FIRST EMPIRE STATE CORPORATION _______________________________________ 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 _______________________________________ 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 --- Annual Savings.................................................. $31 --- FIRST EMPIRE STATE CORPORATION _______________________________________ MERGER RELATED CHARGES Pre-Tax Merger Related Charges: $ MILLIONS ---------- - - Deal Costs..................................................... 8 - - Conversion Costs............................................... 10 - - Facilities..................................................... 11 - - Human Resources................................................ 16 --- Total Merger Related Costs..................................... $45 --- FIRST EMPIRE STATE CORPORATION _______________________________________ 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 _______________________________________ 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 _______________________________________ 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 _______________________________________ 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 _______________________________________ 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 _______________________________________ 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