Something strange happened to Robert Tracht and Bruce Gilman on their way to building a multi-million-dollar import-export business. In the summer of 1982, after six months of skyrocketing sales and unimpeachable credit, they were suddenly "invited" by their bank, First Interstate Bank of California, to take their business elsewhere.

"They had switched loan officers on us and the new one was insecure and couldn't understand what we were doing," Gilman recalled recently at Tracht's Los Angeles condominium, which doubles as headquarters for their company, Comtek Import/Export Ltd. "He was scared by our growth. So they told us to go find another bank. They wouldn't support us. They thought ours was a flaky business. It was a devastating blow."

As an international broker of fashionable soft goods, including luggage, shoes, and apparel, Comtek relies on short-term loans to purchase goods from one party, which it then sells to another party at a slight markup. These loans, usually secured by a letter of credit, cover the company's costs during the 60-day period before it receives payment from the buyer. Without them, Comtek had little chance of surviving.

Desperate for a new source of credit, Tracht, 30, and Gilman, 32, took out their phone book and started calling banks. They soon learned, however, that most bankers weren't interested in start-ups, no matter how profitable they might be. "We called 35 banks, and they all gave us the same answer," said Tracht. "Everyone said you have to have been in business for at least two years and have $100,000 in working capital. It was like they were all reading from the same cue card."

After a brief and stormy relationship with another Los Angeles bank, Tracht and Gilman went to see Sam Simons, a veteran loan officer and an executive vice-president of Mitsui Manufacturers Bank, and a man with some 40 years' experience lending to companies in the soft-goods business. Unlike the other bankers, Simons immediately understood the subtleties of Comtek's operation

"They told me what they were doing, and it made sense," the 68-year-old Simons explained amid the bustle of Manufacturers's office in L.A.'s garment district. "They seemed to understand soft goods and really wanted to get ahead. They knew the risks, but they were very careful. But I really can't say I made my decision from the numbers. In this business, it boils down to instinct: You have to have the smell."

Thanks to Sam Simons's sense of "smell," Tracht and Gilman are now happily ensconced at Mitsui Manufacturers. Their credit line has been boosted to $1 million, allowing them to participate in larger deals. Equally important, Manufacturers can meet their credit requests within 48 hours -- a critical factor in a business in which speed frequently makes the difference between losing and closing a deal.

"This is what a banking relationship should be," says Gilman, who expects Comtek's sales to top the $10-million mark this year. "They customize the loans for what we need. It's a personal relationship. You call up, you say, 'Here's what's happening,' and Sam comes in like a partner, not an adversary. At Manufacturers, it's more like a business relationship. They give us the money we need, and -- as we grow -- we become a better customer for them. With Sam, banking is a people business, not a numbers business."

Viewing banking as a "people business" has been crucial to the success of growth-oriented banks like Manufacturers. At a time when the entire banking industry is ferociously competing for the broad "middle market" -- a vague term covering everything from start-ups to $250-million-a-year companies -- these banks have set themselves apart by taking a highly personalized, customer-sensitive approach to commercial lending, and they have reaped the rewards. Manufacturers, for example, has seen its asset base grow from $3 million in 1962 -- the year it was founded -- to well over $1.6 billion today. And before its purchase for $174 million by the $71-billion Tokyo-based Mitsui Bank Ltd. in 1981, Manufacturers consistently ranked among the most profitable independent banks in the nation.

Nor is Manufacturers an isolated case. Well-run small and mediuim-size banks -- which account for as much as 75% of loans to businesses with sales of less than $2.5 million annually -- have consistently out-performed their larger competitors. In 1980, for instance, only 13.1% of large banks (those with assets of more than $1 billion) enjoyed returns on equity of 17% or more. Atthe same time, nearly 18% of medium-size banks (with assets from $100 million to $1 billion) and an outstanding 28.8% of small banks (with assets under $100 million) earned such high returns. And despite recent trends toward deregulation and interstate banking, a 1982 Federal Reserve Bank of Atlanta study found that small banks across the country have generally continued to gain market share.

In contrast, giant banks, with their sprawling branch systems and far-flung loan portfolios, have so far proven ineffective in servicing the burgeoning entrepreneurial sector of the economy. "The corner office in San Rafael was trying to take care of the little old lady in tennis shoes, the dentist, and the high-tech start-up," explains Allen Sanborn, senior vice-president for corporate banking at Bank of America (BOA). "The small banks have outsmarted us by going after specific niche markets. We have tried to be all things to all people, and that's made us vulnerable to target marketing."

But it is customer orientation, not marketing strategy, that most clearly distinguishes the best-run smaller banks from the financial giants. Where the latter do business by the numbers, operating according to a mind-boggling maze of rules and policy guidelines, the successful small business bankers have focused on developing close relations with individual companies. They regard themselves more as service companies than as "financial institutions" and, like any well-run company, they consider the customer the heart and soul of their business. They thus make a point of knowing the customer, of being close to the customer's company, and of understanding the customer's business. As a result, they are able to take into account things like the strengths and weaknesses of a management team, the idiosyncracies of an organization, the nuances of a market -- in short, those very factors that make for success or failure in business and that often elude less imaginative bankers.

This emphasis on the customer affects every aspect of the way excellent banks go about their business. "We have assembled a group of bankers here who have the know-how to work with middle-market companies," says Leonard Weil, the 62-year-old president and chief executive officer of Mitsui Manufacturers. "We serve those customers well, and they refer us to more customers. That's how we built this bank. Our attitude is that we're here to help people and solve their problems. Others may not agree, but that's really the purpose of banking."

To ensure that this attitude permeates the organization, Weil insists that all prospective candidates for senior management be screened by an outside psychologist. If the psychologist detects a lack of empathy, or disinterest in helping others, a candidate's chances can be in severe jeopardy, according to personnel manager Mike Henninger.

Equally important, Manufacturers strives to keep the same personnel working with each small business account over a long period of time -- in contrast to the major banks, where talented officers are frequently shuttled into new jobs and different locations. Indeed, Weil will often promote an officer without even having him switch desks. This policy helps maintain a low rate of turnover -- 8 of the original 15 employees from 1962 are still with the bank -- and it has allowed Manufacturers to develop a remarkable cadre of experienced officers like Sam Simons, to whom Weil can grant considerable leeway in assessing individual credit.

"I feel inadequate to explain the philosophy of the big banks," Weil admits, looking rather unbankerly in his baggy brown suit. "We just try to get together people who really understand business, who want to help middle-market companies. We like to present a certain consistency. People like dealing with the same people. The way the industry does things -- moving people out all the time -- we think is totally insane."

Even in his own personal routine, Weil reflects his faith in the importance of cultivating close relations with the bank's customer base. Although Mitsui has set up elegant offices for him in one of Los Angeles's new high-rise offices, Weil spends half of each day at the bank's original location in the bustling, somewhat seedy garment district more than a mile away. There he plunks himself down at his desk on the bank floor and freely exchanges views with both employees and customers. "I am probably the most accessible bank president in America," he claims.

In addition to being accessible, Weil takes pains to make sure Manufacturers can respond quickly to customers' needs, thereby eliminating the frustrating delays and bureaucratic miscommunications that can drive an entrepreneur to despair. Loan committee meetings are held daily, rather than once a week or less, as is common at other banks. And, although he now heads up California's 11th largest bank, Weil still meets regularly with his loan officers to discuss bank policy, using teleconferencing to include those located in the more distant branches.

It is precisely the lack of such direct contact between top mananagement, loan officers, and customers that often prevents large banks from adequately serving small companies. A case in point is First Interstate, the bank that asked Comtek to take its business elsewhere. According to executive vice-president Robert E. Greene, First Interstate actually has a policy of encouraging loans to entrepreneurial companies, but the bank's sheer size and hierarchical structure often prevents that message from getting through to the junior officers on the lending platform. "Just educating our loan officers is a massive problem," Greene admits. "Small businesses sometimes fail." So, at the first sign of trouble, a nervous junior officer will often ask a small-business customer to leave. "Then, after the problem is solved, the entrepreneur wonders why we invited him out."

The incompatability between giant bank culture and entrepreneurial business suggests that small and medium-size banks will continue to offer special advantages to growing companies, despite the belated efforts of large banks to get into the market (see "The Big Banks Strike Back," page 124). At any rate, there has been a dramatic upsurge in the formation of new banks across the country, many of them oriented to the middle market. According to figures supplied by the U.S. Controller of the Currency, the number of new federal bank charters jumped from 35 in 1977 to 189 in 1982.

"The big banks make a lot of noise about going after the middle market, but none of them really wants to go after the emerging small companies or professionals," insists Jeffrey M. Bucher, a former director of Manufactures and now chairman of the new National Enterprise Bank in Washington, D.C. "We're people who think that banking's a business where you have to give good service. We think not that it's great to have a bank, but that a bank is lucky first to have customers."

That approach has certainly paid off for National Enterprise, which opened its doors last August. In just six months, its assets soared from $4.6 million to $17 million. One reason for this fast growth has been the bank's ability to attract entrepreneurial customers from outside the District of Columbia.

Ed Taylor and Vincent A. Butler, for example, would have to drive half an hour or more to reach National Enterprise's Washington headquarters from their Aero Flight Ltd. flight-training school at Gaithersburg, Md.'s Montgomery County Airpark. And so, when they started their company early last year, the thought of banking downtown never even crossed their minds.

As it turned out, however, business was brisker than expected, and Taylor and Butler soon realized they would have to start turning away customers unless they bought a new helicopter. They first approached the local branch of Maryland National Bank for a loan of $75,000. After reviewing the application, Maryland National agreed to make a loan of $55,000, at a rate that Taylor and Butler considered ruinous -- three points above prime to be paid off over five years. "It would have turned a successful business into a struggling one," recalls Taylor. "In a start-up, cash flow is all-important. We couldn't stay in the black that way. But they didn't look at us as a business with a future. Everything was out of the book, pure standard operating procedure."

Then they visited National Enterprise Bank president Harry G. Felix. Unlike the Maryland National loan officers, Felix took into consideration Aero Flight's total business situation, including the experience of the founders, the school's rising enrollment, and its prospects for future growth. On that basis, he offered Aero Flight a loan of $70,000 on considerably more attractive terms -- two points above prime to be paid off over seven years. Taylor and Butler accepted. "Harry looked at the whole picture and saw we were a good potential customer," Taylor recalls. "He takes each case as an individual, and he thought our situation deserved a better break."

With the help of that loan, Aero Flight is today an expanding, profitable business. Butler predicts that annual revenues for 1984 will pass the $1 million mark. And although Gaithersburg has not moved any closer to downtown Washington the distance is not a problem, thanks largely to electronic banking. "Even if you're in the far reaches of North Virginia, you can cash a check at nine at night and we receive it in eight seconds," observes Felix, former president and CEO of $100-million First National Bank of Southern Maryland. "This helps us become what we should be -- a marketing and sales-oriented organization. As long as we establish that close, personal relationship, everything can be done by wire and phone."

In many ways, the kind of banking practiced by National Enterprise and Mitsui Manufacturers is a throwback to the early days of the industry. Long before the invention of electronic teller machines and MBAs, banks serving small and medium-size businesses played a crucial role in the development of the national economy. During the first half of the 19th century, nearIy 1,500 state-chartered banks opened their doors, many catering to new frontier businesses, factories, and farms. Some were remarkably specialized in their approach: Pacific National Bank of Nantucket in Massachusetts, for example, was set up to finance whaling journeys to an ocean few New Englanders would ever see.

But it was Amadeo Peter Giannini, founder of Bank of America NT & SA, who best exemplified the principles of effective small business banking. While his rivals in turn-of-the-century San Francisco adopted the large company mentality of the New York financial establishment, Giannini staked his career on providing personal service to entrepreneurs.

Most of Giannini's early clients were Italian vegetable merchants, whose business he had learned about firsthand from his stepfather on the streets of the city. Moving from the vegetable markets into real estate, he served briefly on the board of the local Building and Loan Society, where his novel notions about small business lending were quickly dismissed as "too radical." Undaunted, Giannini set up Bank of Italy in 1904 with an initial capitalization of $150,000 gathered from friends and relatives. (The name was changed to Bank of America in the late 1920s.) Like Leonard Weil long after him, Giannini worked from a modest desk on the banking floor.

Giannini understood that personal contact was absolutely critical to winning over small business customers. As he traveled out into the California hinterland to build his remarkable network of bank branches, he took pains to develop strong ties with potential customers, sometimes pursuing farmers into their fields until they agreed not only to deposit their cash but also to purchase Bank of America stock. When other bankers scoffed that his aggressive marketing violated the dignity of the profession, Giannini responded, "The bank is not a secret enterprise. It is a business. . . ."

This fact -- that banking is a business -- is precisely what many banks forgot as they grew large and complacent, and Bank of America was one of the worst offenders. With the passing of the Giannini era, it abandoned the very business philosophy that had been responsible for its growth. Power moved into the hands of professionally trained managers, most of whom had only marginal experience in lending to small business, and who catered instead to the large corporate and international accounts. By the early 1980s, Bank of America had become the very antithesis of the bank built by Giannini.

"There was no one in the bank who could talk to small business," recalls Tracy Herrick, formerly a high-ranking vice-president at BOA's San Francisco headquarters and now a director of Jefferies & Co "They couldn't walk the walk, they couldn't talk the talk and tell the jokes -- which is exactly what Giannini could do. . . . [Former BOA president A. W] Clausen was a numbers man, not a customer's man. Hell, he never had a customer."

The small business customers were still around, however, and some of them decided to take matters into their own hands. Manufacturers, for example, was founded by -- among others -- Los Angeles garment-makers and retailers, who felt that major banks like BOA were failing to meet the credit needs of their burgeoning industry. These founders served as directors and helped Leonard Weil and his loan officers build the bank's initial customer base. As an incentive, management awarded little bells to directors for each account they brought in.

Manufacturers's entrepreneur-directors also worked on developing loan policies tailored to the garment trade and helped steer the bank away from problem accounts. "Who would know better?" asks veteran garment manufacturer Louis Tabak, a co-founder of the bank who, at age 90, still has a desk in the garment-district branch office. "We knew the ins and outs, who was good, who was going downhill. The other banks tried to get this business, but they didn't have the feel."

Entrepreneurs with "the feel" have played a crucial role in the success of many other small business banks, including National Enterprise Bank and Wisconsin's Brown Deer Bank. Indeed, National Enterprise founder Jeff Bucher made it one of his top priorities to find such entrepreneur-directors. As a result, the bank now has a board of directors representing the very businesses -- law corporations, construction firms, printing houses, and so on -- that have become the focus of the bank's marketing strategy. National Enterprise is counting on these entrepreneur-directors to help implement that strategy. It has even set up a special incentive program, offering a free trip to Bermuda to the director who brings in the most business.

But there is more at stake here than a week in the sun -- at least in the view of entrepreneur-director T. Halter Cunningham, chairman and CEO of The Lanman Cos., based in Washington, D.C., a diversified graphic arts company specializing in color separation. He says he joined National Enterprise's board in order to help address the lack of responsiveness of Washington's large commercial banks to the problems of entrepreneurs.

He has firsthand experience in the matter. As a young entrepreneur in the early 1960s, he did his banking at one of Washington's largest banks. One day, he went in for a loan. A new loan officer had been assigned to his account. "We needed a few thousand bucks, and this SOB started talking about a camera loan, which we still had time to pay off," recalls Cunningham, whose business last year grossed over $15 million. "When he said that, I wrote him a check and told him to shove it."

Since then, Cunningham has done most of his own banking in Baltimore, but he was happy to sign on as a director of National Enterprise. He has already helped to bring in over a half dozen new small business customers, some of whom might have had trouble getting loans from other Washington banks.

"If I recommend people in, say, the printing business, and I know they're good people, we can get them through," Cunningham says. "Someone who's built a company knows you can't justify everything in your heart and mind with a balance sheet. Somebody's got to stick his neck out and give [these companies] a shot. The board gives the bank a real grass-roots, hands-on effort."

Aside from attracting new customers, entrepreneur-directors also help set a tone conducive to serving small business. Dean Treptow, president of Wisconsin's Brown Deer Bank, credits his board -- which includes a pharmacist, a cutting-tool distributor, and the retired proprietor of a welding-supply company -- with encouraging his bank's managers and loan officers to be creative in their dealings with customers.

"Our small business directors have an extremely different view of risk-taking and time horizons [from that of] the directors of big banks, who are usually professional managers with no ownership experience," claims Treptow, whose suburban Milwaukee bank last year earned a 20.7% return on its $56 million in assets. "As small businessmen themselves, they understand the need to be innovative. They let us be flexible. We don't have to take a bunch of financial packages off the shelf and force them down the throats of our customers."

For some companies, this flexibility can spell the difference between life and death on the corporate battlefield. Consider Jack Gardner's Artcraft Industries Corp. in Milwaukee, which, in 1980, was awarded a six-month, $4.3-million contract to replace fire-damaged seat cushions and covers for San Francisco's Bay Area Rapid Transit Authority (BART). On the surface, the deal seemed like the break of a lifetime: That one contract alone would provide revenues exceeding Artcraft's total sales in 1979 by some $800,000.

Gardner talked to his bank, one of Milwaukee's three largest, about the pending deal. His new loan officer -- the third within five years -- expressed some mild skepticism. When Gardner actually won the contract, however, that skepticism turned to intransigence: The bank categorically refused to boost his credit line beyond the level deemed appropriate for a company with Artcraft's traditional level of revenues. Even though the contract provided for BART's reimbursement of 80% of the cost of inventory items within 10 days, the loan officer didn't budge.

Gardner found all of this hard to swallow. He had done business with the bank for nearly three decades, and now -- by refusing him the necessary credit -- it threatened to turn his windfall into a disaster. If Artcraft couldn't perform the contract, BART had the right to demand payment of penalties totaling $430,000 -- an amount roughly equivalent to the net worth of the company at that time.

"What the bank was saying, in essence, was that a growing, profitable manufacturing company should go bankrupt," says a still bitter Gardner. "Their decision was not to support a 30-year relationship. I guess they had no confidence that we could handle the growth."

In desperation, Gardner turned to Brown Deer Bank Although the BART contract did seem exceptionally large for Artcraft, Treptow took into account the fact that the company had grown 30% since Gardner had acquired it in 1971. Moreover, Brown Deer's board had established a policy of developing long-term relationships with reliable growth-oriented companies. So Treptow decided to ignore the textbook strictures and provide Artcraft with the necessary loans.

"In Jack's case, the key thing was our personal assessment of him and his ability to handle growth," Treptow says. "I make myself available to all our customers, so that we know how a loan fits into their long-range goals and ours " as determined by the board.

To be sure, a bank doesn't have to rely exclusively on its board of directors to maintain close relations with the entrepreneurial business sector. Another vehicle has been developed at Nashville CityBank & Trust Co., one of the South's most successful small business -- oriented banks. For the past five years, the Tennessee bank has had a Young Executives Council, consisting of 36 entrepreneurs under the age of 40. The council meets with top bank officials, including president Richard Chambers, in order to review bank procedures, local business trends, and new bank initiatives. According to Chambers, the bank uses this process to hone its skills in dealing with emerging companies.

"We're a relationship-oriented, not a transaction-oriented, bank," says Chambers. "We want our customers to understand how a commercial bank works, so they become better customers and we learn from them what the young comers in this community are thinking. After all, we have identified this market. We have done well with it, and our goal is to keep concentrating on what we do well."

One enthusiastic supporter of this effort is Steve Moskovitz, a member of the Young Executives Council since 1982. Moskovitz got his own start in business back in 1977 when, at age 22, he opened an out-of-town newsstand with $10,000 borrowed from his old family bank, Commerce Union Bank. Working 18 hours a day, seven days a week, he built the business into a $160,000 concern. Then, in 1979, the drive-in market next store went bankrupt, and Commerce Union issued Moskovitz a $10,000 90-day note to buy it, with the understanding he could take two to four years to pay it off.

But six months later, Commerce Union suddenly changed its mind, dismissed Moskovitz's old loan officer, and called in the loan. "Here I was, a man who had first borrowed from them when he was 15 to buy a car," the native Nashvillean remembers. "They had my assets, my property, my inventory. I never missed a payment. They'd take your children if they could. It was like trying to work with the Gestapo." Although he eventually talked Commerce Union into extending the loan, Moskovitz never forgot the episode.

So in 1981, when he bought the first Tennessee franchise for David's Cookies -- a fast-growing chain of chocolate-chip-cookie stores -- he turned to Nashville CityBank for financing. In preparation for his meeting with Chambers and James Webb, then president of the bank, he flew in 10 pounds of cookies from New York. Midway through his presentation, he stopped, turned to the bankers, and said, "If you don't think these are the best goddamn cookies you ever had, maybe we should just forget it."

Not only did Chambers and Webb like the cookies, they were sold on Moskovitz and his flair for marketing as well. They immediately offered him a loan with generous payout provisions. Subsequently, they supported his expansion of the cookie franchises and other ventures.

"These guys don't look at it as bankers. They ask the right questions. They want to learn about your business, the cost of goods, the margins," says Moskovitz, whose operations grossed $1.3 million last year. "To me, they are like business partners. Anything I can do for those guys, I will. They are very good people. Everyone hates going to the bank, but I love it."

That is a view that many small business people would find incomprehensible, but it is not uncommon among the customers of the excellent small and medium-size banks. The banks, for their part, cultivate such attitudes by staying close to their customers, and by tailoring their services -- financial and otherwise -- to the customers specific needs.

At Chicago's Manufacturers Bank, for instance, loan officers specialize in dealing with the old-line manufacturing companies that are clustered near its headquarters in an industrial district west of the city proper. Working closely with manufacturers of steel wire, nails, furniture, and the like, they have developed a remarkable expertise in the management and financing of such enterprises. As a result, companies will often turn to an experienced Manufacturers officer -- rather than, say, an outside consultant -- when problems arise.

"We want our customers to get larger, and we think we know how to help them get there," observes bank vice-president Alan I. Rubens. "At this bank, we have customers with grease under the fingernails and six-figure bank accounts. They don't wear ties. Sometimes they don't shave, but they know their business. We don't want someone who just wants money to pay off this month's bills. But if you want to buy a machine that will make you money, we'll buy it for you."

And the bank's approach seems to work. Indeed, Manufacturers Bank, with assets of $226 million, has consistently been among the most profitable banks in the area, enjoying rates of return several times higher than those of such heavyweights as Continental Illinois Corp. and First Chicago Corp.

Manufacturers chairman Samuel F. Hillman ascribes much of his bank's success to its ability to provide an exceptionally high level of personal service to its customers. Headquartered in a squat, turn-of-the century building, Manufacturers even seems like a friendly small town bank, where everyone knows everyone else. And well they might: Half the bank's 110 employees have been there for more than 10 years, and some have lasted more than 40. Many customers have been with the bank just as long.

"My employees die on the job," boasts the 79-year-old Hillman. "People love their work. They know the customers, their problems. The MBA at the bank downtown doesn't have the experience our people do. If our customer runs into a problem, even a family problem, he can come to me. I've been a family counselor many times in my life."

Last winter, for example, Richard Carrigan Sr., 67, needed some help restructuring a buy/sell agreement he had made with his 37-year-old son, Richard Jr., the president of United Displaycraft Inc., a company the elder Carrigan had founded 33 years before.

Uncertain as to the best method of transferring ownership, Carrigan Sr. called Alan Rubens at Manufacturers. Rubens set up a meeting for him with chairman Hillman and president Fred O. Sack, who has since retired. Although the bank stood to gain nothing financially from the agreement, its two top executives spent considerable time offering advice.

"They are so easy to work with," marvels the elder Carrigan, whose company last year grossed over $5 million making point-of-purchase displays for such customers as Hallmark Cards, Nabisco Brands, and Keebler. "They know our processes, our business, what we want to do. I always feel I can call them if there's a business situation I don't know. Even though this matter didn't really effect them, that's the way they do business. They are always there. They're never too busy to help a customer."

San Jose's Silicon Valley Bank, which opened last fall, seems to operate in a completely different world from Chicago's gritty, industrial West Side. Yet president and chief executive officer Roger Smith approaches his own landscape with attitudes very similar to those of Hillman and Rubens at Manufacturers in Chicago

"In a way, we are trying to be like a small-town bank," says Smith, who has been doing high-tech banking for 20 years at such places as Wells Fargo Bank and Imperial Bank. "We look at the explosion of small companies around here and spend our time helping them develop. We want to be there at every level, helping them plan their growth and giving them the advantage of our networking."

Such assistance was exactly what Ron Murphy and John Dillon needed last winter when they decided to start their own company, along with several other engineers from ESL Inc., a subsidiary of TRW Inc. in Sunnyvale. Although specialists in the burgeoning field of electronic warfare, they knew little about building and financing a start-up. Then Murphy ran into Smith at the Junior League of Palo Alto's annual " Silicon Valley Follies," and things suddenly began to fall into place.

"I told Roger we were starting a company, and he told me he was starting a bank. It seemed a perfect fit," the 46-year-old Murphy recalls. "He gave us a conference room so we could meet in the evenings and the weekends. He also gave us access to an attorney and financial advisers. All of this led to forming a crackerjack team. Good fortune smiled on us."

With the help of Bob Gunderson, the lawyer recommended by Smith, the engineers received venture capital from Hambrecht & Quist and Seidler Anidec Securities, and today their company, Delfin Systems Inc., is off to a promising start. As for Silicon Valley Bank, its rising assets now include Delfin's venture capital deposit, with the prospect of more to follow as the company develops.

But in order to grow in Silicon Valley, as elsewhere, a successful bank needs to do more than provide its customers with advice and contacts. What entrepreneur Rick Ramras needed was money -- lots of it, and fast.

Last December 10, Ramras's fledgling company, Legacy Computer Systems of Carmel, Calif., received a $750,000 order from American Telephone & Telegraph Co. for 210 customized Kaypro portable computers. They were to come equipped with Ramras's add-on printed circuit boards, which would allow the devices to run on all three major operating systems for personal computers -- CP/M, MS-DOS (used by the IBM Personal Computer), and Bell Telephone Laboratories Inc.'s own Unix. The catch: He had to deliver all the systems before the phone company was restructured at the end of the year.

Ramras a former executive of Paint 4 Data Corp. and Datapoint Corp., immediately set out to borrow the $300,000 he would need to pay his various suppliers and subcontractors. His first stop was the local branch of a giant California bank, where he was told it would take 60 to 90 days just to get a decision. The following day, he visited Richard D. Fritz, a senior vice-president at locally owned National Bank of Carmel. Fritz was reluctant to venture into the unfamiliar computer field, but he suggested that Ramras call Roger Smith at Silicon Valley Bank.

On December 14, with time running out, Ramras met Smith and Silicon Valley Bank vice-president David Titus for the first time. "I got there and laid out the deal," he recalls. "They understood the electronics business. They assessed our ability to fill the order. It got down right away to the nitty-gritty. They weren't worrying about the loan committee. They were the loan committee. They weren't covering their asses either; they were looking to make money."

Less than 48 hours later, Ramras flew to San Jose, and picked up a cashier's check for $300,000. "We were in the office for 20 minutes," recalls Ramras, who had 1983 revenues of $2.3 million from his add-on business and his Carmel computer store. "I was in such a rush, I forgot to say thank you."

Thanks were certainly deserved. Because of the bank's swift action, Ramras was able to fulfill the order on time, and soon won additional contracts with AT&T. This year, Legacy's sales are expected to break $5 million.

"What we are saying to companies is: Don't pick a bank, pick a banker -- someone who can really help," says Roger Smith. "This is the future of banking. It's the kind of service the customers are starting to demand. It also happens to be a hell of a good way to build a bank."

All of this might seem novel in San Jose, but the basic values of Silicon Valley Bank do not differ significantly from those of other well-run banks around the country -- banks that, in many ways, resemble the companies they aim to serve. It is banking based on a dedication to the customer. From that, all else flows.

Leonard Weil, for one, has been practicing this kind of banking for years. Looking back, he recalls the time, 21 years ago, when Morris Niemerow first came into Manufacturers newly opened office in the Los Angeles garment district. He was looking for a $50,000 loan to buy a drugstore, and had already been turned down by the local Bank of America, but Weil saw something that made him take a chance. Today Niemerow owns seven drugstores, and last year his sales topped $17 million.

These days, when you ask Morris Niemerow for the secret of his success, you get no tales of heroic struggle or entrepreneurial genius. He just points to Leonard Weil and the bank that believed in him. As Niemerow explains it, Manufacturers saved him hundreds of thousands of dollars over the years.

There was the time, for example, when he wanted to buy a new store, but the owner was demanding $350,000 -- far more than Niemerow was willing to pay. So he went to Weil, who made him a $250,000 loan on the spot. He then offered that amount in cash to the store owner, who immediately caved in. Thus did Niemerow get his store -- at $100,000 under asking price.

"You know, people used to wonder where the money came from so fast," says Niemerow, still feisty and vigorous at 73. "People thought I was fronting for the Mafia. No one could believe I could get such service from my bank.

"But I did"