First Financial Bankshares Announces Second Quarter Earnings Results

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Jul 18, 2013, 04:05 ET

ABILENE, Texas, July 18, 2013 /PRNewswire/ -- First Financial Bankshares, Inc. (NASDAQ: FFIN) today reported earnings for the second quarter of 2013 of $19.49 million, up 6.21 percent compared with earnings of $18.35 million in the same quarter last year. Basic earnings per share were $0.62 for the second quarter of 2013 compared with $0.58 in the same quarter a year ago.

All amounts for the second quarter of 2013 include the results of the Company's acquisition of Orange Savings Bank, SSB, Orange, Texas, which was effective on May 31, 2013. As of May 31, 2013, Orange had total loans of $293.29 million and total deposits of $385.95 million.

Net interest income increased 7.64 percent to $41.50 million compared with $38.56 million in 2012. The net interest margin, on a taxable equivalent basis, was 4.18 percent compared with 4.33 percent in the same quarter last year and 4.19 percent in the first quarter of this year.

The provision for loan losses was $832 thousand in the second quarter of 2013 compared with $759 thousand in the same quarter last year and $401 thousand in the first quarter of this year. Nonperforming assets as a percentage of loans and foreclosed assets totaled 1.20 percent at June 30, 2013, compared with 1.20 percent at March 31, 2013, and 1.76 percent at June 30, 2012. Classified loans totaled $87.83 million at June 30, 2013, compared to $70.18 million at March 31, 2013, and $80.86 million at June 30, 2012. The increase in dollar amount of nonperforming assets and classified loans was primarily from the Orange Savings Bank, SSB acquisition.

Noninterest income increased 12.54 percent in the second quarter of 2013 to $15.15 million compared with $13.46 million in the same quarter a year ago. Trust fees increased to $3.95 million in the second quarter of 2013 compared with $3.67 million in the same quarter last year, primarily due to continued growth in the fair value of Trust assets managed to $3.05 billion from $2.65 billion a year ago. ATM, interchange and credit card fees increased 10.49 percent to $4.18 million compared with $3.78 million in the same quarter last year. Real estate mortgage income increased to $1.69 million in the second quarter of 2013 compared with $1.22 million in the same quarter a year ago.

Noninterest expense increased in the second quarter of 2013 to $29.91 million from $26.75 million in the same quarter last year. The Company's efficiency ratio in the second quarter of 2013 was 49.25 percent compared with 48.02 percent in the same quarter last year. Healthcare expenses for the second quarter of 2013 totaled $1.28 million compared to $833 thousand in the same quarter a year ago. Also included in noninterest expense in the second quarter of 2013 was $232 thousand and $226 thousand related to the acquisition of Orange Savings Bank, SSB and database consolidation technology costs, respectively.

For the first half of 2013, net income increased 5.43 percent to $38.07 million from $36.11 million a year ago. Basic earnings per share rose to $1.20 in the first half of 2013 from $1.15 in the same period last year. Net interest income increased 4.37 percent to $80.17 million in the first half of 2013 from $76.81 million in the same period a year ago. The provision for loan losses totaled $1.23 million compared with $2.06 million in the first half of the previous year. Noninterest income was $29.11 million in the first half of 2013 compared with $26.76 million a year ago. Noninterest expense rose to $57.38 million in the first half of 2013 compared with $53.21 million last year.

As of June 30, 2013, consolidated assets for the Company totaled $4.98 billion compared with $4.29 billion a year ago. Loans totaled $2.58 billion at quarter end compared to $1.92 billion a year ago. Total deposits were $3.92 billion as of June 30, 2013, versus $3.39 billion a year earlier. Shareholders' equity rose to $575.86 million as of June 30, 2013, compared with $534.26 million at June 30, 2012.

"We are pleased to report another positive quarter and are excited about our Orange acquisition and welcome their employees and customers to First Financial," said F. Scott Dueser, Chairman, President and CEO. "In the second half of the year, we will continue to pursue opportunities for acquisitions and for internal growth while remaining vigilant over expenses and loan quality."

About First Financial Bankshares

Headquartered in Abilene, Texas, First Financial Bankshares is a financial holding company that operates 12 banking regions with 61 locations in Texas including Abilene, Acton, Albany, Aledo, Alvarado, Boyd, Bridgeport, Brock, Burleson, Cisco, Cleburne, Clyde, Decatur, Eastland, Fort Worth, Glen Rose, Granbury, Grapevine, Hereford, Huntsville, Keller, Mauriceville, McLewis, Merkel, Midlothian, Mineral Wells, Moran, Newton, Odessa, Orange, Port Arthur, Ranger, Rising Star, Roby, San Angelo, Southlake, Stephenville, Sweetwater, Trent, Trophy Club, Vidor, Waxahachie, Weatherford and Willow Park. The Company also operates First Financial Trust & Asset Management Company, N.A., with six locations and First Technology Services, Inc., a technology operating company.

The Company is listed on The NASDAQ Global Select Market under the trading symbol FFIN. For more information about First Financial Bankshares, please visit our website at http://www.ffin.com.

Certain statements contained herein may be considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These statements are based upon the belief of the Company's management, as well as assumptions made beyond information currently available to the Company's management, and may be, but not necessarily are, identified by such words as "expect", "plan", "anticipate", "target", "forecast" and "goal". Because such "forward-looking statements" are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from the Company's expectations include competition from other financial institutions and financial holding companies; the effects of and changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; changes in the demand for loans; fluctuations in value of collateral and loan reserves; inflation, interest rate, market and monetary fluctuations; changes in consumer spending, borrowing and savings habits; and acquisitions and integration of acquired businesses, and similar variables. Other key risks are described in the Company's reports filed with the Securities and Exchange Commission, which may be obtained under "Investor Relations-Documents/Filings" on the Company's Web site or by writing or calling the Company at 325.627.7155. Except as otherwise stated in this news announcement, the Company does not undertake any obligation to update publicly or revise any forward-looking statements because of new information, future events or otherwise.


FIRST FINANCIAL BANKSHARES, INC.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
(In thousands, except share and per share data)


		As of
			2013						2012
ASSETS:			June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
Cash and due from banks		$	138,087		$	113,958		$	207,018		$	128,606		$	122,534
Interest-bearing deposits in banks			6,624			20,065			139,676			25,633			25,794
Interest-bearing time deposits in banks			39,350			45,172			49,005			67,506			74,594
Fed funds sold			16,025			3,175			14,045			23,400			10,100
Investment securities			1,975,490			1,959,054			1,820,096			1,883,864			1,963,367
Loans			2,578,883			2,138,137			2,088,623			2,003,854			1,918,292
	Allowance for loan losses		(34,099)			(34,672)			(34,839)			(34,932)			(34,747)
Net loans			2,544,784			2,103,465			2,053,784			1,968,922			1,883,545
Premises and equipment			94,808			86,265			84,122			80,580			80,404
Goodwill			94,882			71,865			71,865			71,865			71,865
Other intangible assets			2,366			98			108			136			175
Other assets			70,189			52,863			62,293			60,035			59,426
	Total assets	$	4,982,605		$	4,455,980		$	4,502,012		$	4,310,547		$	4,291,804

LIABILITIES AND SHAREHOLDERS' EQUITY:
Noninterest-bearing deposits		$	1,305,049		$	1,237,840		$	1,311,708		$	1,200,154		$	1,156,238
Interest-bearing deposits			2,612,540			2,312,286			2,320,876			2,244,244			2,235,942
	Total deposits		3,917,589			3,550,126			3,632,584			3,444,398			3,392,180
Short-term borrowings			431,575			263,345			259,697			254,480			251,428
Other liabilities			57,577			78,257			52,768			61,757			113,933
Shareholders' equity			575,864			564,252			556,963			549,912			534,263
	Total liabilities and shareholders' equity	$	4,982,605		$	4,455,980		$	4,502,012		$	4,310,547		$	4,291,804


		Quarter Ended
			2013						2012
INCOME STATEMENTS			June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
Interest income		$	42,446		$	39,575		$	39,801		$	40,287		$	39,911
Interest expense			946			904			1,049			1,168			1,355
Net interest income			41,500			38,671			38,752			39,119			38,556
Provision for loan losses			832			401			642			787			759
Net interest income after provision for loan losses			40,668			38,270			38,110			38,332			37,797
Noninterest income			15,153			13,960			14,948			15,499			13,464
Noninterest expense			29,911			27,471			28,633			27,203			26,745
	Net income before income taxes		25,910			24,759			24,425			26,628			24,516
Income tax expense			6,420			6,182			6,107			6,828			6,165
	Net income	$	19,490		$	18,577		$	18,318		$	19,800		$	18,351

PER COMMON SHARE DATA
Net income - basic		$	0.62		$	0.59		$	0.58		$	0.63		$	0.58
Net income - diluted			0.61			0.59			0.58			0.63			0.58
Cash dividends declared			0.26			0.25			0.25			0.25			0.25
Shares outstanding - end of period			31,967,424			31,519,973			31,496,881			31,488,530			31,481,747
Average outstanding shares - basic			31,683,355			31,507,975			31,490,402			31,484,375			31,478,980
Average outstanding shares - diluted			31,809,840			31,601,364			31,530,907			31,502,172			31,497,241

PERFORMANCE RATIOS
Return on average assets			1.67	%		1.71	%		1.68	%		1.84	%		1.75	%
Return on average equity			13.53			13.41			13.09			14.53			14.01
Net interest margin (tax equivalent)			4.18			4.19			4.17			4.26			4.33
Efficiency ratio			49.25			48.68			49.86			46.61			48.02


			Six Months Ended
			June 30,
INCOME STATEMENTS			2013			2012
Interest income		$	82,022		$	79,708
Interest expense			1,851			2,895
Net interest income			80,171			76,813
Provision for loan losses			1,233			2,055
Net interest income after provision for loan losses			78,938			74,758
Noninterest income			29,113			26,762
Noninterest expense			57,382			53,213
	Net income before income taxes		50,669			48,307
Income tax expense			12,602			12,200
	Net income	$	38,067		$	36,107

PER COMMON SHARE DATA
Net income - basic		$	1.20		$	1.15
Net income - diluted			1.20			1.15
Cash dividends			0.51			0.49
Book Value			18.01			16.97
Market Value			55.66			34.56
Shares outstanding - end of period			31,967,424			31,481,747
Average outstanding shares - basic			31,596,150			31,472,843
Average outstanding shares - diluted			31,709,971			31,474,653

PERFORMANCE RATIOS
Return on average assets			1.69	%		1.74	%
Return on average equity			13.47			13.90
Net interest margin (tax equivalent)			4.18			4.36
Efficiency ratio			48.98			48.05

FIRST FINANCIAL BANKSHARES, INC.
SELECTED FINANCIAL DATA (UNAUDITED)
(In thousands)


		Quarter Ended
			2013						2012
ALLOWANCE FOR LOAN LOSSES			June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
Balance at beginning of period		$	34,672		$	34,839		$	34,932		$	34,747		$	34,529
Loans charged off			(1,570)			(823)			(1,119)			(1,064)			(766)
Loan recoveries			165			255			384			462			225
Net charge-offs			(1,405)			(568)			(735)			(602)			(541)
Provision for loan losses			832			401			642			787			759
Balance at end of period		$	34,099		$	34,672		$	34,839		$	34,932		$	34,747

Allowance for loan losses /
period-end loans		*	1.32	%		1.62	%		1.67	%		1.74	%		1.81	%
Allowance for loan losses /
nonperforming loans			128.75			153.87			159.10			143.45			130.08
Net charge-offs / average loans
(annualized)			0.24			0.11			0.14			0.12			0.12

* Reflects the impact of loans acquired in the Orange Savings Bank, SSB acquisition, which were initially recorded at fair value with no allocated allowance for loan losses

NONPERFORMING ASSETS
Nonaccrual loans		$	26,297		$	22,509		$	21,800		$	24,283		$	26,606
Accruing loans 90 days past due			187			24			97			69			105
	Total nonperforming loans		26,484			22,533			21,897			24,352			26,711
Foreclosed assets			4,589			3,185			3,565			6,373			7,149
	Total nonperforming assets	$	31,073		$	25,718		$	25,462		$	30,725		$	33,860

As a % of loans and foreclosed assets			1.20	%		1.20	%		1.22	%		1.53	%		1.76	%
As a % of end of period total assets			0.62			0.58			0.57			0.71			0.79

CAPITAL RATIOS
Tier 1 risk-based			15.20	%		17.54	%		17.43	%		17.66	%		17.23	%
Total risk-based			16.31			18.80			18.68			18.92			18.48
Tier 1 leverage			10.32			10.69			10.60			10.49			10.36
Equity to assets			11.56			12.66			12.37			12.76			12.45


		Quarter Ended
			2013						2012
NONINTEREST INCOME			June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
Trust fees		$	3,953		$	3,793		$	3,616		$	3,723		$	3,670
Service charges on deposits			4,316			3,895			4,432			4,337			4,042
ATM, interchange and credit card fees			4,181			3,729			3,961			3,767			3,784
Real estate mortgage fees			1,686			1,384			1,331			1,495			1,218
Net gain on sale of available-for-sale securities			33			222			565			1,479			382
Net gain (loss) on sale of foreclosed assets			17			(316)			162			(106)			(404)
Net gain (loss) on sale of assets			1			168			5			(32)			105
Other noninterest income			966			1,085			876			836			667
	Total noninterest income	$	15,153		$	13,960		$	14,948		$	15,499		$	13,464


NONINTEREST EXPENSE
Salaries and employee benefits, excluding profit sharing		$	14,968		$	14,101		$	13,565		$	13,502		$	13,304
Profit sharing expense			1,183			1,079			1,441			1,343			885
Net occupancy expense			2,064			1,766			1,790			1,806			1,743
Equipment expense			2,380			2,281			2,269			2,269			2,144
FDIC insurance premiums			568			572			565			563			565
ATM, interchange and credit card expenses			1,347			1,340			1,432			1,317			1,450
Legal, tax and professional fees			1,272			993			1,162			1,019			968
Audit fees			351			334			323			311			283
Printing, stationery and supplies			498			472			487			468			511
Amortization of intangible assets			33			10			28			38			38
Advertising and public relations			1,100			994			1,085			998			953
Correspondent bank service charges			222			202			220			220			216
Other noninterest expense			3,925			3,327			4,266			3,349			3,685
	Total noninterest expense	$	29,911		$	27,471		$	28,633		$	27,203		$	26,745


TAX EQUIVALENT YIELD ADJUSTMENT		$	4,082		$	3,795		$	3,727		$	3,743		$	3,673


			Six Months Ended
			June 30,
NONINTEREST INCOME			2013			2012
Trust fees		$	7,746		$	7,124
Service charges on deposits			8,211			7,924
ATM, interchange and credit card fees			7,910			7,460
Real estate mortgage fees			3,069			2,268
Net gain on sale of available-for-sale securities			255			728
Net gain (loss) on sale of foreclosed assets			(299)			(406)
Net gain (loss) on sale of assets			169			235
Other noninterest income			2,052			1,429
	Total Noninterest Income	$	29,113		$	26,762

NONINTEREST EXPENSE
Salaries and employee benefits, excluding profit sharing		$	29,069		$	26,491
Profit sharing expense			2,262			1,927
Net occupancy expense			3,831			3,480
Equipment expense			4,661			4,252
FDIC Insurance premiums			1,141			1,093
ATM, interchange and credit card expenses			2,687			2,699
Legal, tax and professional fees			2,265			2,002
Audit fees			685			578
Printing, stationery and supplies			970			1,015
Amortization of intangible assets			43			82
Advertising and public relations			2,094			1,894
Correspondent bank service charges			424			416
Other noninterest expense			7,250			7,284
	Total Noninterest Expense	$	57,382		$	53,213


TAX EQUIVALENT YIELD ADJUSTMENT		$	7,877		$	7,167


	FIRST FINANCIAL BANKSHARES, INC.
	SELECTED FINANCIAL DATA (UNAUDITED)
	(In thousands)


		Three Months Ended
		June 30, 2013
			Average		Tax Equivalent	Yield /
			Balance		Interest	Rate
Interest-earning assets:
Fed funds sold		$	5,918	$	9	0.58	%
Interest-bearing deposits in nonaffiliated banks			59,333		111	0.75
Taxable securities			1,066,586		6,313	2.37
Tax exempt securities			917,460		10,813	4.71
Loans			2,324,268		29,282	5.05
Total interest-earning assets			4,373,565		46,528	4.27
Noninterest-earning assets			305,201
	Total assets	$	4,678,766

Interest-bearing liabilities:
Deposits		$	2,403,899	$	853	0.14	%
Fed funds purchased and other short term borrowings			405,438		93	0.09
Total interest-bearing liabilities			2,809,337		946	0.14
Noninterest-bearing liabilities			1,291,602
Shareholders' equity			577,827
	Total liabilities and shareholders' equity	$	4,678,766

Net interest income and margin (tax equivalent)				$	45,582	4.18	%



		Six Months Ended
		June 30, 2013
			Average		Tax Equivalent	Yield /
			Balance		Interest	Rate
Interest-earning assets:
Fed funds sold		$	9,570	$	14	0.30	%
Interest-bearing deposits in nonaffiliated banks			91,830		281	0.62
Taxable securities			1,052,723		12,688	2.41
Tax exempt securities			871,459		20,886	4.79
Loans			2,218,292		56,030	5.09
Total interest-earning assets			4,243,874		89,899	4.27
Noninterest-earning assets			302,071
	Total assets	$	4,545,945

Interest-bearing liabilities:
Deposits		$	2,362,645	$	1,721	0.15	%
Fed funds purchased and other short term borrowings			338,549		130	0.08
Total interest-bearing liabilities			2,701,194		1,851	0.14
Noninterest-bearing liabilities			1,274,970
Shareholders' equity			569,781
	Total liabilities and shareholders' equity	$	4,545,945

Net interest income and margin (tax equivalent)				$	88,048	4.18	%