Daily headlines and commentary make it hard to separate the truth from "the sky is falling" when it comes to what financial news means to you.  VIST Financial makes it simple to get you easy to understand answers from our trusted advisors to make sound financial decisions...Ask VIST! With Ask VIST, you can email your questions and have them answered by our team of trusted financial advisors who specialize in banking, insurance, investments, and mortgages.

 

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(Check back weekly for the answers to more Ask VIST questions)

Q:  I am 50 years old and currently I have 10% of my wages going to my 401k plan. I am set up with 50% going to a money market fund and 50% to a balanced fund. Should I continue with the 10% during these critical times, or should I go to 3% as that is the current employer match. I’m losing money every day.

A:  First, you need to examine your investment elections and evaluate if you are comfortable with the risk level.  Traditionally in 401(k) investments, investments with higher risk possibilities also have higher return possibilities and as the risk levels drop, so does the return potential. Second, you need to examine your household budget.  If you can contribute 10% without it impacting your household budget, I would encourage you to continue.  If you are finding it difficult to make ends meet while contributing 10%, then it could benefit you in the short term to drop that amount down to a lower percentage.  Assuming you are going to retire at 65, you have 15 more years to build net worth and a 401(k) designed for your goals and risk tolerance may be a good vehicle to do that.  I would encourage you to speak with an investment advisor for specific recommendations or questions about your investment elections and your overall 401(k).

Keep in mind, when it comes to evaluating what to do with a 401(k), there are a number of points to consider:
•  Your current age
•  Your expected retirement age
•  Your risk tolerance
•  Your goals

Unless you are within 10 years of retirement, remember that your focus should be on long-term growth, not short-term fluctuations that are part and parcel of the stock market.

    ~ Ben Stopper, CFP, Financial Advisor, VIST Capital Management

 

 

Q:  VIST announced its exposure to Fannie Mae & Freddie Mac shares two weeks ago that will have a material effect on the company.  My understanding is that these shares still exist, but that no dividend will be paid to holders.  Does that leave room for dividends to be paid again in a few years?  Are VIST executives communicating concerns to U.S. Congress members about the status of the preferred shares in Fannie Mae and Freddie Mac?  Other banks and mutual funds must be similarly affected and the prospect of reinstating dividends would be some good news.  Most people holding these shares must have thought these were low-risk, conservative investments.

A:  You are correct, we did feel that the Fannie Mae and Freddie Mac (GSE's) investments were low-risk and very conservative.  Both the equity and mortgage-backed securities offered by the GSE's have always been considered among the safest investments both from a cash flow and collateral perspective.  It came as quite a surprise to us as well as the investment community when the Treasury Department took over and placed the GSE's into conservancy.
 
The loss being recorded in the third quarter is directly related to a write-down of the current market value for these investments.  We still own the shares of both FNMA and FHLMC.  The third quarter dividend was paid on our FNMA shares but not our FHLMC shares.  FNMA had already declared their third quarter dividend but FHLMC had not.  Will the Treasury pay dividends on the existing shares in the future?  As of today, the answer is no.  VIST Executives are in communication with Congress via direct contact and through professional associations such as The Pennsylvania Bankers Association and The American Bankers Association which have lobbied extensively on behalf of the banking community and have been successful to some degree.  Only time will tell but please stay tuned for future press releases on any recent developments that may affect VIST Financial Corp.

    ~ Terry Favilla, Senior Vice President, Treasurer, VIST Financial Corp.

Q:  Is there a difference between banks like Lehman Brothers & Bear Stearns and VIST?

A:  As the media reports on the failures of banks, they neglect to qualify those failures as “investment banks”, such as Lehman Brothers, Bear-Stearns, and other behemoths that have been allowed to grow so large, without the same oversight we—as a community bank—are bound by.  As we’ve seen, the failure of just one of these massive institutions can have a dramatic impact in our community and around the world.  These investment banks deal in securities (including securities backed by mortgages that are subprime or Alt-A), in raising capital for other companies, and oftentimes in merger & acquisition deals on a grand scale, not in cash transactions like a traditional or community bank like VIST Bank.  As a community bank, we are not involved in those lines of business, but rather the traditional banking products and services to help businesses and individuals manage their money at every stage in life.  Lumping community banks in with investment banks is purely an apples and oranges comparison, and does not give consumers or investors an accurate picture of the implications of our different operations.  As a community bank, we are continually mindful of the trust our customers and shareholders have placed in us; safety and soundness are always at the forefront of our operations as they have been for nearly 100 years.

     ~ Edward Barrett, Chief Financial Officer, VIST Financial

 

Q:  I currently rent but have been saving to buy my first house.  Is now a good time to buy or should I wait?

A:  It’s definitely a buyer’s market when it comes to home prices.  While they might go a bit lower, for the most part I think we’ll see a leveling off in the next 6 to 12 months.  When you combine that with a favorable interest-rate environment for mortgages, now could be a good time to look at houses on the market.  Keep in mind, though, there are costs not part of a home’s selling price:  taxes, heating, and maintenance.  Ask yourself, when you factor in those things along with your mortgage, can you still afford to buy a house, maintain a somewhat comfortable lifestyle, and save for that inevitable rainy day?  If the answer is a “no” or “maybe”, I’d wait a little longer before diving into home ownership.  But keep an eye on housing prices or for a truly good deal.  Looking and waiting for the right opportunity never hurts, regardless of the market conditions.

      ~ Haniff Skeete, Mortgage Officer, VIST Bank

 

Q:  When the government increased FDIC coverage, did that cover all accounts or only certain ones?

A:  When President Bush signed the emergency law on October 3, 2008, increasing FDIC coverage from $100,000 to $250,000, it covered all account types that were previously covered.  This increased coverage is only in effect, at this point, until December 31, 2009.  A recent permanent modification involves revocable trust accounts.  Under the new ruling, any natural person, charitable organization, or non-profit organization may be covered by FDIC insurance providing the beneficiary is specifically named in the account titling.  Additional coverage is also available for account owners who have more than five named beneficiaries and more than $1,250,000 on deposit in their revocable trust account at one institution.  An account owner’s maximum coverage under a revocable trust account is the greater of $1,250,000 or the aggregate of each beneficiary’s ownership interest, but no more than $250,000 per beneficiary.  It is still important to talk to your Financial Center manager to ensure account titling options are being utilized to maximize FDIC coverage of your accounts at a single institution.  The FDIC’s website offers consumers a free service called EDIE the Estimator, where you can see whether all your deposits at a particular institution are within or exceed the FDIC coverage limits.  You can find that service at http://www.fdic.gov/edie

     ~ Holly Balatgek, Vice President, Retail Banking, VIST Bank
 

Q:  I own some stock that has decreased significantly in value.  Should I hold onto it or cut my loses?

A:  As with any investment, a clear understanding of the risks and some investigative work are key to understanding when it’s time to hold, buy, or sell.  If you’re seen an investment decrease in value, selling the stock will only allow you to “cut your losses” and relieve yourself of the risks inherent with the stock market.  However, selling will also prevent you from any potential recovery or gains if the stock rebounds.  This is where a little investigation into the investment is vital.  Are the financials of the company and their business plan sound?  Is there anything in their financials that could spell trouble down the line?  What are the company’s plans for expansion or retention of their place in the market?  Your licensed Financial Advisor can be a valuable asset in helping you learn more about a stock you’re interested in, and also in structuring your investments in a way to reflect your comfort with the risks inherent in the market.

     ~ Michael Flanagan, Managing Director, VIST Capital Management

 

Q:  What alternatives are available to avoid forecolsure if I fall behind on my mortgage payments? 

A:  Most financial institutions DO NOT want to foreclose on delinquent mortgages.  There are opportunities available within these organizations, designed to assist customers during difficult financial times. 
At the first sign of financial strain, contact your loan officer or financial center manager to begin a dialogue.
An open and honest discussion will allow your loan officer or financial center manager to find options that are available to best suit your specific financial needs.  Early communication plays a key roll in a financial institutions decision making process.

        ~ Melanie Iezzi, Vice President, Managed Assets VIST Financial

 

Q:  I am looking to purchase my first home. Is now a good time? 

A:  As we’ve all heard, with home prices falling it is definitely a buyer’s market.  However, as with any other time and economy, any discussion on buying a home or any other large purchase should include an honest examination of your financial situation.  Aside from down payment money, what other expenses will you have in the near term that could impact your budget?  Should your employment situation change unexpectedly, do you have enough of a savings cushion to continue with your mortgage and utilities for three to six months?  Am I considering all the mortgage options available?  As we’ve seen with people impacted by the housing crisis in other parts of our country, being blinded by a low adjustable rate or a high preapproval amount does not mean that conditions could not change in a short period of time and drastically change your ability to afford your home.  Programs through Pennsylvania Housing Finance Agency or discussions with a reputable mortgage lender can help you gauge if now is the right time to buy a house, the options available to you, and a realistic idea of the price range you should shop in.

        ~ Michael White, Senior Vice President, Mortgage Operations VIST Bank

 

Q:  Why is my credit score so important and what can I do to increase my score? 

A:  Your credit score determines your credit worthiness and your ability to repay.  But it’s not just banks and credit card companies that look at your credit score.  Employers, insurance carriers, and even utility companies can use your credit score in evaluating you as a potential employee or customer (discrimination based on bankruptcy is illegal; however, depending on the level of a job you’re applying for, a credit score and unsatisfactory notations on your credit report can be considered in some instances).
If you would like to improve your credit score, there are some easy steps you can take:
Pay your bills on time.  Late payments of 30 days or more can stay on your credit report for up to seven years, and payment history has the largest weight when it comes to determining your credit score.
Keep your balances low.  Having credit cards that are all near their available credit limit can negatively impact your score, so work to keep your balances below half of what’s available to you.
Keep some old accounts open.  While it should be a priority to keep the number of open accounts manageable, you definitely want to keep some age in your credit report, so don’t close all those credit cards you signed up for years ago.  Keep one of them open.
Don’t fall for a discount just for opening a credit card.  Don’t open a card if you’re likely to not use it (or if you’re likely to abuse it).  Credit use is like everything else in life…always best in moderation.

        ~  Barbara DiCello, Consumer Loan Manager VIST Financial

 

Q:  I may be in jeopardy of losing my job.  From an insurance perspective, is there anything I can do to protect my family since my family’s health benefits are tied to my job?

A:  Companies with 20 or more full and part-time employees may be required to offer COBRA (check with your company’s human resource department to find out if you are eligible).  However, traditionally COBRA is more costly, so you may want to talk to your insurance agent to discuss individual or family health insurance options and policies.  For those with children under 18, Pennsylvania’s CHIP program may also be a possibility.  More information on CHIP can be found at www.chipcoverspakids.com 

        ~ Steve Brunner, Vice President VIST Insurance

 

Q:  Should I keep more cash on hand than I normally would?

A:  Keeping large amounts of cash at home presents a number of potential problems, not the least of which is your safety and your money’s safety.  All it would take is a fire at home and your savings have literally gone up in smoke.  Add to that the concerns about a potential break-in should anyone know you’re keeping large amounts of cash in your home and your personal security can be compromised as well.
Talk to your banker to ensure your bank is well-capitalized, like VIST.  Your banker can also help you with account titling options or alternative solutions like the Certificate of Deposit Account Registry Service (CDARS) which can further protect your CD deposits with up to $50 million in FDIC Insurance coverage.

        ~ Tina McDonald, Executive Vice President Retail Banking VIST Financial