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In 1979, at 49 years old, Robert Wilmers made a decision that even the savviest business school graduate would think twice about.
He purchased a stake in "a declining bank in a shrinking rust belt city." He would quickly leave his "comfortable and not unrewarding" job with Morgan Guaranty Trust Co. — a name used previously by J.P. Morgan Chase— to take over the reins of Manufacturers and Traders Trust Company in Buffalo, New York.
"It was a bank … with deep problems, from unacknowledged, nonperforming old loans to a culture that inhibited making good new ones," Wilmers said. "It was barely earning enough to pay its promised dividends."
Still, Wilmers said, "I was seeking the satisfaction that comes with hands-on, day-to-day management—that comes with running a business."
Some three decades later, Wilmers is still the bank's chief executive officer, and the bank, now known commonly as M&T Bank, is the country's 16th largest. The bank counts Warren Buffett's Berkshire Hathaway among its largest shareholders, and it is the is the only commercial bank in the S&P 500 that neither cut its dividend nor executed a dilutive equity offering during the financial crisis.
Wilmers outlined the reasons for the bank's success on January 27 at the Charles M. Harper Center during a Distinguished Speaker Series event sponsored by the student-led Graduate Business Council.
Among one of Wilmers's first moves was to recruit top-rate talent.
"I won't kid you; it wasn't easy to get people with options to move to Buffalo," Wilmers said. "But bonuses of sleds, skis, and lift tickets helped with that." Joking aside, however, Wilmers said his bank invested $40 million in headhunter fees and relocation expenses. It continues to recruit the country's top banking talent through its Executive Associate Program, which recruits MBA students directly from business schools.
The bank also focuses on knowing its local market. "We have a credit culture that the only good loan is one that gets paid back," Wilmers said. "We get to know our clients, and we focus on being community bankers.
"As such, if we know our communities and we know the people we are lending to, chances are we also know their relatives. We know the people that they are selling to or buying from. If you have all that knowledge, the nature of the credit almost speaks for itself."
That doesn't mean however, "that we haven't made mistakes," Wilmers said. "We did a pretty good job, but not a perfect one, of staying away from the punch bowl" of sub-prime mortgage backed securities at the center of the economic crisis.
Among the biggest mistakes that M&T made, Wilmers said, was investing $132 million in collateralized debt obligations in 2007. "That was stupid. We marked them down to $4 million by the end of the year."
M&T also at one point originated loans on a national basis that were between prime and sub-prime, then re-selling them to Wall Street, where the loans were repackaged and bundled. "We thought that we were just making a commission, and then the market changed, the music stopped, and we got left with a billion and a half of the stuff. The (other banks) were doing big-time what we were doing small-time," Wilmers said. "But I was embarrassed to say we had ever been in that business. We are a community bank."
Tim Johnson, a first-year student in the Full-Time MBA Program, said he attended the speech largely because he wanted to find out why M&T has been so successful.
"He was able to emphasize that looking out for the well-being of his community had a direct impact on his business' success, in contrast to some of the bigger banks, which are all commercialized and looking out for the bottom line." Johnson said. "It seems like it's really basic, but that's what sets him apart."
As for Wilmer's own personal management style, it focuses on asking questions: "It's an approach based on the belief that the other guys around the table, the high-priced talent, know more than I do about their specific areas. What's more, if I talk too much, I'll tip which way I'm leaning at the risk of being told what I want to hear."
"I like his management style, as far as being open to hearing everybody's decisions and making sure he doesn't lead the group into telling him what he wants to hear," said Joshua Perry, also a first-year student in the Full-Time MBA Program. "When you do that, you get to take a step back and hear ideas you probably wouldn't see."
—Patrick Ferrell