Effective use of Succession Planning to Drive Value

1. Effective use of Succession Planning to Drive Value September 6, 2013 20 Church Street  Liberty Corner, NJ 07938  P: (908) 604-9336  F: (908) 604-5951  finpro@finpronj.com  www.finpronj.com

2. Is Succession Planning is connected to value? • Value is driven by: • Loan generation • Deposit generation • Relationships • Non interest income opportunities • Expense control • All of these are people centric • More often than not, buyers buy people not banks!

3. What do all the most valuable companies have in common? They have the best people who Are paid based on success, and Demand a culture of excellence

4. Formal management succession planning is a duty of the Board and CEO and should be driven by multiple obligations (not just the regulatory requirement) . . . • A management succession plan is critical for : • business continuity • preserving shareholder value • employee morale • Yet according to the National Association of Corporate Directors: • 44% of public companies lack a formal plan • 40% of financial institutions lack a formal plan • The plan should incorporate a short term contingency strategy, as well as a longer term more permanent component to identify and groom key individuals to assume senior management roles including the CEO’s Graphic from American Banker October 5, 2009

5. As Bankers, we stink at talent management . . . • Major problem as people are our number one asset • Key to relationships • One of 7 P’s of growth • We do not have young talent in the business, many think of banks as dinosaurs • Rather than infusing talent, we recycle and retread • We do not have effective training • Tends to be generic, not institution or job specific • We appear incapable of thinking outside the box

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