Following months of takeover speculation that has made Keystone Financial Inc.'s stock one of the hottest in the bank sector, chief executive Carl L. Campbell said Tuesday that he intends to keep the Harrisburg, Pa., institution independent.

In an interview with Dow Jones News Service, Mr. Campbell said his bank would continue a strategy of acquiring carefully selected community banks and asset management companies.

The statement had little effect on the stock, which closed down 25 cents at $31.25 in light volume of 10,000 shares. Takeover speculation has driven the company's stock price up 12.5% since June 1, compared with a 7.6% increase in the American Banker index for the same period.

Keystone, a $4.7 billion-asset bank with consistently sound returns, has been high on many analysts' takeover lists because of its size and location. The bank earned $2.20 per share last year, and analysts expect $2.61 this year.

Pennsylvania, which has hundreds of banks and thrifts, remains relatively unconsolidated, said David Stumpf, an analyst with Wheat First Butcher Singer Inc.

"The Pennsylvania market looks a lot like what the North Carolina market looked like 10 years ago," he said.

"You have got a couple of large institutions focusing on markets outside of the state" - Pennsylvania companies such as PNC Bank Corp. and CoreStates Financial Corp. - "and then you've got a group of small to mid- tier banks like Keystone, Dauphin Deposit, and Susquehanna Bancshares that will be the consolidators in the state."

Most states have four or five banks controlling 50% of deposits, but in Pennsylvania the top banks control roughly only 25%, he said. As a result, mid-tier players like Keystone must consume the small fish before larger banks take notice, he said.

This year, Keystone agreed to buy an asset manager, Martindale Andres & Co., and two community banks.

Keystone is unusual in that only a small part of its shareholder base is institutional, so it is under little pressure to be sold.

Outside institutional shareholders control 18.5%, a paltry figure for a bank Keystone's size. Keystone executives own 4%, and much of the rest is owned by retail investors.

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