United States v. Citizens and Southern National Bank

• Decision Date: 03 June 1974
• Docket Number: Civ. A. No. 15823.
• Citation: 372 F. Supp. 616
• Parties: UNITED STATES of America, Plaintiff, v. CITIZENS AND SOUTHERN NATIONAL BANK et al., Defendants.
• Court: U.S. District Court — Northern District of Georgia

372 F. Supp. 616

UNITED STATES of America, Plaintiff, v. CITIZENS AND SOUTHERN NATIONAL BANK et al., Defendants.

Civ. A. No. 15823.

United States District Court, N. D. Georgia, Atlanta Division.

January 25, 1974.

As Amended June 3, 1974.

Donald A. Kincaid, Kenneth D. Stern, Curtis L. Frisbie, Attys., Dept. of Justice, Antitrust Div., Atlanta, Ga., for plaintiff.

Charles M. Stapleton and Cubbedge Snow, Martin, Snow, Grant & Napier, Macon, Ga., amicus curiae.

Daniel B. Hodgson, Michael A. Doyle and Walter M. Grant, Alston, Miller & Gaines, Atlanta, Ga., Philip L. Roache, Jr., Washington, D. C., for defendants.

FINDINGS OF FACT

CONCLUSIONS OF LAW AND ORDER

MOYE, District Judge.

INTRODUCTION

A. The Proceeding and the Parties

This action, instituted by the United States of America ("the Government") under Section 15 of the Clayton Act, as amended 15 U.S.C. § 25, seeks injunctive relief to prevent and restrain alleged violations of Section 7 of the Clayton Act, as amended 15 U.S.C. § 18, which would result from the consummation of contemplated mergers within the Atlanta Metropolitan Area which are described below. The Government also alleges violations of Section 1 of the Sherman Act 15 U.S.C. § 1 and seeks injunctive relief under Section 4 of that Act 15 U.S.C. § 4.

The defendants, who oppose the relief sought by the Government, are:

1. The Citizens and Southern National Bank ("C&S National"), formerly the Citizens and Southern Bank, a state bank with headquarters in Savannah, Georgia, itself, a product of the merger of the Citizens Bank of Savannah and the Southern Bank of Georgia in 1906. In 1927 the Citizens and Southern Bank was converted to a national banking association which presently exists under the laws of the United States. C&S National presently has over 60 banking offices in six Georgia cities, about 40 of which are located in Fulton and DeKalb Counties. While the home office of C&S National is located in Savannah, its principal executive, actual headquarters and principal place of business are located in Atlanta, Fulton County, Georgia. C&S National is registered under the laws of the United States as a bank holding company by virtue of its ownership of The Citizens and Southern Holding Company ("C&S Holding," infra). As of June 30, 1970, C&S National had total assets of approximately 1.7 billion dollars, total deposits of 1.4 billion dollars, and net loans and discounts of 1.1 billion dollars.

2. C&S Holding, a wholly-owned subsidiary of C&S National, was organized in 1927 and is a registered bank holding company existing under the laws of the state of Georgia having its home office and principal place of business in Atlanta, Georgia. It owns a majority stock interest in several Georgia banks, including three located in the Atlanta area —The Citizens and Southern Emory Bank ("Emory"), The Citizens and Southern Bank of East Point ("East Point"), and The Citizens and Southern DeKalb Bank ("DeKalb"). The latter, DeKalb, is not a defendant, but since it is a part of the overall C&S system of banks in the area involved herein, it is relevant to note that DeKalb presently has two offices, both located in DeKalb County, and as of December 31, 1970, had total assets of 28.4 million dollars, deposits of 23.5 million dollars and total loans and discounts of 22.9 million dollars.

3. Emory, a 95 percent-owned subsidiary of C&S Holding, is a state banking corporation with its headquarters and principal place of business in a residential area of DeKalb County, Georgia, near Emory University. It presently has four offices, all located in DeKalb County. As of December 31, 1970, Emory had total assets of approximately 42.3 million dollars and total loans and discounts of 28.5 million dollars.

4. East Point, a 90 percent-owned subsidiary of C&S Holding, is a state banking corporation with its principal place of business and headquarters in the suburban community of East Point, Fulton County, Georgia. It has four offices, all located in Fulton County. As of December 31, 1970, it had total assets of 28.4 million dollars, total deposits of 23.3 million dollars, and total loans and discounts of 22.9 million dollars.

5. The Citizens and Southern Chamblee Bank ("Chamblee") is a state banking corporation with its principal place of business and headquarters located in Chamblee in the northern part of DeKalb County, Georgia. It was originally organized in 1960 as a national banking association. In 1969 Chamblee converted into a state-chartered bank and adopted its present name. Chamblee has two offices, both located in DeKalb County. As of December 31, 1970, it had total assets of 21.1 million dollars, total deposits of 18.7 million dollars and total loans and discounts of 10.7 million dollars.

6. The Citizens and Southern Park National Bank ("Park National") is a national banking association located in the Executive Park area of DeKalb County, Georgia. As of December 31, 1970, it had total assets of 11.1 million dollars, total deposits of 9.8 million dollars and total loans and discounts of 3.5 million dollars.

7. The Citizens and Southern South DeKalb Bank ("South DeKalb") is a state banking corporation located in the Candler-Glenwood area of DeKalb County, Georgia. South DeKalb was organized in 1969. At the time of trial it operated one office in DeKalb County and had approval to open an additional office, also in DeKalb County, which was actually opened in November, 1972. As of December 31, 1970, South DeKalb had total assets of 5.1 million dollars, total deposits of 4.3 million dollars and total loans and discounts of 2.1 million dollars.

8. The Citizens and Southern Bank of Tucker ("Tucker") is a state banking corporation having its principal place of business and headquarters at Tucker, DeKalb County, Georgia. Tucker was chartered as the Bank of Tucker in 1919, and existed as such until 1965, when C&S Holding purchased five percent of its stock, and Tucker adopted its present name. Tucker operates two offices, both in DeKalb County. As of December 31, 1970, it had total assets of 26.5 million dollars, total deposits of 23 million dollars, and total loans and discounts of 14.8 million dollars.

9. The Citizens and Southern Bank of North Fulton ("North Fulton") is a state banking corporation and has its only office in Roswell in the northern part of Fulton County, Georgia. It has pending an application for authority to open an additional office to be located in Alpharetta, also in Fulton County, Georgia. As of December 31, 1970, it had total assets of 7.7 million dollars, total deposits of 6.3 million dollars and net loans and discounts of 5.6 million dollars.

10. The Citizens and Southern Bank of Sandy Springs ("Sandy Springs") is a state banking corporation having its only office in Sandy Springs, a suburban community north of Atlanta in Fulton County, Georgia. Sandy Springs was organized as a national banking association in December, 1959, as the Citizens National Bank of Sandy Springs. In October, 1969 Sandy Springs converted to a state chartered bank and adopted its present name. As of December 31, 1970, it had total assets of 22 million dollars, total deposits of 19 million dollars and net loans and discounts of 11.7 million dollars.

All defendant banks concededly are engaged in interstate commerce.

In September 1970, Emory entered into agreements to acquire all the assets and assume all the liabilities of Chamblee, South DeKalb, Park National and Tucker. Concurrently, East Point entered into similar agreements with North Fulton and Sandy Springs. All agreements were approved by the stockholders and directors of the banks involved, and, except for the Emory-Tucker agreement, all were approved by the Federal Deposit Insurance Corporation ("FDIC"), the appropriate federal regulatory agency. Since C&S National owns C&S Holding, and since C&S Holding owns 95 percent of the stock of Emory and East Point, the proposed transactions are, in substance, acquisitions by C&S National and will be so treated by the Court.

Within the time provided by law, the Department of Justice brought this suit pursuant to Section 7 of the Clayton Act to enjoin the five mergers approved by the FDIC and the mergers were automatically stayed. 12 U.S.C. § 1849(b) The Government also seeks to enjoin, as a violation of Section 1 of the Sherman Act, the operation of Chamblee, Park National, South DeKalb, Tucker, North Fulton and Sandy Springs as part of the overall C&S system, contending that there is a concerted activity of exchanging, on a formal and continuing basis, detailed information as to past, present and future competitive policies and practices which constitutes combinations between and among each of these banks and C&S National. The Court will sometimes refer to these six banks as the "five percent defendants" because C&S Holding owns five percent of the stock of each of those banks—the maximum permitted by Georgia law.

All defendant banks transact business and are located within the Northern District of Georgia which is within the geographical jurisdiction of this Court.

B. Background of this Litigation

1. History of Banking Laws in Georgia

The banks involved in this litigation are the subject of concurrent state and federal regulation by multiple regulatory authorities operating under numerous regulatory statutes. Some of the banking laws of Georgia are particularly relevant to consideration of the issues herein.

Prior to 1927, Georgia's branch banking laws contained no limitation on the geographic areas in which banks could open branches. New branches, however, required the approval of the State Superintendent of Banks. In 1927 the establishment of additional branch banks was absolutely prohibited, regardless of location, but in 1929 the laws were again amended to permit banks to open branches in cities in which their "home offices" were located.

Georgia's branch banking laws were further amended...