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Boenning eyes further expansion after deal for bank-focused broker

Boenning & Scattergood Inc. has no plans to slow down its expansion following the recent addition of broker/dealer Sweney Cartwright & Co.

The West Conshohocken, Penn.-based investment bank unveiled July 30 that it was bringing Sweney Cartwright and its roughly $700 million in client assets under the Boenning corporate umbrella. Now, with Sweney Cartwright on board, Boenning has its eyes set on expanding its private client business into the Columbus, Ohio, market with the intention of scaling out those operations throughout the state and beyond.

To do that, Boenning executives say they will not shy away from future M&A opportunities that would extend their company's footprint in the Midwest and Mid-Atlantic regions, so long as the corporate cultures are a match.

"We're making sure that we don't just pursue acquisitions, transactions or anybody joining us just for the sake of growing the business," Boenning President Michael Mara Jr. said in an interview. "We're really looking at each individual opportunity."

Based in Columbus, Sweney Cartwright specializes in tax-free municipal bonds, stocks and a mix of other investments. The company provides Boenning with a wealth management presence in the Ohio region, where it already has sizable public finance and investment banking businesses, Mara said. The companies also share an affinity for community banks, as both have "deep roots" in making markets for those stocks, according to the deal announcement.

"This transaction provides some firepower to put toward an expansion outside of [our] investment banking relationships within the market," said Chad Hull, a Boenning managing director and its head of investment banking, in an interview.

Boenning has been a leading adviser and underwriter to the banking industry for the past several years. Between Jan. 1, 2017, and June 30, the company worked on 25 deals in the sector that carried a total valuation of $2.62 billion. That was the tenth-highest amount of deals that any financial adviser worked on in the banking industry during the two-and-a-half year period, according to S&P Global Market Intelligence data. During that same period, Boenning worked on 10 common stock offerings in the banking sector, making it the No. 11 underwriter for the industry based on number of offerings.

Sweney Cartwright's ties to the banking industry date back to 1933 with the passage of the Glass-Steagall Act, the landmark legislation that separated commercial and investment banking and ultimately led to the company's creation. Today, Sweney Cartwright makes markets, meaning it continually provides bids and offers in securities so investors have liquidity to trade against, for more than 25 community banks' stocks.

The push for further exposure to the community banking sector comes amid a mixed year for bank stocks, as concerns about the yield curve have particularly dampened many investors' outlooks on the sector. As of Aug. 20, the SNL U.S. Bank and Thrift Index was up 6.68% on the year while the S&P 500 had risen 15.70%.

But Boenning Managing Director Charlie Crowley still believes there is room to run for bank stocks. Retail investors, in particular, have long been drawn to community banking investing given the fact that those companies' stocks tend to be "reasonably valued, pay a nice dividend and, from time to time, there's some acquisition pops that occur in a portfolio of bank stocks," Crowley said. He added that the banks that Boenning is in contact with say they are still "very confident" about their business and earnings prospects over the next couple of years, making the addition of Sweney Cartwright that much more valuable.

"It's a nice fit culturally because we have trading, research and investment-banking expertise all focused on the banking sector, among other things," Crowley said in an interview. "We think there will be a number of well-run banks that will prove to be good investments over time."