First Financial Bankshares (FFIN) 8-K Results of Operations and Financial Condition

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 16, 2014 –First Financial Bankshares, Inc. (NASDAQ: FFIN) today reported earnings for the third quarter of 2014 of $23.43 million, up 19.78 percent compared with earnings of $19.56 million in the same quarter last year. Basic earnings per share were $0.37 for the third quarter of 2014 compared with $0.31 in the same quarter a year ago.

Net interest income for the third quarter of 2014 increased 7.46 percent to $48.89 million compared with $45.49 million in the same quarter of 2013. The net interest margin, on a taxable equivalent basis, was 4.18 percent compared to 4.24 percent in the second quarter of 2014 and 4.25 percent in the same quarter last year. Included in interest income for the third quarter of 2014 was $536 thousand, or four 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 $896 thousand in the third quarter of 2014 compared with $1.35 million in the same quarter last year and $1.12 million in the second quarter of 2014. Nonperforming assets as a percentage of loans and foreclosed assets totaled 0.83 percent at September 30, 2014, compared with 0.93 percent at June 30, 2014, and 1.09 percent at September 30, 2013. Classified loans totaled $81.39 million at September 30, 2014, compared to $79.93 million at June 30, 2014, and $81.67 million at September 30, 2013.

Noninterest income increased 1.46 percent in the third quarter of 2014 to $17.32 million compared with $17.08 million in the same quarter a year ago. Trust fees increased to $4.77 million in the third quarter of 2014 compared with $4.14 million in the same quarter last year, primarily due to continued growth in the fair value of Trust assets managed to $3.66 billion from $3.20 billion a year ago. ATM, interchange and credit card fees increased 15.64 percent to $5.09 million compared with $4.40 million in the same quarter last year due to a large growth in net new accounts and debit cards. Real estate mortgage fees decreased to $1.81 million in the third quarter of 2014 compared to $2.01 million in the same quarter last year due to the decline in the overall mortgage refinance market.

Noninterest expense for the third quarter of 2014 totaled $34.04 million compared to $35.53 million in the third quarter of 2013. 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 acquisition of Orange Savings Bank, SSB. There were no such expenses for the quarter ended September 30, 2014. The Company’s efficiency ratio in the third quarter of 2014 was 47.93 percent compared with 53.10 percent in the same quarter last year.

For the nine months ended September 30, 2014, net income increased 16.21 percent to $66.97 million from $57.63 million in the same period a year ago. Basic earnings per share rose to $1.05 from $0.91 for the same period last year. Net interest income increased 14.88 percent to $144.28 million for the nine months ended September 30, 2014 from $125.59 million in the same period a year ago. The provision for loan losses totaled $3.71 million compared with $2.58 million in the same period last year.

Noninterest income was $49.60 million for the first nine months of 2014 compared with $46.26 million in the same period a year ago. Noninterest expense rose to $101.49 million compared with $92.92 million in the same period a year ago.

As of September 30, 2014, consolidated assets for the Company totaled $5.58 billion compared with $5.08 billion a year ago. Loans totaled $2.84 billion at quarter end compared with loans of $2.61 billion a year ago. Total deposits grew 11.59 percent to $4.46 billion at September 30, 2014, compared to $4.00 billion a year ago. Shareholders’ equity rose to $658.77 million as of September 30, 2014, compared with $568.24 million at September 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. “We 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 quarters and nine months ended on September 30, 2014 and 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.

About First Financial Bankshares

Headquartered in Abilene, Texas, First Financial Bankshares is a financial holding company that operates 12 banking regions with 62 locations in Texas including Abilene, Acton, Albany, Aledo, Alvarado, Beaumont, Boyd, Bridgeport, Brock, Burleson, Cisco, Cleburne, Clyde, Decatur, Eastland, Fort Worth, Glen Rose, Granbury, Grapevine, Hereford, Huntsville, Keller, Mauriceville, Merkel, Midlothian, Mineral Wells, Moran, New Waverly, 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 eight 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 athttp://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
	Sept. 30,			June 30,			Mar. 31,			Dec. 31,			Sept. 30,
ASSETS
Cash and due from banks	$	149,957		$	166,237		$	160,469		$	183,084		$	164,666
Interest-bearing deposits in banks		83,994			68,331			3,772			25,498			48,634
Interest-bearing time deposits in banks		19,234			24,188			30,026			31,917			34,352
Fed funds sold		4,785			3,110			3,620			3,430			14,300
Investment securities		2,254,316			2,174,396			2,163,599			2,058,407			1,976,101
Loans		2,839,696			2,786,644			2,698,717			2,689,448			2,614,809
Allowance for loan losses		(36,388	)		(35,892	)		(34,693	)		(33,900	)		(34,800	)
Net loans		2,803,308			2,750,752			2,664,024			2,655,548			2,580,009
Premises and equipment		101,437			96,619			95,406			95,505			94,676
Goodwill		94,882			94,882			94,882			94,882			94,882
Other intangible assets		2,547			2,547			2,600			2,603			2,547
Other assets		61,351			65,294			62,629			71,334			65,468
Total assets	$	5,575,811		$	5,446,356		$	5,281,027		$	5,222,208		$	5,075,635
LIABILITIES AND SHAREHOLDERS’ EQUITY
Noninterest-bearing deposits	$	1,505,847		$	1,445,947		$	1,389,331		$	1,362,184		$	1,371,835
Interest-bearing deposits		2,958,517			2,872,511			2,844,950			2,772,891			2,628,722
Total deposits		4,464,364			4,318,458			4,234,281			4,135,075			4,000,557
Short-term borrowings		341,909			434,583			383,220			463,888			466,500
Other liabilities		110,773			53,279			46,960			35,598			40,337
Shareholders’ equity		658,765			640,036			616,566			587,647			568,241
Total liabilities and shareholders’ equity	$	5,575,811		$	5,446,356		$	5,281,027		$	5,222,208		$	5,075,635
	Quarter Ended
	2014									2013
	Sept. 30,			June 30,			Mar. 31,			Dec. 31,			Sept. 30,
INCOME STATEMENTS
Interest income	$	49,955		$	49,254		$	48,209		$	47,756		$	46,655
Interest expense		1,069			1,037			1,036			1,066			1,164
Net interest income		48,886			48,217			47,173			46,690			45,491
Provision for loan losses		896			1,124			1,690			1,171			1,349
Net interest income after provision for loan losses		47,990			47,093			45,483			45,519			44,142
Noninterest income		17,324			15,872			16,405			15,792			17,075
Noninterest expense		34,040			35,002			32,448			33,096			35,534
Net income before income taxes		31,274			27,963			29,440			28,215			25,683
Income tax expense		7,843			6,758			7,104			6,977			6,121
Net income	$	23,431		$	21,205		$	22,336		$	21,238		$	19,562
PER COMMON SHARE DATA
Net income - basic	$	0.37		$	0.33		$	0.35		$	0.33		$	0.31
Net income - diluted		0.36			0.33			0.35			0.33			0.30
Cash dividends declared		0.14			0.14			0.13			0.13			0.13
Book Value		10.28			9.99			9.63			9.18			8.88
Market Value	$	27.79		$	31.37		$	30.90		$	33.06		$	29.43
Shares outstanding - end of period		64,065,828			64,053,010			64,039,234			63,984,994			63,955,340
Average outstanding shares - basic		64,059,675			64,045,282			64,010,076			63,965,876			63,940,810
Average outstanding shares - diluted		64,304,985			64,301,306			64,212,018			64,192,458			64,243,542
PERFORMANCE RATIOS
Return on average assets		1.71	%		1.59	%		1.74	%		1.65	%		1.56	%
Return on average equity		14.27			13.46			15.02			14.47			13.64
Net interest margin (tax equivalent)		4.18			4.24			4.32			4.27			4.25
Efficiency ratio		47.93			50.84			47.57			49.42			53.10
	Nine Months Ended Sept. 30,
	2014			2013
INCOME STATEMENTS
Interest income	$	147,418		$	128,605
Interest expense		3,143			3,014
Net interest income		144,275			125,591
Provision for loan losses		3,710			2,582
Net interest income after provision for loan losses		140,565			123,009
Noninterest income		49,601			46,260
Noninterest expense		101,489			92,917
Net income before income taxes		88,677			76,352
Income tax expense		21,705			18,723
Net income	$	66,972		$	57,629
PER COMMON SHARE DATA
Net income - basic	$	1.05		$	0.91
Net income - diluted		1.04			0.90
Cash dividends declared		0.41			0.39
Book Value		10.28			8.88
Market Value	$	27.79		$	29.43
Shares outstanding - end of period		64,065,828			63,955,340
Average outstanding shares - basic		64,038,526			63,444,544
Average outstanding shares - diluted		64,302,615			63,706,588
PERFORMANCE RATIOS
Return on average assets		1.68	%		1.64	%
Return on average equity		14.24			13.53
Net interest margin (tax equivalent)		4.25			4.21
Efficiency ratio		48.78			50.47

FIRST FINANCIAL BANKSHARES, INC.

SELECTED FINANCIAL DATA (UNAUDITED)

(In thousands)

	Quarter Ended
	2014									2013
	Sept. 30,			June 30,			Mar. 31,			Dec. 31,			Sept. 30,
ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period	$	35,892		$	34,693		$	33,900		$	34,800		$	34,099
Loans charged off		(614	)		(302	)		(1,297	)		(1,294	)		(944	)
Loan recoveries		214			377			400			311			297
Net recoveries (charge-offs)		(400	)		75			(897	)		(983	)		(647	)
Provision for loan losses		896			1,124			1,690			1,171			1,348
Transfer of off balance sheet exposure to other liabilities		—			—			—			(1,088	)		—
Balance at end of period	$	36,388		$	35,892		$	34,693		$	33,900		$	34,800
Allowance for loan losses / period-end loans		1.28	%		1.29	%		1.29	%		1.26	%		1.33	%
Allowance for loan losses / nonperforming loans		162.77			151.52			140.23			120.82			152.21
Net charge-offs / average loans (annualized)		0.06			(0.01	)		0.14			0.15			0.10
NONPERFORMING ASSETS
Nonaccrual loans	$	22,093		$	23,565		$	24,710		$	27,926		$	22,809
Accruing loans 90 days past due		263			123			30			133			54
Total nonperforming loans		22,356			23,688			24,740			28,059			22,863
Foreclosed assets		1,273			2,342			2,813			3,069			5,672
Total nonperforming assets	$	23,629		$	26,030		$	27,553		$	31,128		$	28,535
As a % of loans and foreclosed assets		0.83	%		0.93	%		1.02	%		1.16	%		1.09	%
As a % of end of period total assets		0.42			0.48			0.52			0.60			0.56
CAPITAL RATIOS
Tier 1 risk-based		16.07	%		16.15	%		16.24	%		15.82	%		15.37	%
Total risk-based		17.20			17.30			17.39			16.92			16.49
Tier 1 leverage		10.10			9.99			9.95			9.84			9.77
Equity to assets		11.81			11.75			11.68			11.25			11.20
	Quarter Ended
	2014									2013
	Sept. 30,			June 30,			Mar. 31,			Dec. 31,			Sept. 30,
NONINTEREST INCOME
Trust fees	$	4,772		$	4,549		$	4,576		$	4,433		$	4,138
Service charges on deposits		4,402			4,174			4,047			4,537			4,798
ATM, interchange and credit card fees		5,093			4,754			4,443			4,436			4,404
Real estate mortgage fees		1,813			1,337			1,024			1,200			2,008
Net gain (loss) on sale of available-for-sale securities		1			(1	)		(4	)		—			(108	)
Net gain (loss) on sale of foreclosed assets		305			47			452			111			36
Net gain (loss) on sale of assets		(31	)		44			3			6			9
Other noninterest income		969			968			1,864			1,069			1,790
Total noninterest income	$	17,324		$	15,872		$	16,405		$	15,792		$	17,075
NONINTEREST EXPENSE
Salaries and employee benefits, excluding profit sharing	$	16,354		$	16,279		$	16,197		$	15,690		$	16,024
Profit sharing expense		1,596			995			1,217			1,942			1,477
Net occupancy expense		2,297			2,273			2,234			2,101			2,164
Equipment expense		2,758			2,665			2,622			2,527			2,490
FDIC insurance premiums		693			684			659			636			640
ATM, interchange and credit card expenses		1,819			1,696			1,480			1,499			1,474
Legal, tax and professional fees		1,463			1,208			1,273			1,248			1,576
Audit fees		403			367			369			506			368
Printing, stationery and supplies		632			554			775			562			534
Amortization of intangible assets		62			74			75			77			77
Advertising and public relations		1,591			1,465			1,375			1,495			1,245
Correspondent bank service charges		222			215			228			241			250
Other noninterest expense		4,150			6,527			3,944			4,572			7,215
Total noninterest expense	$	34,040		$	35,002		$	32,448		$	33,096		$	35,534
TAX EQUIVALENT YIELD ADJUSTMENT	$	4,814		$	4,753		$	4,629		$	4,490		$	4,358
	Nine Months Ended Sept. 30,
	2014			2013
NONINTEREST INCOME
Trust fees	$	13,897		$	11,884
Service charges on deposits		12,623			13,009
ATM, interchange and credit card fees		14,291			12,315
Real estate mortgage fees		4,174			5,149
Net gain (loss) on sale of available-for-sale securities		(4	)		147
Net gain (loss) on sale of foreclosed assets		804			(263	)
Net gain (loss) on sale of assets		15			177
Other noninterest income		3,801			3,842
Total noninterest income	$	49,601		$	46,260
NONINTEREST EXPENSE
Salaries and employee benefits, excluding profit sharing	$	48,830		$	45,093
Profit sharing expense		3,808			3,738
Net occupancy expense		6,804			5,995
Equipment expense		8,045			7,146
FDIC insurance premiums		2,035			1,781
ATM, interchange and credit card expenses		4,995			4,161
Legal, tax and professional fees		3,945			3,846
Audit fees		1,138			1,052
Printing, stationery and supplies		1,960			1,504
Amortization of intangible assets		210			120
Advertising and public relations		4,431			3,339
Correspondent bank service charges		666			674
Other noninterest expense		14,622			14,468
Total noninterest expense	$	101,489		$	92,917
TAX EQUIVALENT YIELD ADJUSTMENT	$	14,197		$	12,235

FIRST FINANCIAL BANKSHARES, INC.

SELECTED FINANCIAL DATA (UNAUDITED)

(In thousands)

	Three Months Ended Sept. 30, 2014							Three Months Ended June 30, 2014
	Average Balance		Tax Equivalent Interest		Yield / Rate			Average Balance		Tax Equivalent Interest		Yield / Rate
Interest-earning assets:
Fed funds sold	$	10,619	$	11		0.40	%	$	11,310	$	12		0.41	%
Interest-bearing deposits in nonaffiliated banks		50,213		69		0.55			48,974		78		0.64
Taxable securities		1,166,248		6,856		2.35			1,159,430		7,091		2.45
Tax exempt securities		1,057,715		12,763		4.83			1,037,608		12,599		4.86
Loans		2,814,083		35,070		4.94			2,748,023		34,227		5.00
Total interest-earning assets		5,098,878	$	54,769		4.26	%		5,005,345	$	54,007		4.33	%
Noninterest-earning assets		348,369							335,651
Total assets	$	5,447,247						$	5,340,996
Interest-bearing liabilities:
Deposits	$	2,892,065	$	999		0.14	%	$	2,867,740	$	955		0.13	%
Fed funds purchased and other short term borrowings		384,768		70		0.07			406,913		82		0.08
Total interest-bearing liabilities		3,276,833	$	1,069		0.13	%		3,274,653	$	1,037		0.13	%
Noninterest-bearing liabilities		1,518,907							1,434,674
Shareholders’ equity		651,507							631,669
Total liabilities and shareholders’ equity	$	5,447,247						$	5,340,996
Net interest income and margin (tax equivalent)			$	53,700		4.18	%			$	52,970		4.24	%
	Three Months Ended Mar. 31, 2014							Three Months Ended Dec. 31, 2013
	Average Balance		Tax Equivalent Interest		Yield / Rate			Average Balance		Tax Equivalent Interest		Yield / Rate
Interest-earning assets:
Fed funds sold	$	5,718	$	5		0.35	%	$	7,177	$	7		0.40	%
Interest-bearing deposits in nonaffiliated banks		48,708		82		0.68			44,421		89		0.79
Taxable securities		1,121,296		7,084		2.53			1,094,256		6,687		2.44
Tax exempt securities		992,947		12,218		4.92			958,278		11,817		4.93
Loans		2,689,474		33,450		5.04			2,650,834		33,645		5.04
Total interest-earning assets		4,858,143	$	52,839		4.41	%		4,754,966	$	52,245		4.36	%
Noninterest-earning assets		351,309							344,927
Total assets	$	5,209,452						$	5,099,893
Interest-bearing liabilities:
Deposits	$	2,817,181	$	941		0.14	%	$	2,696,123	$	950		0.14	%
Fed funds purchased and other short term borrowings		426,204		96		0.09			454,573		115		0.10
Total interest-bearing liabilities		3,243,385	$	1,037		0.13	%		3,150,696	$	1,065		0.13	%
Noninterest-bearing liabilities		1,362,852							1,366,726
Shareholders’ equity		603,215							582,471
Total liabilities and shareholders’ equity	$	5,209,452						$	5,099,893
Net interest income and margin (tax equivalent)			$	51,802		4.32	%			$	51,180		4.27	%
	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, 2014							Nine 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	$	9,234	$	27		0.39	%	$	10,932	$	28		0.35	%
Interest-bearing deposits in nonaffiliated banks		49,304		229		0.62			77,543		376		0.65
Taxable securities		1,149,156		21,032		2.44			1,038,679		18,818		2.42
Tax exempt securities		1,029,661		37,580		4.87			895,778		32,327		4.81
Loans		2,750,983		102,747		4.99			2,359,216		89,291		5.06
Total interest-earning assets		4,988,338	$	161,615		4.33	%		4,382,148	$	140,840		4.30	%
Noninterest-earning assets		345,098							312,933
Total assets	$	5,333,436						$	4,695,081
Interest-bearing liabilities:
Deposits	$	2,859,269	$	2,894		0.14	%	$	2,453,370	$	2,758		0.15	%
Fed funds purchased and other short term borrowings		405,811		249		0.08			378,775		256		0.09
Total interest-bearing liabilities		3,265,080	$	3,143		0.13	%		2,832,145	$	3,014		0.14	%
Noninterest-bearing liabilities 1,439,382									1,293,373
Shareholders’ equity		628,974							569,563
Total liabilities and shareholders’ equity	$	5,333,436						$	4,695,081
Net interest income and margin (tax equivalent)			$	158,472		4.25	%			$	137,826		4.21	%