Reasserting itself as the market leader in New Jersey and underlining its desire to stay independent, Summit Bancorp has gone on an all-out retail banking offensive.

For the last few months, hundreds of Summit employees have been scouring New Jersey towns to glean information about their neighborhoods.

Summit has deployed its 335 branch managers and 93 market managers in virtually a household-by-household search for every possible bit of knowledge about their customers, from the makes and colors of their cars to the types of homes they live in to where they shop and what they like to buy.

The company's six regional presidents will draw from the resulting written reports-complete with photographs and other reconnaissance on local bank competitors-to set a new retail strategy in motion.

"We are investing for the future of an independent Summit," said the five-star general in charge of this operation, president Robert G. Cox.

"You can't lose touch with the customers," he said during a recent interview at Summit's headquarters in Princeton. "You have to be on the alert."

With a 16% share of New Jersey households, $22.7 billion-asset Summit ranks as the state's leading retail and small-business bank. It is also the largest native New Jersey institution to survive the 1990s merger waves.

Summit has been on an acquisition tear of its own over the last few years, which analysts cite as the reason for its improved performance. The company earned $305.9 million in 1996, a 26% increase from 1995. Return on common equity was up from 14.82% to 16.6%.

In 1996, Summit bought UJB Financial Corp., the parent of United Jersey Banks. Earlier this year it said it would acquire Collective Bancorp, a thrift holding company.

But the competition is more and more heated.

Over the last year, Summit has had to confront interlopers like First Union Corp. and Fleet Financial Group, each entering the Garden State through acquisition. Summit also has had to contend with the encroachment of Pittsburgh-based PNC Bank Corp. and CoreStates Financial Corp. of Philadelphia.

Summit "continues to improve revenues and take out costs," said Michael Mayo, an analyst at Credit Suisse First Boston. "The threat of takeover has been a powerful motivator."

The new retail strategy-dubbed "Managing Local Markets"-has three intertwined and complementary goals:

Bringing in a greater proportion of the business of existing customers.

Improving the profitability of those customers.

Improving the effectiveness of the sales force.

Through the program, Summit is encouraging greater autonomy for the 93 market managers, each of whom oversees one to six branches. These managers will be allowed to make more decisions at the local level.

Mr. Cox said he hopes to improve earnings another 15% to 20% this year as a result of the program.

Summit will use a computer system developed by Action Systems in Dallas, Tex., to help track market data. The same customer tracking program has been used by other regional banks, including CoreStates, with a fair amount of success, according to analysts.

William J. Wolverton, one of Summit's regional presidents, keeps a watchful eye on the campaign from his command center in Princeton.

He has divived Summit's customers into three groups: gold, silver, and bronze. He aims to upgrade the silver customers to gold customers, and the bronze customers at least to silver.

To qualify for a gold rating, a customer could have as many as six relationships with Summit, or as few as one. The question is how profitable that relationship is for the bank, said Mr. Wolverton.

"Just knowing the customer is not enough," Mr. Wolverton said. "It's how they behave."

The customer data base will pinpoint the products and services in demand by Summit customers in a given market, he added. Customers in working-class Teterboro, for example, may have a propensity for automobile finance products, while those in well-heeled Short Hills might want investment services.

Summit will aim a series of product campaigns at select customer groups. Summit's "teleconsultants" will work off lists of 50 to 250 customers whose data indicate a likelihood to purchase the product being peddled, Mr. Wolverton said.

The bank also hopes to steer certain consumer choices. That might involve encouraging usage of electronic delivery channels like automated teller machines, the new telephone service center, or the growing number of supermarket branches.

"Rather than grabbing customers by the throat and shaking them to get them to buy more, our strategy is to get the right products to the right customers at the right price in the right channel," Mr. Wolverton said.

Summit's expansion into local supermarkets will add a dimension to the retail initiative, Mr. Cox said. The bank plans to have up to 70 branches in grocery locations by the end of 1999, up from the current 17.

"The banks that will win at this game are the best marketers," Mr. Cox said. "The key is to understand customers and their potential, household by household."

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