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Firm Profile

A discussion between SJ Guzzo, MD of Debt Capital Markets at SouthState| DuncanWilliams and Mike Nicholas, CEO of the Bond Dealers of America

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S.J. Guzzo, MD, Debt Capital Markets
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Founded in 1969, SouthState|DuncanWilliams is a broker-dealer headquartered in Memphis, Tennessee and is the wholly owned subsidiary of SouthState Bank, N.A. From its beginnings in 1969 as a small, regional municipal bond firm with its roots in the southeast, Duncan-Williams Inc. (D-W) grew to be one of the largest regional, woman-owned broker-dealers in the nation before becoming a wholly owned subsidiary of SouthState Bank, N.A. in February 2021. Over its 53 years, Duncan-Williams Inc. has become a nationally recognized financial services provider serving institutional fixed income clients across the country. SouthState Bank’s own Debt Capital Markets group also has a long history in the industry serving southeastern financial institutions.
On October 11, 2022, the Debt Capital Markets teams from Duncan-Williams, Inc. and Southstate Bank’s Correspondent Division became one operating under the brand SouthState|DuncanWilliams. Today, this combined team is better prepared than ever to address even the most complex financial challenges. SouthState|DuncanWilliams has expanded its capabilities across asset classes and financial markets, giving its clients broad access to an ever-changing world of financial opportunity.
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Mike Nicholas, Bond Dealers of America:

First, thank you very much to SJ Guzzo, MD for Debt Capital Markets at SouthState|DuncanWilliams and BDA Board Vice Chairman for taking time to talk with the BDA for Fixed Income Insights. We mention the integration into SouthState Bank in the opening and I’m wondering if you can talk about that move and now being part of a regional bank after being independent since 1969.

SJ Guzzo, SS|DW:

D-W had successfully competed for many years as a family-owned broker-dealer and we worked hard to maintain a family-like culture. As we all know, dealers are facing increasing regulation, expensive technology development, and competition hasn’t gotten any easier. The direction and velocity of all those issues didn’t seem to be changing, and was definitely not slowing. We didn’t go out seeking a partner but when SouthState reached out and we found that they shared the idea of a family-like culture, were familiar with our business and provided us an opportunity to be even more competitive going forward, we felt like we should explore it. The opportunity presented itself, and within a few months we reached an agreement. Duncan Williams, our CEO, felt that while the sale was bitter-sweet, moving forward with this transaction was the best option for our Team Members and to continue the D-W legacy.

MN:

How has business evolved at SouthState|DuncanWilliams, and how do you expect that evolution to continue now as part of the bank?

SJ:

D-W started as a municipal firm with a Public Finance group bringing municipal deals in the Southeast. Over the next 50+ years as a BD, D-W evolved its customer base into one that is national and includes institutional buyers of all types, and its product set to include all asset classes. The Debt Capital Markets group at SouthState Bank is a group of veteran professionals with its beginnings in correspondent banking in the Southeast, many that have been together for twenty-five years or more. The group specialized in its southeastern footprint, growing its customer base and creating deep relationships with client financial institutions by offering a broad array of correspondent services to them. Because the two businesses are very similar, the combination would not only increase, but also diversify, both the footprints and the revenue streams of the combined group. Our plan is to continue to expand the platform, and the opportunity to do that is even bigger now after joining SouthState Bank. Similar businesses, and the larger balance sheet, makes for a smoother transition and a runway for growth.https://www.oysterllc.com/

MN:

Can you talk about the challenges of operating a regional BD - from business to market issues and obviously to federal regulatory challenges?

SJ:

Every business manager must have a close eye on profitability. And just by the laws of economics, economies of scale more greatly benefit larger rather than smaller. Time marches on, and in our industry, with it so does technology and regulation. Monitoring our business to keep up with regulation takes a tremendous amount of time and budget. Often keeping up with regulation means updating technology, and even though there’s no choice the new technology is no less expensive. We have adapted our platform to focus our time and budget more fully on our core business, Institutional Sales. All of that magnifies the challenge of operating a middle market BD, not to mention the people issues and the changes brought on by COVID. And for those reasons, having the BDA to lobby on our behalf regarding the issues that affect us daily is of paramount importance.

MN:

Aside from challenges, we at BDA like to discuss opportunities for middle market dealers. As now as part of a regional bank, where do you see the most opportunity for growth, expansion, and benefits to clients?

SJ:

We have long had an eye toward expanding our platform because we can do that organically and in ways that will complement our current business and customer base. That growth includes broadening the width and breadth of security types we actively trade and increasing the situations where we ‘create the CUSIP’. With a bank partner, our ability to take advantage of opportunities that allow us to do those things increases both because of the opportunities to capitalize on the bank balance sheet and the larger pot of capital. And we shouldn’t forget Duncan-William’s beginnings as a Municipal Bond firm. Our Public Finance group is active in the Southeast, but there is opportunity to expand that business to match our fixed income distribution footprint more fully. Finally, the industry in general, especially the middle market BD sector, has changed significantly due to acquisition. We have started to make those changes so we can take advantage of our strengths. All those changes are yet to filter through, but we look forward to capitalizing on those changes. All of that implies more product and service for our clients.

MN:

How has COVID and remote work affected the business and the office culture? And what are your plans moving forward to address the remote work dynamics most are facing?

SJ:

COVID has been a game changer. Obviously, we were concerned about how we were going to get business done in March of 2020 when we pivoted to work-from-home. But we learned over the next 2 years that we can get it done in ways we didn’t fully consider before. Now that the genie is out of the bottle, people have an opportunity to manage the balance of their work and personal lives like never before. The cost of that is the loss of cohesion and culture at firms like BD’s. Our industry has always relied heavily on the office interaction between Sales and Traders and Analysts to get our business done. But the transfer of ideas can be less fluid over the internet. With fewer people in the office, we had to shift how we go about training new personnel. Additionally, there is a Regulatory aspect of work-from-home that requires adapting our procedures to accommodate. I think this new paradigm will continue to evolve over time – it must. Firms will have to have a way to maintain their culture and train new people. And we all enjoy the additional flexibility between our work and personal lives. We are currently in a hybrid work environment and plan to remain that way at least for the foreseeable future.

MN:

As a former woman-owned firm, can you talk about the focus on diversity and inclusion? Is there a dedicated D&I initiative and focus at SS|DW and how do you expect / hope it impacts the culture at D-W and the industry overall?

SJ:

As you mentioned D-W operated as a woman-owned firm for many years. Diversity awareness is a part of our parent bank’s commitment to promoting a greater purpose as it recognizes its own corporate social responsibility. The bank has adopted a 3-year diversity plan and formed a D&I Council to oversee the strategy. For SS|DW and our industry, broadening our insights and our capabilities can only enhance our commitment to the communities we serve.

MN:

Bond market technology is ever evolving. It is an expensive but necessary tool to maintain and increase market share across products. Can you talk about SS|DW’s focus on technology and the steps you have taken to position yourselves when competing against larger firms with deeper pockets?

SJ:

There is no doubt that technology continues to evolve – I get calls every day from technology companies talking about how their product will solve all the latest regulatory requirements. If we had enough money, we could solve all the problems. But that’s the issue, isn’t it? We have an ever-increasing regulatory burden, and evolving markets and products, both of which require more advanced technology to stay competitive and must allocate and manage our budgets to afford it. One of the exciting things about partnering with SouthState is the technology they had previously developed and brought to the table. We are using that technology to answer some of our internal needs for sales, trading, and settlement. Obviously externally, where we are dependent on third party vendors, we are very cognizant of the ‘must-haves’ v. the ‘nice-to-haves’ and allocate our budget accordingly. I do like to keep up with the evolution of technology in the industry and invite vendors to present their products regularly so we have a good idea of what’s out there and how technology might help our business.

MN:

Last question - among all the challenges this industry throws at you, what is your biggest focus related to expanding an already very successful platform at SS|DW?

SJ:

People and culture are the fuel that makes the technology and platform and products and services valuable to our customers. COVID has had a significant impact on how people work, and what they expect from work, and there’s a gap between that and what might be the most effective answer for the collective firm. Bridging that gap is bigger than just the reconciliation of how many days a week or month someone is in the office. It’s reconciling expectations on both sides and finding the right answer somewhere in between. To complicate things further, we are currently bringing together two different platforms. We have new policies, procedures, workflows, titles, responsibilities, etc., that we are asking people to embrace. That’s a tall order. Our employees have done a great job of being open to change and working through the hurdles we run across. But the effort by everyone at our firm that has gone into bringing these two platforms together is by far my biggest focus. And frankly, given the importance of people and culture to our business, I don’t see that changing.