<PAGE> 1
Exhibit 99.5
M&T BANK CORPORATION
PRO FORMA CONDENSED COMBINED BALANCE SHEET
(DOLLARS IN THOUSANDS)
(UNAUDITED)
The following unaudited pro forma condensed combined balance sheet gives
effect to the acquisition by M&T Bank Corporation ("M&T") of Keystone Financial,
Inc. and subsidiaries ("Keystone") using the purchase method of accounting
assuming the acquisition was consummated on June 30, 2000. Keystone was acquired
by M&T on October 6, 2000.
<TABLE>
<CAPTION>
June 30, 2000
---------------------------------------------------------------------------------
Pro forma
M&T Keystone adjustments Pro forma
------------------------------------------------ -----------------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 545,423 199,906 $ 745,329
Money-market assets 100,744 89,539 190,283
Investment securities 2,865,259 1,666,136 (12,389) (2) 4,519,006
Loans and leases 17,110,535 4,809,658 (20,999) (3) 21,899,194
Unearned discount (161,585) (35,499) (197,084)
Allowance for credit losses (320,165) (61,604) (381,769)
------------------------------------------------ -----------------
Loans and leases, net 16,628,785 4,712,555 (20,999) 21,320,341
------------------------------------------------ -----------------
Premises and equipment 161,367 116,924 (18,794) (4) 259,497
Goodwill and core deposit intangible 624,648 52,109 568,890 (1)-(10) 1,245,647
Accrued interest and other assets 819,874 201,764 19,138 (5) 1,040,776
------------------------------------------------ -----------------
Total assets $ 21,746,100 7,038,933 535,846 $ 29,320,879
================================================ =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits $ 12,681,798 4,330,294 7,504 (6) $ 17,019,596
Short-term borrowings 2,604,919 431,199 3,036,118
Long-term borrowings 1,774,816 859,147 368,522 (1)(7) 3,002,485
------------------------------------------------ -----------------
Interest-bearing liabilities 17,061,533 5,620,640 376,026 23,058,199
------------------------------------------------ -----------------
Non-interest bearing deposits 2,541,690 708,849 3,250,539
Other liabilities 290,860 143,132 57,683 (8) 491,675
------------------------------------------------ -----------------
Total liabilities 19,894,083 6,472,621 433,709 26,800,413
------------------------------------------------ -----------------
Common equity 1,852,017 566,312 102,137 (9) 2,520,466
------------------------------------------------ -----------------
Total stockholders' equity 1,852,017 566,312 102,137 2,520,466
------------------------------------------------ -----------------
Total liabilities and stockholders' equity $ 21,746,100 7,038,933 535,846 $ 29,320,879
================================================ =================
</TABLE>
See accompanying notes to pro forma condensed combined balance sheet.
<PAGE> 2
M&T BANK CORPORATION
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
The following unaudited pro forma condensed combined statement of
income for the six-month period ended June 30, 2000 gives effect to M&T's
acquisition of Keystone using the purchase method of accounting assuming the
acquisition was consummated on January 1, 1999. Keystone was acquired by M&T on
October 6, 2000.
<TABLE>
<CAPTION>
For the six months ended June 30, 2000
--------------------------------------------------------------------
Pro forma
M&T Keystone adjustments Pro forma
--------------------------------------- -------------
Interest income
<S> <C> <C> <C> <C>
Loans and leases, including fees $ 721,237 200,181 813 (11) $ 922,231
Money-market assets 13,202 3,296 16,498
Investment securities
Fully taxable 66,721 46,130 3,888 (12) 116,739
Exempt from federal taxes 5,158 6,762 11,920
--------------------------------------- -------------
Total interest income 806,318 256,369 4,701 1,067,388
--------------------------------------- -------------
Interest expense
Deposits 270,382 94,918 (1,411) (13) 363,889
Short-term borrowings 81,985 10,108 92,093
Long-term borrowings 60,070 26,123 15,873 (14)(15) 102,066
--------------------------------------- -------------
Total interest expense 412,437 131,149 14,462 558,048
--------------------------------------- -------------
Net interest income 393,881 125,220 (9,761) 509,340
Provision for credit losses 15,000 8,425 23,425
--------------------------------------- -------------
Net interest income after provision for credit losses 378,881 116,795 (9,761) 485,915
Other income
Mortgage banking revenues 29,531 3,986 33,517
Service charges on deposit accounts 41,414 9,798 51,212
Trust income 19,741 13,936 33,677
Brokerage services income 17,462 4,053 21,515
Trading account and foreign exchange gains 513 - 513
Gain on sales of bank investment securities 26 204 230
Other revenues from operations 36,693 17,606 54,299
-------------------------- -------------
Total other income 145,380 49,583 194,963
Other expense
Salaries and employee benefits 153,639 52,801 206,440
Equipment and net occupancy 35,702 21,043 (2,082) (16) 54,663
Printing, postage and supplies 8,716 3,832 12,548
Amortization of goodwill and core deposit
intangible 28,510 2,102 23,198 (17) 53,810
Other costs of operations 79,740 30,925 525 (18) 111,190
--------------------------------------- -------------
Total other expense 306,307 110,703 21,641 438,651
--------------------------------------- -------------
Income before income taxes 217,954 55,675 (31,402) 242,227
Income taxes 78,181 15,626 (7,927) (19) 85,880
--------------------------------------- -------------
Net income $ 139,773 40,049 (23,475) $ 156,347
======================================= =============
Net income per common share (20)
Basic $ 1.82 0.82 $ 1.69
Diluted $ 1.77 0.82 $ 1.65
Average common shares outstanding (20)
Basic 76,872 48,862 15,900 92,772
Diluted 79,049 48,930 15,945 94,994
</TABLE>
See accompanying notes to pro forma condensed combined statements of income.
<PAGE> 3
M&T BANK CORPORATION
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
The following unaudited pro forma condensed combined statement of income
for the year ended December 31, 1999 gives effect to M&T's acquisition of
Keystone using the purchase method of accounting assuming the acquisition was
consummated on January 1, 1999. Keystone was acquired by M&T on October 6, 2000.
<TABLE>
<CAPTION>
For the year ended December 31, 1999
--------------------------------------------------------------------------
Pro forma
M&T Keystone adjustments Pro forma
--------------------------------------- ---------------
<S> <C> <C> <C> <C> <C>
Interest income
Loans and leases, including fees $ 1,323,262 379,538 3,286 (11) $ 1,706,086
Money-market assets 27,731 5,031 32,762
Investment securities
Fully taxable 118,741 89,357 8,608 (12) 216,706
Exempt from federal taxes 8,897 12,105 21,002
----------------------------------------- ---------------
Total interest income 1,478,631 486,031 11,894 1,976,556
----------------------------------------- ---------------
Interest expense
Deposits 506,476 173,942 (5,710) (13) 674,708
Short-term borrowings 104,911 15,844 120,755
Long-term borrowings 107,847 38,872 31,973 (14)(15) 178,692
----------------------------------------- ---------------
Total interest expense 719,234 228,658 26,263 974,155
----------------------------------------- ---------------
Net interest income 759,397 257,373 (14,369) 1,002,401
Provision for credit losses 44,500 23,376 67,876
----------------------------------------- ---------------
Net interest income after provision for
credit losses 714,897 233,997 (14,369) 934,525
Other income
Mortgage banking revenues 71,819 12,765 84,584
Service charges on deposit accounts 73,612 19,173 92,785
Trust income 40,751 26,422 67,173
Brokerage services income 27,140 8,158 35,298
Trading account and foreign exchange gains 315 - 315
Gain (loss) on sales of bank investment
securities 1,575 (338) 1,237
Other revenues from operations 67,163 39,469 106,632
---------------------------- ---------------
Total other income 282,375 105,649 388,024
Other expense
Salaries and employee benefits 284,822 106,850 391,672
Equipment and net occupancy 73,131 39,272 (4,165) (16) 108,238
Printing, postage and supplies 17,510 8,079 25,589
Amortization of goodwill and core deposit
intangible 49,715 4,324 50,585 (17) 104,624
School districts' settlement expense - 43,658 43,658
Special charges - 26,917 26,917
Other costs of operations 153,780 61,878 1,037 (18) 216,695
----------------------------------------- ---------------
Total other expense 578,958 290,978 47,457 917,393
----------------------------------------- ---------------
Income before income taxes 418,314 48,668 (61,826) 405,156
Income taxes 152,688 11,592 (15,507) (19) 148,773
----------------------------------------- ---------------
Net income $ 265,626 37,076 (46,319) $ 256,383
========================================= ===============
Net income per common share (20)
Basic $ 3.41 0.76 $ 2.73
Diluted $ 3.28 0.75 $ 2.65
Average common shares outstanding (20)
Basic 78,003 48,856 15,900 93,903
Diluted 80,905 49,186 15,997 96,902
</TABLE>
See accompanying notes to pro forma condensed combined statements of income.
<PAGE> 4
NOTES TO PRO FORMA
CONDENSED COMBINED BALANCE SHEET (UNAUDITED)
Adjustments used in the preparation of the unaudited pro forma condensed
combined balance sheet are as follows:
(1) The unaudited pro forma condensed combined financial information
assumes that the funding of the cash consideration of $374,371,000 is
provided by issuance of subordinated notes payable.
(2) Adjustment to record acquired investment securities at estimated market
value.
(3) Adjustment to record acquired loans at estimated market value.
(4) Adjustment to record acquired premises and equipment at estimated market
value. The adjustment includes writedowns associated with duplicate
facilities, equipment and other fixed assets of Keystone.
(5) Reflects adjustments to record net pension plan assets, mortgage
servicing rights and other assets at estimated fair value.
(6) Adjustment to record interest-bearing deposits of Keystone at estimated
fair value.
(7) Adjustment of $5,849,000 to record long-term borrowings of Keystone at
estimated fair value.
(8) Adjustments to record fees for investment bankers and other professional
services associated with the merger, severance benefits associated with
the elimination of employment positions at Keystone, the estimated net
tax credits associated with adjustments to reflect the fair value of net
assets acquired, and other miscellaneous adjustments.
(9) Reflects issuance of 15,900,292 shares of M&T common stock with a value
of $659,862,000, estimated fair value of Keystone stock options
converted into M&T stock options of $8,587,000, and the elimination of
Keystone's June 30, 2000 equity of $566,312,000.
(10) Represents incremental core deposit intangible and goodwill.
<PAGE> 5
NOTES TO PRO FORMA
CONDENSED COMBINED STATEMENTS OF INCOME (UNAUDITED)
Adjustments used in the preparation of the unaudited proforma condensed combined
statements of income are as follows:
<TABLE>
<CAPTION>
Six months
ended Year ended
June 30, 2000 December 31, 1999
------------- -----------------
(dollars in thousands)
<C> <C> <C>
(11) Net accretion of discounts related to loans and leases $ 813 3,286
using a level-yield method over the estimated remaining
terms to maturity of the loans and leases.
(12) Accretion of discount related to investment securities on a 3,888 8,608
straight-line basis over the estimated weighted-average
remaining life of the securities.
(13) Amortization of the mark-to-market adjustments related to (1,411) (5,710)
deposits using an effective interest method over the
remaining terms to maturity of the deposits.
(14) Reflects the estimated increase in interest expense from 15,012 30,025
the assumed issuance of $374,371,000 of subordinated
notes payable to fund the cash portion of the merger
consideration at an effective interest rate of 8.02%.
(15) Amortization of mark-to-market adjustments to long-term 861 1,948
borrowings on a straight-line basis over the remaining
terms to maturity of the borrowings.
(16) Adjustment to depreciation expense related to mark-to-market (2,082) (4,165)
adjustments on premises and equipment.
(17) Additional amortization on an accelerated basis for core deposit
intangible and on a straight-line basis for goodwill.
</TABLE>
<TABLE>
<CAPTION>
Estimated life
(in years)
-------------------
<S> <C> <C>
Core deposit intangible 7 11,864 28,017
Goodwill 20 11,334 22,568
------ ------
Total amortization 23,198 50,585
(18) Amortization on an accelerated basis of the mark-to-market 525 1,037
adjustment on mortgage servicing rights.
(19) Income tax benefits on pro forma adjustments (other than amortization of (7,927) (15,507)
goodwill) computed using a 39.5% tax rate.
(20) The pro forma net income per common share amounts and average common
shares outstanding include the effect of the adjustments described above
and the issuance of 15,900,292 shares of M&T common stock. The
calculation of pro forma diluted earnings per share also includes the
dilutive effect of Keystone stock options converted into M&T stock
options by application of the "treasury stock method" of accounting.
</TABLE>
