How to Choose a Bank That Doesn't Suck

Last month, M&T Bank CEO Robert Wilmers penned an op-ed in American Banker Magazine that laid out the characteristics of what he considers a "good, socially responsible" bank. Whether you're an investor looking to find the perfect bank stock for your portfolio, or a consumer looking to relocate your savings account, Wilmers' vision is a virtual blueprint for finding exactly the bank you need.

Everything starts locally

Wilmers has more than 40 years in the industry, the majority of which were at the helm of M&T, a regional lender in the Mid-Atlantic and Northeast. It's also worth noting that, during the past 35 years, you'd have been hard pressed to find a bank with a better performance in the stock market than M&T.

At the core of Wilmers' vision, and a major driver of M&T's success, is the theory that a bank can only be as successful as the community it serves. Banks serve a critical civic function in the American capitalist system connecting individuals and businesses of the community with the capital to invest, grow, and prosper.

The best banks never lose sight of this fundamental fact, and they operate with a business model that demands the client's best interests come first. As Wilmers notes, those clients are more often than not the banker's friends and neighbors.

That means denying a loan from time to time when it's clear the applicant most likely can't make the payments. It means Wall Street-style trading is off the table. It means hiring bankers that are upstanding and contributing members of the community.

Banks are people, too

Banks have millions, billions, or even trillions of dollars in assets. Those are mind-boggling figures. And understandably, popular culture tends to characterize them as faceless, corporate monoliths. It's really hard for just about everyone to identify with a bank.

But don't forget that, at its core, a bank is really just an organization of people running a business. The best banks, it follows, will employ the very best people. People that, per Wilmers, have "intense personal responsibility," are "concerned, involved citizens," and "cut from the finest cloth of character."

These individuals will treat the bank's assets as their own, working diligently to align the interests of ownership, management, and customer. They are a "pillar in the community" who lend not just money, but expertise, time, and effort to improve the well-being of customers, neighbors, and the bank itself.

It applies from the CEO's office all the way down to the teller line. The best banks will have the best people.

Long term matters more than short term

The best banks will take a long-term approach in both their corporate objectives, as well as in their client relationships.

It's impossible to control or even predict short-term events. That's true of life, just as much as it's true of the stock market and business. That's why the best banks focus on making decisions based on timeless principles and long-term objectives. When bankers of high integrity make decisions today in the best interests of their clients, the long-term results will almost certainly follow. Wilmers said,

Safeguarding the hard-earned savings of their neighbors and putting deposits to work through soundly underwritten loans to families and businesses constitutes an honest day's work. A banker is wholly committed to doing the right thing the right way and, even in this changing world, the right way has no shortcut.

In one word: culture

You may have noticed that none of these qualities are found on a financial statement, none can be quantitatively calculated, or as Wilmers put it, none fit nicely onto a scorecard. That's because the best banks for your deposits, your mortgage, or your investment can't be defined that simply. The best banks are defined by their qualitative advantages. The quantitative successes are an effect, not a cause.

Wilmers sums it up with one word, and I completely agree: "They are the basis of a way of doing business -- a set of core operating principles that can set a company apart and permeate it at all levels -- a culture."

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The article How to Choose a Bank That Doesn't Suck originally appeared on

Jay Jenkins has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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