BB&T's third-quarter net interest margin (NIM) -- the difference between the average yield on loans and investments and the average cost for deposits and borrowings -- was 3.94%, declining only one basis point from the previous quarter, but company estimated that the margin would narrow ""to the mid-3.70s% range in 4Q12."
O'Connor said that "earlier this month, BBT noted 4Q's NIM was coming in slightly better than expected--at around 3.80%. However, low rates and run off of purchase accounting accretion is likely to put additional pressure on NIM in 2013/beyond."
Today's announcement by the Fed won't do anything to ease BB&T's net interest margin pressure, but the continued monetary stimulus could help the company achieve its expected loan growth of 5% to 7% in 2013.
O'Connor estimates that BB&T will earn $2.90 a share in 2013. The analyst said that "it's tempting to get more positive" on the shares because of a valuation to forward earnings estimates that is only slightly above peers, with expectations for above average loan growth, "driven by good business/geographic mix and execution." On the other hand, his firm still sees "modest downside to 2013 consensus estimates (of 2-4%) and our 2014 [estimate] of $3.00 is 6% below consensus (with [additional] downside if interest rates don't rise)."
Interested in more on BB&T? See TheStreet Ratings' report card for this stock.
Written by Philip van Doorn in Jupiter, Fla.