Sterne Agee Keeps Boosting Staff, But Strives to Keep Regional Touch

Despite more than tripling their public finance team over the past two years, Birmingham, Ala.-based Sterne Agee & Leach Inc. doesn't aspire to be a big national firm.

"We like to pride ourselves on being a regional firm with a national approach," said B. Hanson Slaughter, who heads public finance group. "I don't want to be a big cumbersome investment bank. I want to have the right bankers in the right places, but I want to always have the flexibility that we have at our current size, and that just means managing your growth very carefully."

Before coming to Sterne Agee in 2006, Slaughter had worked at PaineWebber and Porter, White & Co. He earned his MBA at Duke University.

Two years ago the firm's public finance team comprised 10 people and was part of its fixed-income group. Since then, public finance has become its own group and grown to 35 people, including 13 people hired in the last 12 months.

During that same time, Sterne Agee's New York City office, which provides a range of financial services and has a sitting New York City Council member, David Weprin, on its team, has grown to about 90 from 10 people. Slaughter said he hopes to hire another 10 people to the public finance group over the next year.

So far, the investment appears to be paying off - senior underwriting business doubled in 2007 compared to the previous year. The firm had slipped in its national rankings as a senior manager to 82d on 28 deals totaling $218.9 million in 2006 from 64th on 39 deals totaling $301.9 million in 2004, according to Thomson Reuters data.

In 2007, Sterne Agee senior managed 52 deals totaling $539.4 million. As of last week, the firm had senior managed 64 deals totaling $361.2 million. Its business as a co-manager this month surpassed last year's total, with 26 deals totaling $637.4 million so far compared to 57 deals totaling $637.2 million in 2007.

In August, the firm hired William Laverty, a 32-year veteran of public finance, as managing director of municipal sales, trading and underwriting.

Laverty, who had been underwriting manager at Banc of America Securities LLC from 2004 to 2007 and a vice president of underwriting at JPMorgan from 1997 to 2004, said that when he wanted to get back into public finance after leaving to deal with a family matter last year, he wanted to work for a smaller firm.

The environment emerging out of the financial turmoil that has roiled large investment banks and bond insurers reminded Laverty of his days at Merrill Lynch & Co. where he cut his public finance teeth in 1975.

"It's a market that's like when I started in the 1970s when there was hardly any insurance," Laverty said. "You had to know what a bond was worth compared to another bond, not just compared to MMD ... It's very much back to the basics and that's why the smaller firms are trying to build with people who have experience."

The firm has been adding staff who specialize in certain sectors and expects to add specialists in renewable energy and public power, Slaughter said.

Former Citi banker Jeffrey Cepler was hired this month as a health care specialist and former Morgan Keegan banker Don Hight was hired in June as an education specialist.

Last year the firm hired Scott Fairclough to start a derivatives advisory service. He had been on the swap provider side for nearly 19 years, having been a senior interest rate derivative trader most of the 1990s at Lehman Brothers, where he said he had a hand establishing their derivatives desk and more recently had worked on the derivatives desk at Dexia Credit Local.

"The market really seems to demand people who have a keen understanding of a particular aspect of the market," Slaughter said. "It seems to make sense to bring someone to the table who has specific expertise in a given area."

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