Dorothy Savarese had been preparing for a leadership role for a decade when Cape Cod 5 named her CEO in 2005.
Savarese, 65, had been named chief operating officer in 2004. Before that she had served several years as director of product planning, a job that Cape Cod 5 created specifically for her when she sought to enter management after working a decade as a commercial lender.
But even during her days as a lender, Savarese sought to carve out a more active role in bank affairs.
"I realized I'd been doing commercial lending for a really long time," Savarese said. "I started working on some of our strategic projects — internet banking, things like that — as a volunteer."
Those efforts allowed her to acquire a near-encyclopedic knowledge of bank operations. "I got to understand every single part of the bank," Savarese said.
One thing Savarese couldn't prepare for was the unique burden that came with leading one of the nation's most venerable financial institutions. Founded before the Civil War, in 1855, Cape Cod 5 certainly fit the bill.
"You felt the weight of responsibility for carrying this amazing community resource that had served families and businesses on the Cape through the Civil War, two world wars, through the other [1918 Influenza] pandemic … into the next century," Savarese said. "I was always conscious of that."
As things turned out, Savarese, who stepped down as CEO in May and plans to retire from her current position as executive chairman in May 2023, did fine. Judging by income, credit quality and capital, the $4.9 billion-asset Cape Cod 5 is significantly bigger, stronger and more profitable than it was 17 years ago.
The Hyannis, Massachusetts, company experienced an unbroken string of annual profits during Savarese's 16 full years as CEO. It finished 2021 on a high note, reporting record net income of $49.2 million.
Credit quality remained pristine throughout Savarese's tenure. In an Oct. 21 research note, Kroll Bond Rating Agency analyst Ben Rodriguez characterized Cape Cod 5's charge-offs as "negligible and immaterial."
During the financial crisis, when credit problems spiked industry-wide, "Cape Cod 5 significantly outperformed its peers, as net charge-offs peaked at just 19 basis points" of total loans, Rodriguez added. More recently, from 2016 to 2021, Cape Cod 5's cumulative charge-offs amounted to a negative $786,000.
Equity capital — a crucial metric for a mutual institution such as Cape Cod 5 that can only add to their capital bases via retained earnings — totaled $139.5 million in March 2005, just before Savarese took over as CEO. Seventeen years later, Cape Cod 5's capital totaled $470.5 million, good for a combined annual growth rate of 7.4%.
Savarese also leveraged her position as Cape Cod 5's CEO to launch a parallel career as a community and industry advocate. Savarese has chaired the Cape Cod Chamber of Commerce and the Massachusetts Bankers Association.
On the national stage, Savarese served as chairman of the American Bankers Association in 2016 and as president of the Federal Reserve's Community Depository Institutions Advisory Council in 2020 and 2021.
Savarese has appeared on American Banker's list of the Most Powerful Women in Banking for 11 consecutive years. Pursuing a full slate of extracurricular activities on top of her job as CEO kept Savarese working 60-hour weeks, but it's a price she was willing to pay to help the industry get its point across in Boston and Washington.
"One of the things I realized is that one bank speaking to a regulator or a legislator is one thing. Many banks speaking with one voice is another," Savarese said.
For Savarese's record of accomplishments, American Banker selected her as its Community Banker of the Year for 2022.
An ear for music, a head for business
Savarese grew up in Bergen County, New Jersey, one of eight children in a family that prized music over television. When the family TV set broke, Savarese's mother used the money it would have cost to replace it to pay for piano lessons instead.
"I was 15 and Dorothy was 5," Savarese's sister Joan, who described Dorothy as "off-the-charts smart," recalled. "I quit the piano lessons when I realized that Dorothy had passed me in the practice book."
For Dorothy, the lessons ended about a year later, when she grew too afraid to walk to the teacher's house on her own. "I think [the house] was less than a mile away, but it felt like a mile," Savarese said. "I was crossing those busy streets. One time the bus came up and stopped and frightened me."
After her music studies came to a halt, Savarese began displaying an entrepreneurial bent. With a neighbor, she went into business giving dogs obedience lessons. Savarese and a friend had taken their dogs to be trained by a master trainer, "who just happened to live around the corner," Dorothy recalled. When neighbors began asking for training tips, "one thing led to another and we started collecting money every Saturday morning and we'd have a dog-training class."
When she was an undergraduate at Thomas More University in Crestview, Kentucky, Savarese's entrepreneurialism resurfaced. She wrote a grant proposal to create a pilot program to help at-risk adolescents avoid the pitfalls of substance abuse. Savarese was given an office in a nearby halfway house for recovering alcoholics, where she got a bird's-eye view of the therapy residents received.
Her work at the halfway house helped put Savarese on the path to a career in financial services. According to Joan, Dorothy noticed program participants who worked became less depressed after they got jobs and were able to stabilize their lives and support their loved ones.
Years later, Savarese's work with business owners during the decade and a half she spent as a commercial lender with a national nonprofit group and with Cape Cod 5 would hammer the point home.
"When we created economic development opportunities and they got jobs, many of their problems went away," Savarese said. "That's what got me passionate about economic development and business creation. … I just felt my skills could really be put to work in terms of creating livelihoods for people."
Finding her feet in banking
Savarese followed a circuitous career path after graduating college. She parlayed involvement in a mayoral election in Covington, Kentucky, into a job with the city's economic development department, jumped to a similar role in Cincinnati then took a job as an economic development consultant with a national nonprofit group.
The move into banking came when a Fifth Third executive recruited Savarese. "I was traveling over 20 days a month" for the nonprofit. Then " ... we had our son, so I wanted to stop traveling," Savarese said. "A gentleman in management with Fifth Third said, 'You know, if you ever want a job. … ' "
Savarese did. She went to work for Fifth Third in northern Kentucky. Initially, Fifth Third tasked her with supporting its community reinvestment program. Her focus soon shifted to retail banking, and she was assigned to manage a branch. A few years later in 1993, after a family move to Cape Cod, Savarese joined Cape Cod 5, initially as a part-time commercial banker.
"I loved being a commercial lender, being a partner with those brave entrepreneurs," she said.
While her work as CEO was ultimately the most fulfilling part of her career, Savarese acknowledged she struggled with the decision to leave lending for management in the early 2000s.
"It was hard for me to give up my customers to move into strategic planning," she said. "I felt I was a part of their businesses and their lives."
Helming Cape Cod 5
It wouldn't be a stretch to describe the bank Savarese took control of in May 2005 as conservative. Cape Cod 5, after all, was a $1.4 billion-asset, highly capitalized mutual bank with 14 branches and 300 employees. Primarily a residential lender, the company had made a grand total of one acquisition in its 150-year existence.
Over the next 17 years, Savarese hewed closely to the course her predecessors set. She steered clear of merger-and-acquisition activity, expanding carefully in contiguous markets like Nantucket and Barnstable.
Savarese referred to her strategy as "hyperlocal." Market expansions were led by lending and wealth management. Once a branch was established, Cape Cod 5 created a market-specific relationship team including all the bank's departments, which met regularly to discuss ways to help customers and the local community. Relationship teams would also meet with the bank's corporators, who are responsible for selecting the board of directors, as well as nonprofits and other local groups.
The goal was preserving Cape Cod 5's hometown feel, even as assets tripled.
"The Cape and Islands would be considered one region for a larger institution," Savarese said. "We see these in terms of individual communities and each one is very different. … That kind of intimacy with the community lets us meet those needs in a way that's informed and responsive."
One option Savarese and Cape Cod 5 never considered: departing from its mutual ownership structure. Massachusetts and the rest of the country have seen the number of mutual banks decline sharply over the past four decades. At Cape Cod 5 mutuality "is part of our DNA," Savarese said.
"We feel a sense of stewardship," she said. "This is not your capital. It's not my capital. It was built through the hard work of all the generations of people that came before. … As long as I've been CEO," conversion to stock ownership "has never been a consideration."
Inside the bank, Savarese's leadership style emphasized consultation and consensus, almost to a fault, said Matt Burke, who joined Cape Cod 5 in 2012. Burke was appointed chief financial officer in September 2014 and co-president in 2019. Burke succeeded Savarese as CEO in May.
Savarese "is very inclusive in her leadership style," Burke said. "We spend a ton of time in meetings, I'll tell you that. You're probably not going to find too many organizations that spend more time in meetings than us."
Savarese sought out different viewpoints, which was eye-opening for Burke. "She's very, very different from a dictator-type CEO," Burke said. "For me that was one of the most impactful things in terms of the way she led, the way she empowered others and the way she brought people together and allowed them to learn from each other.
Not only did you have Dorothy who is a pretty seasoned banker herself, but other members of the executive team, the senior team all brought different perspectives."
"We really believe divergent points of views lead to better outcomes," Savarese said. "There's a ton of research that supports that. It's not me in a room in the corner making decisions. We hear from many voices and move ahead. We feel that leads to our nimbleness and our creativity."
The other notable facet of Savarese's leadership style, Burke said, was the time she took to mentor employees, invariably providing a few minutes of counsel immediately after a meeting or presentation. Sometimes the input was positive, sometimes the message was tougher, but it was always intended to make the listener a better leader and employee, according to Burke.
Speakers at American Banker's Most Powerful Women in Banking gala acknowledged that many women have made it to high positions, but the number of female CEOs is still tiny.
"She'll tell you what you don't want to hear," Burke said. "That's a constant. After a meeting, she'd say, 'Do you have a couple minutes for some coaching?' She's always been good about appropriate, constructive feedback. She'd tell you when you did a good job, and she'd definitely tell you what you could have done better, but always in the context of the next time, not beating you up over something you can't change but how to improve. That's been a huge part of my development."
It was a huge part of Savarese's, too. Her mentor was her first boss at Cape Cod 5, Bruce Hammat. "He actually hired me and was the senior lender. Then when I became CEO he actually worked for me. We still had a mentor-mentee relationship. I learned so much from him, how he could do it in a very constructive way. The candor he would have with me was so appreciated."
We really believe divergent points of views lead to better outcomes. There's a ton of research that supports that. It's not me in a room in the corner making decisions.
Whether or not her team spent too much time in meetings, in the end, Savarese's style worked. The proof is on the bottom line. Cape Cod 5 earned more than $310 million during her time as CEO.
For Savarese, her biggest accomplishment has little to do with numbers and everything about the leadership team she brought together. "We've assembled a world-class management team and employee core that is more than capable of taking the bank to the next level," Savarese said. "We're a bank and we're also a technology company. It's all about people, processes and technology, but at the end of the day, it all starts with the people."
That team was a big consideration in her decision to retire. While Savarese was still enjoying her work, she felt it was the right time for her colleagues to step forward and her to step away.
"The team was ready, and was ready sooner than I expected," Savarese said. "The last thing in the world that I wanted was for someone to sit around waiting for me to leave. … I see myself as a steward of this institution. My No. 1 job is handing it off to the next generation. That's what I've done."
"That's one of the things with Dorothy. She always puts the bank first," Burke said. "It's no surprise to me she did what's best for the bank and not what's best for her, which could have been to stay on for another few years."
"This bank is everything to her. She's put her entire life into it," Burke said.
What's next
Savarese has taken a hands-off posture as executive chairman, engaging only when Burke asks for help. After her 17 years as a decidedly hands-on manager, Savarese's restraint came as a surprise to Burke. "I didn't know Dorothy was capable of not being involved in every detail in the day-to-day, in all the decision-making."
"She's done a great job of saying, 'I'm here to support you in whatever capacity you need,' and I take her up on that," Burke added.
With more time freed up for contemplation, Savarese is naturally thinking about the next chapter in her career. She continues to serve on a number of boards and plans to stay involved in a variety of issues, including climate.
Savarese is active in the Cape Cod Climate Change Collaborative, as well as the Alliance for Business Leadership, which advises the Massachusetts Legislature on climate issues.
In addition, Savarese said she "got talked into" serving on her church's search committee for a rector, which expects to meet every other week for the next 12 to 18 months. "There's a lot of opportunity for me to consider serving. That's what I feel drawn to."
She may also pick up where she left off all those years ago with piano lessons. "I actually have dreams that I play well," Savarese said. "I have a piano, but, sadly, even though I've retuned it, it's too out of tune now. I'm going to get a keyboard and learn on that. I have a friend who's a piano teacher who keeps saying, 'Anytime now.' "
