By Evan SparksIf you tag along with Jeff Szyperski in Kilmarnock, Va., the first thing you notice is that he seems to know everyone he sees. Drivers roll down their car windows to yell hello. In a branch of Chesapeake Bank, he greets the customers in the teller line by name and asks them about their kids. And he knows the names of all 240 employees of the bank.
It’s actually become something of a legend around town. As one local puts it, he knows every employee’s name, their spouses’ name and their kids’ names. Szyperski chuckles a bit at this—he doesn’t remember every employees’ kids’ names, as much as he might like to—but he does make a point of personally meeting every employee. “It’s consummately important to remember names if you want to have a familial relationship within the bank,” he says.
It’s a personal touch that’s apparent in another tradition: visiting every branch on Christmas Eve. When his children were young, he’d bring them with him, and they would all dispense holiday treats and warm Christmas greetings to the team members. And, in an expression of the good humor he’s also known for, Szyperski would be dressed in a Santa outfit or a tacky red plaid suit. (The Christmas Eve tradition continues, but with more branches across a broader territory, it takes a few days now.)
‘Too much personality to be a CPA’
Szyperski’s path into banking was due to that personal touch—his love of getting out there and working with people. But he hadn’t planned to become a banker at all. Born and raised in Greensboro, N.C., he studied accounting at the University of North Carolina and became a CPA in Raleigh, working for a major accounting firm.
The interest in banking came from his father-in-law. Szyperski met his wife, Wende, at UNC; she was from a little town in the Virginia Tidewater region called Irvington. Her father, Doug Monroe, was chairman and CEO of Chesapeake Bank, a community bank founded in 1900 to serve the watermen and farmers along the shores of the Chesapeake Bay and the Rappahannock River.
The bank had made a few hires as part of its succession planning process, but they hadn’t panned out—and the board knew it needed a viable leadership pipeline if it was going to keep the bank independent for the long run. Monroe thought that his son-in-law was one of the smartest people he’d ever met and “had too much personality to be a CPA”; the offer came at a good time for the Szyperski family.
Szyperski had learned a lot as a CPA, but he had indeed learned that he didn’t want to be an accountant forever. He decided community banking would allow him to put his relational side to work. In 1990, he and Wende and their young son—the first of four now-grown children, three boys and a daughter—moved to Virginia.
It was a rough time to switch into banking. The savings and loan crisis was in full swing, and not long after, the country hurtled into a recession. Szyperski was put in charge of the loan administration department. The bank was struggling with a large portfolio of real estate loans made on collateral value rather than cash flow. “When the music stopped and there was no more income coming from developmental real estate, there was no secondary source of repayment for these folks,” he says.
Like many others who came up in the industry during times of crisis, Szyperski now looks back on this period as a “great, earn-your-stripes type of time.” It gave him a perspective on the right ways to manage risk and structure loans. By the time 2008 came along, Chesapeake Bank came through largely unscathed, “because we had laid the foundation that we weren’t going jump back into that pool again, and a lot had.”
Grooming the SLOBs
As Szyperski’s career developed—he served as a lead commercial lender before becoming president of the bank in 2003—so did Chesapeake Bank. The company opened up new markets in the Middle Peninsula, just south of the Rappahannock River from Kilmarnock, and in Williamsburg. Most recently, the company has moved into the Richmond area.
And while the bank maintains the DNA of a local community bank, it’s opened up several new lines that bring a high level of sophistication and technological savvy to the company. Szyperski affectionately calls them SLOBs—“specialty lines of business.”
For example, Chesapeake Bank has a cashflow financing division for small businesses that serves clients nationwide. “It’s a middle space between factoring and commercial lending,” Szyperski says. Tommy Kellum is a local customer who uses this service. As VP of a family owned oyster harvesting and processing facility in nearby Weems—processing more than 150,000 bushels of oysters per year—Kellum buys Rappahannock oysters in cash from the watermen and sells them to grocers and restaurants nationwide on a longer billing cycle. Chesapeake Bank’s cashflow service smooths the discontinuity and provides a tailored solution for the seasonality of the oyster market.
“About 60 percent of our business is done in November and December, so our capital needs rev up pretty strongly,” says Kellum, who is also a board member at the bank. “We have unique financing needs in an industry where you pay for your resource daily and in a lot of cases we won’t get paid for 30 to 60 days.”
Other SLOBs include wealth management and a major business as a merchant acquirer for debit and credit cards. Chesapeake serves 22,000 merchants nationwide and is just one of about a dozen community banks in that business. This has become a huge value-add in reaching local businesses, Szyperski adds. “That is a great door opener for our commercial lenders.”
These businesses require extra investments in risk management. “Managing these special business lines takes creative leadership, attention to detail, and making sure you have the right people in place,” says Craig Kelly, a 40-year banking industry veteran who currently serves on Cheseapeake’s board. But they generate a strong fee income margin, which has helped land Chesapeake Bank on American Banker’s list of the 200 best-performing community banks for 11 years in a row. “Our percentage of fee income as a percentage of total income is pretty much double what our peer group does, and [the SLOBs] are the drivers,” Szyperski says.
A culture of self-improvement
Chesapeake Bank’s top performance—record earnings in 2017 and growing dividend—isn’t just due to its business lines; it’s due to a powerful team dynamic and corporate culture. It’s one of Jeff Szyperski’s signature areas of focus as CEO.
“Jeff defined the bank culture even more,” says Dianne Hall, a nearly four-decade veteran of the bank who leads its retail unit. “It was part of him, his everyday life. He exudes friendly, he’s all about community, and he speaks to everyone by name.”
It all starts with culture: eight corporate values that define the bank. Each job interview question is pegged to a corporate value; performance reviews are oriented around them; ongoing employee training inculcates them. In fact, employees can get bonuses for pursuing continuing education. “Our collective team is only going to be as good as the individual players we begin with,” Szyperski says. “We attract people who want to develop themselves. That’s a cultural expectation we have, and it gets really good people in here.” There are opportunities for leadership and career development at every level of the bank.
“We’re fervently protective of our culture,” he adds. That’s part of why Chesapeake Bank grows organically and has not pursued acquisitions. “If we were to acquire somebody and bring a flood of coworkers in, we think that would just really take us off our game.”
Chesapeake Bank’s corporate culture, and the resulting high level of employee engagement, have been recognized by American Banker as one of the top bank workplaces in the country for six straight years. Employees say they like working for a place with a culture of self-improvement. To quote one of Szyperski’s favorite aphorisms, “what makes you good this year is not going to make you good next year.”
Innovation, from nautical to digital
Szyperski personally drives much of that innovation, in part because he’s a huge techie and an inveterate early adopter. “Back at LSU, Jeff always had his gadgets,” chuckles Johnny Milleson, CEO of Bank of Clarke County in northern Virginia and a classmate of Szyperski at the Graduate School of Banking at Louisiana State University. “Jeff is on the leading edge of technology. Our bank has called on Jeff to hear more about some of their new solutions.”
Chesapeake Bank has long been an innovator. In 1968, it launched—literally—a very early form of mobile banking: a boat. The boat was considered a branch for regulatory purposes—the bank listed its latitude and longitude instead of a street address. It stopped in at harbors along the Rappahannock, taking the bank directly to the watermen bringing in their oysters and other catch. (The security plan? If robbed, throw the deposits overboard.)
More recently, the bank was a few years ahead of its peer group in rolling out mobile banking and is currently developing a three-to-five-year “Gen D” digital strategy. “It’s looking not just at upgrading our mobile technology, but rather using more of our customer data to help be predictive of what needs we think they would have,” Szyperski says. “We’re just at the headwaters of that process, but we know we need to do it right now.”
Under Szyperski, the bank has continued its focus on cutting-edge technology. “That’s the fun frontier to me,” he says. John O’Shaughnessy, the bank’s senior credit officer, adds that what attracted him to Chesapeake Bank was its focus on “trying to solve rural problems with city solutions.”
Lancaster County—at the tip of the Northern Neck, where Kilmarnock is located—may give Chesapeake Bank a little breathing room on digital investments. A retirement haven, it’s the eighth-oldest county in the country in terms of the average age of its residents, and economic life there is a bit slower, driven mostly by real estate. (It’s faster in the bank’s other markets, which are more urban or suburban.) Szyperski’s passion is to bring new investment to the region. He is involved with virtually every regional economic development project, locals say, as well as leadership cultivation programs like Lead Northern Neck.
Driving around Lancaster County, Szyperski loves being able to see the outcomes of his work—both at the bank and in the community. “If you drive down the road and there are dots on the map that you had some material role in making that happen, it’s very gratifying,” he explains. “I like it because it’s so integrated. It’s a mosaic of things that have helped the community. I love that role.”