Deposits at top 300 banks edged up 0.9% in first half.

Deposits at the nation's largest banks increased slightly in the first six months, with much of the gain due to acquisitions, even as customers continued to drain funds from low-rate bank accounts in search of more lucrative investments.

According to the American Banker's semiannual survey of the 300 largest commercial banks, deposits rose by $16.3 billion, or 0.9%, in the first six months, to $1.75 trillion from $1.73 trillion at yearend. (See tables beginning on page, 6.)

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Only major acquisitions by 15 of the top 300 prevented a decline. Those 15 banks acquired $32.3 billion of deposits during the first half.

Year to year, deposits rose 2.5% from $1.71 trillion at June 30, 1992. Two and a half years ago, bank deposits were increasing at a more robust 5% rate.

Weak Loan Demand Cited

"Banks currently have very little loan demand," said William C. Ferguson, president of Ferguson & Co. in Irving, Tex. "Consequently, they continue to lower the rate of interest that they pay on deposits, and many depositors are heading to mutual funds or finding other investments."

The national average yield on six-month certificates of deposit was 2.83% last week, down from 3.05% at yearend and 3.25% a year ago, according to Bank Rate Monitor, which is based in North Palm Beach, Fla.

Meanwhile, assets of equity mutual funds soared 22% in the first six months to $580.4 billion, while bond fund assets jumped 16% to $673.1 billion, according to the Investment Company Institute, Washington, D.C.

Customers Fleeing

I'm not sure banks aren't closing the door," said Mr. Ferguson, the consultant. "They're losing a lot of loyal customers that may not be inclined to come back."

The American Banker survey obtained its bank deposit results from federal call report data, which included information on interest-bearing and noninterest accounts in both domestic and overseas offices.

The data indicate that acquisitions played a major role in whatever deposit gains were visible during the first half.

New York-based Chase Manhattan Bank, for example, reported a 9.3% jump in deposits, which reached $61.4 billion from $56.2 billion at yearend. Much of the gain was attributable to the acquisition of affiliate Chase Lincoln First Bank in Rochester, which contributed $3.9 billion in deposits when the deal closed on Jan. 1.

Other Big Purchases

Other important acquisitions closed in the first half included Pittsburgh-based PNC Bank's merger of three affiliates, which contributed $10 billion of deposits; the purchase by First Fidelity Bank, Philadelphia, of two banks with combined deposits of $2 billion; and Houston-based Texas Commerce Bank's takeover of $2.1 billion of deposits from New First City Bank, Houston.

Citibank, the nation's largest bank, reported $124.8 billion of deposits, which represents a 5.4% gain from $118.4 billion at yearend. But all of that increase came from foreign offices, which saw their deposits rise by $8 billion, or 9.7%, to $90.8 billion.

Citibank's domestic offices, on the other hand, lost $1.5 billion of deposits, representing a 4.4% decline, during the period. Total deposits at New Yorkbased Citibank were down by 1.6% from $126.8 billion a year earlier.

Run-Off at B of A

Bank of America in San Francisco lost deposits on both the six-month and year-ago comparisons. Deposits at the nation's second-largest bank were $105.9 billion at June 30, down 0.9% from $106.9 billion at yearend and 4.9% from $111.4 billion in the year-ago period.

Deposits at New York-based Chemical Bank were down 3.4% in the first six months, to $72.7 billion from $75.2 billion at yearend. Compared with June 30, 1992, the decline was 4.7%.

In another survey finding, assets at the top 300 banks grew 3.8% to $2.48 trillion during the first six months. They stood at $2.38 trillion at yearend and $2.33 trillion at June 30, 1992.

Meanwhile the number of branches at the top 300 banks increased 2.7% in the first half to 28,633 from 27,869 at yearend, largely due to acquisitions. By comparison, the number stood al 27,238 last June 30.

Similarly, employment was up 0.9%, to 918,122 from 910,105 at yearend, despite an industry-wide emphasis on expense control. The top 300 banks employed 901,394 people on June 30, 1992.

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