CFO Bids Adieu to Struggling Wachovia

The exit announcement comes just days after the bank reported an $8.9 billion quarterly loss that included a $6.1 billion goodwill charge.
Stephen TaubJuly 25, 2008

The financial-services meltdown appears to have claimed another victim, with Wachovia’s announcement Thursday that CFO Thomas Wurtz plans to leave the embattled bank after a successor is named. A search will begin immediately.

“I want to personally thank Tom for his many contributions to Wachovia,” said Robert Steel, Wachovia’s new president and CEO. “Tom has been a professional partner and colleague and we are grateful for all he has done for the company.”

Last week Wachovia reported an $8.9 billion second-quarter loss, including a $6.1 billion noncash goodwill impairment charge in what it called commercial-related subsegments. The giant deficit stunned observers who had hoped for a gentler slope to the big bank’s earnings slide.

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The bank said the goodwill write-off reflected declining market valuations and asset values. It stressed that the charge has no impact on Wachovia’s tangible capital levels, regulatory capital ratios, or liquidity. Wachovia also said it had added $5.6 billion to its loan loss reserve to cover net charge-offs and increase the reserve by $4.2 billion.

In an effort to preserve cash, the bank also slashed its quarterly dividend to 5 cents a share from 37.5 cents, noting that the move will conserve about $700 million of capital per quarter. In April Wachovia pared its dividend 41 percent.

Much of Wachovia’s problem stems from its 2006 acquisition of Golden West Financial Corp. for about $25 billion at the top of the real estate boom, before it came crashing down. Golden West was known for underwriting some of the most “creative” mortgage loans, including the so-called Pick-A-Payment loan option. Under this program, which Wachovia recently halted, borrowers could choose to make a partial interest payment on all new home loans.

Steel was hired as CEO and president two weeks ago after serving as undersecretary for domestic finance at the U.S. Department of Treasury.

Wurtz joined the company in 1994 and was named CFO in 2006. He previously served as head of treasury and planning, director of forecasting, and assistant treasurer, Finance Division.