Cedar Rapids Bank & Trust
Cedar Rapids, Iowa
For community banks, serving retail business customers involves more than just providing loans; they also help these customers successfully grow their businesses. And one critical piece of assistance banks can offer to their retail business customers is succession planning. An effective succession plan can ensure that these businesses continue to exist and prosper after current management has retired or moved on to other endeavors.
Cedar Rapids Bank & Trust (CRBT) in Cedar Rapids, Iowa, a $2.2 billion-asset subsidiary of the publicly traded $7.9 billion-asset multibank holding company QCR Holdings, Inc., has developed a strong reputation for its succession plan offerings for customers.
The community bank’s succession planning support initiative is led by Josh Moore, senior vice president, commercial banking, and David Stoltenberg, first vice president, commercial and industrial manager, commercial banking.
Planning is a critical part of addressing business succession. According to Moore and Stoltenberg, over the next 10 years, almost half of all privately held firms in the U.S. will be looking to transfer ownership of their businesses.
According to Moore and Stoltenberg, business succession needs to plan for:
A well-defined exit strategy for owners to ensure their business is sustainable
Maximizing the value of their business enterprise that they have worked years to build
The business employees and the business legacy within the community
Family member(s) or key employees to whom to transition the business
Impact on customers
Since it opened in 2001, CRBT has been a partner to many Iowa-based businesses. “We partner with our clients to assist their businesses with the appropriate commercial banking products and services for each stage of the business life cycle from start-up, growth, maturity and succession,” says Moore.
“Through our relationships with clients over our careers, we have seen many businesses transition to new ownership, which provides for a good share of our knowledge and experience.”
—David Stoltenberg, Cedar Rapids Bank & Trust
Stoltenberg and Moore both have more than 25 years of commercial banking experience and proudly lead what they say is one of the most experienced commercial banking teams in the market.
“Through our relationships with clients over our careers, we have seen many businesses transition to new ownership, which provides for a good share of our knowledge and experience,” says Stoltenberg. “Over the years, we have established long-time connections and relationships with our client’s key business advisors, such as their accountants, attorneys, insurance, valuation advisors and wealth advisors.”
The two are also members of the Employee Stock Ownership Plan (ESOP) Association, the Exit Planning Institute and the Iowa Bankers Association, and they attend seminars, conferences and workshops on succession planning.
“Having regular conversations with our clients about their goals has led to us gaining knowledge of plans for succession.”
—Josh Moore, Cedar Rapids Bank & Trust
“We are intentional in showing a strong interest in our clients’ businesses and personal goals and plans,” says Moore. “Having regular conversations with our clients about their goals has led to us gaining knowledge of plans for succession. Our approach is not about only offering a loan at the lowest interest rate or [a] money market account paying the highest rate. Rather, we’re about being a trusted advisor for our clients with their best interests in mind.”
Sharing the knowledge
CRBT regularly sends informational mailers, hosts seminars such as “lunch and learns” and provides industry information. “We also share our knowledge of other advisor partners that we know can assist our clients,” says Stoltenberg.
Business succession is time-consuming and complicated, notes Moore. It requires preparation and planning, as there are many predispositions at play that make business owners hesitant to approach the topic.
One of the more common struggles includes business owners not knowing what they will do next. Another is that they often don’t want anyone else to know they are planning to exit. In addition, these business owners often have priorities that can seem more urgent than succession planning. Finally, the business owners are usually not familiar with the various exit options.
However, failure to plan can be costly and could have far-reaching ramifications, according to Stoltenberg and Moore. For example, if a business needs to sell quickly due to an owner’s unexpected death or other reasons, the family may not realize the full value of the business at the sale. A buyer from outside the area could also have an impact on the employees and the community.
“Over our careers, we have helped many clients with successions,” says Stoltenberg. “In fact, the years 2021 and 2022 were very active years for the bank’s clients, during which we assisted with multiple client successions and transitions.”
“There are multiple clients of ours with transitions planned for 2023 that CRBT will have a role in assisting,” says Moore. To make things go smoothly for its business customers, both Stoltenberg and Moore have experience with inside exit options such as family, partners, management and ESOPs, as well as outside exit options such as third-party buyers, recapitalizations, private equity and orderly liquidation.
Russ Nieland, CFP, AIF, managing director of Carson Wealth in Cedar Rapids, Iowa, found great value in the community bank’s assistance. “Josh was intentional about learning about our company and the levers that drive our success,” says Nieland. “This knowledge and his confidence in our business was instrumental in leveraging our relationship when it was time to implement a plan when buying out my longtime business partner.
"He continues to drive conversations with our current and future owners, while anticipating how our current succession plan will benefit from a strong banking relationship.