U.S. Bank testimony from Fed/OCC public meeting

March 08, 2022


U.S. Bank leaders testified today as part of a virtual joint public meeting held by the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency. The meeting was in regards to U.S. Bancorp’s application to acquire MUFG Union Bank, N.A.

Below is testimony from Andy Cecere, U.S. Bank chairman, president and CEO, and Reba Dominski, U.S. Bank’s chief social responsibility officer and president, U.S. Bank Foundation.

Andy Cecere

Thank you and good morning. My name is Andy Cecere and I am the Chairman, President and Chief Executive Officer of U.S. Bancorp. I am joined today by Reba Dominski, U.S. Bancorp’s Chief Social Responsibility Officer and President of the U.S. Bank Foundation, as well as CEO for MUFG Americas, Kevin Cronin and MUFG Union Bank’s Head of Corporate Social Responsibility, Julius Robinson. I’d like to first thank the Federal Reserve and the OCC for convening this important meeting and for this opportunity to discuss our proposed acquisition of MUFG Union Bank. We look forward to discussing many of the customer and community benefits that will result from the proposed transaction.

We believe this transaction is an opportunity to create a stronger bank that will greatly benefit the customers and communities of both institutions by deepening and expanding our footprint, enhancing competition, and providing customers with greater access to industry leading technology, products and customer service. After the transaction, U.S. Bank’s mission will be unchanged. We will continue to maintain a relatively simple business model, focused on serving consumer and commercial banking customers. The combined company will be a resilient banking organization with robust capital and liquidity levels to continue serving our customers and communities regardless of economic conditions. The combined bank will foster competition remaining far from the largest bank in the nation or even in California. In fact, the combined company will be only approximately one-sixth the size of the largest bank in the U.S., and approximately one-third or less the size of each of the top-three banks in California.

At U.S. Bank, we are anchored by our strong ethical culture. This is core to our organization, and in fact is part of our very roots. It is one of the reasons I have been at this company for more than 30 years, and it has resulted in U.S. Bank being named one of the World’s Most Ethical Companies by Ethisphere Institute for eight consecutive years. We are dedicated to supporting our communities, listening to community leaders and stakeholders and being responsive in our actions to meet their needs. One of the most beneficial components of this proposed transaction to date was the opportunity it gave me to hear from hundreds of community leaders through the six listening sessions we held. I found these sessions very valuable, and I learned from each one. I saw the passion and dedication these leaders bring to their work and heard examples of the huge impact they have in meeting the needs of the underserved. And it is why our plan is intentionally focused on increasing access to capital for those who live and work in lower income communities.

Let me discuss some of the benefits that we see resulting from our combination with Union Bank. We recognize that meeting the needs of our customers often begins with our valuable front-line branch employees. That is why we are committed to retaining all front-line branch employees throughout Union Bank’s footprint. We also believe in investing in our people through fair and competitive pay. Later this year, we will increase our minimum base pay rate from $15 to $18 an hour for all U.S. Bank employees throughout the United States— including our colleagues coming to us from Union Bank, pending a successful close.

Furthermore, we are committed to staying in every market that Union Bank currently serves. There will be no branch closures in LMI communities, or majority-minority census tracts in California that would result in U.S. Bank exiting a community – in fact, we intend to open new branches in LMI and majority-minority communities. And as a commitment in our forthcoming plan, we intend to engage with community stakeholders for future changes.

Both U.S. Bank and Union Bank are dedicated to maintaining an excellent record of serving low-income communities and supporting minority-led institutions. Last year, we launched U.S. Bank Access Commitment, our long-term approach to help build wealth while redefining how the bank serves diverse communities. This ongoing work builds on the millions of dollars that our company has already committed to address the racial wealth gap.

With these core values, we have actively been working to develop a strong community benefits plan that will ensure that the combined institution builds on the extensive legacies of both banks in serving community needs. Both U.S. Bank and Union Bank are outstanding partners with our communities. But we understand that, with this transaction, our combined company must do even more. I am excited about the opportunities that will result from our combination and the impact that we will be able to make in our communities.

While we continue to finalize details, we expect to invest $100 billion over five years, the largest community benefits plan in history, using a unique hybrid model with a California focus and a national impact. We plan to accelerate our exploration of new products and investments, expand our ongoing commitments, such as Access Commitment and the Small Business Access Initiative, and continue certain already successful Union Bank initiatives.

To speak in more detail about our commitment to community and how the proposed transaction will benefit all of the communities we serve, I’m pleased to turn it over now to Reba Dominski.

Reba Dominski

Thank you Andy, and thank you to the agencies for this opportunity. I am pleased to be here today.

As the Chief Social Responsibility officer at U.S. Bank, my responsibility includes ensuring that we meet the needs of our communities through the financial services we provide and the investments we make. On a personal note, I was born in India, came to this country when I was two years old, and was raised by a single mother in Detroit. It was my mother who taught me the importance of service and who inspired me to pursue a career in Corporate Social Responsibility. The best part of my job is helping our 70,000 employees make decisions every day that are good for the business, people and the planet. And I am honored to do that at U.S. Bank, alongside Andy and so many others who work hard every day to do the right thing and create economic opportunity for all.

I am proud to share that U.S. Bank received an Outstanding rating in our most recent CRA exam in total and across all three tests, lending, service and investment.

In 2021 alone, U.S. Bank provided 62 million dollars in charitable contributions focused on financial education, college and career readiness, small business, affordable housing and the arts with 97% of our U.S. Bank Foundation dollars supporting women, people of color and low and moderate-income communities.

We have invested 43.6 billion dollars in environmentally beneficial business since 2008. And, in November 2021 we announced a series of new environmental goals including setting an environmental finance goal and committing to net zero emissions by 2050.

Last year, we provided 197 million dollars in capital to Black-owned or led business and organizations and our employees logged 267,000 volunteer hours

Our Employee Assistance Program provides support and mental health assistance and since its inception in 2008, our Employee Assistance Fund has provided more than $13 million to employees facing an unexpected financial hardship

We are also looking forward. As Andy referenced, we have engaged in listening sessions related to this proposed acquisition with over 200 community leaders. We are conscious of the fact that this has taken time and I want you to know that was intentional. We believe it is critical to hear all voices and perspectives. Our forthcoming community benefits plan represents the voices of many contributing to a community strategy that includes:

  • Significant lending and investment goals nationally and in California, focusing on low and moderate-income (LMI) borrowers, LMI communities and communities of color.
  • The plan includes incremental investments prioritizing LMI and communities of color and focused on, access to capital, small business growth, affordable housing, environmental impact, philanthropy and supplier diversity.
  • The plan also includes a governance and accountability model to further two-way dialogue with community organizations to develop shared solutions.

Our forthcoming community benefits plan prioritizes areas of focus and actions where we can have the greatest impact on the communities we serve, especially those in California. For example, we intend to invest an incremental $115 million in grants and contributions over five years above and beyond the current giving of Union Bank and U.S. Bank combined. This incremental investment will include $75 million nationally and $40 million in California to provide greater support to nonprofits working to improve broadband access and community development in Native American communities. It will also support small business technical assistance programs, down payment assistance programs and the climate resilience of LMI communities.

Under this plan, we will adopt and enhance Union Bank’s small business Special Purpose Credit Program expanding it to all the markets we serve across the country.

Through the work of our Community Development Corporation, we are committed to advancing neighborhood revitalization and the preservation of affordable housing, including a willingness to finance more complex deals that focus on racial equity and environmental sustainability. And we will increase community development lending and investments, prioritizing CDFIs and developers led by and serving women and people of color.

Finally, we are committed to investing in the future of our workforce. Our commitment to diversity, equity and inclusion is a business imperative and core to U.S. Bank’s culture. As part of our community benefits plan, we will commit to ensuring 50% of U.S. Bank leadership is made up of underrepresented groups in the next five years.

We are proud of the plan we will put forth. Union Bank and U.S. Bank have been longstanding leaders in serving communities, but we can do even more for community through this proposed acquisition because with size, comes the ability to scale. In our plan, we will not simply put the two entities together, we will meaningfully increase community investments. We look forward to engaging with the community as we continue this work to ensure the combined organization will have even greater social and environmental impact. Thank you very much for your time today, I will now turn it over to our colleagues at Union Bank.

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