Profile: DNB Financial Corporation (DNBF.O)

DNB Financial Corporation (DNB), incorporated on October 28, 1982, is a bank holding company of DNB First, National Association (the Bank). The Bank is a commercial bank providing a range of services to individuals and small to medium sized businesses in the southeastern Pennsylvania market area, including accepting time, demand and savings deposits, and making secured and unsecured commercial, real estate and consumer loans. In addition, the Bank has 11 service and two limited service branches and a full-service wealth management group known as DNB Advisors.

Lending Activities

DNB's loan and lease portfolio consists primarily of commercial and residential real estate loans, commercial loans and lines of credit (including commercial construction), commercial leases, and consumer loans. In 2008, net loans and leases were $331.9 million. The commercial loans were $83.2 million in 2008. As of December 31, 2008, commercial mortgage loans were $138.9 million and consumer loans were $63.4 million.

Sources of Funds

DNB's primary source of funds is derived from customer deposits, which are typically generated by DNB's 13 branch offices. DNB's deposit mix consists of low costing core deposits, (demand, negotiable order of withdrawal (NOW), and savings accounts). The remaining deposits are comprised of rate-sensitive money market and time products. DNB offers tiered savings and money market accounts. Certificates of deposit and individual retirement accounts (IRAs) are offered with interest rates commensurate with their terms.

DNB offers non-deposit products and services through its subsidiaries under the names DNB Financial Services (DNBFS) and DNB Advisors. It includes fixed and variable annuities, 401(k) rollovers, self-directed IRAs, mutual funds, long term care insurance, life insurance, disability insurance, and self employed pension (SEP). DNB Advisors offers a line of products and services, which includes investment management, investment advisory, estate settlement, trust services, custody services, retirement planning, and safekeeping.

Investment Activities

DNB's investment portfolio consists of United States agency securities, mortgage-backed securities issued by United States Government agencies, collateralized mortgage obligations, state and municipal securities, bank stocks, and other bonds and notes. Investment securities are classified as securities held to maturity (HTM) based on management's intent and ability to hold them to maturity, trading account (TA) securities that are bought and held principally for the purpose of selling them in the near term, and securities available for sale (AFS). DNB's investment portfolio (HTM and AFS securities) totaled to $120.1 million at December 31, 2008.