Appendix — United States v. Connecticut Nat. Bank
Supreme Court brief1974
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In THE
Supreme Court of the United States
OcToBER TERM, 1973
No. 73-767
UNITED STATES OF AMERICA,
Vi
THE CONNECTICUT NATIONAL BANK, THE First NEW
HAVEN NATIONAL BANK, AND JAMES E. SMITH, COMP-
TROLLER OF THE CURRENCY
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF CONNECTICUT
INDEX
Page
Realovamt Docleet Tmtries <....s..:0ccseeccocesescecccerecccssoosecnsenestcnecoeateres 1
Complaint by the United States filed August 23, 1971............. 3
Answer of The Connecticut National Bank and The First
New Haven National Bank filed September 13, 1971 ........ 12
Order filed October 20, 1971 granting the motion of the
Comptroller of the Currency to intervene 18
Intervenor’s Answer filed November 22, 1971 19
Plaintiff’s Answer to Defendants’ Interrogatory No. 18......... 25
INDEX
of Proceedings held before the Hon. Robert C.
Zampano, United States District Judge for the District
of Connecticut, commencing October 10, 1972:
Appearances [2]
Testimony of Frederick Glantz
—direct—[43]
—cross—([83]
—redirect—[123] .
of Proceedings held before the Hon. Robert C.
Transcript
Zampano, United States District Judge for the District
of Connecticut, on October 11, 1972:
Testimony of Neil B. Murphy
—direct—[136] atieininiaseipaesetccamesnenieicsiensiesg
SS ae |.) ee
Transcript of Proceedings held before the Hon. Robert C.
Zampano, United States District Judge for the District
of Connecticut, on October 12, 1972:
pt _ | ee TE TT EEE TE
Testimony of Neil B. Murphy (continued)
—cross—[281] es
Transcript of Proceedings held before the Hon. Robert C.
Zampano, United States District Judge for the District
of Connecticut, on October 17, 1972:
Appearances [429]
Testimony of Neil B. Murphy (continued)
—cross—[430]
—redirect—[547]
Transcript of Proceedings held before the Hon. Robert C.
Zampano, United States District Judge for the District
of Connecticut, on October 19, 1972:
109
112
156
198
199
INDEX
Transcript of Proceedings held before the Hon. Robert C.
Zampano, United States District Judge for the District
of Connecticut, on October 20, 1972:
Testimony of Alexander Hawley (continued)
—cross—[773]
Transcript of Proceedings held before the Hon. Robert C.
Zampano, United States District Judge for the District
of Connecticut, on October 25, 1972:
Appearances [813]
Testimony of Alexander Hawley (continued)
—cross—[815]
—redirect—[860]
—recross— [864]
Testimony of Charlies J. Stokes
—direct—[868]
—voir dire—[872]
—direct—[879]
Transcript of Proceedings held before the Hon. Robert C.
Zampano, United States District Judge for the District
of Connecticut, on October 26, 1972:
Appearances [935]
Testimony of Charles J. Stokes (continued)
—direct—[936]
—cross—[1013]
Transcript of held before the Hon. Robert C.
Zampano, United States District Judge for the District
of Connecticut, on October 27, 1972:
Appearances [1124]
Testimony of Charles J. Stokes (continued)
—cross—[1141]
—redirect—[1199]
ili
Page
INDEX
of Proceedings held before the Hon. Robert C.
Zampano, United States District Judge for the District
of Connecticut, on October 31, 1972:
Appearances [1218]
Testimony of Merton J. Peck
—direct—[1219]
—voir dire—[1224]
—direct—[1226]
—cross—[1326]
Transcript of Proceedings held before the Hon. Robert C.
Zampano, United States District Judge for the District
of Connecticut, on November 1, 1972:
Appearances [1352]
Testimony of Merton J. Peck (continued)
—cross—[1353]
—redirect—[1422]
Testimony of Frank G. Chadwick
—direct—[1430]
—cross—[1479]
Transcript of Proceedings held before the Hon. Robert C.
Zampano, United States District Judge for the District
of Connecticut, on November 2, 1972:
Appearances [1511]
Testimony of William S. Krafchik
—direct—[1512]
—cross—[1583]
—redirect—[1626]
Testimony of Carl B. Adolphson
—direct—[1638]
—cross—([1643]
—redirect—[1658]
Testimony of James J. Terzakis
—direct—[1666]
Transcript of Proceedings held before the Hon. Robert C.
United States District Judge for the District
of Connecticut, on November 7, 1972:
Appearances [1679]
Page
Page
Transcript of Proceedings held before the Hon. Robert C.
Zampano, United States District Judge for the District
of Connecticut, On November 7, 1972:—Continued
Testimony of James J. Terzakis (continued)
—direct—[1680] 1032
—cross—[1700] 1043
Testimony of Paul H. Johnson
—direct—[1737] 1065
—cross—[1750] 1073
Testimony of Thornton B. Morris
—direct—[1757] 1077
—cross—[1767] 1083
Testimony of John L. Donovan
—direct—[1784] 1092
Transcript of Proceedings held before the Hon. Robert C.
Zampano, United States District Judge for the District
of Connecticut, on November 8, 1972:
Appearances [1836] 1123
Testimony of Thomas F. Richardson
—direct—[1865] 1189
—cross—[1881] 1149
Testimony of John L. Donovan (continued)
—direct—[1904] 1163
Transcript of Proceedings held before the Hon. Robert C.
Zampano, United States District Judge for the District
of Connecticut, on November 9, 1972:
Appearances [1999] 1218
Testimony of John L. Donovan (continued)
—cross—[2000] 1219
—redirect—[2021] 1231
—recross—[2024] 1233
Testimony of Robert J. Blinken
—direct—[2037] 1241
Testimony of James H. Gilbert
—direct— [2059] 1254
—cross— [2067] 1260
vi INDEX
Transcript of Proceedings held before the Hon. Robert C.
Zampano, United States District Judge for the District
of Connecticut, on November 9, 1972 :—Continued
Testimony of William Schmiedel
—direct—[2071]
—cross—[2082]
Testimony of Virgil DeChant
—direct—[2090]
Testimony of Leon J. Simkins
—direct—[2110]
—cross—([2116]
Testimony of Frederick M. Robison
—direct—[2122]
—cross—([2128]
Transcript of Proceedings held before the Hon. Robert C.
Zampano, United States District Judge for the District
of Connecticut, on November 15, 1972:
Appearances [2144]
Testimony of James E. Hagen
—direct—[2147]
—cross—[2164]
—redirect—[2169]
—recross—[2169]
Testimony of Michael F. Fountain
—direct—([2173]
—cross—[2177]
Testimony of Peter Stassa, Jr.
—direct— [2224]
—cross—[2238]
—redirect—[2253]
Stipulation of November 8, 1972, concerning business solici-
tation in Connecticut by representatives of New York city
banks
Transcript of Procéedings held before the Hon. Robert C.
Zampano, United States District Judge for the District
of Connecticut, on February 26, 1973:
Appearances [2]
Proceedings [3]
1308
1319
1821
1321
1324
1827
1352
1360
1369
1873
1876
1377
viii INDEX
Page
Government Exhibits :—Continued
Gx-49 1529
GX-50 1530
GX-51 S. 1531
GX-52 7 1532
GX-53 1533
GX-54 1534
GX-55 1535
GX-56 1536
GX-57 1537
GxX-58 1538
GX-59 1539
GxX-60 1540
GX-61 1541
GX-62 1542
GX-63 1543
GX-64 1548
GX-65 1545
GX-66 . 1546
GX-67 1547
GX-68 1548
GX-69 1549
Gx-70 7 1550
GX-71 1552
GX-72 . 1553
GX-73 1559
GX-74 1564
GX-75 1565
GX-76 1581
GX-77 1582
GX-78 1583
GX-79 1585
GX-80 1587
GX-81 ; 1588
GX-82 1589
GX-83 . 1590
CG oo cass ccs devcscsawescnsavectenesenessoes cars cceveseesssuenss 1591
GX-85 . 1692
GX-86 1593
GX-87 . 1594
GX-88 1595
I ric caeseasaseevevery tnt etvia piatiaeeerecser renee tae .. 1596
GX-90 1957
GXx-91 .... 1598
GX-92 1599
GX-93 1600
GX-94 1613
GX-95 . 1618
GX-96 1627
INDEX
Government Exhibits :—Continued
GX-97
GX-98
GX-99
GX-100
GX-101
GX-102
GX-103
GX-104
GX-105
GX-106
GX-107
GX-108
GX-109
GX-110
GX-111
GX-112
GX-113
GX-114
GX-115
GX-116
GX-117
GX-118
GX-119
GX-120
GX-121
GX-122
GX-123
GX-124
GX-125
GX-126
GX-127
GX-128
GX-129
GX-130
GX-131
GX-132
GX-133
GX-134
GX-135
GX-136
GX-137
GX-138
GX-189
GX-140
GX-143
GX-144
GX-145
~
seeeee
x INDEX
Page
Defendants’ Exhibits:
DX-1 1995
Dx-2 2003
Dx-8 2004
Dx-4 2004a
DXx-5 2010
Dx-6 2016
DX-7 2017
Dx-8 2018
Dx-9 2019
DX-10 2020
DX-11 2021
DX-12 2022
DX-13 2028
DX-14 2024
DX-15 2025
DX-16 2026
DX-17 2027
DX-18 2028
DX-19 2029
DX-20 2030
DX-21 2081
DX-22 2032
DX-23 2033
DX-24 2034
DX-25 2035
DX-26 2036
DX-27 2037
DX-28 2202
DxX-29 2203
DX-30 2204
DX-31 2205
DX-32 2206
DX-33 2207
DX-34 2208
DX-35 2209
DX-36 2226
DX-87 2227
DX-38 2228
DX-39 2229
Dx-40 2230
DX-41 2231
DXx-42 2232
Dx-43 2233
DXx-44 2234
DX-45 2235
DXx-46 2236
INDEX-
Defendants’ Exhibits :—Continued
DX-48
DX-49
DX-50
DX-51
DX-52
DX-53
DX-54
DX-55
DX-56
DX-58
DX-59
DX-60
DX-61
DX-62
DX-63
DX-64
DX-65
DX-66
DX-67
DX-68
DX-69
DX-70
DX-71
DX-72
DX-73
DX-74
DX-75
DX-76
DX-77
DX-78
DX-79
DX-80
DX-81
DX-82
DX-83
DX-84
DX-85
DX-86
DX-87
DX-88
DX-89
DX-90
DX-91
DX-92
DX-93
DX-94
xii INDEX
Intervenor’s Exhibits:
IX-1
IX-2
IX-3
IX-4
Judgment of the district court dated July 16, 1978 ..................
Notice of Appeal to the Supreme Court by the United States
dated September 12, 1973
Order of the Supreme Court noting probable jurisdiction,
dated January 7, 1974
2587
New Haven and Bridgeport SMSA's
of Banking Offices in Centra
red to No. of Offices in SM
ompa SA
1971
New Haven City
Remainder of SMSA 1/
Bridgeport City
Remainder of SMSA 2/
1/ Includes Guilford, added to SMSA in 19
42.2
57.8
100.0
40.7
59.3
100.9
63, and Bethany
and Branford, added to SMSA in 1963.
2/ Includes Shelton and Monroe,
added to SMSA in 1959, and
Easton, added to SMSA in 1963.
Source: Polk's Bank Directory, March 1955; Connecticut
, anking Commissioner, 1971
1582
GX-77
Ten Largest Connecticut Comnercia!l Banks
Offices Operated Outside Headquarters SMSA
December 31, 1954
Bank
Hartford National Bank,
Hart ford
Connecticut Bank & Trust Co.,
Hart ford
Connecticut National Bank,
Bridgepott
City Trust Co.,
Bridgeport
First New Haven Nat'l Bank,
New Haven
Fairfield County Trust Co.,
Stamford
Union & New Haven Trust Co.,
New Haven
Second Nat'l Bank of New Haven
Greenwich Trust Co.
New Haven Bank, N.B.A.
Total Outside Offices
Outside Offices
(By County)
New London 5
Middlesex 1
B
Litchfield 2
New Haven 2
Middlesex 2
New Londcn l
Tolland 1
B
Fairfield 1
0
0
0
0
0
0
2
Source: Polk's Bank Directory, March, 1955.
15
.Stete Nat'l]
Ten Largest Connecticut Comm
Offices Operated Outsid
December 31
ercial Banki
1971
ng Organizations
e Headquarters SMSA
Bank
Hartford Nat'l Bank
Connecticut Bank &
ford
Hartfor
Union Trust Co.,
New Haven
Bridgeport
Connecticut Nat!
Bridgeport
City Nat'l Bank
Bridgeport
Waterbury
Trust Co.,
Rank of Conn. ,
1 Bank,
of Conn.,
First New Haven Nat'l Bank
Colonial Bank & Truet Co.,
Outside Offices
(By County)
New Londen
Fairfield
Middlesex
Litchfield
‘Middlesex .
Fairfield
Hart ford
Tolland
Litchfield
Fairfield
New Haven
Litchfield
Middlesex
Fairfield
New Haven
Litchfield
Fairfield
.New Haven
Litchfield
New Haven
Fairfield
Litchfield
New Haven
Litchfield
New Haven
Fairfield
~
Ww
+. RS ee . Seen
w Shou 2 a SS «
1584
Outside Offices
Bank (By County)
First Conn. Bancshares, Hart ford
Hartford 1/ Middlesex
Litchfield
8
3
1
New London u
Second Nat'l Bank of
New Haven New Haven _2
Total Outside Offices ; 217
1/ All offices operated by three constituent banks
outside Hartford SMSA included,
Source: 1971 Annual Report, Connecticut State Bank Commissioner,
De Hove Banks Chartered By Domestic
. Companies tate
Bo. of Holding
De Hove Companies
Participetiog
Florida Unit }/ .b
aioe 4 —
— coat P~ - fo = /
Colorado Unit 3/
}-—--—} —y + iceman office
Rew York —--—A home 6
Minnesote Unie 3/ 3
Rew Jersey A district, home office
—y- f— yr
tie in towns ay ¥ lese than
Wisconsin Headquarters and cont counties
or. but home and branch office .
protection 7/
Statewide except for home office
restses* for cities of less than
00, 000
Vait 9/
- Unit 10/
California Statewide 11/
—— iy and contiguous
Wyoming Unit 13/
Missourt Unit 14/ :
Headquarters county 15/
Hampshire In yo ty town and withio 15
miles radius from headquarters
provided aot a 10 miles of
Total
1586
Fla. Stat. Anno., § 659.06.
Code of Va., $ 6.1-39,
Colo. Rev. Stat. Anno °. §. 14-3-1.
Laws of N.Y., Anno., Art. 3 § 105.
Ertectize et lew amended to limit home office
‘ed towns. On 76, statewide branching will be
tted, with home office tion in towns of
,000 or less. Art. 3 §§ 105, 142-a.
3/ Minn, Stat. Anno., § 48.34.
6/ WJ. Stat. Anno., § 17:9A-19,
Bf deste. Mise. Stat..Anno,, §.221.04,
Utah Code Anno., § 7-3-6.
Vernon's Civil Stat. of Texas Art, 342-903,
Towa Code Anno., § 524.1201.
West's Anno, Cal, Codes (Financial) § 500.
Maine Rev, Stat. Anno,, Title 9 § 1003.
Wo statute authorizing branches.
TAP ~Vernon*s Anno; Mo. ‘Stat. “§ 362.705.
15/ Page's Ohio Rev, Code Anno., § 1111.03.
16/ W.H. Rev. Stat, Anno. § 384-13:2.
ears
EEE Kee
Source: Department of Justice files.
Union Trust Co.
City Bet'l Bask of Conn,
Conn, Nat'l Bank
State Nat'l Bank of Conn,
Danbury Bank & Trust Co,
Hartford Nat'l Bank & Trust Co,
_ Colonial Bank & Trust Co,
Total
Note: Offices as of 12/31/71; deposits as of 6/30/70.
1/ Includes Danbury, Bethel, Brookfield and New Pair field.
2/ Offices opened since 6/30/70; deposits not available.
Source: See “dune 90,2970; 2971 Annuel -Report,
ox-02
Commercial Banks In
more, its —-& of SMBA
Baok Offices
Westport Bank & Trust Co. $ $ 45.4 21.2%
Union Trust Co. s 43.9 20.6
Conn. Nat'l Bank 4 35.7 16.7
City Nat'l Bank of Cona. 2 33.8 15.8
Merchants Bank & Trust Co.,
Norwalk ‘ 30.2 14.1
Westport Mat'l Beak 2 10.4 4.9
Fairfield County Nat'l Bank 2) 8.6 - 6.0
State Nat'l Bank of Conn. 1 5.6 6
Total“ 2 $213.5 200.0%
Mote: Offices as of 12/31/71; deposits as of 6/30/70.
1/ Includes Norwalk, Westport and Wilton.
Source: FDIC of a June 30, 1970; 1971 Annual Report
Conn. Bank iss ener.” , . ,
1589
Commercial Banks — In
; Bank
Home National Bank
Conn, Bank & Trust Co.
Colonial Bank & Trust Co.
Laurel Bank & Trust Co.
Meriden Industrial Bank
Meriden Trust & Safe Deposit
Total
ee |
Note: Offices as of 12/31/71; deposits as of 6/30/70.
1/ Include Meriden,
Source: FDIC of —_— June 30, 1970; 1971 Annual Report
ny oy RA oner.” , ' . _°
Colonial Bank & Trust Co,
City Nat'l Bank of Conn. 2/
Conn, Nat'l Bank .
_ Home Nat'l Bank
State Nat'l Bank of Conn,
Total
Note: Offices as of 12/31/71; deposits as of 6/30/70.
Includes Waterbury, tuck, Cheshire, Middlebury, Prospect,
se. Falls and Wolcott 1 located in New Haven County, ana the
Litchfield communities ‘of Thomaston, Watertown and Woodbury.
2/ Acquired Waterbury Nat'l Bank on 5/11/71.
Source: FDIC of oo June 30, 1970; 1971 Annual Report
Conn. Bank oner. . . , :
1591
Gx-84
Commercial Banks ating In
Hart ford i/
Bank Offices (iilions) Deposits.
Conn, Bank & Trust Co, 29 $ 699.7 46.1%
Hartford Nat'l Bank & Trust Co. 24 594.8 39.2
_ United Bank & Trust Co. . “ 53.7 3.5
Northern Conn, Nat'l Bank 8 27.1 1.8
Simsburg Bank & Trust Co. 4 26.0 1.7
South End Bank & Trust Co. 4 19.1 1.3.
Glastonburg Bank & Trust Co. 2 16.5 1.1
Constitution Nat'l Bank 4 15.8 1.0
Charter Oak Bank & Trust Co. 3 15.1 1.0
South Windsor Bank & Trust Co. 3 9.9 0.7
Citizens Bank & Trust Co. of
Glastonburg 2 9.3 0.6
Vernon Nat'l Bank (Tolland County) 3 8.5 0.6
New Britain Bank & Trust -Co. 3 6.5 0.4
Plainville Trust Co, 2 5.4 0.4
First Nat'l Bank of Suffield - 4 4.6 0.3
First Nat'l Bank of Enfield a | 3.2 0.2
New Britain Nat'l Bank 1 1.4 0.1
Manchester State Bank 1 2/ -
New England Bank & Trust Co, 1 2/
Total 105 $1,516.6 100,03
Note: Offices as of 12/31/71; deposits as of 6/30/70.
Includes Hartford, East A og West Hartford, Avon a =a
ton, East Grenby, Rast W » Enfield, Farmington Glastonbury
Granby, Manchester eg Hill, * Simsbury, South Windsor,”
Suttield, Wethersfield, ¥ ndscr and Winder Locks, all in Hartford
County, 11 in Middlesex County, and Andover, Bolton, Coventry
Ellington and Vernon in Tolland County.
2/ Offices opened since 6/30/70; deposits not available.
Source: — of i June 30, 1970; 1971 Anmirl Report,
Bank
State Nat'l Bank of Conn.
Union Trust Co.
Putnam Trust Co.
. Fidelity Trust Co.
Hartford Nat'l Bank & Trust Co.
Conn. Nat'l Bank
First Stamford Bank & Trust Co.
Conn. Bank & Trust Co.
Total
Note: Offices as of 12/31/71; deposits as of 6/30/70.
1/ Includes Stamford, Darien, Greenwich and New Canaan.
2/ Offices opened after 6/30/70; deposits not available,
Source: FDIC S of a June 30, 1970; 1971 Annual Report
Conn Sank Gonntse oner. , , ,
1598
Gx-86
wey Banks shi ting In
its
Bank Offices fons
New Britain Nat'l Bank 5 $ 57.9
New Britain Bank & Trust Co. 5 51.6
Plainsville Trust Co, 3 17.2
Southington Bank & Trust Co. 3 14.5
Citizens Nat'l Bank of Southington 2 6.5
Total 18 - $147.7
Note: Offices as of 12/31/71; deposits as of 6/30/70.
1/ Includes New Britain, Berlin, Plainville and Southington.
Source: FDIC S of Deposits June 30, 1970; 1971 Annual Report
Conn, Sauk Gunden oner.” , . -°
Rartford Nat'l Bank & Trust Co. 12 $100.9 60.4%
Conn. Bank & Trust Co, 7 47.8 . 28.6
Winthrop Bank & Trust Co. 1 9.6 5.7
Jewett City Trust ‘Co. Y 5.8 3.5
United Bank & Trust Co. 1 2.9 1.7
Total 22 . $167.0 100, 0%
Note: Offices as of 12/31/71; deposits as of 6/30/70.
1/ Includes New East Lyme, Griswold, Groton,
London, Norwich
ard, Lisbon, Montville, Old L » Preston, Sprague, Stonington
and Waterford,
Source: FDIC of nr Soa June 30, 1970; 1971 Annual Report
a. bee Coates oner.” , , ,
Bank :
United Bank & Trust Co.
Conn, Bank & Trust Co, 2/
Terryville Trust Co,
Total
lle | vw &
Note: Offices as of 12/31/71; deposits as of 6/30/70.
1/ Includes Bristol (Hartford County) and Plymouth (Litchfield County).
2/ Acquired North Side Bank & Trust Co,, 12/13/71.
Source: FDIC Summary of i Sant fo June 30, 1970; 1971 Annual Report
Conn, Banking Comm sioner. .- . .
1596
Gx-89
WUMBER OF CONNECTICUT
1955-1971
eer uw 02a & &€ 6 OM OF
Source: 195$-1967, Board of Governors of FRS, Division of Research &
Statistics, Banking Markets Section, Number of Commercial
Banks amd Branches.
1968-1970, FDIC, Changes Among Operating Banks end Branches.
Source:
1597
Gx-90
WUMBER OF CONNECTICUT COMMERCIAL BANKS
1955-1971
PO eee
Banks in Banks ae eee eS
Cee Le Opeeetion _Consclidations) “Bec. 31 change
105 1 8 98 o?
98 : -~ 95 -3
95 - 8 87 -8
87 - ? 80 -7
80 : ? 73 “7
BE) - 3 70 -3
70 - 3 ~ eae -3
67 3 4 66 “1
66 1 3 64 -2
64 5 3 66 +2
66 5 3 68 42
68 - 1 67 “1
67 1 1 67
67 1 2 66 of
66 . 4 62 “4
62 1 2 61 “1
61 . 3 63 +2
1955-1967, Board of Governors of FRS, Division of Research &
——. Banking Markets Section, Number of Commercial
Banks and Branches.
1968-1970, FDIC, Changes Among Operating Banks and Branches.
1598
woot 69‘Szo'z
e°c4s) = Mo zz“
i797 «= £96076 ¢
ee a
_ *ZL6T PUP IL6T ‘9961 ‘1961 ‘SS6T ‘Senesy yoamy “ZIOTIOITC JOST 6 ,AI0d + e02n0s
“O61 ‘13ady uy pemz0z ‘uozzPsz0dz0ouRg ynoz3>20UUOD 38234 Sepntoul /T
‘WOOT 6618077 woot 6te‘sor‘€ "001 ess‘e19*s 3NIFI20NUOD UF
, . syueg [¥}2290m0) TTY
6°SL sos*cze*t ste 6t0'eeo*z «= fT tee = /T Len*ozL*» 3808287 O1
w°ss §«zzs* Ee Is ZI°SS §«© C86‘ HL“ TS m'19 610‘ 999s 380810) ¢
“Sst eT ET Tet 390
(epuvsnogs uy sjuncue Ie] lod)
INDILDGNNOD MI SNOLLVZINVI4O ONIUNVE ‘IVIDUBWOD LSA NZL FHL NI SLISOdAd TVLOL 40 NOLLVELNZONOD
16-x9
1599
Concentration of Deposits by Number of Accouates
Nine Largest Connecticut Commercial Banks
June 30, 1970
Total
Size of Account Connecticut a.
0 to $1,000 2,218,161 1,600,197 72.1%
$1,001 to $20,000 $09, 540 372,413 72.9
$20,001 to $100,000 21,907 15,555 71.2
$100,001 or more 3,695 3,077 83.8
Total 2,753,303 1,991,242 72.2%
Source: FDIC, Summary of Accounts and Derosits in All Commercial
Banks, Boston TRegioa, p. ——
1600
Gx-93
PLAINTIFF'S INTERROGATORY TO SEPENDANSS ,
SET 1, NO. 28
Interrogatory 28
List all other discussions since January 1, 1960,
between officers or representatives of (A) Connecticut
National and (B) First New Haven and any other bank
relating to merger or consolidation wich such bank, giving:
(1) Dates and names and addresses of participants;
and
(2) Substance end result of each such discussion,
1601
CONNECTICUT NATIONAL BANK
INTERRCGATORY 28 A
LINCOLN NATIONAL RANK, Stamford .
In July of 1967, Lewis A, Shea, President, and Alexander Hawley, Executive
Vice President, met at Linceln National with Isadore E. Cherniack, 5Sr.,
President, and Norman H, Reader, Executive Vice President, of Lanecla, It
was later indicated that the Board of Directors of Lincoln National Bank
anne be receptive to an offer of acquisition by Connecticut National Bank,
During the ensuing months Mesers, Hawley and Read al telephone
conversations, and during April and May, 1968, er Hoey C, Peters and Edward
G, O'Shea, Senior Vice Presidents of Connecticut National, had discussions
with representetives of Lincoln National regarding internal operations and
accounting procedures,
No formal offer was ever made and the Lincoln Nationa) Bank was subsequently _
acquired by the Hartford National Bank and Trust Company.
LITCHFIELD COUNTY BATIONAL BANK, Nev Wiiford.
In June and July, 1967, informal discussions took place between Messrs.
Shea and Hawley of Connecticut National Bank and —— L. Stone, President
of Litchfield County National Bank,
In Janvary, 1968, the Board of Directors of Connecticut National authorized
-the President to negotiate tontative merger terms with Litchfield County.
In February, 1968, the Board approved a tentative merger plan.
In April, 1968, Connecticut National's offer was formally rejected by the
Board of Directors of Idtchfield County National Bank, The bank was subse-
quently acquired by the Colonial Bank and Trust Company.
=
THE CONNECTICUT BANK AND TRUST COMPANY, Hartford
In June, 1968, Lewis A. Shea, then Chairman of Connecticut National Bank,
initiated discussions with Pomeroy Day, Chairman of Connecticut Bank and Trust..
This was followed by numerous meetings in Hartford and in Bridgeport with
Messrs, Shea and Hawley of Connecticut National and Messrs. Day and English of
Connecticut Bank and Trust, and others participating. '
These meetings and éiecussions resulted in a consolidation agreement dated
August 20, 1968, followed by shareholder approval on October 15, 1968 and
approval of the Comptroller of the Currency on or about April x, 1969.
1602
INTERROSATORY #28 . page 2
On or about May 9, 1969, a ‘complaint was filed with the U. S. District Court
” dm New Haven on behalf of the United States of Americe seeking an injunction
against the consolida‘’ « Pursuit of the consolidation was subsequently
abandoned by the two banks.
ATLANTIC RATIONAL BAKK, Stamford /
In May, 1969, a preliminary discussion took place between Mesars. Shea and
Hawley of Connecticut National Bank and Joseph P, Zone, representing Atlantic.
In June, 1969, further meetings took place relative to the possible
acquisition of Atlantic National by Connecticut National, with Messrs. Peters
and O'Shea, Senior Vice Presidents of Connecticut National, aleo participating.
In July, 1969, the Board of Directors of Connecticut National authorized
finalization of merger terms and in August the consolidation agreement was
approved,
The merger became effective on April 17,1970.
1608
THE FIRST NEW HAVEN NATIONAL BANK:
INTERROGATORY NO. 28
a
Interrogatory No. 28: List all other discussions since January 1,
1960 between officers of . . . (B) Pirst New Haven and any other bank
relating to merger or consolidation, giving: :
(1) Dates and names and addresses of participants; and
(2). Substance and result of each such @iecussion.
First New Haven Answer
Note: Because of the span of time involved, the numbers of
participants, the varying degrees of formality attendant
upon such discussions, and because of the fact that such
discussions on this general topic are frequently undertaken
by banking executives on a very informal basis, it is impos-
sible to respond with complete seeskelén. Set forth below
is a chronological history of such discussions, as relate to
The First New Haven National Bank, drawn from the Minutes of
the Bank's Executive Committee and Board, with supporting
data from appropriate officers.
1. On April 2, 1962 the Executive Committee authorized the officers
to make an offer for the stock of the Wallingford Bank & Trust
Company. Mr. J. Coy Reid, then President of the Bank, was
1604
(2)
primarily responsible for discussions with the Wallingford bank.
The Board approved.on April 9, 1962 and subsequently, in March,
authorized an adjustment to the offer. Other banks had been
invited to make offers by Wallingford, and on April 26, 1962 it
was announced to the Board of First New Haven that Connecticut
Bank & Trust Company had been successful in acquiring the Walling-
ford Bank & Trust Company.
On May 3, 1962 the Executive Committee considered an invitation
from the Madison Trust Company for its acquisition. Again, Mr.
Reid was responsible for discussions with Madison representatives.
On May 9, 1962 after further discussion, First New Haven was
authorized to make an offer of three of its shares for each one
of the shares of the Madison Bank. This was approved by the
Board on May 10, 1962. However, the Union & New Raven Trust
Company was successful in acquiring the Madison Bank.
On October 4, 1962 the Executive Committee generally discussed a
possible merger of the American Bank & Trust Company but no con-
crete action was taken.
For over 10 years vrior to 1964, Senior Vice President F. G.
Chadwick, Jr. had been talking with Wallace Foote, Treasurer and
principal stockholder of the Branford Trust Company regarding a
S.
1605
acouisition by First New Haven of the Branford Trust Company. By
the summer of 1964, Mr. Foote was well advanced in years (over 90)
and had recently resolved his family trust matters which were
designed and agreed upon by Messrs. Chadwick and Foote and the
Bank's counsel. At this time Mr. Foote wanted to put the Branford
Trust Company up for “bid" but was dissuaded by Mr. Chadwick.
Discussions became serious in the early summer of 1964 and a
negotiating committee from each bank was set-up consisting of
manaaibe Sargent, Zorn, Reid and Chadwick for First New Haven
and Messrs. Foote, Hitchcock, Williams and Enquist for the
Branford Trust Company. On July 13, 1964 the Executive Committee
approved a possible merger with the Branford Trust Company, and
authorized an offer of 9 shares of Pirst New Haven stock for each
share of Branford stock outstanding. This offer was approved at
a Board Meeting on July 16, 1964 and subseauently discussed at
several Executive Committee and Board Meetinas, proceeding into
the fall of 1964. The merger itself was in fact consummated on
or about September 30, 1964. In view of the consummation, almost
all top officers of the bank were. involved in discussions with
opposite numbers at the Branford bank.
On August 11, 1964.the Executive Committee considered an invi-
tation from the Guilford Trust Company to bid on that bank's
stock. An offer of two shares of First New Haven for one share
of Guilford stock was authorized and subsecuently reported to
On August 27, 1964 it was apparent
the Board on August 13, 1964.
oti
{4}
/
that Second National Bank was successful in acauiring the
Guilford Bank. .
On October 22, 1964 the Executive Committee considered an invita-
tion to bid on a merger’ with The Birmingham National Bank and
The Home Trust Company, both of Derby, Connecticut. An offer of
18 shares of First New Haven stock for one share of the combined
bank was authorized and approved by The First New Haven National
Bank Board on August 23, 1964. The bid of First New Haven was
subsequently rejected and Second National Bank of New Haven was
successful in the acquisition of these Derby banks.
Sometime during the summer of 1965, Thomas Hooker of Pirst New
“Haven had general informal discussions with the then president
of The Puritan Bank & Trust Company of Meriden, Connecticut,
Mr. Prederick Calkins. The subject of the conversation was the
general subject of merger with no definitive exploration devel-
opment. Subsequently, Puritan in fact was merged with The
Colonial Bank and Trust Commany.
On December 2, of 1965 the Executive Committee discussed prior
discussions involvine Mr. J. Coy Reid, then president, Mr. Joel
Cohn, a Director of First New Haven, and Mr. William Horwitz, :
president of The Winthrop Trust Company of New London, Connecticut.
1607
{5}
The general subject of merger had been discussed but the conclu-
sion of the Executive Committee at the meetina was adverse and
this was confirmed at the December, 1965 Board Meeting of First
New Haven. ,
/
9, On May 5, 1966 the Executive Committee discussed prior conversa-
tions involving Mr. J. Coy Reid of First New Haven, Mr. G. Harold
Welch, a director of Pirst New Haven and Mr. Nicholas Mauro and
Mr. Roland Bixler, officers of The Woodbridge Bank & Trust Company.
The prior discussions involved the possibility of acquiring a
majority interest of the stock of The Woodbridge Bank & Trust
Company and the invitation was eventually declined. During this
time, First New Haven held €0% of Woodbridge Bank stock which had
been pledged ty its owner, Mr. Mauro, for loans at the First New
Haven.
10. On September 1, 1966 the Executive Committee discussed prior
conversations of hank officials with The Seymour Trust Company
regarding a possible merger of that bank. Mr. Chadwick had been
involved in such discussions, as well as Mr. Thomas Rooker who
had often conferred with Mr. Earl Boies, successor to the late
Clarence Hummel, president of The Seymour Trust Company. These,
again, were general informal discussions and no substantive
developments ensued.
Rae
12.
13.
14.
1608
On June 1, 1967, Mr. Chadwick reported on discussions with
Gerald Fellows of The North Haven National Bank regardina a
possible merger. Exchange ratios were developed between
committees of both banks: Messrs. Reid, Saraent and Zorn on
behalf of First New Haven and Messrs. Knudsen and Fellows on
behalf of the North Haven bank. A tentative offer was made by
First New Haven but was rejected by the North Haven National
Bank. However, personal and informal discussions wetwcia Mr.
Chadwick and Mr. Fellows have continued to the present date
although no concrete action has been taken.
On September 28, 1967 the matter of a possible merger with The
Woodbridge Bank & Trust Company was raised again. Mr. Reid
had made an offer of $21.00 ver share to officials of The
Woodbridge Bank which was rejected.
Sometime prior to December, 1967 discussions involving Mr. Reid
of First New Haven and officials of The Pairfield County Trust
Company were undertaken.- These discussions proceeded to the
point of detailed economic analyses on behalf of the banks, but
no formal merger proposals were undertaken ané the project was
subsequently abandoned.
On May 28, 1968 the Executive Committee again noted that the
matter of the Woodbricge Bank & Trust Company was still under
15.
1s.
1609
Ra eae
consideration. Again, discussions involving Messrs. Reid, G. H.
‘Welch and, on behalf of Woodbridge, Mr. Nicholas Mauro, were
reported and the matter of the purchase of a majority stock
interest was considered and rejected by Woodbridge.
Sometime during the summer of 1968 (possibly summer of 1967)
Mr. Thomas Hooker of First New Haven talked informally with
Mr. George Church, then President of The Meriden Trust & Safe
Deposit Company. There were apparently a number of informal
discussions, possible also involving Mr. Prederick calkins who
had left the Puritan Rank after its merger with Colonial Bank
& Trust Company. These discussions were on an informal basis
only and did not proceed beyond that point.
In early 1968, possibly September of 1968, Mr. Chedwick undertook
informal discussions with The Colonial Bank & Trust Company, and;
at approximately the same time, Mr. Reid with the State National
Bank of Stamford. Neither of these discussions came to any serious
‘level although the Colonial, discussions were subsequently renewed
in the summer of 1969.
In the fall of 1968, a representative of The Randolnh Computer
Corporation discussed the possibility of that corporation making
a tender offer to First New Haven shareholders.. This matter was
18.
19.
(8) wetted,
Gelegated to Mr. Chadwick for investigation. After several
a@iscussions, some in New York City, Mr. Chadwick reported to the
Board of First New Haven on the status of the matter, and the
Board indicated its disfavor whereupon the matter was Gropped.
/
On December 11, 1968 the Executive Committee noted that a possible
tender proposal, involving a one bank holding company structure,
had been received through Mr. Chadwick, now president of The First
New Haven, from James Talcott, Inc. Several discussions were had
with the Talcott Company, involving primarily Mr. Silverman, then
Chairman of.the Board of Talcott National. Mr. Chadwick and
Mr. Bowerman participated in these conversations on behalf of the
Bank and a proposal by Talcott was discussed. The First New Haven
Board indicated that it would not recommend such a proposition to
its stockholders and the matter was subsequently dropped.
Early in the fall of 1969, informal discussions between Nelson
North, President of the City Trust Company in Bridgeport, and
Mr. Chadwick, of First New Haven, were conducted. These dis-
cussions involved the possible merger of these two banks. On
September 11, 1969, Messrs. Chadwick and Bowerman and Lapides
of First New Haven were constituted a committee to develop the
terms of a possible merger with a like committee from City Trust
Company, consisting of Mr. North and Daniel Wheeler. Several
discussions followed involvine the negotiatino committees and the
1611_
{9}
banks proceeded to draw guidelines of a possible merger, and
. further proceeded to seek outside opinions as to the validity
of a proposed exchange ratio. Counsel for both banks (Messrs.
Marsh, Day & Calhoun from City Trust and Messrs. Tyler, Cooper,
Grant, Bowerman & Keefe for First New Haven) were drawn into
the discussions at various stages, and a conference was held
with Richard J. Blanchard of the Comptroller's Office in
Washington. Arthur Andersen Co. and American Appraisal Co. were
drawn in by the banks as consultants to advise and give opinions
with respect to exchange ratios and property values, respectively.
By April 30, 1970 it was apparent, however, that the merger could
not go forward because of the inability of the banks to resolve
certain points of negotiation, primarily the issue of cumulative
voting. Negotiations with The City Trust Co. were terminated
on May 28, 1970. ;
In the summer of 1969, informal discussions with The Colonial Bank
& Trust Company of Waterbury. had also begun with respect to a
possible merger. These discussions involved Messrs. Chadwick and
Hooker for First New Haven and Mr. Donald Henry and Prank White
on behdlf of The Colonial Bank. The discussions were dropped
during the conversations held by First New Haven and City Trust
Co. of Bridgeport. Subseauently, after the City Trust Co. matter
had terminated, the subject of a possible merger with The Colonial
Bank & Trust Co. was discussed by the Pirst New Haven Board on or
-~
F
1612
{10}
about nee 30, 1970 but the general feeling was that the
Colonial Bank would not be in a position to meet the kinds of
terms that Pirst New Haven would feel to be appropriate and
nothing further developed.
21. There were other instances of general discussions regarding
“hergers recalled by officers of First New Haven. One involved
the Clinton National Bank where at least qeneeel conversations
were held between Mr. William Hasse and other officers of First
New Haven and Mr. Sturges Redfield of The Clinton National Bank.
Consideration has been given to the Community Banking Company
of North Branford, Connecticut and inquiries have been received
from the Vernon National Bank of Vernon, Connecticut. The details
of these items are vague; none proceeded to any level of serious
consiceration.
PLAINTIFF'S INTERROGATORY TO DEFENDANTS,
SET 1, MO. 27
Interrogatory 27
With regard to the proposed consolidation of Connecticut
Hational and First New Haven, state:
(A) The dates of and participants in all discussions
regarding the consolidation preceding the consolidation
agreement between officers or representatives of defendants;
(B) The name(s) of the person or persons who initiated
each such discussion and the reasons for the initiation of
each such discussion; and
(C) The substance and result of each such discussion.
1614
~ FIRST NEW HAVEN NATIONAL BANK
INTERROGATORY - NO. 27: Discussions re Proposed First New Haven -
1.
Connecticut National Consolidation
May 27, 1970: The first meeting on the subject was between
Alexander Hawley and Frank G. Chadwick, Ire, Presidents
respectively of The Connecticut National Bank and The First
New Haven National Bank, and resulted from a call by Mr. Hawley
to Mr. Chadwick. The subject matter was a general discussion
regarding consolidating the two banks. It resulted in a
@ecision to talk further.
July 24, 1970: A meeting took place between the above to
further discuss the possibility of consolidation. The result,
after both Presidents had conferred with their Directors, was
a decision to seek an appointment with the Office of the Comp-
troller of the Currercy to make him aware of the banks'
interest in further studying a consolidation and soliciting
the view of his office.
%
August 4, 1970: A meeting took place in the Office of the
Comptroller of the Currency with the two Presidents and Richard
J. Blancharé, Deputy Cometroller - Branches and Mergers, (plus
counsel from the Cdmptroller's office), regarding the procedure
required in filing an application for the consolidation of two
national banks.
?.
1615
August 12,2970: A meeting took place between Messrs. Hawley
and Chadwick to discuss the results of the conference in the
Comptroller's office in Washington noted above. A general
@iscussion ensued regarding pursuing the idea of a consolidation
further.
September 10,1970: A meeting took place between the two
Presidents concerning the presentation of discussions to date
to the attention of the Boards of Directors of each bank with
the suggestion that the time had come for Director involvement.
September 15,1970: Mr. Chadwick reported back to the Executive
Committee and other Directors of First New Haven regarding his
discussions with Mr. Hawley. As a result, a negotiating committee
from First New Haven was formed consisting of Mr. Chadwick, Robert
Lapides and Charles N. Schenck III.
September 17, 1970: Mr. Hawley reported to his Board of Directors
the discussions that had taken place with Mr. Chadwick, and asked
that a negotiating committee. be authorized to talk with represeata-
tives of the Board of Directors of First New Haven regarding a
plan of consolidation. This committee was authorized, and con-
sisted of Mr. Hawley, Samuel W. Hawley. and Henry C. Wheeler.
10.
1616
(3)
September 23, 1970: Prior to September 23, 1970, operating
personnel from both banks, at the Presidents' requests, had
prepared statistical and other data for discussion purposes.
On September 23, 1970, a meeting took place in Mr. Hawley's
office between committees representing the Boards of Directors
of each bank to consider the terms of consolidation of the two
banks. Present were Messrs. Alexander Hawley, Samuel W. Hawley
and Henry C. Wheeler - Directors of the Connecticut National
Bank; and Messrs. Frank G. Chadwick, Jr., Robert E. Lapides and
Charles N. Schenck III - Directors of The First New laven
National Bank. This group agreed in principle to terms of con-
solidation to be recommended to the Boards of Directors of each
bank at their next meeting.
Sentember 24, 1970: The Board of Directors of First New Haven
approved a resolution giving preliminary approval) in principle
to the terms and conditions recommended by the negotiating
committees regarding a plan of consolidation of the two banks.
September 28, 1970: The Board of Directors of Connecticut
National approved a resolution giving preliminary approval in
principle to the terms and conditions recommended by the
negotiating committees regardinc a plan of consolidation of the
two banks.
ll.
12.
(4)
September 28 - November 19, 1970: During this period, many
meetings took place including the two chief executive officers,
the negotiating committees, and counsel for both banks (Samuel
A. Gilliland, Grove W. Stoddard and Huntley Stone for Connecticut
National; Richard G. Bell for First New Haven). These meetings
were addressed to refining the terms of a formal agreement, the
retention of outside counsel (Cadwalader, Wickersham & Taft of
New York, New York), the process of application to the office of
the Comptroller of the Currency and stockholder approval, and
broad operational considerations regarding the proposed new bank.
In addition to the foregoing personnel, other officers of both
banks began conferring on matters germane to the application in
particular and the consolidation in general.
November 19, 1970: The Boards of Directors of both banks for-
mally approved an Agreement of Consolidation and authorized its
presentation to shareholders.
1618
|extes '
UNITED STATES DEPARTMENT OF JUSTICE
WASHINGTON, D.C. 20530
; core March 29, 1971
RWMcL :DIB:CLW .
60-111-2111
’
Honorable William B. Camp
Comptroller of the Currency
Treasury Department
Washington, D. C. 20220
Dear Mr. Camp:
This is in reply to your letter of oe sang | 3
1971, requesting a report pursuant to Section 1 (c}
of the Federal Deposit Insurance Act, on the compe-
titive factors involved in the proposed consolidation .
of The Connecticut National Bank, Bridgeport
Connecticut, and The First New Haven National Bank,
New Haven Connecticut, under the charter of the
latter and with the title The First Connecticut
National Bank. | :
1. The Banks eae
The Connecticut National Bank ("CNB"), organized
in 1806, operates its main office and nine branches
in Bridgeport and 38 other branches in 24 towns in
Fairfield, New Haven and Litchfield Counties. As of
December 31, 1970, CNB was the fourth largest commer-
_ cial bank in Connecticut, with total deposits of ‘
154.0 million) and total loans and discounts of
228.5 million. Its 1970 net current eee
income was $5.1 million, compared to its 1965-
average of $3.8 million. gee
#i54:0 million (including IPC demand deposits of
1619
The First New Haven. National Bank ("First New
Haven"), the result of a consolidation in 1957 of
two New Haven banks organized in 1792 and 1863,.
operates its main office and seven branches in New
Haven, and 13 other branches in nine towns of New
Haven mesg As of December 31, 1970, First New
Haven was the sixth largest commercial bank in
Connecticut, with total deposits of $260.9 million
(including IPC demand deposics of $145.3 million)
and total loans and discounts of ‘$185.2 million.
Its 1970 net current operating income was $5.1
million, compared to its 1965-9 average of $4.4 million.
The State of Connecticut (population 3.0
million) is heavily industrialized, with a large
white collar population and relatively little
farming. Industrial development and population
are concentrated in a corridor extending from
Greenwich in the extreme southwestern corner of the
state to New Haven and north to Hartford, the state
capital. Connecticut's population grew at the rate
of 17.9 pee cent- during the 1960's, the highest rate
of growth in the northeast. The state ranks first
in the nation in per capita personal income and per
‘capita value added by manufacture, and second in
per capita effective buying income.
Fairfield pp toe A a congeannngged yo is
situated in the southwestern comer of Connecticut,
“with New York to the west and Long Island Sound to
the south. Bridgeport (population 155,000) is the .
second most populous city and the leading industrial
center in Connecticut. Fairfield County is characterized |
by diversified manufacturing and residential areas.
Fairfield.County enjoyed substantial population and ©
economic growth in the 1960's.
New Haven County (population 734,000) is adjacent
to Fairfield County to the northeast. There is consid-
erable manufacturing activity in the county, including
that of firearms, nuclear products, chemicals,
electrical components and‘silverware. New Haven
(population 134,000) is the largest city in the county.
1620
3. Effect on Existing Competition
All of First New Haven's 21 offices are in
New Haven County. CNB operates eight offices in
New Haven County, in addition to its 39 offices
in Fairfield County and one in Litchfield County.
The main offices of the consolidating banks are
approximately 19 miles apart. Both banks operate
offices in the towns of Milford and Orange. In
addition, CNB's Ansonia office is within one mile
of the First New Haven office in Derby. These four
towns are all located between Bridgeport and New
Haven. CNB's five other New Haven County offices
are located in towns in which First New Haven has
~no-offices , in -the -morthern..part..of .the. county.
The application indicates that the bulk of the
business of both banks is derived from those towns
in which they operate offices; however, some business
is derived from other towns as well. 1/ It is apparent
that the proposed consolidation will eliminate direct .
competition between CNB and First New Haven, particu-
larly in the Orange-Milford-Ansonia Derby area
(total population 97,000) where both banks
operate offices. |
4. Effect on Concentration
First New Haven is the second largest of nine .-
commercial banks headquartered in New Haven County. 2/
It holds the largest share of deposits in New Haven
County banking offices, about 24.1 per cent, while
CNB's eight New Haven County offices hold about 5.3
per cent. 3/ If the proposed consolidation is
1/ For éxample, CNB derives 7.3 per cent of its
commercial and industrial loans from New Haven County
towns in which it does not operate offices. First
New Haven derives 7.1 per cent of its commercial and
industrial loans from New Haven County towns in
which it does not operate offices.
2/ A total of 15 commercial banks operate offices
the county, including the two large Hartford
banks and the three large Bridgeport banks, ge.
3/ FDIC, Summary of Deposits, June 30, 1970.
3
1621
proved, the resulting bank would increase its
share to 29.4 per cent, and the share of the four
leading banks in the county would increase from
68.1 per cent to 73.4 per cent. :
“The effects of the proposed consolidation will
be most immediate in the Orange-Milford-Derby-Ansonia
area, where sevén commercial banks operate 16 offices.
First New Haven and CNB hold 39.0 per cent and 19.5
per cent (first and second largest shares), respectively,
of the total deposits in these offices. If the
posed .censcolidation -is..approved, .the resulting
Tek would hold almost 60 per cent of commercial
bank deposits in this area, and would operate eight
of its 16 offices.
5. Effect on Potential Competition
Connecticut banking law permits statewide
de novo branching into any incorporated city or
town which is not the site of the head office of
another bank. 4/ Both Bridgeport and New Haven
are presently Closed to de novo entry by new banks. 5/
Of a total of 50 towns in Fairfield and New Haven
Coun. -however, 36, .containing a total population
of 680,000, are open to de novo entry by outside banks.
e
Five New Haven County towns in which First New
Haven presently operates offices are open to branching
by CNB. These include the towns of East Haven, West
Haven, and Branford, which are adjacent or very close
to New Haven, and thus would provide good locations
from which CNB could compete more effectively in New
Haven. In each of these three towns, as well as in
New Haven itself,: First New Haven holds the leading
market position. It may also be possible for CNB
to — a holding company and charter a de novo
bank. the City of New Haven. i
4/ —.. General Statutes Annotated, Section
36-59, ‘ . er eden -
Fa Four commercial banks are presently headquartered
n Bridgeport and three in New Haven.
1622
' First New Haven also has branching opportunities
iff towns in which CNB presently operates offices.
These include three towns in northern New Haven
County, and 12 towns in Fairfield County, including
the towns of Stratford, Trumbull and Fairfield,
which are adjacent to Bridgeport. CNB holds the
second largest share of deposits, 39.9 per cent,
only slightly below the leader, in the immediate
Bridgeport area. It may also be possible for First
New Haven to organize a holding company which could
charter a de novo bank in the City of Bridgeport.
Finally, in the remaining six counties in
Connecticut, 103 of a total of 127 towns, containing
a population of about 870,000, are open to de novo
entry by both CNB and First New Haven, In recent
years, the larger banks in the state have begun to
expand into areas more distant’ from their home offices,
As the state's fourth and sixth largest commercial
banks, CNB and First New Haven appear to be two of
the most 1!'*ely de novo entrants into these 103 open
towns as well as any that may become open in the
future as a result of mergers. Each has the resources
and ability to open new branches throughout the
state, Thus, whether the impact of the proposed
consolidation is considered with respect to individual
towns in the state, or with respect to the state as
a whole, there is significant potential for increased.
es gg between CNB and First New Haven which —
would be eliminated by the consolidation,
‘6. Conclusion
Because of its elimination of existing and
potential competition between the two banks and
the effect on concentration, we conclude that this
consolidation would have a significantly adverse
effect on competition.
1623
A ‘summary of this report is attached,
Sincerely yours,
4 RICHARD W. McLAREN
Assistant Attorney General
fh Division
t
Byf Donald. I.-. om
Hating D rector of Policy Planning
1624
SUMMARY OF THE NEPORT OF TIE DEPARTAINT OF JUSTICE
ON THE COMPETITIVE FACTORS INVCLVZD Il THE PROPOSED
CONSOLIDATION OF TME COMIECTICUT MATICAL BANK,
BRIDGEPORT, COMIGCTICUT AND THE FIRST WEW HAVEN
TOUAL RAMK, WOW RAVE SECTICUT
All of first New Haven's 21 offices are in
New Haven County, where it has a leading market
position. Connecticut National. Bank operates
eight offices in New Haven County, in addition
to its 39 offices in Fairfield Caimty and one in
»» Ltohfield County, ‘The-mzin offices of the consoli-
dating banks are approximately 19 miles apart.
Both banks operate offices in the towns of Milford
and Orange. In addition, Connecticut iaticnal Bank's
Ansonia office is within one mile of the First New
Haven office in Derby. These four towns are all
located between Bridzeport end New Havon. Th
lication indicates that the bulk of the business
of both banks is derived.from those tqwns in which
they operate offices, It is thus epparent that the
proposed consolidation will eliminate direct come-
‘tition between Connecticut National Bank and First
New Haven, particularly in the Orange-liilford-
Ansonia-Derby.avea (total population 97,000).
First New Maven is the second larrest of nine
commercial banks headauartered in New Haven County,
It holds the largest share of deposits in New Haven
County banking offices, about 24.1 per cent, while
Connecticut National Bank's cight New Haven County
offices hold about 5.3 per cent. If ah osed
‘consolidation is approved; tho resulting would
increase ite share to 29.4 per cent and the share
of the four leading banks in the county would increase
from 68.1 per cent to 73.4 per cent, Ss
The effects of the proposed consolidation will
be most immediate in the Oranre-Milford-Derby-Ansonia
area, where seven commercial banks operate 16 offices.
First New Haven and Connecticut National Bank Lold
39.0 per cent and 19.5 per cent (first and second
largest shates), respectively, of the total deposits
in these offices. If the proposed consolidation
1625
is approved, the resulting bank would hold almost
60 per cent of commercial bank deposits in this
area, and would operate eight of its 16 offices,
, Connecticut banking law permits statewide
de novo branching into any incorporated city or
town which is not the site of the head office of
another bank. Both Bridgeport and New Haven are
resently closed to de novo entry by new banks.
bf a total of 50 towns in Fairfield and New Haven
Counties, however, 36, containing a total population
o£ 680,000, -are-open to de-novo entry by outside banks.
Five New Haven County towns in which First New
Haven presently operates offices are open to branching
by Connecticut National Bank. In at least three of
these towns, as well as in New Haven itself, First
New Haven holds the leading market position. It may
also be possible for Connecticut. National Bank to
organize a holding company and charter a de novo
bank in the City of New Haven.
First New Haven also has branching opportunities
in three towns in northern New Haven County, and 12
towns in Fairfield County in which Connecticut
National Bank eoep tages operates offices. Connecticut
National Bank holds the second largest share of ',
deposits, only slightly below the leader, in the
immediate Bridgeport area. . It may also be possible
for First New Haven to organize a holding company which
could charter a de novo bank in the City of Bridgeport.
Finally, in the remainitig six counties in
Connecticut, 103 of a total of 127 towns, containing
a population of about 870,000, are open to de nove
entry by both Connectictt National Bank and First «
New Haven. As the state's fourth and sixth largest
commercial banks, Connecticut National Bank and First
New Haven appear to be two of the most likely de novo
entrants into these 103 — towns as well as any
that may become open in the future as a result of
mergers. Each has the resources and ability to
a new branches throughout the state. Thus,
whether the impact of the proposed consolidation
is considered with respect to individual towns in.
the state, or with respect to the state as a whole,
there is significant potential for increased compe-
tition between Connecticut National Bank and First
New Haven which would be eliminated by the consolidation.
1626
Because of its elimination of existing and
potential competition between the two banks and
the effect on concentration, we conclude that this
consolidation would have a significantly adverse
effect on competition. :
eres sess. =
2
1627 .
: a-& (>-20-/1)
Gx-96
| (REPORT OF THE
a
Pursuant ‘to Section 18(c) of the Federal Deposit Insurance Act (12 U.S.C. 1828(c))
On the competitive factors involved in the proposed consolidation of
Fi Natior. k a t
and ;
ticut National Bank i ort, Connecticut
1, THE FACTUAL SETTING
fhe First New Haven National Bank ("First New Haven"), (total resources
$315,270,000; IPC deposits $237,196,000) was established in 1957 when the
te Haven Bank, founded in 1792, and the First National Bank of New Haven,
dartered in 1965, were consolidated. TIwenty-one offices are cperated in
few Haven County, including the main office and 7? other offices in the City of
te Haven. First New Haven has participated in no mergers or siwilar type
transactions in the past five years.
fhe Connecticut National Bank (“Connecticut National"), (total resources
$398,313,000; IPC deposits $301,629,000), operates 49 offices: 1 in Litchfield
Qunty, 9 in New Haven County and 32 in Fairfield County. The main office is
in Bridgeport. One bank, having deposits of $17,046,000, has been acquired ‘by
Connecticut Netionaf since 1958.
few Haven County is in the south-central sector of Connecticut. The population
ws 733,840 in 1970, reflecting a growth of 11.1 percent since 1960. The City of
few Haven had a2 decline in population of 18,500 (12.2 percent) in the sane
period. First New Haven's trade area encompasses 15 communities, an area which
tas had a population increase of 43,730 (10.3 percent)since 1960, the present
population being 468,090. 5
Conmecticut National's primary service area is Fairficld County, the second
test populous county in Connecticut with 785,600 people in 1970, a growth of
010 people (20.2 percent) since 1960. Connecticut National's overall trade
includes 39 communities with an aggregate teases of 1,032,600, some
1 percent more people than in 1960.
*
.
. >
aye Finet Bee Raven Mattonal Seek
The combined population of both bank's service areas is estimated at 1,391,950,
or about 46.5 percent of Connecticut's total population. Overlapping service
exists today in the towns of Milford, Orange, Ansonia, Bethany, Derby and
Woodbridge, having an aggregate population of 108,770. : .
While New York City exerts an influence on the economy of this southern Con-
necticut area and on local banks (since many residents reside in south-western
Connecticut but work at New York State locations where the large New York City
banks compete), the area is primarily dependent on local industrial and con-
mercial activities. :
Connecticut National is the dominant commercial bank in its service area with
19.8 percent of total commercial bank IPC deposits. Four other banks also
have more than 10.0 percent of area commercial bank IPC deposits: Union Trust
Company (17.4 percent), The State National Bank of Connecticut (14.8 percent),
City Trust Company (13.5 percent) and Colonial Bank and Trust Company (11.0
percent). First New Haven holds 2.2 percent of commercial bank IPC deposits
in Connecticut National's service area.
Within its own service area, First New Haven is the largest commercial bank
with 36.8 percent of total commercial bank IPC deposits. ‘Two other commercial
banks hold more then 10.0 percent of area commercial bank IPC deposits: The
Second National Bank (24.9 percent), and Union Trust Company (17.1 percent).
Connecticut National holds 2.5 percent of IPC deposits in First New Haven's area.
lf the proposed .consolidation is effected, the resulting bank would have 26.0
_percent of commercial bank IPC deposits and 70 offices in the combined service
area, the largest commercial bank in this populated southern portion of Con-
mecticut. The second-ranking commercial bank in the same service area would
hold only 17.6 percent of total commercial bank IPC deposits and 38 offices in
the same area.
TL. EXISTING AND POTENTIAL COMPETITION BETWEEN THE TWO INSTITUTIONS
The nearest offices of Connecticut National and First New Haven are only one
mile apart, and each draws a significant volume of business from areas served by
the other. The proposed merger would eliminate this existing competition and
reinforce for the resulting bank the dominant position held by each constituent
bank in its present service areas. Each bank, moreover, is likely to find itself
increasing competition with the other through the establishment of additional
de novo offices in this part of Connecticut in the future, since each has the
resources and the past experience necessary for such activity as well as the
incentives of a fast-growing area. The proposed merger accordingly, would also
eliminate a significant potential for increased competition between the two banks
through de novo branching. . =
Ill. ETITIVE
Commercial barkihg is relatively concentrated in the State of Connecticut. The
ten largest: comzercial banks hold 81.1 percent of the total deposits held by
all 58 of the State's commercial banks. The merger proposed would increase that
-3- A-4 (5-20-71)
es
Re: The First New Haven National Bank
tage to 82.8 percent, and if approved, would permit the consolidation
of the fouth and sixth largest commercial banks, thereby significantly encour-
aging other large banks to merge.and further concentrating the commercial bank
resources of the State.
GONCLUS TON
The Corporation concludes that the proposed transaction would eliminate existing
competition between. First New Haven and Connecticut National, foreclose the
possibility of increased competition between them in the future, strengthen
the dominant position of each bank in its present markét, and encourage the
concentration of commercial bank resources in the State of Connecticut. The
Corporation concludes that the proposed transaction would have a substantially
adverse effect on commercial bank competition in southern Connecticut and over
the long run, in the State as a whele.
As required by the Bank Merger Act of 1966 (12 U.S.C. 1828 (c)), this report
is limited to a report on the competitive factors involved, does not comment
on the factors of convenience and needs of the community to be served or the
financial and managerial resources or future prospects of either bank or of
the resulting bank, and is not a recommendation as to whether the application
should be approved or disapproved.
1630
.GX-97
MAR {
REPORT BY THE een
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEN
, to the
Comptroller of the Currency, under the Bank Merger Act
(22 U.S.c. 1828(c)), on the competitive teeters
involved in the proposed consolidation of
The Connecticut National Bank, Bridseport. Connecticut
and
New Haven National Bank, New Haven, Connecticu
I. PROPOSAL
The Connecticut Notional Benk, Bridgeport (Connecticut National),
with deposits of $354 million, end The First New Haven National Bank,
New Uaven (First New Haven), with deposits of $261 million, propose to
consolidate under the charter of the latter and new title of The First
Connecticut National Bank, with headquerters in Bridgeport,
te
Incident to the proposal, the 49 offices of Connecticut National,
located in Fairfield, Litchfield and New Haven Counties, would become
offices of the resulting bank. Presently, First New Haven operates its
main office and 20 branches in New Haven County, including the bank's cuin
office end 7? branches in the city of New Haven, It is contexplated that
@ll offices of the 2 proponents would be operated by the consolidated bark,
‘IX, ME Conanrties
Bridgeport, the State's second largest city and industrial center,
has a population of about 154,000 and is the largest cormunity in Fairfield
County in the southwestern part of Connecticut, approximately 60 miles
from New York City.
. New Haven, populotion 143,000, is situated on Long Island Sound,
epproxicetély 18 wiles northeast of Bridgeport. It ranks as a major
retail and industriel center.
Ul, COMPETITION BETWEEN THE TO INSTITUTIONS
The moin offices of the proponents are approxinately 18 miles
apart. Connecticut Kational presently serves the Bridgeport, Norwalk,
Stanford, Dorjury, New Milford, Waterbury, and New Faven markets; First
New Naven terves the New Waven, Bridgeport, end Meriden markets. Each of
the banks has offices in the towns of Orange and Milford; Orange is in
the New Haven market, Milford is in the Bridgeport market. In addition,
the branch of Connecticut National in the toun of Ansonia is located
within 1 mile of the Derby office of First New Haven, Each of the
proponents derives some loan, deposit and trust accéunts from areas
served by the other; however, in most instances, the nimber of accounts
and doller volumes are not viewed as stgnificsse.
The two proponents generally grant the same classes of loans
and hold the same categories of deposits. Approximately 49 per cent of
_ Sannecticut National's tatal .depasits represent time and savings deposits,
while 38 per cent of time deposits at First New Haven are in this
category. Loans represent approximately 65 per cent of deposits at the
former and 71 per cent of deposits at the latter.
There is potential for increased competition between the two banks,
Under Connecticut law, no bank may establish a de novo branch in any °
town in which the main office of another bank is located. Under this
law, a number of towns in the southwestern part of the State are closed to
de branching, including Bridgeport, New Haven, Waterbury, Stamford,
Greenwich, and Norwalk, At the same time, there are a number of towns
open to de novo entry, and many of these are located in either the
Connecticut National or First New Haven mariet area, which do not have
‘offices of either.bank, Also, there are a number of possible merger
alternatives within the towns which are closed to de novo branching which
would have considerably less of an adverse competitive impact than the
proposed consolidation.
IV, OTHER COMPETITIVE EFFECTS
Connecticut National presently ranks fifth in the State, holding
‘about 7 per cent of total deposits; First New Haven ranks peventh, holding
about 5 per cent (data as of June 30, 1970). The consolidated bank would
rank third with approximately 12 per cent of the State's total cocmercial
bank deposits. The 4 largest banks presently hold about 53 per cent of
the State's total’ deposits.. The 10 largest hold slightly more than
80 per cent. Consucmation of the proposed consolidation would increase
the share held by the 4 largest banks to about 58 per cent of totel
deposits, and that of the 10 largest to 82 per cent.
Based on data as of June 29, 1968, Connecticut National has 3
39 per cent share of the Bridgeport banking carket, while First New Haven
-holds 4 per cent, In the New Haven banking carket,: First New Baven's
share is about 39 per cent, and Connecticut Notional has about 2 per cent.
In the Bridgeport market the four largest bouks hold about 96 per
cent of total dcposits; in the New Haven msrxct the four largest
hold almost 26 per cent. Connecticut National presently ranks second
in the Bridgeport merket, but consucmatioa. of the preseat proposal would
increase its share to the largest. First New Eaven presently ranks first
among the banks serving the New Haven market.
1632
«Se
There is presently an application pending to consolidate
City Trust Company, Bridgeport, with deposits of $242 million, and The
Waterbury National Bank, Waterbury, which has deposits of about
$61 million. The bank resulting from this consolidation would rank
sixth in the State. ‘
All of the largest banks in Connecticut have possibilities
open to them whereby they coyld expand their present branch systems
through de novo branching or through merger with relatively small local
banks. It is i important to note that as.local banks are ecquired by
outside institutions home office protection can be broken so that where
de novo branching was previously barred other outside banks can enter the
Tocal market. Considering the resources of Connecticut's largest banks
and the present geographical extent of their branch systems, several
banks appear to be in on excellent position to develop Statewide branch
networks in the foreseeable future, including the Connecticut National and
First New Haven. It would eppear that the trend in banking structure in
Connecticut is toward development of several Statewide banks and it would
be undesirable at this point to permit the elimination of one of the
banks which is aost likely to develop an independent Statewide systen,
The application indicates that New York and Boston hanks
Coupete for business in Connecticut ond thot the resulting bank would
be in a better position to compete with the larger institutions, The
resulting institution would, however, be substantially smaller than
most of New York City banking institutions.
According to the application there were as of December 31, 1969,
25 mutual savings banks with aggregate deposits of $2.5 billion and
16 savinge and loan associations with combined assets of $752 million
operating within the area of Connecticut National and First New Haven,
There are also numerous credit unions as well as insurance comp:nics
and small loan and finance companies in the relevant area.
VV. CONCLUSION WITHA RESPECT TO COMPETITIVE FACTORS
Consummation of the proposed consolidation of The Connecticut
National Bank, Bridgeport, and The First New Haven National Bank, New Haven,
would eliminate a significant amount of existing competition, particularly
1633
a
in the local Bridgeport and New Haven banking markets. Moreover, there
is potential for greater competition between the two banks through de
branching or through merger with other possible alternatives in which the
anticompetitive effects would be considerably lessened,
The subject proposal would join the fifth and seventh wnnnen
banks in the State, creating a bank which would rank third; holding about
12 per cent of the State’ s' total commercial bank deposits, Thereafter,
the four largest commercial banks would hold 58 per cent of total deposits
in Connecticut. Such a move would continue concentration of banking
resources in-Connecticut in the large banks.
Overall, the competitive effect of the — consolidation
would be substentially adverse.
As required by the Benk Merger act (12 U.S.C. 1828(c)),
this report is limited to a report on the competitive
factors involved, and is not a recommendation as to
whether the application should be epproved or disepproved.
The term “substentially adverse" as used in the above
conclusion is defined at 12 C.F.R. 250.182 (34 Fed,
Reg., July 10, 1969, p. 11414); Fed. Res. Bulletin, July 1969.
1684
GX-98
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF CONNECTICUT
Civil Action No. 14,588
UNITED STATES OF AMERICA and WILLIAM B. Camp,
COMPTROLLER OF THE CURRENCY, INTERVENOR,
PLAINTIFFS
v8.
THE CONNECTICUT NATIONAL BANK and THE First NEw
HAVEN NATIONAL BANK, DEFENDANTS
Deposition of FRANK G. CHADWICK, JR., taken
pursuant to the Federal Rules of Civil Procedure, at the
United States Court House, New Haven, Connecticut,
before Gerald Gale, a Notary Public in and for the State
of Connecticut, on Monday, July 17, 1972, at 2:00 p.m.
[9] Q Are you familiar with the terms “retail bank-
ing business” and “wholesale banking business”?
A I am familiar with how I would interpret them.
I am not familiar with how you would interpret them:
Q ame you explain how you would interpret those
terms
A I think anything that has to do with dealing with
any segment of our communities, particularly in the
lending field, with all segments, except the manufactur-
ing and mercantile and trust activities would be retail. I
would include that most of the mortgage activity, most
of our—all our lending, even part of our commercial
lending, anything that does not—that you would not
[10] commonly think had to do with corporate commerce
or manufacturing.
Q You would consider wholesale anything that has
; to do with corporate commerce?
A Yes, sir.
[12] Q How many offices does The First New Haven
: National operate in the City of New Haven?
a
1635
MR. REYCRAFT: Rather than rely—do you know?
A Yes, I could give it to you in a minute. Seven,
including the main office.
Q Do you think that the bank would be able to service
the City of New Haven with one very large office if
that office were centrally located?
[13] A No. If we could, we wouldn’t have the seven
offices. I should say, of course, we couldn’t.
Q What is the reason?
A We have found, I think, that we have to be where
our customers are or at least nearer to them than our
competition, or at least as near to them as our com-
petition.
Q Do you believe that the factor of convenience to
the customer is of any importance?
A Primary im
Q Could you lain why you believe it’s of prime
importance?
A _ I would have to, say that experience has taught us
very clearly that if we are not where the customers are,
we are not going to enjoy the business.
Q Are you talking about retail business?
A I am talking about both.
[15] Q Wouki you be able to state what you consider
to be the [16] service area of The First New Haven Na-
‘tional Bank?
A I have got to answer this question two ways.
What I consider the service area was up until two years
ago, and what I consider the service area today. Up
until two years ago or three years ago, we considered
our service area, that area between the two rivers in
Connecticut. Now we consider our service area the State
of Connecticut.
Q What happened two or three years ago to cause you
to change your view?
A Complete change in the climate of the banking busi-
ness in the State of Connecticut.
Q What are you referring to which would cause this
complete change in the climate?
—
1636
A Recognizing that statewide banking is here and
this happened very swiftly in the last several years,
{[72] Q I notice that this branch shows a substantial
loss in each of the five years reflected in the statement.
Does that mean your bank is losing money by operating
this branch?
A Yes, of course, it does,
Q If you dropped the branch, would you expect that
the expenses included in the Service Departments would
drop by that amount?
A You mean if we closed the branch?
Q Yes.
A Of course, it would. These people, theoretically,
are buying that amount of service from the main office.
Some of it, parts of my salary would have to be divided
up among 30 other locations. We are divided among 30
instead of 31. .
Q So, then, the expenses incurred by the main office
would not decrease because—for many items—because
the branch was closed?
A Probably riot, but I don’t understand what. we are
getting at. :
(73] Q Is there any reason why you don’t close this
branch that’s losing money?
A Yes, because it’s our judgment that this branch
would be a profitable branch down the road. There is
a great deal of development going on down there. It’s
much slower than we thought when we put the branch
there, and I would predict that this branch will become
one of the most profitable branches in the whole system.
It just didn’t come along as swiftly as we thought.
Q When you put the branch into this location were
you counting on the growth and development to eventu-
ally make it profitable?
A Yes.
Q Is there any reason why you did not wait several
years to put this branch in until the area had become
developed? .
A We made a mistake in judgment, in timing.
_—
1637
Q Asa general matter, wouldn’t it be more profitable
to wait until an area is built up before you place a
branch in that area?
A No
Q Why not?
A Because Hartford might put a branch in there
instead, and then we would be foreclosed from that time.
[77] Q Did you play in the role in the establishment
of branches in Wallingford in 1968?
A As President of the bank, but not the chief execu-
tive officer, yes, te
Q Will you explain what your role was in the estab-
lishment of that branch?
MR. BELL: Which branch?
MR. BENTKOVER: - Wallingford.
A Judgmental.
[78] Q Did you make a recommendation whether or
not to establish that branch?
A I am sure—I would be sure that I joined in the
recommendation to establish the branch.
Q What was the reason why you recommended estab-
lishing that branch?
A No one reason.
Q Several reasons?
A Sure. Number one, geographic, we needed to have
representation in that part of the territory. We had
some good customers up there. We saw it developing
very strong economy in that particular area. We saw
our competitors getting footholds there, and I guess all
of our research said that’s the place to put a branch.
Q What indications did you see of a developing econ-
omy in that area?
A First place, we saw Old Colony Road developing
like very swiftly. We knew of the real estate develop-
ment that was going on up there. We knew of the trans-
actions having to do with several shopping centers. Re-
search, counting the businesses and the deposit potential,
and the potential customers that we saw there led us
to a decision.
—
1688
[79] Q Was it your judgment that the market for the
— 8 services in Wallingford was expanding?
Yes,
Q Did you expect to make a profit the first year you
Se ee
No.
Q Is it normal to make a profit the first year?
A Not for us.
Q About how many years do you normally expect
it to take for your branch to be profitable?
A I have no rule. I have no judgment on that at
all. There is no rule.
Q Would you explain how you decided it’s worthwhile
a branch if you realize you are going to
lose money for the first few years?
We look at our business in a much longer range
We look at our business in a much
f
:
:
Q
A In fact, in that particular location another factor
was we were in a position of losing substantial cus-
tomers and we felt from a defensive standpoint that was
a criteria that we [80] had to recognize, too.
Q How far do you look ahead when considering the
profitability of the branch?
A I can’t answer. I don’t know.
Q You mentioned long-term. I wondered whether you
had some specific number of years in mind?
A No.
Q Would you look as far ahead as 10 years in analyz-
ing the growth potential of an area?
._ A Yes, I think any business rule, any experience that
I would have would indicate that it’s common practice
to look at least 10 years ahead to get your investment
back before you start making profit.
Q Would your bank then look ahead 10 years in esti-
mating how large the market for services would be for
banking service in a potential market?
A Best estimate, yes.
1639
Q Are there any particular factors of growth which
you consider to be particularly good indicators of how
good the market would be in the future?
A Yes. The injection of industrial activity, manu-
facturing activity. .
[81] Q Who makes such projections?
Q Is your bank also interested in predictions of the
increase in population of a particular area in the future?
A Yes.
Q Why are you interested in that?
A Because we are in the banking business and popu-
lation has a direct bearing on what our market is going
to look like, It’s a whole new science which I think
they call demographic studies, and the demographic
studies which we are becoming familiar with and which
we are using are teaching us some very interesting and
significant .things.
Q Do you know which particular demographic studies
your bank uses in reaching a judgment on whether to
establish a branch?
[82] A Number one, we are using our own. Num-
ber two, we are using our—subscribing to a combined
study which started from the census tracts which was
being done by young computer scientists at Harvard and
Yale, which are supplying us a lot of basic material, in
combination with our own computers. We are doing a
lot of this with computer patterns.
Q If your marketing staff and branch staff stated to
you that in a particular town there was not at the pres-
ent sufficient business to be—to make a new branch prof-
itable, but in the future there would be substantial
= would you consider placing a branch in such a
town ;
iiehammenaiated
1640
A They would have to document this, based upon the
documentation and—a business judgment would be made.
Q Are you willing to consider placing a branch in
a town if it is not profitable now, but maybe because
of future growth become profitable?
a
Q You would look as far ahead as 10 years in assess
ing the potential and profitability of the branch?
A Yes.
[84] Did you plan any role in establishing the
branch in Guilford in 19657
A As the chief lending officer of the bank, as a mem-
ber of the staff committee, again, the judgmental input,
yes.
Q What was your recommendation as to whether or
not to establish that branch?
A’ I was in favor. ;
Q Was there anything in Guilford that made that lo
cation attractive to your bank?
A Which location?
Q The location where you now have a branch?
A Yes
Q Would you explain what made it attractive?
A Post Road has all the signs of developing over the
next few years in significant ways, activity is moving
away from the Guilford Green in significant ways and
we felt that where we are [85] now is the place to be
in the future pattern growth of the town.
Q At the time you established the branch at that
— was there sufficient business to make it profit-
e .
A Did we have sufficient business to make it, or
was there?
Q Was there?
A Potential?
Q At that time that you established the branch.
place. Our research indicated that we ought to be there.
In practice, we found that we could be there quite inex-
a
pensiyely, as a matter of fact, as compared with other
see a We had substantial built-in business there, so
that the mix was different. The mix was substantially
th
Q Are you currently surveying locations within your
service area for potential branches?
A We always are.
Q Are there any.areas in Service area which
you now believe would be profitable sites for a new
branch?
A We believe will be profitable \sites?
Q Considering the future as you normally do?
A Yes.
sider? out YR Bame towns or areas which you con-
A Does this become public information?
1642
MR. REYCRAFT: If you want a list of sites that
he is surveying, we don’t mind giving it te you in
[87] confidence, but we will object to putting it in the
deposition because it’s going to be filed.
THE WITNESS: I wouldn’t even tell my own wife
where these are.
MR. BENTKOVER: Do you want to talk about this
off the record?
MR. REYCRAFT: Sure.
(Discussion off the record.)
(Deposition adjourned at 4:45 p.m.)
[91] FRANK G. CHADWICK, JR., having been pre
ee ee resumed and testified further as
ows:
DIRECT EXAMINATION CONTINUED
BY MR. BENTKOVER:
Q Before we closed yesterday, we were omy
areas which First New Haven considered to have
potential for new banking offices. Could you state as
specifically as you can without giving away what you
consider to be confidential information, whether there
are any such areas on the eastern shore of Connecticut,
and could you identify those areas?
A May I refer to the map, please? We see a new
character of potential banking business developing all
along the east shore between where we are and New
London. As you know, at least two of the towns are
protected by the Home Rule Act with independent banks
which would foreclose our going into those towns unless
we purchased the banks that have that protection at this
time.
Our purpose, therefore, would be to get as close to
those towns as we can and to share the potential bank-
ing business. Those towns, of course, at the present time
are Clinton and Deep River. We have studied and are
studying the (92) traffic patterns, the developing growth
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1644
Q Do you have any knowledge of the attractiveness
for new banking offices of the City of Hartford and the
towns immediately surrounding Hartford?
A None.
Q Do you have any knowledge or opinion of the at-
tractiveness for new banking offices of the towns in the
far southwestern part of the State of Connecticut be
ginning at Greenwich and moving up through Fairfield?
A I recognize—I understand your question. Our mar-
ket research says that part of the State is p
growing faster than any other part of the State. This
has to be one of the [98] rationale of our attempting
to have our stockholders share in that market.
Q Do you believe that there will be a need for new
banking offices within that area?
A I would assume, yes.
(102] Q Did The First New Haven Bank stop its
plans to develop offices in this area because of the cur
rent antitrust case?
A I hesitate to answer that, to try to answer that.
MR. REYCRAFT: If there are a number of factors
you can—
A I think my answer would be on the advice of
counsel to answer: yes, we did interrupt our—what
probably would have [103] been a time schedule.
Q Would you have planned to have opened branches
in that area had this case not been filed?
A I think so, I think so.
Q What was the reason that you did not open branch-
es in the area? .
A I have to defer to counsel on that. It was on the
basis of their advice to me that it probably might get
in the way of this case.
[111] MR. BENTKOVER: Mark as Chadwick Ex-
hibit No. 6 a letter from F. G. Chadwick, Jr., to a party
identified as “Dear Coy,” dated October 30, 1970.
(Plaintiffs’ Exhibit Chadwick 6 was marked for
Identification. )
1645
Mr. Chadwick, did you write this letter?
Yes, ;
Can identify the man you wrote it to?
Yes, Me J. Coy Reid, my predecessor.
What was the reason you wrote this letter to Mr.
OPO PO
Reid?
A He wrote a letter to me which you have a copy of
requesting information on, I believe, 32 questions or ob-
servations which he made.
Q_ I direct your attention to the last paragraph on
the first page. You state: “If my memory and records
are correct, our Bank under your leadership has had
serious conversations in the last ten years with sixteen
banks or companies towards possible mergers. In the
last fifteen years approximately, we have been success-
ful in only three cases, Milford Trust Company, New
Haven Bank, NBA, and the Branford Trust Company.”
Did you think that The First New Haven National
Bank [112] should have acquired more than the three
banks you refer to?
A No.
Q_ At the top of Page 2 you state: “Two of these I
consider to have been very good and constructive; the
one with New Haven Bank, N BA, is still questionable in
my mind for many reasons.”
The two mergers you refer to, I believe those are
Milford Trust Company and Branford Trust, is that
correct?
A That’s correct.
Q Would you explain why you considered those merg-
ers to have been good and constructive?
A In each case, each bank gave us a foothold in a new
territory with profitable operations immediately with no
long term personnel liabilities, costly liabilities. -
Q What did you mean by the word “foothold”?
A Meant that it got us into new towns that we could-
n’t have otherwise gotten into.
Q = you use that foothold to expand within those
towns
A Yes, Milford and Branford.
Q What form did your expansion take? —
A In both cases we have additional branches as well
1646
as the branches—as well as the locations that were in
existence [113] when we bought the banks.
Q Did you expand the particular branches which you
se! ?
A Yes.
Q Have you substantially increased the deposits with-
in the two banks that you acquired?
A Yes. « . * Sd
Q In the next sentence on Page 2 you state: “All
of a sudden, certainly during the past year, the Con-
necticut banking scene has changed dramatically .
Would ven date to wes [114] you refer to as “.. . the
Connecticut banking scene has changed dramatically
sad
“A The activities of the Hartford banks, specifically
_ in their moving into new parts of the State and their
* -intention to encroach upon our—into our areas.
Q Continuing the same sentence you state: “...I
believe that our Board almost unanimously feels that we
can no longer enjoy the immunity or the luxury of fur
ther failure to gain for our stockholders a broader geo-
graphic base from which to expect growth and competi-
tive capabilities.”
Did you see any advantage to your bank in obtaining
a broader geographic base?
A We discussed this in a number of different ways
here, particularly Fairfield County and Litchfield County,
of the State where CNB was entrenched. We saw
the possibility of our stockholders sharing in that specific
growth immediately.
Q Are there any particular advantages or would
there be any particular advantages to your bank by
having a broader geographic base rather than just in
the immediate New Haven area?
A It seems to me self-evident if we are able to share
in a faster growing area than where we now are that
our stockholders [115] and our ability to serve would
be enhanced.
Q Does having a broader geographic base also pro
vide a more stable source of business so that you are
less reliant on one area than another?
—
1647
Yes.
Did you consider that point?
Of course.
Was that of any importance to you?
I would have to think of prime importance.
MR. BENTKOVER: Mark as Chadwick Exhibit No
7 two pages of handwritten notes.
(Plaintiffs’ Exhibit Chadwick 7 was marked for
Identification. )
Q Mr. Chadwick, can you identify the handwriting
on the exhibit?
A Yes. ;
Q Whose handwriting is that?
A It’s mine.
[119] Q Would you read the last paragraph on the
first page?
A “Even though our present discussions with CNB
are highly tenuous, I see still a possibility that we in
a new bank can become significant part of the largest
bank in Connecticut.”
Q Would you explain how you saw the possibility of
that in a new bank First New Haven could become
part of the largest [120] bank of Connecticut?
A If The Connecticut National Bank merger is suc-
cessful, this would make us a three-quarter billion dollar
bank and I would—I would suspect that my successors
somewhere along the line would be taking the next step
to—one way or another to make us a billion dollar bank,
which would put us in the ballgame as the largest bank
in the State of Connecticut.
Q Were you thinking of any specific steps?
A No, sir. Possibilities, yes, but specifically, no.
Q What possibilities did you have in mind?
A Pick any other bank that you want in Connec-
ticut that is 300 million and you have the answer, and
there are several.
Q Do you mean, then, that you were considering
merging with another bank of equivalent size after this?
A I mean that I considered it a possibility.
1648
: Mert ,
Gx-99- ° Tune 235, 1904
MEMORANDUM
To: Messieurs —~ ee
Chadwick
Hooker
James
‘Are you interested in
\
\
««.statewide bank representation? —
e+eClosing towns now open to
..-ommercial bank branching?
.--opening closed towns (such as
Hartford, New Britain, Waterbury,
Stamford) to branching?
a t
- e208 lead time of one to two years
on our competition?
We have a plan....
James J. Terzakis, Ext. 2983
Paul H. Johnson, Ext. 4097
Teesvay
° . Inne 2, 19by
CORPORATE ORGANIZATION FOR GROWTH
I. t Merger Developments in Connecticut Banki
Ta 1968 the Connecticut Bank and Trust Company and
the Connecticut National Bank filed an application with the
Comptroller of the Currency to merge the two institutions.
Qn April 14, 1969 the proposed merger was approved by the
Comptroller, following which on May 9 the Justice Department ¥
filed suit to enjoin the merger. Subsequently the two banks
abandoned their Merger plans. ~ .
On July 9, 1968, The Union-& New.Haven Trust Company
and The Pairfield County Trust Company announced plans to merge.
On September 30, the State Banking Commission approved the.
proposed merger as did the FDIC on June 13, 1969. The Justice
Departuent now-has until July 13th to attack the proposed
merger in the courts or to allow its consummation.
II. Antitrust Environment — |
It is clear that the Justice Department has adopted
amore stringent stance toward mergers of any type - -~ industrial
or financial. Even now the Department is planning to test in
the courts the cannibalistic appetites of the conglomerates such
as 1.7.7. and LTV despite the fact. that the original antitrust -
legislation pre-dates the cqnglomerate form as we know it today.
= ~, If the Department is consistent in its interpretation
of the antitrust laws, then, the proposed merger of Fairfield
County Trust and Union aad Haven will not survive either.
It seems clear that the major banks in Connecticut
will be allowed to merge only with the’ tiniest institutions --
"certainly not more than $10 million in deposits -- and even
these will be subjected to close scrutiny. The message rings
clear that the avenues of growth for large banks will be re-
stricted to de novo branching, in this state at least.
‘We cannot visualize such aggressive banks as CBT,
Hartford National, or Connecticut National restricting their
branching activities to their present market areas. These
banks have gone on record as desiring statewide representation.
If banking in Connecticut does move towards a "seats-of-power" ie
* stance (Hartford, "New Haven, Stamford, Bridgeport, for example),
we can expect that these banks will acquire “seats® \in each of -
*
these power centers °
rrr. ‘De Novo Branching Situation in Connecticut Now
. : If we accept the de novo route as the only practical
avénue to bank growth, what then is the present situation? We
ean branch de novo in about 128 towns in Connecticut; the balance
of 41 towns is closed to us via this route. Pi
. Among the 128, there aré about 30 towns which have
no financial institutions of any kind -- either commercial,
mutual savings or savings and loans. These towns generally
. have’ less than 4,500 people, ‘lack a significant retail focus
and cannot support a standard size branch such as we have in
Wallingford, for example. (A standard size branch building can-
sot be beilt for auch less than $100,000 and with equipment,
for about $125,000 total. Moreover, we have abundant evidence
that our standard size branches are going to become even more
costly in the future.) Por this reason (and others) we have not
” considered these towns for a standard facility.
However, if we wait for a town ‘to grow and develop
to the point where it can support our standard facility, it is
reasonable to expect that in a good many cases our competition
will file branch applications before we do. And yet ‘the bank
that establishes a branch in these towns first will gain a-
measurable advantage over its competition, not only in terms
of being considered favorably as a depository for town funds .
but idee in terms of the favorable corporate image it would
project to the town residents. *
Hence, if these unbanked towns are too small to support
our standard branch, then attack the problem in reverse -- make
the branch of a size that will fit the existing town market.
Wi: Motor Banks - An Answer
Po
We'have explored the ahib-beniath or motor bank size
facility to achieve this objective. For an investment of about
$35,000 we can have a motor bank with 2 drive-ins, a walk-in
lobby, 300-500 square feet of usable space, staffed with three
people and fully equipped and more importantly, relocatable.
, ; . the factor of optimum location within the town
is not critic al -- getting in first is.
The market for this type branch, then, could be the
30 unbanked towns or the 149 where we are not represented. Con-
ceivably, we can be established physically in the former instance
for an investment of about $1,000,000 or in the latter for about
‘$5,500,000. : . . .
What, then, have we accomplished?
1. A highly favorable public opinion of our bank
im those towns where we have provided full-service banking.
& a competitive advantage initially.
3. Broader geographic market coverage.
4. A lead time on competition of perhaps up to
six months only since competition will examine our motor bank
concept and imitate it.
Proceeding further, how can we place greater constraints
on competition and make our own position less vulnerable?
Vv. Organizing for Growth ;
, Porm a registered bank holding company. Not a one-
bank holding company but a registered one. To qualify under
this organizational form, two independent banks are required
wherein the holding company “directly or indirectly owns, con-
trols or holds power to vote, 25% or more of the voting shares
of each of two or more banks...° The flagship bank would
be the First New Haven and the second bank could be any number
of possibilities including, for example, a “spin-off" of the
University Park Office (Dixwell) after it is established for a
time. (It should be noted that Connecticut has no laws regula-
ting bank holding companies.)
.
1 = Bank’ Holding Company Act of 1956
1653
Traditionally, a holding company acquires existing
4ndependently owned and operated banks. But why be bound only
to existing banks? Why hot establish newly chartered inde-
pendent commercial banks in unbanked and banked towns as part
of the holding company. e ee tan
Tt will then be possible -- and legal -- for any one
of the independent banks © branch within the town it is located.
for example, if such banks are formed in Hartford, New London,
Stamford, or Bridgeport, there is no legal restriction to
trenching by the infepentont vithin the tm.
“The following organizational chart outlines this
—
corporate form.
Mow what advantages have'we gained?
1. { Closes unbanked towns to de novo branching by
commercial bank competitors. Their entry to a town is re-
stricted only to a newly chartered bank. Rowever, there are
no restrictions imposed on branching by mutual savings and/or
savings and loan associations.
x Opens towns closed to de novo branching by us
forever or so long as the existing state banking laws remain
in effect. 7
3. Presents us with an opportunity to gain statewide —
representation relatively quickly.
i 4. Purnishes our bank an immediate competitive ad-
wantage by being first in unbanked towns.
5S. Establishes a competitive lead time of perhaps
one to two years.
There are any number of variations that could ‘be
employed under this corporate form of organization. It may
even be an attractive alternative for existing independent
commercial banks (Home National, North Haven National and others)
to enjoy the advantages of the holding company form but at the
same time retaining their local autonomy.
In ahy event, we are convinced that we cannot insulate
-
our bahk from encroachment by the larger commercial banks of
Connecticut in light of recent Justice Department actions.
What are Some of the Problems?
1. Personnel
2.: Money
3. Incorporators
4. Regulatory Obstacles
5S. Bank Security
6. Operations
a
1657
GX-100
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF CONNECTICUT
Civil Action No. 14,583
UNITED STATES OF AMERICA and WILLIAM B. Camp,
COMPTROLLER OF THE CURRENCY, INTERVENOR,
PLAINTIFFS
v8.
THE CONNECTICUT NATIONAL BANK and THE First NEW
HAVEN NATIONAL BANK, DEFENDANTS
Deposition of ALEXANDER F. HAWLEY, taken pur
suant to the Federal Rules of Civil Procedure, at the
United States Court House, Bridgeport, Connecticut, be-
fore Gail F. Keane, a Notary Public in and for the State
of Connecticut on Friday, July 21, 1972, at 9:00 A.M.
Appearances:
JOHN W. CLARK, ESQ., FRANK N. BENTKOVER,
ESQ, and KELLEY V. REA, ESQ,
Trial Attorneys
U. S. Department of Justice
Antitrust Division
Washington, D. C.
CADWALADER, WICKERSHAM AND TAFT, ESQS.
Attorneys for the Defendants
1 Wall Street
New York City, New York
BY: GEORGE D. REYCRAFT, ESQ, of Counsel
[4] Q What were your reasons for’ desiring this con-
solidation [5] with First New Haven National Bank?
A Well, I was becoming very aware of what was
happening to the banking industry in this State, particu-
larly the moves were being made into this very impor-
A I knew of their interest, obviously, I knew of their
interest in Fairfield County.
Q Did anyone at CBT indicate to you specifically that
he would attempt to enter Fairfield County in another
way, should the proposed consolidation fail?
A Yes.
Q And who was that?
A I believe the remark was made by one of the of-
ficers that this could only be done de novo,
__Q Did he indicate that he would attempt such eritry
1659
A Well, to me, the way he said it was a clear indi-
cation.
Q And who was that?
A It was either Jim English or Walter Connolly.
Q When did he say this, was this after you had
agreed to consolidate or before?
[7] A This was after the decision was made not to
pursue the matter.
Q Now, in the time which has passed since that pro-
posed consolidation failed, have the Hartford banks made
efforts to enter Fairfield County?
A The first part of the question again?
Q Well, since 1970, since 1969, have the Hartford
banks made efforts to enter Fairfield County?
A Since 1970? Yes, they have, Mr. Clark, yes.
Q Yes, they have? .
A They have, in effect, entered the County.
Q How have they done so? |
A They have done so by both the merger route and
the de novo branching route.
Q_ Let’s take CBT. Now, CBT did acquire Columbus
Industrial Bank, did they not?
A Yes.
Q CBT has established one or more de novo offices
in Fairfield County, is that correct?
A Yes.
Q One in Fairfield, is that right?
A Yes.
[8] Q One in Darien?
A Yes.
Q Are there others that I have missed?
A I don’t think so. Darien, Fairfield, Bridgeport,
and of course their entry which is currently being ef-
fected through their holding company with the Fair
field County National Bank in Norwalk which has two
or three branches in the City of Norwalk.
Q WoulM you elaborate on this Fairfield County Na-
tional Bank transaction?
A Yes. The Fairfield County National Bank was
originally a merger arrangement with the Connecticut
Bank and Trust Company. They subsequently have re-
And that will become a subsidiary of a bank hold-
ing company which also controls CBT, is that right?
[9] A Correct.
Q When was that announced?
A I guess within the month.
Q Now, let’s take Hartford National. How have they
attempted to enter Fairfield County?
A I think their first move was merging the Lincoln
National Bank in Stamford.
Q And they have also established one or more de novo
offices, have they not?
A A number of yes. .
Q One in Fairfield, is that correct?
A Yes
Q Is there one in Trumbull, I don’t know?
A I don’t think so.
Q Are there any other de novo offices in the Bridge
port area that you know of?
A No.
Q How would you characterize—
A They are in our service area, not in the Bridge
port, but in our service area.
Q What other offices are there then within your serv-
5
d
{10] A Danbury, Ridgefield, I believe that is it.
Q Have these two banks offered significant competi-
tion to CNB within its service area?
A Yes.
Q Since they came in?
A Yes
Q What was the extent of competition with these two
1661
Hartford banks prior to these moves into Fairfield County
that we have spoken of?
A Prior to moving into Fairfield County, their com-
petition was negligible.
Q Was there any competition for the larger accounts?
A The only competition that we saw or recognized
was in the municipal field.
Q Would you elaborate on that? What does that in-
volve?
A Well, this is the rendering of financial services
to municipalities from the point of view of bidding on
their short-term obligations, discussing with them and
assisting in their financial management.
Q But you are saying then that as far as you know,
there was not significant competition for, let’s say, the
larger corporations which are operating in Fairfield
County?
[11] A I wasn’t aware of it.
Q Do you have any explanation for that, that is do
you know why Hartford banks were not competing for
that business?
A In our business, until you are established there,
why, there aren’t compelling reasons to solicit business.
But now they are established here and strongly so.
Q And that holds true even for the largest accounts?
A Well, there are, of course, large accounts that are
Shared. I mean such as, well, United Aircraft and some
of the larger accounts. But with respect to large local
accounts, that holds.
{12] .Q Is Union Trust attempting to establish offices
in the greater Bridgeport area?
A In the greater Bridgeport area?
Q Yes.
A Yes.
Q_ Do you know where?
a They have just established an office up in Trum-
Q Would you expect that office to offer significant
competition to CNB in this area?
1662
A It will offer competition.
Assuming that you are permitted to consolidate
with First New Haven, how will that make you better
able to compete with these three larger banks that we
have spoken of?
A Well, there are any number of reasons. It will
first of all give us a stronger base for attempting to
compete with them in other parts of the State. It will
give us, of course, improved lending limits, which will
help us to hold important business. And this is the
ents Cf ur business; to keep the business that you
ve,
It will enable us to provide more services than we
are able to do now because of our size and improve
our personnel, our staff, greater skills, more training,
and come into this [13] market in a stronger competi-
tive position then each of us is, separately.
[15] Q Why do you feel it necessary, first of all, for
the consolidated bank to become a state-wide bank?
A Because if we are not permitted to grow and im-
prove the competitive structure of Connecticut banking,
the State is going to be overwhelmed by these two Hart-
ford banks.
[16] Q What does it matter to CNB that some other
bank, a larger bank perhaps, would be represented
throughout the State?
A We have been a very important bank in the com-
mercial development of this State. The Connecticut Na-
tional Bank has long and important identity with the
commerce of this State and it is my intention to see
that this is fostered and continues.
As our companies grow, it is necessary that a service
vaso neals grow with them to retain and hold onto this
ness,
[18] Q And have you considered what Connecticut
National Bank will do with respect to this need to be
come a state-wide bank if you are not permitted to
merge with First New Haven?
1663
A We have been attempting to spring out of this
area that we are in and improve the competitive struc-
ture with the banking industry here for a couple of years
now. It has been a lot of work, a lot of effort. It
has its impressions which are left with our people. I
don’t know what I would do immediately. I feel that
if this fails, we are delivering the domination of the
banking industry in this State to Hartford.
Sanh atape cnn: ne re CNB take to prevent
that
A I might consider certain ways.
Q Would you elaborate?
A Now mind you, this is something I haven't given
very much thought to because I have been all wrapped
up in what I am doing now.
MR. REYCRAFT: Mr. Hawley, I don’t want you to
speculate about things that you haven’t really considered
[19] carefully. So you don’t have to engage in wild
ati
on,
MR. CLARK: No, I am not asking you to engage
in wild speculation.
THE WITNESS: There are things that I suppose
can be done, but—
MR. REYCRAFT: If you haven’t considered them
specifically, I really don’t want you to speculate about
them at this short notice and on the spur of the moment.
Q May I ask whether you have considered any alter-
native courses of action?
A If this merger should fail?
Q Yes?
A No.
Q And, therefore, you state that today your are un-
able to testify except through speculation as to what CNB
would do in the absence of this consolidation?
A There are things that I would consider. I might,
although I have never thought of it at the present time,
I would study the holding company techniques and might
analyze other possible mergers, but the period of time in-
volyed would place (20] this bank of mine at a serious
disadvantage.
Q Vis a vie?
1664
A Because it would divert attention from the business
of banking which my major competitors in Hartford are
now. doing. : zs :
[80] Q Do you believe then that this consolidation
would permit you or would make you better able to re
tain business of this type which you now have?
A Yes.
Q And if you are not permitted to consolidate, what
would be the effect within Fairfield County?
[81] A Fairfield County is extremely important from
the point of view of its manufacturing strength and cor-
porate headquarters strength and this is frightfully im-
portant to the Connecticut National Bank. The improved
banking services across the board that we will have will
be very meaningful in this competitive climate.
Q I was referring to the possibility that the con-
solidation would not go through.
A Oh, would not go through.
Q Now, you said that if it did, you would be better
able to retain business of this type. If it does not go
through, would you be likely to lose it?
A Very likely to lose the business.
Q To whom, Hartford?
A Yes.
Q Since the entry of the Hartford banks into Fair-
field County, have you lost business to these banks?
A I believe business has gone to them that we might
have retained, or that we might secure.
Q So this is business which you had not had before
but which you might have gained except— .
A No, it is portions of business, municipal area, for
[82] example.
Q Can you state whether or not there was any busi-
ness which your bank was doing with one or more cus-
tomers which you have lost to the Hartford banks?
A No, I can’t answer that.
So then are you speaking of simply the ability
of CNB to continue to gain a share of this larger busi-
ness which you have gained in the past? I haven't
made myself clear. I won’t pursue that.
1665
Let’s take the subject of loan limits. What would the
loan limit of the consolidated bank be, how much larger
than CNB’s?
A Almost double. Be something over four million.
Q Do you expect that there would be customers who
would borrow fully within this loan limit?
A Yes.
Q How many customers, roughly?
A If I understand your question, the number of people
who would avail themselves of the new limit to its fullest?
Q Yes. |
Q Can you estimate in numbers of dollars then how
many dollars of additional commercial industrial loans
the consolidated bank would make to these large cus-
tomers
A In other words, on the consolidated bank, with
its increased lending ability, what that would mean in
dollars?
Q Yes,
A Well, as I said a moment ago, with our current
limit of two million and we have a number of national
lines who are using that, I expect that most of these lines,
these national companies, would take our full limit. It
is pretty hard to measure in terms of dollars.
Q Would the consolidated bank then be making a
greater amount of commercial industrial loans by dollar
than both banks are now making separately?
A I believe, yes,
Q Can you estimate in terms of a percentage or
dollars how much more? ;
A No, I couldn’t. I really couldn’t.
Q Do you think it would be substantial?
A Well, substantial is a relative word. It would be
measurable, we would see it.
a) x Does CNB compete in the City of New Haven?
0. ‘
1666
Q Do you solicit accounts in New Haven?
A No.
Q Do you consider CNB to be in competition with
First New Haven in any area of the State of Connec-
ticut?
A Not really, except for Orange and Milford.
[52] Q How about Ansonia-Derby?
A Well, I think it is fairly modest. They have an
office in Derby and, of course, we are in Ansonia. There
would be some.
Q And I take it your reason for stating that there
is competition in these towns is that both banks have
offices there?
A Yes.
Q Am I correct?
A Yes. . . ao J
[52] Q Have you made any attempt to estimate the
cost of substituting new services which the consolidated
banks might offer?
A No
Q Have you made any attempt to assess the market
demand for such new services which might be offered?
A We know they are needed in order to maintain our
competitive position with the Hartford banks.
Q How do you know that?
A Because if we are going to, as a service business,
render the kind of banking services this wholesale and
retail market needs, we must do it.
Q Have you sent your marketing division Vice-Presi-
dent, for example, into the Fairfield County area to at-
tempt to find out [53] the number of corporations who
would use some new service other than higher loan limits?
A I have not sent them, whether they have or not,
I hope they have.
Q Have you hired any consulting firms to make sur-
veys as to the possible demands for new bank services?
A Noa
Q Do you recall whether or not your bank has, in re
cent years, received requests from customers for cer
1667
tain services, any services which you were not then offer-
?
er Yes, I have heard remarks made from officers of
mine about services we do not provide.
Q They had received inquiries from possible cus-
tomers about them?
A Yes
Q What happens after these inquiries? Did the bank
attempt to satisfy them in any way?
A We didn’t feel that we could, at that time or this
time, invest the money.
Q Did you attempt to help the customer by putting
him in contact with the bank that could satisfy his
needs?
A I believe they would, I would.
(54) Q Is that the normal thing for a bank to do
when it finds that it cannot personally satisfy a cus-
tomer? They put him in contact with a correspondent
bank, for example?
A I think so, and it is logical that the client would
ask questions.
A A request of us that we have not been able to
provide?
ion placed before the Shareholders to require
all such dual memberships to be eliminated?
Q What were the reasons for your bank’s position?
1668
A Number one, there is nothing illegal about a man
A Why do I fear it?
Q Yes
A I don’t fear it.
Q Well, you said that if the businessman could not
Serve on both boards, it might hamper CNB’s ability
to ‘get or to attract capable people as directors, am 1
correct?
Q Wouldn’t you expect those capable corporate of-
ficers, given the fact that they are perhaps closer to the
Q Did you consider that factor, you or the bank or
the Board, when it made its decision to oppose the mo-
because there are several members who are
these
‘such a
Q You don’t feel that your bank is at a disadvantage
then also
mem of a savings bank, am I correct?
a
[59] Q Would you tell us how CNB made its de
Yes, I was very much involved. ‘He; as you may
Bete know: established the first branch ‘bank i
State and he was way ahead of his time in relation
ship to bringing banking to [60] the
period of growth for our
was between 1958 and 1968 and that
re
F
banking and he saw in
ing in Fairfield County. He just started out,
dustry
thought it represented, would represent in the way of
growth.
Q Did you attempt to project earnings for the pos-
sible new branch?
A Y did.
(61] Q How far into the future did you look in order
to make the sion that an area woul & good place
for a branch?
A We would target profitability on three
Q pe yon know or not that target was
met
". ae
Q Did you ever look farther than three years into
the future?
1670
any .
A Let’s see, he became Chairman in 1968 and from
January 1 of ’68 I maintained the same branching and
hopefully merger philosophy which we had always had
vis a vie the Atlantic Bank in Stamford, April of 1970.
orderly basis spread out and expand our service areas,
town by town, moving north and to the west of us.
Q What factors did you consider in deciding to
into a town, just that the town was
look at the economics of the town?
[63] A We studied everything which would have to
do, hopefully, with allowing a decision that we would
have a profitable bank.
1671
A Well, there really weren’t towns. I will give you
an example, and it wasn’t too long ago, perhaps two
years ago. The Lordship area of Stratford is right
behind the Municipal Airport and it is a small, little
community, it doesn’t have a bank. I was approached
from time to time by citizens living out there about
establishing a banking office and I went out and looked
it over and felt that it just could not be justified
economically.
A Where I have not branched?
Q Either way?
A Oh yes, when I opened the office in Newtown, I
studied the entire town of Newtown. 6
[64] Q Did you study the Town of New Milford before
you opened that branch?
A The Town of New Milford?
Q Yes.
A Yes, indeed.
Q What did you find attractive about that Town?
A It is a very, very rapidly growing area on Route 7
which is an important north-south artery and we very
much wanted to be in business there.
Q Did you study the Town of Prospect, which I think
you opened in 1966 or so?
A Yes.
Q What was attractive about Prospect?
A Growing town. We had a base in Waterbury and
we wanted to have a flanker out here for the bank.
Q What criteria do you use to determine whether a
town is growing or not?
A Well, we analyze the population trend over the
last ten or twenty years, talk with people in the towns,
see what is going on in terms of new building, new
construction, development. Gather any statistics that we
1672
can which would give us a basis on which to make a
judgment.
165) Q You mentioned your merger in Stamford.
What were the reasons which led yoy to acquire that
bank in Stamford?
A We want very much to be doing business, have
the Connecticut National Bank doing business in the City
of Stamford.
Q Because it is, in fact, a growing area?
A Right.
Your bank did pay a rather substantial premium
for the Atlantic Bank in Stamford, did it not?
A Yes, we did. We paid a premium.
Q Why were you willing to pay that premium?
A In order to secure more banking offices for the
Connecticut National Bank in this very important and
rapidly growing area.
Q Do you feel then that it was a good investment?
A Yes, I do
1678
GX-101
OUTLINE OF PROPOSAL TO CONSOLIDATE
I have talked with Frank Chadwick from time to time
during the summer, and we also made a trip together
to Washington to discuss with the Comptroller of the
Currency’s office in very general terms the possibility
of the consolidation of the Connecticut National Bank
and the First New Haven National Bank. In one of
my conversations with Frank, I outlined what I thought
might be a plan of consolidation of our two banks. In
these times of unprecendented change in the banking in-
_ @ustry in our State, I believe a consolidation to be in
the best interests of our staffs, customers, shareholders
and the public. The changing situation can perhaps be
most vividly illustrated by what has taken place in the
City of New Haven within the last year. Mergers re-
sulting in The Union Trust Company, the entry into
the New Haven market of the Connecticut Bank and
Trust Company, and the proposed entry of the Hartford
National Bank and Trust Company will have placed the
First New Haven National Bank fourth in size in New
Haven and brought to bear in its immediate principle
service area severely increased competitive pressures.
A review of the approach to the banking business cur-
rently being taken by our two banks indicates a high
degree of homogeneity and compatibility. Each bank has
a branch system with a somewhat similar diversity of
business mix. A consolidation of our two banks would
link up the strong position the Connecticut National Bank
has in Fairfield County with the strong position enjoyed
by the First New Haven National Bank in New Haven
County. I view this as a consolidation of two national
banks of somewhat similar size. The Connecticut Na-
tional Bank as of June 30, 1970 had in operation 48 of-
fices in Fairfield, New Haven and Litchfield Counties—
total assets of the bank were $380,446,418.
The combined banks had total assets of $663,412,787
as of June 30, 1970. The legal lending limit to any one
borrower woultl be $4 million. It would appear unde-
1674
niable that the combined banks would be in a far better
position to meet the new competitive situation that has
so recently developed to a major degree in New Haven
County and to a somewhat lesser but increasing degree
in Fairfield County.
My proposal would be along the following lines:
1. Charter—retention of the present charter of the
First New Haven National Bank.
Name—First Connecticut National Bank.
Head Office—Bridgeport.
Board of Directors—25 members composed of 18
members from the Connecticut National Bank
vl 12 from the First New Haven National
B
5. Directors’ Meetings—to be held monthly alternat-
ing between the Bridgeport and New Haven Ex-
ecutive Offices.
6. Management—
> go bo
Present Proposed
Frank G. Chadwick, Jr. President Chairman
Lewis A. Shea Chairman of Vice Chairman
the Board of the Board and
Consultant
Alexander Hawley President and President and
C.E.O. C.E.O.
I would propose that the Chairman of the Board main-
tain his office in New Haven and assume the major
responsibility in the direction of the affairs of the New
Haven division to be called the New Haven Executive
Office. The Vice Chairman will continue the maintenance
of his present office in Bridgeport. The President would
have his principal office at the Bridgeport Executive
Office and also an office in New Haven.
Terms of Consolidation
In reality what is being proposed is the organization
of a new bank under the existing charter of the First
New Haven National Bank. An analysis of the State
ments of Condition and Operating Statements of the
1675
would be worth more than one share in the
while shares of the Connecticut National Bank would be
exchanged on a one share for one share basis.
General Remarks
Our visit with the Comptroller of the Currency in
Washington left me with the following conclusions which
certainly deserve consideration:
1. The Comptroller of the Currency’s office would ap-
prove consolidation of our two banks.
2. The Justice Department would probably render an
unfavorable advisory opinion.
8. If the Justice Department were to bring suit to
prevent the consolidation, the Comptroller of the
Currency’s office is optimistic about prevailing in
the U. S. District Court.
1676
GX-102
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF CONNECTICUT
Civil Action No. 14,583
UNITED STATES OF AMERICA and WILLIAM B. CAmp,
COMPTROLLER OF THE CURRENCY, INTERVENOR,
PLAINTIFFS
v8.
THE CONNECTICUT NATIONAL BANK and THE FIRST
NEW HAVEN NATIONAL BANK, DEFENDANTS
Deposition of WILLIAM C. PETERS, taken pursuant
to the Federal Rules of Civil Procedure, at the United
States Court House, Bridgeport, Connecticut, before
Gerald Gale, a Notary Public in and for the State of
Connecticut, on Wednesday, July 19, 1972, at 3:00 p.m.
[6] Q Are you familiar with the way in which branch
earnings and expenses are computed? ~ 4
A They have changed a number of ways over the
years and I wouldn’t want to say that definitely yes now.
Q Do you know, for example, how the indirect earn-
ings and expense items are allocated to branches, what
factors are considered and what sort of formulas you
used?
A As I say, we used a number of ifferent formulas
over the years. Some indirect are ’t ailocated at all
and others are. It’s sometimes done on the basis of de
posits, sometimes done on the basis of accounts, numbers
of accounts. You know, the proportion to the other of-
fices in distributing down what the expense might be.
Q There are a number of ways this can be done?
A Right.
As comptroller, do you have a general opinion as
to the profitability of your bank’s branches?
A I would say they probably all are profitable now.
There [7] may be one or two borderline ones, especially
1677
the new ones. We figure on two or three years before
you can count on a branch being profitable.
Q Has your bank ever closed a branch because it
was unprofitable?
A No, we have not, not to my knowledge.
Q Have you ever been requested to make cost studies
or estimates of possible new services that your bank would
offer?
A We have—we look into services, and as part of
looking into them we would estimate the profitability of
what we felt it would be of these services yes.
Q Can you name some of these services that you have
investigated?
A’ Recently our preferred earnings plan, which is. an
investment account that we got into, I think in 1970,
and—I was involved when we were getting into customer
services, and that was more of a case of determining
whether we wanted to get into the overall type of opera-
tion.
Q Customer service is what?
A Customer service is more or less computer services
that you render to various customers of the bank, such
as account reconciliation, professional billings, payroll
accounting, [8] municipal accounting and so forth.
Q You say that the bank is not now offering this?
A We are, yes.
Q How long have you been offering it?
A Some of the services we have been offering as much
as 10 or 12 years ago, and around 1964 or ’65 we looked
into the possibilities of setting up a smaller computer
for this one function. We decided to go into it and
we ran that until last fall and then we incorporated
it back in again with our overall data processing opera-
tion and eliminated that separate computer as a function.
Then, of course, streamline down the number of types of
— we offered to what we felt were the more profita-
.
Q Did you say that you had conducted studies into
one or more of these customer services at profitability
of the bank?
1678
A We looked into what we felt would be an estimated
profitability, and as things didn’t prove out, we might
tend to drop off these services.
Q How did you go about estimating the profitability?
A It’s a very difficult thing to answer because at that
time there wasn’t too much experience in the field. You
had a more or less guesstimate, I suppose. You couldn’t
come up with [9] hard figures as to what profitability
would be on such things as inventory control or not
knowing how many customers you could possibly touch.
Q That was a question—
A And what the volume would be and so forth.
Q That was a question I asked, as to what your
methods were, if any, for estimating the possible demand
for this service or for any service you were looking into?
A You are strictly trying to guess what the market
might be and how many people would be interested in a
type of service you were offering.
Did you ever—
A It depended a lot on—I think we talked to some
extent to some of the equipment manufacturers and got
some leads there. Just to try and find out where there
would be a need for the service we were rendering.
Q Did you try to make market surveys contacting pos-
sible customers to find out if they would use such a
service?
A Not as such. Not in a real market survey, because
such things as customer services, what happened along
those lines, it would develop that each customer began
to get customerized and that’s where you started to lose
your profitability. If you [10] could set it up and be
hard and fast on a particular type of service and have
every customer adhere to exactly what your p
are and all, that’s fine and dandy, you would be able
to do a good job, but you find in such things sales
analysis and inventory control and some of these dif-
ferent services like that, everybody wants it done a little
differently. Pretty soon you just get out of that par-
ticular field because you can’t afford to spread your
work so wide. You get into too many perhaps. It’s
just impractical.
1679
Other services like payroll where you can standardize
and the customer pretty much conforms to that type of
a service, then you can get into good volume with it, it
becomes a profitable service and it’s a matter of trial and
error, really.
Q Are there any programs of this type that you feel
your bank is not capable of instituting should there be
a requisite demand? ;
A I think it’s not a matter of whether the bank is
capable of doing it or not, it’s a matter of whether
your market is large enough to support it. For ex-
ample, we get a lot of competition in our municipal tax
accounting, and it’s difficult to maintain that market in
the area we are in because we have so much competi-
tion from outside the area. We started out, I forget
[11] how many towns we were doing, maybe six or
seven, and we are down to three or four now.
Q What is your competition from outside the area,
who is it?
A Well, for a while there a good portion was coming
from CBT, Connecticut Bank and Trust in Hartford. I
don’t know if Hartford National is in it too much now
or not because I have not been since—since we have had
out our own marketing set up, I don’t get involved with
what the marketing competition is. In the early days
before we set up marketing we were a little closer to it.
Our biggest competition is from CBT and another out-
fit out of Hartford, and I don’t know if it’s associated
with Hartford National or not.
Q When was this that the CBT competition became
particularly significant?
A ’65, ’66, in there, I know. How much since then,
I am not sure. Usually, the towns would sign three-
year contracts with whoever they were having their
work done with, and by the time they got around to
renewing some of these contracts, I had gotten more
disassociated from the marketing side, and I really don’t
know what the competition is at this moment, where it
is from, but I know we are down to about four towns,
[12] A Very marginal. It’s a very detailed operation,
as you can imagine, tax accounting.
1680
Q Is any of this outside competition coming from
New York City?
A I can’t say definitely. It could be down the county
” o . .
[14] MR. CLARK: I ask this be marked as Peter’s
Exhibit 1, a memorandum to Mr. Bruce W. Taylor from
William C. Peters, Subject: “Effect of New York Banks
[15] on CNB Market Area”.
(Plaintiff's Exhibit Peter 1 was marked for Iden-
tification. )
Q Do you recall writing that memorandum, Mr.
Peters?
A I don’t recall writing the memorandum itself, no.
I believe the—survey we did at the time of CBT.
Q Would you elaborate on that, what occasioned the
survey and what your role was?
A We are down in the lower Fairfield County area
looking over the deposits that were coming in to get a
feeling as to how much in the way of New York items
were—we were processing and just by reviewing it to
see if we could get a feel to see how many were local
people banking in New York as compared to outside of
Connecticut items.
This was in connection with the proposed merger
with CBT, is that right?
A Yes, I would say so, judging from the dates, too.
Q You spoke of “we” making the survey. Was any-
one else involved?
A A representative from CBT was with us.
Q Do you recall his name?
A John Laverty.
[16] Q This indicates that you visited four offices
down in that lower part of the county, Darien, West-
port, New Canaan and Norwalk. Do you recall those
visits?
A I recall the day, it was one day. As I recall, it
was in preparation for the economic brief on that at-
tempted consolidation.
1681
Q Have you had occasion to do any follow-up studies
of this kind since then?
A Not that I remember. I don’t believe so, unless
that personal New York ‘checks of the husband were de-
posited to a household account handled by the wife in
many cases.” .
Does that mean that the husband would have written
a personal check to his wife?
A Yes.
Q On an account which he held in a New York bank?
A No. I am just wondering if the second page goes
with the first one. I guess it does because the figures
tie in. They wouldn’t be reflected here. These are the
various ‘direct cash letter sends that we have out of
Bridgeport to different federal reserve banks.
Q Does this memorandum correctly reflect the results
of your investigation on that day?
A It reflects what we felt was the situation, yes.
MR. BOYER: Could we establish the date of this
memorandum?
Q Can you be more specific on that, Mr. Peters?
A I can’t give you the exact date, no, but it had to
be in the—I am sure it was the summer of ’68 because
I know we were preparing—it was in preparation of the
economic brief with CBT and some information that they
asked for us to get.
Q Are those the only offices that you checked on this
subject?
:
estport
other
Q In«
That’s closer to Bri
No, W
A
questions.
not
(Whereupon, the taking of the deposition was con-
MR. CLARK: We have no further
MR. BOYER: No questions,
cluded at 3:30 p.m.)
A No, not South N
Subscribed and sworn to before me on this the ——
1683
GX-103
SUBJECT: Effect of New York Banks on CNB Market
Area
TO : Bruce W. Taylor
FROM : William C. Peters
revealed very little except that personal NY checks of the
husband were deposited to a household account handled
by the wife in many cases. Mr. DePalmer confirmed
that this was the case, and repeated efforts to convert the
husband’s account have been unavailing, because the com-
muter husband keeps his account close to his place of work
through necessity and for convenience. The two largest
potential accounts in Westport were not lost to us through
any effort exercised on them by NY banks, but through
our own failure to handle them properly when we were
afforded the opportunity. They are the Famous Artists
School and Glendennon.
2. Darien and New Canaan were mirrors of West-
port. The same situation exists in these towns concern-
ing the influence of New York banks. Our main com-
petition in all three towns comes from firmly entrenched,
old time local banks that have either been merged with
Fairfield County Trust or still independent (Westport
8. South Norwalk was somewhat different in that they
claim that they do not feel any direct competition from
NY banks. The large industries in town banking with
New York will normally have their head office located in
New York. Locally, they only do what ever financial
business is necessary for their daily operations, For this
business, we compete with the local banks.
4. Of all four towns, only one, New Canaan, indi-
cated the existence of competition from New York against
which we might compete. Mr. Canel indicated that he re-
ceived a deal of competition on car loans.
5. Review of Clearings (dollar only)
1684
Monthly Clearings for June 1968 were $243,127,701.
Of this total, New York City, US Treasury and
USPMO were 35%. Boston City and Country items
were 10.2% and direct clearings with New Haven,
Waterbury and Seymour in the First District con-
sisted of an additional 11.7%. Direct clearings in
Fairfield County in Bridgeport, Westport, Norwalk
and Stamford consisted of 27.8%.
Clearings by District are as follows:
Total Clearings Daily Average Percent
for June 1968 Cash Letter of Total
53,288,092 2,667,168 21.93
163,457,048 8,172,846 67.21
5,993,345 299,666 2.47
433,131 21,656 0.18
518,399 25,919 0.21
3,063,833 153,191 1.26
287,882 14,394 0.12
1685
GX-104
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF CONNECTICUT
Civil Action No. 14,583
UNITED STATES OF AMERICA and WILLIAM B. Camp,
COMPTROLLER OF THE CURRENCY, INTERVENOR,
PLAINTIFFS
v8.
THE CONNECTICUT NATIONAL BANK and THE First
NEW HAVEN NATIONAL BANK, DEFENDANTS
Deposition of WILLIAM S. KRAFCHIK, taken pur-
suant to the Federal Rules of Civil Procedure, at the
United States Court House, Bridgeport, Connecticut, be-
fore Gerald Gale, a Notary Public in and for the State of
Connecticut, on Thursda , July 20, 1972, at 10:00 a.m.
[3] WILLIAM §. KRAFCHIK, called as a witness, hav-
ing first been duly sworn by Gerald Gale, a Notary Pub-
lic in and for the State of Connecticut, was examined and
testified as follows:
DIRECT EXAMINATION
BY MR. CLARK:
Q * ia is your position with Connecticut National
A Vice-president, Corporate Planning.
Q Would you describe for us your occupational back-
ground prior to coming to Connecticut National Bank?
A I have been in the banking business since 1960, ten
years with First National City of New York and two
with Connecticut National Bank.
Q What was the date of your employment with Con-
necticut National?
A April of 1970,
Q What duties did you have at First National City?
A A variety.. Would you like a whole rundown?
1686
Q Yes. You don’t have to be too specific, but tell us
generally. _
A Start with the training program, a year and a half
or so. About six years in branch management, a couple of
years in [4] credit analysis, and the final year or two in
the bank’s consulting department.
[20] Q Did the First National City—what type of
customer did First National City call on or solicit out-
side of New York area?
A Corporate customers whose needs were exceeded by
the capabilities of local banks.
Q They did not go along with corporate customers
whose needs were not exceeded—
A No, they had a definite policy against that, because
these banks were their customers—
Q They did not wish to alienate the correspondent
banks which they served in these same local markets, is
that correct? .
{21} A I would say, yes.
{[86] Q Perhaps I can ask a more specific question. Item
number two: geographic expansion. Did the bank have
specific objectives as to geographical expansion?
A Not to my knowledge, no.
Q Since you have been with Connecticut National |
Bank, have you participated in formulation of such ob-
jectives as to geographic expansion?
A Exclusively in the context of the current consolida-
tion.
Q Nothing other than the consolidation
A No.
[44] Would you explain what you mean by competitive
pressures?
A The competitive pressures would be whatever de-
velopments pretty much necessitated our taking an ae-
quisition action.
If I may be permitted to use that same example of
Atlantic National Bank, we felt we had to be in the City
1687
of Stamford. It’s the most rapidly developing town in
Fairfield County. At that point in time the Hartford
banks were making overtures to the two or three local
banks that were left in Stamford, and this is competitive
pressure. We made a fundamental decision that we had
to be in that town, we had to be represented there, and
we had to judge the premium that was [45] involved in
that light. This was the competitive pressure. These are
the kinds of things that you have to take into consider-
ation.
Q Would your term “industry trends” differ at all
from competitive pressure?
A You are talking basically about the same thing.
* . * *
[46] Q Are you able to state, then, what the reasons
were of top management for seeking this consolidation?
A Well, they have become known to me since that de-
cision was made, of course, yes.
Q Would you tell us what they were?
A Well, we felt that the consolidation was the appro-
priate response for us and for First New Haven Bank
to the competitive pressures that have developed in the
State in the last three to five years.
Q Tell us what those competitive pressures are.
A They basically revolve around the fact that there
is a widening spread between the presence of the two
large Hartford banks and the medium sized banks in the
rest of the State. .
bas What banks are considered to be medium sized
nks?
A Well, we have ourselves, City National Bank, Co-
lonial, State National Bank.
Q_ Did you state there is a widening competitive pres-
sure between these medium sized banks?
A I think in terms of market share, yes.
Q I don’t understand. A share of what market?
A A share of banking resources in the State. .
Q You state these medium sized banks are becoming
[47] more competitive within the State?
A No, I am saying that the gap is widening between
these banks as a group and the two Hartford banks.
—y
1688
Q How do you measure that gap, in terms of size of
the banks or how?
A In several ways. Share of the market in deposits,
assets, earnings, capital position.
What market now are you referring to?
A State of Connecticut.
Q How do you measure the share, what is the universe
that you are taking?
A Assets of the whole State and state and national
banks, all commercial banks in the State.
Q You have said that the two large Hartford banks
are increasing their share vis-a-vis the medium sized
banks?
A Yes, that’s right.
Q Are there any other factors which relate to this
gap which you say exists? What other factors relate
to the gap between the medium sized and large banks?
MR. REYCRAFT: You mean what are the reasons for
the gap?
A I don’t understand the question.
[48] Q Let’s go back to competitive pressure. The
Hartford banks are growing, you say, vis-a-vis the medium
sized banks in asset size?
A Yes.
Q What other competitive pressures exist which gave
rise to this proposed consolidation?
A Well, I think to restate it again, the rapidly growing
presence of the two major Hartford banks in our mar-
ket has caused us to take a drastically different view of the
structure of banking in the State. Ten years ago if you
drew a diagonal from southeastern to northwestern Con-
necticut and then plotted the presence of the Hartford
banks, they were in the northern quadrant or northern
half. Over the northern half of that diagonal line. If
you do it today, you will find that they have quite a con-
siderable presence in the southwestern part of the State
and this is where their effort has been in the last five or
ten years. They have expanded quite dramatically through
acquisition and branching acquisitions. New Haven, Stam-
ford and Norwalk, as you know. It’s a brand-new ball-
game as far as banking in the State goes. We find our-
1689
selves under considerable pressure to find a means to try
and stay with them.
{49] Q Have you considered any other means other
than this acquisition?
A Have I? No.
Q To your knowledge, has the bank?
A No, it hasn’t.
Q Have you had any—in the course of your duties
with Connecticut National, have you had occasion to eval-
uate the effectiveness of the de novo expansion of CNB,
has this been part of your long-range planning?
A_ I have taken the position—I have not done specific
number pushing on it—I have taken the personal position
that in terms of return on investment the opportunities
are nothing like they once were, referring specifically to
the ’50’s and early ’60’s when we did do a lot of branch
expanding. The opportunities just don’t exist in the mar-
_ket place anymore. Any analysis you do of things like
population per banking office, you start hunting around for
towns in which you have relatively favorable numbers go-
ing in an attractive chance for success, they are hard to
come by today.
Q You*said that the opportunities don’t exist in the
market any more. What market are you referring to?
A I am referring to the market that we operate in
now.
[50] Q Fairfield County?
A We operate, as you know, in Fairfield County, and
to some extent in upper New Haven County, and we have
one branch in Litchfield County.
Q What about the rest of the State?
A It hasn’t been discussed, to my knowledge.
Q So you cannot say whether or not there are op-
portunities in Hartford or New Haven, for example, that
would justify de novo expansion?
A Not to my immediate knowledge. I have done no
studies on the rest of the State myself. That’s branch
location—branch location studies are not my job, anyway.
1690
GX-105
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF CONNECTICUT
Civil Action No. 14,583
UNITED STATES OF AMERICA and WILLIAM B. CAMP,
COMPTROLLER OF THE CURRENCY, INTERVENOR,
PLAINTIFFS
v8.
THE CONNECTICUT NATIONAL BANK and THE FIRST
NEw HAVEN NATIONAL BANK, DEFENDANTS
Deposition of BRUCE W. TAYLOR, taken pursuant to
the Federal Rules of Civil Procedure, at the United States
Court House, Bridgeport, Connecticut, before Gerald Gale,
a Notary Public in and for the State of Connecticut, on
Thursday, July 20, 1972, at 2:00 p.m.
[5] Q So, then, up until the reorganization you were
in charge of the calling which was done on bank customers
or A ae og bank customers, is that correct?
Yes.
Q How many people did you have to do this calling?
A Eight people just prior to July. Eight calling
officers. We had the bank divided into geographic areas
and there was a man responsible for each geographic area.
Q Did these men operate out of the main office, all
of them?
A No. Four did and the other four had offices in their
geographic area.
Q Did they have other duties besides these calling?
A No, primarily calling on customers and potential
customers.
Q Would you describe the eight geographic areas that
were in existence?
A Bridgeport, Norwalk, Stamford, Danbury, Water-
bury and the Valley, which constituted Ansonia, Derby,
Milford, Orange.
1691
Q What were the criteria behind the establishment of
these eight regions, why were they separate regions?
A Primarily geographic determines because they are
around [6] industrial cities, as you can see, 80 geogrpahic
was the main factor of setting up in this order.
Q What were the responsibilities, then, for each calling
officer, how was his territory defined? Was he responsible
for making calls outside of the area to which he was as-
signed?
A No, his main responsibility was to call on ac-
counts of the branches within his geographic area. That
was his primary function—was to call on customers of the
branches within his geographic area.
Q Togo back to a number of years, I am told that you
only named six. Let’s see if we can get them again.
Bridgeport, Norwalk, Stamford, Darien, Danbury—is Da-
rien one?
A No, Bridgeport, Norwalk, Stamford, Danbury,
Waterbury, the Valley. Then we have Bridgeport sub-
divided into three areas. East, west and north. The City
of Bridgeport itself. ;
Q Is that just the city or were there surrounding
towns that were part of the Bridgeport?
A The west side of Bridgeport had Fairfield annexed
to it. The north side of Bridgeport had our Trumbull
office annexed to it. The east part of Bridgeport had
Stratford annexed to it, so actually, it was not just the
geographic area of Bridgeport.
[7] @Q What types of customers did these men call on?
A Primarily what we could classify as commercial
customers, that is: checking account customers. The cri-
teria was a certain minimum balance that they main-
tained with us as determining as to whether they were
on a customer call program and in addition to that, of
course, they called on noncustomers what we call pros-
What was the cutoff to determine the size of the
demand deposit balance?
A $10,000.00. It was five at one point, and then we
increased it to ten.
Q When did you increase it?
1692
A I would say about two years ago. I am not positive
on that. We sort of increased it informally because of
the numbers and then we formally cut it off, about two
years ago.
Q What was the purpose of the call, then, to those
customers who had balances of that size? What did the
calling officer attempt to achieve? J
A To enhance our—to see if we were serving our
customers properly and to attempt to cross sell him
other services. If he had a checking account with us
only, attempt to sell him computer services, or see if we
had—he had any loan needs or [8] any other service
we might perform for him.
Q Did you attempt to differentiate between individuals
and corporations?
A Yes. Primarily, it was corporations or business.
We did not call on individuals. For example, if we had
an attorney with a $50,000.00 account, we would not call
on him. Professional people were not called on, just pri-
marily business.
Q Why was that? Why did you not bother to call
individuals?
A Mainly because the calling officers were involved
with selling commercial type of business type service and,
therefore, we didn’t call on individuals as such.
Q How did you decide on the noncustomers that would
be contacted?
A Through various sources or leads, if you will. We
watched the newspapers for firms moving into the area,
we subscribed to a Dunn and Bradstreet service, the F.
W. Dodge reports, so that we knew who was building
where. Branch managers would refer us to people: ABC
Company is not our customer, I think they should, and
just the general knowledge of the area by the calling
officer himself.
Q Did you have any sort of upper limit on the size
of the customer that you would call on, were you con-
cerned with the very [9] largest customers or potential
customers?
A No. Merely by the minimum balance figure, and
then we just called on anyone from there on up.
1698
Q Did you have any calling officer who was responsi-
ble for New Haven City, for example?
A No.
Q Why?
A Because the determination of the calling officer’s
area was purely geographic to the branches that we had.
In the case of New Haven, he would call on the Orange
and Milford customers, period.
Q Why was the factor of branch location important?
A Because our primary purpose in the calling pro-
gram was to serve our existing customers first, and
this is why it was used on a branch association basis.
Q With respect to the possible new business, however,
you also felt that branch location was important?
A Yes, because of the growth of Fairfield County in
which we were located, this more than kept us busy to
call on first, our customers, and secondly, those businesses
moving into our immediate area.
Q Did you send any of your calling officers to New
York [10] City?
A Only if the—if a corporation headquarters was in
New York and had established office or operation in our
branch area.
_ * * a
[18] Q Do you as vice-president in charge of market-
ing regularly keep track of the activities of the pricing
Ne hanle peer manent arent
es. ml
Q What factors do you look for to determine the type
of competition other banks are offering your bank?
A By keeping abreast of other services, such as the
service they are offering, the hours they are open, ob-
serve their branching activities. Those are factors that
would affect our market or our share of the market.
Q So you keep track of demand deposit service
charges?
A Yes.
Q Interest paid on savings and time accounts?
A Yes.
Q Office hours?
Yes.
aE
H Lael
§ belt sts. i os
mai Jougo<foll “c
2
:
= §
e532
A Primarily, as I say, newspaper advertistment, feed-
back from branch managers or calling officers. Those are
the primary sources.
A There is a clerk, a young lady.
Q How does she gain the information?
Q
A These should include all the banks in our pri-
mary service area.
eee
es.
Q So you would define that as being all the banks in
Fairfield County?
A Yes.
Q I notice that do have First New Haven, for
example, and National and Orange?
A Yes, I just saw that.
Q Why?
[16] A Because of Milford, it’s in New Haven County.
Q Do you know if these banks vary their service
charges from office to office?
A - Not to my knowledge, I don’t.
Q Does there—
A There are exceptions, but I don’t know.
Q Does CNB?
A No.
(Plaintiffs’ Exhibit Taylor 2 was marked for Identi-
fication. )
Q Is this & similar study for Saturday banking hours?
A Yes. This is again keeping abreast of the hours
Q Do you do so for the savings banks in the City?
A Yes, we do.
Q Do you have a separate sheet for them, or what?
A Yes, because I notice this as headed: Commercial.
There should be one that says: Savings Banks.
1696
Yes. This top sheet is a marketing committee
Se nauce Ghanee, spparentiy a change of timo from
March 24 to March 31.
Q Whose handwritten notes are those?
A These are mine.
Q On that page that you just turned to, I think,
tha
where you talk about branch expansion, I believe it is, is
you discuss those issues at that meeting?
in a cursory manner insofar as the branch
t last category, that list of locations,
=p Waet ek Gaauened: with seletion to dese lece-
A This actually, as I recall, was sort of a composite
af
©
=
E
F
I have services listed in here, ad-
itional markets such as Spanish speaking market, finan-
ter, additional services, and the attempt
1697
Q “7 you consider those branch locations at that
Q Would you read those factors for us, please?
A I say many factors enter into final branch loca-
ons. Demographic statistics, zoning, availability of sites,
cost of sites, growth potential, highway construction
P. ng.
ve you made any studies since the meeting which
ted those factors?
A No,
Q Was that the first time that you brought up for dis-
cussion branch location in some of those areas that are
not located in Fairfield County?
listed?
A Over a long period to time if we were going to con-
tinue to grow, yes.
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1704
Gx-108
PLEASE NOTE DATO CHANGE
TO: : MARKETING COMMITTEE MEMBERS
FROM: BRUCE W, TAYLOR, CHAIRMAN
The next Marketing Commitice Meeting scheduled for March 24th has been
chznged to March 31st. Plesse chinze the date ca your calendar.
An Agenda will be forwarded te you sometime teJore the scheduled meeting.
1705
CONNECTICUT RATIONAL BANK
gre
MARKETING STRATEGY
WeTene:
ee fue Ver euriar
Te sere ovr Tre
ee C. w.@ , =
WEF OS. ‘
yuete 7VE - Ar
Cosrswan Ss
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To LoewTiFy
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. Perr & Fon C:A.B.
ey {) ) “srahinive Dirsscen 2 me Tas 7 %
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Assist Yeu Ww Rev ntercnt sa Any
-
TH ese
m» ve DsvseS7ew
way “Ves2e@er. i. i, sy
——~- Die . Dont? Ware Aas swe Masweia Ser
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bus “Views aserry er @AR. 2...
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4 om oe PI ene lt
1706
i a ae =
Dree Be) DiSevutes are
TO SATISFY A Fhe Aas “wire
KORE YOUTHFUL... ; Baqpoevre, Sivaicos Pim
As Fee Lreraref.,
MORE EDUCATED...
WORE AFPLUZKT...
BORZ FASS-CONSUHING KARKET...
AT A SATISFACTCRY PROFIT FOR C.N.Beoee
WE KUST REALIZE TKAT CERTAIN FACTORS,
PREVICUSLY PRESENT, WILL NOT BE AS
PREVALENT ik TKE FUTURE:
- RISING INTEREST RATES
= EXCESS LIQUIDITY
@ PAVORASLE ACCOUNTING PRACTICES SUCH AS
TAX SAVINGS ON SECURITY LOSSES, ETC.
* Bho Loaw CrAkbr-Of es,
a - aw BFS Rene Boer. bewirTs-DPes
WE KUST
- LOOK FOR, AND DSVISE WORE OPPORTUNISTIC LENDING
AND INVESTMENT POLICIES (i.e. EQUIPMENT LEASING)
© RESEARCH AND DEVELOPHENT OF OTHER SOURCES OF INCOSE
© RESEARCH AND DEVELOPMENT OF VEHICLES TO ENLARGE THE
THE NARKET SCOPE OF C.N.B. (Lee. HOLDING COXPANY)
> ESTABLISH NORE BRANCH FACILITISS 70 ENHANCE “THE
WARKET PENETRATION OF C.N.B.
* PLACE STRONG EWPHASIS ON ZCSUISITION OF FUKDS-AS
WELL AS UTILIZATICN OF FUNDS
_ EMPLOY CUSTOKER PROFILE AND WARKET SEGHENTATION
CONCEPTS TO INSURE FULL UTILIZATION CP OUR
* MARKETING SES CRIS (30TH T1i=z AND DOLLARS)
-G:aP “vs Lerrere Carerae
* Commustearsews Ca, z Aovéers see)
= Ree vad VS - Sor Cv Arpteaen e
. * Foose | Siieese:" 4Pmeaert % Tete a ACH Ceoemaeniel
1707
Wow Ts Seciere # Fon 1992 SH
Bn 3
e BRAS ATIC: "Cow wecesimarey i)
RELOCATE EXISTING OFFICES: . HE Fawa+Ty eave)
SOUTHBURY Auny Faereas fuTze rs
Fivas Decitrevs
CANDL=WOOoD*
‘5 - Dem sceapire & Framsne.
8 x — Zonret
BROCKFIELD : ; — Avannariry oe Sorz
: - —CesT et Sore
ana —Ceew rm Foreurrac
ENLARGE EXISTING OF?ICS: ' —Mteweny Covsraverren
Pinan
STRATFIELD iin Dinas
Bemer** . .
fg Sy, Yh *
ESTABLISH NEW OFFICES:
BETHEL + NORTH EAST QUADRANT
BAS
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