Go West, yon bank.

Or East, North, or South, depending on where ambitions may point.

For a banking industry making more money and flexing its capital muscle more forcefully than ever, 1997 was a year of manifest destiny. Major holding companies expanded in unprecedented dimensions, both geographically and by business line, and they may only just be getting started.

"We'll see our first nationwide franchise" in 1998, said D. Anthony Plath, director of the Center for Banking Studies at the University of North Carolina, Charlotte. "Somebody east of the Mississippi is going to go to California, or somebody from California is going to go east of the Mississippi."

"The walls between different segments of the financial services industry continue to crumble," said Warren Traiger, a banking lawyer with the New York firm of Butler, Fitzgerald & Potter.

First Union Corp. was typical. Its acquisitions last year included CoreStates Financial Corp., with a record U.S. bank price tag of $16.6 billion, and the securities firm of Wheat First Butcher Singer.

NationsBank Corp., already in Texas, stretched farther past the Mississippi by buying Boatmen's Bancshares of St. Louis (which had a New Mexico subsidiary) and Montgomery Securities of San Francisco. Its $15 billion deal for Barnett Banks Inc. of Florida is about to close.

The West Coast beckoned First Bank System of Minneapolis, too. It bought U.S. Bancorp of Portland, Ore., and adopted its geographically definitive name.

Industry experts who weighed in for this roundup of the big banking trends of the year just past invariably put growth and diversification atop their lists. Consolidation was an obvious corollary-it went almost without saying.

Bankers who turned cold about traditional branches in years past were even more so in 1997. They have not closed all that many, in aggregate, but they look at them very differently. Many view their not-so-old-fashioned offices as "sales centers."

And there was no less interest in "nontraditional" branching, with supermarket and other in-store locations now surpassing 5,000.

Leading the industry even further afield, Wells Fargo & Co. announced plans to put Starbucks Coffee counters, dry cleaners, and photocopy services in a few of its branches. KeyCorp worked with OfficeMax on a new kind of financial center combining business services with banking.

"You will see a lot more coffee pots in the lobbies of banks, and you'll see a lot more banks in the lobbies of coffee stores," Mr. Plath predicted.

As they were discarding some of the last calendar pages from the old year, several banking industry wags offered opinions of what was hot and what was not-and some pet peeves.

"One thing I hope I don't see again in 1998 is the word 'solutions,'" said William Adcock, chairman of Synergistics Research Corp. of Atlanta. "I am so tired of people putting everything in the context of solutions. It is a marvelous word, but it has been cheapened, turned into a buzzword."

Depending on who is talking, the year-2000 computer-conversion problem was either tremendously intriguing or totally boring.

Diogo Teixeira, president of the Tower Group, a Needham, Mass., technology consulting firm, rated what is fashionably called "Y2K" as "extremely hot," right up there with the Internet, intranets, data mining, and object-oriented programming.

Mr. Plath yawned. "From what I understand there is a mandate that every time two or more bankers get together, they've got to talk about Y2K," he said. "Y3K will be the next thing."

Analysts at BT Alex. Brown-another name in investment banking that reflects a banking company's acquisitiveness, in this case Bankers Trust- concluded that "on average, a year-2000 solution is costing banks $42 million."

Mr. Adcock would probably approve of that use of "solution." But anything that costs that much just for maintenance or catch-up purposes would seem to be more like a headache.

Collaborative work spaces were hot, people said. Enclosed offices were not. Tellers were out, financial advisers were in.

Also in vogue were golden parachutes, the Euro, fair-lending, branding, middleware, variable annuities, thrift charters, and target marketing.

On the cold side were credit card cobranding, gain-on-sale accounting, Community Reinvestment Act protests, Korean banks, and branch automation.

While the many 1997 megadeals left a long list of winners and losers in their wake, some of the biggest beneficiaries were lawyers and consultants.

"I don't think we've ever worked on as many of those as we did in 1997," said Thomas P. Vartanian, a law partner in the Washington office of Fried, Frank, Harris, Shriver & Jacobson.

OUT: Java ... IN: Latte

Java, a computer programming language from Sun Microsystems, hit it big in parts of the Internet community but not quite in banking. Some are debating - Visa adopted Java for smart cards; MasterCard and its Mondex venture did something else - others are just waiting. Wells Fargo Bank, meanwhile, wants to jump on the coffee-wagon. In October it announced plans to put Starbucks outlets in seven of its branches - along with photocopying, dry cleaning, and other "daily necessity" services.

OUT: Letters ... IN: Multiples

Subprime lenders, specialists in higher-margin B and C credits, were hot commodities until a few high-fliers in that business fell on hard times. But bank acquisition premiums spiraled: First Union agreed to pay 3.5 times book value for Signet, NationsBank 4.1 for Barnett, First Union 5.4 for CoreStates. Banc One's 5.7 for First USA won the prize - though that was for a monoline credit card lender.

OUT: Tom Hanley ... IN: Tom Brown

The perennially high-ranking bank analyst Thomas Hanley of UBS Securities fell from grace after incorrectly predicting that Travelers Group would buy Bankers Trust. Stock-price movements prompted a Securities and Exchange Commission investigation. By contrast, Thomas Brown of Donaldson, Lufkin & Jenrette won kudos for questioning the conventional wisdom that bigger is better; he openly quarreled with First Union Corp.'s expensive acquisition strategy.

OUT: Retirement ... IN: Starting over

It used to be that when a community bank sold for 2 or 3 times book value, the ousted president, being of a certain age, would ride off into the sunset. These days, the displaced executive is more likely to turn up as head of a new community bank. For instance, in October, five months after the sale of First Michigan Bank Corp., Gerard R. Johnson former chief executive officer of its lead bank, turned up at the helm of Mercantile Bank Inc., Grand Rapids, Mich. The Federal Deposit Insurance Corp. said 214 new bank charters were approved through the first 11 months of 1997, quadruple the number of 1994.

OUT: FinMod ... IN: Y2K

Congress tried for the umpteenth time in 1997 to enact "financial modernization" legislation, and again came up short. But lawmakers and regulators found something else - at once futuristic and scary - to pounce on: the year-2000 programming problem. Different from a virus and worse than a bug, a failure to address Y2K could mean disaster for what are known in computer-speak as mission-critical systems. It definitely means a bonanza for consultants and software providers.

OUT: Ax-wielding ... IN: Back-patting

"Cost cutting professionals" are still roaming bank corridors and sniffing out underperformers, and layoffs are climbing as mergers mount. But banks are showing their warm, fuzzy side to workers who survive the relentless pressure for better performance. Telecommuting, job sharing, flex time, and workforce diversity are hot. One Philadelphia thrift, saying it was eager to foster lifetime careers, capped 1997 by paying bonuses equaling up to 64% of workers' average salary.

OUT: Gold ... IN: Platinum

MasterCard and Visa banks issued so many gold cards over the years that they lost their cachet. In 1997 they stepped up to platinum, giving many gold customers automatic upgrades and dangling $10,000 or larger credit lines in front of new prospects. But even platinum can go downscale: one of First USA's new Visa offerings is cobranded with Loehmann's, the off-price specialty retailer.

OUT: Corporate thrift ... IN: Thrift charters

Banking profits were plentiful, and so were perks. Hefty bonuses once reserved for pooh-bahs filtered down to lower-level managers. Wachovia Corp., for instance, boosted incentive pay 27%. If thrift was out, thrift charters were anything but. Nonbanks like the flexibility a unitary thrift charter affords, and 16 entities applied, including a casket maker, a grain processor, and several insurance companies. One of the three to win approval so far was Ukrop's Super Markets of Richmond, co-owner of a supermarket branch network with National Commerce Bancorp. of Memphis.

OUT: Isolationism ... IN: Manifest Destiny

Retrenchment - a major theme in the early 1990s - became a dim memory in 1997 as bankers pursued visions of vastness. NationsBank grabbed Barnett, the last big prize in Florida, and First Bank System went West, adopting the U.S. Bancorp moniker in the process. Bankers also invaded the securities industry, with First Union, NationsBank, BankAmerica, and Fleet among the raiders. By the time First Union sealed its deal for CoreStates Financial in November, megamergers had become matter-of-fact. "We're in a very unusual era," said analyst Nancy Bush. "These guys have to do these deals."

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