<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 9, 1997
----------------------
FIRST EMPIRE STATE CORPORATION
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(Exact name of registrant as specified in its charter)
New York
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(State or other jurisdiction of incorporation)
1-9861 16-0968385
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(Commission File Number) (I.R.S. Employer Identification No.)
One M&T Plaza, Buffalo, New York 14240
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (716) 842-5445
------------------
(NOT APPLICABLE)
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(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
First Empire State Corporation ("First Empire") announced on January 9,
1997 that fully diluted earnings per common share rose 18% to $20.97 in 1996
from $17.78 in 1995. Net income for 1996 totaled $151.1 million, up 15% from
$131.0 million in 1995. For the fourth quarter of 1996, net income per
common share on a fully diluted basis was $5.68, an increase of 13% from
$5.03 earned in the year-earlier quarter. Net income was $40.4 million in
the recently completed quarter, 10% higher than the $36.8 million earned in
the final quarter of 1995.
Taxable-equivalent net interest income rose to $535.5 million in 1996
from $491.1 million in 1995. Average loans outstanding totaled $10.1 billion
in 1996, a 14% increase from $8.9 billion in 1995. First Empire's net
interest margin, or taxable-equivalent net interest income expressed as a
percentage of average earning assets, was 4.45% in 1996, compared with 4.43%
in 1995.
The provision for possible credit losses was $43.3 million in 1996,
compared with $40.4 million in 1995. Net charge-offs for the year were $35.2
million or .35% of average loans compared with $21.3 million or .24% in 1995.
As a result, the allowance for possible credit losses was $270.5 million or
2.52% of loans outstanding at December 31, 1996 compared with $262.3 million
or 2.75% at the prior year-end. Nonaccrual loans totaled $58.2 million or
.54% of loans outstanding at the recent year-end, compared with $75.2 million
or .79% a year earlier. Loans past due ninety days or more and accruing
interest totaled $39.7 million at December 31, 1996, up from $17.8 million a
year earlier. The increase in such past due loans resulted mainly from the
inclusion at December 31, 1996 of $16.3 million of one-to-four family
residential mortgage loans serviced by First Empire and repurchased during
1996 from the Government National Mortgage Association. These loans are
covered by guarantees of government agencies. As a result, total
nonperforming loans were $97.9 million at December 31, 1996, compared with
$93.1 million at December 31, 1995. The ratio of the allowance to
nonperforming loans was 276% and 282% at December 31, 1996 and 1995,
respectively. Assets taken in foreclosure of defaulted loans were $8.5
million and $7.3 million at the end of 1996 and 1995, respectively.
Exclusive of the effects of securities transactions, other income rose
17% to $170.3 million in 1996 from $145.1 million in 1995. Higher revenues
associated with mortgage banking and credit card activities contributed to
this increase. Other expense was $409.0 million in 1996, up 9% from $374.4
million in 1995. Expenses associated with expansion of businesses providing
mortgage banking services, indirect automobile loans, credit cards and the
sale of mutual funds and annuities contributed to this increase. Included in
other expense for 1996 is a $7.0 million charge for a special assessment by
the Federal
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<PAGE>
Deposit Insurance Corporation to recapitalize the Savings Association Insurance
Fund.
The rates of return on average total assets and average common
stockholders' equity in 1996 were 1.21% and 17.60%, respectively, compared with
1.14% and 17.16% in 1995. Excluding securities transactions, the rates of
return on assets and common stockholders' equity in 1995 were 1.12% and 16.81%,
respectively.
At December 31, 1996, First Empire had total assets of $12.9 billion,
compared with $12.0 billion a year earlier. Loans and leases, net of unearned
discount, were $10.7 billion at the end of 1996, up from $9.6 billion at
December 31, 1995. Deposits were $10.5 billion and $9.5 billion at December 31,
1996 and 1995, respectively. Total stockholders' equity was $905.7 million or
7.00% of total assets at year-end 1996, compared with $846.3 million or 7.08% a
year earlier. Common stockholders' equity per share was $135.45 at the recent
year-end and $125.33 at December 31, 1995.
In November 1995, First Empire announced a plan to repurchase up to 380,582
shares of its common stock to be held as treasury stock for reissuance upon the
possible future exercise of outstanding stock options. As of December 31, 1996,
First Empire had repurchased 351,520 common shares pursuant to such plan at an
average cost of $239.09.
M&T Bank, N.A. ("M&T"), a wholly-owned subsidiary of First Empire, is
party to a co-branded credit card agreement with Giant of Maryland, Inc.
("Giant"). In October 1996, M&T notified Giant of its intent to terminate the
agreement under its termination provisions. In December 1996, Giant filed a
complaint against M&T in the United States District Court for the District of
Maryland alleging that M&T breached the agreement by attempting to terminate
and that M&T negligently misrepresented certain information provided to
Giant. The complaint seeks interlocutory and permanent injunctive relief,
specific performance for the five-year term of the agreement, and damages for
breach of contract and negligent misrepresentation in the amount of $40
million. An answer has not yet been filed by M&T in the case, but M&T has
denied the allegations in motions practice before the court and is otherwise
vigorously defending the litigation. Management believes that there are
meritorious defenses to the complaint, and that the final disposition of this
litigation and other litigation pending against First Empire or its
subsidiaries in the normal course of business will not be material to First
Empire's consolidated financial position, but at the present time is not in a
position to determine whether such litigation will have a material adverse
effect on First Empire's consolidated results of operations in any future
reporting period.
Certain financial schedules pertaining to the year and quarter ended
December 31, 1996 are attached hereto as Exhibit 99 and are incorporated herein
by reference.
Item 7. Financial Statements and Exhibits.
The following exhibits are filed as a part of this report:
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<PAGE>
Exhibit No.
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99 Financial Schedules (unaudited). Filed herewith.
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 hereunto duly authorized.
FIRST EMPIRE STATE CORPORATION
Date: January 22, 1997 By: /s/ Michael P. Pinto
-------------------------------
Michael P. Pinto
Senior Vice President
and Controller
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<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Report Dated: January 9, 1997 Commission File Number: 1-9861
--------------- ------
FIRST EMPIRE STATE CORPORATION
(Exact name of registrant as specified in its charter)
EXHIBITS
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<PAGE>
EXHIBIT INDEX
Exhibit No.
- -----------
99 Financial Schedules (unaudited).
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<PAGE>
Exhibit No. 99
FIRST EMPIRE STATE CORPORATION
Condensed Consolidated Statement of Income
- -------------------------------------------
<TABLE>
<CAPTION>
Three months ended Twelve months ended
December 31 December 31
Amounts in thousands, ------------------------- ---------------------
except per share 1996 1995 Change 1996 1995 Change
------------------------- ------ --------------------- ------
<S> <C> <C> <C> <C> <C> <C>
Net interest income. . . . . . . . . . . . $ 136,624 124,955 9% $ 531,024 486,424 9%
Less: Provision for
possible credit losses . . . . . . . . . . 11,475 12,025 -5 43,325 40,350 7
Gain (loss) on sales of bank
investment securities. . . . . . . . . . (449) (408) - (37) 4,479 -
Other income . . . . . . . . . . . . . . . 48,090 45,258 6 170,285 145,059 17
Less:
Salaries and employee benefits . . . . . . 54,564 48,197 13 208,342 188,222 11
Other expenses . . . . . . . . . . . . . . 52,518 48,847 8 200,636 186,217 8
-------- -------- -------- --------
Income before income taxes . . . . . . . . 65,708 60,736 8 248,969 221,173 13
Applicable income taxes. . . . . . . . . . 25,288 23,949 6 97,866 90,137 9
-------- -------- -------- --------
Net income.. . . . . . . . . . . . . . . . $ 40,420 36,787 10% $ 151,103 131,036 15%
Taxable-equivalent net
interest income . . . . . . . . . . . . $ 137,853 125,978 9% $ 535,511 491,066 9%
Dividends on preferred stock . . . . . . . $ - 900 -100 $ 900 3,600 -75
Per common share:
Net income
Primary. . . . . . . . . . . . . . . . . $5.70 5.29 8% $ 21.31 18.79 13%
Fully diluted. . . . . . . . . . . . . . 5.68 5.03 13 20.97 17.78 18
Net income excluding
securities transactions
Primary . . . . . . . . . . . . . . . . 5.73 5.33 8 21.31 18.41 16
Fully diluted . . . . . . . . . . . . . 5.71 5.06 13 20.97 17.43 20
Cash dividends. . . . . . . . . . . . . . $ 0.70 0.70 -% $ 2.80 2.50 12%
Common shares outstanding:
Average (1). . . . . . . . . . . . . . . 7,098 6,774 5% 7,048 6,781 4%
Period end . . . . . . . . . . . . . . . 6,686 6,433 4% 6,686 6,433 4%
Performance ratios, annualized
Net income to:
Average total assets. . . . . . . . . . . 1.26% 1.23% 1.21% 1.14%
Average common
stockholders' equity. . . . . . . . . . 18.05% 18.14% 17.60% 17.16%
Yield on average earning assets (2). . . . 8.31% 8.41% 8.32% 8.42%
Cost of interest-bearing liabilities . . . 4.54% 4.74% 4.52% 4.65%
Net interest spread (2). . . . . . . . . . 3.77% 3.67% 3.80% 3.77%
Contribution of interest-free funds. . . . 0.69% 0.69% 0.65% 0.66%
Net interest margin (2). . . . . . . . . . 4.46% 4.36% 4.45% 4.43%
</TABLE>
(1) Includes common stock equivalents
(2) On a fully taxable-equivalent basis
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<PAGE>
FIRST EMPIRE STATE CORPORATION
Condensed Consolidated Balance Sheet
- -------------------------------------
<TABLE>
<CAPTION>
December 31
---------------------------
Dollars in thousands 1996 1995 Change
----------- ------------ -------
ASSETS
<S> <C> <C> <C>
Cash and due from banks. . . . . . . . . . . . . . . . . . . . . . . . $ 324,659 363,119 -11%
Money-market assets. . . . . . . . . . . . . . . . . . . . . . . . . . 209,968 136,209 54
Investment securities. . . . . . . . . . . . . . . . . . . . . . . . . 1,571,698 1,769,295 -11
Loans and leases, net of unearned discount . . . . . . . . . . . . . . 10,722,123 9,555,849 12
Less: Allowance for possible credit losses . . . . . . . . . . . . . 270,466 262,344 3
----------- ------------
Net loans and leases . . . . . . . . . . . . . . . . . . . . . . . . 10,451,657 9,293,505 12
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385,933 393,774 -2
----------- ------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,943,915 11,955,902 8%
----------- ------------
----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits at U.S. offices. . . . . . . . . . . . . . . . . . . . $ 1,352,929 1,184,359 14%
Other deposits at U.S. offices . . . . . . . . . . . . . . . . . . . . 8,968,324 8,129,913 10
Deposits at foreign office . . . . . . . . . . . . . . . . . . . . . . 193,236 155,303 24
----------- ------------
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,514,489 9,469,575 11
Short-term borrowings. . . . . . . . . . . . . . . . . . . . . . . . . 1,150,187 1,273,206 -10
Accrued interest and other liabilities . . . . . . . . . . . . . . . . 195,578 174,077 12
Long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . 178,002 192,791 -8
----------- ------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 12,038,256 11,109,649 8
Stockholders' equity (1) . . . . . . . . . . . . . . . . . . . . . . . 905,659 846,253 7
----------- ------------
Total liabilities and stockholders' equity . . . . . . . . . . . . . $ 12,943,915 11,955,902 8%
----------- ------------
----------- ------------
</TABLE>
(1) Includes the after-tax impact of net unrealized losses on investment
securities classified as available for sale of $2.5 million at December 31, 1996
and $3.2 million at December 31, 1995.
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<PAGE>
FIRST EMPIRE STATE CORPORATION
Condensed Consolidated Average Balance Sheet
- ---------------------------------------------
<TABLE>
<CAPTION>
Three months ended Twelve months ended
December 31 December 31
------------------------- ------------------------
Dollars in thousands 1996 1995 Change 1996 1995 Change
--------- ----------- ------ ---------- --------- ------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Money-market assets. . . . . . . . . . . . $122,201 171,979 -29% $123,523 185,688 -33%
Investment securities. . . . . . . . . . . 1,659,285 1,898,039 -13 1,806,250 2,035,045 -11
Loans and leases,
net of unearned discount . . . . . . . . . 10,526,960 9,383,906 12 10,113,947 8,857,222 14
------------ ------------ ------------ ------------
Total earning assets . . . . . . . . . . 12,308,446 11,453,924 7 12,043,720 11,077,955 9
Other assets . . . . . . . . . . . . . . . 419,604 444,310 -6 434,946 406,799 7
------------ ------------ ------------ ------------
Total assets . . . . . . . . . . . . . . $ 12,728,050 11,898,234 7% $ 12,478,666 11,484,754 9%
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits . . . . . . . . $9,391,917 8,275,220 13% $8,991,125 7,927,687 13%
Borrowings . . . . . . . . . . . . . . . . 1,067,353 1,501,094 -29 1,321,767 1,569,514 -16
------------ ------------ ------------ ------------
Total interest-bearing liabilities . . . . 10,459,270 9,776,314 7 10,312,892 9,497,201 9
Demand deposits . . . . . . . . . . . . . 1,216,588 1,148,184 6 1,168,987 1,093,305 7
Other liabilities. . . . . . . . . . . . . 161,330 148,917 8 133,654 111,728 20
------------ ------------ ------------ ------------
Total liabilities. . . . . . . . . . . . 11,837,188 11,073,415 7 11,615,533 10,702,234 9
Stockholders' equity
Preferred. . . . . . . . . . . . . . . - 40,000 -100 9,618 40,000 -76
Common . . . . . . . . . . . . . . . . 890,862 784,819 14 853,515 742,520 15
------------ ------------ ------------ ------------
Total stockholders' equity . . . . . . . 890,862 824,819 8 863,133 782,520 10
------------ ------------ ------------ ------------
Total liabilities and stockholders'
equity. . . . . . . . . . . . . . . . $ 12,728,050 11,898,234 7% $ 12,478,666 11,484,754 9%
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
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