assets and deposits, as well as efficiency ratios and profitability measures, according to American Banker's latest survey of the top 300 commercial banks. During the first half, 52 banks in the top 300 acquired 132 depository institutions. Seventy-five were affiliates of their acquirers; 57 were unaffiliated. Banks' weakening position as financial intermediaries was underscored by the finding that although the top 300 banks acquired $87.3 billion in deposits through acquisitions, the net increase was only $75.4 billion, because funds continued to flee to higher-yielding investments. Deposits at the top 300 banks climbed only 4%, to just short of $2 trillion, over the last six months, but assets rose 6.9%, to slightly over $3 trillion. "Core deposits are going down," said Lawrence Cohn, a banking analyst with PaineWebber Inc. "Customers are being tempted out of banks, because banks are sacrificing their customer bases in order to maintain their margins." As testimony to the streamlining taking place throughout the industry, the number of commercial banks fell 5% during the first half, to 10,168. Since 1988, that number is down by more than 24%. Employment in the banking industry is also declining. At mid-year, commercial banks' staffing totaled 1,479,385, down 16,292, or 1%, since yearend, after increases in 1993 and 1994. The survey also found more concentration of banking business at the largest banks. At the end of June, the top 300 held 68.6% of the $2.9 trillion of total bank deposits, up from 66.8% at yearend and 62.4% seven years ago. The 300 also held 73.5% of total banking assets of $4.17 trillion, up from 67.8% five years ago. "The trend toward consolidation will continue," predicted Raphael Soifer, an analyst with Brown Brothers Harriman. "The big banks will get bigger, partly through internal growth and partly through acquisitions, while banks that are too large to be community banks and too small to be superregionals will get squeezed. "Many of those institutions are feeling competitive pressure and will continue to merge and be absorbed by larger institutions," he added. In a measure of accelerating concentration, total assets increased 6.9% at the top 300 but only 4% for all banks. Deposits at the top 300 rose 1.9%, while only rising 1.1% for all banks over the six months. The data also showed how pressure on banks' funding is increasing as a result of the slowdown in deposit growth while assets are growing faster. First-half asset growth was 2.6 times the 2.6% rate of the 1994 half. Deposits rose this year at only one-third of the year-earlier 5.9% rate. Analysts like Mr. Cohn noted that a large part of the gain comes from acquisitions. He also said banks are liquidating their securities portfolios as interest rates rise and using that liquidity to increase lending. Much of the merger activity was carried out within holding companies. For instance, Birmingham-based SouthTrust Bank of Alabama absorbed 22 of its banks spread across that state. Denver-based Norwest Bank Colorado absorbed 22 of its affiliated banks, while Old Kent Bank and Trust Co. in Grand Rapids, Mich., absorbed 15 affiliates in the first half. However, the data, which excluded recently announced but not yet completed megamergers this year, revealed relatively few changes in rank among the top 20 in assets. Citibank, which would be displaced as No. 1 by the combination of Chemical Banking Corp. and Chase Manhattan Corp., was followed by Bank of America, Chemical Bank, Morgan Guaranty Trust Co., Chase Manhattan Bank, and Bankers Trust Co.

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