WYOMISSING, Pa., July 27 /PRNewswire-FirstCall/ -- VIST Financial Corp. ("Company") (Nasdaq: VIST) reported net income for the six months ended June 30, 2010 of $3,239,000, a $3,216,000 increase over net income of $23,000 for the same period in 2009. The Company also reported net income for the three months ended June 30, 2010 of $2,526,000, a $4,034,000 increase over a net loss of $1,508,000 for the same period in 2009.
The Company also reported that the board of directors declared a cash dividend of $0.05 per share on the Company's common stock to shareholders of record on August 6, 2010 payable August 13, 2010.
Commenting on the second quarter 2010, Robert D. Davis, President and Chief Executive Officer of VIST Financial Corp. said, "Consistent with the slow improvement in the regional economy served by VIST Financial, our linked quarter profitability continues to improve. Our strong second quarter results include the sale of our 25% interest in First HSA, LLC which produced a pre-tax gain of $1,875,000. Of equal importance was our ability to raise $5.2 million in new capital through the issuance of 644,000 of common stock to two institutional investors who specialize in the banking sector at a price of $8 a share. Accordingly, VIST Financial capital ratios continue to exceed all regulatory capital guidelines. This modest capital raise will also allow us to take advantage of market opportunities, anticipate new regulatory capital guidelines and provide us with a capital cushion if the economy does not continue to improve."
Davis continued, "During the second quarter of 2010, we experienced an improvement in our net interest margin; however loans outstanding decreased from both the first quarter and year end as a result of a conscious decision to exit a number of commercial loan relationships which did not meet our credit standards. We do see the opportunity to continue our historical growth levels in commercial loans in the second half of this year. Our overall asset quality metrics have continued to stabilize and measurably improve through a reduction of non-performing loans and reduced delinquencies."
Davis concluded, "We are pleased that our board of directors has declared a cash dividend. By this action, our board respects both the need to preserve capital while demonstrating confidence in our future operating results which will continue our well-capitalized status."
Net Interest Income
For the six months ended June 30, 2010, net interest income before the provision for loan losses increased 18.4% to $19,823,000 compared to $16,749,000 for the same period in 2009. The increase in net interest income for the six months resulted from a 3.2% increase in total interest income to $31,837,000 from $30,849,000 and a 14.8% reduction in total interest expense to $12,014,000 from $14,100,000. For the three months ended June 30, 2010, net interest income before the provision for loan losses increased 22.7% to $10,146,000 compared to $8,267,000 for the same period in 2009. The increase in net interest income for the three months resulted from a 4.7% increase in total interest income to $16,033,000 from $15,313,000 and a 16.4% reduction in total interest expense to $5,887,000 from $7,046,000.
The increase in total interest income for the three and six months ended June 30, 2010 resulted primarily from an increase in average earning assets compared to the same periods in 2009. Average earning assets for the three and six month periods ended June 30, 2010 increased $100,114,000 and $92,811,000, respectively, compared to the same periods in 2009 due primarily to growth in commercial loans and available for sale investment securities.
The reduction in total interest expense for the three and six months ended June 30, 2010 resulted primarily from lower interest rates compared to the same periods in 2009. Average interest-bearing liabilities for the three and six months ended June 30, 2010 increased $98,110,000 and $97,214,000, respectively, compared to the same periods in 2009. The increases in interest-bearing liabilities are due primarily from an increase in average interest-bearing deposits for the three and six months ended June 30, 2010 of $129,777,000 and $143,049,000, respectively, offset by a net decrease in average securities sold under agreements to repurchase and average long term borrowings for the three and six months ended June 30, 2010 of $46,791,000 and $49,248,000, respectively.
The provision for loan losses for the six months ended June 30, 2010 was $4,610,000 compared to $5,125,000 for the same period in 2009. The provision for loan losses for the three months ended June 30, 2010 was $2,010,000 compared to $4,300,000 for the same period in 2009. As of June 30, 2010, the allowance for loan losses was $12,825,000 compared to $11,449,000 as of December 31, 2009, an annualized increase of 24.0%. The increase in the provision is due primarily to economic conditions and the result of management's evaluation and classification of the credit quality of the loan portfolio utilizing a qualitative and quantitative internal loan review process. At June 30, 2010, total non-performing loans were $22,498,000 or 2.5% of total loans compared to $26,951,000 or 3.0% of total loans at December 31, 2009. The $4,453,000 decrease in non-performing loans from December 31, 2009 to June 30, 2010, was due primarily to pay-downs and charge-offs of non-performing commercial real estate loans. Management considers the current allowance for loan losses adequate as of June 30, 2010.
Net interest income after the provision for loan losses for the three and six months ended June 30, 2010 was $8,136,000 and $15,213,000, respectively, as compared to $3,967,000 and $11,624,000, respectively, for the same periods in 2009.
For the six months ended June 30, 2010, the net interest margin on a fully taxable equivalent basis was 3.42% as compared to 3.12% for the same period in 2009. For the three months ended June 30, 2010, the net interest margin on a fully taxable equivalent basis was 3.43% as compared to 3.05% for the same period in 2009 and 3.40% for the first quarter of 2010. The increase in net interest margin for the comparative six and three month periods ended June 30, 2010 was due mainly to lower cost of funds compared to the same periods in 2009.
Non-Interest Income
Total non-interest income for the six months ended June 30, 2010 increased 12.6% to $11,457,000 compared to $10,176,000 for the same period in 2009. Total non-interest income for the three months ended June 30, 2010 increased 44.8% to $6,908,000 compared to $4,771,000 for the same period in 2009.
For the six months ended June 30, 2010, customer service fees decreased to $1,132,000 from $1,254,000, or 9.7%, for the same period in 2009. For the three months ended June 30, 2010, service charges on deposits decreased to $549,000 from $596,000, or 7.9%, for the same period in 2009. The decrease for the comparative six and three month periods is due primarily to a decrease in commercial account analysis fees, uncollected funds charges and non-sufficient funds charges.
For the six months ended June 30, 2010, revenue from mortgage banking activities decreased to $365,000 from $675,000, or 45.9%, for the same period in 2009. For the three months ended June 30, 2010, revenue from mortgage banking activities decreased to $231,000 from $408,000, or 43.4%, for the same period in 2009. The decrease for the comparative six and three month periods is primarily due to a decrease in the volume of loans sold into the secondary mortgage market. The Company operates its mortgage banking activities through VIST Mortgage, a division of VIST Bank.
For the six months ended June 30, 2010, revenue from commissions and fees from insurance sales increased 2.9% to $6,168,000 compared to $5,994,000 for the same period in 2009. For the three months ended June 30, 2010, revenue from commissions and fees from insurance sales increased 1.8% to $3,092,000 compared to $3,036,000 for the same period in 2009. The increase for the comparative six and three month periods is mainly attributed to an increase in commission income on group insurance products sold through VIST Insurance, LLC, a wholly owned subsidiary of the Company.
For the six months ended June 30, 2010, revenue from brokerage and investment advisory commissions and fee activity decreased to $286,000 from $482,000, or 40.7%, for the same period in 2009. For the three months ended June 30, 2010, revenue from brokerage and investment advisory commissions and fee activity decreased to $151,000 from $152,000, or 0.7%, for the same period in 2009. Fluctuations for the comparative six and three month periods is due primarily to the volume of investment advisory services offered through VIST Capital Management, LLC, a wholly owned subsidiary of the Company.
For the six months ended June 30, 2010, earnings on investment in life insurance increased to $191,000 from $184,000, or 3.8%, for the same period in 2009. For the three months ended June 30, 2010, earnings on investment in life insurance increased to $113,000 from $108,000, or 4.6%, for the same period in 2009. The increase for the comparative six and three month periods is due primarily to increased earnings credited on the Company's bank owned life insurance ("BOLI").
For the six months ended June 30, 2010, revenue from other commissions and fees increased to $1,062,000 from $971,000, or 9.4%, for the same period in 2009. For the three months ended June 30, 2010, revenue from other commissions and fees increased to $558,000 from $498,000, or 12.0%, for the same period in 2009. The increase for the comparative six and three month periods is due primarily to an increase in customer debit card activity through the debit card network interchange.
For the six months ended June 30, 2010, other income including gain on sale of equity interest increased to $2,116,000 from $653,000 for the same period in 2009. For the three months ended June 30, 2010, other income including gain on sale of equity interest increased to $2,073,000 from $169,000 for the same period in 2009. The increase for the comparative six and three month periods is due primarily to a $1,875,000 gain recognized on the sale of a 25% equity interest in First HSA, LLC related to the transfer of approximately $89,000,000 of Health Savings Account ("HSA") deposits in the second quarter of 2010.
For the six months ended June 30, 2010, net realized gains on sales of available for sale securities were $286,000 compared to net realized gains on sales of available for sale securities of $285,000 for the same period in 2009. For the three months ended June 30, 2010, net realized gains on sales of available for sale securities were $194,000 compared to net realized gains on sales of available for sale securities of $126,000 for the same period in 2009. The net securities gains are primarily from the planned sale of existing available for sale investment securities.
For the six months ended June 30, 2010, net credit impairment losses recognized in earnings resulting from other-than-temporary impairment ("OTTI") losses on investment securities were $149,000 compared to net credit impairment losses recognized in earnings resulting from OTTI losses on investment securities of $322,000 for the same period in 2009. For the three month period ended June 30, 2010, net credit impairment losses recognized in earnings resulting from OTTI losses on investment securities were $53,000 compared to net credit impairment losses recognized in earnings resulting from OTTI losses on investment securities of $322,000 for the same period in 2009. The net credit impairment losses relate to OTTI charges for estimated credit losses on available for sale and held to maturity pooled trust preferred securities.
Non-Interest Expense
Total non-interest expense for the six months ended June 30, 2010 increased 0.5% to $22,955,000 compared to $22,846,000 for the same period in 2009. Total non-interest expense for the three months ended June 30, 2010 increased 2.6% to $11,864,000 compared to $11,567,000 for the same period in 2009.
Salaries and benefits were $10,838,000 for the six months ended June 30, 2010, a decrease of 5.3% compared to $11,442,000 for the same period in 2009. Salaries and benefits were $5,419,000 for the three months ended June 30, 2010, a decrease of 5.8% compared to $5,754,000 for the same period in 2009. The decrease in salaries and benefits for the comparative six and three month periods is due primarily to a decrease in employer 401(k) matching contributions and commissions paid. Included in salaries and benefits for the six months ended June 30, 2010 and 2009 were stock-based compensation costs of $76,000 and $77,000, respectively. Included in salaries and benefits for the three months ended June 30, 2010 and 2009 were stock-based compensation costs of $39,000 and $56,000, respectively. Total commissions paid for the six months ended June 30, 2010 and 2009 were $496,000 and $736,000, respectively. Total commissions paid for the three months ended June 30, 2010 and 2009 were $268,000 and $353,000, respectively.
For the six months ended June 30, 2010, occupancy expense and furniture and equipment expense increased to $3,503,000 from $3,190,000, or 9.8%, for the same period in 2009. For the three months ended June 30, 2010, occupancy expense and furniture and equipment expense increased to $1,731,000 from $1, 515,000, or 14.3%, for the same period in 2009. The increase for the comparative six and three month periods is due primarily to an increase in building lease expense, equipment maintenance and software maintenance expense.
For the six months ended June 30, 2010, marketing and advertising expense decreased to $507,000 from $605,000, or 16.2%, for the same period in 2009. For the three months ended June 30, 2010, advertising and marketing expense decreased to $261,000 from $335,000, or 22.1%, for the same period in 2009. The decrease for the comparative six and three month periods is due primarily to a reduction in marketing costs associated with market research, media space, media production and special events.
For the six months ended June 30, 2010, professional services expense decreased to $1,354,000 from $1,374,000, or 1.5%, for the same period in 2009. For the three months ended June 30, 2010, professional services expense increased to $745,000 from $482,000, or 54.6%, for the same period in 2009. The increase for the comparative three month periods is due primarily to an increase in accounting fees for accounting and accounting related services and consulting fees associated with various corporate projects.
For the six months ended June 30, 2010, outside processing expense decreased to $1,885,000 from $2,037,000, or 7.5%, for the same period in 2009. For the three months ended June 30, 2010, outside processing expense decreased to $854,000 from $1,086,000, or 21.4%, for the same period in 2009. The decrease for the comparative six and three month periods is due primarily to a decrease in costs incurred for computer services and network fees.
For the six months ended June 30, 2010, FDIC deposit and other insurance expense decreased to $1,056,000 from $1,428,000, or 26.1%, for the same period in 2009. For the three months ended June 30, 2010, insurance expense decreased to $524,000 from $984,000, or 46.7%, for the same period in 2009. The decrease in FDIC deposit and other insurance expense for the comparative six and three month periods is due primarily to a $580,000 special industry-wide FDIC deposit insurance premium assessed in 2009.
For the six months ended June 30, 2010, other real estate owned ("OREO") expense increased to $1,692,000 from $618,000, or 173.8%, for the same period in 2009. For the three months ended June 30, 2010, other real estate owned expense increased to $1,195,000 from $292,000, or 309.2%, for the same period in 2009. The increase in other real estate owned expense for the comparative six and three month periods is due primarily to an increase in costs associated with adjusting foreclosed properties to fair value after these assets have been classified as OREO, as well as other costs to operate and maintain OREO property during the holding period.
Income Tax Expense
Income tax expense for the six months ended June 30, 2010 was $476,000, a 144.5% increase as compared to an income tax benefit of $1,069,000 for the six months ended June 30, 2009. Income tax expense for the three months ended June 30, 2010 was $654,000, a 149.5% increase as compared to an income tax benefit of $1,321,000 for the three months ended June 30, 2009. The increase for the comparative six and three month periods is due primarily to an increase in net income before income taxes. Included in income tax expense for the six and three months ended June 30, 2010 and 2009 is a federal tax benefit from a $5,000,000 investment in an affordable housing, corporate tax credit limited partnership.
Earnings Per Share
Diluted earnings per common share for the six months ended June 30, 2010 were $0.40 on average shares outstanding of 6,076,656, a 385.7% increase as compared to diluted (loss) per common share of ($0.14) on average shares outstanding of 5,763,648 for the six months ended June 30, 2009. Diluted earnings per common share for the three months ended June 30, 2010 were $0.34 on average shares outstanding of 6,268,026, a 203.0% increase as compared to diluted (loss) per common share of ($0.33) on average shares outstanding of 5,791,023 for the three months ended June 30, 2009. The increase in diluted earnings per share for the comparative six and three month periods is due primarily to an increase in net income available to common shareholders.
Assets, Liabilities and Equity
Total assets as of June 30, 2010 decreased $20,115,000, or 3.1% annualized, to $1,288,604,000 compared to $1,308,719,000 at December 31, 2009. Total gross loans as of June 30, 2010 decreased $15,380,000, or 3.4% annualized, to $895,584,000 compared to $910,964,000 at December 31, 2009. Total deposits decreased $15,326,000, or 3.0% annualized, to $1,005,572,000 compared to $1,020,898,000 at December 31, 2009 due primarily to the sale of a 25% equity interest in First HSA, LLC and the related transfer of approximately $89,000,000 of HSA deposits in the second quarter of 2010. Total borrowings as of June 30, 2010, decreased $15,162,000, or 19.6% annualized, to $139,692,000 compared to $154,854,000 at December 31, 2009.
Shareholders' equity as of June 30, 2010 increased $9,262,000, or 14.8% annualized, to $134,690,000 compared to $125,428,000 at December 31, 2009. In the second quarter of 2010, the Company completed the issuance of approximately $4.8 million in common stock, net of offering costs. Also Included in shareholders' equity is an unrealized loss position on available for sale and held to maturity securities, net of taxes, as of June 30, 2010, of $2,490,000 compared to an unrealized loss position on available for sale securities, net of taxes, of $4,512,000 at December 31, 2009.
