Northwest Arkansas Business Journal’s Top 10 Business Stories of 2008

1. Bank Bust – Regulators shut down ANB Financial NA on May 9 and the Federal Deposit Insurance Corp. was appointed the receiver. The bank posted losses of $120.4 million at the end of 2007 and had $589.3 million in nonaccruing loans as of March 31. It is estimated the failure will cost the FDIC’s fund $214 million and there were nearly $40 in uninsured deposits at the bank. It’s estimated that those depositors will only get back 60 cents on the dollar. Right up to the day before the closure, Dan Dykema, former chairman and CEO of ANB Bancshares Inc. had hope. On May 8, he told the Business Journal, “I’m kind of bullish on the second quarter.”

Other banks were beleaguered in the wake of ANB with the Office of the Comptroller of the Currency clamping down on Legacy National Bank of Springdale and Metropolitan National Bank of Little Rock with formal written agreements about their practices. Parkway Bank of Rogers got a similar one from the FDIC on Aug. 5.

2. Wal-Martian Promotion – If the trouble of local banks hadn’t so dominated the news for 2008, Wal-Mart’s change at the top would have surely been the No. 1 story of the year. Wal-Mart announced on Nov. 21 that international chief Mike Duke would succeed Lee Scott as of Feb. 1, 2009. In spite of the recent and tragic trampling death of an employee by shoppers-turned-savages in a Black Friday rush, Wal-Mart’s image hasn’t been this good since the late Sam Walton was running the show.

Sure, enviros and unions will always have beef with the Bentonville retailer, but there is no getting around the true commitment the company has shown to remaking itself during Scott’s last three years at the helm. Remodeled stores, curtailed U.S. expansion, $4 generic drugs and sustainability and supplier requirements have drawn praise from analysts and adversaries alike.

3. Bankruptcies – Beleaguered developers Brandon Barber and Ben Israel, whose rapid falls were chronicled as heavily as their successes, both attempted to use bankruptcy court to stave off the losses of two signature projects. Barber’s seven-story Legacy Building was foreclosed upon on July 23 with total debts of $18.7 million. After Barber’s eleventh-hour Chapter 11 filing was tossed out by a federal judge, the building was finally sold back to Legacy National Bank on Nov. 13 for $11.25 million.

Israel also filed a last-ditch Chapter 11 on the eve of the scheduled foreclosure sale of his four-story Commerce Park II building in Fayetteville, but again, only delayed the inevitable. Note-holder Chambers Bank purchased the building at auction and former Israel partner Tom Muccio, through his TAM LLC, took final ownership for a price of $10.14 million.

4. Real Estate Bubble – The good news in the Northwest Arkansas residential real estate market is that people are still buying homes, and Benton and Washington counties still rank Nos. 2 and 3 in the state’s most active markets.

The bad news is that the two-county market still has a five-year inventory of unsold homes and lots. Foreclosures jumped in 2008 and while list prices for homes have steadily declined, average sale prices are only between 3 percent and 5 percent off their peaks from the booming 2004-2006 period.

Compared to Southern California, where 84 percent of homes sold since 2005 are “under water,” Northwest Arkansas is still a pretty safe place to buy a home.

5. Layoffs – It was a bad year for manufacturing workers in Fort Smith as five plants announced lay-offs.

Whirlpool Corp. announced in September that 700 Fort Smith employees would be laid off because of the housing and national economic slowdown

In the same week, Riverside Furniture Corp. said it will lay off 250 workers in January at plants in Fort Smith and Russellville as the slowdown has impacted consumer spending.

Rheem Manufacturing Co. laid off 185 workers in October.

Following suit in December, Trane Inc. in Fort Smith and North American Pipe Corp. in Van Buren announced lay-offs of 101 and 64, respectively.

6. Health & Wellness – Northwest Arkansas took a significant step closer in 2008 to having a satellite campus of the state’s medical school.

In November, UAMS-Northwest reached its fundraising goal of $3 million to start renovating the former Washington Regional Medical Center facility on North College Avenue in Fayetteville. The campus is expected to open for the fall 2009 semester.

Mercy Health System of Northwest Arkansas made a major move in 2008, moving out of the St. Mary’s Hospital on Walnut Street and into the Mercy Medical Center, a new 160-bed facility off Interstate 540 in Rogers. The six-story, $145 million facility is next door to the Mercy Medical Plaza, an office building for 40 doctors. The old campus, opened in 1951 by The Dominican Sisters, a Springfield, Ill.-based Catholic order, was donated to the Harvey and Bernice Jones Charitable Trust to be used by non-profit organizations.

7. Big Dig – After trying to put a happy face on a Fayetteville eyesore for months, developers John Nock and Richard Alexander were forced to make a pair of huge public concessions that their dream of an 18-story Renaissance Tower hotel at the corner of Mountain Street and College Avenue would remain just that – a dream – for both the near and foreseeable future.

The 260-foot crane came down, the pair were forced to pay more than $25,000 a month in penalties for a year and now they’ve filled in a two-story hole that was originally to be the foundation and underground parking for the Marriott-affiliated hotel. In a separate but equally devastating blow, the collapse of ANB Financial took away the pair’s funding for the Cosmopolitan Hotel renovation, leaving six floors of rooms in flux. In an August interview with the Business Journal, Alexander said the Renaissance would be built when the credit crisis is over.

8. Chicken Scratch – Peterson Farms of Decatur announced in June that it would sell its integrated broiler operations to Simmons Foods Inc. of Siloam Springs.

The company cited rising poultry business costs as the reason for ceasing its broiler operations. Peterson Farms CEO Blake Evans conducted a national search before selecting Simmons to acquire the operations.

Simmons Foods assumed ownership of the broiler operation, hatcheries, corporate offices, feed mill, processing facility, transport vehicles and the independent contractor relationships with local growers. Peterson Farms retained the Decatur General Store, the chicken breeder operation and cattle operation.

Three members of the family were directors for ANB. Victor Evans, former CEO of Peterson Farms, owned 14.47 percent of the bank, and Debra Evans, daughter of Peterson Farms founder Lloyd E. Peterson, owned 14.09 percent of ANB. Blake Evans, grandson of Peterson, owned about 1.06 percent.

9. Batter Up! – A two-year process that included a sales tax referendum passing by just 13 votes culminated in the debut of pro sports in Northwest Arkansas.

The Double-A affiliate of the Kansas City Royals – the rebranded Northwest Arkansas Naturals – enjoyed a successful first season. The Naturals outdrew expectations in the beautiful Arvest Ballpark, attracting around 5,200 fans per game compared to projections of around 3,500, and proving a desirable destination for those outside the two-county area. Surveys of license plates showed as many as a third of visitors were from either out-of-state or outside Benton and Washington counties. The Naturals performed on the field as well, winning the Texas League’s second-half division championship before losing to their in-state rival Arkansas Travelers in the playoffs.

10. Mayor May I? – Business was a big deal in the races for mayor in Springdale and Fayetteville. In Springdale, two years of steadily declining sales tax revenue that wasn’t helped by the city’s refusal to accommodate Wal-Mart’s plans for a liquor store at a new Sam’s Club, voters chose Doug Sprouse over Mike Overton in a runoff to succeed the retiring Jerre Van Hoose. Sprouse, a furniture-store owner, has vowed to fight the new streamlined sales tax process that has further wracked city revenues.

In Fayetteville, it was out with the old as voters chose alderman Lioneld Jordan in a runoff over incumbent Dan Coody. Jordan, with his routine obstructionism on the City Council, certainly represents Fayetteville’s reputation as a place where getting anything done takes months and multiple meetings. Springdale chose a mayor who knows his city’s problems. Fayetteville may have elected a mayor who is part of them.