OMEF Omega Financial (MM)

Omega First Quarter Earnings Increase Over 82% STATE COLLEGE, Pa., April 22 /PRNewswire-FirstCall/ -- Omega Financial Corporation (NASDAQ:OMEF) achieved record earnings for the quarter ended March 31, 2005 of $6.58 million, an increase of 82.5% or $2.97 million, when compared to the same period last year, company officials said. (Logo: http://www.newscom.com/cgi-bin/prnh/19990921/OMFCLOGO ) Omega Financial merged with Sun Bancorp on October 1 of last year, a transaction that nearly doubled the company's assets to $2.0 billion, while adding 23 offices in seven new counties in Eastern Pennsylvania. The company now has 68 Omega Bank offices in 14 counties. David B. Lee, Omega Financial's chairman and chief executive officer, said that the first quarter for 2005 also represented a $643,000 or 10.8% increase over the earnings for fourth quarter 2004, the first full quarter of operations since the Sun merger was completed. Fully diluted earnings per share for the first quarter were $.52 in 2005, compared to $.42 and $.47 per share for the first and fourth quarter last year, respectively. "The strength of our first quarter earnings reflects the continuing efficiencies that we are achieving from the consolidation of the Sun operations," Lee said. "In addition, completing our balance sheet restructuring, selling various assets acquired from Sun and the extinguishment of Sun's long-term Federal Home Loan Bank debt all contributed to the dramatic increase in our net income." Lee noted that a gain of $1,043,000 was realized from the early extinguishment of debt, while securities and a book of loans were sold to fund the payment at a net gain of $649,000. Omega management also revised its determination of the value of the Core Deposit Intangible acquired from Sun. This revised valuation was lower than originally estimated and reduced amortization costs for the first quarter of 2005 as compared to the fourth quarter of 2004. Common share dividends declared rose 3.3% for the quarter compared to last year's first quarter, while the Return on Average Assets (ROA) remained steady from that period. ROA rose by 11.3% in the first quarter of this year when compared to the final quarter of last year. The effect of the Sun acquisition was evidenced in several categories of the income statement for the first quarter, Lee said. He noted that income from credit activities and net interest income were both up approximately 50%. "Of course, with the addition of Sun's operations comes added expenses, but we are confident that our commitment to profitable loan growth and expense control that served us well prior to the merger will continue to do the same now that these operations are combined," he said. During the first quarter, Omega opened its 68th office, located in Wilkes- Barre (Luzerne County). Lee said that this new office and a new office in Mechanicsburg in the state's Capital Region that opened late last year have provided excellent opportunities to extend the Omega brand into new service areas. Omega now has offices throughout Bedford, Blair, Centre, Clinton, Cumberland, Dauphin, Huntingdon, Juniata, Luzerne, Lycoming, Mifflin, Northumberland, Snyder and Union counties. "In both Luzerne County and the Capital Region, we have moved aggressively to market our hallmarks of outstanding customer service and a broad range of financial services that meet a variety of needs," Lee commented. In January, Omega Bank was once again named one of the Top 10 Safest Banks in the country, according to Weiss Ratings, a national company that provides ratings for over 15,000 financial institutions. This year marks the third year in a row that Omega has made the Top 10. "We are obviously pleased to have earned the Top 10 Safest designation for the third time in as many years," Lee said. "It is a testament to the hard work of all the members of the Omega family." Quarterly and annual reports, a corporate profile, stock quotes and other financial data can be accessed through the Omega web site at http://www.omegafinancial.com/ . Financial statements and selected financial highlights are summarized on the following pages. OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) (In thousands, except as indicated *) 1st Qtr 1st Qtr % 1st Qtr 4th Qtr % 2005 2004 Change 2005 2004 Change Earnings: Net income $ 6,577 $3,604 82.5% $ 6,577 $5,934 10.8% Per share statistics: * Diluted earnings $.52 $.42 23.8% $.52 $.47 10.6% Dividends declared - common .31 .30 3.3 .31 .30 3.3 Book value - common 25.10 20.00 25.5 25.10 25.07 0.1 Book value - tangible 11.51 20.00 (42.5) 11.51 11.28 2.0 Market value - High 34.50 38.75 (11.0) 34.50 36.75 (6.1) Low 29.40 33.71 (12.8) 29.40 30.95 (5.0) Financial position at period end: Assets $ 2,004,159 $1,131,870 77.1% $2,004,159 $2,082,571 (3.8)% Deposits 1,488,785 898,487 65.7 1,488,785 1,502,082 (0.9) Net loans 1,265,296 776,765 62.9 1,265,296 1,312,606 (3.6) Shareholders' equity 316,433 169,850 86.3 316,433 315,739 0.2 Average Balances: Assets $ 2,048,010 $1,126,297 81.8% $2,048,010 $2,060,742 (0.6)% Deposits 1,497,084 893,568 67.5 1,497,084 1,532,995 (2.3) Net loans 1,298,469 778,694 66.7 1,298,469 1,339,386 (3.1) Shareholders' equity 318,589 169,964 87.4 318,589 255,565 24.7 Profitability ratios - annualized: * Return on average assets 1.28% 1.28% -% 1.28% 1.15% 11.3% Return on average tangible equity (1) 18.14% 8.48% 113.9 18.14% 29.06% (37.6) Return on average stated equity (2) 8.26 8.48 (2.6) 8.26 9.29 (11.1) Net interest margin - fully tax equivalent 3.81 4.12 (7.5) 3.81 3.78 0.8 Shares outstanding at period end: * Common 12,608,133 8,490,898 48.5% 12,608,133 12,593,524 0.1% (1) Average tangible equity represents average shareholders' equity less average intangibles and goodwill. (2) Average stated equity is equal to average shareholders' equity. OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share data) Unaudited Three Months Ended March 31, 2005 2004 Interest Income: Interest and fees on loans $19,347 $11,197 Interest and dividends on investment securities 2,367 1,853 Other interest income 358 56 TOTAL INTEREST INCOME 22,072 13,106 Interest Expense: Interest on deposits 4,692 2,692 Interest on short-term borrowings 490 76 Interest on long-term debt and other interest bearing liabilities 1,648 248 TOTAL INTEREST EXPENSE 6,830 3,016 NET INTEREST INCOME 15,242 10,090 Provision for loan losses 142 - INCOME FROM CREDIT ACTIVITIES 15,100 10,090 Other Income: Service fees on deposit accounts 2,140 1,339 Service fees on loans 312 281 Earnings on bank-owned life insurance 575 354 Trust fees 1,666 915 Investment and insurance product sales 1,072 302 Gain on the early extinguishment of debt 1,043 - Gain on sale of loans and other assets (339) (1) Net gains on investment securities 988 8 Other 1,029 540 TOTAL OTHER INCOME 8,486 3,738 Other Expense: Salaries and employee benefits 7,551 4,955 Net occupancy expense 1,111 627 Equipment expense 1,089 702 Data processing service 626 423 Pennsylvania shares tax 619 384 Amortization of intangible assets 163 3 Other 3,810 2,139 TOTAL OTHER EXPENSE 14,969 9,233 Income before taxes 8,617 4,595 Income tax expense 2,040 991 NET INCOME $6,577 $3,604 Net income per common share: Basic $0.52 $0.43 Diluted $0.52 $0.42 Weighted average shares and equivalents: Basic 12,596 8,471 Diluted 12,659 8,559 Dividends declared per share: Common $.31 $.30 OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share data) March 31, December 31, Assets 2005 2004 Cash and due from banks $49,424 $47,877 Interest bearing deposits with other banks 29,899 31,122 Federal funds sold 17,000 36,350 Investment securities available for sale 315,108 327,979 Investment in unconsolidated subsidiary 1,625 1,625 Loans available for sale 69 22,515 Total portfolio loans 1,280,783 1,305,735 Less: Allowance for loan losses (15,487) (15,644) Net portfolio loans 1,265,296 1,290,091 Premises and equipment, net 36,979 35,509 Other real estate owned 2,639 3,082 Bank-owned life insurance 73,420 72,845 Investment in limited partnerships 7,338 8,605 Core deposit intangibles 7,349 13,927 Other intangibles 2,731 2,799 Goodwill 161,218 156,959 Other assets 34,064 31,286 TOTAL ASSETS $2,004,159 $2,082,571 Liabilities and Shareholders' Equity Deposits: Non-interest bearing $220,520 $228,408 Interest bearing 1,268,265 1,273,674 Total deposits 1,488,785 1,502,082 Short-term borrowings 78,251 90,259 ESOP debt 2,107 2,192 Junior subordinated debentures 57,066 57,190 Long-term debt 43,853 99,579 Other interest bearing liabilities 848 854 Other liabilities 16,816 14,676 TOTAL LIABILITIES 1,687,726 1,766,832 Shareholders' Equity Preferred stock, par value $5.00 per share: Authorized - 5,000,000 shares, none issued Common stock, par value $5.00 per share: Authorized - 25,000,000 shares; Issued and outstanding- 12,608,133 shares at March 31, 2005; 12,593,524 shares at December 31, 2004 63,057 62,968 Capital surplus 98,734 98,370 Retained earnings 154,929 152,249 Accumulated other comprehensive income 1,026 3,526 Unearned compensation related to ESOP debt (1,313) (1,374) TOTAL SHAREHOLDERS' EQUITY 316,433 315,739 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,004,159 $2,082,571 http://www.newscom.com/cgi-bin/prnh/19990921/OMFCLOGO http://photoarchive.ap.org/ DATASOURCE: Omega Financial Corporation CONTACT: JoAnn McMinn, SVP, Investor Relations Officer of Omega Financial Corporation, +1-814-231-5779 Web site: http://www.omegafinancial.com/

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