First Financial Bankshares Announces Fourth Quarter Earnings Results And 31st Year Of Consecutive Earnings Growth

ABILENE, Texas, Jan. 25, 2018 /PRNewswire/ -- First Financial Bankshares, Inc. (NASDAQ: FFIN) today reported earnings for the fourth quarter of 2017 of $36.14 million, up $9.48 million when compared with earnings of $26.67 million in the same quarter last year. Basic earnings per share were $0.55 for the fourth quarter of 2017 compared with $0.40 in the same quarter a year ago. Of the $9.48 million increase in net income during the quarter when compared to the same quarter a year ago, $7.65 million resulted from the recent enactment of tax legislation that reduced the corporate tax rate from 35 percent to 21 percent. This amount represents the net effect of the Company's revaluation of its deferred tax assets and liabilities using the new tax rate. Without this adjustment, earnings for the quarter would have been $28.49 million with an adjusted basic earnings per share of $0.43.

Net interest income for the fourth quarter of 2017 was $60.89 million compared with $56.54 million in the same quarter of 2016. The net interest margin, on a taxable equivalent basis, was 4.00 percent for the fourth quarter of 2017 compared to 3.94 percent in the third quarter of 2017 and 4.01 percent in the fourth quarter of 2016. Included in interest income for the fourth quarter of 2017 was $439 thousand, or three basis points in net interest margin, related to discount accretion from fair value accounting related to the Conroe and Orange acquisitions.  

The provision for loan losses was $1.44 million in the fourth quarter of 2017 compared with $1.42 million in the third quarter of 2017 and $1.99 million in the fourth quarter of 2016. The continued provision for loan losses in 2017 reflects growth in the loan portfolio and the continued levels of gross charge-offs. Nonperforming assets as a percentage of loans and foreclosed assets totaled 0.57 percent at December 31, 2017, compared with 0.63 percent at September 30, 2017, and 0.86 percent at December 31, 2016. Classified loans totaled $117.21 million at December 31, 2017, compared to $121.29 million at September 30, 2017, and $127.80 million at December 31, 2016.

At December 31, 2017, loans with oil and gas industry exposure totaled 1.72 percent of gross loans. These loans comprised $20.35 million of the classified loan totals and $1.41 million of the nonperforming loan totals. In addition, there were no net charge-offs related to these oil and gas loans for the quarter ended December 31, 2017. At December 31, 2017, the Company's allowance for loan loss reserve specific to its total oil and gas loan portfolio totaled 7.90 percent of total oil and gas loans.

Noninterest income increased 2.67 percent in the fourth quarter of 2017 to $22.30 million compared with $21.72 million in the same quarter a year ago. Trust fees increased $702 thousand to $5.89 million in the fourth quarter of 2017 compared with $5.19 million in the same quarter last year, primarily due to continued growth in the fair value of Trust assets managed to $5.13 billion from $4.37 billion a year ago as well as the continued increases in oil and gas prices. ATM, interchange and credit card fees increased 3.04 percent to $6.58 million compared with $6.39 million in the same quarter last year due to continued growth in debit cards. Service charges on deposits increased 2.66 percent to $4.90 million compared with $4.77 million in the same quarter a year ago due to continued growth in net new accounts. Offsetting these increases was a decrease in real estate mortgage fees of $624 thousand or 14.73 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 fourth quarter of 2017 totaled $44.10 million compared to $41.99 million in the fourth quarter of 2016. The Company's efficiency ratio in the fourth quarter of 2017 was 49.37 percent compared with 49.61 percent in the same quarter last year. The increase in noninterest expense in the fourth quarter of 2017 was driven by a $1.35 million increase in salary and employee benefit expense, primarily due to merit based pay increases and profit sharing expenses, an increase of $531 thousand in software amortization and expense primarily resulting from a write-off of internally developed software and the addition of approximately $222 thousand in various expenses related to the Company's recent acquisition of Commercial Bancshares, Inc. and its wholly-owned subsidiary, Commercial State Bank, Kingwood, Texas, effective January 1, 2018.

For the year ended December 31, 2017, net income increased $15.60 million ($7.65 million was attributed to the change in the corporate tax rate) to $120.37 million from $104.77 million in 2016, marking 2017 as the 31^st consecutive year of earnings increases for the Company. Basic earnings per share in 2017 rose to $1.82 from $1.59 in the previous year. Without the tax adjustment in the fourth quarter mentioned above, earnings for the year would have been $112.72 million with an adjusted basic earnings per share of $1.70.

Net interest income increased $9.85 million for the year to $236.69 million from $226.84 million a year ago. The provision for loan losses for 2017 totaled $6.53 million compared with $10.21 million in 2016. Noninterest income was $91.02 million in 2017 compared with $85.13 million in 2016. Noninterest expense rose to $173.99 million in 2017 compared with $165.83 million a year ago.

As of December 31, 2017, consolidated assets for the Company totaled $7.25 billion compared with $6.81 billion at December 31, 2016. Loans totaled $3.50 billion at year end compared with loans of $3.38 billion a year ago. Deposits totaled $5.96 billion at December 31, 2017, compared to $5.48 billion a year ago.  Shareholders' equity rose to $922.77 million at year end compared with $837.89 million at December 31, 2016. 

"We are pleased to report the 31^st consecutive year of increased earnings for the Company," said F. Scott Dueser, Chairman, President and CEO. "We are excited to welcome Commercial State Bank of Kingwood to the First Financial family at the beginning of 2018. As we continue to visit with other potential acquisition candidates, we are 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 Bankshares is a financial holding company that through its subsidiary, First Financial Bank, N.A., operates multiple banking regions with 73 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.