In the wake of First Chicago Corp.'s surprise announcement of a merger of equals with NBD Bancorp last week, midwestern banks are suddenly looking like grist for the consolidation mill.

NationsBank Corp. and Banc One Corp. are both rumored to be eager to acquire in the Midwest, and National City Corp. said it is interested in buying a bank with $5 billion to $15 billion of assets.

Among the banks seen as likely targets are First of America Corp., Kalamazoo, Mich.; Mercantile Bancorp., St. Louis; Fourth Financial Corp., Wichita, Kan.; Star Banc Corp., Cincinnati; and Old Kent Financial Corp., Grand Rapids, Mich.

Analysts also talk of banks that are "on the bubble." Generally they have roughly $30 billion of assets, meaning they are both small enough to be acquired by a large buyer like NationsBank and large enough pull off a merger of equals or remain independent.

Banks in this category include Boatmen's Bancshares, St. Louis; Comerica Inc., Detroit; and Fifth Third Bancorp, Cincinnati.

"It's a lot like spring break at Daytona Beach out there; everybody is checking each other out," said Joseph Stieven, a banking analyst with St. Louis-based Stifel, Nicolaus & Co.

Consolidation has already swept the East Coast, with Fleet Financial Group, First Union Corp., and PNC Bank Corp. announcing multibillion-dollar deals.

But aside from the First Chicago transaction, consolidation is still slow to take hold in the Midwest, a region with a large surplus of banks and thrifts.

Banc One, normally one of the region's most voracious acquirers, has been notably absent from this year's merger activity. But in an interview last week, executive vice president William P. Boardman, a senior vice president at the Columbus, Ohio-based company, said that was a function of low bank stock prices, which made deals less palatable.

"As prices have rebounded we see ourselves very much involved," Mr. Boardman said, suggesting that his bank would make a good partner for a smaller institution that has not made the investment in technology needed to compete.

One investment banker said Banc One may look a little farther south, and perhaps buy Memphis-based First Tennessee National Corp., which would open up a new region to the bank.

"There also may be a wave of in-market consolidations as banks look to avoid being picked off by Hugh McColl," he added, referring to NationsBank's chief executive. For example, he said, First of America could merge with Old Kent in an effort to ward off the larger banks.

National City president and chief operating officer David Daberko said the Cleveland bank did not fear the new entity to be created by the First Chicago-NBD merger, and would look to acquire a bank with assets from $5 billion to $15 billion.

"We are well postured to a do a deal anytime an advantageous transaction comes along," he said.

Another investment banker said National City would make a perfect fit for Pittsburgh-based Mellon Bank Corp. or for the combined First Chicago- NBD.

NationsBank is widely rumored to be champing at the bit to get a deal done. It was thought to be interested in acquiring First Chicago, and now is said to be roving the region looking for another bank.


In trading on Tuesday, bank stocks closed only slightly down in defiance of the overall stock market, which swooned as profit taking and a stumbling technology sector depressed the indexes.

The Dow Jones industrial average plunged 50.01 points to 4,686.28, or 1.06%, while the broader Standard & Poor's 500 fell 0.76%. The S&P bank index fell 0.03%.

Chemical Banking Corp. surged $1.625 to $49.75 on the strength of a positive earnings report and an expanded share repurchase program. Chemical said it would buy 25 million shares, or 10% of all its shares outstanding, instead of just six million shares as was previously announced.

Chemical will spend $1.2 billion on the program, which would suggest that the New York money-center is not about to enter a merger with Chase Manhattan Corp., as was rumored in the marketplace last week.

Share repurchases taint shares for the purposes of a pooling-of-interest transaction.

Chase stock dropped 37.5 cents to $50.75.

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