Building Strong Bonds

How Siebert Brandford Shank & Co. L.L.C. became Wall Street�s fastest-growing public finance firm

It was a beneficial match. Muriel “Mickie” Siebert is legendary in finance circles. In 1967, Siebert became the first woman to buy a seat on the New York Stock Exchange, and she founded her own brokerage firm, in 1969. Sometimes referred to as “the first woman of finance,” Siebert used her notoriety to fight for a larger presence of women and minorities in the financial industry. When Brandford and Shank put forth the idea of starting a firm together, Siebert jumped at the proposition. “Napoleon, Suzanne, and I formed the firm over dinner with a handshake,” explains Siebert. “I was impressed with each of their individual accomplishments in the public finance arena. They each had senior managed large deals for major issuers across the country. We wanted to form a firm wholly owned by women and minorities that would be a force on Wall Street—and that is exactly what we did.”

After the dinner with Siebert, says Brandford, “we started the new business the next day. I saw it as a continuation of what we all did in the civil rights era, where the black and Jewish communities worked together to break barriers.” Siebert contributed $392,000, while Brandford and Shank invested $204,000 apiece to start the company. Some 30 of Grigsby’s 60 employees left for the new firm, Siebert Brandford Shank & Company L.L.C.

SBS had its work cut out for it to overcome those barriers. It was once common for clients to sometimes consider only one minority-owned firm for a deal and to pit us all against one another, Shank says. “My pitch was always that we wanted to compete against all firms because we had a track record of superior performance. Other growing firms seemed to focus more aggressively on getting a nice paycheck by just being included in the deal. While that’s more lucrative on a short-term basis, we began to be hired to lead larger deals because our clients had seen our results and trusted our ability to perform. This is a business of relationships. If you do well for your clients they remain loyal to you. I believe in the axiom ‘Slow and steady wins the race.’”

Though SBS has been in business for nearly 15 years, it’s never seen a period like 2009. The key to its success has been attracting new talent. One of the strongest recruits has been former New York City comptroller Bill Thompson. Believing Thompson would add depth to its bond-structuring team, SBS went after him when he lost his bid to become mayor of New York last fall. He joined the firm in April of this year, noting his pride in becoming part of a company “that’s witnessed such considerable growth in recent years.” Thompson also echoed the firm’s reasons for bringing him aboard: “Given the current fiscal distress faced by most large cities and states across our country, my experience will prove invaluable as our firm identifies strategies to assist these municipalities.” Because of Thompson’s former role as the person who supervised New York City’s accounting and finances, he will not conduct bond business with the City.

Many of SBS’s new hires reinforce what Brandford believes is one of the firm’s core strategic advantages: “We have far more former public sector employees than any other firm in this business.” Brandford says he’s pushed the company to find people who fully understand governments.

To that end, SBS has 18 regional offices in major metropolitan areas such as Atlanta, Chicago, Dallas, Detroit, Los Angeles, Miami, and Seattle. While larger firms were pulling back and centralizing their public finance operations in New York, SBS began significant expansion in 2002, setting up offices around the country with finance specialists who can service clients at a moment’s notice “rather than having to fly from New York,” says Brandford. “You can’t know how people in Seattle are thinking when you’re in New York. Or what officials in Fort Worth need when you’re based in New York. You have to have boots on the ground.”

SBS’s frequent clients agree that the company has an aptitude for understanding their particular needs. “I talk to a lot of bankers and look at a lot of [deal proposals] that they put together. Suzanne has a way of preparing some of the most compelling [proposals] in the marketplace,” says Paul T. Williams Jr., president of the Dormitory Authority of the State of New York (DASNY). “It’s not magic. She just hones in on the issues that we want to hear about. Other bankers present you with what they want you to see. For example, when we’re preparing to go into the market, SBS always offers strong pricing analysis of comparable deals that are both quantitative and qualitative; not everyone does that.” DASNY is responsible for public financing of public works construction in New York State, and is the second largest issuer of bonds in the nation after the State of California. In 2008 and 2009 combined, SBS participated in 10 transactions for DASNY, helping to raise $3.2 billion. “We couldn’t be happier with Siebert Brandford Shank’s talent and professionalism. The caliber of service and ability to execute put them right on par with the rest of Wall Street,” Williams says.

Nappier couldn’t agree more. In 2008, when the credit markets were virtually frozen, Connecticut went ahead with a bond issuance led by SBS. “The deal was initially sized at $250 million, but the state was able to increase the issuance to $500 million thanks in large part to SBS’s confidence and ability to seize on an opportunity to capitalize on the turning tide in the markets,” says Nappier. The state treasurer was particularly grateful that SBS cut yields on the bonds, which eventually reduced Connecticut’s cost of borrowing to 4.9% and saved the state more than $20 million in debt service costs. “Along with our debt management team, SBS has been a critical component to the strength and vitality of our state’s economy,” she says.

All of this explains the warm reception Shank received when she showed up in Hartford to visit Nappier that April morning. The two women sat in a conference room, chatting for about 30 minutes. Then Shank gave Nappier’s staff a presentation on a possible opportunity to refinance some of its existing debt, using an innovative structural feature that might lower the cost of borrowing. Shank was once again doing what she does best: engineering a deal.

—Additional reporting by Dale R. Coachman

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