Investors have soured on large bank mergers this year, but analysts question whether the disenchantment stems from general antimerger sentiment or the specifics of the deals.

The market's skepticism is the result of the relatively poor performance of large banks that merged last year, said John Moore, a bank analyst at Memphis-based Morgan Keegan & Co.

"Last year bankers promised investors synergies which didn't happen and returns that didn't appear," Mr. Moore said. "Investors have grown skeptical of bank deals, and this might give some bankers pause when it comes to larger deals."

Investors for the most part cheered last year's megadeals, which included Travelers Group Inc.'s acquisition of Citicorp, NationsBank Corp.'s buyout of BankAmerica Corp., Norwest Corp.'s acquisition of Wells Fargo & Co., and Banc One Corp.'s acquisition of First Chicago NBD Corp.

Shares of Travelers rose 15.77% a month after its deal was announced, compared with a 4.72% fall in the Standard & Poor's bank index. Similarly, shares of Norwest rose 8.31%, while the index fell 11.92%. And shares of Banc One fell only 3.55% a month after that deal was announced, compared with a 5.34% drop in the bank index.

Some of this year's deals, however, took a beating.

Firstar Corp., which has agreed to buy Mercantile Bancorp, declined 6.94%, compared with a rise in the index of 1.79%.

Amsouth Bancorp., which has agreed to buy First American Corp., has fallen 6.9% since June 1, when the deal was announced, compared with a 1.12% rise in the index.

But some banks bucked the downward trend. Fleet Financial Group Inc., which announced on March 15 that it would buy BankBoston Corp., had just a 1.73% drop, compared with a 4.17% decline in the index.

Still, most bank deals this year have left investors concerned, Mr. Moore said.

"Just because Porsche buys Volkswagen doesn't make that Volkswagen a Porsche," he said.

Other analysts, though, argue that the market's negative reactions will have little effect on the pace of bank mergers. H. Rodgin Cohen, a partner with the law firm of Sullivan & Cromwell, said he expects merger activity to hold steady, though he admitted that investor sentiment may doom a few deals.

And at Bear, Stearns & Co., bank analyst Sean J. Ryan said the market's reaction to this year's deals was undeserved. Yet he admitted that the poor performance of the stocks of the companies involved in this year's deals may cause potential acquirers to be a "little more hesitant to do a transaction."

But he said merger activity is unlikely to be blunted by skeptical investors. "These deals make sense," he said. "The market is rational."

And Michael A. Plodwick, an analyst at Lehman Brothers Inc., said the market's reaction to this year's deals is more a function of their specifics than of antimerger sentiment.

Investors reacted poorly to Firstar's planned purchase of Mercantile because they thought Firstar was buying another company too soon after a previous acquisition, he said. And they questioned Amsouth's ability to digest First American because Amsouth had not made a deal in five years and because First American's profits were lagging.

The trends propelling bank consolidation are still in place, Mr. Plodwick said. "There might be a lull because second-quarter earnings are coming up, but we expect a steady flow of deals," he said.

Others argued that bankers are in a race to beat the implementation next year of a ban on pooling-of-interest accounting, which would force acquirers to report lower earnings for years to come. This, they said, should offset the effects of a disgruntled market.

Steven Dykeman, an investment banker at Lehman Brothers, said, "if the deal is strategic, if it's consistent with what the bank has been telling the market, and execution risk is perceived to be manageable, then the market will endorse the transaction."

Mr. Moore, however, said he remains skeptical. "The end of pooling accounting is going to put some pressure on bankers to merge sooner than later," Mr. Moore said. "However, the market's negative reaction to this year's deals will outweigh that because you can't run your company based on some accounting change."

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