By JAY SCHERF and JUSTINE JOHNSON
During a four-day period last month, 845 Santa Rosa Junior College students signed a petition requesting that the Sonoma County Superior Court review the Doyle Trust. We want to ensure it is being properly administered to protect our interests as SRJC students. We are, after all, the main beneficiaries of the trust.
This is not a criticism of Exchange Bank, which is a respected community institution. In fact, solutions exist that would benefit the students, the bank and the trust.
Some background: Frank Doyle was a local visionary who greatly developed both Exchange Bank and the Santa Rosa Junior College. In 1948, Doyle placed his Exchange Bank stock in a charitable trust prohibiting the trustees from selling the stock; the stock’s dividends then funded the Doyle Scholarship, which was the largest scholarship in the California Community College system until its suspension in 2009. Despite returning to profitability for more than two years since its financial troubles in 2008, the bank has not yet restored dividend payments, and the scholarship remains suspended indefinitely.
In recent months, the community has begun discussing the interpretation of Doyle’s will, erroneously pitting SRJC students against Exchange Bank. Unfortunately, this has created the impression that the bank is responsible for the scholarships, and we students are biting the hand that feeds us. This is not correct. The Doyle Trust is responsible for providing the scholarships; and as beneficiaries of the trust, we students have a say in how the trust functions.
We believe reviewing the trust is necessary. Carrying on with the status quo could deny thousands of students the Doyle Scholarship and subject it to future fluctuations of Exchange Bank’s stock price.
The bank’s financial position and the $40 million in TARP loans — plus interest — that it must repay could prevent meaningful dividends for years. Although the bank has missed at least one TARP payment, the FDIC will likely allow the bank to restore dividend payments while repaying TARP funds. However, the dividend’s size would be negligible — a fraction of its pre-2009 amount and much less than what a diversified portfolio would yield.
We students do not pretend to have all the answers. Rather, we believe the fairest plan is to ask the Sonoma County Superior Court for unbiased guidance. The Associated Student Senate has endorsed our campaign, and we hope the SRJC administration and the Doyle trustees will also join us in seeking the court’s help.
As beneficiaries of the trust, we have the right to approach the court with our request. Additionally, solutions exist that could restart the scholarship immediately and ensure that the bank remains an independent, locally owned institution.
Doyle wrote his will more than 60 years ago; trust law and investing guidelines have changed dramatically since 1948. Despite language in the trust prohibiting the sale of Exchange Bank stock, one option the court has is to encourage the trustees to diversify part of the trust’s assets to protect the interests of SRJC students.
As precedent, the David and Lucile Packard Foundation, the Milton Hershey School Trust and many other charitable trusts have sold some of their founder’s stock to protect their beneficiaries, although the original trusts prohibited such sales. If the Doyle Trust diversified half of its assets, it would remain Exchange Bank’s largest shareholder, the scholarship would resume immediately and the trust would gain a strong, low-risk investment portfolio.
We ask the community to support us in requesting the court’s opinion. We also hope the community understands we are not attacking Exchange Bank. We are thankful for its help for the last 60 years. Though we are grateful for the community’s help in the Bridging the Doyle campaign, it is a temporary fix; it is many times smaller than the pre-2009 Doyle Scholarship and what the Doyle Trust would provide if it diversified its investments.
Therefore, we respectfully request that the Doyle trustees implement a solution to immediately resume the scholarship in full or join us in asking the Superior Court for advice. If the trustees have the students’ best interests at heart, then they have no reason to oppose our requiest.
Jay Scherf is a Santa Rosa native and sophomore at Santa Rosa Junior College hoping to transfer UC Berkeley next fall. Justine Johnson is also an SRJC sophomore and a resident of Santa Rosa.