The share of total assets and deposits held by the top 100 U.S. banking companies fell in the first six months, according to a survey by American Banker.

Analysts said the nation's biggest institutions dumped low-yielding assets during the period and lost deposits in the course of mergers.

Among the top 100 -- ranked in terms of asset size -- the share of total bank assets dropped to 85.3%, or $4.69 trillion, as of June 30, from 88.1%, or $4.79 trillion, as of Dec. 31, 1998. At the same time, those companies' share of bank deposits slipped to 72.2%, or $2.67 trillion, from 73.1%, or $2.69 trillion.

"A number of banks are trying to slough off thin-priced assets by using financial engineering techniques, such as securitizations," said Charles Peabody, a banking analyst at Mitchell Securities Inc., New York. "Financial engineering is used to improve returns and create excess capital for share buyback programs."

Chase Manhattan Corp.'s assets fell to $356.9 billion as of June 30, from $365.9 billion at Dec. 31. Bank of America Corp.'s assets fell to $614.1 billion, from $617.7 billion. At J.P. Morgan & Co., assets rose to $269.4 billion at June 30, from $261.1 billion six months earlier, but the latest figure marks a decline from $280.8 billion at June 30, 1998.

Among other top banks with falling assets, Bank One Corp. is securitizing credit card assets, First Union Corp. is securitizing and selling mortgage loans, and National City Corp. is selling and securitizing real estate loans, Mr. Peabody said.

Bank of America, Bank One, and First Union have been selling loans to generate revenue, he said. "That allows them to hit analysts' earnings estimates and get less profitable loans off the books." The problem with that strategy, though, is that while sales gains help in the quarter they occur, the company has to come up with other ways to boost earnings later in the year when there may be nothing left to sell, Mr. Peabody said.

Meanwhile, government regulators have been requiring banking companies engaged in mergers to divest branches and deposits. Acquisitions also often lead to customer defections and deposit runoff, especially when the mergers result in the creation of banking behemoths.

"About 20% of the public won't do business with the biggest banks," said Edward Furash, chairman of Monument Financial Group, a consulting firm in Alexandria, Va.

Bank of America, Bank One, and First Union have all suffered from deposit flight as a result of acquisitions, said Scott Edgar, director of research at Sife Trust Fund, a Walnut Creek, Calif.-based institutional investor, which manages $1 billion of financial services stocks.

The top 100 are also increasingly turning away from deposits as a source of funding, Mr. Furash said. The largest banking companies can borrow funds cheaply in the money markets, he noted.

Competition from non-bank financial services companies, such as Charles Schwab Corp. and Merrill Lynch & Co., are also having an effect. Those firms have been luring deposits and assets away from the top banking companies for several years, Mr. Edgar said.

Deutsche Bank's deal to buy Bankers Trust Corp., which closed in June, took a bite out of the top 100's assets and deposits, too.

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