Finding the Next Generation of Bank Leaders: Succession Planning in Regional Banks

Introduction

Leadership succession is one of the most pressing challenges for community and regional banks. Many of today’s executives, CEOs, and senior leaders began their careers in the 1980s and 1990s—a period when banking talent pipelines were far stronger. Fast forward to 2025, and a wave of retirements is colliding with a limited pool of next-generation leaders. According to the Conference of State Bank Supervisors (CSBS), over 30% of community bank CEOs plan to retire within the next five years, with many banks admitting they lack formal succession strategies. This talent gap poses both risks and opportunities, and recruiting firms are increasingly being asked to step in and help banks identify and groom future leaders.

The Urgency of Succession Planning

• Continuity of operations: Leadership transitions without preparation can disrupt culture, strategy, and community relationships.

• Risk management: Regulators now ask banks to demonstrate succession planning as part of sound governance.

• Competitive pressure: Larger institutions and fintechs lure away rising talent, making it harder for smaller banks to keep strong candidates.

• Stakeholder trust: Shareholders, boards, and customers want to know that the bank has a clear leadership plan.

Why Leadership Recruiting Is Challenging for Regional Banks

1. Limited internal pipelines: Smaller banks often lack formal development programs to groom mid-level staff into executives.

2. Changing leadership skill sets: Tomorrow’s leaders must understand not just lending and compliance, but also fintech partnerships, digital strategy, data analytics, and cybersecurity.

3. Cultural fit concerns: Boards often hesitate to bring in outsiders, even when internal successors aren’t ready.

4. Compensation gaps: Regional banks may not match the executive packages offered by national players or fintechs.

5. Generational expectations: Younger leaders demand flexibility, transparency, and innovation in ways that traditional governance structures sometimes resist.

Best Practices in Succession-Focused Recruiting

• Early identification: Boards should work with recruiters to assess leadership potential years in advance.

• Blended approaches: Successful banks combine internal development with external recruiting to ensure strong pipelines.

• Competency frameworks: Beyond banking acumen, boards now prioritize digital literacy, cultural agility, and change management.

• Mentorship programs: Pairing younger executives with senior leaders accelerates readiness.

• Board engagement: Transparent discussions about succession prevent last-minute crises.

Case Example: Community Bank in the Midwest

A $2B-asset bank in Indiana faced the retirement of its long-time CEO. With recruiter support, the board benchmarked candidates against a leadership competency model, identifying internal high-potential executives while also interviewing external candidates with fintech backgrounds. The eventual successor combined local knowledge with digital expertise, positioning the bank for growth.

Case Example: Regional Bank in Texas

A regional bank sought a Chief Lending Officer with both commercial lending expertise and digital transformation experience. Recruiters sourced from both traditional banking channels and fintech partnerships. The hire successfully launched a digital lending platform within 12 months, proving the value of casting a wider net.

The Recruiter’s Role in Leadership Succession

Recruiters bring critical value in succession planning by:

• Conducting leadership assessments for boards.

• Providing market intelligence on compensation and expectations.

• Offering confidential search processes for sensitive leadership changes.

• Bringing cross-industry perspective, sourcing candidates from fintechs, technology firms, and adjacent industries.

The Candidate Perspective

Next-gen leaders evaluating regional bank opportunities often ask:

• Will I have influence on digital transformation and strategy?

• How committed is the board to modernization?

• What mentorship and support will I receive?

• Does this role offer flexibility and autonomy compared to fintech opportunities?

Recruiters help candidates navigate these questions, ensuring alignment between board expectations and candidate aspirations.

Future Outlook: Leadership Recruiting Beyond 2026

• Hybrid skill sets: By 2030, community bank leaders will need to be as fluent in APIs, digital lending, and cybersecurity as they are in credit and compliance.

• Diverse leadership: Greater emphasis will be placed on recruiting women and underrepresented professionals into senior roles.

• Cross-industry hires: Banks will increasingly recruit leaders from fintechs, credit unions, and technology companies.

• Succession as strategy: Regulators and boards will treat succession planning not as optional, but as a critical governance function.

Summary

Succession planning is no longer a back-burner issue for community and regional banks—it is a core element of risk management and long-term growth. Recruiting for leadership roles requires balancing tradition with modernization, community roots with fintech expertise, and continuity with innovation. Banks that embrace structured succession planning and partner with recruiters who understand the evolving skill sets required will thrive. For candidates, this era represents opportunity: leadership roles are increasingly open to forward-thinking professionals with both banking and digital transformation expertise.