BRADENTON, Fla. - Birmingham, Ala.-based Sterne, Agee & Leach Inc. has opened its first public finance office in Florida with two former Wachovia bankers at the helm.
Sterne Agee, which has been on a hiring spree for more than a year, believes the time is right for the move because the regional firm had no exposure to mortgage-backed securities while some larger investment banks that had a foothold in Florida are pulling back on their muni operations.
"This is precisely the right time to be getting involved in a state like Florida with municipalities and issuers desperately looking for answers," said B. Hanson Slaughter, senior managing director of Sterne's public finance group. "I think the biggest question issuers have to be asking in good conscience is while the big firms may have capacity to underwrite transactions, are they going to get the best rate?"
Sterne Agee currently has nearly 700 employees, with 40 new hires in January alone, and plans to continue expansion efforts, according to Slaughter.
"We have all the capabilities that a large firm has, albeit on a smaller level, but not the distraction that larger competitors are grappling with," he said. "Our objective in the Southeast is to be a top-10 underwriter in every state from Texas to the Atlantic Ocean and down through Florida. We're a well-diversified company with a more traditional investment-banking approach."
Sterne has hired longtime banker and Broward County commissioner John Rodstrom to head up the firm's public finance effort from a new office in Fort Lauderdale. Rodstrom is joined in the office by associate Jon Murstein.
Both men most recently came from Wachovia, which closed its public finance office in South Florida after assuming A.G. Edwards & Sons and undergoing management changes. Wachovia is now part of Wells Fargo.
Because some issuers in Florida are especially hard-hit by the recession, such as schools and community development districts, Rodstrom said the firm likely will emphasize water and sewer transactions since those sectors continue to be important throughout the state.
"Our clients are looking for solutions, maybe beyond typical bond financings," Rodstrom said, noting that one area that may require new funding strategies is pension liabilities because of disruption in the financial markets.
Murstein said the company's platform is efficient and poised to handle the current market, with no overlap in the numbers of bankers that some large firms had before the current downturn. Sterne Agee bankers have the freedom to pitch the solutions that are warranted, he added.
Before Wachovia, Rodstrom worked at Smith Barney, which later merged with Citigroup, from 1994 to 2005. He worked at Kidder Peabody & Co. from 1987 to 1994, and Merrill Lynch & Co. from 1982 to 1987. He has been a Broward County commissioner since 1992, and before that he was the mayor of Sunrise and a Fort Lauderdale city commissioner. Rodstrom obtained his bachelor's degree in political science from Columbia College and his law degree from Nova Southeastern University in Fort Lauderdale.
Murstein was at Wachovia from 2005 to 2008. Before that he was a summer intern at Harch Capital Management and Precept Asset Management, both in Boca Raton, Fla. He obtained a bachelor's in economics from Harvard College.
Sterne Agee's public finance group served as an underwriter on more than 147 municipal financings totaling $16.7 billion in par amount in the last year, the firm said. It has public finance offices in Atlanta, Birmingham, Boston, Houston, Macon, New York, and San Antonio.
The brokerage firm was founded in 1901 and has offices in 23 states.