Home > Banking Information & Regulation > Public Meeting Transcripts > PMT - Agendas September 17, 1998
Public Meeting Transcripts
Public Meeting Regarding Norwest Corporation and Wells Fargo & Company
Thursday, September 17, 1998
Transcript of Panel Eight
169 1 2 MS. CAPLAN: Good afternoon. My name 3 is Karen Caplan. I'm the President and CEO of 4 Fried's, Incorporated. We're the nation's 5 premier marketer of specialty produce. We're 6 located in Los Angeles, California. And we're 7 the company that introduced the kiwi fruit to 8 America 36 years ago. Through our produce 9 companies, we employ about 100 people. We do 10 about 25 million dollars in business and 11 distribute our specialty produce all over the 12 United States to supermarkets and restaurants. 13 We've been in business for 37 years. It's a 14 family-owned business. It was started by my 15 mother in 1962. And my sister and I purchased 16 the company from our parents in 1990. 17 For over 30 years, our banking relationship 18 was with First Interstate Bank. And, of course, 19 about three years ago our bank merged with Wells 20 Fargo. Frankly, at that time I was absolutely 21 disgusted with our relationship with First 22 Interstate and was planning on shopping around 23 for a new bank anyway. Because I had become 24 familiar with Wells Fargo through my association 25 with the National Association of Women Business 170 1 Owners -- NAWBO -- it seemed less trouble to go 2 ahead and try Wells Fargo out. 3 Well, I have to admit, Wells Fargo really 4 impressed us. First, contrary to what you heard 5 today, their transition through the merger was 6 relatively smooth. The things that really stuck 7 out in our office is that we are able to do all 8 of our transactions electronically, wire 9 transfers, all of our international business. 10 We actually speak with our banking officers more 11 frequently than we ever did with our officers at 12 First Interstate. And they've actually worked 13 with us to customize our services and reduce our 14 cost of doing business. But most importantly, 15 for the first time in the history of our company 16 about a year and a half ago, we decided we 17 needed a line of credit. Many of our big 18 supermarket suppliers have slowed down their 19 payments to us, and we wanted to maintain our 20 quick payment with our suppliers. 21 So we worked with Wells Fargo. We did shop 22 other banks at that time. And Wells Fargo was 23 fabulous. They walked us through the process. 24 Two of the banking officers came to our 25 facility, helped us fill out the paperwork, got 171 1 it through very quickly. And actually, their 2 rates were very competitive. 3 Well, the line came up for renewal earlier 4 this year. And sadly, my father had just passed 5 away at the time the application was due. And I 6 was a bit nervous making that time schedule. 7 Well, Sue, our contract rep in Phoenix, was 8 great. She extended our credit line for a 9 couple months. She worked with me on the 10 paperwork, just hand walked everything through. 11 We met the deadline and our credit line was 12 continued. 13 So as a customer and as a merger survivor, 14 I want to compliment Wells Fargo as a bank. 15 They've been extremely service-oriented. And 16 even though our main bank contact is in Phoenix 17 quite a ways away, we've had a better working 18 relationship than we ever had with First 19 Interstate. 20 Now, with my remaining time, I'd like to 21 share with you how Wells Fargo is an excellent 22 corporate citizen. I'm a member of NAWBO, the 23 National Association of Women Business Owners. 24 We represent the over eight million women 25 business owners in the United States. I served 172 1 as the president of the LA Chapter of NAWBO from 2 1995 to 1997 with the largest chapter in the 3 world. And I currently serve on the Board of 4 the National Foundation for Women Business 5 Owners, which provides research and publishes 6 statistics on women business owners in the 7 United States and around the world. Wells Fargo 8 is a national corporate partner of NAWBO and 9 also supports many local chapters across the 10 United States, not only with their dollars, but 11 with other resources. 12 According to information from the 13 foundation, there are nearly eight million 14 women-owned businesses in the United States. 15 The number of women business-owned firms has 16 increased by 78 percent between 1987 and 1996, 17 nearly twice the rate of all U.S. firms. 18 Currently over one-third of the businesses in 19 the United States are owned and operated by 20 women. The nearly eight million women-owned 21 firms in the U.S. contribute nearly 2.3 trillion 22 dollars in revenue to the economy, a three-fold 23 increase over 1987 levels. And women-owned 24 businesses employ 18 and a half million people. 25 One in four company workers in the U.S. can pay 173 1 their mortgage, purchase goods and services and 2 send their kids to college thanks to a woman 3 business owner. They are located throughout the 4 United States. The fastest growing states for 5 women-owned firms are the mountain states, 6 southwest and southeastern regions. 7 I realize I have one minute so I'm going to 8 kind of zip through this. The foundation 9 published many of these statistics back in 10 1994. When they were published, they had a 11 profound effect on banking. I don't know if it 12 was a Wells Fargo representative, but when they 13 were published, a banking officer asked "Is it 14 really true that women-owned businesses employ 15 one out of every four workers in the United 16 States?" And actually, women-owned businesses 17 employ 35 percent more people in the United 18 States than all the Fortune 500 companies do 19 worldwide. She commented at that time it would 20 change the way her bank does business. 21 Well, Wells Fargo changed the way they do 22 business in 19 -- I believe it was '95 they 23 created a one billion dollar loan program for 24 women business owners. It was so successful 25 that they increased it after one year to a ten 174 1 billion dollar loan fund. They made it 2 incredibly easy for us -- many of us across the 3 United States to get loans. So my thanks to 4 Wells Fargo. They've been a fabulous bank and a 5 very responsible corporate citizen. 6 CHAIRPERSON SMITH: Thank you. And 7 then we'll go to Mr. Reagan. We're not? 8 MR. REAGAN: Let me refer to Mr. 9 McGill. 10 11 MR. McGILL: Good afternoon. And 12 thank you for inviting us to speak on behalf of 13 this merger between our Norwest and Wells Fargo 14 Company. I am from a small nonprofit 15 organization called The Black State Employees 16 Association, which is an agency that is mainly 17 involved in Civil Rights and development 18 issues. We have a long-established relationship 19 with Wells dating back to its acquisition of 20 First Interstate. First Interstate had one of 21 the finest bankers in this country, Lenet 22 Dialy. And we were very concerned when that 23 acquisition was announced, what our relationship 24 with Wells Fargo would become. 25 I'm here to say that not only did Wells 175 1 live up to its commitment to us during hearings 2 similar to these, but they promised during those 3 hearings to expand opportunities in areas that 4 were quite important to us. And one of those 5 areas we are quite concerned and want to urge 6 the consideration for the creation of a bank 7 CDC. We think that bank CDCs is one of the most 8 effective tools that we've found to help with 9 development projects in low and moderate-income 10 areas, and particularly in the area of retail 11 and commercial development. We think that there 12 is a huge, relatively speaking, amount of 13 resources that have been devoted to housing. 14 Two issues that have been of primary concern to 15 us in the area of retail and commercial 16 development is the ability to raise funds for 17 predevelopment costs and equity needs. 18 Quite frankly, we wouldn't be sitting here 19 now saying that we are about to start 20 construction on a retail strip center in 21 southwest Dallas except that Wells, meaning 22 Byron Reid, mainly, and Karen Wegman, had the 23 faith in our leadership, mainly Mr. Reagan, to 24 make a substantial commitment to predevelopment 25 needs. And we -- there just aren't many 176 1 financial institutions or foundations that's 2 willing to express their support at the level 3 that Wells provided to this organization. And 4 because that happened, then we were able to meet 5 other kinds of needs and, more importantly, 6 develop the kind of presentations that really 7 led to the interests and support of other 8 financial institutions and other providers of 9 resources that we needed. 10 So we have been quite pleased to hear that 11 a bank CDC is one of the considerations that the 12 combined institutions is considering. We would 13 certainly urge them to take a close look at the 14 equity and predevelopment needs of 15 organizations, such as the Black State Employees 16 Association's community development corporations 17 and decide what the fair -- and perhaps take the 18 leadership in establishing creative ways to help 19 organizations such as ours meet those kind of 20 needs. 21 Just two other areas that I would like to 22 briefly speak to. And one of the -- one of the 23 issues that we raised in public forums with 24 smaller groups and senior administrators in both 25 institutions is that as opportunities become 177 1 available, particularly in areas of professional 2 services, meaning the merger -- mergers happen. 3 And they often create opportunities -- thank 4 you -- create opportunities for employment for 5 African Americans and others. And certainly in 6 the areas of legal needs, accounting needs and 7 advertising and marketing needs. And certainly 8 as those opportunities become available, we have 9 certainly urged the institutions to consider how 10 they can divide and subdivide those 11 opportunities so that law firms and accounting 12 firms and advertisers, particularly African 13 Americans, can take advantage of those 14 opportunities. 15 Thank you very much. 16 17 MR. REAGAN: I'm Darren Reagan, the 18 Chairman and CEO of the Black State Employees 19 Association of Texas. And I thank Mr. McGill 20 for providing the groundwork. And we also have 21 submitted written comments as well. So we would 22 just simply like to surmise our support for this 23 merger. 24 Now, I, heading up and founding the Black 25 State Employees Association of Texas as a Civil 178 1 Rights organization with critical concerns. 2 Many have been expressed here today. And we are 3 very, very sympathetic and empathetic with those 4 concerns. And we know that based on our 5 experience with Wells Fargo in a recent -- very 6 good and productive conversations, meetings with 7 the presidents and senior officers of Norwest 8 Corporation, that they will follow properly and 9 rectify as many of those concerns as possible. 10 I live in Dallas, Texas. I've lived there 11 for about 38 years now. And I live in a section 12 of town, Southern Dallas, Southeast Oak Cliff in 13 particular, where we have 108,000. If we were 14 to have this conversation about seven years ago, 15 this town of about 108,000 residents, 95 percent 16 African American, we did not have a single bank 17 branch in Southeast Oak Cliff. I was down in 18 Tyler, Texas. And my town of -- hometown of 19 Tyler, Texas is about 90,000 residents. In 20 Tyler, Texas, we have numerous banks. We have 21 the traditional retail shopping experience and 22 dineries that most major cities have. But in 23 Southeast Oak Cliff, this city of 108,000 24 residents, we did not have a single branch. 25 However, nearly one billion dollars of the 2.5 179 1 billion dollars of consumer spending power came 2 out of Southeast Oak Cliff. We took a personal 3 challenge of revitalizing southern Dallas, 4 Southeast Oak Cliff in particular. Now we have 5 about five branches there. 6 First Interstate put up one of their most 7 productive. I believe it is now the top 8 producer in the State of Texas, now Wells 9 Fargo. Nations Bank, one of their top 10 producers, not only in the state, but in the 11 country. Bank of America and Chase. We're not 12 saying that -- and I'm not here to suggest that 13 all is well in southern Dallas and many other 14 urban cities across this United States. But 15 I've come to recognize as a leader in our 16 communities that we have to forge 17 relationships. And much of what we've been able 18 to accomplish by way of this organization has 19 been because of establishing relationships. 20 I don't make it a habit to support banks in 21 these type of forums. As a matter of fact, this 22 is my first. And I consider it an honor to be 23 able to sit here and tell you guys the truth. 24 If it had not been for Wells Fargo following up 25 on their commitment made by First Interstate to 180 1 become leaders in our state, and in our city in 2 particular, much of what we've been able to 3 accomplish would not have come to fruition as it 4 has to date. 5 We were able to acquire the first enclosed 6 mall in the City of Dallas, built in 1963, West 7 Cliff Shopping Center. We acquired that center 8 about a year ago and have already demolished the 9 center to construct a power center, which will 10 be anchored by an Abison's grocer and many other 11 national and local regional credit tenants and 12 some small business owners. Wells Fargo was one 13 of our key supporters on the front of this 14 acquisition. And a number of other projects 15 that we have underway right now. Housing 16 development, a joint venture with Centex and 17 Choice Homes. Wells Fargo we know will be 18 actively involved in this process. The new 19 Wells Fargo. We've met, as I say, with the 20 senior team of Norwest Corporation in 21 conjunction with the Wells Fargo senior 22 management. 23 I must tell you that I've been among many 24 merger meetings, president and senior officers, 25 and I can just share with you that our meetings 181 1 with Wells and with Norwest have been very, very 2 cordial. As a matter of fact, it's been the 3 best and most productive meeting we've had in a 4 long time with bankers. 5 Again, we support this -- this merger. And 6 we encourage and we know that Norwest and Wells 7 Fargo -- the new Wells Fargo will do all within 8 its power to make sure that the concerns of all 9 of its community needs are met. 10 Thank you. 11 CHAIRPERSON SMITH: Mr. Reid? 12 13 MR. REID: Yes. Good afternoon. And 14 thank you very much. My name is Jim Reid. I'm 15 the President and Founder of the Southern Dallas 16 Development Corporation. We're what's known in 17 the business as a community development 18 financial institution. We provide an 19 alternative source for financing small 20 business. We're a 501C3 founded in 1989. Our 21 mission is to assist businesses, create jobs and 22 promote investment in southern Dallas, which is 23 a section of our city that has 45 percent of the 24 population and only 13 percent of the commercial 25 tax base. That's a big imbalance in terms of 182 1 jobs and services. And to compare the northern 2 sector of Dallas with the southern sector, the 3 per capita income in the south is about 60 4 percent in terms of the northern section of the 5 city. Southern Dallas is primarily a minority 6 area. It's 50 percent African American and 25 7 percent Hispanic, 25 percent White or other. 8 We started out with one loan program. We 9 now run five loan programs that are funded by 10 the federal government to Treasury, HUD and SBA, 11 by foundation, and by corporate donors. In the 12 last two years, we have loaned money that 13 enabled a thousand people to go to work. And I 14 tell my 12 staff persons that each one of them 15 in the last two years personally is responsible 16 for 85 people being on the payroll. That's the 17 way we look at it. 18 Our borrowers typically -- we've done about 19 300 loans. About 100 of them we've done in 20 participation with banks where we're taken a 21 subordinate debt position. The other 200 we've 22 done directly. They were totally unbankable. 23 We provide our loans in the form of subordinate 24 debt, thereby bringing other dollars to the 25 table. And dealing with an issue in the 183 1 minority community, which is a lack of equity. 2 So this quite a bit of equity helps out. 70 3 percent of our borrowers are minority business 4 persons. 5 We're in favor of this merger because our 6 experience with Wells Fargo and our feeling that 7 into -- in the future, this experience will be 8 realized in a larger form through the merged 9 institutions. 10 We are -- and I want to use this 11 opportunity to talk a little bit to the federal 12 representatives about something -- a real sea of 13 change that's happened in the small business 14 lending the last couple years. We -- now 15 basically small business lending is done by 16 credit scoring. You get a computer score. And 17 the transactions are much faster, much cheaper 18 on behalf of the bank. So you -- it has that 19 advantage. For a number of customers that -- 20 that we serve, because of blips in their credit, 21 because their deal doesn't fit the mold, they 22 need special treatment. And I would make a 23 generic plea as you're dealing with compliance 24 and those kind of issues to make sure that 25 the -- all banks have second review processes 184 1 for their loans if they're using credit scoring 2 and that they all establish policies in 3 referring loans that are denied to community 4 development financial institutions, institutions 5 like ours that can take the time with the 6 borrowers and really set up, and as nonprofits, 7 to bridge that gap. 8 In terms of our specific experience with 9 Wells, which has been very positive, they're a 10 major investor in an entity we call the Southern 11 Dallas Development Fund. It's a bank -- a CDC 12 in which 17 bank investors have created this 13 fund. And we manage it on behalf of these 14 banks. And again, we can do things with these 15 funds that banks can't do. We can provide 16 subordinate debt. We can provide equity, things 17 that they can't do as lenders. So that's been 18 an instrument that Wells has invested in and 19 been very useful. They've participated with us 20 in a number of deals. When they take the 21 primary position, we do subordinate debt. 22 They've done innovative outreach with us. One 23 of our problems in that area is the media. Not 24 the particular media over here, but some media 25 who all write about -- all they can write about 185 1 is drug busts and drive-by shootings and that 2 kind of thing. They don't have a positive word 3 about our area of the city. We decided to write 4 our own newspaper. So every year we write an 5 eight-page supplement to the "Dallas Morning 6 News," send it to a million households. And 7 it's positive. And we know it's true because we 8 write it. Anyway, and Wells Fargo has helped us 9 do that. 10 They also helped us -- one of the things 11 facing small businesses is there is a maze in 12 terms of who -- who's providing services. They 13 helped publish a guide that went to 12 -- 25,000 14 businesses in terms of how to service. 15 I'm saving the best for last. Last year we 16 got a -- in September we got a $600,000 grant 17 from the Treasury Department. And we had to 18 match with it $600,000. And Wells had made a 19 four-year pledge of 400 -- a 100,000 a year. 20 And Chase, three years, 100,000 a year. Bank 21 One, 300, 100,000 a year. But I needed 600,000 22 right away. And I called Karen. And I got 100 23 each from Chase and Bank One. And I called 24 Karen Wegman's office and said, "Wells, we need 25 you to accelerate your commitment and deliver us 186 1 500,000 -- 400,000 immediately so we can match 2 this federal money and in the process create 3 about 500 jobs." In one week, those funds were 4 wire transferred to a new branch bank serving 5 our area. And that's what I call service. 6 Thank you. 7 CHAIRPERSON SMITH: Mr. Grovender? 8 9 MR. GROVENDER: Well, my name is Kelby 10 Grovender. And I'm from the American Indian 11 Housing Corporation. And I'm here to talk a 12 little bit about our relationship that we've had 13 with Norwest Bank. 14 First, I'd like to tell you a little bit 15 about who we are. American Indian Housing 16 Corporation started as a task force back in 17 1991, partially in response to the lack of 18 counting of homeless Indian people during that 19 statewide homeless survey of 1990. In that 20 survey, it said that there were 87 homeless 21 Native American people who had been counted. We 22 knew that anybody who walked down Franklin 23 Avenue in South Minneapolis would realize that 24 that was a ludicrous number to use. And so the 25 task force was formed to look into that, as well 187 1 as looking into what really are the housing 2 needs for Indian people primarily in South 3 Minneapolis. Eventually that evolved into the 4 American Indian Housing Corporation. 5 The biggest project that we have completed 6 to date is a project called Anishinabe Wakiagun, 7 which I am the Director of Anishinabe Wakiagun. 8 It is a permanent supportive housing program 9 serving late-stage -- excuse me -- serving 10 late-stage chronic inebriates who have been 11 homeless the majority of the past five years. 12 Oftentimes have been homeless the majority of 13 the past 10 or 15 years. So it is a project 14 that is housing people who are the most 15 difficult to serve, but also who had the 16 greatest need in terms of housing. 17 Norwest applied for us to the Federal Home 18 Loan Bank for $210,000, which helped in the 19 construction of that project. We've finished 20 construction in 1996, opened up our doors 21 September 3rd of that year. Now we have been in 22 operation for two years and have been housing a 23 lot of people who otherwise would have been on 24 the streets. And I think that we have probably 25 saved a lot of lives in the process, especially 188 1 considering our cold winter months and that a 2 lot of these folks do live outside during the 3 wintertime. 4 In -- in addition to the assistance that 5 Norwest gave us in construction of that project, 6 the American Indian Housing Corporation also 7 started a capital campaign two years ago. This 8 has -- up to fairly recently has been a real 9 shoestring budget kind of an organization. It 10 started out officing in the basement of -- of 11 the Native American Educational Services 12 Building, which we didn't pay any rent for. 13 Some of the early staff people were sleeping in 14 those offices. This is just to give you an idea 15 of where we were starting from, a very grass 16 roots kind of an organization. 17 Two years ago, we started a capital 18 campaign to purchase a building that is the 19 offices for the American Indian Housing 20 Corporation. And Norwest was able to give us 21 $40,000 towards that capital campaign. They've 22 supported us in a variety of ways beyond just 23 money. And I think the most important thing 24 that I personally have seen through the 25 involvement of Norwest is having one of their 189 1 staff people, Muffy Gabler, who served on the 2 Board of the American Indian Housing Corporation 3 for the past three years. She has been a 4 dynamic force on our board. 5 Any of you who have sat on the boards of 6 nonprofit organizations know that there are some 7 people who just show up. There are some people 8 who, even though they are on the board, they 9 don't even show up. And then there are those 10 people who are on the board and they are there 11 and they are doing things. And Muffy was always 12 the person who was doing things, who was helping 13 to move the organization forward and who was 14 keeping us fiscally responsible as the Chair of 15 our Finance Committee. I think that we were 16 able to build our capacity at a much faster rate 17 through the assistance of Muffy as a member of 18 our board and as a good driving force. 19 CHAIRPERSON SMITH: Thank you. 20 MR. GROVENDER: You're welcome.
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