Commerce Bank to acquire muni firm L.J. Hart

BY SourceMedia | MUNICIPAL | 11/30/22 12:57 PM EST By Christine Albano

Commerce Bank is planning to acquire L.J. Hart & Co. to expand its products and services and overall capabilities to clients.

Pending regulatory approval, St. Louis-based Commerce Bank will acquire the Chesterfield-based municipal bond underwriting and advisory firm to become a key part of Commerce Bank's growing institutional fixed-income business that is currently operated by more than 50 professionals across two business units.

Commerce Bank will retain the L.J. Hart & Company brand, staff members, and the subsidiary's current office in Chesterfield, the firms said.

The heads of both firms believe the merger is a win-win situation that will only strengthen and broaden their business goals.

"This transaction brings together two like-minded Missouri-based institutions that share a fundamental mission of building client relationships through great customer service," Bob Holmes, chairman and chief executive officer of commercial bank Commerce Bank, headquartered in St. Louis, said in a press release.

"We are excited to have L.J. Hart & Company as part of our team," Holmes said.

Through Commerce Brokerage Services, Inc. and Commerce Bank Capital Markets Group, Commerce provides fixed income trading, asset liability management, safekeeping and bond accounting to thousands of institutional clients.

Founded in 1991, L.J. Hart develops creative and tailored financing solutions for local governments, including school districts, counties, special districts, not-for-profit corporations, and other entities.

It has advised more than 300 Missouri public school districts and nearly a quarter of the 114 Missouri county governments, while also underwriting more than 2,600 municipal financings as senior manager with a par value over $7.3 billion, according to Refinitiv Financial Solutions.

"Commerce and L.J. Hart have worked together for many years and have gotten to know each other over time," Erik Swanson, executive vice president and managing director, Commerce Bank Commercial Tradeable Products, told The Bond Buyer. "Our companies are aligned on culture, have strong relationship-based business models, and a community focus," he added, calling L.J. Hart a "welcome addition to Commerce's capabilities" and a "great fit" for the bank's culture.

"The acquisition of L.J. Hart presents a unique opportunity to fill a gap in Commerce's institutional fixed income business and L.J. Hart helps establish the bank's municipal bond underwriting capabilities," Swanson said in an interview.

The founder of L.J. Hart & Company also sees benefits from the marriage.

"I am very proud of the business footprint we are developing with this excellent team and look forward to leveraging Commerce Bank's network for future growth," Larry J. Hart, chairman, chief executive officer and founder of L.J. Hart & Company, said in the release.

Thomas J. Pisarkiewicz, president of L.J. Hart, said the firms' compatibility was evident in the early stages of the acquisition talks.

"I was impressed by how well we worked together on an arrangement that expands our reach while continuing our present business practices," Pisarkiewicz said.

Commerce Bank is a subsidiary of Commerce Bancshares (CBSH) and has more than 155 years of financial service experience. It currently operates full-service banking facilities across the Midwest and some commercial offices in the Midwest and Southwest regions.

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.