FORM 10-K
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2007
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For
the transition period from __________________ to __________________
Commission file number 0-13599
Omega Financial Corporation
(Exact name of registrant as specified in its charter)
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Pennsylvania
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25-1420888
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification No.)
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366 Walker Drive, State College, PA
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16801
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(Address of principal executive offices)
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(Zip Code)
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Registrants telephone number, including area code:
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(814) 231-7680
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Name of each exchange on which registered
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Common Stock, par value $5.00
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The NASDAQ Stock Market LLC
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Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405
of the Securities Act Yes
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No
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Indicate by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
Yes
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No
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Indicate by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes
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No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K.
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Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act). (Check one):
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Large accelerated filer
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Accelerated filer
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Non-accelerated
filer
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(Do not check if a smaller
reporting company)
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Smaller reporting company
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Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act) Yes
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No
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The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was last sold on June
29, 2007, the last business day of the registrants most recently completed second fiscal quarter
was $339,514,269. (1)
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There were 12,670,692 shares of the registrants common stock outstanding as of March 7, 2008.
DOCUMENTS INCORPORATED BY REFERENCE
(Specific sections incorporated by reference are identified under applicable items herein)
Certain portions of the Companys Proxy Statement to be filed in connection with its 2008 Annual
Meeting of Shareholders are incorporated by reference in Part III of this Report; provided,
however, that the Audit Committee Report and any other information in such Proxy Statement that is
not required to be included in this Annual Report on Form 10-K, shall not be deemed to be
incorporated herein or filed with the Securities and Exchange Commission for any purpose.
Certain portions of the Companys Annual Report to Shareholders for the year ended December
31, 2007 are incorporated by reference in Part II of this Report.
With the exception of the information incorporated by reference in Part II of this Report, the
Companys Annual Report to Shareholders for the year ended December 31, 2007 is not to be deemed to
be incorporated herein or filed with the Securities and Exchange Commission for any purpose.
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(1)
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The aggregate dollar amount of the voting stock set forth equals the number of shares of the
registrants common stock outstanding, reduced by the amount of common stock held by officers,
directors, shareholders owning in excess of 10% of the registrants common stock and the
registrants employee benefit plans multiplied by the last reported sale price for the registrants
common stock on June 29, 2007, the last business day of the registrants most recently completed
second fiscal quarter. The information provided shall in no way be construed as an admission that
any officer, director or more than 10% shareholder of the registrant, or any employee benefit plan,
may be deemed an affiliate of the registrant or that such person or entity is the beneficial owner
of the shares reported as being held by such person or entity, and any such inference is hereby
disclaimed. The information provided herein is included solely for record keeping purposes of the
Securities and Exchange Commission.
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OMEGA FINANCIAL CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2007
TABLE OF CONTENTS
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FORWARD LOOKING STATEMENTS
The information contained in this annual report on Form 10-K contains forward looking
statements (as such term is defined in the Securities Exchange Act of 1934 and the regulations
thereunder), including without limitation, statements as to the future loan and deposit volumes,
the allowance and provision for possible loan losses, future interest rates and their effect on the
financial condition or results of operations of Omega Financial Corporation (Omega), the
classification of Omegas investment portfolio and other statements which are not historical facts
or as to trends or managements intentions, plans, beliefs, expectations or opinions. Such forward
looking statements are subject to risks and uncertainties and may be affected by various factors
which may cause actual results to differ materially from those in the forward looking statements
including without limitation, the effect of economic conditions and related uncertainties, the
effect of interest rate changes and loan losses on Omega, federal and state government regulation,
competition and other risk factors described in Item 1A of this Annual Report on Form 10-K, a copy
of which may be obtained from Omega upon request and without charge (except for the exhibits
thereto). Omega undertakes no obligation to update or revise any forward-looking statement.
PART I
Item 1: Business
GENERAL
Omega Financial Corporation (Omega or the Company) is a Pennsylvania business corporation
that is registered as a bank holding company and has elected to be a financial holding company
under the Bank Holding Company Act of 1956, as amended. Omega was formed, effective December 31,
1986, as a result of the merger of Heritage Financial Services Corporation (Heritage) into
Peoples National Bancorp, Inc. (Peoples) and the change of Peoples name to Omega.
Peoples was incorporated on June 24, 1982 and became an active bank holding company on
December 7, 1982 through the acquisition of all of the outstanding shares of Peoples National Bank
of Central Pennsylvania (Peoples Bank). Heritage was incorporated on June 21, 1982 and became an
active bank holding company on December 31, 1982 through the acquisition of all of the outstanding
shares of The Russell National Bank (Russell Bank). As a result of the merger of Heritage into
Peoples, Omega became the holding company for both Peoples Bank and Russell Bank. On January 28,
1994, Penn Central Bancorp, Inc. (Penn Central), a bank holding company, merged into Omega. As a
result of the merger of Penn Central into Omega, Omega became the holding company for Penn
Centrals five wholly-owned subsidiaries: Penn Central National Bank (Penn Central Bank),
Hollidaysburg Trust Company (Hollidaysburg), the First National Bank of Saxton (Saxton Bank),
Penn Central Bancorp Life Insurance Company and Penn Central Bancorp Investment Company. On
February 18, 1995, Saxton Bank merged into Penn Central Bank and on March 18, 1995, Peoples Bank
and Russell Bank merged to form Omega Bank (the Bank). On August 1, 1995, Omega acquired all of
the outstanding shares of Montour Bank (Montour). On December 31, 1996, Montour was merged into
the Bank. In 1999, Omega sold all the assets and liabilities of Montour Bank. On October 20, 2001,
Hollidaysburg and Penn Central Bank were merged into Omega Bank.
On October 1, 2004, Sun Bancorp, Inc. (Sun), a bank holding company was merged into Omega.
On that same date, Suns banking subsidiary, Sun Bank, was merged into Omega Bank. In connection
with the Sun merger, the Company issued a total of 4,117,116 shares of its common stock, and paid a
total of $35,921,000 to the former shareholders of Sun. Also as a result of this merger, Omega
acquired Suns wholly-owned subsidiaries: Beacon Life Insurance Company, Sun Bancorp Statutory
Trust I, Sun Investment Services, Inc., SUBI Services LLC, Mid-Penn Insurance Associates, Bank
Capital Services Corporation and Sentry Trust Company. The Company sold Sentry Trust Company on
September 15, 2006. The Company currently has one banking subsidiary, Omega Bank, and its current
non-banking subsidiaries consist of Central Pennsylvania Life Insurance Company, Central
Pennsylvania Investment Company, Omega Insurance Agency, Inc., Omega Financial Company LLC, Central
Pennsylvania Leasing, Inc., Central Pennsylvania Real Estate, Inc., Sun Investment Services, Inc.,
SUBI Services LLC, Mid-Penn Insurance Associates, and Bank Capital Services Corporation. The
Company also owns two subsidiaries that are unconsolidated: Omega Financial Capital Trust 1 and Sun
Bancorp Statutory Trust I.
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Unless the context otherwise requires, the Company refers to Omega Financial Corporation and
its consolidated subsidiaries and the Bank or Omega Bank refers to the Companys banking
subsidiary.
BANKING SERVICES
The Bank currently provides retail and commercial banking services through 64 full service
offices in Bedford, Blair, Cameron, Centre, Clinton, Huntingdon, Juniata, Mifflin, Snyder, Union,
Northumberland, Lycoming, and Luzerne counties in northeastern and central Pennsylvania.
The Bank provides a full range of consumer and commercial services. Consumer services include
Internet and telephone banking, an automated teller machine network, personal checking accounts,
interest checking accounts, savings accounts, insured money market accounts, debit cards,
investment certificates, fixed and variable rate certificates of deposit, club accounts, secured
and unsecured installment loans, auto and equipment leases, construction and mortgage loans, safe
deposit facilities, credit lines with overdraft checking protection, IRA accounts and student
loans. Commercial banking services include small and high-volume business checking accounts,
on-line account management services, ACH origination, payroll direct deposit, commercial lending,
commercial cash management services, lockbox service, and repurchase agreements. The Bank also
provides a variety of trust and asset management services.
Omegas primary loan products include commercial loans, commercial real estate loans, real
estate construction loans, real estate mortgage loans, home equity and other personal/consumer
products.
Omegas loan underwriting policies are updated periodically and are presented for approval by
the Board of Directors of the Bank. The purpose of the policies is to grant loans on a sound and
collectible basis; to invest available funds in a safe, profitable manner; to serve the legitimate
credit needs of the communities of Omegas primary market area; and ensure that all loan applicants
receive fair and equal treatment in the lending process. It is the intent of the underwriting
policies to minimize loan losses by carefully investigating the credit history of each applicant,
verify the source of repayment and the ability of the applicant to repay, collateralize those loans
in which collateral is deemed to be required, exercise care in the documentation of the
application, review, approval and origination process and administer a comprehensive loan
collection program.
The major types of investments held consist of obligations and securities issued by U.S.
Treasury or other government agencies or corporations, obligations of state and local political
subdivisions, corporate and other securities, mortgage-backed securities, common stock and other
investments. Other investments held include limited partnership low-income housing projects and
other real estate owned. Our investment policy directs that investments be managed in a way that
provides necessary funding for the Companys liquidity needs, provides adequate collateral to
pledge for public funds held and, as directed by the Asset Liability Committee, is managed to
control interest rate risk. The investment policy provides limits on types of investments owned,
credit quality of investments and limitations by investment types and issuer.
The Companys primary source of funds is deposits that are gathered by the Bank. These
deposits consist of transaction type accounts such as demand deposits and savings accounts and time
deposits such as certificates of deposits. The majority of deposits have been gathered by the Bank
in the Companys market area. No material portion of the deposits has been obtained from a single
or small group of customers and the Company believes that the loss of any customers deposits or a
small group of customers deposits would not have a material adverse effect on the Company. The
Bank has a relatively stable deposit base with no major seasonal depositor or group of depositors.
Most of its commercial customers are small and mid-sized businesses in northeastern and central
Pennsylvania.
Other sources of funds used by the Company include retail repurchase agreements, borrowings
from Federal Home Loan Bank of Pittsburgh, and lines of credit established with various
correspondent banks for overnight funding.
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As of December 31, 2007, the Bank operated an aggregate of 85 automated teller machines (ATMs)
at various locations. The Bank is a member of the First Data/Star System and the Plus System both
of which operate nationwide.
OTHER ACTIVITIES
On December 26, 1985, the Company formed Central Pennsylvania Investment Co., a Delaware
corporation, for the purpose of holding and managing certain investments of the Company. In 2001,
Central Pennsylvania Investment Co. formed a subsidiary, Omega Insurance Agency Inc., a
Pennsylvania corporation, for the purpose of offering certain insurance and investment services
within Omegas market area.
On January 22, 1986, the Company formed Central Pennsylvania Life Insurance Co., an Arizona
corporation, for the purpose of underwriting credit life insurance for the Companys bank
subsidiaries.
On January 14, 1988, the Company formed Central Pennsylvania Leasing, Inc., for the purpose of
leasing of personal property and real estate. Central Pennsylvania Leasing Inc. is not currently
an active subsidiary.
In November 2002, the Bank formed its subsidiary, Omega Financial Company, LLC, a Delaware
limited liability company whose purpose is to hold certain investments of the Company.
In September 2004, the Company formed Omega Financial Capital Trust I, for the purpose of
issuing trust preferred securities through a pooled trust preferred program.
On October 1, 2004, in connection with the Sun merger, the Company acquired the following
subsidiaries of Sun:
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Beacon Life Insurance Company
, an Arizona corporation for the purpose of providing credit
life and disability insurance. Beacon Life Insurance Company was merged with Central
Pennsylvania Life Insurance Company on December 31, 2004;
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Sun Bancorp Statutory Trust I
, a wholly owned Connecticut corporation, for the purpose of
issuing trust preferred securities through a pooled trust preferred program;
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Sun Investment Services, Inc
. offers mutual funds and annuity products to Omegas customers;
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SUBI Services, LLC,
an employee services company, solely owned by the Bank. SUBI Services
LLC is not currently an active subsidiary;
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Mid-Penn Insurance Associates
, an independent insurance agency, to diversify the financial
services available to Omegas customers;
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Bank Capital Services Corporation
provides leasing alternatives to Omegas customers and
also services leases for several other financial institutions;
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Sentry Trust Company
provides trust and wealth management services for clients throughout
central Pennsylvania. Sentry Trust Company was sold on September 15, 2006.
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COMPETITION
The Banks service areas are characterized by intense competition for banking business among
commercial banks, savings and loan associations, mutual savings banks and other financial
institutions. The Bank actively competes with such banks and institutions for local retail and
commercial accounts. The Bank also is subject to competition from other banks and financial
institutions in central and northeastern Pennsylvania, as well as other financial institutions
outside their service areas, for certain types of banking business. Many competitors have
substantially greater financial resources and larger branch systems than those of the Bank.
In commercial transactions, the Company believes that the Banks legal lending
limit to a single borrower (approximately $31.0 million as of December 31, 2007) enables it to
compete effectively for the business of small and mid-sized businesses. However, this legal
lending limit is considerably lower than
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that of various competing institutions and thus may act as
a constraint on the Banks effectiveness in competing for financings in excess of the limit.
In consumer transactions, the Bank believes that it is able to compete on a substantially
equal basis with larger financial institutions because it offers competitive interest rates on
savings and time accounts and loans.
In competing with other banks, savings and loan associations and other financial institutions,
the Bank seeks to provide personalized services through managements knowledge and awareness of
their service areas, customers and borrowers. In managements opinion, larger institutions often
do not provide sufficient attention to the retail depositors and the relatively small commercial
borrowers that comprise the Banks customer base.
Other competitors, including credit unions, consumer finance companies, insurance companies,
and money market mutual funds, compete with certain lending and deposit gathering services offered
by the Bank. The Bank also competes with insurance companies, investment-counseling firms, mutual
funds and other business firms and individuals in corporate and trust investment management
services.
As a result of the repeal of the Glass-Steagall Act, which separated the commercial and
investment banking industries, all banking organizations are facing increased competition. See
Supervision and Regulation Gramm-Leach-Bliley Act.
SUPERVISION AND REGULATION
The following discussion sets forth certain of the material elements of the regulatory
framework applicable to bank holding companies and financial holding companies and their
subsidiaries and provides certain specific information relevant to the Company and its
subsidiaries. The regulatory framework is intended primarily for the protection of depositors,
other customers and the federal deposit insurance funds and not for the protection of security
holders. To the extent that the following information describes statutory and regulatory
provisions, it is qualified in its entirety by reference to the particular statutory and regulatory
provisions. A change in applicable statutes, regulations or regulatory policy may have a material
adverse effect on the business, assets or results of operations of the Company.
The Company
. The Company is registered as a bank holding company and has elected to
be a financial holding company under the Bank Holding Company Act of 1956, as amended (the BHC
Act), and is therefore subject to supervision and regulation by the Board of Governors of the
Federal Reserve System (the FRB). For a discussion of regulations applicable to a financial
holding company, see Gramm-Leach-Bliley Act.
Under the BHC Act, the Company is required to secure the prior approval of the FRB before it
can merge or consolidate with any other bank holding company or acquire all or substantially all of
the assets of any bank that is not already majority owned by it or acquire direct or indirect
ownership, or control of, any voting shares of any bank that is not already majority owned by it,
if after such acquisition it would directly or indirectly own or control more than 5% of the voting
shares of such bank.
The Company is generally prohibited under the BHC Act from engaging in, or acquiring direct or
indirect ownership or control of more than 5% of the voting shares of any company engaged in
non-banking activities unless the FRB, by order or regulation, has found such activities to be so
closely related to banking or managing or controlling banks as to be a proper incident thereto. In
making such determination, the FRB considers whether the performance of these activities by a bank
holding company can reasonably be expected to produce benefits to the public that outweigh the
possible adverse effects.
Satisfactory financial condition, particularly with regard to capital adequacy, and
satisfactory Community Reinvestment Act (CRA) ratings are generally prerequisites to obtaining
federal regulatory approval to make acquisitions and open branch offices. As of December 31, 2007,
the Bank was rated satisfactory under the CRA and it was a well-capitalized bank as defined by
the Federal Deposit Insurance Corporation (FDIC).
The Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) contains a
cross-guarantee provision that could result in any insured depository institution owned by the
Company being assessed for losses incurred by the FDIC in connection with assistance provided to,
or the failure of, any
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other depository institution owned by the Company. Also, under FRB policy,
the Company is expected to act as a source of financial strength to each of its banking
subsidiaries and to commit resources to support each such bank in circumstances where such bank
might not be in a financial position to support
itself. Consistent with the source of strength policy for subsidiary banks, the FRB has stated
that, as a matter of prudent banking, a bank holding company generally should not maintain a rate
of cash dividends unless its net income available to common shareholders has been sufficient to
fully fund the dividends and the prospective rate of earnings retention appears to be consistent
with the corporations capital needs, asset quality and overall financial condition.
Under the BHC Act, the Company is required to file periodic reports and other information of
its operations with, and is subject to examination by the FRB. In addition, under the Pennsylvania
Banking Code of 1965, the Pennsylvania Department of Banking has the authority to examine the
books, records and affairs of any Pennsylvania bank holding company or to require any documentation
deemed necessary to ensure compliance with the Banking Code.
The Company is under the jurisdiction of the Securities and Exchange Commission and various
state securities commissions for matters relating to the offer and sale of its securities and is
subject to the Securities and Exchange Commissions rules and regulations relating to periodic
reporting, reporting to shareholders, proxy solicitation and insider trading.
There are various legal restrictions on the extent to which the Company and its non-bank
subsidiaries can borrow or otherwise obtain credit from its banking subsidiaries. In general, these
restrictions require that any such extensions of credit must be secured by designated amounts of
specified collateral and are limited, as to any one of the Company or such non-bank subsidiaries,
to ten percent of the lending banks capital stock and surplus, and as to the Company and all such
non-bank subsidiaries in the aggregate, to 20 percent of such lending banks capital stock and
surplus. Further, a bank holding company and its subsidiaries are prohibited from engaging in
certain tie-in arrangements in connection with any extension of credit, lease or sale of property
or furnishing of services.
In the course of our business, we may foreclose and take title to real estate, and could be
subject to environmental liabilities with respect to these properties. We may be held liable to a
governmental entity or to third parties for property damage, personal injury, investigation and
clean-up costs incurred by these parties in connection with environmental contamination, or may be
required to investigate or clean up hazardous or toxic substances, or chemical releases at a
property. The costs associated with investigation or remediation activities could be substantial.
In addition, if we are the owner or former owner of a contaminated site, we may be subject to
common law claims by third parties based on damages and costs resulting from environmental
contamination emanating from the property. If we become subject to significant environmental
liabilities, our business, financial condition, results of operations and cash flows could be
materially adversely affected.
Omega Bank
. Omega Bank, is a state bank chartered under the Pennsylvania Banking Code
of 1965, as amended and is a member of the Federal Reserve System. The Bank is subject to the
supervision of, and is regularly examined by both the Federal Deposit Insurance Corporation (FDIC)
and the Pennsylvania Department of Banking and is required to furnish quarterly reports to both
agencies. The approval of the Pennsylvania Department of Banking is required for the establishment
of additional branch offices. Under current Pennsylvania law, banking institutions, such as the
Bank, may establish branches within any county in Pennsylvania, subject to prior regulatory
approval.
Under the CRA, a bank has a continuing and affirmative obligation, consistent with its safe
and sound operation, to help meet the credit needs of its entire community, including low and
moderate income neighborhoods. The CRA does not establish specific lending requirements or programs
for financial institutions nor does it limit an institutions discretion to develop the types of
products and services that it believes are best suited to its particular community, consistent with
the CRA. The CRA requires the applicable regulatory agency to assess an institutions record of
meeting the credit needs of its community. The CRA requires public disclosure of an institutions
CRA rating and requires that the applicable regulatory agency provide a written evaluation of an
institutions CRA performance utilizing a four-tiered descriptive rating system. An institutions
CRA rating is considered in determining whether to grant charters, branches and other deposit
facilities, relocations, mergers, consolidations and acquisitions. Performance less than
satisfactory may be the basis for denying an application. For its most recent examinations, the
Bank received a satisfactory rating.
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Omega Bank is a member of the FDIC and a member of the Federal Reserve System and, therefore,
is subject to additional regulation by these agencies. Some of the aspects of the lending and
deposit business of the Bank that are regulated by these agencies include personal lending,
mortgage lending and reserve requirements.
The operations of the Bank are also subject to numerous Federal, state and local laws and
regulations which set forth specific restrictions and procedural requirements with respect to
interest rates on loans, the extension of credit, credit practices, the disclosure of credit terms
and discrimination in credit transactions. The Bank also is subject to certain limitations on the
amount of cash dividends that it can pay. See Note 23 of Notes to the Companys Consolidated
Financial Statements, contained in the Companys 2007 Annual Report to Shareholders filed as
Exhibit 13.1.
Deposits of the Bank are insured up to applicable limits by the FDIC and are subject to
deposit insurance assessments to maintain the Deposit Insurance Fund. The insurance assessments are
based upon a matrix that takes into account a banks capital level and supervisory rating.
Capital
Regulation.
The Company and the Bank are subject to risk-based capital
standards by which all bank holding companies and banks are evaluated in terms of capital adequacy.
These standards relate a banking companys capital to the risk profile of its assets. The
risk-based capital standards require that bank holding companies and banks must have Tier 1 capital
of at least 4% and total capital, including Tier 1 capital, equal to at least 8% of its total
risk-adjusted assets. Tier 1 capital includes common stockholders equity and qualifying perpetual
preferred stock together with related surpluses and retained earnings. The remaining portion of
this capital standard, known as Tier 2 capital, may be comprised of limited life preferred stock,
qualifying subordinated debt instruments, and the reserves for possible loan losses.
Additionally, banking organizations must maintain a minimum leverage ratio of 3% measured as
the ratio of Tier 1 capital to adjusted average assets. This 3% leverage ratio is a minimum for
the top-rated banking organizations without any supervisory, financial or operational weaknesses or
deficiencies and other banking organizations are expected to maintain leverage capital ratios 100
to 200 basis points above the minimum depending on their financial condition.
See Note 23 of Notes to the Companys Consolidated Financial Statements, contained in the
Companys Annual Report, for a table that provides a comparison of Omegas and the Banks risk
based capital ratios and the leverage ratio to minimum regulatory requirements.
Federal Banking Agencies have broad powers to take corrective action to resolve problems of
insured depository institutions. The extent of these powers depends upon whether the institutions
in question are well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized, or critically undercapitalized. As of December 31, 2007, the Bank was a
well-capitalized bank as defined by the FDIC.
Other.
Central Pennsylvania Life Insurance Co., Mid-Penn Insurance Associates and
Omega Insurance Agency, Inc. are subject to regulation by applicable state insurance regulatory
authorities. The Companys non-bank subsidiaries are subject to the laws and regulations of both
the federal government and various states in which they conduct business.
Gramm-Leach-Bliley Act
On November 12, 1999 the Gramm-Leach-Bliley Act (the Act) became law, repealing the 1933
Glass-Steagall Acts separation of the commercial and investment banking industries. The Act
expands the range of nonbanking activities a bank holding company may engage in, while preserving
existing authority for bank holding companies to engage in activities that are closely related to
banking. The legislation creates a category of holding company called a financial holding
company, a subset of bank holding companies that satisfy the following criteria: (1) all of the
depository institution subsidiaries must be well capitalized and well managed and (2) the holding
company must have made an effective election to be a financial holding company to engage in
activities that would not have been permissible before the Act. In order for the election to be
effective, all of the depository institution subsidiaries must have a CRA rating of satisfactory
or better at its most recent examination. Omegas election to be a financial holding company became
effective on February 21, 2002. Financial holding companies may engage in any
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activity that (i) is financial in nature or incidental to such financial activity or (ii) is complementary to a
financial activity and does not pose a substantial risk to the safety and soundness of depository
institutions or the financial system generally. The Act specifies certain activities that are
financial in nature. These activities include: acting as principal, agent or broker for insurance; underwriting, dealing in or
making a market in securities; and providing financial and investment advice. The Federal Reserve
Board and the Secretary of the Treasury have authority to decide whether other activities are also
financial in nature or incidental to financial activity, taking into account changes in technology,
changes in the banking marketplace, competition for banking services and so on.
Omega may engage directly or indirectly in activities considered financial in nature, either
de novo or by acquisition, as long as it gives the FRB after-the-fact notice of the new activities
If any banking subsidiary of Omega ceases to be well capitalized or well managed under
applicable regulatory standards, the FRB may, among other things, place limitations on Omegas
ability to conduct the broader financial activities permissible for financial holding companies or,
if the deficiencies persist, require Omega to divest the banking subsidiary. In addition, if any
banking subsidiary of Omega receives a CRA rating of less than satisfactory, Omega would be
prohibited from engaging in any additional activities other than those permissible for bank holding
companies that are not financial holding companies.
The financial activities authorized by the Act may also be engaged in by a financial
subsidiary of a national or state bank, except for insurance or annuity underwriting, insurance
company portfolio investments, real estate investment and development, and merchant banking, which
must be conducted in a financial holding company. In order for the new financial activities to be
engaged in by a financial subsidiary of a national or state bank, the Act requires each of the
parent bank (and its sister-bank affiliates) to be well capitalized and well managed; the aggregate
consolidated assets of all of that banks financial subsidiaries may not exceed the lesser of 45%
of its consolidated total assets or $50 billion; the bank must have at least a satisfactory CRA
rating; and, if that bank is one of the 100 largest national banks, it must meet certain financial
rating or other comparable requirements.
The Act establishes a system of functional regulation, under which the federal banking
agencies will regulate the banking activities of financial holding companies and banks financial
subsidiaries, the Securities and Exchange Commission will regulate their securities activities and
state insurance regulators will regulate their insurance activities. The Act also provides new
protections against the transfer and use by financial institutions of consumers nonpublic,
personal information.
The foregoing discussion is qualified in its entirety by reference to the statutory provisions
of the Act and the related regulations, which are adopted by various government agencies pursuant
to the Act.
The rules governing the regulation of financial services institutions and their holding
companies are very detailed and technical. Accordingly, the above discussion is general in nature
and does not propose to be complete or to describe all the laws and regulations that apply to Omega
and its subsidiaries.
USA Patriot Act
Anti-terrorism legislation enacted under the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Patriot Act) expanded
the scope of anti-money laundering laws and regulations and imposed additional obligations on U.S.
financial institutions, including banks. These regulations include obligations to maintain
appropriate policies, procedures and controls, which are reasonably designed to detect and report
instances of money laundering and terrorist financing.
Failure to comply with the Patriot Acts requirements could have serious legal and financial
consequences for the institution. The Company has adopted appropriate polices, procedures and
controls to address compliance with the Patriot Act.
Sarbanes-Oxley Act of 2002
The Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) implemented a broad range of corporate
governance, accounting and reporting measures for companies that have securities registered under
the Securities Exchange Act of 1934, including publicly-held bank holding companies such as the
Company.
10
Sarbanes-Oxley created new requirements in the areas of financial disclosure and
corporate governance, including; (i) increased responsibility for the Chief Executive Officer and
the Chief Financial Officer with respect to the content of financial statements; (ii) new
requirements for audit committees, including independence, expertise, and responsibilities; (iii) new standards for auditors and regulation
of audits, including independence and the type of non-audit services that auditors may provide;
(iv) accelerated filing requirements for SEC reports; (v) disclosures concerning internal controls
and procedures; (vi) increased disclosure and reporting obligations for the reporting company and
their directors and executive officers; (vii) disclosure of a code of ethics; and (viii) a range of
new and increased civil and criminal penalties for fraud and other violations of the securities
laws.
NATIONAL MONETARY POLICY
In addition to being affected by general economic conditions, the earnings and growth of the
Bank and, therefore, the earnings and growth of the Company, are affected by the policies of
regulatory authorities, including the FRB, the FDIC and the State of Pennsylvania. An important
function of the FRB is to regulate the money supply and credit conditions. Among the instruments
used to implement these objectives are open market operations in U.S. government securities,
setting the discount rate and changes in reserve requirements against bank deposits. These
instruments are used in varying combinations to influence overall growth and distribution of
credit, bank loans, investments and deposits, and their use may also affect interest rates charged
on loans or paid on deposits.
The monetary policies and regulations of the FRB have had a significant effect on the
operating results of commercial banks in the past and are expected to continue to do so in the
future. The effects of such policies upon the future businesses, earnings and growth of the
Company cannot be predicted.
EMPLOYEES
As of December 31, 2007, the Company had a total of 606 full-time employees and 114
part-time employees.
ADDITIONAL INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the
SEC. So long as we are subject to the SECs reporting requirements, we will continue to furnish
the reports and other required information to the SEC.
You may read and copy any reports, statements and other information we file at the SECs
Public Reference Room at 100 F. Street, N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operations of the Public Reference Room. Our SEC
filings are also available on the SECs Internet site (http://www.sec.gov).
The Companys common stock is traded on the NASDAQ Global Select Market under the symbol
OMEF. You may also read reports, proxy statements and other information we file at the offices
of the National Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, DC 20006.
The Companys Internet address is www.omegafinancial.com. We make available free of charge on
www.omegafinancial.com our annual report on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after we
electronically file such material with, or furnish it to, the SEC.
In addition, we will provide the shareholders, at no cost, paper or electronic copies of our
reports and other filings made with the SEC (except for exhibits). Requests should be directed to
David S. Runk, Corporate Secretary, 366 Walker Drive, State College, PA 16801.
The information on the websites listed above, is not and should not be considered to be part
of this annual report on Form 10-K and is not incorporated by reference in this document.
Item 1A. Risk Factors
Unless the context indicates otherwise, all references to we, us, our in this subsection
Risk Factors refer to the Company and the Bank. You should carefully consider the risks
described below as well as elsewhere in this Annual Report on Form 10-K or in our Annual Report to
Shareholders. If any of
11
the risks actually occur, our business, financial condition and results of
future operations could be materially adversely affected. This Annual Report on Form 10-K contains
forward-looking statements that involve risk and uncertainties. Our actual results could differ
materially from those anticipated in the forward-looking statements as a result of many factors, including the risks faced by us
described below and elsewhere in this Annual Report on Form 10-K or in our Annual Report to
Shareholders.
We may be adversely affected by changes in economic and political conditions and by
governmental monetary and fiscal policies.
The commercial banking industry is affected, directly and indirectly, by local, domestic, and
international economic and political conditions, and by governmental monetary and fiscal policies.
Conditions such as inflation, recession, unemployment, volatile interest rates, tight money supply,
real estate values, international conflicts and other factors beyond our control may adversely
affect our potential profitability. Economic downturns may adversely affect loan demand and could
result in the delinquency of outstanding loans. We do not expect any one particular factor to
materially affect our results of operations. However, downtrends in several areas, including real
estate, construction and consumer spending, could have a material adverse impact on our ability to
remain profitable.
Changes in interest rates could adversely affect our financial condition and results of
operations.
The operations of financial institutions, such as us, are dependent to a large degree on net
interest income, which is the difference between interest income from loans and investments and
interest expense on deposits and borrowings. Our net interest income is significantly affected by
market rates of interest that in turn are affected by prevailing economic conditions, by the fiscal
and monetary policies of the federal government and by the policies of various regulatory agencies.
At December 31, 2007, total interest earning liabilities maturing or re-pricing within one year
exceeded total interest bearing assets maturing or re-pricing during the same time period by $145.3
million, representing a cumulative one-year sensitivity ratio of 0.80. Simulation of interest rate
changes suggests that if interest rates immediately decreased 100 basis points, our net interest
income would likely decrease .66% over the next twelve months. Like all financial institutions, our
balance sheet is affected by fluctuations in interest rates. We closely monitor the sensitivity of
our net interest income to changes in interest rates and attempt to limit the variability. We
attempt to manage such risk by modifying investment, lending, funding or pricing strategies.
Volatility in interest rates can also result in disintermediation, which is the flow of funds away
from financial institutions into direct investments, such as US Government and corporate securities
and other investment vehicles, including mutual funds, which, because of the absence of federal
insurance premiums and reserve requirements, generally pay higher rates of return than financial
institutions.
Most of our loans are secured by real estate located in our market area. If there is a
downturn in our real estate market, these borrowers may default on their loans and we may not be
able to fully recover our loans.
The national downturn in the housing market has not affected our local market area, but if it
did, our business would be adversely affected because most of our loans are secured by real estate.
As of December 31, 2007, approximately 75.2% of the book value of our loan portfolio consisted of
loans collateralized by various types of real estate. Substantially all of our real property
collateral is located in central and northeastern Pennsylvania. Real estate values and real estate
markets are generally affected by changes in national, regional or local economic conditions,
fluctuations in interest rates and the availability of loans to potential purchasers, changes in
tax laws and other governmental statutes, regulations and policies and acts of nature. If real
estate prices decline, the value of real estate collateral securing our loans could be reduced. Our
ability to recover on defaulted loans by foreclosing and selling the real estate collateral would
then be diminished and we would be more likely to suffer losses on defaulted loans. Any such
downturn could have a material adverse effect on our business, financial condition and results of
operations.
We are exposed to risk of environmental liabilities with respect to properties to which we
take title.
In the course of our business, we may foreclose and take title to real estate, and could be
subject to environmental liabilities with respect to these properties. We may be held liable to a
governmental entity or to third parties for property damage, personal injury, investigation and
clean-up costs incurred by these parties in connection with environmental contamination, or may be
required to investigate or clean up hazardous or toxic substances, or chemical releases at a
property. The costs associated with
12
investigation or remediation activities could be substantial.
In addition, if we are the owner or former owner of a contaminated site, we may be subject to
common law claims by third parties based on damages and costs resulting from environmental
contamination emanating from the property. If we become subject to significant environmental liabilities, our business, financial condition,
results of operations and cash flows could be materially adversely affected.
The geographic concentration of our operations in central and northeastern Pennsylvania makes
our business highly susceptible to local economic conditions, and an economic downturn or recession
in Pennsylvania may adversely affect our ability to operate profitably.
Unlike larger banking organizations that are more geographically diversified, our operations
are currently concentrated in central and northeastern Pennsylvania. In addition, almost all of our
loans have been made to borrowers located in this area. As a result of this geographic
concentration in the Pennsylvania market, our financial results depend largely upon economic
conditions in this market area. A deterioration or recession in economic conditions in this market
could result in one or more of the following:
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an increase in loan delinquencies;
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an increase in problem assets and foreclosures;
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a decrease in the demand for our products and services; and
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a decrease in the value of collateral for loans, especially real estate, and reduction in the customers borrowing power.
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Any of the foregoing factors may adversely affect our ability to operate profitably.
We are subject to federal and state regulation and the monetary policies of the Federal
Reserve Board. Such regulation and policies can have a material adverse effect on our earnings and
prospects.
Our operations are heavily regulated and will be affected by present and future legislation
and by the policies established from time to time by various federal and state regulatory
authorities. In particular, the monetary policies of the Federal Reserve Board have had a
significant effect on the operating results of banks in the past, and are expected to continue to
do so in the future. Among the instruments of monetary policy used by the Federal Reserve Board to
implement its objectives are changes in the discount rate charged on bank borrowings and changes in
the reserve requirements on bank deposits. It is not possible to predict what changes, if any,
will be made to the monetary polices of the Federal Reserve Board or to existing federal and state
legislation or the effect that such changes may have on our future business and earnings prospects.
We have established an allowance for loan losses based on our managements estimate. Actual
losses could differ significantly from those estimates. If the allowance is not adequate, it could
have a material adverse effect on our earnings and the price of our stock.
We have established an allowance for loan losses which management believes to be adequate to
offset probable losses on our existing loans. At December 31, 2007, we allocated $1.8 million of
the loan loss reserve to one large commercial borrower who is in the bankruptcy re-organization
process. We estimated and provided for known exposures for this $15.1 million loan; however
evaluations of the credit continue. Because there is no precise method of estimating loan losses,
our ongoing analysis of loan losses may cause our estimates to change in the future and, therefore,
actual losses resulting from our loans may differ materially from our initial estimates. Moreover,
there can be no assurance that any future declines in real estate market conditions, general
economic conditions or changes in regulatory policies will not require us to increase our allowance
for loan losses with respect to the $15.1 million loan described above or other loans in our
portfolio. Any increase in the allowance for loan losses will reduce our earnings and may
adversely affect the price of our common stock.
Competition with a number of local, regional and national financial institutions for customers
could adversely affect our profitability
.
We face strong competition from other banks, savings institutions and other financial
institutions that have branch offices or otherwise operate in our market area, as well as many
other companies now offering a range of financial services. Many of these competitors have substantially greater financial
13
resources and larger branch systems than we do. In addition, many of our competitors have higher legal
lending limits than we do. Particularly intense competition exists for sources of funds including savings
and retail time deposits and for loans, deposits and other services that we offer. During the past several
years, significant legislative attention has been focused on the regulation and deregulation
of the financial services industry. Non-bank financial institutions, such as securities brokerage
firms, insurance companies and money market funds, have been permitted to engage in activities that
compete directly with traditional bank business. Competition with various financial institutions
could hinder our ability to maintain profitable operations and grow our business.
Our information systems may experience an interruption or breach in security, which could
result in a loss of business.
We rely heavily on communications and information systems to conduct our business. While we
have policies and procedures designed to prevent or limit the effect of the failure, interruption
or security breach of our information systems, there can be no assurance that failures,
interruptions or security breaches will not occur or, if they do occur, that they will be
adequately addressed. Any failure, interruption or breach in security of these systems could result
in failures or disruptions in our customer relationship management, general ledger, deposit, loan
and other systems. The occurrence of any failures, interruptions or security breaches of our
information systems could damage our reputation, result in a loss of customer business, subject us
to additional regulatory scrutiny, or expose us to civil litigation and possible financial
liability, any of which could have a material adverse effect on our financial condition and results
of operations. We depend on third-party providers for many of our systems and if these providers
experience financial, operational or technological difficulties, or if there is any other
disruption in our relationships with them, we may be required to locate alternative sources of such
services, and we cannot assure you that we would be able to negotiate terms that are as favorable
to us, or could obtain services with similar functionality as found in our existing systems without
the need to expend substantial resources, if at all.
We continually encounter technological change, and, if we are unable to develop and implement
efficient and customer friendly technology, we could lose business.
The banking industry is continually undergoing rapid technological change with frequent
introductions of new technology-driven products and services. The effective use of technology
increases efficiency and enables financial institutions to better serve customers and to reduce
costs. Our future success depends, in part, upon our ability to address the needs of our customers
by using technology to provide products and services that will satisfy customer demands, as well as
to create additional efficiencies in our operations. Many of our competitors have substantially
greater resources to invest in technological improvements. Such technology may permit competitors
to perform certain functions at a lower cost than us. There can be no assurance that we will be
able to effectively implement new technology-driven products and services or be successful in
marketing these products and services to our customers. Failure to successfully keep pace with
technological change affecting the financial services industry could have a material adverse impact
on our business and, in turn, our financial condition and results of operations.
There can be no assurance that we will continue to pay dividends in the future.
Although we expect to continue our policy of regular quarterly dividend payments, this
dividend policy will be reviewed periodically in light of future earnings, regulatory restrictions
and other considerations. No assurance can be given, therefore, that cash dividends on common
stock will be paid in the future at the same rate or at all.
An investment in our common stock is not insured against loss.
Investments in the shares of our common stock are not deposits insured against loss by the
FDIC or any other entity. As a result, you may lose some or all of your investment.
There is not presently an active market for shares of our common stock, and, therefore, you
may be unable to sell any shares of common stock in the event that you need a source of liquidity.
Although our common stock is listed on the NASDAQ Global Select Market, the trading in our
common stock has substantially less liquidity than the trading in the securities of many other
companies listed on that market. A public trading market in the securities having the desired
characteristics of depth, liquidity and orderliness depends on the presence in the market of
willing buyers and sellers of our
14
securities at any time. This presence depends on the individual
decisions of investors and general economic and market conditions over which we have no control.
There can be no assurance that a regular and active market for our common stock will develop in the
foreseeable future. In the event an active market for the securities does not develop, you may be unable to resell your shares of
common stock at or above the price you pay for them or at any price.
Our success depends on members of our senior management team and if we are not able
to retain them, it could have a materially adverse effect on us.
We are highly dependent upon the continued services and experience of our senior management
team. We depend on the services of our senior management team to, among other things, continue the
development and implementation of our strategies, and maintain and develop our client
relationships.
Continuing as an independent organization would be difficult if the pending merger between
Omega Financial Corporation and FNB Corporation does not occur.
In November 2007, the Board of Directors of Omega approved the acquisition of Omega by FNB
Corporation, based in Hermitage, Pennsylvania. Terms of the agreement call for the exchange of
2.022 shares of FNB Corporation stock for each share of Omega stock. The acquisition will be voted
upon by Omega stockholders at a Special Meeting of the shareholders scheduled for March 19, 2008,
and is expected to be finalized on April 1, 2008 subject to regulatory and shareholder approval.
If the merger with FNB Corporation does not occur, Omega would experience stress on
its operations, due to the cancellation of several key vendor contracts as well as the departure of
numerous employees.
Item 1B. Unresolved Staff Comments
The Company, like other issuers, from time to time receives written comments from
the staff of the SEC regarding its periodic or current reports under the Securities Exchange Act of
1934. There are no comments that remain unresolved that the Company received not less than 180
days before the end of its fiscal year to which this report relates.
Item 2: Properties
The Companys headquarters are located at 366 Walker Drive, State College,
Pennsylvania. This building is owned by the Company, and it occupies the first two floors and a
portion of the third floor of this building and is leasing office space on the third floor. In
addition, the Bank operates branch offices and/or automated teller machines, indicated by (ATM), at
the following locations that are owned by the Company.
Omega Bank
117 South Allen Street, State College, PA (ATM)
222 South Allen Street, State College, PA (ATM and drive up only)
1480 East College Ave., State College, PA (ATM Only)
2591 Park Center Boulevard, State College, PA (ATM)
137 North Allegheny Street, Bellefonte, PA (ATM)
Fourth and Olive Streets, Snow Shoe, PA
121 W. Main Street, Rebersburg, PA
101 E. Main Street, Millheim, PA
400 East Boal Avenue, Boalsburg, PA (ATM)
100 High Street, Port Matilda, PA (ATM)
Main and Mill Streets, Loganton, PA
201 Mill Street, Milesburg, PA
32 East Market St., Lewistown, PA (ATM)
1250 West Fourth St., Lewistown, PA
Wal-Mart, Route 522, Lewistown, PA (ATM Only)
111 North Logan Blvd., Burnham, PA (ATM)
Main and Juniata Streets, Mifflin, PA
Main and Mill Streets, Thompsontown, PA
10 Carriage House Lane, Reedsville, PA (ATM)
109 East Main Street, Allensville, PA
366 Walker Drive, State College, PA (ATM Only)
15
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218 - 224 Allegheny Street, Hollidaysburg, PA
113 West Allegheny Street, Martinsburg, PA (ATM)
215 High Street, Williamsburg, PA
1567 East Pleasant Valley Boulevard, Altoona, PA (ATM)
430 East 25th Avenue, Altoona, PA (ATM)
431 Penn Street, Huntingdon, PA
16-20 East Shirley Street, Mount Union, PA (ATM)
Main Street, Alexandria, PA
911 Church Street, Saxton, PA
8
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and Main Street, Saxton, PA (ATM only)
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and Moore Streets, Huntingdon, PA (ATM)
2 South Market Street, Selinsgrove, PA (ATM)
108 West Pine Street, Selinsgrove, PA (ATM Only)
2625 N. Susquehanna Trail, Shamokin Dam, PA (ATM)
Market and Plum Streets, New Berlin, PA (ATM)
11 South Second Street, Sunbury, PA (ATM)
Route 522 and Dock Hill Road, Middleburg, PA (ATM)
300 Main Street, Watsontown, PA (ATM)
96 Duke Street, Northumberland, PA (ATM)
311 Market Street, Lewisburg, PA (ATM)
40 Bellefonte Avenue, Lock Haven, PA (ATM)
349 Main Street, Mill Hall, PA
10 South Market Street, Shamokin, PA (ATM)
35 East Main Street, Nanticoke, PA (ATM)
46 South Mountain Boulevard, Mountain Top, PA (ATM)
2378 State Route 118, Hunlock Creek, PA (ATM)
639 South Main Street, Wilkes Barre, PA (ATM) (closing April 30, 2008)
120 Highland Park Boulevard, Wilkes Barre, PA (ATM)
90 Maynard Street, Williamsport, PA (ATM)
2131 West Fourth Street, Williamsport, PA (ATM)
3155 Lycoming Creek Road, Williamsport, PA (ATM Only)
2 South Main Street, Hughesville, PA (ATM)
301 Broad Street, Montoursville, PA (ATM)
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The Bank operates branch offices and ATMs at the following locations that are leased by the
Company. The leases for these properties have expiration dates ranging from 2008 to 2024.
Branches
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460 Westerly Parkway, State College, PA (ATM)
1811 South Atherton Street, State College, PA (ATM) building owned, land leased.
1667 North Atherton Street, State College, PA (ATM) building owned, land leased.
366 East College Avenue, State College, PA (ATM Only)
Routes 45 and 144, Centre Hall, PA (ATM) building owned, land leased.
520 Third Avenue, Duncansville, PA (ATM)
3014 Pleasant Valley Boulevard, Altoona, PA (ATM)
98 Nason Drive, Roaring Spring, PA (ATM)
5812 Sixth Avenue, Altoona, PA (ATM) building owned, land leased.
1402 Logan Avenue, Tyrone, PA (ATM) building owned, land leased.
Morrisons Cove Home, 429 South Market Street, Martinsburg, PA
Westminster Woods, 360 Westminster Woods Drive, Huntingdon, PA
Foxdale Village, 500 Marylyn Avenue, State College, PA
205 Park Place, Bellefonte, PA (ATM) (Closing April 30, 2008)
5
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and Penn Streets, Huntingdon, PA (ATM)
7409 Westbranch Highway, Lewisburg, PA (ATM)
814 Westminster Drive, Williamsport, PA (ATM) (Closing April 30, 2008)
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ATMs
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Weis Shopping Plaza, Mifflintown, PA
414 East College Avenue, State College, PA
Penns Cave, Penns Cave Road, Centre Hall, PA
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Interstate 80 Exit 147 and Route 144, Snow Shoe, PA
Martin General Store, Route 22, Alexandria, PA
Martin General Store, 300 High Street, Williamsburg, PA
Service Mart of Mifflin, 2 Mowery Street, Mifflin, PA
Loganton Country Store, 21 East Main Street, Loganton, PA
A Plus Convenience Store, 522 Allegheny St., Hollidaysburg, PA
Lewistown Hospital, 400 Highland Ave., Lewistown, PA
284 Hogan Boulevard, Lock Haven, PA
Dunkin Donuts, 859 New Berwick Highway, Bloomsburg, PA
1 College Avenue, Williamsport, PA
Dunkin Donuts, Routes 11 and 15, Hummels Wharf, PA
Dunkin Donuts, Route 15, Lewisburg, PA
Susquehanna University, Selinsgrove, PA
Variety Stop, 15 East Main Street, Glen Lyon, PA
Pump N Pantry, Routes 118 and 29, Hunlock Creek, PA
Brodart, 500 Arch Street, Williamsport, PA
Pump N Pantry, Montrose, PA
Pump N Pantry, 620 State Route 29 South, Tunkhannock, PA
Pump N Pantry, Exit 230 Interstate 80, Great Bend, PA
Pump N Pantry, Exit 233, New Milford, PA
Pump N Pantry, 58 North Main Street, Lawrenceville, PA
Pump N Pantry, 1 North Main Street, Tioga, PA
Pump N Pantry, State Route 307, Lake Winola, PA
Pump N Pantry Exit 211 Interstate 80, Kingsley, PA
Pump N Pantry, 622 State Route 6 West, Tunkhannock, PA
Pump N Pantry, Route 11, Nicholson, PA
Pump N Pantry, 114 N German Street, Dushore, PA
Pump N Pantry, RR2 Box 3360, Canton, PA
Pump N Pantry, 1229 West Main Street, Stroudsburg, PA
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Other
The Company also leases buildings and/or office space for several of its
subsidiaries including: Pittston offices for Bank Capital Services Corporation, and Sunbury, PA
office for Mid-Penn Insurance Associates. The Bank also leases office space in Bedford, PA for a
Trust Services office.
Item 3: Legal Proceedings
The Company and the Bank are involved in various legal proceedings incidental to their
business. Neither the Company, the Bank nor any of their properties are subject to any material
legal proceedings, nor are any such proceedings known to be contemplated by any governmental
authority.
Item 4:
Submission of Matters to a Vote of Security Holders
None
PART II
Item 5:
Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Incorporated by reference from the section entitled Common Stock Market Prices and Dividends
in the Companys Annual Report to Shareholders for the year ended December 31, 2007 attached hereto
as exhibit 13.1.
The Company did not sell any equity securities during 2007 that were not registered under the
Securities Act of 1933.
For information concerning Omegas Equity Compensation Plans, see Item 12: Security Ownership of
Certain Beneficial Owners and Management and Related Stockholder Matters, which is incorporated
herein by reference.
17
On January 23, 2006, the Board of Directors approved a share repurchase program to begin
immediately, authorizing management to buy back up to 10% of Omegas outstanding common stock. At
that time, there were 12,604,477 shares of common stock outstanding with 1,260,447 shares eligible
to be repurchased. This program remained in effect through December 31, 2007. As a result of the
proposed merger with FNB Corporation, it is not anticipated that additional shares will be
repurchased under this program. At December 31, 2007, 167,547 shares were repurchased in
conjunction with this program, at an average cost of $30.72 per share. There were no shares
repurchased in the fourth quarter of 2007.
Item 6: Selected Financial Data
Incorporated by reference from the section entitled Selected Financial Data in the Companys
Annual Report to Shareholders for the year ended December 31, 2007 attached hereto as exhibit 13.1.
Item 7: Managements Discussion and Analysis of Financial Condition and Results of
Operations
Incorporated by reference from the section entitled Managements Discussion and Analysis of
Financial Condition and Results of Operations in the Companys Annual Report to Shareholders for
the year ended December 31, 2007 attached hereto as exhibit 13.1.
Item 7A: Quantitative and Qualitative Disclosures about Market Risk
Incorporated by reference from the section entitled Managements Discussion and Analysis of
Financial Condition and Results of Operations Market Risk in the Companys Annual Report to
Shareholders for the year ended December 31, 2007 attached hereto as exhibit 13.1.
Item 8: Financial Statements and Supplementary Data
Incorporated by reference from the Companys Consolidated Financial Statements and the Notes
to Consolidated Financial Statements thereto included in the Companys Annual Report to
Shareholders for the year ended December 31, 2007 attached hereto as exhibit 13.1.
Item 9: Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
Not applicable.
Item 9A: Controls and Procedures
Preceding the Companys financial statements and included in the Companys Annual Report which
is attached as exhibit 13.1 to this Form 10-K is the Report of Management on Internal Control Over
Financial Reporting; incorporated herein by reference and Report on Effectiveness of Internal
Control Over Financial Reporting of Ernst & Young LLP, the Companys independent registered public
accounting firm incorporated herein by reference. This section should be read in conjunction with
the managements and Ernst & Young LLPs reports for a more complete understanding of the topics
presented.
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
The Companys management, with the participation of its chief executive officer and chief
financial officer, conducted an evaluation, as of December 31, 2007, of the effectiveness of the
Companys disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)). Based on
this evaluation, the Companys CEO and CFO concluded that, as of the end of the period covered by
this annual report, the Companys disclosure controls and procedures were effective in reaching a
reasonable level of assurance that (i) information required to be disclosed by the Company in the
reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the Securities and Exchange
Commissions rules and forms and (ii) information required to be disclosed by the Company in its
reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to its management, including its principal executive
and principal financial officers, or persons performing similar functions as appropriate to allow
timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
The Companys management, with the participation of the Companys chief executive officer and chief
financial officer, also conducted an evaluation of the Companys internal control over financial
reporting, as defined in Exchange Act Rule 13a-15(f), to determine whether any changes occurred
during the quarter ended December 31, 2007 that have materially affected, or are reasonably likely
to materially
18
affect, the Companys internal control over financial reporting.
Based on that evaluation, there was no such change during the quarter ended December 31, 2007.
A control system, no matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met. Further, the design of a
control system must reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if
any, within the Company have been detected. The Company conducts periodic evaluations of its
controls to enhance, where necessary, its procedures and controls. Because of the inherent
limitations in a cost-effective control system, misstatements due to error or fraud may occur and
not be detected.
Item 9B. Other Information
In connection with the annual employee compensation review in December 2007, the Compensation
Committee set the salaries for the following named executive officers for 2008. In addition, on
December 21, 2007, the Compensation Committee determined the bonus payable to such named executive
officers under Omegas Executive Incentive Compensation Plan for services rendered in 2007, as
follows:
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Named Executive Officer
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2008 Annual Salary
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2007 Bonus
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Donita R. Koval,
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$
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321,360
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$
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131,064
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President and Chief Executive Officer
of Omega and Omega Bank
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|
|
Daniel L. Warfel,
|
|
$
|
240,900
|
|
|
$
|
100,584
|
|
Executive Vice President and Chief
Financial Officer of Omega and Omega
Bank
|
|
|
|
|
|
|
|
|
David S. Runk,
|
|
$
|
174,552
|
|
|
$
|
73,152
|
|
Executive Vice President of Omega and
Executive Vice President and Chief
Operating Officer of Omega Bank
|
|
|
|
|
|
|
|
|
PART III
Item 10: Directors, Executive Officers and Corporate Governance
Incorporated by reference from the Companys Proxy Statement relating to the 2008 Annual
Meeting of Shareholders to be filed pursuant to General Instruction G(3) to Form 10-K, except
information concerning certain Executive Officers of the Company which is set forth below.
19
Set forth below is certain information concerning the executive officers of the Company who are not
directors.
On March 18, 1995, Omegas banking subsidiaries, Peoples National Bank of Central Pennsylvania
(Peoples Bank) and The Russell National Bank merged to form Omega Bank. Any reference below to
service with Omega Bank includes service with Omega Banks predecessors prior to such merger.
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
Daniel L. Warfel
|
|
|
61
|
|
|
Executive Vice President and Chief Financial
Officer of Omega since 1987; Executive Vice
President of Omega Bank since 1983.
|
|
|
|
|
|
|
|
David S. Runk
|
|
|
44
|
|
|
Executive Vice President of the Company since
June 2005; Executive Vice President and Chief
Operating Officer of Omega Bank since June
2005; Executive Vice President and Chief
Financial Officer of Kishacoquillas Bancorp,
Inc from March 1994 to June 2005.
|
20
Code of Ethics
The Board approved a Code of Ethics & Comprehensive Insiders Activity Policy (the Code)
applicable to the Companys directors, officers and employees, including Chief Executive Officer,
the Chief Financial Officer, the Corporate Controller and persons performing similar functions.
The Code is available for review on Omegas website at www.omegafinancial.com, under Company
Information/Investor Relations/Governance Documents links. Omega intends to satisfy the applicable
disclosure requirements under Item 5.05 of Form 8-K regarding an amendment to a provision of its
Code on its website, except as otherwise required by applicable Nasdaq requirements.
Item 11:
Executive Compensation
Incorporated by reference from the Companys Proxy Statement relating to the 2008 Annual
Meeting of Shareholders to be filed pursuant to General Instruction G(3) to Form 10-K.
21
Item 12: Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Incorporated by reference from the Companys Proxy Statement relating to the 2008 Annual
Meeting of Shareholders to be filed pursuant to General Instruction G(3) to Form 10-K.
The following table details information regarding Omegas existing equity compensation plans
as of December 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities
|
|
|
|
(a)
|
|
|
(b)
|
|
|
remaining available
|
|
|
|
Number of securities
|
|
|
Weighted-average
|
|
|
for future issuance
|
|
|
|
to be issued upon
|
|
|
exercise price of
|
|
|
under equity
|
|
|
|
exercise of
|
|
|
outstanding
|
|
|
compensation plans
|
|
|
|
outstanding options,
|
|
|
options, warrants
|
|
|
(excluding securities
|
|
Plan Category
|
|
warrants and rights
|
|
|
and rights
|
|
|
reflected in column (a))
|
|
Equity compensation plans
approved by security
holders
|
|
|
441,187
|
|
|
$
|
33.24
|
|
|
|
1,697,715
|
(1)
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans
not approved by security
holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
441,187
|
|
|
$
|
33.24
|
|
|
|
1,697,715
|
(1)
|
|
|
|
|
|
|
|
|
|
|
(1)Under Omegas 2006 Equity Incentive Plan, the aggregate number of shares of common stock
for which awards may be granted under that plan is subject to increase by the number of shares of
common stock that are issuable pursuant to option grants outstanding under Omegas 1996 Employee
Stock Option Plan and 2004 Stock Option Plan for Non-Employee Directors (collectively, the Old
Plans) as of April 24, 2006 that, but for the termination and/or suspension of the Old Plans,
would otherwise have reverted to the share reserve of the Old Plans pursuant to the terms of the
Old Plans as a result of the expiration, termination, cancellation or forfeiture of such options.
During the period from April 24, 2006 to December 31, 2007,
options to purchase 83,583 shares
issued under the Old Plans were forfeited and added to the share reserve of the 2006 Equity
Incentive Plan. As of December 31, 2007, options to purchase
441,187 shares of Common Stock were
outstanding under the Old Plans, which, if forfeited, would be added to the share reserve under the
2006 Equity Incentive Plan.
Item 13:
Certain Relationships and Related Transactions, and Director Independence
Incorporated by reference from the Companys Proxy Statement relating to the 2008 Annual
Meeting of Shareholders to be filed pursuant to General Instruction G(3) to Form 10-K.
22
Item 14:
Principal Accounting Fees and Services
Incorporated by reference from the Companys Proxy Statement relating to the 2008 Annual
Meeting of Shareholders to be filed pursuant to General Instruction G(3) to Form 10-K.
23
PART IV
Item 15: Exhibits, Financial Statement Schedules
(a) Documents filed as part of this report:
(1)
Financial Statements
. The following consolidated financial statements and the
notes thereto of the Company, which are included in the Companys Annual Report to Shareholders for
the year ended December 31, 2007, and the report of independent public accountants which is also
included in such Annual Report, are incorporated by reference into Item 8 of this Report:
Consolidated Balance Sheets -
December 31, 2007 and 2006
Consolidated Statements of Income
Years ended December 31, 2007, 2006 and 2005
Consolidated Statements of Shareholders Equity -
Years ended December 31, 2007, 2006 and 2005
Consolidated Statements of Cash Flows
Years ended December 31, 2007, 2006 and 2005
Notes to Consolidated Financial Statements
Report of Independent Certified Public Accountants
(2)
Financial Statement Schedules
. Financial statement schedules are omitted because
they are not applicable or the required information is shown in the financial statements or notes
thereto.
Exhibits
filed pursuant to Item 601 of Regulation S-K
|
|
|
Number
|
|
Title
|
2.1(14)
|
|
Agreement and Plan of Merger with Sun Bancorp
|
2.2(20)
|
|
Agreement and Plan of Merger with FNB Corporation
|
3.1(1)
|
|
Amended and Restated Articles of Incorporation of Omega
|
3.2(4)
|
|
Articles of Amendment to the Amended and Restated Articles of
Incorporation.
|
3.3(7)
|
|
Articles of Amendment to the Amended and Restated Articles of
Incorporation
|
3.4(22)
|
|
Articles of Amendment to the Amended and Restated Articles of Incorporation
|
3.5(18)
|
|
Amended and Restated By-Laws of Omega
|
*10.2(2)
|
|
Peoples (now Omega) Stock Option Plan (1986).
|
*10.2(5)
|
|
Amendment No. 1 to Stock Option Plan (1986).
|
*10.3(3)
|
|
Omega Executive Incentive Compensation Plan.
|
10.4(5)
|
|
Purchase Agreement (with Exhibits) between Omega and Mid-State
Bank & Trust Company (Mid-State).
|
24
|
|
|
Number
|
|
Title
|
10.5(5)
|
|
Assignment of Promissory Note from Omega to Mid-State together with
$5,000,000 Secured Promissory Note of Omega Financial Corporation Employee
Stock Ownership Plan Trust (ESOP Trust).
|
10.6(5)
|
|
Pledge and Security Agreement between Omega and the ESOP Trust.
|
10.7(5)
|
|
Mortgage from Omega to Mid-State.
|
*10.8(6)
|
|
1994 Stock Option Plan for Non-Employee Directors
|
*10.9(7)
|
|
Directors Deferred Compensation Agreements for Peoples National Bank
and Omega Financial Corporation
|
*10.10(8)
|
|
1996 Employee Stock Option Plan
|
*10.11(9)
|
|
Omega Bank, National Association Amended and Restated Salary
Continuation Agreement with David B. Lee
|
*10.12(9)
|
|
Omega Bank, National Association Salary Continuation Agreement with Daniel Warfel
|
*10.13(10)
|
|
Omega Financial Corporation Employee Stock Ownership Plan (Restated
Effective January 1, 1997)
|
*10.14 (11)
|
|
Amendment No. 1 to Omega Employee Stock Ownership Plan
|
*10.15 (11)
|
|
Amendment No. 2 to Omega Employee Stock Ownership Plan
|
*10.16 (11)
|
|
Amendment No. 3 to Omega Employee Stock Ownership Plan
|
*10.17 (11)
|
|
Amendment No. 4 to Omega Employee Stock Ownership Plan
|
*10.18 (12)
|
|
Severance Agreement by and between Omega Financial Corporation and
Daniel L. Warfel
|
*10.19 (12)
|
|
Severance Agreement by and between Omega Financial Corporation and
Donita R. Koval
|
*10.20(12)
|
|
First Amendment to the Omega Bank, National Association Amended
and Restated Salary Continuation Agreement with David B. Lee
|
*10.21 (12)
|
|
Employment Agreement with David B. Lee
|
*10.22 (12)
|
|
First Amendment to the Omega Bank, National Association Amended
and Restated Salary Continuation Agreement with Daniel L. Warfel
|
*10.23 (12)
|
|
Omega Bank, National Association Salary Continuation Agreement with Donita Koval
|
*10.24(19)
|
|
Employment Agreement with Maureen Bufalino
|
*10.25
|
|
Description of Directors and Executive Officers Compensation (filed
herewith)
|
*10.26(16)
|
|
First Amendment to Employment Agreement with David B. Lee
|
*10.27(14)
|
|
2004 Stock Option Plan for Non-Employee Directors
|
25
|
|
|
Number
|
|
Title
|
*10.28(17)
|
|
2006 Equity Incentive Plan
|
*10.29(19)
|
|
First Amendment to Salary Continuation Agreement for Donita Koval
|
*10.30(19)
|
|
Second Amendment to Salary Continuation Agreement for Daniel Warfel
|
*10.31(21)
|
|
Amendment to Severance Agreement for Donita Koval
|
*10.32(21)
|
|
Amendment to Severance Agreement for Daniel Warfel
|
*10.33(21)
|
|
Amended and Restated Salary Continuation Agreement for Donital Koval
|
*10.34(21)
|
|
Amended and Restated Salary Continuation Agreement for Daniel Warfel
|
*10.35(23)
|
|
Form of Restricted Stock
Unit
|
13.1
|
|
Annual Report to Shareholders for the year ended December 31, 2007 (such
report, except for those portions expressly incorporated by reference in
this Annual Report on Form 10-K, is furnished for the information of the
Commission and is not to be deemed filed as part of this Report).
|
14.1(19)
|
|
Omega Financial Corporation Code of Ethics and Comprehensive Insiders
Activities Policy
|
21.1
|
|
Subsidiaries of Omega Financial Corporation (filed herewith)
|
23.1
|
|
Consent of Ernst & Young LLP (filed herewith)
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) Rule
15(d)-14(a) of the Securities Exchange Act of 1934, as amended (filed
herewith)
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) Rule
15(d)-14(a) of the Securities Exchange Act of 1934, as amended (filed
herewith)
|
32.1
|
|
Certification of Chief Executive Officer and Chief Financial Officer
pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. (filed herewith)
|
|
|
|
*
|
|
Indicates management contract or compensatory plan, contract or arrangement.
|
|
(1)
|
|
Incorporated by reference from Omegas (formerly Peoples) Annual Report on Form 10-K
for the year ended December 31, 1986.
|
|
(2)
|
|
Incorporated by reference from Omegas (formerly Peoples Registration Statement on Form
S-4 (File No. 33-9045).
|
|
(3)
|
|
Incorporated by reference from Omegas Annual Report on Form 10-K for the year ended
December 31, 1988.
|
|
(4)
|
|
Incorporated by reference from Omegas Quarterly Report on Form 10-Q for the period
ended June 30, 1990.
|
|
(5)
|
|
Incorporated by reference from Omegas Annual Report on Form 10-K for the year ended
December 31, 1990.
|
|
(6)
|
|
Incorporated by reference from Omegas Registration Statement on Form S-8 (Registration
No. 33-82214).
|
|
(7)
|
|
Incorporated by reference from Omegas Annual Report on Form 10-K for the year ended
December 31, 1994.
|
26
|
|
|
(8)
|
|
Incorporated by reference from Omegas Annual Report on Form 10-K for the year ended
December 31, 1995.
|
|
(9)
|
|
Incorporated by reference from Omegas Annual Report on Form 10-K for the year ended
December 31, 2000.
|
|
(10)
|
|
Incorporated by reference from Omegas Annual Report on Form 10-K for the year ended
December 31,2001.
|
|
(11)
|
|
Incorporated by reference from Omegas Annual Report on Form 10-K for the year ended
December 31, 2002.
|
|
(12)
|
|
Incorporated by reference from Omegas Annual Report on Form 10-K for the year ended
December 31, 2003.
|
|
(13)
|
|
Incorporated by reference from an exhibit to Omegas Current Report on Form 8-K filed on
April 21, 2004.
|
|
(14)
|
|
Incorporated by reference from Appendix C to Omegas Proxy Statement relating to the
2004 Annual Meeting of Shareholders filed on March 15, 2004.
|
|
(15)
|
|
Incorporated by reference from Omegas Annual Report on Form 10-K for the year ended
December 31, 2004.
|
|
(16)
|
|
Incorporated by reference from Omegas Annual Report on Form 10-K for the year ended
December 31, 2005
|
|
(17)
|
|
Incorporated by reference from an exhibit to Omegas Current Report on Form 8-K filed on
May 1, 2006.
|
|
(18)
|
|
Incorporated by reference from an exhibit to Omegas Current Report on Form 8-K filed on
September 28, 2006.
|
|
(19)
|
|
Incorporated by reference from Omegas Annual Report on Form 10-K for the year ended
December 31, 2006.
|
|
(20)
|
|
Incorporated by reference from an exhibit to FNB Corporations Current Report on Form 8-K
filed on November 9, 2007.
|
|
(21)
|
|
Incorporated by reference from an exhibit to Omegas Current Report on Form 8-K filed on
November 14, 2007.
|
|
(22)
|
|
Incorporated by reference from an exhibit to Omegas Current Report on Form 8-K filed on
January 28, 2008.
|
|
(23)
|
|
Incorporated by reference from an exhibit to Omegas
Quarterly Report on Form 10-Q for the period ended
March 31, 2007.
|
27
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
|
|
|
|
|
|
OMEGA FINANCIAL CORPORATION
|
|
Date:
03/17/2008
|
By:
|
/s/ Donita R. Koval
|
|
|
|
Donita R. Koval
|
|
|
|
President and Chief Executive Officer
|
|
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been
signed below by the following persons on behalf of the registrant and in the capacities and on the
dates indicated.
|
|
|
|
|
Signatures
|
|
Title
|
|
Date
|
/s/ Donita R. Koval
Donita R. Koval
|
|
President and
Chief Executive Officer and
Director (Principal Executive
Officer)
|
|
03/17/2008
|
/s/ Daniel L. Warfel
Daniel L. Warfel
|
|
Executive Vice President and
Chief Financial Officer (Principal
Financial Officer)
|
|
03/17/2008
|
/s/ Teresa M. Ciambotti
Teresa M. Ciambotti
|
|
Senior Vice President and Controller
(Principal Accounting Officer)
|
|
03/17/2008
|
/s/ Carl H. Baxter
Carl H. Baxter
|
|
Director
|
|
03/17/2008
|
/s/ Maureen M. Bufalino
Maureen M. Bufalino
|
|
Director
|
|
03/17/2008
|
/s/ Philip E. Gingerich
Philip E. Gingerich
|
|
Director
|
|
03/17/2008
|
/s/ Jodi L. Green
Jodi L. Green
|
|
Director
|
|
03/17/2008
|
/s/ Robert A. Hormell
Robert A. Hormell
|
|
Director
|
|
03/17/2008
|
/s/ Stephen M. Krentzman
Stephen M. Krentzman
|
|
Director
|
|
03/17/2008
|
/s/ David B. Lee
David B. Lee
|
|
Director
|
|
03/17/2008
|
/s/ D. Stephen Martz
D. Stephen Martz
|
|
Director
|
|
03/17/2008
|
/s/ Stanton R. Sheetz
Stanton R. Sheetz
|
|
Director
|
|
03/17/2008
|
/s/ Robert A. Szeyller
Robert A. Szeyller
|
|
Director
|
|
03/17/2008
|
/s/ Dennis J. Van Benthuysen
Dennis J. Van Benthuysen
|
|
Director
|
|
03/17/2008
|
28
OMEGA FINANCIAL CORPORATION
ANNUAL REPORT ON FORM 10-K
DECEMBER 31, 2007
EXHIBIT INDEX
|
|
|
|
|
|
|
10.25
|
|
Description of Directors and Named Executive Officers
Compensation
|
|
|
38
|
|
|
|
|
|
|
|
|
13.1
|
|
Annual Report to Shareholders for the year ended
December 31, 2007 (such report, except for those
portions expressly incorporated by reference in
this Annual Report on Form 10-K, is furnished for
the information of the Commission and is not to be
deemed filed as part of this Report)
|
|
|
41
|
|
|
|
|
|
|
|
|
21.1
|
|
Subsidiaries of Omega Financial Corporation
|
|
|
52
|
|
|
|
|
|
|
|
|
23.1
|
|
Consent of Ernst & Young LLP
|
|
|
53
|
|
|
|
|
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to
Rule 13a-14(a) Rule 15(d)-14(a) of the Securities Exchange
Act of 1934, as amended
|
|
|
54
|
|
|
|
|
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to
Rule 13a-14(a) Rule 15(d)-14(a) of the Securities Exchange
Act of 1934, as amended
|
|
|
55
|
|
|
|
|
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer and Chief
Financial Officer pursuant to 18 U.S.C. 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
56
|
|
29
Exhibit 13.1
Annual Report to Shareholders
(2)
Financial Statement Schedules
. Financial statement schedules are omitted because
they are not applicable or the required information is shown in the financial statements or notes
thereto.
Exhibits filed pursuant to Item 601 of Regulation S-K
|
|
|
Number
|
|
Title
|
2.1(14)
|
|
Agreement and Plan of Merger with Sun Bancorp
|
2.2(20)
|
|
Agreement and Plan of Merger with FNB Corporation
|
3.1(1)
|
|
Amended and Restated Articles of Incorporation of Omega
|
3.2(4)
|
|
Articles of Amendment to the Amended and Restated Articles of Incorporation.
|
3.3(7)
|
|
Articles of Amendment to the Amended and Restated Articles of Incorporation
|
3.4(22)
|
|
Articles of Amendment to the Amended and Restated Articles of Incorporation
|
3.5(18)
|
|
Amended and Restated By-Laws of Omega
|
*10.2(2)
|
|
Peoples (now Omega) Stock Option Plan (1986).
|
*10.2(5)
|
|
Amendment No. 1 to Stock Option Plan (1986).
|
*10.3(3)
|
|
Omega Executive Incentive Compensation Plan.
|
10.4(5)
|
|
Purchase Agreement (with Exhibits) between Omega and Mid-State Bank & Trust
Company (Mid-State).
|
10.5(5)
|
|
Assignment of Promissory Note from Omega to Mid-State together with $5,000,000
Secured Promissory Note of Omega Financial Corporation Employee Stock Ownership Plan
Trust (ESOP Trust).
|
10.6(5)
|
|
Pledge and Security Agreement between Omega and the ESOP Trust.
|
10.7(5)
|
|
Mortgage from Omega to Mid-State.
|
*10.8(6)
|
|
1994 Stock Option Plan for Non-Employee Directors
|
*10.9(7)
|
|
Directors Deferred Compensation Agreements for Peoples National Bank and Omega Financial Corporation
|
*10.10(8)
|
|
1996 Employee Stock Option Plan
|
*10.11(9)
|
|
Omega Bank, National Association Amended and Restated Salary Continuation Agreement with David B. Lee
|
30
|
|
|
Number
|
|
Title
|
*10.12(9)
|
|
Omega Bank, National Association Salary Continuation Agreement with Daniel Warfel
|
*10.13(10)
|
|
Omega Financial Corporation Employee Stock Ownership Plan (Restated Effective January 1, 1997)
|
*10.14(11)
|
|
Amendment No. 1 to Omega Employee Stock Ownership Plan
|
*10.15(11)
|
|
Amendment No. 2 to Omega Employee Stock Ownership Plan
|
*10.16(11)
|
|
Amendment No. 3 to Omega Employee Stock Ownership Plan
|
*10.17(11)
|
|
Amendment No. 4 to Omega Employee Stock Ownership Plan
|
*10.18(12)
|
|
Severance Agreement by and between Omega Financial Corporation and Daniel L. Warfel
|
*10.19(12)
|
|
Severance Agreement by and between Omega Financial Corporation and Donita R. Koval
|
*10.20(12)
|
|
First Amendment to the Omega Bank, National Association Amended and Restated Salary Continuation
Agreement with David B. Lee
|
*10.21(12)
|
|
Employment Agreement with David B. Lee
|
*10.22(12)
|
|
First Amendment to the Omega Bank, National Association Amended and Restated Salary Continuation
Agreement with Daniel L. Warfel
|
*10.23(12)
|
|
Omega Bank, National Association Salary Continuation Agreement with Donita Koval
|
*10.24(19)
|
|
Employment Agreement with Maureen Bufalino
|
*10.25
|
|
Description of Directors and Executive Officers Compensation (filed herewith)
|
*10.26(16)
|
|
First Amendment to Employment Agreement with David B. Lee
|
*10.27(14)
|
|
2004 Stock Option Plan for Non-Employee Directors
|
*10.28(17)
|
|
2006 Equity Incentive Plan
|
*10.29(19)
|
|
First Amendment to Salary Continuation Agreement for Donita Koval
|
*10.30(19)
|
|
Second Amendment to Salary Continuation Agreement for Daniel Warfel
|
*10.31(21)
|
|
Amendment to Severance Agreement for Donita Koval
|
*10.32(21)
|
|
Amendment to Severance Agreement for Daniel Warfel
|
*10.33(21)
|
|
Amended and Restated Salary Continuation Agreement for Donital Koval
|
31
|
|
|
Number
|
|
Title
|
*10.34(21)
|
|
Amended and Restated Salary Continuation Agreement for Daniel Warfel
|
*10.35(23)
|
|
Form of Restricted Stock Unit
|
13.1
|
|
Annual Report to Shareholders for the year ended December 31, 2007 (such report, except for those
portions expressly incorporated by reference in this Annual Report on Form 10-K, is furnished for the
information of the Commission and is not to be deemed filed as part of this Report).
|
14.1(19)
|
|
Omega Financial Corporation Code of Ethics and Comprehensive Insiders Activities
Policy
|
21.1
|
|
Subsidiaries of Omega Financial Corporation (filed herewith)
|
23.1
|
|
Consent of Ernst & Young LLP (filed herewith)
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) Rule
15(d)-14(a) of the Securities Exchange Act of 1934, as amended (filed herewith)
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) Rule
15(d)-14(a) of the Securities Exchange Act of 1934, as amended (filed
herewith)
|
32.1
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to
18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (filed
herewith)
|
|
|
|
*
|
|
Indicates management contract or compensatory plan, contract or
arrangement.
|
|
(1)
|
|
Incorporated by reference from Omegas (formerly Peoples) Annual Report
on Form 10-K for the year ended December 31, 1986.
|
|
(2)
|
|
Incorporated by reference from Omegas (formerly Peoples Registration
Statement on Form S-4 (File No. 33-9045).
|
|
(3)
|
|
Incorporated by reference from Omegas Annual Report on Form 10-K for the
year ended December 31, 1988.
|
|
(4)
|
|
Incorporated by reference from Omegas Quarterly Report on Form 10-Q for
the period ended June 30, 1990.
|
|
(5)
|
|
Incorporated by reference from Omegas Annual Report on Form 10-K for the
year ended December 31, 1990.
|
|
(6)
|
|
Incorporated by reference from Omegas Registration Statement on Form S-8
(Registration No. 33-82214).
|
|
(7)
|
|
Incorporated by reference from Omegas Annual Report on Form 10-K for the
year ended December 31, 1994.
|
|
(8)
|
|
Incorporated by reference from Omegas Annual Report on Form 10-K for the
year ended December 31, 1995.
|
|
(9)
|
|
Incorporated by reference from Omegas Annual Report on Form 10-K for the
year ended December 31, 2000.
|
|
(10)
|
|
Incorporated by reference from Omegas Annual Report on Form 10-K for the year ended
December 31, 2001.
|
|
(11)
|
|
Incorporated by reference from Omegas Annual Report on Form 10-K for the year ended
December 31, 2002.
|
32
|
|
|
(12)
|
|
Incorporated by reference from Omegas Annual Report on Form 10-K for the year ended
December 31, 2003.
|
|
(13)
|
|
Incorporated by reference from an exhibit to Omegas Current Report on Form 8-K filed
on April 21, 2004.
|
|
(14)
|
|
Incorporated by reference from Appendix C to Omegas Proxy Statement relating to the
2004 Annual Meeting of Shareholders filed on March 15, 2004.
|
|
(15)
|
|
Incorporated by reference from Omegas Annual Report on Form 10-K for the year ended
December 31, 2004.
|
|
(16)
|
|
Incorporated by reference from Omegas Annual Report on Form 10-K for the year ended
December 31, 2005
|
|
(17)
|
|
Incorporated by reference from an exhibit to Omegas Current Report on Form 8-K filed
on May 1, 2006.
|
|
(18)
|
|
Incorporated by reference from an exhibit to Omegas Current Report on Form 8-K filed
on September 28, 2006.
|
|
(19)
|
|
Incorporated by reference from Omegas Annual Report on Form 10-K for the
year ended December 31, 2006.
|
|
(20)
|
|
Incorporated by reference from an exhibit to FNB Corporations Current Report on Form
8-K filed on November 9, 2007.
|
|
(21)
|
|
Incorporated by reference from an exhibit to Omegas Current Report on Form 8-K filed
on November 14, 2007.
|
|
(22)
|
|
Incorporated by reference from an exhibit to Omegas Current Report on Form 8-K filed
on January 28, 2008.
|
|
(23)
|
|
Incorporated by reference from an exhibit to Omegas
Quarterly Report on Form 10-Q for the period ended
March 31, 2007.
|
33
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Omega Financial (MM) (NASDAQ:OMEF)
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