Home > Banking Information & Regulation > Public Meeting Transcripts > PMT - Agendas July 9-10, 1998
Public Meeting Transcripts
Public Meeting Regarding NationsBank and BankAmerica
Thursday, July 9, 1998
Transcript of Panel Nine
247 1 MS. SMITH: All right. Why don't we start with 2 Mr. Shapiro. 3 MR. SHAPIRO: I don't think it's often that a 4 small public agency such as ours can custom design our own 5 community lending program. That's exactly what we did 6 with NationsBank's help. I'm Harold Shapiro, the 7 Executive Director of Catawba Regional Planning Council 8 and it's affiliate Development Corporation. We are the 9 Council of Governments for four counties and 21 towns and 10 cities of the north central section of South Carolina. 11 One of our counties is within the Charlotte 12 metropolitan area, the remaining three are rural and 13 relatively poor. To put our area in perspective, the 14 approximate population of our largest county is about 15 145,000 and our largest city is 50,000. 16 As the Council of Governments, we provide a wide 17 range of services and key among these is community and 18 economic development in the form of project planning, 19 grants management and lending. Our lending is conducted 20 primarily through our public nonprofit development 21 corporation. We use resources such as the SBA 504 program 22 and the EDA's revolving loan fund. Since 1982, our 23 development corporation has made over 90 loans totaling 24 $60 million, our borrowers have created in excess of a 25 thousand jobs. 26 My purpose today is to tell you about . 248 1 NationsBank's support of our lending activities. 2 NationsBank involvement is varied. NationsBank is 3 represented on the Development Corporation's board of 4 directors by Mr. Randy Imler, his bankers' experience and 5 creative approach to community lending have been 6 invaluable. 7 In related activities, NationsBank has helped 8 promote our lending services by providing funding for 9 promotional materials. It has helped sponsor the first of 10 a planned series of business seminars such as the one 11 recently held to promote child care facilities in 12 low-income areas. 13 NationsBank has also enabled us to start a 14 community lending program which I first mentioned. This 15 program offers micro loans to low-income residents for 16 small business development and for homeowner repairs. 17 Our community lending program began one year ago 18 with a $400,000 three percent interest loan from 19 NationsBank. In a truly collaborative effort, its bankers 20 and our staff developed a region-wide lending strategy to 21 serve the needs of low-income residents. These loans 22 funds are available for use throughout our region 23 regardless of whether NationsBank has a presence or not. 24 While other banks may eventually participate in 25 this community lending program, NationsBank was the first 26 to commit. Of the other banks expressing interest, not . 249 1 one has come close to matching NationsBank's funding. 2 Our community lending program is successful, 3 loans ranging from $1,000 to $50,000 are made. To date, 4 over one-third has been lent to help low-income residents 5 establish businesses and make essential home repairs. 6 Although these loans are open to all applicants meeting 7 low-income guidelines, all of our business loans to date 8 have gone to minority or women owners. 9 Is NationsBank's effort unique to our own area? 10 We believe community participation is part of the bank's 11 general corporate culture. Locally, bankers from 12 NationsBank are prominently involved in numerous community 13 and cultural causes. Also, in checking with some of our 14 counterparts within South Carolina, we have found that 15 NationsBank is active in community economic development 16 lending in other areas of the state. 17 Our experience in working with NationsBank may 18 have some wider implications. Although our agency is an 19 independent entity with its own board and staff, we also 20 are part of a nationwide network of similar organizations. 21 Many of these have experience in operating revolving loan 22 funds and the like. These organizations generally have a 23 practical understanding of local economic and community 24 development needs. Rural areas of our country, in 25 particular, rely heavily on such agencies to provide 26 needed assistance, including community and public sector . 250 1 lending. 2 I believe this network represented through 3 organizations such as the National Association of 4 Development Organizations would welcome the opportunity to 5 assist national banking institutions in partnering with 6 their community lending program. 7 In closing, I want to emphasize that our strong 8 testament of support for NationsBank comes from the 9 history of our working relationship. We hope our example 10 provides insight into NationsBank's community lending 11 activity. Thank you for this opportunity. 12 MS. SMITH: Thank you. Mr. Reid. 13 MR. REID: Thank you, Madam Chairman. My name is 14 Donnell Reid, I'm the President of Gateway National Bank 15 in St. Louis, Missouri, one of 33 African American banks 16 throughout the United States. Our bank is based in 17 St. Louis, the gateway to the west and the home of Mark 18 McGuire, the man that was destined to eclipse Babe Ruth's 19 record in 1998. 20 But I come today to lend my voice to those in 21 support of the merger of NationsBank and Bank of America. 22 Our company has been intimately involved with NationsBank 23 and several predecessor banks. The state of Missouri ten 24 years ago had over some 700 different banks. And we have 25 witnessed throughout the state extensive mergers and 26 acquisitions, so we are fully aware of what happens and . 251 1 the anxiety that comes with that. 2 I can tell you, however, that our experience with 3 NationsBank, its acquired Boatmen's National Bank and its 4 acquired Sovran National Bank and its acquired First 5 National Bank of St. Louis has been extraordinary. 6 When our bank was formed 33 years ago, it was 7 First National Bank that provided the management 8 assistance and the financial assistance that we needed to 9 get started. It was First National Bank that provided 10 managers to assist us in running our bank. 11 When they were acquired by Boatmen's Bank, it was 12 Boatmen's Bank that provided additional capital and 13 continued the support provided by First National Bank some 14 20 years ago. When NationsBank acquired Boatmen's Bank, 15 we were concerned as to whether or not this relationship 16 would continue. We were pleasantly surprised that not 17 only has it continued but more has been done. 18 NationsBank has played a very instrumental role 19 in many aspects of economic activity in St. Louis. Not 20 only has it provided additional capital to our bank, it 21 has provided financial and managerial support to our bank. 22 But NationsBank has become an intimate part of the fabric 23 of our entire community. If you look at what's happening 24 with our school systems, NationsBank is involved. If you 25 look at what is happening to development and redevelopment 26 throughout the community, NationsBank is involved. If you . 252 1 look at what is happening to the resurgence of our 2 downtown which is vital to our community, NationsBank is 3 involved. If you look at what is happening to the 4 suburban communities, the small towns, all of the 5 different areas of St. Louis, which is a two and a half 6 million dollar community, NationsBank is intimately 7 involved. 8 For those who have some concerns about the 9 merger, I can assure you that if NationsBank comes aboard 10 you will find many, many more benefits than you can 11 possibly imagine. Let me just cite a few of the benefits 12 that NationsBank and its predecessor has provided our 13 small $27 million bank. 14 When we were formed three decades ago, they were 15 there providing all sorts of assistance. When we needed 16 additional capital required by the regulators, it was 17 NationsBank that pulled together local companies to make 18 sure we had the capital we needed. Any time there was 19 assistance needed, whether operationally or managerially, 20 NationsBank is always there for us. Whenever we need 21 assistance on our investments, it's NationsBank we turn 22 to. Whenever we need to make decisions on capital 23 expenditures, it's NationsBank that advises us. We are 24 currently exploring the possibility of forming a CDFI in 25 St. Louis and it is NationsBank that is leading the way. 26 NationsBank was also very, very instrumental two . 253 1 years ago when we, like so many other African American 2 banks, needed to broaden our loan involvement. 3 NationsBank came forward and sold us loans at a very 4 attractive rate to enable us to double our outstanding 5 loans, and it began a program with us, as well as other 6 minority banks across the country, in providing loans. 7 This company has been vital to our success every 8 step of the way. And I can assure those of you who may 9 have some concerns, that with NationsBank involved in your 10 community, you will find benefits more than disadvantages. 11 Thank you very much. 12 MS. SMITH: Thank you. Mr. King. 13 MR. KING: Good afternoon. My names is Charles 14 King from Little Rock, Arkansas. Donnell, while we don't 15 have a Mark McGuire or even have a major league team in 16 Arkansas, we do have a guy by the name of Bill Clinton 17 that we're real proud of, too, so I'll get in my local 18 plug. 19 Good afternoon. I do bring you greetings this 20 afternoon from Arkansas. My name is Charles King and I'm 21 the Executive Director of the Arkansas Regional Minority 22 Supplier Development Council, Incorporated. The Minority 23 Supplier Development Council is the oldest and largest 24 minority business advocacy group in Arkansas and I'm here 25 today on behalf of those minority businesses and the 26 minority community across the great state of Arkansas to . 254 1 unequivocally give our support and endorsement of 2 NationsBank's merger efforts. 3 Arkansas is a very small state with many needs in 4 the arena of minority economic development. While we 5 share with the rest of the country, our number one need 6 being access to capital, our needs are much deeper. 7 In Arkansas, prior to the arrival of NationsBank 8 in the fourth quarter of 1997, minority businesses had 9 little opportunity to do business with the financial and 10 banking entities. In fact, the procurement of goods and 11 services by banks from minority businesses was limited to 12 janitorial services in the bank lobby only. No 13 contractors served as primes to build or to add on to 14 existing structures, no technology firms provided 15 technical support or technical service or equipment to 16 banks. 17 NationsBank has changed the outlook of minority 18 businesses and the minority community in Arkansas. After 19 years of little to no respect, minority businesses are 20 finally achieving access to opportunities for capital and 21 access to opportunities to do business with the bank. 22 In the first nine months of its presence in 23 Arkansas, NationsBank has achieved a 39 percent 24 participation rate with minorities in purchasing goods and 25 services. Minority businesses are no longer just cleaning 26 lobbies. We actually have with us today someone who . 255 1 traveled with me who has a contract with NationsBank to do 2 vault and safe deposit boxes, places we never thought we 3 would get into. Minority architects are serving as primes 4 to retrofit buildings across the state. Minority 5 contractors are primes on mid to large bank construction 6 projects. Technology firms, technology firms are entering 7 the doors and the list goes on and on. 8 NationsBank within one year has become the 9 example for other banks in Arkansas to emulate. The bank, 10 in fact, received the Minority Business Community's Impact 11 Award for its efforts in 1997 and '98. NationsBank is 12 moving forward with educational programs and access to 13 capital through innovative approaches using community 14 support groups such as ours. 15 Earlier this year, when the Arkansas state 16 branches of the NAACP hosted its regional conference, 17 NationsBank stepped forward, as no financial institution 18 has in the past, to support the conference financially and 19 in kind. Through NationsBank's support, the conference 20 was one of our most successful events since the Little 21 Rock Central High School crisis in 1957. 22 And finally, one critical area that NationsBank 23 participates in in Arkansas is communications. Cost and 24 communications in the community generating ideas because 25 we in Arkansas believe that ideas generate hope and hope 26 generates opportunity and opportunity generates economic . 256 1 development, economic development generates a healthy 2 community, communities based on good commerce. Was it not 3 the great philosopher Socrates that asked what is the 4 purpose of commerce if not to build communities? The 5 minority community and the business community at whole 6 believe that the relationship, actions and activities that 7 we share with NationsBank is building our community. 8 Also, that any growth or expansion that the bank 9 acquires will become a new opportunity for growth in our 10 strong relationship with NationsBank. Individuals like 11 Dorothy Brothers at their corporate office, Diane Quail at 12 their regional office, Virgil Miller and Sam Hidden 13 (phonetic) at their local office, as well as the President 14 of NationsBank Arkansas Brian Foster make it possible with 15 my and other organizations to have such a relationship. 16 I thank you for this opportunity to come and just 17 talk about a very good friend to our community, 18 NationsBank. Thank you. 19 MS. SMITH: Thank you. Mr. Jenkins. 20 MR. JENKINS: Thank you, Madam Chair, and thanks 21 for the opportunity to address the Reserve Board this 22 morning on such a very important topic. My name, of 23 course, is Carlton Jenkins and I am here today in my 24 capacity as president and CEO of Founders National Bank of 25 Los Angeles. 26 Our institution is one of only three African . 257 1 American owned institutions in Los Angeles and one of only 2 three headquarted in South Central Los Angeles. Since our 3 opening in 1991, our institution has grown to become over 4 a hundred million dollars in assets serving 17,000 account 5 holders in a five branch system. I'm here today at the 6 invitation and in support of our newest institutional ally 7 NationsBank and also secondarily in support of our 8 historical ally and strategic partner Bank of America. We 9 are blessed to count Bank of America as a historical ally 10 and NationsBank as a potentially new ally. 11 It is important, however, as we are a minority 12 bank, to also note, however, that I am here also as a 13 member of the Western Independent Bankers Association, the 14 California Bankers Association, the IBAA and the ABA. I 15 cite that because, notwithstanding my positive feelings 16 about this particular transaction, I don't want my 17 testimony to appear to be de minimus relative to our 18 institutional concerns about the kind of this advantageous 19 impact that mergers of this can have on small community 20 banks such as ours. 21 Having said that, however, it is important enough 22 for us to come today to set the record straight relative 23 to some of the positive experiences that we have had in 24 our historical dealings with Bank of America as well as 25 our most recent dealings with NationsBank, and I might add 26 pre-merger announcement. I feel this historical . 258 1 perspective is important because I believe it to be 2 demonstrative of the kind of positive impact that a major 3 bank CRA commitment when focused on minority banks can 4 have and their ability to serve inner city communities. 5 Additionally, I believe the commentary herein on 6 our prospective relationship relative to NationsBank 7 evidences the kind of relationship that can and will 8 undoubtedly occur as a result of the newest CRA commitment 9 made by the Bank of America/NationsBank organization. 10 Bank of America has been an extremely significant 11 participant in the growth and maturation of our 12 institution since our opening in 1991. This in spite of 13 the fact that in several of our branch locations we are 14 clearly a competitive institution to them for both 15 deposits and loans. 16 In spite of that, though, Bank of America through 17 our long-term relationship with their EVP Don Mullane and 18 as a direct consequence of their CRA commitment here in 19 Los Angeles, they have assisted our institution Founders 20 National Bank since 1991 in the following ways: They have 21 provided us $1.8 million to the bank's shareholders to 22 refinance initial debt incurred in starting the 23 institution. They provided $300,000 in new Tier 1 equity 24 capital through their purchase of preferred stock in 25 Founders Capital. I might add that it's still resident in 26 our institution. They've also provided $700,000 in Tier 2 . 259 1 equity capital through the issuance of subordinated debt. 2 Tier 2 capital, I might add again, it is still resident in 3 our institution and is counted very important as part of 4 our capital base. 5 They provided assistance to us in the acquisition 6 of two branch banking offices that had planned to close as 7 a result of the merger years ago with SecPac. One of 8 those offices is now our largest and our most significant 9 office. They provided over the years assistance in the 10 analysis of our asset/liability policies, investment 11 practices, et cetera, et cetera. All of the things that 12 have been designed to enhance the viability of our 13 institution. 14 NationsBank recently through the efforts of 15 Senior Vice President Darryl Basham and again before the 16 merger was announced, I might add, has over the last 17 several months become seriously involved in our 18 institution and has agreed in principle to look at 19 seriously providing us with approximately $10 million in 20 NationsBank consumer loans. They've agreed to provide 21 infrastructural support in areas such as training, 22 marketing, computer automation systems and process 23 analysis, loan participation relationships, private 24 banking services, cash management services, credit card 25 services, ATM services, et cetera, et cetera. 26 The point I try to make is that these . 260 1 institutions, when focused, can be and have demonstrated 2 their capacity to be sensitive and understanding of the 3 need to ensure competitiveness in communities that they 4 serve by enhancing and providing the support necessary to 5 indigenous institutions such as ours who exist to, 6 frankly, become and provide a more intimate level of 7 service, even against themselves. And Bank of America 8 historically, even in the face of branch competition side 9 by side has never waivered from their support of our 10 institution. And I can only hope and I can only believe 11 that, by virtue of the new relationship we've established 12 with NationsBank, that this kind of practice has been 13 internalized and will ultimately prevail as the way of 14 doing business in this new combined institution. 15 Accordingly, we have nothing but support for this 16 kind of merger. Again, recognizing the impact it can have 17 on our industry. We believe, however, they've been able 18 to see the forest from the trees relative to ensuring that 19 institutions like ours continue to exist. 20 MS. SMITH: Thank you. Ms. Dodd. 21 MS. DODD: Thank you for allowing me to address 22 the board today. My name is Cathie Dodd, I am a Woodbine 23 community organization. 24 MS. SMITH: Can you move the mike a little 25 closer? 26 MS. DODD: Is this better? We're a 501C3 . 261 1 nonprofit out of Nashville, Tennesse. And I guess we have 2 the Oilers. We don't have any home-run hitters but we 3 have got the Oilers, I don't know what that means. 4 Our mission as a nonprofit is to serve the folks 5 in middle Tennesse and to improve their life-styles, 6 including their education and their housing and the whole 7 gambit of what we do. We are a small CDC in Davidson 8 County and we've been around since 1985. We are 9 definitely a grassroots organization. 10 And NationsBank came to us probably around eight 11 years ago to help us with something that we were kind of 12 struggling with and that was capacity. And once we have 13 been able to do that, we have not --we're not the small 14 kid on the block anymore. 15 Tennesse was one of the first states in the 16 United States to start welfare reform. We did this two 17 years before it became mandated by the federal government. 18 One of the things that in our program that these folks 19 have to do in our Families First Program, which is what 20 our welfare reform program is called, is they either have 21 to work 40 hours a week or they have to go to school 40 22 hours a week or they have to do a combination of both, and 23 they are only on this program for 18 months. 24 It became real obvious that we can't sit around 25 and talk about it very long because the 18 months time 26 period is not a very long time and it was something the . 262 1 state had committed to. And Nations came and said, "What 2 can we do to start working on this?" Before the program 3 was instituted, we started a welfare-to-work program 4 within our community, we brought people in to get them job 5 ready. NationsBank came in with computers that were 6 outdated within their bank to put up a computer lab, we 7 updated the computer lab. The most important thing that 8 they came in with with this program was volunteers. Their 9 staff, their employees, come to my center once a day and 10 teach this class. 11 We come to the table with computer teachers, we 12 facilitate getting the people to the table and, to date, 13 we've put 22 people out of the welfare roles. That may 14 not seem a lot to you, but for a program that just started 15 a year ago, we're really pretty proud of it. 16 One of the things that we have done in Woodbine 17 is we have a thing called Peer Lending and it's a model 18 from the Green Bank out of Bangledesh and it was real 19 scary in Nashville, Tennesse to talk about loaning people 20 who have no money money. As a matter of fact, the people 21 from SCORE came to me and said, "What do you use for 22 collateral?" And I said, "Well, nothing." And they said, 23 "Well, it doesn't work." And I said, "Well, okay." And 24 so somebody said, "No, really, it doesn't work." And I 25 said, "Well, it keeps working." 26 NationsBank came with a line of credit for these . 263 1 folks to use. It was a pretty scary thing to do and it's 2 five years now down the road. We have had many, many 3 successful small businesses coming out of this program. 4 We have a new growing Hispanic community in Nashville that 5 NationsBank is going to provide the funding for their Peer 6 Lending group. 7 On the social side of things, what NationsBank 8 has done has been right there for my folks and my clients. 9 They were very instrumental in doing some big stuff in 10 Nashville which we were all part of and that was bringing 11 everybody together and starting the Housing Trust Fund. 12 The Housing Trust Fund now helps people have access to 13 downpayment and closing cost money. They brought 11 14 lending institutions together and their money and, to 15 date, have done over 300 loans to these folks. So they 16 took the lead. They didn't have to carry the banner, they 17 just took the lead and made it happen. 18 One of the things that I would really like to 19 talk about is -- again, I'm from Nashville, Tennesse and 20 with music, Music Row is what we do. There's a section 21 next to Music Row that contains probably the worst housing 22 and probably the most blighted area that is part of our 23 city. And HUD had let the properties decay and there was 24 quite not an answer for this. 25 The NationsBank CDC came in and purchased the 26 property and, of course, we had community reaction to it . 264 1 and the community was screaming that this is going to 2 happen and that's going to happen. And what has actually 3 happened is in next month they are going to open and rent 4 up their first units of these and there's going to be 394 5 units. There will be, hopefully, all of the drugs and the 6 things that were brought in by all this stuff, will be 7 gone. Hopefully, we'll follow and emulate the first CDC 8 project they did in Nashville that has a Make A Difference 9 Center. Woodbine is involved with our Make A Difference 10 Center in the fact that we hold Homebuyers' Clubs there. 11 Our nonprofit holds 20 Homebuyers' Clubs a month 12 and we have about 400 folks doing this and we get folks' 13 mortgage ratings and we're proud of doing that and all the 14 banks participate with us and life is great. 15 Well, I went to the Homebuyers' Club at the 16 NationsBank apartment CDC and was pleasantly surprised at 17 the tenants that they have put into their properties. 18 Their tenants are the kind of folks that you want to live 19 next door to, but let me share with you these are 20 low-income folks, these are folks who have been living in 21 substandard housing, they've made available the best case 22 scenario for them and these people that have rented in 23 their properties will be homeowners very, very soon. 24 Thank you for allowing me come here today and I do support 25 this measure. 26 MS. SMITH: Thank you. Mr. Wright, sorry I . 265 1 missed you. 2 MR. WRIGHT: My name is Leroy Wright and I'm the 3 President and CEO of TLC Next Generation International 4 Holdings Company based in St. Louis, Missouri. I'm going 5 to, in interest of brevity, be very specific. 6 Basically, NationsBank, since it's entered into 7 the St. Louis market in 1997 with the acquisition of 8 Boatmen's Bank, has done some very good things for the 9 African American community in St. Louis and the community 10 at large. They've created community partnerships between 11 a major banking institution and the African American 12 community in St. Louis, renewed realistic support for 13 African American businesses through community investment, 14 provided loans and equity investments in the St. Louis 15 community which is causing a ripple effect in the St. 16 Louis region from an economic standpoint especially in our 17 downtown St. Louis area. 18 And African American employment within 19 NationsBank seems to be increasing since its inception in 20 1997 in the St. Louis market. Basically, we in St. Louis 21 have seen an overall improvement in the business 22 environment of the community for African Americans. 23 With regards to my company, TLC Next Generation, 24 it's a 15 store chain of cellular retail outfits. 25 NationsBank had a tremendous impact on working with me 26 diligently to complete my financing package for the . 266 1 acquisition of this company. 2 When I bought Next Generation in 1997, it marked 3 the largest acquisition in the history of St. Louis by an 4 African American. The acquisition created the fifth 5 largest minority-owned company in the St. Louis area 6 employing over 80 people. One of the major impediments of 7 minority businesses involves around having sufficient 8 equity capital to obtain bank loans. I, as well as other 9 minority-owned companies, have been able to utilize and 10 capitalize on the fact that NationsBank, in addition to 11 the commercial side, has a small business investment 12 company that's also located in St. Louis. In addition to 13 that, they're the largest investor and the only other 14 small business investment company in St. Louis, Missouri 15 Civic Ventures Investment Fund. 16 In short, in closing, I would just like to say 17 that because of the NationsBank commitment to the 18 community, investment and relationships building in 19 St. Louis, Missouri and the communities that it serves 20 nationwide, I'm here to testify on behalf of the merger 21 between NationsBank and Bank of America. Thank you very 22 much. 23 MS. SMITH: Thank you. Any questions from the 24 panel? If not, thank you very much for coming and we will 25 move on to the next one.
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