A miniature Silicon Valley is forming about 2,400 miles to the southwest, in Hawaii - and a community bank there is capitalizing on it.

Honolulu's City Bank, with $1.7 billion of assets, is reaching out to the state's growing roster of young biotechnology and high-tech firms, started mainly by former University of Hawaii and U.S. military researchers. City Bank said it is hoping to emulate the success of Silicon Valley Bank in Santa Clara, Calif., which was founded in 1983 and has grown to $4.8 billion of assets by focusing on tech start-ups in Silicon Valley and, later, in other technology hotbeds nationwide.

The bank has also been soliciting business from newly formed specialized tourism companies. These firms create vacation packages centered around sports events, such as national youth soccer tournaments, or educational seminars. The packages have become increasingly popular, particularly as Japanese high school excursions.

The technology and special tourism industries were practically nonexistent a decade ago but now contribute about $2.4 billion to Hawaii's economy of $40.9 billion annually. Though the sectors are still small, City Bank believes that paying attention to the upstarts now could pay off handsomely, said Wayne Miyao, senior vice president.

"Our niche has always been small business, so we've just sharpened our focus," Mr. Miyao said. "We think it's helped our bottom line, and it also gains us a reputation of being cutting-edge."

In the three years since City Bank began focusing on emerging industries, it has reported double-digit earnings growth. Last year its parent, CB Bancshares Inc., posted the best results since its founding in 1980 - net income was up 23%, to $11.2 million, or $3.48 a share. Earnings in its most recent quarter grew 15.2%, to $2.8 million, or 88 cents a share.

Like Silicon Valley Bank, City Bank garners fee income by offering the start-ups flexible business checking accounts and cash management services. And many of these customers have matured into borrowers, which has helped increase the bank's interest income as well.

So far, though, City Bank has not obtained stock warrant options from the companies, a lucrative activity at Silicon Valley Bank. Most of the Hawaii newcomers are still too small to go public, Mr. Miyao said.

The bank says it is doing all it can to help change that, by making sure the young companies develop viable business models.

"We try to develop close ties with our emerging companies; we're constantly talking to them and monitoring what they are doing," Mr. Miyao said. "We want them to succeed in the long term, so it's a win-win situation for them and for us."

Of course City Bank knows its new customers could easily suffer the same fate as many of Silicon Valley's. Since January, 350 dot-com customers of Silicon Valley Bank have gone out of business, according to officials, and the bank's deposits fell 10% in the second quarter from the previous year, to $3.6 billion. As a result, Silicon Valley reduced its second-quarter earnings estimate by 10 cents, to 45 cents a share. In April, it posted first-quarter earnings of $33.3 million, or 65 cents a share.

Industry analysts have predicted that Silicon Valley's woes are only temporary and that it will climb out of its current slump by yearend. Overall the technology boom in Silicon Valley and in the bank's other markets have proven to be good profit generators for the bank, analysts say, and City Bank officials are betting that it can follow suit in the blossoming Hawaiian market.

Moreover, City Bank's new focus on emerging companies has also brought it business from more established companies, Mr. Miyao added.

"When we started to get involved," with the new sectors, "it gave the bank a new image of being a very progressive bank, which helped increase our entire loan portfolio," he said.

Randy Havre, a financial analyst at Honolulu Venture Group LLC, agreed. "That strategy is starting to really pay off for them," he said, and he attributed the change in focus to the April 1997 hiring of Ronald K. Migita, the company's current president and chief executive officer.

Under Mr. Migita City Bank has also "tremendously beefed up its board of directors," Mr. Havre said, "and the bank has really dynamic people working there right now."

Best of all, City Bank seems to have a clear shot at the emerging tech market in Hawaii.

"There really is nobody competing with them for that kind of business," Mr. Havre said. "The only one that could, would be Silicon Valley Bank, but they don't have a presence here."

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