1. 0 20 Church Street  Liberty Corner, NJ 07938  P: (908) 604-9336  F: (908) 604-5951  finpro@finpronj.com  www.finpronj.com Effective use of Succession Planning to Drive Value September 6, 2013

2. 1 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. 2 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. 3 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. 4 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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