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 September 30, 1998
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 October 31, 1998, there were 4,572,262 shares of $.50 par value
Common Stock outstanding.
<PAGE>
VISTA BANCORP, INC.
Form 10-Q
For the period ended September 30, 1998
Index
PAGE
Part I Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets - September 30, 1998
and December 31, 1997 3
Consolidated Statements of Income - Three Months and
Nine Months Ended September 30, 1998 and 1997 4
Consolidated Statements of Cash Flows - Nine Months
Ended September, 30, 1998 and 1997 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Part II Other Information
Item 1. Legal Proceedings 21
Item 2. Changes in Securities 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 21
2
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
- ------------------------------------
CONSOLIDATED BALANCE SHEETS
Amounts in Thousands (Except Per Share and Share Data)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
-------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents:
Cash and due from banks $22,136 $19,195
Federal funds sold 0 4,190
Short-term investments 1,036 4,465
- ----------------------------------------------------------------------------------------------------------------
Total Cash and Cash Equivalents 23,172 27,850
- ----------------------------------------------------------------------------------------------------------------
Securities available for sale
(Amortized cost: $185,130 and $185,944 in 1998 and 1997, respectively) 188,015 187,746
- ----------------------------------------------------------------------------------------------------------------
Loans, net of unearned income:
Mortgage 137,720 132,496
Commercial 125,866 98,813
Consumer 92,044 86,180
- ----------------------------------------------------------------------------------------------------------------
Total Loans 355,630 317,489
Allowance for loan losses (4,482) (4,148)
- ----------------------------------------------------------------------------------------------------------------
Total Net Loans 351,148 313,341
- ----------------------------------------------------------------------------------------------------------------
Premises and equipment 7,172 7,435
Accrued interest receivable 3,448 2,973
Other assets 5,051 4,122
- ----------------------------------------------------------------------------------------------------------------
Total Assets $578,006 $543,467
================================================================================================================
Liabilities and Shareholders' Equity
Deposits:
Demand:
Noninterest-bearing $55,713 $52,147
Interest-bearing 78,772 74,237
Savings 128,639 123,437
Time 240,002 233,935
- ----------------------------------------------------------------------------------------------------------------
Total Deposits 503,126 483,756
- ----------------------------------------------------------------------------------------------------------------
Borrowed funds 20,902 8,859
Long-term debt 3,000 4,222
Accrued interest payable 1,350 1,249
Other liabilities 2,727 2,079
- ----------------------------------------------------------------------------------------------------------------
Total Liabilities 531,105 500,165
- ----------------------------------------------------------------------------------------------------------------
Shareholders' Equity:
Common stock: $.50 par value; shares authorized 10,000,000;
shares issued, 4,588,462 and 4,168,013 at September 30, 1998
and December 31, 1997, respectively 2,294 2,084
Paid-in capital 22,646 14,345
Retained earnings 19,863 25,770
Treasury stock (7,302 Shares) 0 (87)
Accumulated other comprehensive income 2,098 1,190
- ----------------------------------------------------------------------------------------------------------------
Total Shareholders' Equity 46,901 43,302
- ----------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $578,006 $543,467
================================================================================================================
</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 September 30, Nine Months Ended September 30,
1998 1997 1998 1997
-------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $ 7,273 $ 6,609 $ 21,019 $ 18,953
Interest on federal funds sold 49 248 229 591
Interest on short-term investments 53 51 175 104
Interest on securities:
Taxable 2,428 2,743 7,476 7,742
Nontaxable 400 231 1,080 645
- ------------------------------------------------------------------------------------------------------------------------------------
Total Interest Income 10,203 9,882 29,979 28,035
- ------------------------------------------------------------------------------------------------------------------------------------
Interest Expense:
Interest on deposits 4,716 4,774 13,953 13,516
Interest on borrowed funds 164 226 433 501
Interest on long-term debt 47 78 143 236
- ------------------------------------------------------------------------------------------------------------------------------------
Total Interest Expense 4,927 5,078 14,529 14,253
- ------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income 5,276 4,804 15,450 13,782
- ------------------------------------------------------------------------------------------------------------------------------------
Provision for Loan Losses 195 195 585 585
- ------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income After Provision for Loan Losses 5,081 4,609 14,865 13,197
- ------------------------------------------------------------------------------------------------------------------------------------
Noninterest Income:
Service charges on deposit accounts 444 413 1,254 1,226
Other service charges 215 137 590 387
Net security gains 31 135 238 235
Other income 127 90 367 262
- ------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest Income 817 775 2,449 2,110
- ------------------------------------------------------------------------------------------------------------------------------------
Noninterest Expense:
Salaries and benefits 2,090 1,932 6,163 5,763
Occupancy expense 355 346 1,029 1,018
Furniture and equipment expense 404 388 1,365 1,103
Other expense 962 876 3,036 2,520
- ------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest Expense 3,811 3,542 11,593 10,404
- ------------------------------------------------------------------------------------------------------------------------------------
Income Before Provision for Income Taxes 2,087 1,842 5,721 4,903
Provision for Income Taxes 625 610 1,753 1,594
- ------------------------------------------------------------------------------------------------------------------------------------
Net Income $ 1,462 $ 1,232 $ 3,968 $ 3,309
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings per Share (Basic and Diluted) $ 0.32 $ 0.27 $ 0.86 $ 0.73
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted Average Number of Common Shares Outstanding 4,610,913 4,533,802 4,598,746 4,515,159
- ------------------------------------------------------------------------------------------------------------------------------------
</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 CASH FLOWS
Amounts in Thousands
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1998 1997
-------------------------------
<S> <C> <C>
Cash Flows From Operating Activites:
Net Income $ 3,968 $ 3,309
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 789 764
Provision for loan losses 585 585
Increase in deferred income 165 118
Increase in accrued interest receivable (475) (577)
Increase in accrued interest payable 101 166
Increase in other assets (660) (616)
Increase in other liabilities 688 450
Net amortization of premium on securities 464 240
Net security gains (238) (235)
- -----------------------------------------------------------------------------------------------------------------
Net Cash Provided By Operating Activities 5,387 4,204
- -----------------------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Proceeds from maturities of securities available for sale 43,320 18,019
Proceeds from sales of securities available for sale 39,180 18,075
Purchases of securities available for sale (81,912) (70,234)
Net increase in loans (39,094) (24,727)
Net capital expenditures (433) (699)
- -----------------------------------------------------------------------------------------------------------------
Net Cash Used In Investing Activities (38,939) (59,566)
- -----------------------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Net increase in demand and savings deposits 13,303 25,464
Net increase in time deposits 6,067 31,661
Net increase (decrease) in borrowed funds 12,043 (2,278)
Net decrease in long-term debt (1,222) (188)
Net proceeds from issuance of common stock 1,218 867
Purchases of treasury stock (1,018) (127)
Cash dividends paid (1,510) (1,271)
Cash in lieu of fractional shares (7) --
- -----------------------------------------------------------------------------------------------------------------
Net Cash Provided By Financing Activities 28,874 54,128
- -----------------------------------------------------------------------------------------------------------------
Net Decrease in Cash and Cash Equivalents (4,678) (1,234)
Cash and Cash Equivalents, Beginning of Period 27,850 35,582
- -----------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, End of Period $ 23,172 $ 34,348
=================================================================================================================
Supplemental Disclosures of Cash Flow Information:
Interest paid $ 14,428 $ 14,087
Income taxes paid 1,855 1,655
Supplemental Disclosures of Investing and Financing Activities:
Transfers from loans to other real estate owned 537 298
Net unrealized gain in the fair value of securities available for sale 1,083 623
Decrease in deferred tax asset related to net unrealized
gain in the fair value of securities available for sale (175) (212)
Net unrealized gain in the fair value of securities available for sale,
net of income taxes 908 411
Deferred compensation 40 35
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
5
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
- ------------------------------------
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, 1997.
Results of operations for the nine month period ended September 30, 1998,
are not necessarily indicative of the results to be expected for the full year.
Note 2. Recently Issued Accounting Standards
Vista adopted the Financial Accounting Standards Board (FASB) Statement of
Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income"
in 1998. SFAS No. 130 provides standards for the reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. The statement defines comprehensive income as the changes
in equity of a business enterprise during the period from transactions and other
events and circumstances from non-owner sources. Other comprehensive income
would include revenues, expenses, gains and losses that under generally accepted
accounting principles are included in comprehensive income but are excluded from
net income such as foreign currency items, minimum pension liability
adjustments, and unrealized gains and losses on available for sale securities.
This statement is effective for fiscal years beginning after December 15, 1997.
Prior year financial statements, which are presented for comparative purposes,
have been reclassified.
Vista held securities classified as Available for Sale, which experienced
net unrealized pre-tax gains of $1.083 million during the nine-month period,
ended September 30, 1998. In compliance with SFAS No. 130, the before tax and
after tax amount for this category as well as the tax expense, is summarized
below.
<TABLE>
<CAPTION>
(Amounts in thousands) Before-Tax Tax Net-of-Tax
Amount Amount
---------------------------------------------
<S> <C> <C> <C>
Unrealized gains on securities:
Unrealized holding gains arising during period $1,321 $ (241) $1,080
Less: reclassification adjustment for gains realized
in net income 238 (66) 172
---------------------------------------------
Net unrealized gain 1,083 (175) 908
---------------------------------------------
Other comprehensive income $1,083 $ (175) $ 908
=============================================
</TABLE>
6
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
- ------------------------------------
In February 1998, the FASB issued Statement No. 132, "Employer's
Disclosures about Pensions and Other Postretirement Benefits." SFAS No. 132
standardizes the disclosure requirements for pension and other postretirement
benefits. This statement requires additional information on changes in the
benefit obligations and fair values of the plan assets and eliminates certain
disclosures that are considered no longer useful. SFAS No. 132 supersedes the
disclosure requirements in FASB Statements 87, "Employer's Accounting for
Pensions", and 88, "Employers' Accounting for Settlements and Curtailments of
Defined Benefit Pension Plans and for Termination Benefits", and 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions". This
statement is effective for fiscal years beginning after December 15, 1997. The
adoption of this statement is not expected to have a material effect on the
consolidated financial statements of Vista.
In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It requires
that all derivatives be recognized as either assets or liabilities on the
statement of condition and be measured at fair value. If certain conditions
exist a derivative may be specifically designated as a hedge. The accounting for
changes in the fair value of a derivative depends upon the specific use of the
derivative and resulting designation. This statement amends SFAS No. 52,
"Foreign Currency Translation". This statement supersedes SFAS No. 80,
"Accounting for Future Contracts," SFAS No. 105, "Disclosure of Information
about Financial Instruments with Off-Balance-Sheet Risk and Financial
Instruments with Concentrations of Credit Risk," and No. 119, "Disclosure about
Derivative Financial Instruments and Fair Value of Financial Instruments. It
amends SFAS No. 107, "Disclosures about Fair Value of Financial Instruments" to
include the disclosure provisions about concentrations of credit risk from
Statement 105. This statement is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. Vista is currently reviewing SFAS No. 133.
Note 3. Stock Dividend
On May 15, 1998, Vista declared a 10% stock dividend to shareholders' of
record as of June 1, 1998 and payable June 10, 1998. In connection therewith,
Vista issued 417,898 shares of its common stock. Accordingly, an amount equal to
the fair market value (based on the quoted market price of the stock on May 15,
1998) of the additional shares issued was charged to retained earnings and
credited to common stock and additional paid in capital. Earnings per share,
weighted average shares outstanding and all per share amounts have been restated
in the accompanying financial statements, to reflect this dividend.
7
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
- ------------------------------------
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Certain statements in this Form 10-Q are forward-looking statements that
involve a number of risks and uncertainties. A discussion of these factors,
among others, which may cause actual results to differ materially from projected
results appears under "Factors That May Affect Future Results."
Factors That May Affect Future Results
General. Banking is affected, directly and indirectly, by local, domestic
and international economic and political conditions, and by government monetary
and fiscal policies. Conditions such as inflation, recession, unemployment,
volatile interest rates, tight money supply, real estate values, international
conflicts and other factors beyond the control of Vista may adversely affect the
future results of operations of Vista. Management does not expect any particular
factor to affect Vista's results of operations. A downward trend in several
areas, however, including real estate, construction and consumer spending, could
have an adverse impact on Vista's ability to maintain or increase profitability.
Therefore, there is no assurance that Vista will be able to continue its current
rates of income and growth.
Interest Rates. Vista's earnings depend, to a large extent, upon net
interest income, which is primarily influenced by the relationship between its
cost of funds (deposits and borrowings) and the yield on its interest-earning
assets (loans and investments). This relationship, known as the net interest
spread, is subject to fluctuation and is affected by regulatory, economic and
competitive factors which influence interest rates, the volume, rate and mix of
interest-earning assets and interest-bearing liabilities, and the level of
nonperforming assets. As part of its interest rate risk management strategy,
management seeks to control its exposure to interest rate changes by managing
the maturity and repricing characteristics of interest-earning assets and
interest-bearing liabilities.
Adequacy of Allowance for Loan Losses. In originating loans, there is a
likelihood that some credit losses will occur. This risk of loss varies with,
among other things, general economic conditions, the type of loan being made,
the credit worthiness and debt servicing capacity of the borrower over the term
of the loan and, in the case of a collateralized loan, the value and
marketability of the collateral securing the loan. Management maintains an
allowance for loan losses based on, among other things, historical loan loss
experience, known inherent risks in the loan portfolio, adverse situations that
may affect the borrower's ability to repay, the estimated value of any
underlying collateral and the evaluation of current economic conditions.
Management currently believes that the allowance for loan losses is adequate,
but there can be no assurance that nonperforming loans will not increase in the
future.
Local Economic Conditions. The success of Vista is dependent, to a certain
extent, upon the general economic conditions in the geographic market served by
Vista. Although Vista expects that economic conditions will continue to be
favorable in this market, no assurance can be given that these economic
conditions will continue. Adverse changes in economic conditions in the
geographic market that Vista serves would likely impair Vista's ability to
collect loans and could otherwise have a material adverse effect on Vista's
results of operations and financial condition.
8
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
- ------------------------------------
Competition. The banking industry is highly competitive, with rapid changes
in product delivery systems and in the consolidation of service providers. Many
of Vista's competitors are bigger than Vista in terms of assets and have
substantially greater technical, marketing and financial resources. Because of
their size, any of these competitors can (and do) offer products and services
that Vista does not offer. Vista is constantly striving to meet the convenience
and needs of its customers and to enlarge its customer base. No assurance can be
given that these efforts will be successful in maintaining and expanding Vista's
customer base.
Growth by Internal Expansion and Acquisition. Vista's strategy to expand
internally by establishing new branch offices is dependent on its ability to
identify advantageous branch office locations and generate new deposits and
loans from those locations that will create an acceptable level of net income
for Vista. At the same time, Vista's strategy to grow externally through
selective acquisitions of other financial institutions or branches of such
institutions is dependent on successfully identifying, acquiring and integrating
such institutions or branches. There can be no assurance Vista will be
successful in implementing its internal growth strategy or in identifying
attractive acquisition candidates, acquiring such candidates on favorable terms
or successfully integrating any acquired institutions or branches into Vista.
Federal and State Government Regulation. The operations of Vista are
heavily regulated and will be affected by present and future legislation and by
the policies established from time to time by various federal and state
regulatory authorities. In particular, the monetary policies of the Federal
Reserve Board have had a significant effect on the operating results of banks in
the past and are expected to continue to do so in the future.
Results of Operations for the periods ended September 30, 1998 and September 30,
1997
Earnings Summary
The information concerning 1997 share and per share data included in this
discussion has been restated to reflect the 10 percent stock dividend issued in
June 1998 (See Note 3).
For the third quarter of 1998, Vista reported a 19% increase in net income
to $1.462 million or $.32 per basic common share compared to $1.232 million or
$.27 per basic common share reported for the comparable third quarter of 1997.
The increase in net income can be attributed to an increase in net interest
income, an increase in fee based income and a lower effective tax rate. These
revenue increases were offset in part by increased operating expenses and lower
gains from security transactions.
Return on average assets increased to 1.01% in the third quarter of 1998
from .89% in 1997, while return on average shareholders' equity also increased
to 12.88% in the third quarter of 1998 from 11.99% in 1997.
For the nine months ended September 30, 1998, net income increased 20% to
$3.97 million, or $.86 per basic common share compared to $3.31 million, or $.73
per basic common share for the similar period in 1997. The increase in net
income was due primarily to growth in net interest income, growth in fee-based
income and a lower effective tax rate offset in part by increased operating
expenses.
9
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
- ------------------------------------
Return on average assets for the nine months ended September 30, 1998
increased to .94% from .84% in 1997, while return on average equity increased to
11.94% in 1998 from 11.18% in 1997.
Net Interest Income
For the third quarter of 1998, net interest income on a tax-equivalent
basis increased 12% to $5.5 million compared to $4.9 million for the third
quarter of 1997. The increase in tax-equivalent net interest income is
attributable to a net interest margin that widened to 4.00% in the third quarter
of 1998 from 3.71% in 1997 and a $19.2 million increase in average earning
assets to $542.5 million from $523.3 million. The net interest margin continues
to benefit from strategies employed to improve the mix of earning assets and
funding sources within the context of overall balance sheet growth.
For the nine months ended September 30, 1998, tax-equivalent net interest
income increased 14% to $16.0 million compared to $14.0 million for the same
period in 1997. The increase is attributable to a net interest margin that
widened to 4.00% in 1998 from 3.76% in 1997, as the yield on earning assets
increased due to growth in lending volumes and a lower cost of funds. In
addition, average earning assets increased $33.9 million to $532.9 million from
$499.0 million.
The 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 September 30, 1998
and 1997, are also reflected.
The 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.
10
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
- ------------------------------------
Consolidated Average Balances, Net Interest Income and Average Rates
(Tax-equivalent Basis)
Amounts in Thousands (Except Percentages)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1998 1997
------------------------------------------------------------------
Average Average Average Average
Balances Interest Rates Balances Interest Rates
(1) (2) (3) (1) (2) (3)
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Federal funds sold $ 5,499 $ 229 5.57% $ 14,340 $ 591 5.51%
Short-term investments 4,436 175 5.27% 2,719 104 5.11%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Short-term Investments 9,935 404 5.44% 17,059 695 5.45%
- ------------------------------------------------------------------------------------------------------------------------------------
Securities:
U.S. Treasury 17,747 808 6.09% 23,546 1,070 6.08%
U.S. Government agencies and corporations 123,128 5,903 6.41% 117,004 6,030 6.89%
States and other political subdivisions 31,142 1,550 6.65% 18,722 876 6.26%
Other 14,931 766 6.86% 12,948 643 6.64%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Securities 186,948 9,027 6.46% 172,220 8,619 6.69%
- ------------------------------------------------------------------------------------------------------------------------------------
Loans, net of unearned income:(4)
Mortgage 135,581 7,699 7.59% 141,435 8,066 7.62%
Commercial 112,472 7,944 9.44% 85,964 5,889 9.16%
Consumer 87,986 5,412 8.22% 82,309 5,024 8.16%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Loans 336,039 21,055 8.38% 309,708 18,979 8.19%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Interest-earning Assets 532,922 30,486 7.65% 498,987 28,293 7.58%
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and due from banks 17,420 16,146
Allowance for loan losses (4,292) (3,901)
Other assets 15,518 15,442
- ------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest-earning Assets 28,646 27,687
- ------------------------------------------------------------------------------------------------------------------------------------
Total Assets $ 561,568 $ 526,674
====================================================================================================================================
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Demand $ 77,520 $ 1,256 2.17% $ 71,157 $ 1,143 2.15%
Savings 127,638 2,915 3.05% 116,822 2,811 3.22%
Time 196,253 8,007 5.45% 197,883 8,072 5.45%
Time deposits $100,000 and over 42,293 1,775 5.61% 35,610 1,490 5.59%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Interest-bearing Deposits 443,704 13,953 4.20% 421,472 13,516 4.29%
- ------------------------------------------------------------------------------------------------------------------------------------
Borrowed funds 13,131 433 4.41% 14,117 501 4.74%
Long-term debt 3,058 143 6.25% 4,431 236 7.12%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Borrowed Funds and Long-term Debt 16,189 576 4.76% 18,548 737 5.31%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Interest-bearing Liabilities 459,893 14,529 4.22% 440,020 14,253 4.33%
- ------------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing demand deposits 53,388 43,313
Other liabilities 3,872 3,776
- ------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest-bearing Liabilities 57,260 47,089
- ------------------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity 44,415 39,565
- ------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $ 561,568 $ 526,674
====================================================================================================================================
Net Interest Income/Spread (Tax-equivalent basis) 15,957 3.43% 14,040 3.25%
- ------------------------------------------------------------------------------------------------------------------------------------
Tax-equivalent Basis Adjustment (507) (258)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income $ 15,450 $ 13,782
- ------------------------------------------------------------------------------------------------------------------------------------
Net Interest Margin (5) 4.00% 3.76%
- ------------------------------------------------------------------------------------------------------------------------------------
</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 average interest-earning assets on a
tax-equivalent basis.
11
<PAGE>
VISTA BANCORP, INC. AND SUBSIDIARIES
- ------------------------------------
Volume/Rate Analysis of Changes in Net Interest Income (Tax-equivalent Basis)
Amounts in Thousands
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1998 vs. 1997
---------------------------------------------
Increase (Decrease)
Due to Changes in:
---------------------------------------------
Total Average Average
Change(1) Volume Rate
---------------------------------------------
<S> <C> <C> <C>
Interest Income
Federal funds sold $ (362) $ (368) $ 6
Short-term investments 71 68 3
- ------------------------------------------------------------------------------------------------------------------------------------
Total Short-term Investments (291) (300) 9
- ------------------------------------------------------------------------------------------------------------------------------------
Securities:
U.S. Treasury (262) (264) 2
U.S. Government agencies and corporations (127) 307 (434)
States and other political subdivisions 674 615 59
Other 123 101 22
- ------------------------------------------------------------------------------------------------------------------------------------
Total Securities 408 759 (351)
- ------------------------------------------------------------------------------------------------------------------------------------
Loans, net of unearned income: (2)
Mortgage (368) (333) (35)
Commercial 2,055 1,867 188
Consumer 389 350 39
- ------------------------------------------------------------------------------------------------------------------------------------
Total Loans 2,076 1,884 192
- ------------------------------------------------------------------------------------------------------------------------------------
Total Interest Income 2,193 2,343 (150)
- ------------------------------------------------------------------------------------------------------------------------------------
Interest Expense
Interest-bearing liabilities:
Demand 113 103 10
Savings 104 252 (148)
Time (65) (67) 2
Time deposits $100,000 and over 285 280 5
- ------------------------------------------------------------------------------------------------------------------------------------
Total Interest-bearing Deposits 437 568 (131)
- ------------------------------------------------------------------------------------------------------------------------------------
Borrowed funds (68) (34) (34)
Long-term debt (93) (67) (26)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Borrowed Funds and Long-term Debt (161) (101) (60)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Interest Expense 276 467 (191)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income (tax-equivalent basis) $ 1,917 $ 1,876 $ 41
====================================================================================================================================
</TABLE>
(1) The volume/rate variance is allocated based on the percentage relationship
of changes in volume and changes in rate to the "Total Change."
(2) Includes nonaccrual loans.
12
<PAGE>
VISTA BANCORP, INC. AND SUBSIDIARIES
- ------------------------------------
Noninterest Income
Noninterest income continues to represent a growing source of revenues and
profitability for Vista. For the third quarter of 1998, total noninterest
income, excluding security gains, increased 23% to $786 thousand compared to
$640 thousand for the third quarter of 1997.
Net gains on security transactions were $31 thousand for the third quarter
of 1998 compared to $135 thousand in 1997. For the nine months ended September
30, 1998, security gains were $238 thousand, essentially unchanged from the $235
thousand in net security gains recorded for the similar period in 1997.
Service charges on deposit accounts increased 8% or $31 thousand to $444
thousand during the third quarter 1998 from the same period in 1997. This
increase was driven by an increase in service charges on personal demand deposit
accounts and fees received from non-sufficient (NSF) funds on demand accounts.
Other service charges increased 57% or $78 thousand to $215 thousand in the
third quarter 1998 compared to the third quarter 1997. Revenue increases
consisted primarily of loan origination-related fees, ATM user fees, debit card
transaction fees and merchant credit card plan fees.
Other income increased 41% or $37 thousand to $127 thousand for the third
quarter of 1998 compared to $90 thousand during 1997. Other income revenue
consisted primarily of trust department fees, commissions from the sale of
mutual funds and annuities, and safe deposit box rental income.
For the nine months ended September 30, 1998, total noninterest income
increased 16% or $339 thousand to $2.45 million from $2.11 million in the
comparable period of 1997. Excluding security gains, non-interest income
increased 18% or $336 thousand compared to the nine months ended September 30,
1997.
For the nine months ended September 30, 1998, service charges on deposit
accounts increased to $1.3 million. Other service charges for the period
increased 52% or $203 thousand to $590 thousand. Factors contributing to this
revenue increase included third party loan origination fees, loan-servicing
fees, appraisal fees, ATM user fees and debit card interchange income.
Other income for the first nine months of 1998 increased 40% or $105
thousand to $367 thousand compared to 1997. The increase is attributable to
higher trust department fees, commissions on mutual fund and annuity sales and a
gain on the sale of a student loan portfolio.
Noninterest Expense
For the third quarter 1998, noninterest expense increased 8% or $269
thousand to $3.8 million from $3.5 million in the third quarter 1997. The
efficiency ratio was 60.99% for the third quarter 1998 compared to 63.98% for
the same period in 1997.
13
<PAGE>
VISTA BANCORP, INC. AND SUBSIDIARIES
- ------------------------------------
For the nine months ended September 30, 1998 noninterest expense increased
11% or $1.2 million to $11.6 million compared to $10.4 million for the nine
months ended September 30, 1997. The efficiency ratio for the first nine months
of 1998 was 63.81% compared to 65.37% during 1997.
Salary and benefits expense for the third quarter 1998 totaled $2.1
million, an increase of 8% compared to 1997. For the first nine months of 1998,
salary expense increased 7% or $400 thousand to $6.2 million. The increase in
salary and benefits expense was the result of increased staffing in the retail
banking, lending and technical support areas; as well as, higher accruals for
annual merit and performance-based incentive rewards. Vista intends to link a
greater portion of its future compensation structure to performance-based
incentives for its officer staff as a means to strengthen the link between
performance and compensation to increase profitability. The higher staffing
costs were partially offset by lower expense accrual for pension and
post-retirement benefits.
Occupancy expense for the third quarter of 1998 totaled $355 thousand,
which was virtually unchanged from the $346 thousand expensed during the third
quarter of 1997. The $355 thousand expensed during the third quarter 1998
included a $25 thousand charge for the closing of the Phillipsburg Mall branch.
For the first nine months of 1998 as well, occupancy expense was relatively
unchanged from the third quarter of 1997 with $1.03 million expensed.
Furniture and equipment expense increased 4% or $16 thousand to $404
thousand for the third quarter 1998. For the nine months ended September 30,
1998, furniture and equipment expense increased 24% or $262 thousand to $1.4
million. This increase is due to depreciation and leasing expenses related to
technology upgrades, the new main frame system, licensing and servicing
agreements for hardware and software, and the 24-hour banking system.
Other expenses, which consists primarily of marketing, legal and
professional fees, loan-related fees and other miscellaneous expenses increased
10% or $86 thousand to $962 thousand during the third quarter of 1998. For the
first nine months of 1998, other expense increased 20% or $516 thousand to $3.0
million compared to $2.5 million for the first nine months of 1997. Other
expenses included an additional $139 thousand in marketing expenditures which
were instrumental in the loan and deposit growth which resulted during the first
nine months of 1998; as well as, in the introduction of the 24-hour telephone
banking system and the alternative investment program which features mutual fund
and annuity products. The write-down of an ORE property, NASDAQ National Market
listing and entry fees, and professional fees impacted other expenses as well.
Also included in other expenses were technical consultant costs for hardware
support and maintenance; as well as, network support.
Vista has always viewed technology as a key element in its strategic
planning process and fundamental to providing continuation of the quality
customer service that Vista is known for. The use of technology also enables
Vista to increase the efficiency and productivity of its employees within the
context of its growth objectives.
In early 1998, the Board of Directors approved management's plan to enhance
the technology based delivery systems of Vista across both bank subsidiaries.
14
<PAGE>
VISTA BANCORP, INC. AND SUBSIDIARIES
- ------------------------------------
Currently, Vista's network technology consists of PC's, data
communications, file servers and routers that are used to provide customer
service and back office operational support. Much of this technology
infrastructure was put into place over many years and consists of numerous
vendor providers of hardware and software. Maintenance, upgrade, and replacement
become unwieldy, costly, and inefficient.
Management's plan is to develop a common hardware and software platform for
all systems that provides Vista with the ability to concentrate on the prime
objective of serving our customers. The goals of the new network system are
numerous but are primarily based on being cost effective, to provide enhanced
customer service by expanding delivery systems and product lines, increase
customer convenience and to improve efficiency.
The new delivery system will entail installation of a local area network at
each location that will be linked together through a wide area network. The
delivery system upgrade is expected to provide noticeable improvements for our
customers and greater efficiencies and productivity gains while giving Vista
greater predictability of its future technology costs.
The new system is expected to be fully installed and functional during the
fourth quarter of 1998. Vista has entered into a leasing arrangement with a
major technology company to provide all hardware, installation, integration, and
ongoing support services for the new system. The incremental equipment cost of
the new delivery system is expected to be approximately $400 thousand per year
which will be charged to furniture and equipment expense. Vista expects to
record a one-time pre-tax charge ranging from $100 thousand to $150 thousand in
the fourth quarter to cover the undepreciated cost of obsolete equipment.
The decision to upgrade Vista's delivery system was not related to or
accelerated due to Year 2000 issues.
Readiness for Year 2000
The Year 2000 date change (Y2K) could potentially affect any system that
uses computer software programs or embedded technology. Many software programs
and computer chips store calendar dates as two-digit rather than four-digit
numbers. These software programs record the year 1998 as "98". This approach
will work until the year 2000 when the "00" may be read as 1900 instead of 2000.
Organizations are fixing or upgrading their systems to make sure they will
operate properly when the calendar changes.
As a commercial banking organization, Vista uses computer systems to
perform financial calculations, track deposits and loan payments, transfer
funds, and make direct deposits. Computer software and embedded computer chips
may also be used to run non-information technology based systems such as
security systems, vaults, tele-communication networks, and other infrastructure
items. Because of its reliance on these systems, Vista has placed great emphasis
on making sure its systems are ready for the year 2000 date change.
Vista's plan to become ready for the year 2000 is broken down into
5-phases.
15
<PAGE>
VISTA BANCORP, INC. AND SUBSIDIARIES
- ------------------------------------
The awareness phase involves an extensive internal and external awareness
campaign that includes not only the initial awareness raising effort, but
continues with proactive ongoing activities to maintain heightened awareness of
Y2K implications.
The assessment phase is designed to identify the systems and processes that
could potentially be affected by the millenium date change. This assessment
identified all systems or processes that could be affected by the millenium date
change. In addition, during the assessment phase, Vista established a high-level
plan that required completing development of, its Y2K test plan by June 30,
1998. Vista plans to aggressively test its "A priority" applications. "A
Priorities" are defined as mission critical systems that must be tested
regardless of cost or impact to operations. "B Priorities" are defined as
non-mission critical systems that should be tested. Vista will also seek to test
the "B Priority" items but will rely on vendor certification where it feels the
applications are not critical to its survival, and the risk of vendor
non-compliance is low.
The remediation phase includes code enhancement, hardware and software
upgrades, system replacements, vendor certification, and other associated
changes.
The validation or testing phase is a multi-faceted process that is critical
to the Year 2000 project and inherent in each phase of the project management
plan. This process includes the testing of incremental changes to hardware and
software components. In addition to testing upgraded components, interfaces with
other systems must be verified, and all changes should be accepted by internal
and external users.
The implementation phase involves system certification as Y2K compliant and
acceptance by business users. For any system failing certification, the business
effect will be clearly assessed and Year 2000 contingency plans will be
implemented.
An essential component of Vista's Year 2000 program relates to third
parties with which it has a material relationship. Vista has endeavored to
evaluate the risk associated with Y2K vulnerability of these "material"
customers. Vista defines these material customers by the size of their loan and
deposit relationships, the complexity of customers systems and dependence on
third party technology providers. Vista assessed the preparedness of its
material customers through a combination of surveys and personal visitations.
Vista also requires semi-annual status updates from material customers including
capital market counter-parties and documents its assessment conclusions and
maintains updates in its files. The individual and aggregate portfolio risk is
then measured and reported as high/moderate/low with quarterly updates presented
to the Board of Directors on customers not effectively addressing Y2K issues.
The following chart describes the status of efforts to remediate and test
mission-critical systems:
Status of Mission-Critical Systems:
<TABLE>
<CAPTION>
Assessment Remediation Testing Implementation
---------- ----------- ------- --------------
<S> <C> <C> <C> <C>
Milestone to be Completed December 1997 December 1998 December 1998 June 1999
Completed at September 30, 1998 100% 100% 25% 25%
</TABLE>
16
<PAGE>
VISTA BANCORP, INC. AND SUBSIDIARIES
- ------------------------------------
Vista continues to evaluate the estimated costs associated with attaining
Year 2000 readiness. Incremental costs for 1998 and 1999, such as testing,
software purchases and marketing publications are expected to range between $50
thousand and $100 thousand. Through the nine months ended September 30, 1998,
$29 thousand has been charged to expense. While additional costs beyond $100,000
could be incurred, Vista believes, based on available information, that it will
be able to manage its Year 2000 transition without any adverse effect on its
business operations or financial condition.
However, Vista believes that the most reasonably likely worst case Year
2000 scenario would involve failure to attain Y2K compliant status for a portion
of its non-mission critical applications. Non-mission critical systems include
desktop PC applications, supplemental non-mainframe loan and deposit systems as
well as automated teller machines. Vista is in the process of developing
contingency plans for this occurrence. This effort involves identifying
alternate operating procedures, vendors and sources for products and services.
In any event, the failure of non-mission critical systems is not expected to
have a material impact on Vista's business operations or financial condition.
The preceding Y2K discussion contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. These
statements include, but are not limited to (i) whether or not testing will be
accurate; (ii) the estimated costs associated with becoming Y2K compliant; (iii)
the date by which the Company expects to be fully compliant, and (iv) the
successfulness of any contingency plans. These statements are made using current
estimates and assumptions about future events. There can be no assurance that
these estimates will be achieved and actual results could differ materially from
those anticipated. The factors that might lead to material differences include,
among others, (i) the ability to accurately identify all mission-critical
systems; (ii) accuracy of the testing performed; (iii) whether or not third
party certifications are accurate; (iv) whether or not material customers,
suppliers, governmental agencies and other significant third parties are
successful in their Y2K efforts; (v) the adequacy of contingency plans, and (vi)
the ability to implement contingency plans.
17
<PAGE>
VISTA BANCORP, INC. AND SUBSIDIARIES
- ------------------------------------
Financial Condition - September 30, 1998 versus December 31, 1997
Total consolidated assets at September 30, 1998 were $578 million, an
increase of 6% or $35 million compared to $543 million in total assets at
December 31, 1997.
Short-term investments and federal funds sold were $1 million at September
30, 1998 compared to $8.5 million at December 31, 1997, respectively. This
reduction in short-term investments was the result of a strategy to minimize
exposure to short-term interest rate risk in the declining rate environment.
Securities available for sale remained unchanged at $188.0 million at
September 30, 1998 compared to $187.7 million at December 31, 1997 in response
to a declining interest rate environment and flat yield curve.
As of September 30, 1998 the security portfolio consisted of: 12% U.S.
Government Obligations and Agencies; 61% mortgage backed securities with fixed
and variable interest rates and pass-through, balloon, adjustable rate and CMO
structures; 18% tax-exempt municipals and the balance in corporate and other
securities. In comparison, at December 31, 1997, the portfolio consisted of 19%
U.S. Government Obligations and Agencies, 61% mortgage backed securities with
fixed and variable interest rates and pass-through, balloon, adjustable rate and
CMO structures, 13% tax-exempt securities and the balance in corporate and other
securities. During the first nine-months of 1998, proceeds from the maturities
and sales of securities totaled $43.3 million and $39.2 million respectively;
which were reinvested into purchases of $81.9 million. At September 30, 1998,
the portfolio contained unrealized pre-tax net gains of $2.89 million.
Total loans equaled $355.6 million as of September 30, 1998, an increase of
$38.1 million from $317.5 million outstanding at December 31, 1997. This growth
was driven primarily by the commercial loan portfolio. As of September 30, 1998
commercial loans totaled $125.9 million, a 27% or $27.1 million increase
compared to $98.8 million at year-end 1997. The growth was in commercial time
and term loans; along with, lines of credit. This was the result of the strategy
to decrease the concentration in mortgage loans and increase commercial and
consumer concentrations. This asset mix shift would result in a higher yielding
and more diversified loan portfolio. The portfolio's composition as of September
30, 1998 was 35% commercial; 39% mortgage and 26% consumer. The mortgage
portfolio totaled $137.7 million and $132.5 million at September 30, 1998 and
December 31, 1997 respectively. The installment portfolio, driven by growth in
home equity loans, equaled $92.0 million at September 30, 1998 compared to $86.2
million at December 31, 1997. The loan to deposit ratio was 71% at September 30,
1998 compared to 66% at year-end 1997.
Total deposits were $503.1 million at September 30, 1998, reflecting an
increase of approximately $19.3 million or 4% in total deposits compared to
$483.8 million at year-end 1997. The composition of the portfolio remained
virtually unchanged since year-end 1997 with 26% transaction accounts, 26%
savings, and 48% certificates of deposit accounts. Non-interest bearing demand
accounts increased $3.6 million or 6.8%, consistent with the growth in
commercial lending activities. Interest bearing consumer demand accounts
increased $4.5 million during the nine months ended September 30, 1998.
18
<PAGE>
VISTA BANCORP, INC. AND SUBSIDIARIES
- ------------------------------------
Total borrowed funds and long-term debt equaled $23.9 million at September
30, 1998, and $13.1 million at December 31, 1997. These borrowings consisted of
$5 million in overnight federal funds purchased, $15.6 million in overnight
repurchase agreements, $3 million in long-term FHLB borrowings and the balance
in treasury tax and loan payment deposits. At December 31, 1997, overnight
repurchase agreements totaled $8.3 million while long-term debt equaled $4.2
million.
Nonperforming Assets
At September 30, 1998, nonperforming assets, consisting of loans on
nonaccrual status plus other real estate acquired through foreclosure (OREO),
totaled $3.9 million compared to $4.3 million at December 31, 1997.
Nonperforming loans equaled $2.5 million at September 30, 1998, a decline of
$400 thousand from $2.9 million at year-end 1997. OREO remained unchanged at
September 30, 1998 at $1.4 million. The ratio of non-performing assets to total
loans equaled 1.10% at September 30, 1998 compared to 1.34% at December 31,
1997. The decline in this ratio was the result of the increase in total loans
outstanding.
The reserve for loan loss totaled $4.5 million at September 30, 1998 and
$4.2 million at December 31, 1997 respectively. The loan loss provision was $585
thousand for the first nine months of 1998 and 1997. Net charge-offs through
September 30, 1998 were approximately $251 thousand compared to $489 thousand
for the comparable period in 1997. The ratio of the allowance for loan loss to
total loans plus ORE declined slightly to 1.26% at September 30, 1998 from 1.30%
at December 31, 1997.
Loan loss reserve activity for the quarter ending September 30, 1998
included charge-offs of $88 thousand and recoveries of $43 thousand. Commercial
loan charge-offs totaled $12 thousand and consumer charge-offs equaled $76
thousand for the third quarter 1998. The provision for loan losses was $195
thousand for the third quarter 1998 and 1997. The ratio of the allowance for
loan loss to nonperforming loans was 178% at September 30, 1998 compared to 142%
at December 31, 1997.
Liquidity
At September 30, 1998, cash and cash equivalents equaled $23.2 million,
which represented a decrease of $4.7 million from the $27.9 million in cash and
cash equivalents at December 31, 1997. Changes in cash are measured by changes
in operating, investing and financing activities. The $4.7 million decrease in
cash and cash equivalents was attributable to combined net cash flows provided
by operating and financing activities totaling $5.4 million and $28.9 million,
which were then used for investing activities of $39.0 million.
Net cash provided by operating activities totaled $5.4 million for the nine
months ended September 30, 1998 compared to $4.2 million for the comparable
period in 1997. Net cash provided by financing activities equaled $28.9 million.
These funds consisted of $13.3 million in demand and savings accounts, $6.1
million in time deposits, and a net increase of $10.8 million in borrowed funds.
These funds were offset by dividend payments and the treasury stock purchases.
19
<PAGE>
VISTA BANCORP, INC. AND SUBSIDIARIES
- ------------------------------------
Net cash used in investing activities totaled $38.9 million for the nine
months ended September 30, 1998 that consisted primarily of the $39.1 million
increase in loans. Proceeds from the maturities and sales of securities were
offset by new purchases during this period.
Capital Resources
As of September 30, 1998, total shareholder's equity equaled $46.9 million,
an increase of $3.6 million from $43.3 million at December 31, 1997. The
increase in shareholder's equity included net income of $3.97 million,
unrealized gains on available for sale securities of $908 thousand and $1.2
million from the issuance of common stock offset in part by cash dividends of
$1.5 million and $1.0 million in treasury stock purchases. The dividend payout
ratio for the nine months ended September 30, 1998 equaled 38.2%.
In August 1998, Vista's board of directors authorized the company to
purchase up to 100 thousand shares of Vista's common stock in open market
transactions to fund its dividend reinvestment plan. As of September 30, 1998,
Vista purchased approximately 52 thousand shares of treasury stock and retired
59 thousand treasury shares.
Vista maintained a Tier I risk-based capital ratio of 13.06% and a total
risk-based capital ratio of 14.31% at September 30,1998, compared to 13.58 % and
14.99%, respectively, at December 31, 1997. Vista maintained a leverage capital
ratio of 7.80% at September 30, 1998 and 7.61% at December 31, 1997.
20
<PAGE>
VISTA BANCORP, INC. AND SUBSIDIARIES
- ------------------------------------
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
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 filed the following report on Form 8-K for the
quarterly period ended September 30, 1998:
On August 21, 1998, the registrant reported on Form 8-K that the
directors authorized the purchase of up to 100,000 shares of its
issued and outstanding common stock, in open market purchases
from time to time in the discretion of the company's management
to fund its dividend reinvestment plan and in accordance with the
terms, conditions, and restrictions contained in Rule 10b-18.
21
<PAGE>
VISTA BANCORP, INC. AND SUBSIDIARIES
- ------------------------------------
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: November 13, 1998
--------------------
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.)
22
<PAGE>
VISTA BANCORP, INC. AND SUBSIDIARIES
- ------------------------------------
INDEX TO EXHIBITS
Item Number Description Page
- ----------- ----------- ----
27 Financial Data Schedules.................................. 24
23
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000831979
<NAME> VISTA BANCORP, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 22,136
<INT-BEARING-DEPOSITS> 1,036
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 188,015
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 355,630
<ALLOWANCE> 4,482
<TOTAL-ASSETS> 578,006
<DEPOSITS> 503,126
<SHORT-TERM> 20,902
<LIABILITIES-OTHER> 4,077
<LONG-TERM> 3,000
0
0
<COMMON> 2,294
<OTHER-SE> 44,607
<TOTAL-LIABILITIES-AND-EQUITY> 578,006
<INTEREST-LOAN> 21,019
<INTEREST-INVEST> 8,556
<INTEREST-OTHER> 404
<INTEREST-TOTAL> 29,979
<INTEREST-DEPOSIT> 13,953
<INTEREST-EXPENSE> 14,529
<INTEREST-INCOME-NET> 15,450
<LOAN-LOSSES> 585
<SECURITIES-GAINS> 238
<EXPENSE-OTHER> 11,593
<INCOME-PRETAX> 5,721
<INCOME-PRE-EXTRAORDINARY> 5,721
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,968
<EPS-PRIMARY> 0.86
<EPS-DILUTED> 0.86
<YIELD-ACTUAL> 4.00
<LOANS-NON> 2,522
<LOANS-PAST> 309
<LOANS-TROUBLED> 95
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,148
<CHARGE-OFFS> 346
<RECOVERIES> 95
<ALLOWANCE-CLOSE> 4,482
<ALLOWANCE-DOMESTIC> 4,482
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,050
</TABLE>
