CEO Succession – One Bank’s Successful Road Map
I recently completed an inspiring fireside chat with Trent Troyer, former CEO now serving as chairman, of First Federal Community Bank in Dover, Ohio. First Federal is a very high-performing institution with $900 million in assets and eight offices. Trent joined the bank in 1997 and became CEO in 2000 when the bank had $120 million in assets. He’s been a trusted friend for a long time though he has never been a client of our firm.
The bank was founded in 1898, and one of the first things that jumped out at me throughout the planning for our conversation was the sense of stewardship that Trent exhibited. There was no hint of “hanging on” to the CEO seat or debate around independence. When the lens is stewardship, the desire becomes to “leave the bank in a better place than when you first became the leader.”
During our planning conversation ahead of the program, Trent laid out several foundational philosophies and rules of engagement as their bank began to navigate CEO succession:
- Keep a perpetual focus on growth and continual improvement.
- Maintain an intense priority on strong financial performance, which helps to earn your right to remain independent.
- Build a true culture of excellence, thus enhancing the development of high performers. Plan far ahead for CEO Succession — at least five years.
Remember, First Federal is a small community bank, still under $1 billion in assets. Yet the bank focused on CEO succession much farther in advance than most community banks. As a high-performing institution (1.8% return on assets in 2025), First Federal could easily sell for a premium or attract an excellent external candidate. Yet the bank sought to maintain forward momentum and develop internal successors for the CEO role. Again, the sense of stewardship.
Trent shared several milestones and strategies that the bank deployed along their CEO succession journey. Begin with an honest, third-party driven assessment of prospective internal contenders. In the case of First Federal, their first assessment was 10 years before Trent’s potential departure date. Starting far ahead allows for the opportunity to weave newer internal prospects into the mix and accommodates a shifting “leader board” along the way. Evaluations at First Federal occurred every two years.
Involve the board in this process as it’s ultimately their decision. Also, seeing contenders outside of standard board meetings provides a different context for directors. Along the way, include senior officer contenders in board and strategic planning meetings. Begin to narrow the field of serious CEO contenders. As the current CEO gets closer to his or her potential retirement date, perhaps three or so years out, directors need to align with the incumbent around the timeline and the continuing process.
Around the same time, the board should determine whether there appear to be viable internal contenders or whether an external candidate comparison will likely be necessary or appropriate. In the 12- to 24-month timeframe before incumbent retirement, the development of a firm timeline and transition strategy needs to be nailed down. Ultimately, no later than a year away from the incumbent retirement date, the bank needed to affirm an internal successor or go to market and search for the next leader.
There are countless intermediate steps between these milestones. By planning far ahead, however, the board — and Trent — had a road map that was logical and that the directors could align around. Rushed decisions around CEO successors — especially those not well groomed for the role — too often result in underperformance, or worse. There’s an old saying that “the next in line is not always the best in line.”
CEO succession will always be a board’s primary responsibility. If a smaller market community bank of First Federal’s size can successfully navigate a CEO succession plan, there is really no excuse for your bank not to develop a succession plan as well. As the data shows, a well-developed internal plan of succession for the bank’s leaders is the surest path to continued success and independence.
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Alan J. Kaplan, Founder & CEO
Alan J. Kaplan is Founder & CEO of Kaplan Partners, a retained executive search and board advisory firm based in Philadelphia. Kaplan Partners is a longstanding partner with Bank Director. You can reach Alan at 610-642-5644 or alan@kaplanpartners.com.