First Financial Bankshares Announces Third Quarter Earnings Results

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Oct 18, 2012, 04:00 ET

ABILENE, Texas, Oct. 18, 2012 /PRNewswire/ -- First Financial Bankshares, Inc. (NASDAQ: FFIN) today reported earnings for the third quarter of 2012 of $19.80 million, up 9.47 percent compared with earnings of $18.09 million in the same quarter last year. Basic earnings per share were $0.63 for the third quarter of 2012 compared with $0.58 in the same quarter a year ago.

Net interest income increased 2.11 percent to $39.12 million compared with $38.31 million in 2011. The net interest margin, on a taxable equivalent basis, was 4.26 percent compared with 4.62 percent in the same quarter last year and 4.33 percent in the second quarter of this year.

The provision for loan losses was $787 thousand in the third quarter of 2012, compared with $1.35 million in the same quarter last year and $759 thousand in the second quarter of this year. Nonperforming assets as a percentage of loans and foreclosed assets totaled 1.53 percent at September 30, 2012, compared with 1.76 percent at June 30, 2012, and 1.60 percent at September 30, 2011. Classified loans totaled $76.48 million at September 30, 2012, compared to $80.86 million at June 30, 2012, and $82.99 million at September 30, 2011.

Noninterest income increased 11.42 percent in the third quarter of 2012 to $15.50 million compared with $13.91 million in the same quarter a year ago. Trust fees increased to $3.72 million in the third quarter of 2012 compared with $3.27 million in the same quarter last year, primarily due to continued growth in the fair value of Trust assets managed to $2.75 billion from $2.30 billion a year ago. ATM, interchange and credit card fees increased 6.29 percent to $3.77 million compared with $3.54 million in the same quarter last year. Service charges on deposit accounts decreased to $4.34 million during the third quarter of 2012 compared with $4.48 million for the same quarter a year ago, due primarily to decreased customer use of overdraft services. The net gain on securities sold during the third quarter of 2012 totaled $1.48 million compared to $67 thousand in the same quarter of 2011.

Noninterest expense increased in the third quarter of 2012 to $27.20 million from $26.32 million in the same quarter last year. The Company's efficiency ratio in the third quarter of 2012 improved to 46.61 percent compared with 47.48 percent in the same quarter last year.

For the first nine months of 2012, net income increased 9.83 percent to $55.91 million from $50.90 million for the same period a year ago. Basic earnings per share rose to $1.78 in the first nine months of 2012 from $1.62 in the same period last year. Net interest income increased 1.86 percent to $115.93 million in the first nine months of 2012 from $113.81 million a year ago. The provision for loan losses totaled $2.84 million compared with $5.41 million in the first nine months of the previous year. Noninterest income was $42.26 million in the first nine months of 2012 compared with $38.65 million for the same period a year ago. Noninterest expense rose to $80.42 million in the first nine months of 2012 compared with $78.37 million last year.

As of September 30, 2012, consolidated assets for the Company totaled $4.31 billion compared with $3.94 billion a year ago. Loans grew 15.91 percent and totaled $2.00 billion at quarter end compared with loans of $1.73 billion a year ago. Total deposits were $3.44 billion as of September 30, 2012, which represents an 8.09 percent growth over $3.19 billion a year earlier. Shareholders' equity rose to $549.91 million as of September 30, 2012, compared with $499.20 million the prior year.

"This was another good quarter for our company," said F. Scott Dueser, Chairman, President and CEO. "We continue to see good growth in loans and deposits and continue to pursue acquisition prospects to put our capital to use."

Additionally, the Company announced today that it will consolidate its eleven charters into one charter, effective at the end of the 2012 fiscal year, subject to regulatory approval. "Due to regulatory, compliance and technology complexities and the opportunity for additional cost savings, we believe it is time to make this enhancement," stated Scott Dueser. "Outside of consolidating the eleven databases, our banks will continue to operate as they do today with local management and board decisions to benefit the customers and communities we serve," added Dueser.

About First Financial Bankshares

Headquartered in Abilene, Texas, First Financial Bankshares is a financial holding company that operates 11 separately chartered banks with 54 locations in Texas. The bank subsidiaries are First Financial Bank, N.A., Abilene, Albany, Clyde, Moran and Odessa; First Financial Bank, N.A., Eastland, Ranger, Cisco and Rising Star; First Financial Bank, N.A., Cleburne, Burleson, Alvarado, Midlothian and Crowley; First Financial Bank, Hereford; First Financial Bank, Huntsville; First Financial Bank, N.A., Mineral Wells; First Financial Bank, N.A., San Angelo; First Financial Bank, N.A., Southlake, Bridgeport, Boyd, Decatur, Grapevine, Keller and Trophy Club; First Financial Bank, N.A., Stephenville, Granbury, Glen Rose and Acton; First Financial Bank, N.A., Sweetwater, Roby, Trent and Merkel; and First Financial Bank, N.A., Weatherford, Willow Park, Aledo, Brock and Fort Worth. The Company also operates First Financial Trust & Asset Management Company, N.A., with six 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)


		Quarter Ended
			2012									2011
ASSETS:			Sept. 30,			June 30,			Mar. 31,			Dec. 31,			Sept. 30,
Cash and due from banks		$	128,606		$	122,534		$	131,163		$	146,239		$	127,174
Interest-bearing deposits in banks			25,633			25,794			84,169			104,597			103,850
Interest-bearing time deposits in banks			67,506			74,594			62,018			61,175			66,688
Fed funds sold			23,400			10,100			11,200			-			3,580
Investment securities			1,883,864			1,963,367			1,963,341			1,844,998			1,732,919
Loans			2,003,854			1,918,292			1,798,867			1,786,544			1,728,832
	Allowance for loan losses		(34,932)			(34,747)			(34,529)			(34,315)			(34,301)
Net loans			1,968,922			1,883,545			1,764,338			1,752,229			1,694,531
Premises and equipment			80,580			80,404			79,308			76,483			73,443
Goodwill			71,865			71,865			71,865			71,865			71,865
Other intangible assets			136			175			213			257			341
Other assets			60,035			59,426			59,635			62,688			61,012
	Total assets	$	4,310,547		$	4,291,804		$	4,227,250		$	4,120,531		$	3,935,403

LIABILITIES AND SHAREHOLDERS' EQUITY:
Noninterest-bearing deposits		$	1,200,154		$	1,156,238		$	1,125,577		$	1,101,576		$	1,020,953
Interest-bearing deposits			2,244,244			2,235,942			2,272,495			2,233,222			2,165,653
	Total deposits		3,444,398			3,392,180			3,398,072			3,334,798			3,186,606
Short-term borrowings			254,480			251,428			237,567			207,756			180,790
Other liabilities			61,757			113,933			74,606			69,440			68,808
Shareholders' equity			549,912			534,263			517,005			508,537			499,199
	Total liabilities and shareholders' equity	$	4,310,547		$	4,291,804		$	4,227,250		$	4,120,531		$	3,935,403


		Quarter Ended
			2012									2011
INCOME STATEMENTS			Sept. 30,			June 30,			Mar. 31,			Dec. 31,			Sept. 30,
Interest income		$	40,287		$	39,911		$	39,797		$	39,888		$	40,164
Interest expense			1,168			1,355			1,540			1,704			1,854
Net interest income			39,119			38,556			38,257			38,184			38,310
Provision for loan losses			787			759			1,296			1,221			1,354
Net interest income after provision for loan losses			38,332			37,797			36,961			36,963			36,956
Noninterest income			15,499			13,464			13,298			12,792			13,911
Noninterest expense			27,203			26,745			26,468			26,257			26,320
	Net income before income taxes		26,628			24,516			23,791			23,498			24,547
Income tax expense			6,828			6,165			6,035			6,032			6,460
	Net income	$	19,800		$	18,351		$	17,756		$	17,466		$	18,087

PER COMMON SHARE DATA
Net income - basic		$	0.63		$	0.58		$	0.56		$	0.56		$	0.58
Net income - diluted			0.63			0.58			0.56			0.55			0.57
Cash dividends			0.25			0.25			0.24			0.24			0.24
Shares outstanding - end of period			31,488,530			31,481,747			31,477,483			31,459,635			31,452,283
Average outstanding shares - basic			31,484,375			31,478,980			31,466,706			31,454,197			31,451,687
Average outstanding shares - diluted			31,502,172			31,497,241			31,479,743			31,489,304			31,481,092

PERFORMANCE RATIOS
Return on average assets			1.84	%		1.75	%		1.73	%		1.74	%		1.87	%
Return on average equity			14.53			14.01			13.79			13.88			14.79
Net interest margin (tax equivalent)			4.26			4.33			4.39			4.44			4.62
Efficiency ratio			46.61			48.02			48.08			48.33			47.48



			Nine Months Ended
			Sept. 30,
INCOME STATEMENTS			2012			2011
Interest income		$	119,994		$	120,132
Interest expense			4,063			6,320
Net interest income			115,931			113,812
Provision for loan losses			2,842			5,405
Net interest income after provision for loan losses			113,089			108,407
Noninterest income			42,261			38,646
Noninterest expense			80,415			78,367
	Net income before income taxes		74,935			68,686
Income tax expense			19,028			17,784
	Net income	$	55,907		$	50,902

PER COMMON SHARE DATA
Net income - basic		$	1.78		$	1.62
Net income - diluted			1.78			1.62
Cash dividends			0.74			0.71
Book value			17.46			15.87
Market value			36.03			26.16
Shares outstanding - end of period			31,488,530			31,452,283
Average outstanding shares - basic			31,476,715			31,440,178
Average outstanding shares - diluted			31,486,707			31,488,129

PERFORMANCE RATIOS
Return on average assets			1.78	%		1.79	%
Return on average equity			14.12			14.65
Net interest margin (tax equivalent)			4.32			4.68
Efficiency ratio			47.55			48.39


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

		Quarter Ended
			2012									2011
ALLOWANCE FOR LOAN LOSSES			Sept. 30,			June 30,			Mar. 31,			Dec. 31,			Sept. 30,
Balance at beginning of period		$	34,747		$	34,529		$	34,315		$	34,301		$	33,406
Loans charged off			(1,064)			(766)			(1,405)			(2,195)			(722)
Loan recoveries			462			225			323			988			263
Net charge-offs			(602)			(541)			(1,082)			(1,207)			(459)
Provision for loan losses			787			759			1,296			1,221			1,354
Balance at end of period		$	34,932		$	34,747		$	34,529		$	34,315		$	34,301

Allowance for loan losses /
period-end loans			1.74	%		1.81	%		1.92	%		1.92	%		1.98	%
Allowance for loan losses /
nonperforming loans			143.4			130.1			164.3			171.0			194.3
Net charge-offs / average loans
(annualized)			0.12			0.12			0.24			0.27			0.11

NONPERFORMING ASSETS
Nonaccrual loans		$	24,283		$	26,606		$	20,963		$	19,975		$	17,598
Accruing loans 90 days past due			69			105			53			96			52
	Total nonperforming loans		24,352			26,711			21,016			20,071			17,650
Foreclosed assets			6,373			7,149			7,852			9,464			10,254
	Total nonperforming assets	$	30,725		$	33,860		$	28,868		$	29,535		$	27,904

As a % of loans and foreclosed assets			1.53	%		1.76	%		1.60	%		1.64	%		1.60	%
As a % of end of period total assets			0.71			0.79			0.68			0.72			0.71

CAPITAL RATIOS
Tier 1 risk-based			17.66	%		17.23	%		17.73	%		17.49	%		17.89	%
Total risk-based			18.92			18.48			18.99			18.74			19.14
Tier 1 leverage			10.49			10.36			10.31			10.33			10.45
Equity to assets			12.76			12.45			12.23			12.34			12.68



		Quarter Ended
			2012									2011
NONINTEREST INCOME			Sept. 30,			June 30,			Mar. 31,			Dec. 31,			Sept. 30,
Trust fees		$	3,723		$	3,670		$	3,454		$	3,151		$	3,265
Service charges on deposits			4,337			4,042			3,882			4,313			4,482
ATM, interchange and credit card fees			3,767			3,784			3,676			3,551			3,544
Real estate mortgage fees			1,495			1,218			1,050			1,013			1,056
Net gain on sale of available-for-sale securities			1,479			382			346			164			67
Net gain (loss) on sale of foreclosed assets			(106)			(404)			6			(159)			18
Net gain (loss) on sale of assets			(32)			105			122			43			588
Other noninterest income			836			667			762			716			891
	Total noninterest income	$	15,499		$	13,464		$	13,298		$	12,792		$	13,911


NONINTEREST EXPENSE
Salaries and employee benefits, excluding profit sharing		$	13,502		$	13,304		$	13,186		$	12,753		$	12,790
Profit sharing expense			1,343			885			1,043			1,153			1,318
Net occupancy expense			1,806			1,743			1,737			1,707			1,823
Equipment expense			2,269			2,144			2,108			2,008			1,970
FDIC insurance premiums			563			565			527			517			561
ATM, interchange and credit card expenses			1,317			1,450			1,249			1,311			1,276
Legal, tax and professional fees			1,019			968			1,033			994			947
Audit fees			311			283			295			304			305
Printing, stationery and supplies			468			511			505			473			443
Amortization of intangible assets			38			38			44			84			101
Advertising and public relations			998			953			942			1,105			1,033
Correspondent bank service charges			220			216			200			198			198
Other noninterest expense			3,349			3,685			3,599			3,650			3,555
	Total noninterest expense	$	27,203		$	26,745		$	26,468		$	26,257		$	26,320


TAX EQUIVALENT YIELD ADJUSTMENT		$	3,743		$	3,673		$	3,495		$	3,348		$	3,209



			Nine Months Ended
			Sept. 30,
NONINTEREST INCOME			2012			2011
Trust fees		$	10,848		$	9,520
Service charges on deposits			12,261			13,376
ATM, interchange and credit card fees			11,226			10,036
Real estate mortgage fees			3,763			2,930
Net gain on sale of available-for-sale securities			2,206			328
Net gain (loss) on sale of foreclosed assets			(512)			(1,156)
Net gain (loss) on sale of assets			203			854
Other noninterest income			2,266			2,758
	Total noninterest income	$	42,261		$	38,646


NONINTEREST EXPENSE
Salaries and employee benefits, excluding profit sharing		$	39,993		$	38,816
Profit sharing expense			3,270			3,535
Net occupancy expense			5,286			5,154
Equipment expense			6,521			5,792
FDIC insurance premiums			1,655			2,129
ATM, interchange and credit card expenses			4,017			3,607
Legal, tax and professional fees			3,020			3,217
Audit fees			889			855
Printing, stationery and supplies			1,483			1,359
Amortization of intangible assets			120			317
Advertising and public relations			2,893			2,711
Correspondent bank service charges			636			606
Other noninterest expense			10,632			10,269
	Total noninterest expense	$	80,415		$	78,367


TAX EQUIVALENT YIELD ADJUSTMENT		$	10,911		$	9,503

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


			Three Months Ended
			Sept. 30, 2012
			Average		Tax Equivalent	Yield /
			Balance		Interest	Rate
Interest-earning assets:
Fed funds sold		$	23,924	$	1	0.01	%
Interest-bearing deposits in nonaffiliated banks			96,878		185	0.76	%
Taxable securities			1,121,465		7,480	2.67	%
Tax exempt securities			795,727		9,912	4.98	%
Loans			1,967,789		26,452	5.35	%
Total interest-earning assets			4,005,783		44,030	4.37	%
Noninterest-earning assets			274,379
	Total assets	$	4,280,162

Interest-bearing liabilities:
Deposits		$	2,240,977	$	1,094	0.19	%
Fed funds purchased and other short term borrowings			289,568		74	0.10	%
Total interest-bearing liabilities			2,530,545		1,168	0.18	%
Noninterest-bearing liabilities			1,207,352
Shareholders' equity			542,265
	Total liabilities and shareholders' equity	$	4,280,162

Net interest income and margin (tax equivalent)				$	42,862	4.26	%




			Nine Months Ended
			Sept. 30, 2012
			Average		Tax Equivalent	Yield /
			Balance		Interest	Rate
Interest-earning assets:
Fed funds sold		$	11,453	$	9	0.10	%
Interest-bearing deposits in nonaffiliated banks			119,379		615	0.69	%
Taxable securities			1,174,249		24,498	2.78	%
Tax exempt securities			747,614		29,150	5.20	%
Loans			1,867,829		76,633	5.48	%
Total interest-earning assets			3,920,524		130,905	4.46	%
Noninterest-earning assets			282,235
	Total assets	$	4,202,759

Interest-bearing liabilities:
Deposits		$	2,251,221	$	3,887	0.23	%
Fed funds purchased and other short term borrowings			257,090		176	0.09	%
Total interest-bearing liabilities			2,508,311		4,063	0.22	%
Noninterest-bearing liabilities			1,165,450
Shareholders' equity			528,998
	Total liabilities and shareholders' equity	$	4,202,759

Net interest income and margin (tax equivalent)				$	126,842	4.32	%