FIRST FINANCIAL BANKSHARES ANNOUNCES FIRST QUARTER 2023 EARNINGS

ABILENE, Texas, April 20, 2023 /PRNewswire/ -- First Financial Bankshares, Inc. (the "Company," "we," "us" or "our") (NASDAQ: FFIN) today reported earnings for the first quarter of 2023 of $52.57 million compared to earnings of $55.97 million for the same quarter a year ago. Basic and diluted earnings per share were $0.37 for the first quarter of 2023 compared with $0.39 for the same quarter a year ago.

As further described below, the results this quarter compared to the same quarter a year ago included (i) a decrease in debit card fees of $3.99 million, (ii) a decrease in mortgage revenues of $3.36 million and (iii) an increase in FDIC assessment fees of $785 thousand. Offsetting these items was (i) a decrease in the provision for credit losses of $2.00 million and (ii) a decrease in salary and employee benefits expenses of $2.68 million.

"We are pleased with our results that were highlighted by strong organic loan growth with only a small contraction in deposits during the quarter.  In light of the historical increase in interest rates by the Federal Reserve, we continue to focus on loan and deposit pricing that aligns with our competitive environment. While funding costs have increased, we continue to have opportunities to reinvest bond cash flows into our higher yielding loan portfolio," said F. Scott Dueser, Chairman, President and CEO of First Financial Bankshares, Inc. "Additionally, the financial strength of our Company is reflected in our strong regulatory capital ratios, diversified deposit base and access to multiple liquidity sources. We are steadfast in our commitment to remaining safe, sound and secure. We appreciate the continued support of our customers, shareholders and associates," added Mr. Dueser.

Net interest income for the first quarter of 2023 was $96.29 million compared to $95.44 million for the first quarter of 2022. The net interest margin, on a taxable equivalent basis, was 3.34 percent for the first quarter of 2023 compared to 3.22 percent in the first quarter of 2022. Average interest-earning assets were $12.07 billion for the first quarter of 2023 compared to $12.50 billion a year ago. 

The Company recorded a provision for credit losses of $2.78 million for the first quarter of 2023 compared to a provision for credit losses of $4.78 million for the first quarter of 2022. At March 31, 2023, the allowance for credit losses totaled $80.82 million, or 1.23 percent of loans held-for-investment ("loans" hereafter), compared to $66.91 million, or 1.20 percent of loans, at March 31, 2022. Additionally, the reserve for unfunded commitments totaled $10.40 million at March 31, 2023 compared to $7.47 million at March 31, 2022.

Net recoveries totaled $277 thousand in the first quarter 2023 compared to net charge-offs of $299 thousand for the first quarter of 2022. Nonperforming assets as a percentage of loans and foreclosed assets totaled 0.37 percent at March 31, 2023, compared with 0.52 percent at March 31, 2022.  Classified loans totaled $157.06 million at March 31, 2023, compared to $152.16 million at March 31, 2022.

Noninterest income for the first quarter of 2023 was $28.01 million compared to $34.88 million for the first quarter of 2022, due to the following:

• Service charges on deposits increased to $6.04 million for the first quarter of 2023 compared with $5.71 million for the first quarter of 2022, driven by the growth of over 4,300 net new accounts opened during the first quarter of 2023.
• Debit card fees decreased by $3.99 million for the first quarter of 2023 compared to the same quarter a year ago. The decrease was due the impact of becoming subject to regulations that limit debit card interchange revenue ("Durbin Amendment") which became effective for the Company as of July 1, 2022.
• Mortgage income declined to $2.97 million for the first quarter of 2023 compared to $6.33 million for the first quarter of 2022 due to lower overall origination volumes and margins primarily because of the increase in mortgage interest rates.
• Gains on sales of assets, foreclosed assets and securities were $976 thousand during the first quarter of 2023 compared to $1.11 million for the first quarter of 2022.

Noninterest expense for the first quarter of 2023 totaled $57.26 million compared to $59.23 million for the first quarter of 2022, as a result of the following:

• Salary, commissions, and employee benefit costs decreased to $31.46 million for the first quarter of 2023, compared to $34.14 million in the first quarter of 2022 primarily resulting from a decrease of $1.57 million in profit sharing expense and $781 thousand in mortgage incentives.
• Noninterest expenses, excluding salary related costs, increased $708 thousand for the first quarter of 2023 compared to the same period in 2022 largely due to an increase of $785 thousand in FDIC insurance fees.

The Company's efficiency ratio was 44.93 percent for the first quarter of 2023 compared to 44.16 percent for the first quarter of 2022.  The increase was driven by the decrease in non-interest income from the prior year.

As of March 31, 2023, consolidated total assets were $13.01 billion compared to $13.31 billion at March 31, 2022. Loans totaled $6.58 billion at March 31, 2023, compared with loans of $5.57 billion at March 31, 2022. During the first quarter of 2023, loans grew $134.35 million, or 8.46 percent annualized, when compared to December 31, 2022 balances. Deposits totaled $10.94 billion at March 31, 2023, compared to $11.00 billion at March 31, 2022.  

During the first quarter of 2023, the Company sold $135.86 million of securities classified as available-for-sale with an average book yield of 2.92 percent. The proceeds from the sales of these securities were largely used to fund organic loan growth during the quarter. As of March 31, 2023, cash flows from maturities in the security portfolio of $599.43 million are projected over the next twelve months.

Shareholders' equity was $1.37 billion as of March 31, 2023, compared to $1.27 billion and $1.49 billion at December 31, 2022, and March 31, 2022, respectively, primarily as a result of changes in Other Comprehensive Income ("OCI") due to interest rate changes over the past year. The unrealized loss on the securities portfolio, net of applicable tax, totaled $458.25 million at March 31, 2023, compared to an unrealized loss of $535.23 million and $209.58 million at December 31, 2022 and March 31, 2022, 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 79 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, Lumberton, 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," "project," 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.