The life of Sam Fleming: One great deal after another

The late banker's influence on local business can hardly be overstated

Sam Fleming, who passed away this week at 91, was probably at the center of more Nashville business stories than anyone else who ever lived. One of the most important was one never reported: how he saved the day for Hospital Corporation of America.

After its founding in 1969, HCA grew rapidly and succeeded in getting financing packages of $30 million in 1970 (from an bank consortium led by First National City Bank of New York) and $27 million from a group of insurers in 1972.

In 1974, the hospital company went to the well once more, seeking $35 million in loans. After believing the credit was all lined up from a group of banks, the company made plans to deploy the funding. At the last minute, however, First American National Bank dropped out – for reasons that remain secret to this day. HCA co-founder Jack Massey called Sam Fleming.

"It was a near disaster," said John Neff, who was then HCA's chief financial officer. But after a day on the phone, the former president of the American Bankers Association had found a bank to replace First American. "Sam Fleming saved the day," Mr. Neff said. "To this day, HCA owes a debt of gratitude to Sam Fleming."

Twenty-five years later, in 1999, Sam Fleming said he couldn't remember much about the day he helped HCA get its line of credit. Part of the reason that he couldn't was because it wasn't the only time he came through for a Nashville company.

Mr. Fleming's life and career seemed to last forever. Born in Franklin in 1908, Mr. Fleming's great-grandfather Newton Cannon and great-uncle Aaron Brown were both Tennessee governors in the early-nineteenth century. (Mr. Fleming had a pronounced "Old South" accent his entire life.) At the age of eight, Mr. Fleming started working as a runner for the Harpeth National Bank of Franklin, where his father was a director. After graduating from Vanderbilt a month after his twentieth birthday, Mr. Fleming went to work for the New York Trust Company.

The stock market crash and the massive layoffs that followed took the glamour off New York. In 1931, Fleming accepted an offer from Frank Farris to work for the credit department of Third National Bank. The four-year-old bank had about $6 million in deposits at that time.

Third National turned out to be the perfect place for Sam Fleming. During the Depression, American National Bank (later First American) couldn't make many new loans because it had to concentrate on delinquent loans, many of which it had inherited from the old Fourth and First National Bank. Commerce Union, which had been organized in 1917, also had its share of bad paper.

Mr. Fleming became the man to see if you wanted to get money in Nashville. He relished and excelled in this role. "Sam Fleming had a lot of sense and a lot of personality and a lot of salesmanship," said Ed Nelson, formerly head of Commerce Union. "He was the perfect person to flourish in that type of environment, where he did not have to spend all his time collecting loans."

While American National/First American sometimes acted like it was above the practice of asking for business, Mr. Fleming turned it into an art. "If we wanted to go after the General Electric account, for example, we would start by trying to find something we could do for the local manager," Mr. Fleming said in 1979. "Then, with his recommendation, we'd go to New York and try to sell them on the idea that we were the ones who could do more for them down in Nashville. And it was the same with Metropolitan Life Insurance and others. We began breaking through and gaining more and more accounts, mainly because we outworked our competition."

At least two small business owners who became friends with Mr. Fleming during the Depression made it very big. One was Mr. Massey, who owned a struggling drugstore on Church Street in the 1930s and years later made a fortune with Kentucky Fried Chicken and HCA. For the rest of his life, Mr. Massey remained loyal to Third National. Another was Herman Lay, who started a small potato chip business in Nashville in 1939 and went on to be chairman of Pepsico. "I have been associated with the bank since the difficult days of the last Depression and have always appreciated the fairness Third National has shown the little man," Lay said at a dinner honoring Fleming in 1968.

As Nashville's newest bank loaned money and made friends during the Depression, it became known as the "Friendly Third." And for the next thirty years, there would be no better ambassador for the Friendly Third than the energetic optimist named Sam Fleming.

One thing that made Mr. Fleming so hard to compete with was his connections. Mr. Fleming frequently played golf with Dwight Eisenhower. A few years later, Mr. Fleming became a supporter of Lyndon Johnson, something for which he took a lot of heat in the Nashville business community.

One of the most important loans that Third National ever made was in 1946, when the bank loaned a thousand dollars to three WSM engineers who were trying to start a recording studio in their spare time. That small business, Castle Recording, was enormously important to Nashville's eventual role as a music recording center. And during the 1950s, Mr. Fleming's Third National Bank became the bank most closely affiliated with country music stars.

Mr. Fleming became president of Third National in 1950, and would be either the bank's president, CEO or chairman until 1973. During those years, Mr. Fleming seemed to be everywhere - on influential public company boards such as National Life & Accident and Genesco to the Chamber of Commerce to the board of Vanderbilt University. Third National also became the first of Nashville's three banks to build a skyscraper downtown in the 1960s, when it built the Third National Center.

In many ways, Sam Fleming's greatest moment came when he oversaw a merger that temporarily made Nashville home to the largest financial institution in the South. Since Third National was started by a group of National Life & Accident Insurance Co. executives, Mr. Fleming always had the inside track on the National Life crowd. In the 1960s, the federal government had begun allowing banks to form a holding company that owned the bank, then use the holding company as an avenue to invest in other things. Eventually, these new entities were in vogue and became known as "one-bank holding companies." Like the name implied, they were allowed to own only one bank.

In 1967, Mr. Fleming suggested merging National Life and Third National into a one-bank holding company called NLT, which would stand for "National Life-Third." The new company would be dominated by National Life management, since the insurance company was about five times larger than the bank. It would have an asset base of over $2 billion, making it the South's largest financial institution.

Given its conservative history, this did not seem like the kind of thing the National Life board would go for. But at the time, investing in other areas of commerce seemed like something that would impress Wall Street. Besides, National Life and Third National had such a close affiliation that it wasn't as if either the bank or the insurance company would be controlled by outsiders.

In December 1968, National Life and Third National formed NLT, with Dan Brooks as chairman and Mr. Fleming as president. NLT quickly got to business on new ventures, forming a separate real estate arm called Intereal (which soon owned shopping malls at Green Hills, Rivergate and Hickory Hollow) and a new computer company called NLT Computer Services. "It was one of the great things that had ever happened here," Mr. Fleming said in an interview with this reporter last year. "We thought we had hit the jackpot."

However, the National Life/Third National merger was short-lived. By the time NLT was formed, members of both political parties had great concern about the rise of one-bank holding companies. In 1969, President Richard Nixon recommended legislation making it illegal for one-bank holding companies to buy controlling interest in companies not in the financial business. Several months later, Congress did, requiring NLT to divest Third National. Nashville would never again be able to claim it was home of the South's largest financial institution.

During the 1980s and 1990s, Mr. Fleming looked and acted like a man who was decades younger. He still went to his office several days a week. He was still sharp enough to explain complex nuances of Nashville business history, such as the freight rate controversy of the late 19th century or the reasons for the collapse of Rogers Caldwell's banking empire.

Like many other old men, Mr. Fleming was hard of hearing. But he still dominated every conversation in which he took part, mainly because of the "wonderful force of his personality," as former Nashville Trust executive John Hardcastle puts it. Last year, when asked by a reporter why he never retired, Mr. Fleming gave a quizzical look, as if that were a stupid question to ask a 90-year-old man.

Yesterday, former First American chairman Andrew Benedict said he was very sorry to hear that his friend Sam Fleming had passed away. "He was a good close friend of mine and a tough competitor," Mr. Benedict said. "But he was a great credit to the banking business. He was a fine citizen in every way and highly regarded as he should be."

When asked to name some of Sam Fleming's closest friends, Mr. Nelson found himself citing people who were born 20 years before Mr. Fleming and people who were born 40 years after Mr. Fleming. "Sam Fleming transcended generations," Nelson said. "He had friends older and younger."

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Editor's note: This article contains excerpts from Bill Carey's book on Nashville business history, which comes out in June. If you would like to receive a postcard announcing the release of this book, please message and you will receive one.