Public Meeting Regarding First Chicago and Banc One
Thursday, August 13, 1998
Transcript of Panel Thirteen
20 MS. CARRILLO: Thank you. My name is Rita
21 Carrillo.
22 MS. SMITH: Oops, oops, I guess we're not
23 ready.
24 MS. CARRILLO: My name is Rita Carrillo. I'm
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1 the Executive Director of Neighborhood Housing
2 Services of Phoenix.
3 The NHS of Phoenix is a nonprofit
4 organization founded in 1975 and is dedicated to
5 neighborhood revitalization through the creation of
6 home ownership opportunities for low and moderate
7 income families.
8 To accomplish this, the NHS provides home
9 buyer education and counselling, develops new and
10 rehabilitated, affordable single-family homes and
11 develops flexible mortgage financing programs to
12 meet the credit needs of low and moderate income
13 borrowers.
14 In the last three years, the NHS of
15 Phoenix has provided home buyer education to over a
16 thousand families, created 251 new homeowners and
17 developed 30 affordable new single-family homes for
18 a total community investment of over $17 million.
19 I mention this because Banc One Arizona
20 has been a strong and long-standing partner of the
21 NHS in all of these endeavors.
22 Banc One and its predecessor, Valley
23 National Bank, have been leaders in corporate
24 support for community development in the Phoenix
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1 Metropolitan area. And in the Phoenix area, this
2 is very significant because we are not headquarters
3 to many major corporations and banks have
4 traditionally been the corporate leaders in our
5 community.
6 Banc One is the NHS's single largest
7 financial contributor and a major contributor to
8 numerous other community development efforts in the
9 City of Phoenix. It is also exemplary in the
10 leadership provided by top management on important
11 community issues.
12 Banc One Arizona's CEOs are and have had a
13 tradition of being active members of the
14 community. They volunteer their time and resources
15 to organizations and initiatives for the betterment
16 of the community. This includes issues such as
17 mass transportation programs, homelessness and
18 public education programs. This commitment to
19 volunteerism filters down to all levels of the
20 bank.
21 As the largest bank in Arizona, Banc One
22 sets the tone and level of commitment provided by
23 the other financial institutions in the state. For
24 example, the NHS of Phoenix recently launched an
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1 effort to create a second mortgage loan pool that
2 would provide below-market interest rate loans to
3 low and moderate income families. Banc One was the
4 first to make a verbal commitment for a major
5 investment in the loan pool. With that commitment,
6 the other banks at the table quickly signed on as
7 well.
8 The current Banc One Arizona CEO, Michael
9 Wellborne, is a member of the NHS Board of Trustees
10 and as such assists the NHS by soliciting other
11 corporate support for our programs.
12 Banc One staff sit on the NHS Board of
13 Directors and participate on the NHS Loan
14 Committee.
15 As mentioned by others testifying here
16 today, of most importance to a community is a
17 financial institution's approach to community
18 development and corporate social responsibility.
19 Banc One has always sought to be
20 knowledgeable on community issues. It is an
21 approach that seeks to understand diverse
22 perspectives and respond to rather than dictate
23 community needs and priorities.
24 Of significance to the nonprofit and
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1 minority communities in the City of Phoenix and to
2 me personally was my appointment four years ago to
3 the Banc One Arizona Corporate Board of Directors.
4 Of its own accord, Banc One chose to
5 become the first and still the only major bank or
6 any bank in Arizona, in the state, to appoint a
7 representative of a nonprofit community development
8 organization and a minority woman to its legal
9 Board of Directors.
10 With the continuation of this commitment
11 and this approach to community activism and
12 development, the merger of Banc One and First
13 Chicago NBD will create a stronger bank and, thus,
14 should bring additional resources and stability to
15 the community development efforts in the City of
16 Phoenix.
17 As a result, the NHS of Phoenix
18 anticipates a continued and strengthened
19 partnership with the post-merger Banc One.
20 Thank you.
21 MS. SMITH: Thank you.
22 And we'll go to Ms. Coleman.
23 MS. COLEMAN: Good afternoon. My name is Marva
24 Coleman. I am the Executive Director of the Five
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1 Points Business Association in Denver, Colorado.
2 We are a nonprofit organization that has
3 been founded since 1963. We promote economic
4 development in our area. Also, we do business
5 counselling, special events, business improvement,
6 marketing and we provide economic development in
7 our area.
8 The demographics of the area that I do
9 work in is 65 percent African American, 35 percent
10 Hispanic and Asian.
11 The area that we work in, that I work in,
12 is a seven-block area that is very important to
13 keep because it's the only African American strip
14 that is left in Colorado that is seven blocks
15 long. It has restaurants and it provides many
16 entrepreneurs that are minorities, and we need to
17 keep that alive.
18 One of the roles of Banc One is to provide
19 financial support for my office. Because we're
20 nonprofit, it's very difficult to find funding, and
21 Banc One has provided this kind of support for six
22 years.
23 They provide things such as technical
24 assistance. We have Ma and Pa restaurants,
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1 existing business, new businesses that really does
2 need technical assistance. They provide
3 scholarship funds for us. They provide a lot of
4 funding for an event that we put on in Colorado, in
5 Denver especially, called Juneteenth. And this
6 year, we were able to provide a huge, huge number
7 of support. 180,000 people went to our Juneteenth
8 event, which has made us larger than Texas, which
9 was very interesting.
10 They also provide banking education, which
11 means that they come into our establishment,
12 provide classes.
13 One of the very, very important things
14 which I mentioned before is the scholarship
15 program. We have given over $100,000 worth of
16 scholarships, and without Banc One's support, we
17 are not able to do this. And it's very important
18 for the education of the African Americans, Asian
19 and Hispanics in our area.
20 I would like to at this time support the
21 merger because Banc One is one of the banks that's
22 always been in our corner. They've always provided
23 services for us. We can call on them at any time.
24 They've been there.
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1 We also have an employee that is on our
2 board, and that is very important. She keeps us in
3 line, she supports us tremendously and makes sure
4 that we are on target and also makes sure that we
5 know exactly what's going on in the banking
6 industry.
7 I thank you very much for your time.
8 MS. SMITH: Thank you, Ms. Coleman.
9 Mr. Fairfield.
10 MR. FAIRFIELD: My name is Steven Fairfield.
11 I'm the Executive Director of Fifth Ward Community
12 Redevelopment Corporation in Houston, Texas, a
13 resident-founded and resident-governed CDC in
14 Houston's lowest income community and the home of
15 Barbara Jordan, Mickey Leland, George Foreman and
16 other trailblazers in the African American
17 community.
18 I agree with my colleagues that public
19 subsidy in the form of Federal Deposit Insurance
20 creates an obligation to provide a corresponding
21 public benefit and that too much industry
22 consolidation can adversely affect the scope and
23 depth of investment and credit available in low
24 income communities.
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1 However, I am here to testify that Banc
2 One has delivered the goods in our community and
3 their entry into the Houston market earlier this
4 decade through the acquisition of an old Texas
5 institution served to expand the scope and depth of
6 investment and credit available in our community.
7 Our first experience with Banc One in 1991
8 was not a positive one with the mortgage shop
9 saddled with peculiar southern operating practices
10 remaining from the institution they acquired
11 previously in Houston.
12 After complaining about these practices,
13 Banc One instituted a housecleaning resulting in
14 the creation of the city's friendliest mortgage
15 shop for our low income clients, something that was
16 later copied by other local lending institutions.
17 The bank has subsequently donated
18 furniture for our offices, provided general
19 operating grants to us, offered us construction
20 lines of credit, financed a neighborhood finance
21 center on an environmentally troubled tract of land
22 will feature an electronic banking kiosk for Banc
23 One, as well as a roaming loan officer, a small
24 business center, consuming credit counselling
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1 services case manager, policed storefront, new home
2 ownership center and a one-stop insurance center.
3 The bank has also offered competitive
4 investment and mortgage financing for a mixed use
5 retail and residential project we have under
6 construction. In fact, unfortunately, the bank has
7 offered us so much credit that we haven't been able
8 to use it all because we have a policy of working
9 with multiple lenders, but they're always there
10 with an offer for us when we have a new project.
11 As an advocate six years ago, I and four
12 Texas colleagues formed the Texas Housing Finance
13 Corporation to raise investment equity for
14 hard-to-do affordable housing transactions that
15 were small or rural or had special uses and were
16 more difficult to originate.
17 Banc One was our first multi-million
18 dollar investment commitment for that fund and has
19 continued as a lead investor in subsequent funds,
20 and they are now entertaining an investment in a
21 new venture capital fund we have created in Houston
22 to invest in minority-owned businesses in Houston's
23 inner city.
24 In short, seven years ago, we were a CDC
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1 on paper only. Since that time, we have developed
2 over 300 units of new rental affordable housing,
3 nearly a hundred scattered site homes, over 200
4 senior home repairs and improvements, two
5 neighborhood clinics, a Head Start center, a
6 finance center, a policed storefront, the equity
7 funds I mentioned and other economic development,
8 public safety and beautification initiatives.
9 Through this time, Banc One has been the
10 best top-to-bottom person who's committed to what
11 we're trying to do in Houston's lowest income
12 community of banks that are not based in our city.
13 And we haven't, in fact, been able to use all of
14 the resources that they have offered to us.
15 So I speak here in support of what Banc
16 One has done in our community for our low income
17 residents.
18 Thank you.
19 MS. SMITH: Thank you very much.
20 We'll go to Mr. Garcia.
21 MR. GARCIA: I want to first thank you for the
22 opportunity to come here today before you. I'm the
23 past president of the Indiana Hispanic Chamber of
24 Commerce.
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1 I was the president for five years and
2 have a long relationship with the Banc One
3 organization. And fortunate enough, we have a
4 relationship with NBD and First Chicago NBD, so we
5 have the best of both worlds in Indianapolis.
6 I've heard a lot of opinions and
7 definitely a lot of facts here today, but I can
8 only speak in regards to Indianapolis and the
9 Indiana community.
10 Banc One and First Chicago NBD continue to
11 provide us with leadership and support within our
12 community.
13 I have been involved in three mergers
14 individually and as the representative of the
15 Indiana Hispanic Chamber of Commerce, and some of
16 them have been very uncomfortable, and I would say
17 that the last one -- maybe we're getting it down
18 now, but it has it has become more comfortable.
19 And through those mergers, the success has
20 been primarily dependent upon maybe three things,
21 and one is definitely communication with community,
22 commitment to that community. And probably most
23 important is the adherence, if you will, or
24 maintaining of the current leadership.
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1 Our leaders, our bank leaders, the bank
2 leaders from Banc One and NBD in Indianapolis,
3 Indiana continue to fight, continue to promote the
4 involvement in our community of Indianapolis.
5 Many of those founders or I would
6 primarily say Andy Payne and Joe Barnett, who are
7 the leaders there in Indianapolis founded many
8 minority and women-owned minority programs that
9 still live today, and these are programs that have
10 been in existence for ten or more years.
11 So with the culture that we have received
12 in Indianapolis, it's been very positive in
13 strengthening all through the mergers that we have
14 experienced.
15 The merger of First Chicago NBD and Banc
16 One can propose success or failure. It's really
17 dependent upon, again, the continuity of the
18 culture and the individuals that stay within that
19 area. And that's why we are cautious but we are
20 confident that NBD, First Chicago NBD -- there's so
21 many names, I can't get them all out -- and Banc
22 One will be positive to the communities that we
23 work in and have.
24 I can say a few things about the Hispanic
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1 Chamber of Commerce and my company. I'm President
2 of GM Construction in Indianapolis, Indiana, but I
3 take a very proactive approach within the community
4 that we work in.
5 First Chicago and Banc One and NBD
6 continue to support organizations like statewide
7 certified development corporations which provides
8 funding and guidance and leadership to small
9 businesses.
10 They also provide leadership and
11 involvement to the Indiana Hispanic Chamber of
12 Commerce, the Black Chamber of Commerce, also
13 Indiana's Business Development Corp. They supplied
14 us with two million dollars of a loan pool that we
15 could draw on. Our MESBIC, which we call LINKS,
16 which is primarily -- I believe it's quarter of a
17 million dollars and above in loans, they supplied
18 $2 million for that fund also.
19 And again, it goes back to my previous
20 statement, which is our leaders are involved in the
21 Indianapolis community, and that's why we're
22 successful.
23 Banc One has never turned down one of my
24 clients, if you will, or my representatives with
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1 the Indiana Hispanic Chamber of Commerce. I've
2 brought numerous numbers, over 25 people or more,
3 and we have never walked away from the table
4 without some type of positive result.
5 Now, maybe those individuals at that time
6 or those companies could not perform or provide the
7 information needed for that criteria, but we always
8 had a secondary plan, and Banc One stood at the
9 table and stayed there until we came up with that
10 secondary plan. And we thank them for that.
11 And because of that, in Indianapolis, I
12 know that we have in the top 100 companies in the
13 Hispanic 500, we have two of them. And in the 200,
14 we have five of them.
15 So in Indianapolis, which has an Hispanic
16 community of only about two percent, has been very
17 progressive and forthcoming as far as experience
18 and success, and part of that is due to the
19 relationship with Banc One.
20 I would say in closing that the Latino
21 community, Hispanic community, of Indianapolis, we
22 support this merger.
23 We have had individuals that continue to
24 sit on the CRA Advisory Council for Banc One for
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1 the State of Indiana, and they listen to us. They
2 take our recommendations and implement them.
3 Our only concern, again, is that both
4 entities continue with the proactive approaches
5 towards the Hispanic community of Indianapolis and
6 other cities and that the new Banc One, as it's
7 been deemed, is even more sensitive to the needs of
8 our community. So we support it in totality.
9 Thank you.
10 MS. SMITH: Thank you.
11 Ms. Gnau.
12 MS. GNAU: Thank you for the opportunity to
13 speak with you today about our relationship with
14 Banc One.
15 My name is Debbie Gnau, and I'm one of
16 three female owners of the Chesapeake Group in
17 Cincinnati, Ohio.
18 We started the Chesapeake Group in 1994,
19 and we specialize in package designs for consumer
20 package goods companies. Our clients include
21 Hines, Starkist, Jergens, Paragon Trade Brands,
22 Marzetti, Chiquita and many others.
23 Our business has grown from $600,000 in
24 1995, our first full year of business, to
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1 $1.4 million last year, and we're on target to do
2 $2 million this year.
3 We view Banc One as a key partner in this
4 success, our provider of choice. They serve as a
5 lender and cash management provider as well as an
6 important advisor to our company.
7 Our relationship with Banc One began in
8 November of 1994 with a meeting in Cincinnati with
9 Dave Outcalt, a Banc One officer. Dave met with
10 Geralyn Curtis, our president, and reviewed our
11 five-year start-up business plan.
12 Despite limited prospects for any
13 tremendous business from us at the offset, he
14 nonetheless spent several hours with her getting to
15 know our business plan, understanding what we felt
16 we would uniquely bring to the party and
17 understanding our detailed financial assumptions
18 and business plans.
19 They reviewed financing options, cash
20 management details, and importantly, Dave also
21 provided us with a few recommendations for other
22 key advisors, including our attorney who we believe
23 to be one of the best at what he does.
24 We decided initially to self-fund our
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1 start-up, so based on the helpfulness Dave
2 provided, we moved our checking account from
3 Provident Bank to Banc One with our incorporation
4 in January of 1995. We've had our checking account
5 with Banc One since that time.
6 Starting with the day we opened our
7 account, the branch managers have typically gone
8 above and beyond the call of duty. On that first
9 day enabling us to leave the bank with the check we
10 needed to sign our office lease that day.
11 The managers have been consistently
12 helpful and timely with all of our requests,
13 including the time one of us accidently threw away
14 our check register and we had to try and
15 restructure it. Unfortunately, I have to admit to
16 be the one that did that.
17 Finally and very important to us, Banc One
18 has loaned us money to help meet our cash
19 management and growth needs. Kevin Plaugher met
20 with us in 1996 and spent a great deal of time
21 learning about what we do.
22 MS. SMITH: You're fading.
23 MS. GNAU: Learning about what we do.
24 MS. SMITH: That's better.
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1 MS. GNAU: Learning about what we do, what our
2 growth plans were and where we needed help.
3 As a result of our meeting, we were able
4 to obtain both a term loan to fund commuter
5 equipment we needed as we hired additional
6 designers as well as to obtain a line of credit to
7 address the lag in receivables which was growing
8 large. Since that time, we've expanded our line of
9 credit as our business has grown.
10 Wanda Walker-Smith joined Kevin in working
11 with us, too. She, too, has spent a good deal of
12 time getting to know us and our business. She was
13 also kind enough to nominate Geralyn Curtis, our
14 president, for Woman Entrepreneur of the Year,
15 which Geralyn was awarded in June.
16 Wanda has also worked with us to make sure
17 we're aware of and utilizing any specific services
18 that can make our work easier.
19 We also had the opportunity to talk over
20 lunch with Kevin, Wanda and Larry Bradley, the
21 Senior Vice President of the Business Banking Group
22 in Cincinnati, about our needs and to provide our
23 insight for the future in an effort to make sure
24 Banc One has the appropriate products in place for
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1 customers like us.
2 We look forward to working with Banc One
3 as our company continues to grow and appreciate
4 their ability to take time to counsel us on ways to
5 better manage our money and our future growth.
6 Thank you.
7 MS. SMITH: Thank you very much. We'll now go
8 to Mr. Gary.
9 MR. GARY: My name is Printice L. Gary, and I'm
10 the managing partner of Carlton Residential
11 Properties located in Dallas, Texas.
12 Carlton Residential is a for-profit
13 developer and general contractor of affordable as
14 well as market rate housing throughout the State of
15 Texas. Carlton also happens to be a 100 percent
16 minority owned company. I have two other partners
17 in the business.
18 I founded Carlton Residential in 1991, and
19 my first transaction was the acquisition of a
20 192-unit affordable housing project in South
21 Dallas, which is predominantly a minority
22 community, and this acquisition was funded by a
23 $2.9 million acquisition loan from Banc One at a
24 time when the banking industry in Texas was pretty
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1 much in chaos. And this kind of marked what I
2 considered to be a truly outstanding banking
3 relationship with Banc One looking at that time
4 going forward.
5 Since that time through different project
6 level entities, Banc One has provided more than $67
7 million in construction, permanent and equity
8 financing for Carlton Residential. This has
9 produced 1,240 units of housing, 740 of which are
10 affordable strictly, rent restricted, and obviously
11 has enhanced the growth of our company.
12 Our relationship with Banc One has been
13 one distinguished by their ability to be innovative
14 and their willingness to venture with us in new and
15 creative development formats and financing
16 structures.
17 By way of example, and I'm going to use
18 two, both are in impacted areas and both projects
19 have public housing projects within a stone's throw
20 of each of these developments. By way of example,
21 consider the Trainmore City Place, 192 units, mixed
22 income, new development in Texas.
23 In this transaction, Banc One provided a
24 $2.5 million bridge loan as well as a $2.8 million
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1 tax credit equity for the transaction.
2 The key element here is that the entire
3 transaction became a reality when Banc One
4 committed early to the transaction at a time when
5 other banks in Texas wouldn't touch a mixed income
6 type project development. As it turns out today,
7 mixed income across the nation is the way of the
8 future.
9 The project was very successful, and it
10 was so outstanding that we proceeded to Phase 2
11 which included 70 units, and in that transaction,
12 Banc One performed as our permanent lender, and as
13 it turned out, First Chicago was our equity
14 investor and they purchased the tax credits in what
15 turned out to be a pretty seamless transaction.
16 As a second case in point, a local
17 nonprofit community development organization, Maple
18 Avenue Development Corp, in Dallas, discovered a
19 six-acre land parcel in their neighborhood that
20 appeared to be appropriate for multi-family
21 affordable housing production.
22 Carlton combined with Maple Avenue and we
23 got the land under contract, produced a site plan
24 that included 144 affordable units and went out
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1 looking for equity, someone that would partner with
2 us and provide the necessary financing.
3 While this urban neighborhood clearly was
4 improving, the gentrification was showing, because
5 of the presence of the project housing project
6 nearby, most Texas banks wouldn't even take a look
7 at it.
8 Banc One CDC stepped in and after
9 thoroughly reviewing the market with us provided a
10 $1.4 million equity commitment for the project and
11 also provided a seven and a half million dollar
12 permanent takeout through Banc One CDC which
13 supported a seven and a half million dollar
14 construction loan from their local affiliate in
15 Dallas, Banc One of Texas.
16 Believe me, at that time, there's no other
17 bank in Dallas that would have provided that kind
18 of comprehensive commitment for the production of
19 affordable housing.
20 A couple of other points.
21 I really applaud Banc One's approach to
22 community development where they take a partnering
23 approach as opposed to some other institutions
24 forming their own development corporations, and
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1 that partnering approach allows people like myself
2 as well as some of the local community people to
3 build to capacity and to experience and development
4 their companies.
5 Looking forward, Texas is going to
6 probably experience greater growth than most of the
7 other -- many other cities in the nation and
8 thereby create a real need for affordable housing.
9 The way I see it, I think that Banc One
10 has its delivery system already in place. The
11 combination with First Chicago will add more
12 capital and overall provide for more -- 30
13 seconds -- financing for affordable housing in the
14 state.
15 If I could show you just one image, and it
16 just shows the quality that can be produced by
17 local developers if you've got the right kind of
18 financial partner. This is the Trainmore City
19 Place. And without Banc One's help, this simply
20 wouldn't have happened.
21 Now right in that neighborhood is a public
22 housing project. They have applied for Hope 6
23 funding. Together with the development of the
24 Trainmore, which is a real cornerstone that helps
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1 revitalize that neighborhood, hopefully, that
2 entire area will be revitalized.
3 Obviously, I'm very much in favor of the
4 Banc One/First Chicago merger. I think that it
5 will enhance the ability to do more affordable
6 housing in Texas, and hopefully, they will continue
7 their relationship with us.
8 Thank you.
9 MS. SMITH: Thank you very much.
10 Any questions?
11 I have an announcement. Nancy Hayne, you
12 have a fax, if you would stop by the registration
13 table.
14 We'll be starting with Mr. Bellamy, if we
15 can hand him the mic.