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Section 1: 8-K


 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 
ly
   
Date of Report (Date of Earliest Event Reported):
 
August 7, 2018
 


 
DNB Financial Corporation
__________________________________________
(Exact name of registrant as specified in its charter)

       
Pennsylvania
1-34242
23-2222567
 
_____________________
(State or other jurisdiction
_____________
(Commission
______________
(I.R.S. Employer
 
of incorporation)
File Number)
Identification No.)
 
 
 
 
 
4 Brandywine Avenue, Downingtown, Pennsylvania
 
19335
 
_________________________________
(Address of principal executive offices)
 
___________
(Zip Code)
 

 
Registrant's telephone number, including area code:
 
(610) 269-1040
 


Not Applicable
______________________________________________
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.






 
ITEM 7.01  REGULATION FD DISCLOSURE
 
 
The Registrant hereby furnishes its slide presentation which it intends to present at a series of investor meetings hosted by Boenning and Scattergood in Hershey, PA on Wednesday, August 8, 2018 and by FIG Partners in Philadelphia, PA on Tuesday, August 14, 2018. A copy of the slide presentation is attached to this report as Exhibit 99.1 and incorporated by reference herein.

The information in this Current Report on Form 8-K, including the exhibit attached hereto and incorporated by reference into this Item 7.01, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section. Furthermore, such information, including the exhibit attached hereto, shall not be deemed incorporated by reference into any of the Corporation's reports or filings with the SEC, whether made before or after the date hereof, except as expressly set forth by specific reference in such report or filing. The information in this Current Report on Form 8-K, including the exhibit attached hereto, shall not be deemed an admission as to the materiality of any information in this report on Form 8-K that is required to be disclosed solely to satisfy the requirements of Regulation FD.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
The following exhibits are filed herewith:
 
 
 
Exhibit No.
 
Description of Exhibit
 
DNB Financial Corporation slide presentation to be presented at a series of investor meetings hosted by Boenning and Scattergood in Hershey, PA on Wednesday, August 8, 2018 and by FIG Partners in Philadelphia, PA on Tuesday, August 14, 2018.
 
 
 
 


 
 

 

 


 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
DNB Financial Corporation
 
 
August 7, 2018
By:
/s/ Gerald F. Sopp
 
 
Name: Gerald F. Sopp
 
 
Title: Chief Financial Officer and
Executive Vice President
 
 
 


 
 













 

 
 


EXHIBIT INDEX
 
 
 
Exhibit No.
 
Description of Exhibit
 
DNB Financial Corporation slide presentation to be presented at a series of investor meetings hosted by Boenning and Scattergood in Hershey, PA on Wednesday, August 8, 2018 and by FIG Partners in Philadelphia, PA on Tuesday, August 14, 2018.


 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 
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Section 2: EX-99.1


 DNB Financial CorporationInvestor PresentationAugust 2018 
 

 Disclosures  2  This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, expectations or predictions of future financial or business performance. These forward-looking statements include statements with respect to DNB’s beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, that are subject to significant risks and uncertainties, and are subject to change based on various factors (some of which are beyond DNB’s control). The words "may," "could," "should," "would," "will," "believe," "anticipate," "estimate," "expect," "intend," "plan" and similar expressions are intended to identify forward-looking statements. In addition to factors previously disclosed in the reports filed by DNB with the Securities and Exchange Commission (the “SEC”) and those identified elsewhere in this document, the following factors, among others, could cause actual results to differ materially from forward looking statements or historical performance: the strength of the United States economy in general and the strength of the local economies in which DNB conducts its operations; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; the downgrade, and any future downgrades, in the credit rating of the U.S. Government and federal agencies; inflation, interest rate, market and monetary fluctuations; the timely development of and acceptance of new products and services and the perceived overall value of these products and services by users, including the features, pricing and quality compared to competitors' products and services; the willingness of users to substitute competitors’ products and services for DNB’s products and services; the success of DNB in gaining regulatory approval of its products and services, when required; the impact of changes in laws and regulations applicable to financial institutions (including laws concerning taxes, banking, securities and insurance); technological changes; additional acquisitions; changes in consumer spending and saving habits; the nature, extent, and timing of governmental actions and reforms; and the success of DNB at managing the risks involved in the foregoing. Further, DNB’s expectations with respect to the effects of the new tax law could be affected by future clarifications, amendments, and interpretations of such law. Annualized, pro forma, projected and estimated numbers presented herein are presented for illustrative purpose only, are not forecasts and may not reflect actual results. DNB cautions that the foregoing list of important factors is not exclusive. Readers are also cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date of this investor presentation, even if subsequently made available by DNB on its website or otherwise. DNB does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of DNB to reflect events or circumstances occurring after the date of this investor presentation. For a complete discussion of the assumptions, risks and uncertainties related to our business, you are encouraged to review our filings with the SEC, including our most recent annual report on Form 10-K, as supplemented by our quarterly or other reports subsequently filed with the SEC.  
 

 3  This investor presentation contains non-GAAP financial measures calculated using non-GAAP amounts. These measures are tangible book value per common share, return on average tangible equity and tangible equity to tangible assets. Tangible book value per share adjusts the numerator by the amount of Goodwill and Other Intangible Assets (reduction of Shareholders' Equity). Return on average tangible equity adjusts the denominator by the amount of Goodwill and Other Intangible Assets (reduction of Shareholders’ Equity). Tangible equity to tangible assets adjusts the numerator by the amount of Goodwill and Other Intangible Assets (reduction of Shareholders’ Equity) and adjust the denominator by the amount of Goodwill and Other Intangible Assets (reduction of Total Assets). Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of non-GAAP measures provides additional clarity when assessing our financial results and use of equity. Disclosures of this type should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities.  Disclosures 
 

 About:DNB Financial Corporation  4 
 

 DNB Financial Corporation Profile*  5  NASDAQ Ticker: DNBFMarket Cap: $145 million**Total Assets: $1.1 billionTotal Loans: $885.3 millionTotal Deposits: $934.1 millionTotal Equity: $105.3 million  Founded: 1860, oldest National Bank in Philadelphia regionHeadquarters: Downingtown, Chester County, PABranch Offices: 15 *Financial data as of June 30, 2018**As of July 31, 2018 
 

 Investment Thesis  Affluent southeastern Pennsylvania marketsHeadquartered in fast-growing Chester County with ability to grow organically and via acquisitionEnviable deposit franchiseCore deposits are 78% and noninterest-bearing deposits are 19% of total customer depositsConservative operating and risk cultureExperienced management with 12% ownership stakeStrong asset qualityNPAs comprise only 1.05% of total assets Exceeds all regulatory guidelinesSupports flexibility to grow and diversify businessesCompelling valuationDiscount to peers based on price-to-tangible book value  6 
 

 STRATEGIC OBJECTIVES  Emphasize long-term shareholder value through consistent earnings growth with superior credit qualityGain market share and continue to attract stable core depositsGenerate prudent commercial loan growth Grow and diversify fee-based businessesPursue selective bank & non-bank M&A opportunities in southeastern PA and contiguous areasProvide superior customer experience through state-of-the-art digital platform including branch, web and mobile delivery systemsAttract, engage and retain great talent  7 
 

 East River Bank Acquisition  8  In-market acquisition supports strategic growth in greater Philadelphia areaCompletion date: October 1, 2016Transaction Value: $43.3 millionConsideration: 85% stock and 15% cashPer Share Multiples:Price / East River Tangible Book: 155%Price /East River Earnings per Share: 21.2X East River: Total assets were $311 millionEast River’s three branch network complemented DNB’s Philadelphia presence  
 

 DELIVERING value FOR OUR SHAREHOLDERS   9  As of July 24, 2018Source: S&P Global Market Intelligence  October 1, 2016:Closing of East River Bank acquisition 
 

 Established SOUTHEASTERN PA Footprint  10  Significant opportunities in many of Pennsylvania’s most attractive suburban marketsLargest commercial bank headquartered in fast-growing Chester CountyBanking offices located in Chester, Delaware and Philadelphia counties            As of June 30, 2017              County  Bank & Thrift Branches  DNB Branches  Bank & Thrift Deposits ($000)  DNB Deposits In Market($000)  Median HH Income ($, 2018)  Total Population (2018)  Population Change (%, 2010 vs. 2018)  Chester, PA  164  10  14,235,689  643,421  97,843  519,514  4.13  Delaware, PA  165  2  14,124,846  60,708  74,951  564,233  0.94  Philadelphia, PA  288  3  50,113,866  190,030  45,267  1,574,685  3.19  Source: S&P Global Market Intelligence 
 

 Chester County Dynamics  11  Pennsylvania’s seventh most populous countyTotal residents of approximately 520,000Projected 1.9% annual population growth rate 2018-2022Median household income of $97,843 with projected 10.3% annual growth rate 2018-2022Median household income for Pennsylvania of $60,400Diverse economy near several large metropolitan areasTop employers include Chester County Government, Chester County Hospital, The Devereaux Foundation, Federal Government, Giant Food Stores, Main Line Hospitals, PA State System of Higher Education, QVC Network, United Parcel Service and Vanguard Group 
 

 Delaware & Philadelphia Counties Dynamics  Delaware is Pennsylvania’s sixth most populous countyTotal Delaware County residents of 564,000Median Delco household income of $74,951 with projected 14.0% annual growth rate 2018-2022Median household income for Pennsylvania of $60,400Diverse Delco economy near several large metro areasTop Delco employers include AmeriHealth Mercy Systems, Boeing, Delaware County, Prospect CCMC, SAP of America, United Parcel Service, Villanova University and WawaPhiladelphia is Pennsylvania’s most populous countyTotal residents of 1.6 millionSixth largest metropolitan area in the United StatesMedian household income of $45,267  12 
 

 Financial Highlights  13 
 

 selected financial Data  14    At or For the Six Months Ended June 30                At or For the Year Ended December 31                        (Dollars in thousands)  2018         2017         2017      2016*      2015      2014                                                RESULTS OF OPERATIONS                                                               Net interest income  $   18,095         $   18,511         $   37,665      $   25,855      $   21,766      $   21,285      Provision for credit losses     750            910            1,660         730         1,105         1,130      Non-interest income     2,605            2,728            5,418         6,364         5,009         4,958      Non-interest expense     14,270            13,829            28,021         24,641         19,029         18,632      Income before income taxes     5,680            6,500            13,402         6,848         6,641         6,481      Income tax expense     1,018            1,773            5,456         1,869         1,503         1,677      Net income  $  4,662         $  4,727         $  7,946      $  4,979      $  5,138      $  4,804      Preferred stock dividends & accretion of discount     -            -            -         -         50         135      Net income available to common stockholders  $  4,662         $  4,727         $  7,946      $  4,979      $  5,088      $  4,669                                                FINANCIAL CONDITION                                          Total assets  $   1,133,609       $   1,081,460       $   1,081,915     $   1,070,685     $  748,818     $  723,330     Total liabilities     1,028,276         982,055         979,973        975,845       693,330       659,422     Total stockholders' equity    105,333         99,405         101,942       94,840       55,488       63,908     Loans, gross    885,320         816,525         845,897       817,529       481,758       455,603     Allowance for credit losses    6,188         5,267         5,843       5,373       4,935       4,906     Investment securities    165,574         177,149         174,173       182,206       220,208       231,656     Goodwill    15,525         15,525         15,525       15,590       -       -     Intangible assets    388         485         435       537       66       82     Deposits    934,115         893,059         861,203       885,187       606,275       605,083     Borrowings    87,946         84,991         112,803       86,668       81,909       49,005     *East River Bank acquisition closed on October 1, 2016. 
 

 Second Quarter 2018 HIghlights  15  Net income of $2.0 million, or $0.47 per shareROA and ROTCE of 0.74% and 9.2%Total loans increased 4.7% year-to-dateCommercial loans: 82% of total loansCore deposits grew 6.9% year-to-dateLoan-to-deposit ratio: 95%NCO ratio only .15% (annualized) Non-performing loans/total loans: 0.76%Wealth management fees grew 8.7% year-to-dateWealth management fees: 38% of total fee incomePaid cash dividend of $0.07  
 

 DEPOSIT MIX  16  *Includes brokered deposits  Core deposits are 78% of total deposits as of June 30, 2018 
 

 Loan MIX  17  Construction Concentration: Construction & Land Development to Total Risk-Based Capital was 69% at June 30, 2018 Total CRE Concentration: Total CRE (NOO) plus Construction & Land Development to Total Risk-Based Capital was 282% at June 30, 2018 
 

 Generating attractive returns  18     *2016 includes the one-time impact of acquiring East River Bank. 2017 includes the one-time impact of the Tax Cuts and Jobs Act.  
 

 PERFORMANCE RATIOS  19 
 

 Conservative credit culture   20  *As of or for the six months ended June 30, 2018 
 

 Conservative credit culture   21  *As of or for the six months ended June 30, 2018 
 

 STRONG CAPITAL POSITION  22  Ratios at 6-30-18  DNBF  Current Minimum Capital Required-Basel III Phase -In   Minimum Capital Required-Basel III Fully Phased -In (Jan. 2019)   Common equity tier 1 to risk-weighted assets  10.69%  6.375%  7.00%  Tier 1 capital to risk-weighted assets  11.72%  7.875%  8.50%  Total capital to risk-weighted assets  13.59%  9.875%  10.50%  Tier 1 leverage to average assets  9.35%  4.00%  4.00%  Tangible equity to Tangible assets (Non-GAAP)  8.00%  N/A  N/A 
 

 EARNINGS & PER SHARE DATA  23  *2016 includes the one-time impact of acquiring East River Bank. 2017 includes the one-time impact of the Tax Cuts and Jobs Act. **For the six months ended June 30 
 

 EARNINGS & PER SHARE DATA  24  *2016 includes the one-time impact of acquiring East River Bank. 2017 includes the one-time impact of the Tax Cuts and Jobs Act. **For the six months ended June 30 
 

 BUILDING CAPITAL FOR SHAREHOLDERS  25  *2016 includes the one-time impact of acquiring East River Bank. 2017 includes the one-time impact of the Tax Cuts and Jobs Act. **For the six months ended June 30 
 

 appendix  26 
 

 experienced MANAGEMENT Team  27  Executive  Title  Years at DNB  Selected Experience  William J. Hieb  President, Chief Executive Officer  15  CoreStates Bank,Wachovia  Gerald F. Sopp  Executive Vice President, Chief Financial Officer & Corporate Secretary  11  Wilmington Trust Corp.,The Clarks Companies, N.A.  Linda M. Devine  Senior Vice President, Director of Human Resources  9  Willow Financial Bank  James F. Gagliano  Senior Vice President, Director of Retail Banking  5  Wells Fargo Bank, Sovereign/Santander Bank  C. Tomlinson Kline III  Senior Vice President, Chief Commercial Lending Officer  14  First National Bank of Chester County, First Union Bank  Jonathan T. McGrain  Senior Vice President, Director of Sales & Marketing  3  Radian Group, Citibank  Frank S. Monterosso  Senior Vice President,Managing Director Operations  10  First Data Corporation, First Pennsylvania Bank  Bruce E. Moroney  Executive Vice President, Chief Accounting Officer  26  Brandywine Savings Bank  Joseph C. Spada  Senior Vice President, Chief Risk Officer  4  Blue Ball Bank, Bank of Baltimore  Richard C. Weber  Senior Vice President, Managing Director of DNB First Wealth Management  8  Fifth Third Bank, National City Bank 
 

 Peer Analysis*  28        Total   Price/  Price/  Name  Ticker  Assets  LTM Earn  TBV        ($000s)  (x)  (%)  ACNB Corporation  ACNB  1,623,342  16.3  180  CB Financial Services  CBFV  1,231,660  23.8  173  Citizens & Northern Corp  CZNC  1,284,007  19.9  188  Citizens Financial Services  CZFS  1,397,594  14.7  207  Codorus Valley Bancorp  CVLY  1,779,132  18.7  171                 Embassy Bancorp  EMYB  1,020,781  16.4  158  Evans Bancorp  EVBN  1,346,091  19.4  196  First Keystone Corp  FKYS  1,010,597  17.3  161  Mid Penn Bancorp  MPB  1,415,647  25.8  177  Orrstown Financial Services  ORRF  1,644,118  20.9  153                 Parke Bancorp, Inc.  PKBK  1,289,635  15.5  169  Penns Woods Bancorp  PWOD  1,603,273  20.1  177  Peoples Financial Services  PFIS  2,235,626  17.2  168  QNB Corp.  QNBC  1,172,874  18.3  165  Two River Bancorp  TRCB  1,055,527  20.4  171                 Median    1,346,091  18.7  171  Average    1,407,327  19.0  174             DNB Financial Corporation  DNBF  1,133,609  18.4  162            *Pricing data as of July 31, 2018. Financial data as or for the 12 months ended June 30, 2018. 
 

 DIGITAL Driven PLATFORM  29  Digital Offerings:Online BankingBill PayPop Money P2PCash ManagementAccount AggregationFunds TransfereStatementMobile Banking AppMobile Deposit  Home Loan CenterOnline mortgage and home equity applicationRemote Check Deposit 
 
 
 

 Non-Gaap reconciliation   30  Reconciliation of Tangible Book Value Per Common Share to Book Value Per Common Share                                (In thousands, except share and per share data)  2014       2015       2016       2017       2018 Q2 YTD       Stockholders' Equity  $  63,908     $  55,488     $   94,840     $   101,942     $  105,333     Goodwill     -        -       15,590       15,525       15,525     Preferred Stock    13,000       -       -       -       -     Other intangible assets     168         196         537         435         388      Tangible common equity (Non-GAAP)  $  50,740     $  55,292     $   78,713     $   85,982     $  89,420                                     Outstanding shares    2,778,724       2,823,840       4,240,778       4,286,117       4,301,898                                     Book value per common share (GAAP)  $  18.33     $  19.65     $   22.36     $   23.78     $  24.49     Tangible book value per common share (Non-GAAP)     18.26         19.58         18.56         20.06         20.79                                      Return on Average Tangible Equity                                (Dollars in thousands)  2014       2015       2016       2017       2018 Q2 YTD       Average Stockholders' Equity  $  61,763     $  58,913     $   67,100     $   100,212     $  104,434     Average goodwill    -       -       15,590       15,540       15,525     Average other intangible assets     82         72         537         485         388      Average tangible stockholders' equity (Non-GAAP)  $  61,681     $  58,841      $   50,973      $   84,187     $  88,521                                     Net Income  $  4,804     $  5,138     $   4,979     $   7,946     $  4,662                                     Return on average stockholders' equity (GAAP)    7.78   %    8.72   %    7.40   %    7.93   %    9.00   %  Return on average tangible equity (Non-GAAP)     7.79         8.73         9.74         9.44         10.62     
 

 Non-Gaap reconciliation   31  Reconciliation of Tangible Book Value Per Common Share to Book Value Per Common Share                                (In thousands, except share and per share data)  2014       2015       2016       2017       2018 Q2 YTD       Stockholders' Equity  $  63,908     $  55,488     $   94,840     $   101,942     $  105,333     Goodwill    -       -       15,590       15,525       15,525     Other intangible assets     82         66         537         435         388      Tangible common equity (Non-GAAP)  $  63,826     $  55,422     $   78,713     $   85,982     $  89,420                                     Assets    723,330       748,818       1,070,685       1,081,915       1,133,609     Goodwill    -       -       15,590       15,525       15,525     Other intangible assets     82         66         537         435         388      Tangible assets (Non-GAAP)    723,248       748,752       1,054,558       1,065,955       1,117,696                                     Total equity/Total assets (GAAP)    8.84   %    7.41   %    8.86   %    9.42   %    9.29   %  Tangible equity/Tangible assets (Non-GAAP)     8.82         7.40         7.46         8.07         8.00                                     
 

 
 INVESTOR RELATIONS CONTACT  32  Gerald F. Sopp, EVP and CFO484.359.3138gsopp@dnbfirst.comhttp://investors.dnbfirst.com/  For more information, Investors may contact: 
 

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