In recent ads in The Wall Street Journal and other business publications, Summit Commercial Corp. asks readers to imagine a commercial finance company "strong enough to have $30 billion behind it."
Only the trademark information in fine print at the bottom of the ads identifies the company as a subsidiary of Summit Bancorp of Princeton, N.J.
"We want to get beyond the name 'Summit Bank.' 'Summit Commercial' can mean a bit more," said Thomas Smyth, Summit Bancorp's senior vice president and director of marketing.
Executives at the nation's 32d-largest bank holding company say they want to extend their commercial finance business into new markets, including western Pennsylvania and Ohio, while avoiding the trappings of a bank.
They said the name Summit Bancorp would not have the same resonance outside the bank's core market, which stretches from Philadelphia to New York.
This year Summit Commercial opened a small loan production office with three professionals in Columbia, Maryland, where the bank had not had a presence. Summit also plans to serve northern Virginia from that office.
By consolidating many of its commercial finance activities into a nonbank subsidiary, Summit Bancorp avoids the expense of opening branch offices and complying with interstate banking regulations.
"The bank has telegraphed its plan to expand into neighboring states, both through internal growth and through potential acquisitions," said Michael Mayo, a bank equity analyst with Credit Suisse First Boston.
"This could be one way to get a toehold in nearby states as a way to test the waters for something potentially more major," he said.
Summit Commercial provides clients with products, including asset-based finance, mezzanine finance, international finance, and private placements. Executives plan to expand the product line to include nonapparel factoring and debtor-in-possession financing.
They would consider doing this by acquisition.
"We are not really looking at expanding the market side with acquisitions. We are looking more at broadening the product line," said Robert Peters, Summit Bancorp's executive vice president in charge of specialty lending.
But Mr. Mayo cautioned that entering new markets in a lending category outside the bank's core business of commercial lending could be fraught with pitfalls.
"The upside is that it could lead to potential new revenues. But the downside could be increased risk if the origination of new loans is not done as well as the bank's core business," he said.
Mr. Peters said Summit Commercial's portfolio has grown more than 20% since January 1997, when the specialized finance products were moved into the subsidiary.
