The decade of the 2010s started off with the recovery from the Great Recession as Arkansas’ economy was stung by banking, manufacturing, and housing turmoil. Halfway through the decade, economic fortunes had changed as did the political landscape of the state.
Talk Business & Politics sat down with three business executives who had a front row seat to the business and policy changes that shaped the decade. This year’s State of the State executive roundtable includes Darrin Williams, CEO of Southern Bancorp; Elizabeth Bowles, CEO of Aristotle Inc.; and Davy Carter, regional president for Centennial Bank in Jonesboro.
Carter and Williams served in the legislature in the first half of the 2010s, while Bowles served as a member of the state’s regulatory bank board during the recovery years. Carter was recently appointed to serve on the board of directors for the Federal Reserve Bank of St. Louis’ Memphis branch.
TB&P Editor-in-Chief Roby Brock quizzed the panel on what we’ve just been through and their hopes for Arkansas’ future.
Roby Brock: I’m going to throw some statistics out to ponder. In January 2010, we had a jobless rate of 8.2%. We’re at 3.5% today. We had 110,000 people unemployed. There are less than 48,000 unemployed today. Two big topics of conversation were TARP — the Troubled Asset Relief Program — and the Fayetteville Shale Play, both of which may be obsolete from our vocabularies. The housing market was still flat. You guys were first term legislators, and Joyce Elliott was running for Congress in 2010 just like she is in 2020.
What a difference a decade makes. What were you doing 10 years ago in your professional lives?
Davy Carter: You said TARP and those unemployment numbers and throwing those stats out, you have these flashbacks. Obviously, we were coming out of the Great Recession. And here we are today, 10 years later, somewhat at the end, maybe the eighth, ninth inning of a great economic cycle… Wow, 10 years goes by fast.
Elizabeth Bowles: Ten years ago is when we formed our broadband internet division and started deploying fixed wireless broadband in central Arkansas to reach unserved people with broadband. I was also appointed to the State Bank Board that year.
Darrin Williams: I wasn’t at Southern Bancorp then. I was at Carney Williams Bates & Pulliam law firm and specializing in suing banks and publicly traded companies and securities in class action lawsuits and corporate governance grievances. So a little different than what I’m doing now.
Brock: I mentioned the Fayetteville Shale Play. It was really one of the things that kept the Arkansas economy from really going off the deep edge of the cliff. We had some tough economic times, but it really did provide a little bit of buoyancy there. Does it surprise any of you that it is really not part of our conversation of the economy today?
Williams: I’m not sure that it surprises me. I think what you see happening now with so much emphasis on sustainability and environmental consciousness, there a lot of questions about fracking. There’s been really a revolution in the energy space. It was an economic boom. And some people, some landowners kind of hit almost like a lottery for awhile there. It went well, but I think we’re heading in a different direction. Renewables, alternative energy is really taking shape, and I think that’s very positive for this country.
Bowles: It’s interesting because I remember that we had a Fixed Wireless Association meeting in Little Rock, and the whole trade association held their national conference in Little Rock that year. A friend of mine called me when he landed in Virginia and he said, “You need to do something. They’re fracking you guys all over the place.” It hit me there, so he was very concerned about the environment. And I think Darrin’s right — the environment was a piece of it. But I also think it still has a future; it’s just we have to come at it in a more environmentally sustainable, cost-effective way than we approached it before. It was sort of this exciting gold rush type mentality.
Brock: Davy, you’re in the great state of Northeast Arkansas, which has been slow and steady, even in the recession years. It didn’t fall off the cliff as much as some of the other parts of the state did. There was really stabilization in that market and we still see that today. Agriculture’s a big component of that. Do you still see that stability in Northeast Arkansas?
Carter: I do, and you’re right, Ag is a big part of that. Arkansas State University is a huge economic driver for the area and a lot of medical services, a lot of doctors, a lot of ancillary things that pop up from that. It is very steady progress in Northeast Arkansas. It’s changed a lot in 10 years doing the contrast back like ’08, ’09.
Brock: Tell me where you all see potential progress for Arkansas’ economy as we head into a new decade. What do you see as a couple of key areas to keep an eye on?
If we could have gone back 10 years ago, we would’ve said, “Watch what happens in the banking sector, watch what happens in technology, watch what happens in energy.” And we would have talked about some of these things that we’ve seen. What do we see as we move into the next phase?
Williams: I don’t think I would focus so much on a sector. I want to focus a little more broadly. One thing that concerns me and concerns us at Southern Bancorp is the growing income and wealth and inequality in America. But particularly in the state of Arkansas. If you look at just the median income growth and just divided by Congressional districts, in the 2nd and the 3rd, you see growth. In fact, the 3rd probably outpaces the 1st by almost double.
Arkansas will not succeed if we don’t succeed together. While we are broken down regionally, we’ve got to be concerned and intentional about those who need a hand up, who need help. And it’s just proven that if we can have broad-based prosperity, the entire economy works better. This divide between the wealth, between black and white or people of color and white, or even gender diversity, the lack of income and wealth and equality among people of color and among women. It’s just not sustainable for our country, not for the state of Arkansas. We’ve got to make sure that everyone succeeds as we grow.
Bowles: I think that over the last 10 years, the state was focused in directions that were really good for the state. In particular, when you look at that income and inequality and broadband, which is obviously what we do, but broadband and the lack thereof, is really where it’s telling the story of the shrinking of the rural areas of Arkansas. Arkansas went from 47th to 50th in broadband over the last four years since they started keeping those statistics, and it’s because of these rural, economically challenged, sparsely populated areas that are really the breadbasket of Arkansas.
This is farm country, and you see a concentration of the technology and the concentration of the availability of access to services elsewhere. So my daughter goes to a school where she has everything online, and she goes home at night, and she studies her homework, and it’s all online. She has access to educational opportunities that do not exist for some of the children in this state.
Until you levelize that, until you levelize the ability of a business to locate in Blytheville or Osceola or Dumas or wherever they want to locate, you’re not going to see economic growth. You’re going to continue to see the shrinking of these regions.
I’ll say one more thing about that. We tried to start addressing the issue of broadband and the Delta back in 2010. We identified the Delta as a place in Arkansas that absolutely needed better broadband and needed that for economic development. Purdue University did a study that every dollar you invest in broadband returns $4 into the economy. So by that math, Arkansas should’ve been focusing on this problem a long time ago. Very pleased to say that we’re focusing on it now, not just [at] my company, but as a state.
Brock: Let me throw some statistics here, Davy, that will fold into this conversation. I know we’ve looked at the projections for the Census data for 2020. The 1st Congressional District — which is a big chunk of East Arkansas — lost about 60,000 in population. 40,000 [residents were lost] in the 4th Congressional District, which is South Arkansas. That’s 100,000 people who have exited the 1st and the 4th districts. I think there’s about a 15,000 population gain in the 2nd District of Central Arkansas, and it’s about 85,000 in Northwest Arkansas. Can you reverse those numbers? What level of investment could you even do to turn those numbers around, if you can?
Carter: It’s really hard. A lot of people have tried. People are still trying. The Delta is near and dear to my heart. My family is still in Marianna. I went down there last week and went to visit them, and every time I go I just get heartbroken to see how things have declined. Even in the short 20 years since I’ve been gone.
So can it change? Yes, I think it’s a long ball play. It won’t happen overnight. At some point, it just becomes an attractive place to be because of the economics of the cost of living and the natural resources that we have. And I want to say this, that I do have some confidence in some of the younger people that are engaged now in the agriculture business. They’re thinking about things differently: What to grow? How to deliver their crops? And we have the largest retailer in the world on the other side of the state. There are some other ways to do things, but it’s going to take a long time. We can’t quit. We can’t just let it go.
With this population shift, they’re are going to be less represented in Little Rock. I don’t know how the Congressional maps will ultimately be drawn, but it’s certainly snowballing the wrong way, and I hope the state can continue to pull together and try to resolve the issue. I hope it happens within my lifetime.
Brock: Let me ask a question about agriculture in that respect. Tell me some things that are going to change from what you see now in terms of big farm operations, whether it’s big family farm operations or conglomerates. What’s going to be different about agriculture over the next decade? What are we going to see investments in? What’s going to be different from the current model?
Carter: The consumers drive that, right? I mean, it takes time for that to filter down through the production, but any consumer habits are shifting. I mean, there is more demand for organic goods and farm-to-table and — what do they call it? — grain-to-glass. Making whiskey and beer and all these things. Again, we have the largest retailer in the world in another part of the state. There’s got to be a way to parlay all of these things together. I think you’re going to see a shift in that. It may take another generation cycle to go because it’s the younger people that are, no offense to the older people, I don’t mean that way, but I think they do see those things that are different.
Williams: This is something that’s a significant part of our portfolio, which is Ag-based. What we’re seeing, it’s really tough for the family farmer to make it. You’re seeing much, much more large scale corporate farming, and so it’s tougher for smaller farms to make it. So I think you’re going to continue to see that consolidation. I’ve seen it in banking, and I think you’re going to see it in the agriculture space as well.
But I think we can’t lose sight of the fact that the population of the world is growing, and you’ve got to feed the world. And in the heart of the Arkansas-Mississippi Delta where you have some of the most fertile land in the world, we’re still helping to feed the world. I mean, our second largest export in Arkansas is agricultural products. So you’re going to see, I think, shifts in Ag-tech. You’re going to see a lot more innovation coming into the space because we still have to feed the world. I do believe in organic and farm-to-table. It’s going to continue to grow.
Bowles: To add to that, because in respect to feeding the world and to the family farms, I think that when you start looking at smart farming and what technology can bring to the farming enterprise, farming is going to become much more efficient over the next 10 years. And broadband is key.
Brock: It’s pretty damn efficient now.
Bowles: Well, they have to be efficient. The economics don’t work if they’re not efficient. But this gets down to a square inch of whether you need extra fertilizer on that square inch. It gets very, very granular, and it enables farmers to maximize their output and minimize their expense through high-tech farming. All of that high-tech farming is incumbent on infrastructure, not just broadband, though that’s a piece of that, but also other infrastructure being made available. And then when you start seeing other parts of the country where you have the smart farms and you have the infrastructure coming into place, you see reverse urbanization. You see people coming home, you see people moving back into the communities. They bring their spouses back in and the spouse wants a coffeehouse, so they open a coffeehouse, and then the movie theater reopens. I think we can turn this tide, and I think it does hinge — in a very real measure — on empowering our farmers in the agriculture sector.
Brock: You’re talking about community building … which is going on in the urban and suburban areas as well.
Brock: All right. In your work areas this next year, the next five years, what are you going to be focused on mostly?
Williams: We’re going to really be focused, and our slogan is, “Building communities, changing lives.” So we’re really focused on providing access to capital in areas where capital just doesn’t flow. What’s happening in the banking space is you’re seeing mass consolidation in banks. Twenty years ago, there were over 15,000 banks in America. Today there are less than 6,000. That decline has been largely felt in rural and low-wealth communities.
We’ve just completed a capital campaign. We’re growing. We’ve been very profitable, it’s been a very good time for us, and we’re looking to acquire some of those small banks that are struggling. If you don’t have scale, it is hard to make it in the banking space today. So we’re in a growth mode, and I hope to see us continue to grow throughout our region, both in Arkansas, Mississippi, and the states that surround us.
Bowles: We are going to be deploying broadband in the Arkansas and Mississippi Delta and in two counties in Oklahoma — rural counties. We have about $12.2 million in federal money. The bulk of that is coming into Arkansas, and our mission is to connect the unconnected. We’re going to do our best to solve at least one of the infrastructure problems that I perceive. When you start getting into South Arkansas in particular, there’s just very, very little existing infrastructure, and we’re hoping to solve part of that problem.
Carter: I think one of the most rewarding things about being a banker is being able to, at least indirectly, participate in our customers’ success. It’s those men and women, these entrepreneurs on Main Street, Wall Street, whatever it is, to be able to help those people do what they do and create jobs and be successful is rewarding. So we’ll continue that. Again, bringing that back into context about making Arkansas further prosper, it’s drawing those kind of people into our state. Those are the people that go out and get stuff done. To be able to help them and to continue to focus and support, I think that’s our role in that process.
Bowles: When I grew up in Arkansas, I actually grew up in the Land of Opportunity, well before it became the Natural State. It is the Natural State, I get it. But the truth of the matter is, Arkansas is a land of opportunity. It is low cost. If you can make something happen in this state, the world is your oyster. I think that Arkansas has to focus on its economic development and bringing in these people and creating the infrastructure so that those people want to come and live in this state. Because, as far as what Arkansas has to offer, it has a huge amount to offer, pretty much across the board.
Brock: And we’re small enough too, that you can connect with people. I think that’s one of the things that I have found year-over-year, decade-over-decade, and talking to people that have moved here from Arkansas: It’s like, you can walk down the street and meet someone. I can know someone who knows the person I need to talk to. You’re literally one degree of separation removed from making something happen. That is an advantage for us.
All right, I cannot have this panel without asking one final politics question here. Politics and policy. What do the ’20s hold in store for politics in Arkansas?
Williams: When Davy and I served in the Arkansas General Assembly, I think it was a different place. It was not quite as divided on a partisan basis. I mean the numbers were different, and of course, when I came in we had over 70 Democrats, and by the time I left we were the minority party. You’ve seen that further decline of the Democratic party in the Arkansas House of Representatives. I don’t think that’s going to change very much over the next several years.
What I hope I will see is the ability to work together and not so much D.C.-style partisanship, which when we were there, and maybe because I was in the majority party most of the time, but even when Davy was our speaker, I don’t think that the state of Arkansas would have passed the Affordable Healthcare Act if Davy Carter were not speaker. He was able to bring people together, both the Republicans and Democrats, because it was not popular in his party. It was popular in my party, but he had to convince his people, and that has done more for the health of this state than anything that’s happened in years. Not only just the health of the state, but it’s done more for the small rural hospitals that would not be here but for having passed that.
I hope that you will see in the ’20s the kind of working together that Davy and I tried to do. I served as his Speaker Pro Tem, a Democrat serving for a Republican. I hope you’ll see more of that in this upcoming 10 years of politics.
Carter: Thank you for those words, Darrin. I mean, that was a team effort, and it did take a lot of people coming together in a difficult time, and it was a special period. I don’t see it changing back to those days overnight. I think both parties have gotten off on some tangents, and people are divided, and there’s a lot of stuff going on nationally. I don’t think anybody should be spiking the ball because most people I talk to are pretty fed up with everybody. And it’s eight out of nine people, so it’s very concerning.
I think there’s economic risk. We hear it around our banking table. It’s just, “Get the politicians out of our way. People would feel more at ease.” So, I think next year, I don’t see it getting any better, but I hope that one day things will come back, and more reasonable people will prevail, and the truth will matter again. So, I’m not optimistic in the short run, but I am in the long run.
Bowles: I 100% agree. I’ve always been involved in politics, though I’ve never run for office. And one of the things that I’ve always loved about this state was that we elected the person, and it wasn’t so much the party. And that changed, honestly, with the national money coming in with Citizens United and with all of this national rhetoric, which sometimes doesn’t really apply to the state. It’s not a particular party. Either party pushing is not in the best interest of Arkansas. I really would like to get back to the place where we’re talking about what’s in the best interest of Arkansas, regardless of whether it has a particular label on it. I don’t think the labels have helped the state at all.
I agree that it’s going to be a Republican-controlled state house, probably for the foreseeable future, but I don’t think that should matter. It really shouldn’t matter what party’s in control. It should matter that we are all working together to do what’s in the best interest of the state. It would be my hope that we can get there, and I think we can. Obviously not in 2020 because there’s too much polarization on a national level.
Brock: We’ve got the whole decade, though, to work towards this.
Bowles: Maybe in another four years, because I think we’re going to see a little more polarization before we come back together.
Brock: I think that’s an accurate observation. All right. Darrin, Elizabeth, Davy, thank you all very much. This has been enlightening. I appreciate you.
Editor’s note: This article first appeared in Talk Business & Politics annual State of the State magazine.