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JPMorgan Chase looks to be Charlotte player ‘for the next 50 years or more’

Only in Charlotte would the largest bank in the country consider itself an upstart newcomer.

But that’s almost exactly how JPMorgan Chase’s commercial banking CEO Doug Petno talks about his bank’s expansion into the market over the last few months.

Though Chase doesn’t have any branches in the area, it’s nearly doubled its business banking presence. The bank has celebrated with a flurry of activity. Chase hosted Gov. Pat McCrory as it celebrated its middle market banking team’s move into the Hearst Tower uptown. It also sponsored a discussion on Charlotte’s role in the global economy.

The Observer sat down with Petno for a half -hour Thursday at the Renaissance Hotel after he finished a breakfast with some of the bank’s corporate clients. He’s on a Southeastern swing, hitting some of the bank’s newest markets gained in a commercial lending expansion.

Questions and answers have been edited for length and clarity.

Q: How does Chase’s expansion in Charlotte fit with your national strategy?

A: We want to be in all the markets where there’s great opportunity and a good set of customers. We look to find good management teams, good businesses, and we just put a good team in place.

We’ll look to be a player here for the next 50 years or more. So let’s put a team in place, let’s bring in some Chase people from other geographies, let’s hire some local people who have great local perspective and put the two together. Let’s identify all the interesting companies and just start to meet with them, understand their companies, understand their needs and work to develop a relationship over time.

It’s not necessarily a loan origination effort. Loans will come out of those relationships. But it’s really about let’s build a team and start covering some really great companies.

Q: Why is Charlotte on the list of your expansion markets?

A: We don’t blindly enter markets. We do a lot of legwork before we go in, to understand the demographics of the city, to understand the trend lines in the city, to talk to local thought leaders, policy leaders, and just to get a good sense of the landscape. Charlotte feels good in all those dimensions. It’s always had a good vibrant economy. There’s a lot of optimism about the prospects for growth.

New businesses are coming in. It’s the workforce, it’s the fiscal climate, it’s the lifestyle, it’s the access to the base of employees here, it’s the way the state is embracing business. Relative to other places in the country, this is a really prospective business climate and we want to be a part of that.

I’m not sure why we weren’t here earlier.

Q: Have there been any insights you’ve been able to glean on the economy of Charlotte?

A: I think everybody’s cautious, but encouraged. I just came out of a breakfast with six of our larger clients. They feel better year over year, but it’s still not where it was prior to the financial crisis. They all felt like their businesses have adapted. Most were trying to hire people. Not all of them felt they could raise prices for their goods or services.

But they’re very encouraged. Some of our clients are looking to move into the (merger and acquisition) market, so they have enough confidence to go out and buy some things. That’s not always been the case. That’s been much more quiet over the past year or so. When people are trying to buy things, that’s a good indicator of confidence.

Q: Is that borne out at the national level?

A: There’s a lot of regional variation. I’d say, nationally, it’s better period over period, year over year. You go to some places, it’s like nothing ever happened, there never was a downturn. Things feel pretty good in Texas. If you go to San Francisco, there’s a lot going on in the tech sector. Some regional economies have really sprung back.

But on average nationally, things feel better. Charlotte probably feels better than average just given the diversity of the community that’s happened since the downturn and what the state has done to facilitate businesses coming here.

Q: Do you have any results yet from your expansion in Charlotte or in the other markets?

A: We want to make progress, we’re obviously in business. But we’re taking a very long-term view. I think we want to resist the temptation to set loan targets or revenue targets. We’ve been able to prove in markets like Charlotte around the country that if we get very good people and start to cover our customers the way we know how to do it, there will be ways to do business together. That’s starting to happen. But we’re not setting a specific target or milestone and judging ourselves on that.

Building a valuable and enduring business here will take decades. We’re ready for that. The reception has been fabulous across the board. Which you could worry about, coming in to this town given the banks that are here.

Q: Right, you’re obviously coming into Bank of America’s backyard, and you have Wells Fargo. Is that a consideration at all?

A: Not really. We expect competition to be fierce given where we are, but it’s fierce everywhere anyway. I think it’s more about the kind of companies that are here than about the competitors. It’s such a great place to be. There’s a lot of great companies here.

The clients want a diversity of relationships and they recognize that different banks have different strengths. Even though it is the home base for some of our key competitors, we feel there is room for us to add value and build. We are respectful of existing relationships. What I told our clients last night is that the fact that you’re loyal to your incumbent banks makes us want to bank you even more. Those are the kind of relationships we want.

The respect we have for those relationships means it will take us longer to find a seat at the table. But that’s not any different because those banks are based here.

Q: Speaking of fierce competition, we hear a lot about competition in loan terms. Is that something you’re still seeing?

A: There’s a credit cycle, and right now there’s a very aggressive market. All the real responsible loan opportunities are heavily competed for. We’ve seen that kind of market in the past.

Our typical client, the private family-owned business, doesn’t want to put their company in harm’s way, doesn’t want an excessive amount of leverage, is not the most concerned about having the most liberal credit structure.

Terms are better than they were during the financial crisis. But credit got tight, as everyone knows. The correction from how tight it was to now has been substantial. We’re watching it very closely. We’re tracking new originations very carefully. But it’s normal for credit cycles to do this. Banks just have to know where to draw the line. We accept the fact that we may underperform in a bull market because we have to say no to some things that our competitors may end up doing.

Q: Before the JPMorgan shareholders meeting, there was a lot written on CEO Jamie Dimon and the vote to split the chairman’s role. How did that affect the management team?

It’s really a board issue, it’s not the operating committee. Where it’s impacted us is we’ve just tried to spend a lot of time in front of our customers. When you’re in the news that much, we want to make sure people understand that it doesn’t affect the operations whatsoever.

We didn’t take our eye off the ball for a moment other than have to read all the articles. If anything, it was a good reason to stay visible out in the markets.

Dunn: 704-358-5235 Twitter: @andrew_dunn
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