Academy Securities, an investment bank started in 2009 by a retired naval officer, is on a mission to put veterans of the Afghanistan and Iraq wars to work in the securities industry.
The firm, which teamed up with JPMorgan as part of a U.S. government mentor-protégé program to rise to ninth in Thomson Reuters' ranking of municipal bond managers for the year to date, has a goal to expand its staff to 100, from 40.
It wants 50% of those to be veterans of the military and the rest to be experienced securities professionals. Currently, just over one third of the staff served in the military. To fill the remaining seats, the firm isn't looking for finance majors or those with prior experience on Wall Street, either, said Michael Boyd, Academy's chief compliance officer.
"We're looking for people who are veterans and have an interest and are looking for a job," he said.
There are many from which to choose. About 2.6 million Americans served in the four armed forces' operations in Iraq and Afghanistan alone. The unemployment rate for veterans from the two wars fell just shy of 10% in 2012, compared with 7.5% in the general population through April, according to the most recent data from the U.S. Bureau of Labor Statistics.
Men and women who've served overseas bring plenty of valuable skills and experiences to the marketplace, said Jeffrey Goldstein, senior vice president and municipal underwriter and trader at Academy. For starters, they have hands-on experience with state-of-the-art technology, including communications and information systems.
"We're seeing these veterans transition very easily into this Wall Street environment," he said, "meaning they have to multitask, be organized, efficient, focused, all the things that their training has enabled them to do without any problem."
What's more, added Paul Palmeri, head of public finance at JPMorgan, someone with a military background today, even at 22 or 24 years of age, possesses an uncommon poise from having experience leading large groups of people, working on significant and sizable projects and managing substantial budgets.
"They've worked in extreme pressure situations and they're well-trained," Palmeri said. "They've got all the makings of great leaders, and now they just need to learn the business part."
The firm started its trading, sales and underwriting operations in municipal bonds in January 2012. The veterans would join a muni department that has grown to nine - four bankers and five in sales, trading and underwriting - said Robert Ceresa, head of municipal trading and underwriting at Academy.
Goldstein and Ceresa were the first aboard, hired as the muni department's foundation. A recent expansion tapped Frank Paul to head the firm's public finance group in Chicago. On the banking side, Academy brought in Francis McKenna as director of public finance for the East Coast and his counterpart, Michael Miller, on the West Coast.
Building a sales force remains the next priority, Ceresa said. To that end, Academy hired Michael Keane, who is well-versed in muni finance as a trader and underwriter with more than 30 years of experience. The firm also brought in Michael Perry, a salesman with more than 25 years of experience in munis.
As part of its rapid build-out, the firm aims to tally six sales people in New York, two in Chicago and two in California for the muni group.
"As with any small firm, we have sales people who also execute municipal trades and sales," added Paul. "So there is some crossover there."
As the company has grown, JPMorgan Chase has played a huge role. The bank early on provided a $4 million subordinated loan to expand Academy's business operations as well as hire and train military veterans in trading, investment banking and municipal finance.
The bank also entered into a four-year mentor-protégé agreement with Academy under the U.S. Department of the Treasury Mentor-Protégé program. Through it, JPMorgan offers its industry knowledge and works with Academy on negotiated and competitive deals, Ceresa said.
"They lend their expertise, help us provide product knowledge as to when the deals are coming and who we're bidding with, what the size of the deal is and so forth," Ceresa said. "That helps us develop the sales and trading side of the industry. Because of that, we can continue to build our sales force, which is very important."
The program was created to encourage established firms to help small businesses, including those that fall under such classification as disadvantaged, women-owned, veteran-owned, service disabled veteran-owned and others.
Academy's founder, Chance Mims, emerged from a background in real estate investment, brokerage, financing and management; he's also served on a guided missile destroyer during America's initial strikes into Afghanistan. Mims set up the firm as a minority business enterprise that is both veteran- and service disabled veteran-owned.
He leads with president and partner Phil McConkey, a former pro football player for the New York Giants and other teams who has experience in asset management, trading, alternative investment strategies and investment banking. McConkey's background also includes stretches as a naval aviator and nuclear weapons transshipment pilot.
JPMorgan's help with competitive offerings and as co-manager on negotiated deals is instrumental in Academy's efforts to build credibility with issuers and investors. Academy has targeted many transactions independently, as well, Paul said.
Academy has participated in $2.77 billion in 43 issues in 2013 through May 22, according to Thomson Reuters numbers. That compares with $1.01 billion in 11 issues in 2012, the muni group's first year in operation.
"It's encouraging to see how much business they've done in such a short period of time," Palmeri said.
The head of public finance at JPMorgan attributes Academy's successes to the muni group's experience, abilities and approach. He also identifies the desire of issuers and investors to do business with veteran-heavy firms.
The relationship will continue. The JPMorgan loan has a maturity date, he added, but the mentorship with Academy won't end when the loan does.
"We love what they're doing in the business," Palmeri said. "They're doing it in a very first-class way. And we like what they stand for and what they're trying to do for veterans. We'll try to continue to help them in any way we can; we have no ending point."
The muni business as a percentage of revenues varies with those of equities from week to week and month to month, Boyd said.
Academy is generating revenues, but not enough to be profitable, Ceresa said. That should come as it builds out the firm.
"We're still probably six months to a year out before we can have a full municipal bond department," he said, "where we have enough sales people and bankers."
In addition to sales, Academy wants to build up the banking group to reach out to issuers and get involved in their deals, Ceresa said. The group wields a two-pronged strategy.
"It's a bifurcated business plan, where we want to work with the very large issuers as a co-manager," McKenna said. "But we're open to working with smaller issuers, where we would senior manage those deals."
"We have that knowledge, and we have contacts," Paul added. "We have people in the business, financial advisors, bond attorneys who know us, know our capabilities, know our experience, and can refer us transactions."
It's a particularly challenging market in which to be a start-up, Boyd concedes. But Academy is managing. "Obviously, we would've preferred to have done this in the late-90s, but we're here where we are," he said.
"The market is definitely in flux, however, state and local governments need capital," Paul added. "And they need it just as much as they've ever needed it. So, it's a tremendous opportunity here."
Although Academy's public finance clients are often public servants themselves, and therefore understand and respect the public service others provide, including veterans, the muni bond industry is still a business.
"Performance is what determines whether or not you get an assignment as an underwriting group or receive an order from a customer," Goldstein said. "As sympathetic as both customers and issuers are to the plight of veterans, it's a competitive industry that we're in."