Big banks seek best bang for their bucks.

• Position: Banking

It's not always true that bigger is better. But North Carolina's two biggest banks certainly have had it better than their competitors during the past few years. "These guys are making tons and tons of money," says Tony Plath, banking professor at UNC Charlotte. "The question is, what do you do with it?"

In the case of the state's largest, Charlotte-based Bank of America, the answer is: spend a bunch of it. In October, BofA announced one of the nation's biggest bank acquisitions in years--its $47 billion purchase of Boston-based FleetBoston Financial. CEO Ken Lewis pulled the trigger despite lingering questions over trading irregularities in his bank's family of mutual funds. In the third quarter, the bank set aside $100 million to cover costs of the mutual-fund scandal and still posted record earnings of $2.9 billion. Through September, it had earned $8.1 billion.

Charlotte-based Wachovia, the state's second-largest bank, was still integrating the 2001 megadeal in which First Union bought Winston-Salem-based Wachovia and took its name. As the inaugural Wachovia Championship, Charlotte's only PGA Tour event, neared in May 2003, Wachovia was still changing the signs on First Union branches. In July, it bought Prudential Financial to expand brokerage services. Along the way, it posted record profits, earning $3.2 billion through the third quarter.

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So will CEO Ken Thompson use all that money to go shopping? "I think they want to expand the footprint, probably in the Northeast," says Christopher Marinac, analyst with FIG Partners LLC in Atlanta.

The state's third-biggest bank, BB & T of Winston-Salem, completed its $3 billion takeover of Falls Church, Va.-based First Virginia Banks in July and said it would cut 900 jobs in Virginia. BB & T restructured its finances in 2003, partly because of the First Virginia deal. In the third quarter, it took a merger-related $15 million charge and retired $249 million in debt. That knocked BB & T's third-quarter earnings down 70% to $116 million. Through September, it had made about $760 million, down 21% from 2002. In December, it agreed to buy Republic Bankshares of St. Petersburg, Fla., for $436 million.

Now BB & T has to prove that it can boost earnings through internal growth and cost control as Wachovia and BofA have done. "BB & T has to say no to acquisitions for a temporary period to demonstrate to investors that they can survive without doing deals," Marinac says.

In Raleigh...