'Another great year' for branching out.

• Position: Banking in North Carolina - Industry Overview

Two big deals shook up North Carolina banking in 1996 - NationsBank Corp.'s $9.46 billion offer for St. Louis-based Boatmen's Bancshares and Southern National Corp.'s $985 million bid for United Carolina Bancshares. But the banking wars weren't being fought just in the boardrooms. There were skirmishes in corner groceries and on home computers.

Durham-based CCB Financial Corp., for example, began putting 40 branches in Harris Teeter supermarkets in Raleigh, Greensboro and New Hanover County. It already had five in Cary, Greensboro, Wilmington and Winston-Salem. Charlotte-based NationsBank was wheeling automated teller machines into 20 Harris Teeters in Charlotte, and Rocky Mount-based Centura Banks responded with branches in rival Hannaford Bros. stores.

In June, NationsBank began offering personal-computer banking, a year after Centura launched its cyberbanking program. "In the early stages of the rollout, we were signing up 10,000 customers a day," NationsBank spokesman Dick Stilley says.

Aggressive banking, healthy loan portfolios and consolidations, along with solid regional economic growth, propelled Tar Heel banks to records. "It was simply another great year for banking," says Paul Stock, executive vice president of the 112-member North Carolina Community Bankers Association. "We've had four years in a row."

Banking's vital signs were excellent. Total assets for state and nationally chartered banks were $181 billion on June 30. "The delinquency ratio was 1.44%, which indicates our banks have good asset quality," says Otis Meacham, the N.C. Banking Commission's deputy commissioner. Ratios of less than 3% are considered acceptable.

Vernon Plack, banking analyst with Richmond, Va.-based Scott & Stringfellow, says North Carolina bank stocks "outperformed the rest of the industry, largely because they're showing robust earnings growth in an environment in which earnings in general are slowing down."

There were some good reasons. "The strategies implemented, particularly by First Union and NationsBank, are paying off," he says. "They're trying to become more full-service providers of financial services and products and not just lenders. Both institutions saw very strong gains in fee income, which more than compensated for the lack of robust loan growth."

NationsBank officials said the Boatmen's deal marked the bank's re-emphasis on traditional banking services, but investors initially didn't seem to have much stock in tradition...