Expansion-minded suitors are moving quickly to consolidate Pennsylvania's banking industry, according to expert in the Northeast.

Nearly a dozen small and medium-size banks and thrifts are sprinkled throughout the state. Those with assets of $1 billion to $15 billion are expected to be swept up in mergers, as has already happened in Florida, Georgia, and some other states.

The suitors will come from Pennsylvania and elsewhere according to analysts.

The Keystone State's largest banking institutions -- PNC Bank Corp., Mellon Bank Corp., and CoreStates Financial Corp. -- are seeking fillin acquisitions. across its wide expanse.

Meanwhile, big regional banks from New York, New Jersey, and even Ohio are also scouting with fervor.

The prize is demographics. Pennsylvania is rich in small and medium-size businesses, has a relative well-educated population, and borders six other states.

Assorted Strategies

"We'll see a combination of in-market mergers as well as acquisitions by out-of-state banks seeking contiguous market share," said James P. Benson, research director at Ryan, Beck & Co., Philadelphia.

Some analysts believe that some of he state's bigger banks also will be acquired quickly.

Thomas Hanley, who follows large banks for First Boston Corp., is betting that Integra Financial Corp., a$13 billion-in-asset Pittsburgh-based company, will be scooped up relatively soon.

Meridian Bancorp, a Reading-based regional banks with $12 billion in assets, is also considered a likely takeover target.

And even Philadelphia-based CoreStates, with $23 billion in-assets, would be a valuable franchise for a New York or New Jersey bank, banking sources said.

The Search for Revenue

In some respects, consolidation in Pennsylvania is happening for the same reasons are as it is everywhere else, according to Mr. Benson.

Potential acquirers are trying to broaden revenue streams by acquiring new franchises, and other opportunities - such as cheap thrifts from the Resolution Trust Corp.-- are drying up.

Stronger Numbers

Some acquirers who prefer to make purchases through stock swaps also want to move quickly while the market gives them high valuations.

Improving profitability in Pennsylvania also plays a role.

Pennsylvania's 211 commercial banks earned 12.2% on average common equity last year, up from 10.5% in 1991, according to Ryan Beck. Asset quality is also improving. Non performing loans plus foreclosures represented 3.15% of the banks; total loans plus other real estate owned in this year's first quarter, compared with 4.11% a year earlier, according to data on the state's 316 banks and thrifts complied by Ferguson & Co.

"Most of the pennsylvania banks have put their credit quality problems behind them," said Bernard M. Markstein 3d, chief economist at Meridian Bancorp.

The consolidation wave has already hit institutions with $2 billion or less in assets. Five banks and eight thrifts in this category were consolidated into other organizations last year, according to Ryan Beck.

The pace remains brisk this year.

Two weeks ago PNC Bank Corp. announced its intention to acquire First Eastern Corp., a $2.1 billion banking company with 51 branches in and around Wilkes-Barre, in the northeastern corner of the state. The transaction is a stock deal valued at $330 million, or two times book value.

Shareholders of First Financial Corp., a$1.2 billion bank in Wilkes-Barre, recently agreed to be acquired by Onbancorp, a $4 billion-asset bank company in Syracuse, N.Y. Onbanc has agreed to pay $138.4 million, or 1.4 times book value.

Meridian, the state's fifth-largest bank, announced in March that it will acquire Commonwealth Bancshares, a $2 billion company based in Williamsport. It is paying $349 million, or a hefty 2.23 times Commonwealth's book value.

First Eastern and First Financial were among the last independent community banks with assets above $1 billion in the Scranton/Wilkes-Barre area. Others have been scooped up over the last few years by PNC, Mellon, and Meridian, as well as by New Jersey banks such as UJB Financial Corp. and First Fidelity Bancorp.

Onbanc's Reasoning

"Wilkes-Bare had very similar demographics to our local markets," said Robert J. Bennett, chairman and chief executive of Onbancorp.

His company, which is opened a regional lending office in Wilkes-Barre three years ago, was waiting for the right acquisitions to come along Mr. Bennett said. First Financial gives Onbanc a No. 2 position in Luzerne County, with 14% share of deposits.

While Wilkes-Barre may now be picked over, several other towns are homes to attractive takeover targets.

Analysts identified $2.2-billion-asset Fulton Financial Corp. of Lancaster, in the central part of the state. Also high on the list is Keystone Financial Corp., a commercial banks in Harrisburg, the state capital, with $13 billion of assets.Waiting for the CallPennsylvania banks seen astakeover candidates Market/ Assets book (in billions) valueMeridianBancorp $12.2 155.6%ReadingIntegra FinancialPittsburgh 13.3 189.2KeystoneFinancial 3.0 163.0HarrisburgIndependenceBancorp, Perkasie 2.7 157.7Fulton FinancialLancaster 2.2 169.8GermantownSavings Bank 1.5 120.3Bala CynwydParkvale Financial 0.9 117.4York FinancialYork 0.9 124.8Sources: Analysts' estimates

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