Highlighting its capital and distribution capabilities, Janney Montgomery Scott LLC wants to continue taking advantage of the shake-out of major firms due to the credit crisis. The firm said its public finance division has tripled profits and doubled staff in the past 18 months.
The Philadelphia-based firm attributes its success to opportunities that have opened up in the market since many of the larger investment banks merged, collapsed, or opted out of the municipal business.
Three of Janney’s senior staff hired in 2009, for instance, hail from UBS Securities LLC. And when players from the bigger firms bring their personal reputation to a middle-sized firm, new business follows.
“We’ve penetrated — in the sales and trading side — accounts this year that probably wouldn’t have talked to us or a firm like Janney just two years ago,” said Steve Genyk, head of fixed-income capital markets.
In 2007, the year the credit crisis began, Janney was book-runner on 20 issues in the Northeast totaling $215.7 million, according to Thomson Reuters. Year to date in 2009, it has been book-runner on 38 issues in the Northeast totaling $496.3 million. The 130% gain in underwriting has increased the firm’s regional ranking by five spots to 22d from 2007 through 2009.
The ranking advance is less dramatic than the increase in dollar amount, illustrating the point that opportunities are growing for many middle-market firms.
“For the firms that remain, it’s physically impossible for them to execute all the business that’s out there,” said Michael Solomon, a managing director in the New York City office. “The larger firms will target the largest transactions but there’s a tremendous opportunity also in the mid-market for firms like us to bank in a strong way.”
According to Genyk, the firm has two core strengths.
“What makes us different is that if we can’t find people that meet our standards, we’re not going to go out and hire somebody,” he said.
Genyk hopes to add five people to the public finance headcount in the first quarter of 2010, but the goal is loosely defined and entirely dependent on who shows up for an interview.
Some of the most recent hires include Tom Bajus, who joined the firm’s headquarters in October as managing director of municipal retail trading. Bajus has been in the business for 16 years, including a recent stint as a senior managing director of muni trading and underwriting at Sovereign Bank.
Vivian Altman joined Janney’s New Jersey office in September as a managing director. She left her position as president and chief executive officer of the development council for the township of Edison, N.J. A former banker at JPMorgan Chase, she also owned her own financial advisory firm, Altman & Co., from 1991 to 2005.
In November, Janney also tapped Matthew Davis to become director of municipal underwriting in Philadelphia. His 13 years in the business include a stint as head of muni trading and underwriting at TD Securities LLC.
“We don’t want to be all things to all people, and we don’t want to be huge. We want to continue to grow, and we grow by attracting very high-quality people,” Genyk said. “We’re not going to compromise on quality.”
Another strength is the firm’s two-pronged distribution approach.
“We have very strong institutional distribution and capital, and we have very strong retail distribution,” said Dale Foard, who heads municipal sales, trading, and underwriting. “Many firms have one or the other but they don’t have, solidly, both.”
Looking ahead to next year, Genyk said he is optimistic about the muni market in general, especially for middle-market firms. In addition, the advent of taxable Build America Bonds has opened up “a whole different universe of buyers” to the market, he said.
The privately owned firm, established in 1832, has more than $300 million in capital. Its parent company, the Penn Mutual Life Insurance Co., has capital approximating $2 billion.