Banking Law

When we last visited the situation in Albuquerque in the immediate aftermath of the failure of New Mexico's Charter Bank and its potential effects on the local economy, we noted that the "new" Charter Bank's "new owner," Texas-based Beal Financial Corporation, had unloaded the "old" Charter Bank's low-income loan servicing operation and would be laying off up to 90 employees. Most of those layoffs occurred. However, the "new" Charter Bank's "new" CEO, Robert Bonnet, says that the bank has been offering out-placement assistance to laid off employees and that 75% of them have found new jobs. Whether those "new" jobs are comparable to the "old" jobs or, instead, involve asking repeatedly, "You want fries with that?" is not clear. Nevertheless, in an economy as poor as this one, in an industry as pummeled as is community banking, any job is arguably a good job.

There was also fear that Beal Financial would implement the same game plan for Charter Bank that Beal's used for its other banking operations, namely, run a "wholesale bank" that raises funds from sources other than retail consumer deposits and buys commercial loans with "lots of hair on them," and then "shaves them," making money where others fear to tread. So far, claims the "new" CEO, the "new" Charter Bank is going to implement a whole new game plan (as far as Beal Financial is concerned) and start acting a lot like the "old" Charter Bank, in the sense that it will be a "traditional" community bank, seeking core retail deposits and making loans to consumers and local businesses.

?This is a new bank with a new license, and we are probably the best capitalized bank in the state,? said the 57-year-old Bonnet, who became CEO on March 18. ?We have $166 million in capital. All of our locations have remained open, and we will be a full-service community bank.

?Our focus will be in serving the community?s businesses as far as lending, as well as families and consumers with all the various products that a full-service community bank offers.?

New Charter Bank has been helped immensely by the fact that most of the loans of the former bank that it purchased from the FDIC came with an agreement under which the FDIC absorbs 80% of the losses on those assets. For the first quarter of 2010, the FDIC has paid "new" Charter Bank $69 million under that loss-sharing agreement. As the Chevy Hemi guy would say: "Sweet!"

?We are one of the few banks that can lend. We are positioned to lend, and that is one of the biggest messages I want to get out to the community right now,? Bonnet said. ?I salivate knowing that we can lend so much. For any one transaction, we can lend up to $25 million.?

Bonnet said he understands how heavily the former bank was involved in the community, and that role will continue.

?I understand the role of being a good corporate citizen, and we will maintain that,? Bonnet said. ?We will be participating in the community.?

Well, there you have it, New Mexicans. The "new" Charter Bank has publicly stated that it has loads of capital, a high loans-to-one-borrower limit, and is "salivating" to make loans to the local community. My unsolicited, common sense advice is "go for it." Apply for loans. Consumer and/or commercial, it makes no difference. Beat the door down and "get some."

As the old saw goes, "the proof is in the pudding." Therefore, we'll be interested in checking back periodically and seeing how things are going in this brave "new" world of retail banking in one of my favorite states.