First Financial Bankshares Announces First Quarter Earnings Results

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Apr 20, 2017, 16:05 ET

ABILENE, Texas, April 20, 2017 /PRNewswire/ -- First Financial Bankshares, Inc. (NASDAQ: FFIN) today reported earnings for the first quarter of 2017 of $26.60 million, up 3.51 percent compared with earnings of $25.70 million in the same quarter last year. Basic earnings per share were $0.40 for the first quarter of 2017 compared with $0.39 in the same quarter a year ago.

Net interest income for the first quarter of 2017 and 2016 was $57.02 million. The net interest margin, on a taxable equivalent basis, was 4.03 percent for the first quarter of 2017 compared to 4.01 percent in the fourth quarter of 2016 and 4.15 percent in the first quarter of 2016. Included in interest income for the first quarter of 2017 was $401 thousand, or three basis points in net interest margin, related to discount accretion from fair value accounting related to the Conroe and Orange acquisitions.

The provision for loan losses was $1.95 million in the first quarter of 2017 compared with $1.99 million in the fourth quarter of 2016 and $2.33 million in the first quarter of 2016. The continued provision for loan losses in 2017 reflects the continued levels of nonperforming and classified assets, gross charge-offs, as well as the continuing economic effects related to the oil and gas industry. Nonperforming assets as a percentage of loans and foreclosed assets totaled 0.90 percent at March 31, 2017, compared with 0.86 percent at December 31, 2016, and 0.88 percent at March 31, 2016. Classified loans totaled $122.62 million at March 31, 2017, compared to $127.80 million at December 31, 2016, and $142.14 million at March 31, 2016.

At March 31, 2017, loans with oil and gas industry exposure totaled 2.22% of gross loans. These loans comprised $29.08 million of the classified loan totals and $3.21 million of the nonperforming loan totals. There were no charge-offs related to these oil and gas loans for the quarter ended March 31, 2017. At March 31, 2017, the Company's allowance for loan loss reserve specific to its total oil and gas loan portfolio totaled 6.59% of total oil and gas loans.

Noninterest income increased 7.39 percent in the first quarter of 2017 to $21.29 million compared with $19.82 million in the same quarter a year ago. Trust fees increased $1.36 million to $6.02 million in the first quarter of 2017 compared with $4.66 million in the same quarter last year, primarily due to continued growth in the fair value of Trust assets managed to $4.54 billion from $4.01 billion a year ago and an increase of $514 thousand in real estate and lease bonus fees over the same quarter a year ago. ATM, interchange and credit card fees increased 8.52 percent to $6.16 million compared with $5.68 million in the same quarter last year due to continued growth in net new accounts and debit cards. Real estate mortgage fees increased 8.86 percent in the first quarter of 2017 to $3.42 million compared with $3.14 million in the same quarter a year ago.

Noninterest expense for the first quarter of 2017 totaled $42.15 million compared to $41.08 million in the first quarter of 2016. The Company's efficiency ratio in the first quarter of 2017 was 49.67 percent compared with 49.52 percent in the same quarter last year. The increase in noninterest expense in the first quarter of 2017 was primarily driven by a $669 thousand increase in salary and employee benefit expense and an increase in fraud and operational and other losses of $499 thousand when compared to the same quarter a year ago.

As of March 31, 2017, consolidated assets for the Company totaled $6.93 billion compared to $6.81 billion at December 31, 2016 and $6.53 billion at March 31, 2016. Loans totaled $3.39 billion at quarter end compared with loans of $3.38 billion at December 31, 2016, and $3.30 billion at March 31, 2016. Deposits totaled $5.66 billion at March 31, 2017, compared to $5.48 billion at December 31, 2016, and $5.06 billion at March 31, 2016. Shareholders' equity rose to $859.35 million as of March 31, 2017, compared with $837.89 million at December 31, 2016, and $838.61 million at March 31, 2016.

"We continue to work diligently to grow loans and deposits, reduce expenses to improve our bottom line while continuing to look for acquisition opportunities to better utilize our strong capital position and increase our return to our shareholders," said F. Scott Dueser, Chairman, President and CEO.

About First Financial Bankshares

Headquartered in Abilene, Texas, First Financial Bankshares is a financial holding company that through its subsidiary, First Financial Bank, N.A., operates multiple banking regions with 69 locations in Texas including Abilene, Acton, Albany, Aledo, Alvarado, Beaumont, Boyd, Bridgeport, Brock, Burleson, Cisco, Cleburne, Clyde, Conroe, Cut and Shoot, Decatur, Eastland, Fort Worth, Glen Rose, Granbury, Grapevine, Hereford, Huntsville, Keller, Magnolia, Mauriceville, Merkel, Midlothian, Mineral Wells, Montgomery, Moran, New Waverly, Newton, Odessa, Orange, 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 seven 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

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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
			2017			2016
ASSETS			Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
Cash and due from banks		$	163,674		$	204,782		$	166,981		$	135,092		$	139,995
Interest-bearing deposits in banks			55,165			48,574			117,334			67,746			22,993
Interest-bearing time deposits in banks			1,707			1,707			1,707			2,427			2,427
Fed funds sold			3,840			3,130			3,400			2,960			2,660
Investment securities			3,018,393			2,860,958			2,729,159			2,795,493			2,763,185
Loans			3,386,141			3,384,205			3,369,384			3,309,388			3,299,207
	Allowance for loan losses		(46,192)			(45,779)			(45,298)			(45,060)			(44,072)
Net loans			3,339,949			3,338,426			3,324,086			3,264,328			3,255,135
Premises and equipment			122,787			122,685			122,725			122,326			118,208
Goodwill			139,971			139,971			139,971			139,971			139,971
Other intangible assets			3,464			3,632			3,758			3,959			4,198
Other assets			81,420			86,066			77,615			80,688			76,413
	Total assets	$	6,930,370		$	6,809,931		$	6,686,736		$	6,614,990		$	6,525,185

LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits		$	1,827,609		$	1,717,722		$	1,702,993		$	1,644,812		$	1,654,271
Interest-bearing deposits			3,834,359			3,760,817			3,532,471			3,411,477			3,409,536
	Total deposits		5,661,968			5,478,539			5,235,464			5,056,289			5,063,807
Borrowings			360,264			445,770			513,759			556,924			525,340
Other liabilities			48,784			47,737			69,569			135,619			97,430
Shareholders' equity			859,354			837,885			867,944			866,158			838,608
	Total liabilities and shareholders' equity	$	6,930,370		$	6,809,931		$	6,686,736		$	6,614,990		$	6,525,185

		Quarter Ended
			2017			2016
INCOME STATEMENTS			Mar. 31,			Dec 31,			Sept. 30,			June 30,			Mar. 31,
Interest income		$	58,783		$	57,979		$	58,093		$	57,881		$	58,335
Interest expense			1,763			1,443			1,366			1,330			1,312
Net interest income			57,020			56,536			56,727			56,551			57,023
Provision for loan losses			1,950			1,993			3,833			2,058			2,328
Net interest income after provision for loan losses			55,070			54,543			52,894			54,493			54,695
Noninterest income			21,286			21,721			22,152			21,438			19,821
Noninterest expense			42,152			41,990			42,003			40,756			41,081
	Net income before income taxes		34,204			34,274			33,043			35,175			33,435
Income tax expense			7,605			7,608			7,440			8,366			7,739
	Net income	$	26,599		$	26,666		$	25,603		$	26,809		$	25,696

PER COMMON SHARE DATA
Net income - basic		$	0.40		$	0.40		$	0.39		$	0.41		$	0.39
Net income - diluted			0.40			0.40			0.39			0.41			0.39
Cash dividends declared			0.18			0.18			0.18			0.18			0.16
Book Value			12.99			12.68			13.14			13.11			12.70
Market Value		$	40.10		$	45.20		$	36.44		$	32.79		$	29.58
Shares outstanding - end of period			66,131,832			66,094,695			66,063,285			66,059,912			66,043,442
Average outstanding shares - basic			66,073,399			66,037,447			66,023,069			66,016,562			65,974,559
Average outstanding shares - diluted			66,363,222			66,307,119			66,147,202			66,138,275			66,118,998

PERFORMANCE RATIOS
Return on average assets			1.57	%		1.59	%		1.54	%		1.65	%		1.58	%
Return on average equity			12.74			12.44			11.72			12.76			12.55
Net interest margin (tax equivalent)			4.03			4.01			4.04			4.12			4.15
Efficiency ratio			49.67			49.61			49.33			48.43			49.52

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

		Quarter Ended
			2017						2016
ALLOWANCE FOR LOAN LOSSES			Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
Balance at beginning of period		$	45,779		$	45,298		$	45,060		$	44,072		$	41,877
Loans charged off			(2,026)			(1,774)			(4,372)			(1,888)			(1,782)
Loan recoveries			489			262			777			818			1,649
Net recoveries (charge-offs)			(1,537)			(1,512)			(3,595)			(1,070)			(133)
Provision for loan losses			1,950			1,993			3,833			2,058			2,328
Balance at end of period		$	46,192		$	45,779		$	45,298		$	45,060		$	44,072

Allowance for loan losses / period-end loans
Allowance for loan losses / period-end loans			1.36	%		1.35	%		1.34	%		1.36	%		1.34	%
Allowance for loan losses / nonperforming loans
Allowance for loan losses / nonperforming loans			159.48			161.44			131.04			112.36			156.24
Net charge-offs / average loans (annualized)
Net charge-offs / average loans (annualized)			0.18			0.18			0.43			0.13			0.02

SUMMARY OF LOAN CLASSIFICATION
Special Mention		$	23,341		$	24,787		$	25,488		$	26,125		$	31,486
Substandard			99,280			103,015			101,110			106,540			110,657
Doubtful			-			-			2			-			-
	Total classified loans	$	122,621		$	127,802		$	126,600		$	132,665		$	142,143

NONPERFORMING ASSETS
Nonaccrual loans		$	28,080		$	27,371		$	33,712		$	38,904		$	27,175
Accruing troubled debt restructured loans			695			701			750			961			973
Accruing loans 90 days past due			190			284			107			237			59
	Total nonperforming loans		28,965			28,356			34,569			40,102			28,207
Foreclosed assets			1,553			644			369			285			821
	Total nonperforming assets	$	30,518		$	29,000		$	34,938		$	40,387		$	29,028

As a % of loans and foreclosed assets			0.90	%		0.86	%		1.04	%		1.22	%		0.88	%
As a % of end of period total assets			0.44			0.43			0.52			0.61			0.44

OIL AND GAS PORTFOLIO INFORMATION
Oil and gas loans		$	75,262		$	78,483		$	86,785		$	87,857		$	92,058
Oil and gas loans as a % of total loans			2.22	%		2.32	%		2.58	%		2.65	%		2.79	%
Classified oil and gas loans			29,077			32,518			31,541			32,674			36,402
Nonaccrual oil and gas loans			3,208			4,092			5,140			5,763			4,917
Net charge-offs for oil and gas loans			-			105			104			419			517
Allowance for oil and gas loans as a % of oil and gas loans			6.59	%		6.28	%		5.60	%		6.57	%		7.37	%

CAPITAL RATIOS
Common equity Tier 1 capital ratio			17.56	%		17.30	%		17.11	%		16.64	%		16.34	%
Tier 1 capital ratio			17.56			17.30			17.11			16.64			16.34
Total capital ratio			18.72			18.45			18.28			17.79			17.47
Tier 1 leverage			10.60			10.71			10.60			10.50			10.23
Equity to assets			12.40			12.30			12.98			13.09			12.85


		Quarter Ended
			2017						2016
NONINTEREST INCOME			Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
Trust fees		$	6,017		$	5,189		$	5,066		$	4,726		$	4,655
Service charges on deposits			4,550			4,773			4,796			4,404			4,413
ATM, interchange and credit card fees			6,164			6,390			6,000			5,840			5,680
Real estate mortgage fees			3,417			4,237			4,697			4,013			3,139
Net gain on sale of available-for-sale securities			3			117			239			912			2
Net gain (loss) on sale of foreclosed assets			41			112			(10)			278			76
Net gain (loss) on sale of assets			4			(103)			(168)			(74)			513
Interest on loan recoveries			154			141			709			629			633
Other noninterest income			936			865			823			710			710
	Total noninterest income	$	21,286		$	21,721		$	22,152		$	21,438		$	19,821

NONINTEREST EXPENSE
Salaries and employee benefits, excluding profit sharing		$	22,233		$	21,742		$	22,193		$	22,038		$	21,545
Profit sharing expense			1,026			1,329			738			109			1,045
Loss from partial settlement of pension plan			-			267			-			-			-
Net occupancy expense			2,600			2,534			2,672			2,583			2,631
Equipment expense			3,437			3,293			3,420			3,386			3,380
FDIC insurance premiums			547			525			513			818			824
ATM, interchange and credit card expenses			1,713			1,879			1,859			1,806			1,687
Legal, tax and professional fees			2,478			2,386			2,389			2,108			2,209
Audit fees			419			331			413			400			449
Printing, stationery and supplies			438			590			536			464			503
Amortization of intangible assets			168			168			172			199			199
Advertising and public relations			1,544			1,574			1,729			1,537			1,444
Operational and other losses			985			717			533			433			486
Other noninterest expense			4,564			4,655			4,836			4,875			4,679
	Total noninterest expense	$	42,152		$	41,990		$	42,003		$	40,756		$	41,081

TAX EQUIVALENT YIELD ADJUSTMENT		$	6,550		$	6,391		$	6,271		$	6,168		$	6,115

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

		Three Months Ended						Three Months Ended
		Mar. 31, 2017						Dec. 31, 2016
			Average		Tax Equivalent	Yield /			Average		Tax Equivalent	Yield /
			Balance		Interest	Rate			Balance		Interest	Rate
Interest-earning assets:
Fed funds sold		$	3,529	$	2	0.23	%	$	4,703	$	5	0.42	%
Interest-bearing deposits in nonaffiliated banks			134,556		274	0.83			85,907		116	0.54
Taxable securities			1,367,331		7,431	2.17			1,281,717		6,459	2.02
Tax exempt securities			1,529,610		17,561	4.59			1,489,463		16,958	4.55
Loans			3,369,599		40,065	4.82			3,374,652		40,831	4.81
Total interest-earning assets			6,404,625	$	65,333	4.14	%		6,236,442	$	64,369	4.11	%
Noninterest-earning assets			446,961						434,629
	Total assets	$	6,851,586					$	6,671,071

Interest-bearing liabilities:
Deposits		$	3,808,933	$	1,590	0.17	%	$	3,580,489	$	1,305	0.14	%
Fed funds purchased and other borrowings			448,217		173	0.16			488,240		137	0.11
Total interest-bearing liabilities			4,257,150	$	1,763	0.17	%		4,068,729	$	1,442	0.14	%
Noninterest-bearing liabilities			1,747,532						1,749,320
Shareholders' equity			846,904						853,022
	Total liabilities and shareholders' equity	$	6,851,586					$	6,671,071

Net interest income and margin (tax equivalent)				$	63,570	4.03	%			$	62,927	4.01	%

		Three Months Ended						Three Months Ended
		Sept. 30, 2016						June 30, 2016
			Average		Tax Equivalent	Yield /			Average		Tax Equivalent	Yield /
			Balance		Interest	Rate			Balance		Interest	Rate
Interest-earning assets:
Fed funds sold		$	4,596	$	4	0.33	%	$	5,701	$	6	0.44	%
Interest-bearing deposits in nonaffiliated banks			69,285		95	0.55			37,159		57	0.61
Taxable securities			1,305,103		6,775	2.08			1,349,325		7,130	2.11
Tax exempt securities			1,478,719		16,541	4.47			1,439,575		16,446	4.57
Loans			3,349,458		40,948	4.86			3,295,557		40,410	4.93
Total interest-earning assets			6,207,161	$	64,363	4.13	%		6,127,317	$	64,049	4.20	%
Noninterest-earning assets			428,239						416,414
	Total assets	$	6,635,400					$	6,543,731

Interest-bearing liabilities:
Deposits		$	3,460,208	$	1,111	0.13	%	$	3,388,572	$	1,033	0.12	%
Fed funds purchased and other borrowings			569,883		254	0.18			587,981		297	0.20
Total interest-bearing liabilities			4,030,091	$	1,365	0.13	%		3,976,553	$	1,330	0.14	%
Noninterest-bearing liabilities			1,736,071						1,722,037
Shareholders' equity			869,238						845,141
	Total liabilities and shareholders' equity	$	6,635,400					$	6,543,731

Net interest income and margin (tax equivalent)				$	62,998	4.04	%			$	62,719	4.12	%

		Three Months Ended
		Mar. 31, 2016
			Average		Tax Equivalent	Yield /
			Balance		Interest	Rate
Interest-earning assets:
Fed funds sold		$	7,534	$	9	0.50	%
Interest-bearing deposits in nonaffiliated banks			40,239		51	0.51
Taxable securities			1,323,606		7,262	2.19
Tax exempt securities			1,428,178		16,326	4.57
Loans			3,312,664		40,802	4.95
Total interest-earning assets			6,112,221	$	64,450	4.24	%
Noninterest-earning assets			432,862
	Total assets	$	6,545,083

Interest-bearing liabilities:
Deposits		$	3,445,622	$	1,052	0.12	%
Fed funds purchased and other borrowings			562,569		260	0.19
Total interest-bearing liabilities			4,008,191	$	1,312	0.13	%
Noninterest-bearing liabilities			1,713,122
Shareholders' equity			823,770
	Total liabilities and shareholders' equity	$	6,545,083

Net interest income and margin (tax equivalent)				$	63,138	4.15	%