NEW YORK — Donald Trump's election as president has made many small business owners more upbeat about 2017.

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 This material may not be published, broadcast, rewritten or redistributed.)

Editor's Note: This is the fourth of five articles this week by the labor and employment team at the law firm of Wright Lindsey Jennings of Little Rock examining key trends for employers and the workplace in 2017. Below, a quick look at two important employment issues that could arise next year.

Momentum for ‘Ban-the-Box’ Continues to Grow

Last year I wrote an article about the "ban the box" movement — an initiative intended to prevent employers from learning about and considering the criminal history of an applicant in the early stages of the hiring process.

The initiative, which delays the background check inquiry, is intended to provide job applicants with a criminal record a more fair chance to make their qualifications known to prospective employers.

Momentum for the policy continues to grow with a total of 24 states now having adopted statewide policies, according to the National Employment Law Project. Additionally, nine states have now removed the conviction history question from job applications for private employers. Although Arkansas has not yet adopted a statewide policy, Pulaski County has now joined the movement by unanimously passing an ordinance removing criminal history questions from the county’s initial employment applications.

The stated purpose of Pulaski County Ordinance 16-1-29A, which took effect in August, is to assist in the “successful reintegration into the workforce of people with criminal records by removing barriers to employment and enhance the health and safety of the community by assisting people with criminal records to lawfully provide for themselves and their families.” The ordinance requires that background checks are delayed until after a conditional offer of employment is made.

If a background check reveals an offense, the county is required to conduct an individualized assessment that consists of a consideration of the nature and gravity of the offense, the time passed since the offense and the nature of the job.

If Pulaski County rescinds an offer of employment based on a finalist’s criminal history, the applicant must be provided with an adverse-action letter that specifies the deadline by which the applicant may contest the accuracy of the reported information or provide evidence of rehabilitation.

Attorneys with expertise in employment screening can help private sector employers who are considering the implementation of a ban-the-box policy. Human resource professionals should be prepared to discuss with counsel the company’s current hiring process and to provide documents that are involved in the hiring process, including employment applications, offer letters and adverse-action notices.

(By Regina Young, a partner at Wright Lindsey Jennings in Little Rock. Her active trial practice includes defending employers in federal and state court litigation and appeals. Email her here.)

Protected Concerted Activity Under the National Labor Relations Act

Recently, the National Labor Relations Board (the board) seems to be focusing more on violations of the National Labor Relations Act (the act) involving non-unionized employees.

That’s right, non-union employees as well as employees represented by a union are protected by the act. Under Section 7, employees have a right to engage in "concerted activities for the purpose of … mutual aid or protection" or "protected concerted activity."

Protected concerted activity involves two or more employees taking action for their mutual aid or protection regarding terms and conditions of their employment. The board’s concept of the type of conduct protected by Section 7 is broader than you might expect.

For example, an employee at a used car dealership in Yuma, Arizona complained to his manager about how sales commissions were being calculated. Later, the owner asked the employee to come to a meeting in the sales manager’s office.

During the meeting, the employee lost his temper and began yelling at the owner calling him a "f--king motherf--ker," a "f--king crook" and an "a--hole." He also told the owner he was "stupid" and stood up during the meeting, pushed his chair aside and warned the owner that if he was fired, the owner would "regret it."

The employee was fired by the owner for his conduct at the meeting. After reviewing the facts, the board concluded that the employee’s conduct was protected by Section 7 of the act and it was against the law for the owner to fire him.

In a similar case, an employee of a catering company became upset because he thought a supervisor had been disrespectful of his co-workers.

The employee posted on Facebook that the supervisor was "a nasty mother f--ker," a "loser," and said "f--k his mother and his entire f--king family."

When the posting was brought to the attention of the employer, the employee was fired. The board found that the employee’s Facebook posting was not so egregious as to lose protection under Section 7 of the act. The board ordered the employer to reinstate the employee and pay him full back pay.

Employers must be very careful how they deal with situations that could involve an employee engaged in protected concerted activity under the National Labor Relations Act.

Currently, the five-member National Labor Relations Board consists of only three members: two Democrats and one Republican. The two vacant seats will be filled by President-elect Trump, giving Republicans majority control.

But this does not mean that employers should expect immediate relief from what some would consider overreaching decisions by a board controlled by President Obama’s appointees.

(By John Davis, a partner at Wright Lindsey Jennings in Little Rock. He represents employers in labor and employment law matters and workers' compensation defense. He advises clients in connection with wage and hour issues, union activity, and employment policies and agreements. Email him here.)

WASHINGTON — Long-term US mortgage rates ticked up again this week, staying at their highest levels since early 2014.

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

Editor's Note: This is the last of five articles this week by the labor and employment team at the law firm of Wright Lindsey Jennings of Little Rock examining key trends for employers and the workplace in 2017. Below, a quick look at two important employment issues that could arise next year.

LGBT Rights in the Workplace: What's Next for Arkansas?

In the summer of 2015, the U.S. Supreme Court issued a landmark decision affecting the LGBT community, ruling that same-sex couples have a constitutional right to marry. While there were no such watershed LGBT decisions in 2016, several legal issues are working their way through state legislatures and the lower courts.

Title VII

For example, this year several federal courts considered whether to overturn years of precedent and adopt the U.S. Equal Employment Opportunity Commission’s (EEOC) position that Title VII’s prohibition against "discrimination because of sex" includes a prohibition against sexual orientation discrimination.

In oral arguments held in late November, the judges of the Seventh Circuit seemed inclined to rule that Title VII does cover sexual orientation discrimination. It seems inevitable that this question will ultimately have to be resolved by the Supreme Court. Like Title VII, the Arkansas Civil Rights Act (ARCA) does not list sexual orientation or gender identity as a protected class, but Arkansas courts have looked to Title VII when interpreting the ACRA. If Title VII is ultimately found to prohibit sexual orientation discrimination, we can expect plaintiffs to argue that the ACRA should be interpreted the same way.

At the agency level the EEOC under the Obama administration has identified sexual orientation and gender identity discrimination as an enforcement priority. Many have questioned whether that enforcement priority will change under the incoming Trump administration.

Transgender employees’ restroom access is another area in which legal challenges are working their way through the courts.

Bathroom Access

A bathroom access bill similar to the one passed in North Carolina is expected to be introduced in the 2017 session of the Arkansas General Assembly.

North Carolina’s controversial law requires people to use the restroom of the gender assigned to them at birth and is the subject of more than one pending lawsuit.

Some believe North Carolina’s governor lost his re-election bid at least in part because of the bathroom bill, which many business groups opposed. Should such a bill pass in Arkansas, we can expect national attention and reaction similar to that received by North Carolina.

(By Michelle Kaemmerling, a partner at Wright Lindsey Jennings in Little Rock. Her labor and employment practice focuses on employment and complex commercial litigation in state and federal court, and consumer class action lawsuits. Email here here.)

Immigration Law Compliance: Preparing for a Trump Administration

Donald Trump's victory in November has generated many questions for employers — what's going to happen to the Affordable Care Act, or the U.S. Department of Labor's new overtime rule? — but there is one area slated for change in which employers can prepare for now: immigration.

While Mr. Trump’s proposal for "an impenetrable wall" along the southern border has garnered the most attention, his other immigration policies likely will have a more direct and immediate impact for Arkansas employers.

As an employer you might be thinking, "Well, I don’t have any foreign workers, so changes in immigration policy won't affect me, right?" Wrong.

Trump has consistently stated that he wants to deter illegal immigration by "turning off the jobs and benefits magnet" that attracts foreign workers. In other words, he wants to crack down on businesses that employ people without work authorization.

This likely means more worksite enforcement visits from Immigrations and Customs Enforcement (ICE) to check whether there are workers employed without work authorization. Such visits commonly occur by ICE agents who arrive unannounced (or with very little notice) seeking to audit the company's I-9 forms.

To accomplish his goal of increased enforcement, Trump has proposed tripling the number of ICE agents. He's also suggested that E-Verify should be mandatory for all employers (keep in mind that E-Verify is separate from Form I-9; it does not replace it).

In short, employers need to be prepared for an increase in I-9 audits by a beefed-up ICE agency.

During an ICE audit, employers can find themselves in trouble not only if they have unauthorized workers, but (more commonly) because they did not properly prepare or maintain their I-9 forms for each employee. Penalties can be steep; fines generally start around $200 and go up to several thousand dollars per offense. In 2015, a California company was fined more than $600,000 because it failed to properly complete I-9 forms for its employees.

So what should employers do to get ready for a possible audit?

First, you must prepare. You definitely don't want to wait until ICE is on-site demanding to see your I-9 forms. Therefore, employers would be wise to conduct an internal I-9 audit to identify and correct potential problems now. In fact, an annual internal I-9 audit is on ICE's list of "Best Employment Practices."

If you need another reason to conduct an internal audit, keep in mind that you'll be given safe harbor if ICE discovers an unauthorized worker, but only if you have properly prepared and maintained your I-9 forms.

Unfortunately, audits can create more problems when employers choose to perform them themselves and then commit mistakes that lead to further violations. Common mistakes include filling out new I-9s for employees and throwing the old ones away, making revisions to I-9 forms without signing and dating the changes, and preparing new I-9 forms to correct mistakes and backdating them so they appear to be timely.

Even if these mistakes are "innocent," they can lead to stiff fines.

Therefore, the better practice may be to engage an outside firm to perform the audit, especially if it's the company’s first audit or if the company suspects there may be issues.

Employers can also use an external audit as an opportunity to update I-9 policies and to train compliance employees on proper procedures to prevent future mistakes.

While the future of employer regulations may be uncertain, conducting an internal I-9 audit is an easy step employers can take to ensure they are complying with both current immigration law and likely changes by the Trump administration.

(By Neemah Esmaeilpour, who heads up the immigration law practice at Wright Lindsey Jennings in Little Rock and is a member of the Labor & Employment team. Email him here.)

Dear Readers,

Last week Arkansas Business subscribers received the Book of Lists, in which we compile most of the business lists that we published throughout 2016. Lists like that — the biggest law firms or the highest-paid executives or the most profitable banks — appeal to the part of the human brain that likes to see data organized (especially the kind of data that can translate directly into business contacts and sales leads).

This week, for the third time, we offer a compilation that appeals to the universal interest in other people: all 50 of 2016’s Executive Q&A features in the first issue of Arkansas Business for 2017.

Executive Q&A is not hard-hitting journalism. We don’t set out to grill the executives who agree to answer questions for us. (In fact, if we suspect we need to grill someone, we don’t ask him or her to participate in this particular feature.) But we do look for a variety of subjects from all over Arkansas and from a broad cross-section of our state’s industries and institutions. We ask questions about the individual, his company and his industry or area of expertise. We try to ask questions that will elicit candid and enlightening answers, but, naturally, some people are more candid and enlightening than others.

I know the Executive Q&A is a popular feature with our readers, mainly because of the response that the executives themselves report after appearing in it. With this issue, you have an opportunity to catch up on any of the Q&A features that you missed.

Executive Q&A will continue throughout 2017. If you know of someone who would make a worthy subject, I’m all ears. Email me at GMoritz@ABPG.com.

Best wishes,
Gwen Moritz, Editor

Executive Q&A - 2016

BOSTON  — As marijuana shops sprout in states that have legalized the drug, they face a critical stumbling block — lack of access to the kind of routine banking services other businesses take for granted.

(Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

WASHINGTON — After nine straight weeks of increases, long-term US mortgage rates fell this week.

(Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

A new player has entered the financial fray at the dormant K Lofts development in downtown Little Rock.

Creek Capital Partners LLC of Fort Smith last month stepped to the front of the line of creditors by purchasing the project’s construction loan from IberiaBank of Lafayette, Louisiana.

The faces behind Creek Capital Partners: the Steve Creekmore Jr. family.

You might recall that four months ago IberiaBank sued to recover more than $1.4 million owed on an original June 2013 loan of $1.3 million to K Lofts LLC.

That debt bears the personal guarantees of Scott Reed of Portland, Oregon, and Brian Corbell of Los Angeles.

Another K Lofts creditor is Pulaski County Brownfields Revolving Loan Fund, which provided a $275,000, zero-interest loan for asbestos abatement.

Work on the renovated 115-year-old building at 315 Main St. remains incomplete six years after Reed trumpeted the mixed-use project.

The K Lofts contractor, Little Rock’s AMR Construction LLC, pulled off the job after April Fools’ Day 2015. The company has a lien claim of $196,440 divided between two contracts.

More than $143,700 of that is owed on the original $2.1 million contract to redevelop the upper floors of the once-dilapidated five-story building into 32 apartments.

The remaining $52,600-plus is owed on an $825,300 contract to repair a partial collapse of the east wall in 2013.

AMR filed a foreclosure action in June, and at last report, its dispute with K Lofts is in arbitration.

Jim Johnson has been named senior vice president and senior lending officer of the Harrison location of Stone Bank. A native of Harrison, Johnson had been serving in a similar capacity at the bank’s home office in Mountain View, which he joined in 2013 after working for several other banks.

Bill Blankenship Jr., a farmer from Pine Bluff, and George Wesley “Wes” Booker II of White Hall, owner of Wes Booker Insurance, have been named to a new advisory board for the White Hall branch of Stone Bank. Other advisory board members include the following:

• Charles “Trey” Buckner of White Hall, owner of Charles S. Buckner III Real Estate Appraisals, co-owner of Fowl Smokin’ Swine and vice president of the Arkansas Wildlife Federation
• Franklin “Beaver” Johnson of White Hall, owner of Johnson’s Metal Recycler
• Warren Parker of Dumas, sales manager at Dumas Motor Co.
• Pat Sutliff of White Hall, owner of Sutliff Construction.

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

Eric Bunnell has been promoted to president of Arvest Equipment Finance and is relocating to Fort Smith for the job.

Bunnell, who has worked in the Kansas City area, joined Arvest Bank in 2012. He has worked in the commercial lending industry since 2001 and is a Certified Lease & Finance Professional.

Fernando Adame and Stephanie Hagan have joined First National Bank of Northwest Arkansas in Rogers as mortgage loan officers.

Adame has 11 years of banking experience in northwest Arkansas. Hagan has more than 20 years of banking experience in the area.

Lisa Coker, an advanced practice registered nurse, has joined Renal Care Associates in Fort Smith, part of the Sparks Health System.

Coker earned her degree from Maryville University in St. Louis and has more than 13 years of experience in renal care and dialysis.

Mandi Owens has been promoted to director of client services at Central Research Inc. of Lowell. Owens has worked with Central Research for six years, most recently as the senior client services manager.

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

With the new year upon us and 2016 behind us, maybe you’ve begun to think about your “new year’s resolutions.” Whether 2016 was a mountaintop or a valley for you, I’m sure there are aspects that you would like to change about your life. If you’re like me, too often, you make new year’s resolutions at the beginning of January and they become more like wishes you might give to a genie rather than goals with a plan in place to make actual progress. I find this to be true for other people too when I look on Craigslist in April to see a surplus of treadmills for sale with “very little wear and tear.”

Whether it’s your health, relationships, your finances or something else, here are a few thoughts you can put into practice that could help you get one step closer to real progress.

1. Don’t Change Overnight

When I was 20, I was about 80 pounds overweight. By the time I was 21 I had run a full marathon. It didn’t happen overnight. Once I had decided what I was going to accomplish, I had to assess where I was starting from. I set short-term goals that were one step out of my comfort zone that would get progressively harder: one-mile runs this week, two-mile runs next week, etc. When you break your bigger battles into smaller, more attainable steps, you are much more likely to follow through. 

2. Review Your Calendar

We all have the same amount of time in the day. Decide what the most important things are to you and focus your time and energy on those things. The older I get, the more it feels like time is water coming in over the side of an overloaded boat. Sometimes I find myself standing with a bucket trying to scoop water back into the lake faster than it’s coming onto the boat. The reality is, if I would throw some items overboard rather than trying to extend the laws of buoyancy, my chances of staying afloat are much greater. Sometimes we need to give ourselves permission to let some things go; throw it overboard and keep only the things that are most important to us.

3. Communicate More Clearly

An influential person in my life once told me “It is unkind to be unclear.” When we don’t communicate effectively, it can lead to false assumptions and unmet expectations. This is not just true for our relationships with people. This can also be true of our relationship with ourselves, or our money. If you don’t clearly communicate where you want your money to go, then your expectations of financial success will likely be unmet. If you don’t tell yourself that you expect to lose 15 pounds, then it isn’t going to happen by accident.

4. Check Your Surroundings

This is not just a phrase to be used when putting your car in reverse. The people and the environment with which you surround yourself can be the difference between success and failure. Everyone you encounter has some level of influence on you. Consider what kind of influences you are being exposed to.  Maybe you need to seek guidance in some areas. Maybe a personal trainer, or a marriage counselor, or a financial advisor. Or maybe you just need to distance yourself from some unfruitful relationships in your life. Whatever the case, maybe you are a product of your surroundings. 

A new year brings new beginnings and opportunities for change. Don’t just wish for change. Now is the time to take control of your life, make a plan, write it down and take a step. Don’t focus on where you want to be next year, just focus on what you can change today that will make a difference for tomorrow.

(By Brandon Grable, Financial Advisor. GenWealth Financial Advisors is a registered investment advisor. Securities offered through LPL Financial. Member FINRA/SIPC.)

JTS Financial of Little Rock said Thursday that it acquired controlling interest in Your Benefits Agency Inc. of Little Rock, which does business as Educational Benefits, or EBi, and provides insurance to the state education sector, including school districts. 

The companies said Educational Benefits will continue serving clients in Arkansas and operating as EBi. Kim Tidwell, who has been EBi's senior account executive, has been promoted to director for EBi.

Financial terms of the deal were not disclosed.  

The companies said EBi contracted with JTS Financial in August to integrate JTS' benefits administration platform.

"After operating under the management agreement, it was clear that joining forces would be beneficial for both organizations and, most importantly, our customers throughout the state and region," John Starling, JTS' president and CEO, said in a news release.

Tidwell said that pairing EBi's experienced team with JTS' technologies and administrative services "will create the best possible customer and administrative experience for school districts throughout Arkansas and beyond." 

An employee benefits consulting firm, JTS Financial has offices in Little Rock, Fayetteville, Jonesboro and Russellville. Your Benefits Agency Inc. has worked in Arkansas' education sector for more than 30 years.

WASHINGTON — Long-term U.S. mortgage rates fell this week, the second week of declines after snapping a nine-week run of increases.

(Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

Dale Cole grew up in Garland, Texas, and graduated with a business administration degree from the University of Texas in 1970. He worked as a commercial loan officer at Texas Bank & Trust in Dallas in 1974-79. Cole became senior vice president at McKinney First National Bank in Marshall, Texas, and in 1983-88 served as president and chief operating officer at Banc Texas McKinney.

In 1988-96, he served as chairman, president and CEO of Worthen National Bank in Batesville and Newark. In 1997, he organized First Community Bank.

First Community Bank of Batesville is a $1.1 billion-asset lender with 18 branches in northeast Arkansas and southwest Missouri.

First Community Bank celebrates its 20th anniversary in August. What’s your vision for the next 20 years?

When we started the bank on Aug. 4, 1997, we never dreamed we’d be $1 billion in assets. We passed this milestone on July 31, 2015, and finished 2016 at $1,200,995,004. The regulators have told me I need to prepare for the $2 billion size quickly. Now we can see this next milestone within five to seven years. The next 20 years First Community Bank will continue to focus on relationship banking, and we see our company having probably 50 locations throughout Arkansas, Missouri and probably Texas and Tennessee.

What drew you to a career in banking?

My banking career started in 1974 with the idea that banking would be a great business to be involved in for my family. We had two young children at the time. One of my uncles had been a successful banker, and my dad has served on a bank board of directors.

What are your front-burner issues for the banking industry?

The most pressing issues for the banking industry and First Community Bank are regulatory. The regulatory landscape is changing dramatically, and helping people is more difficult today than ever. The regulators have included the smaller banks in the requirements to mitigate the risks of the mega banks and the Wall Street investment banks. These regulations actually cost the consumers more even though the regulations have been put in place to protect the consumers. Some of these regulations are nonsensical.

Who are your mentors, people who have made a difference in your life?

My parents gave me the foundation of a strong work ethic and the education to carry me to where I am today.

Two CEOs I would recognize who helped my banking career are Grant Hollingsworth at FNB of Marshall, Texas, and Chairman James Stewart at Bank Texas McKinney, who showed me what relationship banking was all about, which is helping people.

Then I watched Wallace Fowler for probably 15 years and learned from the master. Wallace was always willing to talk and guide me when needed.

What has been the most significant change in banking during your career?

The most significant change in banking has been automation of the operations of the bank through electronic banking. I still believe people believe in relationships, and First Community Bank’s success is built on providing a high level of customer service with a personal touch. We have two officers assigned to every customer to provide quality service.

What was your biggest challenge in banking?

One of my biggest was starting First Community Bank. This leap of faith was encouraged by three individuals in Batesville — Howard House, Royce Wilson and John Belew. They all said Batesville needed a community bank. We started with 14 employees, and today we have over 325. We started with $3,452,300 in capital, and today we have over $97 million in capital and assets of $1,200,995,004.

Simmons First National Corp. and Home BancShares Inc. were among those companies enjoying sizable stock price bumps during the past two months.

Simmons First soared from $48.65 on Nov. 4 to $66.40 on Dec. 9 before settling to back above $60. Home BancShares began its run from $19.89 on Oct. 13 and climbed to more than $27.

“I think it was the election,” said Simmons CEO George Makris. “The whole banking industry stock valuation went nuts after the election. We did nothing at Simmons to justify that. We were one of those benefiting from a rising tide that lifts all ships.”

Wall Street was moved by the possibility of cuts in the corporate tax rate and the cost of regulatory requirements for banks presented by a change of administration.

“We all got the Trump Effect,” said Johnny Allison, chairman of Home BancShares. “If he reduces federal income taxes on companies to 15 percent, it would mean $50 million more a year that we could use for capital, to buy more banks, to pay more dividends.

“We’ll put it to work.”

Arkansas membership in the $10 billion bank club should double by the end of September. Home BancShares Inc. of Conway is poised to surpass $10 billion in total assets by March. Simmons First National Corp. of Pine Bluff looks to cross the mark during the third quarter.

Both public companies have two pending acquisitions that will help take them beyond $10 billion to join Bentonville’s Arvest Bank Group Inc. and Little Rock’s Bank of the Ozarks Inc.

The $534 million deal for Southwest Bancorp Inc. marks the third stock swap-cash transaction for Simmons since returning to the acquisition trail after a hiatus of more than a year.

“When we got to $7 billion [in total assets during 2015], we knew we had some decisions to make,” said Simmons CEO George Makris. “Most of our inactive time was preparing for the new regulatory environment to be a $10 billion bank.

“We worked to upgrade our audit functions and staffing to meet the increased regulatory compliance. We didn’t want to cross $10 billion until we had shored up all those areas. We knew it wouldn’t be in the cards until 2017.”

Simmons expects to hit $11 billion in the third quarter when the momentous purchase of Southwest Bancorp closes. The acquisition of the $2.47 billion-asset public company in Stillwater, Oklahoma, is Simmons’ largest transaction.

The purchase of Southwest’s Bank SNB network of 31 branches opens the door to new markets in Oklahoma, Texas and Colorado while expanding the Simmons franchise in Kansas.

The new states were among the expansion territory identified by Makris at the Simmons annual shareholders banquet on April 19. At the Pine Bluff Convention Center gathering, he pointed to Louisiana, Mississippi, Alabama and Kentucky as other new markets the company might be calling on during the next few years.

“The pipeline of potential partners is pretty light right now,” Makris said in a recent interview with Arkansas Business. “The No. 1 thing is to prioritize the needs of our company, where we need to grow.”

Adding to the Simmons asset total is the $78 million purchase of Hardeman County Investment Co. of Jackson, Tennessee, which should close by March.

Hardeman’s $464 million-asset First South Bank will add 10 branches to the growing Simmons footprint in western Tennessee.

Each merger brings its own assimilation puzzle of systems, software, products and more.

“Integration is the biggest challenge,” Makris said. “It drives the speed of our acquisitions. How many can we manage in any period of time? It’s not how many deals can we make. It’s how many integrations can we manage.”

The 2015 purchase of Community First Bancshares Inc. of Union City, Tennessee, provided a door opener to the 2016 acquisition of Citizens National Bancorp Inc. of Athens, Tennessee.

John Clark, CEO of Community First, offered to make introductions to Paul Willson, chairman of Citizens National, if Simmons was interested.

“They were good friends for a long time and had talked about combining their two organizations,” Makris said.

That relationship facilitated a getting-to-know-you meeting between Simmons and Citizens National on June 15, 2015. After an 11-month courtship, the deal was announced and followed by its completion in September.

Crossing $10 Billion

(Ranked by when total assets topped or will top $10 billion)

*As of Sept. 30. In thousands.

Simmons Bank and Home BancShares’ Centennial Bank join lenders with $10 billion in assets that face additional costs, fee restrictions and new layers of regulatory oversight.

The changes, wrought in response to the 2008 financial meltdown, flow from the Dodd-Frank Wall Street Reform & Consumer Protection Act of 2010 and its amendments.

The 2011 Durbin Amendment alone means a sizable revenue loss for $10 billion-plus banks. The amendment caps swipe fees — debit card interchange fees charged to merchants — at 21 cents plus 0.05 percent.

“The financial effect on us will be tremendous,” Makris said. “We will lose $5 million to $7 million on the artificial cap on debit card interchange fees alone.”

A new regulator comes into play after crossing the $10 billion-asset mark, too.

The Consumer Financial Protection Bureau is charged with monitoring how banks deal with customers and is empowered to levy financial penalties for practices or acts deemed unfair, deceptive or abusive.

“That made us really pay attention to how we do consumer lending,” Makris said. “We heard some stories that they have some very specific ways they look at things, metrics they use that we’re taking a look at regarding staffing levels. Some of their rulings have turned the industry upside down.”

Sunshine State
While Simmons turned to neighboring states for growth, Home BancShares returned to Florida as a popular destination for acquisitions to expand its Centennial Bank franchise and build its asset total.

“We’re always on something,” said Johnny Allison, chairman of Home BancShares. “We’re always working on deals. The next step is at $50 billion. We have a ways to go before we hit that.”

The $88 million purchase of Giant Holdings Inc., parent company of Land-mark Bank of Fort Lauderdale, should close in late February.

“We probably could’ve done this deal earlier, but we wanted to finish the year under $10 billion,” Allison said.

The addition of Landmark will position Centennial Bank among the 25 largest lenders in Florida based on deposits.

“It is a well-run bank, different than most deals we do, which typically involve distressed banks,” Allison said. “This is a straight M&A deal with good management and leadership.”

The pending Bank of Commerce purchase in Sarasota is a different story.

Home BancShares was the high bidder for the $196 million-asset bank in a bankruptcy auction in November.

The court-administered sale began with a stalking horse bid of $1.7 million by Byron DeFoor, a Chattanooga businessman looking to add to his bank holdings.

After 2-1/2 hours and three rounds of bidding, Home BancShares emerged the winner with an offer of $3.7 million and up to $400,000 more in expense reimbursement for approved administrative claims.

Opened in 2000, Bank of Commerce had operated under an order with regulators since 2010.

The deal for the troubled bank is the second bankruptcy auction transaction for Home BancShares. The $1.4 million purchase of Premier Bank of Tallahassee in 2012 was accomplished through the Chapter 11 of its corporate parent: Premier Bank Holding Co.

“We were the stalking horse, and there were no other bids,” Allison said. “We had to have another hearing to confirm the sale because there was a protest.

“Some creditors accused management of not marketing the property properly. But they did, and the judge upheld the sale.”

What’s new with talk of a sale of the Acxiom Building in downtown Little Rock?

Glad you asked.

Our well-placed insider tells us that Simmons First National Corp. is taking a long, hard look at buying the 188,460-SF building at 601 E. Third St.

If the company moves forward with an acquisition, it would facilitate the consolidation of about 200 staffers scattered around town.

Most of those are on floors 11-14 at the Simmons Tower at 425 W. Capitol Ave.

Three of those floors were occupied by Metropolitan National Bank, which Simmons bought in 2013.

A purchase of the 10-story Acxiom Building with supporting five-story parking deck is among the several options that Simmons is exploring.

That list includes consolidating personnel in another location, staying as is and building a new building.

Total household debt in the United States rose by $63 billion to $12.35 trillion, a 0.5 percent increase, during the third quarter of 2016 compared with second-quarter 2016. That’s according to the Federal Reserve Bank of New York, which issued its latest “Quarterly Report on Household Debt & Credit” Nov. 30.

Overall household debt is 2.6 percent below its peak of $12.68 trillion, which occurred in third-quarter 2008. Mortgage balances, the largest component of household debt, fell 0.1 percent decline during the quarter, but every kind of non-housing debt rose, the report said. Among them:

• Auto loan balances rose 2.9 percent.
• Credit card balances rose 2.5 percent.
• Student loan balances increased 1.6 percent.

Source: Federal Reserve Bank of New York Consumer Credit Panel/Equifax

The suspicion that one’s 401(k) plan might be costing more in fees than necessary has taken root in the American consciousness. It was the subject of an expose by the PBS documentary series “Frontline” in 2013, a groundbreaking U.S. Supreme Court ruling in 2015 and even a profanity-laden episode of John Oliver’s “Last Week Tonight” last June.

It’s been four and a half years since the U.S. Department of Labor required all providers who get a piece of the retirement pie to reveal their fees, both direct and indirect. That accelerated downward pressure on fees, now averaging less than 0.7 percent, as 401(k)s and similar plans have become the dominant retirement vehicle for private-sector employees.

But disclosure is hardly the same as transparency when the fees are disclosed in different places. Even knowing the total cost is not the same as knowing whether the price is fair. And that matters, since plan sponsors — employers offering 401(k) plans — can face legal consequences if they allow their employees to be overcharged.

Two firms in central Arkansas, CFO Network of North Little Rock and Fiduciary Wealth Management of Little Rock, have in recent months begun offering 401(k) fee analysis for companies that want to make sure that their plan fees are reasonable.

“There are so many cracks and crevices in which fees can hide,” said Ed Mahaffy, principal owner of ClientFirst Wealth Management in Little Rock, who formed Fiduciary Wealth Management with Rocklin “Roc” Senavinin last year.

“When we do the analysis, it’s amazing what some people are paying, and they have no idea,” Senavinin said.

CFO Network was paid by Arkansas Business Publishing Group to analyze its retirement plan in 2016. The service is a sideline to CFO Network’s primary business as an outsourced provider of accounting and consulting services, and it grew out of Managing Director Allen Engstrom’s concern about his own company’s 401(k) costs.

“This started with me looking at my own [account] statement as a member of the plan,” Engstrom said last week.

Plan advisers charge a fixed percentage of the assets in each account, and they may also get a trading commission, opaquely referred to as an “override,” on contributions invested in the actively managed mutual funds that they choose or recommend as investment options within the plan.

The percentages charged for advisory fees and the fees associated with mutual funds within the plan seem small, Engstrom said, but a rough spreadsheet analysis told him that an employee saving for 35 years or more could end up with an account balance that had been reduced by more than a third because of fees.

For a hypothetical employee whose retirement account after 35 years would grow to $1 million without any fees, the cost of the advice and fund management can be “shocking,” Enstrom said.

“If you told Mary Smith, ‘You have to write a check for $380,000 for all the advice they’ve given you over the years,’ you’d say, ‘No way.’”

You might also get sued. As plan sponsors, employers have a fiduciary duty to employees, even if some of the plan advisers may not.

And the fiduciary has to stay on top of the details. In its 2015 Tibble v. Edison International decision, the U.S. Supreme Court ruled unanimously that the trustees of a retirement fund have a continuing duty to monitor the suitability of the investments. In this case, the fund was a 401(k) and the suitability question concerned management fees on mutual funds.

Engstrom gave Senior Analyst Matt Duckworth the assignment of ferreting out the fees.

They are all disclosed, “but it’s buried in an ocean of 8-point type,” Engstrom said. Even a motivated plan member has no one to consult except the adviser, who may have a vested interest in making it confusing.

When CFO Network’s previous plan adviser learned that Engstrom and Duckworth were crunching the numbers, “they tried to be proactive by saying we were on a list of clients eligible for a reduction in fees,” Engstrom said.

Transparency is effective: In 2012, many providers voluntarily slashed their fees in the run-up to the DOL disclosure deadline. Mahaffy, with Fiduciary Wealth Management, said average fees have come down by a third since 2000.

While a 401(k) plan will never be free, Engstrom said CFO Network ultimately changed providers, and its plan now features low-cost index funds rather than the higher priced managed funds. And instead of projecting a reduction in an account’s balance of 38 percent after fees and lost earnings, the reduction is about 5 percent — $50,000 rather than the $380,000 from Mary Smith’s hypothetical account.

Passive Savings

Duckworth at CFO Network and Senavinin at Fiduciary Wealth Management have both developed processes for identifying and analyzing total fees being charged in existing plans, and their analysis typically costs $5,000 or less.

“With one meeting taking an hour, I can usually have the results back within two weeks,” Senavinin said. “It’s a very transparent, reader-friendly analysis: Here’s what I have and here’s everything I’m paying and here’s a benchmark.”

(Senavinin also offers wealth management services to individuals and trusts, and he was recognized as an Arkansas Business 40 Under 40 honoree in 2014, when he was a vice president with Charles Schwab & Co. in Little Rock.)

Another thing CFO Network and Fiduciary Wealth Management have in common is a fondness for low-cost passive investments — index funds — rather than funds that are actively managed by professional stock pickers.

Engstrom, at CFO Network, said he became a believer in index funds when he was studying for his MBA at the University of Texas at Austin. “I had these Ph.D. finance professors who were saying they can’t beat the market. If you accept that you can’t beat the market, that leads you down the path of passive investing,” he said.

And that’s becoming a well-traveled path, Mahaffy said. Late last month, Barron’s reported that nearly $1 trillion flowed into passive funds during the past three years while almost $500 billion has flowed out of active U.S. funds during the same period.

Barron’s is actually suggesting that investors consider more actively managed funds in 2017, but Mahaffy has not changed his mind.

“Their performance is hideous,” he said. “Eighty-six percent underperform the passive index funds.”

Madeline Kurrus Moore has been hired as human resources manager for Arvest Bank’s central Arkansas market.

Moore previously practiced law with the Cross Gunter Witherspoon & Galchus firm and, before that, with Quattlebaum Grooms & Tull, both in Little Rock.

She had worked in Arvest’s HR division before attending law school at the University of Arkansas in Fayetteville.

“We are pleased to welcome Madeline back to the Arvest team where she returns with even broader experience and knowledge to support our associates and our customers,” Jim Cargill, CEO of Arvest in central Arkansas, said in a news release.