JPMorgan Chase (JPM 0.83%), the largest bank by assets in the U.S., recently found itself at the center of headlines when it acquired most of the assets from First Republic, which was seized by regulators earlier this month.
For those who follow banking, it is no surprise to see the bank and its CEO Jamie Dimon come to the rescue yet again, as Dimon and the institution itself are seen as industry leaders.
JPMorgan has not only been the top dog in banking for many years now but it's also been a great stock to own that has served shareholders well over the long term. What's amazing is how far the bank has come even since the Great Recession. Let's say in the year 2010 that your great Uncle John Paul passed away and left you $2,300. If you took this sum and invested it in JPMorgan stock that year, here's how much you would have today.
JPMorgan is making leaps and bounds
Dimon took over JPMorgan Chase in 2006, a few years after the bank he formerly ran, the Chicago-based Bank One got acquired by JPMorgan. But the Great Recession really cemented Dimon and JPMorgan as the leaders of banking.
Image source: Getty Images.
JPMorgan did a good job of not getting overly exposed to the subprime mortgage debacle and was able to navigate the Great Recession from a position of strength, acquiring both Bear Stearns and Washington Mutual, both of which were on the brink of collapse.
Now, Dimon would not leave the Great Recession completely unscathed because JPMorgan would have to deal with the past indiscretions of Bear Stearns and Washington Mutual. In the years that followed, JPMorgan would have to pay $19 billion in fines due to regulatory issues largely stemming from the two beleaguered institutions, something that Dimon has publicly expressed displeasure about.
But the trouble seems to have been worth it because JPMorgan Chase has grown at an incredible pace since 2010. Total assets at the bank jumped from roughly $2.1 trillion to nearly $3.7 trillion, and the bank has bulked up a lot of its businesses. JPMorgan in 2010 generated $17.4 billion of net income and a return on equity of 10%. In 2022, the bank generated $37.7 billion of net income and a return on equity of 14%.
JPMorgan Chase has also seen a lot of its core businesses get immensely bigger. Its two largest business divisions -- the consumer and community bank, and the corporate and investment bank -- expanded greatly. As of June of last year, JPMorgan Chase had roughly 11.7% U.S. deposit market share. The bank also saw ancillary businesses grow and launched new verticals that are having a material impact.
In asset and wealth management, JPMorgan Chase more than doubled client assets from roughly $1.8 trillion at the end of 2010 to more than $4 trillion at the end of 2022. JPMorgan also become a massive player in the global payments space and in helping merchants process transactions. In 2010, JPMorgan processed more than $469 billion of volume for merchants. In 2022, that number jumped to more than $2.1 trillion.
If you had invested $2,300 in 2010...
The global scale that JPMorgan created and the depth of the various products and services it offers created a moat that even its large bank competitors will have difficulty replicating.
This scale and revenue diversity also allow JPMorgan Chase to perform well in many different economic environments, as evidenced by the events of this year, which is why the bank is truly best-in-breed.
At the very beginning of 2010, JPMorgan Chase's stock traded around $42 per share. Today the stock trades at around $136, which equates to a gain of 224%. Therefore, $2,300 invested in the stock in 2010 including the reinvestment of all dividends would now be worth $7,533. That's below the total return of the broader benchmark S&P 500 since 2010 but still very solid and strong for the banking sector as well. Uncle John Paul would likely be proud of your investing choices.
