The stock of MNC Financial Inc. opened with a bang yesterday morning before fizzling away much of its initial gain and closing at $7.875 a share, up 37.5 cents.
In the first trading since the company announced it would be keeping its regular 29-cent-a-share quarterly dividend, the banking company's stock jumped 15 percent from Tuesday's close, opening at $8.125 a share.
But in a slow and steady decline, MNC lost most of the initial gain in heavy trading. The company was the 12th most active stock on the New York Stock Exchange with more than 1.27 million shares changing hands.
Analysts said the initial increase in the stock price of MNC, the parent of Maryland National Bank and American Security Bank, apparently came after the dividend decision Tuesday evening caught investors off guard. MNC stock had fallen to a low of $5.75 a share a week ago from its Aug. 20 close of $9.
Speculation had been circulating for weeks that the board would vote to reduce or abolish the company's dividend and that a deal with MNC's largest shareholder, Alfred Lerner, to pump $180 million into the banking company was in jeopardy.
Both rumors were scuttled Tuesday, however, as MNC announced that the directors had voted to keep the $1.16 annual dividend intact and that the agreement with Mr. Lerner had been approved.
"It came as a surprise to most people that the dividend was not cut," said David S. Penn, a banking analyst with Legg Mason Inc. in Baltimore. "The stock this morning obviously did well, and then some profit-taking came in."
For example, Mr. Penn said, he had spoken with shareholders who purchased the company's stock at $6 a share last week and followed many investors into the market yesterday, selling at about $8 a share and realizing a 33 percent gain.
In addition, he said, yesterday's daylong decline also reflected some second-guessing after a flurry of optimism yesterday morning.
"After the initial euphoria, some reality set in," Mr. Penn said. "It's not the end of the world [at MNC], but there are probably some difficult quarters coming up."