Independent Banker - June 2024 - 52

C
1
ommunity banks are excellent at fostering
close relationships, supporting local
businesses, contributing to important
causes and providing a sense of financial
security in the communities they serve.
For these and other reasons, those
communities come to rely on independent
financial institutions for a broad range of
products, services and support.
By investing time and effort into
succession planning, these " hearts of Main Street "
can keep beating even if a top executive retires or
some other unforeseen circumstance arises.
According to the 2023 ICBA Compensation and
Benefits Survey sponsored by Crowe, only 20.6%
of respondents feel " prepared, " while 59.4% of
the respondents feel " somewhat prepared " for the
succession of C-suite executives and the CEO to the
next generation.
And succession planning, which involves
identifying and developing future leaders, is critical
for even the smallest community bank.
Jack Hartings, chairman of the board at
Peoples Bank Co. in Coldwater, Ohio, says
community banks should start the succession
planning process early, as opposed to waiting for
the inevitable to happen and then scrambling to
address it. Hartings says $800 million-asset Peoples
Bank embarked on its succession planning journey
roughly two years before he retired from his 30-year
tenure as CEO and president.
Hartings admits that ramping up a succession
planning effort after someone has held a top
leadership position for three decades isn't easy, but
it can be done. He credits the two-year runway with
helping to smooth out the transition.
" The trick is to think out at least two years, work
with your board and vet candidates to ensure you
select someone who will be the right fit, " says
Hartings, whose successor was a 20-year employee
5 succession planning tips for community banks
2
Leverage
the power of
Identify individuals
within your
organization who have
leadership qualities.
" Be sure to factor
soft skills into the
identification process, "
says Jack Hopkins,
president and CEO of
CorTrust Bank in Sioux
Falls, S.D. " As a leader,
you have to be able to get
along with and manage
people effectively. "
mentoring. Pair up
seasoned leaders
(mentors) with potential
successors (mentees)
to share knowledge,
experience and
guidance. For example,
CorTrust pairs up senior
lenders with individuals
who want to fill the
position. " We work
out a compensation
arrangement for the
senior lender, who then
takes that person under
their wing and helps
them become next in
line for their position, "
says Hopkins.
4
3
Find ways to
broaden out
their experience.
If the candidate
came up through
the operations or
lending side of the
organization, use
internal and external
training to break down
the silos and expand
on their experience.
If you're
covering
tuition, use
clawback clauses.
If you include
these clauses in
your employment
contracts, your bank
can recoup money
previously paid to an
employee for external
training. Hopkins sees
this as an important
step in the current
labor market. " You
don't want to pay for
them to go to school
only to have them
get recruited to
another organization, "
he says.
52 // ICBA Independent Banker // June 2024
Independent Banker - June 2024

Table of Contents for the Digital Edition of Independent Banker - June 2024
