Bank Mergers Are Rising Along With Stock Prices; Cleaner loan portfolios and expectations of leaner profits ahead are also behind latest consolidation phase.(INDUSTRY SNAPSHOT)(REGIONAL BANKS)

Byline: LAURA MANDARO

The next time you drive by your hometown bank, it may sport a new name and owner.

Regional and community bank mergers have picked up this quarter and are expected to continue increasing in the first half of 2004.

Look what's happened in December alone. Among deals of more than $200 million, which include all but the tiniest community banks, seven banks and thrifts announced unions totaling $2.8 billion. That's up from three deals worth $2.3 billion in November.

The fourth quarter, even excluding the $49 billion megamerger of Bank of America Corp. and FleetBoston Corp., had 120% more deals worth 171% more than the third quarter's, according to Thomson Financial.

Behind the activity are higher bank stock prices that give buyers more negotiating power with their potential targets.

Many banks have also cleaned up their commercial loan portfolios, thereby easing acquirers' fears they could get stuck with a pile of soured credits.

Finally, buyers and sellers are looking ahead to a period where they will likely have more trouble generating earnings at their recent …