Turnabout artist may be out in cold.

FREDERICK A. "RICK" DEAL has engineered his second successful bank turnaround, but now he wonders whether he has a place in a consolidating industry.

President and chief executive of First Eastern Corp., Wilkes-Barre, Pa., he my sold the reviving unit to PNC Bank Corp. for $330 million or two times book. The $26.50-a-share price is nearly triple the trading low of last fall, according to data from ILX Systems Inc.

While the payoff undoubtedly endeared Mr. Deal to shareholders, PNC has not asked him to stay with the $2.2 billion-asset operation after it is acquired.

So instead of settling in at a small bank he can run himself, the former Society Corp. officer is considering whether he should rejoin a big banking company.

"The question is whether small operators are becoming dinosaurs," said Mr. Deal, noting that many banks of First Eastern's size are being snapped up by larger rivals.

The issue is more emotional than financial for Mr. Deal, whose severance package at the minimum will include a $560,000 payment, equaling two years' salary. But it speaks to the ranks of bankers preferring to run their own shows.

Toledo Consolidation Turned Heads

Mr. Deal gained notoriety for his turnaround skills when he spearheaded the consolidation of Trustcorp Inc., Toledo, after being placed in charge of the unit by acquirer Society in 1990.

In retrospect, Mr. Deal acknowledged, the support of a strong parent company eased the project. "When you're a senior executive at a major subsidiary of a bank holding company, you just call and say how much capital you need."

That was not the case at First Eastern, which was becoming a candidate for regulatory takeover when he took the reins last fall. It took excursions to London, Milan, Glasgow, Edinburgh, Zurich, and Geneva before Mr. Deal succeeded in a $27 million offering managed by Fox-Pitt Kelton.

Efforts on the home front were hardly less spectacular: Mr. Deal carried out plans devised by First Manhattan Consulting Group calling for branch consolidations and a 12% work force reduction, sold loans and a municipal underwriting unit, cut problem assets, and built loss reserves.

Fruits of His Labors

The results of his handiwork became apparent by midyear 1993. Nonperforming assets were down 28% from a year earlier, loss reserves were up 15.8 percentage points to 85.7% of nonperforming loans, and a 7.04% leverage capital ratio exceeded the 6.5% floor specified by federal regulators.

Wall Street took notice. When First Boston Corp. commenced coverage of First Eastern in June, for example, analysts predicted strong earnings gains and said. "We believe Mr. Deal was the driver behind the turnaround."

But when PNC instigated buyout talks, shareholders were presented with a payoff Mr. Deal was in no position to deliver anytime soon. He negotiated a price with the help of Alex. Brown & Sons, Baltimore.

The deal, to be completed by yearend, will bring big changes. First Eastern will be absorbed into a nearby PNC unit with an eye toward eliminating a third of its annual operating expenses, and Mr. Deal is re-thinking his career goals.

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