Leveraging the High Demand of Community Bank Stocks

The OTCQX Banks Index, a benchmark for community banks traded on the OTCQX market, gained 30 percent in the past 12 months, compared to 15 percent for the S&P 500.  How can community banks leverage this positive trend and deliver greater value to their shareholders?

With interest rates expected to increase, an administration focused on domestic issues and reducing regulation – community bank stocks are in high demand.  In a recent article featured in Bank Director, we took the opportunity to share our perspective on how community banks can harness this demand to increase shareholder value.

Achieving fair valuation of their shares

Achieving fair valuation ensures that a publicly traded community bank yields the highest value for shareholders.  Determining fair market value for a publicly traded stock is relatively straightforward and can be done by, for example, taking the average of the highest and lowest selling prices for the stock that day.  This becomes a much more difficult process for private banks – where the process for determining valuation can be both opaque and inefficient.

Reducing the risk of owning the security

Trading on an established public market reduces risk to shareholders as they can freely get into and out of its stock.  Market standards, like those in place for our OTCQX and OTCQB markets, also help lower risk.  This demonstrates that banks have gone through a verification process to ensure they are in compliance and meet the standards for the market they trade on.

Embracing technology

As the shareholder base for community banks continues to age, embracing technology helps connect with a younger audience, who demand information in real time.  Keeping them informed of your bank’s news and ensuring that it is widely distributed and accessible across screens is essential for attracting millennials .

You can read the complete article here: “Three Ways to Increase Shareholder Value

Jason Paltrowitz is Executive Vice President, Corporate Services at OTC Markets Group, where he is responsible for managing the firm’s international and domestic Corporate Services business. Drawing upon his expertise in cross-border trading and as a recognized proponent of Reg A+ and small company capital raising, Jason is an advocate for small cap issuers, start-ups, and entrepreneurial innovators working to alleviate the cost, time and complexity associated with being a public company. Prior to joining OTC Markets in October 2013, Jason was Managing Director and Segment Head at JP Morgan Chase responsible for the custody, clearing and collateral management business in the Corporate and Investment Bank division. Jason also held multiple senior management positions at BNY Mellon, most notably, as Head of M&A for the Financial Markets and Treasury Services Sector and 11 years as the Head of the Global Capital Markets Group in the Depositary Receipt Division. Jason currently serves on the Board of Directors of the Crowdfunding Professional Association (CfPA) and also served as a member of the Board of Directors at OTC Markets Group from 2008 – 2011. Jason holds a Bachelor's degree in International Relations from Boston University and received his MBA from the NYU Stern School of Business.

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