First Financial Bankshares Announces Second Quarter Earnings Results

ABILENE, Texas, July 17, 2008 /PRNewswire-FirstCall via COMTEX/ -- FFIN | Quote | Chart | News | PowerRating -- First Financial Bankshares, Inc. (Nasdaq: FFIN | Quote | Chart | News | PowerRating) today reported earnings for the second quarter of 2008 of $13.60 million, up 2.5 percent from $13.27 million in the same quarter last year. Basic earnings per share were $0.65 per share for the second quarter, compared with $0.64 for the same quarter last year.

Net interest income for the second quarter of 2008 increased 10.2 percent to $30.02 million compared with $27.25 million in the same quarter last year. The net interest margin, on a taxable equivalent basis, was 4.61 percent for the second quarter of 2008 compared with 4.38 percent in the same period a year ago and 4.58 percent for the quarter ended March 31, 2008.

Noninterest income in the second quarter of 2008 was $13.46 million compared with $12.97 million in the same quarter a year earlier. Trust fees increased 3.8 percent to $2.36 million compared with $2.27 million in the second quarter last year. Service charges on deposit accounts increased 2.1 percent to $5.67 million compared with $5.55 million a year ago. The gain from sale of student loans totaled $1.42 million for the 2008 second quarter compared with $1.62 million for the same quarter in 2007. Real estate mortgage fees decreased 11.5 percent to $765,000 from $864,000 in the same quarter last year. ATM and debit card fees increased 21.8 percent to $2.26 million from $1.86 million a year ago.

Noninterest expense increased 8.3 percent in the second quarter of 2008 to $23.01 million from $21.25 million in the same quarter last year. The Company's efficiency ratio in the second quarter improved to 50.95 percent compared with 51.19 percent in the same quarter a year ago.

The provision for loan losses increased to $1.44 million in the second quarter of 2008, up from $238,000 in the same quarter last year and $1.07 million in the first quarter of 2008. This increase is reflective of the Company's growth in loans, concern for a slowing economy and the increase in nonperforming loans. Nonperforming assets as a percentage of loans and foreclosed assets totaled 71 basis points at June 30, 2008, compared with 38 basis points at March 31, 2008, and 46 basis points at June 30, 2007.

"We are pleased to report another quarter of earnings growth and improved net interest margins, especially in light of the slowing economy and credit problems that have impacted consumers and businesses nationwide," said F. Scott Dueser, President and Chief Executive Officer. "The Texas economy remains relatively strong compared with many other regions, but Texas is not immune to the slowing national economy."

For the first half of 2008, net income increased 8.2 percent to $26.76 million from $24.73 million a year ago. Basic earnings per share rose to $1.29 in the first half of 2008 from $1.19 in the same period last year. Net interest income increased 11.2 percent in the first half to $59.85 million compared with $53.82 million a year ago. Noninterest income was $25.77 million in the first half of 2008, up 7.8 percent from $23.89 million a year ago.

As of June 30, 2008, consolidated assets for the Company totaled $3.08 billion compared with $2.85 billion a year ago. Loans totaled $1.51 billion at quarter end, compared with loans of $1.39 billion a year ago. Total deposits were $2.57 billion as of June 30, 2008, compared with $2.38 billion a year earlier. Noninterest-bearing deposits grew $142.7 million from a year ago. Shareholders' equity increased $37.4 million to $343.9 million as of June 30, 2008.

Headquartered in Abilene, Texas, First Financial Bankshares is a financial holding company that operates ten separately chartered banks with 47 locations in Texas. The bank subsidiaries are First Financial Bank, N.A., Abilene, Albany, Clyde and Moran; First Financial Bank, N.A., Eastland, Ranger and Rising Star; First Financial Bank, N.A., Cleburne, Burleson, Alvarado and Midlothian; Hereford State Bank, Hereford; First Financial Bank, N.A., Mineral Wells; San Angelo National Bank, San Angelo; First Financial Bank, N.A., Southlake, Bridgeport, Boyd, Decatur, Keller and Trophy Club; First Financial Bank, N.A., Stephenville, Granbury, Glen Rose and Acton; First Financial Bank, N.A., Sweetwater, Roby, and Trent; and Weatherford National Bank, Weatherford, Willow Park, Aledo and Brock. The Company also operates First Financial Trust and Asset Management Company, N.A., with five locations and First Technology Services, Inc., a technology operating company.

The Company is listed on The NASDAQ Global Select Market under the trading symbol FFIN. For more information about First Financial Bankshares, please visit our Web site at http://www.ffin.com.

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. Except as otherwise stated in this news announcement, the Company does not undertake any obligation to update publicly or revise any forward-looking statements because of new information, future events or otherwise.

FIRST FINANCIAL BANKSHARES, INC. CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED) (In thousands, except share and per share data) June 30, 2008 2007 ASSETS: Cash and due from banks $156,220 $113,794 Fed funds sold 107,920 54,760 Investment securities 1,153,902 1,127,344 Loans 1,512,542 1,391,984 Allowance for loan losses (18,677) (16,425) Net loans 1,493,865 1,375,559 Premises and equipment 63,514 61,204 Goodwill 62,112 62,112 Other intangible assets 2,480 3,829 Other assets 44,652 51,850 Total assets $3,084,665 $2,850,452 LIABILITIES AND SHAREHOLDERS' EQUITY: Noninterest- bearing deposits $807,681 $664,952 Interest-bearing deposits 1,760,940 1,711,799 Total deposits 2,568,621 2,376,751 Short-term borrowings 149,895 147,110 Other liabilities 22,238 20,075 Shareholders' equity 343,911 306,516 Total liabilities and shareholders' equity $3,084,665 $2,850,452 Three Months Ended Six Months Ended June 30, June 30, INCOME STATEMENTS 2008 2007 2008 2007 Interest income $38,951 $42,259 $80,697 $83,331 Interest expense 8,931 15,013 20,847 29,512 Net interest income 30,020 27,246 59,850 53,819 Provision for loan losses 1,441 238 2,509 479 Net interest income after provision for loan losses 28,579 27,008 57,341 53,340 Noninterest income 13,455 12,972 25,767 23,892 Noninterest expense 23,009 21,247 45,670 42,114 Net income before income taxes 19,025 18,733 37,438 35,118 Income tax expense 5,423 5,463 10,674 10,385 Net income $13,602 $13,270 $26,764 $24,733 PER COMMON SHARE DATA Net income - basic $0.65 $0.64 $1.29 $1.19 Net income - diluted 0.65 0.64 1.29 1.18 Cash dividends 0.34 0.32 0.66 0.62 Book value 16.54 14.76 Market value 45.81 38.81 Shares outstanding - end of period 20,792,309 20,760,116 20,792,309 20,760,116 Average outstanding shares - basic 20,786,902 20,756,846 20,780,421 20,752,044 Average outstanding shares - diluted 20,833,048 20,888,879 20,816,219 20,872,613 PERFORMANCE RATIOS Return on average assets 1.81% 1.86% 1.78% 1.75% Return on average equity 15.55 17.25 15.48 16.35 Net interest margin (tax equivalent) 4.61 4.38 4.59 4.38 Efficiency ratio 50.95 51.19 51.40 52.50 FIRST FINANCIAL BANKSHARES, INC. SELECTED FINANCIAL DATA (UNAUDITED) (In thousands) Quarter Ended 2008 2007 June 30, March 31, Dec. 31, Sept. 30, June 30, ALLOWANCE FOR LOAN LOSSES Balance at beginning of period $18,377 $17,462 $16,728 $16,425 $16,458 Loans charged off (1,374) (288) (803) (342) (505) Loan recoveries 233 135 160 170 234 Net (charge-offs) recoveries (1,141) (153) (643) (172) (271) Provision for loan losses 1,441 1,068 1,377 475 238 Balance at end of period $18,677 $18,377 $17,462 $16,728 $16,425 Allowance for loan losses / period-end loans 1.23% 1.20% 1.14% 1.15% 1.18% Allowance for loan losses / nonperforming loans 208.4 465.0 541.5 395.6 387.4 Net charge-offs (recoveries) / average loans (annualized) 0.30 0.04 0.17 0.05 0.08 NONPERFORMING ASSETS Nonaccrual loans $8,963 $3,933 $3,189 $4,023 $4,179 Accruing loans 90 days past due 0 19 36 206 61 Total nonperforming loans 8,963 3,952 3,225 4,229 4,240 Foreclosed assets 1,792 1,908 1,506 2,594 2,174 Total nonperforming assets $10,755 $5,860 $4,731 $6,823 $6,414 As a % of loans and foreclosed assets 0.71% 0.38% 0.31% 0.47% 0.46% CAPITAL RATIOS Tier 1 Risk-based 15.25% 15.08% 14.65% 14.81% 14.85% Total Risk-based 16.27 16.09 15.62 15.76 15.81 Tier 1 Leverage 9.55 9.34 9.23 9.31 9.05 Equity to assets 11.15 11.49 10.93 11.12 10.75 Three Months Ended Six Months Ended June 30, June 30, NONINTEREST INCOME 2008 2007 2008 2007 Gain on sale of student loans, net $1,432 $1,616 $1,715 $1,780 Gain on securities transactions, net 166 0 559 85 Trust fees 2,359 2,272 4,731 4,372 Service charges on deposits 5,671 5,553 11,196 10,692 Real estate mortgage operations 765 864 1,369 1,602 Net gain (loss) on sale of foreclosed assets (15) 22 89 35 ATM and credit card fees 2,264 1,859 4,295 3,578 Other noninterest income 813 786 1,813 1,748 Total Noninterest Income $13,455 $12,972 $25,767 $23,892 NONINTEREST EXPENSE Salaries and employee benefits $12,545 $11,448 $25,093 $22,887 Net occupancy expense 1,652 1,445 3,243 2,854 Equipment expense 1,865 1,812 3,712 3,557 Printing, stationery and supplies 441 520 951 992 ATM and credit card expenses 1,115 964 2,117 1,893 Audit fees 334 256 596 505 Legal, tax and professional fees 733 631 1,475 1,303 Correspondent bank service charges 299 293 565 618 Advertising and public relations 656 603 1,300 1,162 Amortization of intangible assets 304 377 615 760 Other noninterest expense 3,065 2,898 6,003 5,583 Total Noninterest Expense $23,009 $21,247 $45,670 $42,114 TAX EQUIVALENT YIELD ADJUSTMENT $1,687 $1,286 $3,242 $2,512 FIRST FINANCIAL BANKSHARES, INC. SELECTED FINANCIAL DATA (UNAUDITED) (In thousands) Three Months Ended June 30, 2008 Tax Average Equivalent Yield / Balance Interest Rate Interest earning assets: Fed funds sold $92,042 $469 2.05% Interest bearing deposits in nonaffiliated banks 4,452 37 3.31% Taxable securities 827,589 9,376 4.53% Tax exempt securities 324,551 4,952 6.10% Loans 1,520,043 25,804 6.83% Total interest earning assets 2,768,677 40,638 5.90% Noninterest earning assets 258,663 Total assets $3,027,340 Interest bearing liabilities: Deposits $1,757,120 $8,491 1.94% Fed funds purchased and other short term borrowings 156,849 440 1.13% Total interest bearing liabilities 1,913,969 8,931 1.88% Noninterest bearing liabilities 761,462 Shareholders' equity 351,909 Total liabilities and shareholders' equity $3,027,340 Net interest income and margin (tax equivalent) $31,707 4.61% Six Months Ended June 30, 2008 Tax Average Equivalent Yield / Balance Interest Rate Interest earning assets: Fed funds sold $102,435 $1,320 2.59% Interest bearing deposits in nonaffiliated banks 3,270 56 3.46% Taxable securities 806,059 18,493 4.59% Tax exempt securities 322,517 9,772 6.06% Loans 1,527,593 54,298 7.15% Total interest earning assets 2,761,874 83,939 6.11% Noninterest earning assets 257,913 Total assets $3,019,787 Interest bearing liabilities: Deposits $1,776,471 $19,579 2.22% Fed funds purchased and other short term borrowings 160,559 1,268 1.59% Total interest bearing liabilities 1,937,030 20,847 2.16% Noninterest bearing liabilities 735,119 Shareholders' equity 347,638 Total liabilities and shareholders' equity $3,019,787 Net interest income and margin (tax equivalent) $63,092 4.59%

SOURCE First Financial Bankshares, Inc.

http://www.ffin.com

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