The Top 10 Business Stories of 2009

by Arkansas Business Staff  on Monday, Dec. 28, 2009 12:00 am  

No. 1

No matter the label, recession, economic downturn or financial meltdown, the shadow of bad tidings from 2008 covered 2009. But the lingering darkness in Arkansas wasn't as bad as in other parts of the nation.

President Barack Obama signed the American Recovery & Reinvestment Act in February, and the state's share of the $787 billion war chest was projected at $2.9 billion. Schools, roads and more across the state were the beneficiaries of the taxpayer-backed financial windfall.

The federal government also stepped up its investment in the nation's financial community, and a dozen Arkansas-based lenders chose to participate in Uncle Sam's $250 billion Capital Purchase Program.

Little Rock's Bank of the Ozarks accepted and later repaid $75 million, cutting the roster to 11 financial institutions with more than $128 million in capital in exchange for preferred stock issued to the U.S. Treasury.

Actions by the Office of the Comptroller of the Currency and the Office of Thrift Supervision increased the tally of sanctioned Arkansas lenders to at least eight.

The number is likely higher, but unlike federal regulators, the Arkansas State Bank Department does not disclose the state banks it has sanctioned.

The number of 2009 bank failures across the nation was at 133 and climbing in December, but none was in Arkansas. The single-year body count of lenders is the biggest since 1992 when 181 fell at the tail-end of the S&L Crisis.

Afflicting the balance sheets of more than a few lenders was the overbuilt northwest Arkansas market. New home construction in Benton and Washington counties plummeted by nearly 75 percent compared with 2006 activity.

The real estate market fallout produced high-profile bankruptcies such as Fayetteville developer Brandon Barber's Chapter 7 with $47.8 million of debt.

It also produced litigation aplenty from banks and borrowers alike. Northwest Arkansas developers such as Tom Terminella, Gary Combs and J.B. Hays took their financial battles to court, sometimes filing preemptive lawsuits ahead of foreclosure actions as leverage for settlements.

Eleven Arkansas lenders reported losses of $1 million or more through the first three quarters of 2009, with Little Rock's Metropolitan National Bank generating the biggest loss at $54.8 million.



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