Though there is little overlap between J.P. Morgan Chase & Co. and Bank One Corp. elsewhere, Wednesday's deal could produce a huge upheaval in Texas, where both companies have extensive operations.
"It's definitely a major event," said Scott Alaniz, an analyst who covers the Texas banking market for Samco Capital Markets Inc. in Dallas. "There is probably not a lot of emotional attachment, because both of these banks are based out-of-state, but the impact is still huge."
In terms of banking, the most visible effects would be a wave of branch sales and closures in Dallas and Houston and a heightened level of competition for small and midsize businesses, he said.
In the Dallas area, there are 21 Morgan Chase branches located within a mile of a Bank One branch, Mr. Alaniz said. And the companies have even more branches in Houston (109 combined) than they do in Dallas (102).
Though they have not said anything about branch closings, "there are going to be some redundancies," Mr. Alaniz said.
"A lot of Texans work for these two companies," he added.
Bankers and analysts also predict that the deal would lead to considerable run-off, especially among small and middle-market business customers, which typically crave more personal service.
In a research report published Thursday, Peter J. Winter, who covers Texas banks for Advest Inc. of New York, said both J.P. Morgan Chase and Bank One have been "tiering up" their client bases - in other words, focusing increasingly on big businesses. The deal, he wrote, "will intensify that process."
But Calmetta Coleman, a Bank One spokeswoman, said it was "ridiculous" to think the two companies would abandon the small- and middle-market sectors.
"We'll certainly continue to focus on all of our customers, regardless of their size," she said. "We think this merger will make us stronger and better companies."
Greg Hassell, a J.P. Morgan Chase spokesman, added that the company is "not big because we serve big customers, we're big because we serve everybody."
He pointed out that J.P. Morgan Chase is among the top Small Business Administration lenders in Texas.
Mr. Winter, however, predicted there would be growth opportunities for smaller banks. In particular, the $5.6 billion-asset Southwest Bancorp. of Texas in Houston and the $13.1 billion-asset BOK Financial Corp., which is based in Tulsa but has major operations in Texas, are "best positioned" to take advantage of the opportunities, he said.
And they are hardly the only community banking companies looking to grab share from J.P. Morgan Chase and Bank One.
"We should be very busy over the next two years," said J. Downey Bridgwater, the president and chief executive officer of the $3.1 billion-asset Sterling Bancshares Inc. in Houston.
"When big banks merge," they always lose some customers and bankers, Mr. Bridgwater said. "We don't perceive this to be any different, and that's not because these two banks will do a bad job integrating. They won't, but the small-business market segment that we focus on has typically been underserved, anyway."
Tricia Linderman, the director of marketing at Texas Capital Bancshares Inc. of Dallas, said her $2 billion-asset company "absolutely" expects to grow as a result of the deal.
"First of all, it will put some great talent on the market, and that is how we grow," she said. "Second, as the big get bigger, the first to fall out are the small and mid-size businesses we cater to."
Texas Capital moved into Houston in August, but only after it lured seven veteran commercial lenders away from Wells Fargo & Co. Mr. Bridgwater said community banks will take similar advantage of any defections from either J.P. Morgan Chase or Bank One.
"Bankers will leave and take their customers with them," he said.
Mr. Alaniz said the deal would also leave a number of consumers looking for a new bank. However, the biggest winner in the consumer area would likely be Bank of America Corp., which has a large and growing Texas operation and can offer individual customers the most convenience, he said.
According to Federal Deposit Insurance Corp. statistics, J.P. Morgan Chase has the No. 1 deposit share in Texas, with 15.5%. Bank of America ranks second, with 11.43%. Bank One is No. 4, with 6.59%.
After buying Bank One, J.P. Morgan Chase expects to eliminate as many as 10,000 jobs, but it is not clear how many, if any, of those cuts would come from Texas. The companies have more than 4,500 back-office workers in Austin and Dallas.
"Big companies make money by cutting costs," Mr. Alaniz said. "There are probably going to be people leaving, either voluntarily or involuntarily."
Another market expected to undergo some upheaval - though to a lesser extent - is Chicago, Bank One's hometown.
Jill York, the chief financial officer of the $4.3 billion-asset MB Financial Inc. in Chicago, said the challenges of integrating the two banks might cause J.P. Morgan Chase to lose focus for some time, especially on smaller clients. That loss of focus would give companies like MB a chance to win new customers.
Competing banks could also pick up an edge as they hire any lenders who are displaced in the deal, she said. "We think it will be a chance to pull some lenders and customers out of the new bank."
Terry J. McEvoy, an analyst with Oppenheimer & Co. of New York, agreed that the deal could be a boon for local banks, as well as out-of-town ones that have recently expanded into Chicago, and he doubts they will waste much time trying to capitalize on it.
"The sales calls will begin tomorrow morning," Mr. McEvoy said Wednesday, the day the deal was announced. "Everyone that has entered the market is licking their chops."
Mitchell Saywitz, the chairman and CEO at the $400 million-asset Builders Bank in Chicago, said the deal would probably not affect the smaller banks in town, except perhaps to give them an opportunity to pick up business at the lower end of the lending scale.
"Builders Bank exists to serve a market segment that is often overlooked by the major banks," he said. "The consolidation of Bank One into a much larger entity probably won't change that."
