Markets are always wary of CFO resignations, and Howard Atkins' resignation, announced after Tuesday's market close with immediate effect and without the usual pleasantries, demands more wariness than most. So what's up at Wells Fargo (NYSE:WFC)?
A 10-year veteran, Atkins is well-regarded, a premier financial services star. Even better, he's accomplished. In the lead-up to the 2008 financial panic, he positioned Wells to survive, with greater profitability and less credit risk and leverage than most peers. Working for the legendary Chairman/CEO Dick Kovacevich, he avoided catastrophic acquisitions, then supported the company's timely and transformative FDIC-assisted acquisition of Wachovia and managed much of its successful integration. In 2009, he recapitalized the bank, repaid TARP, and began to repurchase warrants, if not shares. Throughout, the company never had a losing quarter. Now, Wells has a national banking footprint and is on the cusp of increasing its common dividend.
Simply put, the suddeness of his departure - for "personal reasons" - and the unpaid leave are out of the ordinary course. So is the fact that last week, the company replaced Atkins as its presenter at Morgan Stanley's financial services conference.
In press releases, the company states that the departure wasn't related to the its financial condition or reporting -- two of Atkin's principal responsibilities. "Personal reasons" was purposefully vague, but it seems reasonable that had these been wholly personal reasons - health, a family tragedy - that the company would be more accomodative. Had it been a turf battle - unlikely here - it would have been resolved with the support of the new Chairman, President, and CEO John Stumpf.
So what's up at Wells? Anyone who knows these men, knows that Stumpf compares poorly to his predecessor, sorely lacking Kovacevich's gravitas, his command, and communication skills. Atkins' departure has the earmarks of a clash between Stumpf and Atkins, with Atkins and shareholders the losers.
Howard, I wish you well. You leave Wells Fargo & Company positioned to thrive, if it doesn't get in its own way.
Disclosure: I am long WFC.