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First Financial Bankshares Announces First Quarter Earnings Results

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April 19, 2018 4:05 PM EDT

ABILENE, Texas, April 19, 2018 /PRNewswire/ -- The Board of Directors of – First Financial Bankshares, Inc. (NASDAQ: FFIN) today reported earnings for the first quarter of 2018 of $34.52 million, up $7.92 million when compared with earnings of $26.60 million in the same quarter last year. Basic earnings per share were $0.51 for the first quarter of 2018 compared with $0.40 in the same quarter a year ago. The increase in net earnings and earnings per share in the current quarter when compared with the same quarter a year ago largely resulted from the recent enactment of tax legislation that reduced the corporate income tax rate from 35 percent to 21 percent. Without this adjustment, net earnings for the first quarter of 2018 would have been $30.26 million with an adjusted basic earnings per share of $0.45.

All amounts for the first quarter ended March 31, 2018, include the results of the Company's recent acquisition of Commercial Bancshares, Inc. and its wholly-owned subsidiary, Commercial State Bank, Kingwood, Texas, which was effective January 1, 2018. As of the acquisition date, Commercial State Bank had total assets of approximately $390.20 million, total loans of approximately $271.50 million and total deposits of approximately $345.90 million.

Net interest income for the first quarter of 2018 was $65.45 million compared with $57.02 million in the same quarter of 2017. The net interest margin, on a taxable equivalent basis, was 3.88 percent for the first quarter of 2018 compared to 4.00 percent in the fourth quarter of 2017 and 4.03 percent in the first quarter of 2017. The decrease in the Company's tax equivalent net interest margin in the current quarter when compared with the fourth quarter of 2017 and the first quarter of 2017 resulted from the change in corporate tax rate from 35 percent to 21 percent and the corresponding effect of that change on the Company's tax exempt bond portfolio. Included in interest income for the first quarter of 2018 was $645 thousand, or four basis points in net interest margin, related to discount accretion from fair value accounting related to the Kingwood and Orange acquisitions.  

The provision for loan losses was $1.31 million in the first quarter of 2018 compared with $1.44 million in the fourth quarter of 2017 and $1.95 million in the first quarter of 2017. Nonperforming assets as a percentage of loans and foreclosed assets totaled 0.66 percent at March 31, 2018, compared with 0.57 percent at December 31, 2017, and 0.90 percent at March 31, 2017. Classified loans totaled $124.06 million at March 31, 2018, compared to $117.21 million at December 31, 2017, and $122.62 million at March 31, 2017.

Noninterest income increased 14.74 percent in the first quarter of 2018 to $24.42 million compared with $21.29 million in the same quarter a year ago. Trust fees increased $887 thousand to $6.90 million in the first quarter of 2018 compared with $6.02 million in the same quarter last year, primarily due to continued growth in the fair value of Trust assets managed to $5.23 billion from $4.54 billion a year ago. ATM, interchange and credit card fees increased 13.50 percent to $7.00 million compared with $6.16 million in the same quarter last year due to continued growth in debit cards. Service charges on deposits increased 7.34 percent to $4.88 million compared with $4.55 million in the same quarter a year ago due to continued growth in net new accounts. In addition, a gain on sale of securities totaling $1.22 million was recorded in the first quarter of 2018 compared to $3 thousand in the same quarter of 2017. Offsetting these increases was a decrease in real estate mortgage fees of $484 thousand or 14.16 percent compared to the same quarter a year ago, partially due to a slowdown in refinance activity and the sale of the mortgage servicing portfolio in July 2017.

Noninterest expense for the first quarter of 2018 totaled $47.80 million compared to $42.15 million in the first quarter of 2017. The Company's efficiency ratio in the first quarter of 2018 was 51.76 percent compared with 49.67 percent in the same quarter last year. The increase in noninterest expense in the first quarter of 2018 was primarily a result of an increase in salary and employee benefit costs to $26.20 million compared to $23.26 million in the same quarter a year ago, primarily driven by the acquisition of Commercial State Bank and annual merit based pay increases. Also included in noninterest expense in the first quarter of 2018 were technology contract termination and conversion related costs totaling $1.55 million related to the Commercial State Bank acquisition.

As of March 31, 2018, consolidated assets for the Company totaled $7.57 billion compared to $7.25 billion at December 31, 2017 and $6.93 billion at March 31, 2017. Loans totaled $3.75 billion at quarter end compared with loans of $3.50 billion at December 31, 2017, and $3.39 billion at March 31, 2017. Deposits totaled $6.19 billion at March 31, 2018, compared to $5.96 billion at December 31, 2017, and $5.66 billion at March 31, 2017. Shareholders' equity rose to $969.81 million as of March 31, 2018, compared with $922.77 million at December 31, 2017, and $859.35 million at March 31, 2017. 

"We are pleased to get off to a good start for 2018 with our first quarter earnings performance, especially in light of the additional expenses incurred to complete our acquisition of Commercial State Bank," said F. Scott Dueser, Chairman, President and CEO. "We continue to see strong growth in trust fees and expect our recent acquisition of Commercial State Bank to contribute nicely to our bottom line. Also, we continue to visit with other potential acquisition candidates as well as working diligently on organically growing loans and deposits while reducing expenses to reward our shareholders, customers and employees even more."

About First Financial Bankshares

Headquartered in Abilene, Texas, First Financial is a financial holding company that through its subsidiary, First Financial Bank, N.A., operates multiple banking regions with 72 locations in Texas, following the close of this acquisition, including Abilene, Acton, Albany, Aledo, Alvarado, Beaumont, Boyd, Bridgeport, Brock, Burleson, 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 seven 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 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)

As of

2018

2017

ASSETS

Mar. 31, 

 Dec 31,  

 Sept. 30,  

June 30, 

Mar. 31, 

Cash and due from banks

$

130,979

$

209,583

$

177,615

$

163,435

$

163,674

Interest-bearing deposits in banks

67,060

162,764

166,820

53,336

55,165

Interest-bearing time deposits in banks

1,458

1,458

1,458

1,458

1,707

Fed funds sold

-

-

-

3,740

3,840

Investment securities

3,276,193

3,087,473

2,885,483

2,964,618

3,018,393

Loans

3,747,081

3,500,699

3,491,346

3,457,679

3,386,141

Allowance for loan losses

(49,499)

(48,156)

(47,922)

(47,410)

(46,192)

Net loans

3,697,582

3,452,543

3,443,424

3,410,269

3,339,949

Premises and equipment

126,446

124,026

125,668

123,620

122,787

Goodwill

171,565

139,971

139,971

139,971

139,971

Other intangible assets

4,004

1,172

1,384

3,149

3,464

Other assets

92,162

75,725

67,341

83,796

81,420

Total assets

$

7,567,449

$

7,254,715

$

7,009,164

$

6,947,392

$

6,930,370

LIABILITIES AND SHAREHOLDERS'  EQUITY

Noninterest-bearing deposits

$

2,111,116

$

2,041,650

$

1,949,174

$

1,856,439

$

1,827,609

Interest-bearing deposits

4,079,647

3,921,311

3,748,286

3,770,170

3,834,359

Total deposits

6,190,763

5,962,961

5,697,460

5,626,609

5,661,968

Borrowings

372,155

331,000

351,435

379,324

360,264

Other liabilities

34,717

37,986

53,713

54,017

48,784

Shareholders' equity

969,814

922,768

906,556

887,442

859,354

Total liabilities and shareholders' equity

$

7,567,449

$

7,254,715

$

7,009,164

$

6,947,392

$

6,930,370

Quarter Ended

2018

2017

INCOME STATEMENTS

Mar. 31, 

 Dec 31,  

 Sept. 30,  

 June 30,  

Mar. 31, 

Interest income

$

69,082

$

63,456

$

62,554

$

61,182

$

58,783

Interest expense

3,633

2,562

2,866

2,097

1,763

Net interest income

65,449

60,894

59,688

59,085

57,020

Provision for loan losses

1,310

1,440

1,415

1,725

1,950

Net interest income after provision for loan losses

64,139

59,454

58,273

57,360

55,070

Noninterest income

24,423

22,302

24,260

23,170

21,286

Noninterest expense

47,798

44,096

43,964

43,775

42,152

Net income before income taxes

40,764

37,660

38,569

36,755

34,204

Income tax expense

6,245

9,167

9,195

8,500

7,605

Tax benefit from tax rate change

-

(7,650)

-

-

-

Net income

$

34,519

$

36,143

$

29,374

$

28,255

$

26,599

PER COMMON SHARE DATA 

Net income - basic

$

0.51

$

0.55

$

0.44

$

0.43

$

0.40

Net income - diluted

0.51

0.54

0.44

0.43

0.40

Cash dividends declared

0.19

0.19

0.19

0.19

0.18

Book Value

14.34

13.93

13.69

13.41

12.99

Market Value

$

46.30

$

45.05

$

45.20

$

44.20

$

40.10

Shares outstanding - end of period

67,612,760

66,260,444

66,223,957

66,170,312

66,131,832

Average outstanding shares - basic

67,527,010

66,191,995

66,140,518

66,100,089

66,073,399

Average outstanding shares - diluted

67,799,545

66,428,871

66,417,281

66,344,943

66,363,222

PERFORMANCE RATIOS

Return on average assets

1.84

%

2.02

%

1.65

%

1.64

%

1.57

%

Return on average equity

14.74

15.79

12.95

12.94

12.74

Return on average tangible equity

17.82

18.70

15.38

15.48

15.34

Net interest margin (tax equivalent)

3.88

4.00

3.94

4.05

4.03

Efficiency ratio

51.76

49.37

48.71

49.32

49.67

 

FIRST FINANCIAL BANKSHARES, INC.

SELECTED FINANCIAL DATA (UNAUDITED)

(In thousands)

Quarter Ended

2018

2017

ALLOWANCE FOR LOAN LOSSES

Mar. 31, 

 Dec 31,  

 Sept. 30,  

June 30, 

Mar. 31, 

Balance at beginning of period

$

48,156

$

47,922

$

47,410

$

46,192

$

45,779

Loans charged off

(471)

(1,440)

(1,180)

(1,174)

(2,026)

Loan recoveries

504

234

277

667

489

Net recoveries (charge-offs)

33

(1,206)

(903)

(507)

(1,537)

Provision for loan losses

1,310

1,440

1,415

1,725

1,950

Balance at end of period

$

49,499

$

48,156

$

47,922

$

47,410

$

46,192

Allowance for loan losses / period-end loans

1.32

%

1.38

%

1.37

%

1.37

%

1.36

%

Allowance for loan losses / nonperforming loans

209.80

259.11

243.57

210.95

159.48

Net charge-offs / average loans (annualized)

-

0.14

0.10

0.06

0.18

SUMMARY OF LOAN CLASSIFICATION

Special Mention

$

40,079

$

37,079

$

35,237

$

27,999

$

23,341

Substandard

83,976

80,131

86,057

89,609

99,280

Doubtful

-

-

-

-

-

Total classified loans

$

124,055

$

117,210

$

121,294

$

117,608

$

122,621

NONPERFORMING ASSETS

Nonaccrual loans

$

22,752

$

17,670

$

18,750

$

21,489

$

28,080

Accruing troubled debt restructured loans

514

627

668

672

695

Accruing loans 90 days past due

327

288

257

314

190

Total nonperforming loans

23,593

18,585

19,675

22,475

28,965

Foreclosed assets

1,276

1,532

2,401

2,245

1,553

Total nonperforming assets

$

24,869

$

20,117

$

22,076

$

24,720

$

30,518

As a % of loans and foreclosed assets

0.66

%

0.57

%

0.63

%

0.71

%

0.90

%

As a % of end of period total assets

0.33

0.28

0.31

0.36

0.44

OIL AND GAS PORTFOLIO INFORMATION

Oil and gas loans

$

86,218

$

60,164

$

69,433

$

70,187

$

75,262

Oil and gas loans as a % of total loans

2.30

%

1.72

%

1.99

%

2.03

%

2.22

%

Classified oil and gas loans

10,485

20,346

21,817

24,404

29,077

Nonaccrual oil and gas loans

1,460

1,414

1,569

2,860

3,208

Net charge-offs for oil and gas loans

-

-

-

50

-

Allowance for oil and gas loans as a % of oil and gas loans

3.64

%

7.90

%

6.03

%

7.24

%

6.59

%

CAPITAL RATIOS

Common equity Tier 1 capital ratio

18.62

%

18.66

%

18.35

%

17.79

%

17.56

%

Tier 1 capital ratio

18.62

18.66

18.35

17.79

17.56

Total capital ratio

19.76

19.85

19.54

18.97

18.72

Tier 1 leverage

10.98

11.09

10.84

10.79

10.60

Equity to assets

12.82

12.72

12.93

12.77

12.40

Quarter Ended

2018

2017

NONINTEREST INCOME

Mar. 31, 

 Dec 31,  

 Sept. 30,  

 June 30,  

Mar. 31, 

Trust fees

$

6,904

$

5,891

$

6,040

$

5,747

$

6,017

Service charges on deposits

4,884

4,900

5,083

4,883

4,550

ATM, interchange and credit card fees

6,996

6,584

6,340

6,598

6,164

Real estate mortgage fees

2,933

3,613

3,891

4,188

3,417

Net gain on sale of available-for-sale securities

1,221

3

1,075

747

3

Net gain (loss) on sale of foreclosed assets

99

(8)

(11)

(72)

41

Net gain (loss) on sale of assets

(91)

(185)

(15)

(200)

4

Interest on loan recoveries

119

232

405

337

154

Other noninterest income

1,358

1,272

1,452

942

936

Total noninterest income

$

24,423

$

22,302

$

24,260

$

23,170

$

21,286

NONINTEREST EXPENSE

Salaries and employee benefits, excluding profit sharing

$

24,994

$

22,760

$

23,052

$

22,508

$

22,233

Profit sharing expense

1,209

1,661

1,091

957

1,026

Net occupancy expense

2,883

2,439

2,711

2,771

2,600

Equipment expense

3,516

3,369

3,294

3,665

3,437

FDIC insurance premiums

566

560

561

550

547

ATM, interchange and credit card expenses

2,143

1,935

2,001

1,803

1,713

Legal, tax and professional fees

2,807

2,580

2,396

2,526

2,478

Audit  fees

411

338

356

379

419

Printing, stationery and supplies

486

567

449

536

438

Amortization of intangible assets

387

136

143

165

168

Advertising and public relations

1,575

1,689

1,527

1,576

1,544

Operational and other losses

566

553

1,081

574

985

Software amortization and expense

524

1,056

742

995

500

Other noninterest expense

5,731

4,453

4,560

4,770

4,064

Total noninterest expense

$

47,798

$

44,096

$

43,964

$

43,775

$

42,152

TAX EQUIVALENT YIELD ADJUSTMENT

$

2,467

$

6,125

$

6,312

$

6,509

$

6,550

 

FIRST FINANCIAL BANKSHARES, INC.

SELECTED FINANCIAL DATA (UNAUDITED)

(In thousands)

Three Months Ended

Three Months Ended

Mar. 31, 2018

Dec. 31, 2017

Average

Tax Equivalent

Yield /

Average

Tax Equivalent

Yield /

Balance

Interest

Rate

Balance

Interest

Rate

Interest-earning assets:

  Fed funds sold

$

6,215

$

27

1.78

%

$

1,192

$

5

1.52

%

  Interest-bearing deposits in nonaffiliated banks

160,399

613

1.55

186,355

645

1.37

  Taxable securities

1,826,391

11,354

2.49

1,562,744

8,977

2.30

  Tax exempt securities

1,352,235

12,559

3.72

1,405,327

16,259

4.63

  Loans

3,748,561

46,995

5.08

3,483,939

43,695

4.98

Total interest-earning assets

7,093,801

$

71,548

4.09

%

6,639,557

$

69,581

4.16

%

Noninterest-earning assets

497,049

441,645

Total assets

$

7,590,850

$

7,081,202

Interest-bearing liabilities:

  Deposits

$

4,139,324

$

3,519

0.34

%

$

3,795,808

$

2,465

0.26

%

  Fed funds purchased and other borrowings

357,414

113

0.13

343,683

97

0.11

Total interest-bearing liabilities

4,496,738

$

3,632

0.33

%

4,139,491

$

2,562

0.25

%

Noninterest-bearing liabilities                                                                              

2,144,065

2,033,580

Shareholders' equity

950,047

908,131

Total liabilities and shareholders' equity

$

7,590,850

$

7,081,202

Net interest income and margin (tax equivalent)

$

67,916

3.88

%

$

67,019

4.00

%

Three Months Ended

Three Months Ended

Sept. 30, 2017

June 30, 2017

Average

Tax Equivalent

Yield /

Average

Tax Equivalent

Yield /

Balance

Interest

Rate

Balance

Interest

Rate

Interest-earning assets:

  Fed funds sold

$

2,467

$

9

1.43

%

$

5,229

$

8

0.64

%

  Interest-bearing deposits in nonaffiliated banks

198,322

629

1.26

45,043

112

1.00

  Taxable securities

1,492,246

8,074

2.16

1,494,187

8,343

2.23

  Tax exempt securities

1,477,559

16,884

4.57

1,528,760

17,414

4.56

  Loans

3,468,524

43,270

4.95

3,418,105

41,814

4.91

Total interest-earning assets

6,639,118

$

68,866

4.12

%

6,491,324

$

67,691

4.18

%

Noninterest-earning assets

431,070

428,245

Total assets

$

7,070,188

$

6,919,569

Interest-bearing liabilities:

  Deposits

$

3,728,442

$

2,228

0.24

%

$

3,803,412

$

1,930

0.20

%

  Fed funds purchased and other borrowings

524,357

638

0.48

372,910

167

0.18

Total interest-bearing liabilities

4,252,799

$

2,866

0.27

%

4,176,322

$

2,097

0.20

%

Noninterest-bearing liabilities                                                                              

1,917,681

1,867,596

Shareholders' equity

899,708

875,651

Total liabilities and shareholders' equity

$

7,070,188

$

6,919,569

Net interest income and margin (tax equivalent)

$

66,000

3.94

%

$

65,594

4.05

%

Three Months Ended

Mar. 31, 2017

Average

Tax Equivalent

Yield /

Balance

Interest

Rate

Interest-earning assets:

  Fed funds sold

$

3,529

$

2

0.23

%

  Interest-bearing deposits in nonaffiliated banks

134,556

274

0.83

  Taxable securities

1,367,331

7,431

2.17

  Tax exempt securities

1,529,610

17,561

4.59

  Loans

3,369,599

40,065

4.82

Total interest-earning assets

6,404,625

$

65,333

4.14

%

Noninterest-earning assets

446,961

Total assets

$

6,851,586

Interest-bearing liabilities:

  Deposits

$

3,808,933

$

1,590

0.17

%

  Fed funds purchased and other borrowings

448,217

173

0.16

Total interest-bearing liabilities

4,257,150

$

1,763

0.17

%

Noninterest-bearing liabilities                                                                              

1,747,532

Shareholders' equity

846,904

Total liabilities and shareholders' equity

$

6,851,586

Net interest income and margin (tax equivalent)

$

63,570

4.03

%

 

Cision View original content:http://www.prnewswire.com/news-releases/first-financial-bankshares-announces-first-quarter-earnings-results-300633271.html

SOURCE First Financial Bankshares, Inc.


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