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2nd Quarter 2016 First Financial
Bankshares, Inc.
2
Forward Looking Statement
The numbers, as of and for the quarter ended June 30, 2016, 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.
33
Who We Are
$6.6 billion financial holding company headquartered in Abilene, Texas
Group of 11 separate regions
126 year history
Growth markets include 50 mile radius of the larger cities of Texas
4
Recognitions – Financial Exploitation Prevention Program
ABA Foundation Community Commitment Award – November 2015
Texas Bankers Association 2016 Leaders in Financial Education Award – May 2016
White House Conference on Aging – July 2015
AARP Roundtable Discussion – November 2015
Texas Senate Committee on Business and Commerce – Jan. 2016
House Investments and Financial Services Committee – March 2016
5
66
Recognitions
SNL - #5 Best-Performing Regional Bank – April 2016
Raymond James Community Bankers Cup #3, One of thirty banks named– March 2016
2015 Proven Performers Award Winner – Bank Intelligence Solutions
American Banker - #15 – Based on three year average Return on Equity – May 2015
KBW Honor Roll – One of twenty five banks named – April 2015
77
What Makes Us Different
One Bank, Eleven Regions Concept
One Bank Consolidation of backroom operations, technology, and
compliance (lower efficiency ratio)
Eleven 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
88
FFIN’s Unique Positioning in Texas
Bank Key MarketsComerica 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)
99
First Bank, N.A. - Conroe Acquisition Consummated July 31, 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
$374 million in Assets at acquisition date $343 million in deposits $248 million in loans
1.06% Return on Assets in 2014 $61.0 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
1010
4Trust Mortgage Acquisition Consummated – 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 is now 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
Are now offering expanded mortgage products and services to customers
10
1212
Texas: Large and Growing
Five most populous states:* Growth (2004 – 2014)
California 38.8 million 8.1%
Texas 26.9 million 20.1%
Florida 19.9 million 15.0%
New York 19.7 million 2.6%
Illinois 12.9 million 1.8%
* U.S. Census Bureau
1313
Target Markets – Population Growth
Population growth (2004-2014) in FFIN expansion markets:*
Texas 20.1%
Bridgeport & Wise County 19.4%
Fort Worth & Tarrant County 21.4%
Cleburne & Johnson County 14.4%
Weatherford, Willow Park, Aledo & Parker County 30.3%
Granbury & Hood County 19.6%
Stephenville & Erath County 15.9%
Conroe & Montgomery County 47.0%* U.S. Census Bureau
1414
Core Markets: West Central Texas Markets served benefiting from well-established, long- time customers
REGIONASSET SIZE*
LOCATIONSDEPOSIT
MARKET SHARE**MARKET
SHARE RANK**
First Financial Bank(Abilene, Clyde, Moran, Albany, Odessa
Eastland, Ranger, Rising Star, Cisco,
Sweetwater, Roby, Trent, Merkel)
$2,118M 23 48% 1
First Financial Bank(Hereford)
$192M 1 44% 1
First Financial Bank(San Angelo)
$675M 3 27% 1
TOTALS $2,985M 27
* Data as of 06-30-16** Data as of 06-30-15
1515
Expansion Markets REGION ASSET SIZE* LOCATIONS
DEPOSIT MARKET SHARE**
MARKET SHARE RANK**
First Financial Bank (Cleburne, Burleson, Alvarado)
(Midlothian, Waxahachie)
$432M 42
24%5%
16
First Financial Bank (Southlake, Trophy Club, Keller, Grapevine)
(Bridgeport, Decatur, Boyd)
$479M 43
4%18%
63
First Financial Bank (Stephenville, Granbury, Glen Rose, Acton)
$479M 6 24% 2
First Financial Bank(Weatherford, Aledo, Willow Park, Brock)
$496M 7 23% 1
First Financial Bank(Mineral Wells)
$256M 1 39% 1
First Financial Bank(Ft. Worth)
$67M 1 - -
First Financial Bank(Orange, Mauriceville, Vidor)
(Newton, Port Arthur, Beaumont)
$511M 33
38%2%
19
First Financial Bank (Conroe, Magnolia, Cut and Shoot, Montgomery, Huntsville, Willis, Tomball,
New Waverly)
(Market Share for Huntsville, Conroe, Magnolia, Cut and Shoot, Montgomery and Willis Only)
$591M 9 4% 9
TOTALS $3,311M 43 * Data as of 6-30-16** Data as of 06-30-15
1616
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 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 (Building New Building – Planned Opening 3rd Qtr. 2016)
Lamesa: Office of Trust Company – April 2011 Odessa: Branch of Abilene – February 2010 (Building New Building – Planned Opening 3rd Qtr. 2016)
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 (New Building – Opened May 2016)
Fort Worth – Forest Park Blvd. and Rosedale (Opened May 2016)
1716
Fort Worth – Forest Park Blvd. and Rosedale (Opened May 2016)
1817
19
Years with Company Years in Industry
Scott Dueser Chairman of the Board, President & Chief Executive Officer
40 45
Ron Butler Executive Vice President Chief Administrative Officer
23 34
Troy Fore President First Financial Mortgage
1 35
Gary S. Gragg Executive Vice President Lending
26 38
J. Bruce Hildebrand, CPA Executive Vice President Chief Financial Officer
14 37
Executive Management at First Financial
19
20
Years with Company Years in Industry
Luke Longhofer Executive Vice President & Loan Review Officer Lending
6 13
Stan Limerick Executive Vice President Chief Information Officer
1 35
Randy Roewe Executive Vice President Chief Risk Officer
1 25
Kirk Thaxton, CTFA President First Financial Trust & Asset Management
29 33
Marna Yerigan Executive Vice President Lending
5 32
Executive Management at First Financial
20
21
Years with Company Years in Industry
Brandon Harris Senior Vice President Appraisal Services
2 15
Monica Houston Senior Vice President Training
20 20
Larry Kentz Senior Vice President & Compliance Officer Compliance
2 36
Michele Stevens Senior Vice President Advertising and Marketing
16 32
Senior Management at First Financial
21
Experienced Regional CEOs & Presidents
22
Years with Company Years in Industry
Marelyn Shedd, Abilene 25 33
Mike Mauldin, Hereford 13 38
Mike Boyd, San Angelo 40 44
Tom O’Neil, Cleburne 18 36
Trent Swearengin, Stephenville 16 18
Jay Gibbs, Weatherford 14 42
Mark Jones, Southlake 15 38
Ken Williamson, Mineral Wells 14 45
Stephen Lee, Southeast Region 3 27
Sam Baker, Conroe 1 39
Martin Noto, Fort Worth 1 32
2323
2011 2012 2013 2014 2015 2016
$4,121$4,502
$5,222
$5,522
$6,665$6,615*Chart Title
Growth in Total Assets
Asset Performance
(in millions)
*As of June 30, 2016
2424
2011 2012 2013 2014 2015 2016
$1,102 $1,312 $1,362 $1,570 $1,746 1,645
$2,233$2,321
$2,773$3,180
$3,444 $3,411
Non Interest Bearing Interest Bearing
Deposit Growth
Growth in FFIN Total Deposits (in millions)
$5,056*
$3,335$3,633
$4,135
$4,750$5,190
*As of June 30, 2016
2525
Deposit Products
Time11.0%
Deman
d32.5%
Money
Market44.4%
Sav-ings12.1%
*As of June 30, 2016
2626
Account Growth
Net Growth in 2012 – 1,219 Accounts
Net Growth in 2013 – 3,308 Accounts*
Net Growth in 2014 – 10,687 Accounts
Net Growth in 2015 – 5,886 Accounts**
Net Growth in 2016 – 2,112 Accounts
December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015
June 30,2016
Total Number of Accounts
205,282 208,590 234,614 251,699 253,811
*(Excluding Orange Acquisition)**(Excluding Conroe Acquisition)
2727
2011 2012 2013 2014 2015 2016$66 $68 $76 $106 $102 $81
$218 $273 $334 $361 $386 $387 $427
$510 $590 $640 $685 $657
$1,076 $1,238
$1,689 $1,831
$2,178 $2,184
Real Estate
Commercial
Consumer
Agricultural
Loan PerformanceGrowth in FFIN Total Loans (in millions)
$1,787
$2,089
$2,689
$3,309
$2,938
$3,351
*As of June 30, 2016
2828
Overview of Loan Portfolio Commercial
19.8%Agriculture
2.5%
Consumer11.7%
Real Estate66.0%
Note: Oil & Gas Exposure 2.65%*As of June 30, 2016
2929
Residential Development & Construction 9.5%
1-4 Family 44.8%
Commercial Development and Construc-tion
5.1%
Commercial R/E 23.9%
Other R/E 16.7%
Chart Title
Breakdown of R/E Loan Portfolio
*As of June 30, 2016
3030
Oil & Gas Portfolio Analysis
Oil & Gas Supplemental Information (dollars in thousands)
December 31, 2015 June 30, 2016
Oil & Gas Loans 96,712 87,857
% of Total Loans 2.89% 2.65%
Classified Oil & Gas Loans 34,506 32,674
Non Accrual Oil & Gas Loans 5,404 5,763
Quarter Ended Net Charge-offs 1,370 419
ALLL of % of Oil & Gas 6.35% 6.57%
3131
2011 2012 2013 2014 2015 2016*
End of Period 53.6 57.5 65.0 61.8 64.6 65.5
Average Balances
54.6 56.4 64.3 64.1 63.0 65.2
Loan to Deposit Ratio
*As of June 30, 2016
3232
2011 2012 2013 2014 2015 2016
FirstFinancial 1.64% 1.22% 1.16% 0.74% 0.89% 1.22%*
Peer Group 4.59% 3.67% 2.71% 1.92% 1.30% 1.27%**
Sound Lending Practices
Nonperforming assets as a percentage of loans + foreclosed assets (FFIN vs. Peers)
*As of June 30, 2016
**As of Mar. 31, 2016
3333
Less than 1 year
1 to 2 years 3 to 5 years 6 to 10 yearsOver 10 years
34.75% 12.91% 29.86% 15.60% 6.88%
Loan Repricing
Loan Portfolio Interest Rate Risk Analysis
*As of June 30, 2016
3434
2011 2012 2013 2014 2015 2016*
$34,315 $34,839 $33,900$36,824
$41,877$45,060
$6,626$3,484 $3,753 $4,465
$9,685
$4,386
ALLL Provision
Allowance for Loan Losses and Provision for Loan Losses
(in thousands)
*As of June 30, 2016
3535
Summary of Bond Portfolio
Agencies 4.83% Corporates 2.51%
Muni 52.27%
MBSs 16.81%
CMOs 23.16%
Treasuries 0.42%
*As of June 30, 2016
3636
2011 2012 2013 2014 2015 2016
$1,912
$2,233$2,465
$2,774$3,060
$3,267*Chart Title
Growth in Trust Assets
Total Trust Assets – Book Value (in millions)
*As of June 30, 2016
3737
2011 2012 2013 2014 2015 2016
$12,671$14,464
$16,317
$18,766 $19,251
$6,254 $7,124 $7,746
$9,125 $9,472 $9,380
Total Trust Fees
Growth in FFTAM Fees (in thousands)
thru June 30th
3838
2011 2012 2013 2014 2015 2016
$4,176
$5,183
$6,142
$7,109$7,449
$2,078 $2,597
$2,900 $3,542 $3,631 $3,350
Total Trust Net Income
Growth in FFTAM Net Income (in thousands)
thru June 30th
39
2011 2012 2013 2014 2015 2016
$68.4$74.2
$78.9
$89.6$100.4
$32.8 $36.1 $38.1$43.5
$49.3 $52.5
29th Consecutive Year of Increased Earnings
FFIN Earnings (Full year and 1st 6 months) (in millions)
39
thru June 30th
40
2011 2012 2013 2014 2015 2016
$1.1$1.2 $1.2
$1.4$1.6
$0.52 $0.58 $0.60$0.68
$0.77 $0.80
Strong Shareholder Earnings
Basic Earnings Per Share (Full year and 1st 6 months)
40
thru June 30th
41
2011 2012 2013 2014 2015
1.78% 1.75%1.64% 1.65% 1.61%
0.80%0.98%
1.04%0.95% 0.97%
FFIN Outperforms Peers
Percentage Return on Average Assets
Peer
Gro
up
Firs
t Fin
anci
al
41
42
2011 2012 2013 2014 2015
14.44%13.85% 13.75% 14.00% 13.60%
7.27%8.56% 8.89% 8.34% 8.68%
Strong Return on Capital Percentage Return on Average Equity
Peer
Gro
up
Firs
t Fin
anci
al
42
4343
2012 2013 2014 2015 2016
Shareholders’Equity 556,963 587,647 681,537 804,986 866,158
As a Percent of Total Assets
12.37 11.25 11.65 12.08 13.09
Tangible
Capital484,990 490,163 584,178 660,537 722,228
Tier 1
Leverage Ratio10.60 9.84 9.89 9.96 10.49
Common Equity
Tier 1 Capital Ratio17.43 15.82 16.05 15.90 16.64
Tier 1 Capital Ratio 17.43 15.82 16.05 15.90 16.64
Total
Capital Ratio18.68 16.97 17.16 16.97 17.79
Capital & Capital Ratios(dollars in thousands)
44
1st Qtr. '13
2nd Qtr. '13
3rd Qtr. '13
4th Qtr. '13
1st Qtr. '14
2nd Qtr. '14
3rd Qtr. '14
4th Qtr. '14
1st Qtr. '15
2nd Qtr. '15
3rd Qtr. '15
4th Qtr. '15
1st Qtr. '16
2nd Qtr. '16
3.00%
3.25%
3.50%
3.75%
4.00%
4.25%
4.50%
4.75%
5.00%
First Financial Peer Group
Net Interest Margin
Quarterly Interest Margin
44
4545
2011 2012 2013 2014 2015 2016
FirstFinancial 48.37% 48.14% 50.20% 49.24% 47.61% 48.97%*
Peer Group 65.57% 65.77% 67.80% 66.84% 63.90% 63.10%**
Working Harder and Smarter
Efficiency Ratio (FFIN vs. Peers)
*As of June 30, 2016
**As of March 31, 2016
4646
Stock cost in January 2015 $29,880
Dividend declared ($0.62 x 1,000 shares) $ 620
Increase in stock price during 2015($29.88 to $30.17 X 1,000 shares) $290
2015 return on investment 3.05%
2014 return on investment -7.96%
2013 return on investment 72.11%
2012 return on investment 19.65%
2011 return on investment 0.61%
5 year compound average return 12.36%
Total Return on Investment
13.95%
Assume you owned 1,000 shares of FFIN stock on January 1, 2015…
4747
Dividends Per Share
2011 2012 2013 2014 2015
$0.48 $0.50$0.52 $0.55
$0.62Chart Title
Annual Dividends Declared Per Share*
*Per share amounts reflect the 2 for 1 stock split that was effective June 2, 2014.
4848
Strong Stock Performance
-100.00%
-50.00%
0.00%
50.00%
100.00%
150.00%
200.00%
FFIN S&P 500 NASDAQ Dow JonesJan . ‘07 June ’16Dec . ‘09Dec ‘07 Dec ‘08 Dec. ‘10 Dec. ’11 Dec. ’12 Dec. ’13 Dec. ’14 Dec. ’15
4949
Challenges
Regulatory reform from Washington
Stagnant national economy
Oil & gas price decline
Low interest rate environment
Maintaining net interest margin
5050
Opportunities
Loan Growth
Mortgage Lending
Trust Services
Treasury Management
Mobile Banking
Lower Efficiency Ratio
Potential Acquisitions