| Pennsylvania (State or other jurisdiction of  incorporation or organization) | 23-2222567(I.R.S. Employer Identification No.)   |
|---------------------------------------------------------------------------------------------|------------------------------------------------------------|

| Yes x |   | No o |
|-------|--------|------|

| Yes o |   | No o |
|-------|--------|------|

| Yes o |   | No x |
|------------|--------|------|

| Common Stock ($1.00 Par Value)(Class) | 2,672,055(Shares Outstanding as of May 10, 2011)  |
|---------------------------------------|--------------------------------------------------------|

----

|          |   | PART  I - FINANCIAL INFORMATION                                             | PAGE NO        |
|---------------|--------|---------------------------------------------------------------------------------------|----------------|
|          |   |                                                                                  |           |
| ITEM 1.       |   | FINANCIAL STATEMENTS (Unaudited):                                                     |           |
|          |   |                                                                                  |           |
|          |   | CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION                                        |           |
|          |   | March 31, 2011 and December 31, 2010                                                  | 3              |
|          |   |                                                                                  |           |
|          |   | CONSOLIDATED STATEMENTS OF OPERATIONS                                                 |           |
|          |   | Three Months Ended March 31, 2011 and 2010                                            | 4              |
|          |   |                                                                                  |           |
|          |   | CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME (LOSS) | 5              |
|          |   | Three Months Ended March 31, 2011 and 2010                                            |           |
|          |   |                                                                                  |           |
|          |   | CONSOLIDATED STATEMENTS OF CASH FLOWS                                                 |           |
|          |   | Three Months Ended March 31, 2011 and  2010                                 | 6              |
|          |   |                                                                                  |           |
|          |   | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                            | 7              |
|          |   |                                                                                  |           |
| ITEM 2.       |   | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |   23 |
|          |   |                                                                                  |           |
|          |   |                                                                                  |           |
| ITEM 3.       |   | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK,                           |  38       |
|          |   |                                                                                  |           |
| ITEM 4T.      |   | CONTROLS AND PROCEDURES                                                               | 38             |
|          |   |                                                                                  |           |
|          |   | PART II - OTHER INFORMATION                                                           |           |
|          |   |                                                                                  |           |
| ITEM 1.       |   | LEGAL PROCEEDINGS                                                                     | 39             |
|          |   |                                                                                  |           |
| ITEM 1A.      |   | RISK FACTORS                                                                          | 39             |
|          |   |                                                                                  |           |
| ITEM 2.       |   | UNREGISTERED SALES OF EQUITY  SECURITIES AND USE OF PROCEEDS                | 39             |
|          |   |                                                                                  |           |
| ITEM 3.       |   | DEFAULTS UPON SENIOR SECURITIES                                                       | 39             |
|          |   |                                                                                  |           |
| ITEM 4.       |   | REMOVED AND RESERVED                                                                  | 39             |
|          |   |                                                                                  |           |
| ITEM 5.       |   | OTHER INFORMATION                                                                     | 39             |
|          |   |                                                                                  |           |
| ITEM 6.       |   | EXHIBITS                                                                              | 40             |
|          |   |                                                                                  |           |
| SIGNATURES    | 41     |
|          |   |                                                                                  |           |
| EXHIBIT INDEX |   |
|          |   |                                                                                  |           |

----

PART I – FINANCIAL INFORMATION

|                                                                                |   | March 31, |    |   | December 31, |   |
|-------------------------------------------------------------------------------------|--------|-----------|---------|--------|--------------|--------|
| (Dollars in thousands, except per share data)                                       |   | 2011      |    |   | 2010         |   |
| Assets                                                                              |   |      |    |   |         |   |
| Cash and due from banks                                                             |   | $         | 17,714  |   |         | $      | 18,360 |   |
| Federal funds sold                                                                  |   |      | 6,445   |   |         |   | 8,000 |   |
| Cash and cash equivalents                                                           |   |      | 24,159  |   |         |   | 26,360 |   |
| AFS investment securities (amortized cost of $140,886 and $144,205)                 |   |      | 139,267 |   |         |   | 142,161 |   |
| HTM investment securities (fair value of $9,197 and $8,723)                         |   |      | 8,931   |   |         |   | 8,431 |   |
| Total investment securities                                                         |   |      | 148,198 |   |         |   | 150,592 |   |
| Loans and leases                                                                    |   |      | 409,501 |   |         |   | 396,171 |   |
| Allowance for credit losses                                                         |   |      | (6,307  | )      |         |   | (5,884 | ) |
| Net loans and leases                                                                |   |      | 403,194 |   |         |   | 390,287 |   |
| Restricted stock                                                                    |   |      | 4,046   |   |         |   | 4,201 |   |
| Office property and equipment, net                                                  |   |      | 8,145   |   |         |   | 8,248 |   |
| Accrued interest receivable                                                         |   |      | 2,512   |   |         |   | 2,283 |   |
| OREO & other repossessed property                                               |   |      | 4,338   |   |         |   | 4,324 |   |
| Bank owned life insurance (BOLI)                                                    |   |      | 8,197   |   |         |   | 8,137 |   |
| Core deposit intangible                                                             |   |      | 179     |   |         |   | 160 |   |
| Net deferred taxes                                                                  |   |      | 3,677   |   |         |   | 3,822 |   |
| Other assets                                                                        |   |      | 3,364   |   |         |   | 3,918 |   |
| Total assets                                                                        |   | $         | 610,009 |   |         | $      | 602,332 |   |
| Liabilities and Stockholders’ Equity                                          |   |      |    |   |         |   |   |   |
| Liabilities                                                                         |   |      |    |   |         |   |   |   |
| Non-interest-bearing deposits                                                       |   | $         | 60,927  |   |         | $      | 58,948 |   |
| Interest-bearing deposits:                                                          |   |      |    |   |         |   |   |   |
| NOW                                                                                 |   |      | 160,714 |   |         |   | 163,104 |   |
| Money market                                                                        |   |      | 110,085 |   |         |   | 89,944 |   |
| Savings                                                                             |   |      | 44,512  |   |         |   | 42,521 |   |
| Time                                                                                |   |      | 131,005 |   |         |   | 138,229 |   |
| Total deposits                                                                      |   |      | 507,243 |   |         |   | 492,746 |   |
| Federal Home Loan Bank of Pittsburgh (FHLB) advances                                |   |      | 20,000  |   |         |   | 25,000 |   |
| Repurchase agreements                                                               |   |      | 20,536  |   |         |   | 23,349 |   |
| Junior subordinated debentures                                                      |   |      | 9,279   |   |         |   | 9,279 |   |
| Other borrowings                                                                    |   |      | 615     |   |         |   | 2,602 |   |
| Total borrowings                                                                    |   |      | 50,430  |   |         |   | 60,230 |   |
| Accrued interest payable                                                            |   |      | 433     |   |         |   | 527 |   |
| Other liabilities                                                                   |   |      | 5,551   |   |         |   | 3,621 |   |
| Total liabilities                                                                   |   |      | 563,657 |   |         |   | 557,124 |   |
| Stockholders’ Equity                                                          |   |      |    |   |         |   |   |   |
| Preferred stock, $10.00 par value;                                                  |   |      |    |   |         |   |   |   |
| 1,000,000 shares authorized; $1,000 liquidation preference per share; 11,750 issued |   |      | 11,549  |   |         |   | 11,541 |   |
| Common stock, $1.00 par value;                                                      |   |      |    |   |         |   |   |   |
| 10,000,000 shares authorized; 2,874,694 issued                                      |   |      | 2,886   |   |         |   | 2,884 |   |
| Stock warrants                                                                      |   |      | 151     |   |         |   | 151 |   |
| Treasury stock, at cost; 208,402 and 213,545 shares, respectively                   |   |      | (4,461  | )      |         |   | (4,515 | ) |
| Surplus                                                                             |   |      | 35,314  |   |         |   | 35,294 |   |
| Retained earnings                                                                   |   |      | 2,849   |   |         |   | 2,069 |   |
| Accumulated other comprehensive loss, net                                           |   |      | (1,936  | )      |         |   | (2,216 | ) |
| Total stockholders’ equity                                                    |   |      | 46,352  |   |         |   | 45,208 |   |
| Total liabilities and stockholders’ equity                                    |   | $         | 610,009 |   |         | $      | 602,332 |   |
| See accompanying notes to unaudited consolidated financial statements.              |   |      |    |   |         |   |   |   |
|                                                                                |   |      |    |   |         |   |   |   |

----

DNB Financial Corporation and Subsidiary

|                                                                   |   | Three Months Ended March 31, |      |
|------------------------------------------------------------------------|--------|-----------------------------------|-----------|
| (Dollars in thousands, except per share data)                          |   | 2011                              |      |   | 2010 |   |   |
| Interest and Dividend Income:                                          |   |                              |      |   |   |   |   |
| Interest and fees on loans and leases                                  |   | $                                 | 5,606     |   |   | $ | 5,131 |   |
| Interest and dividends on investment securities:                       |   |                              |      |   |   |   |   |   |
|  Taxable                                                          |   |                              | 837       |   |   |   | 1,448 |   |
|  Exempt from federal taxes                                        |   |                              | —   |   |   |   | 45 |   |
| Interest on cash and cash equivalents                                  |   |                              | 9         |   |   |   | 27 |   |
| Total interest and dividend income                                     |   |                              | 6,452     |   |   |   | 6,651 |   |
| Interest Expense:                                                      |   |                              |      |   |   |   |   |   |
| Interest on NOW, money market and savings                              |   |                              | 297       |   |   |   | 630 |   |
| Interest on time deposits                                              |   |                              | 600       |   |   |   | 888 |   |
| Interest on FHLB advances                                              |   |                              | 227       |   |   |   | 521 |   |
| Interest on repurchase agreements                                      |   |                              | 37        |   |   |   | 65 |   |
| Interest on junior subordinated debentures                             |   |                              | 80        |   |   |   | 120 |   |
| Interest on other borrowings                                           |   |                              | 32        |   |   |   | 22 |   |
| Total interest expense                                                 |   |                              | 1,273     |   |   |   | 2,246 |   |
| Net interest income                                                    |   |                              | 5,179     |   |   |   | 4,405 |   |
| Provision for credit losses                                            |   |                              | 426       |   |   |   | 426 |   |
| Net interest income after provision for credit losses                  |   |                              | 4,753     |   |   |   | 3,979 |   |
| Non-interest Income:                                                   |   |                              |      |   |   |   |   |   |
| Service charges                                                        |   |                              | 276       |   |   |   | 343 |   |
| Wealth management                                                      |   |                              | 208       |   |   |   | 216 |   |
| Increase in cash surrender value of BOLI                               |   |                              | 60        |   |   |   | 62 |   |
| Gain on sale of investment securities, net                             |   |                              | 1         |   |   |   | 696 |   |
| Other fees                                                             |   |                              | 416       |   |   |   | 252 |   |
| Total non-interest income                                              |   |                              | 961       |   |   |   | 1,569 |   |
| Non-interest Expense:                                                  |   |                              |      |   |   |   |   |   |
| Salaries and employee benefits                                         |   |                              | 2,200     |   |   |   | 2,103 |   |
| Furniture and equipment                                                |   |                              | 331       |   |   |   | 359 |   |
| Occupancy                                                              |   |                              | 526       |   |   |   | 456 |   |
| Professional and consulting                                            |   |                              | 299       |   |   |   | 266 |   |
| Marketing                                                              |   |                              | 156       |   |   |   | 104 |   |
| Printing and supplies                                                  |   |                              | 37        |   |   |   | 41 |   |
| FDIC insurance                                                         |   |                              | 192       |   |   |   | 211 |   |
| FHLB prepayment penalties                                              |   |                              | —   |   |   |   | 560 |   |
| Other expenses                                                         |   |                              | 513       |   |   |   | 502 |   |
| Total non-interest expense                                             |   |                              | 4,254     |   |   |   | 4,602 |   |
| Income before income taxes                                             |   |                              | 1,460     |   |   |   | 946 |   |
| Income tax expense                                                     |   |                              | 445       |   |   |   | 271 |   |
| Net income                                                             |   | $                                 | 1,015     |   |   | $ | 675 |   |
| Preferred stock dividends and accretion of discount                    |   |                              | 155       |   |   |   | 154 |   |
| Net income available to common Stockholders                            |   | $                                 | 860       |   |   | $ | 521 |   |
| Earnings per share:                                                    |   |                              |      |   |   |   |   |   |
|  Basic                                                            |   | $                                 | 0.32      |   |   | $ | 0.20 |   |
|  Diluted                                                          |   | $                                 | 0.32      |   |   | $ | 0.20 |   |
| Cash dividends per share                                               |   | $                                 | 0.03      |   |   | $ | 0.03 |   |
| Weighted average common shares outstanding:                            |   |                              |      |   |   |   |   |   |
|  Basic                                                            |   |                              | 2,664,348 |   |   |   | 2,620,314 |   |
|  Diluted                                                          |   |                              | 2,697,985 |   |   |   | 2,620,314 |   |
| See accompanying notes to unaudited consolidated financial statements. |   |                              |      |   |   |   |

----

DNB FINANCIAL CORPORATION AND Subsidiary

|                                                                           |   | Preferred Stock |    |   | CommonStock |   |    | StockWarrants |   |   | TreasuryStock |   |   | Surplus |    |   | Retained Earnings (AccumulatedDeficit) |   |    | AccumulatedOtherCompre-hensiveIncome(Loss) |   |   | Total   |   |
|--------------------------------------------------------------------------------|--------|-----------------|---------|--------|-------------|--------|---------|---------------|--------|--------|---------------|--------|--------|---------|---------|--------|----------------------------------------|--------|---------|--------------------------------------------|--------|--------|---------|--------|
|                                                                           |   |            |    |   |        |   |    |          |   |   |          |   |   |    |    |   |                                   |   |    |                                       |   |   |    |   |
| Balance at January 1, 2011                                                |   | $               | 11,541  |   |        | $      | 2,884   |          |   | $      | 151           |   |   | $       | (4,515  | )      |                                   | $      | 35,294  |                                       |   | $      | 2,069   |   |   | $ | (2,216 | ) |   | $ | 45,208 |   |
| Comprehensive income:                                                          |   |            |    |   |        |   |    |          |   |   |          |   |   |    |    |   |                                   |   |    |                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Net income for three months      ended March 31, 2011      |   |            | — |   |        |   | — |          |   |   | —       |   |   |    | — |   |                                   |   | — |                                       |   |   | 1,015   |   |   |   | — |   |   |   | 1,015 |   |
| Other comprehensive     income, net of tax:                |   |            |    |   |        |   |    |          |   |   |          |   |   |    |    |   |                                   |   |    |                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Unrealized gains on AFS      securities, net               |   |            | — |   |        |   | — |          |   |   | —       |   |   |    | — |   |                                   |   | — |                                       |   |   | — |   |   |   | 280 |   |   |   | 280 |   |
| Total comprehensive income                                                     |   |            | — |   |        |   | — |          |   |   | —       |   |   |    | — |   |                                   |   | — |                                       |   |   | — |   |   |   | — |   |   |   | 1,295 |   |
| Preferred stock discount      accretion                    |   |            | 8       |   |        |   | — |          |   |   | —       |   |   |    | — |   |                                   |   | — |                                       |   |   | (8      | )      |   |   | — |   |   |   | — |   |
| Restricted stock     compensation expense                  |   |            | — |   |        |   | 2       |          |   |   | —       |   |   |    | — |   |                                   |   | 20      |                                       |   |   | — |   |   |   | — |   |   |   | 22 |   |
| Cash dividends ($.03 per share)                                                |   |            | — |   |        |   | — |          |   |   | —       |   |   |    | — |   |                                   |   | — |                                       |   |   | (80     | )      |   |   | — |   |   |   | (80 | ) |
| Cash dividends-Preferred                                                       |   |            | — |   |        |   | — |          |   |   | —       |   |   |    | — |   |                                   |   | — |                                       |   |   | (147    | )      |   |   | — |   |   |   | (147 | ) |
| Sale of treasury shares to 401(k)      plan (5,143 shares) |   |            | — |   |        |   | — |          |   |   | —       |   |   |    | 54      |   |                                   |   | — |                                       |   |   | — |   |   |   | — |   |   |   | 54 |   |
|      Balance at March 31, 2011                             |   | $               | 11,549  |   |        | $      | 2,886   |          |   | $      | 151           |   |   | $       | (4,461  | )      |                                   | $      | 35,314  |                                       |   | $      | 2,849   |   |   | $ | (1,936 | ) |   | $ | 46,352 |   |
|                                                                           |   |            |    |   |        |   |    |          |   |   |          |   |   |    |    |   |                                   |   |    |                                       |   |   |    |   |   |   |   |   |   |   |   |   |
|                                                                           |   | Preferred Stock |    |   | CommonStock |   |    | StockWarrants |   |   | TreasuryStock |   |   | Surplus |    |   | AccumulatedDeficit                     |   |    | AccumulatedOtherCompre-hensiveLoss         |   |   | Total   |   |
|                                                                           |   |            |    |   |        |   |    |          |   |   |          |   |   |    |    |   |                                   |   |    |                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Balance at January 1, 2010                                                |   | $               | 11,511  |   |        | $      | 2,875   |          |   | $      | 151           |   |   | $       | (4,727  | )      |                                   | $      | 35,179  |                                       |   | $      | (666    | )      |   | $ | (1,447 | ) |   | $ | 42,876 |   |
| Comprehensive income:                                                          |   |            |    |   |        |   |    |          |   |   |          |   |   |    |    |   |                                   |   |    |                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Net income for three months      ended March 30, 2010      |   |            | — |   |        |   | — |          |   |   | —       |   |   |    | — |   |                                   |   | — |                                       |   |   | 675     |   |   |   | — |   |   |   | 675 |   |
| Other comprehensive income,      net of tax:               |   |            |    |   |        |   |    |          |   |   |          |   |   |    |    |   |                                   |   |    |                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Unrealized gains on AFS      securities, net               |   |            | — |   |        |   | — |          |   |   | —       |   |   |    | — |   |                                   |   | — |                                       |   |   | — |   |   |   | 181 |   |   |   | 181 |   |
| Total comprehensive income                                                     |   |            | — |   |        |   | — |          |   |   | —       |   |   |    | — |   |                                   |   | — |                                       |   |   | — |   |   |   | — |   |   |   | 856 |   |
| Preferred stock discount      accretion                    |   |            | 7       |   |        |   | — |          |   |   | —       |   |   |    | — |   |                                   |   | — |                                       |   |   | (7      | )      |   |   | — |   |   |   | — |   |
| Restricted stock compensation      expense                 |   |            | — |   |        |   | 2       |          |   |   | —       |   |   |    | — |   |                                   |   | 24      |                                       |   |   | — |   |   |   | — |   |   |   | 26 |   |
| Cash dividends ($.03 per share)                                                |   |            | — |   |        |   | — |          |   |   | —       |   |   |    | — |   |                                   |   | — |                                       |   |   | (79     | )      |   |   | — |   |   |   | (79 | ) |
| Cash dividends-Preferred                                                       |   |            | — |   |        |   | — |          |   |   | —       |   |   |    | — |   |                                   |   | — |                                       |   |   | (147    | )      |   |   | — |   |   |   | (147 | ) |
| Sale of treasury shares to 401(k)      plan (8,586 shares) |   |            | — |   |        |   | — |          |   |   | —       |   |   |    | 50      |   |                                   |   | — |                                       |   |   | — |   |   |   | — |   |   |   | 50 |   |
| Balance at March 31, 2010                                                 |   | $               | 11,518  |   |        | $      | 2,877   |          |   | $      | 151           |   |   | $       | (4,677  | )      |                                   | $      | 35,203  |                                       |   | $      | (224    | )      |   | $ | (1,266 | ) |   | $ | 43,582 |   |
|                                                                           |   |            |    |   |        |   |    |          |   |   |          |   |   |    |    |   |                                   |   |    |                                       |   |   |    |   |   |   |   |   |   |   |   |   |

----

DNB Financial Corporation and Subsidiary

|                                                                               |   | Three Months EndedMarch 31, |
|------------------------------------------------------------------------------------|--------|-----------------------------|
| (Dollars in thousands)                                                             |   | 2011                        |   |   | 2010 |   |
| Cash Flows From Operating Activities:                                              |   |                        |   |   |   |   |
| Net income                                                                         |   | $                           | 1,015 |   |   | $ | 675 |   |
| Adjustments to reconcile net income to net cash provided by operating activities:  |   |                        |   |   |   |   |   |   |
| Depreciation, amortization and accretion                                           |   |                        | 638 |   |   |   | 688 |   |
| Provision for credit losses                                                        |   |                        | 426 |   |   |   | 426 |   |
| Unvested stock amortization                                                        |   |                        | 22 |   |   |   | 26 |   |
| Net gain on sale of securities                                                     |   |                        | (1 | ) |   |   | (696 | ) |
| Net loss on sale and write down of OREO and other repossessed property             |   |                        | 1 |   |   |   | 7 |   |
| Increase in accrued interest receivable                                            |   |                        | (229 | ) |   |   | (229 | ) |
| Decrease in other assets                                                           |   |                        | 554 |   |   |   | 374 |   |
| Earnings from investment in BOLI                                                   |   |                        | (60 | ) |   |   | (62 | ) |
| Decrease in accrued interest payable                                               |   |                        | (94 | ) |   |   | (162 | ) |
| Increase in deferred tax benefit (expense)                                         |   |                        | — |   |   |   | (17 | ) |
| Decrease in other liabilities                                                      |   |                        | (63 | ) |   |   | (268 | ) |
| Net Cash Provided  By Operating Activities                               |   |                        | 2,209 |   |   |   | 762 |   |
| Cash Flows From Investing Activities:                                              |   |                        |   |   |   |   |   |   |
| Activity in available-for-sale securities:                                         |   |                        |   |   |   |   |   |   |
| Sales                                                                              |   |                        | 3,335 |   |   |   | 59,227 |   |
| Maturities, repayments and calls                                                   |   |                        | 7,582 |   |   |   | 9,983 |   |
| Purchases                                                                          |   |                        | (8,010 | ) |   |   | (74,689 | ) |
| Activity in held-to-maturity securities:                                           |   |                        |   |   |   |   |   |   |
| Maturities, repayments and calls                                                   |   |                        | 1,040 |   |   |   | 4,363 |   |
| Purchases                                                                          |   |                        | (1,552 | ) |   |   | — |   |
| Net decrease (increase) in restricted stock                                        |   |                        | 155 |   |   |   | (298 | ) |
| Net increase in loans and leases                                                   |   |                        | (13,354 | ) |   |   | (4,212 | ) |
| Proceeds from sale of OREO and other repossessed property                          |   |                        | 12 |   |   |   | 1,265 |   |
| Purchases of property and equipment                                                |   |                        | (129 | ) |   |   | (64 | ) |
| Net Cash Used By Investing Activities                                              |   |                        | (10,921 | ) |   |   | (4,425 | ) |
| Cash Flows From Financing Activities:                                              |   |                        |   |   |   |   |   |   |
| Net increase (decrease) in deposits                                                |   |                        | 14,497 |   |   |   | (7,493 | ) |
| Repayment of FHLB advances                                                         |   |                        | (5,000 | ) |   |   | (23,000 | ) |
| Net (decrease) increase in short term repurchase agreements                        |   |                        | (2,813 | ) |   |   | 9,885 |   |
| Decrease in other borrowings                                                       |   |                        | — |   |   |   | (5 | ) |
| Dividends paid                                                                     |   |                        | (227 | ) |   |   | (226 | ) |
| Sale of treasury stock, net                                                        |   |                        | 54 |   |   |   | 50 |   |
| Net Cash Used By Financing Activities                                              |   |                        | 6,511 |   |   |   | (20,789 | ) |
| Net Change in Cash and Cash Equivalents                                       |   |                        | (2,201 | ) |   |   | (24,452 | ) |
| Cash and Cash Equivalents at Beginning of Period                              |   |                        | 26,360 |   |   |   | 43,832 |   |
| Cash and Cash Equivalents at End of Period                                         |   | $                           | 24,159 |   |   | $ | 19,380 |   |
| Supplemental Disclosure of Cash Flow Information:                                  |   |                        |   |   |   |   |   |   |
| Cash paid during the period for:                                                   |   |                        |   |   |   |   |   |   |
|  Interest                                                                     |   | $                           | 1,367 |   |   | $ | 2,408 |   |
|  Income taxes                                                                 |   |                        | 4 |   |   |   | 461 |   |
| Supplemental Disclosure of Non-cash Flow Information:                              |   |                        |   |   |   |   |   |   |
| Change in unsettled securities sold included in other assets                       |   |                        | — |   |   |   | (2,920 | ) |
| Change in unsettled loans purchased included in other liabilities                  |   |                        | 1,966 |   |   |   | 832 |   |
| Transfers from loans and leases to real estate owned                               |   |                        | — |   |   |   | 453 |   |
|  See accompanying notes to unaudited consolidated financial statements.  |   |                        |   |   |   |   |   |   |

----

DNB FINANCIAL CORPORATION AND SUBSIDIARY

|                                                           |   | March 31, 2011 |    |
|----------------------------------------------------------------|--------|---------------------|---------|
| (Dollars in thousands)                                         |   | AmortizedCost       |    |   | UnrealizedGains |   |   | UnrealizedLosses |   |   | EstimatedFair Value |   |
| Held To Maturity                                               |   |                |    |   |   |   |   |   |   |   |   |   |
| Government Sponsored Entities (GSE) mortgage-backed securities |   | $                   | 6,182   |   |   | $ | 270 |   |   | $ | — |   |   | $ | 6,452 |   |
| Corporate bonds                                                |   |                | 1,552   |   |   |   | — |   |   |   | (23 | ) |   |   | 1,529 |   |
| Collateralized mortgage obligations GSE                        |   |                | 1,197   |   |   |   | 19 |   |   |   | — |   |   |   | 1,216 |   |
| Total                                                          |   | $                   | 8,931   |   |   | $ | 289 |   |   | $ | (23 | ) |   | $ | 9,197 |   |
|                                                           |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Available For Sale                                             |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| US Government agency obligations                               |   | $                   | 44,987  |   |   | $ | 18 |   |   | $ | (889 | ) |   | $ | 44,116 |   |
| GSE mortgage-backed securities                                 |   |                | 59,987  |   |   |   | 131 |   |   |   | (626 | ) |   |   | 59,492 |   |
| Collateralized mortgage obligations GSE                        |   |                | 16,554  |   |   |   | 37 |   |   |   | (289 | ) |   |   | 16,302 |   |
| Corporate bonds                                                |   |                | 19,331  |   |   |   | 201 |   |   |   | (189 | ) |   |   | 19,343 |   |
| Equity securities                                              |   |                | 27      |   |   |   | — |   |   |   | (13 | ) |   |   | 14 |   |
| Total                                                          |   | $                   | 140,886 |   |   | $ | 387 |   |   | $ | (2,006 | ) |   | $ | 139,267 |   |
|                                                           |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                    |   | December 31, 2010 |    |
|-----------------------------------------|--------|------------------------|---------|
| (Dollars in thousands)                  |   | AmortizedCost          |    |   | UnrealizedGains |   |   | UnrealizedLosses |   |   | EstimatedFair Value |   |
| Held To Maturity                        |   |                   |    |   |   |   |   |   |   |   |   |   |
| GSE mortgage-backed securities          |   | $                      | 7,085   |   |   | $ | 291 |   |   | $ | — |   |   | $ | 7,376 |   |
| Collateralized mortgage obligations GSE |   |                   | 1,346   |   |   |   | 14 |   |   |   | (13 | ) |   |   | 1,347 |   |
| Total                                   |   | $                      | 8,431   |   |   | $ | 305 |   |   | $ | (13 | ) |   | $ | 8,723 |   |
|                                    |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Available For Sale                      |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| US Government agency obligations        |   | $                      | 45,128  |   |   | $ | 32 |   |   | $ | (916 | ) |   | $ | 44,244 |   |
| GSE mortgage-backed securities          |   |                   | 64,463  |   |   |   | 127 |   |   |   | (592 | ) |   |   | 63,998 |   |
| Collateralized mortgage obligations GSE |   |                   | 17,155  |   |   |   | 14 |   |   |   | (551 | ) |   |   | 16,618 |   |
| Corporate bonds                         |   |                   | 17,432  |   |   |   | 159 |   |   |   | (303 | ) |   |   | 17,288 |   |
| Equity securities                       |   |                   | 27      |   |   |   | — |   |   |   | (14 | ) |   |   | 13 |   |
| Total                                   |   | $                      | 144,205 |   |   | $ | 332 |   |   | $ | (2,376 | ) |   | $ | 142,161 |   |
|                                    |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                    |   | March 31, 2011  |   |
|-----------------------------------------|--------|-----------------|--------|
| (Dollars in thousands)                  |   | TotalFair Value |   |   | TotalUnrealizedLoss |   |   | Fair valueImpairedLess Than12 Months |   |   | UnrealizedLossLess Than12 Months |   |   | Fair valueImpairedMore Than12 Months |   |   | UnrealizedLossMore Than12 Months |   |
| Held To Maturity                        |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate bonds                         |   | $               | 1,529  |   |   | $ | (23 | ) |   | $ | 1,529 |   |   | $ | (23 | ) |   | $ | — |   |   | $ | — |   |
| Total                                   |   | $               | 1,529  |   |   | $ | (23 | ) |   | $ | 1,529 |   |   | $ | (23 | ) |   | $ | — |   |   | $ | — |   |
|                                    |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                    |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Available For Sale                      |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate bonds                         |   | $               | 10,376 |   |   | $ | (189 | ) |   | $ | 10,376 |   |   | $ | (189 | ) |   | $ | — |   |   | $ | — |   |
| US Government agency obligations        |   |            | 28,934 |   |   |   | (889 | ) |   |   | 28,934 |   |   |   | (889 | ) |   |   | — |   |   |   | — |   |
| Collateralized mortgage obligations GSE |   |            | 12,531 |   |   |   | (289 | ) |   |   | 12,531 |   |   |   | (289 | ) |   |   | — |   |   |   | — |   |
| GSE mortgage-backed securities          |   |            | 31,050 |   |   |   | (626 | ) |   |   | 31,050 |   |   |   | (626 | ) |   |   | — |   |   |   | — |   |
| Equity securities                       |   |            | 14     |   |   |   | (13 | ) |   |   | — |   |   |   | — |   |   |   | 14 |   |   |   | (13 | ) |
| Total                                   |   | $               | 82,905 |   |   | $ | (2,006 | ) |   | $ | 82,891 |   |   | $ | (1,993 | ) |   | $ | 14 |   |   | $ | (13 | ) |
|                                    |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                    |   | December 31, 2010 |   |
|-----------------------------------------|--------|------------------------|--------|
| (Dollars in thousands)                  |   | TotalFair Value        |   |   | TotalUnrealizedLoss |   |   | Fair valueImpairedLess Than12 Months |   |   | UnrealizedLossLess Than12 Months |   |   | Fair valueImpairedMore Than12 Months |   |   | UnrealizedLossMore Than12 Months |   |
| Held To Maturity                        |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Collateralized mortgage obligations GSE |   | $                      | 789    |   |   | $ | (13 | ) |   | $ | 789 |   |   | $ | (13 | ) |   | $ | — |   |   | $ | — |   |
| Total                                   |   | $                      | 789    |   |   | $ | (13 | ) |   | $ | 789 |   |   | $ | (13 | ) |   | $ | — |   |   | $ | — |   |
|                                    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Available For Sale                      |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate bonds                         |   | $                      | 9,845  |   |   | $ | (303 | ) |   | $ | 9,845 |   |   | $ | (303 | ) |   | $ | — |   |   | $ | — |   |
| US Government agency obligations        |   |                   | 28,972 |   |   |   | (916 | ) |   |   | 28,972 |   |   |   | (916 | ) |   |   | — |   |   |   | — |   |
| Collateralized mortgage obligations GSE |   |                   | 12,539 |   |   |   | (551 | ) |   |   | 12,539 |   |   |   | (551 | ) |   |   | — |   |   |   | — |   |
| GSE mortgage-backed securities          |   |                   | 40,013 |   |   |   | (592 | ) |   |   | 40,013 |   |   |   | (592 | ) |   |   | — |   |   |   | — |   |
| Equity securities                       |   |                   | 13     |   |   |   | (14 | ) |   |   | — |   |   |   | — |   |   |   | 13 |   |   |   | (14 | ) |
| Total                                   |   | $                      | 91,382 |   |   | $ | (2,376 | ) |   | $ | 91,369 |   |   | $ | (2,362 | ) |   | $ | 13 |   |   | $ | (14 | ) |
|                                    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                   |   | Held to Maturity |    |   | Available for Sale  |   |
|----------------------------------------|--------|------------------|---------|--------|---------------------|--------|
| (Dollars in thousands)                 |   | AmortizedCost    |    |   | EstimatedFair Value |   |   | AmortizedCost |   |   | EstimatedFair Value |   |
| Due in one year or less                |   | $                | 850     |   |                | $      | 852 |   |   | $ | 4,655 |   |   | $ | 4,664 |   |
| Due after one year through five years  |   |             | — |   |                |   | — |   |   |   | 32,210 |   |   |   | 32,262 |   |
| Due after five years through ten years |   |             | 5,724   |   |                |   | 5,942 |   |   |   | 33,763 |   |   |   | 32,891 |   |
| Due after ten years                    |   |             | 2,357   |   |                |   | 2,403 |   |   |   | 70,231 |   |   |   | 69,436 |   |
| No stated maturity                     |   |             | — |   |                |   | — |   |   |   | 27 |   |   |   | 14 |   |
| Total investment securities            |   | $                | 8,931   |   |                | $      | 9,197 |   |   | $ | 140,886 |   |   | $ | 139,267 |   |
|                                   |   |             |    |   |                |   |   |   |   |   |   |   |   |   |   |   |

|                      |   | Three Months Ended March 31 |    |
|---------------------------|--------|----------------------------------|---------|
| (Dollars in thousands)    |   | 2011                             |    |   | 2010 |   |
| Gross realized gains-AFS  |   | $                                | 1       |   |   | $ | 859 |   |
| Gross realized losses-AFS |   |                             | — |   |   |   | (163 | ) |
| Net realized gain         |   | $                                | 1       |   |   | $ | 696 |   |
|                      |   |                             |    |   |   |   |   |   |

|                             |   | March 31 |    |   | Dec.  31 |   |
|----------------------------------|--------|---------------|---------|--------|---------------|--------|
| (Dollars in thousands)           |   | 2011          |    |   | 2010          |   |
| Residential mortgage             |   | $             | 29,236  |   |          | $      | 30,929 |   |
| Commercial mortgage              |   |          | 228,916 |   |          |   | 218,099 |   |
| Commercial                       |   |          | 103,010 |   |          |   | 97,544 |   |
| Lease financing                  |   |          | 714     |   |          |   | 898 |   |
| Consumer                         |   |          | 47,625  |   |          |   | 48,701 |   |
| Total loans and leases           |   | $             | 409,501 |   |          | $      | 396,171 |   |
| Less allowance for credit losses |   |          | (6,307  | )      |          |   | (5,884 | ) |
| Net loans and leases             |   | $             | 403,194 |   |          | $      | 390,287 |   |
|                             |   |          |    |   |          |   |   |   |

|                                                                |   | Three Months EndedMarch 31 |    |
|---------------------------------------------------------------------|--------|---------------------------------|---------|
| (Dollars in thousands)                                              |   | 2011                            |    |   | 2010 |   |
| Interest income which would have been recorded under original terms |   | $                               | 86      |   |   | $ | 96 |   |
| Interest income recorded during the year                            |   |                            | — |   |   |   | (1 | ) |
| Net impact on interest income                                       |   | $                               | 86      |   |   | $ | 95 |   |
|                                                                |   |                            |    |   |   |   |   |   |

----

|                                  |   | Three Months Ended March 31 |    |
|---------------------------------------|--------|----------------------------------|---------|
| (Dollars in thousands)                |   | 2011                             |    |   | 2010 |   |
| Beginning balance                     |   | $                                | 5,884   |   |   | $ | 5,477 |   |
| Provision                             |   |                             | 426     |   |   |   | 426 |   |
| Loans charged off                     |   |                             | (54     | ) |   |   | (81 | ) |
| Leases charged off                    |   |                             | — |   |   |   | — |   |
| Recoveries                            |   |                             | 51      |   |   |   | 35 |   |
| Net charge-offs                       |   |                             | (3      | ) |   |   | (46 | ) |
| Ending balance                        |   | $                                | 6,307   |   |   | $ | 5,857 |   |
| Reserve for unfunded loan commitments |   | $                                | 126     |   |   | $ | 139 |   |
|                                  |   |                             |    |   |   |   |   |   |

|                                        |   | Three Months EndedMarch 31 |   |
|---------------------------------------------|--------|---------------------------------|--------|
| (Dollars in thousands)                      |   | 2011                            |   |   | 2010 |   |
| Total recorded investment                   |   | $                               | 6,917  |   |   | $ | 9,229 |   |
| Impaired loans with a specific allowance    |   |                            | 5,211  |   |   |   | 3,776 |   |
| Impaired loans without a specific allowance |   |                            | 1,706  |   |   |   | 5.453 |   |
| Average recorded investment                 |   |                            | 7,120  |   |   |   | 9,229 |   |
| Specific allowance allocation               |   |                            | 749    |   |   |   | 744 |   |
| Total cash collected                        |   |                            | 570    |   |   |   | 112 |   |
| Interest income recorded                    |   |                            | 6      |   |   |   | 1 |   |
|                                        |   |                            |   |   |   |   |   |   |

|                    |   |              |    |   |              |   |    |               |   |   |          |   |   | March 31, 2011 |   |   | LoansReceivable       |   |
|-------------------------|--------|-------------------|---------|--------|-------------------|--------|---------|--------------------|--------|--------|---------------|--------|--------|---------------------|--------|--------|-----------------------|--------|
| (Dollars in thousands)  |   | 30-59Days PastDue |    |   | 60-89Days PastDue |   |    | Greaterthan90 Days |   |   | TotalPast Due |   |   | Current             |   |   | TotalLoansReceivables |   |   | > 90Days andAccruing |   |
| Residential mortgage    |   | $                 | 185     |   |              | $      | 371     |               |   | $      | 1,669         |   |   | $                   | 2,225  |   |                  | $      | 27,011 |   |   | $ | 29,236 |   |   | $ | — |   |
| Commercial mortgage     |   |              | — |   |              |   | — |               |   |   | 736           |   |   |                | 736    |   |                  |   | 228,180 |   |   |   | 228,916 |   |   |   | — |   |
| Commercial:             |   |              |    |   |              |   |    |               |   |   |          |   |   |                |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Commercial term         |   |              | 397     |   |              |   | — |               |   |   | 500           |   |   |                | 897    |   |                  |   | 73,196 |   |   |   | 74,093 |   |   |   | — |   |
| Commercial construction |   |              | — |   |              |   | — |               |   |   | 3,180         |   |   |                | 3,180  |   |                  |   | 25,737 |   |   |   | 28,917 |   |   |   | — |   |
| Lease financing         |   |              | 3       |   |              |   | 5       |               |   |   | 272           |   |   |                | 280    |   |                  |   | 434 |   |   |   | 714 |   |   |   | — |   |
| Consumer:               |   |              |    |   |              |   |    |               |   |   |          |   |   |                |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Home equity             |   |              | 28      |   |              |   | 3       |               |   |   | 58            |   |   |                | 89     |   |                  |   | 39,434 |   |   |   | 39,523 |   |   |   | — |   |
| Other                   |   |              | 14      |   |              |   | 24      |               |   |   | 25            |   |   |                | 63     |   |                  |   | 8,039 |   |   |   | 8,102 |   |   |   | 23 |   |
| Total                   |   | $                 | 627     |   |              | $      | 403     |               |   | $      | 6,440         |   |   | $                   | 7,470  |   |                  | $      | 402,031 |   |   | $ | 409,501 |   |   | $ | 23 |   |
|                    |   |              |    |   |              |   |    |               |   |   |          |   |   |                |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |

----

|                    |   |              |    |   |              |   |    |               |   |   |          |   |   | December 31, 2010 |   |   | LoansReceivable       |   |
|-------------------------|--------|-------------------|---------|--------|-------------------|--------|---------|--------------------|--------|--------|---------------|--------|--------|------------------------|--------|--------|-----------------------|--------|
| (Dollars in thousands)  |   | 30-59Days PastDue |    |   | 60-89Days PastDue |   |    | Greaterthan90 Days |   |   | TotalPast Due |   |   | Current                |   |   | TotalLoansReceivables |   |   | > 90Days andAccruing |   |
| Residential mortgage    |   | $                 | 77      |   |              | $      | 110     |               |   | $      | 2,334         |   |   | $                      | 2,521  |   |                  | $      | 28,408 |   |   | $ | 30,929 |   |   | $ | — |   |
| Commercial mortgage     |   |              | 175     |   |              |   | — |               |   |   | 834           |   |   |                   | 1,009  |   |                  |   | 217,090 |   |   |   | 218,099 |   |   |   | — |   |
| Commercial:             |   |              |    |   |              |   |    |               |   |   |          |   |   |                   |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Commercial term         |   |              | 73      |   |              |   | 182     |               |   |   | 360           |   |   |                   | 615    |   |                  |   | 69,965 |   |   |   | 70,580 |   |   |   | — |   |
| Commercial construction |   |              | — |   |              |   | — |               |   |   | 3,180         |   |   |                   | 3,180  |   |                  |   | 23,784 |   |   |   | 26,964 |   |   |   | — |   |
| Lease financing         |   |              | 41      |   |              |   | — |               |   |   | 273           |   |   |                   | 314    |   |                  |   | 584 |   |   |   | 898 |   |   |   | — |   |
| Consumer:               |   |              |    |   |              |   |    |               |   |   |          |   |   |                   |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Home equity             |   |              | 33      |   |              |   | — |               |   |   | 58            |   |   |                   | 91     |   |                  |   | 40,306 |   |   |   | 40,397 |   |   |   | — |   |
| Other                   |   |              | 71      |   |              |   | — |               |   |   | 2             |   |   |                   | 73     |   |                  |   | 8,231 |   |   |   | 8,304 |   |   |   | — |   |
| Total                   |   | $                 | 470     |   |              | $      | 292     |               |   | $      | 7,041         |   |   | $                      | 7,803  |   |                  | $      | 388,368 |   |   | $ | 396,171 |   |   | $ | — |   |

|                                                          |   |                |    |
|---------------------------------------------------------------|--------|---------------------|---------|
|                                                          |   | March 31  |    |   | Dec. 31 |   |
| (Dollars in thousands)                                        |   | 2011                |    |   | 2010 |   |
| Non-accrual loans:                                            |   |                |    |   |   |   |
| Residential mortgage                                          |   | $                   | 1,669   |   |   | $ | 2,334 |   |
| Commercial mortgage                                           |   |                | 736     |   |   |   | 834 |   |
| Commercial                                                    |   |                | 4,077   |   |   |   | 3,722 |   |
| Lease financing                                               |   |                | 272     |   |   |   | 273 |   |
| Consumer                                                      |   |                | 60      |   |   |   | 60 |   |
| Total non-accrual loans                                       |   |                | 6,814   |   |   |   | 7,223 |   |
| Loans 90 days past due and still accruing (*)            |   |                | 23      |   |   |   | — |   |
| Troubled debt restructurings                                  |   |                | — |   |   |   | — |   |
| Total non-performing loans                                    |   |                | 6,837   |   |   |   | 7,223 |   |
| Other real estate owned & other repossessed property |   |                | 4,338   |   |   |   | 4,324 |   |
| Total non-performing assets                                   |   | $                   | 11,175  |   |   | $ | 11,547 |   |
| Asset quality ratios:                                         |   |                |    |   |   |   |   |   |

| Non-performing loans to total loans   |   |   | 1.67   | %      |   |   | 1.82   | %      |
|---------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Non-performing assets to total assets |   |   | 1.83   |   |   |   | 1.92   |   |
| Allowance for credit losses to:       |   |   |   |   |   |   |   |   |
| Total loans and leases                |   |   | 1.54   |   |   |   | 1.49   |   |
| Non-performing loans and leases       |   |   | 92.2   |   |   |   | 81.5   |   |

----

|                                |   | March 31, 2011 |    |
|-------------------------------------|--------|---------------------|---------|
| (Dollars in thousands)              |   | RecordedInvestment  |    |   | UnpaidPrincipalBalance |   |   | RelatedAllowance |   |   | AverageRecordedInvestment |   |   | InterestIncomeRecognized |   |
| With no related allowance recorded: |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential mortgage                |   | $                   | 201     |   |   | $ | 201 |   |   | $ | — |   |   | $ | 460 |   |   | $ | — |   |
| Commercial mortgage                 |   |                | 684     |   |   |   | 706 |   |   |   | — |   |   |   | 692 |   |   |   | 5 |   |
| Commercial:                         |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial term                     |   |                | 162     |   |   |   | 194 |   |   |   | — |   |   |   | 221 |   |   |   | 1 |   |
| Commercial construction             |   |                | 460     |   |   |   | 782 |   |   |   | — |   |   |   | 460 |   |   |   | — |   |
| Lease financing                     |   |                | 139     |   |   |   | 192 |   |   |   | — |   |   |   | 206 |   |   |   | — |   |
| Consumer                            |   |                | 60      |   |   |   | 61 |   |   |   | — |   |   |   | 60 |   |   |   | — |   |
| With allowance recorded:            |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential mortgage                |   |                | 1,571   |   |   |   | 1,968 |   |   |   | 124 |   |   |   | 1,643 |   |   |   | — |   |
| Commercial mortgage                 |   |                | 52      |   |   |   | 52 |   |   |   | 21 |   |   |   | 26 |   |   |   | — |   |
| Commercial:                         |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial term                     |   |                | 735     |   |   |   | 757 |   |   |   | 370 |   |   |   | 566 |   |   |   | — |   |
| Commercial construction             |   |                | 2,720   |   |   |   | 2,833 |   |   |   | 171 |   |   |   | 2,720 |   |   |   | — |   |
| Lease financing                     |   |                | 133     |   |   |   | 633 |   |   |   | 63 |   |   |   | 66 |   |   |   | — |   |
| Consumer                            |   |                | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Total:                              |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential mortgage                |   |                | 1,772   |   |   |   | 2,169 |   |   |   | 124 |   |   |   | 2,103 |   |   |   | — |   |
| Commercial mortgage                 |   |                | 736     |   |   |   | 758 |   |   |   | 21 |   |   |   | 718 |   |   |   | 5 |   |
| Commercial:                         |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial term                     |   |                | 897     |   |   |   | 951 |   |   |   | 370 |   |   |   | 787 |   |   |   | 1 |   |
| Commercial construction             |   |                | 3,180   |   |   |   | 3,615 |   |   |   | 171 |   |   |   | 3,180 |   |   |   | — |   |
| Lease financing                     |   |                | 272     |   |   |   | 825 |   |   |   | 63 |   |   |   | 272 |   |   |   | — |   |
| Consumer                            |   |                | 60      |   |   |   | 61 |   |   |   | — |   |   |   | 60 |   |   |   | — |   |
| Total                               |   | $                   | 6,917   |   |   | $ | 8,379 |   |   | $ | 749 |   |   | $ | 7,120 |   |   | $ | 6 |   |
|                                |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                |   | December 31, 2010 |    |
|-------------------------------------|--------|------------------------|---------|
| (Dollars in thousands)              |   | RecordedInvestment     |    |   | UnpaidPrincipalBalance |   |   | RelatedAllowance |   |   | AverageRecordedInvestment |   |   | InterestIncomeRecognized |   |
| With no related allowance recorded: |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential mortgage                |   | $                      | 638     |   |   | $ | 780 |   |   | $ | — |   |   | $ | 1,092 |   |   | $ | — |   |
| Commercial mortgage                 |   |                   | 782     |   |   |   | 792 |   |   |   | — |   |   |   | 916 |   |   |   | 70 |   |
| Commercial:                         |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial term                     |   |                   | 197     |   |   |   | 250 |   |   |   | — |   |   |   | 282 |   |   |   | 3 |   |
| Commercial construction             |   |                   | 460     |   |   |   | 895 |   |   |   | — |   |   |   | 818 |   |   |   | 31 |   |
| Lease financing                     |   |                   | 273     |   |   |   | 826 |   |   |   | — |   |   |   | 335 |   |   |   | 7 |   |
| Consumer                            |   |                   | 60      |   |   |   | 61 |   |   |   | — |   |   |   | 43 |   |   |   | 1 |   |
| With allowance recorded:            |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential mortgage                |   |                   | 1,696   |   |   |   | 2,071 |   |   |   | 103 |   |   |   | 1,606 |   |   |   | — |   |
| Commercial mortgage                 |   |                   | 52      |   |   |   | 52 |   |   |   | 22 |   |   |   | 39 |   |   |   | — |   |
| Commercial:                         |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial term                     |   |                   | 345     |   |   |   | 345 |   |   |   | 145 |   |   |   | 369 |   |   |   | 1 |   |
| Commercial construction             |   |                   | 2,720   |   |   |   | 2,720 |   |   |   | 223 |   |   |   | 3,063 |   |   |   | — |   |
| Lease financing                     |   |                   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Consumer                            |   |                   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Total:                              |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential mortgage                |   |                   | 2,334   |   |   |   | 2,851 |   |   |   | 103 |   |   |   | 2,698 |   |   |   | — |   |
| Commercial mortgage                 |   |                   | 834     |   |   |   | 844 |   |   |   | 22 |   |   |   | 955 |   |   |   | 70 |   |
| Commercial:                         |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial term                     |   |                   | 542     |   |   |   | 595 |   |   |   | 145 |   |   |   | 651 |   |   |   | 4 |   |
| Commercial construction             |   |                   | 3,180   |   |   |   | 3,615 |   |   |   | 223 |   |   |   | 3,881 |   |   |   | 31 |   |
| Lease financing                     |   |                   | 273     |   |   |   | 826 |   |   |   | — |   |   |   | 335 |   |   |   | 7 |   |
| Consumer                            |   |                   | 60      |   |   |   | 61 |   |   |   | — |   |   |   | 43 |   |   |   | 1 |   |
| Total                               |   | $                      | 7,223   |   |   | $ | 8,792 |   |   | $ | 493 |   |   | $ | 8,563 |   |   | $ | 113 |   |
|                                |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                    |   | March 31, 2011 |    |
|-------------------------|--------|----------------|---------|
| (Dollars in thousands)  |   | Pass           |    |   | Special Mention |   |   | Substandard |   |   | Doubtful |   |   | Total |   |
| Residential mortgage    |   | $              | 27,567  |   |   | $ | — |   |   | $ | 1,669 |   |   | $ | — |   |   | $ | 29,236 |   |
| Commercial mortgage     |   |           | 211,825 |   |   |   | 10,918 |   |   |   | 6,173 |   |   |   | — |   |   |   | 228,916 |   |
| Commercial:             |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial term         |   |           | 72,480  |   |   |   | 226 |   |   |   | 990 |   |   |   | 397 |   |   |   | 74,093 |   |
| Commercial construction |   |           | 19,943  |   |   |   | 300 |   |   |   | 8,674 |   |   |   | — |   |   |   | 28,917 |   |
| Lease financing         |   |           | 581     |   |   |   | — |   |   |   | — |   |   |   | 133 |   |   |   | 714 |   |
| Consumer:               |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Home equity             |   |           | 39,454  |   |   |   | — |   |   |   | 69 |   |   |   | — |   |   |   | 39,523 |   |
| Other                   |   |           | 8,102   |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 8,102 |   |
| Total                   |   | $              | 379,952 |   |   | $ | 11,444 |   |   | $ | 17,575 |   |   | $ | 530 |   |   | $ | 409,501 |   |
|                    |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                         |   | December 31, 2010 |    |
|------------------------------|--------|-------------------|---------|
|  (Dollars in thousands) |   | Pass              |    |   | Special Mention |   |   | Substandard |   |   | Doubtful |   |   | Total |   |
| Residential mortgage         |   | $                 | 28,595  |   |   | $ | — |   |   | $ | 2,334 |   |   | $ | — |   |   | $ | 30,929 |   |
| Commercial mortgage          |   |              | 202,062 |   |   |   | 10,054 |   |   |   | 5,983 |   |   |   | — |   |   |   | 218,099 |   |
| Commercial:                  |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial term              |   |              | 68,916  |   |   |   | 241 |   |   |   | 1,423 |   |   |   | — |   |   |   | 70,580 |   |
| Commercial construction      |   |              | 18,294  |   |   |   | — |   |   |   | 8,670 |   |   |   | — |   |   |   | 26,964 |   |
| Lease financing              |   |              | 765     |   |   |   | — |   |   |   | — |   |   |   | 133 |   |   |   | 898 |   |
| Consumer:                    |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Home equity                  |   |              | 40,386  |   |   |   | — |   |   |   | 11 |   |   |   | — |   |   |   | 40,397 |   |
| Other                        |   |              | 8,304   |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 8,304 |   |
| Total                        |   | $                 | 367,322 |   |   | $ | 10,295 |   |   | $ | 18,421 |   |   | $ | 133 |   |   | $ | 396,171 |   |

|                                                       |   |       |    |
|------------------------------------------------------------|--------|------------|---------|
| (Dollars in thousands)                                     |   | Commercial |    |   | Leasefinancing |   |   | Residentialmortgage |   |   | Consumer |   |   | Unallocated |   |   | Total |   |
| Allowance for credit losses:                               |   |       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning balance                                          |   | $          | 4,387   |   |   | $ | 86 |   |   | $ | 454 |   |   | $ | 482 |   |   | $ | 475 |   |   | $ | 5,884 |   |
| Charge-offs                                                |   |       | (14     | ) |   |   | — |   |   |   | (40 | ) |   |   | — |   |   |   | — |   |   |   | (54 | ) |
| Recoveries                                                 |   |       | 4       |   |   |   | 1 |   |   |   | 46 |   |   |   | — |   |   |   | — |   |   |   | 51 |   |
| Provisions                                                 |   |       | 95      |   |   |   | 34 |   |   |   | 61 |   |   |   | 4 |   |   |   | 232 |   |   |   | 426 |   |
| Ending balance                                             |   | $          | 4,472   |   |   | $ | 121 |   |   | $ | 521 |   |   | $ | 486 |   |   | $ | 707 |   |   | $ | 6,307 |   |
| Ending balance: individually evaluated for impairment      |   | $          | 562     |   |   | $ | 63 |   |   | $ | 124 |   |   | $ | — |   |   | $ | — |   |   | $ | 749 |   |
| Ending balance: collectively evaluated for impairment |   | $          | 3,910   |   |   | $ | 58 |   |   | $ | 397 |   |   | $ | 486 |   |   | $ | 707 |   |   | $ | 5,558 |   |
| Loans receivables:                                         |   |       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance                                             |   | $          | 331,926 |   |   | $ | 714 |   |   | $ | 29,236 |   |   | $ | 47,625 |   |   |   |   |   |   | $ | 409,501 |   |
| Ending balance: individually evaluated for impairment      |   | $          | 4,813   |   |   | $ | 272 |   |   | $ | 1,772 |   |   | $ | 60 |   |   |   |   |   |   | $ | 6,917 |   |
| Ending balance: collectively evaluated for impairment |   | $          | 327,113 |   |   | $ | 442 |   |   | $ | 27,464 |   |   | $ | 47,565 |   |   |   |   |   |   | $ | 402,584 |   |
| Reserve for unfunded loan commitments                      |   | $          | 109     |   |   | $ | — |   |   | $ | — |   |   | $ | 17 |   |   |   |   |   |   | $ | 126 |   |

----

|                                        |   | Three Months Ended March 31 |    |
|---------------------------------------------|--------|----------------------------------|---------|
| (In thousands, except share data)           |   | 2011                             |    |   | 2010 |   |
|                                        |   | Income                           |    |   | Shares |   |   | Amount |   |   | Income |   |   | Shares |   |   | Amount |   |
| Basic EPS                                   |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income available to common stockholders |   | $                                | 861     |   |   |   | 2,664 |   |   | $ | 0.32 |   |   | $ | 521 |   |   |   | 2,620 |   |   | $ | 0.20 |   |
| Diluted EPS                                 |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect of dilutive common stock awards      |   |                             | — |   |   |   | 34 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Net income available to common stockholders |   | $                                | 861     |   |   |   | 2,698 |   |   | $ | 0.32 |   |   | $ | 521 |   |   |   | 2,620 |   |   | $ | 0.20 |   |
|                                        |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| (Dollars in thousands)                                 |   | Before-TaxAmount |    |   | TaxExpense |   |    | Net-of-TaxAmount |   |
|--------------------------------------------------------|--------|------------------|---------|--------|------------|--------|---------|------------------|--------|
| Three Months Ended March 31, 2011:                |   |             |    |   |       |   |    |             |   |
| Net Income                                             |   |             |    |   |       |   |    | $                | 1,015  |   |
| Other Comprehensive Income:                            |   |             |    |   |       |   |    |             |   |   |
| Unrealized holding gains arising during the period     |   | $                | 426     |   |       | $      | (145    | )                |   |   | 281 |   |
| Accretion of discount on AFS to HTM reclassification   |   |             | — |   |       |   | — |             |   |   | — |   |
| Less reclassification for gains included in net income |   |             | (1      | )      |       |   | — |             |   |   | (1 | ) |
| Total Comprehensive Income                             |   |             |    |   |       |   |    |             |   | $ | 1,295 |   |
| Three Months Ended March 31, 2010:                |   |             |    |   |       |   |    |             |   |   |   |   |
| Net Income                                             |   |             |    |   |       |   |    |             |   | $ | 675 |   |
| Other Comprehensive Income:                            |   |             |    |   |       |   |    |             |   |   |   |   |
| Unrealized holding gains arising during the period     |   | $                | 952     |   |       | $      | (324    | )                |   |   | 628 |   |
| Accretion of discount on AFS to HTM reclassification   |   |             | 18      |   |       |   | (6      | )                |   |   | 12 |   |
| Less reclassification for gains included in net income |   |             | (696    | )      |       |   | 237     |             |   |   | (459 | ) |
| Total Comprehensive Income                             |   |             |    |   |       |   |    |             |   | $ | 856 |   |

----

| (Dollars in thousands)                |   | Before-TaxAmount |   |   | TaxEffect |   |   | Net-of-TaxAmount |   |
|---------------------------------------|--------|------------------|--------|--------|-----------|--------|--------|------------------|--------|
| March 31, 2011                        |   |             |   |   |      |   |   |             |   |
| Net unrealized loss on AFS securities |   | $                | (1,619 | )      |      | $      | 550    |             |   | $ | (1,069 | ) |
| Unrealized actuarial losses-pension   |   |             | (1,314 | )      |      |   | 447    |             |   |   | (867 | ) |
| Total  of all items above   |   | $                | (2,933 | )      |      | $      | 997    |             |   | $ | (1,936 | ) |
| December 31, 2010                     |   |             |   |   |      |   |   |             |   |   |   |   |
| Net unrealized loss on AFS securities |   | $                | (2,044 | )      |      | $      | 695    |             |   | $ | (1,349 | ) |
| Unrealized actuarial losses-pension   |   |             | (1,314 | )      |      |   | 447    |             |   |   | (867 | ) |
| Total  of all items above   |   | $                | (3,358 | )      |      | $      | 1,142  |             |   | $ | (2,216 | ) |

----

|                             |   | NumberOutstanding |    |   | Weighted AverageExercise Price |   |
|----------------------------------|--------|-------------------|---------|--------|--------------------------------|--------|
| Outstanding January 1, 2011 |   |              | 203,575 |   |                           |   | 16.96 |   |
| Issued                           |   |              | — |   |                           |   | — |   |
| Exercised                        |   |              | — |   |                           |   | — |   |
| Forfeited                        |   |              | — |   |                           |   | — |   |
| Expired                          |   |              | — |   |                           |   | — |   |
| Outstanding March  31, 2011 |   |              | 203,575 |   |                           | $      | 16.96 |   |
|                             |   |              |    |   |                           |   |   |   |

|                             |   | NumberOutstanding |    |   | Weighted AverageExercise Price |   |
|----------------------------------|--------|-------------------|---------|--------|--------------------------------|--------|
| Outstanding January 1, 2010 |   |              | 169,503 |   |                           |   | 19.19 |   |
| Issued                           |   |              | — |   |                           |   | — |   |
| Exercised                        |   |              | — |   |                           |   | — |   |
| Forfeited                        |   |              | — |   |                           |   | — |   |
| Expired                          |   |              | — |   |                           |   | — |   |
| Outstanding March  31, 2010 |   |              | 169,503 |   |                           | $      | 19.19 |   |

----

| March 31, 2011    |
|-------------------|
| Range of          |   |   | Weighted Average  |   |
| ExercisePrices    | NumberOutstanding | NumberExercisable | ExercisePrice | RemainingContractual Life | IntrinsicValue |
| $ 6.93-10.99      | 44,600 | — | $6.93 | 6.07 years | $123,542 |
|  11.00-13.99 | 9,414 | 9,414 | 11.16 | 0.25 years | — |
|  14.00-19.99 | 82,419 | 82,419 | 17.44 | 3.73 years | — |
|  20.00-22.99 | 19,101 | 19,101 | 22.78 | 3.73 years | — |
|  23.00-24.27 | 48,041 | 48,041 | 24.27 | 4.05 years | — |
| Total             | 203,575 | 158,975 | $16.96 | 4.16 years | $123,542 |
|              |   |   |   |   |   |

| March  31, 2010 |
|----------------------|
| Range of             |   |   | Weighted Average  |   |
| ExercisePrices       | NumberOutstanding | NumberExercisable | ExercisePrice | RemainingContractual Life | IntrinsicValue |
| $ 9.23-10.99         | 9,419 | 9,419 | $9.23 | 0.25 years | $— |
|  11.00-13.99    | 9,414 | 9,414 | 11.16 | 1.25 years | — |
|  14.00-19.99    | 82,805 | 82,805 | 17.44 | 4.73 years | — |
|  20.00-22.99    | 19,824 | 19,824 | 22.78 | 4.73 years | — |
|  23.00-24.27    | 48,041 | 48,041 | 24.27 | 5.05 years | — |
| Total                | 169,503 | 169,503 | $19.19 | 4.38 years | $— |
|                 |   |   |   |   |   |

----

|                                               |   | Shares |    |   | Weighted AverageStock Price |   |
|----------------------------------------------------|--------|--------|---------|--------|-----------------------------|--------|
| Non-vested stock awards—January 1, 2011 |   |   | 22,750  |   |                        | $      | 7.91 |   |
| Granted                                            |   |   | — |   |                        |   | — |   |
| Forfeited                                          |   |   | — |   |                        |   | — |   |
| Vested                                             |   |   | — |   |                        |   | — |   |
| Non-vested stock awards—March 31, 2011       |   |   | 22,750  |   |                        | $      | 7.91 |   |
|                                               |   |   |    |   |                        |   |   |   |

|                                               |   | Shares |    |   | Weighted AverageStock Price |   |
|----------------------------------------------------|--------|--------|---------|--------|-----------------------------|--------|
| Non-vested stock awards—January 1, 2010 |   |   | 24,101  |   |                        | $      | 13.43 |   |
| Granted                                            |   |   | — |   |                        |   | — |   |
| Forfeited                                          |   |   | (500    | )      |                        |   | 9.55 |   |
| Vested                                             |   |   | — |   |                        |   | — |   |
| Non-vested stock awards—March 31, 2010       |   |   | 23,601  |   |                        | $      | 13.52 |   |
|                                               |   |   |    |   |                        |   |   |   |

----

|                                                        |   | March 31, 2011 |    |
|-------------------------------------------------------------|--------|---------------------|---------|
| (Dollars in thousands)                                      |   | Level 1        |    |   | Level 2 |   |   | Level 3 |   |   | Assets atFair Value |   |
| Assets Measured at Fair Value on a Recurring Basis          |   |                |    |   |   |   |   |   |   |   |   |   |
| AFS Investment Securities:US Government agency obligations  |   | $                   | — |   |   | $ | 44,116 |   |   | $ | — |   |   | $ | 44,116 |   |
| GSE mortgage-backed securities                              |   |                | — |   |   |   | 59,492 |   |   |   | — |   |   |   | 59,492 |   |
| Collateralized mortgage obligations GSE                     |   |                | — |   |   |   | 16,302 |   |   |   | — |   |   |   | 16,302 |   |
| Corporate bonds                                             |   |                | — |   |   |   | 19,343 |   |   |   | — |   |   |   | 19,343 |   |
| Equity securities                                           |   |                | 14      |   |   |   | — |   |   |   | — |   |   |   | 14 |   |
| Total assets measured at fair value on a recurring basis    |   | $                   | 14      |   |   | $ | 139,253 |   |   | $ | — |   |   | $ | 139,267 |   |
|                                                        |   |
|                                                        |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Assets Measured at Fair Value on a Nonrecurring Basis       |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Impaired loans                                              |   | $                   | — |   |   | $ | — |   |   | $ | 4,462 |   |   | $ | 4,462 |   |
| OREO & other repossessed property                  |   |                | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Total assets measured at fair value on a nonrecurring basis |   | $                   | — |   |   | $ | — |   |   | $ | 4,462 |   |   | $ | 4,462 |   |
|                                                        |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |

----

|                                                        |   | December 31, 2010 |    |
|-------------------------------------------------------------|--------|------------------------|---------|
| (Dollars in thousands)                                      |   | Level 1           |    |   | Level 2 |   |   | Level 3 |   |   | Assets atFair Value |   |
| Assets Measured at Fair Value on a Recurring Basis          |   |                   |    |   |   |   |   |   |   |   |   |   |
| AFS Investment Securities:US Government agency obligations  |   | $                      | — |   |   | $ | 44,244 |   |   | $ | — |   |   | $ | 44,244 |   |
| GSE mortgage-backed securities                              |   |                   | — |   |   |   | 63,998 |   |   |   | — |   |   |   | 63,998 |   |
| Collateralized mortgage obligations GSE                     |   |                   | — |   |   |   | 16,618 |   |   |   | — |   |   |   | 16,618 |   |
| Corporate bonds                                             |   |                   | — |   |   |   | 17,288 |   |   |   | — |   |   |   | 17,288 |   |
| Equity securities                                           |   |                   | 13      |   |   |   | — |   |   |   | — |   |   |   | 13 |   |
| Total assets measured at fair value on a recurring basis    |   | $                      | 13      |   |   | $ | 142,148 |   |   | $ | — |   |   | $ | 142,161 |   |
|  Assets Measured at Fair Value on a Nonrecurring Basis |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Impaired loans                                              |   | $                      | — |   |   | $ | — |   |   | $ | 4,320 |   |   | $ | 4,320 |   |
| OREO & other repossessed property                  |   |                   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Total assets measured at fair value on a nonrecurring basis |   | $                      | — |   |   | $ | — |   |   | $ | 4,320 |   |   | $ | 4,320 |   |
|                                                        |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                               |   | March 31, 2011 |    |   | December 31, 2010  |   |
|------------------------------------|--------|----------------|---------|--------|--------------------|--------|
| (Dollars in thousands)             |   | CarryingAmount |    |   | EstimatedFairValue |   |   | CarryingAmount |   |   | EstimatedFairValue |   |
| Financial assets                   |   |           |    |   |               |   |   |   |   |   |   |   |
| Cash and cash equivalents          |   | $              | 24,159  |   |               | $      | 24,159 |   |   | $ | 26,360 |   |   | $ | 26,360 |   |
| AFS investment securities          |   |           | 139,267 |   |               |   | 139,267 |   |   |   | 142,161 |   |   |   | 142,161 |   |
| HTM investment securities          |   |           | 8,931   |   |               |   | 9,197 |   |   |   | 8,431 |   |   |   | 8,723 |   |
| Restricted stock                   |   |           | 4,046   |   |               |   | 4,046 |   |   |   | 4,201 |   |   |   | 4,201 |   |
| Loans and leases, net of allowance |   |           | 403,194 |   |               |   | 403,313 |   |   |   | 390,287 |   |   |   | 391,091 |   |
| Accrued interest receivable        |   |           | 2,512   |   |               |   | 2,512 |   |   |   | 2,283 |   |   |   | 2,283 |   |
| Financial liabilities              |   |           |    |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                           |   |           | 507,243 |   |               |   | 508,619 |   |   |   | 492,746 |   |   |   | 494,673 |   |
| Borrowings                         |   |           | 41,151  |   |               |   | 43,551 |   |   |   | 50,951 |   |   |   | 53,608 |   |
| Junior subordinated debentures     |   |           | 9,279   |   |               |   | 9,685 |   |   |   | 9,279 |   |   |   | 9,132 |   |
| Accrued interest payable           |   |           | 433     |   |               |   | 433 |   |   |   | 527 |   |   |   | 527 |   |
| Off-balance sheet instruments      |   |           | — |   |               |   | — |   |   |   | — |   |   |   | — |   |

----

----

----

ITEM 2

|   | • | Focus on penetrating  existing markets  to maximize profitability |
|--------|---------|---------------------------------------------------------------------------------------|

|   | • | Grow loans and diversify the mix |
|--------|---------|----------------------------------|

|   | • | Improve asset quality |
|--------|---------|-----------------------|

|   | • | Reduce long-term borrowings |
|--------|---------|-----------------------------|

|   | • | Focus on profitable customer segments |
|--------|---------|---------------------------------------|

|   | • | Grow and diversify non-interest income, primarily in the wealth management area |
|--------|---------|---------------------------------------------------------------------------------|

|   | • | Focus on reducing DNB’s cost of funds by changing DNB’s mix of deposits |
|--------|---------|-------------------------------------------------------------------------------------|

|   | • | Focus on cost containment and improving operational efficiencies |
|--------|---------|------------------------------------------------------------------|

----

----

|                                |   | Risk Category I |    |   | Risk Category II |   |   | Risk Category III |   |   | Risk Category IV |   |   | Large and Highly Complex Institutions |   |
|-------------------------------------|--------|-----------------|---------|--------|------------------|--------|--------|-------------------|--------|--------|------------------|--------|--------|---------------------------------------|--------|
|   Initial base assessment rate |   |            | 5-9     |   |             |   | 14     |              |   |   | 23               |   |   |                                  | 35     |   |   |   | 5-35 |   |
| Unsecured debt adjustment**         |   |            | (4.5    | )-0    |             |   | (5     | )-0               |   |   | (5               | )-0    |   |                                  | (5     | )-0 |   |   | (5 | )-0 |
| Brokered deposit adjustment         |   |            | — |   |             |   | 0-10   |              |   |   | 0-10             |   |   |                                  | 0-10   |   |   |   | 0-10 |   |
| TOTAL BASE ASSESMENT RATE           |   |            | 2.5-9   |   |             |   | 9-24   |              |   |   | 18-33            |   |   |                                  | 30-45  |   |   |   | 2.5-45 |   |

----

|   | - | The law permanently raises the federal deposit insurance limit to $250,000 per account ownership.  This change may have the effect of increasing losses to the FDIC insurance fund on future failures of other insured depository institutions. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | The new law makes deposit insurance coverage unlimited in amount for non-interest bearing transaction accounts until December 31, 2012.  This change may also have the effect of increasing losses to the FDIC insurance fund on future failures of other insured depository institutions. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | The law increases the insurance fund’s minimum designated reserve ratio from 1.15 to 1.35, and removes the current 1.50 cap on the reserve ratio. The law gives the FDIC discretion to suspend or limit the declaration or payment of dividends even when the reserve ratio exceeds the minimum designated reserve ratio. |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|   |   |
|--------|--------|

----

----

|   | • | Changes in the nature and volume of the portfolio and in the terms of loans. |
|--------|---------|------------------------------------------------------------------------------|

|   | • | Changes in the volume and severity of past due loans, the volume of non-accrual loans, and the volume and severity of adversely classified or graded loans. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | The existence and effect of any concentrations of credit, and changes in the level of such concentrations. |
|--------|---------|------------------------------------------------------------------------------------------------------------|

|   | • | Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Changes in the experience, ability, and depth of lending management and other relevant staff. |
|--------|---------|-----------------------------------------------------------------------------------------------|

|   | • | Changes in the quality of the institution’s loan review system. |
|--------|---------|-----------------------------------------------------------------------|

|   | • | Changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the institution’s existing portfolio. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Changes in the value of underlying collateral for collateral-dependent loans. |
|--------|---------|-------------------------------------------------------------------------------|

----

----

|                                  |   |                              |    |   |                         |   |    |                              |   |
|---------------------------------------|--------|-----------------------------------|---------|--------|------------------------------|--------|---------|-----------------------------------|--------|
|                                  |   | Three Months Ended March 31, 2011 |    |   | Year Ended December 31, 2010 |   |    | Three Months Ended March 31, 2010 |   |
| Beginning balance                     |   | $                                 | 5,884   |   |                         | $      | 5,477   |                              |   | $ | 5,477 |   |
| Provisions                            |   |                              | 426     |   |                         |   | 2,216   |                              |   |   | 426 |   |
| Loans charged off:                    |   |                              |    |   |                         |   |    |                              |   |   |   |   |
| Residential mortgage                  |   |                              | (40     | )      |                         |   | (520    | )                                 |   |   | (9 | ) |
| Commercial                            |   |                              | (14     | )      |                         |   | (577    | )                                 |   |   | (16 | ) |
| Lease financing                       |   |                              | — |   |                         |   | (548    | )                                 |   |   | — |   |
| Consumer                              |   |                              | — |   |                         |   | (210    | )                                 |   |   | (56 | ) |
| Total charged off                     |   |                              | (54     | )      |                         |   | (1,855  | )                                 |   |   | (81 | ) |
| Recoveries:                           |   |                              |    |   |                         |   |    |                              |   |   |   |   |
| Residential mortgage                  |   |                              | 46      |   |                         |   | 15      |                              |   |   | — |   |
| Commercial                            |   |                              | 4       |   |                         |   | 11      |                              |   |   | 6 |   |
| Lease financing                       |   |                              | 1       |   |                         |   | 20      |                              |   |   | 29 |   |
| Consumer                              |   |                              | — |   |                         |   | — |                              |   |   | — |   |
| Total recoveries                      |   |                              | 51      |   |                         |   | 46      |                              |   |   | 35 |   |
| Ending balance                        |   | $                                 | 6,307   |   |                         | $      | 5,884   |                              |   | $ | 5,857 |   |
|                                  |   |                              |    |   |                         |   |    |                              |   |   |   |   |
| Reserve for unfunded loan commitments |   | $                                 | 126     |   |                         | $      | 150     |                              |   | $ | 139 |   |
|                                  |   |                              |    |   |                         |   |    |                              |   |   |   |   |

----

|                                  |   | Three Months Ended March 31, 2011 |   |   | Year Ended December 31, 2010     |   |    | Three Months Ended March 31, 2010 |   |
|---------------------------------------|--------|-----------------------------------|--------|--------|----------------------------------|--------|---------|-----------------------------------|--------|
|                                  |   | Amount                            |   |   | Percent ofLoan Typeto TotalLoans |   |    | Amount                            |   |   | Percent ofLoan Typeto TotalLoans |   |   | Amount |   |   | Percent ofLoan Typeto TotalLoans |   |
| Residential mortgage                  |   | $                                 | 521    |   |                             |   | 7       | %                                 |   | $ | 454 |   |   |   | 8 | % |   | $ | 669 |   |   |   | 10 | % |
| Commercial                            |   |                              | 4,472  |   |                             |   | 81      |                              |   |   | 4,387 |   |   |   | 80 |   |   |   | 4,266 |   |   |   | 74 |   |
| Lease financing                       |   |                              | 121    |   |                             |   | — |                              |   |   | 86 |   |   |   | — |   |   |   | 62 |   |   |   | 1 |   |
| Consumer                              |   |                              | 486    |   |                             |   | 12      |                              |   |   | 482 |   |   |   | 12 |   |   |   | 512 |   |   |   | 15 |   |
| Unallocated                           |   |                              | 707    |   |                             |   | — |                              |   |   | 475 |   |   |   | — |   |   |   | 348 |   |   |   | — |   |
| Total                                 |   | $                                 | 6,307  |   |                             |   | 100     | %                                 |   | $ | 5,884 |   |   |   | 100 | % |   | $ | 5,857 |   |   |   | 100 | % |
|                                  |   |                              |   |   |                             |   |    |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reserve for unfunded loan commitments |   | $                                 | 126    |   |                             |   | — |                              |   | $ | 150 |   |   |   | — |   |   | $ | 139 |   |   |   | — |   |
|                                  |   |                              |   |   |                             |   |    |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                          |   |           |    |   |              |   |    |           |   |
|---------------------------------------------------------------|--------|----------------|---------|--------|-------------------|--------|---------|----------------|--------|
|                                                          |   | March 31, 2011 |    |   | December 31, 2010 |   |    | March 31, 2010 |   |
| Non-accrual loans:                                            |   |           |    |   |              |   |    |           |   |
| Residential mortgage                                          |   | $              | 1,669   |   |              | $      | 2,334   |           |   | $ | 2,666 |   |
| Commercial mortgage                                           |   |           | 736     |   |              |   | 834     |           |   |   | 1,905 |   |
| Commercial                                                    |   |           | 4,077   |   |              |   | 3,722   |           |   |   | 4,346 |   |
| Lease financing                                               |   |           | 272     |   |              |   | 273     |           |   |   | 149 |   |
| Consumer                                                      |   |           | 60      |   |              |   | 60      |           |   |   | 50 |   |
| Total non-accrual loans                                       |   |           | 6,814   |   |              |   | 7,223   |           |   |   | 9,116 |   |
| Loans 90 days past due and still accruing                |   |           | 23      |   |              |   | — |           |   |   | 410 |   |
| Troubled debt restructurings                                  |   |           | — |   |              |   | — |           |   |   | — |   |
| Total non-performing loans                                    |   |           | 6,837   |   |              |   | 7,223   |           |   |   | 9,526 |   |
| Other real estate owned & other repossessed property |   |           | 4,338   |   |              |   | 4,324   |           |   |   | 3,670 |   |
| Total non-performing assets                                   |   | $              | 11,175  |   |              | $      | 11,547  |           |   | $ | 13,196 |   |

----

|                                  |   |   |   |   |   |   |   |   |   |
|---------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Asset quality ratios:                 |   |   |   |   |   |   |   |   |   |
| Non-performing loans to total loans   |   |   | 1.67   | %      |   |   | 1.82   | %      |   |   | 2.62 | % |
| Non-performing assets to total assets |   |   | 1.83   |   |   |   | 1.92   |   |   |   | 2.15 |   |
| Allowance for credit losses to:       |   |   |   |   |   |   |   |   |   |   |   |   |
| Total loans and leases                |   |   | 1.54   |   |   |   | 1.49   |   |   |   | 1.61 |   |
| Non-performing loans and leases       |   |   | 92.2   |   |   |   | 81.5   |   |   |   | 61.5 |   |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |

|                                       |   | Three Months Ended |    |   | Year Ended       |   |   | Three Months Ended |   |
|--------------------------------------------|--------|--------------------|---------|--------|------------------|--------|--------|--------------------|--------|
|  (Dollars in thousands)               |   | March 31,2011      |    |   | December 31,2010 |   |   | March 31,2010      |   |
| Interest income which would have been      |   |               |    |   |             |   |   |               |   |
| recorded under original terms              |   | $                  | 86      |   |             | $      | 452    |               |   | $ | 96 |   |
| Interest income recorded during the period |   |               | — |   |             |   | (42    | )                  |   |   | (1 | ) |
| Net impact on interest income              |   | $                  | 86      |   |             | $      | 410    |               |   | $ | 95 |   |

|                                        |   | Three Months Ended |   |   | Year Ended             |   |   | Three Months Ended |   |
|---------------------------------------------|--------|--------------------|--------|--------|------------------------|--------|--------|--------------------|--------|
|  (Dollars in thousands)                |   | March 31,2011      |   |   | December 31, 2010 |   |   | March 31,2010      |   |
| Total recorded investment                   |   | $                  | 6,917  |   |                   | $      | 7,223  |               |   | $ | 9,229 |   |
| Impaired loans with a specific allowance    |   |               | 5,211  |   |                   |   | 4,813  |               |   |   | 3,776 |   |
| Impaired loans without a specific allowance |   |               | 1,706  |   |                   |   | 2,410  |               |   |   | 5.453 |   |
| Average recorded investment                 |   |               | 7,120  |   |                   |   | 8,563  |               |   |   | 9,229 |   |
| Specific allowance allocation               |   |               | 749    |   |                   |   | 493    |               |   |   | 744 |   |
| Total cash collected                        |   |               | 570    |   |                   |   | 2,457  |               |   |   | 112 |   |
| Interest income recorded                    |   |               | 6      |   |                   |   | 113    |               |   |   | 1 |   |

----

|                           |   | Actual |   |   | For CapitalAdequacyPurposes |   |   | To Be WellCapitalizedUnderPromptCorrectiveActionProvisions |   |
|--------------------------------|--------|--------|--------|--------|-----------------------------|--------|--------|------------------------------------------------------------|--------|
| (Dollars in thousands)         |   | Amount |   |   | Ratio                       |   |   | Amount                                                     |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
| DNB Financial Corporation      |   |   |   |   |                        |   |   |                                                       |   |   |   |   |   |   |   |   |   |   |
| March 31, 2011:           |   |   |   |   |                        |   |   |                                                       |   |   |   |   |   |   |   |   |   |   |
| Total risk-based capital       |   | $      | 62,461 |   |                        |   | 14.59  | %                                                          |   | $ | 34,256 |   |   |   | 8.00 | % |   |   | N/A |   |   |   | N/A |   |
| Tier 1 risk-based capital |   |   | 57,100 |   |                        |   | 13. 33 |                                                       |   |   | 17,128 |   |   |   | 4.00 |   |   |   | N/A |   |   |   | N/A |   |
| Tier 1 (leverage) capital |   |   | 57,100 |   |                        |   | 9.47   |                                                       |   |   | 24,115 |   |   |   | 4.00 |   |   |   | N/A |   |   |   | N/A |   |
| December 31, 2010:        |   |   |   |   |                        |   |   |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total risk-based capital       |   | $      | 61,653 |   |                        |   | 14.28  | %                                                          |   | $ | 34,531 |   |   |   | 8.00 | % |   |   | N/A |   |   |   | N/A |   |
| Tier 1 risk-based capital |   |   | 56,255 |   |                        |   | 13.03  |                                                       |   |   | 17,265 |   |   |   | 4.00 |   |   |   | N/A |   |   |   | N/A |   |
| Tier 1 (leverage) capital |   |   | 56,255 |   |                        |   | 9.25   |                                                       |   |   | 24,324 |   |   |   | 4.00 |   |   |   | N/A |   |   |   | N/A |   |
| DNB First, N.A.                |   |   |   |   |                        |   |   |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| March 31, 2011:           |   |   |   |   |                        |   |   |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total risk-based capital       |   | $      | 62,326 |   |                        |   | 14.57  | %                                                          |   | $ | 34,222 |   |   |   | 8.00 | % |   | $ | 42,778 |   |   |   | 10.00 | % |
| Tier 1 risk-based capital |   |   | 56,965 |   |                        |   | 13. 32 |                                                       |   |   | 17,111 |   |   |   | 4.00 |   |   |   | 25,667 |   |   |   | 6.00 |   |
| Tier 1 (leverage) capital |   |   | 56,965 |   |                        |   | 9.46   |                                                       |   |   | 24,097 |   |   |   | 4.00 |   |   |   | 30,122 |   |   |   | 5.00 |   |
| December 31, 2010:        |   |   |   |   |                        |   |   |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total risk-based capital       |   | $      | 61,288 |   |                        |   | 14.21  | %                                                          |   | $ | 34,497 |   |   |   | 8.00 | % |   | $ | 43,121 |   |   |   | 10.00 | % |
| Tier 1 risk-based capital |   |   | 55,890 |   |                        |   | 12.96  |                                                       |   |   | 17,248 |   |   |   | 4.00 |   |   |   | 25,872 |   |   |   | 6.00 |   |
| Tier 1 (leverage) capital |   |   | 55,890 |   |                        |   | 9.20   |                                                       |   |   | 24,306 |   |   |   | 4.00 |   |   |   | 30,383 |   |   |   | 5.00 |   |

----

ITEM 3 - 

| (Dollars in thousands)         |   | March 31, 2011 |   |   | December 31, 2010 |   |
|--------------------------------|--------|----------------|--------|--------|-------------------|--------|
| Change in rates                |   | Flat           |   |   |              | -200   | bp |   |   | +200 | bp |   | Flat |   |   |   | -200 | bp |   |   | +200 | bp |
|  EVE                      |   | $              | 42,376 |   |              | $      | 42,564 |   |   | $ | 34,966 |   |   | $ | 41,867 |   |   | $ | 44,026 |   |   | $ | 33,395 |   |
|  Change                   |   |           |   |   |              |   | 188 |   |   |   | (7,411 | ) |   |   |   |   |   |   | 2,159 |   |   |   | (8,472 | ) |
|  Change as % of assets    |   |           |   |   |              |   | — |   |   |   | (1.2 | % ) |   |   |   |   |   |   | .4 | % |   |   | (1.4 | % ) |
|  Change as % of PV equity |   |           |   |   |              |   | 0.4 | % |   |   | (17.5 | % ) |   |   |   |   |   |   | 5.2 | % |   |   | (20.2 | % ) |

----

ITEM 1. LEGAL PROCEEDINGS

| Period                                     |   | Total NumberOf Shares Purchased |   | AveragePrice PaidPer Share |   | Total Number ofShares Purchasedas Part of PubliclyAnnounced Plansor Programs |   | Maximum Numberof Shares that MayYet Be PurchasedUnder the Plans orPrograms (a) |
|--------------------------------------------|--------|--------------------------------------|--------|----------------------------|--------|----------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------|
| January 1, 2011 – January 31, 2011   |   | —                              |   | $   — |   | —                                                                                                              |   | 63,016                                                                                                                           |
| February 1, 2011 – February 28, 2011 |   | —                              |   | —                    |   | —                                                                                                              |   | 63,016                                                                                                                           |
| March 1, 2011 – March 31, 2011       |   | —                              |   | —                    |   | —                                                                                                              |   | 63,016                                                                                                                           |
| Total                                      |   | —                              |   | $—                   |   | —                                                                                                              |   |                                                                                                                             |

|   |   |
|--------|--------|

----

Pursuant

|         |   | DNB FINANCIAL CORPORATION                                            |
|--------------|--------|----------------------------------------------------------------------|
|         |   |                                                                 |
| May 11, 2011 | BY:    | /s/ William S. Latoff                                                |
|         |   | William S. Latoff, Chairman of theBoard and Chief Executive Officer  |
|         |   |                                                                 |
|         |   |                                                                 |
|         |   |                                                                 |
| May 11, 2011 | BY:    | /s/ Gerald F. Sopp                                                   |
|         |   | Gerald F. Sopp, Chief Financial Officer and Executive Vice President |
|         |   |                                                                 |
|         |   |                                                                 |

----

Index to Exhibits

| Exhibit No.Under Item 601of Regulation S-K |   |
|------------------------------------------------------|--------|
| 3                                                    | (i)    | Amended and Restated Articles of Incorporation, as amended effective December 8, 2008, filed March 31, 2009 as item 3(i) to Form 10-K for the fiscal year-ended December 31, 2008 (No. 1-34242) and incorporated herein by reference. |
|                                                 | (ii)   | Bylaws of the Registrant as amended December 8, 2008, filed March 31, 2009 as item 3(ii) to Form 10-K for the fiscal year-ended December 31, 2008 (No. 1-34242) and incorporated herein by reference. |
|                                                 | (iii)  | Certificate of Designations of Fixed Rate Cumulative Preferred Stock, Series 2008A of DNB Financial Corporation, filed as Exhibit 4.3 to Form 8-K (No. 1-34242) on January 26, 2009 and incorporated herein by reference. |
| 4                                                    | (a)    | Registrant has certain debt obligations outstanding, for none of which do the instruments defining holders rights authorize an amount of securities in excess of 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis. Registrant agrees to furnish copies of such agreements to the Commission on request. |
|                                                 | (b)    | Form of Preferred Stock Certificate to the United States Department of the Treasury, filed as Exhibit 4.4 to Form 8-K (No. 1-34242) on January 30, 2009 and incorporated herein by reference. |
|                                                 | (c)    | Form of Warrant to Purchase Common Stock to the United States Department of the Treasury, filed as Exhibit 4.5 to Form 8-K (No. 1-34242) on January 30, 2009 and incorporated herein by reference. |
| 10                                                   | (a)*   | Amended and Restated Change of Control Agreements dated December 20, 2006 between DNB Financial Corporation and DNB First, N.A. and the following executive officers, each in the form filed March 26, 2007 as item 10(a) to Form 10-K for the fiscal year-ended December 31, 2006 (No. 1-34242) and incorporated herein by reference: Bruce E. Moroney, C. Tomlinson Kline III, and Richard J. Hartmann. |
|                                                 | (b)**  | 1995 Stock Option Plan of DNB Financial Corporation (as amended and restated, effective as of April 27, 2004), filed on March 29, 2004 as Appendix A to Registrant’s Proxy Statement for its Annual Meeting of Stockholders held April 27, 2004, and incorporated herein by reference. |
|                                                 | (c)*   | Form of waiver signed by William S. Latoff, William J. Hieb, Gerald F. Sopp, Bruce E. Moroney and Albert J. Melfi, Jr., each dated January 30, 2009, with respect to U.S. Treasury TARP Capital Purchase Program, filed as Exhibit 4.6 to Form 8-K (No. 1-34242) on January 30, 2009 and incorporated herein by reference. |
|                                                 | (d)**  | DNB Financial Corporation Incentive Equity and Deferred Compensation Plan (As Amended and Restated Effective May 5, 2009), filed March 31, 2009 as Appendix A to Registrant’s definitive proxy statement on Schedule 14-A (No. 1-34242) and incorporated herein by reference. |
|                                                 | (e)*   | Amended and Restated Change of Control Agreement among DNB Financial Corporation, DNB First, N.A. and William S. Latoff, dated December 20, 2006, filed March 26, 2007 as item 10(e) to Form 10-K for the fiscal year-ended December 31, 2006 (No. 1-34242) and incorporated herein by reference. |
|                                                 | (f)*   | Agreement of Lease dated February 10, 2005 between Headwaters Associates, a Pennsylvania general partnership, as Lessor, and DNB First, National Association as Lessee for a portion of premises at 2 North Church Street, West Chester, Pennsylvania, filed March 10, 2005 as Item 10(l) to Form 10-K for the fiscal year ended December 31, 2004 (No. 1-34242) and incorporated herein by reference, as amended by Addendum to Agreement of Lease dated as of November 15, 2005, filed March 23, 2006 as Item 10(l) to Form 10-K for the fiscal year ended December 31, 2005 (No. 1-34242) and incorporated herein by reference, and as further amended by Second Addendum to Agreement of Lease dated as of May 25, 2006, filed August 14, 2006 as Item 10(l) to Form 10-Q for the fiscal quarter ended June 30, 2006 (No. 1-34242) and incorporated herein by reference, and as further amended by Third Addendum to Agreement of Lease dated as of June 9, 2010, filed August 13, 2010 as Item 10(f) to Form 10-Q for the fiscal quarter ended June 30, 2010 (No. 1-34242) and incorporated herein by reference. |
|                                                 |   |   |

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|   | (g)** | Form of Stock Option Agreement for grants prior to 2005 under the Registrant’s Stock Option Plan, filed May 11, 2005 as Item 10(n) to Form 10-Q for the fiscal quarter ended March 31, 2005 (No. 1-34242) and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (h)** | Form of Nonqualified Stock Option Agreement for April 18, 2005 and subsequent grants prior to April 23, 2010 under the Stock Option Plan, filed May 11, 2005 as Item 10(o) to Form 10-Q for the fiscal quarter ended March 31, 2005 (No. 1-34242) and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | (i)   | Agreement of Sale dated June 1, 2005 between DNB First, National Association (the “Bank”), as seller, and Papermill Brandywine Company, LLC, a Pennsylvania limited liability company, as buyer (“Buyer”) with respect to the sale of the Bank’s operations center and an adjunct administrative office (the “Property”) and accompanying (i) Agreement of Lease between the Buyer as landlord and the Bank as tenant, pursuant to which the Property will be leased back to the Bank, and (ii) Parking Easement Agreement to provide cross easements with respect to the Property, the Buyer’s other adjoining property and the Bank’s other adjoining property, filed August 15, 2005 as Item 10(p) to Form 10-Q for the fiscal quarter ended June 30, 2005 (No. 1-34242) and incorporated herein by reference. |
|   | (j)   | Agreement of Lease dated November 18, 2005 between Papermill Brandywine Company, LLC, a Pennsylvania limited liability company (“Papermill”), as Lessor, and DNB First, National Association as Lessee for the banks operations center and adjunct administrative office, filed March 23, 2006 as Item 10(q) to Form 10-K for the fiscal year ended December 31, 2005 (No. 1-34242) and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | (k)*  | Amended and Restated Change of Control Agreement among DNB Financial Corporation, DNB First, N.A. and William J. Hieb, filed May 15, 2007 as Item 10(l) to Form 10-Q for the fiscal quarter ended March 31, 2007 (No. 1-34242) and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | (l)** | Form of Nonqualified Stock Option Agreement for grants on and after December 22, 2005 and prior to April 23, 2010 under the Stock Option Plan, filed March 23, 2006 as Item 10(s) to Form 10-K for the fiscal year ended December 31, 2005 (No. 1-34242) and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | (m)*  | Deferred Compensation Plan For Directors of DNB Financial Corporation (adopted effective October 1, 2006), filed November 14, 2006 as Item 10(s) to Form 10-Q for the fiscal quarter ended September 30, 2006 (No. 1-34242) and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | (n)*  | DNB Financial Corporation Deferred Compensation Plan (adopted effective October 1, 2006), filed November 14, 2006 as Item 10(t) to Form 10-Q for the fiscal quarter ended September 30, 2006 (No. 1-34242) and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | (o)*  | Trust Agreement, effective as of October 1, 2006, between DNB Financial Corporation and DNB First, National Association (Deferred Compensation Plan), filed November 14, 2006 as Item 10(u) to Form 10-Q for the fiscal quarter ended September 30, 2006 (No. 1-34242) and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | (p)*  | Change of Control Agreements among DNB Financial Corporation, DNB First, N.A. and each of the following executive officers, each in the form filed March 26, 2007 as item 10(q) to Form 10-K for the fiscal year-ended December 31, 2006 (No. 1-34242) and incorporated herein by reference: Albert J. Melfi, Jr. and Gerald F. Sopp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | (q)*  | DNB Financial Corporation Supplemental Executive Retirement Plan for William S. Latoff as amended and restated effective April 1, 2007, filed May 15, 2007 as Item 10(r) to Form 10-Q for the fiscal quarter ended March 31, 2007 (No. 1-34242) and incorporated herein by reference, as further amended by Amendment dated December 8, 2008, filed March 31, 2009 as item 3(r) to Form 10-K for the fiscal year-ended December 31, 2008 (No. 1-34242) and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                  |
|   | (r)*  | Trust Agreement effective as of December 20, 2006 between DNB Financial Corporation and DNB First, N.A. (William S. Latoff SERP), filed March 26, 2007 as item 10(s) to Form 10-K for the fiscal year-ended December 31, 2006 (No. 1-34242) and incorporated herein by reference, as modified by Agreement to Terminate Trust dated as of April 1, 2007, filed May 15, 2007 as Item 10(s) to Form 10-Q for the fiscal quarter ended March 31, 2007 (No. 1-34242) and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                        |
|   | (s)*  | DNB Offer Letter to Albert J. Melfi, Jr., dated November 10, 2006, filed March 26, 2005 as item 10(t) to Form 10-K for the fiscal year-ended December 31, 2006 (No. 1-34242) and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | (t)*  | DNB Offer Letter to Gerald F. Sopp, dated December 20, 2006, filed March 26, 2007 as item 10(u) to Form 10-K for the fiscal year-ended December 31, 2006 (No. 1-34242) and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

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|   | (u)**  | Form of Restricted Stock Award Agreement dated November, 28, 2007, filed March 28, 2008 as item 10(v) to Form 10-K for the fiscal year-ended December 31, 2007 (No. 1-34242) and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (v)*   | Amendments dated December 16, 2009 to Change of Control Agreements among DNB Financial Corporation, DNB First, N.A. and William S. Latoff, William J. Hieb, Albert J. Melfi, Richard J. Hartman, Gerald F. Sopp and Bruce E. Moroney with respect to compliance with certain provisions of the Emergency Economic Stabilization Act of 2008 (“EESA”), the American Recovery Reinvestment Act of 2009 (“ARRA”) and the provisions of the Interim Final Rule on “TARP Standards for Compensation and Corporate Governance” published by the United States Treasury Department (“UST”) on June 15, 2009, filed March 26, 2010 as item 10(w) to Form 10-K for the fiscal year ended December 31, 2009 (No. 1-34242) and incorporated herein by reference. |
|   | (w)**  | Restricted Stock Award Agreement dated April 23, 2010 between DNB Financial Corporation and William S. Latoff, filed August 13, 2010 as Item 10(x) to Form 10-Q for the fiscal quarter ended June 30, 2010 (No. 1-34242) and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | (x)**  | Form of Restricted Stock Option Agreement for non-employee directors for awards made on and after April 23, 2010 pursuant to the 1995 Stock Option Plan of DNB Financial Corporation (as amended and restated, effective as of April 27, 2004), filed August 13, 2010 as Item 10(y) to Form 10-Q for the fiscal quarter ended June 30, 2010 (No. 1-34242) and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | (y)**  | Form of Restricted Stock Option Agreement for employees for awards made on and after April 23, 2010 pursuant to the 1995 Stock Option Plan of DNB Financial Corporation (as amended and restated, effective as of April 27, 2004), filed August 13, 2010 as Item 10(z) to Form 10-Q for the fiscal quarter ended June 30, 2010 (No. 1-34242) and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | (z)**  | Form of Amendment effective April 23, 2010, to the Restricted Stock Award agreements made between James H. Thornton, James J. Koegel, Mildred C. Joyner and Thomas A. Fillippo, non-employee Directors of the registrant, and the registrant on November 28, 2007 and December 17, 2008, filed August 13, 2010 as Item 10(aa) to Form 10-Q for the fiscal quarter ended June 30, 2010 (No. 1-34242) and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                       |
|   | (aa)** | Form of Amendment effective April 23, 2010, to the Restricted Stock Award agreements made between Eli Silberman, a non-employee Director of the registrant, and the registrant on November 28, 2007 and December 17, 2008, filed August 13, 2010 as Item 10(bb) to Form 10-Q for the fiscal quarter ended June 30, 2010 (No. 1-34242) and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | (bb)** | Form of Amendment effective April 23, 2010, to the Restricted Stock Award agreements made between William S. Latoff, William J. Hieb, Albert J. Melfi, Gerald F. Sopp and Bruce E. Moroney, officers of the registrant, and the registrant on November 28, 2007 and December 17, 2008, filed August 13, 2010 as Item 10(cc) to Form 10-Q for the fiscal quarter ended June 30, 2010 (No. 1-34242) and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                         |
| 11     |   | Registrant’s Statement of Computation of Earnings Per Share is set forth in Footnote 5 to Registrant's consolidated financial statements at page 14 of this Form 10-Q and is incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 14     |   | Code of Ethics as amended and restated effective February 23, 2005, filed March 10, 2005 as Item 10(m) to Form 10-K for the fiscal year ended December 31, 2004 (No. 1-34242) and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 31.1   |   | Rule 13a-14(a)/15d-14 (a) Certification of Chief Executive Officer, filed herewith.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 31.2   |   | Rule 13a-14(a)/15d-14 (a) Certification of Chief Financial Officer, filed herewith.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 32.1   |   | Section 1350 Certification of Chief Executive Officer, filed herewith.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 32.2   |   | Section 1350 Certification of Chief Financial Officer, filed herewith.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | *      | Management contract or compensatory plan arrangement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | **     | Shareholder approved compensatory plan pursuant to which the Registrant’s Common Stock may be issued to employees of the Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

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