Banks stocks have stumbled since the start of 2016 over worries about tight net interest margins and overbearing regulation. Andrew Sleeman, portfolio manager at Franklin Mutual Advisers, said the sector will soon turn around because bank boards have given management a mandate for change.

"That might be changing the business model to cope with the current conditions and what we expect will be the conditions going forward," said Sleeman. "Or it might mean M&A to grow out of their cost base or to reposition the bank."

Sleeman co-manages the Franklin Mutual Financial Services Fund (TFSIX) - Get Franklin Mutual Financial Serv A Report , which is down 8.3% year-to-date after rising over 8% in 2015.

Sleeman is bullish on FCB Financial Holdings (FCB) , which has seen its shares rise 45% in the past 12 months. Franklin Mutual helped capitalize the Weston, Florida-based bank in the wake of the financial crisis, enabling it to roll up small and troubled banks in Florida. The bank went public at $22 per share in August 2014 and now trades just under $33 a share.

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"They have a very interesting franchise in the Florida area which we think is undervalued and its probably an interesting candidate for other larger banks to look to roll up in that Florida region," said Sleeman.

Sleeman is also positive on Citizens Financial (CFG) - Get Citizens Financial Group, Inc. Report of Providence, R.I., despite the fact that the bank has dropped over 22% since the start of the year. Citizens was spun out of Royal Bank of Scotland (RBS) - Get Royal Bank of Scotland Group plc Sponsored ADR Report in September 2014. He said there is a lot of M&A potential for Citizens either as the acquirer or target of a bigger bank.

"It could be bought," said Sleeman. "It looks quite vulnerable at this stage given its price action so far this year. But we think there is a lot of underlying value in the business.

Finally, Sleeman is a fan of CIT Group (CIT) - Get CIT Group Inc. Report of Livingston, N.J., down 30% year-to-date. The lender badly missed Wall Street profit and sales estimates when it reported its fourth quarter results on Tuesday. CIT is currently the focus of activist hedge fund Hudson Executive Capital LP, which wants to break up the bank.

"We expect by the end of the year CIT will look very different than what it looks like today," said Sleeman.