WASHINGTON — U.S. banks' earnings in the July-September period jumped nearly 13 percent from a year earlier as continued growth in lending fueled interest income.

(Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

The U.S. economy grew at modest pace, according to the Federal Reserve's latest survey of business conditions, released Wednesday.

Reports indicate consumer spending did well and manufacturing activity was mixed, possibly due to the rise of the dollar, from mid-May through the end of June. Gains in retail also offset a slump in new automobile sales.

The central bank, which has not raised interest rates in a years, is expected to raise a key interest rate at its December meeting.

Seven of the 12 Federal Reserve Districts in the survey known as the "Beige Book" described growth as modest to moderate.

In the St. Louis District, which includes all of Arkansas and parts of Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee, the report said economic conditions have modestly improved.

Of the businesses surveyed, 40 percent reported employment was higher or slightly higher than at the same time last year, and more than half expect their firm to increase employment over the next 12 months, but many said they had trouble finding workers with the skills they required.

More: Read the complete report for the St. Louis District.

More than half of those surveyed reported wages were higher or slightly higher than during the same period last year, and 60 percent reported increasing wages and salaries to attract or retain employees.

Consumer prices increased modestly.

The following are excerpts from the St. Louis District report.

Consumer Spending

"Reports from general retailers, auto dealers and the hospitality industry paint a mixed picture of consumer spending activity in the district...Multiple auto dealers across the district also reported a slowdown in sales, which some attributed to the uncertainty caused by the presidential election. Most dealers expect an increase in sales and inventory in the next quarter. In addition, several dealers also noted a shift in demand toward used vehicles. Contacts in the hospitality industry in East Arkansas continued to report favorable occupancy rates."

Manufacturing

"Manufacturing activity has increased modestly since our previous report...Several companies reported capital expenditure and facility expansion plans in the district, including firms that manufacture transportation equipment, machinery and fabricated metal products. In particular, an aircraft manufacturer announced a large, multi-year expansion. Reports from manufacturers of paper products were mixed. One manufacturer of pulp products for the personal care industry announced a major investment in new machinery to meet demand, while a manufacturer of paperboard products for packaging announced a plant closure. In the steel industry, contacts reported that increased demand from the automotive sector has partially offset the decline in demand from the energy sector, but that oversupply remains a concern."

Other Business Activity

"Several firms that provide information technology services, leisure and hospitality services, and health care announced plans to build new facilities or expand current facilities and hire new employees. Reports from retail services were mixed, with restaurant and grocery store closings and openings reported across the district. Reports from the transportation sector were positive. A Memphis contact reported revenues are up, and Little Rock contacts reported shipment increases outperforming seasonal highs."

Real Estate & Construction

"Year-to-date home sales remained strong in all four MSAs, increasing by 10 percent in Little Rock, 7 percent in Louisville, 8 percent in Memphis, and 5 percent in St. Louis compared with the same time last year. Most real estate contacts reported fourth-quarter demand for single-family homes has remained flat, but more than half expect demand to increase slightly in the first quarter of 2017. Residential construction has strengthened moderately since our previous report.

"Commercial real estate activity has improved modestly since our previous report. Most survey respondents reported that demand for office and retail properties was about the same or slightly higher than a year ago, while a slim majority indicated that demand for industrial properties has been slightly higher. These trends are expected to continue in the coming months. Commercial construction activity increased modestly, as a majority of local construction contacts indicated an increase in demand for office and retail properties so far in the fourth quarter; they also expect demand to carry into the first quarter."

Banking & Finance

"A survey of district banks indicates growth in loan demand during the current quarter with some signs of slowing demand in the first quarter of 2017. District bankers reported that demand for mortgages and commercial and industrial loans has been strong during the fourth quarter. Contacts expect strong demand for commercial and industrial loans to continue into 2017; however, there was an uptick in the number of bankers expecting the demand for mortgages to slow slightly in early 2017. The demand for auto loans has been generally unchanged; again, there was an uptick in the number of bankers expecting the demand for auto loans to slow slightly."

Agriculture & Natural Resources

"Forecasted corn and rice production are now slightly lower than projected in September. Meanwhile, cotton and soybean production forecasts are up slightly. Overall, contacts believe production levels will not provide any relief from the environment of low crop prices, which means farmer solvency issues will only worsen heading into the next crop year. Year-to-date coal production through October is down 20 percent from one year ago. However, October coal production is up 10 percent from the September level and slightly higher than one year ago. Contacts noted that the outlook has improved modestly in recent weeks; however, the supply and low price of natural gas continues to temper long-run growth prospects."

Patricia Robertson, associate professor of business law at the College of Business at Arkansas State University, has been selected as Woman of the Year by the Jonesboro Business & Professional Women. Before coming to A-State in 2005, Robertson practiced law for 20 years.

Jim Gowen Jr. of Merchants & Planters Bank in Newport, Gary Oltmann of Arkansas County Bank in DeWitt and Bennie Ryburn III of Commercial Bank & Trust in Monticello have been elected to the board of directors of the Arkansas Community Bankers Association. Their terms expire in October 2019.

See more of this week's Movers & Shakers, and submit your own announcement at ArkansasBusiness.com/Movers.

David Kersey, a former Disney digital artist, has been hired as a senior creative director at inVeritas in Rogers. Kersey will lead creative projects throughout the country while serving in the northwest Arkansas office. He earned a Bachelor of Arts with a specialization in computer animation from Savannah College of Art & Design and spent 15 years in the animation industry in Los Angeles before returning to Arkansas in 2015.

Cathy Lester has joined Bear State Bank of Little Rock as a mortgage loan originator in the Bentonville area. Lester has 24 years of experience in mortgage lending and real estate. She has served in a number of positions, including mortgage closer, loan processor, originator, loan shipper and compliance officer.

Scott Hall, an attorney in the Fayetteville office of the law firm Hall Estill of Tulsa, has been named a Mid-South Super Lawyers Rising Star for a third year. Two years ago, Hall was the first Hall Estill lawyer outside of the firm’s Oklahoma office to be named a Super Lawyers Rising Star.

See more of this week's Movers & Shakers, and submit your own announcement at ArkansasBusiness.com/Movers.

Tanya James has been promoted to vice president, private banking adviser at Arvest Bank in Little Rock. She was previously vice president and branch sales manager for Arvest, where she has worked in a number of capacities, including management positions, for 14 years.

Martin Schrodt has been named chief operating officer at Arkansas Federal Credit Union of Jacksonville. Schrodt has more than 20 years of experience in the financial services industry.

Before joining AFCU, Schrodt was executive vice president and director of banking for FSG Bank in Chattanooga, Tennessee.

G. Barton Hammond, Joel Futrell and Daniel Park have all been hired at the Arkansas State Bank Department.

Futrell and Park were hired as commercial bank examiner trainees and Hammond as a commercial bank senior examiner.

Hammond and Park will work in the department’s northwest Arkansas office, while Futrell will be assigned to a commercial examination group based in Little Rock.

See more of this week's Movers & Shakers, and submit your own announcement at ArkansasBusiness.com/Movers.

His testimony failed to convict his former co-workers, but Gary Rickenbach is still hoping to avoid prison time for his admitted role in a fraudulent loan made by One Bank & Trust when he was its senior executive vice president.

He is scheduled to be sentenced Wednesday afternoon by U.S. District Judge Kristine Baker in Little Rock.

Specifically, Rickenbach pleaded guilty in July to a much reduced charge: misprision of a felony — that is, failing to report the manipulation of the bank’s quarterly call report to disguise a $1.5 million loan default back in 2007.

Rickenbach had faced seven counts ranging from conspiracy and money laundering to bank fraud in a case that the special inspector general for the TARP program described as TARP fraud.

He offered to plead guilty to misprision, and to testify against former colleagues Mike Heald and Brad Paul, if he could be guaranteed a probation-only sentence. Judge Baker rejected that offer and instead accepted a plea agreement that suggests a prison sentence of 12-18 months under federal sentencing guidelines.

But the guidelines are just that, so last week Rickenbach’s defense attorney, William O. “Bill” James Jr. of Little Rock, filed a memorandum setting out reasons that Rickenbach shouldn’t go to prison — primarily the fact that he has no criminal history and presents a very low risk of future criminal activity.

“[T]he fact that Gary Rickenbach is now a felon and will probably lose his CPA license, means that a sentence of Probation is more than sufficient to promote respect for the law and will certainly be experienced as punishment by Gary Rickenbach, and anyone that knows him or his family, or who later learned of what happened to him, will agree,” James wrote.

He also noted that Rickenbach “can never again work in a bank insured by the FDIC.”

(With his future uncertain, Rickenbach did persuade Baker to give him back his passport long enough to visit his daughter in London and to take a side trip to Scotland during the week of Thanksgiving. He was required to surrender his passport upon his return.)

Heald and Paul, you may recall, refused plea deals and were acquitted on Halloween. Their three-week trial included testimony by Rickenbach and former One Bank CFO Tom Whitehead, who got charges against him dropped completely in exchange for his testimony against the others.

Rickenbach’s co-defendants, then, all escaped conviction. But the borrower of the ill-fated $1.5 million, a Canadian resident of Florida named Alberto Solaroli, pleaded guilty to money laundering and received a one-year prison sentence.

The federal Bureau of Prisons lists Solaroli as a current guest of a contract correctional institution in Pennsylvania.

Senior vice president J. Lavon Morton will retire after 20 years with ArcBest Corp. of Fort Smith.

Morton, who was the company's risk and chief audit executive, will step down Dec. 31. ArcBest announced it will replace Morton with two people: Laura Bogner will become vice president of internal audit; and Cheryl Harper will become vice president of tax.

Barry Hunter, vice president of safety, administration and treasury of ArcBest’s ABF Freight division, will become vice president of financial services following Morton’s retirement.

Morton earned $959,226 in total compensation in 2015 and $924,725 in 2014. Morton joined ArcBest in 1996 as assistant treasurer after 24 years with Ernst & Young, and he has been senior vice president at ArcBest since 2010.

"Lavon has been an integral part of the company, leading all internal audit, risk management and tax-planning efforts," ArcBest Chairman and CEO Judy McReynolds said. "His hard work and dedication have benefited ArcBest, and he will be greatly missed."

Bogner joined ArcBest in 2000 as an internal audit supervisor. She was promoted to director of internal audit in 2011.

Harper joined ArcBest in 2010 as manager of tax and was promoted to director of corporate tax in 2015.

It's that time. Shopping and spending are at their peak for the year and that puts identity thieves on high alert. While many consumers are aware of the threat to their personal proprietary information, businesses often are not. 

With an increasing number of businesses operating online in addition to traditional means, it is critical that consumers and business owners know how to protect themselves from identity theft and fraud. Fraud not only can ruin the holiday shopping experience, it can have disastrous and long-lasting effects for a business long after the holidays have passed. Even if your company doesn't conduct retail business online, it is important to protect your private business information and data. December is Identity Theft Prevention and Awareness Month, so take these additional precautions to safeguard your confidential information:

• Limit what you carry. When you go out, take only the identification, and business credit or debit cards you need.

• Lock your financial documents and records in a safe place, such as a safe or locked file cabinet that only you can access.

• Before you share information with vendors, ask why they need it, how they will safeguard it, and the consequences of not sharing.

• Protect your company documents. Shred receipts, credit applications and offers, insurance forms, checks, bank statements, expired charge cards and similar documents when you don't need them any longer.

• Install anti-virus software, anti-spyware software and a firewall on all company computers. Set your preference to update these protections often.

• Don't open files, click on links, or download programs sent by strangers. Opening a file from someone you don't know could expose your system to a computer virus or spyware that captures your passwords or other information you type.

• Before you send your business information via your laptop or smartphone over a public wireless network in a public place, see if your information will be protected. If you use an encrypted website, it protects only the information you send to and from that site. If you use a secure wireless network, all the information you send on that network is protected.

• Keep financial information on your laptop only when necessary. Don't use an automatic login feature that saves your user name and password, and always log off when you're finished.

For more extensive information on privacy and identity protection, visit FTC.gov and look for the "Tips & Advice" tab. If you’re interested in fraud prevention services for your business that includes theft resolution and account monitoring services, Arvest offers ACH Fraud Block and ChecXchange® with some of its business services. To learn more, visit Arvest.com and select Fraud Prevention under the "Business" tab. 

Gary Rickenbach's emotional request was granted: The former One Bank & Trust executive was sentenced Wednesday to two years of probation and 100 hours of community service in exchange for pleading guilty to failing to report a crime.

The sentencing by U.S. District Judge Kristine Baker concluded the prosecution of bankers who worked for the late Layton "Scooter" Stuart, who was ultimately removed from the control of the Little Rock bank he owned before his death in March 2013.

Of four bankers charged in connection with a fraudulent $1.5 million loan, only Rickenbach was convicted. Charges against former CFO Tom Whitehead were dropped in exchange for his testimony against the other two, Mike Heald and Brad Paul, who were acquitted after a three-week trial in October.

Only the borrower, a Canadian resident of Florida named Alberto Solaroli, was sent to prison. He was sentenced to a year and a day after pleading guilty to a reduced charge of money laundering.

Wednesday's sentencing hearing was perfunctory until Rickenbach, sniffling and pausing frequently, described to Baker a "very long and tough journey" since he "made what I thought was a well-secured loan" in 2007.

He said he had been embarrassed by the "abject failure" of a loan to someone he subsequently learned was "a con man," and he took improper steps to try to mitigate that lending error. (He did not mention the fact that he had personally invested in Solaroli's company before shepherding the loan through the bank.)

Rickenbach said he had "asked myself a hundred times" why he didn't take the "easy and correct" course of simply writing off the loan. Instead, he and others at the bank refinanced the loan with new loans and collateral owned by Stuart, and the bank's loss was limited. But Rickenbach looked the other way when Stuart submitted a call report to the Federal Deposit Insurance Corp. indicating that the loan was merely past due when the bank had already sought and received a court judgment for the amount in Florida. That was the crime to which he pleaded guilty, technically called misprision of a felony.

Rickenbach to his former coworkers and to Dr. Jim Pappas and Paul Berry, the outside directors of the bank who were left to clean up the mess. He also apologized to his wife and two children. 

"Every time there was another article in the paper, my family paid for it," he said.

The probationary sentence was what Rickenbach had hoped for when he offered in November 2015 to plead guilty to misprision, but Baker rejected that conditional plea. On Wednesday, she calculated the guideline sentence for his crime at between eight and 14 months in federal prison, and the federal prosecutor, First U.S. Assistant Attorney Patrick Harris, asked her to cut it in half in exchange for Rickenbach's testimony against Heald and Paul.

Rickenbach's defense attorney, Bill James of Little Rock, had filed a sentencing memorandum suggesting that probation — which the prosecution had agreed to in the original plea deal — was still appropriate, and Harris took no position on that request.

In granting the probationary sentence, Judge Baker pointed out that she had "sat through a lengthy trial" — that of Heald and Paul — since rejecting the original plea deal and now considered it to be an appropriate sentence in Rickenbach's case.

Heald's attorney, Gary Corum of Little Rock, filed a motion last week seeking to have the federal government pay his attorney's fees on the grounds that the prosecution of Heald was frivolous.

Don't you love it when you get all ready for a party, and at the last minute it gets canceled? 

Although the new overtime exemption rules were not going to be a "party" for employers by any stretch of the imagination, many felt perplexed when a Texas judge pulled the rug out from under the Department of Labor days before the new overtime exemption rule was to go into effect and after many employers had spent months preparing to comply. 

Without going into too much detail, the judge decided that the new rule's salary level (which more than doubled the level set over ten years ago) went too far and exceeded the level of authority normally given to the Department of Labor to interpret the Fair Labor Standards Act. 

The judge believed that Congress "defined the [white collar] exemption with regard to duties, which does not include a minimum salary level," and that the new rule's salary level supplanted the duties test. 

Here's the key portion of the judge's ruling:

"The broad purpose of 213(a)(1) was to exempt from overtime those engaged in executive, administrative, and professional capacity duties. Since the FLSA was enacted, the Department has promulgated regulations to define and delimit the EAP exemption. To be exempt from overtime, the regulations require an employee to (1) have EAP duties; (2) be paid on a salary basis; and (3) meet a minimum salary level. The Final Rule raises the salary level from $455 per week ($23,660 annually) to $913 per week ($47,476 annually). The salary level was purposefully set low to 'screen out the obviously nonexempt employees, making an analysis of duties in such cases unnecessary.'  . . . The Department has admitted that it cannot create an evaluation 'based on salary alone.'  . . . But this significant increase to the salary level creates essentially a de facto salary-only test. . . . Congress did not intend salary to categorically exclude an employee with EAP duties from the exemption."

Basically, the judge saw the new salary level as "the tail wagging the dog."  

So, what now? 

If you have already planned to transition some of your employees from exempt to non-exempt or increase wages for some to meet the new salary level, and you have already talked to your employees about it, think about going through with it for a couple of reasons. 

First, it is entirely possible the Texas judge's ruling will be overturned in whole or part since the Department of Labor has appealed the decision to the Fifth Circuit Court of Appeals. Do you really want to back out of the transition at the last moment, only to have to restart it? 

Second, it's entirely possible President-elect Trump and the Republican Congress will enact a change to the Fair Labor Standards Act in early 2017; it's even possible (although not probable) President Obama and the current Congress could agree on some type of alteration, like a gradual phase-in period for the new salary level. Why not make the planned transition and then see how things play out in the next four-to-six months? 

Once things are finalized — either through the appellate process or a new law — you can decide whether to maintain the post-transition status for your employees.

Remember, the "default" rule under the Fair Labor Standards Act is that everyone is eligible for overtime unless a specific exemption applies. Assuming you have no issues with employees working off-the-clock and you calculate overtime rates correctly, paying hourly wages and making employees overtime eligible (the route a lot of employers were taking to comply with the new rules) will help insulate your business from wage and hour claims.

Attorney Stuart Jackson heads up the Labor & Employment Law team at Wright Lindsey Jennings in Little Rock. You can email him here and see this post on the WLJ website.

WASHINGTON — A healthy increase in home values and higher stock prices drove up U.S. household wealth in the July-September quarter, though the gains are largely concentrated among wealthier Americans.

(Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

A 52-unit apartment complex in Little Rock weighed in at $1.4 million.

Parker Investments Group LLC, an affiliate of Trinity Multifamily of Fort Smith, purchased the Clearbrook Village Apartments at 619 and 719 Brookside Drive.

The seller is Serene Rock Ventures LLC, led by Michael Vick Jr. and Jason Mathis.

The 1.46-acre development previously was tied to an October 2005 mortgage of $1 million held by One Bank & Trust of Little Rock.

Serene Rock acquired the project for $1.28 million more than 11 years ago from Presbyterian Village Inc. of Little Rock.

Liquid Assets
A water company in southeast Pulaski County tipped the scales at $1.3 million.

Liberty Utilities (Woodson-Hensley Water) Corp. of Oakville, Ontario, bought the water treatment plant at 24920 Hwy. 365 in Woodson and a water tower in Hensley.

The seller is Woodson-Hensley Water Co., led by James Walden.

The 0.89-acre water treatment plant site was purchased as part of two transactions with Dr. John Busby and his wife, Thelma, $500 in May 1965; and Irene Woodell, $8,000 in February 1992.

The 0.23-acre water tower site was acquired for $300 in May 1964 from Pauline Meade.

Bike Building
A 10,520-SF commercial building in Little Rock’s Riverdale area changed hands in an $835,000 transaction.

Off the Front LLC, an affiliate of Little Rock’s HIA Velo high-end biking venture, purchased the 1509 Rebsamen Park Road project from James Clements and Reggie Marshall.

The deal is financed with a 10-year loan of $688,000 from Arvest Bank of Fayetteville.

The 0.78-acre development previously was linked with a March 2013 mortgage of $710,000 held by Centennial Bank of Conway.

The property was bought for $300,000 in January 1994 from Rosenbaum Brothers Partnership, led by Carl and Charles Rosenbaum.

Commercial Land
A 5-acre commercial parcel in west Little Rock rang up a $577,000 sale.

Rector-Phillips-Morse Inc. of Little Rock acquired the land near the northwest corner of Shackleford and Shackleford Ridge roads from LL Ark Properties LLC of Minneapolis.

The property was purchased for $525,000 in September 2015 from the Rachel Randell Trust, the Lora Koen Trust and the Kenneth Ray Koen Trust.

Cancun Acquisition
A 4,303-SF Cancun Mexican Restaurant in Jacksonville drew a $325,000 transaction.

LOM Inc., led by Leonor Ortega-Amaya, bought the former Mexico Chiquito at 1524 W. Main St.

The seller is HSRE LLC, led by Lisa Glidewell. The deal is funded with a 15-year loan of $360,000 from BancorpSouth Bank of Tupelo, Mississippi.

The 0.69-acre property was acquired for $31,500 in March 1966 from Frank Carder Sr., and his wife, Faye, and Frank Carder Jr., and his wife, Mary Jane.

Country Club House I
A 5,517-SF house near the Country Club of Little Rock weighed in at $1.2 million.

The namesake trusts of Jeremy Davis and Holly Sanders purchased the house from Craig and Lisa Douglass.

The deal is backed with 30-year loans of $417,000 and $183,000 from Bank of Little Rock Mortgage Corp.

The residence previously was tied to a May 2009 mortgage of $257,927 held by Centennial Bank.

The property was bought for $660,000 in December 2005 from the Robert Richard Revocable Trust.

Country Club House II
A 2,974-SF home near the Country Club of Little Rock is under new ownership after an $855,000 transaction.

Gregg and Paige Day acquired the house from Casey and Rodney Rockwell.

The residence previously was linked with a June 2016 mortgage of $358,000 from Stone Bank of Mountain View.

Rockwell purchased the property for $255,000 in December 2013 from the Theresa M. Larimore Revocable Living Trust.

Ridgefield Abode
A 4,378-SF home in west Pulaski County’s Ridgefield Estates neighborhood sold for $678,000.

Rex and Deborah Critzer bought the 10-acre spread from Don and Kimberly Fowler.

The residence previously was tied to April 2013 mortgages of $417,000 and $64,800 held by IberiaBank Mortgage Co. of Lafayette, Louisiana.

The Fowlers acquired the property for $602,000 more than three years ago from Rex and Jane Bell.

Rivercrest Residence
A 5,992-SF home in Maumelle’s Rivercrest Estates neighborhood changed hands in a $600,000 transaction.

Peter Nikolakakis purchased the house from Robert and Tina Chastain.

The Chastains bought the property for $800,000 in May 2007.

The sellers were Albert and Sharon Reece.

Hallen Court Home
A 3,350-SF home in the Hallen Court neighborhood of west Little Rock’s Chenal Valley development rang up a $550,000 sale.

Don and Kimberly Fowler acquired the house from Crain Family Holdings LLC, led by Larry Crain Jr.

The deal is financed with a 30-year loan of $360,000 from IberiaBank Mortgage.

Brandon and Hope DeGroat forfeited the property in lieu of foreclosure three months ago to Crain Family Holdings, which held a September 2015 mortgage of $465,000.

The DeGroats purchased the location for $98,000 in July 2014 from Deltic Timber Corp. of El Dorado.

Chenal Circle Abode
A 3,548-SF home in west Little Rock’s Chenal Circle neighborhood drew a $542,000 transaction.

James and Kim Cherry bought the house from Darrell and Angela Baker.

The residence previously helped secure a November 2015 mortgage of $900,000 held by First Security Bank of Searcy.

The Bakers acquired the house for $520,000 in October 2015 from the Jack Harper Family Trust.

RV Refinance
The owner of a recreational vehicle dealership in Sherwood picked up a $3.3 million financial package.

PR Properties LLC, led by Paul Minton, received the five-year loan from Bank of the West of San Francisco.

The 9.65-acre River City RV development at 6721 Warden Road previously was linked with a November 2013 mortgage of $3 million and a November 2014 mortgage of $500,000 held by Arvest Bank.

The property was assembled in deals with Stafford Kees Jr. and his wife, Mary, $1.5 million in October 2001; and First Security Bank, $300,000 in July 2012.

Land Loan
A 21.95-acre tract in west Little Rock was used to secure a $2.4 million funding agreement.

Rowan Development LLC, led by Jasen and Jacob Chi, obtained the six-month loan from First Security Bank.

The land between the south end of Aldersgate Road and Shackleford Road previously was tied to a January 2008 mortgage of $3.2 million held by the bank.

The property was purchased for $3.3 million nearly nine years ago from ERC Foundation Inc., led by Mark Davis.

Seven-Digit Construction

Mini Storage     $3,800,000
601 Autumn Road, Little Rock
Richardson Builders LLC, North Little Rock
 
Infrastructure Upgrades    $2,000,000
USAble
416 W. Fourth St., Little Rock
Baldwin & Shell Construction Co., Little Rock
 
Popeye’s Chicken       $1,100,000
8815 Baseline Road, Little Rock
L.R. Mourning Co., Little Rock

Dr. Stavros Manolagas has been named the 2016 recipient of the Veterans Administration Biomedical Laboratory Research & Development Service’s highest honor, the William S. Middleton Award.

The honor includes a cash award of $5,000 plus $50,000 per year for three years in additional VA research support.

Manolagas is a researcher with both the Central Arkansas Veterans Healthcare System and the University of Arkansas for Medical Sciences College of Medicine.

Patrick McCruden and Robert Schulte have been elected to the board of directors of Arkansas Hospice in North Little Rock. Bruce Holsted and William Smith have been elected to the board of directors of the Arkansas Hospice Foundation, also located in North Little Rock.

John Bonner, Dina Bates and Kevin McKenzie have new roles at Farm Bureau Insurance in Little Rock. Bonner has been named vice president of underwriting, Bates was promoted to vice president of products and education, and McKenzie was named vice president of claims. The three longtime employees together have 85 years of experience with Farm Bureau Insurance.

Joe Dunn has joined the management team of Gateway Bank in Bryant as executive vice president. Dunn holds a degree from the Southwestern Graduate School of Banking in Dallas.

See more of this week's Movers & Shakers, and submit your own announcement at ArkansasBusiness.com/Movers.

Bank of the Ozarks shares have followed a sometimes precipitous trek during the past few quarters. The pricing landscape traveled by the $18.5 billion-asset bank holding company is marked by several dramatic climbs and descents.

The topography of the company’s two-year stock price resembles a mountain range dominated by three peaks with a fourth major summit now under formation. Market activity established four high points for OZRK closing prices:

• $48.27 on June 22, 2015;
• $54.69 on Dec. 1, 2015;
• $44.74 on April 20, 2016; and
• $50.07 on Dec. 6, 2016.

Interspersed with the ridges are low-point valleys:

• $39.25 on Aug. 24, 2015;
• $36.73 on Feb. 11, 2016; and
• $34.82 on June 27, 2016.

The ups and downs of stock pricing are at odds with a company where re-cord earnings are the norm rather than the exception.

“Earnings have not lagged,” said Matt Olney, research analyst with Little Rock’s Stephens Inc. “This has just been a valuation issue. Expectations are that strong earnings will continue. It’s only a matter of time before the valuation rebounds.”

And valuations did rebound though some of the 2015-16 price swings were larger than historical patterns.

George Gleason, Bank of the Ozarks chairman and CEO, shrugs off the uncharacteristic movements as vagaries of the market relative to the performance of his company.

“There’s a disconnect for a season,” Gleason said. “That doesn’t really matter. As long as we keep putting up excellent results, the stock price will eventually reflect it. That is our approach. Our focus is on the long-term performance of our company and stock.”

The occasional bouncing valuation of OZRK shares is sometimes tied to investment community concerns that have so far proven to be misplaced.

Among the concerns in some quarters was that Bank of the Ozarks perhaps had overpaid for Community & Southern Holdings Inc. of Atlanta and C1 Financial Inc. of St. Petersburg, Florida.

The nearly $800 million stock-swap deal for the $4.4 billion-asset Community & Southern represented a tangible book value multiple of about 1.8.

The $402.5 million stock swap for the $1.7 billion-asset C1 franchise clocked in at about 2 times tangible book value.

Helping feed misgivings were the longer than expected time it took to close the deals announced in October and November 2015. The July 20 Community & Southern purchase and the July 21 C1 acquisition came about three to four months later than anticipated.

An added wild card for some was the unexpected July 26 exit of Trevor Burgess, former CEO of C1 who resigned as chief innovation officer and director at Bank of the Ozarks.

“The informed people who follow our company and our track record understand our transactions,” Gleason said. “We had done our homework. If anyone did have concerns, our third-quarter results certainly put those issues to rest.”

On Oct. 11, Bank of the Ozarks announced record third-quarter net in-come of $76 million, a whopping 64.8 percent increase over the third quarter of 2015.

The results followed the company’s July 11 announcement of record second-quarter net income of $54.5 million, up nearly 22 percent from the same quarter in 2015.

“Our asset growth and earnings have just been excellent,” Gleason said. “There’s really no reason whatsoever that the fundamentals of our company are so good and our stock price isn’t.”

CRE Concerns
Bank of the Ozarks hasn’t been immune from creeping concerns about commercial real estate lending, the chief fuel of the company’s profit machine.

“They’ve probably been among the best and most effective commercial real estate lenders,” said Olney of Stephens Inc. “Some investors who rewarded Bank of the Ozarks for that in the past are now punishing the company for what they perceive as too much commercial real estate lending. It’s a fickle thing.”

The worry about possible overbuilding affecting commercial real estate was among the topics Gleason addressed in the company’s Oct. 11 conference call with analysts.

“You’ve got all of these articles and a lot of these articles are self-propagated articles,” he said. “You know, one person writes an article about CRE, that causes another person to write an article about CRE, and you have this whole litany of articles about CRE written by people who by and large don’t understand the market, and in many cases some do, but many don’t. The result of that is you end up with a lot of commentary about the markets that is just not consistent with the reality that’s occurring in the market.”

Timur Braziler, analyst with Wells Fargo Securities in New York, asked in the conference call if Gleason saw any warning signs or cause for fear related to commercial lending on the national scene.

“No, and what I will tell you is that our product by and large — whether it’s speculative homes or lots, commercial lots or residential lots or condos or speculative buildings — our product is selling faster than we modeled in the majority of cases and not slower,” Gleason said. “And in our universe of customers and our universe of projects, the trends are very positive.”

He acknowledged that Bank of the Ozarks draws attention as one of the largest and most active CRE lenders in the nation and tends to get lumped in with worrisome broad brush critiques of the commercial lending scene despite its profitable quarterly march through the Great Recession.

Gleason has told the investment community he doesn’t expect another Great Recession but if one happens, Bank of the Ozarks is “superbly prepared.”

“Simply stated, we believe our CRE portfolio is the lowest risk CRE portfolio in the industry,” Gleason said during the third-quarter conference call.

The tumble taken by shares in a Houston-area appliance retailer is the only reason for a new name among the 10 largest stockholders in Arkansas.

A year ago, the heirs of W. R. “Witt” Stephens Sr. were among the top 10 because their shares in Conn’s Inc. of The Woodlands, Texas, were valued at more than $140 million. But Conn’s share price, which flirted with $80 back in 2013, has slumped from more than $25 a year ago to $10.80 on Dec. 2, the date used for ranking this week’s list of the top stockholders in the state. (Conn’s stock rebounded to the $13 range last week.)

As a result, the Witt Stephens family dropped to No. 14, and Gary George of Springdale, chairman of George’s Inc. and a director of J.B. Hunt Transport Services Inc. of Lowell, moved into the No. 10 spot. The Securities & Exchange Commission, to which officers, directors and large shareholders must disclose the number of shares owned, considers George to be the beneficial owner of more than 1.4 million shares of J.B. Hunt stock worth nearly $140 million. More than a third of those shares are held by CL George & Sons Ltd. rather than by Gary George personally.

Shares in the trucking company are worth considerably more this month than they were in December 2015. The Dec. 2 closing price was $96.33, up 24 percent in a year. Three trading days later, on Wednesday, it cracked $100 for the first time in intraday trading, and ticker symbol JBHT opened at $100.25 on Thursday.

J.B. Hunt stock is the foundation of two other top-10 stock fortunes on this week’s list: the heirs of founder J.B. Hunt (widow, Johnelle, and son, Bryan), No. 3 with stock valued at almost $1.9 billion, and director Wayne Garrison, who moved from No. 8 last year to No. 7 with stock worth $223.6 million.

The top stockholders, as always, are the heirs of Wal-Mart Stores Inc. founder Sam Walton. Their disclosed stock in the Bentonville retailer was valued at $112.7 billion as of Dec. 2, and they had another billion dollars worth of combined stock value in three other companies: First Solar Inc., Hyatt Hotels Corp. and Enphase Energy Inc.

A distant second — but richer than ever on paper — are the heirs of Don Tyson, whose class A and B shares in meat and poultry giant Tyson Foods Inc. were worth $4.15 billion.

Year-over-year improvement in the price of both Murphy Oil Corp. and Murphy USA Inc. helped the Murphy family of El Dorado maintain its spot at No. 4. Members of the family are also major stockholders in the Murphy Oil spinoff Deltic Timber Corp. and of BancorpSouth Inc. of Tupelo, Mississippi.

Despite continuing revenue challenges — see Holidays Should Buoy Dillard’s Slow Sales — Dillard’s Inc. stock was slightly higher on Dec. 2 than it had been a year ago. That kept the heirs of founder William Dillard at No. 5 on the list. (CEO William Dillard II is a director of Acxiom Corp. and Barnes & Noble Inc., so his holdings in those companies are also included in the family total.)

Bankers George Gleason, Rick Massey and Johnny Allison round out the top 10 at Nos. 6, 8 and 9 respectively. The stock in Bear State Financial Inc. attributed to Massey, its chairman, includes nearly 19 million shares owned by Bear State Financial Holdings LLC, of which Massey is the managing member. Gleason’s total includes shares held by his wife, Linda, a director of Bank of the Ozarks Inc., where George Gleason is chairman and CEO.

Allison is chairman of Home BancShares Inc. of Conway, the parent company of Centennial Bank.

The List

The U.S. Securities & Exchange Commission requires public disclosure of stock held by officers, directors and any person or entity that owns at least 5 percent of the outstanding shares of any publicly traded company. The information included in Arkansas Business’ annual list is gleaned from corporate proxy statements and Forms 3, 4 and 5 filed with the SEC.

Unless otherwise noted, the shares are deemed by the SEC to be owned outright by the person or family listed. Exercisable options and restricted shares are generally not included.

The stockholders on the list can be presumed to have other investments, even in publicly traded companies, that aren’t made public and therefore aren’t included in the totals.

Southern Bancorp Community Partners, a nonprofit loan fund that works in partnership with Southern Bancorp Inc. of Little Rock, said Tuesday that it has received $2 million — the maximum available under the Financial Assistance program of the U.S. Treasury's Community Development Financial Institution Fund.  

SBCP was among 196 organization to receive money from the fund this year. The money is awarded to institutions like SBCP based on their success in providing financial access to underserved communities.

"We are honored to have once again been selected as a CDFI Fund award recipient," said Darrin Williams, CEO of Southern Bancorp Inc. "These awards are critical to the mission of financial organizations like SBCP that are working to increase access to capital and financially strengthen families in low-income communities."

Southern Bancorp and SBCP have used previous awards to increase lending. Dominik Mjartan, CEO of SBCP and executive vice president of Southern Bancorp, said this year's award will allow SBCP to extend financial development services like credit and homebuyer counseling, financial education and free tax preparation to more of Southern Bancorp's markets.

One other Arkansas CDFI, the Bank of Lake Village, received $700,000 from the fund.

The Federal Reserve is raising a key interest rate for the first time in a year, reflecting a resilient U.S. economy and expectations of higher inflation. The move will mean modestly higher rates on some loans.

The Fed signaled in a statement Wednesday that additional rate increases will likely be made slowly as the economy improves and inflation edges closer to the Fed's 2 percent target.

The central bank is increasing its benchmark rate by a quarter-point to a still-low range of 0.5 percent to 0.75 percent. The Fed last raised the rate in December 2015 from a record low near zero set during the 2008 financial crisis.

More: Read the Fed's complete statement here or at the end of this article.

President-elect Donald Trump's plans for tax cuts and infrastructure spending have led investors to expect that inflation will pick up in coming months.

The economy, after growing at an anemic annual rate of 1.1 percent in the first half of this year, accelerated to a 3.2 percent pace in the July-September quarter. That pickup has lifted hopes that the economy will keep rising, fueled by steady hiring gains. The unemployment rate is at a nine-year low of 4.6 percent.

In the month since Trump's victory, investors have sent stock prices surging to record highs and driven up bond yields. The markets have calculated that Republican control of Congress will enable Trump to cut taxes, ease regulations and accelerate infrastructure spending — and that higher economic growth, inflation and corporate profits will result.

The Fed's action Wednesday should have little effect on mortgages or auto and student loans. The Fed doesn't directly affect those rates, at least not in the short run. But rates on some other loans — notably credit cards, home equity loans and adjustable-rate mortgages — will likely rise soon, though only modestly. Those rates are based on benchmarks like banks' prime rate, which moves in tandem with the Fed's key rate.

Mortgage rates have been surging since Trump's election victory last month on expectations that his economic program will accelerate economic growth and inflation.

Some Fed watchers expect faster growth to lead the central bank to shift its focus from trying to energize the economy to considering ways to counter the risk of too-high inflation. On that assumption, some are revising their forecasts for Fed rate hikes in 2017.

Before Trump's victory, the consensus view of economists was for two Fed rate increases next year. Now, some say they foresee three or possibly as many as four. Others think the Fed will be hesitant to step up the pace of rate hikes. For one thing, Trump's economic program still must win congressional approval and could undergo significant change along the way.

Last month after Trump's election, Yellen told a congressional committee that Fed officials would be monitoring Congress' actions and "updating our economic outlook as the policy landscape becomes clearer."

Other Fed officials have endorsed that wait-and-see approach.

Simmons First National Corp. of Pine Bluff announced its intention to enter the Oklahoma market by acquiring Southwest Bancorp Inc. of Stillwater.

The pending purchase of the $2.47 billion-asset public company represents the largest Simmons acquisition to date, and it push total assets at Simmons to more than $10.6 billion. The combination stock swap-cash deal, valued at $564.4 million, is expected to close during the third quarter 2017.

Under terms of the agreement, each outstanding share of common stock and equivalents of SBI will be converted into the right to receive 0.3903 shares of the Simmons common stock and $5.11 in cash: all subject to certain conditions and potential adjustments.

In addition to Oklahoma, Southwest's Bank SNB network of 31 branches will also open the door to new markets in Texas and Colorado as well expand the Simmons franchise in Kansas.

Bank SNB operates 18 offices in Oklahoma, five in Texas, four in Kansas and three in Colorado, with total loans of $1.87 billion and deposits of $1.95 billion.

The bank, which employs a staff of 393, recorded net income of nearly $12.9 million through the first nine months of 2016.

Bank SNB reported annual profits of almost $19.3 million last year, more than $21.8 million in 2014, nearly $20.7 million in 2013 and about $18.4 million in 2012.

Most of the owners of the 30-story Regions Center in downtown Little Rock filed for Chapter 11 bankruptcy protection on Dec. 9, about a month before a hearing to decide whether to appoint a receiver for the property.

In the initial filings in U.S. Bankruptcy Court in Delaware, the owners, in 24 separate bankruptcy filings, listed estimated debts of between $10 million and $50 million. A more detailed filing is expected later. The owners’ assets also are estimated between $10 million and $50 million.

The bankruptcy filing automatically puts a hold on all legal proceedings against the property owners, including the foreclosure lawsuit filed against them in Pulaski County Circuit Court on Nov. 9.

An attorney for Regions Center's owners, Mark Rubin of Florida, told Arkansas Business Friday afternoon that the owners expect to be out of bankruptcy in the first or second quarter of 2017.

"We have a plan to reorganize the property and payoff the loan and to finance it with a new lender," he said.

Wells Fargo Bank filed the lawsuit, alleging that the 32 LLCs with an ownership interest in the building defaulted on a $32 million loan used to buy the property in 2006. As of Nov. 7, according to the bank, the defendants owed $29.6 million.

Wells Fargo also asked for an emergency hearing to appoint a receiver. That hearing was scheduled for Jan. 12 in front of Pulaski County Circuit Judge Chris Piazza, but is now stayed.

"The lender was being a little heavy handed with the way that they were preceding," Rubin said. "We felt that the most appropriate action would be to go to bankruptcy court where they have to have a referee in the room with them to make them do the things that they should do according to the contracts that we have with them."

In bankruptcy filings, the owners listed its 20 largest unsecured creditors: Moses Tucker Real Estate Inc. of Little Rock, owed $145,000; Colliers International Valuation & Advisory Services LLC of Little Rock, owed $145,000; and Entergy Corp. of Baton Rouge, Louisiana, owed $60,000.

"This isn't an issue of about not having money. This is an issue of a dispute with a lender," Rubin said. "So we just have to figure out in this process how we move this lender out and bring somebody that's going to be more commercially reasonable."

Earlier this year, the 547,000-SF Regions Center was listed for sale with a $40 million asking price.

Dusty Middleton has been hired as senior vice president, senior lending officer and Harrison market manager for Stone Bank of Mountain View.

Middleton was formerly a senior vice president and loan manager for Community First Bank in Harrison, now Equity Bank, and a vice president and branch manager for the Western Grove branch of Bank of the Ozarks.

Frank Bailey, co-founder and partner of the Bailey & Oliver Law Firm in Rogers, has been recognized as one of Arkansas’ top 50 lawyers by the 2016 Super Lawyers report.

Super Lawyers is a legal rating service of outstanding lawyers from more than 70 practice areas and uses a rating process that includes independent research, peer nominations and peer evaluations.

Ken Stuckey, director of talent acquisition and development for Pace Industries of Fayetteville, has joined the Manufacturing Skill Standards Council board of directors in Alexandria, Virginia.

He leads the talent acquisition and workforce development initiatives for its 4,000 U.S. and Mexico employees. He will be responsible for producing talent pipelines, building technical bench strength through workforce development, creative sourcing and recruiting and retaining technical talent.

See more of this week's Movers & Shakers, and submit your own announcement at ArkansasBusiness.com/Movers.