After the storm: New Orleans-based bank emerging strong post-Hurricane Katrina.

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THREE YEARS AGO, LIBERTY BANK AND TRUST CO. (NO. 8 on the BE BANKS list with $299.3 million in assets) was nearly wiped out by Hurricane Katrina. Offices were flooded, ATMs vandalized, and customers had scattered to the four winds. Now, its never-say-die President and CEO Alden J. McDonald Jr. and his bank are as strong as ever.

Evidence of McDonald's resilience abounds: Liberty Bank recently won a bid to take over the assets of Douglass National Bank in Kansas City, Kansas, and Missouri, formerly listed on the BE BANKS list. Liberty bought an estimated $55 million of Douglass' assets at book value, less a discount of $6.1 million. Liberty also picked up approximately 6,500 accounts, three branches, and the ATM network from Douglass, previously the Kansas City areas only black-owned bank. Federal regulators closed Douglass because of escalating bad loans and insufficient capital.

How much did Liberty lose as a result of Katrina?

The bank lost about $2 million in net profits in 2005 because of Katrina, one of the few times it lost money in its 35-year history. We lost a revenue stream of $2 million largely because of fewer transaction base customers. We have since recovered that revenue stream and more by implementing a new business model with new and exciting products. We had profits of $3.6 million in 2007, up from $3.5 million in 2006.

How does the Douglass deal fit into your strategy of growing and rebuilding Liberty Bank?

The Douglass National Bank acquisition is part of our continued strategy to grow Liberty through acquisition. It's significant because it grows our footprint out of the South into the Midwest. It comes after we opened a loan production office in Houston, giving us operations in seven [major] cities in five states. Today, we have assets of nearly $380 million with 14 locations in Louisiana, Texas, Mississippi, Missouri, and Kansas. It also was significant because it puts Liberty into a new market, allowing minority customers in Kansas City to continue to do business with and have access to services of a black-owned bank in the community. The deal allows minority assets to remain in the minority community.

How will the acquisition help Liberty Bank bounce back?

It won't help us bounce back, but it will help us continue our growth strategy, [which] includes helping Liberty Bank reach its short-term goal of being a half-billion dollar financial institution in three to five years and entering other new markets.

Among the challenges Liberty faces post-Katrina, what are the biggest?

The main one is rebuilding the institution, because we lost everything. It's also rebuilding our customer base, because a large percentage of our customers were forced to move to other communities. The population of New Orleans used to be about 470,000. Today, it's in the range of 225,000 to 250,000. With most of that being in the black community, that meant a significant loss of our market niche and bank business.