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

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 20, 2006 — First Financial Bankshares, Inc. today reported earnings for the second quarter of 2006 of $11.45 million, an 8.0 percent increase compared with $10.60 million in the same quarter last year. Basic earnings per share were $0.55 compared with $0.51 in the same period last year. The 2005 second-quarter results included a $513,000 before income tax special distribution of proceeds to the Company from the merger of PULSE EFT Association and Discover Financial Services, Inc. Excluding these special proceeds, the Company’s net income in the second quarter of 2006 would have increased 11.5 percent.

Net interest income for the second quarter of 2006 increased 11.9 percent to $26.54 million compared with $23.73 million in the same quarter last year, primarily due to an increase in interest-earning assets from the acquisition in December 2005 of The First National Bank of Bridgeport. The net interest margin, on a taxable equivalent basis, was 4.50 percent for the second quarter of 2006 compared with 4.53 percent in the same period a year ago. This decrease in the net interest margin was due primarily to the flattening yield curve between short and long-term interest rates, which has put pressure on margins in recent quarters. The provision for loan losses was $389,000 in the second quarter of 2006, compared with $323,000 in the same quarter last year.

Noninterest income in the second quarter was $10.95 million compared with $10.54 million in the same quarter a year earlier. However, excluding the proceeds from the PULSE/Discover transaction described above, noninterest income in the second quarter of 2005 would have been $10.03 million, resulting in a 9.3 percent increase in the second quarter of 2006 compared to a year ago. Trust fees increased 7.3 percent to $1.83 million compared with $1.71 million in the same quarter last year. Revenue from service fees increased 5.0 percent to $5.66 million compared with $5.39 million a year ago due primarily to the Bridgeport acquisition and an increase in number of accounts at all subsidiary banks. The net gain on the sale of student loans was $490,000 versus $350,000 in the same quarter last year.

Noninterest expense increased 10.5 percent in the second quarter of 2006 to $20.84 million from $18.86 million in the same quarter last year. The increase was due primarily to additional salary, employee benefits and facilities expenses resulting from the acquisition of the Bridgeport bank and from the opening of new bank branches in late 2005 in Midlothian and Granbury. The Company’s efficiency ratio in the second quarter of 2006 stood at 53.91 percent compared with 53.21 percent in the same quarter a year ago. Without the PULSE/Discover proceeds described above, the second quarter 2005 efficiency ratio was 53.99 percent. First Financial expects to realize better efficiencies as the Company brings its newly acquired banks into its template and as newly opened branches become profitable.

“We are pleased with our bank’s performance during the first half of the year, especially in light of the continuing flat yield curve, which has put pressure on our net interest margin, and the highly competitive banking environment in Texas,” said F. Scott Dueser, President and Chief Executive Officer.

For the first half of 2006, net income was $22.92 million compared with $22.68 million in the first half of 2005. Excluding PULSE proceeds received during the first half of 2005, net income for the six months ended June 30, 2006 would have increased 12.3 percent. Basic earnings per share for the first half of 2006 were $1.11 compared with $1.10 a year ago. Net interest income increased 12.0 percent in the first half of 2006 to $52.19 million from $46.58 million in the same period last year.

As of June 30, 2006, consolidated assets for the Company totaled $2.72 billion compared with $2.43 billion a year ago. Loans increased 8.5 percent to $1.29 billion at quarter end, compared with loans of $1.19 billion at the end of the second quarter of 2005. Total deposits rose 10.2 percent as of June 30, 2006, to $2.31 billion from $2.09 billion a year earlier. The acquisition of The First National Bank of Bridgeport accounted for $65.9 million of the loan growth and $132.0 million of the deposit growth. Shareholders’ equity rose to $279.77 million as of June 30, 2006, compared with $274.01 million the prior year.

Headquartered in Abilene, Texas, First Financial Bankshares is a financial holding company that operates ten separately chartered banks with 44 locations in Texas, a trust company and a technology operating company. These subsidiaries are First Financial Bank, N.A., Abilene, Clyde and Moran; First Financial Bank, N.A., Eastland, Ranger and Rising Star; First Financial Bank, N.A., Cleburne, Burleson, Alvarado and Midlothian; Hereford State Bank, Hereford; City National Bank, Mineral Wells; San Angelo National Bank, San Angelo; First Financial Bank, N.A., Southlake, Trophy Club, Keller, Bridgeport, Decatur and Boyd; First Financial Bank, N.A., Stephenville, Granbury and Glen Rose; First National Bank, Sweetwater, Roby and Trent; Weatherford National Bank, Weatherford, Willow Park and Aledo; First Financial Trust & Asset Management Company, N.A.; and First Technology Services, Inc.

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,
	2006			2005
ASSETS:
Cash and due from banks	$	125,796		$	90,649
Fed funds sold		30,950			40,100
Investment securities		1,112,112			980,798
Loans		1,293,111			1,192,212
Allowance for loan losses		(15,473	)		(14,323	)
Net loans		1,277,638			1,177,889
Premises and equipment		60,334			55,216
Goodwill		62,146			49,909
Other intangible assets		5,470			4,101
Other assets		40,977			27,163
Total assets	$	2,715,423		$	2,425,825
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Noninterest-bearing deposits	$	622,994		$	553,682
Interest-bearing deposits		1,683,629			1,540,391
Total deposits		2,306,623			2,094,073
Short-term borrowings		110,842			38,279
Other liabilities		18,186			19,463
Shareholders’ equity		279,772			274,010
Total liabilities and shareholders’ equity	$	2,715,423		$	2,425,825

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
INCOME STATEMENTS
Interest income	$	38,140		$	30,294		$	74,541		$	58,828
Interest expense		11,598			6,569			22,349			12,247
Net interest income		26,542			23,725			52,192			46,581
Provision for loan losses		389			323			722			733
Net interest income after provision for loan losses		26,153			23,402			51,470			45,848
Noninterest income		10,954			10,539			22,433			23,889
Noninterest expense		20,840			18,862			41,352			37,403
Net income before income taxes		16,267			15,079			32,551			32,334
Income tax expense		4,819			4,475			9,636			9,654
Net income	$	11,448		$	10,604		$	22,915		$	22,680
PER COMMON SHARE DATA
Net income — basic	$	0.55		$	0.51		$	1.11		$	1.10
Net income — diluted		0.55			0.51			1.10			1.09
Cash dividends		0.30			0.28			0.58			0.54
Book value								13.50			13.24
Market value								36.54			33.84
Shares outstanding — end of period		20,727,734			20,697,633			20,727,734			20,697,633
Average outstanding shares — basic		20,722,054			20,692,904			20,718,763			20,688,637
Average outstanding shares — diluted		20,775,448			20,768,007			20,775,648			20,768,694
PERFORMANCE RATIOS
Return on average assets		1.68	%		1.76	%		1.69	%		1.90	%
Return on average equity		16.48			15.70			16.59			17.00
Net interest margin (tax equivalent)		4.50			4.53			4.45			4.52
Efficiency ratio		53.91			53.21			53.73			51.32

Note: On April 26, 2005, the Company’s Board of Directors declared a four-for-three stock split in the form of a 33% stock dividend effective June 1, 2005. All share and per share amounts in this earnings release have been restated to reflect this stock split.

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2006		2005			2006		2005
RECONCILIATION OF NET INCOME
Net Income	$	11,448	$	10,604		$	22,915	$	22,680
Gain on sale of Pulse ownership rights		—		513			—		3,493
Less Tax Effect		—		(180	)		—		(1,223	)
Net gain on sale of Pulse ownership rights		—		333			—		2,270
Net Income excluding gain on sale of Pulse Ownership rights	$	11,448	$	10,271		$	22,915	$	20,410

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

	Quarter Ended
	2006						2005
	June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,
ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period	$	15,116		$	14,719		$	14,375		$	14,323		$	14,409
Loans charged off		(379	)		(380	)		(529	)		(486	)		(552	)
Loan recoveries		347			444			175			221			143
Net (charge-offs) recoveries		(32	)		64			(354	)		(265	)		(409	)
Allowance established at acquisition		—			—			429			—			—
Provision for loan losses		389			333			269			317			323
Balance at end of period	$	15,473		$	15,116		$	14,719		$	14,375		$	14,323
Allowance for loan losses / period-end loans		1.20	%		1.20	%		1.14	%		1.19	%		1.20	%
Allowance for loan losses / nonperforming loans		370.0			401.3			415.9			475.1			609.7
Net charge-offs (recoveries) / average loans (annualized)		0.01			(0.02	)		0.11			0.09			0.14
NONPERFORMING ASSETS
Nonaccrual loans	$	4,088		$	3,570		$	3,524		$	2,989		$	2,323
Accruing loans 90 days past due		94			197			15			37			26
Total nonperforming loans		4,182			3,767			3,539			3,026			2,349
Foreclosed assets		545			588			705			796			838
Total nonperforming assets	$	4,727		$	4,355		$	4,244		$	3,822		$	3,187
As a % of loans and foreclosed assets		0.37	%		0.35	%		0.33	%		0.32	%		0.27	%
CAPITAL RATIOS
Tier 1 Risk-based		14.51	%		14.54	%		14.17	%		15.90	%		15.60	%
Total Risk-based		15.49			15.52			15.13			16.92			16.62
Tier 1 Leverage		8.39			8.22			8.56			9.30			9.08
Equity to assets		10.30			10.17			10.11			11.15			11.30

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2006			2005		2006			2005
NONINTEREST INCOME
Gain on sale of student loans, net	$	490		$	350	$	1,912		$	1,659
Gain on sale of PULSE ownership rights		—			513		—			3,493
Gain on securities transactions, net		—			143		—			184
Trust fees		1,834			1,709		3,681			3,424
Service charges on deposits		5,658			5,388		10,946			10,406
Real estate mortgage fees		560			510		1,009			922
Net gain (loss) on sale of foreclosed assets		(1	)		33		(13	)		45
ATM and credit card fees		1,542			1,224		2,982			2,347
Other noninterest income		871			669		1,916			1,409
Total Noninterest Income	$	10,954		$	10,539	$	22,433		$	23,889
NONINTEREST EXPENSE
Salaries and employee benefits	$	11,128		$	10,113	$	22,425		$	19,992
Net occupancy expense		1,514			1,257		2,990			2,413
Equipment expense		1,790			1,487		3,496			2,973
Printing, stationery and supplies		513			495		1,011			1,016
ATM and credit card expenses		864			711		1,675			1,391
Audit fees		231			219		480			642
Legal, tax and professional fees		617			624		1,161			1,359
Correspondent bank service charges		291			363		602			746
Advertising and public relations		615			605		1,182			1,278
Amortization of intangible assets		385			176		611			279
Other noninterest expense		2,892			2,812		5,719			5,314
Total Noninterest Expense	$	20,840		$	18,862	$	41,352		$	37,403
TAX EQUIVALENT YIELD ADJUSTMENT	$	1,161		$	1,183	$	2,340		$	2,405

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

			Three Months Ended
	June 30, 2006
	Average		Tax Equivalent		Yield /
	Balance		Interest		Rate
Interest earning assets:
Fed funds sold	$	66,662	$	785		4.66	%
Interest bearing deposits in nonaffiliated banks		5,966		73		4.93	%
Taxable securities		898,808		10,088		4.50	%
Tax exempt securities		229,284		3,613		6.30	%
Loans		1,272,648		24,742		7.80	%
Total interest earning assets		2,473,368		39,301		6.38	%
Noninterest earning assets		257,233
Total assets	$	2,730,601
Interest bearing liabilities:
Deposits	$	1,712,199	$	10,395		2.44	%
Fed funds purchased and other short term borrowings		105,221		1,203		4.59	%
Total interest bearing liabilities		1,817,420		11,598		2.56	%
Noninterest bearing Liabilities		634,501
Shareholders’ equity		278,680
Total liabilities and shareholders’ equity	$	2,730,601
Net interest income and margin (tax equivalent)			$	27,703		4.50	%

			Six Months Ended
	June 30, 2006
	Average		Tax Equivalent		Yield /
	Balance		Interest		Rate
Interest earning assets:
Fed funds sold	$	86,014	$	1,903		4.40	%
Interest bearing deposits in nonaffiliated banks		5,935		137		4.64	%
Taxable securities		870,519		19,338		4.48	%
Tax exempt securities		229,794		7,225		6.29	%
Loans		1,279,750		48,278		7.61	%
Total interest earning assets		2,472,012		76,881		6.28	%
Noninterest earning assets		256,856
Total assets	$	2,728,868
Interest bearing liabilities:
Deposits	$	1,734,877	$	20,250		2.35	%
Fed funds purchased and other short term borrowings		96,772		2,099		4.37	%
Total interest bearing liabilities		1,831,649		22,349		2.46	%
Noninterest bearing liabilities		618,695
Shareholders’ equity		278,524
Total liabilities and shareholders’ equity	$	2,728,868
Net interest income and margin (tax equivalent)			$	54,532		4.45	%