Many observers confidently predict that as mergers continue to rage, so-called "mid-tiers" - banks with assets between $1 billion and $10 billion -will be squeezed out of existence.

It's happened already in several southern states. South Carolina, Georgia, and Florida have lost most of their publicly traded midsize banks. Charlotte-based NationsBank in January bought one of the last in Georgia, Atlanta's Bank South Corp. Only Synoyus Financial Corp., of Columbus, Ga., remains.

North Carolina stands out as an exception.

The state has four midsize banks since last year's merger between Southern National Corp. and BB&T Financial Corp., both mid-tiers, formed a $20.5 billion holding company. And a fifth, smaller institution is about to break into the midsize ranks.

The mid-tiers now are Raleigh-based First Citizens Bancshares, with $7.4 billion of assets; Centura Banks Inc. of Rocky Mount, with $5.3 billion; Durham-based CCB Financial Corp., $5.1 billion; and Whiteyille-based United Carolina Bancshares, $3.6 billion.

The bank expected to enter the category within a year is fast-growing Triangle Bancorp of Raleigh, headed by former Centura executive Michael Patterson. With its just-announced purchase of Granville United Bank, Triangle has nearly $900 million of assets.

Why a bumper crop in North Carolina when other states have seen mid- tiers disappear?

Look to North Carolina's banking giants for an answer, says analyst John Mason of Interstate/Johnson Lane. First Union Corp., NationsBank Corp., and Wachovia Corp. are holding a protective umbrella over the midsize banks, he says. The competitive threat they pose offers protection from expansion- minded predators who might be thinking about establishing a foothold in the Tarheel state.

"If somebody contemplates coming to North Carolina from the outside," Mason says, "I would think that they would go for somebody large, able to stand up to First Union, able to stand up to NationsBank, able to stand up to Wachovia. For that reason we have settled upon Southern National as the most likely candidate to be acquired by an outsider, outside of the South."

Those who predict the demise of midsize banks say that such institutions lack a clear identity.

Small community banks sell service. Big banks offer cheaper prices, huge ATM networks, and a vast array of products - everything from credit cards to derivatives. Although midsize banks say they combine the best of the two, skeptics say bank's can't be all things to all people.

"You can't continue to offer the same hometown service from 100 offices," Mr. Mason said.

Nevertheless, bankers at several of these companies insist they're committed to an independent course.

What's not clear is how long the protection from North Carolina's big banks may last. After all, a buyout offer may well come from an in-state competitor before a Midwestern bank comes knocking.

Banking consultant Bert Ely says North Carolina may have these banks around for another five or 10 years. They produce above-average returns and are nimble competitors compared to their bureaucratic big brethren, he said.

Analyst Moshe Orenbuch of Sanford C. Bernstein & Co. said strong earnings gains by N.C. mid-tiers have allowed them to control their destiny. But the double-digit earnings banks have posted may soon give out. If that happens, consolidation will heat up.

"There's a waiting game going on," Mr. Orenbuch said. "I think in general the future of those kinds of banks is they will become part of larger organizations. It'll happen slower there (in North Carolina), but I think it'll happen."

Several high-ranking bank executives, merger specialists, and analysts predict that within two to three years two of North Carolina's midsize banks will disappear.

A number of things might provoke change. Aging executives may very well decide it's time to sell. And takeover premiums are eroding, making banks more affordable to prospective buyers, said Tony Plath, a finance professor at UNC Charlotte.

Another factor is the sheer momentum of industry consolidation. Last year was the year of the megamerger: Chase-Chemical, First Union-First Fidelity, First Interstate-Wells Fargo, and Fleet-Shawmut.

This may be the year consolidation picks up among the midsize banks, particularly if NationsBank or First Union decides it wants to build market share in its own backyard, several of their competitors said.

Robert Mauldin, Centura's chairman and chief executive, likes to say that banks are sold, not bought.

The most likely sellers are CCB and United Carolina, said some of the state's senior bankers and retired executives who know the top management at both companies.

CCB is seen as a popular target because it boasts large deposit share in the state's urban markets; since 1993 it also has marketed a credit card nationwide, offering a rate lower than many banks.

United Carolina, which dominates the southeastern corner of the state and collects deposits from many small, stable farming communities, is also viewed as a possible seller because Rhone Sasser, its 59-year-old chairman and chief executive, is expected to want to step down in a couple years.

UCB, the smallest of the state's midsize banks, also has been slow to expand outside its home base. Some of UCB's competitors said this could be a sign that the bank may not be aggressively charting an independent course.

Out of the equation, most believe: First Citizens Bancshares. More than 73% of the Raleigh-based bank's voting stock is controlled by members of the Holding family.

Centura is one bank publicly sending plenty of signals that it wants to stay independent. Centura has caught the eye of Wall Street for its willingness to invest in home-banking technology early on while trying innovative management styles to attack bureaucracy.

Last year, it became the first N.C. bank to offer customers a way to bank and pay bills by computer through Microsoft's Money and Intuit's Quicken software programs. At the end of June, the bank had opened 6,000 home-banking accounts since it began offering the software in the fall; half of those are new customers, executives said.

Analysts also like Centura's efforts to instill a sales culture. Last year, it took away all administrative work from nearly 600 branch managers and loan officers to free them to be full-time salespeople. On July 1, it got rid of all vice president titles.

Mr. Mauldin's heir at Centura, president Cecil Sewell Jr., 49, is regarded by competitors as an ambitious executive who wants to run the bank. Mr. Sewell succeeds Mr. Mauldin Feb. 1 as chairman and chief executive.

"We know what it would take to buy us, and we don't believe anybody's willing to pay it," Mr. Sewell says.

CCB may not be trumpeting news about its technology strategies, but it's investing with the intention of being a survivor, bankers there said.

Chief executive Ernie Roessler "likes it here and is very much committed to a course of independence," says Rob Savage, a senior vice president for marketing and planning.

Mr. Savage said there's a strong case to be made for midsize banks: They can compete on price with the big players, and senior loan officers tend to stay put in small towns longer than at the big banks, earning more loyalty from small businesses and other customers who depend on fast, reliable service.

Today only one major out-of-state bank - Birmingham, Ala.-based SouthTrust - is trying to muscle its way into North Carolina, a market known for its fiercely competitive loan pricing and legion of efficient, profitable banks.

SouthTrust has been in the market since 1991, when it acquired a thrift. As of June 30 the bank had $955 million of assets in North Carolina.

The environment throws up a wall to most out-of-state banks considering buying one of the midsize banks, analysts and bankers said.

A midsize bank probably isn't big enough to give Columbus, Ohio-based Banc One or San Francisco's Wells Fargo a strong foothold to compete with the state's four large banks. The more likely scenario is NationsBank or First Union buying one of the midsize banks, analysts said.

Another likely scenario: a merger of equals between United Carolina and CCB. Several bankers say the two talked, but couldn't resolve social issues, such as who would lead the newly created bank and where the headquarters would be. But a deal may be likely if Mr. Sasser is willing to step aside, those sources said.

Said Rob Savage of CCB: "I think we would give careful consideration to such a deal. I can't picture Ernie (Roessler) taking a contract to walk away. It's something that comes up from time to time that you take a look at. With a merger of equals, there are so many social issues to be ironed out."

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