Appendix — United States v. First National Bancorporation, Inc.
Supreme Court brief1972
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In the Supreme Court of the Gnited States
Octoser Term, 1971
No. 71-703
Unitep States oF AMERICA, APPELLANT,
v.
First NationaL Bancorporation, Inc., AND
Tue First Nationa Bank or GREELEY
ON APPEAL FROM THE UNITED STATES DISTRICT
COURT FOR THE DISTRICT OF COLORADO
INDEX *
Page
ee TN TNE oo ova kv crh seis dccdck ness ees 1
Complaint by the United States filed July 8, 1970 ........ 4
Answer of First National Bancorporation, Inc. and The
First National Bank of Greeley, filed July 24, 1970 ..... 10
Complaint by the United States as amended nunc pro tunc
er TE, Oe: cox ans scabs donk Suse ed saeaskabaens 20
Trial of the action held before the Hon. William E. Doyle,
US. District District Judge for the District of Colorado,
1 commencing on May 3, 1971, at Denver, Colorado:
PE occ cknadusvbusdceudniak ook ses cueees 27
Testimony of Howard E. Smith—direct .... [Tr. 120] 28
—CIOSS ........ [127] 32
—redirect ..... [131] 34
Testimony of George P. Evans—direct ........ [138] 35
—Ccross ........ [157] 42
—redirect ...... [160] 43
“The memorandum opinion and order of the district court are printed in
Appendix A of the Jurisdictional Statement of the United States, at pages
26-61.
a rege ORS ote
Transcript of proceedings held before the Hon. William E.
Doyle, U.S. District Judge for the District of Colorado,
on May 4, 1971:
Appearances ...........cceercecccecccccccccccees
Testimony of Richard G. Walsh—direct ...... [166]
7 —voir dire ... [169]
Transcript of proceedings held before the Hon. William E.
Doyle, U.S. District Judge for the District of Colorado,
on May 5, 1971:
ADPORFANCED .... 2. ccc ceccccccccnencccesensscces
Testimony of Richard G. Walsh (continued)
ME casas sceeanapasfescastecsvasevbes [350]
NEE ca cass scevecsenstetesentanve's [435]
MGUOE nc cess cnancnvccceeenvessresess [457]
Testimony of James M. Small—direct ........ [470]
—Cross ........ [481]
—redirect ...... [487]
—recross ....... [491]
Testimony of Thomas Moon—direct .......... [492]
—CFOSS ........-. [495]
Testimony of H. J. Bleakley—direct ........ [499]
MES osaaneas [506]
Testimony of Harry Bloom—direct ......... [518]
—=CFONB 2 oc esccce [521]
Testimony of Stanley Allen—direct ......... [524]
Transcript of proceedings held before the Hon. William E.
Doyle, U.S. District Judge for the District of Colorado,
on May 6, 1971:
APPEAFANCES .... 22. c cece ccccesseccccccccnees
Testimony of Stanley Allen (continued)
Gini vickecdn dab eondsennerswake cua [548]
ee ee ee eee re [549]
Testimony of Donald W. Winter—direct ..... [550]
—cross ..... [558]
—redirect ... [567]
—recross .... [568]
Testimony of Walter R. McKinstry—direct ... [570]
—cross ... [575]
—redirect . [578]
Testimony of Charles H. Smukler—direct .... [579]
—cross .... [590]
—redirect .. [601]
—recross ... [602]
BOOK TOO LARGE FOR Fil
sg ili
a Page
2
"
Testimony of George R. Hall—direct ......... [604] 218
—voir dire ..... [641] 235
oe, [689G ] 262
Transcript of proceedings held before the Hon. William E.
Doyle, U.S. District Judge for the District of Colorado,
on May 10, 1971:
IIR eee ge te ee, 276
Testimony of Theodore D. Brown—direct ..... [726] 276
—Ccross ..... [745] 286
—redirect ... [759] 293
—recross .... [763] 295
—redirect ... [767] 297
Testimony of A. H. Trautwein—direct ....... [767] 297
—=CFOMS ....000. [769 | 299
—redirect ..... [771] 299
—recrogs ...... [772] 300
Testimony of Norman M. Dean—direct ....... [773] 301
—OPONB ox sees [774] 301
—redirect ..... [777] 303
Testimony of Dale R. Hinman—direct ....... [779] 303
—CFOSS ........ [780] 304
—redirect ..... [782] 304
Testimony of Robert M. Gilbert—direct ....... [783] 305
—CFOSS ....... [784] 305
Testimony of Larry DeBell—direct .......... [785] 306
—“CFOSB ........0. [795] 312
Testimony of Ronald C. Harris—direct ....... [800] 314
——CFOMS .......; [807] 318
—redirect ..... [812 321
Testimony of Richard P. Brown—direct ..... [813] 322
—cross ...... [817] 324
—redirect ... [820] 326
Testimony of Jack R. Thomas—direct ....... [823] 326
—GPOUE ........ [833] 331
—redirect ..... [852] 342
Testimony of John F. Falkenberg—direct ..... [865] 342
—CFOss ...... | 870] 345
Testimony of Royce Clark—direct ........... [875] 346
4 POE bent bee es [877] 347
Testimony of Philip H. Hogue—direct ....... [882 350
—CFOss ........ [911] 367
—redirect ..... [924] 373
JMING-POSSIBLE BLURRED PAGES
Transcript of proceedings held before the Hon. William E.
Doyle, U.S. District Judge for the District of Colorado,
on May 11, 1971:
FO MET AUT EUY TEE eT CL eR Tee ETT eT
Testimony of Norman M. Postles—direct ..... [929]
—Cross ...... [932]
—redirect ... [936]
—recross .... [936
Testimony of Lester R. Pagels—direct ....... [938]
—Cross ........ [940]
—redirect ..... [944]
Testimony of Nevins D. Baxter—direct ....... [945]
—cross ...... [1071]
Transcript of proceedings held before the Hon. William E.
Doyle, U.S. District Judge for the District of Colorado,
on May 12, 1971:
SAN ch kannie Qhbkbeenkn ded basaanaeeews
Testimony of Nevins D. Baxter (continued)
EE ShGab cee Ea SWONEeesenasdsacneasee [1122]
REL \ cad cakaneNWeedeSescancacdvecae [1153]
EE antec aBbaeeWches tn sedeee dns cce [1161]
ME icUtcnedakh stesdh es isa seeks [1163]
Testimony of Dale Hinman—direct ....... [1165]
—Cross ........ [1168]
Testimony of Harry Bloom—direct ....... [1199]
—Ccross ........ [1202
—redirect ...... [1203]
—reeross ...... [1204]
Testimony of Walter C. Emery—direct ..... [1207]
—CrOss ...... {1211]
Testimony of Philip H. Hogue—direct ....... [1264]
Transcript of proceedings held before the Hon. William E.
Doyle, U.S. District Judge for the District of Colorado,
on May 13, 1971:
ID 4 ba WER W NUNS 4 O55 arate oases anecekent
Testimony of William P. Lober—direct ..... [1274]
—Ccross ...... [1277]
been [1278]
PRRARERBADSARR OHS SEDER AD ARSE HAR HSH AKT SS
Page
374
374
376
378
378
379
380
382
383
442
464
464
481
486
487
488
489
490
492
492
493
493
495
501
503
503
505
EMO SCCRSCden SW ecad dhe eaeantnNeabecnaacenccuaces
TAIS™. QOsAC CM! CH Mb rt iDmpbob nem pPArrcae
BOOK TOO LARGE FOR FILMING—
OSSIBLE BLURRED PAGES
ee ee Ore . ., aee Pee e ee
NG-POSSIBLE BLURRED PAGES
SAA TAM 1 ARGE FOR FiL.
SM UR SES PAG odd cdc bebbiccsssaessveoeves
Transcript of proceedings held before the Hon. William E.
Doyle, U.S. Distriet Judge for the District of Colorado,
on August 9, 1971, at Denver, Colorado:
ae an cen bde bs bbe6 es 000 0%0¥s
Testimony of Keith Anderson—direct ......... [23]
—Cross .......... [28]
—redirect ....... [29]
Testimony of Roger B. Knight, Jr.—direct ..... [30]
Testimony of Bruce Alexander—direct ........ [33]
—OTONE . cccccce [36]
Prosecution exhibits :
METRE EGEWEUE EEG A pba eos n6050506s00r0ed8ers
PC CSLEasaSUsghossinsisccvevesdovecece
lF oenmceipat © RI IIRRED PAGES
Order of the district court dated August 27, 1971, denying
plaintiff’s motion to reopen the record
Notice of appeal filed by the United States on September 24,
1971
Supreme Court’s Order of February 22, 1972, noting prob-
able jurisdiction
BOOK TOO LARGE FOR Fil
3
Unitep States or AMERICA,
First NationaL BANCORPORATION,
Inc., anp Tue First Nationau
Bank or GREELEY, DEFENDANTS.
Date
1970
7/8
7/24
9/4
12/17
1971
1/11
1/15
1/29
3/8
3/22
1/15
4/29
5/3
5/4
5/5
5/6
Unitep States Disrricr Court ror THE
District or CoLorapo
PLAINTIFF,
v. Civil Action
No. C-2413
Retevant Docket Ewnrnries
Complaint
Answer of both defts . Cert. of Service.
Pre-trial Conference | (WED)
Motion of pltf. for consolidation of actions involving
common question of law & fact with C-2754
Motion for leave to file amended complaint
Pre Trial conference (WED)
Ordered: Motion to consolidate is taken under ad-
visement. eod 1/18/71 Motion to amend was granted
Signed (WED) order denying motion for consolida-
tion. eod 1/29/71
Signed (WED) order that pltfs motion for leave io
file amended complaint is granted, & that the
amended complaint be filed as of 1/15/71 eod 3/9/71
Hearing (WED) Ordered: set this matter for trial
on 5/3/71... Recess ..eod 3/24/71
Amended complaint . Cert. of Service
Pre-trial Conference (WED)
Trial to court (WED) 1st day — Exhibits
Witnesses. Recess _e0d 5/5/71
Trial to court (WED) 2nd day Exhibits
Witnesses Recess . e0d 5/5/71
Trial to court (WED) 3rd day — Exhibits
Witnesses. Recess eod 5/6/71
Hearding (WED) 4th day discussion of preliminary
matters Witnesses. Exhibits Ordered:
(1)
VING-POSSIBLE BLURRED PAGES
Motion of Deft. to dismiss is denied... Recess to
5/10/71. . .e0od 5/7/71
5/10 Trial to court (WED) 5th day... Exhibits... Wit-
nesses. . Recess eod 5/12/71
5/11 Trial to court (WED) 6th day... Witnesses... Re-
cess. . e0d 5/12/71
5/12 Trial to court (WED) 7th day. Witnesses... Ex-
hibits. Recess.. eod 5/13/71
5/13 Trial to court (WED) 8th day... Witnesses... Ex-
hibits . Ordered: Pitfs. have 10 days to file supple-
mental findings & this matter is under advisement... .
recess... eod 5/14/71
6/23 Motion of Pitf. for order setting expiration date for
statutory stay
7/12 Signed (WED) Memo. Opinion and Order.. .Or-
dered: that requested relief must be denied and that
the complaint and cause of action be dismissed... . the
govt. is granted a stay of proceeding for 30 days—
during this period the statutory injunction will re-
main in force.. e0d 7/13/71
7/22 Motion of Pltf. to Re-Open the Record, to make addi-
tional findings of fact, and to amend the judgment
_. Cert. of service.
8/4 Motion to extend the statutory stay-attached to No-
tice Signed (WED) on motion to extend the statu-
tory stay, stay granted until after hearing on mo-
tion to reopen... Matter to be considered after that
hearing. eod 8/4/71
8/9 Trial to court (WED). ..1st Day... Witnesses...
Exhibits... Ordered: Pltfs. motion to reopen the
record is denied... Motion for stay is granted for an
additional 40 days from this date.. written order
to follow.. eod 8/10/71
8/13 Signed (WED) Ordered that the statutory stay set
forth in the Bank Holding Act of 1956, is continued
for a period of 40 days from 8/9/71...eod 8/16/71
8/27 Signed (WED) Order that the Motion to Re Open
the Record, to make additional findings of fact & to
amend the judgment is denied.. eod 8/27/71
9/13 Stipulation Re judgment entered 7/12/71
9/24 Notice of appeal to the Supreme Court of the U. S.
by the U.S. . Cert. of Mail. ;
annKkt THO | ARGEF FOR FII MI-
3
10/8 Copy of order from the Supreme Court of the U. S.—
that the stay of proceedings granted by the U. S.
District, Dist. of Colo. is continued pending the
timely docketing of an appeal by the U. S. and the
final determination of said appeal by this Court
” . “ x -
‘. eee ie Ae pn. teed EET ane Sanne ie
s—-POSSIBLE BLURRED PAGES
Unirep States District Court FoR THE
District or CoLoRADO
Unirep States or AMERICA, )
PLAINTIFF,
Civil Action
No. C-2413
Filed: July 8, 1970
Vv.
First NationaL BANCORPORATION,
Inc., anD THe First Nationau
Bank or GREELEY, DEFENDANTS,
CoMPLAINT
The United States of America, plaintiff, by its attorneys,
acting under the direction of the Attorney General of the
United States, brings this civil action to obtain equitable
relief against the above-named defendants, and complains
and alleges as follows.
I
JURISDICTION AND VENUE
1. This complaint is filed and this action is instituted
under Section 15 of the Act of Congress of October 15, 1914,
e, 323, 38 Stat. 736, as amended (15 U.S.C. § 25), commonly
known as the Clayton Act, in order to prevent and restrain
the violation by the defendants, as hereinafter alleged, of
Section 7 of the Clayton Act, 38 Stat. 731, as amended.
2. Each of the defendants has its principal place of busi-
ness, transacts business and is found within the District of
Colorado.
II
Tue DeFreNDANTS
3. First National Bancorporation, Inc. (hereinafter _re-
ferred to as ‘‘ Bancorporation’’) is made a defendant herein.
Bancorporation is a registered bank holding company or-
ganized under the laws of the State of Colorado and main-
tains its principal place of business in Denver, Colorado.
4. The First National Bank of Greeley (hereinafter re-
ferred to as ‘‘First National Bank’’) is made a defendant
herein. First National Bank is a banking association or-
4
SLE APL SITIES EELINE LEASED NLT NYT EL IE SSIOI LRTI SEE ALN ELA GM, SED.
i.
BOOK TOO LARGE FOR FILMING-
5
ganized under the laws of the United States of America
and maintains its principal place of business in Greeley,
Weld County, Colorado.
Ill
TRADE AND COMMERCE
5. Commercial banks fill an essential and unique role in
the nation’s economy. Their principal functions are the
acceptance of deposits for safekeeping and convenience in
making payments by check, the granting of loans or ad-
vances of funds to individuals and business firms, and the
creation through demand deposits of net additions to the
supply of money. Most money payments in the United
States are made through checks drawn aaginst demand
deposits, and the creation and holding of such deposits is a
function peculiar to commercial banks and one which makes
them to a great extent the administrators of the nation’s
check payment system. Through the making of loans to
individuals and businesses, commercial banks supply a
significant part of the credit requirements of the nation’s
economy. Commercial banks also accept time deposits from
various types of depositors and provide a wide variety of
other financial services, including personal and corporate
trust accounts, the collection of drafts, bills and other com-
mercial instruments, the acceptance of bills of exchange,
the issuance of letters of credit, the sale of cashier’s checks
and drafts on correspondent banks, the purchase of sale or
securities for customers, the sale of foreign exchange, and
the renting of safety deposit boxes. This combination of
services is unduplicated by other financial institutions.
6. Customers of Bancorporation subsidiary banks and of
First National Bank have regularly utilized interstate com-
munications, including the mails, telephone and telegraph,
to carry on their business with, apply for, and obtain the
services provided by these banks. Bancorporation’s sub-
sidiary banks and First National Bank have regularly uti-
lized interstate communications, including the mails, tele-
phone and telegraph, to conduct business with customers
and with other banks located in states other than Colorado.
Bancorporation and First National Bank are engaged in
interstate commerce.
7. Bancorporation is the second largest bank holding
company and the second largest banking organization in the
WR. wandesecrt
POSSIBLE BLURRED PAGES
oo.
State of Colorado. As of December 31, 1969, it controlled
four subsidiary banks with aggregate deposits of about
$530 million, representing almost 15 percent of the total
deposits held by all commercia! banks in the State of
Colorado. As of that same date, these four subsidiary
banks combined had total assets of about $668 million and
total loans of more than $374 million.
8. First National Bank was organized in 1884. It operates
its sole office in Greeley, Weld County, Colorado. As of De-
cember 31, 1969, it had total assets of $46 million, total de-
posits of $40 million and total loans of $27 million.
9. Weld County lies to the northeast of the Denver
Standard Metropolitan Statistical Area. Weld County is
one of the leading agricultural counties in the United
States. Its population in 1970 is about 89,000.
10. Greeley is the commercial center for this area of
broad, irrigated farmlands. Its population in 1970 is about
40,000. ‘‘Greeley”’’ is defined as the City of Greeley proper
and all adjacent urbanized areas. The ‘‘Greeley area’? in-
cludes Greeley and the towns of Evans, La Salle, Peckman,
Kersey, Gill, Eaton, Lucerne, Farmers and Bracewell. In
the last decade both Greeley and the Greeley area have
experienced substantial economic and population growth.
11. Commercial banking in Greeley is highly concen-
trated. As of December 31, 1969, six commercial banks
operated in Greeley, three of which are subsidiaries of the
same bank holding company. On that date, First National
Bank held approximately 34 per cent, or the second largest
share, of the total deposits held in such banks, two banking
organizations accounted for about 76 percent of such de-
posits, and three banking organizations accounted for about
98 percent of such deposits.
12. Commercial banking in the Greeley area is also
highly concentrated. As of December 31, 1969, eight com-
mercial banks operated in the Greeley area, three of which
are subsidiaries of the same bank holding company. On
that date, First National Bank accounted for about 32 per-
cent, or the second largest share, of the total deposits held
in such banks, two banking organizations accounted for
over 70 percent of such deposits, and three banking or-
ganilizations accounted for about 90 percent of such deposits.
13. Bancorporation is the largest holding company in
Colorado which does not have a subsidiary bank operating
MS PORE SALEM LISLE A LOGIT AEE SITLL Ff PI EES i
BOOK TOO LARGE FOR FILMI
. 7
in Greeley or the Greeley area. Bancorporation has the
resources and interest to enter Greeley or the Greeley area
by the establishment of a de novo bank or by acquisition of
a small bank in Greeley or the Greeley area. Bancorpora-
tion is one of the most likely entrants into these markets.
14. Bancorporation has applications pending, or has an-
nounced plans to acquire, in addition to First National
Bank, the following banks: The Exchange National Bank,
Colorado Springs, Colorado (‘‘Exchange’’); First Na-
tional Bank, Pueblo, Colorado (‘‘Pueblo Bank’’); and The
Security State Bank of Sterling, Sterling, Colorado (‘‘Se-
curity’’). As of December 31, 1969, Exchange, Pueblo Bank
and Security had, respectively, total deposits of $50.0 mil-
lion, $53.5 million, and $24.9 million. In addition, the largest
banking organization in the state, United Banks of Colorado
Inc., has an application pending to acquire Colorado Springs
National Bank, Colorado Springs, Colorado (‘‘CSNB’’),
which as of December 31, 1969, had total deposits of $36.0
million. Pueblo Bank, Exchange and First National Bank
are respectively the three largest independent Colorado
banks located outside of Denver. CSNB is the fourth larg-
est such bank.
15. Bancorporation’s leading subsidiary, The First Na-
tional Bank of Denver, Denver, Colorado (‘‘FNBD’’), is
the largest bank in Denver, which is the state capital and
financial center in the State of Colorado. FNBD is a lead-
ing source of correspondent banking services to other com-
mercial banks in Colorado and the surrounding states.
Such services are generally provided by a large metro-
politan bank to local banks, and they inelude clearing of
checks and other commercial transactions, participation in
loans (usually larger loans) with the local bank, providing
various forms of investment and other information and ad-
vice, providing data processing services, and providing
a variety of other financial services which a particular local
bank may require. As compensation for such services, the
local bank maintains inter-bank deposits with its principal
correspondent banks; FNBD holds substantial inter-bank
deposits. FNBD has provided correspondent banking serv-
ices to banks in Greeley and the Greeley area.
IV
OFFENSE CHARGED
16. Defendants Bancorporation and First National Bank
NG-POSSIBLE BLURRED PAGES
umes — a
have entered into agreements which will result in acquisi-
tion by Bancorporation of 80 percent or more of the voting
shares of First National Bank. On June 9, 1970, the Board
of Governors of the Federal Reserve Board granted ap-
proval of the proposed acquisition.
17. The effect of the acquisition described in paragraph
16 above may be substantially to lessen competition or tend
to create a monopoly in violation of Section 7 of the Clayton
Act in the following ways, among others ;
(a) potential competition between Bancorporation and
First National Bank in commercial banking in
Greeley and the Greeley area will be permanently
eliminated ;
(b) Bancorperation will be eliminated as a potential en-
trant into commercial banking in Greeley and the
Greeley area, either through chartering a new bank
or acquiring a small existing competitor ;
(c) potential competition will be reduced by the elimina-
tion of First National Bank as a potential member
of a new holding company capable of entering com-
mercial banking in other areas in the State of
Colorado;
(d) Competition for correspondent bank services for the
remaining independent banks in Greeley and the
Greeley area may be reduced;
(e) This acquisition may trigger similar acquisitions of
leading local banks by the leading banking organiza-
tions in the state, thereby causing various further
anticompetitive effects of the type alleged herein.
(f) Potential competition in commercial banking may
be reduced by the continuation of a trend of acquisi-
tions by leading banking organizations in Colorado
of independent banks with substantial positions in
markets throughout many parts of the state, thereby
reducing diversity in banking choices and promoting
parallel policies among leading banks in local
markets;
(g) Banking resources in the State of Colorado may be
further concentrated in the leading banking organiza-
tions in the state, thereby enhancing the power of
emer TMM 1 ADRE CMP Fil MING
9
those organizations in the banking markets in which
they operate.
PRAYER
Wuereror:, plaintiff prays:
1, That the agreements described in paragraph 16 of this
complaint be adjudged to be unlawful, in violation of Sec-
tion 7 of the Clayton Act.
2. That defendants and all persons acting on their behalf
be enjoined from carrying out the aforesaid acquisition
agreements, or any similar plans or agreements, the effect
of which would be to merge, consolidate, or in any other way
combine the businesses of said defendants.
3. That the plaintiff have such other and further relief
as the Court may deem just and proper.
4. That the plaintiff recover the costs of this action.
Joun N. MitrcHeti
Attorney General
Hersert G. ScHorPKE
Ricuarp W. McLaren
Assistant Attorney General
Evcene V. Lirxowrtz
Bappra J. Rasuip
Peter C. CarsTENsEN
Attorneys,
Department of Justice
Cuartes L. WairrincHILu
Attorneys,
Department of Justice
United States Attorney
ameceini C§ BILIIDRENM PAGES
Unrrep Srates Distaicr Court ror THE
District or CoLorapo
Usirep States or America,
PLAINTIFF,
Civil Action
= | No. C-2413
Finest Nationa, Banconporation, Filed: July 8, 1970
Inc., asp Tue Finest Nationar
Bank or GREELEY, DEFENDANTS.
ANSWER
Defendants, First National Bancorporation, Inc. and The
First National Bank of Greeley, by their attorneys, answer
the Complaint brought against them as follows:
1
1, Defendants agree that jurisdiction is properly vested
in this court under section 25 of Title 15 of the United States
Code to restrain violations of federal merger statutes. We
deny that we have violated those statutes.
2. Defendants admit the allegations in paragraph 2 of
the Complaint.
3. Defendants admit the factual allegations in para-
graph 3 of the Complaint.
4. Defendants admit the factual allegations in para-
graph 4 of the Complaint.
5. Insofar as plaintiff, in paragraph 5 of its Complaint,
attempts to characterize the relative importance of various
of the activities of commercial banks, or to suggest that
certain results of their actions are relevant to a competitive
analysis of their business, defendants deny the allegations.
Defendants deny the relevance of the last sentence of para-
graph 5, noting that the same might be said of every kind of :
financial institution. The proper question is whether these :
financial institutions compete as to particular services and
if the Complaint is to be read as alleging that they do not
so compete, such allegation is denied.
6. Defendants agree that they are engaged in interstate
commerce,
7. Paragraph 7 of the Complaint is denied insofar as it
represents that First National Bancorporation is the second
BOOK TOO LARGE FOR FILMING
11
largest bank holding company and the second largest bank-
ing organization in the State of Colorado. First National
Bancorporation and United Banks of Colorado, Inc., are
dwarfed by Western Bancorporation which operates in
Colorado through its subsidiaries, American National Bank
of Denver, First National Bank in Fort Collins, and Con-
tinental National Bank of Englewood. Western Bancor-
poration has resources of more than $10 billion. First Na-
tional Bancorporation and United Banks do not operate
outside the State of Colorado, while Western Bancorpora-
tion has only a small ($212 million) portion of its total de-
posit pool in the State of Colorado. Thus, the Colorado de-
posits of First National Bancorporation and United Banks
are larger. This fact is, however, competitively irrelevant.
The competitive effects of a merger proposal are to be
measured in geographic and product markets. Commercial
banking markets are essentially local ones. To the same ex-
tent that intrastate ‘bank holding companies are able to
marshal their deposits in Colorado banks in support of their
operations in particular banking markets, Western Bancor-
poration is able to marshal its deposits from whatever state
it may have accumulated them. The total amount of de-
posits a particular banking organization may derive from a
particular state is relevant only insofar as that state com-
prises an actual and an actually relevant banking market.
Defendants deny that the State of Colorado comprises an
actual or an actually relevant banking market. Defendant
First National Bancorporation denies that the deposits of
its subsidiaries ‘‘represents almost 15 percent of the total
deposits held by all commercial banks in the State of
Colorado . . . as of December 31, 1969.’’ In fact, including
the wholesale banking function performed by First Na-
tional Bancorporation’s principal money market subsidiary,
First National Bancorporation controls only 13.5 percent
of said deposits as was well known to plaintiff prior to the
filing of this Complaint. By stripping out the wholesale
marketing functions of First National Bancorporation sub-
sidiaries and concentrating on the small retail accounts with
which the merger statutes are principally concerned and
which constitute the overwhelming bulk of all deposit ac-
counts in commercial banks, defendant First National
Bancorporation subsidiaries are seen to have about a 6.8%
share of this relevant submarket (assuming, arguendo, that
Directs er rrr PUT er ney”
>-POSSIBLE BLURRED PAGES
12
commercial! banking is a relevant line of commerce in this
case, which we deny).
8. Paragraph 8 of the Complaint is admitted.
9. Defendants admit the first and third sentences of para-
graph 9. Defendants admit that Weld County is the most
important cattle feeding and crop producing county in
Colorado.
10. Defendants admit that Greeley is the seat of Weld
County, that its population in 1970 approximates 40,000
and that it has in the last twenty years demonstrated demo-
graphic and economic growth on a modest scale somewhat
below state averages. Defendants note the definitions re-
cited in the third and fourth sentences without conceding
them any relevance to this litigation.
11. Defendants agree with the arithmetic plaintiff utilizes
in the second and thrid sentences of paragraph 11 of the
Complaint. Defendants deny that ‘‘commercial banking”’
is a relevant market and most emphatically deny that com-
mercial banking in Greeley is concentrated, much less
‘thighly concentrated.’’ In its ordinary, or pejorative, con-
text, the word ‘‘concentrated’’ as applied to an industrial
structure is taken to mean that the market in question has
been preempted by fewer competitive entrants than could
reasonably be accommodated by the size of the geographic
market or the economies of scale appropriate to that in-
dustry. Thus, two competing gasoline stations in a com-
munity of 1,500 might be characteristic of a highly uncon-
centrated market while ten competing gas stations in a
community of 150,000 could be characterized as ‘‘highly
concentrated.’’ Or, in an industry-wide context, if the
major economies of scale can be accommodated by only
seven or eight suppliers (say automobile manufacture), it
would be improper to speak of the industry as ‘‘concen-
trated’’ if five of these have the dominant share of produc-
tive capacity. Thus, in local banking markets, four (in
Greeley) or six (in the ‘‘Greeley area’’) banking alterna-
tives is a highly concentrated banking structure. Indeed,
Weld county is one of the most unconcentrated counties in
the United States in terms of banking alternatives. On
June 29, 1968 there were 2,810 counties or county equiva-
lents in the United States with populations of 100,000 or less
(1960 census of population). Only three (3) were served by
more banks than served Weld County. This remarkable fact
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a
13
is wholly inconsistent with a contention that the area is a
‘*highly concentrated’’ banking market. A conclusion by
the Supreme Court that the City of Philadelphia, with
nearly double the deposit pool of the entire State of Colo-
rado, was concentrated with 18 banks is not to be taken as
evidence that Colorado, with 224 banks, is similarly con-
centrated.
12. See the answer to the previous paragraph of the Com-
plaint.
13. Paragraph 13 of the Complaint is denied. As pointed
out in the answer to paragraph 7 of the Complaint, First
National Bancorporation is dwarfed by the $10 billion
Western Bancorporation which operates in Colorado
through subsidiaries named in paragraph 7. There is abso-
lutely no evidence to support the statement in paragraph 13
of the Complaint that Bancorporation is ‘‘interested[ed]’’
in entering ‘‘Greeley or the Greeley area by the establish-
ment of a de novo bank or by acquisition of a smal] bank in
Greeley or the Greeley area.’’ Indeed, we specifically deny
such interest or intent. Finally, the capability of establish-
ing a de novo bank is ultimately subject to the sole discre-
tion of the supervising bank regulatory agencies and is not
within the ‘‘resources’’ of Bancorporation, or any other
organization, to accomplish at will. Consistent with and
arising out of the same economic imperatives that influenced
our decision not to enter by the paths plaintiff proposes in
the alternative, we have been given to understand that the
bank regulatory agencies would not be inclined to act fa-
vorably upon any such de novo application, should any hold-
ing company in the state be so motivated.
14. First National Bancorporation admits that its Board
of Directors has outstanding agreements of affiliation with
the respective Boards of the banks enumerated in the first
sentence of paragraph 14 of the Complaint but denies the
relevance of this recitation. None of these proposals have
been acted upon by the Federal Reserve Board, without
whose approval the agreements cannot be consummated,
nor has the option of the Department of Justice to move
to enjoin their consummation been impaired. None of these
proposed affiliations would in any way affect the competitive
impact of this proposed affiliation.
Defendants admit the second sentence of paragraph 14 of
the Complaint. Defendants sedi that vienna Banks of
Dineen eorm
5>~POSSIBLE BLURRED PAGES
14
Colorado is the largest banking organization in Colorado
(see paragraph 7 of this Answer). As to the last two
sentences of paragraph 14 of the Complaint, defendants
admit that the enumerated banks are the four largest banks
not already part of one of the eight holding companies in
the state. If each of the four applications pending on behalf
of First National Bancorporation were approved by the
Federal Reserve Board and the Department of Justice (or,
ultimately, a federal court), there would then be just as
many banking alternatives in every banking market in the
State of Colorado as there are today. First National Ban-
corporation’s share of state deposit totals would be 17.8
percent, placing Colorado 27th among the several states
when ranked by concentration of state deposits in the largest
banking organization in each such state.
15. The first sentence of paragraph 15 of the Complaint
is admitted except insofar as it appears to suggest that
Denver is a financial center only for the State of Colorado.
The second sentence of paragraph 15 of the Complaint is
admitted, except insofar as it implies that ‘‘correspondent
banking services’’ is a relevant line of commerce in this
case, which is denied. The remainder of paragraph 15 of
the Complaint is denied. Correspondent relationships, their
functions, purposes and usages are enormously more dif-
fuse, complex and intricate than plaintiff would have us
understand.
16. Paragraph 16 of the Complaint is admitted, except
that the agreements entered into to date are agreements
of the respective Boards of Directors and not agreements
of the respective banking institutions.
17. Generally, in response to paragraph 17 of the Com-
plaint the defendants deny that the proposed affiliation will
either substantially lessen competition in any line of com-
merce in any section of the country or tend to create a
monopoly in any line of commerce in any section of the
country. Furthermore, defendants deny that either Greeley
or the ‘‘Greeley area’’ constitutes an economically signifi-
cant ‘‘section of the country”’ within the intendment of the
Clayton Act. Specifically, to the sub-paragraphs of para-
graph 17 of the Complaint, the defendants allege as follows:
(a) Paragraph 17(a) of the Complaint is denied.
Defendants admit that the potential for direct competi-
tion between a hypothetical First National Bancorpora-
BOOK TOO LARGE FOR FILMING-
pean
15
tion subsidiary and First National Bank of Greeley
in commercial banking in Greeley and the Greeley area
will be eliminated for the foreseeable future should the
acquisition be accomplished. It is denied, however, that
the elimination of competition, actual or potential, be-
tween two business entities is, in and of itself, a mean-
ingful event under the terms of Section 7 of the Clayton
Act.
(b) Paragraph 17(b) of the Complaint is denied.
Defendants deny that First National Bancorporation
is a reasonably probable entrant into commercial bank-
ing in Greeley or the Greeley area through chartering
a new bank or acquiring a smaller, presently existing,
bank in the foreseeable future. Further, the absence
of First National Bancorporation from the very large
group of persons and businesses with the financial re-
sources to open or buy a small unit banking office in
Greeley could not have a perceptible much less sub-
stantially adverse effect upon competition in that geo-
graphic area.
(c) It appears to defendants that this proposal begs
the question. First National Bank of Greeley is by
force of this proposed affiliation to become a member
of a new holding company capable of entering com-
mercial banking in ‘‘other areas’’ in the State of Colo-
rado. First National Bancorporation is presently com-
posed of four Denver banks. The three small suburban
banks were created and staffed by First National Bank
of Denver. As a practical matter then, First National
Bank of Greeley is becoming, through this agreement,
part of a new holding company. To argue that it should
not be permitted to join one new holding company
in order to preserve its capacity to join another is
incongruous at best; to argue that failure to so pre-
serve it is likely to substantially lessen competition is a
proposition which will not withstand its own recitatioz .
(d) There is one bank in Greeley and two other
banks in the ‘‘Greeley area’’ which are not themselves
parts of substantial holding companies or defendants
in this action. Together, they approximate $10 million
in deposits. Since First National Bancorporation would
be perfectly happy to supply such modest correspond-
ent services as they might require, we suppose that
Meee PNAS ALE AIM! LO
-POSSIBLE BLURRED PAGES
16
plaintiff has implicitly assumed that the three small
banks would reject such proffered services. We do not
understand how this assumed rejection of our services
can constitute a ‘‘lessening of competition,’’ but then
this proposition is not supported by any characteriza-
tion of the competitive universe or any meaningful
‘‘product line.’’ In any case, we deny that any sub-
stantial lessening of competition would result from the
postulated reaction of the local banks.
(e) No bank affiliation can ‘‘trigger’’ any other
bank affiliation. No bank mav affiliate with another
without the explicit approval of at least one bank regu-
latory agency. No bank affiliation approved by at least
one bank supervisory agency can be consummated with-
out complete and careful analysis of the competitive
effects by the Antitrust Division of the Department of
Justice (as that agency is required to do by statute in
this industry and in this industry alone). No two banks
can consummate an affiliation which is opposed by the
Antitrust Division of the Department of Justice be-
cause in this industry and in this industry alone, the
Department of Justice has an automatic injunction im-
posed by force of the mere filing of a complaint and no
merger can be consummated until thirty days after the
Department of Justice is advised that the bank regula-
tory agency has approved the affiliation.
(f) Paragraph 17(f) of the Complaint is denied for
the same reason that paragraph 17(e) was denied.
We also note that the ‘‘trend of acquisitions’’ of which
this is a continuation is, insofar as First National
Bancorporation is concerned, a nonexistent one. First
National Bancorporation has never acquired any inde-
pendent banks. The supposition that the creation (for
that is what is transpiring) of banking chains in
Colorado ‘‘promotes parallel policies’’ is a flat ipse
dixit without warrant in the history of the industry or
in the practice within the State. We deny that the de-
velopment of banking chains ‘‘reduces diversity in
banking choices.’’ The number of competitive options
initially remains the same in those states where branch
or chain banking is becoming established, and as the
developing chains become experienced with the prob-
lems associated with ‘‘ branch”’’ banking, the competitive
onmnme TAT +t AD er UOCMmD ULC CLIT «AAT ACHK
17
need to grow has tended to substantially mcrease the
number of banking alternatives in particular banking
markets at (and sometimes before) the earliest moment
such markets could support a further entrant.
(g) Paragraph 17(g) of the Complaint is denied.
Banking resources in Colorado are not concentrated,
nor is there any evidence that size in, e.g., Denver,
has any effect upon competitive viability in, e.,
Greeley. Indeed, the United Banks of Colorado holding
company, which is larger than First National Bancor-
poration, has operated in Greeley for more than five
years and has a smaller market share today than its
subsidiary had when it was ‘‘independent.’’
IL.
1. As a second and a separate defense to the charges of
the Complaint, defendants contend that even if this Court
should find that the probable effect of this proposed merger
might be to bring about a substantial lessening of competi-
tion or a tendency towards monopoly in a line of commerce
in a section of the country, that, nevertheless, this anti-
competitive effect is substantially outweighed in the public
interest by the favorable impact of the proposed merger in
meeting the convenience and needs of the community to be
served. Under the Bank Merger Act of 1966 (12 U.S.C.
§ 1828(c)(7)(B) and § 1828(c) (5), this finding by the Court
is a complete defense to the Complaint should the Court
conclude that said Complaint was otherwise well founded:
(c)(7)(B) In any judicial proceeding attacking a
merger transaction approved under paragraph (5) on
the ground that the merger transaction alone and of
itself constituted a violation of any antitrust laws other
than section 2 of Title 15, the standards applied by the
court shall be identical with those that the banking
agencies are directed to apply under paragraph (5).
(c)(5) The responsible agency shall not approve—
(A) any proposed merger transaction which
would result in a monopoly, or which would be in
furtherance of any combination or conspiracy to
monopolize or to attempt to monopolize the busi-
ness of banking in any part of the United States, or
(B) any other proposed merger transaction
whose effect in any section of the country may be
rcs ce NET LAPT NS TIENT
paAccini C RILIRRED PAGES
substantially to lessen competition, or to tend to .
create a monopoly, or which in any other manner 4
would be in restraint of trade, unless it finds that
the anticompetitive effects of the proposed trans-
action are clearly outweighed in the public interest
by the probable effect of the transaction in meeting
the convenience and needs of the community to be
served.
In every case, the responsible agency shall take into
consideration the financial and managerial resources
and future prospects of the existing and proposed insti-
tutions, and the convenience and needs of the com-
munity to be served.
PRAYER
Wuererore, defendants pray that this action against
them be dismissed; that they may have such other and
further relief as the Court may deem just and proper; and,
that they recover the costs of this action.
Dated: July 24, 1970.
Merzcer, Scowarz & McKenna
By Eugene J. Metzger
(Evcene J. Merzcer)
Attorneys for First National Bancorporation,
Ine, and The First National Bank of Greeley
1 Farragut Square South
Washington, D. C. 20006
Telephone: Area Code 202 347-1631
Hucues & Dorsey
By
Edward B. Close
(Epwarp B. Cuiose)
Raymond B. Danks
(Raymonp B. Danks)
H. Robert Walsh, Jr.
(H. Roserr Watsu, JR.)
Attorneys for First National Bancorporation,
Inc.
401 First National Bank Building
Denver, Colorado 80202
Telephone : 623-0196 i.
aD te > CPR
BOOK TOO LARGE FOR FILMI?
CERTIFICATE OF SERVICE
I Heresy Certiry that on July 24, 1970, I served the
within and foregoing Answer upon the plaintiff by mailing
a trne copy of said Answer, postage pre-paid, to the follow-
ing attorneys of Record for the plaintiff:
Hexsert G. Scuoerke, Esquire
United States Department of Justice
Antitrust Division
Washington, D. C. 20530
James L. Treece, Esquire
United States Attorney
U. S. Attorney’s Office
U. S. Courthouse
Denver, Colorado 80202
/s/ Edward B. Close, Jr.
Epwarp B. Ciosg, Jr.
ee. ot et
s-POSSIBLE BLURRED PAGES
° Unitep States District Court
FOR THE District or CoLoRADO
Unrtep Srartes or AMERICA,
PLAINTIFF,
“5 Civil Action No: 0-2413
First Nationan Bancorpora- f Filed: July 8, 1970
tion, Inc. and Tue First
NationaL Bank or GREELEY,
DEFENDANTS.
AMENDED COMPLAINT
The United States of America, plaintiff, by its attorneys,
acting under the direction of the Attorney General of the
United States, brings this civil action to obtain equitable
relief against the above-named defendants, and complains
and alleges as follows.
I
JURISDICTION AND VENUE
1. This complaint is filed and this action is instituted
under Section 15 of the Act of Congress of October 15, 1914,
ce. 323, 38 Stat. 736, as amended (15 U.S.C. § 25), commonly
known as the Clayton Act, in order to prevent and restrain
the violation by the defendants, as hereinafter alleged, of
Section 7 of the Clayton Act, 38 Stat. 731, as amended.
2. Each of the defendants has its principal place of
business, transacts business and is found within the District
of Colorado.
Il
Tue DeEreNnDANTS
3. First National Bancorporation, Inc. (hereinafter re-
ferred to as ‘‘ Bancorporation’’) is made a defendant herein.
Bancorporation is a registered bank holding company
organized under the laws of the State of Colorado and
maintains its principal place of business in Denver, Colo-
rado.
4. The First National Bank of Greeley (hereinafter re-
20
BOOK TOO LARGE FOR FILMIN
———— 21
ferred to as ‘‘First National Bank’’) is made a defendant
herein. First National Bank is a banking association or-
ganized under the laws of the United States of America
and maintains its principal place of business in Greeley,
Weld County, Colorado.
Iti
TRADE AND COMMERCE
5. Commercial banks fill an essential and unique role in
the nation’s economy. Their principal functions are the
aeceptance of deposits for safekeeping and convenience in
making payments by check, the granting of loans or ad-
vances of funds to individuals and business firms, and the
creation through demand deposits of net additions to the
supply of money. Most money payments in the United
States are made through checks drawn against demand
deposits, and the creation and holding of such deposits is
a function peculiar to commercial banks and one which
makes them to a great extent the administrators of the
nation’s check payment system. Through the making of
loans to individuals and businesses, commercial banks sup-
ply a significant part of the credit requirements of the
nation’s economy. Commercial banks also accept time
deposits from various types of depositors and provide a
wide variety of other financial services, including personal
and corporate trust accounts, the collection of drafts, bills
and other commercial instruments, the acceptance of bills
of exchange, the issuance of letters of credit, the sale of
eashier’s checks and drafts on correspondent banks, the
purchase or sale of securities for customers, the sale of
foreign exchange, and the renting of safety deposit boxes.
This combination of services is unduplicated by other finan-
cial institutions.
6. Customers of Bancorporation subsidiary banks and
of First National Bank have regularly utilized interstate
communications, including the mails, telephone and tele-
graph, to carry on their business with, apply for, and obtain
the services provided by these banks. Bancorporation’s
subsidiary banks and First National Bank have regularly
utilized interstate communications, including the mails,
telephone and telegraph, to conduct business with customers
and with other banks located in states other than Colorado.
P
ee EE TPR
G-POSSIBLE BLURRED PAGES
Bancorporation and First National Bank are engaged in
interstate commerce.
7. Bancorporation is the second largest bank holding
company and the second largest banking organization in
the State of Colorado. As of December 31, 1969, it controlled
four subsidiary banks with aggregate deposits of about
$530 million, representing almost 15 percent of the total
deposits held by all commercial banks in the State of Colo-
rado. As of that same date, these four subsidiary banks
combined had total assets of about $668 million and total
loans of more than $374 million.
8. First National Bank was organized in 1884. It op-
erates its sole office in Greeley, Weld County, Colorado.
As of December 31, 1969, it had total assets of $46 million,
total deposits of $40 million and total loans of $27 million.
9. Weld County lies to the northeast of the Denver Stand-
ard Metropolitan Statistical Area. Weld County is one of
the leading agricultural counties in the United States. Its
population in 1970 is about 89,000.
10. Greeley is the commercial center for this area of
broad, irrigated farmlands. Its population in 1970 is about
40,000. ‘‘Greeley’’ is defined as the City of Greeley proper
and all adjacent urbanized areas. The ‘‘Greeley area’’
includes Greeley and the towns of Evans, LaSalle, Peckham,
Kersey, Gill, Eaton, Lucerne, Farmers and Bracewell. In
the last decade both Greeley and the Greeley area have
experienced substantial economic and population growth.
11. Commercial banking in Greeley is highly concen-
trated. As of December 31, 1969, six commercial bonks
operated in Greeley, three of which are subsidiaries of the
same bank holding company. On that date, First National
Bank held approximately 34 per cent, or the second largest
share, of the total deposits held in such banks, two banking
organizations accounted for about 76 per cent of such
deposits, and three banking organizations accounted for
about 98 per cent of such deposits.
12. Commercial banking in the Greeley area is also highly
concentrated. As of December 31, 1969, eight commercial
banks operated in the Greeley area, three of which are
subsidiaries of the same bank holding company. On that
date, First National Bank accounted for about 32 per cent,
or the second largest share, of the total deposits held in
such banks, two banking organizations accounted for over
BOOK TOO LARGE FOR FILMIN(¢
23
70 per cent of such deposits, and three banking organiza-
tions accounted for about 90 per cent of such deposits.
13. Bancorporation is the largest holding company in
Colorado which does not have a subsidiary bank operating
in Greeley or the Greeley area. Bancorporation has the
resources and interest to enter Greeley or the Greeley area
by the establishment of a de novo bank or by acquisition
of a small bank in Greeley or the Greeley area. Bancorpo-
ration is one of the most likely entrants into these markets.
14. Bancorporation has applications pending, or has an-
nounced plans to acquire, in addition to First National
Bank, the following banks: The Exchange National Bank,
Colorado Springs, Colorado (‘‘Exchange’’) ; First National
Bank, Pueblo, Colorado (‘‘Pueblo Bank’’); and The Se-
curity State Bank of Sterling, Sterling, Colorado (‘‘Se-
curity’’). As of December 31, 1969, Exchange, Pueblo Bank
and Security had, respectively, total deposits of $50.0 mil-
lion, $53.5 million, and $24.9 million. In addition, the largest
banking organization in the state, United Banks of Colo-
rado, Inc., has an application pending to acquire Colorado
Springs National Bank, Colorado Springs, Colorado
(‘“‘CSNB’’), which as of December 31, 1969, had total
deposits of $36.0 million. Pueblo Bank, Exchange and First
National Bank are respectively the three largest independ-
ent Colorado banks located outside of Denver. CSNB is
the fourth largest such bank.
15. Bancorportion’s leading subsidiary, The First Na-
tional Bank of Denver, Denver, Colorado (““FNBD”’), is
the largest bank in Denver, which is the state capital and
financial center in the State of Colorado. FNBD is a leading
source of correspondent banking services to other com-
mercial banks in Colorado and the surrounding states. Such
services are generally provided by a large metropolitan
bank to local banks, and they include clearing of checks
and other commercial transactions, participation in loans
(usually larger loans) with the local bank, providing various
forms of investment and other information and advice,
providing data processing services, and providing a variety
of other financial services which a particular local bank
may require. As compensation for such services, the local
bank maintains inter-bank deposits with its principal cor-
respondent banks; FNBD holds substantial inter-bank de-
BOK, LER IEE BEI OERDR MY 2A MRE I I
-POSSIBLE BLURRED PAGES
posits. FNBD has provided correspondent banking services
to banks in Greeley and the Greeley area.
IV
Orrense CHancep
16. Defendants Bancorporation and First National Bank
have entered into agreements which will result in acquisi-
tion by Bancorporation of 80 per cent or more of the voting
shares of First National Bank. On June 9, 1970, the Board
of Governors of the Federal Reserve Board granted ap-
proval of the proposed acquisition.
17. The effect of the acquisition described in paragraph
16 above may be substantially to lessen competition or tend
to create a monopoly in violation of Section 7 of the Clayton
Act in the following ways, among others;
(a) potential competition between Bancorporation and
First National Bank in commercial banking in
Greeley and the Greeley area will be permanently
eliminated ;
(b) Bancorporation will be eliminated as a potential
entrant into commercial banking in Greeley and the
Greeley area, either through chartering a new bank
or acquiring a small existing competitor ;
(c) potential competition will be reduced by the elimina-
tion of First National Bank as a potential member
of a new holding company capable of entering com-
mercial banking in other areas in the State of
Colorado;
(d) Competition for correspondent bank services for the
remaining independent banks in Greeley and the
Greeley area may be reduced;
(e) This acquisition may trigger similar acquisitions of
leading local banks by the leading banking organiza-
tions in the state, thereby causing various further
anticompetitive effects of the type alleged herein;
(f) Potential competition in commercial banking may
be reduced by the continuation of a trend of aequisi-
tions by leading banking organizations in Colorado
of independent banks with substantial positions in
markets throughout many parts of the state, thereby
reducing diversity in banking choiees and promoting
parallel policies among leading banks in local mar-
|- le « @nade ote 1 -le4 = te ~ moet ee
25
(g) Banking resources in the State of Colorado may be
further concentrated in the leading banking organiza-
tions in the state, thereby enhancing the power of
those organizations in the banking markets in which
they operate ;
(h) This acquisition combined with the trend of acquisi-
tions by leading banking organizations in Colorado
of independent banks with substantial positions in
markets throughout many parts of the state will sub-
stantially reduce existing competition in providing
correspondent banking services in Colorado, increase
barriers to new entry into correspondent banking
services in Colorado, and effectively foreclose the
remaining independent banks in many markets from
access to correspondent banking services in Colorado.
Prayer
Wuenerone, plaintiff prays:
1. That the agreements described in paragraph 16 of
his complaint be adjudged to be unlawful, in violation of
ection 7 of the Clayton Act.
2. That defendants and all persons acting on their behalf
e enjoined from carrying out the aforesaid acquisition
greements, or any similar plans or agreements, the effect
f which would be to merge, consolidate, or in any other
‘ay combine the businesses of said defendants.
3. That the plaintiff have such other and further relief
s the Court may deem just and proper.
4. That the plaintiff recover the costs of thi« action.
CERTIFICATION
I, Herbert G. Schoepke, attorney for the Department of
ustice, hereby certify that the foregoing allegations and
rayers truly and accurately incorporate the allegations
nd prayers contained in the Complaint of the United
tates filed July 8, 1970 in the above-entitled cause, as
mended by Order of the Court under date of March 5,
971, granting nune pro tune January 15, 1971, Plaintiff's
lotion for Leave to File Amended Complaint.
/s/ Herbert G. Schoepke
Heaseat G. Scnoerxe
lated: January 15, 1971 Attorney for Plaintiff
ae nea .
| ermceimi £ BLURRED PAGES
Ceetivicate or Service
I, Hexwent G. Scuoerke, attorney, United States Depart-
ment of Justice, do hereby certify that I have on this day
served copies of the attached Amended Complaint on the
attorneys of record for the defendants by mailing copies
thereof to
Evoene J. Metzoen, Esquire
Metzger, Schwarz, McKenna & Kempler
One Farragut Square South
Washington, D.C. 20006
and to
Eowanp B. Cros, Esquire
Hughes & Dorsey
401 First National Bank Building
Denver, Colorado 80202
/s/ Herbert G. Schoepke
Henrverr G. Scnoerxe
Attorney, Department of Justice
March 18, 1971
Ap
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Civil Action No. C-2413
‘rep States or Amenica,
PLAINTIFF,
vs.
wet NationaL Baxconpdna-
yw and Finest Nationat Bank
GeeeLey,
DEFENDANTS. -
Proceedings before the Howoraste Wituiam E. Doyte,
dge, Presiding, United States District Court for The
strict of Colorado, Courtroom D, U. 8. Courthouse, Den-
r, Colorado, commencing at or about the hour of 9:50
lock a.m., Monday May 3, 1971.
PEARANCES :
Henxsent G. Scnoerxe, Attorney, Department of Justice,
Antitrust Division, Washington, D.C., and;
Kevin D. Brenan, Attorney, Department of Justice,
Antitrust Division, Washington, D.C., and;
jvoene V. Larxowrrz, Attorney, Department of Justice,
Antitrust Division, Washington, D.C., and;
Ataw Matasky, Attorney, Department of Justice, Anti-
rust Division, Washington, D.C., and;
YanoLtys J. McNeus, Assistant U. S. Attorney, (2) for
lames L. Treece, U. S. Attorney, 323 U. S. Courthouse,
Jenver, Colorado, appearing on behalf of Plaintiff.
ivorne J. Merzoen, Attorney at Law, Metzger, Schwarz
¢ MeKenna, One Farragut Square South, Washington,
». C. 20006, and ;
towarp B. Crose, Jn., Attorney at Law, Hughes and
Jorsey, 401 First National Bank Building, Denver, Colo-
ado; and;
‘ani J. Scuwanz, Attorney at Law, Metzger, Schwarz
MeKenna, One Farragut Square South, Washington,
.C., and;
lowaLo Wissamson, Attorney at Law, of counsel at
letzger, Schwarz & McKenna, One Farragut Square
South, Washington, D. C., appearing on behalf of Defend-
ants.
Wuexevron, the following proceedings were had, to wit:
[120] Howarp E. Samira,
a witness called by and on behalf of plaintiff, having first
been duly sworn, was examined and testified as follows:
Direct ExaMinaTION
By Mr. Brenan:
Tue Court: Give us your full name, address and occupa-
tion.
Tue Witness: May name is Howard E. Smith and I am
from Windsor, Colorado. Manager of the Colorado Divi-
sion of Kastman Kodak Company.
Q. (By Mr. Brenan) Mr. Smith, how long have you been
with Eastman Kodak?
A. Approximately 37 years.
Q. How long have you been in Colorado?
A. IL have been with the Colorado Division since approxi-
mately June, 1968.
Q. Where in Colorado is Kodak located?
A. In Windsor, approximately 60 miles north of Denver,
about 15 miles equidistant from Greeley, Loveland and
Fort Collins.
Q. Would you state why Kodak is presently locating in
Colorado?
A. Very soon half of our markets will be west of the
Mississippi River and this is the primary reason why we
are located here.
[121] Q. And could you describe your facility over there
in detail?
simply cutting and packing. But to us it is a fairly sophis-
ticated operation. We will also have a distribution center —
on the site. We will have a plastics and chemical manu- —
facturing building on the site. Just a little bit later on,
— [122]
anticip:
will be «
A. I
that is
and res
ception
roughly
Q. Yi
would |
» 1976.
A. It’s a strictly manufacturing facility. We are build- —
ing approximately a million and a half square feet. There —
will be several functions. The first one is to get an operation ©
that will be the finishing of film and paper. Now, this means —
BOOK TOO LARGE FOR FILMING-PO
_———
99 -
ly six months later, we will have a plate manufactur-
ility.
is a facility for manufacturing synthetized aluminum
for the lithographic industry.
nd are there plans for further operations to be
o effect?
‘es, we are looking into the future—we hope to go
1 our manufacturing operations, starting late this
pefully, and we will build a synthetizing manufactur-
nt. This is the operation whereby we put the light
tic emulsion on either film or paper base.
Vhen is it anticipated that—to have production of
articular phase of your operation? When will it
here is a long lead time. We will start hopefully this
will be 1976 before it is in operation.
Q. How long have you been constructing your fa-
Ve broke ground in June of 1969.
nd when is it anticipated that the facility will be
ted?
| will never be completed. The operations we are
about now will start producing January 1, 1972.
laybe you misunderstood my question. When is it
ated that your construction of your facilities there
completed? Or, is there?
answered that. The million and a half square feet
under construction now will be finished by January
ady for production by January, 1972, with the ex-
of the plate manufacturing building which will be
y July, 1972.
es, but then you mentioned another operation that
not be ready now until—I believe you said until
hat’s the synthetizing operation. We will start
ction of that hopefully in November of this year.
re there any further plans for construction beyond
'e would hope so, yes, but they’re a little bit nebulous
ut, the construction would mostly be the base manu-
ig where we would actually manufacture the base,
e that you put the light synthetic emulsion on.
See PRE a NET NTH TNT
oes
iSSIBLE BLURRED PAGES
30
[123] Q. In connection with that facility, Mr. Smith, how
much money will be spert for construction in 1971?
A. In 1971 we will spend $47 million.
Q. And does that represent the entire cost of the facility?
A. Hardly.
Q. How many people will Kodak employ at the Windsor
site?
A. By the end of this year, by the end of 1971 we will
have a thousand employees in total. If you project that out
to 1975 we anticipate 2,500.
Q. Are there any projections past 1975?
A. We haven’t give any specific projections beyond then.
We would expect an orderly growth beyond that point.
Q. In other words 2500 people is about your maximum?
A. No, by no means.
Q. How rapidly will the—will the increase in employ-
ment be between the 1,000 at the end of 1971 and the 2500
at the end of 1975?
Mr. Wuuatamson: Objection. Counsel is_ testifying.
Utilizing words which he has no foundation for.
Tue Court: Overruled.
Do you understand the question?
Tue Wirtwsess: I didn’t hear the other comments.
But in answer to your question it will be more or [124]
less a straight line growth from 1971 through 1975.
Q. Do you presently have any employees at the Windsor
site?
A. Yes, we have about 400 on the payroll now. Approxi-
mately 300 of those are at the Windsor site. The remaining
people are back in Rochester. Some of them being in
training.
Q. How many of those people are from Colorado?
A. Roughly half of them at the moment are from Colo-
rado.
<e Rgh ae SRRE Le E e
Sia diel a illite eel and Aa ci A Ya eaten y
Q. Would you state for us what type of employees you —
have hired and will be hiring for your facility?
A. We will hire employees with skills all the way from
those who are just trainable through those who have college —
degrees, technically trained people.
Q. And where are the employees which you have already
hired? Will those come from——
A. I want to be sure we separate Colorado employees
BOOK TOO LARGE FOR FILMING-—F
_ ——
31
sus Rochester employees. The Colorado employees that
are employing now from Colorado are from the triangle
a, Loveland, Fort Collins and Greeley. And all places
yetween. On oceasion one—we will get one from a little
ther.
. Do you anticipate that the empleyces that you will be
ing in the future will come from the same area?
5] A. In general we would expect they would come
m the same area based on our applications.
. How many applications have you had?
.. Well over 11,000 so iar.
). Has your company set up any training programs for
r Colorado facility?
.. Yes, we have training programs in Rochester that I
ided to a moment ago and this is for training technicians
| training people in the various skills. We also are
ing up training programs out here in Windsor to train
in technicians and trades people. We will be setting up
nagement training programs as we get more of our
nagement people in operation so to speak. We are also
‘king with Aims College to set up training programs
h them.
). Where is Aims College located?
\. Aims College is in Greeley.
). Describe the training program you will be setting
with them.
.. With Aims College we will be setting up academic
ining programs, if you will, for the skilled trades people.
» on-hand training, so to speak—we will have to do
selves because they are not yet equipped to do that.
lowever, you will have to teach them mathematies or in
case of chemists, chemistry. This kind of thing, we will
end on Aims to help us with.
6] Q. When is it anticipated that production will ac-
lly start at the Windsor site?
‘nE Court: January, 1972.
.. January, 1972.
. Mr. Smith, once production is started in what way
it be increased? How rapidly will you increase produc-
i?
. I guess I can’t give you a good answer to that. It
be more or less in proportion to the number of people
lire.
| LSE LEE EE I
POSSIBLE BLURRED PAGES
32
Tue Court: How soon do you think you will be in full
swing?
Tue Witness: Well, we will be in full swing in January
of 1972 with all the things that we have talked about here.
Does that answer your question?
Q. (By Mr. Brenan) I think so. I think what I was driv-
ing at was whether there was going to be a start of one
thing now and then a long delay before an additional in-
crease in production.
[127] A. There won’t be a long delay. As I said, our
employment will be more or less straight through up until
1975 and we will be adding service-type functions in the
period between 1971 and 1976, if you will.
Q. What geographic area is this facility designed to
serve?
A. Well, primarily the area west of the Mississippi.
Q. Are there any additional areas?
A. Well, you obviously can’t balance your production to
serve just that area so we will be shipping back—some
back to the eastern part of the country and some, in fact,
will go overseas, just to balance out production.
Q. Thank you.
Mr. Brenan: I have no further questions, Your Honor.
CRross-EXAMINATION
By Mr. Scuwarz:
Q. Mr. Smith, I believe I heard you say that by the end
of 1975 you estimated about 2500 people will be employed?
A. Correct.
Q. How many out of that 2500 people will come from
the East?
Mr. Brenan: I don’t think that question is clear. What
does he mean by the east?
Q. East of the Mississippi.
[128] A. You mean from Rochester?
Q. Okay.
Tue Court: Back East, you mean?
Tue Witness: We estimate 250 people—approximately
250 will come from Rochester. For the most part those will
be here by the end of this year. There will be an odd one
coming but essentially all will be here this year.
ASAE Pe edustian®
Seoers
BOOK TOO LARGE FOR FILMING-PO
pir baer a
33
Q. And the remainder of all those employees will be
drawn from the indigenous population already from the
Colorado area?
A. Yes.
Q. Is it true most of the financing—not all of the financing
for this plant was obtained from financial institutions in
the Kast?
Mr. Brenan: Object to that, Your Honor. Completely
outside the scope of cross-examination. Irrelevant to any
testimony.
Mr. Scuwarz: He asked how much it cost and I’m trying
to find out where the financing came from. This is a case
involving banking in Colorado.
Tue Court: True, but I can’t see where it has very much
probative value.
Mr. Scuwarz: The implication from the question that
Mr. Brenan brought out is that this $47 million—was that
some if not all of its financing was obtained here locally.
I wish to squelch that implication.
[129] Te Court: I didn’t get that impression. It seemed
to me that the object here was to show the impact of this
large number of people in the area and what effect it will
have on the banking facilities. I don’t think he sought to
establish that the banks financed or were in the process
of financing this building.
Me Scuwarz: Allright. I'll accept that.
Q. Mr. Smith, of the people that have come from the
East, new people to work in your plant, do you know how
many have settled in the Greeley area?
A. Are you speaking of those who come from Rochester
now?f
Q. Yes.
A. I think it’s only five.
Q. Out of a total of how many?
A. About 160 have committed themselves. Now, they’re
not all located yet but about 160 have committed themselves
to living in Colorado and of those five are in Greeley. The
bulk of the rest of them are in Loveland and Fort Collins.
[130] Q. Would you expect the percentage trend of settle-
ments in Greeley to continue?
Baer ns ore rarer anna
OSSIBLE BLURRED PAGES
ae ROME OSE
A oe wesc Bar matt: ioe
A. Based on the information we have, I see no reason .
&
a
for this ratio to change with respect to those people coming
from Rochester.
Q. Do you know why so few settle in Greeley?
A. This is opinion. The Number One problem is odor.
There are others, proximity of th. mountains in Fort
Collins and Loveland, if you will, but primarily the reason
they haven’t settled in Greeley is because of the odor. The
people in the Kast are not used to it.
Tue Court: You mean from the stockyards.
Tue Wirness: Yes.
THe Court: And the packing plant?
Tue Witness: Stockyards, and I would imagine the
sewage treatment plant, too.
Mr. Scuwarz: No further questions.
REDIRECT EXAMINATION
By Mr. Brenan:
Q. Mr. Smith, on cross you stated that not very many
of the people who are moving out from Rochester are ac-
tually living in Greeley. In your opinion, will the location
of your facility in Windsor have any economic effect on
the city of Greeley?
A. Of course, it will, yes. Sure, it will, because as we
hire people here in Colorado there will be a lot of Greeley
people I am sure—Greeley residents, who will be working
for us.
Tue Court: He is talking about the Rochester people.
The percentage would be about the same.
Mr. Brenan: Yes, sir, I know.
Tue Court: He says the Colorado people don’t mind
the odor. They are used to it.
Q. Well, will your plant itself have any economic effect
on the city of Greeley?
A. I guess the greatest economic effect is that the gen-
eral contractor for the project is a Greeley contractor and
that’s pretty good economic impact, and, of course, we will
be using—we will be using service industries as we [132]
go along for supplying us with some of these items of raw
materials that we don’t make ourselves.
Q. You mean service industries in Greeley?
se ao&atetartise rf
—— 35
A. There will be some in Greeley, I’m sure, as well as
Denver and other areas, yes.
Mr. Brenan: No further questions.
Mr. Scuwarz: No further questions, Your Honor.
THe Court: All right, you may be excused then Mr.
Smith. By the way, where do you live?
Tue Witness: We live north of Windsor about three
miles on a hilltop. We don’t mind the odor so much.
Tue Court: Thank you.
[138] GrorcE P. Evans,
called as a witness by the plaintiff, being first duly sworn,
on his oath testified as follows:
Tur Court: Give us your name, address, and your oc-
cupation, Mr. Evans.
Tue Witness: George P. Evans, Greeley, Colorado. I
am executive vice president of the Greeley Chamber of
Commerce.
DIRECT EXAMINATION
By Mr. Brenan:
Q. Mr. Evans, what are your duties as executive vice
president of the Greeley Chamber of Commerce?
A. Supervision of the staff and overseeing the conduct
of the daily program, usual management duties.
Q. And what are the functions of the Chamber of Com-
merce?
A. Generally speaking, economic development, progres-
sive development of the community.
Q. Are you familiar with the City of Greeley and its
surrounding communities?
A. Reasonably so.
[139] Q. Where is Greeley located?
A. Greeley is located approximately 50 miles north of
Denver on Highway 85. It is in approximately the middle
of Weld County and is the county seat of Weld County.
Q. What is Greeley’s economic base?
A. Well, historically, Greeley’s economic base was agri-
culture in many of its forms. It still is to a great extent.
eaters HH LE BTR 4
ae a ical cial dasa
_—————- Cl lll
a )
Greeley also has quite a bit of manufacturing and other-
wise employment related with manufacturing and it is an
educational community as well.
Q. Is it as agriculturally oriented now as it has been
historically?
A. Yes.
Q. Is there any manufacturing in Greeley?
A. Yes, there is.
Q. Is there more manufacturing in Greeley now than
there was, say, ten years ago?
A. Yes, there is.
Q. Who is the major employer in Greeley?
A. At the present time the largest payroll is held by
Monfort of Colorado, approximately 1,400 employees.
Q. Could you generally describe Monfort of Colorado’s
operations?
A. They are a cattle feeder primarily and they have a
packing plant in which cattle, sheep and lambs are killed
[140] and processed, shipped out.
Q. Do you know how many head of cattle they maintain
in Greeley at one time?
A. Approximately 200,000.
Q. Are there other similar businesses to Monfort in
Greeley?
A. To the extent that they feed cattle, yes, there are.
There are no other major packing plants in Greeley.
Q. How many other feedlot operations are there in the
town?
A. Iam sorry, I don’t know.
Q. Are there any colleges in Greeley?
A. Yes, there are two, University of Northern Colorado
and Aims College.
Q. What is Aims College?
A. Aims is a two-year community college, primarily
vocational in thrust.
Q. And what is the current enrollment at these colleges?
A. At the University of Northern Colorado, approxi-
mately 10,500, and Aims College, approximately 1,300.
Q. Are all of these students included in the 1970 census
population figure for the City of Greeley?
A. No, they are not.
Tue Court: The 38,000 is permanent population?
ae SL rent a& ZEAL
- 37
Tue Witness: Yes, Your Honor, that’s my understand-
ing [141] of it, the way the Census Bureau split them up.
Q. Are there any governmental offices located in the
City of Greeley?
A. Yes, there are. The Greeley—Greeley is the county
seat of Weld County. Therefore, all or a good portion
of the county’s employment is in Greeley proper. There
are some state offices there, Bureau of Revenue, Highway
Patrol, this sort of thing, and a few federal government
offices as well.
Q. Are there also city government buildings?
A. Yes. Yes, there are.
Q. Are there any cultural groups or associations in the
City of Greeley?
A. Yes, there are.
Q. Could you enumerate them and describe them briefly?
A. Quite briefly, most of them are based around the
University. The Greeley Philharmonic Symphony is a
rather well-known cultural activity. The theater groups, the
musical groups and so forth that perform are usually
university oriented, University of Northern Colorado
oriented, although they do perform for the general public
both in Greeley and the area.
Q. What is the City of Greeley’s relationship to the
towns which are located near it?
A. Well, it is the seat of government for the county.
[142] Therefore, county business is conducted in Greeley
for the towns in the—in Weld County. It also provides a
great amount of the cultural activities that go on in the
county and the bulk of the medical facilities are located in
Greeley. Weld County General Hospital is in Greeley and
the practicing physicians that are on the staff of Weld
County General are basically officed in Greeley.
Q. Now, where is the town of Evans?
A. It is immediately south of Greeley. Its northern
city limit is contiguous with Greeley’s southern city limits
on Highway 85.
Q. Whai’s the economic basis of the town of Evans?
A. Basically agricultural.
Q. Are the residents of Evans dependent on Greeley in
any way?
A. Yes, they are.
a ee .
_ _ _ am lems ll lm es eA ek eS
Q. Could you describe in what way they are dependent
on Greeley?
A. Well, generally cultural, medical, governmental serv-
ices. That is county governmental services. The bulk of
the retail activity would go on in Greeley. Their retail
area is not defined heavily enough to provide all the services
needed in a retail community.
Q. And where is La Salle?
A. La Salle is immediately south of Evans on Highway
[143] 85, as well separated from Evans by the river there.
Their city limit lines are not contiguous.
Q. What is the economic base in La Salle? P
A. Again agricultural. They have a small amount of
manufacturing in the community as well.
Q. Are the residents of La Salle dependent on Greeley?
A. Yes, in the same general way as are the residents of
Evans, with the exception that the retail activity of La
Salle is a bit more pronounced than it is in Evans.
Q. Are they still, however, dependent for retailing on
Greeley?
A. Yes.
Q. Where is Peckham?
A. Peckham is on Highway 85 south of La Salle. Ae-
tually it is a crossroads. It is not much of a community.
Q. What is its economic base?
A. Agricultural.
Q. Are the residents of Peckham dependent on Greeley?
A. Yes, they would be for the same services La Salle
and Evans would be.
Q. Are they dependent on Greeley for retail?
A. Yes.
{144] Q. Forgive me if I repeat a question, but are the
residents of Peckham dependent on Greeley for retail?
Tux Count: Yes, he said yes.
Q. Where is Kersey?
A. Kersey is east of Greeley on Highway 34.
Q. What is its economic base?
A. Agricultural.
[145] Q. Is it dependent on Greeley?
A. Yes, it is.
Q. For retailing?
eure &
I A LI, Ny lt aa sty
A. In the same way that Evans and La Salle and Peck-
m would be, yes.
Q. Where is Gill?
A. Gill is in the southern part of the county. I am sorry
an’t place it exactly on the highway.
Q. Are you familiar with the economic base of Gill
A. Yes, it’s agriculture as well.
Q. And would the same——
Tue Cover: Well, is this a makeup of the Greeley area
at you are having him describe?
Mn. Burra: Yes, sir.
aa . . * . *
45] Tur Covrer: Well, so far he hasn’t testified about
nking.
. . . * *.
47] Tue Court: Well, he is not succeeding in showing
ut it’s a banking area so far.
Tue Covet: He said he could not tell you anything about
il; where it’s located.
Is that right?
Tue Witxess: That's correct. sir.
Tne Court: Which other ones have you got?
Mn. Brexax: We've got in the Greeley area, Eaton, Lu-
‘ne, Farmers and Bracewell.
18] Tue Cover: Are you able to testify concerning
me towns?
Tue Wrreess: Yes, sir, l am.
T'nux Court: All right. Eaton is in Larimer County, isn’t
Tun Wrrxess: No, sir. It’s north of Greeley, on Highway
between Greeley and Cheyenne.
T'uz Cover: It’s closer to Fort Collins?
Tus Wires: No, sir, it’s only eight miles out of Greeley.
Tux Covet: Okay. I don’t know too much either. I can’t
te judicial notice of Eaton although I’ve been there.
Tue Wirxess: You have been to Erie and I haven’t, so
’re even.
2% (By Mr. Brenan) On the subject of Eaton, could
i describe the nature of Eaton's economy?
\. Basically agricultural.
ye. ne PYF SEES ERT we
——-_-- ——<—— ll
Q. Is it dependent upon Greeley for retail services as
the others?
A. Yes, in the same general ways of LaSalle and the
others.
Q. Where is Lucerne?
A. Lucerne is between Eaton and Greeley. And it’s more
or less a crossroads. It is a commercial area to a very
limited extent.
[149] Q Are the residents of Lucerne dependent on
Greeley for the same retail services as the people in the
other towns?
A. Yes, they are.
Q. Maybe we can shorten this. Would the same be true
with the residents of Farmer and Bracewell?
A. Yes.
Q. Mr. Evans, would you consider these communities
satellite communities of the City of Greeley?
a. I’d like to ask you to define what you mean by satel-
ite?
Q. Well, in the sense that they are dependent upon the
city?
A. Yes, in that sense, they are.
Q. Would you describe the nature of the economy in the
City of Ault—the Town of Ault? Excuse me.
A. Well, it’s basically agricultural as well as the rest of
them are.
Q. Are there—is there retailing in Ault?
A. Yes.
Q. Are the residents of Ault as dependent upon the City
of Greeley for retailing as the residents of these other
communities?
{150] Tue Wrrwess: If you’re asking if the residents of
Ault are as dependent—or are—excuse me—are dependent
upon Greeley for retail services, yes. I’m not qualified to
make a comparison.
Q. Is there more retailing in Ault than there is in the
other communities to the extent that the residents there ©
are not as dependent upon Greeley as for instance the
residents of Farmer, Lucerne?
A. If you say specifically Farmers and Lucerne, there
41
{151} is more retailing in Ault, yes. They are less depend-
ent upon Greeley as compared to Farmers and Lucerne.
Q. Mr. Evans, do you know the economic base of Johns-
town?
A. Yes, it’s basically agriculture.
Q. Is there any retailing there?
A. Yes, there is.
Q. Is there more retailing there than in the towns im-
mediately surrounding Greeley?
A. Some, there is, and some, there is not. Some of the
communities that you have mentioned are quite small and
Johnstown has a better defined retail community than they.
Q. Mr. Evans, would you describe Johnstown as a satel-
lite community of Greeley?
[152] A. In the general sense that we established a while
ago, yes.
Q. — you familiar with the economic base of Windsor?
A. Yes.
Q. What is the economic base?
A. Basically agricultural; historically agricultural.
Q. And is there a retailing—is there retailing done in the
Town of Windsor?
A. Yes, there is.
Q. Could you describe to what extent there is retailing
in Windsor?
A. Windsor is a self-serving community in that regard.
Most of the major items of retailing can be purchased in
Windsor.
Q. Are you familiar with the Town of Fort Lupton?
A. Yes, sir.
Q. What is the economic base of Fort Lupton?
A. Again, agricultural.
Q. Is there retailing in Fort Lupton?
A. Yes, there is.
Q. Would you describe the nature of that retailing?
A. Well, it’s again like Windsor; basically a self-serving
town for retail activity.
[153] Q. Are you familiar with the economy of Keenes-
burg?
A. No, sir, I’m not. I know generally that it is an agri-
cultural area.
Q. And are you familiar with the economy of Erie?
ee
STS OP
—E——————— CC lCUCUlUeLUmUmrlUC CY
42
A. No, sir, not as much as His Honor is.
Tue Court: You didn’t play baseball there on Sunday.
Q. Are you familiar with the economy of Hereford!
A. Just generally; that it is an agricultural area, a
ranching area.
Q. Does it have any retail activity of its own?
A. Toa limited extent it does, yes.
Q. Are the people in Hereford dependent upon the City
of Greeley for retail services?
A. That would call for speculation on my part. I’m not
sure. It would be my supposition that they would be but——
* > * * .
[157] Cross-EXAMINATION
By Mr. Scuwarz:
Q. Mr. Evans, how long have you lived in Greeley?
A. Since June 22, 1970.
Q. That is how many months? Eight months?
A. Ten months.
Q. Where did you live before that?
A. Carlsbad, New Mexico.
Q. Do you consider yourself an expert on the Greeley
area?
A. Not an unqualified expert, no, sir.
Q. Do you believe that ten months’ residence in Greeley
qualifies you to make distinctions about which towns are
more or less dependent on Greeley than others in the area?
A. Not fine distinctions, no, sir.
Q. Have you made studies on this particular question of
which towns are more or less dependent on Greeley than
others?
A. Ina nonacademic, rather casual manner, yes.
[158] Q. Mr. Evans, can one assume that the great bulk
of the members of the Chamber of Commerce would come
from Greeley?
A. Yes.
[160] Mr. Merzcer: Your Honor, this is a factual point.
If we can have a letter from Mr. Freeman to the effect that
BOOK TOO LARGE FOR FILMI!
43
the student population is counted, can we have the record
corrected to show the facts as they are?
Tue Court: Yes. Surely.
Mr. Scuorrke: I wouldn’t object to that.
Tue Court: That’s fine; whatever the fact is.
Mr. Scuwanrz: No further questions.
REDIRECT EXAMINATION
By Mr. Brenan:
Q. Mr. Evans, do you feel that ten months in the City
of Greeley in the capacity in which you function there are
enough to know generally the economy of the area?
A. Generally, yes.
Q. And do you know why most of the members of the
Chamber of Commerce come from the City of Greeley?
A. Well, obviously as our area of primary concern—
this is where we do most of our solicitation for members.
Mr. Brenan: No further questions.
Tue Court: You may be excused, then, Mr. Evans, from
further attendance.
(Witness excused.)
— i a ae Ems a
5-POSSIBLE BLURRED PAGES
[164] In Tue Untrep Srates District Court
ror Tue District or CoLorapo
Civil Action No. C-2413
Wesel
Unrrep States or AMERICA,
PLAINTIFF,
vs.
First Nationat Bancorpora-
TION and F'mst Nationa Bank
or GREELEY,
DEFENDANTS.
Proceedings before the HonorasLe Wuu1am E. Doyte,
Judge, Presiding, United States District Court for the Dis-
triet of Colorado, Courtroom D, U. S. Courthouse, Denver,
Colorado, commencing at or about the hour of 9:00 o’clock
a.m., Tuesday, May 4, 1971.
APPEARANCES:
Henrsert G. Scnoerxe, Attorney, Department of Justice,
Antitrust Division, Washington, D. C., and;
Kevixs D. Brenan, Attorney, Department of Justice,
Antitrust Division, Washington, D. C., and;
Evocene V. Lirxowrrz, Attorney, Department of Justice
Antitrust Division, Washington, D. C., and;
Avan R. Matasky, Attorney, Department of Justice, Anti-
trust Division, Washington, D. C., and;
Carnotyn J. McNemu, Assistant U.S. Attorney, [165] for
James L. Treece, U. S. Attorney, 323 U. S. Courthouse,
Denver, Colorado, appearing on behalf of Plaintiff.
Evoene J. Merzoer, Attorney at Law, Metzger, Schwarz
& McKenna, One Farragut Square South, Washington,
D. C. 20006, and ;
Epwarp B. Criose, Jr., Attorney at Law, Hughes and
Dorsey, 401 First National Bank Building, Denver, Colo-
rado; and
Cart J. Scuwarz, Attorney at Law, Metzger, Schwarz
& McKenna, One Farragut Square South, Washington,
D. C.; and
Dowatp WriuiMson, Attorney at Law, of counsel at
Metzger, Schwarz & McKenna, One Farragut Square
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45
South, Washington, D. C., appearing on behalf of De-
fendants.
Wuerevpon, the following proceedings were had, to-wit:
[166] Ricuarp G. Watsu,
a witness called by and on behalf of plaintiff, having first
been duly sworn, was examined and testified as follows:
DIRECT EXAMINATION
By Mr. ScHoerKe:
Tue Court: Give us your name, address and occupation,
please.
Tue Witness: My name is Richard G. Walsh. [I live in
Fort Collins, Colorado. And I am a teacher and an econ-
omist.
Tue Court: Do you have a written statement as to his
background and qualifications?
Mr. Scuoerke: Yes, we do, Your Honor.
Q. (By Mr. Schoepke) Mr. Walsh, I show you what has
been marked Plaintiff’s Exhibit No. 39 for identification
and ask if that is a summary of your background and ex-
perience.
A. It is. The first half of it was prepared in the year
1967 and the last half was prepared on October 16, 1970,
as dated.
Q. Did you prepare those summaries?
A. I did. And they were accurate as prepared.
Q. Mr. Walsh, there is just one detail on that summary
[167] I’d like you to clarify for a moment if I may, on the
second page. The summary Item No. 5 indicates that you
prepared for a law firm in Salt Lake City expert testimony
for presentation .n a private antitrust suit.
Now, I would like to ask you if you would give us a
little more detail on that. Did you actually ever testify in
that particular lawsuit?
A. No. This vita was prepared with the intention to
testify. However, the case had not yet been before the
court. After preparing the study in the case, the case was
settled out of court and I never did appear.
Q. And have you ever appeared as an expert witness in
any litigation?
Se SFG LI OPE ROO NOOO MG LAO ‘
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46
A. No, Ihave not.
Mr. ScuorepKe: Your Honor, we offer Plaintiff’s Exhibit
No. 39 for identification in evidence.
Mr. Merzcer: No objection.
Tue Court: It will be received.
(Whereupon, Plaintiff’s Exhibit
No. 39 was received in evidence.)
Mr. ScuoerpKe: We ask that Dr. Walsh be qualified as
an expert in the—in industrial organization.
[169] VoIRr DIRE EXAMINATION
By Mr. Scuwarz:
Q. Dr. Walsh, as this is a case involving the acquisition
of a bank by a bank holding company and since your pro-
posed testimony is outlined in the answers to the inter-
rogatories served in the case that your testimony will con-
sist of many opinions regarding banking, the structure of
banking markets and the competitive interaction between
banks, can I take it that you are being offered here as an
expert on those subjects.
A. Well, I am being offered as a
Tue Court: If you know.
Q. Answer the question. It is a very simple question.
Tue Court: If you know.
A. I am being offered as an expert in the field of indus-
trial organization.
Q. That’s not my question. Are you being offered as an
expert on banking, the structure of banking markets and
the competitive interaction between banks, the subject of
which your testimony is supposed to be concerned.
A. That question has several parts. I don’t believe I am
being offered as an expert on banking. I am being offered as
an expert on banking market structure and the relationship
between banks.
Q. Then the answer to my question is yes, you are being
offered as an expert on the structure of banking markets
and [170] the competitive interaction between banks, is that
correct?
[171] Q. Dr. Walsh, did you prepare the second supple-
mental government’s answer to our interrogatory regard-
ing your testimony?
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47
A. Yes, I did.
Q. Then you are aware, of course, that there are many
areas in here that state that you will testify as to [172]
banking structure, the structure of banking markets and
competition in banking, is that correct?
A. That is correct.
Q. Your answer to my original question then I believe,
if I may clarify it, you do offer yourself as an expert on
those subjects?
. Right.
Do you have any degrees in banking, sir?
. Lhave a degree in economics.
Do you have any degrees in banking economics?
. No.
Have you ever taught banking?
. Yes, in part.
In part? Banking? Would you explain what part?
. Money and banking is a part of most courses in eco-
nomics and I have taught in the field of economics for a
dozen or more years.
Q. Have you taught banking then?
A. Some—not a specific course in banking, but in eco-
nomics we deal with banking as a part of general commerce
and industry.
Q. But you have not taught banking?
A. No, I don’t claim to be a banking expert in the detailed
day-to-day operations of a bank.
Q. You are, I understand, offering yourself as an [173]
expert in banking markets and banking——
POPOPoOPOoD>
Mr. Scuorerpke: Again, I must object, Your Honor. He
is not——
Tue Court: Sustained.
Q. Have you ever worked for a bank regulatory agency?
A. [have not.
Q. Have you ever worked for a bank?
A. No.
Q. Have you ever testified on the subject of banking?
Mr. ScuoerKe: He has answered he has never testified
in any case at all.
Mr. Scuwarz: All right. I withdraw the question.
Q. Now, how then if you have not had such experience
ie _ msm aa ee —e - > id
oe yet
mrmAecini Cc DIIlIIipern PAGES
48
in banking would you know what a typical banking market
is?
A. Well, the field of industrial organization deals with all
industries and lines of commerce. I have studied the mate-
rials prepared by the government and prepared by the bank
in this case. I don’t feel that banking markets are so differ-
ent as a topic from other kinds of markets that one special-
izing in the field of industrial organization cannot deal with
it.
- ” * o *
[175] Q. May I ask if all your publications have been in
food related or agriculture publications or on that subject?
A. Nearly all my publications have been on the subject
of industrial organization, many of which have been applied
to the agriculturai industry, the agricultural processing
iodustries, the agricultural marketing industries, but the
general topic is the field of industrial organization.
Q. Well, may I ask if you agree with this quotation:
‘‘The choice of criteria for bank holding company expan-
sion cannot be settled by simple analogy to industrial
merger policy.”’
A. Would you repeat that?
Q. ‘‘The choice of criteria for bank holding company
expansion cannot be settled by simple analogy to industrial
merger policy.’’ Do you agree with that?
A. Yes, convenience and need has to be considered.
Q. No, I am speaking strictly with regard to the competi-
tive aspects of it. Do you agree with that quotation as far
as the competitive aspects of this case is concerned? Isn’t
it true that you are saying that you are qualified to speak
to the specific questions of bank holding company expansion
and banking markets on the basis of industrial—general in-
dustrial merger policy?
A. Correct.
[176] Q. Then you disagree with this quotation?
A. Read it again.
Q. I will read it again. ‘‘The choice of criteria——”’
Tue Court: Never mind. Let’s get on to the next one,
please. I mean, you pursue it, as many as you like, to suit
your sufficiencies and make your record.
Mr. Scuwarz: Well, Your Honor, I believe by Dr.
Walsh’s own statements he is not an expert in banking
pane Suis yOu hana ieinicn-cind AE Mee maw eo
BOOK TOO LARGE FOR FILMIN
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markets, banking competition and the subjects with which
he is scheduled to testify and assumedly will testify, and on
that ground I move that his testimony be excluded as not
qualified expert testimony. I have some authority, if Your
Honor cares to hear me on that subject.
[177] Mx. Scuwarz: It is not his veracity, as I said, and
I don’t doubt his expertise in his particular field of exper-
tise. As I understand it, he has referred to himself as an
agricultural economist quite recently in some of the publi-
cations. Now, I don’t doubt his qualifications in that area,
but this is an entirely different subject. Banking has its
own problems, its own competitive milieu, which we must
examine, and we can’t examine them in relation to broiler
chickens, which he has written on, or macaroni manufactur-
ing. It has particular, important differences. For that rea-
son, I submit he is not qualified to give expert opinions
which will go in the record on this case on that subject.
[178] The plaintiff, I might add, has on his staff two ex-
pert witnesses, whom although we do not agree with their
views, we do not doubt their qualifications to speak on the
subject of banking markets, Dr. George Hall and Dr. Harry
Johnson.
Tre Court: Do you wish to make a statement?
Mr. ScHoepke: Well
Tue Court: Regarding the reason for submitting him?
What are his particular qualifications? You know him
better than Ido. Why is he qualified?
Mr. Scuoerke: He is qualified, Your Honor, because he
is qualified and we have offered him as an expert in the
field of industrial organization and market structure analy-
sis, which is, as he himself has just briefly set out, a field,
specialized field of economics, that deals with all industries,
and the same type of analysis, same basic analysis, concen-
tration of competitors in the markets, the relative market
shares and the effect of these market shares and the concen-
tration of market shares among the few competitors, the
basic effect that this has on competition.
These are all of the things that the courts in the various
Section 7 cases that we have noted in our briefs, these basic
market structure elements, are the things that the courts
have emphasized in their various Section 7 opinions, and
G-POSSIBLE BLURRED PAGES
50
industrial organization is a field that Dr. Walsh has [179]
specialized in, and it is a field that applies the same analysis
to all industries. He is not a banking expert in the sense
that he can take the stand and explain how you run a bank
from the inside or how you organize a credit department or
things of that sort, or he is not a financier. He is an indus-
trial organization man concerned with market structure
analysis and all of the banking cases and the Philadelphia
case indicate that this is one of the basic elements in judg-
ing the competitive implications of a banking consolidation,
and that is what he will testify to.
Tue Court: Very well. The objection is overruled. He
may testify.
[181] Q. (By Mr. Schoepke) Now, Dr. Walsh, you have
already indicated that you specialize in the field of eco-
nomics in a field known as industrial organization. Could
you tell us briefly what this field of industrial organization
is?
A. Well, I can tell you what people do who work in the
field. We study the relationship of buyers to each other
and buyers to sellers. Sometimes the field is called market
structure analysis.
Q. All right, now, in considering the problems that you
deal with, what factors in general do you take into account?
A. What factors or what problems?
[182] Q. What problems?
A. Well, basically the problems, I think, of competition
and monopoly; the extent of competition and monopoly.
Their impact. How they affect the prices that we pay for
everything; the quality of products. How they affect the
distribution of power in the economy; not only economic
but political, and I think the antitrust laws are developed
in response to this distribution of power and I think indus-
trial organization economists have made an important con-
tribution to understanding these important problems.
Q. Well, now, is this field of industrial organization a
field that is recognized among economists as a field of ©
specialization?
A. Itis.
Q. And is it related to any one particular industry?
A. No, it’s—it cuts across all industries. No, it’s no more
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7_7"" 51
related to the agricultural process industries than to com-
merce and trade or to the basic manufacturing industries.
It cuts across all industries.
Q. Now, you mentioned, I believe, a moment ago that
industrial organization was concerned with market struc-
ture. Now, from that standpoint of the specialty known as
industrial organization, how do you determine market
structure.
A. Well, first you determine the industry, the particular
product or the particular service that is offered by that
[183] industry. And then we measure the market area, that
is, the extent of the industry. Is it local or is it regional or
is it national? And then we identify the firms in that indus-
try and their relationship to one another.
Q. Well, in the field of industrial organization analysis,
why is market structure significant?
A. Well, because it’s related to their relative size, one to
the other.
Q. And why is that of significance?
A. Well, their relative size determines their market
power. The larger the size the more the market power; the
smaller the size relative to the market, the less the market
power.
Q. Now, when you measure relative market power as you
express it of the various firms in a particular industry, do
you have any particular phrase that you apply to the meas-
urement after you have completed it?
A. The most frequent measure, although there are sev-
oral, is concentration ratio.
Q. What do you mean by concentration ratio?
A. Well, the concentration ratio is the share of the mar-
ret controlled by the leading firms.
Q. Now, in market structure analysis, how do you go
tbout measuring the degree of concentration ratios?
A. Well, it depends on the particular industry and [184]
he statistics that are available; the share of overall sales,
he relative total assets, the share of plant capacity con-
rolled by the largest single firm, perhaps the largest two
irms, the largest three, four, the largest eight; even the
argest 20.
Q. Now, directing your attention to the field of banking,
tow would you as an industrial organization specialist go
bout measuring the degree of concentration in banking?
i i le i ee ee Oe a
A. Well, you would apply the general terms, the total
assets, the deposits or loans of various kinds. These tend
in general to correspond, to move in parallel ways.
Q. Now, is the matter of concentration important in
market structure analysis?
A. Well, because the number of firms and their relative
size, one to another, is basic to determining the degree of
competition in the market.
Q. I wonder if you could expand on that?
A. As I said before, the more concentrated the market
is among the leading firms, the less likely the market is to
be competitive.
Q. Well, could you tell us why in the view of industrial
organization economics a concentrated market tends to be
less competitive than a smaller concentrated market or an
evenly-divided market?
A. Well, because of the relative power of the largest
[185] firms versus the smaller ones. They can engage in
more—are more likely to engage and have a capability to
engage in parallel policies, for example, price leadership or
service leadership of a dominant firm; where others fall,
and this kind of behavior. A single firm is less likely to take
independent action—competitive action in a market that is
dominated by a few large sellers. You are more likely to
get a cooperative kind of competition, a parallel action; we
rn say a live-and-let-live kind of relationship between the
rms.
Q. Now, are there any mathematical guidelines for meas-
uring concentration during the course of market structure
analysis?
A. Well, there are, but it’s very difficult. There are some
guidelines by Bain, who is a leader in the field of industrial
organization, Joe Bain. Some guidelines by Kaysen and
Turner in their book, ‘‘ Antitrust Economie Policy,’’ a 1959
book, and there are some guidelines by Stigler, who is also
an expert in the field of industrial organization. Probably
the most widely-accepted guideline is from Kaysen and
Turner, that when the eight largest firms make at least )
percent of the market sales, then that market is concen-—
trated. And this has some validity in industrial organiza
tion. Of course, if less than eight firms control 50 percent —
or more of the market, then the market is very concentrated.
If [186] eight control more than WO percent, again, it ia more
than just concentrated. It’s very concentrated. I think it’s
important to recognize in using these kinds of guidelines
that they necessarily involve a comparison between the
leading firms in the market and the total number of firms.
That is, I think, the source of their validity.
Q. Dr. Walsh, does the theory of market structure analy-
sis have any ultimate purpose?
A. Yes, the more widely dispersed and evenly distributed
the market shares and hence power—market power, the
more likely is competition to be effective.
Q. Now, in the field of your specialty in industrial orga-
nization and market structure analysis do you ever have
oceasion to consider corporate mergers or acquisitions?
A. Yes. I have studied and lectured on them at great
length. The industrial and commercial history of the United
States has been chaarcterized by merger movements.
Q. I wonder if you could just describe them very briefly.
A. One was from about 1897 to 1901 or 1902 and this
was when the great trusts were put together. The steel
trusts, tobacco trusts, meat packing trusts. The 1920s was
a period of consolidation of firms throughout the country,
leading to various consumer product lines such as baking,
dairy, canning, and from 1947 to the current time, which is
[187] the largest and most significant in terms of assets
involved, kind of—all merger movements, and even Fortune
magazine has expressed alarm at the transformation of
industrial—of our industrial society by this movement.
Q. Now, as a result of your study and lecturing on merger
movement or the three that you have just described, did
you arrive at any conclusion as to the standards, if any,
which should be utilized in judging the competitive signifi-
cance or particular corporate acquisitions or mergers?
A. I have arrived at about the same conclusions as most
everyone else in the field of industrial organization; that
one must look primarily to market structure changes; what
kinds of market structure changes,—changes in the rank of
the firms, changes in their concentration, the merger history
and trend in mergers and finally the effect of those mergers
in actual competitive or potential competitive terms.
Q. Can you think of any other factors that you consider
important?
A. Well, there are probably other factors.
Q. Have you exhausted your recollection?
a. eee Or »
54
A. Yes.
Q. How about the issue of actual and potential competi-
tion between the combining organizations?
A. Well, I perhaps didn’t make that clear. That is [188]
the ultimate consideration of any kind of merger; what are
the competitive and related factors of that merger?
Q. Now, have you made any studies of any particular
mergers in the course of your career?
A. Yes, I have, quite a few. As the defense counsel
charged, most of these studies of mergers were in the food
processing and baking and flour industries. Also, I have
studied mergers in the chemical nitrogen industry.
Q. Have you had occasion to study the acquisition in-
volved in this case, that is, the acquisition by the First
National Bancorporation of Denver of the First National
Bank of Greeley?
A. Yes, Ihave.
Q. Would you tell us what, if anything, you considered in
connection with your study of this case?
A. Well, in addition to my general background knowledge
of the field of industrial organization, I studied the applica-
tions of the Federal Reserve Board in the proposed mergers
in Greeley and Colorado Springs and Sterling. I studied
the Federal Reserve Board decisions in these acquisitions.
I studied the banking statistics prepared by the government
on these areas and on the total State of Colorado.
I studied economic growth statistics on these areas and
those in the State of Colorado, again. And, the [189] docu-
mentary material of the banks, including their answers to
requests for information and so forth.
Q. Now, in your analysis of the particular transaction
that is the subject matter of this case, what industry did
you use?
A. lL used commercial banking.
Q. Could you tell us very briefly why you used commer-
cial banking as the appropriate industry?
A. Well, I am no lawyer, but one reason was because of
the ruling of three Supreme Court cases. I think the Su-
preme Court has ruled and it has been brought out before
that in judging the line of commerce of this kind of merger
an appropriate line was commercial banking.
Mz. Merzorn: May I object to this witness testifying in
this area. This is the distribution of the legal aspects of the
55
vase. He can testify as an industrial—as to industrial eco-
nomics and his theories drawn therefrom and not as to the
meaning and content of the opinions of the court.
Tue Cover: Sustained. I will take judicial notice of the
fact as to anything that is in the decisions, including
whether banking is a line of commerce.
Mz. Scnoerxe: Your Honor, I asked him to state it very
briefly just as the reason that he utilized in his field. It is
not my intention for him to——
[190] Tue Covrr: Well, he answered it. He said based on
the laws as he understands it. That’s all.
Q. Now, I believe you testified a moment ago, Dr. Walsh,
that in analyzing the competitive effects of mergers and
heir significance with regard to market structure, that one
of the other things that you took into account was the par-
‘icular area affected that was the appropriate area within
which to measure the competitive impact of the merger, and
[ wonder if you would tell us—did you choose any particu-
ar area within which to judge the competitive impact of
his particular merger?
A. Well, I looked at the primary service area of the banks
us the relevant geographic market.
[201] Q Now, Dr. Walsh, in connection with your analy-
jis of the competitive implications of the Greeley acquisi-
ion itself, did you give any consideration as to whether or
ot there existed any direct competition between First Na-
ional Bank of Greeley and the Bancorporation?
A. Yes, I did.
Q. And what materials did you consider in connection
vith your analysis of this particular point?
A. Well, again, I examined the same documents as before,
he application to the Federal Reserve Board of the First
¥ational Bancorporation to acquire the Greeley bank, and I
neluded examining the sources of business information
epared by the Government from the interrogatory of the
lefense.
Q. Dr. Walsh, I show you Plaintiff’s Exhibit for Identifi-
ation No. 45, 46, 47, 48, 49, 50, 51, 52, and 53, and ask if you
tilized these documents in connection with your analysis
if the existence of direct competition if any [202] between
be Bancorporation and the First National Bank of Greeley?
A. Yes, I did.
(Whereupon, Plaintiff’s
Exhibits 45 through 53 were
received in evidence.)
Q. Now, Dr. Walsh, would you tell us in what way you
used Plaintiff’s Exhibit 45 through 53 in connection with
your analysis of the degree of actual competition if any be-
tween Bancorporation and the First National Bank of
Greeley.
A. Well, this shows the source of business of First Na-
tional Bancorporation.
Q. Well, what are you referring to?
A. With respect to the City of Denver, with respect to the
Denver SMSA area, Denver metropolitan area, with respect
to Greeley, with respect to the Greeley area, and so on.
Q. What document number do you refer to?
A. Well, Document No. 45 is the first one that shows de-
mand deposits of individuals, partnerships and corpora-
tions in First National Bancorporation as of August 31,
1970. This shows that—well, I don’t know which way to go
here, whether to discuss—well, primarily in the City and
County of Denver, with nearly 70 percent of their total de-
mand [204] deposits in that area of individuals, partner-
ships and corporations. If you include the Denver statisti-
cal area, they have 84.8, nearly 85 percent, of their total
business in that area.
Q. May I interrupt just while you mention that word
‘*statistical’’ area.
A. Yes.
Q. You will notice at the bottom of what is titled ‘‘ Metro-
politan Denver’’ there is in capital letters and indented
the term ‘‘Denver SMSA.”’ I wonder if you would just
indicate for the Court what the meaning of that term is,
**Denver SMSA.”’
A. This is a statistical convenience developed by the U.S.
Census Bureau, which in this case when you say SMSA you
mean the City and County of Denver as listed here, the City
of Aurora, Adams County, Arapahoe County, Jefferson
County, and Boulder County.
[205] Q. That area has been designated by the Bureau of
Census as the Denver SMSA, is that correct?
A. Yes. ;
Q. Now, would you just for the record state what the
- we.
57
itials SMA stand for since that term occurs in many of
ese documents?
A. Standard Metropolitan Statistical Area.
Q. So the Denver SMSA stands for the Denver Metropoli-
n Statistical Area?
A. Yes.
Q. Now, will you go through these documents and indi-
te as briefly as you can the significance that they had in
yur analysis with respect to the existence of direct compe-
lion, if any, between Bancorporation affiliates and the
irst National Bank of Greeley.
A. Well, | started to report on the showings of Exhibit 45
ith regard to the demand deposits of individuals, partner-
ips, and corporations. In addition to what I previously
id this document shows that the First National Bancor-
yration had less than five-tenths of one percent of its—of
ese types of demand deposits in the City of Greeley, less
an five-tenths of one percent in the Greeley area. How-
er, the dollar amounts in the former were $40,000 and in
e latter $8,000—excuse me, $48,000. It shows also for
eld County that the Bancorporation had approximately
06} one tenth of one percent or a $234,000 of demand
posits of individuals, partnerships and corporations in
eld County. So I should say from that, they are not in
ry direct competition with regard to demand deposits
ith the Greeley bank.
With regard to Plaintiff’s Exhibit No. 46, saving deposits
the First National Bancorporation, again, it shows 70
'reent are in the City and County of Denver and slightly
‘er 90 percent in the Denver metropolitan area.
Q. Dr. Walsh, perhaps we could shorten this a bit if you
yuld just direct your attention to the Denver metropolitan
ea instead of subdividing it into the City of Denver. I
ink the figures are sufficiently close so that the point that
' are developing can be adequately covered. If you would
st point out the Denver metropolitan area and the busi-
8s derived by Bancorporation in the Greeley area.
A. Yes.
Q. How about document 467 Could you state briefly how
u used that in your analysis?
A. Well, it shows that there are primarily—they have
‘ee savings deposits from the Denver metropolitan area
d that they have a very small share in the City of Greeley,
en ns 4h iia ai SOOT OOO OO LO
$67,000 or one-tenth of one percent of their total; and in
the Greeley area they have also $67,000 or one percent of the
totals. However, for Weld County this rises to $325,000 or
three-tenths of one percent of their total savings deposits.
[207] Q. How about Plaintiff’s Exhibit 47, briefly.
A. Very briefly, okay. The First National Bancorporation
has 90 percent of their time deposits of individuals, partner-
ships and corporations in the Denver metropolitan area.
They have two-tenths of one percent in Greeley, and in the
Greeley area and in Weld County. With regard to the docu-
ment No. 48, First National Bancorporation has 71 percent
of its total loans in the Denver metropolitan area. It has
however 2.1 percent or $7,129,000 in the city of Greeley. It
has 2.8 percent or $9,691,000 in the Greeley area. It has 3.7
percent of its total loans in Weld County and this amounts
to $12.6 million.
Q. Now, Dr. Walsh, Plaintiff’s Exhibit 48 is the total
loans. Exhibits 49 through 53 are various subcategories of
the loans. If I may lead you a bit, is that not true?
A. Yes, sir.
Q. Can you summarize your analysis of Exhibits 49, 50,
51, 52 and 53, bearing in mind that the figures there are in
the record and speak for themselves?
A. Well, they all show that First National Bancorpora-
tion primarily operates in the Denver metropolitan area
and it has a slight amount of business in Greeley area.
Q. Well, if I may just direct your attention quickly to
Plaintiff’s Exhibit No. 53 which is concerned with loans to
farmers, I wonder if you would tell us in what way you
used this [208] particular exhibit in connection with your
analysis?
A. Well, I suppose as you expect the Denver metropolitan
area accounts for 12 percent of the loans to farmers. There
are not many farmers in the Denver metropolitan area. The
city of Greeley accounts for thirteen percent. Very pros-
perous agricultural area. The Greeley area is a local—it
accounts for 16.3 percent of the farm loans or 4.7 million
dollars. And Weld County accounts for 20 percent of their
farm loans, $5.8 million. This indicates that with regard to
farm lending the First National Bancorporation is a sub-
stantial competitor in the Greeley area.
Q. Dr. Walsh, I would like to show you what has been
marked as Plaintiff’s Exhibits No. 54, 55, 56, 57, 58, 59, 60,
;
¢
;
59
61 and 62 marked Plaintiff’s Exhibits marked for identifica-
tion and if you used—ask you if you used those documents
in connection with your analysis of the actual competition
if any between the First National Bank of Denver and the
First National Bank of Greeley?
A. Well, this shows for the
Q. Excuse me. Did you utilize them?
A. Idid.
[216]
(Whereupon, Plaintiff’s Exhibits
54 through 62 were received in
evidence.)
Q. Now, Dr. Walsh, I would like to ask you if you would
sxamine Plaintiff’s Exhibits 54 through 62 in evidence and
which you will note are concerned with various business
tems and their sources of the First National Bank of
Denver and ask you in what way you considered them in
connection with your analysis of the competitive issues in
his case.
A. Well, I considered them in that they show for the lead
yank of the First National Bancorporation, for the lead
yank, the First National Bank of Denver, their distribution
217] of demand deposits, savings deposits, time deposits,
f individuals, partnerships and corporations and so forth,
he total loans, commercial and industrial loans, single-
vayment loans, real estate loans, and finally, loans to
armers.
These charts show that the First National Bank of
Yenver, the lead bank for the Bancorporation, primarily
perates in the City of Denver and the Denver metropolitan
rea. For example, in the case of demand deposits of indi-
iduals, partnerships and corporations, fully 84.2 percent of
‘8 activity is in the Denver metropolitan area. Also, it
hows that their share of demand deposits in the Greeley
rea is less than one-half of one percent and also the same
or the City of Greeley, and amounting to, for the Greeley
rea, $45,000 as of August 31, 1970.
Would you like me to report orally the rest of these?
here are some variations, particularly in the amount of
etivity that the First National Bank of Denver carries on
ithe Greeley area
Q. But would you be able to summarize this series of
documents in any way, to save time?
Tue Court: Is there any area in which they are active?
Tue Wiryess: Well, certainly——
Tue Court: In the Greeley area? I mean, any aspect?
[218] Tue Witness: They have, for example, the real
estate loans, 12 loans, of all classes. This is an amount of
$563,000, representing 1.7 percent of their total real estate
loans. They have, for loans to farmers in the Greeley area
12 loans, representing 15.4 percent of their loans to farmers
total, amounting to $4,138,000, or 16 percent of their total
farm loans.
Just looking at some other categories, loans to individ-
uals, partnerships and corporations on an installment basis,
are very small, only 28 in the Greeley area, amounting to
$51,000, and only .3 of one percent of their total loans in that
category.
[219] In the case of commercial and industrial loans,
again, it’s rather sizable to the Greeley area. It amounts to
fully 2.7 million dollars or two percent of all the commercial
and industrial loans of the First National Bank. Generally,
small loans, by summing up. As to the share of business
activity of the First National Bank in the Greeley area and
also in the City of Greeley. And, also in Weld County; very
minor.
Tue Court: So then you would conclude that the First
National Bank of Denver is not a strong competitor?
Tue Wirness: But, to the extent they have these opera-
tions, although it’s not a strong competitor, it’s on the edge
of the Greeley area market. As these numbers of intrusions,
as we have just——
Tue Court: But you say they are no competitor—no
competitive factor, really, as you know of now?
Tue Wirness: No direct competition, I would be willing
to conclude.
Q. (By Mr. Schoepke) None whatever?
A. Well, only a very small amount of direct competition.
Q. I would ask you to look briefly at Plaintiff’s Exhibit 38
and ask you whether you used this in connection with your
analysis of the degree of direct competition if any between
First National Bank of Denver and the First National Bank
Gelade Ane
.. ae a
of Greeley, and in that connection I direct [220] your at-
tention to Pages 8—8 and 14——
[222] Mr. Scnorrke: Those would be 33, 35, 37 and 38 we
offer in evidence, Your Honor, as plaintiff’s exhibits subject
to the protective orders requested by the defendants.
Tur Court: These are not to be utilized as a matter of
record at any time?
Mr. Metzcer: Yes, Your Honor. In order that we may be
entitled to the protective order, the Court would have to
order that the clerk seal these particular documents and we
respectfully request the Court to so order.
Tue Court: They can’t be referred to in the course of
argument or decision, is that right?
Mr. Merzcer: Yes, Your Honor.
Mr. Scnoerke: Without further order of the Court or on
application.
[223] Tue Court: Fine with me. I don’t know what good
hey are then.
Mr. Merzcer: Customers tend to be very sensitive about
yandying their names about, Your Honor.
Mr. Scnorerke: Well, with the protective order, Your
Honor—I perhaps need a little education. Does Your
Honor anticipate that we can refer to them generally with-
mut going into the confidential specifics that the defendants
ire concerned about?
Tue Court: The identification, that’s what he’s objecting
0; specific identification.
(Whereupon, Plaintiff’s Exhibits
33, 35, 37 and 38 were received
in evidence.)
Q. (By Mr. Schoepke) Now, referring, Dr. Walsh, to
laintiff’s Exhibit 38 in evidence, calling your attention to
vages marked as 8 and 14 thereof, would you indicate with-
ut mentioning any names or otherwise identifying the
ndividuals or organizations there indicated, would you in-
licate in what way you used this particular Plaintiff’s Ex-
libit Number 38 in connection with your analysis concern-
ng the competitive aspects of the proposed merger or
iroposed acquisition?
A. Well, this shows that the First National Bank of Den-
‘er has direct loans in its correspondent bank department.
62
Q. Why don’t you count the number?
[224] A. Some 15 medium to large-size operations, pri-
marily in the feeding and feedlot area—in the Greeley area,
I see that a couple of them extend throughout Weld County.
But most of them are in the Greeley area. These are
medium to large-sized lending operations.
I see on page identified as 14 of Document Number 38
that they reply that they have solicited commercial banking
business from some 11 present merchants in Greeley and
these will be primarily small to medium-sized retailing and
commercial operations, although there are a couple here
that are fairly large organizations, although I think they
are calling on the regional office of the—-the local offices of
these large organizations. So, they show that this latter—
this latter list shows that the First National Bank indeed
solicits business in Greeley and the Greeley area.
Q. Now, I would now show you Plaintiff’s Exhibit Num-
ber 37 in evidence and ask you, directing your attention
and admonishing you not to indicate names or amounts, and
directing your attention particularly to pages designated
as 5 and 6 to this iaterrogatory answer in what way you
used this particular exhibit in connection with your analysis
of this case?
A. This is a list of the trus: accounts originating in Weld
County and nearby counties. It shows that in Weld County
the First National Bank of Denver has four living [225] and
personal trusts and we might go through—there are a
small number of various other kinds of accounts—the total
being eight for testamentary trusts.
Q. No, that’s for four counties.
A. Two testamentary trusts in Weld County. Five
escrow accounts in Weld County; only one custody account
and one investment banking account. Excuse me, that’s in
Logan County. No investment banking account in Weld
County. I guess they also list the dollar amounts involved,
but it isn’t a substantial amount of money.
Q. Now, Mr. Walsh, in connection with these documents
that we have just been discussing, namely, Plaintiff’s Ex-
Pah RANE at ties RL
hibits 45 through 53 in evidence and 54 through 62 in ©
evidence, 38 in evidence, 37 in evidence, and 40 in evidence, —
did you reach any conclusion with regard to the effect that —
the proposed acquisition of the First National Bank of
Greeley would have in terms of actual competition?
ee See ee
A. Yes. There is some direct competition, no doubt about
t. But, on balance, it’s relatively small or insignificant.
Some direct actual competition will of necessity be elimi-
nated by this merger. It’s relatively minor. And will not
ause me concern as a market structure economist. That
s, in terms of the market structure analysis, essentially
they operate in two different markets; one basically in the
Denver market and the other basically [226] in the Greeley
narket.
Q. Did this evidence indicate to you an) thing with regard
‘0 the proximity of the organizations to the markets in
which they operate?
A. Well, they’re on the edge of each other’s markets,
und this is shown by the solicitation of business, the amount
of business of varied categories in each other’s market. The
svidence is quite clear on that to me as an economist.
Q. Now, Dr. Walsh, in your analysis of the competitive
ffects of the Greeley acquisition itself, did you consider
any factors other than actual competition between Ban-
orporation and the First National Bank of Greeley?
A. Yes, I did. I considered potential competition.
Q. And could you tell us why did you consider potential
‘competition in your analysis of this particular acquisition?
A. Well, this kind of merger is known in the field of
ndustrial organization as a market extension merger. And
n market extension mergers or acquisitions the issue of
yotential competition is the important one.
Q. Now, you mentioned the term market extension merger
—I wonder if you could just tell us briefly what you mean
vhen you use the term market extension merger?
A. There are two kinds, one is a product market [227]
xtension merger, meaning the joining of two related but
lifferent products or services. And the other is a geo-
‘raphic market extension merger which joins firms pro-
lucing the same product but in different markets.
Q. When you say with regard to a geographic market
xtension merger, you said in two different markets. In
wo different what kind of markets?
A. Product markets; where they ——
Q. No, no. I’m speaking of geographic market extension
aerger.
— li a
64
Tue Wirness: Didn’t I define geographic market ex-
tension merger?
Q. Would you start again and define what a geographic
market extension merger is?
A. Firms producing the same product or service but
operating in two different markets joined together. This is
a geographic market extension merger.
Q. Now, what category does the present acquisition of ihe
First National Bank of Greeley fall in?
A. Well, this is a geographic market extension merger.
Q. And why?
[228] A. The First National Bancorporation in the Den-
ver market seeks to extend its operations by acquiring the
First National Bank of Greeley into the Greeley market
area. This extends their geographic operations.
Q. Now, you indicated a moment ago that in a market
extension merger that potential competition was the im- —
portant thing to be considered under an industrial organiza- _
tion or market structure analysis. Could you tell us what is
a potential competitor as you use the term?
A. There are three main determinates: one, resources, —
a potential competitor has to have size; resources, capabil-
ity to enter the market if he wishes, without a merger of a
major bank already in that market. The second is incentive.
The potential competitor has the incentive to enter the
market because of growth or attractive—economic attrac-
tive kind of market; and third, he has a relative capability.
This is in relationship to the potential capacity of others
outside the market that might be potential entrants.
eo eh one Dee
Meta Pah Gilde abe My
Mr. ScuorrKe: May I have a moment, Your Honor, just —
to get my documents out? K
[229] Tue Court: Well, the most that can be said is that —
it possesses a possible threat to competition which might —
develop in the future? a
Tue Wiryess: I agree, Your Honor, that’s one of the—— ©
Tue Court: Well, it doesn’t possess any threat to any ©
present competition because there isn’t any, substantially, ©
trifling, is that right? :
Tue Witness: I wouldn’t go so far as to say there isn’t |
any, but it is a minor element in that market.
Tue Court: It is insubstantial, is that right?
Tue Wirtvess: It is interesting, however, to observe that
Pini,
ts Sa Coes te ee
CR Ri get EIT iI
—7—_—_—
First National Bank does in fact serve as an alternative
to Greeley area purchasers of banking services with regard
to the various banking services that they provide. They are
more of an alternative with regard to some of those banking
services than others. That’s why we do not say banking
competition. I do say, however, that they are an alternative
to the Greeley banks in providing the services and I should
think not an unimportant alternative. I don’t know about
the use of the word ‘‘substantial’’ in legal terms.
Tue Court: Well, perhaps to the extent that it is a
lending institution that has enough money to make a big
loan, is that right?
Tae Witness: Well, it certainly has that.
Tue Court: At least to get one, if they don’t [230] have
the money to loan at the time?
Tue Wirness: Certainly, and in saying that, Your Honor,
I think you are saying they have the potential to make large
loans in the Greeley market and they are currently using
that potential in that market.
Tue Court: But you can’t go further than that, I take
it?
THe Witness: I wouldn’t call it substantial direct com-
petition.
Q. Now, Mr. Walsh, I would like to show you Plaintiff’s
Exhibit 21 for identification, and ask you if you used that _
in connection with your analysis?
A. I did.
Q. Mr. Scuorrxe: If Your Honor please, we offer Plain-
tiff’s Exhibit No. 21 for Identification into evidence.
Mr. Merzcer: We have no objection to the document,
Your Honor, save as to the staleness of the data. We have
documents which are year end 1970 which I think would be
more use, but no objection.
Tue Court: Very well, it will be received.
(Whereupon Plaintiff’s
Exhibit No. 21 was
received in evidence. )
Mr. ScuorpKke: Your Honor, these are the ones that are
closest to the merger and our inquiry is as of the date of
the merger.
[231] Tue Court: The only purpose is to support your
allegation that there is concentration in the Denver banks?
—
Sead eo
Me. Scuoerxe: That is one of the purposes. Yes, this
indicates the degree of concentration in the Denver market.
Q. Now, could you just tell us briefly, Dr. Walsh, in what
way you used Plaintiff’s Exhibit in Evidence No. 21 in
connection with your analysis as to whether the Bancorpo-
ration, First National Bancorporation of Denver, had the
resources to enter the Greeley market, should it desire?
A. Well, this shows that the First National Bank of
Denver is the largest bank in the Denver market. It is also
the largest bank in the State of Colorado.
Mrz. Merzcex: Your Honor, I believe that the answer to
this complaint conceded that we have the resources to enter
this market and that this question is not in issue.
Tue Cover: Very well. That takes care of that, I guess.
Mrz, Scuoerxe: Takes care of that. Well, then may I
offer in evidence as fundamental background information
Plaintiff’s Exhibit 15, which is the 1969 annual report of
the First National Bank of Denver.
Q. Dr. Walsh, I would like to show you Plaintiff’s Ex-
hibit No. 15 and direct your attention to——
Tue Cover: Wait a minute——
[232] Mn Merzoen: If it is being offered in support of
the proposition just advanced, I believe we have conceded
it
Tue Cover: Well, I suppose he can offer it anyway, if
he wishes. You don’t dispute its authenticity, I take it?
Mr. Merzcez: No. Your Honor, simply one of the basic
elements of our case is that not only we but just about any
entrepreneurial group in Colorado has the financial re-
sources to enter Greeley de novo. These are very minimal
dollar figures and we concede that airybody has that ability.
In fact we contend it.
Tue Cover: Well, we will receive it.
(Whereupon, Plaintiff's
Exhibit No. 15 was
received in evidence.)
Tux Cover: I suppose they may be able to use it for
any purpose they wish. Is this a recent financial statement,
annual statement?
Mz. Scuoerxe: Yes, and it is of particular signifi-
cance——
BOOK TOO LARGE FOR FILM
eres lee DO St ae owe,
Tue Covet: What year?
Mz. Scuoerxe: For 1969, and on Page No. 8 of that is
a ten-year growth record of the First National Bank of
Denver, which we believe supports our basic position in this
Q. Now, we would also at this time show Dr. Walsh
Plaintiff’s Exhibits for Identification 18, 20 and 19, and
ask [233] whether he used these particular tables in con-
nection with his analysis as to the resources?
A. Yes, I did.
Q. Of the First National Bank to enter the Greeley mar-
ket, should it wish?
A. Yes, I did.
[238] Mr. Scnoerxe: Just the continued growth of the
First National Bank of Denver and its maintenance of its
lead as the largest bank in Denver, and also the largest bank
in the state, thereby by definition qualifying it as the or-
ganization most likely to be a potential entrant in Greeley
[239] simply because of its size relative to its other com-
petitors.
Tue Court: Well, I think they will stipulate to its size
and its steady growth and its being the largest banking
institution in Colorado.
Mn. Merzcer: Yes, Your Honor, and there is a docu-
ment the government has not objected to, our Exhibit No.
3 which lists from 1960 to 1970 deposits in each of the banks
of Denver.
[240] Q. Now, Dr. Walsh, we have covered the subject of
resources and I believe you indicated in response to my
question as to what one of the attributes would be that
would constitute in your view a significant potential en-
trant or potential competitor was incentive. I wonder if
we might direct our attention to this subject of incentive
at this time, and I would ask you if you have examined any
material in connection with your analysis as to whether an
incentive was present for the First National Baneorpora-
tion to enter the Greeley market as a significant potential
entrant?
Mn. Merzorn: May it please the Court, I object to the
| testimony of this witness of an incentive on the part of
| pale arma mm . :
iG-POSSIBLE BLURRED PAGES
somebody else without demonstrating that he has some
private knowledge as to what that person was thinking.
Mz. Scnorrxe: Well, that is subjective, Your Honor.
I am asking this witness to testify with regard to the vari-
ous growth data of the City of Greeley, its prosperity and
attractiveness and so forth as an objective indicia that
would lead a reasonable bank to have the incentive. As the
court in the Penn-Olin case, which was a potential competi-
tion case, [241] indicated the primary test is objective,
not subjective.
Mr. Merzoer: As the Court is aware, not only I but the
Supreme Court disagree with counsel’s representation as
to what the court said. I simply do not think he is competent
to testify as to what the incentives of the bank are. I do
not think he is competent to testify to that.
Q. Well, Dr. Walsh, with regard to incentive, what in
your view as a market structure analyst would you con-
sider as appropriate indicia to indicate the probability of
incentive to enter a particular market, in a geographic
market extension case——
Mr. Merzoenr: Objection, Your Honor, counsel is sug-
gesting that the appropriate criteria for evaluating the in-
centive of a bank to enter a market are economic and statis-
tical data. The Supreme Court in the Penn-Olin case made
it very clear that the expressed intentions of the institution
involved were the relevant considerations, and on that
grounds decided the case. We do not think it appro-
priate——
Tue Covert: Well, that could be that it would be conclu-
sive. I don’t know. I will have to take a look at that case,
but that doesn’t prevent them from presenting evidence
as to objective elements that would lead a reasonable or
rational person to want to get into the game, so to speak.
Mr. Merzcer: Not at all, Your Honor.
Tue Cover: That’s all he is bringing out now, as I [242]
view it.
Mz. Merzocer: Counsel is inquiring into the incentives of
a bank to enter the market. |
Tue Cover: What are the features that are attractive, —
that’s all he is asking.
Mz. Merzorr: Fine, to that I have no objection.
Tue Cover: All right.
BOOK TOO LARGE FOR FILMI»
Q. Dr. Walsh, what are some of the features that would
be attractive to a sign: Seant potential entrant in a market
extension case?
A. Rapidly growing economy, one of increasing trade and
commerce, perhaps increasing manufacturing, perhaps in-
creasing cattle feeding, increasing population, these kinds
of factors that account for market growth and development
which lure banks lead to expansion of bank operation.
Q. Did you examine any data in connection with your
analysis of these particular factors vis-a-vis the Greeley
area?
A. Yes, I did.
Q. Dr. Walsh, I show you Plaintiff’s Exhibits for Identi-
fication 87, 88, 89, 90, 91, 92, 93, 94, 95, 96 and 97, which
you will note are all concerned with the City of Greeley, and
ask if you utilized these particular exhibits at all in con-
nection with your analysis of the attractiveness of the
Greeley market?
[243] A. Yes, I did.
Mz. Scnorerxe: Here are Your Honor’s copies, sir.
(Counsel handed exhibits to Court.)
[244] Mr. Scuoerxe: In view of the fact that the witness
has used these in his analysis, I respectfully move that
these plaintiff’s exhibits, 87 through 97 for identification,
be received in evidence.
>. . * * *
[246] Tue Covrr: 87 through 97, inclusive, are received.
( Whereupon, Plaintiff’s Exhibits
87 through 97, inclusive, were
received in evidence.)
Q. Now, Dr. Walsh, I would like to ask you if you would
go through Plaintiff’s Exhibits 87 through 97, inclusive, and
indicate in what way you used them in your analysis of the
City of Greeley as a banking market?
A. Well, Document 87 shows that the population of
Greeley increased from 26,300 in 1960 to 38,900 in 1970.
Document 89 shows that there was a 47.8 percent in-
crease in population over the past ten years for the City
[247] of Greeley.
Q. Did you carry it back beyond ten years?
A. Document 89 carries it back for decades, running it
__ aieenditi
5~POSSIBLE BLURRED PAGES
70
back to 1920, which would be a 50-year period. The City of
Greeley has increased in population by 255 percent. Also,
as shown on Document 89, is a comparison with the State
of Colorado population increase and the increase of the
United States. The City of Greeley population growth is
nearly double that for this whole State of Colorado, which
had a population growth of only 25.8 and nearly four times
that of the growth of the United States as a whole, which
is 13.3 percent over the last decade. Also shown in Docu-
ment 89 is the greater population growth for Weld County
as compared to the other counties mentioned just a moment
ago. Weld County has had a population growth of 23.4
percent in the last ten years. El Paso County has grown
at nearly three times that rate, 64.2 percent. Boulder
County has grown even more, 77.6 percent, and Logan
County has had a slight decline, 7.1 percent, in the last ten
years.
Q. How about Plaintiff’s Exhibit Number 90 in evi-
dence?
A. This shows gross sales, 1960 to 1970 in Weld County
and in the City of Greeley. It shows that for the City of
Greeley gross sales increased from 95.8 million in 1961 to
55.8 million in 1970, or an increase—a percentage [248]
increase of 282 percent. It shows for Weld County nearly
as large an increase of gross sales or gross business activity
increasing from 148.7 million in 1961 to 444.2 million in
1970. A 215 percent increase over the period.
Q. I believe that’s 219 percent, is it not?
A. 219.6 percent.
Q. How about Plaintiff’s Exhibit Number 917
A. Exhibit 91 shows the growth in retail sales from
1960 to 1970, not quite as rapid as gross business activity.
As a matter of fact, one-third as rapid. Retail sales for
the City of Greeley increased from 82 million in 1961 to
162 million in 1970; nearly doubled. Similarly, in Weld
County the increase was from 121 million in 1961 to 226
million in 1970, a 94 percent increase in retail sales.
Shall I just continue?
Q. Yes, just continue on as rapidly as you can, Dr. Walsh.
A. All the indicators are up. Exhibit Number 92 shows
that electric power consumption has increased from—in
this case from 54.7 kilowatt hours to 152.6 kilowatt hours,
ten years later. 178.7 percent growth in electric power con-
BOOK TOO LARGE FOR FILMID
—————
71
sumption. That’s a good indicator of consumption of en-
ergy as is the next one—or not quite the next one. Later—
a later document in this series.
Document 93 shows the increase in number of [249] tele-
phones, which kind of follows along, although it is a much
lesser rate than the other indices. It shows the telephones
increased in the City of Greeley from 11.5 thousand in
1960 to 17.5 thousand in 1970, a 51 percent increase over the
ten-year period,
The Document 94 shows——
Q. Dr. Walsh, these figures are on the record, of course,
and in your comments I think perhaps we might save time
if you could concentrate on the percentage increase unless
counsel for defendants object.
A. Okay.
[250] Q. Now, Document—Plaintiff’s Exhibit No. 94 in
evidence.
A. This shows for postal activity for the City of Greeley
44 percent increase over the last ten years in number
of daily deliveries, Exhibit 95 shows for rural deliveries,
out of the Greeley office an increase of 27 percent over the
last ten years.
Exhibit 96, again for the City of Greeley, shows the
increase in the number of water taps—a percentage increase
from 1960 of 36.9—37 percent.
Exhibit 97 shows that for building permits issued for
residential building, both single and family and apartments
this shows substantial construction activity throughout the
period with some ups and downs, For example, in 1970
there were 358 apartments units constructed at a cost of
$3.4 million, and this is substantially more than any of the
activity in previous years in the department of construc-
tion. The same thing is true for single-family dwellings in
1970, substantially larger number of single-family dwell-
ings constructed. 256. Total value, $4.9 million. Generally
a substantial construction activity in that area.
I was just visiting the area last week and noted the
large number of apartment houses going up, and I was
quite amazed.
Q. Now, as a result of your study of Plaintiff’s [251]
Exhibits in Evidence 87 through 97, inclusive, Dr. Walsh, did
you come to any conclusion with regard to the economic
condition of the City of Greeley?
iG-POSSIBLE BLURRED PAGES
72
A. It’s a boom town. It’s a rapidly growing community.
It’s a tremendous growth area, you know. It’s just tremen-
dously attractive to a banker in the growth market. And,
to an economist by the way too.
Q. Now, Dr. Walsh, I show you Plaintiff’s Exhibit for
Identification No. 98, 99, 100,, 101 which you will note are
concerned with the Greeley area, and ask you if you con-
sidered those particular documents in connection with your
analysis in this case?
A. Yes, I did.
Mr. Merzcer: What numbers?
Mr. Scuoerxe: 98 through 101.
Let me withdraw that.
[252] Mr. Scnorrxe: Your Honor, since the witness used
Plaintiff’s exhibits for identification 98, 99, 100 and 101 in
his analysis, we move at this time that these exhibits, that
Plaintiff’s Exhibits 98, 99, 100 and 101 be received in evi-
dence.
Tue Court: Subject to the correction they are received.
(Whereupon, Plaintiff’s
Exhibits 98 through 101
were received in evidence.)
Q. Dr. Walsh, would you go through Exhibits 98 through
101 and tell us as rapidly and as briefly and as cogently as
you can how you used these particular documents in con-
nection with your analysis off the economic attributes of
the Greeley area, in quotes.
A. The Greeley area includes these surrounding small
towns within roughly a ten-mile radius, And it shows popu-
lation is growing there as one would expect in this kind of a
[253] greater Greeley area, but not as rapidly as in the city
population. The city population increased nearly 30 per-
cent during the last ten years. 45,228 to 58,500. That’s
shown on Plaintiff’s Exhibit No. 98.
Electric power consumption for the Greeley area shows
a substantial increase from—well, it increased by 115 per-
cent over the ten-year period in greater Greeley area.
Telephone installations, the number of main telephones
increased by 48 percent, nearly 50 percent; nearly half
again over the ten-year period.
4
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3
A
3
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73
Q. What do you mean? Are you referring to—
A. That’s the document 99.
And gas sales in the Greeley area includes these sur-
rounding towns to the city of Greeley, they showed sub-
stantial growth. This too is an indication of energy con-
sumption as is electricity and there is an indication of
economic activity. The volume increase of natural gas con-
sumption increased by 127 percent over the ten-year period.
Q. To which document are you referring now?
A. That’s Document No. 100.
Q. And I believe you commented a moment ago on
electric power consumption in the Greeley area? I don’t
believe you mentioned specifically the document that you
were referring to. Would you do so for the record, please.
A. Document 101.
[254] Plaintiff’s Exhibit 101?
A. Right.
Q. Dr. Walsh, yould you tell us that what conclusion, if
any, did you draw from Plaintiff’s Exhibits—what con-
clusion—I withdraw that. I’ll start again.
Dr. Walsh, would you tell us what conclusions, if any,
concerning the Greeley area you drew in your analysis of
Plaintiff’s Exhibits in Evidence 98 through 101 exclusive?
A. Well, the area is a rapidly growing economic area
and as such it would be attractive to potential entrants. It
would be economically attractive. It would be an area where
profits could be made. A rapidly growing area. And thus it
would be attractive to outside banks.
[255] Tue Witness: Economie activity, deposits, loans,
and other services. A rapidly growing economic activity is
very attractive to banks.
Tue Covrt: Potential business, I suppose?
Tue Witness: Yes.
Mr. Merzcer: I’ll be back to that, Your Honor.
Tue Witness: Would you argue the reverse?
Tue Court: They’re not interested in any ghost towns,
I don’t suppose.
Tue Witness: I don’t think so.
Tue Court: They’re not going to establish a branch
up at Tincup.
[256] Q. I would like to show you Plaintiff’s Exhibits for
Identification Numbers 102, 103, 104, 105, 106, 107, 108, 109,
_————— 7
|
110, and 111, and I would like to ask you whether you used
Plaintiff’s Exhibits for Identification Numbered 102 through
111 inclusive in connection with your economic analysis in
this case.
Mr. Merzcer: Before we get to that, we have no ob-
jection to these documents, Your Honor.
A. Yes.
74
Tue Court: Very good, Mr. Metzger. We will take
them all in evidence then without further ado, 102 through
111.
(Whereupon, Plaintiff’s
Exhibits 102 through 111
were received in evidence.)
Q. Now, in this connection, Dr. Walsh, you will notice
that these particular documents are concerned with sta-
tistics in Weld County, and I wonder if you would go
through them as cogently as you can and indicate generally
in what way you used these in connection with your——
[257] A. Plaintiff’s Exhibit 102 shows commercial de-
velopment in Weld County from 1959 to 1969, an increase
of 65.7 percent over the ten-year period to a level of 14,213
persons.
Plaintiff’s Exhibit 103 for Weld County personal income,
1929 to 1968—I think the most relevant is the last nine
years—personal income increased from 1959 to 1968 by
77 percent to a level of $211.9 million personal income in
the county. These are U. S. Department of Commerce
figures, and over the entire period of from 1929 this same
exhibit shows substantial increase from the level at that
time of $28.8 million.
The next Plaintiff’s Exhibit 104 for Weld County shows |
total earnings by industrial sector, that is by farming —
broken out from total nonfarm, which in turn is broken out —
by government and private, and private is in turn broken
down by manufacturing, mining and so on, it shows sub- —
stantial growth in several of these sectors and substantial —
total growth. From 4950 to 1968, total earnings increased —
from 70.3 million to 164.6 milion. I think particularly im.
BOOK TOO LARGE FOR FILMI
——
75
portant is the fact that manufacturing earnings grew from
$2.8 million to 1950 to $18.2 million in 1968, many times
increase in manufacturing.
It shows the economy is diversified. Very important I
should think to stability in amount of growth. It shows
that wholesale and retail trade has advanced very sharply.
Q. I wonder if I could direct your attention to the [258]
second page of that, the same thing in percentage terms,
and ask if you would care to direct your remarks to the
second page.
A. Oh, page 2 of this document shows that farm earnings
declined from 49 percent of total economic activity in
1950 to 28 per cent in 1958. It is no longer an economy
dependant wholly or even substantially on agriculture,
although agriculture is still very important.
It reflects government earnings have increased sub-
stantially from nearly 10 percent in 1950 to 20 percent in
1968. These are primarily people workiug there at the
Northern Colorado University.
Q. How about manufacturing?
A. Here again manufacturing employment in the county
has increased from four percent in 1950 of total employment
to 11 percent in 1968, nearly a threefold increase. As a
share of total activities ——
[269] Now, Dr. Walsh, we have discussed the resources of
the First National Bancorporation. We have discussed the
growth of the Greeley area, and the third factor I believe
you indicated that was of significance in determining
whether a firm was a significant potential entrant in a
_ market extension case was its capability in comparison to
_ other significant firms outside of that market. I wonder
_ if I could direct your attention to that portion of your
_ testimony—could you tell us—have you, on the basis of
_ your study of the various documents in this case, come
_ to any conclusion as to the relative capability of Ban-
/ corporation in contrast to other significant firms outside
_ the Greeley area in terms of its position as a significant
_ market entrant?
_ A. Well, there is good reason to believe that it’s one
_ of the most significant potential competitors in the Greeley
market.
Q. And on what do you base that conclusion?
MO ee vA
AING-POSSIBLE BLURRED PAGES
76
A. Well, several. Geographic proximity; less than 60
miles between the two cities. There is a main four-lane
highway to Denver from Greeley. Bancorporation is the
largest bank in the—the single largest bank in the state
and has the proximity in Denver as the lead bank and I
think also in relation to other holding company banks in
Denver, it The second largest single bank in Denver is
United. It’s already in Greeley. So, it rules them out.
Colorado CNB Bankshares [270] is one-half the size
but they potentially could I suppose. Central Bank and
Trust is one-fourth the size, It is one-bank holding com-
pany which rules them out. ABC, Affiliated Bankshares of
Colorado, is already in Greeley. Three banks. And all
nearby. That rules them out. Western Bancorporation, E
an out of state holding company is prohibited from acquir- ,
ing additional Colorado banks. Rules them out. First
Colorado Bankshares, Denver area holding company, is one-
fifth the size of the First National Bancorporation. So in
terms of the relative other potential entrants I should say
they are substantially larger and have substantially more
capability in that regard.
Q. Would you say that they are one of the most likely
entrants into the market?
Mr. Merzcer: Objection, Your Honor. Calling for con-
clusion of the witness of which the witness has no capacity.
Not an official of the Bancorporation.
Tue Court: Sustained.
Q. Now, in connection with the documentary evidence
which you have been testifying on, have you reached any
conclusion with respect to the competitive impact of the pro-
posed acquisition by First National Bancorporation of the
First National Bank of Greeley?
A. Well, the economic evidence I think is sufficient to
say that it eliminates a substantial potential of competition 4
[271] of the First National Bancorporation being on the
edge of the Greeley market.
Q. Dr. Walsh, I would like to show you what’s been
marked for identification as Plaintiff’s Exhibit Nos. 73, 74,
75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86 and ask you
whether you have used these exhibits in connection with
your analysis of this case?
A. Yes, Ihave.
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77
Q. And in what connection have you used Government’s
Proposed Exhibits 73 through 86 in connection with your
analysis?
A. This shows the concentration of the Greeley and
Greeley area market for commercial banking.
Mr. ScuorerKe: At this time, Your Honor, I would
respectfully move that Plaintiff’s Exhibits for Identification
Nos. 73 through 86 inclusive be admitted in evidence.
[272]
(Whereupon, Plaintiff’s Exhibits
Nos. 73 through 86 inclusive
were received in evidence.)
Q. Dr. Walsh, would you tell us in what way you used
Government’s Exhibits Nos, 73 through 86 in connection
with your analysis of this case?
A. Well, Plaintiff’s Exhibit 73 shows total assets of
commercial banks in the City of Greeley and Greeley area
and shows that First National Bank of Greeley has nearly
35 percent of the assets in the city and a little over 32
percent of the assets in the Greeley area. Its main com-
petitor, Greeley National and an affiliate of ABC Holding
Company, is only slightly larger. Of the total banks in the
area, the two largest have about 66 percent of the total
assets. The three largest banks have about 88 percent and
all would be holding company banks. As of June, 1970
they would have these ratios of assets.
Q. Assuming that First National Bank of Greeley were*
acquired by Bancorporation of Denver?
A. (Nods affirmatively)
Q. Now, would you go through the rest of the documents
as quickly but as thoroughly as you can and point out
briefly the significance of those particular documents with
regard to the matter you have just been testifying about?
A. Well, just about all these tables show that the First
National Bank of Greeley is the second largest bank in the
city [273] and the area, Just about all the tables show that
the same thing—show the same thing as Plaintiff’s Exhibit
No, 73, the one I just discussed, except for Table 1 on
commercial industrial loans, Exhibit 79.
Q. What does that show with regard to commercial and
industrial loans?
item sseeeccrresco2meresnsemmmmeannnnigs iia
LMING-POSSIBLE BLURRED PAGES
78
A. It shows that the First National Bancorporation is
the largest bank in both Greeley and the Greeley area in
that line of commerce, of the particular service activity.
The First National Bank has 40 percent of the commercial
and industrial loans in Greeley and nearly 39 percent in the
Greeley area, and this is superior to either the share of the
Affiliated Bankshares of Colorado or the United Banks of
Colorado.
Q. May I interrupt you just a moment, Mr. Walsh. It’s
been called to my attention that you indicated and that you
stated—perhaps you misspoke yourself—that the First Na-
tional Bank of Denver had 40 percent of the commercial
and industrial loans in the City of Greeley.
A. May I correct to First National of Greeley.
Q. You’re speaking of the First National of Greeley?
A. (Nods affirmatively)
Q. And you’re addressing yourself in that connection
with Plaintiff’s Exhibit 79?
A. Yes, sir.
Q. Linterrupted you. Had you concluded your discussion
[274] of the significance in your view of Government’s
Exhibits 73 through 86 inclusive?
A. Well, if you look at total assets or total deposits,
demand deposits, savings deposits, other time deposits of
individuals, total loans, commercial and industrial loans,
real estate loans, single-payment loans, loans to individuals
on installment basis, loans to farmers, you find in all cases
but one that the First National Bank of Greeley ranks as the
second largest bank in the city and that the three largest
banks have a very substantial share constituting a highly
concentrates market. Either taking the city itself or taking
the area as whole.
Q. Now, in respect to these documents that you have
just discussed and the previous documents that you have
already testified about, what effect if any would the ac-
quisition by Bancorporation of the First National Bank in
Greeley have on competition?
A. Well, I conclude that it would have an anti-competitive
effect on competition.
Q. In what ways?
A. Well, first, we mentioned this before and that is the
elimination of substantial potential competition by the
First National Bank of Denver in Greeley and in the Greeley
wh
P of sp
BOOK TOO LARGE —
79
area. It can’t help but entrench the First National Bank of
Greeley and the existing concentrated structure with 84
percent [275] of the market in the hands of three largest
organizations. The highly concentrated market leaders can
preempt new bank locations in the suburbs. They can dis-
courage——
i Mr. Metzcer: May I object to this entire line of response.
4 This is absolutely unsupported in the record from the time
: we started talking about entrenchmen
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