Banking Firm Fuels Investment in Delta

We still don’t have much to show for the years of commissions, studies and grants that focused on the Arkansas Delta region.

For whatever reason, the business community is generally content to set aside the Delta as a hopeless government cause and concentrate its energies on areas where progress can be seen and measured. It’s an unfortunate attitude because the positive impact of economic growth in Northwest Arkansas, Little Rock and Jonesboro is weighed down by the Delta’s excessive drain on the state’s tax base.

But there’s an entity that isn’t so ready to give up on the Delta and southern Arkansas, and it’s called the Southern Development Bancorporation.

The leader is Tom McRae, the former director of the Winthrop Rockefeller Foundation and perhaps better known as Bill Clinton’s last unsuccessful opponent in a Democratic gubernatorial primary in 1990.

The company has four primary arms: Elk Horn Bank & Trust of Arkadelphia; First National Bank of Phillips County and Delta State Bank in Helena; Opportunity Lands Corp., a real estate development firm in Arkadelphia; and Arkansas Enterprise Group, a 501(c) nonprofit organization. As of this month, Southern Development’s banking operations has $238 million in assets.

The premise of the operation and its investors is to generate profits through the banking operations and pour them into the nonprofit entity for reinvestment into development of southern Arkansas communities. These investors are willing to forego dividends and settle for 5 percent annual stock appreciation.

“It’s a permanent self-sustaining engine for development in rural Arkansas,” McRae says.

The goal is to be a holding company of 6-10 banks that can pump $1 million a year to nonprofit development in poor, rural regions of Arkansas. He’s looking for more investors who will help the corporation achieve that goal.

Where’s the Revival?

McRae notes that rural America is enjoying an economic revival but Arkansas isn’t part of it.

“Why are we in the midst of continued malaise and depression in so many Arkansas areas?” he asks.

He says Arkansas’ dependence on manufacturing made the state more susceptible to the negative impact of the North American Free Trade Agreement. “What was good for the nation as a whole was bad for rural Arkansas,” he says.

Then there’s what he calls the “Pitiful Index.” Residents of the Delta learned that if you keep telling people — particularly bureaucratic government agencies — how pitiful you are, you get resources.

It’s a poverty of spirit, McRae says, and we need to “create vehicles that provide hope.” Thousands of Arkansans want to be able to remain in rural cities to work, and people who suggest that they “just move to the city” for jobs don’t appreciate the social implications.

Southern Development is trying to provide not only financial resources, but also a positive influence and leadership on public policy in the region.

It sounds like a noble task worth considering as a proactive investment in the future of Arkansas.

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With the 1998 edition of the Northwest Arkansas Business Journal “40 Under 40,” we’ve recognized 80 up-and-coming business and political leaders during the past two years.

These individuals continue to grow in their careers, their community service and their leadership roles across Northwest Arkansas and beyond.

Take note of who they are, and keep your eye on them for the future.