Chicago Tribune reporter
September 27, 2008
JPMorgan Chase & Co. acknowledged Friday that Illinois is among the states where it’s likely to close branches due to overlap with newly acquired Washington Mutual Inc.
Chase and WaMu, the failed thrift that it acquired Thursday, have two of the biggest branch footprints in the Chicago area.
WaMu, hit hard by the housing crisis, was seized by the government and sold to Chase after market conditions worsened and billions of dollars of deposits began flowing away from the Seattle-based lender. Without sufficient liquidity, the government closed the institution and simultaneously arranged its sale, representing the biggest bank failure in U.S. history.
With financial stocks hit hard by the crisis, another huge bank, Wachovia Corp., was said to be looking for a suitor, and reports Friday had the Charlotte-based bank in preliminary talks with several institutions, including Citigroup Inc.
In the deal for WaMu, Chase has said that, nationally, it’s eyeing about 400 potential branch closings as it brings WaMu into the fold, but it hasn’t given a geographic breakout.
Chase, which has about 340 Windy City branches, will consider such factors as locations and lease terms as it decides which ones to shutter in its integration of WaMu, which has 117 Chicago-area branches.
"Those consolidations could be from a WaMu branch or a Chase branch," Charlie Scharf, head of Chase’s retail operations, said in a conference call Friday.
A study done in March by SNL Financial on behalf of the Chicago Tribune found that the two had significant overlap in the Chicago area. At that time, more than 160 Chase branches had at least one WaMu branch within about 11/2 miles. A Chase branch at 230 W. Grand Ave., for example, had a dozen WaMu sites within that distance.
Chase is tight-lipped about potential layoffs in the Chicago area, where WaMu has about 2,000 workers.
"Even in places where we intend to close branches, like Illinois, we’ve got turnover and openings, so even though we might consolidate branches we hope to find a lot of people jobs in the company," Scharf said.
Peaking in the Chicago area with more than 170 branches, WaMu had the seventh-biggest footprint among Chicago-area institutions. But despite an aggressive expansion effort in the area in 2003, it ranks only 28th in deposit market share, with 0.51 percent of the market, Federal Deposit Insurance Corp. numbers show.
"In Chicago, WaMu was a yawner," said Steve Kent of investment bank Keefe Bruyette & Woods.
While WaMu was a weak deposit gatherer in the market, the thrift ranked sixth in originating residential mortgages in the six-county area in 2007, representing market share of 4.1 percent, according to the Woodstock Institute, a Chicago-based tracker of housing trends.
Chase had top market share, with 6.3 percent.
"It’s interesting to note that, of the top 15 lenders by market share in 2007, six no longer exist as independent entities," said Tom Feltner, Woodstock policy director.
A day after the deal, it was business as usual, at least at some WaMu branches on Friday. Jose Ramos, 23, a student at the University of Chicago, walked into a downtown WaMu office Friday to talk to a customer service rep.
"I went in to ask if I should be worried," he said. "They told me to relax and that they’re officially Chase."
Chase, which has been in a virtual tie with Bank of America Corp. for the title of Chicago’s biggest bank, had deposit market share of 14.5 percent as of June 30, 2007, the latest period for which numbers are available.
Ramos said he has $8,000 in his WaMu account but isn’t too worried for now.
"I’m chill-axing," he said, taking a sip from a giant Styrofoam cup. "I’m just going to drink my Jamba Juice. I’ll let the Great Depression come if it comes."
Tribune reporter Noreen Ahmed-Ullah contributed to this report.
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