Core Insights - First Financial Bankshares, Inc. reported a net income of $61.35 million for Q1 2025, an increase from $53.40 million in Q1 2024, with earnings per share rising to $0.43 from $0.37 [1][2][3] Financial Performance - Net interest income for Q1 2025 was $118.79 million, up from $100.24 million in Q1 2024, with a net interest margin of 3.74% compared to 3.34% a year earlier [3][6] - Noninterest income increased to $30.23 million in Q1 2025 from $29.38 million in Q1 2024, while noninterest expenses rose to $70.34 million from $63.94 million [6][16] - The efficiency ratio improved to 46.36% in Q1 2025 from 48.37% in Q1 2024, indicating better cost management [6][16] Asset and Loan Growth - Total assets reached $14.31 billion as of March 31, 2025, compared to $13.19 billion a year prior, with loans increasing to $7.95 billion from $7.23 billion [7][14] - Deposits and repurchase agreements grew to $12.52 billion, up from $11.60 billion in the same period last year, reflecting a 12.10% annualized growth [7][14] Credit Quality - The provision for credit losses was $3.53 million in Q1 2025, significantly higher than $808 thousand in Q1 2024, with the allowance for credit losses totaling $101.08 million, or 1.27% of loans [4][5] - Nonperforming assets as a percentage of loans and foreclosed assets increased to 0.78% from 0.51% year-over-year [5][15] Capital and Equity - Shareholders' equity rose to $1.68 billion as of March 31, 2025, compared to $1.49 billion a year earlier, indicating a strengthening capital position [8][14] - The unrealized loss on the securities portfolio decreased to $388.89 million from $441.23 million year-over-year, reflecting improved market conditions [8][14]

Core Points - First Financial Bankshares, Inc. will hold its 2025 Annual Shareholders' Meeting on April 29, 2025, at 10:30 a.m. Central time, which will be live-streamed [1] - Key executives including F. Scott Dueser, David Bailey, Michelle Hickox, and Lon Biebighauser will recap the operational and financial results for 2024 and the first quarter of 2025, as well as discuss the company's strategic direction [1] Company Overview - First Financial Bankshares, Inc. is headquartered in Abilene, Texas, and operates multiple banking regions with 79 locations across Texas [3] - The company also operates First Financial Trust & Asset Management Company and First Technology Services, Inc. [3] - It is listed on The NASDAQ Global Select Market under the trading symbol FFIN [4]

Company Overview - First Financial Bankshares (FFIN) shares increased by 5.8% to close at $33.52, following a period of 9.4% loss over the past four weeks, indicating a significant recovery in stock performance [1] - The bank is primarily operating in Texas and is expected to report quarterly earnings of $0.43 per share, reflecting a year-over-year increase of 16.2% [3] - Revenue projections for the upcoming report are estimated at $149.2 million, which is a 12.9% increase compared to the same quarter last year [3] Market Context - The recent rally in FFIN shares was influenced by broader market strength, particularly after President Donald Trump's announcement of a 90-day suspension on tariffs for non-retaliating countries, which alleviated trade tensions and improved market sentiment [2] - The consensus EPS estimate for FFIN has remained unchanged over the last 30 days, suggesting stability in earnings expectations [4] Industry Comparison - First Financial is part of the Zacks Banks - Southwest industry, where another competitor, Southside Bancshares (SBSI), saw a 3.9% increase in its stock price, closing at $27.64, despite a -7.6% return over the past month [4] - Southside Bancshares has an unchanged EPS estimate of $0.67 for the upcoming report, which represents a decline of 5.6% from the previous year [5]

Core Insights - First Financial Bank has been ranked as the number three bank in Forbes' America's Best Banks 2025 listing, reflecting its strong financial performance and commitment to customer service [1][2] Financial Performance Metrics - Forbes evaluated the 200 largest publicly traded banks and thrifts in the U.S. using 11 metrics that assess growth, credit quality, and profitability for the 12 months ending September 30, 2024, along with stock performance through January 10, 2025 [2] - The ten equally-weighted financial metrics include net interest margin, return on average tangible common equity, return on average assets, CET1 ratio, efficiency ratio, nonperforming assets as a percentage of total assets, reserves as a percentage of total assets, risk-based capital ratio, operating revenue growth, and net charge-offs as a percentage of total loans [2] 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 also manages First Financial Trust & Asset Management Company and First Technology Services, Inc., enhancing its service offerings [4]

Workforce and Employee Benefits - The company employed approximately 1,500 employees as of December 31, 2024, with 1,400 full-time and 100 part-time[40]. - The company incurred expenses totaling approximately $30.00 million for employee benefits in 2024, compared to $19.19 million in 2023, reflecting a significant increase[46]. - The company has a diverse workforce, with 70% of employees being female and 46% identifying as minorities, veterans, or disabled[44]. - The average tenure of employees with the company is approximately seven years, indicating strong employee retention[45]. - The company has a board of directors comprising twelve members, including one Hispanic, one African-American, and three females, reflecting its commitment to diversity[48]. Community Engagement - The company has a strong focus on community involvement, contributing approximately 5,000 hours of community service in 2024[47]. - The company operates under a community banking model, emphasizing personal relationships with customers, which is critical for its strategy execution[39]. Financial Performance and Capital Management - Interest income for Q4 2024 was $165,792,000, an increase from $142,207,000 in Q4 2023, representing a growth of 16.6% year-over-year[372]. - Net interest income after provision for credit losses in Q4 2024 was $115,114,000, compared to $97,508,000 in Q4 2023, reflecting a year-over-year increase of 17.9%[372]. - Noninterest income for Q4 2024 was $30,977,000, slightly down from $21,979,000 in Q4 2023, indicating a decrease of 40.9%[372]. - Net earnings for Q4 2024 reached $62,321,000, up from $45,982,000 in Q4 2023, marking an increase of 35.4%[372]. - Earnings per share (diluted) for Q4 2024 was $0.43, compared to $0.32 in Q4 2023, which is a growth of 34.4%[372]. - The provision for credit losses in Q4 2024 was $1,003,000, significantly lower than $2,276,000 in Q4 2023, indicating improved credit quality[372]. - Total interest expense in Q4 2024 was $49,675,000, compared to $44,699,000 in Q4 2023, reflecting an increase of 11.1%[372]. - Cash dividends declared in Q4 2024 remained stable at $0.18 per share, consistent with Q4 2023[372]. - The book value at period-end for Q4 2024 was $11.24, an increase from $10.50 in Q4 2023, representing a growth of 7.0%[372]. - The common stock sales price closed at $36.05 in Q4 2024, up from $30.30 in Q4 2023, indicating a year-over-year increase of 19.1%[372]. Regulatory Compliance and Assessments - First Financial Bank is subject to a risk-based assessment system for FDIC deposit insurance, with higher premiums for institutions classified as higher risk[61]. - The Dodd-Frank Act requires that institutions with over $10 billion in assets, like First Financial Bank, cannot utilize future credits to offset FDIC assessments[65]. - The Basel III Rules established minimum capital ratios, and failure to meet these ratios can limit activities such as dividend payments and share repurchases[85]. - First Financial Bank's subsidiary bank must maintain adequate capital above regulatory guidelines to pay dividends, and cannot pay dividends if it would become undercapitalized[71]. - The FDIC uses performance and loss severity scores to calculate initial assessment rates for institutions with $10 billion or more in assets[66]. - The subsidiary bank was classified as "well capitalized" as of December 31, 2024, meeting all regulatory capital requirements[89]. - The minimum CET1 ratio to risk-weighted assets is 7.0%, with a capital conservation buffer of 2.5%[89]. - The minimum Tier 1 capital ratio is 8.5%, which includes the capital conservation buffer[89]. - The total capital ratio must be at least 10.5%, combining Tier 1 and Tier 2 capital[89]. - The bank is subject to regulatory assessments under the Community Reinvestment Act, receiving an "Outstanding" rating in its most recent evaluation[99]. - The Consumer Financial Protection Bureau regulates the subsidiary bank due to its assets exceeding $10 billion, ensuring compliance with consumer protection laws[110]. - The bank must comply with various federal and state consumer laws, which include the Truth in Lending Act and the Equal Credit Opportunity Act[109]. - The Federal Reserve Board has the authority to prohibit unsafe banking practices and can impose civil money penalties of up to $1 million per day for violations[94]. - The bank is required to monitor and report suspicious activities under the Bank Secrecy Act, which includes enhanced due diligence measures[100]. Special Assessments and Capital Structure - In Q4 2023, the FDIC imposed a special assessment of $1.75 million on First Financial Bank, which was updated to $2.06 million in Q1 2024, to be paid over ten quarters starting Q2 2024[64]. - As of December 31, 2024, First Financial Bank had a total risk-based capital ratio of 20.00%, a tier 1 capital to risk-weighted asset ratio of 18.83%, and a CET1 to risk-weighted assets ratio of 18.83%[87]. - The subsidiaries paid aggregate dividends of $55.50 million in 2024 and $133.50 million in 2023, with the potential to declare an additional $428.66 million from retained net profits without regulatory approvals as of December 31, 2024[76]. - As of December 31, 2024, First Financial Bank had no non-cumulative perpetual preferred stock or subordinated notes[83]. - The Basel III Rules allow for a one-time election to exclude certain accumulated other comprehensive income items from capital calculations, which First Financial Bank has utilized[84]. Accounting and Financial Disclosure - No changes or disagreements with accountants on accounting and financial disclosure reported[374].

Core Viewpoint - The article discusses the valuation concerns regarding First Financial Bankshares, a Texas-based bank, while highlighting its potential as a quality growth stock [1]. Company Summary - First Financial Bankshares is characterized as an excellent bank with strong fundamentals and growth potential [1]. - The investment approach favored is long-term, focusing on buy-and-hold strategies, particularly in high-quality earnings stocks [1]. Investment Strategy - The investment strategy emphasizes a preference for stocks that can sustainably deliver high-quality earnings, often found in the dividend and income sectors [1].

Earnings and Net Income - Fourth quarter 2024 earnings were $62.32 million, up from $55.31 million in Q3 2024 and $45.98 million in Q4 2023[1] - Full year 2024 net income was $223.51 million, a 12.33% increase from $198.98 million in 2023[2] - Net income for the year ended Dec. 31, 2024, reached $223,511 thousand, compared to $198,977 thousand in 2023[20] Net Interest Income - Net interest income for Q4 2024 was $116.12 million, compared to $107.11 million in Q3 2024 and $97.51 million in Q4 2023[4] - Net interest income for the year ended Dec. 31, 2024, was $426,741 thousand, up from $383,809 thousand in 2023[20] - Net interest income increased to $118.79 million in Q4 2024, up from $109.74 million in Q3 2024, with a margin of 3.67% compared to 3.50% in the previous quarter[27] - Net interest income and margin (tax equivalent) rose to $437,187 and 3.50% in 2024 from $395,361 and 3.29% in 2023[29] Loans and Deposits - Loans grew to $7.91 billion at December 31, 2024, a 10.69% increase from $7.15 billion at December 31, 2023[10] - Deposits and Repurchase Agreements totaled $12.16 billion at December 31, 2024, a 5.56% increase from $11.52 billion at December 31, 2023[10] - Loans held-for-investment grew to $7,913,098 thousand as of Dec. 31, 2024, from $7,148,791 thousand in Dec. 31, 2023[19] - Total deposits increased to $12,099,174 thousand as of Dec. 31, 2024, from $11,138,300 thousand in Dec. 31, 2023[19] - Total loans held-for-investment increased to $7.91 billion at the end of Q4 2024 from $7.72 billion at the end of Q3 2024[22] - Loans grew to $7,516,352 in 2024 from $6,784,352 in 2023, with a yield of 6.72% compared to 6.01% in 2023[29] - Deposits increased to $8,166,855 in 2024 from $7,188,171 in 2023, with a cost of 2.39% compared to 1.74% in 2023[29] Trust and Mortgage Income - Trust fee income increased by $1.98 million or 18.58% compared to the same quarter last year, driven by growth in assets under management to $10.83 billion[11] - Mortgage income increased to $3.01 million for Q4 2024 compared to $1.94 million in Q4 2023 due to increased loan volume[11] - Trust fees increased to $12.66 million in Q4 2024 from $11.69 million in Q3 2024[24] Employee Costs - Salary, commissions, and employee benefit costs increased to $41.64 million for Q4 2024, up from $35.75 million in Q4 2023[11] - Salaries, commissions and employee benefits increased to $37.99 million in Q4 2024 from $35.26 million in Q3 2024[24] - Salaries, commissions, and employee benefits (excluding profit sharing) grew to $143,830 million in 2024 from $130,542 million in 2023, an increase of 10.2%[25] Credit Losses and Nonperforming Assets - The allowance for credit losses totaled $98.33 million at December 31, 2024, compared to $88.73 million at December 31, 2023[6] - Nonperforming assets as a percentage of loans and foreclosed assets totaled 0.80% on December 31, 2024, compared to 0.83% at September 30, 2024 and 0.49% at December 31, 2023[7] - Allowance for loan losses decreased to $98.3 million at the end of Q4 2024 from $99.9 million at the end of Q3 2024[22] - Net charge-offs (recoveries) as a percentage of average total loans (annualized) increased to 0.10% in Q4 2024 from 0.04% in Q3 2024[22] - Nonperforming assets as a percentage of loans held-for-investment and foreclosed assets decreased to 0.80% at the end of Q4 2024 from 0.83% at the end of Q3 2024[22] - Provision for credit losses increased to $13,821 thousand in 2024 from $10,631 thousand in 2023[20] Total Assets and Equity - Total assets increased to $13,979,418 thousand as of Dec. 31, 2024, compared to $13,105,594 thousand in Dec. 31, 2023[19] - Shareholders' equity grew to $1.63 billion in Q4 2024, up from $1.57 billion in Q3 2024[27] - Total assets increased to $13.69 billion in Q4 2024, up from $13.29 billion in Q3 2024[27] - Shareholders' equity increased to $1,539,947 in 2024 from $1,327,827 in 2023[29] Noninterest Income and Expense - Noninterest income for the year ended Dec. 31, 2024, was $123,989 thousand, compared to $108,003 thousand in 2023[20] - Total noninterest income decreased to $30.98 million in Q4 2024 from $32.36 million in Q3 2024[24] - Total noninterest expense increased to $70.10 million in Q4 2024 from $66.01 million in Q3 2024[24] - Total noninterest expense increased to $265,063 million in 2024 from $237,882 million in 2023, up by 11.4%[25] Interest Rates and Yields - Net interest margin (tax equivalent) improved to 3.50% in 2024 from 3.29% in 2023[20] - Total interest-earning assets grew to $12.86 billion in Q4 2024, up from $12.48 billion in Q3 2024, with a yield of 5.21% compared to 5.18%[27] - Loans, the largest interest-earning asset, increased to $7.81 billion in Q4 2024, up from $7.64 billion in Q3 2024, maintaining a yield of 6.78%[27] - Interest-bearing deposits rose to $8.52 billion in Q4 2024, up from $8.24 billion in Q3 2024, with a cost of 2.29% compared to 2.51%[27] - Total interest-earning assets increased to $12,483,738 in 2024 from $12,000,403 in 2023, with a yield of 5.12% compared to 4.50% in 2023[29] - Interest-bearing deposits in nonaffiliated banks increased to $253,393 in 2024 from $115,785 in 2023, with a yield of 5.23% compared to 5.09% in 2023[29] - Total interest-bearing liabilities grew to $8,394,866 in 2024 from $7,837,638 in 2023, with a cost of 2.41% compared to 1.84% in 2023[29] Capital Ratios - Common equity Tier 1 capital ratio remained stable at 18.83% at the end of Q4 2024 compared to Q3 2024[24] Other Expenses - FDIC insurance premiums decreased to $1.51 million in Q4 2024 from $1.51 million in Q3 2024[24] - Software amortization and expense surged to $13,523 million in 2024 from $10,288 million in 2023, a rise of 31.4%[25] - Net occupancy expense increased to $14,579 million in 2024 from $13,766 million in 2023, up by 5.9%[25] - Legal, tax, and professional fees rose to $14,157 million in 2024 from $11,666 million in 2023, an increase of 21.4%[25] - Advertising, meals, and public relations expenses remained nearly flat at $6,028 million in 2024 compared to $6,032 million in 2023[25] Miscellaneous - Book value per share rose to $11.24 in 2024 from $10.50 in 2023[20] - Interest income increased to $47,449 million in 2024 from $40,456 million in 2023, reflecting a growth of 17.3%[25] - Debit card fees decreased slightly to $21,070 million in 2024 from $21,721 million in 2023, a decline of 3%[25] - Service charges on deposits dropped to $24,988 million in 2024 from $25,378 million in 2023, a decrease of 1.5%[25] - Interest on loan recoveries rose to $3,010 million in 2024 from $2,055 million in 2023, a significant increase of 46.5%[25] - Taxable securities grew to $3.32 billion in Q4 2024, up from $3.21 billion in Q3 2024, with a yield of 2.64% compared to 2.47%[27] - Federal funds sold decreased to $1.90 million in Q4 2024, down from $2.90 million in Q3 2024, with a yield of 4.90% compared to 5.84%[27] - Taxable securities decreased to $3,289,683 in 2024 from $3,500,839 in 2023, with a yield of 2.48% compared to 2.28% in 2023[29] - Tax-exempt securities decreased to $1,420,846 in 2024 from $1,597,204 in 2023, with a yield of 2.75% compared to 2.87% in 2023[29] - Noninterest-earning assets decreased to $840,674 in 2024 from $860,859 in 2023[29]

Core Viewpoint - First Financial Bankshares, Inc. has announced a series of promotions as part of its management succession plan, aimed at fostering the next generation of leaders while ensuring continuity in leadership [1][5]. Management Promotions - Ron Butler has been promoted to Vice Chairman of the Executive Management Committee and will continue as Chief Administrative Officer [2][6]. - David Bailey has been promoted to President of First Financial Bankshares, Inc. and First Financial Bank, succeeding F. Scott Dueser, who remains as CEO and Chairman [2][5]. - Lon Biebighauser has been elected President of First Financial Trust and Asset Management Company, replacing Kirk Thaxton, who will transition to a relationship manager role [3][16]. - Marelyn Shedd has been promoted to Chief Executive Officer of the Abilene Region, previously held by Ron Butler, while Marshall Morris has been elected as President of the Abilene Region [4][17]. Leadership Transition - The promotions are part of a strategic transition to allow senior officers to take on oversight roles, enabling the next generation of leaders to develop [5]. - F. Scott Dueser emphasized the importance of continuity and mentorship from long-standing leaders during this transition [5]. Company Background - First Financial Bankshares, Inc. is headquartered in Abilene, Texas, and operates multiple banking regions with 79 locations across Texas [20]. - The company also includes First Financial Trust & Asset Management Company, which has nine locations [20].

Financial Performance - Total assets increased to $13,582,932 thousand as of September 30, 2024, up from $12,777,418 thousand in the same period last year, representing a growth of 6.3%[7] - Net loans held-for-investment rose to $7,623,255 thousand, compared to $6,904,982 thousand a year ago, marking an increase of 10.4%[7] - Total deposits reached $11,755,861 thousand, up from $10,716,523 thousand, reflecting a year-over-year growth of 9.7%[7] - Shareholders' equity increased to $1,662,191 thousand, compared to $1,240,110 thousand in the prior year, indicating a significant rise of 34.0%[7] - Net earnings for the three months ended September 30, 2024, were $55,308 thousand, a 11.1% increase from $49,556 thousand in the same period of 2023[10] - Net earnings for the nine months ended September 30, 2024, were $161,190, compared to $152,997 for the same period in 2023, representing a growth of approximately 5.8%[18] - Basic and diluted net earnings per share for the three months ended September 30, 2024, were both $0.39, compared to $0.35 in the same period of 2023, indicating an increase of 11.4%[9] Income and Expenses - Total interest income for the three months ended September 30, 2024, was $159,958 thousand, an increase of 18.2% from $135,351 thousand in the same period of 2023[9] - Net interest income after provision for credit losses for the three months ended September 30, 2024, was $100,986 thousand, up 9.8% from $91,873 thousand in the prior year[9] - Noninterest income totaled $32,362 thousand for the three months ended September 30, 2024, compared to $28,070 thousand in the same period of 2023, reflecting a growth of 8.2%[9] - Total noninterest expense increased to $66,012 thousand for the three months ended September 30, 2024, from $59,539 thousand in the same period of 2023, representing an increase of 10.3%[9] - The provision for credit losses for the three months ended September 30, 2024, was $6,123 thousand, significantly higher than $2,276 thousand in the same period of 2023, reflecting increased credit risk[9] Deposits and Loans - Interest-bearing deposits increased to $8,452,718 thousand, up from $7,238,970 thousand, representing a growth of 16.7%[7] - Noninterest-bearing deposits decreased to $3,303,143 thousand from $3,477,553 thousand, a decline of 5.0% year-over-year[7] - Total loans held-for-investment increased to $7,723,191,000 as of September 30, 2024, up 10.4% from $6,994,696,000 in 2023[82] - The total commercial loan portfolio reached $1,509,506,000 as of September 30, 2024, up from $1,326,598,000 in 2023, representing a 13.8% increase[82] - The total consumer loan portfolio increased to $776,012,000 as of September 30, 2024, compared to $694,874,000 in 2023, reflecting an increase of 11.7%[82] Credit Losses and Risk Management - The allowance for credit losses was $99,936 thousand, up from $89,714 thousand, indicating a rise of 11.3%[7] - The company uses a collective reserve methodology for estimating the allowance for credit losses, considering historical default rates and economic conditions[53] - The allowance for credit losses is adjusted based on the company's historical default and loss experience, with significant economic variables impacting the estimates[55] - As of September 30, 2024, the reserve for unfunded commitments totaled $8,004,000, an increase from $7,903,000 at the same date in 2023[60] - The total amount of loans rated substandard increased to $15,000,000 in 2024 from $3,000,000 in 2023, reflecting a significant rise of 400%[101] Stock and Shareholder Information - The company reported a total of 142,906,070 shares issued as of September 30, 2024, compared to 142,677,069 shares a year earlier, reflecting a slight increase of 0.2%[7] - Cash dividends declared per share remained stable at $0.18 for both the three months ended September 30, 2024, and September 30, 2023[9] - Cash dividends declared were $0.54 per share for the nine months ended September 30, 2024, compared to $0.53 per share for the same period in 2023[14] - The company repurchased and retired 101,337 shares at an average price of $26.99 per share during September 2023[24] Regulatory and Accounting Changes - ASU 2022-06 extends the reference rate reform relief guidance until December 31, 2024, without significant impact on the financial statements[29] - ASU 2023-02 allows for proportional amortization of qualifying tax equity investments, early adopted by the company, with no significant impact on financial statements[30] - ASU 2023-09 requires detailed disclosures on income tax rates and expenses, effective for annual periods after December 15, 2024, with no significant impact expected[31] Future Outlook - The company is focusing on maintaining asset quality across all sectors while exploring opportunities for market expansion and new product development[105][106][107][109][110][111][112] - Future outlook remains positive with strategic initiatives aimed at enhancing operational efficiency and market presence[105][106][107][109][110][111][112]

Core Viewpoint - First Financial Bankshares (FFIN) has received a Zacks Rank 1 (Strong Buy) upgrade, indicating a positive earnings outlook that could favorably impact its stock price [1][2]. Earnings Outlook - The Zacks Consensus Estimate for First Financial is projected at $1.52 per share for the fiscal year ending December 2024, reflecting a year-over-year increase of 9.4% [5]. - Over the past three months, the Zacks Consensus Estimate for First Financial has risen by 1.6% [5]. Impact of Earnings Estimates - Changes in a company's future earnings potential, as indicated by earnings estimate revisions, are strongly correlated with near-term stock price movements [3]. - Institutional investors utilize earnings estimates to calculate the fair value of a company's shares, leading to significant stock price movements based on these estimates [3]. Zacks Rating System - The Zacks Rank stock-rating system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [4]. - The upgrade of First Financial to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [6].