Community banker David R. Duncan doubts the consolidation wave will ever wash over tiny Chamois, Mo.

For starters, United Bank of Chamois is the only bank in town and it wants no part of any holding company, said Mr. Duncan, the institution's executive vice president.

Further, he said, an outsider wouldn't want any part of Chamois, a central Missouri farming community with a population of about 500 and shrinking.

"It's kind of an isolated area and there's not a lot of growth," said Mr. Duncan, who also answers the telephone at the bank, which has amassed $12 million of assets during its 61 years of existence. "I don't think the big banks are interested in acquiring something our size."

Bank United symbolizes why the Midwest is likely to remain the most fragmented banking region in the country, despite all the speculation of regional consolidation spurred by NationsBank Corp.'s pending acquisition of Boatmen's Bancshares.

The reality of the Midwest is that for every juicy target like Boatmen's there are dozens of institutions like United Bank that are too small and too isolated to attract notice. So once the consolidation wave recedes - assuming it ever arrives - those tiny institutions will be left behind to muck along on their own or band together.

"I think it will remain more fragmented because there are more independent institutions," said Joseph A. Stieven, a banking analyst for Stifel, Nicolaus & Co. in St. Louis."There are going to be a lot of towns the big banks won't want to go into."

The core midwestern states - Illinois, Indiana, Iowa, Michigan, Minnesota, Missouri, Ohio, and Wisconsin - traditionally have been places where legislation or historical circumstance dictated that virtually every one-tractor town had its own independent bank.

That legacy is still with us. According to the Federal Deposit Insurance Corp., there were 9,689 commercial banks in the country as of June. Of that population, 3,322 - more than one-third - were located in the eight states.

While that number suggests the Midwest is ripe for consolidation, so far the region's bank population has been declining slightly slower than the nation as a whole.

From yearend 1989 to this June, the number of banks in the eight core Midwestern states plummeted 22.1%, according to the FDIC. Meanwhile, the bank population for the country as a whole fell 23.7%.

But banking analysts predict that consolidation in the Midwest isn't going away.

"There's just way too many banks for the amount of business out there," said Joseph Gomberg, a banking analyst for Chicago-based Howe Barnes Investments Inc.

But big banks by and large won't be doing the acquiring, analysts said. The big regionals aren't interested in tiny banks - and for the most part, Midwestern banks are shrimps.

As of June, 1,573 of the banks in the eight-state region had $50 millionor less in assets, according to figures from Sheshunoff Information Services.

Moreover, some of the big local players that once would have considered swallowing smaller fry have been gobbled by giants that ignore tiny franchises, bankers said. For example, First Interstate Bank of Iowa was acquired in 1992 by Boatmen's, which now is about to be absorbed into NationsBank.

The Midwest's solid economy also is likely to delay mass consolidation, because prospering small banks are demanding high prices, analysts and bankers said. The high prices being paid for Boatmen's and for Mark Twain Banchshares - being acquired by Mercantile Bancorp. - only further encourage these Main Street bankers.

Premiums are running high in Wisconsin right now, despite some softening in recent months, said Donald R. Mengedoth, chief executive of Community First Bankshares, Fargo, N.D. Community First has some offices in Wisconsin and has investigated making other acquisitions there only to be turned off by the prices being asked.

"Their expectations for pricing was high," he said. "In Wisconsin they were asking 14 to 15 times earnings."

Community banks that overestimate the attractiveness of their franchises might price themselves right out of the merger market for a long time, analysts said.

"Boatmen's and Mark Twain are very attractive franchises; you're not going to see those multiples with smaller operations," Mr. Gomberg said.

That seems to be fine as far as many small banks are concerned. Banking analyst Ross Demmerle has followed Midwestern community banks for more than two years; in that time, none of the 22 on his watch list have been taken out.

"We keep waiting for it to happen and it just doesn't seem to come," Mr. Demmerle said.

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