First Financial Bankshares Presentation 3rd qtr 2013

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  • Main focus should be on years in the industry – You have world-class talent.
  • Main focus should be on years in the industry – You have world-class talent.

Transcript

  • 1. 3rd Quarter 2013
  • 2. Forward Looking Statement The numbers, as of and for nine months ended September 30, 2013, 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 $5.1 billion financial holding company headquartered in Abilene, Texas Group of 12 separate regions 122-year history Growth markets include 50 mile radius of the larger cities of Texas 2
  • 4. 3
  • 5. Recognitions  Sandler O’Neil 2013 Bank & Thrift Small-Cap All Stars – September 2013  KBW Honor Roll – One of forty-seven banks named – April 2013  SNL Financial #11 Best Performing Community Bank ($500M $5B) – March 2013  Nifty 50: Bank Director Magazine - #5 – Based on Return on Equity / Average Tangible Equity – January 2013  American Banker - #14 – Based on three year average Return on Equity – August 2013  ABA Banking Journal - #16 – Top Performing mid-sized banks ($1B - $10B) – May 2013 4
  • 6. What Makes Us Different One Bank, Twelve Regions Concept  One Bank  Consolidation of backroom operations, technology, and compliance (lower efficiency ratio)  Twelve Regions  Regional Presidents run their regions  Local Boards – Movers and Shakers of the Community  Keep our regions locally focused  Make sure we meet the needs of the community  Help us make better loan decisions  Help us market the region 5
  • 7. FFIN’s Unique Positioning in Texas Bank Key Markets BBVA Compass Rio Grande, Gulf Coast, Houston, Dallas, El Paso, Lubbock Comerica, Inc. DFW, Austin, Houston, California, Michigan, Florida, Mexico Frost San Antonio, Austin, Corpus Christi, DFW, Rio Grande Independent North and Central Texas International Bancshares Corp. Rio Grande, Houston, San Antonio, Oklahoma Prosperity Houston, DFW, Austin, West Texas, South Central Texas, and Oklahoma Southside East Texas Texas Capital DFW, Austin, San Antonio and Houston ViewPoint Financial Dallas Zions DFW and Houston 6
  • 8. Orange Acquisition  Definitive Agreement Signed - February 2013  Orange, Jefferson and Newton Counties     Approximately 350,000 Residents Strategically located on Interstate 10 – 100 miles east of Houston Three Major Shipping Ports for Energy and Petrochemical industries Large refineries, natural gas terminals and recent investment from large Fortune 500 Companies, such as Exxon Mobil, DuPont and Goodyear  $468.9 million in Assets*  $389.1 million in deposits  $326.8 million in loans  Approximately 1.3x book; 13x last twelve months earnings (tax effected)  Orange acquisition is consistent with our acquisition model of high growth areas and along the Interstates  Provides Diversification  #1 Market Share in Orange County – 40%, more than twice the nearest competitor *As of Sept. 30, 2013 7
  • 9. 88
  • 10. Texas: Large and Growing Five most populous states:* Growth (2002 – 2012) California 38.0 million 8.3% Texas 26.1 million 19.7% New York 19.6 million 2.2% Florida 19.3 million 15.9% Illinois 12.9 million 2.2% * U.S. Census Bureau 9
  • 11. Target Markets – Population Growth Population growth (2002-2012) in FFIN expansion markets:* Texas 19.7% Bridgeport & Wise County 24.6% Fort Worth & Tarrant County 25.8% Cleburne & Johnson County 31.8% Weatherford, Willow Park, Aledo & Parker County 29.6% Granbury & Hood County 31.8% Stephenville & Erath County 22.6% * U.S. Census Bureau 10
  • 12. Texas Benefits CEO Magazine ranks Texas best state for business – for seventh consecutive year Texas created more jobs (239,146) in 2012 more than any other state Texas created more private sector jobs than any other state during the past decade 11
  • 13. Core Markets: West Central Texas  Markets served benefiting from well-established, long- time customers ASSET DEPOSIT SHARE RANK** LOCATIONS SIZE* First Financial Bank MARKET MARKET SHARE** REGION $1,731 M 15 44% 1 $155 M 1 45% 1 $206M 4 60% 1 $181 M 4 34% 1 $452M 3 18% 2 $2,725M 27 (Abilene, Clyde, Moran, Albany, Odessa) First Financial Bank (Hereford) First Financial Bank (Eastland, Ranger, Rising Star, Cisco) First Financial Bank (Sweetwater, Roby, Trent, Merkel) First Financial Bank (San Angelo) TOTALS 12 * Data as of 09-30-13 ** Data as of 06-30-13
  • 14. Expansion Markets REGION First Financial Bank DEPOSIT MARKET MARKET SHARE SHARE** RANK** 6 20% 1 4 5% 5 3 21% 1 $384 M 6 21% 2 $396 M 7 24% 1 $218M 1 33% 1 $167M 1 19% 2 $469M 6 41% 1 ASSET SIZE* LOCATIONS $338 M $367 M (Cleburne, Burleson, Alvarado, Midlothian, Waxahachie) First Financial Bank (Southlake, Trophy Club, Keller, Grapevine Bridgeport, Decatur, Boyd) First Financial Bank (Stephenville, Granbury, Glen Rose, Acton) First Financial Bank (Weatherford, Aledo, Willow Park, Brock, Ft. Worth) First Financial Bank (Mineral Wells) First Financial Bank (Huntsville) First Financial Bank (Orange, Mauriceville, Newton, Port Arthur, Vidor) * Data as of 09-30-13 TOTALS $2,339 13 34 ** Data as of 06-30-13
  • 15. Recent De Novo Growth  Beaumont – Under Construction (Opening in 2014)  Weatherford – I-20 Branch – June 2013  San Angelo: HEB Branch – March 2013  Waxahachie: Branch of Cleburne – December 2012  Abilene: Antilley Road Branch – September 2012  Grapevine: Branch of Southlake – March 2012  Cisco: Branch of Eastland – September 2011  Lamesa: Office of Trust Company – April 2011  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 14
  • 16. Senior Management at First Financial Years with Company Years in Industry 37 42 10 34 10 24 22 34 2 29 19 31 Scott Dueser Chairman of the Board, President & Chief Executive Officer J. Bruce Hildebrand, CPA Executive Vice President Chief Financial Officer Gary L. Webb Executive Vice President Operations Gary S. Gragg Executive Vice President Credit Administration Marna Yerigan Executive Vice President Credit Administration Ron Butler Executive Vice President Chief Administrative Officer 15
  • 17. Senior Management at First Financial Years with Company Years in Industry 16 32 5 18 12 35 3 10 1 15 26 30 Michele Stevens Senior Vice President Advertising and Marketing Courtney Jordan Senior Vice President Training Bob Goodner Senior Vice President & Compliance Officer Compliance Luke Longhofer Senior Vice President & Loan Review Officer Credit Administration Brandon Harris Senior Vice President Appraisal Services Kirk Thaxton, CTFA President, First Financial Trust & Asset Management 16
  • 18. Experienced Regional CEOs & Presidents Years with Company Years in Industry Marelyn Shedd, Abilene 22 30 Mike Mauldin, Hereford 10 35 Kirby Andrews, Sweetwater 22 25 Trent Swearengin, Eastland 13 15 Mike Boyd, San Angelo 37 41 Tom O’Neil, Cleburne 15 33 Matt Reynolds, Cleburne 8 31 Ron Mullins, Stephenville 7 35 Jay Gibbs, Weatherford 11 39 Mark Jones, Southlake 12 35 Ken Williamson, Mineral Wells 11 42 Robert Pate, Huntsville 16 32 Fred Wren, Huntsville 1 34 Stephen Lee, Orange 6 20 Gary Tucker, First Technology Services 22 38 17
  • 19. Asset Performance Growth in Total Assets (in millions) $5,076* $4,500 $4,121 $3,776 $3,212 $3,279 2008 2009 2010 2011 2012 2013 *As of Sept. 30, 2013 18
  • 20. Deposit Growth Growth in FFIN Total Deposits (in millions) $4,001* $3,633 $3,335 $3,113 $2,583 $2,685 $2,321 $2,233 $2,154 $1,786 $2,629 $1,849 $1,102 $959 $797 $836 2008 2009 2010 Non Interest Bearing $1,312 2011 2012 Interest Bearing $1,372 2013 *As of Sept. 30, 2013 19
  • 21. Deposit Products Savings 10.4% Time 17.0% Demand 34.3% Money Market 38.3% *As of Sept. 30, 2013 20
  • 22. Account Growth December 31, 2010 Total Number of Accounts December 31, 2011 December 31, 2012 Sept. 30, 2013 200,027 204,063 205,282 208,757 Net Growth in 2011 – 4,036 Accounts Net Growth in 2012 – 1,219 Accounts New Growth in 2013 – 3,475 Accounts (Excluding Orange Acquisition) 21
  • 23. Loan Performance Growth in FFIN Total Loans (in millions) $2,615* Real Estate $2,089 Commercial Student Consumer Agricultural $1,787 $1,528 $836 $1,566 $855 $394 $391 $32 $182 $84 $52 $191 $77 2007 2008 $1,653 $1,690 $1,514 $1,238 $990 $860 $1,076 $406 $429 $427 $0 $175 $73 2009 $191 $81 $218 $66 2011 2010 $510 $273 $68 2012 $567 $329 $66 2013 *As of Sept. 30, 2013 22
  • 24. Overview of Loan Portfolio Commercial 21.7% Agriculture 2.5% Consumer 12.6% Real Estate 63.2% *As of Sept. 30, 2013 23
  • 25. Breakdown of R/E Loan Portfolio Residential Development & Construction 6.7% Other R/E 17.0% 1-4 Family 45.8% Commercial R/E 26.4% Commercial Development and Construction 4.1% 24 *As of Sept. 30, 2013
  • 26. Loan to Deposit Ratio 2007 End of Period Average Balances 2008 2009 2010 2011 2012 2013* 60.0 60.6 56.4 54.3 53.6 57.5 65.4 59.8 61.1 59.5 56.0 54.6 56.4 63.8 *As of Sept. 30, 2013 25
  • 27. Variable and Fixed Rate Loans Loan Portfolio Interest Rate Risk Analysis Variable Fixed Rate Rate Less than 3 to 5 5 to 10 10 to 15 Over 15 1 year 33.1% 1 to 3 years years years years years 9.8% 12.7% 18.6% 11.1% 9.6% 5.1% *As of Sept. 30, 2013 26
  • 28. Sound Lending Practices Nonperforming assets as a percentage of loans + foreclosed assets (FFIN vs. Peers) 2008 2009 2010 2011 2012 2013 First Financial 0.80% 1.46% 1.53% 1.64% 1.22% 1.09%* Peer Group 2.63% 5.41% 5.37% 4.64% 3.69% 3.12%** *As of Sept 30, 2013 **As of June 30, 2013 27
  • 29. Allowance for Loan Losses and Provision for Loan Losses (in thousands) $34,315 $34,839 $34,800* $31,106 $27,612 $21,529 $17,462 $11,419 $8,962 $7,957 $6,626 $3,484 $2,331 2007 2008 2009 2010 ALLL 2011 2012 $2,582 2013 Provision *As of Sept. 30, 2013 28
  • 30. Summary of Bond Portfolio Corporates 5.10% Agencies 7.39% CMOs 23.71% Muni 49.31% MBSs 14.49% *As of Sept. 30, 2013 29
  • 31. Municipal Allocation by State State Percentage Texas 73.23% Michigan 2.87% Wisconsin 2.35% Washington 1.77% Illinois 1.54% Ohio 1.47% New Jersey 1.36% Louisiana 1.35% Florida 1.22% Utah 1.10% Other 40 States 11.74% *As of June 30, 2013 30
  • 32. Growth in Trust Assets update Total Trust Assets – Book Value (in millions) $2,411* $1,912 $2,031 $1,784 $1,631 $1,664 2008 2009 2010 2011 2012 2013 *As of Sept. 30, 2013 31
  • 33. Total Trust Fees Growth in FFTAM Fees (Full year and 1st 9 months) (in thousands) $14,464 $12,617 $7,230 2008 $9,083 $11,884 $10,848 $10,808 $9,441 thru Sept. 30th $9,520 $7,904 $6,570 2009 2010 2011 32 2012 2013
  • 34. 26th Consecutive Year of Increased Earnings FFIN Earnings (Full year and 1st 9 months) (in millions) $74.2 $68.4 $59.7 $53.1 $40.1 2008 $55.9 $53.8 $41.3 2009 thru Sept. 30th $57.6 $50.9 $44.1 2010 2011 33 2012 2013
  • 35. Strong Shareholder Earnings Basic Earnings Per Share (Full year and 1st 9 months) $2.36 $2.17 $1.91 $1.71 $1.29 2008 $1.78 $1.72 $1.32 2009 thru June 30th $1.82 $1.62 $1.41 2010 2011 34 2012 2013
  • 36. FFIN Outperforms Peers Percentage Return on Average Assets 1.72% 1.74% 1.72% 1.75% 1.78% 1.75% 0.98% Peer Group First Financial 0.87% 2007 1.64%* 1.08%** 0.79% -0.03% -0.18% 0.24% 2008 2009 2010 2011 2012 2013 *As of Sept. 30, 2013 **As of June 30, 2013 35
  • 37. Strong Return on Capital Percentage Return on Average Equity 15.87% 15.27% 13.63% 13.74% 14.44% 9.45% 13.85% 13.53%* 8.57% 9.18%** 2012 2013 Peer Group First Financial 7.27% 2007 -1.83% -2.57% 2008 2009 0.88% 2010 2011 *As of Sept. 30, 2013 **As of June 30, 2013 36
  • 38. Capital & Capital Ratios (dollars in thousands) 2009 2013* 415,702 441,688 508,537 556,963 568,241 12.68 11.70 12.34 12.37 11.20 369,164 436,415 484,990 470,813 10.28 10.33 10.60 9.77 17.73 17.01 17.49 17.43 15.37 19.10 Assets 2012 10.69 As a Percent of Total 2011 352,550 Shareholders’ Equity 2010 18.26 18.74 18.68 16.49 Tangible Capital Tier 1 Leverage Ratio Tier 1 Risk Based Capital Ratio Risk Based Capital Ratio *As of Sept. 30, 2013 37
  • 39. Net Interest Margin Quarterly 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. '10 Qtr. '10 Qtr. '10 Qtr. '10 Qtr. '11 Qtr. '11 Qtr. '11 Qtr. '11 Qtr. '12 Qtr. '12 Qtr. '12 Qtr. '12 Qtr. '13 Qtr. '13 First Financial 38 Peer Group
  • 40. Working Harder and Smarter Efficiency Ratio (FFIN vs. Peers) 2007 2008 2009 2010 2011 2012 2013 First Financial 52.83% 50.76% 50.11% 49.49% 48.37% 48.14% 50.47%* Peer Group 63.12% 68.12% 69.53% 67.33% 65.57% 65.77% 66.23%** *As of Sept. 30, 2013 **As of June 30, 2013 39
  • 41. Total Return on Investment Assume you owned 1,000 shares of FFIN stock on January 1, 2012… Stock cost in January 2012 Dividend declared $33,430 ($0.99 x 1,000 shares) Increase in stock price during 2012 ($39.01 from $33.43 X 1,000 shares) $ 990 $5,580 $2210,720 2012 return on investment 19.65% 2011 return on investment 0.61% 2010 return on investment -2.99% 2009 return on investment 0.69% 2008 return on investment 50.20% 5 year compound average return 40 9.55%
  • 42. Dividends Per Share Annual Dividends Declared Per Share $0.79 2006 $0.84 2007 $0.89 $0.91 $0.91 2008 2009 2010 41 $0.95 2011 $0.99 2012
  • 43. Strong Stock Performance 140.00% 120.00% 100.00% 80.00% 60.00% 40.00% 20.00% 0.00% -20.00% -40.00% -60.00% Jan . ‘07 Dec ‘07 FFIN Dec ‘08 S&P 500 Dec . ‘09 NASDAQ 42 Dec. ‘10 Dow Jones Dec. ’11 Dec. ’12 Sept. ’13
  • 44. Challenges  Regulatory reform from Washington  Stagnant national economy  Inept federal government  Low interest rate environment  Maintaining net interest margin  Keep nonperforming assets to a minimum 43
  • 45. Opportunities  Loan Growth  Mortgage Lending  Trust Services  Treasury Management  Mobile Banking  Lower Efficiency Ratio  Potential Acquisitions 44
  • 46. www.ffin.com