Public Meeting Transcripts
Public Meeting Regarding Fleet Financial Group, Inc., and BankBoston Corporation
Wednesday, July 7, 1999
Transcript of Panel One
19 MR. MURRAY: Thank you. I'd like to begin 20 by thanking the Federal Reserve Board for inviting 21 me to speak on behalf of Fleet on our proposed 22 merger. Since the months since we announced our 23 proposal, it has been a very proud and challenging 24 time for all of us at Fleet and Bank of Boston. I 25 would particularly like to thank our employees, many 0016 1 of whom have been working very hard this summer to 2 ensure that our company gets off on the right foot. 3 I know there are many questions and 4 concerns about this merger and we hope to address 5 them today. All of us, employees and citizens 6 alike, are on the verge of ensuring that New England 7 will enter the 21st century with a hometown bank, 8 headquartered in this city, committed to serving our 9 customers and our community. 10 Four years ago when I testified before this 11 Board about Fleet's merger with Shawmut, I spoke 12 about the banking industry's trend towards 13 consolidation and how it affected our relations with 14 our customers and our communities. Chad talked 15 about the same issues when it came time to discuss 16 BankBoston's merger with BayBanks. We took steps 17 then to keep our institutions strong and 18 independent. Neither of us expected to be here 19 today talking about a merger between our banks, but 20 we recognize that this merger is another necessary 21 step to ensure that New England continues to have a 22 major locally-based banking presence. 23 In the past few years we've seen a number 24 of bank megamergers like NationsBank and Bank 25 America, First Chicago and Bank One. The number of 0017 1 commercial banks in the U.S. decreased by a third 2 between 1987 and 1997. The number of bank branches 3 increased by a third over the same period, as fewer 4 banks worked to expand access to service. 5 We've seen consolidation spill across 6 national borders as Deutsche Bank acquired Bankers 7 Trust, and we've seen it in France with Banque 8 Nationale de Paris' attempt to take over Sogen 9 Paribas to create a bank with a trillion dollars in 10 assets. 11 Already in Europe there are far fewer banks 12 than in the U.S., possessing far greater assets and 13 ability with which to compete in the global 14 financial markets. In the U.S. we've also seen 15 interindustry mergers between Citicorp and 16 Travelers, and E-trade and Telebank, as new 17 technologies help to break down archaic barriers 18 between banking and other financial service 19 providers. 20 By increasing in size, banks achieve 21 economies of scale that allow us to invest more in 22 technology and in people so that we can develop 23 superior products and services like banking, 24 brokerage and investment services. With products 25 such as these, we can match the increasingly 0018 1 sophisticated needs of both the businesses and 2 consumers we serve. 3 Our merger also addresses the challenges 4 offered by new kinds of competitors. We no longer 5 compete with just other banks. We now compete with 6 institutions such as Fidelity, Merrill Lynch and 7 more recently with on-line banks. More importantly, 8 this is a merger that seeks to strengthen our 9 national and international competitiveness while 10 making a deep local commitment. 11 Fleet-Boston brings together two of 12 America's oldest and most prestigious banks to 13 create one of the world's premier financial 14 institutions and financial providers right here in 15 the City of Boston. 16 When we announced the merger in mid-March, 17 our slides used the tag line, "One Plus One Equals 18 Greater Than Two." This slide illustrated the idea 19 that our combined institution could do more in total 20 for our customers, communities and stockholders than 21 what the two premerger banks have done separately. 22 This was not a statistical assertion, but rather a 23 broad statement about how the new bank's synergies 24 would make Fleet-Boston more competitive than either 25 bank would be by itself. The merger would enhance 0019 1 our geographic diversification and our role as the 2 premier financial service provider from Bangor to 3 Brazil and from Cape May to Cape Cod. 4 This diversification will help reduce our 5 vulnerability to economic downturns. Those of us 6 who went through the regional banking crisis of the 7 early '90s understand how important both geographic 8 and operating diversity are, and we don't want to be 9 at risk in the event of another economic downturn in 10 a particular region or industry sector. 11 This is indeed a very important time for 12 all of us who live in New England. It is the time 13 for us to secure our economic future by responding 14 to the competitive challenge raised by world-wide 15 banking financial services, consolidation and 16 mergers. 17 While there are many opportunities and 18 benefits to this merger, at the same time there are 19 many concerns being voiced, and I'd like to address 20 them right now. 21 One of the compelling reasons for this 22 merger and why we know it will work is that each 23 company brings certain strengths to the table. 24 Right from the beginning Chad and I understood that 25 we must leverage the advantages of each company. In 0020 1 that spirit we will have BankBoston lead the way in 2 the area of community development. They've done a 3 great job in this area for which they have been 4 rightly recognized. 5 Maintaining our outstanding CRA ratings 6 will continue to be a corporate goal for 7 Fleet-Boston. We will use the BankBoston community 8 development approach, including First Community Bank 9 and the BankBoston Development Corporation. 10 Together we look forward to setting a new standard 11 of community development. 12 We have an outstanding CRA rating in 13 Massachusetts. We have enormous successes and 14 successful partnerships that have worked to create 15 thousands of new homeowners that have invigorated 16 communities. Moving forward, we plan to continue 17 these efforts. 18 We will also sustain our support of 19 neighborhood-oriented banking services, community 20 development programs and the charitable giving that 21 makes this commitment a reality. 22 Gail will speak about these initiatives in 23 detail, but I wanted to state that we strongly 24 believe that our recently announced commitment of 25 14.6 billion dollars is a realistic and achievable 0021 1 plan and one that will increase affordable housing, 2 strengthen small business, and stabilize 3 neighborhoods in our footprint. 4 Moving forward with the new commitment, 5 we'll have an oversight board that will measure our 6 progress in serving community needs, a board with 7 representatives from many of the 125 community 8 groups we consulted when developing this plan. 9 Addressing antitrust concerns, it is 10 important to realize that the proposed merger is 11 more about combining the complementary businesses of 12 Fleet and BankBoston and not about combining 13 competing businesses. In this regard Fleet's retail 14 branch operations extend to many Northeastern states 15 in which BankBoston has no branches, whereas, 16 BankBoston's large corporate banking business 17 extends across the nation, in 23 foreign countries 18 where Fleet has no presence. 19 The merger will also bring together 20 complementary nonbanking lines of businesses such as 21 Fleet's Quick & Reilly retail brokerage franchise 22 and BankBoston's Robertson Stephens, an investment 23 banking business. Where the two banks do overlap, 24 we have proposed a divestiture plan that was 25 intended to preempt any conceivable competitive 0022 1 concerns. With more than 290 branches and 2 approximately 12-1/2 billion dollars in deposits, 3 the proposed divestitures are far and away the 4 largest ever made in the history of U.S. bank 5 mergers. As a stand-alone entity, the divestiture 6 would rank among the top 50 bank holding companies 7 in the nation in terms of small business loans and 8 total assets. 9 Chad and I both grew up with banks 10 headquartered here in our home region, banks managed 11 by people who cared about New England and its 12 people. I don't want my children or my 13 grandchildren living in a New England whose economic 14 fate is dictated from outside the region. I want 15 them to have local institutions that are strong and 16 sophisticated, but that make decisions locally with 17 New Englanders in mind. So many American cities 18 have lost that. There's no longer a major 19 indigenous bank in Los Angeles, none in Miami, 20 Denver, Dallas, Philadelphia or Houston. 21 Panelists, I mentioned at the outset how 22 excited all of us at Fleet and BankBoston are about 23 this merger. I'd like to finish by telling you how 24 much this merger means to me personally. I grew up 25 in New England, went to school here, and I've worked 0023 1 in banking here for almost four decades. This is my 2 home and this is home to Fleet and BankBoston and 3 our tens of thousands of dedicated employees. Our 4 legacy will be a large global institution domiciled 5 in New England with deep community commitments. 6 The financial system that is now taking 7 shape in which the Federal Reserve Board has done so 8 much to make possible is one that reflects the 9 vision and innovation that has made our nation the 10 world's financial leader. 11 I'm also pleased that the House of 12 Representatives last week passed the Financial 13 Services Act of 1999. With the House and Senate 14 both voting to appeal the outdated Glass-Steagal 15 Act, we're a step closer to ensuring that this 16 nation's financial institutions can thrive and 17 compete in the next century. 18 Thank you for the opportunity to speak, and 19 let me also thank the concerned citizens of all 20 viewpoints who cared enough to join us today and 21 share their thoughts. 22 PRESIDING OFFICER SMITH: Thank you. I'd 23 like to remind witnesses that they can submit their 24 full written statement for the record, so that to 25 the extent you can abbreviate your comments, that 0024 1 would be helpful and help us stay within the 2 allotted time for the panel. 3 Mr. Gifford? 4 MR. GIFFORD: That's one heck of an 5 introduction. Thank you. I'll move quickly in my 6 mind. But thank you, Terry. Thanks all for 7 participating with us. I, too, welcome this 8 opportunity to discuss some of the reasons behind 9 and benefits of BankBoston's proposed merger with 10 Fleet. I feel strongly, strongly that this merger 11 is in the best interests of all our stakeholders, 12 our employees, our customers, our communities, not 13 just shareholders. I do not want to pick out any 14 one of those as being more important than any other, 15 but it's no secret -- and we said this in March when 16 we announced it -- the opportunity to preserve a 17 financial service powerhouse in New England was 18 important, and you heard Terry comment on that. I 19 clearly share his passion for preserving the 20 hometown banks in the region, serving the individual 21 cities and communities that make up this great 22 fabric. 23 I, too, am a New Englander. I'm a son of a 24 former New England bank chairman, so the importance 25 of a strong, locally-based banking organization has 0025 1 been with me for a long, long time, and surely, as 2 Terry also referenced, all of us learned a very 3 painful lesson about the importance of a strong 4 banking organization about a decade ago. 5 As Terry has described, the consolidation 6 and convergence are the hallmarks, the realities of 7 financial services today. BankBoston is no stranger 8 to that tradition, having participated in the 9 purchase of BayBanks in '95, Robertson Stephens, an 10 investment bank, in 1998 as part of a continued 11 consolidation in convergence of financial services. 12 I'm moving faster now, Madam Chairwoman. 13 But our proposed merger is not just about size and 14 strength, of course, but quality and commitment. 15 Our first principle from our first conversation has 16 been to preserve the best of Fleet and the best of 17 BankBoston, to build a new company that leverages on 18 respective strengths as well as honors and reaffirms 19 our shared commitments. 20 We will take the best talent and best 21 practices and make them one of everyday standards 22 and go on to build one of the premier financial 23 service organizations in the world and surely one 24 this region will be proud of. 25 The new Fleet-Boston will be one of the top 0026 1 two employers in the region. After the merger, 2 divestitures and consolidations, we will employ some 3 25,000 New Englanders and infuse into this company 4 no less than a billion-five in purchasing power and 5 tax dollars. 6 Acknowledging the painful impact of job 7 loss on some employees, we have pledged to treat 8 affected employees fairly and compassionately. We 9 will provide a generous severance program and a 10 cutting-edge transition assistance program of 11 support for career retraining, starting a business, 12 or doing bank-subsidized community work. At the 13 same time, and I think very importantly, we envision 14 career opportunities for tens of thousands of local 15 residents in a dynamic growth company. 16 The new Fleet-Boston will be a leader in 17 many markets around the world, able to meet the full 18 financial service needs of consumers, businesses of 19 all sizes, large and small, public sector entities 20 and nonprofit organizations. We will be the premier 21 banking franchise in the Northeast, serving eight 22 million households through nearly 6,000 branches and 23 ATMs. Nationwide the new company will serve more 24 than 20 million consumers and will have 450,000 25 small business customers and more than 100 billion 0027 1 dollars in assets under management. 2 When our wholesale banking capabilities are 3 combined, the results will be equally valuable for 4 commercial customers. We're talking about a bank in 5 CNI lending in the top three, the number one bank in 6 commercial field, premier investment bank, top five 7 in cash management provider, the top tier leader in 8 private equity, a strong company based here in 9 Boston. 10 BankBoston's unique Latin America 11 franchise, formed more than 80 years ago, of the 12 commercial needs of New England merchants will 13 continue to put Boston on the world map, helping to 14 forge links between businesses and nations in our 15 hemisphere. The new Fleet-Boston will be able to 16 leverage this connection even further. 17 Finally, Fleet-Boston will have the 18 resources that Terry also referenced to be a major 19 player in E-banking, leveraging, for example, 20 BankBoston's base of a half million on-line banking 21 customers and Fleet's quarter million electronic 22 sure trade customers, again assuring that Boston 23 will participate in this very important growth 24 industry. 25 In short, a local financial service 0028 1 company, competitive across the country and around 2 the world, will be a valuable asset to individuals 3 and communities and an invaluable partner to New 4 England businesses seeking to operate in today's and 5 tomorrow's global economy. 6 But again, this is not about size alone. 7 It's ironic, just as we're on the verge of an 8 industry that will conduct more and more of its 9 business electronically, without walls and without 10 boundaries, without bricks and mortar, without paper 11 or passbooks. Our determination also to be grounded 12 in our local communities is greater than ever. 13 For me, this merger would not be effective, 14 would not be right if we were only able to build a 15 powerful regional, national, global business, if we 16 were only a large and strong employer, and if we 17 left behind the communities that have nurtured both 18 companies for a few centuries. As we are poised to 19 become one of the leading financial institutions, we 20 have also pledged to remain a local partner and one 21 that will -- he took all the time. (Laughter) I'm 22 not sure how the system works. 23 I want to emphasize we remain a local 24 partner, continuing the development of our 25 communities. We look at community development very 0029 1 broadly as a strategic -- as a business opportunity. 2 We see as part of it the access by minority and 3 women-owned businesses, to the purchasing power of 4 Fleet-Boston. We intend to continue and strengthen 5 our minority vendor programs. 6 We see as part of community development the 7 support we offer employee volunteers. Between Team 8 Fleet and Eagle Core almost 20,000 of our employees 9 devote 150,000 hours making our community stronger 10 and healthier. We see as part of community 11 development the embracing of individuals of all 12 races, genders, sexual orientations, customers and 13 employees. 14 Diversity will be an integral part of the 15 management of Fleet-Boston reporting directly to me. 16 We will continue to add to the very strong record we 17 are trying to achieve. 18 Terry has been explicit about the intention 19 to proceed with the BankBoston model for community 20 investment and very complimentary about our record. 21 To say that I am proud of First Community Bank and 22 BankBoston Development Company is an understatement, 23 but it is very important that we will continue to 24 play a leadership role in our new company. 25 Therefore, I ask you all to look at these 0030 1 pledges in light of the very strong community 2 leadership records of Fleet and BankBoston, and 3 driven by our shared New England values, operating 4 in a global economy, grounded in the local 5 community, Terry and I will be supported and aided 6 by the 25,000 employees who, like us and our 7 company, call this region home. We will preserve 8 and enhance the best of our two approaches and 9 records. We will commit our honor and we will honor 10 our commitments. 11 Two months ago I was privileged to 12 represent BankBoston at a White House ceremony where 13 we were given the Ron Brown award for corporate 14 leadership. BankBoston was cited for its community 15 banking group which has successfully served the 16 urban population as an emerging market. I was 17 joined on that day, as I have been joined throughout 18 this effort, by the woman who is most singly 19 responsible for the success of our community banking 20 efforts at BankBoston and who will become the leader 21 of Fleet-Boston's community banking investment 22 initiatives, a daughter of a community activist, a 23 product of the community, a 30-year veteran of 24 BankBoston and by friend, Gail Snowden. 25 MS. SNOWDEN: Thank you, Chad, and thank 0031 1 you to the Board for the opportunity to present our 2 viewpoints and vision for the new bank now taking 3 shape. It's extremely gratifying to me to have 4 heard from both Terry and Chad on the strong 5 position that community investment and in particular 6 BankBoston's model of development will take in the 7 new entity. 8 Nine years ago BankBoston began to redefine 9 the mission and objectives of its retail business in 10 the inner city. By taking a more holistic approach 11 to economic development, we acknowledged that 12 economic growth must evolve from job creation to 13 wealth creation if sustainable growth was to happen. 14 We knew we had to prove we were willing to take 15 risks and to truly invest in community growth in a 16 more direct way. 17 We have learned much along the way, 18 receiving national recognition for our efforts in 19 urban banking through First Community Bank and the 20 BankBoston Development Company, both of which will 21 become part of the new company. 22 Like BankBoston, Fleet has been a leader in 23 small business and mortgage lending, helping to 24 revitalize entire neighborhoods and create new 25 enterprises, particularly those owned by minorities 0032 1 and women. Continuing these records going forward, 2 Fleet-Boston Corp. intends to be the number one 3 small business bank in New England, maintaining its 4 strong ties to keep partnerships with organizations 5 such as the SBA. 6 We believe the key to our success has been 7 our commitment to strong partnerships in the 8 community, whether with individuals, community 9 groups, governments or private organizations. They 10 provide us with essential ties to the fabric of the 11 community. These relationships have helped Fleet 12 and BankBoston to be more responsive to the unique 13 needs of our diverse communities by providing the 14 customer focus that did not exist before. 15 Over these last few months I have joined 16 with my colleagues at both banks in listening to the 17 frank discussions that took place with 18 representatives from over 125 community 19 organizations throughout New England. Our goal was 20 to gain maximum insight into the needs of emerging 21 low to moderate income markets and to develop a 22 comprehensive investment plan that was both business 23 minded and community minded. These discussions have 24 underscored the tremendous gains that our banks have 25 made in helping to revitalize entire neighborhoods 0033 1 within our New England communities such as Codman 2 Square and Egleston Square. 3 The key themes that surfaced provided the 4 framework for our community investment commitment. 5 The result is a 14.6 billion dollar commitment over 6 five years which incorporates the best of our banks' 7 programs while establishing a leadership role of 8 continuing to earn an outstanding CRA rating. This 9 dollar commitment represents a continuation and in 10 most cases an enhancement of LMI lending activities 11 by Fleet and BankBoston when adjusted for divested 12 branches and deposits. We view the plan as 13 responsive and affirmative and continuing to enhance 14 those programs that support wealth creation and 15 economic development. 16 In the past, particularly during merger 17 discussions, various banks have reached agreements 18 with community organizations that may have been too 19 narrowly focused with regard to issues or geography. 20 Fleet-Boston has chosen to create a broad-based plan 21 for its entire marketplace that effectively responds 22 to critical community issues and will offer 23 significant opportunities for multi-state 24 partnerships with organizations as committed as we 25 are to the revitalization of urban and rural areas. 0034 1 I would now like to spend some time 2 outlining the five-year 14.6 billion dollar 3 strategy. Because we believe entrepreneurs are the 4 engine for growth creation and job creation that 5 transform entire communities, over half of this 6 entire commitment, 17.5 billion, is earmarked for 7 the support of small business lending. We will 8 continue our strong support of small business 9 development in LMI communities, with special 10 consideration given to minority and women-owned 11 businesses. 12 In addition, we will go beyond the 13 traditional role of lending to small businesses by 14 providing 100 million in equity investment over five 15 years to help new business development. We also 16 foresee an enhanced SDA partnership in addition to 17 our conventional loan activity. With affordable 18 housing in the forefront of community concerns, we 19 are committing four billion over the next five years 20 to provide additional options for low and moderate 21 income homebuyers in need of home purchase mortgages 22 and refinancing. 23 Additionally, it provides sufficient 24 product flexibility to continue our existing 25 mortgage program partnerships such as the soft 0035 1 second mortgage program to first-time home buyers in 2 Massachusetts. 3 The bank will continue its leadership in 4 community development lending, including at a 5 minimum 1.5 billion in CRA-eligible loans in LMI 6 areas. In addition, the bank will invest 500 7 million in low-income housing tax credit investments 8 in support of the development of much needed 9 affordable housing. 10 We will continue to meet basic consumer 11 borrowing needs with the commitment of one billion 12 for consumer lending in LMI areas. 13 Finally, the bank will expand its technical 14 assistance and support with the commitment of 15 15 million. Interwoven throughout this commitment is 16 what I view as a precedent-setting partnership that 17 we are announcing between Fleet-Boston and Fannie 18 Mae over the next five years. The 19 Fleet-Boston/Fannie Mae communities initiative will 20 commit much needed resources to home ownership and 21 affordable housing and is projected to create 22 affordable housing options for tens of thousands of 23 families in the communities we serve. 24 Affordable home ownership, loans to LMI 25 home borrowers through a variety of innovative and 0036 1 flexible programs such as a new women head of 2 household mortgage initiative, affordable 3 multifamily rental housing, a comprehensive plan to 4 preserve and accelerate the production of affordable 5 rented housing units. We heard this so many times 6 from community groups. 7 And finally, neighborhood revitalization. 8 Fleet-Boston and Fannie Mae will stimulate new 9 housing and community development activity through 10 an innovative, comprehensive, strategic neighborhood 11 investment initiative. 12 What I have presented is a framework of the 13 partnership with Fannie Mae, and we will be 14 announcing more details in the next month or so. 15 Accountability. We see community 16 organizations as critical partners in implementing 17 our commitment for capital access, outreach and 18 education. Key to this approach is the issue of 19 accountability, and we are prepared to be held 20 publicly accountable for meeting all the commitments 21 laid out today. An oversight board comprised of 22 community leaders will be formed and will meet twice 23 a year to receive information and to give us 24 feedback. A community investment subcommittee of 25 the Fleet-Boston board will meet regularly during 0037 1 the year to monitor the corporation's accountability 2 for community initiatives. And in addition, a 3 business line steering committee will meet regularly 4 to monitor business line performance against our 5 commitments and our goals. 6 In conclusion, I look upon this new 7 organization, Fleet-Boston, with the same enthusiasm 8 and excitement as when we undertook the challenge of 9 building a profitable business in New England's 10 underserved urban markets nine years ago. We enter 11 our alliance with Fleet Financial Group with a 12 blueprint for success in this emerging market in 13 which everyone benefits: Our shareholders, our 14 customers and the communities we serve. 15 My colleagues at BankBoston and I are 16 gratified by this opportunity that Terry and Chad 17 are giving us to continue our work within a larger, 18 stronger community. I believe in their commitment 19 to community investment and neighborhood 20 revitalization and that's why I'm sitting here today 21 committed to realizing upon this initiative. 22 At this point I would like to pass the 23 microphone to my colleague, Agnes Bundy Scanlan, who 24 has been instrumental in developing and managing 25 Fleet's community development program since 1994 and 0038 1 who has worked tirelessly over the past few months 2 in meeting with community groups to help develop 3 this community investment commitment. 4 MS. SCANLAN: Thank you, Gail. Good 5 morning. I'm pleased to be here today speaking on 6 behalf of the Fleet-BankBoston merger. Fleet and 7 BankBoston are committed to working toward improving 8 the quality of life and the overall vitality of our 9 communities. I would like to reiterate the pledge 10 expressed by Terry, Chad and Gail. We stand 11 committed to continue to meet the needs of 12 communities we serve through a wide range of 13 financial services and products. 14 We enthusiastically embrace our role in 15 fostering job creation, promoting home ownership, 16 enhancing economic growth and providing education 17 and support to individuals and businesses in urban, 18 rural and suburban communities. This is without 19 question the most rewarding part of my job. 20 Understandably there have been concerns 21 expressed about this merger in terms of its effect 22 upon communities, businesses, and consumers. Terry, 23 Chad, Gail and I have addressed some of them here 24 and in other meetings with concerned parties. 25 Nonetheless, apprehension and misapprehensions 0039 1 remain, fueled in part by incomplete and in some 2 instances incorrect information. 3 In fact, we have some very good stories to 4 tell which have not been noted to date. Affordable 5 housing. In our 125 community meetings, and indeed 6 in everyday conversations, it becomes clear that 7 affordable housing is of great importance to all of 8 us. When Professor James Campen released his study 9 on mortgage lending, it garnered a great deal of 10 attention. He noted that Fleet cut back on its 11 lending following the Shawmut merger and concluded 12 that bank mergers mean less mortgage lending for LMI 13 and minority borrowers. 14 Fleet did experience a decline in mortgage 15 lending overall. It is important to note that Fleet 16 did not intentionally cut back on its loan volume or 17 cede market share willingly. Rather, several 18 factors contributed to reductions in overall 19 mortgage lending, including increased competition 20 within the marketplaces, particularly from 21 non-banks, merger-related branch divestitures and 22 significant management turnover and operational 23 changes at Fleet Mortgage. 24 Despite these developments, Fleet has 25 remained the leader in affordable housing. For the 0040 1 six-state region cited in the study, Fleet held the 2 number one market share for home purchase loans to 3 LMI borrowers in 1995 and 1996, and held the number 4 two market share to these borrowers in 1997, 5 exceeding industry averages. 6 In Massachusetts, a primary area 7 highlighted in the Campen study, Fleet held the 8 number one market share for LMI black and Hispanic 9 borrowers for the period 1995 through 1997. In this 10 regard, even though our combined bank will only be 11 65 percent of its predivestiture size in 12 Massachusetts, today we have announced a commitment 13 commensurate with 100 percent of our predivestiture 14 size for affordable housing lending in this state. 15 In the City of Boston Fleet also held the 16 number one market share for LMI and minority 17 borrowers for the three-year period 1995 through 18 1997. I believe these statistics confirm our 19 commitment to LMI minority borrowers. Fleet and 20 BankBoston are doing the heavy lifting here. 21 Perhaps we should consider the point that 22 as other lenders increase market share, they have an 23 obligation to increase their share of lending to 24 these traditionally underserved markets. Even if 25 they do not have CRA requirements as the banks do, 0041 1 the combined voices of community groups, opinion 2 leaders and the public generally can raise this 3 imperative. 4 Small business lending. In the course of 5 our meetings we heard concerns about the 6 availability of credit to small business. But I 7 think one should consider the fine record of both 8 companies in working with small businesses as an 9 indication of our commitment moving forward. In 10 fact, the largest component of our commitment to 11 small businesses at 7.5 billion over five years, 12 coupled with technical assistance support, is large. 13 At Fleet we serve more than 320,000 small business 14 customers in eight states. 15 Today Fleet is the largest provider of 16 financial services to small businesses in New 17 England. According to the latest industry data, as 18 of June 1998, Fleet is ranked 10th among bank 19 holding companies for small businesses. We are a 20 leading SBA lender. In 1997 Fleet was the top SBA 21 lender in New England with more than 70 million in 22 total SBA volume. 23 I have some more remarks that I would like 24 to submit for the record, but in deference to time 25 I'd like to submit my time and yield to Terry Murray 0042 1 to close. 2 MR. MURRAY: Thank you, Agnes. And that 3 concludes our remarks. We'll be happy to respond to 4 the panel. 5 PRESIDING OFFICER SMITH: Thank you. 6 Questions from the panel? 7 MR. ALVAREZ: I have a question. There are 8 a number of commenters who have referred to the 9 study that Ms. Scanlan discussed, suggesting that 10 Fleet's lending in LMI areas in particular, in home 11 mortgage lending in particular, has declined after 12 each of the last two major mergers Fleet has been 13 involved in, and that has caused some folks to be 14 concerned that one plus one does not equal greater 15 than two in low and moderate income neighborhoods. 16 I understand that the program that you have 17 discussed, the CRA plan, is going forward. I was 18 interested in how the 14.6 billion dollar plan 19 compares to the amount of lending that the two 20 organizations are doing now and whether there are 21 any special steps that Fleet proposes to take to 22 ensure that lending will not decline after this 23 merger if this is approved. 24 MS. SNOWDEN: I'll take that one. In terms 25 of how we got to the number, particularly on 0043 1 affordable mortgage lending, we took a look at the 2 past three years, and the projected combined annual 3 average amount was 820 million dollars a year. We 4 then took an 80 percent divestiture factor, which 5 would give you a number of 736 million. 6 However, our plan commits on an average 7 annual amount of 800 million. So we feel that we 8 are maintaining the same level, and in fact this one 9 is an enhanced level. How you make sure you meet 10 your goals, you have goals, you have tracking at the 11 line of business level. You have the oversight 12 committee, you have the CRA Council that reports to 13 Chad. And so we'll be monitoring this initiative, 14 as we do most business initiatives, to make sure 15 that we stay on track. 16 PRESIDING OFFICER SMITH: Other questions? 17 MR. KWAST: I have a question regarding 18 proposed divestitures. As I think Mr. Murray 19 pointed out, you are proposing to divest a large 20 amount of offices and dollars of deposits. My 21 question is, when considering who to divest your 22 offices to, what are the major factors that you 23 consider in deciding who the winning bidders are. 24 MR. MURRAY: Well, to a large degree 25 Justice has certain ground rules. They are 0044 1 obviously looking for a major new competitor in this 2 marketplace. Subject to that, however, we've been 3 fortunate in that there's been a great deal of 4 interest in the pieces as well as the whole of the 5 divested package. And we have received enormous 6 amounts of interest. And I guess from an ideal 7 point of view we can address Justice's concerns in 8 terms of viable competitors as well as some of the 9 local concerns, and that is something the community 10 banks and local banks participated in these 11 purchases. 12 Over the next two or three weeks we 13 collectively will be looking at the various bids. 14 Obviously it is an auction, and price is a 15 consideration, but not the sole consideration. And 16 I think it's a balance. It's balancing factors 17 between community bank expansion possibilities as 18 well as satisfying Justice's issues of viable 19 competition. 20 The major divestiture is in the State of 21 Massachusetts, which is 8 to $9 billion of the 12 22 billion dollar package; the others being in Rhode 23 Island and Connecticut. But there have been dozens 24 of bids on the packages. 25 PRESIDING OFFICER SMITH: Other questions? 0045 1 If not, thank you very much for coming this morning. 2 And we'll go on to panel number two. 3 Thank you very much. 4 (At this point there was a chant from some 5 members of the audience, saying "Shame on you") 6 PRESIDING OFFICER SMITH: We're going to 7 call on the panelists in the order in which they are 8 listed. So we'll start with Mayor Menino.
Last update: December 3, 2010