Abrupt exit of respected CFO rattles Wells Fargo investors

Last month, Wells Fargo & Co. executive Howard Atkins was singing the praises of his employer to Wall Street, boasting of the bank's "strong and consistent earnings" and "broad-based revenue growth" in an earnings call with analysts.

Now the veteran chief financial officer is suddenly out of a job, for reasons the bank did not fully disclose. Wells Fargo bid adieu to Atkins in a short news release late Tuesday without even thanking him for his years of service -- standard fare in executive departures.

It was an unusually abrupt sendoff for a man who has been CFO at Wells Fargo since 2001 and was considered by many to be a possible successor to CEO John Stumpf.

The lack of detail from the nation's fourth-largest bank puzzled analysts and rattled investors. Shares of the bank fell 97 cents, or 2.8 percent, to $33.13 a share on Wednesday.

About an hour after the market closed Tuesday, Wells Fargo announced that Atkins was retiring for "personal reasons," taking an unpaid leave of absence and would be replaced at once by chief administrative officer Timothy Sloan, 50.

Atkins, who turns 60 this week, retires in August, when benefits tied to 10 years of employment become effective. Wells Fargo said his departure was unrelated to company's financial condition.

"Clearly, the guy did something that really infuriated [Wells Fargo], because they're not paying him for six months," said Richard Bove, a bank analyst at Rochdale Securities in Lutz, Fla. "It's really upsetting because he's a superior CFO who has done a superior job."

The timing of the announcement also unnerved investors. Wells Fargo and other large banks are undergoing another round of "stress tests" by the Federal Reserve. In essence, the banks must prove they have a plan in place and enough capital to absorb losses over the next two years. Those that pass the tests will be allowed to raise their dividends. Results are expected as early as the third week of March.

"Usually, when there is a CFO departure, it's the numbers," said Tony Plath, a finance professor at the University of North Carolina at Charlotte. "But here, the numbers are fine. Unless there is something we don't know about."

Atkins was considered Wells Fargo's second-most-prominent executive, after Stumpf. He appeared regularly on CNBC to discuss the company's financial results and fielded many of the tough questions from Wall Street analysts on conference calls. In Wells Fargo's most recent annual report, Atkins is pictured standing side by side with Stumpf.

The CFO also was respected on Wall Street for navigating Wells Fargo through the most severe financial crisis since the Great Depression. His departure comes less than a month after the bank posted an annual profit of $12.4 billion. It also came as Wells Fargo's stock hit a 52-week high.

Atkins will get about $9 million in deferred compensation, including salary, bonus and pension payments, upon leaving Wells Fargo, the firm said. His retirement also gives him the opportunity to have restricted stock and stock options vest that were worth $13.2 million at the time they were granted.

Scott Siefers, managing director at Sandler O'Neill & Partners, said in a research note that Atkins' departure contrasted sharply from the last major management change at Wells Fargo -- the replacement a year ago of longtime CEO Dick Kovacevich by Stump. That changeover was "well-telegraphed, measured, and took place over a period of time," Siefers wrote. "This one is obviously different."