Omega Financial Corporation

The company’s net income for the first quarter of 2000 was down 11.3% from the same period last year. We attribute this reduction to the substantial recovery in January of 1999 of previously unaccrued interest and the fact that there have been no year-to-date securities gains in 2000 as compared to a $201,000 gain in 1999 first quarter.

For the quarter, Omega recorded net income of $3.974 million compared to $4.479 million for 1999’s first quarter. On a per share basis, diluted and basic earnings were $0.43 and $0.44 compared to $0.47 and $0.49 for the same period last year. Our dividend per share was up 13.6% to $0.25 compared to $0.22 in the first quarter of 1999.

When you remove the effects of the large non-accrual loan recovery and security gains from last year’s numbers, our income for the first quarter is nearly unchanged. Nevertheless, like the rest of the banking industry, we are experiencing the narrowing of spreads between our lending and funding rates.

Downward pressure in this critical area represents a significant hurdle in our effort to maintain consistently increasing earnings. With the net interest margin at 4.80% on a fully tax-equivalent basis compared to 5.19% in 1999, income from credit activities was $11.042 million for this year’s first quarter compared to $11.996 million for the same period last year. Although our net interest margin has declined, when compared to Omega’s national peers it remains highly favorable.

Even in the face of declining margins, we have not abandoned our emphasis on the quality as well as the profitability of asset growth. Underscoring this commitment, we improved our percentage of non-performing loans to loan loss reserve by 34.5% in the first quarter.

Additionally, reflecting the success of our commitment to meet and exceed the expectations of our customers, traditional service fee income continues to improve, rising 8.0% in the first quarter. Fees from core services increased from $1.483 million in the first quarter of 1999 to $1.602 million in the first quarter of 2000.

During the quarter, Hollidaysburg Trust Company filed applications with banking authorities to establish a new office in Tyrone, the bank’s first in that community. Depending on regulatory approval, the office could be serving customers as early as July.

Establishing a presence in Tyrone is a logical move for us. We already have customers in the area and a number of our staff members either have roots in Tyrone or reside there now. We know the local needs, and we can deliver the kind of personal service people expect from their bank — always the formula for our success.

We also have established a new regional mortgage loan team. The new team represents a concentration of extensive experience in the field. We are now offering a broader range of products at better rates and reacting more quickly to a wider range of customers’ needs. With a marketing campaign initiated during the quarter to promote the team and our products, the mortgage initiative has begun to show results.

Late in the quarter, Omega unveiled its new Internet banking service, Omega Online. The Web continues to grow in popularity as a convenient way for people to address the needs of fast-paced life styles. Omega Online responds to that trend, giving our customers the means to do the majority of their banking over the Internet.

To complement the development of Omega Online and to enhance our customers’ online experience, we initiated a major redesign of our web site. Featuring the latest web technology, www.omegafinancial.com represents a great potential for us to develop lower-cost, alternative service delivery channels.

Although this quarter’s financial results are below the standard we have set, we feel that in the long run careful asset growth and top-quality customer service continue to be the solid strategies we need for future performance.

OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
(In thousands, except as indicated * )


	For the Quarter
	2000	1999	% Change

Earnings:
Net income ..................................................	$ 3,974	$ 4,479	(11.3)%

Per share statistics:
Diluted earnings...........................................	$ .43	$ .47	(8.5)
Dividends declared - common....................	.25	.22	13.6
Dividends declared - preferred....................	.45	.45	--
Book value - common..................................	17.00	16.98	0.1
Market value - High......................................	29.38	33.88	(13.3)
Low......................................	23.00	29.75	(22.7)

Financial position at March 31:
Assets..........................................................	$ 1,081,008	$ 1,069,063	1.1%
Deposits.......................................................	865,282	865,014	0.0
Net loans......................................................	702,348	721,283	(2.6)
Shareholders' equity....................................	152,107	152,939	(0.5)

Average Balances:
Assets..........................................................	$ 1,057,483	$ 1,049,662	0.7%
Deposits.......................................................	852,268	854,576	(0.3)
Net loans......................................................	699,245	713,961	(2.1)
Shareholders' equity....................................	153,534	155,724	(1.4)

Profitability ratios - annualized: *
Return on average assets...........................	1.50%	1.71%	(12.3)%
Return on average equity ............................	10.35	11.50	(10.0)
Net interest margin - fully tax equivalent......	4.80	5.19	(7.5)

Shares outstanding at March 31: *
Common......................................................	8,802,624	8,876,089	(0.8)%
Preferred......................................................	219,781	219,781	--

Number of shareholders at March 31: *
Common......................................................	2,771	2,839	(2.4)%

OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
	March 31,	December 31,
Assets	2000	1999
Cash and due from banks.................................................	$ 37,865	$ 36,580

Interest bearing deposits with other financial institutions.	758	872
Federal funds sold............................................................	25,650	1,975

Investment securities held to maturity...............................	4,948	4,951
Investment securities available for sale............................	259,374	267,718

Total loans.........................................................................	714,530	705,241
Less: Unearned discount................................................	(247)	(293)
Allowance for loan losses....................................	(11,935)	(11,865)
Net loans...........................................................................	702,348	693,083

Premises and equipment, net............................................	14,568	14,644
Other assets.....................................................................	35,497	33,580
TOTAL ASSETS................................................................	$ 1,081,008	$ 1,053,403

Liabilities and Shareholders' Equity
Deposits:
Non-interest bearing......................................................	$ 122,786	$ 119,391
Interest bearing..............................................................	742,496	732,204
Total deposits....................................................................	865,282	851,595

Short-term borrowings.....................................................	38,191	28,527
Other liabilities...................................................................	14,293	10,919
ESOP debt.........................................................................	3,552	3,611
Long-term debt..................................................................	7,000	7,000
Other interest bearing liabilities.........................................	583	600
TOTAL LIABILITIES............................................................	928,901	902,252

TOTAL SHAREHOLDERS' EQUITY....................................	152,107	151,151
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.........	$ 1,081,008	$ 1,053,403

OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
	Three Months Ended
	March 31,
	2000	1999
Interest Income:
Interest and fees on loans........................................	$ 14,602	$ 15,348
Interest and dividends on investment securities......	3,576	3,453
Other interest income...............................................	191	205
TOTAL INTEREST INCOME....................................	18,369	19,006

Interest Expense:
Interest on deposits..................................................	6,655	6,487
Interest on short-term borrowings............................	411	188
Interest on long-term debt and
other interest bearing liabilities...............................	118	70
TOTAL INTEREST EXPENSE.................................	7,184	6,745

NET INTEREST INCOME........................................	11,185	12,261
Provision for loan losses..........................................	143	265
INCOME FROM CREDIT ACTIVITIES.....................	11,042	11,996

Other Income:
Service fees on deposit accounts............................	877	840
Trust fees.................................................................	903	759
Gain on sale of loans and other assets....................	(29)	2
Net gains on investment securities..........................	-	201
Other.........................................................................	1,142	818
TOTAL OTHER INCOME.........................................	2,893	2,620

Other Expense:
Salaries and employee benefits...............................	4,747	4,614
Net occupancy expense...........................................	554	587
Equipment expense..................................................	567	514
Data processing service..........................................	363	381
Other.........................................................................	2,351	2,161
TOTAL OTHER EXPENSE......................................	8,582	8,257
Income before taxes.................................................	5,353	6,359
Income tax expense.................................................	1,379	1,880
NET INCOME..........................................................	$ 3,974	$ 4,479

Net income per common share:
Basic......................................................................	$ .44	$ .49
Diluted....................................................................	$ .43	$ .47

Weighted average shares and equivalents:
Basic......................................................................	8,789,153	8,953,772
Diluted....................................................................	9,220,930	9,445,046

Omega Financial Corporation
366 Walker Drive		Principal Subsidiaries
P.O. Box 619	(NASDAQ - OMEF)	Omega Bank, N.A.
State College, PA 16804-0619	www.omegafinancial.com	Hollidaysburg Trust Company
814-231-7680		Penn Central National Bank

1st Quarter 2000