Small banks need big packaging.

• Position: REGIONALREPORT

Community banks in North Carolina aren't worried about being too big to fail--but being too small to succeed is another matter. That's what one Tar Heel banker told a joint study by the Federal Reserve System and the Conference of State Banking Supervisors, which includes N.C. Commissioner of Banks Ray Grace. Community Banking in the 21st Century, released in October, says the greatest opportunity for North Carolina community banks lies in consolidation. "Scale and scope are very important to the viability of the community-bank business model. Smaller banks do not enjoy the economies of scale to spread new regulatory costs."

Such concentration is already underway. In 1994, the three largest banks in North Carolina held 42.2% of deposits in the state. Now they control nearly 80%. Bank of America Corp. holds about half in Mecklenburg County, where it's headquartered. To survive on their own, the report surmises, smaller banks must develop niches. For example, Wilmington-based Live Oak Bank may only have 0.1% of state deposits, but it was the fourth-largest Small Business Administration lender in the country in fiscal 2012 (Regional Report, April).

N.C. deposit market share 2013 Wells Fargo, San Francisco 14.8% BB&T, Winston-Salem 15.5% Bank of America, Charlotte 48.8% 20.9% First-Citizens, Raleigh 3.8% PNC, Pittsburgh 2.4 SunTrust, Atlanta 2.1 First Bank, Southern Pines 0.7 Fifth Third Bank, Cincinnati 0.7 Bank of North Carolina, Thomasville 0.6 Capital Bank, Miami 0.6 Other 10.1 Most branches in N.C. BB&T 365 Wells Fargo 335 First-Citizens 260 Bank of America 182 PNC 163 SunTrust 160 Woodforest, The Woodlands, Texas 90 First Bank 82 The Fidelity Bank, Fuquay Var/na 63 Fifth Third Bank 59 COUNTY INDEX 1. Alamance $13.069 21. Chowan $12,077 41. Guilford 2. Alexander $8.696 22. Clay; $14,363 42. Halifax 3. Alleghany $15,515 23. Cleveland $12,270 43. Harnett 4. Anson $9,349 24. Columbus $10,923 44. Haywood 5. Ashe $17,745 25. Craven $11,420 45. Henderson 6. Avery $13,824 26. Cumberland $8,754 46. Hertford 7. Beaufort $22,913 27. Currituck $7,490 47. Hoke 8. Bertie $6,231 28. Dare $28,516 48. Hyde 9. Bladen $6,914 29. Davidson $15,273 49. Irdell 10...