SANTA MONICA, Calif. -- John C. Dorman started the high-tech and high-priced Treasury Services Corp. here 11 years ago to help bankers increase profits through better risk management.

Treasury Services offers six sophisticated software products to help banks prove compliance with everything from the Community Reinvestment Act to mark-to-market accounting rules.

"We're experts in the business who have become experts in the technology," Mr. Dorman said in a recent interview.

Treasury Services's 60 customers include the industry's largest, such as Bane One, Chemical Bank, Citibank, and Home Savings of America. These institutions typically pay $500,000 to $1 million for Treasury Services's software.

With the big bank market safely in hand, the company plans to pursue small banks with a simpler, cheaper version of its software.

Treasury Services also plans to focus on the foreign market over the next 18 months.

The company's newest product, "Option Adjusted Valuation," is designed to help banks analyze derivatives. Mr. Dorman expects sales will be fueled by the increasing interest regulators are showing in bank derivatives activities.

The product is now being tested by banks, mortgage lenders, and federal agencies and is expected to be on the market next year.

One of Treasury Services's most popular products, "Asset/Liability Modeling", allows a bank to analyze loan data in order to make decisions about its risk portfolio, such as how much to hedge. Through the database, the banker has access to every item that relates to his balance sheet.

Because each loan - millions of records for some banks - is included, the analysis is more accurate than if representative samples were used, said Katherine Jansen, Treasury Services's sales manager.

Truer Projection

"With actual rates, actual pricing, actual data, you get a much more realistic pattern of what's going to happen," Ms. Jansen said.

Some of Treasury Services's customers have come to them after an examiner advised the bank to better manage their margins, she said. The information gleaned from the software is just what those banks need, Ms. Jansen said.

"They can slice it, they can dice it...so when they have the dialogue with the examiner, they have all the facts at their finger-tips."

Such services don't come cheaply. In addition to the six-figure start-up costs, banks pay an average of $100,000 in annual fees. Currently a quarter of Treasury Services's clients buy everything the company sells.

Those are the customers that have been with Treasury Services the longest, Mr. Dorman said.

The big banks that make up the company's customer base have better businesses as a result of the software, said Mr. Dorman.

"They're learning how to measure risk and how to price for profit," said Mr. Dorman. "The whole business is becoming more efficient."

Saw Niche

While a banker at Union Bank in Los Angeles from 1979 to 1983, Mr. Dorman saw a business opportunity in the changing world of banking.

In a time when interest rates were going wild and trading activity was especially volatile, Mr. Dorman thought bankers would need high-tech help managing risk.

So he started Treasury Services in 1983, expecting an explosion of demand for management software products. Although the company grew a fair amount in the early years, Mr. Dorman was several years early in his prediction.

In the past three years, the company has grown at least 60% each year. Employees now number 102.

To fuel growth, Treasury Services has taken on a passive investor. Over the last two years, Systematics Financial Services Inc., the Little Rock-based data processing provider, bought 49% of the company.

Forming partnerships with other technology companies is one of Mr. Dorman's main strategies. He envisions a small number of big players dominating the management systems industry in the next five years. The ones who will outlive the rest, he said, will have developed strong partnerships.

Mr. Dorman, 44, credits much of his success to his own endurance. Sleeping four to six hours a night, Mr. Dorman is at his desk by 4:30 a.m. Keeping such early hours started as a way to be on the same time schedule as the East Coast.

Next year, Treasury Services plans to come out with an altered line of products for small banks. The price will not be as hefty and the software will be less complicated. "A small bank business is a simpler business," Mr. Dorman said.

But the community banks are ready, he said. "The small bank market is not very far behind the large bank market," Mr. Dorman said. "They just won't have to invest as much, they won't have to put as many people into it. There will be more canned and packaged solutions that will make their jobs much easier," he said.

Mr. Dorman is thinking not only about the future of the banking business but the future of his own company. He predicts two possible futures for Treasury Services. Either it will go public within 18 months to three years, or another computer company will buy it.

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