Michigan National Corp.'s stock surged for the second day amid rumors that the company's chief executive and chief financial officer, who have fought for the bank's independence, would resign.
The embattled CEO, Robert J. Mylod, and his CFO, Joseph J. Whiteside, denied they were leaving, but the stock has surged $5.25 in the past two days to $86.125, or 7%.
On Wednesday, amid a broad-based bank rally, Michigan National stock jumped $2.875 as retail investors reacted to local news reports of the resignation rumors and of purported negotiations with "a large midwestern bank."
Mr. Whiteside called the resignation rumors "preposterous and absolutely untrue." A spokesman for Michigan National told the Detroit News that he was "not aware of" the negotiations.
The buying comes as shareholders and management brace for a bitter proxy fight at the April shareholders' meeting.
A bloc led by dissident shareholder Michael Price of Heine Securities - which owns 8.25% of the company, or more than one million shares - and former Michigan National chairman Stanford C. "Bud" Stoddard, is expected to call for the sale of the bank.
Last April, 33% of voting shareholders voted against the board.
Mr. Mylod has resisted all entreaties to sell the bank, last month announcing that it would repurchase 14% of its shares, which would make a sale far more difficult.
Mr. Stoddard, who owns 100,000 shares, said the resignation rumors were sweeping Detroit.
More than two-thirds of shareholders will vote against the current management team, he predicted, and the board of directors, realizing this, must be pressuring Mr. Mylod to leave.
Mr. Stoddard, whose father founded the company, is threatening to sue the bank if the April proxy does not include his proposal to sell.
The rumors apparently were ignited by a report that files with information about top corporate customers were recently removed from Mr. Mylod's office, possibly for due-diligence reviews by other banks.
Sources pointed out that the files could be used for evaluating non- Michigan assets that the bank has been selling.
