JPMorgan Chase expects to open more branches than it closes

JPMorgan Chase & Co. plans to press ahead with a market expansion strategy it said is driving deposit share outperformance, and it will build more branches than it will close.

Industrywide net closures have continued, though they have decelerated from record levels during the pandemic.

JPMorgan Chase said its own network declined from 5,293 branches in 2017 to 4,831 branches in 2022 even as it expanded its coverage, with 60% of the population within a 10-minute drive, up from 50% in 2017. It aims to reach 70% coverage by that measure.

Deposits per branch shot up from an average of $119 million in 2017 to $227 million in 2022, and the bank expects its network to remain less dense by that measure than in the past. Nevertheless, in the future, "you will see us build more branches than we close, resulting in a modestly larger branch network over time," Jennifer Roberts, CEO of consumer banking, said at the bank's investor day May 22.

Retail banking "is still absolutely local," said Jennifer Piepszak, co-CEO of consumer and community banking. The bank plans to spend $1.4 billion building its branch network in 2023.

"It is a love affair with branches," said Marianne Lake, co-CEO of consumer and community banking. "We have complete conviction about the value that branches deliver to all of our businesses and all of our products."

Roberts highlighted several large markets that JPMorgan Chase has entered or where it has mounted major branch construction efforts. In Los Angeles, the bank has built more than 100 branches since 2012, lifting its deposit share to 20.4% in 2022 from 11.6% a decade ago, it said.

Executives said they do expect deposits to be modestly down from 2023 to 2024 excluding the failed First Republic Bank acquisition, reflecting prevailing trends. Banking and wealth management deposits fell from $1.17 trillion in the first quarter of 2022 to $1.13 trillion in the first quarter this year, including $118 billion of outflows that the bank said reflected movements to other institutions and its own investment offerings and that were partially offset by customer growth.

Piepszak said deposits could be "closer to flat or slightly up" with First Republic, though it is "way too early to call it."

About three weeks after the First Republic acquisition, "we have seen stabilization of clients and deposits" at the target, Lake said. "In fact, since the acquisition, we've actually seen a small net inflow of deposits."

First Republic had 84 branches. JPMorgan Chase plans to close some branches because of geographic proximity. It plans to turn others into "private client centers" focusing on affluent customers.

CFO Jeremy Barnum said the bank expects industrywide deposits to keep declining because of forces including the Federal Reserve's effort to shrink its balance sheet, though the executive noted a wide array of uncertainties impacting the outlook.