# Appendix — United States v. First National Bancorporation, Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385001_1562%3A01 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1972 - **Citation:** 405 U.S. 915 ## Text ee ee ee Say 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 BOOK TOO LARGE FOR FILMING 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 ] ; ] J I y, 4 t C J D E & D E D ra C, & D. De M. ] I~ tue Unsrrep Srares District Court vor THe Distaict or CoLoravo 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. * * . [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 d: See Sy Ven ne eee omAmw TMaAM tft ADCO CMD Cil AIiNG—! — 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 ‘ Pines ronmmerserne , — mi - MI IIDDEN PAGES 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? De an an ee all an en ee ee ee el ee el cn, | ee eee & 4" i i V7”_™ 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 - 49 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 NN a ae eae ee ee 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 sumpt [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385001_1562%3A01. Public record. Not legal advice.