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First Financial Bankshares presentation 2nd qtr 2012

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  • Main focus should be on years in the industry – You have world-class talent.
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    • 1. 2nd Quarter 2012
    • 2. Forward Looking Statement The numbers, as of and for six months ended June 30, 2012, contained within this presentation are unaudited. 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. The Company does not undertake any obligation to update publicly or revise any forward-looking statements herein because of new information, future events or otherwise.
    • 3. Who We Are $4.3 billion financial holding company headquartered in Abilene, Texas Group of 11 separately chartered banks 122-year history Growth markets include 50 mile radius of the larger cities of Texas 2
    • 4. 3
    • 5. Recognitions KBW Honor Roll – One of Forty banks named – March 2012 SNL Financial #4 Best Performing Community Bank ($500M - $5B) – March 2012 Nifty 50: Bank Director Magazine - #2 – Based on Return on Equity / Average Tangible Equity – January 2012 Bank Intelligence Proven Performers - #4 in the Nation in $1 - $10 billion category – June 2011 4
    • 6. What Makes Us Different One Bank, Eleven Charters Concept  One Bank  Consolidation of backroom operations (lower efficiency ratio)  Agency agreements (customers may use any of our 53 locations)  Eleven Community Bank Charters  Bank Presidents run their banks  Local Boards – Movers and Shakers of the Community  Keep our banks locally focused  Make sure we meet the needs of the community  Help us make better loan decisions  Help us market the bank  Up to $2.75 million of FDIC insurance available 5
    • 7. Huntsville Acquisition  Acquired November 2010  Huntsville, Texas  37,000 Residents  Sam Houston State University – 17,000 Students  Fastest Growing University in Texas  Headquarters of the Texas Department of Criminal Justice – 5,000 employees  Strategically located on Interstate 45 – 70 miles north of Houston  $177 million in Assets*  $148 million in deposits  $94 million in loans  Approximately 1.63x book; 10.8x last twelve months earnings (tax effected)  Huntsville acquisition is very similar to our model around Dallas/Fort Worth and provides diversification  #2 Market Share in Walker County – 21% *As of June 30, 2012 6
    • 8. FFIN’s Unique Positioning in TexasBank Key MarketsBBVA Compass Rio Grande, Gulf Coast, Houston, Dallas, El Paso, LubbockComerica, Inc. DFW, Austin, Houston, California, Michigan, Florida, MexicoFrost San Antonio, Austin, Corpus Christi, DFW, Rio GrandeInternational Bancshares Corp. Rio Grande, Houston, San Antonio, OklahomaProsperity Houston, DFW, AustinSouthside East TexasTexas Capital DFW, Austin, San Antonio and HoustonViewPoint Financial DallasZion DFW and Houston 7
    • 9. 88
    • 10. Texas: Large and Growing Five most populous states:* Growth (2000 – 2010) California 37.3 million 10.0% Texas 25.2 million 20.6% New York 19.4 million 2.1% Florida 18.8 million 17.6% Illinois 12.8 million 3.3% * U.S. Census Bureau 9
    • 11. Target Markets – Population GrowthPopulation growth (2000-2010) in FFIN expansion markets:*Texas 20.6%Bridgeport & Wise County 21.2%Fort Worth / Tarrant County 25.1%Cleburne, Midlothian & Johnson County 19.0%Weatherford, Willow Park, Aledo 32.1%Granbury & Hood County 24.5%Stephenville & Erath County 14.8% * U.S. Census Bureau 10
    • 12. Texas BenefitsCEO Magazine ranks Texas best state for business – for seventh consecutive yearTexas created more jobs (230,800) in 2010 more than any other stateTexas created more private sector jobs than any other state during the past decade 11
    • 13. Preferred Acquisition: Granbury and Glen Rose 12 12
    • 14. Core Markets: West Central Texas  Markets served benefiting from well-established, long- time customers ASSET DEPOSIT MARKETBANK LOCATIONS SIZE* MARKET SHARE** SHARE RANK**First Financial Bank $1,508 M 14 41% 1(Abilene, Clyde, Moran, Albany, Odessa)First Financial Bank $165 M 1 42% 1(Hereford)First Financial Bank $198M 4 55% 1(Eastland, Ranger, Rising Star, Cisco)First Financial Bank $192 M 4 37% 1(Sweetwater, Roby, Trent, Merkel)First Financial Bank $442M 2 20% 2(San Angelo)TOTALS $2,505M 25 * Data as of 06-30-12 ** Data as of 06-30-11 13
    • 15. Expansion Markets DEPOSIT MARKET MARKET SHAREBANK ASSET SIZE* LOCATIONS SHARE** RANK**First Financial Bank $324 M 6 21% 1(Cleburne, Burleson, Alvarado, Midlothian, Crowley)First Financial Bank $334 M 4 8% 5 (Southlake, Trophy Club, Keller, Grapevine 3 16% 3 Bridgeport, Decatur, Boyd)First Financial Bank $381 M 6 21% 2 (Stephenville, Granbury, Glen Rose, Acton)First Financial Bank $399 M 7 24% 1(Weatherford, Aledo, Willow Park, Brock, Ft. Worth)First Financial Bank $214 M 1 35% 1(Mineral Wells)First Financial Bank $177 M 1 21% 2(Huntsville) * Data as of 06-30-12TOTALS $1,829M 28 ** Data as of 06-30-11 14
    • 16. Recent De Novo Growth San Angelo: HEB Branch – Expected to Open 4th Qtr. 2012 Abilene: Antilley Road Branch – Expected to Open 4th Qtr. 2012 Grapevine: Branch of Southlake – March 2012 Cisco: Branch of Eastland – September 2011 Lamesa: Office of Trust Company – April 2011 Crowley: Branch of Cleburne – October 2010 Odessa: Branch of Abilene – February 2010 Fort Worth: Branch of Weatherford – February 2010 Odessa: Office of Trust Company – April 2009 Merkel: Branch of Sweetwater – July 2008 Brock: Branch of Weatherford – March 2008 Acton: Branch of Stephenville – March 2008 Albany: Branch of Abilene – May 2007 Fort Worth: Office of Trust Company – April 2007 15
    • 17. Senior Management at First Financial Years with Company Years in Industry Scott Dueser Chairman of the Board, President & 36 41 Chief Executive Officer J. Bruce Hildebrand, CPA Executive Vice President 10 34 Chief Financial Officer Gary L. Webb Executive Vice President 9 24 Operations Gary S. Gragg Executive Vice President 22 34 Credit Administration Marna Yerigan Executive Vice President 1 28 Credit Administration Michele Stevens Senior Vice President 15 31 Advertising and Marketing Courtney Jordan Senior Vice President 3 18 Training & Education Kirk Thaxton, CTFA President, First Financial Trust & Asset 26 29 Management 16
    • 18. Experienced Bank CEOs & Presidents Years with Company Years in Industry Ron Butler, FFB Abilene 19 31 Mike Mauldin, FFB Hereford 10 34 Kirby Andrews, FFB Sweetwater 22 25 Trent Swearengin, FFB Eastland 13 15 Mike Boyd, FFB San Angelo 37 40 Tom O’Neil, FFB Cleburne 14 32 Matt Reynolds, FFB Cleburne 7 30 Ron Mullins, FFB Stephenville 6 34 Jay Gibbs, FFB Weatherford 10 38 Mark Jones, FFB Southlake 12 35 Ken Williamson, FFB Mineral Wells 11 41 Robert Pate, FFB Huntsville 15 31 Gary Tucker, First Technology Services 21 37 17
    • 19. Asset Performance Growth in Total Assets (in millions) $4,292* $4,121 $3,776 $3,212 $3,279 $3,070 2007 2008 2009 2010 2011 2012 *As of June 30, 2012 18
    • 20. Deposit Growth Growth in FFIN Total Deposits (in millions) $3,335 $3,392* $3,113 $2,546 $2,583 $2,685 $2,233 $2,236 $2,154 $1,786 $1,849 $1,807 $1,102 $1,156 $739 $797 $836 $959 2007 2008 2009 2010 2011 2012 Non Interest Bearing Interest Bearing *As of June 30, 2012 19
    • 21. Deposit Products Time Savings 20.9% 8.1% Demand 34.1% Money Market 36.9% *As of June 30, 2012 20
    • 22. Account Growth December 31, 2010 December 31, 2011 June 30, 2012 Total Number of Accounts 200,027 204,063 207,718 Net Growth in 2011 – 4,036 Accounts New Growth in 2012 – 3,655 Accounts 21
    • 23. Loan Performance Growth in FFIN Total Loans (in millions) $1,918*Real Estate $1,787 $1,690 $1,528 $1,566 $1,514Commercial $1,373 $1,159 $1,076 $990Student $836 $855 $860 $760Consumer $394 $391 $429 $427 $473Agricultural $344 $406 $31 $32 $52 $165 $182 $191 $175 $191 $218 $234 $73 $84 $77 $73 $81 $66 $52 2006 2007 2008 2009 2010 2011 2012 *As of June 30, 2012 22
    • 24. Overview of Loan Portfolio Commercial 24.7% Agriculture 2.7% Consumer 12.2% Real Estate 60.4% *As of June 30, 2012 23
    • 25. Breakdown of R/E Loan Portfolio Residential Development & Construction 5.5% Other R/E 1-4 Family 19.1% 40.9% Commercial R/E 30.3% Commercial Development and Construction 4.2% *As of June 30, 2012 24
    • 26. Loan to Deposit Ratio 2006 2007 2008 2009 2010 2011 2012* End of Period 57.6 60.0 60.6 56.4 54.3 53.6 56.6Average 56.6 59.8 61.1 59.5 56.0 54.6 54.3Balances *As of June 30, 2012 25
    • 27. Variable and Fixed Rate LoansLoan Portfolio Interest Rate Risk Analysis Variable Fixed Rate Rate Less than 1 to 3 3 to 5 5 to 10 10 to 15 Over 15 1 year years years years years years 36.3% 10.1% 13.4% 18.6% 9.0% 8.8% 3.8% *As of June 30, 2012 26
    • 28. Sound Lending PracticesNonperforming assets as a percentage of loans + foreclosed assets (FFIN vs. Peers) 2007 2008 2009 2010 2011 2012* FirstFinancial 0.31% 0.80% 1.46% 1.53% 1.64% 1.76%Peer Group 0.98% 2.63% 5.41% 5.37% 4.63% 4.39%** *As of June 30, 2012 **As of March 31, 2012 27
    • 29. Allowance for Loan Losses and Provision for Loan Losses (in thousands) $34,315 $34,747* $31,106 $27,612 $21,529 $17,462 $16,201 $11,419 $7,957 $8,962 $6,626 $2,061 $2,331 $2,055* 2006 2007 2008 2009 2010 2011 2012 ALLL Provision *As of June 30, 2012 28
    • 30. Summary of Bond Portfolio Treasuries Corporates 0.63% Agencies 6.47% 14.07% CMOs 22.65% Muni 42.41% MBSs 13.77% 29
    • 31. Municipal Allocation by State State Percentage Texas 62.02% Michigan 4.30% Wisconsin 3.54% Illinois 2.51% Massachusetts 1.96% Washington 1.91% Florida 1.84% New Jersey 1.75% Utah 1.57% California 1.53% Kentucky 1.42% Louisiana 1.41% Other 38 states 14.24% 30
    • 32. Growth in Trust Assets Total Trust Assets – Book Value (in millions) $2,082* $1,912 $1,784 $1,664 $1,631 $1,428 2007 2008 2009 2010 2011 2012 *As of June 30, 2012 31
    • 33. Total Trust Fees Growth in FFTAM Fees (Full year and 1st 6 months) (in thousands) $12,617 $10,808 thru $9,441 $9,083 June 30th $8,746 $7,124 $6,254 $5,198 $4,372 $4,728 $4,242 2007 2008 2009 2010 2011 2012 32
    • 34. 25th Consecutive Year of Increased Earnings FFIN Earnings (Full year and 1st 6 months) (in millions) $68.4 $59.7 $1.3 $53.1 $53.8 $49.5 thru June 30th $36.1 $32.8 $26.8 $27.3 $27.9 $24.7 2007 2008 2009 2010 2011 2012 33
    • 35. Strong Shareholder Earnings Basic Earnings Per Share (Full year and 1st 6 months) $2.17 $1.91 $0.04 $1.71 $1.72 thru $1.59 June 30th $1.15 $1.04 $0.86 $0.87 $0.89 $0.79 2007 2008 2009 2010 2011 2012 34
    • 36. FFIN Outperforms Peers Percentage Return on Average Assets 1.74% 1.72% 1.75% 1.78% 1.74% 1.68% 1.72% 1.10% 0.93%* 0.87% 0.80% First Financial Peer Group -0.03% -0.18% 0.25% 2006 2007 2008 2009 2010 2011 2012 *(thru March 31st) 35
    • 37. Strong Return on Capital Percentage Return on Average Equity 16.20% 15.87% 15.27% 14.44% 13.90% 13.63% 13.74% 12.61% 9.45% 8.54%* 7.30% First Financial Peer Group 0.88% -1.83% -2.57% 2006 2007 2008 2009 2010 2011 2012 *(thru March 31st) 36
    • 38. Capital & Capital Ratios (dollars in thousands) 2008 2009 2010 2011 2012 Shareholders’ Equity 368,782 415,702 441,688 508,537 534,263As a Percent of Total 11.48 12.68 11.70 12.34 12.45 Assets Tangible 304,779 352,550 369,164 436,415 462,223 Capital Tier 1 9.68 10.69 10.28 10.33 10.36 Leverage Ratio Tier 1 Risk 15.89 17.73 17.01 17.49 17.23 Based Capital Ratio Risk Based 17.04 19.10 18.26 18.74 18.48 Capital Ratio 37
    • 39. Net Interest MarginQuarterly Interest Margin 5.00% 4.75% 4.50% 4.25% 4.00% 3.75% 3.50% 3.25% 3.00% 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd Qtr. 09 Qtr. 09 Qtr. 09 Qtr. 09 Qtr. 10 Qtr. 10 Qtr. 10 Qtr. 10 Qtr. 11 Qtr. 11 Qtr. 11 Qtr. 11 Qtr. 12 Qtr. 12 First Financial Peer Group 38
    • 40. Working Harder and SmarterEfficiency Ratio (FFIN vs. Peers) 2006 2007 2008 2009 2010 2011 2012 FirstFinancial 53.57% 52.83% 50.76% 50.11% 49.49% 48.37% 48.05%*Peer Group 61.29% 63.12% 68.12% 69.53% 67.33% 65.75% 65.06%** *As of June 30, 2012 **As of March 31, 2012 39
    • 41. Total Return on Investment Assume you owned 1,000 shares of FFIN stock on January 1, 2011… Stock cost in January 2011 $34,170 Dividend received ($0.95 x 1,000 shares) $ 950 Decrease in stock price during 2011 ($740) $2210,720 ($34.17 to $33.43 X 1,000 shares) 2011 return on investment 0.61% 2010 return on investment -2.99% 2009 return on investment 0.69% 2008 return on investment 50.20% 2007 return on investment -7.05% 5 year compound average return 6.32% 40
    • 42. Dividends Per Share Annual Dividends Per Share $0.95 $0.89 $0.91 $0.91 $0.84 $0.79 $0.73 2005 2006 2007 2008 2009 2010 2011 41
    • 43. Strong Stock Performance40.00%30.00%20.00%10.00% 0.00%-10.00%-20.00%-30.00%-40.00%-50.00%-60.00% Jan . ‘07 Dec ‘07 Dec ‘08 Dec . ‘09 Dec. ‘10 Dec. ’11 June ’12 FFIN S&P 500 NASDAQ Dow Jones 42
    • 44. Challenges  Regulatory reform from Washington  Keep nonperforming assets to a minimum  Maintain net interest margin  Lower efficiency ratio 43
    • 45. Opportunities  Loan Growth  Mortgage Lending  Trust Services  Treasury Management  Potential Acquisitions 44
    • 46. www.ffin.com

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