The Doyle Scholarship for incoming Santa Rosa Junior College students will resume next year after a five-year hiatus, the result of a decision Tuesday by Exchange Bank to resume stock dividends that funded the popular program for six decades.
The resurgent Santa Rosa bank announced Tuesday it will pay its first dividend since 2008, making it possible for SRJC to issue Doyle scholarships to new students in the fall of 2013.
"The Doyle's back in business," SRJC President Frank Chong said Tuesday after the bank's announcement, describing himself as "ecstatic."
The bank, which halted the dividend after it was pummeled by big losses on construction loans, will pay a 25-cents-per-share quarterly dividend on Sept. 21, bank Chairman C. William Reinking said Tuesday.
On an annual basis, the dividend would provide about $850,000 to the bank's largest shareholder, the Frank P. Doyle and Polly O'Meara Doyle Trust, which funds the Doyle Scholarship.
That is significantly less than the $5.3 million the college received from the trust in 2007, the last year of full dividends. That year, the bank paid a total of $6.10 in dividends per share over four quarters, including a bonus.
But it would easily surpass the estimated $668,000 the college will have awarded since 2009 under its alternative "Bridging the Doyle" scholarship program. That includes about $120,000 the college plans to hand out to new students this year.
Reinking and bank CEO William Schrader said the dividend is an important step on the bank's road to recovery. While dividend announcements by other companies rarely make headlines, bank executives are well-aware its dividends fund the Doyle program, which has helped upwards of 120,000 students pay for college.
"It's deeply satisfying to us as residents of Sonoma County," Schrader said. "It's something we're very proud of."
The bank, which has now reported a profit for 13 straight quarters, sought to resume the dividend in March. The plan was rejected by the Treasury Department, which owned preferred stock in Exchange Bank after loaning it $45 million in 2008 under a program designed to shore up the U.S. banking system during the financial crisis.
The Treasury Department sold its stock in Exchange Bank last month for $39.7 million, freeing the bank's board of directors to resume dividends.
Schrader and Reinking defended the dividend as a prudent and sustainable amount for Sonoma County's largest community bank.
"This bank hasn't healed yet," Reinking said.
Exchange Bank has significantly reduced its nonperforming assets from $75 million in late 2008, they said, but such assets still amount to about $38 million today.
Schrader said the bank's board of directors also considered the health of the local economy, which "still stands on weak legs." As employment and revenue for local businesses improve, he said, so will the bank's performance.
The Doyle trust will meet sometime this fall to oversee the distribution of funds to the college, said Reinking, who is a member of the trust.
The slimmed-down dividend could affect the size of the scholarships or the number of students who qualify. Before they were suspended in 2008 for new students, the scholarships were available to any local student with a 2.5 grade-point average or higher. They generally ran from about $1,000 to $1,800 a year, covering much of the annual cost of attending SRJC full-time.