First Financial Bankshares Announces Second Quarter 2018 Earnings Results

ABILENE, Texas, July 19, 2018 /PRNewswire/ -- First Financial Bankshares, Inc. (NASDAQ: FFIN) today reported earnings for the second quarter of 2018 of $37.63 million, up $9.38 million when compared with earnings of $28.26 million in the same quarter last year.  Basic earnings per share were $0.56 for the second quarter of 2018 compared with $0.43 in the same quarter a year ago. Contributing to the increase in net earnings and earnings per share in the current quarter when compared with the same quarter a year ago were the Kingwood acquisition (see below) and the recent enactment of tax legislation that reduced the corporate income tax rate from 35 percent to 21 percent. Without this tax adjustment, net earnings for the second quarter of 2018 would have been $32.95 million with an adjusted basic earnings per share of $0.49.

All amounts for the three and six months ended June 30, 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 second quarter of 2018 was $67.61 million compared with $59.09 million in the same quarter of 2017. The net interest margin, on a taxable equivalent basis, was 3.92 percent in the second quarter of 2018 compared to 3.88 percent in the first quarter of 2018 and 4.05 percent in the second quarter of 2017. The decrease in the Company's tax equivalent net interest margin in the current quarter when compared with the second 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 second quarter of 2018 was $581 thousand, or three 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 $1.11 million in the second quarter of 2018 compared with $1.31 million in the first quarter of 2018 and $1.73 million in the second quarter of 2017. Nonperforming assets as a percentage of loans and foreclosed assets totaled 0.73 percent at June 30, 2018, compared with 0.66 percent at March 31, 2018, and 0.71 percent at June 30, 2017. Classified loans totaled $113.73 million at June 30, 2018, compared to $124.06 million at March 31, 2018, and $117.61 million at June 30, 2017.

Noninterest income increased 10.00 percent in the second quarter of 2018 to $25.49 million compared with $23.17 million in the same quarter a year ago. Trust fees increased $1.32 million to $7.07 million in the second quarter of 2018 compared with $5.75 million in the same quarter last year, primarily due to continued growth in the fair value of Trust assets managed to $5.40 billion from $4.73 billion a year ago. ATM, interchange and credit card fees increased 6.71 percent to $7.04 million compared with $6.60 million in the same quarter last year due to continued growth in debit cards. Service charges on deposits increased 10.08 percent to $5.38 million compared with $4.88 million in the same quarter a year ago due to continued growth in net new accounts. Offsetting these increases was a decrease in gains on sales of securities to $67 thousand in the second quarter of 2018 compared to $747 thousand in the same quarter a year ago.

Noninterest expense for the second quarter of 2018 totaled $47.14 million compared to $43.78 million in the second quarter of 2017. The Company's efficiency ratio in the second quarter of 2018 was 49.42 percent compared with 49.32 percent in the same quarter last year. The increase in noninterest expense in the second quarter of 2018 was primarily a result of an increase in salary and employee benefit costs to $26.82 million compared to $23.47 million in the same quarter a year ago, primarily driven by the acquisition of Commercial State Bank, annual merit based pay increases and an increase in profit sharing expenses.

For the first half of 2018, net income increased to $72.15 million from $54.85 million for the same period a year ago. Basic earnings per share rose to $1.07 in the first half of 2018 from $0.83 in the same period of 2017. Net interest income increased to $133.06 million in the first half of 2018 from $116.11 million in the same period a year ago. The provision for loan losses totaled $2.42 million compared with $3.68 million in the first half of the previous year. Noninterest income was $49.91 million in the first half of 2018 compared with $44.46 million in the same period of 2017. Noninterest expense rose to $94.94 million in the first half of 2018 compared with $85.93 million during the same period last year.

As of June 30, 2018, consolidated assets for the Company totaled $7.69 billion compared to $7.57 billion at March 31, 2018, and $6.95 billion at June 30, 2017. Loans totaled $3.86 billion at June 30, 2018, compared with loans of $3.75 billion at March 31, 2018, and $3.46 billion at June 30, 2017. Deposits totaled $6.21 billion at June 30, 2018, compared to $6.19 billion at March 31, 2018, and $5.63 billion at June 30, 2017. Shareholders' equity rose to $985.63 million as of June 30, 2018, compared with $969.81 million at March 31, 2018, and $887.44 million at June 30, 2017. 

"We are very pleased to report increased earnings and stronger organic loan growth this quarter," said F. Scott Dueser, Chairman, President and CEO. "Our recent acquisition of Commercial State Bank has contributed nicely to our bottom line and we continue to see good growth in trust fees. We are diligently pursuing other acquisition candidates to utilize our strong capital position. Also, in light of the recent increases in interest rates by the Federal Reserve, we are focused on increasing loan rates and minimizing expenses to offset the potential impact of rising rates on our interest expense."

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.