United States v. First National Bancorporation, Inc., Civ. A. No. C-2413.
| Decision Date | 12 July 1971 |
| Docket Number | Civ. A. No. C-2413. |
| Citation | 329 F. Supp. 1003 |
| Parties | UNITED STATES of America, Plaintiff, v. FIRST NATIONAL BANCORPORATION, INC., and the First National Bank of Greeley, Defendants. |
| Court | U.S. District Court — District of Colorado |
COPYRIGHT MATERIAL OMITTED
Herbert G. Schoepke, Kevin D. Brenan, Alan R. Malasky, Eugene V. Lipkowitz, Attys., Dept. of Justice, Antitrust Div., Washington, D. C., James L. Treece, U. S. Atty. by Carolyn J. McNeill, Asst. U. S. Atty., Denver, Colo., for plaintiff.
Metzger, Schwarz, McKenna & Kempler by Eugene J. Metzger, Carl J. Schwarz, Donald Williamson, Washington, D. C., of counsel, Hughes & Dorsey by Edward B. Close, Jr., Denver, Colo., for defendants.
Involved in this action is the attempted acquisition of The First National Bank of Greeley by the First National Bancorporation, Inc. The United States has instituted this suit under Section 15 of the Clayton Act, 15 U.S.C. § 25, seeking an injunction preventing the alleged violation of Section 7 of the Clayton Act. The cause was tried to the Court, and following the filing of post-trial briefs, together with proposed findings, has been submitted.
On June 9, 1970, the Board of Governors of the Federal Reserve Board approved in a four-to-three decision the application of First National Bancorporation, Inc. for the acquisition of 80 percent or more of the voting shares of The First National Bank of Greeley. The opinion of the Board recites that the comptroller had been duly notified and had approved the application. The majority opinion considered all of the evidence and concluded that the proposed acquisition would not have the effect of substantially lessening competition or would not tend to create a monopoly. It was pointed out that this was the first expansion by First National Bancorporation, Inc., outside the Denver area, and that while other applications about which the Board had knowledge might change the banking structure in the state, that this one would not have such an effect. It was noted that one of the competitors in Greeley was also a leading competitor of First of Denver in Denver (United Bank); that there existed, however, no likelihood that a structure in Greeley would result in mirroring the situation in Denver. In a concurring opinion one of the Governors pointed out that Weld County (where Greeley is located) is not underbanked; that, rather, there are more banking institutions per population than in the adjoining counties of Larimer and Boulder.
The main thrust of the minority opinion was that the proposed acquisition was one step in a trend toward concentration not only in the Greeley area but in the state as a whole, and that the Board should not approve an acquisition in furtherance of this trend. The minority finally said:
In our view, the effect of consummation of the applicant's proposal would be to substantially lessen future competition in Greeley, in Weld County, and perhaps in other Colorado areas which might otherwise have been served by a new organization which bank could have significantly participated.
The minority also considered that one result of the acquisition would be to close a mortgage loan production office maintained by The First National Bank of Denver, the lead bank of Bancorporation, and would thus remove this institution as a competitor, and would also lessen potential competition resulting from The First National Bank of Denver being on the threshold of the market.
As noted above, Bancorporation is a registered bank holding company organized under the laws of Colorado and maintains its principal place of business in Denver. On the other hand, The First National Bank of Greeley is a national banking association organized under the laws of the United States which operates in Greeley, Weld County, Colorado, which is roughly 50 miles north of Denver. Both Bancorporation and The First National Bank of Greeley are engaged in interstate commerce. Moreover, the Court has jurisdiction of the action.
The main nucleus of Bancorporation is The First National Bank of Denver. However, there are three other subsidiaries—commercial banks—all of which are located in the metropolitan area surrounding Denver, Colorado. The First National Bank of Denver is the largest commercial bank in Colorado. Its total deposits as of June 1970 amounted to $468.0 million, 12.3% of the total commercial bank deposits within Colorado. Its assets total $586.5 million, and its loans and discounts total $340.8 million.
The other three commercial banks, subsidiaries of Bancorporation, are The First National Bank of Northglenn, The First National Bank of Bear Valley and The First National Bank of Southglenn. Each of these banks was organized de novo by officers and directors of The First National Bank of Denver.
The Northglenn bank was established on November 14, 1963. It is located in the suburban community of Northglenn in Adams County, which adjoins Denver County. It has been, from the date of its opening to the date of its acquisition by Bancorporation, an affiliate of First National Bank of Denver. Its total assets as of June 1970 amounted to $9.5 million. It had total deposits of $8.5 million and total loans and discounts of $6.1 million. Its income in 1969 amounted to $780,058, an increase over prior years.
The First National Bank of Bear Valley was also organized by officers and directors of The First National Bank of Denver, having been established on June 15, 1964. This institution is located within the City and County of Denver and has been, from the date of its opening to the date of its acquisition by Bancorporation, an affiliate of The First National Bank of Denver. The total assets of the Bear Valley bank are $11.4 million. Its total deposits are $10.1 million, and its loans and discounts total $6.9 million. Its income as of 1969 had substantially increased over the prior years.
Similarly, The First National Bank of Southglenn was organized de novo by officers of The First National Bank of Denver, having been established on November 30, 1964, in Littleton, Arapahoe County, Colorado. It was an affiliate of The First National Bank of Denver from the date of its opening until its acquisition. As of June 1970, it had total assets of $6.4 million, total deposits of $5.8 million and total loans and discounts of $3.2 million. Its total income in 1969 was substantially higher than in prior years.
As noted above, the present acquisition represents the first attempt by Bancorporation to acquire a banking institution outside of Denver. This application was approved, as also noted, by the Board of Governors on June 9, 1970. On July 8, 1970, the Antitrust Division of the Department of Justice brought the present suit.
The First National of Greeley was established in 1884. Its only office is in the City of Greeley, County of Weld. As of June 1970, its deposits totaled $39.2 million, and its total loans and discounts amounted to $28.9 million. It is the fifteenth largest bank in Colorado from the standpoint of total deposits, and the twelfth largest in terms of total loans and discounts.
The evidence does not disclose that there is competition at the present time between The First National Bank of Denver and The First National Bank of Greeley. To be sure, The First National Bank of Denver maintains a mortgage loan production office in the City of Greeley. This institution does not perform banking functions, but rather sells and services real estate loans to long-term investors such as savings and loan institutions, mutual savings banks and insurance companies. This service is performed for a fee and the most that can be said as to its contribution to the objectives of Bancorporation and First National Bank of Denver is that it undoubtedly serves to furnish information as to the market conditions to the First National, although there is no evidence in the record which establishes this fact. In other respects the First National Bank cooperates with The First National Bank of Greeley in connection with overline loans either itself or through its correspondent banks in other sections of the country. The First National Trust Department administers a small number of trusts for individuals who live in Weld County, but it does not solicit this kind of business there. Accordingly, it cannot be said that the proposed merger or acquisition qualifies as a horizontal one.
There are six commercial banks in the City of Greeley and two other banks in what is referred to as the Greeley Area —which includes communities adjacent to the City of Greeley.1 The following Table sets forth the relative percentages of total deposits held by each of these eight banks as of June 1970:
TOTAL DEPOSITS-COMMERCIAL BANKS IN THE CITY OF GREELEY AND THE GREELEY AREA*
(Dollar amounts in thousands) (Dollar amounts in thousands)
______________________________________________ | ___________________________________________________
June 1970 | June 1970
___________________ | ___________________
Amount % of % of | Amount % of % of
City Area | City Area
FIRST NATIONAL | UNITED BANKS OF
BANK OF GREELEY $ 39,237 33.9% 31.8% | COLORADO, INC
|
AFFILIATED BANKSHARES | United Bank of Greeley $ 24,743 21.4 20.0
OF COLORADO, INC. | State Bank of Greeley 2,070 1.8
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