JPMorgan Chase is accelerating its aggressive expansion into Florida, encouraged by turning a profit well ahead of schedule.
This year alone, Chase is adding 35 branches, including 10 in the Tampa Bay area. Within five years, it plans to add 375 to 500 branches statewide, more than doubling its presence.
Among megabanks, Chase was slow to enter Florida, stung by a retrenchment after its initial entry in the 1980s. That all changed with the acquisition of Washington Mutual after the 2008 financial crisis, a deal that gave it more than 200 locations in Florida. Capitalizing on a poor real estate market, weakened competitors and relationships with existing clients, Chase made up for lost time quickly.
"We didn't think Florida would be a profitable business for us in (2011), but it is," said S. Todd Maclin, chief executive officer of commercial banking for the New York financial giant. "We're now making money here, so that emboldens us to move a little faster."
In fact, up to a third of all new U.S. branches that Chase builds will be in Florida.
Chase is already a household name with a portfolio of 90 million credit card customers and 8.5 million mortgages. With 5,400 U.S. branches, it also has a healthy banking customer base in the Northeast and Midwest; many want to keep that relationship going when they retire or relocate to Florida.
Florida's banking market has long been one of the most competitive in the country, but the real estate meltdown and lending squeeze has exacted a toll. Last year, Florida led the country in bank failures. Meanwhile, Wells Fargo is putting its name across the vast Wachovia branch network that it acquired.
Maclin, who stopped in Tampa on Thursday to meet with clients and co-workers, sees opportunity in the upheaval. "Let's just say we're hanging around the net," he said. "We'll pick up any easy baskets we can."
In running the third-biggest commercial bank in the country, Maclin said he thinks the economy is improving. It helps, he said, that the long-anticipated commercial real estate crunch was not as severe as some had feared.
Doug Petno, Chase's chief operating officer for commercial banking, talks about the economic turnaround in terms of bank balances. In 2008, Chase saw its loan balances drop from $140 billion to less than $100 billion, while its cash balances rose from $100 billion to about $140 billion as people "hoarded cash and just hunkered down."
After the fall elections, he said, many of Chase's business customers began feeling better about the economy and less queasy about more regulation. That momentum continued to build, he said, until political unrest in the Middle East and rising oil prices convinced some customer to "tap the brakes."
Petno is based in New York but has local ties, having grown up in Indian Rocks Beach. He thinks his old home is on the mend despite the dual drags of high unemployment and troubled housing. "On average, we're very encouraged," he said.
Chase bankers routinely quiz customers on two fronts: Do they plan to raise prices? And do they plan to hire? For the most part, Petno said, customers say they're doing both.
Even in hard-hit Florida, Maclin said, companies are investing again. And he thinks Florida will work its way through its real estate woes relatively soon.
"There's going to be a lot of bargain real estate in this state, and that will attract people," he said. "I would argue that's already happening."