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Investor Relations
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What is a "stock dividend" and why not pay a cash dividend?
- A stock dividend is a distribution of a company's profits in the form of additional shares of stock in the company. Whereas a cash dividend results in a reduction of a company's capital, a stock dividend does not. The advantage of a stock dividend is that it allows a company to preserve its capital during certain economic times. It also allows shareholders who usually receive quarterly dividends an opportunity to raise cash by selling their new shares.
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What do I do if I want to receive cash instead of stock?
- United Community Advisory Services is pleased to assist you with the sale of your stock dividend. For a financial advisor near you, call Colleen Flake at (866) 270-5900.
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Do I have to pay tax on my stock dividend?
- The stock you receive is not taxable to you and you should not report it on your tax return. However you may owe tax on any cash received in lieu of fractional shares. Also, if you sell your new shares, you may have a capital gain or loss to report on your tax return.
You should consult your tax advisor for further explanation of the tax law and determination of how a stock dividend will affect you individually. You should also retain a record of any cash received in lieu of a fractional share and provide this amount to your tax advisor. You may visit the web site of the Internal Revenue Service at www.irs.gov.
If you receive less than an aggregate amount of $20 cash in lieu of fractional shares during a tax year, a 1099B will not be reported to you.
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What happens to my fractional share?
- If you are a registered shareholder of our transfer agent and not enrolled in the company's dividend reinvestment and share purchase plan, you will receive a stock certificate for whole shares and a cash payment in lieu of any remaining fractional share at a rate based on the closing price of the stock on the record date.
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I am already enrolled in the company's dividend reinvestment and share purchase plan. How will this affect me?
- The stock dividend will be credited, including fractional shares, to your plan account. You will not receive a stock certificate or cash in lieu of a fractional share. You will not be taxed on any portion of the stock dividend until you sell your shares. Please refer to the question above for further explanation of tax treatment.
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My shares are deposited and held in a brokerage account. How will this affect me?
- The stock dividend will be credited, including fractional shares, to your brokerage account. You will not receive a stock certificate or cash in lieu of a fractional share. Please refer to the question above for further explanation of tax treatment.
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Will this affect the stock price?
- We do not expect the stock dividend to have a significant effect on the company's stock price.
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How does a stock dividend differ from a stock split?
- A stock split and a stock dividend are similar in that they both result in an increase in the number of shares outstanding but no overall reduction in capital. Because a stock split usually involves the distribution of a much greater number of shares (i.e. two for one split), the post-split stock price will adjust to reflect the split.
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Will I ever receive another cash dividend?
- In future quarters we will review our dividend policy with the intention of paying cash dividends again when improved economic conditions permit us to do so prudently.
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What is the safety and soundness condition of the bank?
- United's regulatory capital ratios are very strong and are in excess of the levels required to be considered well-capitalized. A solid earnings base continues to sustain the company and keep it positioned to grow our business as this economic cycle begins to improve.
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