JPMorgan Chase, which has offered financial services in Las Vegas since 2008, expanded its commercial banking business to Nevada last month, part of a long-term growth plan throughout the Western region.
VEGAS INC recently interviewed JPMorgan Chase’s Douglas Petno, chief executive officer of commercial banking; John Simmons, head of middle market banking & specialized industries, and Megan Ackaert, market executive for Nevada’s middle market banking & specialized industries business.
Here are excerpts from the interview at the JPMorgan Chase office in the Hughes Center:
Why did you decide on Las Vegas now for expansion of your commercial banking efforts?
Petno: We’ve been in certain parts of the country for many years, hundreds of years — New York City, 220 years. Houston, 150 years. With the Washington Mutual acquisition in 2008, we acquired branches in some interesting and exciting parts of the U.S. literally overnight in the middle of the financial crisis.
From that moment, we decided to organically build out a middle-market banking franchise in tandem with our small-business banking team next door (in the Hughes Center) — using local branches to attract relationships with very exciting and dynamic small and midsized companies.
In 2009 we put a gentleman in California to be the anchor to build out our whole Western franchise, and he’s been methodically going market by market building out systematically. We’re taking a very long-term view, think, 100 years, comparable to New York and Chicago and Houston.
We’re making a bet on a lot of these different geographies. We feel very good about everywhere we’ve gone based on business climate, the number of existing clients, where we think client growth will be over time, the types of clients, industries we’re excited about.
Simmons: Vegas was actually the largest market that we did not have a commercial banking presence. We obviously have a branch presence and a business banking presence. We’ve effectively been covering clients in the Las Vegas and Nevada area for the last decade. But if you really want to have a 100-year strategy, you need someone who is terrific in the market in the community who’s connected and who can then hire a team locally where you’re intersecting with companies and different organizations on a regular basis.
As that point person for the company here since February, what are your impressions of Las Vegas so far?
Ackaert: The city’s been incredibly welcoming. I’ve spent a lot of time meeting with business leaders, the UNLV team and others to get a feel for what’s important in the community. There’s been a real push, a real focus on diversifying the types of businesses that are located in Las Vegas. We just feel the excitement and optimism here, and we want to be part of it.
What kinds of companies are you reaching out to?
Petno: It’s a breadth of industries. The real opportunity is to work hand in hand as the state diversifies from its more traditional industry categories. You’ve seen the influx of technology, health care and energy companies. It sounds pretty generic, but those are industries where we have a lot of specific expertise and experience. And that's why it’s a pretty exciting time.
So you’re optimistic about the variety of businesses here?
Petno: There’s a lot of potential. It’s a very good pro-growth business climate. There’s a good infrastructure. The government seems like it’s in a good place. It has all the right ingredients to accomplish what it wants to accomplish.
What types of businesses are flourishing here, what types are struggling?
Ackaert: I haven’t formed a view of types of businesses that are struggling. Every CEO that I’ve met since I got here is excited about growth. They’re expanding into new states. They’re buying new buildings. They’re buying more equipment. They’re hiring new people. Everyone seems very positive.
What has surprised you so far?
Petno: The potential here is even greater than we estimated it would be — and this sense of energy around diversifying the economy and the ambition of the companies that are here.
The types of companies we cover all got hit pretty hard during the financial crisis. Obviously this area was hit exceptionally hard. There’s been a step-by-step recovery. Every day is better than the last day.
This is one of the markets with the most startups, the greatest velocity of new company formations. … If you started a company today, you would go into our branch and get a business banking account. As you rapidly grew, you would move forward to Megan and we could cover you all the way until you were Microsoft.
We bank almost 60,000 small businesses in the state right now and almost a million consumers. We have a pretty good brand and a good presence, in the top five in terms of banking branch presence and we’re adding branches. So it has all right ingredients.
What metrics do you look at to have that sense of optimism about entrepreneurship?
Petno: It’s hard to measure entrepreneurship, but we look at macroeconomic indicators for the state in terms of the health of the business environment. More specifically, we have a unique big-data capability that helps us catalog private businesses in certain geographies.
If you started a company today, it’s hard for the world, it’s hard for a bank to know, you’re even in place yet alone know how successful you are, what your needs are, where you’re located. We feel like we’ve got a pretty good sense for the universe of names out there, and it’s a pretty rich market for us.
Speaking of the market opportunity, it’s pretty robust and growing. And the bet we’re making is it’s going to keep getting better and better every year. In the next 20 years, this will be even more thriving and diversified and dynamic place to be doing business.
Where do you see the whole industry of commercial banking in the next five or 10 years in terms of regulation or what’s happening in Washington, D.C.
Petno: We’ve absorbed all or most of the banking regulations that have come out of the financial crisis. JPMorgan is spending a lot of time making sure we get that right. We live by the letter and the spirit of all these new rules, and company’s doing very well.
We’re also trying to be a leader in the market to help shape if there’s going to be any legislative reform or change. We want to do it on behalf of the country and the economy broadly because that’s the right thing to do. And it’s better if the local economy’s stronger, and it’s better for all of us — not just JPMorgan.
There are some things we think that Washington can do to refine the rules that they’ve imposed on the industry — not just financial services but the regulatory framework broadly. That’s all playing out in real time.
And you’re on the same roller coaster everybody else is watching what’s happening in Washington, but there is a chance for a lot of good, pro-economic actions to be taken in Washington that would be good for America. Whether that can happen politically — the devil’s in the details — we’ll see what happens.
How do you counter the impression of some small businesses that you’re too big to help them?
Petno: Let our actions speak louder than any kind of sales pitch. It starts with strong leadership, being visible in town. It starts with a strong and growing physical presence of our branches and the presence of a business banking partner. We also have our private bankers here. We have investment bankers flying into Nevada every day. We bank the governments here, we bank hospitals. When I say strong local leadership, we ask and expect our local leaders to be visible civically and active in their communities.
What’s unique about Nevada is that focus on the importance of philanthropy and community. That’s something that we've gleaned from the business leaders that we've met with so far. That’s likewise important to our company.
We made a $2 million grant to the state of Nevada to help with job skills. Access to skilled labor is a major pinch point for the economy and for small businesses in particular. We think the grant will help deal with a structural problem in the labor market. Those kinds of things hopefully underscore the importance of community presence and are specific to the economy here and our commitment to these markets.
Ackaert: There’s no substitute for showing up. And that’s a lot of what my team and I are doing. We do get asked, “You know my business isn't big enough for JPMorgan Chase?” My response is, “That's not true. We bank companies just like yours across the country.” Once we do a great job for a business owner, they tell their friends and they tell other people. That's really how we do it. It’s a grassroots effort.