At Wells Fargo's town hall meetings, executives have fielded countless questions from employees about efforts to resolve scandals that erupted almost three years ago.
One looming topic hasn't come up recently: Who will run the bank?
While the abrupt exit of CEO Tim Sloan in March kicked off a succession hunt that's captivated the industry, an unexpected calm has taken hold inside Wells Fargo, according to people close to the firm. The rumor mill — once abuzz with talk of potential candidates — has quieted. Privately, some executives say the continuing search is giving them room to focus on their businesses and work through regulators' remaining concerns.
Yet on Wall Street, the scene is the other kind of sanguine: The stock has slipped into the red for the year. Since its hunt for a leader began, the company has lost almost $24 billion in market value.
That performance puts Wells Fargo behind its largest U.S. competitors this year, signaling frustration in the market over the board's quiet search. The stock has lost 8% since Mr. Sloan stepped down in late March, while top rivals have broken even or posted gains. JPMorgan Chase & Co. is up 8% and Citigroup 4%. Bank of America Corp. is little changed. The broader KBW Bank Index has slipped almost 1%.
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Much of Wells Fargo's divergence occurred just after Mr. Sloan stepped down. The gap later widened, at least briefly, after the lender forecast a bigger drop in interest income than some major rivals as declining interest rates drag on the industry.
Wells Fargo also faces a regulatory cap on assets imposed last year. Still, those challenges bring some analysts and big investors back to the CEO search: They say they can't advocate buying more shares until the bank installs a leader with the authority to lay out a plan for the future.
"It's really hard to own the stock if there's no long-term strategy being articulated," said Brian Kleinhanzl at KBW. He downgraded the shares to "market perform" when Mr. Sloan announced his retirement.
A company spokeswoman declined to comment.
In March, Chair Betsy Duke said the board would act with urgency to recruit an outsider. Still, "we want to be thorough in our search and find the candidate that we think will best fit the objectives for Wells Fargo," she said at the time.
Since then, the board hasn't provided updates. In the meantime, a number of potential candidates turned down overtures from recruiters. On a conference call with analysts last month, interim CEO Allen Parker said he isn't directly involved in the search and doesn't know when it will end.
The CEO hunt "has been made worse by having it be an opaque process being driven by the board with management unable to communicate to investors," Mr. Kleinhanzl said. "The fact that people don't want this job hurts the reputation of the bank."
Altogether, only 31% of analysts covering the company recommend buying its stock, according to ratings tracked by Bloomberg. For JPMorgan, Bank of America and Citigroup, the percentage ranges from 49% to 90%.
Outside, a constellation of political issues is threatening to complicate the search. Sen. Elizabeth Warren, D-Mass., one of Wells Fargo's most vocal critics, is climbing in polls as she pursues the Democratic nomination for next year's U.S. presidential race. Last week, House Financial Services Committee Chairwoman Maxine Waters, a Democrat from Wells Fargo's home state of California, issued a report slamming the lack of diversity atop the financial industry. She and others on the committee are turning up pressure on the nation's largest banks to elevate a woman or member of a minority group to CEO.
One thing that does weigh on Wells Fargo employees is the uncertainty around what a new CEO might do next. An outside hire is widely expected to review the bank's strategy, which long focused on selling as many products as possible through a network of branches. That's left Wells Fargo with the largest workforce among U.S. banks, with almost 263,000 people at the end of June. Yet their productivity has suffered since the scandals came to light.
"There's a tremendous opportunity to streamline," said Kyle Sanders, an analyst at Edward Jones. "I expect a new leader to come in and likely say, 'We're going to let a lot of people go and cut costs to support profitability.'"
Expenses were front of mind for investors when Wells Fargo posted quarterly results last month. On a conference call, executives predicted costs would be "relatively flat" in 2020 compared with this year. Under Mr. Sloan, the bank had said next year's expenses would be lower.
Mr. Parker, formerly the bank's general counsel, has publicly vowed not to "tread water" while in charge. His priorities include improving operations and customer service, while tackling issues raised by regulators. Indeed, senior executives credit his knowledge of those woes with hastening reforms. Progress there may even give the board more time to find a longer-term replacement.
People familiar with the thinking at the bank say the last thing the board wants to do is make a quick decision it later regrets. Wells Fargo faces significant challenges — both in its business and in relationship with regulators — and the wrong pick could damage the company and erode returns for years.
Those people predict the panel will take the time it needs to find the right person, however long that is.
"The board of directors wants the best of the best to clean up all the problems," said Jeanne Branthover, a managing partner at executive search firm DHR International who isn't involved in Wells Fargo's CEO search. "The best of the best most likely felt that this is too risky for their career and their reputation to take it. So then the question is going to be, who do you go to?"