Jefferies touts its depository i-banking success

Jefferies LLC has worked on some notable deals lately in the bank space, and the investment bank has touted its success.

A Jefferies LinkedIn post in March noted that the firm landed six high-profile bank deals over 15 months. In at least three of the deals, Jefferies worked on transactions involving banks at the center of the industry's recent tumult.

The most recent one came when it served as the exclusive financial adviser to New York Community Bancorp Inc. on its capital raise of $1.05 billion, the largest-ever private investment in a public equity (PIPE), according to Jefferies' LinkedIn post. The financing — which included backing from former US Treasury Secretary Steven Mnuchin's Liberty Strategic Capital, Hudson Bay Capital Management LP, Reverence Capital Partners LP and Citadel Global Equities — along with a leadership overhaul was seen as a lifeline to rescue the bank from its previous deteriorating situation.

Earlier in the cycle, Jefferies worked on another PIPE deal that helped shore up a different troubled institution, PacWest Bancorp. In that situation, Jefferies was a financial adviser to Warburg Pincus & Co. and Centerbridge Partners LP on their $400 million capital injection into Banc of California Inc. that was announced in July 2023 as part of the bank's reverse merger with PacWest. At the time, the capital raise was viewed as a key element that made it possible for the approximately $9 billion-asset-sized Banc of California to sign a deal with the roughly $38 billion-asset-sized PacWest.

Jefferies also had a role in one of the major failed bank deals in 2023. Jefferies and Morgan Stanley advised New York Community in March 2023 when the bank acquired assets and liabilities of the failed Signature Bridge Bank NA from the Federal Deposit Insurance Corp.'s receivership.

Yearslong relationship

It is not surprising to see New York Community turn to Jefferies. The depository investment bankers at Jefferies have a long deal history with the bank.

Jefferies' Aaron Packles and Vishal Sitapara were part of the advisory team to New York Community in the Signature Bridge Bank deal, according to S&P Global Market Intelligence data. Packles is the firm's head of financial institutions investment banking Americas and a senior managing director; Sitapara is a managing director covering banks and fintech, according to their LinkedIn profiles.

Packles and Sitapara — and a team from Morgan Stanley — helped advise Flagstar Bancorp Inc. in its sale to New York Community, Market Intelligence data shows. The transaction, announced in April 2021 and closed in December 2022, was a transformational move for New York Community that helped accelerate a shift to a commercial banking model.

Before moving to Jefferies, Packles advised on two New York Community asset sales in 2017, when the bank sold its mortgage banking business to Freedom Mortgage Corp. and sold its residential assets to an affiliate of Cerberus Capital Management LP. Packles joined Jefferies in 2018 after spending just about two decades at Merrill Lynch Pierce Fenner & Smith Inc., which was acquired by Bank of America Corp. in 2009. His move to Jefferies came after the investment bank's depository coverage thinned out.

The recent deal assignments suggest Jefferies has gained traction in the depository investment banking space, and they can help the firm build a reputation for arranging financing for institutions facing headwinds.

Recent large capital raises

Financial institutions hit in the 2023 banking turmoil accounted for a large amount of equity issuance in recent years. Since 2021, common and preferred equities issued by Silicon Valley Bank, First Republic Bank, Signature Bank, New York Community and Silvergate Capital Corp. accounted for 52% of total issuance by US banks with less than $250 billion in total assets, according to Market Intelligence data.

The New York Community equity financing was split over three offerings, two preferred stock offerings and one common stock offering that helped make Jefferies a top underwriter of bank common equity offerings in the first quarter.

Two other large equity offerings in the bank space that Jefferies has landed spots in recent years involved deals for Signature Bank. Jefferies had book manager roles on Signature's $739.2 million offering in 2022 and its $709 million offering in 2021.