10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2012.

or

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File No. 000-51338

PARKE BANCORP, INC.

(Exact name of registrant as specified in its charter)

New Jersey	65-1241959
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
601 Delsea Drive, Washington Township, New Jersey	08080
(Address of principal executive offices)	(Zip Code)

856-256-2500

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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 [X]                No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.   See the definitions of "large accelerated filer”, “accelerated filer", and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [  ]             Accelerated filer [  ]            Non-accelerated filer [  ]          Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ]                No [X]

As of November 14, 2012, there were issued and outstanding 5,383,893 shares of the registrant's common stock.

PARKE BANCORP, INC.

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2012

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	43
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54
Item 4.	Controls and Procedures	54
Part II	OTHER INFORMATION
Item 1.	Legal Proceedings	54
Item 1A.	Risk Factors	54
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 3.	Defaults Upon Senior Securities	54
Item 4.	Mine Safety Disclosures	55
Item 5.	Other Information	55
Item 6.	Exhibits	55
SIGNATURES
EXHIBITS and CERTIFICATIONS

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Parke Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
(unaudited)
(in thousands except share and per share data)
	September 30,			December 31,
	2012			2011
Assets
Cash and due from financial institutions	$	1,934		$	3,733
Federal funds sold and cash equivalents		98,949			106,495
Total Cash and cash equivalents		100,883			110,228
Investment securities available for sale, at fair value		21,457			22,517
Investment securities held to maturity (fair value of  $2,209 at September 30, 2012 and $2,080 at December 31, 2011)		2,058			2,032
Total investment securities		23,515			24,549
Loans held for sale		1,835			225
Loans, net of unearned income		603,560			625,117
Less: Allowance for loan losses		(17,487	)		(19,323	)
Net loans		586,073			605,794
Accrued interest receivable		2,765			3,039
Bank premises and equipment, net		4,072			4,122
Other real estate owned (OREO)		28,102			19,410
Restricted stock, at cost		2,225			3,565
Bank owned life insurance (BOLI)		5,679			5,541
Other assets		15,041			14,265
Total Assets	$	770,190		$	790,738
Liabilities and Equity
Liabilities
Deposits
Noninterest-bearing deposits	$	28,392		$	31,146
Interest-bearing deposits		611,308			603,709
Total deposits		639,700			634,855
FHLB borrowings		20,488			50,607
Other borrowed funds		10,000			10,000
Subordinated debentures		13,403			13,403
Accrued interest payable		631			618
Other liabilities		4,378			3,982
Total liabilities		688,600			713,465
Equity
Preferred stock, cumulative perpetual, $1,000 liquidation value;  authorized 1,000,000 shares; Issued: 16,288 shares at September  30, 2012 and December 31, 2011		16,016			15,868
Common stock, $.10 par value; authorized 10,000,000 shares; Issued:  5,594,793 shares at September 30, 2012 and 5,097,078 sharesDecember 31, 2011		560			510
Additional paid-in capital		48,869			45,844
Retained earnings		19,366			17,808
Accumulated other comprehensive loss		(632	)		(626	)
Treasury stock, 210,900 shares at September 30, 2012 and  December 31, 2011, at cost		(2,180	)		(2,180	)
Total shareholders’ equity		81,999			77,224
Noncontrolling interest in consolidated subsidiaries		(409	)		49
Total equity		81,590			77,273
Total liabilities and equity	$	770,190		$	790,738
See accompanying notes to consolidated financial statements

1

Parke Bancorp Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
	For the nine months ended September 30,						For the three months ended September 30,
	2012			2011			2012			2011
Interest income:
Interest and fees on loans	$	27,637		$	29,802		$	8,766		$	9,912
Interest and dividends on investments		800			1,033			259			329
Interest on federal funds sold and cash equivalents		178			75			59			31
Total interest income		28,615			30,910			9,084			10,272
Interest expense:
Interest on deposits		5,011			5,965			1,552			1,960
Interest on borrowings		709			1,066			234			352
Total interest expense		5,720			7,031			1,786			2,312
Net interest income		22,895			23,879			7,298			7,960
Provision for loan losses		5,800			6,850			1,500			2,350
Net interest income after provision for loan losses		17,095			17,029			5,798			5,610
Noninterest income (loss):
Loan fees		251			185			91			20
Net income from BOLI		138			133			47			45
Service fees on deposit accounts		166			166			62			58
Gain on sale of SBA loans		2,057			3,892			700			751
Other than temporary impairment losses		—			(132	)		—			(48	)
Portion of loss recognized in other comprehensive income (OCI) (before taxes)		—			47			—			20
Net impairment losses recognized in earnings		—			(85	)		—			(28	)
Loss on sale of real estate owned		(757	)		(525	)		(132	)		(577	)
Other		712			173			184			56
Total noninterest income		2,567			3,939			952			325
Noninterest expense:
Compensation and benefits		4,267			4,227			1,415			1,406
Professional services		1,065			966			288			321
Occupancy and equipment		776			751			244			248
Data processing		307			316			103			92
FDIC insurance		824			877			278			192
OREO Expense		1,025			431			339			219
Other operating expense		2,704			1,940			803			574
Total noninterest expense		10,968			9,508			3,470			3,052
Income before income tax expense		8,694			11,460			3,280			2,883
Income tax expense		2,895			4,605			1,365			1,161
Net income attributable to Company and noncontrolling interest		5,799			6,855			1,915			1,722
Net income attributable to noncontrolling interest		(442	)		(848	)		(194	)		(152	)
Net income attributable to Company		5,357			6,007			1,721			1,570
Preferred stock dividend and discount accretion		758			749			253			251
Net income available to common shareholders	$	4,599		$	5,258		$	1,468		$	1,319
Earnings per common share
Basic	$	0.86		$	0.98		$	0.25		$	0.23
Diluted	$	0.85		$	0.96		$	0.25		$	0.23
Weighted average shares outstanding
Basic		5,378,103			5,374,561			5,872,276			5,818,506
Diluted		5,381,347			5,458,044			5,872,643			5,841,855
See accompanying notes to consolidated financial statements

2

Parke Bancorp Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
	For the nine months ended September 30,							For the three months ended September 30,
	2012				2011			2012				2011
	(in thousands)							(in thousands)
Net income attributable to Company		$	5,357			$	6,007		$	1,721			$	1,570
Unrealized gains on securities:
Non-credit related unrealized gains (losses) on securities with OTTI			12				16			(7	)			(4	)
Net unrealized (losses) gains on securities without OTTI			(28	)			109			(58	)			22
Total unrealized (losses) gains on securities			(16	)			125			(65	)			18
Pension liability adjustments			10				31			4				14
Total other comprehensive (loss) income			(5	)			156			(61	)			32
Total comprehensive income		$	5,351			$	6,163		$	1,660			$	1,602
See accompanying notes to consolidated financial statements

3

Parke Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGE IN TOTAL EQUITY
(unaudited)
	Preferred Stock		Shares of Common Stock		Common Stock		Additional  Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total Shareholders’ Equity			Non-Controlling Interest			Total Equity
	(in thousands except share data)
Balance, December 31, 2011	$	15,868		5,097,078	$	510	$	45,844	$	17,808		$	(626	)	$	(2,180	)	$	77,224		$	49		$	77,273
Capital withdrawals by noncontrolling  interest																						(900	)		(900	)
Stock options exercised				9,332		1		34											35						35
10% common stock dividend				488,383		49		2,991		(3,041	)								(1	)					(1	)
Comprehensive income:
Net income										5,357									5,357			442			5,799
Non-credit unrealized gain on securities with OTTI, net of taxes													12						12						12
Net unrealized( loss) on securities without OTTI, net of taxes													(28	)					(28	)					(28	)
Pension liability adjustments, net of taxes													10						10						10
Total comprehensive income																			5,351			442			5,793
Dividend on preferred stock (5% annually)										(610	)								(610	)					(610	)
Accretion of discount on preferred stock		148								(148	)
Balance, September 30, 2012	$	16,016		5,594,793	$	560	$	48,869	$	19,366		$	(632	)	$	(2,180	)	$	81,999		$	(409	)	$	81,590
See accompanying notes to consolidated financial statements

4

Parke Bancorp Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
	For the nine months ended September 30,
	2012			2011
	(Amounts in thousands)
Cash Flows from Operating Activities
Net income	$	5,799		$	6,855
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		267			273
Provision for loan losses		5,800			6,850
Bank owned life insurance		(138	)		(133	)
Supplemental executive retirement plan expense		102			286
Gain on sale of SBA loans		(2,057	)		(3,892	)
SBA loans originated for sale		(18,679	)		(21,993	)
Proceeds from sale of SBA loans originated for sale		19,210			24,455
Loss on sale of other real estate owned		757			525
Contribution of OREO property		138			—
Other than temporary decline in value of investments		—			85
Net accretion of purchase premiums and discounts on securities		(10	)		(59	)
Changes in operating assets and liabilities:
Increase in accrued interest receivable and other assets		(448	)		(908	)
Increase (decrease) in accrued interest payable and other accrued liabilities		316			(1,047	)
Net cash provided by operating activities		11,057			11,297
Cash Flows from Investing Activities
Purchases of investment securities available for sale		(4,148	)		—
Redemptions (purchases) of restricted stock		1,340			(77	)
Proceeds from sale of securities available for sale		—			500
Proceeds from maturities, calls and principal payments on securities		5,039			2,983
Proceeds from sale of other real estate owned		1,331			3,175
Advances on other real estate owned		(227	)		(4,387	)
Net decrease (increase) in loans		3,230			(17,427	)
Purchases of bank premises and equipment		(217	)		(161	)
Net cash provided by (used in) investing activities		6,348			(15,394	)
Cash Flows from Financing Activities
Payment of dividend on preferred stock		(610	)		(611	)
Cash payment of fractional shares on 10% stock dividend		(1	)		(1	)
Minority interest capital withdrawal, net		(900	)		(812	)
Net decrease in Federal Home Loan Bank and short term borrowings		(30,119	)		—
Proceeds from exercise of stock options and warrants		35			—
Payments of Federal Home Loan Bank advances		—			(113	)
Net (decrease) increase in noninterest-bearing deposits		(2,754	)		227
Net increase in interest-bearing deposits		7,599			17,080
Net cash (used in) provided by financing activities		(26,750	)		15,770
(Decrease) increase in cash and cash equivalents		(9,345	)		11,673
Cash and Cash Equivalents, beginning of period		110,228			57,628
Cash and Cash Equivalents, end of period	$	100,883		$	69,301
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest on deposits and borrowed funds	$	5,707		$	7,219
Income taxes	$	4,015		$	5,601
Supplemental Schedule of Noncash Activities:
Real estate acquired in settlement of loans	$	10,691		$	802
See accompanying notes to consolidated financial statements

5

Notes to Consolidated Financial Statements (Unaudited)

NOTE 1.  ORGANIZATION

Parke Bancorp, Inc. ("Parke Bancorp” or the "Company") is a bank holding company incorporated under the laws of the State of New Jersey in January 2005 for the sole purpose of becoming the holding company of Parke Bank (the "Bank").

The Bank is a commercial bank which commenced operations on January 28, 1999. The Bank is chartered by the New Jersey Department of Banking and insured by the Federal Deposit Insurance Corporation ("FDIC"). Parke Bancorp and the Bank maintain their principal offices at 601 Delsea Drive, Washington Township, New Jersey. The Bank also conducts business through branches in Galloway Township, Northfield and Washington Township, New Jersey and Philadelphia, Pennsylvania.

The Bank competes with other banking and financial institutions in its primary market areas. Commercial banks, savings banks, savings and loan associations, credit unions and money market funds actively compete for savings and time certificates of deposit and all types of loans. Such institutions, as well as consumer financial and insurance companies, may be considered competitors of the Bank with respect to one or more of the services it renders.

The Bank is subject to the regulations of certain state and federal agencies, and accordingly, the Bank is periodically examined by such regulatory authorities. As a consequence of the regulation of commercial banking activities, the Bank’s business is particularly susceptible to future state and federal legislation and regulations.

The FDIC and the New Jersey Department of Banking and Insurance Consent Orders: On April 9, 2012, the Bank entered into Consent Orders with the FDIC and the New Jersey Department of Banking and Insurance (the “Department”).  Under the Consent Orders, the terms of which are substantially identical, the Bank is required, among other things, subject to review and approval by the FDIC and the Department: (i) to adopt and implement a plan to reduce the Bank’s position in delinquent or classified assets; (ii) to adopt and implement a program providing for a periodic independent review of the Bank’s loan portfolio and the identification of problem credits; (iii) to review and revise the Bank’s loan policies and procedures to address identified lending deficiencies; and (iv) to adopt and implement a plan to reduce and manage each of the concentrations of credit identified by the FDIC and the Department.

The Consent Orders also require the Bank to obtain the prior approval of the FDIC and the New Jersey Department before declaring or paying any dividend or appointing or changing the title or responsibilities of any director or senior executive officer.  Additional regulatory provisions require FDIC prior approval before the Bank enters into any employment agreement or other agreement or plan providing for the payment of a “golden parachute payment” or the making of any golden parachute payment.

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Financial Statement Presentation: The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”) and predominant practices within the banking industry.

The accompanying consolidated financial statements include the accounts of Parke Bancorp, Inc. and its wholly-owned subsidiaries Parke Bank, Parke Capital Markets, Farm Folly, Inc. and Taylors Glen LLC. Also included are the accounts of 44 Business Capital Partners LLC, a joint venture formed in 2009 to originate and service SBA loans. Parke Bank has a 51% ownership interest in the joint venture. Parke Capital Trust I,

6

Parke Capital Trust II and Parke Capital Trust III are wholly-owned subsidiaries but are not consolidated because they do not meet the requirements for consolidation under applicable accounting guidance.  All significant inter-company balances and transactions have been eliminated.

The accompanying interim financial statements should be read in conjunction with the annual financial statements and notes thereto included in Parke Bancorp Inc.’s Annual Report on Form 10-K for the year ended December 31, 2011 since they do not include all of the information and footnotes required by GAAP. The accompanying interim financial statements for the nine months ended September 30, 2012 and 2011 are unaudited. The balance sheet as of December 31, 2011, was derived from the audited financial statements. In the opinion of management, these financial statements include all normal and recurring adjustments necessary for a fair statement of the results for such interim periods. Results of operations for the nine months ended September 30, 2012 are not necessarily indicative of the results for the full year.

Use of Estimates: In preparing the interim financial statements, management makes estimates and assumptions based on available information that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the balance sheet and reported amounts of expenses and revenues. Actual results could differ from such estimates. The allowance for loan losses, deferred taxes, evaluation of investment securities for other-than-temporary impairment, fair values of financial instruments and other real estate owned (“OREO”) are significant estimates and particularly subject to change.

Recently Issued Accounting Pronouncements:

In May 2011, FASB issued ASU 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This ASU does not extend the use of fair value accounting, but provides guidance on how it should be applied where its use is already required or permitted. This guidance is to be applied prospectively and is effective during interim and annual periods beginning after December 15, 2011. Adoption of this guidance has not had a material impact on results of operations or financial condition.

In June 2011, the FASB issued guidance to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. The amendments require that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amendments do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The amendments are effective for interim and annual periods beginning after December 15, 2011 with retrospective application. The Company adopted the accounting standard on January 1, 2012, as required, with no material impact on its results of operations or financial position.

7

NOTE 3.  INVESTMENT SECURITIES

The following is a summary of the Company's investments in available for sale and held to maturity securities as of September 30, 2012 and December 31, 2011: 

As of September 30, 2012	Amortized cost		Gross unrealized gains		Gross unrealized losses		Other-than- temporary impairments in OCI		Fair Value
	(Amounts in thousands)
Available for sale:
U.S. Government sponsored entities	$	7	$	—	$	—	$	—	$	7
Corporate debt obligations		1,500		51		—		—		1,551
Residential mortgage-backed securities		14,172		746		—		—		14,918
Collateralized mortgage obligations		1,024		62		—		—		1,086
Collateralized debt obligations		5,556		—		1,157		504		3,895
Total available for sale	$	22,259	$	859	$	1,157	$	504	$	21,457
Held to maturity:
States and political subdivisions	$	2,058	$	151	$	—	$	—	$	2,209

As of December 31, 2011	Amortized cost		Gross unrealized gains		Gross unrealized losses		Other-than- temporary impairments in OCI		Fair Value
	(Amounts in thousands)
Available for sale:
U.S. Government sponsored entities	$	1,006	$	5	$	—	$	—	$	1,011
Corporate debt obligations		1,500		43		57		—		1,486
Residential mortgage-backed securities		13,697		764		—		—		14,461
Collateralized mortgage obligations		1,534		73		—		13		1,594
Collateralized debt obligations		5,556		—		1,080		511		3,965
Total available for sale	$	23,293	$	885	$	1,137	$	524	$	22,517
Held to maturity:
States and political subdivisions	$	2,032	$	87	$	39	$	—	$	2,080

8

The amortized cost and fair value of debt securities classified as available for sale and held to maturity, by contractual maturity as of September 30, 2012 are as follows:

	Amortized Cost		Fair Value
	(Amounts in thousands)
Available for sale:
Due within one year	$	—	$	—
Due after one year through five years		—		—
Due after five years through ten years		—		—
Due after ten years		7,062		5,452
Residential mortgage-backed securities and collateralized mortgage obligations		15,197		16,005
Total  available for sale	$	22,259	$	21,457

Held to maturity:
Due within one year	$	—	$	—
Due after one year through five years		—		—
Due after five years through ten years		—		—
Due after ten years		2,058		2,209
Total held to maturity	$	2,058	$	2,209

Expected maturities will differ from contractual maturities for mortgage related securities because the issuers of certain debt securities do have the right to call or prepay their obligations without any penalty.

As of September 30, 2012, securities with a carrying value of $16.4 million, and fair value of $17.3 million, were pledged as collateral for borrowed funds. In addition, securities with a carrying value of $4.6 million, and fair value of $5.0 million, were pledged to secure public deposits.

9

The following tables show the gross unrealized losses and fair value of the Company's investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2012 and December 31, 2011:

As of September 30, 2012	Less Than 12 Months				12 Months or Greater				Total
Description of Securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(Amounts in thousands)
Available for sale:
Collateralized debt obligations		—		—		3,593		1,157		3,593		1,157
Total available for sale	$	—	$	—	$	3,593	$	1,157	$	3,593	$	1,157
Held to maturity:
States and political subdivisions	$	—	$	—	$	—	$	—	$	—	$	—

As of December 31, 2011	Less Than 12 Months				12 Months or Greater				Total
Description of Securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(Amounts in thousands)
Available for sale:
Corporate debt obligations		—		—		443		57		443		57
Collateralized debt obligations		—		—		3,670		1,080		3,670		1,080
Total available for sale	$	—	$	—	$	4,113	$	1,137	$	4,113	$	1,137
Held to maturity:
States and political subdivisions	$	758	$	39	$	—	$	—	$	758	$	39

Collateralized Debt Obligations:  The Company’s unrealized loss on investments in collateralized debt obligations (“CDOs”) relates to three securities issued by financial institutions, totaling $3.6 million. CDOs are pooled securities primarily secured by trust preferred securities (“TruPS”), subordinated debt and surplus notes issued by small and mid-sized banks and insurance companies. These securities are generally floating rate instruments with 30-year maturities, and are callable at par by the issuer after five years. The current economic downturn has had a significant adverse impact on the financial services industry; consequently, TruPS CDOs do not have an active trading market. With the assistance of competent third-party valuation specialists, the Company utilized the following methodology to determine the fair value:

Cash flows were developed based on the estimated speeds at which the trust preferred securities are expected to prepay (a range of 1% to 2%), the estimated rates at which the trust preferred securities are expected to defer payments, the estimated rates at which the trust preferred securities are expected to default (a range of 0.57% to 0.66%), and the severity of the losses on securities which default (95%). Trust preferred securities

10

generally allow for prepayment by the issuer without a prepayment penalty any time after five years. Due to the lack of new trust preferred issuances and the relatively poor conditions of the financial institution industry, a relatively modest rate of prepayment was assumed going forward. Estimates for conditional default rates (“CDR”) are based on the payment characteristics of the trust preferred securities themselves (e.g. current, deferred, or defaulted) as well as the financial condition of the trust preferred issuers in the pool. Estimates for the near-term rates of deferral and CDR are based on key financial ratios relating to the financial institutions’ capitalization, asset quality, profitability and liquidity. Finally, we consider whether or not the financial institution has received TARP funding, and if it has, the amount. Longer-term rates of deferral and defaults are based on historical averages. The fair value of each bond was assessed by discounting its projected cash flows by a discount rate.  The discount rates were based on the yields of publicly traded TruPS and preferred stock issued by comparably rated banks (3 month LIBOR plus a spread of 400 to 959 basis points).  The fair value for previous reporting periods was based on indicative market bids and resulted in much lower values due to the inactive trading market.

The underlying issuers have been analyzed, and projections have been made regarding the future performance, considering factors including defaults and interest deferrals.  The analysis indicates that the Company should expect to receive all contractual cash flows.  Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, it does not consider these investments to be other-than-temporarily impaired at September 30, 2012.

11

Other-Than-Temporarily Impaired Debt Securities

We assess whether we intend to sell or it is more likely than not that we will be required to sell a security before recovery of its amortized cost basis less any current-period credit losses. For debt securities that are considered other-than-temporarily impaired (“OTTI”) and that we do not intend to sell and will not be required to sell prior to recovery of our amortized cost basis, we separate the amount of the impairment into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the security’s amortized cost basis and the present value of its expected future cash flows. The remaining difference between the security’s fair value and the present value of future expected cash flows is due to factors that are not credit related and is recognized in other comprehensive income.

The present value of expected future cash flows is determined using the best estimate of cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security. The methodology and assumptions for establishing the best estimate cash flows vary depending on the type of security. The asset-backed securities cash flow estimates are based on bond specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity and prepayment speeds and structural support, including subordination and guarantees. The corporate bond cash flow estimates are derived from scenario-based outcomes of expected corporate restructurings or the disposition of assets using bond specific facts and circumstances including timing, security interests and loss severity.

We have a process in place to identify debt securities that could potentially have a credit impairment that is other than temporary.  This process involves monitoring late payments, pricing levels, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts and cash flow projections as indicators of credit issues.  On a quarterly basis, we review all securities to determine whether an other-than-temporary decline in value exists and whether losses should be recognized. We consider relevant facts and circumstances in evaluating whether a credit or interest rate-related impairment of a security is other than temporary. Relevant facts and circumstances considered include: (1) the extent and length of time the fair value has been below cost; (2) the reasons for the decline in value; (3) the financial position and access to capital of the issuer, including the current and future impact of any specific events and (4) for fixed maturity securities, our intent to sell a security or whether it is more likely than not we will be required to sell the security before the recovery of its amortized cost which, in some cases, may extend to maturity and for equity securities, our ability and intent to hold the security for a period of time that allows for the recovery in value.

The following table presents a roll-forward of the credit loss component of the amortized cost of debt securities that we have written down for OTTI and the credit component of the loss that is recognized in earnings. OTTI recognized in earnings for credit-impaired debt securities is presented as additions in two components based upon whether the current period is the first time the debt security was credit-impaired (initial credit impairment) or is not the first time the debt security was credit impaired (subsequent credit impairments). The credit loss component is reduced if we sell, intend to sell or believe we will be required to sell previously credit-impaired debt securities. Additionally, the credit loss component is reduced if we receive cash flows in excess of what we expected to receive over the remaining life of the credit-impaired debt security, the security matures or is fully written down. Changes in the credit loss component of credit-impaired debt securities were as follows for the periods ended September 30, 2012 and 2011.

12

	For the Nine Months Ended September 30,
	2012			2011
	(Amounts in thousands)
Beginning balance	$	1,950		$	2,657
Initial credit impairment		—			—
Subsequent credit impairments		—			85
Reductions for amounts recognized in earnings due to intent or requirement to sell		—			—
Reductions for securities sold		—			—
Reductions for securities deemed worthless		(731	)		(524	)
Reductions for increases in cash flows expected to be collected		—			—
Ending balance	$	1,219		$	2,218

	For the Three Months Ended September 30,
	2012			2011
	(Amounts in thousands)
Beginning balance	$	1,551		$	2,398
Initial credit impairment		—			—
Subsequent credit impairments		—			28
Reductions for amounts recognized in earnings due to intent or requirement to sell		—			—
Reductions for securities sold		—			—
Reductions for securities deemed worthless		(332	)		(208	)
Reductions for increases in cash flows expected to be collected		—			—
Ending balance	$	1,219		$	2,218

13

A summary of investment gains and losses recognized in income during the nine month and three month periods ended September 30, 2012 and 2011 are as follows:

	For the Nine Months Ended September 30,
	2012		2011
	(Amounts in thousands)
Available for sale securities:
Realized gains	$	—	$	—
Realized (losses)		—		—
Other than temporary impairment		—		(85	)
Total available for sale securities	$	—	$	(85	)
Held to maturity securities:
Realized gains	$	—	$	—
Realized (losses)		—		—
Other than temporary impairment		—		—
Total held to maturity securities	$	—	$	—

	For the Three Months Ended September 30,
	2012		2011
	(Amounts in thousands)
Available for sale securities:
Realized gains	$	—	$	—
Realized (losses)		—		—
Other than temporary impairment		—		(28	)
Total available for sale securities	$	—	$	(28	)
Held to maturity securities:
Realized gains	$	—	$	—
Realized (losses)		—		—
Other than temporary impairment		—		—
Total held to maturity securities	$	—	$	—

14

NOTE 4.  LOANS

The portfolio of loans outstanding consisted of the following at September 30, 2012 and December 31, 2011:

	September 30, 2012					December 31, 2011
	Amount		Percentage of Total Loans			Amount		Percentage of Total Loans
	(Amounts in thousands)
Commercial and Industrial	$	21,955		3.6	%	$	24,136		3.9	%
Real Estate Construction:
Residential		8,117		1.3	%		21,287		3.4	%
Commercial		41,190		6.8	%		50,361		8.1	%
Real Estate Mortgage:
Commercial – Owner Occupied		148,785		24.7	%		147,449		23.6	%
Commercial – Non-owner Occupied		206,529		34.3	%		204,216		32.6	%
Residential – 1 to 4 Family		138,528		23.0	%		138,768		22.2	%
Residential – Multifamily		20,056		3.3	%		20,126		3.2	%
Consumer		18,400		3.0	%		18,774		3.0	%
Total Loans	$	603,560		100.0	%	$	625,117		100.0	%

The Company maintains interest reserves for the purpose of making periodic and timely interest payments for borrowers that qualify for development and construction loans. Total development and construction loans with interest reserves were $6.4 million and $14.6 million at September 30, 2012 and December 31, 2011, respectively. The amount of interest capitalized from interest reserves and recognized as interest income for the nine month periods ended September 30, 2012 and 2011 was $158,000 and $238,000, respectively. Interest reserves provide borrowers temporary sources of cash flow which can be used to make interest payments during the development or construction phases of a project. It is our expectation that equity in the project increases as the project moves towards completion and that cash flows will be positive once sales begin or stabilization occurs. Loans with interest reserves are monitored throughout the life of the project. Interest accrual may be suspended on interest reserve dependent loans that are not delinquent but are risk rated substandard or worse.

Loan Origination/Risk Management:  In the normal course of business the Company is exposed to a variety of operational, reputational, legal, regulatory and credit risks that could adversely affect our financial performance. Most of our asset risk is primarily tied to credit (lending) risk. The Company has lending policies, guidelines and procedures in place that are designed to maximize loan income within an acceptable level of risk. The Board of Directors reviews and approves these policies, guidelines and procedures.  When we originate a loan we make certain subjective judgments about the borrower’s ability to meet the loan’s terms and conditions. We also make objective and subjective value assessments on the assets we finance. The borrower’s ability to repay can be adversely affected by economic changes. Likewise, changes in market conditions and other external factors can affect asset valuations. The Company actively monitors the quality of its loan portfolio. A reporting system supplements the credit review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit risk, loan delinquencies, troubled debt restructures, nonperforming and potential problem loans. Diversification in the loan portfolio is another means of managing risk associated with fluctuations in economic conditions.

15

With respect to construction loans to developers and builders that are secured by non-owner occupied properties, the Company generally requires the borrower to have had an existing relationship with the Company and have a proven record of success. Construction loans are underwritten utilizing feasibility studies, independent appraisal reviews, sensitivity analysis of absorption and lease rates and financial analysis of the developers and property owners. Construction loans are generally underwritten based upon estimates of costs and value associated with the complete project. These estimates may be inaccurate. Construction loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing.

Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans, in addition to those of real estate loans. Commercial real estate loans may be riskier than loans for one-to-four family residences and are typically larger in dollar size. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. The repayment of these loans is generally largely dependent on the successful operation and management of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type and geographic location within our market area. This diversity helps reduce the Company's exposure to adverse economic events that affect any single market or industry. Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. The Company also monitors economic conditions and trends affecting market areas it serves. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans.

Consumer loans may carry a higher degree of repayment risk than residential mortgage loans. Repayment is typically dependent upon the borrower’s financial stability which is more likely to be adversely affected by job loss, illness, or personal bankruptcy. To monitor and manage consumer loan risk, policies and procedures are developed and modified as needed. This activity, coupled with relatively small loan amounts that are spread across many individual borrowers, minimizes risk. Additionally, trend and outlook reports are reviewed by management on a regular basis. Underwriting standards for home equity loans are heavily influenced by statutory requirements, which include, but are not limited to, a maximum loan-to-value percentage of 80%, collection remedies, the number of such loans a borrower can have at one time and documentation requirements. Historically the Company’s losses on consumer loans have been negligible.

The Company maintains an outsourced independent loan review program that reviews and validates the credit risk assessment program on a periodic basis. Results of these external independent reviews are presented to management. In 2011 the Company expanded its risk monitoring program by creating a standalone Credit Risk Management Department. The external independent loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit risk management personnel.

Nonaccrual and Past Due Loans:  Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on non-accrual status when, in management's opinion, the borrower may be unable to meet payment obligations as they become due, as well as when a loan is 90 days past due, unless the loan is well secured and in the process of collection, as required by regulatory provision. Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued

16

interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

An age analysis of past due loans by class follows:

September 30, 2012	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and Not Accruing		Total Past Due		Current		Total Loans		Loans > 90 Days and Accruing
	(Amounts in thousands)
Commercial and Industrial	$	68	$	—	$	303	$	371	$	21,584	$	21,955	$	—
Real Estate Construction:
Residential		—		—		1,035		1,035		7,082		8,117		—
Commercial		—		—		14,501		14,501		26,689		41,190		—
Real Estate Mortgage:
Commercial – Owner Occupied		—		—		1,864		1,864		146,921		148,785		—
Commercial – Non-owner Occupied		375		5,036		24,122		29,533		176,996		206,529		—
Residential – 1 to 4 Family		1,299		—		7,634		8,933		129,595		138,528		—
Residential – Multifamily		—		—		3,160		3,160		16,896		20,056		—
Consumer		66		—		291		357		18,043		18,400		—
Total	$	1,808	$	5,036	$	52,910	$	59,754	$	543,806	$	603,560	$	—

December 31, 2011	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and Not Accruing		Total Past Due		Current		Total Loans		Loans > 90 Days and Accruing
	(Amounts in thousands)
Commercial and Industrial	$	603	$	—	$	—	$	603	$	23,533	$	24,136	$	—
Real Estate Construction:
Residential		350		—		5,265		5,615		15,672		21,287		—
Commercial		—		—		7,703		7,703		42,658		50,361		—
Real Estate Mortgage:
Commercial – Owner Occupied		1,358		—		4,797		6,155		141,294		147,449		—
Commercial – Non-owner Occupied		1,574		—		18,132		19,706		184,510		204,216		—
Residential – 1 to 4 Family		2,587		—		7,691		10,278		128,490		138,768		—
Residential – Multifamily		—		—		597		597		19,529		20,126		—
Consumer		—		—		274		274		18,500		18,774		—
Total	$	6,472	$	—	$	44,459	$	50,931	$	574,186	$	625,117	$	—

17

Impaired Loans: Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collectamounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. In addition, any loan that is modified in a troubled debt restructuring is considered impaired.

 All impaired loans have an independent third-party full appraisal to determine the net realizable value (“NRV”) based on the fair value of the underlying collateral, less cost to sell (a range of 5% to 10%) and other costs, such as unpaid real estate taxes, that have been identified, or the present value of discounted cash flows in the case of certain impaired loans that are not collateral dependent. The appraisal will be based on an "as-is" valuation and will follow a reasonable valuation method that addresses the direct sales comparison, income, and cost approaches to market value, reconciles those approaches, and explains the elimination of each approach not used. Appraisals are updated every 12 months or sooner if we have identified possible further deterioration in value. Prior to receiving the updated appraisal, we will establish a specific reserve for any estimated deterioration, based upon our assessment of market conditions, adjusted for estimated costs to sell and other identified costs. If the NRV is greater than the loan amount, then no impairment loss exists. If the NRV is less than the loan amount, the shortfall is recognized by a specific reserve. If the borrower fails to pledge additional collateral in the ninety day period, a charge-off equal to the difference between the loan carrying value and NRV will occur. In certain circumstances, however, a direct charge-off may be taken at the time that the NRV calculation reveals a shortfall. All impaired loans are evaluated based on the criteria stated above on a quarterly basis and any change in the reserve requirements are recorded in the period identified. All partially charged-off loans remain on nonaccrual status until they are brought current as to both principal and interest and have at least six months of payment history and future collectability of principal and interest is assured.

18

Impaired loans are set forth in the following tables.

September 30, 2012	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Amounts in thousands)
With no related allowance recorded:
Commercial and Industrial	$	803	$	870	$	—
Real Estate Construction:
Residential		1,519		3,319		—
Commercial		14,435		14,435		—
Real Estate Mortgage:
Commercial – Owner Occupied		5,600		5,784		—
Commercial – Non-owner Occupied		47,547		51,019		—
Residential – 1 to 4 Family		12,608		13,464		—
Residential – Multifamily		3,538		3,538		—
Consumer		291		327		—
		86,341		92,756		—
With an allowance recorded:
Commercial and Industrial		—		—		—
Real Estate Construction:
Residential		—		—		—
Commercial		481		538		34
Real Estate Mortgage:
Commercial – Owner Occupied		938		938		55
Commercial – Non-owner Occupied		3,571		3,571		45
Residential – 1 to 4 Family		507		764		16
Residential – Multifamily		—		—		—
Consumer		—		—		—
		5,497		5,811		150
Total:
Commercial and Industrial		803		870		—
Real Estate Construction:
Residential		1,519		3,319		—
Commercial		14,916		14,973		34
Real Estate Mortgage:
Commercial – Owner Occupied		6,538		6,722		55
Commercial – Non-owner Occupied		51,118		54,590		45
Residential – 1 to 4 Family		13,115		14,228		16
Residential – Multifamily		3,538		3,538		—
Consumer		291		327		—
	$	91,838	$	98,567	$	150

19

December 31, 2011	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Amounts in thousands)
With no related allowance recorded:
Commercial and Industrial	$	603	$	603	$	—
Real Estate Construction:
Residential		4,440		5,246		—
Commercial		12,898		13,118		—
Real Estate Mortgage:
Commercial – Owner Occupied		6,946		6,946		—
Commercial – Non-owner Occupied		30,424		30,852		—
Residential – 1 to 4 Family		8,477		10,737		—
Residential – Multifamily		597		667		—
Consumer		229		229		—
		64,614		68,398		—
With an allowance recorded:
Commercial and Industrial		—		—		—
Real Estate Construction:
Residential		4,170		5,151		1,297
Commercial		3,329		3,329		380
Real Estate Mortgage:
Commercial – Owner Occupied		590		590		23
Commercial – Non-owner Occupied		17,820		17,940		2,526
Residential – 1 to 4 Family		3,388		3,589		600
Residential – Multifamily		3,268		3,268		33
Consumer		—		—		—
		32,565		33,867		4,859
Total:
Commercial and Industrial		603		603		—
Real Estate Construction:
Residential		8,610		10,397		1,297
Commercial		16,227		16,447		380
Real Estate Mortgage:
Commercial – Owner Occupied		7,536		7,536		23
Commercial – Non-owner Occupied		48,244		48,792		2,526
Residential – 1 to 4 Family		11,865		14,326		600
Residential – Multifamily		3,865		3,935		33
Consumer		229		229		—
	$	97,179	$	102,265	$	4,859

20

The following table presents by loan portfolio class, the average recorded investment and interest income recognized on impaired loans for the nine months and three months ended September 30, 2012 and 2011:

	Nine Months Ended September 30,
	2012				2011
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(Amounts in thousands)
Commercial and Industrial	$	850	$	17	$	594	$	18
Real Estate Construction:
Residential		2,126		47		12,614		336
Commercial		14,947		196		16,019		386
Real Estate Mortgage:
Commercial – Owner Occupied		6,751		176		7,690		169
Commercial – Non-owner Occupied		52,619		1,469		57,521		2,533
Residential – 1 to 4 Family		13,877		370		16,363		233
Residential – Multifamily		3,604		60		4,762		247
Consumer		310		6		171		8
Total	$	95,084	$	2,341	$	115,734	$	3,930

	Three Months Ended September 30,
	2012				2011
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(Amounts in thousands)
Commercial and Industrial	$	806	$	6	$	594	$	8
Real Estate Construction:
Residential		1,497		15		12,413		148
Commercial		14,931		36		16,910		123
Real Estate Mortgage:
Commercial – Owner Occupied		6,652		59		7,648		61
Commercial – Non-owner Occupied		51,475		408		50,766		1,299
Residential – 1 to 4 Family		13,556		85		15,943		84
Residential – Multifamily		3,559		6		4,883		83
Consumer		291		1		86		8
Total	$	92,767	$	616	$	109,243	$	1,814

21

Troubled debt restructurings: Periodically management evaluates our loans in order to determine the appropriate risk rating, interest accrual status and potential classification as a TDR, some of which are performing and accruing interest. A TDR is a loan on which we have granted a concession due to a borrower’s financial difficulty. These are concessions that would not otherwise be considered. The terms of these modified loans may include extension of maturity, renewals, changes in interest rate, additional collateral requirements or infusion of additional capital into the project by the borrower to reduce debt or to support future debt service. On construction and land development loans we may modify the loan as a result of delays or other project issues such as slower than anticipated sell-outs, insufficient leasing activity and/or a decline in the value of the underlying collateral securing the loan. Management believes that working with a borrower to restructure a loan provides us with a better likelihood of collecting our loan. It is our policy not to renegotiate the terms of a commercial loan simply because of a delinquency status. However, we will use our Troubled Debt Restructuring Program to work with delinquent borrowers when the delinquency is temporary. We consider all loans modified in a troubled debt restructuring to be impaired.

At the time a loan is modified in a TDR, we consider the following factors to determine whether the loan should accrue interest:

·   Whether there is a period of current payment history under the current terms, typically 6 months;

·   Whether the loan is current at the time of restructuring; and

·   Whether we expect the loan to continue to perform under the restructured terms with a debt coverage ratio that complies with the Bank’s credit underwriting policy of 1.25 times debt service.

We also review the financial performance of the borrower over the past year to be reasonably assured of repayment and performance according to the modified terms. This review consists of an analysis of the borrower’s historical results; the borrower’s projected results over the next four quarters; current financial information of the borrower and any guarantors. The projected repayment source needs to be reliable, verifiable, quantifiable and sustainable. In addition, all TDRs are reviewed quarterly to determine the amount of any impairment.

At the time of restructuring, the amount of the loan principal for which we are not reasonably assured of repayment is charged-off, but not forgiven.

A borrower with a restructured loan must make a minimum of six consecutive monthly payments at the restructured level and be current as to both interest and principal to be on accrual status.

Performing  TDRs  (not  reported  as  non-accrual   loans)  totaled  $39.0   million  and  $4l.l  million  as  of September 30, 2012 and December 31, 2011, respectively. Non-performing TDRs totaled $31.3 million and $25.8  million as of September  30, 2012 and December  31, 2011,  respectively.  All TORs are classified  as impaired loans and are included in the impaired loan disclosures above.

22

The following tables illustrate new TDRs and TDR default information for the nine months and three months ended September 30, 2012 and 2011.

	Nine Months Ended September 30, 2012						Nine Months Ended September 30, 2011
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification  Outstanding  Recorded Investment		Number of Contracts		Pre-Modification Outstanding  Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in Thousands)
Troubled Debt Restructurings
Commercial and Industrial		2	$	750	$	750		1	$	594	$	594
Construction:
Residential		1		415		415		1		959		959
Commercial		11		9,938		9,938		—		—		—
Real Estate Mortgage:
Commercial – Owner Occupied		1		3,220		3,220		1		315		315
Commercial – Non-owner Occupied		3		4,067		4,067		3		5,543		5,543
Residential – 1-4 Family		3		4,168		4,168		4		6,250		6,250
Residential – Multifamily		1		380		380		2		506		506
Consumer		—		—		—		—		—		—
Total		22	$	22,938	$	22,938		12	$	14,167	$	14,167

	Three Months Ended September 30, 2012						Three Months Ended September 30, 2011
	Number of Contracts		Pre-Modification Outstanding  Recorded Investment		Post-Modification Outstanding  Recorded Investment		Number of Contracts		Pre-Modification Outstanding  Recorded Investment		Post-Modification Outstanding  Recorded Investment
	(Dollars in Thousands)
Troubled Debt Restructurings
Commercial and Industrial		—	$	—	$	—		—	$	—	$	—
Construction:
Residential		—		—		—		—		—		—
Commercial		11		9,938		9,938		—		—		—
Real Estate Mortgage:
Commercial – Owner Occupied		—		—		—		—		—		—
Commercial – Non-owner Occupied		1		1,148		1,148		—		—		—
Residential – 1-4 Family		1		203		203		—		—		—
Residential – Multifamily		—		—		—		—		—		—
Consumer		—		—		—		—		—		—
Total		13	$	11,289	$	11,289		—	$	—	$	—

23

The following tables shows the types of modifications made during the nine months and three months ended September 30, 2012 and 2011:

	Nine Months Ended September 30, 2012								Nine Months Ended September 30, 2011
	Extension		Period of Interest Only		Interest Rate Reduction		Total		Extension		Period of Interest Only		Interest Rate Reduction		Total
	(Dollars in Thousands)
Troubled Debt Restructurings
Commercial and Industrial	$	500	$	—	$	250	$	750	$	—	$	—	$	594	$	594
Construction:
Residential		—		—		415		415		—		—		959		959
Commercial		8,008		—		1,930		9,938		—		—		—		—
Real Estate Mortgage:
Commercial – Owner Occupied		3,220		—		—		3,220		—		—		315		315
Commercial – Non-owner Occupied		1,156		—		2,911		4,067		—		1,505		4,038		5,543
Residential – 1-4 Family		924		—		3,244		4,168		—		—		6,250		6,250
Residential – Multifamily		—		380		—		380		—		—		506		506
Consumer		—		—		—		—		—		—		—		—
Total	$	13,808	$	380	$	8,750	$	22,938	$	—	$	1,505	$	12,662	$	14,167

	Three Months Ended September 30, 2012								Three Months Ended September 30, 2011
	Extension		Period of Interest Only		Interest Rate Reduction		Total		Extension		Period of Interest Only		Interest Rate Reduction		Total
	(Dollars in Thousands)
Troubled Debt Restructurings
Commercial and Industrial	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Construction:
Residential		—		—		—		—		—		—		—		—
Commercial		8,008		—		1,930		9,938		—		—		—		—
Real Estate Mortgage:
Commercial – Owner Occupied		—		—		—		—		—		—		—		—
Commercial – Non-owner Occupied		1,148		—		—		1,148		—		—		—		—
Residential – 1-4 Family		—		—		203		203		—		—		—		—
Residential – Multifamily		—		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—		—
Total	$	9,156	$	—	$	2,133	$	11,289	$	—	$	—	$	—	$	—

24

Troubled Debt Restructurings That Subsequently Defaulted	For the nine months ended September 30, 2012			For the nine months ended September, 30 2011
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in Thousands)
Commercial and Industrial	1	$	603	—	$	—
Real Estate Construction:
Residential	1		1,004	1		316
Commercial	10		8,508	—		—
Real Estate Mortgage:
Commercial – Owner Occupied	—		—	5		4,131
Commercial – Non-owner Occupied	3		4,779	1		121
Residential – 1-4 Family	4		978	1		929
Residential – Multifamily	1		3,267	—		—
Consumer	—		—	—		—
Total	20	$	19,139	8	$	5,497

Troubled Debt Restructurings That Subsequently Defaulted	For the three months ended September 30, 2012			For the three months ended September, 30 2011
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in Thousands)
Commercial and Industrial	—	$	—	—	$	—
Real Estate Construction:
Residential	—		—	1		316
Commercial	9		8,008	—		—
Real Estate Mortgage:
Commercial – Owner Occupied	—		—	—		—
Commercial – Non-owner Occupied	1		1,156	—		—
Residential – 1-4 Family	1		202	—		—
Residential – Multifamily	—		—	—		—
Consumer	—		—	—		—
Total	11	$	9,366	1	$	316

Some loan modifications classified as TDRs may not ultimately result in the full collection of principal and interest, as modified, and result in potential incremental losses. These potential incremental losses have been factored into our overall allowance for loan losses estimate. The level of any re-defaults will likely be affected by future economic conditions. Once a loan becomes a TDR, it will continue to be reported as a TDR until it is repaid in full, foreclosed, sold or it meets the criteria to be removed from TDR status.

25

Credit Quality Indicators: As part of the on-going monitoring of the credit quality of the Company's loan portfolio, management tracks certain credit quality indicators including trends related to the risk grades of loans, the level of classified loans, net charge-offs, nonperforming loans (see details above) and the general economic conditions in the region.

The Company utilizes a risk grading matrix to assign a risk grade to each of its loans. Loans are graded on a scale of 1 to 7. Grades 1 through 4 are considered “Pass”. A description of the general characteristics of the seven risk grades is as follows:

1.   Good:  Borrower exhibits the strongest overall financial condition and represents the most creditworthy profile.

2.   Satisfactory (A):  Borrower reflects a well balanced financial condition, demonstrates a high level of creditworthiness and typically will have a strong banking relationship with Parke Bank.

3.   Satisfactory (B):  Borrower exhibits a balanced financial condition and does not expose the Bank to more than a normal or average overall amount of risk.  Loans are considered fully collectable.

4.   Watch List:  Borrower reflects a fair financial condition, but there exists an overall greater than average risk. Risk is deemed acceptable by virtue of increased monitoring and control over borrowings.  Probability of timely repayment is present.

5.   Other Assets Especially Mentioned (OAEM):  Financial condition is such that assets in this category have a potential weakness or pose unwarranted financial risk to the Bank even though the asset value is not currently impaired.  The asset does not currently warrant adverse classification but if not corrected could weaken and could create future increased risk exposure. Includes loans which require an increased degree of monitoring or servicing as a result of internal or external changes.

6.   Substandard:  This classification represents more severe cases of #5 (OAEM) with characteristics that require increased monitoring.  Assets are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Assets are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral. Asset has a well-defined weakness or weaknesses that impairs the ability to repay debt and jeopardizes the timely liquidation or realization of the collateral at the asset’s net book value.

7.   Doubtful:  Assets which have all the weaknesses inherent in those assets classified #6 (Substandard) but the risks are more severe relative to financial deterioration in capital and/or asset value; accounting/evaluation techniques may be questionable and the overall possibility for collection in full is highly improbable. Borrowers in this category require constant monitoring, are considered work out loans and present the potential for future loss to the Bank.

26

An analysis of the credit risk profile by internally assigned grades is as follows:

At September 30, 2012	Pass		OAEM		Substandard		Doubtful		Total
	(Amounts in thousands)
Commercial and Industrial	$	13,984	$	7,100	$	871	$	—	$	21,955
Real Estate Construction:
Residential		6,598		—		1,519		—		8,117
Commercial		19,375		—		21,815		—		41,190
Real Estate Mortgage:
Commercial – Owner Occupied		142,590		755		5,440		—		148,785
Commercial – Non-owner Occupied		160,744		14,349		31,436		—		206,529
Residential – 1 to 4 Family		123,912		2,272		12,344		—		138,528
Residential – Multifamily		15,406		1,112		3,538		—		20,056
Consumer		18,110		—		290		—		18,400
Total	$	500,719	$	25,588	$	77,253	$	—	$	603,560

At December 31, 2011	Pass		OAEM		Substandard		Doubtful		Total
	(Amounts in thousands)
Commercial	$	16,033	$	7,500	$	603	$	—	$	24,136
Real Estate Construction:
Residential		12,327		350		8,610		—		21,287
Commercial		23,898		—		26,463		—		50,361
Real Estate Mortgage:
Commercial – Owner Occupied		137,200		3,840		6,409		—		147,449
Commercial – Non-owner Occupied		156,277		10,430		37,509		—		204,216
Residential – 1 to 4 Family		120,658		4,360		13,750		—		138,768
Residential – Multifamily		16,261		3,268		597		—		20,126
Consumer		18,500		—		274		—		18,774
Total	$	501,154	$	29,748	$	94,215	$	—	$	625,117

NOTE 5.  ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is a reserve established through a provision for loan losses charged to expense, which represents management's best estimate of probable losses that have been incurred within the existing portfolio of loans. The allowance, in the judgment of management, is necessary to reserve for estimated loan losses and risks inherent in the loan portfolio. The Company's allowance for loan loss methodology includes allowance allocations calculated in accordance with ASC Topic 310, "Receivables" and allowance allocations calculated in accordance with ASC Topic 450, "Contingencies." Accordingly, the methodology is based on historical loss experience by type of credit and internal risk grade, specific homogeneous risk pools and specific loss allocations, with adjustments for current events and conditions. The Company's process for determining the appropriate level of the allowance for loan losses is designed to account for credit deterioration as it occurs. The provision for loan losses reflects loan quality trends, including the levels of and trends related to non-accrual loans, past due loans, potential problem loans, criticized loans and net charge-offs or recoveries, among other factors. The provision for possible loan losses also reflects the totality of actions taken on all loans for a particular period. In other words, the amount of the provision reflects not only the necessary increases in the allowance for loan losses related to newly identified criticized loans, but it also reflects actions taken related to other loans including, among other things, any necessary increases or decreases in required allowances for specific loans or loan pools.

27

The level of the allowance reflects management's continuing evaluation of industry concentrations, specific credit risks, loan loss experience, current loan portfolio quality, present economic, political and regulatory conditions and unidentified losses inherent in the current loan portfolio. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management's judgment, should be charged off. While management utilizes its best judgment and information available, the ultimate adequacy of the allowance is dependent upon a variety of factors beyond the Company’s control, including, among other things, the performance of the Company's loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications.

The Company's allowance for possible loan losses consists of three elements: (i) specific valuation allowances determined in accordance with ASC Topic 310 based on probable losses on specific loans; (ii) historical valuation allowances determined in accordance with ASC Topic 450 based on historical loan loss experience for similar loans with similar characteristics and trends, adjusted, as necessary, to reflect the impact of current conditions; and (iii) general valuation allowances determined in accordance with ASC Topic 450 based on general economic conditions and other qualitative risk factors both internal and external to the Company.

The allowances established for probable losses on specific loans are based on a regular analysis and evaluation of problem loans. Loans are classified based on an internal credit risk grading process that evaluates, among other things: (i) the obligor's ability to repay; (ii) the underlying collateral, if any; and (iii) the economic environment and industry in which the borrower operates. This analysis is performed at the relationship manager level for all commercial loans. When a loan has a grade of 6 or higher, the loan is analyzed to determine whether the loan is impaired and, if impaired, the need to specifically allocate a portion of the allowance for loan losses to the loan. Specific valuation allowances are determined by analyzing the borrower's ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower's industry, among other things.

Historical valuation allowances are calculated based on the historical loss experience of specific types of loans. The Company calculates historical loss ratios for pools of similar loans with similar characteristics based on the proportion of actual charge-offs experienced to the total population of loans in the pool. The historical loss ratios are periodically updated based on actual charge-off experience. A historical valuation allowance is established for each pool of similar loans based upon the product of the historical loss ratio and the total dollar amount of the loans in the pool. The Company's pools of similar loans include similarly risk-graded groups of commercial loans, commercial real estate loans, consumer real estate loans and consumer and other loans.

General valuation allowances are based on general economic conditions and other qualitative risk factors both internal and external to the Company. In general, such valuation allowances are determined by evaluating, among other things: (i) the experience, ability and effectiveness of the Bank's lending management and staff; (ii) the effectiveness of the Bank's loan policies, procedures and internal controls; (iii) changes in asset quality; (iv) changes in loan portfolio volume; (v) the composition and concentrations of credit; (vi) the impact of competition on loan structuring and pricing; (vii) the effectiveness of the internal loan review function; (viii) the impact of environmental risks on portfolio risks; and (ix) the impact of rising interest rates on portfolio risk. Management evaluates the degree of risk that each one of these components has on the quality of the loan portfolio on a quarterly basis. Each component is determined to have either a high, high-moderate, moderate, low-moderate or low degree of risk. The results are then input into a "general allocation matrix" to determine an appropriate general valuation allowance.

28

An analysis of the allowance for loan losses for the nine month and three month periods ended September 30, 2012 and 2011 is as follows:

Allowance for Loan Losses:	For the nine month period ended September 30, 2012
	Beginning Balance		Charge-offs			Recoveries		Provisions			Ending Balance
	(Amounts in thousands)
Commercial and Industrial	$	451	$	(66	)	$	—	$	76		$	461
Real Estate Construction:
Residential		2,613		(1,326	)		37		(573	)		751
Commercial		1,971		(310	)		—		(642	)		1,019
Real Estate Mortgage:
Commercial – Owner Occupied		2,714		(1,058	)		—		2,028			3,684
Commercial – Non-owner Occupied		6,742		(3,756	)		—		2,746			5,732
Residential – 1 to 4 Family		4,190		(1,531	)		407		1,360			4,426
Residential – Multifamily		278		—			—		3			281
Consumer		148		(36	)		—		237			349
Unallocated		216		—			—		568			784
Total	$	19,323	$	(8,083	)	$	444	$	5,803		$	17,487

Allowance for Loan Losses:	For the nine month period ended September 30, 2011
	Beginning Balance		Charge-offs			Recoveries		Provisions			Ending Balance
	(Amounts in thousands)
Commercial and Industrial	$	448	$	(22	)	$	—	$	30		$	456
Real Estate Construction:
Residential		2,980		(2,764	)		22		2,171			2,409
Commercial		1,576		(494	)		—		1,030			2,112
Real Estate Mortgage:
Commercial – Owner Occupied		2,508		—			—		203			2,711
Commercial – Non-owner Occupied		3,792		—			—		783			4,575
Residential – 1 to 4 Family		2,848		(1,910	)		—		2,919			3,857
Residential – Multifamily		372		—			—		(167	)		205
Consumer		130		—			1		16			147
Unallocated		135		—			—		(135	)		—
Total	$	14,789	$	(5,190	)	$	23	$	6,850		$	16,472

29

	For the three month period ended September 30, 2012
	Beginning Balance		Charge-offs			Recoveries		Provisions			Ending Balance
	(Amounts in thousands)
Commercial and Industrial	$	494	$	—		$	—	$	(33	)	$	461
Real Estate Construction:
Residential		1,290		(37	)		—		(502	)		751
Commercial		1,481		—			—		(462	)		1,019
Real Estate Mortgage:
Commercial – Owner Occupied		3,521		(311	)		—		474			3,684
Commercial – Non-owner Occupied		6,268		(816	)		—		280			5,732
Residential – 1 to 4 Family		4,408		(1,181	)		4		1,195			4,426
Residential – Multifamily		268		—			—		13			281
Consumer		178		—			—		171			349
Unallocated		417		—			—		367			784
Total	$	18,325	$	(2,345	)	$	4	$	1,503		$	17,487

	For the three month period ended September 30, 2011
	Beginning Balance		Charge-offs		Recoveries		Provisions		Ending Balance
	(Amounts in thousands)
Commercial and Industrial	$	496	$	—	$	—	$	(40)	$	456
Real Estate Construction:
Residential		2,494		(37)		22		(70)		2,409
Commercial		2,077		(494)		—		529		2,112
Real Estate Mortgage:
Commercial – Owner Occupied		2,508		—		—		203		2,711
Commercial – Non-owner Occupied		4,452		—		—		123		4,575
Residential – 1 to 4 Family		3,694		(1,910)		—		2,073		3,857
Residential – Multifamily		372		—		—		(167)		205
Consumer		143		—		1		3		147
Unallocated		304		—		—		(304)		—
Total	$	16,540	$	(2,441)	$	23	$	2,350	$	16,472

30

Allowance for Loan Losses, at September 30, 2012	Individually evaluated for impairment		Collectively evaluated for impairment		Total
	(Amounts in thousands)
Commercial and Industrial	$	—	$	461	$	461
Real Estate Construction:
Residential		—		751		751
Commercial		34		985		1,019
Real Estate Mortgage:
Commercial – Owner Occupied		55		3,629		3,684
Commercial – Non-owner Occupied		45		5,687		5,732
Residential – 1 to 4 Family		16		4,410		4,426
Residential – Multifamily		—		281		281
Consumer		—		349		349
Unallocated		—		784		784
Total	$	150	$	17,337	$	17,487

Allowance for Loan Losses, at December 31, 2011	Individually evaluated for impairment		Collectively evaluated for impairment		Total
	(Amounts in thousands)
Commercial and Industrial	$	—	$	451	$	451
Real Estate Construction:
Residential		1,297		1,316		2,613
Commercial		380		1,591		1,971
Real Estate Mortgage:
Commercial – Owner Occupied		23		2,691		2,714
Commercial – Non-owner Occupied		2,526		4,216		6,742
Residential – 1 to 4 Family		600		3,590		4,190
Residential – Multifamily		33		245		278
Consumer		—		148		148
Unallocated		—		216		216
Total	$	4,859	$	14,464	$	19,323

31

Loans, at September 30, 2012:	Individually evaluated for impairment		Collectively evaluated for impairment		Total
	(Amounts in thousands)
Commercial and Industrial	$	803	$	21,152	$	21,955
Real Estate Construction:
Residential		1,519		6,598		8,117
Commercial		14,916		26,274		41,190
Real Estate Mortgage:
Commercial – Owner Occupied		6,538		142,247		148,785
Commercial – Non-owner Occupied		51,118		155,411		206,529
Residential – 1 to 4 Family		13,115		125,413		138,528
Residential – Multifamily		3,538		16,518		20,056
Consumer		291		18,109		18,400
Total	$	91,838	$	511,722	$	603,560

Loans, at December 31, 2011:	Individually evaluated for impairment		Collectively evaluated for impairment		Total
	(Amounts in thousands)
Commercial and Industrial	$	603	$	23,533	$	24,136
Real Estate Construction:
Residential		8,610		12,677		21,287
Commercial		16,227		34,134		50,361
Real Estate Mortgage:
Commercial – Owner Occupied		7,536		139,913		147,449
Commercial – Non-owner Occupied		48,244		155,972		204,216
Residential – 1 to 4 Family		11,865		126,903		138,768
Residential – Multifamily		3,865		16,261		20,126
Consumer		229		18,545		18,774
Total	$	97,179	$	527,938	$	625,117

32

NOTE 6.  REGULATORY RESTRICTIONS

The Company and the Bank are subject to various regulatory capital requirements of federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company and the Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.  Prompt corrective action provisions are not applicable to bank holding companies.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the following table) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined).

	Actual					For Capital Adequacy Purposes					To be Well-Capitalized Under Prompt Corrective Action Provisions
Parke Bancorp, Inc.	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of September 30, 2012
(Amounts in thousands except ratios)
Total Risk Based Capital	$	103,629		16.44	%	$	50,430		8	%		N/A		N/A
(to Risk Weighted Assets)
Tier 1 Capital	$	95,631		15.17	%	$	25,215		4	%		N/A		N/A
(to Risk Weighted Assets)
Tier 1 Capital	$	95,631		12.32	%	$	31,056		4	%		N/A		N/A
(to Average Assets)

	Actual					For Capital Adequacy Purposes					To be Well-Capitalized Under Prompt Corrective Action Provisions
Parke Bancorp, Inc.	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2011
(Amounts in thousands except ratios)
Total Risk Based Capital	$	98,992		15.46	%	$	51,209		8	%		N/A		N/A
(to Risk Weighted Assets)
Tier 1 Capital	$	90,851		14.19	%	$	25,604		4	%		N/A		N/A
(to Risk Weighted Assets)
Tier 1 Capital	$	90,851		12.06	%	$	30,122		4	%		N/A		N/A
(to Average Assets)

33

	Actual					For Capital Adequacy Purposes					To be Well-Capitalized Under Prompt Corrective Action Provisions
Parke Bank	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of September 30, 2012
(Amounts in thousands except ratios)
Total Risk Based Capital	$	103,596		16.43	%	$	50,430		8	%	$	63,037		10	%
(to Risk Weighted Assets)
Tier 1 Capital	$	95,598		15.17	%	$	25,215		4	%	$	37,822		6	%
(to Risk Weighted Assets)
Tier 1 Capital	$	95,598		12.31	%	$	31,056		4	%	$	38,820		5	%
(to Average Assets)

	Actual					For Capital Adequacy Purposes					To be Well-Capitalized Under Prompt Corrective Action Provisions
Parke Bank	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2011
(Amounts in thousands except ratios)
Total Risk Based Capital	$	98,817		15.44	%	$	51,208		8	%	$	64,010		10	%
(to Risk Weighted Assets)
Tier 1 Capital	$	90,676		14.17	%	$	25,604		4	%	$	38,406		6	%
(to Risk Weighted Assets)
Tier 1 Capital	$	90,676		12.04	%	$	30,122		4	%	$	37,652		5	%
(to Average Assets)

On October 3, 2008 Congress passed the Emergency Economic Stabilization Act of 2008 (EESA), which provides the U.S. Secretary of the Treasury with broad authority to implement certain actions to help restore stability and liquidity to the U.S. markets.  One of the provisions resulting from the Act was the Treasury Capital Purchase Program (CPP) which provides for the direct equity investment of perpetual preferred stock by the U.S. Treasury in qualified financial institutions.   This program was voluntary and requires an institution to comply with several restrictions and provisions, including limits on executive compensation, stock redemptions, and declaration of dividends. The perpetual preferred stock has a dividend rate of 5% per year until the fifth anniversary of the Treasury investment and a dividend of 9%, thereafter.  The CPP also requires the Treasury to receive warrants for common stock equal to 15% of the capital invested by the U.S. Treasury.   The Company received an investment in perpetual preferred stock of $16,288,000 on January 30, 2009.   These proceeds were allocated between the preferred stock and warrants based on relative fair value in accordance with FASB ASC Topic 470-20, “Debt with Conversion and Other Options.” The allocation of proceeds resulted in a discount on the preferred stock that is being accreted over five years. The Company issued 329,757 common stock warrants to the U.S. Treasury and $930,000 of those proceeds was allocated to the warrants. The warrants are accounted for as equity securities. The warrants have a contractual life of 10 years and an exercise price of $6.12 per share of common stock.

34

NOTE 7.  OTHER COMPREHENSIVE INCOME

The Company’s accumulated other comprehensive income consisted of the following at:

	September 30, 2012			December 31, 2011
	(Amounts in thousands)
Securities
Non-credit unrealized losses on securities with OTTI	$	(504	)	$	(524	)
Unrealized losses on securities without OTTI		(298	)		(252	)
Minimum pension liability		(250	)		(268	)
Tax impact		420			418
Other comprehensive income	$	(632	)	$	(626	)

35

NOTE 8.  FAIR VALUE

Fair Value Measurements

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. In accordance with the Fair Value Measurements and Disclosures Topic 820 of FASB ASC, the fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company's various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

The fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions. In accordance with this guidance, the Company groups its assets and liabilities carried at fair value in three levels as follows:

Level 1 Input:

1) Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2 Inputs:

1)           Quoted prices for similar assets or liabilities in active markets.

2)           Quoted prices for identical or similar assets or liabilities in markets that are not active.

3) Inputs other than quoted prices that are observable, either directly or indirectly, for the term of the asset or liability (e.g., interest rates, yield curves, credit risks, prepayment speeds or volatilities) or “market corroborated inputs.”

Level 3 Inputs:

1) Prices or valuation techniques that require inputs that are both unobservable (i.e. supported by little or no market activity) and that are significant to the fair value of the assets or liabilities.

2) These assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

36

Fair Value on a Recurring Basis:

The following is a description of the Company’s valuation methodologies for assets carried at fair value. These methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes that its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting measurement date.

Investment Securities Available for Sale:

Where quoted prices are available in an active market, securities are classified in Level 1 of the valuation hierarchy. Securities in Level 1 are exchange-traded equities. If quoted market prices are not available for the specific security, then fair values are provided by independent third-party valuations services. These valuations services estimate fair values using pricing models and other accepted valuation methodologies, such as quotes for similar securities and observable yield curves and spreads. As part of the Company’s overall valuation process, management evaluates these third-party methodologies to ensure that they are representative of exit prices in the Company’s principal markets. Securities in Level 2 include U.S. Government agencies, mortgage-backed securities, state and municipal securities and trust preferred securities.

Securities in Level 3 include thinly-traded and collateralized debt obligations. With the assistance of competent third-party valuation specialists, the Company utilized the following methodology to determine the fair value:

Cash flows were developed based on the estimated speeds at which the trust preferred securities are expected to prepay (a range of 1% to 2%), the estimated rates at which the trust preferred securities are expected to defer payments, the estimated rates at which the trust preferred securities are expected to default (a range of 0.57% to 0.66%), and the severity of the losses on securities which default (95%). Trust preferred securities generally allow for prepayment by the issuer without a prepayment penalty any time after five years. Due to the lack of new trust preferred issuances and the relatively poor conditions of the financial institution industry, a relatively modest rate of prepayment was assumed going forward. Estimates for CDRs are based on the payment characteristics of the trust preferred securities themselves (e.g. current, deferred, or defaulted) as well as the financial condition of the trust preferred issuers in the pool. Estimates for the near-term rates of deferral and CDR are based on key financial ratios relating to the financial institutions’ capitalization, asset quality, profitability and liquidity. Finally, we consider whether or not the financial institution has received TARP funding, and if it has, the amount. Longer-term rates of deferral and defaults are based on historical averages. The fair value of each bond was assessed by discounting its projected cash flows by a discount rate.  The discount rates were based on the yields of publicly traded TruPS and preferred stock issued by comparably rated banks (3 month LIBOR plus a spread of 400 to 959 basis points).

 

37

The table below presents the balances of assets and liabilities measured at fair value on a recurring basis.

Financial Assets	Level 1		Level 2		Level 3		Total
	(Amounts in thousands)
Securities Available for Sale
As of September 30, 2012
U.S. Government sponsored entities	$	—	$	7	$	—	$	7
Corporate debt obligations		—		1,551		—		1,551
Residential mortgage-backed securities		—		14,918		—		14,918
Collateralized mortgage-backed securities				1,080		6		1,086
Collateralized debt obligations		—		—		3,895		3,895
Total	$	—	$	17,556	$	3,901	$	21,457
As of December 31, 2011
U.S. Government sponsored entities	$	—	$	1,011	$	—	$	1,011
Corporate debt obligations		—		1,486		—		1,486
Residential mortgage-backed securities		—		14,461		—		14,461
Collateralized mortgage-backed securities				1,437		157		1,594
Collateralized debt obligations		—		—		3,965		3,965
Total	$	—	$	18,395	$	4,122	$	22,517

For the nine months ending September 30, 2012, there were no transfers between the levels within the fair value hierarchy.

38

The changes in Level 3 assets measured at fair value on a recurring basis are summarized as follows for the nine months ending September 30:

	Securities Available for Sale
	2012			2011
	(Amounts in thousands)
Beginning balance at January 1,	$	4,122		$	4,560
Total net losses included in:
Net loss		(128	)		(85	)
Other comprehensive loss		(93	)		(47	)
Settlements		—			(161	)
Net transfers into Level 3		—			—
Ending balance September 30,	$	3,901		$	4,267

Fair Value on a Non-recurring Basis:

Certain assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

Financial Assets	Level 1		Level 2		Level 3		Total
	(Amounts in thousands)
As of September 30, 2012
Collateral dependent impaired loans	$	—	$	—	$	65,945	$	65,945
OREO		—		—		28,102		28,102
As of December 31, 2011
Collateral dependent impaired loans	$	—	$	—	$	72,958	$	72,958
OREO		—		—		19,410		19,410

Collateral dependent impaired loans, which are measured in accordance with FASB ASC Topic 310 “Receivables”, for impairment, had a carrying amount of $91.7 million and $92.3 million at September 30, 2012 and December 31, 2011 respectively, with a valuation allowance of $200,000 and $4.9 million at September 30, 2012 and December 31, 2011 respectively. The valuation allowance for collateral dependent impaired loans is included in the allowance for loan losses on the balance sheet. All collateral dependent impaired loans have an independent third-party full appraisal to determine the NRV based on the fair value of the underlying collateral, less cost to sell (a range of 5% to 10%) and other costs, such as unpaid real estate taxes, that have been identified, or the present value of discounted cash flows in the case of certain impaired loans that are not collateral dependent. The appraisal will be based on an "as-is" valuation and will follow a reasonable valuation method that addresses the direct sales comparison, income, and cost approaches to market value, reconciles those approaches, and explains the elimination of each approach not used. Appraisals are updated every 12 months or sooner if we have identified possible further deterioration in value.

OREO consists of commercial real estate properties which are recorded at fair value based upon current appraised value less estimated disposition costs, which is adjusted based upon management’s review and changes in market conditions (Level 3 inputs). Properties are reappraised annually.

39

Fair Value of Financial Instruments

The Company discloses estimated fair values for its significant financial instruments in accordance with FASB ASC Topic 825, “Disclosures about Fair Value of Financial Instruments”.  The methodologies for estimating the fair value of financial assets and liabilities that are measured at fair value on a recurring or non-recurring basis are discussed above. The methodologies for estimating the fair value of other financial assets and liabilities are discussed below.

For certain financial assets and liabilities, carrying value approximates fair value due to the nature of the financial instrument. These instruments include cash and cash equivalents, restricted stock, accrued interest receivable, demand and other non-maturity deposits and accrued interest payable.

The Company used the following methods and assumptions in estimating the fair value of the following financial instruments:

Investment Securities:Fair value of securities available for sale is described above. Fair value of held to maturity securities is based upon quoted market prices (Level 2 inputs).

Loans (other than impaired):  Fair values are estimated for portfolios of loans with similar financial characteristics.  Loans are segregated by type such as commercial, residential mortgage and other consumer.  Each loan category is further segmented into groups by fixed and adjustable rate interest terms and by performing and non-performing categories. The fair value of performing loans is calculated by discounting scheduled cash flows through their estimated maturity, using estimated market discount rates that reflect the credit and interest rate risk inherent in each group of loans (Level 2 inputs).  The estimate of maturity is based on contractual maturities for loans within each group, or on the Company’s historical experience with repayments for each loan classification, modified as required by an estimate of the effect of current economic conditions.

Deposits:  The fair value of time deposits is based on the discounted value of contractual cash flows, where the discount rate is estimated using the market rates currently offered for deposits of similar remaining maturities (Level 2 inputs).

Borrowings:  The fair values of FHLB borrowings, other borrowed funds and subordinated debt are based on the discounted value of estimated cash flows.  The discounted rate is estimated using market rates currently offered for similar advances or borrowings (Level 2 inputs).

Bank premises and equipment, customer relationships, deposit base and other information required to compute the Company’s aggregate fair value are not included in the above information. Accordingly, the above fair values are not intended to represent the aggregate fair value of the Company.

40

The following table summarizes the carrying amounts and fair values for financial instruments at September 30, 2012 and December 31, 2011:

	Level in	September 30, 2012				December 31, 2011
	Fair Value	Carrying		Fair		Carrying		Fair
	Hierarchy	Value		Value		Value		Value
	(Amounts in thousands)
Financial Assets:
Cash and cash equivalents	Level 1	$	100,883	$	100,883	$	110,228	$	110,228
Investment securities (available for sale and held to maturity)	(1)		23,515		23,666		24,549		24,597
Restricted stock	Level 2		2,225		2,225		3,565		3,565
Loans held for sale	Level 2		—		—		225		225
Loans, net	(2)		586,073		608,991		605,794		622,801
Accrued interest receivable	Level 2		2,765		2,765		3,039		3,039
Financial Liabilities:
Demand and savings deposits	Level 2	$	363,969	$	363,969	$	356,440	$	356,440
Time deposits	Level 2		275,731		277,613		278,415		280,147
Borrowings	Level 2		43,891		51,478		74,010		79,997
Accrued interest payable	Level 2		631		631		618		618

(1)See the recurring fair value table above.

(2)For non-impaired loans, Level 2; for impaired loans, Level 3.

NOTE 9. INCOME TAXES

	For the nine months ended September 30,						For the three months ended September 30,
	2012			2011			2012			2011
	(Amount in thousands)
Income Taxes
Pre-tax Income		$	8,694		$	11,460		$	3,280		$	2,883
Income Tax Expense			2,895			4,605			1,365			1,161

For the nine months ended September 30, 2012, the Company recorded a net tax expense of $2.9 million compared to a net tax expense of $4.6 million for the nine months ended September 30, 2011. For the three months ended September 30, 2012, the Company recorded a net tax expense of $1.4 million compared to a net tax expense of $1.2 million for the three months ended September 30, 2011.

Deferred federal and state tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The decrease in income tax expense is due to lower earnings and the change to an alternative tax methodology for bank owned life insurance (“BOLI”) income whereby it is treated on a tax free basis. The portion related to prior years is $576,000.

41

NOTE 10.  EARNINGS PER SHARE (“EPS”)

The following tables set forth the calculation of basic and diluted EPS for the nine month periods ending September 30, 2012 and 2011.

	For the nine months ended September 30,				For the three months ended  September 30,
	2012		2011		2012		2011
	(Amounts in thousands except share data)
Basic earnings per common share
Net income available to common shareholders	$	4,599	$	5,258	$	1,468	$	1,319
Average common shares outstanding		5,378,103		5,374,561		5,872,276		5,818,506
Basic earnings per common share	$	0.86	$	0.98	$	0.25	$	0.23
Diluted earnings per common share
Net income available to common shareholders	$	4,599	$	5,258	$	1,468	$	1,319
Average common shares outstanding		5,378,103		5,374,561		5,872,276		5,818,506
Dilutive potential common shares		3,244		115,237		367		23,349
Total diluted average common shares outstanding		5,381,347		5,489,798		5,872,643		5,841,855
Diluted earnings per common share	$	0.85	$	0.96	$	0.25	$	0.23

For the nine months ended September 30, 2012 and 2011, options to purchase 335,186 shares and 308,274 shares, respectively, were outstanding but were not included in the computation of diluted EPS because the options’ common stock equivalents were antidilutive.

For the three months ended September 30, 2012 and 2011, options to purchase 335,186 shares and 319,284 shares, respectively, were outstanding but were not included in the computation of diluted EPS because the options' common stock equivalents were antidilutive.

In May of 2012 and May of 2011 the Company paid a 10% common stock dividend to shareholders. All weighted share information has been retroactively adjusted to give effect to this stock dividend for the periods presented.

NOTE 11.  SUBSEQUENT EVENTS

Accounting guidance establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued.

New Jersey’s coastal areas recently suffered extensive flooding caused by tropical storm Sandy. The Bank is currently in the process of assessing any potential impact on loan collateral and OREO located along the coast in Southern New Jersey. It is not expected that it will have any material impact to the Company’s financial results.

42

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

Forward-Looking Statements

The Company may from time to time make written or oral "forward-looking statements" including statements contained in this Report and in other communications by the Company which are made in good faith pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, such as statements of the Company's plans, objectives, expectations, estimates and intentions, involve risks and uncertainties and are subject to change based on various important factors (some of which are beyond the Company's control). The following factors, among others, could cause the Company's financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements: the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, the impact of the Bank’s compliance with the Consent Orders entered into with the FDIC and the Department, inflation, interest rate, market and monetary fluctuations; the timely development of and acceptance of new products and services of the Company and the perceived overall value of these products and services by users, including the features, pricing and quality compared to competitors' products and services; the impact of changes in financial services laws and regulations (including laws concerning taxes, banking, securities and insurance); technological changes; acquisitions; changes in consumer spending and saving habits; and the success of the Company at managing the risks involved in the foregoing.

The Company cautions that the foregoing list of important factors is not exclusive. The Company also cautions readers not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date on which they are given. The Company is not obligated to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after any such date.

General

The Company's results of operations are dependent primarily on net interest income, which is the difference between the interest income earned on its interest-earning assets, such as loans and securities, and the interest expense paid on its interest-bearing liabilities, such as deposits and borrowings. The Company also generates non-interest income such as service charges, gains from the sale of loans, earnings from BOLI, loan exit fees and other fees. The Company's non-interest expenses primarily consist of employee compensation and benefits, occupancy expenses, marketing expenses, data processing costs and other operating expenses. The Company is also subject to losses in its loan portfolio if borrowers fail to meet their obligations. The Company's results of operations are also significantly affected by general economic and competitive conditions, particularly changes in market interest rates, government policies and actions of regulatory agencies.

The Company is intently focused on managing its non-performing assets.  The deterioration of the local real estate market and the continued high levels of unemployment have had a significant negative impact on the credit quality of our loan portfolio. Management has allocated significant resources to resolve these issues, either through foreclosure or working with borrowers to bring the loans current.  New processes have been implemented to identify and monitor impaired loans.  New appraisals of the collateral securing impaired loans have been obtained to identify any potential exposure.  The lengthy process of foreclosure has had a negative impact on earnings due to higher levels of legal fees.

43

Comparison of Financial Condition at September 30, 2012 and December 31, 2011

At September 30, 2012, the Company’s total assets decreased to $770.2 million from $790.7 million at December 31, 2011, a decrease of $20.5 million or 2.6%.

Cash and cash equivalents decreased $9.3 million to $100.9 million at September 30, 2012 from $110.2 million at December 31, 2011.

Total investment securities decreased to $23.5 million at September 30, 2012 ($21.5 million classified as available for sale or 91.2%) from $24.5 million at December 31, 2011, a decrease of $1.0 million or 4.2%.

Management evaluates the investment portfolio for OTTI on a quarterly basis. Factors considered in the analysis include, but are not limited to, whether an adverse change in cash flows has occurred, the length of time and the extent to which the fair value has been less than cost, whether the Company intends to sell, or will more likely than not be required to sell, the investment before recovery of its amortized cost basis, which may be maturity, credit rating downgrades, the percentage of performing collateral that would need to default or defer to cause a break in yield or a temporary interest shortfall, and management’s assessment of the financial condition of the underlying issuers. For the three months and nine months ended September 30, 2012, the Company did not recognize any credit-related OTTI charges.

Total gross loans decreased to $603.6 million at September 30, 2012 from $625.1 million at December 31, 2011, a decrease of $21.5 million or 3.4%. The decrease in the loan portfolio was a result of charge-offs of impaired loan balances and loan pay-offs.

Delinquent loans totaled $59.7 million or 9.9% of total loans at September 30, 2012, an increase of $8.8 million from December 31, 2011. Delinquent loan balances by number of days delinquent were: 30 to 59 days --- $1.8 million; 60 to 89 days --- $5.0 million; 90 days and greater not accruing interest --- $52.9 million.

At September 30, 2012, the Company had $52.9 million in nonaccrual loans or 8.8% of total loans, an increase from $44.5 million or 7.1% of total loans at December 31, 2011. The three largest relationships in nonaccrual loans are a $7.9 million retail center construction loan, a $6.6 million retail center construction loan and a $3.2 million residential condominium loan.

44

The composition of nonaccrual loans as of September 30, 2012 and December 31, 2011 was as follows:

	September 30,  2012			December 31, 2011
	(Amounts in thousands except ratios)
Commercial and Industrial	$	303		$	—
Real Estate Construction:
Residential		1,035			5,265
Commercial		14,501			7,703
Real Estate Mortgage:
Commercial – Owner Occupied		1,864			4,797
Commercial – Non-owner Occupied		24,122			18,132
Residential – 1 to 4 Family		7,634			7,691
Residential – Multifamily		3,160			597
Consumer		291			274
Total	$	52,910		$	44,459
Nonperforming  loans to total loans		8.76	%		7.11	%

At September 30, 2012 Parke Bancorp's allowance for loan losses was $17.5 million, a decrease of $1.8 million from December 31, 2011. The ratio of allowance for loan losses to total loans decreased to 2.9% at September 30, 2012 from 3.1% at December 31, 2011. During the nine month period ended September 30, 2012, the Company charged-off $8.1 million in loans. Specific allowances for loan losses have been established in the amount of $150,000 on impaired loans totaling $91.8 million at September 30, 2012. To our knowledge, we have provided for all losses that are both probable and reasonably estimable at September 30, 2012 and December 31, 2011. There can be no assurance, however, that further additions to the allowance will not be required in future periods.

The negative economic trends that began in 2008, including the weakness in the residential and commercial real estate markets and high levels of unemployment, have had a significant impact on the credit quality of our loan portfolio. Nonperforming assets have increased from 8.1% of total assets at December 31, 2011 to 10.5% at September 30, 2012. We are aggressively managing all loan relationships by enhancing our credit monitoring and tracking systems. New processes have been established to manage delinquencies. We are working closely with borrowers to resolve these non-performing loans. Updated appraisals are being obtained, where appropriate, to ensure that collateral values are sufficient to cover outstanding loan balances, and we are establishing specific reserves for any potential shortfall.  See Note 4 – Loans for additional information. Cash flow-dependent commercial real estate properties are being visited to inspect current tenant lease status. Where necessary, we will apply our loan work-out experience to protect our collateral position.

45

OREO at September 30, 2012 was $28.1 million, compared to $19.4 million at December 31, 2011, the largest being a condominium development valued at $12.7 million. This property was sold in 2010 but does not qualify for a sales treatment under GAAP.

An analysis of OREO activity is as follow:

	For the Nine Months Ended September 30,
	2012			2011
	(Amounts in thousands)
Balance at beginning of period	$	19,410		$	16,701
Real estate acquired in settlement of loans		10,691			802
Sales of real estate		(1,331	)		(3,175	)
Loss on sale of real estate		(757	)		(45	)
Write-down of real estate carrying values		(138	)		(480	)
Capitalized improvements to real estate		227			4,387
Balance at end of period	$	28,102		$	18,190

At September 30, 2012, the Bank’s total deposits increased to $639.7 million from $634.9 million at December 31, 2011, an increase of $4.8 million or 0.8%. The increase was due to continued core deposit growth.

At September 30, 2012, total equity increased to $81.6 million from $77.3 million at December 31, 2011, an increase of $4.3 million, or 5.6% due to the retention of earnings from the period.

46

Comparison of Operating Results for the Nine Months Ended September 30, 2012 and 2011

General:Net income available to common shareholders for the nine months ended September 30, 2012 was $4.6 million, compared to $5.3 million for the same period in 2011. The decrease was impacted by the following:

Interest Income:  Interest income decreased $2.3 million, or 7.4%, to $28.6 million for the nine months ended September 30, 2012, from $30.9 million for the nine months ended September 30, 2011. The decrease is attributable to lower average loan balances and lower average yield on loans.  Average loans for the nine month period ended September 30, 2012 were $614.0 million compared to $634.8 million for the same period last year. The average yield on loans was 6.01% for the nine months ended September 30, 2012 compared to 6.28% for the same period in 2011.

Interest Expense:Interest expense decreased $1.3 million to $5.7 million for the nine months ended September 30, 2012, from $7.0 million for the nine months ended September 30, 2011. The decrease is primarily attributable to a lower cost of deposits as the Bank has been able to re-price deposits due to the current, historically low, interest rate environment while still maintaining strong deposit growth. The average rate paid on deposits for the nine month period ended September 30, 2012 was 1.09% compared to 1.39% for the same period last year.

Net Interest Income:  Net interest income decreased $984,000 to $22.9 million for the nine months ended September 30, 2012, as compared to the same period last year. We experienced a decrease in our net interest rate spread of 29 basis points, to 4.03% for the nine months ended September 30, 2012, from 4.32% for the same period last year. Our net interest margin decreased 32 basis points to 4.15% for the nine months ended September 30, 2012, from 4.47% for the same period last year.

Provision for Loan Losses:  We recorded a provision for loan losses of $5.8 million for the nine months ended September 30, 2012, compared to $6.9 million for the same period last year. The continued high level of provision for losses correlates to credit deterioration within the loan portfolio and management’s analysis of non-performing loans, and credit risks inherent in the overall loan portfolio.

Non-interest Income: Non-interest income was $2.6 million for the nine months ended September 30, 2012, compared to $3.9 million for the same period last year. There was a $1.8 million decrease in gain on sale of SBA loans as compared to the same period in 2011. The 2011 gain was higher due to a change in the SBA sales agreement; warranty language was removed from the sales agreement and Parke Bancorp was no longer required to defer the recognition of the gain for 90 days. The gain recorded in the 2011 period represented loans sold during the 2011 period as well as previously deferred gains of $1.4 million from the quarter ended December 31, 2010. In addition, the Company recorded a loss on OREO of $895,000 during the nine month period ended September 30, 2012 as compared to a loss of $525,000 in the corresponding period in 2011.

Non-interest Expense:  Non-interest expense increased $1.5 million to $11.0 million for the nine months ended September 30, 2012, from $9.5 million for the nine months ended September 30, 2011. The increase was primarily attributable to OREO and loan expenses related to the payment of expenses resulting from a higher level of properties acquired through foreclosure or deed in lieu of foreclosure.

Income Taxes:  The Company recorded income tax expense of $2.9 million, on income before taxes of $8.7 million for the nine months ended September 30, 2012, resulting in an effective tax rate of 33.3%, compared to income tax expense of $4.6 million on income before taxes of $11.4 million for the same period of 2011, resulting in an effective tax rate of 40.2%. The decrease in income tax expense is due to lower earnings and the change to an alternative tax methodology for BOLI income whereby it is treated on a tax free basis.

47

The following table sets forth average balance sheets, average yields and costs, and certain other information for the periods indicated. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances, and have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees, discounts and premiums that are amortized or accreted to interest income or expense. Yields and costs have been annualized.

	For the Nine Months Ended September 30,
	2012								2011
	Average Balance			Interest Income/ Expense		Yield/ Cost			Average Balance			Interest Income/ Expense		Yield/ Cost
	(Amounts in thousands, except percentages)
Assets
Loans	$	614,015		$	27,637		6.01	%	$	634,841		$	29,802		6.28	%
Investment securities		23,798			800		4.49	%		31,060			1,033		4.45	%
Federal funds sold and cash equivalents		99,314			178		0.24	%		47,555			75		0.21	%
Total interest-earning assets		737,127			28,615		5.19	%		713,456			30,910		5.79	%
Other assets		58,977								45,393
Allowance for loan losses		(18,758	)							(16,046	)
Total assets	$	777,346							$	742,803
Liabilities and Shareholders’ Equity
Interest bearing deposits
NOWs	$	18,952			99		0.70	%	$	15,354			113		0.98	%
Money markets		93,871			581		0.83	%		90,427			734		1.09	%
Savings		221,317			1,524		0.92	%		192,368			1,784		1.24	%
Time deposits		258,275			2,599		1.34	%		228,231			2,652		1.55	%
Brokered certificates of deposit		23,824			208		1.17	%		47,420			682		1.92	%
Total interest-bearing deposits		616,239			5,011		1.09	%		573,800			5,965		1.39	%
Borrowings		46,938			709		2.02	%		64,099			1,066		2.22	%
Total interest-bearing liabilities		663,177			5,720		1.15	%		637,899			7,031		1.47	%
Non-interest bearing deposits		29,620								22,122
Other liabilities		4,466								8,194
Total liabilities		697,263								668,215
Shareholders’ equity		80,083								74,588
Total liabilities and shareholders’ equity	$	777,346							$	742,803
Net interest income				$	22,895							$	23,879
Interest rate spread							4.03	%							4.32	%
Net interest margin							4.15	%							4.47	%

48

Comparison of Operating Results for the Three Months Ended September 30, 2012 and 2011

General:Net income available to common shareholders for the three months ended September 30, 2012 was $1.5 million, compared to $1.3 million for the same period in 2011. The change was impacted by the following:

Interest Income:  Interest income decreased $1.2 million, or 11.6%, to $9.1 million for the three months ended September 30, 2012, from $10.3 million for the three months ended September 30, 2011. The decrease is attributable to lower average loan balances and lower yield on loans.  Average loans for the three month period ended September 30, 2012 were $607.4 million compared to $631.6 million for the same period last year. The average yield on loans was 5.74% for the three months ended September 30, 2012 compared to 6.24% for the same period in 2011.

Interest Expense:Interest expense decreased $526,000 to $1.8 million for the three months ended September 30, 2012, from $2.3 million for the three months ended September 30, 2011. The decrease is primarily attributable to a lower cost of deposits as the Bank has been able to re-price deposits due to the current, historically low, interest rate environment while still maintaining deposit growth. The average rate paid on deposits for the three month period ended September 30, 2012 was 1.00% compared to 1.33% for the same period last year.

Net Interest Income:  Net interest income decreased $662,000 to $7.3 million for the three months ended September 30, 2012, as compared to the same period last year. We experienced a decrease in our net interest rate spread of 40 basis points, to 3.85% for the three months ended September 30, 2012, from 4.25% for the same period last year. Our net interest margin decreased 42 basis points to 3.96% for the three months ended September 30, 2012, from 4.38% for the same period last year.

Provision for Loan Losses:  We recorded a provision for loan losses of $1.5 million for the three months ended September 30, 2012, a decrease of $850,000 for the same period last year. The continued high level of provision for losses correlates to credit deterioration within the loan portfolio and management’s analysis of non-performing loans, and credit risks inherent in the overall loan portfolio.

Non-interest Income:  Non-interest income was $952,000 for the three months ended September 30, 2012, compared to $325,000 for the same period last year. The increase was primarily attributable to lower OREO losses.

Non-interest Expense:  Non-interest expense increased $418,000 to $3.5 million for the three months ended September 30, 2012, from $3.1 million for the three months ended September 30, 2011. The increase was primarily attributable to OREO and loan expenses related to the payment of expenses resulting from a higher level of properties acquired through foreclosure or deed in lieu of foreclosure.

Income Taxes:  The Company recorded income tax expense of $1.4 million, on income before taxes of $3.3 million for the three months ended September 30, 2012, resulting in an effective tax rate of 41.6%, compared to income tax expense of $1.2 million on income before taxes of $2.9 million for the same period of 2011, resulting in an effective tax rate of 40.3%. The increase in income tax expense is due to higher earnings.

49

	For the Three Months Ended September 30,
	2012								2011
	Average Balance			Interest Income/ Expense		Yield/ Cost			Average Balance			Interest Income/ Expense		Yield/ Cost
	(Amounts in thousands, except percentages)
Assets
Loans	$	607,399			8,766		5.74	%	$	631,648		$	9,912		6.24	%
Investment securities		24,646			259		4.18	%		30,023			329		4.36	%
Federal funds sold and cash equivalents		101,422			59		0.23	%		59,685			31		0.21	%
Total interest-earning assets		733,467			9,084		4.93	%		721,356			10,272		5.66	%
Other assets		60,765								49,643
Allowance for loan losses		(18,543	)							(17,214	)
Total assets	$	775,689							$	753,785
Liabilities and Shareholders’ Equity
Interest bearing deposits
NOWs	$	19,749			31		0.62	%	$	15,900			39		0.98	%
Money markets		88,971			167		0.75	%		87,486			237		1.08	%
Savings		227,217			463		0.81	%		203,665			637		1.24	%
Time deposits		256,771			825		1.28	%		235,701			871		1.47	%
Brokered certificates of deposit		23,219			66		1.13	%		42,534			176		1.65	%
Total interest-bearing deposits		615,927			1,552		1.00	%		585,286			1,960		1.33	%
Borrowings		43,906			234		2.12	%		64,062			352		2.19	%
Total interest-bearing liabilities		659,833			1,786		1.08	%		649,348			2,312		1.42	%
Non-interest bearing deposits		29,506								23,443
Other liabilities		4,687								4,411
Total liabilities		694,026								676,202
Shareholders’ equity		81,663								76,583
Total liabilities and shareholders’ equity	$	775,689							$	753,785
Net interest income					7,298							$	7,960
Interest rate spread							3.85	%							4.25	%
Net interest margin							3.96	%							4.38	%

50

Critical Accounting Policies

In the preparation of our consolidated financial statements, management has adopted various accounting policies that govern the application of accounting principles generally accepted in the United States. The significant accounting policies are described in Note 2 to the Consolidated Financial Statements.

Certain accounting policies involve significant judgments and assumptions by management that have a material impact on the carrying value of certain assets and liabilities. Management considers these accounting policies to be critical accounting policies. The judgments and assumptions used are based on historical experience and other factors, which management believes to be reasonable under the circumstances. Actual results could differ from these judgments and estimates under different conditions, resulting in a change that could have a material impact on the carrying values of assets and liabilities and results of operations.

Allowance for Loan Losses:  The allowance for loan losses is considered a critical accounting policy. The allowance for loan losses is the amount estimated by management as necessary to cover losses inherent in the loan portfolio at the balance sheet date. The allowance is established through the provision for loan losses, which is charged to income. Determining the amount of the allowance for loan losses necessarily involves a high degree of judgment.

In evaluating the allowance for loan losses, management considers historical loss factors, the mix of the loan portfolio (types of loans and amounts), geographic and industry concentrations, current national and local economic conditions and other factors related to the collectability of the loan portfolio, including underlying collateral values and estimated future cash flows. All of these estimates are susceptible to significant change. Large groups of smaller balance homogeneous loans, such as residential real estate, home equity loans, and consumer loans, are evaluated in the aggregate under FASB ASC Topic 450, “Accounting for Contingencies”, using historical loss factors adjusted for economic conditions and other qualitative factors which include trends in delinquencies, classified and non-performing loans, loan concentrations by loan category and by property type, seasonality of the portfolio, internal and external analysis of credit quality, peer group data, loan charge offs, local and national economic conditions and single and total credit exposure. Large balance and/or more complex loans, such as multi-family and commercial real estate loans, commercial business loans, and construction loans are evaluated individually for impairment in accordance with FASB ASC Topic 310 “Receivables”. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s effective interest rate or at the fair value of collateral if repayment is expected solely from the collateral. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available or as projected events change.

Management reviews the level of the allowance monthly. Although management used the best information available to establish the allowance for loan losses, future adjustments to the allowance may be necessary if economic conditions differ substantially from the assumptions used in making the evaluation. In addition, the FDIC and the Department, as an integral part of their examination process, periodically review the allowance for loan losses. Such agencies may require us to recognize adjustments to the allowance based on judgments about information available to them at the time of their examination. A large loss could deplete the allowance and require increased provisions to replenish the allowance, which would adversely affect earnings.

51

Other Than Temporary Impairment on Investment Securities:  Management periodically performs analyses to determine whether there has been an OTTI in the value of one or more securities. The available for sale securities portfolio is carried at estimated fair value, with any unrealized gains or losses, net of taxes, reported as accumulated other comprehensive income or loss in stockholder’s equity. The held to maturity securities portfolio, consisting of debt securities for which there is a positive intent and ability to hold to maturity, is carried at amortized cost. Management conducts a quarterly review and evaluation of the securities portfolio to determine if the value of any security has declined below its cost or amortized cost, and whether such decline is other-than-temporary. If such decline is deemed other-than-temporary, the cost basis of the security is adjusted by writing down the security to estimated fair market value through a charge to current period earnings to the extent that such decline is credit related. All other changes in unrealized gains or losses for investment securities available for sale are recorded, net of tax effect, through other comprehensive income.

Income Taxes:  Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences.  Temporary differences are the difference between the reported amounts of assets and liabilities and their tax bases.  Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.  Realization of deferred tax assets is dependent on generating sufficient taxable income in the future.

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that ultimately would be sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more-likely-than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. The evaluation of a tax position taken is considered by itself and not offset or aggregated with other positions. Tax positions that meet the more likely-than not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

Liquidity:  Liquidity describes the ability to meet the financial obligations that arise out of the ordinary course of business. Liquidity addresses the Company's ability to meet deposit withdrawals on demand or at contractual maturity, to repay borrowings as they mature, and to fund current and planned expenditures. Liquidity is derived from increased repayment and income from interest-earning assets. The loan to deposit ratio was 94.4% and 98.5% at September 30, 2012 and December 31, 2011, respectively. Funds received from new and existing depositors provided a large source of liquidity for the nine month period ended September 30, 2012. The Company seeks to rely primarily on core deposits from customers to provide stable and cost-effective sources of funding to support loan growth. The Company also seeks to augment such deposits with longer term and higher yielding certificates of deposit. To the extent that retail deposits are not adequate to fund customer loan demand, liquidity needs can be met in the short-term funds market. Longer term funding can be obtained through advances from the FHLB. As of September 30, 2012, the Company maintained lines of credit with the FHLB of $106.3 million, of which $25.5 million was outstanding at September 30, 2012.

As of September 30, 2012, the Company's investment securities portfolio included $14.9 million of mortgage-backed securities that provide cash flow each month. The majority of the investment portfolio is classified as available for sale, is marketable, and is available to meet liquidity needs. The Company's residential real estate portfolio includes loans, which are underwritten to secondary market criteria, and accordingly could be sold in the secondary mortgage market if needed as an additional source of liquidity. The Company's management is not aware of any known trends, demands, commitments or uncertainties that are reasonably likely to result in material changes in liquidity.

52

Capital:  A strong capital position is fundamental to support the continued growth of the Company. The Company and the Bank are subject to various regulatory capital requirements. Regulatory capital is defined in terms of Tier I capital (shareholders' equity as adjusted for unrealized gains or losses on available for sale securities), Tier II capital (which includes a portion of the allowance for loan losses) and total capital (Tier I plus Tier II). Risk-based capital ratios are expressed as a percentage of risk-weighted assets. Risk-weighted assets are determined by assigning various weights to all assets and off-balance sheet associated risk in accordance with regulatory criteria. Regulators have also adopted minimum Tier I leverage ratio standards, which measure the ratio of Tier I capital to total assets.

At September 30, 2012, management believes that the Company and the Bank are "well-capitalized" and in compliance with all applicable regulatory requirements.

53

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable as the Company is a smaller reporting company.

ITEM 4.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Evaluation of disclosure controls and procedures. Based on their evaluation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, (the "Exchange Act")), the Company's principal executive officer and principal financial officer have concluded that as of the end of the period covered by this Quarterly Report on Form 10-Q, such disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the required time periods specified in the SEC’s rules and forms.

Internal Controls

Changes in internal control over financial reporting. During the last quarter, there was no change in the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

The Company was not a party to any material legal proceedings.

ITEM 1A.  RISK FACTORS

Not applicable as the Company is a smaller reporting company.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

54

ITEM 4.  MINE SAFETY DISCLOSURES

Not applicable

ITEM 5.  OTHER INFORMATION

None

ITEM 6.  EXHIBITS

31.1	Certification of CEO required by Rule 13a-14(a)
31.2	Certification of CFO required by Rule 13a-14(a)
32	Certification required by 18 U.S.C. §1350
101.INS	XBRL Instance Document *
101.SCH	XBRL Schema Document *
101.CAL	XBRL Calculation Linkbase Document  *
101.DEF	XBRL Definition Linkbase Document *
101.LAB	XBRL Labels Linkbase Document *
101.PRE	XBRL Presentation Linkbase Document *

* Submitted electronically herewith

55

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.

	PARKE BANCORP, INC.
Date:  November 14, 2012	/s/ Vito S. Pantilione
	Vito S. Pantilione
	President and Chief Executive Officer
	(Principal Executive Officer)
Date:  November 14, 2012	/s/ John F. Hawkins
	John F. Hawkins
	Senior Vice President and
	Chief Financial Officer
	(Principal Accounting Officer)

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Vito S. Pantilione, President and Chief Executive Officer, certify that:

1.   I have reviewed this Form 10-Q of Parke Bancorp, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing equivalent functions):

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  November 14, 2012	/s/ Vito S. Pantilione
	Vito S. Pantilione
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, John F. Hawkins, Senior Vice President and Chief Financial Officer, certify that:

1.   I have reviewed this Form 10-Q of Parke Bancorp, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  November 14, 2012	/s/ John F. Hawkins
	John F. Hawkins
	Senior Vice President and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 (the "Report") of Parke Bancorp, Inc. (the "Company") as filed with the Securities and Exchange Commission, we, Vito S. Pantilione, President and Chief Executive Officer, and John F. Hawkins, Senior Vice President and Chief Financial Officer, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)           The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Vito S. Pantilione	/s/ John F. Hawkins
Vito S. Pantilione	John F. Hawkins
President and Chief Executive Officer	Senior Vice President and Chief Financial Officer
(Principal Executive Officer)	(Principal Financial Officer)

November 14, 2012

XML

FAIR VALUE (Details) (USD $)	9 Months Ended
	Sep. 30, 2012		Sep. 30, 2011	Dec. 31, 2011
Inputs to determine fair value [Abstract]
Expected rate of severity on losses (in hundredths)	95.00%
Period to avoid prepayment penalty, minimum	5 years
Description of variable rate basis	3 month LIBOR
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	$ 21,457,000			$ 22,517,000
Fair value on a non-recurring basis [Abstract]
Carrying amount of impaired loans receivable	91,800,000			97,200,000
Valuation allowance	200,000			4,859,000
Period for performing appraisal of loans	12 months
Changes in Level 3 assets measured at fair value on a recurring basis [Abstract]
Beginning balance	4,122,000		4,560,000
Total net losses included in [Abstract]
Net loss	(128,000)		(85,000)
Other comprehensive loss	(93,000)		(47,000)
Settlements	0		(161,000)
Net transfers into Level 3	0		0
Ending balance	3,901,000		4,267,000
Carrying Value [Member]
Financial Assets [Abstract]
Investment securities (available-for-sale and held-to-maturity)	23,515,000	[1]		24,549,000	[1]
Loans, net	586,073,000	[2]		605,794,000	[2]
Carrying Value [Member] | Level 1 [Member]
Financial Assets [Abstract]
Cash and cash equivalents	100,883,000			110,228,000
Carrying Value [Member] | Level 2 [Member]
Financial Assets [Abstract]
Restricted stock	2,225,000			3,565,000
Loans held for sale	0			225,000
Accrued interest receivable	2,765,000			3,039,000
Financial Liabilities [Abstract]
Demand and savings deposits	363,969,000			356,440,000
Time deposits	275,731,000			278,415,000
Borrowings	43,891,000			74,010,000
Accrued interest payable	631,000			618,000
Fair Value [Member]
Financial Assets [Abstract]
Investment securities (available-for-sale and held-to-maturity)	23,666,000	[1]		24,597,000	[1]
Loans, net	608,991,000	[2]		622,801,000	[2]
Fair Value [Member] | Level 1 [Member]
Financial Assets [Abstract]
Cash and cash equivalents	100,883,000			110,228,000
Fair Value [Member] | Level 2 [Member]
Financial Assets [Abstract]
Restricted stock	2,225,000			3,565,000
Loans held for sale	0			225,000
Accrued interest receivable	2,765,000			3,039,000
Financial Liabilities [Abstract]
Demand and savings deposits	363,969,000			356,440,000
Time deposits	277,613,000			280,147,000
Borrowings	51,478,000			79,997,000
Accrued interest payable	631,000			618,000
Recurring [Member]
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	21,457,000			22,517,000
Recurring [Member] | Level 1 [Member]
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	0			0
Recurring [Member] | Level 2 [Member]
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	17,556,000			18,395,000
Recurring [Member] | Level 3 [Member]
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	3,901,000			4,122,000
Recurring [Member] | U.S. Government sponsored entities [Member]
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	7,000			1,011,000
Recurring [Member] | U.S. Government sponsored entities [Member] | Level 1 [Member]
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	0			0
Recurring [Member] | U.S. Government sponsored entities [Member] | Level 2 [Member]
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	7,000			1,011,000
Recurring [Member] | U.S. Government sponsored entities [Member] | Level 3 [Member]
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	0			0
Recurring [Member] | Corporate debt obligations [Member]
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	1,551,000			1,486,000
Recurring [Member] | Corporate debt obligations [Member] | Level 1 [Member]
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	0			0
Recurring [Member] | Corporate debt obligations [Member] | Level 2 [Member]
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	1,551,000			1,486,000
Recurring [Member] | Corporate debt obligations [Member] | Level 3 [Member]
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	0			0
Recurring [Member] | Residential mortgage-backed securities [Member]
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	14,918,000			14,461,000
Recurring [Member] | Residential mortgage-backed securities [Member] | Level 1 [Member]
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	0			0
Recurring [Member] | Residential mortgage-backed securities [Member] | Level 2 [Member]
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	14,918,000			14,461,000
Recurring [Member] | Residential mortgage-backed securities [Member] | Level 3 [Member]
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	0			0
Recurring [Member] | Collateralized mortgage-backed securities [Member]
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	1,086,000			1,594,000
Recurring [Member] | Collateralized mortgage-backed securities [Member] | Level 2 [Member]
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	1,080,000			1,437,000
Recurring [Member] | Collateralized mortgage-backed securities [Member] | Level 3 [Member]
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	6,000			157,000
Recurring [Member] | Collateralized debt obligations [Member]
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	3,895,000			3,965,000
Recurring [Member] | Collateralized debt obligations [Member] | Level 1 [Member]
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	0			0
Recurring [Member] | Collateralized debt obligations [Member] | Level 2 [Member]
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	0			0
Recurring [Member] | Collateralized debt obligations [Member] | Level 3 [Member]
Assets and liabilities measured at fair value on a recurring basis [Abstract]
Securities Available for Sale	3,895,000			3,965,000
Nonrecurring [Member]
Fair value on a non-recurring basis [Abstract]
Collateral dependant impaired loans	65,945,000			72,958,000
OREO	28,102,000			19,410,000
Nonrecurring [Member] | Level 1 [Member]
Fair value on a non-recurring basis [Abstract]
Collateral dependant impaired loans	0			0
OREO	0			0
Nonrecurring [Member] | Level 2 [Member]
Fair value on a non-recurring basis [Abstract]
Collateral dependant impaired loans	0			0
OREO	0			0
Nonrecurring [Member] | Level 3 [Member]
Fair value on a non-recurring basis [Abstract]
Collateral dependant impaired loans	65,945,000			72,958,000
OREO	$ 28,102,000			$ 19,410,000
Minimum [Member]
Inputs to determine fair value [Abstract]
Expected rate of prepayment (in hundredths)	1.00%
Expected rate of default (in hundredths)	0.57%
Basis spread on variable rate (in basis points)	400
Fair value on a non-recurring basis [Abstract]
Percentage of cost to sell (in hundredths)	5.00%
Maximum [Member]
Inputs to determine fair value [Abstract]
Expected rate of prepayment (in hundredths)	2.00%
Expected rate of default (in hundredths)	0.66%
Basis spread on variable rate (in basis points)	959
Fair value on a non-recurring basis [Abstract]
Percentage of cost to sell (in hundredths)	10.00%

[1] See the recurring fair value table above.

[2] For non-impaired loans, Level 2; for impaired loans, Level 3.

XML

LOANS, Nonaccrual and Past Due Loans (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Nonaccrual and Past Due Loans [Abstract]
Number of days past due for loan to be classified under non-accrual status	90 days
Age analysis of past due loans by class [Abstract]
30-59 Days Past Due	$ 1,808	$ 6,472
60-89 Days Past Due	5,036	0
Greater than 90 Days and Not Accruing	52,910	44,459
Total Past Due	59,754	50,931
Current	543,806	574,186
Loans	603,560	625,117
Loans > 90 Days and Accruing	0	0
Commercial and Industrial [Member]
Age analysis of past due loans by class [Abstract]
30-59 Days Past Due	68	603
60-89 Days Past Due	0	0
Greater than 90 Days and Not Accruing	303	0
Total Past Due	371	603
Current	21,584	23,533
Loans	21,955	24,136
Loans > 90 Days and Accruing	0	0
Real Estate Construction [Member] | Residential [Member]
Age analysis of past due loans by class [Abstract]
30-59 Days Past Due	0	350
60-89 Days Past Due	0	0
Greater than 90 Days and Not Accruing	1,035	5,265
Total Past Due	1,035	5,615
Current	7,082	15,672
Loans	8,117	21,287
Loans > 90 Days and Accruing	0	0
Real Estate Construction [Member] | Commercial [Member]
Age analysis of past due loans by class [Abstract]
30-59 Days Past Due	0	0
60-89 Days Past Due	0	0
Greater than 90 Days and Not Accruing	14,501	7,703
Total Past Due	14,501	7,703
Current	26,689	42,658
Loans	41,190	50,361
Loans > 90 Days and Accruing	0	0
Real Estate Mortgage [Member] | Commercial - Owner Occupied [Member]
Age analysis of past due loans by class [Abstract]
30-59 Days Past Due	0	1,358
60-89 Days Past Due	0	0
Greater than 90 Days and Not Accruing	1,864	4,797
Total Past Due	1,864	6,155
Current	146,921	141,294
Loans	148,785	147,449
Loans > 90 Days and Accruing	0	0
Real Estate Mortgage [Member] | Commercial - Non-owner occupied [Member]
Age analysis of past due loans by class [Abstract]
30-59 Days Past Due	375	1,574
60-89 Days Past Due	5,036	0
Greater than 90 Days and Not Accruing	24,122	18,132
Total Past Due	29,533	19,706
Current	176,996	184,510
Loans	206,529	204,216
Loans > 90 Days and Accruing	0	0
Real Estate Mortgage [Member] | Residential - 1 to 4 Family [Member]
Age analysis of past due loans by class [Abstract]
30-59 Days Past Due	1,299	2,587
60-89 Days Past Due	0	0
Greater than 90 Days and Not Accruing	7,634	7,691
Total Past Due	8,933	10,278
Current	129,595	128,490
Loans	138,528	138,768
Loans > 90 Days and Accruing	0	0
Real Estate Mortgage [Member] | Residential - Multifamily [Member]
Age analysis of past due loans by class [Abstract]
30-59 Days Past Due	0	0
60-89 Days Past Due	0	0
Greater than 90 Days and Not Accruing	3,160	597
Total Past Due	3,160	597
Current	16,896	19,529
Loans	20,056	20,126
Loans > 90 Days and Accruing	0	0
Consumer [Member]
Age analysis of past due loans by class [Abstract]
30-59 Days Past Due	66	0
60-89 Days Past Due	0	0
Greater than 90 Days and Not Accruing	291	274
Total Past Due	357	274
Current	18,043	18,500
Loans	18,400	18,774
Loans > 90 Days and Accruing	$ 0	$ 0

XML

OTHER COMPREHENSIVE INCOME (Tables)

9 Months Ended

Sep. 30, 2012

OTHER COMPREHENSIVE INCOME [Abstract]

Accumulated Other Comprehensive Income

The Company's accumulated other comprehensive income consisted of the following at:

	September 30, 2012			December 31, 2011
	(Amounts in thousands)
Securities
Non-credit unrealized losses on securities with OTTI	$	(504	)	$	(524	)
Unrealized losses on securities without OTTI		(298	)		(252	)
Minimum pension liability		(250	)		(268	)
Tax impact		420			418
Other comprehensive income	$	(632	)	$	(626	)

XML

REGULATORY RESTRICTIONS (Details) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2009	Sep. 30, 2012 Parke Bancorp Inc. [Member]	Dec. 31, 2011 Parke Bancorp Inc. [Member]	Sep. 30, 2012 Parke Bank [Member]	Dec. 31, 2011 Parke Bank [Member]
Total Risk Based Capital (to Risk Weighted Assets) [Abstract]
Actual, Amount			$ 103,629,000	$ 98,992,000	$ 103,596,000	$ 98,817,000
For Capital Adequacy Purposes, Amount			50,430,000	51,209,000	50,430,000	51,208,000
To be Well-Capitalized Under Prompt Corrective Action Provisions, Amount					63,037,000	64,010,000
Tier 1 Capital (to Risk Weighted Assets) [Abstract]
Actual, Amount			95,631,000	90,851,000	95,598,000	90,676,000
For Capital Adequacy Purposes, Amount			25,215,000	25,604,000	25,215,000	25,604,000
To be Well-Capitalized Under Prompt Corrective Action Provisions, Amount					37,822,000	38,406,000
Total Risk Based Capital and Tier 1 Capital (to Risk Weighted Assets) [Abstract]
Total Risk Based Capital, Actual, Ratio (in hundredths)			16.44%	15.46%	16.43%	15.44%
Total Risk Based Capital, For Capital Adequacy Purposes, Ratio (in hundredths)			8.00%	8.00%	8.00%	8.00%
Total Risk Based Capital, To be Well-Capitalized Under Prompt Corrective Action Provisions, Ratio (in hundredths)					10.00%	10.00%
Tier 1 Capital, Actual, Ratio (in hundredths)			15.17%	14.19%	15.17%	14.17%
Tier 1 Capital, For Capital Adequacy Purposes, Ratio (in hundredths)			4.00%	4.00%	4.00%	4.00%
Tier 1 Capital, To be Well-Capitalized Under Prompt Corrective Action Provisions, Ratio (in hundredths)					6.00%	6.00%
Tier 1 Capital (to Average Assets) [Abstract]
Actual, Amount			95,631,000	90,851,000	95,598,000	90,676,000
For Capital Adequacy Purposes, Amount			31,056,000	30,122,000	31,056,000	30,122,000
To be Well-Capitalized Under Prompt Corrective Action Provisions, Amount					38,820,000	37,652,000
Tier 1 Capital (to Average Assets) [Abstract]
Actual, Ratio (in hundredths)			12.32%	12.06%	12.31%	12.04%
For Capital Adequacy Purposes, Ratio (in hundredths)			4.00%	4.00%	4.00%	4.00%
To be Well-Capitalized Under Prompt Corrective Action Provisions, Ratio (in hundredths)					5.00%	5.00%
Perpetual preferred stock, dividend rate (in hundredths)	5.00%
Perpetual preferred stock, dividend rate after fifth anniversary (in hundredths)	9.00%
Warrants receivable by US Treasury as percentage of capital invested (in hundredths)	15.00%
Proceeds from issuance of perpetual preferred stock		16,288,000
Period of accretion of discount on issuance of preferred stock	5 years
Common stock warrants issued to US Treasury (in shares)		329,757
Proceeds from issuance of warrants		$ 930,000
Period of contractual life of warrants	10 years
Exercise price of warrants (in dollars per share)	$ 6.12

XML

ORGANIZATION

9 Months Ended

Sep. 30, 2012

ORGANIZATION [Abstract]

ORGANIZATION

NOTE 1.  ORGANIZATION

Parke Bancorp, Inc. ("Parke Bancorp" or the "Company") is a bank holding company incorporated under the laws of the State of New Jersey in January 2005 for the sole purpose of becoming the holding company of Parke Bank (the "Bank").

The Bank is a commercial bank which commenced operations on January 28, 1999. The Bank is chartered by the New Jersey Department of Banking and insured by the Federal Deposit Insurance Corporation ("FDIC"). Parke Bancorp and the Bank maintain their principal offices at 601 Delsea Drive, Washington Township, New Jersey. The Bank also conducts business through branches in Galloway Township, Northfield and Washington Township, New Jersey and Philadelphia, Pennsylvania.

The Bank competes with other banking and financial institutions in its primary market areas. Commercial banks, savings banks, savings and loan associations, credit unions and money market funds actively compete for savings and time certificates of deposit and all types of loans. Such institutions, as well as consumer financial and insurance companies, may be considered competitors of the Bank with respect to one or more of the services it renders.

The Bank is subject to the regulations of certain state and federal agencies, and accordingly, the Bank is periodically examined by such regulatory authorities. As a consequence of the regulation of commercial banking activities, the Bank's business is particularly susceptible to future state and federal legislation and regulations.

The FDIC and the New Jersey Department of Banking and Insurance Consent Orders: On April 9, 2012, the Bank entered into Consent Orders with the FDIC and the New Jersey Department of Banking and Insurance (the "Department"). Under the Consent Orders, the terms of which are substantially identical, the Bank is required, among other things, subject to review and approval by the FDIC and the Department: (i) to adopt and implement a plan to reduce the Bank's position in delinquent or classified assets; (ii) to adopt and implement a program providing for a periodic independent review of the Bank's loan portfolio and the identification of problem credits; (iii) to review and revise the Bank's loan policies and procedures to address identified lending deficiencies; and (iv) to adopt and implement a plan to reduce and manage each of the concentrations of credit identified by the FDIC and the Department.

The Consent Orders also require the Bank to obtain the prior approval of the FDIC and the New Jersey Department before declaring or paying any dividend or appointing or changing the title or responsibilities of any director or senior executive officer. Additional regulatory provisions require FDIC prior approval before the Bank enters into any employment agreement or other agreement or plan providing for the payment of a "golden parachute payment" or the making of any golden parachute payment.

XML

ORGANIZATION (Details)	9 Months Ended
	Sep. 30, 2012
ORGANIZATION [Abstract]
Date of commencement of operations	Jan. 28, 1999

XML

EARNINGS PER SHARE (EPS) (Tables)

9 Months Ended

Sep. 30, 2012

EARNINGS PER SHARE (EPS) [Abstract]

Calculation of Basic and Diluted EPS

The following tables set forth the calculation of basic and diluted EPS for the nine month periods ending September 30, 2012 and 2011.

	For the nine months ended September 30,				For the three months ended  September 30,
	2012		2011		2012		2011
	(Amounts in thousands except share data)
Basic earnings per common share
Net income available to common shareholders	$	4,599	$	5,258	$	1,468	$	1,319
Average common shares outstanding		5,378,103		5,374,561		5,872,276		5,818,506
Basic earnings per common share	$	0.86	$	0.98	$	0.25	$	0.23
Diluted earnings per common share
Net income available to common shareholders	$	4,599	$	5,258	$	1,468	$	1,319
Average common shares outstanding		5,378,103		5,374,561		5,872,276		5,818,506
Dilutive potential common shares		3,244		115,237		367		23,349
Total diluted average common shares outstanding		5,381,347		5,458,044		5,872,643		5,841,855
Diluted earnings per common share	$	0.85	$	0.96	$	0.25	$	0.23

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	Sep. 30, 2012
Basis of Financial Statement Presentation [Abstract]
Ownership interest in joint venture (in hundredths)	51.00%

XML

INVESTMENT SECURITIES (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Available-for-sale: [Abstract]
Amortized cost	$ 22,259,000		$ 22,259,000		$ 23,293,000
Gross unrealized gains	859,000		859,000		885,000
Gross unrealized losses	1,157,000		1,157,000		1,137,000
Other-than-temporary impairments in OCI	504,000		504,000		524,000
Total available-for-sale	21,457,000		21,457,000		22,517,000
Held to maturity [Abstract]
Held-to-maturity Securities, Fair Value	2,209,000		2,209,000		2,080,000
Available-for-sale [Abstract]
Less Than 12 Months, Fair Value	0		0		0
Less Than 12 Months, Unrealized Losses	0		0		0
12 Months or Greater, Fair value	3,593,000		3,593,000		4,113,000
12 Months or Greater, Unrealized Losses	1,157,000		1,157,000		1,137,000
Total, Fair Value	3,593,000		3,593,000		4,113,000
Total, Unrealized Losses	1,157,000		1,157,000		1,137,000
Collateralized Debt Obligations [Abstract]
Expected rate of severity on losses (in hundredths)			95.00%
Period to avoid prepayment penalty, minimum			5 years
Available-for-sale, amortized cost [Abstract]
Due within one year	0		0
Due after one year through five years	0		0
Due after five years through ten years	0		0
Due after ten years	7,062,000		7,062,000
Residential mortgage-backed securities and collateralized mortgage obligations	15,197,000		15,197,000
Total available-for-sale	22,259,000		22,259,000
Available-for-sale, fair value [Abstract]
Due within one year	0		0
Due after one year through five years	0		0
Due after five years through ten years	0		0
Due after ten years	5,452,000		5,452,000
Residential mortgage-backed securities and collateralized mortgage obligations	16,005,000		16,005,000
Total available-for-sale	21,457,000		21,457,000		22,517,000
Held-to-maturity, amortized cost [Abstract]
Due within one year	0		0
Due after one year through five years	0		0
Due after five years through ten years	0		0
Due after ten years	2,058,000		2,058,000
Total held-to-maturity	2,058,000		2,058,000
Held-to-maturity, fair value [Abstract]
Due within one year	0		0
Due after one year through five years	0		0
Due after five years through ten years	0		0
Due after ten years	2,209,000		2,209,000
Total held-to-maturity	2,209,000		2,209,000
Carrying value of securities pledged as collateral for borrowed funds	16,400,000		16,400,000
Fair value of securities pledged as collateral for borrowed funds	17,300,000		17,300,000
Carrying value of securities pledged to secure public deposits	4,600,000		4,600,000
Fair value of securities pledged to secure public deposits	5,000,000		5,000,000
Changes in the credit loss component of credit-impaired debt securities [Roll Forward]
Beginning balance	1,551,000	2,398,000	1,950,000	2,657,000
Initial credit impairment	0	0	0	0
Subsequent credit impairments	0	28,000	0	85,000
Reductions for amounts recognized in earnings due to intent or requirement to sell	0	0	0	0
Reductions for securities sold	0	0	0	0
Reductions for securities deemed worthless	(332,000)	(208,000)	(731,000)	(524,000)
Reductions for increases in cash flows expected to be collected	0	0	0	0
Ending balance	1,219,000	2,218,000	1,219,000	2,218,000
Available-for-sale securities: [Abstract]
Realized gains	0	0	0	0
Realized (losses)	0	0	0	0
Other than temporary impairment	0	(28,000)	0	(85,000)
Total available-for-sale securities	0	(28,000)	0	(85,000)
Held-to-maturity securities: [Abstract]
Realized gains	0	0	0	0
Realized (losses)	0	0	0	0
Other than temporary impairment	0	0	0	0
Total held-to-maturity securities	0	0	0	0
Minimum [Member]
Collateralized Debt Obligations [Abstract]
Expected rate of prepayment (in hundredths)			1.00%
Expected rate of default (in hundredths)			0.57%
Maximum [Member]
Collateralized Debt Obligations [Abstract]
Expected rate of prepayment (in hundredths)			2.00%
Expected rate of default (in hundredths)			0.66%
U.S. Government sponsored entities [Member]
Available-for-sale: [Abstract]
Amortized cost	7,000		7,000		1,006,000
Gross unrealized gains	0		0		5,000
Gross unrealized losses	0		0		0
Other-than-temporary impairments in OCI	0		0		0
Total available-for-sale	7,000		7,000		1,011,000
Available-for-sale, fair value [Abstract]
Total available-for-sale	7,000		7,000		1,011,000
Corporate debt obligations [Member]
Available-for-sale: [Abstract]
Amortized cost	1,500,000		1,500,000		1,500,000
Gross unrealized gains	51,000		51,000		43,000
Gross unrealized losses	0		0		57,000
Other-than-temporary impairments in OCI	0		0		0
Total available-for-sale	1,551,000		1,551,000		1,486,000
Available-for-sale [Abstract]
Less Than 12 Months, Fair Value					0
Less Than 12 Months, Unrealized Losses					0
12 Months or Greater, Fair value					443,000
12 Months or Greater, Unrealized Losses					57,000
Total, Fair Value					443,000
Total, Unrealized Losses					57,000
Available-for-sale, fair value [Abstract]
Total available-for-sale	1,551,000		1,551,000		1,486,000
Residential mortgage-backed securities [Member]
Available-for-sale: [Abstract]
Amortized cost	14,172,000		14,172,000		13,697,000
Gross unrealized gains	746,000		746,000		764,000
Gross unrealized losses	0		0		0
Other-than-temporary impairments in OCI	0		0		0
Total available-for-sale	14,918,000		14,918,000		14,461,000
Available-for-sale, fair value [Abstract]
Total available-for-sale	14,918,000		14,918,000		14,461,000
Collateralized mortgage obligations [Member]
Available-for-sale: [Abstract]
Amortized cost	1,024,000		1,024,000		1,534,000
Gross unrealized gains	62,000		62,000		73,000
Gross unrealized losses	0		0		0
Other-than-temporary impairments in OCI	0		0		13,000
Total available-for-sale	1,086,000		1,086,000		1,594,000
Available-for-sale, fair value [Abstract]
Total available-for-sale	1,086,000		1,086,000		1,594,000
Collateralized debt obligations [Member]
Available-for-sale: [Abstract]
Amortized cost	5,556,000		5,556,000		5,556,000
Gross unrealized gains	0		0		0
Gross unrealized losses	1,157,000		1,157,000		1,080,000
Other-than-temporary impairments in OCI	504,000		504,000		511,000
Total available-for-sale	3,895,000		3,895,000		3,965,000
Available-for-sale [Abstract]
Less Than 12 Months, Fair Value	0		0		0
Less Than 12 Months, Unrealized Losses	0		0		0
12 Months or Greater, Fair value	3,593,000		3,593,000		3,670,000
12 Months or Greater, Unrealized Losses	1,157,000		1,157,000		1,080,000
Total, Fair Value	3,593,000		3,593,000		3,670,000
Total, Unrealized Losses	1,157,000		1,157,000		1,080,000
Collateralized Debt Obligations [Abstract]
Number of securities issued	3		3
Maturity period of trust preferred securities			30 years
Period the securities become callable by issuer, minimum			5 years
Expected rate of severity on losses (in hundredths)			95.00%
Period to avoid prepayment penalty, minimum			5 years
Fair value inputs, discount rate variable basis			3 month LIBOR
Available-for-sale, fair value [Abstract]
Total available-for-sale	3,895,000		3,895,000		3,965,000
Collateralized debt obligations [Member] | Minimum [Member]
Collateralized Debt Obligations [Abstract]
Expected rate of prepayment (in hundredths)			1.00%
Expected rate of default (in hundredths)			0.57%
Fair value inputs, spread on LIBOR (in hundredths)			4.00%
Collateralized debt obligations [Member] | Maximum [Member]
Collateralized Debt Obligations [Abstract]
Expected rate of prepayment (in hundredths)			2.00%
Expected rate of default (in hundredths)			0.66%
Fair value inputs, spread on LIBOR (in hundredths)			9.59%
States and political subdivisions [Member]
Held to maturity [Abstract]
Amortized cost	2,058,000		2,058,000		2,032,000
Gross unrealized gains	151,000		151,000		87,000
Gross unrealized losses	0		0		39,000
Other-than-temporary impairments in OCI	0		0		0
Held-to-maturity Securities, Fair Value	2,209,000		2,209,000		2,080,000
Held-to-maturity [Abstract]
Less Than 12 Months, Fair Value	0		0		758,000
Less Than 12 Months, Unrealized Losses	0		0		39,000
12 Months or Greater, Fair value	0		0		0
12 Months or Greater, Unrealized Losses	0		0		0
Total, Fair Value	0		0		758,000
Total, Unrealized Losses	$ 0		$ 0		$ 39,000

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash Flows from Operating Activities
Net income	$ 5,799	$ 6,855
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	267	273
Provision for loan losses	5,800	6,850
Bank owned life insurance	(138)	(133)
Supplemental executive retirement plan expense	102	286
Gain on sale of SBA loans	(2,057)	(3,892)
SBA loans originated for sale	(18,679)	(21,993)
Proceeds from sale of SBA loans originated for sale	19,210	24,455
Loss on sale of other real estate owned	895	525
Other than temporary decline in value of investments	0	85
Net accretion of purchase premiums and discounts on securities	(10)	(59)
Deferred income tax benefit	0	0
Changes in operating assets and liabilities:
Increase in accrued interest receivable and other assets	(448)	(908)
Increase (decrease) in accrued interest payable and other accrued liabilities	316	(1,047)
Net cash provided by operating activities	11,057	11,297
Cash Flows from Investing Activities
Purchases of investment securities available for sale	(4,148)	0
Redemptions (Purchases) of restricted stock	1,340	(77)
Proceeds from sale of securities available for sale	0	500
Proceeds from maturities, calls and principal payments on securities	5,039	2,983
Proceeds from sale of other real estate owned	1,331	3,175
Advances on other real estate owned	(227)	(4,387)
Net decrease (increase) in loans	3,230	(17,427)
Purchases of bank premises and equipment	(217)	(161)
Net cash provided by (used in) investing activities	6,348	(15,394)
Cash Flows from Financing Activities
Payment of dividend on preferred stock	(610)	(611)
Cash payment of fractional shares on 10% stock dividend	(1)	(1)
Minority interest capital withdrawal, net	(900)	(812)
Net decrease in Federal Home Loan Bank and short term borrowings	(30,119)	0
Proceeds from exercise of stock options and warrants	35	0
Payments of Federal Home Loan Bank advances	0	(113)
Net (decrease) increase in noninterest-bearing deposits	(2,754)	227
Net increase in interest-bearing deposits	7,599	17,080
Net cash (used in) provided by financing activities	(26,750)	15,770
(Decrease) increase in cash and cash equivalents	(9,345)	11,673
Cash and Cash Equivalents, beginning of period	110,228	57,628
Cash and Cash Equivalents, end of period	100,883	69,301
Cash paid during the year for:
Interest on deposits and borrowed funds	5,707	7,219
Income taxes	4,015	5,601
Supplemental Schedule of Noncash Activities:
Real estate acquired in settlement of loans	$ 10,691	$ 802

XML

LOANS (Details) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Portfolio of loans outstanding [Abstract]
Loans Amount	$ 603,560,000		$ 625,117,000
Percentage of Total Loans (in hundredths)	100.00%		100.00%
Development and construction loans with interest reserves	6,400,000		14,600,000
Amount capitalized from reserves and recognized as interest income	158,000	238,000
Loan origination/risk management [Abstract]
Percentage of loan-to-value (in hundredths)	80.00%
Commercial and Industrial [Member]
Portfolio of loans outstanding [Abstract]
Loans Amount	21,955,000		24,136,000
Percentage of Total Loans (in hundredths)	3.60%		3.90%
Real Estate Construction [Member] | Residential [Member]
Portfolio of loans outstanding [Abstract]
Loans Amount	8,117,000		21,287,000
Percentage of Total Loans (in hundredths)	1.30%		3.40%
Real Estate Construction [Member] | Commercial [Member]
Portfolio of loans outstanding [Abstract]
Loans Amount	41,190,000		50,361,000
Percentage of Total Loans (in hundredths)	6.80%		8.10%
Real Estate Mortgage [Member] | Commercial - Owner Occupied [Member]
Portfolio of loans outstanding [Abstract]
Loans Amount	148,785,000		147,449,000
Percentage of Total Loans (in hundredths)	24.70%		23.60%
Real Estate Mortgage [Member] | Commercial - Non-owner occupied [Member]
Portfolio of loans outstanding [Abstract]
Loans Amount	206,529,000		204,216,000
Percentage of Total Loans (in hundredths)	34.30%		32.60%
Real Estate Mortgage [Member] | Residential - 1 to 4 Family [Member]
Portfolio of loans outstanding [Abstract]
Loans Amount	138,528,000		138,768,000
Percentage of Total Loans (in hundredths)	23.00%		22.20%
Real Estate Mortgage [Member] | Residential - Multifamily [Member]
Portfolio of loans outstanding [Abstract]
Loans Amount	20,056,000		20,126,000
Percentage of Total Loans (in hundredths)	3.30%		3.20%
Consumer [Member]
Portfolio of loans outstanding [Abstract]
Loans Amount	$ 18,400,000		$ 18,774,000
Percentage of Total Loans (in hundredths)	3.00%		3.00%

XML

INCOME TAXES (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
INCOME TAXES [Abstract]
Pre-tax income	$ 3,280,000	$ 2,883,000	$ 8,694,000	$ 11,460,000
Income tax expense	1,365,000	1,161,000	2,895,000	4,605,000
Tax savings related to prior years			$ 576,000

XML

CONSOLIDATED BALANCE SHEETS (unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Assets
Cash and due from financial institutions	$ 1,934	$ 3,733
Federal funds sold and cash equivalents	98,949	106,495
Total Cash and cash equivalents	100,883	110,228
Investment securities available for sale, at fair value	21,457	22,517
Investment securities held to maturity (fair value of $2,209 at September 30, 2012 and $2,080 at December 31, 2011)	2,058	2,032
Total investment securities	23,515	24,549
Loans held for sale	1,835	225
Loans, net of unearned income	603,560	625,117
Less: Allowance for loan losses	(17,487)	(19,323)
Net loans	586,073	605,794
Accrued interest receivable	2,765	3,039
Bank premises and equipment, net	4,072	4,122
Other real estate owned (OREO)	28,102	19,410
Restricted stock, at cost	2,225	3,565
Bank owned life insurance (BOLI)	5,679	5,541
Other assets	15,041	14,265
Total Assets	770,190	790,738
Deposits
Noninterest-bearing deposits	28,392	31,146
Interest-bearing deposits	611,308	603,709
Total deposits	639,700	634,855
FHLB borrowings	20,488	50,607
Other borrowed funds	10,000	10,000
Subordinated debentures	13,403	13,403
Accrued interest payable	631	618
Other liabilities	4,378	3,982
Total liabilities	688,600	713,465
Equity
Preferred stock, cumulative perpetual, $1,000 liquidation value; authorized 1,000,000 shares; Issued: 16,288 shares at September 30, 2012 and December 31, 2011	16,016	15,868
Common stock, $.10 par value; authorized 10,000,000 shares; Issued: 5,594,793 shares at September 30, 2012 and 5,097,078 shares December 31, 2011	560	510
Additional paid-in capital	48,869	45,844
Retained earnings	19,366	17,808
Accumulated other comprehensive loss	(632)	(626)
Treasury stock, 210,900 shares at September 30, 2012 and December 31, 2011, at cost	(2,180)	(2,180)
Total shareholders' equity	81,999	77,224
Noncontrolling interest in consolidated subsidiaries	(409)	49
Total equity	81,590	77,273
Total liabilities and equity	$ 770,190	$ 790,738

XML

CONSOLIDATED STATEMENTS OF CHANGE IN TOTAL EQUITY (unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]	Treasury Stock [Member]	Total Shareholders Equity [Member]	Non-Controlling Interest [Member]	Total
Balance at Dec. 31, 2011	$ 15,868	$ 510	$ 45,844	$ 17,808	$ (626)	$ (2,180)	$ 77,224	$ 49	$ 77,273
Balance (in shares) at Dec. 31, 2011		5,097,078							5,097,078
Capital withdrawals by noncontrolling interest								(900)	(900)
Stock options exercised		1	34				35		35
Stock options exercised (in shares)		9,332
10% common stock dividend		49	2,991	(3,041)			(1)		(1)
10% common stock dividend (in shares)		488,383
Comprehensive income:
Net income				5,357			5,357	442	5,799
Non-credit unrealized gain on securities with OTTI, net of taxes					12		12		12
Net unrealized (loss) on securities without OTTI, net of taxes					(28)		(28)		(28)
Pension liability adjustments, net of taxes					10		10		10
Total comprehensive income							5,351	442	5,793
Dividend on preferred stock (5% annually)				(610)			(610)		(610)
Accretion of discount on preferred stock	148			(148)
Balance at Sep. 30, 2012	$ 16,016	$ 560	$ 48,869	$ 19,366	$ (632)	$ (2,180)	$ 81,999	$ (409)	$ 81,590
Balance (in shares) at Sep. 30, 2012		5,594,793							5,594,793

XML

LOANS, Credit Quality Indicators (Details) (USD $) In Thousands, unless otherwise specified			9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 Minimum [Member]	Sep. 30, 2012 Maximum [Member]	Sep. 30, 2012 Commercial and Industrial [Member]	Dec. 31, 2011 Commercial and Industrial [Member]	Dec. 31, 2011 Commercial [Member]	Sep. 30, 2012 Real Estate Construction [Member] Residential [Member]	Dec. 31, 2011 Real Estate Construction [Member] Residential [Member]	Sep. 30, 2012 Real Estate Construction [Member] Commercial [Member]	Dec. 31, 2011 Real Estate Construction [Member] Commercial [Member]	Sep. 30, 2012 Real Estate Mortgage [Member] Commercial - Owner Occupied [Member]	Dec. 31, 2011 Real Estate Mortgage [Member] Commercial - Owner Occupied [Member]	Sep. 30, 2012 Real Estate Mortgage [Member] Commercial - Non-owner occupied [Member]	Dec. 31, 2011 Real Estate Mortgage [Member] Commercial - Non-owner occupied [Member]	Sep. 30, 2012 Real Estate Mortgage [Member] Residential - 1 to 4 Family [Member]	Dec. 31, 2011 Real Estate Mortgage [Member] Residential - 1 to 4 Family [Member]	Sep. 30, 2012 Real Estate Mortgage [Member] Residential - Multifamily [Member]	Dec. 31, 2011 Real Estate Mortgage [Member] Residential - Multifamily [Member]	Sep. 30, 2012 Consumer [Member]	Dec. 31, 2011 Consumer [Member]	Sep. 30, 2012 Pass [Member]	Dec. 31, 2011 Pass [Member]	Sep. 30, 2012 Pass [Member] Commercial and Industrial [Member]	Dec. 31, 2011 Pass [Member] Commercial [Member]	Sep. 30, 2012 Pass [Member] Real Estate Construction [Member] Residential [Member]	Dec. 31, 2011 Pass [Member] Real Estate Construction [Member] Residential [Member]	Sep. 30, 2012 Pass [Member] Real Estate Construction [Member] Commercial [Member]	Dec. 31, 2011 Pass [Member] Real Estate Construction [Member] Commercial [Member]	Sep. 30, 2012 Pass [Member] Real Estate Mortgage [Member] Commercial - Owner Occupied [Member]	Dec. 31, 2011 Pass [Member] Real Estate Mortgage [Member] Commercial - Owner Occupied [Member]	Sep. 30, 2012 Pass [Member] Real Estate Mortgage [Member] Commercial - Non-owner occupied [Member]	Dec. 31, 2011 Pass [Member] Real Estate Mortgage [Member] Commercial - Non-owner occupied [Member]	Sep. 30, 2012 Pass [Member] Real Estate Mortgage [Member] Residential - 1 to 4 Family [Member]	Dec. 31, 2011 Pass [Member] Real Estate Mortgage [Member] Residential - 1 to 4 Family [Member]	Sep. 30, 2012 Pass [Member] Real Estate Mortgage [Member] Residential - Multifamily [Member]	Dec. 31, 2011 Pass [Member] Real Estate Mortgage [Member] Residential - Multifamily [Member]	Sep. 30, 2012 Pass [Member] Consumer [Member]	Dec. 31, 2011 Pass [Member] Consumer [Member]	Sep. 30, 2012 OAEM [Member]	Dec. 31, 2011 OAEM [Member]	Sep. 30, 2012 OAEM [Member] Commercial and Industrial [Member]	Dec. 31, 2011 OAEM [Member] Commercial [Member]	Sep. 30, 2012 OAEM [Member] Real Estate Construction [Member] Residential [Member]	Dec. 31, 2011 OAEM [Member] Real Estate Construction [Member] Residential [Member]	Sep. 30, 2012 OAEM [Member] Real Estate Construction [Member] Commercial [Member]	Dec. 31, 2011 OAEM [Member] Real Estate Construction [Member] Commercial [Member]	Sep. 30, 2012 OAEM [Member] Real Estate Mortgage [Member] Commercial - Owner Occupied [Member]	Dec. 31, 2011 OAEM [Member] Real Estate Mortgage [Member] Commercial - Owner Occupied [Member]	Sep. 30, 2012 OAEM [Member] Real Estate Mortgage [Member] Commercial - Non-owner occupied [Member]	Dec. 31, 2011 OAEM [Member] Real Estate Mortgage [Member] Commercial - Non-owner occupied [Member]	Sep. 30, 2012 OAEM [Member] Real Estate Mortgage [Member] Residential - 1 to 4 Family [Member]	Dec. 31, 2011 OAEM [Member] Real Estate Mortgage [Member] Residential - 1 to 4 Family [Member]	Sep. 30, 2012 OAEM [Member] Real Estate Mortgage [Member] Residential - Multifamily [Member]	Dec. 31, 2011 OAEM [Member] Real Estate Mortgage [Member] Residential - Multifamily [Member]	Sep. 30, 2012 OAEM [Member] Consumer [Member]	Dec. 31, 2011 OAEM [Member] Consumer [Member]	Sep. 30, 2012 Substandard [Member]	Dec. 31, 2011 Substandard [Member]	Sep. 30, 2012 Substandard [Member] Commercial and Industrial [Member]	Dec. 31, 2011 Substandard [Member] Commercial [Member]	Sep. 30, 2012 Substandard [Member] Real Estate Construction [Member] Residential [Member]	Dec. 31, 2011 Substandard [Member] Real Estate Construction [Member] Residential [Member]	Sep. 30, 2012 Substandard [Member] Real Estate Construction [Member] Commercial [Member]	Dec. 31, 2011 Substandard [Member] Real Estate Construction [Member] Commercial [Member]	Sep. 30, 2012 Substandard [Member] Real Estate Mortgage [Member] Commercial - Owner Occupied [Member]	Dec. 31, 2011 Substandard [Member] Real Estate Mortgage [Member] Commercial - Owner Occupied [Member]	Sep. 30, 2012 Substandard [Member] Real Estate Mortgage [Member] Commercial - Non-owner occupied [Member]	Dec. 31, 2011 Substandard [Member] Real Estate Mortgage [Member] Commercial - Non-owner occupied [Member]	Sep. 30, 2012 Substandard [Member] Real Estate Mortgage [Member] Residential - 1 to 4 Family [Member]	Dec. 31, 2011 Substandard [Member] Real Estate Mortgage [Member] Residential - 1 to 4 Family [Member]	Sep. 30, 2012 Substandard [Member] Real Estate Mortgage [Member] Residential - Multifamily [Member]	Dec. 31, 2011 Substandard [Member] Real Estate Mortgage [Member] Residential - Multifamily [Member]	Sep. 30, 2012 Substandard [Member] Consumer [Member]	Dec. 31, 2011 Substandard [Member] Consumer [Member]	Sep. 30, 2012 Doubtful [Member]	Dec. 31, 2011 Doubtful [Member]	Sep. 30, 2012 Doubtful [Member] Commercial and Industrial [Member]	Dec. 31, 2011 Doubtful [Member] Commercial [Member]	Sep. 30, 2012 Doubtful [Member] Real Estate Construction [Member] Residential [Member]	Dec. 31, 2011 Doubtful [Member] Real Estate Construction [Member] Residential [Member]	Sep. 30, 2012 Doubtful [Member] Real Estate Construction [Member] Commercial [Member]	Dec. 31, 2011 Doubtful [Member] Real Estate Construction [Member] Commercial [Member]	Sep. 30, 2012 Doubtful [Member] Real Estate Mortgage [Member] Commercial - Owner Occupied [Member]	Dec. 31, 2011 Doubtful [Member] Real Estate Mortgage [Member] Commercial - Owner Occupied [Member]	Sep. 30, 2012 Doubtful [Member] Real Estate Mortgage [Member] Commercial - Non-owner occupied [Member]	Dec. 31, 2011 Doubtful [Member] Real Estate Mortgage [Member] Commercial - Non-owner occupied [Member]	Sep. 30, 2012 Doubtful [Member] Real Estate Mortgage [Member] Residential - 1 to 4 Family [Member]	Dec. 31, 2011 Doubtful [Member] Real Estate Mortgage [Member] Residential - 1 to 4 Family [Member]	Sep. 30, 2012 Doubtful [Member] Real Estate Mortgage [Member] Residential - Multifamily [Member]	Dec. 31, 2011 Doubtful [Member] Real Estate Mortgage [Member] Residential - Multifamily [Member]	Sep. 30, 2012 Doubtful [Member] Consumer [Member]	Dec. 31, 2011 Doubtful [Member] Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan scale for risk grade points range			1	7
Loans	$ 603,560	$ 625,117			$ 21,955	$ 24,136	$ 24,136	$ 8,117	$ 21,287	$ 41,190	$ 50,361	$ 148,785	$ 147,449	$ 206,529	$ 204,216	$ 138,528	$ 138,768	$ 20,056	$ 20,126	$ 18,400	$ 18,774	$ 501,719	$ 501,154	$ 13,984	$ 16,033	$ 6,598	$ 12,327	$ 19,375	$ 23,898	$ 142,590	$ 137,200	$ 160,744	$ 156,277	$ 123,913	$ 120,658	$ 15,406	$ 16,261	$ 18,110	$ 18,500	$ 25,588	$ 29,748	$ 7,100	$ 7,500	$ 0	$ 350	$ 0	$ 0	$ 755	$ 3,840	$ 14,349	$ 10,430	$ 2,272	$ 4,360	$ 1,112	$ 3,268	$ 0	$ 0	$ 77,253	$ 94,215	$ 871	$ 603	$ 1,519	$ 8,610	$ 21,815	$ 26,463	$ 5,440	$ 6,409	$ 31,436	$ 37,509	$ 12,344	$ 13,750	$ 3,538	$ 597	$ 290	$ 274	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0

XML

LOANS (Tables)

9 Months Ended

Sep. 30, 2012

LOANS [Abstract]

Portfolio of Loans Outstanding

The portfolio of loans outstanding consisted of the following at September 30, 2012 and December 31, 2011:

	September 30, 2012					December 31, 2011
	Amount		Percentage of Total Loans			Amount		Percentage of Total Loans
	(Amounts in thousands)
Commercial and Industrial	$	21,955		3.6	%	$	24,136		3.9	%
Real Estate Construction:
Residential		8,117		1.3	%		21,287		3.4	%
Commercial		41,190		6.8	%		50,361		8.1	%
Real Estate Mortgage:
Commercial – Owner Occupied		148,785		24.7	%		147,449		23.6	%
Commercial – Non-owner Occupied		206,529		34.3	%		204,216		32.6	%
Residential – 1 to 4 Family		138,528		23.0	%		138,768		22.2	%
Residential – Multifamily		20,056		3.3	%		20,126		3.2	%
Consumer		18,400		3.0	%		18,774		3.0	%
Total Loans	$	603,560		100.0	%	$	625,117		100.0	%

Age Analysis of Past Due Loans by Class

An age analysis of past due loans by class follows:

September 30, 2012	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and Not Accruing		Total Past Due		Current		Total Loans		Loans > 90 Days and Accruing
	(Amounts in thousands)
Commercial and Industrial	$	68	$	—	$	303	$	371	$	21,584	$	21,955	$	—
Real Estate Construction:
Residential		—		—		1,035		1,035		7,082		8,117		—
Commercial		—		—		14,501		14,501		26,689		41,190		—
Real Estate Mortgage:
Commercial – Owner Occupied		—		—		1,864		1,864		146,921		148,785		—
Commercial – Non-owner Occupied		375		5,036		24,122		29,533		176,996		206,529		—
Residential – 1 to 4 Family		1,299		—		7,634		8,933		129,595		138,528		—
Residential – Multifamily		—		—		3,160		3,160		16,896		20,056		—
Consumer		66		—		291		357		18,043		18,400		—
Total	$	1,808	$	5,036	$	52,910	$	59,754	$	543,806	$	603,560	$	—

December 31, 2011	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and Not Accruing		Total Past Due		Current		Total Loans		Loans > 90 Days and Accruing
	(Amounts in thousands)
Commercial and Industrial	$	603	$	—	$	—	$	603	$	23,533	$	24,136	$	—
Real Estate Construction:
Residential		350		—		5,265		5,615		15,672		21,287		—
Commercial		—		—		7,703		7,703		42,658		50,361		—
Real Estate Mortgage:
Commercial – Owner Occupied		1,358		—		4,797		6,155		141,294		147,449		—
Commercial – Non-owner Occupied		1,574		—		18,132		19,706		184,510		204,216		—
Residential – 1 to 4 Family		2,587		—		7,691		10,278		128,490		138,768		—
Residential – Multifamily		—		—		597		597		19,529		20,126		—
Consumer		—		—		274		274		18,500		18,774		—
Total	$	6,472	$	—	$	44,459	$	50,931	$	574,186	$	625,117	$	—

Impaired Loans

Impaired loans are set forth in the following tables.

September 30, 2012	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Amounts in thousands)
With no related allowance recorded:
Commercial and Industrial	$	803	$	870	$	—
Real Estate Construction:
Residential		1,519		3,319		—
Commercial		14,435		14,435		—
Real Estate Mortgage:
Commercial – Owner Occupied		5,600		5,784		—
Commercial – Non-owner Occupied		47,547		51,019		—
Residential – 1 to 4 Family		12,608		13,464		—
Residential – Multifamily		3,538		3,538		—
Consumer		291		327		—
		86,341		92,756		—
With an allowance recorded:
Commercial and Industrial		—		—		—
Real Estate Construction:
Residential		—		—		—
Commercial		481		538		34
Real Estate Mortgage:
Commercial – Owner Occupied		938		938		55
Commercial – Non-owner Occupied		3,571		3,571		45
Residential – 1 to 4 Family		507		764		16
Residential – Multifamily		—		—		—
Consumer		—		—		—
		5,497		5,811		150
Total:
Commercial and Industrial		803		870		—
Real Estate Construction:
Residential		1,519		3,319		—
Commercial		14,916		14,973		34
Real Estate Mortgage:
Commercial – Owner Occupied		6,538		6,722		55
Commercial – Non-owner Occupied		51,118		54,590		45
Residential – 1 to 4 Family		13,115		14,228		16
Residential – Multifamily		3,538		3,538		—
Consumer		291		327		—
	$	91,838	$	98,567	$	150

December 31, 2011	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Amounts in thousands)
With no related allowance recorded:
Commercial and Industrial	$	603	$	603	$	—
Real Estate Construction:
Residential		4,440		5,246		—
Commercial		12,898		13,118		—
Real Estate Mortgage:
Commercial – Owner Occupied		6,946		6,946		—
Commercial – Non-owner Occupied		30,424		30,852		—
Residential – 1 to 4 Family		8,477		10,737		—
Residential – Multifamily		597		667		—
Consumer		229		229		—
		64,614		68,398		—
With an allowance recorded:
Commercial and Industrial		—		—		—
Real Estate Construction:
Residential		4,170		5,151		1,297
Commercial		3,329		3,329		380
Real Estate Mortgage:
Commercial – Owner Occupied		590		590		23
Commercial – Non-owner Occupied		17,820		17,940		2,526
Residential – 1 to 4 Family		3,388		3,589		600
Residential – Multifamily		3,268		3,268		33
Consumer		—		—		—
		32,565		33,867		4,859
Total:
Commercial and Industrial		603		603		—
Real Estate Construction:
Residential		8,610		10,397		1,297
Commercial		16,227		16,447		380
Real Estate Mortgage:
Commercial – Owner Occupied		7,536		7,536		23
Commercial – Non-owner Occupied		48,244		48,792		2,526
Residential – 1 to 4 Family		11,865		14,326		600
Residential – Multifamily		3,865		3,935		33
Consumer		229		229		—
	$	97,179	$	102,265	$	4,859

The following table presents by loan portfolio class, the average recorded investment and interest income recognized on impaired loans for the nine months and three months ended September 30, 2012 and 2011:

	Nine Months Ended September 30,
	2012				2011
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(Amounts in thousands)
Commercial and Industrial	$	850	$	17	$	594	$	18
Real Estate Construction:
Residential		2,126		47		12,614		336
Commercial		14,947		196		16,019		386
Real Estate Mortgage:
Commercial – Owner Occupied		6,751		176		7,690		169
Commercial – Non-owner Occupied		52,619		1,469		57,521		2,533
Residential – 1 to 4 Family		13,877		370		16,363		233
Residential – Multifamily		3,604		60		4,762		247
Consumer		310		6		171		8
Total	$	95,084	$	2,341	$	115,734	$	3,930

	Three Months Ended September 30,
	2012				2011
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(Amounts in thousands)
Commercial and Industrial	$	806	$	6	$	594	$	8
Real Estate Construction:
Residential		1,497		15		12,413		148
Commercial		14,931		36		16,910		123
Real Estate Mortgage:
Commercial – Owner Occupied		6,652		59		7,648		61
Commercial – Non-owner Occupied		51,475		408		50,766		1,299
Residential – 1 to 4 Family		13,556		85		15,943		84
Residential – Multifamily		3,559		6		4,883		83
Consumer		291		1		86		8
Total	$	92,767	$	616	$	109,243	$	1,814

New TDRs and TDR Default Information

The following tables illustrate new TDRs and TDR default information for the nine months and three months ended September 30, 2012 and 2011.

	Nine Months Ended September 30, 2012						Nine Months Ended September 30, 2011
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in Thousands)
Troubled Debt Restructurings
Commercial and Industrial		2	$	750	$	750		1	$	594	$	594
Construction:
Residential		1		415		415		1		959		959
Commercial		11		9,938		9,938		—		—		—
Real Estate Mortgage:
Commercial – Owner Occupied		1		3,220		3,220		1		315		315
Commercial – Non-owner Occupied		3		4,067		4,067		3		5,543		5,543
Residential – 1-4 Family		3		4,168		4,168		4		6,250		6,250
Residential – Multifamily		1		380		380		2		506		506
Consumer		—		—		—		—		—		—
Total		22	$	22,938	$	22,938		12	$	14,167	$	14,167

	Three Months Ended September 30, 2012						Three Months Ended September 30, 2011
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in Thousands)
Troubled Debt Restructurings
Commercial and Industrial		—	$	—	$	—		—	$	—	$	—
Construction:
Residential		—		—		—		—		—		—
Commercial		11		9,938		9,938		—		—		—
Real Estate Mortgage:
Commercial – Owner Occupied		—		—		—		—		—		—
Commercial – Non-owner Occupied		1		1,148		1,148		—		—		—
Residential – 1-4 Family		1		203		203		—		—		—
Residential – Multifamily		—		—		—		—		—		—
Consumer		—		—		—		—		—		—
Total		13	$	11,289	$	11,289		—	$	—	$	—

TDR modification by types

The following tables shows the types of modifications made during the nine months and three months ended September 30, 2012 and 2011:

	Nine Months Ended September 30, 2012								Nine Months Ended September 30, 2011
	Extension		Period of Interest Only		Interest Rate Reduction		Total		Extension		Period of Interest Only		Interest Rate Reduction		Total
	(Dollars in Thousands)
Troubled Debt Restructurings
Commercial and Industrial	$	500	$	—	$	250	$	750	$	—	$	—	$	594	$	594
Construction:
Residential		—		—		415		415		—		—		959		959
Commercial		8,008		—		1,930		9,938		—		—		—		—
Real Estate Mortgage:
Commercial – Owner Occupied		3,220		—		—		3,220		—		—		315		315
Commercial – Non-owner Occupied		1,156		—		2,911		4,067		—		1,505		4,038		5,543
Residential – 1-4 Family		924		—		3,244		4,168		—		—		6,250		6,250
Residential – Multifamily		—		380		—		380		—		—		506		506
Consumer		—		—		—		—		—		—		—		—
Total	$	13,808	$	380	$	8,750	$	22,938	$	—	$	1,505	$	12,662	$	14,167

	Three Months Ended September 30, 2012								Three Months Ended September 30, 2011
	Extension		Period of Interest Only		Interest Rate Reduction		Total		Extension		Period of Interest Only		Interest Rate Reduction		Total
	(Dollars in Thousands)
Troubled Debt Restructurings
Commercial and Industrial	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Construction:
Residential		—		—		—		—		—		—		—		—
Commercial		8,008		—		1,930		9,938		—		—		—		—
Real Estate Mortgage:
Commercial – Owner Occupied		—		—		—		—		—		—		—		—
Commercial – Non-owner Occupied		1,148		—		—		1,148		—		—		—		—
Residential – 1-4 Family		—		—		203		203		—		—		—		—
Residential – Multifamily		—		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—		—
Total	$	9,156	$	—	$	2,133	$	11,289	$	—	$	—	$	—	$	—

Troubled Debt Restructurings That Subsequently Defaulted	For the nine months ended September 30, 2012			For the nine months ended September, 30 2011
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in Thousands)
Commercial and Industrial	1	$	603	—	$	—
Real Estate Construction:
Residential	1		1,004	1		316
Commercial	10		8,508	—		—
Real Estate Mortgage:
Commercial – Owner Occupied	—		—	5		4,131
Commercial – Non-owner Occupied	3		4,779	1		121
Residential – 1-4 Family	4		978	1		929
Residential – Multifamily	1		3,267	—		—
Consumer	—		—	—		—
Total	20	$	19,139	8	$	5,497

Troubled Debt Restructurings That Subsequently Defaulted	For the three months ended September 30, 2012			For the three months ended September, 30 2011
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in Thousands)
Commercial and Industrial	—	$	—	—	$	—
Real Estate Construction:
Residential	—		—	1		316
Commercial	9		8,008	—		—
Real Estate Mortgage:
Commercial – Owner Occupied	—		—	—		—
Commercial – Non-owner Occupied	1		1,156	—		—
Residential – 1-4 Family	1		202	—		—
Residential – Multifamily	—		—	—		—
Consumer	—		—	—		—
Total	11	$	9,366	1	$	316

Analysis of Credit Risk Profile by Internally Assigned Grades

An analysis of the credit risk profile by internally assigned grades is as follows:

At September 30, 2012	Pass		OAEM		Substandard		Doubtful		Total
	(Amounts in thousands)
Commercial and Industrial	$	13,984	$	7,100	$	871	$	—	$	21,955
Real Estate Construction:
Residential		6,598		—		1,519		—		8,117
Commercial		19,375		—		21,815		—		41,190
Real Estate Mortgage:
Commercial – Owner Occupied		142,590		755		5,440		—		148,785
Commercial – Non-owner Occupied		160,744		14,349		31,436		—		206,529
Residential – 1 to 4 Family		123,912		2,272		12,344		—		138,528
Residential – Multifamily		15,406		1,112		3,538		—		20,056
Consumer		18,110		—		290		—		18,400
Total	$	500,719	$	25,588	$	77,253	$	—	$	603,560

At December 31, 2011	Pass		OAEM		Substandard		Doubtful		Total
	(Amounts in thousands)
Commercial	$	16,033	$	7,500	$	603	$	—	$	24,136
Real Estate Construction:
Residential		12,327		350		8,610		—		21,287
Commercial		23,898		—		26,463		—		50,361
Real Estate Mortgage:
Commercial – Owner Occupied		137,200		3,840		6,409		—		147,449
Commercial – Non-owner Occupied		156,277		10,430		37,509		—		204,216
Residential – 1 to 4 Family		120,658		4,360		13,750		—		138,768
Residential – Multifamily		16,261		3,268		597		—		20,126
Consumer		18,500		—		274		—		18,774
Total	$	501,154	$	29,748	$	94,215	$	—	$	625,117

XML

ALLOWANCE FOR LOAN LOSSES (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
ALLOWANCE FOR LOAN LOSSES [Abstract]
Number of elements in allowance for possible loan losses	3		3
Grade for a loan to be evaluated for impairment, minimum	6		6
Allowance for Loan Losses [Roll Forward]
Beginning Balance	$ 18,325	$ 16,540	$ 19,323	$ 14,789
Charge-offs	(2,345)	(2,441)	(8,083)	(5,190)
Recoveries	4	23	444	23
Provisions	1,503	2,350	5,803	6,850
Ending Balance	17,487	16,472	17,487	16,472
Loans and Allowances for Loan Losses [Abstract]
Allowances for loan losses, individually evaluated for impairment	150		150		4,859
Allowances for loan losses, collectively evaluated for impairment	17,337		17,337		14,464
Allowance for loan losses	17,487	16,472	17,487	16,472
Loans, individually evaluated for impairment	91,838		91,838		97,179
Loans, collectively evaluated for impairment	511,722		511,722		527,938
Loans	603,560		603,560		625,117
Commercial and Industrial [Member]
Allowance for Loan Losses [Roll Forward]
Beginning Balance	494	496	451	448
Charge-offs	0	0	(66)	(22)
Recoveries	0	0	0	0
Provisions	(33)	(40)	76	30
Ending Balance	461	456	461	456
Loans and Allowances for Loan Losses [Abstract]
Allowances for loan losses, individually evaluated for impairment	0		0		0
Allowances for loan losses, collectively evaluated for impairment	461		461		451
Allowance for loan losses	461	456	461	456
Loans, individually evaluated for impairment	803		803		603
Loans, collectively evaluated for impairment	21,152		21,152		23,533
Loans	21,955		21,955		24,136
Real Estate Construction [Member] | Residential [Member]
Allowance for Loan Losses [Roll Forward]
Beginning Balance	1,290	2,494	2,613	2,980
Charge-offs	(37)	(37)	(1,326)	(2,764)
Recoveries	0	22	37	22
Provisions	(502)	(70)	(573)	2,171
Ending Balance	751	2,409	751	2,409
Loans and Allowances for Loan Losses [Abstract]
Allowances for loan losses, individually evaluated for impairment	0		0		1,297
Allowances for loan losses, collectively evaluated for impairment	751		751		1,316
Allowance for loan losses	751	2,409	751	2,409
Loans, individually evaluated for impairment	1,519		1,519		8,610
Loans, collectively evaluated for impairment	6,598		6,598		12,677
Loans	8,117		8,117		21,287
Real Estate Construction [Member] | Commercial [Member]
Allowance for Loan Losses [Roll Forward]
Beginning Balance	1,481	2,077	1,971	1,576
Charge-offs	0	(494)	(310)	(494)
Recoveries	0	0	0	0
Provisions	(462)	529	(642)	1,030
Ending Balance	1,019	2,112	1,019	2,112
Loans and Allowances for Loan Losses [Abstract]
Allowances for loan losses, individually evaluated for impairment	34		34		380
Allowances for loan losses, collectively evaluated for impairment	985		985		1,591
Allowance for loan losses	1,019	2,112	1,019	2,112
Loans, individually evaluated for impairment	14,916		14,916		16,227
Loans, collectively evaluated for impairment	26,274		26,274		34,134
Loans	41,190		41,190		50,361
Real Estate Mortgage [Member] | Commercial - Owner Occupied [Member]
Allowance for Loan Losses [Roll Forward]
Beginning Balance	3,521	2,508	2,714	2,508
Charge-offs	(311)	0	(1,058)	0
Recoveries	0	0	0	0
Provisions	474	203	2,028	203
Ending Balance	3,684	2,711	3,684	2,711
Loans and Allowances for Loan Losses [Abstract]
Allowances for loan losses, individually evaluated for impairment	55		55		23
Allowances for loan losses, collectively evaluated for impairment	3,629		3,629		2,691
Allowance for loan losses	3,684	2,711	3,684	2,711
Loans, individually evaluated for impairment	6,538		6,538		7,536
Loans, collectively evaluated for impairment	142,247		142,247		139,913
Loans	148,785		148,785		147,449
Real Estate Mortgage [Member] | Commercial - Non-owner occupied [Member]
Allowance for Loan Losses [Roll Forward]
Beginning Balance	6,268	4,452	6,742	3,792
Charge-offs	(816)	0	(3,756)	0
Recoveries	0	0	0	0
Provisions	280	123	2,746	783
Ending Balance	5,732	4,575	5,732	4,575
Loans and Allowances for Loan Losses [Abstract]
Allowances for loan losses, individually evaluated for impairment	45		45		2,526
Allowances for loan losses, collectively evaluated for impairment	5,687		5,687		4,216
Allowance for loan losses	5,732	4,575	5,732	4,575
Loans, individually evaluated for impairment	51,118		51,118		48,244
Loans, collectively evaluated for impairment	155,411		155,411		155,972
Loans	206,529		206,529		204,216
Real Estate Mortgage [Member] | Residential - 1 to 4 Family [Member]
Allowance for Loan Losses [Roll Forward]
Beginning Balance	4,408	3,694	4,190	2,848
Charge-offs	(1,181)	(1,910)	(1,531)	(1,910)
Recoveries	4	0	407	0
Provisions	1,195	2,073	1,360	2,919
Ending Balance	4,426	3,857	4,426	3,857
Loans and Allowances for Loan Losses [Abstract]
Allowances for loan losses, individually evaluated for impairment	16		16		600
Allowances for loan losses, collectively evaluated for impairment	4,410		4,410		3,590
Allowance for loan losses	4,426	3,857	4,426	3,857
Loans, individually evaluated for impairment	13,115		13,115		11,865
Loans, collectively evaluated for impairment	125,413		125,413		126,903
Loans	138,528		138,528		138,768
Real Estate Mortgage [Member] | Residential - Multifamily [Member]
Allowance for Loan Losses [Roll Forward]
Beginning Balance	268	372	278	372
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provisions	13	(167)	3	(167)
Ending Balance	281	205	281	205
Loans and Allowances for Loan Losses [Abstract]
Allowances for loan losses, individually evaluated for impairment	0		0		33
Allowances for loan losses, collectively evaluated for impairment	281		281		245
Allowance for loan losses	281	205	281	205
Loans, individually evaluated for impairment	3,538		3,538		3,865
Loans, collectively evaluated for impairment	16,518		16,518		16,261
Loans	20,056		20,056		20,126
Consumer [Member]
Allowance for Loan Losses [Roll Forward]
Beginning Balance	178	143	148	130
Charge-offs	0	0	(36)	0
Recoveries	0	1	0	1
Provisions	171	3	237	16
Ending Balance	349	147	349	147
Loans and Allowances for Loan Losses [Abstract]
Allowances for loan losses, individually evaluated for impairment	0		0		0
Allowances for loan losses, collectively evaluated for impairment	349		349		148
Allowance for loan losses	349	147	349	147
Loans, individually evaluated for impairment	291		291		229
Loans, collectively evaluated for impairment	18,109		18,109		18,545
Loans	18,400		18,400		18,774
Unallocated [Member]
Allowance for Loan Losses [Roll Forward]
Beginning Balance	417	304	216	135
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provisions	367	(304)	568	(135)
Ending Balance	784	0	784	0
Loans and Allowances for Loan Losses [Abstract]
Allowances for loan losses, individually evaluated for impairment	0		0		0
Allowances for loan losses, collectively evaluated for impairment	784		784		216
Allowance for loan losses	$ 784	$ 0	$ 784	$ 0

XML

REGULATORY RESTRICTIONS (Tables)

9 Months Ended

Sep. 30, 2012

REGULATORY RESTRICTIONS [Abstract]

Quantitative Measures Established by Regulation to Ensure Capital Adequacy Minimum Amounts and Ratios

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the following table) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined).

	Actual					For Capital Adequacy Purposes					To be Well-Capitalized Under Prompt Corrective Action Provisions
Parke Bancorp, Inc.	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of September 30, 2012
(Amounts in thousands except ratios)
Total Risk Based Capital	$	103,629		16.44	%	$	50,430		8	%		N/A		N/A
(to Risk Weighted Assets)
Tier 1 Capital	$	95,631		15.17	%	$	25,215		4	%		N/A		N/A
(to Risk Weighted Assets)
Tier 1 Capital	$	95,631		12.32	%	$	31,056		4	%		N/A		N/A
(to Average Assets)

	Actual					For Capital Adequacy Purposes					To be Well-Capitalized Under Prompt Corrective Action Provisions
Parke Bancorp, Inc.	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2011
(Amounts in thousands except ratios)
Total Risk Based Capital	$	98,992		15.46	%	$	51,209		8	%		N/A		N/A
(to Risk Weighted Assets)
Tier 1 Capital	$	90,851		14.19	%	$	25,604		4	%		N/A		N/A
(to Risk Weighted Assets)
Tier 1 Capital	$	90,851		12.06	%	$	30,122		4	%		N/A		N/A
(to Average Assets)

	Actual					For Capital Adequacy Purposes					To be Well-Capitalized Under Prompt Corrective Action Provisions
Parke Bank	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of September 30, 2012
(Amounts in thousands except ratios)
Total Risk Based Capital	$	103,596		16.43	%	$	50,430		8	%	$	63,037		10	%
(to Risk Weighted Assets)
Tier 1 Capital	$	95,598		15.17	%	$	25,215		4	%	$	37,822		6	%
(to Risk Weighted Assets)
Tier 1 Capital	$	95,598		12.31	%	$	31,056		4	%	$	38,820		5	%
(to Average Assets)

	Actual					For Capital Adequacy Purposes					To be Well-Capitalized Under Prompt Corrective Action Provisions
Parke Bank	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2011
(Amounts in thousands except ratios)
Total Risk Based Capital	$	98,817		15.44	%	$	51,208		8	%	$	64,010		10	%
(to Risk Weighted Assets)
Tier 1 Capital	$	90,676		14.17	%	$	25,604		4	%	$	38,406		6	%
(to Risk Weighted Assets)
Tier 1 Capital	$	90,676		12.04	%	$	30,122		4	%	$	37,652		5	%
(to Average Assets)

XML

CONSOLIDATED STATEMENTS OF CHANGE IN TOTAL EQUITY (unaudited) (Parenthetical)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
CONSOLIDATED STATEMENTS OF CHANGE IN TOTAL EQUITY (unaudited) [Abstract]
Common stock, dividend rate (in hundredths)	10.00%	10.00%
Preferred stock, dividend rate (in hundredths)	5.00%

XML

CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Assets
Investment securities held to maturity, fair value	$ 2,209	$ 2,080
Equity
Preferred stock, liquidation value per share (in dollars per share)	$ 1,000	$ 1,000
Preferred stock, authorized (in shares)	1,000,000	1,000,000
Preferred stock, issued (in shares)	16,288	16,288
Common stock, par value (in dollars per share)	$ 0.1	$ 0.1
Common stock, authorized (in shares)	10,000,000	10,000,000
Common stock, issued (in shares)	5,594,793	5,097,078
Treasury stock, shares (in shares)	210,900	210,900

XML

INCOME TAXES

9 Months Ended

Sep. 30, 2012

INCOME TAXES [Abstract]

INCOME TAXES [Text Block]

NOTE 9. INCOME TAXES

	For the nine months ended September 30,						For the three months ended September 30,
	2012			2011			2012			2011
	(Amount in thousands)
Income Taxes
Pre-tax Income		$	8,694		$	11,460		$	3,280		$	2,883
Income Tax Expense			2,895			4,605			1,365			1,161

For the nine months ended September 30, 2012, the Company recorded a net tax expense of $2.9 million compared to a net tax expense of $4.6 million for the nine months ended September 30, 2011. For the three months ended September 30, 2012, the Company recorded a net tax expense of $1.4 million compared to a net tax expense of $1.2 million for the three months ended September 30, 2011.

Deferred federal and state tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The decrease in income tax expense is due to lower earnings and the change to an alternative tax methodology for bank owned life insurance ("BOLI") income whereby it is treated on a tax free basis. The portion related to prior years is $576,000.

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 14, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	PARKE BANCORP, INC.
Entity Central Index Key	0001315399
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		5,383,893
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012

XML

EARNINGS PER SHARE (EPS)

9 Months Ended

Sep. 30, 2012

EARNINGS PER SHARE (EPS) [Abstract]

EARNINGS PER SHARE (EPS)

NOTE 10.  EARNINGS PER SHARE ("EPS")

The following tables set forth the calculation of basic and diluted EPS for the nine month periods ending September 30, 2012 and 2011.

	For the nine months ended September 30,				For the three months ended September 30,
	2012		2011		2012		2011
	(Amounts in thousands except share data)
Basic earnings per common share
Net income available to common shareholders	$	4,599	$	5,258	$	1,468	$	1,319
Average common shares outstanding		5,378,103		5,374,561		5,872,276		5,818,506
Basic earnings per common share	$	0.86	$	0.98	$	0.25	$	0.23
Diluted earnings per common share
Net income available to common shareholders	$	4,599	$	5,258	$	1,468	$	1,319
Average common shares outstanding		5,378,103		5,374,561		5,872,276		5,818,506
Dilutive potential common shares		3,244		115,237		367		23,349
Total diluted average common shares outstanding		5,381,347		5,489,798		5,872,643		5,841,855
Diluted earnings per common share	$	0.85	$	0.96	$	0.25	$	0.23

For the nine months ended September 30, 2012 and 2011, options to purchase 335,186 shares and 308,274 shares, respectively, were outstanding but were not included in the computation of diluted EPS because the options' common stock equivalents were antidilutive.

For the three months ended September 30, 2012 and 2011, options to purchase 335,186 shares and 319,284 shares, respectively, were outstanding but were not included in the computation of diluted EPS because the options' common stock equivalents were antidilutive.

In May of 2012 and May of 2011 the Company paid a 10% common stock dividend to shareholders. All weighted share information has been retroactively adjusted to give effect to this stock dividend for the periods presented.

XML

CONSOLIDATED STATEMENTS OF INCOME (unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Interest income:
Interest and fees on loans	$ 8,766	$ 9,912	$ 27,637	$ 29,802
Interest and dividends on investments	259	329	800	1,033
Interest on federal funds sold and cash equivalents	59	31	178	75
Total interest income	9,084	10,272	28,615	30,910
Interest expense:
Interest on deposits	1,552	1,960	5,011	5,965
Interest on borrowings	234	352	709	1,066
Total interest expense	1,786	2,312	5,720	7,031
Net interest income	7,298	7,960	22,895	23,879
Provision for loan losses	1,500	2,350	5,800	6,850
Net interest income after provision for loan losses	5,798	5,610	17,095	17,029
Noninterest income (loss):
Loan fees	91	20	251	185
Net income from BOLI	47	45	138	133
Service fees on deposit accounts	62	58	166	166
Gain on sale of SBA loans	700	751	2,057	3,892
Other than temporary impairment losses	0	(48)	0	(132)
Portion of loss recognized in other comprehensive income (OCI) (before taxes)	0	20	0	47
Net impairment losses recognized in earnings	0	(28)	0	(85)
Loss on sale of real estate owned	(132)	(577)	(757)	(525)
Other	184	56	712	173
Total noninterest income	952	325	2,567	3,939
Noninterest expense:
Compensation and benefits	1,415	1,406	4,267	4,227
Professional services	288	321	1,065	966
Occupancy and equipment	244	248	776	751
Data processing	103	92	307	316
FDIC insurance	278	192	824	877
OREO Expense	339	219	1,025	431
Other operating expense	803	574	2,704	1,940
Total noninterest expense	3,470	3,052	10,968	9,508
Income before income tax expense	3,280	2,883	8,694	11,460
Income tax expense	1,365	1,161	2,895	4,605
Net income attributable to Company and noncontrolling interest	1,915	1,722	5,799	6,855
Net income attributable to noncontrolling interest	(194)	(152)	(442)	(848)
Net income attributable to Company	1,721	1,570	5,357	6,007
Preferred stock dividend and discount accretion	253	251	758	749
Net income available to common shareholders	$ 1,468	$ 1,319	$ 4,599	$ 5,258
Earnings per common share
Basic (in dollars per share)	$ 0.25	$ 0.23	$ 0.86	$ 0.98
Diluted (in dollars per share)	$ 0.25	$ 0.23	$ 0.85	$ 0.96
Weighted average shares outstanding
Basic (in shares)	5,872,276	5,818,506	5,378,103	5,374,561
Diluted (in shares)	5,872,643	5,841,855	5,381,347	5,458,044

XML

LOANS

9 Months Ended

Sep. 30, 2012

LOANS [Abstract]

LOANS

NOTE 4.  LOANS

The portfolio of loans outstanding consisted of the following at September 30, 2012 and December 31, 2011:

	September 30, 2012					December 31, 2011
	Amount		Percentage of Total Loans			Amount		Percentage of Total Loans
	(Amounts in thousands)
Commercial and Industrial	$	21,955		3.6	%	$	24,136		3.9	%
Real Estate Construction:
Residential		8,117		1.3	%		21,287		3.4	%
Commercial		41,190		6.8	%		50,361		8.1	%
Real Estate Mortgage:
Commercial – Owner Occupied		148,785		24.7	%		147,449		23.6	%
Commercial – Non-owner Occupied		206,529		34.3	%		204,216		32.6	%
Residential – 1 to 4 Family		138,528		23.0	%		138,768		22.2	%
Residential – Multifamily		20,056		3.3	%		20,126		3.2	%
Consumer		18,400		3.0	%		18,774		3.0	%
Total Loans	$	603,560		100.0	%	$	625,117		100.0	%

The Company maintains interest reserves for the purpose of making periodic and timely interest payments for borrowers that qualify for development and construction loans. Total development and construction loans with interest reserves were $6.4 million and $14.6 million at September 30, 2012 and December 31, 2011, respectively. The amount of interest capitalized from interest reserves and recognized as interest income for the nine month periods ended September 30, 2012 and 2011 was $158,000 and $238,000, respectively. Interest reserves provide borrowers temporary sources of cash flow which can be used to make interest payments during the development or construction phases of a project. It is our expectation that equity in the project increases as the project moves towards completion and that cash flows will be positive once sales begin or stabilization occurs. Loans with interest reserves are monitored throughout the life of the project. Interest accrual may be suspended on interest reserve dependent loans that are not delinquent but are risk rated substandard or worse.

Loan Origination/Risk Management: In the normal course of business the Company is exposed to a variety of operational, reputational, legal, regulatory and credit risks that could adversely affect our financial performance. Most of our asset risk is primarily tied to credit (lending) risk. The Company has lending policies, guidelines and procedures in place that are designed to maximize loan income within an acceptable level of risk. The Board of Directors reviews and approves these policies, guidelines and procedures. When we originate a loan we make certain subjective judgments about the borrower's ability to meet the loan's terms and conditions. We also make objective and subjective value assessments on the assets we finance. The borrower's ability to repay can be adversely affected by economic changes. Likewise, changes in market conditions and other external factors can affect asset valuations. The Company actively monitors the quality of its loan portfolio. A reporting system supplements the credit review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit risk, loan delinquencies, troubled debt restructures, nonperforming and potential problem loans. Diversification in the loan portfolio is another means of managing risk associated with fluctuations in economic conditions.

With respect to construction loans to developers and builders that are secured by non-owner occupied properties, the Company generally requires the borrower to have had an existing relationship with the Company and have a proven record of success. Construction loans are underwritten utilizing feasibility studies, independent appraisal reviews, sensitivity analysis of absorption and lease rates and financial analysis of the developers and property owners. Construction loans are generally underwritten based upon estimates of costs and value associated with the complete project. These estimates may be inaccurate. Construction loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing.

Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans, in addition to those of real estate loans. Commercial real estate loans may be riskier than loans for one-to-four family residences and are typically larger in dollar size. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. The repayment of these loans is generally largely dependent on the successful operation and management of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company's commercial real estate portfolio are diverse in terms of type and geographic location within our market area. This diversity helps reduce the Company's exposure to adverse economic events that affect any single market or industry. Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. The Company also monitors economic conditions and trends affecting market areas it serves. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans.

Consumer loans may carry a higher degree of repayment risk than residential mortgage loans. Repayment is typically dependent upon the borrower's financial stability which is more likely to be adversely affected by job loss, illness, or personal bankruptcy. To monitor and manage consumer loan risk, policies and procedures are developed and modified as needed. This activity, coupled with relatively small loan amounts that are spread across many individual borrowers, minimizes risk. Additionally, trend and outlook reports are reviewed by management on a regular basis. Underwriting standards for home equity loans are heavily influenced by statutory requirements, which include, but are not limited to, a maximum loan-to-value percentage of 80%, collection remedies, the number of such loans a borrower can have at one time and documentation requirements. Historically the Company's losses on consumer loans have been negligible.

The Company maintains an outsourced independent loan review program that reviews and validates the credit risk assessment program on a periodic basis. Results of these external independent reviews are presented to management. In 2011 the Company expanded its risk monitoring program by creating a standalone Credit Risk Management Department. The external independent loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit risk management personnel.

Nonaccrual and Past Due Loans: Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on non-accrual status when, in management's opinion, the borrower may be unable to meet payment obligations as they become due, as well as when a loan is 90 days past due, unless the loan is well secured and in the process of collection, as required by regulatory provision. Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

An age analysis of past due loans by class follows:

September 30, 2012	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and Not Accruing		Total Past Due		Current		Total Loans		Loans > 90 Days and Accruing
	(Amounts in thousands)
Commercial and Industrial	$	68	$	—	$	303	$	371	$	21,584	$	21,955	$	—
Real Estate Construction:
Residential		—		—		1,035		1,035		7,082		8,117		—
Commercial		—		—		14,501		14,501		26,689		41,190		—
Real Estate Mortgage:
Commercial – Owner Occupied		—		—		1,864		1,864		146,921		148,785		—
Commercial – Non-owner Occupied		375		5,036		24,122		29,533		176,996		206,529		—
Residential – 1 to 4 Family		1,299		—		7,634		8,933		129,595		138,528		—
Residential – Multifamily		—		—		3,160		3,160		16,896		20,056		—
Consumer		66		—		291		357		18,043		18,400		—
Total	$	1,808	$	5,036	$	52,910	$	59,754	$	543,806	$	603,560	$	—

December 31, 2011	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and Not Accruing		Total Past Due		Current		Total Loans		Loans > 90 Days and Accruing
	(Amounts in thousands)
Commercial and Industrial	$	603	$	—	$	—	$	603	$	23,533	$	24,136	$	—
Real Estate Construction:
Residential		350		—		5,265		5,615		15,672		21,287		—
Commercial		—		—		7,703		7,703		42,658		50,361		—
Real Estate Mortgage:
Commercial – Owner Occupied		1,358		—		4,797		6,155		141,294		147,449		—
Commercial – Non-owner Occupied		1,574		—		18,132		19,706		184,510		204,216		—
Residential – 1 to 4 Family		2,587		—		7,691		10,278		128,490		138,768		—
Residential – Multifamily		—		—		597		597		19,529		20,126		—
Consumer		—		—		274		274		18,500		18,774		—
Total	$	6,472	$	—	$	44,459	$	50,931	$	574,186	$	625,117	$	—

Impaired Loans: Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collectamounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. In addition, any loan that is modified in a troubled debt restructuring is considered impaired.

All impaired loans have an independent third-party full appraisal to determine the net realizable value ("NRV") based on the fair value of the underlying collateral, less cost to sell (a range of 5% to 10%) and other costs, such as unpaid real estate taxes, that have been identified, or the present value of discounted cash flows in the case of certain impaired loans that are not collateral dependent. The appraisal will be based on an "as-is" valuation and will follow a reasonable valuation method that addresses the direct sales comparison, income, and cost approaches to market value, reconciles those approaches, and explains the elimination of each approach not used. Appraisals are updated every 12 months or sooner if we have identified possible further deterioration in value. Prior to receiving the updated appraisal, we will establish a specific reserve for any estimated deterioration, based upon our assessment of market conditions, adjusted for estimated costs to sell and other identified costs. If the NRV is greater than the loan amount, then no impairment loss exists. If the NRV is less than the loan amount, the shortfall is recognized by a specific reserve. If the borrower fails to pledge additional collateral in the ninety day period, a charge-off equal to the difference between the loan carrying value and NRV will occur. In certain circumstances, however, a direct charge-off may be taken at the time that the NRV calculation reveals a shortfall. All impaired loans are evaluated based on the criteria stated above on a quarterly basis and any change in the reserve requirements are recorded in the period identified. All partially charged-off loans remain on nonaccrual status until they are brought current as to both principal and interest and have at least six months of payment history and future collectability of principal and interest is assured.

Impaired loans are set forth in the following tables.

September 30, 2012	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Amounts in thousands)
With no related allowance recorded:
Commercial and Industrial	$	803	$	870	$	—
Real Estate Construction:
Residential		1,519		3,319		—
Commercial		14,435		14,435		—
Real Estate Mortgage:
Commercial – Owner Occupied		5,600		5,784		—
Commercial – Non-owner Occupied		47,547		51,019		—
Residential – 1 to 4 Family		12,608		13,464		—
Residential – Multifamily		3,538		3,538		—
Consumer		291		327		—
		86,341		92,756		—
With an allowance recorded:
Commercial and Industrial		—		—		—
Real Estate Construction:
Residential		—		—		—
Commercial		481		538		34
Real Estate Mortgage:
Commercial – Owner Occupied		938		938		55
Commercial – Non-owner Occupied		3,571		3,571		45
Residential – 1 to 4 Family		507		764		16
Residential – Multifamily		—		—		—
Consumer		—		—		—
		5,497		5,811		150
Total:
Commercial and Industrial		803		870		—
Real Estate Construction:
Residential		1,519		3,319		—
Commercial		14,916		14,973		34
Real Estate Mortgage:
Commercial – Owner Occupied		6,538		6,722		55
Commercial – Non-owner Occupied		51,118		54,590		45
Residential – 1 to 4 Family		13,115		14,228		16
Residential – Multifamily		3,538		3,538		—
Consumer		291		327		—
	$	91,838	$	98,567	$	150

December 31, 2011	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Amounts in thousands)
With no related allowance recorded:
Commercial and Industrial	$	603	$	603	$	—
Real Estate Construction:
Residential		4,440		5,246		—
Commercial		12,898		13,118		—
Real Estate Mortgage:
Commercial – Owner Occupied		6,946		6,946		—
Commercial – Non-owner Occupied		30,424		30,852		—
Residential – 1 to 4 Family		8,477		10,737		—
Residential – Multifamily		597		667		—
Consumer		229		229		—
		64,614		68,398		—
With an allowance recorded:
Commercial and Industrial		—		—		—
Real Estate Construction:
Residential		4,170		5,151		1,297
Commercial		3,329		3,329		380
Real Estate Mortgage:
Commercial – Owner Occupied		590		590		23
Commercial – Non-owner Occupied		17,820		17,940		2,526
Residential – 1 to 4 Family		3,388		3,589		600
Residential – Multifamily		3,268		3,268		33
Consumer		—		—		—
		32,565		33,867		4,859
Total:
Commercial and Industrial		603		603		—
Real Estate Construction:
Residential		8,610		10,397		1,297
Commercial		16,227		16,447		380
Real Estate Mortgage:
Commercial – Owner Occupied		7,536		7,536		23
Commercial – Non-owner Occupied		48,244		48,792		2,526
Residential – 1 to 4 Family		11,865		14,326		600
Residential – Multifamily		3,865		3,935		33
Consumer		229		229		—
	$	97,179	$	102,265	$	4,859

The following table presents by loan portfolio class, the average recorded investment and interest income recognized on impaired loans for the nine months and three months ended September 30, 2012 and 2011:

	Nine Months Ended September 30,
	2012				2011
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(Amounts in thousands)
Commercial and Industrial	$	850	$	17	$	594	$	18
Real Estate Construction:
Residential		2,126		47		12,614		336
Commercial		14,947		196		16,019		386
Real Estate Mortgage:
Commercial – Owner Occupied		6,751		176		7,690		169
Commercial – Non-owner Occupied		52,619		1,469		57,521		2,533
Residential – 1 to 4 Family		13,877		370		16,363		233
Residential – Multifamily		3,604		60		4,762		247
Consumer		310		6		171		8
Total	$	95,084	$	2,341	$	115,734	$	3,930

	Three Months Ended September 30,
	2012				2011
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(Amounts in thousands)
Commercial and Industrial	$	806	$	6	$	594	$	8
Real Estate Construction:
Residential		1,497		15		12,413		148
Commercial		14,931		36		16,910		123
Real Estate Mortgage:
Commercial – Owner Occupied		6,652		59		7,648		61
Commercial – Non-owner Occupied		51,475		408		50,766		1,299
Residential – 1 to 4 Family		13,556		85		15,943		84
Residential – Multifamily		3,559		6		4,883		83
Consumer		291		1		86		8
Total	$	92,767	$	616	$	109,243	$	1,814

Troubled debt restructurings: Periodically management evaluates our loans in order to determine the appropriate risk rating, interest accrual status and potential classification as a TDR, some of which are performing and accruing interest. A TDR is a loan on which we have granted a concession due to a borrower's financial difficulty. These are concessions that would not otherwise be considered. The terms of these modified loans may include extension of maturity, renewals, changes in interest rate, additional collateral requirements or infusion of additional capital into the project by the borrower to reduce debt or to support future debt service. On construction and land development loans we may modify the loan as a result of delays or other project issues such as slower than anticipated sell-outs, insufficient leasing activity and/or a decline in the value of the underlying collateral securing the loan. Management believes that working with a borrower to restructure a loan provides us with a better likelihood of collecting our loan. It is our policy not to renegotiate the terms of a commercial loan simply because of a delinquency status. However, we will use our Troubled Debt Restructuring Program to work with delinquent borrowers when the delinquency is temporary. We consider all loans modified in a troubled debt restructuring to be impaired.

At the time a loan is modified in a TDR, we consider the following factors to determine whether the loan should accrue interest:

·   Whether there is a period of current payment history under the current terms, typically 6 months;

·   Whether the loan is current at the time of restructuring; and

·   Whether we expect the loan to continue to perform under the restructured terms with a debt coverage ratio that complies with the Bank's credit underwriting policy of 1.25 times debt service.

We also review the financial performance of the borrower over the past year to be reasonably assured of repayment and performance according to the modified terms. This review consists of an analysis of the borrower's historical results; the borrower's projected results over the next four quarters; current financial information of the borrower and any guarantors. The projected repayment source needs to be reliable, verifiable, quantifiable and sustainable. In addition, all TDRs are reviewed quarterly to determine the amount of any impairment.

At the time of restructuring, the amount of the loan principal for which we are not reasonably assured of repayment is charged-off, but not forgiven.

A borrower with a restructured loan must make a minimum of six consecutive monthly payments at the restructured level and be current as to both interest and principal to be on accrual status.

Performing TDRs (not reported as non-accrual loans) totaled $39.0 million and $4l.l million as of September 30, 2012 and December 31, 2011, respectively. Non-performing TDRs totaled $31.3 million and $25.8 million as of September 30, 2012 and December 31, 2011, respectively. All TORs are classified as impaired loans and are included in the impaired loan disclosures above.

The following tables illustrate new TDRs and TDR default information for the nine months and three months ended September 30, 2012 and 2011.

	Nine Months Ended September 30, 2012						Nine Months Ended September 30, 2011
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in Thousands)
Troubled Debt Restructurings
Commercial and Industrial		2	$	750	$	750		1	$	594	$	594
Construction:
Residential		1		415		415		1		959		959
Commercial		11		9,938		9,938		—		—		—
Real Estate Mortgage:
Commercial – Owner Occupied		1		3,220		3,220		1		315		315
Commercial – Non-owner Occupied		3		4,067		4,067		3		5,543		5,543
Residential – 1-4 Family		3		4,168		4,168		4		6,250		6,250
Residential – Multifamily		1		380		380		2		506		506
Consumer		—		—		—		—		—		—
Total		22	$	22,938	$	22,938		12	$	14,167	$	14,167

	Three Months Ended September 30, 2012						Three Months Ended September 30, 2011
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in Thousands)
Troubled Debt Restructurings
Commercial and Industrial		—	$	—	$	—		—	$	—	$	—
Construction:
Residential		—		—		—		—		—		—
Commercial		11		9,938		9,938		—		—		—
Real Estate Mortgage:
Commercial – Owner Occupied		—		—		—		—		—		—
Commercial – Non-owner Occupied		1		1,148		1,148		—		—		—
Residential – 1-4 Family		1		203		203		—		—		—
Residential – Multifamily		—		—		—		—		—		—
Consumer		—		—		—		—		—		—
Total		13	$	11,289	$	11,289		—	$	—	$	—

The following tables shows the types of modifications made during the nine months and three months ended September 30, 2012 and 2011:

	Nine Months Ended September 30, 2012								Nine Months Ended September 30, 2011
	Extension		Period of Interest Only		Interest Rate Reduction		Total		Extension		Period of Interest Only		Interest Rate Reduction		Total
	(Dollars in Thousands)
Troubled Debt Restructurings
Commercial and Industrial	$	500	$	—	$	250	$	750	$	—	$	—	$	594	$	594
Construction:
Residential		—		—		415		415		—		—		959		959
Commercial		8,008		—		1,930		9,938		—		—		—		—
Real Estate Mortgage:
Commercial – Owner Occupied		3,220		—		—		3,220		—		—		315		315
Commercial – Non-owner Occupied		1,156		—		2,911		4,067		—		1,505		4,038		5,543
Residential – 1-4 Family		924		—		3,244		4,168		—		—		6,250		6,250
Residential – Multifamily		—		380		—		380		—		—		506		506
Consumer		—		—		—		—		—		—		—		—
Total	$	13,808	$	380	$	8,750	$	22,938	$	—	$	1,505	$	12,662	$	14,167

	Three Months Ended September 30, 2012								Three Months Ended September 30, 2011
	Extension		Period of Interest Only		Interest Rate Reduction		Total		Extension		Period of Interest Only		Interest Rate Reduction		Total
	(Dollars in Thousands)
Troubled Debt Restructurings
Commercial and Industrial	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Construction:
Residential		—		—		—		—		—		—		—		—
Commercial		8,008		—		1,930		9,938		—		—		—		—
Real Estate Mortgage:
Commercial – Owner Occupied		—		—		—		—		—		—		—		—
Commercial – Non-owner Occupied		1,148		—		—		1,148		—		—		—		—
Residential – 1-4 Family		—		—		203		203		—		—		—		—
Residential – Multifamily		—		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—		—
Total	$	9,156	$	—	$	2,133	$	11,289	$	—	$	—	$	—	$	—

Troubled Debt Restructurings That Subsequently Defaulted	For the nine months ended September 30, 2012			For the nine months ended September, 30 2011
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in Thousands)
Commercial and Industrial	1	$	603	—	$	—
Real Estate Construction:
Residential	1		1,004	1		316
Commercial	10		8,508	—		—
Real Estate Mortgage:
Commercial – Owner Occupied	—		—	5		4,131
Commercial – Non-owner Occupied	3		4,779	1		121
Residential – 1-4 Family	4		978	1		929
Residential – Multifamily	1		3,267	—		—
Consumer	—		—	—		—
Total	20	$	19,139	8	$	5,497

Troubled Debt Restructurings That Subsequently Defaulted	For the three months ended September 30, 2012			For the three months ended September, 30 2011
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in Thousands)
Commercial and Industrial	—	$	—	—	$	—
Real Estate Construction:
Residential	—		—	1		316
Commercial	9		8,008	—		—
Real Estate Mortgage:
Commercial – Owner Occupied	—		—	—		—
Commercial – Non-owner Occupied	1		1,156	—		—
Residential – 1-4 Family	1		202	—		—
Residential – Multifamily	—		—	—		—
Consumer	—		—	—		—
Total	11	$	9,366	1	$	316

Some loan modifications classified as TDRs may not ultimately result in the full collection of principal and interest, as modified, and result in potential incremental losses. These potential incremental losses have been factored into our overall allowance for loan losses estimate. The level of any re-defaults will likely be affected by future economic conditions. Once a loan becomes a TDR, it will continue to be reported as a TDR until it is repaid in full, foreclosed, sold or it meets the criteria to be removed from TDR status.

Credit Quality Indicators: As part of the on-going monitoring of the credit quality of the Company's loan portfolio, management tracks certain credit quality indicators including trends related to the risk grades of loans, the level of classified loans, net charge-offs, nonperforming loans (see details above) and the general economic conditions in the region.

The Company utilizes a risk grading matrix to assign a risk grade to each of its loans. Loans are graded on a scale of 1 to 7. Grades 1 through 4 are considered "Pass". A description of the general characteristics of the seven risk grades is as follows:

1.   Good: Borrower exhibits the strongest overall financial condition and represents the most creditworthy profile.

2.   Satisfactory (A): Borrower reflects a well balanced financial condition, demonstrates a high level of creditworthiness and typically will have a strong banking relationship with Parke Bank.

3.   Satisfactory (B): Borrower exhibits a balanced financial condition and does not expose the Bank to more than a normal or average overall amount of risk. Loans are considered fully collectable.

4.   Watch List: Borrower reflects a fair financial condition, but there exists an overall greater than average risk. Risk is deemed acceptable by virtue of increased monitoring and control over borrowings. Probability of timely repayment is present.

5.   Other Assets Especially Mentioned (OAEM): Financial condition is such that assets in this category have a potential weakness or pose unwarranted financial risk to the Bank even though the asset value is not currently impaired. The asset does not currently warrant adverse classification but if not corrected could weaken and could create future increased risk exposure. Includes loans which require an increased degree of monitoring or servicing as a result of internal or external changes.

6.   Substandard: This classification represents more severe cases of #5 (OAEM) with characteristics that require increased monitoring. Assets are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Assets are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral. Asset has a well-defined weakness or weaknesses that impairs the ability to repay debt and jeopardizes the timely liquidation or realization of the collateral at the asset's net book value.

7.   Doubtful: Assets which have all the weaknesses inherent in those assets classified #6 (Substandard) but the risks are more severe relative to financial deterioration in capital and/or asset value; accounting/evaluation techniques may be questionable and the overall possibility for collection in full is highly improbable. Borrowers in this category require constant monitoring, are considered work out loans and present the potential for future loss to the Bank.

An analysis of the credit risk profile by internally assigned grades is as follows:

At September 30, 2012	Pass		OAEM		Substandard		Doubtful		Total
	(Amounts in thousands)
Commercial and Industrial	$	13,984	$	7,100	$	871	$	—	$	21,955
Real Estate Construction:
Residential		6,598		—		1,519		—		8,117
Commercial		19,375		—		21,815		—		41,190
Real Estate Mortgage:
Commercial – Owner Occupied		142,590		755		5,440		—		148,785
Commercial – Non-owner Occupied		160,744		14,349		31,436		—		206,529
Residential – 1 to 4 Family		123,912		2,272		12,344		—		138,528
Residential – Multifamily		15,406		1,112		3,538		—		20,056
Consumer		18,110		—		290		—		18,400
Total	$	500,719	$	25,588	$	77,253	$	—	$	603,560

At December 31, 2011	Pass		OAEM		Substandard		Doubtful		Total
	(Amounts in thousands)
Commercial	$	16,033	$	7,500	$	603	$	—	$	24,136
Real Estate Construction:
Residential		12,327		350		8,610		—		21,287
Commercial		23,898		—		26,463		—		50,361
Real Estate Mortgage:
Commercial – Owner Occupied		137,200		3,840		6,409		—		147,449
Commercial – Non-owner Occupied		156,277		10,430		37,509		—		204,216
Residential – 1 to 4 Family		120,658		4,360		13,750		—		138,768
Residential – Multifamily		16,261		3,268		597		—		20,126
Consumer		18,500		—		274		—		18,774
Total	$	501,154	$	29,748	$	94,215	$	—	$	625,117

XML

INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 2012

INVESTMENT SECURITIES [Abstract]

INVESTMENT SECURITIES

NOTE 3.  INVESTMENT SECURITIES

The following is a summary of the Company's investments in available for sale and held to maturity securities as of September 30, 2012 and December 31, 2011:

As of September 30, 2012	Amortized cost		Gross unrealized gains		Gross unrealized losses		Other-than- temporary impairments in OCI		Fair Value
	(Amounts in thousands)
Available for sale:
U.S. Government sponsored entities	$	7	$	—	$	—	$	—	$	7
Corporate debt obligations		1,500		51		—		—		1,551
Residential mortgage-backed securities		14,172		746		—		—		14,918
Collateralized mortgage obligations		1,024		62		—		—		1,086
Collateralized debt obligations		5,556		—		1,157		504		3,895
Total available for sale	$	22,259	$	859	$	1,157	$	504	$	21,457
Held to maturity:
States and political subdivisions	$	2,058	$	151	$	—	$	—	$	2,209

As of December 31, 2011	Amortized cost		Gross unrealized gains		Gross unrealized losses		Other-than- temporary impairments in OCI		Fair Value
	(Amounts in thousands)
Available for sale:
U.S. Government sponsored entities	$	1,006	$	5	$	—	$	—	$	1,011
Corporate debt obligations		1,500		43		57		—		1,486
Residential mortgage-backed securities		13,697		764		—		—		14,461
Collateralized mortgage obligations		1,534		73		—		13		1,594
Collateralized debt obligations		5,556		—		1,080		511		3,965
Total available for sale	$	23,293	$	885	$	1,137	$	524	$	22,517
Held to maturity:
States and political subdivisions	$	2,032	$	87	$	39	$	—	$	2,080

The amortized cost and fair value of debt securities classified as available for sale and held to maturity, by contractual maturity as of September 30, 2012 are as follows:

	Amortized Cost		Fair Value
	(Amounts in thousands)
Available for sale:
Due within one year	$	—	$	—
Due after one year through five years		—		—
Due after five years through ten years		—		—
Due after ten years		7,062		5,452
Residential mortgage-backed securities and collateralized mortgage obligations		15,197		16,005
Total available for sale	$	22,259	$	21,457

Held to maturity:
Due within one year	$	—	$	—
Due after one year through five years		—		—
Due after five years through ten years		—		—
Due after ten years		2,058		2,209
Total held to maturity	$	2,058	$	2,209

Expected maturities will differ from contractual maturities for mortgage related securities because the issuers of certain debt securities do have the right to call or prepay their obligations without any penalty.

As of September 30, 2012, securities with a carrying value of $16.4 million, and fair value of $17.3 million, were pledged as collateral for borrowed funds. In addition, securities with a carrying value of $4.6 million, and fair value of $5.0 million, were pledged to secure public deposits.

The following tables show the gross unrealized losses and fair value of the Company's investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2012 and December 31, 2011:

As of September 30, 2012	Less Than 12 Months				12 Months or Greater				Total
Description of Securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(Amounts in thousands)
Available for sale:
Collateralized debt obligations		—		—		3,593		1,157		3,593		1,157
Total available for sale	$	—	$	—	$	3,593	$	1,157	$	3,593	$	1,157
Held to maturity:
States and political subdivisions	$	—	$	—	$	—	$	—	$	—	$	—

As of December 31, 2011	Less Than 12 Months				12 Months or Greater				Total
Description of Securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(Amounts in thousands)
Available for sale:
Corporate debt obligations		—		—		443		57		443		57
Collateralized debt obligations		—		—		3,670		1,080		3,670		1,080
Total available for sale	$	—	$	—	$	4,113	$	1,137	$	4,113	$	1,137
Held to maturity:
States and political subdivisions	$	758	$	39	$	—	$	—	$	758	$	39

Collateralized Debt Obligations: The Company's unrealized loss on investments in collateralized debt obligations ("CDOs") relates to three securities issued by financial institutions, totaling $3.6 million. CDOs are pooled securities primarily secured by trust preferred securities ("TruPS"), subordinated debt and surplus notes issued by small and mid-sized banks and insurance companies. These securities are generally floating rate instruments with 30-year maturities, and are callable at par by the issuer after five years. The current economic downturn has had a significant adverse impact on the financial services industry; consequently, TruPS CDOs do not have an active trading market. With the assistance of competent third-party valuation specialists, the Company utilized the following methodology to determine the fair value:

Cash flows were developed based on the estimated speeds at which the trust preferred securities are expected to prepay (a range of 1% to 2%), the estimated rates at which the trust preferred securities are expected to defer payments, the estimated rates at which the trust preferred securities are expected to default (a range of 0.57% to 0.66%), and the severity of the losses on securities which default (95%). Trust preferred securities generally allow for prepayment by the issuer without a prepayment penalty any time after five years. Due to the lack of new trust preferred issuances and the relatively poor conditions of the financial institution industry, a relatively modest rate of prepayment was assumed going forward. Estimates for conditional default rates ("CDR") are based on the payment characteristics of the trust preferred securities themselves (e.g. current, deferred, or defaulted) as well as the financial condition of the trust preferred issuers in the pool. Estimates for the near-term rates of deferral and CDR are based on key financial ratios relating to the financial institutions' capitalization, asset quality, profitability and liquidity. Finally, we consider whether or not the financial institution has received TARP funding, and if it has, the amount. Longer-term rates of deferral and defaults are based on historical averages. The fair value of each bond was assessed by discounting its projected cash flows by a discount rate. The discount rates were based on the yields of publicly traded TruPS and preferred stock issued by comparably rated banks (3 month LIBOR plus a spread of 400 to 959 basis points). The fair value for previous reporting periods was based on indicative market bids and resulted in much lower values due to the inactive trading market.

The underlying issuers have been analyzed, and projections have been made regarding the future performance, considering factors including defaults and interest deferrals. The analysis indicates that the Company should expect to receive all contractual cash flows. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, it does not consider these investments to be other-than-temporarily impaired at September 30, 2012.

Other-Than-Temporarily Impaired Debt Securities

We assess whether we intend to sell or it is more likely than not that we will be required to sell a security before recovery of its amortized cost basis less any current-period credit losses. For debt securities that are considered other-than-temporarily impaired ("OTTI") and that we do not intend to sell and will not be required to sell prior to recovery of our amortized cost basis, we separate the amount of the impairment into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the security's amortized cost basis and the present value of its expected future cash flows. The remaining difference between the security's fair value and the present value of future expected cash flows is due to factors that are not credit related and is recognized in other comprehensive income.

The present value of expected future cash flows is determined using the best estimate of cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security. The methodology and assumptions for establishing the best estimate cash flows vary depending on the type of security. The asset-backed securities cash flow estimates are based on bond specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity and prepayment speeds and structural support, including subordination and guarantees. The corporate bond cash flow estimates are derived from scenario-based outcomes of expected corporate restructurings or the disposition of assets using bond specific facts and circumstances including timing, security interests and loss severity.

We have a process in place to identify debt securities that could potentially have a credit impairment that is other than temporary. This process involves monitoring late payments, pricing levels, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts and cash flow projections as indicators of credit issues. On a quarterly basis, we review all securities to determine whether an other-than-temporary decline in value exists and whether losses should be recognized. We consider relevant facts and circumstances in evaluating whether a credit or interest rate-related impairment of a security is other than temporary. Relevant facts and circumstances considered include: (1) the extent and length of time the fair value has been below cost; (2) the reasons for the decline in value; (3) the financial position and access to capital of the issuer, including the current and future impact of any specific events and (4) for fixed maturity securities, our intent to sell a security or whether it is more likely than not we will be required to sell the security before the recovery of its amortized cost which, in some cases, may extend to maturity and for equity securities, our ability and intent to hold the security for a period of time that allows for the recovery in value.

The following table presents a roll-forward of the credit loss component of the amortized cost of debt securities that we have written down for OTTI and the credit component of the loss that is recognized in earnings. OTTI recognized in earnings for credit-impaired debt securities is presented as additions in two components based upon whether the current period is the first time the debt security was credit-impaired (initial credit impairment) or is not the first time the debt security was credit impaired (subsequent credit impairments). The credit loss component is reduced if we sell, intend to sell or believe we will be required to sell previously credit-impaired debt securities. Additionally, the credit loss component is reduced if we receive cash flows in excess of what we expected to receive over the remaining life of the credit-impaired debt security, the security matures or is fully written down. Changes in the credit loss component of credit-impaired debt securities were as follows for the periods ended September 30, 2012 and 2011.

	For the Nine Months Ended September 30,
	2012			2011
	(Amounts in thousands)
Beginning balance	$	1,950		$	2,657
Initial credit impairment		—			—
Subsequent credit impairments		—			85
Reductions for amounts recognized in earnings due to intent or requirement to sell		—			—
Reductions for securities sold		—			—
Reductions for securities deemed worthless		(731	)		(524	)
Reductions for increases in cash flows expected to be collected		—			—
Ending balance	$	1,219		$	2,218

	For the Three Months Ended September 30,
	2012			2011
	(Amounts in thousands)
Beginning balance	$	1,551		$	2,398
Initial credit impairment		—			—
Subsequent credit impairments		—			28
Reductions for amounts recognized in earnings due to intent or requirement to sell		—			—
Reductions for securities sold		—			—
Reductions for securities deemed worthless		(332	)		(208	)
Reductions for increases in cash flows expected to be collected		—			—
Ending balance	$	1,219		$	2,218

A summary of investment gains and losses recognized in income during the nine month and three month periods ended September 30, 2012 and 2011 are as follows:

	For the Nine Months Ended September 30,
	2012		2011
	(Amounts in thousands)
Available for sale securities:
Realized gains	$	—	$	—
Realized (losses)		—		—
Other than temporary impairment		—		(85	)
Total available for sale securities	$	—	$	(85	)
Held to maturity securities:
Realized gains	$	—	$	—
Realized (losses)		—		—
Other than temporary impairment		—		—
Total held to maturity securities	$	—	$	—

	For the Three Months Ended September 30,
	2012		2011
	(Amounts in thousands)
Available for sale securities:
Realized gains	$	—	$	—
Realized (losses)		—		—
Other than temporary impairment		—		(28	)
Total available for sale securities	$	—	$	(28	)
Held to maturity securities:
Realized gains	$	—	$	—
Realized (losses)		—		—
Other than temporary impairment		—		—
Total held to maturity securities	$	—	$	—

XML

ALLOWANCE FOR LOAN LOSSES (Tables)

9 Months Ended

Sep. 30, 2012

ALLOWANCE FOR LOAN LOSSES [Abstract]

Analysis of Allowance for Loan Losses

An analysis of the allowance for loan losses for the nine month and three month periods ended September 30, 2012 and 2011 is as follows:

Allowance for Loan Losses:	For the nine month period ended September 30, 2012
	Beginning Balance		Charge-offs			Recoveries		Provisions			Ending Balance
	(Amounts in thousands)
Commercial and Industrial	$	451	$	(66	)	$	—	$	76		$	461
Real Estate Construction:
Residential		2,613		(1,326	)		37		(573	)		751
Commercial		1,971		(310	)		—		(642	)		1,019
Real Estate Mortgage:
Commercial – Owner Occupied		2,714		(1,058	)		—		2,028			3,684
Commercial – Non-owner Occupied		6,742		(3,756	)		—		2,746			5,732
Residential – 1 to 4 Family		4,190		(1,531	)		407		1,360			4,426
Residential – Multifamily		278		—			—		3			281
Consumer		148		(36	)		—		237			349
Unallocated		216		—			—		568			784
Total	$	19,323	$	(8,083	)	$	444	$	5,803		$	17,487

Allowance for Loan Losses:	For the nine month period ended September 30, 2011
	Beginning Balance		Charge-offs			Recoveries		Provisions			Ending Balance
	(Amounts in thousands)
Commercial and Industrial	$	448	$	(22	)	$	—	$	30		$	456
Real Estate Construction:
Residential		2,980		(2,764	)		22		2,171			2,409
Commercial		1,576		(494	)		—		1,030			2,112
Real Estate Mortgage:
Commercial – Owner Occupied		2,508		—			—		203			2,711
Commercial – Non-owner Occupied		3,792		—			—		783			4,575
Residential – 1 to 4 Family		2,848		(1,910	)		—		2,919			3,857
Residential – Multifamily		372		—			—		(167	)		205
Consumer		130		—			1		16			147
Unallocated		135		—			—		(135	)		—
Total	$	14,789	$	(5,190	)	$	23	$	6,850		$	16,472

	For the three month period ended September 30, 2012
	Beginning Balance		Charge-offs			Recoveries		Provisions			Ending Balance
	(Amounts in thousands)
Commercial and Industrial	$	494	$	—		$	—	$	(33	)	$	461
Real Estate Construction:
Residential		1,290		(37	)		—		(502	)		751
Commercial		1,481		—			—		(462	)		1,019
Real Estate Mortgage:
Commercial – Owner Occupied		3,521		(311	)		—		474			3,684
Commercial – Non-owner Occupied		6,268		(816	)		—		280			5,732
Residential – 1 to 4 Family		4,408		(1,181	)		4		1,195			4,426
Residential – Multifamily		268		—			—		13			281
Consumer		178		—			—		171			349
Unallocated		417		—			—		367			784
Total	$	18,325	$	(2,345	)	$	4	$	1,503		$	17,487

	For the three month period ended September 30, 2011
	Beginning Balance		Charge-offs		Recoveries		Provisions		Ending Balance
	(Amounts in thousands)
Commercial and Industrial	$	496	$	—	$	—	$	(40)	$	456
Real Estate Construction:
Residential		2,494		(37)		22		(70)		2,409
Commercial		2,077		(494)		—		529		2,112
Real Estate Mortgage:
Commercial – Owner Occupied		2,508		—		—		203		2,711
Commercial – Non-owner Occupied		4,452		—		—		123		4,575
Residential – 1 to 4 Family		3,694		(1,910)		—		2,073		3,857
Residential – Multifamily		372		—		—		(167)		205
Consumer		143		—		1		3		147
Unallocated		304		—		—		(304)		—
Total	$	16,540	$	(2,441)	$	23	$	2,350	$	16,472

Allowance for Loan Losses, at September 30, 2012	Individually evaluated for impairment		Collectively evaluated for impairment		Total
	(Amounts in thousands)
Commercial and Industrial	$	—	$	461	$	461
Real Estate Construction:
Residential		—		751		751
Commercial		34		985		1,019
Real Estate Mortgage:
Commercial – Owner Occupied		55		3,629		3,684
Commercial – Non-owner Occupied		45		5,687		5,732
Residential – 1 to 4 Family		16		4,410		4,426
Residential – Multifamily		—		281		281
Consumer		—		349		349
Unallocated		—		784		784
Total	$	150	$	17,337	$	17,487

Allowance for Loan Losses, at December 31, 2011	Individually evaluated for impairment		Collectively evaluated for impairment		Total
	(Amounts in thousands)
Commercial and Industrial	$	—	$	451	$	451
Real Estate Construction:
Residential		1,297		1,316		2,613
Commercial		380		1,591		1,971
Real Estate Mortgage:
Commercial – Owner Occupied		23		2,691		2,714
Commercial – Non-owner Occupied		2,526		4,216		6,742
Residential – 1 to 4 Family		600		3,590		4,190
Residential – Multifamily		33		245		278
Consumer		—		148		148
Unallocated		—		216		216
Total	$	4,859	$	14,464	$	19,323

Loans, at September 30, 2012:	Individually evaluated for impairment		Collectively evaluated for impairment		Total
	(Amounts in thousands)
Commercial and Industrial	$	803	$	21,152	$	21,955
Real Estate Construction:
Residential		1,519		6,598		8,117
Commercial		14,916		26,274		41,190
Real Estate Mortgage:
Commercial – Owner Occupied		6,538		142,247		148,785
Commercial – Non-owner Occupied		51,118		155,411		206,529
Residential – 1 to 4 Family		13,115		125,413		138,528
Residential – Multifamily		3,538		16,518		20,056
Consumer		291		18,109		18,400
Total	$	91,838	$	511,722	$	603,560

Loans, at December 31, 2011:	Individually evaluated for impairment		Collectively evaluated for impairment		Total
	(Amounts in thousands)
Commercial and Industrial	$	603	$	23,533	$	24,136
Real Estate Construction:
Residential		8,610		12,677		21,287
Commercial		16,227		34,134		50,361
Real Estate Mortgage:
Commercial – Owner Occupied		7,536		139,913		147,449
Commercial – Non-owner Occupied		48,244		155,972		204,216
Residential – 1 to 4 Family		11,865		126,903		138,768
Residential – Multifamily		3,865		16,261		20,126
Consumer		229		18,545		18,774
Total	$	97,179	$	527,938	$	625,117

XML

SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2012

SUBSEQUENT EVENTS [Abstract]

SUBSEQUENT EVENTS

NOTE 11.  SUBSEQUENT EVENTS

Accounting guidance establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued.

New Jersey's coastal areas recently suffered extensive flooding caused by tropical storm Sandy. The Bank is currently in the process of assessing any potential impact on loan collateral and OREO located along the coast in Southern New Jersey. It is not expected that it will have any material impact to the Company's financial results.

XML

OTHER COMPREHENSIVE INCOME

9 Months Ended

Sep. 30, 2012

OTHER COMPREHENSIVE INCOME [Abstract]

OTHER COMPREHENSIVE INCOME

NOTE 7.  OTHER COMPREHENSIVE INCOME

The Company's accumulated other comprehensive income consisted of the following at:

	September 30, 2012			December 31, 2011
	(Amounts in thousands)
Securities
Non-credit unrealized losses on securities with OTTI	$	(504	)	$	(524	)
Unrealized losses on securities without OTTI		(298	)		(252	)
Minimum pension liability		(250	)		(268	)
Tax impact		420			418
Other comprehensive income	$	(632	)	$	(626	)

XML

ALLOWANCE FOR LOAN LOSSES

9 Months Ended

Sep. 30, 2012

ALLOWANCE FOR LOAN LOSSES [Abstract]

ALLOWANCE FOR LOAN LOSSES

NOTE 5.  ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is a reserve established through a provision for loan losses charged to expense, which represents management's best estimate of probable losses that have been incurred within the existing portfolio of loans. The allowance, in the judgment of management, is necessary to reserve for estimated loan losses and risks inherent in the loan portfolio. The Company's allowance for loan loss methodology includes allowance allocations calculated in accordance with ASC Topic 310, "Receivables" and allowance allocations calculated in accordance with ASC Topic 450, "Contingencies." Accordingly, the methodology is based on historical loss experience by type of credit and internal risk grade, specific homogeneous risk pools and specific loss allocations, with adjustments for current events and conditions. The Company's process for determining the appropriate level of the allowance for loan losses is designed to account for credit deterioration as it occurs. The provision for loan losses reflects loan quality trends, including the levels of and trends related to non-accrual loans, past due loans, potential problem loans, criticized loans and net charge-offs or recoveries, among other factors. The provision for possible loan losses also reflects the totality of actions taken on all loans for a particular period. In other words, the amount of the provision reflects not only the necessary increases in the allowance for loan losses related to newly identified criticized loans, but it also reflects actions taken related to other loans including, among other things, any necessary increases or decreases in required allowances for specific loans or loan pools.

The level of the allowance reflects management's continuing evaluation of industry concentrations, specific credit risks, loan loss experience, current loan portfolio quality, present economic, political and regulatory conditions and unidentified losses inherent in the current loan portfolio. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management's judgment, should be charged off. While management utilizes its best judgment and information available, the ultimate adequacy of the allowance is dependent upon a variety of factors beyond the Company's control, including, among other things, the performance of the Company's loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications.

The Company's allowance for possible loan losses consists of three elements: (i) specific valuation allowances determined in accordance with ASC Topic 310 based on probable losses on specific loans; (ii) historical valuation allowances determined in accordance with ASC Topic 450 based on historical loan loss experience for similar loans with similar characteristics and trends, adjusted, as necessary, to reflect the impact of current conditions; and (iii) general valuation allowances determined in accordance with ASC Topic 450 based on general economic conditions and other qualitative risk factors both internal and external to the Company.

The allowances established for probable losses on specific loans are based on a regular analysis and evaluation of problem loans. Loans are classified based on an internal credit risk grading process that evaluates, among other things: (i) the obligor's ability to repay; (ii) the underlying collateral, if any; and (iii) the economic environment and industry in which the borrower operates. This analysis is performed at the relationship manager level for all commercial loans. When a loan has a grade of 6 or higher, the loan is analyzed to determine whether the loan is impaired and, if impaired, the need to specifically allocate a portion of the allowance for loan losses to the loan. Specific valuation allowances are determined by analyzing the borrower's ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower's industry, among other things.

Historical valuation allowances are calculated based on the historical loss experience of specific types of loans. The Company calculates historical loss ratios for pools of similar loans with similar characteristics based on the proportion of actual charge-offs experienced to the total population of loans in the pool. The historical loss ratios are periodically updated based on actual charge-off experience. A historical valuation allowance is established for each pool of similar loans based upon the product of the historical loss ratio and the total dollar amount of the loans in the pool. The Company's pools of similar loans include similarly risk-graded groups of commercial loans, commercial real estate loans, consumer real estate loans and consumer and other loans.

General valuation allowances are based on general economic conditions and other qualitative risk factors both internal and external to the Company. In general, such valuation allowances are determined by evaluating, among other things: (i) the experience, ability and effectiveness of the Bank's lending management and staff; (ii) the effectiveness of the Bank's loan policies, procedures and internal controls; (iii) changes in asset quality; (iv) changes in loan portfolio volume; (v) the composition and concentrations of credit; (vi) the impact of competition on loan structuring and pricing; (vii) the effectiveness of the internal loan review function; (viii) the impact of environmental risks on portfolio risks; and (ix) the impact of rising interest rates on portfolio risk. Management evaluates the degree of risk that each one of these components has on the quality of the loan portfolio on a quarterly basis. Each component is determined to have either a high, high-moderate, moderate, low-moderate or low degree of risk. The results are then input into a "general allocation matrix" to determine an appropriate general valuation allowance.

An analysis of the allowance for loan losses for the nine month and three month periods ended September 30, 2012 and 2011 is as follows:

Allowance for Loan Losses:	For the nine month period ended September 30, 2012
	Beginning Balance		Charge-offs			Recoveries		Provisions			Ending Balance
	(Amounts in thousands)
Commercial and Industrial	$	451	$	(66	)	$	—	$	76		$	461
Real Estate Construction:
Residential		2,613		(1,326	)		37		(573	)		751
Commercial		1,971		(310	)		—		(642	)		1,019
Real Estate Mortgage:
Commercial – Owner Occupied		2,714		(1,058	)		—		2,028			3,684
Commercial – Non-owner Occupied		6,742		(3,756	)		—		2,746			5,732
Residential – 1 to 4 Family		4,190		(1,531	)		407		1,360			4,426
Residential – Multifamily		278		—			—		3			281
Consumer		148		(36	)		—		237			349
Unallocated		216		—			—		568			784
Total	$	19,323	$	(8,083	)	$	444	$	5,803		$	17,487

Allowance for Loan Losses:	For the nine month period ended September 30, 2011
	Beginning Balance		Charge-offs			Recoveries		Provisions			Ending Balance
	(Amounts in thousands)
Commercial and Industrial	$	448	$	(22	)	$	—	$	30		$	456
Real Estate Construction:
Residential		2,980		(2,764	)		22		2,171			2,409
Commercial		1,576		(494	)		—		1,030			2,112
Real Estate Mortgage:
Commercial – Owner Occupied		2,508		—			—		203			2,711
Commercial – Non-owner Occupied		3,792		—			—		783			4,575
Residential – 1 to 4 Family		2,848		(1,910	)		—		2,919			3,857
Residential – Multifamily		372		—			—		(167	)		205
Consumer		130		—			1		16			147
Unallocated		135		—			—		(135	)		—
Total	$	14,789	$	(5,190	)	$	23	$	6,850		$	16,472

	For the three month period ended September 30, 2012
	Beginning Balance		Charge-offs			Recoveries		Provisions			Ending Balance
	(Amounts in thousands)
Commercial and Industrial	$	494	$	—		$	—	$	(33	)	$	461
Real Estate Construction:
Residential		1,290		(37	)		—		(502	)		751
Commercial		1,481		—			—		(462	)		1,019
Real Estate Mortgage:
Commercial – Owner Occupied		3,521		(311	)		—		474			3,684
Commercial – Non-owner Occupied		6,268		(816	)		—		280			5,732
Residential – 1 to 4 Family		4,408		(1,181	)		4		1,195			4,426
Residential – Multifamily		268		—			—		13			281
Consumer		178		—			—		171			349
Unallocated		417		—			—		367			784
Total	$	18,325	$	(2,345	)	$	4	$	1,503		$	17,487

	For the three month period ended September 30, 2011
	Beginning Balance		Charge-offs		Recoveries		Provisions		Ending Balance
	(Amounts in thousands)
Commercial and Industrial	$	496	$	—	$	—	$	(40)	$	456
Real Estate Construction:
Residential		2,494		(37)		22		(70)		2,409
Commercial		2,077		(494)		—		529		2,112
Real Estate Mortgage:
Commercial – Owner Occupied		2,508		—		—		203		2,711
Commercial – Non-owner Occupied		4,452		—		—		123		4,575
Residential – 1 to 4 Family		3,694		(1,910)		—		2,073		3,857
Residential – Multifamily		372		—		—		(167)		205
Consumer		143		—		1		3		147
Unallocated		304		—		—		(304)		—
Total	$	16,540	$	(2,441)	$	23	$	2,350	$	16,472

Allowance for Loan Losses, at September 30, 2012	Individually evaluated for impairment		Collectively evaluated for impairment		Total
	(Amounts in thousands)
Commercial and Industrial	$	—	$	461	$	461
Real Estate Construction:
Residential		—		751		751
Commercial		34		985		1,019
Real Estate Mortgage:
Commercial – Owner Occupied		55		3,629		3,684
Commercial – Non-owner Occupied		45		5,687		5,732
Residential – 1 to 4 Family		16		4,410		4,426
Residential – Multifamily		—		281		281
Consumer		—		349		349
Unallocated		—		784		784
Total	$	150	$	17,337	$	17,487

Allowance for Loan Losses, at December 31, 2011	Individually evaluated for impairment		Collectively evaluated for impairment		Total
	(Amounts in thousands)
Commercial and Industrial	$	—	$	451	$	451
Real Estate Construction:
Residential		1,297		1,316		2,613
Commercial		380		1,591		1,971
Real Estate Mortgage:
Commercial – Owner Occupied		23		2,691		2,714
Commercial – Non-owner Occupied		2,526		4,216		6,742
Residential – 1 to 4 Family		600		3,590		4,190
Residential – Multifamily		33		245		278
Consumer		—		148		148
Unallocated		—		216		216
Total	$	4,859	$	14,464	$	19,323

Loans, at September 30, 2012:	Individually evaluated for impairment		Collectively evaluated for impairment		Total
	(Amounts in thousands)
Commercial and Industrial	$	803	$	21,152	$	21,955
Real Estate Construction:
Residential		1,519		6,598		8,117
Commercial		14,916		26,274		41,190
Real Estate Mortgage:
Commercial – Owner Occupied		6,538		142,247		148,785
Commercial – Non-owner Occupied		51,118		155,411		206,529
Residential – 1 to 4 Family		13,115		125,413		138,528
Residential – Multifamily		3,538		16,518		20,056
Consumer		291		18,109		18,400
Total	$	91,838	$	511,722	$	603,560

Loans, at December 31, 2011:	Individually evaluated for impairment		Collectively evaluated for impairment		Total
	(Amounts in thousands)
Commercial and Industrial	$	603	$	23,533	$	24,136
Real Estate Construction:
Residential		8,610		12,677		21,287
Commercial		16,227		34,134		50,361
Real Estate Mortgage:
Commercial – Owner Occupied		7,536		139,913		147,449
Commercial – Non-owner Occupied		48,244		155,972		204,216
Residential – 1 to 4 Family		11,865		126,903		138,768
Residential – Multifamily		3,865		16,261		20,126
Consumer		229		18,545		18,774
Total	$	97,179	$	527,938	$	625,117

XML

REGULATORY RESTRICTIONS

9 Months Ended

Sep. 30, 2012

REGULATORY RESTRICTIONS [Abstract]

REGULATORY RESTRICTIONS

NOTE 6.  REGULATORY RESTRICTIONS

The Company and the Bank are subject to various regulatory capital requirements of federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company and the Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the following table) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined).

	Actual					For Capital Adequacy Purposes					To be Well-Capitalized Under Prompt Corrective Action Provisions
Parke Bancorp, Inc.	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of September 30, 2012
(Amounts in thousands except ratios)
Total Risk Based Capital	$	103,629		16.44	%	$	50,430		8	%		N/A		N/A
(to Risk Weighted Assets)
Tier 1 Capital	$	95,631		15.17	%	$	25,215		4	%		N/A		N/A
(to Risk Weighted Assets)
Tier 1 Capital	$	95,631		12.32	%	$	31,056		4	%		N/A		N/A
(to Average Assets)

	Actual					For Capital Adequacy Purposes					To be Well-Capitalized Under Prompt Corrective Action Provisions
Parke Bancorp, Inc.	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2011
(Amounts in thousands except ratios)
Total Risk Based Capital	$	98,992		15.46	%	$	51,209		8	%		N/A		N/A
(to Risk Weighted Assets)
Tier 1 Capital	$	90,851		14.19	%	$	25,604		4	%		N/A		N/A
(to Risk Weighted Assets)
Tier 1 Capital	$	90,851		12.06	%	$	30,122		4	%		N/A		N/A
(to Average Assets)

	Actual					For Capital Adequacy Purposes					To be Well-Capitalized Under Prompt Corrective Action Provisions
Parke Bank	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of September 30, 2012
(Amounts in thousands except ratios)
Total Risk Based Capital	$	103,596		16.43	%	$	50,430		8	%	$	63,037		10	%
(to Risk Weighted Assets)
Tier 1 Capital	$	95,598		15.17	%	$	25,215		4	%	$	37,822		6	%
(to Risk Weighted Assets)
Tier 1 Capital	$	95,598		12.31	%	$	31,056		4	%	$	38,820		5	%
(to Average Assets)

	Actual					For Capital Adequacy Purposes					To be Well-Capitalized Under Prompt Corrective Action Provisions
Parke Bank	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2011
(Amounts in thousands except ratios)
Total Risk Based Capital	$	98,817		15.44	%	$	51,208		8	%	$	64,010		10	%
(to Risk Weighted Assets)
Tier 1 Capital	$	90,676		14.17	%	$	25,604		4	%	$	38,406		6	%
(to Risk Weighted Assets)
Tier 1 Capital	$	90,676		12.04	%	$	30,122		4	%	$	37,652		5	%
(to Average Assets)

On October 3, 2008 Congress passed the Emergency Economic Stabilization Act of 2008 (EESA), which provides the U.S. Secretary of the Treasury with broad authority to implement certain actions to help restore stability and liquidity to the U.S. markets. One of the provisions resulting from the Act was the Treasury Capital Purchase Program (CPP) which provides for the direct equity investment of perpetual preferred stock by the U.S. Treasury in qualified financial institutions. This program was voluntary and requires an institution to comply with several restrictions and provisions, including limits on executive compensation, stock redemptions, and declaration of dividends. The perpetual preferred stock has a dividend rate of 5% per year until the fifth anniversary of the Treasury investment and a dividend of 9%, thereafter. The CPP also requires the Treasury to receive warrants for common stock equal to 15% of the capital invested by the U.S. Treasury. The Company received an investment in perpetual preferred stock of $16,288,000 on January 30, 2009. These proceeds were allocated between the preferred stock and warrants based on relative fair value in accordance with FASB ASC Topic 470-20, "Debt with Conversion and Other Options." The allocation of proceeds resulted in a discount on the preferred stock that is being accreted over five years. The Company issued 329,757 common stock warrants to the U.S. Treasury and $930,000 of those proceeds was allocated to the warrants. The warrants are accounted for as equity securities. The warrants have a contractual life of 10 years and an exercise price of $6.12 per share of common stock.

XML

FAIR VALUE

9 Months Ended

Sep. 30, 2012

FAIR VALUE [Abstract]

FAIR VALUE

NOTE 8.  FAIR VALUE

Fair Value Measurements

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. In accordance with the Fair Value Measurements and Disclosures Topic 820 of FASB ASC, the fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company's various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

The fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions. In accordance with this guidance, the Company groups its assets and liabilities carried at fair value in three levels as follows:

Level 1 Input:

1) Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2 Inputs:

1)	Quoted prices for similar assets or liabilities in active markets.
2)	Quoted prices for identical or similar assets or liabilities in markets that are not active
3)	Inputs other than quoted prices that are observable, either directly or indirectly, for the term of the asset or liability (e.g., interest rates, yield curves, credit risks, prepayment speeds or volatilities) or "market corroborated inputs."

Level 3 Inputs:

1)	Prices or valuation techniques that require inputs that are both unobservable (i.e. supported by little or no market activity) and that are significant to the fair value of the assets or liabilities.
2)	These assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Fair Value on a Recurring Basis:

The following is a description of the Company's valuation methodologies for assets carried at fair value. These methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes that its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting measurement date.

Investment Securities Available for Sale:

Where quoted prices are available in an active market, securities are classified in Level 1 of the valuation hierarchy. Securities in Level 1 are exchange-traded equities. If quoted market prices are not available for the specific security, then fair values are provided by independent third-party valuations services. These valuations services estimate fair values using pricing models and other accepted valuation methodologies, such as quotes for similar securities and observable yield curves and spreads. As part of the Company's overall valuation process, management evaluates these third-party methodologies to ensure that they are representative of exit prices in the Company's principal markets. Securities in Level 2 include U.S. Government agencies, mortgage-backed securities, state and municipal securities and trust preferred securities.

Securities in Level 3 include thinly-traded and collateralized debt obligations. With the assistance of competent third-party valuation specialists, the Company utilized the following methodology to determine the fair value:

Cash flows were developed based on the estimated speeds at which the trust preferred securities are expected to prepay (a range of 1% to 2%), the estimated rates at which the trust preferred securities are expected to defer payments, the estimated rates at which the trust preferred securities are expected to default (a range of 0.57% to 0.66%), and the severity of the losses on securities which default (95%). Trust preferred securities generally allow for prepayment by the issuer without a prepayment penalty any time after five years. Due to the lack of new trust preferred issuances and the relatively poor conditions of the financial institution industry, a relatively modest rate of prepayment was assumed going forward. Estimates for CDRs are based on the payment characteristics of the trust preferred securities themselves (e.g. current, deferred, or defaulted) as well as the financial condition of the trust preferred issuers in the pool. Estimates for the near-term rates of deferral and CDR are based on key financial ratios relating to the financial institutions' capitalization, asset quality, profitability and liquidity. Finally, we consider whether or not the financial institution has received TARP funding, and if it has, the amount. Longer-term rates of deferral and defaults are based on historical averages. The fair value of each bond was assessed by discounting its projected cash flows by a discount rate. The discount rates were based on the yields of publicly traded TruPS and preferred stock issued by comparably rated banks (3 month LIBOR plus a spread of 400 to 959 basis points).

The table below presents the balances of assets and liabilities measured at fair value on a recurring basis.

Financial Assets	Level 1		Level 2		Level 3		Total
	(Amounts in thousands)
Securities Available for Sale
As of September 30, 2012
U.S. Government sponsored entities	$	—	$	7	$	—	$	7
Corporate debt obligations		—		1,551		—		1,551
Residential mortgage-backed securities		—		14,918		—		14,918
Collateralized mortgage-backed securities				1,080		6		1,086
Collateralized debt obligations		—		—		3,895		3,895
Total	$	—	$	17,556	$	3,901	$	21,457
As of December 31, 2011
U.S. Government sponsored entities	$	—	$	1,011	$	—	$	1,011
Corporate debt obligations		—		1,486		—		1,486
Residential mortgage-backed securities		—		14,461		—		14,461
Collateralized mortgage-backed securities				1,437		157		1,594
Collateralized debt obligations		—		—		3,965		3,965
Total	$	—	$	18,395	$	4,122	$	22,517

For the nine months ending September 30, 2012, there were no transfers between the levels within the fair value hierarchy.

The changes in Level 3 assets measured at fair value on a recurring basis are summarized as follows for the nine months ending September 30:

	Securities Available for Sale
	2012			2011
	(Amounts in thousands)
Beginning balance at January 1,	$	4,122		$	4,560
Total net losses included in:
Net loss		(128	)		(85	)
Other comprehensive loss		(93	)		(47	)
Settlements		—			(161	)
Net transfers into Level 3		—			—
Ending balance September 30,	$	3,901		$	4,267

Fair Value on a Non-recurring Basis:

Certain assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

Financial Assets	Level 1		Level 2		Level 3		Total
	(Amounts in thousands)
As of September 30, 2012
Collateral dependent impaired loans	$	—	$	—	$	65,945	$	65,945
OREO		—		—		28,102		28,102
As of December 31, 2011
Collateral dependent impaired loans	$	—	$	—	$	72,958	$	72,958
OREO		—		—		19,410		19,410

Collateral dependent impaired loans, which are measured in accordance with FASB ASC Topic 310 "Receivables", for impairment, had a carrying amount of $91.7 million and $92.3 million at September 30, 2012 and December 31, 2011 respectively, with a valuation allowance of $200,000 and $4.9 million at September 30, 2012 and December 31, 2011 respectively. The valuation allowance for collateral dependent impaired loans is included in the allowance for loan losses on the balance sheet. All collateral dependent impaired loans have an independent third-party full appraisal to determine the NRV based on the fair value of the underlying collateral, less cost to sell (a range of 5% to 10%) and other costs, such as unpaid real estate taxes, that have been identified, or the present value of discounted cash flows in the case of certain impaired loans that are not collateral dependent. The appraisal will be based on an "as-is" valuation and will follow a reasonable valuation method that addresses the direct sales comparison, income, and cost approaches to market value, reconciles those approaches, and explains the elimination of each approach not used. Appraisals are updated every 12 months or sooner if we have identified possible further deterioration in value.

OREO consists of commercial real estate properties which are recorded at fair value based upon current appraised value less estimated disposition costs, which is adjusted based upon management's review and changes in market conditions (Level 3 inputs). Properties are reappraised annually.

Fair Value of Financial Instruments

The Company discloses estimated fair values for its significant financial instruments in accordance with FASB ASC Topic 825, "Disclosures about Fair Value of Financial Instruments". The methodologies for estimating the fair value of financial assets and liabilities that are measured at fair value on a recurring or non-recurring basis are discussed above. The methodologies for estimating the fair value of other financial assets and liabilities are discussed below.

For certain financial assets and liabilities, carrying value approximates fair value due to the nature of the financial instrument. These instruments include cash and cash equivalents, restricted stock, accrued interest receivable, demand and other non-maturity deposits and accrued interest payable.

The Company used the following methods and assumptions in estimating the fair value of the following financial instruments:

Investment Securities:Fair value of securities available for sale is described above. Fair value of held to maturity securities is based upon quoted market prices (Level 2 inputs).

Loans (other than impaired): Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial, residential mortgage and other consumer. Each loan category is further segmented into groups by fixed and adjustable rate interest terms and by performing and non-performing categories. The fair value of performing loans is calculated by discounting scheduled cash flows through their estimated maturity, using estimated market discount rates that reflect the credit and interest rate risk inherent in each group of loans (Level 2 inputs). The estimate of maturity is based on contractual maturities for loans within each group, or on the Company's historical experience with repayments for each loan classification, modified as required by an estimate of the effect of current economic conditions.

Deposits: The fair value of time deposits is based on the discounted value of contractual cash flows, where the discount rate is estimated using the market rates currently offered for deposits of similar remaining maturities (Level 2 inputs).

Borrowings: The fair values of FHLB borrowings, other borrowed funds and subordinated debt are based on the discounted value of estimated cash flows. The discounted rate is estimated using market rates currently offered for similar advances or borrowings (Level 2 inputs).

Bank premises and equipment, customer relationships, deposit base and other information required to compute the Company's aggregate fair value are not included in the above information. Accordingly, the above fair values are not intended to represent the aggregate fair value of the Company.

The following table summarizes the carrying amounts and fair values for financial instruments at September 30, 2012 and December 31, 2011:

	Level in	September 30, 2012				December 31, 2011
	Fair Value	Carrying		Fair		Carrying		Fair
	Hierarchy	Value		Value		Value		Value
	(Amounts in thousands)
Financial Assets:
Cash and cash equivalents	Level 1	$	100,883	$	100,883	$	110,228	$	110,228
Investment securities (available for sale and held to maturity)	(1)		23,515		23,666		24,549		24,597
Restricted stock	Level 2		2,225		2,225		3,565		3,565
Loans held for sale	Level 2		—		—		225		225
Loans, net	(2)		586,073		608,991		605,794		622,801
Accrued interest receivable	Level 2		2,765		2,765		3,039		3,039
Financial Liabilities:
Demand and savings deposits	Level 2	$	363,969	$	363,969	$	356,440	$	356,440
Time deposits	Level 2		275,731		277,613		278,415		280,147
Borrowings	Level 2		43,891		51,478		74,010		79,997
Accrued interest payable	Level 2		631		631		618		618

(1)See the recurring fair value table above.

(2)For non-impaired loans, Level 2; for impaired loans, Level 3.

XML

LOANS, Impaired Loans and Troubled debt restructurings (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Impaired Loans [Abstract]
Period for performing appraisal of loans			12 months
Period for borrower to pledge additional security, maximum			90 days
Period of payment history, minimum			6 months
Recorded Investment [Abstract]
With no related allowance recorded	$ 86,341,000		$ 86,341,000		$ 64,614,000
With an allowance recorded	91,800,000		91,800,000		97,200,000
Total recorded investment	91,838,000		91,838,000		97,179,000
Unpaid Principal Balance [Abstract]
With no related allowance recorded	92,756,000		92,756,000		68,398,000
With an allowance recorded	5,811,000		5,811,000		33,867,000
Total unpaid principal balance	98,567,000		98,567,000		102,265,000
Related Allowance [Abstract]
With no related allowance recorded	0		0		0
With an allowance recorded	150,000		150,000		4,859,000
Total related allowance	150,000		150,000		4,859,000
Average recorded investment and interest income recognized [Abstract]
Average Recorded Investment	92,767,000	109,243,000	95,084,000	115,734,000
Interest Income Recognized	616,000	1,814,000	2,341,000	3,930,000
Troubled debt restructurings [Abstract]
Period of current payment history			6 months
Debt coverage ratio	1.25		1.25
Number of projected future quarters under review	4		4
Performing TDRs	39,000,000		39,000,000		41,100,000
Non-Performing TDRs	31,300,000		31,300,000		25,800,000
New Troubled Debt Restructurings [Abstract]
TDRs - Number of contracts	13	0	22	12
Pre-Modification Recorded Investment	11,289,000	0	22,938,000	14,167,000
Post-Modification Recorded Investment	11,289,000	0	22,938,000	14,167,000
Number of TDRs with subsequent payment default	11	1	20	8
Subsequent Default, Recorded Investment	9,366,000	316,000	19,139,000	5,497,000
Analysis of performing and nonperforming TDRs [Abstract]
Total	11,289,000	0	22,938,000	14,167,000
Extension [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	9,156,000	0	13,808,000	0
Period of Interest Only [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	380,000	1,505,000
Interest Rate Reduction [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	2,133,000	0	8,750,000	12,662,000
Commercial and Industrial [Member]
New Troubled Debt Restructurings [Abstract]
TDRs - Number of contracts	0	0	2	1
Pre-Modification Recorded Investment	0	0	750,000	594,000
Post-Modification Recorded Investment	0	0	750,000	594,000
Number of TDRs with subsequent payment default	0	0	1	0
Subsequent Default, Recorded Investment	0	0	603,000	0
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	750,000	594,000
Commercial and Industrial [Member] | Extension [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	500,000	0
Commercial and Industrial [Member] | Period of Interest Only [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	0	0
Commercial and Industrial [Member] | Interest Rate Reduction [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	250,000	594,000
Residential Real Estate Construction [Member]
New Troubled Debt Restructurings [Abstract]
TDRs - Number of contracts	0	0	1	1
Pre-Modification Recorded Investment	0	0	415,000	959,000
Post-Modification Recorded Investment	0	0	415,000	959,000
Number of TDRs with subsequent payment default	0	1	1	1
Subsequent Default, Recorded Investment	0	316,000	1,004,000	316,000
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	415,000	959,000
Residential Real Estate Construction [Member] | Extension [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	0	0
Residential Real Estate Construction [Member] | Period of Interest Only [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	0	0
Residential Real Estate Construction [Member] | Interest Rate Reduction [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	415,000	959,000
Commercial Real Estate Construction [Member]
New Troubled Debt Restructurings [Abstract]
TDRs - Number of contracts	11	0	11	2
Pre-Modification Recorded Investment	9,938,000	0	10,039,000	3,250,000
Post-Modification Recorded Investment	9,938,000	0	10,039,000	3,250,000
Number of TDRs with subsequent payment default	9	0	10	0
Subsequent Default, Recorded Investment	8,008,000	0	8,508,000	0
Analysis of performing and nonperforming TDRs [Abstract]
Total	9,938,000	0	9,938,000	0
Commercial Real Estate Construction [Member] | Extension [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	8,008,000	0	8,008,000	0
Commercial Real Estate Construction [Member] | Period of Interest Only [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	0	0
Commercial Real Estate Construction [Member] | Interest Rate Reduction [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	1,930,000	0	1,930,000	0
Commercial Real Estate Mortgage - Owner Occupied [Member]
New Troubled Debt Restructurings [Abstract]
TDRs - Number of contracts	0	0	1	1
Pre-Modification Recorded Investment	0	0	3,220,000	315,000
Post-Modification Recorded Investment	0	0	3,220,000	315,000
Number of TDRs with subsequent payment default	0	0	0	5
Subsequent Default, Recorded Investment	0	0	0	4,131,000
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	3,220,000	315,000
Commercial Real Estate Mortgage - Owner Occupied [Member] | Extension [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	3,220,000	0
Commercial Real Estate Mortgage - Owner Occupied [Member] | Period of Interest Only [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	0	0
Commercial Real Estate Mortgage - Owner Occupied [Member] | Interest Rate Reduction [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	0	315,000
Commercial Real Estate Mortgage - Non-owner Occupied [Member]
New Troubled Debt Restructurings [Abstract]
TDRs - Number of contracts	1	0	3	3
Pre-Modification Recorded Investment	1,148,000	0	4,067,000	5,543,000
Post-Modification Recorded Investment	1,148,000	0	4,067,000	5,543,000
Number of TDRs with subsequent payment default	1	0	3	1
Subsequent Default, Recorded Investment	1,156,000	0	4,779,000	121,000
Analysis of performing and nonperforming TDRs [Abstract]
Total	1,148,000	0	4,067,000	5,543,000
Commercial Real Estate Mortgage - Non-owner Occupied [Member] | Extension [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	1,148,000	0	1,156,000	0
Commercial Real Estate Mortgage - Non-owner Occupied [Member] | Period of Interest Only [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	0	1,505,000
Commercial Real Estate Mortgage - Non-owner Occupied [Member] | Interest Rate Reduction [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	2,911,000	4,038,000
Residential Real Estate Mortgage -Multifamily [Member]
New Troubled Debt Restructurings [Abstract]
TDRs - Number of contracts	0	0	1	2
Pre-Modification Recorded Investment	0	0	380,000	506,000
Post-Modification Recorded Investment	0	0	380,000	506,000
Number of TDRs with subsequent payment default	0	0	1	0
Subsequent Default, Recorded Investment	0	0	3,160,000	0
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	380,000	506,000
Residential Real Estate Mortgage -Multifamily [Member] | Extension [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	0	0
Residential Real Estate Mortgage -Multifamily [Member] | Period of Interest Only [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	380,000	0
Residential Real Estate Mortgage -Multifamily [Member] | Interest Rate Reduction [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	0	506,000
Residential Real Estate Mortgage - 1 to 4 family [Member]
New Troubled Debt Restructurings [Abstract]
TDRs - Number of contracts	1	0	3	4
Pre-Modification Recorded Investment	203,000	0	4,168,000	6,250,000
Post-Modification Recorded Investment	203,000	0	4,168,000	6,250,000
Number of TDRs with subsequent payment default	1	0	4	1
Subsequent Default, Recorded Investment	202,000	0	978,000	929,000
Analysis of performing and nonperforming TDRs [Abstract]
Total	203,000	0	4,168,000	6,250,000
Residential Real Estate Mortgage - 1 to 4 family [Member] | Extension [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	924,000	0
Residential Real Estate Mortgage - 1 to 4 family [Member] | Period of Interest Only [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	0	0
Residential Real Estate Mortgage - 1 to 4 family [Member] | Interest Rate Reduction [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	203,000	0	3,244,000	6,250,000
Consumer [Member]
New Troubled Debt Restructurings [Abstract]
TDRs - Number of contracts	0	0	0	0
Pre-Modification Recorded Investment	0	0	0	0
Post-Modification Recorded Investment	0	0	0	0
Number of TDRs with subsequent payment default	0	0	0	0
Subsequent Default, Recorded Investment	0	0	0	0
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	0	0
Consumer [Member] | Extension [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	0	0
Consumer [Member] | Period of Interest Only [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	0	0
Consumer [Member] | Interest Rate Reduction [Member]
Analysis of performing and nonperforming TDRs [Abstract]
Total	0	0	0	0
Minimum [Member]
Financing Receivable, Impaired [Line Items]
Percentage of cost to sell (in hundredths)			5.00%
Maximum [Member]
Financing Receivable, Impaired [Line Items]
Percentage of cost to sell (in hundredths)			10.00%
Commercial and Industrial [Member]
Recorded Investment [Abstract]
With no related allowance recorded	803,000		803,000		603,000
With an allowance recorded	0		0		0
Total recorded investment	803,000		803,000		603,000
Unpaid Principal Balance [Abstract]
With no related allowance recorded	870,000		870,000		603,000
With an allowance recorded	0		0		0
Total unpaid principal balance	870,000		870,000		603,000
Related Allowance [Abstract]
With no related allowance recorded	0		0		0
With an allowance recorded	0		0		0
Total related allowance	0		0		0
Average recorded investment and interest income recognized [Abstract]
Average Recorded Investment	806,000	594,000	850,000	594,000
Interest Income Recognized	6,000	8,000	17,000	18,000
Real Estate Construction [Member] | Residential [Member]
Recorded Investment [Abstract]
With no related allowance recorded	1,519,000		1,519,000		4,440,000
With an allowance recorded	0		0		4,170,000
Total recorded investment	1,519,000		1,519,000		8,610,000
Unpaid Principal Balance [Abstract]
With no related allowance recorded	3,319,000		3,319,000		5,246,000
With an allowance recorded	0		0		5,151,000
Total unpaid principal balance	3,319,000		3,319,000		10,397,000
Related Allowance [Abstract]
With no related allowance recorded	0		0		0
With an allowance recorded	0		0		1,297,000
Total related allowance	0		0		1,297,000
Average recorded investment and interest income recognized [Abstract]
Average Recorded Investment	1,497,000	12,413,000	2,126,000	12,614,000
Interest Income Recognized	15,000	148,000	47,000	336,000
Real Estate Construction [Member] | Commercial [Member]
Recorded Investment [Abstract]
With no related allowance recorded	14,435,000		14,435,000		12,898,000
With an allowance recorded	481,000		481,000		3,329,000
Total recorded investment	14,916,000		14,916,000		16,227,000
Unpaid Principal Balance [Abstract]
With no related allowance recorded	14,435,000		14,435,000		13,118,000
With an allowance recorded	538,000		538,000		3,329,000
Total unpaid principal balance	14,973,000		14,973,000		16,447,000
Related Allowance [Abstract]
With no related allowance recorded	0		0		0
With an allowance recorded	34,000		34,000		380,000
Total related allowance	34,000		34,000		380,000
Average recorded investment and interest income recognized [Abstract]
Average Recorded Investment	14,931,000	16,910,000	14,947,000	16,019,000
Interest Income Recognized	36,000	123,000	196,000	386,000
Real Estate Mortgage [Member] | Commercial - Owner Occupied [Member]
Recorded Investment [Abstract]
With no related allowance recorded	5,600,000		5,600,000		6,946,000
With an allowance recorded	938,000		938,000		590,000
Total recorded investment	6,538,000		6,538,000		7,536,000
Unpaid Principal Balance [Abstract]
With no related allowance recorded	5,784,000		5,784,000		6,946,000
With an allowance recorded	938,000		938,000		590,000
Total unpaid principal balance	6,722,000		6,722,000		7,536,000
Related Allowance [Abstract]
With no related allowance recorded	0		0		0
With an allowance recorded	55,000		55,000		23,000
Total related allowance	55,000		55,000		23,000
Average recorded investment and interest income recognized [Abstract]
Average Recorded Investment	6,652,000	7,648,000	6,751,000	7,690,000
Interest Income Recognized	59,000	61,000	176,000	169,000
Real Estate Mortgage [Member] | Commercial - Non-owner occupied [Member]
Recorded Investment [Abstract]
With no related allowance recorded	47,547,000		47,547,000		30,424,000
With an allowance recorded	3,571,000		3,571,000		17,820,000
Total recorded investment	51,118,000		51,118,000		48,244,000
Unpaid Principal Balance [Abstract]
With no related allowance recorded	51,019,000		51,019,000		30,852,000
With an allowance recorded	3,571,000		3,571,000		17,940,000
Total unpaid principal balance	54,590,000		54,590,000		48,792,000
Related Allowance [Abstract]
With no related allowance recorded	0		0		0
With an allowance recorded	45,000		45,000		2,526,000
Total related allowance	45,000		45,000		2,526,000
Average recorded investment and interest income recognized [Abstract]
Average Recorded Investment	51,475,000	50,766,000	52,619,000	57,521,000
Interest Income Recognized	408,000	1,299,000	1,469,000	2,533,000
Real Estate Mortgage [Member] | Residential - 1 to 4 Family [Member]
Recorded Investment [Abstract]
With no related allowance recorded	12,608,000		12,608,000		8,477,000
With an allowance recorded	507,000		507,000		3,388,000
Total recorded investment	13,115,000		13,115,000		11,865,000
Unpaid Principal Balance [Abstract]
With no related allowance recorded	13,464,000		13,464,000		10,737,000
With an allowance recorded	764,000		764,000		3,589,000
Total unpaid principal balance	14,228,000		14,228,000		14,326,000
Related Allowance [Abstract]
With no related allowance recorded	0		0		0
With an allowance recorded	16,000		16,000		600,000
Total related allowance	16,000		16,000		600,000
Average recorded investment and interest income recognized [Abstract]
Average Recorded Investment	13,556,000	15,943,000	13,877,000	16,363,000
Interest Income Recognized	85,000	84,000	370,000	233,000
Real Estate Mortgage [Member] | Residential - Multifamily [Member]
Recorded Investment [Abstract]
With no related allowance recorded	3,538,000		3,538,000		597,000
With an allowance recorded	0		0		3,268,000
Total recorded investment	3,538,000		3,538,000		3,865,000
Unpaid Principal Balance [Abstract]
With no related allowance recorded	3,538,000		3,538,000		667,000
With an allowance recorded	0		0		3,268,000
Total unpaid principal balance	3,538,000		3,538,000		3,935,000
Related Allowance [Abstract]
With no related allowance recorded	0		0		0
With an allowance recorded	0		0		33,000
Total related allowance	0		0		33,000
Average recorded investment and interest income recognized [Abstract]
Average Recorded Investment	3,559,000	4,883,000	3,604,000	4,762,000
Interest Income Recognized	6,000	83,000	60,000	247,000
Consumer [Member]
Recorded Investment [Abstract]
With no related allowance recorded	291,000		291,000		229,000
With an allowance recorded	0		0		0
Total recorded investment	291,000		291,000		229,000
Unpaid Principal Balance [Abstract]
With no related allowance recorded	327,000		327,000		229,000
With an allowance recorded	0		0		0
Total unpaid principal balance	327,000		327,000		229,000
Related Allowance [Abstract]
With no related allowance recorded	0		0		0
With an allowance recorded	0		0		0
Total related allowance	0		0		0
Average recorded investment and interest income recognized [Abstract]
Average Recorded Investment	291,000	86,000	310,000	171,000
Interest Income Recognized	$ 1,000	$ 8,000	$ 6,000	$ 8,000

XML

INVESTMENT SECURITIES (Tables)

9 Months Ended

Sep. 30, 2012

INVESTMENT SECURITIES [Abstract]

Summary of Investments in Available-for-sale and Held-to-maturity Securities

The following is a summary of the Company's investments in available for sale and held to maturity securities as of September 30, 2012 and December 31, 2011:

As of September 30, 2012	Amortized cost		Gross unrealized gains		Gross unrealized losses		Other-than- temporary impairments in OCI		Fair Value
	(Amounts in thousands)
Available for sale:
U.S. Government sponsored entities	$	7	$	—	$	—	$	—	$	7
Corporate debt obligations		1,500		51		—		—		1,551
Residential mortgage-backed securities		14,172		746		—		—		14,918
Collateralized mortgage obligations		1,024		62		—		—		1,086
Collateralized debt obligations		5,556		—		1,157		504		3,895
Total available for sale	$	22,259	$	859	$	1,157	$	504	$	21,457
Held to maturity:
States and political subdivisions	$	2,058	$	151	$	—	$	—	$	2,209

As of December 31, 2011	Amortized cost		Gross unrealized gains		Gross unrealized losses		Other-than- temporary impairments in OCI		Fair Value
	(Amounts in thousands)
Available for sale:
U.S. Government sponsored entities	$	1,006	$	5	$	—	$	—	$	1,011
Corporate debt obligations		1,500		43		57		—		1,486
Residential mortgage-backed securities		13,697		764		—		—		14,461
Collateralized mortgage obligations		1,534		73		—		13		1,594
Collateralized debt obligations		5,556		—		1,080		511		3,965
Total available for sale	$	23,293	$	885	$	1,137	$	524	$	22,517
Held to maturity:
States and political subdivisions	$	2,032	$	87	$	39	$	—	$	2,080

Investments Classified by Contractual Maturity

The amortized cost and fair value of debt securities classified as available for sale and held to maturity, by contractual maturity as of September 30, 2012 are as follows:

	Amortized Cost		Fair Value
	(Amounts in thousands)
Available for sale:
Due within one year	$	—	$	—
Due after one year through five years		—		—
Due after five years through ten years		—		—
Due after ten years		7,062		5,452
Residential mortgage-backed securities and collateralized mortgage obligations		15,197		16,005
Total available for sale	$	22,259	$	21,457

Held to maturity:
Due within one year	$	—	$	—
Due after one year through five years		—		—
Due after five years through ten years		—		—
Due after ten years		2,058		2,209
Total held to maturity	$	2,058	$	2,209

Gross Unrealized Losses and Fair Value of Investments with Continuous Unrealized Loss Position

The following tables show the gross unrealized losses and fair value of the Company's investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2012 and December 31, 2011:

As of September 30, 2012	Less Than 12 Months				12 Months or Greater				Total
Description of Securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(Amounts in thousands)
Available for sale:
Collateralized debt obligations		—		—		3,593		1,157		3,593		1,157
Total available for sale	$	—	$	—	$	3,593	$	1,157	$	3,593	$	1,157
Held to maturity:
States and political subdivisions	$	—	$	—	$	—	$	—	$	—	$	—

As of December 31, 2011	Less Than 12 Months				12 Months or Greater				Total
Description of Securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(Amounts in thousands)
Available for sale:
Corporate debt obligations		—		—		443		57		443		57
Collateralized debt obligations		—		—		3,670		1,080		3,670		1,080
Total available for sale	$	—	$	—	$	4,113	$	1,137	$	4,113	$	1,137
Held to maturity:
States and political subdivisions	$	758	$	39	$	—	$	—	$	758	$	39

Changes in the Credit Loss Component of Credit-impaired Debt Securities

The following table presents a roll-forward of the credit loss component of the amortized cost of debt securities that we have written down for OTTI and the credit component of the loss that is recognized in earnings. OTTI recognized in earnings for credit-impaired debt securities is presented as additions in two components based upon whether the current period is the first time the debt security was credit-impaired (initial credit impairment) or is not the first time the debt security was credit impaired (subsequent credit impairments). The credit loss component is reduced if we sell, intend to sell or believe we will be required to sell previously credit-impaired debt securities. Additionally, the credit loss component is reduced if we receive cash flows in excess of what we expected to receive over the remaining life of the credit-impaired debt security, the security matures or is fully written down. Changes in the credit loss component of credit-impaired debt securities were as follows for the periods ended September 30, 2012 and 2011.

	For the Nine Months Ended September 30,
	2012			2011
	(Amounts in thousands)
Beginning balance	$	1,950		$	2,657
Initial credit impairment		—			—
Subsequent credit impairments		—			85
Reductions for amounts recognized in earnings due to intent or requirement to sell		—			—
Reductions for securities sold		—			—
Reductions for securities deemed worthless		(731	)		(524	)
Reductions for increases in cash flows expected to be collected		—			—
Ending balance	$	1,219		$	2,218

	For the Three Months Ended September 30,
	2012			2011
	(Amounts in thousands)
Beginning balance	$	1,551		$	2,398
Initial credit impairment		—			—
Subsequent credit impairments		—			28
Reductions for amounts recognized in earnings due to intent or requirement to sell		—			—
Reductions for securities sold		—			—
Reductions for securities deemed worthless		(332	)		(208	)
Reductions for increases in cash flows expected to be collected		—			—
Ending balance	$	1,219		$	2,218

Summary of Investment Gains and Losses

A summary of investment gains and losses recognized in income during the nine month and three month periods ended September 30, 2012 and 2011 are as follows:

	For the Nine Months Ended September 30,
	2012		2011
	(Amounts in thousands)
Available for sale securities:
Realized gains	$	—	$	—
Realized (losses)		—		—
Other than temporary impairment		—		(85	)
Total available for sale securities	$	—	$	(85	)
Held to maturity securities:
Realized gains	$	—	$	—
Realized (losses)		—		—
Other than temporary impairment		—		—
Total held to maturity securities	$	—	$	—

	For the Three Months Ended September 30,
	2012		2011
	(Amounts in thousands)
Available for sale securities:
Realized gains	$	—	$	—
Realized (losses)		—		—
Other than temporary impairment		—		(28	)
Total available for sale securities	$	—	$	(28	)
Held to maturity securities:
Realized gains	$	—	$	—
Realized (losses)		—		—
Other than temporary impairment		—		—
Total held to maturity securities	$	—	$	—

XML

FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2012

FAIR VALUE [Abstract]

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The table below presents the balances of assets and liabilities measured at fair value on a recurring basis.

Financial Assets	Level 1		Level 2		Level 3		Total
	(Amounts in thousands)
Securities Available for Sale
As of September 30, 2012
U.S. Government sponsored entities	$	—	$	7	$	—	$	7
Corporate debt obligations		—		1,551		—		1,551
Residential mortgage-backed securities		—		14,918		—		14,918
Collateralized mortgage-backed securities				1,080		6		1,086
Collateralized debt obligations		—		—		3,895		3,895
Total	$	—	$	17,556	$	3,901	$	21,457
As of December 31, 2011
U.S. Government sponsored entities	$	—	$	1,011	$	—	$	1,011
Corporate debt obligations		—		1,486		—		1,486
Residential mortgage-backed securities		—		14,461		—		14,461
Collateralized mortgage-backed securities				1,437		157		1,594
Collateralized debt obligations		—		—		3,965		3,965
Total	$	—	$	18,395	$	4,122	$	22,517

Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis

The changes in Level 3 assets measured at fair value on a recurring basis are summarized as follows for the nine months ending September 30:

	Securities Available for Sale
	2012			2011
	(Amounts in thousands)
Beginning balance at January 1,	$	4,122		$	4,560
Total net losses included in:
Net loss		(128	)		(85	)
Other comprehensive loss		(93	)		(47	)
Settlements		—			(161	)
Net transfers into Level 3		—			—
Ending balance September 30,	$	3,901		$	4,267

Fair Value on a Non-recurring Basis

Certain assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

Financial Assets	Level 1		Level 2		Level 3		Total
	(Amounts in thousands)
As of September 30, 2012
Collateral dependent impaired loans	$	—	$	—	$	65,945	$	65,945
OREO		—		—		28,102		28,102
As of December 31, 2011
Collateral dependent impaired loans	$	—	$	—	$	72,958	$	72,958
OREO		—		—		19,410		19,410

Summary of Carrying Value and Fair Value of Financial Instruments

The following table summarizes the carrying amounts and fair values for financial instruments at September 30, 2012 and December 31, 2011:

	Level in	September 30, 2012				December 31, 2011
	Fair Value	Carrying		Fair		Carrying		Fair
	Hierarchy	Value		Value		Value		Value
	(Amounts in thousands)
Financial Assets:
Cash and cash equivalents	Level 1	$	100,883	$	100,883	$	110,228	$	110,228
Investment securities (available for sale and held to maturity)	(1)		23,515		23,666		24,549		24,597
Restricted stock	Level 2		2,225		2,225		3,565		3,565
Loans held for sale	Level 2		—		—		225		225
Loans, net	(2)		586,073		608,991		605,794		622,801
Accrued interest receivable	Level 2		2,765		2,765		3,039		3,039
Financial Liabilities:
Demand and savings deposits	Level 2	$	363,969	$	363,969	$	356,440	$	356,440
Time deposits	Level 2		275,731		277,613		278,415		280,147
Borrowings	Level 2		43,891		51,478		74,010		79,997
Accrued interest payable	Level 2		631		631		618		618

(1)See the recurring fair value table above.

(2)For non-impaired loans, Level 2; for impaired loans, Level 3.

XML

EARNINGS PER SHARE (EPS) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Basic earnings per common share [Abstract]
Net income available to common shareholders	$ 1,468	$ 1,319	$ 4,599	$ 5,258
Average common shares outstanding (in shares)	5,872,276	5,818,506	5,378,103	5,374,561
Basic earnings per common share (in dollars per share)	$ 0.25	$ 0.23	$ 0.86	$ 0.98
Diluted earnings per common share [Abstract]
Net income available to common shareholders	$ 1,468	$ 1,319	$ 4,599	$ 5,258
Average common shares outstanding (in shares)	5,872,276	5,818,506	5,378,103	5,374,561
Dilutive potential common shares (in shares)	367	23,349	3,244	115,237
Total diluted average common shares outstanding (in shares)	5,872,643	5,841,855	5,381,347	5,458,044
Diluted earnings per common share (in dollars per share)	$ 0.25	$ 0.23	$ 0.85	$ 0.96
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common stock, dividend rate (in hundredths)			10.00%	10.00%
Common stock options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities not included in the computation of diluted EPS (in shares)	335,186	319,284	335,186	308,274

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) [Abstract]
Net income attributable to Company and other comprehensive income net of tax	$ 1,721	$ 1,570	$ 5,357	$ 6,007
Unrealized gains on securities:
Non-credit unrealized gains on securities with OTTI	(7)	(4)	12	16
Net unrealized (losses) gains on securities without OTTI	(58)	22	(28)	109
Total unrealized (losses) gains on securities	(65)	18	(16)	125
Pension liability adjustments	4	14	10	31
Total other comprehensive income (loss)	(61)	32	(5)	156
Total other comprehensive (loss) income	$ 1,660	$ 1,602	$ 5,351	$ 6,163

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2012

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Financial Statement Presentation: The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America ("GAAP") and predominant practices within the banking industry.

The accompanying consolidated financial statements include the accounts of Parke Bancorp, Inc. and its wholly-owned subsidiaries Parke Bank, Parke Capital Markets, Farm Folly, Inc. and Taylors Glen LLC. Also included are the accounts of 44 Business Capital Partners LLC, a joint venture formed in 2009 to originate and service SBA loans. Parke Bank has a 51% ownership interest in the joint venture. Parke Capital Trust I,

Parke Capital Trust II and Parke Capital Trust III are wholly-owned subsidiaries but are not consolidated because they do not meet the requirements for consolidation under applicable accounting guidance. All significant inter-company balances and transactions have been eliminated.

The accompanying interim financial statements should be read in conjunction with the annual financial statements and notes thereto included in Parke Bancorp Inc.'s Annual Report on Form 10-K for the year ended December 31, 2011 since they do not include all of the information and footnotes required by GAAP. The accompanying interim financial statements for the nine months ended September 30, 2012 and 2011 are unaudited. The balance sheet as of December 31, 2011, was derived from the audited financial statements. In the opinion of management, these financial statements include all normal and recurring adjustments necessary for a fair statement of the results for such interim periods. Results of operations for the nine months ended September 30, 2012 are not necessarily indicative of the results for the full year.

Use of Estimates: In preparing the interim financial statements, management makes estimates and assumptions based on available information that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the balance sheet and reported amounts of expenses and revenues. Actual results could differ from such estimates. The allowance for loan losses, deferred taxes, evaluation of investment securities for other-than-temporary impairment, fair values of financial instruments and other real estate owned ("OREO") are significant estimates and particularly subject to change.

Recently Issued Accounting Pronouncements:

In May 2011, FASB issued ASU 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This ASU does not extend the use of fair value accounting, but provides guidance on how it should be applied where its use is already required or permitted. This guidance is to be applied prospectively and is effective during interim and annual periods beginning after December 15, 2011. Adoption of this guidance has not had a material impact on results of operations or financial condition.

In June 2011, the FASB issued guidance to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. The amendments require that all non-owner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amendments do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The amendments are effective for interim and annual periods beginning after December 15, 2011 with retrospective application. The Company adopted the accounting standard on January 1, 2012, as required, with no material impact on its results of operations or financial position.

XML

INCOME TAXES (Tables)

9 Months Ended

Sep. 30, 2012

INCOME TAXES [Abstract]

Income Taxes

	For the nine months ended September 30,						For the three months ended September 30,
	2012			2011			2012			2011
	(Amount in thousands)
Income Taxes
Pre-tax Income		$	8,694		$	11,460		$	3,280		$	2,883
Income Tax Expense			2,895			4,605			1,365			1,161

XML

OTHER COMPREHENSIVE INCOME (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Other comprehensive income [Abstract]
Non-credit unrealized gains on securities with OTTI	$ (504)	$ (524)
Unrealized losses on securities without OTTI	(298)	(252)
Minimum pension liability	(250)	(268)
Tax impact	420	418
Other comprehensive income	$ (632)	$ (626)

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2012

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Basis of Financial Statement Presentation

Basis of Financial Statement Presentation: The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America ("GAAP") and predominant practices within the banking industry.

The accompanying consolidated financial statements include the accounts of Parke Bancorp, Inc. and its wholly-owned subsidiaries Parke Bank, Parke Capital Markets, Farm Folly, Inc. and Taylors Glen LLC. Also included are the accounts of 44 Business Capital Partners LLC, a joint venture formed in 2009 to originate and service SBA loans. Parke Bank has a 51% ownership interest in the joint venture. Parke Capital Trust I,

Parke Capital Trust II and Parke Capital Trust III are wholly-owned subsidiaries but are not consolidated because they do not meet the requirements for consolidation under applicable accounting guidance. All significant inter-company balances and transactions have been eliminated.

The accompanying interim financial statements should be read in conjunction with the annual financial statements and notes thereto included in Parke Bancorp Inc.'s Annual Report on Form 10-K for the year ended December 31, 2011 since they do not include all of the information and footnotes required by GAAP. The accompanying interim financial statements for the nine months ended September 30, 2012 and 2011 are unaudited. The balance sheet as of December 31, 2011, was derived from the audited financial statements. In the opinion of management, these financial statements include all normal and recurring adjustments necessary for a fair statement of the results for such interim periods. Results of operations for the nine months ended September 30, 2012 are not necessarily indicative of the results for the full year.

Use of Estimates

Use of Estimates: In preparing the interim financial statements, management makes estimates and assumptions based on available information that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the balance sheet and reported amounts of expenses and revenues. Actual results could differ from such estimates. The allowance for loan losses, deferred taxes, evaluation of investment securities for other-than-temporary impairment, fair values of financial instruments and other real estate owned ("OREO") are significant estimates and particularly subject to change.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements:

In May 2011, FASB issued ASU 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This ASU does not extend the use of fair value accounting, but provides guidance on how it should be applied where its use is already required or permitted. This guidance is to be applied prospectively and is effective during interim and annual periods beginning after December 15, 2011. Adoption of this guidance has not had a material impact on results of operations or financial condition.

In June 2011, the FASB issued guidance to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. The amendments require that all non-owner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amendments do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The amendments are effective for interim and annual periods beginning after December 15, 2011 with retrospective application. The Company adopted the accounting standard on January 1, 2012, as required, with no material impact on its results of operations or financial position.