New Orleans-based Liberty Bank And Trust took 50 years to surpass $1 billion in assets under its founding CEO Alden McDonald, Jr. Now it needs to convince a new generation to buy into its mission of growing to $10 billion.
By Jabari Young, Forbes Staff
Nearly 20 years after Hurricane Katrina devastated New Orleans, the scars are still visible. In the New Orleans East section of the city, about 20 minutes from the French Quarter, miles of brown grass grow through the concrete of what was once the Lake Forest Plaza mall, which boasted the state’s first food court and, more improbably in the South, its first ice skating rink. For many New Orleanians—including Alden McDonald Jr., the 81-year-old CEO of Liberty Bank—this roughly 1.2 million square feet of vacant land is also a haunting reminder of a once vibrant life. “Over there,” McDonald says, pointing to one of the many absent buildings, “was a 12-screen movie theater.” Nearby, a Lowe’s that residents that relied on to rebuild their homes has become a Goodwill center. But amidst the buildings with shattered windows and colorful graffiti is a beacon of hope: The headquarters for McDonald’s Liberty Bank, the largest Black-owned bank in America.
“We could do everything any bank can do in America,” McDonald tells Forbes. “And do it better.” The only problem, McDonald adds, is Black America. “They don’t have confidence in us,” he says. “That’s our biggest challenge today. Black people don’t feel that we could do what they need us for.”
Founded in 1972, Liberty has grown from $2 million in assets to more than $1 billion. According to the Federal Deposit Insurance Corporation (FDIC), the bank has $948 million in deposits, making it the largest bank for Black Americans by asset size. Liberty serves 11 states, including Illinois, Michigan, Texas, and Tennessee, and, McDonald notes proudly, has been profitable for 47 of its 52 years. The bank has achieved this by focusing on lending to underserved communities and, like all banks, generating revenue from fees and interest.
“Banking is nothing but a rental business,” McDonald says. “You’re renting somebody’s money and then reloaning it out.”
Known as Minority Depository Institutions (MDIs) or Community Development Financial Institutions (CDFIs), Black banks—like their Hispanic and Asian counterparts—fall under federal oversight and play a vital role in many neighborhoods. Historically, Black banks have financed small businesses, churches, and individuals who have traditionally faced discrimination from larger banks.
Currently, there are 23 Black banks in America, down from 48 in 2001, but their combined assets have increased from $5 billion to $9 billion over the past quarter century. The FDIC categorizes these banks based on their leadership structure and equity. Washington D.C.-based City First Bank, a Black-led institution, leads with assets of $1.3 billion, primarily due to a merger with Broadway Financial in 2021. Liberty follows closely behind with $1.1 billion.
“Most Black banks are still surviving today,” McDonald says. But few have thrived like Liberty Bank.
Under his leadership for more than 50 years, the bank successfully navigated the 1986 oil bust (which caused unemployment to rise to 13.2% in Louisiana), Katrina, the global financial crisis in 2008, and the pandemic.
“A well-run organization, highly thought of,” Darrin Williams, CEO of Southern Bancorp, says. “That’s not the case with what you would call ‘Traditional Black banks.’” Adds John Lewis, CEO of Baltimore-based Harbor Bank of Maryland, “They’ve been smart in what they’re doing in their own market. But they’ve been opportunistic in terms of growing. Going from a community bank to one in several states is truly impressive.”
Inside Liberty Bank, Alden and his son, Todd—the bank’s 43-year-old president and CEO-in-waiting—are surrounded by an impressive collection of Black art. Elegant pieces by artists such as Elizabeth Kaplan and Clementine Hunter adorn the walls, while a $25,000 reprint of Jacob Lawrence’s portrait of Haitian General Toussaint L’Ouverture hangs just outside Alden’s office. “We think we have the largest collection of Black art in the South,” Alden says of the estimated $2.5 million collection. His favorite piece is a bronze sculpture of Sisyphus pushing his massive rock uphill. It sits on a table in the conference room and bears the inscription: Never give up.
“It reminds me of me,” Alden says. “That’s how it felt when we were rebuilding the bank” post-Katrina.
Now, looking down on the barren land from a sixth-room conference boardroom at their headquarters, the McDonalds admit they want to redevelop Lake Forest Plaza. The project, however, would cost hundreds of millions just to untangle the land’s legal woes. Besides, Alden sees other financial headwinds and he wants Todd to be prepared.
“There’s going to be a lot of shakeups,” Alden says, predicting another economic downturn thanks to generative AI and government policy changes. “A lot of people are going to lose their jobs.” Local real estate values, he predicts, will also decline over the next five years. “It’s a correction,” he says. “But we’ve got to look for the opportunities. O for obstacles. O for opportunities.”
The complex relationship between Black Americans and banking institutions goes all the way back to the Civil War. In March 1865, weeks before Robert E. Lee surrendered at Appomattox, Abraham Lincoln established the Freedman’s Bank to help formerly enslaved Black people become financially stable. At its height, Freedman’s had branches in 17 states with 70,000 depositors totaling more than $57 million, (or around $1.1 billion today). However, the bank collapsed in 1874, after several runs of its branches— Frederick Douglass even briefly served as the bank’s president to help stabilize it—leaving thousands of Black Americans without access to millions in wealth creation. Ultimately, that failure created a distrust of banks that hasn’t ever been fully repaired.
Fast forward a century, to the early 1970s, and many Black banks faltered again—this time due to bad loans, poor management, and adverse economic conditions. Billionaire Warren Buffett even invested in a Black-led bank, the Community Bank of Nebraska, but even the Oracle of Omaha couldn’t prevent its eventual collapse.
The McDonalds are working to repair the relationship between Black Americans and commercial banks. “We have more networking and more contacts for more things than any other type of industry,” Alden says. “When you need something, you pick up the phone. If we don’t know, we know somebody else who will know.”
Raised in New Orleans during the Jim Crow era, Alden McDonald is the son of a waiter, and his mother was an unofficial neighborhood school bus driver who often transported children to school in the family’s red Chevrolet van. Watching his parents work hard taught young Alden the value of community service. By 1966, he had started working as operation specialist in charge of backroom processing at International City Bank in New Orleans, and eventually was promoted to the bank’s vice-president where he made $18,000 a year. In 1972, he was approached by Dr. Norman C. Francis, the founding director and Chairman of Liberty Bank and former President of Xavier University, with the concept of starting a bank.
And he has spent much of the past 20 years teaching Todd, a graduate of Morehouse College, everything he knows about the business. Todd developed a fascination for banking during his junior year. Todd also credits a white banker named Joseph Canizaro, the former CEO of First Bank & Trust in New Orleans, for helping develop his passion for banking. As it turns out, Alden also taught Canizaro the business, and he paid it forward by teaching Todd how a banking executive can help build—and rebuild—underserved communities.
After earning his MBA from Northwestern in 2013, Todd eventually joined his father at Liberty, where he held various roles, including vice president of corporate strategy. One of his first successes was convincing top banks—including JPMorgan Chase, Bank of America, and Citi—to invest $30 million in Liberty. That helped satisfy federal mandates of capital-to-asset ratio when banks surpass $1 billion.
Alden was impressed with his son’s boldness. “Todd’s vision is twice my vision,” Alden says. “I was satisfied with being $700 million [in assets]. Todd said, ‘No—we’ve got to be $1 billion.’ I said, Well, go get the capital.’ And he went and got the capital.”
The next mission for the McDonalds is to grow Liberty’s assets to an ambitious $10 billion while rebuilding trust in the Black community. Liberty is opening an additional corporate office near the French Quarter so the grim views of East New Orleans will be far behind. Meanwhile, Todd is meeting with Black leadership in major cities to convince them that Liberty can serve everyday workers—not just Black Americans.
“The sales pitch for America to bank with us is good,” he says. “You get the same services. And you grow your community.”