Bank bond investors are not nearly as sanguine as equity investors about banks' exposure to inflation and interest rate hikes.

Bank stocks rallied for two days last week and surged Tuesday despite a 25-basis-point hike in two key interest rates by the Federal Open Market Committee. Analysts said investors were relieved that the hike was a modest one and confident that the Fed could slow the economy without triggering a recession.

It was a different story in the bond market, however.

The spreads on bank bonds - the gap between their yields and those on comparable Treasuries - have tightened only marginally in the last week, indicating that investors see little to cheer about in the latest economic news.

"The bond market seems to be more skeptical about inflation than the stock market," said John Otis, a bank bond analyst at Bear, Stearns & Co. "You are not seeing the same rally in corporate bond that you are in the equities."

Bond investors are more concerned because inflation and higher interest rates have a direct impact on their investments, Mr. Otis said. "The higher interest rates go, the lower the value of the bonds," he said.

In other news, Chase Manhattan Corp., the second-largest U.S. banking company, said it will split its stock 3-for-2 and raise its quarterly dividend by 17%.

The split is scheduled for May 17 if it is approved by shareholders at Chase's annual meeting on May 16. The stock has gained 15% this year and was unchanged at $92 Wednesday.

Chase last split its stock on March 17, 1998, when investors received two shares for each share they owned.

Chase will raise its quarterly dividend by 7 cents, to 48 cents a share, to shareholders of record at the close of business on April 6, which will bring the annual dividend to $1.92 a share. The company last raised its dividend by 5 cents, to 41 cents, on April 30.

Chase also approved a 17% increase in the quarterly common stock, to 48 cents, or $1.92 on an annualized basis.

Separately, a group including Chicago-based Banc Fund III LP reported it has raised its stake in SJNB Financial Corp. to 7.26%, from the 6.01% previously reported.

In a filing with the Securities and Exchange Commission, the group said it bought 44,690 SJNB common shares between Jan. 25 and March 16 at $27.13 to $28.13 a share.

The group currently holds 260,304 shares of the San Jose, Calif., owner of San Jose National Bank. The bank's shares rose 12.5 cents, to $28.125.

Bank stocks for the day were mixed after Tuesday's strong rally. The American Banker index of the 50 largest banks rose 1.04%, while its index of 225 banks rose 1.47%.

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