Liberty And Profit For All

By stepping in when other banks gave up, Liberty Bank & Trust has created a profit centera profit center for Louisiana's black community

clever ways, like circulating paper dips, to track the most minute office expenses. “And the vendors we just had to have, we asked them to take cuts in their fees. And most of them did,” recalls Gregory St. Etienne, Liberty’s executive vice president. “The ones that didn’t, we cut them out completely.”

If timing is everything, then St. Etienne’s watch must have been serious impaired. An independent auditor, he joined Liberty in 1985, just before the rollercoaster ride began. “I was just getting my feet wet before we started to feel it,” he says. “If that experience was good for anything, it’s that you appreciate the light more when you spend some time on the dark side.”

Despite their best efforts, capita plunged to under $1.5 million in 1987 less than the amount the bank started with some 15 years earlier. Just as McDonal was running out of cost-cutting measures he came upon a financial boon that he was able to ride while the local economy trudged to a slower recovery. McDonald learned that many large corporations used banking services to make quarterly tax payments to the federal government. And in 1988, Liberty began selling itself as a depository for tax money and soon landed the deposit business of Aetna Life Insurance. The company would forward a check for its tax payment to Liberty. The bank would receive interest on the overnight deposit and forward the money to the U.S. Treasury. Liberty began soliciting similar business from other companies and soon had a clientele that included Sears Roebuck, J.C. Penney, Travelers Corp., Anheuser-Busch and Avon Products.

Slowly, Liberty started a steady climb back up the financial ladder. Its 1988 losses came in at $750,000. A year later, Liberty further decreased its losses by $350,000, before eventually showing a profit of $350,000 in 1990. By 1992, it was showing a modest profit of $1.4 million. That year, as the local economy stabilized, Liberty made its purchase of the long-waning Corpus Christi Federal Credit Union in New Orleans for 76 cents on the dollar. The purchase was the first ever of a credit union by a commercial bank. Most importantly, it helped boost Liberty’s capital while giving it a much-needed influx of mortgage loans. But that acquisition was just the tip of the iceberg.

Since Liberty re-ascended BE’s Financial listing, the bank has moved methodically, picking up concerns left for dead by majority banks. Soon after the Corpus Christi credit union purchase, Liberty made a move outside its home market in 1994. Venturing into the bayou country of Baton Rouge, it took over the assets and deposits of Life Federal Savings Bank of Baton Rouge.

The Baton Rouge move, another first, was a bold stroke as it took Liberty some 90 miles away from its homebase. While those outside of New Orleans might consider both areas to be simply “Cajun country” with similar community needs, St. Etienne says the communities are like night and day. The people, culture and environment are completely different. While

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