Podesta & Co., a Chicago-based investment banking firm, has formed an financial institutions group that will focus on small-cap banks and thrifts in the Midwest and California.

The group, which consists of Christopher R. Raffo and David B. Moore, will conduct research on companies that are undergoing dramatic turnarounds and those that are ignored by analysts, said Carol Podesta Foley, president and CEO of Podesta & Co.

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