First Financial Bankshares 1st qtr 2015

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1st Quarter 2015

First Financial Bankshares, Inc.

Forward Looking Statement

The numbers, as of and for the quarter ended March 31, 2015, 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.

2

Who We Are

$6.0 billion financial holding company

headquartered in Abilene, Texas

Group of 12 separate regions

125-year history

Growth markets include 50 mile radius of

the larger cities of Texas

Recognitions

KBW Honor Roll – One of twenty five banks named – April 2015

Raymond James Community Bankers Cup #1 – December 2014

Sandler O’Neil Bank & Thrift Small-Cap All Stars – September

2014

American Banker - #11 – Based on three year average Return on

Equity – August 2014

ABA Banking Journal - #8 – Top Performing mid-sized banks

($1B - $10B) – May 2014

2014 Proven Performers Award Winner – Bank Intelligence

Solutions

SNL Financial #7 Best Performing Regional Bank – April 2014

Nifty 50: Bank Director Magazine - #12 – Based on Return on

Equity / Average Tangible Equity – January 2014

4

5

What Makes Us Different

One Bank, Twelve Regions Concept

One Bank

Consolidation of backroom operations, technology, and

compliance (lower efficiency ratio)

Twelve 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

FFIN’s Unique Positioning in Texas

Bank Key Markets

Comerica DFW, Austin, Houston, California, Michigan, Florida, Mexico

Green Houston, Austin, Dallas (New Public Company – August 2014)

Frost San Antonio, Austin, Corpus Christi, DFW, Rio Grande, West Texas

Independent North and Central Texas

International Bancshares Rio Grande, Houston, San Antonio, Oklahoma

Legacy Texas Dallas

Prosperity Houston, DFW, Austin, West Texas, South Central Texas, and Oklahoma

Southside East Texas

Texas Capital DFW, Austin, San Antonio, and Houston

Triumph Dallas (New Public Company – November 2014)

Veritex Dallas (New Public Company – October 2014)

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First Bank, N.A. - Conroe Proposed Acquisition Definitive Agreement Signed - April 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, 24th 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

$378.1 million in Assets*

$342.4 million in deposits

$259.5 million in loans

1.06% Return on Assets in 2014

$59 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*As of Dec. 31, 2014

8

4Trust Mortgage Proposed Acquisition Announced

Asset Purchase Agreement Signed - April 2015

Anticipated effective date – May 31, 2015

Originated $175 million in mortgage loans in 2014 – Compared to $225 million that

First Financial Bank originated in 2014

15 year old Company with offices in Fort Worth, Dallas and North Richland Hills

$1.9 million purchase price

Troy Fore will be 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

Will be able to offer expanded mortgage products and services to their customers

10

Texas: Large and Growing

Five most populous states:* Growth

(2003 – 2013)

California 38.3 million 8.7%

Texas 26.5 million 20.1%

New York 19.7 million 2.5%

Florida 19.6 million 15.0%

Illinois 12.9 million 2.6%

* U.S. Census Bureau

11

Target Markets – Population Growth

Population growth (2003-2013) in FFIN expansion markets:*

Texas 20.1%

Bridgeport & Wise County 13.2%

Fort Worth & Tarrant County 23.2%

Cleburne & Johnson County 12.0%

Weatherford, Willow Park, Aledo & Parker County 25.6%

Granbury & Hood County 18.2%

Stephenville & Erath County 17.9%

* U.S. Census Bureau

12

Texas Benefits

State unemployment rate at 4.1%, state’s lowest rate

since November 2008

Only Texas and New York have restored all the jobs

lost when recession hit in 2007

CEO Magazine ranks Texas best state for business –

for seventh consecutive year

Texas created more jobs (310,000) during the prior

twelve months, more than any other state

Texas created more private sector jobs than any other

state during the past decade

Core Markets: West Central Texas

Markets served benefiting from well-established,

long- time customers

REGIONASSET

SIZE*LOCATIONS

DEPOSIT

MARKET SHARE**

MARKET

SHARE RANK**

First Financial Bank

(Abilene, Clyde, Moran, Albany, Odessa)

$1,890M 15 48% 1


(Hereford)

$178M 1 42% 1


(Eastland, Ranger, Rising Star, Cisco)

$244M 4 66% 1


(Sweetwater, Roby, Trent, Merkel)

$221M 4 36% 1


(San Angelo)

$693M 3 19% 2

TOTALS $3,226M 27 * Data as of 3-31-15

** Data as of 06-30-14

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Expansion Markets

REGION ASSET SIZE* LOCATIONSDEPOSIT MARKET

SHARE**

MARKET SHARE

RANK**


(Cleburne, Burleson, Alvarado)

(Midlothian, Waxahachie)

$418M 4

2

20%

4%

2

6


(Southlake, Trophy Club, Keller, Grapevine)

(Bridgeport, Decatur, Boyd)

$400M 4

3

5%

19%

5

3


(Stephenville, Granbury, Glen Rose, Acton)

$487M 6 22% 2


(Weatherford, Aledo, Willow Park, Brock, Ft. Worth)

$499M 7 23% 1


(Mineral Wells)

$264M 1 38% 1


(Huntsville, New Waverly)

$203M 2 19% 2


(Orange, Mauriceville, Vidor)

(Newton, Port Arthur, Beaumont)

$496M 3

3

41%

10%

1

5

TOTALS $2,767M 35* Data as of 3-31-15

** Data as of 06-30-14

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Recent De Novo Growth Lubbock: Office of Trust Company – September 2014

New Waverly: Branch of Huntsville – August 2014

Beaumont: Branch of Orange – August 2014

Weatherford: I-20 Branch – June 2013 (New Building Opened January 2015)

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

Lamesa: Office of Trust Company – April 2011

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 (Building New Building – Opening 3rd Qtr. 2015)

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Fort Worth – Forest Park Blvd. and Rosedale

16

Fort Worth – Forest Park Blvd. and Rosedale

17

Years with Company Years in Industry

Scott DueserChairman of the Board, President &

Chief Executive Officer

38 43

Ron ButlerExecutive Vice President

Chief Administrative Officer

22 33

Gary S. GraggExecutive Vice President

Credit Administration

24 36

J. Bruce Hildebrand, CPAExecutive Vice President

Chief Financial Officer

12 36

Stan LimerickExecutive Vice President

Chief Information Officer

- 35

Kirk Thaxton, CTFAPresident, First Financial Trust & Asset

Management

28 31

Gary L. WebbExecutive Vice President

12 26

Marna YeriganExecutive Vice President


4 30

Senior Management at First Financial

18

Years with Company Years in Industry

Brandon Harris

Senior Vice President

Appraisal Services

2 15

Monica Houston


Training

20 20

Larry Kentz

Senior Vice President & Compliance Officer

Compliance

1 35

Luke Longhofer

Senior Vice President & Loan Review Officer


3 10

Michele Stevens


Advertising and Marketing

16 32

Senior Management at First Financial

19

Experienced Regional CEOs & PresidentsYears with Company Years in Industry

Marelyn Shedd, Abilene 23 31

Mike Mauldin, Hereford 12 37

Kirby Andrews, Sweetwater 24 27

Trent Swearengin, Eastland 15 17

Mike Boyd, San Angelo 39 42

Tom O’Neil, Cleburne 16 34

Ron Mullins, Stephenville 8 36

Jay Gibbs, Weatherford 13 40

Mark Jones, Southlake 14 37

Ken Williamson, Mineral Wells 13 43

Robert Pate, Huntsville 17 33

Fred Wren, Huntsville 2 35

Stephen Lee, Southeast Region 7 25

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21

$3,776$4,121

$4,502

$5,522

$5,848$6,025*

2010 2011 2012 2013 2014 2015

Growth in Total Assets

Asset Performance

(in millions)

*As of March 31, 2015

22

$959 $1,102 $1,312 $1,362 $1,570 $1,601

$2,154$2,233

$2,321$2,773

$3,180 $3,236

2010 2011 2012 2013 2014 2015

Non Interest Bearing Interest Bearing

Deposit Growth

Growth in FFIN Total Deposits (in millions)

$4,837*

$3,113$3,335

$3,633

$4,135

$4,750


23

Deposit Products

Time12.9%

Demand33.1%

Money Market42.6%

Savings11.4%


Account Growth

Net Growth in 2011 – 4,036 Accounts


Net Growth in 2013 – 3,308 Accounts*



December 31,

2011

December 31,

2012

December

31, 2013*

December 31,

2014

March31,

2015

Total Number

of Accounts

204,063 205,282 208,590 234,614 237,660

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*(Excluding Orange Acquisition)

$81 $66 $68 $76 $106 $91

$191 $218 $273 $334 $361 $360

$429 $427 $510

$590 $640 $646

$990 $1,076

$1,238

$1,689

$1,831 $1,842

2010 2011 2012 2013 2014 2015

Real Estate

Commercial

Consumer

Agricultural

Loan Performance

Growth in FFIN Total Loans (in millions)

$1,691$1,787

$2,089

$2,939

25

$2,689

$2,938


26

Overview of Loan Portfolio

Commercial 21.9%

Agriculture3.1%

Consumer12.3%

Real Estate62.7%

Note: Oil & Gas Exposure 3.1%*As of March 31, 2015

Residential Development & Construction

7.1%

1-4 Family 46.5%

Commercial Development and

Construction4.1%

Commercial R/E 28.0%

Other R/E 14.3%

27

Breakdown of R/E Loan Portfolio


28

2010 2011 2012 2013 2014 2015*

End ofPeriod 54.3 53.6 57.5 65.0 61.8 60.8

Average

Balances56.0 54.6 56.4 64.3 64.1 61.3

Loan to Deposit Ratio


29

Less than

1 year

1 to 3

years

3 to 5

years

5 to 10

years

10 to 15

years

Over 15

years

38.6% 4.4% 4.3% 13.8% 18.2% 12.0% 8.7%

Variable and Fixed Rate Loans

Loan Portfolio Interest Rate Risk Analysis

Variable

RateFixed Rate


2010 2011 2012 2013 2014 2015

FirstFinancial 1.53% 1.64% 1.22% 1.16% 0.74% 0.69%

Peer Group 5.37% 4.59% 3.67% 2.71% 1.94% -

Sound Lending Practices

Nonperforming assets as a percentage of loans + foreclosed assets (FFIN vs. Peers)

30

31

$31,106

$34,315 $34,839 $33,900$36,824 $37,828*

$8,962$6,626

$3,484 $3,753 $4,465

$1,290*

2010 2011 2012 2013 2014 2015

ALLL Provision

Allowance for Loan Losses and Provision for Loan Losses

(in thousands)


Summary of Bond Portfolio

Agencies 6.96%

Corporates 3.51%

Muni 47.05%

MBSs 19.00%

CMOs 23.05%

Treasuries 0.43%

32


33

$1,783$1,912

$2,233

$2,465

$2,774$2,888*

2010 2011 2012 2013 2014 2015

Growth in Trust Assets

Total Trust Assets – Book Value (in millions)


34

$10,808

$12,671

$14,464

$16,317

$18,766

$2,526 $3,044 $3,454 $3,793

$4,576 $4,732

2010 2011 2012 2013 2014 2015

Total Trust Fees

Growth in FFTAM Fees (in thousands)

thru

March 31st

35

$3,254

$4,176

$5,183

$6,142

$7,109

$739 $1,015

$1,225 $1,422

$1,792 $1,814

2010 2011 2012 2013 2014 2015

Total Trust Net Income

Growth in FFTAM Net Income (in thousands)

thru

March 31st

$59.7

$68.4$74.2

$78.9

$89.6

$13.7$16.3 $17.8 $18.6

$22.3 $24.0

2010 2011 2012 2013 2014 2015

28th Consecutive Year of Increased Earnings

FFIN Earnings (Full year and 1st 3 months) (in millions)

36

thru

March 31st

37

$0.95

$1.09$1.18

$1.24

$1.40

$0.22$0.26 $0.28 $0.29

$0.35 $0.37

2010 2011 2012 2013 2014 2015

thru

March 31st

Strong Shareholder Earnings

Basic Earnings Per Share

*Per share amounts reflect the 2 for 1 stock split that was effective June 2, 2014.

1.75% 1.78% 1.75%1.64% 1.65%

0.24%

0.80%

0.98% 1.04%0.94%

2010 2011 2012 2013 2014

FFIN Outperforms Peers

Percentage Return on Average Assets

Pe

er

Gro

up

Fir

st

Fin

an

cia

l

38

13.74%14.44%

13.85% 13.75%14.00%

0.88%

7.27%

8.56%8.89%

8.23%

2010 2011 2012 2013 2014

Strong Return on Capital

Percentage Return on Average Equity

Pe

er

Gro

up

Fir

st

Fin

an

cia

l

39

40

2011 2012 2013 2014 2015

Shareholders’Equity 508,537 556,963 587,647 681,537 706,248

As a Percent of Total

Assets12.34 12.37 11.25 11.65 11.72

Tangible

Capital436,415 484,990 490,163 584,178 609,056

Tier 1

Leverage Ratio10.33 10.60 9.84 9.89 9.85

Tier 1 Risk

Based Capital Ratio17.49 17.43 15.82 16.05 16.23

Risk Based

Capital Ratio18.74 18.68 16.97 17.16 17.35

Capital & Capital Ratios

(dollars in thousands)

3.00%

3.25%

3.50%

3.75%

4.00%

4.25%

4.50%

4.75%

5.00%

4thQtr. '11

1stQtr. '12

2ndQtr. '12

3rdQtr. '12

4thQtr. '12

1stQtr. '13

2ndQtr. '13

3rdQtr. '13

4thQtr. '13

1stQtr. '14

2ndQtr. '14

3rdQtr. '14

4thQtr. '14

1stQtr. '15

First Financial Peer Group

Net Interest Margin

Quarterly Interest Margin

41

2010 2011 2012 2013 2014 2015

FirstFinancial 49.49% 48.37% 48.14% 50.20% 49.24% 47.01%

Peer Group 67.33% 65.57% 65.77% 67.79% 66.77% -

Working Harder and Smarter

Efficiency Ratio (FFIN vs. Peers)

42

Stock cost in January 2014 $33,060

Dividend declared ($0.55 x 1,000 shares) $ 550

Decrease in stock price during 2014

($33.06 to$29.88 X 1,000 shares)$2210,720

2014 return on investment -7.96%

2013 return on investment 72.11%



2010 return on investment -2.99%

5 year compound average return 12.36%

Total Return on Investment

($2,630)

Assume you owned 1,000 shares of FFIN stock on January 1, 2014…

43

*Adjusted for 2 for 1 stock split effective June 2, 2014.

Dividends Per Share

$0.46 $0.48$0.50 $0.52

$0.55

2010 2011 2012 2013 2014

Annual Dividends Declared Per Share*

44

*Per share amounts reflect the 2 for 1 stock split that was effective June 2, 2014.

Strong Stock Performance

-100.00%

-50.00%

0.00%

50.00%

100.00%

150.00%

FFIN S&P 500 NASDAQ Dow JonesJan . ‘07 Mar. ’15Dec . ‘09Dec ‘07 Dec ‘08 Dec. ‘10 Dec. ’11 Dec. ’12 Dec. ’13 Dec. ’14

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Challenges

Regulatory reform from Washington

Stagnant national economy

Oil & gas price decline

Low interest rate environment

Maintaining net interest margin

46

Opportunities

Loan Growth

Mortgage Lending

Trust Services

Treasury Management

Mobile Banking

Lower Efficiency Ratio

Potential Acquisitions

47

First Financial Bankshares 1st qtr 2015

Business

Transcript of First Financial Bankshares 1st qtr 2015