A GSBC Special Interest Group Project
Created by Tyler Freeburg (Oklahoma Bank & Trust Company), Jennifer Hendrickson (United Community Bank), Mary Laughlin (Core Bank), Adriana Scott (Carson Community Bank), Chris Simmons (FDIC) and Scott Smaligo (Forvis Mazars).
Family-owned community banks have long been pillars of the communities they serve. Built over generations, these institutions often represent more than a business. They embody a family legacy, a commitment to local relationships and a long-term investment in the success of their communities.
But as ownership and leadership transitions accelerate across the banking industry, many family-owned institutions face a critical question:
How can community banks successfully transition from one generation to the next while preserving their independence, culture and long-term viability?
That question became the focus of a GSBC Special Interest Group project examining multigenerational succession planning for family-owned banks.
The project brought together participants with perspectives spanning family ownership, executive leadership, regulation and consulting. Through interviews, industry research and analysis, the group explored the factors that contribute to successful multigenerational transitions and the challenges that often lead family-owned banks to pursue mergers, acquisitions or ownership changes. The research was rooted in a shared goal: preserving the community banking model and helping family-owned institutions remain independent for future generations.
Understanding the Challenge
The team began by examining broader industry trends affecting community banking.
According to the research, the number of FDIC-insured institutions has declined significantly over the past two decades as consolidation pressures continue to reshape the industry. At the same time, succession planning is becoming an increasingly important factor in merger and acquisition decisions.
The group also explored research surrounding family-owned businesses more broadly and found a sobering reality: only about 30 percent of family businesses successfully transition to the second generation, roughly 12 percent survive to the third generation and only a small percentage continue beyond that.
These trends highlight the importance of intentional succession planning long before a transition becomes necessary.
What the Research Found
Through interviews with family-owned bank leaders, non-family executives, consultants and industry experts, the project identified several recurring barriers to successful succession planning.
Among the most common challenges:
Lack of a Qualified Successor
Many institutions assume a future leader has been identified, but succession plans are often informal, undocumented or never clearly communicated. In some cases, potential successors may not even know they are being considered for leadership positions.
Retirement and Reluctance to Relinquish Control
The research found that many owners struggle to step away from leadership roles, even when succession is recognized as necessary. Delayed transitions can slow leadership development and create uncertainty for both family and non-family leaders.
Family Conflict and Misaligned Vision
Differences in priorities, risk tolerance and long-term goals can create tension among family ownership groups. These disagreements often become more pronounced during succession discussions and can complicate decision-making if not addressed proactively.
Ownership and Liquidity Pressures
The project found that estate planning considerations, shareholder liquidity needs and wealth diversification goals can all influence whether families choose to retain ownership or pursue a sale.
Changing Generational Priorities
Not every member of the next generation wants to take over the family business. The research highlighted a growing trend in which younger family members may prefer different career paths, creating additional succession challenges for ownership groups.
The Importance of Governance and Communication
One of the strongest themes throughout the project was the importance of communication.
Interviewees consistently pointed to open dialogue, clearly defined expectations and strong governance structures as key ingredients in successful transitions. The research also challenged the assumption that succession planning is solely about transferring ownership.
Instead, the team found that successful transitions require alignment between ownership, leadership development, governance and family relationships. Institutions that treat succession planning as an ongoing process rather than a one-time event are often better positioned for long-term success.
The Role of Non-Family Leadership
The project also examined the role non-family executives can play in preserving family-owned institutions.
Through interviews and case studies, the team found that family ownership and non-family leadership can work effectively when responsibilities are clearly defined and communication remains strong. In many cases, non-family leaders help carry forward a bank’s culture, values and long-term vision while supporting continuity across generations.
Rather than viewing succession as a choice between family leadership and outside leadership, the research suggests that many successful institutions find ways to blend both.
Key Recommendations
The project ultimately concluded that preserving a family-owned bank requires much more than financial planning.
The team’s recommendations focused on three core areas:
Start With People, Not the Plan
Strong relationships, open communication and leadership development should come before legal structures and ownership documents.
Give the Wealth a Purpose
Families that successfully preserve institutions across generations tend to have a shared understanding of their values, mission and long-term purpose.
Build Systems That Endure
Formal governance structures, family councils, ownership policies and regular plan reviews help create stability and continuity over time.
The project also outlines a detailed ten-year framework for succession planning, emphasizing early preparation, leadership development, governance planning and ongoing review.
Why This Matters
Community banks continue to play a vital role in supporting local businesses, agricultural producers and the communities they serve.
As industry consolidation continues and leadership transitions become more common, succession planning is increasingly tied to the future independence of community banking itself.
This project demonstrates how emerging industry leaders are tackling those questions head-on. Through collaborative research, interviews and analysis, the team developed practical insights that can help family-owned institutions think differently about leadership, ownership and long-term stewardship.
Most importantly, the research reinforces a simple but powerful idea:
Successful succession planning is not about preparing for a single event. It is about creating a framework that allows community banks to remain strong, independent and community-focused for generations to come.
Looking Ahead
The Multigenerational Succession Planning for Family-Owned Banks project is part of GSBC’s growing Special Interest Group initiative being shared through Bolder Banking®.
Together, these student-led projects demonstrate the value of collaborative research, industry engagement and thoughtful dialogue around the issues shaping the future of community banking.