In an effort to further its integration of Wachovia, Wells Fargo & Co.(WFC) has completed the conversion of 300 Wachovia Community Banking locations into Wells Fargo outlets across the southern half of Florida.
In June, Wells Fargo completed the conversion of Wachovia Community Banking operations in 363 Stores across north and central Florida and the greater Tampa.
As a result of the Wachovia branch conversions over the past couple of months, more than 70 million customers in the state and throughout the U.S. can now access nearly 700 stores and more than 900 ATMs of Wells Fargo spread across Florida.
In May, Wells Fargo announced that it would wrap up the transition of the remaining Wachovia signs and systems into Wells Fargo by mid-October 2011.
Specifically, Wachovia’s stores in Virginia will be converted in August; Maryland, South Carolina, and Washington, D.C. in September; and finally North Carolina in October. The conversion of 868 stores and 1,487 ATMs across these four states and the District of Columbia will conclude the transition from Wachovia to Wells Fargo.
Wells Fargo purchased Wachovia in December 2008, in a $12.7 billion all-stock deal, after Wachovia suffered due to its exposure to bad mortgages right before the housing bubble burst.
Our Take
Wells Fargo’s growth plans have historically included a large number of acquisitions, Wachovia being the largest addition. In May, the company announced that it would acquire substantially all of the US-based operating assets of Foreign Currency Exchange Corporation, a wholly-owned subsidiary of the Bank of Ireland Group, in order to expand its international banking capabilities.
The deal is expected to fortify Wells Fargo’s foreign currency exchange capabilities for domestic correspondent banks.
The company has demonstrated its ability to assimilate local franchises, by offering a broader range of products than the acquired company could have had, thereby increasing the options for customers. This has been the driving force behind Wells Fargo’s growth in the recent years.
Looking forward, the Wachovia merger offers significant growth prospects and above-average profitability for the company in the longer term.
However, we believe revenue will remain challenged given the tepid economic recovery, with a lackluster loan growth and legacy mortgage issues. Moreover, regulatory issues also pose a threat to the company’s top line.
Wells Fargo currently retains a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. Also, the company’s peer, Fifth Third Bancorp (FITB), retains a Zacks #3 Rank.
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