FIRST FINANCIAL BANKSHARES INC - FORM 8-K - EX-99.1

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8-K - FORM 8-K - FIRST FINANCIAL BANKSHARES INC	d758811d8k.htm

Exhibit 99.1


For immediate release		For More Information:
		J. Bruce Hildebrand, Executive Vice President
		325.627.7155

FIRST FINANCIAL BANKSHARES ANNOUNCES

SECOND QUARTER EARNINGS RESULTS

ABILENE, Texas, July 17, 2014 – First Financial Bankshares, Inc. (NASDAQ: FFIN) today reported earnings for the second quarter of 2014 of $21.21 million, up 8.80 percent compared with earnings of $19.49 million in the same quarter last year. Basic earnings per share were $0.33 for the second quarter of 2014 compared with $0.31 in the same quarter a year ago.

Net interest income for the second quarter of 2014 increased 16.19 percent to $48.22 million compared with $41.50 million in the same period of 2013. The net interest margin, on a taxable equivalent basis, was 4.24 percent compared to 4.32 percent in the first quarter of 2014 and 4.18 percent in the same quarter last year. Included in interest income for the second quarter of 2014 was $366 thousand, or two 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 $1.12 million in the second quarter of 2014 compared with $832 thousand in the same quarter last year and $1.69 million in the first quarter of 2014, primarily due to continued loan growth. Nonperforming assets as a percentage of loans and foreclosed assets totaled 0.93 percent at June 30, 2014, compared with 1.02 percent at March 31, 2014, and 1.20 percent at June 30, 2013. Classified loans totaled $79.93 million at June 30, 2014, compared to $81.56 million at March 31, 2014, and $87.83 million at June 30, 2013.

Noninterest income increased 4.74 percent in the second quarter of 2014 to $15.87 million compared with $15.15 million in the same quarter a year ago. Trust fees increased to $4.55 million in the second quarter of 2014 compared with $3.95 million in the same quarter last year, primarily due to continued growth in the fair value of Trust assets managed to $3.63 billion from $3.05 billion a year ago along with additional oil and gas activity. ATM, interchange and credit card fees increased 13.70 percent to $4.75 million compared with $4.18 million in the same quarter last year. Real estate mortgage fees decreased to $1.34 million in the second quarter of 2014 compared to $1.69 million in the same quarter last year due to the decline in the overall mortgage refinance market.

Noninterest expense increased in the second quarter of 2014 to $35.00 million from $32.45 million in the first quarter of 2014 and $29.91 million in the same quarter last year. The increase in noninterest expense in the second quarter of 2014 from the first quarter of 2014 was largely attributable to the Company’s recognition of $2.39 million related to a litigation settlement and the deductible from damage sustained in a hail storm in Abilene. The additional increase in noninterest expense in the second quarter of 2014 compared to the same quarter a year ago was mainly due to increases in salary and employee benefit costs to $17.27 million, an increase of 6.95 percent when compared to $16.15 million in the same quarter a year ago, primarily driven by an increase in personnel from the Orange acquisition and annual pay increases. The Company’s efficiency ratio in the second quarter of 2014 was 50.84 percent compared with 49.25 percent in the same quarter last year.

For the first half of 2014, net income increased 14.38 percent to $43.54 million from $38.07 million a year ago. Basic earnings per share rose to $0.68 in the first half of 2014 from $0.60 in the same period last year. Net interest income increased 18.98 percent to $95.39 million in the first half of 2014 from $80.17 million in the same period a year ago. The provision for loan losses totaled $2.81 million compared with $1.23 million in the first half of the previous year. Noninterest income was $32.28 million in the first half of 2014 compared with $29.11 million a year ago. Noninterest expense rose to $67.45 million in the first half of 2014 compared with $57.38 million last year.

As of June 30, 2014, consolidated assets for the Company totaled $5.45 billion compared with $4.98 billion a year ago. Loans totaled $2.79 billion at quarter end compared with loans of $2.58 billion a year ago. Total deposits grew 10.23 percent to $4.32 billion at June 30, 2014, compared to $3.92 billion a year ago. Shareholders’ equity rose to $640.04 million as of June 30, 2014, compared with $575.86 million at June 30, 2013.

“We are pleased to report another quarter of good growth in loans and deposits as well as solid earnings,” 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, cutting costs and increasing income.”

On April 22, 2014, 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 2, 2014. All share and per share amounts in this earnings release have been restated to reflect this stock split.

All amounts for the second quarter of 2014 include the results of the Company’s acquisition of Orange Savings Bank, SSB, Orange, Texas, which was effective on May 31, 2013. As of the acquisition date, Orange had total loans of $293.29 million and total deposits of $385.95 million.

About First Financial Bankshares

Headquartered in Abilene, Texas, First Financial Bankshares is a financial holding company that operates 12 banking regions with 60 locations in Texas including Abilene, Acton, Albany, Aledo, Alvarado, Boyd, Bridgeport, Brock, Burleson, Cisco, Cleburne, Clyde, Decatur, Eastland, Fort Worth, Glen Rose, Granbury, Grapevine, Hereford, Huntsville, Keller, Mauriceville, Merkel, Midlothian, Mineral Wells, Moran, 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 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.

*****

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
	2014						2013
	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
ASSETS:
Cash and due from banks	$	166,237		$	160,469		$	183,084		$	164,666		$	138,087
Interest-bearing deposits in banks		68,331			3,772			25,498			48,634			6,624
Interest-bearing time deposits in banks		24,188			30,026			31,917			34,352			39,350
Fed funds sold		3,110			3,620			3,430			14,300			16,025
Investment securities		2,174,396			2,163,599			2,058,407			1,976,101			1,975,490
Loans		2,786,644			2,698,717			2,689,448			2,614,809			2,578,883
Allowance for loan losses		(35,892	)		(34,693	)		(33,900	)		(34,800	)		(34,099	)

Net loans		2,750,752			2,664,024			2,655,548			2,580,009			2,544,784
Premises and equipment		96,619			95,406			95,505			94,676			94,808
Goodwill		94,882			94,882			94,882			94,882			94,882
Other intangible assets		2,547			2,600			2,603			2,547			2,366
Other assets		65,294			62,629			71,334			65,468			70,189

Total assets	$	5,446,356		$	5,281,027		$	5,222,208		$	5,075,635		$	4,982,605


LIABILITIES AND SHAREHOLDERS’ EQUITY:
Noninterest-bearing deposits	$	1,445,947		$	1,389,331		$	1,362,184		$	1,371,835		$	1,305,049
Interest-bearing deposits		2,872,511			2,844,950			2,772,891			2,628,722			2,612,540

Total deposits		4,318,458			4,234,281			4,135,075			4,000,557			3,917,589
Short-term borrowings		434,583			383,220			463,888			466,500			431,575
Other liabilities		53,279			46,960			35,598			40,337			57,577
Shareholders’ equity		640,036			616,566			587,647			568,241			575,864

Total liabilities and shareholders’ equity	$	5,446,356		$	5,281,027		$	5,222,208		$	5,075,635		$	4,982,605


	Quarter Ended
	2014						2013
	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
INCOME STATEMENTS
Interest income	$	49,254		$	48,209		$	47,756		$	46,655		$	42,446
Interest expense		1,037			1,036			1,066			1,164			946

Net interest income		48,217			47,173			46,690			45,491			41,500
Provision for loan losses		1,124			1,690			1,171			1,349			832

Net interest income after provision for loan losses		47,093			45,483			45,519			44,142			40,668
Noninterest income		15,872			16,405			15,792			17,075			15,153
Noninterest expense		35,002			32,448			33,096			35,534			29,911

Net income before income taxes		27,963			29,440			28,215			25,683			25,910
Income tax expense		6,758			7,104			6,977			6,121			6,420

Net income	$	21,205		$	22,336		$	21,238		$	19,562		$	19,490


PER COMMON SHARE DATA
Net income - basic	$	0.33		$	0.35		$	0.33		$	0.31		$	0.31
Net income - diluted		0.33			0.35			0.33			0.30			0.31
Cash dividends declared		0.14			0.13			0.13			0.13			0.13
Book Value		9.99			9.63			9.18			8.88			9.01
Market Value	$	31.37		$	30.90		$	33.06		$	29.43		$	27.83
Shares outstanding - end of period		64,053,010			64,039,234			63,984,994			63,955,340			63,934,848
Average outstanding shares - basic		64,045,282			64,010,076			63,965,876			63,940,810			63,366,710
Average outstanding shares - diluted		64,301,306			64,212,018			64,192,458			64,243,542			63,619,680

PERFORMANCE RATIOS
Return on average assets		1.59	%		1.74	%		1.65	%		1.56	%		1.67	%
Return on average equity		13.46			15.02			14.47			13.64			13.53
Net interest margin (tax equivalent)		4.24			4.32			4.27			4.25			4.18
Efficiency ratio		50.84			47.57			49.42			53.10			49.25


	Six Months Ended June 30,
	2014			2013
INCOME STATEMENTS
Interest income	$	97,463		$	82,022
Interest expense		2,073			1,851

Net interest income		95,390			80,171
Provision for loan losses		2,814			1,233

Net interest income after provision for loan losses		92,576			78,938
Noninterest income		32,277			29,113
Noninterest expense		67,449			57,382

Net income before income taxes		57,404			50,669
Income tax expense		13,863			12,602

Net income	$	43,541		$	38,067


PER COMMON SHARE DATA
Net income - basic	$	0.68		$	0.60
Net income - diluted		0.68			0.60
Cash dividends declared		0.27			0.26
Book Value		9.99			9.01
Market Value	$	31.37		$	27.83
Shares outstanding - end of period		64,053,010			63,934,848
Average outstanding shares - basic		64,027,776			63,192,300
Average outstanding shares - diluted		64,298,525			63,419,942

PERFORMANCE RATIOS
Return on average assets		1.66	%		1.69	%
Return on average equity		14.22			13.47
Net interest margin (tax equivalent)		4.28			4.18
Efficiency ratio		49.22			48.98

FIRST FINANCIAL BANKSHARES, INC.

SELECTED FINANCIAL DATA (UNAUDITED)

(In thousands)


	Quarter Ended
	2014						2013
	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period	$	34,693		$	33,900		$	34,800		$	34,099		$	34,672
Loans charged off		(302	)		(1,297	)		(1,294	)		(944	)		(1,570	)
Loan recoveries		377			400			311			297			165

Net recoveries (charge-offs)		75			(897	)		(983	)		(647	)		(1,405	)
Provision for loan losses		1,124			1,690			1,171			1,348			832
Transfer of off balance sheet exposure to other liabilities		—			—			(1,088	)		—			—

Balance at end of period	$	35,892		$	34,693		$	33,900		$	34,800		$	34,099


Allowance for loan losses / period-end loans		1.29	%		1.29	%		1.26	%		1.33	%		1.32	%
Allowance for loan losses / nonperforming loans		151.52			140.23			120.82			152.21			128.75
Net charge-offs / average loans (annualized)		(0.01	)		0.14			0.15			0.10			0.24


NONPERFORMING ASSETS
Nonaccrual loans	$	23,565		$	24,710		$	27,926		$	22,809		$	26,297
Accruing loans 90 days past due		123			30			133			54			187

Total nonperforming loans		23,688			24,740			28,059			22,863			26,484
Foreclosed assets		2,342			2,813			3,069			5,672			4,589

Total nonperforming assets	$	26,030		$	27,553		$	31,128		$	28,535		$	31,073


As a % of loans and foreclosed assets		0.93	%		1.02	%		1.16	%		1.09	%		1.20	%
As a % of end of period total assets		0.48			0.52			0.60			0.56			0.62

CAPITAL RATIOS
Tier 1 risk-based		16.15	%		16.24	%		15.82	%		15.37	%		15.20	%
Total risk-based		17.30			17.39			16.92			16.49			16.31
Tier 1 leverage		9.99			9.95			9.84			9.77			10.32
Equity to assets		11.75			11.68			11.25			11.20			11.56

	Quarter Ended
	2014						2013
	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
NONINTEREST INCOME
Trust fees	$	4,549		$	4,576		$	4,433		$	4,138		$	3,953
Service charges on deposits		4,174			4,047			4,537			4,798			4,316
ATM, interchange and credit card fees		4,754			4,443			4,436			4,404			4,181
Real estate mortgage fees		1,337			1,024			1,200			2,008			1,686
Net gain (loss) on sale of available-for-sale securities		(1	)		(4	)		—			(108	)		33
Net gain (loss) on sale of foreclosed assets		47			452			111			36			17
Net gain (loss) on sale of assets		44			3			6			9			1
Other noninterest income		968			1,864			1,069			1,790			966

Total noninterest income	$	15,872		$	16,405		$	15,792		$	17,075		$	15,153


NONINTEREST EXPENSE
Salaries and employee benefits, excluding profit sharing	$	16,279		$	16,197		$	15,690		$	16,024		$	14,968
Profit sharing expense		995			1,217			1,942			1,477			1,183
Net occupancy expense		2,273			2,234			2,101			2,164			2,064
Equipment expense		2,665			2,622			2,527			2,490			2,380
FDIC insurance premiums		684			659			636			640			568
ATM, interchange and credit card expenses		1,696			1,480			1,499			1,474			1,347
Legal, tax and professional fees		1,208			1,273			1,248			1,576			1,272
Audit fees		367			369			506			368			351
Printing, stationery and supplies		554			775			562			534			498
Amortization of intangible assets		74			75			77			77			33
Advertising and public relations		1,465			1,375			1,495			1,245			1,100
Correspondent bank service charges		215			228			241			250			222
Other noninterest expense		6,527			3,944			4,572			7,215			3,925

Total noninterest expense	$	35,002		$	32,448		$	33,096		$	35,534		$	29,911


TAX EQUIVALENT YIELD ADJUSTMENT	$	4,753		$	4,629		$	4,490		$	4,358		$	4,082


	Six Months Ended June 30,
	2014			2013
NONINTEREST INCOME
Trust fees	$	9,125		$	7,746
Service charges on deposits		8,221			8,211
ATM, interchange and credit card fees		9,197			7,910
Real estate mortgage fees		2,361			3,069
Net gain (loss) on sale of available-for-sale securities		(5	)		255
Net gain (loss) on sale of foreclosed assets		499			(299	)
Net gain (loss) on sale of assets		47			169
Other noninterest income		2,832			2,052

Total noninterest income	$	32,277		$	29,113


NONINTEREST EXPENSE
Salaries and employee benefits, excluding profit sharing	$	32,476		$	29,069
Profit sharing expense		2,212			2,262
Net occupancy expense		4,507			3,831
Equipment expense		5,287			4,661
FDIC insurance premiums		1,343			1,141
ATM, interchange and credit card expenses		3,176			2,687
Legal, tax and professional fees		2,481			2,265
Audit fees		735			685
Printing, stationery and supplies		1,329			970
Amortization of intangible assets		148			43
Advertising and public relations		2,841			2,094
Correspondent bank service charges		443			424
Other noninterest expense		10,471			7,250

Total noninterest expense	$	67,449		$	57,382


TAX EQUIVALENT YIELD ADJUSTMENT	$	9,383		$	7,877

FIRST FINANCIAL BANKSHARES, INC.

SELECTED FINANCIAL DATA (UNAUDITED)

(In thousands)


	Three Months Ended June 30, 2014							Three Months Ended Mar. 31, 2014
	Average Balance		Tax Equivalent Interest		Yield / Rate			Average Balance		Tax Equivalent Interest		Yield / Rate
Interest-earning assets:
Fed funds sold	$	11,310	$	12		0.41	%	$	5,718	$	5		0.35	%
Interest-bearing deposits in nonaffiliated banks		48,974		78		0.64			48,708		82		0.68
Taxable securities		1,159,430		7,091		2.45			1,121,296		7,084		2.53
Tax exempt securities		1,037,608		12,599		4.86			992,947		12,218		4.92
Loans		2,748,023		34,227		5.00			2,689,474		33,450		5.04

Total interest-earning assets		5,005,345	$	54,007		4.33	%		4,858,143	$	52,839		4.41	%
Noninterest-earning assets		335,651							351,309

Total assets	$	5,340,996						$	5,209,452


Interest-bearing liabilities:
Deposits	$	2,867,740	$	955		0.13	%	$	2,817,181	$	941		0.14	%
Fed funds purchased and other short term borrowings		406,913		82		0.08			426,204		96		0.09

Total interest-bearing liabilities		3,274,653	$	1,037		0.13	%		3,243,385	$	1,037		0.13	%
Noninterest-bearing liabilities		1,434,674							1,362,852
Shareholders’ equity		631,669							603,215

Total liabilities and shareholders’ equity	$	5,340,996						$	5,209,452

Net interest income and margin (tax equivalent)			$	52,970		4.24	%			$	51,802		4.32	%


	Three Months Ended Dec. 31, 2013							Three Months Ended Sept. 30, 2013
	Average Balance		Tax Equivalent Interest		Yield / Rate			Average Balance		Tax Equivalent Interest		Yield / Rate
Interest-earning assets:
Fed funds sold	$	7,177	$	7		0.40	%	$	13,611	$	14		0.42	%
Interest-bearing deposits in nonaffiliated banks		44,421		89		0.79			49,434		95		0.76
Taxable securities		1,094,256		6,687		2.44			1,011,050		6,130		2.43
Tax exempt securities		958,278		11,817		4.93			943,623		11,441		4.85
Loans		2,650,834		33,645		5.04			2,636,253		33,333		5.02

Total interest-earning assets		4,754,966	$	52,245		4.36	%		4,653,971	$	51,013		4.35	%
Noninterest-earning assets		344,927							334,521

Total assets	$	5,099,893						$	4,988,492


Interest-bearing liabilities:
Deposits	$	2,696,123	$	950		0.14	%	$	2,631,862	$	1,038		0.16	%
Fed funds purchased and other short term borrowings		454,573		115		0.10			457,914		126		0.11

Total interest-bearing liabilities		3,150,696	$	1,065		0.13	%		3,089,776	$	1,164		0.15	%
Noninterest-bearing liabilities		1,366,726							1,329,582
Shareholders’ equity		582,471							569,134

Total liabilities and shareholders’ equity	$	5,099,893						$	4,988,492

Net interest income and margin (tax equivalent)			$	51,180		4.27	%			$	49,849		4.25	%


	Three Months Ended June 30, 2013
	Average Balance		Tax Equivalent Interest		Yield / Rate
Interest-earning assets:
Fed funds sold	$	5,918	$	9		0.58	%
Interest-bearing deposits in nonaffiliated banks		59,333		111		0.75
Taxable securities		1,066,586		6,313		2.37
Tax exempt securities		917,460		10,813		4.71
Loans		2,324,268		29,282		5.05

Total interest-earning assets		4,373,565	$	46,528		4.27	%
Noninterest-earning assets		305,201

Total assets	$	4,678,766


Interest-bearing liabilities:
Deposits	$	2,403,899	$	853		0.14	%
Fed funds purchased and other short term borrowings		405,438		93		0.09

Total interest-bearing liabilities		2,809,337	$	946		0.14	%
Noninterest-bearing liabilities		1,291,602
Shareholders’ equity		577,827

Total liabilities and shareholders’ equity	$	4,678,766

Net interest income and margin (tax equivalent)			$	45,582		4.18	%


	Six Months Ended June 30, 2014							Six Months Ended June 30, 2013
	Average Balance		Tax Equivalent Interest		Yield / Rate			Average Balance		Tax Equivalent Interest		Yield / Rate
Interest-earning assets:
Fed funds sold	$	8,530	$	16		0.39	%	$	9,570	$	14		0.30	%
Interest-bearing deposits in nonaffiliated banks		48,842		160		0.66			91,830		281		0.62
Taxable securities		1,140,469		14,175		2.49			1,052,723		12,688		2.41
Tax exempt securities		1,015,401		24,817		4.89			871,459		20,886		4.79
Loans		2,718,910		67,678		5.02			2,218,292		56,030		5.09

Total interest-earning assets		4,932,152	$	106,846		4.37	%		4,243,874	$	89,899		4.27	%
Noninterest-earning assets		343,435							302,071

Total assets	$	5,275,587						$	4,545,945


Interest-bearing liabilities:
Deposits	$	2,842,600	$	1,895		0.13	%	$	2,362,645	$	1,721		0.15	%
Fed funds purchased and other short term borrowings		416,505		178		0.09			338,549		130		0.08

Total interest-bearing liabilities		3,259,105	$	2,073		0.13	%		2,701,194	$	1,851		0.14	%
Noninterest-bearing liabilities		1,398,961							1,274,970
Shareholders’ equity		617,521							569,781

Total liabilities and shareholders’ equity	$	5,275,587						$	4,545,945

Net interest income and margin (tax equivalent)			$	104,773		4.28	%			$	88,048		4.18	%

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FIRST FINANCIAL BANKSHARES INC Reports