October isn't as scary as it used to be.

For the past 10 years, retail bankers have been faced with a deluge of maturing certificates of deposits each October - the legacy of rate deregulation in 1983. And, with interest rates low, much of that money has fled banks over the past couple of years for higher-yielding pastures.

Lower Concentration

But bankers are less worried this time around.

For one thing, they say, the heavy concentration of October maturities has diminished somewhat. That's because depositors have, over the years, gradually shifted to CDs maturing in other months.

For example, at National Bank of Detroit, the maturity bulges in October and during the April tax season have been eroding at a rate of 5% a year, a bank officer said.

"We don't notice the peaks we used to have," added Kenneth D. Lewis, who heads up retail banking for NationsBank Corp. "It's smoother each year."

Bankers are also taking comfort because the outflow of maturing deposits does not seem to be accelerating, even though interest rates are near historic lows.

In part, that reflects investor concerns that securities markets may be headed for a fall, analysts said.

"A lot of people are beginning to repudiate the |cash is trash' idea" espoused by Wall Street," said David Cates, chairman of Ferguson & Co., a Washington-based consulting firm for banks. "There's nothing like an insured product."

Of course, plenty of deposts are still leaving banks. In the 12 months through August, the volume of six-month to one-year Cds at commercial banks fell 13%, to about $155 billion, according to estimates by the Federal Reserve Board.

It's easy to see why. Average returns are just 2.93% for sixmonth CDs, 3.21% for one-year models, according to Bank Rate Monitor.

But for banks there is a silver lining. To the extent consumers are moving their money to mutual funds, they are increasingly picking funds run or sold by banks.

"If someone has a maturing CD and purchases a mutual fund at the bank, that doesn't matter," Mr. Cates said. In either case, banks get something. In fact, the profitability of proprietary mutual funds equals or exceeds CD profitability in many cases, said Webb Martin, first vice president and head of the retail deposit services division at NBD.

Watching for Trouble

Despite the intitial reports about CD activity this month, many bankers and analysts are still watching closely for signs of trouble.

The genesis of October's rollover hump was Oct. 1, 1983 when bank deposit ceilings were eliminated. The Oct. 13, 1987 stock market crash exacerbated the bulge by prompting stunned investors to look for the safety of deposit insurance.

Robert Heady, publisher of Bank Rate Monitor, Palm Beach, Fla., estimates that $1 10 billion in CDs comes due this month--slightly larger than the April surge caused by the deadline for individual retirement accounts.

Moreover, he maintains that there will always be at least some surges each October and April for years to come. "It would take a sledgehammer to level them," Mr. Heady said.

For retail bankers, the challenge is to make sure the customer stays with the insitution--either either rolling over a CD or getting a mutual fund from the bank.

"What we want to do is retain the customer and have opportunities to sell them other things. That's the game plan," NationsBank's Mr. Lewis explained. "We're not worrying about what pocket the money is going into. We are just trying to keep them in the bank."

Pushing Alternatives

Indeed, many bankers are aggressively educating customers about alternative products available at banks.

"We are very proactive," said Mitchell Ratliff, group marketing manager for deposits and investments at Chase Manhattan Bank.

"If customers are considering other options, we want them to come in for a face-to-face consultation," he added.

Targeting Customers

Nations Bank is using direct mail and telephone conversations to alert customers with maturing CDs about other products, Mr. Lewis said.

Many investment product sales departments have been routinely targeting deposit customers with statement stuffers and other advertising.

"We've been trying to get the message out to people" about proprietary fund offerings, said Peter Herlihy, vice president of Fleet Investment Services, a unit of Fleet Financial Group.

Fleet has been notifying customers about alternative products "throughout the year," Mr. Herlihy said.

More Inquiries

Though Fleet's sales were up at the start of October, money does not appear to be pouring into mutual funds, Mr. Herlihy said. There have been more inquiries recently about mutual funds, Mr. Herlihy said, "but not to the extent of IRA season."

Of course, while banks are building their strength in the mutual fund sales game, money is still leaving to outside brokerage firms and mutual fund companies.

"We have people coming to Fleet's funds and some going outside the bank," Mr. Herlihy said.

Customers are flooded with marketing materials from nonbank competitors and articles and rankings in the press.

"A lot of it may leave because mutual fund hype is so great," said Mr. Cates.

If the pendulum should swing back to Cds, some bankers say it will be simple to target those who've moved into mutual funds.

That's because the bank has detailed records of those investing in their funds, said Michael Rothmeier, executive vice president of investment services at Shawmut National Corp., Boston. But, he believes consumers who've become investors won't go back they'll just choose different types of funds.

"I think money will stick to our ribs in this mutual fund environment," he said.

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