Stifel Buys Stone & Youngberg to Expand Muni Banking Reach

Stifel Financial Corp., a St. Louis-based brokerage that has quintupled revenue since 2005 with nine acquisitions, said it bought Stone & Youngberg LLC, California’s fourth-biggest municipal-bond underwriter.

The latest deal, whose terms weren’t disclosed in a statement today, will boost Stifel’s public-finance banking business in the western U.S. Stone & Youngberg, based in San Francisco, has managed $2.3 billion in bond sales by issuers in California this year, ranking fourth overall in the state, according to Bloomberg data.

“Stone & Youngberg fits very well with our overall strategy of creating the premier middle-market investment bank,” Ronald Kruszewski, Stifel’s chairman and chief executive officer, said in the statement. Stone & Youngberg had revenue of about $100 million in 2010 and the combined company will have about 100 public-finance professionals, according to Stifel.

Stifel is expanding its municipal-bond business even as new issues this year have declined about 50 percent from the same period in 2010. For the first six months, 2011 issuance has averaged $4 billion a week, the lowest rate since at least 2003. Tepid demand from individual investors has coupled with budget deficits to curb borrowing by state and local governments.

U.S. states and municipalities issued about $121 billion of bonds last week compared with $216.6 billion in the same period a year earlier, according to data compiled by Bloomberg.

Last year, Stifel and San Francisco-based Stone & Youngberg managed more than 500 municipal bond issues, raising more than $8.5 billion, according to the Stifel statement.

Stifel will use the Stone & Youngberg brand in the markets the San Francisco broker currently serves, Stifel indicated. The companies plan to complete the acquisition, which is subject to regulatory approval, by Oct. 1.

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