SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITES EXCHANGE ACT OF 1934
For the transition period from to
--------------
Commission File No. 0-13599
Omega Financial Corporation
----------------------------- -----------------------------
(Exact name of registrant as
specified in its charter)
Pennsylvania 25-1420888
----------------------------- -----------------------------
(State or other jurisdiction (IRS Employer Identification
or incorporation Number)
of organization)
366 Walker Drive
State College, Pennsylvania 16801
----------------------------- -----------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's Telephone Number,
Including
Area Code: (814) 231-7680
-----------------------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding twelve months
(or for such shorter period that the registrant was requested to
file such reports), and (2) has been subject to such filing
requirements for the past ninety days. Yes X No
----- -----
The number of shares outstanding of each of the Registrant's classes
of common stock as of May 1, 1995:
Common Stock, $5.00 par value - 5,936,393 shares
------------------------------------------------
PART I.Financial Information
Item 1. Financial Statements
OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
Assets 1995 1994
----------- ---------
Cash and due from banks.............................. $35,731 $42,151
Interest bearing deposits with other financial
institutions......................................... 2,145 4,182
Federal funds sold................................... 10,600 350
Investment securities held to maturity
(market value-$182,299 and $195,107, respectively) 186,289 202,212
Investment securities available for sale............. 25,729 25,610
Total loans.......................................... 652,120 648,711
Less: Unearned discount............................ (764) (778)
Allowance for loan losses.................... (11,141) (11,057)
---------- -----------
Net loans............................................ 640,215 636,876
Premises and equipment, net.......................... 16,595 16,520
Other assets......................................... 12,456 12,052
------------ ----------
TOTAL ASSETS......................................... $929,760 $939,953
============ ==========
Liabilities and Shareholders' Equity
Deposits:
Non-interest bearing............................... $109,718 $118,439
Interest bearing................................... 691,072 683,297
------------ ----------
Total deposits....................................... 800,790 801,736
Short-term borrowings................................ 469 11,868
Other liabilities.................................... 8,023 7,204
ESOP debt............................................ 4,482 4,518
Long-term debt....................................... 700 1,050
Other interest bearing liabilities................... 459 468
------------- -----------
TOTAL LIABILITIES.................................... 814,923 826,844
Preferred stock, par value $5.00 per share:
Authorized - 5,000,000 shares;
Issued and outstanding -
219,781 shares Series A Convertible ............. 5,000 5,000
Unearned compensation related to ESOP debt........... (4,482) (4,518)
Common stock, par value $5.00 per share:
Authorized - 25,000,000 shares;
Issued -
6,008,382 shares at March 31, 1995;
5,985,735 shares at December 31, 1994
Outstanding -
5,975,196 shares at March 31, 1995;
5,985,735 shares at December 31, 1994............ 30,042 29,929
Capital surplus...................................... 4,513 4,211
Retained earnings.................................... 79,308 77,263
Cost of common stock in treasury:
33,186 shares at March 31, 1995.................. (860) -
Net unrealized gain on securities available for sale. 1,316 1,224
-------------- ----------
TOTAL SHAREHOLDERS' EQUITY........................... 114,837 113,109
-------------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........... $929,760 $939,953
============== ==========
OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
Three Months
Ended
March 31,
1995 1994
--------- ---------
Interest Income:
Interest and fees on loans......................... $14,060 $12,777
Interest and dividends on investment securities.... 2,882 2,983
Other interest income.............................. 99 115
---------- ----------
TOTAL INTEREST INCOME.............................. 17,041 15,875
Interest Expense:
Interest on deposits............................... 6,422 5,752
Interest on short-term borrowings.................. 124 31
Interest on long-term debt and
other interest bearing liabilities............... 12 15
---------- ----------
TOTAL INTEREST EXPENSE............................. 6,558 5,798
---------- ----------
NET INTEREST INCOME................................ 10,483 10,077
Provision for loan losses.......................... 100 262
---------- ----------
INCOME FROM CREDIT ACTIVITIES...................... 10,383 9,815
Other Income:
Service fees....................................... 1,207 1,336
Trust fees......................................... 493 535
Investment securities gains and losses, net:
Debt instruments................................. (3)
Equity instruments............................... 69 93
---------- ----------
TOTAL OTHER INCOME................................. 1,766 1,964
Other Expense:
Salaries and employee benefits..................... 3,980 3,858
Net occupancy expense.............................. 560 593
Equipment expense.................................. 434 510
Data processing service............................ 362 439
FDIC insurance premiums............................ 452 468
Other.............................................. 1,955 1,791
---------- ----------
TOTAL OTHER EXPENSE................................ 7,743 7,659
---------- ----------
Income before taxes................................ 4,406 4,120
Income tax expense................................. 1,271 1,089
---------- ----------
NET INCOME......................................... $3,135 $3,031
========== ==========
Net income per common share:
Primary......................................... $ .51 $ .49
Fully diluted................................... $ .49 $ .48
Weighted average shares and equivalents:
Primary......................................... 6,056,242 6,010,138
Fully diluted................................... 6,287,012 6,240,908
<TABLE>
OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<CAPTION>
Three Months
Ended
March 31,
1995 1994
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income......................................................... $3,135 $3,031
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization.................................... 680 520
Provision for loan losses........................................ 100 262
Gain on sale of investment securities............................ (66) (93)
Gain on sale of fixed assets and other property owned............ (4) 203
Gain on sale of loans............................................ (3) -
Increase in tax asset............................................ (63) (181)
Decrease (increase) in interest receivable and other assets...... (486) (756)
Increase (decrease) in interest payable.......................... 60 (49)
Decrease in taxes payable....................................... 1,243 1,232
Amortization of deferred net loan costs (fees)................... (86) (40)
Deferral of net loan fees (costs)................................ 286 (86)
Decrease in accounts payable and accrued expenses................ (446) (1,829)
Total adjustments.............................................. 1,215 (817)
Net cash provided by operating activities............................ 4,350 2,214
Cash flows from investing activities:
Proceeds from the sale or maturity of:
Interest bearing deposits with other financial institutions...... 2,494 107
Investment securities available for sale - sales and maturities. 302 4,311
Investment securities held to maturitiy - maturities............ 15,747 9,438
Purchase of:
Interest bearing deposits with other financial instutions........ (457) -
Investment securities held to maturity........................... (98) (7,481)
Investment securities available for sale......................... (160) (3,596)
Decrease (increase) in loans....................................... (4,167) 7,343
Gross proceeds from sale of loans.................................. 531 818
Capital expenditures............................................... (495) (444)
Sale of fixed assets and other property owned...................... 22 581
Decrease (increase) in federal funds sold.......................... (10,250) (5,962)
Net cash used in investing activites................................. 3,469 5,115
Cash flows from financing activities:
Increase(decrease) in deposits..................................... (946) 5,668
Increase (decrease) in short-term borrowings, net.................. (11,399) (4,625)
Principal payment on long-term debt................................ (350) -
Net change in other interest bearing liabilities................... (9) (9)
Dividends paid..................................................... (1,116) (1,051)
Tax benefit from preferred stock dividend and stock option activity 26 33
Issuance of common stock........................................... 415 217
Issuance, acquisition and sale of treasury stock, net.............. (860) -
Net cash provided by (used in) financing activities.................. (14,239) 233
----------- --------
Net increase (decrease) in cash and due from banks................... $(6,420) $7,562
========= =========
Cash and due from banks at beginning of period....................... $42,151 $34,292
Cash and due from banks at end of period............................. 35,731 41,854
Net increase (decrease) in cash and due from banks................... $(6,420) $7,562
========= ========
Interest paid........................................................ $6,551 $5,847
Income taxes paid.................................................... 21 1,300
</TABLE>
OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
A. Basis of Presentation:
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments, including
normal recurring accruals considered necessary for a fair presentation,
have been included. Operating results for the three months ended March 31,
1995, are not necessarily indicative of the results that may be experienced
for the year ending December 31, 1995 or any other interim period. For
further information, refer to the Consolidated Financial Statements and
Footnotes included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1994.
The accompanying Consolidated Financial Statements include Omega Financial
Corporation (Omega), a bank holding company, and the combined results of
its wholly-owned banking and non-banking subsidiaries.
B. Accounting Changes
Accounting by Creditors for Impairment of a Loan - Statement of Financial
-------------------------------------------------------------------------
Accounting Standards No. 114 as amended by SFAS No. 118
-------------------------------------------------------
Omega adopted FAS114 "Accounting by Creditors for Impairment of a Loan", as
amended by FAS118, as of January 1, 1995. This statement addressses the
accounting by creditors for impairment of certain loans. There was no
material effect on the Corporation's financial condition or results of
operation upon adoption of this pronouncement.
Accounting for Certain Investments in Debt and Equity Securities-Statement
--------------------------------------------------------------------------
of Financial Accounting Standards No. 115
-----------------------------------------
On January 1, 1994, Omega adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities". As a result of this adoption, Omega has segmented its
investment securities into two categories: those held to maturity and
those available for sale. This statement requires that the unrealized net
gain (loss), net of tax, for securities classified as available for sale be
reflected as a component of shareholders' equity, and the carrying value of
these securities be reflected at fair market value.
The effect of adoption resulted in an increase to shareholders' equity of
$2,061,000 on January 1, 1994.
Debt securities are acquired with the intent to maintain them in the
portfolio until maturity, and except as noted below, are carried at
amortized cost. Omega does not engage in trading activity, however
management considers, for liquidity purposes, a portion of the portfolio to
be designated as available for sale. Therefore, certain debt securities
have been specifically categorized as such. Additionally, all marketable
equity securities are classified as "available for sale". A table
detailing the breakout of investment categories can be found in the
accompanying Investment Securities section of the Management Discussion and
Analysis .
Statement of Financial Accounting Standards No. 112 - Employers' Accounting
---------------------------------------------------------------------------
for Post-employment Benefits
----------------------------
Omega provides certain post-employment benefits to its employees. The
Company has adopted SFAS No. 112 as of January 1, 1994 and the impact was
not material to the Company's financial statements.
C. Commitments and Contingent Liabilities:
In the ordinary course of business, Omega and its subsidiaries make
commitments to extend credit to their customers. At March 31, 1995 and
December 31, 1994 standby letters of credit issued and outstanding amounted
to $13,271,000 and $10,327,000, respectively. These letters of credit are
not reflected in the accompanying financial statements. Management does
not anticipate any significant losses as a result of these transactions.
At March 31, 1995, the Corporation had $94,805,000 outstanding in unused
lines of credit commitments extended to its customers. Of this amount,
$24,376,000, or 25.7%, are commitments to consumers for home equity lines
of credit and credit card limits. The remainder, $70,429,000, are
commercial commitments.
In 1994, the Corporation entered into a five year agreement to obtain data
processing services from an outside service bureau. The agreement provides
for termination penalties if it is canceled prior to the end of the
commitment period by the Corporation.
D. Earnings Per Share Data:
Primary earnings per share is computed based on the weighted average number
of shares and common stock equivalents outstanding during each period.
Primary earnings per share is computed by dividing net earnings after
preferred stock dividends by the weighted average number of shares and
dilutive common stock equivalents outstanding. The outstanding preferred
stock is not a common stock equivalent. On a fully-diluted basis, both
earnings and shares outstanding are adjusted to assume the conversion of
convertible preferred stock from the date of issue.
Computations of Per Share Earnings
(In thousands, except per share amounts)
(Unaudited)
Three months ended
March 31,
1995 1994
---------- ----------
Primary earnings per share
- -------------------------------------------------------
Net income........................................... $3,135 $3,031
Dividend requirements for preferred stock,
net of tax benefits................................ (72) (71)
--------- ----------
Net earnings applicable to common stock.............. 3,063 2,960
========== ===========
Shares and equivalents outstanding:
Weighted average number of common
shares outstanding................................. 5,993 5,937
Common stock equivalents - options................... 63 73
---------- -----------
Weighted average of common shares
outstanding and equivalents........................ 6,056 6,010
========== ===========
Primary earnings per common share.................... $0.51 $0.49
Fully diluted earnings per share
- -------------------------------------------------------
Net income........................................... $3,135 $3,031
Additional cash contribution required to service
debt on assumed conversion of preferred
stock (tax effected)............................... (63) (41)
--------- ----------
Net earnings applicable to common stock.............. 3,072 2,990
========== ===========
Shares and equivalents outstanding:
Weighted average number of common
shares outstanding................................. 5,993 5,937
Common stock equivalents - options................... 63 73
Assumed conversion of preferred stock
outstanding and equivalents........................ 231 231
---------- -----------
Weighted average of common shares
outstanding and equivalents........................ 6,287 6,241
========== ===========
Fully diluted earnings per common share.............. $0.49 $0.48
F. Acquisitions
On January 11, 1995, Omega entered into an Agreement and Plan of
Reorganization with Montour Bank ("Montour"), a bank incorporated under the
Pennsylvania Banking Code of 1965. This merger is subject to approval of
the Board of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation and the Department of Banking of the Commonwealth of
Pennsylvania, as well as the stockholders of Montour.
The transaction is expected to be accounted for under the purchase method.
For each share of Montour, shareholders will receive, at their election and
subject to certain adjustments, one-half share of Omega common stock or
$12.00 in cash, or a combination of stock and cash, with not more than 49%
nor less than 40% of the total outstanding shares being converted to cash.
Warrant holders will receive $2.00 per warrant. Based on the last sale
price of Omega's common stock in 1994, the approximate value of the
consideration to be issued to Montour shareholders upon the consummation of
the acquisition is $5.528 million in the aggregate. Montour's assets at
December 31, 1994 were $41.013 million.
G. Defined Benefit Plan
During 1994, management developed a plan to terminate its defined benefit
plan and transfer the plan's assets and obligations at the settlement date
to a defined contribution plan. In anticipation of the execution of
management's plan, Omega froze the accrual of benefits under the Omega
defined benefit plan effective April 15, 1994. Management expects to
complete the termination of the combined defined benefit plan in 1995. In
completing the settlement of the defined benefit plan and the transferring
of assets and obligations to a defined contribution plan, any shortfall
between the then fair value of plan assets and the final settlement amount
of plan obligations will be charged against earnings. However, management
does not believe the net impact of the termination of Omega's defined
benefit plan will have a material effect on Omega's financial position or
results of operations.
H. Investment Considerations
In analyzing whether to make, or to continue, an investment in Omega,
investors should consider, among other factors, certain investment
considerations more particularly described in "Item 1: Business -
Investment Considerations" in the Company's Annual Report on Form 10-K for
the year ended December 31, 1994, a copy of which can be obtained from
David N. Thiel, Senior Vice President, Omega Financial Corporation, 366
Walker Drive, State College, Pennsylvania 16801.
OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
1. Comparison of the Three Months Ended March 31, 1995 and 1994
Operations
----------
The first quarter's income before income taxes increased $286,000, or 6.9%,
when compared to the same period in 1994. A $161,000 reduction in the
provision for loan losses helped account for a 5.8% increase in income from
credit activities.
At the same time, other income decreased by $198,000, and other expense
increased by $84,000, resulting in a $282,000 increase in net other expense
for the period.
After the income tax provision (which increased by $182,000, or 16.7%
compared to the same period in 1994) was deducted from earnings, net income
shows an improvement of $104,000, or 3.4%, over the first quarter of 1994.
Effective tax rate for the first quarter of 1995 increased to 28.8% from
26.4% in the first quarter of 1994 as levels of tax exempt investments have
fallen slightly, and the corporate tax rate has increased.
Following are selected key ratios for the period:
Three Months Ended
March 31
------------------------
1995 1994
--------- ----------
Return on average assets (annualized)... 1.36% 1.30%
Return on average equity (annualized)... 10.95 11.70
Dividend payout ratio (common).......... 32.47 31.41
Average equity to average assets........ 12.39 11.14
Net Interest Income
-------------------
Although average earning assets have decreased by 0.8%, or $6.9 million,
net interest income for the first quarter of 1995 increased by $406,000, or
4.0%, as compared to the first quarter of 1994. Tax equivalent net
interest margin increased by 17 basis points to 5.00%. Average interest
bearing deposits have decreased by $22.2 million in the first quarter of
1995 as compared to the first quarter of 1994 while average loans increased
by $16.9 million. This loan growth was funded by proceeds from investment
security maturities, short term borrowed funds and non-interest bearing
sources. This loan growth occurred in a rising rate environment (with prime
climbing to 9.00% in March of 1995 as compared to 6.00% in March of 1994).
All these factors have positively affected the net interest margin.
Following are key net interest margin ratios (annualized):
Three Months Ended
March 31
-------------------------
1995 1994
---------- ----------
Yield on average earning assets......... 7.87% 7.28%
Cost to fund earning assets............. 3.05 2.67
Net interest margin..................... 4.82 4.61
Net interest margin - tax equivalent.... 5.00 4.83
At March 31, 1995, Omega had $416,385,000 of earning assets scheduled to
reprice over the next twelve months as compared to $388,318,000 in interest
bearing liabilities. This means that if rates rose by 100 basis points on
April 1, Omega's net interest income over a one year period would increase
by $1,497,000, or 3.4%, assuming that the volumes do not grow and the mix
of the balance sheet does not change. Conversely, a reduction in rates
would have a negative impact to the same magnitude.
Other Income and Expense
------------------------
Other income decreased $198,000, or 10.1% for the first quarter of 1995 as
compared to the same period in 1994. Service fee income in 1994 included a
$211,000 gain on sale of an in-substance foreclosed loan. In addition,
trust fee income has decreased by 7.8%, or $42,000. Net gains from the sale
of investment securities dropped by $27,000 in 1995.
As a percentage of average assets, other income net of security gains and
losses annualized was .74% for the first quarter of 1995 as compared to
.80% in 1994, while security gains and losses were an insignificant
percentage of average assets for the two periods.
Other expenses were $84,000, or 1.1% higher for the first quarter of 1995
than for the same period in 1994. Salaries and employee benefits were
$122,000, or 3.2% higher in 1995 as in 1994. Occupancy expense has
decreased by 5.6%, while equipment expense decreased by 14.9%. Expense
related to data processing service has been reduced by 17.5% as a result of
a renegotiated contract in mid-1994. FDIC insurance premiums have dropped
by 3.4% as a result of lower deposit levels. Other non-interest expenses
have increased by 9.1%, or $164,000.
As a percentage of average assets, annualized expenses for the quarter
ended March 31, 1995 were 3.35% and for the same period in 1994 were 3.29%.
2. Investment Securities
Management of the investment portfolio entails evaluation and realignment
of the size and mix of the portfolio in order to balance various
characteristics of the balance sheet, including asset quality, liquidity,
yield relationships, maturity and tax planning. The following schedule
describes characteristics of the investment portfolio as of March 31, 1995
and December 31, 1994.
<TABLE>
<CAPTION>
Securities Classified as Available for Sale
Gross Gross Estimated
Amortized Unrealized Unrealized Market
March 31, 1995 Cost Gains Losses Value
---------- --------- -------- ---------
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of other U.S.
Government agencies and corporations..................... $19,304 $ - $(118) $19,186
Obligations of state and political subdivisions............ 238 - (37) 201
Equity securities.......................................... 4,139 2,312 (109) 6,342
---------- --------- -------- ---------
Total...................................................... $23,681 $2,312 $(264) $25,729
Securities Classified as Held to Maturity
Gross Gross Estimated
Amortized Unrealized Unrealized Market
March 31, 1995 Cost Gains Losses Value
---------- --------- -------- ---------
U.S. Treasury securities and obligations of other U.S.
Government agencies and corporations..................... $73,300 $178 $(1,933) $71,545
Obligations of state and political subdivisions............ 50,915 308 (959) 50,264
Corporate securities....................................... 30,075 33 (687) 29,421
Mortgage backed securities................................. 28,122 42 (972) 27,192
Equity securities (non-marketable)......................... 3,877 3,877
---------- --------- -------- ---------
Total...................................................... $186,289 $561 $(4,551) $182,299
Securities Classified as Available for Sale
Gross Gross Estimated
Amortized Unrealized Unrealized Market
December 31, 1994 Cost Gains Losses Value
---------- --------- -------- ------------
U.S. Treasury securities and obligations of other U.S.
Government agencies and corporations...................... $19,314 $ - $(326) $18,988
Obligations of state and political subdivisions............. 269 - (52) 217
Equity securities........................................... 4,150 2,333 (78) 6,405
---------- --------- -------- ------------
Total....................................................... $23,733 $2,333 $(456) $25,610
Securities Classified as Held to Maturity
Gross Gross Estimated
Amortized Unrealized Unrealized Market
December 31, 1994 Cost Gains Losses Value
---------- --------- --------- ----------
U.S. Treasury securities and obligations of other U.S.
Government agencies and corporations...................... $79,736 $25 $(3,297) $76,464
Obligations of state and political subdivisions............. 54,788 287 (1,404) 53,671
Corporate securities........................................ 34,138 29 (1,181) 32,986
Mortgage backed securities.................................. 29,503 9 (1,573) 27,939
Equity securities (non-marketable).......................... 4,047 - - 4,047
---------- --------- -------- ----------
Total....................................................... $202,212 $350 $(7,455) $195,107
</TABLE>
Total investment securities as a percentage of total assets at March 31,
1995 and December 31, 1994 were 22.8% and 24.2%, respectively. Securities
maturing or repriceable in one year or less comprised 34.9% of the total
investment securities of $212,018,000 as of March 31, 1995, as compared to
37.9% of total investment securities of $227,822,000 as of December 31,
1994. There was $35,000 in investments in instruments of foreign countries
on March 31, 1995.
3. Interest Bearing Deposits with Other Financial Institutions
As of March 31, 1995, Omega had $2,145,000 in interest bearing deposits
with other financial institutions. There were no investments in
instruments issued by U.S. branches of banks of foreign countries or
deposits in banks of foreign countries included in the March 31, 1995
balance.
4. Loans
Net loans for the first three months increased 0.5% to $640,215,000. This
increase in volumes is a continuation of the loan demand experienced in the
latter part of 1994, particularly in the commercial loan category.
Additionally, Omega is now originating long term fixed rate mortgage loans
to maintain internally rather than selling them in the secondary market.
Changes in the allowance for loan losses for the three months ended March
31, 1995 and 1994 were as follows (in thousands):
1995 1994
-------- --------
Balance at January 1............ $11,057 $11,168
Charge-offs..................... (79) (135)
Recoveries...................... 63 69
-------- --------
Net charge-offs............. (16) (66)
Provision for loan losses....... 100 262
-------- --------
Balance at March 31............. $11,141 $11,364
======== ========
The allowance for loan losses is considered adequate by management to cover
possible uncollectible loans. Management is also of the opinion that the
level of loan loss provision is adequate to maintain the allowance at an
acceptable level. The allowance for loan losses at March 31, 1995 and 1994
represented 1.71% and 1.81%, respectively, of the total loans outstanding,
net of unearned interest.
Non-performing Loans
--------------------
(In thousands)
March 31, December 31,
1995 1994
-------- --------
Non-accrual loans................................ $1,697 $1,596
Accruing loans past due 90 days or more.......... 1,821 1,317
Restructured loans............................... - 44
-------- --------
Total non-performing loans....................... $3,518 $2,957
======== ========
Non-performing loans as percent of allowance.... 31.6% 26.7%
5. Deposits and Other Sources of Funds
Deposits provide the primary source of funding for loans and investment
securities. During the three month period ended March 31, 1995, total
deposits decreased by $946,000 or 0.1%, with interest bearing funds
decreasing $7.8 million and non-interest bearing deposits increasing by
$8.7 million.
6. Regulatory Capital Compliance
Risk-based capital standards are issued by bank regulatory authorities in
the United States. These capital standards relate a banking company's
capital to the risk profile of its assets and provide the basis for which
all banking companies and banks are evaluated in terms of capital adequacy.
The risk-based capital standards require all banks to have Tier 1 capital
of at least 4% and total capital, including Tier 1 capital of at least 8%
of risk-adjusted assets. Tier 1 capital includes common stockholders'
equity and qualifying perpetual preferred stock together with related
surpluses and retained earnings. Total capital is comprised of Tier 1
capital, limited life preferred stock, qualifying debt instruments, and the
reserves for possible loan losses. Banking regulators have also issued
leverage ratio requirements. The leverage ratio requirement is measured as
the ratio of Tier 1 capital to adjusted average assets. The table below
provides a comparison of Omega's and its bank subsidiaries risk-based
capital ratios and leverage ratio to the minimum regulatory requirements
for the periods indicated.
Minimum
March 31, December 31, Regulatory
Omega Financial Corp 1995 1994 Requirements
-------------------- ---- ---- ------------
Risk based capital ratios:
Tier 1 ................... 17.71% 17.55% 4.00%
Total capital ............ 18.97 18.80 8.00
Leverage ratio............. 11.97 11.76 3.00
Omega Bank, N.A.
----------------
Risk based capital ratios:
Tier 1 ................... 15.77% 15.65% 4.00%
Total capital ............ 17.02 16.90 8.00
Leverage ratio............. 10.92 10.71 3.00
Hollidaysburg Trust Company
---------------------------
Risk based capital ratios:
Tier 1 ................... 14.72% 14.55% 4.00%
Total capital ............ 15.98 15.80 8.00
Leverage ratio............. 10.28 10.12 3.00
Penn Central National Bank
--------------------------
Risk based capital ratios:
Tier 1 ................... 19.69% 19.48% 4.00%
Total capital ............ 20.96 20.73 8.00
Leverage ratio............. 11.37 11.37 3.00
Pursuant to the Federal Deposit Insurance Corporation Improvement Act of
1991 ("FDICIA"), the FDIC has issued a rule which sets the capital level
for each of the five capital categories established in FDICIA. As required
by FDICIA, the regulations specify the levels at which an insured
institution would be considered "well capitalized", "adequately
capitalized", "undercaptialized", "significantly undercapitalized", or
critically undercapitalized". At March 31, 1995, Omega and each of its
banking subsidiaries met the regulatory definition of a "well capitalized"
financial institution, i.e., a leverage ratio exceeding 5%, and Tier 1
capital exceeding 6%, and total capital exceeding 10%.
PART II. Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Debt
None
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27 Financial Data Schedule
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
OMEGA FINANCIAL CORPORATION
-----------------------------
(Registrant)
May 9, 1995 By: David B. Lee
- ---------------------- -------------------------
Date David B. Lee
Chairman and
Chief Executive Officer
May 9, 1995 JoAnn N. McMinn
- ---------------------- -------------------------
Date JoAnn N. McMinn
Senior Vice President and
Controller
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from Omega
Financial Corporation's first quarter 1995 10-Q and is qualified in its entirety
to such 10-Q.
</LEGEND>
<CIK> 0000705671
<NAME> OMEGA FINANCIAL CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
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<DEPOSITS> 800,790
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<COMMON> 114,319
0
518
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