Creating and Growing the Entrepreneurial Firm.

University Degree Business and Administrative studies

EMBA 890A,

David Solter

Case Study:

University National Bank & Trust Company

Creating and Growing the Entrepreneurial Firm

EMBA 890A

Dr. Don Hackett

January 24, 2004

David A. Solter

Overview of Issues

Bank Expansion

One of the issues facing University National Bank & Trust Company (UNBANK) was the decision on expansion. An early UNBANK advertising a slogan was “Never had branches never will”. This slogan was a fundamental commitment and an original vision from Carl Schmitt for this new bank with a small and personal atmosphere. Maintaining a commitment and a natural alignment to the location community. Their successes of the right formula for customer service complicates the expansion decision, how to expand without a dilution of establish high standards for service. Can each of the processes for hiring, personnel development, empowerment, rewards/salaries, and continuing the theme of “Relationship Banking” be replicated to another location?

Some of the UNBANK’s managers did not agree with Carl’s concept of a predetermined, natural market share for the bank. Therefore a decision of expanding the bank services or products, expand into new markets or grow through acquisition was another issue confronting UNBANK. Carl was very concerned about deteriorating the “Relationship Banking” and becoming just another small bank with branch offices. Two expansion opportunities were under consideration: a second office or “banking floor in Menlo Park and the other is a potential trust operation in Santa Cruz.

One final issue to challenging UNBANK was a question that the shareholders, employees and customers were asking was “who will lead the bank and how would it survive the transition?” Carl was intimately tied to the success of UNBANK, without his personal vision, guidance and nurturing it probably would have not had been so fruitful.

Strengths and Weaknesses

Strengths

Resounding business success in strategy and execution:

UNBANK was able to effectively enter a new market with innovative customer service focus to capture market and sustain grow, this success is detailed by several factors. UNBANK was able to capture over 9% of the market share. High customer satisfaction was also evident by a customer turnover rate less that one third of its competitors. UNBANK’s recruited, trained and retained high performing employees with an average assets/employee (assets per employee of $2.83 million) 40% higher that comparably sized banks and 65% higher than the national average. UNBANK demonstrated an employee turnover rate of nearly zero, where the banking industry had an estimate teller turnover of approximately 75% annually. Other indicators of their successful business formula was the fact that UNBANK loan losses were consistently lower, 1988 UNBANK’s nonperforming loans were less than 0.5% of gross loans where the competitor’s were experiencing over five times that amount.

Weaknesses

Lack of upward mobility for UNBANK employees, a stagnant work force will provide fewer opportunities for advancement was a key weakness. This situation could cause complacency and loss of employee motivation, which could result in higher employee turnover or performance issues.

Lack of space in the current bank at Palo Alto was another weakness plaguing UNBANK, number of employees has grown from 46 in 1984 to 83 in 1988. (See Exhibit Six) Projections of additional rapid growth in UNBANK’s trust department would require additional space in two to three years. Employee efficiencies will begin ...