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In order to enhance its presence in Texas, BB&T Corporation (BBT - Analyst Report) announced a deal to acquire 21 branches from Citibank, the consumer banking division of Citigroup Inc. (C - Analyst Report). The company will pay approximately $36 million for the branches, which is premium to book value of 4.25% of core deposits (as of Sep 30, 2013).

BB&T will acquire all the Citibank branches located in Austin, Bryan-College Station and San Antonio markets. Further, the company will assume $1.2 billion in deposits and $134 million in loans. The transaction, still subject to regulatory approvals, is expected to close by the second quarter of 2014.

Following the completion of the deal, BB&T will have 81 branches in Texas, along with $2.8 billion of deposits and $2.1 billion of loans. While the company already has a presence in Austin and San Antonio, it will be entering the Bryan-College Station market for the first time.

BB&T entered the Texas banking region with the acquisition of 22 branches of Colonial Bank in 2009. In a span of four years, the company witnessed widespread growth in the region. In Nov 2012, the company announced plans to expand further in the Texas region through 30 branch openings, which have now been accomplished.

Apart from banking branches, BB&T has other operations in the Texas region. The company’s subsidiaries, Regional Acceptance Corporation, McGriff, Seibels & Williams, Inc, BB&T Insurance Services, BB&T Capital Markets, BB&T Investment Services and Grandbridge Real Estate Capital LLC are well-established names in the state.

BB&T’s expansion strategy is going to further increase its expenses. In the first nine months of 2013, the company’s operating expenses were $4.3 billion, up nearly 1% from the prior-year period.

On the bright side, BB&T’s top line will be positively impacted by the acquisition. Further, loans and deposit balances will witness substantial improvements. All these should boost the company’s financial performance, going forward.

At present, BB&T carries a Zacks Rank #3 (Hold). However, some better-ranked banking stocks include Comerica Incorporated (CMA - Analyst Report) and Fifth Third Bancorp (FITB - Analyst Report). Both of these carry a Zacks Rank #2 (Buy).

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