Big banks are getting bigger, but small banks can still prosper, according to celebrated investor Warren E. Buffett, who continues to single out North Carolina's Bank of Granite Corp. as his favorite example.

"It's a fabulous operation. It disproves a lot of myths that people have about banking," Mr. Buffett asserted in a weekend interview before the annual meeting of Berkshire Hathaway Inc., of which he is chairman.

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