First Financial Bankshares (FFIN) 8-K First Financial Bankshares Announces First 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 FIRST QUARTER EARNINGS RESULTS

ABILENE, Texas, April 23, 2020 -First Financial Bankshares, Inc. (NASDAQ: FFIN) today reported earnings for the first quarter of 2020 of $37.23 million when compared with earnings of $38.25 million in the same quarter last year. Basic earnings per share were $0.26 for the first quarter of 2020 compared with $0.28 in the same quarter a year ago. Included in noninterest expense in the first quarter of 2020, were technology contract termination and conversion related costs totaling $3.81 million related to the acquisition of The Bank & Trust of Bryan/College Station (see below).

All amounts for the quarter ended March 31, 2020, include the results of the Company’s recent acquisition of TB&T Bancshares, Inc. and its wholly owned subsidiary, The Bank & Trust of Bryan/College Station, Texas which was effective January 1, 2020. As of the acquisition date, The Bank & Trust of Bryan/College Station had total assets of approximately $631.41 million, total loans of approximately $455.35 million and total deposits of approximately $551.95 million.

Net interest income for the first quarter of 2020 was $80.90 million, up 16.38 percent when compared with $69.51 million in the same quarter of 2019, due to an increase in average interest earning assets of $1.27 billion over the same quarter in 2019, primarily from the acquisition that just closed. The net interest margin, on a taxable equivalent basis, was 3.91 percent for the first quarter of 2020 compared to 3.99 percent in the fourth quarter of 2019 and 4.00 percent in the first quarter of 2019. Included in interest income for the first quarter of 2020 was $354 thousand, or two basis points in net interest margin, related to discount accretion from fair value accounting related to the Kingwood and Bryan/College Station acquisitions. Amounts related to discount accretion for the fourth quarter of 2019 and first quarter of 2019 were $384 thousand (or two basis points) and $466 thousand (or two basis points), respectively. The Company recorded a $7.65 million discount on the acquired loan portfolio from the Bryan/College Station acquisition on January 1, 2020.

The provision for loan losses was $9.85 million in the first quarter of 2020 compared with $950 thousand in the fourth quarter of 2019 and $965 thousand in the first quarter of 2019. The increase in the Company’s provision for loan losses in the first quarter of 2020 compared to prior quarters reflects (i) growth in the overall loan portfolio, (ii) increased levels of nonperforming assets, classified loans and charge-offs, (iii) increasing uncertainty surrounding unemployment and the economic impact caused by the coronavirus(COVID-19) and (iv) the economic effects related to the recent decline in oil and gas prices.

Accounting Standards Update (ASU)2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (CECL), became effective for the Company on January 1, 2020. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (CARES Act) signed by the President of the United States included an option for entities to delay the implementation of CECL until the earlier of the termination date of the national emergency declaration by the President or December 31, 2020. Due to the uncertainty on the economy and unemployment fromCOVID-19 and the sharp reduction in oil and gas prices, the Company has determined to delay its

implementation of CECL and has calculated and recorded its provision for loan losses under the incurred loss model that existed prior to CECL. Had the Company completed the adoption and implementation of CECL, we believe our allowance for loan losses amount at January 1, 2020 would have been approximately $52.0 million.

Nonperforming assets as a percentage of loans and foreclosed assets totaled 0.86 percent at March 31, 2020, compared with 0.61 percent at December 31, 2019, and 0.74 percent at March 31, 2019. Classified loans totaled $190.35 million at March 31, 2020, compared to $140.66 million at December 31, 2019, and $118.43 million at March 31, 2019. Nonperforming assets and classified loans at March 31, 2020 included Bryan/College Station balances of $11.27 million and $30.12 million, respectively.

At March 31, 2020, loans with oil and gas industry exposure totaled 2.50 percent of gross loans. These loans comprised $3.48 million of the Company’s nonperforming loan totals and $22.03 million of the classified loan totals. In addition, the Company recorded $606 thousand in net charge-offs related to one oil and gas loan for the quarter ended March 31, 2020. At March 31, 2020, the Company’s allowance for loan loss reserve specific to its total oil and gas loan portfolio totaled 4.46 percent of total oil and gas loans.

In addition, at March 31, 2020, loan balances in the retail, restaurant, hotel, other hospitality and travel industries totaled $217.38 million (4.64%), $25.57 million (0.55%), $46.69 million (1.00%), $8.47 million (0.18%) and $937 thousand (0.02%), respectively. Classified loan and nonperforming loan amounts for these industries combined at March 31, 2020, totaled $5.68 million and $867 thousand, respectively.

Noninterest income in the first quarter of 2020 rose to $28.73 million compared with $24.44 million in the same quarter a year ago. Trust fees increased $458 thousand to $7.44 million in the first quarter of 2020 compared with $6.98 million in the same quarter last year. The fair value of Trust assets managed increased to $6.15 billion from $6.06 billion a year ago. Service charges on deposits increased 14.28 percent to $5.92 million compared with $5.18 million in the same quarter a year ago due to continued growth in net new accounts. ATM, interchange and credit card fees increased 8.19 percent to $7.40 million compared with $6.84 million in the same quarter last year due to continued growth in the number of debit cards issued. Real estate mortgage fees increased 10.88 percent to $3.85 million compared with $3.47 million in the same quarter a year ago due to an increase in the volume of loans originated. The Company’s mortgage loan pipeline increased 239 percent, or $118.29 million, as of March 31, 2020 when compared to March 31, 2019 balances; however, the fair value of the mortgage loan pipeline was negatively impacted at March 31, 2020 as a result of the recent volatility in mortgage loans and related hedging market. Also included in noninterest income during the first quarter of 2020 was a gain on sale of securities of $2.06 million.

Noninterest expense for the first quarter of 2020 totaled $55.32 million compared to $47.37 million in the first quarter of 2019. The Company’s efficiency ratio in the first quarter of 2020 was 49.63 percent compared with 49.46 percent in the same quarter last year. The increase in noninterest expense in the first quarter of 2020 was primarily a result of an increase in salary and employee benefit costs to $29.64 million compared to $26.45 million in the same quarter a year ago, primarily driven by the Bryan/College Station acquisition and annual merit-based pay increases. Also included in noninterest expense in the first quarter of 2020 were technology contract termination and conversion related costs totaling $3.81 million as a result of the Bryan/College Station acquisition.

As of March 31, 2020, consolidated assets for the Company totaled $9.70 billion compared to $8.26 billion at December 31, 2019 and $7.95 billion at March 31, 2019. Loans totaled $4.68 billion at March 31, 2020, compared with loans of $4.22 billion at December 31, 2019, and $4.00 billion at March 31, 2019. Deposits totaled $7.21 billion at March 31, 2020, compared to $6.60 billion at December 31, 2019, and $6.35 billion at March 31, 2019. Shareholders’ equity rose to $1.53 billion as of March 31, 2020, compared with $1.23 billion at December 31, 2019, and $1.11 billion at March 31, 2019, primarily from the Bryan/College Station acquisition.

“We are pleased with our first quarter 2020 earnings performance, especially in light of the impact the coronavirus is having on our economy, historically low oil and gas prices and the additional acquisition related expenses to complete the Bryan/College Station acquisition,” said F. Scott Dueser, Chairman, President and CEO. “As we face this challenging economic environment, we continue to work diligently to maximize shareholder value by utilizing our strong capital position to support our customers and the communities we serve with outstanding customer service.”

The Company elected to participate in the Small Business Act Paycheck Protection Program under the CARES Act. Through the date of this release, the Company has processed over 4,900 applications and funded over $650 million in such loans. “We are so proud of the efforts of our team that has worked tirelessly over days, nights and weekends to meet the needs of our customers and keep Texas strong,” said Dueser. “Our quick and extensive response has also brought numerous new loans and deposits to the Company.”

About First Financial Bankshares

Headquartered in Abilene, Texas, First Financial Bankshares is a financial holding company that through its subsidiary, First Financial Bank, N.A., operates multiple banking regions with 78 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, 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 nine 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 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
	2020			2019
	Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
ASSETS
Cash and due from banks	$	191,486		$	231,534		$	198,855		$	178,345		$	176,278
Interest-bearing deposits in banks		76,378			47,920			31,410			128,652			197,758
Interest-bearing time deposits in banks		—			—			—			960			1,458
Fed funds sold		—			3,150			—			700			12,825
Investment securities		4,107,069			3,413,317			3,397,156			3,259,492			3,212,812
Loans		4,681,423			4,223,197			4,140,815			4,063,257			4,003,606
Allowance for loan losses		(60,440	)		(52,499	)		(51,889	)		(51,820	)		(51,585	)
Net loans		4,620,983			4,170,698			4,088,926			4,011,437			3,952,021
Premises and equipment		139,554			131,022			132,367			134,322			135,321
Goodwill		312,842			171,565			171,565			171,565			171,565
Other intangible assets		6,392			2,102			2,340			2,586			2,850
Other assets		246,387			90,919			91,220			91,234			83,007
Total assets	$	9,701,091		$	8,262,227		$	8,113,839		$	7,979,293		$	7,945,895
LIABILITIES AND SHAREHOLDERS’ EQUITY
Noninterest-bearing deposits	$	2,288,597		$	2,065,128		$	2,210,997		$	2,167,552		$	2,165,745
Interest-bearing deposits		4,921,869			4,538,678			4,186,686			4,202,214			4,184,996
Total deposits		7,210,466			6,603,806			6,397,683			6,369,766			6,350,741
Borrowings		857,871			381,356			400,155			362,005			382,711
Other liabilities		106,392			49,868			110,903			82,774			104,921
Shareholders’ equity		1,526,362			1,227,197			1,205,098			1,164,748			1,107,522
Total liabilities and shareholders’ equity	$	9,701,091		$	8,262,227		$	8,113,839		$	7,979,293		$	7,945,895
	Quarter Ended
	2020			2019
	Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
INCOME STATEMENTS
Interest income	$	88,100		$	82,123		$	80,591		$	79,576		$	76,901
Interest expense		7,198			6,801			7,953			7,961			7,387
Net interest income		80,902			75,322			72,638			71,615			69,514
Provision for loan losses		9,850			950			450			600			965
Net interest income after provision for loan losses		71,052			74,372			72,188			71,015			68,549
Noninterest income		28,732			27,347			28,669			27,976			24,437
Noninterest expense		55,318			51,938			48,910			48,304			47,367
Net income before income taxes		44,466			49,781			51,947			50,687			45,619
Income tax expense		7,234			8,393			8,867			8,594			7,367
Net income	$	37,232		$	41,388		$	43,080		$	42,093		$	38,252
PER COMMON SHARE DATA
Net income - basic	$	0.26		$	0.30		$	0.32		$	0.31		$	0.28
Net income - diluted		0.26			0.30			0.32			0.31			0.28
Cash dividends declared		0.12			0.12			0.12			0.12			0.11
Book Value		10.73			9.03			8.87			8.58			8.16
Market Value	$	26.84		$	35.10		$	33.33		$	30.79		$	28.89
Shares outstanding - end of period		142,314,930			135,891,755			135,822,456			135,809,224			135,680,420
Average outstanding shares - basic		142,118,864			135,747,381			135,693,901			135,650,599			135,494,254
Average outstanding shares - diluted		142,735,208			136,539,286			136,369,328			136,218,235			136,286,862
PERFORMANCE RATIOS
Return on average assets		1.63	%		2.01	%		2.15	%		2.14	%		2.00	%
Return on average equity		10.11			13.56			14.46			15.04			14.51
Return on average tangible equity		12.89			15.83			16.96			17.81			17.34
Net interest margin (tax equivalent)		3.91			3.99			3.94			3.98			4.00
Efficiency ratio		49.63			49.75			47.54			47.71			49.46

FIRST FINANCIAL BANKSHARES, INC.

SELECTED FINANCIAL DATA (UNAUDITED)

(In thousands)

	Quarter Ended
	2020			2019
	Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period	$	52,499		$	51,889		$	51,820		$	51,585		$	51,202
Loans charged off		(2,227	)		(834	)		(767	)		(1,061	)		(1,464	)
Loan recoveries		318			494			386			696			882
Net recoveries (charge-offs)		(1,909	)		(340	)		(381	)		(365	)		(582	)
Provision for loan losses		9,850			950			450			600			965
Balance at end of period	$	60,440		$	52,499		$	51,889		$	51,820		$	51,585
Allowance for loan losses /period-end loans		1.29	%		1.24	%		1.25	%		1.28	%		1.29	%
Allowance for loan losses / nonperforming loans		153.16			212.02			200.75			190.66			177.41
Net charge-offs / average loans (annualized)		0.16			0.03			0.04			0.04			0.06
SUMMARY OF LOAN CLASSIFICATION
Special Mention	$	87,099		$	63,371		$	46,300		$	51,490		$	45,275
Substandard		103,249			77,284			72,904			74,550			73,158
Doubtful		—			—			—			—			—
Total classified loans	$	190,348		$	140,655		$	119,204		$	126,040		$	118,433
NONPERFORMING ASSETS
Nonaccrual loans	$	39,226		$	24,582		$	25,717		$	26,408		$	28,508
Accruing troubled debt restructured loans		26			26			27			471			472
Accruing loans 90 days past due		209			153			104			300			97
Total nonperforming loans		39,461			24,761			25,848			27,179			29,077
Foreclosed assets		983			1,009			1,364			681			647
Total nonperforming assets	$	40,444		$	25,770		$	27,212		$	27,860		$	29,724
As a % of loans and foreclosed assets		0.86	%		0.61	%		0.66	%		0.69	%		0.74	%
As a % of end of period total assets		0.42			0.31			0.34			0.35			0.37
OIL AND GAS PORTFOLIO INFORMATION
Oil and gas loans	$	117,223		$	119,789		$	122,908		$	107,097		$	107,335
Oil and gas loans as a % of total loans		2.50	%		2.84	%		2.97	%		2.64	%		2.68	%
Classified oil and gas loans		22,032			7,041			7,953			3,438			4,255
Nonaccrual oil and gas loans		3,477			481			519			621			669
Net charge-offs for oil and gas loans		606			—			—			—			—
Allowance for oil and gas loans as a % of oil and gas loans		4.46	%		2.54	%		2.87	%		2.95	%		3.22	%
CAPITAL RATIOS
Common equity Tier 1 capital ratio		19.55	%		20.06	%		20.05	%		20.04	%		19.86	%
Tier 1 capital ratio		19.55			20.06			20.05			20.04			19.86
Total capital ratio		20.65			21.13			21.14			21.16			21.00
Tier 1 leverage		12.49			12.60			12.58			12.29			12.08
Tangible Common Equity Ratio		13.09			12.43			12.94			12.31			11.83
Equity/Assets		15.73			14.85			14.85			14.60			13.94
	Quarter Ended
	2020			2019
	Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
NONINTEREST INCOME
Trust fees	$	7,437		$	7,344		$	7,051		$	7,027		$	6,979
Service charges on deposits		5,915			5,861			5,629			5,374			5,176
ATM, interchange and credit card fees		7,400			7,943			7,728			7,352			6,840
Real estate mortgage fees		3,852			4,216			5,733			4,721			3,474
Net gain on sale ofavailable-for-sale securities		2,062			5			52			676			—
Net gain (loss) on sale of foreclosed assets		1			81			71			53			69
Net gain (loss) on sale of assets		116			78			235			6			—
Interest on loan recoveries		265			277			575			903			338
Other noninterest income		1,684			1,542			1,595			1,864			1,561
Total noninterest income	$	28,732		$	27,347		$	28,669		$	27,976		$	24,437
NONINTEREST EXPENSE
Salaries and employee benefits, excluding profit sharing	$	28,670		$	27,175		$	27,030		$	25,510		$	24,960
Cost related to termination of pension plan		—			1,700			—			—			973
Profit sharing expense		972			2,766			1,520			1,884			1,491
Net occupancy expense		3,027			2,784			2,830			2,779			2,763
Equipment expense		2,075			2,043			2,225			2,331			2,453
FDIC insurance premiums		45			—			15			538			538
ATM, interchange and credit card expenses		2,985			2,419			2,627			2,427			2,383
Legal, tax and professional fees		2,921			2,353			2,274			2,302			2,154
Audit fees		411			233			341			455			417
Printing, stationery and supplies		566			465			480			502			366
Amortization of intangible assets		509			238			246			264			269
Advertising and public relations		1,195			1,791			1,745			1,630			1,648
Operational and other losses		576			626			507			480			266
Software amortization and expense		2,024			2,158			1,767			1,783			1,597
Other noninterest expense		9,342			5,187			5,303			5,419			5,089
Total noninterest expense	$	55,318		$	51,938		$	48,910		$	48,304		$	47,367
TAX EQUIVALENT YIELD ADJUSTMENT	$	1,834		$	1,732		$	1,575		$	1,664		$	1,819

FIRST FINANCIAL BANKSHARES, INC.

SELECTED FINANCIAL DATA (UNAUDITED)

(In thousands)

	Three Months Ended							Three Months Ended
	Mar. 31 2020							Dec. 31, 2019
	Average		Tax Equivalent		Yield /			Average		Tax Equivalent		Yield /
	Balance		Interest		Rate			Balance		Interest		Rate
Interest-earning assets:
Fed funds sold	$	2,712	$	10		1.50	%	$	1,198	$	6		2.03	%
Interest-bearing deposits in nonaffiliated banks		220,906		745		1.36			54,841		218		1.58
Taxable securities		2,263,329		14,655		2.59			2,185,777		14,165		2.59
Tax exempt securities		1,346,842		11,200		3.33			1,243,487		10,695		3.44
Loans		4,667,436		63,323		5.46			4,185,716		58,771		5.57
Total interest-earning assets		8,501,225	$	89,933		4.25	%		7,671,019	$	83,855		4.34	%
Noninterest-earning assets		692,432							500,924
Total assets	$	9,193,657						$	8,171,943
Interest-bearing liabilities:
Deposits	$	4,904,087	$	6,680		0.55	%	$	4,336,063	$	6,052		0.55	%
Fed funds purchased and other borrowings		460,605		517		0.45			417,316		749		0.71
Total interest-bearing liabilities		5,364,692	$	7,197		0.54	%		4,753,379	$	6,801		0.57	%
Noninterest-bearing liabilities		2,348,485							2,207,508
Shareholders’ equity		1,480,480							1,211,056
Total liabilities and shareholders’ equity	$	9,193,657						$	8,171,943
Net interest income and margin (tax equivalent)			$	82,736		3.91	%			$	77,054		3.99	%
	Three Months Ended							Three Months Ended
	Sept. 30, 2019							June 30, 2019
	Average		Tax Equivalent		Yield /			Average		Tax Equivalent		Yield /
	Balance		Interest		Rate			Balance		Interest		Rate
Interest-earning assets:
Fed funds sold	$	3,006	$	19		2.52	%	$	5,436	$	39		2.88	%
Interest-bearing deposits in nonaffiliated banks		61,465		363		2.34			107,381		628		2.35
Taxable securities		2,183,930		14,292		2.62			2,063,497		13,925		2.70
Tax exempt securities		1,132,279		10,075		3.56			1,169,889		10,615		3.63
Loans		4,094,235		57,417		5.56			4,043,055		56,033		5.56
Total interest-earning assets		7,474,915	$	82,166		4.36	%		7,389,258	$	81,240		4.41	%
Noninterest-earning assets		489,446							487,931
Total assets	$	7,964,361						$	7,877,189
Interest-bearing liabilities:
Deposits	$	4,156,850	$	7,123		0.68	%	$	4,196,123	$	7,286		0.70	%
Fed funds purchased and other borrowings		388,235		830		0.85			378,389		675		0.72
Total interest-bearing liabilities		4,545,085	$	7,953		0.69	%		4,574,512	$	7,961		0.70	%
Noninterest-bearing liabilities		2,237,462							2,180,361
Shareholders’ equity		1,181,814							1,122,316
Total liabilities and shareholders’ equity	$	7,964,361						$	7,877,189
Net interest income and margin (tax equivalent)			$	74,213		3.94	%			$	73,279		3.98	%
	Three Months Ended
	Mar. 31, 2019
	Average		Tax Equivalent		Yield /
	Balance		Interest		Rate
Interest-earning assets:
Fed funds sold	$	4,894	$	34		2.79	%
Interest-bearing deposits in nonaffiliated banks		100,258		585		2.36
Taxable securities		1,924,863		13,289		2.76
Tax exempt securities		1,226,457		11,279		3.68
Loans		3,973,108		53,534		5.46
Total interest-earning assets		7,229,580	$	78,721		4.42	%
Noninterest-earning assets		508,368
Total assets	$	7,737,948
Interest-bearing liabilities:
Deposits	$	4,144,091	$	6,662		0.65	%
Fed funds purchased and other borrowings		408,641		726		0.72
Total interest-bearing liabilities		4,552,732	$	7,388		0.66	%
Noninterest-bearing liabilities		2,116,080
Shareholders’ equity		1,069,136
Total liabilities and shareholders’ equity	$	7,737,948
Net interest income and margin (tax equivalent)			$	71,333		4.00	%