One M&T Plaza
P.O. Box 223
Buffalo, New York 14240-0223
Telephone: (716) 842-5445
Fax: (716) 842-5177
Incorporated: 1969 as First Empire State Corporation
Assets: $10.36 billion
Stock Exchanges: American
SICs: 6712 Bank Holding Companies; 6021 National Commercial Banks
A major banking force in New York State, First Empire State Corporation is the holding company for two primary banking subsidiaries, Manufacturers and Traders Trust Company, and The East New York Savings Bank. Headquartered in Buffalo, New York, First Empire concentrated its expansion in upstate New York throughout the 1980s and early 1990s, intent on first consolidating its position in already established markets before broadening its geographic scope of influence to new markets. By the 1990s, this methodical approach toward growth had extended the company's presence southward from upstate New York to New York City, where its East New York Savings Bank operated 19 branch offices. Through its Manufacturers and Traders Trust Company, First Empire maintained 106 branch offices throughout western New York State, 13 offices in the Hudson Valley region, as well as offices in New York City, Albany, Syracuse, and Nassau, the Bahamas.
More than a century before First Empire was incorporated, one of its predecessor, Manufacturers and Traders Bank, began operating in New York under a charter granted in 1856. Manufacturers and Traders Bank would eventually operate under the charter granted Fidelity Trust & Guaranty Co. in 1892 in Buffalo, New York. A series of name changes ultimately resulted in the adoption of Manufacturers and Traders Trust Company (M&T) name in 1933. With these name changes came several mergers with other banks in upstate New York--all occurring the 1920s--that saw M&T bolster its presence in the Buffalo and Niagara Falls region. By the early 1930s, after nearly 80 years of existence, M&T had established only a modest record of growth, acquiring two banks--Central Park Bank of Buffalo and the Riverside National Bank of Buffalo--and completing two mergers. Before the decade was through, M&T would make an additional acquisition, the Falls National Bank of Niagara Falls in 1939. Its first great surge of expansion, however, would wait until after the conclusion of World War II, when, in the first three years following the war, M&T merged with eight banks.
Aside from any particular strategy for growth each generation of M&T management may have employed, there was one legal barrier applicable to M&T that effectively restrained even the most aggressive acquirer: a New York state law stipulated that a bank could not expand through the acquisition of other banks outside its home district. Adopted in the early 1930s, the restrictive district legislation divided New York into nine banking districts; M&T was confined to one, legally bound to limit its acquisitions to the region surrounding Buffalo and barred from extending its presence beyond the state's boundaries. A few statewide banking concerns did exist at the time, operating under holding companies formed before the early 1930s, such as Marine Midland Corp., based in Buffalo. However, for the majority of the state's banks, widespread growth was essentially impossible.
In 1961, the dynamics guiding bank growth changed with the promulgation of a state law authorizing, once approved by the New York State banking department and federal regulators, the formation of statewide bank holding companies. M&T was one of the first banks to seek such authorization, joining, in 1961, six other banks in a bid to form a holding company. Led by Morgan Guaranty Trust Co., the seven banks gained approval by the New York State banking department, but their union was rejected on anticompetitive grounds by the Federal Reserve Board.
Though unsuccessful, the proposition led to further holding company proposals by other banks throughout the state, as large and small groups of banks banded together and then waited for the all-important nod of approval from the appropriate governing bodies. Three of the banks included in the group headed by Morgan Guaranty combined with other banks to successfully form a holding company, and four such companies were formed in the two years leading up to M&T's next chance at creating a holding company, in 1967. That year, M&T announced its intentions to join with two other banks, National Commercial Bank & Trust Co., based in Albany, New York, and First Trust & Deposit Co., of Syracuse, New York, to form a holding company with the name First Empire State Corporation.
M&T at that time was Buffalo's second largest bank, ranking behind Marine Midland Corp., which had been operating statewide for roughly the past 30 years. With 61 banking offices, more than $1 billion in resources, and approximately $850 million in deposits, M&T was the largest of the three now seeking state and federal approval, closely followed by National Commercial and far ahead of First Trust & Deposit. Six months after the announcement, in May 1968, a fourth bank joined the bid for approval, the First National Bank of Yonkers, with $112 million in deposits, roughly equal to the financial magnitude of First Trust & Deposit. Although small in comparison to the much larger deposit totals held by M&T and National Commercial, the addition of First National brought the total deposits of the four banks to $1.95 billion, which would make First Empire State Corporation the fourth largest bank holding company in New York and the seventh largest in the United States.
Slightly more than a year later, however, in August 1969, the Federal Reserve Board rejected First Empire's bid, citing the same concerns that had derailed M&T's first attempt eight years earlier. Ruling against the combination in a four-to-three vote, the Federal Reserve Board stated, as reported by the Wall Street Journal, that the proposed First Empire State Corp. "would foreclose significant potential competition in upstate areas of New York." In addition, the four board members who voted against it stated that if either of the two larger banks were excluded from the proposal then the merger "would be highly desirable." Three months later First Empire was incorporated as a holding company, not as a combination of banks, but solely for the purpose of acquiring M&T, the two earlier bids having dissuaded M&T's management from seeking a merger suitable to the Federal Reserve Board. First Empire then acquired the outstanding shares of M&T before the year was through.
M&T served as First Empire's principal operating subsidiary and held two small, wholly owned subsidiaries itself: M&T Capital Corporation, a business investment company, and M&T Discount Corporation, a dealer in banker's acceptances and certificates of deposits. First Empire first used its ability to acquire banks outside its home district in 1972, when it acquired Hambro American Bank & Trust Co., with $157 million in assets, from Hambros Bank Ltd., based in London. The Hambro purchase gave First Empire a foothold in the New York City market, where the Hambro name was changed to First Empire Bank--New York, and extended First Empire's presence into Europe, where Hambro had operated an office in Paris. Later that year First Empire acquired First National Bank of Highland, with $80 million in assets and five branch offices. The acquisition gave the rapidly growing holding company, now three years after its creation, a solid position in three of New York's nine banking districts.
Though it took several years for First Empire to assume the role of acquirer, the purchases completed in 1972 sparked an expansionary period that increasingly made the company an international banking concern. In 1973, First Empire opened a subsidiary of First Empire Bank--New York, named First Empire Bank International N.V., on Curacao in the Netherland Antilles. Later that year the company formed First Empire Overseas Corporation and two other overseas subsidiaries, First Empire Financial Services, Ltd., and First Empire Development Company, Ltd.
As First Empire increased its international presence, lending more money overseas and widening its geographic scope, an individual who would play an integral role in First Empire's future also was focusing on the international aspects of banking. The future chairman, president, and chief executive officer of First Empire, Robert G. Wilmers, was heading the efforts of the venerable J. P. Morgan & Co. in international private banking, a position he had been promoted to after running Morgan's bank in Belgium. Wilmers left J. P. Morgan in 1980, after ten years of service there, to start his own investment and consulting firm. It was through the course of this work that he first came in contact with First Empire.
What brought First Empire to Wilmers' attention did not bode well for the bank, now fully involved in international lending: Wilmers was conducting a search for under-performing banks possessing assets between $1 billion and $3 billion, criteria applicable to First Empire. By 1982, two years into his stint as an investor and consultant, Wilmers had become a director of First Empire, a company plagued by heavy international loan losses. When the chief executive of First Empire resigned the following year, as the pernicious effects of the loan losses mounted, the company's board of directors elected Wilmers, known for his conservative approach in financial matters, chairman of First Empire.
Wilmers responded to the bank's troubles by taking the bank in a different direction, a direction that started overseas and pointed back to upstate New York. In the course of a decade, First Empire, confined for more than a century to one banking district in northern New York, had expanded considerably beyond its original boundaries of operation, becoming a bank with decided international ambitions. This expansion, however, led to the bank's current troubles, the solution for which, as Wilmers perceived it, was to revert First Empire to strictly a regional banking concern. By 1985, no more than two years after his election as First Empire's chairman, Wilmers had realized his goal of taking the company back to its roots; now First Empire stood as a bank sharply focused on mortgage lending in northern New York.
This new strategy, a revamped version of M&T's operating philosophy, called for market consolidation before entry into new markets, an approach that enabled First Empire to bar out-of-state banks and the larger banks located downstate in New York City from entering its core area of activity. In 1987, an acquisition that represented an exception to this rule, the purchase of East New York Savings Bank, gave First Empire branch offices in New York City and added $1.6 billion in deposits. The addition of East New York Savings, which now became, along with M&T, one of First Empire's two primary subsidiaries, was an integral contribution to the company's growth during the late 1980s. During that span the holding company doubled its assets from roughly $4.5 billion in 1985 to $9 billion by the beginning of the 1990s.
As First Empire was recording this robust growth, other banks, particularly savings and loan institutions, were nearing a point of crisis that would predicate First Empire's expansion in the early 1990s. The late 1980s and early 1990s witnessed the devastation of the savings and loan industry, engendered by imprudent lending practices and exacerbated by a nationwide recession. Conversely, First Empire, under the conservative stewardship of Wilmers, stood on solid ground during these turbulent years, as several financial institutions within its region of operation collapsed. Poised to capitalize during a time characterized by a glut of properties and a limited number of buyers, First Empire did so, acquiring three failed savings and loan institutions in the first two years of the 1990s.
The first acquisition came in early 1990, the purchase of failed Monroe Savings Bank, with branch offices in Buffalo and Rochester. The absorption of Monroe Savings added $482 million in deposits to First Empire's deposit total, a figure that increased considerably with the company's next acquisition, in September 1990, of Empire of America. Empire of America gave First Empire an additional $1.2 billion in deposits from an acquisition unlike any of the company's recent purchases. The acquisition of Empire of America was made through a joint bid with one of First Empire's major competitors, Albany-based KeyCorp, and led to another, much larger First Empire-KeyCorp acquisition the following year of Goldome, a savings bank with $11.4 billion in assets. First Empire's share of the Goldome purchase brought the company $2.1 billion in deposits, 14 branch offices, and significantly reshaped the banking market in northern New York. Before the addition of Goldome's resources, First Empire controlled 23.1 percent of the banking market in Erie and Niagara counties, a market share that jumped to 34.6 percent after the purchase and vaulted First Empire from the second largest depositor in the area to the number one position.
First Empire's acquisitive activity continued in 1992, still fueled by a depressed market filled with failed banks and few buyers. In July, the company completed another joint bid acquisition, this time with Syracuse-based Onbancorp Inc., that divided four bank subsidiaries owned by Midlantic Corp. between First Empire and Onbancorp. First Empire's share of the $201 million bid gave the company two commercial banks, Central Trust Company and Endicott Trust Company, both of which were merged into M&T. Central Trust, based in Rochester, increased First Empire's deposit total by $1 billion, and Endicott Trust, based in Endicott, New York, a property First Empire had originally attempted to purchase in 1988 and now obtained for $50 million below the 1988 asking price, added eight branch offices and $276 million in deposits.
First Empire nearly doubled in size between 1990 and 1992, a frenetic period of growth that made 1993 the first year since 1989 that the company completed a year with the same corporate structure with which it had begun. At the conclusion of 1993, First Empire's deposits had reached $7.35 billion, its assets had climbed to $10.36 billion, and the company's net income had soared from $41.3 million in 1989 to $102 million in 1993. Strengthened considerably by an economic climate that had negatively affected many other financial institutions during the late 1980s and early 1990s, First Empire charted its course for the remainder of the 1990s, emboldened by the results of the company's transformation into a more regionally focused network of banks.
Principal Subsidiaries: Manufacturers and Traders Trust Company; The East New York Savings Bank; M&T Capital Corporation; M&T Mortgage Corporation; M&T Securities, Inc.; M&T Financial Corporation.
"First Empire State Corporation," Wall Street Transcript, January 1, 1973, pp. 31, 345.
"First Empire State's Holding Firm Plan Is Spurned by Federal Reserve Board, 4--3," Wall Street Journal, August 27, 1969, p. 7.
"Fourth New York Bank Agrees to Join Planned Upstate Holding Firm," Wall Street Journal, May 22, 1968, p. 4.
Hartley, Tom, "Rochester Expansion Ends M&T, Key 'Marriage of Convenience,"' Business First, March 2, 1992, p. 1; "Two Banks Become Darlings of Wall Street," Business First, June 17, 1991, p. 17; "The Verdict Is In on Takeover of Goldome, Empire," Business First, December 2, 1991, p. 3.
"Holding Company Set by 3 Upstate New York Banks," Wall Street Journal, December 7, 1967, p. 13.
Leander, Tom, "First Empire's Wilmers: Blunt Talk, Big Profits," American Banker, December 10, 1991, p. 1.
McNatt, Robert, "Parental Help Turns into Profits for Thrift," Cain's New York Business, April 13, 1992, p. 39.
McRae, Ron, "First Empire Emerging from KeyCorp's Shadow," American Banker, March 18, 1992, p. 9.
Source: International Directory of Company Histories, Vol. 11. St. James Press, 1995.