transfer from loans to real estate owned                                         |  | $                              | 729     |   |      | $ | 1,987  |  

See accompanying notes to consolidated financial statements.



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Park Bancorp, Inc. and Subsidiaries

Consolidated Statements of Stockholders Equity

Nine months ended September 30, 2008 and 2007

(In thousands of dollars, except share data)

(Unaudited)



|                                                                           |  |             |    |                          |   |                  |  |   |               |   |  |                    |         |   |                                 |   |      |                     |  |   |      |   |  |   |        |  
|-------------------------------------------------------------------------- |  | ----------- | -- | ------------------------ | - | ---------------- |  | - | ------------- | - |  | ------------------ | ------- | - | ------------------------------- | - | ---- | ------------------- |  | - | ---- | - |  | - | ------ | -
|                                                                           |  | CommonStock |    | AdditionalPaid-inCapital |   | RetainedEarnings |  |   | TreasuryStock |   |  | UnearnedESOPShares |         |   | OtherComprehensiveIncome (Loss) |   |      | StockholdersEquity | 
|2007                                                                       |  |             |    |                          |   |                  |  |   |               |   |  |                    |         |   |                                 |   |      |                     |  |   |      |   |  |   |        |  
|Balance at January 1, 2007                                                 |  | $           | 28 |                          | $ | 29,033           |  | $ | 29,898        |   |  | $                  | (29,056 | ) |                                 | $ | (436 | )                   |  | $ | (347 | ) |  | $ | 29,120 |  
|Net income                                                                 |  |             |   |                          |   |                 |  |   | 239           |   |  |                    |        |   |                                 |   |     |                     |  |   |     |   |  |   | 239    |  
|Change in fair value of securities available for sale, net of income taxes |  |             |   |                          |   |                 |  |   |              |   |  |                    |        |   |                                 |   |     |                     |  |   | 277  |   |  |   | 277    |  
|                                                                           |  |             |    |                          |   |                  |  |   |               |   |  |                    |         |   |                                 |   |      |                     |  |   |      |   |  |   |        |  
|Total comprehensive income                                                 |  |             |    |                          |   |                  |  |   |               |   |  |                    |         |   |                                 |   |      |                     |  |   |      |   |  |   | 516    |  
|                                                                           |  |             |    |                          |   |                  | 
|Exercise of 145,519 stock options, including tax benefits                  |  |             | 1  |                          |   | 2,747            |  |   |              |   |  |                    |        |   |                                 |   |     |                     |  |   |     |   |  |   | 2,748  |  
|Purchase of 46,299 shares of treasury stock                                |  |             |   |                          |   |                 |  |   |              |   |  |                    | (1,504  | ) |                                 |   |     |                     |  |   |     |   |  |   | (1,504 | )
|Stock based compensation                                                   |  |             |   |                          |   | 18               |  |   |              |   |  |                    |        |   |                                 |   |     |                     |  |   |     |   |  |   | 18     |  
|Dividends paid                                                             |  |             |   |                          |   |                 |  |   | (636          | ) |  |                    |        |   |                                 |   |     |                     |  |   |     |   |  |   | (636   | )
|ESOP shares earned                                                         |  |             |   |                          |   | 197              |  |   |              |   |  |                    |        |   |                                 |   | 89   |                     |  |   |     |   |  |   | 286    |  
|                                                                           |  |             |    |                          |   |                  |  |   |               |   |  |                    |         |   |                                 |   |      |                     |  |   |      |   |  |   |        |  
|Balance at September 30, 2007                                              |  | $           | 29 |                          | $ | 31,995           |  | $ | 29,501        |   |  | $                  | (30,560 | ) |                                 | $ | (347 | )                   |  | $ | (70  | ) |  | $ | 30,548 |  
|                                                                           |  |             |    |                          |   |                  |  |   |               |   |  |                    |         |   |                                 |   |      |                     |  |   |      |   |  |   |        |  
|2008                                                                       |  |             |    |                          |   |                  |  |   |               |   |  |                    |         |   |                                 |   |      |                     |  |   |      |   |  |   |        |  
|Balance at January 1, 2008                                                 |  | $           | 29 |                          | $ | 32,045           |  | $ | 28,938        |   |  | $                  | (30,560 | ) |                                 | $ | (317 | )                   |  | $ | 142  |   |  | $ | 30,277 |  
|Net (loss)                                                                 |  |             |   |                          |   |                 |  |   | (1,230        | ) |  |                    |        |   |                                 |   |     |                     |  |   |     |   |  |   | (1,230 | )
|Change in fair value of securities available for sale, net of income taxes |  |             |   |                          |   |                 |  |   |              |   |  |                    |        |   |                                 |   |     |                     |  |   | (462 | ) |  |   | (462   | )
|                                                                           |  |             |    |                          |   |                  |  |   |               |   |  |                    |         |   |                                 |   |      |                     |  |   |      |   |  |   |        |  
|Total comprehensive (loss)                                                 |  |             |    |                          |   |                  |  |   |               |   |  |                    |         |   |                                 |   |      |                     |  |   |      |   |  |   | (1,692 | )
|                                                                           |  |             |    |                          |   |                  | 
|Purchase of 21,805 shares of treasury stock                                |  |             |   |                          |   |                 |  |   |              |   |  |                    | (483    | ) |                                 |   |     |                     |  |   |     |   |  |   | (483   | )
|Dividends paid                                                             |  |             |   |                          |   |                 |  |   | (364          | ) |  |                    |        |   |                                 |   |     |                     |  |   |     |   |  |   | (364   | )
|Dividends declared                                                         |  |             |   |                          |   |                 |  |   | (108          | ) |  |                    |        |   |                                 |   |     |                     |  |   |     |   |  |   | (108   | )
|ESOP shares earned                                                         |  |             |   |                          |   | 75               |  |   |              |   |  |                    |        |   |                                 |   | 84   |                     |  |   |     |   |  |   | 159    |  
|                                                                           |  |             |    |                          |   |                  |  |   |               |   |  |                    |         |   |                                 |   |      |                     |  |   |      |   |  |   |        |  
|Balance at September 30, 2008                                              |  | $           | 29 |                          | $ | 32,120           |  | $ | 27,236        |   |  | $                  | (31,043 | ) |                                 | $ | (233 | )                   |  | $ | (320 | ) |  | $ | 27,789 |  
|                                                                           |  |             |    |                          |   |                  |  |   |               |   |  |                    |         |   |                                 |   |      |                     |  |   |      |   |  |   |        |  

See accompanying notes to consolidated financial statements.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

(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), and the Banks subsidiaries, GPS
Corporation and GPS Development Corporation (GPS), as of September 30, 2008 and December 31, 2007 and for the three-month and nine-month periods ended September 30, 2008 and 2007. 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 2007 Annual Report on Form 10-K filed with the Securities and Exchange Commission. The December 31, 2007 balance sheet presented herein has been derived from the
audited financial statements included in the Companys 2007 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, 2008. 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, 2008 and 2007 are not necessarily indicative of the results to be expected for the full year.

Adoption of New Accounting Standards

In September 2006, the FASB Emerging Issues Task Force finalized Issue No. 06-4, Accounting for Deferred Compensation and Postretirement
Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements. This issue requires that a liability be recorded during the service period when a split-dollar life insurance agreement continues after participants employment or
retirement. The required accrued liability will be based on either the post-employment benefit cost for the continuing life insurance or based on the future death benefit depending on the contractual terms of the underlying agreement. This issue was
effective for fiscal years beginning after December 15, 2007. The impact of adoption on January 1, 2008 had no impact on the Companys financial condition or results of operations.

In September 2006, FASB issued Statement 157, Fair Value Measurements. This Statement defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, FASB having previously
concluded in those accounting pronouncements that fair value is the relevant measurement attribute. This Statement was effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years. The adoption of this standard on January 1, 2008 did not have a material impact on the Companys financial statements or results of operations. Applicable disclosures are presented in these consolidated financial
statements.



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##### Table of Contents

In February 2007, the FASB issued Statement No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities. The standard provides companies with an option to report selected financial assets and liabilities at fair value and establishes presentation and disclosure requirements designed to facilitate comparisons between companies that
choose different measurement attributes for similar types of assets and liabilities. The new standard was effective for the Company on January 1, 2008. The Company did not elect the fair value option for any financial assets or financial
liabilities as of the January 1, 2008 effective date.

Note 2 - Earnings (loss) Per Share

The following table presents a reconciliation of the components used to compute basic and diluted earnings per share for the three-month and nine-month periods ended
September 30, 2008 and 2007.



|                                                                    |  |                            |           |   |                           |   |           |                            |  |                           |           |  |   |          
|------------------------------------------------------------------- |  | -------------------------- | --------- | - | ------------------------- | - | --------- | -------------------------- |  | ------------------------- | --------- |  | - | ---------
|                                                                    |  | 2008                       |           |   | 2007                     
|                                                                    |  | Three MonthsEnded Sept. 30 |           |   | Nine MonthsEnded Sept. 30 |   |           | Three MonthsEnded Sept. 30 |  | Nine MonthsEnded Sept. 30
|Basic earnings (loss) per share                                     |  |                            |           |   |                           |   |           |                            |  |                           |           |  |   |          
|Net income (loss) as reported                                       |  | $                          | (834      | ) |                           | $ | (1,230    | )                          |  | $                         | 75        |  | $ | 239      
|Weighted average common shares outstanding                          |  |                            | 1,168,112 |   |                           |   | 1,173,278 |                            |  |                           | 1,190,694 |  |   | 1,181,676
|                                                                    |  |                            |           |   |                           |   |           |                            |  |                           |           |  |   |          
|Basic earnings (loss) per share                                     |  | $                          | (.71      | ) |                           | $ | (1.05     | )                          |  | $                         | .06       |  | $ | .20      
|                                                                    |  |                            |           |   |                           |   |           |                            |  |                           |           |  |   |          
|Diluted earnings (loss) per share                                   |  |                            |           |   |                           |   |           |                            |  |                           |           |  |   |          
|Net income (loss) as reported                                       |  | $                          | (834      | ) |                           | $ | (1,230    | )                          |  | $                         | 75        |  | $ | 239      
|Weighted average common shares outstanding                          |  |                            | 1,168,112 |   |                           |   | 1,173,278 |                            |  |                           | 1,190,694 |  |   | 1,181,676
|Dilutive effect of stock options                                    |  |                            |          |   |                           |   |          |                            |  |                           | 14,700    |  |   | 26,080   
|                                                                    |  |                            |           |   |                           |   |           |                            |  |                           |           |  |   |          
|Weighted average common shares and dilutive potential common shares |  |                            | 1,168,112 |   |                           |   | 1,173,278 |                            |  |                           | 1,205,394 |  |   | 1,207,756
|                                                                    |  |                            |           |   |                           |   |           |                            |  |                           |           |  |   |          
|Diluted earnings (loss) per share                                   |  | $                          | (.71      | ) |                           | $ | (1.05     | )                          |  | $                         | .06       |  | $ | .20      
|                                                                    |  |                            |           |   |                           |   |           |                            |  |                           |           |  |   |          

Diluted earnings per share reflect potential dilution from outstanding stock options, using the treasury stock
method. Due to the Companys net loss in 2008, all stock options were excluded from the computation of diluted loss per share.



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Note 3 - Loans

The Company
grants 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 30,2008 |         |   | December 31,2007 |  
|One-to-four-family residential     |  | $                 | 89,910  |   |                  | $ | 86,427  |  
|Multi-family residential           |  |                   | 19,487  |   |                  |   | 23,882  |  
|Commercial, construction, and land |  |                   | 18,823  |   |                  |   | 22,324  |  
|Consumer loans                     |  |                   | 5,148   |   |                  |   | 6,026   |  
|Participations and loans purchased |  |                   | 9,115   |   |                  |   | 10,150  |  
|                                   |  |                   |         |   |                  |   |         |  
|Total loans, gross                 |  |                   | 142,483 |   |                  |   | 148,809 |  
|Undisbursed portion of loans       |  |                   | (1,397  | ) |                  |   | (1,857  | )
|Net deferred loan origination fees |  |                   | (236    | ) |                  |   | (275    | )
|Allowance for loan losses          |  |                   | (733    | ) |                  |   | (640    | )
|                                   |  |                   |         |   |                  |   |         |  
|Total loans, net                   |  | $                 | 140,117 |   |                  | $ | 146,037 |  
|                                   |  |                   |         |   |                  |   |         |  

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



|                          |  |                                |     |   |      |   |     |  
|------------------------- |  | ------------------------------ | --- | - | ---- | - | --- | -
|                          |  | Nine Months EndedSeptember 30, |    
|                          |  | 2008                           |     |   | 2007 |  
|Beginning balance         |  | $                              | 640 |   |      | $ | 637 |  
|Provision for loan losses |  |                                | 135 |   |      |   |    |  
|Recoveries                |  |                                |    |   |      |   |    |  
|Loans charged off         |  |                                | (2  | ) |      |   | (69 | )
|                          |  |                                |     |   |      |   |     |  
|Ending balance            |  | $                              | 733 |   |      | $ | 568 |  
|                          |  |                                |     |   |      |   |     |  

There were no impaired loans as of September 30, 2008 and December 31,
2007.

Non-performing loans were as follows:



|                                             |  |                   |    |                  |   |    
|-------------------------------------------- |  | ----------------- | -- | ---------------- | - | ---
|                                             |  | September 30,2008 |    | December 31,2007
|Loans past due over 90 days still on accrual |  | $                 |   |                  | $ |   
|Nonaccrual loans                             |  |                   | 31 |                  |   | 190

Non-performing loans and impaired loans are defined differently. Some loans may be included in both categories,
whereas other loans may only be included in one category.



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Note 4 - Fair Value

Statement 157 establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may
be used to measure fair value:

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

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

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

Assets and Liabilities Measured on a Recurring Basis

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

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



|                              |  |                                                     |        |                                                            |   |                                           |  |                                         |        |  |  
|----------------------------- |  | --------------------------------------------------- | ------ | ---------------------------------------------------------- | - | ----------------------------------------- |  | --------------------------------------- | ------ |  | -
|                              |  | Fair Value Measurements at September 30, 2008 Using
|                              |  | Sept. 30, 2008                                      |        | Quoted Prices inActive MarketsFor IdenticalAssets(Level 1) |   | SignificantOtherObservableInputs(Level 2) |  | Significant UnobservableInputs(Level 3)
|Assets:                       |  |                                                     |        |                                                            |   |                                           |  |                                         |        |  |  
|Securities available for sale |  | $                                                   | 45,738 |                                                            | $ | 5,389                                     |  | $                                       | 40,349 |  | 

Note 5 - Regulatory Capital

The Bank is subject to regulatory capital requirements administered by federal regulatory agencies. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain
off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet various capital classifications are also subject to qualitative
judgments by regulators. Failure to meet various capital requirements can initiate regulatory action. At September 30, 2008, the Bank exceeded all of its regulatory capital requirements with a Tier 1 (core) capital level of $27.4 million, or
12.4% of adjusted total assets, which is above the required level of $8.9 million, or 4.0%; and total risk-based capital of $28.2 million, or 20.9% of risk-based assets, which is above the required level of $10.8 million, or 8.0%. The Bank at
June 30, 2008 was categorized as well capitalized. Management is not aware of any conditions or events since the most recent notification that would change the Banks category. In July 2008, the Bank received notice from the OTS
supplementing the February 2007 Supervisory Agreement. This notice is typically delivered at execution of a



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Supervisory Agreement and requires the Bank to obtain OTS approval for any capital distribution, including payment of a dividend from the Bank to the Holding
Company. The Bank received approval from the OTS for a $1,000,000 dividend from the Bank to the Holding Company on August 18, 2008. Management believes future dividend requests, if necessary, should be approved given the Banks current
capital levels.



|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

RECENT EVENTS

Emergency Economic Stabilization Act of 2008

On October 14, 2008 the United States Treasury Department (Treasury), the Federal Reserve Board and the Federal Deposit Insurance Corporation (FDIC) jointly
announced additional programs pursuant to the Emergency Economic Stabilization Act of 2008 to address the current instability in the financial markets. These programs include the Capital Purchase Program (CPP) and the Temporary Liquidity Guarantee
Program (TLGP).

The CPP allows qualifying financial institutions (QFI) to issue senior preferred shares to the Treasury. The preferred shares will count
as Tier 1 capital and will pay a cumulative dividend of 5% for the first 5 years and 9% thereafter. In connection with the purchase of the preferred shares the Treasury will receive warrants to purchase common stock in an amount equal to 15% of the
senior preferred investment. Participating institutions will be subject to restrictions on dividend payments, share repurchases and the payment of certain amounts of executive compensation. QFI must elect to participate by November 14, 2008.

The TLGP will allow QFI to have the FDIC guarantee newly issued senior unsecured debt issued on or before June 30, 2009 and provide unlimited FDIC
insurance coverage for non-interest bearing transaction accounts. The guarantee program in available only to a QFI that had existing senior unsecured debt outstanding as of September 30, 2008. The guarantee/additional insurance coverage is
automatic under TLGP for the first 30 days without charge. Thereafter, there will be a 75 basis points charge for the guarantee and a 10 basis point assessment for insurance coverage for non-interest bearing transaction account balances above
$250,000. Institutions have until November 14, 2008 to opt out of TLGP.

The Company has not determined if it will participate in the CPP or the TLGP
as of the date of this filing.

FDIC Assessments

The
FDIC has issued a proposed rule to raise current deposit insurance assessment rates uniformly for all financial institutions for the first quarter of 2009. The proposed rule also provides for a new means of calculating deposit insurance beginning
during the second quarter of 2009, and includes an assessment of the financial institutions risk profile as determined by the FDIC. Although final rules have not been published, the Company anticipates that its cost of insuring deposits will
increase in 2009, when and if the final rules are adopted.

Financial Institution Industry Conditions

During the past year, the banking industry has been under significant stress due to declining real estate values, asset impairment, eroding capital ratios and tightening
liquidity. The impact of these trends are briefly discussed below and more fully discussed in the notes to the interim financial statements.



| |  |  | Real Estate Trends and Loan Quality: The Company has seen only a modest increase in non-performing loans. Year to date net charge-offs have remained relatively
stable compared to prior periods.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Security Portfolio: The Companys security portfolio primarily consists of Government sponsored entities debt securities, mortgage-backed securities, and
a mutual fund investment that holds mortgage-backed securities. At September 30, 2008, the total unrealized loss on the security portfolio
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | was 1.1% of total investment securities. The fair value of the security portfolio declined $402,000 and $702,000 exclusive of other-than-temporary
impairment, for the quarter and nine months ended September 30, 2008. As illustrated in this filing, the Company recorded a $9,000 net loss in conjunction with the sale of securities and a $972,000 loss on security impairment of its mutual fund
investment in the nine months ended September 30, 2008. As of September 30, 2008, management has not identified any other securities that we believe would be classified as other than temporarily impaired.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Capital Levels: As detailed in the Liquidity and Capital Resources section of the Management Discussion and Analysis portion of this filing, the Banks capital
levels exceed regulatory capital requirements. As of September 30, 2008, the Bank is categorized as well capitalized under the regulatory framework for prompt corrective action.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Liquidity: In recent months, certain banking institutions have encountered liquidity issues. As of the date of this filing, the Company has not encountered
abnormally high liquidity constraints. However, to address industry trends, the Company has invested in securities available for sale, that if needed, could be sold to meet short term liquidity needs. We refer your attention to the Liquidity and
Capital Resources section of the Management Discussion and Analysis portion of this filing for additional details.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

EXECUTIVE SUMMARY

The following discussion compares the financial condition of Park Bancorp, Inc. (the Company) and its wholly owned subsidiaries, Park Federal
Savings Bank (the Bank) and PBI Development Corporation, and the Banks subsidiaries, at September 30, 2008 to its financial condition at December 31, 2007 and the results of operations for the three and nine months ended
September 30, 2008 to the same periods in 2007. This discussion should be read in conjunction with the interim financial statements and footnotes included herein.

FINANCIAL CONDITION

Total assets at September 30, 2008 were $222.2 million compared to $220.1 million at
December 31, 2007. The change was due to an increase in securities and premises and equipment; offset by a decrease in loans receivable and interest bearing deposits.

As of September 30, 2008, the Companys unrealized loss position on securities available for sale is ($485,000), compared to an unrealized gain of $216,000 as of December 31, 2007. Except for its mutual
fund investment as explained in the following paragraph, the unrealized losses have not been recognized into income because management is monitoring the high credit quality of the issuers, management has the intent and ability to hold these
securities, and the decline in fair value is largely due to the interest rate environment and illiquidity in the capital markets.

The Company recognized
other-than-temporary impairment losses of $476,000 in the second quarter and $496,000 in the third quarter of 2008 on its mutual fund investment. The mutual fund has been in an unrealized loss position since 2003, and further declined in value
during 2008. Even though management does not perceive credit losses at this time, the unrealized loss was deemed to be other-than-temporary and the loss was recognized through earnings in these periods.

The allowance for loan losses was $733,000 at September 30, 2008 and $640,000 at December 31, 2007. Non-performing assets were $2.5 million at
September 30, 2008 and $2.6 million at December 31, 2007, respectively. Non-performing assets at September 30, 2008 consist of $31,000 in non-performing loans and $2.5 million in real estate owned; compared to $190,000 in
non-performing loans and $2.4 million in real estate owned at December 31, 2007. The allowance for loan losses as a percentage of total gross loans was at .52% as of September 30, 2008 and .44% as of December 31, 2007.



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



|                           |  |                   |       |                  |   |      
|-------------------------- |  | ----------------- | ----- | ---------------- | - | -----
|                           |  | September 30,2008 |       | December 31,2007
|Nonaccrual loans           |  |                   |       |                  |   |      
|One-to-four-family         |  | $                 | 31    |                  | $ | 190  
|Multi-family               |  |                   |      |                  |   |     
|Commercial                 |  |                   |      |                  |   |     
|Construction and land      |  |                   |      |                  |   |     
|Consumer and other         |  |                   |      |                  |   |     
|                           |  |                   |       |                  |   |      
|Total nonperforming loans  |  |                   | 31    |                  |   | 190  
|Real estate owned          |  |                   | 2,471 |                  |   | 2,449
|                           |  |                   |       |                  |   |      
|Total nonperforming assets |  | $                 | 2,502 |                  | $ | 2,639
|                           |  |                   |       |                  |   |      

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.



|                                |  |          |     |                                      |          |   |                                                       |        |   |        |   |                                      |  |        |                                                       |  |        |  
|------------------------------- |  | -------- | --- | ------------------------------------ | -------- | - | ----------------------------------------------------- | ------ | - | ------ | - | ------------------------------------ |  | ------ | ----------------------------------------------------- |  | ------ | -
|                                |  | 09/30/08 |     |                                      | 12/31/07 |  
|                                |  | Amount   |     | Percent ofAllowanceto TotalAllowance |          |   | Percent ofGrossLoans inEachCategoryto TotalGrossLoans |        |   | Amount |   | Percent ofAllowanceto TotalAllowance |  |        | Percent ofGrossLoans inEachCategoryto TotalGrossLoans | 
|One-to-four-family              |  | $        | 460 |                                      | 62.76    | % |                                                       | 63.10  | % |        | $ | 319                                  |  | 49.85  | %                                                     |  | 58.08  | %
|Multi-family                    |  |          | 99  |                                      | 13.51    |   |                                                       | 13.68  |   |        |   | 47                                   |  | 7.34   |                                                       |  | 16.05  |  
|Commercial                      |  |          | 31  |                                      | 4.23     |   |                                                       | 7.34   |   |        |   | 63                                   |  | 9.84   |                                                       |  | 8.59   |  
|Construction and land           |  |          | 21  |                                      | 2.86     |   |                                                       | 5.87   |   |        |   | 40                                   |  | 6.25   |                                                       |  | 6.41   |  
|Consumer and other              |  |          | 122 |                                      | 16.64    |   |                                                       | 10.01  |   |        |   | 171                                  |  | 26.72  |                                                       |  | 10.87  |  
|                                |  |          |     |                                      |          |   |                                                       |        |   |        |   |                                      |  |        |                                                       |  |        |  
|Total allowance for loan losses |  | $        | 733 |                                      | 100.00   | % |                                                       | 100.00 | % |        | $ | 640                                  |  | 100.00 | %                                                     |  | 100.00 | %



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The Bank opened its fourth full-service office in June 2008. Total construction costs including land and building were
$5.7 million.

Total liabilities at September 30, 2008 were $194.4 million compared to $189.8 million at December 31, 2007. The change was due
primarily to an increase in deposits of $1.0 million, an increase in Federal Home Loan Bank advances of $2.3 million and a draw on an existing line of credit of $500,000.

Stockholders equity was $27.8 million at September 30, 2008 and $30.3 million at December 31, 2007. The decrease was attributable to the net loss of the Company, the repurchase of 21,805 shares at an
average price of $22.15, dividends paid of $364,000, dividends declared of $108,000, and an unrealized loss on securities available for sale, net of tax, of $462,000.

RESULTS OF OPERATIONS

The Company recorded a net loss of ($834,000) for the quarter ended September 30, 2008 compared
to net income of $75,000 for the quarter ended September 30, 2007. The change was primarily due to an increase in non-interest expense and an increase in the provision for loan losses; offset by an increase in net interest income. The Company
recorded a net loss of ($1.2 million) for the nine months ended September 30, 2008 compared to net income of $239,000 for the nine months ended September 30, 2007. The change was primarily due to an increase in non-interest expense, an
increase in the provision for loan losses, a decrease in non-interest income and a decrease in net interest income.

Net interest income was $1.4 million
for the three months ended September 30, 2008 compared to $1.3 million for the same quarter in 2007. The net interest margin increased to 2.84% for the 2008 period from 2.75% for the 2007 period. This was largely due to an increase in the
spread to 2.74% for the 2008 period from 2.52% for the 2007 period. The average yield on earning assets decreased to 5.84% for the quarter ended September 30, 2008 from 6.04% for the 2007 period. The average cost of funds decreased to 3.10% for
the quarter ended September 30, 2008 from 3.52% for the quarter ended September 30, 2007. Net interest income was $4.0 million for the nine months ended September 30, 2008 compared to $4.1 million for the same period in 2007. The net
interest margin decreased to 2.65% for the nine months ended September 30, 2008 from 2.76% for the same period in 2007. This was due to a decrease in the spread to 2.50% for the nine months ended September 30, 2008 from 2.53% for the same
period in 2007. The average yield on earnings assets decreased to 5.75% for the nine months ended September 30, 2008 from 6.01% for the same period in 2007. The average cost of funds decreased to 3.25% for the nine months ended
September 30, 2008 from 3.48% for the same period in 2007.

Management establishes provisions for loan losses, which are charged to operations, at a
level management believes is appropriate to absorb probable incurred credit losses in the loan portfolio. In evaluating the level of the allowance for loan losses, management considers historical loss experience, the types of loans and the amount of
loans in the loan portfolio, adverse situations that may affect the borrowers ability to repay, estimated value of any underlying collateral, peer group information, and prevailing economic conditions. This evaluation is inherently subjective,
as it requires estimates that are susceptible to significant revision as more information becomes available or as future events change. There was a $120,000 provision for loan losses recorded for the quarter and a $135,000 provision for the nine
months ended September 30, 2008. No provision for loan losses recorded for the quarter and nine months ended September 30, 2007. While the Bank has not experienced a significant change in non-performing loans, management has recorded a
provision in the 2008 periods as a result of general economic conditions that may impact borrowers, as well as declines in real estate values.

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



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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, 2008 is maintained at a level that represents managements best estimate of inherent losses in the loan portfolio, and such losses were both probable and reasonably estimable.

Noninterest income decreased to $143,000 for the quarter ended September 30, 2008 from $217,000 for the quarter ended September 30, 2007. Noninterest income
decreased to $417,000 for the nine months ended September 30, 2008 from $660,000 for the period ended September 30, 2007. The changes were due to a gain on sale on securities and gains on sales of real estate owned in 2007.

Noninterest expense increased to $2.7 million for the quarter ended September 30, 2008 from $1.5 million for the corresponding quarter in 2007. Noninterest expense
increased to $6.2 million for nine months ended September 30, 2008 from $4.6 million for the period ended September 30, 2007. The changes were due to losses as a result of security impairment of $496,000 and $972,000 during the quarter and
nine months ended September 30, 2008 respectively, a write-down on real estate owned of $417,000 in the third quarter due to declines in real estate values, and increases in compensation, occupancy and marketing expense due to opening a new
office.

Income tax benefit was $474,000 for the quarter ended September 30, 2008 compared to income tax benefit of $7,000 for the quarter ended
September 30, 2007. Income tax benefit was $770,000 for the nine months ended September 30, 2008 compared to an income tax benefit of $16,000 for the period ended September 30, 2007. The changes in income tax were attributable to the
decrease in income before income taxes and an investment that provides tax credits which are a direct reduction of income tax expense.

LIQUIDITY AND
CAPITAL RESOURCES

The Companys primary sources of funds are deposits, principal and interest payments on loans and securities, proceeds from
maturities and calls of securities, FHLB advances, and securities sold under repurchase agreements. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are
greatly influenced by general interest rates, economic conditions, and competition. The Banks most liquid assets are cash and short-term investments. The levels of these assets are dependent on the Banks operating, financing, lending,
and investing activities during any given period. The Banks liquidity ratio was 29% at September 30, 2008.

The Companys cash flows are
comprised of three primary classifications: cash flows from operating activities, investing activities and financing activities. Net cash from operating activities were ($241,000) and $1.0 million in 2008 and 2007, respectively. Net cash from
investing activities consisted primarily of disbursements for loan originations and the purchase of securities, offset by principal collections on loans, and proceeds from maturing securities and paydowns on mortgage-backed securities. Net cash from
investing activities were ($11.2) million and $1.3 million in 2008 and 2007, respectively. Net cash from financing activities consisted primarily of the activity in deposit accounts, FHLB borrowings, securities sold under repurchase agreements and
the purchase of treasury stock. The net cash from financing activities was $3.6 million and ($8.2) million in 2008 and 2007, respectively.

At
September 30, 2008, the Bank exceeded all of its regulatory capital requirements with a Tier 1 (core) capital level of $27.4 million, or 12.4% of adjusted total assets, which is above the required level of $8.9 million, or 4.0%; and total
risk-based capital of $28.2 million, or 20.9% of risk-weighted assets, which is above the required level of $10.8 million, or 8.0%. At September 30, 2008, the Bank was categorized as well-capitalized. Management is not aware of any conditions
or events since the most recent notification that would change the Banks category. In July 2008, the Bank received notice from the OTS supplementing the February 2007



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Supervisory Agreement. This notice is typically delivered at execution of a Supervisory Agreement and requires the Bank to obtain OTS approval for any
capital distribution, including payment of a dividend from the Bank to the Holding Company. Management does not believe that approval for regular dividends from the Bank to the Holding Company would be denied by the OTS given the Banks capital
levels.

At September 30, 2008, the Bank had outstanding commitments to originate mortgage loans of $2.3 million. The Bank anticipates that it will
have sufficient funds available to meet its current loan origination commitments. Certificate accounts that are scheduled to mature in less than one year from September 30, 2008 totaled $63.8 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. The 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, 2008, 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 (26)% and would result in a $8.3 million reduction 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.



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The following table shows the NPV and projected change in the NPV of the Bank at June 30, 2008, 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.

Interest Rate Sensitivity of Net Portfolio Value (NPV)



|                |  |                     |        |          |                           |         |          |  |     |           |  |       |        |  |      |    
|--------------- |  | ------------------- | ------ | -------- | ------------------------- | ------- | -------- |  | --- | --------- |  | ----- | ------ |  | ---- | ---
|                |  | Net Portfolio Value |        |          | NPV as a % ofPV of Assets |        
|Change in Rates |  | $ Amount            |        | $ Change |                           |         | % Change |  |     | NPV Ratio |  |       | Change | 
|+ 300 bp        |  | $                   | 18,524 |          | $                         | (13,176 | )        |  | (42 | )%        |  | 8.67  | %      |  | (506 | )bp
|+ 200 bp        |  |                     | 23,366 |          |                           | (8,334  | )        |  | (26 | )%        |  | 10.64 | %      |  | (309 | )bp
|+ 100 bp        |  |                     | 27,962 |          |                           | (3,738  | )        |  | (12 | )%        |  | 12.40 | %      |  | (133 | )bp
|0 bp            |  |                     | 31,700 |          |                           |         |          |  |     |           |  | 13.73 | %      |  |      |    
| 100 bp        |  |                     | 33,050 |          |                           | 1,350   |          |  | 4   | %         |  | 14.11 | %      |  | 38   | bp 

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, 2008 but estimates that the results would not be materially different than those presented above.



|ITEM 4T. | CONTROLS AND PROCEDURES
|-------- | -----------------------

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

Management, including the Chief Executive Officer and Interim Chief Financial
Officer, has conducted an evaluation of the effectiveness of disclosure controls and procedures, pursuant to Exchange Act Rule 13a-15 (b), as of September 30, 2008. Based on that evaluation and as of September 30, 2008, the Chief Executive
Officer and Interim Chief Financial Officer concluded that the Companys disclosure controls and procedures are effective.

There have been no changes
in the Companys internal control over financial reporting during the quarter ended September 30, 2008 that have materially affected, or are 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.
|------- | ------------------

None



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

In addition to the risk factors set forth below and
the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. Risk Factors in the Companys Annual Report filed on Form 10-K for the fiscal year ended December 31,
2007, which could materially affect the Companys business, financial condition or future results.

If Economic Conditions Deteriorate in our
Primary Market, Our Results of Operations and Financial Condition could be Adversely Impacted as Borrowers Ability to Repay Loans Declines and the Value of the Collateral Securing Loans Decreases.

Our financial results may be adversely affected by changes in prevailing economic conditions, including decreases in real estate values, changes in interest rates which
may cause a decrease in interest rate spreads, adverse employment conditions, the monetary and fiscal policies of the federal government and other significant external events. Decreases in real estate values could potentially adversely affect the
value of property used as collateral for our mortgage loans. In the event that we are required to foreclose on a property securing a mortgage loan, there can be no assurance that we will recover funds in an amount equal to any remaining loan balance
as a result of prevailing general economic conditions, real estate values and other factors associated with the ownership of real property. As a result, the market value of the real estate underlying the loans may not, at any given time, be
sufficient to satisfy the outstanding principal amount of the loans. Consequently, we would sustain loan losses and potentially incur a higher provision for loan loss expense. Adverse changes in the economy may also have a negative effect of the
ability of borrowers to make timely repayments of their loans, which could have an adverse impact on earnings.

Our Securities Portfolio may be
Negatively Impacted by Fluctuations in Market Value.

Our securities portfolio may be impacted by fluctuations in market value, potentially reducing
accumulated other comprehensive income and/or earnings. Fluctuations in market value may be caused by decreases in interest rates, lower market prices for securities and lower investor demand. Our securities portfolio is evaluated for
other-than-temporary impairment on at least a quarterly basis. If this evaluation shows an impairment to cash flow connected with one or more securities, as was the case this quarter, a potential loss to earnings may occur.



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

The
following table provides the specified information about the repurchases of the Company shares by the Company during the third quarter of 2008.



|                       |  |                               |  |                            |       |                                                                            |       |                                                                           |       
|---------------------- |  | ----------------------------- |  | -------------------------- | ----- | -------------------------------------------------------------------------- | ----- | ------------------------------------------------------------------------- | ------
|Period                 |  | Totalnumberof sharespurchased |  | Averageprice paidper share |       | Total number ofsharespurchased aspart of publiclyannouncedplans orprograms |       | Maximumnumber of sharesthat may yet bepurchased underthe plans orprograms
|July 1  31, 2008      |  | 7,500                         |  | $                          | 19.15 |                                                                            | 7,500 |                                                                           | 43,682
|August 1  31, 2008    |  |                              |  |                            |      |                                                                            |      |                                                                           |      
|September 1  30, 2008 |  |                              |  |                            |      |                                                                            |      |                                                                           |      
|                       |  |                               |  |                            |       |                                                                            |       |                                                                           |       
|Total                  |  | 7,500                         |  | $                          | 19.15 |                                                                            | 7,500 |                                                                           |       
|                       |  |                               |  |                            |       |                                                                            |       |                                                                           |       



|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES.
|------- | --------------------------------

None



|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.
|------- | ------------------------------------------------------

None



|ITEM 5. | OTHER INFORMATION.
|------- | ------------------

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

As previously disclosed, on July 24, 2008, the Bank received a letter from the OTS, as part of and in connection with the Agreement indicating that the OTS believed
that the Bank is deemed to be in troubled condition for purposes of the OTS regulations and examination policies. This designation resulted from the Agreement.

In addition to the actions the Bank agreed to take in connection with entering into the Agreement in 2007, as a result of this designation, the Bank is now subject to certain restrictions requiring prior OTS approval
for: (1) adding or replacing any member of the Board of Directors or any senior executive officer; (2) the payment of any golden parachute as defined under OTS regulations; (3) entering into, renewing, extending or
revising any compensation or benefit arrangement or agreement; (4) entering into any third party contracts outside the normal course of business; (5) making any capital distributions, including the payment of dividends from the Bank to the
Holding Company; and (6) engaging in transactions with any affiliates. The Bank expects that these restrictions will not have a material effect on its operations or financial results.



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The agreement will remain in effect until terminated, modified, or suspended in writing by the OTS. The Bank has already
adopted and implemented many of the various plans, policies, and procedures required by the agreement and intends to adopt and implement the rest. However, a failure to comply with the agreement could result in the initiation of formal enforcement
action by the OTS.

The information provided above has been previously disclosed by the Company and included in a Current Report on Form 8-K filed with the
Securities and Exchange Commission.



|ITEM 6. | EXHIBITS.
|------- | ---------

(a) Exhibits

31.1 Certification of Chief Executive Officer pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002.

31.2
Certification of Interim Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Certification of
Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification of Interim Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



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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 13, 2008 |  | /s/ David A. Remijas                 
|                        |  | David A. Remijas                     
|                        |  | President and Chief Executive Officer
|                        | 
|Date: November 13, 2008 |  | /s/ Richard J. Remijas, Jr.          
|                        |  | Richard J. Remijas, Jr.              
|                        |  | Chief Operating Officer and          
|                        |  | Interim Chief Financial Officer      



19.