Dallas saw three of Wall Street’s largest banks start on new campuses this year, cementing their bets on one of the fastest-growing metros in one of the fastest-growing states. The industry’s rapid Texas expansion since the onset of the pandemic means the area now has more finance workers than Chicago or Los Angeles, trailing only New York.

And it isn’t just the major banks. Asset managers of all sizes have been looking to cash in on the influx of wealth and people moving from the coasts to Dallas for cheaper housing and no state income tax. Fisher Investments relocated to suburban Plano from Washington state earlier this year, joining asset managers including Charles Schwab and Canyon Partners that arrived a few years before.

“Right now, the smart money is on Dallas,” Mayor Eric Johnson said at the groundbreaking ceremony in October for Goldman Sachs Group Inc.’s 5,000-person campus in the trendy Victory Park neighborhood near downtown.

The bank build-outs are helping solidify the city’s status as the financial mecca of the South, overshadowing competitors like Atlanta and Miami. The rapid migration of people and businesses to Texas has led to a virtuous cycle of job creation in construction, restaurants and other industries without direct ties to banking.

Finance workers in Dallas, however, tend to be paid a lot less than those in New York, even for similar jobs. Financial and investment analysts, for example, average $102,000 a year in Dallas, almost 30% less than the going rate in New York. 

Average salaries are also lower because of the types of jobs available. In Texas, a greater portion of the employee base is made up of back-office operations like engineering, customer service and loan processing.

And there are concerns that the state’s politics may slow the industry boom. In October, Attorney General Ken Paxton’s office said it was reviewing whether 10 financial companies, including Bank of America Corp. and JPMorgan Chase & Co., violate a Republican-backed law that punishes firms for limiting work with the oil and gas industry because of climate change concerns. Officials have also probed financial firms over a 2021 law that restricts public contracts for companies that “discriminate” against gunmakers.

In an interview with Bloomberg News in November, JPMorgan Chief Executive Officer Jamie Dimon said the laws risk undermining the state’s business-friendly reputation. Paxton has said the concern is overblown, and that all companies need to do to avoid the issue is keep away from politics. 

For now, there are no signs of any slowdown in the Dallas financial sector. Wells Fargo & Co.’s new $500 million campus, which will hold 3,000 workers, is going up in the suburb of Irving. Last month, Bank of America held a groundbreaking ceremony for its 30-story high-rise less than a mile from Goldman’s new campus.

Now the country’s fourth-largest metro, Dallas-Fort Worth surpassed Chicago and Los Angeles during the pandemic to become the No. 2 city for finance jobs. It’s home to more than 380,000 who work in the industry, according to data from the Bureau of Labor Statistics. That compares with 323,000 in Chicago, the home of CME Group Inc., Cboe and other derivatives firms that form the backbone of that city’s finance industry. New York is still No. 1, with 809,000 people employed in that sector.

And finance firms occupy 28 million square feet of office space in the Dallas area, second behind New York, according to Cushman and Wakefield. Combined with the insurance industry, the sector accounts for 12% of all commercial real estate space in Dallas, CoStar data show.

Dallas benefits from being in the middle of the country, with two airports that offer a plethora of direct flights, according to Jennifer Chandler, the market president for Bank of America in Dallas. The company has about 14,000 employees in the Dallas metro, with more than half in engineering and operations, Chandler said. 

“We obviously love the central location,” Chandler said. “It’s very easy to get to and the quality of living is strong.”

While banks like JPMorgan, Wells Fargo and Bank of America have long had a presence in Texas, the pandemic supercharged growth.

Atalaya Capital Management, a $10 billion alternative investment advisory firm, opened an office in Dallas in 2022, it’s only location outside its New York headquarters. Charles Schwab moved to the suburb of Westlake from San Francisco in 2021. Fisher Investments came from Camas, Washington. Canyon Partners, a $24 billion Los Angeles-based fund, opened an office in Dallas in 2021. And KKR & Co. opened a real estate credit office in Dallas last year.

“Covid gave everyone an appreciation for what you can do remotely,” said Ivan Zinn, the founder of Atalaya. “With the growth of asset management, hedge funds, in Dallas in particular, you’ve seen that talent pool diffuse.”

Dallas finance executives say the region is chock full of engineering and technology workers, which is part of the reason they’ve located so many back-office operations there. 

Over the coming years, they expect more executive and investment banking positions to be located in Texas. Already, executives like Rick Wurster, a top deputy at Charles Schwab, and Fortress Investment co-CEOs Joshua Pack and Drew McKnight have moved to North Texas. Dallas-based Texas Capital Bank has been expanding its business lines over the past couple years by adding an investment banking division. It launched its first exchange-traded fund in July, focused on Texas.

JPMorgan now has 15 investment bankers based in Dallas, a number that’s more than doubled in just a few years.

“There are now CEOs within our business or different business units who sit in Dallas or Plano or Fort Worth running businesses with employees all around the world,” said Elaine Agather, chairman of the Dallas region for JPMorgan. “Before, so much of that was concentrated in New York.”