SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): October 21, 2005
FIRST FINANCIAL BANKSHARES, INC.
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(Exact Name of Registrant as Specified in its Charter)
Texas 0-7674 75-0944023
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(State or other Jurisdiction (Commission File No.) (IRS Employer
of Incorporation) Identification No.)
400 Pine Street, Abilene, Texas 79601
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(Address of Principal Executive Offices and Zip Code)
Registrant's Telephone Number (325) 627-7155
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2 (b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
ITEM 2.02 Results of Operations and Financial Condition
Attached as an exhibit to this Form 8-K is the earnings release for the
quarter ended September 30, 2005 of First Financial Bankshares,
Inc.
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST FINANCIAL BANKSHARES, INC.
(Registrant)
DATE: October 21, 2005 By: /S/ F. Scott Dueser
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F. SCOTT DUESER
President and Chief Executive Officer
EXHIBIT
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 20, 2005 - First Financial Bankshares, Inc. today
reported earnings for the third quarter of 2005 of $10.76 million, a 9.2 percent
increase compared with $9.85 million in the same quarter last year. Basic
earnings per share were $0.52 compared with $0.48 in the same period last year.
These results include the final $402,000 special distribution of proceeds from
the merger of PULSE EFT Association and Discover Financial Services, Inc.
Excluding the PULSE proceeds, net income for the third quarter of 2005 would
have been $10.50 million, a 6.6 percent increase over the same period last year,
and basic earnings per share would have been $0.51, an increase of 6.3 percent.
Net interest income in the third quarter increased 11.8 percent to $23.8 million
compared with $21.3 million in the same quarter last year, due primarily to an
increase in interest-earning assets from the acquisition of banks in Glen Rose
and Clyde. The net interest margin, on a taxable equivalent basis, was 4.49
percent for the third quarter of 2005 compared with 4.52 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 for the quarter and the year-to-date. The provision for
loan losses was $317,000 in the third quarter of 2005, down from $532,000 in the
same quarter last year.
Noninterest income in the third quarter increased 4.8 percent to $10.3 million
from $9.9 million in last year's third quarter. Trust fees increased 9.5 percent
to $1.7 million compared with $1.6 million in the same quarter last year.
Revenue from service fees decreased 5.2 percent to $5.5 million compared with
$5.8 million a year ago, reflecting a more realistic usage of the Company's
enhanced overdraft privilege product which was introduced and heavily marketed
in the first half of 2004.
Noninterest expense increased 11.4 percent in the third quarter to $18.7 million
from $16.8 million in the third quarter of 2004. The increase was due primarily
to additional salary, employee benefits and facilities expenses resulting from
the acquisition of banks in Glen Rose and Clyde. In the third quarter of 2005,
the Company's efficiency ratio was 52.99 percent compared with 51.86 percent in
the same quarter a year ago primarily due to the acquisition of banks with
higher efficiency ratios. First Financial expects to realize better efficiencies
as the Company brings these new banks into its template.
"We continued to grow our franchise and expand our footprint during the third
quarter, and this expansion is reflected in our financial results," said F.
Scott Dueser, President and Chief Executive Officer. "At the same time, the
flattening yield curve put pressure on our net interest margins and impacted our
bottom-line results. Given this more challenging environment, we are pleased to
report to our shareholders another quarter of growth in net income."
For the first nine months of 2005, net income rose 14.9 percent to $33.4 million
from $29.1 million in the first nine months of 2004. Excluding PULSE proceeds of
$3.9 million received during the first, second and third quarters of 2005, net
income for the nine months ended September 30, 2005, increased 6.2 percent to
$30.9 million. Basic earnings per share for the first nine months of 2005 were
$1.62 compared with $1.41 in the same period a year ago. Excluding the PULSE
gain, basic earnings per share for the first nine months were $1.49, a 5.7
percent increase. Net interest income increased 13.7 percent in the first nine
months of 2005 to $70.4 million from $61.9 million in the same period last year.
The provision for loan losses was $1.05 million for the first nine months of
2005, compared with $1.02 million a year ago.
As of September 30, 2005, consolidated assets for the Company totaled $2.5
billion compared with $2.2 billion a year ago. Loans totaled $1.21 billion in
the third quarter of 2005, an increase of 7.2 percent from $1.13 billion in the
same quarter last year. Total deposits rose 14.8 percent to $2.12 billion from
$1.85 billion a year earlier. The acquisition of banks in Glen Rose and Clyde
accounted for $85.7 million of the loan growth and $157.1 million of the deposit
growth. Shareholders' equity rose to $276.3 million as of September 30, 2005,
compared with $264.3 million the prior year.
During the third quarter, First Financial announced plans to acquire the $146
million Bridgeport Financial Corporation, the parent company of The First
National Bank of Bridgeport, and to combine the bank with First Financial Bank
N.A., Southlake. The First Financial Bank of Bridgeport has offices in
Bridgeport, Boyd and Decatur, Texas. The combined bank, with assets of $250
million, will operate under the First Financial Bank name and will serve
customers in northern Tarrant and Wise Counties. Subject to regulatory approval,
the acquisition is expected to be finalized in the fourth quarter of 2005.
The Company also made progress with its de novo growth plan during the third
quarter, with new branches opening in Midlothian and Abilene. The Midlothian
location is a branch of First Financial Bank, Cleburne, which serves Johnson and
Ellis counties, south of Dallas and Fort Worth. First Financial Bank, Abilene,
with branches in Abilene, Clyde and Moran, opened its second Wal-Mart
Supercenter bank office. The Company expects to open another new bank branch
during the fourth quarter in Granbury, Texas, marking its second location in
that city.
Headquartered in Abilene, Texas, First Financial Bankshares is a financial
holding company that operates ten separately chartered banks with 40 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 and Keller; 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 Stock 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)
September 30,
----------------------------
2005 2004
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ASSETS:
Cash and due from banks $ 95,296 $ 89,270
Fed funds sold 103,500 7,750
Investment securities 950,714 892,982
Loans 1,206,973 1,125,940
Allowance for loan losses (14,375) (13,680)
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Net loans 1,192,598 1,112,260
Premises and equipment 56,357 47,602
Goodwill 49,907 30,554
Other intangible assets 3,914 1,270
Other assets 25,975 24,063
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Total assets $ 2,478,261 $ 2,205,751
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LIABILITIES AND SHAREHOLDERS' EQUITY:
Noninterest-bearing deposits $ 543,478 $ 486,255
Interest-bearing deposits 1,577,732 1,361,143
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Total deposits 2,121,210 1,847,398
Fed Funds purchased and repurchase agreements 63,374 72,000
Other liabilities 17,359 22,021
Shareholders' equity 276,318 264,332
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Total liabilities and shareholders' equity $ 2,478,261 $ 2,205,751
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Three Months Ended Nine Months Ended
September 30, September 30,
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INCOME STATEMENTS 2005 2004 2005 2004
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Interest income $ 31,305 $ 25,391 $ 90,133 $ 73,311
Interest expense 7,488 4,094 19,734 11,378
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Net interest income 23,817 21,297 70,399 61,933
Provision for loan losses 317 532 1,051 1,018
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Net interest income after
provision for loan losses 23,500 20,765 69,348 60,915
Other noninterest income 10,325 9,851 34,215 29,106
Noninterest expense 18,725 16,812 56,128 49,200
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Net income before income taxes 15,100 13,804 47,435 40,821
Income tax expense 4,338 3,951 13,993 11,708
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Net income $ 10,762 $ 9,853 $ 33,442 $ 29,113
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PER COMMON SHARE DATA
Net income - basic $ 0.52 $ 0.48 $ 1.62 $ 1.41
Net income - diluted 0.52 0.47 1.61 1.40
Cash dividends 0.28 0.26 0.82 0.74
Book value 13.35 12.79
Market value 34.83 30.12
Shares outstanding - end of period 20,704,527 20,668,628 20,704,527 20,668,628
Average outstanding shares - basic 20,700,760 20,664,092 20,692,722 20,654,465
Average outstanding shares - diluted 20,782,051 20,751,503 20,772,503 20,748,311
PERFORMANCE RATIOS
Return on average assets 1.76 % 1.82 % 1.86 % 1.84 %
Return on average equity 15.61 15.14 16.46 15.13
Net interest margin (tax equivalent) 4.49 4.52 4.51 4.51
Efficiency ratio 52.99 51.86 51.87 51.90
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.
FIRST FINANCIAL BANKSHARES, INC.
SELECTED FINANCIAL DATA (UNAUDITED)
(In thousands, except per share data)
Quarter Ended
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2005 2004
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Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
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ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period $ 14,323 $ 14,409 $ 13,837 $ 13,680 $ 11,932
Loans charged off (486) (552) (390) (1,099) (331)
Loan recoveries 221 143 187 185 147
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Net (charge-offs) recoveries (265) (409) (203) (914) (184)
Allowance established at acquisition - - 365 457 1,400
Provision for loan losses 317 323 410 614 532
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Balance at end of period $ 14,375 $ 14,323 $ 14,409 $ 13,837 $ 13,680
========== ============= ============= ============= =============
Allowance for loan losses /
period-end loans 1.19 % 1.20 % 1.20 % 1.19 % 1.21 %
Allowance for loan losses /
nonperforming loans 475.1 609.7 462.6 324.7 295.8
Net charge-offs / average loans
(annualized) 0.09 0.14 0.07 0.32 0.07
NONPERFORMING ASSETS
Nonaccrual loans $ 2,989 $ 2,323 $ 3,112 $ 4,142 $ 4,564
Accruing loans 90 days past due 37 26 3 120 60
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Total nonperforming loans 3,026 2,349 3,115 4,262 4,624
Foreclosed assets 796 838 1,138 779 514
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Total nonperforming assets $ 3,822 $ 3,187 $ 4,253 $ 5,041 $ 5,138
========== ============= ============= ============= =============
As a % of loans and foreclosed assets 0.32 % 0.27 % 0.35 % 0.43 % 0.46 %
CAPITAL RATIOS
Tier 1 Risk-based 15.90 % 15.60 % 15.37 % 16.46 % 17.50 %
Total Risk-based 16.92 16.62 16.41 17.49 18.56
Tier 1 Leverage 9.30 9.08 8.94 9.80 10.46
Equity to assets 11.15 11.30 11.07 11.47 11.98
Three Months Ended Nine Months Ended
September 30, September 30,
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RECONCILIATION OF NET INCOME 2005 2004 2005 2004
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Net Income $ 10,762 $ 9,853 $ 33,442 $ 29,113
Gain on sale of PULSE ownership rights 402 - 3,895 -
Less Tax Effect (141) - (1,363) -
------------ ------------ ------------ ------------
Net Gain on sale of Pulse ownership rights 261 - 2,532 -
------------ ------------ ------------ ------------
Net Income excluding gain on sale of Pulse
Ownership rights $ 10,501 $ 9,853 $ 30,910 $ 29,113
============ ============ ============ ============
FIRST FINANCIAL BANKSHARES, INC.
SELECTED FINANCIAL DATA (UNAUDITED)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
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NONINTEREST INCOME 2005 2004 2005 2004
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Gain on sale of student loans, net $ 95 $ 82 $ 1,754 $ 2,511
Gain on sale of PULSE ownership rights 402 - 3,895 -
Gain on securities transactions, net 46 33 230 51
Trust fees 1,728 1,578 5,152 4,667
Service charges on deposits 5,482 5,785 15,888 15,057
Real estate mortgage fees 684 573 1,607 1,548
Net gain on sale of foreclosed assets 19 55 64 171
ATM and credit card fees 1,283 1,019 3,630 2,845
Other noninterest income 586 726 1,995 2,256
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Total Noninterest Income $ 10,325 $ 9,851 $ 34,215 $ 29,106
============= ============= ============= =============
Three Months Ended Nine Months Ended
September 30, September 30,
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NONINTEREST EXPENSE 2005 2004 2005 2004
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Salaries and Employee Benefits $ 10,058 $ 9,095 $ 30,050 $ 26,758
Net Occupancy Expense 1,278 1,094 3,690 3,136
Equipment Expense 1,543 1,309 4,516 4,147
Printing, Stationery and Supplies 475 421 1,491 1,260
ATM and credit card expenses 770 577 2,161 1,661
Audit Fees 204 256 793 623
Legal and Professional Fees 527 620 1,823 1,504
Correspondent Bank Service Charges 350 411 1,096 1,193
Advertising and Public Relations 615 498 1,892 1,621
Amortization of Intangible Assets 187 47 466 115
Other Noninterest Expense 2,718 2,484 8,150 7,182
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Total Noninterest Expense $ 18,725 $ 16,812 $ 56,128 $ 49,200
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TAX EQUIVALENT YIELD ADJUSTMENT $ 1,194 $ 1,273 $ 3,599 $ 3,754
============= ============= ============= =============
Three Months Ended Nine Months Ended
SELECTED AVERAGE BALANCES September 30, September 30,
------------------------------- ------------------------------
2005 2004 2005 2004
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Total Loans $ 1,205,316 $ 1,078,233 $ 1,200,477 $ 1,013,608
Investment Securities 977,245 898,031 943,445 914,739
Federal Funds Sold and Other Short Term Investments 30,857 13,190 51,415 20,783
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Total Interest Earning Assets $ 2,213,418 $ 1,989,454 $ 2,195,337 $ 1,949,130
============= ============= ============= =============
Interest Bearing Deposits $ 1,536,867 $ 1,344,738 $ 1,540,304 $ 1,326,765
Federal Funds Purchased and Repurchase Agreements 65,932 72,024 56,131 58,756
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Total Interest Bearing Liabilities $ 1,602,799 $ 1,416,762 $ 1,596,435 $ 1,385,521
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Total Deposits $ 2,062,847 $ 1,811,777 $ 2,065,657 $ 1,782,659
============= ============= ============= =============
Shareholders' Equity $ 273,471 $ 258,866 $ 271,723 $ 257,079
============= ============= ============= =============
Total Assets $ 2,421,628 $ 2,156,961 $ 2,410,334 $ 2,114,578
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