Beyond a cavernous lobby, past escalators and through long hallways, $300 million in SAISD bonds were bought and sold Tuesday at Frost Bank’s downtown headquarters on the only bond trading floor in San Antonio. Business as usual for the bank’s agents. But on this particular morning, eight SAISD students were there to watch.
It was a visual connection that Frost’s traders don’t typically get with the millions of dollars of bonds that come through this room every day and a rare opportunity for students to see how the process works. The Lanier High School International Banking & Business Magnet students were an especially engaged group.
“Their education is coming alive,” said Don Frost, executive vice president of public finance of Frost Bank San Antonio. He and his staff led the students on an (almost) all-inclusive tour of the tower and its operations.
Imagining what a stock/bond trade floor looks like, most minds go straight to “pit traders” as seen on CNBC, yelling at each other and throwing tickets across the room. The students entered a room similar to those in large banks across the world: rows of seated traders talking with investors on telephones, or typing furiously on their computers, many doing both at once.
“Today they don’t use paper tickets, it’s all electronic,” Frost said. “On active days you might see someone throwing a paper clip … it only gets wild if there isn’t any work to be done.”
SAISD is refinancing outstanding bonds to take advantage of current low-interest rates. The trade agents are on the phone with institutional investors across the country. Today’s transaction is part of an ongoing debt management strategy that SAISD hopes will save $35 million.
‘Today, y’all are the star, they’re spending all their time on San Antonio Independent School district,” Frost said.
These students have gone through business and accounting courses and most will soon be going on to take classes about entrepreneurship. The magnet school has an on-site credit union that provides some hands-on learning, but the Frost Bank tour is certainly on an entirely different level.
“To be on the trading floor while it’s happening, talking to the capital markets people, being a part of it, it really puts it in a whole different perspective,” said Leslie Price, SAISD’s executive director of communications.
Sarah Chavez, a 16-year-old junior attending the magnet program, said she was surprised at how many different jobs – how many pieces to the puzzle – there were at a bank. Not everyone is a “banker,” per se.
“Right now we’re kind of in the ‘money phase’ of our lessons,” she said. “We came to the bank not knowing how we can make a big impact at a place like this. We walked in and everyone greeted us as if we worked here everyday. That was really awesome … we have more power than we think we have.”
Chavez said she’s “pretty nerdy,” so she actually enjoys the accounting and math side of her coursework – but is also interested in owning her own business.
Anthony Rodriguez, 17, said he found the tour enlightening in terms of what banks actually do.
“A majority of this is helping the community – helping out people,” he said. Rodriguez, a senior, is keeping his career plans open but has enrolled at Norwich University, a private military college, in Vermont.
For the students, a popular stop on the tour was the commercial vault. Stacks of cash are more interesting than people sitting at computers. But the students were engaged every step of the way – even asking questions about global finance.
“This is a school district (bond today), but we take care of cities, counties, water districts, state of Texas issues,” Frost said. “We’re the lead manager of a syndicate of six banks,” that sells to brokers, other large banks, insurance agencies, and other entities. Frost Bank also has more than 260 “correspondent banks” that use the trading floor; smaller, rural banks otherwise would not have access to a trading floor. Even as Frost grows its financial reach across Texas and globally, it remains local, Frost said.
“If Frost grows, we’re keeping the business right here in Texas,” he said.
According to an SAISD press release, “Prudent financial management of SAISD’s debt portfolio has resulted in a property tax rate that is seven cents below originally projections in the 2010 Bond election –producing $99.6 million in interest-saving tax-rate relief for our taxpayers to date since December of 2010.”
*Featured/top image: Frost Bank Executive Vice President of Finance Don Frost gives Lanier High School International Banking & Business Magnet students parting words before they continue their tour of the bank. Photo by Scott Ball.
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