When it came to his career, Frank Chin didn't really have a choice.
As a child of the space age and a math and science enthusiast who liked to build things, he was fated to do something that involved numbers, engineering or airplanes.
Today Chin is co-head of public finance at Citi and a 35-year veteran of the municipal bond industry, with a specialty in airports. The career that emerged from his childhood interests dovetailed with the evolution of the airline and airport industries.
Over that span, Chin took part in a period of dramatic change that has shaped the aviation and muni bond industries. He's also helped his department navigate through a series of acquisitions in the banking industry while maintaining enduring relationships with municipal issuing clients throughout the turbulence.
The industry has noticed. The Municipal Forum of New York on Wednesday will present Chin with a lifetime achievement award in recognition of his accomplishments in public finance.
Chin's interest in science, math and building carried him to two degrees in civil engineering: first a bachelor's in 1971 at Cooper Union in New York, and later a master's in 1973 at the Massachusetts Institute of Technology in transportation planning.
A Fascination with Aviation
"I actually grew up during the space age, with the man on the moon, etc.," he said. "At one point, I thought about going into aerospace engineering, but I wound up going into civil. So, I always had an interest in aviation."
Chin went to work for the city of New York in 1974 in what became the Department of Transportation, starting as a junior engineer. As the city's finances sank in the mid-1970s, it shut down his entire unit and transferred it under a consulting arrangement to what was, at the time, the Tri-State Regional Planning Commission.
No longer a city employee, Chin became a consultant. He concluded quickly that government work might not be as stable as he thought and decided to give the private sector a try.
Before he did, Chin resolved to get his MBA and graduated from Harvard Business School in 1978. While studying civil engineering and finance, Chin carried his fascination for aviation with him and looked for businesses and opportunities that involved the financing of airports.
Smith Barney, Harris Upham & Co., which hired Chin in 1978, "had a pretty successful transportation practice," Chin said. "So I got to work on a lot of airports."
Now he was involved in financing projects he regarded as basically civil engineering projects, which represented a natural extension of what he liked to do.
"When you look at design, I did a lot with airports when I was at MIT," Chin said. "I was a teaching assistant in airport finance, so I had the opportunity to work on an airport from scratch."
He did the first financing for the Orlando, Fla., airport in 1981 and he's continued to work with it ever since. He got involved in the Las Vegas airport expansion in the late 1970s. That also holds for the Lee County Port Authority in Florida and the New Jersey Turnpike Authority, which remain clients of Chin's since his early days at Smith Barney.
He still likes airports, and continues to work on airport deals. Despite his current role running one of the largest public finance departments in the entire industry, Chin hasn't totally walked away from his client banking businesses.
He is a lead banker at a number of airports around the country, as well as some toll road projects and other large issuers. He's the point person with the Port Authority of New York and New Jersey on work that his group has done with it.
"I've maintained that relationship because I like it," Chin said. "It's fun, and you're always learning. Airports, all these things, are interesting enterprises, much more complex than people would think on the outside. It's fascinating watching how it all works."
Part of that lasting attraction stems from the dramatic changes that the industry has undergone over the past 35 years. Technology, through computers and engineering, has transformed airplanes.
Meanwhile, security has almost become an industry within an industry, and consolidation within the airline industry changed the economics for airport design.
"What airports continue to do is to provide a basic service," Chin said. "But clearly, you look at airports from the amenities they provide passengers, but also the cost of doing business because of security issues; it's really become a much more complicated business. And the financing of an airport, in its basic construct, hasn't changed that much."
Before 1978, he recalled, airlines were a regulated industry and route changes required approval by the Federal Aviation Administration. Deregulation in 1978 led to a dramatic increase in airport construction in the mid-1980s. In Orlando, Disney opened Disney World "and they had to build an airport to accommodate them," Chin said.
It was a period of spectacular growth and consolidation. When Chin started out in the industry, there were roughly a dozen large American carriers. Now the industry is down to four, depending on whether the US Airways-American Airlines merger goes forward.
"All that dramatic change," Chin said. "It'll probably affect airport design and construction for a while."
For Chin and his public finance department, though, degrees of change and continuity have played contrasting roles. Chin joined Smith Barney in 1978, and although the firm's name changed through many acquisitions, he's remained in the same public finance department his entire 35-year career on Wall Street.
When Chin was hired, banks such as Citi could only participate in general obligation bonds and education bonds. So, even though Citi technically competed with Smith Barney, it offered only GOs and student loans, Chin noted, whereas Smith Barney was a full-fledged broker-dealer competing in all sectors of the marketplace.
Primerica Corp. acquired Smith Barney in the late 1980s. In 1988, Sanford Weill's Commercial Credit purchased Primerica. Through various mergers and acquisitions involving the stockbroker Shearson, Travelers Insurance and Salomon Brothers, Smith Barney mostly kept its name and the public finance department its autonomy.
In 1998, Travelers Group merged with Citicorp, bringing what was Salomon Smith Barney under the new umbrella. The SSB public finance group absorbed Citibank's muni group.
Spared from Disruption
Citi and Morgan Stanley combined their brokerage business in a joint venture in 2009. In September 2012, Citi agreed to sell the brokerage to Morgan Stanley, but retained the muni group.
"We were pretty lucky that through all the mergers, most of the acquiring firms did not have a municipal finance division," Chin said. "So we were probably spared a lot of the disruption you saw at other firms on the Street when two big broker-dealers with two large municipal operations merged. We didn't really have that. So, it's been a really stable department, in terms of personnel and industry position and the like."
Citi was the top underwriter of municipal bonds from 1997 through 2005, according to Thomson Reuters numbers. Since 2005, its ranking has never dropped below third.
While with Smith Barney, Chin's group had been separated into a banking-origination side and a sales-syndicate trading side. Smith Barney merged the two into a single division in 1990.
That year management also consolidated under a single divisional head, Chin recalled. The public finance group has operated that way ever since.
Chin became the head of public finance in 1993. Currently, he shares the department lead with David Brownstein. While Chin tackles more of the classic banking side, Brownstein concentrates on credit and balance-sheet metrics.
"The business got more and more complex," he said. "It was helpful to add another lead in the banking area."
Over the last 20 to 30 years, muni deals have gotten ever more complex, Chin noted. And when the monoline insurers' ratings were cut, Citi's clients leaned more heavily on Chin's group to raise capital and find opportunities to save money.
"If you look at municipal government, they have so many responsibilities to their citizens and their own customers that capital-raising is not a regular activity for them; they do it episodically," Chin said. "Having bankers they trust and can rely on is very important to them. And that's kind of an acknowledgement we've always had about how to conduct ourselves and run our business."
Ultimately, Chin's experiences have taught him to view municipal finance as slowly shifting terrain. Technology, market forces and regulations have prompted seismic changes over 35 years that underwriters continue to reconcile for issuers.
Much of the specialization seen in the industry today had yet to develop when Chin started out. And because of that — as well as the fact that deals were smaller and less frequent — people wore a lot of hats.
A Little of Everything
"At that point, I got to work on everything because you did a little of everything," Chin said. "So I got a very broad exposure to what was going on in municipals. I learned a lot about different areas when I did housing or power or airports, toll roads."
Chin started out as an associate who did a lot of modeling numbers and more analytical work. But his Wall Street career began in an era before computers and word processing were ubiquitous.
Staff still used IBM Selectric typewriters, with their signature bouncing typeballs; all presentations were typed out. Word processing and computing power were only starting to emerge.
"We used to spend two days pricing bond deals," Chin said. "Now we spend two hours, because the technology allows us to move so much faster that the calculations don't take days and hours, but minutes and seconds now."
Prior to the advent of electronic documents, printing bills and shipping expenses were very high. Every time the bank needed to send clients a document, it had to physically ship an actual document.
"We used to spend more money shipping Official Statements around the country than we did on almost anything else," Chin said.
Innovations the Municipal Securities Rulemaking Board initiated, such as the online EMMA system, have helped tremendously, he added.
"The fact the industry uses the Internet to facilitate information flows and secondary-market disclosures is important," Chin said. "And the emphasis on trading has brought an amount of transparency to the system of bond trading. It's clearly had dramatic impacts up and down, throughout all these firms."
Annual issuance has climbed to well north of $300 billion over the past decade from the sub-$100 billion figures Chin saw 35 years ago. The number of professionals working in the industry hasn't kept pace, he said.
"Issue size has gone up; efficiency has gone up," Chin said. "So the industry has been able to help municipal clients raise capital pretty efficiently, and without adding a huge number of bodies."
But with all of these modernizations and efficiencies, is Chin's job easier today than it was, say, 20 years ago? Not necessarily, he said.
Where he spends his time is different. Early on in Chin's career, he focused on building a business. Today, his efforts are spent maintaining it, as well as keeping track of different issues, whether they involve regulatory concerns or developing new ideas to help issuers solve problems.
"We clearly live in a more complex world," Chin said. "Trying to deal with that complexity is a challenge for issuers as well as the banking side."