<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from ___________________ to _________________________
Commission file number 0-21264
VISTA BANCORP, INC.
- - --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
New Jersey 22-2870972
- - --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
305 Roseberry Street, P.O. Box 5360, Phillipsburg, New Jersey 08865
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(908) 859-9500
- - --------------------------------------------------------------------------------
(Issuer's telephone number, including area code)
- - --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such report), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of April 30, 1996, there were 4,019,451 shares of $.50 par value Common
Stock outstanding.
<PAGE>
VISTA BANCORP, INC.
Form 10-Q
For the period ended March 31, 1996
Index
-----
PAGE
----
Part I Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets - March 31, 1996
and December 31, 1995 3
Consolidated Statements of Income - Three Months
Ended March 31, 1996 and 1995 4
Consolidated Statements of Changes in Shareholders' Equity -
Three Months Ended March 31, 1996 and
The Year Ended December 31, 1995 5
Consolidated Statements of Cash Flows - Three Months
Ended March 31, 1996 and 1995 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12
Part II Other Information
Item 1. Legal Proceedings 24
Item 2. Changes in Securities 24
Item 3. Defaults Upon Senior Securities 24
Item 4. Submission of Matters to a Vote of Security Holders 24
Item 5. Other Information 24
Item 6. Exhibits and Reports on Form 8-K 24
2
<PAGE>
VISTA BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Amounts in Thousands (Except Per Share and Share Data)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------------------------
<S> <C> <C>
Assets
Cash and cash equivalents:
Cash and due from banks $16,036 $18,823
Federal funds sold and securities purchased under agreements to resell 3,500 10,980
Short-term investments 697 6,345
- - ----------------------------------------------------------------------------------------------------------------------
Total Cash and Cash Equivalents 20,233 36,148
- - ----------------------------------------------------------------------------------------------------------------------
Securities available for sale (Amortized cost: $162,971 and $143,563
in 1996 and 1995, respectively) 162,732 145,867
- - ----------------------------------------------------------------------------------------------------------------------
Loans, net of unearned income:
Mortgage 135,153 134,471
Commercial 65,646 67,311
Consumer 63,507 62,500
- - ----------------------------------------------------------------------------------------------------------------------
Total Loans 264,306 264,282
Allowance for loan losses (3,915) (3,932)
- - ----------------------------------------------------------------------------------------------------------------------
Total Net Loans 260,391 260,350
- - ----------------------------------------------------------------------------------------------------------------------
Premises and equipment 5,822 5,903
Accrued interest receivable 3,878 3,779
Other assets 6,960 5,193
- - ----------------------------------------------------------------------------------------------------------------------
Total Assets $460,016 $457,240
- - ----------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Deposits:
Demand:
Noninterest-bearing $38,647 $40,215
Interest-bearing 62,870 64,044
Savings 109,885 104,749
Time 191,558 192,555
- - ----------------------------------------------------------------------------------------------------------------------
Total Deposits 402,960 401,563
- - ----------------------------------------------------------------------------------------------------------------------
Borrowed funds 13,684 12,141
Long-term debt 4,670 4,725
Accrued interest payable 970 1,023
Other liabilities 2,505 1,943
- - ----------------------------------------------------------------------------------------------------------------------
Total Liabilities 424,789 421,395
- - ----------------------------------------------------------------------------------------------------------------------
Shareholders' Equity:
Common stock: $.50 par value; shares authorized 10,000,000; shares issued,
4,019,880 and 3,999,344 at March 31, 1996 and December 31, 1995, respectively 2,010 2,000
Paid-in capital 12,302 12,064
Retained earnings 21,080 20,268
Treasury stock (780 shares) (7) (7)
Net unrealized (loss) gain on securities available for sale (158) 1,520
- - ----------------------------------------------------------------------------------------------------------------------
Total Shareholders' Equity 35,227 35,845
- - ----------------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $460,016 $457,240
- - ----------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
3
<PAGE>
VISTA BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Amounts in Thousands (Except Per Share and Share Data)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1996 1995
----------------------------
<S> <C> <C>
Interest Income:
Interest and fees on loans $5,454 $4,898
Interest on federal funds sold and securities purchased
under agreements to resell 144 119
Interest on short-term investments 74 67
Interest on securities:
Taxable 2,300 2,171
Nontaxable 138 99
- - ----------------------------------------------------------------------------------------------------------------------
Total Interest Income 8,110 7,354
- - ----------------------------------------------------------------------------------------------------------------------
Interest Expense:
Interest on deposits 3,867 3,327
Interest on borrowed funds 131 117
Interest on long-term debt 86 47
- - ----------------------------------------------------------------------------------------------------------------------
Total Interest Expense 4,084 3,491
- - ----------------------------------------------------------------------------------------------------------------------
Net Interest Income 4,026 3,863
Provision for Loan Losses 45 55
- - ----------------------------------------------------------------------------------------------------------------------
Net Interest Income After Provision for Loan Losses 3,981 3,808
- - ----------------------------------------------------------------------------------------------------------------------
Noninterest Income:
Service charges on deposit accounts 392 334
Other service charges 128 71
Net security gains 58 13
Other income 132 103
- - ----------------------------------------------------------------------------------------------------------------------
Total Noninterest Income 710 521
- - ----------------------------------------------------------------------------------------------------------------------
Noninterest Expense:
Salaries and benefits 1,609 1,533
Occupancy expense 284 243
Furniture and equipment expense 287 277
Other expense 711 830
- - ----------------------------------------------------------------------------------------------------------------------
Total Noninterest Expense 2,891 2,883
- - ----------------------------------------------------------------------------------------------------------------------
Income Before Provision for Income Taxes 1,800 1,446
Provision for Income Taxes 628 516
- - ----------------------------------------------------------------------------------------------------------------------
Net Income $1,172 $930
- - ----------------------------------------------------------------------------------------------------------------------
Earnings per Share $0.29 $0.27
- - ----------------------------------------------------------------------------------------------------------------------
Weighted Average Number of Common Shares Outstanding 4,003,962 3,427,464
- - ----------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
4
<PAGE>
VISTA BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Amounts in Thousands (Except Per Share and Share Data)
<TABLE>
<CAPTION>
For The Year Ended December 31, 1995 and
For The Three Months Ended March 31, 1996
Net Unrealized
(Loss) Gain on
Securities Total
Shares Common Paid-in Retained Treasury Available Shareholders'
Issued Stock Capital Earnings Stock for Sale Equity
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 3,423,061 $1,712 $6,247 $17,350 ($7) ($730) $24,572
Net income - 1995 - - - 4,093 - - 4,093
Cash dividends - $.34 per share - - - (1,175) - - (1,175)
Net proceeds from
issuance of common stock 576,283 288 5,808 - - - 6,096
Deferred compensation - - 9 - - - 9
Net unrealized appreciation in the
market value of securities available
for sale, net of income taxes - - - - - 2,250 2,250
- - ----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 3,999,344 2,000 12,064 20,268 (7) 1,520 35,845
Net income - 1996 - - - 1,172 - - 1,172
Cash dividends - $.09 per share - - - (360) - - (360)
Net proceeds from
issuance of common stock 20,536 10 231 - - - 241
Deferred compensation - - 7 - - - 7
Net unrealized depreciation in the
market value of securities available
for sale, net of income taxes - - - - - (1,678) (1,678)
- - ----------------------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1996 4,019,880 $2,010 $12,302 $21,080 ($7) ($158) $35,227
- - ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
5
<PAGE>
VISTA BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Amounts in Thousands
<TABLE>
<CAPTION>
Three Months Ended March 31,
1996 1995
----------------------------
<S> <C> <C>
Cash Flows From Operating Activites:
Net Income $1,172 $930
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 223 189
Provision for loan losses 45 55
(Decrease) increase in deferred income (147) 14
Increase in accrued interest receivable (99) (112)
(Decrease) increase in accrued interest payable (53) 55
(Increase) decrease in other assets (949) 15
Increase in other liabilities 569 552
Net amortization of premium on securities 160 113
Net security gains (58) (13)
- - ----------------------------------------------------------------------------------------------------------------------
Net Cash Provided By Operating Activities 863 1,798
- - ----------------------------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Proceeds from maturities of securities available for sale 8,941 2,799
Proceeds from sales of securities available for sale 16,012 9,539
Purchases of securities available for sale (44,463) (5,514)
Proceeds from maturities of securities held to maturity - 4,485
Purchases of securities held to maturity - (10,194)
Net decrease (increase) in loans 61 (9,506)
Net capital expenditures (95) (392)
- - ----------------------------------------------------------------------------------------------------------------------
Net Cash Used For Investing Activities (19,544) (8,783)
- - ----------------------------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Net increase (decrease) in demand and savings deposits 2,394 (8,954)
Net (decrease) increase in time deposits (997) 15,286
Net increase in borrowed funds 1,543 1,048
Net decrease in long-term debt (55) (35)
Net proceeds from issuance of common stock 241 192
Cash dividends paid (360) (273)
- - ----------------------------------------------------------------------------------------------------------------------
Net Cash Provided By Financing Activities 2,766 7,264
- - ----------------------------------------------------------------------------------------------------------------------
Net (Decrease) Increase in Cash and Cash Equivalents (15,915) 279
Cash and Cash Equivalents, Beginning of Period 36,148 26,091
- - ----------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, End of Period $20,233 $26,370
- - ----------------------------------------------------------------------------------------------------------------------
Supplemental Disclosures of Cash Flow Information:
Interest paid $4,137 $3,436
Income taxes paid - -
Supplemental Disclosures of Investing and Financing Activities:
Transfers from loans to other real estate owned - -
Net unrealized (loss) gain in the fair value of securities available for sale (2,543) 670
Increase (decrease) in deferred tax asset related to net unrealized
(loss) gain in the fair value of securities available for sale 865 (238)
Net unrealized (loss) gain in the fair value of securities available for sale,
net of income taxes (1,678) 432
Deferred compensation 7 2
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
6
<PAGE>
Notes to Consolidated Financial Statements
Note 1. Basis of Presentation
The accompanying consolidated financial statements of Vista Bancorp,
Inc. and its subsidiaries (Vista) reflect all adjustments and disclosures which
are, in the opinion of management, necessary for a fair presentation of interim
results. The financial information has been prepared in accordance with Vista's
customary accounting practices and has not been audited.
Certain information and footnote disclosures required under generally
accepted accounting principles have been condensed or omitted pursuant to the
Securities and Exchange Commission (SEC) rules and regulations. The preparation
of financial statements in conformity with general accepted accounting
principals requires management to make certain estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates. These interim financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in Vista's Annual Report for the year
ended December 31, 1995.
Results of operations for the three month period ended March 31, 1996,
are not necessarily indicative of the results to be expected for the full year.
Note 2. Securities
Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting
for Certain Investments in Debt and Equity Securities," was adopted on January
1, 1994 and required Vista to classify its securities according to three
categories. Debt and equity securities that Vista has the positive intent and
ability to hold to maturity are classified as held to maturity (HTM) and
reported at amortized cost. Debt and equity securities that are bought and held
principally to be sold in the near term are classified as trading securities and
reported at fair value, with unrealized gains and losses included in earnings.
Vista currently does not employ this strategy. Debt and equity securities that
do not fall into either of these categories are classified as available for sale
(AFS) and reported at fair value, with unrealized gains and losses shown as a
separate component of shareholders' equity on an after tax basis.
In October 1995, the Financial Accounting Standards Board (FASB)
suspended certain transfer provisions of SFAS No. 115 for a defined period of
time beginning November 15 and ending on December 31, 1995. During this one-time
adjustment period, Vista elected to transfer all securities classified as held
to maturity into the AFS portfolio in accordance with SFAS No. 115. The transfer
involved securities with an amortized cost of $116.0 million and a market value
of $117.7 million.
7
<PAGE>
Notes to Consolidated Financial Statements - (Continued)
Note 2. Securities (Continued)
Gains or losses are recognized and shown separately in the statements
of income on realization or when values are deemed to have been other than
temporarily impaired. Recognition of these gains or losses is based on the
specific identification method. Proceeds from the sales of securities AFS during
the first quarter of 1996 and 1995 were $16.0 million and $9.5 million,
respectively. Gross realized gains of $67 thousand and gross realized losses of
$9 thousand were recognized on the sales of securities AFS during the first
quarter of 1996. For the first quarter of 1995 gross realized gains of $13
thousand were recognized on the sales of securities AFS.
The amortized cost, estimated market value and contractual maturity
information for securities AFS at March 31, 1996 and December 31, 1995, are
disclosed on the following pages. Securities not due at a single maturity date,
such as mortgage-backed securities, are disclosed separately rather than
allocated over several maturity categories.
8
<PAGE>
Notes to Consolidated Financial Statements - (Continued)
Note 2 - Securities
<TABLE>
<CAPTION>
Securities Available for Sale March 31, 1996
---------------------------------------------------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Amounts in Thousands Cost Gains Losses Value
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities $24,724 $83 ($315) $24,492
U.S. Government agencies and corporations 12,124 73 (117) 12,080
State and political subdivisions 14,265 35 (109) 14,191
Corporate debt securities 14,250 162 (52) 14,360
Mortgage-backed securities 95,051 1,033 (1,032) 95,052
Equity securities 2,557 - - 2,557
---------------------------------------------------------------------------------------------------------
Total securities available for sale $162,971 $1,386 ($1,625) $162,732
---------------------------------------------------------------------------------------------------------
Securities Available for Sale December 31, 1995
---------------------------------------------------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Amounts in Thousands Cost Gains Losses Value
---------------------------------------------------------------------------------------------------------
U.S. Treasury securities $28,142 $314 ($1) $28,455
U.S. Government agencies and corporations 13,602 168 (9) 13,761
State and political subdivisions 11,435 71 (28) 11,478
Corporate debt securities 14,963 338 (8) 15,293
Mortgage-backed securities 73,190 1,580 (121) 74,649
Equity securities 2,231 - - 2,231
---------------------------------------------------------------------------------------------------------
Total securities available for sale $143,563 $2,471 ($167) $145,867
---------------------------------------------------------------------------------------------------------
Securities Available Securities Available
for Sale for Sale
March 31, 1996 December 31, 1995
------------------------------------------------------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Amounts in Thousands Cost Gains Losses Value
------------------------------------------------------------------------------------------------------------
Maturing within one year $15,668 $15,698 $26,045 $26,149
Maturing after one year but within five years 37,591 37,467 35,546 36,205
Maturing after five years but within ten years 12,104 11,958 5,878 5,952
Maturing after ten years - - 673 681
No Maturity 2,557 2,557 2,231 2,231
Mortgage-backed securities 95,051 95,052 73,190 74,649
------------------------------------------------------------------------------------------------------------
Total securities available for sale $162,971 $162,732 $143,563 $145,867
------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
Notes to Consolidated Financial Statements - (Continued)
Note 3. Loans
SFAS No. 114, "Accounting by Creditors for Impairment of a Loan," as
amended by SFAS No. 118, "Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosures," addresses the accounting by creditors for
impairment of certain loans. SFAS No. 114 and SFAS No. 118 apply to
collateralized loans, except large groups of homogeneous loans, that are
collectively evaluated for impairment. They also apply to all loans that are
restructured in a troubled debt restructuring involving a modification of terms.
SFAS No. 114 and SFAS No. 118 require that loans within the scope of these
statements be measured based on the present value of expected future cash flows
discounted using the loan's effective interest rate, the loan's observable
market price or the fair value of the collateral securing the loan. SFAS No. 114
and SFAS No. 118 apply to all financial statements for the fiscal years
beginning after December 15, 1994. Vista adopted SFAS No. 114 and SFAS No. 118
on January 1, 1995.
At March 31, 1996, the total impaired loans recognized in accordance
with SFAS No. 114 and SFAS No. 118 were $3.9 million, of which $1.3 million were
valued based upon discounted cash flows and $2.6 million using the fair value of
collateral. Based on these methods, $741 thousand of the $3.9 million allowance
for loan losses was allocated against the $3.9 million of impaired loans. The
remaining allowance for loan losses, totalling $3.2 million at March 31, 1996,
is available to absorb losses in Vista's entire credit portfolio. Vista's total
average impaired loans during the quarter ended March 31, 1996 was approximately
the same as the balance at March 31, 1996. Interest income recorded on total
impaired loans during the first quarter of 1996 was immaterial.
Note 4. Recently Issued Accounting Standards
In March 1995, FASB issued SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This
statement became effective and was adopted by Vista on January 1, 1996. The
statement establishes accounting standards for the impairment of long-lived
assets, certain identifiable intangibles, and goodwill related to those assets
to be held and used, and for long-lived assets and certain identifiable
intangibles to be disposed of. This statement requires that long-lived assets
and certain identifiable intangibles to be held and used by an entity be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of the asset may not be recoverable. Measurement of an
impairment loss for long-lived assets and identifiable intangibles that an
entity expects to hold and use should be based on the fair value of the asset.
Adoption of this statement had no material impact on Vista's financial position
or its results of operations during the first quarter of 1996.
10
<PAGE>
Notes to Consolidated Financial Statements - (Continued)
Note 4. Recently Issued Accounting Standards - (Continued)
In May 1995, FASB issued SFAS No. 122, "Accounting for Mortgage
Servicing Rights." This statement became effective and adopted by Vista on
January 1, 1996. This statement requires the recognition of separate assets
relating to the rights to service mortgage loans for others based on their fair
value if it is practicable to estimate the value. This statement applies
prospectively to transactions entered into in 1996, therefore, there is no
cumulative effect upon adoption of this statement. This statement had no effect
on the financial position or results of operations during the first quarter of
1996 since Vista did not engage in any activities covered by the provisions of
this statement during this time period.
In October 1995, FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation." This statement became effective on January 1, 1996. SFAS No. 123
provides an alternative method of accounting for stock-based compensation
arrangements, based on fair value of the stock-based compensation utilizing
various assumptions regarding the underlying attributes of the options and
Vista's stock, rather than the existing method of accounting for stock-based
compensation which is provided in Accounting Principals Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB No. 25). FASB encourages
entities to adopt the fair-value-based method but does not require adoption of
this method. Vista has elected to continue its current accounting policy.
11
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations
General
Vista Bancorp, Inc. (Vista), formed in 1988, has two wholly-owned
subsidiary banks, The Phillipsburg National Bank and Trust Company (PNB) located
in Phillipsburg, New Jersey and Twin Rivers Community Bank (Twin Rivers) located
in Palmer Township, Pennsylvania. PNB has nine branch sites serving Warren and
Hunterdon counties in New Jersey. Twin Rivers maintains two branch sites serving
Northampton County in Pennsylvania.
On October 31, 1995, Vista commenced Rights and Community Stock
Offerings to issue 500,000 new common shares. The shares offered were fully
subscribed in December and Vista received approximately $5.3 million of net
proceeds after issuance costs.
On December 1, 1995, PNB, acquired the Washington Township, Warren
County, New Jersey, branch of Summit Bank with its principal offices located in
Chatham, New Jersey. The acquisition involved the branch facility and $14.0
million in deposits. The purchase price for the branch facility and deposit
premium paid totaled $1.0 million.
Results of Operations for the periods ended March 31, 1996 and March 31, 1995
Vista's net income equaled $1.2 million for the first quarter of 1996,
an increase of $242 thousand or 26% over net income of $930 thousand earned in
the first quarter of 1995. Earnings per share equaled $.29 in the first quarter
of 1996 compared to $.27 for the same period in 1995, despite a 17% increase in
the average number of common shares outstanding attributable to the stock
offering.
The increase in net income for the quarter was primarily the result of
growth in net interest income of $163 thousand, a provision for loan losses that
was lower by $10 thousand, increased gains realized on the sale of securities of
$45 thousand and noninterest income which climbed by $144 thousand and included
a one-time gain of $62 thousand from the sale of a student loan portfolio.
Offsetting these improvements was an $8 thousand increase in noninterest
expenses and a $112 thousand increase in the provision for income taxes
resulting from higher pre-tax earnings. A $203 thousand reduction in bank
insurance premium assessments by the Federal Deposit Insurance Corporation
favorably impacted noninterest expenses on a quarter over quarter basis.
Return on average shareholders' equity (ROE) equaled 12.94%, and return
on average assets (ROA) equaled 1.03% for the first quarter of 1996 compared to
ROE of 14.97% and ROA of .91% for the same period of 1995. ROE declined over the
comparable period as the growth in average shareholders' equity outpaced the 26%
growth in annualized net income. The 45% increase in shareholders' equity
resulted primarily from the added capital raised through the stock offering and
the quarterly tax- effected SFAS No. 115 adjustment. ROA improved over the prior
year as the increase in net income outpaced the growth in total average assets.
12
<PAGE>
Net Interest Income
Net interest income on a tax-equivalent basis amounted to $4.1 million
for the first quarter of 1996, an increase of $176 thousand, or 5%, compared to
$3.9 million earned in the first quarter of 1995. The net interest rate spread
declined 39 basis points to 3.25% for the quarter compared to the prior year
quarter of 3.64%. The net interest margin, which is tax-equivalent net interest
income expressed as a percentage of average interest-earning assets, declined to
3.77% for the first quarter of 1996 from 4.03% in the first quarter of 1995 and
from 3.90% from the fourth quarter of 1995 as growth in earning assets outpaced
the growth in net interest income. The growth in average earning assets competed
with a flattened yield curve which resulted in slimmer margins compared to
historical experience.
Interest income on a tax-equivalent basis amounted to $8.2 million for
the first quarter of 1996, an increase of $769 thousand, or 10%, compared to
$7.4 million in interest income earned in the first quarter of 1995. The
increase in interest income was largely due to higher average volumes in all
categories of interest-earning assets which increased interest income by $840
thousand but were offset in part by lower yields which reduced interest income
by $71 thousand. The average yield on interest-earning assets declined 11 basis
points to 7.54% for the first quarter of 1996 compared to 7.65% for the
comparable quarter in 1995.
Interest expense amounted to $4.1 million for the first quarter of
1996, an increase of $593 thousand, or 17%, compared to the first quarter of
1995. The increase in interest expense is primarily due to higher volumes of
average interest-bearing liabilities which increased interest expense by $345
thousand and higher rates paid for deposits which also increased interest
expense by $248 thousand. The average cost of funds on interest-bearing
liabilities was 4.29% in the first quarter of 1996, an increase 28 basis points
from 4.01% in the comparable quarter of 1995.
The following table, "Consolidated Average Balances, Net Interest
Income and Average Rates," presents Vista's average assets, liabilities and
shareholders' equity. Vista's net interest income, net interest spreads and net
interest income as a percentage of interest-earning assets for the periods ended
March 31, 1996 and 1995, are also reflected.
13
<PAGE>
VISTA BANCORP, INC. AND SUBSIDIARIES
Consolidated Average Balances, Net Interest Income and Average Rates
(Tax-equivalent Basis)
<TABLE>
<CAPTION>
Three Months Ended March 31, 1996
1996 1995
----------------------------- -----------------------------
Average Average Average Average
Balances Interest Rates Balances Interest Rates
Amounts in Thousands (Except Percentages) (1) (2) (3) (1) (2) (3)
- - ---------------------------------------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Federal funds sold and securities purchased
under agreements to resell $10,721 $144 5.40% $8,153 $119 5.92%
Short-term investments 5,483 74 5.43% 4,703 67 5.78%
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Short-term Investments 16,204 218 5.41% 12,856 186 5.87%
- - ------------------------------------------------------------------------------------------------------------------------------------
Securities:
U.S. Treasury 28,032 414 5.94% 34,842 526 6.12%
U.S. Government agencies and corporations 96,992 1,601 6.64% 78,851 1,396 7.18%
States and other political subdivisions 12,577 186 5.95% 8,988 137 6.18%
Other 17,202 284 6.64% 14,963 249 6.75%
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Securities 154,803 2,485 6.46% 137,644 2,308 6.80%
- - ------------------------------------------------------------------------------------------------------------------------------------
Loans, net of unearned income: (4)
Mortgage 134,670 2,549 7.61% 132,518 2,491 7.62%
Commercial 65,704 1,536 9.40% 56,938 1,323 9.42%
Consumer 64,012 1,373 8.63% 52,176 1,084 8.43%
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Loans 264,386 5,458 8.30% 241,632 4,898 8.22%
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Interest-earning Assets 435,393 8,161 7.54% 392,132 7,392 7.65%
- - ------------------------------------------------------------------------------------------------------------------------------------
Cash and due from banks 15,663 12,485
Allowance for loan losses (3,984) (3,973)
Other assets 12,522 11,854
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest-earning Assets 24,201 20,366
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Assets $459,594 $412,498
- - ------------------------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Demand $67,172 $410 2.45% $60,206 $379 2.55%
Savings 106,658 827 3.12% 104,949 780 3.01%
Time 167,300 2,286 5.50% 159,971 1,953 4.95%
Time deposits $100,000 and over 24,742 344 5.59% 15,900 215 5.48%
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Interest-bearing Deposits 365,872 3,867 4.25% 341,026 3,327 3.96%
- - ------------------------------------------------------------------------------------------------------------------------------------
Borrowed funds 11,900 131 4.43% 10,177 117 4.66%
Long-term debt 4,723 86 7.32% 1,885 47 10.11%
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Borrowed Funds and Long-term Debt 16,623 217 5.25% 12,062 164 5.51%
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Interest-bearing Liabilities 382,495 4,084 4.29% 353,088 3,491 4.01%
- - ------------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing demand deposits 37,136 31,093
Other liabilities 3,526 3,125
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest-bearing Liabilities 40,662 34,218
- - ------------------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity 36,437 25,192
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $459,594 $412,498
- - ------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income/Spread (tax-equivalent basis) $4,077 3.25% $3,901 3.64%
- - ------------------------------------------------------------------------------------------------------------------------------------
Tax-equivalent Basis Adjustment (51) (38)
- - ------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income $4,026 $3,863
- - ------------------------------------------------------------------------------------------------------------------------------------
Net Interest Margin (5) 3.77% 4.03%
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Average volume information was computed using approximate daily averages.
(2) Interest on loans includes fee income.
(3) Rates have been annualized and computed on a tax-equivalent basis using the
federal income tax statutory rate of 34%.
(4) Includes nonaccrual loans.
(5) Net interest income as a percent of interest-earning assets on a
tax-equivalent basis.
14
<PAGE>
VISTA BANCORP, INC. AND SUBSIDIARIES
Volume/Rate Analysis of Changes in Net Interest Income
(Tax-equivalent Basis)
<TABLE>
<CAPTION>
Three Months Ended March 31, 19
1996 vs. 1995
-------------------------------
Increase (Decrease
Due to Changes in
--------------------
Total Average Average
Amounts in Thousands Change(1) Volume Rate
- - -------------------------------------------- -------------------------------
<S> <C> <C> <C>
Interest Income
Federal funds sold and securities purchased
under agreements to resell $25 $36 ($11)
Short-term investments 7 10 (3)
- - -----------------------------------------------------------------------------------------
Total Short-term Investments 32 46 (14)
- - -----------------------------------------------------------------------------------------
Securities:
U.S. Treasury (112) (101) (11)
U.S. Government agencies and corporations 205 306 (101)
States and other political subdivisions 49 53 (4)
Other 35 37 (2)
- - -----------------------------------------------------------------------------------------
Total Securities 177 295 (118)
- - -----------------------------------------------------------------------------------------
Loans, net of unearned income: (2)
Mortgage 58 41 17
Commercial 213 205 8
Consumer 289 253 36
- - -----------------------------------------------------------------------------------------
Total Loans 560 499 61
- - -----------------------------------------------------------------------------------------
Total Interest Income 769 840 (71)
- - -----------------------------------------------------------------------------------------
Interest Expense
Interest-bearing deposits:
Demand 31 43 (12)
Savings 47 13 34
Time 333 93 240
Time deposits $100,000 and over 129 123 6
- - -----------------------------------------------------------------------------------------
Total Interest-bearing Deposits 540 272 268
- - -----------------------------------------------------------------------------------------
Borrowed funds 14 19 (5)
Long-term debt 39 54 (15)
- - -----------------------------------------------------------------------------------------
Total Borrowed Funds and Long-term Debt 53 73 (20)
- - -----------------------------------------------------------------------------------------
Total Interest Expense 593 345 248
- - -----------------------------------------------------------------------------------------
Net Interest Income (tax-equivalent basis) $176 $495 ($319)
- - -----------------------------------------------------------------------------------------
</TABLE>
(1) The volume/rate variance is allocated based on the percentage relationship
of changes volume and changes in rate to the "Total Change".
(2) Includes nonaccrual loans.
15
<PAGE>
The preceding table, "Volume/Rate Analysis of Changes in Net Interest
Income," analyzes net interest income by segregating the volume and rate
components of the changes in net interest income resulting from changes in the
volume of various interest-earning assets and interest-bearing liabilities and
the changes in the rates earned and paid by Vista.
Noninterest Income
Major Components of Noninterest Income
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For The Three Months Ended March 31,
Change Change
Amounts in Thousands (Except Percentages) 1996 1995 $ %
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Service charges on deposit accounts $392 $334 $ 58 17%
Other service charges 128 71 57 80
Net security gains 58 13 45 346
Trust income 29 37 (8) (22)
Safe deposit box income 19 21 (2) (10)
Other income 84 45 39 87
--------------------------------------------------------
Total Noninterest Income $ 710 $ 521 $ 189 36%
========================================================
</TABLE>
For the quarter ended March 31, 1996, total noninterest income
increased 36% to $189 thousand compared to the same quarter in 1995.
Income from service charges on deposit accounts increased 17% to $392
thousand from $334 thousand in 1995. The majority of the increase resulted from
higher service charge income on consumer transaction accounts due to increased
volume and pricing changes and higher service charge income on commercial
accounts due to a greater volume of item processing activity.
Other service charge income increased 80% to $128 thousand in 1996
compared to $71 thousand in 1995. The increase reflects higher service charge
income on loans fueled by an increase in loan modification fees as customers
responded to lower interest rates and refinanced their debt, fees earned by
originating mortgages for the secondary market and attendant activities which
generate appraisal and insurance fee income. Also contributing to the increase
was higher service charge income from increased automated teller machine usage.
In the first quarter of 1996, Vista sold $16.0 million of securities
compared to $9.5 million in the first quarter of 1995 resulting in net gains of
$58 thousand in 1996 versus $13 thousand in 1995. During the first quarter of
1996 and 1995, lower yielding securities were sold with the proceeds reinvested
into higher yielding mortgage-backed securities.
16
<PAGE>
Other income increased 87% to $84 thousand in 1996 compared to $45
thousand in 1995. Other income for the first quarter of 1996 included a gain of
$62 thousand on the sale of $2.8 million of student loans to Sallie Mae in March
1996. The first quarter of 1995 included a gain totaling $31 thousand from the
sale of a property classified as other real estate owned. Adjusting for these
one time events, other income was $22 thousand for the first quarter of 1996
compared to $14 thousand for the first quarter of 1995.
Noninterest Expense
Major Components of Noninterest Expense
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For The Three Months Ended March 31,
Change Change
Amounts in Thousands (Except Percentages) 1996 1995 $ %
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Salaries and benefits:
Salary expense $1,241 $1,158 $ 83 7%
Benefit expense 368 375 (7) (2)
--------------------------------------------------------
Total salaries and benefits 1,609 1,533 76 5
Occupancy expense 284 243 41 17
Furniture and equipment expense 287 277 10 4
Other expenses:
FDIC insurance 1 204 (203) (99)
Regulatory exam assessments 26 24 2 8
Marketing and advertising 98 90 8 9
Professional fees 67 45 22 49
Printing and stationery 90 54 36 67
Postage 66 63 3 5
Fees on loan accounts 73 46 27 59
Correspondent bank charges 12 8 4 50
Intangible asset amortization 47 22 25 114
Insurance 26 24 2 8
Property expense on ORE 16 28 (12) (43)
All other 189 222 (33) (15)
--------------------------------------------------------
Total other expenses 711 830 (119) (14)
--------------------------------------------------------
Total Noninterest Expense $2,891 $2,883 $ 8 -%
========================================================
</TABLE>
Total noninterest expense for the first quarter of 1996 was largely
unchanged from the first quarter of 1995 at $2.9 million. Total annualized
noninterest expense expressed as a percentage of total average assets declined
to 2.53% for the first quarter of 1996 from 2.84% in the first quarter of 1995.
The improvement in this key benchmark underscores the strategy to leverage the
existing cost structure and profitably grow assets at a pace that will exceed
the incremental cost to manage and administer a larger organization and, in
turn, generate higher levels of net income over the longer-term.
17
<PAGE>
The largest component of Vista's cost structure is salary and benefits
expense which equaled $1.6 million for the first three months of 1996 compared
to $1.5 million for the same period in 1995. Salary and benefit expense
accounted for 56% and 53% of total noninterest expense for the same periods.
When considered separately, salary expense increased 7%, or $83 thousand, in
1996 compared to 1995 due to higher staffing levels and normal salary
adjustments.
Despite the increase in staff, benefit expense for the first quarter of
1996 declined 2% over the same period last year due to a decrease in pension
related expenses which offset increases in postretirement medical plan benefits,
payroll taxes and other benefits.
Occupancy expense increased 17% to $284 thousand in the first quarter
of 1996 from $243 thousand in 1994 due to higher facilities maintenance costs,
real estate taxes and utility costs. Contributing to the higher facilities
maintenance and utility costs was the severe winter weather and the addition of
the Washington Township branch banking facility in December 1995.
Furniture and equipment expense increased 4% to $287 thousand in the
first quarter of 1996 compared to 1995 due primarily to upgrades in technology.
Other expenses decreased 14% to $711 thousand in the first quarter of
1996 from $830 thousand for the same period in 1995 due to significant
reductions in the bank insurance premium assessments by the Federal Deposit
Insurance Corporation (FDIC) and the reduction of property expense on other real
estate owned. The FDIC reduced bank insurance fund premiums for highly-rated
institutions to the annual statutory minimum of $2 thousand effective January 1,
1996. There is no guarantee that this rate will remain at this minimum level
beyond 1996. Increases in core deposit amortization expense resulting from the
core deposits acquired in December 1995, printing and stationery fees
attributable primarily to new technology, fees on loan accounts and professional
fees associated with benefit plan administration, offset these expense
reductions.
Provision for Income Taxes
Vista's provision for income taxes increased $112 thousand, or 22%, to
$628 thousand for the first quarter of 1996 from $516 thousand in the first
quarter of 1995. The primary reason for this increase was a higher level of
pretax income. The effective tax rate declined to 34.9% in the first quarter
1996 from 35.7% in the first quarter of 1995 due to a higher level of tax exempt
interest income in 1996 compared to 1995.
18
<PAGE>
Financial Condition - March 31, 1996 versus December 31, 1995
General
At March 31, 1996, Vista's total consolidated assets equaled $460
million which represented an increase of approximately $3 million from $457
million at December 31, 1995. Funding the increase in assets was a $1 million
increase in total deposits and $2 million in short-term overnight borrowings.
Total deposits equaled $403 million at March 31, 1996, versus $402 million at
December 31, 1995. Decreases in interest and noninterest-bearing demand and time
deposits were offset by higher savings account balances during the quarter. At
March 31, 1996, total shareholders' equity equaled $35 million versus $36
million at December 31, 1995. The decline was attributable to the increase in
market interest rates during the first quarter of 1996 which depressed the value
of the available for sale security portfolio and resulted in the $1.7 million
adjustment to capital at quarter-end. Offsetting this adjustment was $1.1
million in added capital from earnings retention and stock plan participation.
Securities
Vista classifies its entire investment securities portfolio as
available for sale and records the portfolio at market value. At March 31, 1996
the fair market value of the portfolio approximated its amortized cost. The
available for sale portfolio equaled $163 million at March 31, 1996 compared to
$146 million at December 31, 1995. The portfolio activity during the first
quarter included $45 million in purchases, $16 million in sales and $9 million
of maturities. Vista had maintained higher than average short-term cash
equivalents at December 31, 1995 and utilized these available funds during the
first quarter of 1996 as market interest rates increased and provided an
opportunity to improve the earning asset yields. The sales of securities were
largely attributed to portfolio mix realignment and sales of pools of
mortgage-backed securities that had amortized down to small outstanding
balances.
Loans
Total loans equaled $264 million at March 31, 1996, largely unchanged
from December 31, 1995. Consumer loans increased $1 million or 2% during the
first quarter of 1996. Growth in this sector was concentrated in indirect auto
lending and was offset by the sale of a substantial portion of the student loan
portfolio. Mortgage loans increased $682 thousand with the majority of the
increase coming in adjustable-rate mortgage loans. Commercial loans decreased
approximately $2 million or 2% during the first quarter of 1996 reflecting a
payoff of a commercial demand loan.
At March 31, 1996, residential mortgage loans accounted for 51% of the
total loan portfolio followed by 25% in commercial and 24% in consumer loans.
These concentrations are unchanged from December 31, 1995. Vista anticipates
lowering its concentration of residential mortgage loans as it moves toward
increased lending to small businesses and consumer installment loans.
19
<PAGE>
At March 31, 1996, Vista's loan to deposit ratio was 65.6% compared to
65.8% at December 31, 1995 and 64.5% at March 31, 1995.
Deposits
Total deposits amounted to $403 million at March 31, 1996, reflecting
an increase of $1 million compared to December 31, 1995. All of the net growth
was seen in savings deposits. The increase in savings deposits resulted in part
from the migration away from time deposits as customers opted to move into more
liquid products and await more definite signs as to the direction of time
deposit rates. Also contributing to the increase in the savings account category
was a special savings promotion during the first quarter of 1996.
During the first quarter of 1996, average time deposits, including
those $100,000 and over, remained the largest component of Vista's total average
interest-bearing deposits, increasing to 53% for the first quarter of 1996 from
52% in the same quarter of 1995. Demand accounts averaged 18% of total average
interest-bearing deposits during the first quarter of 1996 and 1995. Savings
accounts averaged 29% of total average interest-bearing deposits compared to 31%
for the first quarter of 1995.
Borrowed Funds and Long-term Debt
Total borrowed funds and long-term debt equaled $18 million at March
31, 1996, an increase of approximately $1 million compared to the $17 million
outstanding at December 31, 1995.
Total average interest-bearing liabilities funded 88% of total average
interest-earning assets during the first quarter of 1996 compared to 90% for the
same period in 1995.
Nonperforming Assets
Nonperforming assets, consisting of loans on nonaccrual status plus
other real estate acquired through foreclosure (ORE), totaled $5 million at
March 31, 1996 and December 31, 1995, or 1.81% and 1.71% of total outstanding
loans and ORE, respectively. The increase in this percentage at March 31, 1996
compared to December 31, 1995 was primarily due to an increase in nonaccrual
commercial loans offset, in part, by a reduction in nonaccrual mortgages.
ORE decreased to $374 thousand at March 31, 1996, compared to $489
thousand at December 31, 1995, due to the sale of several small ORE properties.
20
<PAGE>
Allowance for Loan Losses and Related Provision
The allowance for loan losses equaled $4 million at March 31, 1996 and
December 31, 1995. The allowance equaled 1.48% of total loans at March 31, 1996,
compared to 1.49% at December 31, 1995. Net charge-offs to the allowance during
the first quarter of 1996 were $62 thousand.
The provision for loan losses equaled $45 thousand for the first
quarter of 1996 compared to $55 thousand in the first quarter of 1995. The
provision for loan losses represented 52% of actual charge-offs recognized by
Vista during the first quarter of 1996 compared to 108% for the same period in
1995. At March 31, 1996, the allowance for loan losses represented 89% of total
nonaccrual loans as compared to 115% at December 31, 1995.
In determining the adequacy of the allowance for loan losses,
management reviews a loan analysis prepared by Vista's internal loan review
officer, national and local economic indicators, loan collateral values and
historical loss factors. The recognition of impaired loans and specific
allowances that must be determined for such loans are also factored into Vista's
determination of the allowance for loan losses. This information is reviewed on
a quarterly basis with each subsidiary's Board of Directors. Management has
determined Vista's allowance for loan losses to be adequate at March 31, 1996.
Liquidity
Liquidity is a measure of Vista's ability to meet present and future
financial obligations and commitments on a timely basis. Liquidity needs include
sufficient cash flow to meet present and future loan commitments, deposit
outflows and daily business operations. At the bank subsidiary level, liquidity
is generally provided by deposit growth, maturities and sales of securities,
periodic repayments of loans, borrowings and net income. Liquidity is provided
to Vista in the form of monthly service fees paid by the bank subsidiaries,
issuance of common stock through participation in the various stock plans of
Vista and quarterly dividend payments from the bank subsidiaries.
Vista's ability to meet its quarterly dividend payments is dependent to
a large degree on the bank subsidiaries' ability to make dividend payments to
Vista. Any restriction on the subsidiaries' ability to pay dividends could
impair Vista's ability to make cash dividend payments to its shareholders.
Liquidity is managed on a daily basis at both the parent company and
subsidiary levels, enabling management to effectively monitor changes in
liquidity and to react accordingly to market conditions. Management believes
that liquidity is sufficient to meet present and future financial obligations
and commitments on a timely basis.
21
<PAGE>
At March 31, 1996, cash and cash equivalents equaled $20 million which
represented a decrease of $16 million from the $36 million in cash and cash
equivalents on hand at December 31, 1995. Changes in cash are measured by
changes in the three major classifications of cash flows known as operating,
investing and financing activities. The $16 million decrease in cash and cash
equivalents was attributable to combined net cash flows provided by operating
and financing activities totaling $4 million, which were then used for investing
activities of $20 million.
At March 31, 1996, net cash provided by operating activities equaled
$863 thousand which consisted mainly of net income adjusted for noncash charges.
Net cash provided by financing activities totaled approximately $3 million and
consisted of an increase in savings deposits, increased borrowed funds and
proceeds from common stock issuance that were offset by decreases in time
deposits, long-term debt and cash dividends paid.
Cash flows of $25 million from maturities and sales of securities
combined with $863 thousand and $3 million of net cash flows provided by
operating and financing activities, respectively, and $16 million in cash and
cash equivalents available at December 31, 1995 to fund $45 million in security
purchases.
Capital Resources
The capital adequacy of Vista is reviewed on an ongoing basis by
management and the Board of Directors which considers regulatory guidelines,
asset size, balance sheet composition and risk profile characteristics,
including asset quality, interest rate risk and liquidity needs. An adequate
capital base is important to support growth and expansion and to protect against
unexpected losses that cannot be covered by current year earnings.
Capital is generally provided to Vista in the form of retained net
income after the payment of dividends and by the issuance of common stock to the
public, and issuance of common stock through participation in the Employee Stock
Purchase Plan, Board of Directors Stock Purchase Plan and the Dividend
Reinvestment Plan.
At March 31, 1996 total shareholders' equity decreased $618 thousand to
$35 million, a decrease of 2% from the $36 million at December 31, 1995. This
decrease was due to the $2 million decline in the net unrealized gain on
securities AFS and dividends paid of $360 thousand which offset the $1 million
in net income and $241 thousand in added capital raised through the various
stock plans.
Vista's dividend payout ratio equaled 31% for the quarter ended March
31, 1996 compared to 29% for same period in 1995. Vista paid cash dividends
totaling $360 thousand during the first quarter of 1996, an increase of $87
thousand or 32% over the $273 thousand paid during the first quarter of 1995.
The increase in cash dividends is attributed to the increased number of shares
outstanding and an increase in the quarterly dividend to 9 cents per share in
the first quarter of 1996 from 8 cents per share in the first quarter of 1995.
Vista's book value per share at March 31, 1996, was equal to $8.77 compared to
$8.96 at December 31, 1995.
22
<PAGE>
Vista maintained a Tier I risk-based capital ratio of 12.80% and a total
risk-based capital ratio of 14.70% at March 31, 1996, compared to 12.75% and
14.68%, respectively, at December 31, 1995. Both of these key capital ratios
reflect the relative quality of Vista's on-balance sheet and off-balance sheet
composition based on the regulatory minimum ratios.
Vista maintained a leverage capital ratio of 7.15% at March 31, 1996,
and 7.41% at December 31, 1995. The decrease in Vista's leverage ratio can be
attributed to the growth in total average assets outpacing the growth in Tier I
leverage capital in the first quarter of 1996.
Vista may be a party to financial instruments with off-balance sheet
risk in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend credit and
standby letters of credit. These instruments involve, to varying degrees,
elements of credit risk in excess of the amount recognized in the consolidated
statements of condition. The contract or notional amounts of these instruments
reflect the extent of involvement Vista has in particular classes of financial
instruments. Vista uses the same credit policies in making commitments and
conditional obligations as it does for on-balance sheet instruments.
Vista was committed to advance $24 million to its borrowers at March
31, 1996 and December 31, 1995. Standby letters of credit contracts with its
customers totaled $1 million as of March 31, 1996 and December 31, 1995.
Vista does not issue nor hold derivative instruments. However, Vista
does issue loan commitments and letters of credit. These instruments are issued
in the normal ordinary course of business to meet customer needs. Commitments to
fund fixed-rate loans were immaterial at March 31, 1996 and December 31, 1995.
Variable rate commitments are generally issued for less than one year and carry
market rates of interest. Such instruments are not likely to be affected by
annual rate caps triggered by rising interest rates. Vista management expects
that off-balance sheet risk will not be material to Vista's results of
operations or financial condition.
23
<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. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-K:
Exhibit Number Description of Exhibit
-------------- ----------------------
2 Not Applicable
3(i) Articles of Incorporation
3(ii) By-laws
4 Not Applicable
10 Not Applicable
11 Not Applicable
15 Not Applicable
18 Not Applicable
19 Not Applicable
22 Not Applicable
23 Not Applicable
24 Not Applicable
27 Financial Data Schedules
99 Not Applicable
(b) Reports on Form 8-K
The registrant has filed no reports on Form 8-K for the
quarterly period ended March 31, 1996.
24
<PAGE>
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Vista Bancorp, Inc.
---------------------------
(Registrant)
Dated: May 14, 1996
By /s/ William F. Keefe
-----------------------------------
William F. Keefe
Executive Vice President and
and Chief Financial Officer
(Mr. Keefe is the Principal
Accounting Officer and has
been duly authorized to sign
on behalf of the registrant.)
25
<PAGE>
INDEX TO EXHIBITS
Item Number Description Page
- - ----------- ----------- ----
3(i) Articles of Incorporation . . . . . 27
3(ii) By-laws . . . . . . . . . . . . . . 35
27 Financial Data Schedules . . . . . 45
<PAGE>
CERTIFICATE OF INCORPORATION
(ARTICLES OF ASSOCIATION)
OF
VISTA BANCORP, INC.
The undersigned incorporator, being over the age of eighteen years, for the
purpose of forming a corporation under the New Jersey Business Corporation Act,
does hereby execute the following Certificate of Incorporation:
1.CORPORATE NAME. The name of the Corporation is Vista Bancorp, Inc.
2.REGISTERED OFFICE AND AGENT. The address of the Corporations's initial
registered office is 305 Roseberry Street, Phillipsburg, New Jersey, and the
name of the registered agent at such address is Barbara Harding.
3. CORPORATE PURPOSES. The purpose or purposes for which the
Corporation is organized are:
(a) To act as a bank holding company, with all of the rights, powers
and privileges, and subject to all of the limitations, specified in any
applicable state or federal legislation from time to time in effect;
(b) To engage in any other activities within the purposes for which
corporations may be organized under the New Jersey Business Corporation
Act.
4. CAPITALIZATION. The total authorized capital stock of the
Corporation shall consist of 10,000,000 shares of common stock, par value $.50
per share.
5. PREEMPTIVE RIGHTS. Shareholders of the Corporation shall have
preemptive rights to subscribe for, purchase or receive any shares of the
Corporation, whether now or hereafter authorized, or any obligations or other
securities convertible into or carrying options to purchase any such shares of
the Corporation, or any options or rights to purchase any such shares or
securities issued or sold by the Corporation for cash or any other form of
consideration; except that shareholders will not have preemptive rights with
respect to shares issued pursuant to Section 14A:5-29(d) of the New Jersey
Business Corporation Act or in connection with any Employee Stock Purchase Plan,
Board of Directors' Stock Purchase Plan, or Shareholders' Dividend Reinvestment
Plan.
6. INITIAL DIRECTORS. The number of directors constituting the initial
Board of Directors of the Corporation shall be twelve; and the names and
addresses of the directors are:
<PAGE>
Name Address
---- -------
Albert L. Baldock Buckwampum Farm, Box 385, Springtown, PA
John J. Cane 677 Hillcrest Boulevard, Phillipsburg, NJ
Richard A. Cline Box 559, RD No. 2, Stewartsville, NJ
Harold John Curry 658 Hillcrest Boulevard, Phillipsburg, NJ
Louis Hajdu Box A, 710 New Brunswick Avenue, Alpha, NJ
Barbara Harding 1059 Logan Street, Phillipsburg, NJ
David L. Hensley 4545 Meadow Drive, Nazareth, PA
William B. Hutchens 7 Hawthorne Court, Easton, PA
Thomas F. McGinley 903 N. 32nd Street, Allentown, PA
Robert B. Meyner 16 Olden Lane, Princeton, NJ
Mark A. Reda RD No. 3, Box 61, Phillipsburg, NJ
A. James Sederis 98 Bald Eagle, RD No. 2, Hackettstown, NJ
7. INCORPORATION. The name and address of the sole incorporator is:
Barbara Harding, 1059 Logan Street, Phillipsburg, NJ 08865.
8. DIRECTOR LIABILITY. A member of the Board of Directors of the
Corporation shall not be held personally liable for damages resulting from a
breach of any duty owned to the Corporation or its shareholders, except that:
(a) A director shall not be relieved of liability for an act or
omission in breach of that person's duty of loyalty to the Corporation
or its shareholders;
(b) A director shall not be relieved of liability for an act or
omission that is not in good faith, or involves a knowing violation of
the law; or
(c) A director shall not be relieved of liability for an act or
omission resulting in receipt by that person of an improper personal
benefit.
9. CLASSIFICATION OF DIRECTORS. The directors shall be divided into
three classes, as nearly equal in number as possible, known as Class A,
consisting of not more than eight directors; Class B, consisting of not more
than eight directors; and Class C, consisting of not more than nine directors.
Such classification shall become effective at the first annual meeting of
shareholders in 1989. The initial directors of Class A shall serve until the
second annual meeting of shareholders in 1990. At the second annual meeting of
the shareholders, the directors of Class A shall be elected for a term of three
years and, after expiration of such term, shall thereafter be elected every
three years for three year terms. The initial directors of Class B shall serve
until the third annual meeting of shareholders in 1991. At the third annual
meeting of the shareholders, the directors of Class B shall be elected for a
term of three years and, after the expiration of such term, shall thereafter be
elected every three years for three year terms. The initial directors of Class C
shall serve until the fourth annual meeting of shareholders in 1992. At the
<PAGE>
fourth annual meeting of shareholders, the directors of Class C shall be elected
for a term of three years and, after the expiration of such term, shall
thereafter be elected every three years for three year terms. Each director
shall serve until his/her successor shall have been elected and shall qualify,
even though his/her term of office as herein provided has otherwise expired,
except in the event of his/her earlier resignation, removal or disqualification.
10. CUMULATIVE VOTING RIGHTS. In the election of directors, each
shareholder entitled to vote at such election shall have the right to cumulate
his votes by giving one candidate as many votes as the number of such directors
multiplied by the aggregate number of his votes, or by distributing such votes
on the same principle among any number of such candidates.
11. OPPOSITION OF TENDER (OR OTHER OFFER)
(a) The Board of Directors may, if it deems it advisable, oppose a
tender or other offer for the Corporation's securities, whether the
offer is in cash or in the securities of a corporation or otherwise.
When considering whether to oppose an offer, the Board of Directors
may, but it is not legally obligated to, consider any relevant, germane
or pertinent issue; by way of illustration, but not to be considered
any limitation on the power of the Board of Directors to oppose a
tender or other offer for this Corporation's securities, the Board of
Directors may, but shall not be legally obligated to, consider any or
all the following:
(1) Whether the offer price is acceptable based on the
historical and present operating results or financial condition
of the Corporation.
(2) Whether a more favorable price could be obtained for the
Corporations's securities in the future.
(3) The social and economic effects of the offer or transaction
on the Corporation and any of its subsidiaries, employees,
depositors loan and other customers, creditors, shareholders
and other elements of the communities in which the Corporation
and any of its subsidiaries operate or are located.
(4) The reputation and business practice of the offeror and its
management and affiliates as they would affect the
shareholders, employees, depositors and customers of the
Corporation and its subsidiaries and the future value of the
Corporation's stock.
<PAGE>
(5) The value of the securities (if any) which the offeror is
offering in exchange for the Corporation's securities, based on
an analysis of the worth of the corporation or other entity
whose securities are being offered.
(6) The business and financial condition and earnings prospects
of the offeror, including, but not limited to, debt service and
other existing or likely financial obligations of the offeror,
and the possible effect of such conditions upon the Corporation
and any of its subsidiaries and the other elements of the
communities in which the Corporation and any of its
subsidiaries operate or are located.
(7) Any antitrust of other legal and regulatory issues that are
raised by the offer.
(b) If the Board of Directors determines that an offer should be
rejected, it may take any lawful action to accomplish its purpose,
including, but not limited to, any or all of the following: advising
shareholders not to accept the offer; litigation against the offeror;
filing complaints with all governmental and regulatory authorities;
acquiring the offeror corporation's securities; selling or otherwise
issuing authorized but unissued securities or treasury stock or
granting options with respect thereto; acquiring a company to create an
antitrust or other regulatory problem for the offeror; and obtaining a
more favorable offer from another individual or entity.
12. BUSINESS COMBINATIONS.
(a) No merger, consolidation, liquidation or dissolution of the
Corporation, nor any action that would result in the sale or other
disposition of all or substantially all of the assets of the
Corporation shall be valid unless first approved by the affirmative
vote of:
(1) the holder of at least seventy-five percent (75%) of the
outstanding shares of Common Stock of the Corporation; or
(2) the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the outstanding shares of Common Stock of the
Corporation, provided that such transaction has received the
prior approval of eighty percent (80%) of the entire Board of
Directors.
Any business combination initiated by a 5% Stockholder (as hereinafter
defined) shall also require the percentage approval referenced in subparagraphs
a(1) and a(2).
<PAGE>
(b) Not withstanding the percentage approval referenced in subparagraphs
a(1) and a(2), no merger, consolidation, liquidation or dissolution of
the Corporation, nor any action that would result in the sale or other
disposition of all or substantially all the assets of the Corporation
shall be valid unless the cash or fair market value of the property,
securities or other consideration to be received per share by holders
of Common Stock of the Corporation is at least equal to the higher of
the following:
(1) the highest per share price (with appropriate adjustments
for recapitalization and for stock splits, stock dividends and
like distributions) paid by the 5% Stockholder in acquiring any
of its holdings of the Corporation's Common Stock; and
(2) the market value per share of common stock on the
announcement date with respect to such Business Combination.
(c) For the purpose of this Article 12:
(1) A " person" shall mean any individual, firm, corporation or
other entity.
(2) "5% Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which, as of the record date for the
determination of stockholders entitled to notice of and to vote
on such business combination, or immediately prior to the
consummation of any such transaction,
a. is the beneficial owner, directly or indirectly, of
not less than 5% of the Voting Shares, or
b. is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 5% of the then
outstanding Voting Shares, or
(3) A person shall be the "beneficial owner" of any Voting
Shares:
a. which such person or any of its Affiliates or
Associates (as hereinafter defined) beneficially own,
directly or indirectly; or
<PAGE>
b. which such person or any of its Affiliates or
Associates has (i) the right to acquire (whether such
right is exercisable immediately or only after the
passage of time), pursuant to any agreement, arrangement
or understanding or upon the exercise of conversion
rights, exchange rights, warrants, options, or
otherwise, or (ii) the right to vote pursuant to any
agreement, arrangement or understanding; or
c. which are beneficially owned, directly or indirectly,
by any other person with which such first mentioned
person or any of its Affiliates or Associates has any
agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of any shares
of capital stock of the Corporation.
(4) The term "other consideration to be received" shall
include, without limitation, Common Stock of the Corporation
retained by its existing public stockholders in the event of a
business combination in which the Corporation is the surviving
corporation.
(5) "Affiliate" and "Associates" shall have the respective
meanings given those terms in Rule 12b-2 of the General Rules
and Regulations of the Securities Exchange Act of 1934.
(6) The term "market value" shall mean:
a. in the case of stock, the highest closing sale price
during the thirty-day period immediately preceding the
date in question of a share of such stock on the
composite tape for New York stock-exchange-listed
stocks, or, if such stock is not quoted on such
composite tape or if such stock is not listed on such
exchange, on the principal United States securities
exchange registered under the Exchange Act on which such
stock is listed, or if such stock is not listed on any
such exchange, the highest closing bid quotation with
respect to a share of such stock during the thirty-day
period preceding the date in question on the National
Association of Securities Dealers, Inc. Automated
Quotations System or any system then in use, or if no
such quotations are available, the fair market value on
the date in question of a share of such stock as
determined by the Board of Directors in good faith; and
b. in the case of property other than cash or stock, the
fair market value of such property on the date in
question as determined by the Board of Directors in good
faith.
<PAGE>
13. AMENDMENTS TO ARTICLES. Articles 5, 9, 10, 11, 12, and 13 may not
be amended unless first approved by the affirmative vote of:
(a) the holders of at least seventy-five percent (75%) of the
outstanding shares of Common Stock of the Corporation; or
(b) the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the outstanding shares of Common Stock of the
Corporation, provided that such amendment has received the
prior approval of eighty percent (80%) of the entire Board of
Directors.
IN WITNESS WHEREOF, the undersigned incorporator subscribes this Certificate and
affirms it as true under the penalties of perjury on this 4th day of March, 1988
By:/s/Barbara Harding
-----------------------------------
Barbara Harding, Incorporator
State of New Jersey )
):s.
County of Warren )
On this 4th day of March, 1988, before me, the subscriber, personally
appeared Barbara Harding, to me known and known to me to be the same person
described in and who executed the foregoing Certificate of Incorporation, and
she severally duly acknowledged to me that she executed the same.
/s/Jean D. Willever
-------------------------
Notary Public
<PAGE>
BYLAWS
OF
VISTA BANCORP, INC.
These Bylaws are supplemental to the New Jersey Business Corporation
Act and other applicable provisions of law, as the same shall from time
to time be in effect.
ARTICLE I. MEETINGS OF SHAREHOLDERS.
- - ------------------------------------
Section 101. Place of Meetings. The place, date, and time of annual meeting will
be selected by the Board of Directors. The shareholders shall meet at the place,
date, and time on the day appointed and shall elect a Chairman and a Secretary.
The President of the Corporation shall then make a report to the shareholder
showing the condition of the Corporation with a review of the business for the
year.
Section 102. Annual Meetings. The annual meeting of the shareholders
for the election of directors and the transaction of such other business as may
properly come before the meeting shall be held at such date or hour as may be
fixed by the board of Directors. Written notice of the place, date, time, and
purpose of the annual meeting of shareholders shall be given not less than
twenty (20) days before the meeting, either personally or by mail, to each
shareholder of record entitled to vote at the meeting. Any business which is a
proper subject for shareholder action may be transacted at the annual meeting,
irrespective of whether the notice of said meeting contains any reference
thereto, except as otherwise provided by applicable law.
Section 103. Special Meetings. Special meetings of the shareholders may
be called at any time by the Board of Directors, or by any three or more
shareholders entitled to cast at least ten percent (10%) of the vote which all
shareholders are entitled to cast at the particular meeting.
Section 104. Conduct of Shareholders' Meetings. The Chief Executive
Officer shall preside at all shareholders' meetings. In the absence of the Chief
Executive Officer, the President shall preside or, in his/her absence, any
officer designated by the Board of Directors. The officer presiding over the
shareholders' meeting may establish such rules and regulations for the conduct
of the meeting as he/she may deem to be reasonably necessary or desirable for
the orderly and expeditious conduct of the meeting. Unless the officer presiding
over the shareholders' meeting otherwise requires, shareholders need not vote by
ballot on any question.
<PAGE>
ARTICLE II. DIRECTORS AND BOARD MEETINGS.
- - -----------------------------------------
Section 201. Management by Board of Directors. The business and affairs
of the Corporation shall be managed by its Board of Directors. The Board of
Directors may exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute, regulation, the Articles of Incorporation
or these Bylaws directed or required to be exercised or done by the
shareholders.
Section 202. Nomination for Directors. Nominations for directors to be
elected at an annual meeting of shareholders, except those made by the Board of
Directors of the Corporation, must be submitted to the Secretary of the
Corporation in writing not later than the close of business on the fifteenth
(15th) day immediately preceding the date of the meeting. Such notification
shall contain the following information: (a) name and address of each proposed
nominee; (b) the principal occupation of each proposed nominee; (c) the number
of shares of capital stock of the Corporation owned by the notifying shareholder
and the nominee. Nominations not made in accordance herewith may, in his/her
discretion, be disregarded by the presiding officer of the meeting, and upon
his/her instruction, the vote tellers may disregard all votes cast for each such
nominee. In the event the same person is nominated by more than one shareholder,
the nomination shall be honored, and all shares of capital stock of the
Corporation shall be counted if at least one nomination for that person complies
herewith.
Section 203. Directors Must be Shareholders. Every director must be a
shareholder of the Corporation and shall own in his/her own right a minimum of
$1,000 aggregate par value of stock in the Corporation in order to qualify as
such director. Any director shall forthwith cease to be a director when he/she
no longer holds such shares, which fact shall be reported to the Board of
Directors by the Secretary, whereupon the Board of Directors shall declare the
seat of such directors vacated.
Section 204. Eligibility and Mandatory Retirement. Commencing with the
annual meeting of shareholders in 1989, no person shall be eligible to be newly
elected or appointed as a director as he/she shall have attained the age of
seventy-two years on or prior to the date of his/her election. Notwithstanding
the foregoing, the mandatory retirement provisions of this section shall not
apply retroactively to the directors of the Corporation who have attained the
age of seventy-two years prior to June 30, 1988. Any director of this
Corporation, with the exception of the directors specified above, who attains
the age of seventy-two years shall cease to be a director (without any action on
his/her part) at the close of business on the day prior to the date of the next
shareholders' meeting at which directors are to be elected regardless of whether
or not his/her term as a director would otherwise expire at such shareholders'
meeting. The Board of Directors may designate any director of the Corporation
who is age sixty-five or older as a director emeritus. A director emeritus may
attend meetings of the Board but shall have no authority to vote or receive
compensation.
<PAGE>
Section 205. Number of Directors. The Board of Directors shall consist
of not less than five (5) nor more than twenty-five (25) shareholders, the exact
number to be fixed and determined from time to time by resolution of a majority
of the full Board of Directors or by resolution of the shareholders at any
annual or special meeting thereof.
Section 206. Vacancies. Vacancies in the Board of Directors, including
vacancies resulting from an increase in the number of directors, shall be filled
by a majority of the remaining members of the Board, even though less than a
quorum. Any director elected to fill a vacancy in the Board of Directors shall
become a member of the same Class of directors in which the vacancy existed; but
if the vacancy is due to an increase in the number of directors a majority of
the members of the Board of Directors shall designate such directorship as
belonging to Class A, Class B or Class C so as to maintain the three (3) classes
of directors as nearly equal in number as possible. Each director so elected
shall be a director until his/her successor is elected by the shareholders, who
may make such election at the next annual meeting of the shareholders or at any
special meeting duly called for that purpose and held prior thereto.
Section 207. Compensation of Directors. No director shall be entitled
to any salary as such; but the Board of Directors may fix, from time to time, a
reasonable fee to be paid each director for his/her services in attending
meetings of the Board and meetings of committees appointed by the Board. The
Corporation may reimburse directors for expenses related to their duties as a
member of the Board.
Section 208. Organization Meeting. The President or Secretary, upon
receiving the certificate of the judges, of the result of any election, shall
notify the directors-elect of their election and of the time at which they are
required to meet for the purpose of organizing the new Board and electing and
appointing officers of the Corporation for the succeeding year. Such meeting
shall be held on the day of the election or as soon thereafter as practicable,
and, in any event, within thirty days thereof. If, at the time fixed for such
meeting, there shall not be a quorum present, the directors present may adjourn
the meeting, from time to time, until a quorum is obtained.
Section 209. Regular Meetings. Regular meetings of the Board of
Directors shall be held on such day, at such hour, and at such place, consistent
with applicable law, as the Board shall from time to time designate or as may be
designated in any notice from the Secretary calling the meeting. Notice need not
be given of regular meetings of the Board of Directors which are held at the
time and place designated by the Board of Directors. If a regular meeting is not
to be held at the time and place designated by the Board of Directors, notice of
such meeting, which need not specify the business to be transacted thereat and
which may be either verbal or in writing, shall be given by the Secretary to
each member of the Board at least twenty-four (24) hours before the time of the
meeting.
<PAGE>
The Chief Executive Officer shall preside at meetings of the Board of
Directors. A majority of the members of the Board of Directors shall constitute
a quorum for the transaction of business. If at the time fixed for the meeting,
including the meeting to organize the new Board following the annual meeting of
shareholders, a quorum is not present, the directors in attendance may adjourn
the meeting from time to time until a quorum is obtained.
Except as otherwise provided herein, a majority of those directors
present and voting at any meeting of the board of Directors, shall decide each
matter considered. A director cannot vote by proxy, or otherwise act by proxy at
a meeting of the Board of Directors.
Section 210. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairperson of the Board, the President or at the
request of three or more members of the Board of Directors. A special meeting of
the Board of Directors shall be deemed to be any meeting other than the regular
meeting of the Board of Directors. Notice of the time and place of every special
meeting, which need not specify the business to be transacted thereat and which
may be either verbal or in writing, shall be given by the Secretary to each
member of the Board at least twenty-four (24) hours before the time of such
meeting excepting the Organization Meeting following the election of directors.
Section 211. Reports and Records. The reports of officers and
Committees and the records of the proceedings of all Committees shall be filed
with the Secretary of the Corporation and presented to the Board of Directors,
if practicable, at its next regular meeting. The Board of Directors shall keep
complete records of its proceedings in a minute book kept for that purpose. When
a director shall request it, the vote of each director upon a particular
question shall be recorded in the minutes.
ARTICLE III. COMMITTEES.
- - ------------------------
Section 301. Committees. The following Committee of the Board of
Directors shall be established by the Board of Directors in addition to any
other Committee the Board of Directors may in its discretion establish.
Section 302. Executive Committee. The Executive Committee shall consist
of any three or more directors. A majority of the members of the Executive
Committee shall constitute a quorum, and actions of a majority of those present
at a meeting at which a quorum is present shall be actions of the committee.
Meetings of the Committee may be called at any time by the Chairperson or
Secretary of the Committee, and shall be called whenever two (2) or more members
of the Committee so request in writing.
<PAGE>
Section 303. Appointment of Committee Members. The Chief Executive
Officer shall elect the members of the Committees and the Chairperson and Vice
Chairperson of each such Committee to serve until the next organization meeting
of the Board of Directors. The Chief Executive Officer may appoint, from time to
time, other committees, for such purposes and with such powers as the Board may
determine. The Chief Executive Officer shall serve as an ex-officio member of
all Committees of which he/she has not been appointed a member.
Section 304. Organization and Proceedings. Each Committee of the Board
of Directors shall effect its own organization by the appointment of a Secretary
and such other officers, except the Chairperson and Vice Chairperson, as it may
deem necessary. A record of proceedings of all Committees shall be kept by the
Secretary of such Committee and filed and presented as provided in Section 211
of these Bylaws.
ARTICLE IV. OFFICERS.
- - ---------------------
Section 401. Officers. The officers of the Corporation shall be a
Chairperson of the Board, a President, one (1) or more Vice Presidents, a
Secretary, a Treasurer, and such other officers and assistant officers as the
Board of Directors may from time to time deem advisable. Except for the
President, Secretary, and Treasurer, the Board may refrain from filing any of
the said offices at any time and from time to time. The same individual may hold
any two (2) or more offices except both the offices of President and Secretary.
The officers shall be elected by the Board of Directors at the annual
organization meeting, in the manner and for such terms as the Board of Directors
from time to time shall determine. Any officer may be removed at any time, with
or without cause, and regardless of the term for which such officer was elected,
but without prejudice to any contract right of such officer. Each officer shall
hold his office for the current year for which he was elected or appointed by
the Board unless he shall resign, becomes disqualified, or be removed at the
pleasure of the Board of Directors.
Section 402. Chairperson of the Board. The Board of Directors shall
elect a Chairperson of the Board at the organization meeting of the Board
following each annual meeting of shareholders at which directors are elected.
The Chairperson of the Board shall be a member of the Board of Directors and
shall preside at the meetings of the Board and perform such other duties as may
be prescribed by the Board of Directors.
<PAGE>
Section 403. President. The President shall have general supervision of
all the departments and business of the Corporation and shall prescribe the
duties of the other officers and employees and see to the proper performance
thereof. The President shall be responsible for having all orders and
resolutions of the Board of Directors carried into effect. The President shall
execute on behalf of the Corporation and may affix or cause to be affixed a seal
to all authorized documents and instruments requiring such execution, except to
the extent that signing and execution thereof shall have been delegated to some
other officer or agent of the Corporation by the Board of Directors or by the
President. The President shall be a member of the board of Directors. In the
absence or disability of the Chief Executive Officer or his/her refusal to act,
the President shall preside at meetings of the Board. In general, the President
shall perform all the duties and exercise all the powers and authorities
incident to such office or as prescribed by the Board of Directors.
Section 404. Vice Presidents. The Vice Presidents shall perform such
duties, do such acts and be subject to such supervision as may be prescribed by
the Board of Directors or the President. In the event of the absence or
disability of the President or his/her refusal to act, the Vice Presidents, in
the order of their rank, and within the same rank in the order of their
authority, shall perform the duties and have the powers and authorities of the
President, except to the extent inconsistent with applicable law.
Section 405. Secretary. The Secretary shall act under the supervision
of the President or such other officers as the President may designate. Unless a
designation to the contrary is made at a meeting, the Secretary shall attend all
meetings of the Board of Directors and all meetings of the shareholders and
record all of the proceedings of such meetings in a book to be kept for that
purpose, and shall perform like duties for the standing Committees when required
by these Bylaws or otherwise. The Secretary shall give, or cause to be given,
notice of all meetings of the shareholders and of the Board of Directors. The
Secretary shall keep a seal of the Corporation, and, when authorized by the
Board of Directors or the President, cause it to be affixed to any documents and
instruments requiring it. The Secretary shall perform such other duties as may
be prescribed by the Board of Directors, President, or such other supervising
officer as the President may designate.
Section 406. Treasurer. The Treasurer shall act under the supervision
of the President or such other officer as the President may designate. The
Treasurer shall have custody of the Corporation's funds and such other duties as
may be prescribed by the Board of Directors, President or such other supervising
officer as the President may designate.
<PAGE>
Section 407. Assistant Officers. Unless otherwise provided by the Board
of Directors, each assistant officer shall perform such duties as shall be
prescribed by the Board of Directors, the President or the officer to whom
he/she is an assistant. In the event of the absence or disability of an officer
or his/her refusal to act, his/her assistant officer shall, in the order of
their rank, and within the same rank in the order of their seniority, have the
powers and authorities of such officer.
Section 408. Compensation. The salaries and compensation of all
officers and assistant officers shall be fixed by or in the manner designated by
the Board of Directors.
Section 409. General Powers. The officers are authorized to do and
perform such corporate acts as are necessary in the carrying on of the business
of the Corporation, subject always to the direction of the Board of Directors.
ARTICLE V. INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES.
- - ----------------------------------------------------------------
Section 501. Indemnification. The Corporation shall indemnify any
director, officer of "corporate agent" of the Corporation against "expenses" and
"liabilities" in connection with any "proceeding", as such terms within
quotation marks are defined in the New Jersey Business Corporation Act, as such
Act may be amended from time to time, to the fullest extent now or hereafter
permitted by law.
The provisions of this Section shall be applicable to all proceedings
commenced after its adoption, whether such arise out of acts or omissions which
occurred prior or subsequent to such adoption and shall continue as to any
person who has ceased to be a corporate agent and shall inure to the benefit of
the heirs, executors and administrators of such a person. The indemnification
provided by this Section shall not exclude any other rights to which a director,
officer or corporate agent may be entitled under any agreement, vote of
shareholders, or otherwise.
Section 502. Expenses. Expenses incurred by an officer, director or
corporate agent in connection with a proceeding may be paid by the Corporation
in advance of the final disposition of the proceeding upon receipt of an
undertaking by or on behalf of the officer, director or corporate agent to repay
such amount unless it shall ultimately be determined that he is entitled by law
or these Bylaws to be indemnified as provided herein.
Section 503. Insurance. The Corporation may, upon the determination of
the Board of Directors, purchase and maintain insurance on behalf of any
officer, director or corporate agent and against any expenses incurred in any
proceeding and any liabilities asserted against him in his capacity as officer,
director or corporate agent, whether or not the Corporation will have the power
to indemnify him against such liability under the provisions of the law and
these Bylaws.
<PAGE>
Section 504. Non-exclusive Remedy; Continuing Right of Indemnification.
The indemnification provided by this Article V shall not be deemed exclusive of
any other rights to which those seeking indemnification may be entitled under
any Bylaw, agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or corporate agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
ARTICLE VI. SHARES OF CAPITAL STOCK
- - -----------------------------------
Section 601. Authority to Sign Share Certificates. Every share
certificate of the Corporation shall be signed by the President and by the
Secretary or one of the Assistant Secretaries. Certificates may be signed by a
facsimile signature of the President and the Secretary or one of the Assistant
Secretaries of the Corporation.
Section 602. Lost or Destroyed Certificates. Any person claiming a
share certificate to be lost, destroyed or wrongfully taken shall receive a
replacement certificate if such person shall have: (a) requested such
replacement certificate before the Corporation has notice that the shares have
been acquired by a bona fide purchaser; (b) provided the Corporation with an
indemnity agreement satisfactory in form and substance to the Board of
Directors, or the President or the Secretary; and (c) satisfied any other
reasonable requirements (including providing an affidavit and a surety bond)
fixed by the Board of Directors, or the President or the Secretary.
ARTICLE VII. GENERAL
- - --------------------
Section 701. Fiscal Year. The fiscal year of the Corporation shall
begin on the first (1st) day of January in each year and end on the thirty-first
(31st) day of December in each year.
Section 702. Record Date. The Board of Directors may fix any time
whatsoever (but not more than sixty (60 days) prior to the date of any meeting
of shareholders, or the date of the payment of any dividend or distribution, or
the date for the allotment of rights, or the date when any change or conversion
or exchange of shares will be made or will go into effect, as a record date for
the determination of the shareholders entitled to notice of, or to vote at, any
such meetings, or entitled to receive payment or any such dividend or
distribution, or to receive any such allotment of rights, or to exercise the
rights in respect to any such change, conversion or exchange of shares.
<PAGE>
Section 703. Emergency Bylaws. In the event of any emergency resulting
form a nuclear attack or similar disaster, and during the continuance of such
emergency, the following Bylaw provisions shall be in effect, notwithstanding
any other provisions of the Bylaws:
(a) A meeting of the Board of Directors or of any Committee
thereof may be called by any officer or director upon one (1)
hour's notice to all persons entitled to notice whom, in the
sole judgment of the notifier, it is feasible to notify;
(b) The director or directors in attendance at the meeting of
the Board of Directors or of any Committee thereof shall
constitute a quorum; and
(c) These Bylaws may be amended or repealed, in whole or in
part, by a majority vote of the directors attending any meeting
of the Board of Directors, provided such amendment or repeal
shall only be effective for the duration of such emergency.
Section 704. Severability. If any provision of these Bylaws is illegal
or unenforceable as such, such illegality or unenforceability shall not affect
any other provision of these Bylaws and such other provisions shall continue in
full force and effect.
ARTICLE VIII. AMENDMENT OR REPEAL.
- - ----------------------------------
Section 801. Amendment or Repeal by the Board of Directors. These
Bylaws may be amended or repealed, in whole or in part, by a majority vote of
members of the Board of Directors at any regular or special meeting of the Board
duly convened. Notice will be given of the purpose of the meeting of the Board
of Directors at which the amendment or repeal is to be considered.
Section 802. Recording Amendments and Repeals. The text of all
amendments and repeals to these Bylaws shall be attached to the Bylaws with a
notation of the date and vote of such amendment or repeal. Shareholders shall be
notified of any amendments and repeals to these Bylaws in the proxy statement
for the next annual meeting of shareholders.
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<ALLOWANCE-CLOSE> 3,915
<ALLOWANCE-DOMESTIC> 3,915
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 734
</TABLE>
