SANTA ROSA -- Exchange Bank could be moving closer to reinstating its shareholder dividends, which fund the Doyle college scholarship, after the U.S. Department of the Treasury today announced it has completed the auction of stock in the bank purchased through the Troubled Asset Relief Program in 2008.

The 45,000 shares of preferred stock brought the Treasury $39.7 million at auction and stand to free Exchange Bank from a restriction that had prevented it from reinstating its dividend earlier this year. The bank received $45 million from stock purchases under TARP, according to bank officials.

"The bigger story is the overall recovery of the bank," said Bill Schrader, president and chief executive officer. "This was the last door to walk through from a regulatory standpoint."

The majority of those shares -- 43,000 -- sold for $875 each, with 2,150 selling for $965, according to Treasury. The sale is expected to close on or before Aug. 10.

The identity of the buyers was not released, but Exchange Bank and the other 11 institutions involved in the sale were allowed to purchase their own shares, along with other qualified buyers. The aggregate earnings from the sale are expected to be $248.5 million.

Exchange Bank’s board of directors, which holds the power over the dividend, will review the results of the auction during its regular meeting on Aug. 21, Mr. Schrader said.

“There’s no question about it -- this is a big event,” he said.

Mr. Schrader noted that the Treasury has currently restricted the information that the bank and its executives can discuss about the sale.

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 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.

TARP’s bank programs have earned a profit for taxpayers, with $265 billion recovered from a $245 billion initial investment, according to the Treasury. The department began outlining its efforts to wind down its involvement in the program this May.

“These auctions are an important part of our efforts to wind down the program in a way that helps support our nation’s community banks and recovers additional taxpayer dollars,” said Assistant Secretary for Financial Stability Tim Massad in the announcement.