Starting Over

When the planes slammed into the World Trade Center on Sept. 11, few companies were as hard-hit as a small, close-knit firm called Sandler O'Neill. Of the 83 people in the office that morning, only 17 got out alive. Employees lost mentors, assistants lost bosses, friends lost friends. This is the story of what happened next.

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Herman's Motto
A week after the attack, rescue workers at ground zero found Herman Sandler's battered body--one of several hundred (out of 3,000 deaths) to be recovered from the rubble. On hearing the news, Sandler O'Neill employees were not surprised at all. "That's so Herman," said Suzanne Ircha. "He was always larger than life."

To hear people talk about him now, that would certainly seem to be the case. At 6-foot-2, perennially tanned and spectacularly bald, Sandler was a grand and imposing figure with a big, magnetic personality. He was the kind of guy everyone wanted to be around: strong and confident and funny and charming. "Herman was Daddy Warbucks," says John Kanas, CEO of North Fork Bank on Long Island, who, in addition to being a client, was one of Sandler's closest friends. "My dad never brought a briefcase home," recalls his youngest daughter, Jordana. "My dad believed in having fun." He owned houses in the Hamptons and in Florida, and was famous for his over-the-top parties. He had three yachts. The one that was docked at the marina by the World Trade Center was named No Problem. That was his motto. If you can write a check for it, it's not a problem, he liked to say.

Dunne first got to know Sandler after landing a job as a bond salesman with Bear Stearns. Dunne had been fired from his previous job at Paine Webber and was in bad straits. Sandler, a decade older and a much higher-ranking member of the bond sales team, became his protector and mentor. As was invariably the case when Sandler took a shine to someone, he also became his friend. He helped Dunne regain his confidence, and he showed the younger man that you could do business on Wall Street without being cutthroat. For Dunne, this was a revelation. He remembers, early in his Bear Stearns career, taking Sandler along on a visit to a client in Florida to whom he hoped to sell some bonds. Dunne watched in awe as Sandler spent the afternoon talking to the client--the portfolio manager of a small community bank--not just about the bonds but about the bank's business, its opportunities, and its problems. And then he listened--really listened--to what the man had to say. By the end of the conversation, the bank's entire top management was in the room, hanging on his every word. As the two men left the meeting, Sandler turned to Dunne and said, "I'm here for you." No one on Wall Street had ever said anything like that to Jimmy Dunne. "I knew I'd found the guy," he says now. "I knew I had to stick with him."

In 1988, after nine years at Bear Stearns, Sandler quit in a dispute over money. There was never any doubt that Dunne would be among the Sandler loyalists who walked out with him. There were six of them who founded Sandler O'Neill--3-2-1, they called themselves, meaning that they were three Jews, two Irishmen, and a Wasp. (Quackenbush signed on a few months later.) At Bear Stearns, Sandler's clients had been financial institutions; now he and the others set out to establish an investment bank that would cater to small and medium-sized banks, which they saw as an underserved market.

Soon enough, they had a business. But they built it in a way not often seen on Wall Street anymore. They gave clients the advice they felt they needed rather than the advice they thought would put the most money in their own pockets. They stayed with clients when things went bad, not just when things were going well. And to the clients themselves, nobody represented this ethos better than Sandler himself. "When no other investment bank would talk to us," says North Fork's Kanas, "Herman stood by us."

Even more than his loyalty, Sandler's clients valued his business sense. "You always listened to Herman because he was always right," says Tom O'Brien, president and CEO of Atlantic Bank in Manhattan. In his universe of small banks and thrifts, Sandler's clients say, he was nothing short of a visionary. "Whenever I spent a weekend with him, I always came back with a $5 million idea," says Kanas. Tommy Wu, the head of United Commercial Bank Holdings in San Francisco, recalls Sandler's advice when the firm was taking his company public: "He told me, 'Don't limit yourself.' I'll remember that as long as I live."

Among his troops, Herman Sandler was beloved--a father figure to just about everyone who worked at the firm. He was the one you'd go to for advice--not just about business but about life. He'd help you through the rough patches, and then applaud when you were back on your feet. On holidays and summer weekends, if you didn't have a place to go, Sandler would invite you to his home. "When you were around Herman, everything was taken care of, everything was going to be all right," says Ircha.

By the time of the WTC attacks, Sandler O'Neill was both thriving and highly profitable. It had 31 partners and 171 employees in all--148 in the World Trade Center, plus 23 in offices in Memphis, Chicago, and Boston. By the end of 2000, it was generating well over $100 million a year in revenues. Some $60 billion worth of bonds flowed through its fixed-income desk. It was ranked sixth among financial advisors in bank and thrift deals--behind the likes of Merrill and Goldman, but ahead of such first-rank firms as J.P. Morgan and Morgan Stanley. It had a roster of over 1,000 clients. In its small pond, it had become a very big fish. Though it was still an aggressive firm--this is Wall Street--there was a sense that the mountain had been climbed. Now Sandler and its clients could enjoy what they had achieved.

That's what Tom O'Brien of Atlantic Bank felt this past Labor Day, which he spent at the beach with Chris Quackenbush. It was a beautiful day, and the kids were playing, and there was a warm feeling of contentment in their little group. "Who would have ever thought we would be this fortunate," said Quackenbush. Sept. 11 was eight days away.

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