Updates stock price and information about Atkins' retirement package.



) -- Going through the process of elimination, Howard Atkins' abrupt departure from the C suite of

Wells Fargo

(WFC) - Get Report

on Tuesday could be the result of a personality conflict with his boss CEO John Stumpf, according to industry observers.

But the now-former CFO's mysterious resignation -- and uncertainty about the firm's financial footing without Atkins -- has given investors cause for concern.

Wells Fargo surprised Wall Street with the abrupt resignation of CFO Howard Atkins

On Wednesday, Wells shares were off as much as 3.5%, selling for $32.74 to $33.66 in intraday trading, vs. a close of $34.10 the prior session. On Thursday, the stock wavered between marginal gains and losses. Analysts predicted that the stock could come under more pressure as investors struggled to interpret the news.

"We expect the stock to come under some near-term pressure as the market digests such a big surprise," said Sandler O'Neill's Scott Siefers, echoing the comments of many analysts.

Atkins' track record at Wells Fargo, his reputation on Wall Street and clues in the bank's statement would seem to rule out the most serious issues that might have forced his resignation -- whether corruption, incompetence or a health issue.

Yet Atkins and his former employer have so far refused to offer additional clarity on the reason for his unexpected departure, beyond saying it was "personal" in nature and unrelated to the firm's financial reporting.

Until Wells Fargo files its annual report with the

Securities and Exchange Commission

-- which Atkins' successor, Tim Sloan, and not Atkins, will sign off on within the next couple of weeks -- the company's share price may just keep getting hammered.

There's been a spate of departures at the top level of giant banks, but most of them had to do with poor performance during the financial crisis. Atkins' 10-year track record at Wells Fargo suggests just the opposite.

An alumnus of retail banks like Chase Manhattan and PNC predecessor Midlantic Corp., Atkins is credited with having deftly steered Wells Fargo through the subprime era without much exposure to that type of risky debt. When Wells acquired Wachovia, which nearly fell under the weight of subprime, Atkins helped Wells offset related losses with hedging and accounting expertise - all while overseeing the integration of a bank that was nearly equal to the size of its acquirer.

Sickness could also be ruled out. The 59-year-old banker appears to be in good health -- and, if he wasn't, it's unlikely that Wells would put him on unpaid leave for eight months and issue a pithy, mysterious press release about his departure that brought up more questions than it answered.

>>>Read More: Wells Fargo CFO 'Retires' Unexpectedly

Wells' official statement and regulatory disclosures regarding Atkins' exit didn't include any remarks from the man in question. A statement from his boss, CEO John Stumpf, was less syrupy than one would expect from an amicable divorce.

Additionally, while Wells is allowing Atkins to postpone his official end-date until Aug. 6 so that he will be eligible for his full retirement package -- worth about $22 million, according to the company's latest proxy filing -- he's been placed on unpaid leave until then.

It's almost as if the bank was begrudgingly bidding adieu to someone it didn't mind getting rid of.

When asked whether Atkins butted heads with other top executives, one Wells Fargo executive said, "I can't go into details but you're on the right track. All I can say is, it was definitely 'personal.'"

Daniel Dalton, a partner at the law firm Dalton, Tomich, Pensler, who has worked with banking clients on corporate governance issues, says there are two reasons why top executives leave: "One is health, the other is simply conflict," he says. In reviewing the circumstances at Wells Fargo, he says, "My guess would be a conflict."

Attempts to reach Atkins were unsuccessful. Wells Fargo spokesman Oscar Suris wouldn't get into more detail about the reason for his departure, but reiterated that company's statement that "financial condition and financial reporting were absolutely unrelated to Howard's decision to retire."

"If we were to elaborate on personal reasons, they wouldn't be personal anymore," Suris said on Wednesday. "That's why we're not elaborating. They are personal reasons and we're leaving it at that."

At a conference on Wednesday, David Carroll, who heads Wells' wealth management, brokerage and retirement services division, also declined to provide additional details. "No, I can't add anything," said Carroll. "I mean, what we announced in the press release was a personal decision. We'll just leave it at that.

Of course, the word "personal" can mean a lot of things. In the case of

American International Group's

(AIG) - Get Report

Robert Benmosche or


(AAPL) - Get Report

Steve Jobs, it meant serious health issues. In the case of Wachovia's Ken Thompson, it meant he didn't know how to run a bank. In the case of


(HPQ) - Get Report

Mark Hurd, it meant he had some sort of dalliance with an events planner and submitted inaccurate expense records. In the case of

Bank of America's

(BAC) - Get Report

Liam McGee, it meant he was seeking opportunities outside the bank because he would never get promoted to CEO.

When it comes to Atkins, though, none of those appear to be the case.

Jill Brown, an assistant professor of management and Axelrod Fellow at Lehigh University who performs research on corporate governance says it isn't odd for a CFO to quit. However, several elements surrounding his mysterious exit are likely to lead to ongoing speculation over the real reason for his departure.

"The disclaimer from Wells Fargo that this is unrelated to the financial condition of the company is a departure from the norm and hence, the reason for speculation in the press," she says, adding that "the 'unpaid leave' aspect is highly unusual" as well.

In searching for an explanation for Atkins' sudden exit, banking industry veterans point out that 2010 was the first year in which Stumpf had full control of the bank and its board. Atkins had been hired under Stumpf's predecessor Richard Kovacevich, who announced his retirement in 2008 but stayed on the board through early 2010 to ensure a smooth transition.

Lee Kyriacou, a partner at the consulting firm Novantas, notes that it's not unusual for new CEOs to replace their predecessors' top managers with executives of their own choosing. As a former executive at Fleet Bank and Chase Manhattan, Kyriacou said he has encountered Atkins but doesn't know details about his resignation.

"He's a very nice guy," says Kyriacou, "Obviously, he was there with the prior CEO and people like having one of their own sometimes. My analogy would be, when Jamie Dimon took over at Chase, eventually he wanted his own CFO. The CFO who was there before Jamie left for just that reason."

On conference calls and other public appearances, Stumpf's no-nonsense and sometimes rigid demeanor came in stark contrast to Atkins, his more exuberant second banana. While the dynamic could have been a beneficial one, it might also have worked against Atkins.

One of Atkins' colleagues at New York Life Insurance Co., where he was CFO for a few years before joining Wells Fargo, had nothing but praise for his former coworker. The executive said he couldn't imagine Atkins leaving under any untoward circumstances, whether personal or professional: "He was absolutely a straight arrow - that was his reputation," he says. But, he could envision a personality clash between Atkins and his boss.

"Howard's a strong personality and there's been some movement around the executive suite over there," says the executive, who did not want to be identified to protect business relationships. "When the people who hired you are no longer around, it can be a little bit of a different dynamic...And when you have all the money you need and you're 60 years old, you can say, 'You know what? I'm done. The guy who hired me is gone, these guys are fine, but they're not my kind of guys. I got my bonus for 2010, thank you very much, but I don't need this anymore. That's it, I'm retiring.'"

If that was the case, Atkins' departure and his company's terse statement would make sense on many levels. He didn't provide a quote for the release because he didn't have anything nice to say. Management didn't say anything too nice about him, because they weren't all that happy he was leaving. And, to keep everything quiet, he was granted a departure deal that allowed him to keep all of his multi-million-dollar retirement package.

From investors' point of view, though, there's reason to be worried about life after Atkins -- as Wednesday's selloff indicated.

For one thing, there's no guarantee that Atkins' replacement can do as good a job in managing risk as Atkins has done, particularly over the past three years. Atkins proved his tenacity in handling interest rate risks by balancing its $13 billion to $16 billion dollar

mortgage-servicing rights portfolio against its $200 billion to $400 billion worth of mortgages. He also dealt with

$1.9 trillion worth of off-balance sheet assets that had to come onto Wells Fargo's books, eventually resulting in a mere

$55 billion addition of assets and a bolstering of capital levels.

While Sloan isn't a novice, it will be hard to follow someone who seems, in hindsight, to have been a financial magician.

During 23 years at Wells Fargo, Sloan has led several businesses within its commercial bank, real-estate groups and capital markets groups. But unlike Atkins, Sloan has never been responsible for the overall financial health of a company, particularly one that's very sensitive to interest-rate fluctuations in a volatile rate environment.

While analysts generally remained bullish on Wells Fargo's outlook - noting, for instance, that the team responsible for rate hedging is managed by Paul Ackerman and will remain in place - they sounded alarm bells about the likelihood of near-term pressure on the stock, given the heightened uncertainty. Investors may not be reassured until Wells' 10-K filing, signed by Sloan, is filed with the SEC or until management offers some more clarity on the situation.

Citi analyst Keith Horowitz says the departure comes "at an inopportune time" for Wells, given Atkins' hedging prowess and Sloan's untested abilities.

"In our view, Atkins is one of the top CFOs in banking, and is a very effective communicator of Wells Fargo's strategy," says Horowitz, "and we view his exit as a very big loss for Wells Fargo."

Sandler O'Neill analyst Scott Siefers called the departure a "big surprise." He hadn't expected Atkins to leave for several years, given his relatively young age and that other top-level management changes have been "well-telegraphed, measured, and took place over a period of time."

"This one," he added, "is obviously different."

-- Written by Lauren Tara LaCapra in New York


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