CHICAGO - With an unabated appetite for expansion, Stifel, Nicolaus & Co.'s public finance division is making a pronounced step into Ohio by hiring most of the banking team from Wachovia Securities, but the move comes at the expense of its newly acquired Butler Wick & Co. municipal group.
The Butler Wick bankers the firm let go on Feb. 12 include its manager Omar Ganoom, Donald Bank, and Eric Prall, all located in the firm's Columbus office, and Joseph O'Keefe, who was hired last June to establish a presence in Illinois.
The Wachovia group that resigned over the last two weeks and will join Stifel over the next two months includes senior bankers Alan Baucco and Timothy Offtermatt in Cleveland along with Mark Fisher, Michelle Hillstrom, and Robert Franz, and from the Columbus office Marvin Founds and Richard Maxwell, according to Stifel director of public finance Peter Czajkowski.
Sources said Patrick King is the only remaining banker in Ohio, working out of the Columbus office. Sources also said Wachovia plans to close the Cleveland office next month. A Wachovia representative said she could not immediately comment on the fate of the offices, but did say: "The firm remains committed to continuing to serve our existing public finance client base."
The hiring of the Wachovia team marks Stifel's latest expansion, bringing to about 30 the number added to its public finance ranks.
"They are a tremendously experienced group and have a diverse set of clients and they have very strong reputations for professionalism," Czajkowski said. "We have had a large non-public finance presence in Ohio for a long time and have been looking for an appropriate opportunity to do more there."
While Stifel's additions have come from many firms, a significant number have come from Wachovia, which in 2006 acquired A.G. Edwards & Sons Inc. - one of Stifel's chief competitors in St. Louis. The move follows the opening last month of a New York office. The firm has significantly expanded its St. Louis and Michigan offices and also opened offices in Illinois and Texas.
Czajkowski declined to make any comment on the decision not to keep the Butler Wick team.
In Ohio, Wachovia ranked 12th among senior managers with $357 million of bonds in 12 transactions, compared to Butler Wick, which ranked 18th with $97 million in 10 transactions, according to Thomson Reuters.
In the Midwest, Stifel last year ranked 19th and Wachovia, which has been acquired by Wells Fargo Bank, ranked 11th. Nationally, Stifel ranked 26th over the last two years among senior managers while Wachovia ranked ninth, although that last figure represents the combined business of Wachovia and Wells Fargo.
St. Louis-based Stifel Financial Corp. announced its agreement to acquire Youngstown, Ohio-based Butler Wick for $12 million in cash in December and closed on the deal early last month.
"The combination of Stifel Nicolaus and Butler Wick represents a unique strategic fit. By adding this talented group of professionals, we meet our goal of expanding in the Ohio Valley Region," Ronald J. Kruszewski, Stifel's chief executive officer, said at the time.
The small Butler Wick public finance group that is among the firm's 175 employees working in 23 offices in three states were told after the deal closed early last month that they would be folded into Stifel's public finance team so their firing came as a surprise, several sources close to members of the group said last week. About 40 employees have so far been cut, according to sources who said Stifel was most interested in acquiring the firm's brokers.
Butler Wick's capital markets group was established in 1990. The firm was a subsidiary of United Community Financial Corp. The public finance team primarily worked on fixed-rate issuance with a smaller variable-rate book and the capital capacity to serve as sole senior manager on a deal of up to about $135 million.
In an interview last year when the firm announced the addition of O'Keefe, Ganoom said most of the firm's municipal professionals, which included another four or five sales professionals and traders, worked together at the former McDonald Investments Inc. O'Keefe previously was a senior credit analyst for Fitch Ratings and before that worked at Standard & Poor's covering government credits for more than 25 years.
