The fourth quarter shaped up as relatively calm for the niche companies that help banks administer and distribute mutual funds.

According to Lipper Analytical Services Inc., Summit, N.J., the five largest players remained unchanged, as all but one grew their assets modestly. The growth was driven by fund sales, fund launches, and transfers of assets from trust accounts.

But, in the opinion of some, this was merely the calm before a storm of change.

Consider, for instance, that Congress and the Clinton administration are eyeing Glass-Steagall Act reform that could strike at the very reason for these companies' existence.

Now, according to the Glass-Steagall rules, banks must use nonbanks to underwrite and distribute bank-managed mutual funds. Most banks employ administrators, which handle legal and back office work for mutual funds, to do this. But Glass-Steagall reform could let banks take underwriting and distribution in-house.

This comes just as many big banks are moving to internalize administration, having gained confidence after running funds for a few years.

On another front, two mergers were announced in the fourth quarter that stand to substantially change the competitive landscape: The Shareholder Services Group is buying 440 Financial, Worcester, and Bisys Group Inc., is buying Concord Holding Corp.

These deals, expected to close this month, would give rise to a pair of behemoths - each of which aims to be the largest bank-fund administrator, and to destroy smaller players.

All of which is leaving Ronald M. Petnuch, vice president and director of Federated Investor's administration and distribution business focusing on the near term.

The Pittsburgh-based company got into bank-fund administration and distribution in the late 1980s as an adjunct to its main business of selling its own funds through banks.

At yearend, Federated was the country's sixth-largest bank fund administrator, with $21.2 billion of assets, up $400 million from Sept. 30. It has 24 bank clients, including First Union National Bank of North Carolina, Marshall & Ilsley Corp., and Wachovia Bank of North Carolina.

Most of the gain in the fourth quarter came from new flows into bank- managed money market and equity funds.

The flow into money funds is continuing. But it is being joined by a new flow of money into bond mutual funds, which boosted Federated's fund assets by $900 million as of the last week in February, Mr. Petnuch said.

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