Exhibit 99.1
FIRST EMPIRE STATE CORPORATION
RETIREMENT SAVINGS PLAN AND TRUST
Financial Statements and Additional Information
December 31, 1996 and 1995
FIRST EMPIRE STATE CORPORATION RETIREMENT SAVINGS PLAN AND TRUST
FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION
INDEX PAGE
- ----- ----
Report of independent accountants................................ 3
Financial statements:
Statement of net assets available for plan benefits
as of December 31, 1996 and 1995............................. 4
Statement of changes in net assets available for
plan benefits for the years ended
December 31, 1996 and 1995................................... 5
Notes to financial statements.................................. 6
Exhibit I--Allocation of net assets available for plan
benefits to investment programs
as of December 31, 1996 and 1995............................. 11
Exhibit II--Allocation of changes in net assets
available for plan benefits to investment programs
for the years ended December 31, 1996 and 1995............... 13
Additional information:
Schedule I--Schedule of assets held for investment
at December 31, 1996........................................ 15
Schedule II--Schedule of transactions in excess of 5%
of fair value of plan assets for
the year ended December 31, 1996............................ 16
-2-
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrative Committee of the First Empire State
Corporation Retirement Savings Plan and Trust
We have audited the accompanying statement of net assets available for plan
benefits of the First Empire State Corporation Retirement Savings Plan and Trust
(the Plan) as of December 31, 1996 and 1995 and the related statement of changes
in net assets available for plan benefits for the years then ended. These
financial statements are the responsibility of the Plan's Administrative
Committee. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 the
Plan's Administrative Committee, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to in the first paragraph
of this report present fairly, in all material respects, the net assets
available for plan benefits of the First Empire State Corporation Retirement
Savings Plan and Trust at December 31, 1996 and 1995, and the changes in its net
assets available for plan benefits for the years then ended in conformity with
generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information included in
Schedules I and II is presented for purposes of additional analysis and is
not a required part of the basic financial statements but is additional
information required by ERISA. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
/s/ PRICE WATERHOUSE LLP
Buffalo, New York
March 7, 1997
-3-
FIRST EMPIRE STATE CORPORATION RETIREMENT SAVINGS PLAN AND TRUST
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31
----------------------------
1996 1995
------------ ----------
ASSETS
Cash............................................... $ 5,914,067 416,238
Investments, at current value:
Short-term investments (cost: $37,490,680 in
1996 and $10,966,751 in 1995)................. 37,490,680 10,966,751
Common stock (cost: $27,304,900 in 1996 and
$36,061,617 in 1995).......................... 62,420,544 60,674,151
U.S. government and agency obligations
(cost: $2,865,307 in 1995).................... -- 3,039,237
Corporate bonds (cost: $2,734,371 in 1995)...... -- 2,882,910
Loans to participants (cost: $3,103,865 in
1996 and $2,648,774 in 1995).................. 3,103,865 2,648,774
------------ ----------
Total investments......................... 103,015,089 80,211,823
Receivables:
Due from broker.................................. 758,309 510,272
Employee contributions........................... 227,730 142,337
Employer contributions........................... 129,898 82,967
Interest and dividends........................... 31,363 131,674
------------ ----------
Total receivables.............................. 1,147,300 867,250
------------ ----------
Total assets................................... 110,076,456 81,495,311
LIABILITIES
Due to broker...................................... -- 602,999
------------ ----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS............. $110,076,456 80,892,312
------------ ----------
------------ ----------
See accompanying notes to financial statements.
4
FIRST EMPIRE STATE CORPORATION RETIREMENT SAVINGS PLAN AND TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
YEAR ENDED DECEMBER 31
----------------------------
1996 1995
-------------- ------------
ADDITIONS TO NET ASSETS AVAILABLE FOR PLAN BENEFITS
Net investment income:
Interest.................................................... $ 1,276,752 1,218,874
Dividends................................................... 937,337 800,895
Net realized gain on sale of investments.................... 3,720,698 407,654
Net appreciation in current value of investments............ 14,335,054 17,934,774
-------------- ------------
Total net investment income............................. 20,269,841 20,362,197
Contributions:
Employee.................................................... 9,935,774 12,302,507
Employer.................................................... 4,723,965 4,085,991
-------------- ------------
Total contributions..................................... 14,659,739 16,388,498
-------------- ------------
34,929,580 36,750,695
DEDUCTIONS FROM NET ASSETS AVAILABLE FOR PLAN BENEFITS
Benefit payments to participants............................... (5,745,436) (6,441,865)
-------------- ------------
NET INCREASE IN NET ASSETS AVAILABLE FOR PLAN BENEFITS......... 29,184,144 30,308,830
Net assets available for plan benefits at beginning of year.... 80,892,312 50,583,482
-------------- ------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS AT END OF YEAR.......... $ 110,076,456 80,892,312
-------------- ------------
-------------- ------------
See accompanying notes to financial statements.
-5-
FIRST EMPIRE STATE CORPORATION RETIREMENT SAVINGS PLAN AND TRUST
Notes to Financial Statements
1. DESCRIPTION OF PLAN
GENERAL
The following description of the First Empire State Corporation Retirement
Savings Plan and Trust ("the Plan") is provided for general information purposes
and is qualified in its entirety by reference to the Plan. The Plan is subject
to the provisions of the Employee Retirement Income Security Act of 1974
("ERISA").
ELIGIBILITY AND PARTICIPATION
The Plan is a defined contribution plan and exists for the benefit of
permanent employees of First Empire State Corporation and its subsidiaries ("the
Company"). Persons who are at least 21 years of age and have completed 12 months
of continuous service are eligible to participate in the Plan. Through December
31, 1996, eligible employees could elect to participate in the Plan effective
the first day of any January, April, July or October subsequent to meeting the
eligibility criteria.
ADMINISTRATION
The Plan is administered by a committee ("Administrative Committee") which
is appointed by the Board of Directors of Manufacturers and Traders Trust
Company ("M&T Bank"), a wholly owned subsidiary of First Empire State
Corporation ("First Empire"). The assets of the Plan are held by M&T Bank, as
Trustee. Watson Wyatt & Company, an actuarial and consulting firm, provides
recordkeeping services on an individual participant basis to the Plan.
The Board of Directors of M&T Bank has the right to terminate, amend or
modify the Plan at any time subject to the Plan provisions. Upon Plan
termination, participants would receive the assets allocated to their accounts.
CONTRIBUTIONS
Contributions to the Plan are made by participants through salary reduction
and by the Company through employer matching contributions. Effective October 1,
1995, participants may elect to reduce their compensation by a specified whole
percentage not to exceed 10%, subject to certain limitations under Section
401(k) and Section 415 of the Internal Revenue Code. Prior thereto the maximum
contribution by participants was limited to 8% of compensation. The Company
remits to the Plan on behalf of each participant the amount by which the
participant's compensation is reduced. In addition, the Company makes an
employer matching contribution in an amount equal to 75% of the participant's
contribution. Such matching contribution is limited to 4.5% of the participant's
compensation. Compensation is generally defined in the Plan to mean a
participant's base salary for the calendar year excluding any form of additional
compensation. Effective April 1, 1995 compensation was redefined to include 75%
of participants' sales commissions. Generally, total annual employee
contributions may not exceed the lesser of 25% of compensation, as defined in
the Internal Revenue Code, or $30,000, adjusted for inflation. An individual
participant's pre-tax contribution was limited to $9,500 in 1996 and $9,240 in
1995. Contributions above this limit were treated as post-tax contributions.
Participants' accounts, including all salary reduction contributions,
employer matching contributions and increments thereon are at all times fully
vested and nonforfeitable.
-6-
FIRST EMPIRE STATE CORPORATION RETIREMENT SAVINGS PLAN AND TRUST
Notes to Financial Statements, continued
INVESTMENT PROGRAMS
Through December 31, 1996, participants could invest their salary reduction
contributions in the common stock of First Empire ("First Empire stock fund"),
equity securities other than those of First Empire ("diversified equity fund"),
short-term fixed income securities other than those of First Empire
("money-market fund") or long-term fixed income securities other than those of
First Empire ("bond fund") in increments of 25%. A separate account is
maintained for each participant's interest in each fund. There were 3,383
participants in the First Empire stock fund, 2,922 in the diversified equity
fund, 1,403 in the money-market fund and 1,217 in the bond fund at December 31,
1996. A total of 3,887 employees of the Company were active participants in the
Plan at December 31, 1996. The allocation of net assets available for Plan
benefits to investment programs and allocation of changes in net assets
available for Plan benefits to investment programs are set forth in Exhibit I
and II, respectively.
Through December 31, 1996, participants could, in accordance with the rules
of the Plan, transfer existing balances among the available investment funds,
reduce or increase the percentage of salary reduction elected and/or redirect
their current salary reduction contributions into different funds effective the
first day of January, April, July and October. Contributions may be suspended at
any time.
EMPLOYER MATCHING CONTRIBUTIONS
Employer matching contributions have been invested in the above funds in the
same proportion as elected by the participants.
LOANS TO PARTICIPANTS
Upon written application to the Administrative Committee, participants
may borrow from their account an amount not to exceed the lesser of (1) 50%
of the participant's vested account balance as of the most recent valuation
date or (2) $50,000 reduced by the participant's highest outstanding loan
balance in the twelve months prior to the date of loan origination. The
minimum loan amount is $1,000. Loans bear interest at one percentage point
above prime as designated by M&T Bank and are repaid in equal installments
through after-tax payroll deductions for a period of up to five years.
WITHDRAWALS AND DISTRIBUTIONS
A participant undergoing financial hardship may make withdrawals from the
Plan while employed by the Company, subject to Plan limitations. Upon
termination of employment for any reason, participants are entitled to a
distribution of the full amount of individual account balances as of the
revaluation date immediately following such termination of service.
Unless the participant elects otherwise, distribution of the full amount of
the participant's account balance will be made no later than 60 days after the
close of the calendar year in which the last of the following occurs: (a) the
participant attains age 65; (b) the tenth anniversary of the year in which
participation began; or (c) the participant terminates service with the Company.
The participant may elect to defer distribution of either the minimum required
under Internal Revenue Code Section 401 (a)(9) or the entire balance, until no
later than April 1 of the calendar year following the year in which age 70-1/2
is attained.
-7-
FIRST EMPIRE STATE CORPORATION RETIREMENT SAVINGS PLAN AND TRUST
Notes to Financial Statements, continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accounts of the Plan are maintained on the accrual basis.
INVESTMENTS
Investments are reported on a current value basis. Other than short-term
investments, investments of the First Empire stock fund, diversified equity
fund, money-market fund and bond fund are traded on national securities
exchanges and are valued using the last reported sales price prior to the close
of the Plan year. Investments representing 5% or more of net assets available
for plan benefits at December 31, 1996 and 1995 consisted of the common stock of
First Empire and the Vision Group of Funds, Inc. Money Market Fund. Loans to
participants are valued by the Administrative Committee as no active market
exists for such loans. The current value of loans, which are fully secured by a
portion of the participant's vested benefits, approximates the outstanding
principal balance of the loans at both December 31, 1996 and 1995.
Investment income of the First Empire stock fund, diversified equity fund,
money-market fund and bond fund is allocated to participants based on their
proportionate share of the net assets of the respective investment fund.
Interest income on loans to participants is allocated to participants based on
their respective loan agreement.
BENEFIT PAYMENTS TO PARTICIPANTS
Benefit payments to participants are recorded when paid.
Net assets available for plan benefits and benefit payments to participants
reported on Internal Revenue Service Form 5500 differ from the amounts included
in the financial statements by amounts payable to participants who have elected
to make withdrawals from the Plan. Such amounts were $845,546 and $788,297 at
December 31, 1996 and 1995, respectively.
ADMINISTRATIVE EXPENSES
Expenses related to administration of the Plan are paid by the Company.
Brokerage commissions, transfer taxes and similar costs of acquiring or
selling securities are paid by the Plan. The Plan incurred brokerage
commissions in 1996 and 1995 totaling $89,236 and $32,108, respectively.
These amounts have been included in the statement of changes in net assets
available for plan benefits in net realized gain on sale of investments for
securities sold and net appreciation in current value of investments for
securities acquired during the year.
3. INCOME TAXES
The Internal Revenue Service issued a favorable determination letter in 1995
regarding the qualified and tax-exempt status of the Plan under Sections 401 and
501 of the Internal Revenue Code. Subsequent to receipt of the favorable
determination letter the Plan was amended. The Administrative Committee is of
the opinion that these amendments do not affect the qualified and tax-exempt
status of the Plan and, accordingly, no provision has been made for income
taxes.
-8-
FIRST EMPIRE STATE CORPORATION RETIREMENT SAVINGS PLAN AND TRUST
Notes to Financial Statements, continued
3. INCOME TAXES, CONTINUED
Participants are not subject to Federal or state income tax on employer
matching contributions and pre-tax participant salary reduction contributions
until such contributions are withdrawn or distributed. Participants are also not
subject to Federal or state income tax on the earnings and appreciation of the
assets of the Plan until such amounts are withdrawn or distributed.
4. PLAN AMENDMENTS
During 1995, the Plan was amended to add special eligibility and benefit
provisions for employees of certain entities acquired by the Company in 1994 and
1995 and to accept the transfer of assets associated with account balances of
such employees. Such asset transfers totaled $5,337,797, and have been included
in employee contributions for the year ended December 31, 1995.
Effective January 1, 1997, the plan was amended to enable participants to
direct employee contributions in 5% increments in any of six investment
options. The diversified equity fund, money-market fund and bond fund have
liquidated their long-term fixed income and equity investment securities at
December 31, 1996 in order to facilitate their transition to three new mutual
fund investment options; a growth and income equity fund, a money-market fund,
and a U.S. government securities fund, respectively. Two additional mutual
funds, a capital appreciation equity fund and an international stock fund,
will be offered to participants effective January 1, 1997.
Effective January 1, 1997, participants may elect to change their investment
options and allocations monthly. Additionally, newly eligible employees may
elect to participate in the Plan as of the first day of the month subsequent to
the month in which the employee becomes eligible.
5. RELATED PARTY TRANSACTIONS
During 1996, the Plan acquired in the open market, in 29 transactions,
28,398 shares of First Empire common stock at a cost of $6,929,874. The Plan
disposed of, in 22 transactions, 9,754 shares of First Empire common stock which
resulted in proceeds of $2,399,040 and realized gains of $370,164. At December
31, 1996, the Plan held 216,738 shares of First Empire common stock with a total
cost of $27,304,900 and a current value of $62,420,544.
During 1995, the Plan acquired in the open market, in 35 transactions,
26,360 shares of First Empire common stock at a cost of $4,694,547. The Plan
disposed of, in 18 transactions, 18,354 shares of First Empire common stock
which resulted in proceeds of $2,704,890 and realized gains of $247,266. At
December 31, 1995, the Plan held 198,094 shares of First Empire common stock
with a total cost of $21,556,170 and a current value of $43,184,492.
-9-
FIRST EMPIRE STATE CORPORATION RETIREMENT SAVINGS PLAN AND TRUST
Notes to Financial Statements, continued
6. NET REALIZED GAIN ON SALE OF INVESTMENTS
Net realized gain on sale of investments is comprised of the following:
NET
REALIZED
TOTAL BASIS OF GAIN
PROCEEDS ASSETS SOLD (LOSS)
------------ ----------- ------------
For the year ended December 31, 1996:
First Empire common stock.................................... $ 2,399,040 2,028,876 $ 370,164
Other common stock........................................... 43,707,738 40,187,901 3,519,837
U.S. government and agency obligations....................... 7,767,988 7,900,005 (132,017)
Corporate bonds.............................................. 3,182,987 3,220,273 (37,286)
----------- ----------- ----------
$57,057,753 53,337,055 $3,720,698
----------- ----------- ----------
----------- ----------- ----------
For the year ended December 31, 1995:
First Empire common stock.................................... $ 2,704,890 2,457,624 $ 247,266
Other common stock........................................... 1,177,993 1,105,936 72,057
U.S. government and agency obligations....................... 1,298,388 1,294,697 3,691
Corporate bonds.............................................. 1,141,819 1,057,179 84,640
----------- ----------- ----------
$ 6,323,090 5,915,436 $ 407,654
----------- ----------- ----------
----------- ----------- ----------
In accordance with the requirements of ERISA, the basis of assets sold is
equal to either the current value at the beginning of the period, for securities
held as of that date, or cost, for securities acquired during the year.
7. NET APPRECIATION IN CURRENT VALUE OF INVESTMENTS
Net appreciation in current value of investments is comprised of the
following:
CURRENT BASIS OF
VALUE AT ASSETS HELD
END OF AT END NET
PERIOD OF PERIOD APPRECIATION
------------- ------------ -------------
For the year ended December 31, 1996:
First Empire common stock............................................ $ 62,420,544 48,085,490 $ 14,335,054
-------------
-------------
For the year ended December 31, 1995:
First Empire common stock............................................ $ 43,184,492 28,088,891 $ 15,095,601
Other common stock................................................... 17,489,659 15,026,953 2,462,706
U.S. government and agency obligations............................... 3,039,237 2,819,712 219,525
Corporate bonds...................................................... 2,882,910 2,725,968 156,942
-------------
$ 17,934,774
-------------
-------------
In accordance with the requirements of ERISA, the basis of assets held at
end of period is equal to either the current value at the beginning of the
period, for securities held as of that date, or cost, for securities acquired
during the year.
-10-
EXHIBIT I
FIRST EMPIRE STATE CORPORATION RETIREMENT SAVINGS PLAN AND TRUST
ALLOCATION OF NET ASSETS AVAILABLE FOR PLAN BENEFITS TO INVESTMENT PROGRAMS
DECEMBER 31, 1996
FIRST EMPIRE DIVERSIFIED MONEY- BOND PARTICIPANT
STOCK FUND EQUITY FUND MARKET FUND FUND LOAN ACCOUNT TOTAL
------------- ------------ ------------ ---------- ------------ --------------
Assets
Cash................................ $ 1,802 31,483 46,773 5,834,009 -- $ 5,914,067
Investments, at current value
(cost:$27,737,652, $26,591,333,
$10,190,613, $275,982 and
$3,103,865):
Short-term investments.............. 432,752 26,591,333 10,190,613 275,982 -- 37,490,680
Common stock........................ 62,420,544 -- -- -- -- 62,420,544
U.S. government and agency
obligations....................... -- -- -- -- -- --
Corporate bonds..................... -- -- -- -- -- --
Loans to participants............... -- -- -- -- 3,103,865 3,103,865
------------- ------------ ------------ ---------- ------------ --------------
Total investments................... 62,853,296 26,591,333 10,190,613 275,982 3,103,865 103,015,089
Receivables:
Due from broker..................... 758,309 -- -- -- -- 758,309
Employee contributions.............. 126,512 73,315 15,061 12,842 -- 227,730
Employer contributions.............. 70,797 42,072 9,380 7,649 -- 129,898
Interest and dividends.............. -- 21,186 -- 10,177 -- 31,363
------------- ------------ ------------ ---------- ------------ --------------
Total receivables................... 955,618 136,573 24,441 30,668 -- 1,147,300
------------- ------------ ------------ ---------- ------------ --------------
Net assets available for plan
benefits.......................... $ 63,810,716 26,759,389 10,261,827 6,140,659 3,103,865 $ 110,076,456
------------- ------------ ------------ ---------- ------------ --------------
------------- ------------ ------------ ---------- ------------ --------------
-11-
EXHIBIT I
(continued)
FIRST EMPIRE STATE CORPORATION RETIREMENT SAVINGS PLAN AND TRUST
ALLOCATION OF NET ASSETS AVAILABLE FOR PLAN BENEFITS TO INVESTMENT PROGRAMS
DECEMBER 31, 1995
FIRST EMPIRE DIVERSIFIED MONEY- BOND PARTICIPANT
STOCK FUND EQUITY FUND MARKET FUND FUND LOAN ACCOUNT TOTAL
- ------------------------------------- ------------- ------------ ------------ ---------- ------------ -------------
Assets
Cash................................. $ 139,803 171,515 49,807 55,113 -- $ 416,238
Investments, at current value
(cost:$21,835,971, $14,785,478,
$10,350,413, $5,656,184 and
$2,648,774):
Short-term investments............... 279,801 280,031 10,350,413 56,506 -- 10,966,751
Common stock......................... 43,184,492 17,489,659 -- -- -- 60,674,151
U.S. government and agency
obligations........................ -- -- -- 3,039,237 -- 3,039,237
Corporate bonds...................... -- -- -- 2,882,910 -- 2,882,910
Loans to participants................ -- -- -- -- 2,648,774 2,648,774
------------- ------------ ------------ ---------- ------------ -------------
Total investments.................... 43,464,293 17,769,690 10,350,413 5,978,653 2,648,774 80,211,823
Receivables:
Due from broker...................... -- 510,272 -- -- -- 510,272
Employee contributions............... 66,266 48,915 15,044 12,112 -- 142,337
Employer contributions............... 37,786 28,419 9,359 7,403 -- 82,967
Interest and dividends............... -- 19,590 -- 112,084 -- 131,674
------------- ------------ ------------ ---------- ------------ -------------
Total receivables.................... 104,052 607,196 24,403 131,599 -- 867,250
------------- ------------ ------------ ---------- ------------ -------------
Total assets......................... 43,708,148 18,548,401 10,424,623 6,165,365 2,648,774 81,495,311
Liabilities
Due to broker........................ 416,479 186,520 -- -- -- 602,999
------------- ------------ ------------ ---------- ------------ -------------
Net assets available for plan
benefits........................... $ 43,291,669 18,361,881 10,424,623 6,165,365 2,648,774 $ 80,892,312
------------- ------------ ------------ ---------- ------------ -------------
------------- ------------ ------------ ---------- ------------ -------------
-12-
EXHIBIT II
FIRST EMPIRE STATE CORPORATION RETIREMENT SAVINGS PLAN AND TRUST
ALLOCATION OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
TO INVESTMENT PROGRAMS
YEAR ENDED DECEMBER 31, 1995
FIRST EMPIRE DIVERSIFIED MONEY- BOND PARTICIPANT
STOCK FUND EQUITY FUND MARKET FUND FUND LOAN ACCOUNT TOTAL
------------- ----------- ----------- ---------- ------------ -------------
ADDITIONS TO NET ASSETS
AVAILABLE FOR PLAN
BENEFITS
Net investment income:
Interest................. $ 6,032 79,065 538,656 395,337 257,662 $ 1,276,752
Dividends................ 589,308 348,029 -- -- -- 937,337
Net realized gain
(loss) on sale of
investments............. 370,164 3,519,837 -- (169,303) -- 3,720,698
Net appreciation
in current value of
investments............ 14,335,054 -- -- -- -- 14,335,054
----------- ----------- ---------- ---------- ----------- ------------
Total net
investment income..... 15,300,558 3,946,931 538,656 226,034 257,662 20,269,841
Contributions:
Employee................ 4,831,299 3,373,541 983,179 747,755 -- 9,935,774
Employer................ 2,259,225 1,642,226 453,274 369,240 -- 4,723,965
----------- ----------- ---------- ---------- ----------- ------------
Total contributions...... 7,090,524 5,015,767 1,436,453 1,116,995 -- 14,659,739
----------- ----------- ---------- ---------- ----------- ------------
22,391,082 8,962,698 1,975,109 1,343,029 257,662 34,929,580
DEDUCTIONS FROM NET
ASSETS AVAILABLE
FOR PLAN BENEFITS
Benefit payments
to participants........ (2,395,988) (1,654,459) (1,179,344) (515,645) -- (5,745,436)
INTERFUND TRANSFERS
Loans, net
of repayments.......... 224,748 (218,297) (341,014) (120,528) 455,091 --
Reallocation
of investments-
additions (deductions). 299,205 1,307,566 (617,547) (731,562) (257,662) --
----------- ----------- ---------- ---------- ----------- ------------
523,953 1,089,269 (958,561) (852,090) 197,429 --
----------- ----------- ---------- ---------- ----------- ------------
Net increase
in net assets
available for plan
benefits............... $20,519,047 8,397,508 (162,796) (24,706) 455,091 $ 29,184,144
----------- ----------- ---------- ---------- ----------- ------------
----------- ----------- ---------- ---------- ----------- ------------
-13-
EXHIBIT II
(continued)
FIRST EMPIRE STATE CORPORATION RETIREMENT SAVINGS PLAN AND TRUST
ALLOCATION OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
TO INVESTMENT PROGRAMS
YEAR ENDED DECEMBER 31, 1995
FIRST EMPIRE DIVERSIFIED MONEY- BOND PARTICIPANT
STOCK FUND EQUITY FUND MARKET FUND FUND LOAN ACCOUNT TOTAL
------------- ----------- ----------- ---------- ------------ -------------
ADDITIONS TO NET ASSETS
AVAILABLE FOR PLAN
BENEFITS
Net investment income:
Interest.................. $ 8,597 85,633 598,516 348,862 177,266 $ 1,218,874
Dividends................. 472,705 328,190 -- -- -- 800,895
Net realized gain
on sale of
investments.............. 247,266 72,057 -- 88,331 -- 407,654
Net appreciation
in current
value of investments..... 15,095,601 2,462,706 -- 376,467 -- 17,934,774
----------- ----------- ---------- ---------- ----------- ------------
Total net
investment income........ 15,824,169 2,948,586 598,516 813,660 177,266 20,362,197
Contributions:
Employee.................. 4,057,000 3,804,600 2,811,267 1,447,587 182,053 12,302,507
Employer.................. 1,845,451 1,271,596 566,642 402,302 -- 4,085,991
----------- ----------- ---------- ---------- ----------- ------------
Total contributions........ 5,902,451 5,076,196 3,377,909 1,849,889 182,053 16,388,498
----------- ----------- ---------- ---------- ----------- ------------
21,726,620 8,024,782 3,976,425 2,663,549 359,319 36,750,695
DEDUCTIONS FROM NET
ASSETS AVAILABLE
FOR PLAN BENEFITS
Benefit payments
to participants.......... (3,327,544) (959,098) (1,700,477) (454,746) -- (6,441,865)
INTERFUND TRANSFERS
Loans, net
of repayments............ 114,927 (210,555) (405,607) (138,365) 639,600 --
Reallocation
of investments-
additions (deductions)... (1,165,319) 1,461,685 (179,150) 60,050 (177,266) --
----------- ----------- ---------- ---------- ----------- ------------
(1,050,392) 1,251,130 (584,757) (78,315) 462,334
----------- ----------- ---------- ---------- ----------- ------------
Net increase
in net assets
available for plan
benefits................ $17,348,684 8,316,814 1,691,191 2,130,488 821,653 $ 30,308,830
----------- ----------- ---------- ---------- ----------- ------------
----------- ----------- ---------- ---------- ----------- ------------
-14-
SCHEDULE I
FIRST EMPIRE STATE CORPORATION RETIREMENT SAVINGS PLAN AND TRUST
SCHEDULE OF ASSETS HELD FOR INVESTMENT
DECEMBER 31, 1996
NUMBER OF
SHARES OR CURRENT VALUE
PRINCIPAL TOTAL -------------------------
NAME AND TITLE OF ISSUE AMOUNT UNIT COST COST PER UNIT TOTAL
- ----------------------- ----------------------- -------------- ------------- ---------- -------------
SHORT-TERM INVESTMENTS
Vision Group of Funds,
Inc. Money Market
Fund................. 37,490,680 1.000 $37,490,680 $ 1.000 $ 37,490,680
COMMON STOCK
Financial:
First Empire State
Corporation*......... 216,738 125.981 27,304,900 288.000 62,420,544
LOANS TO PARTICIPANTS
7.00%-10.50%, fully
secured by vested
benefits, due 1997
through 2001......... $ 3,103,865 -- 3,103,865 -- 3,103,865
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Total investments...... $67,899,445 $103,015,089
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* See note 5 to the financial statements
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SCHEDULE II
FIRST EMPIRE STATE CORPORATION RETIREMENT SAVINGS PLAN AND TRUST
SCHEDULE OF TRANSACTIONS IN EXCESS OF 5% OF FAIR VALUE OF PLAN ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
PURCHASES SALES/DISTRIBUTIONS
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NUMBER OF NUMBER OF
DESCRIPTION OF ASSET TRANSACTIONS COST TRANSACTIONS PROCEEDS BASIS GAIN
- ------------------------------------ ------------ ----------- ------------ ----------- ---------- ---------
Short-term investments:
Vision Group of Funds, Inc.
Money Market Fund................. 398 $49,176,811 166 $22,652,882 22,652,882 $ --
Common stock:
First Empire State Corporation...... 29 6,929,874 22 2,399,040 2,028,876 370,164
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