Would-be sellers left gasping as prices ebb.

Acquisition offers for community banks are settling down to price levels more consistent with their earnings, after months of unusually expensive deals, analysts say.

"It's bringing back some measure of caution to the marketplace," said First Albany Corp. bank analyst Don J. Kauth.

Mr. Kauth said offers for community banks have been more modest than earlier this year.

But the sudden change has left some bank officials and directors in limbo as they await better offers that apparently aren't there. In the meantime, they're turning away suitors whom they would have welcomed in the past, ruining any chances for a deal.

"If expectations are too high, then transactions won't happen," said Stanley T. Wells, executive vice president of Keefe, Bruyette & Woods in Hartford, Coon.

With bank consolidation in full swing this year, rumors of pending deals and high projections of value by analysts and bank officials drove stock prices and acquisition premiums far above book value, creating some deals at artificial levels as high as 180% of book value.

Deals were also driven by a willingness by large companies such as Boston's Shawmut National Corp. to pay high prices for strategically located banks such as Gateway Financial Corp. In Connecticut, Mr. Wells said.

In some cases, however, stock prices soared even when the rumors didn't "make any sense," said Robert W. Sides, a broker at H.C. Wainwright.

"Sometimes people drive these stocks up where the speculation is just outright wrong," said H.C. Wainwright bank analyst Jeffrey Cohn, citing Abington Savings Bank in Massachusetts. "The thing just got hyped and hyped and management's just minding their own business. The rumors aren't always right."

The result of such rumors and high-priced deals is that bank officials who now want to sell expect to get lofty offers for their institutions based on what happened a few months ago. Instead, bank directors have found themselves disappointed as reality returns to appraisals and offers fall short of hopes.

This past summer, the stock price of $458 million-asset Grove Bank in Boston surged dramatically after takeover rumors spread in the market. In mid-June, the bank hired a consultant to help find potential buyers, but officials decided in late August to remain independent after concluding that none of the offers came close to their expectations.

Now, that lack of a good deal is actually a sign that "the buyers are becoming more disciplined," Mr. Cohn said.

"Sellers expect certain prices now, but buyers don't want to pay so much that they're giving all of the benefits to the acquiree's shareholders," Mr. Kauth agreed.

Also, Mr. Cohn noted that even the regional bank stocks have been depressed, including those of many acquirers. That "pros a limit on what companies can pay before the transaction is dilutive."

In fact, Mr. Kauth predicted more cash deals in the near future, noting that most banks are over-capitalized and sellers don't want to take a chance on how well the buyer's stock does in the future.

"Prices will be more or less where they should be," Mr. Kauth said. "Yon tend not to pay as much with a cash deal."

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