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Building Bridges
Between Industry and Minority-owned Banks
Remarks by:

William O. Beers, Chairman and Chief Executive Officer, Kraft, Inc.

National Bankers Association Convention
Houston, Texas
October 13, 1977

KRAFT, INC. RECEIVES NATIONAL BANKERS ASSOCIATION FIRST CORPORATE AWARD
[[image - Award Plaque]]
[[written on plaque]] THE NATIONAL BANKERS ASSOCIATION PRESENTS THIS SPECIAL AWARD TO KRAFT, INC. In Recognition Of THEIR PIONEER EFFORTS IN ASSISTING THE MINORITY BANKING INDUSTRY. October 1977
[/written on plaque]]

In making the presentation, James C. Purnell, president of the NBA, said, "For a number of years, Kraft has followed a conscious policy of developing strong relationships with minority-controlled banks as its contribution to the economic development of minority communities in the United States. These relationships, which provide additional financial strength to minority-owned banks and which demonstrate the corporation's commitment to the economic vitality of the minority communities, include federal tax deposit accounts, lines of credit and a disbursement account."

I want you to know how greatly I appreciate the honor and the privilege of being here with you today. The growth of the National Bankers Association is certainly a testament to the unflagging commitment of its members --- a commitment that will benefit our entire society because it also benefits the basic economic development of minority communities. The organization that you are part of has made steady progress, and we at Kraft are proud to have contributed to it. As I remember, the original ten member-banks possessed total aggregate assets of $77 million. Today I am heartened to address an organization that has grown to 83 institutions with total aggregate assets of more than $1.5 billion. Growth is certainly one of your most important goals and you have been very expert in achieving it.

My company is a different kind of organization from your member banks. But, I keenly appreciate the benefits that are available to Kraft through a dynamic association like NBA. Kraft benefits from membership in such industrial and trade associations as The Business Roundtable and the Grocery Manufacturers of America as forums where we can exchange ideas, where we can obtain information and where we can identify business opportunities. The same principle certainly applies to your own organization. Diversity of membership in an organization increases the total resources which its members can utilize.

Understanding the diversity of all corporate market places is a basic concept that none of us can ignore. It is a key to the long-term success and the growth for any organization. Recognition of difference or variety, if you will, should strongly influence the way in which we conduct our businesses, be we bankers or food processors.

For example, a major factor in Kraft's growth and success has been the variety of food products that we offer to the consumer. Our lines include hundreds of varieties of cheese, dozens of pourable salad dressings, scores of frozen dessert flavors, milk and many other products. Recently we introduced Golden Image, an imitation process cheese food made with corn oil. We introduced it in several markets because consumers indicated a desire for a nutritious alternative to regular process cheese. Our marketing organization is responsible for identifying the distinguishing characteristics of major sub-markets, for appealing to them and for providing customers with the information they need to make appropriate choices in their product selection.

I believe the same principle of market research applies to the continued development of minority-owned banks and to basic economic growth in minority communities.
To accomplish this, banks and industrialists across the country must expand their understanding of the diverse markets and the sources of capital which can be relied upon to grow. Large companies today may well be your most important sources of capital.

Many companies are seeking mutually beneficial relationships with minority owned banks. These corporate opportunities benefit you in the long run because they require you to expand the scope and the sophistication of your services. The end result will be a stronger minority-owned banking network.

Your primary task is to find out what the customer wans, find out how you are going to give it to him and then to satisfy him. You will have that customer for a long, long time and your business will grow.

However, some industrial corporations today do not yet understand the opportunities and the available ways of working with minority-owned banks. And, I might add, some minority-owned banks and minority bankers do not realize the most effective ways to approach industrial firms. I think that there may be shortcomings on both sides.

Communication is the path to mutual understanding of any situation.  I think those of you who saw Dick Courtice's marketing presentation understand how we view communications at Kraft. In order to utilize all the resources of the important industrial market, both bankers and corporate financial officer should better understand one another's functions. Corporate financial officers can tell you precisely what services they need to establish banking relationships. I suspect that with great communications, you may become aware of fee type services and other banking functions not requiring specific legal lending limits which you can perform, profitably.

This communications function is not one-way by any means. Corporate financial officers, in turn, can become more familiar with the capabilities and opportunities that are associated with minority bank services.  Expanded knowledge may help them to analyze their own financial operations and develop more avenues of participation for your institutions. Stereotypes and misconceptions should not be allowed to cripple potential relationships between industrial companies and banks.

Our own experience provides an excellent case in point. As it has for many years, Kraft today enjoys a Triple-A bond rating. As a result, we use the commercial paper market to raise most of our short-term cash and we rely on banks only for lines of credit to back the paper. We do very little direct bank borrowing in the United States. However, about 200 U.S. banks render essential services in our cash collection and disbursement operations. 

At first glance, it might seem that Kraft's operations offer little opportunity for minority bank participation. As a matter of fact, a minority-owned bank in Seattle, with which I am sure you are familiar, participates in our national disbursement program. Liberty Bank working through its correspondent, Seattle-First National Bank, developed a new relationship with us. As a
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