First Financial Bankshares (FFIN) 8-K First Financial Bankshares Announces Second Quarter Earnings

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

ABILENE, Texas, July 23, 2009 — First Financial Bankshares, Inc. (Nasdaq: FFIN) today reported earnings for the second quarter of 2009 of $13.57 million compared with earnings of $13.60 million in the same quarter last year. Basic earnings per share were $0.65 in the second quarter of 2009, equal to the same period last year.

Net interest income for the second quarter of 2009 increased 7.0 percent to $32.12 million compared with $30.02 million in the same quarter last year. The net interest margin, on a taxable equivalent basis, rose to 4.88 percent for the second quarter of 2009 compared with 4.61 percent in the same period a year ago and 4.76 percent for the quarter ended March 31, 2009. The provision for loan losses was $1.59 million in the second quarter of 2009, up from $1.44 million in the same quarter last year. Nonperforming assets as a percentage of loans and foreclosed assets totaled 95 basis points at June 30, 2009, compared with 95 basis points at March 31, 2009, and 71 basis points at June 30, 2008.

Noninterest income in the second quarter of 2009 declined 9.9 percent to $12.12 million compared with $13.46 million in the same quarter a year earlier. Noninterest income for the second quarter of 2008 included $1.43 million in pre-tax gain on the sale of student loans with no gain on the sale of student loans reported during the second quarter of 2009. The Company announced in April 2009 that it had suspended its student lending activities as a result of changes mandated by the Department of Education beginning with the 2009-2010 school year, which significantly reduced the profitability of the student loan program. During the first quarter of 2009, the Company recorded a pre-tax gain of $616,000 on the sale of the student loans, excluding related servicing and overhead expenses.

Trust fees declined 9.9 percent during the second quarter of 2009 to $2.13 million compared with $2.36 million in the second quarter last year, reflecting declines in the market value of the equity investments under management and lower oil prices, offset in part by a growth of $92.1 million in new business over the prior year. Service charges on deposit accounts decreased 4.4 percent to $5.42 million compared with $5.67 million a year ago. Offsetting these declines were increases in ATM and credit card fees of $163,000, primarily as a result of increased use of debit cards, real estate mortgage fees of $93,000, due primarily to refinancing existing mortgages and gain on securities transactions of $332,000 compared to the same period in 2008.

Noninterest expense increased 5.9 percent in the second quarter of 2009 to $24.36 million from $23.01 million in the same quarter last year. However, noninterest expense would

have declined over prior periods had it not been for the significant increase in FDIC insurance premiums, including a $1.4 million special assessment. Total insurance premiums to the FDIC, including the special assessment, increased to $2.31 million in the second quarter of 2009 from $143,000 in the same quarter last year. The Company’s efficiency ratio in the second quarter of 2009 was 52.17 percent compared with 50.95 percent in the same quarter a year ago. Offsetting the overall increase in noninterest expense were decreases in profit sharing expense of $434,000, debit card expense of $385,000 and utility costs of $172,000 compared to same period in 2008.

“We could not be more pleased that our earnings were level for the second quarter, especially since we did not have student loan income this quarter compared to $1.43 million in the second quarter last year, and we had an increase in FDIC insurance premiums of $2.2 million for the quarter,” said F. Scott Dueser, President and Chief Executive Officer. “Overcoming these two large obstacles by increasing our net interest margin and decreasing expenses was extraordinary. Our bank presidents continue to do an exceptional job of managing our net interest margin and their banks.”

For the first half of 2009, net income increased 1.9 percent to $27.27 million from $26.76 million a year ago. Basic earnings per share rose to $1.31 in the first half of 2009 from $1.29 in the same period last year. Net interest income increased 7.0 percent in the first half of 2009 to $64.04 million from $59.85 million a year ago. Provision for loan losses increased 33.5 percent from $2.51 million to $3.35 million as the Company continues to aggressively address problem loans and the national recession. Noninterest income was $23.66 million compared with $25.77 million in the same period a year earlier. Noninterest expense was up 3.6 percent to $47.31 million from $45.67 million a year ago, primarily due to the $2.98 million increase in FDIC insurance premiums.

As of June 30, 2009, consolidated assets for the Company totaled $3.08 billion, virtually unchanged from a year ago. Loans totaled $1.48 billion at quarter end, compared with loans of $1.51 billion a year ago. Total deposits held relatively steady at $2.47 billion as of June 30, 2009, compared with $2.57 billion a year earlier. Shareholders’ equity rose to $388.9 million as of June 30, 2009, compared with $343.9 million the prior year.

Headquartered in Abilene, Texas, First Financial Bankshares is a financial holding company that operates ten separately chartered banks with 48 locations in Texas. The bank subsidiaries are First Financial Bank, N.A., Abilene, Albany, Clyde and Moran; First Financial Bank, N.A., Eastland, Ranger and Rising Star; First Financial Bank, N.A., Cleburne, Burleson, Alvarado and Midlothian; First Financial Bank, Hereford; First Financial Bank, N.A., Mineral Wells; San Angelo National Bank, San Angelo; First Financial Bank, N.A., Southlake, Bridgeport, Boyd, Decatur, 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 and Brock. 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 Web site 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)

	June 30,
	2009			2008
ASSETS:
Cash and due from banks	$	119,592		$	156,220
Fed funds sold		26,375			107,920
Investment securities		1,301,251			1,153,902
Loans		1,479,122			1,512,542
Allowance for loan losses		(23,247	)		(18,677	)
Net loans		1,455,875			1,493,865
Premises and equipment		63,807			63,514
Goodwill		62,112			62,112
Other intangible assets		1,453			2,480
Other assets		47,070			44,652
Total assets	$	3,077,535		$	3,084,665
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Noninterest-bearing deposits	$	741,242		$	807,681
Interest-bearing deposits		1,731,273			1,760,940
Total deposits		2,472,515			2,568,621
Short-term borrowings		176,673			149,895
Other liabilities		39,488			22,238
Shareholders’ equity		388,859			343,911
Total liabilities and shareholders’ equity	$	3,077,535		$	3,084,665

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
INCOME STATEMENTS
Interest income	$	36,468		$	38,951		$	73,430		$	80,697
Interest expense		4,347			8,931			9,386			20,847
Net interest income		32,121			30,020			64,044			59,850
Provision for loan losses		1,588			1,441			3,348			2,509
Net interest income after provision for loan losses		30,533			28,579			60,696			57,341
Noninterest income		12,120			13,455			23,656			25,767
Noninterest expense		24,358			23,009			47,305			45,670
Net income before income taxes		18,295			19,025			37,047			37,438
Income tax expense		4,729			5,423			9,777			10,674
Net income	$	13,566		$	13,602		$	27,270		$	26,764
PER COMMON SHARE DATA
Net income — basic	$	0.65		$	0.65		$	1.31		$	1.29
Net income — diluted		0.65			0.65			1.31			1.29
Cash dividends		0.34			0.34			0.68			0.66
Book value								18.68			16.54
Market value								50.36			45.81
Shares outstanding — end of period		20,814,760			20,792,309			20,814,760			20,792,309
Average outstanding shares — basic		20,809,061			20,786,902			20,805,392			20,780,421
Average outstanding shares — diluted		20,830,965			20,833,048			20,821,782			20,816,219
PERFORMANCE RATIOS
Return on average assets		1.77	%		1.81	%		1.76	%		1.78	%
Return on average equity		13.98			15.55			14.28			15.48
Net interest margin (tax equivalent)		4.88			4.61			4.82			4.59
Efficiency ratio		52.17			50.95			51.21			51.40

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

	Quarter Ended
	2009						2008
	June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,
ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period	$	22,652		$	21,529		$	20,048		$	18,677		$	18,377
Loans charged off		(1,225	)		(893	)		(2,406	)		(647	)		(1,374	)
Loan recoveries		232			255			204			253			233
Net charge-offs		(993	)		(638	)		(2,202	)		(394	)		(1,141	)
Provision for loan losses		1,588			1,761			3,683			1,765			1,441
Balance at end of period	$	23,247		$	22,652		$	21,529		$	20,048		$	18,677
Allowance for loan losses / period-end loans		1.57	%		1.53	%		1.37	%		1.28	%		1.23	%
Allowance for loan losses / nonperforming loans		225.4			233.5			216.8			245.7			208.4
Net charge-offs / average loans (annualized)		0.27			0.17			0.56			0.10			0.30
NONPERFORMING ASSETS
Nonaccrual loans	$	10,242		$	9,606		$	9,893		$	7,947		$	8,963
Accruing loans 90 days past due		72			94			36			213			—
Total nonperforming loans		10,314			9,700			9,929			8,160			8,963
Foreclosed assets		3,755			4,415			2,602			2,613			1,792
Total nonperforming assets	$	14,069		$	14,115		$	12,531		$	10,773		$	10,755
As a % of loans and foreclosed assets		0.95	%		0.95	%		0.80	%		0.69	%		0.71	%
As a % of end of period total assets		0.46			0.45			0.39			0.34			0.35
CAPITAL RATIOS
Tier 1 Risk-based		17.36	%		16.80	%		15.89	%		15.41	%		15.25	%
Total Risk-based		18.61			18.05			17.04			16.49			16.27
Tier 1 Leverage		10.53			10.01			9.68			9.63			9.55
Equity to assets		12.64			12.22			11.48			11.13			11.15

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2009		2008			2009			2008
NONINTEREST INCOME
Gain on sale of student loans, net	$	—	$	1,432		$	616		$	1,715
Gain on securities transactions, net		498		166			747			559
Trust fees		2,126		2,359			4,242			4,731
Service charges on deposits		5,421		5,671			10,562			11,196
Real estate mortgage fees		858		765			1,446			1,369
Net gain (loss) on sale of foreclosed assets		99		(15	)		(59	)		89
ATM and credit card fees		2,427		2,264			4,636			4,295
Other noninterest income		691		813			1,466			1,813
Total Noninterest Income	$	12,120	$	13,455		$	23,656		$	25,767
NONINTEREST EXPENSE
Salaries and employee benefits, excluding profit sharing	$	11,686	$	11,556		$	23,183		$	23,059
Profit sharing expense		555		989			1,050			2,034
Net occupancy expense		1,567		1,652			3,187			3,243
Equipment expense		1,968		1,865			3,908			3,712
Printing, stationery and supplies		465		441			897			951
ATM and credit card expenses		734		1,115			1,651			2,117
Audit fees		262		334			547			596
Legal, tax and professional fees		763		733			1,693			1,475
FDIC Insurance premiums		2,305		143			3,256			276
Correspondent bank service charges		323		299			635			565
Advertising and public relations		590		656			1,122			1,300
Amortization of intangible assets		216		304			438			615
Other noninterest expense		2,924		2,922			5,738			5,727
Total Noninterest Expense	$	24,358	$	23,009		$	47,305		$	45,670
TAX EQUIVALENT YIELD ADJUSTMENT	$	2,450	$	1,687		$	4,686		$	3,242

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

	Three Months Ended
	June 30, 2009
	Average		Tax Equivalent		Yield /
	Balance		Interest		Rate
Interest-earning assets:
Fed funds sold	$	32,435	$	19		0.23	%
Interest-bearing deposits in nonaffiliated banks		12,851		52		1.61	%
Taxable securities		885,381		9,209		4.16	%
Tax exempt securities		429,542		6,738		6.27	%
Loans		1,481,792		22,900		6.20	%
Total interest-earning assets		2,842,001		38,918		5.49	%
Noninterest-earning assets		240,277
Total assets	$	3,082,278
Interest-bearing liabilities:
Deposits	$	1,735,640	$	4,154		0.96	%
Fed funds purchased and other short term borrowings		171,935		193		0.45	%
Total interest-bearing liabilities		1,907,575		4,347		0.91	%
Noninterest-bearing liabilities		785,608
Shareholders’ equity		389,095
Total liabilities and shareholders’ equity	$	3,082,278
Net interest income and margin (tax equivalent)			$	34,571		4.88	%

	Six Months Ended
	June 30, 2009
	Average		Tax Equivalent		Yield /
	Balance		Interest		Rate
Interest-earning assets:
Fed funds sold	$	32,968	$	43		0.26	%
Interest-bearing deposits in nonaffiliated banks		8,147		70		1.73	%
Taxable securities		895,102		18,946		4.23	%
Tax exempt securities		414,480		12,899		6.22	%
Loans		1,524,211		46,158		6.11	%
Total interest-earning assets		2,874,908		78,116		5.48	%
Noninterest-earning assets		249,720
Total assets	$	3,124,628
Interest-bearing liabilities:
Deposits	$	1,751,263	$	8,932		1.03	%
Fed funds purchased and other short term borrowings		201,416		454		0.45	%
Total interest-bearing liabilities		1,952,679		9,386		0.97	%
Noninterest-bearing liabilities		786,970
Shareholders’ equity		384,979
Total liabilities and shareholders’ equity	$	3,124,628
Net interest income and margin (tax equivalent)			$	68,730		4.82	%