GOP sweep, bank industry changes, legal rulings top Arkansas stories in 2014

Politics certainly dominated the headlines in Arkansas during 2014, with the GOP sweep in Arkansas likely to be noted by future historians as a pivotal event in the state’s history. But big changes in Arkansas’ banking sector, and improvement in the state’s economy also created much news buzz during the year.

Following are the top five Arkansas stories, as determined by The City Wire, during 2014.

1. The 2014 election cycle and GOP sweep
Led by resounding victories at the top of the ticket, Republicans made unprecedented gains at the federal, state and local levels in November 2014.

U.S. Rep. Tom Cotton, R-Dardanelle, trounced incumbent U.S. Sen. Mark Pryor, D-Ark., capping off a grueling 18-month battle that saw tens of millions of dollars spent by in-state and out-of-state groups. For more than a year, the race was positioned to tip control of the U.S. Senate into one party’s control. In the end, Cotton won by more than 17 points as the last month proved pivotal for opening up his lead after the national mood toward President Barack Obama and Washington, D.C., swung solidly in the Republican column.

The top of the ticket was also aided by a near-flawless campaign from Gov.-elect Asa Hutchinson (R), who also easily defeated former U.S. Rep. Mike Ross, D-Prescott. The governor’s race also saw unprecedented spending from inside and outside the state, although not nearly of the magnitude as the Senate race.

Republicans easily won all four congressional seats, giving them control of all of the federal offices in Arkansas. U.S. Reps. Steve Womack, R-Rogers, and Rick Crawford, R-Jonesboro, cruised to easy re-election victories, while newcomers French Hill, R-Little Rock, and state Rep. Bruce Westerman, R-Hot Springs, won open seats by defeating solid Democratic rivals.

The GOP gains filtered down-ballot with Republicans taking commanding control of the state house. Republicans increased their margins in the 100-member House of Representatives from 51 seats to 64 seats, and in the 35-member state Senate from 22 to 24 seats.

They also won all of the remaining constitutional offices – including lieutenant governor, attorney general, secretary of state, auditor, treasurer and commissioner of state lands – giving Republicans the title of “majority party,” which includes controlling local election commissions in all 75 counties.

2. Arkansas bank industry changes
Arkansas banks churned through another year of restored health and several trendsetters went on a tear with acquisitions.

The Federal Deposit Insurance Corp. (FDIC) reported that Arkansas’ banking segment grew its employment to 18,930 full-time workers in the third quarter, despite more bank consolidation. The state had 111 financial institutions as of Sept. 30, down from 120 reported at the end of 2013. Total assets in Arkansas-based banks grew to $64.94 billion as of Sept. 30, a gain of $2.89 billion or 4.6%. Assets rose 6% since 2012 and 11% since 2011.

Other aspects of banks’ balance sheets also improved leading to growth through acquisition for several publicly traded financial institutions. Little Rock-based Bank of the Ozarks nabbed Summit Bank of Arkadelphia in a $216 million deal. Bank of the Ozarks would later acquire a Florida bank, Intervest Bancshares, in a $228.5 million purchase.

Simmons First continued its surprise streak of bank buyouts. While closing on the Metropolitan National Bank deal, Pine Bluff-based Simmons bought Little Rock’s Delta Trust & Bank for $66 million in March.  In May, Simmons added two more huge acquisitions to its portfolio, buying Community First Bancshares of Tennessee in a $243.4 million deal and Liberty Bancshares of Springfield, Mo., in a transaction valued at approximately $207 million.

Home Bancshares (parent company of Centennial Bank), which has grown its footprint in Arkansas and Florida through acquisitions, was a little more low-profile in 2014. Still, the Conway-based bank bought Broward Financial Holdings, Inc., a financial institution in Fort Lauderdale, Fla., in a $33 million transaction.

A fourth Arkansas bank that is publicly traded, Bear State Financial, sent a signal that it intends to be a player on the Arkansas banking scene. Formerly First Federal Bancshares, the name change for the Harrison-based financial institution also marked its intention to raise more capital for growth. With former Alltel Corp. executives Scott Ford and Rick Massey as shareholders and board members, expect to see activity in the near future.

3. Private Option rollout, results
The politics of the private option has been ongoing since its inception in 2013 and it promises to continue to be a political battle in 2015.

The GOP-crafted, bipartisan-supported legislation created a health-insurance exchange that allows federal Medicaid expansion funding from the Affordable Care Act to be used to supplement private health insurance for lower-income workers.

In 2014, the private option survived its first test for funding in the fiscal session. With three-fourths votes needed by both chambers of the Arkansas legislature, the PO barely cleared the hurdle and only after intense negotiations and multiple tries.

GOP gubernatorial candidate Asa Hutchinson described the PO as a “pilot program” during his campaign. Since his victory in November, he’s said he is studying the private option.

Two days after his win, Hutchinson said he would work with leaders in the Legislature and in state government to look at benefits and costs and to determine if the program should be continued and, if so, what changes should be made. He said he would not commit to a decision “at least through the end of January.”

Many legislative candidates, particularly conservative Republicans, campaigned against the private option in the general election. Those candidates’ victories have many suspecting that a major reshaping of the private option is in the works for 2015 if supporters and Gov.-elect Hutchinson want to keep the federal funding coming. The Legislature could choose to eliminate the program altogether and wind it down before the state has to pick up a larger share of its costs.

4. Same-sex marriage, other legal rulings
Three major legal battles involving abortions, voter ID and same-sex marriages occurred in different stages throughout 2014.

The 89th General Assembly passed two major anti-abortion bills in the 2013 regular session over constitutionality objections by Democratic Gov. Mike Beebe. The GOP-led chambers overrode Beebe’s vetoes and in 2014, a legal ruling struck down a portion of one of those laws.

In April, Federal Judge Susan Webber Wright ruled that a law prohibiting abortion after 12 weeks was unconstitutional and in violation of the 1973 Roe v. Wade decision. Wright’s ruling did leave a provision of the law intact that requires a doctor to notify a pregnant woman when a fetal heartbeat is detected. The lawsuit is on appeal.

Democrats and Republicans fought tooth-and-nail over a law requiring voter IDs to be presented at the polls in the 2013 session. Again, the GOP-led legislature overrode a veto from Beebe. A legal ruling on the state law, however, struck down the controversial measure three weeks before Election Day 2014.

The Arkansas Supreme Court determined that the voter ID law did not pass constitutional muster because it required an “additional qualification” beyond four requirements currently in the state’s Constitution. Look for a constitutional referral in 2015.

For supporters and opponents of same-sex marriage, 2014 was a roller coaster ride. The state’s courts allowed, disallowed and ultimately were still considering the constitutionality of a 2004 voter-approved amendment defining marriage as between a man and a woman. The state Supreme Court had yet to issue its final determination on the suit by the end of 2014.

A concurrent federal lawsuit also worked its way through the court system with U.S. District Judge Kristine Baker determining the law unconstitutional. That ruling is on appeal.

5. Arkansas economy improves
While not broad, improvements in employment, sales tax collections and tourism sector employment helped push positive economic trends during the third quarter of 2014 for Arkansas’ three largest metro areas.

Data gathered and analyzed as part of The Compass Report showed gains and stability during the first three quarters of 2014. The quarterly Compass Report is managed by The City Wire, and is sponsored in the Fort Smith area by Arvest Bank. The report is the only independent analysis of economic conditions in Arkansas’ three largest metro areas.

The third quarter, the most recent, showed that economic conditions were improved in Northwest Arkansas and the Fort Smith metro area, and unchanged (stable) in central Arkansas. To underscore the impact of the three largest metro areas, for June of this year the unemployment rate for the rest of the state was 6.4%, down 1.7% from September 2013. The statewide unemployment rate with the three largest metros added back in was 5.7%, down 1.5% September-on-September.

Arkansas’ November labor report showed a positive trend in terms of labor force growth and shows a gain of almost 12,000 jobs compared to November 2013. The report included a significant decline in the number of unemployed, and a year-over-year gain of 5,300 jobs in the state’s manufacturing sector.

The closely watched nonfarm payroll number was 1.201 million in November, the first time the category has topped 1.2 million since September 2008.