PD Editorial: Students get a boost with Doyle support

Signs of recovery are in the air.

First the state Employment Development Department reported that the jobless rate in the North Bay had dropped to 8.6 percent in July, down from 8.7 percent in June. For those keeping track, just a year ago local unemployment it was at 10.2 percent.

Then came news that home sales in Sonoma County are up this summer. The county recorded 1,541 single-family homes being sold between May and July — the most for any three-month period in nearly seven years.

Now comes perhaps the most positive sign yet that Sonoma County is on the mend.

Exchange Bank reported on Tuesday that it will issue its first stock dividend in five years, opening the door for the resumption of Doyle Scholarships for students at Santa Rosa Junior College in 2013.

It's welcome news, particularly for students who are finding it harder to get the classes they needed, harder to find jobs that will support them while they go to school and harder to make ends meet.

The 122-year-old bank stopped issuing dividends in September 2008 in the face of mounting loan troubles, particularly those related to construction. Records show the bank lost $18.5 million in 2008 and $3.8 million in 2009. During that dark period, the bank received help from the federal Troubled Asset Relief Program to the tune of $45 million.

Given that the Doyle trust is the largest shareholder, receiving more than half of the bank's overall dividend, suspension of the dividend meant Doyle Scholarships stopped being awarded for the first time in the 60 years of the program.

The bank's founder, Frank P. Doyle, set up the trust with the intent that bank dividends would help local students with a GPA of at least 2.5 cover costs at the junior college. Since 1948, the trust has doled out $76 million in scholarships, making it one of the most unique programs in the nation.

But students have been forced to go without during one of the worst economic downtown's in the nation's history.

Although Exchange Bank has showed a profit for the past 13 consecutive quarters, the bank needed to repay the TARP funds before it could issue a dividend again. That occurred last month when the Treasury Department sold its stock in Exchange Bank for nearly $40 million.

This paved the way for Exchange Bank Chairman C. William Reinking to announce this week that the bank will pay a quarterly dividend of 25 cents per share on Sept. 21.

The dividend is not impressive, a far cry from better days when the bank would issue more robust dividends. But it reflects the challenges that continue to confront Exchange Bank which still has about $38 million in nonperforming assets, roughly half of what it had four years ago.

As such, scholarships will be much less than what students received five years ago, back when they ranged from roughly $1,000 to $1,800 a year.

Regardless, it's a start, the start of something better for thousands of SRJC students and their families.

For the sake of students and the local economy, we hope the bank continues its path toward recovery. For the sake of the scholarship, we trust the bank will continue to evaluate how it got into dire straits so it doesn't find itself there again some day. Students can't afford it.