Direct Purchase Plans and Dividend Reinvestment Plans have gained great popularity among banks. They provide the opportunity for shareholders to purchase shares by reinvesting cash dividends or sending in additional cash contributions. Direct stock purchase plans allow first time shareholders to buy stock. This is great for depositors or employees to participate in the growth of your bank and builds loyalty. In addition, they frequently become long-term "buy and hold" investors who support bank management.
Although shareholders and depositors love investment plans, there are two distinct benefits to your bank depending on how we buy the shares. The first is buying the shares in the open market. This creates demand for your stock and supports the price, especially if it is undervalued. The second is buying the stock from the bank's treasury. This helps your bank raise capital inexpensively. Your AST Bank Specialist will tailor a plan best for you.
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