A group that includes the co-founder of Sandler O'Neill & Partners has started a new investment bank aimed at community and regional banks.

Kimberlite Advisors will advise community banks, real estate companies and investors, the New York firm said in a release issued Tuesday. Thomas O'Neill, founder of Sandler O'Neill, will serve as co-chief executive with Michael Coster, a former Lazard Frères managing director.

There has been a lot of upheaval in investment banking in recent months. Stifel Financial earlier this year bought Keefe, Bruyette & Woods for $575 million. That combination created the largest U.S. investment bank advisor to commercial banks, as measured by M&A deal value. Kimberlite starts in an environment where investment banks have enjoyed an increase in fee income.

Other principals involved with Kimberlite include Lewis Ranieri, a former Salomon Brothers vice chairman who is considered a mortgage-finance pioneer; Alan Pomerantz, a lawyer who headed the real estate practice group at Weil, Gotshal & Manges; and Kenneth Hamlet, a former president and CEO of Holiday Inn.

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