First Financial Bankshares Earnings Up 10.48%

First Financial Bankshares, Inc. (NASDAQ: FFIN) today reported earnings for the third quarter of 2015 of $25.89 million, up 10.48 percent when compared with earnings of $23.43 million in the same quarter a year ago.  Basic earnings per share were $0.40 for the third quarter of 2015 compared with $0.37 in the same quarter a year ago.

All amounts for the third quarter and nine months ended September 30, 2015, include the results of the asset purchase of 4Trust Mortgage, Inc. on May 31, 2015, and the acquisition of First Bank, N.A., Conroe, Texas, on July 31, 2015. As of the acquisition date, First Bank had total gross loans of $252.46 million and total deposits of $356.75 million.

Net interest income for the third quarter of 2015 increased 14.75 percent to $56.10 million compared with $48.89 million in the same quarter of 2014. The net interest margin, on a taxable equivalent basis, was 4.13 percent for the third quarter of 2015 compared to 4.07 percent in the second quarter of 2015 and 4.18 percent in the third quarter of 2014. Included in interest income for the third quarter of 2015 was $657 thousand, or four 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 $2.66 million in the third quarter of 2015 compared with $1.55 million in the second quarter of 2015 and $896 thousand in the third quarter of 2014. The continued provision for loan losses in 2015 and 2014 reflects the overall growth in loans and continued levels of nonperforming and classified assets, including those related to the oil and gas industry. Nonperforming assets as a percentage of loans and foreclosed assets totaled 0.69 percent at September 30, 2015, compared with 0.61 percent at June 30, 2015, and 0.83 percent at September 30, 2014.  Classified loans totaled $112.12 million at September 30, 2015, compared to $95.77 million at June 30, 2015, and $81.39 million at September 30, 2014. The increase in classifieds at September 30, 2015, was primarily due to the Conroe acquisition, which included $11.30 million in classified loans.

Noninterest income increased 18.02 percent in the third quarter of 2015 to $20.45 million compared with $17.32 million in the same quarter a year ago. Trust fees increased to $4.82 million in the third quarter of 2015 compared with $4.77 million in the same quarter last year, due to continued growth in the fair value of Trust assets managed to $3.83 billion from $3.66 billion a year ago. This growth offset a $248 thousand decline in Trust oil and gas fee income in the third quarter of 2015 compared to the same quarter a year ago.  ATM, interchange and credit card fees increased 13.76 percent to $5.79 million compared with $5.09 million in the same quarter last year due to continued growth in net new accounts and debit cards. Real estate mortgage fees increased 79.99 percent in the third quarter of 2015 to $3.74 million compared with $2.08 million in the same quarter a year ago, primarily resulting from a stronger mortgage market and the asset purchase of 4Trust Mortgage, Inc.

Noninterest expense for the third quarter of 2015 totaled $39.97 million compared to $34.04 million in the third quarter of 2014. The Company's efficiency ratio in the third quarter of 2015 was 48.44 percent compared with 47.93 percent in the same quarter last year. The increase in noninterest expense in the third quarter of 2015 was primarily a result of an increase in salary and employee benefit costs to $21.65 million compared to $17.95 million in the same quarter a year ago, primarily driven by the addition of employees in compliance-related areas, the addition of 4Trust Mortgage Inc. and First Bank employees and annual pay increases. Also included in noninterest expense in the third quarter of 2015 were technology contract termination and conversion related costs totaling $1.14 million related to the First Bank acquisition.

For the nine months ended September 30, 2015, net income increased 12.27 percent to $75.19 million from $66.97 million a year ago. Basic earnings per share rose to $1.16 from $1.05 in the same period last year. Net interest income increased 10.58 percent to $159.53 million for the nine months ended September 30, 2015 from $144.28 million in the same period a year ago. The provision for loan losses totaled $5.51 million compared with $3.71 million in the same period a year ago. Noninterest income was $54.15 million for the first nine months 2015 compared with $49.60 million in the same period a year ago. Noninterest expense rose to $109.12 million compared with $101.49 million during the same period a year ago.

As of September 30, 2015, consolidated assets for the Company totaled $6.47 billion compared with $5.58 billion a year ago. Loans grew to $3.29 billion at quarter-end compared with loans of $2.84 billion a year ago. Deposits totaled $5.10 billion at September 30, 2015, compared to $4.46 billion a year ago.  Shareholders' equity rose to $792.03 million as of September 30, 2015, compared with $658.77 million in the prior year. 

"We are pleased with the earnings performance this quarter, especially in light of the additional expenses incurred to complete our acquisition of First Bank," said F. Scott Dueser, Chairman, President and CEO. "We continue to see growth in loans and earnings, and the recent acquisition of First Bank and asset purchase of 4Trust Mortgage, Inc. have contributed nicely to the bottom line. In light of the current depressed oil and gas prices, we continue to closely monitor our oil and gas industry exposure, which has declined slightly to 2.8% of gross loans and remains consistent with the 2014 year-end balances."

First Financial Bankshares operates three branches in San Angelo, including the main branch downtown, a second on Sherwood Way at the HEB, and its Knickerbocker Road location.