The dollar value of banking industry mergers and acquisitions soared 61% during the first half of 1995, as the combined prices of announced deals topped $18.4 billion, according to SNL Securities.

The bulk of the rise was due to a few megadeals, as large, strategic transactions dominated the scene, rather than the small, tactical "fill-in" acquisitions seen last year.

As a result, though total deal value was up 61%, the number of actual deals declined from 280 in the first half of 1994, with a total value of $11.4 billion, to 199 during the first half of this year.

"In 1994, a lot of deals were struck where larger banks bought smaller banks using purchase accounting as a way of sopping up excess capital," said Michael Martin, co-head of the financial institutions group at CS First Boston Corp.

"But the larger, more strategic deals are now on the minds of regional bank chief executives more than at any time in the last couple of years," he said. "What is their next step and how do they maintain profitability in an environment where revenue growth is slowing are the major questions confronting regional banks."

Leading the way in the first half was First Union Corp.'s $5.4 billion planned purchase of New Jersey's First Fidelity Bancorp. in late June, the largest bank deal in the nation's history.

First Fidelity chief executive Anthony P. Terracciano cited the need for technological investment and his bank's flattening revenue and earnings prospects as reasons for the merger.

Earlier in the year, Fleet Financial Group agreed to buy Shawmut National Corp. for $3.4 billion, creating a major New England banking company with more than $80 billion of assets.

That deal leaves the future of BayBanks Inc. and Bank of Boston Corp. in doubt, with the stock of both banks bid up on takeover speculation.

In fact, Bank of Boston pushed for a merger of equals with First Fidelity, before that bank decided on a sale to First Union.

While the two largest deals were on the East Coast, the Midwest also had its share of deals.

Michigan National Corp. finally sold itself after more than a year of intense shareholder pressure to do so. National Australia Bank agreed to buy the struggling midwestern company for $1.5 billion in cash.

Two midwestern thrifts combined in a merger of equals, as Charter One Financial and Firstfed Michigan Corp. merged to create a company with nearly $15 billion in assets.

The $5.1 billion merger of equals between First Chicago Corp. and NBD Bancorp was announced in July, so is not included in first half numbers.

In the West, there was little activity besides U.S. Bancorp's $1.6 billion deal to buy West One Bancorp. While that deal set off speculation about remaining banks in the region, like First Security Corp. of Salt Lake City, transactions have been scarce.

In the South, First Union continued to buy thrifts throughout the region, nabbing yet another prized company in Miami. In January, the Charlotte, N.C., bank agreed to buy Coral Gables Fedcorp to give the superregional the No. 1 market share in Dade County.

In June, NationsBank Corp. agreed to buy Intercontinental Bank in Miami, but the First Union competitor is still a distant third in market share in lucrative Dade.

Perhaps the biggest story of the first half of 1995 will not show up in any tables, however.

Investor Michael Price's disclosure that his Heine Securities owns 6.1% of Chase Manhattan Corp., and his call to break up the money-center, rocked the industry as shareholder activism was brought to the highest levels of U.S. banking.

His argument that Chase was worth more in parts than as a whole resonated in many circles as banks have combined different companies to create financial conglomerates.

While that story's conclusion is unknown, observers agree that merger mania will continue to sweep the U.S. banking industry.

"Most people consider this as a critical year in better defining who the survivors are," said William Rubenstein, a partner at Skadden, Arps, Slate, Meagher & Flom. "The reality of limited revenue growth will require many companies, including some fairly large organizations, to affiliate with others."

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