SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
   (Mark One)

      |X|   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
            EXCHANGE ACT OF 1934 (FEE REQUIRED)

                   For the Fiscal Year ended December 31, 2001
                                             -----------------

                                       or

      |_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
            EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

     For the transition period from __________________ to __________________

                           Commission File No. 0-13599
                                               -------

                           Omega Financial Corporation
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

          Pennsylvania                                  25-1420888
----------------------------------------  --------------------------------------
(State or other jurisdiction of             (IRS Employer Identification Number)
incorporation or organization)

            366 Walker Drive
            State College, PA                            16801
----------------------------------------  --------------------------------------
(Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code: (814)  231-7680
                                                    ---------------

Securities registered pursuant to Section 12(b) of the Act: None
                                                            ----

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $5.00                                8,230,936
-----------------------------                      -----------------------------
      (Title of Class)                             (Number of shares outstanding
                                                     as of February 26, 2002)

      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, and (2) has been subject to such filing
requirements for the past 90 days.

                                 Yes |X| No |_|

      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 registrant's 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. [ ]

      The aggregate market value of the voting stock held by non-affiliates of
the Registrant as of February 26, 2002 was $234,300,171. (1)


                                       1
<PAGE>

                       DOCUMENTS INCORPORATED BY REFERENCE

  (Specific sections incorporated are identified under applicable items herein)

      Certain portions of the Company's Annual Report to Shareholders for the
year ended December 31, 2001 are incorporated by reference in Parts II and IV of
this Report.

      With the exception of the information incorporated by reference in Parts
II and IV of this Report, the Company's Annual Report to Shareholders for the
year ended December 31, 2001 is not to be deemed "filed" with the Securities and
Exchange Commission for any purpose.

      Certain portions of the Company's Proxy Statement to be filed in
connection with its 2002 Annual Meeting of Shareholders are incorporated by
reference in Part III of this Report.

      Other documents incorporated by reference are listed in the Exhibit Index.

--------------------------------

(1) The aggregate dollar amount of the voting stock set forth equals the number
of shares of the Company's Common Stock outstanding, reduced by the amount of
Common Stock held by officers, directors, shareholders owning in excess of 10%
of the Company's Common Stock and the Company's employee benefit plans
multiplied by the last reported sale price for the Company's Common Stock on
February 26, 2002. The information provided shall in no way be construed as an
admission that any officer, director or 10% shareholder of the Company, or any
employee benefit plan, may be deemed an affiliate of the Company 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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<PAGE>

                                     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
Central's 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 N.A. ("Omega Bank"). On August 1,
1995, Omega acquired all of the outstanding shares of Montour Bank ("Montour").
On December 31, 1996, Montour was merged into Omega Bank. On October 20, 2001,
Hollidaysburg and Penn Central Bank were merged into Omega Bank. 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 and Central Pennsylvania Leasing, Inc. Unless
the context otherwise requires, the "Company" refers to Omega Financial
Corporation and its consolidated subsidiaries and the "Bank" refers to the
Company's banking subsidiary.

BANKING SERVICES

      The Bank currently provides retail and commercial banking services through
43 full service offices in Bedford, Blair, Centre, Clinton, Huntingdon, Juniata
and Mifflin counties in 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, 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 cash management services and
repurchase agreements. The Bank also provides a variety of trust and asset
management services.

      As of December 31, 2001, the Bank operated an aggregate of 43 automated
teller machines (ATMs) at various locations. The Bank is a member of the
MAC/Star System and the "Plus System." The MAC/Star and Plus Systems operate
nationwide.

      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 Central Pennsylvania.


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<PAGE>

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.

      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 Company's bank subsidiaries.

      On January 14, 1988, the Company formed Central Pennsylvania Leasing,
Inc., for the purpose of leasing of personal property and real estate.

COMPETITION

      The Bank's 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 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 Bank's legal
lending limit to a single borrower (approximately $21,915,000 as of December 31,
2001) enables it to compete effectively for the business of small and mid-sized
businesses. However, this legal lending limit is considerably lower than that of
various competing institutions and thus may act as a constraint on the Bank's
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
management's knowledge and awareness of their service areas, customers and
borrowers. In management's opinion, larger institutions often do not provide
sufficient attention to the retail depositors and the relatively small
commercial borrowers that comprise the Bank's 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
likely to face an increase in competition. See "Supervision and Regulation -
Recent Legislation".


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<PAGE>

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. 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
"Recent Legislation".

      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. See "Interstate Banking".

      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 nonbanking 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 ratings are generally
prerequisites to obtaining federal regulatory approval to make acquisitions. The
Bank is currently rated "satisfactory" under the Community Reinvestment Act.

      Under the Federal Deposit Insurance Corporation Improvement Act of 1991
(the "1991 Act"), a bank holding company is required to guarantee that any
"undercapitalized" (as such term is defined in the statute) insured depository
institution subsidiary will comply with the terms of any capital restoration
plan filed by such subsidiary with its appropriate federal banking agency to the
lesser of (I) an amount equal to 5% of the institution's total assets at the
time the institution became undercapitalized, or (ii) the amount which is
necessary (or would have been necessary) to bring the institution into
compliance with all capital standards as of the time the institution failed to
comply with such capital restoration plan.

      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
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
corporation's 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 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.


                                       5
<PAGE>

      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
Commission's 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 bank's capital stock and surplus,
and as to the Company and all such non-bank subsidiaries in the aggregate, to 20
percent of such lending bank's 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.

      Omega Bank. Omega Bank, as a national bank, is subject to the National
Bank Act. The Bank also is subject to the supervision of, and are regularly
examined by, the Office of the Comptroller of the Currency (the "OCC") and are
required to furnish quarterly reports to the OCC. The approval of the OCC is
required for the establishment of additional branch offices by any national
bank, subject to applicable state law restrictions. 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 Community Reinvestment Act, as amended)"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. CRA does not establish specific lending
requirements or programs for financial institutions nor does it limit an
institution's discretion to develop the types of products and services that it
believes are best suited to its particular community, consistent with CRA. CRA
requires that the applicable regulatory agency to assess an institution's record
of meeting the credit needs of its community and to take such record into
account in its evaluation of certain applications by such institution. The CRA
requires public disclosure of an institution's CRA rating and requires that the
applicable regulatory agency provide a written evaluation of an institution's
CRA performance utilizing a four-tiered descriptive rating system. An
institution's 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. In addition, under applicable regulations a bank having a less than
satisfactory rating is not entitled to participate on the bid list for FDIC
offerings. For its most recent examinations, the Bank received a "satisfactory"
rating.

      Omega Bank is a member of the Federal Deposit Insurance Corporation (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 is 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 20 of Notes to the Company's
Consolidated Financial Statements, contained in Exhibit 13.1.

      The OCC has authority under the Financial Institutions Supervisory Act to
prohibit national banks from engaging in any activity that, in the OCC's
opinion, constitutes an unsafe or unsound practice in conducting their
businesses. The FRB has similar authority with respect to the Company and the
Company's non-bank subsidiaries.

      Substantially all of the deposits of the Bank are insured up to applicable
limits by the Bank Insurance Fund ("BIF") of the FDIC and are subject to deposit
insurance assessments to maintain the BIF. The insurance assessments are based
upon a matrix that takes into account a bank's capital level and supervisory
rating.


                                       6
<PAGE>

      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 company's 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 22 of Notes to the Company's Consolidated Financial Statements,
contained in the Company's Annual Report, for a table that provides a comparison
of Omega's and the Bank's 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," "under capitalized", "significantly undercapitalized,"
or "critically undercapitalized." The Bank is a "well-capitalized" bank as
defined by the FDIC.

      The FDIC has issued a rule that sets the capital level for each of the
five capital categories established in the 1991 Banking Law. Under the rule a
bank is deemed to be "well capitalized" if the bank has a total risk-based
capital ratio of 10% or greater, has a Tier 1 risk-based capital ratio of 6% or
greater, has a leverage ratio of 5% or greater, and is not subject to any order
of final capital directive by the FDIC to meet and maintain a specific capital
level for any capital measure. A bank is deemed "adequately capitalized" if the
bank has a total risk-based capital ratio of 8% or greater, a Tier-1 risk-based
capital ratio of 4% or greater and a leverage capital ratio of 4% or greater (or
3% or greater for the most highly rated banks), and does not meet the definition
of a "well capitalized" bank. A bank that has total risk-based capital, Tier-1
risk-based capital and leverage capital that is less than 8%, 4% and 4%,
respectively, is deemed "undercapitalized." Under the regulation "significantly
undercapitalized" banks are those with total risk-based capital, Tier-1
risk-based capital and leverage capital that is less than 5%, 3% and 3%,
respectively. Finally, "critically undercapitalized" banks are defined as those
banks that have a ratio of tangible equity to total assets that is equal to or
less than 2%. A depository institution may be deemed to be in a capitalization
category that is lower than is indicated by its actual capital position if it
received an unsatisfactory examination rating.

      All of the bank regulatory agencies have issued final rules that amend
their capital guidelines for interest rate risk and requires such agencies to
consider in their evaluation of a bank's capital adequacy the exposure of a
bank's capital and economic value to changes in interest rates. These final
rules do not establish an explicit supervisory threshold. The agencies intend,
at a subsequent date, to incorporate explicit minimum requirements for interest
rate risk into their risk based capital standards and have proposed a
supervisory model to be used together with bank internal models to gather data
and hopefully propose at a later date explicit minimum requirements.

      Central Pennsylvania Life Insurance Co. is subject to regulation by
applicable state insurance regulatory authorities. The Company's non-bank
subsidiaries are subject to the laws and regulations of both the federal
government and various states in which they conduct business.


                                       7
<PAGE>

RECENT LEGISLATION

      On November 12, 1999 the Gramm-Leach-Bliley Act (the "Act") became law,
repealing the 1933 Glass-Steagall Act's 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. Omega's
election to be a financial holding company became effective on February 21,
2002. Financial holding companies may engage in any 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. Omega has not yet engaged in any
new activities as a result of having elected to be a financial holding company.

      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 Omega's 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
bank's 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.

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,
is affected by the policies of regulatory authorities, including the OCC, the
FRB and the FDIC. 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


                                       8
<PAGE>

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, 2001, the Company had a total of 461 full-time
employees and 94 part-time employees.


                                       9
<PAGE>

INVESTMENT CONSIDERATIONS

      In analyzing whether to make or to continue an investment in the Company,
investors should consider, among other factors, the following:

      Economic Conditions and Related Uncertainties. Commercial banking 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 the Company's control may adversely affect the
potential profitability of the Company. Any future rises in interest rates,
while increasing the income yield on the Company's earnings assets, may
adversely affect loan demand and the cost of funds and, consequently, the
profitability of the Company. Any future decreases in interest rates may
adversely affect the Company's profitability because such decreases may reduce
the amounts that the Company may earn on its assets. Economic downturns could
result in the delinquency of outstanding loans. Management does not expect any
one particular factor to materially affect the Company's results of operations.
However, downtrends in several areas, including real estate, construction and
consumer spending, could have an adverse impact on the Company's ability to
remain profitable.

      Effect of Interest Rates on the Bank and the Company. The operations of
financial institutions such as the Company 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. An
institution's 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, 2001, total interest bearing
liabilities maturing or repricing within one year exceeded total interest
earning assets maturing or repricing during the same time period by $107.253
million, representing a cumulative one-year sensitivity ratio of 0.80.
Simulation of interest rate changes indicates that if interest rates were
decreased, net interest income would likewise decrease over the next twelve
months. Like all financial institutions, the Company's balance sheet is affected
by fluctuations in interest rates. 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. See "Item 7:
Management's Discussion of Financial Condition and Results of Operations" and
"Item 7a: Quantitative and Qualitative Disclosure about Market Risk".

      Federal and State Government Regulations. The operations of the Company
and the Bank 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 the future business and earnings prospects
of the Company.

      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. The Company faces strong competition from other banks,
savings institutions and other financial institutions that have branch offices
or otherwise operate in the Company's market area, as well as many other
companies now offering a range of financial services. Many of these competitors
have substantially greater financial resources and larger branch systems than
the Company. In addition, many of the Banks' competitors have higher legal
lending limits than do the Banks. Particularly intense


                                       10
<PAGE>

competition exists for sources of funds including savings and retail time
deposits and for loans, deposits and other services that the Banks offer. See
"Item 1: BUSINESS - Competition."

      As a result of the repeal of the Glass Steagall Act, which separated the
commercial and investment banking industries, all banking organizations are
likely to face an increase in competition. See "Item 1: Business - Supervision
and Regulation - Recent Legislation".

      Allowance for Loan Losses. The Company has established an allowance for
loan losses which management believes to be adequate to offset potential losses
on the Company's existing loans. However, there is no precise method of
predicting loan losses. 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 the Company to increase its allowance for
loan losses.

      Dividends. While the Board of Directors expects to continue its 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. See "Item 5: Market for the
Registrant's Common Stock and Related Shareholder Matters."

      Market for Common Stock. Although the Company's Common Stock is listed on
the Nasdaq National Market System, there has been only limited trading in the
Common Stock. There can be no assurance that a regular and active market for the
Common Stock will develop in the foreseeable future. See "Item 5: Market for the
Registrant's Common Stock and Related Stockholder Matters." Investors in the
shares of Common Stock must, therefore, be prepared to assume the risk of their
investment for an indefinite period of time.

      "Anti-Takeover" and "Anti-Greenmail" Provisions and Management
Implications. The Articles of the Company presently contain certain provisions
which may be deemed to be "anti-takeover" and "anti-greenmail" in nature in that
such provisions may deter, discourage or make more difficult the assumption of
control of the Company by another corporation or person through a tender offer,
merger, proxy contest or similar transaction or series of transactions. The
overall effects of the "anti-takeover" and "anti-greenmail" provisions may be to
discourage, make more costly or more difficult, or prevent a future takeover
offer, prevent shareholders from receiving a premium for their securities in a
takeover offer, and enhance the possibility that a future bidder for control of
the Company will be required to act through arms-length negotiation with the
Company's Board of Directors. Copies of the Articles of the Company are on file
with the Securities and Exchange Commission and the Pennsylvania Secretary of
State.

      Stock Not an Insured Deposit. Investments in the shares of the Company's
Common Stock are not deposits insured against loss by the FDIC or any other
entity.

      Bespeaks Caution Doctrine. Investors should be aware that the United
States Court of Appeals for the Third Circuit, in a case entitled In Re: Donald
J. Trump Casino Securities Litigation - Taj Mahal Litigation (No. 92-5350, filed
October 14, 1993), adopted a legal doctrine entitled the "Bespeaks Caution
Doctrine" which may prevent holders of the Company's Common Stock from
recovering from the Company based upon material misstatements and omissions
contained in the Annual Report on Form 10-K and the Company's other disclosure
documents to the extent that this Form 10-K or such other documents contained
cautionary statements to apprise investors of the risks of the Company's
securities. The foregoing investment considerations may have the effect of
bringing this Form 10-K, as well as other Company disclosure documents, within
the purview of the Bespeaks Caution Doctrine.

Item 2: Properties

      The Company's corporation headquarters are located at 366 Walker Drive,
State College, Pennsylvania. This building is owned by the Company, subject to a
mortgage in the original principal amount of $5,000,000 held by M&T Bank. The
Company 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.


                                       11
<PAGE>

      Omega Bank

           117 South Allen Street, State College, PA (Main Office) (ATM)
           222 South Allen Street, State College, PA
           1480 East College Ave., State College, PA (ATM)
           137 North Allegheny Street, Bellefonte, PA (ATM)
           Fourth and Olive Streets, Snow Shoe, PA
           Main Street, Rebersburg, PA
           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  (Main Office) (ATM)
           1250 West Fourth St., Lewistown, PA
           111 North Logan Blvd., Burnham, PA (ATM)
           Main Street, Mifflin, PA
           On the Square, Thompsontown, PA
           10 Carriage House Lane, Reedsville, PA (ATM)
           East Main Street, Allensville, PA
           Route 522 North, Lewistown, PA (ATM only)
           366 East College Avenue, State College, PA (ATM)
           366 Walker Drive, State College, PA  (ATM Only)
           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
           Main Street, Alexandria, PA
           Route 26, James Creek, PA
           911 Church Street, Saxton, PA
           708 Main Street, Saxton, PA (ATM only)
           14th and Moore Streets, Huntingdon, PA (ATM)

      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 2002 to 2015.

      Branches

           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.
           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)
           300 Spring Plaza, Roaring Spring, PA  (ATM)
           5812 Sixth Avenue, Altoona, PA (ATM) building owned, land leased.
           1402 Logan Avenue, Tyrone, PA (ATM)
           Morrison's 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)

      ATMs

           Weis Shopping Plaza, Mifflintown, PA
           414 East College Avenue, State College, PA
           110 1/2 Burrowes Street, State College, PA
           Centre Community Hospital, 1800 East Park Avenue, State College, PA
           116 W. College Ave., State College, PA


                                       12
<PAGE>

         135 S. Pugh Street, State College, PA
         I80 Exit 22 and Rt 144, Snow Shoe, PA
         Martin General Store, Route 22, Alexandria, PA
         Ames Store, Route 22 Plaza, Huntingdon, PA
         Martin General Store, 300 High Street, Williamsburg, PA
         Service Mart of Mifflin, 2 Mowery Street, Mifflin, PA
         Centre County Visitors Center, 800 East Park Avenue, State College, PA
         Ingram's market, I80 and Rt. 477, Loganton, PA
         A Plus Convenience Store, 522 Allegheny St., Hollidaysburg, PA
         Lewistown Hospital, 400 Highland Ave., Lewistown, PA
         Walmart Plaza, Route 522N. Lewistown, PA


                                       13
<PAGE>

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 is 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

Item 4.1: Executive Officers of the Registrant

      Set forth below is certain information concerning the executive officers
of the Company who are not also directors.

      On March 18, 1995, Omega's banking subsidiaries, Peoples National Bank of
Central Pennsylvania ("Peoples Bank") and The Russell National Bank ("Russell
Bank"), merged to form Omega Bank. Any reference below to service with Omega
Bank includes service with Omega Bank's predecessors prior to such merger.

<TABLE>
<CAPTION>
       Name              Age                             Position
       ----              ---                             --------
<S>                      <C>       <C>
Daniel L. Warfel         55        Executive Vice President and Chief Financial Officer of
                                   the Company since 1987; Executive Vice President of
                                   Omega Bank since 1983.

David N. Thiel           58        Senior Vice President and Secretary of the Company
                                   since 1987; Vice President, Secretary and Cashier of
                                   Omega Bank since 1973.

JoAnn N. McMinn          49        Senior Vice President and Controller of the Company
                                   since 1988; Vice President and Controller of Omega
                                   Bank since 1976.

Donita R. Koval          41        Executive Vice President of the Company since 2000.
                                   Senior Vice President of the Company since 1995.
</TABLE>


                                       14
<PAGE>

                                     PART II

Item 5: Market for the Registrant's Common Stock and Related Stockholder Matters

      Incorporated by reference from the section entitled "Common Stock Market
Prices and Dividends" in the Company's Annual Report to Shareholders for the
year ended December 31, 2001.

      The Company did not sell any equity securities during 2001 that were not
registered under the Securities Act.

Item 6: Selected Financial Data

      Incorporated by reference from the section entitled "Selected Financial
Data" in the Company's Annual Report to Shareholders for the year ended December
31, 2001.

Item 7: Management's Discussion and Analysis of Financial Condition and Results
of Operations

      Incorporated by reference from the sections entitled "Management's
Discussion and Analysis - Results of Operations" and "Financial Condition" in
the Company's Annual Report to Shareholders for the year ended December 31,
2001.

Item 7A: Quantitative and Qualitative Disclosure about Market Risk

      Incorporated by reference from the sections entitled "Management's
Discussion and Analysis - Financial Condition" in the Company's Annual Report to
Shareholders for the year ended December 31, 2001.

Item 8: Financial Statements and Supplementary Data

      Incorporated by reference from the Company's Consolidated Financial
Statements and the Notes to Consolidated Financial Statements thereto included
in the Company's Annual Report to Shareholders for the year ended December 31,
2001.

Item 9: Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

      None


                                       15
<PAGE>

                                    PART III

Item 10: Directors and Executive Officers of the Registrant

      Incorporated by reference from the Company's Proxy Statement relating to
the 2002 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 in Item 4.1 hereof.

Item 11: Executive Compensation

      Incorporated by reference from the Company's Proxy Statement relating to
the 2002 Annual Meeting of Shareholders to be filed pursuant to General
Instruction G(3) to Form 10-K.

Item 12: Security Ownership of Certain Beneficial Owners and Management

      Incorporated by reference from the Company's Proxy Statement relating to
the 2002 Annual Meeting of Shareholders to be filed pursuant to General
Instruction G(3) to Form 10-K.

Item 13: Certain Relationships and Related Transactions

      Incorporated by reference from the Company's Proxy Statement relating to
the 2002 Annual Meeting of Shareholders to be filed pursuant to General
Instruction G(3) to Form 10-K.


                                       16
<PAGE>

                                     PART IV

Item 14: Exhibits, Financial Statement Schedules and Reports on Form 8-K

      (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
Company's Annual Report to Shareholders for the year ended December 31, 2001,
and the report of independent public accountants which is also included in such
Annual Report, are incorporated herein by reference into Item 8 of this Report:

         Consolidated Balance Sheets -
                  December 31, 2001 and 2000

         Consolidated Statements of Income
                  Years ended December 31, 2001, 2000 and 1999

         Consolidated Statements of Shareholders' Equity - Years ended December
                  31, 2001, 2000 and 1999

         Consolidated Statements of Cash Flows
                  Years ended December 31, 2001, 2000 and 1999

         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
    ------                                  -----

    3.1(1)      Amended and Restated Articles of Incorporation of Omega

    3.2(6)      Articles of Amendment to the Amended and Restated Articles of
                Incorporation.

    3.3(13)     Articles of Amendment to the Amended and Restated Articles of
                Incorporation

    3.4(8)      Amended and Restated By-Laws of Omega, as amended.

    10.1        Intentionally Omitted

    10.2        Intentionally Omitted

    *10.3(7)    Severance Agreement by and among David B. Lee, the Company, and
                Peoples Bank dated March 15, 1990.

    *10.4(7)    Severance Agreement by and among Daniel L. Warfel and the
                Company dated December 18, 1990.


                                       17
<PAGE>

    Number                                Title
    ------                                -----

    *10.5(2)    Peoples (now Omega) Employee Stock Purchase Plan.

    *10.6(2)    Peoples (now Omega) Stock Option Plan (1986).

    *10.7(7)    Amendment No. 1 to Stock Option Plan (1986).

    *10.8.1(7)  ESOP Trust Agreement

    *10.9(4)    Peoples (now Omega) Employee Retirement Plan.

    *10.10(4)   Second Amendment to Peoples (now Omega) Employee Retirement
                Plan.

    *10.11(7)   TRA '86 Amendments to Peoples (now Omega) Employee Retirement
                Plan.

    *10.13(1)   Form of Russell Bank Deferred Compensation Agreement for
                Directors.

    10.14(1)    Credit Agreement, dated December 6, 1985, between the Company
                and Pittsburgh National Bank.

    *10.15      Intentionally omitted.

    *10.16      Intentionally omitted.

    *10.17(4)   Omega Executive Incentive Compensation Plan.

    10.18       Intentionally omitted.

    10.19       Intentionally omitted.

    10.20(7)    Purchase Agreement (with Exhibits) between Omega and Mid-State
                Bank & Trust Company ("Mid-State").

    10.21(7)    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").

    10.22(7)    Pledge and Security Agreement between Omega and the ESOP Trust.

    10.23(7)    Mortgage from Omega to Mid-State.

    *10.24(10)  Severance Agreement, as amended, with D. Stephen Martz.

    *10.26(11)  1994 Stock Option Plan for Non-Employee Directors

    10.27       Intentionally omitted.


                                       18
<PAGE>

    Number                                Title
    ------                                -----

    *10.28(13)  Directors Deferred Compensation Agreements for Peoples National
                Bank and Omega Financial Corporation

    *10.29(14)  1996 Employee Stock Option Plan

    10.31(16)   Omega Bank, National Association Amended and Restated Salary
                Continuation Agreement with David B. Lee

    10.32(16)   Omega Bank, National Association Salary Continuation Agreement
                with Daniel Warfel

    10.33       Omega Financial Corporation Employee Stock Ownership Plan
                (Restated Effective January 1, 1997) (filed herewith)

    13.1        Annual Report to Shareholders for the year ended December 31,
                2001 (such reports, 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).

    21.1        Subsidiaries of the Registrant (filed herewith)

    23.1        Consent of Arthur Andersen LLP (filed herewith)

    99.1        Independent Auditor Representation (filed herewith)

    (b)  Reports on Form 8-K.
         None.

----------
    *     Indicates management contract or compensatory plan, contract or
          arrangement.

    (1)   Incorporated by reference from Omega's (formerly Peoples') Annual
          Report on Form 10-K for the year ended December 31, 1986.
    (2)   Incorporated by reference from Omega's (formerly Peoples'
          Registration Statement on Form S-4 (File No. 33-9045).
    (3)   Incorporated by reference from Omega's Annual Report on Form 10-K
          for the year ended December 31, 1987.
    (4)   Incorporated by reference from Omega's Annual Report on Form 10-K
          for the year ended December 31, 1988.
    (5)   Incorporated by reference from Omega's Annual Report on Form 10-K
          for the year ended December 31, 1989.
    (6)   Incorporated by reference from Omega's Quarterly Report on Form 10-Q
          for the period ended June 30, 1990.
    (7)   Incorporated by reference from Omega's Annual Report on Form 10-K
          for the year ended December 31, 1990.
    (8)   Incorporated by reference from Omega's Annual Report on Form 10-K
          for the year ended December 31, 1992.
    (9)   Incorporated by reference from Omega's Registration Statement on
          Form S-4 (File No. 33-71070).
    (10)  Incorporated by reference from Omega's Annual Report on Form 10-K
          for the year ended December 31, 1993.
    (11)  Incorporated by reference from Omega's Registration Statement on
          Form S-8 (Registration No. 33-82214).
    (12)  Incorporated by reference from Omega's Registration Statement on
          Form S-4 (Registration No. 33-91472).


                                       19
<PAGE>

    (13)  Incorporated by reference from Omega's Annual Report on Form 10-K
          for the year ended December 31, 1994.
    (14)  Incorporated by reference from Omega's Annual Report on Form 10-K
          for the year ended December 31, 1995.
    (15)  Incorporated by reference from Omega's Annual Report on Form 10-K
          for the year ended December 31, 1996.
    (16)  Incorporated by reference from Omega's Annual Report on Form 10-K
          for the year ended December 31, 2000.


                                       20
<PAGE>

                                   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:___________________         By: ________________________________
                                              David B. Lee, Chairman of the
                                              Board 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
----------                            -----                        ----

----------------------        Chairman of the Board, and           -------------
David B. Lee                  Chief Executive Officer and
                              Director (Principal Executive
                              Officer)

----------------------        President and Chief                  -------------
D. Stephen Martz              Operating Officer and Director

----------------------        Executive Vice President and         -------------
Daniel L. Warfel              Chief Financial Officer (Principal
                              Financial Officer)

-----------------------       Senior Vice President and Controller -------------
JoAnn N. McMinn               (Principal Accounting Officer)

-----------------------       Director                             -------------
Raymond F. Agostinelli

-----------------------       Director                             -------------
Philip E. Gingerich

-----------------------       Director                             -------------
Robert N. Oliver

-----------------------       Director                             -------------
James W. Powers, Sr.

-----------------------       Director                             -------------
Stanton R. Sheetz

-----------------------       Director                             -------------
Robert A. Szeyller


                                       21