On Monday, JPMorgan Chase & Co. (JPM) announced its plans to open 100 new banking branches in California by the end of this year. This is part of the company’s expansion plan in California that it had announced in its Investors’ Day presentation in February, where the company had announced the opening of 525 to 700 branches in California over the next five years.
Of the 100 new branches, JPMorgan stated that nearly 65 will be in Southern California (Los Angeles, Ventura, Riverside, San Bernardino, Orange and San Diego counties), about 20 in Northern California (San Francisco Bay Area and Sacramento Delta) and remaining 15 will be in Central California (Kern, Tulare, Fresno and Madera counties).
With this branch expansion, JPMorgan’s network would expand to more than 900 bank branches and 3,000 ATMs in California. At present, the company employs more than 18,500 people in the state. This expansion would add nearly 1,500 jobs to better serve the customers in the state.
Apart from creating employment in its banking operation, JPMorgan would be able to generate a significant number of jobs in the construction sector to build the branches and various other small business vendors who will provide bank related services.
Furthermore, over the last two years, JPMorgan has opened 16 Homeownership Centers, offering loan counseling to families struggling with mortgage payments in California. In 2010, the company raised about $24.3 billion in finance for non-profit organizations and local governments and also loaned $3.13 billion to them.
JPMorgan offers branch banking services, credit cards, online and mobile banking, investments, and mortgages and other loans to approximately 14.5 million customers and small businesses in California. This year, the company anticipates investing $10 million as grants to non-profit organizations in the state.
Californiais a major and a high-priority growth market for JPMorgan. The company plans to invest substantially in people, facilities and technologies in the state.
With the completion of this expansion plan, JPMorgan will be able to improve its top line. Further, the confluence of strong client inflows, improved equity-centric activities, growth in credit cards and investment products along with steady international expansion will usher in meaningful revenue opportunities over time.
However, sluggish lending activity and customer trading, pressure on net interest margin as well as the impact of legal and regulatory challenges will drag down JPMorgan’s future earnings.
Currently, JPMorgan retains a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. Similarly, one of the company’s close competitors Comerica Incorporated (CMA) retains a Zacks #3 Rank.
Further, considering the fundamentals for JPMorgan, we maintain a long-term “Neutral” recommendation on the stock.
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