content: SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C. 20549
                                      FORM 10-Q
  
                                     (MARK ONE)
  
       [X]  Quarterly  report  pursuant  to Section 13 or 15(d) of the  Securities
            Exchange  Act of 1934.
                    FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 1999
                                         or
       [ ]  Transition report pursuant to Section 13 or 15(d) of the Securities
            Exchange Act of 1934.
  
  For the transition period from ________________ to _____________
  
                           COMMISSION FILE NUMBER: 0-16667
  
                              DNB FINANCIAL CORPORATION
               (Exact name of registrant as specified in its charter)
  
            PENNSYLVANIA                                   23-2222567
  (State or other jurisdiction of             (I.R.S. Employer Identification No.)
   incorporation or organization)
  
                     4 BRANDYWINE AVENUE - DOWNINGTOWN, PA 19335
                (Address of principal executive offices and Zip Code)
  
                                   (610) 269-1040
                (Registrant's telephone number, including area code)
  
                                   NOT APPLICABLE
  (Former  name,  former  address and former fiscal year, if changed since last
  report)
  
       Indicate  by check mark  whether the  registrant  (1) has filed all reports
  required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
  1934  during  the  preceding  12 months  (or for such  shorter  period  that the
  registrant  was required to file such  reports) and (2) has been subject to such
  filing requirements for the past 90 days.
  
                             [X] Yes                   [    ] No
  
       Indicate the number of shares  outstanding of each of the issuer's  classes
  of common stock, as of the latest practicable date.
  
       COMMON STOCK ($1.00 PAR VALUE)                            1,524,229
                  (Class)                                (Shares Outstanding as of
                                                              August 13, 1999)
  ___________________________________________________________________________
  
  
  
  
  <PAGE>
  
  
                      DNB FINANCIAL CORPORATION AND SUBSIDIARY
  
                                        INDEX
  
  PART  I - FINANCIAL INFORMATION                                         PAGE NO.
  
       ITEM 1.   FINANCIAL STATEMENTS:
  
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                 June 30, 1999 and December 31, 1998                             3
  
                 CONSOLIDATED STATEMENTS OF OPERATIONS
                 Three Months Ended June 30, 1999 and 1998                       4
  
                 CONSOLIDATED STATEMENTS OF OPERATIONS
                 Six Months Ended June 30, 1999 and 1998                         5
  
                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                 Six Months Ended June 30, 1999 and 1998                         6
  
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 June 30, 1999 and December 31, 1998                             7
  
       ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS                   9
  
  PART II - OTHER INFORMATION
  
       ITEM 1.    LEGAL PROCEEDINGS                                             18
  
       ITEM 2.    CHANGE IN SECURITIES                                          18
  
       ITEM 3.    DEFAULTS UPON SENIOR SECURITIES                               18
  
       ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF                            18
                  SECURITY HOLDERS
  
       ITEM 5.    OTHER INFORMATION                                             18
  
       ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K                              18
  
  SIGNATURES                                                                    19
  
  
  
  <PAGE>
  
  
  <TABLE>
  <CAPTION>
  
  
  ------------------------------------------------------------------------------------------------------------------------
  CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
  ------------------------------------------------------------------------------------------------------------------------
                                                                                                June 30,      December 31,
                                                                                                  1999             1998
                                                                                           -------------     -------------
  <S>                                                                                             <C>              <C>
  ASSETS
  Cash and due from banks ..............................................................   $   8,813,695    $  13,660,149
  Federal funds sold ...................................................................       9,140,000        6,171,000
  Total cash and cash equivalents ......................................................      17,953,695       19,831,149
  Investment securities available for sale, at market value ............................      50,690,716       45,519,420
  Investment securities (market value $47,963,222
     in 1999 and $47,528,269 in 1998) ..................................................      48,195,186       47,380,404
  Loans, net of unearned income ........................................................     165,877,914      148,725,716
  Allowance for loan losses ............................................................      (5,233,027)      (5,204,869)
                                                                                           -------------    -------------
  Net loans ............................................................................     160,644,887      143,520,847
                                                                                           -------------    -------------
  Office property and equipment, net ...................................................       4,819,696        4,558,811
  Accrued interest receivable ..........................................................       1,792,744        1,670,123
  Other real estate owned ..............................................................         555,026          138,775
  Deferred income taxes ................................................................       1,487,636        1,037,415
  Other assets.........................................................................       2,462,907        1,761,487
                                                                                           -------------    -------------
  Total assets .........................................................................   $ 288,602,493    $ 265,418,431
                                                                                           =============    =============
  
  LIABILITIES AND STOCKHOLDERS' EQUITY
  Liabilities
  Non-interest-bearing deposits ........................................................   $  34,756,626    $  30,001,051
  Interest-bearing deposits:
     NOW accounts ......................................................................      39,356,597       37,074,977
     Money market ......................................................................      42,309,068       32,582,044
     Savings ...........................................................................      31,952,221       28,321,246
     Time ..............................................................................      99,379,968       97,394,014
                                                                                           -------------    -------------
  Total deposits .......................................................................     247,754,480      225,373,332
                                                                                           -------------    -------------
  Federal Home Loan Bank advances ......................................................      18,000,000       18,000,000
  Accrued interest payable .............................................................         845,390          902,009
  Other liabilities ....................................................................       1,373,348          536,872
                                                                                           -------------    -------------
  Total liabilities ....................................................................     267,973,218      244,812,213
                                                                                           -------------    -------------
  
  STOCKHOLDERS' EQUITY
  Preferred stock, $10.00 par value;
     1,000,000 shares authorized; none issued ..........................................              --               --
  Common stock, $1.00 par value;
     10,000,000 shares authorized; 1,524,229 and
     1,524,229 issued and outstanding, respectively ....................................       1,524,229        1,524,229
  Surplus ..............................................................................      17,104,817       17,104,817
  Retained earnings ....................................................................       2,902,979        1,924,803
  Accumulated other comprehensive (loss) income ........................................        (902,750)          52,369
                                                                                           -------------    -------------
  Total stockholders' equity ...........................................................      20,629,275       20,606,218
                                                                                           -------------    -------------
  Total liabilities and stockholders' equity ...........................................   $ 288,602,493    $ 265,418,431
                                                                                           =============    =============
  
  See accompanying notes to consolidated financial statements.
  
  </TABLE>
  <PAGE>
  <TABLE>
  <CAPTION>
  --------------------------------------------------------------------------------
  CONSOLIDATED STATEMENTS OF OPERATIONS
  --------------------------------------------------------------------------------
  
                                                        Three Months Ended June 30
                                                        --------------------------
                                                              1999         1998
  <S>                                                         <C>          <C>
  INTEREST INCOME:
  Interest and fees on loans ........................      $3,525,100   $2,959,749
  Interest on taxable investment securities .........       1,434,439    1,104,925
  Interest on tax-free investment securities ........         113,836           --
  Interest on Federal funds sold ....................          56,683      245,895
                                                           ----------   ----------
  Total interest income .............................       5,130,058    4,310,569
                                                           ----------   ----------
  INTEREST EXPENSE:
  Interest on time deposits .........................       1,310,128    1,268,721
  Interest on NOW, money market and savings .........         808,589      615,664
  Interest on FHLB advance ..........................         231,005       64,323
                                                           ----------   ----------
  Total interest expense ............................       2,349,722    1,948,708
                                                           ----------   ----------
  Net interest income ...............................       2,780,336    2,361,861
  Provision for loan losses .........................              --           --
                                                           ----------   ----------
  Net interest income after provision for loan losses       2,780,336    2,361,861
                                                           ----------   ----------
  
  NON-INTEREST INCOME:
  Service charges ...................................         158,783      149,119
  Trust income ......................................         137,545       99,632
  Other .............................................          94,758      147,765
                                                           ----------   ----------
  Total non-interest income .........................         391,086      396,516
                                                           ----------   ----------
  NON-INTEREST EXPENSE:
  Salaries and employee benefits ....................       1,075,561      979,408
  Furniture and equipment ..........................          222,475      159,452
  Occupancy .........................................         166,333      112,233
  Advertising and marketing .........................         134,215       75,890
  Professional and consulting .......................         101,647       65,334
  Printing and supplies .............................          71,378       36,023
  Other .............................................         300,502      299,870
                                                           ----------   ----------
  Total non-interest expense ........................       2,072,111    1,728,210
                                                           ----------   ----------
  Income before income taxes ........................       1,099,311    1,030,167
  Income tax expense ................................         352,000      285,000
                                                           ----------   ----------
  
  NET INCOME ........................................      $  747,311   $  745,167
                                                           ==========   ==========
  
  EARNINGS PER SHARE:
     Basic ..........................................       $    0.49    $    0.49
     Diluted ........................................            0.47         0.47
  WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
     Basic ..........................................       1,524,229    1,523,942
     Diluted ........................................       1,574,589    1,580,269
  CASH DIVIDENDS PER SHARE ..........................       $    0.13    $    0.12
  
  See accompanying notes to consolidated financial statements
  </TABLE>
  <PAGE>
  <TABLE>
  <CAPTION>
  --------------------------------------------------------------------------------
  CONSOLIDATED STATEMENTS OF OPERATIONS
  --------------------------------------------------------------------------------
                                                         Six Months Ended June 30
                                                           1999            1998
  <S>                                                      <C>             <C>
  INTEREST INCOME:
  Interest and fees on loans ......................... $6,649,831      $5,822,742
  Interest on taxable investment securities ...........  2,858,405       2,224,618
  Interest on tax-free investment securities ..........    217,893           --
  Interest on Federal funds sold ......................    101,105         426,876
  Total interest income ...............................  9,827,234       8,474,236
  INTEREST EXPENSE:
  Interest on time deposits ...........................  2,609,256       2,518,878
  Interest on NOW, money market and savings ...........  1,500,544       1,173,498
  Interest on repurchase agreements ...................         --             673
  
  Interest on FHLB advances ...........................    459,471         102,493
  Total interest expense ..............................  4,569,271       3,795,542
  Net interest income .................................  5,257,963       4,678,694
  Provision for loan losses ...........................         --              --
  Net interest income after provision for loan losses .  5,257,963       4,678,694
  
  NON-INTEREST INCOME:
  Service charges .....................................    288,382         282,414
  Trust income ........................................    219,886         233,561
  Other ..............................................     249,730         218,835
  Total non-interest income .........................      757,998         734,810
  NON-INTEREST EXPENSE:
  Salaries and employee benefits ......................  2,099,142       2,057,687
  Furniture and equipment .............................    438,124         308,426
  Occupancy ..........................................    285,426         212,346
  Advertising and marketing ...........................    222,575         120,788
  Professional and consulting .........................    197,497         134,314
  Printing and supplies ...............................    135,209          93,486
  Other ...............................................    620,512         555,284
  Total non-interest expense ..........................  3,998,485       3,482,331
  Income before income taxes ..........................  2,017,476       1,931,173
  Income tax expense ..................................    643,000         535,000
  
  NET INCOME .......................................... $1,374,476      $1,396,173
  
  COMMON SHARE DATA:
       Basic .......................................... $     0.90      $     0.92
       Diluted ........................................       0.87            0.88
  WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
       Basic ..........................................  1,524,229       1,523,942
       Diluted .......................................  1,574,657       1,578,252
  Cash dividends per share ............................ $     0.26      $     0.24
  
  See accompanying notes to consolidated financial statements.
  </TABLE>
  <PAGE>
  <TABLE>
  <CAPTION>
  --------------------------------------------------------------------------------
  Consolidated Statements of Cash Flows
  --------------------------------------------------------------------------------
                                                                  Six Months Ended June 30
                                                                     1999            1998
  <S>                                                                <C>             <C>
  
  CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income .............................................      $  1,374,476    $  1,396,173
  Adjustments to reconcile net income to net cash provided
     by operating activities:
  Depreciation and amortization ..........................           380,157         459,452
  Gain on sale of investments ...........................                --            (507)
  Gain on sale of OREO ...................................           (45,811)        (64,349)
  (Increase) decrease in accrued interest receivable .....          (122,621)         48,135
  Increase in other assets ...............................          (701,420)       (174,590)
  Decrease in accrued interest payable ...................           (56,619)       (154,717)
  Decrease in current taxes payable ......................            (8,357)        (40,000)
  Increase (decrease) in other liabilities ...............           844,833        (393,944)
  Net Cash Provided By Operating Activities ..............         1,664,638       1,075,653
  
  
  CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from maturities & paydowns of AFS securities ..         1,977,117       5,667,092
  Proceeds from maturities & paydowns of HTM securities ..         3,199,954      15,886,596
  Purchase of AFS securities .............................        (8,578,690)     (7,456,407)
  Purchase of HTM securities .............................        (4,078,644)    (17,355,833)
  Proceeds from sale of AFS securities ...................                --         997,656
  Net increase in loans ..................................       (17,595,707)     (6,687,367)
  Proceeds from sale of OREO .............................           101,227         293,556
  Purchase of office property and equipment ..............          (552,197)       (159,725)
  Net Cash Used By Investing Activities ..................       (25,526,940)     (8,814,432)
  
  CASH FLOWS FROM FINANCING ACTIVITIES:
  Net increase in deposits ...............................        22,381,148       6,772,959
  Increase in FHLB advances ..............................                --       5,000,000
  Proceeds from exercise of stock options ................                --           2,949
  Dividends paid .........................................          (396,300)       (348,435)
  Net Cash Provided By Financing Activities ..............        21,984,848      11,427,473
  Net Change in Cash and Cash Equivalents ................        (1,877,454)      3,688,694
  Cash and Cash Equivalents at Beginning of Period .......        19,831,149      23,392,007
  CASH AND CASH EQUIVALENTS AT END OF PERIOD .............      $ 17,953,695    $ 27,080,701
  
  SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during the period for:
  Interest ...............................................      $  4,625,890    $  3,950,259
  Taxes ..................................................           650,000         575,000
  
  SUPPLEMENTAL DISCLOSURE OF NON-CASH FLOW INFORMATION:
  Transfer of loans to OREO ..............................      $    471,667    $    240,404
  
  See accompanying notes to consolidated financial statements.
  
  </TABLE>
  <PAGE>
  
                      DNB FINANCIAL CORPORATION AND SUBSIDIARY
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
  NOTE 1:   BASIS OF PRESENTATION AND RESTATEMENT
  
       The  accompanying   unaudited  consolidated  financial  statements  of  DNB
  Financial Corporation (referred to herein as the "Corporation" or "DNB") and its
  subsidiary,  Downingtown  National  Bank (the  "Bank"),  have been  prepared  in
  accordance  with the  instructions  for Form 10-Q and  therefore  do not include
  certain  information or footnotes  necessary for the  presentation  of financial
  condition,  statement of  operations  and  statement  of cash flows  required by
  generally accepted accounting principles. However, in the opinion of management,
  the consolidated  financial statements reflect all adjustments (which consist of
  normal recurring  adjustments)  necessary for a fair presentation of the results
  for the  unaudited  periods.  Prior period  amounts not affecting net income are
  reclassified  when necessary to conform with current year  classifications.  The
  results of operations for the six months ended June 30, 1999 are not necessarily
  indicative  of the  results  which may be  expected  for the  entire  year.  The
  consolidated  financial statements should be read in conjunction with the Annual
  Report and report on Form 10-K for the year ended December 31, 1998.
  
  NOTE 2: EARNINGS PER SHARE (EPS)
  
       Basic earnings per share is computed  based on the weighted  average number
  of common  shares  outstanding  during the period.  Diluted  earnings  per share
  reflect the potential  dilution  that could occur from the  conversion of common
  stock equivalents and is computed using the treasury stock method.  Earnings per
  share,  dividends per share and weighted  average shares  outstanding  have been
  adjusted to reflect the effects of the 5% stock  dividend paid in December 1998.
  Net income  and  weighted  average  number of shares  outstanding  for basic and
  diluted  EPS for the  three  and six  months  ended  June 30,  1999 and 1998 are
  reconciled as follows:
  <TABLE>
  <CAPTION>
  
                                                            Three months ended                  Three months ended
                                                             June 30, 1999                        June 30, 1998
                                                   -------------------------------    --------------------------------
                                                      Income     Shares     Amount      Income       Shares     Amount
                                                   ----------   ---------   ------    ---------      ---------  ------
  <S>                                                  <C>        <C>         <C>        <C>         <C>        <C>
  BASIC EPS:
  Income available to common stockholders ....      $ 747,311   1,524,229   $ 0.49     $ 745,16     1,523,942   $ 0.49
  Effect of dilutive common stock equivalents-
       stock options .........................             --      50,360     0.02           --        56,327     0.02
                                                   ----------   ---------   ------    ---------     ---------   ------
  DILUTED EPS: ...............................      $ 747,311   1,574,589    $0.47    $ 745,167     1,580,269   $ 0.47
                                                   ==========   =========   ======    =========     =========   ======
  </TABLE>
  
  <TABLE>
  <CAPTION>
  
                                                            Six months ended                Six months ended
                                                             June 30, 1999                      June 30, 1998
                                                   -------------------------------    --------------------------------
                                                      Income     Shares     Amount      Income       Shares     Amount
                                                   ----------   ---------   ------    ----------    ---------   ------
  <S>                                                  <C>         <C>       <C>          <C>         <C>        <C>
  BASIC EPS:
  Income available to common stockholders ....     $1,374,476   1,524,229   $ 0.90    $1,396,173    1,523,942   $ 0.92
  Effect of dilutive common stock equivalents-
        stock options ........................             --      50,428     0.03            --       54,310     0.04
                                                   ----------   ---------   ------    ----------    ---------   ------
  DILUTED EPS:...............................     $1,374,476   1,574,657   $ 0.87    $1,396,173    1,578,252   $ 0.88
                                                   ==========   =========   ======    ==========    =========   ======
  </TABLE>
  <PAGE>
  
  
  NOTE 3:   COMPREHENSIVE INCOME
  
       Comprehensive  income includes all changes in  stockholders'  equity during
  the period,  except those resulting from investments by owners and distributions
  to owners.  Comprehensive  income for all  periods  consisted  of net income and
  other comprehensive  (loss) income relating to the change in unrealized (losses)
  gains on  investment  securities  available  for sale, as shown in the following
  tables:
  <TABLE>
  <CAPTION>
  
                                                 For three months ended June 30        For six months ended June 30
                                                 ------------------------------        ----------------------------
                                                        1999            1998                1999            1998
                                                        ----            ----                ----            ----
  <S>                                                    <C>             <C>                 <C>             <C>
  COMPREHENSIVE INCOME:
  Net Income ...................................   $   747,311    $   745,167           $ 1,374,476    $ 1,396,173
  Other comprehensive (loss) income, net of tax,
    relating to unrealized losses on investments      (593,003)        10,530              (955,119)        (6,864)
                                                   -----------    -----------           -----------    -----------
  Total comprehensive (loss) income ............   $   154,308    $   755,697           $   419,357    $ 1,389,309
                                                   ===========    ===========           ===========    ===========
  </TABLE>
  
  NOTE 4:   RECENT ACCOUNTING PRONOUNCEMENTS
  
       In June 1998,  the FASB  issued  SFAS No. 133,  Accounting  for  Derivative
  Instruments  and Hedging  Activities  ("SFAS No.  133")  which was  subsequently
  amended in June, 1999. This statement standardizes the accounting for derivative
  instruments,   including  certain  derivative   instruments  embedded  in  other
  contracts,  and those used for hedging  activities,  by requiring that an entity
  recognize  those items as assets or  liabilities  in the  statement of financial
  position and measure  them at fair value.  SFAS No. 133  generally  provides for
  matching  of  gain  or loss  recognition  on the  hedging  instrument  with  the
  recognition  of the changes in the fair value of the hedges  asset or  liability
  that are  attributable  to the hedged risk,  so long as the hedge is  effective.
  Prospective  application  of SFAS  No.  133 is  required  for all  fiscal  years
  beginning after June 15, 2000, however earlier application is permitted. DNB has
  not yet  determined  the  impact,  if  any,  of this  statement,  including  its
  provisions  for the potential  reclassifications  of investment  securities,  on
  operations,  financial condition and equity and comprehensive  income.  However,
  DNB  currently  has no  derivatives  covered  by this  statement  and  currently
  conducts no hedging activities.
  <PAGE>
  
  
                      DNB FINANCIAL CORPORATION AND SUBSIDIARY
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                              AND RESULTS OF OPERATIONS
  
  FINANCIAL CONDITION
  
       DNB's total assets were $288.6  million at June 30, 1999 compared to $265.4
  million at December 31, 1998. Total loans were $165.9 million,  up $17.2 million
  or 12% from $148.7  million at December 31,  1998.  Significant  increases  were
  noted in the real estate loan portfolio  which  increased  $12.1 million or 15%.
  Investment  securities  (AFS  and HTM)  increased  $6.0  million  or 6% to $98.9
  million at June 30, 1999. Federal funds sold were $9.1 million at June 30, 1999,
  up $3.0 million from  December.  A significant  portion of these  increases were
  funded from deposits at our two new branches. Other assets increased $701,000 or
  40% to $2.5  million  at June  30,  1999 as a  result  of the  intangible  asset
  recognized on the Kennett Square branch purchase.
  
       Deposits  and other  borrowings  at June 30, 1999 totaled  $265.8  million,
  compared to $243.4  million at December 31, 1998.  Since December 31, 1998 there
  have been  increases of $9.7 million in money market  accounts,  $4.8 million in
  non-interest bearing accounts, $3.6 million in savings deposits, $2.3 million in
  NOW  accounts,  and $2.0  million  in time  deposits,  with $9.1  million of the
  overall  deposit  increase coming from the Kennett Square branch purchase at the
  end of the first  quarter.  Borrowings  were  $18.0  million  at June 30,  1999,
  unchanged from December.
  
       At June 30,  1999,  stockholders'  equity  was $20.6  million or $13.53 per
  share,  compared to $20.6 million or $13.52 per share at December 31, 1998.  The
  increase in  stockholders'  equity was the result of net income of $1.4  million
  for  the  six  months  ended  June  30,  1999,   offset  by  dividends  paid  of
  approximately  $396,000 or $.26 per share and the change in fair  market  value,
  net of taxes, of available-for-sale securities of $955,000.
  
  RESULTS OF OPERATIONS
  
  NET INTEREST INCOME
  
       DNB's  earnings  performance  is primarily  dependent upon its level of net
  interest income,  which is the excess of interest revenue over interest expense.
  Interest  revenue  includes  interest  earned on loans,  investments and Federal
  funds sold and interest-earning  cash, as well as loan fees and dividend income.
  Interest expense  includes  interest cost for deposits,  repurchase  agreements,
  Federal funds purchased, Federal Home Loan Bank advances and other borrowings.
  
       Net interest income increased $418,000 or 18% to $2.8 million for the three
  month  period and $579,000 or 12% to $5.3 million for the six month period ended
  June 30, 1999.  As shown in the following  tables,  the increase in net interest
  income  for the three and six month  periods  ended  June 30,  1999 was  largely
  attributable to the positive  effects of volume change,  partially offset by the
  negative effects of rate changes. The positive impact from volume changes during
  the three and six month periods was  attributable  to  significant  increases in
  interest-earning  assets,  which  increased  $44.3  million and $41.1 million on
  average for both  periods,  respectively.  The  negative  impact from changes in
  rates for both  periods  was  primarily  attributable  to loans and  investments
  rolling over at lower yields, reflecting the current interest rate environment.
  <PAGE>
  
       The following  tables set forth,  among other  things,  the extent to which
  changes  in   interest   rates  and   changes  in  the   average   balances   of
  interest-earning assets and interest-bearing  liabilities have affected interest
  income and expense  during the three and six months ended June 30, 1999 compared
  to the same  periods in 1998  (tax-exempt  yields  have been  adjusted  to a tax
  equivalent  basis using a 34% tax rate).  For each category of  interest-earning
  assets and interest-bearing liabilities, information is provided with respect to
  changes  attributable  to (i) changes in rate (change in rate  multiplied by old
  volume) and (ii) changes in volume  (change in volume  multiplied  by old rate).
  The net change  attributable  to the combined impact of rate and volume has been
  allocated  proportionately  to the  change  due to rate  and the  change  due to
  volume.
  <TABLE>
  <CAPTION>
  
                                               Three Months Ended June 30, 1999
                                                       Compared to 1998
                                               --------------------------------
                                                  Increase (Decrease) Due to
                                               --------------------------------
  (Dollars in Thousands) .................          Rate    Volume   Total
                                                    -----    -----    -----
  <S>                                                <C>      <C>      <C>
  Interest-earning assets:
  Loans ..................................         $ (24)   $ 589    $ 565
  Investment securities-taxable ..........           (31)     360      329
  Investment securities-tax exempt .......            --      147      147
  Federal funds sold .....................           (48)    (141)    (189)
                                                    -----    -----   -----
  Total ..................................          (103)     955      852
  
  
  Interest-bearing liabilities:
  Savings, NOW and money market deposits .            33      160      193
  Time deposits ..........................           (71)     112       41
  FHLB advances ..........................            --      167      167
                                                    -----    -----   -----
       Total .............................           (38)     439      401
                                                    -----    -----   -----
  NET INTEREST INCOME/INTEREST RATE SPREAD         $ (65)   $ 516    $ 451
                                                    =====    =====   =====
  </TABLE>
  
  <TABLE>
  <CAPTION>
  
                                             Six Months Ended June 30, 1999
                                                     Compared to 1998
                                             -------------------------------
                                               Increase (Decrease) Due to
                                             ------------------------------
  (Dollars in Thousands)                            Rate   Volume     Total
                                                    ----   ------     -----
  <S>                                                <C>     <C>       <C>
  Interest-earning assets:
  Loans .................................         $(166)   $ 993    $ 827
  Investment securities-taxable ..........           (62)     696      634
  Investment securities-tax exempt .......            --      282      282
  Federal funds sold .....................           (86)    (240)    (326)
                                                     ---     ----     ----
       Total .............................          (314)   1,731    1,417
  
  Interest-bearing liabilities:
  Savings, NOW and money market deposits .            52      276      328
  Time deposits ..........................          (120)     210       90
  Other borrowings .......................            --      356      356
                                                    ----     ----     ----
  Total ..................................           (68)     842      774
                                                    ----     ----     ----
  NET INTEREST INCOME/INTEREST RATE SPREAD       $  (246) $   889  $   643
                                                    ====     ====     ====
  
  </TABLE>
  <PAGE>
  
  PROVISION FOR LOAN LOSSES
  
       To provide for  potential  losses in the loan  portfolio,  DNB maintains an
  allowance for loan losses. To maintain an adequate allowance, management charges
  the provision for loan losses against income.  Loan losses are charged  directly
  against the allowance and recoveries on previously  charged-off  loans are added
  to the  allowance.  In  establishing  its allowance for loan losses,  management
  considers the size and risk exposure of each segment of the loan portfolio, past
  loss experience, present indicators of risk such as delinquency rates, levels of
  nonaccruals,  the potential  for losses in future  periods,  and other  relevant
  factors.  Management's  evaluation  of the  loan  portfolio  generally  includes
  reviews,  on a sample  basis,  of  individual  borrowers  regardless of size and
  reviews of problem borrowers of $100,000 or greater. Consideration is also given
  to examinations  performed by regulatory  agencies,  primarily the Office of the
  Comptroller of the Currency  ("OCC").  The provisions are based on  management's
  review of the economy,  interest rates, general market conditions,  estimates of
  the fair value of  collateral,  financial  strength and ability of the borrowers
  and guarantors to pay, and considerations  regarding the current and anticipated
  operating or sales environment.  These estimates are particularly susceptible to
  change  and  may  result  in a  material  adjustment  to  the  allowance.  While
  management uses the latest  information  available to make its evaluation of the
  adequacy of the  allowance,  future  adjustments  may be necessary if conditions
  differ substantially from the assumptions used in making the evaluations.
  
       There were no  provisions  made during the six months  ended June 30, 1999,
  since management  determined the allowance for loan losses was adequate based on
  its analysis and the level of net  charge-offs/recoveries  compared to the total
  allowance.  Net loan  recoveries  were $28,000 for the six months ended June 30,
  1999,  compared to net loan  charge-offs  of $76,000 for the year ended December
  31,  1998 and loan  charge-offs  of $161,000  for the six months  ended June 30,
  1998. The percentage of net  recoveries/(charge-offs) to total average loans was
   .0l%, (.03%) and .07% for the same periods, respectively. Another measure of the
  adequacy  of  the   allowance  is  the  coverage   ratio  of  the  allowance  to
  non-performing loans, which was 218% at June 30, 1999. In addition, the ratio of
  non-performing  loans to total loans has steadily  declined and was 1.4% at June
  30, 1999.
  
       The following table summarizes the changes in the allowance for loan losses
  for the periods indicated.  Real estate includes both residential and commercial
  real estate.
  <TABLE>
  <CAPTION>
  
                                 6 Months      Year    6 Months
                                   Ended       Ended     Ended
  (Dollars in Thousands)          6/30/99    12/31/98   6/30/98
                                  -------    --------   -------
  <S>                               <C>         <C>       <C>
  Beginning balance ..........   $ 5,205    $ 5,281    $ 5,281
  Provisions .................        --         --         --
  Loans charged off:
         Real estate .........        --        (59)       (59)
         Commercial ..........       (11)      (233)      (135)
         Consumer ............        --        (11)        (8)
                                 -------    -------    -------
             Total charged off       (11)      (303)      (202)
  Recoveries:
         Real estate .........        --        144         23
         Commercial ..........        35         71         13
         Consumer ............         4         12          5
                                 -------    -------    -------
             Total recoveries         39        227         41
                                 -------    -------    -------
  Net recoveries (charge-offs)        28        (76)      (161)
                                 -------    -------    -------
  Ending balance .............   $ 5,233    $ 5,205    $ 5,120
                                 =======    =======    =======
  </TABLE>
  <PAGE>
  
  NON-INTEREST INCOME
  
       Total  non-interest  income includes  service charges on deposit  products;
  fees received by DNB's Investment Services and Trust Division; and other sources
  of income  such as net gains on sales of  investment  securities  and other real
  estate  owned  ("OREO")  properties,  fees for cash  management  services,  safe
  deposit box rentals,  issuing travelers' checks and money orders, check cashing,
  lockbox services and similar activities.
  
       For the three and six  month  periods  ended  June 30,  1999,  non-interest
  income was  $391,000  and  $758,000,  respectively,  compared  to  $397,000  and
  $735,000 for the same periods in 1998.  Service  charges  increased  $10,000 and
  $6,000,  to $159,000 and $288,000 for the three and six month periods ended June
  30, 1999.  The increase in service  charge  income came largely from increase in
  deposit volume.
  
       Trust  income  increased  $38,000 and  decreased  $14,000 to  $138,000  and
  $220,000 for the three and six month periods  ended June 30, 1999.  The increase
  for the three month period was the result of several  estate  settlements  along
  with fees for bond  issuances.  The decrease  for the six month period  reflects
  higher estates fees earned during the first quarter of 1998 over 1999.
  
       Other  non-interest  income  decreased  $53,000  and  increased  $31,000 to
  $95,000 and  $250,000 for the three and six month  periods  ended June 30, 1999.
  The  decrease in other  income for the three month  period  reflected  the gains
  recognized on the sales of OREO  properties  during the second  quarter of 1998.
  This increase  during the six month period  reflects  higher gains on OREO sales
  during the first quarter of 1999 versus 1998.
  
  NON-INTEREST EXPENSE
  
       Non-interest  expense includes  salaries & employee  benefits,  furniture &
  equipment,  occupancy,  professional  &  consulting  fees as well as  printing &
  supplies, advertising and other less significant expense items.
  
       Non-interest  expenses  increased  $344,000 to $2.1 million and $516,000 to
  $4.0  million  for the three and six month  periods  ended  June 30,  1999.  The
  increase during these periods resulted  primarily from higher levels of expenses
  in all categories due to branch expansion and technology upgrading.
  
       Salaries & employee  benefits  increased $96,000 or 10% to $1.1 million for
  the three months  ended June 30, 1999,  compared to $979,000 for the same period
  in 1998.  The  increase in this  category  reflects  the  increase in  full-time
  equivalent employees caused by the staffing of two new full service branches.
  
       Furniture & equipment  expense  increased  approximately  $63,000 or 40% to
  $222,000 and $130,000 or 42% to $438,000 for the three and six months ended June
  30, 1999,  respectively,  compared to $159,000 and $308,000 for the same periods
  in  1998.  The  increases  for  both  periods  were  due  to  higher  levels  of
  depreciation and maintenance.  Occupancy expense increased approximately $54,000
  or 48% to $166,000  and $73,000 or 34% to $285,000  for the three and six months
  ended June 30, 1999,  respectively.  This  compares to $112,000 and $212,000 for
  the same periods in 1998. The increases in this category reflect the added costs
  incurred in 1999 for the two new offices as well as higher costs for repairs and
  maintenance of all facilities.
  
       Advertising & marketing  expense increased $58,000 and $102,000 to $134,000
  and $223,000  for the three and six months  ended June 30,  1999,  respectively,
  compared to $76,000 and $121,000 for the same periods in 1998. Expenditures have
  risen due to increased  marketing for new products and services,  such as Direct
  Checking,  Premier  Money Market,  and Home Power equity  loans,  as well as the
  Investment Services and Trust Division.  In addition expenditures have increased
  due to the opening and promotion of two new branches as well as advertising open
  employment positions at the Bank
  <PAGE>
  
  INCOME TAXES
  
       Income tax expense was  $352,000  and $643,000 for the three and six months
  ended June 30, 1999 and $285,000 and $535,000 for the three and six months ended
  June 30,  1998.  The rates used for income taxes for both periods were less than
  the statutory rate as a result of tax exempt interest income.
  
  ASSET QUALITY
  
       Non-performing  assets are comprised of nonaccrual loans,  loans delinquent
  over  ninety days and still  accruing,  and Other Real  Estate  Owned  ("OREO").
  Nonaccrual  loans are loans for which the  accrual of  interest  ceases when the
  collection  of principal or interest  payments is  determined  to be doubtful by
  management.  It is the policy of DNB to discontinue the accrual of interest when
  principal or interest  payments are  delinquent 90 days or more (unless the loan
  principal  and interest are  determined by management to be fully secured and in
  the process of collection), or earlier, if considered prudent. Interest received
  on such loans is applied to the principal balance, or may in some instances,  be
  recognized  as income on a cash  basis.  A  nonaccrual  loan may be  restored to
  accrual status when management expects to collect all contractual  principal and
  interest due and the borrower has  demonstrated a sustained  period of repayment
  performance  in accordance  with the  contractual  terms.  OREO consists of real
  estate acquired by foreclosure or deed in lieu of  foreclosure.  OREO is carried
  at the lower of cost or estimated fair value, less estimated  disposition costs.
  Any significant  change in the level of  nonperforming  assets is dependent to a
  large extent on the economic  climate within DNB's markets and to the efforts of
  management to reduce the level of such assets.
  
       The  following  table sets forth those assets that are:  (i) on  nonaccrual
  status,  (ii)  contractually  delinquent  by 90 days or more and still and (iii)
  other real estate owned as a result of foreclosure or voluntary transfer to DNB.
  <TABLE>
  <CAPTION>
  
                                               June 30 Dec. 31  June 30
  (Dollars in Thousands)                         1999    1998     1998
                                                 ----    ----     ----
  <S>                                            <C>      <C>      <C>
  Nonaccrual Loans:
       Residential mortgage                   $  106   $  250   $  250
       Commercial mortgage                       689    1,063      886
       Commercial .........                      781      990      950
       Consumer ...........                      124      114       93
                                               -----    -----    -----
  Total nonaccrual loans ..                    1,700    2,417    2,179
  
  Loans 90 days past due and still accruing      703      699      760
                                               -----    -----    -----
  Total non-performing loans ..............    2,403    3,116    2,939
  Other real estate owned .................      555      139      206
                                              -- ---   ------   ------
  Total non-performing assets .............   $2,958   $3,255   $3,145
                                              ======   ======   ======
  </TABLE>
  <PAGE>
  
       The  following  table  sets forth the DNB's  asset  quality  and  allowance
  coverage ratios at the dates indicated:
  <TABLE>
  <CAPTION>
                                                      June 30  Dec. 31  June 30
                                                        1999    1998     1998
                                                       -----    -----    -----
  <S>                                                    <C>     <C>      <C>
  Non-performing Loans/Total Loans ..............       1.4%     2.1%     2.2%
  Non-performing Assets/Total Loans and OREO ....       1.8      2.2      2.3
  Allowance for Loan Losses/Total Loans .........       3.2      3.5      3.8
  Allowance for Loan Losses/Total Loans and OREO        3.1      3.5      3.7
  Allowance for Loan Losses/Non-performing Assets     176.9    159.9    162.9
  Allowance for Loan Losses/Non-performing Loans      217.8    167.0    174.3
  </TABLE>
  
       If interest  income had been recorded on nonaccrual  loans and trouble debt
  restructurings,  interest  would have been  increased as shown in the  following
  table:
  <TABLE>
  <CAPTION>
  
                                                   6 Months    Year   6 Months
                                                     Ended     Ended    Ended
  (Dollars in thousands)                            6/30/99   12/31/98  6/30/98
                                                    -------   --------  -------
  <S>                                                 <C>       <C>       <C>
  Interest income which would have been recorded
         under original terms ..................      $  66      $ 194    $  89
  Interest income recorded during the period ...         (5)       (92)     (36)
                                                      -----      -----    -----
  Net impact on interest income ................      $  61      $ 102    $  53
                                                      =====      =====    =====
  </TABLE>
  
       As of  June  30,  1999,  DNB  had  impaired  loans  with a  total  recorded
  investment of $1.1 million and an average recorded  investment for the six month
  period ended June 30, 1999 of $1.5  million.  As of June 30, 1999,  there was no
  related  allowance for credit losses  necessary for these impaired loans.  Total
  cash  collected  on impaired  loans was  credited to the  outstanding  principal
  balance in the amount of $57,000  during the six months ended June 30, 1999.  No
  interest income was recorded on such loans.
  
       As of December  31,  1998,  DNB had  impaired  loans with a total  recorded
  investment of $1.7 million and an average recorded investment for the year ended
  December 31, 1998 of $1.6 million. As of December 31, 1998, there was no related
  allowance  for credit  losses  necessary for these  impaired  loans.  Total cash
  collected on impaired loans was credited to the outstanding  principal income in
  the amount of $115,000  during the six months ended June 30,  1998.  No interest
  income was recorded on such loans.
  <PAGE>
  
  LIQUIDITY AND CAPITAL RESOURCES
  
       For a financial institution,  liquidity is a measure of the ability to fund
  customers'  needs  for  loans  and  deposit  withdrawals.  Management  regularly
  evaluates economic  conditions in order to maintain a strong liquidity position.
  One of the most  significant  factors  considered by management  when evaluating
  liquidity  requirements is the stability of DNB's core deposit base. In addition
  to cash,  DNB  maintains  a  portfolio  of short  term  investments  to meet its
  liquidity requirements. DNB has historically relied on cash flow from operations
  and other financing  activities.  Liquidity is provided by investing activities,
  including the repayment and maturing of loans and investment securities.
  
       At June 30, 1999 DNB has $12.7 million in  commitments  to fund  commercial
  real estate, construction and land development. In addition, DNB had commitments
  to fund $2.3  million in home equity  lines of credit and $8.7  million in other
  unused  commitments.  Management  anticipates the majority of these  commitments
  will be funded by means of normal cash flows. In addition, $36.7 million of time
  deposits at DNB are scheduled to mature  during the six months  ending  December
  31,  1999.  Management  believes  that the  majority  of such  deposits  will be
  reinvested with DNB and that certificates that are not renewed will be funded by
  maturing loans and investments.
  
       Stockholders'  equity  increased  to $20.6  million  at June 30,  1999 as a
  result of the $1.4  million  profit  reported  for the six months then ended and
  after dividends paid totaling approximately  $396,000  year-to-date.  The Bank's
  common  equity  position  at June  30,  1999  exceeds  the  regulatory  required
  minimums.  The  following  table  summarizes  data and ratios  pertaining to the
  Bank's capital structure.
  
  <TABLE>
  <CAPTION>
  
  (Dollars in thousands)                                       June 30, 1999
                                                               -------------
  <S>                                                               <C>
  Tier I Capital..............................                  $20,804
  Tier II Capital..............................                    2,527
                                                                 -------
  Total Capital................................                  $23,331
                                                                 =======
  </TABLE>
  <TABLE>
  <CAPTION>
                                                   Required  Current  Excess
                                                   --------  -------  ------
  <S>                                                 <C>        <C>     <C>
  Leverage ....................................      4.00%    7.46%   3.46%
  Tier I ......................................      4.00    10.43    6.43
  Risk-based...................................      8.00    11.70    3.70
  </TABLE>
  
       In  addition,  the Federal  Reserve Bank (the "FRB")  leverage  ratio rules
  require bank holding  companies to maintain a minimum level of "primary capital"
  to total assets of 5.5% and a minimum  level of "total  capital" to total assets
  of 6%. For this  purpose,  (i) "primary  capital"  includes,  among other items,
  common stock, contingency and other capital reserves, and the allowance for loan
  losses, (ii) "total capital" includes,  among other things, certain subordinated
  debt,  and "total  assets" is increased by the allowance for loan losses.  DNB's
  primary  capital ratio and its total capital ratio are both 8.8%, well in excess
  of FRB requirements.
  <PAGE>
  
  REGULATORY MATTERS
  
       Dividends  payable to the  Corporation  by the Bank are  subject to certain
  regulatory limitations. Under normal circumstances,  the payment of dividends in
  any year without regulatory permission is limited to the net profits (as defined
  for  regulatory  purposes) for that year,  plus the retained net profits for the
  preceding two calendar years.
  
  YEAR 2000 ISSUES
  
       Year 2000 issues arise from a concern that certain  information systems and
  automated   equipment   will  be  unable  to  recognize  and  process   properly
  date-related information after December 31, 1999. If not corrected, these system
  and equipment failures could produce inaccurate or unpredictable results causing
  disruptions of normal business operations beginning on January 1, 2000.
  
       In  order  to  address  these  Year  2000  issues,   DNB  has  developed  a
  comprehensive approach beginning with the establishment of a Technology Steering
  Committee.  The Committee has developed and implemented a compliance plan, which
  is divided into five phases: (1) awareness; (2) assessment;  (3) renovation; (4)
  validation & testing;  and (5)  implementation.  The goal is to ensure that each
  organizational function,  system,  application,  file, program and database will
  correctly  process,  provide  and/or  receive  data at the  century  date change
  beginning December 31, 1999.
  
       DNB has  substantially  completed the first four phases of the plan for all
  of  its   mission-critical   systems,   and  it  is  currently  working  on  the
  implementation  phase. DNB has  substantially  completed the final phase,  which
  requires testing of all Bank interfaces and connections  with other systems.  In
  addition to mission-critical  systems,  DNB has identified and is monitoring the
  Year 2000 readiness of other vendors and service  providers and has  established
  contingency  plans for alternate  suppliers  based upon target  compliance  time
  frames.
  
       To evaluate the risk of customer  non-compliance with Year 2000 issues, the
  Bank initiated  written  communications  with all of its commercial  deposit and
  borrowing  customers,  which included a questionnaire,  to assist in determining
  their  awareness and  readiness  for the century date change.  DNB also reviewed
  significant  borrowing  relationships  (over  $250,000) and classified them into
  high, moderate and low risk categories for non-compliance with Year 2000 issues.
  DNB called those  customers in the high and moderate  risk  categories to obtain
  personal  responses to  questionnaires in order to evaluate the risk to DNB from
  the failure of those  customers  to remediate  their own Year 2000  issues.  The
  results of these  assessments  are being  incorporated  into DNB's  credit  risk
  management  processes,  including customer risk ratings.  These assessments were
  completed by June 30, 1999.
  <PAGE>
  
       DNB has developed a business resumption contingency plan which outlines its
  courses of action in the event of a Year 2000-related  systems failure. The plan
  was  developed  to help DNB  resume  operations  in an  orderly  fashion  and to
  continue providing essential services in the event of the most reasonably likely
  worst case scenarios.  At this point,  DNB has completed the four-phase  process
  recommended  by regulators.  The project was completed by July 14, 1999.  During
  August and  September,  the plans will be  validated  independently  in order to
  judge the effectiveness and reasonableness of the contingency strategies.
  
       DNB is substantially Year 2000 compliant and is working diligently on a few
  remaining  items with an estimated  completion  date of September 30, 1999. Year
  2000 issues could result in material  financial risk to a company such as DNB if
  the company and third party  vendors upon which it relies were unable to address
  this issue in a timely manner. However, management currently expects DNB and its
  third party vendors to be Year 2000  compliant in all material  respects  before
  August  15,  1999.  The Year  2000  statements  contained  herein,  and in other
  securities  filings of DNB are Year 2000  readiness  disclosures  subject to the
  Year 2000  Readiness and  Disclosure  Act of 1998, and may not be relied upon as
  representations  or warranties for any purpose other than disclosure for Federal
  securities law compliance purposes.
  
       Management  currently estimates that the costs of Year 2000 compliance will
  be approximately  $60,000 during the two years ended December 31, 1999, of which
  approximately  $58,000 has been  expended  through June 30,  1999.  All of these
  expenses have been funded from operating cash flow.
  
  RECENT DEVELOPMENTS
  
       On May 17th,  DNB opened its eighth office in West Goshen.  This new branch
  is located at 1115 West  Chester  Pike in the  Shop-Rite/Office  Depot  Shopping
  Center.
  
       In addition,  DNB recently  announced that it has entered into an agreement
  with  Exton  Square,  Inc.  to lease a parcel  of ground  formerly  known as the
  Guernsey Cow in Exton.  The Bank is currently  working with its  architect on an
  adaptive  reuse of the  Guernsey  Cow Dairy Barn.  In addition to a full service
  branch  with four  drive-up  windows,  the  building  will also house the Bank's
  Investment  Services & Trust Division as well as Commercial  Lending  personnel.
  The  opening  is  expected  to take  place  in the  summer  of 2000 and has been
  approved by the Office of the Comptroller of the Currency.
  
  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
       No material changes in DNB's market risk occurred from December 31, 1998 to
  June 30, 1999.
  
  FORWARD-LOOKING STATEMENTS
  
       Certain  statements in this report,  including any which are not statements
  of historical  fact,  may  constitute  "forward-looking  statements"  within the
  meaning of Section 27A of the  Securities  Act and  Section 21E of the  Exchange
  Act. Without limiting the foregoing, the words "expect",  "anticipate",  "plan",
  "believe",  "seek",  "estimate",  "predict",  "internal"  and similar  words are
  intended  to  identify  expressions  that  may  be  forward-looking  statements.
  Forward-looking  statements involve certain risks and uncertainties,  and actual
  results may differ  materially from those  contemplated by such statements.  For
  example,   actual   results  may  be   adversely   affected  by  the   following
  possibilities:  (1)  competitive  pressure  among  depository  institutions  may
  increase; (2) changes in interest rates may reduce banking interest margins; (3)
  general  economic  conditions  and real estate values may be less favorable than
  contemplated; (4) adverse legislation or regulatory requirements may be adopted;
  (5) the impact of the Year 2000  issue may be more  significant  than  currently
  anticipated;  (6) unexpected contingencies relating to Year 2000 compliance; and
  (7) other unexpected  contingencies  may arise. Many of these factors are beyond
  DNB's  ability to control or  predict.  Readers of this  report are  accordingly
  cautioned  not to  place  undue  reliance  on  forward-looking  statements.  DNB
  disclaims any intent or obligation to update publicly any of the forward-looking
  statements  herein,  whether in response to new  information,  future  events or
  otherwise.
  <PAGE>
  
  
                            PART II - OTHER INFORMATION
  
  ITEM 1.   LEGAL PROCEEDINGS
  
                  Not Applicable
  
  ITEM 2.   CHANGES IN SECURITIES
  
                  Not Applicable
  
  ITEM 3.   DEFAULTS UPON SENIOR SECURITIES
  
                  Not Applicable
  
  ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
                  Not Applicable
  
  ITEM 5.   OTHER INFORMATION
  
                  Not Applicable
  
  ITEM 6.
             (a)  EXHIBITS:
  
                  Exhibit Number referred to in
                  Item 601 of Regulation S-K                Description of Exhibit
                  --------------------------                ----------------------
                  27                                       Financial Data Schedule
  
             (b)  REPORTS ON FORM 8-K
  
                  Not Applicable
  <PAGE>
  
                                     SIGNATURES
  
       Pursuant to the  requirements  of The Securities  Exchange Act of 1934, the
  registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
  undersigned thereunto duly authorized.
  
                                                         DNB FINANCIAL CORPORATION
                                                               (Registrant)
  
  
  
  DATE:  August 13, 1999                               /S/ Henry F. Thorne
  -----  ---------------                               -------------------
                                                       Henry F. Thorne, President
                                                       and Chief Executive Officer
  
  
  
  DATE:  August 13, 1999                               /S/ Bruce E. Moroney
  -----  ---------------                               --------------------
                                                       Bruce E. Moroney
                                                       Chief Financial Officer
metadata_documents: [{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 64235}]
metadata_filer: {"company-data": {"conformed-name": "DNB FINANCIAL CORP /PA/", "cik": "0000713671", "assigned-sic": "6022", "irs-number": "232222567", "state-of-incorporation": "PA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-16667", "film-number": "99688815"}, "business-address": {"street1": "4 BRANDYWINE AVE", "city": "DOWNINGTOWN", "state": "PA", "zip": "19335", "phone": "6102691040"}, "mail-address": {"street1": "4 BRANDYWINE AVENUE", "city": "DOWNINGTOWN", "state": "PA", "zip": "19335"}}
text: SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C. 20549
                                      FORM 10-Q
  
                                     (MARK ONE)
  
       [X]  Quarterly  report  pursuant  to Section 13 or 15(d) of the  Securities
            Exchange  Act of 1934.
                    FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 1999
                                         or
       [ ]  Transition report pursuant to Section 13 or 15(d) of the Securities
            Exchange Act of 1934.
  
  For the transition period from ________________ to _____________
  
                           COMMISSION FILE NUMBER: 0-16667
  
                              DNB FINANCIAL CORPORATION
               (Exact name of registrant as specified in its charter)
  
            PENNSYLVANIA                                   23-2222567
  (State or other jurisdiction of             (I.R.S. Employer Identification No.)
   incorporation or organization)
  
                     4 BRANDYWINE AVENUE - DOWNINGTOWN, PA 19335
                (Address of principal executive offices and Zip Code)
  
                                   (610) 269-1040
                (Registrant's telephone number, including area code)
  
                                   NOT APPLICABLE
  (Former  name,  former  address and former fiscal year, if changed since last
  report)
  
       Indicate  by check mark  whether the  registrant  (1) has filed all reports
  required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
  1934  during  the  preceding  12 months  (or for such  shorter  period  that the
  registrant  was required to file such  reports) and (2) has been subject to such
  filing requirements for the past 90 days.
  
                             [X] Yes                   [    ] No
  
       Indicate the number of shares  outstanding of each of the issuer's  classes
  of common stock, as of the latest practicable date.
  
       COMMON STOCK ($1.00 PAR VALUE)                            1,524,229
                  (Class)                                (Shares Outstanding as of
                                                              August 13, 1999)
  ___________________________________________________________________________
  DNB FINANCIAL CORPORATION AND SUBSIDIARY
  
                                        INDEX
  
  PART  I - FINANCIAL INFORMATION                                         PAGE NO.
  
       ITEM 1.   FINANCIAL STATEMENTS:
  
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                 June 30, 1999 and December 31, 1998                             3
  
                 CONSOLIDATED STATEMENTS OF OPERATIONS
                 Three Months Ended June 30, 1999 and 1998                       4
  
                 CONSOLIDATED STATEMENTS OF OPERATIONS
                 Six Months Ended June 30, 1999 and 1998                         5
  
                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                 Six Months Ended June 30, 1999 and 1998                         6
  
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 June 30, 1999 and December 31, 1998                             7
  
       ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS                   9
  
  PART II - OTHER INFORMATION
  
       ITEM 1.    LEGAL PROCEEDINGS                                             18
  
       ITEM 2.    CHANGE IN SECURITIES                                          18
  
       ITEM 3.    DEFAULTS UPON SENIOR SECURITIES                               18
  
       ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF                            18
                  SECURITY HOLDERS
  
       ITEM 5.    OTHER INFORMATION                                             18
  
       ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K                              18
  
  SIGNATURES                                                                    19
  ------------------------------------------------------------------------------------------------------------------------
  CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
  ------------------------------------------------------------------------------------------------------------------------
                                                                                                June 30,      December 31,
                                                                                                  1999             1998
                                                                                           -------------     -------------
  ASSETS
  Cash and due from banks ..............................................................   $   8,813,695    $  13,660,149
  Federal funds sold ...................................................................       9,140,000        6,171,000
  Total cash and cash equivalents ......................................................      17,953,695       19,831,149
  Investment securities available for sale, at market value ............................      50,690,716       45,519,420
  Investment securities (market value $47,963,222
     in 1999 and $47,528,269 in 1998) ..................................................      48,195,186       47,380,404
  Loans, net of unearned income ........................................................     165,877,914      148,725,716
  Allowance for loan losses ............................................................      (5,233,027)      (5,204,869)
                                                                                           -------------    -------------
  Net loans ............................................................................     160,644,887      143,520,847
                                                                                           -------------    -------------
  Office property and equipment, net ...................................................       4,819,696        4,558,811
  Accrued interest receivable ..........................................................       1,792,744        1,670,123
  Other real estate owned ..............................................................         555,026          138,775
  Deferred income taxes ................................................................       1,487,636        1,037,415
  Other assets.........................................................................       2,462,907        1,761,487
                                                                                           -------------    -------------
  Total assets .........................................................................   $ 288,602,493    $ 265,418,431
                                                                                           =============    =============
  
  LIABILITIES AND STOCKHOLDERS' EQUITY
  Liabilities
  Non-interest-bearing deposits ........................................................   $  34,756,626    $  30,001,051
  Interest-bearing deposits:
     NOW accounts ......................................................................      39,356,597       37,074,977
     Money market ......................................................................      42,309,068       32,582,044
     Savings ...........................................................................      31,952,221       28,321,246
     Time ..............................................................................      99,379,968       97,394,014
                                                                                           -------------    -------------
  Total deposits .......................................................................     247,754,480      225,373,332
                                                                                           -------------    -------------
  Federal Home Loan Bank advances ......................................................      18,000,000       18,000,000
  Accrued interest payable .............................................................         845,390          902,009
  Other liabilities ....................................................................       1,373,348          536,872
                                                                                           -------------    -------------
  Total liabilities ....................................................................     267,973,218      244,812,213
                                                                                           -------------    -------------
  
  STOCKHOLDERS' EQUITY
  Preferred stock, $10.00 par value;
     1,000,000 shares authorized; none issued ..........................................              --               --
  Common stock, $1.00 par value;
     10,000,000 shares authorized; 1,524,229 and
     1,524,229 issued and outstanding, respectively ....................................       1,524,229        1,524,229
  Surplus ..............................................................................      17,104,817       17,104,817
  Retained earnings ....................................................................       2,902,979        1,924,803
  Accumulated other comprehensive (loss) income ........................................        (902,750)          52,369
                                                                                           -------------    -------------
  Total stockholders' equity ...........................................................      20,629,275       20,606,218
                                                                                           -------------    -------------
  Total liabilities and stockholders' equity ...........................................   $ 288,602,493    $ 265,418,431
                                                                                           =============    =============
  
  See accompanying notes to consolidated financial statements.
  --------------------------------------------------------------------------------
  CONSOLIDATED STATEMENTS OF OPERATIONS
  --------------------------------------------------------------------------------
  
                                                        Three Months Ended June 30
                                                        --------------------------
                                                              1999         1998
  INTEREST INCOME:
  Interest and fees on loans ........................      $3,525,100   $2,959,749
  Interest on taxable investment securities .........       1,434,439    1,104,925
  Interest on tax-free investment securities ........         113,836           --
  Interest on Federal funds sold ....................          56,683      245,895
                                                           ----------   ----------
  Total interest income .............................       5,130,058    4,310,569
                                                           ----------   ----------
  INTEREST EXPENSE:
  Interest on time deposits .........................       1,310,128    1,268,721
  Interest on NOW, money market and savings .........         808,589      615,664
  Interest on FHLB advance ..........................         231,005       64,323
                                                           ----------   ----------
  Total interest expense ............................       2,349,722    1,948,708
                                                           ----------   ----------
  Net interest income ...............................       2,780,336    2,361,861
  Provision for loan losses .........................              --           --
                                                           ----------   ----------
  Net interest income after provision for loan losses       2,780,336    2,361,861
                                                           ----------   ----------
  
  NON-INTEREST INCOME:
  Service charges ...................................         158,783      149,119
  Trust income ......................................         137,545       99,632
  Other .............................................          94,758      147,765
                                                           ----------   ----------
  Total non-interest income .........................         391,086      396,516
                                                           ----------   ----------
  NON-INTEREST EXPENSE:
  Salaries and employee benefits ....................       1,075,561      979,408
  Furniture and equipment ..........................          222,475      159,452
  Occupancy .........................................         166,333      112,233
  Advertising and marketing .........................         134,215       75,890
  Professional and consulting .......................         101,647       65,334
  Printing and supplies .............................          71,378       36,023
  Other .............................................         300,502      299,870
                                                           ----------   ----------
  Total non-interest expense ........................       2,072,111    1,728,210
                                                           ----------   ----------
  Income before income taxes ........................       1,099,311    1,030,167
  Income tax expense ................................         352,000      285,000
                                                           ----------   ----------
  
  NET INCOME ........................................      $  747,311   $  745,167
                                                           ==========   ==========
  
  EARNINGS PER SHARE:
     Basic ..........................................       $    0.49    $    0.49
     Diluted ........................................            0.47         0.47
  WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
     Basic ..........................................       1,524,229    1,523,942
     Diluted ........................................       1,574,589    1,580,269
  CASH DIVIDENDS PER SHARE ..........................       $    0.13    $    0.12
  
  See accompanying notes to consolidated financial statements
  --------------------------------------------------------------------------------
  CONSOLIDATED STATEMENTS OF OPERATIONS
  --------------------------------------------------------------------------------
                                                         Six Months Ended June 30
                                                           1999            1998
  INTEREST INCOME:
  Interest and fees on loans ......................... $6,649,831      $5,822,742
  Interest on taxable investment securities ...........  2,858,405       2,224,618
  Interest on tax-free investment securities ..........    217,893           --
  Interest on Federal funds sold ......................    101,105         426,876
  Total interest income ...............................  9,827,234       8,474,236
  INTEREST EXPENSE:
  Interest on time deposits ...........................  2,609,256       2,518,878
  Interest on NOW, money market and savings ...........  1,500,544       1,173,498
  Interest on repurchase agreements ...................         --             673
  
  Interest on FHLB advances ...........................    459,471         102,493
  Total interest expense ..............................  4,569,271       3,795,542
  Net interest income .................................  5,257,963       4,678,694
  Provision for loan losses ...........................         --              --
  Net interest income after provision for loan losses .  5,257,963       4,678,694
  
  NON-INTEREST INCOME:
  Service charges .....................................    288,382         282,414
  Trust income ........................................    219,886         233,561
  Other ..............................................     249,730         218,835
  Total non-interest income .........................      757,998         734,810
  NON-INTEREST EXPENSE:
  Salaries and employee benefits ......................  2,099,142       2,057,687
  Furniture and equipment .............................    438,124         308,426
  Occupancy ..........................................    285,426         212,346
  Advertising and marketing ...........................    222,575         120,788
  Professional and consulting .........................    197,497         134,314
  Printing and supplies ...............................    135,209          93,486
  Other ...............................................    620,512         555,284
  Total non-interest expense ..........................  3,998,485       3,482,331
  Income before income taxes ..........................  2,017,476       1,931,173
  Income tax expense ..................................    643,000         535,000
  
  NET INCOME .......................................... $1,374,476      $1,396,173
  
  COMMON SHARE DATA:
       Basic .......................................... $     0.90      $     0.92
       Diluted ........................................       0.87            0.88
  WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
       Basic ..........................................  1,524,229       1,523,942
       Diluted .......................................  1,574,657       1,578,252
  Cash dividends per share ............................ $     0.26      $     0.24
  
  See accompanying notes to consolidated financial statements.
  --------------------------------------------------------------------------------
  Consolidated Statements of Cash Flows
  --------------------------------------------------------------------------------
                                                                  Six Months Ended June 30
                                                                     1999            1998
  CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income .............................................      $  1,374,476    $  1,396,173
  Adjustments to reconcile net income to net cash provided
     by operating activities:
  Depreciation and amortization ..........................           380,157         459,452
  Gain on sale of investments ...........................                --            (507)
  Gain on sale of OREO ...................................           (45,811)        (64,349)
  (Increase) decrease in accrued interest receivable .....          (122,621)         48,135
  Increase in other assets ...............................          (701,420)       (174,590)
  Decrease in accrued interest payable ...................           (56,619)       (154,717)
  Decrease in current taxes payable ......................            (8,357)        (40,000)
  Increase (decrease) in other liabilities ...............           844,833        (393,944)
  Net Cash Provided By Operating Activities ..............         1,664,638       1,075,653
  
  CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from maturities & paydowns of AFS securities ..         1,977,117       5,667,092
  Proceeds from maturities & paydowns of HTM securities ..         3,199,954      15,886,596
  Purchase of AFS securities .............................        (8,578,690)     (7,456,407)
  Purchase of HTM securities .............................        (4,078,644)    (17,355,833)
  Proceeds from sale of AFS securities ...................                --         997,656
  Net increase in loans ..................................       (17,595,707)     (6,687,367)
  Proceeds from sale of OREO .............................           101,227         293,556
  Purchase of office property and equipment ..............          (552,197)       (159,725)
  Net Cash Used By Investing Activities ..................       (25,526,940)     (8,814,432)
  
  CASH FLOWS FROM FINANCING ACTIVITIES:
  Net increase in deposits ...............................        22,381,148       6,772,959
  Increase in FHLB advances ..............................                --       5,000,000
  Proceeds from exercise of stock options ................                --           2,949
  Dividends paid .........................................          (396,300)       (348,435)
  Net Cash Provided By Financing Activities ..............        21,984,848      11,427,473
  Net Change in Cash and Cash Equivalents ................        (1,877,454)      3,688,694
  Cash and Cash Equivalents at Beginning of Period .......        19,831,149      23,392,007
  CASH AND CASH EQUIVALENTS AT END OF PERIOD .............      $ 17,953,695    $ 27,080,701
  
  SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during the period for:
  Interest ...............................................      $  4,625,890    $  3,950,259
  Taxes ..................................................           650,000         575,000
  
  SUPPLEMENTAL DISCLOSURE OF NON-CASH FLOW INFORMATION:
  Transfer of loans to OREO ..............................      $    471,667    $    240,404
  
  See accompanying notes to consolidated financial statements.
  DNB FINANCIAL CORPORATION AND SUBSIDIARY
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
  NOTE 1:   BASIS OF PRESENTATION AND RESTATEMENT
  
       The  accompanying   unaudited  consolidated  financial  statements  of  DNB
  Financial Corporation (referred to herein as the "Corporation" or "DNB") and its
  subsidiary,  Downingtown  National  Bank (the  "Bank"),  have been  prepared  in
  accordance  with the  instructions  for Form 10-Q and  therefore  do not include
  certain  information or footnotes  necessary for the  presentation  of financial
  condition,  statement of  operations  and  statement  of cash flows  required by
  generally accepted accounting principles. However, in the opinion of management,
  the consolidated  financial statements reflect all adjustments (which consist of
  normal recurring  adjustments)  necessary for a fair presentation of the results
  for the  unaudited  periods.  Prior period  amounts not affecting net income are
  reclassified  when necessary to conform with current year  classifications.  The
  results of operations for the six months ended June 30, 1999 are not necessarily
  indicative  of the  results  which may be  expected  for the  entire  year.  The
  consolidated  financial statements should be read in conjunction with the Annual
  Report and report on Form 10-K for the year ended December 31, 1998.
  
  NOTE 2: EARNINGS PER SHARE (EPS)
  
       Basic earnings per share is computed  based on the weighted  average number
  of common  shares  outstanding  during the period.  Diluted  earnings  per share
  reflect the potential  dilution  that could occur from the  conversion of common
  stock equivalents and is computed using the treasury stock method.  Earnings per
  share,  dividends per share and weighted  average shares  outstanding  have been
  adjusted to reflect the effects of the 5% stock  dividend paid in December 1998.
  Net income  and  weighted  average  number of shares  outstanding  for basic and
  diluted  EPS for the  three  and six  months  ended  June 30,  1999 and 1998 are
  reconciled as follows:
  Three months ended                  Three months ended
                                                             June 30, 1999                        June 30, 1998
                                                   -------------------------------    --------------------------------
                                                      Income     Shares     Amount      Income       Shares     Amount
                                                   ----------   ---------   ------    ---------      ---------  ------
  BASIC EPS:
  Income available to common stockholders ....      $ 747,311   1,524,229   $ 0.49     $ 745,16     1,523,942   $ 0.49
  Effect of dilutive common stock equivalents-
       stock options .........................             --      50,360     0.02           --        56,327     0.02
                                                   ----------   ---------   ------    ---------     ---------   ------
  DILUTED EPS: ...............................      $ 747,311   1,574,589    $0.47    $ 745,167     1,580,269   $ 0.47
                                                   ==========   =========   ======    =========     =========   ======
  Six months ended                Six months ended
                                                             June 30, 1999                      June 30, 1998
                                                   -------------------------------    --------------------------------
                                                      Income     Shares     Amount      Income       Shares     Amount
                                                   ----------   ---------   ------    ----------    ---------   ------
  BASIC EPS:
  Income available to common stockholders ....     $1,374,476   1,524,229   $ 0.90    $1,396,173    1,523,942   $ 0.92
  Effect of dilutive common stock equivalents-
        stock options ........................             --      50,428     0.03            --       54,310     0.04
                                                   ----------   ---------   ------    ----------    ---------   ------
  DILUTED EPS:...............................     $1,374,476   1,574,657   $ 0.87    $1,396,173    1,578,252   $ 0.88
                                                   ==========   =========   ======    ==========    =========   ======
  NOTE 3:   COMPREHENSIVE INCOME
  
       Comprehensive  income includes all changes in  stockholders'  equity during
  the period,  except those resulting from investments by owners and distributions
  to owners.  Comprehensive  income for all  periods  consisted  of net income and
  other comprehensive  (loss) income relating to the change in unrealized (losses)
  gains on  investment  securities  available  for sale, as shown in the following
  tables:
  For three months ended June 30        For six months ended June 30
                                                 ------------------------------        ----------------------------
                                                        1999            1998                1999            1998
                                                        ----            ----                ----            ----
  COMPREHENSIVE INCOME:
  Net Income ...................................   $   747,311    $   745,167           $ 1,374,476    $ 1,396,173
  Other comprehensive (loss) income, net of tax,
    relating to unrealized losses on investments      (593,003)        10,530              (955,119)        (6,864)
                                                   -----------    -----------           -----------    -----------
  Total comprehensive (loss) income ............   $   154,308    $   755,697           $   419,357    $ 1,389,309
                                                   ===========    ===========           ===========    ===========
  NOTE 4:   RECENT ACCOUNTING PRONOUNCEMENTS
  
       In June 1998,  the FASB  issued  SFAS No. 133,  Accounting  for  Derivative
  Instruments  and Hedging  Activities  ("SFAS No.  133")  which was  subsequently
  amended in June, 1999. This statement standardizes the accounting for derivative
  instruments,   including  certain  derivative   instruments  embedded  in  other
  contracts,  and those used for hedging  activities,  by requiring that an entity
  recognize  those items as assets or  liabilities  in the  statement of financial
  position and measure  them at fair value.  SFAS No. 133  generally  provides for
  matching  of  gain  or loss  recognition  on the  hedging  instrument  with  the
  recognition  of the changes in the fair value of the hedges  asset or  liability
  that are  attributable  to the hedged risk,  so long as the hedge is  effective.
  Prospective  application  of SFAS  No.  133 is  required  for all  fiscal  years
  beginning after June 15, 2000, however earlier application is permitted. DNB has
  not yet  determined  the  impact,  if  any,  of this  statement,  including  its
  provisions  for the potential  reclassifications  of investment  securities,  on
  operations,  financial condition and equity and comprehensive  income.  However,
  DNB  currently  has no  derivatives  covered  by this  statement  and  currently
  conducts no hedging activities.
  DNB FINANCIAL CORPORATION AND SUBSIDIARY
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                              AND RESULTS OF OPERATIONS
  
  FINANCIAL CONDITION
  
       DNB's total assets were $288.6  million at June 30, 1999 compared to $265.4
  million at December 31, 1998. Total loans were $165.9 million,  up $17.2 million
  or 12% from $148.7  million at December 31,  1998.  Significant  increases  were
  noted in the real estate loan portfolio  which  increased  $12.1 million or 15%.
  Investment  securities  (AFS  and HTM)  increased  $6.0  million  or 6% to $98.9
  million at June 30, 1999. Federal funds sold were $9.1 million at June 30, 1999,
  up $3.0 million from  December.  A significant  portion of these  increases were
  funded from deposits at our two new branches. Other assets increased $701,000 or
  40% to $2.5  million  at June  30,  1999 as a  result  of the  intangible  asset
  recognized on the Kennett Square branch purchase.
  
       Deposits  and other  borrowings  at June 30, 1999 totaled  $265.8  million,
  compared to $243.4  million at December 31, 1998.  Since December 31, 1998 there
  have been  increases of $9.7 million in money market  accounts,  $4.8 million in
  non-interest bearing accounts, $3.6 million in savings deposits, $2.3 million in
  NOW  accounts,  and $2.0  million  in time  deposits,  with $9.1  million of the
  overall  deposit  increase coming from the Kennett Square branch purchase at the
  end of the first  quarter.  Borrowings  were  $18.0  million  at June 30,  1999,
  unchanged from December.
  
       At June 30,  1999,  stockholders'  equity  was $20.6  million or $13.53 per
  share,  compared to $20.6 million or $13.52 per share at December 31, 1998.  The
  increase in  stockholders'  equity was the result of net income of $1.4  million
  for  the  six  months  ended  June  30,  1999,   offset  by  dividends  paid  of
  approximately  $396,000 or $.26 per share and the change in fair  market  value,
  net of taxes, of available-for-sale securities of $955,000.
  
  RESULTS OF OPERATIONS
  
  NET INTEREST INCOME
  
       DNB's  earnings  performance  is primarily  dependent upon its level of net
  interest income,  which is the excess of interest revenue over interest expense.
  Interest  revenue  includes  interest  earned on loans,  investments and Federal
  funds sold and interest-earning  cash, as well as loan fees and dividend income.
  Interest expense  includes  interest cost for deposits,  repurchase  agreements,
  Federal funds purchased, Federal Home Loan Bank advances and other borrowings.
  
       Net interest income increased $418,000 or 18% to $2.8 million for the three
  month  period and $579,000 or 12% to $5.3 million for the six month period ended
  June 30, 1999.  As shown in the following  tables,  the increase in net interest
  income  for the three and six month  periods  ended  June 30,  1999 was  largely
  attributable to the positive  effects of volume change,  partially offset by the
  negative effects of rate changes. The positive impact from volume changes during
  the three and six month periods was  attributable  to  significant  increases in
  interest-earning  assets,  which  increased  $44.3  million and $41.1 million on
  average for both  periods,  respectively.  The  negative  impact from changes in
  rates for both  periods  was  primarily  attributable  to loans and  investments
  rolling over at lower yields, reflecting the current interest rate environment.
  The following  tables set forth,  among other  things,  the extent to which
  changes  in   interest   rates  and   changes  in  the   average   balances   of
  interest-earning assets and interest-bearing  liabilities have affected interest
  income and expense  during the three and six months ended June 30, 1999 compared
  to the same  periods in 1998  (tax-exempt  yields  have been  adjusted  to a tax
  equivalent  basis using a 34% tax rate).  For each category of  interest-earning
  assets and interest-bearing liabilities, information is provided with respect to
  changes  attributable  to (i) changes in rate (change in rate  multiplied by old
  volume) and (ii) changes in volume  (change in volume  multiplied  by old rate).
  The net change  attributable  to the combined impact of rate and volume has been
  allocated  proportionately  to the  change  due to rate  and the  change  due to
  volume.
  Three Months Ended June 30, 1999
                                                       Compared to 1998
                                               --------------------------------
                                                  Increase (Decrease) Due to
                                               --------------------------------
  (Dollars in Thousands) .................          Rate    Volume   Total
                                                    -----    -----    -----
  Interest-earning assets:
  Loans ..................................         $ (24)   $ 589    $ 565
  Investment securities-taxable ..........           (31)     360      329
  Investment securities-tax exempt .......            --      147      147
  Federal funds sold .....................           (48)    (141)    (189)
                                                    -----    -----   -----
  Total ..................................          (103)     955      852
  
  Interest-bearing liabilities:
  Savings, NOW and money market deposits .            33      160      193
  Time deposits ..........................           (71)     112       41
  FHLB advances ..........................            --      167      167
                                                    -----    -----   -----
       Total .............................           (38)     439      401
                                                    -----    -----   -----
  NET INTEREST INCOME/INTEREST RATE SPREAD         $ (65)   $ 516    $ 451
                                                    =====    =====   =====
  Six Months Ended June 30, 1999
                                                     Compared to 1998
                                             -------------------------------
                                               Increase (Decrease) Due to
                                             ------------------------------
  (Dollars in Thousands)                            Rate   Volume     Total
                                                    ----   ------     -----
  Interest-earning assets:
  Loans .................................         $(166)   $ 993    $ 827
  Investment securities-taxable ..........           (62)     696      634
  Investment securities-tax exempt .......            --      282      282
  Federal funds sold .....................           (86)    (240)    (326)
                                                     ---     ----     ----
       Total .............................          (314)   1,731    1,417
  
  Interest-bearing liabilities:
  Savings, NOW and money market deposits .            52      276      328
  Time deposits ..........................          (120)     210       90
  Other borrowings .......................            --      356      356
                                                    ----     ----     ----
  Total ..................................           (68)     842      774
                                                    ----     ----     ----
  NET INTEREST INCOME/INTEREST RATE SPREAD       $  (246) $   889  $   643
                                                    ====     ====     ====
  PROVISION FOR LOAN LOSSES
  
       To provide for  potential  losses in the loan  portfolio,  DNB maintains an
  allowance for loan losses. To maintain an adequate allowance, management charges
  the provision for loan losses against income.  Loan losses are charged  directly
  against the allowance and recoveries on previously  charged-off  loans are added
  to the  allowance.  In  establishing  its allowance for loan losses,  management
  considers the size and risk exposure of each segment of the loan portfolio, past
  loss experience, present indicators of risk such as delinquency rates, levels of
  nonaccruals,  the potential  for losses in future  periods,  and other  relevant
  factors.  Management's  evaluation  of the  loan  portfolio  generally  includes
  reviews,  on a sample  basis,  of  individual  borrowers  regardless of size and
  reviews of problem borrowers of $100,000 or greater. Consideration is also given
  to examinations  performed by regulatory  agencies,  primarily the Office of the
  Comptroller of the Currency  ("OCC").  The provisions are based on  management's
  review of the economy,  interest rates, general market conditions,  estimates of
  the fair value of  collateral,  financial  strength and ability of the borrowers
  and guarantors to pay, and considerations  regarding the current and anticipated
  operating or sales environment.  These estimates are particularly susceptible to
  change  and  may  result  in a  material  adjustment  to  the  allowance.  While
  management uses the latest  information  available to make its evaluation of the
  adequacy of the  allowance,  future  adjustments  may be necessary if conditions
  differ substantially from the assumptions used in making the evaluations.
  
       There were no  provisions  made during the six months  ended June 30, 1999,
  since management  determined the allowance for loan losses was adequate based on
  its analysis and the level of net  charge-offs/recoveries  compared to the total
  allowance.  Net loan  recoveries  were $28,000 for the six months ended June 30,
  1999,  compared to net loan  charge-offs  of $76,000 for the year ended December
  31,  1998 and loan  charge-offs  of $161,000  for the six months  ended June 30,
  1998. The percentage of net  recoveries/(charge-offs) to total average loans was
   .0l%, (.03%) and .07% for the same periods, respectively. Another measure of the
  adequacy  of  the   allowance  is  the  coverage   ratio  of  the  allowance  to
  non-performing loans, which was 218% at June 30, 1999. In addition, the ratio of
  non-performing  loans to total loans has steadily  declined and was 1.4% at June
  30, 1999.
  
       The following table summarizes the changes in the allowance for loan losses
  for the periods indicated.  Real estate includes both residential and commercial
  real estate.
  6 Months      Year    6 Months
                                   Ended       Ended     Ended
  (Dollars in Thousands)          6/30/99    12/31/98   6/30/98
                                  -------    --------   -------
  Beginning balance ..........   $ 5,205    $ 5,281    $ 5,281
  Provisions .................        --         --         --
  Loans charged off:
         Real estate .........        --        (59)       (59)
         Commercial ..........       (11)      (233)      (135)
         Consumer ............        --        (11)        (8)
                                 -------    -------    -------
             Total charged off       (11)      (303)      (202)
  Recoveries:
         Real estate .........        --        144         23
         Commercial ..........        35         71         13
         Consumer ............         4         12          5
                                 -------    -------    -------
             Total recoveries         39        227         41
                                 -------    -------    -------
  Net recoveries (charge-offs)        28        (76)      (161)
                                 -------    -------    -------
  Ending balance .............   $ 5,233    $ 5,205    $ 5,120
                                 =======    =======    =======
  NON-INTEREST INCOME
  
       Total  non-interest  income includes  service charges on deposit  products;
  fees received by DNB's Investment Services and Trust Division; and other sources
  of income  such as net gains on sales of  investment  securities  and other real
  estate  owned  ("OREO")  properties,  fees for cash  management  services,  safe
  deposit box rentals,  issuing travelers' checks and money orders, check cashing,
  lockbox services and similar activities.
  
       For the three and six  month  periods  ended  June 30,  1999,  non-interest
  income was  $391,000  and  $758,000,  respectively,  compared  to  $397,000  and
  $735,000 for the same periods in 1998.  Service  charges  increased  $10,000 and
  $6,000,  to $159,000 and $288,000 for the three and six month periods ended June
  30, 1999.  The increase in service  charge  income came largely from increase in
  deposit volume.
  
       Trust  income  increased  $38,000 and  decreased  $14,000 to  $138,000  and
  $220,000 for the three and six month periods  ended June 30, 1999.  The increase
  for the three month period was the result of several  estate  settlements  along
  with fees for bond  issuances.  The decrease  for the six month period  reflects
  higher estates fees earned during the first quarter of 1998 over 1999.
  
       Other  non-interest  income  decreased  $53,000  and  increased  $31,000 to
  $95,000 and  $250,000 for the three and six month  periods  ended June 30, 1999.
  The  decrease in other  income for the three month  period  reflected  the gains
  recognized on the sales of OREO  properties  during the second  quarter of 1998.
  This increase  during the six month period  reflects  higher gains on OREO sales
  during the first quarter of 1999 versus 1998.
  
  NON-INTEREST EXPENSE
  
       Non-interest  expense includes  salaries & employee  benefits,  furniture &
  equipment,  occupancy,  professional  &  consulting  fees as well as  printing &
  supplies, advertising and other less significant expense items.
  
       Non-interest  expenses  increased  $344,000 to $2.1 million and $516,000 to
  $4.0  million  for the three and six month  periods  ended  June 30,  1999.  The
  increase during these periods resulted  primarily from higher levels of expenses
  in all categories due to branch expansion and technology upgrading.
  
       Salaries & employee  benefits  increased $96,000 or 10% to $1.1 million for
  the three months  ended June 30, 1999,  compared to $979,000 for the same period
  in 1998.  The  increase in this  category  reflects  the  increase in  full-time
  equivalent employees caused by the staffing of two new full service branches.
  
       Furniture & equipment  expense  increased  approximately  $63,000 or 40% to
  $222,000 and $130,000 or 42% to $438,000 for the three and six months ended June
  30, 1999,  respectively,  compared to $159,000 and $308,000 for the same periods
  in  1998.  The  increases  for  both  periods  were  due  to  higher  levels  of
  depreciation and maintenance.  Occupancy expense increased approximately $54,000
  or 48% to $166,000  and $73,000 or 34% to $285,000  for the three and six months
  ended June 30, 1999,  respectively.  This  compares to $112,000 and $212,000 for
  the same periods in 1998. The increases in this category reflect the added costs
  incurred in 1999 for the two new offices as well as higher costs for repairs and
  maintenance of all facilities.
  
       Advertising & marketing  expense increased $58,000 and $102,000 to $134,000
  and $223,000  for the three and six months  ended June 30,  1999,  respectively,
  compared to $76,000 and $121,000 for the same periods in 1998. Expenditures have
  risen due to increased  marketing for new products and services,  such as Direct
  Checking,  Premier  Money Market,  and Home Power equity  loans,  as well as the
  Investment Services and Trust Division.  In addition expenditures have increased
  due to the opening and promotion of two new branches as well as advertising open
  employment positions at the Bank
  INCOME TAXES
  
       Income tax expense was  $352,000  and $643,000 for the three and six months
  ended June 30, 1999 and $285,000 and $535,000 for the three and six months ended
  June 30,  1998.  The rates used for income taxes for both periods were less than
  the statutory rate as a result of tax exempt interest income.
  
  ASSET QUALITY
  
       Non-performing  assets are comprised of nonaccrual loans,  loans delinquent
  over  ninety days and still  accruing,  and Other Real  Estate  Owned  ("OREO").
  Nonaccrual  loans are loans for which the  accrual of  interest  ceases when the
  collection  of principal or interest  payments is  determined  to be doubtful by
  management.  It is the policy of DNB to discontinue the accrual of interest when
  principal or interest  payments are  delinquent 90 days or more (unless the loan
  principal  and interest are  determined by management to be fully secured and in
  the process of collection), or earlier, if considered prudent. Interest received
  on such loans is applied to the principal balance, or may in some instances,  be
  recognized  as income on a cash  basis.  A  nonaccrual  loan may be  restored to
  accrual status when management expects to collect all contractual  principal and
  interest due and the borrower has  demonstrated a sustained  period of repayment
  performance  in accordance  with the  contractual  terms.  OREO consists of real
  estate acquired by foreclosure or deed in lieu of  foreclosure.  OREO is carried
  at the lower of cost or estimated fair value, less estimated  disposition costs.
  Any significant  change in the level of  nonperforming  assets is dependent to a
  large extent on the economic  climate within DNB's markets and to the efforts of
  management to reduce the level of such assets.
  
       The  following  table sets forth those assets that are:  (i) on  nonaccrual
  status,  (ii)  contractually  delinquent  by 90 days or more and still and (iii)
  other real estate owned as a result of foreclosure or voluntary transfer to DNB.
  June 30 Dec. 31  June 30
  (Dollars in Thousands)                         1999    1998     1998
                                                 ----    ----     ----
  Nonaccrual Loans:
       Residential mortgage                   $  106   $  250   $  250
       Commercial mortgage                       689    1,063      886
       Commercial .........                      781      990      950
       Consumer ...........                      124      114       93
                                               -----    -----    -----
  Total nonaccrual loans ..                    1,700    2,417    2,179
  
  Loans 90 days past due and still accruing      703      699      760
                                               -----    -----    -----
  Total non-performing loans ..............    2,403    3,116    2,939
  Other real estate owned .................      555      139      206
                                              -- ---   ------   ------
  Total non-performing assets .............   $2,958   $3,255   $3,145
                                              ======   ======   ======
  The  following  table  sets forth the DNB's  asset  quality  and  allowance
  coverage ratios at the dates indicated:
  June 30  Dec. 31  June 30
                                                        1999    1998     1998
                                                       -----    -----    -----
  Non-performing Loans/Total Loans ..............       1.4%     2.1%     2.2%
  Non-performing Assets/Total Loans and OREO ....       1.8      2.2      2.3
  Allowance for Loan Losses/Total Loans .........       3.2      3.5      3.8
  Allowance for Loan Losses/Total Loans and OREO        3.1      3.5      3.7
  Allowance for Loan Losses/Non-performing Assets     176.9    159.9    162.9
  Allowance for Loan Losses/Non-performing Loans      217.8    167.0    174.3
  If interest  income had been recorded on nonaccrual  loans and trouble debt
  restructurings,  interest  would have been  increased as shown in the  following
  table:
  6 Months    Year   6 Months
                                                     Ended     Ended    Ended
  (Dollars in thousands)                            6/30/99   12/31/98  6/30/98
                                                    -------   --------  -------
  Interest income which would have been recorded
         under original terms ..................      $  66      $ 194    $  89
  Interest income recorded during the period ...         (5)       (92)     (36)
                                                      -----      -----    -----
  Net impact on interest income ................      $  61      $ 102    $  53
                                                      =====      =====    =====
  As of  June  30,  1999,  DNB  had  impaired  loans  with a  total  recorded
  investment of $1.1 million and an average recorded  investment for the six month
  period ended June 30, 1999 of $1.5  million.  As of June 30, 1999,  there was no
  related  allowance for credit losses  necessary for these impaired loans.  Total
  cash  collected  on impaired  loans was  credited to the  outstanding  principal
  balance in the amount of $57,000  during the six months ended June 30, 1999.  No
  interest income was recorded on such loans.
  
       As of December  31,  1998,  DNB had  impaired  loans with a total  recorded
  investment of $1.7 million and an average recorded investment for the year ended
  December 31, 1998 of $1.6 million. As of December 31, 1998, there was no related
  allowance  for credit  losses  necessary for these  impaired  loans.  Total cash
  collected on impaired loans was credited to the outstanding  principal income in
  the amount of $115,000  during the six months ended June 30,  1998.  No interest
  income was recorded on such loans.
  LIQUIDITY AND CAPITAL RESOURCES
  
       For a financial institution,  liquidity is a measure of the ability to fund
  customers'  needs  for  loans  and  deposit  withdrawals.  Management  regularly
  evaluates economic  conditions in order to maintain a strong liquidity position.
  One of the most  significant  factors  considered by management  when evaluating
  liquidity  requirements is the stability of DNB's core deposit base. In addition
  to cash,  DNB  maintains  a  portfolio  of short  term  investments  to meet its
  liquidity requirements. DNB has historically relied on cash flow from operations
  and other financing  activities.  Liquidity is provided by investing activities,
  including the repayment and maturing of loans and investment securities.
  
       At June 30, 1999 DNB has $12.7 million in  commitments  to fund  commercial
  real estate, construction and land development. In addition, DNB had commitments
  to fund $2.3  million in home equity  lines of credit and $8.7  million in other
  unused  commitments.  Management  anticipates the majority of these  commitments
  will be funded by means of normal cash flows. In addition, $36.7 million of time
  deposits at DNB are scheduled to mature  during the six months  ending  December
  31,  1999.  Management  believes  that the  majority  of such  deposits  will be
  reinvested with DNB and that certificates that are not renewed will be funded by
  maturing loans and investments.
  
       Stockholders'  equity  increased  to $20.6  million  at June 30,  1999 as a
  result of the $1.4  million  profit  reported  for the six months then ended and
  after dividends paid totaling approximately  $396,000  year-to-date.  The Bank's
  common  equity  position  at June  30,  1999  exceeds  the  regulatory  required
  minimums.  The  following  table  summarizes  data and ratios  pertaining to the
  Bank's capital structure.
  (Dollars in thousands)                                       June 30, 1999
                                                               -------------
  Tier I Capital..............................                  $20,804
  Tier II Capital..............................                    2,527
                                                                 -------
  Total Capital................................                  $23,331
                                                                 =======
  Required  Current  Excess
                                                   --------  -------  ------
  Leverage ....................................      4.00%    7.46%   3.46%
  Tier I ......................................      4.00    10.43    6.43
  Risk-based...................................      8.00    11.70    3.70
  In  addition,  the Federal  Reserve Bank (the "FRB")  leverage  ratio rules
  require bank holding  companies to maintain a minimum level of "primary capital"
  to total assets of 5.5% and a minimum  level of "total  capital" to total assets
  of 6%. For this  purpose,  (i) "primary  capital"  includes,  among other items,
  common stock, contingency and other capital reserves, and the allowance for loan
  losses, (ii) "total capital" includes,  among other things, certain subordinated
  debt,  and "total  assets" is increased by the allowance for loan losses.  DNB's
  primary  capital ratio and its total capital ratio are both 8.8%, well in excess
  of FRB requirements.
  REGULATORY MATTERS
  
       Dividends  payable to the  Corporation  by the Bank are  subject to certain
  regulatory limitations. Under normal circumstances,  the payment of dividends in
  any year without regulatory permission is limited to the net profits (as defined
  for  regulatory  purposes) for that year,  plus the retained net profits for the
  preceding two calendar years.
  
  YEAR 2000 ISSUES
  
       Year 2000 issues arise from a concern that certain  information systems and
  automated   equipment   will  be  unable  to  recognize  and  process   properly
  date-related information after December 31, 1999. If not corrected, these system
  and equipment failures could produce inaccurate or unpredictable results causing
  disruptions of normal business operations beginning on January 1, 2000.
  
       In  order  to  address  these  Year  2000  issues,   DNB  has  developed  a
  comprehensive approach beginning with the establishment of a Technology Steering
  Committee.  The Committee has developed and implemented a compliance plan, which
  is divided into five phases: (1) awareness; (2) assessment;  (3) renovation; (4)
  validation & testing;  and (5)  implementation.  The goal is to ensure that each
  organizational function,  system,  application,  file, program and database will
  correctly  process,  provide  and/or  receive  data at the  century  date change
  beginning December 31, 1999.
  
       DNB has  substantially  completed the first four phases of the plan for all
  of  its   mission-critical   systems,   and  it  is  currently  working  on  the
  implementation  phase. DNB has  substantially  completed the final phase,  which
  requires testing of all Bank interfaces and connections  with other systems.  In
  addition to mission-critical  systems,  DNB has identified and is monitoring the
  Year 2000 readiness of other vendors and service  providers and has  established
  contingency  plans for alternate  suppliers  based upon target  compliance  time
  frames.
  
       To evaluate the risk of customer  non-compliance with Year 2000 issues, the
  Bank initiated  written  communications  with all of its commercial  deposit and
  borrowing  customers,  which included a questionnaire,  to assist in determining
  their  awareness and  readiness  for the century date change.  DNB also reviewed
  significant  borrowing  relationships  (over  $250,000) and classified them into
  high, moderate and low risk categories for non-compliance with Year 2000 issues.
  DNB called those  customers in the high and moderate  risk  categories to obtain
  personal  responses to  questionnaires in order to evaluate the risk to DNB from
  the failure of those  customers  to remediate  their own Year 2000  issues.  The
  results of these  assessments  are being  incorporated  into DNB's  credit  risk
  management  processes,  including customer risk ratings.  These assessments were
  completed by June 30, 1999.
  DNB has developed a business resumption contingency plan which outlines its
  courses of action in the event of a Year 2000-related  systems failure. The plan
  was  developed  to help DNB  resume  operations  in an  orderly  fashion  and to
  continue providing essential services in the event of the most reasonably likely
  worst case scenarios.  At this point,  DNB has completed the four-phase  process
  recommended  by regulators.  The project was completed by July 14, 1999.  During
  August and  September,  the plans will be  validated  independently  in order to
  judge the effectiveness and reasonableness of the contingency strategies.
  
       DNB is substantially Year 2000 compliant and is working diligently on a few
  remaining  items with an estimated  completion  date of September 30, 1999. Year
  2000 issues could result in material  financial risk to a company such as DNB if
  the company and third party  vendors upon which it relies were unable to address
  this issue in a timely manner. However, management currently expects DNB and its
  third party vendors to be Year 2000  compliant in all material  respects  before
  August  15,  1999.  The Year  2000  statements  contained  herein,  and in other
  securities  filings of DNB are Year 2000  readiness  disclosures  subject to the
  Year 2000  Readiness and  Disclosure  Act of 1998, and may not be relied upon as
  representations  or warranties for any purpose other than disclosure for Federal
  securities law compliance purposes.
  
       Management  currently estimates that the costs of Year 2000 compliance will
  be approximately  $60,000 during the two years ended December 31, 1999, of which
  approximately  $58,000 has been  expended  through June 30,  1999.  All of these
  expenses have been funded from operating cash flow.
  
  RECENT DEVELOPMENTS
  
       On May 17th,  DNB opened its eighth office in West Goshen.  This new branch
  is located at 1115 West  Chester  Pike in the  Shop-Rite/Office  Depot  Shopping
  Center.
  
       In addition,  DNB recently  announced that it has entered into an agreement
  with  Exton  Square,  Inc.  to lease a parcel  of ground  formerly  known as the
  Guernsey Cow in Exton.  The Bank is currently  working with its  architect on an
  adaptive  reuse of the  Guernsey  Cow Dairy Barn.  In addition to a full service
  branch  with four  drive-up  windows,  the  building  will also house the Bank's
  Investment  Services & Trust Division as well as Commercial  Lending  personnel.
  The  opening  is  expected  to take  place  in the  summer  of 2000 and has been
  approved by the Office of the Comptroller of the Currency.
  
  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
       No material changes in DNB's market risk occurred from December 31, 1998 to
  June 30, 1999.
  
  FORWARD-LOOKING STATEMENTS
  
       Certain  statements in this report,  including any which are not statements
  of historical  fact,  may  constitute  "forward-looking  statements"  within the
  meaning of Section 27A of the  Securities  Act and  Section 21E of the  Exchange
  Act. Without limiting the foregoing, the words "expect",  "anticipate",  "plan",
  "believe",  "seek",  "estimate",  "predict",  "internal"  and similar  words are
  intended  to  identify  expressions  that  may  be  forward-looking  statements.
  Forward-looking  statements involve certain risks and uncertainties,  and actual
  results may differ  materially from those  contemplated by such statements.  For
  example,   actual   results  may  be   adversely   affected  by  the   following
  possibilities:  (1)  competitive  pressure  among  depository  institutions  may
  increase; (2) changes in interest rates may reduce banking interest margins; (3)
  general  economic  conditions  and real estate values may be less favorable than
  contemplated; (4) adverse legislation or regulatory requirements may be adopted;
  (5) the impact of the Year 2000  issue may be more  significant  than  currently
  anticipated;  (6) unexpected contingencies relating to Year 2000 compliance; and
  (7) other unexpected  contingencies  may arise. Many of these factors are beyond
  DNB's  ability to control or  predict.  Readers of this  report are  accordingly
  cautioned  not to  place  undue  reliance  on  forward-looking  statements.  DNB
  disclaims any intent or obligation to update publicly any of the forward-looking
  statements  herein,  whether in response to new  information,  future  events or
  otherwise.
  PART II - OTHER INFORMATION
  
  ITEM 1.   LEGAL PROCEEDINGS
  
                  Not Applicable
  
  ITEM 2.   CHANGES IN SECURITIES
  
                  Not Applicable
  
  ITEM 3.   DEFAULTS UPON SENIOR SECURITIES
  
                  Not Applicable
  
  ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
                  Not Applicable
  
  ITEM 5.   OTHER INFORMATION
  
                  Not Applicable
  
  ITEM 6.
             (a)  EXHIBITS:
  
                  Exhibit Number referred to in
                  Item 601 of Regulation S-K                Description of Exhibit
                  --------------------------                ----------------------
                  27                                       Financial Data Schedule
  
             (b)  REPORTS ON FORM 8-K
  
                  Not Applicable
  SIGNATURES
  
       Pursuant to the  requirements  of The Securities  Exchange Act of 1934, the
  registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
  undersigned thereunto duly authorized.
  
                                                         DNB FINANCIAL CORPORATION
                                                               (Registrant)
  
  DATE:  August 13, 1999                               /S/ Henry F. Thorne
  -----  ---------------                               -------------------
                                                       Henry F. Thorne, President
                                                       and Chief Executive Officer
  
  DATE:  August 13, 1999                               /S/ Bruce E. Moroney
  -----  ---------------                               --------------------
                                                       Bruce E. Moroney
                                                       Chief Financial Officer