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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, 2009





PARK BANCORP, INC.

(Exact name of registrant as specified in its charter)





0-20867

(Commission File Number)

Delaware

(State of incorporation)

36-4082530

(IRS Employer Identification No.)

5400 South Pulaski Road, Chicago, Illinois

(Address of Principal Executive Offices)

60632

(ZIP Code)

(773) 582-8616

(Registrants telephone number, including area code)





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

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

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



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

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

As of November 16, 2009, the Registrant had outstanding 1,192,174 shares of common stock.









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TABLE OF CONTENTS



|                                                                                              |  |     
|--------------------------------------------------------------------------------------------- |  | ----
|                                                                                              |  | Page
|PART I  FINANCIAL INFORMATION                                                                |  | 2   
|                                                                                              | 
|Item 1. Financial Statements                                                                  |  | 2   
|                                                                                              | 
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 16  
|                                                                                              | 
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                            |  | 20  
|                                                                                              | 
|Item 4T. Controls and Procedures                                                              |  | 21  
|                                                                                              | 
|PART II  OTHER INFORMATION                                                                   |  | 23  
|                                                                                              | 
|Item 1. Legal Proceedings                                                                     |  | 23  
|                                                                                              | 
|Item 1A. Risk Factors                                                                         |  | 23  
|                                                                                              | 
|Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 23  
|                                                                                              | 
|Item 3. Defaults Upon Senior Securities                                                       |  | 23  
|                                                                                              | 
|Item 4. Submission of Matters to a Vote of Security Holders                                   |  | 23  
|                                                                                              | 
|Item 5. Other Information                                                                     |  | 23  
|                                                                                              | 
|Item 6. Exhibits                                                                              |  | 24  
|                                                                                              | 
|SIGNATURES                                                                                    |  | 25  



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

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



1



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PART I  FINANCIAL INFORMATION



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

PARK BANCORP, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(In thousands of dollars, except share data)

(Unaudited)



|                                                                                          |  |                    |         |   |                   |   |         |  
|----------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | ----------------- | - | ------- | -
|                                                                                          |  | September 30, 2009 |         |   | December 31, 2008 |  
|Assets                                                                                    |  |                    |         |   |                   |   |         |  
|Cash and due from banks                                                                   |  | $                  | 2,369   |   |                   | $ | 3,138   |  
|Federal funds sold                                                                        |  |                    | 4,353   |   |                   |   | 3,244   |  
|Interest-bearing deposits with other financial institutions                               |  |                    | 9,096   |   |                   |   | 2,477   |  
|                                                                                          |  |                    |         |   |                   |   |         |  
|Total cash and cash equivalents                                                           |  |                    | 15,818  |   |                   |   | 8,859   |  
|                                                                                          |  |                   
|Securities available for sale                                                             |  |                    | 35,310  |   |                   |   | 43,595  |  
|Loans receivable, net of allowance of $1,088 and $775                                     |  |                    | 142,533 |   |                   |   | 138,580 |  
|Federal Home Loan Bank stock, at cost                                                     |  |                    | 5,423   |   |                   |   | 5,423   |  
|Premises and equipment, net                                                               |  |                    | 9,500   |   |                   |   | 9,625   |  
|Accrued interest receivable                                                               |  |                    | 908     |   |                   |   | 1,139   |  
|Bank-owned life insurance                                                                 |  |                    | 8,203   |   |                   |   | 7,975   |  
|Real estate owned                                                                         |  |                    | 1,595   |   |                   |   | 1,874   |  
|Other assets                                                                              |  |                    | 2,321   |   |                   |   | 2,530   |  
|                                                                                          |  |                    |         |   |                   |   |         |  
|Total assets                                                                              |  | $                  | 221,611 |   |                   | $ | 219,600 |  
|                                                                                          |  |                    |         |   |                   |   |         |  
|                                                                                          |  |                   
|Liabilities and Stockholders Equity                                                      |  |                    |         |   |                   |   |         |  
|Liabilities                                                                               |  |                    |         |   |                   |   |         |  
|Non-interest bearing deposits                                                             |  | $                  | 5,681   |   |                   | $ | 6,152   |  
|Interest bearing deposits                                                                 |  |                    | 143,360 |   |                   |   | 131,497 |  
|                                                                                          |  |                    |         |   |                   |   |         |  
|Total deposits                                                                            |  |                    | 149,041 |   |                   |   | 137,649 |  
|                                                                                          |  |                   
|Securities sold under repurchase agreements                                               |  |                    | 2,600   |   |                   |   | 3,239   |  
|Advances from borrowers for taxes and insurance                                           |  |                    | 2,442   |   |                   |   | 2,051   |  
|Federal Home Loan Bank advances                                                           |  |                    | 41,125  |   |                   |   | 48,860  |  
|Accrued interest payable                                                                  |  |                    | 284     |   |                   |   | 365     |  
|Other liabilities                                                                         |  |                    | 517     |   |                   |   | 570     |  
|                                                                                          |  |                    |         |   |                   |   |         |  
|Total liabilities                                                                         |  |                    | 196,009 |   |                   |   | 192,734 |  
|                                                                                          |  |                   
|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; 1,192,174 shares outstanding   |  |                    | 29      |   |                   |   | 29      |  
|Additional paid-in capital                                                                |  |                    | 32,102  |   |                   |   | 32,118  |  
|Retained earnings                                                                         |  |                    | 24,415  |   |                   |   | 26,103  |  
|Treasury stock, 1,721,854 shares, at cost                                                 |  |                    | (31,043 | ) |                   |   | (31,043 | )
|Unearned ESOP shares                                                                      |  |                    | (126    | ) |                   |   | (205    | )
|Accumulated other comprehensive income (loss)                                             |  |                    | 225     |   |                   |   | (136    | )
|                                                                                          |  |                    |         |   |                   |   |         |  
|Total stockholders equity                                                                |  |                    | 25,602  |   |                   |   | 26,866  |  
|                                                                                          |  |                    |         |   |                   |   |         |  
|Total liabilities and stockholders equity                                                |  | $                  | 221,611 |   |                   | $ | 219,600 |  
|                                                                                          |  |                    |         |   |                   |   |         |  

See accompanying notes to consolidated financial statements.



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PARK BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of
dollars, except share data)

(Unaudited)



|                                                            |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|----------------------------------------------------------- |  | ------------------------------- | ----- | - | ------------------------------ | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                            |  | Three Months EndedSeptember 30, |       |   | Nine Months EndedSeptember 30, |  
|                                                            |  | 2009                            |       |   | 2008                           |   |        | 2009 |  |   | 2008   |  
|Interest income                                             |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Loans receivable                                            |  | $                               | 2,017 |   |                                | $ | 2,266  |      |  | $ | 6,272  |   |  | $ | 6,905  |  
|Securities                                                  |  |                                 | 397   |   |                                |   | 618    |      |  |   | 1,473  |   |  |   | 1,512  |  
|Interest-bearing deposits with other financial institutions |  |                                 | 3     |   |                                |   | 19     |      |  |   | 9      |   |  |   | 189    |  
|                                                            |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Total                                                       |  |                                 | 2,417 |   |                                |   | 2,903  |      |  |   | 7,754  |   |  |   | 8,606  |  
|                                                            |  |                                 |       |  
|Interest expense                                            |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Deposits                                                    |  |                                 | 836   |   |                                |   | 952    |      |  |   | 2,624  |   |  |   | 3,136  |  
|Federal Home Loan Bank advances and other borrowings        |  |                                 | 438   |   |                                |   | 537    |      |  |   | 1,388  |   |  |   | 1,506  |  
|                                                            |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Total                                                       |  |                                 | 1,274 |   |                                |   | 1,489  |      |  |   | 4,012  |   |  |   | 4,642  |  
|                                                            |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|                                                            |  |                                 |       |  
|Net interest income                                         |  |                                 | 1,143 |   |                                |   | 1,414  |      |  |   | 3,742  |   |  |   | 3,964  |  
|                                                            |  |                                 |       |  
|Provision for loan losses                                   |  |                                 | 198   |   |                                |   | 120    |      |  |   | 358    |   |  |   | 135    |  
|                                                            |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|                                                            |  |                                 |       |  
|Net interest income after provision for loan losses         |  |                                 | 945   |   |                                |   | 1,294  |      |  |   | 3,384  |   |  |   | 3,829  |  
|                                                            |  |                                 |       |  
|Noninterest income                                          |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Loss on sale of securities                                  |  |                                 |      |   |                                |   | (9     | )    |  |   |       |   |  |   | (9     | )
|Loss on sale of real estate owned                           |  |                                 |      |   |                                |   | (3     | )    |  |   |       |   |  |   | (3     | )
|Service fee income                                          |  |                                 | 60    |   |                                |   | 66     |      |  |   | 173    |   |  |   | 177    |  
|Earnings on bank-owned life insurance                       |  |                                 | 77    |   |                                |   | 77     |      |  |   | 228    |   |  |   | 221    |  
|Other operating income                                      |  |                                 | 12    |   |                                |   | 12     |      |  |   | 55     |   |  |   | 31     |  
|                                                            |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Total noninterest income                                    |  |                                 | 149   |   |                                |   | 143    |      |  |   | 456    |   |  |   | 417    |  
|                                                            |  |                                 |       |  
|Noninterest expense                                         |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Compensation and benefits                                   |  |                                 | 826   |   |                                |   | 880    |      |  |   | 2,540  |   |  |   | 2,507  |  
|Occupancy and equipment expense                             |  |                                 | 207   |   |                                |   | 298    |      |  |   | 633    |   |  |   | 674    |  
|Professional fees                                           |  |                                 | 82    |   |                                |   | 95     |      |  |   | 297    |   |  |   | 281    |  
|Loss on impairment of equity securities                     |  |                                 |      |   |                                |   | 496    |      |  |   | 233    |   |  |   | 972    |  
|Real estate owned impairment and expenses                   |  |                                 | 68    |   |                                |   | 471    |      |  |   | 419    |   |  |   | 646    |  
|Federal deposit insurance expenses                          |  |                                 | 82    |   |                                |   | 27     |      |  |   | 322    |   |  |   | 52     |  
|Other operating expenses                                    |  |                                 | 369   |   |                                |   | 478    |      |  |   | 1,172  |   |  |   | 1,114  |  
|                                                            |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Total noninterest expense                                   |  |                                 | 1,634 |   |                                |   | 2,745  |      |  |   | 5,616  |   |  |   | 6,246  |  
|                                                            |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|                                                            |  |                                 |       |  
|Loss before income taxes                                    |  |                                 | (540  | ) |                                |   | (1,308 | )    |  |   | (1,776 | ) |  |   | (2,000 | )
|Income tax benefit                                          |  |                                 |      |   |                                |   | (474   | )    |  |   | (88    | ) |  |   | (770   | )
|                                                            |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Net loss                                                    |  | $                               | (540  | ) |                                | $ | (834   | )    |  | $ | (1,688 | ) |  | $ | (1,230 | )
|                                                            |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|                                                            |  |                                 |       |  
|Basic loss per share                                        |  | $                               | (.46  | ) |                                | $ | (.71   | )    |  | $ | (1.43  | ) |  | $ | (1.05  | )
|Diluted loss per share                                      |  | $                               | (.46  | ) |                                | $ | (.71   | )    |  | $ | (1.43  | ) |  | $ | (1.05  | )

See accompanying notes to consolidated financial statements.



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PARK BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of
dollars)

(Unaudited)



|                                                                        |  |                                |         |   |      |   |         |  
|----------------------------------------------------------------------- |  | ------------------------------ | ------- | - | ---- | - | ------- | -
|                                                                        |  | Nine Months EndedSeptember 30, |        
|                                                                        |  | 2009                           |         |   | 2008 |  
|Cash Flows From Operating Activities                                    |  |                                |         |   |      |   |         |  
|Net loss                                                                |  | $                              | (1,688  | ) |      | $ | (1,230  | )
|Adjustments to reconcile net loss to net cash from operating activities |  |                                |         |   |      |   |         |  
|Net premium amortization on securities                                  |  |                                | 52      |   |      |   | 39      |  
|Loss on sale of securities                                              |  |                                |        |   |      |   | 9       |  
|Loss on security impairment                                             |  |                                | 233     |   |      |   | 972     |  
|Write-down of REO property                                              |  |                                | 291     |   |      |   | 417     |  
|Loss on sale of real estate owned                                       |  |                                |        |   |      |   | 3       |  
|Earnings on bank-owned life insurance, net                              |  |                                | (228    | ) |      |   | (221    | )
|Provision for loan losses                                               |  |                                | 358     |   |      |   | 135     |  
|Depreciation                                                            |  |                                | 290     |   |      |   | 303     |  
|Stock based compensation                                                |  |                                | 13      |   |      |   |        |  
|ESOP compensation expense                                               |  |                                | 50      |   |      |   | 159     |  
|Net change in:                                                          |  |                                |         |   |      |   |         |  
|Accrued interest receivable                                             |  |                                | 231     |   |      |   | (253    | )
|Accrued interest payable                                                |  |                                | (81     | ) |      |   | 60      |  
|Other assets                                                            |  |                                | 209     |   |      |   | (690    | )
|Other liabilities                                                       |  |                                | (53     | ) |      |   | 56      |  
|                                                                        |  |                                |         |   |      |   |         |  
|Net cash - operating activities                                         |  |                                | (323    | ) |      |   | (241    | )
|                                                                        |  |                               
|Cash Flows From Investing Activities                                    |  |                                |         |   |      |   |         |  
|Net change in loans                                                     |  |                                | (4,329  | ) |      |   | 5,056   |  
|Purchase of securities available for sale                               |  |                                | (17,447 | ) |      |   | (28,317 | )
|Maturities, paydowns, and calls of securities available for sale        |  |                                | 25,808  |   |      |   | 14,275  |  
|Proceeds from sale of securities available for sale                     |  |                                |        |   |      |   | 364     |  
|Proceeds from sale of real estate owned                                 |  |                                | 6       |   |      |   | 287     |  
|Purchase of premises and equipment                                      |  |                                | (165    | ) |      |   | (2,896  | )
|                                                                        |  |                                |         |   |      |   |         |  
|Net cash - investing activities                                         |  |                                | 3,873   |   |      |   | (11,231 | )
|                                                                        |  |                               
|Cash Flows From Financing Activities                                    |  |                                |         |   |      |   |         |  
|Net change in deposits                                                  |  |                                | 11,392  |   |      |   | 1,037   |  
|Net change in securities sold under repurchase agreements               |  |                                | (639    | ) |      |   | 5       |  
|Net change in advances from borrowers for taxes and insurance           |  |                                | 391     |   |      |   | 552     |  
|Federal Home Loan Bank advances                                         |  |                                | 2,800   |   |      |   | 9,000   |  
|Repayments of Federal Home Loan Bank advances                           |  |                                | (10,535 | ) |      |   | (6,684  | )
|Change in other borrowings                                              |  |                                |        |   |      |   | 500     |  
|Purchase of treasury stock                                              |  |                                |        |   |      |   | (483    | )
|Dividends paid                                                          |  |                                |        |   |      |   | (364    | )
|                                                                        |  |                                |         |   |      |   |         |  
|Net cash - financing activities                                         |  |                                | 3,409   |   |      |   | 3,563   |  
|                                                                        |  |                                |         |   |      |   |         |  
|                                                                        |  |                               
|Net change in cash and cash equivalents                                 |  |                                | 6,959   |   |      |   | (7,909  | )
|Cash and cash equivalents at beginning of period                        |  |                                | 8,859   |   |      |   | 15,443  |  
|                                                                        |  |                                |         |   |      |   |         |  
|Cash and cash equivalents at end of period                              |  | $                              | 15,818  |   |      | $ | 7,534   |  
|                                                                        |  |                                |         |   |      |   |         |  
|                                                                        |  |                               
|Supplemental disclosures of cash flow information                       |  |                                |         |   |      |   |         |  
|Cash paid during the period for interest                                |  | $                              | 4,093   |   |      | $ | 7,534   |  
|Non-cash activity                                                       |  |                                |         |   |      |   |         |  
|Loans transferred to real estate owned                                  |  | $                              | 18      |   |      | $ | 729     |  

See accompanying notes to consolidated financial statements.



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PARK BANCORP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

Nine
months ended September 30, 2009 and 2008

(In thousands of dollars, except share data)

(Unaudited)



|                                                                           |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                           |  |   |      |   |  |   |        |  
|-------------------------------------------------------------------------- |  | ----------- | -- | ------------------------ | - | ------ | ---------------- |  | - | ------------- | - |  | ------------------ | ------- | - | ------------------------------------------ | - | ---- | ------------------------- |  | - | ---- | - |  | - | ------ | -
|2008                                                                       |  | CommonStock |    | AdditionalPaid-inCapital |   |        | RetainedEarnings |  |   | TreasuryStock |   |  | UnearnedESOPShares |         |   | AccumulatedOtherComprehensiveIncome (Loss) |   |      | TotalStock-holdersEquity | 
|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 |  
|                                                                           |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                           |  |   |      |   |  |   |        |  
|                                                                           |  |             |    |                          |   |        |                 
|2009                                                                       |  | CommonStock |    | AdditionalPaid-inCapital |   |        | RetainedEarnings |  |   | TreasuryStock |   |  | UnearnedESOPShares |         |   | AccumulatedOtherComprehensiveIncome (Loss) |   |      | TotalStock-holdersEquity | 
|Balance at January 1, 2009                                                 |  | $           | 29 |                          | $ | 32,118 |                  |  | $ | 26,103        |   |  | $                  | (31,043 | ) |                                            | $ | (205 | )                         |  | $ | (136 | ) |  | $ | 26,866 |  
|Net loss                                                                   |  |             |   |                          |   |       |                  |  |   | (1,688        | ) |  |                    |        |   |                                            |   |     |                           |  |   |     |   |  |   | (1,688 | )
|Change in fair value of securities available for sale, net of income taxes |  |             |   |                          |   |       |                  |  |   |              |   |  |                    |        |   |                                            |   |     |                           |  |   | 361  |   |  |   | 361    |  
|Total comprehensive (loss)                                                 |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                           |  |   |      |   |  |   | (1,327 | )
|Stock based compensation                                                   |  |             |   |                          |   | 13     |                  |  |   |              |   |  |                    |        |   |                                            |   |     |                           |  |   |     |   |  |   | 13     |  
|ESOP shares earned                                                         |  |             |   |                          |   | (29    | )                |  |   |              |   |  |                    |        |   |                                            |   | 79   |                           |  |   |     |   |  |   | 50     |  
|                                                                           |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                           |  |   |      |   |  |   |        |  
|Balance at September 30, 2009                                              |  | $           | 29 |                          | $ | 32,102 |                  |  | $ | 24,415        |   |  | $                  | (31,043 | ) |                                            | $ | (126 | )                         |  | $ | 225  |   |  | $ | 25,602 |  
|                                                                           |  |             |    |                          |   |        |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                           |  |   |      |   |  |   |        |  

See accompanying notes to consolidated financial statements.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

(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, 2009 and December 31, 2008 and for the three and nine month periods ended September 30, 2009 and 2008. 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 2008 Annual Report on Form 10-K filed with the Securities and Exchange Commission. The December 31, 2008 balance sheet presented herein has been derived from the audited financial
statements included in the Companys 2008 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, 2009. 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, 2009 are not necessarily indicative of the results to be expected for the full year. In preparing the unaudited financial statements, we are required to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan
losses, the carrying value of securities, and the valuation of real estate owned acquired in connection with foreclosures or in satisfaction of loans.

Certain amounts in the unaudited consolidated financial statements for prior periods have been reclassified to conform to the current unaudited financial statement presentation.

Adoption of New Accounting Standards

In February 2008, the FASB issued a Staff Position delaying the effective date of fair value disclosures for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or
disclosed at fair value on a recurring basis (at least annually) to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. On October 10, 2008 the FASB issued a FSP regarding Determining the
Fair Value of a Financial Asset When the Market for That Asset Is Not Active, which illustrates key considerations in determining the fair value of a financial asset when the market for that asset is not active. This FSP provides clarification
for how to consider various inputs in determining fair value under current market conditions. This FSP became effective upon issuance. Adoption of these FSPs did not significantly impact the Company.



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In December 2007, FASB issued a Statement regarding Business Combinations, which
establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in an acquiree, including the recognition and
measurement of goodwill acquired in a business combination. The adoption of this standard on January 1, 2009 did not have a material impact on the Companys financial statements.

In December 2007, FASB issued a Statement regarding Noncontrolling Interests in Consolidated Financial Statements. This statement is
intended to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards for the noncontrolling
interest in a subsidiary and for the deconsolidation of a subsidiary. This Statement is effective for fiscal years and interim periods within those fiscal years beginning on or after December 15, 2008. The adoption of this standard on
January 1, 2009 did not have a material impact on the Companys financial statements.

In March 2008, FASB
issued a Statement regarding Disclosures about Derivative Instruments and Hedging Activities. This statement changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures
about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for, and (c) how derivative instruments and related hedged items affect an entitys financial
position, financial performance, and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The adoption of this standard on January 1, 2009 did not
have a material impact on the Companys financial statements.

In June 2008, the FASB issued a FASB Staff Position
regarding Determining Whether Instruments Granted in Share-based Payment Transactions Are Participating Securities. This FASB FSP addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting
and, therefore, need to be included in the earnings allocation in computing earnings per share (EPS). This FSP provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or
unpaid) are participating securities and shall be included in the computation of EPS. This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years. Upon
adoption of this FSP in 2009, the Company began including non vested restricted stock award shares in the computation of basic EPS. There were no restricted stock awards outstanding in the previous periods presented.

In April 2009 the FASB issued a FSP regarding Recognition and Presentation of Other Than Temporary Impairments. This FSP eliminates the
requirement for the issuer to evaluate whether it has the intent and ability to hold an impaired debt security until maturity. Conversely, the new FSP requires the issuer to recognize an other than temporary impairment (OTTI) if the issuer intends
to sell the impaired debt security or the issuer will be required to sell the security prior to recovery. In the event that the sale of the security in question prior to its maturity is not probable but the entity does not expect to recover its
amortized cost basis in that security, then the entity will be required to recognize an OTTI. In the event that the recovery of the securitys cost basis prior to maturity is not probable and an OTTI is recognized, the FSP provides that any
component of the OTTI relating to a decline in the creditworthiness of the debtor should be reflected in earnings, with the remainder being recognized in Other Comprehensive Income. Conversely, in the event that the issuer determines that sale of
the security in question prior to recovery is probable, then the entire OTTI will be recognized in earnings. The FSP is effective for interim and annual reporting periods ending after June 15, 2009. The adoption of this FSP did not have a
material impact on the Companys financial statements.



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In April 2009 the FASB issued a FSP regarding Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly. This FSP provides additional guidance for determining fair value based on observable transactions. The FSP provides that
if evidence suggests that an observable transaction was not executed orderly that little, if any, weight should be assigned to this indication of an assets or liabilitys fair value. Conversely, if evidence suggests that the observable
transaction was executed orderly then the transaction price of the observable transaction may be appropriate to use in determining the fair value of the asset/liability in question, with appropriate weighting given to this indication based on facts
and circumstances. Finally, if there is no way for the entity to determine whether the observable transaction was executed orderly, relatively less weight should be ascribed to this indicator of fair value. The FSP is effective for interim and
annual reporting periods ending after June 15, 2009. The adoption of this FSP did not have a material impact on the Companys financial statements.

In April 2009 the FASB issued a FSP regarding Interim Disclosures about Fair Value of Financial Instruments. This FSP provides that publicly traded companies shall provide information concerning the
fair value of its financial instruments whenever it issues summarized financial information for interim reporting periods. In periods after initial adoption this FSP requires comparative disclosures only for periods ending after initial adoption.
The FSP is effective for interim periods ending after June 15, 2009. The required disclosures are presented herein.

In
May 2009, the FASB issued a Statement regarding Subsequent Events, which sets forth guidance concerning the recognition or disclosure of events or transactions that occur subsequent to the balance sheet date but prior to the release of the financial
statements. The statement also defines available to be issued financial statements as financial statements that are complete and in a format that complies with GAAP and have received all the required approvals, for example from the board
of directors. The statement sets forth that management of a public company must evaluate subsequent events for recognition and/or disclosure through the date of issuance, whereas private companies need only evaluate subsequent events through the
date the financial statements became available to be issued. The statement also delineates between and defines the recognition and disclosure requirements for Recognized Subsequent Events and Non-Recognized Subsequent Events. Recognized Subsequent
Events provide additional evidence about conditions that existed as of the balance sheet date and will be recognized in the entitys financial statements. Non-Recognized Subsequent Events provide evidence about conditions that did not exist as
of the balance sheet date and if material will warrant disclosure of the nature of the subsequent event and the financial impact. An entity shall disclose the date through which subsequent events have been evaluated and whether that date is the date
the financial statements were issued or available to be issued. This statement is effective for interim and annual reporting periods ending after June 15, 2009. The Company has evaluated subsequent events through the date of issuance of these
financial statements on November 12, 2009.

On July 1, 2009, the FASBs GAAP Codification became effective as
the sole authoritative source of U.S. GAAP. This codification, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, reorganizes current GAAP for nongovernmental entities into a topical index to
facilitate accounting research and to provide users additional assurance that they have referenced all related literature pertaining to a given topic. Existing GAAP prior to the Codification was not altered in compilation of the GAAP Codification.
This Statement is effective for all interim and annual periods ending after September 15, 2009.

Newly Issued, but not yet
Effective Accounting Standards

In June 2009, the FASB issued a Statement regarding Accounting for the Transfer of
Financial Assets which removes the concept of a special purpose entity (SPE) and removes the exception from applying guidance regarding Consolidation of Variable Interest Entities to qualifying SPEs. It limits the circumstances in which
a transferor derecognizes a financial asset. The statement amends the requirements for the transfer of a financial asset to meet the requirements for sale accounting. The statement is effective for all interim and annual periods
beginning after November 15, 2009. The Company is currently evaluating the impact of this Statement on its financial position and results of operations.



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

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 and nine month periods ended September 30, 2009 and 2008. Due to the Companys net loss in 2009 and 2008, all stock options were considered anti-dilutive and thus were excluded from the computation
of diluted loss per share.



|                                                           |  |                                     |           |   |                                    |   |           |                                     |  |   |                                    |   |  |   |           |  
|---------------------------------------------------------- |  | ----------------------------------- | --------- | - | ---------------------------------- | - | --------- | ----------------------------------- |  | - | ---------------------------------- | - |  | - | --------- | -
|                                                           |  | Three MonthsEnded September 30,2009 |           |   | Nine MonthsEnded September 30,2009 |   |           | Three MonthsEnded September 30,2008 |  |   | Nine MonthsEnded September 30,2008 |  
|Basic loss per share                                       |  |                                     |           |   |                                    |   |           |                                     |  |   |                                    |   |  |   |           |  
|Net loss as reported                                       |  | $                                   | (540      | ) |                                    | $ | (1,688    | )                                   |  | $ | (834                               | ) |  | $ | (1,230    | )
|Weighted average common shares outstanding                 |  |                                     | 1,182,031 |   |                                    |   | 1,177,395 |                                     |  |   | 1,168,112                          |   |  |   | 1,173,278 |  
|                                                           |  |                                     |           |   |                                    |   |           |                                     |  |   |                                    |   |  |   |           |  
|Basic loss per share                                       |  | $                                   | (.46      | ) |                                    | $ | (1.43     | )                                   |  | $ | (.71                               | ) |  | $ | (1.05     | )
|                                                           |  |                                     |           |   |                                    |   |           |                                     |  |   |                                    |   |  |   |           |  
|                                                           |  |                                     |           |  
|Diluted loss per share                                     |  |                                     |           |   |                                    |   |           |                                     |  |   |                                    |   |  |   |           |  
|Net loss as reported                                       |  | $                                   | (540      | ) |                                    | $ | (1,688    | )                                   |  | $ | (834                               | ) |  | $ | (1,230    | )
|Weighted average common shares outstanding                 |  |                                     | 1,182,031 |   |                                    |   | 1,177,395 |                                     |  |   | 1,168,112                          |   |  |   | 1,173,278 |  
|Dilutive effect of stock options                           |  |                                     |          |   |                                    |   |          |                                     |  |   |                                   |   |  |   |          |  
|                                                           |  |                                     |           |   |                                    |   |           |                                     |  |   |                                    |   |  |   |           |  
|Average common shares and dilutive potential common shares |  |                                     | 1,182,031 |   |                                    |   | 1,177,395 |                                     |  |   | 1,168,112                          |   |  |   | 1,173,278 |  
|                                                           |  |                                     |           |   |                                    |   |           |                                     |  |   |                                    |   |  |   |           |  
|Diluted loss per share                                     |  | $                                   | (.46      | ) |                                    | $ | (1.43     | )                                   |  | $ | (.71                               | ) |  | $ | (1.05     | )
|                                                           |  |                                     |           |   |                                    |   |           |                                     |  |   |                                    |   |  |   |           |  



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NOTE 3 - SECURITIES AVAILABLE FOR SALE

Securities are summarized as follows:



|                                 |  |               |        |                      |   |                       |  |   |           |   |  |   |       
|-------------------------------- |  | ------------- | ------ | -------------------- | - | --------------------- |  | - | --------- | - |  | - | ------
|                                 |  | AmortizedCost |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | FairValue
|September 30, 2009               |  |               |        |                      |   |                       |  |   |           |   |  |   |       
|Government sponsored enterprises |  | $             | 16,980 |                      | $ | 133                   |  | $ | (76       | ) |  | $ | 17,037
|Municipal                        |  |               | 503    |                      |   | 21                    |  |   |          |   |  |   | 524   
|Corporate                        |  |               | 5,019  |                      |   | 86                    |  |   | (62       | ) |  |   | 5,043 
|Equity                           |  |               | 4,528  |                      |   | 178                   |  |   | (24       | ) |  |   | 4,682 
|Mortgage-backed-residential      |  |               | 7,937  |                      |   | 94                    |  |   | (7        | ) |  |   | 8,024 
|                                 |  |               |        |                      |   |                       |  |   |           |   |  |   |       
|                                 |  |               |        |                     
|                                 |  | $             | 34,967 |                      | $ | 512                   |  | $ | (169      | ) |  | $ | 35,310
|                                 |  |               |        |                      |   |                       |  |   |           |   |  |   |       
|                                 |  |               |        |                     
|                                 |  | AmortizedCost |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | FairValue
|December 31, 2008                |  |               |        |                      |   |                       |  |   |           |   |  |   |       
|Government sponsored enterprises |  | $             | 25,091 |                      | $ | 240                   |  | $ | (5        | ) |  | $ | 25,326
|Corporate                        |  |               | 4,089  |                      |   |                      |  |   | (273      | ) |  |   | 3,816 
|Equity                           |  |               | 4,762  |                      |   |                      |  |   |          |   |  |   | 4,762 
|Mortgage-backed-residential      |  |               | 9,858  |                      |   | 9                     |  |   | (176      | ) |  |   | 9,691 
|                                 |  |               |        |                      |   |                       |  |   |           |   |  |   |       
|                                 |  |               |        |                     
|                                 |  | $             | 43,800 |                      | $ | 249                   |  | $ | (454      | ) |  | $ | 43,595
|                                 |  |               |        |                      |   |                       |  |   |           |   |  |   |       

Securities with unrealized losses at September 30, 2009 and December 31, 2008 by length of
time that individual securities have been in a continuous loss position, are as follows:



|                                 |  |                     |       |                |                   |      |           |       |                |       |  |           |      |                |  |   |        |  |   |      |  
|-------------------------------- |  | ------------------- | ----- | -------------- | ----------------- | ---- | --------- | ----- | -------------- | ----- |  | --------- | ---- | -------------- |  | - | ------ |  | - | ---- | -
|                                 |  | Less than 12 Months |       |                | 12 Months or More |      |           | Total |               
|                                 |  | FairValue           |       | UnrealizedLoss |                   |      | FairValue |       | UnrealizedLoss |       |  | FairValue |      | UnrealizedLoss | 
|September 30, 2009               |  |                     |       |                |                   |      |           |       |                |       |  |           |      |                |  |   |        |  |   |      |  
|Government sponsored enterprises |  | $                   | 6,924 |                | $                 | (76  | )         |       | $              |      |  | $         |     |                |  | $ | 6,924  |  | $ | (76  | )
|Corporate                        |  |                     |      |                |                   |     |           |       |                | 941   |  |           | (62  | )              |  |   | 941    |  |   | (62  | )
|Equity                           |  |                     | 36    |                |                   | (24  | )         |       |                |      |  |           |     |                |  |   | 36     |  |   | (24  | )
|Mortgage-backed-residential      |  |                     | 27    |                |                   | (1   | )         |       |                | 1,559 |  |           | (6   | )              |  |   | 1,586  |  |   | (7   | )
|                                 |  |                     |       |                |                   |      |           |       |                |       |  |           |      |                |  |   |        |  |   |      |  
|                                 |  |                     |       |                |                   |     
|Total temporarily impaired       |  | $                   | 6,987 |                | $                 | (101 | )         |       | $              | 2,500 |  | $         | (68  | )              |  | $ | 9,487  |  | $ | (169 | )
|                                 |  |                     |       |                |                   |      |           |       |                |       |  |           |      |                |  |   |        |  |   |      |  
|                                 |  |                     |       |                |                   |     
|December 31, 2008                |  |                     |       |                |                   |      |           |       |                |       |  |           |      |                |  |   |        |  |   |      |  
|Government sponsored enterprises |  | $                   | 990   |                | $                 | (5   | )         |       | $              |      |  | $         |     |                |  | $ | 990    |  | $ | (5   | )
|Corporate                        |  |                     | 3,816 |                |                   | (273 | )         |       |                |      |  |           |     |                |  |   | 3,816  |  |   | (273 | )
|Mortgage-backed-residential      |  |                     | 4,099 |                |                   | (69  | )         |       |                | 4,029 |  |           | (107 | )              |  |   | 8,128  |  |   | (176 | )
|                                 |  |                     |       |                |                   |      |           |       |                |       |  |           |      |                |  |   |        |  |   |      |  
|                                 |  |                     |       |                |                   |     
|Total temporarily impaired       |  | $                   | 8,905 |                | $                 | (347 | )         |       | $              | 4,029 |  | $         | (107 | )              |  | $ | 12,934 |  | $ | (454 | )
|                                 |  |                     |       |                |                   |      |           |       |                |       |  |           |      |                |  |   |        |  |   |      |  



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

Except for its equity investments as explained in the following paragraph, unrealized losses on the above securities have not been recognized into income
because the issuers of these securities are of high credit quality, management does not intend to sell securities with an unrealized loss and does not believe the Company will be required to sell the securities prior to recovery, and the decline in
fair value is largely due to current market conditions. The corporate bonds portfolio includes one investment in another financial institution, of which the security has been at an unrealized loss position for greater than 12 months. The security
has an investment grade rating of A2, as of September 30, 2009. The Companys management believes that the fair value of this security, as well as the other securities at an unrealized loss, will recover in the future as the security
approaches maturity and as current market conditions improve.

For the nine months ended September 30, 2009, the Company recognized a
$178 impairment loss on its mutual fund investment in the first quarter and a $55 impairment loss on a financial institution equity security in the second quarter. Management believed it could no longer forecast a recovery within a reasonable
holding period for these investments, the unrealized losses were deemed to be other-than-temporary, and the losses were recognized through earnings as a loss on equity securities. At September 30, 2009 the mutual fund value increased by $178,
which is included in other comprehensive income, as a write up in value through earnings is not permitted under accounting standards.

Contractual maturities of securities at September 30, 2009 are listed below. Securities not due at a single maturity date, primarily mortgage-backed and equity securities, are shown separately.



|                            |  |               |        |            |   |       
|--------------------------- |  | ------------- | ------ | ---------- | - | ------
|                            |  | AmortizedCost |        | Fair Value
|Due within one year         |  | $             | 1,013  |            | $ | 1,022 
|Due one to five years       |  |               | 2,990  |            |   | 2,961 
|Due five years to ten years |  |               | 6,503  |            |   | 6,592 
|Due after ten years         |  |               | 11,996 |            |   | 12,029
|                            |  |               |        |            |   |       
|                            |  |               | 22,502 |            |   | 22,604
|                            |  |              
|Equity                      |  |               | 4,528  |            |   | 4,682 
|Mortgage-backed-residential |  |               | 7,937  |            |   | 8,024 
|                            |  |               |        |            |   |       
|                            |  |              
|                            |  | $             | 34,967 |            | $ | 35,310
|                            |  |               |        |            |   |       

Securities with a carrying value of $9,100 at September 30, 2009 and December 31, 2008 were
pledged to secure securities sold under repurchase agreements and public deposits as required or permitted by law.

There were no investment
sales for the nine months ended September 30, 2009.



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Note 4 - Loans

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

Loans receivable are summarized as follows at the period end:



|                                   |  |                    |         |   |                   |   |         |  
|---------------------------------- |  | ------------------ | ------- | - | ----------------- | - | ------- | -
|                                   |  | September 30, 2009 |         |   | December 31, 2008 |  
|One-to-four-family residential     |  | $                  | 93,929  |   |                   | $ | 92,829  |  
|Multi-family residential           |  |                    | 19,690  |   |                   |   | 19,338  |  
|Commercial, construction, and land |  |                    | 17,635  |   |                   |   | 18,907  |  
|Consumer loans                     |  |                    | 6,474   |   |                   |   | 4,738   |  
|Participations and loans purchased |  |                    | 7,345   |   |                   |   | 5,050   |  
|                                   |  |                    |         |   |                   |   |         |  
|Total loans, gross                 |  |                    | 145,073 |   |                   |   | 140,862 |  
|Undisbursed portion of loans       |  |                    | (1,270  | ) |                   |   | (1,287  | )
|Net deferred loan origination fees |  |                    | (182    | ) |                   |   | (220    | )
|Allowance for loan losses          |  |                    | (1,088  | ) |                   |   | (775    | )
|                                   |  |                    |         |   |                   |   |         |  
|Total loans, net                   |  | $                  | 142,533 |   |                   | $ | 138,580 |  
|                                   |  |                    |         |   |                   |   |         |  

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



|                          |  |                                |       |   |      |   |     |  
|------------------------- |  | ------------------------------ | ----- | - | ---- | - | --- | -
|                          |  | Nine Months EndedSeptember 30, |      
|                          |  | 2009                           |       |   | 2008 |  
|Beginning balance         |  | $                              | 775   |   |      | $ | 639 |  
|Provision for loan losses |  |                                | 358   |   |      |   | 135 |  
|Recoveries                |  |                                |      |   |      |   | 1   |  
|Loans charged off         |  |                                | (45   | ) |      |   | (42 | )
|                          |  |                                |       |   |      |   |     |  
|Ending balance            |  | $                              | 1,088 |   |      | $ | 733 |  
|                          |  |                                |       |   |      |   |     |  

Impaired loans, including troubled debt restructurings, were $8,374 as of
September 30, 2009. The allocated allowance for impaired loans was $186 as of September 30, 2009. There were no impaired loans as of December 31, 2008.

Non-performing loans were as follows:



|                                             |  |                    |        |                   |   |    
|-------------------------------------------- |  | ------------------ | ------ | ----------------- | - | ---
|                                             |  | September 30, 2009 |        | December 31, 2008
|Loans past due over 90 days still on accrual |  | $                  |       |                   | $ |   
|Nonaccrual loans                             |  |                    | 10,655 |                   |   | 780

Nonaccrual loans include smaller balance homogeneous loans that are collectively
evaluated for impairment.



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Note 5 - Income Taxes

Realization of deferred tax assets is dependent upon generating sufficient future taxable income to utilize the deferred tax assets, and for net operating losses or other tax credits, prior to their
expiration. Based on forecasted earnings and available tax strategies, a valuation allowance to reflect managements estimate of the temporary deductible differences that may expire prior to their utilization was recorded in 2008. In making
this determination, management considered all evidence currently available, both positive and negative, including forecasts of future income, applicable tax planning strategies, and assessments of the current and future economic and business
conditions. Positive evidence includes the Companys ability to carry-back 2009 losses to prior years and other tax planning strategies that, if needed, would enable the Company to realize deferred tax assets associated with capital loss
carryforwards. Negative evidence includes the cumulative losses in the current year and the immediately preceding fiscal year, the generally downward economic and business trends, the volatility of earnings in the current economic environment
relative to additions to the provision for loan losses and the fact the Company has a three year cumulative loss for financial reporting purposes.

Based upon these factors, the Company established a valuation allowance of $339,000, resulting in net deferred tax assets of $1.5 million as of December 31, 2008. During the nine months ended
September 30, 2009, the Company continued to recognize a valuation allowance against net deferred taxes recognized from operating losses. On a quarterly basis, the Company will determine whether this valuation allowance is necessary and whether
the allowance should be adjusted based on then available evidence.

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

Note 6 - Fair Value of Assets and Liabilities

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) for identical assets or liabilities in active markets that the entity has the ability to
access as of the measurement date.

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

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

Assets and Liabilities Measured on a Recurring Basis

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

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



|                                 |  |         |                                                             |                               |                                            |       |                                        |   |        |  |   |  
|-------------------------------- |  | ------- | ----------------------------------------------------------- | ----------------------------- | ------------------------------------------ | ----- | -------------------------------------- | - | ------ |  | - | -
|                                 |  | Balance |                                                             | Fair Value Measurements Using
|                                 |  |         | Quoted Prices inActive Markets forIdentical
Assets(Level 1) |                               | Significant OtherObservableInputs(Level 2) |       | SignificantUnobservableInputs(Level 3)
|Assets:                          |  |         |                                                             |                               |                                            |       |                                        |   |        |  |   |  
|                                 |  |         |                                                             |                              
|September 30, 2009               |  |         |                                                             |                               |                                            |       |                                        |   |        |  |   |  
|Government sponsored enterprises |  | $       | 17,037                                                      |                               | $                                          |      |                                        | $ | 17,037 |  | $ | 
|Municipal                        |  |         | 524                                                         |                               |                                            |      |                                        |   | 524    |  |   | 
|Corporate                        |  |         | 5,043                                                       |                               |                                            |      |                                        |   | 5,043  |  |   | 
|Equity                           |  |         | 4,682                                                       |                               |                                            | 4,647 |                                        |   | 35     |  |   | 
|Mortgage-backed residential      |  |         | 8,024                                                       |                               |                                            |      |                                        |   | 8,024  |  |   | 
|                                 |  |         |                                                             |                               |                                            |       |                                        |   |        |  |   |  
|                                 |  |         |                                                             |                              
|                                 |  | $       | 35,310                                                      |                               | $                                          | 4,647 |                                        | $ | 30,663 |  | $ | 
|                                 |  |         |                                                             |                               |                                            |       |                                        |   |        |  |   |  



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|                                 |  |         |                                                             |                               |                                            |       |                                        |   |        |  |   |  
|-------------------------------- |  | ------- | ----------------------------------------------------------- | ----------------------------- | ------------------------------------------ | ----- | -------------------------------------- | - | ------ |  | - | -
|                                 |  | Balance |                                                             | Fair Value Measurements Using
|                                 |  |         | Quoted Prices inActive Markets forIdentical
Assets(Level 1) |                               | Significant OtherObservableInputs(Level 2) |       | SignificantUnobservableInputs(Level 3)
|December 31, 2008                |  |         |                                                             |                               |                                            |       |                                        |   |        |  |   |  
|Government sponsored enterprises |  | $       | 25,326                                                      |                               | $                                          |      |                                        | $ | 25,326 |  | $ | 
|Municipal                        |  |         |                                                            |                               |                                            |      |                                        |   |       |  |   | 
|Corporate                        |  |         | 3,816                                                       |                               |                                            |      |                                        |   | 3,816  |  |   | 
|Equity                           |  |         | 4,762                                                       |                               |                                            | 4,647 |                                        |   | 115    |  |   | 
|Mortgage-backed residential      |  |         | 9,691                                                       |                               |                                            |      |                                        |   | 9,691  |  |   | 
|                                 |  |         |                                                             |                               |                                            |       |                                        |   |        |  |   |  
|                                 |  |         |                                                             |                              
|                                 |  | $       | 43,595                                                      |                               | $                                          | 4,647 |                                        | $ | 38,948 |  | $ | 
|                                 |  |         |                                                             |                               |                                            |       |                                        |   |        |  |   |  

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



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Assets and Liabilities Measured on a Non-Recurring Basis

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

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



|                    |  |         |                                                             |                               |                                            |   |                                        |   |     |  |   |      
|------------------- |  | ------- | ----------------------------------------------------------- | ----------------------------- | ------------------------------------------ | - | -------------------------------------- | - | --- |  | - | -----
|                    |  | Balance |                                                             | Fair Value Measurements Using
|                    |  |         | Quoted Prices inActive Markets forIdentical Assets(Level 1) |                               | Significant OtherObservableInputs(Level 2) |   | SignificantUnobservableInputs(Level 3)
|Assets:             |  |         |                                                             |                               |                                            |   |                                        |   |     |  |   |      
|                    |  |         |                                                             |                              
|September 30, 2009  |  |         |                                                             |                               |                                            |   |                                        |   |     |  |   |      
|Impaired loans, net |  | $       | 785                                                         |                               | $                                          |  |                                        | $ | 785 |  | $ |     
|Real estate owned   |  |         | 1,595                                                       |                               |                                            |  |                                        |   |    |  |   | 1,595
|                    |  |         |                                                             |                              
|December 31, 2008   |  |         |                                                             |                               |                                            |   |                                        |   |     |  |   |      
|Real estate owned   |  | $       | 1,874                                                       |                               | $                                          |  |                                        | $ |    |  | $ | 1,874

Impaired loans, which are measured primarily for impairment using the fair market
value of collateral or the present value of future cash flows, were $971, with an allowance for loan losses of $186 at September 30, 2009, compared to no impaired loans at December 31, 2008.

Real estate owned, which is carried at lower of cost or fair value, was written down to a fair value of $1,595 as of September 30,
2009. A charge of $291 was included in earnings for the nine months ended September 30, 2009.

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



|                                                |  |                    |         |   |                     |   |         |                |  |   |                     |   |  |   |         |  
|----------------------------------------------- |  | ------------------ | ------- | - | ------------------- | - | ------- | -------------- |  | - | ------------------- | - |  | - | ------- | -
|                                                |  | September 30, 2009 |         |   | December 31, 2008   |  
|                                                |  | CarryingAmount     |         |   | EstimatedFair Value |   |         | CarryingAmount |  |   | EstimatedFair Value |  
|Financial assets                                |  |                    |         |   |                     |   |         |                |  |   |                     |   |  |   |         |  
|Cash and cash equivalents                       |  | $                  | 15,818  |   |                     | $ | 15,818  |                |  | $ | 8,859               |   |  | $ | 8,859   |  
|Loans receivable, net                           |  |                    | 142,533 |   |                     |   | 144,394 |                |  |   | 138,580             |   |  |   | 140,240 |  
|FHLB stock                                      |  |                    | 5,423   |   |                     |   | NA      |                |  |   | 5,423               |   |  |   | NA      |  
|Accrued interest receivable                     |  |                    | 908     |   |                     |   | 908     |                |  |   | 1,139               |   |  |   | 1,139   |  
|                                                |  |                    |         |  
|Financial liabilities                           |  |                    |         |   |                     |   |         |                |  |   |                     |   |  |   |         |  
|Deposits with no fixed maturity dates           |  | $                  | (55,215 | ) |                     | $ | (55,215 | )              |  | $ | (50,195             | ) |  | $ | (50,195 | )
|Deposits with fixed maturity dates              |  |                    | (93,826 | ) |                     |   | (94,801 | )              |  |   | (87,454             | ) |  |   | (87,753 | )
|Securities sold under repurchase agreements     |  |                    | (2,600  | ) |                     |   | (2,600  | )              |  |   | (3,239              | ) |  |   | (3,239  | )
|Advances from borrowers for taxes and insurance |  |                    | (2,442  | ) |                     |   | (2,442  | )              |  |   | (2,051              | ) |  |   | (2,051  | )
|FHLB advances                                   |  |                    | (41,125 | ) |                     |   | (44,559 | )              |  |   | (48,860             | ) |  |   | (54,265 | )
|Accrued interest payable                        |  |                    | (284    | ) |                     |   | (284    | )              |  |   | (365                | ) |  |   | (365    | )



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

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



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

Executive Summary

The
following discussion compares the financial condition of Park Bancorp, Inc. (Company) and its wholly owned subsidiaries, Park Federal Savings Bank (Bank) and PBI Development Corporation, and the Banks subsidiaries, at
September 30, 2009 to its financial condition at December 31, 2008 and the results of operations for the three and nine months ended September 30, 2009 to the same period in 2008. This discussion should be read in conjunction with the
interim financial statements and footnotes included herein.

Financial Condition

Total assets at September 30, 2009 increased $2.0 million or 0.9% to $221.6 million from $219.6 million at
December 31, 2008. Increases of $7.0 million in cash and cash equivalents and $4.0 million in net loans receivable, offset by a decrease of $8.3 million in securities available for sale during the nine month period ended September 30, 2009
were the primary reasons for the change from December 31, 2008.

The securities portfolio is primarily government
sponsored enterprise debt securities and residential mortgage-backed securities issued by government sponsored enterprises. The total portfolio decreased from December 31, 2008 to September 30, 2009 as a result of debt security maturities
and calls, partially offset by securities purchases and an increase in the market value of existing investments.

For the nine
months ended September 30, 2009, total gross loans increased $4.2 million, or 3.1%, to $145.1 million from $140.9 million at December 31, 2008.

The Company continues to see an increase in loan delinquencies and nonperforming loans due to higher unemployment levels and the continued weakening economy in its market area. If the recession continues
to worsen, the results could further negatively impact economic conditions in the Companys market areas and its borrowers, and the Company could experience significantly higher delinquencies and credit losses.

The allowance for loan loss was $1.1 million at September 30, 2009 compared to $775,000 at December 31, 2008 while nonperforming
assets were $12.3 million and $2.7 million for the comparable periods. The Company believes that the increase in the allowance for loan losses is consistent with the increase in credit risk. Approximately 51% of the Companys nonperforming
loans are one-to-four family loans. Approximately 46% of the nonperforming one-to-four family loans were related to rental investment properties owned by investment companies controlled by two individuals. Commercial, construction and land loans,
multi-family loans, and consumer loans represent approximately 35%, 11%, and 3% of the nonperforming loans at September 30, 2009, respectively. Approximately 90% of the nonperforming commercial portfolio pertains to one borrower. Collateral is
estimated to be sufficient to limit losses, as the Companys loan to value underwriting guidelines are expected to limit the losses due to deterioration in the collateral values. Further, the Company does not originate riskier subprime loans,
and the total second mortgage segment of the portfolio only represents $1.3 million of the $145.1 million total gross loan portfolio.

Real estate owned decreased from $1.9 million at December 31, 2008 to $1.6 million at September 30, 2009 predominately due to a $291,000 write-down on the existing properties. The write-down was the result of continued declines in
the estimated value of the existing properties in 2009. Based on recent appraisals and sales contract negotiations, the Companys management believes the properties are recorded at the lower of cost or fair value less cost to sell as of
September 30, 2009.

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.



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##### Table of Contents

|                                        |  |                    |        |                   |   |      
|--------------------------------------- |  | ------------------ | ------ | ----------------- | - | -----
|                                        |  | September 30, 2009 |        | December 31, 2008
|Nonaccrual loans                        |  |                    |        |                   |   |      
|One-to-four-family                      |  | $                  | 5,444  |                   | $ | 780  
|Multi-family                            |  |                    | 1,155  |                   |   |     
|Commercial, construction and land       |  |                    | 3,780  |                   |   |     
|Consumer and other                      |  |                    | 276    |                   |   |     
|                                        |  |                    |        |                   |   |      
|Total nonaccrual loans                  |  |                    | 10,655 |                   |   | 780  
|Loans past due 90 days still on accrual |  |                    |       |                   |   |     
|                                        |  |                    |        |                   |   |      
|Total nonperforming loans               |  |                    | 10,655 |                   |   | 780  
|Real estate owned                       |  |                    | 1,595  |                   |   | 1,874
|                                        |  |                    |        |                   |   |      
|Total nonperforming assets              |  | $                  | 12,250 |                   | $ | 2,654
|                                        |  |                    |        |                   |   |      

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.



|                                  |  |          |       |                                         |          |   |                                             |        |   |        |   |                                         |  |        |                                             |  |        |  
|--------------------------------- |  | -------- | ----- | --------------------------------------- | -------- | - | ------------------------------------------- | ------ | - | ------ | - | --------------------------------------- |  | ------ | ------------------------------------------- |  | ------ | -
|                                  |  | 09/30/09 |       |                                         | 12/31/08 |  
|                                  |  | Amount   |       | Percentageof Allowanceto TotalAllowance |          |   | Percentage ofGross Loans toTotal GrossLoans |        |   | Amount |   | Percentageof Allowanceto TotalAllowance |  |        | Percentage ofGross Loans toTotal GrossLoans | 
|One-to-four-family                |  | $        | 790   |                                         | 72.60    | % |                                             | 65.17  | % |        | $ | 529                                     |  | 68.26  | %                                           |  | 65.90  | %
|Multi-family                      |  |          | 114   |                                         | 10.49    |   |                                             | 13.66  |   |        |   | 108                                     |  | 13.93  |                                             |  | 13.73  |  
|Commercial, construction and land |  |          | 65    |                                         | 5.95     |   |                                             | 12.24  |   |        |   | 62                                      |  | 8.00   |                                             |  | 13.42  |  
|Consumer and other                |  |          | 119   |                                         | 10.96    |   |                                             | 8.93   |   |        |   | 76                                      |  | 9.81   |                                             |  | 6.95   |  
|                                  |  |          |       |                                         |          |   |                                             |        |   |        |   |                                         |  |        |                                             |  |        |  
|Total allowance for loan losses   |  | $        | 1,088 |                                         | 100.00   | % |                                             | 100.00 | % |        | $ | 775                                     |  | 100.00 | %                                           |  | 100.00 | %
|                                  |  |          |       |                                         |          |   |                                             |        |   |        |   |                                         |  |        |                                             |  |        |  

Total liabilities at September 30, 2009 were $196.0 million, an increase of $3.3
million or 1.7%, compared to $192.7 million at December 31, 2008. The change was due primarily to an increase in deposits of $11.4 million or 8.3% from December 31, 2008. The Company has competitively priced its deposit products over the
last nine months to improve liquidity and reduce borrowings from the Federal Home Loan Bank of Chicago. The Company reduced its borrowings from the Federal Home Loan Bank of Chicago during the nine months ended September 30, 2009 by $7.7
million or 15.8% to $41.1 million due to maturities and calls.

Stockholders equity decreased $1.3 million or 4.7% to
$25.6 million at September 30, 2009 from $26.9 million at December 31, 2008. The decrease was primarily attributable to the net loss for the nine months ended September 30, 2009 of $1.7 million.

Results of Operations

The
net loss for the quarter ended September 30, 2009 was $540,000, a decrease of $294,000 from the net loss of $834,000 for the comparable quarter in 2008. The change was due to a decrease in net interest income of $271,000, an increase in the
provision for loan loss of $78,000 and a decrease in the income tax benefit of $474,000, offset by an increase in noninterest income of $6,000 and a decrease in noninterest expense of $1.1 million. The net loss for the nine months ended
September 30, 2009 was $1.7 million, an



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increase of $458,000 from the net loss of $1.2 million for the comparable nine months in 2008. The change was due to a decrease in noninterest income of $222,000 an increase in the provision for
loan loss of $223,000, and a decrease in the income tax benefit of $682,000. These increases to the net loss were offset by a decrease in noninterest expense of $630,000 and an increase in noninterest income of $39,000.

Net interest income for the quarter ended September 30, 2009 decreased $271,000 or 19.2% to $1.1 million from $1.4 million. The average
yield on interest-earning assets decreased 94 basis points to 4.90% for the quarter ended September 30, 2009 from 5.84% for the same period in 2008, while average interest-earning assets decreased $1.7 million during the same time period. The
average yield decreased partially as a result of foregone interest on nonaccrual loans of approximately $252,000 during the quarter ended September 30, 2009. The average cost of interest-bearing liabilities decreased 37 basis points to 2.73%
from 3.10% for the quarters ended September 30, 2009 and 2008, respectively. Average interest-bearing liabilities decreased $5.6 million during the third quarter of 2009 compared to the third quarter of 2008. The interest rate spread decreased
56 basis points to 2.18% for the quarter ended September 30, 2009 from 2.74% for the comparable quarter in 2008 while the net interest margin decreased to 2.32% from 2.84% for the same period. Net interest income was $3.7 million and $4.0
million for the nine months ended September 30, 2009 and 2008, respectively. The average yield on interest-earning assets decreased 53 basis points to 5.22% for the nine months ended September 30, 2009 from 5.75% for the same period in
2008, while average interest-earning assets decreased $1.6 million compared to the same period. The average yield decreased partially as a result of foregone interest on nonaccrual loans of approximately $472,000 during the nine month period ended
September 30, 2009. The average cost of interest-bearing liabilities decreased 41 basis points to 2.84% from 3.25% for the nine month periods ended September 30, 2009 and 2008, respectively. Average interest-bearing liabilities decreased
$1.8 million for the nine months ended September 30, 2009 from the same period in 2008. The interest rate spread decreased 11 basis points to 2.39% for the nine months ended September 30, 2009 from 2.50% for the comparable nine month
period in 2008 while the net interest margin decreased to 2.52% from 2.65% for the same period.

Management establishes
provisions for loan losses, which are charged to operations, at a level management believes is appropriate to absorb probable credit losses in the loan portfolio. In evaluating the level of the allowance for loan losses, management considers
historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect the borrowers ability to repay, estimated value of any underlying collateral, peer group information, and
prevailing economic conditions. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available or as future events change. Based on managements estimates, a
$198,000 provision for loan loss was established for the quarter ended September 30, 2009, compared to $120,000 for the same quarter in 2008. The loan loss provision was $358,000 and $135,000 for the nine months ended September 30, 2009
and 2008, respectively. The increase in the loan loss provision in 2009 is the result of an increase in impaired loans and nonperforming loans during the quarter and nine months ended September 30, 2009. The provision for loan losses for
impaired loans was $122,000 and $186,000 during the quarter and nine months ended September 30, 2009.

Management
assesses the allowance for loan losses on a quarterly basis and makes provisions for loan losses as necessary in order to maintain the allowance. While management uses available information to recognize losses on loans, future loan loss provisions
may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses and may require us to recognize additional
provisions based on their judgment of information available to them at the time of their examination. The allowance for loan losses as of September 30, 2009 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.



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Noninterest income increased to $149,000 or $6,000 for the quarter ended
September 30, 2009 from $143,000 for the quarter ended September 30, 2008. Noninterest income increased to $456,000 or $39,000 for the nine months ended September 30, 2009 from $417,000 for the nine months ended September 30,
2008. The increase was primarily due to an increase in revenue generated from a lease executed during the second quarter of 2009 by a major tenant at the Banks 47thStreet office.

Noninterest expense decreased $1.1 million to $1.6 million for the quarter ended September 30, 2009 from $2.7 million for the corresponding three month period in 2008. The decrease for the quarter
was primarily the result of a $496,000 loss on security impairment incurred and a $417,000 write-down on real estate owned incurred in the third quarter of 2008 with no comparable transactions in the third quarter of 2009.Noninterest expense for the nine months ended September 30, 2009
decreased $630,000 to $5.6 million from $6.2 million for the same period in 2008. The decrease was due primarily to a decrease in the loss on security impairment of $739,000 and a decrease in the write-down on real estate owned of $126,000 offset by
an increase of $270,000 primarily due to an increase in the regular FDIC assessment charge of $169,000 and an FDIC special assessment charge of $101,000 in 2009.

The Companys federal income tax benefit was $163,000 for the three-month period ended September 30, 2009 offset by a $163,000 deferred tax asset valuation allowance of $163,000 compared to the
federal income tax benefit of $474,000 for the three-month period ended September 30, 2008. The change in the income tax benefit for the three month period was attributable to the decrease in the loss before income taxes, offset by a deferred
tax asset valuation allowance recorded in 2009. The Company recognized a deferred tax asset valuation allowance, as the Company is not able to project sufficient future taxable income to fully utilize the deferred tax asset given the present
economic conditions. The Companys federal income tax benefit was $88,000 for the nine month period ended September 30, 2009 compared to the federal income tax benefit of $770,000 for the nine month period ended September 30, 2008.
The change in the income tax benefit for the nine month period was attributable to the decrease in the loss before income taxes for the period, partially offset by a deferred tax asset valuation allowance recorded in 2009. The Company recognized a
deferred tax asset valuation allowance due to uncertainty as to whether the deferred tax assets would be fully utilized.

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 16.81% at September 30, 2009 as compared to 22.28% at December 31, 2008. During the nine month period ended
September 30, 2009, excess liquidity was used to repay FHLB advances.

The Companys cash flows are comprised of
three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash used in operating activities were $323,000 and $241,000 for the nine months ended September 30, 2009 and 2008,
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 and securities, and paydowns on
mortgage-backed securities. Net cash from investing activities were $3.9 million and $(11.2) million for the nine months ended September 30, 2009 and 2008, respectively. Net cash from financing activities consisted primarily of the
activity in deposit accounts, FHLB borrowings, and securities sold under repurchase agreements in addition to the purchase of treasury stock. The net cash from financing activities was $3.4 million and $3.6 million for the nine months ended
September 30, 2009 and 2008, respectively.

At September 30, 2009, the Bank exceeded all of its regulatory capital
requirements with a Tier 1 (core) capital level of $22.9 million, or 10.42% of adjusted total assets, which is above the required level of $8.8 million, or 4.0%; and total risk-based capital of $23.8 million, or 18.60% of risk-weighted assets, which
is above the required level of $10.2 million, or 8.0%. Accordingly the Bank was categorized as well capitalized at September 30, 2009. Management is not aware of any conditions or events since the most recent notification that would change the
Banks category.

A notification from the Office of Thrift Supervision (OTS) received in July 2008, remains
in effect as of September 30, 2009. The notification received in 2008 is typically delivered at the execution of a Supervisory Agreement, and requires the Bank to obtain OTS approval for any capital distribution, including payment of a dividend
from the Bank to the Holding Company. Management believes future dividend requests, if necessary, will be approved given the Banks current capital levels. The agreement will remain in effect until terminated, modified, or suspended in writing
by the OTS. Failure to comply with the agreement could result in the initiation of formal enforcement action by the OTS.

At
September 30, 2009, the Bank had outstanding commitments to originate mortgage loans of $2.2 million, commitments under unused lines of credit of $4.7 million and undisbursed portions of construction loans of $1.2 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



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in less than one year from September 30, 2009 totaled $70.4 million. Management expects that a substantial portion of the maturing certificate accounts will be renewed at the Bank. However,
if a substantial portion of these deposits is not retained, the Bank may utilize FHLB advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.



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

The Banks interest rate sensitivity is monitored by management through the use of a model which estimates the change in net portfolio value (NPV) over a range of interest rate scenarios. NPV is the
present value of expected cash flows from assets, liabilities, and off-balance-sheet contracts. An NPV Ratio, in any interest rate scenario, is defined as the NPV in that scenario divided by the market value of assets in the same scenario. The
Sensitivity Measure is the decline in the NPV Ratio, in basis points, caused by a 2% increase or decrease in rates, whichever produces a larger decline. The higher an institutions Sensitivity Measure is, the greater its exposure to interest
rate risk is considered to be. The OTS has incorporated an interest rate risk component into its regulatory capital rule. Under the rule, an institution whose sensitivity measure exceeds 2% would be required to deduct an interest rate risk component
in calculating its total capital for purposes of the risk-based capital requirement. As of June 30, 2009, 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 (15)% and would result in a $4.4 million decrease in the NPV of the Bank. Accordingly, increases in interest rates would be expected to have a negative impact on the Banks operating results. The NPV
Ratio sensitivity measure is below the threshold at which the Bank could be required to hold additional risk-based capital under OTS regulations.



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

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

The
following table shows the NPV and projected change in the NPV of the Bank at June 30, 2009, the latest date for which information is available, assuming an instantaneous and sustained change in market interest rates of 100, 200 and 300 basis
points and a decline of 100 basis points. Due to the current economic conditions and level of interest rates, a 200 and 300 basis point decline would not apply.

Interest Rate Sensitivity of Net Portfolio Value (NPV)



|                |  |                     |        |          |                           |        |          |  |     |           |  |       |        |  |      |    
|--------------- |  | ------------------- | ------ | -------- | ------------------------- | ------ | -------- |  | --- | --------- |  | ----- | ------ |  | ---- | ---
|                |  | Net Portfolio Value |        |          | NPV as a % of PV ofAssets |       
|Change in Rates |  | $ Amount            |        | $ Change |                           |        | % Change |  |     | NPV Ratio |  |       | Change | 
|+ 300 bp        |  | $                   | 21,073 |          | $                         | (7,804 | )        |  | (27 | )%        |  | 9.54  | %      |  | (282 | )bp
|+ 200 bp        |  |                     | 24,446 |          |                           | (4,431 | )        |  | (15 | )         |  | 10.83 |        |  | (152 | )bp
|+ 100 bp        |  |                     | 27,222 |          |                           | (1,654 | )        |  | (6  | )         |  | 11.83 |        |  | (52  | )bp
|0 bp            |  |                     | 28,877 |          |                           |       |          |  |    |           |  | 12.36 |        |  |     |    
| 100 bp        |  |                     | 28,839 |          |                           | (38    | )        |  |    |           |  | 12.23 |        |  | (13  | )bp
| 200 bp        |  |                     | N/A    |          |                           | N/A    |          |  | N/A |           |  | N/A   |        |  | N/A  |    
| 300 bp        |  |                     | N/A    |          |                           | N/A    |          |  | N/A |           |  | N/A   |        |  | N/A  |    

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

Management has not yet completed the computation of NPV as of September 30, 2009 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.



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

There was no change in the Companys internal control over financial reporting that occurred during the Companys fiscal quarter
ended September 30, 2009, that materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.



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PART II  OTHER INFORMATION



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

None



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

There has
been no material changes with respect to the risk factors disclosed in the Companys 2008 Annual Report on Form 10-K.



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

Issuer Repurchases of Equity Securities

The Companys Board of
Directors approved the repurchase by the Company of up to 50,000 shares of its common stock pursuant to a repurchase program that was publicly announced on July 31, 2008. No shares were repurchased in the first nine months of 2009 under the
program. A total of 43,682 shares remain available for repurchase under the program.



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

None



|Item 4. | Submission of Matters to a Vote of Security Holders.
|------- | ----------------------------------------------------

None



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

None



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



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



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



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SIGNATURES

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



|                        |  |                                      
|----------------------- |  | -------------------------------------
|                        |  | PARK BANCORP, INC.                   
|                        | 
|Date: November 16, 2009 |  | /S/    DAVID A.
REMIJAS              
|                        |  | David A. Remijas                     
|                        |  | Chairman and Chief Executive Officer 
|                        | 
|Date: November 16, 2009 |  | /S/    VICTOR E.
CAPUTO              
|                        |  | Victor E. Caputo                     
|                        |  | Treasurer and Chief Financial Officer



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