How Andrew built the fortune
Andrew Beal has made most of his money by buying what other lenders want to get rid of. In 1988, in the middle of the savings and loan crisis, he founded Beal Bank in Dallas with a modest amount of capital. Instead of competing for retail customers, the bank bought pools of loans from failed institutions and from federal agencies charged with cleaning up the wreckage, paying a fraction of their face value. When borrowers repaid or the collateral was sold, the gap between the purchase price and the recovery became profit.
The approach requires patience and a willingness to hold large amounts of cash while waiting for prices to fall. Beal became known for withdrawing from lending when he thought credit was too cheap, letting his bank shrink during booms, and then buying aggressively when panic set in. He did this in the early 1990s and, most notably, during the financial crisis of 2008 and 2009, when Beal's banks acquired large portfolios of commercial real estate and corporate loans as other institutions retreated.
Because he owns the bank privately and keeps it heavily capitalized, nearly all the profits from these cycles have accrued to him. His fortune therefore reflects a long record of contrarian timing rather than a single breakthrough deal.
Companies and holdings
Beal's banking and investment interests are organized around:
- Beal Bank, based in Plano, Texas, and Beal Bank USA, chartered in Nevada.
- Loan portfolios, foreclosed property and corporate debt bought from other lenders and from government agencies.
- Real estate holdings acquired through workouts of troubled loans.
He also founded Beal Aerospace in 1997 to build a low cost heavy lift rocket. The company developed and tested large engines in Texas but closed in 2000, with Beal citing government support for competing launch vehicles.
The bank funds itself largely through deposits gathered online and through a small number of branches, keeping operating costs low. Its lending is concentrated in areas where it can buy at a discount or lend on conservative terms, and it has periodically held very large amounts of cash and government securities while waiting for opportunities.
Early life and career
Daniel Andrew Beal was born in November 1952 in Lansing, Michigan. As a teenager he showed a talent for small business, repairing and reselling televisions and pursuing other ventures. He attended Michigan State University and Baylor University but did not complete a degree.
While still a young man he bought a run down apartment building in Waco, Texas, renovated it and sold it, and he went on to buy more distressed property. That experience with buying neglected assets cheaply and improving them shaped his later approach to banking. By the time he founded Beal Bank, he had already built a sense of how to price risk in assets that most investors avoided. He has also pursued serious amateur interests in mathematics, physics and aviation.
Philanthropy and public life
Beal is known in academic circles for the Beal conjecture, a problem in number theory related to Fermat's Last Theorem that he formulated in 1993. He has offered a prize, administered by the American Mathematical Society, for a proof or counterexample, and the award has been raised over time to encourage work on it. He has also funded mathematics education and competitions.
In the early 2000s he gained wider attention for playing very high stakes heads up poker against a group of leading professional players in Las Vegas, contests that were later described in a book about the games. He has been a political donor and served on an economic advisory group for Donald Trump's 2016 presidential campaign.
Beal has given interviews about his investment philosophy, often stressing patience, independence from consensus and the discipline to stay out of markets when prices do not compensate for risk. His bank's structure, with relatively few employees managing large portfolios, reflects that approach.
He has also spoken about the costs of excessive leverage in the banking system, a theme he links to his decision to keep Beal Bank's capital levels well above regulatory minimums. That cushion, he has argued, is what allows the bank to act decisively when markets seize up.