In stark contrast to six months ago, with bank stock prices 28% below their peak and some pending deals threatening to come apart, the bank merger outlook has turned decidedly bearish.

Dealmakers see an effective moratorium in place until the market regains its bearings and companies assess how much they can pay for acquisitions.

"This is a sobering market," said John J. Spidi, a partner at the Washington law firm of Malizia, Spidi, Sloane & Fisch. "We've been chastened."

A recent deal involving a client of Mr. Spidi's firm, Little Falls Bancorp in New Jersey, reflects the market's unforgiving mood.

On Aug. 13 the company announced plans for a merger of equals with Skylands Community Bank of Hackettstown, N.J.. The deal was valued then at $39 million.

It seemed risk-free, involving no big premium to the seller's shareholders. Neither company has any exposure to Asia or Latin America. The partners predicted cost savings of 11%.

But Little Falls' shares have declined 27% since the announcement, and Skyland's are off 20%. The Nasdaq bank index, which tracks the performance of small banks, is down only 9% over the same period.

Analysts said investors shedding stocks left and right are not likely to keep those of a small bank involved in no-premium merger.

Shares of some companies have fallen so far that their pending mergers may be in jeopardy. In New York, shares of Roslyn Bancorp share price have fallen 41% since the company announced it would buy TR Financial Corp.

Under the merger agreement, Roslyn may have to increase the offer if its stock does not recover soon.

Similarly, KeyCorp has told its shareholders that it may have to revise the terms of its bid for McDonald & Co.

To be sure, there are still plenty of investors willing to bet on more mergers. Talking up the possibility of a deal is still a great way to sell bank stocks.

"Investors are still interested in stocks that are potential takeover targets," said Kenneth Pugilisi of Sandler O'Neill & Partners, New York.

But he added that investors may not be as excited about the prospects as they used to be. With year-2000 concerns and many big banks taking big hits in share prices since mid-July, "the market is assuming there won't be as many mergers as before," Mr. Pugilisi said.

Eric Rothmann, a bank analyst at Stephens Inc. in Little Rock, said investors may not want to bet on another takeover wave until next July. By then, he said, banks should have resolved most year-2000 software issues and will be ready to negotiate again.

In the meantime, the falling market is making investors fretful about pending deals.

Shares of Citicorp, priced at $180.50 on April 6 when its agreement to merge with Travelers Group was announced, were at $96 Friday afternoon. Analysts said investor attention has shifted from the companies' cross- selling opportunities toward their potential for losses in emerging markets.

In a move that could gain investor confidence, Citicorp and Travelers last week acknowledged that thousands of jobs would probably be eliminated to cut costs. Until then the two companies had de-emphasized such measures in favor of extolling their cross-selling and money-making potential.

Banks lagged the market again in Friday's trading. The Standard & Poor's bank index fell 1.1%, though the Dow Jones industrial average rose 21.89 points, to 7,895.66.

BankBoston Corp. fell $2.0625, to $36.6875, after saying third-quarter trading losses would be about $40 million, or one-third higher than originally forecast. Keefe, Bruyette & Woods Inc. analyst Thomas Theurkauf downgraded the shares to "market perform" from "attractive."

Shares of BankAmerica Corp. and NationsBank Corp. each dropped 5%.

Most regional banks, without the exposure to foreign markets, fared better. Old Kent Financial Corp. rose 5%, or $1.625, to $33.875.

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