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March 1, 2012
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Bill Gatton’s Generous Spirit

Man behind UK’s business school and WKU’s academy is ‘investing’ fruits of seven decades of success into education

By Debra Gibson

Bill Gatton

Bill Gatton graduated from the University of Kentucky in 1954 with a bachelor's in business administration, then after two years in the Army earned an MBA at the University of Pennsylvania’s Wharton School of Business.

Where to begin? When the subject is Carol Martin “Bill” Gatton there isn’t a simple answer.

There is Gatton’s success with automobile dealerships. This is where his adult entrepreneurial career officially began, where “Wild Bill” was created, and where Gatton earned the capital to purchase numerous banks.

Gatton’s even greater success in banking is yet another story. He owned controlling interest in a succession of banks, and from 1981 to 2002 he was chairman of Area Bancshares of Owensboro, the largest bank holding company headquartered in Kentucky at the time.

Even Gatton’s earliest days growing up on a farm in western Kentucky bear mention. Gatton made his first precocious business transaction at age 8 when he bought six acres of land for $600. The grade-schooler put the property in his older sister’s name since he was too young to legally pass title, and by age 12 he had doubled his investment – a preview of things to come. On the farm he also earned the money to pay for college at the University of Kentucky.

There’s a stint in the Army, an MBA in finance and banking from the Wharton School of Business at the University of Pennsylvania, and hundreds of television commercials that he said made him “better known than the U.S. senators from Tennessee and Virginia.”

Now approaching 80 and still very active, Gatton’s life focus is on investing. Don’t look for stock tips, though. Rather than equities, Gatton has chosen to invest in the education of others. He has donated more than $33 million to educational institutions, plus substantial gifts of land, and said his goal is to give back as much as possible of the wealth he has built up over the arc of a successful life. He is “the” Gatton of the UK Gatton College of Business and Economics in Lexington and of the Gatton Academy of Mathematics and Science at Western Kentucky University in Bowling Green to name just two of the myriad educational institutions he has supported financially.

This generous spirit is the first thing you notice when you meet Gatton. The morning of a recent Lane Report interview, he is on the 18th floor of UK’s Patterson Office Tower, its sweeping views of the university beckoning from a wall of windows.

Gatton had driven 210 miles from his Kingsport, Tenn., home the previous day for afternoon and evening meetings that went until nearly 11 p.m., fulfilling responsibilities as a UK Board of Trustees member. (He began a six-year term on the elite panel in 2009.) Committee meetings had resumed at 8 a.m. – with Gatton chairing the Investment Committee session – and would flow into the main session in the afternoon.

Despite an already full schedule, Gatton is willing to talk between meetings. He offers a quiet smile, a strong handshake and an attentiveness that would make you believe he has all the time in the world to talk about his life and why education is the focus of his extensive philanthropy.

Learning when to take a risk

Gatton Farms, just outside Bremen in Muhlenberg County, has been a family operation since the 1840s. 

But Gatton’s story does not begin here in the rarified company of UK’s elite. His story has the humbler beginnings of many in his generation – on a farm. It was on his father’s 1,700-acre farm outside the tiny western Kentucky community of Bremen that a young Gatton learned to work hard, a lesson that served him well.
Gatton Farms, dating to 1840, remains a going concern, known today for its Father’s Country Hams brand launched in the 1950s.

“There was many a morning before daylight that I would be throwing silage out of a silo with no roof on it in the sleet or rain,” Gatton recalled. “I also grew watermelons and other crops and sold them on the side of the road. I worked in tobacco and raised beef cattle and hogs.”

But it was a financial life lesson learned on that farm that perhaps served him better. This lesson was in calculated risk.

“My father missed two opportunities that would have made him wealthy because he was afraid to go into debt,” Gatton said. “He had seen neighbors lose their farms during the Great Depression, which made him afraid to take risks. Each of those two opportunities could have made him millions.”

Gatton also saw another side of calculated risk. His Uncle Charlie (Martin) was an entrepreneur who became wealthy in coal, farming, banking and retail. Martin was an inspiration to the young boy and helped him realize risk was an essential part of financial success. Gatton also was aware of the half dozen or so men in nearby Greenville who had made millions during the worst economic time ever, the Great Depression, by operating coal mines.

Those lessons coalesced with Gatton’s natural temperament: an optimistic, cando spirit that still finds second place unacceptable. A young man willing to work both hard and smart emerged.

“In grade school, we all sold garden seed and magazines to help support the school,” Gatton said. “I sold more than all the rest of the students combined and believed that if I couldn’t sell more than everyone else combined, then I had failed.”

That competitiveness also showed up in high school. Gatton had just transferred to a school in Sacramento, Ky., and it needed someone to represent them in the Future Farmers of America speech contest. With only a week to prepare, Gatton managed to place fourth among 16.

“I told myself then that I was going to win state the next year,” he said. “I did, and then went on to Eastern Regionals in Madison, Wis., where I tied with a boy from Minnesota because my speech was (penalized for being) 40 seconds too long. Since we tied, we had to make our speeches again the next day. It was the first time I ever had a headache. The other boy barely beat me. I always wanted to win.”

Two years later in 1950, Gatton was elected state FFA president.

By this time, the high schooler already was an experienced businessman who had made “a good bit of money.” He used those profits to attend the University of Kentucky – the only college the high school valedictorian was interested in attending.

Preparation and a preview

Agriculture was Gatton’s first major at UK, a natural since his father and two older brothers were all successful farmers. By his junior year, however, the young man had discovered what would become his lifelong passion: business. In addition to his classes, Gatton began working part-time at the nearby L.R. Cooke Chevrolet/Cadillac dealership then in downtown Lexington.

“When I sold seven cars in six days, I thought I’d hit the bottom of Fort Knox,” Gatton said.

He graduated from UK in 1954 with a bachelor’s of science in business administration. Two years in the Army followed. Then, in 1956, at the recommendation of the dean of what was then the UK College of Commerce, Gatton headed for the University of Pennsylvania’s prestigious Wharton School of Business.

There he learned a lot more about calculated risk.

“When I finished graduate school, I had offers from prestigious companies in the East,” Gatton said, “and I almost accepted a few of them, but I really wanted to go into business for myself. I knew if a took a job with one of those firms, I would never leave because the benefits would be so good.”

Gatton signed on for $300 a month with Security Trust Co. in Lexington and started putting into practice what he had learned at Wharton. In 1959 – just a year after grad school – Gatton borrowed $25,000 from his father and started Bill Gatton Motors Inc. in Owensboro, a Volkswagen dealership that was only the third in the state. He was the youngest Volkswagen dealer in the nation for a several years.

“Volkswagen was nothing but Beetles back then,” Gatton said, “and nobody really wanted that dealership; no one thought it would be a success.”

Except Gatton, who accurately calculated the risk – and had the last laugh all the way to the bank.

Wheels and other deals

Gatton wasn’t just interested in depositing money in a bank, however. He was interested in owning a bank, and in 1963 he got the chance. Gatton became director and chairman of the executive committee of Central Bank & Trust Co. of Owensboro.

For the next several decades, Gatton bought and sold controlling interest in banks in Kentucky and invested in banks in Tennessee. He purchased car dealerships in Tennessee, Texas and Alabama. He also ventured into real estate.

In 1965, Gatton sold the Volkswagen dealership and after some world travel bought a Chevrolet/Cadillac franchise in Bristol, Tenn., and moved there – he had a similar offer in Atlanta but calculated there’d be much more competition there. Eventually, Gatton owned 10 dealerships, including Bill Gatton Honda in Bristol, Tenn., and Howdy Honda in Austin, Texas, which he still owns.

Bill Gatton, center, chairs an Investment Committee meeting of the UK Board of Trustees on Feb. 21.

Gatton was even more successful in banking. From 1981 to 2002, Gatton served as chairman of the board of Area Bancshares of Owensboro, the largest bank holding company in Kentucky during that time. The company, which Gatton and four partners started, acquired 16 Kentucky banks with 65 branch offices from Harlan to Paducah.

“We went from $100 million in assets when we bought the first bank to $3 billion in assets,” Gatton said. In March of 2002, he and his partners sold the holding company to BB&T for $340 million. Gatton is believed to remain the largest individual stockholder in WinstonSalem, N.C.-based BB&T.

“For years I regretted selling,” Gatton said, “but you couldn’t find a finer group to sell to than BB&T.”

Giving it all back

Gatton thought about retiring at several points along the way.

“I said I would retire when I was 30,” Gatton said. “Then when I was 30, I said I would retire at 40. At 40, I said 50; and at 50 I said maybe I would retire at 60. At 60, I decided I would never retire.”

Instead, Gatton now focuses on supporting education through the foundation he established in 1985. Today, the foundation has a net worth of approximately $50 million.

In 1995, Gatton gave $14 million to UK for what is now the Gatton College of Business and Economics. And he didn’t stop there.

“Mr. Gatton, with gifts approaching $20 million, is the single largest donor in the institution’s history,” said Jay Blanton, spokesman for UK.

Gatton also donated $4 million to help form the Carol Martin Gatton Academy of Mathematics and Science, a residential program for gifted Kentucky high school students who are interested in a career in science, technology, engineering and mathematics.

Besides benefiting its students, the academy is also a potential boon for economic development in the state, since many good-paying jobs require high-level math and science skills. That fact is not lost on Gatton.

“He understood the economic development aspect of this,” said Gary Ransdell, president of Western Kentucky University where the Academy is located. “Bill recognized that and was willing to support it.”

Gatton also recognized the need for a private pharmacy school in East Tennessee and became the largest donor for what is now the Gatton School of Pharmacy at East Tennessee State University. Until the school opened in 2006, the state’s only pharmacy school was more than 550 miles away in Memphis, forcing area students to attend private schools or pay out-of-state tuition.

He helped save Virginia Intermont College by donating $1 million and talking a friend into doing likewise. The school had been placed on probation because of its financial struggles. Later, the two friends each donated yet another $1 million.

In Lexington, Gatton donated the land for Rosa Parks Elementary School and the YMCA in Beaumont, as well as another YMCA near Hamburg that has yet to be built. He donated money to build a bridge to connect Liberty Elementary with Hamburg.

The list goes on, and teachers are often at the top of that list.

Gatton’s sister was a teacher, and he knew that teachers often have to dip into their own pockets to provide supplies. He decided to donate more than $100,000 to teachers in the Tennessee-Virginia Tri-City area on three occasions. Last year, he gave $135,000 to teachers in Bristol, Tenn., in honor of his sister.

‘A life of leadership, meaning and purpose’

“I just get a good feeling giving to worthwhile charitable endeavors related to education,” Gatton said. “It goes back to the old story about giving someone a fish dinner or teaching them to fish. If you teach them to fish, they can feed themselves for a lifetime. That’s what education is all about.”

That attitude earns him high praise from many around him, including UK’s President Eli Capilouto.

“Bill Gatton, quite simply, has spent most of his adult life devoted to the university, finding profoundly important ways to make this institution better for more young Kentuckians,” Capilouto said. “As a donor, he has sought to give in ways that have transformed our College of Business and Economics. As a board member, he has provided wise counsel to me and others as we have worked together to find new and creative ways to continue to honor what I call The Kentucky Promise. He is a shining example to our students of what it means to live a life of leadership, meaning and purpose.”

Gatton followed five principles as he created that life.

“First, you have to be completely honest,” he said. One of Gatton’s first acts as the owner of a car dealership was to stop the common practice, then legal, of rolling back the odometers of used cars.

“Second, you have to work hard,” he continued. “You can’t be afraid of work.

“You have to be logical and have common sense.

“It is important to have a good education, to be educated about tax laws and business practices.”

And finally, Gatton said it is wise to hire people who are smarter than you are. It has paid off for Gatton, and now he is paying it forward to the future of
his home states and communities.

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Lane Report Cover March 2012 In This Issue
Bill Gatton’s Generous Spirit
Man behind UK’s business school and WKU’s academy is ‘investing’ fruits of seven decades of success into education
Features

Partly Sunny, But Keep An Eye On Those Clouds
Banks and businesses have improved balance sheets and see 2012 building on improvements seen in 2011

Finding a Venture ‘Angel’
Accounting sector foresees rising demand for business services and expects firm mergers

Major Verdicts and Settlements
In business cases, Kentucky courts clarify contract law-tort law claims, LLC capital calls and bank-borrower responsibility

Reaching Kentucky’s Unbanked
With education, 600,000-plus households could avoid fees and be ready when U.S. agencies go to direct deposit in 2013

More Interest in Business Loans
Commercial and industrial lending went up 10 percent in 2011 and is rising as those with strong balance sheets invest

One-On-One: Gary Ransdell
President Gary Ransdell outlines how Western Kentucky University partners with government and business to benefit the community

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