CHICAGO - At home in Cincinnati since 1887, Seasongood & Mayer has watched many old giants fall.
Once-big players in the state like the Ohio Co., Prescott, Ball, & Turbin, and Cranston Securities were taken over by larger firms. Certain other Ohio underwriting firms have moved away from the municipal business as it has become less profitable.
But Seasongood & Mayer has remained a constant in the Ohio market -- always keeping just one office and concentrating on Ohio and northern Kentucky municipal bonds. Despite changes in the market, Seasongood's single-minded focus remains successful -- it was among the top three managers and among the top two advisers of Ohio public finance deals in the past five years, according to Thomson Financial Securities Data.
"An independent voice is becoming more rare," commented Raymond Headen, an Ohio bond attorney with Thompson, Hine & Flory. "With all these big banks, to have a voice almost crying in the wilderness adds a lot of value to the marketplace."
"We tend to be the people who are always here," said Paul Stubbins, a principal at Seasongood who has been with the firm since 1985. "We present a consistent face to the public. We don't lose people, either."
KEEPING IT IN THE FAMILY
Managing partner Gordon Reis 3d, 63, wasn't exactly born with a bond prospectus in his hand. But it was a near thing.
His great-grandfather, Julius Reis, was a co-founder of the firm with named partners Adolph Seasongood and Charles Mayer. Julius Reis was married to Adolph's daughter, Julia Seasongood. Then came three generations of Gordon Reis, the first two of whom are deceased, and all of whom have held the managing partnership of the firm. The next generation is involved as well. Gordon's daughter, Thea Reis, works in the firm's institutional sales department, while cousin Richard D. Reis is a principal on the firm's trading desk.
"We've really seen the industry grow," said the elder Reis. "My dad got in the business in 1929 and never really worked until after World War II. Business was terrible."
"In the 1930s, there were 50 public finance firms in this town. This was the bastion of the west. The bankers would go all over the United States," Reis said. But the Depression knocked out many of the firms, as issuers went into default. "That was the beginning of a lot of the attrition in this industry," Reis explained.
The bond business stayed bad during World War II because most available capital was dedicated to the war effort, Reis went on. But starting in 1946, issues started to pick up as economic productivity was directed toward rebuilding the country.
In the 1950s, Seasongood & Mayer was able to pick up work bringing primary sewage treatment to towns along the Ohio River.
The firm began to take on health care work in the mid-1970s, when that market started to take off nationwide. In 1976, it handled what was then the largest health care project ever handled in the United States -- a revenue bond deal for $68 million for Bethesda Hospital in Cincinnati, said Reis.
The firm came to realize that its survival depended on senior managing deals, and it started reinvesting profits to build its investment banking staff. Longtime staffers include J. Lee Mairose, who joined the firm in 1972; Joseph Magdich, the former deputy auditor of Butler County, Ohio; Stubbins, formerly at accounting giant Ernst & Whinney; and Lynn Goodwin, former treasurer of the Cincinnati Public Schools.
Other principals at the firm are Daniel R. Blank, Todd I. Braff, David J. Conley, Robert G. Cooper, Scot Perlman, and Richard Reis. "We've really accelerated hiring in the past 10 years," Gordon Reis said. Paul Stubbins' son, Scott Stubbins, will soon be joining the firm.
HOLDING THE STAFF
Reis, the managing partner, attributes Seasongood's staying power to investing in skilled people and convincing them to stay. "We've never lost an investment banker to another investment banking firm," Reis said. "Nobody has got a track record like that. We have the ability to reaffirm one another, and the cross-pollination of our skills has been very helpful in that we can take on deals other firms wouldn't take on or even generate or develop."
To get a job at Seasongood, Reis said it is "almost mandatory" to have prior job experience, "almost preferably" not as an investment banker. "Generally our modus operandi is to find people in one side of the business we think have talents in the other side of the business," Reis said, noting that Goodwin and Magdich both came from government jobs.
Reis said also said he is not interested in hiring anyone who doesn't know Ohio. "We don't have one investment banker that wasn't born in Ohio or northern Kentucky. That's pretty much my rule," Reis said. "I don't want people that don't think Cincinnati's their home .... Most of our people are University of Cincinnati, Ohio State people -- just regular guys, with a Midwest work ethic -- and we all like each other."
"One thing that's important for me is that I have some regional boundaries around my work," said Goodwin. "It's easier when you're dealing with local debt if you know all the parameters around that. I'm not as good a banker in Idaho as I am in Ohio."
"They've got a real feel for the Ohio market," said Ronald Shankman, chief operating officer of the Ohio Water Development Authority, a triple-A rated state agency which has used Stubbins as its financial adviser for 10 years. "Most of those guys have been around for a long time."
FOCUSING ON MUNICIPALS
Seasongood is run entirely by municipal investment bankers, something that has become more uncommon in the industry, Stubbins said.
Stubbins noted that spreads aren't what they used to be in the municipal business, and that some banks tend to treat municipals as a "loss leader" and less prestigious than areas like mergers and acquisitions.
Since Seasongood concentrates on munis and is in the business "for the long haul," it makes it easier to tell issuers what they don't want to hear, Stubbins said. For example, back in the 1980s, Stubbins advised the city of Dover, Ohio, to forgo a huge electric expansion financing it wanted to do. "Now they're really glad they didn't," Stubbins said.
"What we try to do is put ourselves in other folks' shoes and do what's best for them from the long-term perspective," said Mairose. "If that means telling someone their pet project is not economically feasible, then before they spend a lot of money on consultants and engineers, we tell them that.
"That's how you maintain your long-term credibility," he said. "We're dealing with long-term finance and it should be long-term financial planning, not to see what deal we can do next week or next quarter."
Headen agreed that concentrating on one line of business helps keep Seasongood independent. "There are a lot of big banks that have many different lines of business and the municipal market is only part of that business, so a lot of times the municipal bankers have to keep their mouths shut -- they can't affect securities lending or asset management. You have to have a voice out there that can really represent the municipal market."
Headen said he believes Gordon Reis is in an "excellent position ... to have a clear voice and have no allegiances other than to what he really believes in ," Headen said. "A lot of New York bankers recognize that if they want to do business in Cincinnati, you have to talk to Seasongood & Mayer."
COMPETITION AND THE FUTURE
Although Seasongood has a strong base, it is facing increased competition from the expansion of FifthThird Securities, which took over The Ohio Company two years ago. The Ohio Company had previously concentrated on Columbus and northwest Ohio, but FifthThird now wants to aggressively compete in southwest Ohio, according to Jeffrey Chapman, vice president and manager.
"This is the headquarters of the bank, so we're obviously going to have a presence here in this market," said Chapman, who noted that FifthThird had doubled its public finance business since taking over the Ohio Company. "We have a lot of respect for Seasongood and we think the issuers are the beneficiaries of some competition."
Another Cincinnati rival is Ross, Sinclaire & Associates Inc., although it tends to focus on Kentucky.
An ongoing source of competition are the big New York-based investment banks, jockeying for Ohio business. Reis believes that assuming all other things are equal, state underwriting business should go to firms with a presence in the state. "I guess I wouldn't feel that way if New York state was putting me on their deals," Reis mused.
Two years ago, Seasongood considered merging with a larger bank, "solely for the purpose of finding a broader platform, while continuing to maintain the entirety of the public finance operation within that platform," Reis said. "We just never found an appropriate partner."
Seasongood & Mayer has since decided to extend its product mix by forming an asset management department at the beginning of this year. "Frankly, we're looking at other business opportunities as well," Reis said.
But even as it expands, Reis said the firm's main focus continues to be public finance, and finding and maintaining talent. He said Seasongood welcomes any competition. "I think we have an attitude," Reis said. "I think our people think they're very special."
