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, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 0-13599
Omega Financial Corporation
(Exact name of registrant as
specified in its charter)
Pennsylvania 25-1420888
(State or other jurisdiction or (IRS Employer Identification No.)
incorporation of organization)
366 Walker Drive
State College, Pennsylvania 16801
(Address of principal executive (Zip Code)
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, 1996:
Common Stock, $5.00 par value - 6,041,239 shares
PART I.Financial Information
Item 1. Financial Statements
OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
MARCH 31, DECEMBER 31,
ASSETS 1996 1995
Cash and due from banks $40,203 $38,796
Interest bearing deposits with other banks 1,780 843
Federal funds sold 11,250 12,460
Investment securities held to maturity
(Market value:
$96,191 and $98,207, respectively) 96,626 97,863
Investment securities available for sale 129,081 121,845
Total loans 707,581 706,640
Less: Unearned discount (2,933) (3,515)
Allowance for loan losses (11,867) (11,668)
Net loans 692,781 691,457
Premises and equipment, net 17,335 17,153
Other assets 15,594 14,423
TOTAL ASSETS $1,004,650 $994,840
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing $112,055 $116,729
Interest bearing 741,744 733,453
Total deposits 853,799 850,182
Short-term borrowings 2,851 1,545
Other liabilities 11,318 8,339
ESOP debt 4,335 4,373
Long-term debt 5,350 5,700
Other interest bearing liabilities 522 530
TOTAL LIABILITIES 878,175 870,669
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 (4,335) (4,373)
Common stock, par value $5.00 per share:
Authorized - 25,000,000 shares;
Issued -
6,093,334 shares at March 31, 1996;
6,048,966 shares at December 31, 1995
Outstanding -
6,040,834 shares at March 31, 1996;
6,048,966 shares at December 31, 1995 30,467 30,245
Capital surplus 5,613 5,134
Retained earnings 89,423 86,778
Cost of common stock in treasury
52,500 shares at March 31, 1996;
26,000 shares at December 31, 1995 (1,695) (822)
Net unrealized gain on securities available 2,002 2,209
for sale
TOTAL SHAREHOLDERS' EQUITY 126,475 124,171
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,004,650 $994,840
OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three Months
Ended
March 31,
1996 1995
INTEREST INCOME:
Interest and fees on loans $15,718 $14,060
Interest and dividends on investment 2,951 2,882
securities
Other interest income 235 99
TOTAL INTEREST INCOME 18,904 17,041
INTEREST EXPENSE:
Interest on deposits 7,484 6,422
Interest on short-term borrowings 30 124
Interest on long-term debt and
other interest bearing liabilities 80 12
TOTAL INTEREST EXPENSE 7,594 6,558
NET INTEREST INCOME 11,310 10,483
Provision for loan losses 227 100
INCOME FROM CREDIT ACTIVITIES 11,083 10,383
OTHER INCOME:
Service fees 1,278 1,207
Trust fees 670 493
Gain on sale of loans 4
Investment securities gains and losses,
net:
Investment securities held to maturity - (3)
Investment securities available for 212 69
sale
TOTAL OTHER INCOME 2,164 1,766
OTHER EXPENSE:
Salaries and employee benefits 4,148 3,980
Net occupancy expense 568 560
Equipment expense 482 434
Data processing service 375 362
FDIC insurance premiums 2 452
Other 2,222 1,955
TOTAL OTHER EXPENSE 7,797 7,743
Income before taxes 5,450 4,406
Income tax expense 1,622 1,271
NET INCOME $3,828 $3,135
NET INCOME PER COMMON SHARE:
Primary $ .61 $ .51
Fully diluted $ .59 $ .49
WEIGHTED AVERAGE SHARES AND EQUIVALENTS:
Primary 6,115,874 6,056,242
Fully diluted 6,346,644 6,287,012
OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
THREE MONTHS
ENDED
MARCH 31,
1996 1995
Cash flows from operating activities:
Net income $3,828 $3,135
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 684 680
Provision for loan losses 227 100
Gain on sale of investment securities (212) (66)
Gain on sale of fixed assets
and other property owned (4) (4)
Gain on sale of loans (4) (3)
Increase in tax asset (98) (63)
Increase in interest receivable and other assets (887) (486)
Increase in interest payable 1,705 60
Increase in taxes payable 1,655 1,243
Amortization of deferred net loan fees (145) (86)
Deferral of net loan fees 380 286
Decrease in accounts payable
and accrued expenses (1,529) (446)
Total adjustments 1,772 1,215
Net cash provided by operating activities 5,600 4,350
Cash flows from investing activities:
Proceeds from the sale or maturity of:
Interest bearing deposits with other banks 395 2,494
Investment securities available for sale 11,285 302
Investment securities held to maturity 9,203 15,747
Purchase of:
Interest bearing deposits with other banks (1,332) (457)
Investment securities held to maturity (7,961) (98)
Investment securities available for sale (18,823) (160)
Increase in loans (11,576) (4,167)
Gross proceeds from sale of loans 9,794 531
Capital expenditures (820) (495)
Sale of fixed assets and other property owned 74 22
Decrease (increase) in federal funds sold 1,210 (10,250)
Net cash provided by (used in) investing activities (8,551) 3,469
Cash flows from financing activities:
Increase (decrease) in deposits 3,617 (946)
Increase (decrease) in short-term borrowings, net 1,306 (11,399)
Principal payment on long-term debt (350) (350)
Net change in other interest bearing liabilities (8) (9)
Dividends paid (99) (1,116)
Tax benefit from preferred stock dividend
and stock option activity 64 26
Issuance of common stock 701 415
Acquisition of treasury stock (1,305) (860)
Proceeds from sale of treasury stock 432
Net cash used in (provided by) financing activities 4,358 (14,239)
Net increase (decrease) in cash and due from banks $1,407 $(6,420)
Cash and due from banks at beginning of period $38,796 $42,151
Cash and due from banks at end of period 40,203 35,731
Net increase (decrease) in cash and due from banks $1,407 $(6,420)
Interest paid $5,889 $6,551
Income taxes paid 3 21
OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
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, 1996, are
not necessarily indicative of the results that may be experienced for the
year ending December 31, 1996 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, 1995.
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 SFAS114 "Accounting by Creditors for Impairment of a Loan",
as amended by SFAS118, as of January 1, 1995. This statement addressees 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 the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of - Statement of Financial Accounting Standards No.
121
Omega adopted SFAS 121 "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of", as of January 1, 1996. This
statement establishes accounting standards for the impairment of long-lived
assets, certain identifiable intangibles, and goodwill related to those
assets to be held and used and for long-lived assets and certain
identifiable intangibles to be disposed of. There was no material effect on
the Corporation's financial condition or results of operation upon adoption
of this pronouncement.
Accounting for Mortgage Servicing Rights - Statement of Financial
Accounting Standards No. 122
Omega adopted SFAS 122 "Accounting for Mortgage Servicing Rights", as of
January 1, 1996. This statement prescribes a single procedure for the
capitalization of mortgage servicing rights acquired either through loan
origination or through purchase transactions. There was no material effect
on the Corporation's financial condition or results of operation upon
adoption of this pronouncement.
Accounting for Stock-Based Compensation - Statement of Financial Accounting
Standards No. 123
Omega adopted SFAS 123 "Accounting for Stock-Based Compensation", as of
January 1, 1996. This statement establishes a fair value-based method of
accounting for stock options. It requires the use of that method for
transactions with non-employees and encourages its use for transactions
with employees. The Corporation adopted this method of accounting for only
its Director Stock Option Plan, which resulted in no material effect on
Omega's financial condition or results of operation.
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, 1996 and
December 31, 1995 standby letters of credit issued and outstanding amounted
to $14,104,000 and $15,770,000, 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, 1996, the Corporation had $106,465,000 outstanding in unused
lines of credit commitments extended to its customers. Of this amount,
$27,283,000, or 25.6%, are commitments to consumers for home equity lines
of credit and credit card limits. The remainder, $79,182,000, are
commercial commitments.
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,
1996 1995
PRIMARY EARNINGS PER SHARE
Net income............................. $3,828 $3,135
Dividend requirements for preferred
stock, net of tax benefits........... (74) (72)
Net earnings applicable to common stock 3,754 3,063
Shares and equivalents outstanding:
Weighted average number of common
shares outstanding................... 6,041 5,993
Common stock equivalents - options..... 75 63
Weighted average of common shares
outstanding and equivalents.......... 6,116 6,056
Primary earnings per common share...... $0.61 $0.51
FULLY DILUTED EARNINGS PER SHARE
Net income............................. $3,828 $3,135
Additional cash contribution required to
service debt on assumed conversion of
preferred stock (tax effected)....... (45) (63)
Net earnings applicable to common stock 3,783 3,072
Shares and equivalents outstanding:
Weighted average number of common
shares outstanding................... 6,041 5,993
Common stock equivalents - options..... 75 63
Assumed conversion of preferred stock
outstanding and equivalents.......... 231 231
Weighted average of common shares
outstanding and equivalents.......... 6,347 6,287
Fully diluted earnings per common share $0.59 $0.49
F. Mergers and 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 was approved by 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, and was consummated
on July 31, 1995.
The transaction was accounted for under the purchase method. For each share
of Montour, shareholders received, 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 43.1% of the total outstanding shares
being converted to cash. Warrant holders received $2.00 per warrant. Total
consideration for the acquisition was $5,727,000 in the aggregate, with
123,957 shares of Omega stock issued and $2,442,000 paid in cash. Montour's
assets at July 31, 1995 were $44,641,000.
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. The termination was approved
by Omega's Board of Directors during 1995 and the Corporation is awaiting
approval from the IRS and ERISA. During 1995, Omega purchased an annuity
contract which effectively settled the Corporation's obligations to retired
employees receiving benefit. Management expects to complete the termination
of the combined defined benefit plan in 1996. In completing the remaining
settlement of the defined benefit plan and the transferring of assets and
obligations to a defined contribution plan, the shortfall, if any, 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, 1995, a copy of which can be obtained from
David N. Thiel, Senior Vice President, Omega Financial Corporation, 366
Walker Drive, State College, Pennsylvania 16801.
I. Forward Looking Statements
The information contained in this Report on Form 10-Q contains forward
looking statements (as such term is defined in the Securities Exchange Act
of 1934 and the regulations thereunder), including without limitation,
statements as to the future loan and deposit volumes, the allowance and
provision for possible loan losses, future interest rates and their effect
on Omega's financial condition or results of operations, the classification
of Omega's investment portfolio and other statements as to trends or
management's beliefs, expectations or opinions. Such forward looking
statements are subject to risks and uncertainties and may be affected by
various factors which may cause actual results to differ materially from
those in the forward looking statements. Certain of these risks,
uncertainties and other factors are discussed in this Report on Form 10-Q,
the Corporation's Annual Report or in Omega's Annual Report on Form 10-K
for the year ended December 31, 1995, copies of which may be obtained from
Omega upon request and without charge (except for the exhibits thereto).
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, 1996 and 1995
Operations
The first quarter's income before income taxes increased $1,044,000, or
23.7%, when compared to the same period in 1995. A $700,000, or 6.7%,
increase in income from credit activities, along with a $398,000, or 22.5%
increase in non-interest income accounts for this improvement. Non-interest
expense increased by only $54,000, or 0.7% during this time period.
After the income tax provision (which increased by $351,000, or 27.6%
compared to the same period in 1995) was deducted from earnings, net income
shows an improvement of $693,000, or 22.1%, over the first quarter of 1995.
Effective tax rate for the first quarter of 1996 increased to 29.8% from
28.8% in the first quarter of 1995 as levels of tax exempt investments have
fallen, and the corporate tax rate has increased.
Following are selected key ratios for the period:
Three Months Ended
March 31
------------------------
1996 1995
---------- ----------
Return on average assets (annualized)... 1.54% 1.36%
Return on average equity (annualized)... 12.14 10.95
Dividend payout ratio (common).......... 30.02 32.47
Average equity to average assets........ 12.70 12.39
Net Interest Income
In the first quarter of 1996, average earning assets have increased by
7.2%, or $63.2 million and net interest income increased by $827,000, or
7.7%, as compared to the first quarter of 1995. Tax equivalent net
interest margin remained steady at 5.00%. Average interest bearing
deposits have increased by $51.9 million in the first quarter of 1996 as
compared to the first quarter of 1995 while average loans increased by
$56.3 million. While $36.6 million, or 65% of the loan growth was due to
the acquisition of Montour Bank in the third quarter of 1995, the remainder
of the increase was funded by deposit growth exclusive of the Montour Bank
effect. Of the $827,000 increase in net interest income, $601,000, or 72.7%
was due to outstanding balance changes.
Following are key net interest margin ratios (annualized):
Three Months Ended
March 31
--------------------------
1996 1995
---------- ----------
Yield on average earning assets......... 8.10% 7.87%
Cost to fund earning assets............. 3.26 3.05
Net interest margin..................... 4.84 4.82
Net interest margin - tax equivalent.... 5.00 5.00
At March 31, 1996, Omega had $393,439,000 of earning assets scheduled to
reprice over the next twelve months as compared to $427,942,000 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 $980,000, or 2.1%, 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 increased $398,000, or 22.5% for the first quarter of 1996 as
compared to the same period in 1995. Service fee income for the first
quarter of 1996 increased $71,000, or 5.9% over the first quarter of 1995,
while trust fee income increased by $177,000, or 35.9%, when compared to
1995. Gains on investment security transactions resulted in $146,000 more
income in the first quarter of 1996 as compared to 1995.
As a percentage of average assets, other income net of security gains and
losses annualized was .79% for the first quarter of 1996 as compared to
.74% in 1995, while security gains and losses were .09% and .03% of average
assets for 1996 and 1995, respectively.
Other expenses were $54,000, or 0.7% higher for the first quarter of 1996
than for the same period in 1995. Salaries and employee benefits were
$168,000, or 4.2% higher in 1996 as in 1995. Occupancy expense has
remained flat while equipment expense increased by 11.1%. Expense related
to data processing service has increased by 3.6% as a result of additional
services provided. FDIC insurance premiums have dropped by $450,000, or
nearly 100% as a result of premium reductions. This reduction was given to
only top-rated banks within the FDIC system. Other non-interest expenses
have increased by 13.7%, or $267,000.
As a percentage of average assets, annualized expenses for the quarter
ended March 31, 1996 were 3.14% and for the same period in 1995 were 3.35%.
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, 1996
and December 31, 1995.
Securities Classified as Available
for Sale
Gross Gross Estimat-
Amort- Unreal- Unreal- ed
ized ized ized Market
March 31, 1996 Cost Gains Losses Value
U.S. Treasury securities and
obligations of other U.S. Govern-
ment agencies and corporations $84,809 $190 $(530) $84,469
Obligations of state and
political subdivisions 36,800 219 (357) 36,662
Equity securities 4,403 3,556 (19) 7,950
Total $126,012 $3,975 $(906) $129,081
Securities Classified as Held to
Maturity
Gross Gross Estimat-
Amort- Unreal- Unreal- ed
ized ized ized Market
March 31, 1996 Cost Gains Losses Value
U.S. Treasury securities and
obligations of other U.S. Govern-
ment agencies and corporations $1,089 $1 $(14) $1,076
Obligations of state and
political subdivisions 7,702 19 (39) 7,682
Corporate securities 19,853 70 (175) 19,748
Mortgage backed securities 63,507 211 (508) 63,210
Investment in low-income housing 385 - - 385
Equity securities (non-marketable) 4,090 - - 4,090
Total $96,626 $301 $(736) $96,191
Securities Classified as Available
for Sale
Gross Gross Estimat-
Amort- Unreal- Unreal- ed
ized ized ized Market
December 31, 1995 Cost Gains Losses Value
U.S. Treasury securities and
obligations of other U.S. Govern-
ment agencies and corporations $76,031 $402 $(278) $76,155
Obligations of state and
political subdivisions 38,319 328 (348) 38,299
Equity securities 4,108 3,322 (39) 7,391
Total $118,458 $4,052 $(665) $121,845
Securities Classified as Held to
Maturity
Gross Gross Estimat-
Amort- Unreal- Unreal- ed
ized ized ized Market
December 31, 1995 Cost Gains Losses Value
U.S. Treasury securities and
obligations of other U.S. Govern-
ment agencies and corporations $310 $1 $(-) $311
Obligations of state and
political subdivisions 6,761 58 (11) 6,808
Corporate securities 25,161 170 (148) 25,183
Mortgage backed securities 61,503 528 (254) 61,777
Investment in low-income housing 387 - - 387
Equity securities (non-marketable) 3,741 - - 3,741
Total $97,863 $757 $(413) $98,207
Total investment securities as a percentage of total assets at March 31,
1996 and December 31, 1995 were 22.5% and 22.1%, respectively. Securities
maturing or repriceable in one year or less comprised 33.8% of the total
investment securities of $225,707,000 as of March 31, 1996, as compared to
35.4% of total investment securities of $219,708,000 as of December 31,
1995. There was $35,000 in investments in instruments of foreign countries
on March 31, 1996.
3. Interest Bearing Deposits with Other Financial Institutions
As of March 31, 1996, Omega had $1,780,000 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, 1996
balance.
4. Loans
Net loans in the first three months of 1996 remained relatively flat, with
only a modest increase of 0.2%, bringing the total to $692,781,000.
Changes in the allowance for loan losses for the three months ended March
31, 1996 and 1995 were as follows (in thousands):
1996 1995
-------- --------
Balance at January 1............$11,668 $11,057
Charge-offs..................... (154) (79)
Recoveries...................... 126 63
-------- -------
Net charge-offs............. (28) (16)
Provision for loan losses....... 227 100
-------- -------
Balance at March 31.............$11,867 $11,141
======== ========
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, 1996 and 1995
represented 1.68% and 1.71%, respectively, of the total loans outstanding,
net of unearned interest.
Non-performing Loans
--------------------
(In thousands)
March 31, December 31,
1996 1995
---------- ----------
Non-accrual loans....................... $2,355 $1,932
Accruing loans past due 90 days or more. 1,996 2,697
Restructured loans...................... - -
---------- ----------
Total non-performing loans.............. $4,351 $4,629
========== ==========
Non-performing loans as percent
of allowance......................... 36.7% 39.7%
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, 1996, total
deposits increased by $3,617,000 or 0.4%, with interest bearing funds
increasing $8.3 million and non-interest bearing deposits decreasing by
$4.7 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 1996 1995 Requirements
---- ---- ------------
Risk based capital ratios:
Tier 1 ................... 17.84% 17.21% 4.00%
Total capital ............ 19.10 18.47 8.00
Leverage ratio............. 11.98 11.85 3.00
Omega Bank, N.A.
Risk based capital ratios:
Tier 1 ................... 17.10% 16.48% 4.00%
Total capital ............ 18.35 17.73 8.00
Leverage ratio............. 11.46 11.38 3.00
Hollidaysburg Trust Company
Risk based capital ratios:
Tier 1 ................... 15.53% 14.98% 4.00%
Total capital ............ 16.79 16.24 8.00
Leverage ratio............. 10.84 10.58 3.00
Penn Central National Bank
Risk based capital ratios:
Tier 1 ................... 20.33% 19.02% 4.00%
Total capital ............ 21.60 20.29 8.00
Leverage ratio............. 11.84 11.74 3.00
Montour Bank
Risk based capital ratios:
Tier 1 ................... 9.60% 9.71% 4.00%
Total capital ............ 10.85 10.97 8.00
Leverage ratio............. 7.92 7.93 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", "undercapitalized", "significantly undercapitalized", or
critically undercapitalized". At March 31, 1996, 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
None
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)
By
:
Date David B. Lee
Chairman and
Chief Executive Officer
Date JoAnn N. McMinn
Senior Vice President and
Controller
(Principal Accounting
Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from Omega
Financial Corporation's 1st Quarter 1996 10-Q and is qualified in its entirety
by reference to such 10Q.
</LEGEND>
<CIK> 0000705671
<NAME> OMEGA FINANCIAL CORP
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 40,203
<INT-BEARING-DEPOSITS> 1,780
<FED-FUNDS-SOLD> 11,250
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 129,081
<INVESTMENTS-CARRYING> 96,626
<INVESTMENTS-MARKET> 96,191
<LOANS> 704,648
<ALLOWANCE> 11,867
<TOTAL-ASSETS> 1,004,650
<DEPOSITS> 853,799
<SHORT-TERM> 2,851
<LIABILITIES-OTHER> 11,318
<LONG-TERM> 10,207
<COMMON> 125,810
0
665
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 1,004,650
<INTEREST-LOAN> 15,718
<INTEREST-INVEST> 2,951
<INTEREST-OTHER> 235
<INTEREST-TOTAL> 18,904
<INTEREST-DEPOSIT> 7,484
<INTEREST-EXPENSE> 7,594
<INTEREST-INCOME-NET> 11,310
<LOAN-LOSSES> 227
<SECURITIES-GAINS> 212
<EXPENSE-OTHER> 7,797
<INCOME-PRETAX> 5,450
<INCOME-PRE-EXTRAORDINARY> 5,450
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,828
<EPS-PRIMARY> 0.61
<EPS-DILUTED> 0.59
<YIELD-ACTUAL> 4.84
<LOANS-NON> 2,355
<LOANS-PAST> 1,996
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 11,668
<CHARGE-OFFS> 154
<RECOVERIES> 126
<ALLOWANCE-CLOSE> 11,867
<ALLOWANCE-DOMESTIC> 11,867
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
