SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended Commission File Number
June 30, 1994 0-7674
FIRST FINANCIAL BANKSHARES, INC.
(Exact Name of Registrant as Specified in its Charter)
Texas 75-0944023
(State of Incorporation) (I.R.S. Employer
Identification No.)
400 Pine Street, Abilene, Texas 79601
(Address of Executive Offices) (Zip Code)
Registrant's Telephone Number (915) 675-7155
Securities Registered Pursuant to Section 12(b) of the Act:
None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, Par Value $10.00 Per Share
(Title of Class)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X . No .
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest practicable
date.
4,981,412 shares
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
Item Page
1. Financial Statements 3
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Signatures 11
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
The consolidated balance sheets of First Financial Bankshares, Inc.
at June 30, 1994, December 31, 1993, and June 30, 1993, and the
consolidated statements of income, the consolidated statements of
changes in stockholders'equity, and the consolidated statements of
cash flows for the six months ended June 30, 1994 and 1993, follow
on pages 4 through 8.
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
June 30, December 31,
1994 1993 1 1993 1
ASSETS
Cash and due from banks $ 51,097,002 $ 47,539,540 $ 55,214,848
Interest-bearing deposits
in banks 691,000 981,000 787,000
Federal funds sold 24,563,000 36,825,000 45,506,000
Investment securities:
U.S Treasury and
government agencies 437,857,608 419,258,193 435,839,601
State and political
subdivisions 18,811,892 15,588,915 17,484,964
Other 7,027,918 8,565,495 2,854,971
Total investment
securities 463,697,418 443,412,603 456,179,536
Loans 411,378,162 408,068,408 427,099,587
Less:Allowance for
loan losses 9,249,858 9,250,766 9,013,387
Unearned discount 6,865,665 6,768,240 6,856,584
Net loans 395,262,639 392,049,402 411,229,616
Bank premises and
equipment-net 30,388,223 28,314,629 30,052,817
Goodwill 1,452,130 1,343,365 1,512,902
Other assets 18,349,557 18,613,877 17,499,926
TOTAL ASSETS $ 985,500,969 $ 969,079,416 $ 1,017,982,645
LIABILITIES
Non-interest-bearing
deposits $ 180,346,350 $ 166,720,596 $ 193,934,140
Interest-bearing
deposits-demand 297,072,826 298,529,394 306,975,494
Interest-bearing
deposits-time 400,324,228 402,888,609 412,439,927
Total deposits 877,743,404 868,138,599 913,349,561
Short-term borrowings 100,000 130,000 90,000
Mortgage notes payable 1,103,562 1,195,965 1,150,988
Dividends payable 1,394,795 1,194,225 1,198,940
Other liabilities 5,512,137 6,079,941 5,512,128
Total liabilities 885,853,898 876,738,730 921,301,617
SHAREHOLDERS' EQUITY
Capital stock-$10 par
value; 10,000,000 shares
authorized 49,814,120 37,429,675 39,759,490
Capital surplus 36,849,510 18,298,460 15,947,909
Retained earnings 13,708,290 36,612,551 40,973,629
Unrealized (loss) on
investment securities
available for sale (724,849) - -
Total Shareholders'
equity 99,647,071 92,340,686 96,681,028
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 985,500,969 $ 969,079,416 $ 1,017,982,645
1 Restated to reflect pooling of interests.
/TABLE
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS - UNAUDITED
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1 1994 1993 1
INTEREST INCOME
Loans, including fees $ 8,624,539 $ 8,353,606 $ 16,908,615 $ 16,340,967
Investment income-
taxable 5,983,409 6,361,738 11,977,572 12,684,131
Investment income-
tax exempt 218,580 185,260 436,289 365,006
Interest on interest
bearing deposits 11,348 11,780 22,158 21,968
Interest on federal
funds sold and other 314,413 325,091 596,334 686,644
Total interest
income 15,152,289 15,237,475 29,940,968 30,098,716
INTEREST EXPENSE
Interest-bearing
deposits 5,077,875 5,124,431 9,970,610 10,139,963
Short-term borrowings 1,668 2,391
Interest on mortgage
notes payable 26,264 29,139 52,798 57,783
Total interest
expense 5,105,807 5,153,570 10,025,799 10,197,746
NET INTEREST INCOME 10,046,482 10,083,905 19,915,169 19,900,970
Provision for
loan losses 105,000 146,500 145,000 226,010
NET INTEREST INCOME
AFTER PROVISION FOR
LOAN LOSSES 9,941,482 9,937,405 19,770,169 19,674,960
NON-INTEREST INCOME
Trust fees 746,422 694,190 1,521,235 1,349,690
Service fees on
deposit accounts 1,375,609 1,393,463 2,675,769 2,610,448
Other 571,053 607,843 1,457,790 1,245,134
Total non-
interest
income 2,693,084 2,695,496 5,654,794 5,205,272
NON-INTEREST EXPENSE
Salaries and
employee benefits 4,089,563 3,937,628 8,248,119 7,669,890
Net occupancy and
equipment expenses 624,838 613,204 1,285,427 1,172,520
Equipment expense 541,349 426,910 1,049,032 923,543
FDIC assessments 499,879 506,243 999,759 987,519
Correspondent bank
service charges 219,300 244,240 439,146 445,857
Other 1,990,242 2,280,147 4,186,119 4,140,440
Total non-interest
expense 7,965,171 8,008,372 16,207,602 15,339,769
EARNINGS BEFORE
INCOME TAXES 4,669,395 4,624,529 9,217,361 9,540,463
Provision for
income tax 1,518,656 1,493,385 2,963,227 3,088,766
EARNINGS BEFORE
CUMULATIVE
ADJUSTMENT 3,150,739 3,131,144 6,254,134 6,451,697
Cumulative adjustment-
change in accounting
principle - - - 1,023,595
NET EARNINGS
AFTER CUMULATIVE
ADJUSTMENT DUE
TO CHANGE IN
ACCOUNTING
PRINCIPLE $ 3,150,739 $ 3,131,144 $ 6,254,134 $ 7,475,292
EARNINGS PER
SHARE BEFORE
CUMULATIVE
ADJUSTMENT $ 0.63 $ 0.63 $ 1.26 $ 1.30
NET EARNINGS
PER SHARE
AFTER CUMULATIVE
ADJUSTMENT 2 $ 0.63 $ 0.63 $ 1.26 $ 1.51
DIVIDENDS PER
SHARE 3 $ 0.28 $ 0.25 $ 0.54 $ 0.45
1 Restated to reflect pooling of interests.
2 Earnings per share are calculated using weighted average shares outstanding
for each period presented, giving retroactive effect to shares issued
through a 25% stock dividend in the second quarter of 1994.
3 Dividends per share are calculated using actual number of shares
outstanding at the end of each period presented, giving retroactive effect
to shares issued through a 25% stock dividend in the second quarter of
1994.
/TABLE
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - UNAUDITED
Unrealized
(Loss) On
Investment Total
Securities Stock-
Capital Stock Capital Retained Available holders'
Shares Amount Surplus Earnings for Sale Equity
Balances at
January 1, 1993 3,384,785 $ 33,847,850 $ 4,299,902 $ 43,285,206 $ - $ 81,432,958
Net earnings 13,233,055 13,233,055
Cash dividends (4,505,022) (4,505,022)
Exercise of stock
options 23,386 233,860 63,317 297,177
Cash paid for
fractional shares
resulting from
stock dividend (14,929) (14,929)
Stock dividend 338,516 3,385,160 9,309,190 (12,694,350) -
Balances at
December 31,
1993 3,746,687 37,466,870 13,672,409 39,303,960 - 90,443,239
Initial unrealized
gain recorded on
investment
securities avail-
able for sale 207,991 207,991
Net earnings-
year to date 6,254,134 6,254,134
Cash dividends (2,665,633) (2,665,633)
Exercise of stock
options 10,711 107,110 11,809 118,919
Stock issued in
acquisition 229,262 2,292,620 2,275,500 1,669,669 6,237,789
Cash paid for
fractional shares
resulting from
stock dividend (16,528) (16,528)
Stock dividend 994,752 9,947,520 20,889,792 (30,837,312)
Change in un-
realized gain
(loss) (932,840) (932,840)
Balances at
June 30, 1994 4,981,412 $ 49,814,120 $ 36,849,510 $ 13,708,290 $(724,849) $ 99,647,071
/TABLE
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
Six Months Ended
June 30,
1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 6,254,134 $ 7,475,292
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation and amortization 1,361,664 1,086,769
Provision for loan losses 145,000 226,010
Premium amortization, net of
discount accretion 2,196,309 2,690,086
(Gain) loss on sale of assets 28,391 (2,818)
Deferred federal income tax benefit (719,097) (708,739)
(Increase) decrease in other assets (351,449) 1,234,323
Increase (decrease) in other
liabilities 391,719 (1,897,098)
Total adjustments 3,052,537 2,628,533
Net cash provided by operating
activities 9,306,671 10,103,825
CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease in interest-bearing
deposits in banks 96,000 -
Cash and cash equivalents received
through acquisition, net of
payment for stock - 5,511,888
Proceeds from sale of investment
securities 2,739,810 625,528
Proceeds from maturity of investment
securities 57,097,697 83,249,619
Purchase of investment securities (70,304,937) (78,160,356)
Net (increase)decrease in loans 16,042,842 (1,705,623)
Capital expenditures (1,642,457) (1,281,714)
Proceeds from sale of other assets 6,207 979,902
Net cash provided by
investing activities 4,035,162 9,219,244
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) in demand deposits (23,490,455) (19,031,018)
Net (decrease) in time deposits (12,115,699) (23,452,608)
Net decrease in other short-term
borrowings 10,000 130,000
Repayment of long-term debt (47,426) (43,199)
Proceeds from stock issuances 118,919 120,680
Cash paid for fractional shares
resulting from stock dividend (16,528) (14,929)
Purchase of treasury stock - (344,924)
Dividends paid (2,861,490) (2,161,238)
Net cash (used) by financing
activities (38,402,679) (44,797,236)
Net (decrease) in cash and
cash equivalents (25,060,846) (25,474,167)
June 30,
1994 1993
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 100,720,848 109,838,710
CASH AND CASH EQUIVALENTS AT
ASH EQUIVALENTS AT
END OF PERIOD $ 75,660,002 $ 84,364,543
SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Assets acquired through foreclosure $ 28,100 $ 642,346
Loans to finance sales of other
real estate 248,965 -
Unrealized (loss) on investment
securities available for sale (932,840) -
25% stock dividend
increasing (decreasing):
Capital stock 9,947,520 -
Capital surplus 20,889,792 -
Retained earnings (30,837,312) -
The Company acquired substantially
all of the capital stock of
Concho Bancshares, Inc. in exchange
for capital stock of the Company,
as follows:
Capital stock 2,292,620 -
Capital surplus 2,275,500 -
Retained earnings 1,669,669 -
The Company purchased all of the
capital stock of Stephenville Bank
and Trust for $7,750,000. In
conjunction with the acquisition,
liabilities were assumed, as follows:
Fair value of assets acquired - 87,419,036
Cash paid for the capital stock - (7,750,000)
Liabilities assumed - 79,669,036
10% stock dividend
increasing (decreasing):
Capital stock - 3,385,160
Capital surplus - 9,309,190
Retained earnings - (12,694,350)
OTHER DISCLOSURES:
Interest paid 10,137,001 11,107,042
Federal income tax paid 3,480,284 3,557,343
/TABLE
Item 2. Management's Discussion and Analysis of Financial
Condition
and Results of Operations
Results of Operations
Second quarter 1994 net income totaled $3.15 million compared to
$3.13 million for the second quarter of 1993. Earnings per share
amounted to $.63 per share in both periods. The level earnings for
the quarter is reflected throughout the income statement which for
the most part reflects little change from the same operating period
last year. The lower 1994 second quarter non-interest expenses
result primarily from a $300 thousand charge in 1993 which related
to settlement of legal claims at one of the Company's subsidiary
banks. For the six months ended June 30, 1994, the Company's
earnings from operations amounted to $6.25 million, or $1.26 per
share compared to $6.45 million, or $1.30 per share, earned in the
first half of 1993. The decrease in earnings is attributed to
narrower interest margins and higher operating expenses associated
with a newly installed data processing system and nonrecurring
first quarter merger costs.
In March 1994, the Company acquired through a stock exchange,
Concho Bancshares, Inc. and its subsidiary, Southwest Bank of San
Angelo. The transaction was accounted for as a pooling of
interests; therefore, prior period financial statements have been
restated to include Concho Bancshares, Inc. The following table
shows the effect of Concho Bancshares, Inc.'s operations for the
periods prior to combination (Note- The 1993 amounts are before
cumulative adjustment due to change in accounting principle):
First
$(thousands) Financial Concho Combined
Three Months Ended
June 30, 1994:
Net Interest Income $ 9,219 $ 827 $ 10,046
Net Income 3,199 (48) 3,151
Three Months Ended
June 30, 1993:
Net Interest Income 9,168 916 10,084
Net Income 2,918 213 3,131
Six Months Ended
June 30, 1994:
Net Interest Income 18,203 1,712 19,915
Net Income 6,107 147 6,254
Six Months Ended
June 30, 1993:
Net Interest Income 18,094 1,807 19,901
Net Income 6,049 403 6,452
Balance Sheet Review
As of June 30, 1994, the Company's consolidated assets totaled
$985.5 million compared with $1.02 billion at December 31, 1993 and
$969.1 million at June 30, 1993. As previously stated, the 1993
amounts have been restated to reflect the acquisition of Concho
Bancshares which was accounted for as a pooling.
The decline in total assets from year-end 1993 resulted primarily
from a decrease in loans and Federal funds sold and which reflect
seasonal pay downs of commercial loans and decreases in deposit
balances. Compared to June 30, 1993, total assets are up $16.5
million reflecting higher loans and investment securities and lower
Federal funds sold. At June 30, 1994 the Company held available
for sale $42.3 million in investment securities which were
approximately $1.1 million below market value. Total deposits of
$877.7 million at June 30, 1994 represent a $35.6 decline from the
year-end 1993 amount and an increase of $9.6 million from June 30,
1993.
Nonperforming assets totaled $3.43 million at June 30, 1994, down
from $5.0 million at December 31, 1993 and $8.9 million at June 30,
1993. As a percent of loans plus foreclosed assets these amounts
were .84%, 1.25%, and 2.20%, respectively. Management is not aware
of any material classified credit not properly disclosed as
nonperforming and considers the allowance for possible loan losses
to be adequate.
Liquidity and Capital
The Company's consolidated statements of cash flows are presented
on pages 7-8 in this report. At June 30, 1994, the balance sheet
reflects adequate liquidity and the parent company had no funded
debt under its $5 million line of credit from an unaffiliated
financial institution.
The ratio of equity capital to assets at June 30, 1994, was 10.1%
as compared to 9.5% at December 31, 1993, and 9.5% at June 30,
1993. During the second quarter, the Company declared a cash
dividend of $.28 per share and issued a 25% stock dividend. The
cash dividend was paid on July 1, 1994 and amounted to $1.39
million, or 44.1% of second quarter earnings.
SIGNATURES
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 thereunto duly authorized.
FIRST FINANCIAL BANKSHARES, INC.
Date By:
Curtis R. Harvey
Executive Vice President and
Chief Financial Officer
Date By:
Sandy Lester
Secretary-Treasurer