jpmorgan chase | Idaho Business Review

JPMorgan Chase building Boise branch with private banking

photo of chase boise branch — JPMorgan Chase is building a new branch in Boise at Five Mile and Overland that will look similar to the bank’s downtown Boise renovation. Photo by Sharon Fisher

After closing its Boise branches inside Fred Meyer grocery stores in response to the COVID-19 coronavirus, JPMorgan Chase Bank is now building a new branch — across the street from a Fred Meyer grocery store in which one of those branches had been located.

“We’d outgrown that space and determined it was time to find a location,” said Paul Silva, Chase market director of banking, who is responsible for all of Chase’s 20 branches in Idaho except two near Coeur d’Alene, which are covered by the Spokane market director. “Ironically, we found one right on the corner of Five Mile and Overland.”

New branch

The branch will be located on the northwest corner of the intersection, which is currently fenced off with excavation beginning, Silva said. Just under 3500 square feet, the branch will house from eight to 10 employees, he said.

“We anticipate it being completed and ready to open by the end of October,” Silva said.

The architect is the PM Design Group, which has 11 offices primarily in the West. The general contractor is ESI Construction. The company doesn’t disclose building costs.

“It’s not cheap,” Silva said.

New design

The branch will mark the first new Chase bank building in Idaho in some time.

“Considering that we haven’t had a new build in Idaho that wasn’t inside a Fred Meyer, it’ll be much different from older branches” in terms of its schematics and color palette, Silva said.

In design as well as color, the new branch will look similar to the renovated branch in downtown Boise, which the company opened in January 2019.

“It will look similar to that in feel and color, the way the desks are,” Silva said. “It’ll feel like that.”

In addition, the branch will have a walkup automated teller machine, as well as two ATMs in the lobby, Silva said.

“Typically, there’s one in a branch,” he said.

The ATMs are also a more advanced type, the EATM, that offer additional functions such as making payments and allowing people to get cash in denominations other than $20 bills.

“With an EATM, it performs almost any transaction that you can do at a teller at the ATM,” Silva said.

While the ATM doesn’t offer video, it does have a much larger touchscreen and an improved user interface, as well as the ability to display local content such as marketing messages, Silva said.

Private banking

Building the new branch also gives Chase the ability to offer private banking services at that location, as it does in the downtown Boise branch.

Private banking typically offers customers with complex financial lives a single point of contact to a preselected team of experts in various financial areas, including estate planning, trust planning and investment strategies, as well as banking services such as checking accounts. In addition, private bankers typically act as fiduciaries, meaning they are typically paid on salary, not on commission, and are required to act only in the client’s best interest. Fees for private banking are typically based on a percentage of the assets managed.

Currently, only four Chase branches in Idaho offer private banking services, Silva said. Part of the motivation for the branch was providing the capability to offer private banking.

“It’s been on our agenda for that area to provide private client services. Our big thing is community and location, and we were already familiar with that location,” he said, noting the bank had been providing financial services there since 1994. “We didn’t want to go too far. We wanted to stay close and connected to the community.”

One thing the branch may not have, at least for the time being, is amenities such as coffee and cookies, due to COVID-19, Silva admitted.

“In today’s environment, if you go to any branch, they won’t have coffee or cookies right now,” he said.

However, the bank’s branches continue to remain open through the pandemic, he said.

Chase adds commercial, private banking to downtown Boise

With the goal of moving its middle market commercial banking practice to downtown Boise, JPMorgan Chase has renovated its Capitol Plaza branch to house three commercial bankers, as well as adding a private banking practice to the office.

“We consider this a refresh or remodel for the branch,” said Paul Silva, Chase market director of banking, who is responsible for all of Chase’s 20 branches in Idaho except two near Coeur d’Alene, which are covered by the Spokane market director.

At the Capitol Plaza branch, about 20 feet of the back side of the office has been separated out for the bank’s middle market commercial bank team, which has grown from two staffers to three.

“We’re very happy to have a permanent home,” said Gregory Smith, market executive for the middle market commercial practice. “We have proximity to a lot of folks in the professional services industry, we’re centrally located, and we stay close to our consumer relatives.”

Boise Mayor Dave Bieter said he was pleased to see the group in a downtown Boise location. He said he hoped it would help with new business creation, which he said still hasn’t fully recovered from the 2007 recession.

Trent Wright, president and CEO of the Idaho Bankers Association, said Chase’s expansion puts “a spotlight on the white-hot economy that our state continues to enjoy.”

In addition to commercial banking, effective Feb. 1, the branch will start to provide Chase’s private client offering, and it has hired a private client advisor.

“Because of all the growth we’ve had, we’ve brought in the middle market banking team and added our private client,” Silva said. “When we have a private client branch, we typically do a refresh and spice it up.”

Chase shut down a branch in a Fred Meyer store on the East Boise Bench last year because there were two other branches within a mile, and hasn’t opened any new branches since then, but is continuing to look at constructing a new branch in the Boise and Meridian area.

“We’re looking at sites to be able to do that, but there’s nothing we’ve locked down,” Silva said.

In May 2018, he said that such a branch would likely be a new, stand-alone building that would be open by 2021 or 2022.

The company doesn’t reveal construction costs, and performs design and construction using in-house teams. Construction on the renovated downtown Boise branch started in the beginning of October and was completed Dec. 1, with the branch remaining open during the renovation process.

Chase first opened its middle market office in May in The Village at Meridian, after occupying temporary offices in the Banner Bank building in downtown Boise and in the Regus office in The Village.

Previously, customers in the middle market — which Chase defines as between $20 million and $500 million in top line revenues — were being served out of Salt Lake City. It was intended at that time that the middle market commercial banking office would move to downtown Boise in the first quarter of 2019.

JPMorgan Chase has 20 branches in Idaho and employs more than 150 people. The company announced a nationwide $20 billion, five-year expansion plan in January 2018.

Forgot your ATM card? Use your phone

photo of cardless atm — Using a cardless ATM is a three-step process. Photo courtesy of JPMorgan Chase.

Idahoans will now have more opportunities to use ATMs with their smartphones rather than a card, as JPMorgan Chase joins Wells Fargo in offering the service in the state.

Chase began offering the service quietly in May, after piloting it in February, at its 30 Idaho ATMS. The move is part of a rollout that saw the service become available to 15,000 of the company’s 16,000 ATMs nationwide.

“Regardless of whether you have an Apple or Android phone, as long as you have your debit card in your mobile wallet, you can access an ATM with the cardless feature,” said Paul Silva, market director for Idaho for JPMorgan Chase. Users still have to know their personal identification number code, he added. “Somebody can’t just get your phone and break into it,” he said.

photo of julie fogerson — Julie Fogerson

Wells Fargo began offering the service in Idaho in March 2017, and it is available at 13,000 ATMs nationwide, according to Julie Fogerson, assistant vice president of Idaho regional communications, in Boise. In its first year of service, almost 7 million card-free ATM access codes have been used nationally for ATM transactions, including more than $850 million in transactions, she said. Idaho statistics were not available.

Both Chase and Wells Fargo provide the service using near-field communication (NFC), which requires, first of all, that the customer have a smartphone with them, and that the smartphone supports the communications protocol. It is the same technology used in smartphone mobile wallet technology such as Apple Pay and Samsung Pay, and in fact Chase is partnering with those companies on benefits like loyalty programs, such as Samsung Rewards and Chase Ultimate Rewards points.

In addition to convenience – people typically have their smartphones with them, though they may not have their ATM cards – cardless ATMs, especially ones using NFC, are considered to be more secure because there isn’t a card that someone could steal or find. In addition, they are not susceptible to card-skimming, where someone puts a device inside an ATM card slot to steal information from inserted cards.

“Cardless is an encrypted wireless transaction with minimal risk of skimming or cloning,” said Robert Siciliano, a member of the board of directors of the Identity Theft Resource Center — a San Diego-based nonprofit that raises awareness of identity theft – and a security analyst with Hotspot Shield, a downloadable virtual private network program. “No card, no compromise.”

That’s not to say that cardless ATMs are a security panacea (see box). Some users reported early on in the technology that people obtained their bank account information, called their bank and added a cell phone number to their account, then used that cell phone to withdraw money.

For now, it appears that primarily national banks such as Chase and Wells Fargo are providing the technology in Idaho, though Idaho Central Credit Union plans to offer the functionality soon at a single location in Rexburg. Idaho Central members will be able to get cash without a card via video chat at the new Rexburg Innovation Center, scheduled to open September 4, using its new ILTs (In Lobby Tellers), according to Marion Oswald, card services manager.

Otherwise, local and regional banks and credit unions are not planning to offer the service yet, according to company representatives. “We have no immediate plans to implement this technology,” said Malcolm Hong, communications officer for Zions Bank in Boise.

“We do not have immediate plans to implement cardless ATMs, but we are continuously evaluating new technology across all our delivery channels,” said Josh Botnen, director of digital strategy and client experience for First Interstate Bank.

“We have considered it and researched implementation,” concurred Elizabeth Thomas, vice president of marketing and development for Pioneer Federal Credit Union. “At this time we do not have it on our calendar to implement, but we are always looking for ways to reduce friction for our members’ access to their money, and this would be a great option for that.” Cardless functionality is also typically available only on a financial institution’s own ATMs.

The technology is likely to be more broadly available in the future, said Trent Wright, president and CEO of the Idaho Bankers Association. “Consumers will dictate the speed at which cardless ATMs take off,” he said. “But IBA believes that all of the nation’s 6,000 banks will offer cardless ATM access within five years, once the technology matures and past security concerns are resolved. Consumers want everything on their phones — why should a cardless ATM experience be any different?”

Security tips for cardless ATMs

The Idaho Bankers Association recommends following these tips to protect a mobile device:

Use the passcode lock on your smartphone and other devices. This will make it more difficult for thieves to access your information if your device is lost or stolen.
Log out completely when you finish any type of mobile banking session.
Protect your phone from viruses and malicious software, or malware, just like you do for your computer by installing mobile security software.
Use caution when downloading apps. Apps can contain malicious software, worms and viruses. Beware of apps that ask for unnecessary “permissions.”
Download the updates for your phone and mobile apps.
Avoid storing sensitive information like passwords or a Social Security number on your mobile device.
Tell your financial institution immediately if you change your phone number or lose your mobile device.
Be aware of shoulder surfers. The most basic form of information theft is observation. Be aware of your surroundings especially when you’re punching in sensitive information.
Wipe your mobile device before you donate, sell or trade it using specialized software or using the manufacturer’s recommended technique. Some software allows you to wipe your device remotely if it is lost or stolen.
Beware of mobile phishing. Avoid opening links and attachments in emails and texts, especially from senders you don’t know. And be wary of notifications (not from your security provider) claiming that your device is infected.
Watch out for public Wi-Fi. Public connections aren’t very secure, so don’t perform banking transactions on a public network. If you need to access your account, try disabling the Wi-Fi and switching to your mobile network.
Report any suspected fraud to your bank immediately.

Idaho banks — actually, all of them — had a good quarter

photo of first interstate — First Interstate Bank entered the Idaho market in 2016 with the purchase of Bank of the Cascades, and expanded it in April with the acquisition of Inland Northwest Bank. Photo by Sharon Fisher.

It was a really good earnings quarter for banks nationwide, and Idaho’s publicly owned banks were no exception.

It was, in fact, the highest quarter for quarterly net income ever, according to a representative who asked not to be named from the Federal Deposit Insurance Corp., which issued its report for Q1 2018 on May 22.

chart of fdic income — Banks saw a big increase in quarterly net income. Chart courtesy of FDIC.

“Aggregate net income for the 5,606 FDIC-insured commercial banks and savings institutions reporting first quarter performance totaled $56 billion in first quarter 2018, an increase of $12.1 billion (27.5 percent) from a year earlier,” the organization noted. It attributed the improvement to higher net operating income and a lower effective tax rate. Before the Tax Cuts and Jobs Act, implemented in December, estimated net income would have been $49.4 billion, an increase of $5.5 billion, or 12.6 percent, year over year.

Total assets in Idaho banks amounted to $6.17 billion, compared with $5.76 billion a year ago, the FDIC reported. Total deposits amounted to $5.28 billion, compared with $4.90 billion the year before, the FDIC noted.

“Things are going really well,” said Paul Silva, Chase market director of banking, who is responsible for 18 of Chase’s 20 branches in Idaho. (The other two, near Coeur d’Alene, are covered by the Spokane market director.). Nationwide, the bank reported net income of $8.7 billion, an increase of 35 percent over the previous year. “We continue to have double-digit growth year over year,” he said. Specifically in Idaho, Chase has seen a 10 percent growth year-over-year with deposits, with an average deposit growth of 6 percent, he said. Moreover, Chase is seeing increased activity in all of its lines of business, from consumers to business, he said, with no one particular factor amounting for the increase.

Banner Corp., the parent company of Banner Bank and Islanders Bank, reported that net income in the first quarter of 2018 increased 21 percent to $28.8 million, or $0.89 per diluted share, compared to $23.8 million, or $0.72 per diluted share, in the first quarter a year ago. Revenues were $120.7 million during the quarter ended March 31, 2018, $125.9 million during the preceding quarter and $113.9 million during the first quarter a year ago.

Columbia Bank, which operates 14 locations in North Idaho, the Treasure Valley, and Twin Falls, had assets of $12.53 billion and $10.40 billion, with earnings per share increasing from $.50 a year ago to $.55 now.

First Interstate BancSystem, Inc., which gained an Idaho presence in 2016 by acquiring Bank of the Cascades, reported net income of $36.7 million, or $ .65 per share, compared with net income of $34.2 million, or $ .61 per share, for the fourth quarter of 2017, and $23.2 million, or $ .51 per share, for the first quarter of 2017. The company further expanded its Idaho presence in April by acquiring Inland Northwest Bank.

Washington Federal, Inc. announced quarterly earnings of $49,271,000 or $ .57 per diluted share for the quarter, compared with $42,070,000 or $ .47 per diluted share for the quarter ended March 31, 2017, a $ .10 or 21 percent increase in fully diluted earnings per share. Its total assets were $15.6 billion as of March 31, 2018 compared to $15.3 billion as of September 30. Asset growth since September 30 resulted primarily from a $341 million increase in net loans receivable and a $70 million increase in held-to-maturity securities, the organization said.

The sunny earnings reports came under some criticism by those who were opposed to the loosening of Dodd-Frank regulations.

The FDIC noted that revenue was offset by non-interest expenses, which rose 5.8 percent, and that salary and benefits grew by 4.3 percent. In addition, banks’ loan-loss provisions increased by 3 percent, with almost 37 percent of banks reporting higher loan-loss provisions. The FDIC attributed this to higher net charge-offs and a growing loan portfolio.

Are banks closing branches or opening them? It depends

The Wells Fargo branch in downtown Boise.

Banks in Idaho and nationally are closing some branches but opening new ones as they adjust to changing consumer preferences.

Nationally, a number of banks, such as KeyBank and Wells Fargo, are closing branches, typically to save money, sometimes after a merger or acquisition. The Wall Street Journal reported more than 1,700 branches shut down between June 2016 and June 2017. At the same time, banks such as Bank of America and JPMorgan Chase are opening branches, with Chase planning to open 400 and Bank of America planning to open 500.

In Idaho, 77 branches have been closed since 2010, while 31 branches have been opened, according to the Idaho Department of Finance. In some cases, banks have closed branches in some areas and opened them in others.

KeyBank announced in April that it was going to close 40 branches nationwide, by the end of the year. In Idaho, KeyBank is closing one branch, the Country Club branch in Idaho Falls, effective June 29, said Sonya Hawley, area retail leader. “We’re consolidating that into the Idaho Falls downtown branch, less than 2 ½ miles away,” she said. That branch also offers more services than the branch that is closing, she said, such as a mortgage officer and business expertise. “Satellite branches don’t always have that service,” she said. “Now, clients have a one-stop shop.” All the existing employees are transferring to the downtown branch, she added.

“We expect to close 300 branches throughout the network, which is an increase from the 250 we announced previously,” said Julie Fogerson, assistant vice president of Idaho regional communications at Wells Fargo in Boise. “Based on our assumptions regarding consumer behavior and technology advances, as well as other factors, we still could see our total branch network decline to approximately 5,000 by the end of 2020.” In Idaho, the bank will be closing its Sun Valley and Capitol branches, each of which have another branch within a mile, she said. Capitol branch customers were notified in April that the branch would be closing in July.

Wells Fargo will also close its Kimberly and Buhl branches on August 15. Fogerson said the nearest Wells Fargo branches for Buhl customers will then be in Perrine or Jerome, both about 15 miles away. The nearest branch for Kimberly customers will be in Twin Falls, about 5 miles away, she said.

“We’re actually just seeing what our customers want,” said Paul Silva, Chase market director of banking, who is responsible for 18 of the 20 branches in Idaho. (The other two, near Coeur d’Alene, are covered by the Spokane market director.) “We have closed a couple of branches, we’ve opened some branches. Right now, we don’t have any anticipated closings, but we continually monitor what’s appropriate.”

Chase’s most recent closing was the East Bench branch inside a Fred Meyer department store, because the bank had two freestanding branches within a mile in each direction, Silva said. At the same time, the bank is looking at several sites in Boise and Meridian, particularly because of the latter’s growth, that it expects to have open by 2021 or 2022, he said. Most likely, it would be a new, standalone building, he said.

Generally, bank officials hesitated to go into a lot of detail about their plans for closing branches, with a number saying only that they are always looking at business options. Bankers mentioned they made decisions based on increased support for digital banking, proximity of neighboring branches,

photo of Becky Sechler Patnoi — Becky Sechler Patnoi

and whether branch space was leased or owned.

photo of jason meyerhoeffer — Jason Meyerhoeffer

“The banking industry is definitely evolving,” said Jason A. Meyerhoeffer, president and CEO of First Federal, in Twin Falls. “The number of branches has declined in recent years and will likely continue to do so.” His bank hasn’t closed any branches and he doesn’t plan to close any, he said.

In particular, some are concerned that banks are closing rural branches and opening urban ones. That could mean that, while the overall number of branches remains the same, rural areas become “bank deserts” where there aren’t any bank services around, other than automated teller machines.

That said, banks said branches still play a role, particularly when customers are looking for guidance rather than simply performing a transaction. “Most of our clients who come in, it’s for advice,” Silva said.

“We want the customer to be able to use the channel they prefer for what they’re trying to accomplish,” said Becky Sechler Patnoi, regional manager for retail for Washington Trust Bank. “Simple transactions may be going a digital route for many people, but not for everyone, and complex transactions are still occurring face to face.”

This story was updated on May 23 to add information about Wells Fargo branch closures in Buhl and Jerome.

JPMorgan Chase expands business services

photo of the village — The JPMorgan Chase middle market office will be located in The Village at Meridian, a shopping center west of downtown Boise. File photo.

As part of a nationwide expansion announced in January, JPMorgan Chase is opening an office in Idaho intended for the “middle market” of business customers, including hiring an Idaho-based commercial banking market executive.

Chase entered the Idaho market in 2008 with its acquisition of Washington Mutual, and since then has primarily served consumers and small business, said Gregory Smith, market executive. Customers in the middle market – which Chase defines as between $20 million and $500 million in top line revenues – were being served out of Salt Lake City. Existing and prospective Idaho business customers made it clear they wanted to be serviced more locally, he said.

“It’s not that myself or my team is bringing something new from the expertise standpoint,” Smith said. “What the firm has done is committed resources to serve businesses and communities locally.”

For now, the office, which includes two additional middle market bankers, is in a temporary office space at the Regus facility in The Village in Meridian, but by the first quarter of next year it will likely move into the Chase branch in downtown Boise, Smith said.

“We’re leaning toward the downtown location, given that we already have folks there with the rest of the financial services group,” he said.

In addition to covering middle market, Smith also covers “specialized industries,” or vertical markets, including technology, healthcare, and government entities, including universities, he said.

Smith was recruited from Wells Fargo, where he spent the last 13 years, most recently as director of business development for the middle market group.

JPMorgan Chase has 20 branches in Idaho and employs more than 150 people. The company announced a nationwide $20 billion, five-year expansion plan in January.

Banks help communities with philanthropy

A full house at the Idaho Shakespeare Festival in the summer of 2017. Photo courtesy of Idaho Shakespeare Festival.

If you’ve ever been to the Idaho Shakespeare Festival, you know the person announcing the night’s performance and sponsors – typically producing artistic director Charles Fee – concludes with: “And our season sponsor, for the 20^th consecutive year, is …” and the audience shouts, “KEYBANK!”

Debbie Trujillo

“It gets our name out there,” said Debbie Trujillo, corporate responsibility officer for the Rocky Mountain region of KeyBank, which covers Colorado, Utah, and Idaho. The bank has similar major sponsorships in most cities in which it operates, she added.

KeyBank isn’t alone. Throughout Idaho, banks play a major philanthropic role in communities, whether through direct financial contributions or in-kind contributions of employee time and talent.

photo of jennifer oxley — Jennifer Oxley

“Banks play a significant and important role in Idaho philanthropy,” said Jennifer Oxley, chief communications and marketing office for the Idaho Community Foundation, a Boise-based nonprofit that accepts contributions from donors and makes grants. “All or most of the banks are active in the community in some way, whether it’s with sponsorships, volunteering or other support.” For example, the foundation receives donations from U.S. Bank, D. L. Evans Bank, and Washington Trust Bank, which helps it fund grants. “Our relationship with U.S. Bank, in particular, stretches back decades,” she said. “When we were established 30 years ago in 1988, U.S. Bank allowed us to have rent-free space in the U.S. Bank building. That was a generous benefit that allowed the Idaho Community Foundation to concentrate on our mission.”

Of the 12 Idaho community banks headquartered in Idaho, a total of 1,971 employees provided 56,240 volunteer hours, said Trent Wright, president and CEO of the Idaho Bankers Association, in Boise. In addition, they provided $1.1 million to charitable organizations, he said.

Some banks have a corporate giving program, some have a foundation, and some, like First Interstate, have both, said Kelly Bruggeman, vice president of the First Interstate Foundation, based in Billings, Montana. The bank contributes a minimum of 2 percent of its net income before tax each year – $3.2 million in 2017, she said. Idaho organizations the bank supports include the Home Partnership Foundation and Boise Valley Habitat for Humanity, she said.

photo of kelly bruggeman — Kelley Bruggeman

Banks don’t donate purely out of the goodness of their hearts. As part of the Community Reinvestment Act, banks are rated as part of their compliance, Bruggeman said. And banks have been criticized for using philanthropy as a marketing tool, such as making donations to organizations with good demographics – like the Idaho Shakespeare Festival. “You see banks advertising or providing grants to places that are frequented by the kinds of clients that they are trying to attract as bank clients, like elite cultural organizations,” said Aaron Dorfman, president and CEO of the National Committee for Responsive Philanthropy, in Washington, D.C. “The line gets a little blurry. Is this marketing, or true philanthropy?”

Brian Stewart

Increasingly, though, banks are donating to economic development causes. “We’ve really tried to concentrate around community development and affordable housing as our main philanthropic priorities,” said Brian Stewart, relationship manager with the Office of Nonprofit Engagement for JPMorgan Chase & Co., in Portland. Idaho programs the bank supports include NeighborWorks Boise, the Treasure Valley Education Partnership, and job programs such as Life’s Kitchen, he said.

Employees contribute as well. In 2017, employees in Utah and Idaho raised $765,000 for the United Way, said Toni Nielsen, region president for western Idaho for Zions Bank, in Boise. Most employees are involved with at least two nonprofits – one with a networking component “and one they’re passionate about,” she said.

In response to the 2017 Tax Cut and Jobs Act, some banks said they would be increasing philanthropic efforts. For example, U.S. Bank donated an additional $150 million to its foundation, said Justin Smith, U.S. Bank region president in southern Idaho. But most Idaho banks said the tax cut wasn’t changing their philanthropic plans.

As well as helping society, bank philanthropic efforts can also be good for business, Dorfman said. “A lot of corporate philanthropy is from the desire to give back to communities, but there is self-interest as well,” he said. “When you lift up the most vulnerable, that makes the whole society stronger and healthier – and that’s good for banks.”

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