Enhanced Investments - Financial Portal

Published: 2023-04-20 00:00:00 ET

EX-99 2 ffin-ex99_1.htm EX-99.1 EX-99

For immediate release

For More Information:
Michelle S. Hickox, EVP & Chief Financial Officer  325.627.7155
 

FIRST FINANCIAL BANKSHARES ANNOUNCES FIRST QUARTER 2023 EARNINGS

ABILENE, Texas, April 20, 2023 - First Financial Bankshares, Inc. (the “Company,” “we,” “us” or “our”) (NASDAQ: FFIN) today reported earnings for the first quarter of 2023 of $52.57 million compared to earnings of $55.97 million for the same quarter a year ago. Basic and diluted earnings per share were $0.37 for the first quarter of 2023 compared with $0.39 for the same quarter a year ago.

As further described below, the results this quarter compared to the same quarter a year ago included (i) a decrease in debit card fees of $3.99 million, (ii) a decrease in mortgage revenues of $3.36 million and (iii) an increase in FDIC assessment fees of $785 thousand. Offsetting these items was (i) a decrease in the provision for credit losses of $2.00 million and (ii) a decrease in salary and employee benefits expenses of $2.68 million.

“We are pleased with our results that were highlighted by strong organic loan growth with only a small contraction in deposits during the quarter. In light of the historical increase in interest rates by the Federal Reserve, we continue to focus on loan and deposit pricing that aligns with our competitive environment. While funding costs have increased, we continue to have opportunities to reinvest bond cash flows into our higher yielding loan portfolio,” said F. Scott Dueser, Chairman, President and CEO of First Financial Bankshares, Inc. “Additionally, the financial strength of our Company is reflected in our strong regulatory capital ratios, diversified deposit base and access to multiple liquidity sources. We are steadfast in our commitment to remaining safe, sound and secure. We appreciate the continued support of our customers, shareholders and associates,” added Mr. Dueser.

Net interest income for the first quarter of 2023 was $96.29 million compared to $95.44 million for the first quarter of 2022. The net interest margin, on a taxable equivalent basis, was 3.34 percent for the first quarter of 2023 compared to 3.22 percent in the first quarter of 2022. Average interest-earning assets were $12.07 billion for the first quarter of 2023 compared to $12.50 billion a year ago.

The Company recorded a provision for credit losses of $2.78 million for the first quarter of 2023 compared to a provision for credit losses of $4.78 million for the first quarter of 2022. At March 31, 2023, the allowance for credit losses totaled $80.82 million, or 1.23 percent of loans held-for-investment (“loans” hereafter), compared to $66.91 million, or 1.20 percent of loans, at March 31, 2022. Additionally, the reserve for unfunded commitments totaled $10.40 million at March 31, 2023 compared to $7.47 million at March 31, 2022.

Net recoveries totaled $277 thousand in the first quarter 2023 compared to net charge-offs of $299 thousand for the first quarter of 2022. Nonperforming assets as a percentage of loans and foreclosed assets totaled 0.37 percent at March 31, 2023, compared with 0.52 percent at March 31, 2022. Classified loans totaled $157.06 million at March 31, 2023, compared to $152.16 million at March 31, 2022.

Noninterest income for the first quarter of 2023 was $28.01 million compared to $34.88 million for the first quarter of 2022, due to the following:

•

Service charges on deposits increased to $6.04 million for the first quarter of 2023 compared with $5.71 million for the first quarter of 2022, driven by the growth of over 4,300 net new accounts opened during the first quarter of 2023.

•

Debit card fees decreased by $3.99 million for the first quarter of 2023 compared to the same quarter a year ago. The decrease was due the impact of becoming subject to regulations that limit debit card interchange revenue (“Durbin Amendment”) which became effective for the Company as of July 1, 2022.

•

Mortgage income declined to $2.97 million for the first quarter of 2023 compared to $6.33 million for the first quarter of 2022 due to lower overall origination volumes and margins primarily because of the increase in mortgage interest rates.

•

Gains on sales of assets, foreclosed assets and securities were $976 thousand during the first quarter of 2023 compared to $1.11 million for the first quarter of 2022.

Noninterest expense for the first quarter of 2023 totaled $57.26 million compared to $59.23 million for the first quarter of 2022, as a result of the following:

•

Salary, commissions, and employee benefit costs decreased to $31.46 million for the first quarter of 2023, compared to $34.14 million in the first quarter of 2022 primarily resulting from a decrease of $1.57 million in profit sharing expense and $781 thousand in mortgage incentives.

•

Noninterest expenses, excluding salary related costs, increased $708 thousand for the first quarter of 2023 compared to the same period in 2022 largely due to an increase of $785 thousand in FDIC insurance fees.

The Company’s efficiency ratio was 44.93 percent for the first quarter of 2023 compared to 44.16 percent for the first quarter of 2022. The increase was driven by the decrease in non-interest income from the prior year.

As of March 31, 2023, consolidated total assets were $13.01 billion compared to $13.31 billion at March 31, 2022. Loans totaled $6.58 billion at March 31, 2023, compared with loans of $5.57 billion at March 31, 2022. During the first quarter of 2023, loans grew $134.35 million, or 8.46 percent annualized, when compared to December 31, 2022 balances. Deposits totaled $10.94 billion at March 31, 2023, compared to $11.00 billion at March 31, 2022.

During the first quarter of 2023, the Company sold $135.86 million of securities classified as available-for-sale with an average book yield of 2.92 percent. The proceeds from the sales of these securities were largely used to fund organic loan growth during the quarter. As of March 31, 2023, cash flows from maturities in the security portfolio of $599.43 million are projected over the next twelve months.

Shareholders’ equity was $1.37 billion as of March 31, 2023, compared to $1.27 billion and $1.49 billion at December 31, 2022, and March 31, 2022, respectively, primarily as a result of changes in Other Comprehensive Income (“OCI”) due to interest rate changes over the past year. The unrealized loss on the securities portfolio, net of applicable tax, totaled $458.25 million at March 31, 2023, compared to an unrealized loss of $535.23 million and $209.58 million at December 31, 2022 and March 31, 2022, respectively.

About First Financial Bankshares, Inc.

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 79 locations in Texas, including Abilene, Acton, Albany, Aledo, Alvarado, Beaumont, Boyd, Bridgeport, Brock, Bryan, Burleson, College Station, Cisco, Cleburne, Clyde, Conroe, Cut and Shoot, Decatur, Eastland, El Campo, Fort Worth, Fulshear, Glen Rose, Granbury, Grapevine, Hereford, Huntsville, Keller, Kingwood, Lumberton, Magnolia, Mauriceville, Merkel, Midlothian, Mineral Wells, Montgomery, Moran, New Waverly, Newton, Odessa, Orange, Palacios, 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 ten 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, please visit our website at https://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,” “project,” 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; economic impact of oil and gas prices and the pandemic, 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 and Filings” on the Company’s Website 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
		2023				2022
ASSETS		Mar. 31,				Dec. 31,				Sept. 30,				June 30,				Mar. 31,
Cash and due from banks	$		224,875		$		293,286		$		227,298		$		242,665		$		203,187
Interest-bearing demand deposits in banks			221,336				37,392				138,484				222,899				394,566
Investment securities			5,298,557				5,474,359				5,745,443				6,215,036				6,502,495
Loans, held-for-investment, excluding PPP Loans			6,576,060				6,441,699				6,255,286				5,876,281				5,550,430
PPP loans			155				169				202				2,301				15,739
Total loans, held-for-investment			6,576,215				6,441,868				6,255,488				5,878,582				5,566,169
Allowance for credit losses			(80,818	)			(75,834	)			(74,108	)			(71,932	)			(66,913	)
Net loans, held-for-investment			6,495,397				6,366,034				6,181,380				5,806,650				5,499,256
Loans, held-for-sale			11,996				11,965				18,815				26,445				27,670
Premises and equipment, net			153,718				152,973				152,646				149,280				150,168
Goodwill			313,481				313,481				313,481				313,481				313,481
Other intangible assets			1,825				2,053				2,352				2,658				2,978
Other assets			286,801				322,523				330,445				281,098				220,399
Total assets	$		13,007,986		$		12,974,066		$		13,110,344		$		13,260,212		$		13,314,200

LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits	$		3,890,991		$		4,061,788		$		4,200,792		$		4,104,034		$		3,978,724
Interest-bearing deposits			7,045,427				6,943,719				6,941,326				7,018,949				7,021,101
Total deposits			10,936,418				11,005,507				11,142,118				11,122,983				10,999,825
Borrowings			632,927				642,507				774,581				768,364				758,595
Other liabilities			65,788				60,315				61,030				39,847				67,031
Shareholders' equity			1,372,853				1,265,737				1,132,615				1,329,018				1,488,749
Total liabilities and shareholders' equity	$		13,007,986		$		12,974,066		$		13,110,344		$		13,260,212		$		13,314,200


	Quarter Ended
		2023			2022
INCOME STATEMENTS		Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
Interest income	$		121,508	$		121,137	$		112,728	$		101,981	$		97,009
Interest expense			25,222			17,100			9,572			3,199			1,570
Net interest income			96,286			104,037			103,156			98,782			95,439
Provision for credit losses			2,781			4,075			3,221			5,350			4,782
Net interest income after provision for credit losses			93,505			99,962			99,935			93,432			90,657
Noninterest income			28,007			28,524			30,943			37,317			34,881
Noninterest expense			57,256			57,778			59,442			58,333			59,225
Net income before income taxes			64,256			70,708			71,436			72,416			66,313
Income tax expense			11,688			12,040			12,095			11,922			10,341
Net income	$		52,568	$		58,668	$		59,341	$		60,494	$		55,972


PER COMMON SHARE DATA
Net income - basic	$	0.37	$	0.41	$	0.42	$	0.42	$	0.39
Net income - diluted		0.37		0.41		0.41		0.42		0.39
Cash dividends declared		0.17		0.17		0.17		0.17		0.15
Book value		9.62		8.87		7.94		9.32		10.43
Tangible book value		7.41		6.66		5.73		7.10		8.21
Market value		31.90		34.40		41.83		39.27		44.12
Shares outstanding - end of period		142,703,531		142,657,871		142,628,163		142,586,601		142,704,495
Average outstanding shares - basic		142,665,646		142,619,632		142,524,500		142,682,251		142,558,743
Average outstanding shares - diluted		143,066,011		143,071,538		143,126,088		143,238,669		143,302,063


PERFORMANCE RATIOS
Return on average assets	1.65	%	1.76	%	1.76	%	1.82	%	1.71	%
Return on average equity	16.32		19.87		17.31		17.26		13.53
Return on average tangible equity	21.51		27.20		22.55		22.27		16.68
Net interest margin (tax equivalent)*	3.34		3.47		3.38		3.30		3.22
Efficiency ratio*	44.93		42.39		43.10		41.61		44.16
*Calculations have been adjusted to remove effect of TEFRA disallowance

FIRST FINANCIAL BANKSHARES, INC.

SELECTED FINANCIAL DATA (UNAUDITED)

(In thousands)


	Quarter Ended
		2023				2022
ALLOWANCE FOR LOAN LOSSES		Mar. 31,				Dec. 31,				Sept. 30,				June 30,				Mar. 31,
Balance at beginning of period	$		75,834		$		74,108		$		71,932		$		66,913		$		63,465
Loans charged-off			(288	)			(1,225	)			(293	)			(275	)			(659	)
Loan recoveries			565				320				1,409				1,191				360
Net recoveries (charge-offs)			277				(905	)			1,116				916				(299	)
Provision for loan losses			4,707				2,631				1,060				4,103				3,747
Balance at end of period	$		80,818		$		75,834		$		74,108		$		71,932		$		66,913


ALLOWANCE FOR UNFUNDED COMMITMENTS
Balance at beginning of period	$	12,323			$	10,879		$	8,718			$	7,471			$	6,436
Provision for unfunded commitments		(1,926	)			1,444			2,161				1,247				1,035
Balance at end of period	$	10,397			$	12,323		$	10,879			$	8,718			$	7,471

Allowance for loan losses /
period-end loans held-for-investment		1.23		%		1.18	%		1.18		%		1.22		%		1.20	%
Allowance for loan losses /
nonperforming loans		334.06				311.75			301.02				281.90				232.71
Net charge-offs (recoveries) / average total loans
(annualized)		(0.02	)			0.06			(0.07	)			(0.06	)			0.02


	Quarter Ended
		2023			2022
COMPOSITION OF LOANS HELD-FOR-INVESTMENT		Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
Commercial:
C&I	$		954,531	$		917,148	$		871,133	$		837,627	$		822,310
PPP			155			169			202			2,301			15,739
Municipal			221,379			221,090			214,852			200,577			191,799
Total Commercial			1,176,065			1,138,407			1,086,187			1,040,505			1,029,848
Agricultural			77,017			76,947			76,937			90,420			82,883
Real Estate:
Construction & Development			921,190			959,426			938,051			928,644			806,211
Farm			307,706			306,322			268,139			250,028			225,942
Non-Owner Occupied CRE			737,117			732,089			717,738			636,432			636,160
Owner Occupied CRE			1,043,018			954,400			945,665			909,899			881,181
Residential			1,628,841			1,575,758			1,536,180			1,412,125			1,352,162
Total Real Estate			4,637,872			4,527,995			4,405,773			4,137,128			3,901,656
Consumer:
Auto			537,410			550,635			538,798			468,147			419,818
Non-Auto			147,851			147,884			147,793			142,382			131,964
Total Consumer			685,261			698,519			686,591			610,529			551,782

Total loans held-for-investment	$		6,576,215	$		6,441,868	$		6,255,488	$		5,878,582	$		5,566,169


SUMMARY OF LOAN CLASSIFICATION
Special Mention	$	65,141	$	49,382	$	43,149	$	46,512	$	47,445
Substandard		91,915		101,316		100,568		106,156		104,715
Doubtful		-		-		-		-		-
Total classified loans	$	157,056	$	150,698	$	143,717	$	152,668	$	152,160


NONPERFORMING ASSETS
Nonaccrual loans	$	24,171		$	24,325		$	24,604		$	25,495		$	28,743
Accruing loans 90 days past due		22			-			15			22			11
Total nonperforming loans		24,193			24,325			24,619			25,517			28,754
Foreclosed assets		196			-			-			-			-
Total nonperforming assets	$	24,389		$	24,325		$	24,619		$	25,517		$	28,754

As a % of loans held-for-investment and foreclosed assets		0.37	%		0.38	%		0.39	%		0.43	%		0.52	%
As a % of end of period total assets		0.19			0.19			0.19			0.19			0.22

FIRST FINANCIAL BANKSHARES, INC.

SELECTED FINANCIAL DATA (UNAUDITED)

(In thousands)


	Quarter Ended
		2023			2022
CAPITAL RATIOS		Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
Common equity Tier 1 capital ratio			18.68	%		18.22	%		18.03	%		18.50	%		19.00	%
Tier 1 capital ratio			18.68			18.22			18.03			18.50			19.00
Total capital ratio			19.79			19.29			19.07			19.54			20.01
Tier 1 leverage ratio			11.53			10.96			10.79			10.65			10.78
Tangible common equity ratio			8.33			7.51			6.38			7.83			9.02
Equity/Assets ratio			10.55			9.76			8.64			10.02			11.18


	Quarter Ended
		2023			2022
NONINTEREST INCOME		Mar. 31,			Dec. 31,				Sept. 30,			June 30,			Mar. 31,
Trust fees	$		9,845	$		10,122		$		10,314	$		9,742	$		9,817
Service charges on deposits			6,036			6,397				6,399			6,038			5,706
Debit card fees			4,936			5,899				5,587			9,868			8,926
Credit card fees			609			632				651			700			602
Gain on sale and fees on mortgage loans			2,974			2,904				4,070			5,728			6,333
Net gain on sale of available-for-sale securities			12			131				334			1,648			31
Net gain on sale of foreclosed assets			34			-				349			18			1,084
Net gain (loss) on sale of assets			930			(2	)			526			6			(10	)
Interest on loan recoveries			346			244				664			1,649			283
Other noninterest income			2,285			2,197				2,049			1,920			2,109
Total noninterest income	$		28,007	$		28,524		$		30,943	$		37,317	$		34,881


NONINTEREST EXPENSE
Salaries, commissions and employee benefits, excluding profit sharing	$	31,431	$	32,391	$	33,129	$	31,840	$	32,540
Profit sharing expense		30		565		763		1,307		1,598
Net occupancy expense		3,430		3,350		3,440		3,292		3,225
Equipment expense		2,127		2,053		2,396		2,346		2,257
FDIC assessment fees		1,654		1,021		917		904		869
Debit card expense		3,199		3,054		3,013		3,200		2,964
Legal, tax and professional fees		2,687		2,814		2,604		2,513		2,957
Audit fees		540		451		451		450		451
Printing, stationery and supplies		710		473		600		501		540
Amortization of intangible assets		228		299		306		320		320
Advertising, meals and public relations		1,475		1,646		1,692		1,554		1,493
Operational and other losses		931		982		869		782		596
Software amortization and expense		2,311		2,420		2,564		2,522		2,457
Other noninterest expense		6,503		6,259		6,698		6,802		6,958
Total noninterest expense	$	57,256	$	57,778	$	59,442	$	58,333	$	59,225

TAX EQUIVALENT YIELD ADJUSTMENT*	$	3,131	$	3,751	$	3,807	$	4,083	$	3,782
*Calculations have been adjusted to remove effect of TEFRA disallowance

FIRST FINANCIAL BANKSHARES, INC.

SELECTED FINANCIAL DATA (UNAUDITED)

(In thousands)


	Three Months Ended									Three Months Ended
	Mar. 31, 2023									Dec. 31, 2022
		Average			Tax Equivalent		Yield /				Average			Tax Equivalent		Yield /
		Balance			Interest		Rate				Balance			Interest		Rate
Interest-earning assets:
Federal funds sold	$		2,507	$		32		5.12	%	$		3,165	$		36		4.57	%
Interest-bearing demand deposits in nonaffiliated banks			143,542			1,618		4.57				160,200			1,579		3.91
Taxable securities			3,672,257			20,782		2.26				3,761,206			21,152		2.25
Tax-exempt securities			1,750,533			12,743		2.91				2,001,185			15,740		3.15
Loans			6,500,332			89,464		5.58				6,391,703			86,381		5.36
Total interest-earning assets			12,069,171	$		124,639		4.19	%			12,317,459	$		124,888		4.02	%
Noninterest-earning assets			863,342									891,972
Total assets	$		12,932,513							$		13,209,431
Interest-bearing liabilities:
Deposits	$		7,080,518	$		21,812		1.25	%	$		6,871,315	$		13,123		0.76	%
Borrowings			625,137			3,410		2.21				927,250			3,977		1.70
Total interest-bearing liabilities			7,705,655	$		25,222		1.33	%			7,798,565	$		17,100		0.87	%
Noninterest-bearing deposits			3,860,472									4,179,494
Other noninterest-bearing liabilities			60,028									60,085
Shareholders' equity			1,306,358									1,171,287
Total liabilities and shareholders' equity	$		12,932,513							$		13,209,431

Net interest income and margin (tax equivalent)*				$		99,417		3.34	%				$		107,788		3.47	%

	Three Months Ended									Three Months Ended
	Sept. 30, 2022									June 30, 2022
		Average			Tax Equivalent		Yield /				Average			Tax Equivalent		Yield /
		Balance			Interest		Rate				Balance			Interest		Rate
Interest-earning assets:
Federal funds sold	$		3,107	$		19		2.49	%	$		1,466	$		5		1.45	%
Interest-bearing demand deposits in nonaffiliated banks			248,929			1,413		2.25				288,784			547		0.76
Taxable securities			4,039,107			20,799		2.06				4,101,751			19,151		1.87
Tax-exempt securities			2,164,829			16,423		3.03				2,376,324			17,873		3.01
Loans			6,082,649			77,880		5.08				5,720,804			68,488		4.80
Total interest-earning assets			12,538,621	$		116,534		3.69	%			12,489,129	$		106,064		3.41	%
Noninterest-earning assets			833,980									825,711
Total assets	$		13,372,601							$		13,314,840
Interest-bearing liabilities:
Deposits	$		7,004,478	$		8,787		0.50	%	$		7,049,041	$		2,967		0.17	%
Borrowings			768,096			784		0.40				730,477			232		0.13
Total interest-bearing liabilities			7,772,574	$		9,571		0.49	%			7,779,518	$		3,199		0.16	%
Noninterest-bearing deposits			4,178,675									4,064,207
Other noninterest-bearing liabilities			61,320									65,475
Shareholders' equity			1,360,032									1,405,640
Total liabilities and shareholders' equity	$		13,372,601							$		13,314,840

Net interest income and margin (tax equivalent)*				$		106,963		3.38	%				$		102,865		3.30	%

	Three Months Ended
	Mar. 31, 2022
		Average			Tax Equivalent		Yield /
		Balance			Interest		Rate
Interest-earning assets:
Federal funds sold	$		1,015	$		1		0.52	%
Interest-bearing demand deposits in nonaffiliated banks			171,970			94		0.22
Taxable securities			4,231,949			17,823		1.68
Tax-exempt securities			2,612,025			18,107		2.77
Loans			5,487,538			64,766		4.79
Total interest-earning assets			12,504,497	$		100,791		3.27	%
Noninterest-earning assets			744,810
Total assets	$		13,249,307
Interest-bearing liabilities:
Deposits	$		6,898,059	$		1,369		0.08	%
Borrowings			781,314			201		0.10
Total interest-bearing liabilities			7,679,373	$		1,570		0.08	%
Noninterest-bearing deposits			3,827,451
Other noninterest-bearing liabilities			64,999
Shareholders' equity			1,677,484
Total liabilities and shareholders' equity	$		13,249,307

Net interest income and margin (tax equivalent)*				$		99,221		3.22	%
*Calculations have been adjusted to remove effect of TEFRA disallowance