2nd Quarter 2017 First Financial Bankshares, Inc.

Transcription

1 2nd Quarter 2017 First Financial Bankshares, Inc.

2 Forward Looking Statement The numbers, as of and for the quarter and six-months ended June 30, 2017, 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 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 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. 1

3 Who We Are $6.9 billion financial holding company headquartered in Abilene, Texas Group of 10 separate regions 127 year history Growth markets include 50 mile radius of Dallas, Fort Worth, and Houston 2 2

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5 Recognitions Financial Exploitation Prevention Program Texas Bankers Association Cornerstone Award for Day of Service May 2017 Texas Bankers Association 2016 Leaders in Financial Education Award May 2016 House Investments and Financial Services Committee March 2016 Texas Senate Committee on Business and Commerce Jan AARP Roundtable Discussion November 2015 ABA Foundation Community Commitment Award November 2015 White House Conference on Aging July

6 Recognitions Raymond James Community Bankers Cup #2, One of thirty banks named April 2017 KBW Honor Roll One of fifteen banks named April 2017 SNL - #5 Best-Performing Regional Bank April Proven Performers Award Winner Bank Intelligence Solutions American Banker - #15 Based on three year average Return on Equity May

7 What Makes Us Different One Bank, Ten Regions Concept One Bank Consolidation of backroom operations, technology, and compliance (lower efficiency ratio) Ten 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 6 6

8 FFIN s Unique Positioning in Texas Bank Comerica Green Frost Independent International Bancshares Legacy Texas Prosperity Southside Texas Capital Triumph Veritex Key Markets DFW, Austin, Houston, California, Michigan, Florida, Mexico Houston, Austin, Dallas San Antonio, Austin, Corpus Christi, DFW, Rio Grande, West Texas North and Central Texas Rio Grande, Houston, San Antonio, Oklahoma Dallas Houston, DFW, Austin, West Texas, South Central Texas, and Oklahoma East Texas DFW, Austin, San Antonio, and Houston Dallas Dallas 7 7

9 First Bank, N.A. - Conroe Acquisition Consummated July 31, 2015 Montgomery, Walker, & Harris Counties (On I-45 North of Houston) Exxon Mobil Headquarters in the Woodlands Montgomery County Approximately 500,000 residents, 55% growth from 2000 to 2010, 24 th fastest growing county in the United States #4 Market Share in Conroe 10.6% 8 Branches in Conroe, Magnolia, Tomball, Cut and Shoot, Montgomery, and Huntsville; additional site on Grand Parkway in Spring, Texas to expand $374 million in Assets at acquisition date $343 million in deposits $248 million in loans 1.06% Return on Assets in 2014 $61.0 million purchase price of our stock which represents 16x last twelve months earnings Conroe acquisition is consistent with our acquisition model of high growth areas, strong management and excellent earnings opportunity Provides diversification and fits well into our footprint Management and Board share same values to outstanding customer service 8 8

10 4Trust Mortgage Acquisition Consummated May 31, 2015 Originated $175 million in mortgage loans in 2014 Compared to $225 million that First Financial Bank originated in year old Company with offices in Fort Worth, Dallas and North Richland Hills $1.9 million purchase price Troy Fore is now President of Mortgage Division of First Financial Bank; other owners joining First Financial as EVP s Tammie Harding, Kami Graves, and Ryan Craig Considered one of the top mortgage companies in Fort Worth Are now offering expanded mortgage products and services to customers 9 9

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12 Texas: Large and Growing Five most populous states:* Growth ( ) California 39.2 million 8.3% Texas 27.7 million 21.1% Florida 20.3 million 14.0% New York 19.8 million 2.8% Illinois 12.9 million 0.8% * U.S. Census Bureau 11 11

13 Target Markets Population Growth Population growth ( ) in FFIN expansion markets:* Texas 21.1% Bridgeport & Wise County 20.1% Fort Worth & Tarrant County 20.9% Cleburne & Johnson County 14.6% Weatherford, Willow Park, Aledo & Parker County 31.8% Granbury & Hood County 18.0% Stephenville & Erath County 16.3% Conroe & Montgomery County 46.0% * U.S. Census Bureau

14 Core Markets: West Central Texas Markets served benefiting from well-established, long- time customers REGION ASSET SIZE* LOCATIONS DEPOSIT MARKET SHARE** MARKET SHARE RANK** First Financial Bank (Abilene, Clyde, Moran, Albany, Odessa $2,431M 23 46% 1 Eastland, Ranger, Rising Star, Cisco, Sweetwater, Roby, Trent, Merkel) First Financial Bank (Hereford) First Financial Bank (San Angelo) $190M 1 45% 1 $685M 3 26% 1 TOTALS $3,306M 27 * Data as of ** Data as of

15 Expansion Markets REGION ASSET SIZE* LOCATIONS DEPOSIT MARKET SHARE** MARKET SHARE RANK** First Financial Bank $475M 4 20% 2 (Cleburne, Burleson, Alvarado) (Midlothian, Waxahachie) 2 10% 4 First Financial Bank $531M 4 4% 5 (Southlake, Trophy Club, Keller, Grapevine) (Bridgeport, Decatur, Boyd) 3 20% 2 First Financial Bank (Stephenville, Mineral Wells, Granbury, Glen Rose, Acton) First Financial Bank (Weatherford, Aledo, Willow Park, Brock) First Financial Bank (Fort Worth) $780M 7 30% 1 $519M 6 23% 1 $80M First Financial Bank $522M 3 37% 1 (Orange, Mauriceville, Vidor) (Newton, Port Arthur, Beaumont) 3 3% 7 First Financial Bank (Conroe, Magnolia, Cut and Shoot, Montgomery, Huntsville, Willis, Tomball, New Waverly) (Market Share for Huntsville, Conroe, Magnolia, Cut and Shoot, Montgomery and Willis Only) $604M 9 10% 5 TOTALS $3,511M 42 * Data as of ** Data as of

16 Recent De Novo Growth New Waverly: Branch of Huntsville August 2014 Beaumont: Branch of Orange August 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 (New Building Opened August 2016) Lamesa: Office of Trust Company April 2011 Odessa: Branch of Abilene February 2010 (New Building Opened September 2016) 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 (New Building Opened May 2016) 15

17 Fort Worth Forest Park Blvd. and Rosedale (Opened May 2016)

18 Fort Worth Forest Park Blvd. and Rosedale 17 17

19 Executive Management at First Financial Years with Company Years in Industry Scott Dueser Chairman of the Board, President & Chief Executive Officer Ron Butler Executive Vice President Chief Administrative Officer Troy Fore President First Financial Mortgage Gary S. Gragg Executive Vice President Lending J. Bruce Hildebrand, CPA Executive Vice President Chief Financial Officer Monica Houston Executive Vice President Retail Banking & Training

20 Executive Management at First Financial Years with Company Years in Industry Luke Longhofer Executive Vice President & Loan Review Officer Lending Randy Roewe Executive Vice President Chief Risk Officer Kirk Thaxton, CTFA President First Financial Trust & Asset Management Marna Yerigan Executive Vice President Lending

21 Senior Management at First Financial Years with Company Years in Industry Brandon Harris Senior Vice President Appraisal Services Larry Kentz Senior Vice President & Compliance Officer Compliance Michele Stevens Senior Vice President Advertising and Marketing J. Kyle McVey Senior Vice President Chief Accounting Officer

22 Experienced Regional CEOs & Presidents Years with Company Years in Industry Marelyn Shedd, Abilene Kirby Andrews, Sweetwater David Bailey, Eastland Mike Mauldin, Hereford Chris Evatt, San Angelo Tom O Neil, Cleburne Trent Swearengin, Stephenville Jay Gibbs, Weatherford Justin Hooper, Weatherford Mark Jones, Southlake Stephen Lee, Southeast Region 4 28 Sam Baker, Conroe 2 41 Robert Pate, Conroe Martin Noto, Fort Worth

23 Asset Performance Growth in Total Assets (in millions) $6,665 $6,810 $6,947* $5,848 $5,222 $4, *As of June 30,

24 Deposit Growth Growth in FFIN Total Deposits (in millions) $4,750 $5,190 $5,479 $5,626* $4,135 $3,633 $2,321 $2,773 $3,180 $3,444 $3,761 $3,770 $1,312 $1,362 $1,570 $1,746 $1,718 1, Non Interest Bearing Interest Bearing *As of June 30, 2017

25 Deposit Products Savings 12.9% Time 8.5% Demand 33.0% Money Market 45.6% *As of June 30, 2017

26 Account Growth December 31, 2013 December 31, 2014 December 31, 2015 December 31, 2016 June 30, 2017 Total Number of Accounts 208, , , , ,805 Net Growth in ,308 Accounts* Net Growth in ,687 Accounts Net Growth in ,886 Accounts** Net Growth in ,015 Accounts Net Growth in ,091 Accounts *(Excluding Orange Acquisition) **(Excluding Conroe Acquisition) 25 25

27 Loan Performance Growth in FFIN Total Loans (in millions) $3,351 $3,384 $3,458 Real Estate $2,689 $2,938 Commercial $2,089 $1,689 $1,831 $2,178 $2,217 $2,290 Consumer $1,238 Agricultural $510 $590 $640 $685 $674 $668 $273 $334 $361 $386 $409 $423 $68 $76 $106 $102 $84 $ *As of June 30, 2017

28 Overview of Loan Portfolio Commercial 19.3% Agriculture 2.2% Consumer 12.2% Real Estate 66.3% Note: Oil & Gas Exposure 2.03% *As of June 30,

29 Breakdown of R/E Loan Portfolio Residential Development & Construction 7.7% Other R/E 16.7% 1-4 Family 45.4% Commercial R/E 24.4% Commercial Development and Construction 5.8% *As of June 30,

30 Oil & Gas Portfolio Analysis Oil & Gas Supplemental Information (dollars in thousands) December 31, 2016 June 30, 2017 Oil & Gas Loans 78,483 70,187 % of Total Loans 2.32% 2.03% Classified Oil & Gas Loans 32,518 24,404 Non Accrual Oil & Gas Loans 4,092 2,860 Quarter Ended Net Charge-offs ALLL of % of Oil & Gas 6.28% 7.24% 29 29

31 Loan to Deposit Ratio * End of Period Average Balances *As of June 30,

32 Sound Lending Practices Nonperforming assets as a percentage of loans + foreclosed assets (FFIN vs. Peers) First Financial 1.22% 1.16% 0.74% 0.90% 0.86% 0.72%* Peer Group 3.67% 2.71% 1.92% 1.32% 1.05% 1.01%** *As of June 30, 2017 **As of March 31, 2017

33 Loan Repricing Loan Portfolio Interest Rate Risk Analysis Less than 1 year 1 to 2 years 3 to 5 years 6 to 10 years Over 10 years 34.59% 13.30% 32.49% 14.35% 5.27% *As of June 30,

34 Allowance for Loan Losses and Provision for Loan Losses (in thousands) $41,877 $45,779 $47,410* $34,839 $33,900 $36,824 $3,484 $3,753 $4,465 $9,685 $10,212 $3,675* ALLL Provision *As of and for 6 months ended June 30, 2017

35 Summary of Bond Portfolio Agencies 2.65% Corporates 0.92% Treasuries 0.38% CMOs 22.29% Muni 50.08% MBSs 23.68% *As of June 30,

36 Growth in Trust Assets Total Trust Assets Book Value / Fair Value (in millions) $4,373 $4,733* $2,233 $2,852 $2,465 $3,361 $2,774 $3,759 $3,870 $3,060 $3,374 $3,635* Book Value Fair Value *As of June 30,

37 Total Trust Fees Growth in FFTAM Fees (Full year and 1 st 6 months) (in thousands) $16,317 $18,766 $19,252 $19,636 thru June 30th $14,464 $11,764 $7,124 $7,746 $9,125 $9,472 $9,

38 Total Trust Net Income Growth in FFTAM Net Income (Full year and 1 st 6 months) (in thousands) $7,109 $7,449 $7,190 thru June 30th $6,142 $5,183 $2,597 $2,900 $3,542 $3,631 $3,350 $4,

39 30th Consecutive Year of Increased Earnings FFIN Earnings (Full year and 1st 6 months) (in millions) $100.4 $104.8 $74.2 $78.9 $89.6 thru June 30 $36.1 $38.1 $43.5 $49.3 $52.5 $

40 Strong Shareholder Earnings Basic Earnings Per Share (Full year and 1st 6 months) $1.18 $1.24 $1.40 $1.55 $1.59 thru June 30th $0.58 $0.60 $0.68 $0.77 $0.80 $

41 FFIN Outperforms Peers Percentage Return on Average Assets 1.75% 1.64% 1.65% 1.61% 1.59% 0.98% 1.03% 0.95% 0.95% 1.00% First Financial Peer Group

42 Strong Return on Capital Percentage Return on Average Equity 13.85% 13.75% 14.00% 13.60% 12.36% 8.56% 8.88% 8.32% 8.59% 9.13% First Financial Peer Group

43 Capital & Capital Ratios (dollars in thousands) * Shareholders Equity 587, , , , ,442 As a Percent of Total Assets Tangible Capital Tier 1 Leverage Ratio Common Equity Tier 1 Capital Ratio , , , , , Tier 1 Capital Ratio Total Capital Ratio *As of June 30, 2017

44 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 Qtr. '14 2nd Qtr. '14 3rd Qtr. '14 4th Qtr. '14 1st Qtr. '15 2nd Qtr. '15 3rd Qtr. '15 4th Qtr. '15 1st Qtr. '16 2nd Qtr. '16 3rd Qtr. '16 4th Qtr. '16 1st Qtr. '17 2nd Qtr. '17 First Financial Peer Group 43 43

45 Working Harder and Smarter Efficiency Ratio (FFIN vs. Peers) First Financial 48.14% 50.20% 49.24% 47.61% 49.22% 49.49%* Peer Group 65.77% 67.87% 66.94% 63.92% 62.83% 61.20%** *As of and for 6 months ended June 30, **As of and for 3 months ended March 31, 2017

46 Total Return on Investment Assume you owned 1,000 shares of FFIN stock on January 1, 2016 Stock cost in January 2016 $30,170 Dividend declared ($0.70 x 1,000 shares) $ 700 Increase in stock price during 2016 ($30.17 to $45.20 X 1,000 shares) $15, return on investment 52.14% 2015 return on investment 3.05% 2014 return on investment -7.96% 2013 return on investment 72.11% 2012 return on investment 19.65% 5 year compound average return 21.94% 12.36% 45 45

47 Dividends Per Share Annual Dividends Declared Per Share $0.50 $0.52 $0.55 $0.62 $

48 Increased Cash Dividend Announced at shareholder meeting on April 25, 2017 Increased cash Dividend by $0.01 to $0.19 per quarter 5.6% increase 2017 Dividend will be $

49 Strong Stock Performance % % % % 50.00% 0.00% % % Jan. 07 Dec 07 Dec 08 Dec. 09 Dec. 10 Dec. 11 Dec. 12 Dec. 13 Dec. 14 Dec. 15 Dec. 16 Jun. 17 FFIN S&P 500 NASDAQ Dow Jones 48 48

50 Focus for 2017 Grow Loans and Deposits Grow Mortgage and Trust Improve our net Interest margin Increase our fee income Control expenses Improve credit quality Make an acquisition 49

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