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This Chart About M&T Bank Will Blow Your Mind

By John Maxfield – Jan 25, 2016 at 1:05PM

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M&T Bank's returns under CEO Robert Wilmers make the performance of other bank CEOs seem like child's play.

While M&T Bank CEO Robert Wilmers was producing 18,000% returns for his shareholders, this appears to be where most of his peers in the bank industry spent their time. Image source: iStock/Thinkstock.

In the world of banking, there is Robert Wilmers and then there is everyone else. During his 30-plus years as the CEO of M&T Bank (MTB -0.81%), Wilmers has generated returns that are off the charts -- literally.

His total shareholder returns are so much greater than those of his peers at other banks that a chart comparing them must be at least twice as tall as it is wide so that the other CEOs' returns are visible:

Wilmers' tenure as the longest-serving CEO at a major bank (by about a decade) obviously comes into play. This is because the law of compounding returns gains momentum the longer it operates.

But anyone familiar with the gauntlet that banks have run since the early 1980s knows that Wilmers' longevity is an incredible feat in and of itself. More than 3,300 banks failed over this stretch thanks to repeated bank crises triggered first by the energy crises of the 1970s and later by rapid inflation and deregulation. The financial crisis of 2008-09 was the culmination of this period, as Wilmers wrote in his 2013 shareholder letter:

That culture of two and a half decades leading to the crisis represented a departure from a long period -- for the better part of the 20th century prior to the 1980s -- in which prudent regulations established in the wake of the Great Depression shielded exuberant entrepreneurial spirits from ill-considered risk-taking.

The 81-year-old iconoclast has steered M&T Bank through this storm by focusing on the nuts and bolts of banking. The Buffalo, New York-based bank accepts deposits and lends money. And most importantly, it has avoided the temptation throughout Wilmers' time at the top to venture into the fields that destroyed value at so many other banks.

Most specifically, the growth-at-all-cost model employed by the likes of Bank of America and others over the past few decades accomplished little beyond boosting their executives' paychecks. It's as if the managers of a retail store dipped their hands into the till so frequently that there was nothing left for the store's owners at the end of each day.

"All these changes created a self-feeding mechanism through exorbitant executive compensation that further fueled uninhibited risk-taking," wrote Wilmers in the same letter. "Indeed, the executive pay packages for the Fortune top 50 companies during the 25 years preceding the crisis increased 25 times."

One can draw many lessons from this. But as a lawyer and an avid reader of banking and business history dating back to the Civil War, the inescapable conclusion that I draw is that very few of Wilmers' dozens of counterparts along the way took their fiduciary duties to shareholders even remotely as seriously as he did.

With luck, M&T's octogenarian CEO will discover the fountain of youth somewhere in upstate New York. He can then continue to serve as an ideal against which all other bankers can be measured. But in the event that he doesn't, I hope Wilmers will impart his knowledge on future generations of bankers. Doing so will not only make M&T Bank stronger, as well as other banks in the industry, but it will boost the strength and resiliency of the U.S. economy, too.

John Maxfield owns shares of Bank of America. The Motley Fool recommends Bank of America. 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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