STATE COLLEGE, Pa., July 30 /PRNewswire-FirstCall/ -- Omega Financial
Corporation (Nasdaq: OMEF) reported second quarter net income of $5.0
million versus $5.3 million for the same period last year. For the six
months ended June 30, net income was $10.5 million in 2007 compared to
$10.7 million for 2006, company officials said. Fully diluted earnings per
share were $0.39 for the quarter and $0.83 for the year to date.
Donita R. Koval, Omega's president and chief executive officer stated
that earnings were significantly impacted by increased loan loss provisions
but noted, "Our basic strategies of managing interest rate risk, focusing
on transaction and service revenues and containing operating costs are
sound and favorably reflected in the continued strength of the net interest
margin, increases in non-interest income as well as reductions in
non-interest expense."
The loan loss provision for the second quarter of 2007 totaled $0.7
million, an increase of $0.6 million over the same period in 2006. The
level of the second quarter provision relates primarily to specific
provisions recoded for two commercial borrowers. While non-performing loans
have declined $4.3 million from the first quarter to $22.7 million at June
30, 2007, net charge-offs increased $5.3 million and certain commercial
credits were downgraded during the quarter. Management is actively working
to minimize the ultimate losses on these credits. No material provision was
necessary in the second quarter for the large commercial borrower who filed
for bankruptcy protection in 2006. This borrower emerged from bankruptcy
reorganization in May 2007 and as a result $4.4 million of this borrower's
loans were charged off in the second quarter. These loans had been
appropriately considered in establishing the allowance for loan losses in
prior periods. As of June 30, 2007, total loans outstanding to this
borrower totaled $14.2 million, with a specific allocation of the loan loss
reserve totaling $1.8 million, which management deems to be adequate. These
loans remain on non-accrual status until the new entity demonstrates
consistent positive operating cash flow.
The company's net interest margin for the second quarter was 4.19% on a
fully tax-equivalent basis compared to 4.09% for the same period last year.
Koval attributed this 10 basis point increase to a disciplined approach in
pricing both loans and deposits. She noted that while this approach has
limited balance sheet growth in recent periods it has set the foundation
for profitable future growth. For the year, net interest margin grew by 15
basis points as compared to the same period in 2006.
The net interest margin grew despite decreases in net interest income
of $.4 million for the quarter and $0.6 million for the year. Koval noted
that the 2006 second quarter net interest income included $0.3 million
attributable to three branches sold in the final quarter of last year.
Those three branches accounted for $0.5 million of Omega's interest income
as of June 30, 2006.
Excluding gains on the sale of assets, other income increased $0.4
million or 5.8% for the quarter and $0.5 million or 3.8% year to date.
Non-interest income grew for both the quarter and year to date in several
categories, including revenues on deposits, wealth management and other
income. The three branch locations sold in 2006 contributed $0.06 million
in the second quarter 2006 and $0.1 million for the six months ended June
30, 2006.
The company continues to be successful in controlling non-interest
expense, evidenced by a decline in expenses of $.6 million or 4.15% for the
quarter and $1.5 million or 4.85% year to date. Expense savings came in
several areas due primarily to renegotiations on key operating contracts
and restructuring of certain business lines, including the formation of a
mortgage joint venture.
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,
2007 2006 % Change
Earnings:
Net income $4,963 $5,345 (7.1)%
Per share statistics: *
Diluted earnings $.39 $.42 (7.1)%
Dividends declared - common .31 .31 -
Book value - common 25.96 25.41 2.2
Book value - tangible 12.83 11.89 7.9
Market value - High 29.66 34.10 (13.0)
Low 26.67 28.19 (5.4)
Financial position at period end:
Assets $1,807,454 $1,908,401 (5.3)%
Net loans 1,131,198 1,178,251 (4.0)
Deposits 1,317,084 1,420,652 (7.3)
Shareholders' equity 327,743 318,819 2.8
Average Balances:
Assets $1,801,121 $1,908,861 (5.6)%
Net loans 1,134,049 1,180,827 (4.0)
Deposits 1,306,376 1,416,002 (7.7)
Shareholders' equity 330,369 321,768 2.7
Non-Performing Loans at period end:
Non-accrual loans $20,717 $22,922 (9.6)%
Accruing loans past due 90 days or
more 1,999 2,769 (27.8)
Profitability ratios - annualized: *
Return on average assets 1.10% 1.12% (1.6)%
Return on tangible assets 1.21 1.23 (1.6)
Return on average stated equity (1) 6.01 6.64 (9.6)
Return on average tangible equity (2) 12.07 14.06 (14.2)
Net interest margin - fully tax
equivalent 4.19 4.09 2.4
Shares outstanding at period end: *
Common 12,626,042 12,548,843 0.6
(1) Average stated equity is equal to average shareholders' equity.
(2) Average tangible equity represents average shareholders' equity less
average intangibles and goodwill.
Six Months Ended June 30,
2007 2006 % Change
Earnings:
Net income $10,546 $10,688 (1.3)%
Per share statistics: *
Diluted earnings $.83 $.85 (2.4)%
Dividends declared - common .62 .62 -
Book value - common 25.96 25.41 2.2
Book value - tangible 12.83 11.89 7.9
Market value - High 34.49 34.21 0.8
Low 26.67 27.88 (4.3)
Financial position at period end:
Assets $1,807,454 $1,908,401 (5.3)%
Net loans 1,131,198 1,178,251 (4.0)
Deposits 1,317,084 1,420,652 (7.3)
Shareholders' equity 327,743 318,819 2.8
Average Balances:
Assets $1,801,565 $1,913,847 (5.9)%
Net loans 1,133,310 1,184,835 (4.3)
Deposits 1,304,332 1,411,955 (7.6)
Shareholders' equity 329,838 321,662 2.5
Non-Performing Loans at period end:
Non-accrual loans $20,717 $22,922 (9.6)%
Accruing loans past due 90 days or
more 1,999 2,769 (27.8)
Profitability ratios - annualized: *
Return on average assets 1.17% 1.12% 4.50%
Return on tangible assets 1.29 1.23 4.88
Return on average stated equity (1) 6.39 6.65 (3.80)
Return on average tangible equity (2) 12.87 14.09 (8.70)
Net interest margin - fully tax
equivalent 4.19 4.04 3.7
Shares outstanding at period end: *
Common 12,626,042 12,548,843 0.6%
(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)
June 30, December 31,
2007 2006
Assets
Cash and due from banks 59,595 56,225
Interest bearing deposits with other banks 10,553 12,073
Trading securities 57 48
Investment securities available for sale 285,290 291,807
Other investments 12,193 12,087
Investment in unconsolidated subsidiary 1,625 1,625
Loans held for sale - 204
Total portfolio loans 1,144,029 1,152,188
Less: Allowance for loan losses (12,831) (17,344)
Net portfolio loans 1,131,198 1,134,844
Premises and equipment, net 29,777 30,861
Other real estate owned 945 512
Bank-owned life insurance 77,627 76,341
Investment in limited partnerships 5,404 5,763
Core deposit intangibles 5,273 5,641
Other intangibles 1,030 1,085
Goodwill 159,408 159,387
Other assets 27,479 27,315
TOTAL ASSETS $1,807,454 $1,815,818
Liabilities and Shareholders' Equity
Deposits:
Non-interest bearing $234,332 $232,335
Interest bearing 1,082,752 1,093,428
Total deposits 1,317,084 1,325,763
Short-term borrowings 65,382 65,712
ESOP debt 1,288 1,481
Junior subordinated debentures 55,944 56,193
Long-term debt 27,167 27,877
Other interest bearing liabilities 869 858
Other liabilities 11,977 12,723
TOTAL LIABILITIES 1,479,711 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 -
12,860,658 shares at June 30, 2007;
12,823,471 shares at December 31, 2006 64,319 64,133
Outstanding -
12,626,042 shares at June 30, 2007;
12,622,802 shares at December 31, 2006
Capital surplus 103,973 103,149
Retained earnings 167,391 164,653
Accumulated other comprehensive income (86) 313
Unearned compensation related to ESOP debt (716) (859)
Cost of common stock in treasury:
234,616 shares at June 30, 2007;
200,669 shares at December 31, 2006 (7,138) (6,178)
TOTAL SHAREHOLDERS' EQUITY 327,743 325,211
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,807,454 $1,815,818
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,
2007 2006 2007 2006
Interest Income:
Interest and fees on loans $19,900 $20,372 $39,723 $40,209
Interest and dividends on
investment securities 3,482 3,077 6,827 6,181
Other interest income 141 241 313 342
TOTAL INTEREST INCOME. 23,523 23,690 46,863 46,732
Interest Expense:
Interest on deposits 6,647 6,409 13,099 12,304
Interest on short-term borrowings 676 663 1,399 1,434
Interest on long-term debt and
other interest bearing
liabilities 1,256 1,248 2,497 2,512
TOTAL INTEREST EXPENSE 8,579 8,320 16,995 16,250
NET INTEREST INCOME 14,944 15,370 29,868 30,482
Provision for loan losses 745 100 1,355 220
INCOME FROM CREDIT ACTIVITIES 14,199 15,270 28,513 30,262
Other Income:
Service fees on deposit accounts 2,654 2,598 5,051 4,952
Service fees on loans 430 443 757 825
Earnings on bank-owned life
insurance 646 552 1,286 1,159
Trust fees 1,101 1,025 2,194 2,145
Investment and insurance
product sales 701 618 1,552 1,542
Gain (loss) on sale of loans
and other assets (48) 64 30 121
Net gains on the sale of
investment securities (37) 176 338 238
Other 1,291 1,215 2,659 2,381
TOTAL OTHER INCOME 6,738 6,691 13,867 13,363
Other Expense:
Salaries and employee benefits 6,882 7,308 14,099 14,793
Net occupancy expense 1,096 1,083 2,151 2,188
Equipment expense 1,195 1,143 2,330 2,271
Data processing service 599 673 1,209 1,318
Pennsylvania shares tax 786 728 1,572 1,440
Amortization of intangible assets 212 222 423 443
Other 3,634 3,870 6,668 7,449
TOTAL OTHER EXPENSE 14,404 15,027 28,452 29,902
Income before income taxes
and discontinued operations 6,533 6,934 13,928 13,723
Income tax expense 1,570 1,568 3,382 3,051
Income from continuing
operations 4,963 5,366 10,546 10,672
Discontinued operations:
Income from discontinued
operations, net of tax - 125 - 162
Loss on disposal of discontinued
operations, net of tax - (146) - (146)
Income (Loss) from
discontinued operations - (21) - 16
NET INCOME $4,963 $5,345 $10,546 $10,688
Net income per common share
Basic $0.39 $0.43 $0.83 $0.85
Diluted $0.39 $0.42 $0.83 $0.85
Net income per common share
from continuing operations
Basic $0.39 $0.43 $0.83 $0.85
Diluted $0.39 $0.43 $0.83 $0.85
Net income per common share
from discontinued operations
Basic $- $- $- $-
Diluted $- $- $- $-
Weighted average shares and
equivalents
Basic 12,624 12,572 12,630 12,579
Diluted 12,641 12,616 12,650 12,624
Dividends declared per share
Common $0.31 $0.31 $0.62 $0.62
Omega Financial Corporation
Consolidated Net Interest Income Analysis
Second Quarter 2007 vs. Second Quarter 2006
(In thousands)
Second Quarter 2007 Second Quarter 2006
Average Income/ Average Income/
Balance Rate Expense Balance Rate Expense
INTEREST EARNING ASSETS
Money Market Investments
Interest Bearing
Deposits 10,781 3.79% 102 11,158 4.13% 115
Federal Funds Sold 2,991 5.36% 39 10,237 4.94% 126
Total Money Market
Investments 13,772 4.14% 141 21,395 4.52% 241
Investment Securities
U.S. Treasuries and
Agencies 272,130 4.57% 3,099 279,381 3.64% 2,537
State and Municipals-
Tax Free 1,000 3.20% 8 39,609 2.63% 260
Corporate Securities &
Stock 26,222 5.72% 375 19,201 5.83% 280
Total Investment
Securities 299,352 4.67% 3,482 338,191 3.65% 3,077
Loans
Commercial Loans 239,706 7.60% 4,540 265,236 7.31% 4,835
Tax Free Commercial
Loans 17,276 4.88% 210 19,315 4.76% 229
Real Estate Loans 654,687 6.75% 11,046 706,380 6.73% 11,892
Tax Free Real Estate
Loans 38,873 4.31% 419 40,507 4.30% 435
Personal Loans and
Leases 198,688 7.44% 3,685 164,415 7.27% 2,981
Total Loans 1,149,230 6.94% 19,900 1,195,853 6.82% 20,372
Total Earning Assets 1,462,354 6.45% 23,523 1,555,439 6.10% 23,690
FUNDING SOURCES
Interest Bearing
Liabilities
Checking with Interest 302,067 0.84% 633 314,395 0.73% 572
Money Market Deposits 71,323 1.50% 266 88,131 1.50% 330
Savings Deposits 180,993 0.55% 248 200,977 0.55% 275
CD'S, $100,000 and
Over 85,523 4.40% 939 97,755 4.04% 984
Other Time Deposits 439,783 4.16% 4,561 476,046 3.58% 4,248
Total Interest Bearing
Deposits 1,079,689 2.47% 6,647 1,177,304 2.18% 6,409
Short-Term Borrowings 65,970 4.11% 676 71,576 3.71% 662
Long-Term Debt 84,997 5.87% 1,247 85,236 5.82% 1,240
Other Interest Bearing
Liabilities 853 4.22% 9 806 4.47% 9
Demand Deposits 226,687 238,698
Cash (47,125) (50,685)
Other 51,283 32,504
Total Funding Sources 1,462,354 2.35% 8,579 1,555,439 2.14% 8,320
Net Int Spread -
Net Int Income 4.10% 14,944 3.96% 15,370
Net Int Spread -
Tax Equivalent 4.19% 4.09%
Net Int Income -
Tax Equivalent 15,287 15,868
Tax Rate 35% 35%
Increase/(Decrease)
Due To Volume Due To Rate Net Change
INTEREST EARNING ASSETS
Money Market Investments
Interest Bearing Deposits (4) (9) (13)
Federal Funds Sold (94) 7 (87)
Total Money Market Investments (98) 2 (100)
Investment Securities
U.S. Treasuries and Agencies (68) 630 562
State and Municipals-Tax Free (299) 47 (252)
Corporate Securities & Stock 100 (5) 95
Total Investment Securities (266) 671 405
Loans
Commercial Loans (481) 186 (295)
Tax Free Commercial Loans (25) 6 (19)
Real Estate Loans (881) 35 (846)
Tax Free Real Estate Loans (17) 1 (16)
Personal Loans and Leases 633 71 704
Total Loans (770) 298 (472)
Total Earning Assets (1,136) 969 (167)
FUNDING SOURCES
Interest Bearing Liabilities
Checking with Interest (23) 84 61
Money Market Deposits (64) 0 (64)
Savings Deposits (27) 0 (27)
CD'S, $100,000 and Over (129) 84 (45)
Other Time Deposits (340) 653 313
Total Interest Bearing Deposits (583) 820 237
Short-Term Borrowings (54) 67 13
Long-Term Debt (4) 12 8
Other Interest Bearing Liabilities 1 (1) -
Demand Deposits
Cash
Other
Total Funding Sources (640) 899 259
Net Int Spread - Net Int Income (496) 70 (426)
Net Int Spread - Tax Equivalent
Net Int Income - Tax Equivalent
Tax Rate
SOURCE Omega Financial Corporation
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Related links:
http://www.omegafinancial.com
CONTACT:
Teresa Ciambotti, SVP, Director of Investor
Relations of Omega Financial Corporation, +1-814-231-6401
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