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Public Meeting Transcripts

Public Meeting Regarding NationsBank and BankAmerica

Friday, July 10, 1998

Transcript of Panel Twenty-Nine

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         1            MS. SMITH:  All right, we are reconvened.  This

         2   is Panel 28, and we're going to start with Mr. Lawhorne.

         3       MR. LAWHORNE:  Good afternoon.  I am Don Lawhorne,

         4   President and CEO of MESBIC Ventures Holding Company, I'm

         5   also cofounder and managing director of Pacesetter Growth

         6   Fund.  These two funds exist in Dallas, Texas to provide

         7   equity capital to promising competitive minority-owned

         8   firms.

         9            In light of time restraints, I have submitted my

        10   remarks in writing at my entry to the panel.

        11            The strategic and economic realities for the

        12   proposed merger of NationsBank and Bank of America are

        13   being triggered by global market pressures and perhaps

        14   more importantly today's fast growing digital economy.  It

        15   is well-known today that our nation has entered a new

        16   industrial revolution where technology will change how we

        17   work, how we shop and how we handle use finance.

        18            The digital economy will further fuel consumer

        19   expectations for excellent services and competitive

        20   products.  This will require competitive and extraordinary

        21   capacity for the nation's banking system.

        22            I am here to support NationsBank/Bank of America

        23   merger because it will provide access to larger amounts of

        24   equity capital for the nation's most underserved equity

        25   market, that is firms owned and led by minority

        26   entrepreneurs.
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         1            NationsBank Texas came into being as a result of

         2   an acquisition, one of the state's largest financial

         3   institutions.  In 1992, it announced an unprecedented goal

         4   to provide 10 billion over ten years for community

         5   development investing and lending.

         6            At the same time, NationsBank selected our firm,

         7   MESBIC Ventures, as a national benchmark for providing

         8   equity financing and management assistance to create

         9   competitive small businesses owned and managed by minority

        10   entrepreneurs.  After much due diligence, we received an

        11   equity commitment of $2 million and had the personal

        12   endorsement of Ken Lewis, president of NationsBank.

        13   Cathie Bessant, chief investment officer in the Texas

        14   executive team.  The initial commitment went beyond

        15   dollars, they took an active role in our fund by serving

        16   on the board of directors, which included Deborah Cannon,

        17   a local executive vice president for Nations.

        18            NationsBank's financial commitment did not end

        19   with just this initial investment.  They subsequently, in

        20   1997, made a $5 million investment in our second fund,

        21   Pacesetter, making it the single largest limited partner.

        22   Again, Ken Lewis and the executive team in Texas, Tim

        23   Arnoult and Deborah Cannon made this possible.

        24            Because of NationsBank's leadership, vision, and

        25   unwaivering commitment to our underserved niche, we have

        26   provided over $100 million of equity type financing to
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         1   over 100 minority-owned firms throughout the southwest,

         2   particularly Texas and California.

         3            Let me illustrate just how important this market

         4   is.  Several years ago, the Small Business Administration

         5   was contacted by the auto makers who had an unusual and

         6   unexpected problem.  They said by the year 2000 unless --

         7   their smallest supplier had to have sales between two and

         8   300 million a year.  That would not happen, as it turned

         9   out, from minority-owned companies.  They would not make

        10   the cut.  As they studied it further, it was revealed that

        11   the reason they wouldn't make the cut is the capital

        12   wasn't available to build larger competitive firms. As a

        13   result of this, there was numerous efforts done,

        14   particularly by Congress leaders, Congressional leaders

        15   such as Maxine Waters here in California, along with

        16   Esteban Torres here in California and Bill Jefferson in

        17   Louisiana, there was an attempt made by them and others to

        18   facilitate getting capital to the underserved market.

        19            Since 1993, there's been an estimated hundred

        20   billion dollars placed in private equity partnerships here

        21   in the U.S.  The good news is that sounds like plenty of

        22   capital.  The bad news is less than one percent of that

        23   capital went to funds focused on providing equity capital

        24   to build larger, more competitive firms owned and led by

        25   minority entrepreneurs.  Banks play a major part in these

        26   partnerships throughout the country.
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         1            This merger will help address this horribly

         2   underserved market.  Again, I speak from experience.

         3   NationsBank has 20/20 vision when it comes to serving its

         4   markets.  As I mentioned earlier, barely five years ago

         5   they made a $10 billion commitment including low-income

         6   housing, small business lending and equity investing to

         7   build larger firms in our various communities.  The

         8   NationsBank/Bank of America pledge for 10 billion -- 350

         9   billion over ten years is unprecedented and it will make a

        10   difference for that niche.

        11            I also want to say a few words about Bank of

        12   America.  They, too, are a shareholder and I have the

        13   personal experience of working with the person to my left

        14   who I did not know would be here, Peter Thompson, he has a

        15   fund like ours and I wanted to acknowledge that Bank

        16   One -- Bank of America helped us as well as has helped

        17   Peter.  And between the two of us, we felt we create some

        18   of the nation's largest minority firms.

        19            I submit to you my testimony in writing and urge

        20   the support for this merger.  Thank you very much.

        21            MS. SMITH:  Thank you.  And we'll go next to

        22   Ms. Garland.

        23            MS. GARLAND:  Good afternoon, my name is Ruth

        24   Garland-Dewson.  I came here more or less on a personal

        25   note.  When I read in the Chronicle this morning what was

        26   going on down here, I felt I got to go down there and
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         1   speak for Bank of America.  I own Mrs. Dewson's Hats on

         2   Fillmore Street and I've been a partner with Bank of

         3   America for some 27 years.

         4            When the stock market took a dive, I took a dive

         5   recently.  I went to Bank of America and I tried to get a

         6   loan in the traditional manner and I just couldn't get it.

         7   So I wrote Mr. David Coulter and I said, "David, my name

         8   is Ruth Dewson --" Mr. Coulter, I didn't dare call him

         9   David at the time, now I can.  I said, "Mr. Coulter I

        10   really need this loan, you're obligated to take care of

        11   me.  I've been with you for 27 years and I really need a

        12   loan.  And Mr. Coulter took care of that matter.

        13            And in each phase of my growth, Bank of America

        14   has always been there to support me.  I've gone from point

        15   A to top ten.  Last year I gained national prominence and

        16   again I went to Bank of America.  They are my partners,

        17   they've come through for me, and whether they should merge

        18   or not, I don't know.  But I know about their credibility

        19   and I'm here to tell you that Bank of America is my friend

        20   and I know they're going to do the right thing wherever

        21   they are.

        22            MS. SMITH:  Thank you very much.  Mr. Funk.

        23            MR. FUNK:  My name is Joseph Funk, I'm here

        24   speaking for Victor Weisser who is President of the

        25   California Council for Environmental and Economic Balance.

        26   He's asked that I read this letter into the record today.
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         1   It's addressed to Ms. Joy Hoffman, Community Affairs

         2   Officer of the Federal Reserve Bank of San Francisco.

         3            Dear Ms. Hoffman, The California Council for

         4   Environmental and Economic Balance, CCEEB, is a coalition

         5   of California business, labor and public leaders

         6   established in 1975 by the late former Governor Edmund G.

         7   "Pat" Brown to collaborate on creative approaches to

         8   achieve both our environmental and economic goals.  We

         9   focus on issues such as job creation and economic

        10   development, regulatory reform, environmental protection,

        11   infrastructure investment and fiscal reform.

        12            Everyone should be aware of Bank of America's

        13   exemplary internal efforts to lower their own corporate

        14   environmental operational impacts.  But perhaps what is

        15   less well-known is the commitment and leadership the bank

        16   has shown in helping Caliornia face up to the broader

        17   environmental public policy challenges confronting us.

        18   Their landmark efforts in crafting workable proposed

        19   solutions to California's most intractable issues, such as

        20   land use and sprawl, water and habitat conservation, are

        21   nothing less than remarkable.

        22            For several years we have worked with Bank of

        23   America to help bridge the gap between the environmental

        24   and business communities.  In these efforts Bank of

        25   America has repeatedly demonstrated their commitment and

        26   skills in building collaboration between historically
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         1   adversarial interests.  We are proud to have a good

         2   working relationship with Bank of America and share the

         3   same values.  In fact, CCEEB gave special recognition to

         4   Bank of America in 1995 by presenting our prestigious

         5   Edmund G. "Pat" Brown award to Richard M. Rosenberg, Bank

         6   of America's former chairman and CEO, for exemplifying the

         7   spirit of environmental and economic balance.

         8            Currently, we're pleased that Bank of America's

         9   environmental program is actively participating in the

        10   California Environmental Dialogue, CED, a collaboration

        11   between environmental business and government leaders

        12   working to find common ground and workable solutions to

        13   thorny challenges in such areas as cost effectively

        14   reducing mobile sources of air pollution and demonstrating

        15   the linkage between habitat protection and sustainable

        16   economic growth.  Leaning heavily on Bank of America's

        17   past experience and collaboration, we have seen the CED

        18   members move from conflict to dialogue to actionable

        19   solutions.  The bank's leadership role in this work has

        20   been key in making the CED successful.

        21            We fully expect the merged Bank of America

        22   Corporation to continue working in California on our

        23   established bridge between the business, government and

        24   environmental communities.  In fact, I would anticipate an

        25   expansion and export of these efforts to other areas as

        26   the merged Bank of America Corporation pursues new
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         1   national partnerships between various stake holders in our

         2   environment and economy.  I see this merger as an

         3   opportunity to leverage Bank of America's leadership role

         4   on a national scale and in more geographic locations.

         5            CCEEB looks forward to a continued relationship

         6   with the new merged Bank of America Corporation.

         7            Sincerely, Victor Weisser, President.

         8            MS. SMITH:  Thank you very much.  We'll go next

         9   to Mr. Alcasas.

        10            MR. ALCASAS:  Good afternoon, my name is Gerald

        11   Alcasas, I'm the Executive Director for the Nevada

        12   Microenterprise Initiative.  I appreciate the opportunity

        13   to inform this distinguished panel and/or other interested

        14   parties by means of personal testimonial on the subject of

        15   the proposed merger.  Upon completion of this testimony,

        16   it is my intention that there is understanding of the past

        17   involvement and commitment Bank of America has provided to

        18   Microenterprise in Nevada.

        19            The Nevada Microenterprise Initiative is a

        20   statewide microenterprise organization.  In our capacity

        21   as a nonprofit organization, we aim to help low- and

        22   moderate-income individuals achieve economic

        23   self-sufficiency through entrepreneurialship.  NMI offers

        24   entrepreneurial training, technical assistance and

        25   microloans to develop the entrepreneurial skills of our

        26   clients.
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         1            Our training classes focus on what to consider

         2   when starting a business as well as the development of a

         3   sound business plan.  Topics include determining your

         4   market, cash flow, bookkeeping and financing your

         5   business.  We believe this training is key to the success

         6   of our clients who, in most cases, have little or no

         7   business experience.

         8            Our Microloan fund was established in 1993 to

         9   fill a gap in access to credit for individuals wishing to

        10   start or expand a business.  Our clients typically have

        11   small loan requests, poor credit or poor or no job history

        12   and little, if any, business experience which makes them,

        13   in other terms, unbankable.  With our nontraditional

        14   financing, a client can access up to $7500 for a start-up

        15   loan and $25,000 for expansion.  Our successfulness in

        16   this risky lending is based on our technical assistance

        17   programs.  We work one-on-one with our clients to assist

        18   them with any concerns or challenges they may encounter.

        19   This support is critical and crucial to the success of a

        20   business and repayment of a loan.

        21            Since the creation of the Microloan fund in 1993,

        22   Bank of America has played a key role in the establishment

        23   and continuation of the program.  BankAmerica Foundation

        24   was the second contributor to help establish the Microloan

        25   fund by giving $15,000.  The following year the Bank of

        26   America established a $100,000 Micro/MBEWEBE program
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         1   exclusively for the Nevada Microenterprise Initiative

         2   participants.  Those who utilized this opportunity are now

         3   very successful in their businesses.  In 1995, Bank of

         4   America matched various programs with grants in the amount

         5   of $85,000 and recently committed to 15,000 for NMI

         6   operations.

         7            Bank of America has also supported NMI through

         8   its participation of its employees, opened a second branch

         9   in Las Vegas in 1995.  Bank of America staff served as

        10   founding board members and were instrumental in the

        11   creation of the Las Vegas office.  Other employees offered

        12   assistance to the Nevada Microenterprise Initiative over

        13   the years.

        14            For the past two years, Ms. Joselyn Cousins,

        15   Community Development Officer and who runs the Community

        16   Development Department, serves as the president of our

        17   board of directors and previously she was on our Loan

        18   Review Committee.  Her time and dedication to the

        19   organization has created many opportunities for our

        20   organization.  Ms. Cousins has helped to establish a

        21   referral system between our organization and Bank of

        22   America.  Funds have been set aside for individuals who

        23   bank with Bank of America and who are unable to be

        24   assisted with their lending needs at that time.  Those

        25   clients are then referred to our training program, they

        26   fine-tune their plans, hopefully they become successful
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         1   and eventually become Bank of America clients once again.

         2            As you can see, Bank of America has shown real

         3   commitment to the community through its extensive support

         4   of the Nevada Microenterprise Initiative.  Therefore, we

         5   support the merger between Bank of America and

         6   NationsBank.  Thank you.

         7            MS. SMITH:  Thank you very much.  Mr. Thompson.

         8            MR. THOMPSON:  Thank you.  My name is Peter

         9   Thompson and I'm President of Opportunity Capital

        10   Corporation and also managing partner of Opportunity

        11   Capital Partners.  Our companies, similar to Don's, are

        12   private equity firms that provide financing to

        13   minority-owned companies.  And I would just like to take a

        14   few minutes to share a few comments with you.

        15            Regarding our company's relationship with the

        16   bank, a relationship that is noteworthy, in part, because

        17   it spans a time period of more than 25 years.  And it's a

        18   relationship that started back in 1971 when the BofA made

        19   its first investment in Opportunity Capital.  The

        20   investment at that time was critical, not only because of

        21   the capital that it provided, but also because other Bay

        22   Area companies seemed to regard the bank as a leader in

        23   the minority economic development arena and seemed

        24   inclined to follow the bank's lead and the bank's example.

        25            Ten years later, in 1981, the bank made its

        26   second investment and, again, as was the case in 1971, we
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         1   were able to leverage the bank's involvement with

         2   additional investments from other Bay Area companies.

         3   Fortunately for us, not only did the bank provide capital

         4   and serve as a pacesetter, of sorts, but the bank also

         5   invested time in providing guidance in the form of making

         6   available to us on a consistent basis senior executives

         7   who served as members of our boards of directors and as

         8   members of our various advisory committees.

         9            This capital and this guidance, as provided by

        10   the bank, assisted us in successfully providing capital to

        11   a sizable number of minority-owned companies and allowed

        12   us to become successful in producing what the investment

        13   community, I think, would regard as both respectable and

        14   competitive investment results.

        15            Rolling the tape on a fast-forward basis over

        16   from 1981 to 1992, we realized at that point that the size

        17   and shape of our marketplace had evolved to a point where

        18   we needed to raise a substantially larger pool of capital

        19   in order to remain responsive to the growing needs of our

        20   target marketplace.

        21            As a consequence, we went back to the bank for a

        22   third time, we made a proposal and fortunately the bank

        23   responded.  And the bank responded with a capital

        24   commitment of $15 million.  Now, a commitment which we

        25   believe was at the time the largest single corporate

        26   commitment of capital to a single minority focused venture
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         1   capital company.  And the commitment was for us doubly

         2   important because it played a key role in our success in

         3   obtaining a similar matching $15 million commitment from a

         4   funding source based in Connecticut.

         5            The result of these two excursions into the

         6   capital market was that we were able to increase our

         7   capital base to about $35 million.  And those funds were

         8   used to provide capital to companies and industries

         9   ranging from health care to broadcasting to manufacturing

        10   and companies that have provided employment to, oh, more

        11   than 2,000 people and companies that have a current

        12   combined gross market value of probably over $700 million.

        13            Of course, you know, we are proud of these

        14   results.  But, as importantly, I think it's key to note

        15   that accomplishing those results would have been very

        16   difficult, if not impossible, had it not been for the

        17   continuing willingness of the the bank to provide not only

        18   capital but also time over a time period again which spans

        19   more than two and a half decades.

        20            So just in closing, I'll just say that I

        21   appreciate the opportunity to make these comments, and I

        22   would be pleased to further discuss them with you at any

        23   point.  Thanks a lot.

        24            MS. SMITH:  Thank you very much.  Is that Acree?

        25            MR. ACREE:  Acree.

        26            MS. SMITH:  Acree.  Mr. Acree.
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         1            MR. MAN:  I'm Stephen Acree, the director of

         2   Community Development in the City of St. Louis.

         3            In 1997, NationsBank acquired Boatmen's Bank

         4   which was the oldest and largest banking institution in

         5   St. Louis.  And Boatmen's had been a leader in the

         6   community development field in St. Louis, they had a

         7   reputation for pushing the envelope for worthwhile

         8   projects.  And certainly we in St. Louis at that time were

         9   concerned that this very proactive stance would be altered

        10   with the NationsBank merger with Boatmen's Bank.

        11            In fact, however, NationsBank has assumed a

        12   tremendous leadership role in the community particularly

        13   in our downtown.  Not only has Nations fulfilled the

        14   commitment made by Boatmen's but they have brought

        15   tremendous additional resources to our community.

        16            In the year that NationsBank has been actively

        17   involved in St. Louis, it has invested $2.1 million in the

        18   St. Louis Equity Fund to provide equity to small housing

        19   developers for the creation of low- and moderate-income

        20   housing.  NationsBank has partnered with my agency in a

        21   number of housing developments, including McCormack House,

        22   a 100 unit supportive housing development for the elderly

        23   where NationsBank provided $6.4 million in low-income

        24   housing tax credit equity in affordable housing assistance

        25   program contribution dollars.

        26            NationsBank also contributed $100,000 to the
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         1   day-care center at Murphy Park which is a leading edge

         2   mixed-income development of a large public housing site in

         3   St. Louis.  NationsBank also helped to raise $2.4 million

         4   in equity for this project.

         5            Nations provided 2.5 million in low-income

         6   housing tax credit equity for the Etzel Place Apartments

         7   which is a 42 unit affordable housing development.  And

         8   they provided the construction loan and the equity through

         9   purchase of tax credits for Parkview Gardens, a

        10   not-for-profit development of the Parkview Gardens

        11   Neighborhood Association who originally began their

        12   efforts under the predecessor Boatmen's Bank.

        13            There are a number of very exciting projects that

        14   can be accomplished in St. Louis now exclusively because

        15   of the addition financial resources and financing tools

        16   brought to the community by NationsBank.

        17            NationsBank Community Development Corporation is

        18   undertaking the $5.3 million acquisition and

        19   rehabilitation of an eight story 60,000 square foot

        20   warehouse building in our Downtown Loft District.  The

        21   building is being converted to 26 affordable loft

        22   apartments with a first floor art gallery and studio

        23   space.  The bank CDC will own the project long term in

        24   partnership with a local nonprofit, the Regional Housing

        25   and Community Development Alliance.  NationsBank CDC

        26   invested cash equity and purchased the state and federal
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         1   low-income housing tax credits and the historic rehab tax

         2   credits.  They will provide the construction financing, a

         3   bridge loan and permanent financing, as well.  This

         4   project does not work financially as a mixed-income

         5   development without the NationsBank CDC's ability to

         6   invest patient capital.  NationsBank is essentially

         7   funding 100 percent of the debt and equity for this

         8   project, as well as taking a long-term ownership position.

         9            They're also pursuing the redevelopment of a

        10   140,000 square foot historic warehouse with 42 apartments

        11   again in partnership with a not-for-profit Regional

        12   Housing and Community Development Alliance.  This $9

        13   million project will commence in the third quarter of this

        14   year.  And in the short-term, NationsBank is providing

        15   $200,000 to replace the roof and stabilize the building.

        16            Our partnership with NationsBank is helping us to

        17   create a mixed-income and vibrant residential presence in

        18   our downtown that is absolutely critical to re-energize

        19   and spur the redevelopment of that area.  Their projects

        20   and their commitment serve as a catalyst to encourage

        21   other corporations and institutions to invest in downtown

        22   St. Louis.

        23            They've committed to invest $100 million in

        24   downtown, and as a part of that commitment, the bank

        25   advanced $425,000 to the city to pay for our planning

        26   study and they were the first contribution that allowed
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         1   the team to move forward with the process.  They made a

         2   $2.5 million loan to the city to acquire a long vacant

         3   hotel as part of the city's effort to attract a team to

         4   build a state of the art convention headquarters hotel

         5   there.

         6            They're considering taking a major role in the

         7   redevelopment of a historic warehouse group of buildings

         8   in downtown St. Louis where Western Hotels has recently

         9   announced plans to locate a new property.

        10            On the neighborhood level, NationsBank has made a

        11   commitment to invest $100 million in low- and

        12   moderate-income communities for neighborhood projects such

        13   as mortgages, home improvement loans, small business loans

        14   and small scale community development lending.

        15            In closing, the one thing I was impressed with

        16   most when NationsBank began to assemble their staff in

        17   July of 1997 was that they hired from the community, from

        18   community development professionals, from the former

        19   director of Neighborhood Housing Services to the director

        20   of the Community Development Program in St. Louis County.

        21   It showed their commitment to working with the city on

        22   community development.  Thank you.

        23            MS. SMITH:  Thank you very much.  Any questions?

        24            We don't have any questions for you but we do

        25   thank you very much for coming this afternoon to share

        26   your views with us and having them become part of the
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         1   record on this application.  So thank you.

Last update: December 3, 2010