The blitz of interstate mergers in Kansas, once one of the most fragmented banking markets in the country, has slowed considerably in recent months.

Analysts say out-of-state banking companies have established their long-strategized toe-holds in key Kansas markets and are in a holding pattern where Kansas is concerned.

"The big holding companies that made these acquisitions have had a long time to forge these strategies and form some alliances," said Jerry Duggan, head of Duggan Securities Inc. in Kansas City, Mo.

Prime Locations Taken

"The prime locations and the books of business they wanted have long ago been identified and already resulted in transactions," Mr. Duggan said. "The acquirers are going to wait and see how this first round shakes out and take some time to digest."

That could mean a respite from the flurry of merger activity that gobbled up some of Kansas' most valuable community banks.

Intrastate Pace Also Slows

And not only has the pace of interstate mergers slowed, but also that of intrastate mergers as the county seat banks in rural Kansas communities, at least those with the wherewithal, have by and large finished their consolidation.

"In the last three months we haven't had a lot of merger activity," said James Maag, executive vice president of the Kansas Bankers Association. "Here again it's like the interstate situation. About 80% of the in-state mergers since 1988 happened early."

But Jerry Swords, a Kansas City bank consultant, said deals are still there to be done and despite the recent lull, Kansas will be fertile ground for mergers for years.

Lure Said to Remain

"There are still a lot of interested sellers and a lot of interested buyers," Mr. Swords said. "The lure of at least 1.5 times book is still very attractive."

Kansas adopted unfettered intrastate branching in 1990, and not until July 1992 were interstate acquisitions allowed.

The law change set off a whirlwind of deals. Kansas City, Mo.-based United Missouri Bancshares bought 12, banks totaling $1.3 billion in assets, most of them across the boarder in Johnson County, between April and June of this year. Then it stopped.

KBA's Mr. Maag said that in the last four years, triggered by intrastate branching, Kansas lost 140 bank charters. The number of charters, however, stabilized at 490.

According to the Kansas Bankers Association, 27 Kansas banks with a total of $3.5 billion in assets have been acquired by out-of-state holding companies since interstate banking laws took effect.

Hardest Hit Markets

The consolidation wave crashed hardest in the, Topeka, Kansas City and Wichita markets' In Wichita, Fourth Financial Corp. has been consolidating its Kansas Bank IV banks and has leapfrogged into Missouri. Mr. Duggan said Bank IV will "have to be in the Kansas City market to keep pace."

That leaves the remaining independent community banks left in Kansas, most of them in rural areas of the state to go on about their business.

Mr. Maag said that the weather this year will be particularly hard on these banks. The worst flood damage has been limited to the northeast corner of the state on the banks of the Missouri River. But it has still been a wet summer, he said, and most of the wheat harvest was delayed because of it.

"A lot of our economy depends on the agricultural sector," Maag said. "It's hard to say whether this is going to be a good year."

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