Banker extraordinaire Dean Treptow is leaving banking, but he's not going far. His new company, Polaris Group Inc., will finance small, growing companies with long-term subordinated debt.

For years Treptow was the CEO of Brown Deer Bank, in Brown Deer, Wis., which he built into one of the nation's leading small-business lenders. Last year he sold the bank to Minneapolis-based First Bank System, hoping to use the additional capital to spread his lending philosophy. But Treptow says he found it unexpectedly unsatisfying to work for a larger organization and so began making plans for Polaris.

The start-up's niche lies somewhere between conventional banking and venture capital. Treptow knows that fast-growth companies often need more money than banks can lend, at rates lower than finance companies charge. Enter Polaris, which will make long-term loans at low rates, plus a share of future earnings. The earnings kicker will allow the lending company to finance more risky growth than banks can. And unlike venture capitalists, Polaris won't need an exit vehicle such as a sale or a public offering.

Polaris, in Milwaukee, is being capitalized with about $3 million in equity (much of it from Brown Deer Bank's sale), and Treptow hopes to raise some $10 million in first-round financing. He predicts that fund-raising won't be hard and cites a good track record with the low-rates-plus-earnings technique at Brown Deer. As a banker, however, Treptow could only experiment on a limited basis. And after the merger, he found, the field wasn't one his new managers wanted to pursue. That was OK, says Treptow. "I don't really have any complaints [about the sale and the new owners]. I just had no idea how much I'd miss being in an owner-managed business."

-- Martha E. Mangelsdorf