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
March 31, 1995
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 .
There were 5,006,077 shares of common stock outstanding as
of
May 4, 1995.
<PAGE>
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
Item Page
1. Financial Statements 4
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Signatures 10
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
The consolidated balance sheets of First Financial Bankshares,
Inc.
at March 31, 1995, December 31, 1994, and March 31, 1994, and the
consolidated statements of earnings, the consolidated statements
of
changes in stockholders'equity, and the consolidated statements
of
cash flows for the three months ended March 31, 1995 and 1994,
follow on pages 4 through 7.
<PAGE>
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
December 31,
1995 1994 1994
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 59,174,214 $
50,375,800 $ 60,536,136
Interest-bearing deposits in banks 198,508 885,264
198,000
Federal funds sold 13,715,000 27,078,000
23,100,000
Investment securities:
U.S. Treasury and government agencies 422,473,807
448,424,590
439,236,540
State and political subdivisions15,438,155 18,872,249
17,396,180
Other 6,545,229 7,961,246
6,611,672
Total investment securities 444,457,191
475,258,085 463,244,392
Loans 436,304,809 414,057,089
432,609,308
Less:Allowance for loan losses 8,989,941 9,327,781
9,024,424
Unearned discount 7,014,033
6,868,228 7,048,685
Net loans 420,300,835 397,861,080
416,536,199
Bank premises and equipment-net 29,314,028 30,568,924
29,466,438
Goodwill 1,162,937 1,238,783 1,181,897
Other assets 19,237,490
20,140,311 18,350,085
TOTAL ASSETS $ 987,560,203 $ 1,003,406,247 $
1,012,613,147
LIABILITIES
Noninterest-bearing deposits $ 182,749,132 $
180,137,736 $ 200,912,655
Interest-bearing demand deposits 277,906,602 302,150,976
298,904,193
Interest-bearing time deposits 411,197,457
413,034,325 401,112,784
Total deposits 871,853,191 895,323,037
900,929,632
Short-term borrowings 65,000 150,000 90,000
Mortgage notes payable - 1,127,845 1,054,131
Dividends payable 1,401,702 1,270,837
1,399,220
Other liabilities 7,830,870
7,252,018
5,232,262
Total liabilities 881,150,763
905,123,737
908,705,245
SHAREHOLDERS' EQUITY
Capital stock-$10 par value;
10,000,000 shares authorized 50,060,770 39,723,130
49,972,140
Capital surplus 36,865,955 15,866,153
36,863,701
Retained earnings 19,954,288 42,740,465
17,769,812
Unrealized (loss) on investment
securities available for sale (471,573)
(47,238) (697,751)
Total shareholders'equity 106,409,440
98,282,510 103,907,902
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 987,560,203 $ 1,003,406,247 $
1,012,613,147
</TABLE>
<PAGE>
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
<TABLE>
<CAPTION>
Three Months Ended
March
31,
1995 1994
<S> <C> <C>
INTEREST INCOME
Loans, including fees $ 10,092,526$ 8,240,792
Investment income-taxable 6,058,408 5,994,169
Investment income-tax exempt 180,548 217,709
Interest on interest bearing deposits 2,553 10,810
Interest on federal funds sold 345,268
281,924
Total interest income 16,679,303 14,745,404
INTEREST EXPENSE
Interest-bearing deposits 6,159,172 4,892,737
Short-term borrowings 4,509 724
Interest on mortgage notes payable 6,323
26,534
Total interest expense 6,170,004
4,919,995
NET INTEREST INCOME 10,509,299 9,825,409
Provision for loan losses 20,000
40,000
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 10,489,299 9,785,409
NONINTEREST INCOME
Trust fees 769,437
774,813
Service fees on deposit accounts 1,376,259 1,312,611
Other
855,958 967,512
Total noninterest income 3,001,654 3,054,936
NONINTEREST EXPENSE
Salaries and employee benefits 4,072,762 4,178,115
Net occupancy and equipment expenses 598,531 652,993
Equipment expense 490,090 536,028
FDIC assessments 195,690 204,628
Correspondent bank service charges 212,851 227,594
Other
2,515,927 2,493,122
Total noninterest expense 8,085,851
8,292,480
EARNINGS BEFORE INCOME TAXES 5,405,102 4,547,865
Provision for income tax 1,818,924
1,444,472
NET EARNINGS $ 3,586,178 $
3,103,393
EARNINGS PER SHARE 1 $ 0.72 $
0.62
DIVIDENDS PER SHARE 2 $ 0.28 $
0.26
1 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.
2 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>
<PAGE>
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS'
EQUITY
<TABLE>
<CAPTION>
Unrealized
Gain (Loss)
On
InvestmentTotal
Securities
Share-
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
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 244,069
244,069
Net earnings - year to date
13,112,230
13,112,230
Cash dividends (5,462,207)
(5,462,207)
Exercise of stock options 23,695 236,950 25,525
262,475
Cash paid for fractional
shares resulting from
stock dividend (16,528)
(16,528)
Stock dividend994,752 9,947,520 20,889,792 (30,837,312)
Change in unrealized
gain (loss)
(941,820) (941,820)
Balances at
December 31, 1994 4,997,214 49,972,140 36,863,701
17,769,812 (697,751) 103,907,902
Net earnings-
year to date 3,586,178
3,586,178
Cash dividends (1,401,702)
(1,401,702)
Exercise of stock options 8,863 88,630 2,254
90,884
Change in unrealized
gain (loss)
226,178 226,178
Balances at
March 31, 1995 5,006,077 $ 50,060,770 $
36,865,955 $ 19,954,288 $ (471,573) $ 106,409,440
1 December 31, 1993 balances restated to reflect
pooling-of-interests.
</TABLE>
<PAGE>
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months
Ended
March 31,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 3,586,178 $
3,103,393
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 661,507
640,446
Provision for loan losses 20,000
40,000
Premium amortization, net of discount accretion
857,195 1,106,149
Gain on sale of securities -
(73,396)
Deferred federal income tax benefit 2,934
- -
Increase in other assets (730,197)
(2,508,141)
Increase in other liabilities 2,598,608
1,660,353
Total adjustments 3,410,047
865,411
Net cash provided by operating activities
6,996,225 3,968,804
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in interest-bearing deposits in banks
(508) (98,264)
Proceeds from sale of investment securities
4,119,844 2,024,688
Proceeds from maturity of investment securities
40,585,979 30,067,505
Purchase of investment securities (26,550,496)
(52,250,734)
Net (increase) decrease in loans (3,957,818)
13,451,402
Capital expenditures (548,786)
(1,137,544)
Proceeds from sale of assets 72,546
-
Net cash used in investing activities 13,720,761
(7,942,947)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in noninterest-bearing deposits
(18,163,523)(18,620,921)
Net increase (decrease) in interest-bearing deposits
(10,912,918) 594,398
Net (increase) decrease in other short-term borrowings
(25,000) 60,000
Repayment of long-term debt (1,054,131)
(23,143)
Proceeds from stock issuances 90,884
39,495
Dividends paid (1,399,220)
(1,342,734)
Net cash used by financing activities
(31,463,908) (19,292,905)
Net decrease in cash and cash equivalents
(10,746,922)(23,267,048)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
83,636,136 100,720,848
CASH AND CASH EQUIVALENTS AT END OF PERIOD $
72,889,214 $ 77,453,800
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Assets acquired through foreclosure $ 200,632 $
-
Loans to finance sales of other real estate 27,450
122,865
Change in unrealized (loss) on investment securities available
for sale
226,178 (47,238)
OTHER DISCLOSURES:
Interest paid 5,791,045
4,961,462
Federal income tax paid 100,000
120,000
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition
and Results of Operations
Results of Operations
Net income for the first quarter 1995 totaled $3.6 million, an
increase of approximately 16 percent over the $3.1 million earned
in the first quarter last year. The improved earnings resulted
from increased net interest income and reduced noninterest
expense.
On a per share basis, income amounted to $ .72 per share as
compared to $ .62 reported in 1994. Return on average assets was
1.46 percent which was up from 1.26 percent reported for the
first
quarter last year. Return on average equity for the first
quarter
amounted to 13.80 percent and was slightly below the 1994 first
quarter ratio of 13.87 percent.
Net interest income for the first quarter was $684 thousand above
the 1994 first quarter amount with the increase attributable to
higher average loans. The net interest margin for the first
quarter 1995 was 4.77% as compared to 4.40% for the first quarter
last year.
Total noninterest income for the first quarter amounted to $3.0
million, down slightly from the 1994 first quarter total. Trust
fees were virtually unchanged from the 1994 amount, and service
fees on deposits were up $64 thousand. There were no securities
gains or losses during the first quarter 1995 as compared to
first
quarter 1994 gains of $73 thousand which were included in other
noninterest income. Mortgage loan fees were down $44 thousand
and
also contributed to the 1995 decrease in other noninterest
income.
Total first quarter 1995 noninterest expense totaled $8.1 million
which was approximately $200 thousand below the same period last
year. Salaries and benefits expense and occupancy and equipment
expenses were down $105 thousand and $85 thousand, respectively.
Other noninterest expenses in the first quarter were near prior
year first quarter amounts.
Balance Sheet Review
Total assets of $988 million at March 31, 1995, represent a $16
million decrease from the prior year and a $25 million decrease
from December 31, 1994. These decreases were driven primarily by
lower deposit totals. Compared to March 31, 1994, the Company's
balance sheet at March 31, 1995, reflects a $22 million increase
in
loans and decreases in Federal funds sold and investment
securities
of $31 million and $13 million, respectively. Compared to the
year-end 1994 balance sheet, investment securities and Federal
funds have declined $19 million and $9 million, respectively, and
loans reflect a modest $4 million increase. With respect to
deposits, the March 31, 1995, amount is below both December 31
and
March 31, 1994, with the decline, for the most part, attributable
to the higher returns currently available in non bank investment
products.
Nonperforming assets at March 31, 1995, totaled $2.3 million,
down
from $4.6 million at March 31, 1994, but up slightly from the
year-
end 1994 total of $2.2 million. Improvement from the first
quarter
1994 resulted primarily from a reduction in nonaccrual loans.
The
March 31, 1995, components of nonperforming assets are relatively
unchanged from year-end 1994. Management is not aware of any
material classified credit not properly disclosed as
nonperforming
and considers the allowance for loan losses to be adequate.
<PAGE>
Liquidity and Capital
The Company's consolidated statements of cash flows are presented
on page 7 in this report. At March 31, 1995, 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.
Total equity capital amounted to $106.4 million at March 31,
1995,
which was up from $103.9 million at year-end 1994 and $98.2
million
at March 31, 1994. The ratio of equity capital to assets at March
31, 1995, was 10.8 percent as compared to 10.3 percent at
December
31, 1994, and 9.8 percent at March 31, 1994. The first quarter
dividend was $ .28 per share and amounted to $1.4 million, or 39
percent of earnings. On April 25, 1995, the Company declared a
second quarter cash dividend of $ .31 per share which will be
payable July 1, 1995.
<PAGE>
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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 59,174,214
<INT-BEARING-DEPOSITS> 198,508
<FED-FUNDS-SOLD> 13,715,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 9,819,050
<INVESTMENTS-CARRYING> 434,638,141
<INVESTMENTS-MARKET> 424,879,134
<LOANS> 427,314,868
<ALLOWANCE> 8,989,941
<TOTAL-ASSETS> 987,560,203
<DEPOSITS> 871,853,191
<SHORT-TERM> 65,000
<LIABILITIES-OTHER> 881,085,763
<LONG-TERM> 0
<COMMON> 50,060,770
0
0
<OTHER-SE> 56,348,670
<TOTAL-LIABILITIES-AND-EQUITY> 987,560,203
<INTEREST-LOAN> 10,092,526
<INTEREST-INVEST> 6,238,956
<INTEREST-OTHER> 347,821
<INTEREST-TOTAL> 16,679,303
<INTEREST-DEPOSIT> 6,159,172
<INTEREST-EXPENSE> 6,170,004
<INTEREST-INCOME-NET> 10,509,299
<LOAN-LOSSES> 20,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 8,085,851
<INCOME-PRETAX> 5,450,102
<INCOME-PRE-EXTRAORDINARY> 3,586,178
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,586,178
<EPS-PRIMARY> .72
<EPS-DILUTED> .72
<YIELD-ACTUAL> 4.77
<LOANS-NON> 1,241,636
<LOANS-PAST> 113,132
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 334,034
<ALLOWANCE-OPEN> 9,024,424
<CHARGE-OFFS> 296,935
<RECOVERIES> 242,452
<ALLOWANCE-CLOSE> 8,989,941
<ALLOWANCE-DOMESTIC> 8,989,941
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
