Roger V. Smith has always been one bank president who listens to customers and shareholders. Recently they told him something he did not want to hear. The message concerned a merger Smith had arranged between his own Silicon Valley Bank, based in Santa Clara, Calif., and nearby Plaza Bank of Commerce. Smith, slated to be vice-chairman of the merged entity, thought it was an ideal match, combining Plaza's commercial and real-estate clout with Silicon Valley's expertise in technology lending.

Others did not agree. Following the announcement, Silicon Valley Bank's stock fell from 20 to 17, and anxious customers called. "The concern," Smith says, "was that we'd place less emphasis on lending to technology businesses." Within a month, the deal was kaput -- whereupon Silicon Valley's stock rebounded to 19.

Smith, whose bank has been growing more than 20% a year, hasn't given up on the idea of a merger, though he says he's learned a lesson. "As we look at the opportunities, we'd really like to be the one on top next time."

-- Bruce G. Posner