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address whether economic conditions in those bank markets and in
northwestern Nebraska were similar.
Respondent's experts chose as one of their comparables First
National of Nebraska, the stock they estimated traded at 86
percent of its book value per share on September 30, 1986, and
March 31, 1987. They said that Scottsbluff National Corp.'s
stock was worth less than 86 percent of its book value per share,
yet they valued Scottsbluff National Corp. stock at 125 percent
of its book value per share under the market method.
To apply the income method, respondent's experts used a
14-percent discount rate because that rate is used to value
a Standard & Poor's 500 small capitalized company. We do not
believe that a 14-percent discount rate recognizes the economic
outlook for Scottsbluff National Bank.
Respondent argues that Scottsbluff National Corp. stock sold
at 100 to 115 percent of its book value per share from 1984 to
1988. With one exception, the sales on which respondent relies
involved former employees, directors, or their families. The
shareholders received higher prices for their shares because of
their association with the corporation.
We conclude that the fair market value of Kosman, Inc.'s
Scottsbluff National Corp. stock was 70 percent of its book value
per share. This figure is between the 86 percent used by
respondent's experts and the 60 percent used by petitioner's
expert. We hold that the fair market value of Kosman, Inc.'s
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