The market value of the 100 largest U.S. banking companies rose by $22 billion during the first quarter and passed the $1 trillion mark.

It was the first time that the top 100 stood above $1 trillion at the end of a quarter.

The jump to $1.008 trillion from $986 billion for those same banks at Dec. 31 was fueled by a 29%, or $32 billion, surge in Citigroup Inc.'s market capitalization, to $144.2 billion.

Also increasing substantially were the second and third most-highly valued bank stocks, BankAmerica Corp. and Chase Manhattan Corp. They were up by a combined $27 billion. A rebounding money-center company, J.P. Morgan & Co., rose by 17%, or $3.2 billion, to $21.7 billion.

J.P. Morgan "is benefiting from robust market conditions and some takeover speculation," said George Bicher, banking analyst at BT Alex. Brown.

But such gains were offset by double-digit percentage declines at the likes of Wells Fargo & Co., First Union Corp., Fleet Financial Group, and SunTrust Banks Inc.

First Union revised its earnings expectations during the quarter, "causing concern about its performance going forward," Mr. Bicher said.

And Wells Fargo saw its valuation fall "because of concerns about the pace of its integration with Norwest," Mr. Bicher said.

In aggregate, the top 100 banks regained some luster in the investment community, increasing market valuation by 2.2% from what the same group of companies had on March 31.

The top 100's market capitalization has rebounded smartly from the $794.6 billion of Sept. 30, 1998. In a sign of how far those 100 institutions-and the industry as a whole-fell during the third-quarter market doldrums, they had a $1.03 trillion valuation on June 30, 1998.

But because the top-100 lineup on June 30 was different, in part because of mergers, it was still shy of $1 trillion when American Banker published second-quarter totals in July of last year.

Mergers were a factor in the recent improvement, as some of the larger holding companies, including Citigroup and BankAmerica, bulked up with more shares outstanding.

Rising 18% over the first three months of 1999, to $122.8 billion, BankAmerica Corp. trailed Citigroup in market cap by $21.4 billion. Then there was a big gap to Chase Manhattan Corp.'s $68.7 billion, up 15%, and Bank One Corp.'s $64.8 billion, up 8%.

Though influenced by overall stock market trends, the shifts in market capitalization telegraph how investors feel about banks' strategies and management, as well as the economic conditions under which they are operating.

Financial institutions account for roughly 16% of the Standard & Poor's 500, an indication of bank stocks' importance to the wider market. But bank share prices have been lagging in recent months.

"That seems to be reversing itself this week with the economic outlook remaining favorable," said Keefe, Bruyette & Woods Inc. analyst Joseph Duwan. "The relative valuation difference is looking too compelling for many investors to ignore."

As with the Dow Jones industrial average's recent close above 10,000, there are those who downplay the symbolism of a $1 trillion market valuation.

"It's just a number," said Miles P.H. Seifert, chairman of the money management firm Grey, Seifert. "Will this cause people to pour into bank stocks? I don't think so."

"The only thing that's going to change investor sentiment is if there is a downturn in the Internet stocks," Mr. Seifert said. "That could cause people to look back at value stocks like banks."

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