by Anitra D. Brown
Perhaps it was an audacious aspiration or a daring dream, but 40 years ago, two local men—one a barely 30-year-old bank officer and the other a thirty-something university president—decided that Black folk in and around New Orleans needed a bank they could consider their own; they wanted to open a world of possibilities to the city’s African-American citizenry that seemed to still elude them in the mainstream financial marketplace even as they began to experience increased social and political power.
Surely, it was no coincidence that the word “liberty” was chosen as the name, because for four decades now, Liberty Bank has been providing its customers—everyday men and women, small business owners and parents of college students—with paths to financial freedom.
Because of their foresight and leadership, Liberty Bank CEO & President Alden J. McDonald and its longtime board chairman Dr. Norman Francis have been chosen as The New Orleans Tribune’s 2012 People of the Year.
In 1972, when Alden McDonald started Liberty Bank, he had been a bank officer for about six years—one of just a few Blacks in Louisiana’s banking industry. His relative inexperience or the fact that there were only a handful of Blacks in banking and none that owned banks, at least not in New Orleans, didn’t stop local leaders, including Dr. Norman Francis, from encouraging McDonald to step out on his own.
Though he thought it would be an “interesting opportunity,” McDonald has admitted to not being so certain back then that he had what it took to run a bank.
“I didn’t know whether I was prepared to run a bank,” McDonald once said in a Tribune interview. “No one else had walked that plank.”
While the idea might have been a little daunting for McDonald at first, the reality is that he was considering opening a Black-owned bank in New Orleans just as Black-owned banks were enjoying growth across the country. Beginning in the early 1960s, Black leaders and businessmen throughout America saw the same thing happening in their big cities and small towns that McDonald and Dr. Francis saw happening here – a Black community growing increasingly dissatisfied with inequality and the chance to further the progress being made in the social and political arenas through the ownership of economic institutions. Liberty Bank was one of 42 African American-owned banks to open in the U.S. between 1962 and 1979, according to the National Bankers Association. And, if anyone really ever harbored any misgivings about whether a Black-owned bank acutely aware of the needs and concerns of its largely minority customer base could succeed in New Orleans or whether Alden McDonald and Dr. Francis were the right leaders for the undertaking, it’s safe to say those reservations have long been cast aside today.
On Dec. 8, McDonald along with Dr. Francis, celebrated four decades of Liberty Bank with a special holiday musical extravaganza featuring the Louisiana Philharmonic Orchestra, as well as musicians Kermit Ruffins and Irvin Mayfield, vocalists Stephanie Jordan and Leah Chase, and choirs from Dillard and Xavier. It was a grand celebration, fitting for a financial institution that has played an important role in the social, civic and political fabrics of New Orleans’ tapestry. And McDonald says he is proud of the role Liberty Bank has played in the lives of New Orleanians over the last 40 years.
He says: “When I look back at 40 years and what we have done over the 40 years . . . providing financial access to a community that did not necessarily have full access available to them; bringing to the marketplace new ideas and new products . . . and the homeownership piece is something we are very proud of.”
Dr. Francis is equally as proud and excited about the bank’s milestone.
“Forty years ago, we had a dream to do something special in New Orleans,” he said in a printed statement. “We started a community bank with a focus on an under-served population. Today, we serve thousands of customers in six states.”
The Liberty Story
To be sure, the story of Liberty Bank has been told often during the last 40 years – from its humble start in a trailer on Tulane Avenue to multiple branches in multiple cities in states across the country. Withstanding natural disaster and weathering national and regional financial crises, Liberty Bank has not only existed for 40 years, it has flourished.
McDonald says he began to see the bank’s growth—buoyed by positive changes resulting from the Civil Rights movement—within the first 10 years. And by 1994, everyone else could see it, too, when the bank expanded beyond the confines of New Orleans to Baton Rouge. Liberty now has three branches in the state’s capitol; and its expansion was kicked up a notch in 2008 when Liberty broke into the Midwest market, opening three branches in Kansas City, Mo., and Kansas City, Kan., after its acquisition of Douglass Bank. Liberty has also strengthened its profile in Jackson, Miss., where it first opened a branch in 2003 after acquiring First American Bank and opened a second branch in 2009. And in early 2009, it acquired the locally-based United Bank and Trust Company. In November 2009, Liberty Bank and Trust Company bought the failed Home Federal Savings Bank located in Detroit, Mich. With that buyout, Liberty helped to protect the deposits of Home Federal customers and acquired nearly $15 million in assets and now operates banking centers and/or mortgage offices in seven major urban areas and six states across the country—New Orleans, Baton Rouge, Jackson, Miss., Houston, Texas, Detroit, Mich., Kansas City, Mo., and Kansas City, Kan.
In 1972, when Liberty first began, it had $2 million in assets. Today, the bank’s holdings top $570 million. It employs 170 full and part-time workers. More importantly, here in New Orleans and in other cities across the country, Liberty has helped individuals achieve their goals, whether it has been homeownership or starting a business, buying a new car, saving for college or retirement. It provides access to basic financial services such as personal checking and savings accounts and multi-faceted products for individuals, businesses and institutions such as CDs, IRAs, credit cards, home, college and business loans, ACH and direct deposit to handle employee payroll or vendor payments, and merchant services for credit card processing. In short, nearly any product or service a customer can find at any other bank, is available at Liberty in a straightforward manner that is sensitive to the needs, trepidations and even the financial weaknesses (real or perceived) of its historical customer base.
Much like historically Black colleges and universities, Black-owned banks sprang from a need to offer a service to individuals that had been all but shut out of the mainstream. When the other banks refused to loan African-Americans money or loaned it to them at extraordinarily high interest rates, Black-owned banks were there and their influence was tangible from the very early history. From 1888 to 1934, African-Americans owned more than 130 banks in the U.S. As a result, between 1867 and 1917, the number of Black-owned businesses rose from 4,000 to 50,000.
Still, the question of whether Black-owned banks remain a necessity in a society some have dared to call post-racial is raised every now and then. For those aware of the history of Black-owned banks (the first one founded on the heels of slavery in 1888 in Washington, D.C.) and their impact on various facets of Black America—from spurring the growth of Black businesses to fueling and funding the Civil Rights movement—as well as the present-day reality of financial culture and the obstacles many Blacks, especially those in poor communities, continue to face when it comes to matters of money, the answer is a resounding yes.
According to the FDIC (the federal agency created by Congress in the 1930s to create confidence and stability in the banking industry), Black households are still 21.7 percent more likely than Whites to be unbanked; and nearly 32 percent of Black households are more likely to be underbanked – meaning that while they have a checking or savings account, they still depend on alternative financial services such as non-bank money orders, non-bank check-cashing services, payday loans, or rent-to-own agreements—all products that tend to put financial strain on households and the larger community in the long run. Advocates of Black banking say that a return to reliance upon Black banks can help reverse these figures. And banks like Liberty are stepping up to provide its customers with viable entryways into conventional financial activities. Customers can open checking and savings accounts with minimal deposits and no hassles. And new products like its Freedom Advance loans, which Liberty promotes as “great for those small unexpected expenses, such as car repairs, weekend excursions, holiday shopping, or disaster related expenses,” range from $500 to $2,500 and potentially provide customers with an alternative to high-fee payday loans, car title loans or other high-interest loans from subprime finance companies—all of which typically have a high-profile presence in poor, underserved and minority communities.
What makes the Liberty story even more remarkable is that after 40 years it is still alive and thriving even as other banks—both Black-owned and mainstream, some larger and others smaller—have struggled and even failed. In fact, the number of Black-owned banks across the nation is dwindling. In 1994, the FDIC identified 54 Black-owned banks across the country. By mid-2011, that number had shrunk to 28.
And McDonald is thankful for the support of loyal customers during the last four decades.
“We’re just a good bank,” McDonald says. “We know what we are doing, and God has blessed us to do well in adversity. Treating people with respect is our number one objective. Our philosophy is that you treat the person with one dollar the same way you treat the person with a $1 million.”
Running a Bank, Building a Community
The accomplishments of Alden McDonald and Dr. Norman Francis as they relate to the development of Liberty Bank might be merely a footnote if all they had been doing for the last 40 years is running a bank and leading its board. But Francis, who had only been the at Xavier University as its president for about four years when he accepted the task of becoming the bank’s founding director, has been busy building and strengthening another great institution as well.
When Francis was appointed president of Xavier on June 26, 1968, the school’s budget was less than $20 million and its enrollment was fewer than 800 students. Today, Xavier’s student enrollment is closer to 3,400 and the operating budget exceeds $90 million. Meanwhile, Dr. Francis has overseen a massive expansion of the school’s facilities, including the recent completion of Xavier University’ Convocation Center, their new 4,000 seat arena that replaced the Barn, the school’s old gymnasium. The multi-purpose facility will host academic and community events as well as serve as the site of XU volleyball and basketball games. In fact, the Liberty celebration was held at the Center, offering XU one of its first opportunities to show off the new building to the community.
Francis has the distinction of being America’s longest-serving college president and recently celebrated his 44th year anniversary at the school’s helm. In 2009, he was named one of “America’s Best Leaders” by U.S. News Media Group and the Center for Public Leadership at Harvard’s Kennedy School of Government and was awarded the Presidential Medal of Freedom in 2006.
A graduate of the LSU School of Banking and of Columbia University’s Commercial Banking Management Program, McDonald began his career at International City Bank in New Orleans in 1966, rising to the position of Vice President for Consumer Lending before he left to lead Liberty Bank and Trust Company. President and CEO since its inception, he is the longest-tenured African-American financial executive in the country. And he leads what is today the third largest Black-owned bank in the United States. And while his work growing Liberty Bank has been a major part of his life, it has not been the only. McDonald’s work with the local civic and economic community has been longstanding.
He was a driving force behind the creation of the Black Economic Development Council, a local, private, non-profit organization that works to maximize and create business opportunities for African-Americans and that advocates for policy issues that affect the development and growth of the African-American community. McDonald says influencing change, especially as it relates to the economic development and financial policies, has been just as critical as the day-to-day work of running a bank.
Along with his wife Rhesa Ortique McDonald, he has hosted the annual United Negro College Fund gala in New Orleans for two decades. The event, which benefits local HBCUs, has grown from a small celebration that netted about $10,000 a year for local UNCF schools to a yearly fete that raises about $200,000 annually. Hosting the local UNCF gala is just one example of how McDonald and Liberty Bank exercise good corporate citizenship. He says he feels compelled to do so, and encourages Liberty Bank employees to also find ways to involve themselves in helping the larger community and “dedicate a little of their time to making one thing better.”
“We feel everyone should participate in the community in one way or another,” he says. “And when we see the opportunity to get involved, we do it. This is the only way to make a community grow.”