Much of the banking industry last year took a break, of sorts, from mergers and acquisitions.

After the explosion of consolidation activity in 1995, a lull was probably only natural. A relatively scant $43.8 billion worth of merger deals were announced during 1996, versus over $77 billion in the prior year.

Indeed, the hot-and-cold contrast between the two years would be a lot more dramatic if Wells Fargo & Co.'s ultimately successful pursuit of First Interstate Bancorp had concluded just a few weeks earlier.

While the $10.9 billion Wells Fargo-First Interstate combination ranked as the largest deal of 1996, it was spawned during the superheated atmosphere of the second half of 1995 and finished four days before last year's Super Bowl.

That transaction and the year's second-largest, NationsBank's $9.5 billion purchase of St. Louis-based Boatmen's Bancshares, opened the way for acceptance of the previously little-used "purchase method" of accounting for the cost of mergers.

But if 1996 was not the year of major bank deals, it was surely notable for several major transactions at prices previously unheard of for thrift institutions.

In November, ABN Amro North America, a unit of the Dutch banking giant, agreed to pay $1.9 billion, or more than twice book value, for Michigan's well-regarded Standard Federal Bancorp. A month later, Mercantile Bancorp. agreed to pay $1 billion, also more than twice book value, for St. Louis neighbor Roosevelt Financial Group.

St. Louis was clearly a hot spot for merger activity in 1996, with three of the year's top 10 deals - the third being Mercantile's agreement to buy Mark Twain Bancshares for $855 million.

California saw a major round of consolidation last year - an occurrence long predicted by analysts. In addition to the Wells Fargo-First Interstate deal - and perhaps because of it - American Savings was sold to Washington Mutual Inc. and Cal Fed Bancorp joined First Nationwide Bancorp.

And what of 1997? With the big run-up in bank stock prices during the 1996 bull market on Wall Street, many predict - and few would be surprised by - a renewed surge in the pace of industry consolidation.

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