OMEF Omega Financial (MM)

Omega Earnings Up 60% STATE COLLEGE, Pa., July 22 /PRNewswire-FirstCall/ -- Year to date earnings for Omega Financial Corporation (NASDAQ:OMEF) have risen by nearly 60% over those of 2004, company officials said. Omega recorded net income of $11.958 million for the first six months of the year, compared to $7.535 million for the same period last year, according to David B. Lee, Omega's chairman and chief executive officer. The company's net income in the second quarter was 36.9% higher than the same quarter last year, rising to $5.381 million from $3.931 million. Lee noted that the fact that Omega's acquisition of Sun Bancorp did not close until the fourth quarter of last year makes comparing 2005's first and second quarter results useful in analyzing Omega's second quarter performance in several categories. The acquisition doubled Omega's assets to approximately $2 billion and added new markets in Central and Northeastern Pennsylvania. The company now has 68 Omega Bank offices in 14 counties. Omega's per share fully diluted earnings were $0.95 for the year to date, an 8% increase over the $0.88 recorded in 2004. For the quarter, fully diluted earnings were $0.43, compared to $0.46 in the second quarter of 2004. Although net income for the second quarter of 2005 when compared to the first quarter of this year decreased by about 18%, Lee explained the decrease is largely attributable to steps Omega took in the first quarter to restructure its balance sheet, specifically debt extinguishment as well as sales of investment securities and loans. The restructuring added net gains of approximately $1.7 million before taxes to results in the first quarter. "As we have acquired new markets, we have also added new expenses, Lee said. "We are confident, however, that our focus on profitable loan growth combined with expense control will continue to serve us well as we take advantage of new business opportunities in these markets." Although non- interest expenses in the second quarter exceeded the previous quarter by 4.6%, for the year-to-date, non-interest expenses for the new combined entity are lower than projected, indicating our planned cost containment program is effective. Common share dividends declared rose 3.3% for both the quarter and the year to date. Return on Average Assets (ROA) was 1.07% for the quarter compared to 1.38% for the same period last year. The company's net interest income increased by approximately 1% in the second quarter compared to the first quarter of this year, while total deposits increased by $9.2 million since year end 2004. 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*) Three Months Ended June 30, Six Months Ended June 30, 2005 2004 % Change 2005 2004 % Change Earnings: Net income $5,381 $3,931 36.9% $1,958 $7,535 58.7% Per share statistics: * Diluted earnings $.43 $.46 (6.5)% $.95 $.88 8.0% Dividends declared - common .31 .30 3.3 .62 .60 3.3 Book value - common 25.25 19.73 28.0 25.25 19.73 28.0 Book value - tangible 11.69 19.72 (40.7) 11.69 19.72 (40.7) Market value - High 31.54 37.97 (16.9) 34.50 38.75 (11.0) Low 27.05 29.21 (7.4) 27.05 29.21 (7.4) Financial position at period end: Assets $1,993,745 $1,149,870 73.4% $1,993,745 $1,149,870 73.4% Net loans 1,238,548 763,603 62.2 1,238,548 763,603 62.2 Deposits 1,511,334 916,658 64.9 1,511,334 916,658 64.9 Shareholders' equity 318,329 166,518 91.2 318,329 166,516 91.2 Average Balances: Assets $2,003,840 $1,141,139 75.6% $2,025,803 $1,133,632 78.7% Net loans 1,271,512 780,948 62.8 1,292,943 785,082 64.7 Deposits 1,515,209 911,057 66.3 1,506,197 902,229 66.9 Shareholders' equity 319,986 171,168 86.9 319,292 170,565 87.2 Profitability ratios - annualized: * Return on average assets 1.07% 1.38%(22.0)% 1.18% 1.33%(11.2)% Return on average tangible equity(1) 14.47 9.19 57.5 16.28 8.84 84.2 Return on average stated equity (2) 6.73 9.19 (26.8) 7.49 8.84 (15.2) Net interest margin - fully tax equivalent 3.90 3.98 (2.0) 3.84 4.06 (5.4) Shares outstanding at period end: * Common 12,609,174 8,440,520 49.4% 12,609,174 8,440,520 49.4% (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 BALANCE SHEETS (In thousands, except share data) June 30, December 31, Assets 2005 2004 Cash and due from banks $54,152 $47,877 Interest bearing deposits with other banks 25,153 31,122 Federal funds sold 30,325 36,350 Trading account assets 469 - Investment securities available for sale 322,018 327,979 Investment in unconsolidated subsidiary 1,625 1,625 Loans available for sale 306 22,515 Total portfolio loans 1,253,546 1,305,735 Less: Allowance for loan losses (15,304) (15,644) Net portfolio loans 1,238,242 1,290,091 Premises and equipment, net 37,145 35,509 Other real estate owned 905 3,082 Bank-owned life insurance 73,993 72,845 Investment in limited partnerships 7,089 8,605 Core deposit intangibles 7,142 13,927 Other intangibles 2,664 2,799 Goodwill 161,135 156,959 Other assets 31,382 31,286 TOTAL ASSETS $ 1,993,745 $ 2,082,571 Liabilities and Shareholders' Equity Deposits: Non-interest bearing $235,599 $228,408 Interest bearing 1,275,735 1,273,674 Total deposits 1,511,334 1,502,082 Short-term borrowings 55,664 90,259 ESOP debt 2,021 2,192 Junior subordinated debentures 56,941 57,190 Long-term debt 32,000 99,579 Other interest bearing liabilities 842 854 Other liabilities 16,614 14,676 TOTAL LIABILITIES 1,675,416 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 - 12,621,720 shares; Outstanding- 12,609,174 shares at June 30, 2005; 12,593,524 shares at December 31, 2004 63,125 62,968 Capital surplus 98,982 98,370 Retained earnings 156,410 152,249 Accumulated other comprehensive income 1,444 3,526 Unearned compensation related to ESOP debt (1,252) (1,374) Cost of common stock in treasury: 12,546 shares at June 30, 2005 (380) - TOTAL SHAREHOLDERS' EQUITY 318,329 315,739 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,993,745 $ 2,082,571 OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share data) Unaudited Three Months Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 Interest Income: Interest and fees on loans $19,612 $10,995 $38,959 $22,192 Interest and dividends on investment securities 2,689 1,759 5,056 3,612 Other interest income 338 91 696 147 TOTAL INTEREST INCOME 22,639 12,845 44,711 25,951 Interest Expense: Interest on deposits 5,559 2,643 10,251 5,335 Interest on short-term borrowings 438 72 928 148 Interest on long-term debt and other interest bearing liabilities 1,292 244 2,940 492 TOTAL INTEREST EXPENSE 7,289 2,959 14,119 5,975 NET INTEREST INCOME 15,350 9,886 30,592 19,976 Provision for loan losses 180 - 322 - INCOME FROM CREDIT ACTIVITIES 15,170 9,886 30,270 19,976 Other Income: Service fees on deposit accounts 2,308 1,577 4,448 2,916 Service fees on loans 345 366 657 647 Earnings on bank-owned life insurance 574 330 1,149 684 Trust fees 1,476 884 3,142 1,799 Investment and insurance product sales 779 353 1,851 655 Gain on the early extinguishment of debt - - 1,043 - Loss on sale of loans and other assets (39) 2 (378) 1 Net gains on the sale of investment securities 549 203 1,537 211 Other 1,149 569 2,178 1,109 TOTAL OTHER INCOME 7,141 4,284 15,627 8,022 Other Expense: Salaries and employee benefits 7,721 4,802 15,272 9,757 Net occupancy expense 1,064 559 2,175 1,186 Equipment expense 1,031 729 2,120 1,431 Data processing service 621 430 1,247 853 Pennsylvania shares tax 549 379 1,168 763 Amortization of intangible assets 274 2 437 5 Other 4,403 2,143 8,213 4,282 TOTAL OTHER EXPENSE 15,663 9,044 30,632 18,277 Income before taxes 6,648 5,126 15,265 9,721 Income tax expense 1,267 1,195 3,307 2,186 NET INCOME $5,381 $3,931 $11,958 $7,535 Net income per common share: Basic $.43 $.46 $0.95 $0.89 Diluted $.43 $.46 $0.95 $0.88 Weighted average shares and equivalents: Basic 12,607 8,469 12,601 8,740 Diluted 12,660 8,533 12,659 8,546 Dividends declared per share: Common $.31 $.30 $.62 $.60 OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share data) Unaudited Second Quarter First Quarter 2005 2005 Interest Income: Interest and fees on loans$ 19,612 $19,347 Interest and dividends on investment securities 2,689 2,367 Other interest income 338 358 TOTAL INTEREST INCOME 22,639 22,072 Interest Expense: Interest on deposits 5,559 4,692 Interest on short-term borrowings 438 490 Interest on long-term debt and other interest bearing liabilities 1,292 1,648 TOTAL INTEREST EXPENSE 7,289 6,830 NET INTEREST INCOME 15,350 15,242 Provision (credit) for loan losses 180 142 INCOME FROM CREDIT ACTIVITIES 15,170 15,100 Other Income: Service fees on deposit accounts 2,308 2,140 Service fees on loans 345 312 Earnings on bank-owned life insurance 574 575 Trust fees 1,476 1,666 Investment and insurance product sales 779 1,072 Gain on the early extinguishment of debt - 1,043 Gain on sale of loans and other assets (39) (339) Net gains on the sale of investment securities 549 988 Other 1,149 1,029 TOTAL OTHER INCOME 7,141 8,486 Other Expense: Salaries and employee benefits 7,721 7,551 Net occupancy expense 1,064 1,111 Equipment expense 1,031 1,089 Data processing service 621 626 Pennsylvania shares tax 549 619 Amortization of intangible assets 274 163 Other 4,403 3,810 TOTAL OTHER EXPENSE 15,663 14,969 Income before taxes 6,648 8,617 Income tax expense 1,267 2,040 NET INCOME $5,381 $6,577 Net income per common share: Basic $0.43 $0.52 Diluted $0.43 $0.52 Weighted average shares and equivalents: Basic 12,607 12,596 Diluted 12,660 12,659 Dividends declared per share: Common $.31 $.31 DATASOURCE: Omega Financial Corporation CONTACT: JoAnn McMinn, SVP, Director of Investor Relations of Omega Financial Corporation, +1-814-231-5779 Web site: http://www.omegafinancial.com/

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