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Last week, BB&T Corporation (BBT - Analyst Report) announced its plans of expanding in Texas by focusing entirely on developing small and commercial business lending operations in the region. The company plans to open nearly 30 new branches, mostly through 2013, in the key cities of the state, subject to regulatory approval.

In 2009, BB&T entered the Texas banking region by acquiring Colonial Bank along with 22 of its branches. In a span of three years, the company witnessed widespread growth in the region. Presently, it has 27 branches in the state (more two to open this month) along with $1.3 billion in deposits and $1.65 billion in loans. In addition, the company has nearly 1,200 strong workforce in the region.

BB&T anticipates opening nearly 11 branches in each Dallas/ Forth Worth and Houston, whereas it plans to open four in each Austin and San Antonio. This will result in investments exceeding $40 million and will create approximately 150 jobs in these cities. Instead of new constructions for setting up these branches, the company is looking for vacated properties such as former bank branches and office locations.

Apart from banking branches, BB&T’s auto-loan subsidiary – Regional Acceptance Corporation – operates a major call center in Arlington and has offices in Plano, Houston and San Antonio. Similarly, the company’s wholesale and specialty insurance division manages eight offices in the state.

McGriff, Seibels & Williams, Inc – one of BB&T’s insurance subsidiaries – BB&T Capital Markets division as well as BB&T Corporate Banking and Investments division have offices located in Houston. BB&T Wealth Management division has an office in Dallas. Also, BB&T’s wholly-owned subsidiary, Grandbridge Real Estate Capital LLC, has presence in the state with offices situated in both Dallas and Houston.

Earlier in July this year, BB&T expanded its footprint in the coveted region of Florida with the acquisition of 78 branches of BankAtlantic – the wholly-owned subsidiary of BankAtlantic Bancorp, Inc. . The deal was announced in November 2011, but unexpected contingencies delayed it.

BB&T’s expansion strategy is going to push its expenses to the north. As of September 30, 2012, BB&T’s operating expenses stood at $4.3 billion, rising nearly 3.7% over the same period in 2011. However, it must be noted that though expenses will rise, top line would be positively impacted by the growth initiatives going forward. Further, loans and deposit balances will witness substantial improvements. All these should boost overall development at BB&T.

BB&T currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we also maintain a long-term Neutral recommendation on the shares.

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