Beal Bank USA’s headquarters in Summerlin is as plain and suburban as they come. It’s a strip-mall storefront, just two doors from a Domino’s Pizza and near a Hallmark store and McDonald’s.
It’s no ordinary branch, though. It holds about $2.2 billion in deposits, one of the largest stockpiles of any bank branch in Southern Nevada.
With its lone brick-and-mortar location in the valley, off Town Center Drive just north of Summerlin Parkway, Beal is far from a household name. But its business is based in large part on savings accounts, not on offering high-volume, one-stop-shops on every street like Wells Fargo Bank or Bank of America.
“Instead of spending money on branches that you don’t need,” Beal says on its website, “we’d rather pay you a higher rate on your deposits.”
With the Federal Reserve holding interest rates near zero since the economy crashed, savings accounts offer tiny returns around the country. The average interest rate nationally on a one-year certificate of deposit is just 0.27 percent, down from about 10 percent in 1984, according to Bankrate.com.
Beal’s rates are higher than the national average but not huge. As of Friday, the bank was offering, for accounts with at least $1,000 deposited on Day One, 1.06 percent on a one-year CD.
Amid the industry’s rock-bottom rates, deposits have dropped hard in the past year at Beal, but profits are up.
The lender, with some 20 other locations nationally, had $2.4 billion in deposits as of Sept. 30, down 22 percent from a year earlier. However, it earned $388 million in net income this year through Sept. 30, up 6.7 percent year-over-year, according to filings with the Federal Deposit Insurance Corp.
Beal Bank USA — an affiliate of Plano, Texas-based Beal Bank — was founded by 62-year-old billionaire Andy Beal. When he launched it in 2004, the colorful financier wasn’t new to town. After turning 21, he came to Las Vegas and won at the blackjack tables, but he got 86’d from casinos for counting cards, according to a profile by the Dallas Morning News.
Efforts to reach a Beal executive through spokesman Jim Chambless for an on-the-record interview about the Las Vegas operations were unsuccessful, but Chambless answered some questions via email. Edited excerpts:
What sort of customers does the bank serve in Las Vegas?
Let us begin by noting that the Las Vegas location is the headquarters of Beal Bank USA. Our customers include traditional purchasers of retail CDs and other savings products at our branches; financial institutions that purchase CDs through listing services; and brokers, who purchase CDs on a larger scale. A search will reveal that Beal has made very large loans to very prominent businesses in Las Vegas, but we do not share this information about our customers, even if public.
Beal has an unusually large amount of deposits in its local branch — almost $2.2 billion, according to FDIC data. Is that because of its interest-bearing savings accounts or some other reason?
Our deposits are exclusively in interest-bearing savings products, primarily certificates of deposit. Some portion of our current total is sourced through wholesale channels and includes brokered deposits. The majority of our other deposits come from traditional retail branch customers. For reporting purposes, we attribute our wholesale deposits to the Las Vegas headquarters.
How have the low interest rates effected Beal and its customers?
The interest-rate environment has affected our customer base because of lower returns on their deposits. We anticipate that some customers may have sought alternative, higher investment returns, while accepting substantially greater risk. Further, the rates have increased competition for deposits from customers who are still seeking the security of CDs.
Overall, how is Las Vegas’ banking sector faring? There were several bank failures during the recession, but it seems things have stabilized.
Beal’s sister bank was active during the financial crisis in purchasing two failed banks, and while we continue to review opportunities, we agree with your impression that the banking sector seems to have stabilized. With regard to the Las Vegas banking sector and retail deposit gathering, Beal Bank USA’s headquarters is one of our most active branches, in terms of both advertising and purchase of CDs by local retail customers. We’re very pleased with the response by Las Vegas customers to our products and we anticipate further growth in the market.