# Appendix — United States v. Marine Bancorporation, Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386414_0339%3A01 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1974 - **Citation:** 418 U.S. 602 ## Text Supreme Cuurt of the United States OCTOBER TERM, 1973 No. 73-38 UNITED STATES OF AMERICA, Appellant, —V,—— MARINE BANCORPORATION, THE NATIONAL BANK OF COMMERCE OF SEATTLE, WASHINGTON TRUST BANK, JAMES E. SMITH, COMPTROLLER OF THE CURRENCY ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON INDEX Page Docket Entries. 1 Complaint by the United States filed October 22, 1971 ......... 9 raed Answer to the Complaint filed November 22, * Intervenor's Answer to the Complaint filed December 8, 1971. 24 Defendants’ Answers to Plaintiff'g Interrogatories : No. 5(A)(2), (3) — 30 .. ³˙1w¹ 5 o·¹ꝗw- eta 44 I iach Äͤſ m 53 w h ¹-w-w- ecards ccs 60 77 ͥ̃ĩ³¹1TĩTm—TmTbC—C 0 cy 75 „„ phien es ceastsseieniaenncencacaetioeceanmsee extchcaabsenhir fas ecezciis 80 TO I crests sieecdessnccantinetecesecsees ctciceeen st. 84 . 87 — » ⁰ ] —⁰¹·¹ͥ²oäÄ˙ʃrĩ 89 a ii INDEX Page Plaintiff's Answers to Intervenor’s Interrogatories (Set. No. 1): „... asec enecin scccscs aca: 91 T. Pp ͤͤ 0 7˙ w TA 91 ( ·³·¹ cosa. 92 PPP 00õV f! 92 Deposition of Robert F. Buck taken August 16, 1972 93 Buck Deposition Exhibit 111i: 1514 Buck Deposition Exhibit ꝶ2 1516 Buck Deposition Exhibit . 1576 Buck Deposition Exhibit 4* — 1407 Buck Deposition Exhibit . 132 Buck Deposition Exhibit . 1358 Buck Deposition Exhibit 136 Deposition of Maxwell Carlson taken August 16, 1972 137 Carlson Deposition Exhibit 1... 152 Carlson Deposition Exhibit 2*.. ̃ 1273 Carlson Deposition Exhibit. 154 Deposition of Ralph J. Stowell taken August 16, 1972 157 Stowell Deposition Exhibit 1* 00 1432 Stowell Deposition Exhibit 2* 000 1433 Stowell Deposition Exhibit 3* 1393 Stowell Deposition Exhibit 44 1284 Deposition of Frank A. Abersfeller taken August 17, 1972. 195 Abersfeller Deposition Exhibit 1 0. 236 Abersfeller Deposition Exhibit 2"... 1391 Abersfeller Deposition Exhibit 3... 239 Abersfeller Deposition Exhibit 4... 240 Abersfeller Deposition Exhibit 3555. 1279 Deposition of Andrew Price, Jr. taken August 17, 1972 242 Price Deposition Exhibit 1-1* 0 1430 Price Deposition Exhibit 1-2* 00 ! 1429 Price Deposition Exhibit 1-3* 0 . 1428 Price Deposition Exhibit 1-4* 0 “ 1427 Price Deposition Exhibit 1-5* 0 -r 1426 Price Deposition Exhibit -W 13425 Price Deposition Exhibit 177777 1424 Price Deposition Exhibit 1-8* GR 1423 Price Deposition Exhibit 1-9* ß 1422 Price Deposition Exhibit 1-10* 1421 Price Deposition Exhibit 1-111171777ꝝ˖¶ :: 1420 * Deposition Exhibits which correspond to Government Exhibits are reproduced in the category of Government Exhibits. — INDEX Deposition of Andrew Price, Jr. taken August 17, 1972—Con- tinued Price Deposition Exhibit 1-12 . 1419 Price Deposition Exhibit 1-13* _.. 1418 Price Deposition Exhibit 1-144 1417 Price Deposition Exhibit 1-1 1416 Price Deposition Exhibit 1-16* 1415 Price Deposition Exhibit 1-17* 1414 Price Deposition Exhibit 1-18 — 327 Price Deposition Exhibit 1-19 * 1413 Price Deposition Exhibit 1-20 . 1412 Price Deposition Exhibit 1-21* . 1411 Price Deposition Exhibit 1-22* 0. 1410 Price Deposition Exhibit 1-23* 00 1409 Price Deposition Exhibit 1-24* 0 1406 Price Deposition Exhibit 1-25 — 1404 Price Deposition Exhibit 1-2% UwVſ — 1403 Price Deposition Exhibit 1-277 1402 Price Deposition Exhibit 1-2) 1401 Price Deposition Exhibit 1-29 . 1400 Price Deposition Exhibit 1-300 .! 1399 Price Deposition Exhibit 1-31iI1Ii1i1mwmT1mw ? 1398 Price Deposition Exhibit 1-32ꝛT:: “! 1397 Price Deposition Exhibit 1-33* 1396 Price Deposition Exhibit 1-344. 1395 Price Deposition Exhibit 1-35* 1393 Price Deposition Exhibit 1-36* 1394 Price Deposition Exhibit 1-3: ð 1392 Price Deposition Exhibit 1-3) 1391 Price Deposition Exhibit 1-39* 99 1389 Price Deposition Exhibit 1-40* 1390 Price Deposition Exhibit 2* 1433 Price Deposition Exhibit 3 —— 1432 Price Deposition Exhibit 44? 1593 Price Deposition Exhibit 55 . 1650 Price Deposition Exhibit 0) 1514 Price Deposition Exhibit 7ʒ777 1573 Price Deposition Exhibit; 329 Price Deposition Exhibit 9 — 1356 Price Deposition Exhibit 1000 1358 Price Deposition Exhibit 111144. 1357 Deposition of Dean W. Loney taken August 18, 1972 8 331 Loney Deposition Exhibit 112f . 1514 Loney Deposition Exhibit 2ùʒ 1573 Pretrial Order and attached Exhibits A through H, filed January 8, 1978... 364 Deposition Exhibits which correspond to Government Exhibits are reproduced in the category of Government Exhibits. .ͤͥͤͥͥ ¹²¹0ʃKʃ TTT. u. ͤ ⁵tsSpͥͤͥ·⁊˙—˙¹rQͤ —˙w 7 EO iv INDEX Page Transcript of proceedings held before the Hon. William N. Goodwin, United States District Judge for the Western District of Washington, on January 8, 1973: Appearances 446 Transcript of the proceedings —— — 447 Testimony of Robert E. Smith „ ——— —— 473 voir dire [57] 477 further direct [61] 479 Transcript of proceedings held before the Hon. William N. Goodwin, United States District Judge for the Western District of Washington, on January 9, 1973: Appearances — 510 Testimony of Robert E. Smith (resumed) —direct—[117] ä 511 —cross—[158] 533 —redirect—[183] . 849 Testimony of Warren P. Cooley Se go ee [19 11Tz————.——————— 555 —CTOSS— [2091 564 Testimony of Michael Marston direct [215114 ———————j —ͤ— —L—L—— 568 —cross—[264] 596 Transcript of proceedings held before the Hon. William N. Goodwin, United States District Judge for the Western District of Washington, on January 10, 1973: TIE sie wis ei ees 602 Testimony of Charles F. Haywood i et sy: | re 633 —cross—[378] 5 . 661 Testimony of Lloyd C. Billings direct [42511 688 —CTOSS— [444444 699 Testimony of Maxwell Carlson direct [459 708 Transcript of proceedings held before the Hon. William N. Goodwin, United States District Judge for the Western District of Washington, on January 11, 1973: Appearance 720 Testimony of Joseph C. MacMurray —direct—[485] — 724 —cross—[555] — 764 redirect [574] . — 776 INDEX v N Page Transcript of proceedings held before the Hon. William N. Goodwin, United States District Judge for the Western District of Washington, on January 11, 1973:—Continued Testimony of Richard G. Bennett —direct—[622] 804 —cross—([633] 810 —redirect——[645] 818 Transcript of proceedings held before the Hon. William N. Goodwin, United States District Judge for the Western District of Washington, on January 12, 1978: Appearances 820 Testimony of Betty Bruckner —direct—[654] 822 —cross—[656} 824 redirect [662] 828 Testimony of William F. Barrett direct 663] 828 —cross—[672] 834 Testimony of Leroy Johnson direct [6841 cccccceccececceseseeceveceeeceeeeeeseeceee 841 —cross—[687] 843 Testimony of Maxwell Carlson (resumed) ; —direct—[692] 846. —cross—[715] : 860 —redirect—[749] 881 Transcript of proceedings held before the Hon. William N. Goodwin, United States District Judge for the Western District of Washington, on January 15, 1973: Appearances 883 Testimony of Raymond A. Hanson —direct—[756] 884 —cross—[761] 887 —redirect—[773] 893 Testimony of Neil Degerstrom —direct—[774] 894 —cross—[779] 897 Testimony of E.D. McCarthy —direct—[780] 897 —cross—[785] 900 —redirect—[788] 902 Testimony of Arden Jacklin —direct—[789] 903 —cross—[793] 905 —redirect—[797] — 908 Testimony of R. Neil Williams —direct—[798] - 908 —cross—[802] 911 vi INDEX Page Transcript of proceedings held before the Hon. William N. Goodwin, United States District Judge for the Western District of Washington, on January 15, 1973:—Continued Testimony of Leonard Maxey : —direct—[B03] once . 912 —cross—[805] 913 —redirect—[807] 914 Testimony of Merton L. Howard direct [808 13 915 —cross—[811] 917 Testimony of Philip H. Stanton —direct—[814] 918 ' —cross—[846] 937 —redirect—([861] 945 Testimony of T. Robert Faragher direct [867] 948 —cross—[911] 974 Transcript of proceedings held before the Hon. William N. Goodwin, United States District Judge for the Western District of Washington, on January 16, 1973 :, Appearances oon... ee eeeeeeeeeeeeeneee- . 1007 Testimony of H. Joe Selby direct [969] — 1008 —cross—[979] — 1013 redirect [1018] 1036 Testimony of Nevins D. Baxter direct [1031] — — 1043 —cross—[1066] — 1063 Testimony of Robert K. Hurni direct [11321 .. 1102 Transcript of procedings held before the Hon. William N. Goodwin, United States District Judge for the Western District of Washington, on January 17, 1973: Appearances . 1115 _ Transcript of the proceedings 1116 Government Exhibits: GX A-l — 1148 GX A-2 1149 GX A-3 i. GX A-4 GX A-5 GX A-6 GX A-7 GX AB INDEX viii INDEX N 5 38881888588 885 85888188885 7 INDEX * ix Page GX H-18 1333 GX H-l4 1336 GX H-15 1341 GX 1-1-4 1346 GX I- I — 1347 GX I-l 7 POR FURTHER ANSWER AND BY WAY OF A SEPARATE AND mowmn ~ 6 ey 1 mln oe ose 4+ W & 0 . w E z f FEE EZ rg gs EZ 23 3 3 2 3 3 2 AFFIRMATIVE DEFENSE, the defendants allege that the anti- competitive effects, if any, attributable to the pending merger alleged in plaintiff's Complaint are to be judged and governed by the etandarés set forth in the Bank Merger Act of 1966 [12 U.S.C. 1828(c)) and if there are any anticompetitive effects resulting from the said proposed merger, such anticompetitive effects 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. Wherefore having fully answered plaintiff's Complaint, defendants pray that this action be dismissed, the injunction dissolved, and defendants have their costs and disbursements here in to be taxed. DATED November 22, 1971. By a Un Moen R. X. One of the attorneys for the defendants Daniel M. Gribbon R. A. Moen Charles Lister James Wm. Johnston COVINGTON & BURLING GRAHAM, McCORD, DUNN, MOEN, 688 Sixteenth Street, N. u. JOHNSTON ¢ ROSENQUIST Washington, D. C. 20006 1001 - 4th Avenue, 39th Floor Telephone: (202) 293-3300 Seattle, Washington 98104 Telephone: (206) 624-8300 A copy of the foregoing Answer of Defendants to Plaintiff's Complaint was airmailed on November 22, 1971, addressed to: Richard J. 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Aa l A Ee M — — — — * ‘ J 1 4 fe 4 1 - - > a eee eee ae adeomy-(e08eg rec — anonaz7as ; ‘co TILES 40 ö 40 Wve Mou au 2 emma ee | | : | r iv ! i| itt TI rt ras a PTT TTT pay i aes 1 . He it 1 I. iini i M 100% 4) tei cal | 1 —— uLvU4 — — — sae me i = Se 1 1 8 ; — — 1 — Lb on + te 4 — 4 — — ag gee rr —— rute N uors op yons og suos vez sua ‘peppe jou sen SOTAISS 31 (8) ‘peppe sen oofAes rSuSun (Pp) p p˖fSLUOO S fAAes man (€) hu ra vd oa ad SI0ZS9ITp IO sg ˙ο o souey (2) pos snos gp 20 pezreptsuoo YOTYA uo seed (1) Savas pogspfsuoo SorfAzes uoee TOF ‘OATZeWATZZe sua ut St tomsue sda 31 seofaaes butyuRG meu Bur 26330 pereptsuoo ‘L96T t Kaenuvg SOUTS ,, ALM (a) „ „ zeuaeun 23035 6 ON AAOAUBOZA SAU 45 0 =? — — Seems 1 ‘ eee Following is data relative to new banking services considered by WTB Since January 1, 1967: Ch of Banking Hours (1) Considered and discussed during February, 1971. : (2) ‘Participating were John C. Hilsen, Vice President; Leonard C. Decker, Vice President; F. Neale Bock, Jr., Vice President; William L. Hart, Vice President; William c. Counsell, ‘Assistant Vice President & Cashier; Donald L. Kirkbride, Vice President & Diregtor; William K. Scammell, Jr., Vice President & Director; Claude Flormann, Assistant Vice President & Assistant Secretary; Thomas L. Perko, Vice President; Eldon B. Partch; Assistant Vice . President and Robert J. St. Clair, Auditor. (3) Changing banking hours from 10:00 a.m. to 3:00 p.m. to 9:30 a.m. to 4:30 p.m. (4) Service was added March }, 1971. (5) N/A 299 cking Account (1) Considered and discussed during July, 1969. (2) Participating officers and directors were same as above #2 with the exception of F. Neale Bock, Jr., Vice President. (3) X-200 checking accounts to be exempt from service charges if minimum balance is $200 or more; $2.00 per month charge if balance arope below $200. (4) Service was added August, 1969. (5) N/A : Food Stamp Program (1) Considered and discussed in February, 1968. eh. (2) Participating officers and directors were the same as above with the exception of F. Neale Bock, Jr., Vice President. (3) Service was the sale of Food Stamps in our outlying offices for the State of Washington (Opportunity Pines and East Trent branches only). (4) Service was added February, 1968. (5) N/A Drive-In Visual Auto Teller (1) Considered and discussed beginning June, 1969. Interrogatory 9 (B) - WTB nace 1 46 aoe uae ro) r (2) Participating officers and directors were same as above plus Richard A. Stejer, Vice President and Director. (3) Service provides Visual Auto Teller equipment in lieu of drive-in island at South Hill Drive-In Branch under construction. Also considered for North-Monroe Drive-In Branch and East Sprague Drive-In Branch. (4) These installations were made at the South Hill Drive-In Branch which op d in J , 1970; at our North Monroe Drive-In Branch new building which opened December, 1970; and at our East Sprague Drive-In Branch remodeling; and in August, 1971, at our remodeled Downtown Drive-In Branch. (5) N/A Overdraft Loan Program With Check Guarantee Card Peature (1) Investigation assignment was made in October, 1967. Service was ‘considered and discussed continually until a decision was made July 15, 1968. (2) Investigation assignment was made to William L. Hart, Vice President with direct involvement by John C. Hilsen, Vice President and further participation by all officers and directors listed above. (3) Consideration was given to Overdraft Loan Programs and Check Guarantee Cards. (4) The decision was made not to provide an Overdraft Loan Program at that time (this service was added December, 1969 as an adjunct to Master Charge Card services and is called Master Check Loan). (5) Check Guarantee Cards have not been added as it is not regarded as profitable. Master Charge Cash-By-Mail (1) Considered and discussed in the Fall of 1969. (2) Dennis R. Patterson, Assistant Cashier initiated the service. Participating were John C. Hilsen, Vice President; William K. Scammell, Jr., Vice President & Director and Philip H. Stanton, President & Director. Cash-By-Mail allows any Master Charge cardholder to obtain cash by mail up to his cred?t card limit. Service was added December, 1969. N/A Interrogatory 9 (8) - WTB page 2 Page 3 TV_Auto Banking (1) Considered and discussed during the Summer of 1969. (2) Participating were L d C. Decker, Vice President; Richard A. Stejer, Vice President & Director; William u. Counsell, Assistant Vice President and Cashier; Donald L. Kirkbride, Vice President & Director; William R. Scammell, Jr., Vice President & Director; and Philip H. Stanton, President & Director. (3) Consideration of installation of TV Auto Teller units at new or remodeled locations. , (4) Service not added... (5) It was decided to use the Visual Auto Teller units instead. Superchek (1) Considered and discussed in late 1970 and early 1971. (2) Participating were Thomas C. Garrett, Assistant Vice President ; John C. Hilsen, Vice President; and John Schaar, Manager, Information Systems Department. (3) Superchek would provide a pre-authorized bill paying system for customers with direct transfer of funds to customer's accounts. (4) Service was not added. 2 (5) We did not believe it could be profitable. Freight Billing (1) Considered and discussed in June, 1971. (2) Participating officers were same as above #2. (3) To compute freight billings, process and debit shipper with credit to carrier's accounts (for local freight companies). (4) Service was not added. (5) We did not believe it could be profitable. Bank Card Embossing (1) Considered and discussed in July, 1970. (2) Participating were Dennis R. Patterson, Assistant Cashier; John c. Hilsen, Vice President. : (3) To emboss Master Charge Cards for another local bank. (4) Service was added July, 1970. (5) N/A a Interrogatory 9 (B) - WTB Bago 3 48 : : Se brad Sa} : ae 4 * te 2 (1) considered and discussed in October and November, 1971. (2) Participating were Dennis R. Patterson, Assistant Cashier; John c. Hilsen, Vice President; William K. Scammell, Jr., Vice President & Director; and Philip H. Stanton, President & Director. (3) To allow Master Charge preferred cardholders to skip the payment of December, 1971, without penalty. (4) Service was added in November, 19. (5) N/A Master Charge Special Purpose Checks (1). Considered and discussed in October and Movender, 1970. (2) Participating were the same four officers and directors as above. (3) To mail to all Master Charge cardholders Special purpose checks with which they could pay their motor vehicle license, income tax to the Internal Revenue Service and their property tax to Spokane County. (4) This service was added November, 1970. (5) N/A Master Charge Draft Processing Por Correspondent Banks (1) Considered and discussed in September, 1969. (2) Participating were Dennis R. Patterson, Assistant Cashier; John C. Hilsen, Vice President; William K. Scammell, Jr., Vice President & Director; and Philip H. Stanton, President & Director. (3) To process Master Charge sales drafts for correspondent banks in Montana and Washington. ( Service was added in September, 1969. (5) N/A = Washington Trust Bank Self-Employed Retirement Plan and Trust (Keogh Plan or HR-10) (1) Considered and discussed prior to Pebruary 7, 1968. (2) Participating were Kendall S. Wynstra, Vice President & Trust Officer; William K. Scammell, Jr., Vice President & Director; and Philip R. Stanton, President & Director. (3) To provide a self-employed retirement plan and trust under the Internal Revenue Service qualification letter of February 7, 1968. (4) Service was added February 7, 1968. . (S) N/A : Interrogatory 9 (B) - WTB page 4 a 49 h fit-s 1 P (1) Considered and discussed prior to May 28, 1971. (2) Participating officers and directors were the same as above. (3) 1 provide corporate profit-sharing trusts under the Internal Revenue Service qualification letter of May 28, 1971. (4) Service was added May 28, 1971. (5) N/A Public Works Trust Escrows (1) Considered and discussed prior to Pebruary 23, 1970. (2) Participating officers and directors were the Sam as above. (3) Te provide investment in Washington Trust Bank Savings Certificates of public contractors retainage funds on state, municipal and state agency contracts. (4) Service was added February 23, 1970. (5) N/A Correspondent DDA Process ing (1) Considered and discussed beginning February, 1967. (2) Participating were William K. Scammell, Jr., Vice President & Director; Thomas L. Perko, Vice President; Richard A. Stejer, Vice President & Director; Eldon B. Partch, Assistant Vice President; « @nd William L. Hart, Vice President. (3) Te process DDA for correspondent banks on our computer. (4) Service was added in 1967. (Ss) 7 : r Label Printing (1) Considered and discussed in January, 1968. (2) Participating was John c. Hilsen, Vice President. (3) To print continuous fore mailing labels on our computer print-out equipment for tomers as ded. (4) Service was added in September} 1968.. (5) N/A . Bank General Ledger Processing (1) Considered and discussed beginning in April, 1968. (2) Participating were John C. Hilsen, Vice President and Eldon B. Partch, Assistant Vice President. > Interrogatory 9 (B) - WTS Page 5 50 (3) To provide general ledger print-outs for correspondent banks. (4) Service was added in September, 1968. (5) N/A Labor Distribution (1) Considered and discussed in January, 1968. (2) Participating was John C. Hilsen, Vice President. (3) Process labor distMibution on a custom basis for industrial ts as ded. (A) Service was added March, 1969. (5) N/A Account Numbering System Preparation 0 (2) Considered and sense in November, 1968. ie (2) Participating — John C. Hilsen, Vice President; John Schaar, Manager, Information Systems Department; Robert J. St. Clair, Auditor; and William L. Hart, Vice President. (3) Provide computer print-out en multilith plates for specific customer, Selectrite Systems, Inc., for account numbering system. ( Service was added January, 1969. (5) N/A Bank Credit Card (1) Considered and discussed beginning in the Fall of 1966 with Arthur Kranzley Company survey--discussion resumed in Pall ot 1967. (2) Participating were Thomas L Perko, Vice President; John C. Hilsen, Vice President; William L. Hart, Vice President; William K. — Scammell, Jr., Vice President & Director; and Philip H. Stanton, President & Director. a (3) Provide a bank credit card. (4) Service was added in July, 1968. (5) N/A 25 ; I D i (1) Considered and 4i a in J 5, 1971. (2) Participating were John C. Hilsen, Vice President und Eldon B. . Assistant Vice President. (3) Te process installment loans on computer with necessary print-outs, ete., for correspondent banks. Interrogatory 9 (B) n. 2 page 6 * 51 Care 7 (&) Service was ada 4 July, 1971. (5) N/A Won-Bank General Ledger Proces: ing ) Considered and discussed in July, 1971. (2) Participating was John c. Nilsen, Vice President. (3) 0 process General Ledger posting with necessary print-outs as ~ required by non-bank bank customers. (4) Service was added December, 1971. (5) N/A Professional Billing - Accounts Receivable (1) Considered and discussed in January, 1969. (2) Participating was John C. Hilsen, Vice President. (3) To provide computer posting and handling of Accounts Receivables for doctors, dent ists, etc. f (4) Service was added June. 1970. (5) N/A Correspondent Savings Account Processing (1) Considered and discussed in July, 1969. (2) Participating were Eldon B. Partch, Assistant Vice President and John C. Hilsen, vice President. (3) To process posting, interest computations, statements (ete.) for correspondent bank's savings accounts. (4) Service was added February, 1970. (5) N/A Accounts Payable Processing (1) Considered and discussed in January, 1970. (2) Participating was John c. Hilsen, Vice President. (3) To post and print out Accounts Payables for bank customers. (4) Service was added April, 1970. (5) N/A Accounts Receivable Processing (i) Considered and discussed in April, 1968. (2) Participating was John C. Milsen, Vice President . (3) Processes Accounts Receivables for customers and Provides print-outs, including aging, as required. Interrogatory 9 (B) - WTS Page 7 (4) (5) 52 2 : Take N ° Service was added February, 1969. N/A Contract Programming @) Considered and di ain J y, 1968. Participating was John C. Hilsen, Vice President. Provides custom programming for bank customers, for computer use, on a contract basis. Service was added January, 1968. N/A Record Master (10 (2) (3) (4) (5) Considered and di ain J 7, 1969. Participating was John C. Hilsen, Vice President. Provides computer distribution and print-outs of "Income and Expense" ledgers for customers. Service was added September, 1970. N/A Interrogatory 9 (B) - WTB page 8 “UOFIEITOTFTOS sua 30 atusez su (5) SUOCTZEITOTTOS aua hu ra onpuoo sefotdue 20 a0aο f ‘TsOTZZO JO owen (¢) pa fotos TOWOZSNS terzuszod 20 zue 30 Ssoippe pue sue (z) $93eq (T) 8 793838 uopzea top tos uons yore oa SY surzods UT pezeoot zcuoagsno Terzuszod 20 z uogsno Aue JO sssufsnd 943 ‘TL6T PUR OL6ET ses sua butanp pogo tos OGN JO S Aotdus 20 ‘2z030e2Tp ‘Ze0TzZzJO Aue zcugesun seg €Z N 764550117541 Date __ potential customer 5-19-71 3-9-71 5-12-71 and Name of Customer or Name of Officer ___or_Employee esult of Solicitation Spokane Industrial Park, Inc. N. 3808 Sullivan Road Spokane, Washington Fidelity Mutual Savings Bank West 42nd and Riverside Avenue Spokane, Washington 99201 Spokane City Treasurer 2 subsequent Harry Bonck calls 7-17-70 Spokane Municipal Building Spokane, Washington American Sign & Indicator Co. 2310 No. Pancher Way Spokane, Washington 99220 Stephen D. Churchill Vice President Edwin J. McWilliams President Earl Sorsdahl Vice President/Treasurer Bert L. Sellin Vice President, Governmental Affairs John M. Horne Vice President Manager Walter F. CI, oti Vice Presidente $4,100,000 real estate loan No result To clarify the services of the Fiscal Agency Dept. and seek cooperation of the City Treasurer in connection with the depositing of funds to cover redemption of bonds and coupons. NBofc was appointed Fiscal Agent for the State of Washington effective April 8, 1971. A satisfactory arrangement was worked out with the City Treasurer to have all funds directed to the Fiscal Agency Dept. for the redemption of all bonds and coupons issued by the City of Spokane Established relationship shortly thereafter Protection Int. 23 Schedule I naae 1 2 ane ae Se ame T 55 Date Potential Customer 9-70 10-70 7-16-70 11-18-71 12-28-71 Name of Customer or Name of Officer or Employee _ Cascade Airways, Inc. Spokane International Airport Spokane, Washington 99219 Thomas J. Faure Gonzaga University Spokane, Washington 99202 Columbia Electric & Supply Co. East 3420-Ferry Avenue Spokane, Washington 99220 Columbia Electric & Supply Co. East 3420-Ferry Avenue Spokane, Washington 99220 Goofy's, Inc. West 340 Riverside Spokane, Washington 99201 Mr. and Mrs. John Key 2826 West Hoffman Spokane, Washington Mr. Steve Lewis 2827 West Hoffman Spokane, Vashington Walter F. Clift Vice President Ronald L. Bosi Assistant Cashier Gregory T. Faure James Lockwood Vice President Robert Cummings Vice President Don H. Linderoth Manager Charles R. Chadwick Vice President William c. Estep Vice President Don H. Linderoth Manager Don H. Linderoth Manager , Dave Key Checking account was opened. Credit was extended in 1971. 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Fearbay ( Te IS dd app v „ 4epuey] . ° 10 2 200 zunouy ; . . sepuey Buraedtorzaeg ‘ (a) N (v) SUNVG@ UZHLO MTN NOILVA4IOILUVd AAA OL ONITIIA SUBWOLSND uo LO-T-T ours LIMIT Wo GLA 40 SSBOXE NI SNVOT HOs SLsanday uA „dN ¹¹¹t l 30 queg * Pies os" toes — 7 200 % sen en 3 S amn „ 20; ques * e 9420 dam - ct Xoarsozzezur 3 Bs eee > 30 au 1978320 110 0009 OL-91-9 69-01-4 ues 0004 69-61-9 99-61-6 % 89-62-9 19-62-9 l . 30m 381 - 85 Northtown Drive-In Branch—February 25, 1963 Opportunity Pines Drive-In Branch—August 4, 1967 South Hill Drive-In Branch—January 13, 1970 (6) The annual operating profit (loss) for each office opened for business per above from the date of opening to date is shown below. The accounting conventions fol- lowed are noted in the footnotes in the answer to Inter- rogatory No. 58 and in general should not be regarded as being actual operating profits or losses because of difficulties in allocating income and expenses for main office or head office activities in previous years: Northtown Drive-In Branch 1963 thru 1965—not available 1966—8 23,718.62 1967—$ 47,484.97 1968—$ 91,041.70 1969—$107,719.00 1970—$ 76,522.07 1971—$ 15,686.92 Opportunity Pines Drive-In Branch 1967— ($23,668.99) Loss 1968— ($27,469.40) Loss 1969—($ 7,362.65) Loss 1970—($ 867.48) Loss 1971— $10,121.57 South Hill Drive-In Branch 1970 — ($79,371.80) Loss 1971— ($71,831.28) Loss (C) During the period January 1, 1960 to date, WTB has considered establishing de novo banking offices in Spokane County in addition to those listed above. (D) (1) The following areas have been considered suit- able for de novo banking offices: 1) Far North of Spokane 2) Shadle Park District. 3) In the area of Cheney, Washington 4) Wellesley Avenue, between Maple & Ash— Spokane 5) Baldwin & Ruby—Spokane 86 (2) As follows: 1) 2) 3) 4) 5) Far North of Spokane—1968 Shadle Park District—April, 1960 Cheney, Washington—Prior to 1-68 Wellesley Avenue—August, 1969 Baldwin & Ruby—April, 1970 (3) The reasons for considering establishment of of- fices at the above locations were as follows: 1) 2) 3) 4) 5) Far North of Spokane—Growth in population of area and expanding shopping center. Shadle Park District—Large shopping center and growth in population to the northwest. Cheney, Washington—The continued growth in Eastern Washington State College. Wellesley Avenue—Maple & Ash one way street feed from far north side of Spokane which has continued its growth and growth in professional and small retail buildings. Baldwin & Ruby—Growth in small business; large area within one mile of branch location, zoned for manufacturing and warehousing; rapid growth in bank deposits in market area, and in excess of five square blocks, rezoned for residence office from multifamily residence. (4) Applications were not made to bank regulatory agencies for approval to establish the above offices for the following reasons: 1) Far North of Spokane—First National Bank of Spokane opened a branch office in Five Mile Shop- ping Center and the area could not support two banking offices. 2) Shadle Park District—After complete investiga- 3) tion, we found at that time the area could not support two banking offices. Cheney, Washington—It was felt that the pres- ent and future growth potential did not exist to support another banking office and WTB would not have been permitted to locate a branch with- in the corporate city limits of Cheney. 87 4/5) Wellesley Avenue/Baldwin & Ruby—Investiga- tion was underway for information to make ap- plication for these two offices and was put aside after the announcement of our intent to merge with NBC. Interrogatory No. 48 (A) For the period January 1, 1955 to date state wheth- er (1) Marine or its directors, officers, employees, or other agents, or the directors, officers, employees, or other agents of (2) NBC or (3) WTB hold or have held op- tions to purchase stock of any Washington bank or of any corporation which holds or controls 3% or more of the stock of a Washington bank. (B) If the answer to (A) is affirmative, state: (1) The name and position of the holder of the. option; (2) The name and location of the bank or corpora- tion on whose stock the option is held; (3) The name, position, and address of the grantor of the option; (4) The terms and conditions of the option. DEFENDANTS’ ANSWERS TO PLAINTIFF’S INTERROGATORIES Answers to Interrogatory 48 For Marine and NBC: So far as is known to its management, for the period January 1, 1955 to date, Marine Bancorporation and its subsidiaries and the directors, officers, employees, or other agents thereof have not held options to purchase stock of any Washington bank or of any corporation which holds or controls 3% or more of the stock of any Washington bank. If such options are or have been held, it was with- out the knowledge of management of Marine Bancorpo- ration or its subsidiaries and would be held as private investments. For WTB: On the first day of December, 1965, WTB loaned R. L. Goedde $51,000 at six percent (6%) annual inter- est to be repaid in monthly installments of $500 per . d . month. R. L. Goedde is the Vice President and Cashier of Farmers State Bank of Uniontown at Uniontown, Washington, and the owner of 171 shares, which consti- State Bank of Washington from the Estate of aed G. Cordes and another five (5) shares from Martiis the said 171 shares together with some life insurance, pursuant to the terms of a pledge agreement which grants to WTB a right of first refusal to purchase the stock. WTB was also entitled to representation with one di- rector on the bank’s board of directors. The pertinent paragraph reads as follows: That during the term of this loan, or for a period of ten (10) years from and after date of this agreement, whichever occurs last, if the Borrower or their heirs, executors, administrators or assigns, receive, from time to time, a bona fide offer to pur- chase all or any part of their stock of the Farmers State Bank, Uniontown, Washington, and such offer to purchase is satisfactory to the Borrower, said Borrower or their heirs, executors, administrators or assigns shall immediately notify the Bank of said offer by Registered Mail at its Main Office and the Borrower or their heirs, executors, administrators or assigns agree to sell said stock to a person named by the Bank at the price and on the terms of the offer so made, said notice shall require the person so named, if it desires to exercise said right to pur- chase, to make said purchase within 10 days after such notice is received. WTB also holds a right of first refusal to purchase 5,817 shares, which constitutes 29.085% of the capital stock of Security Bank of Washington at Ephrata, Wash- ington. Gordon R. Fletcher, a Vice President and Direc- tor of the Security Bank of Washington died owning 29.085% of the bank’s capital stock. To pay death taxes, costs of administration, and other obligations of the es- tate, it was necessary to sell the decedent’s stock in the Ephrata bank. To prevent this stock from falling into. the hands of strange or unfriendly owners, William Wol- ford, President of the bank, arranged for a group of fourteen, all of whom were employees or officers of the bank, to purchase from the To finance the purchase, Wolford arranged with WTB ~ 8 f 7 2 b : stock. The names and these borrowers, the amount of their re- ve loans, and the terms of repayment are all set in the answers to Interrogatory 52. The pertinent paragraph of the pledge agreement reads as follows: That before Borrower shall sell or cause gle exchanged or transferred any part or portion of sai shares of stock hereinabove referred to, he shall no- tify Bank in writing by registered mail at the Bank’s address in Spokane, Washington, of his intention to sell such stock or cause it to be exchanged or trans- ferred, and in said notice the Borrower shall further state the amount he has been offered for the stock, and the price, terms and conditions of the proposed sale. In the event the said notice specifies a trade or exchange of said stock for property other re cash, the value of property to be exchanged traded for the said stock shall be set forth. For a period of 30 days from and after the mail- ing of said notice, the Bank shall have the exclusive right and option to name a person to purchase the part or portion of said stock proposed to be sold, or transferred by the Borrower for the price and upon the terms and conditions stated in the notice. Interrogatory No. 53 (A) State with respect to (1) Marine, (2) NBC, and (3) WTB, whether any of their directors, officers, em- ‘oyees, or other agents is serving or has served at any me since January 1, 1955 on the board of directors of any other bank located in Washington. — —— ᷑ . — — 90 (B) If the anSwer to (A) is affirmative, state with re- spect to each such individual: (1) His name and the nature of his affiliation with a defendant at the time of such service ; (2) The bank involved and its location ; (3) His length of service as a director of each bank. Answer to Interrogatory 53 For Marine and NBC: Two former directors of Marine and NBC and one present director of NBC have served as directors of other banks in Washington as follows: Keith Fisken served as a director of Washington Mu- tual Savings Bank and also as a director of Marine and NBC from 1955 to 1966. Arthur W. Faragher served as a director of Pruden- tial Mutual Savings Bank and also as a director of Ma- rine and NBC from January 1960 to January 1971. Winston D. Brown, a director of NBC since August 25, 1966, served as a director of Prudential Mutual Savings Bank prior to becoming a director of NB of C. For WTB: During the period January 1, 1955 to date and con- tinuing, an officer of WTB has served on a Board of Directors of two (2) other banks located in Washington. W. D. McLaughlin, i the Board of Directors of Farmers 91 PLAINTIFF'S ANSWERS TO INTERVENOR’S INTERROGATORIES (Ser No. 1) Interrogatory 14 With respect to paragraph 21 (e) of the Complaint state whether plaintiff contends that this paragraph, in and of itself, alleges a violation of §7 of the Clayton Act; and in further regard to said paragraph identify by city or county name, zip code numbers, or other rea- sonable delineation each of the “banking markets in other parts of eastern. Washington” and state whether you contend for each such “market” that it is a “section of the country” within the meaning of §7 of the Clayton Act, for purposes of this case. Answer to Interrogatory 14 No. See answer to Interrogatory 15, below. Interrogatory 15 With respect to paragraph 21(f) of the Complaint state whether plaintiff contends that this paragraph, in and of itself, alleges a violation of 7 of the Clayton Act; and in further regard to said paragraph state whether you contend that each or any of the “local mar- kets” referred to constitute a “section of the country” within the meaning of § 7 of the Clayton Act for pur- poses of this case. Answer to Interrogatory 15 No. Plaintiff contends that paragraphs 21(e) and (f) taken together allege effects in violation of §7 of the Clayton Act. With respect to paragraph 21 (e), plaintiff at this time lacks the information necessary to make the requested geographic delineations. With respect to para- graphs 21 (e) and (f), the “banking markets” and “local markets” referred to are “sections of the country” within the meaning of § 7 of the Clayton Act. | EEE EEE EET Interrogatory 16 ‘With respect to paragraph 21(g) of the Complaint state whether plaintiff contends that this paragraph, in and of itself, alleges a violation of §7 of the Clayton Act. Answer to Interrogatory 16 No. See answer to Interrogatory 17, below. Interrogatory 17 With respect to paragraph 21(h) of the Complaint state whether plaintiff contends that this paragraph, in and of itself, alleges a violation of 87 of the Clayton Act; * ee Answer to Interrogatory 17 No. Plaintiff contends that paragraphs 21(g) and (h) taken together all effects in violation of §7 of the Clayton Act. * * * 93 DEPOSITION OF ROBERT F. BuCK TAKEN AUGUST 16, 1972 DIRECT EXAMINATION BY MR. TORRE: Q. State your name, please? A. Robert F. Buck. Q Your address? A. 1611 Roanoke Way, Mercer Island, Washington. Q. Are you employed by the National Bank of Com- merce? Q. What is your position? A. Senior vice-president. Q. And what are your duties in that capacity? A. Well, they are multi, but in general I am in charge of business development for the bank. Q. And what does that encompass? A. Well, if I can recall correctly, I have reporting to me people who operate the BankAmericard, the so-called Business Development Department, which includes Ad- vertising, Marketing, Public Affairs, Governmental Rela- tions, the National Division, the Metropolitan Division, and in addtion I also have another small truncated opera- ton called Urban Affairs reporting to me. Q. Do you serve on any management committees of the bank? A. Yes. Q. Which ones do you serve on? A. Well, there is only one so-called management com- mittee on which I serve. There are a number of special committees on which I serve. Are you interested in them? Q. Yes. A. I am Chairman of the BankAmericard Committee, I am Chairman of the Business Development Committee, Branch Expansion Committee, I serve ex-officio on the Budget Committee. There may be some others. 94 Q. Are you Chairman of the Branch Expansion Com- mittee? A. Yes. Q. And what are your duties as the Chairman of the Branch Expansion Committee? A. Preside over its meetings primarily. But tech- nically I would assume that I would be responsible for analyzing and approving the applications of the branches that we submit to the Comptroller. Q. What means are available to the National Bank of Commerce to establish branches? A. Are you talking about de novo branches? Q. Yes. Are there other types? A. Yes, I think there are. Q. And what are the other types of branches that can be established? A. I am not sure I know all of them, but I know we can acquire branches by purchase, we can establish branches de novo in certain circumstances within the limitations of the rather stringent Washington law. Q. Do you know what that law is? A. I am not going to be prepared to say I know exactly. My general recollection is that we can establish de novo branches inside the City of Seattle, which is the head office of the bank. We can establish de novo branches in King County in which the City of Seattle is located, in unincorporated areas where we can establish facts justify- ing the bank on economic grounds. I believe in the rest of the state we are restricted to de novo branching only in areas that are incorporated in which there is no bank. Q. You can acquire banks in order to establish branches, is that correct? A. We can buy banks and make them into branches of our bank as I understand it. . Q. Can you promote the organization of banks and their chartering and then acquire them as branches? A. I don’t know. Q. Why don’t you know? A. Because, frankly, I haven’t tried to promote a bank for the purpose of branching it except in the sense that I 95 believe that we would assist independent banks to be established wherever we felt there was an expectation that a bank could be established, and we would probably desire to acquire almost any bank that was established ~ in the State of Washington under circumstances that would permit us to acquire it because the branching laws are so restrictive that outside of King County, we have no way to branch except by acquisition. Q. If you so assisted the establishment of a bank in an area where you thought the prospects for a bank were good, would you seek to insure that you would acquire that bank at some future time? 2 A. I am sure we would use any legal and fair means of trying to establish a basis on which we could acquire it, sure. ö Q. What means could you use to so insure the acquisi- tion of a bank that you were promoting? A. Well, I think that we would certainly offer to assist them in their organization, give them advice on how to go about setting up a bank. We quite possibly would be interested in assisting them to find management for the bank. We would hope that we would get the correspondent relationship with such a bank. In some instances I suppose we might be interested in making a loan to some of the people who would be stockholders for the purpose of acquiring their stock. Q. Would this be used to get leverage or some sort of relationship with them in order to acquire their stock at some future time? A. It depends on what you mean by leverage. I assume that we would be doing it because we felt that there would be some advantage. But what is leverage? Leverage is taking somebody to lunch too. Q. Has the National Bank of Commerce inspired in- dividuals to organize a bank and assisted the individuals in organizing a bank and chartering a bank? A. Yes. Q. What bank was this or what banks? 96 A. I only know of one, and I am not sure whether we inspired it, but we certainly assisted the Columbia Center National Bank in Kennewick. Q. Was it the intention of management of the National Bank of Commerce at the time it sponsored or assisted or promoted or inspired such a bank to be organized and chartered to eventually acquire that bank? A. Well, within my qualification to answer for the management of the bank, which is strictly limited, I really don’t know what the president of the bank or chief executive officer had in mind. I am a very competitive individual and I certainly hoped that we would be able to acquire the bank. Q. Do you know of other banks in the State of Wash- ington that have established branches by promoting or sponsoring the creation of banks and subsequently acquir- ing them? A. Ihave had no direct knowledge of that. Q. When you say you have no direct knowledge, what do you mean by that? A. Well, I have heard rumors that this has been done, but I did not participate and I have never talked to any- body who admitted that he had done it, so I frankly have nothing but general gossip as to the subject. Q. Do these sources of information lead you to be- lieve that other banks have done it? A. I am not—I don’t know that they have. I know that there is speculation that they may have, but I don’t know what the facts were, so it’s very difficult for me to say. Q. Was the assistance of the National Bank of Com- merce that was given to the Columbia Center National Bank promoters done with the knowledge and consent of the Comptroller of the Currency? A. Well, I don’t really know what he knew. He knew certain things that we were doing to assist the establish- ment of the bank. 97 Q. Did you have meetings with officials of the office of the Comptroller of the Currency regarding this matter? MR. MOEN: Pardon me, Counsel, are you referring THE WITNESS: The representatives you say? Q. (By Mr. Torre) Representatives for the Comp- troller himself or his subordinates. A. I never talked to the Comptroller. I believe I talked to some people from the Comptroller’s office in Portland on the telephone. I am not really sure whether I ever visited with them in person. I have been in the Comptroller’s office in Portland on a couple of occasions, but I really believe they were on behalf of branches of our bank and not in connection with this. Q. What role did you play in the organization of the Columbia Center National Bank? A. Well, let’s see, why don’t you give me some par- ticulars? This was a process that took a number of years, and I am not—and I was involved in consultations about the subject on many occasions, But what is it that you particularly want? Q. Generally speaking, what did you do with regard to A. I assisted in their search for a manager for one thing, I assisted in the effort to provide the economic justification for the branch, I think I discussed with Mr. Loney people who would be useful in the community in terms of their becoming directors and providing busi- ness to the bank. I believe I went over the articles and by-laws, the forms and procedures that they submitted to the Comptroller. I guess you would say I was involved in a good deal of it. Q. Did you assemble and help draft the application for the charter? A. I did not, but I am not sure but what some of our people helped on it. Q. Did you review that charter application before it went to the Comptroller of the Currency? 98 A. I think I did the second one, but I am not sure about the first one. Q. For the record would you identify who Mr. Loney is? A. Chairman of the Board of the Columbia Center National Bank. ö 7 Q. Was he the primary organizer of that bank or promoter? A. I believe so. Q. Would it be fair to characterize your position vis- a-vis the National Bank of Commerce from the Colum- bia Center National Bank as liaison in this organizational process? A. I think so. Q. Did you have veto power over any of the actions taken in the organization of that bank by the organizers? A. Certainly not. Q. Would they come to you for advice on a regular basis in their process of organization and chartering? A. I don’t think that there was any regular basis, but when Mr. Loney had questions, he occasionally called and wrote about it. I think he probably visited the bank and talked to me on a couple of occasions. Q. Would you explain the process and the procedure that was involved in organizing the Columbia Center Na- tional Bank and what the National Bank of Commerce did precisely to assist in its organization, specifically, property, building, facilities, equipment, management? A. Well, you are gong to have to refresh my memory on some of these as we go along. Q. What did they do with regard to the land upon which the bank was to be built? A. Well, we have to go back to how this all came about, I guess. Although I didn’t personally discuss it, my understanding is that we were approached by Allied Stores or Realbon, which I believe is a real estate devel- opment affiliate of Allied Stores, which was the developer of the Columbia Center Shopping Center to establish a branch in that bank—pardon me, that shopping center, ea 99 and my recollection further is that we probably explored whether it could be a branch and came to the conclusion that it could not be a branch unless they went ahead and organized the community as a city, and after this was done, and I don’t really know when I came into the pic- ture, but I believe this had all been explored coinciden- tally with the time that the establishment of an independ- ent bank was contemplated. Q. You mentioned that the National Bank of Com- merce could branch if the area was organized into a city; was any thought given to promoting that idea? A. I have no personal knowledge that it was, but on— I believe that it was from conversations that I have heard. I did not participate in it as far as I know. Q. Who would have knowledge with regard to this? A. I suspect the people in Allied Stores explored this because we undoubtedly told them that we couldn’t branch unless this was an incorporated area. Q. After Allied Stores came to you, that is the Na- tional Bank of Commerce, what did the bank do once it determined it could not branch de novo into the area in which the Allied Stores wanted a branch of your bank located? A. I don’t know who approached Mr. Loney or whether he approved us or whether others in the Tri-Cities com- munity approached us because these plans were general knowledge in the community. It’s a new area and a number of banks have been formed de novo in that area. So I honestly can’t tell you whether Mr. Loney approached us after discussions with others over there or whether we conceived the idea of trying to get a bank established in the area. But in any event, I did discuss it on a num- ber of occasions with Mr. Loney. Q. You mentioned that a number of banks had been organized in the area, what banks were these? A. Well, I think specifically the Bank of Richland, the Bank of Kennewick were both formed in the post-War years, and this is almost by definition true because there was almost literally nothing there until the War. Q. Were any banks formed since 1960? A. I don’t know. \ 100 \ Q. The banks you mentioned, are they still existing as independent banks or have they been acquired by other banks? : A. I believe they have been acquired. Q. Who have they been acquired by? A. The Bank of Richland I believe by the Old Na- tional Bank in Spokane, I don’t know who acquired the other one, the Bank of Kennewick. Q. Do you have any reason to believe that the Bank of Richland was sponsored by the Old National Bank of Spokane? A. No personal knowledge, but again it’s a matter of gossip. Q. A matter of gossip that it was sponsored? A. Yes. Q. If we will continue with the assistance that was given by the NB of C in establishing the bank, what did they do as far as acquiring the land on which to build the bank? A. They never did acquire it. You have to remem- ber that Allied Stores was not interested in a little ordi- nary independent Bank with no financial security and no expertise in that kind of a shopping center. It was their intention to make this the premier shopping center of Southeastern Washington, and they obviously approached us because they thought from the experience that they had in establishing shopping centers in King County that a bank of our size would be interested in being in this kind of a shopping center, and obviously, we would have been. But they were not at all interested in having just an or- dinary community bank I think in that shopping center because they wanted financial assurance that whoever signed that lease was going to be responsible, and they wanted to have a kind of a building built that would be a credit to the shopping center and would be the kind of a building that everybody else was going to have to build if they were going to be a tenant. This was one of the problems in establishing an independent bank, which by definition might have problems in meeting the financial commitments of that kind of a buildnig. 101 So it is my understanding that—well, I don’t know who is the lessee, whether it is an affiliate of the National Bank of Commerce and then there is a sub-lease to the Columbia Center National Bank, but I believe it is, so that in some way we are on the hook. Q. There is a ground lease, is that correct? A. Yes, there is a ground | „but I say I am not sure exactly to whom it is, whether it is the King County Building Corporation, which is a subsidiary of Marine Bancorporation as the National Bank of Commerce is or how that was done. But I am quite sure they wanted some assurance that we were going to provide some muscle to this entity, and we did. Q. Who would know the details of the arrangements involved in the lease, who were the parties on the lease and so forth? A. Well, that would be in our files. Q. Was there any provision, to your knowledge, writ- ten in the lease with regard to exclusivity, that is, that the Columbia Center National Bank or the National Bank of Commerce would be the only bank permitted in Columbia Center? A. I don’t know. I don’t remember reviewing the lease, but.my belief would be that there was not because I think they were aware of the fact they can’t do that. Q. Who financed and built the building for the Colum- bia Center National Bank? A. If it was the King County Building Corporation that was the ground lessee, then I believe they did and then entered into a lease agreement with the Columbia Center National Bank. Q. Who is the King County Building Company, who are they? A. This is—I believe the name has been changed re- cently, but at that time it was a wholly owned sub- sidiary of the Marine Bancorporation. Q. What is its new name? A. I don’t know, it’s Commerce something, but—that can be supplied. 3 Is it still a subsidiary of the Marine Bancorpora- 11 ³˙¹m ²˙ M 7˙ * 102 A. Yes. Q. Was it necessary for you acting as liaison for the National Bank of Commerce to give assurances to the Comptroller of the Currency that you stood behind and intended perhaps at a future time to acquire the Colum- bia Center National Bank? A. You have got two questions there. Q. Well, let’s take the first one— MR. HARTMAN: You have got three questions, the necessity of it all. THE WITNESS: What is the question now? MR. TORRE: I will break it down. Q. (By Mr. Torre) In your role as liaison for the National Bank of Commerce to the Columbia Center Na- tional Bank, was it also necessary for you to make known the intention of the bank, the National Bank of Com- merce, to stand behind Columbia Center National Bank? A. We gave the Comptroller indirectly through his regional office assurances that we would supply manage- ment and that we would supply all assistance that might be required to make this a viable, independent bank. Q. Did you indicate to him that you had hopes of eventually acquiring this bank as a branch? A. I wouldn’t be surprised. I don’t think that is a secret. We have ambitions to acquire anything we can acquire. Q. Do you have a ball park figure on what the overall cost to the National Bank of Commerce was in this whole process of organizing, chartering and helping to operate the Columbia Center National Bank? A. I have a recollection that the building cost some- thing in excess of a quarter million dollars, but indirect expenses, I have no knowledge of. Q. Could you estimate? A. No, I have no way of knowing. How do you charge my time and people’s time? Q. How would you compare the cost of organizing that kind of a bank as opposed to establishing a branch office de novo in a similar location where you could establish a branch de novo? Let’s assume you could establish a — 103 branch de novo, how would you compare that cost with the cost of sponsoring a bank? A. Substantially less. Q. Substantially less? A. Yes. The cost of establishing a de novo branch would be substantially less because, obviously, you don’t have to go through all the legal steps of incorporating, selling stock and a lot of things that were done. We didn’t do them, but somebody did. Q. Did you assume the cost of issuing stock for Colum- bia Center National Bank? A. No. Q. Did you give loans to people to buy the stock in the Columbia Center National Bank? A. I never did. I honestly don’t know. Q. By you I mean the National Bank of Commerce. A. I don’t know. I was not involved in considera- tion of any loan for that purpose to the best of my recollection. Q. Do you know who was, if anyone was? A. I don’t know that anyone was, so I don’t have any recollection that anybody was. Q. Did the bank— A. Wait a minute, I believe we may have assisted Mr. Horning to acquire some stock, who is the president of the bank. Q. And how did you assist Mr. Horning in acquiring some stock? A. I am not sure that we did. I said I believe we may have made him a loan to acquire some stock. Q. Do you know if the bank indirectly assisted in- dividuals to get loans to purchase the stock from other financial institutions? A. No, I don’t know that they did. These stockholders were men of mostly independent means and they may have arranged for credit in various places, and in fact, some of them may have borrowed the money from some of our branches, but I was not involved in it and I don’t i 104 Q. The National Bank of Commerce assumed the costs of leasing the land and building the building for the Columbia Center National Bank, is that correct? A. The King County Building Corporation, I believe, not the bank. Q. The King County Building Corporation was a subsidiary of the Bancorporation? A. Yes, Q. The National Bank of Commerce would have to do the same thing if it were going to establish a branch, is that correct, they would have leased the land or buy the land, they would have to build the building? A. Correct. Q. Would the building be similar to the one built for the Columbia Center National Bank as the one built as a branch de novo for the National Bank of Commerce? A. If it were in that shopping center, it woud have to meet the specifications of the shopping center de- veloper, and it would be that kind of a building or they wouldn’t be there. Q. Who assumed the cost of the salaries for the management of the Columbia Center National Bank, was it paid by the Columbia Center National Bank or was it paid indirectly by the National Bank of Commerce? A. Well, Mr. Horning, who is the president of that bank, was a manager of one of our branches up until the time that he was elected or selected by the organizer to be a director or to be the president of the bank. I am almost positive that we never paid his salary after the bank was organized because I don’t see how we could. I 2 the r sad to your question, isn’t it? you woul ve, of course, to pay the salary of staffing a branch if you had established a de novo branch? A. Yes. Q. Would you agree that there is less risk involved in establishing a de novo—strike that. Would you say that there is less risk involved in sponsoring a bank and hoping to eventually acquire it as a branch than in entering de novo on the same site? A. Yes. 105 Q. Is there any reason, Mr. Buck, why the National Bank of Commerce couldn’t seek to establish branches in areas where it is not permitted to branch de novo by sponsoring organizational banks in those areas and eventually acquiring those banks as branches? A. Economic reasons. Q. What are those economic reasons? A. Well, there aren’t very many places in the state where there are not already sufficient branches, to be honest with you. You have to find a very promising growth situation in order to justify the expense, and this Columbia Center was one of those very promising new areas where a whole new community was being established. So it was an exceptional situation. MR. HARTMAN: Do you put any time connotation on the word eventually? Does that mean any time in the future or does it mean within five years? MR. TORRE: I will just stand on eventually. I don’t think it is necessary to qualify it. He answered it. A. Well, may I say that we have been using this word “sponsor,” I think we should better have a definition of what you mean by “sponsor,” because as far as I am concerned in a state where de novo branches is almost prohibited, there is certainly nothing illegal in encouraging the establishment of independent banks which you might, hope to acquire, and that is what I call sponsoring. So if we are using the word in the same sense Q. Yes, we are. A. Okay. Q. We are not contending that it is illegal. A. No, I understand you are not. Q. So you would say then if there was an opportunity in a community presented by prospects of future growth, that the bank would consider sponsoring a de novo bank? A. In the terms of assisting in the establishment of that bank within the legal metes and bounds of what we can do, why, yes, we would. Q. Were you ever told by any bank regulatory agency that this procedure was illegal or improper? A. Was I? No. el 106 Q. Was the bank, to your knowledge, ever told that? A. Not to my knowledge. Q. Was this question ever raised by the Comptroller of the Currency to you? A. No. Q. In your meetings? A. No. ; Q. Mr. Buck, I am going to give you a letter written December 29, 1967, apparently by yourself to Mr. Dean W. Loney— MR. MOEN: What is the date on that? Q. (By Mr. Torre) December 29, 1967. If you would look at that and read it over. (Brief pause.) A. Okay. Q. Have you read the document? A. Yes, sir. MR. HARTMAN: I haven’t read it yet. (Brief pause.) Q. (By Mr. Torre) Did you write this letter, Mr. Buck? A. Yes, sir. — Q. Did you write it in your capacity as vice-presi- dent for the National Bank of Commerce? A. Yes. Q. Did you write it in your capacity as liaison be- tween the National Bank of Commerce and the Co- lumbia Center National Bank? A. Yes. Q. Is that photocopy a true and accurate copy of the original letter written by you? A. It appears to be. Q. Why was it necessary for you to write that letter? A. Well, my recollection is that the Comptroller had denied the original application because—well, I guess I shan’t say because I don’t know. They don’t give reasons for denial generally, they just didn’t approve it, and in trying to ‘assist the organizers, in conversa- tion with the Comptroller, we ascertained that one of 107 the problems was weakness in proposed management, and so I wrote this letter as a commitment to the Comptroller to supply certain strengths to this new bank which ap- parently it didn’t have inside its own resources at the time. Q. Prior to the denial by the Comptroller of the first application submitted, was the National Bank of Com- merce involved in assisting in the organization of the Bank? A. Well, the time Sequence is so long that I don’t know to what degree we were. I would have to say we were involved, but certainly not as we were later on under this one. MR. HARTMAN: Have you made this a deposition exhibit yet? MR. TORRE: I will in due course. MR. HARTMAN: I thought I missed something. MR. TORRE: We will have it attached to the deposi- tion and identified as Buck Exhibit No. 1. (Buck Deposition Exhibit No. 1 marked for identifi- cation by the reporter.) Q. (By Mr. Torre) I will give you a document now, a letter dated January 8, 1968, to Mr. Kenneth W. Leaf, Regional Administrator of the National Banks, Portland, Oregon, from Mr. Dean Loney, and we will have this marked as Buck Exhibit No. 2, and I will ask you to read that and focus your attention on the third paragraph of that letter. (Buck Deposition Exhibit No. 2 marked for identifi- cation by the reporter.) (Brief pause.) A. Okay. That is the one that begins, “We further wish—”’ Q. The paragraph, “We further wish to call your attention—” A. Yes. Q. Does the letter referred to in the third paragraph of Buck Exhibit No. 2 refer to the letter identified in . 108 the record as Buck Exhibit No. 1 that you just ex- amined and identified? A. I can’t absolutely state that it does because there is no copy of it attached, but I assume it does. Q. Directing your attention to the upper right-hand corner of the letter, Mr. Buck, would you please identify, if you can, the initials? A. Andrew Price and Robert F. Buck. MR. HARTMAN: You are referring to the third paragraph of the January 8 letter? MR. TORRE: That’s right, “We further wish to call to your attention the attached copy of the letter—” MR. HARTMAN: Okay. THE WITNESS: Maybe that’s the fourth paragraph. MR. TORRE: I am sorry. Q. (By Mr. Torre) Do you have any reason to be- lieve that the letter referred to is not the letter you examined? A. No, the letter was for the purpose— Q. Of advising the Comptroller— A. —of advising the Comptroller we would assist these people. Q. Mr. Buck, I show you now a letter dated J uly 12, 1968, which we will identify for the record as Buck Exhibit No. 3. It is a letter addressed to you by Mr. Dean Loney; would you please examine that? (Buck Deposition Exhibit No. 3 marked for identifi- cation by the reporter.) Q. (By Mr. Torre) Do you recognize that letter, Mr. Buck? A. Yes, sir. Q. - Was it received by you from Mr. Loney? A. Yes. Q. Could you identify the marginal notations as being yours? A. Well, they appear to be. Q. I realize that copy is not the best, but if you could try— 109 A. It looks like my handwriting. I don’t have any present recollection of writing it, but it looks like my handwriting. Q. Can you read it? A. Yes, I can read some of it. Q. Well, the first paragraph of the letter, “This letter is written following the meeting with Frank Abers- feller and Jim Dunham in Seattle on Thursday, July 11.” Would you please identify those two individuals? A. Mr. Abersfeller is in charge of Correspondent Banking relationships for the bank, and Mr. Dunham, he’s in our Bank Property Administration Division. “ Q. What were their duties with regard to the Co- lumbia Center National Bank that necessitated their meeting with Mr. Loney? A. Well, Mr. Abersfeller in the Correspondent Bank- ing Division would perform his liaison function with organizers of banks with whom we expected to become a correspondent, and Mr. Dunham in this case I believe was involved because of the construction of the building at Columbia Center. Q. Directing your attention to the Paragraph No. 3 at the bottom of the first page, it says, “We need a clear definition and understanding of the management responsibilities as between the directors of the unit bank and the management of the National Bank of Commerce. For instance, many of the steps taken initially will have a bearing on the long range operation of the bank many years after it has changed from a unit bank to a branch bank. It would seem to make better economic sense that all plans point to the long range operation rather than the short term unit operation.” Did Mr. Loney have reason to believe that the bank was going to be acquired definitely by the National Bank of Commerce? A. Not in my opinion. Q. Why do you think they referred to the bank long after it became a branch, “on the long range operation of the bank many years after it has changed from a unit bank to a branch bank”? —— —— 110 A. Because I think that it is very logical that the owners—I mean that the incorporators had in mind that it would become a branch bank. They didn’t really want over the course of the next indefinite lifetime to be involved in the management of the bank. Q. Was he seeking to have the operations of the Columbia Center National Bank made compatible with the branch operations of the National Bank of Commerce? A. Well, you will have to ask him, I don’t know. I think that since Mr. Horning came from our branch system and that we agreed to assist these people in management, that it would have been logical to try and make it compatible with the thing that we knew how to do. Q. Can you read for us your notations below Para- graph No. 3 at the bottom of the page? A. I am trying, I believe it says, “We will give all requested”—which I assume is “requested”, “aid, and in our opinion any further helpful assistance; manage- ment will be by officers and directors plus assistance by NB of C.” That’s what I seem to have noted, and I assume those are my notes for a reply to his letter. Q. The second point, will you read that, please? A. “We agree to long range planning desirable.” Q. What do you mean by that? When you wrote that, what did you mean? A. I don’t really know, but I assume, and you have to remember that we admitted that we would like to acquire this bank, and within that framework, a long range plan that fitted into our system would be ex- amined, and I would say that today. Q. Would you say there is a general understanding between the bank and its organizers that the bank would be acquired at some future time? A. No, I did not. Q. There was no understanding at all, you say, that the bank would be acquired? A. Well, what’s an understanding, is that an agree- ment? Q. Well, do you understand by agreement that— 111 A. There was no agreement that the bank would be acquired. Q. You are saying there was no formal agreement, written agreement? A. There was no informal agreement either. Q. Was the expectation of the National Bank of Com- merce that they would acquire this bank at some time? A. Well, what is an expectation? Q. They hoped. A. It was our hope that it could be acquired. Q. Was it the expectation or hope of the organizers that it would be acquired by the National Bank of Commerce? A. Oh, again you going to have to speak to them. Q. To your knowledge from reading Mr. Loney’s letter. A. I can only say I think they thought it would be acquired by somebody at some time, but we hoped that it would be acquired by the National Bank of Commerce and that the assistance that we were giving to them in getting it established would add some inducement to them in addition to whatever the price might be some- time and make a sale to us. Q. Do you understand Mr. Loney’s language in Para- graph No. 3 as being in expectation of an eventual acquisition by NB of C? A. Well, it certainly consisted of that, yes. Q. Mr. Buck, I hand you now a letter—another copy of a letter, that same letter that you have looked at, Buck Exhibit No. 3, can you identify the handwriting in the margins of that letter? A. No, I cannot. MR. HARTMAN: Is that the same letter? MR. TORRE: The same letter, different marginal notations, MR. HARTMAN: Why don’t you introduce it? MR. TORRE: I don’t want to introduce it unless he can identify it. I only asked if he can identify it. THE WITNESS: No, I have no idea. Be 112 Q. (By Mr. Torre) Again referring to this letter of July 12, did you respond to that, do you recall, by letter or by phone? A. I don’t recall. If I responded by letter, there would be a letter in the file, I would assume. Q. Mr. Buck, I will show you now a document headed, “Credit Memoranda, Columbia Center National Bank, Kennewick, Washington,” and it is a series of memo notations by various individuals. At the bottom of the first page and the top of the second page is a notation, “12-21-67,” apparently that is December 21, 1967, with the initials, R. F. B.“ in capitalizations. We will have this noted as Buck Exhibit No. 4. Would you please look at that? That is in that group of docu- ments. (Buck Deposition Exhibit No. 4 marked for identifi- cation by the reporter.) Q. Directing your attention to the top of the second page—do you recognize this document or that part of this document with the initials “R.F.B.” as being authored by yourself? A. Yes, sir. Q. And is the R. F. B.“ Robert F. Buck? A. Yes, right. Q. Did you write this in the ordinary course of your business activities as vice-president of the National Bank of Commerce? A. I am sure I did. Q. At the top of the second page it discusses a meet- ing that you and Mr. Fields had and Mr. Loney and Mr. Leaf who were in attendance, and it says Mr. Leaf made it clear to you that it would be desirable to have Messrs. Sotwell, Funk, Broughton, Hemphill and Carrington ap- pear as part of the organizing group and not merely as prospective stockholders. He also indicated that it would be helpful to have some explanation of the supporting role of NB of C. First, would you please identify the individuals named in that first paragraph? Who is Mr. Fields? 113 A. Mr. Fields was the economist that we—I don’t know whether we—or who contracted with him, but we at least negotiated in and assisted in obtaining Mr. Fields to make an economic survey to justify the charter. Q. Do you recall whether the National Bank of Commerce paid for Mr. Fields’ fee? A. I believe we did not. I think this was part of the incorporation cost. Q. And Mr. Leaf is the Regional Comptroller of the Currency, is that right? A. He was at that time. Mr. Stowell, who you have interviewed, is now a consultant to Marine. He was then either executive vice-president of the bank or had just retired, I can’t remember which. Mr. Funk was at one time a senior credit officer in the bank, a resident of Eastern Washington, acquainted with this area and was about to retire or had already retired from the bank. Mr. Broughton is a member of the Board of Directors of the National Bank of Commerce who lives in the vicinity of the Tri-Cities area. Mr. Hemphill is another member of the Board of the National Bank of Commerce who has extensive interests in Eastern Washington, Idaho, and various other places. Mr. Carrington is another member of the Board of the Bank who had some Specific interest I believe in the Tri-Cities area, but I can’t remember what it was. I believe it was some land investments. Q. The third paragraph on that page refers to a phone call that you received from Mr. Leaf wherein he advised you that he was taking the liberty to advise you that the Bank of Prosser had filed an application for a branch at Columbia Center, and he urged you to expedite your re-application as much as possible because of it, and he did this, he said, because of the good re- lationship—or you said he did this because of the good relationship between his office and the National Bank of Commerce. What is the Bank of Prosser? A. I don’t know what it is today. I believe it is a branch of somebody else’s bank, but it was then an in- dependent bank. 114 (Discussion off the record.) Q. What was the Bank of Prosser at that time, Mr. Buck? A. It was an independent bank in Prosser. Q. How far is Prosser from Columbia Center? A. Somewhere between 20 and 30 miles. I don’t know exactly. Q. Was it normal for Mr. Leaf to advise the Na- tional Bank of Commerce of such activities by state banks? MR. HARTMAN: What do you mean by normal? MR. TORRE: In the normal course of business. MR. HARTMAN: He doesn’t know what the normal course of business is. Q. (By Mr. Torre) In the normal course of your business did you receive phone calls from Mr. Leaf advising you of the branching activities of state banks? A. Occassionally. We would get formal advice from Mr. Leaf's office on the filing of every application for a bank. Q. What do you mean when you said that Mr. Leaf was taking the liberty to advise you of the Bank of Prosser’s application? A. I have no idea because we would have received a letter from Mr. Leaf’s office advising us of the filing of this application, and I have no idea what motivated him to call us before the letter went out. But I didn’t think it was very secretive one way or the other. Q. Why did Mr. Leaf call you instead of the Co- lumbia Center Bank? MR. HARTMAN: He can’t answer for what Mr. Leaf did at one time or another. Q. (By Mr. Torre) If you can, answer. A. I don’t know. Q. Why do you think Mr. Leaf called you? MR. MOEN: He answered the question, I think, Coun- sel. He said he doesn’t know. MR. TORRE: He can give his opinion. MR. MOEN: If he can answer the question, I have no objection to him answering. 115 Q. (By Mr. Torre) Was it because you were a prin- cipal involved in the organization of the bank and that he felt you were the key person to communicate this to? A. I think at this time I had already written that letter to Mr. Loney saying what we would do for the bank, and Mr. Leaf knew about it, so that is possibly why. I don’t know what his motivation was. Q. Did you have any problems in finding individuals who were willing to invest in the stock of the Columbia Center National Bank? A. I had nothing to do with that. Q. To your knowledge, in your discussions with the other executives of the bank was there any problem in finding such individuals? A. In talking to Mr. Loney, my recollection is that he told me that they were not having any difficulties in finding people to subscribe. Q. Would you think that there would be any dif- ficulty in Spokane finding the kinds of individuals to subscribe to the stock of a bank being sponsored by the National Bank of Commerce? A. Yes, indeed. Q. Why? A. Well, because it is completely a different economic situation, and one little bit of a unit bank in Spokane is not a significant entry for the National Bank of Commerce into Spokane. So they really wouldn’t have any inducement, neither would we. Q. You are saying that the National Bank of Com- merce couldn’t make a go of it in Spokane with a small bank? A. I frankly think it would be in my personal judg- ment a difficult decision to know what kind of resources should be committed in a community the size of Spokane if you could only have one branch there, and this is my personal opinion. Q. What if you could branch the unit bank before you acquired it, would that change the situation? MR. HARTMAN: What was that question again? A. By definition we have acquired it when we branch it, so what do you mean? 1 116 Q. Before the unit bank was acquired—would be acquired by you, it could, could it not, if it were head- quartered in Spokane, branch in the City of Spokane, in the unincorporated areas of Spokane County, is that correct? A. Legally. Q. So if it did enter into Spokane by this means, it could branch in Spokane by— MR. MOEN: What bank? Q. (By Mr. Torre) The National Bank of Commerce. A. You say if it entered by any means, I don’t under- stand that it has entered. Q. Assuming the National Bank of Commerce spon- sered a unit bank in Spokane. A. Assuming that the National Bank of Commerce assisted in the establishment of a unit bank in Spokane? Q. With the intention of acquiring that bank at a future time. A. With the hope of acquiring that bank at an appro- priate time, it probably with the consent of the Comp- troller and a proper showing of economic need could branch within the City of Spokane. Q. Would you think the prospects of such a bank would be enhanced by such branching? A. Well, I certainly would think so or they wouldn’t be able to prove the need for the bank. Q. Do you believe that the National Bank of Com- merce lacks the resources to effectively back the spon- sored bank in Spokane? A. No, I don’t think they lack the resources, but— Q. Does it lack the managerial capability to staff such a bank if it has to? A. You asked me about the resources, I said I didn’t think it did, but there still is an economic judgment to be made as to what is to be gained, and I don’t know the answer to that. Does it lack the management; we have problems pro- viding management to our own branches, so it would be a problem to provide management to that kind of a bank. Whether we could do it or not, I suspect that we could, — 7 would be at the expense of some of our existing ranches. 117 Q. — you refer to economie judgment, what do mean A. Getting back to what I said a few minutes ago, I really ink thet-2 om secity uncend thes & would recommend to our management that we go into Spokane with one bank, one office, because I am not convinced that that would be a meaningful entry into the market of that kind for a — of our size and stature. Q. Youa ‘ts haere but it needs a large entry — t is strong A. The bank is strong. But what is the point, what 1 impact upon our earnings and diluting those earn- ings by subsidizing a losing proposition? Q. "Be ven think you could have an impact, though, on the Spokane market by such entry? A. With one office? Q. With one or possibly more offices. A. One or possibly more, certainly, we have already demonstrated that. Q. You are saying you could have an impact on the market? A. I thought I was saying that if we could have more than one office in Spokane, and how many more would be a question of judgment, we could make an impact—we could have an impact in Spokane. I am repeating, however, that it is questionable in my mind whether I would recommend that we go into Spokane with one office. Q. Has any study been done by the bank with regard to the cost of such entry into Spokane? A. Not to my knowledge. Q. So you really don’t know whether you could project the loss or not or gain on such a venture? A. We have not made that kind of study because we have no plans to move into Spokane by this means. Py tinge Mr. Verveer has some questions. That’s ave. MR. MOEN: I am going to interpose the same ob- jection to the same interrogator as I did this morning, . DDr 118 that our objection simply be continued as to all questions asked by the second questioner. MR. HARTMAN: Same objection. Q. (By Mr. Verveer) Mr. Buck, has the National Bank of Commerce ever considered acquiring the Farmers & Merchants Bank now headquartered in Opportunity, Washington? A. Yes. Q. Have you ever participated in discussions with the controlling shareholders of that bank? A. Yes. Q. Discussions which relate to the possibility of ac- quisition or merger? A. Yes. Q. And who are the controlling shareholders of Farm- ers & Merchants Bank? A. I don’t know who they are now. At the time of my discussions, my recollection is that there were three gen- tlemen named Hall, Klaue and Layman. Q. Approximately when did you have the discussions with these controlling shareholders? A. I can’t remember the dates. I haven't had any for some time, probably in the last year, but I recall several in the preceding years. Q. What recommendations did you make to the top management of the National Bank of Commerce in con- nection with the Farmers & Merchants Bank? A. What recommendations did I make? Q. Yes. A. My last one was that we told them to go fly a kite, we weren’t interested at the price they wanted. Q. So you did discuss price with them? A. They indicated to us what they wanted, we never indicated to them what we would pay. Q. Do you happen to recall how far apart you were? A. About one hundred percent. Q. Could you tell me in terms of dollars about how far apart you were? A. My recollection at the moment is that they wanted about five million dollars and we thought it would be closer to two, but maybe we would go two and a half. 119 But these are just figures that I am plucking out of a cold memory. Q. About when were the discussions or at least discus- sions in earnest ur Trust Bank over the bility of merger n? I have no personal knowledge; I did not partici- pate in them. Q. How serious were the negotiations between the Na- tional Bank of Commerce and the Farmers & Merchants Bank? A. I don’t think we ever got to be serious on our part because it was so apparent—at first they said that they really weren’t interested in selling because they wanted to manage the bank, they were happy with its growth, they thought they could build it up substantially, and then in the last discussions, I think I was given to understand that they had an opportunity to sell it to somebody else and that if we were interested, it was available at their price, and I made an analysis at that price as a function of a premium on deposits, as a func- tion of price earnings and came to the conclusion that it was entirely without reason and told him that we simply were not interested. Q. I will ask you, Mr. Buck, if you recognize the hand- writing on that document? Yes. Q. Whose handwriting is that? A. That’s mine. Q. Would you examine the three sheets of figures underneath the top sheet? A. Yes, those are some computations I made on the various methods of valuing the stock. MR. VERVEER: We offer this. MR. MOEN: May I look at that? (Brief pause.) (Buck Deposition Exhibit No. 5 marked for identifi- cation by the reporter.) Q. (By Mr. Verveer) Mr. Buck, would you describe this entire document now? A. I beg your pardon? mmm “““ 120 Q. Would you explain what this document is, what it consists of? A. Well, the first page are my notes on the locations of the three offices of a bank in Spokane that I think is called the American Commercial Bank or something like that, and the other four names are the names of the officers of the three offices of the Farmers & Merchants Bank of Rockford plus the name of a place where they had at one time applied for a branch. The other three pages are some computations that I made of the value of the stock of the Farmers & Mer- chants Bank. Q. Mr. Buck, why did you happen to put together on the first page the branch locations of Farmers & Mer- chants Bank and the American Commercial Bank? A. Because Mr. Emory Hall in explaining why he did not want to sell the bank said that he thought maybe some day it might be possible for them to acquire the American Commercial Bank, and that if he did, this would be a much more attractive prospect for acquisition by the Na- tional Bank of Commerce than they were at the moment. Q. You did not—or did you have any feeling that he was correct in that assessment or incorrect? A. Well, now, what assessment? Q. That a combined American Commercial Bank and Farmers & Merchants Bank would be attractive to the National Bank of Commerce? A. It’s obvious. Q. Well, enlighten me. A. Well, obviously these three offices in Spokane and they would have four outside, that was much more attrac- tive than four offices out in the bushes around Spokane. Q. Three offices inside would be regarded as attractive by the National Bank of Commerce? A. I can’t answer that, I said it would be attractive to me. Q. Mr. Buck, in your opinion would the Farmers & Merchants Bank be an adequate entry vehicle into the Spokane market for the National Bank of Commerce? A. I did not then consider that it was an entry vehi- cle into Spokane and I do not so consider it today. 121 . Why is that? A. Because it isn’t in the Spokane market. It is in the suburban market, and you might just as well talk about getting into Seattle by being in White Center or Burien or Northgate. It just isn’t in the market, it’s a suburban market and that’s all. Q. And so you are telling me that its location, that is the problem? A. Its location is definitely the problem. It only had one branch in the vicinity of Spokane and that was at Opportunity. Rockford is not even a suburban area and Cheney is quite a long ways from Spokane. Q. If I can restate your answer, you said that it is not an adequate entry vehicle, and the reason for that is essentially that its office is not in the commercial district of the City of Spokane? A. Yes. It does not give us entry into the downtown commercial area of Spokane. Furthermore, of course, there is always the problem of whether you can move an office even if we could have moved it to Spokane. I don’t know whether we could have gotten permission to do so, so I didn’t consider it was Spokane at all. Q. Would you explain very briefly the desirability of having an office in the commercial district of Spokane? A. Yes. From my standpoint as the officer responsi- ble for the National Division, we have certain national accounts that in the weighing of which bank to do busi- ness with give consideration to whether it has certain geographic coverage, and that would be one factor that would be important in my mind. There are certain businesses indigenous to Spokane that want to do business with a bank in Spokane for reasons of their own, prestige, prejudice, whatever it may be, that would be another reason why you would want to be downtown. The third reason would be that most of the business that is done in Spokane is done in downtown Spokane. I don’t know that I can think of any others, but those are three pretty good ones. 4 122 Q. All three of those reasons relate to the idea of servicing large customers, business-type customers rather than the idea of marshaling household accounts? A. Yes, and I know what you are getting at. I said that I would be concerned whether we could do what we wanted to do with one office. The fact is that one office might be able to serve these three sectors, but the cost of maintaining that kind of an office is very substantial, and unless you can develop deposits in the surrounding area to help defray those costs in maintaining that pres- tigious downtown office, you have got an economic problem. I can go farther. We are in the Crown Colony of Hong Kong, we have five offices in Hong Kong, most of our busi- ness could be done from one, we have five offices because we have developed indigenous balances in Hong Kong to offset the expense of maintaining the office, and I look at Spokane the same way. Q. Mr. Buck, I have a document, a four-page docu- ment headed “Minutes, Branch Expansion Committee, May 22, 1968.” I would like you to examine it. We might be able to expedite matters by stating that the matter we are particularly concerned with in this document is that on the third page headed “Lynnwood, Security Bank of Lynnwood.” Mr. Buck, do you recognize this document? A. I recognize what it purports to be, but I don’t— Q. What does it purport to be? A. Well, it purports to be an excerpt from the minutes of our Branch Expansion Committee of the National Bank of Commerce. MR. VERVEER: Mr. Moen, are you prepared to stip- ulate that you produced this document from the National Bank of Commerce files? MR. MOEN: I will so stipulate. Q. (By Mr. Verveer) According to these minutes, Mr. Buck, you were present at that meeting, is that correct? A. Yes. Q. May I ask you to read into the record the para- graph headed “Lynnwood, Security Bank of Lynnwood”? A. “Mr. Buck was asked to contact Jim Howells of the 123 Security Bank of Lynnwood concerning the acquisition of that bank by NB of C. That bank could branch into the proposed Lynnwood Shopping Center being developed by the Bon Marche which is expected to be as large as Northgate and the Tacoma Mall. If the bank cannot be acquired, the committee’s recommendation is to sponsor a unit bank to be completed in the shopping center.“ Q. Taking the first two sentences first, what possibil- ity do those two sentences suggest in terms of the acqui- sition of a bank with a branch additional to any offices it might have at the moment? A. I am not sure what you mean. Are you suggesting that it means we could acquire a bank which could then branch into the shopping center? Q. What about the suggestion that you could agree in principle to acquiré a bank, as to the present ownership of that bank to apply for a branch, then acquire the bank plus the branch? A. You are suggesting that, we didn’t consider it. As a matter of fact, I believe Mr. Howells had already ap- plied for another branch in the shopping center and that’s what is being referred to. Q. Why then were you asked to contact him? A. Because we for a long time had thought that it would be a desirable acquisition. Q. You say that would be a desirable acquisition, do you mean the Security Bank of Lynnwood? A. Yes, with or without the branch in that center. Q. In light of that could you explain the last sentence of the paragraph? A. In light of what? Q. In the light of your previous answer would you explain the last sentence of the paragraph? A. The last sentence means, as I understand it, that if we could not acquire the Security Bank of Lynnwood, the committee’s recommendation was that we try to spon- sor a unit bank in the shopping center. 2. Does your previous answer not seem inconsistent with that statement, the previous answer being that your primary concern was acquiring the Security Bank of Lynnwood but not— * 124 A. No, I didn’t say that. I said we have and probably would continue to have, if it were possible, an interest in acquiring the Security Bank of Lynnwood with or without the branch in that shopping center. What I meant was that we had been interested before the shopping center was proposed and we maintained that interest after it was proposed. I am also quite certain that at the time that this dis- cussion took place, Mr. Howells had already applied for a bank in that shopping center or a branch in that shop- ping center. I don’t know whether my recollection is correct on the timing, but I know that he did so apply, and I believe he may have a charter for it, as a matter of fact. So all I am saying is that we were interested in the Security Bank of Lynnwood, we would have been in- terested in acquiring his three branches regardless of whether he branched into th [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_IA40386414_0339%3A01. Public record. Not legal advice.