SANTA ROSA -- In a move that could bring Exchange Bank closer to restoring the shareholder dividend that funds the Doyle college scholarship, the U.S. Department of the Treasury today said it will auction securities in the bank it purchased through the Troubled Asset Relief Program in 2008.
After those securities change hands on the private market, executives at Exchange Bank have said that it could free the bank from dividend restrictions connected to the $45 million in TARP funds it received during the height of the financial crisis. In March, executives said that the sale could mean a reinstatement of the dividend by the end of this year.
Securities of eleven other banks were included in the auction, which will close at 6:30 p.m. Eastern Time on Thursday.
The bank is currently in discussions with Treasury, and is prohibited from commenting on those discussions at this time, said Exchange Bank President and CEO Bill Schrader.
Exchange Bank, a $1.6 billion-asset bank that has operated in Santa Rosa for more than 120 years, has strengthened its financial position since receiving aid from the TARP program. It recently reported its 13th straight profitable quarter. Financial regulators have acknowledged the improved position, yet the terms connected to the TARP funding prevented a plan to reinstate the dividend earlier this year.
The Frank P. Doyle and Polly O'Meara Doyle Trust, responsible for the Doyle Scholarship at Santa Rosa Junior College, is the largest shareholder of Exchange Bank and is funded by the bank's shareholder dividend. It has aided 115,000 students since 1948, and was temporarily suspended pending the resumption of the dividend.
Treasury auctioned preferred stock in six TARP-assisted banks in March, a move that many saw as foreshadowing a broader process to wind down the department’s involvement in the program.