PR Newswire | Apr 22, 2021 04:02PM EDT

04/22 15:02 CDT

First Financial Bankshares Announces First Quarter 2021 Earnings ABILENE, Texas, April 22, 2021

ABILENE, Texas, April 22, 2021 /PRNewswire/ -- First Financial Bankshares, Inc. (NASDAQ: FFIN) today reported earnings for the first quarter of 2021 of $56.92 million, up $19.69 million or 52.87 percent, when compared with earnings of $37.23 million in the same quarter a year ago. Diluted earnings per share were $0.40 for the first quarter of 2021 compared with $0.26 in the same quarter a year ago.

"We are extremely pleased that last year we did not look at the pandemic as a hurdle to performance, but we looked at it as an opportunity to be here and serve our customers. This created a great deal of momentum which maximized earnings last year and has rolled right into the first quarter this year. During the quarter, the Company had an organic asset growth of $1.20 billion driven by loan growth of $103.38 million, net of PPP and held-for-sale loans, and deposit growth of $737.63 million while overall asset quality continued to improve. We remain very focused on serving our customers and capitalizing on our growth over the last year," said F. Scott Dueser, Chairman, President and CEO of First Financial Bankshares, Inc.

Net interest income for the first quarter of 2021 was $88.82 million, up $7.92 million from $80.90 million for the first quarter of 2020. The net interest margin, on a taxable equivalent basis, was 3.55 percent for the first quarter of 2021 compared to 3.75 percent in the fourth quarter of 2020 and 3.91 percent in the first quarter of 2020. Net interest income was positively impacted by a $2.05 billion increase in average-earning assets to $10.56 billion for the first quarter of 2021 when compared to the same period a year ago. The net interest margin was negatively impacted by the overall level of excess liquidity which totaled $1.08 billion at March 31, 2021 pending investment.

For the first quarter of 2021, interest income included Payroll Protection Program ("PPP") loan fees of $6.25 million compared to $5.67 million for the fourth quarter of 2020. The remainder of the PPP loan deferred fees totaled approximately $16 million at March 31, 2021, including approximately $11 million for 2021 originations, and continue to be amortized over the shorter of the repayment period or the contractual life of 24 to 60 months. Additional information related to the Company's PPP loan balances are included in the following table:

PPP Loans Originated PPP Loans Outstanding at March 31, 2021*

Number Of Dollars Of Loans Number Of Dollars Of Loans Loans Loans

PPP Round 1 6,530 $ 703,450,000 2,759 $ 315,879,000

PPP Round 2 2,016 216,683,000 1,990 215,931,000

PPP Total 8,546 $ 920,133,000 4,749 $ 531,810,000

*PPP loan balances accounted for $499.35 million in average balances for the period.

At March 31, 2021, the Company recorded a negative provision for credit losses during the first quarter of 2021 of $2.00 million. The Company's provision for credit losses in the first quarter of 2021 reflected the continued improvement in the economic outlook for our markets across Texas and overall improvements in asset quality.

During the first quarter of 2021, net charge-offs totaled $131 thousand compared to $1.91 million in the first quarter of 2020. At March 31, 2021, the allowance for credit losses totaled $62.97 million, or 1.18 percent of loans held-for-investment ("loans" hereafter), or 1.31 percent of loans excluding PPP loans, compared to $60.44 million at March 31, 2020, or 1.30 percent of loans. Additionally, the reserve for unfunded commitments totaled $6.92 million at March 31, 2021. Nonperforming assets as a percentage of loans and foreclosed assets totaled 0.75 percent at March 31, 2021, compared with 0.87 percent at March 31, 2020. Classified loans totaled $190.42 million at March 31, 2021, compared to $190.35 million at March 31, 2020.

Noninterest income in the first quarter of 2021 rose to $34.87 million from $28.73 million for the first quarter of 2020, as a result of the following:

* Trust fees increased to $8.30 million in the first quarter of 2021 from $7.44 million in the first quarter of 2020. The fair value of trust assets managed increased to $7.54 billion, up 22.55 percent at March 31, 2021 from $6.15 billion at March 31, 2020. * Service charges on deposits were $4.79 million in the first quarter of 2021 compared with $5.92 million in the first quarter of 2020. * ATM, interchange and credit card fees increased to $8.68 million in the first quarter of 2021 from $7.40 million in the first quarter of 2020, driven by continued growth in the number of debit cards issued and overall customer utilization. * Mortgage income increased to $9.89 million compared with $3.85 million in the first quarter of 2020 due to a significant increase in the volume of loans originated. * Gains on sales of securities and other assets total $1.01 million compared to $2.18 million in the first quarter of 2020.

Noninterest expense for the first quarter of 2021 totaled $57.72 million compared to $55.32 million in the first quarter of 2020, as a result of the following:

* Salary, commissions and employee benefit costs totaled $34.93 million for the first quarter of 2021, compared to $29.64 million in the first quarter of 2020. The increase over the prior year was primarily driven by annual merit-based pay increases, higher mortgage related commissions and increases to incentive compensation based on operating results. * Noninterest expense in the first quarter of 2020 included merger related costs totaling $3.81 million.

The Company's efficiency ratio was 45.36 percent for the first quarter of 2021 compared to 49.63 percent for the first quarter of 2020.

As of March 31, 2021, consolidated assets for the Company totaled $12.10 billion compared to $9.70 billion at March 31, 2020. Loans totaled $5.32 billion at March 31, 2021, compared with loans of $4.64 billion at March 31, 2020. During the first quarter of 2021, loans, excluding PPP loans, grew $103.38 million or 8.94 percent annualized, from December 31, 2020 balances. Deposits totaled $9.41 billion at March 31, 2021, compared to $7.21 billion at March 31, 2020, driven by organic growth. Shareholders' equity rose to $1.67 billion as of March 31, 2021, compared to $1.53 billion at March 31, 2020.

About First Financial Bankshares, Inc.

Headquartered in Abilene, Texas, First Financial Bankshares, Inc. 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 ten 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 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; economic impact of oil and gas prices and the pandemic, 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 and Filings" on the Company's Website 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

2021 2020

ASSETS Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,

Cash and due from banks $ 190,350 $ 211,113 $ 175,088 $ 188,373 $ 191,486

Interest-bearing deposits in banks 893,221 517,971 58,933 196,426 76,378

Investment securities 5,109,631 4,393,029 4,431,280 4,118,863 4,107,069

Loans, held-for-investment 5,322,562 5,171,033 5,293,679 5,253,067 4,639,389

Allowance for loan losses (62,974) (66,534) (76,038) (68,947) (60,440)

Net loans, held-for-investment 5,259,588 5,104,499 5,217,641 5,184,120 4,578,949

Loans, held-for-sale 65,405 83,969 101,055 66,370 42,034

Premises and equipment, net 142,415 142,269 141,002 138,933 139,554

Goodwill 313,481 313,481 313,481 313,481 312,842

Other intangible assets 4,499 4,911 5,394 5,884 6,392

Other assets 124,297 133,258 123,778 127,367 246,387

Total assets $ 12,102,887 $ 10,904,500 $ 10,567,652 $ 10,339,817 $ 9,701,091

LIABILITIES AND SHAREHOLDERS' EQUITY

Noninterest-bearing deposits $ 3,350,145 $ 2,982,697 $ 2,950,407 $ 2,941,679 $ 2,288,597

Interest-bearing deposits 6,063,302 5,693,120 5,344,481 5,215,963 4,921,869

Total deposits 9,413,447 8,675,817 8,294,888 8,157,642 7,210,466

Borrowings 548,604 430,093 503,163 449,224 857,871

Other liabilities 475,408 120,400 150,100 150,502 106,392

Shareholders' equity 1,665,428 1,678,190 1,619,501 1,582,449 1,526,362

Total liabilities and shareholders' equity $ 12,102,887 $ 10,904,500 $ 10,567,652 $ 10,339,817 $ 9,701,091

Quarter Ended

2021 2020

INCOME STATEMENTS Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,

Interest income $ 90,610 $ 92,457 $ 91,373 $ 92,197 $ 88,100

Interest expense 1,786 1,920 2,163 2,962 7,198

Net interest income 88,824 90,537 89,210 89,235 80,902

Provision for credit losses (1,997) (8,033) 9,000 8,700 9,850

Net interest income after provisions for credit losses 90,821 98,570 80,210 80,535 71,052

Noninterest income 34,874 35,709 38,575 36,919 28,732

Noninterest expense 57,723 63,705 55,593 53,321 55,318

Net income before income taxes 67,972 70,574 63,192 64,133 44,466

Income tax expense 11,054 12,099 10,335 10,663 7,234

Net income $ 56,918 $ 58,475 $ 52,857 $ 53,470 $ 37,232

PER COMMON SHARE DATA

Net income - basic $ 0.40 $ 0.41 $ 0.37 $ 0.38 $ 0.26

Net income - diluted 0.40 0.41 0.37 0.38 0.26

Cash dividends declared 0.13 0.13 0.13 0.13 0.12

Book value 11.70 11.80 11.40 11.14 10.73

Tangible book value 9.47 9.57 9.15 8.89 8.48

Market value $ 46.73 $ 36.17 $ 27.91 $ 28.89 $ 26.84

Shares outstanding - end of period 142,285,611 142,161,834 142,121,595 142,035,396 142,314,930

Average outstanding shares - basic 142,146,275 142,057,705 141,980,707 141,973,522 142,118,864

Average outstanding shares - diluted 143,002,658 142,644,088 142,529,242 142,454,083 142,735,208

PERFORMANCE RATIOS

Return on average assets 2.05 % 2.19 % 2.01 % 2.06 % 1.63 %

Return on average equity 13.83 14.27 13.14 14.00 10.11

Return on average tangible equity 17.09 17.74 16.41 17.67 12.89

Net interest margin (tax equivalent) 3.55 3.75 3.75 3.78 3.91

Efficiency ratio 45.36 49.15 42.45 41.32 49.63

FIRST FINANCIAL BANKSHARES, INC.

SELECTED FINANCIAL DATA (UNAUDITED)

(In thousands)

Quarter Ended

2021 2020

ALLOWANCE FOR LOAN LOSSES Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,

Balance at beginning of period $ 66,534 $ 76,038 $ 68,947 $ 60,440 $ 52,499

Loans charged off (574) (1,339) (853) (894) (2,227)

Loan recoveries 443 778 444 701 318

Net recoveries (charge-offs) (131) (561) (409) (193) (1,909)

Initial adoption of ASU 2016-13 (CECL) - recorded in retained earnings - (619) - - -

Reclassification of credit marks on purchased credit deteriorated (PCD) loans - 1,678 - - -

Provision for loan losses (3,429) (10,002) 7,500 8,700 9,850

Balance at end of period $ 62,974 $ 66,534 $ 76,038 $ 68,947 $ 60,440

ALLOWANCE FOR UNFUNDED COMMITMENTS

Balance at beginning of period $ 5,486 $ 2,309 $ 809 $ 809 $ 809

Initial adoption of ASU 2016-13 (CECL) - recorded in retained earnings - 1,208 - - -

Provision for unfunded commitments 1,432 1,969 1,500 - -

Balance at end of period $ 6,918 $ 5,486 $ 2,309 $ 809 $ 809

Allowance for loan losses /

period-end loans held-for-investment 1.18 % 1.29 % 1.44 % 1.31 % 1.30 %

Allowance for loan losses /

nonperforming loans 160.00 155.61 177.99 174.83 153.16

Net charge-offs / average total loans

(annualized) 0.01 0.04 0.03 0.01 0.16

SUMMARY OF LOAN CLASSIFICATION

Special Mention $ 61,866 $ 56,585 $ 66,033 $ 63,489 $ 87,099

Substandard 128,550 140,866 136,010 137,408 103,249

Doubtful - - - - -

Total classified loans $ 190,416 $ 197,451 $ 202,043 $ 200,897 $ 190,348

NONPERFORMING ASSETS

Nonaccrual loans $ 39,333 $ 42,619 $ 42,673 $ 39,320 $ 39,226

Accruing troubled debt restructured loans 23 24 25 25 26

Accruing loans 90 days past due 2 113 23 92 209

Total nonperforming loans 39,358 42,756 42,721 39,437 39,461

Foreclosed assets 300 142 331 287 983

Total nonperforming assets $ 39,658 $ 42,898 $ 43,052 $ 39,724 $ 40,444

As a % of loans held-for-investment and foreclosed assets 0.75 % 0.83 % 0.81 % 0.76 % 0.87 %

As a % of end of period total assets 0.33 0.39 0.41 0.38 0.42

OIL AND GAS PORTFOLIO INFORMATION *

Oil and gas loans $ 105,261 $ 106,237 $ 118,567 $ 128,143 $ 117,223

Oil and gas loans as a % of total loans held-for-investment 2.20 % 2.27 % 2.58 % 2.82 % 2.53 %

Classified oil and gas loans 10,079 13,298 26,823 28,366 22,032

Nonaccrual oil and gas loans 4,759 4,774 6,800 3,702 3,477

Net charge-offs for oil and gas loans 40 24 - 195 606

* Excluding PPP loans

RETAIL/RESTAURANT/HOSPITALITY PORTFOLIO INFORMATION *

Retail loans $ 282,310 $ 216,244 $ 229,386 $ 216,244 $ 217,380

Restaurant loans 51,772 48,618 39,523 46,418 25,570

Hotel loans 71,435 71,716 63,273 51,957 46,690

Other hospitality loans 24,014 21,970 26,041 23,230 8,470

Travel loans 664 780 801 908 937

Total Retail/Restaurant/Hospitality loans $ 430,195 $ 359,328 $ 359,024 $ 338,757 $ 299,047

Retail/Restaurant/Hospitality loans as a % of total loans held-for-investment 8.98 % 7.67 % 7.82 % 7.45 % 6.45 %

Classified Retail/Restaurant/Hospitality loans $ 45,214 $ 31,192 $ 28,171 $ 15,837 $ 5,680

Nonaccrual Retail/Restaurant/Hospitality loans 6,575 5,975 5,689 5,752 867

Net Charge-offs for Retail/Restaurant/Hospitality loans - 561 26 178 130

* Excluding PPP loans

CAPITAL RATIOS

Common equity Tier 1 capital ratio 20.32 % 20.79 % 20.56 % 20.78 % 19.55 %

Tier 1 capital ratio 20.32 20.79 20.56 20.78 19.55

Total capital ratio 21.47 22.03 21.82 22.03 20.65

Tier 1 leverage ratio 11.55 11.86 11.65 11.25 12.49

Tangible common equity ratio 12.35 12.71 12.61 12.00 13.09

Equity/Assets ratio 13.76 15.39 15.33 15.30 15.73

Quarter Ended

2021 2020

NONINTEREST INCOME Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,

Trust fees $ 8,299 $ 7,672 $ 7,461 $ 6,961 $ 7,437

Service charges on deposits 4,793 5,330 5,009 4,318 5,915

ATM, interchange and credit card fees 8,677 8,376 8,644 8,049 7,400

Gain on sale and fees on mortgage loans 9,894 11,116 15,228 13,676 3,852

Net gain on sale of available-for-sale securities 808 23 36 1,512 2,062

Net gain on sale of foreclosed assets 55 87 19 52 1

Net gain (loss) on sale of assets 145 22 (2) (24) 116

Interest on loan recoveries 382 235 202 154 265

Other noninterest income 1,821 2,848 1,978 2,221 1,684

Total noninterest income $ 34,874 $ 35,709 $ 38,575 $ 36,919 $ 28,732

NONINTEREST EXPENSE

Salaries, commissions and employee benefits, excluding profit sharing $ 32,636 $ 34,773 $ 32,104 $ 28,836 $ 28,670

Profit sharing expense 2,295 6,245 1,545 1,978 972

Net occupancy expense 3,147 3,067 3,193 3,101 3,027

Equipment expense 2,164 2,154 2,157 2,010 2,075

FDIC insurance premiums 701 663 587 463 45

ATM, interchange and credit card expenses 2,772 2,811 2,829 2,610 2,985

Legal, tax and professional fees 2,726 2,302 2,615 2,931 2,921

Audit fees 281 407 526 739 411

Printing, stationery and supplies 325 449 615 533 566

Amortization of intangible assets 412 483 490 508 509

Advertising and public relations 1,388 1,600 797 1,011 1,195

Operational and other losses 287 537 621 728 576

Software amortization and expense 2,619 2,563 2,265 2,010 2,024

Other noninterest expense 5,970 5,651 5,249 5,863 9,342

Total noninterest expense $ 57,723 $ 63,705 $ 55,593 $ 53,321 $ 55,318

TAX EQUIVALENT YIELD ADJUSTMENT $ 3,547 $ 3,355 $ 3,170 $ 2,902 $ 1,834

FIRST FINANCIAL BANKSHARES, INC.

SELECTED FINANCIAL DATA (UNAUDITED)

(In thousands)

Three Months Ended Three Months Ended

Mar. 31, 2021 Dec. 31, 2020

Average Tax Equivalent Yield / Average Tax Equivalent Yield /

Balance Interest Rate Balance Interest Rate

Interest-earning assets:

Federal funds sold $ 1,942 $ 3 0.58 % $ - $ - - %

Interest-bearing deposits in nonaffiliated banks 637,129 159 0.10 195,637 50 0.10

Taxable securities 2,251,419 10,264 1.82 2,086,419 10,708 2.05

Tax exempt securities 2,368,615 16,979 2.87 2,318,912 16,733 2.89

Loans 5,296,149 66,753 5.11 5,356,229 68,321 5.07

Total interest-earning assets 10,555,254 $ 94,158 3.62 % 9,957,197 $ 95,812 3.83 %

Noninterest-earning assets 700,550 674,229

Total assets $ 11,255,804 $ 10,631,426

Interest-bearing liabilities:

Deposits $ 5,916,237 $ 1,696 0.12 % $ 5,479,873 $ 1,826 0.13 %

Borrowings 456,620 91 0.08 428,117 94 0.09

Total interest-bearing liabilities 6,372,857 $ 1,787 0.11 % 5,907,990 $ 1,920 0.13 %

Noninterest-bearing 3,214,237 3,093,637liabilities

Shareholders' equity 1,668,710 1,629,799

Total liabilities and shareholders' equity $ 11,255,804 $ 10,631,426

Net interest income and margin (tax equivalent) $ 92,371 3.55 % $ 93,892 3.75 %

Three Months Ended Three Months Ended

Sept. 30, 2020 June 30, 2020

Average Tax Equivalent Yield / Average Tax Equivalent Yield /

Balance Interest Rate Balance Interest Rate

Interest-earning assets:

Federal funds sold $ 2,009 $ 3 0.51 % $ 840 $ 1 0.51 %

Interest-bearing deposits in nonaffiliated banks 223,104 59 0.10 352,628 86 0.10

Taxable securities 2,187,547 12,063 2.21 2,399,364 14,030 2.34

Tax exempt securities 2,058,032 15,737 3.06 1,800,339 14,733 3.27

Loans 5,334,174 66,681 4.97 5,248,052 66,249 5.08

Total interest-earning assets 9,804,866 $ 94,543 3.84 % 9,801,223 $ 95,099 3.90 %

Noninterest-earning assets 671,374 663,595

Total assets $ 10,476,240 $ 10,464,818

Interest-bearing liabilities:

Deposits $ 5,270,600 $ 2,064 0.16 % $ 5,135,772 $ 2,550 0.20 %

Borrowings 482,555 99 0.08 877,076 412 0.19

Total interest-bearing liabilities 5,753,155 $ 2,163 0.15 % 6,012,848 $ 2,962 0.20 %

Noninterest-bearing 3,122,995 2,915,461liabilities

Shareholders' equity 1,600,090 1,536,509

Total liabilities and shareholders' equity $ 10,476,240 $ 10,464,818

Net interest income and margin (tax equivalent) $ 92,380 3.75 % $ 92,137 3.78 %

Three Months Ended

Mar. 31, 2020

Average Tax Equivalent Yield /

Balance Interest Rate

Interest-earning assets:

Federal funds sold $ 2,712 $ 10 1.50 %

Interest-bearing deposits in nonaffiliated banks 220,906 745 1.36

Taxable securities 2,263,329 14,655 2.59

Tax exempt securities 1,346,842 11,200 3.33

Loans 4,667,436 63,323 5.46

Total interest-earning assets 8,501,225 $ 89,933 4.25 %

Noninterest-earning assets 692,432

Total assets $ 9,193,657

Interest-bearing liabilities:

Deposits $ 4,904,087 $ 6,680 0.55 %

Borrowings 460,605 517 0.45

Total interest-bearing liabilities 5,364,692 $ 7,197 0.54 %

Noninterest-bearing 2,348,485liabilities

Shareholders' equity 1,480,480

Total liabilities and shareholders' equity $ 9,193,657

Net interest income and margin (tax equivalent) $ 82,736 3.91 %

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SOURCE First Financial Bankshares, Inc.