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Charlotte Amalie
Monday, June 27, 2022
HomeNewsArchivesBEAL BANK: AN ADVENTUROUS INSTITUTION

BEAL BANK: AN ADVENTUROUS INSTITUTION

Hearing about Delegate to Congress Donna Christian Christensen's criticism of how Beal Bank handled some Small Business Administration disaster loans, I decided to check out the bank, and give it a chance to speak for itself.
The delegate said in a press release that Beal Bank of Dallas, Texas, had bought some of the SBA's loans in the Virgin Islands (loans and mortgages are sold and re-sold routinely), and had (apparently) leaned pretty hard on the borrowers for repayment. Her press release then speculated that these actions related to a retaliation against the V.I. borrowers because of community resistance to a proposed Beal Aerospace facility on St. Croix.
My initial reaction was "this is pretty bizarre, why would a banking institution react in this manner?" Further (and this is an unkind thought, I know) why would a mainland banker in his right mind buy SBA disaster loans; it is a little like making a personal loan to a known, unlucky horseplayer.
I also wondered if the two Beal institutions were really related.
They are. Andrew Beal, a tough cookie, owns them both. And I was reminded that while most mainland banks are run by bureaucracies and by faceless, colorless managers, this one isn't.
I checked out both the bank and the aerospace firm on the web, and what I found was interesting. The bank says it is sturdy, and highly profitable (I would prefer to deal with a bank that stressed its good citizenship, rather than its profit levels, but that's a matter of taste). It says in has a billion dollars in assets.
It is also a savings bank that has opted for state supervision in Texas rather than national supervision. It was, of course, the Texas-based savings and loan associations that cost the U.S. taxpayers a bundle a decade ago.
Beal Bank must like the regulatory climate in Texas, and in Houston where its one and only branch operates. (Houston, as we have learned in the presidential election has the dirtiest air in the country, because of the relaxed regulatory climate in that state.)
Beal Bank apparently limits its contacts with real people, as it has only the one branch and the main office in Dallas. It apparently attracts most of its business by providing high-interest certificates of deposit, not through retail banking.
So why would a high-flying bank with no retail network want to buy shaky loans on a distant island? Maybe Donna Christian Christensen's speculation is right on target.
When I turned to the Aerospace firm's website I found that Beal, like other adventurous mainland financiers willing to venture into the islands, had other island interests as well — and other struggles with regulators tougher than the Texas variety.
Somebody should ask these questions: 1) does Beal Bank own any other SBA disaster loans? and 2) what did it pay for them, and what other bids were received? Is there a non-financial motive, as the delegate suggests, for this transaction.
I tried to ask these questions for a full day, but no one at the Beal Bank in Dallas would return my phone calls. Finally, I got someone there to refer me to someone who might. He was David Spode of the Aerospace firm.
He did call back. He refused to comment on the Delegate's charge, saying he worked for the Aerospace company; I asked him a question about its proposed facility on St. Croix and he said "you are doing a bank story, so I have no comment." He then suggested I renew my efforts to get the bank spokesperson to call.
I hope that people whose loans have been sold to Beal Bank have better luck than I — but I doubt that they will.
Editor's note: David North is a retired federal employee who frequently writes on governmental financial matters.

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Hearing about Delegate to Congress Donna Christian Christensen's criticism of how Beal Bank handled some Small Business Administration disaster loans, I decided to check out the bank, and give it a chance to speak for itself.
The delegate said in a press release that Beal Bank of Dallas, Texas, had bought some of the SBA's loans in the Virgin Islands (loans and mortgages are sold and re-sold routinely), and had (apparently) leaned pretty hard on the borrowers for repayment. Her press release then speculated that these actions related to a retaliation against the V.I. borrowers because of community resistance to a proposed Beal Aerospace facility on St. Croix.
My initial reaction was "this is pretty bizarre, why would a banking institution react in this manner?" Further (and this is an unkind thought, I know) why would a mainland banker in his right mind buy SBA disaster loans; it is a little like making a personal loan to a known, unlucky horseplayer.
I also wondered if the two Beal institutions were really related.
They are. Andrew Beal, a tough cookie, owns them both. And I was reminded that while most mainland banks are run by bureaucracies and by faceless, colorless managers, this one isn't.
I checked out both the bank and the aerospace firm on the web, and what I found was interesting. The bank says it is sturdy, and highly profitable (I would prefer to deal with a bank that stressed its good citizenship, rather than its profit levels, but that's a matter of taste). It says in has a billion dollars in assets.
It is also a savings bank that has opted for state supervision in Texas rather than national supervision. It was, of course, the Texas-based savings and loan associations that cost the U.S. taxpayers a bundle a decade ago.
Beal Bank must like the regulatory climate in Texas, and in Houston where its one and only branch operates. (Houston, as we have learned in the presidential election has the dirtiest air in the country, because of the relaxed regulatory climate in that state.)
Beal Bank apparently limits its contacts with real people, as it has only the one branch and the main office in Dallas. It apparently attracts most of its business by providing high-interest certificates of deposit, not through retail banking.
So why would a high-flying bank with no retail network want to buy shaky loans on a distant island? Maybe Donna Christian Christensen's speculation is right on target.
When I turned to the Aerospace firm's website I found that Beal, like other adventurous mainland financiers willing to venture into the islands, had other island interests as well -- and other struggles with regulators tougher than the Texas variety.
Somebody should ask these questions: 1) does Beal Bank own any other SBA disaster loans? and 2) what did it pay for them, and what other bids were received? Is there a non-financial motive, as the delegate suggests, for this transaction.
I tried to ask these questions for a full day, but no one at the Beal Bank in Dallas would return my phone calls. Finally, I got someone there to refer me to someone who might. He was David Spode of the Aerospace firm.
He did call back. He refused to comment on the Delegate's charge, saying he worked for the Aerospace company; I asked him a question about its proposed facility on St. Croix and he said "you are doing a bank story, so I have no comment." He then suggested I renew my efforts to get the bank spokesperson to call.
I hope that people whose loans have been sold to Beal Bank have better luck than I -- but I doubt that they will.
Editor's note: David North is a retired federal employee who frequently writes on governmental financial matters.