Over the past decade, Wells Fargo (NYSE:WFC) has transformed itself from a regional bank operating principally in the western United States, to the nation's third biggest bank by assets with locations spanning the continent. All along the way, moreover, it has stayed true to its model of relationship-based consumer and commercial banking.
You can see the extent of Wells Fargo's reach in the image below, which shows the location of its physical offices around the country.
All told, Wells Fargo has 8,643 "stores," to use its terminology. These are divided into three main categories: retail bank branches, Wells Fargo Advisors offices, and wholesale and mortgage lending locations.
The majority of its locations consist of retail branches. As of the end of last year, for instance, 6,132 of its locations were actual branches, accounting for 71% of the total. These are places where individual customers go to cash checks and make deposits.
Physical outlets for its Wells Fargo Advisors make up the next largest category, with 1,383 locations. This unit was formerly known as Wachovia Securities. That changed in May 2009, when it took on the name of its parent company following Wells Fargo's 2008 acquisition of Wachovia.
Finally, Wells Fargo operates 1,128 offices dedicated to originating commercial loans and residential mortgages -- there were 663 of the former and 465 of the latter on the last day of 2015.
Regardless of how you slice the numbers, it seems clear that Wells Fargo has a competitive advantage in the retail banking space as a result of this extensive network. This is particularly true in the wake of the financial crisis, as other banks have been forced to retreat and retrench.
Bank of America (NYSE:BAC) serves as a case in point. Since the first quarter of 2009, Bank of America has closed nearly 1,300 physical branches, amounting to roughly one out of every five locations. Today, it boasts 4,726 bank branches. Thus, while Bank of America went into the crisis with the nation's largest branch network, it emerged from it trailing Wells Fargo.
This reality underscores the value of Wells Fargo's acquisition of Wachovia in 2008. If you revisit the map above, it was this deal that gave Wells Fargo its dense branch network along the East Coast.
The takeaway for investors is that Wells Fargo has emerged over the last few years as the leader of retail banking. This should give it a competitive moat stemming from economies of scale that, assuming that it continues to be prudently managed, should translate into superior returns in the years and decades ahead.