Jamie Dimon: Success Story

Jamie Dimon's career path to the President and CEO of JPMorgan Chase & Co. (JPM) showed just how determined and shrewd he could be. He is loud and unapologetic and his results speak for themselves. For example, in 2000 Dimon took a failing bank in Chicago, and after only four years of running it, he made it so successful that JPMorgan Chase bought it for $58 billion.

But we’re getting ahead of ourselves. In 1985 Dimon had just quit American Express to follow his mentor Sandy Weill to Commercial Credit, a struggling sub-prime lending business in Baltimore. Dimon worked at turning the business around by cutting costs while Sandy sought out new businesses to merge with. After every sale, the business grew both in size and number of offerings, and Dimon found money to pay down the debt and acquire something new.

By 1998 Commercial Credit had taken over Primerica, Smith Barney and Salomon Brothers when it merged with Travelers Group to form Citigroup Inc. (C). Citigroup soon became the biggest bank holding company in the world. The business structure allowed for fantastic cross-selling opportunities and it was a one-stop-shop for a customer’s banking needs from cradle to grave. (See also: How Citigroup Makes Its Money.)

Unfortunately for Dimon, his time at Citigroup was coming to an end. False rumors began to spread that Dimon and Sandy Weill were in a disagreement about promoting Weill’s daughter or that Dimon was taking too much media attention away from Weill. The real story is that Dimon wanted to be in charge of the investment division but Weill and Citigroup CEO John Reed felt he wasn’t ready for the job and that he would be best suited to run the division along with two others. Dimon refused the proposal, and in November 1998 he was fired from Citigroup.

Bank One and JPMorgan Chase

With a reported $110 million in Citigroup stock, Dimon was able to take his time and find a job that would be right for him. He is also quoted as saying that he was “never going to work for anyone else again.” During his stint of unemployment he considered jobs at Microsoft Corp., Amazon.com Inc. and Home Depot Inc. before realizing that banking was where his heart and talents lay. He became CEO of Bank One in 2000 and began aggressively cutting costs. (See also: Six Extreme Ways To Land Your Dream Job.)

Bank One at the time was the sixth largest bank in the country, but it was struggling hard. Within four years, expenses had been trimmed enough that the bank was looking attractive to investors. In 2004, the bank was purchased by JPMorgan Chase for $58 billion creating the second largest bank in America with over $1.1 trillion in assets.

Dimon started at JPMorgan Chase as President but quickly rose through the ranks of upper-management to become CEO a year later in 2005 and Chairman in 2006. The company’s shares have increased 66% since Dimon took over as CEO. Dimon maintains that JPMorgan Chase is the best run bank in the world. (related: The Kingpin of Wall Street: J.P. Morgan.)

The Great Recession

In the aftermath of the 2007-2008 credit crisis, JPMorgan Chase came out relatively unscathed. Sure, the bank lost a lot of money but the amounts weren’t anything close to what the other investment firms lost. JPMorgan Chase’s profitability in 2008 has been credited with two major decisions that Dimon had a part in: First, the bank had sold its only structured investment vehicle (SIV) in 2005. Second, the bank had only limited exposure to collateralized debt obligations (CDO).

In a retrospectively excellent day for JPMorgan Chase, Dimon negotiated the acquisition of Bear Sterns for only $2 (later $10) a share. The company was worth approximately $12 billion dollars in the week before the sale and the $2 price represented 7% of that value. Under Dimon’s leadership, JPMorgan Chase also acquired Washington Mutual to become the largest bank in America. (See also: Investing In Crisis, A High Risk-High Reward Strategy.)

The biggest disaster that Dimon faced in his career is, without a doubt, the London Whale. Without getting into too much detail, the London Whale was an incident that occurred because traders were making large, risky hedged investments that were going unnoticed by their superiors. By the time the bank learned about the unprofitable hedging strategy, it was already too late to mitigate the losses. (See also: JP Morgan: The Other Side Of The Hedge.)

When news of the London Whale disaster broke in 2012, original reports put the loss to JPMorgan Chase at $2 billion, but by the time the dust had settled the loss was looking more like $6 billion. JPMorgan Chase was forced to pay $1 billion in fines as a penalty. Dimon, who was embarrassed to be a part of the scandal took a large pay cut and vowed that JPMorgan Chase would be a “port of safety in the next storm.”

Today, JPMorgan Chase is one of the top financial services firms in the world with $2.4 trillion in assets in 60 countries. The company, in their second Q2 2015 earnings, posted a net income of over $6 billion on $24.5 billion in revenue and paid a 44 cent dividend. Jamie Dimon, with his 6.1 million shares of JPMorgan Chase, is performing spectacularly and being paid handsomely for it.