The value of the top five bank mergers announced during the first half of 1999 plunged more than 75% from the year earlier.

The value of this year's top five announced deals was $49 billion, down from $210.1 billion in the first half of 1998, according to American Banker research and Sheshunoff Information Services, a Thomson Financial company.

As dramatic as the plunge may be, it indicates not so much a decline in activity as a changing impetus behind mergers. Last year's biggest deals were aggressively expansionary, in which acquirers sought to create banking companies that stretched from sea to shining sea.

They included North Carolina-based NationsBank's deal for San Francisco- based BankAmerica Corp. and Minneapolis-based Norwest's deal for San Francisco's Wells Fargo & Co. The biggest deal, between Citicorp and Travelers Group, combined two of the nation's largest financial services companies.

This year mergers have been more defensive. Partly in response to the creation of the super giants, large regionals have been trying to shore up their positions in local markets, often to avoid being gobbled up themselves.

"This year bank deals are smaller, and banks are merging to preserve their position in their markets," said Michael Krebs, a mergers and acquisition attorney at Nutter, McClennan & Fish LLC in Boston. "Banks are looking to preserve their position in the market as opposed to more dramatic mergers that spanned the continent."

The largest deal announced this year, valued at $16 billion, was between two Boston banking companies, Fleet Financial Group Inc. and BankBoston Corp. The postmerger company will dominate banking in New England.

Similarly, the fifth-largest announced deal was between two companies- Zions Bancorp and First Security Corp.-in the same market, Salt Lake City.

The second-largest was between companies in the Midwest, Milwaukee's Firstar Corp. and Mercantile Bancorp of St. Louis. And the fourth-largest would combine two companies in the Southeast, Amsouth Bancorp of Birmingham and First American Corp. of Nashville.

The lower valuations are not great news for investment banks and law firms that advise on such deals, but they do not mean that fewer banks are merging, analysts say.

Indeed, they say that regional bank deals will continue at a robust clip as more banks decide to cash out in the face of an increasingly competitive market. The trend accelerated in this year's first half as announced deals outstripped deals that closed. While the top five deals announced were valued at $49 billion, the deals that closed were worth only $11.5 billion.

Neither Fleet nor BankBoston wanted an outside acquirer to enter their market, Mr. Krebs said. "If that had happened, the remaining company would have been left with a severe disadvantage."

Many of the bank combinations this year were financially strong banking companies taking over languishing ones. That trend is likely to continue, said Michael Plodwick, a bank analyst at Lehman Brothers Inc.

"We are in the best period for banking," Mr. Plodwick said. "And if you are not driving for revenues or if you haven't figured out the magic bullet for gaining price/earnings expansion, then you will be at the mercy of those that have."

Carole S. Berger president of Berger & Jackson Capital Management LLC, also said she sees a continual flow of midsize bank deals this year.

"You will see more deal flow, because earnings are decelerating," Ms. Berger said. "If you are buyer you can look for significant synergies in other companies, and if you are a seller you can look forward to better growth and a premium to the market."

But not everyone expects super-heated merger activity-even among regionals-in the second half.

"We have come to an impasse in the bank merger cycle," said Nancy Bush, a bank analyst at Ryan, Beck & Co. "We really have not seen as much activity as many have speculated.

"And we're not sure if we are going to see so much more," Ms. Bush said. "We do not have any clear indications yet that revenue is slowing or that asset quality is a problem. We don't have the macro factors that would lead these companies to the table to do a deal."

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