Leadership, Culture, & Succession Planning with Dorothy Savarese, Executive Chair of Cape Cod Five Cents Savings Bank

Caleb Stevens: Well, hey everybody, and welcome to the Community Bank Podcast. Thanks for joining today’s conversation. I’m Caleb Stevens. I work with SouthState Bank’s Capital Markets and Correspondent Banking Division, and I’m glad you’re here for today’s conversation. Today we’re talking with Dorothy Savarese. She’s the Executive Chair of Cape Cod Five Cents Savings Bank in Massachusetts. She served as CEO there as well for a number of years. She’s been named as one of the top 25 most powerful women in banking by the American Banker for over 10 years in a row. She has served as the chair of the American Bankers Association, and she was recently named Community Banker of the Year. So a very well-recognized, world-class leader that we’ll be speaking with today. And we talk about her career, strategic decisions that the bank made as they grew to over 5 billion in assets. And we also talk about succession planning. That’s a hot topic today as bankers are thinking about the future of their banks and want to make sure that their bank is left in the hands of capable leaders in the future. So we talk about her thought process behind developing leaders, creating a culture of leadership development in her bank to make sure that it’ll be set up for success in the future.
Before we get there, if you are a banker and you are not sure where your cost of funding is headed over the next few years, but probably most of us here are listening, we have a free report that we can run that shows your bank’s historical cost of funding all the way back to 1990 if your bank exists that far back. And it also shows how your bank’s cost of funding correlates to short-term rates and shows a projection for where they’re likely to head over the next 10 years – your bank’s cost of funding relative to short-term rates. To get this free report, all you have to do is click the link in the show notes of this episode, and we will have a member of our team reach out to you with your custom cost of funding analysis report. And with that, here’s my conversation with Dorothy Savarese.
Well, Dorothy, thank you so much for joining us today on the Community Bank Podcast. It’s great to be speaking with you. How are things up your way in Massachusetts?
Dorothy Savarese: Well, it’s great to be with you, Caleb. And things are a little windy right now, but other than that, they’re terrific.
Caleb Stevens: Yeah, well, we were talking earlier, we had some tornadoes come through Atlanta, so certainly understand rough weather and wanting to make sure everything’s okay.
Dorothy Savarese: Yeah. Thank you.
Caleb Stevens: Well, thanks for hopping on. You were recently named Community Banker of the Year, so congratulations on that. You’ve also been featured multiple times on the list of most powerful women in banking by the American Banker, so it’s a treat to be speaking with you. Did you know in college you wanted to get into banking or did you sort of fall into it? How did this whole journey get started for you?
Dorothy Savarese: I know so few bankers that this is what they always had their cap set to do is to be a banker. No, I was a psychology major and I thought I would go on and get a PhD in psychology and treat people. But through a series of events, I became involved in our city government, in cleaning up our city and building it up, and got involved in economic development. And at that point, I saw just what a change can happen in people when they have a job or they’re able to grow their business and have that pride and contribute to the community. So I began a career in economic development and worked for two cities and then for a national nonprofit economic development organization, and was traveling all over the country. And then I had my son and so I wanted to get off the road. And so a banker had offered me a job eight years before, and I was always working with bankers because we always wanted to do public-private partnerships with them and I was doing a lot of commercial lending. So I went on and they said, “Well, we could really have you help us with CRA but you know commercial lending and residential lending, you don’t know the retail side. Could you run a branch?” So I ran their main office in Northern Kentucky for a couple of years, and then we moved to Cape Cod. And I went to work for Cape Cod 5, and that was 30 years ago as a commercial lender. And then I became the Chief Operating Officer and then the CEO and that was about 18 years ago.
Caleb Stevens: Wow. And Cape Cod, not a bad place to land for the last 30 years, so I’m sure that’s been a lot of fun. Talk about maybe just a couple unique roles that you had prior to becoming CEO that maybe helped prepare you for that role – CEO I heard someone say recently that when you’re a CEO, 80 or 90% of your day, you’re doing things that you’re not really an expert in, or you’re talking about things you’re not a complete expert in, and you’re kind of an inch deep and a mile wide, so you’ve got to be able to see the big picture. Anything that kind of prepared you for that?
Dorothy Savarese: You know, Caleb that is such a great observation. And one of the really important books I read, when I became CEO, is, what got you here isn’t what’s going to get you there. Right? It’s understanding that your approach. But everything, what I found in my life is everything I’d done helped me to be a CEO. My psychology work, my economic development work, acting in high school and college. All of that were things that really, really helped because communication and engagement of people. Our business is all about people, right? But the other thing is, you’re no longer the subject matter expert. And the whole point is you’re working to empower people and to get things done with people. And I mean with and not through. So your observation about that is critical, and that’s really a big part of the learning curve for leaders is understanding that that’s their job. They’re not supposed to be the smartest person in the room. And I so frequently let people know that very clearly, I’m not the smartest person in the room, but the whole point is if you can build teams and get ideas, then you can move on.
So when I was doing commercial lending here, one of the things I realized in our bank is yeah, we had the loveliest people in the world; we had no bank platform system. So people were literally opening accounts on green screens. And so I was like, “Oh, we’re having a little problem with customer service.” So I went around and I talked to people and listened to people, and they said, “What we really need is a new computer system.” So I got involved in, first of all, while I was a commercial lender, rolling out our internet bank, and then helping begin the process of our computer conversion.
And so I worked with my wonderful mentor, Bruce Hammett, and he said, “I’ve been doing this commercial lending for a long time. We have so much to do.” And he says, “Well, just make up a job for yourself.” So we made up this job called Director of Product Planning, and I got to roll out our debit card and our relationship package, and then I discovered that a lot of what we do is impacted by the regulatory framework that we work in. So I went on our legislative and regulatory affairs committee at Mass Bankers to let them know, gee, this 1865 thing, do you realize that really rich people benefit by it and the poor paper boy really doesn’t? And help them understand unintended consequences. And that’s when kind of that external involvement. But through all of that, I’ve always been involved in the community.
And to your point about what you draw, and so I’m a firm believer in continuous learning. And so serving on the Symphony Board and the Regional Employment Board, and ultimately when I became CEO of the Healthcare Board and the Community College Board, I learned so much from everyone around me. And I also learned how you work at a different level in terms of leading people. So those were all roles leading up to being CEO that really informed my work. So after I became CEO, I went on the board of Massachusetts Bankers Association, ultimately became the chair, got involved with the American Bankers Association because a lot of federal regulations and laws impact then, then went on to chair ABA, only the second woman to do that. And then served on some advisory committees first for FDIC and then, as you know, I chaired the Federal Reserve Board’s CDIAC in Boston and I was the president of the CDIAC for the Federal Reserve Board for two years, through COVID actually, and ended that last year. So the key for me is always if there’s something that needs to be changed, just get in there and help educate people and work together in a team way. But to your point about leadership and being a CEO, draw from all those experiences and have them inform that.
Caleb Stevens: Well, hearing you talk about the value of listening, I think is really important because as leaders and CEOs, particularly the more extroverted leaders would love to talk, we’ve got these big ideas, this big vision, but if you don’t listen, it sort of reminds me of the quote that leaders who refuse to listen to their team will eventually be surrounded by people who have nothing to say. And so, if you don’t lean on your team and draw on their own expertise, wisdom, skillset, you probably won’t get very far long term. And so I think that’s a really important reminder just for all leaders listening, is that can be a struggle for us sometimes because we got all this energy and we want to take the hill and we want to cast the vision, but you also want to have buy-in and ownership from your team. And a lot of that comes from hearing them, seeing them, knowing that you value them, that kind of thing, I would think.
Dorothy Savarese: Caleb, I think that we should turn this into an interview of me asking you questions because that’s a really, really cogent observation.
Caleb Stevens: Oh, well, it wasn’t my quote. I forget where I read it. Some book probably back in the day, so I don’t want to take credit for it. But it’s something that always sticks in my mind as I’m thinking about leadership. So the bank’s 5 billion in assets, give or take, but you all didn’t start there, I’m sure. Talk about how the bank’s sort of grown and any key decisions that you look back on and say, “That was a really pivotal decision that maybe we even didn’t realize it at the time, but that kind of helped us get to where we are today”?
Dorothy Savarese: Yeah, no, it’s a great question. And also, we have an additional 3.7 off balance sheet right now between residential loans and our wealth management business. So total of over 8 billion in assets. You know, there’s some key underlying decisions that we made a long time ago, and that was our commitment to mutuality, to continue that and to grow organically. We’ve got 22 banking centers, three lending and wealth management offices, a trust and asset management building, and then our new headquarters here. And now we’re covering Cape Cod and Martha’s Vineyard and Nantucket and Southeastern Massachusetts. And with digital much more, we’re in New Hampshire and Florida and a lot of places like that. And we’ve grown to be number one in all but our newer markets.
So in terms of what are those key decisions, as I said, one was the focus on mutuality, the focus on our mission and vision, and our focus on employees and customers and communities. Really having that underlying, this idea that we’re going to surround our customers and our communities with objective advice and the right services and things. And we’re really friendly and we care, but we also are focused on excellent execution. And our residential mortgage department, for example, is just one example, has an exquisite reputation for execution. And when you’re closing on a house, that’s really important. You don’t care how friendly somebody is, you want to get it done right. So the other thing that we decided, and this was actually before I was CEO, is that we really needed to focus on technology and digital offerings and our internal technology as well as our external. As we grew, one of the things that we really decided strategically was rather than build it, and they will come, what we do is when we grow, we build business with boots on the ground first, and then we develop a desire on the customers in the area’s desire for a physical location, then we follow it with a physical location. That’s been really important.
Just before I was CEO, I established our trust department, which is now over a billion and a half in assets and continues to grow very effectively given some of the demographics we serve, not all. We have a much more demographic diversity here than I think people understand, but that was an important part of maintaining those relationships with those individuals. And then because we have a focus on one bank, and we can talk about that a little bit more, what our culture is, building this 80,000 square foot headquarters that I’m in right now, which is a LEED Gold building, was important in terms of allowing people to innovate and get together and really problem solve. And that whole spirit, our focus on culture strategically was important even in COVID, where people from all over the bank were willing to support whatever area needed to be supported. And we were the top PPP lender in our region in terms of numbers, not necessarily dollars. And the reason is because our commitment is to the full range of businesses in our community, and frankly, it was the smallest ones that needed us the most, and we leveraged technology to get that done. So those are some of the key strategic decisions that have been really essential to our success.
Caleb Stevens: Talk a little more about the balance between technology and relationships. Or maybe balance is the wrong word, maybe it’s complement. Because I talk to bankers sometimes that say, “Oh, we’re just about relationships here. We’re fine. We don’t need to invest in technology. We’re all about relationships.” And then I meet some bankers that are maybe a little too focused on becoming like an Amazon, where you never have to talk to anybody, ever. And so to me, they probably go together but I think people struggle with knowing exactly how. Because community banking, you think relationships, if I need somebody, I can call somebody, but at the same time, you don’t want to be a dinosaur, you don’t want to be left in the dust. Talk about how you all sort of think about managing that tension.
Dorothy Savarese: Yeah, it’s both end, right? And so for us, technology and innovation has been absolutely critical. If you think about the challenges facing community banks, begin from the backend, right? Cloud migration has been critical. Process improvement has been critical in terms of allowing our people to be more productive. Then when you think about the relationship with customers, you want to meet the customers where they are. So some customers want to come in and sit down and talk to a real-life person, and they can do that. And we have those physical locations where they can do that, and we’re delighted to do that. We love to see them in person. Some people want to talk on the phone. We have a world-class call center here of people that, I don’t know how they do it, but they are able to problem solve any single thing that comes through.
You know, the world has changed and people are going to go home and order their paper towels on Amazon, they don’t expect to not have that ability at the bank. And so if they want to actually consummate a transaction without talking to anybody, have at it, they can do that and they can do that friction right. And so when we say friction right, obviously it’s again, building in the effective information, security, protection for them, protection for us that enables them to do that. It’s been a constantly evolving thing for us. So one of the things that we were introducing pre-COVID was a platform on the lending side. And when PPP was announced, we worked with Summit Technologies who we’d engaged, and actually, we had invested in, we were one of their investors, and now they’re just so big they don’t need us anymore. But we flipped that to be the PPP portal.
Now, there were some customers that just weren’t going to be able to use a PPP technology portal. So even when, because of case counts here, we had to close our branches, we had drive-up banking where you could pull up to the curbside and drop off your loan application. We had drive-through banking where you could go to the drive-up window and you could drive. And our retail people were just heroes in terms of supporting all of our business lines. So it’s always that idea for us, which is, again, it’s that one bank thing where we support everybody, but there’s always a human being here at the end of the technology, the telephone, the banking center, the wealth management area. You can always get to a person.
And frankly, because of our community commitment, which is a huge part of our, I hate to call it strategy, it’s who we are, and so we have our five ways, our community banking, our responsible business practices, our corporate leadership and volunteerism, our advancement of financial know-how, and our philanthropy, people see us all the time in the community. When I go to church, you know, in fact, the head of retail said to me the other day, “Was this another church question?” Because people will come up and they’ll say, “I spoke to somebody and I didn’t understand this. Could you have somebody call me?” So all of our leaders are actively involved in the community, and that’s another way that we make sure that technology will never replace that human touch.
Caleb Stevens: Well, I think that’s a good segue into just want to kind of hear your thoughts more broadly on what are some key pillars that define a well-run community bank. Maybe regardless of where you’re located geographic wise or regardless of where you sort of specialize in terms of product offerings, whether you’re more commercial or retail or mortgage or SBA. Just in general, as you meet with leaders across the country, as you attend banking conventions, and so forth, what are some common themes or trends that you see in the banks that they run?
Dorothy Savarese: It’s a great thing. I’ll start with some underlying fundamentals and then sort of build out from there. For me, it’s sort of three things: the core values, the desire to serve, and the growth mindset. And I’ll come back to that, but the other thing is this, I said to you before, it’s a people business. You have to understand that fundamentally that’s what it’s about. It starts with leadership, setting the culture, ensuring communication, including good relationships with the board, engaging the entire organization in setting the vision and the mission and the values and the strategy, and making sure that that mission and core values are clearly communicated internally and externally. And in fact, recently, Matt Burke, our new CEO, who we promoted to be CEO, and Bert Talerman, our new president, took the organization again through updating those values to make sure that they accurately imbued everything that we were trying to do.
But again, kind of building out from there, financial strength. You know, I know this is a banking podcast, so that sounds crazy, but what do you do, Caleb? You make sure that you help people through, that’s not just an advertisement for you, but with effective financial management and strategies, those are critical. Risk management is critical. Information security is critical. Where I’ve seen banks being successful is that they serve customers as a trusted advisor, where they’re offering objective information, where the customer has faith that they can trust that. And really at core, employees are the heart of any bank’s ability or any organization’s ability to execute. And as I said, you need that leadership. You need the culture, the two-way communication. When you hire, you’ve got to hire the right people, and it’s got to be a career and not just a job. And then, as I said, get that mission of every employee working toward the mission, feeling engaged and empowered, and understanding the purpose of their efforts. For us also, it’s a one bank philosophy, like, hey, we’re all together. And it’s that growth mindset, that idea we can all continue learning both individually and as an organization. And then from my perspective, for community banks that focus on serving the community, I think can be a key differentiator.
Caleb Stevens: When it comes to culture and core values, I’d love to get your thoughts on that a little bit more, because I think some people, and we talk about this a lot on this show, some people sort of think, “Well, doesn’t that just mean free food in the break room and bean bags and PTO and we’re all going to be nice to each other?” We, on this podcast, try to take a broader view and say, “Well, that may be one element of it, but it’s also about focus and accountability and performance and achievement, challenge, but also a culture of high support.” We want to have high challenge, but we also want to have high support. We don’t want it to be a backstabbing, dishonest culture where we’re all about getting things done at the expense of relationships. But if we’re just talking about relationships all day, every day, and we’re never focused on the mission and serving the customer and being profitable, we’re not going to be in this business for very long. So again, maybe that’s a tension of results and relationships. How do you sort of think about that as you try to define your culture?
Dorothy Savarese: Well, you’ve really done a fabulous job of recognizing you can’t just have the relationship part, you have to have the accountability as well. I love your description of the free food and the bean bags, and they help. We were really excited to make the American Banker’s top banks to work for again. And moving up to number nine this year, we were thrilled. And then coincidentally, we were on Boston Globe’s Top Places to Work again this year, and then we were number nine for large employers. So number nine is our lucky number this year. But you’ve heard Drucker say “culture eats strategy for lunch,” right? It’s that collective purpose that engages the employees that results in the higher level of satisfaction.
So a few years ago, you know, like everybody was saying, we had a wonderful culture, but we said, let’s keep focusing more on the how instead of just the what. So we went through a process of a really deep dive on the culture. We surveyed everybody in the organization. I brought in a performance organization that deals with high-performing cultures, and they did a cultural blueprint, and they benchmarked us against other companies, global as well as national in their database. And we had a great culture, but we wanted to be greater. And they said that’s actually characteristic of companies with great cultures, is they always want to get better. So we focused on, and you know, you hear me keep saying this, the growth mindset versus the fixed mindset. Creating a culture of want to, rather than have to, and if employees feel like they’re part of the mission of the bank, and the mindset and the belief that they can actually make a difference, that drives engagement and engagement is really key to employee satisfaction, frankly, more than free food.
And the other thing of course is we have our one bank methodology, which is so important. And frankly, during COVID, that really is what got us through, that whole idea of, I’m part of a mission that’s helping my neighbors. But accountability and innovation and change management are all essential parts of that. So, to your point, Caleb, it’s not just, “I feel good and I like people, it’s,” I feel like I’m an important part of the mission. I want to deliver on that mission. I want to keep innovating and changing, and I want to be held accountable for what I’m doing. And in fairness, I want others to be held accountable.” And frankly, when we hire and manage people, if someone doesn’t live up to that culture, they don’t have a future in our organization. Clearly, integrity is absolutely critical, and respect and collaboration and inclusivity, and care, those are our values. But that our principles of operating involve that accountability, that responsibility. I want to be able to count on you if I’m working like this. And it’s been great. Our teamwork is amazing.
Caleb Stevens: Is it ever difficult to explain to maybe folks in the bank who are more quantitative and numbers driven? “Well, Dorothy, how does culture show up on the balance sheet or the income statement? Aren’t we just sort of talking real fuzzy?” And I think some people on the other side of maybe the spectrum, struggle with that element of, well, it kind of reminds me of the Albert Einstein quote, “Not everything that counts can be counted.” And sometimes we try to boil life down to numbers on a spreadsheet, and you’re making the case that, yes, it does impact our balance sheet over time. It does help our performance. You may not be able to find it on a line item, but it does impact things. Do you ever sort of struggle with that side of pushback?
Dorothy Savarese: We spend a lot of time helping people understand that, that it’s really important in terms of outcomes. So one of the reasons we’re like, “Oh, you know what? There’s the Best Banks to Work For and Top Places to Work, and for free, you get them to be able to do anonymized surveys. And we’d already done tons of surveys, but we thought, “Oh, let’s get the advantage of this.” I mean, we were thrilled that when we did do that, we ended up on the list for the last five years. But what we’re able to show is through research and through our own outcomes, how that impacts financially and in terms of our strategic outcomes, why that’s so important. And if people don’t get that, again, there might be another organization that they’re better suited for, because for us– But we spend a lot of time communicating that. Why does this link to this? Understanding the why is the most important thing.
So one of the things that, and you and I were talking ahead of time about some positive things that came out of COVID as terrible as it is, because it made us pivot and adapt. So we had had officer meetings in person and stuff, but what this gave us an opportunity to do along with our shift to digital was having live town meetings every week. At the beginning, we actually had town meetings twice a week, just to let everybody know what was going on and communicate. Well, they’ve become the most amazing tool for communication back and forth in the organization. And so it’s sort of a living evidence for people about why that’s so important. The interesting thing is that we’ll take any questions and people can say them anonymously. And I’ve had so many employees come up to me and say, “I can’t believe you just take any questions that come along, but that’s part of our culture. And so when you allow people to beg questions, to be skeptical, and then you say, “Let’s work on this together,” then it is what draws people into it, you know?
Caleb Stevens: And you hear that a lot today. You hear a lot about the importance of, I think the term is called psychological safety. Like I can speak up, I can ask a question, I can voice my opinion without fear of I’m going to get made fun of or whatever. There’s sort of a safety of, I can bring things to my leaders and we can have a discussion about it and that kind of thing. I think that probably has a big impact.
Dorothy Savarese: That is a huge point. And that’s why in town Hall again, and we have a thing called the Loop Report, where anybody, we want to know how they’re doing, how the customers are doing, and they can say their names or they can say it anonymously, and we report out what we’re doing about the thing. And that’s part of the issue too. Leaders have to be accountable. So if somebody raises something, you have to let them know, can we learn from this? Can we work on it together? Does this give us an innovative idea? Where does this fit in our strategy? And here’s what we’re going to do about it. Because if it just goes into a black hole, then nobody is going to give you that feedback back. And then to your point, you’re going to be surrounded by people who have nothing [inaudible 31:23]
Caleb Stevens: Right. Well, I’d love to wrap up just talking a little bit about succession planning. I think that’s an area that a lot of leaders struggle with because the organization we lead, it’s our baby in many respects. And we’ve seen it grow and we’ve been there in the tough times and the good times, and handing off the reins can be a challenge and can be a struggle in a lot of different ways. You seem to have handled that extraordinarily well. You’ve recently handed off the reins; you’re now the Executive Chair. What were some things that you thought about as you were considering succession planning and making sure that your bank was set up for success over the long term?
Dorothy Savarese: Well, I think there’s a few things. Fundamentally, I think the most important thing is every CEO needs to understand that they’re the steward of their company and that their primary job is handing it off to the next generation and having it succeed in the future. And from my perspective, you need to think about succession planning from day one at every level. That’s how you grow an organization and that’s how you get to the point where you can have a successful transition. So the other thing is, and this is really hard, I love this bank. It’s been my heart and soul for 30 years, but you don’t want to lose fabulous candidates who you’ve groomed and groaned and supported and watched them turn into these amazing leaders because they’re like, “Hey, when is she going to leave?” And it’s hard, but when they’re ready, it’s time to go. It’s time to get out of the way.
So for me, it was important to involve the board in the process, and the board was confidentially involved in the process for a long time in terms of building the groundwork for the transition. I brought in external folks, advisors, and council to explain what their responsibilities were relative to succession. And it’s also building the whole team. So it’s not just, oh, it’s John Q or Mary J who comes in after you. You’re building a team that can take on the responsibility. And is it hard? Yes, but it’s your primary job and if you lose sight of that and you start thinking of this as my job and my bank, then you are doing a disservice to everyone involved. Am I sad about leaving the bank? Yes. I mean, it was the hardest decision I’ve ever made. I actually was just going to walk out the door next year and I realized that that would be unfair as well. I mean, we had the plan in place, but I was talked into staying on doing the executive chair year. And my role as executive chair, and we brought on some new board members as well, is to be a resource. Not to overlook and say, “No, you should turn left” when you turn right. And that’s, I think, one of the hardest things. In fact, my successor Matt Burke did say, “You know, I’ve been, let me just say thrilled with how you’ve been able to stay out of the day-to-day,” and that’s your job too. Your job is to pull away from the day-to-day and let them learn and let them grow and be there as a resource for them. So I don’t know if it works for everyone, but that’s how we did it in our organization.
Caleb Stevens: Well, I think it takes a great measure of humility to say, “You know what? I may not have done it exactly that way, or I may not have presented this exactly that way, but that’s your personality. That’s your leadership style. That’s what’s going to take us forward.” How do you sort of know maybe when to speak up and offer some sage wisdom and when to say, “You know what? This is their style. I may not have personally done it this way, but that doesn’t necessarily make it better or worse”? Kind of talk about that experience.
Dorothy Savarese: I think that’s the hardest part of the dance. And I’ve just been lucky, or fortunate, my son hates the word lucky because you know, it’s the old Chinese character, blah, blah, blah. But I’ve had the privilege of working with both Matt and Bert for years. And we have a relationship where they’re willing to come to me and say, “I’m going to run this by you. What do you think?” And again, 99% of the time I say to myself, it doesn’t matter if this isn’t the way you’d do it, is this–” And then the other thing is, some of learning is letting people try something. And we really follow the growth mindset concepts that Carol Dweck laid out. And what we always say is, “next time.” So one of the questions is, “Just how significant would the damage be if you didn’t intervene?”
And honestly, there was only one time that I made a suggestion to Matt and I said, “I understand why the team wants to do it that way. I want you to think about what the ramifications might be.” But the rest of the time, frankly, half the time I’m thinking, “Man, that is such a good way of doing it. I don’t think I had thought of that.” That happens multiple times a day, and it’s because they’re ready and they’re going to take the organization even beyond where I could. Now, if I continued focusing on the day-to-day and threw myself into it, I could lead it for another five or 10 years, but they’re ready to take it in a direction that I’m not even sure I could.
Caleb Stevens: Well, I think that is a testament to the culture you all have built in terms of leadership development because you hear M&A, and many times, that’s the reason a bank sells, is there’s no one to take the reins because they never invested in their leadership bench strength, so to speak. There’s no leaders on the bench who are prepared and ready for their opportunity when it comes. And maybe that’s a good segue into just final question. As you kind of think about challenges that community banks are facing over the next several years, coming out of COVID, some opportunities that community banks are facing, of course, succession planning, inflation, war for talent, interest rate, volatility, a number of economic, there’s all kinds of challenges. What are some things that you think will be key for leaders as they go forward and lead their banks into the next few years? And maybe just some words of encouragement or opportunities that you think they’ll also have in addition to some of the challenges.
Dorothy Savarese: Well, you already named some, Caleb, so you made my job much easier. First of all, I think that during COVID and PPP, community banks, and it was acknowledged by all the regulators, just showed how critical they are. And they are now moving toward innovation and leveraging technology effectively to be able to do the value add that they do. And I think that needs to continue. Now we’re facing historic differences in terms of the economic environment that we’re in. Obviously, you just said it, interest rates with the yield conversion, the economic environment as the Fed goes through the tightening cycle, liquidity in the system. The deposits, I think are the most concerning part of this for community banks that have sort of the traditional model of relying on net interest income.
And obviously again, we are creatures of our community, so the pressure on our customers and communities are actually going to flow through to community banks as well. But if the community bankers embrace innovation and taking things on in a different way than they have before, so illustratively with a deposit cycle, we’ve always been taught and all the ALM guidance always is “lag is a thing, look at the data.” Well in this cycle, you needed to be proactive. You actually needed to get out there with higher interest rates sooner rather than later so that you could staunch that bleeding that was unnecessarily going to happen. The encouragement that I would give to community bankers is, “You already know how essential you are to your communities and you know that we live in a changing world and that we’re going to go through some turbulent waters over the next couple of years. Your customers and your employees and your communities are depending on you to evolve and change and meet those challenges. So you don’t have a choice. We’re counting on you. And so we’re asking you to rise to the challenge.”
Caleb Stevens: Well, can’t think of a better note to end the discussion on. Dorothy, thank you so much for your time, for sharing your wisdom. And if folks want to learn a little bit more about the bank and everything you all do to serve your communities, how can they find you?
Dorothy Savarese: www.capecodfive.com.
Caleb Stevens: All righty. Thanks so much for your time. Really enjoyed the discussion.
Dorothy Savarese: Thank you, Caleb. So did I.