First Financial Bankshares Announces Second Quarter 2019 Earnings Results

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Jul 18, 2019, 16:05 ET

ABILENE, Texas, July 18, 2019 /PRNewswire/ -- First Financial Bankshares, Inc. (NASDAQ: FFIN) today reported earnings for the second quarter of 2019 of $42.09 million, up $4.46 million when compared with earnings of $37.63 million in the same quarter last year. Basic earnings per share were $0.31 for the second quarter of 2019 compared with $0.28 in the same quarter a year ago.

On April 23, 2019, the Company's Board of Directors declared a two-for-one stock split in the form of a 100 percent stock dividend, which was effective June 3, 2019. All share and per share amounts in this earnings release have been restated to reflect this stock split.

Net interest income for the second quarter of 2019 was $71.62 million compared with $67.61 million in the same quarter of 2018. The net interest margin, on a taxable equivalent basis, was 3.98 percent in the second quarter of 2019 compared to 4.00 percent in the first quarter of 2019 and 3.92 percent in the second quarter of 2018. Included in interest income for the second quarter of 2019 was $402 thousand, or two basis points in net interest margin, related to discount accretion from fair value accounting related to the Kingwood and Orange acquisitions.

The provision for loan losses was $600 thousand in the second quarter of 2019 compared with $965 thousand in the first quarter of 2019 and $1.11 million in the second quarter of 2018. Nonperforming assets as a percentage of loans and foreclosed assets totaled 0.69 percent at June 30, 2019, compared with 0.74 percent at March 31, 2019, and 0.73 percent at June 30, 2018. Classified loans totaled $126.04 million at June 30, 2019, compared to $118.43 million at March 31, 2019, and $113.73 million at June 30, 2018.

Noninterest income increased 9.76 percent in the second quarter of 2019 to $27.98 million compared with $25.49 million in the same quarter a year ago. Trust fees were $7.03 million in the second quarter of 2019 compared with $7.07 million in the same quarter last year. The fair value of Trust assets managed increased to $6.19 billion from $5.40 billion a year ago; however, the income from this growth was offset by lower mineral fees. ATM, interchange and credit card fees increased 4.42 percent to $7.35 million compared with $7.04 million in the same quarter last year due to continued growth in debit cards. Real estate mortgage fees increased 19.49 percent in the second quarter of 2019 to $4.72 million compared with $3.95 million in the same quarter a year ago.

Noninterest expense for the second quarter of 2019 totaled $48.30 million compared to $47.14 million in the second quarter of 2018. The Company's efficiency ratio in the second quarter of 2019 was 47.71 percent compared with 49.42 percent in the same quarter last year. The increase in noninterest expense in the second quarter of 2019 was primarily a result of an increase in salary and employee benefit costs to $27.39 million compared to $26.86 million in the same quarter a year ago, primarily driven by annual merit-based pay increases and rising medical insurance costs.

For the first half of 2019, net income increased to $80.34 million from $72.15 million for the same period a year ago. Basic earnings per share rose to $0.59 in the first half of 2019 from $0.53 in the same period of 2018. Net interest income increased to $141.13 million in the first half of 2019 from $133.06 million in the same period a year ago. The provision for loan losses totaled $1.57 million compared with $2.42 million in the first half of the previous year. Noninterest income was $52.41 million in the first half of 2019 compared with $49.91 million in the same period of 2018. Noninterest expense rose to $95.67 million in the first half of 2019 compared with $94.94 million during the same period last year.

As of June 30, 2019, consolidated assets for the Company totaled $7.98 billion compared to $7.95 billion at March 31, 2019, and $7.69 billion at June 30, 2018. Loans totaled $4.06 billion at June 30, 2019, compared with loans of $4.00 billion at March 31, 2019, and $3.86 billion at June 30, 2018. Deposits totaled $6.37 billion at June 30, 2019, compared to $6.35 billion at March 31, 2019, and $6.21 billion at June 30, 2018. Shareholders' equity rose to $1.16 billion as of June 30, 2019, compared with $1.11 billion at March 31, 2019, and $985.63 million at June 30, 2018.

"We are pleased to report increased earnings and steady organic loan growth this quarter," said F. Scott Dueser, Chairman, President and CEO. "In the second half of the year, we will continue to pursue opportunities for acquisitions and focus on growing loans and deposits, cutting costs and increasing our bottom line."

About First Financial Bankshares:
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 73 locations in Texas, including Abilene, Acton, Albany, Aledo, Alvarado, Beaumont, Boyd, Bridgeport, Brock, Burleson, 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, Spring, 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 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
			2019						2018
ASSETS			June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
Cash and due from banks		$	178,345		$	176,278		$	207,835		$	164,998		$	178,217
Interest-bearing deposits in banks			128,652			197,758			40,812			34,511			99,499
Interest-bearing time deposits in banks			960			1,458			1,458			1,458			1,458
Fed funds sold			700			12,825			-			-			8,450
Investment securities			3,259,492			3,212,812			3,158,777			3,144,367			3,197,567
Loans			4,063,257			4,003,606			3,975,308			3,885,536			3,855,769
	Allowance for loan losses		(51,820)			(51,585)			(51,202)			(50,871)			(49,951)
Net loans			4,011,437			3,952,021			3,924,106			3,834,665			3,805,818
Premises and equipment			134,322			135,321			133,421			130,815			130,366
Goodwill			171,565			171,565			171,565			171,565			171,565
Other intangible assets			2,586			2,850			3,118			3,342			3,620
Other assets			91,234			83,007			90,762			85,510			88,910
	Total assets	$	7,979,293		$	7,945,895		$	7,731,854		$	7,571,231		$	7,685,470

LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits		$	2,167,552		$	2,165,745		$	2,116,107		$	2,146,984		$	2,105,953
Interest-bearing deposits			4,202,214			4,184,996			4,064,282			3,998,298			4,104,654
	Total deposits		6,369,766			6,350,741			6,180,389			6,145,282			6,210,607
Borrowings			362,005			382,711			468,706			380,760			456,935
Other liabilities			82,774			104,921			29,464			49,450			32,300
Shareholders' equity			1,164,748			1,107,522			1,053,295			995,739			985,628
	Total liabilities and shareholders' equity	$	7,979,293		$	7,945,895		$	7,731,854		$	7,571,231		$	7,685,470

		Quarter Ended
			2019						2018
INCOME STATEMENTS			June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
Interest income		$	79,576		$	76,901		$	76,481		$	74,049		$	72,078
Interest expense			7,961			7,387			6,207			4,623			4,467
Net interest income			71,615			69,514			70,274			69,426			67,611
Provision for loan losses			600			965			1,800			1,450			1,105
Net interest income after provision for loan losses			71,015			68,549			68,474			67,976			66,506
Noninterest income			27,976			24,437			24,797			27,055			25,488
Noninterest expense			48,304			47,367			48,235			47,506			47,144
	Net income before income taxes		50,687			45,619			45,036			47,525			44,850
Income tax expense			8,594			7,367			6,599			7,475			7,217
	Net income	$	42,093		$	38,252		$	38,437		$	40,050		$	37,633

PER COMMON SHARE DATA
Net income - basic		$	0.31		$	0.28		$	0.28		$	0.30		$	0.28
Net income - diluted			0.31			0.28			0.28			0.29			0.28
Cash dividends declared			0.12			0.11			0.11			0.11			0.11
Book Value			8.58			8.16			7.77			7.35			7.28
Market Value		$	30.79		$	28.89		$	28.85		$	29.55		$	25.45
Shares outstanding - end of period			135,809,224			135,680,420			135,506,266			135,387,172			135,339,316
Average outstanding shares - basic			135,650,599			135,494,254			135,352,408			135,270,116			135,194,550
Average outstanding shares - diluted			136,218,235			136,286,862			136,191,224			136,107,448			135,848,336

PERFORMANCE RATIOS
Return on average assets			2.14	%		2.00	%		2.00	%		2.10	%		1.98	%
Return on average equity			15.04			14.51			15.18			16.00			15.53
Return on average tangible equity			17.81			17.34			18.38			19.42			18.94
Net interest margin (tax equivalent)			3.98			4.00			4.02			4.01			3.92
Efficiency ratio			47.71			49.46			49.69			48.12			49.42


		Six Months Ended
		June 30,
INCOME STATEMENTS			2019			2018
Interest income		$	156,477		$	141,160
Interest expense			15,348			8,100
Net interest income			141,129			133,060
Provision for loan losses			1,565			2,415
Net interest income after provision for loan losses			139,564			130,645
Noninterest income			52,413			49,912
Noninterest expense			95,673			94,943
	Net income before income taxes		96,304			85,614
Income tax expense			15,959			13,462
	Net income	$	80,345		$	72,152

PER COMMON SHARE DATA
Net income - basic		$	0.59		$	0.53
Net income - diluted			0.59			0.53
Cash dividends declared			0.23			0.20
Book Value			8.58			7.28
Market Value		$	30.79		$	25.45
Shares outstanding - end of period			135,809,224			135,339,316
Average outstanding shares - basic			135,572,859			135,124,672
Average outstanding shares - diluted			136,195,811			135,735,930

PERFORMANCE RATIOS
Return on average assets			2.08	%		1.91	%
Return on average equity			14.78			15.14
Return on average tangible equity			17.58			18.39
Net interest margin (tax equivalent)			3.99			3.90
Efficiency ratio			48.56			50.57

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

		Quarter Ended
			2019						2018
ALLOWANCE FOR LOAN LOSSES			June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
Balance at beginning of period		$	51,585		$	51,202		$	50,871		$	49,951		$	49,499
Loans charged off			(1,061)			(1,464)			(2,081)			(945)			(949)
Loan recoveries			696			882			612			415			296
Net recoveries (charge-offs)			(365)			(582)			(1,469)			(530)			(653)
Provision for loan losses			600			965			1,800			1,450			1,105
Balance at end of period		$	51,820		$	51,585		$	51,202		$	50,871		$	49,951

Allowance for loan losses / period-end loans			1.28	%		1.29	%		1.29	%		1.31	%		1.30	%
Allowance for loan losses / nonperforming loans			190.66			177.41			176.22			194.25			182.31
Net charge-offs / average loans (annualized)			0.04			0.06			0.15			0.05			0.07

SUMMARY OF LOAN CLASSIFICATION
Special Mention		$	51,490		$	45,275		$	50,379		$	36,450		$	34,557
Substandard			74,550			73,158			75,919			81,073			79,170
Doubtful			-			-			-			-			-
	Total classified loans	$	126,040		$	118,433		$	126,298		$	117,523		$	113,727

NONPERFORMING ASSETS
Nonaccrual loans		$	26,408		$	28,508		$	27,534		$	25,587		$	26,685
Accruing troubled debt restructured loans			471			472			513			513			514
Accruing loans 90 days past due			300			97			1,008			88			200
	Total nonperforming loans		27,179			29,077			29,055			26,188			27,399
Foreclosed assets			681			647			577			671			705
	Total nonperforming assets	$	27,860		$	29,724		$	29,632		$	26,859		$	28,104

As a % of loans and foreclosed assets			0.69	%		0.74	%		0.75	%		0.69	%		0.73	%
As a % of end of period total assets			0.35			0.37			0.38			0.35			0.37

OIL AND GAS PORTFOLIO INFORMATION
Oil and gas loans		$	107,097		$	107,335		$	113,536		$	112,039		$	103,381
Oil and gas loans as a % of total loans			2.64	%		2.68	%		2.86	%		2.88	%		2.68	%
Classified oil and gas loans			3,438			4,255			3,894			4,861			5,001
Nonaccrual oil and gas loans			621			669			1,048			1,825			1,629
Net charge-offs for oil and gas loans			-			-			-			-			-
Allowance for oil and gas loans as a % of oil and gas loans			2.95	%		3.22	%		3.23	%		3.28	%		3.48	%

CAPITAL RATIOS
Common equity Tier 1 capital ratio			20.04	%		19.86	%		19.47	%		19.19	%		18.68	%
Tier 1 capital ratio			20.04			19.86			19.47			19.19			18.68
Total capital ratio			21.16			21.00			20.61			20.34			19.81
Tier 1 leverage			12.29			12.08			11.85			11.57			11.14
Equity to assets			14.60			13.94			13.62			13.15			12.82


		Quarter Ended
			2019						2018
NONINTEREST INCOME			June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
Trust fees		$	7,027		$	6,979		$	6,915		$	7,291		$	7,070
Service charges on deposits			5,374			5,176			5,713			5,690			5,375
ATM, interchange and credit card fees			7,352			6,840			6,962			7,533			7,041
Real estate mortgage fees			4,721			3,474			3,439			4,834			3,951
Net gain on sale of available-for-sale securities			676			-			8			58			67
Net gain (loss) on sale of foreclosed assets			53			69			(85)			84			19
Net gain (loss) on sale of assets			6			-			5			(61)			-
Interest on loan recoveries			903			338			332			199			289
Other noninterest income			1,864			1,561			1,508			1,427			1,676
	Total noninterest income	$	27,976		$	24,437		$	24,797		$	27,055		$	25,488

NONINTEREST EXPENSE
Salaries and employee benefits, excluding profit sharing		$	25,510		$	25,033		$	23,908		$	24,693		$	24,545
Loss from partial settlement of pension plan			-			900			1,546			-			-
Profit sharing expense			1,884			1,491			1,839			1,684			2,317
Net occupancy expense			2,779			2,763			2,583			2,900			2,806
Equipment expense			2,827			3,127			3,403			3,482			3,440
FDIC insurance premiums			538			538			565			570			632
ATM, interchange and credit card expenses			2,427			2,383			2,589			2,344			2,205
Legal, tax and professional fees			2,302			2,154			2,609			2,417			2,308
Audit fees			455			417			291			382			439
Printing, stationery and supplies			502			366			513			387			612
Amortization of intangible assets			264			269			223			279			384
Advertising and public relations			1,630			1,648			1,805			1,709			1,576
Operational and other losses			480			266			337			981			305
Software amortization and expense			1,287			923			755			540			479
Other noninterest expense			5,419			5,089			5,269			5,138			5,096
	Total noninterest expense	$	48,304		$	47,367		$	48,235		$	47,506		$	47,144

TAX EQUIVALENT YIELD ADJUSTMENT		$	1,664		$	1,819		$	1,996		$	2,242		$	2,289


		Six Months Ended
		June 30,
NONINTEREST INCOME			2019			2018
Trust fees		$	14,006		$	13,975
Service charges on deposits			10,550			10,259
ATM, interchange and credit card fees			14,192			14,037
Real estate mortgage fees			8,195			6,884
Net gain (loss) on sale of available-for-sale securities			676			1,288
Net gain (loss) on sale of foreclosed assets			122			118
Net gain (loss) on sale of assets			6			(91)
Interest on loan recoveries			1,241			408
Other noninterest income			3,425			3,034
	Total noninterest income	$	52,413		$	49,912

NONINTEREST EXPENSE
Salaries and employee benefits, excluding profit sharing		$	50,543		$	49,539
Loss from partial settlement of pension plan			900			-
Profit sharing expense			3,375			3,526
Net occupancy expense			5,542			5,689
Equipment expense			5,954			6,957
FDIC insurance premiums			1,076			1,199
ATM, interchange and credit card expenses			4,810			4,348
Legal, tax and professional fees			4,457			5,115
Audit fees			872			851
Printing, stationery and supplies			868			1,098
Amortization of intangible assets			532			771
Advertising and public relations			3,278			3,151
Operational and other losses			746			871
Software amortization and expense			2,210			1,003
Other noninterest expense			10,510			10,825
	Total noninterest expense	$	95,673		$	94,943

TAX EQUIVALENT YIELD ADJUSTMENT		$	3,484		$	4,755

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

		Three Months Ended						Three Months Ended
		June 30, 2019						Mar. 31, 2019
			Average		Tax Equivalent	Yield /			Average		Tax Equivalent	Yield /
			Balance		Interest	Rate			Balance		Interest	Rate
Interest-earning assets:
Fed funds sold		$	5,436	$	39	2.88	%	$	4,894	$	34	2.79	%
Interest-bearing deposits in nonaffiliated banks			107,381		628	2.35			100,258		585	2.36
Taxable securities			2,063,497		13,925	2.70			1,924,863		13,289	2.76
Tax exempt securities			1,169,889		10,615	3.63			1,226,457		11,279	3.68
Loans			4,043,055		56,033	5.56			3,973,108		53,534	5.46
Total interest-earning assets			7,389,258	$	81,240	4.41	%		7,229,580	$	78,721	4.42	%
Noninterest-earning assets			487,931						508,368
	Total assets	$	7,877,189					$	7,737,948

Interest-bearing liabilities:
Deposits		$	4,196,123	$	7,286	0.70	%	$	4,144,091	$	6,662	0.65	%
Fed funds purchased and other borrowings			378,389		675	0.72			408,641		726	0.72
Total interest-bearing liabilities			4,574,512	$	7,961	0.70	%		4,552,732	$	7,388	0.66	%
Noninterest-bearing liabilities			2,180,361						2,116,080
Shareholders' equity			1,122,316						1,069,136
	Total liabilities and shareholders' equity	$	7,877,189					$	7,737,948

Net interest income and margin (tax equivalent)				$	73,279	3.98	%			$	71,333	4.00	%

		Three Months Ended						Three Months Ended
		Dec. 31, 2018						Sept. 30, 2018
			Average		Tax Equivalent	Yield /			Average		Tax Equivalent	Yield /
			Balance		Interest	Rate			Balance		Interest	Rate
Interest-earning assets:
Fed funds sold		$	1,620	$	10	2.54	%	$	3,377	$	19	2.29	%
Interest-bearing deposits in nonaffiliated banks			41,511		240	2.30			88,118		450	2.03
Taxable securities			1,957,638		13,384	2.73			1,943,125		12,594	2.59
Tax exempt securities			1,206,728		11,482	3.81			1,213,212		11,459	3.78
Loans			3,918,360		53,361	5.40			3,845,836		51,769	5.34
Total interest-earning assets			7,125,857	$	78,477	4.37	%		7,093,668	$	76,291	4.27	%
Noninterest-earning assets			493,244						490,155
	Total assets	$	7,619,101					$	7,583,823

Interest-bearing liabilities:
Deposits		$	3,961,582	$	5,092	0.51	%	$	4,035,174	$	4,329	0.43	%
Fed funds purchased and other borrowings			484,054		1,115	0.91			399,026		294	0.29
Total interest-bearing liabilities			4,445,636	$	6,207	0.55	%		4,434,200	$	4,623	0.41	%
Noninterest-bearing liabilities			2,169,069						2,156,258
Shareholders' equity			1,004,396						993,365
	Total liabilities and shareholders' equity	$	7,619,101					$	7,583,823

Net interest income and margin (tax equivalent)				$	72,270	4.02	%			$	71,668	4.01	%

		Three Months Ended
		June 30, 2018
			Average		Tax Equivalent	Yield /
			Balance		Interest	Rate
Interest-earning assets:
Fed funds sold		$	2,228	$	13	2.32	%
Interest-bearing deposits in nonaffiliated banks			59,373		258	1.74
Taxable securities			2,007,949		12,719	2.53
Tax exempt securities			1,281,757		12,001	3.75
Loans			3,797,341		49,376	5.22
Total interest-earning assets			7,148,648	$	74,367	4.17	%
Noninterest-earning assets			486,837
	Total assets	$	7,635,485

Interest-bearing liabilities:
Deposits		$	4,076,522	$	4,005	0.39	%
Fed funds purchased and other borrowings			434,239		462	0.43
Total interest-bearing liabilities			4,510,761	$	4,467	0.40	%
Noninterest-bearing liabilities			2,152,451
Shareholders' equity			972,273
	Total liabilities and shareholders' equity	$	7,635,485

Net interest income and margin (tax equivalent)				$	69,900	3.92	%

		Six Months Ended						Six Months Ended
		June 30, 2019						June 30, 2018
			Average		Tax Equivalent	Yield /			Average		Tax Equivalent	Yield /
			Balance		Interest	Rate			Balance		Interest	Rate
Interest-earning assets:
Fed funds sold		$	5,166	$	73	2.84	%	$	4,210	$	40	1.92	%
Interest-bearing deposits in nonaffiliated banks			103,839		1,213	2.35			109,607		871	1.60
Taxable securities			1,994,563		27,213	2.73			1,917,671		24,073	2.51
Tax exempt securities			1,198,016		21,893	3.65			1,316,801		24,560	3.73
Loans			4,008,275		109,569	5.51			3,773,085		96,371	5.15
Total interest-earning assets			7,309,859	$	159,961	4.41	%		7,121,374	$	145,915	4.13	%
Noninterest-earning assets			498,094						489,356
	Total assets	$	7,807,953					$	7,610,730

Interest-bearing liabilities:
Deposits		$	4,170,250	$	13,947	0.67	%	$	4,107,750	$	7,524	0.37	%
Fed funds purchased and other short term borrowings			393,432		1,401	0.72			396,039		576	0.29
Total interest-bearing liabilities			4,563,682	$	15,348	0.68	%		4,503,789	$	8,100	0.36	%
Noninterest-bearing liabilities			2,148,398						2,145,719
Shareholders' equity			1,095,873						961,222
	Total liabilities and shareholders' equity	$	7,807,953					$	7,610,730

Net interest income and margin (tax equivalent)				$	144,613	3.99	%			$	137,815	3.90	%