As banks helped lead the market's winter rally, a flock of them announced stock splits in a bid to keep their share prices within arm's reach of retail investors.

BankAmerica Corp. and NationsBank Corp., which have long had major retail ownership of their shares, were among the 19 banking companies that unveiled splits during the just-completed quarter. Many acted as their stock prices set records.

But market sentiment has cooled since many of the splits were announced, raising questions about their impact on investors now.

"We like to encourage individual investors so that our shareholder base mirrors our customer base," said Peter Magnani, a spokesman for BankAmerica, which is 35% owned by retail investors.

It is a two-way street. Analyst Sally Pope Davis of Goldman, Sachs & Co. said the theory behind splits is that making a stock more affordable to retail investors reduces price volatility.

Besides, splits are among the most bullish announcements any company can make. "Stock splits send a momentum message to investors that the stock is going up," said Ms. Davis.

Arriving at a decision to split a bank's stock, however, requires attention to investor perceptions. There are "a lot of optics" in stock prices, noted analyst George Bicher of Alex Brown and Sons Inc.

While splits are almost always greeted as bullish, "banks have to make sure that the stock is high enough before they announce the split" to avoid the risk of a price descending "into the teens and single digits" if market conditions change, Mr. Bicher said.

Indeed, conditions were transformed recently as fears of inflation seeped into the market. Despite assurances by analysts, banks have sold off sharply.

That raises the question of how investors will digest the notion that splits are "merely mathematical" and only a matter of "cutting the same pie in smaller pieces" as the pie itself shrinks slightly.

"I believe the banks' fundamentals will be fine," said analyst Edward Wojciechowski of Strong Capital Management Inc., Menomonee Falls, Wis. "It's the market psychology that you have to worry about. The banks were loved for so long, and if investor psychology turns against them, they'll be fighting a big head wind."

Another industry analyst, Anthony R. Davis of Dean Witter Reynolds Inc., said he is confident that "the fundamentals will prevail over the psychology."

Still, the wave of splits followed by the selloff underscores the force of "investor psychology" in today's marketplace.

"You're always nervous that the stocks went up too far, too fast, and when the Fed raises rates, that's a red light," said analyst Charles N. Cranmer of M.A. Schapiro & Co. "It's always been that way; it always will be. People who deny that are whistling past the graveyard."

Most are hoping that first-quarter earnings reports, which begin coming out next week, will calm the whiplashed market.

Positive economic news from the National Association of Purchasing Managers gave bank stocks a chance to recover a little in trading Tuesday; the S&P bank index gained 1.69%, to 483.09, while the Dow Jones industrial average rose 0.42%, to 6,611.05.

"I continue to believe that strong economic growth does not have to be inflationary," said Edward Yardeni, chief economist at Deutsche Morgan Grenfell, who said he sees no immediate sign of recession, either.

Under that scenario, he said, "the bank stocks have been pretty washed out, and now they represent good value."

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