Home > Banking Information & Regulation > Public Meeting Transcripts > PMT - Agendas August 13, 1998
Public Meeting Transcripts
Public Meeting Regarding Banc One and First Chicago
Thursday, August 13, 1998
Transcript of Panel Seven
1 MR. HAGAMAN: Good morning. My name is Frank 2 Hagaman, and I'm the President of Partners in 3 Housing Development of Indianapolis. 4 Partners in Housiing was founded in 1993 5 to create housing opportunities for special needs 6 populations. These include individuals with 7 chronic mental illness, AIDS/HIV, substance and 8 alcohol abuse and the frail elderly. 9 Today, our focus is on supportive housing 10 which links directly affordable housing 11 opportunities with social services. 12 In 1993, as we assembled the financing for 13 our first project, we possessed a net worth. As I 14 often explain to people, it consisted of a folder 15 chair and a Princess phone. Regardless, we 16 approached NBD First Chicago which made a one-year 17 non-interest bearing loan to us for working 18 capital. The purpose of the loan was to provide us 19 with predevelopment funds. 20 We repaid that loan ahead of schedule and 21 have subsequently borrowed on numerous occasions 22 from time to time for various predevelopment needs 23 on our projects. 24 I think the two points that are very 120 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 important about this particular loan program, and 2 they are, one, working capital was made available 3 at a critical time for a very small company with 4 obviously little financial strength, and the second 5 was that the bank demonstrated a flexibility to 6 lend on character. 7 I am a reform banker, and character loans 8 used to be very interesting, but in point of fact, 9 this loan was made based on character and on the 10 mission of our organization. 11 Additionally, NBD and First Chicago have 12 now made corporate contributions to Partners in 13 Housing Development and is currently an investor in 14 our current project, a five and a half million 15 dollar, 96-unit, single-room occupancy residence. 16 This represents the first housing of its kind in 17 Indianapolis to meet the housing needs for homeless 18 men and women. 19 By the same token, Banc One has been an 20 equally strong and long-standing partner of ours. 21 It has been a major investor in all of our projects 22 and has stood beside us on many occasions offering 23 its support and help. 24 Our station in life has increased and has 121 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 improved, and I must say it's a tip of the hat 2 again to Banc One. 3 All of our office furniture has been 4 contributed by Banc One, and quite honestly, we are 5 very happy to have one of our Board members who is 6 a Banc One employee, the former CRA director for 7 Indiana. She represents one of our most thoughtful 8 and helpful Board members. 9 In conclusion, I guess that I would like 10 to say that I can't speculate on the future of what 11 this merger means. Frankly, I don't have the time 12 to worry about it. 13 My purpose in coming here today is to 14 recognize publicly two good corporate partners of 15 ours and to encourage that their unification 16 continues to make important investment and 17 contributions to our community of low income 18 individuals and families. 19 Thank you. 20 MS. SMITH: Thank you very much. 21 Ms. Morris. 22 MS. MORRIS: I'm Cora Morris, owner of Greek 23 Grandeur in Champaign, Illinois. 24 Greek Grandeur was established in December 122 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 of 1991. It is a retail and embroidery business 2 that specializes in fraternal organization and 3 company logos. 4 I am here today on behalf of African 5 American small businesses, a small business owner 6 for which Banc One has assisted for a business 7 loan. 8 I am only one of many African American 9 business owners who have experienced a great deal 10 of difficulty in financial assistance in starting a 11 business and staying in business. 12 I went to four different financial 13 institutions within my community in order to obtain 14 a small business loan and was denied. Finally, I 15 went to Banc One, who received my business plan, 16 reviewed my business plan and began to give me a 17 criteria and qualification for how to obtain a 18 small business loan. Through this, I gained 19 valuable information. Banc One helped me when no 20 one else would. 21 When I ran into trouble, they were 22 flexible and understanding with payment 23 arrangements. Due to their willingness to give me 24 a chance, we not only stayed in business but were 123 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 able to expand including a Web page on the World 2 Wide Web. 3 I would also like to add that there are 4 other Afro-Americans within our community that was 5 able to go to Banc One for assistance. One 6 included my mother. In 1996, she wanted to 7 relocate to the Champaign-Urbana area to live with 8 my sister. We wanted to buy a house for her and 9 she did not want to live in a high-rise, so we 10 started house hunting, my sister and I and my mom. 11 We went to another financial institution 12 to obtain a home mortgage loan, and we were 13 denied. We went to Banc One and were accepted. 14 In closing, Banc One has been an asset in 15 our community through their relationship with 16 Afro-Americans. My experience with this 17 organization has been beneficial, valuable and a 18 great pleasure. 19 Thank you. 20 MS. SMITH: Thank you very much. 21 Mr. Odem. 22 MR. ODEM: First of all, I want to say good 23 morning and thank you for the opportunity to 24 testify. 124 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 Again, my name is Jerome Odem, and I am a 2 member of the Organization of the Northeast, better 3 known as ONE. I am also the President of the 4 Lakeview Towers Residents Association and currently 5 working to purchase our 500-unit HUD subsidized 6 unit in the uptown area. 7 Now, the Organization of the Northeast was 8 founded in 1974, and it's an organization of 60 9 dues-paying member institutions in the Uptown and 10 Edgewater communities here in Chicago. 11 Now, the mission of ONE is to sustain and 12 build a successful multi-ethnic mixed income 13 community in the Uptown and Edgewater community. 14 To this end, ONE has enjoyed a close working 15 relationship with First Chicago NBD. 16 Now, First Chicago has been a member of 17 the organization for the past nine years. 18 Currently First Chicago invests greatly in these 19 two communities financially and by close working 20 relationships with many organizations to support 21 housing development, small business development and 22 industrial retention. 23 Now, several years ago, First Chicago NBD 24 and three other banks created a commercial loan 125 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 program to provide below market financing to 2 commercial credit borrowers as a way to enhance 3 small business development and job creation in the 4 area. 5 First Chicago NBD and Banc One recently 6 committed to a new CRA agreement with ONE and six 7 other community organizations through the National 8 Training and Information Center. 9 Now, the agreement which constitutes a 10 nearly four billion, ten-year investment for all of 11 Chicago with targets for investment in specific 12 communities, this commitment is for single-family 13 housing, multi-family housing, small business 14 development, marketing and services. It provides 15 for a bank representative to work closely with each 16 of the six areas to target this agreement to 17 neighborhood needs. This agreement builds on 18 First Chicago's history of being a strong presence 19 in this community. 20 Now, the Organization of the Northeast has 21 no prior experience working with Banc One but view 22 their commitment to the CRA agreement and their 23 willingness to continue the great work that 24 First Chicago has done here in Chicago as a 126 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 positive sign. 2 We look forward to working with Banc One 3 and First Chicago to fully utilize the 4 opportunities created by the agreement. We support 5 this merger with the confidence that there is a 6 genuine commitment to this agreement in the hope 7 that similar commitments will be made for the rest 8 of Banc One and First Chicago's market. 9 Thank you. 10 MS. SMITH: Thank you. Ms. Ryan. 11 MS. RYAN: Good morning. I'd also like to 12 thank you for the opportunity to be here. 13 My name is Liz Ryan. I'm the lead Housing 14 and Banking Staff for the National Training and 15 Information Center. Gayle Stuccato regrets she was 16 out of town and unable to be here today. 17 The NTIC is a resource center that has 18 been working with grassroots, community-based 19 organizations for over 25 years. Throughout our 20 history, we have assisted literally hundreds of 21 community groups enter into partnerships with banks 22 to better their neighborhoods. Billions of dollars 23 have gone for single-family housing, small business 24 and multi-family lending through these agreements. 127 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 NTIC itself has been directly involved in 2 several community reinvestment partnerships in the 3 City of Chicago, and one of the most successful has 4 been with First Chicago NBD. 5 Throughout three renewals and 14 years, 6 NTIC with other non-profits in the city has forged 7 innovative programs and lending products to better 8 serve the credit needs of the city. 9 A critical component to this agreement 10 have been a quarterly review board meetings, a 11 process engaged in by the banks and participating 12 non-profits. The open lines of communication have 13 enabled the members to establish a real level of 14 accountability and has paved the way for true 15 problem solving. The firm commitment of 16 First Chicago and Banc One to continue on with the 17 review board process after the proposed merger is a 18 major reason for NTIC's support. 19 Recently, in the context of the merger, 20 NTIC and six neighborhood organizations which 21 Jerome just told you about also entered into a 22 ten-year reinvestment agreement with both of the 23 banks. As he said, this nearly $4 billion 24 agreement covers a range of lending products. 128 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 The bank itself a committed to working 2 very closely with the individual groups. It is a 3 way to get loans actually out the door working side 4 by side with the community groups, having lending 5 officers that with interpreters and bi or 6 multi-lingual people in the community, and we're 7 very encouraged by it. 8 As a basis for comparison, the recent 9 nationwide pledge of $350 billion made by Nations 10 Bank and Bank of America in addition to falling 11 short of their current lending levels would 12 compromise only about 23 percent of their 13 residential lending. 14 Conversely, the Chicago commitment made by 15 Banc One and First Chicago would compromise a full 16 46 percent of their residential lending. Instead 17 of an empty promise and sound bytes, First Chicago 18 and Banc One have made a commitment of substance. 19 We will of course keep the Board apprised 20 of the progress on this commitment and will lodge a 21 protest if the commitments made by First Chicago 22 and Banc One are not fulfilled. 23 With the assumption that the banks will be 24 faithful in fulfilling the commitments they have 129 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 made, NTIC would support the merger of these 2 institutions. We are hopeful that the good 3 experiences we have had with First Chicago in the 4 past and renewed commitments to serve Chicago will 5 extend to the entire Banc One and First Chicago 6 market. 7 It would seem that if Banc One and 8 First Chicago see the value of well-thought-out and 9 comprehensive CRA agreements in Chicago it would 10 see the benefit of these agreements in the rest of 11 the country. We expect the Federal Reserve to 12 fulfill its responsibility and assure that this 13 will be the case. 14 Thank you. 15 MS. SCHMIDT: Thank you very much. 16 Mr. Schmidt. 17 MR. SCHMIDT: Thank you. Good morning. 18 My name is Raymond Schmidt, and I'm an 19 Executive Director of a non-profit corporation in 20 Milwaukee, Wisconsin called Select Milwaukee. 21 Select Milwaukee was formed in 1991 and is 22 dedicated to promoting supporting and facilitating 23 affordable home ownership in Milwaukee 24 neighborhoods through collaboration with private 130 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 and public sectors and non-profit organizations as 2 well. 3 We do a number of different things to 4 fulfill our mission, including providing direct 5 services to potential home buyers, first time buyer 6 urban market training for mortgage lenders and real 7 estate professionals, produce neighborhood 8 marketing events, and we have developed and 9 administer for several Milwaukee employers their a 10 employer assisted home ownership and walk to work 11 programs. 12 My comments today really are designed to 13 reflect our organization's valued and long-standing 14 relationship with Banc One Wisconsin, and it's 15 based on that relationship that I extend 16 Milwaukee's support of Banc One's proposed 17 acquisition of First Chicago NBD. 18 As noted, collaboration is a major piece 19 of everything we do at Select Milwaukee. All of us 20 in this line of work have had the opportunity over 21 the years to meet with and try to enlist the 22 support of many different businesses and 23 institutions and organizations. 24 For the past several years, Select 131 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 Milwaukee has developed a number of relationships 2 on various levels with many mortgage lenders in 3 Milwaukee. During that time, we've had many 4 opportunities to to work directly with Banc One 5 Wisconsin and to observe its affordable lending and 6 other community development efforts. It's those 7 experiences with Banc One that lead me to suggest 8 that Banc One is among one of Milwaukee's most 9 savvy, thoughtful and more committed affordable 10 housing financial institutions and also a very 11 valued corporate partner in many other ways in the 12 City of Milwaukee. 13 In our view, Banc One Wisconsin is clearly 14 distinguished from most Milwaukee lenders by its 15 thoughtful, serious approach to collaboration with 16 our organization and with our colleagues in 17 Milwaukee and a variety of ventures, and I'm being 18 quite candid -- and Liz eluded to this just a 19 second ago -- when I suggested that unlike some 20 other institutions, Banc One doesn't embarrass 21 itself or organizations like ours merely by talking 22 a good game, by glad handing or with product or 23 service gimmickry. 24 For us, Banc One is the respected and 132 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 valued corporate citizen it is because of a 2 corporate philosophy, and it's that philosophy that 3 I believe is also responsible for the highly 4 competent and diverse staff with which we've had 5 the pleasure to work within the past several 6 years. 7 Through my vantage point, there's probably 8 no more significant example of Banc One's 9 commitment to affordable lending here than the 10 leadership, dedication and support extended to the 11 launch of the coalition in Milwaukee called New 12 Opportunities for Home Ownership in Milwaukee or 13 NOHIM. 14 NOHIM is nationally recognized, and it's 15 comprised of 55 members including most banks, 16 thrifts and credit unions in the Milwaukee area, 17 several community-based counseling organizations, 18 MI firms, City of Milwaukee and the Wisconsin 19 Housing and Economic Development Authority. NOHIM 20 has had dramatic impact on housing opportunities 21 for Milwaukee. 22 Since its inception in 1991, NOHIM is 23 directly responsible for nearly 2,000 new modest 24 income homeowners and over $85 million in mortgage 133 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 investment in our neighborhoods, and I'm convinced 2 that it has been Banc One's leadership and 3 significant financial and staff support that 4 nurtured NOHIM, and it's really these that it's 5 largely responsibile for Milwaukee's reknown and 6 successes in affordable lending. 7 Organizations like Select Milwaukee has 8 had the garnered the support of Banc One for our 9 marketing activities, and these are home ownership 10 expositions and neighborhood tours that we believe 11 are valuable to introduce first-time home buyers to 12 the buying process and also to their housing 13 opportunities in the city as well as to expand 14 their range of options in terms of neighborhoods 15 and housings. 16 And of course there's the next component 17 of support for these types of activities, but in 18 the case of Banc One, its involvement and support 19 has always gone beyond just dollars, and I know 20 this may sound funny, but it's really easy to write 21 a check in my view, but reflecting the seriousness 22 with which the bank takes its community involvement 23 and our experience of its trademark professionalism 24 in these endeavors, significant dedication of staff 134 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 has always been a part of the bank's support of our 2 activities. 3 Corporate community affairs and marketing 4 staff lend their time and their expertise to ensure 5 that these city events are as successful and 6 well-produced as any new suburban subdivision 7 promotion. 8 I would like to say Select Milwaukee has 9 benefitted a great deal from the professional 10 comradery developed and obtained with Banc One and 11 government relations staff persons. On many 12 occasions, covering a variety of issues covering 13 regulatory matters, legislative issues, Banc One 14 served as a sounding board, provided us advice and 15 very valuable insight. 16 It doesn't mean we've always agreed, but 17 we've consistently gained from the impressive level 18 of interest their accessibility to us and their 19 thoughtfulness. 20 In conclusion, I wish to reiterate Select 21 Milwaukee's support. Our organization hopes the 22 merger can only enhance the bank's commitment and 23 capacity to invest in affordable homeownership for 24 modest income families and other community 135 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 development initiatives in Milwaukee and 2 elsewhere. Thank you. 3 MS. SMITH: Thank you very much. Any questions 4 from the Panel? 5 All right. Be sure if you haven't already 6 done so to give your written statements to the 7 people at the registration desk so that we can have 8 them for the record. And thank you very much for 9 coming this morning. 10 We're moving on to Panel 8. We're going 11 to start with Reverend Buzza.
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