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Community Bank Depends on Clients Who Lost All

September 12, 2005|Thomas S. Mulligan | Times Staff Writer

Some wealthy entrepreneurs were mapping plans for a new kind of bank. At a time when Louisiana banks operated from 10 a.m. to 2 p.m. on weekdays, this bank -- the International City Bank -- would run from 9 a.m. to 9 p.m., Monday through Saturday. And it would court an underserved market: black consumers. To do that, the men realized, the bank would have to take the almost unheard-of step of hiring African Americans.

The businessmen asked their waiter if he knew of any bright young men in his part of town who might like to try their hand at banking. The waiter, Alden J. McDonald Sr., said, yes, he could think of at least one candidate.

Six years after joining International City, the younger McDonald, then still in his 20s, was recruited by African American community leaders to head their new bank, Liberty Bank & Trust. Much has changed in the three decades since then, as exemplified by McDonald's being chosen last year as chairman of the New Orleans Chamber of Commerce.

On Friday, McDonald had only a moment to reflect on such matters as he watched depositors in the Baton Rouge branch line up to make withdrawals.

Among the customers the bank president greeted that afternoon was physician Joshua O. Williams Jr., a longtime customer who needed money for a forced relocation.

As Katrina approached, Williams and his wife and son had loaded an SUV with their belongings and helped prepare the doctor's disabled mother for the flight out of town.

Williams worked out of an office in a New Orleans building. "I had to lock all that up," he said. "I left my bass boat there. I don't know what happened to that."

After making rounds with customers, McDonald -- whose home in New Orleans East was flooded -- rejoined the continuing strategy session in the branch's small conference room. At the table were Peter J. Hamilton Jr., a lawyer and commercial real estate broker, and Jim Thorns, a real estate appraiser and commercial photographer. A while earlier, Ronnie Burns had dropped by. He owns one of New Orleans' biggest courier services and some airport parking lots.

The players kept changing throughout the day, but they all had strong ties to McDonald -- as Liberty Bank board members, former schoolmates, major bank customers or all three. From the banter in the room, it was clear that there were no sharp distinctions between friendship and business.

"There's nothing any one of us wouldn't do for that man," Thorns said. For Thorns, a heavyset man of 58, that included braving the toxic floodwaters in a none-too-stable aluminum skiff on several trips to the bank headquarters.

Thorns and Hamilton have been delegated to help Liberty Bank secure property -- houses, trailers, raw land, whatever is available -- in the midst of an unprecedented land rush in Baton Rouge spurred by a huge inflow of hurricane evacuees. In a bidding war, it helps to have trained appraisers around to avoid getting skinned.

Looking ahead, McDonald sees a key role for Liberty Bank in New Orleans' economic reconstruction. The bank knows its clientele and knows how to work with borrowers who struggle to make each payment.

"We have a little higher default rate than other banks, but that's our business model," McDonald said.

To play its role, however, Liberty Bank has to stay in business. McDonald said he wouldn't be surprised if the bank's deposits eventually shrank to $250 million from their June 30 level of $308 million. The outflow isn't just from small customers displaced by the hurricane. Liberty Bank's largest depositor is the city of New Orleans, which is spending cash at a steady clip but collecting next to nothing in taxes.

No-interest loans or even outright grants would be appropriate ways for the federal government to replenish the depleted capital of institutions such as Liberty Bank, McDonald said.

Such a plan takes time to organize, but McDonald suggested an immediate way to help: Big corporations -- particularly insurers anticipating massive claims payouts to Gulf Coast policyholders -- could simply deposit money in his and other community banks throughout the region.

"A lot of people in America are anxious to help storm victims," McDonald said. "Get us the money to do our jobs and we'll help get people back on their feet. It makes sense. If I'm back, you're going to get taxes from me."

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