FIRST EMPIRE STATE CORPORATION
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Accretive To EPS*
GAAP EPS CASH EPS
---------------- ----------------
$ % $ %
---------------- -----------------
1998 (1.21) -4 1.99 7
1999 0.74 2 4.28 14
2000 1.17 3 4.71 14
*Excludes one time costs associated with the acquisition Note: 1998 based on
median First Call EPS estimates.
FIRST EMPIRE STATE CORPORATION
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EXPECTED COST SAVINGS
- 30% cost saves in 1999, about two-thirds achievable in 1998
- Limited branch closures because it is market expansion
- Net reduction of approximately 250-300 staff
$ MILLIONS
-----------
Technology & Operations......................................... 12
Corporate Overhead.............................................. 10
Business Line Consolidation..................................... 7
Facilities...................................................... 2
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Annual Savings.................................................. $31
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FIRST EMPIRE STATE CORPORATION
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MERGER RELATED CHARGES
Pre-Tax Merger Related Charges:
$ MILLIONS
----------
- - Deal Costs..................................................... 8
- - Conversion Costs............................................... 10
- - Facilities..................................................... 11
- - Human Resources................................................ 16
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Total Merger Related Costs..................................... $45
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FIRST EMPIRE STATE CORPORATION
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FIRST CALL ANALYST ASSUMPTIONS
FIRST EMPIRE
- 1998 EPS of $27.92
- Implies 1998 net income of $195 million
- First Call EPS growth estimate of 10%
- 1998 fully diluted shares of 6,982,000
ONBANCorp
- 1998 EPS of $4.03
- Implies 1998 net income of $53 million
- First Call EPS growth estimate of 11%
- 1998 fully diluted shares of 13,122,000
FIRST EMPIRE STATE CORPORATION
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CASH EARNINGS*
PRO FORMA 1998 PRO FORMA 1998
($000, EXCEPT PER SHARE) FOR FULL REALIZATION OF SAVINGS FOR ACTUAL SAVINGS
--------------------------------- ----------------------
SHARES NET INCOME EPS NET INCOME EPS
- ------------------------------------------------------------- --------- ----------- --------- ----------- ---------
ONBK forecasted standalone earnings.......................... 13,122 52,883 4.03 52,883 4.03
Less: Funding costs of cash portion.......................... (10,365) (10,365)
Plus: amortization of existing deposit premium............... 2,746 2,746
Plus: Expense saves.......................................... 19,314 12,876
----------- --------- ----------- ---------
ONBK cash earnings per FESC basis after saves................ 1,433 64,579 45.08 58,141 40.59
FESC forecasted standalone earnings.......................... 194,925 27.92 194,925 27.92
Plus: Amortization of existing goodwill...................... 6,693 6,693
----------- --------- ----------- ---------
FESC cash earnings........................................... 6,982 201,618 28.88 201,618 28.88
--------
FESC-ONBK Combined........................................... 8,414 266,197 31.64 259,759 30.87
----------- --------- ----------- ---------
Cash EPS accretion($)........................................ 2.76 1.99
Cash EPS accretion (%)....................................... 10% 7%
*Does not include amortization of intangibles created in the deal
FIRST EMPIRE STATE CORPORATION
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RATIOS
CASH RATIOS
CASH AFTER
REPORTED: FESC ONBK PRO FORMA SYNERGIES
--------- ------ ----------- -------------
Quarter-ended September 30, 1997
Return on Average Assets....................................... 1.36% 0.92% 1.23% 1.33%
Return on Average Equity....................................... 18.92% 15.60% 18.10% 19.61%
Net Interest Margin............................................ 4.34% 3.00% 3.95% 3.95%
Efficiency Ratio............................................... 54.34% 56.10% 54.66% 51.39%
PROJECTED
WITHIN 1 MONTH
CAPITAL OF CONSUMMATION
---------------
Quarter-ended June 30, 1997, except Projected
Leverage Ratio................................................. 8.96% 7.10% 7.44%
Tier 1 Capital................................................. 10.81% 12.26% 9.19%
Total Capital.................................................. 13.68% 13.48% 11.63%
Quarter-ended September 30, 1997
Book Value..................................................... 149.31 25.59 198.45(1)
(1) Assumes a 70% stock, 30% cash deal
FIRST EMPIRE STATE CORPORATION
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DEPOSIT RATES
Nine Months Ended September 30, 1997
FESC ONBK COMBINED
----------- ----------- -------------
Now, Money Market and Escrow...................... 2.95% 2.71% 2.90%
Savings Deposits.................................. 2.05% 2.48% 2.18%
Time Deposits..................................... 5.60% 5.63% 5.61%
------- ------- -------
Total Interest Bearing Deposits................. 4.45% 4.62% 4.49%
FIRST EMPIRE STATE CORPORATION
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DEPOSIT COMPOSITION
At September 30, 1997
(Dollars in Millions)
FESC ONBK COMBINED
---------------------- ---------------------- ------------------------
BALANCE % OF TOTAL BALANCE % OF TOTAL BALANCE % OF TOTAL
--------- ----------- --------- ----------- --------- -------------
Noninterest Bearing .................................... $ 1,358 12% $ 371 9% $ 1,729 11%
Interest Bearing:
Now, Money Market and Savings......................... 3,660 33 1,593 40 5,253 35
Time Deposits......................................... 6,187 55 2,061 51 8,248 54
-------- -------- -------- --------- -------- -------
Total Interest Bearing.................................. 9,847 88 3,654 91 13,501 89
-------- -------- -------- --------- -------- -------
Total Deposits.......................................... $ 11,205 100% $ 4,025 100% $ 15,230 100%
Loan/Deposit Ratio...................................... 101% 73% 93%
-------- --------- -------
FIRST EMPIRE STATE CORPORATION
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IMPACT ON LOAN MIX, FUNDING AND CREDIT QUALITY
At, or for 9 months ending, September 30, 1997
FESC ONBK PRO FORMA
----------- ----------- -------------
Loans/Deposits......................... 101% 73% 93%
Deposits/Liabilities................... 88 77 85
Reserves/NPLs.......................... 318 109 256
NPLs/Loans............................. 0.76 1.23 0.86
NCO's/Loans (annualized)............... 0.40 0.21 0.36