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Public Meeting Transcripts

Public Meeting Regarding NationsBank and BankAmerica

Friday, July 10, 1998

Transcript of Panel Nineteen

                                                           429

           
      19              MS. SMITH:  We'll start with Mr. Hewett. 
           
      20              MR. HEWETT:  Thank you.  My name is Conrad W.
           
      21   Hewett.  For over the last three years I served as the
           
      22   State Superintendent of Banks and Commissioner of
           
      23   Financial Institutions for the State of California.  My
           
      24   term ended this past June 30th.  
           
      25              My prior to my position for the State of
           
      26   California, I was a managing partner at Ernst & Young. 
           



                                                             430

       1   For over 33 years I specialized in financial
           
       2   institutions.  Consequently, I have been involved in
           
       3   many mergers and acquisitions of financial institutions. 
           
       4              During my past three years in my capacity as
           
       5   State Superintendent of Banks and Commissioner, I have
           
       6   approved a number of bank mergers and acquisitions.  The
           
       7   largest acquisition was Wells Fargo Bank acquiring first
           
       8   Interstate Bank. 
           
       9              The California laws concerning the sale,
           
      10   merger and conversion of depository corporation are very
           
      11   similar to the federal agency laws such as the Federal
           
      12   Reserve Bank.  
           
      13              As a regulator, I had several standards to
           
      14   consider under California banking law before I could
           
      15   approve or deny such a transaction.  Some of the
           
      16   elements of the law included:  
           
      17              One, the transaction would not result in a
           
      18   monopoly; 
           
      19              two, competition would be not lessened or be
           
      20   anti-competitive; 
           
      21              three, the convenience and needs of the
           
      22   community will be served; 
           
      23              fourth, the shareholders equity will be
           
      24   adequate, and the financial condition of the combined
           
      25   banks will be satisfactory; 
           
      26              fifth, directors and executive officers will
           



                                                             431

       1   be satisfactory; 
           
       2              and, last, the surviving entity will afford
           
       3   reasonable promise of successful operation and operate
           
       4   in a safe and sound manner. 
           
       5              In my opinion, this proposed merger meets all
           
       6   the standards to be considered under the Bank Holding
           
       7   Company Act.  
           
       8              I note that the proposed transaction does not
           
       9   result in the largest bank in the United States.  Also,
           
      10   this merger will operate in only 25 of our 50 states.  
           
      11              I publicly stated over three years ago that
           
      12   there would be a large consolidation in the banking
           
      13   industry.  I had many reasons for this statement and I
           
      14   believe that this trend will continue. 
           
      15              There is too much capacity in the banking
           
      16   industry, too many banks and too much competition from
           
      17   outside the banking industry, thus, the need to
           
      18   consolidate. 
           
      19              Even our largest United States banks face
           
      20   tremendous competition from companies such as Merrill
           
      21   Lynch, GE Capital, General Motor Acceptance
           
      22   Corporations, all of the mutual funds, such as Fidelity
           
      23   and T. Rowe Price and the many consumer finance
           
      24   companies such as Household Finance and now the
           
      25   internet.  Many of these companies are not subject to
           
      26   the same state and federal regulatory laws such as the
           



                                                             432

       1   bank's presently are.  
           
       2              Other reasons I see for this merger are: 
           
       3              First, the high cost of investment in
           
       4   technology helps drive these mergers and consolidations. 
           
       5   The non-bank competitors have invested heavily in
           
       6   technology and banks must invest as heavily, if not
           
       7   more, in order to compete and to survive.  This
           
       8   investment requires a very large capital base, and one
           
       9   way to create this base is through consolidation;
           
      10              secondly, our largest U.S. banks are still
           
      11   small compared to the other banks in the world which
           
      12   comprise mainly of the Japanese, German and French
           
      13   banks. 
           
      14              as you know, the U.S. is rapidly becoming a
           
      15   globally player and world trader.  Our banks must be
           
      16   large enough to provide the financing and capital
           
      17   necessary for our businesses to compete worldwide; 
           
      18              third, because there is very little overlap
           
      19   in this merger concerning the consumer, the consumer
           
      20   need and convenience should be satisfied.  Branch
           
      21   banking has changed dramatically in the past five years
           
      22   because of ATM usage, banking by phone, computer banking
           
      23   and banking by mail.  The consumer has dictated this
           
      24   shift in the delivery system of banks.  The consumer has
           
      25   a wide choice in availability of financial institutions
           
      26   from which to choose.  As I said earlier, the
           



                                                             433

       1   competition is fierce.  This transaction should enhance
           
       2   the service and products available to the customers of
           
       3   the new bank.  This is truly an interstate bank merger
           
       4   as contemplated by the federal Riegle-Neal Interstate
           
       5   Banking and Branching and Efficiency Act of 1994, which
           
       6   congress passed, and the law became effective September
           
       7   29th, 1994.  As I see, as a result, the consumer will be
           
       8   the benefactor of one of the first truly interstate
           
       9   banks in our country.     
           
      10              Concerning the other facts of this merger,
           
      11   both companies are financially strong as indicated by
           
      12   their financial statements, capital ratios, operating
           
      13   ratios and market capitalization. 
           
      14              If this transaction is approved by the
           
      15   Federal Reserve Board, in my opinion it should be, then
           
      16   a nationwide franchise will be delivered which has the
           
      17   potential to deliver financial service to millions upon
           
      18   millions of families and businesses. 
           
      19              Thank you. 
           
      20              MS. SMITH:  Thank you.  Mr. Collette. 
           
      21              MR. COLLETTE:  Is it on? 
           
      22              MS. SMITH:  Yes, if you just bring it a
           
      23   little closer.  
           
      24              MR. COLLETTE:  Thank you.  I appreciate the
           
      25   opportunity of expressing -- addressing this very
           
      26   important topic before the Federal Reserve.  
           



                                                             434

       1              My name is Craig Collette.  I am a member of
           
       2   the Board of Directors of the California Independent
           
       3   Bankers and president of a small bank in Southern
           
       4   California called Marathon National Bank, it's a $75
           
       5   million institution.  
           
       6              As an independent banker with 33 years of
           
       7   experience, I would like to give you my views on the
           
       8   impact of this gigantic merger between NationsBank and
           
       9   Bank of America.  I am speaking this morning also on
           
      10   behalf the California Independent Bankers, which
           
      11   represents some 200 banks throughout our state. 
           
      12              Let me first address you, though, as a
           
      13   concerned citizen of the State of California.  When
           
      14   legislation was debated in Sacramento three years ago,
           
      15   this legislation enabled this kind of merger, and the
           
      16   California Independent Bankers raised an important
           
      17   issue:  What will the tax impact be when we permit out-
           
      18   of-state institutions to own California banks and their
           
      19   headquarters are moved out of state?  Little attention
           
      20   was given to this critical question.  As a concerned
           
      21   taxpayer in the state, I would like to raise this issue
           
      22   again. 
           
      23              I would recommend that those that are
           
      24   reviewing this application for merger derive estimates
           
      25   and projections of what this merger will mean to
           
      26   California taxpayers when the headquarters of the
           



                                                             435

       1   combined institutions shift to Charlotte, North
           
       2   Carolina. 
           
       3              Matter of fact, all of California's three
           
       4   largest financial institutions are now or about to be
           
       5   moved out of state or the headquarters moved out of
           
       6   state from these entities.  
           
       7              Now, as an independent bank president, I have
           
       8   additional views.  The United States, with the passage
           
       9   of the Riegle-Neal bill, is moving from a diversified
           
      10   financial system to one characterized by a lopsided
           
      11   barbell with just a very few large banks at one end and
           
      12   a large number of independent banks at the other.  
           
      13              To quote Hugh McColl, Chief Executive of
           
      14   NationsBank, U.S. banking will be quote "...a
           
      15   barbell-shaped industry with a dozen or a half dozen
           
      16   very large players at one end and four or five thousand
           
      17   boutiques on the other," unquote.  On this issue we
           
      18   agree, but what are the implications of such a
           
      19   structure?  I feel strongly that increased financial
           
      20   concentration means less competition.  
           
      21              NationsBank and Bank of America's merger at
           
      22   60 billion is the largest between two American banks. 
           
      23   The bank created by this merger will have 8.2 percent of
           
      24   the Nations deposits.  Dangerously close to the ten
           
      25   percent limit set by the Riegle-Neal bill. 
           
      26              Unfortunately, this trend towards
           



                                                             436

       1   mega-mergers will probably continue given the overvalued
           
       2   asset base our own stock market has created.  The trend
           
       3   toward mega-mergers, this includes this merger, is not
           
       4   healthy for Main Street, where I come from, is very
           
       5   risky for Wall Street and it is bad for the Federal
           
       6   Reserve and other regulators who will have the
           
       7   responsibility to examine and possibly to even bail out
           
       8   these mega-giants when they are mismanaged, over
           
       9   speculate or reach too far in risky ventures.  These
           
      10   banks are the new super-sized, too-big-to-fail
           
      11   varieties.  
           
      12              The evidence shows that increased the
           
      13   concentration in the banking industry has not benefited
           
      14   bank customers.  The economies of scale that supposedly
           
      15   justify large bank mergers either do not materialize or
           
      16   are not passed on to the customers.  In addition, large
           
      17   interbank mergers reduce competition in ATM network
           
      18   markets as well as credit card markets. 
           
      19              Consider five points:  
           
      20              First, larger banks charge higher fees. 
           
      21   According to Bank Rate Monitor, none of the top 50 banks
           
      22   in the U.S. offer the least expensive checking accounts. 
           
      23   In fact, those offering the most expensive checking
           
      24   accounts are banks involved in the latest mega mergers,
           
      25   Citibank and NationsBank.  The best deals are offered by
           
      26   smaller regional and community banks.  In a 1997 study
           



                                                             437

       1   found a widening gap between large and small bank fees; 
           
       2              the Federal Reserve study found the average
           
       3   fees charged by multi-state banks are significantly
           
       4   higher than those charged by single state banks, even
           
       5   accounting for location and other factors that might
           
       6   explain the differences; 
           
       7              two, banks mergers have an adverse effect on
           
       8   consumer pricing.  A Boston Federal Bank study of 499
           
       9   bank mergers found the combined banks lowered interest
           
      10   rates paid on deposits regardless of the amount of
           
      11   competition in the market; 
           
      12              three, economies of scale.  It is
           
      13   interesting, the evidence suggests that the optimal size
           
      14   of a bank in terms of economies of scale, profitability
           
      15   and efficiency is between $100 and $1 billion, quite a
           
      16   bit smaller than the 300 to 600 billion loss that will
           
      17   be created from the latest mergers.  A Harvard study
           
      18   showed that instances of improved operating results
           
      19   after a merger were due primarily to higher repricing,
           
      20   not economies of scale, suggesting the use of increased
           
      21   market power to raise prices.  Given sufficient market
           
      22   power, large banks can price smaller competitors out of
           
      23   the market with below market rate loans or above market
           
      24   rate deposits; 
           
      25              four, large interbank mergers also have
           
      26   negative effects on competitive ATM network markets;
           



                                                             438

       1              and, five, large bank mergers are creating an
           
       2   oligopoly of credit card issuers led by Citibank, Bank
           
       3   One and NationsBank.  
           
       4              It is also indicated by the Rand Research
           
       5   organization that when the pending mergers are
           
       6   consummated the top ten credit card issuers will control
           
       7   72 percent of the credit card market. 
           
       8              In conclusion, as an independent bank
           
       9   president, I am fully aware that in the beginning
           
      10   community banks will prosper from the fallout of
           
      11   customers from big bank mergers.  After these giants
           
      12   consolidate, however, there will be no longer a fair and
           
      13   equitable competitive environment in independent banks
           
      14   in the areas that I have pointed out in my testimony. 
           
      15   Bank customers and small businesses will suffer as a
           
      16   result.  
           
      17              Thank you very much. 
           
      18              MS. SMITH:  Thank you.  Kurmel.  
           
      19              MR. KURMEL:  My name is Larry Kurmel.  I am
           
      20   Executive Director of the California Bankers
           
      21   Association.  I'll just make a few points.  I've offered
           
      22   some testimony on some things that you can have for the
           
      23   records,  
           
      24              Much has been made over the increased
           
      25   dominance of the banking marketplace resulting from BofA
           
      26   and NationsBank merger.  Our view to the contrary is the
           



                                                             439

       1   merger will do no more harm to the banking industry in
           
       2   California, in fact, it will create market
           
       3   opportunities.  I base that on statements with
           
       4   interviews with community bankers throughout this state
           
       5   and the western United States.  Obviously Craig Collette
           
       6   was not among them. 
           
       7              But there is a very different view, as
           
       8   evidence, there were ten new bank charters in California
           
       9   in the last year.  In Nevada, which concluded in 1997
           
      10   with 21 community bank charters, now has 31 community
           
      11   bank charters.  I understand that's soon to be 32 or 33. 
           
      12              Frankly, there is more threat to the
           
      13   community banking business by unrestrained tax-exempt
           
      14   from credit unions than it will from the combined merger
           
      15   of BankAmerica and NationsBank, which has very little
           
      16   overlap in their marketplace, as you are all aware. 
           
      17              BankAmerica has long been a leader within the
           
      18   ranks of the industry in California.  And the California
           
      19   Banks Association, in particular, a past Chairman or
           
      20   president of our organization is Don Mulane, the current
           
      21   President of the California Bankers Association is Vice
           
      22   Chairman of the Bank of America, Kathy Burke. 
           
      23              The question we had is the commitment of
           
      24   NationsBank to the continued leadership role
           
      25   demonstrated by BankAmerica in California.  And Hugh
           
      26   McColl was a keynote speaker at our convention in May to
           



                                                             440

       1   personally provide that assurance and provide the
           
       2   assurance of his commitment to assuring healthy
           
       3   competition between large banks and community banks in
           
       4   the State of California. 
           
       5              Much has been made about combining and what
           
       6   happens with people and that sort of thing.  I should
           
       7   note the combined employee base of the two organizations
           
       8   is about 200,000 people.  That's larger than the City of
           
       9   Fresno.  Out of that they anticipate somewhere around
           
      10   2,000 to 2,500 jobs will actually be lost.  In relative
           
      11   terms, according to any business study I've seen, that's
           
      12   a relatively insignificant amount. 
           
      13              Let me talk a little bit, there is a lot of
           
      14   speculation about what do the commitments of these banks
           
      15   mean.  Let me focus for a moment, if I may, just on the
           
      16   $250 billion commitment.  I don't know about you, but
           
      17   that's a big number to me. 
           
      18              I started my career as a housing expert in
           
      19   the Department of Housing and Community Development in
           
      20   the State of California.  I was a deputy secretary to
           
      21   the Business Transportation Housing Agency in
           
      22   California. 
           
      23              MS. SMITH:  Would you move your mike a little
           
      24   to the left?  
           
      25              MR. KURMEL:  Sure.  Better?  
           
      26              MS. SMITH:  Yes. 
           



                                                             441

       1              MR. KURMEL:  I am reluctant to move to the
           
       2   left too much, but I appreciate it.  
           
       3              I was a deputy secretary to the Business
           
       4   Housing Transportation Agency under then Governor Jerry
           
       5   Brown and was part of the creation of the California
           
       6   Housing Finance Agency. 
           
       7              Bank of America was one of the instrumental
           
       8   entitles in providing a consortium of banks to provide
           
       9   low and very low multi-family housing financing in the
           
      10   State of California.  The consortium today, which
           
      11   includes, I believe, over 60 banks, mostly community
           
      12   banks, has opportunities for investment in CRA
           
      13   activities they would not have had on their own. 
           
      14              CCRC in California, in its ten years of
           
      15   existence, has done more multi-family, low and very
           
      16   low-income housing financing than has the California
           
      17   Housing Finance Agency in its 20 years of operation.  
           
      18   So, when it comes to commitment, you have to look at the
           
      19   record, it seems to me.  
           
      20              I testified in this very room about the
           
      21   Security Pacific and BankAmerica merger.  At that time a
           
      22   ten-year commitment was made by the bank of the
           
      23   surviving organization to CRA lending.  They met that
           
      24   requirement, met that threshold within three years and
           
      25   went on to fully exceed that.  Last year they started --
           
      26   established I believe it was $140 billion target and
           



                                                             442

       1   they were moving briskly towards fulfilling that public
           
       2   obligation they had created for themselves, I might add. 
           
       3              I would add one note of caution.  In my
           
       4   experience in housing and economic development, I am
           
       5   very cautious of throwing too much money at a problem. 
           
       6   For one reason, you don't want to throw out or denigrate
           
       7   the experience or exercise of experience of other
           
       8   players in that market.  
           
       9              For example, Mayor Corbin might note, that
           
      10   the largest community bank in Richmond is the Mechanics
           
      11   Bank of Richmond, an organization that had been there
           
      12   for over 90 years who had a substantial commitment to
           
      13   financing and improvement in that community.  
           
      14              You don't want BankAmerica/NationsBank
           
      15   commitment to go in there and blow through the ability
           
      16   of Mechanics Bank to participate in the restructuring
           
      17   and rebuilding of its communities. 
           
      18              So, in my view, you have to be real careful
           
      19   about being too specific with this large batch of
           
      20   dollars for fear of disrupting those processes that are
           
      21   already in place.  But, if you are looking at the track
           
      22   record of both NationsBank and BankAmerica as exercised
           
      23   through people like Don Mulane who have chaired the
           
      24   Community Bank of Bank of America, they have met every
           
      25   public goal they have established for themselves and
           
      26   exceeded that performance.  The same has been true in
           



                                                             443

       1   NationsBank in those market areas where it has been
           
       2   performing.  
           
       3              So I would just urge some caution playing
           
       4   with $350 billion dollars.  You don't want to end up
           
       5   tantamount to offering a drunk a bottle of Tokay.  Thank
           
       6   you. 
           
       7              MS. SMITH:  Thank you.  Mr. Koppe. 
           
       8              MR. KOPPE:  Thank you, and good morning.  My
           
       9   name is Bruce Koppe.  I am Executive Director of the
           
      10   Washington Bankers Association, located in Seattle,
           
      11   Washington. 
           
      12              The Washington Bankers Association represents
           
      13   substantially all of the commercial banks in our state,
           
      14   almost all of which fit the generally accepted
           
      15   definition of community bank.  
           
      16              Prior to assuming my present position, I
           
      17   spent over ten years as General Counsel to Rainier
           
      18   National Bank in Seattle, later Security Pacific Bank
           
      19   Washington.  Where my duties included responsibility for
           
      20   community affairs and social policy. 
           
      21              My time in Washington includes the period
           
      22   covering Bank of America's acquisition of Sea First Bank
           
      23   in which Bank of America had a significant interest and
           
      24   the relatively recent conversion of Sea First into
           
      25   branches of Bank of America.  
           
      26              During all of these periods and events, I
           



                                                             444

       1   have had significant contact with the Sea First/Bank of
           
       2   America Corporation in collaborative community affairs
           
       3   projects, as a representative of both donor and donee
           
       4   groups, as a competitor and in promotion of collective
           
       5   efforts on behalf of the banking industry in our state
           
       6   working with and through the bankers association. 
           
       7              My purpose today is to support the merger
           
       8   application and record of Bank of America, particularly
           
       9   its Sea First operation in the State of Washington. 
           
      10              Sea First has been and continues to be a
           
      11   leader in the community especially in community
           
      12   reinvestment.  
           
      13              I don't intend to recite specific
           
      14   accomplishments because those are known to the Federal
           
      15   Reserve through the Sea First/Bank of America CRA exams
           
      16   which for several years have resulted in ratings of
           
      17   outstanding.  Rather, I want to emphasize what I believe
           
      18   are important indicators of future conduct.  
           
      19              Much of the controversy surrounding mergers
           
      20   of institutions involves an attempt to determine what
           
      21   the future holds for the communities to be served.  The
           
      22   best indicators of that are how the institutions have
           
      23   behaved in the past.  And, in order to help determine
           
      24   that, my presentation focuses on four specific points. 
           
      25              First, when bank of America acquired Sea
           
      26   First Bank in the early 1980s, there was a great deal of
           



                                                             445

       1   apprehension in Washington State the control of the
           
       2   entity would shift to San Francisco and that Sea First
           
       3   community involvement would suffer.  That did not happen
           
       4   much to the credit of both parent and subsidiary. 
           
       5              More recently, when Sea First's operations
           
       6   were converted to branches of Bank of America, albeit
           
       7   operating under the Sea First name, the same
           
       8   apprehensions were expressed.  In fact, the apprehension
           
       9   began when the BofA Sea First organization began
           
      10   functionalizing its operation sometime prior to
           
      11   conversion to branches.  
           
      12              Again, those apprehensions have proved
           
      13   groundless.  In each case we have seen no diminution in
           
      14   the Sea First commitment to all aspects of community
           
      15   affairs and community service. 
           
      16              Moreover, I understand that the head of the
           
      17   Bank of America presence in the State of Washington,
           
      18   Mr. John Renlove has been given broad authority and
           
      19   autonomy over community activities.  Certainly that's
           
      20   been borne out by the company's performance to date, a
           
      21   continuation of its broad and significant involvement in
           
      22   all aspects of community development, philanthropy and
           
      23   service to its customers. 
           
      24              As Sea First/Bank of America has gone through
           
      25   each of these transitions its past performance has
           
      26   accurately predicted its future performance. 
           



                                                             446

       1              Second, banking customers are extremely
           
       2   sensitive to mergers and acquisitions even among our
           
       3   smaller community banks, but particularly with respect
           
       4   to the large bank mergers.  This has been demonstrated
           
       5   most notably in the key bank acquisition of Puget Sound
           
       6   Bank and Wells Fargo's acquisition of First Interstate
           
       7   Bank in our state.  Each acquisition has seen some
           
       8   outpouring of customers to local community banks known
           
       9   for excellence of personal service.  
           
      10              Sea First has a great reputation for customer
           
      11   service as well as an aware management team.  They know
           
      12   as well as anyone that to dilute their community
           
      13   activities and service at this time or any time in the
           
      14   future would be the height of folly.  As stated earlier,
           
      15   their record through similar events has demonstrated not
           
      16   only their awareness of that fact but their continued
           
      17   commitment to their customers and their communities
           
      18   generally. 
           
      19              Third, I think it's important to know at
           
      20   least in our state that our community banks do not see
           
      21   the merger of BofA and NationsBank as a threat.  If
           
      22   anything, it's an opportunity to gain customers.  I'm
           
      23   not saying anything that BofA isn't keenly aware of and
           
      24   I don't think Sea First/BofA will let that challenge go
           
      25   unanswered. 
           
      26              Finally, I've worked with Sea First on
           



                                                             447

       1   community outreach including fairly extensive activity
           
       2   over the past year, much of which was very innovative. 
           
       3   The organization has willingly committed its time and
           
       4   resources and continues to do so.  I can attest
           
       5   personally to their commitment. 
           
       6              In summary, the Sea First/Bank of America
           
       7   record of community support and customer service in the
           
       8   State of Washington has been first rate and has not been
           
       9   diminished through corporate change.  
           
      10              We believe their past performance totally
           
      11   supports the presentation application.  We also believe
           
      12   that their past performance through periods of
           
      13   significant corporate change is a reliable predictor of
           
      14   what will happen in the future.  In our view,
           
      15   speculation and conclusions to the contrary are not only
           
      16   totally unwarranted, but very unfair. 
           
      17              Thank you. 
           
      18              MS. SMITH:  Thank you, questions. 
           
      19              MR. FRIERSON:  I have two questions.  First
           
      20   for Mr. Hewett, as a former state banking supervisor and
           
      21   decision-maker, I would be interested in your views on
           
      22   the comments that we have heard at this public meeting
           
      23   and in the comment period that a bank with a
           
      24   headquarters on the east coast would be less successful
           
      25   in understanding the credit needs of California
           
      26   communities. 
           



                                                             448

       1              MR. HEWETT:  That's a good question.  I do
           
       2   believe that California is such a tremendous economic
           
       3   market, not only in the United States but in this world,
           
       4   that if there is any void of consumer availability to do
           
       5   banking of any kind, that the bank from the east coast
           
       6   or from the southeast will come into this state and
           
       7   establish a headquarters if that means that will help
           
       8   that particular institution financially in the future
           
       9   and so forth. 
           
      10              I don't see any -- in today's age of
           
      11   technology, wherever it's headquartered, could be
           
      12   headquartered in Hawaii and still operate in California
           
      13   and still provide services to the consumer and still be
           
      14   competitive.  I don't see that as a real significant
           
      15   issue in terms of where the headquarters -- the
           
      16   headquarters are usually only made up of a few, in this
           
      17   case probably only a few hundred people.  It's not the
           
      18   headquarters, it's the service that's provided to the
           
      19   customer by the representative of that bank, wherever
           
      20   that community may be.  
           
      21              MR. FRIERSON:  And a question for
           
      22   Mr. Collette.  Does your bank operate an ATM network? 
           
      23              MR. COLLETTE:  We don't have our own ATMs. 
           
      24   We utilize networks provided by larger institutions. 
           
      25              MR. FRIERSON.  Could you give us your bank's
           
      26   experience with the competitive impact of the
           



                                                             449

       1   consolidation of ATM networks, specifically how it
           
       2   affects your clients:  
           
       3              MR. COLLETTE:  Yes.  On a pricing basis, we
           
       4   have had experience where we have been -- where our
           
       5   customers have been charged for the use of another
           
       6   institution's ATM, even though we were a member of the
           
       7   network.  And that did do some harm to the customer base
           
       8   of our institution. 
           
       9              MR. FRIERSON:  Thank you.  I don't have any
           
      10   more questions.  
           
      11              MS. SMITH:  There are no other questions,
           
      12   then we thank you very much for coming this morning. 
           

Last update: December 3, 2010