SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON DC 20549

                                 FORM 10-Q
(Mark One)

[X]       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                      SECURITIES EXCHANGE ACT OF 1934

             For the quarterly period ended September 30, 1998

                                    or

[ ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                    THE SECURITIES EXCHANGE ACT OF 1934

      For the transition period from ______________ to ______________

                        Commission File No. 0-13599

        Omega Financial Corporation

       (Exact name of registrant as
         specified in its charter)
               Pennsylvania                             25-1420888

      (State or other jurisdiction or        (IRS Employer Identification No.)
      incorporation of organization)
             366 Walker Drive
        State College, Pennsylvania                        16801

      (Address of principal executive                   (Zip Code)
                 offices)


                                                      (814) 231-7680

                                              Registrant's Telephone Number,
                                                    Including Area Code

    Indicate by check mark whether the registrant (1) has filed all reports
    required to be filed by Section 13 or 15(d) of the Securities Exchange
    Act of 1934 during the preceding twelve months (or for such shorter
    period that the registrant was requested to file such reports), and (2)
    has been subject to such filing requirements for the past ninety days.
    Yes __X__  No ____

     The number of shares outstanding of each of the Registrant's classes of
                      common stock as of November 10, 1998:
             Common Stock, $5.00 par value _ 8,974,760 shares

PART I.  Financial Information
Item 1.  Financial Statements
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                   OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES
                            CONSOLIDATED BALANCE SHEETS
                         (In thousands, except share data)
                                                                           SEPTEMBER 30,       DECEMBER 31,
ASSETS                                                                          1998               1997

Cash and due from banks                                                     $33,256             $31,938

Interest bearing deposits with other banks                                      564                 600
Federal funds sold                                                            2,300              22,650

Investment securities held to maturity
   (Market value:
   $122,414 and $117,344, respectively)                                     120,674             116,802
Investment securities available for sale                                    140,224             133,015

Total loans                                                                 718,250             692,861
  Less: Unearned discount                                                      (580)               (968)
            Allowance for loan losses                                       (12,023)            (11,793)

Net loans                                                                   705,647             680,100

Premises and equipment, net                                                  17,000              17,589
Other assets                                                                 12,463              13,209

TOTAL ASSETS                                                             $1,032,128          $1,015,903



LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
  Non-interest bearing                                                     $112,346            $114,777
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  Interest bearing                                                          730,675             725,998

Total deposits                                                              843,021             840,775

Short-term borrowings                                                        18,434              18,260
Other liabilities                                                            12,995               9,816
ESOP debt                                                                     3,891               4,034
Other interest bearing liabilities                                              546                 586

TOTAL LIABILITIES                                                           878,887             873,471

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                                   (2,939)             (3,125)
Common stock, par value $5.00 per share:
  Authorized - 25,000,000 shares
  Issued -
    9,125,754 shares at September 30, 1998;
    9,050,730 shares at December 31, 1997
  Outstanding -
    8,971,981 shares at September 30, 1998;
    8,879,257 shares at December 31, 1997                                    45,638              45,258
Capital surplus                                                               2,996               1,822
Retained earnings                                                           101,989              94,426
Cost of common stock in treasury
    153,773 shares at September 30, 1998;
    171,473 shares at December 31, 1997                                      (5,333)             (5,947)
Net unrealized gain on securities available for sale                          5,890               4,998

TOTAL SHAREHOLDERS' EQUITY                                                  153,241             142,432

           
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                               $1,032,128          $1,015,903


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                      OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF INCOME
                           (In thousands, except share data)

                                                                        Three Months Ended              Nine Months Ended
                                                                          September 30,                   September 30,
                                                                      1998           1997              1998            1997

INTEREST INCOME:
Interest and fees on loans                                          $15,084        $15,521           $45,073         $45,954
Interest and dividends on investment securities                       3,553          3,673            10,587          10,663
Other interest income                                                   220            301               849             834

TOTAL INTEREST INCOME.                                               18,857         19,495            56,509          57,451
INTEREST EXPENSE:
Interest on deposits                                                  7,015          7,487            20,954          21,909
Interest on short-term borrowings                                       204             83               633             217
Interest on long-term debt and
  other interest bearing liabilities                                      5             81                18             233

TOTAL INTEREST EXPENSE                                                7,224          7,651            21,605          22,359

NET INTEREST INCOME                                                  11,633         11,844            34,904          35,092
Provision for loan losses                                               332            258               817             773

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INCOME FROM CREDIT ACTIVITIES                                        11,301         11,586            34,087          34,319
OTHER INCOME:
Service fees                                                          1,817          1,496             4,803           4,373
Trust fees                                                              755            623             2,226           2,037
Gain on sale of loans and other assets                                  143             66               288              94
Investment securities gains and losses, net:
  Investment securities held to maturity                                                                                   2
  Investment securities available for sale                              260            202               930             712

TOTAL OTHER INCOME                                                    2,975          2,387             8,247           7,218
OTHER EXPENSE:
Salaries and employee benefits                                        4,556          4,397            13,494          12,922
Net occupancy expense                                                   529            554             1,641           1,622
Equipment expense                                                       517            488             1,549           1,370
Data processing service                                                 375            389             1,172           1,154
Other                                                                 2,033          2,169             6,164           6,510

TOTAL OTHER EXPENSE                                                   8,010          7,997            24,020          23,578

Income before taxes                                                   6,266          5,976            18,314          17,959
Income tax expense                                                    1,893          1,808             5,580           5,529

NET INCOME                                                           $4,373         $4,168           $12,734         $12,430



NET INCOME PER COMMON SHARE:
  Basic                                                               $0.48          $0.46             $1.39           $1.35
  Diluted                                                             $0.46          $0.44             $1.33           $1.29
WEIGHTED AVERAGE SHARES AND EQUIVALENTS:
  Basic                                                           8,969,287      8,893,980         8,940,734       8,981,132
  Diluted                                                         9,485,694      9,452,968         9,478,371       9,503,970
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                              OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES
                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                                             (In thousands)
                                                                                                  NINE MONTHS ENDED
                                                                                                     SEPTEMBER 30,

                                                                                                  1998         1997

Cash flows from operating activities:
  Net income                                                                                    $12,734       $12,430
  Adjustments to reconcile net income to
        net cash provided by operating activities:
    Depreciation and amortization                                                                 1,893         1,867
    Provision for loan losses                                                                       817           773
    Gain on sale of investment securities                                                          (930)         (714)
    Gain on sale of fixed assets
          and other property owned                                                                 (205)          (51)
    Gain on sale of loans                                                                           (42)           (1)
    (Increase) decrease in deferred tax asset                                                      (229)            22
    Increase in interest receivable and other assets                                               (254)       (1,117)
    Decrease in interest payable                                                                   (356)         (170)
    Increase in taxes payable                                                                      (153)         (625)
    Amortization of deferred net loan costs (fees)                                                  161         (203)
    Deferral of net loan fees (costs)                                                               418          (55)
    Increase in accounts payable
          and accrued expenses                                                                      670           664

      Total adjustments                                                                           1,790           390

Net cash provided by operating activities                                                        14,524        12,820

Cash flows from investing activities:
  Proceeds from the sale or maturity of:
    Interest bearing deposits with other banks                                                    1,274           550
    Investment  securities available for sale                                                    52,373        35,571
    Investment  securities held to maturity                                                      31,220        28,469
  Purchase of:
    Interest bearing deposits with other banks                                                   (1,238)         (940)
    Investment securities held to maturity                                                      (35,056)      (40,225)
    Investment securities available for sale                                                    (54,104)      (40,310)
  Increase in loans                                                                             (27,900)       (1,559)
  Gross proceeds from sale of loans                                                                 999           298
  Capital expenditures                                                                             (879)       (1,676)
  Sale of fixed assets and other property owned                                                     794           364
  Decrease in federal funds sold                                                                 20,350        14,325

Net cash used in investing activities                                                           (12,167)       (5,133)

Cash flows from financing activities:
  Increase in deposits, net                                                                       2,246         4,723
  Increase in short-term borrowings, net                                                            174         3,623
  Net change in other interest bearing liabilities                                                  (40)          (60)
  Dividends paid                                                                                 (5,293)       (4,538)
  Tax benefit from preferred stock dividend
           and stock option activity                                                                320           302
  Issuance of common stock                                                                        1,554           462
  Acquisition of treasury stock                                                                       -       (10,110)
  Proceeds from reissuance of treasury stock                                                          -         1,682

Net cash used in financing activities                                                            (1,039)       (3,916)

Net increase in cash and due from banks                                                          $1,318        $3,771

Cash and due from banks at beginning of period                                                  $31,938       $30,380
Cash and due from banks at end of period                                                         33,256        34,151

Net increase in cash and due from banks                                                          $1,318        $3,771

Interest paid                                                                                   $21,961       $22,529
Income taxes paid                                                                                 5,639         5,187

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                  OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NINE AND THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

A.   Basis of Presentation:

     The accompanying unaudited financial statements have been prepared in
     accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation
     S-X.  Accordingly, they do not include all the information and footnotes
     required by generally accepted accounting principles for complete financial
     statements.  In the opinion of management, all adjustments, including
     normal recurring accruals, considered necessary for a fair presentation
     have been included.  Operating results for the nine months and three months
     ended September 30, 1998 are not necessarily indicative of the results that
     may be experienced for the year ending December 31, 1998 or any other
     interim period.  For further information, refer to the Consolidated
     Financial Statements and Footnotes included in the Company's Annual Report
     on Form 10-K for the year ended December 31, 1997.

     The accompanying Consolidated Financial Statements include Omega Financial
     Corporation (Omega), a bank holding company, and the combined results of
     its wholly owned banking and non-banking subsidiaries.

B.   Current and Pending Accounting Changes

     Statement of Financial Accounting Standards(SFAS) No. 130 - Reporting
     Comprehensive Income

     On January 1, 1998, Omega adopted Statement of Financial Accounting
     Standards No. 130, "Reporting Comprehensive Income" (SFAS 130). SFAS 130
     establishes standards for reporting and displaying comprehensive income and
     its components. Comprehensive income, as defined by SFAS 130, is the total
     of net income and all other nonowner changes in equity. Total comprehensive
     income for the nine months ended September 30, 1998 and 1997 was
     $13,626,000 and $13,986,000, respectively. For the three month period ended
     September 30, 1998 and 1997, total comprehensive income was $4,517,000 and
     $5,103,000, respectively. The difference between net income and
     comprehensive income for the above periods is due to unrealized gains and
     losses on marketable securities.

     Statement of Financial Accounting Standards No. 133 _ Accounting for
     Derivative Instruments and Hedging Activities

     In June 1998, the Financial Accounting Standards Board issued SFAS 133,
     "Accounting for Derivative Instruments and Hedging Activities". The
     statement establishes accounting and reporting standards requiring that
     every derivative be recorded in the balance sheet as either an asset or
     liability measured at its fair value. SFAS 133 requires that changes in the
     derivative's fair value be recognized currently in earnings unless specific
     hedge accounting criteria are met. Special accounting for qualifying hedges
     allows a derivative's gains and losses to offset related results on the
     hedged item in the income statement, and requires that a company must
     formally document, designate, and assess the effectiveness of transactions
     that receive hedge accounting.

     This statement is effective for fiscal years beginning after June 15, 1999.
     Upon adoption, Omega expects no material impact on its financial
     statements.

C.   Commitments and Contingent Liabilities:

     In the ordinary course of business, Omega and its subsidiaries make
     commitments to extend credit to their customers.  At September 30, 1998 and
     December 31, 1997 standby letters of credit issued and outstanding amounted
     to $17,566,000 and $14,827,000, respectively.  These letters of credit are
     not reflected in the accompanying financial statements.  Management does
     not anticipate any significant losses as a result of these transactions.

     At September 30, 1998, the Corporation had $125,186,000 outstanding in
     unused lines of credit commitments extended to its customers.  Of this
     amount, $37,349,000, or 29.8%, are commitments to consumers for home equity
     and other lines of credit.  The remainder, $87,837,000, are commercial
     commitments.

D.   Earnings Per Share Data:

     Basic earnings per share is computed by dividing income available to common
     stockholders by the weighted average number of shares outstanding for the
     period. On a diluted basis, both earnings and shares outstanding are
     adjusted to assume the conversion of all potentially dilutive securities
     into common stock.
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                                                  Computations of Earnings per Share
                                               (In thousands, except per share amounts)
                                                              (Unaudited)

                                         Nine Months Ended September      Nine Months Ended September
                                                   30, 1998                        30, 1997

                                          Income          Shares        Per-Share          Income          Shares      Per-Share
                                         Numerator      Denominator       Amount          Numerator      Denominator       Amount


Net income                              $  12,734                                           12,430
Less: Preferred stock dividend               (297)                                            (297)

                                 
BASIC EPS
Income available to common

    shareholders                           12,437            8,941         $1.39            12,133          8,981          $1.35

EFFECT OF DILUTIVE SECURITIES
Impact of :
   Assumed conversion of preferred                                                                            346
      to common stock                                           346
                                                                                                                 
   Assumed exercises of outstanding                                                                           177
      options                                                   191
                                                                                                           
Preferred stock dividends
    available to common
    shareholders                              297                                                                         
                                                                                              297
Elimination of tax benefit of                                                                 (34)
    allocated preferred dividends             (39)

Additional expense required to fund

    ESOP debt, net of tax impact              (62)                                            (87)

DILUTED EPS
Income available to common
     shareholders plus assumed

     conversions                         $  12,633            9,478        $1.33          $12,309           9,504          $1.29





                                         Three Months Ended September    Three Months Ended September
                                                   30, 1998                        30, 1997

                                            Income          Shares        Per-Share          Income          Shares        Per-Share
                                           Numerator      Denominator       Amount          Numerator      Denominator       Amount

Net income                                 $ 4,373                                           $ 4,168
Less: Preferred stock dividends                (99)                                              (99)

BASIC EPS
Income available to common
    shareholders                           $ 4,274           8,969         $  0.48            $4,069           8,894         $  0.46

EFFECT OF DILUTIVE SECURITIES
Impact of :
   Assumed conversion of preferred
      to common stock                                          346                                               346
   Assumed exercises of outstanding
      options                                                  170                                               213
      
Preferred stock dividends
    available to common
    shareholders                                99                                                99
    
Elimination of tax benefit of
    allocated preferred dividends              (13)                                              (11)
    
Additional expense required to fund
     ESOP debt, net of tax impact              (19)                                              (28)

DILUTED EPS
Income available to common
     shareholders plus assumed
     conversions                            $ 4,341           9,485          $ 0.46           $ 4,129           9,453        $  0.44

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                  OMEGA FINANCIAL CORPORATION AND SUBSIDIARIES
                

Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
     OF OPERATIONS

     Investment Considerations

     In analyzing whether to make, or to continue to make, an investment in
     Omega, investors should consider, among other factors, certain investment
     considerations more particularly described in "Item 1: Business -
     Investment Considerations" in the Company's Annual Report on Form 10-K for
     the year ended December 31, 1997. A copy of this report can be obtained
     from David N. Thiel, Senior Vice President, Omega Financial Corporation,
     366 Walker Drive, State College, Pennsylvania  16801.

     Forward Looking Statements

     The information in this Report on Form 10-Q 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, statements concerning Year 2000 compliance and other
     statements other than historical facts or as to trends or management's
     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. In addition to the factors discussed in this
     report, certain risks, uncertainties and other factors, including without
     limitation, risks arising from economic conditions and related
     uncertainties, changes in interest rates, federal and state regulation,
     competition, the adequacy of the allowance and provision for loan losses,
     and Year 2000 compliance are discussed in this Report on Form 10-Q, the
     Corporation's 1997 Annual Report or in Omega's Annual Report on Form 10-K
     for the year ended December 31, 1997. Copies of these reports may be
     obtained from Omega upon request and without charge (except for the
     exhibits thereto) as described above.


1.   Comparison of the Nine and Three Months Ended September 30, 1998 and 1997

                          Operations Overview

     A.   Nine months ended September 30, 1998 and 1997

     For the first nine months of 1998, income before taxes increased by
     $355,000, or 2.0%, compared to the same period in 1997. Income from credit
     activities was decreased in 1998 by $232,000, or 0.7%. Non-interest
     expenses increased by $442,000 while non-interest income increased by
     $1,029,000.

     The tax provision for the first nine months of 1998 increased by $51,000,
     or 0.9% when compared to the first nine months of 1997. The effective tax
     rate fell to 30.5% in 1998 from 30.8% in 1997, as a result of an increase
     in tax-exempt income due to higher levels of of tax-exempt investments and
     loans in 1998 than in 1997. Net income increased by $304,000, or 2.4%, in
     the first nine months of 1998 as compared to the same period in 1997.


     B.   Three months ended September 30, 1998 and 1997

     The third quarter's income before income taxes increased $290,000, or 4.9%,
     when compared to the same period in 1997.  Although non-interest income
     increased $588,000, income from credit activities decreased by $285,000, or
     2.5%, and non-interest expense increased by only $13,000.

     After the income tax provision (which increased by $85,000, or 4.7%
     compared to the same period in 1997) was deducted from earnings, net income
     was $205,000, or 4.9%, higher than the third quarter of 1997.  The
     effective tax rate for the third quarter of 1998 was 30.2%, compared to an
     effective rate of 30.3% in 1997.

     Following are selected key ratios for the period:

                                           Three Months Ended Nine Months Ended
                                             September 30         September 30
                                             1998       1997      1998     1997
     Return on average assets (annualized).  1.69%      1.63%      1.66%   1.64%
     Return on average equity (annualized). 11.44      12.10      11.39   12.03
     Dividend payout ratio (common)........ 41.02      33.97      40.79   34.14
     Average equity to average assets...... 14.81      13.47      14.58   13.59


                          Net Interest Income

     A.   Nine months ended September 30, 1998 and 1997

     Omega's net interest income for the first nine months of 1998 was
     $34,904,000, $188,000 or 0.5% less than the same period in 1997. On a fully
     tax equivalent basis, however net interest income improved by $70,000.
     Average earning assets grew by $4,386,000 since September 1997. The 0.5%
     increase in average earning assets resulted primarily from growth in the
     real estate loan portfolio, which increased by $7,387,000, or 2.2% and the
     tax-free commercial loan portfolio which increased by $7,905,000, or
     111.9%. This was partially offset by a decline in the personal loan average
     outstanding balances of $11,067,000. The net result is that outstanding
     total loans have increased by $5,425,000, or 0.8%. Average deposits
     decreased by $8,847,000, or 1.0%, in 1998 as compared to the previous year.
     Average short-term borrowings, which include retail repurchase agreements,
     increased by $6,494,000, or 95.5%. Total cost to fund earning assets was
     3.00% in 1998, compared to 3.11% in 1997, while earning assets yielded
     7.83% in 1998 compared to 8.00% in 1997, resulting in a 6 basis point
     decrease in net interest margin, and a 3 basis point decrease in the fully
     tax equivalent net interest margin.

     B.   Three months ended September 30, 1998 and 1997

     The net interest margin, at 4.78% for the third quarter of 1998, was 11
     basis points lower than the third quarter of 1997, with a $4,852,000 or
     0.5% increase in average earning assets resulting in a 1.78% decrease in
     net interest income.

     Following are key net interest margin ratios (annualized):

                                     Three Months Ended    Nine Months Ended
                                        September 30,        September 30,

                                       1998       1997      1998       1997

Yield on average earning assets.     7.73%       8.03%       7.83%      8.00%
Cost to fund earning assets.....     2.95        3.14        3.00       3.11
Net interest margin.............     4.78        4.89        4.83       4.89
Net interest margin - tax
equivalent......................     5.00        5.06        5.03       5.06



     At September 30, 1998, Omega had $366,019,000 of earning assets scheduled
     to reprice over the next twelve months as compared to $430,069,000 in
     interest bearing liabilities, resulting in a negative gap of $64,050,000,
     or 6.2% of assets.  Economic simulation is a tool used by management to
     measure and manage interest rate risk, including repricing, basis and yield
     curve risk. Possible economic conditions and interest rate scenarios are
     simulated 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. In order to determine
     the approximate amount of net interest income at risk over the next twelve
     months based on hypothetical rate movements, a rate shock simulation was
     performed on the balance sheet as of September 30, 1998. In the event that
     interest rates would decrease immediately by 100 basis points, results of
     the rate shock simulation indicate that Omega's net interest income over
     the next twelve months would decrease by approximately 0.6%, or $286,000.
     Conversely, the results of a rate shock simulation of an immediate 100
     basis point increase in interest rates indicates an increase in net
     interest income of approximately $287,000, or 0.6% over a twelve-month
     period. These simulations assume no volume or mix changes in the balance
     sheet.

                        Other Income and Expense

     A.   Nine months ended September 30, 1998 and 1997

     Other income increased $1,029,000, or 14.3% in the first nine months of
     1998 as compared to the same period in 1997. As a direct result of a new
     product initiated in July 1997 and a new ATM transaction fee starting in
     June 1998, service fee income increased by $346,000. Trust fee income
     increased by $189,000, or 9.3%, through September 30, 1998, as compared to
     1997. Additionally, net gains from the sale of investment securities, loans
     and other assets was $218,000 greater in 1998 than in 1997.

     As a percentage of average assets, annualized other income net of security
     gains and losses was .95% for the first nine months of 1998 as compared to
     .86% in 1997.

     Other expenses were $442,000, or 1.9% higher for the first nine months of
     1998 than for the same period in 1997. Salaries and employee benefits were
     $572,000, or 4.4% higher in 1998 than in 1997, as average full time
     equivalent staffing increased by 1.6%. Occupancy and equipment expenses
     have increased by $198,000, or 6.6% as the full impact of renovations and
     technology advances related to the consolidation of the credit
     administration support group to corporate headquarters is being realized.
     Other expense was reduced by $328,000, or 4.3% in the first nine months of
     1998 as compared to 1997. This is primarily due to a one-time $200,000 loss
     recorded in 1997.

     As a percentage of average assets, annualized expenses for the period ended
     September 30, 1998 were 3.13% and were 3.10% for the same period in 1997.

     B.   Three months ended September 30, 1998 and 1997

     Other income increased $588,000, or 24.6% in the third quarter of 1998 as
     compared to the same period in 1997.  Service fee income in 1998 outpaced
     that in 1997 by $321,000, or 21.5%, with new fee income contributing
     $204,000 of the increase. Trust fee income was $132,000, or 21.2% greater
     in the third quarter of 1998 as compared to the third quarter of 1997. Net
     gains from the sale of investment securities, loans and other assets
     increased by $135,000 in 1998, or 50.4%.

     As a percentage of average assets, annualized other income net of security
     gains and losses was 1.05% for the third quarter of 1998 as compared to
     .85% in 1997.

     Other expenses were $13,000, or 0.2% higher for the third quarter of 1998
     than for the same period in 1997.  Salaries and employee benefits were
     $159,000, or 3.6% higher in 1998 than in 1997.  Occupancy and equipment
     expense has remained constant, while data processing expense decreased by
     3.6%. Other non-interest expenses have decreased by $136,000, or 6.3%, with
     lower reinsurance claims of $62,000 responsible for 46% of the decrease.
     Start-up costs of the debit card program introduced in 1997 had caused
     expenses to be about $31,000 greater in the third quarter of 1997 as
     compared to the same period in 1998.

     As a percentage of average assets, annualized expenses for the quarter
     ended September 30, 1998 were 3.10% and were 3.13% for the same period in
     1997.

2.   Investment Securities

     Management of the investment portfolio entails evaluation and realignment
     of the size and mix of the portfolio in order to balance various
     characteristics of the balance sheet, including asset quality, liquidity,
     yield relationships, maturity and tax planning.  The following schedule
     details characteristics of the investment portfolio as of September 30,
     1998 and December 31, 1997.



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                                                                       Securities Classified as Available for Sale




                                                                                 Gross         Gross       Estimated
                                                                 Amortized    Unrealized    Unrealized      Market
September 30, 1998                                                 Cost          Gains        Losses         Value

U.S. Treasury securities and
    obligations of other U.S. Govern-
    ment agencies and corporations                                $58,565          $502        $    -       $59,067
Obligations of state and
    political subdivisions                                         66,775         1,266           (31)       68,010
Equity securities                                                   5,834         7,326           (13)       13,147

Total                                                            $131,174        $9,094          $(44)     $140,224



                                                                        Securities Classified as Held to Maturity

                                                                                 Gross         Gross       Estimated
                                                                 Amortized    Unrealized    Unrealized      Market
September 30, 1998                                                 Cost          Gains        Losses         Value

U.S. Treasury securities and
    obligations of other U.S. Govern-
    ment agencies and corporations                                $25,494       $   429      $      -       $25,923
Obligations of state and
    political subdivisions                                          5,002           219             -         5,221
Corporate securities                                               53,913           809           (13)       54,709
Mortgage backed securities                                         31,514           307           (11)       31,810
Investment in low-income housing                                      543             -             -           543
                                                                                                                    
Equity securities (non-marketable)                                  4,208             -             -         4,208

Total                                                            $120,674        $1,764          $(24)     $122,414





                                                                       Securities Classified as Available for Sale

                                                                                 Gross         Gross       Estimated
                                                                 Amortized    Unrealized    Unrealized      Market
December 31, 1997                                                  Cost          Gains        Losses         Value

U.S. Treasury securities and
    obligations of other U.S. Govern-
    ment agencies and corporations                                $79,143          $176          $(78)      $79,241
Obligations of state and
    political subdivisions                                         40,781           515           (14)       41,282
Equity securities                                                   5,414         7,078             -        12,492

Total                                                            $125,338        $7,769          $(92)     $133,015



                                                                        Securities Classified as Held to Maturity

                                                                                 Gross         Gross       Estimated
                                                                 Amortized    Unrealized    Unrealized      Market
December 31, 1997                                                  Cost          Gains        Losses         Value

U.S. Treasury securities and
    obligations of other U.S. Govern-
    ment agencies and corporations                                $24,007          $196           $(3)      $24,200
Obligations of state and
    political subdivisions                                          5,799            71             -         5,870
Corporate securities                                               37,105           202           (22)       37,285
Mortgage backed securities                                         45,207           206          (108)       45,368
Investment in low-income housing                                      489             -             -           489
Equity securities (non-marketable)                                  4,132             -             -         4,132

Total                                                            $116,802          $675         $(133)     $117,344


</TABLE>

     Total investment securities as a percentage of total assets at September
     30, 1998 and December 31, 1997 were 25.3% and 24.6%, respectively.
     Securities maturing or repricing in one year or less comprised 32.6% of the
     total investment securities of $260,898,000 as of September 30, 1998, as
     compared to 42.1% of total investment securities of $249,817,000 as of
     December 31, 1997. There was $215,000 in investments in instruments of
     foreign countries on September 30, 1998.

3.   Interest Bearing Deposits with Other Financial Institutions

     As of September 30, 1998, Omega had $564,000 in interest bearing deposits
     with other banks. There were no investments in instruments issued by U.S.
     branches of banks of foreign countries or deposits in banks of foreign
     countries included in the September 30, 1998 balance sheet.

4.   Loans

     Net loans in the first nine months of 1998 increased by $25,547,000, or
     3.8% from the balance at December 31, 1997, bringing the total to
     $705,647,000 at September 30, 1998. Continued competitive pressure in the
     indirect lending market has resulted in limited growth in consumer lending,
     however, there has been an increase in tax-exempt commercial loans, most
     specifically tax revenue anticipation notes since December 31, 1997, of
     $12,048,000. There has been an overall increase of $12,529,000 in
     outstanding real estate loans, including commercial and residential, with a
     noticable switch from variable rate loans to fixed rate.

     Changes in the allowance for loan losses for the nine months ended
     September 30, 1998 and 1997 were as follows (in thousands):


                                                 1998           1997   
     Balance at January 1.................... $11,793        $11,820
     Charge-offs.............................    (854)          (948)
     Recoveries..............................     267            130   
         Net charge-offs.....................    (587)          (818)
     Provision for loan losses...............     817            773   
     Balance at September 30................  $12,023        $11,775




     The allowance for loan losses is considered adequate by management to cover
     possible uncollectible loans, as shown in the following table depicting
     non-performing loans.  Management is also of the opinion that the level of
     loan loss provision is adequate to maintain the allowance at an acceptable
     level.  The allowance for loan losses at September 30, 1998 and 1997
     represented 1.68% and 1.69%, respectively, of the total loans outstanding,
     net of unearned interest.

     Set forth below is an analysis of Omega's non-performing loans as of
     September 30, 1998 as compared to December 31, 1997.


                                Non-performing Loans
                                   (In thousands)
                                            September 30,  December 31,
                                                 1998           1997   
     Non-accrual loans.......................  $5,151         $4,762
     Accruing loans past due 90 days or more.   1,821          2,103
     Restructured loans......................     256             47   
     Total non-performing loans..............  $7,228         $6,912   

     Non-performing loans as
         percent of allowance................    60.1%          58.6%


     The increase in non-performing loans from December 31, 1997 to September
     30, 1998 is primarily due to the addition of one large commercial loan with
     a total outstanding balance of $612,000 to the non-accrual category,
     partially offset by reductions in other non-accrual loans.

5.   Deposits and Other Sources of Funds

     Deposits provide the primary source of funding for loans and investment
     securities. As September 30, 1998, total deposits increased by $2,246,000
     or 0.3%, as compared to December 31, 1997, with all of the increase due to
     increases in interest bearing deposits.

6.   Regulatory Capital Compliance

     Risk-based capital standards are issued by bank regulatory authorities in
     the United States. These capital standards relate a banking company's
     capital to the risk profile of its assets and provide the basis by which
     all banking companies and banks are evaluated in terms of capital adequacy.
     The risk-based capital standards require all banks to have Tier 1 capital
     of at least 4% and total capital, including Tier 1 capital of at least 8%
     of risk-adjusted assets.  Tier 1 capital includes common stockholders'
     equity and qualifying perpetual preferred stock together with related
     surpluses and retained earnings.  Total capital is comprised of Tier 1
     capital, limited life preferred stock, qualifying debt instruments, and the
     reserves for possible loan losses. Banking regulators have also issued
     leverage ratio requirements.  The leverage ratio requirement is measured as
     the ratio of Tier 1 capital to adjusted average assets. The table below
     provides a comparison of Omega's and its bank subsidiaries' risk-based
     capital ratios and leverage ratio to the minimum regulatory requirements
     for the periods indicated.

<TABLE>
<CAPTION>
<S>
<C>


                                                                         MINIMUM REQUIREMENT   MINIMUM REGULATORY


                                                                             FOR CAPITAL       REQUIREMENTS TO BE
                                               ACTUAL            ADEQUACY PURPOSES     "WELL CAPITALIZED"

OMEGA FINANCIAL CORPORATION                 AMOUNT          RATIO          AMOUNT          RATIO          AMOUNT           RATIO

As of September 30, 1998:
    Total Capital                             $154,012          22.0%         $55,905            8.0%        $69,882           10.0%
        (to Risk Weighted Assets)
    Tier I Capital                             145,206          20.8%          27,953            4.0%         41,929            6.0%
        (to Risk Weighted Assets)
    Tier I Capital                             145,206          14.2%          40,899            4.0%         51,124            5.0%
        (to Average Assets)

As of December 31, 1997:
    Total Capital                             $143,673          21.1%         $54,418            8.0%        $68,023           10.0%
        (to Risk Weighted Assets)
    Tier I Capital                             135,127          19.9%          27,209            4.0%         40,814            6.0%
        (to Risk Weighted Assets)
    Tier I Capital                             135,127          13.3%          40,584            4.0%         50,730            5.0%
        (to Average Assets)

OMEGA BANK
As of September 30, 1998:
    Total Capital                              $78,440          20.0%         $31,341            8.0%        $39,176           10.0%
        (to Risk Weighted Assets)
    Tier I Capital                              73,537          17.2%          15,671            4.0%         23,506            6.0%
        (to Risk Weighted Assets)
    Tier I Capital                              73,537          13.0%          22,690            4.0%         28,363            5.0%
        (to Average Assets)

As of December 31, 1997:
    Total Capital                              $74,430          19.5%         $30,557            8.0%        $38,196           10.0%
        (to Risk Weighted Assets)
    Tier I Capital                              69,648          18.2%          15,278            4.0%         22,918            6.0%
        (to Risk Weighted Assets)
    Tier I Capital                              69,648          12.3%          22,621            4.0%         28,276            5.0%
        (to Average Assets)

HOLLIDAYSBURG TRUST COMPANY
As of September 30, 1998:
    Total Capital                              $33,400          18.5%         $14,449            8.0%        $18,061           10.0%
        (to Risk Weighted Assets)
    Tier I Capital                              31,129          17.2%           7,224            4.0%         10,837            6.0%
        (to Risk Weighted Assets)
    Tier I Capital                              31,129          12.3%          10,124            4.0%         12,655            5.0%
        (to Average Assets)

As of December 31, 1997:
    Total Capital                              $31,059          18.3%         $13,604            8.0%        $17,005           10.0%
        (to Risk Weighted Assets)
    Tier I Capital                              28,920          17.0%           6,802            4.0%         10,203            6.0%
        (to Risk Weighted Assets)
    Tier I Capital                              28,920          11.7%           9,849            4.0%         12,311            5.0%
        (to Average Assets)

PENN CENTRAL NATIONAL BANK
As of September 30, 1998:
    Total Capital                              $25,054          23.1%          $8,689            8.0%        $10,862           10.0%
        (to Risk Weighted Assets)
    Tier I Capital                              23,672          21.8%           4,345            4.0%          6,517            6.0%
        (to Risk Weighted Assets)
    Tier I Capital                              23,672          13.0%           7,298            4.0%          9,122            5.0%
        (to Average Assets)

As of December 31, 1997:
    Total Capital                              $24,460          22.4%          $8,754            8.0%        $10,943           10.0%
        (to Risk Weighted Assets)
    Tier I Capital                              23,070          21.1%           4,377            4.0%          6,566            6.0%
        (to Risk Weighted Assets)
    Tier I Capital                              23,070          12.3%           7,474            4.0%          9,343            5.0%
        (to Average Assets)
</TABLE>

     Pursuant to the Federal Deposit Insurance Corporation Improvement Act of
     1991 ("FDICIA"), the FDIC has issued a rule which sets the capital level
     for each of the five capital categories established in FDICIA.  As required
     by FDICIA, the regulations specify the levels at which an insured
     institution would be considered "well capitalized", "adequately
     capitalized", "undercapitalized", "significantly undercapitalized", or
     "critically undercapitalized".  At September 30, 1998, Omega and each of
     its banking subsidiaries met the regulatory definition of a "well
     capitalized" financial institution, i.e., a leverage ratio exceeding 5%,
     Tier 1 capital exceeding 6% and total capital exceeding 10%.

7.   Year 2000 Compliance

     The Year 2000 problem is a source of concern worldwide for businesses that
     rely upon computer and software systems. Many software programs record
     dates as six digit fields, eliminating the first two digits of the year.
     When the Year 2000 arrives, it is possible that these systems will
     recognize it as the year 1900, creating failures in systems. The effects
     could be far reaching. It is important for every company to assess and
     address potential problems prior to the event. Management is currently in
     the process of evaluating Omega's readiness to address the Year 2000
     problem (Y2K). An in-depth analysis of the Information Technology (IT)
     infrastructure as well as its non-IT systems that include embedded
     technology is necessary to assess the extent of risk.

     In 1997, a committee was formed to:
     1. Identify all of the date-dependent systems at the Company that could be
      impacted by the Year 2000 issue. In addition, the committee was charged
      with analyzing the impact of the Year 2000 issue on key customers and
      vendors
     2.Test all internal information systems and obtain certification of
      compliance from all external information service providers
     3. Formulate and execute a plan to minimize risk for customer and vendor
      Y2K failure
     4. Determine the cost of and plan for replacement of non-compliant systems
     5. Formulate a contingency plan for unexpected failures.

     The committee is comprised of executive officers and operations personnel
     from all major divisions of the Corporation. It has not been necessary to
     hire external consultants. The Y2K evaluation process has not hindered
     progress on other planned IT projects.

     The committee has developed a plan to analyze the readiness of all internal
     software. A testing site was developed where PC software could be loaded
     and tested via prescribed test scripts for performance as dates were
     modified. (Certain key dates have been recommended for testing by the
     Corporation's regulators). As of September 30, 1998, about 20% of the
     critical PC software applications have been tested with the remainder to be
     tested over the next six months.

     Major internal system processing software such as Items Processing, which
     is critical to our business has been tested at the Company's "Hot Site",
     where backup hardware and software are maintained for continued operations
     in any crisis. This software (and most related hardware) has been found to
     be reliable when tested for all critical dates. As a result of testing thus
     far, one major hardware item will be replaced in 1999.

     All external software service providers have been contacted and have been
     asked to provide certification and validation that their systems have been
     thoroughly tested and are Y2K compliant. If the provider is not currently
     Y2K compliant we have requested a timetable of planned system upgrades to
     achieve required compliance. All critical vendors have indicated that they
     are dealing with their Year 2000 issues, and in most cases, plan to have
     their testing completed by December 31, 1998. Omega's testing with all
     critical outside vendors will be completed by March 31, 1999.

     Most of the processing of Omega's core financial services are out-sourced.
     Omega's primary information service provider processes all application
     systems, as well as the company's general ledger, and is the source of all
     data inquiry and the data warehouse function. This service is absolutely
     critical to our operation. The provider has completed the identification
     phase of its Y2K process and is currently in the testing phase which is
     scheduled to be completed by December 31, 1998.  Proxy testing with their
     bank clients will be conducted through the first quarter of 1999. As this
     provider is a large servicing operation, it has many other financial
     institutions as clients. These clients have come together as a group to
     finance a third party review of their entire Y2K process, including testing
     and remediation. This independent third party will issue quarterly reports
     to the clients through the end of 1999.

     The Company has also taken steps to ensure that internal hardware is Year
     2000 compliant. The testing of all PC's is nearly complete, with 476 of
     493, or 97% completed. Twelve PC's failed and are to be replaced in 1999,
     while 166, or 34% have been identified as needing to have the system date
     changed manually on 1/1/2000. These PC's will be systematically replaced
     first in Omega's ongoing PC upgrade process in 1999. Major hardware (used
     in the Data Processing area) has been tested as well. Both the mainframe
     and backup computers have passed the tests.

     Non IT systems that are micro-chip driven are also used throughout the
     Corporation. These include such items as proof machines, HVAC, vaults,
     security systems, elevators, telephones and fax machines, and ATM's. All of
     these vendors have been contacted. We have been assured that our vaults,
     elevators and ATM's are Y2K compliant. As of September 30, 1998, the
     control system for the HVAC system at the Administration Center has been
     tested and found to be compliant. Proof machines (equipment that micr-
     encodes all documents to prepare for processing) have already been upgraded
     for year 2000 compliance. All remaining testing is scheduled to be
     completed by December 31, 1998.

     Omega's financial results are dependent upon the solvency of its customer
     base; their ability to repay loans and maintain deposits. Therefore, a
     process has begun in which business customers with existing levels of
     aggregate loans in excess of a designated amount are contacted, reviewed,
     and rated as to credit risk. 74% of the credit relationships reviewed were
     deemed to be low risk, as these borrowers are aware of the potential
     problems with the Year 2000 and are taking steps to analyze and correct any
     deficiencies. The remaining 26% of the credit relationships reviewed were
     deemed to be moderate risk. Management will continue to closely monitor
     their compliance activity on an ongoing basis. Since June 1998, all
     business loan applicants have been asked to demonstrate Y2K compliance as a
     requirement for loan approval.

     Portions of the Corporation's investment portfolio could be at risk in the
     event that an issuer of a security is not Y2K compliant. An evaluation
     process is in place to assess the potential impact that this could have on
     Omega's financial results and operations. The analysis includes segmenting
     the portfolio by risk rating (based on the type of security and the
     potential exposure to any negative impact as a result of the Y2K issue). If
     by September 30, 1999, the analysis does not indicate that the issuer of a
     security has properly addressed the Y2K issue and the investment is
     determined to be at risk, then the security will be sold, leaving the
     investment portfolio with little or no investment risk.

     Costs to address Omega's Year 2000 issues are being expensed as incurred
     and have been insignificant through September 30, 1998. The current
     projections of costs to complete the Y2K remediation are estimated to be in
     the range of $645,000 to $873,000. Included in this estimate is the amount
     of between $162,000 and $390,000 which will be capitalized for replacement
     of major hardware. The remaining costs (currently projected at $482,000
     will be expensed as incurred over the next fifteen months. The source of
     funds will come from Omega's IT budget. These expenditures are not expected
     to be material to the financial condition or results of operations of
     Omega.

     Upon completion of the testing phase, Omega intends to create contingency
     plans for issues that fail the Y2K compliance test. By December 31, 1998,
     those issues requiring contingency plans will have been identified. These
     contingency plans will address procedures to follow in a most likely worst
     case scenario and are expected to be completed by March 31, 1999.

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Omega is impacted by market risks, and has procedures in place to evaluate
     and mitigate these risks. These market risks and Omega's procedures are
     described in the Management's Discussion and Analysis section of the 1997
     Annual Report to Shareholders and in "Item 2. Management's Discussion and
     Analysis of Financial Condition and Results of Operations". There have been
     no material changes in the market risks that impact Omega or their
     procedures relative to these risks, since December 31, 1997.

PART II.  Other Information

Item 1.   Legal Proceedings
     None

Item 2.   Changes in Securities and Use of Proceeds
     None

Item 3.   Defaults upon Senior Securities
     None

Item 4.   Submission of Matters to a Vote of Security Holders
     None

Item 5.   Other Information
     Pursuant to recent amendments to the proxy rules under the Securities
     Exchange Act of 1934, as amended, Omega's shareholders are notified that
     the deadline for providing Omega timely notice of any shareholder proposal
     to be submitted for consideration at Omega's 1999 Annual Meeting of
     Shareholders will be March 15, 1999.  As to all such matters which Omega
     does not have notice on or prior to March 15, 1999, the proxy solicited on
     behalf of the Board of Directors in connection with the matters to be
     considered at the 1999 Annual Meeting of Shareholders will confer
     discretionary voting authority on the persons designated in such proxy.

     Shareholder proposals for the 1999 Annual Meeting of Shareholders must
     still be submitted to the Company by December 2, 1998 to receive
     consideration for inclusion in Omega's Proxy Statement relating to the 1999
     Annual Meeting of Shareholders.


Item 6.   Exhibits and Reports on Form 8-K
     Exhibit 27     Financial Data Schedule






                              SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of 1934,
     the registrant has duly
     caused this report to be signed on its behalf by the
     undersigned thereunto duly authorized.


                                       OMEGA FINANCIAL CORPORATION

                                              (Registrant)




                                  By
                                   :

                 Date                David B. Lee
                                     Chairman and
                                     Chief Executive Officer




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