Now it's finally expanding east of the Mississippi with a $12.2 billion acquisition of Wachovia Corp., a golden opportunity that the San Francisco-based bank was able to seize largely because it never got too wild while many of its rivals gambled on exotic lending products that led to the current financial chaos.

"Wells Fargo knows how to gather deposits, sell additional products and not make loans to people who can't afford to pay them back," said Celent analyst Bart Narter.

It sounds simple, but sticking to the banking basics wasn't standard operating procedure while home prices were soaring in a four-year stretch that ended in 2006. The real estate boom emboldened lenders to lower their standards and offer mortgages that began with abnormally low interest rates before shifting upward to saddle borrowers with monthly payments they couldn't afford to make.

Although Wells Fargo consistently ranked among the largest U.S. mortgage lenders during this frothy period, the bank mostly avoided the crazy stuff that ultimately destroyed Countrywide Financial, Washington Mutual, Wachovia and a long list of other lenders.

The aversion to risky loans was instilled by Wells Fargo's leader for the past decade, Richard Kovacevich, who handed the chief executive reins over to John Stumpf last year. Kovacevich, though, remains Wells Fargo's chairman and is now planning to postpone his retirement plans to help complete the Wachovia combination.

Wells Fargo's lending discipline is even more impressive, given its prominence in California -- an epicenter of the real estate boom and bust.

Not that Wells Fargo has remained completely pristine. The bank already has taken a $1.4 billion loss on ill-advised home equity loans and also delved into the dicey subprime market through an arm that caters to consumers with shabby credit records.

Wells Fargo still hasn't posted a quarterly loss during the past year of upheaval, though its profits have been shrinking during the past nine months.

"They aren't perfect, but they have done enough things right where they look like they are going to be among the chosen ones in this period of banking consolidation," said analyst Frederick Cannon of Keefe, Bruyette & Woods Inc.

Once the Wachovia deal is complete, Wells Fargo will join Bank of America Corp. and JPMorgan Chase & Co. as the U.S. banks with the country's biggest branch networks, "and in many ways, Wells Fargo may be the strongest of them all," Cannon said.

Investors also appear to have high hopes. Wells Fargo's shares gained $1.06, or 3.9 percent, to close at $28.31 on Friday.

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