For those of us that tend to focus on the financial sector, there are certain banks and financial companies that you keep an eye on. A lot of the focus tends to gravitate toward megabanks like JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC), the two largest banks in the country. This focus is warranted, as moves that both make can have major impacts on the sector and financial markets as a whole.

Obviously, there are more banks than the ones that dominate our daily headlines. One such bank is still pretty large when compared with the average bank stock, but it is about 8% the size of JPMorgan Chase. That bank is BB&T (NYSE:BBT). Earlier this month, I provided three reasons to buy the North Carolina-based bank. Today, I'll put on my bear hat and provide three reasons why you should consider selling the bank if you currently own shares.

1. Its size works against it
While BB&T is nowhere near the size of the traditional "Too big to fail" banks, its size can pose difficulties should the bank face difficulties growing through traditional means. BB&T's size limits its ability to seek smaller banks to acquire, primarily because it could be forced to deal with strict regulatory requirements if it decides to grow via acquisition.

Smaller banks, on the other hand, can turn to smart acquisitions and mergers to grow, and have done so on a couple of different occasions this year. Regional neighbor M&T Bank (NYSE:MTB) acquired Hudson City Bancorp (NASDAQ:HCBK) at a premium, expanding its reach from Connecticut to Virginia. FirstMerit (NASDAQ:FMER) announced its acquisition of Citizens Republic (NASDAQ:CRBC) in September, an agreement that will grow its footprint in US Bancorp's home region.

It's not as if BB&T is banned from acquiring other banks; as the largest bank in its region, it might actually make sense to seek out a smaller bank to expand its reach. One potential target that has been mentioned is BankUnited (NYSE:BKU), a bank that I think would be an interesting option. Struggling-to-recover Synovus Financial (NYSE:SNV) could also be an interesting acquisition target. However, either of these acquisitions would likely have a negative impact on the quality of its balance sheet, or would potentially cost the bank more than it is worth. I wouldn't expect "growth through acquisition" to be in the bank's near-term plans.

2. Fiscal cliff drama
It's all over the news. We have an updated farm of articles to keep our readers abreast of what is happening with the negotiations between Congressional leadership and President Obama. How could these talks affect BB&T adversely?

The general consensus is that we don't really know what will happen to the market until an agreement is reached or we are forced to go off the "fiscal cliff." One item rumored to be on the chopping block is the home mortgage deduction that many Americans use every year when itemizing deductions. With mortgage lending a big focus of BB&T's community banking model, a reduction or elimination of this deduction could hamper BB&T's ability to grow its lending portfolio, thus impacting the performance of the bank going forward.

3. It's a bank
Finally, while I personally think there is a lot of value to be found in the banking sector, the market as a whole still seems to be skeptical of bank stocks like BB&T. It seems that every other day there is some news about some big bank losing in court or paying a settlement because of mortgage shenanigans or various other reasons.

Furthermore, there is no industry under more scrutiny than the banking sector because of the financial meltdown they helped cause in 2008. The largest banks are required to pass certain "stress tests" every year, testing the banks' ability to handle various economic scenarios, including a massive drop in home prices, high unemployment, and substantial banking losses. Hopefully, BB&T can follow up its stellar performance in the next round of tests early next year, but only time will tell.

Don't take my word for it
While I like to think that I have the power to move markets, I'm no Warren Buffett. It goes without saying that these three reasons should not be the only reasons that you sell -- or avoid -- BB&T as an investment. I do hope that they are a good starting point as you dig deeper into your research on the company.

 

Robert Eberhard has no positions in the stocks mentioned above. The Motley Fool owns shares of Bank of America, FirstMerit, and JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.