GLENVILLE — The reverse stock split that TrustCo Bank Corp NY is proposing is an effort to make the stock more attractive to investors.
The Glenville-based bank holding company announced the proposal to combine shares Feb. 15. The measure would reduce the currently authorized 150 million shares in the holding company to 30 million.
There would be no immediate financial impact on investors: Five shares trading at $7 would become one share trading at $35, and the dividend would be unchanged.
TrustCo subsequently issued a proxy statement to investors who will vote on the proposal; it explained the decision to pursue the reverse split.
The higher per-share price would make the stock more marketable to a wider range of investors and more attractive to brokers, TrustCo said, explaining that many brokerage houses and institutional investors avoid lower-priced stocks and steer their clients away from them due to perceived volatility.
The proxy also said that similarly sized banks typically have much less than 150 million authorized shares of their stock.
The proxy notes that “odd lots” created by the reverse split — ownership lots that are fewer than 100 shares or which are not in multiples of 100 — may be harder to sell because of the consolidation or incur more fees upon sale.
The vote on the reverse split and other measures will be held during the annual shareholder meeting, to be held virtually May, 20. What date the split occurs, and whether it happens at all, is at the discretion of TrustCo’s board of directors, based on what’s best for the company.
Also last week, TrustCo Bank Corp announced that the board of directors had authorized repurchase of up to 2 million outstanding shares over the next 12 months, with timing and conditions again at the board’s discretion.
The company’s subsidiary, Trustco Bank, operates 148 bank locations in five states.
Its stock closed at $7.02 on Tuesday.