As big banks expand in Charlotte, consumers could benefit. At least for now.

Banking competition in Charlotte is about to intensify as giants JPMorgan Chase and U.S. Bank prepare to open their first branches in the city. For a region already filled with banks large and small, industry officials say the move likely will be good for at least one group: consumers.

In separate announcements this year, JPMorgan and U.S. Bank disclosed that they plan to expand their business in Charlotte by adding branches by the end of the year. In Charlotte, where Bank of America and Wells Fargo already have a large presence, the decisions position the city to have branches for five of the biggest commercial banks in the U.S.

Consumers will benefit, banking experts say, when JPMorgan and U.S. Bank likely dangle attractive rates on products and services at potential customers — and rival banks do the same to keep up.

The move by JPMorgan and U.S. Bank will also give consumers more choice. Bank of America is the only bank headquartered in Charlotte following years of industry consolidation.

“It’s going to be a win-win for customers, having more competition,” said Chris Cole, senior regulatory counsel for Independent Community Bankers of America, a Washington, D.C.-based trade group.

Smaller banks in the region, though, such as community banks, are bracing for the added competition at a time when the number of those institutions has been falling nationwide.

And the benefits for Charlotte-area consumers will probably be short-lived, banking experts say. That’s because special rates or other deals that new banks tend to offer when they enter a market typically don’t last, they say.

Cash for savings accounts

With the increased competition, banks are looking at different ways to entice new customers.

For instance, JPMorgan provides up to $600 in cash to eligible customers if they open a new checking and savings account whenever it enters a new market, spokesman Michael Fusco said.

“These offers, like all of our offers, are only available for a limited time,” he said, declining to provide specifics on when the cash offer might expire.

But JPMorgan doesn’t offer special rates for deposits and loans when it puts branches in a new market, Fusco said. The bank’s rates are consistent across the country, he said.

In March, JPMorgan announced that it plans to have branches in Charlotte by the end of this year. It has not disclosed branch numbers or addresses.

Minneapolis-based U.S. Bank said it’s premature to detail its strategy for Charlotte.

In April, the bank disclosed plans to open its first branch in the city, in the former Dean & Deluca on uptown’s South Tryon Street. It’s one of 10 branches that U.S. Bank said it expects to open in Charlotte by the end of 2020.

The bank has not provided addresses for the other nine sites.

This rendering shows what a U.S. Bank branch planned for uptown Charlotte might look like. U.S. Bank said it plans to open the branch — the Minneapolis-based bank’s first in North Carolina — in the fall at 201 S. Tryon St., next to Vapiano restaurant. Rendering courtesy of U.S. Bank

One of the bank’s initial goals in opening the Charlotte branch is to combine financial advice with the bank’s product mix to offer a different customer experience, Dee O’Dell, U.S. Bank head of consumer and business banking for the eastern U.S., said in a statement.

Doing so will allow the bank to deepen customer relationships and build new ones, he said.

Fewer community banks

The announcement of JPMorgan and U.S. Bank branches for Charlotte comes at a time when smaller banks in the region and elsewhere have continued to disappear and the largest banks have gotten bigger.

JPMorgan Chase, the biggest U.S. bank by assets, reported having $2.62 trillion in assets at the end of last year, up about 20 percent from a decade earlier. U.S. Bank, which had about $467 billion in assets at the end of last year, has reported a roughly 75 percent increase over the same period.

Their arrival with branches in Charlotte will force local community banks to compete, said John Hipp, retired CEO of NewDominion Bank, a Charlotte-based community banking division of Ohio’s Park National Corp.

“That’s good for the consumer,” Hipp said. “But from the community banks’ standpoint, less competition would be better.”

To compete, community banks in the Charlotte region will have to increase the rates they pay savers, Cole, of the community bankers trade group, said. Those banks will also be putting more effort into customer service, which they already heavily focus on, he said.

“There’ll be some fierce competition on the deposit side,” Cole said.

North Carolina had 102 community banks a decade ago, according to the Independent Community Bankers of America. Today, that figure is around 45, the group said.

Since 2011, the decline in the number of community banks in the U.S. has mostly been the result of voluntary mergers, according to a 2015 report by Federal Reserve economists. One factor in such mergers is less-profitable banks seeking to exit the industry by selling themselves to more profitable ones looking to expand, the paper said.

Community bank supporters say they are a vital source of lending for small companies and start-ups. Despite holding only 13 percent of banking industry assets, community banks hold 42 percent of small business loans, Jelena McWilliams, chair of the Federal Deposit Insurance Corporation, said in October.

Banks’ reactions mixed

Community bankers in Charlotte said they are bracing for the potential loss of customers and employees when JPMorgan and U.S. Bank branches open.

And Jim Engel, CEO of Aquesta Bank, a community bank based in Cornelius, said the branch expansions could cost community banks some employees enticed by larger salaries.

“The initial move into the area is probably the negative,” Engel said. “There’s going to be increased competition to hire people, and hiring people right now is difficult anyway with such low unemployment rates.”

JPMorgan entry-level employees in Charlotte will be paid at least $15 an hour and will receive a full benefits package, valued at an average of $12,000 annually per employee, the bank has said. In announcing its plans for Charlotte, JPMorgan said the effort is part of a larger push to establish its first branches in nine top U.S. markets, including Raleigh.

But community bank officials said they are not overly concerned about the added competition, in part because they tend to serve much smaller clients than big banks.

Charlotte’s skyline is shown in this file photo. The city is headquarters to only one bank, Bank of America, following years of industry consolidation. Jeff Siner

Community banks in the region might lose some customers to the two giants at first, Engel said. But some customers will probably return to community banks once JPMorgan and U.S. Bank end any specials they might offer, he said.

Jim Marshall, CEO of Blueharbor Bank, a community bank based in Mooresville, echoed Engel’s comments.

“We get customers every week and month that are fed up with being treated like a number,” Marshall said.

Still, Blueharbor won’t sit idle once JPMorgan and U.S. Bank open their branches, he said.

“If we want to keep our doors open we’ll have to be competitive on the deposit side, and we’ll have to be competitive on the loan side,” Marshall said.

Engel and Marshall also noted that large banks and community banks have always co-existed in the same markets. Generally, large banks issue big loans to large clients, while community banks tend to deal with smaller customers, they said.

Community support

For their part, JPMorgan and U.S. Bank have said their branches will enable them to serve more of their customers in Charlotte, where both banks have had other operations for years.

Both banks also said they plan to step up efforts to give back to communities where they are adding branches.

U.S. Bank said that it and its employees have invested more than $2 million in Charlotte community projects over the past decade. The bank said it plans to invest even more as it opens branches here.

JPMorgan said that as part of its expansion into new markets, it will work with local partners to provide jobs and skills training, small-business growth, neighborhood revitalization and financial health.

Growing digital competition

The new branches could also add to competition among Charlotte banks over mobile banking capabilities and similar technology. In a document last year, JPMorgan said it planned to spend about $10.8 billion on technology in 2018, noting that its strategy is “digital everything.”

In disclosing U.S. Bank’s plans for Charlotte, executives for the bank said its digital tools introduced in recent months, including a new digital app, will help it compete here.

The push by JPMorgan and U.S. Bank also comes as Charlotte waits to see whether a planned merger of BB&T and SunTrust Banks gets federal approval. The proposed combination of Winston-Salem’s BB&T and Atlanta’s SunTrust is expected to create the sixth-largest bank in the U.S. Plans call for the new bank, which would be headquartered in Charlotte, to close in the fourth quarter of this year.

A key reason for the merger is to provide the new bank with greater scale to provide the digital services clients expect, executives for BB&T and SunTrust have said.

Kevin Tweddle, chief operating officer for Independent Community Bankers of America, said community banks are doing a good job competing with bigger rivals on technology, including by partnering with fintech companies.

“I think the community banks have always been able to swiftly implement technology,” he said.

Truliant Federal Credit Union, which is based in Winston-Salem and has 13 branches in the Charlotte area, sounded confident when asked whether it will be impacted by the JPMorgan and U.S. Bank branches.

“Competition is good for consumers,” Truliant President Todd Hall said. “When financial institutions compete, the customer always wins.”

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Deon Roberts has covered Charlotte’s financial services industry for The Charlotte Observer since 2013. His beat includes Bank of America and Wells Fargo. He attended Loyola University in New Orleans and is a native of Lafitte, La.