SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended
Commission File Number
September 30, 1994 0-7674
FIRST FINANCIAL BANKSHARES, INC.
(Exact Name of Registrant as Specified in its Charter)
Texas 75-0944023
(State of Incorporation) (I.R.S. Employer
Identification No.)
400 Pine Street, Abilene, Texas 79601
(Address of Executive Offices) (Zip Code)
Registrant's Telephone Number (915) 675-7155
Securities Registered Pursuant to Section 12(b) of the Act:
None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, Par Value $10.00 Per Share
(Title of Class)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X . No .
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest practicable
date.
4,993,796 shares
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
Item Page
1. Financial Statements
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Signatures
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
The consolidated balance sheets of First Financial Bankshares, Inc.
at September 30, 1994, December 31, 1993, and September 30, 1993,
and the consolidated statements of income, the consolidated
statements of changes in stockholders'equity, and the consolidated
statements of cash flows for the nine months ended September 30,
1994 and 1993, follow on pages 4 through 8.
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993 1993
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 53,642,520 $ 42,228,904$ 55,214,848
Interest-bearing
deposits in banks 396,000 981,000 787,000
Federal funds sold 13,737,000 57,129,000 45,506,000
Investment securities:
U.S Treasury and
government agencies 438,867,645 415,798,397435,839,601
State and political
subdivisions 17,834,036 14,837,997 17,484,964
Other 6,728,227 11,419,797 2,854,971
Total investment
securities463,429,908 442,056,191 456,179,536
Loans 421,493,804 418,178,893427,099,587
Less:Allowance for
loan losses 8,928,056 9,134,701 9,013,387
Unearned discount 6,981,837 6,585,494 6,856,584
Net loans 405,583,911 402,458,698 411,229,616
Bank premises and
equipment-net 30,033,538 29,346,15730,052,817
Goodwill 1,421,744 1,250,170 1,512,902
Other assets 20,320,973 20,448,447 17,499,926
TOTAL ASSETS $988,565,594 $995,898,567$1,017,982,645
LIABILITIES
Non-interest-bearing
deposits $187,988,596 $172,965,384$ 193,934,140
Interest-bearing
deposits-demand 293,569,414 304,349,177 306,975,494
Interest-bearing
deposits-time 396,845,559 412,714,175 412,439,927
Total deposits 878,403,569 890,028,736 913,349,561
Short-term borrowings 160,000 130,000 90,000
Mortgage notes payable 1,078,997 1,173,589 1,150,988
Dividends payable 1,397,354 1,197,377 1,198,940
Other liabilities 5,934,997 8,862,178 5,483,473
Total liabilities 886,974,917 901,391,880 921,272,962
SHAREHOLDERS' EQUITY
Capital stock-$10 par
value; 10,000,000
shares authorized 49,937,960 37,538,920 39,787,670
Capital surplus 36,856,645 18,301,148 15,948,384
Retained earnings 15,662,973 38,666,619 40,973,629
Unrealized (loss) on
investment securities
available for sale (866,901) - -
Total Shareholders'
equity 101,590,677 94,506,687 96,709,683
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $988,565,594 $995,898,567$1,017,982,645
</TABLE>
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS - UNAUDITED
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1 1994 1993 1
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans, including fees $ 9,117,844 $ 8,396,966 $25,967,957 $24,673,184
Investment income-
taxable 5,876,054 6,135,47217,853,626 18,819,603
Investment income-
tax exempt 205,259 189,487 641,547 554,493
Interest on interest
bearing deposits 5,954 12,502 28,112 34,468
Interest on federal
funds sold and other 318,712 415,085 913,366 1,101,730
Total interest
income 15,523,823 15,149,51245,404,608 45,183,478
INTEREST EXPENSE
Interest-bearing
deposits 5,368,508 5,023,34415,339,117 15,163,026
Short-term borrowings 2,905 1,227 3,618 1,510
Interest on mortgage
notes payable 25,684 30,512 78,482 88,295
Total interest
expense 5,397,097 5,055,083 15,421,217 15,252,831
NET INTEREST INCOME 10,126,726 10,094,42929,983,391 29,930,647
Provision for
loan losses (185,000) 231,500 (40,000) 457,510
NET INTEREST INCOME
AFTER PROVISION FOR
LOAN LOSSES 10,311,726 9,862,92930,023,391 29,473,137
NON-INTEREST INCOME
Trust fees 733,339 736,472 2,254,574 2,086,162
Service fees on
deposit accounts 1,409,627 1,401,119 4,122,111 4,011,568
Other 798,204 607,900 2,314,050 1,873,268
Total non-
interest
income 2,941,170 2,745,491 8,690,735 7,970,998
NON-INTEREST EXPENSE
Salaries and
employee benefits 4,024,302 3,993,10812,272,422 11,662,995
Net occupancy and
equipment expenses 660,818 654,829 1,946,248 1,783,366
Equipment expense 500,421 476,826 1,544,953 1,400,369
FDIC assessments 491,568 471,022 1,491,326 1,458,545
Correspondent bank
service charges 217,728 247,924 656,874 686,282
Other 2,309,234 1,920,292 6,536,125 6,067,700
Total non-
interest expense 8,204,071 7,764,001 24,447,948 23,059,257
EARNINGS BEFORE
INCOME TAXES 5,048,825 4,844,41914,266,178 14,384,878
Provision for
income tax 1,696,778 1,599,158 4,660,005 4,687,924
EARNINGS BEFORE
CUMULATIVE ADJUSTMENT 3,352,047 3,245,261 9,606,173 9,696,954
Cumulative adjustment-
change in accounting
principle - - - 1,023,595
NET EARNINGS
AFTER CUMULATIVE
ADJUSTMENT DUE
TO CHANGE IN
ACCOUNTING
PRINCIPLE $ 3,352,047 $ 3,245,261 $ 9,606,173 $10,720,549
EARNINGS PER
SHARE BEFORE
CUMULATIVE
ADJUSTMENT $ 0.67 $ 0.65 $ 1.92 $ 1.95
NET EARNINGS
PER SHARE
AFTER CUMULATIVE
ADJUSTMENT 2 $ 0.67 $ 0.65 $ 1.92 $ 2.16
DIVIDENDS PER
SHARE 3 $ 0.28 $ 0.26 $ 1.54 $ 0.70
1 Restated to reflect pooling of interests.
2 Earnings per share are calculated using weighted average shares outstanding
for each period presented, giving retroactive effect to shares issued
through a 25% stock dividend in the second quarter of 1994.
3 Dividends per share are calculated using actual number of shares
outstanding at the end of each period presented, giving retroactive effect
to shares issued through a 25% stock dividend in the second quarter of
1994.
</TABLE>
FIRST FINANCIAL BANKSHARES, INC. AND
SUBSIDIARIES CONSOLIDATED
STATEMENT OF CHANGES IN SHAREHOLDERS'
EQUITY - UNAUDITED
<TABLE>
<CAPTION>
Unrealized
(Loss) On
Investment Total
Securities Stock-
Capital Stock 1 Capital Retained Available holders'
Shares Amount Surplus 1 Earnings 1 for Sale
Equity 1
<S> <C> <C> <C> <C> <C>
<C>
Balances at January 1, 1993 3,616,865 $ 36,168,650 $ 6,575,877 $ 44,491,880 $
- - $ 87,236,407
Net earnings 13,746,463
13,746,463
Cash dividends (4,540,506)
(4,540,506)
Exercise of stock options 23,386 233,860 48,388
282,248
Cash paid for fractional
shares resulting from
stock dividend (14,929)
(14,929)
Stock dividend 338,516 3,385,160 9,324,119 (12,709,279)
Balances at December 31,1993 3,978,767 39,787,670 15,948,384 40,973,629
- 96,709,683
Initial unrealized gain
recorded on investment
securities available
for sale 207,991
207,991
Net earnings - year to date 9,606,173
9,606,173
Cash dividends (4,062,989)
(4,062,989)
Exercise of stock options 20,277 202,770 18,469
221,239
Cash paid for fractional
shares resulting from
stock dividend (16,528)
(16,528)
Stock dividend 994,752 9,947,520 20,889,792 (30,837,312)
Change in unrealized
gain (loss) (1,074,892)
(1,074,892)
Balances at September 30,1994 4,993,960 $ 49,937,960 $ 36,856,645 $ 15,662,973 $
(866,901) $ 101,590,677
1 Restated to reflect pooling of interests.
</TABLE> FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1994 1993
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 9,606,173 $ 10,720,549
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation and amortization 2,068,898 1,679,595
Provision for loan losses (40,000) 457,510
Premium amortization, net of
discount accretion 3,430,019 4,120,538
(Gain) loss on sale of assets 14,948 (104,081)
Deferred federal income tax benefit (561,825) 146,470
(Increase) decrease in other assets (2,322,965) 666,825
Increase (decrease) in other
liabilities 451,524 (1,099,963)
Total adjustments 3,040,599 5,866,894
Net cash provided by operating
activities 12,646,772 16,587,443
CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease in interest-bearing
deposits in banks 391,000 -
Cash and cash equivalents received
through acquisition, net of
payment for stock - 5,511,888
Cash and cash equivalents received
through purchase of assets and
liabilities, net of cash paid - 16,876,513
Proceeds from sale of investment
securities 2,739,810 18,370,580
Proceeds from maturity of investment
securities 90,419,931 125,623,298
Purchase of investment securities (104,909,852) (137,895,005)
Net (increase)decrease in loans 5,937,068 (11,561,115)
Capital expenditures (1,964,602) (2,616,367)
Proceeds from sale of other assets 6,389 1,492,827
Net cash provided (used) by
investing activities (7,380,256) 15,802,619
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) in demand deposits (19,351,623) (14,536,170)
Net (decrease) in time deposits (15,594,368) (25,186,816)
Net decrease in other short-term
borrowings 70,000 120,000
Repayment of long-term debt (71,991) (65,576)
Proceeds from stock issuances 221,239 217,684
Cash paid for fractional shares (16,526) -
Purchase of treasury stock - (344,860)
Dividends paid (3,864,575) (3,075,130)
Net cash (used) by financing
activities (38,607,844) (42,870,868)
Net (decrease) in cash and
cash equivalents (33,341,328) (10,480,806)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 100,720,848 109,838,710
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 67,379,520 $ 99,357,904
SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Assets acquired through foreclosure $ 35,601 $ 531,664
Loans to finance sales of other
real estate 263,965 530,950
Unrealized (loss) on investment
securities available for sale (1,262 763) -
25% stock dividend
increasing (decreasing):
Capital stock 9,947,520 -
Capital surplus 20,889,792 -
Retained earnings (30,837,312) -
The Company acquired substantially
all of the capital stock of
Concho Bancshares, Inc. in exchange
for capital stock of the Company,
as follows:
Capital stock 2,292,620 -
Capital surplus 2,275,500 -
Retained earnings 1,669,669 -
The Company purchased all of the
capital stock of Stephenville Bank
and Trust for $7,750,000. In
conjunction with the acquisition,
liabilities were assumed, as follows:
Fair value of assets acquired - 87,419,036
Cash paid for the capital stock - (7,750,000)
Liabilities assumed - 79,669,036
The Company purchased assets from
another Bank for $500,000. In
conjunction with the acquisition,
liabilities were assumed, as follows:
Fair value of assets acquired - 19,689,660
Cash paid for the capital stock - (500,000)
Liabilities assumed - 19,189,660
10% stock dividend
increasing (decreasing):
Capital stock - 3,385,160
Capital surplus - 9,309,190
Retained earnings - (12,694,350)
OTHER DISCLOSURES:
Interest paid 15,491,679 16,123,987
Federal income tax paid 5,152,308 5,087,697
</TABLE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Net income for the third quarter amounted to $3.3 million, or $.67
per share, as compared to $3.2 million, or $.65 per share, earned
in the same period last year. The slight earnings increase is
attributed primarily to a credit provision for loan losses which
resulted from reductions in classified loans and net charge offs.
For the nine months ended September 30, 1994, the Company's
earnings totaled $9.6 million, or $1.92 per share, which is
slightly below the prior year amount of $9.7 million, or $1.95 per
share. Compared to the same period last year, the Company's
current year to date earnings have been affected by lower
provisions for loan losses, higher data processing expenses, and
nonrecurring merger expenses.
In March 1994, the Company acquired through a stock exchange,
Concho Bancshares, Inc. and its subsidiary, Southwest Bank of San
Angelo. The transaction was accounted for as a pooling of
interests; therefore, prior period financial statements have been
restated to include Concho Bancshares, Inc. The following table
shows the effect of Concho Bancshares, Inc.'s operations for the
periods prior to combination (1993 amounts are before cumulative
adjustment due to change in accounting principle):
<TABLE>
<CAPTION>
First
$(thousands) Financial Concho Combined
<S> <C> <C> <C>
Three Months Ended September
30, 1994:
Net Interest Income $ 9,293 $ 834 $ 10,127
Net Income 3,119 233 3,352
Three Months Ended September
30, 1993:
Net Interest Income 9,201 893 10,094
Net Income 3,041 204 3,245
Nine Months Ended September
30, 1994:
Net Interest Income 27,495 2,488 29,983
Net Income 9,226 380 9,606
Nine Months Ended September
30, 1993:
Net Interest Income 27,296 2,635 29,931
Net Income 9,091 606 9,697
</TABLE>
Balance Sheet Review
As of September 30, 1994, the Company's consolidated assets totaled
$988.6 million compared with $1.02 billion at December 31, 1993 and
$995.9 million at September 30, 1993. As previously stated, the
1993 amounts have been restated to reflect the acquisition of
Concho Bancshares which was accounted for as a pooling.
The decline in total assets from year-end 1993 relates to a
decrease in Federal funds sold and is attributed to seasonal pay
downs of commercial loans and decreases in deposit balances. When
compared to September 30, 1993, the Company's balance sheet
reflects increases of $21 million and $3 million, respectively, in
investment securities and loans funded primarily from a reduction
in Federal funds sold. At September 30, 1994, the Company held
available-for-sale $41.8 million in investment securities which
were approximately $1.3 million below market value. Total deposits
at September 30, 1994, amounted to $878.4 million as compared to
$913.3 million at December 31, 1993, and $890.0 million at
September 30, 1993. Non-interest bearing deposits remain in line
with historical trends and represent an 8.7% increase over the 1993
third quarter-end balance. The decrease in interest bearing
deposits is for the most part reflective of the higher yielding
non-deposit investments now available to investors.
Liquidity and Capital
The Company's consolidated statements of cash flows are presented
on pages 7-8 in this report. At September 30, 1994, the balance
sheet reflects adequate liquidity, and the parent company had no
funded debt under its $5 million line of credit from an
unaffiliated financial institution.
The ratio of equity capital to assets at September 30, 1994, was
10.3% as compared to 9.5% at December 31, 1993, and 9.5% at
September 30, 1993. During the third quarter the Company declared
a cash dividend of $.28 per share which amounted to $1.39 million,
or 41.7% of second quarter earnings.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
FIRST FINANCIAL BANKSHARES, INC.
Date By:
Curtis R. Harvey
Executive Vice President and
Chief Financial Officer
Date By:
Sandy Lester
Secretary-Treasurer
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> QTR-3
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 53,642,520
<INT-BEARING-DEPOSITS> 396,000
<FED-FUNDS-SOLD> 13,737,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 463,429,908
<INVESTMENTS-MARKET> 447,649,108
<LOANS> 414,511,967
<ALLOWANCE> 8,928,056
<TOTAL-ASSETS> 988,565,594
<DEPOSITS> 878,403,569
<SHORT-TERM> 160,000
<LIABILITIES-OTHER> 8,411,348
<LONG-TERM> 0
<COMMON> 49,937,960
0
0
<OTHER-SE> 51,652,717
<TOTAL-LIABILITIES-AND-EQUITY> 988,565,994
<INTEREST-LOAN> 25,967,957
<INTEREST-INVEST> 18,495,173
<INTEREST-OTHER> 941,478
<INTEREST-TOTAL> 45,404,608
<INTEREST-DEPOSIT> 15,339,117
<INTEREST-EXPENSE> 15,421,217
<INTEREST-INCOME-NET> 29,983,391
<LOAN-LOSSES> (40,000)
<SECURITIES-GAINS> (14,948)
<EXPENSE-OTHER> 24,447,948
<INCOME-PRETAX> 14,266,178
<INCOME-PRE-EXTRAORDINARY> 14,266,178
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,606,173
<EPS-PRIMARY> 1.92
<EPS-DILUTED> 1.92
<YIELD-ACTUAL> 4.47
<LOANS-NON> 1,902,071
<LOANS-PAST> 96,132
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 9,013,387
<CHARGE-OFFS> 1,130,421
<RECOVERIES> 1,085,090
<ALLOWANCE-CLOSE> 8,928,056
<ALLOWANCE-DOMESTIC> 8,928,056
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
