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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2006



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PARK BANCORP, INC.

(Exact name of registrant as specified in its charter)



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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)



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

Indicated by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated files. See definition of accelerated filer and larger accelerated filer in Rule 12b-2
of the Exchange Act.

Large accelerated filer ̈Accelerated filer ̈Non-accelerated filer  x

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

As of November 10, 2006, the Registrant had outstanding 1,114,725 shares of common stock.



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PARK BANCORP, INC.

Form 10-Q Quarterly Report

Index



|                               |  |         |  |                                                                                       |  |     
|------------------------------ |  | ------- |  | ------------------------------------------------------------------------------------- |  | ----
|                               |  |         |  |                                                                                       |  | Page
|PART I - Financial Information |  |        
|                               |  |         | 
|                               |  | Item 1  |  | Financial Statements                                                                  |  | 1   
|                               |  |         | 
|                               |  | Item 2  |  | Management's Discussion and Analysis of Financial Condition and Results of Operations |  | 11  
|                               |  |         | 
|                               |  | Item 3  |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 14  
|                               |  |         | 
|                               |  | Item 4  |  | Controls and Procedures                                                               |  | 16  
|                               | 
|PART II -
Other Information    |  |        
|                               |  |         | 
|                               |  | Item 1  |  | Legal Proceedings                                                                     |  | 18  
|                               |  |         | 
|                               |  | Item 1A |  | Risk Factors                                                                          |  | 18  
|                               |  |         | 
|                               |  | Item 2  |  | Changes in Securities                                                                 |  | 18  
|                               |  |         | 
|                               |  | Item 3  |  | Defaults Upon Senior Securities                                                       |  | 18  
|                               |  |         | 
|                               |  | Item 4  |  | Submission of Matters to a Vote of Securities Holders                                 |  | 18  
|                               |  |         | 
|                               |  | Item 5  |  | Other Information                                                                     |  | 18  
|                               |  |         | 
|                               |  | Item 6  |  | Exhibits                                                                              |  | 18  
|                               | 
|SIGNATURES                     |  | 19     

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

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



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



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##### Table of Contents

ITEM 1  FINANCIAL STATEMENTS

Park Bancorp, Inc. and Subsidiaries

Consolidated Statements of Financial Condition

(In thousands of
dollars, except share data)

(Unaudited)



|                                                                                                 |  |                   |         |   |                  |   |         |  
|------------------------------------------------------------------------------------------------ |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                 |  | September 30,2006 |         |   | December 31,2005 |  
|ASSETS                                                                                           |  |                   |         |   |                  |   |         |  
|Cash and due from banks                                                                          |  | $                 | 2,898   |   |                  | $ | 4,530   |  
|Federal funds sold                                                                               |  |                   | 2,459   |   |                  |   |        |  
|Interest-bearing deposit accounts in other financial institutions                                |  |                   | 1,861   |   |                  |   | 663     |  
|                                                                                                 |  |                   |         |   |                  |   |         |  
|Total cash and cash equivalents                                                                  |  |                   | 7,218   |   |                  |   | 5,193   |  
|                                                                                                 |  |                  
|Securities available-for-sale                                                                    |  |                   | 43,969  |   |                  |   | 50,137  |  
|Loans receivable, net                                                                            |  |                   | 150,946 |   |                  |   | 158,709 |  
|Federal Home Loan Bank stock                                                                     |  |                   | 6,862   |   |                  |   | 9,793   |  
|Premises and equipment, net                                                                      |  |                   | 4,977   |   |                  |   | 4,920   |  
|Accrued interest receivable                                                                      |  |                   | 1,046   |   |                  |   | 1,058   |  
|Bank-owned life insurance                                                                        |  |                   | 7,326   |   |                  |   | 7,119   |  
|Real estate owned                                                                                |  |                   | 2,261   |   |                  |   | 132     |  
|Other assets                                                                                     |  |                   | 1,786   |   |                  |   | 2,407   |  
|                                                                                                 |  |                   |         |   |                  |   |         |  
|Total assets                                                                                     |  | $                 | 226,391 |   |                  | $ | 239,468 |  
|                                                                                                 |  |                   |         |   |                  |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                             |  |                   |         |   |                  |   |         |  
|LIABILITIES                                                                                      |  |                   |         |   |                  |   |         |  
|Non-interest bearing deposits                                                                    |  | $                 | 6,390   |   |                  | $ | 6,525   |  
|Interest bearing deposits                                                                        |  |                   | 137,855 |   |                  |   | 142,479 |  
|                                                                                                 |  |                   |         |   |                  |   |         |  
|Total deposits                                                                                   |  |                   | 144,245 |   |                  |   | 149,004 |  
|                                                                                                 |  |                  
|Securities sold under repurchase agreements                                                      |  |                   | 3,222   |   |                  |   | 3,222   |  
|Advances from borrowers for taxes and insurance                                                  |  |                   | 1,234   |   |                  |   | 2,200   |  
|Borrowings                                                                                       |  |                   | 46,608  |   |                  |   | 53,499  |  
|Accrued interest payable                                                                         |  |                   | 533     |   |                  |   | 477     |  
|Other liabilities                                                                                |  |                   | 1,174   |   |                  |   | 1,164   |  
|                                                                                                 |  |                   |         |   |                  |   |         |  
|Total liabilities                                                                                |  |                   | 197,016 |   |                  |   | 209,566 |  
|                                                                                                 |  |                  
|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; issued 2,751,495 and 2,750,245 shares |  |                   | 27      |   |                  |   | 27      |  
|Additional paid-in capital                                                                       |  |                   | 28,687  |   |                  |   | 28,424  |  
|Retained earnings                                                                                |  |                   | 30,060  |   |                  |   | 30,664  |  
|Treasury stock at cost  1,636,770 and 1,624,970 shares, at cost                                 |  |                   | (28,483 | ) |                  |   | (28,097 | )
|Unearned ESOP shares                                                                             |  |                   | (467    | ) |                  |   | (561    | )
|Accumulated other comprehensive loss                                                             |  |                   | (449    | ) |                  |   | (555    | )
|                                                                                                 |  |                   |         |   |                  |   |         |  
|Total stockholders equity                                                                       |  |                   | 29,375  |   |                  |   | 29,902  |  
|                                                                                                 |  |                   |         |   |                  |   |         |  
|Total liabilities and stockholders equity                                                       |  | $                 | 226,391 |   |                  | $ | 239,468 |  
|                                                                                                 |  |                   |         |   |                  |   |         |  

See accompanying notes to consolidated financial statements.



1.



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Park Bancorp, Inc. and Subsidiaries

Consolidated Statements of Income

(In thousands of dollars, except share data)

(Unaudited)



|                                                    |  |                                  |       |   |                                |   |       |      |  |   |       |   |  |   |      
|--------------------------------------------------- |  | -------------------------------- | ----- | - | ------------------------------ | - | ----- | ---- |  | - | ----- | - |  | - | -----
|                                                    |  | Three Months Ended September 30, |       |   | Nine MonthsEnded September 30,
|                                                    |  | 2006                             |       |   | 2005                           |   |       | 2006 |  |   | 2005 
|Interest income                                     |  |                                  |       |   |                                |   |       |      |  |   |       |   |  |   |      
|Loans receivable                                    |  | $                                | 2,460 |   |                                | $ | 2,552 |      |  | $ | 7,412 |   |  | $ | 7,609
|Securities                                          |  |                                  | 570   |   |                                |   | 669   |      |  |   | 1,703 |   |  |   | 2,107
|Other interest-bearing deposits                     |  |                                  | 65    |   |                                |   | 48    |      |  |   | 206   |   |  |   | 199  
|                                                    |  |                                  |       |   |                                |   |       |      |  |   |       |   |  |   |      
|Total                                               |  |                                  | 3,095 |   |                                |   | 3,269 |      |  |   | 9,321 |   |  |   | 9,915
|                                                    |  |                                  |       |  
|Interest expense                                    |  |                                  |       |   |                                |   |       |      |  |   |       |   |  |   |      
|Deposits                                            |  |                                  | 1,100 |   |                                |   | 905   |      |  |   | 3,137 |   |  |   | 2,623
|Borrowings                                          |  |                                  | 511   |   |                                |   | 561   |      |  |   | 1,644 |   |  |   | 1,689
|                                                    |  |                                  |       |   |                                |   |       |      |  |   |       |   |  |   |      
|Total                                               |  |                                  | 1,611 |   |                                |   | 1,466 |      |  |   | 4,781 |   |  |   | 4,312
|                                                    |  |                                  |       |   |                                |   |       |      |  |   |       |   |  |   |      
|Net interest income                                 |  |                                  | 1,484 |   |                                |   | 1,803 |      |  |   | 4,540 |   |  |   | 5,603
|                                                    |  |                                  |       |  
|Provision for loan losses                           |  |                                  | 249   |   |                                |   | 317   |      |  |   | 249   |   |  |   | 317  
|                                                    |  |                                  |       |   |                                |   |       |      |  |   |       |   |  |   |      
|Net interest income after provision for loan losses |  |                                  | 1,235 |   |                                |   | 1,486 |      |  |   | 4,291 |   |  |   | 5,286
|                                                    |  |                                  |       |  
|Noninterest income                                  |  |                                  |       |   |                                |   |       |      |  |   |       |   |  |   |      
|Gain on sale of securities available-for-sale       |  |                                  |      |   |                                |   | 128   |      |  |   |      |   |  |   | 152  
|Service fee income                                  |  |                                  | 66    |   |                                |   | 77    |      |  |   | 188   |   |  |   | 212  
|Earnings on bank-owned life insurance               |  |                                  | 72    |   |                                |   | 64    |      |  |   | 207   |   |  |   | 201  
|Other operating income                              |  |                                  | 21    |   |                                |   | 5     |      |  |   | 125   |   |  |   | 22   
|                                                    |  |                                  |       |   |                                |   |       |      |  |   |       |   |  |   |      
|Total noninterest income                            |  |                                  | 159   |   |                                |   | 274   |      |  |   | 520   |   |  |   | 587  
|                                                    |  |                                  |       |  
|Noninterest expense                                 |  |                                  |       |   |                                |   |       |      |  |   |       |   |  |   |      
|Compensation and benefits                           |  |                                  | 857   |   |                                |   | 966   |      |  |   | 2,756 |   |  |   | 2,890
|Occupancy and equipment expense                     |  |                                  | 161   |   |                                |   | 259   |      |  |   | 608   |   |  |   | 630  
|REO expense                                         |  |                                  | 245   |   |                                |   |      |      |  |   | 329   |   |  |   |     
|Other operating expenses                            |  |                                  | 444   |   |                                |   | 401   |      |  |   | 1,258 |   |  |   | 1,173
|                                                    |  |                                  |       |   |                                |   |       |      |  |   |       |   |  |   |      
|Total noninterest expense                           |  |                                  | 1,707 |   |                                |   | 1,626 |      |  |   | 4,951 |   |  |   | 4,693
|                                                    |  |                                  |       |   |                                |   |       |      |  |   |       |   |  |   |      
|Income loss before income taxes                     |  |                                  | (313  | ) |                                |   | 134   |      |  |   | (140  | ) |  |   | 1,180
|                                                    |  |                                  |       |  
|Income tax expense (benefit)                        |  |                                  | (115  | ) |                                |   | (34   | )    |  |   | (112  | ) |  |   | 318  
|                                                    |  |                                  |       |   |                                |   |       |      |  |   |       |   |  |   |      
|Net income (loss)                                   |  | $                                | (198  | ) |                                | $ | 168   |      |  | $ | (28   | ) |  | $ | 862  
|                                                    |  |                                  |       |   |                                |   |       |      |  |   |       |   |  |   |      
|Basic earnings (loss) per share                     |  | $                                | (.19  | ) |                                | $ | .16   |      |  | $ | (.03  | ) |  | $ | .81  
|Diluted earnings (loss) per share                   |  | $                                | (.19  | ) |                                | $ | .15   |      |  | $ | (.03  | ) |  | $ | .74  
|Comprehensive income (loss)                         |  | $                                | 55    |   |                                | $ | (104  | )    |  | $ | 78    |   |  | $ | 426  
|                                                    |  |                                  |       |   |                                |   |       |      |  |   |       |   |  |   |      

See accompanying notes to consolidated financial statements.



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Park Bancorp, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands of dollars)

(Unaudited)



|                                                                                |  |                                |         |   |      |   |         |  
|------------------------------------------------------------------------------- |  | ------------------------------ | ------- | - | ---- | - | ------- | -
|                                                                                |  | Nine Months EndedSeptember 30, |        
|                                                                                |  | 2006                           |         |   | 2005 |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                            |  |                                |         |   |      |   |         |  
|Net income (loss)                                                               |  | $                              | (28     | ) |      | $ | 862     |  
|Adjustments to reconcile net income to net cash from operating activities       |  |                                |         |   |      |   |         |  
|Net premium amortization on securities                                          |  |                                | 40      |   |      |   | 86      |  
|Gain on sale of securities available-for-sale                                   |  |                                |        |   |      |   | (152    | )
|Provision for loan loss                                                         |  |                                | 249     |   |      |   | 317     |  
|Earnings on bank-owned life insurance, net                                      |  |                                | (207    | ) |      |   | (201    | )
|Depreciation expense                                                            |  |                                | 284     |   |      |   | 315     |  
|ESOP compensation expense                                                       |  |                                | 314     |   |      |   | 302     |  
|Federal Home Loan Bank stock dividends                                          |  |                                |        |   |      |   | (465    | )
|Net change in:                                                                  |  |                                |         |   |      |   |         |  
|Accrued interest receivable                                                     |  |                                | 12      |   |      |   | 121     |  
|Accrued interest payable                                                        |  |                                | 56      |   |      |   | 207     |  
|Other assets                                                                    |  |                                | (2,275  | ) |      |   | 412     |  
|Other liabilities                                                               |  |                                | 10      |   |      |   | 173     |  
|                                                                                |  |                                |         |   |      |   |         |  
|Net cash from operating activities                                              |  |                                | (1,545  | ) |      |   | 1,997   |  
|                                                                                |  |                               
|CASH FLOWS FROM INVESTING ACTIVITIES                                            |  |                                |         |   |      |   |         |  
|Net change in loans                                                             |  |                                | 7,514   |   |      |   | 5,552   |  
|Purchase of securities available for sale                                       |  |                                | (4,313  | ) |      |   | (2,836  | )
|Maturities and calls of securities available-for-sale                           |  |                                | 6,000   |   |      |   |        |  
|Principal repayments on mortgage-backed securities                              |  |                                | 4,611   |   |      |   | 7,917   |  
|Proceeds from sales of securities available-for-sale                            |  |                                |        |   |      |   | 1,374   |  
|Maturity of time deposits with other financial institutions                     |  |                                |        |   |      |   | 1,087   |  
|Sale of Federal Home Loan Bank stock                                            |  |                                | 2,931   |   |      |   | 1,901   |  
|Purchase of premises and equipment                                              |  |                                | (341    | ) |      |   | (503    | )
|Purchase of bank-owned life insurance                                           |  |                                |        |   |      |   | (1,000  | )
|Proceeds from sale of real estate development                                   |  |                                | 703     |   |      |   |        |  
|                                                                                |  |                                |         |   |      |   |         |  
|Net cash from investing activities                                              |  |                                | 17,105  |   |      |   | 13,492  |  
|                                                                                |  |                                |         |   |      |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                            |  |                                |         |   |      |   |         |  
|Net change in deposits                                                          |  |                                | (4,759  | ) |      |   | (9,821  | )
|Net change in repurchase agreements                                             |  |                                |        |   |      |   | (151    | )
|Net change in advances from borrowers for taxes and insurance                   |  |                                | (966    | ) |      |   | 406     |  
|Proceeds from borrowings                                                        |  |                                | 18,442  |   |      |   | 4,975   |  
|Repayments of borrowings                                                        |  |                                | (25,333 | ) |      |   | (14,754 | )
|Dividends paid                                                                  |  |                                | (576    | ) |      |   | (574    | )
|Stock options exercised                                                         |  |                                | 25      |   |      |   | 40      |  
|Stock based compensation expense                                                |  |                                | 18      |   |      |   |        |  
|Purchase of treasury stock                                                      |  |                                | (386    | ) |      |   | (815    | )
|                                                                                |  |                                |         |   |      |   |         |  
|Net cash from financing activities                                              |  |                                | (13,535 | ) |      |   | (20,694 | )
|                                                                                |  |                                |         |   |      |   |         |  
|Net change in cash and cash equivalents                                         |  |                                | 2,025   |   |      |   | (5,225  | )
|Cash and cash equivalents at beginning of period                                |  |                                | 5,193   |   |      |   | 13,752  |  
|                                                                                |  |                                |         |   |      |   |         |  
|Cash and cash equivalents at end of period                                      |  | $                              | 7,218   |   |      | $ | 8,527   |  
|                                                                                |  |                                |         |   |      |   |         |  
|Supplemental disclosures of cash flow information Transfer to real estate owned |  | $                              | 2,052   |   |      |   |        |  

See accompanying notes to consolidated financial statements.



3.



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Park Bancorp, Inc. and Subsidiaries

Consolidated Statements of Stockholders Equity

Nine months ended September 30, 2006 and 2005

(In thousands of dollars, except share data)

(Unaudited)



|                                                                           |  |             |    |                           |   |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                           |  |   |      |   |  |   |        |  
|-------------------------------------------------------------------------- |  | ----------- | -- | ------------------------- | - | ---------------- |  | - | ------------- | - |  | ------------------ | ------- | - | ------------------------------------------ | - | ---- | ------------------------- |  | - | ---- | - |  | - | ------ | -
|                                                                           |  | CommonStock |    | Additional Paid-inCapital |   | RetainedEarnings |  |   | TreasuryStock |   |  | UnearnedESOPShares |         |   | AccumulatedOtherComprehensiveIncome (Loss) |   |      | TotalStock-holdersEquity | 
|2005                                                                       |  |             |    |                           |   |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                           |  |   |      |   |  |   |        |  
|Balance at January 1, 2005                                                 |  | $           | 27 |                           | $ | 27,819           |  | $ | 30,797        |   |  | $                  | (27,070 | ) |                                            | $ | (694 | )                         |  | $ | 28   |   |  | $ | 30,907 |  
|Net income                                                                 |  |             |   |                           |   |                 |  |   | 862           |   |  |                    |        |   |                                            |   |     |                           |  |   |     |   |  |   | 862    |  
|Change in fair value of securities available-for-sale, net of income taxes |  |             |   |                           |   |                 |  |   |              |   |  |                    |        |   |                                            |   |     |                           |  |   | (436 | ) |  |   | (436   | )
|                                                                           |  |             |    |                           |   |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                           |  |   |      |   |  |   |        |  
|Total comprehensive income                                                 |  |             |    |                           |   |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                           |  |   |      |   |  |   | 426    |  
|Exercise of 2,600 stock options                                            |  |             |   |                           |   | 40               |  |   |              |   |  |                    |        |   |                                            |   |     |                           |  |   |     |   |  |   | 40     |  
|Purchase of 25,835 shares of treasury stock                                |  |             |   |                           |   |                 |  |   |              |   |  |                    | (815    | ) |                                            |   |     |                           |  |   |     |   |  |   | (815   | )
|Dividends paid                                                             |  |             |   |                           |   |                 |  |   | (573          | ) |  |                    |        |   |                                            |   |     |                           |  |   |     |   |  |   | (573   | )
|ESOP shares earned                                                         |  |             |   |                           |   | 203              |  |   |              |   |  |                    |        |   |                                            |   | 99   |                           |  |   |     |   |  |   | 302    |  
|                                                                           |  |             |    |                           |   |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                           |  |   |      |   |  |   |        |  
|Balance at September 30, 2005                                              |  | $           | 27 |                           | $ | 28,062           |  | $ | 31,086        |   |  | $                  | (27,885 | ) |                                            | $ | (595 | )                         |  | $ | (408 | ) |  | $ | 30,287 |  
|                                                                           |  |             |    |                           |   |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                           |  |   |      |   |  |   |        |  
|2006                                                                       |  |             |    |                           |   |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                           |  |   |      |   |  |   |        |  
|Balance at January 1, 2006                                                 |  | $           | 27 |                           | $ | 28,424           |  | $ | 30,664        |   |  | $                  | (28,097 | ) |                                            | $ | (561 | )                         |  | $ | (555 | ) |  | $ | 29,902 |  
|Net (loss)                                                                 |  |             |   |                           |   |                 |  |   | (28           | ) |  |                    |        |   |                                            |   |     |                           |  |   |     |   |  |   | (28    | )
|Change in fair value of securities available-for-sale, net of income taxes |  |             |   |                           |   |                 |  |   |              |   |  |                    |        |   |                                            |   |     |                           |  |   | 106  |   |  |   | 106    |  
|                                                                           |  |             |    |                           |   |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                           |  |   |      |   |  |   |        |  
|Total comprehensive loss                                                   |  |             |    |                           |   |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                           |  |   |      |   |  |   | 78     |  
|Exercise of 1,250 stock options                                            |  |             |   |                           |   | 25               |  |   |              |   |  |                    |        |   |                                            |   |     |                           |  |   |     |   |  |   | 25     |  
|Purchase of 11,800 shares of treasury stock                                |  |             |   |                           |   |                 |  |   |              |   |  |                    | (386    | ) |                                            |   |     |                           |  |   |     |   |  |   | (386   | )
|Stock based compensation                                                   |  |             |   |                           |   | 18               |  |   |              |   |  |                    |        |   |                                            |   |     |                           |  |   |     |   |  |   | 18     |  
|Dividends paid                                                             |  |             |   |                           |   |                 |  |   | (576          | ) |  |                    |        |   |                                            |   |     |                           |  |   |     |   |  |   | (576   | )
|ESOP shares earned                                                         |  |             |   |                           |   | 220              |  |   |              |   |  |                    |        |   |                                            |   | 94   |                           |  |   |     |   |  |   | 314    |  
|                                                                           |  |             |    |                           |   |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                           |  |   |      |   |  |   |        |  
|Balance at September 30, 2006                                              |  | $           | 27 |                           | $ | 28,687           |  | $ | 30,060        |   |  | $                  | (28,483 | ) |                                            | $ | (467 | )                         |  | $ | (449 | ) |  | $ | 29,375 |  
|                                                                           |  |             |    |                           |   |                  |  |   |               |   |  |                    |         |   |                                            |   |      |                           |  |   |      |   |  |   |        |  

See accompanying notes to consolidated financial statements.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2006

(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, 2006 and December 31, 2005 and for the three-month and nine-month periods ended September 30, 2006 and 2005. 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 2005 Annual Report on Form 10-K filed with the Securities and Exchange Commission. The December 31, 2005 balance sheet presented herein
has been derived from the audited financial statements included in the Companys 2005 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, 2006. 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, 2006 and 2005 are not necessarily indicative of the results to be expected for the full year.



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Note 2 - Earnings Per Share

The following table presents a reconciliation of the components used to compute basic and diluted earnings per share for the three-month and nine-month periods ended
September 30, 2006 and 2005.



|                                                                    |  |                            |           |   |                           |   |           |                            |  |                           |           |  |   |          
|------------------------------------------------------------------- |  | -------------------------- | --------- | - | ------------------------- | - | --------- | -------------------------- |  | ------------------------- | --------- |  | - | ---------
|                                                                    |  | 2006                       |           |   | 2005                     
|                                                                    |  | Three MonthsEnded Sept. 30 |           |   | Nine MonthsEnded Sept. 30 |   |           | Three MonthsEnded Sept. 30 |  | Nine MonthsEnded Sept. 30
|Basic earnings (loss) per share                                     |  |                            |           |   |                           |   |           |                            |  |                           |           |  |   |          
|Net income (loss) as reported                                       |  | $                          | (198      | ) |                           | $ | (28       | )                          |  | $                         | 168       |  | $ | 862      
|Weighted average common shares outstanding                          |  |                            | 1,068,703 |   |                           |   | 1,070,953 |                            |  |                           | 1,060,078 |  |   | 1,065,449
|                                                                    |  |                            |           |   |                           |   |           |                            |  |                           |           |  |   |          
|Basic earnings (loss) per share                                     |  | $                          | (.19      | ) |                           | $ | (.03      | )                          |  | $                         | .16       |  | $ | .81      
|                                                                    |  |                            |           |   |                           |   |           |                            |  |                           |           |  |   |          
|Diluted earnings (loss) per share                                   |  |                            |           |   |                           |   |           |                            |  |                           |           |  |   |          
|Net income (loss) as reported                                       |  | $                          | (198      | ) |                           | $ | (28       | )                          |  | $                         | 168       |  | $ | 862      
|Weighted average common shares outstanding                          |  |                            | 1,068,703 |   |                           |   | 1,070,953 |                            |  |                           | 1,060,078 |  |   | 1,065,449
|Dilutive effect of stock options                                    |  |                            | 85,669    |   |                           |   | 85,889    |                            |  |                           | 93,204    |  |   | 94,910   
|                                                                    |  |                            |           |   |                           |   |           |                            |  |                           |           |  |   |          
|Weighted average common shares and dilutive potential common shares |  |                            | 1,154,372 |   |                           |   | 1,156,842 |                            |  |                           | 1,153,282 |  |   | 1,160,411
|                                                                    |  |                            |           |   |                           |   |           |                            |  |                           |           |  |   |          
|Diluted earnings (loss) per share                                   |  | $                          | (.19      | ) |                           | $ | (.03      | )                          |  | $                         | .15       |  | $ | .74      
|                                                                    |  |                            |           |   |                           |   |           |                            |  |                           |           |  |   |          



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Note 3  Stock Based Compensation

Prior to 2006, the Company accounted for stock-based awards to employees using the intrinsic value method in accordance with Accounting Principles Board (APB) Opinion
No. 25, Accounting for Stock Issued to Employees. No compensation expense was recognized in the financial statements for employee stock option arrangements, as the Companys stock option plan provides for the issuance of
options at a price of no less than the fair market value at the date of the grant.

Statement of Financial Accounting Standards (Statement)
No. 123, Accounting for Stock-Based Compensation, requires the disclosure of pro forma net income and earnings per share had the Company adopted the fair value method at the grant date of all stock options. Under Statement
No. 123, the fair value of stock-based awards to employees is calculated through the use of option pricing models, even though such models were developed to estimate the fair value of freely tradable, fully transferable options without vesting
restrictions, which differ significantly from the Companys stock option awards. Those models also require subjective assumptions, which affect the calculated values.

In December 2004, the FASB issued Statement 123 (revised 2004), Share-Based Payment. This Statement requires that compensation costs related to share-based payment transactions be recognized in the
financial statements. Measurement of the cost of employee service is based on the grant-date fair value of the equity or liability instruments issued. That cost is recognized over the period during which an employee is required to provide service in
exchange for the award. Additionally, liability awards will be remeasured each reporting period. Statement 123R replaces Statement No. 123, Accounting for Stock-Based Compensation and supersedes APB Opinion 25 Accounting for
Stock Issued to Employees.

The Company adopted Statement 123R on January 1, 2006, which has resulted in an increase in compensation expense of
$18,000 for the nine month ended September 30, 2006. The Company elected the modified prospective method, under which prior periods are not revised for comparative purposes. If compensation expense for the Companys stock-based awards had
been determined under the requirements of Statement 123R, noninterest expense would have been increased by $18,000 for the nine months ended September 30, 2005.

The Company adopted a stock option plan in 1997 under the terms of which 270,144 shares of the Companys common stock were reserved for issuance. All options granted become exercisable over a five-year period
from the date of grant. All options granted expire ten years from the date of grant.

The Company adopted an Incentive Compensation Plan during 2003 under
the terms of which 100,000 shares of the Companys common stock were reserved for issuance. Of the shares authorized for issuance under the plan, up to 40,000 may be issued with respect to awards of restricted stock and restricted units and up
to 40,000 may be issued pursuant to stock options under which the exercise price was less than the fair market value (but not less than 50% of the fair market value) of a share of common stock on the date the award was granted. In addition, as
required by Code Section 162(m), the plan includes a limit of 50,000 shares of common stock as the maximum number of shares that may be subject to awards made to any one individual. At September 30, 2006, no shares have been granted under
this plan.



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A summary of the activity in the plan is as follows:



|                                     |  |         |   |  |                               |       |                         |   |          
|------------------------------------ |  | ------- | - |  | ----------------------------- | ----- | ----------------------- | - | ---------
|                                     |  | 2006    |   | 
|                                     |  | Shares  |   |  | WeightedAverageExercise Price |       | AggregateIntrinsicValue
|Outstanding at beginning of year     |  | 221,340 |   |  | $                             | 17.20 |                         |   |          
|                                     |  |         |  
|Granted                              |  |        |   |  |                               |      |                         |   |          
|Exercised                            |  | (1,250  | ) |  |                               | 19.95 |                         |   |          
|Forfeited                            |  |        |   |  |                               |      |                         |   |          
|                                     |  |         |   |  |                               |       |                         |   |          
|Outstanding at end of period         |  | 220,090 |   |  | $                             | 17.18 |                         | $ | 3,638,000
|                                     |  |         |   |  |                               |       |                         |   |          
|Options exercisable at end of period |  | 201,955 |   |  | $                             | 16.67 |                         | $ | 3,441,000
|                                     |  |         |   |  |                               |       |                         |   |          

Options outstanding at September 30, 2006 were as follows:



|                         |  |             |  |                                           |  |                               |       |        |         |                               |   |      
|------------------------ |  | ----------- |  | ----------------------------------------- |  | ----------------------------- | ----- | ------ | ------- | ----------------------------- | - | -----
|                         |  | Outstanding |  | Exercisable                              
|Range of Exercise Prices |  | Number      |  | Weighted AverageRemainingContractual Life |  | WeightedAverageExercise Price |       | Number |         | WeightedAverageExercise Price
|$15 - $16                |  | 175,503     |  | .7 years                                  |  | $                             | 15.72 |        | 175,503 |                               | $ | 15.72
|$22 - $23                |  | 44,587      |  | 6.3 years                                 |  | $                             | 22.95 |        | 26,452  |                               | $ | 22.95
|                         |  |             |  |                                           |  |                               |       |        |         |                               |   |      
|Outstanding at year end  |  | 220,090     |  |                                           |  |                               |       |        | 201,955 |                               |   |      
|                         |  |             |  |                                           |  |                               |       |        |         |                               |   |      

A summary of the Companys nonvested shares as of September 30, 2006 and changes during the nine months
ended September 30, 2006 are presented below:



|                               |  |        |   |  |                                      |     
|------------------------------ |  | ------ | - |  | ------------------------------------ | ----
|                               |  | 2006  
|                               |  | Shares |   |  | WeightedAverageGrant-Date Fair Value
|Nonvested at beginning of year |  | 27,202 |   |  | $                                    | 2.66
|                               |  |       
|Granted                        |  |       |   |  |                                      |    
|Vested                         |  | (9,067 | ) |  | $                                    | 2.66
|Forfeited                      |  |       |   |  |                                      |    
|                               |  |        |   |  |                                      |     
|Nonvested at end of period     |  | 18,135 |   |  | $                                    | 2.66
|                               |  |        |   |  |                                      |     



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As of September 30, 2006, there was $30,000 of total unrecognized compensation cost related to nonvested share based
compensation arrangements granted under the Plan. The cost is expected to be recognized over 1.3 years. The total fair value of shares vested during the nine months ended September 30, 2005 and 2006 was $18,000. The Company elected the modified
prospective method, under which prior periods are not revised for comparative purposes. The following table presents the Companys pro forma net income and earnings per common share for the three and nine months ended September 30, 2005 as if
the Company had applied the requirements of Statement 123R:



|                                                                                  |  |                            |     |   |                           |   |     |  
|--------------------------------------------------------------------------------- |  | -------------------------- | --- | - | ------------------------- | - | --- | -
|                                                                                  |  | 2005                       |    
|                                                                                  |  | Three MonthsEnded Sept. 30 |     |   | Nine MonthsEnded Sept. 30 |  
|Net income as reported                                                            |  | $                          | 168 |   |                           | $ | 862 |  
|Deduct: Stock-based compensation expense Determined under fair value based method |  |                            | (4  | ) |                           |   | (12 | )
|                                                                                  |  |                            |     |   |                           |   |     |  
|Pro forma net income                                                              |  |                            | 164 |   |                           |   | 850 |  
|                                                                                  |  |                            |     |   |                           |   |     |  
|Basic earnings per share as reported                                              |  | $                          | .16 |   |                           | $ | .81 |  
|Pro forma basic earnings per share                                                |  |                            | .15 |   |                           |   | .80 |  
|                                                                                  |  |                           
|Diluted earnings per share as reported                                            |  |                            | .15 |   |                           |   | .74 |  
|Pro forma diluted earnings per share                                              |  |                            | .14 |   |                           |   | .73 |  



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Note 4  Allowance for Loan Losses

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



|                          |  |      |        |   |      |   |      
|------------------------- |  | ---- | ------ | - | ---- | - | -----
|                          |  | 2006 |        |   | 2007
|Beginning balance         |  | $    | 2,368  |   |      | $ | 1,373
|Provision for loan losses |  |      | 249    |   |      |   | 317  
|Recoveries                |  |      |       |   |      |   |     
|Loans charged off         |  |      | (2,054 | ) |      |   |     
|                          |  |      |        |   |      |   |      
|Ending balance            |  | $    | 563    |   |      | $ | 1,690
|                          |  |      |        |   |      |   |      

The Company had impaired loans totaling $0 and $4,289 at September 30, 2006 and 2005, respectively. An allowance
of $0 and $1,115 has been designated for these loans at September 30, 2006 and 2005, respectively.

Nonperforming loans were as follows:



|                                             |  |               |     |      |   |      
|-------------------------------------------- |  | ------------- | --- | ---- | - | -----
|                                             |  | September 30,
|                                             |  | 2006          |     | 2005
|Loans past due over 90 days still on accrual |  | $             |    |      | $ |     
|Nonaccrual loans                             |  |               | 363 |      |   | 7,001

Note 5  Recently-Issued Accounting Standards

In September 2006, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 108 (SAB 108). SAB 108 provides interpretive
guidance on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a potential current year misstatement. Prior to SAB 108, companies might evaluate the materiality of financial statement
misstatements using either the income statement or balance sheet approach, with the income statement approach focusing on new misstatements added in the current year, and the balance sheet approach focusing on the cumulative amount of misstatement
present in a companys balance sheet. Misstatements that would be material under one approach could be viewed as immaterial under another approach, and not be corrected. SAB 108 now requires that companies view financial statement misstatements
as material if they are material according to either the income statement or balance sheet approach. This statement is effective as of the end of the fiscal year ending after December 15, 2006. The Company is currently evaluating the impact of
adopting SAB 108 on the consolidated financial statements.

In June 2006, FASB issued FASB Interpretation No. (FIN) 48, Accounting for
Uncertainty in Income Taxes. This Interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes.
This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This Interpretation also provides guidance on
derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. This Interpretation is effective for fiscal years beginning after December 15, 2006. The Company is currently evaluating the
impact of adopting FIN 48 on the consolidated financial statements.



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

The following
discussion compares the financial condition of Park Bancorp, Inc. (the Company) and its wholly owned subsidiaries, Park Federal Savings Bank (the Bank) and PBI Development Corporation, and the Banks subsidiaries, at September 30, 2006 to
its financial condition at December 31, 2005 and the results of operations for the three and nine months ended September 30, 2006 to the same periods in 2005. This discussion should be read in conjunction with the interim financial
statements and footnotes included herein.

FINANCIAL CONDITION

Total assets at September 30, 2006 were $226.4 million compared to $239.5 million at December 31, 2005, a decrease of $13.1 million. During the nine months
ended September 30, 2006, loans receivable decreased by $7.8 million, securities decreased $6.2 million and FHLB stock redemption of $2.9 million, offset by an increase in total cash and cash equivalents of $3.0 million. The change in loans
receivable was due to $4.3 million in foreclosed loans and the reduction of principal in participation loans.

The allowance for loan losses was $563,000
at September 30, 2006 and $2.4 million at December 31, 2005, respectively. Non-performing assets were $2.6 million and $4.9 million at September 30, 2006 and December 31, 2005, respectively.

Total liabilities at September 30, 2006 were $197.0 million compared to $209.6 million at December 31, 2005, a decrease of $12.6 million. This was primarily
due to a decrease in deposits of $4.8 million and a decrease in borrowings of $6.9 million.

Stockholders equity at September 30, 2006 was $29.4
million compared to $29.9 million at December 31, 2005. The decrease was primarily attributable to net loss, the repurchase of 11,800 shares of common stock at an average price of $32.71, and dividends paid offset by unrealized gains on
securities available for sale. 21,234 shares have been repurchased in the current 50,000 share repurchase plan.

RESULTS
OF OPERATIONS

Net loss was ($198,000) for the quarter ended September 30, 2006 compared to net income of $168,000 for the quarter ended
September 30, 2005. Net loss was ($28,000) for the nine months ended September 30, 2006 compared to net income of $862,000 for the nine months ended September 30, 2005.

Net interest income before provision for loan losses was $1.5 million for the three months ended September 30, 2006 compared to $1.8 million for the same quarter in 2005. The provision for loan loss was $249,000
for the three months ended September 30, 2006 compared to $317,000 for the same quarter in 2005. Net interest income before provision for loan losses was $4.5 million for the nine months ended September 30, 2006 compared to $5.6 million
for the same period in 2005. The provision for loan loss was $249,000 for the nine months ended September 30, 2006 compared to $317,000 for the same period in 2005. The net interest margin decreased to 2.82% for the three months ended
September 30, 2006 from 3.09% for the 2005 quarter. The net interest margin decreased to 2.81% for the nine months ended September 30, 2006 compared to 3.11% for the same period in 2005. The average yield on earning assets increased to
5.88% for the three months ended September 30, 2006 compared to 5.61% for the same period in 2005. The average yield on earning assets increased to 5.76% for the nine month ended September 30, 2006 compared to 5.50% for the same period in
2005. Average interest-earning assets for the three months ended September 30, 2006 were $210.6 million compared to $233.3 million for the same period in 2005, a decrease of $22.7 million. Average interest-earning assets for the nine months
ended September 30, 2006 were $215.7 million compared to $240.2 million for the same period in 2005, a decrease of $24.5 million. The average cost of funds increased to 3.17% for the nine



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months ended September 30, 2006 compared to 2.56% for the same period in 2005. Average interest-bearing liabilities
for the three months ended September 30, 2006 were $196.6 million compared to $217.5 million for the same period in 2005, a decrease of $20.9 million. Average interest-bearing liabilities for the nine months ended September 30, 2006 were
$201.2 million compared to $224.5 million for the same period in 2005, a decrease of $23.3 million.



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Management establishes provisions for loan losses, which are charged to operations, at a level management believe is
appropriate to absorb probable incurred credit losses in the loan portfolio. In evaluating the level of the allowance for loan losses, management considers historical loss experience, the types of loans and the amount of loans in the loan portfolio,
adverse situations that may affect the borrowers ability to repay, estimated value of any underlying collateral, peer group information, and prevailing economic conditions. This evaluation is inherently subjective, as it requires estimates
that are susceptible to significant revision as more information becomes available or as future events change. There were a provision for loan losses of $249,000 for the quarter ended September 30, 2006 and $317,000 for the quarter ended
September 30, 2005.

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, 2006 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.

Nonperforming assets and the allowance for loan losses decreased as a result of 3 foreclosures during the year. In the first quarter, the Company foreclosed on a
condominium conversion loan of $1.9 million and a loan loss reserve of $926,000. The property is reported as real estate owned and included in nonperforming assets in the amount of $931,000 as of September 30, 2006. In the third quarter, the
Company foreclosed on a commercial loan of $936,000 and a loan loss reserve of $271,000. A current appraisal of the property indicated an additional $166,000 would be added to the loan loss reserve. The property is reported as real estate owned and
included in nonperforming assets in the amount of $499,000 as of September 30, 2006. Also in the third quarter, the Company foreclosed on a condominium conversion loan of $1.5 million and a loan loss reserve of $597,000. A current appraisal
indicated an additional $83,000 would be added to the loan loss reserve. The property is reported as real estate owned and included in nonperforming assets in the amount of $831,000 as of September 30, 2006.

Noninterest income decreased to $159,000 for the quarter ended September 30, 2006 from $274,000 for the quarter ended September 30, 2005. The change was due
primarily to a decrease in gain on sale of securities available-for-sale of $128,000. Noninterest income decreased to $520,000 for the nine months ended September 30, 2006 from $587,000 for the same period in 2005. The change was due primarily
to a decrease in gain on sale of securities available-for-sale of $152,000 offset by a gain on sale of real estate held for development of $83,000.

Noninterest expense increased to $1.7 million for the quarter ended September 30, 2006 compared to $1.6 million for the corresponding three month period in 2005. Noninterest expense increased to $5.0 million for the nine months ended
September 30, 2006 compared to $4.7 million for the same period in 2005. The change was due to expenses on non-performing assets of $329,000. The expenses relate to legal expenses and paying a lien to secure a property.

Income tax (benefit) increased to ($115,000) for the three month period ended September 30, 2006 from ($34,000) for the three month period ended September 30,
2005. Income tax expense (benefit) decreased to ($112,000) for the nine month period ended September 30, 2006 compared to $318,000 for the same period in 2005. The change in income tax was attributable to the decrease in income before income
taxes and an investment that provides tax credits which are a direct reduction of income tax expense.



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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 35% at September 30, 2006.

The Companys cash flows are comprised of three primary classifications:
cash flows from operating activities, investing activities, and financing activities. Net cash from operating activities were $(1.5) million and $2.0 million in 2006 and 2005, respectively. Net cash from investing activities consisted primarily of
disbursements for loan originations and the purchase of securities, offset by principal collections on loans, and proceeds from maturing securities and paydowns on mortgage-backed securities. Net cash from investing activities were $17.1 million and
$13.5 million in 2006 and 2005, 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 $(13.6) million and $(20.7) million in 2006 and 2005, respectively.

At September 30, 2006, the Bank
exceeded all of its regulatory capital requirements with a Tier 1 (core) capital level of $27.8 million, or 12.3% of adjusted total assets, which is above the required level of $9.9 million, or 4.0%; and total risk-based capital of $28.3 million, or
18.6% of risk-weighted assets, which is above the required level of $11.9 million, or 8.0%. The Bank at September 30, 2006 was categorized as well capitalized. Management is not aware of any conditions or events since the most recent
notification that would change the Banks category.

At September 30, 2006, the Bank had outstanding commitments to originate mortgage loans of
$566,000, and $1.0 million in standby letters of credit. The Bank anticipates that it will have sufficient funds available to meet its current loan origination commitments. Certificate accounts that are scheduled to mature in less than one year from
September 30, 2006 totaled $64.7 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, 2006, 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 (24)% and would result in a $9.0 million reduction
in the NPV of the Bank. Accordingly, increases in interest rates would be expected to have a negative impact on the Banks operating results. The NPV Ratio sensitivity measure is below the threshold at which the Bank could be required to hold
additional risk-based capital under OTS regulations.



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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.



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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, 2006, the latest date for which information is available, assuming an instantaneous and sustained change in market interest rates of 100, 200, and 300 basis points.

Interest Rate Sensitivity of Net Portfolio Value (NPV)



|                |  |                     |        |         |                            |         |          |  |     |           |  |       |        |  |      |    
|--------------- |  | ------------------- | ------ | ------- | -------------------------- | ------- | -------- |  | --- | --------- |  | ----- | ------ |  | ---- | ---
|                |  | Net Portfolio Value |        |         | NPV as a % of PV of Assets |        
|Change in Rates |  | $Amount             |        | $Change |                            |         | % Change |  |     | NPV Ratio |  |       | Change | 
|+ 300 bp        |  | $                   | 20,222 |         | $                          | (13,311 | )        |  | (40 | )%        |  | 9.17  | %      |  | (453 | )bp
|+ 200 bp        |  |                     | 24,536 |         |                            | (8,997  | )        |  | (27 | )%        |  | 10.85 | %      |  | (325 | )bp
|+ 100 bp        |  |                     | 29,051 |         |                            | (4,482  | )        |  | (13 | )%        |  | 12.52 | %      |  | (158 | )bp
|0 bp            |  |                     | 33,533 |         |                            |        |          |  |    |           |  | 14.10 | %      |  |     |    
|- 100 bp        |  |                     | 37,208 |         |                            | 3,675   |          |  | 11  | %         |  | 15.31 | %      |  | 121  | bp 
|- 200 bp        |  |                     | 38,879 |         |                            | 5,346   |          |  | 16  | %         |  | 15.78 | %      |  | 168  | bp 
|- 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, 2006 but estimates that the results would not be materially different than those presented above.

ITEM 4. CONTROLS AND PROCEDURES

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

As mentioned in the March 31, 2006 Form 10Q and 2005 Form 10-K, the Company had a material weakness resulting from improper
application of generally accepted accounting principles for certain allowance for loan loss related transactions, which was identified during the December 31, 2005 audit. During the second quarter of 2006, the Company implemented new controls
and procedures that are designed to ensure the proper application of generally accepted accounting principles. These controls and procedures include the engagement of an independent firm to provide loan review services, amendments to the Banks
loan policy, enhancements to the loan underwriting process and revisions to the loan approval process.



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Based on the Companys new controls and procedures, the Company has had sufficient remediation of the material
weakness previously identified. The new controls and procedures will properly address the material weakness identified. The internal controls over financial reporting were operating effectively as of September 30, 2006. Therefore, management
has determined that there is no material weakness in the Companys internal control over financial reporting as of September 30, 2006. However, the effectiveness of any system of internal controls is subject to inherent limitations and
there can be no assurance that the Companys internal control over financial reporting will prevent or detect all errors. The Company intends to continue to evaluate and strengthen its system of internal control over financial reporting.

During the nine months ended September 30, 2006, except as noted above there were no changes in our internal controls over financial reporting that
materially affected, or are reasonably likely to affect, our internal controls 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 2005 Annual Report on Form 10K.

ITEM 2. CHANGES IN SECURITIES.

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None

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

None

ITEM 5. OTHER INFORMATION.

None

ITEM 6. EXHIBITS.



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

31.1 Rule 13(a)-14(a) Certification (Chief
Executive Officer)

31.2 Rule 13(a)-14(a) Certification (Chief Financial Officer)

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 14, 2006 |  | /s/ David A. Remijas                 
|                        |  | David A. Remijas                     
|                        |  | President and Chief Executive Officer
|                        | 
|Date: November 14, 2006 |  | /s/ Steven J. Pokrak                 
|                        |  | Steven J. Pokrak                     
|                        |  | Treasurer and Chief Financial Officer



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