Jan. 9--Lazard Ltd. wanted to open an office in Charlotte, so it recruited Scott Smith from Wachovia Corp. and asked him to be in charge.

Smith was impressed by Lazard, a 161-year-old investment bank with offices on both coasts. He resigned from Wachovia in the spring, tapped a colleague to come with him, and opened Lazard's first Charlotte office a few blocks north of his old employer.

That was around Labor Day. Within a month or two, another out-of-state investment bank, Robert W. Baird & Co., had moved in down the hall. It was a de facto Wachovia reunion: Baird had tapped three Wachovia alumni to run its first Charlotte office.

"We have to lock our doors now," Smith joked.

He was kidding, but the 10th floor of the Transamerica building on Tryon Street is emblematic of the rising importance of small and midsized investment banks in Charlotte and throughout the country. The firms specialize in services such as advising investors when they want to buy businesses, or helping companies sell themselves or go public.

The five major Wall Street investment banks have all collapsed, been sold or agreed to be regulated like commercial banks. Layoffs are expected at the investment banking arms of Bank of America Corp. and Wachovia Corp.

Most of the smaller firms, by contrast, are staying the course, and some even have plans to hire. The smaller deals they pursue haven't dried up as much as the mega-deals that the big banks work on. They're quietly toiling while their larger counterparts' problems generate negative headlines, and they're free to operate without the scrutiny that comes with accepting the government's banking bailout.

There's buzz that more middle-market investment firms might set up shop in Charlotte, since predicted layoffs here would provide a rich field of potential hires. In addition to Lazard and Baird, New York-based Jefferies Group Inc. opened a Charlotte office in the fall of 2007.

To be sure, most of the smaller firms employ just a handful of bankers. Their high-paying jobs account for a tiny fraction of the 50,000-some finance and insurance jobs in Mecklenburg County.

Don Millen, who co-founded Charlotte's Dragonfly Capital with Rene Matthews-Usher, said smaller firms can take advantage of the uneasiness surrounding some of the big firms. "Nobody wants to hire an investment bank to sell their company and find out three months later that the bank is going out of business," Millen said.