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8-K - FORM 8-K - FIRST FINANCIAL BANKSHARES INCd614085d8k.htm

Exhibit 99.1

 

For immediate release  

For More Information:

J. Bruce Hildebrand, Executive Vice President

325.627.7155

FIRST FINANCIAL BANKSHARES ANNOUNCES

THIRD QUARTER EARNINGS RESULTS

ABILENE, Texas, October 17, 2013 – First Financial Bankshares, Inc. (NASDAQ: FFIN) today reported earnings for the third quarter of 2013 of $19.56 million compared with earnings of $19.80 million in the same quarter last year. Basic earnings per share were $0.61 for the third quarter of 2013 compared with $0.63 in the same quarter a year ago. Included in noninterest expense in the third quarter of 2013 were technology contract termination and conversion costs totaling $3.40 million, before income tax, related to the Company’s recent acquisition of Orange Savings Bank, SSB.

All amounts for the third quarter and first nine months of 2013 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.

Net interest income increased 16.29 percent to $45.49 million for the third quarter of 2013 compared with $39.12 million in the same quarter of 2012. The net interest margin, on a taxable equivalent basis, was 4.25 percent compared with 4.26 percent in the same quarter last year and 4.18 percent in the second quarter of this year.

The provision for loan losses was $1.35 million in the third quarter of 2013 compared with $787 thousand in the same quarter last year and $832 thousand in the second quarter of this year, primarily due to continued loan growth. Nonperforming assets as a percentage of loans and foreclosed assets totaled 1.09 percent at September 30, 2013, compared with 1.20 percent at June 30, 2013, and 1.53 percent at September 30, 2012. Classified loans totaled $81.67 million at September 30, 2013, compared to $87.83 million at June 30, 2013, and $76.48 million at September 30, 2012. The increase in dollar amount of classified loans from prior year amounts was primarily a result of the Orange Savings Bank, SSB acquisition.

Noninterest income increased 10.17 percent in the third quarter of 2013 to $17.08 million compared with $15.50 million in the same quarter a year ago. Trust fees increased to $4.14 million in the third quarter of 2013 compared with $3.72 million in the same quarter last year, primarily due to continued growth in the fair value of Trust assets managed to $3.20 billion from $2.75 billion a year ago. ATM, interchange and credit card fees increased 16.91 percent to $4.40 million compared with $3.77 million in the same quarter last year. Service charges on deposit accounts increased to $4.80 million during the third quarter of 2013 compared with $4.34 million in the same quarter a year ago. Real estate mortgage income increased to $2.01 million compared with $1.50 million in the same quarter a year ago. The net loss on securities sold during the third quarter of 2013 totaled $108 thousand compared to a gain of $1.48 million in the same quarter of 2012.


Noninterest expense increased in the third quarter of 2013 to $35.53 million from $27.20 million in the same quarter last year. The Company’s efficiency ratio in the third quarter of 2013 was 53.10 percent compared with 46.61 percent in the same quarter last year. Included in noninterest expense in the third quarter of 2013 were technology contract termination and conversion costs totaling $3.40 million related to the Company’s recent acquisition of Orange Savings Bank, SSB (discussed above). Also included in noninterest expense in the third quarter of 2013 were salary and employee benefit costs of $17.50 million compared to $14.85 million in the same quarter a year ago, primarily from the increase in personnel from the Orange acquisition. Legal, tax and professional fees increased to $1.58 million compared to $1.02 million in the same quarter a year ago.

For the first nine months of 2013, net income increased 3.08 percent to $57.63 million from $55.91 million for the same period a year ago. Basic earnings per share rose to $1.82 in the first nine months of 2013 from $1.78 in the same period last year. Net interest income increased 8.33 percent to $125.59 million in the first nine months of 2013 from $115.93 million in the same period a year ago. The provision for loan losses totaled $2.58 million compared with $2.84 million in the first nine months of the previous year. Noninterest income was $46.26 million in the first nine months of 2013 compared with $42.26 million for the same period a year ago. Noninterest expense rose to $92.92 million in the first nine months of 2013 compared with $80.42 million last year.

As of September 30, 2013, consolidated assets for the Company totaled $5.08 billion compared with $4.31 billion a year ago. Loans totaled $2.61 billion at quarter end, after approximately $50.00 million of short-term participations paid off, compared with loans of $2.00 billion a year ago. Total deposits were $4.00 billion as of September 30, 2013, versus $3.44 billion a year earlier. Shareholders’ equity rose to $568.24 million as of September 30, 2013, compared with $549.91 million the prior year.

“We were very pleased with the earnings performance this quarter, especially in light of the $3.40 million expense tied to the purchase accounting to terminate the Orange technology contract and conversion costs. We continue to see solid growth in loans and deposits throughout the Company, and the recent acquisition of Orange has contributed nicely to the bottom line on a monthly basis,” said F. Scott Dueser, Chairman, President and CEO. “We are having numerous conversations and are continuing to pursue additional acquisition opportunities to maximize our shareholders’ return.”

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  
     2013     2012  
ASSETS:    Sept. 30,     June 30,     Mar. 31,     Dec. 31,     Sept. 30,  

Cash and due from banks

   $ 164,666      $ 138,087      $ 113,958      $ 207,018      $ 128,606   

Interest-bearing deposits in banks

     48,634        6,624        20,065        139,676        25,633   

Interest-bearing time deposits in banks

     34,352        39,350        45,172        49,005        67,506   

Fed funds sold

     14,300        16,025        3,175        14,045        23,400   

Investment securities

     1,976,101        1,975,490        1,959,054        1,820,096        1,883,864   

Loans

     2,614,809        2,578,883        2,138,137        2,088,623        2,003,854   

Allowance for loan losses

     (34,800     (34,099     (34,672     (34,839     (34,932
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loans

     2,580,009        2,544,784        2,103,465        2,053,784        1,968,922   

Premises and equipment

     94,676        94,808        86,265        84,122        80,580   

Goodwill

     94,882        94,882        71,865        71,865        71,865   

Other intangible assets

     2,547        2,366        98        108        136   

Other assets

     65,468        70,189        52,863        62,293        60,035   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 5,075,635      $ 4,982,605      $ 4,455,980      $ 4,502,012      $ 4,310,547   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY:

          

Noninterest-bearing deposits

   $ 1,371,835      $ 1,305,049      $ 1,237,840      $ 1,311,708      $ 1,200,154   

Interest-bearing deposits

     2,628,722        2,612,540        2,312,286        2,320,876        2,244,244   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

     4,000,557        3,917,589        3,550,126        3,632,584        3,444,398   

Short-term borrowings

     466,500        431,575        263,345        259,697        254,480   

Other liabilities

     40,337        57,577        78,257        52,768        61,757   

Shareholders' equity

     568,241        575,864        564,252        556,963        549,912   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and shareholders' equity

   $ 5,075,635      $ 4,982,605      $ 4,455,980      $ 4,502,012      $ 4,310,547   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     Quarter Ended  
     2013     2012  
INCOME STATEMENTS    Sept. 30,     June 30,     Mar. 31,     Dec. 31,     Sept. 30,  

Interest income

   $ 46,655      $ 42,446      $ 39,575      $ 39,801      $ 40,287   

Interest expense

     1,164        946        904        1,049        1,168   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

     45,491        41,500        38,671        38,752        39,119   

Provision for loan losses

     1,349        832        401        642        787   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income after provision for loan losses

     44,142        40,668        38,270        38,110        38,332   

Noninterest income

     17,075        15,153        13,960        14,948        15,499   

Noninterest expense

     35,534        29,911        27,471        28,633        27,203   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income before income taxes

     25,683        25,910        24,759        24,425        26,628   

Income tax expense

     6,121        6,420        6,182        6,107        6,828   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 19,562      $ 19,490      $ 18,577      $ 18,318      $ 19,800   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

PER COMMON SHARE DATA

          

Net income - basic

   $ 0.61      $ 0.62      $ 0.59      $ 0.58      $ 0.63   

Net income - diluted

     0.61        0.61        0.59        0.58        0.63   

Cash dividends declared

     0.26        0.26        0.25        0.25        0.25   

Shares outstanding - end of period

     31,977,670        31,967,424        31,519,973        31,496,881        31,488,530   

Average outstanding shares - basic

     31,970,405        31,683,355        31,507,975        31,490,402        31,484,375   

Average outstanding shares - diluted

     32,121,771        31,809,840        31,601,364        31,530,907        31,502,172   

PERFORMANCE RATIOS

          

Return on average assets

     1.56     1.67     1.71     1.68     1.84

Return on average equity

     13.64        13.53        13.41        13.09        14.53   

Net interest margin (tax equivalent)

     4.25        4.18        4.19        4.17        4.26   

Efficiency ratio

     53.10        49.25        48.68        49.86        46.61   
     Nine Months Ended
Sept. 30,
             
INCOME STATEMENTS    2013     2012                    

Interest income

   $ 128,605      $ 119,994         

Interest expense

     3,014        4,063         
  

 

 

   

 

 

       

Net interest income

     125,591        115,931         

Provision for loan losses

     2,582        2,842         
  

 

 

   

 

 

       

Net interest income after provision for loan losses

     123,009        113,089         

Noninterest income

     46,260        42,261         

Noninterest expense

     92,917        80,415         
  

 

 

   

 

 

       

Net income before income taxes

     76,352        74,935         

Income tax expense

     18,723        19,028         
  

 

 

   

 

 

       

Net income

   $ 57,629      $ 55,907         
  

 

 

   

 

 

       

PER COMMON SHARE DATA

          

Net income - basic

   $ 1.82      $ 1.78         

Net income - diluted

     1.81        1.78         

Cash dividends

     0.77        0.74         

Book Value

     17.77        17.46         

Market Value

     58.85        36.03         

Shares outstanding - end of period

     31,977,670        31,488,530         

Average outstanding shares - basic

     31,722,272        31,476,715         

Average outstanding shares - diluted

     31,853,294        31,486,707         

PERFORMANCE RATIOS

          

Return on average assets

     1.64     1.78      

Return on average equity

     13.53        14.12         

Net interest margin (tax equivalent)

     4.21        4.32         

Efficiency ratio

     50.47        47.55         


FIRST FINANCIAL BANKSHARES, INC.

SELECTED FINANCIAL DATA (UNAUDITED)

(In thousands)

 

     Quarter Ended  
     2013     2012  
ALLOWANCE FOR LOAN LOSSES    Sept. 30,     June 30,     Mar. 31,     Dec. 31,     Sept. 30,  

Balance at beginning of period

   $ 34,099      $ 34,672      $ 34,839      $ 34,932      $ 34,747   

Loans charged off

     (944     (1,570     (823     (1,119     (1,064

Loan recoveries

     297        165        255        384        462   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net charge-offs

     (647     (1,405     (568     (735     (602

Provision for loan losses

     1,348        832        401        642        787   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   $ 34,800      $ 34,099      $ 34,672      $ 34,839      $ 34,932   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for loan losses / period-end loans

     *1.33     *1.32     1.62     1.67     1.74

Allowance for loan losses / nonperforming loans

     152.21        128.75        153.87        159.10        143.45   

Net charge-offs / average loans (annualized)

     0.10        0.24        0.11        0.14        0.12   
* Reflects the impact of loans acquired in the Orange Savings Bank, SSB acquisition, which were initially recorded at fair value with no allocated allowance for loan losses.    

NONPERFORMING ASSETS

          

Nonaccrual loans

   $ 22,809      $ 26,297      $ 22,509      $ 21,800      $ 24,283   

Accruing loans 90 days past due

     54        187        24        97        69   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nonperforming loans

     22,863        26,484        22,533        21,897        24,352   

Foreclosed assets

     5,672        4,589        3,185        3,565        6,373   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nonperforming assets

   $ 28,535      $ 31,073      $ 25,718      $ 25,462      $ 30,725   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As a % of loans and foreclosed assets

     1.09     1.20     1.20     1.22     1.53

As a % of end of period total assets

     0.56        0.62        0.58        0.57        0.71   

CAPITAL RATIOS

          

Tier 1 risk-based

     15.37     15.20     17.54     17.43     17.66

Total risk-based

     16.49        16.31        18.80        18.68        18.92   

Tier 1 leverage

     9.77        10.32        10.69        10.60        10.49   

Equity to assets

     11.20        11.56        12.66        12.37        12.76   
     Quarter Ended  
     2013     2012  
NONINTEREST INCOME    Sept. 30,     June 30,     Mar. 31,     Dec. 31,     Sept. 30,  

Trust fees

   $ 4,138      $ 3,953      $ 3,793      $ 3,616      $ 3,723   

Service charges on deposits

     4,798        4,316        3,895        4,432        4,337   

ATM, interchange and credit card fees

     4,404        4,181        3,729        3,961        3,767   

Real estate mortgage fees

     2,008        1,686        1,384        1,331        1,495   

Net gain (loss) on sale of available-for-sale securities

     (108     33        222        565        1,479   

Net gain (loss) on sale of foreclosed assets

     36        17        (316     162        (106

Net gain (loss) on sale of assets

     9        1        168        5        (32

Other noninterest income

     1,790        966        1,085        876        836   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total noninterest income

   $ 17,075      $ 15,153      $ 13,960      $ 14,948      $ 15,499   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NONINTEREST EXPENSE

          

Salaries and employee benefits, excluding profit sharing

   $ 16,024      $ 14,968      $ 14,101      $ 13,565      $ 13,502   

Profit sharing expense

     1,477        1,183        1,079        1,441        1,343   

Net occupancy expense

     2,164        2,064        1,766        1,790        1,806   

Equipment expense

     2,490        2,380        2,281        2,269        2,269   

FDIC insurance premiums

     640        568        572        565        563   

ATM, interchange and credit card expenses

     1,474        1,347        1,340        1,432        1,317   

Legal, tax and professional fees

     1,576        1,272        993        1,162        1,019   

Audit fees

     368        351        334        323        311   

Printing, stationery and supplies

     534        498        472        487        468   

Amortization of intangible assets

     77        33        10        28        38   

Advertising and public relations

     1,245        1,100        994        1,085        998   

Correspondent bank service charges

     250        222        202        220        220   

Other noninterest expense

     7,215        3,925        3,327        4,266        3,349   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total noninterest expense

   $ 35,534      $ 29,911      $ 27,471      $ 28,633      $ 27,203   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TAX EQUIVALENT YIELD ADJUSTMENT

   $ 4,358      $ 4,082      $ 3,795      $ 3,727      $ 3,743   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     Nine Months Ended
Sept. 30,
                   
NONINTEREST INCOME    2013     2012                    

Trust fees

   $ 11,884      $ 10,848         

Service charges on deposits

     13,009        12,261         

ATM, interchange and credit card fees

     12,315        11,226         

Real estate mortgage fees

     5,149        3,763         

Net gain on sale of available-for-sale securities

     147        2,206         

Net gain (loss) on sale of foreclosed assets

     (263     (512      

Net gain (loss) on sale of assets

     177        203         

Other noninterest income

     3,842        2,266         
  

 

 

   

 

 

       

Total Noninterest Income

   $ 46,260      $ 42,261         
  

 

 

   

 

 

       

NONINTEREST EXPENSE

          

Salaries and employee benefits, excluding profit sharing

   $ 45,093      $ 39,993         

Profit sharing expense

     3,738        3,270         

Net occupancy expense

     5,995        5,286         

Equipment expense

     7,146        6,521         

FDIC Insurance premiums

     1,781        1,655         

ATM, interchange and credit card expenses

     4,161        4,017         

Legal, tax and professional fees

     3,846        3,020         

Audit fees

     1,052        889         

Printing, stationery and supplies

     1,504        1,483         

Amortization of intangible assets

     120        120         

Advertising and public relations

     3,339        2,893         

Correspondent bank service charges

     674        636         

Other noninterest expense

     14,468        10,632         
  

 

 

   

 

 

       

Total Noninterest Expense

   $ 92,917      $ 80,415         
  

 

 

   

 

 

       

TAX EQUIVALENT YIELD ADJUSTMENT

   $ 12,235      $ 10,911         
  

 

 

   

 

 

       


FIRST FINANCIAL BANKSHARES, INC.

SELECTED FINANCIAL DATA (UNAUDITED)

(In thousands)

 

     Three Months Ended
Sept. 30, 2013
 
     Average
Balance
     Tax Equivalent
Interest
     Yield /
Rate
 

Interest-earning assets:

        

Fed funds sold

   $ 13,611       $ 14         0.42

Interest-bearing deposits in nonaffiliated banks

     49,434         95         0.76   

Taxable securities

     1,011,050         6,130         2.43   

Tax exempt securities

     943,623         11,441         4.85   

Loans

     2,636,253         33,333         5.02   
  

 

 

    

 

 

    

 

 

 

Total interest-earning assets

     4,653,971         51,013         4.35   

Noninterest-earning assets

     334,521         
  

 

 

       

Total assets

   $ 4,988,492         
  

 

 

       

Interest-bearing liabilities:

        

Deposits

   $ 2,631,862       $ 1,038         0.16

Fed funds purchased and other short term borrowings

     457,914         126         0.11   
  

 

 

    

 

 

    

 

 

 

Total interest-bearing liabilities

     3,089,776         1,164         0.15   

Noninterest-bearing liabilities

     1,329,582         

Shareholders' equity

     569,134         
  

 

 

       

Total liabilities and shareholders' equity

   $ 4,988,492         
  

 

 

       
     

 

 

    

Net interest income and margin (tax equivalent)

      $ 49,849         4.25
     

 

 

    

 

 

 
     Nine Months Ended
Sept. 30, 2013
 
     Average
Balance
     Tax Equivalent
Interest
     Yield /
Rate
 

Interest-earning assets:

        

Fed funds sold

   $ 10,932       $ 28         0.35

Interest-bearing deposits in nonaffiliated banks

     77,543         376         0.65   

Taxable securities

     1,038,679         18,818         2.42   

Tax exempt securities

     895,778         32,327         4.81   

Loans

     2,359,216         89,291         5.06   
  

 

 

    

 

 

    

 

 

 

Total interest-earning assets

     4,382,148         140,840         4.30   

Noninterest-earning assets

     312,933         
  

 

 

       

Total assets

   $ 4,695,081         
  

 

 

       

Interest-bearing liabilities:

        

Deposits

   $ 2,453,370       $ 2,758         0.15

Fed funds purchased and other short term borrowings

     378,775         256         0.09   
  

 

 

    

 

 

    

 

 

 

Total interest-bearing liabilities

     2,832,145         3,014         0.14   

Noninterest-bearing liabilities

     1,293,373         

Shareholders' equity

     569,563         
  

 

 

       

Total liabilities and shareholders' equity

   $ 4,695,081         
  

 

 

       
     

 

 

    

Net interest income and margin (tax equivalent)

      $ 137,826         4.21