“TOGETHER we'll go far.” Wells Fargo's corporate slogan is a pledge to its customers, but it might just as well reflect the San Francisco banking giant's optimism about its takeover of Wachovia, a teetering rival it snatched from under Citigroup's nose last October. Losses from the acquisition are “still in the same zip code” as the sum envisaged at the time, says John Stumpf, Wells's chief executive. In another sign of self-confidence, Dick Kovacevich will step down as chairman at the end of the year, a move that would be hard to imagine if the bank's hands-on former boss were worried about the future.

Others are less convinced, suspecting Wells of understating Wachovia's loan losses and questioning its accounting. Fuelling these worries, says Dick Bove of Rochdale Securities, is “extraordinarily poor” communications and disclosure. Alone among big banks, Wells does not hold a quarterly call for analysts.

Had it not bought Wachovia, Wells would be one of finance's clear winners. Long one of America's more conservative lenders, it avoided the most noxious property loans and securities. As Warren Buffett, a fan and shareholder, put it in April: “What Wells didn't do is what defines their greatness.” Wachovia changed that. It brings opportunities, but also risks.

On the positive side, the merger has doubled the number of Wells branches to more than 6,600, giving it a footprint that only Bank of America comes close to matching. Wells and Wachovia were “mirror images” of each other, says Mr Stumpf, with Wells strong west of the Mississippi and Wachovia powerful to the east.

This gives Wells huge deposit-gathering power, as well as an opportunity to pump more products to Wachovia customers, who typically have four to five products with the bank, compared with almost six for Wells clients. Mr Buffett sees echoes of Wal-Mart in Wells's retailing ethic. The merger gives Wells a formidable position in areas such as mortgages. In the first half of the year it handled a staggering 23.5% of all new home loans, according to Inside Mortgage Finance, a newsletter.

But Wachovia also brings credit problems that could take years to resolve. A big worry is its range of “Pick-A-Pay” retail loans, which allowed borrowers to defer principal as well as interest payments: of those that were still current at the time of the merger, 3.2% were seriously delinquent as of June 30th, up from 1.1% in March. The default rate on the bank's $38 billion of property-development loans is several times the national average (though Wells argues that the official numbers do not reflect merger-related adjustments). A big chunk of its $127 billion commercial-property portfolio consists of interest-only loans with a balloon payment at the end, the wholesale equivalent of Pick-A-Pays. These will be hard to refinance.

Another worry is the large amount of credit protection that Wachovia is thought to have sold on risky tranches of mortgage-backed securities. Wells points to its latest filing, which shows $105 billion of protection sold and a similar amount bought. But the extent to which the latter really offsets the former is unclear.

Then there is capital. Among big banks, Wells scores poorly on Tier-1 common equity, the core-capital measure favoured by regulators (see chart). It is well below the 6% level that is likely to be the minimum required in future. And at some point it will have to repay the $25 billion of government capital it got last year.

Wells puts its relative capital paucity down to “purchase” accounting at the time of the Wachovia deal. It immediately wrote down $40 billion of the $60 billion in total losses it envisaged. This upfront hit took a big chunk out of its equity, but put it ahead of peers in dealing with losses. Andrew Marquardt of Fox-Pitt Kelton estimates that Wells has swallowed 60-70% of its expected losses, twice the proportion recognised by a typical large bank.

Wells also argues that analysts and regulators underestimate its earning power. It generates pre-provision profits of around 3% of assets, compared with 2% for its peers. Wells has already plugged the gap identified in this year's stress tests, generating almost half the necessary capital internally (and the rest from a share offering). But, thanks to the uncertain economy and concerns about Wachovia, doubts linger. Mr Bove likens the bank to a rumbling volcano. If it blows, Wells will need lots more capital than it produces internally.