Chase’s shiny new bank branch in West Palm Beach underscores two realities about the financial industry a decade after the Great Recession.


First, so many banks are shrinking their physical footprints that any investment in bricks and mortar is noteworthy.


>>Related: Palm Beach County bank customers forgive Wells Fargo’s missteps


And second, Chase is sitting on so many billions of dollars in capital that building a branch on prime real estate represents little more than a rounding error on the massive balance sheet of New York-based JPMorgan Chase & Co. (NYSE: JPM).


For most banks, branches have lost their luster. Brick-and-mortar locations, once the financial industry’s primary platform, have devolved into little more than a costly throwback to the days of passbook accounts and promotional toasters.


Chase, the trillion-dollar juggernaut, is bucking conventional wisdom by building new branches throughout Palm Beach County and nationally.


The latest example is the new Chase branch at the corner of Southern Boulevard and Dixie Highway in West Palm Beach. Illustrating the desirability of that crossroads as a retail location, there’s a Walgreens at the opposite corner.


Chase also has put up new offices at Atlantic Avenue and Military Trail in Delray Beach and in downtown Lake Worth Beach.


“They’re going on a massive branch expansion,” said Ken Thomas, a bank analyst at Community Development Fund Advisors in Miami. “They understand people want and need branches – even if they don’t go in.”


Consumers no longer go to the bank on payday to deposit their checks, and applying for mortgages, car loans and credit cards also is a fully automated experience. Even so, Thomas said, branches can act as billboards — and they serve to reassure customers who would like face-to-face interaction once in a while.


“People don’t want to call India,” Thomas said. “They’d rather go into the branch and talk to a banker.”


In the era of PayPal, Apple Pay and Bitcoin, the number of old-fashioned bank branches is shrinking.


Fewer than 450 bank branches operated in Palm Beach County as of mid-2018, down from a peak of more than 500 in mid-2009, according to the Federal Deposit Insurance Corp.


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Even as branch counts have dwindled, deposits held by Palm Beach County branches have risen steadily, from $39 billion in 2009 to $53 billion in 2018.


Chase is one of three megabanks with more than $1 trillion in deposits nationally. The others, Wells Fargo (NYSE: WFC) and Bank of America (NYSE: BAC), aren’t aggressively expanding their brick-and-mortar networks, Thomas said.


Some banks are actively pulling back. Citibank (NYSE: C), for instance, closed its office on Banker’s Row in Palm Beach as part of a broader retrenchment.


Rivals SunTrust and BB&T announced a merger this year and said branch closings are likely.


>>Related: In SunTrust-BB&T marriage, is your branch on the chopping block?


Given the new consensus that brick-and-mortar locations are more nuisance than necessity, and that tech-savvy consumers are happy to bank with their phones or online, some wonder why Chase is bothering to expand its footprint.


"We were overbanked a long time ago, and they’re still building out,“ said Gerry Frigon, chief investment officer at California-based Taylor Frigon Capital Management. ”It doesn’t really seem to make sense.“


JPMorgan Chase Chairman Jamie Dimon explains it this way: The megabank had $244 billion in capital as of June 30, making even a million-dollar investment in a branch seem like pocket change.


“We have plenty of capital,” Dimon told analysts in early August. “I mean, our capital cup runneth over, and we prefer to deploy that capital.”


Each branch uses about $10 million of capital, Dimon said, so opening 400 new offices would consume $4 billion, a mere fraction of Chase’s ample total.


Those are the sort of numbers that could strike fear in the hearts of Chase’s smaller competitors.


“You’re going to hear a giant sucking sound of deposits coming out of community banks,” Thomas said.


Frigon likewise frets that big banks are getting bigger and squeezing out community banks.


Chase, he said, is “so big and so vast and in such a position of dominance. They just keep building more physical presence.”


Chase became a big player in Palm Beach County during the Great Recession, when it took over failed Washington Mutual, which had invested heavily in branches.


In a couple of cases, Chase’s new locations represent upgrades to branches in older buildings. The new office in Lake Worth Beach replaced a Chase branch in an aging building next door. The new branch in West Palm Beach replaces an older office a couple miles south.


Chase is a distant third in Palm Beach County deposit share, behind Wells Fargo and Bank of America, but its physical presence ranks second. Chase had 54 branches in the county as of mid-2018, according to the FDIC, trailing only WellsFargo’s 64 branches.


jostrowski@pbpost.com


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