Hilltop Securities trimmed its executive workforce coming into the new year — including a regional manager director in its advisory practice — but remains in growth mode, officials said.
The firm parted ways with at least five professionals from the advisory group that falls under the firm’s roughly 170-member public finance group in offices in Connecticut, Michigan, and New York, sources said.
The cuts come after a year of expansion, despite the COVID-19 pandemic and economic upheaval.
“As a leading municipal investment bank, HilltopSecurities has realigned a few areas within our organization to better position ourselves for the tremendous growth we are experiencing,” said Hilltop Chief Executive Brad Winges. “The changes impacted less than 2% of our existing staff and we continue to hire public finance bankers across the United States who are focused on being full-service solution providers to the public entity sector, leveraging our vast resources.”
Ben Brooks, vice president of the firm, declined to identify specific individuals or positions eliminated.
“As a matter of policy we do not comment on specifics related to staff reductions,” Brooks said. “Each of our verticals remains in growth mode, including Public Finance and Wealth Management.”
Steven Kantor, a regional managing director based in New York, was among those cut, according to sources. Kantor managed more than a dozen professionals in the East and is a 40-year veteran of public finance advisory and issuer positions. His ties to the firm predate the Hilltop name. He reported to David Medanich, Hilltop's head of public finance.
Kantor declined to comment. According to sources, Kantor said he was caught off guard by the firm’s decision and that the firm informed its staff of the cuts earlier this month. Kantor’s career included his position as an assistant to the Philadelphia director of finance and treasurer for the Municipal Assistance Corporation of New York City. He later launched his own firm — Arimax Financial Advisors — which was acquired by First Southwest Co. in 2004.
He remained with the firm after it became known as Hilltop when First Southwest Co. and Southwest Securities began officially operating as one company under the ownership of Hilltop Holdings Inc. in 2016.
Kantor’s clients included Anchorage, the New Jersey Turnpike, and several Detroit-based borrowers. Three others were cut in Connecticut and one in Michigan, sources said, including Benjamin McGuire in Michigan who joined the firm in 2016 from Edward Jones, Susan Caron who had been with the firm since 2004 and Mark Chapman, and William Lindsey, who were based in Connecticut. Chapman and Lindsey joined the firm in 2019. They previously were co-owners of Bond and Investment Consultants LLC which was absorbed by Hilltop.
None could be reached to confirm the information or to comment.
The decision to cut advisory professionals at a time when the firm is expanding in the banking arena raises questions about the firm’s strategic direction. It is a top three advisor and the business had long provided the bread-and-butter for the firm even as it’s grown its banking borders nationally, said several public finance sources.
“It’s hard to market yourself as a bank and separately as a financial advisor and Hilltop has been expanding more in banking and from a profitability standpoint the margins are much better in underwriting,” said one source.
A handful of firms like Baird, the former Piper Jaffray and RBC Capital Markets had healthy banking and advisory businesses over the years, but competition has grown with independent advisors that once focused on specific sectors like swaps, housing, and transportation branching out into new sectors or general governments.
“It’s competitive, no question, and it’s not a high margin business, and the margins are better for banking,” said one market participant.
Hilltop ranked third last year nationally advising on 712 deals valued at $31 billion behind PFM Financial Advisors LLC and Public Resources Advisory Group. It ranked 22nd last year nationally as a senior manager on 217 deals valued at nearly $3 billion, according to data from Refinitiv. On its website, the firm reports providing financial advisory services to more than 1,600 clients across 29 offices in 17 states across most public finance sectors.
Hilltop will hold a conference call Jan. 29 to discuss its fourth-quarter earnings.
Chip Barnett contributed to this story.
