EX-99.1 2 exhibit1.htm EX-99.1 EX-99.1
     
CONTACT:
  Teresa Ciambotti, SVP, Director of Investor Relations
(814) 231-6401
 
    
HEADLINE:
  Omega Earnings Up 34% for 2005

FOR IMMEDIATE RELEASE ¾ January 26, 2006¾

STATE COLLEGE, PA – Omega Financial Corporation (NASDAQ:OMEF) reported 2005 net income of $22.875 million for a 34.39% increase over 2004. Donita R. Koval, Omega’s president and chief executive officer, said the company’s diluted earnings per share rose 1.70% to $1.81, while common share dividends declared rose 3.3% for the year.

The Company’s performance for 2005 was highlighted by the effective integration of its merger with Sun Bancorp, which occurred in the fourth quarter of 2004. While it is difficult to compare full year results because of the merger, the Company’s effective integration plan resulted in a $7,843,000 or 11.39% reduction in non-interest expenses for 2005 compared to proforma combined non-interest expenses for 2004. In addition, although the challenging interest rate environment added significant pressures in 2005, the tax equivalent net interest margin increased from 3.78% in the fourth quarter 2004 to 4.03% in the fourth quarter 2005.

Fourth quarter 2005 net income of $5,352,000 was $582,000 lower than the net income of the fourth quarter 2004 due to a higher loan loss provision in 2005 and the inclusion of $1,066,000 of gains in the final quarter of 2004 related to the Sun merger. The loan loss provision increase of $890,000 in the fourth quarter 2005 relates primarily to one large commercial borrower who is experiencing cash flow problems. Omega has estimated and provided for all known exposures for this credit, however evaluations of the credit continue and could result in changes to management’s loan loss reserve estimates. Gains on early extinguishment of debt and sale of loans and other assets decreased $488,000 in the fourth quarter of 2005 compared to the same period in 2004, while net interest income for the quarter declined $487,000, primarily due to a decline in earning assets.

“We completed 2005 with several key initiatives underway that are designed to enhance our performance in 2006 on both the revenue and expense side of our operations,” Koval said. “While we were naturally focused on implementing merger cost savings, we also implemented innovations like Check 21 and virtual proof, which should lead to significant savings in operating expenses. On the revenue side, we are enhancing our Customer Relationship Management function with the goal of increasing our customer focus and developing total banking relationships that span all traditional lines of financial services.”

Koval noted that Omega also introduced new products such as its Home Equity VISA card and Health Savings Accounts, opened a full-service financial center at Bristol Court in State College, and consolidated its trust, asset management, and financial planning services into Omega Wealth Management.

Quarterly and annual reports, a corporate profile, stock quotes and other financial data can be accessed through the Omega web site at www.omegafinancial.com. Financial statements and selected financial highlights are summarized on the following pages.

                                                 
CONSOLIDATED FINANCIAL HIGHLIGHTS                    
(Unaudited)                    
(In thousands, except as indicated * )                    
    Three Months Ended December 31,           Twelve Months Ended December 31,
                    %                   %
    2005   2004   Change   2005   2004   Change
Earnings:
                                                
Net income
   $ 5,352     $ 5,934       (9.8 )%   $ 22,875     $ 17,021       34.4 %
Per share statistics: *
                                                
Diluted earnings
   $ .42     $ .47       (10.6 )%   $ 1.81     $ 1.78       1.7 %
Dividends declared — common
     .31       .30       3.3       1.24       1.20       3.3  
Book value — common
     25.28       25.07       0.8       25.28       25.07       0.8  
Book value — tangible
     11.76       11.28       4.3       11.76       11.28       4.3  
Market value — High
     30.94       36.75       (15.8 )     34.50       38.75       (11.0 )
Low
     25.42       30.95       (17.9 )     25.42       29.13       (12.7 )
Financial position at period end:
                                                
Assets
   $ 1,939,979     $ 2,082,571       (6.8 )%   $ 1,939,979     $ 2,082,571       (6.8 )%
Net loans
     1,199,109       1,312,606       (8.6 )     1,199,109       1,312,606       (8.6 )
Deposits
     1,422,530       1,502,082       (5.3 )     1,422,530       1,502,082       (5.3 )
Shareholders’ equity
     318,490       315,739       0.9       318,490       315,739       0.9  
Average Balances:
                                                
Assets
   $ 1,950,473     $ 2,060,742       (5.4 )%   $ 1,997,706     $ 1,371,227       45.7 %
Net loans
     1,207,196       1,339,386       (9.9 )     1,262,655       913,596       38.2  
Deposits
     1,431,788       1,532,995       (6.6 )     1,485,048       1,065,230       39.4  
Shareholders’ equity
     321,995       255,565       26.0       320,782       191,512       67.5  
Profitability ratios — annualized: *
                                                
Return on average assets
     1.10 %     1.15 %     (4.7 )%     1.15 %     1.24 %     (7.3 )%
Return on tangible assets
     1.20       1.25       (4.0 )     1.25       1.26       (0.8 )
Return on average stated equity (1)
     6.65       9.29       (28.4 )     7.13       8.89       (19.8 )
Return on average tangible equity (2)
     14.14       29.06       (51.3 )     15.33       11.84       29.5  
Net interest margin — fully tax equivalent
     4.03       3.78       6.6       3.92       3.92       0.0  
Shares outstanding at period end: *
                                                
Common
     12,599,508       12,593,524       0.0 %     12,599,508       12,593,524       0.0 %
(1) Average stated equity is equal to average shareholder’s equity.
                                        
(2) Average tangible equity represents average shareholder’s equity less average intangibles and goodwill.
                                
                 
OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
    December 31,   December 31,
Assets   2005   2004
Cash and due from banks
   $56,194   $ 47,877  
Interest bearing deposits with other banks
   8,908     31,122  
Federal funds sold
   -     36,350  
Trading account assets
   468     —  
Investment securities available for sale
   353,355     327,979  
Investment in unconsolidated subsidiary
   1,625     1,625  
Loans available for sale
   264     22,515  
Total portfolio loans
   1,214,591     1,305,735  
Less: Allowance for loan losses
   (15,482 )     (15,644 )
Net portfolio loans
   1,199,109     1,290,091  
Premises and equipment, net
   38,391     35,509  
Other real estate owned
   956     3,082  
Bank-owned life insurance
   75,144     72,845  
Investment in limited partnerships
   6,612     8,605  
Core deposit intangibles
   6,729     13,927  
Other intangibles
   2,529     2,799  
Goodwill
   161,004     156,959  
Other assets
   28,691     31,286  
TOTAL ASSETS
   $1,939,979   $ 2,082,571  
 
                
Liabilities and Shareholders’ Equity
                
 
                
Deposits:
                
Non-interest bearing
   $236,683   $ 228,408  
Interest bearing
   1,185,847     1,273,674  
Total deposits
   1,422,530     1,502,082  
Short-term borrowings
   90,153     90,259  
ESOP debt
   1,845     2,192  
Junior subordinated debentures
   56,692     57,190  
Long-term debt
   36,322     99,579  
Other interest bearing liabilities
   882     854  
Other liabilities
   13,065     14,676  
TOTAL LIABILITIES
   1,621,489     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 -
                
12,670,323 shares at December 31, 2005;
                
12,593,524 shares at December 31, 2004;
                
Outstanding-
                
12,599,508 shares at December 31, 2005;
                
12,593,524 shares at December 31, 2004
   63,368     62,968  
Capital surplus
   99,874     98,370  
Retained earnings
   159,583     152,249  
Accumulated other comprehensive income
   (1,226 )     3,526  
Unearned compensation related to ESOP debt
   (1,125 )     (1,374 )
Cost of common stock in treasury: 70,815 shares
   (1,984 )     —  
at December 31, 2005
                
TOTAL SHAREHOLDERS’ EQUITY
   318,490     315,739  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $1,939,979   $ 2,082,571  
 
                
                                 
OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES        
CONSOLIDATED STATEMENTS OF INCOME    
(In thousands, except share data)    
    Unaudited    
    Three Months Ended   Twelve Months Ended
    December 31,           December 31,
    2005   2004   2005   2004
Interest Income:
                                
Interest and fees on loans
   $ 20,061   $ 20,278   $ 78,907   $ 53,396
Interest and dividends on investment securities
   3,200   3,032   11,231   8,418
Other interest income
   53   252   1,037   557
TOTAL INTEREST INCOME
   23,314   23,562   91,175   62,371
Interest Expense:
                                
Interest on deposits
   5,686   4,891   21,691   12,964
Interest on short-term borrowings
   832   1,003   2,336   1,302
Interest on long-term debt and
                                
other interest bearing liabilities
   1,327   1,712   5,478   2,400
TOTAL INTEREST EXPENSE
   7,845   7,606   29,505   16,666
NET INTEREST INCOME
   15,469   15,956   61,670   45,705
Provision (credit) for loan losses
   590   (300 )   1,202   (300 )
INCOME FROM CREDIT ACTIVITIES
   14,879   16,256   60,468   46,005
Other Income:
                                
Service fees on deposit accounts
   2,487   2,508   9,344   7,076
Service fees on loans
   391   668   1,380   1,547
Earnings on bank-owned life insurance
   579   578   2,299   1,581
Trust fees
   1,324   1,438   6,007   4,027
Investment and insurance product sales
   663   860   3,163   1,786
Gain on the early extinguishment of debt
   —   570   1,043   570
(Loss) Gain on sale of loans and other assets
   3   (115 )   (376 )   (102 )
Net gains on the sale of investment securities
   656   692   2,327   963
Other
   1,240   1,267   4,681   2,958
TOTAL OTHER INCOME
   7,343   8,466   29,868   20,406
Other Expense:
                                
Salaries and employee benefits
   7,563   8,193   30,555   22,888
Net occupancy expense
   1,107   1,057   4,230   2,790
Equipment expense
   1,084   1,109   4,244   3,246
Data processing service
   642   547   2,521   1,839
Pennsylvania shares tax
   589   562   1,864   1,705
Amortization of intangible assets
   274   394   779   402
Other
   4,196   4,884   17,086   11,198
TOTAL OTHER EXPENSE
   15,455   16,746   61,279   44,068
Income before taxes
   6,767   7,976   29,057   22,343
Income tax expense
   1,415   2,042   6,182   5,322
NET INCOME
   $ 5,352   $ 5,934   $ 22,875   $ 17,021
 
                
Net income per common share:
                                
Basic
   $ .43   $ .47   $ 1.82   $ 1.79
Diluted
   $ .42   $ .47   $ 1.81   $ 1.78
Weighted average shares and equivalents:
                                
Basic
   12,586   12,531   12,601   9,484
Diluted
   12,624   12,627   12,645   9,570
Dividends declared per share:
                                
Common
   $ .31   $ .30   $ 1.24   $ 1.20
                                                                         
Omega Financial Corporation                                        
Consolidated Net Interest Income Analysis                                
Fourth Quarter 2005 vs Fourth Quarter 2004                                
(In thousands)                            
    Fourth Qtr 2005           Fourth Qtr 2004            
    Average           Income/   Average           Income/   Due To   Due To   Net
    Balance   Rate   Expense   Balance   Rate   Expense   Volume   Rate   Change
INTEREST EARNING ASSETS
                                                                        
Money Market Investments
                                                                        
 
                                                                        
Interest Bearing Deposits
   6,902   3.05 %   53   45,869   1.70 %   196   (234.8 )     91.8       (143 )
Federal Funds Sold
   18                   11,988   1.86 %   56   (28.0 )     (28.0 )     (56 )
BA’s and Commercial Paper
                                                                        
 
                                                                        
Total Money Market Investments
   6,920   3.04 %   53   57,857   1.73 %   252   (262.8 )     63.8       (199 )
Investment Securities
                                                                        
 
                                                                        
U.S. Treasuries and Agencies
   285,866   3.56 %   2,567   174,902   4.86 %   2,136   1,107.2     (676.2 )     431  
State and Municipals-Tax Free
   58,316   2.95 %   430   84,272   2.83 %   596   (190.4 )     24.4       (166 )
Corporate Securities
   16,915   4.78 %   202   96,182   1.25 %   301   (405.9 )     306.9       (99 )
Total Investment Securities
   361,097   3.52 %   3,199   355,356   3.40 %   3,033   510.9     (344.9 )     166  
Loans
                                                                        
 
                                                                        
Commercial Loans
   268,637   7.09 %   4,804   269,215   5.78 %   3,909   (8.2 )     903.2       895  
Rate Swaps(Notional Balance)
                                                                        
Tax Free Commercial Loans
   19,690   4.84 %   240   18,317   5.97 %   275   19.6     (54.6 )     (35 )
Real Estate Loans
   736,583   6.37 %   11,738   818,172   5.79 %   11,851   (1,246.5 )     1,133.5       (113 )
Tax Free Real Estate Loans
   38,957   4.16 %   405   37,272   7.04 %   656   28.7     (279.7 )     (251 )
Personal Loans and Leases
   158,436   7.20 %   2,875   217,931   6.44 %   3,526   (1,035.9 )     384.9       (651 )
 
                                                                        
Total Loans
   1,222,303   6.54 %   20,062   1,360,907   5.93 %   20,217   (2,242.3 )     2,087.3       (155 )
 
                                                                        
Total Earning Assets
   1,590,320   5.84 %   23,314   1,774,120   5.29 %   23,502   (1,994.2 )     1,806.2       (188 )
 
                                                                        
 
                                                                        
FUNDING SOURCES
                                                                        
Interest Bearing Liabilities
                                                                        
 
                                                                        
Checking with Interest
   331,951   0.62 %   516   380,382   0.46 %   444   (62.7 )     134.7       72  
Money Market Accounts
   98,761   1.41 %   351   118,591   0.96 %   286   (53.5 )     118.5       65  
Savings Accounts
   208,061   0.55 %   288   220,856   0.46 %   254   (15.1 )     49.1       34  
CD’S, $100,000 and Over
   93,342   3.65 %   859   85,729   3.94 %   849   73.8     (63.8 )     10  
Other Time Deposits
   463,403   3.14 %   3,672   494,173   2.46 %   3,057   (197.5 )     812.5       615  
 
                                                                        
Total Interest Bearing Deposits
   1,195,518   1.89 %   5,686   1,299,731   1.50 %   4,890   (255.0 )     1,051.0       796  
Other Borrowed Funds-Short Term
   88,840   3.72 %   833   70,944   1.50 %   268   82.3     482.7       565  
Long Term Debt
   92,999   5.67 %   1,318   184,339   5.17 %   2,384   (1,277.5 )     211.5       (1,066 )
Other Interest Bearing Liabilities
   847   4.25 %   9   818   1.96 %   4   0.1     4.9       5  
Demand Deposits
   236,269                   233,264                                        
Cash
   (53,639 )                   (45,869 )                                        
Other
   29,486                   30,893                                        
 
                                                                        
Total Funding Sources
   1,590,320   1.96 %     7,846     1,774,120   1.70 %     7,546       (1,450.1 )     1,750.1       300  
 
                                                                        
Net Int Spread — Net Int Income
             3.88 %     15,468               3.59 %     15,956       (544 )     56       (488 )
 
                                                                        
Net Int Spread-Tax Equivalent
             4.03 %                     3.78 %                                
 
                                                                        
Tax Equivalent Net Int Income
                     16,047                       16,778