Independent Banker - December 2022 - 59

(or families) and the communities
that they serve.
Another complication is the fact
that family members likely serve on
the bank's board or as the majority
board. " With most family-owned
banks, 60% to 70% of the board
members are family members and
20% to 30% are outside directors, "
Tuck explains.
If those family members don't want
to give up control to a board that's
diluted by non-family members, the
challenges may mount. One way
to resolve the issue is by creating a
holding company board that has a
different composition than that of the
bank board.
For example, at the holding
company level there may be six
directors, four of whom are family
members and two of whom are
outside directors. Then, at the bank
level, there will be 10 directors, six of
whom are family members and four of
whom are outside directors. Tuck says
this is a very common post-merger
board succession scenario for familyowned
banks.
" That gives a family comfort,
because ultimately the bank board
members are elected and come into
their position as directors by the
consent of the holding company, "
Tuck points out. " Particularly for
a family-owned bank, this strikes
the balance of giving the family the
control they want while allowing
an appropriate number of outside
directors to be involved. "
Working through
differing priorities
Once a community bank has reached
the point where it's decided that a
merger with another institution is
what's best for the organization, it
should turn its attention to the postmerger
board plans. " If you fail to do
this, it's basically like dropping the
ball on all of the work that goes into
the merger planning and strategizing
process, " Moch cautions. " Your board
5
5 tips for successful
post-merger
succession planning
1
Start early by talking about the board
planning at the very first M&A meeting.
Consider both internal and external
candidates, knowing that a good mix of the
two will help the new bank honor legacy
experience while embracing the future.
2
Take early steps to identify individuals
both in and out of the organization with
an eye on diversification (for example,
accountants, attorneys and other
professionals from the community).
3
If one or both banks are family-owned,
be sure to factor in the related cultural and
control issues that will surface as you put
the new board together.
4
In some scenarios two boards may be
the best choice: one that handles the
big-picture strategizing for the new bank
and one that focuses on the day-to-day
operations.
Work to balance the long tenure of
established board members while infusing
the new board with individuals who may
have more experience with technology,
digital transformation and other
modern requirements.
independentbanker.org Q 53

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Independent Banker - December 2022

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Table of Contents
Independent Banker - December 2022 - Cover1
Independent Banker - December 2022 - Cover2
Independent Banker - December 2022 - Table of Contents
Independent Banker - December 2022 - 2
Independent Banker - December 2022 - 3
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