For Carolina State Bank shareholders, a year was worth the wait-and another $8.1 million.

The bank, in Shelby, N.C., was ready to sell last July until its suitor, Granite Falls-based Bank of Granite, pulled out of the deal. Bank of Granite had planned to pay $30.2 million.

This month, First Charter Corp., Concord, came along and signed a second deal to buy Carolina State-for $38.3 million.

Carolina State chief executive officer John Godbold said Bank of Granite's change of heart played to Carolina State's advantage, as changes in the industry drove prices up.

Analysts and other bankers say the rising prices are a result of good timing, a booming market for bank stocks, and a shrinking pool of community bank acquisition targets.

"I think quite honestly we're seeing a general trend of premium inflation," said Frank J. Barkocy, managing director of Josephthal, Lyon & Ross in New York. "There are not too many choices left to enter particular markets ... so banks might have to pay up because of that scarcity."

Chris Hargrove, president of Professional Bank Services, a Louisville, Ky., consulting firm, said rising bank stocks are also a key reason for the markup.

Banks small and large are paying premium prices to enter new markets or bolster their presence in their own.

Although much of the activity and high prices are evident in the Middle Atlantic states and the Southeast, analysts and investment bankers say it typically depends on the particular market.

If a desirable location has only one or two independent community banks left, prices are likely to be higher.

"Paying 21 times earnings is not surprising anymore," said Arnold Danielson, chairman of Danielson Associates in Rockville, Md. He was referring to banks in Maryland, Delaware, Virginia, and the District of Columbia. "The standard used to be 14, 15 times earnings. In the states where there's competition, it's 20 times or more."

In Florida, several out-of-state regional banks have set the tone for community bank pricing, said Ronald W. Goff, first vice president of William R. Hough & Co., a St. Petersburg-based investment firm. "They have sort of raised the bar for everyone."

For example, $12 billion-asset Compass Bancshares, Birmingham, Ala., paid almost three times book value this year for $163 million-asset Enterprise National Bank in Jacksonville.

L. Glenn Orr Jr., founder of Orr Management, a Winston-Salem, N.C., investment bank, said the scarcity of local banks is what helped him secure a good price for Carolina State. He said First Charter couldn't really pass up the chance.

But some banks don't see how others can make such costly acquisitions. "We just don't understand how these banks are paying these prices without substantial dilution, which we're not willing to take at our bank," said John A. Forlines Jr., chairman and CEO of Bank of Granite.

Still, analysts say many banks don't have a choice when it comes to paying a steep price.

"Small to midsize banks feel if they're not doing acquisitions, they're going to be acquired," said Chip Wittman, bank analyst at Wheat First Butcher Singer of Richmond, Va. "There's plenty of incentive for more consolidation."

Fear over what will be left to acquire is driving many mergers these days.

"Every one that's acquired is one less for someone to buy," Mr. Orr said. "Once the regional banks that are buying these are gone, I think the prices will go down pretty quickly."

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