Case study: Carl Schmitt, University National Bank & Trust Co. (UNBT)

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1. Why does Schmitt believe that smaller banks are more profitable?
His sense of keen observation told him so. In 1975, he was struck by how small banks outperformed their larger brethren. Their return on assest was consistently better than that of larger banks. Smaller banks tend to have lower overhead and dedicate themselves exclusively to a specific market, making them more efficient. The well selected location of the bank, for exaple Palo Alto, with a rich client base helped and so also the age old notion of service. Small banks are also in a postion themselves differently from larger banks.
2. Why does staying small force Schmitt to offer superior service?
Staying small forces Schmitt to offer superior service because this is the only way he could compete with large banks that offered multiple branches and multiple products. This forces Schmitt to focus on customer satisfaction, employee satisfaction and shareholder returns. In addition, Schmitt actually 'decides' whether his bank should accept a customer or not. He refuses one stop customers. Then he offers every new customer a miniseminar on UNBT's old-school banking approach. Thus staying small forces Schmitt to compete on service with other larger banks and offers superior service to his customers.
3. How does Schmitt keep his small bank's employees motivated?
By keeping the work climate enjoyable and friendly, for example on Statement Day, the employees collate the statements of all customers and trade jokes, socialize and eat. Further, he motivates his employees by being honest with them, and allows them latitude in doing their work. Schmitt's motivation strategy starts from recruitment when pounces on experienced and competent bankers who have been encouraged to retire early from larger banks. He gives them large and interesting working places. The symbols on UNBT premises and courier trucks emphasize the fun nature of their ...