Sterne, Agee & Leach’s bank advisory team is expanding on the West Coast with the hiring of a veteran California dealmaker and two of his associates.
John Hamel is joining the Birmingham, Ala., investment bank’s Newport Beach, Calif. office as a managing director after a yearlong stint in charge of the financial institutions practice of Roth Capital Partners, a boutique that helps small, growing companies raise money.
Previously Hamel spent more than ten years at Friedman Billings Ramsey & Co., where he ran its West Coast bank advisory group. Two people from Roth are joining him at Sterne Agee: Gerhard Erdelji, who has been named a vice president, and Aaron Sharabaika, named an investment banker. Erdelji worked with Hamel at FBR, too.
Small bank deals in California and elsewhere are picking up and Sterne Agee wants to make sure it has a coast-to-coast M&A coverage, says Robert Hutchinson, head of depository institutions investment banking.
Sterne Agee is one of the three largest private broker-dealers in the country. Rival community bank advisors such as Keefe, Bruyette & Woods and Sandler O’Neill & Partners have added talent on the West Coast recently too.
“We’ve got the nation covered right now,” Hutchinson says. Hamel “really rounds out our investment banking practice, establishing a very firm beachhead out on the West Coast.”
Sterne Agee is already strong in the Northeast, where Hutchinson helped launch KBW’s corporate finance practice before joining Sterne Agee in 2009. Some other KBW bankers later followed him to the Boston office of Sterne Agee, which also advises banks on mergers, capital-raising and other strategic needs in the Midwest and Southeast.
California and New England were two of the most active bank merger markets last year.
Hutchinson expects the momentum to continue this year, particularly in New England, where Sterne Agee recently advised Boston-based Mercantile Capital Corp. in its $26.5 million sale to Commerce Bancshares Corp., of Worcester.
That deal is important because it is an example of a buyer acquiring a healthy franchise for its profits, he says. The pricing of most bank mergers since the downturn has been based on the value of the selling franchise’s equity and liabilities because elevated losses and other impairments had made profit forecasts difficult, he says.
Mercantile Capital has a clean balance sheet and is making money. Its issue was finding the capital to fuel growth, he says, adding that the fairly high price it commanded could compel other small banks in Massachusetts and elsewhere to consider selling.
“We’re starting to crack the door open on mature, small banks being looked at for their earnings stream,” Hutchinson says. “Good performing banks will be rewarded” with good prices.