OPENING STATEMENT OF ROBERT P. GUYTON, PRESIDENT, NATIONAL BANK OF

GEORGIA

MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE: It may be helpful for me to make a brief opening statement as to who I am, my experience, background, and present capacity.

My name is Robert P. Guyton and I have been President and Chief Executive Officer of The National Bank of Georgia since May 1, 1977.

My banking experience began in 1960 when I joined the Deposit Guaranty National Bank of Jackson, Mississippi. This bank is the largest financial institution in Mississippi with current assets in excess of $1 billion. It has branch offices throughout the central part of Mississippi.

In August, 1971, I became President and Chief Operating Officer of The National Bank of Georgia, in Atlanta. I remained with the bank until October, 1974, when I returned to Mississippi to become President and Chief Operating Officer of the First Mississippi National Bank. This bank has $250 million in assets and twenty-six branch offices throughout central and southern Mississippi.

Four months ago, on May 1, 1977, I rejoined The National Bank of Georgia in Atlanta as President and Chief Executive Officer. NBG is the 5th largest bank in Atlanta and in Georgia and has total assets of approximately $400 million. It operates through twenty-six branch offices located in two counties in the Atlanta Metropolitan Area.

During most of my present tenure with The National Bank of Georgia, a considerable amount of our time has been occupied with the publicity surrounding Mr. Bert Lance and the investigation by the Comptroller of the Currency. We have also been besieged by reporters from the broadcasting and print media. We have tried diligently to be accessible to the press and open in our comments, but have been determined to protect the confidentiality of our customers and banking relationships. Admittedly, it has been difficult in this environment to devote much time to the banking business; however, we have tried our best to do so while also cooperating fully with all concerned and providing information on a timely basis when requested by the Comptroller of the Currency.

With the understanding as expressed to me in correspondence with Chairman St Germain, that these hearings are preliminary to legislation to improve the banking codes and bank regulation, I will endeavor to assist the Subcommittee in its deliberations on the policies, procedures, and practices of our bank, and the relationship it has had with the Comptroller. I will be pleased to cooperate with you in this spirit and will be pleased to answer your questions as completely as my knowledge will allow and in conformity with the bank's need to maintain the confidentiality of its banking relationships.

Chairman ST GERMAIN. Mr. Cleveland, if you would tell us in your own words about the advantages of services gained by establishing a correspondent account for a check clearing, portfolios, counseling, et cetera, and if this service is desired in another city like Chicago or New York, what dollars do you feel you would need to maintain for example a $50,000 account 1,500 miles away?

Mr. CLEVELAND. The services provided in a typical relationship vary from bank to bank. If you are talking about a primary corresponding relationship in one of the major eastern cities such as we maintain in Chicago and New York, it normally would involve check clearing; it would involve assistance in foreign exchange matters; it would involve assistance in loan evaluation, loan credit; it would involve assistance in the fields of international banking and foreign exchange, in credits. It could vary in scope from a modest relationship to a very large and very continuing type of detailed paper transaction.

Chairman ST GERMAIN. Now, how do you basically determine how much correspondent balance you will maintain in a large eastern bank, say New York or Chicago, in order to obtain these services?

Mr. CLEVELAND. The correspondent bank which is providing those services has a very complicated fee schedule in which they

set out their basic charges for each service performed. They set this as their base fee arrangement. They tell us basically how much free balance, net collected balance, is required to pay for those services.

Chairman ST GERMAIN. Now, let us say for your particular bank over the past 3 years that you wanted a correspondent relationship where they perform the check clearance services, give you counseling in foreign investments and conduct some seminars for your staff on money management.

For a bank your size, what have you found that the correspondent banks require as a balance to provide you with the services that your bank needs?

Mr. CLEVELAND. For a major correspondent, that is our primary correspondent bank in one of the large eastern cities, those sums would vary anywhere from $800,000 to as high as $1,800,000 depending on the volume of activities in those accounts. When I name these amounts, I am talking about collected balances. There are times when we might have as much as $8 or $10 million on deposit with those banks. A temporary thing of 24 hours. Chairman ST GERMAIN. How low can these balances go? Mr. CLEVELAND. The extraordinarily high balances? Chairman ST GERMAIN. How low can they go?

Mr. CLEVELAND. If they go much lower than their base requirements, they are on the phone calling us the same day.

It would be rare if they let balances fall to less than $700,000. Chairman ST GERMAIN. That is for the full range of services? Mr. CLEVELAND. That is for the primary correspondent bank relationship.

Chairman ST GERMAIN. Now, at the present time how much money do you have in various banks with which you have correspondent relationships, the major banks, such as Chemical, Manufacturers Hanover, First National of Chicago, Citizens & Southern? Mr. CLEVELAND. Mr. Chairman, I cannot respond to that question. I am no longer chief executive officer of the National Bank of Georgia, having retired for the second time back in May. Mr. Guyton, my associate here, is presently chief executive officer of the National Bank of Georgia.

Chairman ST GERMAIN. Mr. Guyton, would you address yourself to that question?

Mr. GUYTON. The question was what kind of balances do we maintain in all of our correspondents at this point?

Chairman ST GERMAIN. How much money does the National Bank of Georgia currently have in corresponding balances? In other words, noninterest-bearing accounts in your correspondent banks?

Mr. GUYTON. The balances on a purely collected base balance, and that is reading it from our end, that being those balances that are collected that are available for our use after deducting all charges, would run a little over $1,500,000 on our balance.

Chairman ST GERMAIN. How about the amount that you leave in the correspondent bank?

Mr. GUYTON. That is an unavailable balance to us, sir. That varies considerably, as Mr. Cleveland has indicated.

Chairman ST GERMAIN. It varies from day to day, the unavailable balance?

Mr. GUYTON. Yes.

Chairman ST GERMAIN. Isn't that the balance on which is predicated the services that are rendered to you primarily?

Mr. GUYTON. You have daily activity in a number of these accounts. I admit it is a complicated process, but it does entail moneys going into these accounts and moneys coming out of these accounts for check clearing and other services and what we attempt to do and what the banks attempt to do is to look at those balances at the end of the month in terms of an average for the month just completed.

Chairman ST GERMAIN. What would your covered balances then

be?

Mr. GUYTON. Our balances average on a collected basis-and this is the amount we try to keep in these accounts-about $1,500,000. Chairman ST GERMAIN. Now, Mr. Guyton, in the August report the Comptroller of the Currency states:

There is no discernible relationship between loans to Mr. Lance and associated interests in the deposit accounts maintained by National Bank of Georgia and Calhoun at Citizens and Southern.

Now, we will take a look at "D," exhibit 2 of the Comptroller's August report. It appears that quite the contrary seems to be the

case.

[The exhibit referred to follows:]

Now

Chairman ST GERMAIN. Now, your comment about the huge increases in December of last year and why your account with Citizens and Southern was reduced to zero in July of this year. there is yours up there. I would also direct the witnesses' attention to the other charts showing your bank's correspondent accounts with various other banks.

[Reference made here to the charts that follow:]