10-Q 1 g10q-24599.txt 10-Q 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, 2001 ------------------------------- 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 May 1, 2001, there were 5,353,231 shares of $.50 par value Common Stock outstanding. Vista Bancorp, Inc. and Subsidiaries ----------------------------------------- VISTA BANCORP, INC. Form 10-Q For the period ended March 31, 2001 Index -----

THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS. 3

4 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

The accompanying notes to consolidated financial statements are an integral part of these statements. 5 CONSOLIDATED STATEMENTS OF CASH FLOWS Amounts in Thousands

THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS. 6 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 principles 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, 2000. Results of operations for the three-month period ended March 31, 2001 are not necessarily indicative of the results to be expected for the full year. NOTE 2. Recently Issued Accounting Standards Statement of Financial Accounting Standards (SFAS) No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities - a replacement of FASB Statement No. 125". SFAS 140 revises the standards for accounting for securitizations and other transfers of financial assets and collateral and requires certain disclosures, but it carries over most of Statement 125's provisions without reconsideration. This Statement is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001. It is effective for disclosures about securitizations and collateral and for recognition and reclassification of collateral for fiscal years ending after December 15, 2000. Adoption of SFAS 140 is not expected to have a material impact on Vista. Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Certain Derivative Instruments and Certain Hedging Activities", as amended by SFAS 137 and SFAS 138, is effective for Vista's fiscal year beginning January 1, 2001. SFAS 133 requires that all derivative instruments be recognized on the balance sheet at their fair value. Accounting for changes in fair value of a derivative depends upon the specific use of the derivative and resulting designation. As of March 31, 2001, we did not hold or issue derivative instruments nor engage in hedging activities. Therefore, SFAS 133, as amended, has not had a material impact on Vista's financial condition or results of operation. 7 NOTE 3. Earnings per Share Earnings per share amounts, weighted average shares outstanding and all per share amounts have been adjusted to reflect the 5 percent stock dividends declared in April 2001 and April 2000. On April 19, 2001, we declared a 5 percent stock dividend to shareholders of record May 11, 2001 and payable May 25, 2001. Following payment of this dividend, Vista will have approximately 5.4 million shares outstanding. Accordingly, an amount equal to the fair market value of the additional shares issued was charged to retained earnings and credited to common stock and additional paid in capital based on the quoted market price on April 19, 2001. On April 21, 2000, we declared a 5 percent stock dividend to shareholders of record May 12, 2000 and payable May 26, 2000. Accordingly, an amount equal to the fair market value of the additional shares issued was charged to retained earnings and credited to common stock and additional paid in capital based on the quoted market price on April 21, 2000. NOTE 4. Other Comprehensive Income Vista held securities classified as available for sale, which experienced net unrealized pre-tax appreciation in value of $2.4 million during the quarter ended March 31, 2001 compared to a net unrealized pre-tax depreciation in value of $1.4 million one year ago. In compliance with SFAS No. 130, the before-tax and after-tax amount for this category as well as the tax benefit, is summarized below. For the three months ended March 31, 2001

8 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 "Forward Looking Statements" in Vista's Annual Report and Form 10-K for the year-ended December 31, 2000. Results of Operations for the periods ended March 31, 2001 and March 31, 2000 Earnings Summary Earnings highlights for the 1st quarter of 2001 include: o Net income increased 3 percent to $1.796 million from $1.749 million. o Diluted earnings per share, adjusted for the 5% stock dividend declared April 19, 2001, increased 3 percent to $.34 from $.33 per diluted share. o Return on average assets equaled 1.05 percent compared to 1.06 percent one year ago. o Return on average equity equaled 13.51 percent compared to 14.24 percent one year ago as growth in average shareholder equity exceeded growth in net income. Pre-tax income declined 3.7 percent as higher operating expenses outpaced growth in net interest income, noninterest income and a lower provision for loan loss. The challenging economic environment prompted several interest rate reductions from the Federal Reserve during the quarter. Despite this positive action by the Federal Reserve loan demand remained slack and lower interest rates triggered loan refinancing activity which resulted in a lower loan portfolio. Much of the added liquidity was captured and maintained in liquid investments pending reinvestment. We continue to focus on earnings improvement and capital management strategies to create shareholder value which include : o Expanding our franchise and market share by pursuing prudent asset and deposit growth initiatives while improving the mix of earning assets and funding sources to produce high quality predictable earnings. o Developing new sources of revenue growth to diversify our sources of income. o Investing in technology, facilities and personnel to increase efficiency and improve productivity to control the growth rate of expenses. o Following a disciplined approach to dividend policy and capital management to maximize returns to shareholders and use of capital resources. 9 Net Interest Income Tax-equivalent net interest income was unchanged at $6.53 million for the quarter ended March 31, 2001 compared to $6.56 million in 2000 as our lower net interest margin was neutralized by a higher level of interest earning assets. Our tax-equivalent net interest margin declined 19 basis points to 3.99 percent for the first quarter 2001 from 4.18 percent in 2000 but increased from 3.97 percent for the fourth quarter of 2000. Rising interest rates during the first half of 2000 pressured our margin as deposit customers transferred money market and savings balances into higher yielding certificates of deposit (CDs). Unification-related deposit promotions in the third quarter also contributed to this higher cost of funds. Year over year, the cost of funding our interest earning assets increased 33 basis points to 3.87 percent. This increase was due to: o Higher rates paid to capture CD deposits, o Shifts of core savings and money market deposits into higher cost CDs, and o Higher overall market interest rates that increased wholesale funding costs. The yield on earning assets increased 14 basis points to 7.86 percent for the first quarter of 2001 compared to 7.72 percent for the same period in 2000. This increase was due to the higher level of market interest rates throughout 2000 which allowed us to reinvest cash flow at higher rates; as well as, an improved mix of earning assets emphasizing commercial lending growth. During the first quarter 2001, our net interest margin stabilized as the lower interest rate environment allowed us to lower our deposit costs. Our net interest margin improved to 3.99 percent at March 31, 2001 from 3.97 percent at December 31, 2000. During the quarter, the Federal Reserve Open Market Committee lowered interest rates three times for a total of 150 basis points. Each decrease resulted in an immediate re-pricing of our prime-based loans; however, the re-pricing of our deposits tends to re-price on a time lag. Also, our funding mix has improved since year-end with growth in checking and savings balances shifting away from time deposits and Federal Home Loan Bank advances of a year ago. Consequently, we expect the reduction in the prime rate to reduce the yield on earning-assets in the short-term and be more than offset by a lower cost of deposits and borrowings in the second half of 2001. Higher levels of earning assets, year over year, partially offset the effect of a lower margin and the deposit mix change. Average interest earning assets increased $32.1 million to $662.9 million due to growth in commercial loans. Recent economic and yield curve conditions have limited lending and investment opportunities. Since year-end 2000, federal funds have increased while securities available for sale have declined. Excess liquidity is invested in fed funds until re-deployed into higher yielding loans or securities. The table, "Consolidated Average Balances, Net Interest Income and Average Rates," 10 presents Vista's average assets, liabilities and shareholders' equity. Net interest income, net interest spreads, and net interest income as a percentage of interest-earning assets for the periods ended March 31, 2001 and 2000, 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. 11

(1) Interest on loans includes fee income. (2) Rates have been annualized and computed on a tax-equivalent basis using the federal income tax statutory rate of 34%. (3) Tax-equivalent adjustments were $205 thousand for 2001 and $268 thousand for 2000. (4) Includes nonaccrual loans. (5) Net interest income as a percent of average interest-earning assets on a tax-equivalent basis. 12 VOLUME/RATE ANALYSIS OF CHANGES IN NET INTEREST INCOME (TAX-EQUIVALENT BASIS) --------------------------------------------------------------------------------

(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. 13 NONINTEREST INCOME Total noninterest income increased 11 percent to $1.1 million for the quarter ended March 31, 2001 compared to a year ago largely on $85 thousand in gains recorded on the sale of investment securities compared to $242 thousand in losses recorded in the comparable quarter of 2000. Excluding the impact of SBA loan sales and security sales, noninterest income decreased 9 percent to $959 thousand reflecting the continuation of the flat trend in fee income from core banking operations over the prior four quarters. The decrease for the first quarter of 2001 was due to: o Lower levels of service charges on deposits as customers maintained higher balances to compensate for per item transaction charges. o Deferral of the annual ATM/debit card user fee over 12 months compared to recognizing the entire amount in income during the first quarter 2000 to better match the recognition of revenue and services provided. Prior periods have not been restated. In addition, the economic slowdown and declining equity markets adversely impacted revenue from SBA sales and investment services. Positive trends include increased mortgage origination fees due to refinancing activity and increased debit card interchange income due to higher levels of customer card usage. Net gains recorded on the sale of the guaranteed portion of SBA loans totaled $22 thousand for the quarter compared to $151 thousand one year ago. During the quarter ended March 31, 2001, we recognized $85 thousand in net gains on the sale of $14.1 million of investment securities. We sold a combination of low balance mortgage-backed securities, tax-exempt investments that had increased in value and permitted maturity restructuring and several corporate bonds for credit reasons. These sale transactions reduced prepayment and re-investment risk in our portfolio in response to the declining interest rate environment of 2001. For the quarter ended March 31, 2000, we recognized $242 thousand in net losses on the sale of $14.6 million of investment securities. Losses were recognized to reinvest the sales proceeds into higher yielding assets. Noninterest income decreased compared to the fourth quarter 2000 due to seasonal and economic factors. We saw a decrease in fees paid for insufficient funds on checking accounts and debit card interchange income during the first quarter 2001 after higher seasonal levels during the holiday buying season. We also ran our "Skip a Payment" program, which allows consumer borrowers to pay a fee and skip one monthly payment during November, December or January, during the fourth quarter, which increased consumer fee income. The economic slowdown and subsequent reduction in capital spending by businesses have resulted in lower levels of demand for SBA loans and gains on the sale of SBA loans. This reduced level of gains on SBA sales is expected to continue until favorable economic conditions return. Gains were 14 recognized on the sales of securities during the first quarter of 2001 compared to nominal losses in the fourth quarter 2000. These security sales were based on strategic decisions and market opportunities. NONINTEREST EXPENSE Total noninterest expense increased 7 percent to $4.7 million for the quarter ended March 31, 2001, from the comparable quarter in 2000 and reflected an increase of 2.7 percent compared to the fourth quarter of 2000. During 2000 we expanded our in-house processing capability by moving into an expanded and modernized technology and operations center. This move increased occupancy and furniture and equipment costs and accounted for the majority of the increase in expenses when compared to 2000. The increase in expenses for the first quarter was seen in all major expense line items. Salary and benefits increased on higher officer salaries, higher payroll tax expense on incentive compensation paid in 2001 for the year 2000 and lower pension income accruals. The higher expenses were offset by lower bonus accruals for the year 2001 and savings from medical benefit plan changes. Occupancy and furniture and equipment expense rose in conjunction with the expanded Operations Center facility discussed above. Occupancy costs, including amortization charges for leasehold improvements and utility costs, increased along with higher maintenance charges incurred during severe winter weather conditions. Increases in furniture and equipment expense were driven by higher equipment leasing costs and depreciation charges. Other expense increased on higher costs for the launch of a home equity loan campaign designed to increase this segment of the portfolio as well as costs associated with the Company's defense in a proxy contest. Additional proxy-related costs are expected to be incurred during the second quarter of 2001. Preliminary estimates are in the range of $100-$120 thousand. A committee calling itself, "The Committee to Preserve Shareholder Value" proposed a slate of three independent directors for election at the Company's 2001 Annual Meeting of Shareholders held on April 26, 2001. Vista's incumbent directors were chosen by a decisive margin and were re-elected to serve for a 3-year term by approximately 80 percent of the votes cast. Vista filed a Form 8-K with the SEC announcing the voting results on April 27, 2001. Our ability to grow the franchise while effectively controlling and monitoring expenses can be quantified using two benchmarks. One benchmark, which considers noninterest expense as a percent of average assets, equaled 2.75 percent at quarter-end compared to 2.67 percent a year ago. Second, the efficiency ratio which measures the cost of generating one incremental dollar of revenue, equaled 62.72 percent compared to 56.53 percent a year ago. Expense growth during the quarter exceeded revenue growth that in-turn accounted for the adverse year over year comparison. The provision for income taxes decreased 18 percent to $659 thousand for the quarter due 15 to the receipt of $94 thousand from the amended filing of prior years' federal income tax returns. Our effective tax rate equaled 26.8 percent for the quarter ended March 31, 2001 and 31.4 percent for 2000. We estimate our effective tax rate to be approximately 31 percent for the balance of the year 2001. FINANCIAL CONDITION - MARCH 31, 2001 VERSUS DECEMBER 31, 2000 Our consolidated assets increased to $702.6 million at March 31, 2001 from $695.3 million at December 31, 2000. Our balance sheet continues to reflect growth in core deposits such as interest bearing checking and savings accounts which increased $7.3 million for the quarter. Time deposits in excess of $100 thousand increased $1.0 million and were offset in part by narrow declines in retail time deposits and noninterest demand accounts. Slower economic growth on a national and local level have tempered demand for commercial borrowing and lower interest rates have provided opportunities for homeowners to refinance their home mortgage loans. We also allowed our indirect auto portfolio to decline $2.6 million from year-end 2000, as competitive rates did not compensate for the risks incurred. These conditions are the primary cause of our loan portfolio declining $8.0 million during the first quarter of 2001, with our commercial portfolio reflecting a net gain of under $1.0 million. The increase in deposits combined with the reduction in the loan portfolio drove the increase in federal funds and short-term investments. These balances are higher but carry low nominal yields and were maintained during the majority of the first quarter because of a challenging yield curve which did not offer profitable longer term reward potential for the embedded risks. Capital continued to remain adequate increasing to $56.5 million at March 31, 2001 compared to $54.0 million at December 31, 2000. Net income of $1.8 million combined with capital flows of $334 thousand from Vista's stock plans to easily fund the cash dividend and complete the share repurchase program. Lower interest rates accounted for a significant increase in the value of the available for sale investment portfolio with the after-tax effect accounting for the balance of the increase in shareholder equity during the quarter. The ratio of shareholder equity to assets strengthened to 8.04 percent at the end of the quarter compared to 7.76 percent at year-end 2000. ASSET QUALITY Non-performing assets, consisting of nonaccrual loans plus other real estate acquired through foreclosure (OREO), decreased 2 percent to $4.0 million at March 31, 2001 from year-end 2000. Non-performing loans remained unchanged from year-end at $3.4 million. OREO decreased $100 thousand to $601 thousand due to the net transactions from the liquidation and sale of two properties plus the transfer of one property to OREO. Non-performing assets equaled less than one percent of total loans and OREO at March 31, 2001 and December 31, 2000. 16 Non-performing mortgage loans increased to 49 percent of total non-performing loans at March 31, 2001 from 44 percent at December 31, 2000. Consumer loans also increased to 20 percent of total non-performing loans at March 31, 2001 from 18 percent at year-end. Historically, residential mortgage loans and consumer loans have experienced nominal losses. Non-performing commercial loans decreased to 31 percent at March 31, 2001 from 38 percent.

IMPAIRED LOANS A loan is considered impaired when, after we have considered current information and events, it is probable that we will be unable to collect all amounts, including principal and interest, according to the contractual terms of the loan agreement. We consider the following in identifying impaired loans: o A default has occurred or is expected to occur, o The payment of principal and/or interest or other cash flows is greater than 90 days past due, or o We have serious doubts about the ability to collect future cash flows, even if the loan is currently performing. Once we identify a loan as impaired, management measures impairment in accordance with Statement of Financial Accounting Standards (SFAS) No. 114, as amended by SFAS No. 118. We measure impairment of a loan based on the present value of expected future cash flows, or on the fair value of any collateral. If the resulting value is less than the recorded investment (book value) in the impaired loan, an allowance is established for the amount deemed not collectible. Generally, when a loan becomes impaired, interest stops accruing and any previously accrued but unpaid interest on the loan is reversed against interest revenue. When we doubt that we can collect the remaining recorded investment, any interest received is applied first against the recorded investment until paid in full, second as a recovery to the allowance up to any previously charged off amounts on the impaired loan, and third as interest revenue. When we deem it highly certain that we will collect the remaining recorded investment, interest revenue is recorded on a cash basis as payments are received. An impaired loan is restored to performing status when principal and interest are deemed to be fully collectible in accordance with the contractual terms of the loan agreement. Once an impaired loan is returned to performing status, any previous allowance allocated is removed, interest accrues according to the original terms of the contract, and principal payments are 17 applied first to the loan balance until paid in full, then as recoveries of charge-offs, and finally as interest income. At March 31, 2001, total impaired loans equaled $4.0 million, of which $3.4 million are non-performing loans. This represented a decrease of $1.0 million from year-end 2000 due to the removal of several loans from impaired status. These loans were removed from impaired status because the principal and interest on these loans is deemed to be fully collectible in accordance with the contractual terms of the loan agreement. A total specific reserve allocation of $156 thousand has been established for all impaired loans. ALLOWANCE FOR LOAN LOSSES The allowance for loan losses increased to $6.23 million or 1.40 percent of total loans at March 31, 2001 from $6.17 million or 1.37 percent of total loans at December 31, 2000. The allowance increased due to the quarterly provision less charge-offs, net of recoveries, totaling $166 thousand. The provision for loan losses decreased $91 thousand to $225 thousand for the quarter. We reduced the quarterly provision due to lower levels of loan growth, historically low net charge-off levels, continued improvement in the level of non-performing assets and our belief in the adequacy of the current reserve. We maintain an allowance for loan losses to absorb any loan losses based on our historical experience, an evaluation of economic conditions, and regular reviews of delinquencies and loan portfolio quality. In evaluating our allowance for loan losses, we segment our loans into the following categories: o Commercial (including investment property mortgages), o Residential mortgages, and o Consumer. We evaluate some loans as a homogeneous group and others on an individual basis. Commercial loans with balances exceeding $200 thousand are reviewed individually. After our evaluation of these loans, we allocate portions of our allowance for loan losses to categories of loans based upon the following considerations: o Historical loss levels, o Prevailing economic conditions, o Delinquency trends, o Changes in the nature and volume of the portfolio, o Concentrations of credit risk, and o Changes in loan policies or underwriting standards. Management and the Board of Directors review the adequacy of the reserve on a quarterly basis and adjustments, if needed, are made accordingly. 18 For The Three Months Ended March 31, Amounts in thousands 2001 2000 -------------------- ----------- ---------- Average loans outstanding $447,936 $417,676 Total loans at end of period 443,374 427,938 Allowance for loan losses: Balance at beginning of period 6,166 5,266 Charge-offs: Commercial 32 26 Real estate - mortgage 74 - Installment 86 49 -------- ------- Total charge-offs 192 75 Recoveries: Commercial 18 27 Real estate - mortgage - - Installment 8 12 -------- ------- Total recoveries 26 39 -------- ------- Net charge-offs: 166 36 Provision for loan losses 225 316 -------- ------- Balance at end of period $6,225 $5,546 -------- ------- Net charge-offs as a percent of average 0.04% 0.01% loans outstanding during period ======== ======= Allowance for loan losses as a percent 1.40% 1.30% of total loans ======== ======= LIQUIDITY At March 31, 2001, cash and cash equivalents equaled $52.7 million representing an increase of $14.9 million from the $37.8 million in cash and cash equivalents at December 31, 2000. Changes in cash are measured by the three major classifications of cash flow defined as operating, investing and financing activities. The $14.9 million increase in cash and cash equivalents was attributed to combined net cash flows provided by all three categories. At quarter-end net cash provided by operating activities equaled $1.6 million. This consisted of net income adjusted for noncash charges and the net change in other assets and other liabilities. Net cash provided by investing activities totaled $9.2 million. This consisted of a $7.5 million decrease in net loans plus a $1.7 million net decrease in securities. Proceeds received through maturities and sales of investment securities provided $18.9 million in funding while purchases totaled $17.2 million. 19 Net cash provided by financing activities totaled $4.1 million. This included $7.6 million in net deposit growth, $2.5 million in long-term debt which offset a $6.0 million decrease in borrowed funds, cash dividends paid and share repurchases. CAPITAL RESOURCES Total shareholders' equity increased $2.5 million to $56.5 million at March 31, 2001 from $54.0 million at December 31, 2000. Changes in shareholders' equity included: o $1.8 million in quarterly net income, o $1.7 million appreciation in the fair value of securities available for sale, o $334 thousand in proceeds from the issuance of common stock, o $761 thousand in cash dividends paid, and o $546 thousand in share repurchases. Our dividend pay-out ratio equaled 42.54 percent for the quarter ended March 31, 2001 compared to 38.54 percent in 2000. At March 31, 2001, a $1.7 million unrealized gain existed in our security portfolio compared to a $28 thousand unrealized gain at December 31, 2000 . The portfolio's market value appreciated due to the decrease in absolute market interest rates during the quarter. During the first quarter 1999, the Board of Directors authorized the extension of the share repurchase program to include an additional 100,000 shares. These purchases are made pursuant to section 10b-18 from time to time in open market transactions in the discretion of management and stock availability. In February 2001, we announced completion of the augmented plan of the additional 100,000 shares for a total of $1.76 million or an average of $17.65 per share. These amounts are not adjusted for any stock dividends declared. Vista maintained a Tier I risk-based capital ratio of 12.03 percent and a total risk-based capital ratio of 13.28 percent at March 31, 2001, compared to 11.83 percent and 13.08 percent, respectively, at December 31, 2000. Vista maintained a leverage capital ratio of 7.87 percent at March 31, 2001 and 7.74 percent at December 31, 2000. 20 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 Not Applicable Security Holders 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 Not Applicable 99 Not Applicable (b) Reports on Form 8-K On February 15, 2001, we filed Form 8-K stating that the Board of Directors amended Sections 202 and 204 of the Bylaws of the Registrant in accordance with Section 801 of the Bylaws of the Registrant. On March 16, 2001, we filed Form 8-K which informed those shareholders of record as of March 12, 2001, of the impending contest for the election of directors at the 2001 annual meeting of shareholders. 21 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 15, 2001 ------------- By /s/ William F. Keefe --------------------------------- William F. Keefe Executive Vice President and Chief Financial Officer (Mr. Keefe is the Principal Accounting Officer and has been duly authorized to sign on behalf of the registrant.) 22

VISTA BANCORP INC 10-Q