First Financial Bankshares Announces First Quarter Earnings Results

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Apr 16, 2015, 04:01 ET

ABILENE, Texas, April 16, 2015 /PRNewswire/ -- First Financial Bankshares, Inc. (NASDAQ: FFIN) today reported earnings for the first quarter of 2015 of $24.00 million, up 7.44 percent when compared with earnings of $22.34 million in the same quarter last year. Basic earnings per share were $0.37 for the first quarter of 2015 compared with $0.35 in the same quarter a year ago.

Net interest income for the first quarter of 2015 increased 8.32 percent to $51.10 million compared with $47.17 million in the same period of 2014. The net interest margin, on a taxable equivalent basis, was 4.11 percent compared to 4.08 percent in the fourth quarter of 2014 and 4.32 percent in the first quarter of 2014. Included in interest income for the first quarter of 2015 was $489 thousand, or three basis points in net interest margin, related to discount accretion from fair value accounting related to the Orange and Huntsville acquisitions.

The provision for loan losses was $1.29 million in the first quarter of 2015 compared with $755 thousand in the fourth quarter of 2014 and $1.69 million in the first quarter of 2014. Nonperforming assets as a percentage of loans and foreclosed assets totaled 0.69 percent at March 31, 2015, compared with 0.74 percent at December 31, 2014, and 1.02 percent at March 31, 2014. Classified loans totaled $77.75 million at March 31, 2015, compared to $72.98 million at December 31, 2014, and $81.56 million at March 31, 2014.

Noninterest income decreased 3.10 percent in the first quarter of 2015 to $15.90 million compared with $16.41 million in the same quarter a year ago. Included in noninterest income in the first quarter of 2014 was a $605 thousand gain from the settlement of a bank owned life insurance contract and a gain on sale of foreclosed assets of $452 thousand compared to only $30 thousand in the first quarter of 2015. Trust fees increased to $4.73 million in the first quarter of 2015 compared with $4.58 million in the same quarter last year, due to continued growth in the fair value of Trust assets managed to $3.85 billion from $3.47 billion a year ago. This growth offset a $241 thousand decline in Trust oil and gas fee income in the first quarter of 2015 compared to the same quarter a year ago. ATM, interchange and credit card fees increased 11.84 percent to $4.97 million compared with $4.44 million in the same quarter last year due to continued growth in net new accounts and debit cards. Real estate mortgage fees increased 39.36 percent in the first quarter of 2015 to $1.43 million compared with $1.02 million in the same quarter a year ago.

Noninterest expense for the first quarter of 2015 totaled $33.94 million compared to $32.45 million in the first quarter of 2014. The Company's efficiency ratio in the first quarter of 2015 was 47.01 percent compared with 47.57 percent in the same quarter last year. The increase in noninterest expense in the first quarter of 2015 was primarily a result of an increase in salary and employee benefit costs to $18.27 million compared to $17.41 million in the same period a year ago, primarily driven by the addition of employees to staff new branches, compliance-related areas and annual pay increases.

As of March 31, 2015, consolidated assets for the Company totaled $6.03 billion compared with $5.28 billion a year ago. Loans totaled $2.94 billion at quarter end compared with loans of $2.70 billion a year ago. Total deposits grew 14.23 percent to $4.84 billion at March 31, 2015, compared to $4.23 billion a year ago. Shareholders' equity rose to $706.25 million as of March 31, 2015, compared with $616.57 million in the prior year.

"We are pleased to report another successful quarter for our company and continue to work to grow and improve our efficiencies," said F. Scott Dueser, Chairman, President and CEO. "We are very excited about the additions of our newest proposed acquisition, First Bank, N.A., Conroe, Texas, and the asset purchase agreement of 4Trust Mortgage, Inc. We believe these additions to the First Financial family fit well into our footprint and continues our strategy to buy well-run banks and companies in high growth areas, which bring good earnings opportunities. In light of the current depressed oil and gas prices, we continue to monitor our direct exposure to the oil and gas industry, which has remained at approximately 3%, consistent with the 2014 year-end balances."

About First Financial Bankshares

Headquartered in Abilene, Texas, First Financial Bankshares is a financial holding company that operates 12 banking regions with 62 locations in Texas including Abilene, Acton, Albany, Aledo, Alvarado, Beaumont, Boyd, Bridgeport, Brock, Burleson, Cisco, Cleburne, Clyde, Decatur, Eastland, Fort Worth, Glen Rose, Granbury, Grapevine, Hereford, Huntsville, Keller, Mauriceville, Merkel, Midlothian, Mineral Wells, Moran, New Waverly, 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 eight 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
			2015			2014
ASSETS			Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
Cash and due from banks		$	142,233		$	190,387		$	149,957		$	166,237		$	160,469
Interest-bearing deposits in banks			18,275			54,324			83,994			68,331			3,772
Interest-bearing time deposits in banks			9,170			17,002			19,234			24,188			30,026
Fed funds sold			5,460			8,760			4,785			3,110			3,620
Investment securities			2,689,640			2,416,297			2,254,316			2,174,396			2,163,599
Loans			2,938,707			2,937,991			2,839,696			2,786,644			2,698,717
	Allowance for loan losses		(37,828)			(36,824)			(36,388)			(35,892)			(34,693)
Net loans			2,900,879			2,901,167			2,803,308			2,750,752			2,664,024
Premises and equipment			104,358			103,000			101,437			96,619			95,406
Goodwill			94,882			94,882			94,882			94,882			94,882
Other intangible assets			2,310			2,477			2,547			2,547			2,600
Other assets			58,165			59,906			61,351			65,294			62,629
	Total assets	$	6,025,372		$	5,848,202		$	5,575,811		$	5,446,356		$	5,281,027

LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits		$	1,600,807		$	1,570,330		$	1,505,847		$	1,445,947		$	1,389,331
Interest-bearing deposits			3,236,200			3,179,925			2,958,517			2,872,511			2,844,950
	Total deposits		4,837,007			4,750,255			4,464,364			4,318,458			4,234,281
Short-term borrowings			401,898			367,110			341,909			434,583			383,220
Other liabilities			80,219			49,300			110,773			53,279			46,960
Shareholders' equity			706,248			681,537			658,765			640,036			616,566
	Total liabilities and shareholders' equity	$	6,025,372		$	5,848,202		$	5,575,811		$	5,446,356		$	5,281,027

		Quarter Ended
			2015			2014
INCOME STATEMENTS			Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
Interest income		$	52,069		$	51,121		$	49,955		$	49,254		$	48,209
Interest expense			970			1,039			1,069			1,037			1,036
Net interest income			51,099			50,082			48,886			48,217			47,173
Provision for loan losses			1,290			755			896			1,124			1,690
Net interest income after provision for loan losses			49,809			49,327			47,990			47,093			45,483
Noninterest income			15,897			17,023			17,324			15,872			16,405
Noninterest expense			33,943			36,435			34,040			35,002			32,448
	Net income before income taxes		31,763			29,915			31,274			27,963			29,440
Income tax expense			7,766			7,328			7,843			6,758			7,104
	Net income	$	23,997		$	22,587		$	23,431		$	21,205		$	22,336

PER COMMON SHARE DATA
Net income - basic		$	0.37		$	0.35		$	0.37		$	0.33		$	0.35
Net income - diluted			0.37			0.35			0.36			0.33			0.35
Cash dividends declared			0.14			0.14			0.14			0.14			0.13
Book Value			11.01			10.63			10.28			9.99			9.63
Market Value		$	27.64		$	29.88		$	27.79		$	31.37		$	30.90
Shares outstanding - end of period			64,142,812			64,089,921			64,065,828			64,053,010			64,039,234
Average outstanding shares - basic			64,122,965			64,075,334			64,059,675			64,045,282			64,010,076
Average outstanding shares - diluted			64,298,896			64,316,815			64,304,985			64,301,306			64,212,018

PERFORMANCE RATIOS
Return on average assets			1.64	%		1.57	%		1.71	%		1.59	%		1.74	%
Return on average equity			14.00			13.34			14.27			13.46			15.02
Net interest margin (tax equivalent)			4.11			4.08			4.18			4.24			4.32
Efficiency ratio			47.01			50.58			47.93			50.84			47.57

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

		Quarter Ended
			2015			2014
ALLOWANCE FOR LOAN LOSSES			Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
Balance at beginning of period		$	36,824		$	36,388		$	35,892		$	34,693		$	33,900
Loans charged off			(509)			(670)			(614)			(302)			(1,297)
Loan recoveries			223			351			214			377			400
Net recoveries (charge-offs)			(286)			(319)			(400)			75			(897)
Provision for loan losses			1,290			755			896			1,124			1,690
Balance at end of period		$	37,828		$	36,824		$	36,388		$	35,892		$	34,693

Allowance for loan losses /
period-end loans			1.29	%		1.25	%		1.28	%		1.29	%		1.29	%
Allowance for loan losses /
nonperforming loans			196.04			178.06			162.77			151.52			140.23
Net charge-offs / average loans
(annualized)			0.04			0.04			0.06			(0.01)			0.14


NONPERFORMING ASSETS
Nonaccrual loans		$	18,935		$	20,195		$	22,093		$	23,565		$	24,710
Accruing troubled debt restructured loans			177			226			-			-			-
Accruing loans 90 days past due			184			260			263			123			30
	Total nonperforming loans		19,296			20,681			22,356			23,688			24,740
Foreclosed assets			1,081			1,035			1,273			2,342			2,813
	Total nonperforming assets	$	20,377		$	21,716		$	23,629		$	26,030		$	27,553

As a % of loans and foreclosed assets			0.69	%		0.74	%		0.83	%		0.93	%		1.02	%
As a % of end of period total assets			0.34			0.37			0.42			0.48			0.52

CAPITAL RATIOS
Tier 1 risk-based			16.23	%		16.05	%		16.07	%		16.15	%		16.24	%
Total risk-based			17.35			17.16			17.20			17.30			17.39
Tier 1 leverage			9.85			9.89			10.10			9.99			9.95
Equity to assets			11.72			11.65			11.81			11.75			11.68


		Quarter Ended
			2015			2014
NONINTEREST INCOME			Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
Trust fees		$	4,731		$	4,869		$	4,772		$	4,549		$	4,576
Service charges on deposits			3,768			4,287			4,402			4,174			4,047
ATM, interchange and credit card fees			4,969			5,137			5,093			4,754			4,443
Real estate mortgage fees			1,427			1,465			1,813			1,337			1,024
Net gain (loss) on sale of available-for-sale securities			5			-			1			(1)			(4)
Net gain (loss) on sale of foreclosed assets			30			100			305			47			452
Net gain (loss) on sale of assets			5			(6)			(31)			44			3
Other noninterest income			962			1,171			969			968			1,864
	Total noninterest income	$	15,897		$	17,023		$	17,324		$	15,872		$	16,405

NONINTEREST EXPENSE
Salaries and employee benefits, excluding profit sharing		$	17,023		$	16,302		$	16,354		$	16,279		$	16,197
Profit sharing expense			1,242			1,516			1,596			995			1,217
Loss from partial settlement of pension plan			-			2,909			-			-			-
Net occupancy expense			2,197			2,296			2,297			2,273			2,234
Equipment expense			2,899			2,695			2,758			2,665			2,622
FDIC insurance premiums			748			689			693			684			659
ATM, interchange and credit card expenses			1,725			1,875			1,819			1,696			1,480
Legal, tax and professional fees			1,697			1,363			1,463			1,208			1,273
Audit fees			381			279			403			367			369
Printing, stationery and supplies			596			676			632			554			775
Amortization of intangible assets			90			64			62			74			75
Advertising and public relations			1,353			1,515			1,591			1,465			1,375
Correspondent bank service charges			222			222			222			215			228
Other noninterest expense			3,770			4,034			4,150			6,527			3,944
	Total noninterest expense	$	33,943		$	36,435		$	34,040		$	35,002		$	32,448

TAX EQUIVALENT YIELD ADJUSTMENT		$	5,213		$	4,934		$	4,814		$	4,753		$	4,629

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

		Three Months Ended						Three Months Ended
		Mar. 31, 2015						Dec. 31, 2014
			Average		Tax Equivalent	Yield /			Average		Tax Equivalent	Yield /
			Balance		Interest	Rate			Balance		Interest	Rate
Interest-earning assets:
Fed funds sold		$	6,767	$	5	0.27	%	$	5,975	$	4	0.30	%
Interest-bearing deposits in nonaffiliated banks			89,798		75	0.34			118,244		110	0.37
Taxable securities			1,333,073		7,808	2.34			1,246,632		7,370	2.36
Tax exempt securities			1,191,772		13,973	4.69			1,091,723		13,078	4.79
Loans			2,931,805		35,420	4.90			2,889,951		35,492	4.87
Total interest-earning assets			5,553,215	$	57,281	4.18	%		5,352,525	$	56,054	4.15	%
Noninterest-earning assets			363,211						358,395
	Total assets	$	5,916,426					$	5,710,920

Interest-bearing liabilities:
Deposits		$	3,221,552	$	927	0.12	%	$	3,043,612	$	989	0.13	%
Fed funds purchased and other short term borrowings			388,213		42	0.04			373,785		49	0.05
Total interest-bearing liabilities			3,609,765	$	969	0.11	%		3,417,397	$	1,038	0.12	%
Noninterest-bearing liabilities			1,611,430						1,621,819
Shareholders' equity			695,231						671,704
	Total liabilities and shareholders' equity	$	5,916,426					$	5,710,920

Net interest income and margin (tax equivalent)				$	56,312	4.11	%			$	55,016	4.08	%

		Three Months Ended						Three Months Ended
		Sept. 30, 2014						June 30, 2014
			Average		Tax Equivalent	Yield /			Average		Tax Equivalent	Yield /
			Balance		Interest	Rate			Balance		Interest	Rate
Interest-earning assets:
Fed funds sold		$	10,619	$	11	0.40	%	$	11,310	$	12	0.41	%
Interest-bearing deposits in nonaffiliated banks			50,213		69	0.55			48,974		78	0.64
Taxable securities			1,166,248		6,856	2.35			1,159,430		7,091	2.45
Tax exempt securities			1,057,715		12,763	4.83			1,037,608		12,599	4.86
Loans			2,814,083		35,070	4.94			2,748,023		34,227	5.00
Total interest-earning assets			5,098,878	$	54,769	4.26	%		5,005,345	$	54,007	4.33	%
Noninterest-earning assets			348,369						335,651
	Total assets	$	5,447,247					$	5,340,996

Interest-bearing liabilities:
Deposits		$	2,892,065	$	999	0.14	%	$	2,867,740	$	955	0.13	%
Fed funds purchased and other short term borrowings			384,768		70	0.07			406,913		82	0.08
Total interest-bearing liabilities			3,276,833	$	1,069	0.13	%		3,274,653	$	1,037	0.13	%
Noninterest-bearing liabilities			1,518,907						1,434,674
Shareholders' equity			651,507						631,669
	Total liabilities and shareholders' equity	$	5,447,247					$	5,340,996

Net interest income and margin (tax equivalent)				$	53,700	4.18	%			$	52,970	4.24	%

		Three Months Ended
		Mar. 31, 2014
			Average		Tax Equivalent	Yield /
			Balance		Interest	Rate
Interest-earning assets:
Fed funds sold		$	5,718	$	5	0.35	%
Interest-bearing deposits in nonaffiliated banks			48,708		82	0.68
Taxable securities			1,121,296		7,084	2.53
Tax exempt securities			992,947		12,218	4.92
Loans			2,689,474		33,450	5.04
Total interest-earning assets			4,858,143	$	52,839	4.41	%
Noninterest-earning assets			351,309
	Total assets	$	5,209,452

Interest-bearing liabilities:
Deposits		$	2,817,181	$	941	0.14	%
Fed funds purchased and other short term borrowings			426,204		96	0.09
Total interest-bearing liabilities			3,243,385	$	1,037	0.13	%
Noninterest-bearing liabilities			1,362,852
Shareholders' equity			603,215
	Total liabilities and shareholders' equity	$	5,209,452

Net interest income and margin (tax equivalent)				$	51,802	4.32	%

SOURCE First Financial Bankshares, Inc.

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