The fewer the better.

• Position: North Carolina banks - Industry Overview

As their number diminish, the state's banks get bigger and stronger.

The count keeps dropping: from 78 in March '93 to 71 in December '93 to 69 in June '94. The number of North Carolina banks gets smaller practically every quarter as the banks merge and converge at a rapid clip.

Over the past year and a half, there have been more than a half-dozen mergers and acquisitions, many of them midtier banks (assets of $2 billion-$10 billion) snapping up community banks. Recent acquisitions include First Charlotte by Rocky Mount-based Centura; Bank of Bladenboro by Raleigh-based First Citizens; and Mooresville-based Bank of Iredell by Whiteville-based United Carolina Bank.

Not on the books yet is the merger of Wilson-based BB&T Financial and Lumberton-based Southern National Corp. Expected to be completed in the second quarter, the merger of the state's fourth- and sixth-largest banks will create a $19 billion institution that, executives say, will be No. 1 in deposit market share in North Carolina, beating out the Big Three - NationsBank, First Union and Wachovia. The new company, called Southern National, will be based in Winston-Salem and led by BB&T Chairman John Allison [cover story, January 1995]. (Southern National Chairman Glenn Orr won't go away empty-handed. His settlement gives him $1.65 million a year for the rest of his life.)

Also in the works is Durham-based CCB Financial's acquisition of Salisbury-based Security Capital Corp. With the purchase of the $1.2 billion bank and thrift holding company, CCB will boost its assets to $4.6 billion (sixth among Tar Heel banks) and have a presence in all three metropolitan markets. "Our advantage in aligning with CCB is to create a strong banking franchise along [Interstate] 85," Security Capital CEO David Jordan says. "We want to go forward and position ourselves to be a survivor in the banking world."

All this upheaval and talk of survival is bankers' response to an increasingly competitive market, made more so by the nationwide interstate-banking law Congress passed last fall.

"Interstate banking will benefit large North Carolina banks. They can consolidate operations and save millions of dollars," says Harry M. Davis, chairman of the Finance, Insurance and Real Estate Department at Appalachian State University. Most observers expect NationsBank and First Union, both based in Charlotte, to expand aggressively outside the Southeast. With their acquisitions, midtier banks are positioning...