Boosted by mergers, total deposits at the top 300 U.S. banks rose by $128 billion in 1995, or 6.54%, pushing over the $2 trillion mark for the first time.

A survey by the American Banker shows, however, that had they not acquired more than $146 billion of deposits through mergers these banks actually would have suffered a $16 billion decline.

Analysts said several trends contributed to that downturn, including a continuing flow of retail and institutional money into smaller banks and into alternative, higher-yielding investments such as mutual funds. Mutual fund assets, for example, rose 31% last year, to $2.82 trillion.

A new listing of the top 100 banks in retail deposits - domestic deposits of $100,000 or less - shows some big banks posting a slight increase, but many saw significant declines. Retail deposits fell more than 5% at BankAmerica Corp.'s Bank of America, to $48.7 billion; more than 3% at NationsBank Carolinas, to $23 billion; and by more than 12% at Chase Manhattan Bank, to $13 billion.

In contrast, analysts pointed out, midsize regional banks reported the strongest deposit gains. Retail deposits at SouthTrust Bank of Alabama, Birmingham, rose 27%, to $5.7 billion; 55% at NBD Bank, Wheaton, Ill., to $3.6 billion; and 14% at National City Bank, Cleveland, to $3.7 billion.

Sagging deposits did not prevent the top 300 from grabbing a bigger share of the overall banking market.

During the last 10 years, more than one-third of all U.S. banks have disappeared, bringing the total down to 9,941 at yearend, from 14,483 in 1984.

Last year alone, nearly one-third of the top 300 banks were involved in mergers or acquisitions. As the number of banks has declined, surviving banks have grabbed bigger shares of both deposits and assets.

The top 300, for example, held nearly 73.5% of the $4.3 trillion in bank assets at yearend 1995, up from 67.5% five years earlier. They also held nearly 69% of the $3 trillion in bank deposits, up from 64% at yearend 1990.

Ed Furash, a Washington-based consultant, predicted that the number of banks will have declined to 6,000 by the year 2000 and the top 300's market share will be around 85%.

Mr. Furash noted that electronics and growing concentration in banking are radically revamping the industry's infrastructure, contributing to a resurgence in correspondent banking as smaller regional and community banks consolidate and turn to bigger banks for services like trade finance, foreign exchange trading, and brokerage.

This trend, along with a surge in off-balance-sheet activities, such as capital markets, mutual fund sales, and other fee-related services, makes it increasingly difficult to measure any one bank's market position by assets and deposits alone, he added.

"The role of direct intermediation is declining, and it's the bigger banks that are increasingly moving into off-balance-sheet activities," Mr. Furash observed. "When you include off-balance-sheet activities, the market share of the top 300 is probably substantially higher than whatever the data would indicate."

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