Wells Fargo & Co. (WFC) has recently announced that it will be converting 65 Wachovia branches in California displaying its own name and stagecoach logo. San Francisco-based Wells Fargo has been moving slowly to consolidate Wachovia Bank into its system.

During December of last year, all 4,800 branches of the residential lender Wachovia Mortgage had been folded into Wells Fargo Home Mortgage.

The integration began in Colorado last month, where both the institutions had overlapping branches. After California, the conversion process will move to other states such as Arizona, Illinois, Nevada and Texas, where Wells Fargo and Wachovia offices overlap. Conversion in these states is expected to begin in 2010, though the conversion dates haven’t been announced for the Wachovia-only markets in the Carolinas and along the East Coast.

Wachovia Corp. was purchased by Wells Fargo on Dec. 31, 2008, when it ceased to be an independent corporation. The company had been battered by heavy losses, especially in its portfolio of flexible, interest-only home loans, and was suffering a run on its deposits.

Wells Fargo’s growth plans have included a large number of acquisitions, Wachovia being the latest in December 2008. The company has demonstrated its ability to assimilate local franchises offering a wider range of products than the acquired company could have had.

The Wachovia merger is expected to generate an internal rate of return (IRR) of about 20% and be accretive to earnings starting from the third year without any adjustments. Further, as a result of the merger, Wells Fargo substantially expanded its distribution network and has a Community Banking presence for the first time in 15 states — Alabama, Connecticut, Delaware, Florida, Georgia, Kansas, Maryland, Mississippi, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia — and Washington D.C.

Last month, Wells Fargo reported net income of 56 cents per share. The company reported that the Wachovia merger is on track and expects to realize $5.0 billion of annual merger-related savings upon completion of the integration process in 2011. Cross-selling revenues are already being realized. With the combined resources, Wells Fargo will be in an even better position to satisfy its customers’ financial needs.
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