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In response to your follow-up questions in your letter of September 20, 1977, I should like to submit the following answers:


I first became aware that we were holding a fictitious
note for the benefit of Mr. Bill Campbell on July 31,
1975, at approximately Noon. At that time I also became
aware that Mr. Campbell had vacated the bank and I
finally located him at his home in the late afternoon.
We called on him at his home, and he admitted several
other false entries, forgeries and other matters to us
whereupon we came back to the bank and called the FBI,
the Regional Administrator of National Banks, our local
bonding company agent and the United States Attorney and
notified that these matters had been discovered. The
Comptroller's office sent representatives here the next
morning as well as the bonding company and the Federal
Bureau of Investigation, and of course we discussed with
them what we already knew. We immediately all set in to
try to delve into the total depths of this which it turned
out took about six months to uncover. We had many dis-
cussions with all of these people about the Campbell
matter for quite some time thereafter,

The first time that I realized anyone considered that we
had handled the campaign funds incorrectly was when I
received a subpoena to come to a proceeding at the Regional
Administrator of the Currency's office in Atlanta on August
28, 1975. After I received the subpoena Mr. John Sherry
called me from the Comptroller's office in Washington and
asked me if I had received it, if I intended to be there
and what my reaction to it was. I informed him that I did
not know that we had done anything wrong, but that I would
certainly be there. After arriving at the Regional Adminis-
trator's office on that date I was put under oath and gave

Mr. St Germain

September 29, 1977

Page Two

my testimony on this matter and was informed that it should
be kept private which I did. I did not hear any more of
this matter at all until the time that the newspapers began
to report on it after Mr. Lance was proposed to be named to
a Cabinet position in President Carter's Cabinet.
To the best of my knowledge our bank was never informed
that the Comptroller's office had made a criminal referral
to the Justice Department about any matters; therefore, the
bank, of course, was not informed of the various steps that
took place thereafter.



I do not recall ever being served with a subpoena for cer-
tain books and records of the bank in September of 1976.
I have asked the various other Officers of the bank who
might be aware of this, and none of them recall such a sub-
poena either.


The loan deposit ratio of The Calhoun First National Bank on
December 2, 1975, was 74.9%.


I have no knowledge of the nature of the Comptroller's concern about the item mentioned in Article 13 of the Agreement between this bank and the Comptroller's office.

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As you are aware, Members of the Subcommittee indicated in our hearings on September 6 that we would have follow-up questions to your appearance.

1. Calhoun First National Bank filed a claim with its bonding company for losses occurred in the Billy Lee Campbell matter.

What was the maximum amount of coverage for such losses in

What was the final disposition of the dispute between
your bank and the bonding company on this matter?

2. Please provide the Subcommittee with stockholder lists for Calhoun First National Bank for the years 1974 to date. Please include in the list the number of shares owned by each stockholder.

3. Please provide the Subcommittee with a detailed analysis of Calhoun First National Bank's capital accounts for the years 1974 to date. Include in this analysis any major increases in the capital accounts and provide data on the method used to increase that capital (such as stock offerings, retained earnings, etc.). For any stock offerings, please provide the names of the purchasers, the number of shares bought by each purchaser, and the price paid for those shares.

Because of ongoing legislative and oversight hearings, your earliest response would be appreciated.

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The Calhoun First National



September 26, 1977

Mr. Fernand J. St Germain
Subcommittee on Financial Institutions
U.S. House of Representatives
Ninety-Fifth Congress
Washington, D. C. 20515

Dear Mr. St Germain:

As requested in your letter of September 20, 1977, the following answers to the follow-up questions to my personal appearance before your subcommittee are furnished: 1. The face amount of our insurance coverage under which a

claim was filed with our former bonding company in the
Billy Lee Campbell matter was $1,700,000.00 during 1975.
After considerable litigation by both sides, The Calhoun
First National Bank settled with the bonding company for
a cash payment of $450,000.00 plus the salvage rights
to all loans, agreements and any other other assets of
any value supporting these credit extensions which were
involved in the matter. Since the settlement date with
the bonding company we have collected approximately an
additional $195,000.00 from the other assets which were
granted us, and we feel that a substantial additional sum
is collectible.


As requested, stockholders lists of The Calhoun First National Bank for 1974, 1975, 1976 and 1977 are included, and as you can see the computer printout shows the total number of shares owned by each stockholder.


The most complete detailed analysis of our capital accounts
for the years 1974 to date will be found within our
financial reports and are included in our Annual Reports of
December 31, 1975, and December 31, 1976. These reports
are attached along with a three-year moving summary of the
changes in equity capital which we submit to the appropriate
regulatory authorities on a regular basis.
In June, 1976, a common stock offering was made to our
stockholders and 1,313 shares of $2.50 per value common
stock were sold. A list of the purchasers of this stock
by name and amount is attached, and as you can see on our

Mr. St Germain

September 26, 1977

Page Two

financial statements after deducting the selling expenses of approximately $10,000.00, $3,000.00 was credited to the Common Stock Account and the undivided profit account was credited for the excess of proceeds from the sale of our stock over the par value in accordance with regulatory authority approval. This is the only stock offering we have had between the years, 1974 to date.

We certainly hope this will complete the information needed from The Calhoun First National Bank in connection with our previous testimony before your Subcommittee.

Yours truly,



ine. Diris, President



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