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, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES 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 25-142088
(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)
(814) 231-7680
Registrant's Telephone Number,
Including Area Code
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 11, 1998:
Common Stock, $5.00 par value - 8,945,782 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 1998 1997
Cash and due from banks $34,640 $31,938
Interest bearing deposits with other banks 799 600
Federal funds sold 21,950 22,650
Investment securities held to maturity
(Market value:
$131,276 and $117,344, respectively) 130,735 116,802
Investment securities available for sale 129,341 133,015
Total loans 691,483 692,861
Less: Unearned discount (827) (968)
Allowance for loan losses (11,978) (11,793)
Net loans 678,678 680,100
Premises and equipment, net 17,364 17,589
Other assets 13,404 13,209
TOTAL ASSETS $1,026,911 $1,015,903
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing $112,165 $114,777
Interest bearing 725,511 725,998
Total deposits 837,676 840,775
Short-term borrowings 19,952 18,260
Other liabilities 17,996 9,816
ESOP debt 3,988 4,034
Other interest bearing liabilities 537 586
TOTAL LIABILITIES 880,149 873,471
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 (3,064) (3,125)
Common stock, par value $5.00 per share:
Authorized - 25,000,000 shares
Issued -
9,106,866 shares at March 31, 1998;
9,050,730 shares at December 31, 1997
Outstanding -
8,938,673 shares at March 31, 1998;
8,879,257 shares at December 31, 1997 45,538 45,258
Capital surplus 2,683 1,822
Retained earnings 96,851 94,426
Cost of common stock in treasury
168,193 shares at March 31, 1998;
171,473 shares at December 31, 1997 (5,833) (5,947)
Net unrealized gain on securities available 5,587 4,998
for sale
TOTAL SHAREHOLDERS' EQUITY 146,762 142,432
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,026,911 $1,015,903
OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
Three Months Ended
March 31,
1998 1997
INTEREST INCOME:
Interest and fees on loans $14,928 $15,060
Interest and dividends on investment 3,410 3,384
securities
Other interest income 357 304
TOTAL INTEREST INCOME 18,695 18,748
INTEREST EXPENSE:
Interest on deposits 6,964 7,152
Interest on short-term borrowings 140 66
Interest on long-term debt and
other interest bearing liabilities 80 76
TOTAL INTEREST EXPENSE 7,184 7,294
NET INTEREST INCOME 11,511 11,454
Provision for loan losses 242 258
INCOME FROM CREDIT ACTIVITIES 11,269 11,196
OTHER INCOME:
Service fees 1,503 1,389
Trust fees 753 783
Gain on sale of loans 37
Gains on investment securities available 289 162
for sale, net
TOTAL OTHER INCOME 2,582 2,334
OTHER EXPENSE:
Salaries and employee benefits 4,425 4,238
Net occupancy expense 573 551
Equipment expense 511 434
Data processing service 402 390
Other 2,046 2,247
TOTAL OTHER EXPENSE 7,957 7,860
Income before taxes 5,894 5,670
Income tax expense 1,784 1,769
NET INCOME $4,110 $3,901
NET INCOME PER COMMON SHARE:
Basic $ .45 $ .42
Diluted $ .43 $ .40
WEIGHTED AVERAGE SHARES AND EQUIVALENTS:
Basic 8,902,114 9,051,713
Diluted 9,455,354 9,545,337
OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $4,110 $3,901
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 614 646
Provision for loan losses 242 258
Gain on sale of investment securities (289) (162)
Gain on sale of fixed assets
and other property owned (25) (15)
Gain on sale of loans (37) -
(Increase) decrease in deferred tax asset (153) 244
Increase in interest receivable and other assets (787) (1,067)
Decrease in interest payable (127) (179)
Increase in taxes payable 1,630 1,055
Amortization of deferred net loan costs (fees) 164 (86)
Deferral of net loan fees 99 41
Increase (decrease) in accounts payable
and accrued expenses 389 (228)
Total adjustments 1,720 507
Net cash provided by operating activities 5,830 4,408
Cash flows from investing activities:
Proceeds from the sale or maturity of:
Interest bearing deposits with other banks 135 412
Investment securities available for sale 24,079 11,812
Investment securities held to maturity 13,234 7,071
Purchase of:
Interest bearing deposits with other banks (334) (484)
Investment securities held to maturity (18,294) (12,554)
Investment securities available for sale (21,751) (13,010)
Decrease (increase) in loans 585 6,756
Gross proceeds from sale of loans 370 113
Capital expenditures (263) (664)
Sale of fixed assets and other property owned 400 137
Decrease (increase) in federal funds sold 700 (4,275)
Net cash used in investing activities (1,139) (4,686)
Cash flows from financing activities:
(Decrease) increase in deposits, net (3,099) 5,352
Increase in short-term borrowings, net 1,692 1,632
Net change in other interest bearing liabilities (49) (78)
Dividends paid (1,695) (1,488)
Tax benefit from preferred stock dividend
and stock option activity 21 23
Issuance of common stock 1,141 -
Acquisition of treasury stock - (2,885)
Proceeds from reissuance of treasury stock - 1,270
Net cash (used in) provided by financing activities (1,989) 3,826
Net increase in cash and due from banks $2,702 $3,548
Cash and due from banks at beginning of period $31,938 $30,380
Cash and due from banks at end of period 34,640 33,928
Net increase in cash and due from banks $2,702 $3,548
Interest paid $7,311 $7,473
Income taxes paid 175 530
</TABLE>
OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
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,
1998 are not necessarily indicative of the results that may be experienced
for the year ending December 31, 1998 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, 1997.
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. Current and Pending Accounting Changes
Statement of Financial Accounting Standards No. 130 - Reporting
Comprehensive Income
On January 1, 1998, Omega adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" (SFAS 130). SFAS 130
establishes standards for reporting and displaying comprehensive income and
its components. Comprehensive income, as defined by SFAS 130, is the total
of net income and all other nonowner changes in equity. Total comprehensive
income for the three months ended March 31, 1998 and 1997 was $589,000 and
$(176,000), respectively. The difference between net income and
comprehensive income for the above periods is due to unrealized gains and
losses on marketable securities.
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, 1998 and
December 31, 1997 standby letters of credit issued and outstanding amounted
to $15,846,000 and $14,827,000, 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, 1998, the Corporation had $103,999,000 outstanding in unused
lines of credit commitments extended to its customers. Of this amount,
$36,021,000, or 34.6%, are commitments to consumers for home equity and
other lines of credit. The remainder, $67,978,000, are commercial
commitments.
D. Earnings Per Share Data:
Basic earnings per share is computed by dividing income available to common
stockholders by the weighted average number of shares outstanding for the
period. On a diluted basis, both earnings and shares outstanding are
adjusted to assume the conversion of all potentially dilutive securities
into common stock.
Computations of Earnings per Share
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended March 31, Quarter Ended March 31,
1998 1997
Per- Per-
Income Shares Share Income Shares Share
Numerator Denominator Amount Numerator Denominator Amount
<S> <C> <C>
Net income $ 4,110 $ 3,901
Less: Preferred stock dividends (99) (99)
BASIC EPS
Income available to common
shareholders 4,011 8,902 $ 0.45 3,802 9,052 $ 0.42
EFFECT OF DILUTIVE SECURITIES
Impact of :
Assumed conversion of preferred
to common stock 346 346
Assumed exercises of outstanding
options 207 147
Preferred stock dividends
available to common
shareholders 99 99
Elimination of tax benefit of
allocated preferred dividends (13) (11)
Additional expense required to
fund ESOP debt, net of tax impact (24) (31)
DILUTED EPS
Income available to common
shareholders plus assumed
conversions $ 4,073 9,455 $ 0.43 $ 3,859 9,545 $ 0.40
</TABLE>
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, 1998 and 1997
Operations
Three months ended March 31, 1998 and 1997
The first quarter's income before income taxes increased $224,000, or 4.0%,
when compared to the same period in 1997. A $248,000 increase in non-
interest income was primarily responsible for the increase. In addition,
income from credit activities increased by $73,000, or 0.7%, while non-
interest expense increased by $97,000, or 1.2%.
After the income tax provision (which increased by $15,000, or 0.8%
compared to the same period in 1997) was deducted from earnings, net income
improved $209,000, or 5.4%, over the first quarter of 1997. The effective
tax rate for the first quarter of 1998 was 30.3%, compared to 31.2% in the
first quarter of 1997.
Following are selected key ratios for the period:
Three Months Ended
March 31
1998 1997
Return on average assets (annualized)... 1.63% 1.55%
Return on average equity (annualized)... 11.35 11.35
Dividend payout ratio (common).......... 39.10 35.53
Average equity to average assets........ 14.34 13.68
Net Interest Income
Three months ended March 31, 1998 and 1997
The net interest margin, at 4.85% for the first quarter of 1998, was 1
basis point higher than the first quarter of 1997, with a $466,000 or 0.04%
increase in average earning assets resulting in a 0.5% increase in net
interest income.
Following are key net interest margin ratios (annualized):
Three Months Ended
March 31,
1998 1997
Yield on average earning assets................ 7.91% 7.94%
Cost to fund earning assets.................... 3.06 3.10
Net interest margin............................ 4.85 4.84
Net interest margin - tax equivalent........... 5.03 4.99
At March 31, 1998, Omega had $403,465,000 of earning assets scheduled to
reprice over the next twelve months as compared to $427,327,000 in interest
bearing liabilities, resulting in a negative gap of $23,862,000, or 2.3% of
assets. In order to predict net interest income at risk over the next
twelve months based on hypothetical rate movements, a rate shock simulation
was performed on the balance sheet. In the event that interest rates would
decrease immediately by 100 basis points, results of the rate shock
simulation indicate that Omega's net interest income over the next twelve
months would decrease by approximately 1.1%, or $520,000. Conversely, the
results of a rate shock simulation of an immediate 100 basis point increase
in interest rates indicates an increase in net interest income of
approximately $540,000, or 1.2% over a twelve-month period. These
simulations assume no volume or mix changes in the balance sheet.
Other Income and Expense
Three months ended March 31, 1998 and 1997
Other income increased $248,000, or 10.6% in the first quarter of 1998 as
compared to the same period in 1997. Service fee income in 1998 outpaced
that in 1997 by $114,000, or 8.2%, while trust fee income was $30,000, or
3.8% less in the first quarter of 1998 as compare to the first quarter of
1997. Net gains from the sale of investment securities increased by
$127,000 in 1998, or 78.4%.
As a percentage of average assets, annualized other income net of security
gains and losses was .91% for the first quarter of 1998 as compared to .86%
in 1997.
Other expenses were $97,000, or 1.2% higher for the first quarter of 1998
than for the same period in 1997. Salaries and employee benefits were
$187,000, or 4.4% higher in 1998 than in 1997. Occupancy expense has
increased by 4.0%, while equipment and data processing expense increased by
10.8%. Other non-interest expenses have decreased by 8.9%, or $201,000.
As a percentage of average assets, annualized expenses for the quarter
ended March 31, 1998 were 3.15% and were 3.13% for the same period in 1997.
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
details characteristics of the investment portfolio as of March 31, 1998
and December 31, 1997.
<TABLE>
<CAPTION>
Securities Classified as Available for Sale
Gross Gross Estimated
Amortized Unrealized Unrealized Market
March 31, 1998 Cost Gains Losses Value
<S> <C>
U.S. Treasury securities and
obligations of other U.S. Govern-
ment agencies and corporations $70,264 $152 $(70) $70,346
Obligations of state and
political subdivisions 45,054 458 (23) 45,489
Equity securities 5,440 8,066 - 13,506
Total $120,758 $8,676 $(93) $129,341
Securities Classified as Held to Maturity
Gross Gross Estimated
Amortized Unrealized Unrealized Market
March 31, 1998 Cost Gains Losses Value
U.S. Treasury securities and
obligations of other U.S. Govern-
ment agencies and corporations $26,502 $ 201 $(12) $26,691
Obligations of state and
political subdivisions 5,796 94 - 5,890
Corporate securities 50,012 242 (84) 50,170
Mortgage backed securities 43,806 195 (95) 43,906
Investment in low-income housing 487 - - 487
Equity securities (non-marketable) 4,132 - - 4,132
Total $130,735 $732 $(191) $131,276
Securities Classified as Available for Sale
Gross Gross Estimated
Amortized Unrealized Unrealized Market
December 31, 1997 Cost Gains Losses Value
U.S. Treasury securities and
obligations of other U.S. Govern-
ment agencies and corporations $79,143 $176 $(78) $79,241
Obligations of state and
political subdivisions 40,781 515 (14) 41,282
Equity securities 5,414 7,078 - 12,492
Total $125,338 $7,769 $(92) $133,015
Securities Classified as Held to Maturity
Gross Gross Estimated
Amortized Unrealized Unrealized Market
December 31, 1997 Cost Gains Losses Value
U.S. Treasury securities and
obligations of other U.S. Govern-
ment agencies and corporations $24,007 $196 $(3) $24,200
Obligations of state and
political subdivisions 5,799 71 - 5,870
Corporate securities 37,105 202 (22) 37,285
Mortgage backed securities 45,207 206 (108) 45,368
Investment in low-income housing 489 - - 489
Equity securities (non-marketable) 4,132 - - 4,132
Total $116,802 $675 $(133) $117,344
</TABLE>
Total investment securities as a percentage of total assets at March 31,
1998 and December 31, 1997 were 25.3% and 24.6%, respectively. Securities
maturing or repricing in one year or less comprised 32.7% of the total
investment securities of $260,076,000 as of March 31, 1998, as compared to
42.1% of total investment securities of $249,817,000 as of December 31,
1997. There was $215,000 in investments in instruments of foreign countries
on March 31, 1998.
3. Interest Bearing Deposits with Other Financial Institutions
As of March 31, 1998, Omega had $799,000 in interest bearing deposits with
other banks. 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, 1998 balance sheet.
4. Loans
Net loans in the first three months of 1998 decreased by $1,422,000, or
0.2% from the balance at December 31, 1997, bringing the total to
$678,678,000 at March 31, 1998. Continued competitive pressure in the
residential real estate market and indirect lending have resulted in the
reduction of loan volumes. This decrease in consumer loans has been offset
to a degree by an increase in tax-exempt commercial loans, most
specifically tax revenue anticipation notes.
Changes in the allowance for loan losses for the three months ended March
31, 1998 and 1997 were as follows (in thousands):
1998 1997
Balance at January 1.................... $11,793 $11,820
Charge-offs............................. (232) (360)
Recoveries.............................. 175 45
Net charge-offs..................... (57) (315)
Provision for loan losses............... 242 258
Balance at March 31..................... $11,978 $11,763
The allowance for loan losses is considered adequate by management to cover
possible uncollectible loans, as shown in the following table depicting
non-performing 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, 1998 and 1997
represented 1.73% and 1.71%, respectively, of the total loans outstanding,
net of unearned interest.
Set forth below is an analysis of Omega's non-performing loans as of March
31, 1998 as compared to December 31, 1997.
<TABLE>
Non-performing Loans
(In thousands)
March 31, December 31,
1998 1997
<S> <C>
Non-accrual loans............................ $5,227 $4,762
Accruing loans past due 90 days or more...... 2,578 2,103
Restructured loans........................... 45 47
Total non-performing loans................... $7,850 $6,912
Non-performing loans as percent of allowance. 65.5% 58.6%
</TABLE>
The increase in non-performing loans from December 31, 1997 to March 31,
1998 is primarily due to the addition of one large commercial loan with a
total outstanding balance of $612,000 to the non-accrual category, and
increased delinquent loan balances.
5. Deposits and Other Sources of Funds
Deposits provide the primary source of funding for loans and investment
securities. As March 31, 1998, total deposits decreased by $3,099,000 or
0.4%, as compared to December 31, 1997, with 84% of the decrease due to
decreases in non-interest bearing deposits.
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 by 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.
<TABLE>
<CAPTION>
MINIMUM REQUIREMENT MINIMUM REGULATORY
FOR CAPITAL REQUIREMENTS TO BE
ACTUAL ADEQUACY PURPOSES "WELL CAPITALIZED"
OMEGA FINANCIAL CORPORATION AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
<S> <C>
As of March 31, 1998:
Total Capital $147,516 21.6% $54,526 8.0% $68,157 10.0%
(to Risk Weighted Assets)
Tier I Capital 138,923 20.4% 27,263 4.0% 40,894 6.0%
(to Risk Weighted Assets)
Tier I Capital 138,923 13.8% 40,402 4.0% 50,503 5.0%
(to Average Assets)
As of December 31, 1997:
Total Capital $143,673 21.1% $54,418 8.0% $68,023 10.0%
(to Risk Weighted Assets)
Tier I Capital 135,127 19.9% 27,209 4.0% 40,814 6.0%
(to Risk Weighted Assets)
Tier I Capital 135,127 13.3% 40,584 4.0% 50,730 5.0%
(to Average Assets)
OMEGA BANK
As of March 31, 1998:
Total Capital $75,711 19.8% $30,647 8.0% $38,308 10.0%
(to Risk Weighted Assets)
Tier I Capital 70,915 18.5% 15,323 4.0% 22,985 6.0%
(to Risk Weighted Assets)
Tier I Capital 70,915 12.7% 22,368 4.0% 27,960 5.0%
(to Average Assets)
As of December 31, 1997:
Total Capital $74,430 19.5% $30,557 8.0% $38,196 10.0%
(to Risk Weighted Assets)
Tier I Capital 69,648 18.2% 15,278 4.0% 22,918 6.0%
(to Risk Weighted Assets)
Tier I Capital 69,648 12.3% 22,621 4.0% 28,276 5.0%
(to Average Assets)
HOLLIDAYSBURG TRUST COMPANY
As of March 31, 1998:
Total Capital $31,783 18.7% $13,617 8.0% $17,022 10.0%
(to Risk Weighted Assets)
Tier I Capital 29,642 17.4% 6,809 4.0% 10,213 6.0%
(to Risk Weighted Assets)
Tier I Capital 29,642 11.9% 9,942 4.0% 12,427 5.0%
(to Average Assets)
As of December 31, 1997:
Total Capital $31,059 18.3% $13,604 8.0% $17,005 10.0%
(to Risk Weighted Assets)
Tier I Capital 28,920 17.0% 6,802 4.0% 10,203 6.0%
(to Risk Weighted Assets)
Tier I Capital 28,920 11.7% 9,849 4.0% 12,311 5.0%
(to Average Assets)
PENN CENTRAL NATIONAL BANK
As of March 31, 1998:
Total Capital $24,670 22.7% $8,692 8.0% $10,865 10.0%
(to Risk Weighted Assets)
Tier I Capital 23,288 21.4% 4,346 4.0% 6,519 6.0%
(to Risk Weighted Assets)
Tier I Capital 23,288 12.8% 7,301 4.0% 9,126 5.0%
(to Average Assets)
As of December 31, 1997:
Total Capital $24,460 22.4% $8,754 8.0% $10,943 10.0%
(to Risk Weighted Assets)
Tier I Capital 23,070 21.1% 4,377 4.0% 6,566 6.0%
(to Risk Weighted Assets)
Tier I Capital 23,070 12.3% 7,474 4.0% 9,343 5.0%
</TABLE>
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, 1998, Omega and each of its
banking subsidiaries met the regulatory definition of a "well capitalized"
financial institution, i.e., a leverage ratio exceeding 5%, Tier 1 capital
exceeding 6% and total capital exceeding 10%.
7. Investment Considerations
In analyzing whether to make, or to continue to make, 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, 1997. A copy of this report can be obtained
from David N. Thiel, Senior Vice President, Omega Financial Corporation,
366 Walker Drive, State College, Pennsylvania 16801.
8. Forward Looking Statements
The information 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 1997
Annual Report or in Omega's Annual Report on Form 10-K for the year ended
December 31, 1997. Copies of these reports may be obtained from Omega upon
request and without charge (except for the exhibits thereto) as described
in Note F above.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Omega is impacted by market risks, and has procedures in place to evaluate
and mitigate these risks. These market risks and Omega's procedures are
described in the Management's Discussion and Analysis section of the 1997
Annual Report to Shareholders. There have been no material changes in the
market risks that impact Omega or their procedures relative to these risks,
since December 31, 1997.
PART II. Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
<PAGE>
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 the March
31, 1998 Form 10-Q and is qualified in its entirety by reference to such 10-Q.
</LEGEND>
<CIK> 0000705671
<NAME> OMEGA FINANCIAL CORP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 34,640
<INT-BEARING-DEPOSITS> 799
<FED-FUNDS-SOLD> 21,950
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 129,341
<INVESTMENTS-CARRYING> 130,735
<INVESTMENTS-MARKET> 131,276
<LOANS> 690,656
<ALLOWANCE> 11,978
<TOTAL-ASSETS> 1,026,911
<DEPOSITS> 837,676
<SHORT-TERM> 19,952
<LIABILITIES-OTHER> 22,521
<LONG-TERM> 0
0
1,936
<COMMON> 144,826
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 1,026,911
<INTEREST-LOAN> 14,928
<INTEREST-INVEST> 3,410
<INTEREST-OTHER> 357
<INTEREST-TOTAL> 18,695
<INTEREST-DEPOSIT> 6,964
<INTEREST-EXPENSE> 7,184
<INTEREST-INCOME-NET> 11,511
<LOAN-LOSSES> 242
<SECURITIES-GAINS> 289
<EXPENSE-OTHER> 2,293
<INCOME-PRETAX> 5,894
<INCOME-PRE-EXTRAORDINARY> 4,110
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,110
<EPS-PRIMARY> .45
<EPS-DILUTED> .43
<YIELD-ACTUAL> 4.85
<LOANS-NON> 5,227
<LOANS-PAST> 2,578
<LOANS-TROUBLED> 45
<LOANS-PROBLEM> 7,850
<ALLOWANCE-OPEN> 11,793
<CHARGE-OFFS> 232
<RECOVERIES> 175
<ALLOWANCE-CLOSE> 11,978
<ALLOWANCE-DOMESTIC> 11,978
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
