Whitepaper: The Role ESOPs Play in Bank Succession Planning

There are multiple ways to recruit, retain and reward your key executives that can also be tied to the succession plan of your bank. One example is the implementation of an Employee Stock Ownership Plan (ESOP). An ESOP is an employee benefit plan that many banks and corporations use to retain their leadership team and provide them with a benefit, while effectively addressing their succession planning needs and providing liquidity for the bank ownership.

An ESOP is similar to a profit-sharing plan, in that it qualifies for certain tax advantages under the Internal Revenue Code. It allows an employee to obtain ownership interest in the bank, which aligns the employee’s interest with that of the owner. Many bank owners choose to leave their bank with their family or key management, but the question in hand remains, how will those individuals be able to purchase the bank? An ESOP is a well thought-out business plan that allows for the purchase process to happen gradually, while the owner still maintains majority ownership.

Read the full whitepaper below.

The Role ESOPs Play in Bank Succession Planning