It's the billion-dollar question for Maryland banks: Do they need at least that much in assets to survive?

"Who knows what the magic number is? A billion, $1.5 billion, $750 million?" said Ronald Paul, chairman of Eagle Bancorp, parent of the second-largest Maryland-based bank, with $2.96 billion in assets. "I can tell you it is getting harder and harder for the smaller bank."

Banks of all sizes are feeling more pressure. Profits are squeezed by historically low interest rates meant to spur borrowing, yet loan demand still remains soft. Meanwhile, banks are dealing with the growing costs of new regulations and keeping up to date with the technology and services that customers demand.

These challenges have prompted some in the banking world to suggest that institutions must have at least $1 billion in assets to easily absorb these costs, remain profitable and, ultimately, keep investors happy.

About 80 banks have headquarters in Maryland, but only five have hit the billion-dollar mark. That has triggered speculation that Maryland, like other states, might be headed for a wave of mergers.

The vast majority of Maryland's banks have less than $500 million in assets, and that's where most of the consolidation will occur, said Anita G. Newcomb, a Columbia-based banking consultant. Newcomb said banks — unless they are in a rural area with little competition — must have around $500 million in assets or they will find it increasingly difficult to compete.

But for a bank of any size to "thrive in the next decade, they have to be really good at something," she said. "They have to separate themselves from the pack in some form or fashion."

Newcomb predicted that Maryland, following the national trend, could have one-third fewer banks with headquarters in the state a decade from now.

Consolidation is happening already.

The parent of Sandy Spring Bank of Olney, the state's largest institution with $3.88 billion in assets, completed the acquisition earlier this year of CommerceFirst Bancorp of Annapolis, which had $205 million in assets.

The parent companies of Bay Bank of Lutherville, with $128 million in assets, and Columbia's Carrollton Bank, with $379 million in assets, are awaiting regulatory approval to merge.

Pennsylvania-based F.N.B. Corp., with nearly $12 billion in assets, announced in October that it would acquire Annapolis Bancorp in Anne Arundel County, which has $437 million in assets.

Last month, Baltimore's Kopernik Federal Bank and Hull Federal Savings Bank completed their merger, creating a two-office bank with about $67 million in assets.

And when Old Line Bancshares concludes its acquisition of the parent company of Washington Savings Bank next year, the Bowie-based company will have more than $1.2 billion in assets. Old Line completed a merger last year with Maryland Bank and Trust, which increased Old Line's assets by about 70 percent.

"It's true that the community banks have to get larger to generate more income to pay for the additional expense of the regulatory burden, which is significant," said James W. Cornelsen, Old Line's president and CEO. But that, he added, wasn't Old Line's merger motive.

"We don't have a need to get bigger to deal with ongoing regulations and the cost of complying," Cornelsen said.

Old Line pursued these deals because they enhance the company in other ways beyond increasing assets, he said. With Washington Savings Bank, for example, Old Line gains a mortgage origination division.

More acquisitions could be in Old Line's future, Cornelsen said.

Carrollton Bancshares, which will be the holding company for Bay Bank, plans to grow partly through acquisitions. Carrollton President Bob Altieri said $1 billion in assets might be too low for banks to achieve the necessary economies of scale.