OMEF Omega Financial (MM)

STATE COLLEGE, Pa., Jan. 25 /PRNewswire-FirstCall/ -- Net income for Omega Financial Corporation (NASDAQ:OMEF) rose by 7.3% to $4.705 million, or $.37 per diluted share, in the fourth quarter of 2007 compared to $4.386 million, or $.35 per diluted share, during the same period in 2006. Net income for calendar year 2007, was $21.097 million, representing a 3.3% increase over 2006 earnings of $20.431 million. Donita R. Koval, Omega's president and chief executive officer, noted that both the fourth quarter and calendar year 2007 results reflected the Corporations ongoing efforts in managing the net interest margin, growing service revenues and wealth management income and controlling non-interest expenses. Koval stated the company's net interest margin for the fourth quarter of 2007 increased 7 basis points to 4.21% from the fourth quarter of 2006 of 4.14% on a fully tax-equivalent basis. The company's Return on Average Assets increased 11.2%, to 1.06%, and Return on Average Equity increased 4.6% to 5.61%, when compared to the same period in 2006. For the year, Omega's net interest margin rose 12 basis points to 4.19% from 4.07% in 2006. The company's Return on Average Assets was 1.17% and Return on Average Equity 6.36%, representing an increase of 8.8% and .7%, respectively. The net interest margin grew despite decreases in net interest income of $.2 million for the quarter and $1.2 million for the year. Koval noted that 2006 net interest income included $1.0 million attributable to three branches sold in the final quarter of 2006. In the fourth quarter of 2007, Omega reported a provision for loan losses of $.6 million compared to $2.8 million during the same period in 2006. The year to date provision for loan loss in 2007 totals $2.2 million compared to $3.9 million in 2006. The higher level of loan loss provision in 2006 related primarily to specific provisions recorded for two large commercial borrowers. In the fourth quarter of 2006, one of the borrower's loans was sold, while in May 2007, the other borrower emerged from bankruptcy reorganization and as a result $4.4 million of this borrowers loans were charged off in the second quarter of 2007. As of December 31, 2007, total loans outstanding to this borrower totaled $14.9 million, with a specific allocation of the loan loss allowance totaling $1.8 million, which management deems to be adequate. This compares to total loans outstanding to this borrower of $16.8 million with a specific allocation of loan loss allowance of $5.3 million as of December 31, 2006. Although the borrower is current with all payments, these loans remain on non-accrual status until the new entity demonstrates consistent positive operating cash flow. Other income for the fourth quarter of 2007, excluding gains on the sale of investment securities and other assets, increased $.2 million or 2.53% as compared to the same period last year. Year to date non-interest income, excluding gains on the sale of investments and other assets, increased $1.3 million or 4.95% to $27.411 million due primarily to increases in deposit and loan fees as well as growth in wealth management fees. The three branch locations sold in 2006 contributed $.2 million of non-interest income in 2006. Other expense increased in the fourth quarter of 2007 by $.1 million or .81%, and decreased $1.5 million or 2.54% for the year of 2007. Included in other expense for both the fourth quarter and year of 2007 is $.8 million in expenses related to the announced merger with F.N.B. Corporation. These expenses were offset by decreases in other areas such as renegotiations on key operating contracts and restructuring of certain business lines, including the formation of a mortgage joint venture. The three branch locations sold in the fourth quarter of 2006 contributed $.7 million of non-interest expense in 2006. In the fourth quarter of 2007, the Company signed a definitive merger agreement with F.N.B. Corporation (NYSE:FNB) pursuant to which F.N.B. Corporation will acquire Omega. The combination of the two organizations will create the fifth largest bank holding company based in Pennsylvania with approximately $8 billion in total assets and over 210 full service branches serving commercial and consumer customers in 35 counties in Pennsylvania and Northeast Ohio. 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. CONTACT: Teresa Ciambotti, SVP, Director of Investor Relations (814) 231-6401 OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) (In thousands, except as indicated *) Three Months Ended December 31, 2007 2006 % Change Earnings: Net income $4,705 $4,386 7.3% Per share statistics: * Diluted earnings $.37 $.35 5.7% Dividends declared - common .31 .31 - Book value - common 26.43 25.76 2.6 Book value - tangible 13.37 12.61 6.0 Market value - High 32.40 33.50 (3.3) Low 24.45 29.48 (17.1) Financial position at period end: Assets $1,789,100 $1,815,818 (1.5)% Net loans 1,090,284 1,135,048 (3.9) Deposits 1,280,869 1,325,763 (3.4) Shareholders' equity 334,749 325,211 2.9 Average Balances: Assets $1,781,140 $1,846,561 (3.5)% Net loans 1,095,940 1,147,555 (4.5) Deposits 1,283,349 1,359,209 (5.6) Shareholders' equity 335,680 327,203 2.6 Non-Performing Loans at period end: Non-accrual loans $21,510 $21,001 2.4% Accruing loans past due 90 days or more 6,891 2,327 196.1 Profitability ratios - annualized: * Return on average assets 1.06% 0.95% 11.2% Return on tangible assets 1.17 1.04 12.5 Return on average stated equity (1) 5.61 5.36 4.6 Return on average tangible equity (2) 11.07 10.91 1.5 Net interest margin - fully tax equivalent 4.21 4.14 1.7 Shares outstanding at period end: * Common 12,665,613 12,622,802 0.3% Twelve Months Ended December 31, 2007 2006 % Change Earnings: Net income $21,097 $20,431 3.3% Per share statistics: * Diluted earnings $1.67 $1.62 3.1% Dividends declared - common 1.24 1.24 - Book value - common 26.43 25.76 2.6 Book value - tangible 13.37 12.61 6.0 Market value - High 34.49 34.21 0.8 Low 20.97 27.88 (24.8) Financial position at period end: Assets $1,789,100 $1,815,818 (1.5)% Net loans 1,090,284 1,135,048 (3.9) Deposits 1,280,869 1,325,763 (3.4) Shareholders' equity 334,749 325,211 2.9 Average Balances: Assets $1,796,135 $1,893,973 (5.2)% Net loans 1,120,728 1,172,033 (4.4) Deposits 1,299,668 1,397,648 (7.0) Shareholders' equity 331,636 323,370 2.6 Non-Performing Loans at period end: Non-accrual loans $21,510 $21,001 2.4% Accruing loans past due 90 days or more 6,891 2,327 196.1 Profitability ratios - annualized: * Return on average assets 1.17% 1.08% 8.8% Return on tangible assets 1.29 1.18 9.3 Return on average stated equity (1) 6.36 6.32 0.7 Return on average tangible equity (2) 12.72 13.22 (3.8) Net interest margin - fully tax equivalent 4.19 4.07 2.9 Shares outstanding at period end: * Common 12,665,613 12,622,802 0.3% (1) Average stated equity is equal to average shareholders' equity. (2) Average tangible equity represents average shareholders' equity less average intangibles and goodwill. OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (unaudited) December 31, December 31, 2007 2006 Assets Cash and due from banks 58,946 56,225 Interest bearing deposits with other banks 11,473 12,073 Federal funds sold 41,750 - Trading securities 61 48 Investment securities available for sale 276,525 291,807 Other investments 12,116 12,087 Investment in unconsolidated subsidiary 1,625 1,625 Loans held for sale 414 531 Total portfolio loans 1,102,756 1,151,861 Less: Allowance for loan losses (12,886) (17,344) Net portfolio loans 1,089,870 1,134,517 Premises and equipment, net 29,107 30,861 Other real estate owned 1,424 512 Bank-owned life insurance 75,783 76,341 Investment in limited partnerships 5,000 5,763 Core deposit intangibles 4,905 5,641 Other intangibles 975 1,085 Goodwill 159,567 159,387 Other assets 19,559 27,315 TOTAL ASSETS $1,789,100 $1,815,818 Liabilities and Shareholders' Equity Deposits: Non-interest bearing $235,948 $232,335 Interest bearing 1,044,921 1,093,428 Total deposits 1,280,869 1,325,763 Short-term borrowings 78,449 65,712 ESOP debt - 1,481 Junior subordinated debentures 55,695 56,193 Long-term debt 26,434 27,877 Other interest bearing liabilities 843 858 Other liabilities 12,061 12,723 TOTAL LIABILITIES 1,454,351 1,490,607 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 - 12,900,229 shares at December 31, 2007 12,823,471 shares at December 31, 2006 64,517 64,133 Outstanding - 12,665,613 shares at December 31, 2007 12,622,802 shares at December 31, 2006 Capital surplus 104,750 103,149 Retained earnings 170,167 164,653 Accumulated other comprehensive income 2,453 313 Unearned compensation related to ESOP debt - (859) Cost of common stock in treasury: 234,616 shares at December 31, 2007; 200,669 shares at December 31, 2006 (7,138) (6,178) TOTAL SHAREHOLDERS' EQUITY 334,749 325,211 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,789,100 $1,815,818 OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share data) (Unaudited) Three Twelve Months Ended Months Ended December 31, December 31, 2007 2006 2007 2006 Interest Income: Interest and fees on loans $19,314 $20,273 $78,914 $81,103 Interest and dividends on investment securities 3,426 3,294 13,686 12,518 Other interest income 606 308 1,378 1,166 TOTAL INTEREST INCOME 23,346 23,875 93,978 94,787 Interest Expense: Interest on deposits 6,612 6,838 26,593 25,966 Interest on short-term borrowings 517 589 2,536 2,731 Interest on long-term debt and other interest bearing liabilities 1,261 1,253 5,024 5,024 TOTAL INTEREST EXPENSE 8,390 8,680 34,153 33,721 NET INTEREST INCOME 14,956 15,195 59,825 61,066 Provision for loan losses 595 2,776 2,155 3,896 INCOME FROM CREDIT ACTIVITIES 14,361 12,419 57,670 57,170 Other Income: Service fees on deposit accounts 2,719 2,584 10,410 10,130 Service fees on loans 392 365 1,499 1,635 Earnings on bank-owned life insurance 627 634 2,556 2,413 Trust fees 1,055 999 4,312 4,063 Investment and insurance product sales 629 732 2,868 2,942 Gain on sale of loans and other assets 34 2,147 39 2,380 Net gains (losses) on the sale of investment securities 141 (426) 632 389 Other 1,388 1,328 5,766 4,934 TOTAL OTHER INCOME 6,985 8,363 28,082 28,886 Other Expense: Salaries and employee benefits 7,335 7,209 28,667 29,398 Net occupancy expense 1,120 1,111 4,266 4,318 Equipment expense 1,069 1,189 4,554 4,571 Data processing service 573 641 2,389 2,642 Pennsylvania shares tax 776 727 3,009 2,765 Amortization of intangible assets 211 218 845 882 Merger Expense 765 - 765 - Other 3,418 4,050 13,600 15,033 TOTAL OTHER EXPENSE 15,267 15,145 58,095 59,609 Income before income taxes and discontinued operations 6,079 5,637 27,657 26,447 Income tax expense 1,374 1,030 6,560 5,702 Income from continuing operations 4,705 4,607 21,097 20,745 Discontinued operations: Income from discontinued operations, net of tax - 446 - 446 Loss on disposal of discontinued operations, net of tax - (667) - (760) Income (Loss) from discontinued operations - (221) - (314) NET INCOME $4,705 $4,386 $21,097 $20,431 Net income per common share Basic $0.37 $0.35 $1.67 $1.62 Diluted $0.37 $0.35 $1.67 $1.62 Net income per common share from continuing operations Basic $0.37 $0.37 $1.67 $1.65 Diluted $0.37 $0.36 $1.67 $1.65 Net income per common share from discontinued operations Basic $- $(0.02) $- $(0.02) Diluted $- $(0.02) $- $(0.02) Weighted average shares and equivalents Basic 12,640 12,591 12,631 12,577 Diluted 12,653 12,627 12,643 12,610 Dividends declared per share Common $0.31 $0.31 $1.24 $1.24 Omega Financial Corporation Consolidated Net Interest Income Analysis Fourth Quarter 2007 vs. Fourth Quarter 2006 (In thousands) Fourth Quarter 2007 Average Income/ Balance Rate Expense INTEREST EARNING ASSETS Money Market Investments Interest Bearing Deposits 22,293 3.95% 222 Federal Funds Sold 33,876 4.50% 384 Total Money Market Investments 56,169 4.28% 606 Investment Securities U.S. Treasuries and Agencies 258,748 4.66% 3,037 State and Municipals-Tax Free 695 3.45% 6 Corporate Securities & Stock 25,199 6.08% 383 Total Investment Securities 284,642 4.78% 3,426 Loans Commercial Loans 216,325 7.31% 3,988 Tax Free Commercial Loans 16,267 4.90% 201 Real Estate Loans 630,459 6.81% 10,731 Tax Free Real Estate Loans 37,949 4.37% 415 Personal Loans and Leases 207,554 7.61% 3,979 Total Loans 1,108,554 6.95% 19,314 Total Earning Assets 1,449,365 6.42% 23,346 FUNDING SOURCES Interest Bearing Liabilities Checking with Interest 292,163 0.65% 476 Money Market Deposits 65,928 1.47% 245 Savings Deposits 168,921 0.55% 234 CD'S, $100,000 and Over 90,324 4.41% 1,005 Other Time Deposits 433,672 4.26% 4,652 Total Interest Bearing Deposits 1,051,008 2.50% 6,612 Short-Term Borrowings 68,152 3.01% 517 Long-Term Debt 82,372 6.08% 1,253 Other Interest Bearing Liabilities 799 4.01% 8 Demand Deposits 232,341 Cash (45,648) Other 60,341 Total Funding Sources 1,449,365 2.30% 8,390 Net Int Spread - Net Int Income 4.12% 14,956 Net Int Spread - Tax Equivalent 4.21% Net Int Income - Tax Equivalent 15,291 Tax Rate 35% Fourth Quarter 2006 Average Income/ Balance Rate Expense INTEREST EARNING ASSETS Money Market Investments Interest Bearing Deposits 11,738 4.36% 129 Federal Funds Sold 13,489 5.26% 179 Total Money Market Investments 25,227 4.84% 308 Investment Securities U.S. Treasuries and Agencies 276,502 4.07% 2,835 State and Municipals-Tax Free 16,265 2.31% 94 Corporate Securities & Stock 24,331 6.00% 365 Total Investment Securities 317,098 4.13% 3,294 Loans Commercial Loans 247,984 7.52% 4,699 Tax Free Commercial Loans 17,839 4.80% 216 Real Estate Loans 665,012 6.90% 11,477 Tax Free Real Estate Loans 40,463 4.34% 439 Personal Loans and Leases 191,730 7.12% 3,442 Total Loans 1,163,028 6.95% 20,273 Total Earning Assets 1,505,353 6.32% 23,875 FUNDING SOURCES Interest Bearing Liabilities Checking with Interest 298,946 0.78% 586 Money Market Deposits 78,236 1.51% 297 Savings Deposits 181,884 0.55% 252 CD'S, $100,000 and Over 97,569 4.28% 1,052 Other Time Deposits 470,560 3.92% 4,651 Total Interest Bearing Deposits 1,127,195 2.41% 6,838 Short-Term Borrowings 61,838 3.78% 589 Long-Term Debt 84,303 5.90% 1,244 Other Interest Bearing Liabilities 814 4.42% 9 Demand Deposits 232,014 Cash (49,442) Other 48,631 Total Funding Sources 1,505,353 2.29% 8,680 Net Int Spread - Net Int Income 4.03% 15,195 Net Int Spread - Tax Equivalent 4.14% Net Int Income - Tax Equivalent 15,598 Tax Rate 35% Increase/(Decrease) Due To Due To Net Volume Rate Change INTEREST EARNING ASSETS Money Market Investments Interest Bearing Deposits 106 (13) 93 Federal Funds Sold 234 (29) 205 Total Money Market Investments 340 (42) 298 Investment Securities U.S. Treasuries and Agencies (190) 392 202 State and Municipals-Tax Free (119) 31 (88) Corporate Securities & Stock 13 5 18 Total Investment Securities (297) 429 132 Loans Commercial Loans (583) (128) (711) Tax Free Commercial Loans (19) 4 (15) Real Estate Loans (596) (150) (746) Tax Free Real Estate Loans (27) 3 (24) Personal Loans and Leases 293 244 537 Total Loans (933) (26) (959) Total Earning Assets (889) 360 (529) FUNDING SOURCES Interest Bearing Liabilities Checking with Interest (13) (97) (110) Money Market Deposits (45) (8) (52) Savings Deposits (18) - (18) CD'S, $100,000 and Over (79) 32 (47) Other Time Deposits (382) 383 1 Total Interest Bearing Deposits (537) 311 (226) Short-Term Borrowings 56 (128) (72) Long-Term Debt (29) 38 9 Other Interest Bearing Liabilities (0) (1) (1) Demand Deposits Cash Other Total Funding Sources (510) 220 (290) Net Int Spread - Net Int Income (380) 141 (239) Net Int Spread - Tax Equivalent Net Int Income - Tax Equivalent Tax Rate DATASOURCE: Omega Financial Corporation CONTACT: Teresa Ciambotti, SVP, Director of Investor Relations of Omega Financial Corporation, +1-814-231-6401 Web site: http://www.omegafinancial.com/

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