Boatmen's Bancshares Inc. History

Company History:

Boatmen's Bancshares Inc. is the oldest bank west of the Mississippi River, the largest commercial bank in Missouri, and one of the 30 largest bank holding companies in North America. In 1995 Boatmen's was operating 50 banks in more than 500 locations throughout the midwest and southwest United States. Its operations also included one of the largest trust companies in the nation, as well as a mortgage banking concern and various credit and insurance businesses. Boatmen's began expanding aggressively in the late 1980s.

Boatmen's began as the vision of banker, entrepreneur, and civic leader George Knight Budd. Budd was born in 1802 to George and Susanah Britton Budd, both of whom claimed prominent East Coast lineage. Before he arrived in St. Louis on a steamer in 1835, he had already traveled extensively in the United States, as well as in the Mediterranean and in South America. Budd brought with him a substantial fortune and cosmopolitan vision. Viewing the thriving commerce on St. Louis' Mississippi shore, Budd determined that the "Gateway" city was the place where he would settle.

Budd spent his first few years in St. Louis as a merchant before joining with a partner, Andrew Park, to form the private banking firm of Budd, Park & Co. Besides his business interests, Budd was a leader in his community. He sold U.S. bonds during the Civil War, for example, and served as financial editor of the Missouri Democrat. He was also a leader in the First Presbyterian Church and served as a city councilman and as city comptroller in the early 1850s. Budd's service as comptroller demonstrated how his far-reaching vision surpassed that of his peers. As comptroller, Budd arranged for the city to purchase a tract of land downtown for use as a park. Many citizens viewed the purchase as wildly extravagant, and Budd was even forced to resign because of opposition to his decision. But the purchase eventually proved to be one of the greatest bargains the city ever made; the site became the location of the City Hall and other municipal buildings.

By the time Budd was forced to resign from the comptroller position, he had already started the organization (Boatmen's Savings Institution) that would become Boatmen's Bancshares. Budd had faced a formidable wall of opposition to that venture, as well, because it was the first nonstate bank of its kind in Missouri. Budd was motivated to start Boatmen's Savings largely by his desire to help the industrial and working classes in St. Louis, many of whom were boatmen. Indeed, he saw that many of the rivermen were drinking and gambling their money away, rather than saving and investing it for their families and their future.

Budd wanted to start a bank that would cater to the needs of the working class rather than commercial enterprise. The entire city would benefit, he reasoned, because welfare and charitable needs would be reduced, a financial instrument would be put in place that would direct working people's money into more productive assets like homes and durable goods, and investment capital would be generated for St. Louis. Opposition to his proposal came from bureaucrats, many of whom wanted to protect the state's control of the commercial banking business. Those critics argued that a private bank would compete with Missouri's commercial bank. In fact, the Missouri legislature had shot down dozens of petitions from other people who wanted to start private, noncommercial banks.

Budd was able to overcome resistance to his plan. On February 16, 1847, the legislature passed an act granting a charter for Boatmen's Saving Institution; "Whereas the boatmen and other industrious classes ... need an institution in which they can safely deposit at interest, their earnings, and experience has proved that savings institutions have been productive and of great benefit to the laboring classes, inducing habits of economy and industry...." Shortly thereafter, Budd and fellow founders of the bank set up shop in an old jewelry store. Adam L. Mills was appointed president of the bank and served in that position until 1854.

Boatmen's started out offering an interest rate of three percent for cash deposits. The bank's trustees invested the cash in relatively conservative instruments. The first $1,000 of deposits, for example, was invested in a city bond that paid six percent interest. Thus, as Budd had predicted, the bank was supplying investment capital for the community. Within a year of opening its doors Boatmen's had accrued $26,000 in deposits and was struggling toward profitability. Encouraged by the success of the venture, the legislature gradually eased restrictions on the bank. In 1851, for instance, the state allowed Boatmen's to begin making real estate loans to individuals. By the early 1850s the bank was showing profits.

Boatmen's survival and growth toward profitability during the mid-1850s was nothing short of miraculous given the string of catastrophes that nearly quashed the fledgling financial institution. A cholera epidemic that raged through the city in 1849 took its toll on the working class, for example, killing more than 600 people in July alone. Even worse, a steamer caught fire in 1850 and ignited a blaze that devastated much of the city. 23 steamers and 430 buildings were destroyed. Fate spared the building that housed Boatmen's, which was damaged but still standing amidst the ashes of the structures immediately adjacent to it.

Despite the seriousness of the fire and the plague, by far the worst setback Boatmen's experienced during its first decade was a nearly ruinous event that transpired the night of April 5th, 1854. On April 6th, the bank's trustees were summoned to a meeting and told that the bank's safe had been robbed. Missing was $19,000 in gold and bank notes. The bank's safe had simply been opened with a key and emptied. It had taken the bank seven years to accrue a total surplus of $11,000. Now, that amount and $8,000 more was suddenly ripped from the company's balance sheet.

Suspicion for the theft quickly fell on Joseph Thornton, the bank's secretary. Thornton was one of the few people that knew that the key to the bank's small safe, which held the key to the larger safe, was hidden in the bank's chandelier the night of the theft. Furthermore, it was learned that shortly after the theft Thornton had deposited in the Bank of the State of Missouri a large package of bank notes that were water soaked and covered with mud, as though they had been buried. When questioned about the incident, Thornton withdrew the notes from the bank and was caught depositing similar water-soaked notes in smaller amounts at Boatmen's.

Despite damning circumstantial evidence, Thornton was eventually acquitted. He argued that the notes had been found under a stump by a steamboat deckhand, who thought the notes were worthless and sold them to Thornton. Justice prevailed a few years later after Thornton met Joseph Charless on the street in St. Louis. Charless, the president of the State Bank of Missouri, had testified against Thornton. Upon seeing his nemesis, Thornton drew a pistol and shot Charless. Thornton was found guilty of murder during a speedy trial and, to the delight of his detractors, promptly lynched.

Adding to Boatmen's woes was a run on its assets on January 13, 1855. Panicked depositors rushed to withdraw their money from the institution. Disaster loomed until the proprietress of one of the city's most expensive bordellos arrived in a carriage. She elbowed her way through the crowd standing outside the bank and conspicuously deposited $4,500 in gold. As the story goes, that giant deposit was enough to quell depositors' fears that Boatmen's would run out of money. The gold remained on deposit for one year, and is credited with having helped save the institution. Interestingly, another one of Boatmen's new depositors in that year was a young farmer and woodchopper named Ulysses S. Grant, the future president of the United States.

Having survived a rough start-up period, Boatmen's enjoyed healthy growth during much of the late 1800s. In the late 1850s, the state allowed the bank to begin issuing stock, lend money at higher rates of interest, execute trusts, and issue notes. Despite its humble beginnings, by the 1870s Boatmen's had emerged as a force in St. Louis banking. By the 1880s, moreover, Boatmen's had become known nationally as a strong financial institution. And by the early 1890s the bank was boasting nearly $7 million in deposits (That amount was temporarily reduced to about $5.4 million during the panic of 1893, however).

Under the presidency of Edwards Whitaker, Boatmen's remained a fiercely independent financial institution during the early 1900s. The Federal Reserve System had been organized in 1914 to, among other benefits, help protect banks from economic turbulence. But Whitaker was wary of federal intrusion and control and refused to allow Boatmen's to become a member. Boatmen's did finally join the Federal Reserve in 1926, following Whitaker's resignation. Other changes at the bank included the use of women tellers and the sale of investment securities, both of which were prompted by the demands of World War I.

Boatmen's experienced several name changes; it became Boatmen's Saving Bank in 1873, Boatmen's Bank in 1890, and Boatmen's National Bank of St. Louis in 1926. The name change in 1926 coincided with the initiation of a separate Trust Division, and reflected the organization's conversion to a national bank. By 1929 Boatmen's National Bank had about $28 million in assets, roughly $20.5 million of which were deposits. Unfortunately, Black Friday reduced that asset value to about $8.5 million and put Boatmen's, like many other banks of the era, on the brink of bankruptcy.

Boatmen's had merged with the investment firm of Kauffman, Smith & Co. shortly before the market collapse. Tom K. Smith, vice-president of the latter company, became president of Boatmen's. He helped steer the organization through the Great Depression and was even instrumental in helping the Federal Government establish the Federal Deposit Insurance Corporation (FDIC), which became an integral part of the American banking system following the Depression. Boatmen's was among the 25 St. Louis banks, of a total of 60, that survived the Depression.

Conservative financial practices and tight management allowed Boatmen's to emerge from the crises during the 1930s relatively unscathed. In fact, by 1942 Boatmen's was sporting more than $100 million in deposits and was established as a leading St. Louis bank. Five year later, in the midst of World War II, Boatmen's celebrated its 100th anniversary with deposits of more than $120 million. It was the fourth largest bank in St. Louis at the time. Boatmen's pulled its weight during the war by selling war bonds and opening special banking facilities for military personnel.

Boatmen's sustained moderate gains during the 1950s and 1960s, growing along with the city of St. Louis. It wasn't until the late 1960s, though, that Boatmen's began its drive to become a leading regional banking institution. Importantly, Boatmen's became a multi-bank holding company in 1969 through the formation of Boatmen's Bancshares. Boatmen's Bancshares was created as the parent company for Boatmen's National Bank to act as the instrument through which the bank would expand into new regions and markets.

Boatmen's Bancshares first expanded locally, purchasing four small suburban banks and a Springfield, Missouri mortgage banking company during the early 1970s. During the next five years Boatmen's aggressively chased regional opportunities to boost its exposure statewide. By 1978 the holding company had purchased eight Missouri banks as well as a mortgage banking operation in Illinois. By 1980, moreover, Boatmen's was boasting a portfolio of assets worth $2 billion and an organization comprised of 17 banks, a mortgage company, an insurance business, and 38 banking branches statewide.

Boatmen's continued to grow throughout the 1980s. A series of mergers and acquisitions included the 1983 purchase of Metro Bancholding Corporation, a prominent St. Louis bank. In 1984 Boatmen's added CharterCorp, a Kansas City-based holding company that had more than 45 banks with 100 branch locations and assets of more than $6 billion. Suddenly, Boatmen's was one of the largest commercial banking organizations in the Midwest. Adding to its muscle was the 1986 takeover of General Bancshares. That important buy gave Boatmen's access to markets in Illinois and Tennessee.

Boatmen's biggest expansion initiative was launched in 1988, when the holding company acquired Centerre Bancorporation. The giant merger nearly doubled the size of Boatmen's and made it the biggest bank in Missouri. Other acquisitions followed during the ongoing bank industry consolidation that permeated the 1980s and early 1990s. Boatmen's bought Community Federal Savings and Loan in 1990, giving it several hundred thousand new Missouri customers. In 1991 it moved westward with the purchase of First Interstate Bank of Oklahoma. Founders Bancorporation, also in Oklahoma, joined the Boatmen's portfolio in 1992. That buyout launched a flurry of acquisition during the year that gave Boatmen's an entry into Arkansas, Iowa, New Mexico, and Texas.

Among the most notable 1992 acquisitions was Sunwest Financial Services, which brought assets worth $3.8 billion to Boatmen's balance sheet. Combined, Boatmen's made acquisitions totaling $6.8 billion in 1991 and 1992, giving it a total asset base of more than $23 billion going into 1993. By early 1993, Boatmen's was operating in seven states with approximately 400 branch locations and about 175 automated teller machines. Later that year the bank initiated operations in Kansas with the purchase of First Continental Bank and Trust Company. By year's end Boatmen's had nearly $25 billion in assets and more than 425 locations in eight states.

Aggressive growth became Boatmen's hallmark for the early and mid-1990s. In 1994 the holding company made a big move in Arkansas with the acquisition of Worthen Banking Corporation, which encompassed approximately $3.5 billion in assets and 112 retail locations in Arkansas and Texas. Subsequent acquisitions were eclipsed by the announcement late in 1994 that Boatmen's had agreed to buy Fourth Financial Corporation of Wichita, Kansas. When that merger was completed in 1996, Boatmen's was expected to have a whopping $41 billion in assets.

By late 1995 Boatmen's was holding $33.4 billion in assets and operating more than 500 bank branches in nine states. It was among the 30 largest holding companies in the nation and one of the leading U.S. providers of trust services with more than $40 billion of assets under management. Importantly, Boatmen's posted net income for 1994 of $355 million, which was the culmination of an increase in earnings almost every year since the mid-1980s. For the remainder of the century, Boatmen's planned to sustain its growth and enhance its stature as a leading U.S. financial institution.

Principal Subsidiaries: Boatmen's Trust Company; Fourth Financial Corporation; Sunwest Bank; Superior Federal Bank, F.S.B.; FKF, Inc.; Security Bancshares, Inc.; Catoosa Bancshares, Inc.; Founders Bancorporation, Inc.; Eighth and Taylor Corp.

Further Reading:

• Boatmen's History of Growth and Expansion, St. Louis: Boatmen's Bancshares, September 1995.
• Elbert, David, "Boatmen's Puts New Man in Charge," Des Moines Register, April 6, 1993, Bus. Sec.
• Eubanks, Ben, and Dan Margolies, "Boatmen's Predicts Earning $137 million After Merger," Kansas City Business Journal, August 22, 1988, p. 12.
• Eubanks, Ben, "At Boatmen's, the Craig Era Begins," St. Louis Business Journal, March 6, 1989, p. 1A.
• ------, "Boatmen's Climbs from Sixth to Become Largest Bank Firm," St. Louis Business Journal, December 25, 1989, p. 6A.
• Gilmore, Casey, "What Will Merger Mean? Boatmen's, Bank IV Working on Details of Combined Forces," The Kansas City Business Journal, September 1, 1995, p. 1.
• Palmeri, Christopher, "Softly to the Big Time," Forbes, May 10, 1993.
• Ringer, Richard, "Can Boatmen's Steer to Bigger Profits," United States Banker, August 1991, p. 20.
• Rule, W.G., The Means of Wealth, Peace and Happiness: The Story of the Oldest Bank West of the Mississippi, St. Louis: Boatmen's National Bank, 1947.
• Schroeder, Amy and Gianna Jacobson, "Mercantile, Centerre Have Long Missouri History," St. Louis Business Journal, April 25, 1988, p. 18A.

Source: International Directory of Company Histories, Vol. 15. St. James Press, 1996.

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