First Financial Bankshares' investor presentation 3rd qtr 2011

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  • Main focus should be on years in the industry – You have world-class talent.
  • First Financial Bankshares' investor presentation 3rd qtr 2011

    1. 1. 3rd Quarter 2011
    2. 2. Forward Looking Statement The numbers, as of and for the nine months ended September 30, 2011, 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. 3. Who We Are $3.9 billion financial holding company headquartered in Abilene, Texas Group of 11 separately chartered banks 121 year history Growth markets include 50 mile radius of the larger cities of Texas 2
    4. 4. 3
    5. 5. Recognitions KBW Honor Roll – One of Forty banks named – March 2011 SNL Financial top publicly traded community bank and sixth overall – March 2011 Ranked #2 in Texas and #7 in the United States by J.D. Power and Associates 2011 Retail Banking Customer Satisfaction Study – April 2011 Bank Intelligence Proven Performers - #4 in the Nation in $1 - $10 billion category – June 2011 4
    6. 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 52 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. 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  $176 million in Assets*  $151 million in deposits  $85 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 Sept. 30, 2011 6
    8. 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, MexicoEncore Bancshares Houston, FloridaFrost 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. 9. 88
    10. 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. 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. 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. 13. Preferred Acquisition: Granbury and Glen Rose 12 12
    14. 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 $1,302 M 14 41% 1(Abilene, Clyde, Moran, Albany, Odessa)First Financial Bank $155 M 1 42% 1(Hereford)First Financial Bank $171 M 4 55% 1(Eastland, Ranger, Rising Star, Cisco)First Financial Bank $172 M 4 37% 1(Sweetwater, Roby, Trent, Merkel)First Financial Bank $407 M 2 20% 2(San Angelo) * Data as of 06-30-11TOTALS $2,207M 25 ** Data as of 06-30-10 13
    15. 15. Expansion Markets DEPOSIT MARKET MARKET SHAREBANK ASSET SIZE* LOCATIONS SHARE** RANK**First Financial Bank $292 M 6 21% 1(Cleburne, Burleson, Alvarado, Midlothian, Crowley)First Financial Bank $326 M 3 8% 5 (Southlake, Trophy Club, Keller, 3 16% 3 Bridgeport, Decatur, Boyd)First Financial Bank $350 M 6 21% 2 (Stephenville, Granbury, Glen Rose, Acton)First Financial Bank $381 M 7 24% 1(Weatherford, Aledo, Willow Park, Brock, Ft. Worth)First Financial Bank $203 M 1 35% 1(Mineral Wells)First Financial Bank $176 M 1 21% 2(Huntsville) * Data as of 09-30-11TOTALS $1,728M 27 ** Data as of 06-30-11 14
    16. 16. Recent De Novo Growth  Grapevine: Branch of Southlake – Expected to Open 1st Quarter 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. 17. Senior Management at First Financial Years with Company Years in Industry Scott Dueser Chairman of the Board, President & 35 40 Chief Executive Officer J. Bruce Hildebrand, CPA Executive Vice President 9 33 Chief Financial Officer Gary L. Webb Executive Vice President 9 23 Operations Gary S. Gragg Executive Vice President 20 32 Credit Administration Marna Yerigan Executive Vice President 1 25 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 24 27 Management 16
    18. 18. Experienced Bank CEOs & Presidents Years with Company Years in Industry Ron Butler, FFB Abilene 18 29 Mike Mauldin, FFB Hereford 8 33 J.V. Martin, FFB Sweetwater 22 41 Kirby Andrews, FFB Sweetwater 20 23 Tom O’Neil, FFB Eastland 12 31 Mike Boyd, FFB San Angelo 35 38 Matt Reynolds, FFB Cleburne 6 29 Ron Mullins, FFB Stephenville 5 32 Doyle Lee, FFB Weatherford 15 39 Jay Gibbs, FFB Weatherford 9 37 Mark Jones, FFB Southlake 10 33 Ken Williamson, FFB Mineral Wells 9 39 Robert Pate, FFB Huntsville 14 30 Gaye Clements, FFB Huntsville 9 27 Gary Tucker, First Technology Services 20 36 17
    19. 19. Asset Performance Growth in Total Assets (in millions) $3,935 $3,776 $3,212 $3,279 $3,070 $2,850 2006 2007 2008 2009 2010 2011 18
    20. 20. Deposit Growth Growth in FFIN Total Deposits (in millions) $3,113 $3,187 $2,583 $2,685 $2,546 $2,384 $2,154 $2,166 $1,786 $1,849 $1,807 $1,699 $797 $959 $1,021 $685 $739 $836 2006 2007 2008 2009 2010 2011 Non Interest Bearing Interest Bearing 19
    21. 21. Deposit Products Savings Time 7.2% 24.1% Demand 32.0% Money Market 36.7% 20
    22. 22. Loan Performance Growth in FFIN Total Loans (in millions) $1,690 $1,729Real Estate $1,528 $1,566 $1,514 $1,373 $1,289Commercial $990 $1,049 $836 $855 $860Student $677 $760Consumer $394 $391 $429 $407 $330 $344 $406Agricultural $37 $31 $32 $52 $0 $160 $165 $182 $191 $175 $191 $212 $85 $73 $84 $77 $73 $81 $61 2005 2006 2007 2008 2009 2010 2011 21
    23. 23. Overview of Loan Portfolio Commercial 23.5% Agriculture 3.5% Consumer 12.3% Real Estate 60.7% 22
    24. 24. Breakdown of R/E Loan Portfolio Residential Development & Construction 5.8% 1-4 Family 38.0% Other R/E 21.5% Commercial Development and Commercial R/E Construction 30.8% 3.9% 23
    25. 25. Loan to Deposit Ratio 2005 2006 2007 2008 2009 2010 2011 End of Period 54.5 57.6 60.0 60.6 56.4 54.3 54.3Average 57.6 56.6 59.8 61.1 59.5 56.0 54.8Balances 24
    26. 26. 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 35.1% 10.9% 15.6% 19.0% 8.5% 7.8% 3.1% 25
    27. 27. Sound Lending PracticesNonperforming assets as a percentage of loans + foreclosed assets (FFIN vs. Peers) 2006 2007 2008 2009 2010 2011 FirstFinancial 0.30% 0.31% 0.80% 1.46% 1.53% 1.60%Peer Group 0.60% 0.98% 2.63% 5.41% 5.49% 5.04%* *As of June 30, 2011 26
    28. 28. Allowance for Loan Losses and Provision for Loan Losses (in thousands) $34,301 $31,106 $27,612 $21,529 $17,462 $16,201 $14,719 $11,419 $7,957 $8,962 $5,405* $1,320 $2,061 $2,331 2005 2006 2007 2008 2009 2010 2011 ALLL Provision *Through 9 – months ended Sept. 30, 2011 27
    29. 29. Summary of Bond Portfolio Treasuries Corporates 0.94% Agencies 5.85% 15.01% CMOs 27.76% Muni 36.61% MBSs 13.83% 28
    30. 30. Municipal Allocation by State State Percentage Texas 57.78% Michigan 5.66% Wisconsin 4.44% Illinois 2.48% Washington 2.47% New Jersey 2.38% Massachusetts 2.35% Florida 2.19% Kentucky 1.95% California 1.87% Louisiana 1.70% Utah 1.50% Minnesota 1.50% Other 37 states 11.73% 29
    31. 31. Growth in Trust Assets Total Trust Assets – Book Value (in millions) $1,909 $1,784 $1,631 $1,664 $1,428 $1,300 2006 2007 2008 2009 2010 2011 30
    32. 32. Total Trust Fees Growth in FFTAM Fees (Full year and 1st 9 months) (in thousands) thru Sept 30th $10,808 $9,441 $9,520 $9,083 $8,746 $7,904 $7,665 $7,230 $6,531 $6,570 $5,572 2006 2007 2008 2009 2010 2011 31
    33. 33. 24th Consecutive Year of Increased Earnings FFIN Earnings (Full year and 1st 9 months) (in millions) $59.7 $1.3 $53.1 $53.8 $49.5 $50.9 $46.0 $44.1 $40.1 $41.3 $37.0 $34.3 2006 2007 2008 2009 2010 2011 32
    34. 34. Strong Shareholder Earnings Basic Earnings Per Share (Full year and 1st 9 months) $1.91 $0.04 $1.71 $1.72 $1.62 $1.59 $1.48 $1.41 $1.29 $1.32 $0.04 $1.18 $1.10 2006 2007 2008 2009 2010 2011 33
    35. 35. FFIN Outperforms Peers Percentage Return on Average Assets 1.80% 1.72% 1.74% 1.72% 1.75% 1.79% 1.68% 1.15% 1.10% 0.87% 0.72%* First Financial Peer Group 0.26% -0.03% -0.18% 2005 2006 2007 2008 2009 2010 2011 *(thru June 30th) 34
    36. 36. Strong Return on Capital Percentage Return on Average Equity 16.15% 16.20% 15.87% 15.27% 14.65% 13.33% 13.63% 13.74% 12.61% 9.45% 6.56%* First Financial Peer Group 1.18% -1.83% -2.57% 2005 2006 2007 2008 2009 2010 2011 *(thru June 30th) 35
    37. 37. Capital & Capital Ratios (dollars in thousands) 2007 2008 2009 2010 2011 Shareholders’ Equity 335,495 368,782 415,702 441,688 499,199As a Percent of Total 10.93 11.48 12.68 11.70 12.68 Assets Tangible 270,288 304,779 352,550 369,164 426,993 Capital Tier 1 9.23 9.68 10.69 10.28 10.45 Leverage Ratio Tier 1 Risk 14.65 15.89 17.73 17.01 17.89 Based Capital Ratio Risk Based 15.62 17.04 19.10 18.26 19.14 Capital Ratio 36
    38. 38. Net Interest MarginQuarterly Interest Margin 5.00% 4.75% 4.50% 4.25% 4.00% 3.75% 3.50% 3.25% 3.00% 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd Qtr. 08 Qtr. 08 Qtr. 08 Qtr. 09 Qtr. 09 Qtr. 09 Qtr. 09 Qtr. 10 Qtr. 10 Qtr. 10 Qtr. 10 Qtr. 11 Qtr. 11 Qtr. 11 First Financial Peer Group 37
    39. 39. Working Harder and SmarterEfficiency Ratio (FFIN vs. Peers) 2005 2006 2007 2008 2009 2010 2011 FirstFinancial 52.48% 53.57% 52.83% 50.76% 50.11% 49.49% 48.86%Peer Group 60.12% 61.29% 63.12% 68.12% 69.53% 67.08% 66.81%* *As of June 30, 2011 38
    40. 40. Total Return on Investment Assume you owned 1,000 shares of FFIN stock on January 1, 2010… Stock cost in January 2010 $36,150 Dividend received ($0.91 x 1,000 shares) $ 910 Decrease in stock price during 2010 ($1,980) $2210,720 ($36.15 to $34.17 X 1,000 shares) 2010 return on investment -2.99% 2009 return on investment 0.69% 2008 return on investment 50.20% 2007 return on investment -7.05% 2006 return on investment 22.76% 5 year average return 10.50% 39
    41. 41. Dividends Per Share Annual Dividends Per Share $0.91 $0.91 thru $0.89 Sept. 30th $0.84 $0.79 $0.73 $0.71 2005 2006 2007 2008 2009 2010 2011 40
    42. 42. 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 Sept. ’11 FFIN S&P 500 NASDAQ Dow Jones 41
    43. 43. Challenges  Regulatory reform from Washington  Keep nonperforming assets to a minimum  Maintain net interest margin  Lower efficiency ratio 42
    44. 44. Opportunities  Loan Growth  Mortgage Lending  Trust Services  Treasury Management  Potential Acquisitions 43
    45. 45. www.ffin.com

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