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JPMorgan Steps Up Campaign for Depositors

Stocks in this article: JPM

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( Trefis) -- JPMorgan Chase (JPM) recently announced that the company plans to open as many as 2,000 new branches in the U.S., with more than half of them in Florida and California.

JPMorgan is targeting the states dominated by Bank of America (BAC) and Wells Fargo (WFC), the largest U.S. bank by deposits and the bank with the largest branch network respectively.

JPMorgan's approach is in contrast to Bank of America's which plans to close 10% of its branches as mobile and Internet banking have reduced the need to have a branch on every corner of the city. JPMorgan is one the largest and most diversified banks in the U.S., and competes primarily with Bank of America, Wells Fargo, Goldman Sachs (GS), Deutsche Bank (DB) and Morgan Stanley (MS).

We have a price estimate of $45.60 on JPMorgan's stock, implying a 15% premium to the current market price.

Bank of America serves nearly 59 million customers and has the most deposits in the U.S., accounting for nearly 12 % of the total deposit base. Total deposits increased from $303 billion in 2005 to $411 billion in 2010 with the acquisitions of LaSalle, US Trust, Countrywide and Merrill Lynch cementing its place as the leader in deposits.

We expect Bank of America's deposit base to remain strong and reach $530 billion by the end of our forecast period.

JPMorgan has also increased its deposit base steadily over the last five years from $190 billion in 2006 to $337 billion in 2010. The acquisition of Washington Mutual in September 2008 helped it increase its customer base while adding 2,200 branches, 5,000 ATMs and 12.6 million checking, savings, mortgage and credit card accounts. We expect JPMorgan's deposit base to grow at a faster rate than Bank of America's and reach $540 billion by the end of our forecast, largely because of its plan to open more branches.

By the end of our forecast period, we expect JPMorgan to overtake Bank of America as the largest U.S. bank by deposits.

See our full analysis of JPMorgan here and our full analysis of Bank of America here.

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