Independent Banker - January 2020 - 27

" Look for companies that
have longevity in the market
and that are serving the
needs of the community. "
-Tricia Bellamy, BancorpSouth Bank
needed capital into Liberty Bank and had the added benefit
of boosting BancorpSouth's Community Reinvestment Act
(CRA) rating.
BancorpSouth's interest in $625 million-asset Liberty
Bank was motivated in part by a little-known provision in
the CRA that credits banks that collaborate with minority
banks. There were 148 MDIs as of the first quarter of 2019,
according to the FDIC, and many bankers may not be aware
that their organizations can receive CRA credit for partnering
with these minority banks.
Liberty Bank reached out to BancorpSouth and other
banks about their interest to invest in its company, which
was looking to redeem about $8.5 million of its cumulative
perpetual preferred stock that was issued in 2010,
says Mike Meyer, BancorpSouth's chief banking officer and
director of community lending. Finding a more attractive,
lower-cost source of funding was an important initiative for
Liberty Bank, a community development financial institution
(CDFI) that also does business in BancorpSouth's home
state of Mississippi, Meyer adds.
For their part, leaders at BancorpSouth saw an opportunity
to simultaneously expand its investment portfolio
beyond mortgage-backed securities and boost its CRA rating.
In November 2016, BancorpSouth had received a
" Needs to Improve " rating from the FDIC, according to the
Federal Financial Institutions Examination Council. In January
2017-the date of the community bank's last exam was
released-its rating had improved to " Satisfactory. "
Besides Liberty Bank, BancorpSouth has made CRA
investments in financial institutions including Southern
Bancorp, a $1.2 billion-asset CDFI in Arkadelphia, Ark.,
and LiftFund, a nonprofit in San Antonio, Texas, that provides
small business loans.
" We were excited to partner with a minority institution
and gain their perspective on how they are able to tap into
the communities, " says Tricia Bellamy, BancorpSouth's
chief compliance officer. " We were able to leverage their
expertise, and they were able to leverage ours. " After Liberty
Liberty Bank opened inside a trailer in 1972.
Liberty Bank's mission to serve the
underserved
Liberty Bank and Trust Company, the first
multiracial bank in New Orleans, has come a
long way since 1972, when it started operations
out of a trailer because its founders couldn't
afford a traditional building. It has grown from a
small, scrappy bank into a thriving community
development financial institution (CDFI) with
locations in eight states and $625 million in assets.
From the start, Liberty Bank's mission was
to improve the financial standing of African
American consumers, a sorely underserved
market at the time. The bank initially sought to
provide African Americans with consumer loans,
mortgages and other products and services that
they might not otherwise have fair and equal
access to, says Todd O. McDonald, Liberty Bank's
senior vice president. He's also the son of the
bank's cofounder and CEO, Alden McDonald, Jr.,
the longest-tenured African American financial
executive in the U.S.
Since its founding, the bank has broadened its
focus to underserved markets in general, whether
this is rural, urban or any community that does
not have access to mainstream financial products,
McDonald says.
There are still too many people who don't have
access to fairly priced loans or credit cards, he
says, and many are stuck using costly payday
loans or nontraditional financial services that
aren't geared toward their financial well-being.
" Our goal is to change that, " he says, " and we're
really good at it. "
independentbanker.org Q 27
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Independent Banker - January 2020

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