Size has always been important to smaller financial institutions.

One reason is ego. It's nice to be the largest or second-largest institution in town. Except in one's girth, bigness implies superiority.

Another reason is a little more down to earth. The bigger the institution, the higher the salaries the top people can take home without raising eyebrows in the community or among regulators.

In any event, most bankers talk about wanting to grow. And the irony is, the larger they are, the more they feel they have to grow.

The $200 million-asset bank whose CEO says, "If we could only be half a billion dollars, we would be satisfied," resets the target at $1 billion once it reaches the first goal.

It is like the farmer who says, "All I want is my land and the land next to it."

But with growth comes a side effect-the attitude of the top people toward the bank's money and how it should be spent seems to change.

As one board member told me, after he had sat helplessly and watched the CEO get approval to build a new headquarters that the director felt was really just an "ego affair": "Times have changed. They are playing with O.P.M.-other people's money-now."

There is something about owning a large stake in a bank's stock or knowing the people who do that makes a banker cautious in spending money.

I remember that when Jim Kemper, the CEO of Commerce Bank of Kansas City, used to leave his office he would always turn off the lights.

When I asked an associate why, he responded, "You would, too, if your family owned half the bank."

Yet all too often we see that bank employees just don't care that much when it's not their money.

Here are some examples:

I recall a bank, which eventually failed, that installed every type of electronic communications equipment long before it was needed.

An Amtrak ticket agent told me of a New York money-center banker who would have his secretary buy him a Metroliner parlor car seat for the 40- minute trip from Baltimore to Washington when a regular coach fare would cost one-eighth as much.

As a result of the cavalier way in which some institutions use O.P.M. those who deal with these banks become cavalier, too, in the way they provide services.

I remember the concierge at an Atlantic City hotel telling the transportation officer during a New Jersey Bankers Association convention, "Come on, book them a limo, not a cab. They're bankers."

Maybe the recognition that one must treat other people's money the same as we treat our own is a basic reason why community banks survive and thrive.

To be sure, in too many cases, their low efficiency ratios come from underpaying employees. But be this as it may, they care about expenses and don't look at costs as something paid by an anonymous sucker sitting out there somewhere.

And that recognition also explains why some banks are beginning to pay directors with stock options instead of cash so that they too can look at "other people's money" and say "that's my money, too." Mr. Nadler, an American Banker contributing editor, is professor of finance at Rutgers University Graduate School of Management.

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