Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, May 26, 1993 TAG: 9305260053
SECTION: BUSINESS PAGE: B5 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
DATELINE: LENGTH: Medium
Now it has five offices - in Roanoke, Charlottesville, Falls Church, Lynchburg and Richmond. A sixth office will be in business June 15 in Harrisonburg.
The company has 45 employees, about half of them former workers for Dominion Bankshares Corp., and a customer base of about 3,000 individuals and businesses.
Ferguson Andrews handles 500 to 600 transactions a month. It has managed one municipal bond offering and taken part in about 30 other deals worth a total of $1.5 billion. It will place commercial debt worth $9 million to $14 million for a Richmond firm.
"Business is going pretty well for a new firm," said President Michael Smith.
How did the staff accomplish this in just one year, especially when Virginia's economy seemed to be stalled in an unsure recovery from recession?
"We're the local boys. That helps," Smith said. "We're locally owned and managed.
Except for Roanoke and Richmond, he pointed out, Ferguson Andrews operates in small cities. Even at Falls Church, it strokes a "small-town image" and works outside the perimeter of major competitors in Washington, D.C.
Another factor, he said, is that "our service tends to be far more personalized" than that of competing brokerage houses and merchant banks.
Gregory W. Feldmann, vice president and treasurer, said customers "want to be dealt with person to person." That level of service, he said, "is our niche."
And, Smith said, the growth is supported by the high technology put in place by James Kern, vice president and operations manager.
A decade ago, such growth wouldn't have been possible, according to Smith. The Ferguson Andrews trading desk in Roanoke is as closely in touch with the markets as any firm in New York City.
Feldmann said the company, working on a capital placement deal with a local firm, was able to trace every offering in its industry for the past 30 days. The firm gave the client, in effect, "a synthetically created bond."
It's not every business, Feldmann said, in which the chief financial office or treasurer will personally roll up his sleeves and do a deal.
"We think we're unique," he said. "There's more than just a brokerage" because it handles municipal and private capital business focused west of Interstate 95. "We're a huge resource embedded locally."
Brokering the buying and selling of stocks and other investments accounts for 80 percent of its business, Smith said. Of that, about 30 percent is for institutions and about 50 percent for individual customers.
The other 20 percent is corporate and public finance. Five people work for that group whose customers are mostly middle-market companies with revenues of $5 million to $150 million.
The firm started by Smith, Feldmann and Kern now has a fourth executive: Philip Davis, vice president and chief financial officer, who came from a company in Atlanta.
Its chief backer is J. Gray Ferguson of Charlottesville, who holds the title of chairman and is described by Smith as a patient man who takes a long view of his investment. (Andrews is the maiden name of Ferguson's wife.)
That's fortunate, because Ferguson Andrews has yet to turn a profit.
"We're getting there, but not yet," Smith said. And whether it happens in the second year depends on the pace of office openings, which have sapped the cash flow.
Smith said Ferguson Andrews would like to open offices in Winchester and Fredericksburg by fall. That would create the loop in the smaller and underserved cities around Washington.
The second year may also see an office in Abingdon, where the firm has established working relationships selling investment products through community banks. Longer range, Smith said, is the logical step into smaller cities in southern West Virginia and western North Carolina.
Feldmann said the staff, like Ferguson, is focused on what the firm can be in three years rather than on profits in the first year.
It also concentrates on what Ferguson Andrews' presence means to Western Virginia, he said.
Capital has tended to flow out of this region rather than into it, he said. Now Ferguson Andrews concentrates on finding capital for companies in Western Virginia with good growth prospects.
There are other investment banks in Virginia, he said, but none in which the top officers rub shoulders with people in the community.
by CNB