Notice of Plan Administrator Change

Transcription

1 Notice of Plan Administrator Change Please note that the administrator for this plan is now Computershare Trust Company, N.A. Computershare Inc. acts as service agent to Computershare Trust Company, N.A. under the plan. The terms and conditions of this plan remain in force. To contact us or view online information about this plan, please visit Visit this website for exciting new features and services available to you. To call us, please use the phone number included on the enclosed form. All written correspondence should contain your account number and the name of the security that appears on your stock certificate or account statement, and be mailed to: Computershare P.O. Box College Station, TX For overnight delivery service: Computershare 211 Quality Circle Suite 210 College Station, TX Please retain this notice for future reference. CERTAINTY INGENUITY ADVANTAGE 01QQRC 003SSN045F 1/14

2 PROSPECTUS JTNB BANCORP, INC. DIVIDEND REINVESTMENT PLAN 50,000 SHARES OF COMMON STOCK TRADING SYMBOL: JTNB.PK This prospectus relates to 50,000 shares of common stock of JTNB Bancorp, Inc., a Pennsylvania corporation (the Corporation ), that the Corporation may issue or sell, from time to time, under its Dividend Reinvestment Plan (the Plan ). Under the terms of the Plan, the Corporation is authorized to issue up to 50,000 shares of its common stock. The Plan offers holders of shares of common stock of the Corporation an opportunity to automatically reinvest their cash dividends in shares of the Corporation's common stock. The Plan Administrator will purchase shares acquired for the Plan directly from the Corporation at fair market value, in the open market, or in negotiated transactions, as described in the Plan. As of November 22, 2011, the most recent closing price of the common stock was $13.50 per share. Trading activity in the Corporation s common stock occurs in the Over-the-Counter market ( OTC ) and is reported on the Pink OTC Markets ( Pink Sheets ) under the symbol "JTNB.PK." See Risk Factors beginning on page 4 for a discussion of various factors that shareholders should consider before making an investment in our common stock. The securities being offered have not been registered with the Securities and Exchange Commission or with any state securities commission. Neither the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, the Pennsylvania Department of Banking nor any state securities commission has approved or disapproved these securities or passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense. The shares of common stock offered in this Prospectus are not savings accounts, deposits, or other obligations of a bank or savings association and are not insured by the FDIC or any other governmental agency. Neither JTNB Bancorp, Inc. nor its wholly owned subsidiary, Jim Thorpe National Bank, has guaranteed the shares being offered. There can be no assurance that the trading price of the common stock being offered will not decrease at any time. The date of this Prospectus is November 22, 2011.

3 TABLE OF CONTENTS PROSPECTUS SUMMARY...3 RISK FACTORS...3 WHERE YOU CAN FIND MORE INFORMATION...15 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...15 DIVIDEND REINVESTMENT PLAN...16 Purpose...16 Advantages...16 Administration...16 Participation...17 Purchases...18 Reports to Participants...19 Share Certificates; Safekeeping...19 Federal Tax Information...21 Other Information...22 USE OF PROCEEDS...23 EXPERTS...23 LEGAL OPINION...23

4 PROSPECTUS SUMMARY The Corporation and Significant Subsidiaries JTNB Bancorp, Inc. (the Corporation ) was formed as a Pennsylvania business corporation on October 17, 1988 for the purpose of forming a one-bank holding Corporation for the Corporation s significant subsidiary, Jim Thorpe National Bank (the Bank ). The Corporation s principal office is located at 12 Broadway, Jim Thorpe, Pennsylvania. The Corporation s only significant subsidiary is the Bank. The Bank is a national association headquartered in Jim Thorpe, Pennsylvania. It was established in 1902 under the provisions of the National Bank Act as amended. The FDIC insures the Bank s deposits to the maximum extent under the law. The Bank s principal office is located at 12 Broadway, Jim Thorpe, PA The Offering; The Plan; Use of Proceeds The securities offered hereby are 50,000 shares of the Corporation s common stock, $.344 par value per share, subject to adjustment for stock splits, stock dividends and other changes in the Corporation s capital structure. The purpose of the offering is to provide holders of the Corporation s common stock with a simple and convenient method of investing cash dividends declared on the common stock in additional shares of common stock, without incurring brokerage commissions, through the Corporation's Dividend Reinvestment Plan (the Plan ). A copy of the Plan can be found beginning on page 15 of this Prospectus. The Corporation intends to act as Plan Administrator for the Plan. Shares may be acquired for issuance pursuant to the Plan by the Plan Administrator through open market purchases, through negotiated transactions or from the Corporation. For open market purchases, the purchase price to participants will be the actual price paid, excluding brokerage commissions and other expenses; these commissions and expenses will be paid by the Corporation. The Corporation will receive none of the proceeds from shares acquired for issuance pursuant to the Plan unless the acquisitions involve the purchase of shares from the Corporation. To the extent any shares are purchased from the Corporation, the proceeds of such sales will be added to the Corporation s general funds and will be available for its general corporate purposes, including working capital requirements and contributions to the Bank to support its anticipated growth and expansion. RISK FACTORS The purpose of the Plan is to provide a convenient and useful service for the Corporation s current shareholders. Nothing in this Prospectus represents a recommendation by the Corporation or anyone else that a person buy or sell the Corporation s common stock. We urge you to read this Prospectus thoroughly before you make your investment decision regarding participation in the Plan. Before you invest in the Corporation s common stock, you should be aware that an investment in our common stock involves a variety of risks, including those described below. You should carefully read and consider these risk factors, together with all the other information contained in this Prospectus, before you decide to purchase the Corporation s common stock. 3

5 Risks Relating to Recent Economic Conditions and Governmental Response Efforts The Corporation s earnings are impacted by general business and economic conditions. The Corporation s operations and profitability are impacted by general business and economic conditions; these conditions include long-term and short-term interest rates, inflation, money supply, political issues, legislative and regulatory changes, fluctuations in both debt and equity capital markets, broad trends in industry and finance, and the strength of the U.S. economy and the local economies in which we operate, all of which are beyond our control. Our results of operations are affected by conditions in the capital markets and the economy generally. The capital and credit markets have experienced extreme volatility and disruption for more than twelve months but stabilized in relative terms in The volatility and disruption in these markets in 2008 to 2010 have produced downward pressure on stock prices of, and credit availability to, certain companies without regard to those companies underlying financial strength. This has resulted in significant writedowns of asset values by financial institutions, including government-sponsored entities and major commercial and investment banks. The U.S. and global economies have been in steep decline and are seeking to recover. Monetary and fiscal policies are loosening around the world to varying degrees, most aggressively in the United States, but they are battling against an extreme credit crunch, and will take time to become effective. These factors, combined with declining business and consumer confidence, dramatic declines in the housing market during the past years, with falling home prices and increasing foreclosures, and rising unemployment have precipitated an economic slowdown and induced fears of a prolonged recession. On a positive note, the end of the recession was announced by the federal government in September, Nevertheless, we cannot predict when positive economic effects will manifest on a steady basis in the banking industry and for the Corporation. We cannot predict the effect of recent legislative and regulatory initiatives. The U.S. federal and state governments and foreign governments have taken or are considering extraordinary actions in an attempt to deal with the worldwide financial crisis and the severe decline in the global economy. To the extent adopted, many of these actions have been in effect for only a limited time, and have provided limited or no relief to the capital, credit and real estate markets. There is no assurance that these actions or other actions under consideration will ultimately be successful. In the United States, the federal government has adopted the Emergency Economic Stabilization Act of 2008 (enacted on October 3, 2008) ( EESA ) and the American Recovery and Reinvestment Act of 2009 (enacted on February 17, 2009) ( ARRA ). With authority granted under these laws, the Treasury implemented a financial stability plan that is intended to: provide for the government to invest additional capital into banks and otherwise facilitate bank capital formation; increase the limits on federal deposit insurance; and provide for various forms of economic stimulus, including to assist homeowners restructure and lower mortgage payments on qualifying loans. 4

6 In many cases, full implementation of the laws will require the adoption of regulations and program parameters. Other laws, regulations, and programs at the federal, state and even local levels are under consideration that address the economic climate and/ or the financial services industry. The full effect of these initiatives cannot be predicted. Compliance with such initiatives may increase our costs and limit our ability to pursue business opportunities. Although we did not participate in the U.S. Treasury s Capital Purchase Program, future participation in specific programs may subject us to additional restrictions. In addition, we are required to pay significantly higher FDIC premiums because market developments have significantly depleted the insurance fund of the FDIC and reduced the ratio of reserves to insured deposits. There can be no assurance that these initiatives will improve economic conditions generally or the financial markets or financial services industry in particular. The failure of EESA, ARRA and the financial stability plan to stabilize the financial markets could materially adversely affect our ability to access the capital and credit markets, our business, financial condition, results of operations and the market price for the Bank's Preferred Stock being offered and the Corporation's common stock. On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), into law. The Dodd-Frank Act will have a broad impact on the financial services industry, including significant regulatory and compliance changes such as, among other things, (1) enhanced resolution authority of troubled and failing banks and their holding companies; (2) increased capital and liquidity requirements; (3) increased regulatory examination fees; (4) changes to assessments to be paid to the FDIC for federal deposit insurance; and (5) numerous other provisions designed to improve supervision and oversight of, and strengthening safety and soundness for, the financial services sector. Additionally, the Dodd-Frank Act establishes a new framework for systemic risk oversight within the financial system to be distributed among new and existing federal regulatory agencies, including the Financial Stability Oversight Council, the Board of Governors of the Federal Reserve System (the "Federal Reserve"), the Office of the Comptroller of the Currency (the "OCC"), and the FDIC. The following items provide a brief description of the impact of the Dodd-Frank Act on the operations and activities, both currently and prospectively, of the Bank and the Corporation. Deposit Insurance. The Dodd-Frank Act makes permanent the $250,000 deposit insurance limit for insured deposits, and for the period of December 31, 2010 through December 31, 2012, there is unlimited deposit insurance for non-interest bearing transaction accounts. Amendments to the Federal Deposit Insurance Act also revise the assessment base against which an insured depository institution's deposit insurance premiums paid to the FDIC's Deposit Insurance Fund (the "DIF"), will be calculated. Under the amendments, the assessment base will no longer be the institution's deposit base, but rather its average consolidated total assets less its average equity. Additionally, the Dodd- Frank Act makes changes to the minimum designated reserve ratio of the DIF, increasing the minimum from 1.15% to 1.35% of the estimated amount of total insured deposits, and eliminating the requirement that the FDIC pay dividends to depository institutions when the reserve ratio exceeds certain thresholds. Several of these provisions could increase the FDIC deposit insurance premiums paid by the Bank. While some provisions may have the effect of increasing those premiums, the FDIC, effective April 1, 2011, will alter the 5

7 formula for calculating the base upon which the premium is calculated. All other things being equal, this change in the formula will reduce the Bank's deposit insurance premium at least in the short term. The Dodd-Frank Act also provides that, effective one year after the date of enactment, depository institutions may pay interest on demand deposits. If competition in the market requires us to do so, it will increase our cost of doing business. Trust Preferred Securities. Under the Dodd-Frank Act, bank holding companies are generally prohibited from including in their regulatory Tier 1 Capital hybrid debt and hybrid equity securities issued on or after May 19, Among the hybrid debt and hybrid equity securities included in this prohibition are trust preferred securities. The Corporation has not used any of these securities in the past as a tool for raising additional Tier 1 capital. Because the Corporation currently qualifies for the small bank holding company exemption, as defined by the Federal Reserve, the prohibition against utilizing trust preferred securities should not be applicable to the Corporation. As the small bank holding company is a Federal Reserve policy, we cannot predict if the policy may be changed in the future, thus eliminating this type of transaction as a potential method to raise additional capital. The Consumer Financial Protection Bureau. The Dodd-Frank Act creates a new, independent Consumer Financial Protection Bureau (the "Bureau") within the Federal Reserve. The Bureau is tasked with establishing and implementing rules and regulations under certain federal consumer protection laws with respect to the conduct of providers of certain consumer financial products and services. The Bureau has rulemaking authority over many of the statutes governing products and services offered to bank consumers. In addition, the Dodd-Frank Act permits states to adopt consumer protection laws and regulations that are stricter than those regulations promulgated by the Bureau and state attorneys general are permitted to enforce consumer protection rules adopted by the Bureau against certain state-chartered institutions and their subsidiaries. Increased Capital Standards and Enhanced Supervision. The federal banking agencies are required to establish minimum leverage and risk-based capital requirements for banks and bank holding companies. These new standards will be no lower than existing regulatory capital and leverage standards applicable to insured depository institutions and may, in fact, be higher when established by the agencies. Compliance with heightened capital standards may reduce our ability to generate or originate revenue-producing assets and thereby restrict revenue generation from banking and non-banking operations. The Dodd-Frank Act also increases regulatory oversight, supervision and examination of banks, bank holding companies and their respective subsidiaries by the appropriate regulatory agency. Compliance with new regulatory requirements and expanded examination processes could increase our cost of operations. Transaction with Affiliates. The Dodd-Frank Act enhances the requirements for certain transactions with affiliates under Section 23A and 23B of the Federal Reserve Act, including an expansion of the definition of "covered transactions" and increasing the amount of time for which collateral requirements regarding covered transactions must be maintained. These changes should have no material impact on the Bank or the Corporation. Transactions with Insiders. Insider transaction limitations are expanded through the strengthening of loan restrictions to insiders and the expansion of the types of transactions subject to the various limits, including derivative transactions, repurchase 6

8 agreements, reverse repurchase agreements and securities lending or borrowing transactions. Restrictions are also placed on certain asset sales to and from an insider to an institution, including requirements that such sales be on market terms and, in certain circumstances, approved by the institution's board of directors. Enhanced Lending Limits. The Dodd-Frank Act strengthens the existing limits on a depository institution's credit exposure to one borrower. Federal banking law currently limits a national bank's ability to extend credit to one person (or group of related persons) in an amount exceeding certain thresholds. The Dodd-Frank Act expands the scope of these restrictions to include credit exposure arising from derivative transactions, repurchase agreements, and securities lending and borrowing transactions. It also eventually will prohibit state-chartered banks from engaging in derivative transactions unless the state lending limit laws take into account credit exposure to such transactions. Corporate Governance. The Dodd-Frank Act addresses many corporate governance and executive compensation matters that will affect most U.S. publicly traded companies. The Dodd-Frank Act (1) grants shareholders of U.S. publicly traded companies an advisory vote on executive compensation; (2) enhances independence requirements for compensation committee members; (3) requires companies listed on national securities exchanges to adopt incentive-based compensation clawback policies for executive officers; and (4) provides the SEC with authority to adopt proxy access rules that would allow shareholders of publicly traded companies to nominate candidates for election as a director and have those nominees included in a company's proxy materials. Many of the requirements called for in the Dodd-Frank Act will be implemented over time and most will be subject to implementing regulations over the course of several years. Because the Corporation does not have stock registered with the SEC, our current assessment is that the Dodd-Frank Act, as it relates to corporate governance, will not have a material effect on the Corporation's operations. The changes resulting from the Dodd- Frank Act may impact the profitability of business activities, require changes to certain of our business practices, impose upon us more stringent capital, liquidity, and leverage requirements or otherwise adversely affect our business. These other changes may also require us to invest significant management attention and resources to evaluate and make any changes necessary to comply with new statutory and regulatory requirements. Failure to comply with the new requirements may negatively impact our results of operations and financial condition. While we cannot predict what effect any presently contemplated or future changes in the laws or regulations or their interpretations would have on us, these changes could be materially adverse to our investors. Regulatory initiatives by the government could increase our costs of doing business and adversely affect our results of operations and financial condition. Government responses to the condition of the global financial markets and the banking industry have, among other things, increased our costs significantly and may further increase our costs for items such as federal deposit insurance and increased capital requirements. The FDIC insures deposits at FDIC-insured financial institutions, including our Bank. The FDIC charges the insured financial institutions premiums to maintain the Deposit Insurance Fund at a certain level. Current economic conditions have increased bank failures and expectations for further failures, in which case the FDIC would pay all deposits of a failed bank up to the insured amount from the Deposit Insurance Fund. In 7

9 2008, the FDIC adopted a rule that increased premiums paid by insured institutions and made other changes to the assessment system. Increases in deposit insurance premiums could adversely affect our net income. In 2009, the FDIC adopted a regulation amending the FDIC s assessment regulations to require insured depository institutions to prepay their quarterly risk-based assessments for the fourth quarter of 2009, and for all of 2010, 2011 and We may also become subject to additional federal legislation and regulation that could force us to change a number of our historical practices, limit the fees we may charge or restrict our ability to attract and maintain executive officers. We borrow from the Federal Home Loan Bank and the Federal Reserve, and there can be no assurance these programs will continue in their current manner. We at times utilize the Federal Home Loan Bank (FHLB) of Pittsburgh for overnight borrowings and term advances; we also borrow from the Federal Reserve and from correspondent banks under our federal funds lines of credit. The amount loaned to us is generally dependent on the value of the collateral pledged. The Bank has an agreement with the Federal Home Loan Bank of Pittsburgh (FHLB) which allows for borrowings up to a percentage of qualifying collateral assets. These lenders could reduce the percentages loaned against various collateral categories, could eliminate certain types of collateral and could otherwise modify or even terminate their loan programs, particularly to the extent they are required to do so because of capital adequacy or other balance sheet concerns. Any change or termination of our borrowings from the FHLB, the Federal Reserve or correspondent banks would have an adverse affect on our liquidity and profitability. Our results of operations may be adversely affected by other-than-temporary impairment charges relating to our investment portfolio. We may be required to record future impairment charges on our investment securities, including our investment in the FHLB of Pittsburgh, if they suffer declines in value that we consider other than temporary. Numerous factors, including the lack of liquidity for re-sales of certain investment securities, the absence of reliable pricing information for investment securities, adverse changes in the business climate, adverse regulatory actions or unanticipated changes in the competitive environment, could have a negative effect on our investment portfolio in future periods. If an impairment charge is significant enough, it could affect the ability of our Bank to pay dividends to us, which could have a material adverse effect on our liquidity and our ability to pay dividends to shareholders. Significant impairment charges could also negatively impact our regulatory capital ratios and result in our Bank not being classified as well-capitalized for regulatory purposes. We may need to raise additional capital in the future and such capital may not be available when needed or at all. We may need to raise additional capital in the future to provide us with sufficient capital resources and liquidity to meet our commitments and business needs. Our ability to raise additional capital, if needed, will depend on, among other things, conditions in the capital markets at that time, which are outside of our control, and our financial performance. The liquidity crisis and the loss of confidence in financial institutions has eased, but nevertheless, our cost of funding may increase and limit our access to some of our customary sources of liquidity, including, but not limited to, inter-bank borrowings, repurchase agreements and 8

10 borrowings from the discount window of the Federal Reserve Bank. We cannot assure you that such capital will be available to us on acceptable terms or at all. Any occurrence that may limit our access to the capital markets, such as a decline in the confidence of debt purchasers, depositors of our subsidiary bank or counterparties participating in the capital markets may adversely affect our capital costs and our ability to raise capital and, in turn, our liquidity. An inability to raise additional capital on acceptable terms when needed could have a material adverse effect on our business, financial condition and results of operations. Risks Related to Our Market and Business The Corporation s profitability is affected by economic conditions in the Commonwealth of Pennsylvania. Unlike larger national or regional banks whose operations cover larger geographic areas, the Corporation provides banking and financial services to customers primarily in Carbon and Schuylkill Counties, and their contiguous counties in Pennsylvania. Because of our geographic concentration, continuation of the economic downturn in our region could make it more difficult to attract deposits and could cause higher rates of loss and delinquency on our loans than if the loans were more geographically diversified. Adverse economic conditions in the region, including, without limitation, declining real estate values, could cause our levels of non-performing assets and loan losses to increase. If the economic downturn continues or a prolonged economic recession occurs in the economy as a whole, borrowers will be less likely to repay their loans as scheduled. A continued economic downturn could, therefore, result in losses that materially and adversely affect our financial condition and results of operations. The Corporation operates in a highly competitive industry and market area. We face substantial competition in all phases of our operations from a variety of different competitors. Our competitors, including commercial banks, community banks, savings and loan associations, mutual savings banks, credit unions, consumer finance companies, insurance companies, securities dealers, brokers, mortgage bankers, investment advisors, money market mutual funds and other financial institutions, compete with lending and deposit-gathering services offered by us. Increased competition in our markets may result in reduced loans and deposits. Many of these competing institutions have much greater financial and marketing resources than are available to us. Due to their size, many competitors can achieve larger economies of scale and may offer a broader range of products and services than we can provide. If we are unable to offer competitive products and services, our business may be negatively affected. Some of the financial services organizations with which we compete are not subject to regulation to the same degree as imposed on bank holding companies and federally insured financial institutions. As a result, these non-bank competitors have certain advantages over us in accessing funding and in providing various services. The banking business in our primary market areas is very competitive, and the level of competition facing us may increase further, which may limit our asset growth and financial results. 9

11 The Corporation s controls and procedures may fail or be circumvented. Our management diligently reviews and updates the Corporation s internal controls over financial reporting, disclosure controls and procedures, and corporate governance policies and procedures. Any failure or undetected circumvention of these controls could have a material adverse impact on our financial condition and results of operations. Potential acquisitions may disrupt the Corporation s business and dilute shareholder value. We regularly evaluate opportunities to acquire and invest in banks and in other complementary businesses. As a result, we may engage in negotiations or discussions that, if they were to result in a transaction, could have a material effect on our operating results and financial condition, including short and long-term liquidity. Our acquisition activities could be material to us. For example, we could issue additional shares of common stock in a purchase transaction, which could dilute current shareholders ownership interest. These activities could require us to use a substantial amount of cash, other liquid assets, and/or incur debt. In addition, if goodwill recorded in connection with our prior or potential future acquisitions were determined to be impaired, then we would be required to recognize a charge against our earnings, which could materially and adversely affect our results of operations during the period in which the impairment was recognized. Any potential charges for impairment related to goodwill would not impact cash flow, tangible capital or liquidity. Our acquisition activities could involve a number of additional risks, including the risks of: incurring time and expense associated with identifying and evaluating potential acquisitions and negotiating potential transactions, resulting in management s attention being diverted from the operation of our existing business; using inaccurate estimates and judgments to evaluate credit, operations, management, and market risks with respect to the target institution or assets; the time and expense required to integrate the operations and personnel of the combined businesses; creating an adverse short-term effect on our results of operations; and losing key employees and customers as a result of an acquisition that is poorly received. We cannot assure you that we will be successful in overcoming these risks or any other problems encountered in connection with potential acquisitions. Our inability to overcome these risks could have an adverse effect on our ability to achieve our business strategy and maintain our market value. 10

12 The Corporation may not be able to attract and retain skilled people. We are dependent on the ability and experience of a number of key management personnel who have substantial experience with our operations, the financial services industry, and the markets in which we offer products and services. The loss of one or more senior executives or key managers may have an adverse effect on our operations. The Corporation does not currently have employment agreements or non-competition agreements with any of our executive officers, with the exception of the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer. Also, as we continue to grow operations, our success depends on our ability to continue to attract, manage, and retain other qualified management personnel. If we lost a significant portion of our low-cost deposits, it would negatively impact our liquidity and profitability. Our profitability depends in part on our success in attracting and retaining a stable base of low-cost deposits. While we generally do not believe these core deposits are sensitive to interest rate fluctuations, the competition for these deposits in our markets is strong and customers are increasingly seeking investments that are safe, including the purchase of U.S. Treasury securities and other government-guaranteed obligations, as well as the establishment of accounts at the largest, most well-capitalized banks. If we were to lose a significant portion of our low-cost deposits, it would negatively impact our liquidity and profitability. The Corporation s information systems may experience an interruption or breach in security. While the Corporation has policies and procedures designed to prevent or limit the effects of any failure, interruption, or breach in our security systems, there can be no assurance that any such failures will not occur and, if they do occur, that they will be adequately addressed. As a result, the occurrence of any such failures, interruptions, or breaches in security could expose the Corporation to reputation risk, civil litigation, regulatory scrutiny and possible financial liability that could have a material adverse effect on our financial condition. The Corporation continually encounters technological change. Our future success depends, in part, on our ability to effectively embrace technology efficiencies to better serve customers and reduce costs. Failure to keep pace with technological change could potentially have an adverse effect on our business operations and financial condition. The Corporation is subject to claims and litigation. Customer claims and other legal actions, whether founded or unfounded, could result in financial or reputation damage and have a material adverse effect on our financial condition and results of operations if such claims are not resolved in a manner favorable to the Corporation. 11

13 External events could impact the Corporation. Natural disasters, acts of war or terrorism and other adverse external events could have a significant impact on the Corporation s ability to conduct business. Our management has established disaster recovery policies and procedures that are expected to mitigate events related to natural or man-made disasters; however, the impact of an overall economic decline resulting from such a disaster could have a material adverse effect on the Corporation s financial condition. The Corporation depends on the accuracy and completeness of information about customers and counterparties. In deciding whether to extend credit or enter into other transactions with customers and counterparties, we may rely on information furnished to us by or on behalf of customers and counterparties, including financial statements and other financial information. We also may rely on representations of customers and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. For example, in deciding whether to extend credit to clients, we may assume that a customer s audited financial statements conform to generally accepted accounting principles ( GAAP ) and present fairly, in all material respects, the financial condition, results of operations and cash flows of the customer. Our earnings are significantly affected by our ability to properly originate, underwrite and service loans. Our financial condition and results of operations could be negatively impacted to the extent we incorrectly assess the creditworthiness of our borrowers, fail to detect or respond to deterioration in asset quality in a timely manner, or rely on financial statements that do not comply with GAAP or are materially misleading. Risks Related to the Banking Industry The Corporation is subject to interest rate risk. Our profitability is dependent to a large extent on our net interest income. Like most financial institutions, we are affected by changes in general interest rate levels and by other economic factors beyond our control. Although we believe we have implemented strategies to reduce the potential effects of changes in interest rates on our results of operations, any substantial and prolonged change in market interest rates could adversely affect our operating results. Net interest income may decline in a particular period if: in a declining interest rate environment, more interest-earning assets than interest-bearing liabilities re-price or mature; or in a rising interest rate environment, more interest-bearing liabilities than interest-earning assets re-price or mature. Our net interest income may decline based on our exposure to a difference in short-term and long-term interest rates. If the difference between the interest rates shrinks or disappears, the difference between rates paid on deposits and received on loans could narrow significantly resulting in a decrease in net interest income. In addition to these factors, if market interest rates rise rapidly, interest rate adjustment caps may limit increases 12

14 in the interest rates on adjustable rate loans, thus reducing our net interest income. Also, certain adjustable rate loans re-price based on lagging interest rate indices. This lagging effect may also negatively impact our net interest income when general interest rates continue to rise periodically. The Corporation is subject to lending risk. Risks associated with lending activities include, among other things, the impact of changes in interest rates and economic conditions, which may adversely impact the ability of borrowers to repay outstanding loans, and impact the value of the associated collateral. Various laws and regulations also affect our lending activities and failure to comply with such applicable laws and regulations could subject the Corporation to enforcement actions and civil monetary penalties. The Corporation s allowance for possible loan losses may be insufficient and an increase in the allowance would reduce earnings. We maintain an allowance for loan losses. The allowance is established through a provision for loan losses based on our management s evaluation of the risks inherent in our loan portfolio and the general economy. The allowance is based upon a number of factors, including the size of the loan portfolio, asset classifications, economic trends, industry experience and trends, industry and geographic concentrations, estimated collateral values, management s assessment of the credit risk inherent in the portfolio, historical loan loss experience and loan underwriting policies. In addition, we evaluate all loans identified as problem loans and augment the allowance based upon our estimation of the potential loss associated with those problem loans. Additions to our allowance for loan losses decrease our net income. If the evaluation we perform in connection with establishing loan loss reserves is wrong, our allowance for loan losses may not be sufficient to cover our losses, which would have an adverse effect on our operating results. Due to the volatile economy, we cannot assure you that we will not experience an increase in delinquencies and losses as these loans continue to mature. The federal regulators, in reviewing our loan portfolio as part of a regulatory examination, may from time to time require us to increase our allowance for loan losses, thereby negatively affecting our financial condition and earnings at that time. Moreover, additions to the allowance may be necessary based on changes in economic and real estate market conditions, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control. The Corporation relies on dividends from our subsidiary for most of our revenue. The Corporation is a bank holding company and our operations are conducted by our sole subsidiary, the Bank, from which we receive dividends. The ability of our subsidiary to pay dividends is subject to legal and regulatory limitations, profitability, financial condition, capital expenditures and other cash flow requirements. The ability of our Bank to pay cash dividends to the Corporation is limited by its obligation to maintain sufficient capital and by other restrictions on its cash dividends that are applicable to national banks. If our Bank is not permitted to pay cash dividends to the Company, it is 13

15 unlikely that we would be able to pay cash dividends on our common stock. Historically our Bank has a policy of paying dividends to the Corporation to support current dividends to shareholders and using the remaining operating profits to build retained earnings to support the growth of the Bank, and its regulatory capital. Risks Related to Our Common Stock An investment in the Corporation s common stock is not an insured deposit. The Corporation s common stock is not a bank deposit, is not insured by the FDIC or any other deposit insurance fund, and is subject to investment risk, including the loss of some or all of your investment. Our common stock is subject to the same market forces that affect the price of stock in any company. The price of the Corporation s Common Stock may be volatile. The Corporation s common stock price may fluctuate in response to a variety of factors, some of which are not under our control. These factors include: our past and future dividend practice; our financial condition, performance, creditworthiness and prospects; quarterly variations in our operating results or the quality of our assets; operating results that vary from the expectations of management, securities analysts and investors; changes in expectations as to our future financial performance; the operating and securities price performance of other companies that investors believe are comparable to us; future sales of our equity or equity-related securities; the credit, mortgage and housing markets, the markets for securities relating to mortgages or housing, and developments with respect to financial institutions generally; and changes in global financial markets and global economies and general market conditions, such as interest or foreign exchange rates, stock, commodity or real estate valuations or volatility and other geopolitical, regulatory or judicial events. These factors could cause the Corporation s common stock price to decrease regardless of our operating results. The Corporation s common stock is not listed for trading on any established exchange and the Corporation does not plan to list the common stock on an established exchange. The trading volume is likely to be less than that of larger financial services companies. Stock price volatility may make it more difficult for you to resell your common stock when you want to sell and at prices you find attractive. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of our common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which we have no control. There can be no assurances that a public market will develop for shares of the common stock. 14

16 Anti-takeover provisions could negatively impact our shareholders. Certain provisions in the Corporation s Articles of Incorporation and Bylaws, as well as federal banking laws, regulatory approval requirements, and Pennsylvania law could make it more difficult for a third party to acquire the Corporation, even if doing so would be perceived to be beneficial to the Corporation s shareholders. Dilution The Corporation is generally not restricted from issuing additional common stock. The issuance of any additional shares of common stock could be substantially dilutive to shareholders of our common stock. Holders of our shares of common stock have no preemptive rights that entitle holders to purchase their pro rata share of any offering of shares of any class or series. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our shareholders bear the risk of our future offerings reducing the market price of our common stock and diluting their stock holdings in us. Dividends The Plan does not represent a change in our dividend policy. The payment of dividends will continue to be dependent upon earnings, financial and regulatory requirements and other factors, which will be determined by our Board of Directors. Shareholders who do not wish to participate or are ineligible to participate in the Plan will continue to receive cash dividends if and when dividends are declared and paid. We cannot provide any assurance whether, or at what rate, we will continue to pay dividends. The stock issued under the Plan will have restrictions on its subsequent resale. The Corporation is issuing shares of stock through the Plan pursuant to an exemption from Federal registration requirements for sales that are made only within one state. In order to maintain this exemption, shares purchased under the Plan may be acquired only by Pennsylvania residents and may be resold only to another Pennsylvania resident. This restriction will remain in effect throughout the period that the Plan is in effect and for a period of nine months after it is terminated. This restriction would also apply to subsequent purchasers of the stock. INCORPORATION OF DOCUMENTS BY REFERENCE We incorporate by reference into this Prospectus the 2010 Annual Report and the accompanying audited financial statements and future Annual Reports and the accompanying audited financial statements. WHERE YOU CAN FIND MORE INFORMATION The Company s Annual Reports for 2010 and years prior are available upon request without charge. A written request should be submitted to the President and Chief Executive Officer, JTNB Bancorp, Inc., 12 Broadway, Jim Thorpe, PA Requests for future Annual Reports may also be directed in the same manner. 15

17 JTNB BANCORP, INC. DIVIDEND REINVESTMENT PLAN This JTNB Bancorp, Inc. Dividend Reinvestment Plan ( Plan ) is authorized to issue not more than 50,000 shares of the common stock of JTNB Bancorp, Inc. ( Corporation ), subject to appropriate adjustments for stock splits, stock dividends and other changes in the Corporation s capital structure. The Plan is presented in a question and answer format. Shareholders who do not participate in the Plan will continue to receive dividend payments as they are declared and paid. Purpose 1. What is the purpose of the Plan? The Plan provides shareholders with a convenient and economical method of investing cash dividends to purchase additional shares of the Corporation s common stock ( Common Stock ). Participants pay no brokerage commissions or service charges when they acquire additional shares of Common Stock through the Plan. Advantages 2. What are the advantages of the Dividend Reinvestment Plan? Administration Participants may: Reinvest cash dividends in additional shares of Common Stock without paying service charges or brokerage commissions; Invest the full amount of all dividends in shares of Common Stock, including fractional shares, which also earn dividends that are reinvested under the Plan; Avoid safekeeping and recordkeeping costs through the free custodial and reporting services under the Plan; and Regularly receive a detailed statement of account transactions and holdings under the Plan. 3. Who administers the Plan for participants? The Corporation will serve as Plan Administrator and will act as the agent for the participants. As agent for the Plan participants, the Plan Administrator will: Hold shares in the name of its nominee as agent for Plan participants; Keep and maintain records; Provide detailed statements of account to participants; and Perform other duties related to the Plan. Any notices, questions or other communications relating to the Plan should include the participant's account number and tax identification number and should be addressed to: 16

18 JTNB Bancorp, Inc. Attention: Dividend Reinvestment Plan Administrator 12 Broadway P. O. Box 209 Jim Thorpe, PA (570) The Corporation has the right to terminate and appoint in its place another Plan Administrator to serve as Plan agent at any time. Participation 4. Who is eligible to participate? Generally, all Common Stock shareholders, whether individuals or other legal entities, whose principal residence is in Pennsylvania are eligible to participate in the Plan. Shareholders who reside outside of Pennsylvania are not eligible to participate in the Plan. Shares purchased under the Plan may only be resold by participants to residents of Pennsylvania. Eligible shareholders may participate in the Plan with respect to all of their shares or with respect to a portion of their shares. 5. How does an eligible shareholder become a participant? An eligible shareholder may join the Plan at any time by completing and returning to the Plan Administrator a signed Authorization Form. The Authorization Form is available from the Plan Administrator. Record holders of Common Stock are eligible to participate in the Plan directly. Beneficial owners of the Common Stock, whose shares are registered in names other than their own (e.g., in the name of a broker, bank nominee or trustee), must become shareholders of record by having any shares that are to be enrolled in the Plan transferred into their own names. 6. What does the Authorization Form provide? The Authorization Form appoints the Plan Administrator as the participating shareholder s agent to reinvest dividends on the shares registered under the Plan by the participant in additional shares of Common Stock. 7. When may a shareholder join the Plan? A shareholder may join the Plan at any time. If the Plan Administrator receives a properly completed Authorization Form at least five (5) business days before a dividend record date, the Plan Administrator will reinvest the dividends payable with respect to such date at the time prescribed by the Plan for reinvesting dividends on Plan shares. In the case of a properly completed Authorization Form received by the Plan Administrator less than five (5) business days before a dividend record date, the dividends payable with respect to such date on any shares enrolled in the Plan pursuant to such Authorization Form will be paid directly to the shareholder of record and will not be reinvested under the Plan; provided, however, that future dividends on such shares of Common Stock shall be reinvested for so long as the shares remain enrolled in the Plan. Historically, the Corporation has declared and paid dividends on a semiannual basis. The Corporation reserves the right to change the 17