Succession planning is more than a risk-management exercise. It’s the clearest expression of a bank’s commitment to long-term stability and growth. Over the past several months, I’ve had the privilege of leading discussions at banking conferences across the country, and one theme has consistently stood out: succession planning remains a gap in many community banks, despite being one of the most critical leadership conversations boards can have.
Let’s be honest. Too often, succession planning is treated as a check-the-box exercise rather than a strategic imperative. But the data tells a different story. Bank Director’s 2024 Compensation & Talent Survey found that 40% of bank CEOs are expected to retire or depart within the next five years, yet only 18% of banks have identified a successor and built a timeline. That’s not just a compliance oversight. It’s a clear signal that many boards are underestimating the impact on culture, customers, and long-term value.
The PCBB’s 2025 report echoes this concern. Nearly a quarter of banking C-suite executives are 65 or older, and 82% of financial institutions don’t have a formal succession plan. In an industry built on trust and stability, these numbers are a wake-up call.
And the financial consequences are real. Russell Reynolds Associates found that banks without a public, long-term succession plan saw their stock fall by an average of 7% after an abrupt CEO departure, and it stayed down a month later. By contrast, banks that communicated a robust succession plan saw a 6% stock price gain. Their research, which examined CEO transitions at top U.S. regional banks over the last decade, also revealed that about half of these banks did not approach succession planning in a thoughtful and pragmatic manner. These findings highlight a simple truth: succession planning is not just about leadership. It’s about balance sheets, investor confidence, and institutional credibility.
Internal development is equally crucial. Russell Reynolds’ data shows that internally promoted CEOs remain in their roles 1.4 years longer than external hires and face lower termination risks. Yet, Bank Director found that fewer than 15% of financial services boards express confidence in their internal talent pipelines. It’s a gap that demands attention.
So why the disconnect? Sometimes it’s cultural. Legacy leaders may hesitate to talk about their departure. Other times, it’s just inertia. But here’s what I believe: succession planning isn’t about endings. It’s about resilience. It’s about ensuring the bank’s institutional memory, its culture, relationships, and hard-earned community trust remain intact even when the CEO steps down.
We also need to be realistic about the market. As the PCBB report points out, smaller CFIs are competing with larger banks and fintech for a shrinking pool of talent. Local pipelines alone aren’t enough. National searches have become the new normal.
Given this reality, here’s what I believe every board should be talking about.
Continuous Planning
Leadership Development
Identify high-potential leaders early, provide cross-functional exposure, and ensure mentorship is a cornerstone of the bank’s culture. The PCBB’s data reinforces the difference this investment can make.
Active board engagement
This isn’t just a CHRO’s job. Boards must be actively involved, regularly reviewing succession plans and holding management accountable for building a resilient pipeline.
Transparent communication
A well-articulated succession plan signals to stakeholders that the bank is not only prepared for leadership transitions but also committed to sustained success.
Ultimately, succession planning isn’t about filling a seat. It’s about ensuring the next generation of leadership is equipped to steward the bank with the same values and vision that built it in the first place. Because in community banking, leadership transitions aren’t just about the CEO. They’re about preserving trust across decades.
*This white paper incorporates insights from public reports by Russell Reynolds Associates, Bank Director, and PCBB, used with attribution.
About the Author
Brandon Biegenzahn
President
biegenzahn@mbexec.com
Brandon holds dual roles as President of McDermott + Bull and Chair of the firm’s Financial Services Practice. As President of McDermott + Bull, Brandon leads day-to-day operations for the firm as well as the strategic buildout of the firm’s team of executive search managing directors. As Chair of the firm’s Financial Services Practice Group, he is a partner to an array of financial services firms, including investment banks, commercial banks, private banks, credit unions, asset managers, institutional investors, and fintech companies.