First Union Corp.'s recent deal to buy Signet Banking Corp. turned heads not only for its $3.25 billion price, but also because that's 3.5 times book value-for an unremarkable banking company.

How was it possible, some investors asked, that a regional bank like Signet could sell for such a price, when just two years ago a Fleet Financial Group could get a bank like Shawmut National Corp. for only two times book?

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