Down 5% in a strong market, things haven’t really gone the way of First Financial Bankshares ( FFIN ) since I last wrote on it in April. While this Texan bank operates a high-quality business, its more defensive qualities are arguably betterI like to take a long term, buy-and-hold approach to investing, with a bias toward stocks that can sustainably post high quality earnings. Mostly found in the dividend and income section. Blog about various US/Canadian stocks at 'The Compound Investor', and predominantly ...

Financial Performance - Net earnings for the three months ended September 30, 2025, were $52,267 thousand, a decrease of 5.0% from $55,308 thousand in 2024[15]. - Comprehensive earnings for the nine months ended September 30, 2025, were $295,980 thousand, compared to $234,671 thousand in 2024, reflecting an increase of 26.1%[16]. - Net earnings for the period reached $161.19 million, reflecting strong performance[21]. - Net earnings for the nine months ended September 30, 2025, were $180,270,000, an increase of 11.5% compared to $161,190,000 for the same period in 2024[23]. - Net earnings for Q3 2025 were $52.27 million, down from $55.31 million in Q3 2024, with diluted earnings per share at $0.36 compared to $0.39[173]. - Year-to-date earnings growth for 2025 is nearly 12% compared to 2024, despite a $21.55 million credit loss due to fraudulent activity[173]. Asset and Loan Growth - Total assets increased to $14,841,528 thousand as of September 30, 2025, up from $13,582,932 thousand in 2024, representing a growth of 9.3%[12]. - Total loans held-for-investment increased to $8,243,625,000 as of September 30, 2025, up from $7,723,191,000 in 2024, representing a growth of 6.7%[85]. - Total deposits increased to $12,846,248 thousand as of September 30, 2025, compared to $11,755,861 thousand in 2024, an increase of 9.3%[12]. - Total loans held-for-investment as of September 30, 2024, amounted to $8,244 million, an increase from $7,991 million in 2023, reflecting a growth of approximately 3.2%[104]. Income and Expenses - Total interest income for the three months ended September 30, 2025, was $179,692 thousand, compared to $159,958 thousand in 2024, reflecting an increase of 12.3%[15]. - Total noninterest income for the nine months ended September 30, 2025, was $97,366 thousand, up from $93,012 thousand in 2024, marking a growth of 4.8%[15]. - Total noninterest expense for the first nine months of 2025 was $215.74 million, up from $194.97 million in the same period of 2024, indicating an increase of 10.6%[197]. - Salaries, commissions, and employee benefits for the first nine months of 2025 totaled $127.32 million, an increase of 14.0% from $111.65 million in 2024[198]. Credit Loss Provisions - The provision for credit losses increased to $24,435 thousand for the three months ended September 30, 2025, compared to $6,123 thousand in 2024, indicating a significant rise in credit loss provisions[15]. - Provision for credit losses increased significantly to $31,095,000 in 2025 from $12,817,000 in 2024, indicating a rise in expected credit losses[23]. - The allowance for credit losses at the end of September 2025 was $105,958,000, compared to $99,936,000 in 2024, reflecting an increase of 6.8%[85]. Shareholder Returns - Dividends per share increased to $0.19 for the three months ended September 30, 2025, compared to $0.18 in 2024, representing a growth of 5.6%[15]. - Cash dividends declared were $0.54 per share, totaling $77.20 million[21]. - Cash dividends declared increased to $0.56 per share, amounting to $80.25 million[21]. Investment and Securities - The company reported an unrealized gain of $73.48 million in available-for-sale investment securities, net of related income taxes[21]. - As of September 30, 2025, the total fair value of available-for-sale securities was $5,260,813,000, down from $4,612,299,000 as of September 30, 2024[78]. - The total amortized cost basis of available-for-sale securities was $5,651,768,000 as of September 30, 2025, with unrealized losses amounting to $413,930,000[78]. Risk Management and Loan Quality - The company has categorized its loans into five risk categories, with ongoing assessments to adjust ratings based on credit quality changes[96][97]. - Loans rated as "special mention" indicate financial weaknesses but are not expected to incur significant losses in the short term[98]. - The overall strategy includes continuous monitoring and adjustment of credit risk ratings to reflect the inherent risks in the loan portfolio[97]. Operational Metrics - Return on average assets for Q3 2025 was 1.44%, down from 1.66% in Q3 2024; return on average equity was 11.85%, down from 14.00%[174]. - The efficiency ratio improved to 45.33% for the first nine months of 2025, compared to 47.39% in the same period of 2024, reflecting better operational efficiency[197]. - The yield on earning assets increased by 16 basis points, while the rate paid on interest-bearing liabilities decreased by 23 basis points in Q3 2025 compared to Q3 2024[178].

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Core Insights - First Financial Bankshares Inc (FFIN) is a significant player in the financial services sector, particularly in the Texas region, and has shown confidence from its leadership through stock purchases [1] Financial Performance - For Q3 2025, FFIN reported a net income of $52.27 million, down from $55.31 million in Q3 2024 and significantly lower than $66.66 million in the previous quarter [2] - The diluted earnings per share for Q3 2025 was $0.36, missing the Zacks Consensus Estimate of $0.47 per share by 23.40% [2] - Revenues for the same quarter were $164.67 million, exceeding the Zacks Consensus Estimate by 1.96% and showing an increase from $142.1 million reported a year ago [3] Impact of Fraudulent Activity - The quarter's performance was adversely affected by a $21.55 million credit loss due to fraudulent activity involving a commercial borrower, which the company is addressing through legal actions [3] - Despite this setback, core earnings trends remain positive, with nearly 12% year-to-date earnings growth compared to 2024 [4] Stock Performance - FFIN's stock is currently priced at $30.88, reflecting a decrease of approximately 1.46% [4] - The company's market capitalization is around $4.42 billion, with a trading volume of 528,272 shares, indicating resilience and potential for recovery [4]

Financial Performance - Third quarter 2025 earnings were $52.27 million, down from $55.31 million in Q3 2024 and $66.66 million in Q2 2025; diluted earnings per share were $0.36 compared to $0.39 and $0.47 respectively[1][2] - Net income for the quarter was $52,267 thousand, compared to $55,308 thousand in the same quarter last year, indicating a decrease of 5.25%[15] - Return on average assets was 1.44% for the quarter, down from 1.66% in the same quarter last year[15] - Return on average equity decreased to 11.85% from 14.00% year-over-year[15] Income and Revenue - Net interest income increased to $127.00 million in Q3 2025 from $107.11 million in Q3 2024, with a net interest margin of 3.80% compared to 3.50% a year ago[2] - Noninterest income for Q3 2025 was $34.26 million, an increase from $32.36 million in Q3 2024[5] - Noninterest income rose to $34,264 thousand, up from $32,362 thousand in the same quarter last year, marking an increase of 5.88%[15] - Total noninterest income for the nine months ended September 30, 2025, was $97,366,000, an increase of 4% from $93,012,000 in 2024[23] Expenses and Loss Provisions - The provision for credit losses was $24.44 million in Q3 2025, significantly higher than $6.12 million in Q3 2024 and $3.13 million in Q2 2025[3] - Total noninterest expense rose to $73,666 thousand, compared to $71,735 thousand in the previous quarter, marking an increase of 2.70%[21] - Total noninterest expense increased to $215,736,000, reflecting a 10.6% rise from $194,965,000 in 2024[23] Asset and Deposit Growth - Total assets reached $14.84 billion as of September 30, 2025, up from $13.58 billion a year earlier; loans increased to $8.24 billion from $7.72 billion[7] - Total deposits increased to $12,846,248 thousand, up from $12,448,416 thousand in the previous quarter, reflecting a growth of 3.20%[15] - Core deposits and repurchase agreements grew by $250.45 million, or 7.95% annualized, compared to June 30, 2025[7] - Total assets increased to $14,841,528 thousand as of September 30, 2025, up from $14,376,841 thousand in the previous quarter, representing a growth of 3.23%[15] Capital and Equity - Shareholders' equity rose to $1.83 billion as of September 30, 2025, compared to $1.66 billion a year ago[8] - The common equity Tier 1 capital ratio remained stable at 19.10% as of September 30, 2025, consistent with the previous quarter[21] - The total capital ratio was reported at 20.29% for the quarter ended September 30, 2025, slightly down from 20.35% in the previous quarter[21] - The equity/assets ratio improved to 12.33% as of September 30, 2025, compared to 12.08% in the previous quarter, indicating a stronger capital position[21] Asset Quality - Nonperforming assets as a percentage of loans and foreclosed assets decreased to 0.71% at September 30, 2025, from 0.83% a year ago[4] - Nonperforming assets decreased to $58,542 thousand, down from $63,708 thousand in the previous quarter, indicating a reduction of approximately 8.67%[19] - The allowance for loan losses increased to $105,958 thousand as of September 30, 2025, up from $102,792 thousand in the previous quarter, reflecting a provision for loan losses of $25,506 thousand[19] - The total classified loans amounted to $252,958 thousand, a decrease from $257,065 thousand in the previous quarter, reflecting a decline of approximately 1.73%[19] Efficiency and Management - The efficiency ratio improved to 44.74% in Q3 2025 from 46.45% in Q3 2024, primarily due to increased net interest income[6] - The efficiency ratio improved to 44.74% from 46.45% in the same quarter last year, indicating better cost management[15] Other Financial Metrics - Cash dividends declared remained stable at $0.19 per share, consistent with the previous quarter[15] - The net charge-offs (recoveries) to average total loans (annualized) was 1.07% for the quarter ended September 30, 2025, compared to 0.04% in the previous quarter[19] - Interest-bearing liabilities totaled $9,157,712,000, with an average interest rate of 2.28%[25] - Noninterest-bearing deposits amounted to $3,383,851,000, indicating a stable funding base[25]

Core Insights - First Financial Bankshares (FFIN) reported quarterly earnings of $0.36 per share, missing the Zacks Consensus Estimate of $0.47 per share, and down from $0.39 per share a year ago [1][2] - The company posted revenues of $164.67 million for the quarter ended September 2025, exceeding the Zacks Consensus Estimate by 1.96% and up from $142.1 million year-over-year [3] - The stock has underperformed the market, losing about 10.8% since the beginning of the year compared to the S&P 500's gain of 13.9% [4] Earnings Performance - The earnings surprise for the recent quarter was -23.40%, while the previous quarter saw a positive surprise of +4.44% [2] - Over the last four quarters, First Financial has surpassed consensus EPS estimates two times and topped consensus revenue estimates four times [2][3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.47 on revenues of $163 million, and for the current fiscal year, it is $1.81 on revenues of $635.7 million [8] - The estimate revisions trend for First Financial was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [7] Industry Context - The Banks - Southwest industry, to which First Financial belongs, is currently in the top 24% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [9] - Another company in the same industry, Southside Bancshares (SBSI), is expected to report quarterly earnings of $0.72 per share, reflecting a year-over-year change of +5.9% [10]

Core Viewpoint - First Financial Bankshares, Inc. reported a decline in net income for Q3 2025, primarily due to a significant credit loss related to fraudulent activity, but core earnings trends remain positive with year-to-date growth of nearly 12% compared to 2024 [2][3]. Financial Performance - Net income for Q3 2025 was $52.27 million, down from $55.31 million in Q3 2024 and $66.66 million in Q2 2025 [1]. - Diluted earnings per share decreased to $0.36 from $0.39 in Q3 2024 and $0.47 in Q2 2025 [1]. - Net interest income increased to $127.00 million from $107.11 million in Q3 2024 and $123.73 million in Q2 2025 [2]. - The net interest margin was 3.80% for Q3 2025, compared to 3.50% in Q3 2024 and 3.81% in Q2 2025 [2]. Credit Losses and Provisions - The company recorded a provision for credit losses of $24.44 million in Q3 2025, significantly higher than $6.12 million in Q3 2024 and $3.13 million in Q2 2025 [3]. - Net charge-offs totaled $22.34 million in Q3 2025, compared to $786 thousand in Q3 2024 [4]. - The allowance for credit losses was $105.96 million, or 1.29% of loans, consistent with the previous year [3]. Asset and Loan Growth - Total assets increased to $14.84 billion as of September 30, 2025, from $13.58 billion a year earlier [5]. - Loans held-for-investment grew to $8.24 billion, up from $7.72 billion in Q3 2024 [5]. - Core deposits and repurchase agreements increased by $250.45 million, or 7.95% annualized, compared to Q2 2025 [5]. Noninterest Income and Expenses - Noninterest income for Q3 2025 was $34.26 million, up from $32.36 million in Q3 2024 [5]. - Noninterest expenses totaled $73.67 million, compared to $66.01 million in Q3 2024 [5]. - The efficiency ratio improved to 44.74% from 46.45% in Q3 2024, primarily due to increased net interest income [5]. Shareholder Equity and Market Position - Shareholders' equity rose to $1.83 billion as of September 30, 2025, compared to $1.66 billion a year earlier [5]. - The company continues to focus on maintaining growth and profitability while addressing the recent credit loss incident [2].

Core Insights - First Financial Bankshares has appointed Tim Brown as Executive Vice President and Chief Information Officer, and CEO of First Technology Services, Inc. as part of its succession planning [1] - John Ruzicka, the former CIO, will transition to Chief Banking Operations Officer, focusing on enhancing the bank's backroom operations [1][3] Leadership Changes - Tim Brown brings over 35 years of technology innovation and operations experience, having previously worked at USAA and Johnson Financial Group, which positions him well for the bank's growth into a mid-size regional bank [2] - John Ruzicka has been with the company since 2018 and has significantly improved the bank's tech infrastructure and digital modernization [2][3] Company Overview - First Financial Bank is a wholly owned subsidiary of First Financial Bankshares, Inc., operating multiple banking regions with 79 locations across Texas [3]

Core Points - First Financial Bank is participating in the inaugural Texas Banks Community Day of Service, a statewide initiative by the Texas Bankers Association aimed at uniting financial institutions for community service [1][2][3] - On October 13, 2025, over 1,000 employees from First Financial Bank will volunteer with local nonprofits, schools, and service organizations, focusing on various projects such as food banks and neighborhood cleanups [2][3] - The Day of Service emphasizes the role of community banks in strengthening local communities and showcases the collaborative impact of banks working together [3] Company Overview - First Financial Bank is a wholly owned subsidiary of First Financial Bankshares, Inc., which operates multiple banking regions with 79 locations across Texas [4] - The company is headquartered in Abilene, Texas, and also operates First Financial Trust & Asset Management Company and First Technology Services, Inc. [4]

Core Insights - Income investors prioritize generating consistent cash flow from liquid investments, with dividends being a key focus for this group [1][2] - Dividends significantly contribute to long-term returns, often exceeding one-third of total returns in many cases [2] Company Overview - First Financial Bankshares (FFIN), based in Abilene, operates in the Finance sector and has experienced a price change of 0.14% this year [3] - The company currently pays a dividend of $0.19 per share, resulting in a dividend yield of 2.11%, which is higher than the Banks - Southwest industry's yield of 1.12% and the S&P 500's yield of 1.49% [3] Dividend Growth - FFIN's annualized dividend of $0.76 has increased by 5.6% from the previous year [4] - Over the past five years, the company has raised its dividend four times, averaging an annual increase of 7.93% [4] - The current payout ratio is 44%, indicating that the company pays out 44% of its trailing 12-month earnings per share as dividends [4] Earnings Growth - The Zacks Consensus Estimate for FFIN's earnings in 2025 is $1.81 per share, reflecting a year-over-year growth rate of 16.03% [5] Investment Considerations - FFIN is viewed as an attractive dividend option and a compelling investment opportunity, holding a Zacks Rank of 2 (Buy) [6]