Stockholders' Equity

6 Months Ended

Jun. 30, 2011

Stockholders' Equity

STOCKHOLDERS' EQUITY

NOTE 12:  STOCKHOLDERS' EQUITY

On January 30, 2009, as part of the CPP administered by the United States Department of the Treasury, DNB Financial Corporation entered into a Letter Agreement and a Securities Purchase Agreement with the U.S. Treasury, pursuant to which the DNB issued and sold on January 30, 2009, and the U.S. Treasury purchased for cash on that date (i) 11,750 shares of the Corporation's Fixed Rate Cumulative Perpetual Preferred Stock, Series 2008A, par value $10.00 per share, having a liquidation preference of $1,000 per share, and (ii) a ten-year warrant to purchase up to 186,311 shares of the DNB's common stock, $1.00 par value, at an exercise price of $9.46 per share, for an aggregate purchase price of $11,750,000 in cash. This transaction closed on January 30, 2009. The issuance and sale of these securities was a private placement exempt from registration pursuant to Section 4(2) of the Securities Act of 1933. The Bank will need to provide dividends to the Corporation in connection with the $11,750,000 of Fixed Rate Cumulative Perpetual Preferred Stock sold on January 30, 2009 as part of the CPP administered by the United States Department of the Treasury.

On August 4, 2011, DNB Financial Corporation entered into a letter agreement with Treasury, pursuant to which DNB repurchased from the Treasury 11,750 shares, constituting all of the issued and outstanding shares, of DNB'S Series 2008A Preferred Stock, at a repurchase price equal to the liquidation value of $1,000 per share, or a total of $11,750,000, plus accrued, unpaid dividends on such shares equal to $128,923.61, for a total repurchase price of $11,878,923.61.

On August 4, 2011, DNB Financial Corporation entered into a Securities Purchase Agreement with the Secretary of the Treasury (the "Treasury"), pursuant to which the Company issued and sold to the Treasury 13,000 shares of its Non-Cumulative Perpetual Preferred Stock, Series 2011A ("Series 2011A Preferred Stock"), having a liquidation preference of $1,000 per share for aggregate proceeds of $13,000,000.   The Securities Purchase Agreement was entered into, and the Series 2011A Preferred Stock was issued, pursuant to the Treasury's Small Business Lending Fund program ("SBLF"), a $30 billion fund established under the Small Business Jobs Act of 2010, that encourages lending to small businesses by providing capital to qualified community banks with assets of less than $10 billion.