As St. Louis-based Stern Brothers & Co. enters its second century of business, the firm is showcasing its profile as a majority woman-owned business that’s committed to a diverse workforce with women in senior leadership roles.
Those are qualities the firm’s chief executive officer and board chair, Pepe Prince Finn, believes complement its capabilities and focus on public and infrastructure finance.
“The world is a pretty different place than it was 100 years ago” when women lacked the right to vote, Finn said in a recent joint interview with Linda Matkowski, the veteran public finance banker who Finn hired early last year to fill the role of chief operating officer. “For us, the women business enterprise” designation “is about much more than ownership, it’s about how we run our business.”
Finn said her goal for the firm is to build out its reputation in advising and executing transactions, to carve out more senior manager business, and internally to provide an environment that positively impacts the lives of women with gender and racial and ethnic diversity a goal throughout its ranks.
Finn sees internal and external benefits to promoting its diversity efforts. A diverse staff broadens the firm’s perspectives on a municipality’s goals and needs, Finn said. For municipalities concerned about gender and racial diversity, Stern’s status can give it a boost. At that point, however, performance and distribution matters if the door is to remain open, and a firm’s capital position is key to leading larger deals.
Matkowski said the firm’s diversity strategies make it an “attractive platform” that extends beyond municipal clients to recruitment of professionals as the firm seeks to grow in a “very careful” manner.
The firm late last year hired Gwendolyn Taylor to fill the role of chief compliance officer and general counsel. She is based in St. Louis. She previously held a similar position at Edward Jones where she was responsible for ensuring corporate compliance with securities regulations and other applicable laws.
In recent years, the firm said its diversity levels have improved with women or minorities now making up 21 of its 50 employees and in the past two years diversity among senior firm leaders has grown to three in five, from one in five.
Such efforts and the greater focus paid by some municipalities on diverse workforces among firms they do business with was highlighted in debate last week among Chicago City Council members.
Several Chicago aldermen complained that only 3.2% of the city’s underwriting business on $4 billion in new airport borrowing was going to women-owned firms. A total of 40% will go to minority and women-owned business. Chicago’s chief financial officer Carole Brown said there are few women-owned businesses.
Stern is on the list of co-managers participating in the O’Hare transactions. Other aldermen also chastised Wall Street firms on the deal for the low number of minorities and women in their leadership ranks, underscoring how the diversity issue is growing in statute.
Stern has 12 offices across the country with locations in Chicago, Denver, Atlanta, Los Angeles, Kansas City, Ohio, Texas, and several in New Jersey and New York.
The firm also continues to expand its floating-rate portfolio with its remarketing volume on the rise in recent years and has made other moves in recent months as looks to enhance its capabilities and push into corporate finance and capital markets services.
The firm hired 35-year veteran underwriting and trading specialist Mark Wren as a senior vice president in underwriting for its St. Louis office. He previously worked at Bank of Oklahoma.
The firm in February participated in its first corporate debt transaction, a $2 billion, three-year deal comprised of $1.3 billion fixed-rate and $700 million floating-rate bank notes led by Citibank. Stern Brothers was a junior co-manager.
With the deal, “we now are able to serve a broader client base including financial institutions, state and local governments, and institutional and individual investors,” Finn said.
The firm earlier in the year hired 25-year veteran Jerome Menifee as managing director, head of syndicate, on the taxable side. He leads originations of capital markets transactions, advisory engagements and brokerage services and has experience at both Wall Street and boutique firms.
The firm has opened a second New Jersey office and Regina O’Connell, who started at the firm in 2016 and is president of institutional sales, works from that office.
In early 2017, Finn hired Matkowski. She spent the previous 4 years as an executive vice president in fixed income capital markets at Indianapolis-based City Securities Corp., where she managed public finance, underwriting, institutional sales, retail and institutional trading, and municipal and corporate debt private placements. Matkowski joined City after working as a banker and group manager at Raymond James.
Stern rose in the ranks last year, finishing 49th among senior managers, up from 67th in 2016, according to data from Thomson Reuters. The firm ranked 28th last year among co-managers, up from 37th in 2016 and a 57th in 2015.
Stern Brothers said it ranked sixth among minority-owned U.S. municipal bookrunners, up from seventh in 2016.
The firm was established in 1917 by Morris and Sigmund Stern who came to the U.S. from Germany. They settled in Iowa and then landed in Kansas City where they bought large pieces of land, divided them up and sold them, eventually using the seed money to launch their investment bank.
The firm landed in different hands through the decades including Gannon Securities and then Bingham and Company Capital markets. The privately-held, independent investment bank gained the status as a Missouri certified women-owned business enterprise in 2009 when Finn purchased a majority stake from her husband and the firm's president, Terrence Finn, and she was named board chairman.
Finn was a lawyer and former public finance banker who had served on Stern's board since 2006. Since 2010, Peggy Finn has been the sole shareholder.