M&T Bank President Robert Wilmers’ on Complexity vs. Size

The imperative of distinguishing between what might be called Main Street and Wall Street banks has been discussed previously, but it bears repetition, analysis and specific illustration.

Simply put, the 6,482 community and regional banks of Main Street have a very different business model than the five large U.S. banks that dominate the activities traditionally associated with Wall Street.

Simply put, the 6,482 community and regional banks of Main Street have a very different business model than the five large U.S. banks that dominate the activities traditionally associated with Wall Street.

Main Street banks gather deposits and make loans; they are the primary providers of finance to local businesses in the neighborhoods they serve. Loans comprise 61% of assets at regional banks compared with just 31% for the five large, complex and globally interconnected U.S. bank holding companies.

Perhaps no other measure illustrates this point better than the comparison of lending to small businesses. It is interesting to note that last year those five large banks funded 4% of Small Business Administration loans, a subset of loans made to small businesses, while the rest, Main Street banks, funded 96%. Core deposits fund 64% of assets at regional banks; the comparable figure for large banks is just 32%.

Those five large banks have limited branch networks in smaller and rural communities. Just 55% of these large bank branch offices can be found outside the ten largest metropolitan areas, compared with 73% for regional banks.

Read more at American Banker