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Stephens looking to cast wider net with bank research coverage

Stephens Inc. is once again taking advantage of the M&A fallout and building up its depository coverage.

The Little Rock, Ark.-based investment bank recently added to its equities team with the hires of financial sector sales specialist Matt Kelley and depository research analysts Matthew Breese and Broderick Preston. All three joined from Piper Jaffray Cos., which is greatly expanding its financial institutions group through the pending acquisition of Sandler O'Neill & Partners LP.

"With the Piper/Sandler combination, it looked like there was going to be some displacement," Stephens Managing Director Matt Olney said. "If there's displacement and there's some great talent available, whatever the industry is, we'll take a look."

In 2015, Stephens added to its financial institutions group by hiring a team from Sterne Agee & Leach Inc., which at the time was in the process of selling to Stifel Financial Corp. Bank equity research analyst Terry McEvoy was among the 2015 hires, but the company also significantly added to its depository investment banking footprint that year.

More recently, Stephens expanded its depository investment banking coverage in the Northeast and upper Mid-Atlantic regions with the hire of Frank Sorrentino IV, who was previously with Keefe Bruyette & Woods Inc. "With the addition of Frank Sorrentino to our investment banking team in July, we've positioned ourselves to cover companies across all regions of the country," Stephens' Head of Equity Capital Markets and Head of U.S. Depositories Scott Studwell said in an emailed statement.

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On the equity research side, Stephens also expects to have the entire country covered once its six analysts have fully launched coverage. Breese will cover regional banks in the Northeast, and Preston will cover regional banks in the Mid-Atlantic. Along with the hires, Stephens announced the promotion of analyst Gordon McGuire, who will cover banks in the West.

Olney said the company is happy with its current bank equity research footprint, but that it will remain opportunistic when it comes to hiring. "We're always going to be talking to top-tier talent, but as far as regions that aren't currently covered, I can't say we have identified anything right now," he said.

Stephens expects to have more than 150 banks under coverage. With the additional research product, the company is also adding FIG expertise on the sales side as Kelley will become the first financial sector sales specialist at Stephens. Previously, the company had generalists handling financial sector sales, and Kelley will now work with that team.

"The feedback we got from institutional clients was someone like Matt brings outstanding industry knowledge and what he brings is significantly important to their process," Olney said.

Olney noted that the equities business in general has faced headwinds in recent years. Some of the pressures include low volatility, shrinking commissions and passive investors taking share from active investors.

But Olney said Stephens takes a big-picture view and believes equities has a good outlook over the long term. He added that the near-term disruption can create some opportunities for Stephens to expand the business.

"We're always doing work and waiting for the right opportunity," he said.

Olney added that the Piper Jaffray and Sandler O'Neill deal created one of the situations.

"With opportunity, you never know when it's going to come along, and you have to be prepared," he said. "We were prepared this time."