JPMorgan Chase & Co.’s plans for Washington Mutual Inc. are starting to unfold.
The New York-based bank’s Chief Executive Jamie Dimon has called WaMu a “tainted brand” and will replace all of its iconic signs and logos here and elsewhere with the blue octagon of its Chase Bank.
JPMorgan bought the assets of the Seattle-based savings and loan for $1.9 billion in September in a deal driven by the Federal Deposit Insurance Corp.
WaMu had been the largest thrift operating in the county with 60 branches and $8 billion in local deposits, according to 2008 government data.
It was among the largest financial institutions operating here, along with Charlotte, N.C.-based Bank of America Corp. and San Francisco’s Wells Fargo & Co.
But WaMu wasn’t as big in business banking as BofA and Wells, though it was a major player in home loans and retail banking. It now stands to be more of a rival for businesses and the wealthy here.
“We plan to provide far more banking services for both small and large businesses, as we do in other markets,” said Pablo Sanchez, senior vice president and Western region manager with JPMorgan. “That is a major expansion of what Chase brings to the table.”
The neighborhood model of WaMu, whose prime business as a thrift was to gather deposits and make loans, will adopt the commercial banking model of JPMorgan.
The bank is looking to offer businesses lines of credit, payment collection, cash management, retirement plans and help for doing business globally.
Just like BofA and Wells, Chase is hoping to use its branches and business banking as an entry to more profitable wealth management and investment banking services.
JPMorgan isn’t abandoning all of WaMu’s policies. Customers who already had free checking will hold on to the perk, according to Sanchez.
Cuts
For now, JPMorgan is focused on integrating and rebranding WaMu.
Plans include more layoffs here.
Last year, WaMu shed 475 local workers, or 20% of its workforce. After cuts this year, WaMu should have about 1,500 workers in the county, down from 2,475 a year ago.
About 250 people have been cut from WaMu’s local workforce since December. Workers with overlapping jobs to those at JPMorgan, like data entry and accounting, made up the bulk of the layoffs, according to the company.
Another 250 workers are expected to be let go throughout the year.
It’s unclear how many of WaMu’s local executives and managers will stay, including George Kaye, a senior vice president who heads Orange County and San Diego for WaMu.
“We haven’t made any local leadership announcements,” Sanchez said.
So far, the nearly 60 managers in WaMu’s local branches and the regional managers who oversee them have stayed put.
Part of what made the deal attractive was the people already in place at WaMu’s branches, according to the company.
JPMorgan’s purchase gives it a long desired piece of the California market, which is where the branding changes will start.
All other states will be converted by year’s end, according to the company.
JPMorgan plans to spend $375 million to remodel its branches across the country, part of which involves giving more privacy to customers.
“It’s what they told us they wanted,” Sanchez said.
JPMorgan becomes the third-largest bank operating in the county by acquiring WaMu’s 11% market share of deposits as of June 30.
BofA holds the top spot with 20% and $13.7 billion in deposits. Wells holds a 13% share with $9 billion, according to government data.
Mortgages
JPMorgan also inherits the root of WaMu’s undoing: mortgages gone bad. It likely has more than $30 billion in bad loans from WaMu, although an exact number hasn’t been released.
In February, JPMorgan plans to open a counseling center in Santa Ana for borrowers having trouble paying their loans. It will be one of 24 in the country, according to Sanchez.
This isn’t the first major integration that JPMorgan has done.
In 2000, JPMorgan bought out Chase Manhattan Corp., followed by the acquisition of Chicago-based Bank One Corp. in 2004 and last May’s rescue of New York-based investment bank Bear Stearns Cos.
