VIST VISTERRA, INC.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

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Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting To Be Held on Tuesday, April 27, 2010:

        The Notice of 2010 Annual Meeting and Proxy Statement, the Proxy Card, and the 2009 Annual Report to Shareholders are available at http://www.vistfc.com.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 2010

TO THE SHAREHOLDERS OF VIST FINANCIAL CORP.:

         NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of VIST Financial Corp. will be held at 10:00 A.M. (Eastern Time) on Tuesday, April 27, 2010, at the Reading Crowne Hotel (formerly Sheraton-Reading Hotel), 1741 Papermill Road, Wyomissing, Pennsylvania, 19610, for the following purposes:

1.

To elect five Class I Directors, each for a three-year term. The nominees of the Board of Directors for election as Class I Directors are Andrew J. Kuzneski III, M. Domer Leibensperger, Brian R. Rich, Karen A. Rightmire, and Alfred J. Weber.



2.

To consider and vote on a shareholder proposal, if properly presented at the meeting, to eliminate classification of terms of directors.



3.

To consider and vote on an advisory (non-binding) vote on executive compensation.



4.

To ratify the appointment of ParenteBeard, LLC as VIST's independent registered public accounting firm for the year 2010.



5.

To transact any such other business as may properly be presented at the meeting or any adjournment or postponement of the meeting.

        In accordance with the bylaws of VIST and action of the Board of Directors, only those shareholders of record at the close of business on Monday, March 1, 2010, will be entitled to notice of and to vote at the Annual Meeting and any adjournment or postponement thereof.

        Your vote is important regardless of the number of shares that you own. Please submit your vote either by mail, via the Internet, or by person at the meeting. Giving your proxy by mail or via the Internet does not affect your right to vote in person if you attend the meeting.

March 31, 2010

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PROXY STATEMENT
Dated and to be mailed March 31, 2010

VIST FINANCIAL CORP.
1240 BROADCASTING ROAD
WYOMISSING PA 19610
610.478.9922

ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 2010

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        Although we recommend that you read carefully the full text of the enclosed Proxy Statement, we have prepared the following "Questions and Answers" to assist you in understanding the voting procedures and information on each Proposal. We refer in the Proxy Statement to VIST Financial Corp. as "VIST" or the "Company."

QUESTIONS AND ANSWERS

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MATTER NO. 1
ELECTION OF CLASS I DIRECTORS

General

        VIST's bylaws provide that its business shall be managed by a Board of Directors of not less than five and not more than twenty-five persons. The Board of Directors of the Company, as provided in the bylaws, is divided into three classes, with each being as nearly equal in number as possible. As of March 1, 2010, the Board of Directors consisted of fourteen members:

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Class I—five members



•

Class II—four members



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Class III—five members

        Under the bylaws, a vacancy on the Board of Directors is filled by the remaining members of the Board. If the vacancy results from death, resignation or removal of a director, the director elected to fill the vacancy will become a member of the Class in which the vacancy occurred. By comparison, persons elected by the Board of Directors in connection with an increase in the size of the Board are designated by the Board of Directors as belonging to either Class I, Class II, or Class III. In either case, the bylaws further provide that each director so elected remains a member of the Board of Directors until his or her successor is elected by shareholders at the next annual meeting of shareholders at which directors of the same Class are elected. Under Pennsylvania law and the Company's articles of incorporation, directors of the Company may be removed from office by a vote of shareholders only for cause.

        Under the bylaws, no person shall be eligible for nomination or for election to the Board of Directors of the Company once such person attains the age of 70 years, provided that the Director was not elected pursuant to the terms of a definitive agreement of acquisition or merger approved by the Board of Directors of the Company. Directors in office on the date of the adoption of the mandatory retirement age are not subject to such provision.

        The term of office for each director in Class I expires on the date of the Annual Meeting of Shareholders on April 27, 2010. Five Class I directors have been nominated for election at the meeting to serve for three-year terms expiring on the date of the Annual Meeting of Shareholders in 2013. The five nominees for election as Class I directors receiving the highest number of votes at the meeting will be elected to serve as directors.

        Any shareholder who wishes to withhold authority to vote for the election of directors or to withhold authority to vote for any individual nominee may do so by marking his or her proxy to that effect. No proxy may be voted for a greater number of persons than the number of nominees named. If any nominee should become unable to serve, the persons named in the proxy may vote for another nominee. Management, however, has no present reason to believe that any nominee listed below will be unable to serve as a director, if elected.

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DIRECTOR INFORMATION

Nominees for Class I Directors to serve for a three-year term, expiring in 2013:

Andrew J. Kuzneski, III, age 42

Mr. Kuzneski has served on our Board of Directors since 2007. He is a principal at Kuzneski Financial Group, a privately owned insurance broker that provides employee benefits, property and casualty, and other lines of insurance products and services to both consumer and business clients. He is also president of Berkshire Securities Corporation, a private investment company that has invested in Pennsylvania based community and regional banks for over thirty years. Mr. Kuzneski's knowledge of the banking industry from an investor perspective, and his insurance industry knowledge and experience are very valuable to our Board of Directors.

M. Domer Leibensperger, age 69

Mr. Leibensperger is president of Leibensperger Funeral Homes, Inc. and is active as a real estate investor. He has served as a director since 2005. Mr. Leibensperger began his service to the Company as a director of VIST Bank in 1999. His strong ties to the community and leadership involvement in local civic organizations provide our Board with valuable insight regarding the local business and consumer environment.

Brian R. Rich, age 50

Mr. Rich has been a director since 2008, and is president and a member of the Board of Directors of Reading Anthracite Company, a company which is engaged in the anthracite coal mining business. Reading Anthracite Company is an energy and media solutions partner to industries and municipalities around the world. Mr. Rich is president and board member for several Rich Family of Companies, all relating to fuel and energy sources. We believe his professional experience managing multiple organizations demonstrates value as a member of our Board of Directors.

Karen A. Rightmire, age 62

Ms. Rightmire is the retired president of United Way of Berks County where she served for twenty years. She has served on our Board of Directors since 1994 and serves as chair of our Human Resources Committee. Ms. Rightmire currently serves as Executive Director of the Wyomissing Foundation, a private foundation established in Berks County and formed for the promotion of charitable, scientific, literary and educational activities. We believe Ms. Rightmire's business experience and long history of involvement in community and human service organizations provides our Board with insight as to the economic challenges our customers are facing.

Alfred J. Weber, age 57

Mr. Weber is president of Tweed-Weber, Inc., a management consulting firm, and has been a member of our Board of Directors since 1995, serving as chairman since 2005. He has been in the consulting industry since 1974 and has been president of his own business since 1984. The fundamental focus of his work is to help clients build and implement strategies to gain and sustain competitive advantage in their marketplace. Mr. Weber's experience in leading change initiatives and talent management, and his aptitude in the area of strategic planning are important to our Board's effectiveness and to his role as chairman.

        THE BOARD OF DIRECTORS RECOMMENDS SHAREHOLDERS VOTE "FOR" THE ELECTION OF THESE CLASS I DIRECTORS.

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Continuing Class II Directors whose term expires in April 2011:

Patrick J. Callahan, age 51

Mr. Callahan joined the Board of Directors in 2004 and is finance director for The DePaul Group. The DePaul Group is a multi-faceted $350 million organization encompassing a wide array of successful businesses and industries, with the primary focus on real estate, quarries and construction. Mr. Callahan brings experience not only in accounting and financial statement reporting (he is a certified public accountant with thirty years of experience), but also brings a thorough knowledge of residential and commercial real estate finance, an expertise vitally important to our Board, especially during the recent economic crisis due to declining real estate values.

Robert D. Davis, age 62

Mr. Davis is currently the president and chief executive officer of VIST Financial Corp. and VIST Bank, chairman of VIST Insurance LLC and VIST Capital Management LLC, and joined our Board in 2005. He was president and chief executive officer of Republic First Bank from 1999 to 2005, and regional president of Mellon PSFS from 1995 to 1998. We believe that for the Board to run efficiently and effectively, the election of Mr. Davis to the Board of Directors assists in keeping the Board abreast of management's progress on corporate initiatives. Additionally, we believe that Mr. Davis' previous broad experience at other financial institutions, including sales, marketing, commercial and consumer credit, insurance and wealth management, provides the Board with insight relevant to its strategic initiatives as well as ongoing day-to-day management of a financial services company.

Charles J. Hopkins, age 59

Mr. Hopkins is vice chair of VIST Insurance LLC, formerly serving as its president. He joined our Board of Directors in 1999 when we acquired Essick & Barr, Inc., a full service insurance agency. Prior to his service as president of Essick & Barr, Inc., he spent eight years as an underwriter for an insurance company. Mr. Hopkins brings valuable experience and knowledge of the insurance industry which supports our company's diversification and insurance product offerings.

Michael J. O'Donoghue, age 67

Mr. O'Donoghue is a partner at the law firm Wisler Pearlstine, LLC and heads the firm's corporate and commercial business practice. He has served on our Board since 2004, and previously served on the Board of Directors of Madison Bank for ten years until it was acquired by VIST. He was recently appointed for a fourth five-year term on the Board of Southeastern Pennsylvania Transit Authority (SEPTA) where he chairs the Pension Committee and is a member of the Audit Committee. SEPTA has an annual operating budget of $1.2 billion. Mr. O'Donoghue has in the past represented publicly owned companies and has been a co-owner of several small businesses. As a public company in a highly regulated industry, we believe Mr. O'Donoghue's perspective as an attorney is valuable as a member of our Board.

Continuing Class III Directors whose term expires in April 2012:

James H. Burton, age 53

Mr. Burton has served as a director since 2000. He is president of Manchester Copper Products, LLC, and chief operating officer of Island Sky Corporation, an Australian stock exchange listed company pioneering the development of air-to-water drinking water systems. He has substantial experience with internal operations of large companies and his experience with a foreign exchange brings unique experience and insight to our Board, and as chair of our Governance Committee.

Robert D. Carl III, age 56

Mr. Carl is chairman, president and chief executive officer of CSCM Inc., an operator of diagnostic imaging clinics and has been a director of our company since 2008. Mr. Carl founded two companies. The

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first, Health Images, Inc., was a successful NYSE listed company and was then sold at a favorable price. The second one, CSCM, Inc., is engaged in the same industry today. Mr. Carl is also a member of the Georgia Bar. Mr. Carl has proven his ability to develop, operate and manage a competitive and profitable business. That ability, along with his experience as an investor and officer in publicly held companies, qualify him to serve on our Board.

Philip E. Hughes, Jr., age 60

Mr. Hughes is a certified public accountant and attorney at Larson Allen, a certified public accounting firm. He specializes in the area of federal and state taxation, especially in the area of partnership taxation and sophisticated income tax planning for business enterprises and their entrepreneur owners. He also has extensive experience in the tax structuring of merger and acquisition transactions between business entities. Mr. Hughes was a founding shareholder and director of Madison Bank which we acquired in 2004. A member of our Board of Directors since 2005, his previous experience as a director of a financial institution as well as his accounting experience and background provide a valuable contribution to our Board.

Frank C. Milewski, age 59

A director since 2002, Mr. Milewski is regional president of Providence Service Corporation, a publicly traded company which provides services in the human services field. Formerly, he was the founder, president and chief executive officer of The ReDCo Group, which had revenue in excess of $35 million, when it was acquired by Providence Service Corporation in 2004. Mr. Milewski is responsible for oversight and direction of six separate operating companies in five states. Mr. Milewski's executive experience in a publicly traded company is valuable as a Board member, chair of our Audit Committee, and vice chair of our Board of Directors.

Harry J. O'Neill, III, age 60

Mr. O'Neill is president of Empire Wrecking Company of Reading PA, and Empire Group. He is also president of Delaware Valley Contractors, Elk Environmental, and Empire Building Products dba Surplus Home Center. Mr. O'Neill has served as a director since 1984, and as our longest serving director, he has extensive knowledge of our operations and has been with us in varying economic climates. In addition to his experience with our company, his professional experience is important to his effective service as a director.

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BENEFICIAL OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS

        The following table shows the beneficial ownership of our common stock as of January 31, 2010 by each director and executive officer, and the directors and executive officers as a group. Unless otherwise indicated in a footnote, shares are not pledged as security.

Director and Executive Officer Stock Ownership

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CORPORATE GOVERNANCE

        Our governing body is our Board of Directors. The Board is elected by and accountable to our shareholders to direct and oversee our management in the long-term interests of shareholders.

Corporate Governance Principles

        The Board has adopted corporate governance principles that, together with our articles of incorporation, bylaws, and the charters of Board Committees, provide a framework for the governance of the Company. The principles are intended to assist the Board in the exercise of its responsibilities. As the operation of the Board is a dynamic and evolving process, these principles are reviewed annually and may be changed by the Board from time to time. A copy of these principles is available at our website at www.VISTfc.com , or by contacting the Corporate Secretary.

Director Independence

        The Board of Directors has affirmatively determined that James H. Burton, Patrick J. Callahan, Robert D. Carl, III, Philip E. Hughes, Jr., Andrew J. Kuzneski, III., M. Domer Leibensperger, Frank C. Milewski, Michael J. O'Donoghue, Harry J. O'Neill, III, Brian R. Rich, Karen A. Rightmire, and Alfred J. Weber are independent within the meaning of the Nasdaq listing standards. In addition, all members of the Board serving on the Audit, Governance and Human Resources/Compensation Committees are independent within the meaning of the Nasdaq listing standards applicable to each committee. The Board determined that the following directors are not independent within the meaning of the Nasdaq listing standards: Robert D. Davis, President and Chief Executive Officer of the Company and VIST Bank, and Charles J. Hopkins, Vice Chairman of VIST Insurance, LLC, a wholly owned subsidiary of the Company.

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        The Board of Directors had previously determined that Patrick J. Callahan and Michael J. O'Donoghue were not independent directors within the meaning of Nasdaq listing standards. The Governance Committee of the Board of Directors conducted a detailed analysis of the existing affiliate relationships of Messrs. Callahan and O'Donoghue. The analysis included consultation with legal counsel and representatives from Nasdaq to obtain a thorough review of the Nasdaq listing standards as they relate to director independence. The Governance Committee determined that directors Callahan and O'Donoghue meet the established independence standards as defined by Nasdaq. The Board of Directors affirmatively determined Messrs. Callahan and O'Donoghue to be independent directors within the meaning of the Nasdaq listing standards.

        The Board has determined that a lending relationship resulting from a loan made by VIST Bank to a director would not affect the determination of independence if the loan complies with Regulation O under the federal banking laws. The Board also determined that maintaining with VIST Bank a deposit, savings or similar account by a director or any of the director's affiliates would not affect the determination of independence if the account is maintained on the same terms and conditions as those available to similarly situated customers. Additional categories or types of transactions or relationships considered by the Board regarding director independence include, but are not limited to: reciprocal directorships ("director interlocks"), existing significant consulting relationships, an existing commercial relationship between the director's organization and VIST, or new business relationships that develop through Board membership.

        The independent directors meet regularly in executive session without management present. The Board has appointed an independent director to serve as Chairman of the Board. The Chairman also serves as chair of the Board's executive sessions (without management present).

Board Membership Criteria

        Each member of the Board must possess the individual qualities of integrity, high performance standards, mature confidence, informed judgment, and financial literacy. Each director is required to own a significant equity position in the Company. Non-employee directors are required to own stock worth at least three times their average annual director fees for the previous three years, and are required to receive 100% of their director fee payments in Company stock until this requirement is met.

Board Diversity

        The primary goal of director selection is to nominate individuals who, as a group, offer a range of specialized knowledge, skills, and expertise that can contribute to the successful operation of the Company. It is therefore critical that Boards bring the most valuable talent available to the boardroom by expanding the pool of potential nominees considered to include a more diverse range of qualified candidates who meet established criteria. Fundamental characteristics, professional experience, skills and core competencies of a director should not, and need not, be waived to achieve diversity.

        VIST will consider, but not choose based solely on, the distinctive skills, perspectives, and experiences that candidates diverse in gender, ethnic background, geographic origin, and professional experience (public, private, and non-profit sectors) can bring to the boardroom.

Board Leadership Structure and Risk Oversight

        Until March 2005, we operated under the traditional leadership structure with our chief executive officer serving as chairman of the board. Upon the resignation of our chief executive officer in 2005, who also served as our chairman, our Board of Directors reevaluated the company's leadership structure. The Board of Directors determined that it would be preferable for one of our independent directors to serve as chairman of the board. The person our Board of Directors elected as chairman, Alfred J. Weber, had served as our Company's lead independent director.

        We believe it is our chief executive officer's responsibility to lead the Company and the chairman's responsibility to lead the Board. As directors continue to have more oversight responsibilities than ever

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before, we believe it is beneficial to have an independent chairman whose sole job is leading the Board. In making its decision to change the leadership structure and appoint an independent chairman, the Board considered the time that an individual will be required to devote to the chief executive officer position in the financial services industry. By having another director serve as the chairman of the board, the chief executive officer can focus his or her entire energy on managing the Company.

        We believe our chief executive officer and our chairman have an excellent working relationship that has allowed our chief executive officer to focus on challenges that the Company is facing in the current environment in the financial services industry. By clearly delineating the role of the chairman position in our governance guidelines, we ensure that there is no duplication of effort between the chairman and the chief executive officer. We believe this provides strong leadership for our Board, while positioning our chief executive officer as the leader of the Company in the eyes of our customers, employees and other stakeholders.

        Our Audit Committee is primarily responsible for overseeing the Company's risk management process on behalf of the full Board. The Company has appointed a chief risk officer who reports directly to the Audit Committee. The chief risk officer chairs the Company's Risk Management Committee which consists of management from each line of business. The Risk Management Committee meets on a bi-monthly basis. The primary objective of the Risk Management Committee is to ensure that adequate policies and procedures are in place and enforced so that the Company is operating safely and soundly and in the best interests of our shareholders and customers. The Committee reviews risk exposure limits to conform with any changes in the Company's strategy. The Risk Management Committee will review and approve new products and services and significant changes to existing products and services by conducting a thorough risk assessment. The Risk Management Committee also monitors events or actions that may affect our Company in achieving its objectives.

        The chief risk officer provides the Audit Committee with reports at least quarterly regarding the Company's assessment of risks. In addition, the Audit Committee reports regularly to the full Board of Directors which also considers the Company's risk profile. The Audit Committee and the full Board of Directors focus on the most significant risks facing the Company and the Company's general risk management strategy, and also ensure that the risks undertaken by the Company are consistent with the Board of Directors' appetite for risk. While the Audit Committee and Board of Directors oversee the Company's risk management, management is responsible for the day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks facing our company and that our board leadership structure supports this approach.

        Pursuant to our bylaws and governance guidelines, our Board of Directors determines the best leadership structure for our company. As part of the self-evaluation process, the Board of Directors evaluates our leadership structure to ensure that the Board continues to provide the optimal structure for our company and shareholders. We recognize that different board leadership structures may be appropriate for companies in different situations. We believe our current leadership structure, with Mr. Davis serving as chief executive officer, and Mr. Weber serving as chairman of the board, is the optimal structure for our company at this time.

Code of Conduct

        We have adopted a Code of Conduct that includes a conflict of interest policy and applies to all directors, officers and employees. All of our directors, officers and employees are required to affirm in writing their acceptance of the Code of Conduct. The Code of Conduct is available for review at our website at www.VISTfc.com or by contacting the Corporate Secretary.

Communications With Directors

        The Board of Directors maintains a process for shareholders to communicate with the Board of Directors. Shareholders wishing to communicate with the Board of Directors should send any communication to Corporate Secretary, VIST Financial Corp., P.O. Box 6219, Wyomissing,

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Pennsylvania 19610. Any such communication should state the number of shares beneficially owned by the shareholder making the communication. The Corporate Secretary will forward all such bona fide communications, with the exception of those clearly of a marketing nature, to the full Board of Directors or to any individual director or directors to whom the communication is directed unless the communication is unduly hostile, threatening, illegal or similarly inappropriate, in which case the Corporate Secretary has the authority to discard the communication or take appropriate legal action regarding the communication.

BOARD OF DIRECTORS AND COMMITTEE MEETINGS

        The Board has five committees: an Audit Committee, an Asset-Liability Committee, an Executive Committee, a Governance Committee, and a Human Resources/Compensation Committee. All committees are chaired by an independent director with the exception of the Asset-Liability Committee which is chaired by the Company's treasurer. The Governance Principles, Code of Conduct, and the charters for committees of the Board may be viewed at www.VISTfc.com or by contacting the Corporate Secretary.

        The following table shows the number of meetings and membership of the Board and committees during 2009. Our directors attended at least 75% of the aggregate of all meetings of our Board of Directors and committees on which they served, with the exception of Mr. Rich who attended 74% of all meetings. All directors are expected to attend the Annual Meeting of Shareholders, and all directors were present at our 2009 Annual Meeting of Shareholders with the exception of Mr. Rich.

        The following describes each committee of the Board of Directors. Each of the committees has authority to engage legal counsel or other experts or consultants as it deems appropriate to carry out its responsibilities. The Board of Directors has determined that each member of each committee meets the applicable laws and regulations regarding "independence" and that each member is free of any relationship that would interfere with his or her individual exercise of independent judgment, with the exception of the Executive Committee, on which two employee directors serve, and the Asset-Liability Committee, on which our senior officers serve.

Asset-Liability Committee

        The committee is composed of three directors and ten senior officers of the Company. The Asset-Liability Committee is responsible for monitoring the interest rate sensitivity of our assets and liabilities.

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Audit Committee

        The Audit Committee is composed of six independent directors (as defined under Nasdaq listing standards) and operates under a written charter, which complies with the requirements of the Nasdaq listing standards and SEC rules and regulations. A copy of the Committee's charter as adopted by the Board of Directors is available at our website at www.VISTfc.com or by contacting the Corporate Secretary. The Audit Committee's duties include:

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Appointing, compensating, and providing oversight of, our independent accountants;



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Approving all audit and non-audit services to be performed by our independent accountants;



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Reviewing the scope and results of the audit plans of the independent accountants and internal auditor;



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Overseeing the scope and adequacy of our internal accounting control and recordkeeping systems;



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Conferring independently with, and reviewing various reports generated by, our independent accountants;



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Overseeing the scope and activities of the internal audit function; and



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Establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.

        The Board of Directors has designated Frank C. Milewski., as the Audit Committee financial expert, and has determined that Mr. Milewski is independent within the meaning of the Nasdaq listing standards.

Executive Committee

        The Executive Committee is composed of eight directors, six of whom are independent directors (as defined under Nasdaq listing standards) and two of whom are employee directors, and operates under a written charter. A copy of the Committee's charter is available at our website at www.VISTfc.com or by contacting the Corporate Secretary. The Executive Committee's duties include:

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Acting on matters that the Chairman of the Board has determined to be an emergency that should not be postponed until the next scheduled Board meeting and for which a special meeting of the Board is not practicable;



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Serving as a sounding board for the chief executive officer in his/her strategic efforts; and



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Taking such other action and do such other things as may be referred to it from time to time by the Board.

Governance Committee

        The Governance Committee is composed of five independent directors (as defined under Nasdaq listing standards) and operates under a written charter. The Committee's charter is available at our website at www.VISTfc.com or by contacting the Corporate Secretary. The Governance Committee's duties include:

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Assisting the Board of Directors and management in developing and maintaining best practices in corporate governance;



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Administering a process to measure the effectiveness of the Board of Directors; and



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Recommending to the Board of Directors the criteria by which directors will be evaluated.

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        The Governance Committee also serves as our Nominating Committee. The Committee believes that candidates for director should have certain minimum qualifications, and takes into consideration the following factors:

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Current knowledge and contacts in the communities in which we do business and in our industry or other industries relevant to our business;



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The ability and willingness to commit adequate time to Board and committee matters;



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Personal qualities and characteristics, accomplishments and professional reputation; and



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The fit of the individual's skills and personality with those of other directors and potential directors in building a Board that is effective, diverse, and responsive to our needs.

        The process for identifying and evaluating nominees is as follows:

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In the case of incumbent directors whose terms of office are set to expire, the Committee reviews such directors' overall service to the Company during their term, including the number of meetings attended, level of participation, quality of performance, and any transactions of such directors with the Company during their term.



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In the case of new director candidates, the Committee first determines whether the nominee is independent pursuant to applicable securities laws, and the rules and regulations of the Securities and Exchange Commission and Nasdaq. The Committee uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. The Committee then meets to discuss and consider such candidates' qualifications and then recommends nominees to the Board of Directors.



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The Committee will consider director candidates recommended by shareholders provided the procedures set forth under the Questions and Answers section of this Proxy Statement, in accordance with our bylaws, are followed. The Committee does not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth above, based on whether the candidate was recommended by a shareholder or not.

Compensation Committee

        The Human Resources Committee, which serves as the compensation committee, is composed of six independent directors (as defined under Nasdaq listing standards) and operates under a written charter. A copy of the charter is available at our website at www.VISTfc.com or by contacting the Corporate Secretary. Its duties include:

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Review our salary and benefits programs;



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Address and make recommendations to the Board of Directors relating to employee matters, including compensation;



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Evaluate the chief executive officer's performance;



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Approve the chief executive officer's compensation level;



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Review and approve the recommendation of the chief executive officer for compensation levels of other executive officers;



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Annually review and approve the amount and compensation of directors, including incentive-compensation plans and equity-based plans;



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Annually review and approve the amount and compensation, including incentive-compensation plans and equity-based plans, for the chief executive officer and each other executive officer of the Company;



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During the period of the Company's participation in the TARP Program, every six months, meet with senior risk officers to discuss, evaluate and review senior executive officer (SEO) compensation plans to ensure that such plans do not encourage the SEOs to take unnecessary and excessive risks that threaten the value of the Company;

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During the period of the Company's participation in the TARP Program, every six months, meet with senior risk officers to discuss, evaluate and review all employee compensation plans to ensure that these plans do not encourage the manipulation of reported earnings of the Company to enhance the compensation of any of the Company's employees; and



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Review and approve the Compensation Discussion and Analysis ("CD&A") for inclusion in the Company's Annual Proxy Statement and Annual Report on Form 10-K.

DIRECTOR COMPENSATION

        The following table sets forth certain information with respect to the compensation of our directors for the fiscal year ended 2009. We disclose the compensation that we paid to Mr. Davis in the Summary Compensation Table.

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(4)

Includes the following payments related to Mr. Hopkins' employment at VIST Insurance, LLC:

Directors' Annual Compensation

        For 2009, we paid our non-employee directors under the Non-Employee Director Compensation Plan (the "2000 Plan"), which we adopted in 2000. The 2000 Plan expires by its terms in April 2010. The 2000 Plan requires directors to receive 65% of their compensation in shares of our common stock. Our shareholders approved the 2010 Non-Employee Director Compensation Plan (the "2010 Plan") at our 2009 Annual Meeting of Shareholders. We will pay our directors' compensation under the 2010 Plan upon the termination of the 2000 Plan. Under the 2010 Plan, fees may be payable in shares of common stock and/or cash as designated by the non-employee director in writing prior to the start of the calendar year to which such fees relate. Such designation must remain in place through the end of the calendar year for which fees relate. However, a non-employee director may change such designation once during any of the first three quarters of such calendar year by filing an amended designation with the corporate secretary.

        Under both the 2010 Plan and the expiring directors' compensation plan, directors who are not officers of us or of our subsidiaries receive annual compensation as follows:

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Annual retainer of $8,000



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Annual retainer of $9,000 for membership on VIST Bank Board's Executive Credit Committee



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Annual retainer for committee chairperson of $10,500



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Annual retainer for Chairman of the Board of $20,000



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Board meeting attendance fee of $600



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Committee meeting attendance fee of $350

Directors and Officers Liability Insurance

        We maintain a directors and officers liability insurance policy. The policy covers all of our directors and officers, as well as those of our subsidiaries, for certain liability, loss, or damage that they may incur in their capacities as such directors and officers. To date, no claims have been filed under this insurance policy.

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Deferred Compensation and Salary Continuation Agreements

        We have entered into agreements with Directors O'Neill, Rightmire and Weber which permit the director to defer part or all of their director fees until the director ceases to be a director of us or our subsidiaries. Ms. Rightmire no longer defers any part of her director fees. Interest accrues on the deferred fees at an annual rate of 8%. The director is an unsecured creditor with respect to such deferred fees. The agreements also provide that if the director dies or becomes disabled while a director, the director receives certain death or disability benefits. We have purchased whole life insurance policies on the lives of certain directors to fund its obligations under these agreements.

Continued Equity Ownership

        We require each of our non-employee directors to maintain holdings of our common stock in an amount equal to at least three times their average annual director fees for the previous three years. If a director does not meet the minimum requirement, such director must receive 100% of his or her compensation in common stock until the requirement is met. All non-employee directors currently meet or exceed these ownership requirements.

REPORT OF THE AUDIT COMMITTEE

        The Audit Committee is composed of six independent directors, as currently defined by Nasdaq rules, and operates under a written charter. A copy of the charter is available at our website at www.VISTfc.com or by contacting the Corporate Secretary. Our Board of Directors has determined that at least one director, Frank C. Milewski, qualifies as an "audit committee financial expert" as currently defined by the Securities and Exchange Commission and Nasdaq.

        The Audit Committee has reviewed the audited consolidated financial statements of VIST for the fiscal year ended December 31, 2009, and discussed them with management and our independent registered public accounting firm, ParenteBeard, LLC. The Audit Committee has also discussed with the independent registered public accounting firm the matters required to be discussed by the U.S. Statement of Auditing Standards No. 61, as amended (Communication With Audit Committees).

        The Audit Committee has received from the independent registered public accounting firm the written disclosures and letter required by the U.S. Independence Standards Board Standard No. 1 (Independence Discussions With Audit Committees), and the Audit Committee has discussed with the auditors their independence from VIST and management.

        Based on the Audit Committee's review of such audited financial statements, discussions with management and the independent registered public accounting firm, the representations of management to the Audit Committee, the representations of the independent registered public accounting firm included in their report on our consolidated financial statements and otherwise on such report of the independent registered public accounting firm, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2009.

        In connection with standards for independence issued by the Securities and Exchange Commission, the Audit Committee considered whether the independent auditors provision of non-audit services was compatible with maintaining such independence. The Audit Committee will continue to consider similar matters relating to independence during the 2010 fiscal year.

Frank C. Milewski, Chairman
James H. Burton
Patrick J. Callahan
Robert D. Carl, III
Philip E. Hughes, Jr.
Harry J. O'Neill, III

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AUDIT AND OTHER FEES

        Aggregate fees billed to VIST by the independent registered public accounting firm for the years ended December 31, 2009 and December 31, 2008 were as follows:

        Audit-related services consisted of audits of two of the Company's employee benefit plans, and accounting and regulatory consultations. Tax services consisted of tax compliance, including tax return preparation services, planning, research and advice.

        The Audit Committee pre-approves all audit and permissible non-audit services provided by the Company's independent registered public accounting firm. In accordance with such policy, all of the services provided by the Company's independent registered public accounting firm set forth above were approved by the Audit Committee. The Committee may delegate to one or more designated members of the Committee the authority to grant required pre-approvals. The decisions of any member to whom authority is delegated under this paragraph to pre-approve an activity under this subsection shall be presented to the full Committee at its next scheduled meeting.

COMPENSATION DISCUSSION AND ANALYSIS

The Compensation Committee

        The Human Resources Committee serves as the Compensation Committee. Members of the Committee are:

•

Karen A. Rightmire, Chair



•

Andrew J. Kuzneski, III



•

M. Domer Leibensperger



•

Michael J. O'Donoghue



•

Brian R. Rich



•

Alfred J. Weber

        Each member of the Committee qualifies as an independent director as defined under Nasdaq standards. The Committee meets a minimum of four times per year and, when necessary, will meet in a specially called meeting.

        The chief executive officer and corporate secretary work with the Committee Chair in establishing the agenda for Committee meetings. Management also prepares meeting information for each Committee meeting.

        The chief executive officer also participates in Committee meetings at the Committee's request to provide:

•

background information regarding our strategic objectives;



•

his evaluation of the performance of executive officers; and



•

recommendation of individual compensation levels as to executive officers (other than himself).

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Compensation Philosophy and Objectives

        The financial services industry faced unprecedented changes and 2009 was a challenging year. Many people are concerned about compensation practices in the financial services industry and there is considerable discussion regarding appropriate approaches to compensation. There is also concern that compensation policies and practices are not consistent with effective risk management. We believe that the compensation of our named executive officers should encourage prudent decisions about both taking risks to improve financial performance and avoiding unnecessary and excessive risk that can have a negative impact to us. We also believe that our compensation policies and practices reflect responsible, effective risk management and accountability to shareholders.

        Our compensation program is designed to attract and retain quality, talented individuals who support our corporate mission and strategies. It is our goal to set salaries and benefits levels that are competitive with levels at other companies within our industry which are comparable in size and type and in our geographic market area. The Human Resources Committee and the Board of Directors believe that maintaining a strong infrastructure to support future growth is essential and dependent on highly skilled executive management of high integrity. The following principles guide the Committee's compensation decisions.

•

Compensation is internally equitable as well as externally competitive;



•

Salary ranges have mid points that reflect the current market wage/salary for each position, with at least the minimum base salary paid to all employees who meet the basic qualifications in education and/or experience;



•

Total compensation should generally increase with position, responsibility, and greater ability to influence our achievement of targeted results and strategic initiatives;



•

Performance-based compensation should incorporate both past performance as well as forward-looking performance. Compensation should also be subject to a clawback in the event that it is based on results that prove to be inaccurate;



•

Individual compensation decisions should be based on financial and nonfinancial performance. Compensation amounts should vary significantly up or down based on business and individual performance;



•

Equity incentive compensation for executive officers will be tied to corporate performance goals and/or individual goals; and



•

Incentive compensation is an important element of compensation for all employees across the organization. Our compensation philosophy emphasizes a strong partnership across business lines and regions to encourage behavior benefitting us as a whole.

Annual Compensation Setting Process

        The following table outlines the annual process that is used to assess the performance of the named executive officers and determine their compensation, and identifies the individual(s) or committee of the Board of Directors that is responsible for that action. These actions typically take place in December of

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each year. We generally establish corporate and individual performance objectives for a given year in the first quarter after the last fiscal year end.

Management's Role in Compensation Setting Process.

        Management plays a significant role in the compensation-setting process. The most significant aspects of management's role are:

•

evaluating employee performance;



•

establishing business performance targets and objectives; and



•

recommending salary levels and option awards.

        The Committee delegates the development of compensation policies and benefit programs affecting employees to executive management, providing these policies and benefit programs are in direct alignment with our objectives and philosophy as established by the Committee.

The Emergency Economic Stabilization Act of 2008

        On December 19, 2008, we sold a series of preferred stock and a warrant to the Department of the Treasury under the Troubled Asset Relief Program Capital Purchase Program ("TARP") created under the Emergency Economic Stabilization Act of 2008. As a result of our participation in TARP, we are subject to certain restrictions on compensation under Section 111 of the Emergency Economic Stabilization Act of 2008.

        Among the key items established by the Emergency Stabilization Act of 2008, as amended (together with all associated regulations, interpretations, and guidance, "EESA"), each of which generally remains in effect for TARP participants while any TARP obligations remain outstanding:

•

Exclude Incentives to Take Unnecessary and Excessive Risk:   EESA requires a TARP participant's compensation committee to limit features in compensation plans that encourage senior executive officers ("SEOs") to take risks that are unnecessary or excessive or that threaten the value of the TARP participant.

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•

Limits on the Payment, or Accrual, of any Bonus, Retention Award or Incentive Compensation:   EESA prohibits the payment or accrual of any bonus, retention award or incentive compensation to the five most highly compensated employees of the Company except in the form of long-term restricted stock that does not become fully transferable until we repay all TARP assistance (for each 25% of total assistance repaid, 25% of the award may become transferable), has a minimum vesting period of at least two years, and does not exceed one-third of the Covered Employee's total annual compensation in the year of grant. Mr. Davis is the only named executive officer to which this applies.



•

Prohibition on Golden Parachute Payments:   EESA prohibits golden parachute payments to SEOs and the next five most highly compensated employees, which include substantially all payments made upon (i) such employee's departure from the TARP participant for any reason other than death or disability or (ii) the effective date of a change in control of the TARP participant.



•

Clawback:   EESA requires that any bonus payment made to the SEOs or the next 20 most highly compensated employees (collectively, "Covered Employees") must be subject to a clawback provision that provides for the clawback or recovery of the bonus payment if it was based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria.



•

Prohibition on Tax Gross-Ups:   EESA generally prohibits TARP participants from providing tax gross-ups to Covered Employees.

        In addition, EESA includes the following notable provisions that are generally applicable to TARP participants:

•

Certification of Compliance:   The principal executive officer and principal financial officer and the compensation committee must provide written certifications of compliance with the identified provisions of, and in the form provided in, EESA in the Company's annual filings with the Securities and Exchange Commission.



•

Risk Review by Compensation Committee:   The independent compensation committee must meet at least every six months to discuss and evaluate, among other things, employee compensation plans in light of an assessment of any risk posed to the TARP participant from such plans, and to ensure that employee compensation plans do not encourage the manipulation of the TARP participant's reported earnings to enhance the compensation of its employees, as well as to discuss and evaluate whether SEO compensation plans encourage SEOs to take unnecessary and excessive risks that threaten the value of the TARP participant.



•

Luxury Expenditures Policy:   Each TARP participant must implement and publicly post on its website a company-wide policy regarding excessive or luxury expenditures.



•

Annual Non-Binding Shareholder Approval of Executive Compensation:   The proxy statement of a TARP participant must permit a separate, non-binding shareholder vote to approve the compensation of executives.

Elements of Executive Compensation

        To meet our compensation objectives, we structure executive officer compensation to include the following elements on an individual basis:

•

Annual base salary;



•

Annual cash incentive award to reward achievement of corporate, business group, and individual performance results for each fiscal year;



•

Long-term compensation in the form of stock option grants or restricted stock awards;

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•

Participation in the same benefit plans that we provide to all our employees, including our qualified retirement plan, health, life, and disability insurance, Employee Stock Purchase Plan, and other benefit plans;



•

Supplemental Executive Retirement Plan accrual; and



•

Perquisite compensation including auto allowance, use of company owned vehicles, and country club memberships.

        In general, we have historically provided the compensation components listed above in amounts competitive with the compensation packages offered by our peers. However, as noted above, certain provisions of EESA prohibit TARP participants from, among other things, paying or accruing compensation in the form of bonus, retention awards, or incentive compensation to certain highly compensated employees, but do permit long-term restricted stock awards for these individuals, subject to certain transferability, vesting, and other requirements as may be established by the Department of the Treasury.

        Base Salaries.     We want to provide our executive management with a level of assured cash compensation in the form of base salary that reflects his or her job responsibilities, experience, value to us, demonstrated performance, and future potential. The majority of compensation at this time for our named executive officers is in the form of base salary. Base salaries of the named executive officers are determined in the same manner as other employees following the principles of our Salary and Wage Program with the goal to be internally equitable as well as externally competitive within the industry and markets we serve.

        Internal equity refers to the relationship between jobs based on their relative worth and then grouped into classes from entry-level jobs to those that we consider most important. Internal equity also means ensuring that we reward comparably employees with similar responsibilities, experience, and historical performance. For each position within our organization, including the named executive officers' positions, we assign a job grade based on job duties and responsibilities. The basic procedure involves the quantitative designation of degrees for each position within factors which have been weighted and grouped under the broad categories of responsibility, skill, effort, and working conditions. Each job grade has a salary range. To determine salary ranges, we use salary surveys of similarly sized financial institutions in the Mid-Atlantic Region. We also perform an internal analysis including a comparison of each job grade against the job grades just above and just below taking into account differences in breadth, scope, and complexities of each role. We also consider affordability in determining base salaries as well as annual salary increases.

        The Committee reviews and approves the recommendation of the chief executive officer for the base salaries paid to executive officers other than him, including all of the named executive officers. The Committee gives substantial weight to the recommendation of the chief executive officer with respect to the base salaries of other management employees because of his level of involvement and interaction with those employees. The chief executive officer recommends base salaries for each named executive officer (other than himself), within the salary range for the job grade after considering:

•

breadth, scope, and complexities of the role;



•

internal equity and affordability;



•

the named executive officer's current compensation; and



•

individual performance.

        The Committee and the chief executive officer use a "tally sheet" to analyze each executive officer's total compensation package in determining a potential increase in base salary. This "tally sheet" includes the following (as applicable):

•

Annual base salary;



•

Annual cash incentive award;

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•

Equity-based compensation;



•

401(k) matching contribution;



•

Supplemental Executive Retirement Plan accrual; and



•

Perquisites.

        Annual Base Salary Increases.     Given the current market conditions and to "set the tone at the top," our named executive officers received no base salary increases for 2009. In June 2009, we implemented several expense reduction strategies. As part of these expense reductions, Messrs. Barrett and Davis each voluntarily reduced their base salary. Commencing with the first pay in June 2009, and ending December 31, 2009, Mr. Barrett voluntarily reduced his base salary by 5%, and Mr. Davis voluntarily reduced his base salary by 10%.

        In years when annual merit increases are awarded, the Human Resources Committee approves base salary increases for the named executive officers other than the chief executive officer at its December meeting. The Committee makes the determination as to whether the chief executive officer has met his established goals, and is thus eligible for a base salary increase, during the first quarter following the fiscal year end. Merit increases to base salary, if any, are effective January 1. Annual merit increases are not guaranteed and adjustments take into account the individual's performance, responsibilities, and experience. We seek to provide the highest performing employees with the highest rewards. This is intended to encourage executive officers to meet their personal performance goals.

        The Committee believes that the chief executive officer's base compensation should be influenced by both qualitative and quantitative goals. The quantitative goals account for 60% of the chief executive officer's annual performance evaluation. For Mr. Davis's 2010 salary, the quantitative goals for 2009 consisted of various corporate performance metrics for which points were awarded are as follows:

Quantitative Performance Criteria

        The qualitative strategic goals account for 40% of the chief executive officer's annual performance evaluation. Qualitative goals for 2009 consisted of strategic measures, for which points were awarded as follows:

Qualitative Performance Criteria

        In evaluating Mr. Davis's performance regarding the 2009 qualitative and quantitative performance goals, the Committee reviewed the impact of market conditions during the year and the effect on his ability to attain such goals. Mr. Davis did not meet these performance goals and therefore the Committee did not increase the base salary of Mr. Davis for 2010. His base salary for 2010 will remain $345,000.

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        The Human Resources Committee approves the salaries of the other named executive officers based on the recommendations of the chief executive officer. The Committee approved merit increases for the named executive officers other than Mr. Davis, after a case-by-case evaluation by the chief executive officer using both qualitative and quantitative goals. The chief executive officer used quantitative and qualitative goals based on the individual's position and role within our organization as part of this evaluation. Our named executive officers who have business line responsibilities also have business line performance goals. It is our belief that the performance of the business lines managed by the named executive officers significantly impacts our overall performance and attainment of financial performance goals. As described below, Mr. Davis determined that each other named executive officer attained a certain level of performance in 2009 to warrant a base salary increase in 2010.

 

 

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        Incentive Compensation/Bonus.     Equity and performance-based compensation relate most directly to achievement of strategic and financial goals and to building shareholder value. The Human Resources Committee believes the performance of executive management has a strong and direct impact on achieving these goals. Accordingly, we award annual cash bonuses to our executive officers based on the attainment of corporate performance factors as set by the Committee. These performance factors directly relate to the annual budget. For a given year, the Committee determines the performance factors during the fourth quarter of the preceding fiscal year as part of the budget process. For 2009, the Committee established a goal of consolidated net income of $8 million. Consolidated net income for the year-ended December 31, 2009 was $607,000. As a result, the Committee determined that we did not meet the corporate performance goal for 2009. Therefore, bonuses were not paid to any of the named executive officers under this arrangement. We note that, as a result of our participation in TARP, Mr. Davis was prohibited from receiving or accruing a bonus in 2009.

        Other Bonus Arrangement.     Under Mr. Herr's employment agreement, which we describe below under "Executive Officer Agreements," Mr. Herr is entitled to receive, for any consecutive six month

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period, a cash bonus if VIST Insurance's earnings before income tax, amortization and management fees ("EBITA") is at least 90% of the predetermined amount budgeted for the applicable six month period. For total EBITA between 90% and 99% of the pre-determined budget period, such bonus shall be equal to 1% of such EBITA. For total EBITA equal to 100% or more of the pre-determined amount budgeted for the applicable six month period, Mr. Herr will receive a cash bonus equal to the sum of:

•

1% of the actual amount of EBITA budgeted, plus



•

10% of the amount by which actual EBITA exceeds the amount budgeted for such six-month period.

        For the first six months of 2009, we set VIST Insurance's budget EBITA at $1,463,508 VIST Insurance's actual EBITA during that period was $966,862, therefore Mr. Herr did not receive a bonus under this arrangement for the first six months of 2009. For the second six months of 2009, we set VIST Insurance's budget EBITA at $1,368,545. VIST Insurance's actual EBITA during that period was $1,300,426, which represents 95% of budgeted EBITA. Therefore, Mr. Herr received a bonus of $13,004. For the purpose of Mr. Herr's bonus calculation, unusual non-recurring events were not included.

        Equity Incentive Compensation.     In 2007, our shareholders approved the VIST Financial Corp. 2007 Equity Incentive Plan (the "2007 Plan"). The 2007 Plan provides the Human Resources Committee with the authority to grant stock options and restricted stock awards to selected employees, including the named executive officers. We provide equity compensation through the form of stock options and restricted stock under the following guidelines:

•

Equity-based compensation facilitates executive stock ownership and we believe that equity based compensation aligns management's long-term performance goals with those of our shareholders;



•

Equity awards are performance-based and all the value received by the recipient from such awards is based upon the increase in value of our stock per share over the exercise price;



•

The vesting and performance criteria attached to awards encourage executive retention; and



•

We reflect all stock option awards in our financial statements in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (formerly FASB 123R).

        The following features apply to stock options:

•

The term of the grant does not exceed ten years in the case of incentive stock options, and ten years and one month in the case of non-qualified stock options;



•

The exercise price is not less than the closing price of a share of our common stock on the grant date; and



•

Grants to executive officers must contain one or more performance goals.

        The Committee has adopted a formal policy outlining the guidelines and practices to be used to grant stock options and other equity awards to our executive officers and other senior officers. These guidelines include:

•

Each year, the Committee will authorize an aggregate number of shares to be awarded under the 2007 Plan during the year by the chief executive officer as he or she determines. The date of such awards must be the first day of any of our fiscal quarters.



•

The chief executive officer is not permitted to approve awards to himself or to other executive officers.



•

At any of its regularly scheduled meetings each year, the Committee may award options and restricted stock (including the terms of the awards) to the chief executive officer and the other executive officers. The date of such meeting shall be the date of grant for accounting purposes and for determining the exercise price of stock options.

        As part of the executive compensation restrictions of EESA, we are prohibited from paying or accruing any bonus, retention award, or incentive compensation, which includes equity awards, to our five most highly compensated employees. Mr. Davis is the only named executive officer who is one of our five most highly compensated employees for 2009.

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        On January 20, 2009, which is prior to the effective date of EESA's compensation restrictions, we awarded Mr. Davis 8,000 stock options. These options generally vest over three years but are subject to forfeiture if pre-established corporate and individual performance goals are not satisfied for 2009. The corporate performance goals were the same goals that we established for the payment of a bonus for 2009 and the individual performance goals were the same goals that we established for Mr. Davis for 2009 in connection with a possible salary increase in 2010. We describe the corporate and individual goals above in the Compensation Discussion & Analysis.

        One third of Mr. Davis's stock option grant was subject to forfeiture if we did not achieve the pre-established corporate performance goals for 2009. Because we did not achieve these goals, Mr. Davis forfeited this portion of the award. One-third of Mr. Davis's stock option grant was subject to forfeiture if he did not achieve his individual performance goals in 2009, with a possible payout of a pro-rated amount based on partial achievement of these goals. The Committee determined that Mr. Davis achieved 90% of his individual qualitative performance goals and 10% of his individual quantitative performance goals for 2009, which aggregates to 50% of his total established individual performance goals for 2009. Therefore, the Committee determined that Mr. Davis forfeited 50% of the portion of the stock option grant that vested upon achievement of established individual performance goals. The remaining portion of the award is subject to the original three-year vesting requirement.

        In December 2009, the Human Resources Committee granted stock options to the named executive officers with the exception of Mr. Davis, who received an award of restricted stock. In establishing Mr. Davis's December 2009 restricted stock award, the Committee considered the amount of previous equity awards as well as his performance throughout the year. The Committee considered historical stock option grants to Mr. Davis and used a 5:1 conversion ratio of options to restricted stock. The Committee awarded stock options to the other named executive officers based on the recommendations of the chief executive officer who also considered the amount of previous awards and each executive's performance throughout the year. The awards to the named executive officers generally vest over three years but are subject to forfeiture if pre-established individual and corporate performance goals are not satisfied for 2010. The corporate performance goals are (i) minimum $4.8 million operating earnings and (ii) net operating expense/average assets (NOE/AA) between 1.7% and 1.9% and are further described below. The individual performance goals are also described below. We disclose the number of shares that we granted to each named executive officer in the "Grants of Plan-Based Awards" table.

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