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Public Meeting Transcripts

Public Meeting Regarding NationsBank and BankAmerica

Thursday, July 9, 1998

Transcript of Applicant Presentation

                                                                     8



         2            MR. COULTER:  Good morning, Madam Chairmen, my

         3   name is David Coulter, with me is Hugh McColl, the CEO of

         4   NationsBank.  I also want to introduce Don Mullane on my

         5   right, Executive Vice President of Corporate Community

         6   Development for Bank of America.  And Cathy Bessant, on my

         7   far left, President of the Community Investment Group at

         8   NationsBank.

         9            We want to thank the Federal Reserve Board for

        10   this opportunity to talk about the proposed creation of

        11   America's first coast-to-coast bank.

        12            The new BankAmerica will represent the triumph of

        13   an idea that began nearly a century ago right here in

        14   San Francisco when a local produce merchant named A.P.

        15   Giannini founded the Bank of Italy.

        16            The Bank of Italy later became the Bank of

        17   America and it became a catalyst for economic opportunity,

        18   moving capital between communities, funding the rise of

        19   major industries and helping to house, feed and move the

        20   population of a state that is now the world's seventh

        21   largest economy.

        22            The story of California is really Bank of

        23   America's story.  Here are just a few highlights.  Through

        24   the years and right up until today, Bank of America has

        25   purchased the bonds that have built universities, highways

        26   and, yes, even the Golden Gate Bridge.
 .

                                                                     9


         1            In 1929 when the City and County of San Francisco

         2   ran out of funds to complete the Hetch Hetchy water

         3   system, our bank stepped in and bought the bonds.  Today

         4   that water is in the drinking fountains in this building.

         5   We financed farmers and ranchers at a time when no other

         6   bank would entertain them.  And today California boasts

         7   the most fruitful agricultural industry in the world.

         8            We helped build Hollywood, too.  We lent money

         9   for thousands of films ranging from Snow White and the

        10   Seven Dwarfs to Gone With the Wind, from Lawrence of

        11   Arabia to It's a Wonderful Life.  In Hollywood we became

        12   known as The Movie Bank.

        13            The Dodgers came to Los Angeles with BofA's help.

        14   Mattel and Disneyland were built with BofA financing.  And

        15   we've been there for Silicon Valley, too.  From O'Malley

        16   to Disney to Jobs, the great visionaries have turned to us

        17   to finance their dreams.  As have millions of individuals

        18   who count on Bank of America when the time comes to

        19   purchase their home, educate their children or start their

        20   business.

        21            I can assure you that Bank of America has brought

        22   unparalleled commitment to the communities we serve.  The

        23   new Bank of America will continue in this manner but on a

        24   much larger scale than ever before.  In fact, it will be

        25   positioned to create economic opportunity nationwide.

        26            Long ago Bank of America sought to empower people
 .

                                                                    10


         1   by opening bank branches in hundreds of communities

         2   throughout California.  Today we're bringing a wide array

         3   of financial services even closer to home and making them

         4   available to customers 24 hours a day.  And we are not

         5   turning our backs on the communities that need financial

         6   services the most.

         7            In South Central Los Angeles, for example, we

         8   have more branches than all other banks combined.  We've

         9   played a principal role in capitalizing one of Los

        10   Angeles's three African American owned financial

        11   institutions, Founders National Bank.  And just last month

        12   the CEO of that bank, Carlton Jenkins, said this in a

        13   letter to the Federal Reserve Bank in Richmond.  Quote,

        14   "BankAmerica has been an extremely significant participant

        15   in the growth and maturation of Founders National Bank.

        16   This, in spite of the fact that several of our branch

        17   locations -- in several of our branch locations, we are

        18   clearly a competitive institution to them," unquote.

        19            The BankAmerica Board of Directors has

        20   established a goal that its major operating units receive

        21   outstanding ratings for their CRA activities.  We are

        22   living up to that standard.  BankAmerica Corporation has

        23   five bank subsidiaries and all five currently hold

        24   outstanding Community Reinvestment Act ratings.  Two of

        25   those have been earned under the new CRA regulations.

        26            Our flagship institution, Bank of America
 .

                                                                    11


         1   National Trust & Savings Association, has received four

         2   consecutive outstanding ratings.  Our Federal Savings Bank

         3   is rated outstanding by the Office of Thrift Supervision.

         4   Our Community Development Bank is rated outstanding by the

         5   FDIC.  Bank of America Texas and our Credit Card Bank in

         6   Phoenix are rated outstanding by the Office of the

         7   Comptroller of the Currency.

         8            We believe that allocating the resources and

         9   performing at a level to achieve these outstanding ratings

        10   is very, very important.  We believe it is equally

        11   important to reward outstanding banks by placing value on

        12   their outstanding ratings at times like this.

        13            I know that it's important to you to have

        14   financial institutions that are committed to community

        15   building.  I hope you come away from today's hearing with

        16   a better understanding of our commitment.  To help in that

        17   regard, let's take a brief look at Bank of America's

        18   record.

        19            We surpassed the ten year $12 billion community

        20   lending commitment that was announced by the bank in 1992

        21   in four and a half years.

        22            Last year, we voluntarily set a new, very well

        23   defined ten year goal of $140 billion in community

        24   lending.  It was an unprecedented move by a major bank,

        25   once again on a voluntary basis.  Mr. McColl will later

        26   speak to an even larger voluntary commitment by the
 .

                                                                    12


         1   BankAmerica.

         2            Since 1992, we have booked $2.5 billion in

         3   affordable consumer loans to low- and moderate-income

         4   borrowers.

         5            Underscoring our commitment to neighborhood

         6   revitalization is the success of Bank of America's

         7   Community Development Bank which has become the west's

         8   number one source of government guaranteed small business

         9   loans and multi-family affordable housing finance.  In the

        10   last five years, we have booked nearly $1.5 billion in

        11   community related small business loans and approximately

        12   $2 billion in credit for multi-family affordable housing,

        13   including more than $600 million in the first half of

        14   1998.

        15            Last year, Bank of America became the first major

        16   bank to launch an initiative tailored specifically around

        17   the banking needs of rural America.  Our rural 2,000

        18   Community Development Initiative includes a three year

        19   $500 million community development lending goal.  It also

        20   calls for $5 million in grants that will benefit rural

        21   communities and Indian country.  Helping us to carry out

        22   this initiative are four advisory committees that include

        23   42 rural community experts and practitioners.

        24            We were the founders of the California Community

        25   Reinvestment Corporation which provides permanent

        26   financing for multi-family affordable housing and serves
 .

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         1   as the model in the western United States for other bank

         2   consortiums.  We have invested in dozens of other similar

         3   multi-bank organizations.

         4            To help create jobs and stimulate economic growth

         5   in minority communities, we have invested more than $32

         6   million in minority venture capital funds.

         7            We continue to expand homeownership opportunities

         8   among low-income and minority borrowers through our

         9   Neighborhood Advantage program which has generated loans

        10   of more than $15 billion since its inception.  In 1997,

        11   nearly one-fourth of all our mortgage loans were made to

        12   minorities and low- and moderate-income borrowers.

        13            We've just introduced a new zero downpayment

        14   mortgage program for low- and moderate-income borrowers

        15   which has had stunning results in our demonstration

        16   markets.  In fact, we accepted nearly $300 million in

        17   applications in just three months.

        18            In 1992, we introduced Advantage Business Credit,

        19   a lending initiative that has taken much of the paperwork

        20   out of small business loan applications for $100,000 or

        21   less.  In fact, the application for this product is just

        22   one page.  During the last six years, our so-called ABC

        23   program has generated loans of $4.1 billion.

        24            And we've trained more than 15,000 of our

        25   associates in diversity programs so that they can better

        26   respect and cherish the differences that make our company
 .

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         1   and our communities unique.  We believe that changing

         2   demographics represent new markets and opportunities for

         3   us to serve people.  Or as my predecessor, Dick Rosenberg,

         4   said so often, quote, "Service to low-income communities

         5   is the right thing to do and the smart thing to do,"

         6   unquote.

         7            We're also helping to meet the financial needs of

         8   a changing population by delivering ATM service in three

         9   languages and staffing many branches with employees who

        10   speak Spanish, Japanese, Korean, Chinese or Tagalog.

        11            And since 1991, we have helped to strengthen

        12   local education, economic development and environmental

        13   quality with $206 million in contributions to nonprofit

        14   organizations across the western United States.

        15            We were the leading advocate for the revised CRA

        16   regulations, encouraging banks, regulators and politicians

        17   to give the regulations a chance.  We recently commented

        18   positively to the Federal Reserve on Regulation B which

        19   calls for the voluntary collection of race and gender data

        20   on small businesses.  We've spoken out and taken

        21   leadership positions on child care, Proposition 13, urban

        22   sprawl, water, Hispanic higher education and other issues

        23   important to all of our communities.

        24            We've established ourselves as good corporate

        25   citizens through an environmental program that has

        26   resulted, among other things, debt for nature swaps to
 .

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         1   preserve Latin American rain forests.  We were the first

         2   major financial institution to sign the CERES Principles,

         3   which hold signatories to a strict environmental code of

         4   conduct.

         5            Throughout the nation, Bank of America's record

         6   is one of commitment, commitments made and commitments

         7   kept.

         8            I think the point is best made in a letter that

         9   was forwarded to me a while back by then Comptroller of

        10   the Currency Gene Ludwig.  The letter was sent to

        11   Mr. Ludwig in October of 1997 by the Greenlining

        12   Institute's Executive Director and General Counsel who

        13   wrote him about our CRA performance.  Here's what they

        14   said, quote, "The so-called outstanding rating given to

        15   almost half of all very large financial institutions is

        16   inadequate regarding Bank of America.  As we previously

        17   discussed, Bank of America is the overall CRA leader.  We

        18   believe the rating for Bank of America should be

        19   outstanding plus," unquote.

        20            I hope this helps give you a better understanding

        21   of our community commitment.

        22            NationsBank has a similar commitment to its

        23   communities just as we are both committed to our

        24   associates.  Hugh McColl will elaborate on this for you

        25   during his testimony.  I'd like to turn it over to Hugh

        26   but first allow me to close with this thought.
 .

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         1            A.P. Giannini once said, "When nationwide branch

         2   banking is an accomplished fact, then America will have

         3   come of age financially."

         4            That's what our merger is all about, it will

         5   produce an awesome combination and its power will be

         6   unleashed for the benefit of this country.

         7            Mr. McColl and I are convinced of this, that is

         8   why we shook hand on this deal and that is why we'll

         9   become teammates.  And now I'd pleased to introduce my

        10   colleague at NationsBank, Hugh McColl.

        11            MR. McCOLL:  Thank you, David.  This meeting is

        12   about the effects bank mergers have on communities.  This

        13   subject is close to my heart, as all of you know, my

        14   company has been through many mergers over the past 20

        15   years.

        16            In each, our intention has been to employ more

        17   people, win more money, do more business with minority

        18   vendors, be more active in the community, and generally

        19   make a bigger difference than our predecessor

        20   institutions.

        21            In fact, in reviewing the effects of these

        22   mergers on our communities, we have found almost

        23   universally that employment, lending, community

        24   development efforts and charitable contributions actually

        25   increase.  That has been our vision and it will continue

        26   to be so with this merger.  In San Francisco and in
 .

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         1   Charlotte and throughout our coast-to-coast franchise.

         2            Our goal is for the new BankAmerica Corporation

         3   to be the best community development bank in this country.

         4   So I welcome the opportunity to share with you the values,

         5   efforts, and achievements that make NationsBank a positive

         6   force in all the communities where we do business.

         7            Now, as you know, NationsBank has a strong record

         8   of community investment.  We have achieved and maintained

         9   outstanding CRA ratings.  We have been a leader in our

        10   local market and we have consistently sought out local

        11   community based partners to help us achieve our community

        12   development goals.

        13            Let's consider some of the results.  In 1997

        14   alone, our mortgage lending to minority borrowers topped

        15   $2.7 billion and our mortgage lending in low-income

        16   neighborhoods topped $2.5 billion.  NationsBank is the

        17   number one bank lender to small businesses in this

        18   country.

        19            Our total production in 1997 was more than $11

        20   billion, $2.3 billion of which was loaned in low-income

        21   areas.  We're also the number one bank originator of SBA

        22   loans in the United States and we have preferred lender

        23   status in every state in our franchise.

        24            Our investment capabilities are significant and

        25   unique with more than $520 million in community

        26   development equity investments currently on our books.
 .

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         1            The NationsBank Community Development

         2   Corporation, with the help of many local partners, has

         3   involved a or re-habbed more than 14,000 units of

         4   affordable housing, investing more than $300 million.  Our

         5   Community Development Corporation is the only bank owned

         6   CDC that serves as both a developer of and investor in

         7   affordable housing.

         8            The NationsBank Small Business Investment

         9   Corporation makes equity investments in small and

        10   minority-owned companies.  Through it, we've invested more

        11   than $15 million in small businesses across the country.

        12   Finally, we have invested more than $50 million in

        13   minority-owned financial institutions and community

        14   development financial institutions.  These organizations

        15   extend our reach to low-income borrowers and provide

        16   capital to distressed neighborhoods in ways that no

        17   traditional bank can.

        18            Now, looking at what we've accomplished is

        19   important, but to understand how we'll continue to be

        20   successful in the future, we should look at how we've

        21   achieved these results.

        22            Our approach can be boiled down to three basic

        23   principles.  One, we build strategical alliances with

        24   community based organizations.  Two, we believe in a

        25   national commitment delivered and differentiated locally.

        26   And, three, we believe strongly in accountability.
 .

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         1            Our partners include national organizations as

         2   well as hundreds of local community based organizations in

         3   cities, towns, and neighborhoods where we do business.

         4   These alliances will represent a fundamental way -- the

         5   fundamental way that we do business.  We seek partnerships

         6   for the betterment of neighborhoods.

         7            Our purpose in these partnerships is not to

         8   compete against community based organizations but, rather,

         9   to work with them to improve neighborhoods.

        10            Our decentralized management philosophy means

        11   that we understand that one size does not fit all

        12   communities in need.  In other words, associates across

        13   the country do not get community development instructions

        14   from Charlotte, North Carolina, they get the resources

        15   they need and they get a corporate culture that backs them

        16   up when they decide what needs to be done.

        17            Our commitment to accountability is self-evident.

        18   Since 1992, we have provided detailed reporting at the

        19   local, state and national level on all of our results.

        20   This process ensures that we continue to meet the evolving

        21   needs of our communities.  Equally important, it provides

        22   further opportunities to gain feedback from community

        23   groups, civic leaders and the public.

        24            Now, let me be perfectly clear about one thing.

        25   Our goal has never been simply to meet the requirements of

        26   the Community Reinvestment Act.  We strive to lead in
 .

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         1   everything we do, and that includes building strong

         2   communities.  Our commitment to our communities extends

         3   throughout the company, to every business line and to

         4   every associate throughout our franchise.

         5            Beyond our core business activity, which fuels

         6   the economy, supports the tax base and provides

         7   employment, there are five areas in which NationsBank and

         8   its associates are active in supporting our communities.

         9   And they are, first, community leadership, an associate

        10   volunteerism; second, individual and corporate

        11   philanthropy; three, commitment to adversity; and, four,

        12   minority business development; and, five, progressive

        13   marketing programs and business policies.

        14            Now, I'd like to touch on each of these areas

        15   briefly.  Community leadership and associate volunteerism

        16   are important parts of the NationsBank culture.  At the

        17   corporate level we provide leadership to our communities

        18   by putting our financial muscle behind important community

        19   projects.  By advocating for a stronger CRA and a

        20   permanent low-income housing tax credit, and by working

        21   with local governments and community organizations to

        22   achieve shared goals.

        23            We also have a strong culture of associate

        24   volunteerism.  Associate volunteers receive two hours of

        25   paid time of every week to work in the schools.  Local

        26   councils within the bank identify volunteer opportunities
 .

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         1   for our associates, and our newest program, NationsBank

         2   Neighborhoods, offers cash grants in an associate's name

         3   to organizations at which the associates volunteer.

         4            Now, the next area I mentioned is philanthropy.

         5   Simply put, NationsBank is the most generous financial

         6   institution in the country and the new BankAmerica will be

         7   so by a long shot.  Our combined budget this year will

         8   exceed $100 million.  No one else even comes close.

         9            One of the most important aspects of our

        10   decision-making process is that we put the control over

        11   charitable dollars in the hands of local executives who

        12   know best how to serve their communities.  This policy has

        13   resulted in not just increased giving but more effective

        14   giving with dollars going where they are needed the most

        15   throughout the franchise.

        16            The third area in which we work very hard to

        17   strengthen communities is building diversity among our own

        18   associates.  Our company will stretch from coast to coast

        19   and will include the entire sunbelt, the Pacific

        20   Northwest, the Midwest and the Mid-Atlantic.  Now, while

        21   we are unalterably opposed to quotas of any type, we will

        22   continue to support affirmative action and we will have

        23   one of the most diverse work forces of any large

        24   corporation in this country.

        25            And it is our intention that our board of

        26   directors will be one of the most diverse corporate boards
 .

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         1   in the country.  Not at some time in the distant future,

         2   but on day one.

         3            One of the most important areas of focus in

         4   building strong communities is minority business

         5   development.

         6            NationsBank has been a pioneer and a national

         7   leader in creating and sustaining a strong minority

         8   business development program.  NationsBank was the first

         9   financial institution to be recognized by their Minority

        10   Supplier Development Council as the corporation of the

        11   year.  And the first to receive this recognition two years

        12   in a row.

        13            In 1990, NationsBank set a goal of ten percent

        14   for directing discretionary spending to women and

        15   minority-owned businesses.  Since then, we have averaged

        16   more than 15 percent, amounting to more than $470 million

        17   spent with women and minority-owned businesses.  Once

        18   again, our self-imposed goal turned out to be a floor, not

        19   a ceiling.  And in typical NationsBank fashion, we blew it

        20   away.

        21            Now, finally, we are supporting our communities

        22   through progressive marketing programs and business

        23   policies.

        24            For example, we have had a formal Hispanic

        25   Marketing Program for more than five years in an effort to

        26   reach out to this growing segment of our population.
 .

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         1            We've installed bilingual ATMs, hired bilingual

         2   tellers and telemarketers and formed partnerships with the

         3   National Council of La Raza, the Hispanic Association on

         4   Corporate Responsibility and SER-Jobs for Progress, Inc.,

         5   as well.

         6            Now, throughout these partnerships, we have begun

         7   to develop programs and products that will make banking

         8   with us easier and more accessible for all members of the

         9   Hispanic community.

        10            What we want to establish with our customers, all

        11   our customers, regardless of race, ethnicity or economic

        12   means are strong relationships and that's why we

        13   implemented a relationship approach to fees and pricing

        14   that minimizes fee increases for as many of our individual

        15   deposit account customers as possible.

        16            This spring NationsBank broke from the pack to

        17   offer pricing benefits to a vast number of customers.  We

        18   eliminated check card fees for all customers, and fees for

        19   a broad array of services associated with our two most

        20   popular accounts were eliminated or frozen through the

        21   year 2000.

        22            Now, we've heard Dave Coulter talk about his

        23   company's commitment to building strong communities across

        24   the western half of the United States.  And you've heard

        25   me talk about my company's commitment to doing the same

        26   across the NationsBank franchise.
 .

                                                                    24


         1            In fulfilling these commitments, both our

         2   companies have a strong record of accessibility and

         3   proactive partnerships with local community groups.  In

         4   fact, since our merger announcement, we've met with

         5   hundreds of community organizations to talk about ways we

         6   can best work together to improve our neighborhoods and

         7   communities.

         8            Bringing our companies together will only enhance

         9   our ability to deliver on all of our commitments.

        10            The company we will create will be the leading

        11   American bank of the 21st Century and we will be this

        12   country's premiere community development bank, as well.

        13   This will benefit all of our constituents.

        14            First, our customers will see a new standard for

        15   choice, convenience, value and market presence.  Second,

        16   our associates will realize more opportunities from

        17   working at a larger, stronger company.  And, third, by

        18   investing in our communities, by providing good jobs and

        19   creating new ones and by helping to improve the quality of

        20   life for customers and associates alike, we will be the

        21   model for corporate citizenship.

        22            We will build on the best initiatives from both

        23   banks, retaining the Bank of America Community Development

        24   Bank and NationsBank Community Development Corporation.

        25   These vehicles, as well as new initiatives to promote

        26   rural development and Indian country lending and
 .

                                                                    25


         1   investment, will be used to rebuild neighborhoods, create

         2   jobs and provide access to the financial system as never

         3   before.

         4            We will keep decision-making in the hands of

         5   local bankers and managers who know best how to serve

         6   their communities.

         7            We will continue to lead locally and nationally

         8   and we will deliver on our commitments whatever and

         9   wherever they may be.

        10            Now, recently we announced a ten year $350

        11   billion commitment to community development lending and

        12   investing.  The commitment targets $180 billion for small

        13   business lending.  115 billion for affordable housing, $25

        14   billion for economic development and $30 billion for

        15   consumer lending.  Now, let me underscore, this is a

        16   floor, not a ceiling.

        17            Furthermore, fulfilling this commitment will not

        18   be easy, it will be a stretch.  This commitment will push

        19   our new company and each of us individually to be even

        20   more proactive, more innovative and more creative than

        21   we've ever been.  We view this as a challenge, and as with

        22   all challenges, we are ready and eager to take it on.

        23            Both banks have a demonstrated record of working

        24   with community partners.  Yet, there are those who oppose

        25   this merger because we have not signed, quote, unquote,

        26   "CRA agreements" and because we have not itemized the
 .

                                                                    26


         1   commitment by market or by product.

         2            I understand the passion these organizations have

         3   for their specific communities.  As I've said, we share

         4   common goals.  However, their desire to receive the

         5   greatest financial support possible for their individual

         6   causes should not overshadow the fact that our pledge, the

         7   largest of its kind ever, is designed to benefit all of

         8   our communities.

         9            When we created this commitment, we decided not

        10   to itemize the commitment by market or by product.  And

        11   there's a good reason for this.

        12            Because community needs and circumstances are

        13   always changing, we believe the best approach is a

        14   flexible commitment that establishes goals on a nationwide

        15   basis and relies on capacity and demand within each market

        16   to determine how goals are met.

        17            Our outstanding record of achievement,

        18   accountability and public reporting of results

        19   demonstrates the CRA agreements and itemized commitments

        20   are unnecessary for our company, they are unwarranted,

        21   they are burdensome to manage, they divert resources from

        22   the areas most in needs and they prevent us and our

        23   partners from meeting the changing needs of our

        24   communities.  In short, they're not in the best interests

        25   of underserved neighborhoods.

        26            Now, for our part, NationsBank is, and the new
 .

                                                                    27


         1   BankAmerica will be, devoted to building strong, growing,

         2   vigorous communities everywhere that we do business.

         3            Community development has been a part of both of

         4   our cultures and it will be an integral part of our new

         5   culture.  It's a fundamental part of the way that we do

         6   business.  It's essential to the future health of our

         7   company and perhaps, most important, as Dave said, it's

         8   simply the right thing to do.

         9            This is what we have always believed, it's what I

        10   believe today and I assure you that it is not going to

        11   change.  Now, we'll be happy to take your questions.

        12            MS. SMITH:  Thank you.  Bob.

        13            MR. FRIERSON:  Thank you very much.  This is a

        14   question to the panel, so anyone feel free to respond.  I

        15   have several.  The board is required to consider the

        16   effects of this proposal and the convenience and needs of

        17   the communities served and this consideration takes into

        18   account the records of performance under the Community

        19   Reinvestment Act of NationsBank and BankAmerica.

        20            In assessing the effects of the proposal on

        21   communities, particularly communities in California,

        22   should the board rely on NationsBank's record or

        23   BankAmerica's record?  If the board should rely on

        24   NationsBank's record, how does NationsBank intend to

        25   ensure that all individuals in all communities will have

        26   access to a full range of products that assist in meeting
 .

                                                                    28


         1   credit needs that may differ substantially from community

         2   to community?  If the board is to rely on BankAmerica's

         3   records, which programs -- and I believe I understood you

         4   correctly to say you would be retaining BankAmerica's

         5   Community Development Bank -- which programs in addition

         6   to that would NationsBank expect to continue?

         7            MR. McCOLL:  Can I answer the last question

         8   first?  As to the last question, we intend to retain all

         9   of what the Bank of America has been doing, including

        10   their support through their foundation of local community

        11   efforts and Don Mullane can outline all of the aspects of

        12   what has been done.

        13            We ask that you measure us on both of our

        14   records.  And what we believe we would do is bring

        15   whatever we think is the best of NationsBank's efforts

        16   also to California and to the west coast to supplement

        17   whatever has been done by the Bank of America.  In other

        18   words, we think the sum will be greater than the parts.

        19   And that's where I am on that.

        20            I may have missed one of the questions.  Oh, you

        21   want to talk about making credit available to all

        22   individuals?

        23            MR. COULTER:  Sure.  I will be somewhat

        24   repetitive but I would indicate that we are trying to

        25   create a new company here.  In fact, we refer to it today

        26   as the new BankAmerica Corporation, and in that sense,
 .

                                                                    29


         1   we're trying to take the best of what we think are two

         2   fine organizations today.  We're blending this merger, as

         3   indicated, from the establishment of a policy committee

         4   with three senior individuals from Bank of America and

         5   three senior individuals from NationsBank and we are going

         6   to attempt to operate on a nationwide basis.  This is the

         7   first coast-to-coast franchise.

         8            And in that sense, I think we have a clear

         9   understanding that to be successful on a nationwide basis

        10   size is not the only important criteria.  To be successful

        11   on a nationwide basis and take advantage of size, you have

        12   to demonstrate local market or natural market leadership.

        13   And that involves community investment efforts as well as

        14   day-to-day business efforts in terms of relating the

        15   products and services you provide in a natural market, be

        16   it the Bay Area or be it St. Louis or be it Jacksonville,

        17   Florida in a way that the market clearly believes that you

        18   have the decision-making power to offer the products and

        19   services that makes sense in that natural market.

        20            MR. McCOLL:  I would just like to add one thing.

        21   As to the understanding of the difference in the markets,

        22   which I think is a fair question, it should be noted that

        23   NationsBank operates in 16 states now, four major regions,

        24   each of which is different.  For instance, the cattle are

        25   more important in Texas by some staggering margin than

        26   they are in South Carolina where cotton is more important.
 .

                                                                    30


         1   And we have different industries, from aerospace to the

         2   furniture industry, just illustratively.

         3            And we understand that the needs of the

         4   individuals in each market are quite different and we

         5   respond.  I made the point earlier and I'd like to

         6   underline it, that we have local market leadership that

         7   makes decisions in the best interests of each individual

         8   community.

         9            So our response in Southern California may well

        10   be quite different from South Carolina, albeit it will be

        11   to achieve the same goals, which is support small

        12   business, adequate housing at fair values and services

        13   available to everyone in the areas where we do business.

        14   So it's not something we're unfamiliar with.

        15            We have earned our CRA ratings over a broad

        16   number of states and broad regions and we have

        17   demonstrably performed in facing the differences that are

        18   existent in each of these markets and we will continue to

        19   do so.

        20            Let me say one last thing.  We are Americans, we

        21   understand what America is about, and it's about all of us

        22   here in the room, even the right to disagree with each

        23   other.  And I just might -- in response to the earlier

        24   statement, you need to understand that we support and, in

        25   fact, furnish money to a large number of the groups that

        26   are here protesting this merger.
 .

                                                                    31


         1            MR. FRIERSON:  Let me follow up on the

         2   characterization which has been used several times here

         3   which is the coast-to-coast banking franchise.  This

         4   proposal has been characterized as allowing customers that

         5   would have access to approximately 5,000 branches and I

         6   believe 15,000 automated teller machines.  In addition to

         7   what you've told us already, can you provide us with any

         8   more detail on how it's going to serve the convenience and

         9   needs of those residents in communities who may only use

        10   the branches and the ATMs that are located within their

        11   own communities?

        12            MR. McCOLL:  Well, we'll try.  The first and most

        13   important thing that I believe that banks should do is to

        14   provide the fuel for the economy, that is, provide credit.

        15   Now, that's the first thing we should do.

        16            We have a large deposit base, but in addition to

        17   that, because of our strong earnings and capital base,

        18   we're able to raise money across the world.  And we have

        19   demonstrated conclusively and can demonstrate empirically

        20   that we're net importers of capital into every market in

        21   which we operate.  And so it starts with that, being a net

        22   importer of capital and furnishing it to markets no matter

        23   how large they are or how small they are.  We start with

        24   that and that's because of our strong ability to access

        25   the world markets and to bring money into the market that

        26   is beyond our deposit base.
 .

                                                                    32


         1            Secondly, because of our company's success, both

         2   companies' success, we are able to develop software that

         3   drives down cost, not only to us but to the customer, that

         4   is it makes the products that are available to the

         5   customer work better for them and facilitates the ease in

         6   which they do their business.  And that isn't a lot

         7   different, candidly,  from Wal-Mart which is a

         8   coast-to-coast company which does the same thing.

         9            Dave, you may want to comment further about that.

        10            MR. COULTER:  I have just a few comments.  Even

        11   if you're confined to a pretty small local market, I

        12   didn't move very far out of the small town I grew up in

        13   Port City, Pennsylvania for the first 16 or 17 years of my

        14   life.  I'd still argue that value and convenience that we

        15   can provide are quite important.

        16            Maybe you go to your normal -- maybe you go to

        17   your branch on a weekly basis.  But perhaps as technology

        18   changes and the world continues to evolve and you don't

        19   have transportation, if you can access your bank via your

        20   interactive cable TV, that's of some value to you.  If you

        21   need information about sending a child to college in

        22   another part of the United States and need to be able to

        23   move money back and forth to that child, that's of value

        24   to you.

        25            So I think the basic benefits you laid out at the

        26   start of the question are quite important and very
 .

                                                                    33


         1   valuable.

         2            In addition to that, it's certainly my experience

         3   here in California that it does not take a very small

         4   business today to have international, if not global,

         5   aspirations to look at this broad pacific rim which we're

         6   fortunate to be on one edge of and desire to sell some of

         7   its product offshore.

         8            Now, we're in a little bit of a disruptive

         9   economic period but I think that's a long-term desire and

        10   a long-term need.  And that's a case where I think the new

        11   BankAmerica Corporation can bring a wide range of services

        12   in how to do business in offshore markets that appear very

        13   foreign and very distant to many small businesses today.

        14   And as I said, I think most small businesses have those

        15   kinds of aspirations and dreams.

        16            MR. McCOLL:  I'd like to add one thing.  We have

        17   about a hundred thousand teammates in our company and Bank

        18   of America has approximately the same number of people who

        19   are drawing a paycheck, in effect, from the company, so a

        20   couple hundred thousand people working.

        21            We live in these communities, large and small,

        22   and if for no other reason, we all like our communities

        23   that we live in and it's in our interests both personally

        24   and corporately to support those communities and we're

        25   going to do that.

        26            Secondly, we are interested in making money.  We
 .

                                                                    34


         1   cannot make money if we don't do the things that banks are

         2   supposed to do.  That is, if we don't lend money.  If we

         3   do not make service and products available at reasonable

         4   prices, they can go somewhere else and we will lose the

         5   business.  So we are incented to do the right thing and

         6   will do so.

         7            MR. FRIERSON:  I have one last question, I just

         8   want to clarify the record.  NationsBank has stated that

         9   it will -- it intends to expand all aspects of the

        10   BankAmerica rural 2000 Community Development Initiative.

        11   Will the rural 2000 initiative be extended to all rural

        12   communities that would be served by the combined

        13   organization if the merger is approved and how will the

        14   initiative be expanded?

        15            MR. McCOLL:  Well, we'll do that where it makes

        16   sense.  And it will be expanded under -- obviously, under

        17   the leadership of the people who thought it up inside our

        18   company.  But we'll obviously have to bring more people to

        19   the -- bring more people to it from our company, that is,

        20   added staffing.  Because of time zones, because of

        21   different types of rural needs.  As I said, a rural need

        22   in eastern North Carolina or South Georgia is quite

        23   different from what it is in Kansas or Iowa or in Southern

        24   California or in -- right here in the valley.  So it will

        25   have to be tailored to be responsive to each region.  But,

        26   yes, we intend to continue with the outreach.
 .

                                                                    35


         1            MS. SMITH:  Thank you very much for your

         2   presentation and we will move on to the first panel.

         3            MS. ORR-SMITH:  Madam Chairman, I'd like to

         4   address this letter to Mr. McColl and Mr. Coulter

         5   requesting a meeting with some of the protestors to

         6   discuss the specific issues raised.  Thank you.

         7            MS. SMITH:  I think the first panel is mostly up

         8   but if there's anyone who hasn't made it up.  And if you

         9   will just introduce yourselves to the audience as you are

        10   seated and let's start with the person on the extreme

        11   right.
Last update: December 3, 2010