EXHIBIT 13.1

                       [OMEGA FINANCIAL CORPORATION LOGO]

                   366 Walker Drive - State College, PA 16801
                             www.omegafinancial.com

<PAGE>

                           OMEGA FINANCIAL CORPORATION
                               2002 ANNUAL REPORT

                       [OMEGA FINANCIAL CORPORATION LOGO]

integrity 1. uncompromising adherence to a code of behavior. 2. the state of
being unimpaired; soundness. 3. completeness; unity.

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                                    strength

1. the full force of numbers of an organization or body. 2. source of power or
encouragement; sustenance.

                           OMEGA FINANCIAL CORPORATION

         Omega Financial Corporation serves Central Pennsylvania with a
        commitment to quality service, a wide range of financial products
       and services offering superior consumer value, local market lending
           authority and outstanding personal and corporate community
                                  involvement.

                                CORPORATE PROFILE

          With a reputation for excellence dating back 150 years, Omega
        anchors its growth through a well-trained, productive workforce,
      sound funds management, vigilant cost containment and the ability to
          quickly adapt to changing technologies and market conditions.

  [THE FOLLOWING DATA WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL.]

                                   '98       '99       '00       '01       '02
(in billions of dollars)
Assets at Year End                $1.06     $1.05     $1.11     $1.16     $1.15
Deposits at Year End              $0.87     $0.85     $0.89     $0.93     $0.92
Diluted Earnings Per Share        $1.79     $1.85     $1.87     $2.01     $2.10

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                                   reliability

1. consistently dependable in character, judgement, performance or result. 2.
capable of being relied on.

                             SELECTED FINANCIAL DATA

The following selected financial data of Omega Financial Corporation and
subsidiaries for the five years ended December 31, 2002 should be read in
conjunction with the consolidated financial statements of Omega Financial
Corporation and the notes thereto, which are set forth elsewhere in the Annual
Report.

                           FIVE-YEAR FINANCIAL SUMMARY

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
(In thousands of dollars, except share and per share data)      2002          2001          2000          1999          1998
----------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>           <C>           <C>           <C>           <C>
Balance Sheet Information at December 31
----------------------------------------
  Assets ..............................................   $1,154,557    $1,158,629    $1,113,836    $1,053,403    $1,062,704
  Deposits ............................................      919,255       931,667       889,501       851,595       870,660
  Loans, net ..........................................      779,819       760,354       751,985       704,948       722,967
  Investment securities ...............................      251,058       266,658       241,736       272,077       260,839
  Long-term debt (including ESOP debt) ................       19,069        20,344        10,264        10,611         8,837
  Shareholders' equity ................................      162,110       156,250       155,204       151,151       153,980
  Number of shares outstanding--common ................    8,099,778     8,222,010     8,606,983     8,774,507     8,960,197
  Number of shares outstanding--preferred .............      219,781       219,781       219,781       219,781       219,781

Income Statement Information Years Ended December 31
----------------------------------------------------
  Total interest income ...............................   $   64,960    $   76,006    $   76,945    $   74,493    $   75,268
  Net interest income .................................       45,637        45,143        45,819        46,788        46,618
  Provision for loan losses ...........................          630           500           428         1,060         1,060
  Income before income taxes ..........................       23,829        23,532        23,112        24,257        24,714
  Income tax expense ..................................        5,650         5,877         5,983         6,895         7,622
  Net income ..........................................       18,179        17,655        17,129        17,362        17,092

Per Common Share Data
---------------------
  Net income--basic ...................................   $     2.17    $     2.08    $     1.92    $     1.92    $     1.87
  Net income--diluted .................................         2.10          2.01          1.87          1.85          1.79
  Cash dividends--common ..............................         1.13          1.07          1.03          0.95          0.80
  Book value--common ..................................        19.63         18.65         17.73         16.96         16.95

Financial Ratios
----------------
  Return on average equity ............................        11.32%        11.50%        11.13%        11.30%        11.35%
  Return on average assets ............................         1.58          1.56          1.59          1.63          1.66
  Dividend payout--common .............................        50.76         50.01         52.42         48.29         41.94
  Average equity to average assets ....................        13.96         13.54         14.28         14.46         14.67
</TABLE>


                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
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                                   consistency

1. steadfast adherence to the same principles, course, form, etc. 2. agreement,
compatibility.*

TO OUR SHAREHOLDERS, CUSTOMERS AND FRIENDS

During 2002, Omega Financial Corporation continued its positive trend of
performance led by a 3% increase in net income. The year-end total of $18.179
million was $524,000 higher than the $17.655 million of net income recorded for
2001. Basic and diluted per-share earnings for the year were $2.17 and $2.10,
respectively, increases of 4.3% and 4.5% over the previous year.

      We have been able to achieve this performance in spite of another year
filled with economic pressures. We increased return on average assets (ROA), net
loans and income from credit activities over 2001. Additionally, despite
industry-wide rate pressures on both loans and deposits, we have been able to
post gains in net interest margin and deliver a respectable 11.32% return on
equity (ROE).

      With dividends taking center stage in the year-end taxation debate, we can
take some pride in our own dividend policy. The 5.6% increase in our common
share dividend this year allows us to add to Omega Financial's record of having
raised dividends in 15 of its 16 years. In fact in this period of unusually low
interest rates, this year's $1.13 dividend represents a healthy 3.15% yield on a
year-end investment in Omega common stock with a closing value of $35.90. Of
course, this good news is even better for those shareholders who made their
investments in Omega Financial many years ago.

      Dividend flows from our strong capital position, and our strong capital
results directly from increases in profitability. Our ability to maintain this
growth reflects the efforts of our staff and management in developing new
revenue streams. One of our key strategies focuses on increasing our market
presence as a total financial service provider.

      During the year, this strategy to seek new revenue streams included the
third quarter debut of the Omega Insurance Agency. The agency provides a full
complement of auto, home and business insurance, as well as life and disability
coverage.

      At the close of the year, we expanded our ability to offer annuities,
mutual funds, stock and bond brokerage services, long-term care insurance and
sophisticated life products. Although the ramping-up of Omega Investment
Services will result in rising expenses in the short term, this move will
ultimately allow us to compete in other profitable segments of the financial
services spectrum...services that go beyond traditional banking. Through Omega
Investment Services and added professional staff, Omega Bank will further
enhance its role as the total financial solution in our local markets.

      We remain committed to the highest levels of customer satisfaction.
Indeed, we feel that the Omega "brand" is the knowledgeable, personal customer
service that always has been our hallmark. We intend to assure that good service
continues to distinguish us from the competition.

      With this goal in mind, we introduced several new customer conveniences
during the year. Among them were Courtesy Coverage(SM), potentially saving
customers embarrassment and merchant fees from returned checks, and CheckView,
which provides images of paid checks to customers with their monthly statements.

      Also during 2002, Omega was nationally recognized for its strength. Every
quarter, Weiss Ratings analyzes and independently evaluates more than 15,000
financial institutions, insurance companies, mutual funds and HMOs. With an A+
Weiss rating in October, Omega Bank earned a spot with the 10 Strongest Banks
and Thrifts in the country.

      As the new year begins and the political guard changes in Harrisburg,
Omega Bank finds that it will have a leading voice in the development of the new
administration's economic agenda for Pennsylvania. Donita R. Koval, President
and COO of Omega Bank, was selected to join Team Pennsylvania and Governor
Edward G. Rendell to create a two-phased summit to address economic development
in our region of the Commonwealth. The effort involves business, labor, elected
officials, educators and community groups in generating input to the new
administration's economic priorities.

      Although the economy was burdened by uncertainty, your company turned in
solid performance in 2002. The uncertainty remains for 2003. At the same time,
we feel that Omega Financial Corporation is positioned to enhance our already
strong core of business. We look forward to the challenge.

We feel that the Omega "brand" is the knowledgeable, personal customer service
that always has been our hallmark.

[PHOTO]

Sincerely,

/s/ David B. Lee
Chairman, President and
Chief Executive Officer


                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
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                  Omega Financial Corporation and Subsidiaries
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

COMPANY OVERVIEW

      This discussion concerns Omega Financial Corporation and the consolidated
results of its active subsidiaries ("Omega" or the "Corporation"), Omega Bank,
N.A. ("Omega Bank"), Central Pennsylvania Investment Company ("CPI"), Central
Pennsylvania Life Insurance Company ("CPLI") and Central Pennsylvania Leasing,
Inc. In October of 2001, Omega merged its Hollidaysburg Trust Company and Penn
Central National Bank subsidiaries into Omega Bank, but maintains the trade
names of the former banks. The purpose of this discussion is to focus on
information concerning Omega's financial condition and results of operations
that is not readily apparent from the consolidated financial statements. In
order to obtain a clear understanding of this discussion, the reader should
reference the consolidated financial statements, the notes thereto and other
financial information presented in this Annual Report.

FORWARD-LOOKING STATEMENTS

      The information contained in this Annual Report 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 Omega's financial condition or
results of operations, the classification of Omega's investment portfolio and
other statements which are not historical facts or as to trends or management's
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 rates on the
Corporation, federal and state government regulation and competition. Certain of
these risks, uncertainties and other factors are discussed in this Annual Report
or in Omega's Annual Report on Form 10-K for the year ended December 31, 2002, a
copy of which may be obtained from Omega upon request and without charge (except
for the exhibits thereto).

NATURE OF OPERATIONS

      Omega Financial Corporation is a financial holding company operating
primarily in central Pennsylvania, with the purpose of delivering financial
services within its local market. Consisting of one bank and three active
non-bank subsidiaries, Omega Financial Corporation provides retail and
commercial banking services through 44 offices in Centre, Clinton, Mifflin,
Juniata, Blair, Huntingdon and Bedford Counties. Omega 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. Omega Bank also
provides a variety of trust and asset management services. In 2002, the
Corporation began to provide a full complement of auto, home and business
insurance as well as term life insurance. Additionally in 2002, Omega added
professional staff and contracted with a broker-dealer to allow it to offer
annuities, mutual funds, stock and bond brokerage services, long-term care
insurance and sophisticated life insurance products. Management believes the
Corporation has a relatively stable deposit base with no major seasonal
depositor or group of depositors. Most of the Corporation's commercial customers
are small and mid-sized businesses in central Pennsylvania.

CRITICAL ACCOUNTING POLICIES AND JUDGEMENTS

      The Corporation's consolidated financial statements are prepared based
upon the application of certain accounting policies, the most significant of
which are described in Note 1--Summary of Significant Accounting Policies.
Certain of these policies require numerous estimates and strategic or economic
assumptions that may prove inaccurate or subject to variations and may
significantly affect the Corporation's reported results and financial position
for the period or in future periods. The accounting policy for establishing the
allowance for loan losses includes many assumptions and estimates. Changes in
underlying factors, assumptions or estimates in the allowance for loan losses
could have a material impact on the Corporation's future financial condition and
results of operations.

FINANCIAL CONDITION

Balance Sheet Summary

      On December 31, 2002, Omega's balance sheet had $1,154,557,000 in total
assets, compared to $1,158,629,000 at year-end 2001. Since Omega functions as a
financial intermediary, its financial condition should be viewed in terms of
changes in its uses and sources of funds, and is most meaningful when analyzed
in terms of changes in daily average balances. Table 1 depicts average daily
balances, the dollar change and percentage change for the past two years. This
table is referenced for the discussion in this section.

      Overall, Omega's average assets in total have grown by 1.4%, from
$1,133,495,000 in 2001 to $1,149,810,000 in 2002. In order to optimize its
present and future performance, management must constantly assess its various
risk factors and act accordingly. When performing comparative analysis of
average balances, certain non-recurring activities of the Corporation which
impact asset or liability category balances must be taken into consideration.
For example, in December of 2001, bank-owned life insurance (BOLI) was increased
by $8,000,000. The cash surrender value of this instrument is included in
non-earning assets, and revenues generated are included in non-interest income.
In November of 2001, a block of mortgage loans was sold, with outstanding
balances of $35,895,000. The average balances of these loans in 2001 was
approximately $33,000,000. There were no similar transactions in 2002.


                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
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                                     Table 1
                      Changes in Uses and Sources of Funds
                                ($ in thousands)

<TABLE>
<CAPTION>
                                           2002       Increase (Decrease)       2001      Increase (Decrease)        2000
                                          Average     -------------------      Average    -------------------       Average
                                          Balance      Amount        %         Balance     Amount         %         Balance
                                       --------------------------------------------------------------------------------------
<S>                                    <C>            <C>           <C>      <C>          <C>             <C>     <C>
Funding Uses:
Loans ..............................   $   730,272    $ (3,046)     (0.4)%   $  733,318   $ 37,849        5.4%    $   695,469
Tax-exempt loans ...................        45,570       9,691      27.0         35,879      2,480        7.4          33,399
Investment securities ..............       168,671       7,590       4.7        161,081    (21,794)     (11.9)        182,875
Tax-exempt investment securities ...        95,875       1,282       1.4         94,593     19,033       25.2          75,560
Interest bearing deposits ..........        11,976       5,795      93.8          6,181      5,290      593.7             891
Federal funds sold .................        13,057     (13,082)    (50.0)        26,139      6,617       33.9          19,522
                                       --------------------------------------------------------------------------------------
  Total interest earning assets ....     1,065,421       8,230       0.8      1,057,191     49,475        4.9       1,007,716
Non-interest earning assets ........        87,118       4,825       5.9         82,293        376        0.5          81,917
Unrealized gains on investments ....         8,614       3,056      55.0          5,558      5,404    3,509.1             154
Less: Allowance for loan losses ....       (11,343)        204      (1.8)       (11,547)       404       (3.4)        (11,951)
                                       --------------------------------------------------------------------------------------
  Total uses .......................   $ 1,149,810    $ 16,315       1.4%    $1,133,495   $ 55,659        5.2%    $ 1,077,836
                                       ======================================================================================

Funding Sources:
Interest bearing demand deposits ...   $   269,610    $ 22,433       9.1%    $  247,177   $ 10,148        4.3%    $   237,029
Savings deposits ...................       118,329      14,079      13.5        104,250      2,726        2.7         101,524
Time deposits ......................       394,710     (38,552)     (8.9)       433,262     30,099        7.5         403,163
Repurchase agreements ..............        16,193        (634)     (3.8)        16,827     (1,913)     (10.2)         18,740
Other borrowed funds ...............        39,586         (45)     (0.1)        39,631     10,917       38.0          28,714
                                       --------------------------------------------------------------------------------------
  Total interest bearing liabilities       838,428      (2,719)     (0.3)       841,147     51,977        6.6         789,170
Demand deposits ....................       138,403      13,408      10.7        124,995      3,454        2.8         121,541
Other liabilities ..................        12,428      (1,435)    (10.4)        13,863        612        4.6          13,251
Shareholders' equity ...............       160,551       7,061       4.6        153,490       (384)      (0.2)        153,874
                                       --------------------------------------------------------------------------------------
  Total sources ....................   $ 1,149,810    $ 16,315       1.4%    $1,133,495   $ 55,659        5.2%    $ 1,077,836
                                       ======================================================================================
</TABLE>

      Omega's funding sources have increased over the last two years at rates of
1.4% and 5.2% in 2002 and 2001, respectively. In 2002, the increases in funding
sources was from core deposits (demand and savings) and used to support loan and
investment activity. In 2001, the majority of the growth was time deposits.
These funds were used primarily to support loan growth.

      More detailed discussion of Omega's earning assets and interest bearing
liabilities will follow in sections titled Loans, Investments, Deposits and
Asset Liability Management.

Loans

      From year-end 2001 to year-end 2002, total loans outstanding, net of
unearned interest, increased by $19,465,000. The following table summarizes how
the ending balances (in thousands) changed annually in each of the last three
years.

                                             2002           2001           2000
                                         --------------------------------------
New loans, net of repayments ......      $ 25,571       $ 45,790       $ 48,062
Loans sold ........................        (5,077)       (36,092)          (140)
Loans charged off .................          (934)        (1,226)          (841)
Other adjustments to
  carrying value ..................           (95)           103)           (44)
                                         --------------------------------------
                                         $ 19,465       $  8,369       $ 47,037
                                         ======================================

      The loan portfolio as of December 31, 2002 was comprised of 44% consumer
loans and 56% commercial loans (including construction), as compared to 46%
consumer loans and 54% commercial loans, at December 31, 2001. See Note 4 of
Notes to Consolidated Financial Statements.

      In 2002, total average loans were $775,842,000 as compared to $769,197,000
in 2001, an increase of $6,645,000, or 0.9%.

      During the year, the commercial loan portfolio increased on average by
$53,604,000, or 14.1%. Of the increase, approximately 50%, or $26,932,000 were
fixed rate loans. Of the increase in fixed rate loans, approximately 26%, or
$6,959,000 were tax- exempt loans.

      Consumer mortgage loans on average declined by $18,674,000 in 2002 when
compared to 2001. It is important to note that in 2001, average balances of
mortgage loans included approximately $33,000,000 of loans that were sold in
November of that year. Actual new mortgage loan production from year-end 2002,
net of repayments was $4,136,000, or 2.0% of the year-end 2001 outstanding
balance of mortgage loans.

      Other consumer loans on average declined by $28,685,000 in 2002 compared
to the previous year. All categories of consumer loans, including direct and
indirect installment loans, vehicle leases, student loans and personal lines of
credit had repayments exceeding new loan activity. Management believes that the
uncertain economy and


                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
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intense competition has resulted in this decline. Omega also has maintained
tight credit standards that may also be responsible for this decrease.

      Omega's lending strategy stresses quality growth, diversified by product
and industry. A standardized credit policy is in place throughout the
Corporation, and a special credit committee reviews all large loan requests
prior to approval. Omega's commercial and consumer lenders make credit judgments
based on a customer's existing debt obligations, ability to pay and general
economic trends.

      Management has been monitoring the activity within the loan portfolio very
carefully and strives to be competitive within its market for both commercial
and residential real estate loans. Omega intends to actively pursue growth in
each of the loan categories again during 2003. Competition will continue to play
a key role in pricing decisions to maintain and build new loan volumes.

      The loan portfolio carries the potential risk of past due, non-performing
or, ultimately, charged-off loans. Omega attempts to manage this risk through
credit approval standards, as discussed above, and aggressive monitoring and
collection policies.

      Loan loss reserves have been established in order to absorb probable
losses on existing loans. An annual provision is charged to current earnings to
maintain the reserve at adequate levels. Charge-offs and recoveries are recorded
as an adjustment to the reserve. The allowance for loan losses at December 31,
2002 was 1.42% of total loans, net of unearned interest, as compared to 1.48% of
total loans, net of unearned interest at the end of 2001. The allowance
decreased $172,000 from 2001 as the net charge-offs of $802,000 exceeded the
provision of $630,000. Net charge-offs for 2002 and 2001 were 0.10% and 0.12%,
respectively of average loans. Commercial loans represented 23% of the loans
charged off in 2002, as compared to 48% of the loans charged off in 2001.

  [The following data was represented by a bar chart in the printed material.]

Net Charge-Offs to Average Loans

2002    0.10%
2001    0.12%
2000    0.09%
1999    0.14%
1998    0.15%

      At December 31, 2002, non-performing loans (as defined in Table 2) as a
percentage of the allowance for loan losses were 33.9% as compared to 31.8% at
December 31, 2001. Of the $3,751,000 of non-performing loans at December 31,
2002, $2,836,000 were collateralized with real estate, $855,000 with other
assets and $60,000 were unsecured.

      Non-performing loans were 0.48% of loans as of December 31, 2002, and
0.47% of loans as of December 31, 2001. The increase in non-performing loans in
2002 was primarily due to one large commercial loan relationship that
deteriorated from past due to non-accrual status during the year. Additionally,
in 2002, there was an increase in levels of commercial loan delinquency.

                                     Table 2
                              Non-Performing Loans

                                               December 31,
                                ---------------------------------------------
                                2002      2001      2000     1999     1998
                                ---------------------------------------------
                                              (In thousands)
Non-accrual loans...........    $3,125   $2,327    $1,503    $2,640   $5,627
Accruing loans past due
  90 days or more...........       614    1,209       564       619      682
Restructured loans..........        12       32        98       184      213
                                ---------------------------------------------
Total non-performing
  loans.....................    $3,751   $3,568    $2,165    $3,443   $6,522
                                =============================================

  [The following data was represented by a bar chart in the printed material.]

Non-Performing Loans to Loans
(at year end)

2002    0.48%
2001    0.47%
2000    0.29%
1999    0.49%
1998    0.90%

Allowance for Loan Losses

      The allowance for loan losses is increased by charges to income and
decreased by charge-offs (net of recoveries). Omega's periodic evaluation of the
adequacy of the allowance for loan losses is determined by management through
evaluation of the loss exposure on individual non-performing, delinquent and
high-dollar loans; review of economic conditions and business trends; historical
loss experience; and growth and composition of the loan portfolio, as well as
other relevant factors.

      A quantitative analysis is utilized to support the adequacy of the
allowance for loan losses. This analysis includes review of historical
charge-off rates for loan categories, fluctuations and trends in the amount of
classified loans and economic factors. Significant to this analysis is any
change in observable trends that may be occurring relative to loans, to assess
potential credit weaknesses. Current economic factors and trends in risk ratings
are considered in the determination and allocation of the allowance for loan
losses.

      The majority of the allowance for loan losses is allocated for risks
associated with commercial real estate and commercial business loans. Therefore,
significant changes in these types of loans drive changes in the levels of loan
loss reserves. The ability for customers to repay commercial loans is more
dependent upon the success of their business, continuing income and general
economic conditions. Accordingly, the risk of loss is higher on such loans than
residential real estate loans, which generally incur fewer losses as the
collateral value exceeds the loan amounts in the event of foreclosure.

      Omega's lending is concentrated within central Pennsylvania and
accordingly the loan portfolio quality is dependent upon localized economic
factors such as: unemployment rates, commercial real estate vacancy rates,
consumer delinquency trends and residential housing appreciation rates.


                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
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<PAGE>

  [The following data was represented by a bar chart in the printed material.]

Allowance for Losses to Loans
(at year end)
2002    1.42%
2001    1.48%
2000    1.55%
1999    1.68%
1998    1.63%

Investments

      Total investments, defined to include all interest earning assets except
loans (i.e., investment securities available for sale (at market value), federal
funds sold, interest bearing deposits and other interest earning assets) totaled
$294,910,000 on December 31, 2002, representing a decrease of $18,704,000 from
year-end 2001. The following table summarizes how the ending balances (in
thousands) changed annually in each of the last three years.

                                   2002        2001         2000
                                 ---------------------------------
Purchases of investment
  securities .................   $ 82,010    $ 113,497    $ 48,282
Sales and maturities of
  investment securities ......    (99,289)     (93,500)    (79,685)
Adjustment in market value
  of AFS securities ..........      3,544        5,271       1,243
Amortization/Accretion .......     (1,415)        (346)       (181)
Federal funds sold, net change     19,450      (25,300)     37,775
Interest bearing deposits
  with others, net change ....    (23,055)      30,717         223
                                 ---------------------------------
                                 $(18,755)   $  30,339    $  7,657
                                 =================================

      On average, investments increased by $1,585,000, or 0.6%, during 2002,
after increasing by $9,146,000, or 3.3%, during 2001.

  [The following data was represented by a bar chart in the printed material.]

Average Asset Mix

        Average Loans   Average Instruments
2002        67.5%              25.9%
2001        67.9%              25.9%
2000        67.6%              25.9%
1999        66.6%              28.6%
1998        68.6%              26.5%

      The investment area is managed according to internally established
guidelines and quality standards. Omega segregates its investment securities
portfolio into two classifications: those held to maturity and those available
for sale. Omega classifies all marketable investment securities as available for
sale. At December 31, 2002, the market value of the entire securities portfolio
exceeded amortized cost by $11,137,000 as compared to December 31, 2001 when
market value was greater than amortized cost by $7,594,000. The weighted average
maturity of the investment portfolio was 1 year and 4 months as of December 31,
2002 as compared to 1 year and 10 months at the end of 2001. The weighted
average maturity has remained short in order to achieve a desired level of
liquidity. Table 4 (located on page 11) shows the remaining maturity or earliest
possible repricing for investment securities.

Non-Interest Earning Assets

      Non-interest earning assets increased $4,825,000, or 5.9% on average in
2002 as compared to an increase of $376,000, or 0.5% in 2001. In December of
2001, $8,000,000 was added to the bank-owned life insurance (BOLI) investment,
and is responsible for the increase in average non-earning assets. Other changes
occurring in both years were the result of normal operating activities.

Deposits

      From year-end 2001 to year-end 2002, total deposits decreased by
$12,412,000. The following table summarizes how the ending balances (in
thousands) changed annually in each of the last three years.




                            2002         2001       2000
                          --------------------------------
Demand deposits .......   $ 10,065    $  8,989    $ 10,052
Interest bearing
  demand deposits .....     18,501      20,776       7,823
Savings deposits ......     13,102       9,889      (2,229)
Time deposits, $100,000
  and greater .........    (16,758)      8,826       9,978
Time deposits, other ..    (37,322)     (6,314)     12,282
                          --------------------------------
                          $(12,412)   $ 42,166    $ 37,906
                          ================================

      Average deposits in 2002 increased by $11,368,000, or 1.2% to
$921,052,000, after an increase in 2001 of $46,427,000, or 5.4%. In the past
several years the banking industry in general has experienced limited deposit
growth because of fierce competition in the marketplace provided by mutual funds
and other investment options that directly compete with traditional banking
products. In 2001, however, we believe that public perception changed somewhat
and the comfort of insured deposits and local familiarity that our bank
continues to offer to depositors once again became a primary consideration for
investors. Omega continues to supply the needs of its customer base by offering
insured deposits and financial services, but has supplemented its funding needs
with borrowings. As reflected in Table 3, in 2002, Omega again experienced low
deposit growth in total and a shift from time deposits back into more liquid
core transaction accounts. On average, core deposits increased by $49,920,000
while time deposits decreased by $38,552,000.

  [The following data was represented by a bar chart in the printed material.]

Average Deposit Mix
        Average Core Deposits   Average Time Deposits
2002            57.1%                   42.9%
2001            52.4%                   47.6%
2000            53.3%                   46.7%
1999            54.1%                   45.9%
1998            53.0%                   47.0%


                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                   o Page 6 o
<PAGE>

                                     Table 3
                               Changes in Deposits
                                ($ in thousands)

<TABLE>
<CAPTION>
                                        2002      Increase (Decrease)       2001     Increase (Decrease)      2000
                                      Average     -------------------     Average    -------------------    Average
                                      Balance     Amount         %        Balance     Amount        %       Balance
                                      ------------------------------------------------------------------------------
<S>                                   <C>        <C>              <C>     <C>        <C>             <C>    <C>
Interest bearing demand deposits ..   $269,610   $ 22,433         9.1%    $247,177   $ 10,148        4.3%   $237,029
Savings deposits ..................    118,329     14,079        13.5      104,250      2,726        2.7     101,524
Demand deposits ...................    138,403     13,408        10.7      124,995      3,454        2.8     121,541
                                      ------------------------------------------------------------------------------
  Total core (transaction) accounts    526,342     49,920        10.5      476,422     16,328        3.5     460,094
Time deposits, $100,000 and greater     69,359     (7,907)      (10.2)      77,266     20,205       35.4      57,061
Time deposits, other ..............    325,351    (30,645)       (8.6)     355,996      9,894        2.9     346,102
                                      ------------------------------------------------------------------------------
  Total time deposits .............    394,710    (38,552)       (8.9)     433,262     30,099        7.5     403,163
                                      ------------------------------------------------------------------------------
    Total deposits ................   $921,052   $ 11,368         1.2%    $909,684   $ 46,427        5.4%   $863,257
                                      ==============================================================================
</TABLE>

Other Interest Bearing Liabilities

      During 2002, little change was seen in average balances of other interest
bearing liabilities. Repurchase agreements combined with other borrowed funds
decreased by $679,000, as these funding vehicles were not used as heavily in
2002 as in 2001. In 2001, combined repurchase agreements and borrowed funds
increased by $9,004,000, or 19.0%, compared to 2000. This increase was needed to
match-fund certain commercial loans and to fund the stock repurchase programs in
effect (see Note 9 of Notes to Consolidated Financial Statements).

Shareholders' Equity

      From year-end 2001 to year-end 2002, total shareholders' equity increased
by $5,860,000. The following table summarizes how the components of equity (in
thousands) changed annually in each of the last three years.

                             2002        2001        2000
                           --------------------------------
Net income .............   $ 18,179    $ 17,655    $ 17,129
Dividends ..............     (9,623)     (9,225)     (9,374)
Stock options exercised       3,470       2,485       1,485
Repurchase of stock ....     (9,207)    (13,713)     (6,354)
Net change in unrealized
  security gains .......      2,300       3,358         768
Other ..................        741         486         399
                           --------------------------------
                           $  5,860    $  1,046    $  4,053
                           ================================

      Shareholders' equity continued to be an important funding source during
2002, providing an average balance of $160,551,000, as compared to the
$153,490,000 provided in 2001. Dividend payout ratios on the common stock were
50.8% for 2002, 50.0% for 2001 and 52.4% for 2000. Capital has been increased as
a result of employee stock option and purchase plans. Other comprehensive income
arising from unrealized gains (net of tax) on securities available for sale
increased average equity by $1,992,000 in 2002 and increased average equity by
$3,503,000 in 2001. At December 31, 2002, Omega held 1,507,298 shares of stock
in treasury at a cost of $45,643,000 as compared to 1,225,613 in 2001 at a cost
of $36,436,000. These increases are a result of the Omega stock repurchase
program in effect during 2001 and 2002 (see Note 12 of Notes to Consolidated
Financial Statements).

      Omega increased the return to shareholders in 2002 by increasing its
dividend 5.6% to $1.13 per common share. Per share common dividends in prior
years were $1.07 and $1.03 in 2001 and 2000, respectively. Omega paid a dividend
of $1.80 per preferred share in each of the years ending 2002, 2001 and 2000.
See Note 20 of Notes to Consolidated Financial Statements regarding restrictions
on dividends from subsidiary banks to the holding company.

  [The following data was represented by a bar chart in the printed material.]

Common Book Value Per Share
2002    $19.63
2001    $18.65
2000    $17.73
1999    $16.96
1998    $16.95

      Federal banking regulators have established capital adequacy requirements
for banks based on risk factors. All banks and bank holding companies are
required to have a minimum of 4% of risk adjusted assets in Tier I capital and
8% of risk adjusted assets in Total capital (Tier I and Tier II capital). As of
December 31, 2002 and 2001, Omega's Tier I capital ratio was 20.3% and 19.9%,
respectively, and its Total capital ratio was 21.5% and 21.1%, respectively.
Additionally, banking organizations must maintain a minimum Tier I capital to
total average asset (leverage) ratio of 3%. This 3% leverage ratio is a minimum
for the top-rated banking organizations without any supervisory, financial or
operational weaknesses or deficiencies. Other banking organizations are required
to maintain leverage capital ratios 100 to 200 basis points above the minimum
depending on their financial condition. At December 31, 2002 and 2001, Omega's
leverage ratio was 13.5% and 13.3%, respectively, against a required leverage
ratio of 4% (see Note 20 of Notes to the Consolidated Financial Statements).

  [The following data was represented by a bar chart in the printed material.]

Equity to Asset Ratio
(at year end)
2002    14.04%
2001    13.49%
2000    13.93%
1999    14.35%
1998    14.49%


                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                   o Page 7 o
<PAGE>

ASSET/LIABILITY MANAGEMENT

      The process by which financial institutions manage their assets and
liabilities is called asset/liability management. This process has become very
important in an industry undergoing an ever-changing interest rate environment.
The goals of Omega's asset/liability management are increasing net interest
income without taking undue interest rate risk or material loss of net market
value of its equity, while maintaining adequate liquidity. Net interest income
is increased by widening the interest spread and increasing earning assets.
Liquidity is measured by the ability to meet both depositors' and credit
customers' requirements.

Net Interest Income and Interest Rate Risk

      Omega believes that it has managed interest rate risk while achieving
optimal levels of net interest income. Interest rate risk is the risk to net
interest income or capital arising from movements of interest rates. There are
several components of interest rate risk: repricing risk, basis risk and
customer option risk. The two methodologies used by the Corporation to aid in
the management of interest rate risk are gap analysis and economic simulation.
Gap analysis is a tool used by the Corporation primarily to measure repricing
risk while economic simulation is used to measure and manage repricing risk,
basis risk and customer option risk.

      Both tools, gap analysis and economic simulations are performed in a
static environment. In reality, Omega's balance sheet is dynamic and in constant
change as are interest rates. Management applies the same techniques using
projected future volumes and various interest rate scenarios to analyze
potential hedging decisions or decisions that involve the acquisition or
investment of funds.

      Economic simulation involves management simulating possible economic
conditions and interest rate scenarios in order to quantify the impact on net
interest income. The effect that changing interest rates has on Omega's net
interest income is simulated by moving interest rates up and down at 100 basis
point increments. This simulation is known as rate shocks.

      As the table below indicates, based on rate shock simulations, the
Corporation is exposed to a loss of income if interest rates fall. For example,
net interest income at risk for a 100 basis point decrease in rates as of
December 31, 2002 was $1,242,000, or 2.81%, of net interest income, compared to
$420,000, or .89%, of net interest income at risk as of December 31, 2001.
Omega's rate risk policies provide for maximum limits on net interest income
that can be at risk for 100 through 300 basis point changes in interest rates.

               Effect of Interest Rate Risk on Net Interest Income
                                (In $ thousands)

                  Change                         Change     Total Change
   Change in      Due to          Change         Due to        Due to
Interest Rates   Repricing        Due to        Customer    Interest Rate
(Basis Points)     Risk         Basis Risk       Options        Risk
-------------------------------------------------------------------------
      300         $ 1,470        $ 2,118        $    60        $ 3,648
      200             974          1,430             46          2,450
      100             486            720             33          1,239
        0               0              0              0              0
     -100            (400)          (795)           (47)        (1,242)
     -200            (536)        (2,641)           (67)        (3,244)
     -300            (690)        (4,855)          (110)        (5,655)

      Omega's interest rate risk position is directly related to the preference
of our customers for fixed rate loans and shorter-term deposits. If customer
preferences change, the same effects could be obtained by changing investment,
lending, funding or pricing strategies; however, these strategies could reduce
liquidity or require maintaining additional capital.

      In addition to determining the impact on net interest income from various
interest rate changes, the same analysis is applied to determine the change that
interest rate movements would have on Omega's market value of equity (MVE). The
MVE provides an indicator of economic value and is computed by discounting all
contractual future cash flows at current market rates. The effect that changing
interest rates has on Omega's MVE is simulated by moving interest rates up and
down at 100 basis point increments. This provides management with information
necessary to analyze long-term interest rate risk. Management can limit
long-term interest rate risk, but it is generally at the expense of short-term
earnings, which can cause more volatility in the short-term. At December 31,
2002, Omega's MVE was within the guidelines established by management and the
Board of Directors. The table below summarizes the results of rate shocks
showing the effect that interest rate risk has on market value of equity as of
December 31, 2002.

             Effect of Interest Rate Risk on Market Value of Equity
                                (In $ thousands)

                  Change                         Change     Total Change
   Change in      Due to          Change         Due to        Due to
Interest Rates   Repricing        Due to        Customer    Interest Rate
(Basis Points)     Risk         Basis Risk       Options        Risk
-------------------------------------------------------------------------
     300         $(20,584)       $ 23,168       $  4,902      $  7,486
     200          (14,119)         16,004          3,831         5,716
     100           (7,269)          8,292          2,583         3,606
       0                0               0              0             0
    -100            7,722          (8,900)        (3,129)       (4,307)
    -200           15,932         (18,019)        (6,046)       (8,133)
    -300           24,676         (27,113)       (10,241)      (12,678)

Repricing Risk

      Repricing risk arises from differences between the timing of rate changes
and the timing of cash flows that occur in the pricing and maturity of assets
and liabilities. The static gap analysis is one of the tools used to measure and
manage repricing risk. By managing gap, fluctuations in net interest income can
be minimized, thereby achieving consistent growth in net interest income during
periods of changing interest rates. Table 4 (located on page 11) shows the
period and cumulative static gaps for various time intervals as of December 31,
2002. The data in this table is based upon the earliest possible repricing dates
or maturity, whichever comes first. Core deposit accounts, defined as interest
bearing demand deposits and certain savings accounts, are considered to have
repricing implications of various intervals between one month and five years.
The gap analysis is used as an indicator of what may happen to net interest
income if interest rates rise or fall. On a cumulative basis, over the next
twelve months, Omega is in a positive gap position of $4,406,000 at December 31,
2002, indicating more earning assets than interest bearing liabilities will
reprice during that period. Over the past several years, the level of our gap
and interest rate risk positions has been affected by both


                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                   o Page 8 o
<PAGE>

the extension of our loan portfolio, which reflects our customers preference for
fixed rates, and the shortening of our certificate of deposit base as customers
continue to prefer shorter term certificates.

      As of December 31, 2002, should interest rates rise by 100 basis points
immediately and Omega's balances do not grow and the mix does not change,
repricing risk would cause net interest income to increase over the next twelve
months by $486,000. If interest rates would decline by 100 basis points
immediately, repricing risk would cause net interest income to decrease by
$400,000 over the next twelve months.

      Omega's management cannot predict the direction of interest rates nor will
the mix remain unchanged, yet management uses this information to help formulate
strategies to minimize any unfavorable effect on net interest income as a result
of interest rate changes.

Basis Risk

      Basis risk is another source of interest rate risk and arises from the
difference in movements of interest rates earned on assets and the interest
rates paid on liabilities with otherwise similar repricing characteristics. The
Corporation analyzed the effects of basis risk on both net interest income and
MVE. This analysis was done through interest rate shocks, which isolated the
movements of the prime rate and treasury rates. The following shows the results
of these rate shocks.

                   Effect of Basis Risk on Net Interest Income
                                (In $ thousands)

                   Change in Net      Change in Net      Change in Net
   Change in      Interest Income    Interest Income    Interest Income
Interest Rates        Due to         Due to Treasury        Due to
(Basis Points)   Prime Basis Risk      Basis Risk      Total Basis Risk
-----------------------------------------------------------------------
      300           $ 6,136             $(4,018)            $ 2,118
      200             4,091              (2,661)              1,430
      100             2,045              (1,325)                720
        0                 0                   0                   0
     -100            (2,045)              1,250                (795)
     -200            (4,091)              1,450              (2,641)
     -300            (6,136)              1,281              (4,855)

      The table above indicates the results of changes in the prime rate or
treasury rates, keeping all other interest rates unchanged. If the prime rate
would increase by 100 basis points, and all other rates remained unchanged, the
Corporation's net interest income would increase by $2,045,000 and market value
of equity would decrease by $4,123,000. The Corporation's prime basis risk has
stabilized over the last several years as a result of customer preference for
fixed rate loans and the fact that the Corporation has increasingly indexed
variable rate loans to rates other than the prime rate. If all points on the
treasury curve would increase 100 basis points and all other rates remained
unchanged, the Corporation's net interest income would decrease $1,325,000 and
market value of equity would increase $12,415,000. This change can be attributed
to the fact that most deposit rates are indexed to the treasury curve;
therefore, an increase in treasury rates would increase interest expense more
than interest income.

                 Effect of Basis Risk on Market Value of Equity
                                (In $ thousands)

                      Change in         Change in          Change in
   Change in        Market Value      Market Value       Market Value
Interest Rates         Due to        Due to Treasury        Due to
(Basis Points)    Prime Basis Risk     Basis Risk      Total Basis Risk
-----------------------------------------------------------------------
      300            $(11,633)          $ 34,801           $ 23,168
      200              (7,991)            23,995             16,004
      100              (4,123)            12,415              8,292
        0                   0                  0                  0
     -100               4,414            (13,314)            (8,900)
     -200               9,159            (27,178)           (18,019)
     -300              14,287            (41,400)           (27,113)

Customer Option Risk

      Customer option risk arises when a customer has the right to alter the
level and timing of cash flows of an asset or liability. Prepayment options on
loans and early withdrawal of deposits are two of the most common types of
customer options. In a rising rate environment, the Corporation's interest rate
risk is increased as customers transfer deposits from products with lower
interest rates to accounts or other products that offer higher interest rates.
In a declining rate environment, the Corporation's interest rate risk is
increased when a customer prepays or refinances their loan in order to take
advantage of the lower rate environment. The Corporation analyzed the effects of
customer options on net interest income and MVE by using interest rate shocks
that include the effect of estimated prepayments on our mortgage portfolio.
Prepayment levels are dependent on several factors including the current
interest rate environment, the interest rate on the loan as well as other
contractual provisions of the loan. Mortgage prepayment levels were determined
by using estimated prepayments of mortgage-backed securities with similar
maturity and rate characteristics. Customer options resulting from a 100 basis
point decrease in interest rates would cause net interest income to decrease
$47,000 and market value of equity to decrease $3,129,000.

Liquidity

      Liquidity represents the Corporation's ability to efficiently meet
commitments to fund loans, purchase securities and repay deposits or other
liabilities.

      There is no standardized formula for measuring liquidity. Therefore, in
order to assess the adequacy of the Corporation's liquidity position, Omega has
adopted a liquidity measurement that answers the following three questions:

      1.    How much cash is on hand and can be raised over the next 30 days
            without any principal loss on the assets?

      2.    If adverse publicity was released about the industry or the
            Corporation, what is the ability of Omega to meet depositor needs?
            This would be the run on the bank or worst-case scenario.

      3.    What are the funding requirements through the next 90 days?


                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                   o Page 9 o
<PAGE>

      When measuring liquidity, total liquid assets must be determined. Total
liquid assets includes cash on hand, federal funds sold, market value of U.S.
Treasury and Agency securities not pledged, loans that could be sold within 30
days, cash from investment or loan maturities within 30 days and any other
readily marketable assets.

      Total short-term liabilities must also be determined to measure liquidity.
Total short-term liabilities include federal funds purchased, repurchase
agreements, certificates of deposit over $100,000 scheduled to mature within
thirty days, and an estimated amount of retail deposit withdrawals.

      The short-term liabilities are deducted from the liquid assets to
determine a surplus or deficit and a percentage of total assets is determined.
At December 31, 2002, total liquid assets were $178,346,000 while the short-term
liabilities were $60,733,000. This left a surplus of liquid assets of
$117,613,000, or 10.2%, of total assets.

      Management believes that a surplus of not less than 5% is adequate. The
Corporation actively manages liquidity at this level and has developed
reasonable liquidity contingency plans, including ensuring available alternative
funding sources to maintain adequate liquidity under a variety of business
conditions.

      The investment portfolio, due to its relatively short average life, has
the ability to provide additional liquidity if necessary. When developing
investment strategies, the Corporation considers runoff of assets and expected
future funding needs.

      If required due to unforeseen circumstances, Omega has the ability to
increase its liquidity through the sale of assets, primarily financial
instruments. As disclosed in Note 16 of Notes to the Consolidated Financial
Statements, most of Omega's financial assets at December 31, 2002 have a fair
value in excess of their aggregate book value; therefore, some of these
instruments could be sold if needed for liquidity purposes and their sale would
not negatively affect current earnings or capital.

      In addition, liquidity can also be provided from off-balance sheet
sources. At December 31, 2002, Omega had available unsecured federal funds lines
totaling $25,000,000. At December 31, 2002, Omega had no amount outstanding
against these federal funds lines. Another source of liquidity is the Federal
Reserve Discount Window. Omega is able to borrow up to 90% of the amount of
collateral pledged, which as of December 31, 2002 was $16,045,000. The
Corporation does not consider either of these to be a source of long-term
liquidity; rather they are used to cover short-term fluctuations in liquidity.

      The Corporation is also a member of the Federal Home Loan Bank of
Pittsburgh (FHLB), which provides overnight or term funding to the bank with a
borrowing limit of $67,686,000. This borrowing limit could be increased to a
maximum amount of $286,291,000 with the purchase of additional FHLB stock. These
borrowings are secured by investment securities and first mortgage residential
real estate loans. At December 31, 2002, Omega had $37,683,000 outstanding in
term loans and no overnight advances (See Note 9 of Notes to the Consolidated
Financial Statements).

      Since deposits are a primary source of liquidity, another measure of
liquidity is the average loan to deposit ratio. This ratio was 84.20% at
December 31, 2002 and 84.60% at December 31, 2001. Management's target range for
this ratio is 70% to 85%. Management believes that Omega has a relatively stable
deposit base with no major seasonal depositor or group of depositors. However,
management recognizes that a significant risk to liquidity is the level and mix
of deposits. Due to market and interest rate uncertainties throughout the past
year, customers have shifted funds from the stock market, longer-term deposits
and other alternative investments, into the safety of core accounts and
short-term certificates. Management has estimated the unusual growth in core
accounts to be $34,229,000 and recognizes that it provides additional liquidity
risk, especially if interest rates would increase.

      The Corporation has numerous off-balance sheet loan obligations that exist
in order to meet the financing needs of its customers. These include commitments
to extend credit, unused lines of credit as well as standby letters of credit.
(See Note 17 of Notes to the Consolidated Financial Statements). Because many
commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements. The
Corporation does not expect that these commitments will have an adverse affect
on its liquidity position.

  [The following data was represented by a bar chart in the printed material.]

Average Loan to Deposit Ratio
2002    84.2%
2001    84.6%
2000    84.4%
1999    82.0%
1998    83.5%


                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 10 o
<PAGE>

                                     Table 4
                  Maturity Distribution as of December 31, 2002
                                 (In thousands)
                 Remaining Maturity/Earliest Possible Repricing

<TABLE>
<CAPTION>
                                                                    Over Three     Over Six    Over One
                                                          Three     Months But    Months But   Year But       Over
                                                         Months     Within Six    Within One  Within Five     Five
                                                         or Less      Months         Year       Years        Years       Total
                                                        ---------   ----------    ----------  -----------  ----------  ----------
<S>                                                     <C>         <C>           <C>         <C>          <C>         <C>
Interest Earning Assets
  Interest bearing deposits .........................   $   8,757   $       --    $       --  $       --   $       --  $    8,757
  Federal funds sold ................................      33,900           --            --          --           --      33,900
  Investment securities:
    U.S. Treasury securities and obligations of other
      U.S. Government agencies and corporations .....      18,644       13,577        28,626      71,123           --     131,970
    Obligations of state and political subdivisions .       5,341        6,817        18,936      54,964           --      86,058
    Corporate and other securities ..................       3,758          509           472       2,484           10       7,233
    Mortgage-backed securities ......................         547          382           605       2,596           --       4,130
    Stocks ..........................................          --           --            --          --       10,980      10,980
  Loans:
    Commercial, financial, and agricultural .........      76,825        2,888         8,158      22,986        5,976     116,833
    Real estate--commercial .........................      85,489       15,308        34,966     142,207       15,040     293,010
    Real estate--construction .......................      32,642           67           155       1,113        2,713      36,690
    Real estate--mortgage ...........................       6,409       10,729        18,661      81,059       78,322     195,180
    Home equity .....................................      17,808        3,319         6,346      40,781       24,246      92,500
    Personal (net of unearned interest) .............      13,195        3,333         7,576      19,909        1,432      45,445
    Lease financing (net of unearned interest) ......          10           20            52          79           --         161
                                                        ---------   ----------    ----------  ----------   ----------  ----------
Total Interest Earning Assets .......................     303,325       56,949       124,553     439,301      138,719   1,062,847

Interest Bearing Liabilities
  Demand deposits ...................................      48,847        1,239         7,436     153,431           --     210,953
  Savings deposits ..................................     113,695          600        27,329      48,414           --     190,038
  Certificates of deposit over $100,000 .............      15,327        8,500         7,557      28,272           --      59,656
  Time deposits .....................................      94,894       61,580        41,151     112,435           50     310,110
  Short-term borrowings .............................      36,452        5,000            --          --           --      41,452
  ESOP debt .........................................          --           --            --          --        2,832       2,832
  Long-term debt ....................................       5,279          282           577       5,281        4,818      16,237
  Other interest bearing liabilities ................         762           --            --          --           --         762
                                                        ---------   ----------    ----------  ----------   ----------  ----------
Total Interest Bearing Liabilities ..................     315,256       77,201        84,050     347,833        7,700     832,040
Gap .................................................   $ (11,931)  $  (20,252)   $   40,503  $   91,468   $  131,019  $  230,807
                                                        =========   ==========    ==========  ==========   ==========  ==========
Cumulative Gap ......................................   $ (11,931)  $  (32,183)   $    8,320  $   99,788   $  230,807
                                                        =========   ==========    ==========  ==========   ==========  ==========
Cumulative sensitivity ratio ........................        0.96         0.92         1.02        1.12         1.28
Commercial, financial and agricultural loans maturing
  after one year with:
    Fixed interest rates ............................                                         $    2,081   $    5,754  $    7,835
    Variable interest rates .........................                                             20,905          222      21,127
                                                                                              ----------   ----------  ----------
    Total ...........................................                                         $   22,986   $    5,976  $   28,962
                                                                                              ==========   ==========  ==========
</TABLE>


                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 11 o
<PAGE>

RESULTS OF OPERATIONS

2002 Financial Performance Overview

      At $18,179,000, Omega's net income for 2002 represented a return on
average assets (ROA) of 1.58%, representing an increase of 1.3% over 2001 and
the seventh consecutive year of ROA's in excess of 1.50%. The management of
Omega strives to attain high earnings levels consistently each year. Management
endeavors to protect the core earnings base with conservative policies,
minimizing risk to shareholders. We believe that this approach has helped
achieve solid performances year after year. As with most corporations, however,
occasional events occur which trigger a significant effect on earnings, such as
Omega's sale in 2001 of a block of mortgage loans for substantial gains.
Additionally other gains or losses realized from the securities portfolio could
create peaks and valleys in earnings results from year to year. In order to
exhibit a true comparison of core operating results, the chart presented below
shows annual net income in two parts--net operating income and non-recurring
income. In viewing results in this manner, the reader can easily see the change
each year in core operating results, without the effects of these one-time
events. In 2002, the effect of non-recurring income was only 1.7% of total net
income as compared to 4.4% in 2001. In 2002, net income increased by 3.0%, or
$524,000, while net operating income (defined as net income reduced by gains on
securities and other non-recurring gains, net of tax) increased by $985,000, or
5.8%. On a diluted basis, net income per common share improved, reaching $2.10
in 2002, an increase of 4.5%, or $.09 over 2001.

  [The following data was represented by a bar chart in the printed material.]

Annual Net Income
(in thousands)

<TABLE>
<CAPTION>
        Net Operating Income    Non-Recurring Income (net of tax)    Total Annual Net Income
<S>             <C>                          <C>                             <C>
2002            $17,864                      $  315                          $18,179
2001            $16,879                      $  776                          $17,655
2000            $16,947                      $  182                          $17,129
1999            $16,170                      $1,191                          $17,362
1998            $15,725                      $1,367                          $17,092
</TABLE>

      The key factors that defined the 2002 results are as follows:

      o     Strong, increasing net interest margin

      o     Increasing service-based fee income

      o     Other non-interest income growth

      o     Ongoing expense control

      A strong balance sheet has again produced good earnings. Assets were
$1,154,557,000 at December 31, 2002, representing a $4,072,000, or 0.4%,
decrease from year-end 2001. Loans (net of unearned interest) were $779,819,000
at December 31, 2002 compared to $760,354,000 at December 31, 2001, an increase
of 2.6%, or $19,465,000. Deposits decreased by $12,412,000, or 1.3%, at December
31, 2002 when compared to December 31, 2001.

      Return on average equity decreased from 11.50% in 2001 to 11.32% in 2002,
while return on average assets increased to 1.58% from 1.56% in 2001. Omega's
performance can be compared to its Mid-Atlantic regional peer group with
consolidated assets of $1 billion to $5 billion (using the most current data for
September 30, 2002 in each case).

                                                            Omega      Peers
                                                            -----------------
Return on average assets..............................       1.60%      1.09%
Return on average equity..............................      11.61      12.90

  [The following data was represented by a bar chart in the printed material.]

Return on Average Equity
2002    11.32%
2001    11.50%
2000    11.13%
1999    11.30%
1998    11.35%

Net Interest Income

      Net interest income is the amount by which interest income on earning
assets exceeds interest expense on interest bearing liabilities. Net interest
income is the most significant component of revenue, comprising approximately
57% of total revenues for 2002. Net interest margin is the percentage of net
return on average earning assets and provides a measure of comparability of a
financial institution's performance. Because some interest earning assets are
tax-exempt, an adjustment is made for analytical purposes to place all assets on
a fully tax-equivalent basis.


                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 12 o
<PAGE>

      Both net interest income and net interest margin are impacted by interest
rate changes, changes in the relationships between rates and changes in the
composition of the average balance sheet. Additionally, product pricing, product
mix and customer preferences dictate the composition of the balance sheet and
the resulting net interest income. Table 5 (located on pages 14-15) shows
average asset and liability balances, average interest rates and interest income
and expense for the period 2000 to 2002. In addition, it shows the changes
attributable to the volume and rate components of net interest income.

      Total average loans were $775,842,000 in 2002 at an average weighted yield
of 6.82% that produced $52,895,000 in interest income. This represented a
$6,645,000, or 0.9%, increase in average loan volumes from 2001. The yield
decreased 117 basis points to 6.82% from 7.99% in 2001 resulting in a decrease
of $8,752,000 in interest income, while mix and volume changes increased
interest income $214,000 when compared to 2001. The combination of these rate,
volume and mix effects resulted in a decrease of $8,538,000, or 13.9% in total
loan interest. In order to explain the 117 basis point decrease in loan yields
in 2002, we must consider the effects of Omega's pricing index. In 2002, the
weighted average rate of all new loans was 5.87%, 212 basis points lower than
the composite rate of the loan portfolio in total during 2001. In November of
2001, blocks of mortgage loans with total outstanding balances of $35,895,000
were sold. These loans were included in 2001 at a composite rate of 7.07%.

      Investment securities averaged $264,546,000, an increase of $8,872,000, or
3.5% from the average investment securities in 2001. The average weighted yield
decreased to 4.42% from 5.19% in 2001. Interest bearing deposits and federal
funds sold, as a group on average, decreased a total of 29.1%, or $7,287,000.
These monies were used to support the loan demand and to purchase new investment
securities.

      Total interest earning assets averaged $1,065,421,000 at a yield of 6.10%
and produced total interest income of $64,960,000 for 2002. The net increase in
average earning assets of $8,230,000 in 2002 over 2001 was funded by demand
deposit growth, cash on hand and earnings. The yield decreased by 109 basis
points to 6.10% in 2002. On a fully tax-equivalent basis, yield on earning
assets decreased by 109 basis points to 6.40%. Interest income increased
$390,000 from volume and mix changes and decreased by $11,436,000 from generally
lower yields producing a net decrease of 14.5%, or $11,046,000. On a fully
tax-equivalent basis, interest income decreased by $493,000, or 1.0%.

      Total interest bearing liabilities averaged $838,428,000 at a cost of
$19,323,000 carrying a composite rate of 2.30%. This represented a decrease in
interest bearing liabilities of 0.3%, or $2,719,000 from 2001. The composite
rate decreased by 137 basis points in 2002, from 3.67% in 2001. Interest expense
decreased $10,175,000 due to lower rates and decreased $1,365,000 due to volume
and mix changes. These changes resulted in a net decrease of $11,540,000, or
37.4%, in interest expense. The most significant change in liabilities was the
decrease in time deposits of $38,552,000, or 8.9% and the increase in core
deposits of $49,920,000. Management believes that many consumers had once again
decided to move their deposits to more liquid vehicles, as was the case in 2000.
Also during 2002, borrowings decreased on average by $679,000, or 1.2%.

      Non-interest bearing funding sources, including equity, averaged
$311,382,000 in 2002, compared to $292,348,000 in 2001, for an increase of
$19,034,000, or 6.5%. Most of the increase is attributed to non-interest bearing
demand deposit balances. The increase in non-interest bearing funding sources
resulted in a decrease of 110 basis points in the rate to fund interest earning
assets (computed by dividing the total interest expense by the total average
earning assets) to 1.82% in 2002 from 2.92% in 2001.

      Net interest income was $45,637,000 for 2002, an increase of $494,000, or
1.1%, from 2001. The increase in net interest income was the result of an
increase of $1,755,000 due to volume and mix changes and a decrease of
$1,261,000 as a result of interest rate effects. Net yield was 4.28% in 2002 and
4.27% in 2001. On a fully tax-equivalent basis, the net yield increased from
4.57% to 4.58% in 2002. As a comparison, Omega's regional peer group reported an
average net interest margin of 4.08% through September 30, 2002 versus Omega's
4.56% for the same reporting period.


                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 13 o
<PAGE>

                                     Table 5
             Average Balance Sheets and Net Interest Income Analysis
                                 (In thousands)



<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------------------------------------------------
                                                              2002
                                            ---------------------------------------

                                             Average                        Yield/
                                            Balance(1)      Interest         Rate
-----------------------------------------------------------------------------------

<S>                                        <C>             <C>               <C>
ASSETS

Interest earning assets:
  Taxable loans(5) ....................    $   730,272     $    50,948       6.98%
  Tax-exempt loans ....................         45,570           1,947       4.27
                                           ----------------------------------------
      Total loans .....................        775,842          52,895       6.82
  Taxable investment securities .......        168,671           7,816       4.63
  Tax-exempt investment securities ....         95,875           3,867       4.03
                                           ----------------------------------------
      Total investment securities .....        264,546          11,683       4.42
  Interest bearing deposits ...........         11,976             177       1.48
  Federal funds sold ..................         13,057             205       1.57
                                           ----------------------------------------
Total interest earning assets .........      1,065,421          64,960       6.10
Non-interest earning assets:
  Cash and due from banks .............         30,729
  Allowance for loan losses ...........        (11,343)
  Premises and equipment ..............         15,130
  Other assets(7) .....................         49,873
                                           ------------
      Total assets ....................    $ 1,149,810
                                           ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
  Interest bearing demand deposits(2)..    $   269,610           1,970       0.73
  Savings deposits ....................        118,329           1,441       1.22
  Time deposits .......................        394,710          14,366       3.64
  Other, including short-term
    borrowings, long-term debt,
    and other interest bearing
    liabilities .......................         55,779           1,546       2.77
                                           ----------------------------------------
Total interest bearing liabilities ....        838,428          19,323       2.30
                                                               -------
Non-interest bearing liabilities:
  Demand deposits .....................        138,403
  Other ...............................         12,428
Shareholders' equity ..................        160,551
                                           ------------
      Total liabilities and
        shareholders' equity ..........    $ 1,149,810
                                           ============

Net interest income ...................                    $    45,637
                                                           -----------
Net yield on interest earning assets(3)                                      4.28%
                                                                            ------
Net interest income and yield
  tax-equivalent basis(4) .............                    $    48,768       4.58%
                                                           -----------------------
</TABLE>



Notes:

1)    Average balances were calculated using a daily average.
2)    Includes NOW, money management and money market accounts.
3)    Net yield on interest earning assets is net interest income divided by
      average interest earning assets.
4)    Interest on obligations of states and municipalities is not subject to
      federal income tax. In order to make the net yield comparable on a fully
      taxable basis, a tax-equivalent adjustment is applied against the
      tax-exempt income utilizing a federal tax rate of 35%.
5)    Non-accruing loans and investments are included in the above table until
      they are charged off.
6)    The change in interest due to rate and volume has been allocated to volume
      and rate changes in proportion to the relationship of the absolute dollar
      amounts of the change in each.

7)    Includes gross unrealized gains on securities available for sale: $8,614
      in 2002 $5,558 in 2001 and $154 in 2000.


                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                     o 14 o
<PAGE>


                                     Table 5
             Average Balance Sheets and Net Interest Income Analysis
                                 (In thousands)



<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------------------------------------------------
                                                               2001
                                           ---------------------------------------

                                             Average                        Yield/
                                            Balance(1)       Interest        Rate
-----------------------------------------------------------------------------------
<S>                                         <C>              <C>            <C>
ASSETS

Interest earning assets:
  Taxable loans(5) ....................    $   733,318     $    59,498       8.11%
  Tax-exempt loans ....................         35,879           1,935       5.39
                                           ----------------------------------------
      Total loans .....................        769,197          61,433       7.99
  Taxable investment securities .......        161,081           9,399       5.83
  Tax-exempt investment securities ....         94,593           3,881       4.10
                                           ----------------------------------------
      Total investment securities .....        255,674          13,280       5.19
  Interest bearing deposits ...........          6,181             161       2.60
  Federal funds sold ..................         26,139           1,132       4.33
                                           ----------------------------------------
Total interest earning assets .........      1,057,191          76,006       7.19
Non-interest earning assets:

  Cash and due from banks .............         33,066
  Allowance for loan losses ...........        (11,547)
  Premises and equipment ..............         14,964
  Other assets(7) .....................         39,821
                                           ------------
      Total assets ....................    $ 1,133,495
                                           ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
  Interest bearing demand deposits(2)..    $   247,177           3,431       1.39
  Savings deposits ....................        104,250           2,134       2.05
  Time deposits .......................        433,262          22,677       5.23
  Other, including short-term
    borrowings, long-term debt,
    and other interest bearing
    liabilities .......................         56,458           2,621       4.64
                                            ---------------------------------------
Total interest bearing liabilities ....        841,147          30,863       3.67
                                                               -------
Non-interest bearing liabilities:
  Demand deposits .....................        124,995
  Other ...............................         13,863
Shareholders' equity ..................        153,490
                                           ------------
      Total liabilities and
        shareholders' equity ..........    $ 1,133,495
                                           ============

Net interest income ...................                    $    45,143
                                                           -----------
Net yield on interest earning assets(3)                                      4.27%
                                                                             ------
Net interest income and yield
  tax-equivalent basis(4) .............                    $    48,275       4.57%
                                                           ------------------------
</TABLE>



                                     Table 5
             Average Balance Sheets and Net Interest Income Analysis
                                 (In thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------------------------------------------------
                                                             2000
                                             --------------------------------------
                                             Average                        Yield/
                                             Balance(1)        Interest      Rate
-----------------------------------------------------------------------------------
<S>                                         <C>               <C>           <C>
ASSETS
Interest earning assets:
  Taxable loans(5) ....................    $   695,469    $   59,568         8.57%
  Tax-exempt loans ....................         33,399         1,935         5.79
                                            ---------------------------------------
      Total loans .....................        728,868        61,503         8.44
  Taxable investment securities .......        182,875        10,953         5.99
  Tax-exempt investment securities ....         75,660         3,198         4.23
                                           ----------------------------------------
      Total investment securities .....        258,435        14,151         5.48
  Interest bearing deposits ...........            891            56         6.29
  Federal funds sold ..................         19,522         1,235         6.33
                                           ----------------------------------------
Total interest earning assets .........      1,007,716        76,945         7.64

Non-interest earning assets:
  Cash and due from banks .............         32,921
  Allowance for loan losses ...........        (11,951)
  Premises and equipment ..............         14,412
  Other assets(7) .....................         34,738
                                           ------------
      Total assets ....................    $ 1,007,836
                                           ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
  Interest bearing demand deposits(2)..    $   237,029         3,944         1.66
  Savings deposits ....................        101,524         2,284         2.25
  Time deposits .......................        403,163        22,062         5.47
  Other, including short-term
    borrowings, long-term debt,
    and other interest bearing
    liabilities .......................         47,454         2,836         5.98
                                           ----------------------------------------
Total interest bearing liabilities ....        789,170        31,126         3.94
                                                           =========
Non-interest bearing liabilities:
  Demand deposits .....................        121,541
  Other ...............................         13,251
Shareholders' equity ..................        153,874
                                           ------------
      Total liabilities and
        shareholders' equity ..........    $ 1,007,836
                                           ============

Net interest income ...................                   $    45,819
                                                          -----------
Net yield on interest earning assets(3)                                      4.55%
                                                                            -------
Net interest income and yield
  tax-equivalent basis(4) .............                   $    48,583        4.82%
                                                          -------------------------
</TABLE>



                                     Table 5
             Average Balance Sheets and Net Interest Income Analysis
                                 (In thousands)


<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------------------------------------------------
                                                     2002 Compared to 2001
                                                 Increase (Decrease)  Due To(6)
                                                --------------------------------

                                                 Volume      Rate       Total
--------------------------------------------------------------------------------
<S>                                             <C>          <C>        <C>
ASSETS
Interest earning assets:
  Taxable loans(5) ....................    $   (247)    $ (8,303)    $ (8,550)
  Tax-exempt loans ....................         461         (449)          12
                                           -------------------------------------
      Total loans .....................         214       (8,752)      (8,538)
  Taxable investment securities .......         425       (2,008)      (1,583)
  Tax-exempt investment securities ....          53          (67)         (14)
                                           -------------------------------------
      Total investment securities .....         478       (2,075)      (1,597)
  Interest bearing deposits ...........         106          (90)          16
  Federal funds sold ..................        (408)        (519)        (927)
                                           -------------------------------------
Total interest earning assets .........         390      (11,436)     (11,046)

Non-interest earning assets:
  Cash and due from banks .............
  Allowance for loan losses ...........
  Premises and equipment ..............
  Other assets(7) .....................

      Total assets ....................

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
  Interest bearing demand deposits(2)..         289       (1,750)      (1,461)
  Savings deposits ....................         260         (953)        (693)
  Time deposits .......................      (1,882)      (6,429)      (8,311)
  Other, including short-term
    borrowings, long-term debt,
    and other interest bearing
    liabilities .......................         (32)      (1,043)      (1,075)
                                           -------------------------------------
Total interest bearing liabilities ....      (1,365)     (10,175)     (11,540)

Non-interest bearing liabilities:
  Demand deposits .....................
  Other ...............................
Shareholders' equity ..................

      Total liabilities and
        shareholders' equity ..........

Net interest income ...................       1,755     $ (1,261)    $    494
                                           -------------------------------------
Net yield on interest earning assets(3)

Net interest income and yield
  tax-equivalent basis(4) .............
</TABLE>



                                     Table 5
             Average Balance Sheets and Net Interest Income Analysis
                                 (In thousands)


<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------------------------------------------------
                                                     2001 Compared to 2000
                                                 Increase (Decrease) Due To(6)
                                                --------------------------------

                                                 Volume      Rate       Total
--------------------------------------------------------------------------------
<S>                                             <C>          <C>        <C>
ASSETS
Interest earning assets:
  Taxable loans(5) .........................    $ 3,186     $(3,256)    $   (70)
  Tax-exempt loans .........................        139        (139)          0
                                                --------------------------------
      Total loans ..........................      3,325      (3,395)        (70)
  Taxable investment securities ............     (1,269)       (285)     (1,554)
  Tax-exempt investment securities .........        784        (101)        683
                                                --------------------------------
      Total investment securities ..........       (485)       (386)       (871)
  Interest bearing deposits ................        156         (51)        105
  Federal funds sold .......................        351        (454)       (103)
                                                --------------------------------
Total interest earning assets ..............      3,347      (4,286)       (939)
Non-interest earning assets:
  Cash and due from banks ..................
  Allowance for loan losses ................
  Premises and equipment ...................
  Other assets(7) ..........................

      Total assets .........................

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
  Interest bearing demand deposits(2) ......        159        (672)       (513)
  Savings deposits .........................         59        (209)       (150)
  Time deposits ............................      1,606        (991)        615
  Other, including short-term
    borrowings, long-term debt,
    and other interest bearing
    liabilities ............................        484        (699)       (215)
                                                --------------------------------
Total interest bearing liabilities .........      2,308      (2,571)       (263)
                                                --------------------------------
Non-interest bearing liabilities:
  Demand deposits ..........................
  Other ....................................
Shareholders' equity .......................

      Total liabilities and
        shareholders' equity ...............

Net interest income ........................    $ 1,039     $(1,715)    $  (676)
                                                --------------------------------
Net yield on interest earning assets(3) ....

Net interest income and yield
  tax-equivalent basis(4) ..................
</TABLE>
                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 15 o


<PAGE>

[BAR GRAPH REPRESENTED BY DATA BELOW]

Net Interest Yield

2002    Yield on Earning Assets         6.10%
        Cost to Fund Earning Assets     1.81%
        Net Interest Yield              4.28%

2001    Yield on Earning Assets         7.19%
        Cost to Fund Earning Assets     2.92%
        Net Interest Yield              4.27%

2000    Yield on Earning Assets         7.64%
        Cost to Fund Earning Assets     3.09%
        Net Interest Yield              4.55%

1999    Yield on Earning Assets         7.40%
        Cost to Fund Earning Assets     2.75%
        Net Interest Yield              4.65%

1998    Yield on Earning Assets         7.75%
        Cost to Fund Earning Assets     2.96%
        Net Interest Yield              4.82%


Provision for Loan Losses

      Omega's provision for loan losses was $630,000 in 2002 and $500,000 in
2001, an increase of $130,000 or 26.0%. In 2002, net charge-offs exceeded the
provision for loan losses by $172,000, while in 2001 the net charge-offs
exceeded the provision by $398,000. Credit quality is a high priority for Omega
as evidenced by its low ratios of net charge-offs to average loans outstanding
and non-performing loans to the loan loss allowance. Net charge-offs in 2002 and
2001 were .10% and .12%, respectively, of average loans outstanding.
Non-performing loans as a ratio to the allowance for loan losses were 33.9% at
year-end 2002 and 31.8% at the end of 2001. The allowance for loan losses as a
ratio to net loans was 1.42% and 1.48% at December 31, 2002 and 2001,
respectively. The ratio of net charge-offs to average loans for Omega's regional
peers as of September 30, 2002 was .14%. For that same reporting period, Omega's
ratio was .14%.

Non-Interest Income

      Omega remains committed to constantly increasing customer satisfaction by
delivering consumer-preferred services through convenient methods. Success in
this endeavor is evidenced by the continued increase in income from traditional
bank services. In 2000, 2001 and 2002, 12.1%, 13.2% and 16.3%, respectively of
total revenues was derived from service-based fee income. We believe that our
advanced front line delivery systems, our interactive web site with on-line
banking, our customer information center, and our extensive employee training
programs have all contributed to the satisfaction of our customer base.
Technology advances that allow us to be better and more quickly informed about
our clients continue to help us to be responsive to their financial needs
through personalized service and product design. Service-based fee income (fees
on deposits, loans, trust services, and other services) grew to $13,026,000
during 2002 for a 9.8% or $1,158,000 increase when compared to $11,868,000 for
2001. New services were unveiled in 2002, which further catered to our
customers' needs. Early in 2003, Omega added yet another financial service,
through an agreement with a broker-dealer which allows new financial products,
such as annuities and other investments, to be sold at Omega's banking offices.
Management anticipates that these products will be well received and will
further increase fee income in future years.

      Bank-owned life insurance (BOLI) continues to generate non-interest income
each year as the cash surrender value increases. The BOLI cash surrender value
increased by $1,523,000 in 2002, as compared to $1,092,000 in 2001.

[BAR GRAPH REPRESENTED BY DATA BELOW]

Non-Interest Income to Average Assets
[text omitted]
2002            1.26%
2001            1.14%
2000            1.10%
1999            0.98%
1998            0.95%

      As a percentage of average assets, non-interest income (excluding
securities gains and other non-recurring gains) was 1.26% for 2002, as compared
to 1.14% in 2001. When compared to our regional peers (most current data as of
September 30, 2002), Omega's ratio was 1.30% and the peer average was 0.79%.

      In 2002, net gains from investment securities decreased by $60,000, or
12.7% to $412,000. There are many factors considered by management when
opportunities arise to sell investment securities, and therefore, income from
this activity can fluctuate dramatically from year to year.

      Likewise, other non-recurring gains or losses can be realized in a given
year based upon unique circumstances. For example, in 2001 management made a
decision to sell two blocks of mortgage loans in order to reduce interest rate
risk within the balance sheet. Book value of the loans on the dates of the sales
in November of 2001 was $35,895,000, producing a gain of $749,000. In 2002,
gains on the sale of loans and other assets were only $73,000.

      In total, net gains realized on the sale of investment securities, loans
and other assets were $485,000 in 2002 versus $1,194,000 in 2001, resulting in a
decrease in non-interest income of $709,000, or 59.4%. These net gains
represented .04% of average assets in 2002, as compared to .10% in 2001.

Non-Interest Expense

      In order to optimize earnings, Omega's management strives to minimize
operating expense where feasible to produce the highest levels of income
possible. Total non-interest expenses were $36,212,000 for 2002 as compared to
$35,265,000 for 2001, representing an increase of $947,000, or 2.7%.


                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                   o Page 16 o


<PAGE>

      Salaries and employee benefits increased by 1.7%, or $328,000 in 2002 as
compared to 2001. Omega was able to decrease the number of full time equivalent
employees during the year. Omega employed one employee for every $2,311,000 in
average assets in 2002, versus $2,210,000 of average assets in 2001.

      Occupancy and equipment increased by $396,000, or 8.9%, driven primarily
by costs for technology advances. All other non-interest expenses of $11,595,000
increased in total by $223,000, or 2.0% in 2002 as compared to 2001. Data
processing fees associated with providing new services and emergency planning
accounted for 54% of the increased expenses.

[BAR GRAPH REPRESENTED BY DATA BELOW]

Non-Interest Expense to Average Assets
[text omitted]
2002            3.15%
2001            3.11%
2000            3.19%
1999            3.16%
1998            3.14%

      As a percentage of average assets, non-interest expense was 3.15% for 2002
as compared to 3.11% in 2001. At September 30, 2002, Omega's ratio of
non-interest expense to average assets was 3.10%, compared to a regional peer
average of 2.80%.

Income Taxes

      Income tax expense for 2002 amounted to $5,650,000 compared to $5,877,000
in 2001. The effective tax rate was 23.7% in 2002 versus 25.0% in 2001. The
improvement in 2002 was due to the increase in the yield of tax-exempt assets.
Omega's level of average tax-exempt investments and average tax-exempt loans
increased in 2002 by 8.4% or $10,973,000, decreasing the federal tax rate by
7.6%, as compared to 2001, when the tax rate was decreased by 7.5% as a result
of tax-exempt assets. Average tax-exempt investments and loans as a percentage
of average assets were 12.3%, 11.5% and 10.1% in 2002, 2001 and 2000,
respectively. Tax-exempt income as a percentage of income before income tax was
24.4%, 24.7% and 22.1% in 2002, 2001 and 2000, respectively. See Note 11 of
Notes to Consolidated Financial Statements for further information on income
taxes.

Net Income

      For comparative purposes, the following table sets forth earnings (in
thousands of dollars) and certain earnings ratios for the past three years.

                                      2002              2001              2000
--------------------------------------------------------------------------------
Net income ...............       $   18,179        $   17,655        $   17,129
Return on average assets .             1.58%             1.56%             1.59%
Return on average equity .            11.32             11.50             11.13

      Summarized below are the components of net income (in thousands of
dollars) and the contribution of each to return on assets for 2002 and 2001.

                                           2002                     2001
                                    ------------------------------------------
                                           % of                     % of
                                          Average                  Average
                                          Assets                   Assets
                                    ------------------------------------------
Net interest income ............    $ 45,637      3.97%    $ 45,143        3.98%
Loan loss provision ............        (630)    (0.05)        (500)      (0.04)
Trust fees .....................       3,585      0.31        3,358        0.30
Deposit service fees ...........       5,099      0.44        4,138        0.37
Other fees .....................       4,342      0.38        4,372        0.39
BOLI ...........................       1,523      0.13        1,092        0.10
Security gains .................         412      0.04          472        0.04
Gains on sale of
  other assets .................          73      0.01          722        0.06
                                    ------------------------------------------
Total non-interest
  income .......................      15,034      1.31       14,154        1.25
Employee expense ...............     (19,753)               (19,425)      (1.71)
Occupancy and
  equipment ....................       4,864)    (0.42)      (4,468)      (0.39)
Other non-interest
  expense ......................     (11,595)    (1.01)     (11,372)      (1.00)
                                    ------------------------------------------
Total non-interest
  expense ......................     (36,212)    (3.15)     (35,265)      (3.11)
Income tax expense .............      (5,650)    (0.49)      (5,877)      (0.52)
                                    ------------------------------------------
Net income .....................    $ 18,179      1.58%    $ 17,655        1.56%
                                    ------------------------------------------

Average assets .................    $1,149,810             $1,133,495


[BAR GRAPH REPRESENTED BY DATA BELOW]

Return on Average Assets
2002            1.58%
2001            1.56%
2000            1.59%
1999            1.63%
1998            1.66%


2001 Financial Performance Overview

      At $17,655,000, Omega's net income for 2001 represented a return on
average assets (ROA) of 1.56%. A significant event occurring during the year was
the sale of a block of mortgage loans, resulting in a notable increase in
earnings. Although this type of transaction is a normal activity for financial
institutions, it does not regularly occur in the course of annual operations at
Omega. Therefore it is important to make adjustments for comparative purposes.
While net income increased in 2001 by 3.1%, or $526,000, as compared to 2000,
net operating income (defined as net income reduced by gains on securities and
other non-recurring gains, net of tax) declined by $67,000, or 0.4%. On a
diluted basis, net income per common share improved, reaching $2.01 in 2001, an
increase of 7.5%, or $.14 over 2000.

      The key factors that defined the 2001 results are as follows:

      o     Strong, but declining net interest margin

      o     Increasing service-based fee income

      o     Other non-interest income growth

      o     Ongoing expense control

      o     Loan sales


                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                   o Page 17 o


<PAGE>

      Assets were $1,158,629,000 at December 31, 2001, representing a
$44,793,000, or 4.0%, increase from year-end 2000. Loans (net of unearned
interest) were $760,354,000 compared to $751,985,000 at December 31, 2000, an
increase of 1.1%, or $8,369,000. Deposits increased by $42,166,000, or 4.7%, at
December 31, 2001 when compared to December 31, 2000.

      Return on average equity increased from 11.13% in 2000 to 11.50% in 2001,
while return on average assets decreased slightly to 1.56% from 1.59% in 2000.
Omega's Mid-Atlantic regional peer group with consolidated assets of $1 billion
to $5 billion, as of December 31, 2001 reported return on average assets and
return on average equity of 1.08% and 12.24%, respectively.

Net Interest Income

      Net interest income is the amount by which interest income on earning
assets exceeds interest expense on interest bearing liabilities. Net interest
income is the most significant component of revenue, comprising approximately
76% of total revenues for 2001. Net interest margin is the percentage of net
return on average earning assets and provides a measure of comparability of a
financial institution's performance. Because some interest earning assets are
tax-exempt, an adjustment is made for analytical purposes to place all assets on
a fully tax-equivalent basis.

      Both net interest income and net interest margin are impacted by interest
rate changes, changes in the relationships between rates and changes in the
composition of the average balance sheet. Additionally, product pricing, product
mix and customer preferences dictate the composition of the balance sheet and
the resulting net interest income. Table 5 (located on pages 14-15) shows
average asset and liability balances, average interest rates and interest income
and expense for the period 2000 to 2002. In addition, it shows the changes
attributable to the volume and rate components of net interest income.

      Total average loans were $769,197,000 in 2001 at an average weighted yield
of 7.99% that produced $61,433,000 in interest income. This represented a
$40,329,000, or 5.5%, increase in average loan volumes from 2000. The yield
decreased 45 basis points to 7.99% from 8.44% in 2000 resulting in a decrease of
$3,395,000 in interest income, while mix and volume changes increased interest
income $3,325,000 when compared to 2000. The combination of these rate, volume
and mix effects resulted in a decrease of $70,000, or 0.1% in total loan
interest. In order to explain the 45 basis point decrease in loan yields in
2001, we must consider the effects of Omega's pricing index. In 2001, the
weighted average rate of all new loans was 6.54%, 145 basis points lower than
the composite rate of the loan portfolio in total during 2000. In November of
2001, blocks of mortgage loans with total outstanding balances of $35,895,000
were sold. Had these loans been included all year, the average loans for 2001
would have been approximately $772,920,000, an increase of 6.0% over the
previous year. The composite rate on the loans that were sold was 7.07%, 104
basis points less than the composite rate on the remaining taxable loan
portfolio.

      Investment securities averaged $255,674,000, a decrease of $2,761,000, or
1.07% from the average investment securities in 2000. The average weighted yield
decreased to 5.19% from 5.48% in 2000. Maturing taxable investment securities
were replaced for the most part by tax-exempt investment securities in 2001,
because tax-equivalent yields on these vehicles were favorable, and because the
availability of desirable taxable securities was low. Accordingly, interest
income from securities decreased a total of $871,000. Most of the tax-exempt
securities purchased were purchased in the first quarter of 2001 and were
new-issued municipal bonds. Commitments were made to purchase the bonds, which
had forward settlement dates of up to three months. Therefore the cash committed
to these purchases was employed into overnight federal funds sold, or in
interest bearing deposits until needed. Consequently, interest bearing deposits
and federal funds sold, as a group on average, increased a total of 58.3%, or
$11,907,000.

      Total interest earning assets averaged $1,057,191,000 at a yield of 7.19%
and produced total interest income of $76,006,000 for 2001. The net increase in
average earning assets of $49,475,000 in 2001 over 2000 was funded by deposit
growth. The yield decreased by 45 basis points to 7.19% in 2001. On a fully
tax-equivalent basis, yield on earning assets decreased by 42 basis points to
7.49%. Interest income increased $3,347,000 from volume and mix changes and
decreased by $4,286,000 from generally lower yields producing a net decrease of
1.2%, or $939,000. On a fully tax-equivalent basis, interest income decreased by
$571,000, or 0.7%.

      Total interest bearing liabilities averaged $841,147,000 at a cost of
$30,863,000 carrying a composite rate of 3.67%. This represented an increase in
interest bearing liabilities of 6.6%, or $51,977,000, over 2000. The composite
rate decreased by 27 basis points in 2001, from 3.94% in 2000. Interest expense
decreased $2,571,000 due to lower rates and increased $2,308,000 due to volume
and mix changes. These changes resulted in a net decrease of $263,000, or 0.8%,
in interest expense. The most significant change in interest bearing liabilities
was the increase in time deposits of $30,099,000, or 7.5%. Management believed
that many consumers were interested in pulling funds out of the declining and
uncertain stock market that existed in 2001 and securing their savings in a
stable insured banking institution, and therefore enticed depositors with
attractive rate specials. Also during 2001, borrowings were increased on average
by $9,004,000, or 19.0% to fund the Corporation's stock repurchase program.

      Non-interest bearing funding sources, including equity, averaged
$292,348,000 in 2001, compared to $288,666,000 in 2000, for an increase of
$3,682,000, or 1.3%. Most of the increase is attributed to non-interest bearing
demand deposit balances. This increase in non-interest bearing funding sources
resulted in a decrease of 17 basis points in the rate to fund interest earning
assets (computed by dividing the total interest expense by the total average
earning assets) to 2.92% in 2001 from 3.09% in 2000.

      Net interest income was $45,143,000 for 2001, a decrease of $676,000, or
1.5%, from 2000. The decrease in net interest income was the result of an
increase of $1,039,000 due to volume and mix changes and a decrease of
$1,715,000 as a result of interest rate effects. Net yield was 4.27% in 2001 and
4.55% in 2000. On a fully tax-equivalent basis, the net yield decreased from
4.82% to 4.57% in 2001. As a comparison, Omega's regional peer group reported an
average net interest margin of 4.02% through December 31, 2001.


                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                   o Page 18 o

<PAGE>

Provision for Loan Losses

      Omega's provision for loan losses was $500,000 in 2001 and $428,000 in
2000, an increase of $72,000 or 16.8%. In 2001, net charge-offs exceeded the
provision for loan losses by $398,000, while in 2000 the net charge-offs
exceeded the provision by $243,000. Credit quality is a high priority for Omega
as evidenced by its low ratios of net charge-offs to average loans outstanding
and non-performing loans to the loan loss allowance. Net charge-offs in 2001 and
2000 were .12% and .09%, respectively, of average loans outstanding. The ratio
of net charge-offs to average loans for Omega's regional peers as of December
31, 2001 was .14%. Non-performing loans as a ratio to the allowance for loan
losses were 31.8% at year-end 2001 and 18.6% at the end of 2000. The allowance
for loan losses as a ratio to net loans was 1.48% and 1.55% at December 31, 2001
and 2000, respectively.

Non-Interest Income

      Service-based fee income (fees on deposits, loans, trust services, and
other services) grew to $11,868,000 during 2001 for a 9.9%, or $1,071,000
increase when compared to $10,797,000 for 2000.

      Late in the fourth quarter of 2001, Omega purchased bank-owned life
insurance (BOLI) in the amount of $8,000,000, bringing the balance to
$30,216,000 at year-end 2001. The BOLI cash surrender value increased by
$1,092,000 in 2001, as compared to $1,027,000 in 2000.

      As a percentage of average assets, non-interest income (excluding
securities gains and other non-recurring gains) was 1.14% for 2001, as compared
to 1.10% in 2000. The peer average was .75% in 2001.

    In 2001, net gains from investment securities increased by $140,000, or
42.2% to $472,000. There are many factors considered by management when
opportunities arise to sell investment securities, and therefore, income from
this activity can fluctuate dramatically from year to year.

    Likewise, other non-recurring gains or losses can be realized in a given
year based upon unique circumstances. For example, in 2001 management made a
decision to sell a block of mortgage loans in order to reduce interest rate risk
within the balance sheet. Book value of the loans on the dates of the sales in
November of 2001 was $35,895,000, producing a gain of $749,000.

    In total, net gains realized on the sale of investment securities, loans and
other assets were $1,194,000 in 2001 versus $279,000 in 2000, resulting in an
increase in non-interest income of $915,000, or 327.9%. These net gains
represented .10% of average assets in 2001, as compared to .03% in 2000.

Non-Interest Expense

    In order to optimize earnings, Omega's management strives to minimize
operating expense where feasible to produce the highest levels of income
possible. Total non-interest expenses were $35,265,000 for 2001 as compared to
$34,383,000 for 2000, representing an increase of $882,000, or 2.6%.

    Salaries and employee benefits increased by 0.8%, or $160,000 in 2001 as
compared to 2000. Omega decreased the number of full time equivalent employees,
as well as the cost of certain benefits programs. Omega employed one employee
for every $2,210,000 in average assets in 2001, versus $2,121,000 of average
assets in 2000.

    Occupancy and equipment increased by only $128,000, or 2.9%, even though
three new branch offices had been established since the third quarter of 2000.
All other non-interest expenses of $11,372,000 increased in total by $594,000,
or 5.5% in 2001 as compared to 2000. Data processing fees associated with
providing new services as well as the cost of consolidating three bank charters
accounted for 32% of the increased expenses.

    As a percentage of average assets, non-interest expense was 3.11% for 2001
as compared to 3.19% in 2000. At December 31, 2001, Omega's regional peers had
an average of 2.73% of non-interest expense to assets.

Income Taxes

    Income tax expense for 2001 amounted to $5,877,000 compared to $5,983,000 in
2000. The effective tax rate was 25.0% in 2001 versus 25.9% in 2000. The
improvement in 2001 was due to the increase in the yield of tax-exempt
investments and loans. Omega's level of average tax-exempt investments and
average tax-exempt loans increased in 2001 by 19.7% or $21,513,000, decreasing
the federal tax rate by 7.5%, as compared to 2000, when the tax rate was
decreased by 6.7% as a result of tax-exempt assets. Average tax-exempt
investments and loans as a percentage of average assets were 11.5%, 10.1% and
9.7% in 2001, 2000 and 1999, respectively. Tax-exempt income as a percentage of
income before income tax was 24.7%, 22.1% and 19.2% in 2001, 2000 and 1999,
respectively. See Note 11 of Notes to Consolidated Financial Statements for
further information on income taxes.

Net Income

    For comparative purposes, the following table sets forth earnings (in
thousands of dollars) and certain earnings ratios for the past three years.


                                              2001         2000         1999
                                              ------------------------------

Net income..........................         $17,655      $17,129      $17,362
Return on average assets............            1.56%        1.59%        1.63%
Return on average equity............           11.50        11.13        11.30

    Summarized below are the components of net income (in thousands of dollars)
and the contribution of each to return on assets for 2001 and 2000.

                                         2001                      2000
                                   ----------------------------------------
                                              % of                   % of
                                             Average                Average
                                             Assets                 Assets
                                   ----------------------------------------
Net interest income.....           $  45,143   3.98%     $   45,819   4.25%
Loan loss provision.....                (500) (0.04)           (428) (0.04)
Trust fees..............               3,358   0.30           3,258   0.30
Deposit service fees....               4,138   0.37           3,675   0.34
Other fees..............               4,372   0.39           3,864   0.36
BOLI....................               1,092   0.10           1,028   0.10
Security gains..........                 472   0.04             332   0.03
Gains on sale of
  other assets..........                 722   0.06             (53)    --
                                  -----------------------------------------
Total non-interest
  income................              14,154   1.25          12,104   1.12
Employee expense........             (19,425) (1.71)        (19,265) (1.79)
Occupancy and
  equipment.............              (4,468) (0.39)         (4,340) (0.40)
Other non-interest
  expense...............             (11,372) (1.00)        (10,778) (1.00)
                                  -----------------------------------------
Total non-interest
  expense...............             (35,265) (3.11)        (34,383) (3.19)
Income tax expense......              (5,877) (0.52)         (5,983) (0.56)
                                  -----------------------------------------
Net income..............          $   17,655   1.56%     $   17,129  (1.59%
                                  =========================================
Average Assets..........          $1,133,495             $1,077,836


                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 19 o
<PAGE>
                  Omega Financial Corporation and Subsidiaries
                           CONSOLIDATED BALANCE SHEETS
                       (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                       December 31,
                                                               ------------------------------
                                                                2002                2001
                                                               ------------------------------

ASSETS
<S>                                                             <C>            <C>
Cash and due from banks .....................................   $    36,049    $    39,072
Interest bearing deposits with other financial institutions .         8,757         31,812
Federal funds sold ..........................................        33,900         14,450
Investment securities available for sale ....................       251,508        266,658
Total loans, net of unearned interest .......................       779,819        760,354
Less: Allowance for loan losses .............................       (11,052)       (11,224)
                                                                --------------------------
                                                                    768,767        749,130
Premises and equipment,net ..................................        14,719         15,563
Bank-owned life insurance ...................................        31,739         30,216
Other assets ................................................         9,118         11,728
                                                                --------------------------
TOTAL ASSETS ................................................   $ 1,154,557    $ 1,158,629
                                                                ==========================


LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
  Non-interest bearing ......................................   $   148,498    $   138,433
  Interest bearing ..........................................       770,757        793,234
                                                                --------------------------
                                                                    919,255        931,667
Short-term borrowings .......................................        41,452         37,572
Other liabilities ...........................................        11,909         12,093
ESOP debt ...................................................         2,832          3,110
Long-term debt ..............................................        16,237         17,234
Other interest bearing liabilities ..........................           762            703
                                                                --------------------------
TOTAL LIABILITIES ...........................................       992,447      1,002,379
Commitments and Contingent Liabilities
Shareholders' Equity
Preferred stock, par value $5.00 per share:
  Authorized--5,000,000 shares;
  Issued and outstanding--219,781 shares Series A
  Convertible................................................         5,000          5,000
Unearned compensation related to ESOP debt ..................        (1,875)        (2,125)
Common stock, par value $5.00 per share:
  Authorized--25,000,000 shares;
  Issued--
    9,607,076 shares at December 31, 2002;
    9,447,623 shares at December 31, 2001
  Outstanding--
    8,099,778 shares at December 31, 2002;
    8,222,010 shares at December 31, 2001 ...................        48,035         47,238
Capital surplus .............................................        10,529          7,856
Retained earnings ...........................................       138,821        129,774
Accumulated other comprehensive income ......................         7,243          4,943
Cost of common stock in treasury:
  1,507,298 shares at December 31, 2002;
  1,225,613 shares at December 31, 2001 .....................       (45,643)       (36,436)
                                                                --------------------------
TOTAL SHAREHOLDERS' EQUITY ..................................       162,110        156,250
                                                                --------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ..................   $ 1,154,557    $ 1,158,629
                                                                ==========================
</TABLE>


The accompanying notes are an integral part of these statements.

                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 20 o
<PAGE>

                  Omega Financial Corporation and Subsidiaries
                        CONSOLIDATED STATEMENTS OF INCOME
                       (In thousands, except share data)*
<TABLE>
<CAPTION>

                                                                        Years Ended December 31,
                                                                   ------------------------------
                                                                       2002       2001       2000
                                                                   ------------------------------
INTEREST INCOME:
<S>                                                                <C>        <C>        <C>
Interest and fees on loans .....................................   $ 52,895   $ 61,433   $ 61,503
                                                                   ------------------------------
Interest and dividends on investment securities:
  Taxable interest income ......................................      7,131      8,817     10,321
  Tax-exempt interest income ...................................      3,867      3,881      3,198
  Dividend income ..............................................        685        582        632
Other interest income ..........................................        382      1,293      1,291
                                                                   ------------------------------
TOTAL INTEREST INCOME ..........................................     64,960     76,006     76,945
INTEREST EXPENSE:
Interest on deposits ...........................................     17,777     28,242     28,290
Interest on short-term borrowings ..............................        754      1,605      2,240
Interest on long-term debt and
other interest bearing liabilities .............................        792      1,016        596
                                                                   ------------------------------
TOTAL INTEREST EXPENSE .........................................     19,323     30,863     31,126
                                                                   ------------------------------
NET INTEREST INCOME ............................................     45,637     45,143     45,819

Provision for loan losses ......................................        630        500        428
                                                                   ------------------------------
INCOME FROM CREDIT ACTIVITIES ..................................     45,007     44,643     45,391
OTHER INCOME:
Trust fees .....................................................      3,585      3,358      3,258
Service fees on deposit accounts ...............................      5,099      4,138      3,675
Service fees on loans ..........................................      1,227      1,512        771
Earnings on bank-owned life insurance ..........................      1,523      1,092      1,027
Net gains on investment securities available for sale ..........        412        472        332
Gain (loss) on sale of loans and other assets ..................         73        722        (53)
Other ..........................................................      3,115      2,860      3,094
                                                                   ------------------------------
TOTAL OTHER INCOME .............................................     15,034     14,154     12,104
OTHER EXPENSE:
Salaries and employee benefits .................................     19,753     19,425     19,265
Net occupancy expense ..........................................      2,287      2,302      2,132
Equipment expense ..............................................      2,577      2,166      2,208
Data processing service ........................................      1,740      1,620      1,470
FDIC insurance premiums ........................................        160        165        174
Other ..........................................................      9,695      9,587      9,134
                                                                   ------------------------------
TOTAL OTHER EXPENSE ............................................     36,212     35,265     34,383
                                                                   ------------------------------
INCOME BEFORE INCOME TAXES .....................................     23,829     23,532     23,112
Income tax expense .............................................      5,650      5,877      5,983
                                                                   ------------------------------
NET INCOME .....................................................   $ 18,179   $ 17,655   $ 17,129
                                                                   ==============================
EARNINGS PER SHARE
Basic ..........................................................   $   2.17   $   2.08   $   1.92
Diluted ........................................................       2.10       2.01       1.87
Weighted average shares and equivalents:
Basic ..........................................................      8,189      8,287      8,725
Diluted ........................................................      8,621      8,721      9,144
</TABLE>
The accompanying notes are an integral part of these statements

                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT

                                  o Page 21 o
<PAGE>

                  Omega Financial Corporation and Subsidiaries
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                       (In thousands, except share data)
<TABLE>
<CAPTION>

                                                                     Years Ended December 31, 2000, 2001 and 2002
                                                  ----------------------------------------------------------------------------------
                                                                                                    Accumulated  Cost of
                                                              Unearned                              Other Com-   Common
                                                  Preferred   Compen-   Common   Capital  Retained  prehensive   Stock In
                                                   Stock      sation    Stock    Surplus  Earnings    Income     Treasury    Total
                                                  ---------------------------------------------------------------------------------
<S>                                                <C>        <C>       <C>      <C>      <C>       <C>          <C>       <C>
Balance at December 31, 1999....................   $5,000     $(2,625)  $46,299  $ 4,825  $113,204  $  817       $(16,369) $151,151
Comprehensive income:
  Net income....................................                                            17,129
  Change in unrealized securities gains, net....                                                       768
Total comprehensive income......................                                                                             17,897
Common dividends declared--
  $1.03 per share...............................                                            (8,978)                          (8,978)
Cash dividends, preferred--$1.80 per share.......                                             (396)                            (396)
Amortization of unearned compensation...........                  250                                                           250
Tax benefit from employee stock options.........                                                77                               77
Tax benefit from preferred stock dividends
  paid to ESOP..................................                                                72                               72
Purchase of treasury stock--240,826 shares.......                                                                  (6,354)   (6,354)
Exercised employee stock options--
  73,302 shares.................................                            366    1,119                                       1,485
                                                  ---------------------------------------------------------------------------------
Balance at December 31, 2000....................    5,000      (2,375)   46,665    5,944   121,108   1,585        (22,723)  155,204
Comprehensive income:
  Net income....................................                                            17,655
  Change in unrealized securities gains, net....                                                     3,358
Total comprehensive income......................                                                                             21,013
Common dividends declared--
  $1.07 per share...............................                                            (8,829)                          (8,829)
Cash dividends, preferred--$1.80 per share.......                                             (396)                            (396)
Amortization of unearned compensation...........                  250                                                           250
Tax benefit from employee stock options.........                                               171                              171
Tax benefit from preferred stock dividends
  paid to ESOP..................................                                                65                               65
Purchase of treasury stock--499,512 shares......                                                                  (13,713)  (13,713)
Exercised employee stock options--
  114,539 shares................................                            573    1,912                                      2,485
                                                  ---------------------------------------------------------------------------------
Balance at December 31, 2001....................    5,000      (2,125)   47,238    7,856   129,774   4,943        (36,436)  156,250
Comprehensive income:
  Net income....................................                                            18,179
  Change in unrealized securities gains, net....                                                     2,300
Total comprehensive income......................                                                                             20,479
Common dividends declared--
  $1.13 per share...............................                                            (9,227)                          (9,227)
Cash dividends, preferred--$1.80 per share.......                                             (396)                            (396)
Amortization of unearned compensation...........                  250                                                           250
Tax benefit from employee stock options.........                                               432                              432
Tax benefit from preferred stock dividends
  paid to ESOP..................................                                                59                               59
Purchase of treasury stock--281,685 shares.......                                                                  (9,207)   (9,207)
Exercised employee stock options--
  159,453 shares................................                            797    2,673                                      3,470
                                                  ---------------------------------------------------------------------------------
Balance at December 31, 2002....................   $5,000     $(1,875)  $48,035  $10,529  $138,821  $7,243       $(45,643) $162,110
                                                  =================================================================================
</TABLE>

The accompanying notes are an integral part of these statements.


                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT

                                  o Page 22 o
<PAGE>

                  Omega Financial Corporation and Subsidiaries
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                          Years Ended December 31,
                                                                                   ----------------------------------
                                                                                      2002         2001        2000
<S>                                                                                <C>         <C>          <C>
Cash flows from operating activities:
  Net income ...................................................................   $ 18,179    $  17,655    $ 17,129
  Adjustments to reconcile net income to net cash provided by operating
activities:
    Depreciation and amortization ..............................................      3,523        2,097       2,048
    Provision for loan losses ..................................................        630          500         428
    Gain on sale of investment securities ......................................       (412)        (212)       (271)
    Non-monetary exchange of cost-method investments ...........................       --            (68)        (61)
    Gain on sale of fixed assets and other property owned ......................        (11)         (47)        (24)
    (Gain) loss on sale of loans ...............................................        (62)        (675)         80
    Increase in deferred tax asset .............................................        (88)          (1)       (391)
    Increase in cash surrender value of bank-owned life insurance ..............     (1,523)      (1,092)     (1,013)
    Decrease (increase) in interest receivable and other assets ................      1,165        1,451      (1,252)
    (Decrease) increase in interest payable ....................................       (547)        (635)        240
    Increase (decrease) in taxes payable .......................................        488         (180)        732
    Amortization of deferred net loan (fees) costs .............................       (311)        (340)        102
    Deferral of net loan fees ..................................................        538          771         112
    (Increase) decrease in accounts payable and accrued expenses ...............       (257)         464         588
                                                                                   ----------------------------------
      Total adjustments ........................................................      3,133        2,033       1,318
                                                                                   ----------------------------------
Net cash provided by operating activities ......................................     21,312       19,688      18,447
Cash flows from investing activities:
  Proceeds from the sale or maturity of investment securities available
  for sale......................................................................     99,701       93,712      79,956
  Purchase of investment securities available for sale .........................    (82,072)    (113,559)    (48,344)
  Net change in interest bearing deposits with other banks .....................     23,055      (30,717)       (223)
  Increase in loans ............................................................    (25,571)     (45,790)    (48,062)
  Gross proceeds from sale of loans ............................................      5,139       36,767          60
  Capital expenditures .........................................................     (1,271)      (3,078)     (1,472)
  Sale of fixed assets and other property owned ................................        341          269         143
  Net change in federal funds sold .............................................    (19,450)      25,300     (37,775)
  Purchase of bank-owned life insurance ........................................       --         (8,000)       --
                                                                                   ----------------------------------
Net cash used in investing activities ..........................................       (128)     (45,096)    (55,717)
Cash flows from financing activities:
  Net change in deposits .......................................................    (12,412)      42,166      37,906
  Increase in short-term borrowings, net .......................................      3,880        2,157      17,122
  Issuance of long-term debt ...................................................         54         --          --
  Principal payment on long-term debt ..........................................     (1,051)        --          --
  Net change in other interest bearing liabilities .............................         59           53          50
  Dividends paid ...............................................................     (9,491)      (9,244)     (9,328)
  Tax benefit from preferred stock dividend and stock option activity ..........        491          236         149
  Issuance of common stock .....................................................      3,470        2,485       1,485
  Acquisition of treasury stock ................................................     (9,207)     (13,713)     (6,354)
                                                                                   ----------------------------------
Net cash (used in) provided by financing activities ............................    (24,207)      24,140      41,030
                                                                                   ----------------------------------
Net (decrease) increase in cash and due from banks .............................   $ (3,023)   $  (1,268)   $  3,760
                                                                                   ----------------------------------
Cash and due from banks at beginning of period .................................   $ 39,072    $  40,340    $ 36,580
Cash and due from banks at end of period .......................................     36,049       39,072      40,340
                                                                                   ----------------------------------
Net (decrease) increase in cash and due from banks .............................   $ (3,023)   $  (1,268)   $  3,760
                                                                                   ==================================
Interest paid ..................................................................   $ 19,918    $  31,498    $ 30,886
Income taxes paid ..............................................................      4,790        5,786       5,496

The accompanying notes are an integral part of these statements.
</TABLE>

                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT

                                  o Page 23 o
<PAGE>

                  Omega Financial Corporation and Subsidiaries
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 Years Ended December 31, 2002, 2001, and 2000

NATURE OF OPERATIONS

    Omega Financial Corporation is a financial holding company operating
primarily in central Pennsylvania, for the purpose of delivering financial
services within its local market. Consisting of one bank and three active
non-bank subsidiaries, Omega Financial Corporation provides retail and
commercial banking and financial services through 44 offices in Centre, Clinton,
Mifflin, Juniata, Blair, Huntingdon, and Bedford counties. Each of Omega's
entities are part of the same reporting segment, whose operating results are
regularly reviewed and managed by a centralized executive management group. The
bank provides a full range of banking services including on-line banking, an
automatic teller machine network, checking accounts, NOW accounts, savings
accounts, money market accounts, investment certificates, fixed rate
certificates of deposit, club accounts, secured and unsecured commercial and
consumer loans, construction and mortgage loans, safe deposit facilities, credit
loans with overdraft checking protection and student loans. The bank subsidiary
also provides a variety of trust services. Omega has contracted with a
broker-dealer to allow the offering of annuities, mutual funds, stock and bond
brokerage services, long-term care insurance and sophisticated life products to
its local market. Most of Omega Financial Corporation's commercial customers are
small and mid-sized businesses in central Pennsylvania.

[1]   SUMMARY OF SIGNIFICANT
      ACCOUNTING POLICIES

      The accounting policies of Omega Financial Corporation and its wholly
owned subsidiaries conform to accounting principles generally accepted in the
United States and to general financial services industry practices. A summary of
the more significant accounting policies applied in the preparation of the
accompanying consolidated financial statements follows.

Principles of Consolidation

      The consolidated financial statements include the accounts of Omega
Financial Corporation and its wholly owned subsidiaries (hereafter collectively
referred to as "Omega" or the "Corporation"): Omega Bank, N.A. ("Omega Bank"),
Central Pennsylvania Investment Co., Central Pennsylvania Life Insurance Co.,
Central Pennsylvania Leasing, Inc. and Central Pennsylvania Real Estate, Inc.
All significant intercompany transactions and balances have been eliminated.

Use of Estimates

      The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates that affect
the amounts reported in the consolidated financial statements and accompanying
notes. Actual results could differ from those estimates.

Investment Securities

      Securities classified as available for sale, which include marketable
investment securities, are stated at market value, with the unrealized gains and
losses, net of tax, reported as a component of comprehensive income, until
realized. Investment securities for which management has the positive intent and
ability to hold the security to maturity are classified as held to maturity and
are stated at cost, adjusted for amortization of premium and accretion of
discount on a level-yield basis. Interest and dividends on investment securities
available for sale and held to maturity are recognized as income when earned.
Gains or losses on the disposition of securities are based on the net proceeds
and the adjusted carrying amount of the securities sold, determined on a
specific identification basis. (See Note 3).

Loans

      Loans are stated at the principal amounts outstanding, net of unearned
income. Interest income on all loans, other than non-accrual loans, is accrued
over the term of the loans based on the amount of principal outstanding, except
on certain installment loans granted at Omega Bank, on which interest is
recognized as income under a method that approximates the interest method.

      Loans on which the accrual of interest has been discontinued are
designated as non-accrual loans. Accrual of interest on loans is discontinued
when reasonable doubt exists as to the full, timely collection of principal or
interest. When a loan is placed on non-accrual status, all interest previously
accrued but not collected is reversed against current period income. Income on
such loans is then recognized only to the extent that cash is received and where
the future collection of principal is probable. Accruals are resumed on loans
only when they are brought fully current with respect to interest and principal,
and when, in the judgment of management, the loan is estimated to be
well-secured and fully collectible as to both principal and interest.

      Loans are considered for charge-off when

(1)   principal or interest has been in default for 120 days or more and for
      which no payment has been received during the previous four months,
(2)   all collateral securing the loan has been liquidated and a deficiency
      balance remains,
(3)   a bankruptcy notice is received for an unsecured loan, or
(4)   the loan is deemed to be uncollectible for any other reason.

      Loans charged off are recorded against the allowance for loan losses.

      Management routinely evaluates all commercial loan accounts for impairment
status. An impaired loan is defined as a commercial loan over $100,000 and
classified as doubtful or substandard and in non-accrual status or troubled debt
restructure. Impairment is recognized to the extent that the collateral fair
value of the impaired loan is less than the loan balance. The difference between
collateral fair value and the loan balance is factored into the loan loss
reserve specific allocations when determining the adequacy of the allowance for
loan losses.

Loan Origination Fees and Costs

      Loan origination fees and related direct origination costs for a given
loan are offset and the net amount is deferred and amortized over the life of
the loan on a level-yield basis as an adjustment to interest income.

                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT

                                  o Page 24 o
<PAGE>

Allowance for Loan Losses

      For financial reporting purposes, the provision for loan losses charged to
current operating income is based on management's estimates, and ultimate losses
may vary from estimates. These estimates are reviewed and adjusted at least
quarterly and are reported in earnings in the periods in which they become
known. In determining the adequacy of the allowance for loan losses, management
makes specific allocations to watch list loans and pools of non-watch list loans
for various credit risk factors, including the composition and growth of the
loan portfolio, overall portfolio quality, levels of delinquent loans, specific
problem loans, prior loan loss experience and current economic conditions that
may affect a borrower's ability to pay. The loan loss provision for federal
income tax purposes is based on current income tax regulations, which allow for
deductions equal to net charge-offs.

Other Real Estate Owned and Held for Investment

      Assets acquired in settlement of mortgage loan indebtedness are recorded
as other real estate owned and held for investment and are included in other
assets at the lower of fair value minus estimated costs to sell or the carrying
amount of the loan. Costs to maintain the assets and subsequent gains and losses
attributable to their disposal are included in other income and other expenses
as realized. No depreciation or amortization expense is recognized. At December
31, 2002 and 2001, the carrying value of other real estate owned and held for
investment was $229,000 and $274,000, respectively.

Premises and Equipment

      Premises and equipment are stated at cost less accumulated depreciation.
Depreciation is computed using both the straight-line and declining-balance
methods, over the estimated useful lives of the assets (See Note 7).

Bank-Owned Life Insurance

      The cash surrender value of bank-owned life insurance is carried as an
asset and changes in cash surrender value are recorded as non-interest income.
(See Note 6).

Income Taxes

      Omega and its subsidiaries, except for Central Pennsylvania Life Insurance
Company, file a consolidated federal income tax return. The provision for income
taxes is based upon the results of operations, adjusted principally for
tax-exempt income. Certain items of income or expense are reported in different
periods for financial reporting and tax return purposes. The tax effects of
these temporary differences are recognized currently in the deferred income tax
provision or benefit.

      Deferred tax assets or liabilities are computed based on the difference
between the financial statement and income tax bases of assets and liabilities
using the applicable enacted marginal tax rate. Deferred income tax expenses or
benefits are based on the changes in the deferred tax asset or liability from
period to period.

Stock-Based Compensation

      In December 2002, the FASB issued Statement of Financial Accounting
Standards No. 148, "Accounting for Stock-Based Compensation--Transition and
Disclosure." This statement provides alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation and amends the disclosure requirements of SFAS 123 to
require prominent annual and interim disclosures about the method used to
account for stock-based compensation.

      Omega accounts for stock-based compensation using the intrinsic value
method in accordance with Accounting Principles Board (APB) Opinion 25,
"Accounting for Stock Issued to Employees," and has adopted the disclosure
provisions of FASB No. 148, "Accounting for Stock-Based Compensation." The
following pro forma information regarding net income and earnings per share
assumes the adoption of Statement No. 123 for stock options granted subsequent
to December 31, 1994. The estimated fair value of the options is amortized to
expense over the vesting period.

      The fair value was estimated at the date of grant using a Black-Scholes
option-pricing model utilizing various assumptions as disclosed in Note 15.
Compensation expense, net of related tax, amounted to $653,000, $751,000 and
$692,000 in 2002, 2001 and 2000, respectively and is included in the pro forma
net income reported below (in thousands, except per share data).

                                           2002        2001        2000
                                          -------------------------------
Net income
  As reported........................     $18,179    $17,655     $17,129
  Pro forma..........................      17,526     16,904      16,437
Basic earnings per share
  As reported........................     $  2.17    $  2.08     $  1.92
  Pro forma..........................        2.09       1.99        1.84
Diluted earnings per share
  As reported........................     $  2.10    $  2.01     $  1.87
  Pro forma..........................        2.02       1.92        1.79

      The Black-Scholes option-valuation model was developed for use in
estimating the fair value of traded options, which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because Omega's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

Reclassifications

      Certain items previously reported were reclassified to conform to the
current year presentation.

                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 25 o
<PAGE>

Recent Accounting Pronouncements

      In June 2002, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 146, "Accounting for Costs Associated with
Exit or Disposal Activities." This Statement nullifies Emerging Issues Task
Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." The principal difference between this
Statement and Issue No. 94-3 relates to its requirements for recognition of a
liability for a cost associated with an exit or disposal activity. Statement 146
requires that such a liability be recognized when the liability is incurred as
opposed to the date of an entity's commitment to an exit plan, as defined in
Issue No. 94-3. The provisions of this Statement are effective for exit or
disposal activities that are initiated after December 31, 2002, with early
application encouraged. The adoption of this Statement is not expected to have a
material impact on the Company's results of operations or financial condition.

      In April 2002, the FASB issued Statement of Financial Accounting Standards
No. 145, Rescission of FASB Statements No. 4, 44, and 62, Amendment of FASB
Statement No. 13, and Technical Corrections (Statement 145). Among other things,
Statement 145 eliminates the requirement under FASB Statement No. 4, "Reporting
Gains and Losses from Extinguishment of Debt" to report gains and losses from
extinguishments of debt as extraordinary items in the income statement.
Similarly, FASB Statement No. 64, Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements has been rescinded. Accordingly, gains or losses from
extinguishments of debt for fiscal years beginning after May 15, 2002 shall not
be reported as extraordinary items unless the extinguishment qualifies as an
extraordinary item under the provisions of APB Opinion No. 30. Statement 145
also amends Statement 13 to require certain modifications to capital leases be
treated as a sale-leaseback and modifies the accounting for sub-leases when the
original lessee remains a secondary obligor (or guarantor). The adoption of this
Statement is not expected to have a material impact on the Company's results of
operations or financial condition.

      In October 2002, the Financial Accounting Standards Board issued Statement
No. 147, "Acquisitions of Certain Financial Institutions." The Statement
provides guidance on the accounting for the acquisition of a financial
institution, which had previously been addressed in FASB Statement No. 72,
"Accounting for Certain Acquisitions of Banking or Thrift Institutions."
Statement 72 required that the excess of the fair value of liabilities assumed
over the fair value of tangible and identifiable intangible assets be recognized
as an unidentifiable intangible asset. That asset was to be amortized over a
period no greater than the life of the long-term interest bearing assets
acquired. Statement 147 states that this excess, if acquired in a business
combination, represents goodwill that should be accounted for in accordance with
FASB Statement No. 142, "Goodwill and Other Intangible Assets." The balance of
previously recognized unidentifiable intangible assets arising from a business
combination should be reclassified to goodwill as of the date the company
initially adopted Statement 142. Companies that reclassify goodwill in
accordance with the Statement are then required to restate previously issued
financial statements to present the balance sheet and income statement as if the
unidentifiable intangible asset had been reclassified as of the date the company
adopted Statement 142. The provisions of Statement 147 are effective October 1,
2002. The Company's adoption of this Statement is not expected to have a
material impact on its results of operations or financial condition.

      Financial Accounting Standards Interpretation No. 45 (FIN 45),
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others" is applicable on a prospective
basis to guarantees issued or modified after December 31, 2002. The disclosure
requirements in this Interpretation are effective for annual periods ending
after December 15, 2002. This interpretation requires the guarantor to recognize
a liability for the fair value of an obligation assumed under a guarantee.
Certain guarantee contracts are excluded from both the disclosure and
recognition requirements of this interpretation, including, among others,
guarantees relating to employee compensation, residual value guarantees under
capital lease arrangements, commercial letters of credit, loan commitments, and
guarantees of a company's own future performance. Other guarantees are subject
to the disclosure requirements of FIN 45 but not to the recognition provisions
and include, among others, a guarantee accounted for as a derivative instrument
under Financial Accounting Standards Statement No. 133, a parent's guarantee of
debt owed to a third party by its subsidiary or vice versa, and a guarantee
which is based on performance not price. Significant guarantees that have been
entered into by the Corporation are disclosed in the notes to the consolidated
financial statements. The Corporation does not expect the requirements of FIN 45
to have a material impact on results of operations, financial condition or
liquidity.

      In January 2003, the FASB issued FASB Interpretation No. 46,
"Consolidation of Variable Interest Entities," (FIN 46). The objective of FIN 46
is to provide guidance on how to identify a variable interest entity (VIE) and
determine when the assets, liabilities, non-controlling interests, and results
of operations of a VIE need to be included in a company's consolidated financial
statements. A company that holds variable interests in an entity will need to
consolidate the entity if the company's interest in the VIE is such that the
company will absorb a majority of the VIE's expected losses and/or receive a
majority of the VIE's expected residual returns, if they occur. FIN 46 also
requires additional disclosures by primary beneficiaries and other significant
variable interest holders. The provisions of this interpretation were effective
upon issuance for all new variable interest entities and as of July 1, 2003, and
for all variable interest entities that existed at the date of its issuance. The
provisions of FIN 46 are not expected to have a material impact on the
Corporation's financial condition or results of operations.

[2]   RESTRICTIONS ON CASH AND DUE FROM BANKS

    Omega's banking subsidiary is required to maintain cash reserve balances
with the Federal Reserve Bank. The total required reserve balances were
$6,564,000 and $2,700,000 as of December 31, 2002 and 2001, respectively.

                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 26 o
<PAGE>

[3]   INVESTMENT SECURITIES (In Thousands)
<TABLE>
<CAPTION>
                                                                                                 December 31, 2002
                                                                                ---------------------------------------------------
Securities classified as Available for Sale                                                         Weighted    Gross      Gross
                                                                                Amortized  Market   Average   Unrealized Unrealized
Type and maturity                                                                 Cost      Value    Yield      Gains      Losses
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>        <C>     <C>      <C>         <C>
U.S. Treasury securities and obligations of other U.S. Government agencies and
  corporations
    Within one year............................................................. $ 60,847  $ 61,749    3.84%   $  902      $--
    After one year but within five years........................................   71,123    73,629    4.11     2,506       --
    After five years but within ten years.......................................       --        --      --        --       --
    After ten years.............................................................       --        --      --        --       --
Obligations of state and political subdivisions
    Within one year.............................................................   31,094    31,577    6.16       483       --
    After one year but within five years........................................   54,964    57,599    5.77     2,635       --
    After five years but within ten years.......................................       --        --      --        --       --
    After ten years.............................................................       --        --      --        --       --
Corporate and other securities
    Within one year.............................................................    4,500     4,532    6.03        32       --
    After one year but within five years........................................    2,723     2,775    4.74        52       --
    After five years but within ten years.......................................       10        10    4.99        --       --
    After ten years.............................................................       --        --      --        --       --
Mortgage-backed securities
    Within one year.............................................................      993     1,009    6.84        16       --
    After one year but within five years........................................    2,021     2,101    5.02        80       --
    After five years but within ten years.......................................       --        --      --        --       --
    After ten years.............................................................    1,116     1,136    6.74        24       (4)
Common stock....................................................................   10,980    15,391     N/M     4,453      (42)
                                                                                --------------------------------------------------
Total........................................................................... $240,371  $251,508    4.79%  $11,183     $(46)
                                                                                ==================================================
                                                                                                  December 31, 2001
<CAPTION>
                                                                                 -------------------------------------------------
Securities classified as Available for Sale                                                       Weighted     Gross      Gross
                                                                                Amortized  Market  Average  Unrealized  Unrealized
Type and maturity                                                                 Cost     Value    Yield      Gains      Losses
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>         <C>        <C>      <C>       <C>
U.S. Treasury securities and obligations of other U.S. Government agencies and
  corporations
    Within one year............................................................  $ 43,716    $ 44,267    6.25%  $   551    $ --
    After one year but within five years........................................   70,545      72,221    4.67     1,676      --
    After five years but within ten years.......................................       --          --      --        --      --
    After ten years.............................................................       --          --     --        --       --
Obligations of state and political subdivisions
    Within one year.............................................................   21,576      21,873    6.39       297      --
    After one year but within five years........................................   85,116      86,547    5.85     1,431      --
    After five years but within ten years.......................................      691         685    5.94        --       (6)
    After ten years.............................................................       --          --      --        --      --
Corporate and other securities
    Within one year.............................................................   10,957      11,138    6.33       182      (1)
    After one year but within five years........................................    8,472       8,638    6.08       214     (48)
    After five years but within ten years.......................................       10          10    4.94        --      --
    After ten years.............................................................       --          --      --        --      --
Mortgage-backed securities
    Within one year.............................................................      192         193    6.32         1      --
    After one year but within five years........................................    6,142       6,305    6.91       163      --
    After five years but within ten years.......................................       --          --      --        --      --
    After ten years.............................................................    1,686       1,734    7.25        48      --
Common stock....................................................................    9,961      13,047     N/M     3,152     (66)
                                                                                --------------------------------------------------
Total........................................................................... $259,064    $266,658    5.70%  $ 7,715   $(121)
                                                                                ==================================================
</TABLE>

                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 27 o
<PAGE>

<TABLE>
<CAPTION>
                                                                                                 December 31, 2000
                                                                                 -------------------------------------------------
Securities classified as Available for Sale                                                        Weighted    Gross      Gross
                                                                                Amortized  Market  Average   Unrealized Unrealized
Type and maturity                                                                 Cost      Value   Yield      Gains      Losses
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>       <C>       <C>     <C>          <C>
U.S. Treasury securities and obligations of other U.S. Government agencies and
  corporations
    Within one year............................................................. $ 52,094  $ 52,082   5.65%  $   40  $    (52)
    After one year but within five years........................................   43,622    44,027   6.31      421       (16)
    After five years but within ten years.......................................       --        --     --       --        --
    After ten years.............................................................       --        --     --       --        --
Obligations of state and political subdivisions
    Within one year.............................................................    8,219     8,231   6.64       14        (2)
    After one year but within five years........................................   67,432    67,440   6.16      200      (192)
    After five years but within ten years.......................................    1,406     1,389   6.05       --       (17)
    After ten years.............................................................       --        --     --       --        --
Corporate and other securities
    Within one year.............................................................   16,608    16,580   5.88        4       (32)
    After one year but within five years........................................   18,660    18,784   6.65      175       (51)
    After five years but within ten years.......................................    2,397     2,403   6.22       13        (7)
    After ten years.............................................................       --        --     --       --        --
Mortgage-backed securities
    Within one year.............................................................      547       546   5.50       --        (1)
    After one year but within five years........................................   11,702    11,746   7.08       47        (3)
    After five years but within ten years.......................................      260       259   4.63       --        (1)
    After ten years.............................................................    5,092     5,148   7.11       62        (6)
Common stock....................................................................   11,269    13,101    N/M    2,554      (722)
                                                                                --------------------------------------------------
Total........................................................................... $239,308  $241,736   6.17%  $3,530   $(1,102)
                                                                                ==================================================
</TABLE>

N/M = Not meaningful

      Investment yields were computed on a tax-equivalent basis (using a 35% tax
rate) for obligations of state and political subdivisions. Total weighted
average yield does not include the common stock holdings.

      Certain obligations of the U.S. Government and state and political
subdivisions are pledged to secure public monies as required by law and for
other purposes. The carrying value of the pledged assets amounted to
$122,830,000, $105,567,000 and $106,659,000 at December 31, 2002, 2001 and 2000,
respectively.

      In addition to cash received from the scheduled maturities of securities,
some investment securities are sold at current market values during the course
of normal operations. Following is a summary of proceeds received from all
investment securities transactions, and the resulting realized gains and losses
(in thousands):

                                                       Years Ended December 31,
                                                  ------------------------------
                                                        2002      2001     2000
--------------------------------------------------------------------------------
Gross proceeds from securities transactions......     $99,701   $93,712  $79,956
Securities available for sale:
    Realized gains...............................         412       312      575
    Realized losses..............................          --       247       --

                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 28 o
<PAGE>

[4]   LOANS

      Loans outstanding at the end of each year consisted of the following (in
thousands):
<TABLE>
<CAPTION>
                                                                 December 31,
                                        --------------------------------------------------------------
                                           2002         2001         2000         1999         1998
                                        --------------------------------------------------------------
<S>                                     <C>          <C>          <C>          <C>          <C>
Commercial, financial and agricultural  $ 116,833    $ 123,938    $ 118,686    $ 107,093    $  97,901
Real estate--commercial ..............    293,010      262,613      229,294      204,809      198,987
Real estate--construction ............     36,690       20,736       18,305       16,039       15,890
Real estate--mortgage ................    195,180      194,422      206,864      200,561      227,846
Home equity ..........................     92,500       92,271       98,725       91,711       83,800
Personal .............................     45,445       65,871       78,797       82,079       95,060
Lease financing ......................        172          544        1,437        2,949        4,001
Unearned interest ....................        (11)         (41)        (123)        (293)        (518)
                                        --------------------------------------------------------------
  Total ..............................  $ 779,819    $ 760,354    $ 751,985    $ 704,948    $ 722,967
                                        ==============================================================
Non-accrual loans ....................  $   3,125    $   2,327    $   1,503    $   2,640    $   5,627
</TABLE>

      Interest income not recorded on non-accrual loans in 2002, 2001 and 2000
was $262,000, $156,000 and $191,000, respectively. Gross interest income that
would have been recorded on non-accrual loans had these loans been in a
performing status was $327,000 in 2002, of which $65,000 was included in
interest income for the year ended December 31, 2002.

      The aggregate amount of demand deposits that have been reclassified as
loan balances at December 31, 2002 and 2001 are $406,000 and $183,000,
respectively.

[5]   ALLOWANCE FOR LOAN LOSSES

      A summary of the transactions in the allowance for loan losses for the
last five years follows (in thousands):
<TABLE>
<CAPTION>
                                                                                        Years Ended December 31,
                                                                     ----------------------------------------------------
                                                                       2002        2001       2000      1999       1998
                                                                     ----------------------------------------------------
<S>                                                                  <C>        <C>        <C>        <C>        <C>
Balance of allowance--beginning of period .........................  $11,224    $11,622    $11,865    $11,772    $11,793
Loans charged off:
  Commercial, financial and agricultural ..........................       25        188        329        465        463
  Real estate--commercial .........................................      219        403        114        154        283
  Real estate--mortgage ...........................................       88         40       --         --         --
  Personal ........................................................      602        595        398        509        682
                                                                     ----------------------------------------------------
    Total charge-offs .............................................      934      1,226        841      1,128      1,428
Recoveries of loans previously charged off:
  Commercial, financial and agricultural ..........................       57         28         45         63        146
  Real estate--commercial .........................................        7        236          6         15         96
  Real estate--mortgage ...........................................        2          3       --         --         --
  Personal ........................................................       66         61        119         83        105
                                                                     ----------------------------------------------------
    Total recoveries ..............................................      132        328        170        161        347
Net charge-offs ...................................................      802        898        671        967      1,081
Provision for loan losses .........................................      630        500        428      1,060      1,060
                                                                     ----------------------------------------------------
Balance of allowance--end of period ...............................  $11,052    $11,224    $11,622    $11,865    $11,772
                                                                     ====================================================
Ratio of net charge-offs during period to average loans outstanding     0.10%      0.12%      0.09%      0.14%      0.15%
                                                                     ====================================================
</TABLE>

      As of December 31, 2002, 2001 and 2000, the recorded investment in the
loans for which impairment has been recognized in accordance with SFAS No. 114
as amended by SFAS No. 118 is $1,388,000, $1,923,000 and $336,000, respectively.
The total allowance for loan losses related to those impaired loans is $590,000,
$836,000 and $132,000, at December 31, 2002, 2001 and 2000, respectively. It is
the policy of the Corporation to recognize income on impaired loans on a cash
basis, only to the extent that it exceeds principal balance recovery.


                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 29 o
<PAGE>

[6]   BANK-OWNED LIFE INSURANCE
      Omega has purchased bank-owned life insurance (BOLI) with a cash surrender
value of $31,739,000 and $30,216,000 at December 31, 2002 and 2001,
respectively. The cash surrender value on the BOLI increased by $1,523,000,
$1,092,000 and $1,028,000 in 2002, 2001 and 2000, respectively. These earnings
are included with other non-interest income.

[7]   PREMISES AND EQUIPMENT
      Premises and equipment consist of the following (in thousands):

                                                               December 31,
                                         Estimated     ----------------------
                                        Useful Life       2002         2001
                                      ---------------------------------------
Land...............................            --       $  2,147    $  2,143
Premises and leasehold
  improvements.....................    5-40 years         19,117      19,432
Furniture, computer
  software and equipment...........    3-20 years         19,254      21,257
Construction in progress...........            --              7       1,331
                                                       ----------------------
                                                          40,525      44,163
Less: Accumulated depreciation.....                      (25,806)    (28,600)
                                                       ----------------------
                                                        $ 14,719    $ 15,563
                                                       ======================

      Depreciation expense on premises and equipment charged to operations was
$2,116,000 in 2002, $1,738,000 in 2001 and $1,836,000 in 2000.

[8]   TIME DEPOSITS
    Time deposits consist of the following (in thousands):

                                                           December 31,
                                                       ---------------------
                                                        2002         2001
                                                       ---------------------
Time deposits $100,000 or greater................      $ 59,656     $ 76,414
Other time deposits..............................       310,110      347,430
                                                       ---------------------
                                                       $369,766     $423,844
                                                       =====================

    Aggregate amount of scheduled maturities of time deposits as of December 31,
2002 include the following (in thousands):

                                                           Time Deposits
                                                     -----------------------
                                                      $100,000
                                                     or greater      Other
                                                     -----------------------
Maturing in:
  2003...........................................     $31,383      $189,892
  2004...........................................      7,322         47,403
  2005...........................................     10,638         28,803
  2006...........................................      4,003         18,240
  2007...........................................      6,310         25,722
  Later..........................................         --             50
                                                     -----------------------
                                                     $59,656       $310,110
                                                     =======================

[9]   BORROWINGS
    Borrowings consist of the following (in thousands):
                                                           December 31,
                                                     ---------------------
                                                       2002        2001
                                                     ---------------------
Short-Term Borrowings:
Retail repurchase agreements.......................  $19,952     $16,072
Notes payable to Federal Home Loan Bank,
  with fixed rates between 1.45% and 2.66%.........   16,500      16,500
Note payable to Federal Home Loan Bank,
  with variable rate payable at prime minus
  271 basis points.................................    5,000       5,000
                                                     ---------------------
                                                     $41,452     $37,572
                                                     =====================
Long-Term Debt:
Notes payable to Federal Home Loan Bank,
  with fixed rates between 5.67% and 6.80%.........   $11,183     $12,234
Note payable to Federal Home Loan Bank,
  with variable rate payable at LIBOR plus
  8 basis points...................................     5,000       5,000
Note payable to GMAC, with fixed rate of 0%........        55          --
                                                     ----------------------
                                                      $16,237     $17,234
                                                     ======================

      Omega has repurchase agreements with several of its depositors, under
which customers' funds are invested daily into an interest bearing account.
These funds are carried by the Corporation as short-term debt and are
collateralized by U.S. Government securities. The interest rate paid on these
funds is variable and subject to change monthly.

      The fixed rate short-term notes payable, as of December 31, 2002, in the
amount of $16,500,000 with the Federal Home Loan Bank are scheduled to mature
between January and February of 2003 and were initiated to match fund commercial
loans. The remaining $5,000,000 Federal Home Loan Bank short-term note payable
will mature in April 2003, with the full principal balance payable upon maturity
and were initiated to provide additional liquidity.

      Long-term notes payable to the Federal Home Loan Bank have maturities
ranging from 2004 through 2011.

      Omega's total borrowing capacity with the Federal Home Loan Bank of
Pittsburgh was $67,686,000 as of December 31, 2002. If the Corporation were to
purchase additional Federal Home Loan Bank stock, the maximum borrowing capacity
could be increased to $337,463,000. The Federal Home Loan Bank is a source of
both short-term and long-term funding. The Corporation must maintain sufficient
qualifying collateral, as defined, to secure all outstanding advances.

      Omega has lines of credit established with various financial institutions
for overnight funding needs. These lines provided a total availability of
$25,000,000 in 2002 and 2001, with interest payable at the daily federal funds
rate. There were no borrowings on December 31, 2002 or December 31, 2001 under
these credit facilities.

                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 30 o
<PAGE>

[10]  OPERATING LEASE OBLIGATIONS
      The Corporation has entered into a number of leasing arrangements that are
classified as operating leases. The operating leases are for several branch
locations, automatic teller machines (ATM) and computer equipment. The majority
of the branch location and ATM leases are renewable at the Corporation's option.
In addition, future rental payments on many of the branch and ATM leases are
subject to change in relation to fluctuations in the Consumer Price Index.
Future minimum lease commitments are based on current rental payments.

      The following is a summary of future minimum rental payments for the next
five years required under operating leases that have initial or remaining
noncancellable lease terms in excess of one year as of December 31, 2002 (in
thousands):

Years Ending December 31,
-----------------------------------------------------
2003...................................        $  323
2004...................................           277
2005...................................           243
2006...................................           203
2007...................................           158
Later years............................           802
                                               ------
Total minimum payments required........        $2,006
                                               ======

      Rental expense charged to operations, net of sub-lease income, was
$206,000, $201,000 and $125,000 in 2002, 2001 and 2000, respectively, which
includes short-term cancellable leases.

[11]  INCOME TAXES

      The components of income tax expense for the three years ended December
31, 2002 were (in thousands):

                                             2002       2001       2000
                                           ------------------------------
Current tax expense....................... $5,767      $5,857    $6,210
Deferred tax expense......................   (117)         20      (227)
                                           ------------------------------
Total tax expense......................... $5,650      $5,877    $5,983
                                           ==============================

      Income tax expense related to realized securities gains was $144,000 in
2002, $23,000 in 2001 and $201,000 in 2000.

      The reasons for the differences between the income tax expense and the
amount computed by applying the statutory federal income tax rate to pre-tax
earnings are as follows:

                                                 Years Ended December 31,
                                             -------------------------------
                                               2002        2001       2000
                                             -------------------------------
Federal tax at statutory rate.............     35.0%       35.0%      35.0%
Tax-exempt income.........................     (7.5)       (7.5)      (6.7)
Bank-owned life insurance earnings........     (2.2)       (1.6)      (1.5)
Low income housing credits................     (0.4)       (0.4)      (0.4)
Other, net................................     (1.2)       (0.5)      (0.4)
                                             -------------------------------
Effective rate............................     23.7%       25.0%      26.0%


      Deductible temporary differences and taxable temporary differences gave
rise to a net deferred tax asset for Omega as of December 31, 2002 and 2001. The
components giving rise to the net deferred tax asset are detailed below (in
thousands):

                                                    December 31,
                                                 ----------------
                                                 2002        2001
                                                 ----        ----
Deferred Tax Assets
  Loan loss reserve ................          $ 3,868       $ 3,928
  Deferred compensation ............            1,124           990
  Employee benefits ................              414           419
  Interest on non-accrual loans ....               31            40
  Other ............................                3             3
                                               ------        ------
    Total ..........................            5,440         5,380
Deferred Tax Liabilities
  Depreciation .....................              (75)          (98)
  Unrealized net gains on securities           (4,098)       (2,858)
  Auto leases (net) ................              (65)         (242)
  Low income housing investments ...             (206)         (189)
  Other ............................             (546)         (387)
                                               ------        ------
    Total ..........................           (4,990)       (3,774)
                                               ------        ------
Net deferred tax asset included
  in other assets ..................          $   450       $ 1,606
                                               ======        ======

      Omega has concluded that the deferred tax assets are realizable (on a more
likely than not basis) through the combination of future reversals of existing
taxable temporary differences, carryback availability, certain tax planning
strategies and expected future taxable income.

[12] SHAREHOLDERS' EQUITY

      Five million shares of preferred stock with a par value of $5.00 per share
are authorized for issuance. The Board has the ability to fix the voting,
dividend, redemption and other rights of the preferred stock, which can be
issued in one or more series.

      There are 219,781 shares of Class A cumulative convertible preferred stock
issued to Omega's Employee Stock Ownership Plan (ESOP) for a total of
$5,000,000. The preferred stock is convertible into Omega's common stock at the
current rate of 1.575 common shares for one preferred share in certain events.
The preferred stock is restricted to the ESOP and can be redeemed by the
Corporation at any time. Dividends on the preferred stock are fixed at $1.80 per
share per year, and are required to be paid prior to any dividend payments on
the common stock. The preferred stock has preference in liquidation over the
common stock in the amount of $22.75 per share, plus all dividend arrearages,
prior to payments to common shareholders. Full voting rights are held by the
preferred stock owner.

      In January of 2002, the Board approved a new share repurchase program to
begin immediately, authorizing management to buy back an additional 10% of its
common stock. At that time, there were 8,222,010 common shares outstanding with
822,201 shares eligible to be repurchased. This program remained in effect
through December 31, 2002, at which time 277,267 shares had been repurchased in
conjunction with this program. See Note 21.

                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 31 o
<PAGE>

[13]  CALCULATION OF EARNINGS PER SHARE

    The following table shows the calculation of earnings per share for the
years ended December 31, 2002, 2001 and 2000 (in thousands, except per share
data).
<TABLE>
<CAPTION>
                                                                           Year Ended December 31,
                                               ---------------------------------------------------------------------
                                                             2002                               2001
                                               --------------------------------- -----------------------------------
                                                Income      Shares     Per-Share   Income      Shares     Per-Share
                                               Numerator  Denominator   Amount    Numerator  Denominator   Amount
                                               ---------------------------------------------------------------------
<S>                                             <C>                               <C>
Net income...................................   $18,179                           $17,655
Less: Preferred stock dividends..............      (396)                             (396)
                                               ---------                          --------
Basic EPS
Income available to common shareholders......    17,783      8,189      $2.17      17,259      8,287       $2.08
                                                                        -----                              -----
Effect of Dilutive Securities
Impact of:
  Assumed conversion of preferred
    to common stock..........................                  346                               346
  Assumed exercises of outstanding options...                   86                                88
  Preferred stock dividends available
    to common shareholders...................       396                               396
  Elimination of tax benefit of
    allocated preferred dividends............       (80)                              (73)
  Additional expense required to
    fund ESOP debt...........................        (3)                              (16)
                                                ----------                      -----------
Diluted EPS
Income available to common
  shareholders plus assumed conversions......   $18,096      8,621      $2.10     $17,566      8,721       $2.01
                                                ================================================================

                                                               Year Ended December 31,
                                                        ----------------------------------
                                                                       2000
                                                         ---------------------------------
                                                          Income      Shares     Per-Share
                                                         Numerator  Denominator   Amount
                                                        ----------------------------------
Net income...................................             $17,129
Less: Preferred stock dividends..............                (396)

Basic EPS
Income available to common shareholders......              16,733     8,725       $1.92
                                                                                  -----
Effect of Dilutive Securities
Impact of:
  Assumed conversion of preferred
    to common stock..........................                           346
  Assumed exercises of outstanding options...                            73
  Preferred stock dividends available
    to common shareholders...................                 396
  Elimination of tax benefit of
    allocated preferred dividends............                 (66)
  Additional expense required to
    fund ESOP debt...........................                 (26)
                                                        ------------
Diluted EPS
Income available to common
  shareholders plus assumed conversions......              $17,037    9,144       $1.87
                                                        ==================================
</TABLE>
[14]  COMPREHENSIVE INCOME
      Components of other comprehensive income (loss) consist of the following
(in thousands):
<TABLE>
<CAPTION>
                                                                                      Year Ended December 31, 2002
                                                                               -------------------------------------------
                                                                               Before Tax     Tax (Expense)    Net-of-Tax
                                                                                 Amount        or Benefit        Amount
                                                                               -------------------------------------------
<S>                                                                              <C>             <C>             <C>
Unrealized gains on available for sale securities:
  Unrealized holding gains arising during the period........................     $3,955          $(1,387)        $2,568
  Less: Reclassification adjustment for gains included in net income........       (412)             144           (268)
                                                                               -------------------------------------------
Other comprehensive income..................................................     $3,543          $(1,243)        $2,300
                                                                               -------------------------------------------

                                                                                      Year Ended December 31, 2001
                                                                               -------------------------------------------
                                                                               Before Tax     Tax (Expense)    Net-of-Tax
                                                                                 Amount        or Benefit        Amount
                                                                               -------------------------------------------
Unrealized gains on available for sale securities:
  Unrealized holding gains arising during the period........................     $5,639          $(1,974)        $3,665
  Less: Reclassification adjustment for gains included in net income........       (472)             165           (307)
                                                                               -------------------------------------------
Other comprehensive income..................................................     $5,167          $(1,809)        $3,358
                                                                               -------------------------------------------

                                                                                      Year Ended December 31, 2000
                                                                               -------------------------------------------
                                                                               Before Tax     Tax (Expense)    Net-of-Tax
                                                                                 Amount        or Benefit        Amount
                                                                               -------------------------------------------
Unrealized gains on available for sale securities:
  Unrealized holding gains arising during the period........................     $1,514          $  (530)        $  984
  Less: Reclassification adjustment for gains included in net income........       (332)             116           (216)
                                                                               -------------------------------------------
Other comprehensive income..................................................     $1,182          $  (414)        $  768
                                                                               -------------------------------------------
</TABLE>

                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 32 o
<PAGE>

[15]  EMPLOYEE BENEFIT PLANS

Omega Stock Compensation Plans

      Omega has four stock-based compensation plans, the Employee Stock Purchase
Plan, the Stock Option Plan (1986) (the "1986 Plan"), the 1996 Employee Stock
Option Plan (the "1996 Plan") and the Non-Employee Director Stock Option Plan.
The 1996 Plan replaced the 1986 Plan pursuant to which no options were issuable
after 1996. Omega accounts for these plans under APB Opinion No. 25, under which
no compensation cost has been recognized. Had compensation cost for these plans
been determined consistent with the fair value method under SFAS No. 123,
Omega's net income and earnings per share would have been reduced to the amounts
disclosed in Note 1.

      The SFAS No. 123 method of accounting has not been applied to options
granted prior to January 1, 1995. Therefore, the resulting pro forma
compensation cost disclosed in Note 1 may not be representative of that to be
expected in future years.

      These computations were derived using the Black-Scholes option-pricing
model with the following weighted average assumptions used for options granted
in 2002, 2001 and 2000:

                                       Employee       Employee      Director
                                         Stock          Stock         Stock
                                       Purchase        Option        Option
                                         Plan        Plan (1996)      Plan
                                    -------------------------------------------
Options Granted in 2002
  Expected life of options.........      1 year        6 years       6 years
  Risk-free interest rate..........       1.32%          3.07%         3.07%
  Expected volatility..............      18.21%         34.10%        34.10%
  Expected dividend yield..........       3.74%          3.74%         3.74%

                                       Employee       Employee      Director
                                         Stock          Stock         Stock
                                       Purchase        Option        Option
                                         Plan        Plan (1996)      Plan
                                    -------------------------------------------
Options Granted in 2001
  Expected life of options.........      1 year       6 years        6 years
  Risk-free interest rate..........       2.20%         4.45%          4.45%
  Expected volatility..............      54.92%        33.66%         33.66%
  Expected dividend yield..........       3.79%         3.79%          3.79%

                                       Employee       Employee      Director
                                         Stock          Stock         Stock
                                       Purchase        Option        Option
                                         Plan        Plan (1996)      Plan
                                    -------------------------------------------
Options Granted in 2000
  Expected life of options.........      1 year       6 years        6 years
  Risk-free interest rate..........       5.50%         5.09%          5.09%
  Expected volatility..............      50.83%        25.62%         25.62%
  Expected dividend yield..........       3.38%         3.38%          3.38%

      The Employee Stock Purchase Plan ("ESPP") is administered by the
Compensation Committee ("Committee") of the Omega Board of Directors ("Board"),
consisting of members who are not eligible to receive options under the ESPP.
The Committee is authorized to grant options to purchase common stock of Omega
to all employees of Omega and its subsidiaries who meet certain service
requirements. The ESPP qualifies as a non-compensatory plan under Section 423 of
the Internal Revenue Code. All options granted under the ESPP are immediately
vested. For 27 months following the date of the grant, options are exercisable
at the lesser of 90% of the fair market value of the shares on the date of grant
or 90% of the fair market value on the date of exercise. After 27 months, the
options are exercisable at 90% of the fair market value on the exercise date.
Outstanding options are scheduled to expire through December 31, 2007. The
aggregate number of shares which may be issued upon the exercise of options
under this plan is 1,125,000 shares. All ESPP options outstanding at December
31, 2002 have current exercise prices between $24.30 and $32.31 and a weighted
average remaining contractual life of 3.77 years. All of these options are
exercisable.

      The 1986 Plan and the 1996 Plan (collectively, the "SOPs") are
administered by the Committee, whose members are not eligible to receive options
under the SOPs. The Committee determines, among other things, which officers and
key employees will receive options, the number of shares to be subject to each
option, the option price and the duration of the option. Options vest over one
year and are exercisable at the fair market value of the shares at date of
grant. These options are scheduled to expire through January 1, 2012. The
aggregate number of shares that may be issued upon the exercise of options under
the 1996 Plan is 1,500,000 shares. The SOPs options outstanding at December 31,
2002 have exercise prices between $16.33 and $33.50, with a weighted average
exercise price of $27.73 and a weighted average remaining contractual life of
6.01 years. 363,481 of these options are exercisable; their weighted average
exercise price is $26.87.

      The Non-Employee Director Stock Option Plan ("DSOP") is administered by
the Board. Options are granted automatically on May 1 each year to non-employee
directors of Omega. Options vest over one year and are exercisable at the fair
market value of the shares at the date of grant. These options are scheduled to
expire through May 1, 2012. The aggregate number of shares that may be issued
upon the exercise of options under this plan is 55,000. DSOP options outstanding
at December 31, 2002 have exercise prices between $16.33 and $38.13, with a
weighted average exercise price of $28.58 and a weighted average remaining
contractual life of 5.91 years. 20,200 of these options are exercisable; their
weighted average exercise price is $27.95.

                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 33 o
<PAGE>

    A summary of the status of Omega's four stock-based compensation plans as of
December 31, 2002, 2001 and 2000, and changes during the years ending on those
dates is presented below:
<TABLE>
<CAPTION>
                                                              2002                   2001                     2000
                                                     ---------------------    ---------------------    ---------------------
                                                               Weighted                 Weighted                  Weighted
                                                               Average                  Average                   Average
Employee Stock Purchase Plans                      Shares   Exercise Price   Shares  Exercise Price  Shares   Exercise Price
----------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>          <C>          <C>      <C>             <C>        <C>
Outstanding at beginning of year.................  189,647     $27.02        194,696     $24.30      190,080     $25.65
Granted..........................................   67,905      32.31         68,021      28.85       68,350      24.30
Exercised........................................  (79,719)     26.83        (67,159)     24.89      (59,152)     22.16
Forfeited........................................  (19,717)     28.66         (5,911)     25.00       (4,582)     27.22
                                                   --------                  -------                 --------
Outstanding at end of year.......................  158,116      30.57        189,647      27.02      194,696      24.30
                                                   --------                  -------                 --------
Options exercisable at year-end..................  158,116                   189,647                 194,696
Weighted average fair value of                     --------                  -------                 --------
  options granted during the year................    $7.06                    $10.10                   $8.56

                                                             2002                     2001                     2000
                                                   ----------------------    ----------------------    ----------------------
                                                             Weighted                 Weighted                   Weighted
                                                              Average                  Average                   Average
Employee Stock Option Plans                        Shares  Exercise Price    Shares  Exercise Price    Shares  Exercise Price
-----------------------------------------------------------------------------------------------------------------------------
Outstanding at beginning of year.................  455,167     $25.58        443,677    $24.56         393,496     $23.52
Granted..........................................   72,322      32.05         65,074     27.00          71,487      28.50
Exercised........................................  (79,734)     18.70        (48,834)    17.76         (16,806)     15.14
Forfeited........................................  (11,952)     32.44         (4,750)    30.08          (4,500)     31.00
                                                   --------                  -------                   -------
Outstanding at end of year.......................  435,803      27.73        455,167     25.58         443,677      24.56
                                                   --------                  -------                   -------
Options exercisable at year-end..................  363,481                   392,593                   374,440
Weighted average fair value of                     --------                  -------                   -------
  options granted during the year................    $7.94                     $7.14                      $6.60

                                                             2002                     2001                      2000
                                                  -----------------------  -----------------------  -----------------------
                                                             Weighted                 Weighted                   Weighted
                                                              Average                  Average                   Average
Director Stock Option Plan                        Shares  Exercise Price    Shares  Exercise Price    Shares   Exercise Price
----------------------------------------------------------------------------------------------------------------------------
Outstanding at beginning of year.................  20,200     $27.95         18,900      $27.49       15,400     $28.06
Granted..........................................   3,000      32.83          3,000       29.65        3,500      25.00
Exercised........................................      --         --           (900)      18.28           --         --
Forfeited........................................      --         --           (800)      34.42           --         --
                                                    ------                    ------                  ------
Outstanding at end of year.......................   23,200     28.58          20,200      27.95       18,900      27.49
                                                    ------                    ------                  ------
Options exercisable at year-end..................   20,200                    17,200                  15,400
Weighted average fair value of                      ------                    ------                  ------
  options granted during the year................    $8.13                      $7.69                  $5.76
</TABLE>
                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 34 o
<PAGE>

Omega Employee Stock Ownership Plan

      Omega has an Employee Stock Ownership Plan ("ESOP") for the benefit of
employees that meet certain age and service requirements. For the years ended
December 31, 2002, 2001 and 2000, expenses incurred under this plan were
$217,000, $1,380,000 and $1,537,000, respectively. The level of annual
contributions is based upon a percentage of employee salary expense. The
majority of the funds obtained through these contributions were used to purchase
Omega stock or meet debt service on the ESOP debt (see comment below); in 2002,
15,400 shares of Omega common stock were acquired at a cost of $478,000 and
$93,000 was applied to debt service. In 2001, no shares of Omega common stock
were acquired and $93,000 was applied to debt service. At December 31, 2002 the
ESOP holds 502,294 shares of Omega common stock and 219,781 shares of preferred
stock. Of the preferred stock, 137,697 of the shares have been allocated to
participants of the plan as of December 31, 2002, based upon principal repayment
of the debt outstanding. The ESOP is administered by a Board of Trustees and an
Administrative Committee appointed by the Board. All of the Trustees are
officers, employees, or directors of Omega.

      On July 1, 1990, the ESOP entered into a $5,000,000 leveraged transaction
for the purpose of acquiring 219,781 shares of convertible preferred stock from
the Corporation for $22.75 per share. The original term of the loan was for
twenty years and carried a fixed interest rate of 10.65% for the first ten
years. Thereafter, the ESOP had the option to take a fixed rate or various
variable rate options for the remaining term of the loan. On October 1, 1998,
this loan was refinanced at a fixed rate of 7.00% through October 1, 2005. After
October 1, 2005, to and including the date this loan is paid in full (maturity
date is July 1, 2010), the principal balance shall bear interest annually at the
five-year Treasury rate at October 1, 2005 plus 250 basis points. The loan is
collateralized by a mortgage on the Corporation's administration center and the
Corporation's guarantee.

      In order to meet the future annual debt service of $489,000, which
includes principal and interest, the ESOP will receive $396,000 in dividends
from the preferred stock and the remainder in contributions from the
Corporation. In 2002, the debt service required was $489,000, of which $210,000
represented interest expense incurred by the ESOP. In 2001, the debt service
required was $489,000, of which $229,000 represented interest expense incurred
by the ESOP. Outstanding ESOP debt as of December 31, 2002 was $2,832,000.
Scheduled principal repayments on the ESOP debt are as follows:

2003.........................................................      $ 298,000
2004.........................................................        319,000
2005.........................................................        342,000
2006.........................................................        367,000
2007.........................................................        393,000
Later years..................................................      1,113,000

Defined Contribution Plan

      Omega maintains a defined contribution plan for eligible employees as
defined. Employer contributions to the plan totaled $1,165,000, $160,000 and
$162,000 for the years ended December 31, 2002, 2001 and 2000, respectively.

Supplemental Executive Retirement Plan

      The Supplemental Executive Retirement Plan ("SERP") is a non-qualified
executive benefit in which the Corporation agrees to pay certain key executives
for a specified period of time after retirement. This plan was established in
2000 and replaced the former Executive Supplemental Income Plan. The present
value of the supplemental retirement benefits to be paid under the SERP program
is being accrued over the estimated remaining service period of the two officers
designated to receive these benefits. Accrued liabilities from the discontinued
plan were transferred to the SERP. At December 31, 2002 the liability for these
future obligations was $2,607,000 as compared to December 31, 2001 when the
liability was $2,281,000. For the years ended December 31, 2002, 2001 and 2000,
$363,000, $383,000 and $383,000, respectively, was charged to operations in
connection with this program.

[16]  FAIR VALUE OF FINANCIAL INSTRUMENTS

      SFAS No. 107, "Disclosure about Fair Value of Financial Instruments,"
requires the Corporation to disclose the estimated fair value of its financial
instruments. The fair value disclosures are made based on relevant market
information for financial instruments with similar repricing characteristics and
credit risk and management assumptions. The estimated values do not reflect any
premium or discount that may be realized from offering for sale at one time the
Corporation's entire holdings of a particular financial instrument.

      The following describes the estimated fair value of the Corporation's
financial instruments as well as the significant methods and assumptions used to
determine these estimated fair values.

      Carrying values approximate fair value for cash and due from banks,
interest bearing deposits, federal funds sold, interest receivable, demand
deposits, savings deposits, short-term borrowings, other interest bearing
liabilities and interest payable given.

      Investment Securities--The fair value of investment securities is
determined by reference to quoted market prices or dealer quotes (see Note 3).

      Commercial, Financial and Agricultural Loans, Real Estate--Commercial
Loans and Real Estate--Construction Loans--These loans are made on either a
floating, adjustable or fixed rate basis. The estimated fair value of these
loans is determined by discounting the future contractual cash flows using rates
at which similar loans would be made to borrowers with similar credit ratings
and for the same remaining maturity or repricing period. The discount rates
utilized for these loans are indexed to either the national prime rate or the
comparable U.S. Treasury rate. Loans discounted at the prime rate have a
positive spread of approximately 15 to 185 basis points at December 31, 2002 and
a positive spread of 50 to 250 basis points at December 31, 2001. Loans
discounted using the U.S. Treasury rate carry a spread of 235 to 275 basis
points at December 31, 2002 and a spread of approximately 325 basis points at
December 31, 2001.

      Real Estate Mortgage Loans--This category is comprised primarily of
residential mortgages that are adjustable rate mortgages (ARMs) or fixed rate
mortgages. The estimated fair value of these loans is arrived at by discounting
the future contractual cash flows, adjusted

                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 35 o
<PAGE>

for prepayments, at the current market rate for these loans. Prepayments, or
acceleration of cash flows, are calculated at speeds at which a pool of loans
with similar characteristics would be expected to prepay. The rates utilized for
adjustable rate mortgages, for December 31, 2002 and December 31, 2001, are
equivalent to the U.S. Treasury rate for the same term plus a spread of
approximately 275 basis points. The market rate for fixed rate mortgages ranged
from 5.80% to 6.55% at December 31, 2002 and from 7.00% to 7.75% at December 31,
2001.

      Home Equity Loans--This category is comprised primarily of fixed rate
loans, but does include home equity lines of credit that have floating rates.
The fair value of the fixed rate loans is estimated by discounting the future
contractual cash flows using rates at which similar loans would be made to
borrowers for the same remaining maturity. The discount rate utilized for home
equity installment loans is the current national market rate for new mortgages
plus a spread of approximately -30 to 175 basis points as of December 31, 2002
and 45 to 225 basis points as of December 31, 2001. Home equity lines of credit
are on a floating basis and approximate current market rates.

      Personal Loans and Lease Financing--This category is comprised primarily
of fixed rate loans, but does include personal lines of credit which have
floating rates. The fair value of the fixed rate loans is estimated by
discounting the future contractual cash flows. The discount factor for these
loans is the current national market rate for a 48-month automobile loan plus a
spread of 125-400 basis points as of December 31, 2002 and a spread of 10-375
basis points as of December 31, 2001. Personal lines of credit are on a floating
basis and approximate current market rates.

      Time Deposits--The estimated fair value is determined by discounting the
contractual future cash flows, using the rates currently offered for deposits of
similar remaining maturities. The rates utilized for time deposits are
equivalent to the U.S. Treasury rate for the same term with a spread of 10 to 70
basis points at December 31, 2002 and a spread of 10 to 40 basis points at
December 31, 2001.

      Long-Term Debt--The fair value of long-term debt is determined by
discounting the contractual cash flows at rates that approximate the current
FHLB borrowing rate for borrowings with similar terms and maturity. As of
December 31, 2002 the appropriate FHLB borrowing rate was 3.40%. The carrying
amounts of all other borrowings approximate fair value due to the short-term
nature of these instruments.

      ESOP Debt--The estimated fair value is determined by discounting the
contractual cash flows, using rates currently available to the Corporation for
debt with similar terms and remaining maturities.

      Many of the fair value estimates presented are based upon the use of
assumptions that are inherently subjective in nature. Changes in these
assumptions can significantly affect the estimates. In addition, the fair value
estimates do not consider the potential income taxes or other expenses that
would be incurred in the actual sale of an asset or settlement of a liability.
Management does not believe that the aggregate fair value information represents
the true underlying value of the Corporation.
<TABLE>
<CAPTION>
                              Financial Instruments
                                  (In thousands)

                                             December 31, 2002        December 31, 2001
                                           -------------------        ------------------
                                              Book        Fair        Book       Fair
                                              Value      Value        Value      Value
                                           ---------------------------------------------
<S>                                        <C>          <C>        <C>          <C>
Loans (net of unearned interest):
  Commercial, financial and agricultural   $ 116,833    $121,026   $ 123,938    $124,435
  Real estate--commercial ..............     293,010     299,887     262,613     268,183
  Real estate--construction ............      36,690      36,897      20,736      20,990
  Real estate--mortgage ................     195,180     199,827     194,422     195,773
  Home equity ..........................      92,500      98,160      92,271      96,807
  Personal .............................      45,445      46,765      65,871      66,195
  Lease financing ......................         161         164         503         493
  Allowance for loan losses ............     (11,052)         --     (11,224)         --
                                           ----------------------------------------------
Total loans ............................   $ 768,767    $802,726   $ 749,130    $772,876
                                           ==============================================
Time deposits ..........................   $ 369,766    $377,930   $ 423,844    $429,139
ESOP debt ..............................       2,832       3,026       3,110       3,321
Long-term debt .........................      16,237      17,492      17,234      17,904
</TABLE>

[17]  FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONCENTRATIONS OF
      CREDIT RISK

      The Corporation is a party to financial instruments with off-balance sheet
risk in the normal course of business to meet the financing needs of its
customers and to reduce its own exposure to fluctuations in interest rates.
These financial instruments include commitments to extend credit, financial
guarantees, financial options and interest exchange agreements. These
instruments involve, to varying degrees, elements of credit and interest rate
risk that are not recognized in the consolidated financial statements.

                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 36 o
<PAGE>

      Exposure to credit loss in the event of non-performance by the other party
to the financial instrument for commitments to extend credit and financial
guarantees written is represented by the contractual notional amount of those
instruments. The Corporation uses the same credit policies in making these
commitments as it does for on-balance sheet instruments. The Corporation
controls the credit risk of its financial options and interest exchange
agreements through credit approvals, limits and monitoring procedures; however,
it does not generally require collateral for such financial instruments since
there is no principal credit risk.

      The Corporation had outstanding loan origination commitments aggregating
$59,465,000 and $68,893,000 at December 31, 2002 and 2001, respectively. In
addition, the Corporation had $98,846,000 and $86,474,000 outstanding in unused
lines of credit commitments extended to its customers at December 31, 2002 and
2001, respectively.

      Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since portions of the commitments are expected
to expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. The Corporation evaluates each
customer's creditworthiness on a case-by-case basis. The amount of collateral
obtained by the Corporation upon extension of credit is based on management's
credit evaluation of the counter party.

      Standby letters of credit are instruments issued by the Corporation that
guarantee the beneficiary payment by the bank in the event of default by the
Corporation's customer in the non-performance of an obligation or service. Most
standby letters of credit are extended for one year periods. The credit risk
involved in issuing letters of credit is essentially the same as that involved
in extending loan facilities to customers. The Corporation holds collateral
supporting those commitments for which collateral is deemed necessary. At
December 31, 2002 and 2001, standby letters of credit issued and outstanding
amounted to $13,520,000 and $16,413,000, respectively.

      As of December 31, 2002, there were no concentrations of credit to any
particular industry equaling 10% or more of total outstanding loans. Omega's
business activities are geographically concentrated in central Pennsylvania,
within Centre, Blair, Huntingdon, Mifflin, Juniata, Clinton and Bedford
counties. Omega has a diversified loan portfolio; however, a substantial portion
of its debtors' ability to honor their obligations is dependent upon the economy
in central Pennsylvania.

[18]  RELATED-PARTY TRANSACTIONS

      Omega's banks have granted loans to certain officers and directors of
Omega and its subsidiaries and to their associates. These loans were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with unrelated persons, and
in the opinion of management, do not involve more than normal risk of
collection. The aggregate dollar amount of these loans was $27,816,000,
$24,291,000 and $12,801,000 at December 31, 2002, 2001 and 2000, respectively.
In 2001, internal restructuring took place as a result of the bank charter
consolidation. Accordingly, the status of certain directors and officers
formerly classified as related parties has changed. Of the $12,801,000
outstanding balance at December 31, 2000, $873,000 is associated with
individuals who are now excluded from the related-party classification. During
2002, $7,056,000 of new loans were made and repayments totaled $3,531,000. None
of these loans were past due, in non-accrual status or restructured at December
31, 2002.

[19]  COMMITMENTS AND CONTINGENT LIABILITIES

      In 1998, the Corporation renewed a five-year agreement to obtain data
processing services from an outside service bureau. The agreement provides for
termination penalties if it is cancelled prior to the end of the commitment
period by the Corporation.

      The Corporation, from time to time, may be a defendant in legal
proceedings relating to the conduct of its banking business. Most of such legal
proceedings are a normal part of the banking business, and in management's
opinion, the financial condition and results of operations of the Corporation
would not be materially affected by the outcome of such legal proceedings.

[20]  REGULATORY MATTERS

      The Corporation and its bank subsidiaries are subject to risk-based
capital standards by which all bank holding companies and banks are evaluated in
terms of capital adequacy. These regulatory capital requirements are
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct
material effect on the Corporation's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Corporation and its bank subsidiary must meet specific capital guidelines
that involve quantitative measures of the Corporation's and bank subsidiary's
assets, liabilities, and certain off-balance sheet items as calculated under
regulatory accounting practices. The Corporation's and bank subsidiary's capital
amounts and classification are also subject to qualitative judgments by the
regulators about components, risk weightings, and other factors.

      Quantitative measures established by regulation to ensure capital adequacy
require the Corporation and the bank subsidiary to each maintain minimum amounts
and ratios (set forth in the table below) of Total and Tier I capital (as
defined in the regulations) to risk-weighted assets (as defined), and Tier I
capital (as defined) to average assets (as defined). Management believes, as of
December 31, 2002 and 2001, that Omega and its bank subsidiary meet all capital
adequacy requirements to which they were subject.

      As of December 31, 2002, the most recent notification from the regulatory
banking agencies categorized Omega and its bank subsidiary as well capitalized
under the regulatory framework for prompt corrective action. To be categorized
as well capitalized Omega and its bank subsidiary must maintain minimum Total
risk-based, Tier I risk-based and Tier I leverage ratios as set forth in the
table. To the knowledge of management, there are no conditions or events since
these notifications that have changed the institutions' category.

                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 37 o
<PAGE>

      The table below provides a comparison of Omega and its bank subsidiary's
risk-based capital ratios and leverage ratios to the minimum regulatory
requirements for the periods indicated (in thousands):
<TABLE>
<CAPTION>
                                                                                   Minimum Requirement     Minimum Regulatory
                                                                                       For Capital         Requirements to be
                                                                Actual             Adequacy Purposes       "Well Capitalized"
                                                       ----------------------------------------------------------------------------
                                                          Amount       Ratio       Amount       Ratio      Amount        Ratio
                                                       ----------------------------------------------------------------------------
Omega Financial Corporation
<S>                                                        <C>           <C>       <C>          <C>         <C>          <C>
  As of December 31, 2002:
    Total Capital (to Risk Weighted Assets).........    $164,183       21.5%     $61,175       8.0%       $76,468       10.0%
    Tier I Capital (to Risk Weighted Assets)........     154,851       20.3%      30,587       4.0%        45,881        6.0%
    Tier I Capital (to Average Assets)..............     154,851       13.5%      45,990       4.0%        57,488        5.0%
  As of December 31, 2001:
    Total Capital (to Risk Weighted Assets).........    $160,520       21.1%     $60,792       8.0%       $75,991       10.0%
    Tier I Capital (to Risk Weighted Assets)........     151,290       19.9%      30,396       4.0%        45,594        6.0%
    Tier I Capital (to Average Assets)..............     151,290       13.3%      45,340       4.0%        56,675        5.0%

Omega Bank
  As of December 31, 2002:
    Total Capital (to Risk Weighted Assets).........    $149,610       20.1%     $59,588       8.0%       $74,485       10.0%
    Tier I Capital (to Risk Weighted Assets)........     140,278       18.8%      29,794       4.0%        44,691        6.0%
    Tier I Capital (to Average Assets)..............     140,278       12.4%      45,201       4.0%        56,502        5.0%
  As of December 31, 2001:
  Total Capital (to Risk Weighted Assets)...........    $144,105       19.6%     $58,913       8.0%       $73,641       10.0%
    Tier I Capital (to Risk Weighted Assets)........     134,875       18.3%      29,456       4.0%        44,185        6.0%
    Tier I Capital (to Average Assets)..............     134,875       12.1%      44,587       4.0%        55,734        5.0%
</TABLE>

      Certain restrictions exist regarding the ability of Omega Bank to transfer
funds to Omega in the form of cash dividends, loans and advances. Omega Bank is
required to obtain the approval of the Comptroller of the Currency to pay
dividends in excess of earnings retained in the current year plus retained net
profits for the preceding two years. At December 31, 2002, the total dividends
that could be paid to Omega without permission from the Comptroller of the
Currency was $13,306,000. During 2002, Omega Bank requested and received
permission from the Comptroller of the Currency to pay dividends in excess of
this formula.

      Under Federal Reserve restrictions, Omega Bank is limited in the amount it
may loan to its affiliates, including Omega. At December 31, 2002, Omega Bank
had an aggregate lending limit to affiliates of $22,700,000 and no amount was
outstanding with Omega.

[21]  SUBSEQUENT EVENTS

      In January of 2003, the Board approved a new share repurchase program to
begin immediately, authorizing management to buy back an additional 10% of its
common stock. At that time, there were 8,099,778 common shares outstanding with
809,978 shares eligible to be repurchased. This program will remain in effect
through December 31, 2003, or until the 10% limit is reached; however, it may be
discontinued at any time.

[22]  OMEGA FINANCIAL CORPORATION
      (PARENT COMPANY ONLY)

    Financial information (in thousands):

                           Condensed Balance Sheets
                                 (Unaudited)
                                                   December 31,
                                               --------------------
                                                 2002         2001
                                               --------------------
ASSETS:
  Cash.....................................   $  3,955     $  4,597
  Investment in bank subsidiaries..........    124,676      137,842
  Investment in non-bank subsidiaries......     33,429       11,944
  Premises and equipment, net..............      4,998        6,877
  Other assets.............................      1,060        2,138
                                               --------------------
TOTAL ASSETS...............................   $168,118     $163,398
                                              =====================
LIABILITIES:
  Dividends payable........................   $  2,351     $  2,219
  Accounts payable and other liabilities...        825        1,819
  ESOP debt................................      2,832        3,110
                                               --------------------
TOTAL LIABILITIES..........................      6,008        7,148
SHAREHOLDERS' EQUITY.......................    162,110      156,250
                                               --------------------
TOTAL LIABILITIES AND
  SHAREHOLDERS' EQUITY.....................   $168,118     $163,398
                                              =====================

                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 38 o
<PAGE>
<TABLE>
<CAPTION>
                         Condensed Statements of Income
                                   (Unaudited)
                                                                                                Years Ended December 31,
                                                                                   ------------------------------------
                                                                                       2002         2001         2000
                                                                                   ------------------------------------
<S>                                                                                   <C>           <C>          <C>
INCOME:
  Dividends from:
    Bank subsidiaries .............................................................  $ 32,148    $ 21,821      $ 16,024
    Non-bank subsidiaries .........................................................        --          --            --
  Management fees from subsidiaries ...............................................       668      12,460        11,500
  Other income ....................................................................        --          --            --
                                                                                   -------------------------------------
TOTAL INCOME ......................................................................    32,816      34,281        27,524
EXPENSE:
  Interest expense ................................................................         6           8           126
  Other ...........................................................................       753      12,460        11,500
                                                                                   -------------------------------------
TOTAL EXPENSE .....................................................................       759      12,468        11,626
                                                                                   -------------------------------------
INCOME BEFORE INCOME TAXES AND EQUITY IN
  UNDISTRIBUTED NET INCOME OF SUBSIDIARIES ........................................    32,057      21,813        15,898
Income tax expense (benefit) ......................................................      (112)        (69)          (94)
                                                                                   -------------------------------------
                                                                                       32,169      21,882         15,992
Equity in undistributed net income of subsidiaries ................................   (13,990)     (4,227)         1,137
                                                                                   -------------------------------------
NET INCOME ........................................................................  $ 18,179    $ 17,655       $ 17,129
                                                                                   =====================================

                       Condensed Statements of Cash Flows
                                   (Unaudited)
                                                                                           Years Ended December 31,
                                                                                    ------------------------------------
                                                                                        2002         2001        2000
                                                                                    ------------------------------------
Cash flows from operating activities:
  Net income ....................................................................... $ 18,179     $ 17,655      $ 17,129
  Adjustments to reconcile net income to net cash provided by operating activities:
    Depreciation and amortization ..................................................      624          823         1,079
    (Increase) decrease in tax receivable ..........................................      (65)        (231)         (197)
    Decrease (increase) in interest and other receivable ...........................    1,134         (210)            8
    Decrease in taxes payable ......................................................       (4)         (21)          (42)
    Increase in accounts payable and accrued expenses ..............................   (1,024)         289           144
    Decrease (increase) in Undistributed earnings of subsidiaries ..................   13,990        4,226        (1,137)
                                                                                    -------------------------------------
      Total adjustments ............................................................   14,655        4,876          (145)
                                                                                       ----------------------------------
Net cash provided by operating activities ..........................................   32,834       22,531        16,984
Cash flows from investing activities:
  Capital expenditures .............................................................       (4)      (1,431)         (501)
  Sale of fixed assets .............................................................    1,231           --            --
                                                                                     ------------------------------------
Net cash provided by (used in) investing activities ................................    1,227       (1,431)         (501)
Cash flows from financing activities:
  Dividends paid ...................................................................   (9,491)      (9,244)       (9,328)
  Net change in interest bearing liabilities .......................................       34           41            40
  (Decrease) increase in borrowings ................................................       --           --        (2,000)
  Capital contribution to subsidiary ...............................................  (20,000)          --            --
  Tax benefit from preferred stock dividend and stock option activity ..............      491          236           149
  Issuance of common stock .........................................................    3,470        2,485         1,485
  Acquisition of treasury stock ....................................................   (9,207)     (13,713)       (6,354)
                                                                                      -----------------------------------
Net cash used in financing activities ..............................................  (34,703)     (20,195)      (16,008)
Net increase (decrease) in cash and due from banks .................................  $  (642)    $    905      $    475
                                                                                      -----------------------------------
Cash and due from banks at beginning of period .....................................  $  4,597    $  3,692      $  3,217
Cash and due from banks at end of period ...........................................     3,955       4,597         3,692
                                                                                      -----------------------------------
Net increase (decrease) in cash and due from banks .................................  $   (642)   $    905      $    475
                                                                                       ==================================

Income taxes paid ..................................................................  $  4,790    $  5,780      $  5,392
Interest paid ......................................................................         6           8           126
</TABLE>


                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 39 o
<PAGE>

[23]  QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

    The unaudited quarterly results of operations for the years ended December
31, 2002 and 2001 follow (in thousands, except per share data).
<TABLE>
<CAPTION>
                                                                       2002 Quarter Ended
-----------------------------------------------------------------------------------------------------------------
                                               March 31       June 30         September 30        December 31
-----------------------------------------------------------------------------------------------------------------
<S>                                             <C>           <C>                <C>                <C>
Total interest income......................     $16,627       $16,424            $16,238            $15,671
Total interest expense.....................       5,495         5,040              4,637              4,151
Net interest income........................      11,132        11,384             11,601             11,520
Provision for loan losses..................         230           250                150                  0
Income before income taxes.................       5,573         5,674              6,552              6,030
Income tax expense.........................       1,324         1,215              1,652              1,459
Net income.................................       4,249         4,459              4,900              4,571
Basic earnings per share...................       $ .50         $ .53              $ .59              $ .55
Diluted earnings per share.................         .49           .51                .57                .53

                                                                  2001 Quarter Ended
-----------------------------------------------------------------------------------------------------------------
                                               March 31       June 30         September 30        December 31
-----------------------------------------------------------------------------------------------------------------
Total interest income......................     $19,648       $19,381            $18,881            $18,096
Total interest expense.....................       8,331         8,090              7,681              6,761
Net interest income........................      11,317        11,291             11,200             11,335
Provision for loan losses..................          --            --                101                399
Income before income taxes.................       5,720         5,882              5,447              6,483
Income tax expense.........................       1,475         1,482              1,283              1,637
Net income.................................       4,245         4,400              4,164              4,846
Basic earnings per share...................       $ .49         $ .52              $ .49              $ .58
Diluted earnings per share.................         .47           .50                .48                .56
</TABLE>


                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 40 o
<PAGE>


                         REPORT OF INDEPENDENT AUDITORS


Shareholders and Board of Directors

Omega Financial Corporation

      We have audited the consolidated balance sheet of Omega Financial
Corporation and subsidiaries (Omega) as of December 31, 2002 and the related
consolidated statements of income, changes in stockholders' equity, and cash
flows for the year ended December 31, 2002. These financial statements are the
responsibility of Omega's management. Our responsibility is to express an
opinion on these financial statements based on our audit. The consolidated
financial statements of Omega Financial Corporation as of December 31, 2001 and
for the years ended December 31, 2001 and 2000 were audited by other auditors
who have ceased operations. Those auditors expressed an unqualified opinion on
those financial statements in their report dated January 18, 2002.

      We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

  In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Omega Financial
Corporation and subsidiaries at December 31, 2002, and the consolidated results
of their operations and their cash flows for the year ended December 31, 2002,
in conformity with accounting principles generally accepted in the United
States.


                                                           /S/ ERNST & YOUNG LLP


Pittsburgh, Pennsylvania

January 17, 2003*

                 Omega Financial Corporation 2002 Annual Report

                                  o Page 41 o
<PAGE>

                  OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES
                   COMMON STOCK MARKET PRICES AND DIVIDENDS

    The common stock of Omega Financial Corporation is traded on the Nasdaq
National Market(R)under the symbol OMEF. As of December 31, 2002, the number of
shareholders of record of the Corporation's common stock was 2,575.

    The following table sets forth, for the periods indicated the high and low
sale prices and dividends declared:

                                                          2002
                                            -----------------------------------
                                                                   Dividends
Quarter Ended                                 High        Low      Declared
-------------------------------------------------------------------------------
March 31.................................     $32.95     $30.02      $0.28
June 30..................................      36.88      32.50       0.28
September 30.............................      35.79      32.85       0.28
December 31..............................      37.25      33.17       0.29

                                                          2001
                                            -----------------------------------
                                                                   Dividends
Quarter Ended                                 High        Low      Declared
-------------------------------------------------------------------------------
March 31.................................     $29.50     $23.25      $0.26
June 30..................................      32.30      26.88       0.27
September 30.............................      32.60      27.70       0.27
December 31..............................      33.34      29.65       0.27

      While the Corporation expects to continue its policy of regular quarterly
dividend payments, no assurance of future dividend payments can be given. Future
dividend payments will depend upon maintenance of a strong financial condition,
future earnings and capital and regulatory requirements. Dividends on the common
stock are also subject to the prior payment of dividends on the Corporation's
Series A Preferred Stock. See Note 12 of the Notes to Consolidated Financial
Statements.

      The following firms have chosen to make a market in the stock of the
Corporation. Inquiries concerning their services should be directed to:

Ryan Beck & Co. Inc.                      Janney Montgomery Scott, Inc.
220 S. Orange Avenue                      1818 Market Street
Livingston, NJ 07039-5817                 Philadelphia, PA 19103
(800-342-2325)                            (800-526-6397)

F. J. Morrissey & Co.                     Ferris, Baker Watts, Inc.
4 Tower Ridge, Suite 300                  6 Bird Cage Walk
200 Barr Harbor Drive                     Hollidaysburg, PA 16648
West Conshohocken, PA 19428-2979          (800-343-5149)
(800-842-8928)

                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT

                                  o Page 42 o
<PAGE>
                  OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES
                              CORPORATE INFORMATION


FORM 10-K

      A copy of the Corporation's Annual Report to the Securities and Exchange
Commission on Form 10-K for the year ended December 31, 2002 will be supplied
without charge (except for exhibits) upon written request. Please direct all
inquiries to Mr. David N. Thiel, 366 Walker Drive, State College, PA 16801.

INVESTMENT CONSIDERATIONS

      In analyzing whether to make, or to continue, an investment in Omega
Financial Corporation, investors should consider, among other factors, the
information contained in this Annual Report and certain investment
considerations and other information more fully described in Omega's Annual
Report on Form 10-K for the year ended December 31, 2002, a copy of which can be
obtained as described above.

ANNUAL MEETING OF SHAREHOLDERS

      The Annual Meeting of Shareholders of Omega Financial Corporation will be
held at 10:00 a.m., Monday, April 28, 2003 at Celebration Hall, 2280 Commercial
Boulevard, State College, Pennsylvania.

REGISTRAR AND TRANSFER AGENT

Omega Bank, N.A.
Trust Department
P.O. Box 298
State College, PA 16804-0298
(814-237-7641)

INFORMATION AVAILABILITY

      Omega Financial Corporation news releases are available by fax 24 hours a
day from Company News On-Call at (800) 758-5804, extension 653250. Quarterly and
annual reports, a corporate profile, stock quotes and other financial data can
be retrieved through the Omega Financial Corporation web site at
www.omegafinancial.com.

                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 43 o
<PAGE>

                         OMEGA FINANCIAL CORPORATIONB

                               BOARD OF DIRECTORS

David B. Lee
Chairman and Chief Executive Officer

Raymond F. Agostinelli
President and Owner, McLanahan Drug
Store Management Co., Inc.

Philip E. Gingerich
Self-employed Real Estate Appraiser
and Consultant

D. Stephen Martz
Officer, Omega Financial Corporation

Robert N. Oliver
Owner, Oliver Farms

James W. Powers, Sr.
Retired President, Polestar Plastics
Manufacturing Company

Stanton R. Sheetz
President and C.E.O., Sheetz, Inc.
Retail Convenience Stores

Robert A. Szeyller
Retired Managing Partner,
Pennsylvania Financial Group, Inc.
Pension and Insurance Consulting Firm

                                    OFFICERS

David B. Lee
Chairman, President and Chief Executive Officer

Daniel L. Warfel, CPA
Executive Vice President and
Chief Financial Officer

Donita R. Koval
Executive Vice President and Chief Credit Officer

David T. Thiel
Senior Vice President and Secretary

JoAnn N. McMinn
Senior Vice President and Corporate Controller

Teresa M. Ciambotti, CFA
Senior Vice President, Funds Management


                                  OMEGA BANK
<TABLE>
<CAPTION>

                               BOARD OF DIRECTORS

<S>                    <C>
David B. Lee              Carl H. Baxter              Frederick J. Kissinger       Robert N. Oliver
Chairman
                          Richard L. Campbell, Esq.   Donita R. Koval              James W. Powers, Sr.
Raymond F. Agostinelli
                          Allen E. Gibboney, Esq.     Stephen M. Krentzman         Stanton R. Sheetz
Edward J. Anderson
                          Philip E. Gingerich         D. Stephen Martz             Robert A. Szeyller
Ralph W. Arthur, Jr.



                                    OFFICERS


               David B. Lee, Chairman and Chief Executive Officer
            Donita R. Koval, President and Chief Operating Officer


                           EXECUTIVE VICE PRESIDENTS


Daniel L. Warfel, CPA      Vincent C. Turiano   John R. Franks, Jr.
Chief Financial Officer                         Retail Sales


                            SENIOR VICE PRESIDENTS

David T. Thiel          Teresa M. Ciambotti, CFA   Trust:                    Commercial Lending:
Secretary               Funds Management           Bruce R. Erb, CFP, CTFA   Richard A. Scholton
                                                   Dennis E. Hampton         Ronald S. Haring
JoAnn N. McMinn                                                              Stephen W. Grim*
Corporate Controller



                               VICE PRESIDENTS

Kimberly A. Benner      William F. Frey         Donna K. Martin        Lowell I. Rohrer
Trust                   Compliance              Loan Services          Technical Services

William J. Bishop       John E. Gravish         Larry D. Muck          R. Keith Sipe
Trust                   Consumer Lending        Mortgage Lending       Audit

Ronald A. Donaldson     Ann K. Guss             Daniel P. Nead         Robin R. Weikel
Operations              Mortgage Lending        Commercial Lending     Bank Controller

Judith G. Fleming       Susan K. Kratzer        Dennis C. O'Connor     Richard E. Winstead
Trust                   Retail Services         Commercial Lending     Commercial Lending

Robert A. Frederick     Thomas C. Landis        Roger W. Oswald
E-Commerce              Commercial Lending      Agricultural Lending


</TABLE>
                 OMEGA FINANCIAL CORPORATION 2002 ANNUAL REPORT
                                  o Page 44 o