BB&T's (BBT) - Get Report stock may be trailing the overall banking sector this year, but the North-Carolina-based lender continues to grow by leaps, bounds and acquisitions, according to Ryan Kelley, portfolio manager for the Hennessy Large Cap Financial Fund (HLFNX) - Get Report .
Shares of BB&T are down 6% year-to-date, a worse performance than the Financial Select Sector SPDR ETF (XLF) - Get Report which is only off 4%. BB&T has been an active acquirer with three whole bank deals in past year including National Penn and Susquehanna Bancshares. The bank has posted solid growth year-over-year, with assets rising 12%, loans up 14% and deposits up 13%. Kelley also said BB&T would be a beneficiary of a potential rising rate environment.
"The company is trading at an attractive valuation at only around 10.5 times next year's earnings, and it's one of our largest positions in the fund," said Kelley.
Kelley is also bullish on Regions Financial (RF) - Get Report , which has seen its shares fall 14% year-to-date. He said recent worries about energy exposure may be over-emphasized and its attractive valuation of 10 times next year's earnings provide a good buying opportunity.
"We took a close look at its energy exposure and think the issue is overblown at this point in time," said Kelley. "There's about a billion dollars in loans to the oilfield services sector which is only about 1% of their total loan portfolio."
Among the names in the Hennessy Small Cap Financial Fund (HSFNX) - Get Report , Kelley is a fan of Florida-based BankUnited (BKU) - Get Report , which has seen its stock surge 27% thus far in 2015. He said CEO John Kanas will grow the lender in the same way he developed North Fork Bank in New York, which was ultimately acquired in 2006 by Capital One.
"He knows the New York market very well. He knows the commercial real estate market," said Kelley. "This has allowed BankUnited to grow very well in the last few years."
"We've known the management team for a number of years and we think it's a pretty good value here," said Kelley.