BB&T to buy 11 Citibank branches in Houston, 30 others in Texas

BB&T is aggressively expanding its Texas footprint, even as Citi cuts retail branches in the Lone Star state.

On Wednesday, BB&T said it will buy 41 Citibank branches with a combined $2.3 billion in deposits and $87 million in loans in the Dallas, Houston, Midland and Odessa markets. The Houston area currently has 12 BB&T branches and will see its 13th location open in two weeks. After the acquisition, the area will have 24 branches.

The announcement follows BB&T's completed deal in June for 21 branches and $1.2 billion in deposits from Citibank, primarily in the Austin, Bryan-College Station and San Antonio areas.

In a written statement, chairman and CEO Kelly King said the earlier acquisition has "proven to be a cultural fit." He called the new markets "strategically important."

BB&T expects the approximately $120 million deal announced Wednesday to be completed during the first quarter of 2015, bringing the bank to about 123 branches and $5.3 billion deposits in Texas. Across the nation, the Winston-Salem, N.C.-based financial services holding company has 1,844 financial centers in 12 states and Washington, D.C.

BB&T entered Texas five years ago. William J. Toomey II, president of its Houston and central Texas region, said the latest acquisition "continues to further cement BB&T's commitment to the Texas market."

Meanwhile, Citi is reallocating its resources.

Spokesman Andrew Brent said in a written statement that Texas remains "Citi's second-largest concentration of personnel in the U.S., with approximately 9,500 employees including major operations facilities in San Antonio and Irving." He said Citi will keep growing throughout Texas in other areas such as corporate and investment banking, commercial banking, credit cards and mortgages.

"However, our branch footprint in Texas did not provide the scale to capture future growth and market share in traditional retail banking," Brent said. "We see the retail banking industry rapidly evolving beyond a purely branch-based model, and so we will dedicate our resources and investments on a more focused branch footprint in our major urban markets and on expanding our digital channels nationally."

Dick Bove, Tampa-based vice president of research for Rafferty Capital Markets, said Citi has been selling retail branches in the U.S. and around the world for five years.

"It recognized that it can't penetrate markets as well as it thought in the retail banking area," Bove said.

He said he thinks Citi no longer wants a Texas retail presence targeting the mass market. But Citi does want a small number of branches in the world's largest metropolitan areas, Bove said.

He assumes it will continue operating in major Texas metropolitan areas but will target higher-wealth individuals instead of the mass market.

Dan Bass, Houston-based managing director of investment banking for Performance Trust Capital Partners, said BB&T entered Texas with the goal of being in the top five in terms of deposit size.

The latest deal will place the bank in the top 15 if Texas deposits indeed reach $5.3 billion.

"They feel like the demographics and the growth of the Texas markets give them reason to want to get bigger here," Bass said.