Community bank merger activity is heating up again east of the Mississippi, as two deals and one set of negotiations were announced just days after the end of the most active year in recent memory.

Great Financial Corp. of Louisville, Ky., and Keystone Financial Corp. of Harrisburg, Pa., are targeting in-market transactions, while North Fork Bancorp. of Mattituck, N.Y., is looking to expand its presence in the Big Apple's Long Island suburbs.

The deals are the first transactions among community banks in 1995, although regional giants First Union Corp. of Charlotte and NBD Bancorp of Detroit have already snapped up a pair of small banks.

The transactions follow a heavy year for mergers. Last year, 518 deals among all banks were announced, for a total price of $22.1 billion. About $187.9 billion of assets were sold.

That pace is expected to continue for community banks, although it might slow for larger transactions, said Ed Dillon, an analyst for SNL Securities, Charlottesville, Va.

"I don't think we'll really see any drop-off" for community banks, he said. But "it's hard to say it'll get much more active than it is now. There are so many transactions going on these days."

Great Financial announced Jan. 9 that it will acquire $123-million-asset First Financial Shares of Richmond, Ky., for $17.6 million.

Under the terms of the deal, Great Financial will pay $50 a share in cash for all outstanding shares of First Financial, the holding company for First Federal Savings Bank.

First Financial will operate as a separate subsidiary of Great Financial, with president and chief executive Tony D. Whitaker directing both First Financial and Great Financial's branch operations in central Kentucky.

"What it really does is fills out our geographic region over central Kentucky," said Paul M. Baker, chairman and CEO of Great Financial. "It's a nice fit."

The acquisition of First Financial, which doubles Great Financial's deposits in central Kentucky, is crucial to Great Financial's expansion, Mr. Baker said. The company's operations already cover the urban areas, but has traditionally been centered around its home base of Louisville.

"This has given us significant position in other markets of Kentucky," Mr. Baker said.

This is the first acquisition by Great Financial, the state's largest thrift, since it converted to a stock institution last spring, raising $165 million in capital. Mr. Baker said that the $1.8-billion-asset bank, which had a Tier 1 capital ratio of about 15% at Sept. 30, is looking to expand into other parts of Kentucky, as well as southern Indiana.

In Pennsylvania, $4.7-billion-asset Keystone Financial Corp. will buy Shawnee Financial Services Corp., a $72-million-asset bank holding company, for about $15 million.

Keystone will issue 6.25 shares of its stock for each of Everett-based Shawnee's 80,184 outstanding shares.

Under terms of the deal announced Jan. 6, Shawnee's four branches will be merged with Mid-State Bank, Keystone's subsidiary serving Bedford County, in central Pennsylvania.

The deal is expected to close by the second quarter of 1995.

The purchase "gives us more significant penetration into the Bedford County market," said Donald F. Holt, senior vice president and controller of Keystone. "The efficiencies that we could gain from an in-market affiliation as well as their wish to take advantage of the services provided by a larger organization made for a nice fit."

Not to be left out of the action, North Fork Bancorp., a $2.9-billion- asset bank holding company, plans to announce a deal with Great Neck Bancorp for about $20.8 million.

Under terms being discussed, $125-million-asset Great Neck's shareholders would get stock in a new company that would keep $13.3 million in performing and nonperforming loans that North Fork didn't want. The shareholders would also retain an equal amount of capital from North Fork to back up the loans.

Mattituck-based North Fork would then pay the shareholders an additional $7 a share in cash, or about $7.5 million, for the remaining $1 million of capital, $110 million of deposits, and other performing loans and investments.

"It is very unusual and quite clever," said Daniel M. Healy, chief financial officer of North Fork. "We're in effect buying a branch, paying $7.5 million for it, and we get deposits and earning assets."

Mr. Healy said he expected the deal to go through shortly.

"We're about a day away from it," he said. "I don't see any interruption on this. It'll happen."

If it's completed, the deal would mark North Fork's second westward expansion in a year from its base on the eastern tip of Long Island. In November, the bank bought Metro Bancshares, which had a $30-million-deposit branch in Great Neck.

"We think by combining (Great Neck) coupled with our branch, we will have a sizable presence in an affluent area where we haven't been before," Mr. Healy said. "It meets with our strategy of moving into new marketplaces through acquisitions and de novo. It's a perfect situation for us."

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