It’s not a bank’s size that determines its profitability, but rather how well management holds expenses down, creates new lending opportunities and collects timely payments on the loans already on the books.

Local bankers say it’s easier said than done, but 2012 financial results indicate banks large and small are holding on to more profits amid a slow moving economy.

In 2012, 17 banks surveyed by The City Wire returned net income profits of $328.274 million, a 14.5% improvement over 2011. These banks are either based in Northwest Arkansas or have a large branch presence in the local market.

This is the last of three stories published this week which compares local bank performance in 2012 against the prior year. This story examines the region’s five smallest banks which returned cumulative net profits of $4.509 million last year, a gain of more than $17.5 million over the steep losses recorded in 2011.

The largest six banks were reviewed here in the first of three stories published Monday (Feb. 4). The mid-size banks in this series were reviewed here in the second story published Tuesday (Feb. 5).

To call 2012 a “turnaround year” is an understatement for a number of the region’s smallest banks.

This cohort includes: Bank of Gravett, Decatur State, Parkway, Pinnacle and First State NWA.

Together these five institutions have cumulative assets of $538.07 million and returned a net income of $4.509 million giving the cohort a cumulative return on asset of 0.84%.

The industry benchmark for profitability is a return on asset (ROA) of 1% and while the group as whole fell a little short of that metric, three of the five banks did achieve an ROA better than 1% during 2012.

One year ago the ROA metric for this same group was in negative territory because of a $14.2 million loss recorded by Decatur State Bank. Several banks from this group said 2012 was better for sure, but no one was ready to gloat saying there is still ample work to be done in moving non-performing real estate off bank books.

As a group these five banks held $34.79 million in real estate on their balance sheets. While a few of banks made forward progress in the total holdings rose from $28.81 million in 2011.

Candace Franks, director for the Arkansas State Bank Department, noted in October that other real estate holdings were a major concern going forward for many state-regulated banks.

Bob Taylor, president of Parkway Bank in Rogers, said while his bank was able to cut its REO almost in half from 2011, the $3 million still on the balance sheet is a drain on earnings.

“We continue to work hard to move these non-performing assets off the books, because that is $3 million that can’t be loaned out or put to work generating future profits,” Taylor said. “We are seeing higher real estate appraisals and that is definitely helping curb write-downs.”

The Bank of Gravett also reduced its REO properties during 2012. The bank reported real estate owned of $546,000, down from $1.829 million a year earlier.

David Bordovsky, president of Pinnacle Bank, said he is keenly focused on reducing REO holdings this year as there are more interested buyers in the local marketplace than in recent years. According to FDIC reports, Pinnacle Bank had assets of $87.45 million at the end of 2012, the bank also held roughly $20.9 million in other real estate owned.

Bordovsky assumed the leadership role at Pinnacle Bank in June 2011 and spent several years as a private loan broker and consultant working via contract with the FDIC on bank closures.

FIRST STATE NWA
The smallest bank in the group, First State NWA, had the biggest profitability margin in 2012 among the 17 banks surveyed.

Led by Larry Olsen, First State NWA showed assets of $85.02 million as the end of 2012. The bank pocketed $2.071 million in net profits giving it a stellar 2.44% ROA, the highest of the 17 banks surveyed by The City Wire.

A modest Olsen agreed the bank had a good 2012, but said he had budgeted for minimal growth in 2013.

First State NWA has a strong balance sheet with roughly $1 million in non-accrual loans, down slightly from 2011. As loan quality improved, the bank set aside less money for reserves, which allowed more profits to flow to the bottomline.

Earnings also benefited from some loans the bank acquired at a discount and sold for profit in 2012, allowing First State NWA to recapture roughly $250,000 in previous charge-offs and loss provisions.

Olsen declined to provide any comment on loan sale.

He describes a very competitive market place for new loans, saying there is some cannibalization among competitors at work, underbidding interest rates and gambling the Federal Reserve will keep rates low for the next two years or so.

“This is just taking overall margins lower for the whole banking sector,” he said.

Olsen said gridlock in Washington has plenty of businesses still sitting on the sideline because they lack the confidence or security to expand.

PARKWAY BANK
One of the best turnaround stories in the local banking sector belongs to Bob Taylor and Parkway Bank. While nearly a dozen local banks have come under enforcement actions since 2008, Parkway Bank is the only one to shake those orders so far.

Taylor said they were one of the first to find trouble and consequently the first one out.

Analyst John Dominick gives Taylor a lot of credit for turning the Parkway ship around, saying it’s not an easy task citing the sluggish economy of the past few years.

Parkway had assets of $119.5 million at the end of 2012 and net income of $1.261 million. This gives the bank a solid 1.06% ROA – ahead of the 1% industry benchmark.

“We are pleased with those results and have budgeted for just a little growth in 2013 because good loans are hard to find.” Taylor said. “Banks around here are flush with deposits and not that many opportunities to make larger commercial loans, which is creating a competitive climate and squeezing loan margins.”

Parkway’s profits rose 139% last year, as the bank’s charge-offs were drastically reduced. In fact, the bank recaptured $82,000 from previous debt charged off. This is money that helped to boost overall earnings.

At the end of 2012, Parkway had non-accrual loans of $1.36 million, up from $404,000 a year earlier.

Taylor said the bank has reserved adequately for all of its risk-related loans.

BANK OF GRAVETT
The Bank of Gravett posted net income of $688,000 last year, up from $599,000 recorded in 2011. This gives the bank an ROA of 0.49% with room for improvement to reach the benchmark 1% across the industry.

Several factors worked together to boost earnings last year. The bank cut its loan loss provisions by more than $300,000 and charge-offs were $1.6 million less in 2012 than the prior year.

Non-accrual loans also subsided by nearly $1 million from 2011 levels, The bank had $1,57 million in non-accrual loans at the end of 2012.

Between 2011 and 2012 the Bank of Gravett shrunk its assets by more than $6 million from fewer loans and less real estate holdings on the books.

PINNACLE BANK
Pinnacle Bank of Rogers posted net profits of $156,000 last year, wiping away a net loss of $1.116 million in 2011.

Bordovsky said the positive results were a move in the right direction but there’s still work to do.

Pinnacle reduced its non-accrual loans from $6.86 million down to $1.13 million during 2012. While the distressed loans subsided, the bank’s real estate holding increased by roughly $6 million over the past year.

Pinnacle’s assets totaled $87.459 million at the end of 2012, shrinking from $93.293 million from the prior year.

DECATUR STATE BANK
The story at Decatur State was a wild one in 2012, the bank faced dire capital shortages after booking a $14.2 million loss in 2011.

Distress calls were made by regulators and two suitors came to the rescue. Near the end of 2012 the Decatur Bank was acquired by Chambers Bancshares giving the anemic institution new life.

In 2012, the bank posted a net profit of $333,000 and held back making additional provisions to loan losses because of its capital shortage.

During the year the bank reduced its non-accruals by more than $13.6 million leaving them about $9 million in seriously delinquent loans.

The bank recaptured $33,000 in past charge-offs which also helped the bottomline.

Decatur Bank got the financial stability it needed from its new holding company, Chambers Bancshares, and will continue to operate independently of the larger Chambers Bank.

Decatur Bank remains under enforcement actions and will continue to work through its problem assets, while gradually rebuilding its capital base.

The bank’s equity capital totaled $4.53 million at the 2012, leaving its key capital ratios well below normalized ranges.

A sister institution – Grand Savings Bank of Grove, Okla. – was also included in the acquisition by Chambers Bancshares. A notice of acquisition of control was recently posted by a local investment group attempting to acquire Grand Savings Bank from Chambers Bancshares.

The local investor group includes Anthony and Suzanne Steele, Rex and Carolyn Grimsley, Gary and Jan Anderson, Steve and Jacqueline Zimmerman, Guy and Eiizabeth Cable, Kirby and Robyn Lane, Tyler and Patricia Steele and Roland and Betty Julian.

Chambers Banschares Chairman John Chambers did not return three messages left at his office this week regarding the Grand Savings Bank deal or the recent financial results at Decatur State Bank.

BANK EARNINGS
Bank of Gravett  $140.9 million in assets
2012: $688,000
2011: $599,000
14.85%

Decatur State  $135.2 million in assets
2012: $333,000
2011: $-14.228 million

Parkway $119.5 million in assets
2012: $1.261 million
2011: $526,000
139%

Pinnacle $87.45 million in assets
2012: $156,000
2011: $-1.116 million

First State NWA  $85.02 million in assets
2012: $2.071 million
2011: $871,000
137%

Four Benton County Rotary Clubs put the organization’s “Service Above Self” motto into practice on Wednesday, Feb. 6, with grants to the Melba Shewmaker Southern Region National Child Protection Training Center totaling $44,500.

Checks were presented during a ceremony in the Walmart Community Room of the Bentonville Public Library. Donations included $25,000 from the Bentonville Noon Rotary Club, $15,000 from the Bentonville/Bella Vista Daybreak Rotary Club, $2,500 from the Bella Vista Sunrise Rotary Club and $2,000 from the Rogers Early Risers Rotary Club.

The gifts go toward the $3 million campaign for renovation, furnishing and transformation of the former Highlands Oncology building into the Melba Shewmaker Southern Region National Child Protection Training Center.

The campaign to fund the renovation has reached 85% of the goal, and leaders hope to begin the project later this year.

NorthWest Arkansas Community College has been the Southern Region location for the national center since 2010 and, even without dedicated lab facilities, has trained thousands of child protection students and professionals from its 16-state service area.

“We are very grateful for the dedicated support area Rotarians have provided for this project,” said Amy Benincosa, development coordinator for the National Child Protection Training Center.
“They truly have demonstrated a commitment to Rotary’s guiding principle of service above self — service in the community, in the workplace and around the globe”

For more information about the Melba Shewmaker Southern Region National Child Protection Training Center or to donate, visit http://www.nwacc.edu/web/ncptc/.

P.A.M. Transportation Services faced stiff headwinds in December sending the trucker’s fourth quarter earnings south bound after 11 months of forward progress.

The Tonitown-based carrier reported net losses of $311,000, or 4 cents a share in the fourth quarter. This lackluster performance compared to net profits of $133,037, or 2 cents per share earned in the year-ago period.

For the full year, P.A.M. pocketed net earnings of $2.178 million, or 25 cents a share in 2012. This compared to an annual net loss of $2.857 million, or 32 cents per share during 2011.

Operating revenues were $95.77 million for the fourth quarter of 2012, up 7.1% from a year earlier. For fiscal 2012 P.A.M. benefited from operating revenue of $380.632 milllion, a 6% increase from fiscal 2011.

"We finished the year with eleven consecutive profitable months, followed by a single month of loss in December. We are pleased with the progress achieved during 2012, reflected in the 57-cent swing in earnings per share. ... This improvement was achieved in an environment characterized by rising fuel prices that averaged 12 cents per gallon higher in 2012 compared to 2011, rising equipment and replacement parts costs, increased competition for drivers, increased regulation, and an economy that continues to struggle to get traction,” Daniel H. Cushman, president of the company, commented in the earnings release.

Total revenue in the quarter was $95.772 million, up from $89.388 million a year earlier. For the full year of 2012 revenue totaled $380.632 million, an increase from $359.242 million in 2011.

Cushman said fourth quarter freight demand began up year over year and remained strong through the Friday before Christmas. However, demand fell off more drastically the last 10 days of 2012 than in 2011.

He said the slack was largely attributable to the mid-week holiday in 2012, compared to the weekend holiday in 2011 and the firm had to manage through this negative calendar effect on momentum.

"We made significant progress towards the goal of sustainable profitability during 2012, but will not be satisfied until we can overcome months like December that pose specific challenges to profitability,” Cushman said.

P.A.M. continues to replenish its fleet taking delivery on approximately 600 tractors and 600 trailers in 2012, with a similar purchases expected in 2013.

"Our fleet replenishment cycle is on schedule with the average age of our tractor fleet reaching 1.70 years as of December 2012, down from 2.67 years at December 2011 and 3.47 years at its peak in April 2011,” Cushman said.

He said the newer fleet is providing fuel efficiency and lower maintenance costs in addition to higher driver and customer satisfaction rates,

P.A.M’s truck fleet was equipped with electronic on-board recorders for all of 2012, well in advance of the July 2015 mandated implementation.

"The driver market continued to tighten throughout 2012, but we ended the year with 260 more drivers and 143 more owner operators than we ended with in 2011. We continue to focus on programs and processes centered in our driving associates and our dedication to creating value for them with P.A.M. in an intensely competitive market,: Cushman said.

P.A.M. management continues to diversify its customer base, citing an intensified focus on premium service, with a larger portion of revenue earned from Mexico Expedited Services and Dedicated operations.

Bob Costello, chief economist with the American Trucking Associations, recently noted that December was a tough year-over-year comparison for many firms.

Costello anticipates more sluggishness in the freight index in 2013, especially early in the year, as the economy continues to face several headwinds.  

“As paychecks shrink for all households due to higher taxes, I’m expecting a weak first quarter for tonnage and the broader economy” Costello said. “Since trucks account for the vast majority of deliveries in the retail supply chain, any reduction in consumer spending will have ramifications on truck tonnage levels.” 

Shares of P.A.M. Transportation closed Wednesday at $9.68. The thinly traded and closely held stock is not followed by Wall Street Analysts so there was no Street estimate to beat.

The share price has ranged from a low $8.81 per share to a high $12.58 over the past 52-week period.

FINANCIAL SNAPSHOT

TOTAL REVENUE
2012: $380.632 million
2011: $359.242 million

NET INCOME
2012: $2.178 million
2011: $-2.857 million

EARNINGS PER SHARE
2012: 25 cents
2011: -32 cents

Dr. Philip Cedeno, a board certified general surgeon, recently joined the medical staff of Northwest Health System, practicing at Northwest Arkansas Surgical Clinic, P.A. in Springdale.

The clinic is located at 724 Deaver St., and Cendeno is accepting new patients. Cedeno comes to Northwest Arkansas from Southeast Kansas Surgical Group, PA where he has been in private practice since 1997. Prior to that, he was in private practice at The Surgicenter in Pratt, Kansas.

He received his medical education at University of Kansas School of Medicine in Kansas City and completed his residency at Wilford Hall Medical Center in San Antonio, Texas.

Drs. James Baker and Stuart Benson have also joined the staff of Northwest Health System practicing at Northwest Medical Plaza at Sugar Creek located at 1102 W Loews Ave., Suite 2 in Bentonville.

Baker received his medical education at Oklahoma State University, College of Osteopathic Medicine and Surgery. He completed his residency in Internal Medicine at Tulsa Regional Medical Center.

He is board-certified in Internal Medicine and a fellow of the American College of Osteopathic Internist. Baker is also a member of the American Osteopathic Board of Internal Medicine.

Benson received his medical education at the University of Osteopathic Medicine and Health Science in Des Moines, Iowa. He completed his residency in Internal Medicine at Tulsa Regional Medical Center. Benson is board-certified in Internal Medicine and a fellow of the American College of Osteopathic Internist.

Dr. Teresa Gatton and family medicine physician has recently joined the medical staff of Northwest Health System, practicing at Northwest Family – Pea Ridge located at 189 Townsend Way.

Dr. Gatton comes to Northwest Arkansas from Joplin, Mo. where she has been an urgent care physician for the past two years. She has been in family practice for several years and her main clinical interests are workers’ compensation, women’s health and weight loss.

Gatton received her medical degree at the University of Health Sciences, College of Osteopathic Medicine in Kansas City and completed her residency training at Park Lane Medical Center.

She received her undergraduate education at Park College in Missouri.

“We are excited to have Drs. Cedeno, Gatton, Benson and Baker as a new members of our medical staff,” said Dan McKay, CEO of Northwest Health System said. “They each bring talent and capabilities to serve the growing needs of our community.”

E-commerce sales rose 15% during 2012 as more consumers and retailers met online in lieu of brick and mortar deals.

Online sales posted their strongest annual growth rate since before the recession, according to Gian Fulgoni, chairman at comScore.

He said, “2012 was a year in which – for the most part – e-commerce continued to grow strongly, despite an uneven macroeconomic environment showing signs of recovery but also cause for continued concern.”

Throughout the entire year e-commerce growth rates were consistently in the mid-teens, he noted.

“It is clear that the online channel has won over the American consumer and will increasingly be relied upon to deliver on the dimensions of lower price, convenience and selection. The only real blemish on an otherwise outstanding year for e-commerce was a holiday season that fell shy of initial expectations,” Fulgoni said.

During the fourth quarter, e-commerce sales totaled $56.8 billion, marking a 14% year-over-year growth rate. Analysts expected e-commerce sales to jump 18% during the final quarter of 2012.

“To the extent that this pullback was just a temporary shock and not a sign of underlying economic weakness.We are optimistic that 2013 will build on the momentum of the past year,” he said.
I

The Arkansas Department of Career Education on Thursday (Feb. 7) approved a satellite technical center in Clarksville for Arkansas Tech University-Ozark Campus, pending funding approval by the state legislature.

ATU-Ozark has overseen a technical-training center in Russellville, the Arkansas Tech Career Center (ATCC), since 2011.

ATCC enrolls students from 11 area high schools in Pope, Yell and Johnson counties, including Russellville, Dover, Pottsville, Hector, Atkins, Dardanelle, Danville, Two Rivers, Western Yell County, Lamar and Clarksville high schools.

ATU-Ozark Chancellor Jo Alice Blondin said, “Approval of the Clarksville site provides students at Johnson County Westside and Scranton with much needed access to technical skills, and makes technical training more accessible for students at Clarksville and Lamar.”

ATCC Director Pat Edmunds said, “I appreciate the Arkansas Department of Career Education State Board for their support and conditional approval for the addition of an Arkansas Tech Career Center satellite located in Clarksville.”
 
Formerly known as the Arkansas Career and Technical Center, this school year ATCC is celebrating its 40th anniversary of providing occupational education for high school students in the River Valley. A celebration is set for April 4. Details will be announced at a later date.

It was a day Patricia Brown will never forget — May 10, 2005.

That day, she went from living her life to fighting to live after receiving news that stopped her in her tracks. Brown had received a breast cancer diagnosis.

The fight to live began soon after receiving the news.

For the next seven months, Brown received cancer treatments that eventually shrank the tumors and led to her being declared cancer free on Jan. 9, 2006.

During the next six years, she lived her life, thankful everyday to be a survivor.

Then on June 29, 2012, Brown received news that blindsided her — her cancer had returned, was stage four and had spread to her lungs and bones. While many may have been ready to give up, The City Wire's chief operations officer prepared to battle the incurable cancer and inspire others in the process.

Brown began chronicling her battle with cancer through a group consisting of more than 1,100 people on Facebook (Prayers for Patricia). She also started a blog, Tick Tock Cancer, on The City Wire's website.

"Going through this has been a roller coaster ride," Brown said.

But she said the blog was a way for her to be able to put her thoughts in writing and maybe help others in the process.

"Journaling is good for the soul," she said. "It's good to put your thoughts on paper."

As Brown has detailed the sad, funny, hard and uplifting moments that have accompanied her fight against stage four breast cancer, she has expanded her reach and is making an impact in the lives of cancer patients and caregivers all over the United States.

"It grew virally, like everything else," she said.

In October, during a visit to MD Anderson Cancer Center in Houston, Brown, who also receives treatment at Highlands Oncology Group in Rogers, decided she wanted some professional photographs taken to accompany her blog.

"I wanted to get some high resolution photos for my blog," Brown said.

She knew the marketing and communications department would be the place to go, though she did not know how to get there on the sprawling campus that consists of 19,000 staff members.

During Brown's hunt for the department, she literally came across an angel.

"The day was actually the day of our pediatric fall festival," said Lucy Richardson, a communications specialist with MD Anderson. "A bunch of employees pass out candy as our pediatric patients pass through. Me and my colleague Sara Farris were there and she was dressed as an angel."

Brown inquired about the marketing department and found out from Farris that she and Richardson were the people she needed to see. While Brown was interested in getting more professional photos for her blog, Richardson said she and Farris had another idea in mind.

Richardson runs MD Anderson's blog Cancerwise and knew Brown would be a great contributor to the site.

"She talked to me and I listened to a little of her story and how she came to MD Anderson," Richardson said. "Her personality just radiates positivity."

The blog, which has been in existence since 2009, now allows Brown to inspire nearly 50,000 readers a month with her story and how she has not taken her diagnosis lying down.

Her first blog post on the site went live Wednesday (Feb. 6) and detailed how she came to be a patient at one of the nation's leading cancer treatment facilities.

Richardson said the purpose of the blog is to offer support to anyone affected by cancer.

"It' a place where they can go and read stories about people like themselves," she said. "It's just a place to kind of offer support."

Brown, who exercises daily and works longer hours than most people in perfect health, said the chance meeting gave her the opportunity of a lifetime to reach more people with the story of the journey she is on and the journey she will continue.

During a recent visit to MD Anderson, PET scans showed that some of the tumors had grown – although the growth was "very small," Brown said.

But she has started a new drug that will surely draw even more attention to her fight for life. The drug, Afinitor, was recently approved by the FDA and has received a lot of praise in national media for results seen during trials while it was awaiting FDA approval.

Brown said she was hoping for the best and as she waits for her next appointment at MD Anderson in May, she'll continue blogging her journey both at Cancerwise and Tick Tock Cancer.

Yet even with the amount of people she will continue to reach through both blogs, Brown almost cannot believe how she has been able to turn her situation into an inspiration to others.

"I've been really surprised," she said. "It's humbling to think anyone would care about my life."

Richardson was not surprised one bit.

"Her story truly is the exception," she said. "Every person is different and Patricia is just one of those really, really special people."

The 21c Museum Hotel nestled in downtown Bentonville and promising world-class contemporary art, dining and hotel experiences is set to open Monday (Feb. 11).

With an estimated price tag of $28 million, and the potential to employ up to 160, the hotel is expected to be a good neighbor to the Crystal Bridges Museum of American Art, which is located within walking distance, a quarter-mile away.

The hotel features 104 guest rooms and suites, more than 12,000 square-feet of exhibition, meeting and event spaces and a restaurant and bar showcasing locally-grown ingredients (see below).  The hotel will have rotating exhibitions and guests can participate in culinary programs.

PART OF A CHAIN
21c is striving to be a chain. Its flagship is located in Louisville, Ky., and is the vision of philanthropists and contemporary art collectors Laura Lee Brown and Steve Wilson. In the middle of Bluegrass Country they wanted to turn farmland into an economic driver for the community and a place to spark conversation and new ideas.

That idea turned into action with the creation of the first 21c Museum Hotel alongside world-renowned architect Deborah Berke. She rehabilitated a series of 19th century tobacco and Bourbon warehouses along Louisville’s downtown West Main Street. The hotel opened in 2006. The name evokes the 21st century with innovation of combining Southern hospitality with design and culinary creativity.

Berke designed the Bentonville location with Little Rock-based firm Polk Stanley Wilcox. According to company literature, the design of the hotel integrates natural lighting throughout the 100,000-square-foot property, which will also feature a 125-seat restaurant, ballroom and meeting and board rooms as well as outdoor spaces for private functions.

“Bentonville is a small town, but it’s home to people from all over the world and has cultural attractions like Crystal Bridges Museum of American Art that compete with big cities,” Emmanuel Gardinier, 21c Museum Hotel Bentonville general manager said.

‘ALREADY EMBRACED’
Like many who come to call Bentonville home, Gardinier is a transplant. He has more than 25 years in managing hotels around the world. He’s originally from Paris and has managed hotels in Lausanne, Switzerland; Reims, France; and the French West Indies.

“Bentonville is home to people from all over the world. There is a true sense of community in Bentonville that is quite remarkable, and very inviting. The hotel is not even open yet, but people have already embraced it,” Gardinier said.

Inside the 21c Museum Hotel is The Hive, a restaurant with reservations available right before Valentine’s Day, Feb. 12.

Arkansas-native Matthew McClure is the executive chef. His cuisine is described as “refined country.”

“Moving back to Arkansas six years ago gave me the opportunity to reconnect with the ingredients and food culture of my childhood, things like black walnuts and sweet onions,” McClure said, “The menu is my take on the foods and ways of cooking that are familiar to this region. For example, we are doing a lot of pickling and preserving, making jam, and sourcing whole animals whenever possible.”

ART AND CORNBREAD
Dishes to share or begin a meal include house-made Pimento Cheese, served with bacon jam and toasted white bread; Crispy Chicken Livers marinated in buttermilk and pan-fried; and Pickled Shrimp, accompanied by salt-cured country ham, mustard greens, and crispy cornbread.

While that is southern to the core, there is also a twist on the regular Southern-fare with rabbit and dumplings served with house-made potato gnocchi.

The Hive will open for dinner, Sunday through Thursday, from 5 to 9:30 p.m., and Friday and Saturday, from 5 to 10:30 p.m., with breakfast, lunch and brunch to follow.

If The Hive sounds a bit too formal, a bar menu will also be offered in the coming days from the opening. It will include dishes such as salt and pepper ox ribs, pickled egg salad and The Hive Burger. It’s not your regular burger. This one comes with ground brisket with pickles and pimento cheese.

McClure worked for years in Boston and most recently returned to Little Rock where he worked under chef Lee Richardson at Ashley’s at the Capital Hotel.

“The energy of downtown is very vibrant, and in addition to The Hive restaurant and the hotel, we look forward to adding a contemporary art museum open free-of-charge and 24-hours-a- day,” Gardinier said, “We are excited to open our doors and welcome both visitors and the community.”

Arvest Bank on Thursday (Feb. 7) announced that that its operations in 2012 results of originated more than 17,000 mortgage loans – refinance loans and purchase money loans – totaling $2.56 billion in 2012 compared to $1.58 billion in 2011, a 62% increase.

The bank reported a 37% increase in the value of purchase money mortgages, from $597 million in 2011 to $818 million in 2012, significantly higher than the projected increase in such loans nationally. The Mortgage Bankers Association (MBA) projected 2012 purchase loans to be up 9% nationally from 2011.

“We see this increase in purchase money transactions as a positive sign and recognize that homebuyers are looking for local lenders who will focus on customer service after the loan is originated,” Steven Plaisance, Arvest Mortgage’s president and chief operating officer, said in a statement.

Mortgage growth continues to be positive around the country, with the Mortgage Bankers Association predicting strong growth in 2013. In a statement, Jay Brinkmann, MBA's chief economist, said that growth in new-home sales and modest home price increases would both contribute to an increase in 2013 purchase originations.

Arvest is unique among most local lenders in that it services 99% of its mortgage loans, meaning that customers make their payments to Arvest and deal with Arvest for any needs after their loan closes, according to the Arvest statement.

Arvest’s mortgage servicing portfolio also had a record year, reaching approximately 62,000 loans in 2012. The outstanding balance of these loans grew from $6.3 billion in 2011 to $7.1 billion in 2012, or an increase of 12% in the value of loans being serviced.

Arvest Bank operates more than 230 bank branches in Arkansas, Oklahoma, Missouri and Kansas through a network of 16 locally managed banks, each with its own advisory board of directors and management team.

Jim Keever, a director at Tyson Foods Inc., recently purchased 10,000 shares of Tyson stock priced at at $23.37 for a total value of $233,690.

The insider buy was reported to the Securities and Exchange Commission as required by law.

Tyson Foods shares have rallied this past week to set a new 52-week high at $23.90 on Tuesday, (Feb. 6).

Shares traded lower at $23.62 in the morning session Friday (Feb. 8).

Other recent insider trades include $16,024 shares acquired by director Kathleen Bader on Jan. 31. This was a non-open market trade.

Gaurdie Banister Jr., also a director at Tyson Foods, acquired 20,474 shares in a non-open market trade on Jan. 31, according to regulatory filings.

In case you were wondering, 5,774 hotel rooms in Northwest Arkansas were occupied by football game attendees during 2012, and 176,957 meals were purchased in area restaurants by those attendees.

Such numbers are from a study conducted by the University of Arkansas that paints a very positive picture of the economic impact of the university’s athletic program. The study did not mention how many of those 2012 football-related meals were swallowed with a bitter pill of disappointment.

The study, conducted by the Center for Business and Economic Research at the University of Arkansas, estimates the annual economic impact of Razorback athletics to be $153.6 million. The program also is estimated to generate an additional $239.7 million impact from planned construction activity.

Conducted during the 2011-12 academic year, the study analyzed three areas categories of Razorback Athletics – athletic department operations, visitor spending related to on-campus sporting events, and construction spending. The operations and visitor spending provide an annual economic impact while construction expenditures results in one-time economic impact, noted the study.

“Our study illustrates the tremendous annual economic value of Razorback Athletics to the entire state,” Kathy Deck, director of the Center for Business and Economic Research in the Walton College, said in a statement. “The impact of a thriving nationally competitive intercollegiate athletics program that draws more than one million fans annually is vital to the economic stability of Arkansas. The region relies on the economic benefits created by fans that pack hotels, dine in restaurants and support local businesses. Razorback football in particular has been a driving force in bringing new hotels and other businesses to our area. They simply wouldn’t be here if they couldn’t count on the influx of visitors during the fall, year in and year out.”

Deck also said the new construction and renovation “adds significant value to the overall economic outlook for Fayetteville and surrounding communities."

Jeff Long, UA vice chancellor and director of athletics, said the program has a positive impact on the entire state.

“As one of the very few financially self-supporting athletics programs in the nation, we provide support for our academic mission as well as serving as an economic driver for the state of Arkansas. Our continued investment will not only lead to the competitive and academic success of our student-athletes, but also increased economic growth for the state and the citizens of Arkansas,” Long explained.

Following are some of the details included in the 74-page report.
• During 2010-11, Razorback Athletics made expenditures of $84.7 million leading to an estimated economic impact of $124.1 million for the statewide economy. During that span, the department employed more than 260 people on a full-time basis and 982 people on a part-time or hourly basis.

• Based on increased spending to support the program in 2011-12, Razorback Athletics generated an increased impact to the state and region, with an estimated economic impact of $129.7 million.

• In the 2011-12 academic year, more than one million fans attended sporting events on the University of Arkansas campus resulting in 35,805 hotel or motel room nights and the purchase of over one million meals.

• Visitors to Razorback events generated new economic activity of nearly $30 million in Northwest Arkansas alone, netting a combined $2.66 million in state and local sales taxes directly benefitting the residents of Northwest Arkansas.

• During 2012, 66.8% of attendees at football games in Fayetteville were visitors from outside Northwest Arkansas. On average, each visitor spent $101.87 to benefit the local economy and generated an estimated $292,026 in state sales tax and $147,013 in local sales taxes.

• A total of 5,774 hotel rooms in Northwest Arkansas were occupied by football game attendees and 176,957 meals were consumed by visitors in area restaurants. In all, visitors to the area spent $4,900,437 in Northwest Arkansas during their stay.

• From 2002-11, the athletic department generated a total of 3,342 jobs related to construction projects creating a direct economic impact of $288.7 million during that span. In 2012 alone, the new football center project provided 561 jobs and made an estimated impact of $64.5 million.

• Based on projections of the next five years of athletic facility construction activity, worth $150 million in 2012, will lead to 2,016 jobs and estimated long-term economic value of $239.7 million.

Link here for the PDF copy of the 74-page report.

Arkansas’ economy in 2013 will create new jobs, but not enough to rebound to pre-recession levels, according to information released Friday (Feb. 8) by the University of Arkansas economist Kathy Deck.

Deck, director of the Center for Business and Economic Research at the Sam M. Walton College of Business at the University of Arkansas, said the Northwest Arkansas metro area will fare better than the rest of the state in terms of job creation.

“The forecast for Arkansas in 2013 is one of continued plodding growth — not enough strength in employment to regain our pre-recession highs over the next few years,” Deck said during the 19th annual Business Forecast luncheon in Rogers. “On the other hand, Northwest Arkansas is poised to continue enjoying substantial employment gains. Construction (of both housing and highways), leisure and hospitality, retail entrepreneurship and professional service gains should help lead the way.”

The Northwest Arkansas metro jobless rate during December was 5.1%, below the 5.7% during December 2011. During December, the lowest metro jobless rate was in Northwest Arkansas and the highest rate was 9% in the Pine Bluff area.

According to figures released Jan. 30 by the U.S. Bureau of Labor Statistics, the size of the Northwest Arkansas regional workforce during December was 235,174, almost 3,500 larger than the 231,708 during December 2011.

Northwest Arkansas continues to trend upward in that category. The average annual monthly labor size was 231,461 during 2011, 227,938 during 2010 and 225,177 during 2009. The number of employed during December was 223,228, more than 4,700 jobs higher than the 218,463 in December 2011.

But, as Deck noted, the jobless rate in Northwest Arkansas is higher than the pre-recession period. The following list is annual average unemployment rates in the metro area in the past 10 years.
2011: 6.2%
2010: 6.5%
2009: 6.1%
2008: 4.1%
2007: 3.8%
2006: 3.6%
2005: 3.3%
2004: 3.8%
2003: 3.7%
2002: 3.3%
2001: 3%

Deck’s comments on Friday also included the following economic points.
• Arkansas per capita personal income is growing more quickly than the U.S. average over the past 40 years. Since 1970, per capita income in Arkansas has grown from 69.5% to 81.6% of the U.S. average.

• Arkansas gross domestic product (GDP) is more concentrated in agriculture, construction, manufacturing, trade and transportation, management of companies, other services, and government than the U.S. average.

• Arkansas GDP is less concentrated in information, finance and real estate, professional and technical services, administrative services, and arts, entertainment and recreation than the U.S. average.

• There were net job losses in the professional and business services, information, financial activities and construction sectors in Arkansas in 2012. Despite these losses, the unemployment rate in Arkansas has fallen to 7.1% from its post-recession high of 9%.

• The Arkansas labor force is declining on a year-over-year basis at this point, even though the U.S. labor force is growing at about 1%.

• Employment growth has been modest in all metropolitan areas of Arkansas except Northwest Arkansas. In Northwest Arkansas, no sectors had employment declines on a year-over-year basis in 2012, and overall employment grew at 4.3%.

• Success in 2013 is likely to depend on new construction, leisure and hospitality growth, strength in retail and a continued rebound in the professional services sector.

Monday's study session of the Fort Smith Board of Directors ran the gamut as Ward 4 Director George Catsavis fired and missed in his attempt to get a repeal of the city's ban on guns in city parks on the agenda and Whirlpool was back in town in an attempt to ban drilling for groundwater wells near its former manufacturing facility on the south side of Fort Smith.

Catsavis began by introducing the repeal proposal, even though it was not on the agenda for Monday afternoon's meeting.

After failing to get a second on his motion to introduce the appeal, the board returned to its agenda.

Robert Jones III, a Fayetteville attorney with the Tulsa-based law firm Conners & Winters, representing Whirlpool, was on hand to advocate for an ordinance that would ban the installation of groundwater wells in an area immediately surrounding the company's former manufacturing plant.

Jones said the ban was necessary due to contamination that had occurred from the use of trichloroethylene (TCE) in equipment degreasing operations. Whirlpool had used TCE from about 1967 until 1981, according to information provided to the Board by ENVIRON International Corp.

According to Dr. Tamara House-Knight of ENVIRON, TCE can be harmful to individuals if ingested.

"In this circumstance because it's outside, there's no risk except in oral ingestion," House-Knight said after the meeting. "This is just through ingestion through drinking water."

Jones told the Board that TCE could be a carcinogen, or cancer-causing, if ingested, according to some studies.

A Centers of Disease Control study suggested that more research is necessary to determine linkage between TCE and cancer.

“In studies with people, there are many factors that are not fully understood. More studies need to be done to establish the relationship between exposure to trichloroethylene and cancer,” noted the CDC public health statement on TCE.

By banning drilling for groundwater wells in the area, which would include a residential neighborhood from Ingersoll Avenue to Brazil Avenue, Jones said the risk for ingestion and health problems would be eliminated.

However, this April 16, 2009 report from Environmental Health suggests ingestion is not the only method for TCE to enter the body.

“In the United States and in Canada, people have been exposed by ingestion, inhalation and or dermal contact,” the report noted.

Vice Mayor Kevin Settle questioned why Whirlpool was just now coming to the city to persuade them to pass a groundwater well ban in the area instead of in 2001 when the company was still in business and aware of the presence of TCE.

"We did not know the extent of the problem," Jones said. "That would have been premature to come to the board."

By its own admission in documents submitted to the board, Whirlpool discovered TCE in 1990 and submitted a notification to the Arkansas Department of Environmental Quality in Aug. 2002 stating it would conduct corrective action to address the problem.

Jones now says Whirlpool is unable to clean up the contamination and a ban on drilling for groundwater wells is the only solution.

Director Pam Weber asked if there was a chance of the contamination spreading.

"Minimal, because it has not moved," said Greg Gillespie, principal consultant with ENVIRON.

Gillespie said his company samples the area twice a year to monitor the contamination field.

Director Keith Lau also questioned how this would impact home prices in the area and whether homeowners could request compensation or damages from Whirlpool. Jones said the ordinance would not take away homeowner's potential to file claims with the company.

Asked after the meeting how a homeowner would file such a claim, Jones said no procedure had been established.

"They need to show us some proof (of damages)," Jones said. "Maybe some expert witnesses or practical considerations."

He said thus far, no claims had been made.

"As litigious as our society is, that says something," Jones said.

Asked whether Whirlpool had dealt with such a problem at its other manufacturing facilities, Jones said he was unsure.

The Board will vote on the ordinance at its March 5 regular meeting.

OTHER BUSINESS
• The Board reviewed recommendations of the Animal Services Advisory Board and will vote on ten recommendations at its meeting on Feb. 19. The board tabled a vote on a ban on offering animals as prizes and allowing dogs to be unleashed within city limits.

• The Board discussed the vote on the county-wide sales tax that will take place later this year. Directors agreed to vote on two resolutions pertaining to the tax. The first would state how Fort Smith intends to use its share of the tax revenue. The second would be a resolution encouraging Fort Smith voters to approve the continuation of the 1% tax. City Administrator Ray Gosack said the second resolution was necessary for staff to advocate for passage of the tax.

JAM Investment has announced the opening of their newest JAM Mart convenience store location in Greenwood at 1275 West Center St. in the 10 Spur Plaza shopping center in Greenwood.

The location, previously known as Sunshine Store, was completely remodeled by Gateway Construction of Fort Smith.

“The remodel was completed to provide a friendlier, more open feel that better represents what people expect from JAM Mart,” said Brad Arterbury, president of JAM Mart stores.

Tyson Washburn, general manager of the new Greenwood story, said the company wanted a store the community could be proud of.

“We are proud to be in Greenwood, and look forward to being an active member of the community,” Washburn noted in a statement.

This is the chain’s ninth location, and their fourth new JAM Mart location in as many years. The chain has opened new locations in Ozark, Booneville, and Fort Smith, in 2010, 2011 and 2012 respectively; and has remodeled several existing locations.

Life is good for the vast majority of Northwest Arkansas residents, according to recent survey commissioned by the Walton Family Foundation.

The survey found that 94% of respondents are happy with life overall, while 85% rate the qualify of their lives as excellent or good and 83% say they have a sense of pride in the way their city looks.

But local residents also want to see more affordable, high quality pre-K options for area children, less traffic issues and more frequent flights to more destinations in addition to more public transportation options.

The Quality of Life Survey highlights six key areas: Amenities, education, diversity, environment, economic development and infrastructure.

The foundation commissioned the survey to access its grant-making strategies in Northwest Arkansas. As part of its Home Region Focus Area, the foundation intends to positively impact the quality of life for local residents through focused investment in the five key areas.

Rob Brothers, director for Home Region for the Walton Family Foundation, said the strategy is driven by a desire to help the region’s major employers attract and keep a high quality workforce.

FIVE-YEAR PLAN
The Walton Family Foundation is midway through a five-year strategic plan for grant making. Investments of $23.5 million have been made to 36 organizations from January 2010 through August 2012.

“This survey provides a deeper look into what quality of life means in Northwest Arkansas, beyond jobs numbers and tax revenue,” Brothers said.

He said the results validate many of the foundation’s investments as well as provide a new baseline from which to measure future investment strategies.

Business and economic leaders often say Northwest Arkansas looks better than most metro areas of its size and some larger, as the region consistently has one of the lower unemployment rates and higher growth rates in the state and country.

When measuring quality of life factors such as jobs, income and family, Northwest Arkansas respondents were 94% happier on average as a group compared to 91.5% of the nation as a whole, as tracked by a University of Chicago study.

Approximately 25% of those local respondents said they did not have enough money to meet their everyday needs. This demographic is 51% female, 83% white, while 52% has a household income of under $20,000 annually.

AMENITY SUPPORT
The local region ranks high for its amenities and art opportunities. The most popular amenities among the local respondents include:
Local trails - 63%
Crystal Bridges Museum - 42%
The Jones Center - 41%
Walton Arts Center - 40%

The Walton Family Foundation supports all four of these amenities.

"One of the points that stood out in the survey was the very high number of respondents that use cultural, arts, and natural amenities like the Jones Center, Walton Arts Center, Crystal Bridges, and the developing regional trail system, Brothers said. "Across the country, most amenities of this sort are used by just over 20% of residents. Our survey showed a 40 to 63% usage rate. These results affirm the Walton Family Foundation strategies in which we have supported such amenities"

Ed Clifford, CEO of the Jones Center, said recently that the Jones Center is a bridge like no other in the region to unite families from all socio-economic and ethnic backgrounds.

He said the region is blessed with thousands of good jobs and affluent business professionals but that’s just half of the story, as there are many families struggling at or below the poverty level with a very different set of needs and wants.

The Jones Center has expanded its offering for area children this summer with special grants from the Walton Family Foundation that will recreate War Eagle for 100 additional children in a day-camp environment.

The Jones Center also has made scholarships available for membership among families who can’t afford the annual dues.

OTHER SURVEY RESULTS
21% believe pre-K is affordable
68% believe water quality is good
60% would like to see more public transit options
68-77% believe K-12 and higher education to be of good quality
60% say diverse lifestyles and cultures make Northwest Arkansas a better place to live
55% of respondents who moved to NWA in the past five years did so for their job
16% of transplants have friends or family here
8% of transplants relocated to NWA for quality of life reasons

Nikita Gupta has joined Fayetteville-based Clear Energy as director of sales. She will be responsible for new business development in the company’s core markets in the southeastern and south central U.S.

Gupta previously worked as a business development director with MSS Solutions, a Charlotte, N.C., company that provides HVAC, security, fire management and building automation services. At MSS, she built the company’s first comprehensive solutions/energy services group.  She has also served as a vertical market leader for NORESCO, one of the largest energy services companies in the country, and as a regional business development manager with Johnson Controls.

She ranked in the top 10% for sales performance at Johnson Controls.

Gupta is a graduate of the University of Illinois, Urbana-Champaign, Ill.  There she earned a bachelor’s degree in biology and a master’s degree in business administration with a concentration in marketing and entrepreneurship.

“Ms. Gupta has consistently served her clients by creating valued-added, energy-saving solutions, and that customer-centric approach mirrors how we do business at Clear Energy,” Stan Green, co-founder of Clear Energy, said in a statement. “We look forward to working with her.”

Clear Energy helps clients find better ways to heat and cool, illuminate, and insulate warehouses, offices, factories, schools, and stores. From retrofits to new construction, the company brings money-saving solutions gleaned from decades of experience working with some of the world’s best-known corporations.  

For Mary Beth Brooks, the world is a little brighter. The light at the end of the tunnel is no longer a lonely street light humming in an empty subdivision.

Brooks, president and CEO of the Bank of Fayetteville, said she can say for the first time since January 2008: “I think this is going to be a great year.”

She’s seen good and bad years come and go. The University of Arkansas graduate grew up in Fort Smith, the daughter of the politically active and politically connected Mary Ellen and Brad Jesson. Her 26 years in banking has included stops in Fort Smith, Little Rock and Memphis.

The Bank of Fayetteville chief since 2004, Brooks said a top goal in 2013 is to use the improving conditions to “take better care of our employees, customers and our community.”

“From my perspective, from the Bank of Fayetteville perspective, it’s looking much better than what I lovingly refer to as, ‘The dark years,’” Brooks said.

Indeed, the past few years have been tough on a Northwest Arkansas financial sector that was too heavily invested in real estate. In 2008, the number of homes sold in Benton and Washington counties fell more than 20% compared to 2007, and fell almost 34% compared to 2006.

2012 saw the number of homes sold in the two-county area rise above 6,000 for the first time since 2007. (Link here for more on the Arkansas housing sector during 2012.)

LESSONS LEARNED
It was in mid-2008 that Brooks said the reality of the unwinding housing market “hit me on the head like a brick.”

But that was then.

“Most people feel like we, regionally, that we are way past that bottom,” Brooks explained. “Now, that’s not to say we are on easy street. ... I think we are at a new normal, where the growth, the economy will be more on a slow and steady pace.”

She also said area bankers “learned their lessons” on getting ahead of housing demand. Like the Bank of Fayetteville, many bankers are reminded each day of those lessons because they still own some of the subdivisions and lots they held in 2009.

“Not all the banks up here are out of the woods, but I think they will get there,” she said.

And it’s not just the housing sector that is improving. Brooks said she is hearing and seeing a more positive outlook from small business owners. They are not yet lining up en masse to borrow money, however.

“It’s a cautious optimism. ... They’re not all ready to hire more people or expand, but in general, the overall outlook is that they are really feeling better,” Brooks said.

DODD-FRANK FRUSTRATION
But it’s not all warm and fuzzy. Brooks’ positive demeanor disappeared faster than a flimsy deposit slip in strong winds when asked about Dodd-Frank.

Named after legislative authors U.S. Sen. Chris Dodd and U.S. Rep. Barney Frank, the “Dodd-Frank Wall Street Reform and Consumer Protection Act” was signed into law on July 21, 2010.

It was passed in response to the near financial collapse of the U.S. banking community in 2007-2008. Advocates of the law say it will prevent banks and other financial institutions from essentially creating a financial house of cards. Conservative opponents say it is overkill regulation that will make economic recovery more difficult. Liberal opponents of the bill say it goes too far in providing security for the financial sector.

Most bankers dread the law, not necessarily for political reasons, but because the law left most of the details up to federal agencies. Those agencies have been slow to trickle out the new rules.

“It’s the fear of the unknown,” Brooks said when asked her opinion of Dodd-Frank.

“There are still thousands of pages of new rules out there. ... I want to know what the rules are before I start the game,” she said.

Continuing, her analogy was one of a football game, in which a wholesale rule change is made at halftime and players are trying to understand them as they walk back onto the field for the kickoff.

“And the third quarter rules may change in the fourth quarter,” she said with a laugh borne more of frustration than humor.

She also feels sorry for the thousands of regulators who “often have little time to learn the new rules before they fan out” to thousands of banks to audit their books.

Brooks does not think those who supported the new law did so to reduce the number of banks, “but that’s what will happen.” Not all smaller regional and community banks have the resources to absorb the new wave of rules. Her argument is that the law squeezes banks by adding costs while reducing the areas in which they can generate revenue.

That said, the Bank of Fayetteville is not likely to be a Dodd-Frank casualty, but Brooks says there are many banks around the country that may not be able to afford the weight of one more straw.

Easing the rules to allow exports of U.S. produced liquified natural gas (LNG) is an energy policy is becoming a contentious energy policy discussion, with the outcome most likely to determine future activity in Arkansas’ Fayetteville Shale Play.

Debate has been fierce at times among proponents and opponents of permitting more LNG terminals in the U.S. for export. With the U.S. supply of natural gas at record highs (more than 100 years of supply by most estimates), and with the price of natural gas near record lows, proponents say LNG exports will boost the U.S. energy industry, help the U.S. become more energy independent, and allow the U.S. to provide cheaper energy to its global allies.

An increase in customers for natural gas could renew activity within the Fayetteville Shale Play. Drilling activity has been reduced in the north-central Arkansas region after years of persistently low natural gas prices.

An updated Fayetteville Shale Play economic impact study found that production in the Play between 2008 and 2011 created total economic activity of more than $18.5 billion. The updated study, produced by the Center for Business and Economic Research at the University of Arkansas, was released in May 2012.

The study also noted that total annual state employment impacts increased from more than 14,500 people to more than 22,000 people during the 2008-2011 period.

“Natural gas is a game changer for Arkansas and we are grateful for the Fayetteville Shale. It has resulted in an economic boom for Arkansans and helped keep the state budget in balance,” noted a statement from the office of U.S. Sen. Mark Pryor, D-Ark.

LNG EXPORT OPPOSITION
Opponents say boosting LNG exports will raise the prices of natural gas for U.S. consumers. With 20% of electricity generated by natural gas, higher prices would result in higher household bills and could harm the nascent U.S. manufacturing rebound.

Paul Cicio, president of the Industrial Energy Consumers of America, has advised a cautious approach, because an LNG terminal could lock-in delivery of U.S. energy to other countries. If prices rise and supply falls in the U.S., the LNG would still be shipped out.

“The price risk is being shifted to consumers because we don’t know what actual supplies and demand will be,” Cicio said in this report in the Oil & Gas Journal.

The Oil & Gas Journal report also indicated that G. O’Neal Hamilton, a member of South Carolina’s Public Service Commission, and Todd Snitchler, chairman of Ohio’s Public Utilities Commission, expressed concern that ramping up LNG exports should be carefully considered because of the potential risk in stifling manufacturing investment in the U.S.

‘SELF-SERVING’ OPPOSITION
Mike Callan, president of Fort Smith-based Arkansas Oklahoma Gas Corp., is skeptical of claims that more LNG exports will harm U.S. industry.

“The argument against exporting natural gas is a self-serving endeavor by certain industries to try and keep the natural gas used in production and as a feedstock low.  Also, consumer advocates often take a shortsighted view of commodity prices,” Callan explained.

Continuing, he noted: “Neither group seems willing or capable of recognizing what happens when prices are not sufficient to encourage drilling and that is demand will eventually outpace supply and prices will spike once again. Keep in mind the drilling industry, once it steps down exploration, takes many months to ramp back up when and if prices recover to again incentivize their efforts.”

To that point, the closely watched Baker Hughes rig count reported 425 active North American natural gas rigs as of Feb. 8, down from 720 a year ago, and well below the 1,606 high reported in August 2008. The natural gas rig count hit a 13-year low in November 2012.

Callan said natural gas prices now – ranging the $3 per MCF – are too low to support more natural gas drilling in the U.S.

“I do not know what the ‘magic’ price range is which will encourage the natural gas producers to drill while at the same time providing affordable energy for consumers, but various industry analysts define that range as between $4.00 and $7.00 per thousand cubic feet. Higher than $7.00 and demand is destroyed, lower than $4.00 and the incentive to drill disappears,” Callan explained.

REPORT FINDINGS
A report written by Nicolas Loris for the Heritage Foundation suggests that federal agencies are “causing unnecessary delays” and that Congress “should remove the DOE (Department of Energy) from the export permitting process and lift restrictions on natural gas recipient countries.”

Loris points to a comprehensive 216-page report issued in December 2012 by NERA Consulting to bolster his claim that increased LNG imports will not cause increases in U.S. natural gas prices that harm U.S. economic interests. The NERA report was conducted on behalf of the DOE.

“While LNG exports would raise domestic prices, those higher prices would act as incentives for more exploration and production, offsetting some of the price increase, or even keeping prices as low as they are now, since the gas is still profitable to produce at a low price in some regions of the country,” Loris wrote.

He also said providing cheaper energy to other countries could improve economic conditions and allow for great import of American-produced goods.

“Simply put, the gains from free trade far outweigh any losses incurred,” Loris asserted.

The summary in the NERA report noted: “Across all these scenarios, the U.S. was projected to gain net economic benefits from allowing LNG exports. Moreover, for every one of the market scenarios examined, net economic benefits increased as the level of LNG exports increased. In particular, scenarios with unlimited exports always had higher net economic benefits than corresponding cases with limited exports. In all of these cases, benefits that come from export expansion more than outweigh the losses from reduced capital and wage income to U.S. consumers, and hence LNG exports have net economic benefits in spite of higher domestic natural gas prices. This is exactly the outcome that economic theory describes when barriers to trade are removed.”

FEDERAL AGENCY DEBATE
U.S. Sen. Mark Pryor does not share the concerns that increased LNG imports will dramatically increase natural gas prices. But he does believe the DOE and the Federal Energy Regulatory Commission should remain in charge of managing LNG exports.

“Exploration and development of U.S. natural gas resources is happening very quickly. It was only a few years ago that the U.S. was planning to import LNG from places like Qatar. Now we are looking at exporting LNG to Japan and Europe,” noted a statement from Pryor spokesman Michael Teague. “Management of natural gas resources needs to be done thoughtfully. DOE and FERC already have the authority to issue permits to build LNG export terminals. Senator Pryor wants these Federal agencies to use their good judgment and balance both the domestic and export interests. He thinks this can be done without affecting natural gas prices.”

U.S. Sen. John Boozman, R-Ark., does believe Congress should move to ease LNG export restrictions. He noted in a statement sent from his office: "Arkansas is blessed with an abundance of natural gas and is a key player in developing this energy product. Opening up markets to natural gas will benefit our state and help create job opportunities. That's why I cosponsored legislation to lift legal barriers preventing LNG exports. This is a commonsense solution to allowing energy producers to meet industry needs. We have seen the benefits of market exports in refined fuel, and are now seeing similar opportunities in the natural gas market. We can take advantage of his opportunity and provide our allies with the resources they need while growing our economy.”

ENERGY, JOBS ISSUE
U.S. Reps. Tom Cotton, R-Dardanelle, and Steve Womack, R-Rogers, also support efforts to allow for more LNG exports. Womack said such restrictions “hinder our ability to produce affordable energy right here at home.” Cotton couched it as a jobs issue.

"The opportunity to export liquid natural gas, or LNG, is a win-win for Arkansas workers and companies involved in its extraction and production. Exporting LNG would provide jobs, drive investment in new facilities and provide a clean, cheap energy resource to Arkansas consumers. If the federal government were to expedite the approval process for exports, there would be further incentive for companies to invest in shale formations across America, turbocharging our economy and keeping energy prices low,” noted a statement from Cotton’s office.

Retail sales inched higher in January as consumers adjusted their spending in response to the increase in payroll taxes and rise in gasoline and energy prices.

According to the National Retail Federation, January retail sales (excluding automobiles, gas stations and restaurants) increased 0.3% seasonally adjusted from December and increased 5.4% unadjusted year-over-year.

“Today’s retail sales figures continue to indicate a stable yet fragile economy,” NRF President and CEO Matthew Shay said. “Consumers are continuing to hold back on spending just as our economy is held back by political brinkmanship in D.C. The failure to address the critical challenges confronting our economy will continue to dampen consumer confidence, which will in turn mute sales and growth. The economy will continue to limp along until our politicians finally address our tax and spending challenges and put forward a pro-growth, pro-jobs agenda.”

January retail sales, released Wednesday (Feb. 13) by the U.S. Department of Commerce, showed total retail and food services sales (which include non-general merchandise categories such as automobiles, gasoline stations, and restaurants) increased 0.1% seasonally adjusted month-to-month and increased 4.7% adjusted year-over-year.

“With the return of healthy housing prices, stronger employment statistics combined with historic highs on Wall Street at the end of 2012 and 2013, consumers seem a bit more confident these days,” NRF Chief Economist Jack Kleinhenz said. “Even though retail sales were relatively modest in January, consumers seem to have adjusted accordingly to rising taxes and energy prices. Far from secure, consumer confidence continues to be shaky.”

In late January, NRF released its annual retail sales forecast for 2013. NRF estimates that retail industry sales (excluding automobiles, gas stations and restaurants) will increase 3.4% in 2013, with online sales set to grow between 9 and 12%.

Retail sales can hint at economic growth potential as consumer spending comprises nearly 70% of the nation’s gross domestic product.

Dennis Gartman, CNBC contributor and analyst, says he’s bearish on retail in the near term as delayed tax refunds and higher gas prices are likely to deliver a one-two punch to consumer spending through the first half of 2013.

It’s also important to note, that Wal-Mart Stores Inc. and a growing number of other retailers do not report monthly sales.

SECTOR LOOK
Following are year-over-year comparisons by retail category:
Clothing and apparel accessories stores' sales, up 5.9%  
Electronics and appliance stores’ sales, up 2.7%  
Furniture and home furnishing stores’ sales, up 5.8%  
General merchandise stores’ sales, down -0.3%  
Health and personal care stores’ sales, up 0.7%
Nonstore retailers’ sales up 17.5%
Sporting goods, hobby, book and music stores’ sales, up 8.3% 

University of Arkansas Chancellor G. David Gearhart on Wednesday (Feb. 13)announced that Chris Wyrick, the executive director of the Razorback Foundation, has agreed to join Gearhart’s senior administrative team as the next vice chancellor for university advancement.

The advancement division has been under review for a $3.3 million deficit. The previous advancement chief was removed from the post.

Gearhart made the announcement at an event held in the lobby of the university’s Administration Building. More than 100 UA alumni, donors, university students, faculty and staff gathered for the announcement.

“After several months of careful thought and consultation, I have selected our new vice chancellor for university advancement from within the U of A family,” Gearhart said as he introduced Wyrick. “Chris has more than 20 years of successful fundraising experience in higher education, including positions at the University of South Carolina, North Carolina State University, and Vanderbilt University. He has been with the University of Arkansas since 2008, and in that time has established himself as a superstar, highly regarded and admired by his colleagues.”

In making the announcement, Gearhart was joined by Johnelle Hunt, a longtime U of A supporter and one of three chairs of the Campaign Arkansas steering committee, the group of volunteers who are helping plan the university’s next capital campaign.

“Chris embodies the enthusiasm and advocacy everyone on the campaign steering committee feels,” Hunt stated.  “A steady, experienced hand is needed—preferably one who has already earned the confidence and respect of the committee, and one who has shown he will go the extra mile and do things the right way. Chris has done all of those things.”

Wyrick, 45 and a native of Greensboro, N.C., said he was honored and humbled by Gearhart’s offer.

“There is a huge capital campaign on the horizon that will be instrumental in making that happen,” Wyrick continued.  “I look forward to working with our campus leaders, deans, department heads, professors, and students to make their dreams come true.”

Gearhart explained that Wyrick’s starting date as vice chancellor will be determined once Wyrick is able to work with his Razorback Foundation board and staff on a transition plan.

Gearhart will continue to oversee the advancement division, which includes the university’s fundraising, communications, and alumni offices as well as the university’s special events and community relations units.

Wyrick is a 1992 graduate of North Carolina State University in Raleigh, N.C.