one of the largest supermarket branching programs in the country. Barnett, Florida's largest bank, announced last week that it had been selected by Publix, Florida's largest supermarket chain, as a "partner" to provide in-store banking services throughout the Sunshine State. Publix, based in Lakeland, operates 439 grocery stores in Florida. Jonathan J. Palmer, Barnett's chief retail banking and technology executive, said the $41 billion-asset banking company would launch a pilot program next spring in 10 to 15 stores in the Jacksonville area. If those in-store branches are successful, "my expectation is we'll develop plans to roll out a Barnett branch in every Publix store" in Florida, Mr. Palmer said. "I don't view it as an experiment - I view it as the future," Mr. Palmer declared in a telephone interview. The Barnett-Publix deal comes two months after Publix confirmed press reports that it was negotiating with Trust Company Bank, a subsidiary of Atlanta-based SunTrust Banks Inc., to install branches in Publix stores in Atlanta. Publix spokeswoman Jennifer Bush said last week that those negotiations with Trust Co. were continuing. Barnett beat out several other banks, including SunTrust, for the right to negotiate exclusively with Publix in Florida. Mr. Palmer pointed out that Barnett has the No. 1 market share in Florida, with 19% of deposits, compared with SunTrust's fourth-ranked 10%. "We looked at our Florida market as a separate market from Georgia," said Publix's Ms. Bush. Publix, the nation's seventh-largest supermarket chain, with $8.6 billion of 1994 sales, operates 492 stores in Florida, Georgia, and South Carolina. It is dominant in Florida and ranks only second to the Kroger Co. in Atlanta, with 33 locations in the Georgia capital. Barnett, like Trust Co., has hired Memphis-based National Commerce Bank Services Inc. to help it design and staff the supermarket branches. National Commerce is one of the country's three major vendors of in-store branching services. Barnett now operates 600 branches in Florida. Mr. Palmer said about half of these are located within half a mile of a Publix store, offering Barnett opportunities to eliminate some of its free-standing branches. But Mr. Palmer also said that some of the smaller Publix stores would get downsized Barnett facilities, consisting of perhaps an ATM, a telephone, and one bank employee, as opposed to the usual in-store staff of four or five. The agreement with Publix marks a big shift for Barnett, which had never shown much interest in supermarket banking. Mr. Palmer said Barnett had picked up some grocery-store branches in recent acquisitions but closed all of them except one, dismissing them as mostly check-cashing facilities, or "human ATMs." "What most of the industry has recognized is that the world has changed," Mr. Palmer said. "Our customers have redefined convenience for us." He added: "They've told us they want seven-day a week access to banking services, not just through ATMs and the telephone but through physical locations. Supermarkets are an ideal way to provide that access." Mr. Palmer said Barnett now believes supermarket branches can be profitable if placed in the right locations with the right employees behind the counter. He said he was inspired by the in-store banking success achieved by other banks such as Wells Fargo & Co., San Francisco; Bank South Corp., Atlanta, and Memphis-based National Commerce Bancorp, the parent company of National Commerce Bank Services. "We're convinced that supermarket branching is a key component of our physical distribution network going forward," Mr. Palmer said. He declined to estimate how much Barnett would spend starting up the supermarket branches or the revenues it expected to get.

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