Greg Miles for NPR
Liberty Bank & Trust President Alden McDonald Jr. helped customers during and after Hurricane Katrina. His bank gave loans to customers without collateral and with no money down.
Liberty Bank & Trust President Alden McDonald Jr. helped customers during and after Hurricane Katrina. His bank gave loans to customers without collateral and with no money down. Greg Miles for NPR
Liberty Bank & Trust, the largest black-owned bank in New Orleans, lost its headquarters, records, six of eight local branches and most of its customers due to Hurricane Katrina.
But Liberty Bank rebounded in 2007, its best year in history. It earned more than $3.5 million on $324 million in assets. And the bank has just opened branches in Houston and Kansas City, Mo.
"We always tell ourselves whenever there's an 'O' for obstacle, the 'O' also stands for opportunity," says Alden McDonald Jr., the bank's president and CEO.
'We Will Take Care of You'
After a calamity, people need money to repair homes and replace cars. When their lives imploded after Hurricane Katrina, the deeply loyal customers of Liberty Bank turned to McDonald.
"I guess the thing that I appreciate so much is that Alden was there, and he came out and said 'We will take care of you,'" says Beverly Wright, a native of New Orleans and a longtime Liberty Bank customer.
After the storm, Wright needed a loan to buy a house in Baton Rouge, but all of her personal records were in her flooded house in New Orleans East.
"You're in a room now filling out papers, and they're asking for support" for a house that's under water, Wright says. She had no proof of salary or titles to the properties she owned. "We had nothing."
In postdiluvian New Orleans, Liberty Bank's customers were desperate. They had evacuated to far-flung cities and needed money. Backup records were temporarily lost, so the bank had no idea how much a person had in his or her account.
Yet the bank made loans to customers without collateral, with no money down, simply relying on trust and longtime relationships.
McDonald could have shut down ATMs until the records were back online, but he didn't. He gave each customer a $500 daily maximum and hoped for the best.
"That was scary," McDonald says with a laugh. "All of our records got washed out. But that wasn't the customer's problem. The customer's problem, at that point, was how do I get money? How do I rebuild my life?"
The bank ended up getting burned for about $1 million in ATM overdrafts; another couple hundred thousand dollars was looted from cash machines and bank branches. At the end of 2005, the year of the storm, the bank showed a $1.5 million loss.
McDonald took it in stride. "I always operate on some advice I got from my grandfather years ago before I got in the banking business," McDonald says. "He said 97 percent of the people in the world are honest. He said, 'So make the rules for 97 percent, not the 3 percent of dishonesty.'"
Like most of his customers and employees, McDonald lost nearly everything he owned in the storm. His family home and belongings were inundated. He has since moved to Baton Rouge and commutes more than hour each way to work.
His bank has become a symbol of New Orleans' plucky spirit. Five out of eight local branches have reopened.
The bank's six-story, smoky-glass headquarters overlooks New Orleans East, a once-thriving area of black middle- and upper-class homes in the Ninth Ward. The neighborhood had the bad fortune to be situated directly between lakes Pontchartrain and Borgne, both of which rose and briefly turned New Orleans East into a suburban Atlantis.
Here, and in the other predominantly black neighborhoods in which the bank operates, about one in five residents have come home. Citywide, the return rate is more than half.
At the branch in Gentilly, another primarily black neighborhood once filled with his bank's customers, McDonald climbs out of his car and lumbers into the lobby.
He greets customer Armand Olivier, owner of Olivier's Creole Restaurant in the French Quarter. McDonald loaned him the money to open his restaurant 16 years ago.
"He kinda reads people," Olivier says of McDonald. "And sometimes he makes a loan on the strength of people. You don't let him down. We pay him back every penny."
Money to Rebuild
McDonald's roots in New Orleans go back four generations. His grandfather was a dentist. His father was a waiter at the city's exclusive, whites-only Boston Club.
McDonald broke barriers in the business dominated by the men to whom his father served Sazeracs and Old Fashioneds. In 1966, he became the city's first black loan officer. In 1972, he helped found Liberty Bank, the city's first black-owned bank.
Now, New Orleans has three black-owned banks.
"This was the first African-American subdivision in the state. Look at it now, all vacant. No life in here," McDonald says, back in his car and driving through Pontchartrain Park, part of Gentilly. He passes moldering, overgrown houses that haven't seen a broom or a paintbrush since the floodwaters receded.
A lot of customers came from Pontchartrain Park.
"We financed a lot of these homes as well," he says.
McDonald, who sat on Mayor Ray Nagin's now-disbanded commission to develop recommendations on rebuilding the city, is frustrated by the lack of reconstruction in these hard-hit precincts and by the laissez-faire attitude in City Hall and in Washington.
McDonald has a plan to contact every single resident on a street, find out what they need to come home, then tap a risk pool and get them the money to rebuild.
"We're literally gonna go door to door and begin infilling all those individuals who want to come back. And then once we get this going, the rest of the community should really begin to take off," McDonald says.