FIRST FINANCIAL BANKSHARES ANNOUNCES FIRST QUARTER 2022 EARNINGS

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Apr 21, 2022, 16:05 ET

ABILENE, Texas, April 21, 2022 /PRNewswire/ -- First Financial Bankshares, Inc. (NASDAQ: FFIN) today reported earnings for the first quarter of 2022 of $55.97 million compared to earnings of $56.92 million for the same quarter a year ago. Basic and diluted earnings per share were $0.39 for the first quarter of 2022 compared with $0.40 for the same quarter a year ago. As further described below, the results this quarter compared to the prior year included i) an increase in the provision for credit losses of $6.78 million; ii) a $4.88 million decrease in PPP loan origination fees; and (iii) a $3.56 million decline in mortgage revenues. Offsetting these items was an increase in net interest income, excluding lower PPP loan origination fees, of $11.50 million from continued balance sheet growth.

"Leveraging the new relationships developed and the momentum created over the last two years, we delivered outstanding growth this quarter reflected by overall loan growth, excluding PPP and held-for-sale loans, of $214.25 million, or 16.07 percent annualized, and deposit growth of $433.34 million, or 16.63 percent annualized. We continue our focus on growth, delivering excellence in customer service, improving our digital delivery, investing in our employees, and maximizing shareholder returns. We appreciate the continued support of our customers, shareholders and associates," said F. Scott Dueser, Chairman, President and CEO of First Financial Bankshares, Inc.

Net interest income for the first quarter of 2022 was $95.44 million compared to $88.82 million for the first quarter of 2021. The net interest margin, on a taxable equivalent basis, was 3.22 percent for the first quarter of 2022 compared to 3.55 percent in the first quarter of 2021. The growth in net interest income was driven by higher average interest-earning assets which increased to $12.50 billion for the first quarter of 2022 compared to $10.56 billion a year ago, partially offset by lower PPP loan origination fees which totaled $1.37 million in the first quarter of 2022 compared to $6.25 million in the first quarter of 2021.

PPP loan balances totaled $15.74 million at March 31, 2022 compared to $52.79 million and $531.81 million at December 31, 2021 and March 31, 2021, respectively, and accounted for $33.46 million in average balances for the first quarter of 2022 compared to $499.35 million for the first quarter of 2021.

The Company recorded a provision for credit losses of $4.78 million for the first quarter of 2022 compared to a provision for credit losses of $2.06 million for the fourth quarter of 2021 and a reversal of provision for credit losses of $2.00 million for the first quarter of 2021. The increase in the Company's provision for credit losses during the first quarter of 2022 was primarily driven by strong organic loan growth. At March 31, 2022, the allowance for credit losses totaled $66.91 million, or 1.20 percent of loans held-for-investment ("loans" hereafter), compared to $62.97 million at March 31, 2021, or 1.18 percent of loans. Additionally, the reserve for unfunded commitments totaled $7.47 million at March 31, 2022 compared to $6.92 million at March 31, 2021.

For the first quarter of 2022, net charge-offs totaled $299 thousand compared to net charge-offs of $131 thousand for the first quarter of 2021. Nonperforming assets as a percentage of loans and foreclosed assets totaled 0.52 percent at March 31, 2022, compared with 0.75 percent at March 31, 2021. Classified loans totaled $152.16 million at March 31, 2022, compared to $190.42 million at March 31, 2021.

Noninterest income for the first quarter of 2022 was $34.88 million compared to $34.87 million for the first quarter of 2021, as a result of the following:

Trust fees increased $1.52 million to $9.82 million for the first quarter of 2022 compared to $8.30 million for the first quarter of 2021 driven by the increase in the fair value of trust assets to $8.63 billion at March 31, 2022 compared to $7.54 billion at March 31, 2021.
Service charges on deposits and ATM, interchange, and credit card fees increased $913 thousand and $851 thousand, respectively, for the first quarter of 2022 compared to the first quarter of 2021.
Mortgage income was $6.33 million for the first quarter of 2022 compared to $9.89 million for the first quarter of 2021 due to lower overall origination volumes and margins.
Gains on sales of foreclosed and other assets and securities were $1.11 million during the first quarter of 2022 compared to $1.01 million for the first quarter of 2021.

Noninterest expense for the first quarter of 2022 totaled $59.23 million compared to $57.72 million for the first quarter of 2021, as a result of the following:

Salary, commissions, and employee benefit costs totaled $34.14 million for the first quarter of 2022, compared to $34.93 million in the first quarter of 2021 reflecting annual merit-based pay increases effective March 1, 2022 offset by lower mortgage compensation expenses of $1.40 million and a decrease of $697 thousand in profit sharing expenses.
Noninterest expenses, excluding salary related costs, increased $2.30 million for the first quarter of 2022 compared to the same period in 2021 due to $600 thousand of foreclosed asset expenses together with increases in FDIC insurance, deposit account charge-offs, interchange processing costs, and loan processing costs.

The Company's efficiency ratio improved to 44.16 percent for the first quarter of 2022 compared to 45.36 percent for the first quarter of 2021.

As of March 31, 2022, consolidated total assets were $13.31 billion compared to $12.10 billion at March 31, 2021. Loans totaled $5.57 billion at March 31, 2022, compared with loans of $5.32 billion at March 31, 2021. During the first quarter of 2022, loans, excluding PPP loans, grew $214.25 million, or 16.07 percent annualized. Deposits totaled $11.00 billion at March 31, 2022, compared to $9.41 billion at March 31, 2021, representing an increase of 16.85 percent. Shareholders' equity was $1.49 billion as of March 31, 2022, compared to $1.76 billion and $1.67 billion at December 31, 2021, and March 31, 2021, respectively, as a result of changes in Other Comprehensive Income ("OCI") due to rate increases during the most recent quarter. The unrealized loss on the security portfolio, net of applicable tax, totaled $209.58 million at March 31, 2022, compared to an unrealized gain of $99.25 million and $117.01 million at December 31, 2021 and March 31, 2021, respectively.

About First Financial Bankshares, Inc.

Headquartered in Abilene, Texas, First Financial Bankshares, Inc. is a financial holding company that through its subsidiary, First Financial Bank, N.A., operates multiple banking regions with 78 locations in Texas, including Abilene, Acton, Albany, Aledo, Alvarado, Beaumont, Boyd, Bridgeport, Brock, Bryan, Burleson, College Station, Cisco, Cleburne, Clyde, Conroe, Cut and Shoot, Decatur, Eastland, El Campo, Fort Worth, Fulshear, Glen Rose, Granbury, Grapevine, Hereford, Huntsville, Keller, Kingwood, Magnolia, Mauriceville, Merkel, Midlothian, Mineral Wells, Montgomery, Moran, New Waverly, Newton, Odessa, Orange, Palacios, Port Arthur, Ranger, Rising Star, Roby, San Angelo, Southlake, Stephenville, Sweetwater, Tomball, Trent, Trophy Club, Vidor, Waxahachie, Weatherford, Willis, and Willow Park. The Company also operates First Financial Trust & Asset Management Company, N.A., with ten 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, please visit our website at https://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; economic impact of oil and gas prices and the pandemic, 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 and Filings" on the Company's Website 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
			2022						2021
ASSETS			Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
Cash and due from banks		$	203,187		$	205,053		$	201,901		$	190,061		$	190,350
Interest-bearing deposits in banks			394,566			323,535			359,241			654,531			893,221
Investment securities			6,502,495			6,573,179			6,119,984			5,578,048			5,109,631
Loans, held-for-investment, excluding PPP Loans			5,550,430			5,336,179			5,147,160			4,984,210			4,790,752
PPP loans			15,739			52,793			139,334			320,392			531,810
Total loans, held-for-investment			5,566,169			5,388,972			5,286,494			5,304,602			5,322,562
	Allowance for loan losses		(66,913)			(63,465)			(63,370)			(62,138)			(62,974)
Net loans, held-for-investment			5,499,256			5,325,507			5,223,124			5,242,464			5,259,588
Loans, held-for-sale			27,670			37,810			47,721			61,802			65,405
Premises and equipment, net			150,168			149,764			147,516			147,655			142,415
Goodwill			313,481			313,481			313,481			313,481			313,481
Other intangible assets			2,978			3,298			3,689			4,087			4,499
Other assets			220,399			170,834			126,601			136,954			124,297
	Total assets	$	13,314,200		$	13,102,461		$	12,543,258		$	12,329,083		$	12,102,887

LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits		$	3,978,724		$	3,780,230		$	3,574,405		$	3,427,038		$	3,350,145
Interest-bearing deposits			7,021,101			6,786,258			6,318,712			6,354,656			6,063,302
	Total deposits		10,999,825			10,566,488			9,893,117			9,781,694			9,413,447
Borrowings			758,595			671,152			648,679			549,969			548,604
Trade date payable			-			-			174,236			189,838			381,871
Other liabilities			67,031			105,597			93,491			87,213			93,537
Shareholders' equity			1,488,749			1,759,224			1,733,735			1,720,369			1,665,428
	Total liabilities and shareholders' equity	$	13,314,200		$	13,102,461		$	12,543,258		$	12,329,083		$	12,102,887

		Quarter Ended
			2022			2021
INCOME STATEMENTS			Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
Interest income		$	97,009		$	95,995		$	97,198		$	92,602		$	90,610
Interest expense			1,570			1,187			1,416			1,653			1,786
Net interest income			95,439			94,808			95,782			90,949			88,824
Provision for credit losses			4,782			2,064			-			(1,206)			(1,997)
Net interest income after provisions for credit losses			90,657			92,744			95,782			92,155			90,821
Noninterest income			34,881			34,903			37,726			34,673			34,874
Noninterest expense			59,225			61,672			62,939			59,374			57,723
	Net income before income taxes		66,313			65,975			70,569			67,454			67,972
Income tax expense			10,341			10,638			11,641			11,075			11,054
	Net income	$	55,972		$	55,337		$	58,928		$	56,379		$	56,918

PER COMMON SHARE DATA
Net income - basic		$	0.39		$	0.39		$	0.41		$	0.40		$	0.40
Net income - diluted			0.39			0.39			0.41			0.39			0.40
Cash dividends declared			0.15			0.15			0.15			0.15			0.13
Book value			10.43			12.34			12.17			12.08			11.70
Tangible book value			8.21			10.12			9.94			9.85			9.47
Market value			44.12			50.84			45.95			49.13			46.73
Shares outstanding - end of period			142,704,495			142,532,116			142,467,687			142,359,774			142,285,611
Average outstanding shares - basic			142,558,743			142,437,804			142,334,449			142,245,555			142,146,275
Average outstanding shares - diluted			143,302,063			143,251,521			143,218,920			143,164,611			143,002,658

PERFORMANCE RATIOS
Return on average assets			1.71	%		1.74	%		1.90	%		1.89	%		2.05	%
Return on average equity			13.53			12.63			13.43			13.38			13.83
Return on average tangible equity			16.68			15.45			16.43			16.48			17.09
Net interest margin (tax equivalent)			3.22			3.29			3.41			3.36			3.55
Efficiency ratio			44.16			46.18			45.88			45.94			45.36


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

		Quarter Ended
			2022			2021
ALLOWANCE FOR LOAN LOSSES			Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
Balance at beginning of period		$	63,465		$	63,370		$	62,138		$	62,974		$	66,534
Loans charged off			(659)			(3,067)			(1,475)			(392)			(574)
Loan recoveries			360			783			2,707			595			443
Net recoveries (charge-offs)			(299)			(2,284)			1,232			203			(131)
Provision for loan losses			3,747			2,379			-			(1,039)			(3,429)
Balance at end of period		$	66,913		$	63,465		$	63,370		$	62,138		$	62,974

ALLOWANCE FOR UNFUNDED COMMITMENTS
Balance at beginning of period		$	6,436		$	6,751		$	6,751		$	6,918		$	5,486
Provision for unfunded commitments			1,035			(315)			-			(167)			1,432
Balance at end of period		$	7,471		$	6,436		$	6,751		$	6,751		$	6,918

Allowance for loan losses /
period-end loans held-for-investment			1.20	%		1.18	%		1.20	%		1.17	%		1.18	%
Allowance for loan losses /
nonperforming loans			232.71			200.33			250.92			208.45			160.00
Net charge-offs (recoveries) / average total loans
(annualized)			0.02			0.17			(0.09)			(0.02)			0.01

		Quarter Ended
			2022			2021
COMPOSITION OF LOANS HELD-FOR-INVESTMENT			Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
Commercial:
C&I		$	822,310		$	784,282		$	680,263		$	662,711		$	646,316
PPP			15,739			52,793			139,334			320,392			531,810
Municipal			191,799			177,905			165,847			179,356			176,949
Total Commercial			1,029,848			1,014,980			985,444			1,162,459			1,355,075
Agriculture			82,883			98,089			98,947			95,212			90,366
Real Estate:
Construction & Development			806,211			749,793			656,530			550,928			587,928
Farm			225,942			217,220			203,064			185,288			162,046
Non-Owner Occupied CRE			636,160			623,434			674,958			673,608			650,144
Owner Occupied CRE			881,181			821,653			824,231			820,055			759,906
Residential			1,352,162			1,334,419			1,328,798			1,328,474			1,254,727
Total Real Estate			3,901,656			3,746,519			3,687,581			3,558,353			3,414,751
Consumer:
Auto			419,818			405,416			394,072			383,764			370,027
Non-Auto			131,964			123,968			120,450			104,814			92,343
Total Consumer			551,782			529,384			514,522			488,578			462,370

	Total loans held-for-investment	$	5,566,169		$	5,388,972		$	5,286,494		$	5,304,602		$	5,322,562

SUMMARY OF LOAN CLASSIFICATION
Special Mention		$	47,445		$	55,670		$	53,620		$	54,497		$	61,866
Substandard			104,715			105,515			112,151			120,497			128,550
Doubtful			-			-			-			-			-
	Total classified loans	$	152,160		$	161,185		$	165,771		$	174,994		$	190,416

NONPERFORMING ASSETS
Nonaccrual loans		$	28,723		$	31,652		$	25,210		$	29,786		$	39,333
Accruing troubled debt restructured loans			20			21			22			23			23
Accruing loans 90 days past due			11			8			23			-			2
	Total nonperforming loans		28,754			31,681			25,255			29,809			39,358
Foreclosed assets			-			2,477			28			305			300
	Total nonperforming assets	$	28,754		$	34,158		$	25,283		$	30,114		$	39,658

As a % of loans held-for-investment and foreclosed assets			0.52	%		0.63	%		0.48	%		0.57	%		0.75	%
As a % of end of period total assets			0.22			0.26			0.20			0.24			0.33


		Quarter Ended
			2022			2021
CAPITAL RATIOS			Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
Common equity Tier 1 capital ratio			19.00	%		19.35	%		19.71	%		20.04	%		20.32	%
Tier 1 capital ratio			19.00			19.35			19.71			20.04			20.32
Total capital ratio			20.01			20.34			20.76			21.12			21.47
Tier 1 leverage ratio			10.78			11.13			11.19			11.10			11.55
Tangible common equity ratio			10.52			11.55			11.90			11.75			12.35
Equity/Assets ratio			11.18			13.43			13.82			13.95			13.76


		Quarter Ended
			2022			2021
NONINTEREST INCOME			Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
Trust fees		$	9,817		$	9,670		$	9,484		$	8,692		$	8,299
Service charges on deposits			5,706			5,762			5,673			4,928			4,793
ATM, interchange and credit card fees			9,528			9,955			9,793			9,853			8,677
Gain on sale and fees on mortgage loans			6,333			6,272			8,788			8,291			9,894
Net gain on sale of available-for-sale securities			31			1			1			5			808
Net gain on sale of foreclosed assets			1,084			107			27			1			55
Net gain (loss) on sale of assets			(10)			(3)			(6)			74			145
Interest on loan recoveries			283			1,207			1,746			704			382
Other noninterest income			2,109			1,932			2,220			2,125			1,821
	Total noninterest income	$	34,881		$	34,903		$	37,726		$	34,673		$	34,874

NONINTEREST EXPENSE
Salaries, commissions and employee benefits, excluding profit sharing		$	32,540		$	31,876		$	34,460		$	32,936		$	32,636
Profit sharing expense			1,598			3,099			2,630			2,110			2,295
Net occupancy expense			3,225			3,333			3,288			3,241			3,147
Equipment expense			2,257			2,382			2,450			2,177			2,164
FDIC insurance premiums			869			848			815			766			701
ATM, interchange and credit card expenses			2,968			3,227			2,935			3,039			2,772
Legal, tax and professional fees			2,957			2,835			2,893			3,352			2,726
Audit fees			451			423			466			430			440
Printing, stationery and supplies			540			664			432			489			325
Amortization of intangible assets			320			391			398			412			412
Advertising and public relations			1,493			1,842			1,746			1,392			1,388
Operational and other losses			596			1,385			1,087			534			287
Software amortization and expense			2,457			2,817			2,855			2,829			2,619
Other noninterest expense			6,954			6,550			6,484			5,667			5,811
	Total noninterest expense	$	59,225		$	61,672		$	62,939		$	59,374		$	57,723

TAX EQUIVALENT YIELD ADJUSTMENT		$	3,782		$	3,841		$	3,670		$	3,633		$	3,547


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


		Three Months Ended												Three Months Ended
		Mar. 31, 2022												Dec. 31, 2021
			Average			Tax Equivalent			Yield /						Average			Tax Equivalent	Yield /
			Balance			Interest			Rate						Balance			Interest	Rate
Interest-earning assets:
Federal funds sold		$	1,015		$	1			0.52	%				$	82		$	-	0.48	%
Interest-bearing deposits in nonaffiliated banks			171,970			94			0.22						320,102			124	0.15
Taxable securities			4,231,949			17,823			1.68						3,590,137			13,556	1.51
Tax exempt securities			2,612,025			18,107			2.77						2,636,360			18,163	2.76
Loans			5,487,538			64,766			4.79						5,347,069			67,993	5.04
Total interest-earning assets			12,504,497		$	100,791			3.27	%					11,893,750		$	99,836	3.33	%
Noninterest-earning assets			744,810												726,932
	Total assets	$	13,249,307											$	12,620,682

Interest-bearing liabilities:
Deposits		$	6,898,059		$	1,369			0.08	%				$	6,399,343		$	1,110	0.07	%
Borrowings			781,314			201			0.10						639,725			77	0.05
Total interest-bearing liabilities			7,679,373		$	1,570			0.08	%					7,039,068		$	1,187	0.07	%
Noninterest-bearing deposits			3,827,451												3,744,848
Other noninterest-bearing liabilities			64,999												99,091
Shareholders' equity			1,677,484												1,737,675
	Total liabilities and shareholders' equity	$	13,249,307											$	12,620,682

Net interest income and margin (tax equivalent)					$	99,221			3.22	%							$	98,649	3.29	%

		Three Months Ended												Three Months Ended
		Sept. 30, 2021												June 30, 2021
			Average			Tax Equivalent			Yield /						Average			Tax Equivalent	Yield /
			Balance			Interest			Rate						Balance			Interest	Rate
Interest-earning assets:
Federal funds sold		$	1,554		$	2			0.51	%				$	3,049		$	4	0.54	%
Interest-bearing deposits in nonaffiliated banks			612,551			236			0.15						796,835			211	0.11
Taxable securities			3,081,215			12,122			1.57						2,656,211			11,449	1.72
Tax exempt securities			2,542,606			17,701			2.78						2,461,924			17,410	2.83
Loans			5,337,807			70,807			5.26						5,383,781			67,161	5.00
Total interest-earning assets			11,575,733		$	100,868			3.46	%					11,301,800		$	96,235	3.42	%
Noninterest-earning assets			705,099												692,282
	Total assets	$	12,280,832											$	11,994,082

Interest-bearing liabilities:
Deposits		$	6,346,267		$	1,340			0.08	%				$	6,229,991		$	1,560	0.10	%
Borrowings			599,934			76			0.05						527,669			93	0.07
Total interest-bearing liabilities			6,946,201		$	1,416			0.08	%					6,757,660		$	1,653	0.10	%
Noninterest-bearing deposits			3,490,685												3,439,683
Other noninterest-bearing liabilities			103,446												106,994
Shareholders' equity			1,740,500												1,689,745
	Total liabilities and shareholders' equity	$	12,280,832											$	11,994,082

Net interest income and margin (tax equivalent)					$	99,452			3.41	%							$	94,582	3.36	%

		Three Months Ended
		Mar. 31, 2021
			Average			Tax Equivalent			Yield /
			Balance			Interest			Rate
Interest-earning assets:
Federal funds sold		$	1,942		$	3			0.58	%
Interest-bearing deposits in nonaffiliated banks			637,129			159			0.10
Taxable securities			2,251,419			10,264			1.82
Tax exempt securities			2,368,615			16,979			2.87
Loans			5,296,149			66,753			5.11
Total interest-earning assets			10,555,254		$	94,158			3.62	%
Noninterest-earning assets			700,550
	Total assets	$	11,255,804

Interest-bearing liabilities:
Deposits		$	5,916,237		$	1,696			0.12	%
Borrowings			456,620			91			0.08
Total interest-bearing liabilities			6,372,857		$	1,787			0.11	%
Noninterest-bearing deposits			3,114,656
Other noninterest-bearing liabilities			99,581
Shareholders' equity			1,668,710
	Total liabilities and shareholders' equity	$	11,255,804

Net interest income and margin (tax equivalent)					$	92,371			3.55	%