By working creatively together to develop innovative loan pools and investment opportunities,
working to meet community credit needs and to deliver national as well as specific local loans
and investments that B of A and Nations to show their support for community development that
creates effective results.

NHS appreciates the opportunity to testify at these hearings because it focuses the attention on
the need to sustain and enhance the local community development efforts and resources.

Thank you


that make homeownership a viable option for many low and moderate income individuals and
families. NHS is able to provide an a range of services through its Full Cycle Lending program,
which offers families guidance and services throughout the entire homebuying process from
credit counseling to landlord training and post-purchase services. It is because of this high level
of service and assistance to families that NHS is able to create lending opportunities for the
banks.

NHS has the history, capacity, and infrastructure/delivery system to make loans to clients and to
neighborhoods that are not routinely served by the bank’s own infrastructure and program. It
creates viable neighborhood markets through education and development.

In Chicago, the Bank of America’s leadership involvement, investment, lending and grant
relationship has produced benefits for neighborhoods and families. In past mergers and
organizational changes, the new entities have always increased their resources to NHS of
Chicago and the community. As NHS of Chicago continues to fulfill its community development
and lending commitments to the neighborhoods, we expect as in the past that B of A /
NationsBank will increase resources based on their size and institutional capacity.

We are supportive of this merger because of our very positive history and working relationship
with Bank of America. In addition, our discussions with Bank of America and NationsBank
representatives make us very optimistic about their commitment to communities and
partnerships. The $350 billion commitment demonstrates this and the interest in developing
local partnerships gives specific avenues that these resources can be delivered in local
communities. Because of this we believe it will result in increased resources for community
development.

Finding solutions at the local level within national organizations is a major challenge. How can
large national institutions respond to local community development needs? As decision-makers
get further removed how can they understand the local communities? How can local
partnerships be built that have the resources and decision-making necessary?

Community development by its very nature is local. In order to truly transform once undeserved
neighborhoods, like the neighborhoods in which NHS operates, you need specialized program
and products that address the very specific problems that cause their decline.

The NeighborWorks Network is actively engaged with B of A/Nations Bank in developing
innovative partnerships to bridge this gap and create mechanisms responsive to local
communities.

We are working to strengthen and enhance a national commitment and build on and strengthen
local partnerships and capacity. This is the way to insure that the $350 billion commitment that
was made will result in loans and dollars committed to community development at the local
level. We are confident that this working relationship and the commitment to community
development and innovative local and national partnerships that this merger will result in
effective and additional resources


“a

July 10, 1998

‘air Island Road, Suite 300
- Redwood City, California 94063

Board of Governors Tel: [650] 299-8000

Federal Reserve System Fax: [650] 299-8010

RE: Nations/Bank of America merger

Gentlemen:

My name & Fran Wagstaff and I am pleased to be here this afternoon representing the
Non-Profit HeusingAssOciation of Northern California (NPH).

NPH is a membership organization of some 500 members, including regional and
community based housing non profits, service providers, consultants, lenders, public
agencies and other parties involved in the production and management of affordable
housing in northern California. I am a non-profit developer and member and past
president of NPH

I am here today to emphasize NPH's concern regarding the proposed merger and its effect
on our constituents

First, I want to describe the active and strong network of non-profit housing organizations
which exists here.

NPH last conducted a poll on non-profit housing production in 1995-96. In the nine Bay
Area counties, we found that non-profits had produced over 15,000 units of housing in
the prior six years, at a development cost exceeding $ | billion. In one year alone, 1994,
non-profit housing production accounted for 61% of all multifamily housing built in the
region. 86% of this housing serves low-income households, and over 50% is targeted to
very low-income households. Unlike for-profit housing, this housing promises to remain
affordable for the long term.

Out active non-profit community has been involved for many years in helping to shape
the programs that are offered by the Bank of America Community Development Bank.
This bank, based in California, has understood the unique needs of a housing market,
which has the dubious distinction of being the least affordable in the nation

We have benefitted by this California presence, and have counted Bank of America as an
important partner in addressing focal needs, and in building local capacity. For example,
the Bank of America Challenge has encouraged talented graduate students to study
affordable housing development, and to compete with their peers by developing
affordable housing proposals. This Challenge competition has generated competent staff

1
Equal Housing Opportunity-Professionally managed by Mid-Peninsula Housing Management Corporation

—


VC ZS |
Northbay Ecumenical omes*

Cc AG) Saga) A — A Non-Profit Housine Devevopment CORPORATION —
Community Assisted Shared Appreciation
Home Loan Program

Offices: 14 Commercial Blvd., Suite #133 (on Pamaron Way), Novato, CA 94949
Mail: PO. Box 428, Novato, CA 94948-0428,

Phone: (415) 382-2530 Fax: (415) 382-2538 E-mail: casa@neh.org  www.neh.org

Clark A. Blasdell
President & CEO

Karen Nathanson FY .
NEH Real Estate Broker Se DATE: Friday, July 10, 1998

Morn TO: Board of Governors, Federal Reserve Bank of San Francisco (FRBSF) /
Rev. Paul Harris FROM: Northbay Ecumenical Homes, Inc. (NEH) and

Board Chairman Suburban Altematives Land Trust (SALT), Inc. Ch

asl Chairman by Clark A. Blasdell, President and CEO of NEH and SALT

Barbara Dalmau
Vice Chairman & Secretary

RE: NationsBank and Bank of America MERGER as “NewBank”

Peter |. Sutton

Treasurer
Ed C Stark INTRODUCTION: NEH and SALT are two affiliated Marin County-based nonprofit
Fand erent Chair community development and affordable home finance corporations. I was a Founder of
Community Alas Chat NEH in 1978 and in 1993 of SALT, which incorporated in 1998. As a developer/builder
Kathi Barrilleaux of new homes for almost two decades, I have known the difficulties of seeking and
Lavestment Loan Cligir securing the cash and credit needed to build and finance subdivisions and individual home
Saeed sales and purchases. We’ve produced over 2,500 homes; more than one in four affordable.
Mesos I particularly have had extensive experience assisting low income first time homebuyers
Bank of son buy their first home in Marin - one of our Nation's most unaffordable and difficult housing
"Area Council :
Sikensiock seth, imerests markets - and more recently with CASA HOME LoanTM contracts in ten Bay Area cities
California Land Title Co. of Marin
apin chantable Unitrus
ett Ace ann SUPPORT FOR MERGER: On behalf of NEH and SALT, and the many low income
Fee Ome agency clients and working families we have served over the past two decades, I support the
Fa Eee ional Tile Co Merger as I understand it from publicly available materials that have been provided
First National Baneoiwenn”  €O Te and us,
Feank Howard alien Reaitors
Good Shepherd Lutheran Church ;
Cithtne Insurance Agency As this is the first merger discussion in which I’ve participated, I am unclear about the
teebitags Moneoas Company roles and process after today’s hearing is closed. However, I offer the following additional
Ligcus Valley Properties

Lothur Burbank Savings & Loan comments. for your considered action
Manin Association of Realtors

Mann Builders Exchange

Mania Church of the Nazarene

Mann Mobile Home Park ISSUES and CONCERNS to ADDRESS/RESOLVE:

Choe tier 1. Whether or not FRBSF retains review and control over subsequent CRA evaluations of
New test That E Loan co “NewBank” performance, I think clear and adequate written direction is important now, in
Sern eye case any other FRB gets jurisdiction. This can ensure California’s diverse credit and

Novato Community Hospital banking needs are properly and adequately understood, as well as provided for by those
Novato Human Needs Center ~
ovate United Methods: Church farther away. Measurable and profitable RESULTS must be standard achieved by

Sur Lads of Loretta NewBank, from the perspective of new Stockholders, any new Regulators, and ultimately
acheco Ranch Winery by the number of new Customers they secure beyond all existing Customers retained.
St Francis of Assist

Episcopal Church

pop Rata! Thalt @ oan 2. “NewBank”’ should make adequate written commitments establishing the numerical
weet eeniee. targets, goals and/or minimum CRA activities for California (e.g. make separate

ccnamiton Parneshy California Commitments”, especially for program areas such as Charitable giving,
eee ee Novato Foundation operations, and State/Community Bank staff H.Q.)

Jerry Ward, Spectra
Mortgage Group

wells Fargo Bank FRBT98

WescAmenca Bank

David Wight, Grant Water

Memon pba wemeee seman weuser
SONS try ayy E AAHL BAY AREAN’COUNCH.
Bpge tb a BAY AREASCOTM=



z)

for many non-profit agencies, thus helping to build local capacity. We would like to see
this and other innovative Community Development Bank programs continued.

NPH is concerned that NationsBank will extend the use of their own for-profit CDC to
California, and will thereby compete for scarce resources and inadvertently undermine
local organizations.

In addition, the Bank America Foundation has been an important source of support for
our industry. If this foundation is integrated into the central corporate structure in North
Carolina, our access to these funds will almost certainly diminish. We want to see a
written commitment to contribute a percentage of the Bank's earnings to charitable
contributions in California.

Since most of NPH's members are engaged in producing multifamily housing, we
expected to see an increased CRA commitment to multifamily housing as a result of this
merger. We note with disappointment that the bank's proposal is not targeted in regards
to serving low income families, non-profit developers or in regards to offering a flexible
mix of financing including construction, term, bridge, bond program and tax credit
investments. All these goals need to be specific, and in writing.

The business relationships of our members with Bank of America have developed over
many years. We don't want to lose this local presence, nor do we want a new huge bank
replacing local staff and making decisions for California from North Carolina, or
"reinventing the wheel" when it comes to community lending. Our members have
benefitted from the lively spirit of competition in community lending which has resulted
in lower costs for loans and more flexible terms. The huge merger that is proposed will
in the long run curtail competition and roll back the gains we have made, therefore we
urge you to consider these issues carefully.

Sincerely,

Fran Wagstaff

Cc: Diane Spaulding, NPH


+ Reprinted from: Spring 1996 edition of Community Investments published by The Federal Reserve Bank of San Francisco.

CHAGSMHIA

Community Assisted/Shared Appreciation

The CASA Home LoanTM Program

by V. Terrell (Terry) Ward, CMB
Consultant & Capital Funds Development Officer

In the process of looking for new ways to respond to CRA
and community investment requirements, many financial in-
stitutions are recognizing residential lending opportunities for
first-time homebuyers which offer real potential for both
growth and profitability.

The CASA Home LoanTM “silent second” Program offers a
simple and effective vehicle for providing affordable home
purchase opportunities. Through the Community Assisted
Shared Appreciation, or CASA, Home LoanTM Program, each
participating lender may benefit in one or more of the follow-
ing Ways:

¢ Investment potential through CASA Home
LoanTM fundings

© Incre;

d first mortgage lending and
related income Opportunities:

* Expanded business opportunities with
builders ancl realtors

© Enhanced CRA performance under the
lending, investment ind service tests

* Community outreach and visibility

@ Increased investment potential through
public/private partnerships

Advantages of CASA Home Loan'TM
Program Participation

Northbay Ecumenical Homes (NEH) has dew eloped the CASA
Home Loan’ Program in response to the substantial nced
for home ownership assistance in the California market where
housing costs are among the highest in the country. Through
ctunique blending of public and pnvate funds, the CASA Home
LoanTM Program has the potential to: 1) substantially increse
the number of families achieving home ownership for the first
time, 2) help financial institutions meet CRA objectives and 3)
through public/private “leveraged investments,” increase the
potential return to participating financial institutions

Structure of the CASA Home LoanTM Program

The CASA Home LoanTM is @ specialized home finance pro-
gram in which the borrower agrees to share appreciation in
the property being purchased with NEH and on behalf of its
public and private CASA partners. Typically, three loans are
put in place along with a minimum downpayment of five per-
cent from the borrower. The first loan will generally be a fixed
rate FannieMae saleable loan made by a primary lending insti-
tution. A second loan is then placed on the property either
from the same first lender or another lender who wishes to
participate in this program. To complete the purcl third
loan is placed on the property through the use of a city silent
loan program or other grant source. When these loans are ul-
timately paid off through the sale of the property, the bor-
rower receives the original amount of their downpayment plus
a minimum of 40% of the appreciation. When the CASA loan
is paid off NEH also receives, on behalf of its CASA part-
ners, its original principal and a maximum 60% share of the
property's appreciation instead of the monthly principal and
interest payments it would have normally received if the loan
had been a traditional second loan.

A simpliticd example of how this program works is as follows:

Original Purchase Transaction

Original Purchase Price $100,000°
Downpayment from Borrower @ 5% $5,000
First Mortgage $75,000
CASA Loan - Second Mortgage $10,000
Silent City Loan or Grant - Thircl Mortgage $10,000
Wwe Your Sal enario

Subsequent Sale Price sH12s00°
Payoll of First Mortgage ($70,903)
Payolf of CASA Loan Second Mortgage ($10,000)
Payoff of Silent City Loan or Grant

- Third Mortgage ($10.00)

(continued)

ee

Community Iruestemerts/ Spring 1996 13


Fane( 29

NHS NEIGHBORHOOD HOUSING SERVICES OF CHICAGO INC.

P47 N. MAY STRELE, CHICAGO, H 60622 (312) 738-2227 © FAX (312) 738-2491
Bruce Gotsehall ~ Ex. Dir.

B of A - Nations Bank merger testimony July 9, 1998 at the Federal Reserve

NHS Chicago background

* 23 years of community development; 18 Chicago neighborhoods

partnership with more than 200 financial institutions in Chicago with neighborhood
residents and city government amid at restoring confidence in declining neighborhoods
community development - neighborhood strategies - neighborhood reinvestment

made 10,000 housing rehabilitation and community development loans

20,000 units directly impacted

involved nationally with NHS’s across the country in the NeighborWorks Campaign for
Home Ownership and the National Neighborhood Housing Network

*

eee

Bank of America and the predecessor organizations in Chicago - B of A IL and Continental Bank
- have been leaders in assisting NHS of Chicago to serve the credit and community development
needs of an increasing number of people and neighborhoods over the last 23 years. Twenty-three
years ago the first president of NHS Chicago was an executive vice president at Continental.
Fifteen years ago Continental Bank was the first single institution to fund the majority of a new
NHS neighborhood - Little Village. Ten years ago Continental made a $20 million commitment
to NHS to develop the Chicago Home Improvement Program (CHIP) which assisted in NHS
becoming the only not for profit mortgage bank licensed in the State of Illinois and substantially
increasing NHS’s capacity as a community development lender.

Five years ago, B of A IL expanded the CHIP commitment to $40 million and invested in the
development of a new neighborhood NHS operation in West Humboldt through a 5 year grant.
Funds were also committed to improve NHS lending capacity, market the lending programs,
assist in funding the RLF and support the NHS operation in other neighborhoods of Chicago.
The B of A community development staff has provided personal leadership for the expansion of
NHS activity in Chicago’s neighborhoods. Among other things, their consultation in financial
planning prepared NHS to submit and be approved for matching funds as a Community
Development Financial Institution.

NHS has been able to provide lending and investment opportunities for financial institutions
through NHS loan pools and investment opportunities such as the Chicago Family Housing Fund
(CFHF). In addition to lending and investment opportunities, NHS provides lending institutions
with “bankable” customers that otherwise could not have been served by their institution. NHS is
able to do this because we provide a level of service that prepares an individual for home
ownership and improvement. NHS provides customers with homebuyer education, rehabilitation
assistance, and affordable financing and downpayment assistance, all of which makes the
customer a better credit risk for the bank. Without NHS added services these loans would not be
made. In the private market, these services are not available or are not combined in such a way

ATM 4M
NeighborWorks* -
MEMBER REBUILDING CHICAGO'S NEIGHBORHOODS,