If you've ever wondered what a well-run bank looks like, check out Buffalo, NY-based M&T Bank (NYSE:MTB).

There are any number of statistics a person could cite to support this, but I'll keep it to two.

First, it's the best-performing bank stock over the last three decades. Since 1983, its dividend-adjusted compound annual growth rate comes in at 15.8%. The only commercial banks that even come close to this are U.S. Bancorp (NYSE:USB) and Wells Fargo (NYSE:WFC), with CAGRs of 12.9% and 12.5%, respectively, over the same time period.

And second, though not coincidentally, it's in a league of its own when it comes to risk management. You can see this in the figure below, which charts M&T's net charge-offs as a percent of total loans over the past decade. The light blue line is the median of its peers in the regional banking space.


It's axiomatic that good banks write good loans. But while every bank purports to do this, M&T actually follows through. "The only good loan is one that gets paid back," its chief executive officer said in last year's letter to shareholders.

Investors in bank stocks would be well-advised to think long and hard about that simple statement, as it can be the difference between a bank stock that goes to zero and one that makes you rich.

John Maxfield has no position in any stocks mentioned. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of Wells Fargo. 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.