The following historical sketch of Barnett Bank appeared in the October 1998 issue of Jacksonville Magazine (reprinted with permission of the magazine).
The Last Days of Barnett
How a home-grown institution helped shape our city
by David Ginzl
The removal of the familiar Barnett Bank logo from more than 600 offices statewide marks the final step in Barnett's acquisition by NationsBank. It also represents the final chapter—or perhaps a new chapter entirely—in the 120-year saga of a home-grown business that helped shape the bustling industrial city in which it was founded.
William Boyd Barnett had only recently moved to Jacksonville when he opened his banking office in the old Freemen's Bank Building at the corner of Pine (now Main) and Forsyth streets. Although he could claim to be a Virginian by birth, he was, in fact, more a Westerner than a Southerner. A merchant and a banker in Hiawatha, Kansas, Barnett first traveled to Jacksonville in 1875 to visit his oldest son Will (William D.), who had settled here the preceding year.
Noticing that his wife Sarah enjoyed improved health during their Florida stay, Barnett returned to Hiawatha and sold his various business interests. Then, joined by his youngest son Bion, who left the University of Kansas during his senior year, the family moved permanently to Jacksonville in March 1877.
Yet the city's prospects did not appear promising that spring. Florida and the rest of the nation were in an economic recession, and transportation around the state was difficult. There were no highways, and the few railroads were in poor repair. Although northern tourists had begun to flock to a smattering of wood-frame hotels during the winter months, Jacksonville offered few amenities for visitors—or residents, for that matter. There were no paved roads, no electricity, no city water, and no sewers. Indeed, poor sanitation contributed to periodic outbreaks of yellow fever, including one shortly after the Barnetts settled in.
Jacksonville did, however, have three banks—probably too many for a town with a population of fewer than 10,000. Undeterred, Barnett, with a capital investment of $43,000, opened the Bank of Jacksonville on May 7, 1877. His staff consisted of 19-year-old Bion as bookkeeper and one other clerk.
Like most other Florida banks, Barnett's was a private—and therefore unregulated—institution. Indeed, anyone with a safe and the ability to attract deposits from townspeople could become a banker. Nonetheless, the fact that a recent arrival—and a nominal Yankee at that—could so quickly win the confidence of his neighbors was a testament to William B. Barnett's personality, vision, and solid business sense.
Still, the bank struggled during its first few years. At the end of 1877, deposits totaled only $11,525. Barnett soon offered Bion a partnership in the fledgling business and a share of its small profits. Concurrently, he passed along to his son five rules of business, about which Bion recalled more than five decades later: "I have never found a flaw in it. It is good advice today."
Barnett's tenets were as follows:
Follow the Golden Rule. You cannot go wrong treating the other man as you would be treated.
Give a man 50 cents if you can make a dollar out of him. In other words, be liberal in your dealings but always have a net profit. Do not do business at a loss.
If a young man is of good habits—honest, capable, saving, giving close attention to his business and making progress but lacking in capital—help him. The young man of today is the businessman of tomorrow.
Never make a promise you cannot and do not fulfill. Investigate carefully before granting a line of credit; once granted, there being no adverse change in your client's financial condition, fulfill your promise. Your word must be as good as your bond.
Watch your expense account and your losses; your profits will take care of themselves.
In 1880 Barnett's other son William D. sold his furniture business and joined the family firm. That same year, the Bank of Jacksonville got its major break and moved permanently into the bigtime—all because of a competitor's apparent stubbornness over a small fee. Henry L'Engle, tax collector for Duval County, complained to Bion about a $6.25 charge routinely assessed by another Jacksonville bank to transfer local tax receipts to a New York institution.
Bion quickly agreed to waive the charge, and the county's tax accounts were switched to the Bank of Jacksonville. The next year, fortuitously for the Barnett family, L'Engle was appointed State Treasurer and subsequently moved the state's depository accounts to the Bank of Jacksonville as well.
By the end of 1887, the 10-year-old institution reported deposits of $358,873. Then, the following year, Barnett sold stock and, with the resulting capital of $150,000, applied for a national bank charter. In May, the charter was granted, and the bank was renamed the National Bank of Jacksonville.
Soon thereafter, another yellow fever epidemic struck the city, during which three of the bank's clerks died. The elderly Barnett was likewise stricken, but recovered. "At the end of the fever, three-fourths of our loans were past due," Bion, ever the no-nonsense businessman, recalled. "But, in time, we got it all straightened out and paid. We only lost one note of $50, the maker of which had died, leaving no estate."
The bank continued to prosper despite periodic crises, including the phosphate speculation boom of the early 1890s, the financial panic of 1893, and the great freeze of 1895 that destroyed the state's citrus crop. Then came the devastating 1901 fire, after which the National Bank of Jacksonville was the only banking office in town left standing. The Barnetts allowed their competitors to keep cash and other valuables in their vault while rebuilding.
In 1903, William B. Barnett died. Bion, who had been the active manager of the bank for years, was named president. In 1908, with its 20-year national charter expiring, the bank reorganized and changed its name to the Barnett National Bank, in honor of its founder.
From 1903 to 1952, when he retired at the age of 94, Bion served as president or chairman of the board for all but seven years. Although he increasingly spent long periods at his home in France or playing golf in Scotland, he remained in close communication with trusted lieutenants, most notably William R. McQuaid, who served as president for more than 25 years beginning in 1925, and his youngest son Donald, who rose through the officer ranks to be vice chairman.
In 1927, Barnett celebrated its 50th anniversary, marked by gala ceremonies dedicating its new 18-story office building—then the tallest structure in Jacksonville—at the corner of Laura and Adams streets.
But a severe downturn was looming. Florida's real estate boom had gone bust the year before, with critical ramifications for many of the state's overextended financial institutions. During the next decade, in the aftermath of the Great Depression, more than 250 Florida banks failed, and those that managed to stay afloat struggled.
In 1929, Bion attempted to merge Barnett with Florida National Bank. But the effort was blocked by Ed Ball at the behest of his powerful brother-in-law, industrialist Alfred I. duPont, who also had designs on Florida National—and who ultimately purchased the controlling interest for himself. Regardless, Bion was not ready to give up on his ambitious expansion plans.
During its failed merger battle, Barnett had been allied with Chicago financier Calvin Fentress. Baker, Fentress & Company, which owned a controlling interest in Jacksonville-based Consolidated Naval Stores, had a stake in promoting a more stable local banking environment. Therefore, in the fall of 1929, Bion sold a large block of bank stock to Consolidated, thereby ending full family control.
However, with this infusion of funds, Bion established the Barnett National Securities Corporation, one of the country's first bank holding companies. The Securities Corporation, in turn, invested in new banks in DeLand, Cocoa, and Avon Park and purchased control of the St. Augustine National Bank.
The capital from the Consolidated purchase also provided Barnett with a cushion during a number of difficult years. Deposits, which had been $25 million in early 1927, had dropped to $14.1 million by 1933, prompting the bank to drastically cut its dividends. In an effort to avoid layoffs, the bank also cut salaries—in 1932, for example, all senior officers took a 15% pay cut, junior officers 10%, and all other employees 5%.
However, by the mid-1930s, the crisis had passed, thanks in large part to conservative policies maintained by McQuaid, who managed day-to-day operations. Nonetheless, by the end of the decade, Barnett was fiscally sound and poised to benefit from Florida's wartime expansion and the subsequent post-war boom.
Bion had been named honorary chairman of the board in 1952. Although he then ceased active involvement in the bank, he still received full business reports, delivered each evening to his apartment, to be reviewed with a bourbon and a good cigar. When he died in 1958, at the age of 101, Barnett National Bank and its four affiliates, confined principally to North Florida, boasted combined deposits of $176 million.
Still, with the exception of a new bank opened in the Murray Hill area of Jacksonville, there had been little expansion since the Depression. While noted for its institutional stability and integrity, Barnett had grown somewhat complacent and stodgy, falling behind its more aggressive rivals, Atlantic Bank and Florida National.
That situation, however, would soon change.
In 1961, Chairman Frank Norris and President William R. Barnett (great-grandson of the founder), spearheaded an effort to combine Barnett with the largest banks in Miami, Orlando, and Tampa. The proposed First Bancorporation of Florida would have created a megabank with more than $670 million in deposits and would have altered the subsequent development of banking in the Southeast. The Federal Reserve Bank, however, vetoed the deal as being anti-competitive.
Then a different approach to expansion emerged with the 1963 election of Guy W. Botts as president. Botts, an attorney who had served on the bank's board since 1955, had no banking experience—but he did have a strategic vision for the company.
Botts reorganized the Barnett National Securities Corporation, which became the vehicle for launching an unprecedented acquisition campaign. From 1966 to 1976, Barnett purchased 37 banks and opened 19 more through new charters, focusing on large, fast-growing population centers. Simultaneously, Botts lobbied the legislature to revise state laws to permit branch banking.
While expanding Barnett's office network to counties that encompassed 86% of the state's population, Botts also expanded the range of bank services. Barnett was the first bank in the state to offer Bank Americard (now VISA) and developed a major consumer lending focus.
Botts also launched a corporate identity program to create a "one-family look". All of the banks adopted Barnett as a common name and used the distinctive green-and-white bank logo on all signage and marketing campaigns.
One of Botts' first acquisitions, in 1966, was the First National Bank of Winter Park, where he met Charles E. Rice, the Central Florida institution's young vice president. Rice transferred to Jacksonville in 1972, and by the following year had become president of the holding company, now renamed Barnett Banks of Florida, Inc. In 1979, he succeeded Botts as chief executive officer.
Under Rice's leadership, Barnett experienced phenomenal growth in the 1980s throughout Florida and Georgia, as regional interstate banking got underway. The bank grew from 120 offices with assets of $3 billion at the beginning of the decade to 563 offices with assets of $29 billion 10 years later. With innovative products and aggressive expansion of electronic banking, Barnett sought to fulfill its marketing slogan and became "Florida's Bank".
The real estate collapse of the early 1990s derailed the company's 14-year string of continuous earnings increases. But by the mid-1990s, earnings had rebounded to record levels, and the bank launched a national consumer credit strategy.
Still, while developing a national presence in residential lending and automobile financing, Barnett always remained committed to serving its local communities. Bank presidents were leaders in chambers of commerce, United Way campaigns, and other charitable activities. On a statewide basis, Barnett launched "Take Stock in Children", an ambitious program to mentor at-risk youngsters and provide them with college scholarships. In addition, the company became a national model for creating a family-friendly workplace, adopting programs such as flextime, child-care assistance, and a variety of employee resource and referral services.
With the acquisition of First Florida Bank in 1992, Barnett had achieved market dominance in Florida. The last major bank headquartered in the state, it controlled 27% of deposits in one of the fastest growing, most dynamic banking markets in the country. Still, although there had been acquisition rumors for years, the August 29, 1997. announcement that NationsBank had acquired Barnett—at that time the largest banking merger in history—came as a shock to many.
But what made the company unique? Allen Lastinger, who started his Barnett career as an analyst in 1971 and rose to be president and chief operating officer, identified Barnett's principal strength to be its people.
"Let's be supportive and encouraging and motivating to the employees of the bank, because they're your direct contact with the customer," he told managers. "If we have a satisfied employee, we will increase our chances of having a satisfied customer. If we have a satisfied customer, that will increase our chances of having a satisfied stockholder."
Recalls Lastinger, "We were 'Team Barnett' and we enjoyed successes that our team created."