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Public Meeting Transcripts

Public Meeting Regarding NationsBank and BankAmerica

Thursday, July 9, 1998

Transcript of Panel Nine


         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


         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


         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


         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


         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


         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


         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


         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


         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


         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


         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


         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


         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


         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


         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


         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


         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


         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


         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


         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.

Last update: December 3, 2010