We are beginning to see some real breakouts in these regional banks, breakouts that signify there's some real loan growth out there, that there's no longer as much credit risk and that the franchises that are intact are probably worth more than they are selling for.
There's tons of these smaller regionals -- I am not talking about Wells Fargo (WFC)/ U.S. Bancorp (USB) which are huge -- and the two I think that are the most exciting are BB&T (BBT) and First Horizon (FHN).
Both companies made mistakes, like every other bank out there, but BBT made fewer, and First Horizon worked harder than most to clean up its mistakes and clean them up quickly.
Both have good enough balance sheets to support good growth. BBT has really carved up Bank of America (BAC) in its hometown and expanded rapidly throughout the southeast. I know that there's some hyperbole to this statement, but it does seem that First Horizon seems to be the only bank in Tennessee that's really doing well.
The big issue with BB&T is that it has run so much and you need a couple of days like we had before today to get a better entry point.
But First Horizon's pretty much done nothing. I have both CEOs of these banks on the show all of the time and I am not surprised that BBT has taken off, but I am a little stunned that First Horizon is still more than 10% from its high and is still below $10.
I think this regional bank rally could, at last, have some legs and will not be a big fake-out because we are getting some employment growth.
BBT, buy it on a pullback. FHN? Buy it now.