Bennington Capital Management, a six-year-old mutual fund company based in Seattle, has amassed nearly $900 million of assets under management by selling almost exclusively through small bank trust departments.

And its chief executive officer says the future is bright because small banks will thrive by providing personal service that the megabanks can't.

"Not everybody in the world wants to deal with the fifth vice president of Bank of America," said CEO Tony Whatley.

It has not hurt that the fund company is a quarter owned by Zions First National Bank of Salt Lake City, which accounts for 16% of its assets under management and about 10% of annual sales.

But Bennington also partners with 31 other banks with $100 million to $4 billion in trust department assets.

"They're too little to have their own mutual funds," said Mr. Whatley, "but they need a way to distinguish themselves in their community versus a Charles Schwab or a Fidelity, and we give them those tools."

The tools include a fund family, the Accessor Funds, that is set up to consistently beat specific benchmarks: The managers of the eight funds forgo almost all their pay unless they handily beat specific index benchmarks.

The company touts a pure, no-nonsense investing approach, shunning sector bets and market timing, and promising to practice "truth in packaging" by shunning stocks that do not fit a fund's stated investment objective.

Another lure for bank partners is Bennington's policy of splitting their fees fifty-fifty with the bank once assets through that bank reach $100 million.

Bennington has plenty of competition in selling through small bank trust departments (they account for 95% of its sales; financial planners and brokerages make up the balance).

Hundreds of mutual fund companies vie for their business, meaning it's vital for the vendors to distinguish themselves, said Andrew DelGrego, senior vice president for bank services at Wright Investors Service, Bridgeport, Conn., a larger competitor of Bennington.

Mr. DelGrego said he was not familiar with Bennington, but he took note of the fee-sharing plan, which he called "much more generous" than usual.

"There's a good example of one of the ways they are competing," said Mr. DelGrego, whose company manages $4.2 billion in mutual funds and individual accounts, $1.2 billion of it through bank trust departments.

Mr. Whatley hopes to increase Bennington's bank partners to 100 from 32 within three years. Though Bennington counts many community banks among its partners, it is not limited to them; its largest partner is $83 billion- asset Fleet Financial Group, Boston.

Mr. Whatley made his reputation in the mutual fund business at Frank Russell Co. of Tacoma, Wash. In 1981 he started the mutual fund complex for Russell, which is also a financial data and consulting company. He founded Bennington a decade later.

"I thought the world could stand at least one more mutual fund company, and we had better ideas where we would ask the managers to beat specific indexes," said Mr. Whatley.

Though mergers have reduced the ranks of small banks, Mr. Whatley said he's confident that huge banks' shoddy service will keep people using smaller institutions.

His attitude is shaped by experience. As an account holder at a big bank, he found it a hassle trying to straighten out questions about his checking account balance. He once left a bank card in an ATM and could not get through to a customer service rep on the phone.

"There seemed to be no humanoids involved," he said. "I can't imagine treating a client as badly as I got treated."

Bennington plans to increase its four-person sales force by two to four people over the next year and to work its way into bank retail brokerages as well, Mr. Whatley said.

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