A new wave of takeovers may be getting under way in the thrift industry.

Two sizable deals were announced earlier this week, and analysts say more could be in store as falling interest rates boost the appeal of thrifts.

On Tuesday, Firstfed Michigan Corp. and Charter One Financial Corp. agreed to merge in a deal valued at $1.1 billion, and First Union Corp. agreed to buy RS Financial Corp., Raleigh, N.C., for $111.6 million.

Earlier this year, high interest rates and low stock values had stymied merger activity. But as rates have fallen and stock prices of acquirers have surged, interest in thrifts has suddenly rebounded, experts said.

"Thrifts are popular because the environment is one where banks still value the deposit franchises thrifts have," said David Levy, co-head of the financial institutions group at Salomon Brothers Inc., which advised Firstfed, Detroit.

He added that there has been "a limited number of bank-buying-bank deals because of the high prices demanded by sellers."

Banks typically sell for between 1.8 and 2 times book value, while thrifts usually sell for 1.6 times book value, said David West, an analyst with Davenport & Co.

First Union paid 1.62 times book value for RS Financial, a $809 million- asset thrift that was put in play when First Citizens Bancshares Inc. made a hostile acquisition bid a few months ago.

"First Union is going after customer base and market share, but feels more comfortable going after thrifts than banks," Mr. West said. "Thrifts are a very economical way to expand." Since January, First Union has bought five thrifts with $5.37 billion in assets.

While many observers believe most mergers will be ones in which banks buy thrifts, the merger of Firstfed and Charter One demonstrates that thrifts also will be active acquirers, said Mr. Levy.

That deal, which will create the nation's fifth-largest publicly traded thrift, is billed as a merger of equals because each companies' shareholders will own half of the new company.

But observers said Charter One was the acquirer, evidenced by its stock's 50 cents rise to $25.25 on Wednesday, compared with Firstfed's stock rise of $2.50 to $29.

The new bank will be based in Charter's Cleveland headquarters, and Charter will issue 1.2 shares for each Firstfed share.

Charter One essentially paid 1.35 times book value for Firstfed, said Wayne Bopp, an analyst with Stifel, Nicolaus & Co.

Charles J. "Bud" Koch, chief executive of Charter One and chairman of the new company that will retain the Charter name, said once his company is done digesting its new partner over the next year, he would look for additional thrift acquisitions in surrounding states.

Firstfed is one of a dying breed of wholesale banks and thrifts, observers said. While the bank has $8.5 billion in assets, it has only $3.2 billion in deposits.

As a result, the first major undertaking of the new company will be to restructure the balance sheet and sell off many of Firstfed's mortgage- backed securities and swaps.

These changes, combined with a $13 million merger charge, will result in a charge of $50 million to $75 million.

The balance sheet restructuring will include terminating the remaining $850 million combined interest rate swap position, liquidating $1.5 billion to $2 billion of low-yielding fixed-rate assets, and repaying $1.5 billion to $2 billion of short-term borrowings.

Montgomery Securities advised Charter One.

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