first financial bankshares presentation 2nd qtr 2012
DESCRIPTION
TRANSCRIPT
2nd Quarter 2012
Forward Looking Statement
The numbers, as of and for six months ended June 30, 2012, 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.
3
Who We Are
$4.3 billion financial holding company headquartered in Abilene, Texas
Group of 11 separately chartered banks
122-year history
Growth markets include 50 mile radius of
the larger cities of Texas
4
Recognitions
KBW Honor Roll – One of Forty banks named – March 2012
SNL Financial #4 Best Performing Community Bank ($500M - $5B) – March 2012
Nifty 50: Bank Director Magazine - #2 – Based on Return on Equity / Average Tangible Equity – January 2012
Bank Intelligence Proven Performers - #4 in the Nation in
$1 - $10 billion category – June 2011
5
6
What Makes Us Different
One Bank, Eleven Charters Concept
One Bank Consolidation of backroom operations (lower efficiency ratio) Agency agreements (customers may use any of our 53 locations)
Eleven Community Bank Charters Bank Presidents run their banks Local Boards – Movers and Shakers of the Community
Keep our banks locally focused Make sure we meet the needs of the community Help us make better loan decisions Help us market the bank
Up to $2.75 million of FDIC insurance available
7
Huntsville Acquisition
Acquired November 2010
Huntsville, Texas 37,000 Residents Sam Houston State University – 17,000 Students
Fastest Growing University in Texas Headquarters of the Texas Department of Criminal Justice – 5,000 employees Strategically located on Interstate 45 – 70 miles north of Houston
$177 million in Assets* $148 million in deposits $94 million in loans
Approximately 1.63x book; 10.8x last twelve months earnings (tax effected) Huntsville acquisition is very similar to our model around Dallas/Fort Worth
and provides diversification #2 Market Share in Walker County – 21%
*As of June 30, 2012
8
FFIN’s Unique Positioning in Texas
Bank Key Markets
BBVA Compass Rio Grande, Gulf Coast, Houston, Dallas, El Paso, Lubbock
Comerica, Inc. DFW, Austin, Houston, California, Michigan, Florida, Mexico
Frost San Antonio, Austin, Corpus Christi, DFW, Rio Grande
International Bancshares Corp. Rio Grande, Houston, San Antonio, Oklahoma
Prosperity Houston, DFW, Austin
Southside East Texas
Texas Capital DFW, Austin, San Antonio and Houston
ViewPoint Financial Dallas
Zion DFW and Houston
98
10
Texas: Large and Growing
Five most populous states:* Growth (2000 – 2010)
California 37.3 million 10.0%
Texas 25.2 million 20.6%
New York 19.4 million 2.1%
Florida 18.8 million 17.6%
Illinois 12.8 million 3.3%
* U.S. Census Bureau
11
Target Markets – Population Growth
Population growth (2000-2010) in FFIN expansion markets:*
Texas 20.6%
Bridgeport & Wise County 21.2%
Fort Worth / Tarrant County 25.1%
Cleburne, Midlothian & Johnson County 19.0%
Weatherford, Willow Park, Aledo 32.1%
Granbury & Hood County 24.5%
Stephenville & Erath County 14.8%
* U.S. Census Bureau
12
Texas Benefits
CEO Magazine ranks Texas best state for
business – for seventh consecutive year
Texas created more jobs (230,800) in 2010 more
than any other state
Texas created more private sector jobs than any
other state during the past decade
13
Preferred Acquisition: Granbury and Glen Rose
12
14
Core Markets: West Central Texas
Markets served benefiting from well-established, long- time customers
BANKASSET
SIZE*LOCATIONS
DEPOSIT
MARKET SHARE**
MARKET
SHARE RANK**
First Financial Bank(Abilene, Clyde, Moran, Albany, Odessa)
$1,508 M 14 41% 1
First Financial Bank(Hereford)
$165 M 1 42% 1
First Financial Bank(Eastland, Ranger, Rising Star, Cisco)
$198M 4 55% 1
First Financial Bank(Sweetwater, Roby, Trent, Merkel)
$192 M 4 37% 1
First Financial Bank(San Angelo)
$442M 2 20% 2
TOTALS $2,505M 25* Data as of 06-30-12** Data as of 06-30-11
15
Expansion MarketsBANK ASSET SIZE* LOCATIONS
DEPOSIT MARKET
SHARE**
MARKET SHARE
RANK**
First Financial Bank (Cleburne, Burleson, Alvarado, Midlothian, Crowley)
$324 M 6 21% 1
First Financial Bank (Southlake, Trophy Club, Keller, Grapevine
Bridgeport, Decatur, Boyd)
$334 M 4
3
8%
16%
5
3
First Financial Bank (Stephenville, Granbury, Glen Rose, Acton)
$381 M 6 21% 2
First Financial Bank(Weatherford, Aledo, Willow Park, Brock, Ft. Worth)
$399 M 7 24% 1
First Financial Bank(Mineral Wells)
$214 M 1 35% 1
First Financial Bank(Huntsville)
$177 M 1 21% 2
TOTALS $1,829M 28 * Data as of 06-30-12** Data as of 06-30-11
Recent De Novo Growth San Angelo: HEB Branch – Expected to Open 4th Qtr. 2012
Abilene: Antilley Road Branch – Expected to Open 4th Qtr. 2012
Grapevine: Branch of Southlake – March 2012
Cisco: Branch of Eastland – September 2011
Lamesa: Office of Trust Company – April 2011
Crowley: Branch of Cleburne – October 2010
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
16
Years with Company Years in Industry
Scott Dueser Chairman of the Board, President & Chief Executive Officer
36 41
J. Bruce Hildebrand, CPA Executive Vice President Chief Financial Officer
10 34
Gary L. Webb Executive Vice President Operations
9 24
Gary S. Gragg Executive Vice President Credit Administration
22 34
Marna Yerigan Executive Vice President Credit Administration
1 28
Michele Stevens Senior Vice President Advertising and Marketing
15 31
Courtney Jordan Senior Vice President Training & Education
3 18
Kirk Thaxton, CTFA President, First Financial Trust & Asset Management
26 29
Senior Management at First Financial
17
Experienced Bank CEOs & Presidents
Years with Company Years in Industry
Ron Butler, FFB Abilene 19 31
Mike Mauldin, FFB Hereford 10 34
Kirby Andrews, FFB Sweetwater 22 25
Trent Swearengin, FFB Eastland 13 15
Mike Boyd, FFB San Angelo 37 40
Tom O’Neil, FFB Cleburne 14 32
Matt Reynolds, FFB Cleburne 7 30
Ron Mullins, FFB Stephenville 6 34
Jay Gibbs, FFB Weatherford 10 38
Mark Jones, FFB Southlake 12 35
Ken Williamson, FFB Mineral Wells 11 41
Robert Pate, FFB Huntsville 15 31
Gary Tucker, First Technology Services 21 37
18
19
2007 2008 2009 2010 2011 2012
$3,070$3,212 $3,279
$3,776
$4,121$4,292*Chart Title
Growth in Total Assets
Asset Performance
(in millions)
*As of June 30, 2012
20
2007 2008 2009 2010 2011 2012
$739 $797 $836 $959 $1,102 $1,156
$1,807 $1,786 $1,849$2,154
$2,233 $2,236
Non Interest Bearing Interest Bearing
Deposit Growth
Growth in FFIN Total Deposits (in millions)
$3,392*
$2,546 $2,583 $2,685
$3,113$3,335
*As of June 30, 2012
21
Deposit Products
Time20.9%
Deman
d34.1%
Money
Market36.9%
Sav-ings8.1%
*As of June 30, 2012
Account Growth
Net Growth in 2011 – 4,036 Accounts
New Growth in 2012 – 3,655 Accounts
December 31, 2010 December 31, 2011 June 30, 2012
Total Number of Accounts 200,027 204,063 207,718
22
2006 2007 2008 2009 2010 2011 2012$73 $84 $77 $73 $81 $66 $52
$165 $182 $191 $175 $191 $218 $234 $31 $32 $52
$344 $394 $391 $406 $429 $427 $473
$760 $836 $855 $860
$990 $1,076 $1,159
Real Estate
Commercial
Student
Consumer
Agricultural
Loan Performance
Growth in FFIN Total Loans (in millions)
$1,373
$1,566 $1,514
$1,690$1,787
$1,528
$1,918*
23
*As of June 30, 2012
24
Overview of Loan Portfolio
Commercial 24.7%
Agricul-ture2.7%
Consumer12.2%
Real Es-tate
60.4%
*As of June 30, 2012
Residential Development & Construction 5.5%
1-4 Family 40.9%
Commercial Devel-opment and Construc-
tion4.2%
Commercial R/E 30.3%
Other R/E 19.1%
Chart Title
25
Breakdown of R/E Loan Portfolio
*As of June 30, 2012
26
2006 2007 2008 2009 2010 2011 2012*
End of Period 57.6 60.0 60.6 56.4 54.3 53.6 56.6
Average
Balances56.6 59.8 61.1 59.5 56.0 54.6 54.3
Loan to Deposit Ratio
*As of June 30, 2012
27
Less than
1 year
1 to 3
years
3 to 5
years
5 to 10
years
10 to 15
years
Over 15
years
36.3% 10.1% 13.4% 18.6% 9.0% 8.8% 3.8%
Variable and Fixed Rate Loans
Loan Portfolio Interest Rate Risk Analysis
Variable
RateFixed Rate
*As of June 30, 2012
2007 2008 2009 2010 2011 2012*
FirstFinancial 0.31% 0.80% 1.46% 1.53% 1.64% 1.76%
Peer Group 0.98% 2.63% 5.41% 5.37% 4.63% 4.39%**
Sound Lending Practices
Nonperforming assets as a percentage of loans + foreclosed assets (FFIN vs. Peers)
28
**As of March 31, 2012
*As of June 30, 2012
29
2006 2007 2008 2009 2010 2011 2012
$16,201 $17,462
$21,529
$27,612
$31,106
$34,315 $34,747*
$2,061 $2,331
$7,957
$11,419$8,962
$6,626
$2,055*
ALLL Provision
Allowance for Loan Losses and Provision for Loan Losses
(in thousands)
*As of June 30, 2012
Summary of Bond Portfolio
Agencies 14.07%Corpo-rates
6.47%
Muni 42.41%
MBSs 13.77%
CMOs 22.65%
Trea-suries 0.63%
30
Municipal Allocation by StateState Percentage
Texas 62.02%
Michigan 4.30%
Wisconsin 3.54%
Illinois 2.51%
Massachusetts 1.96%
Washington 1.91%
Florida 1.84%
New Jersey 1.75%
Utah 1.57%
California 1.53%
Kentucky 1.42%
Louisiana 1.41%
Other 38 states 14.24%
31
32
2007 2008 2009 2010 2011 2012
$1,428
$1,631 $1,664$1,784
$1,912$2,082*Chart Title
Growth in Trust Assets
Total Trust Assets – Book Value (in millions)
*As of June 30, 2012
33
2007 2008 2009 2010 2011 2012
$8,746$9,441 $9,083
$10,808
$12,617
$7,124
$4,372 $4,728 $4,242
$5,198 $6,254
thru June 30th
Total Trust Fees
Growth in FFTAM Fees (Full year and 1st 6 months) (in thousands)
2007 2008 2009 2010 2011 2012
$49.5$53.1 $53.8
$59.7
$68.4
$24.7 $26.8 $27.3 $27.9$32.8
$36.1
$1.3
25th Consecutive Year of Increased Earnings
FFIN Earnings (Full year and 1st 6 months) (in millions)
34
thru June 30th
35
2007 2008 2009 2010 2011 2012
$1.59$1.71 $1.72
$1.91
$2.17
$0.79 $0.86 $0.87 $0.89 $1.04
$1.15
Strong Shareholder Earnings
Basic Earnings Per Share (Full year and 1st 6 months)
$0.04
thru June 30th
2006 2007 2008 2009 2010 2011 2012
1.68% 1.72% 1.74% 1.72% 1.75% 1.78% 1.74%
1.10%
0.87%
-0.03%
-0.18%
0.25%
0.80%0.93%*
FFIN Outperforms Peers
Percentage Return on Average Assets
Pe
er
Gro
up
Fir
st
Fin
an
cia
l
36
*(thru March 31st)
2006 2007 2008 2009 2010 2011 2012
16.20%15.87%
15.27%
13.63% 13.74% 14.44% 13.90%12.61%
9.45%
-1.83%-2.57%
0.88%
7.30%8.54%*
Strong Return on Capital
Percentage Return on Average EquityP
ee
r G
rou
p
Fir
st
Fin
an
cia
l
37
*(thru March 31st)
38
2008 2009 2010 2011 2012
Shareholders’Equity 368,782 415,702 441,688 508,537 534,263
As a Percent of Total
Assets11.48 12.68 11.70 12.34 12.45
Tangible
Capital304,779 352,550 369,164 436,415 462,223
Tier 1
Leverage Ratio9.68 10.69 10.28 10.33 10.36
Tier 1 Risk
Based Capital Ratio15.89 17.73 17.01 17.49 17.23
Risk Based
Capital Ratio17.04 19.10 18.26 18.74 18.48
Capital & Capital Ratios
(dollars in thousands)
1st Qtr. '09
2nd Qtr. '09
3rd Qtr. '09
4th Qtr. '09
1st Qtr. '10
2nd Qtr. '10
3rd Qtr. '10
4th Qtr. '10
1st Qtr. '11
2nd Qtr. '11
3rd Qtr. '11
4th Qtr. '11
1st Qtr. '12
2nd Qtr. '12
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
39
2006 2007 2008 2009 2010 2011 2012
FirstFinancial 53.57% 52.83% 50.76% 50.11% 49.49% 48.37% 48.05%*
Peer Group 61.29% 63.12% 68.12% 69.53% 67.33% 65.75% 65.06%**
Working Harder and Smarter
Efficiency Ratio (FFIN vs. Peers)
40
**As of March 31, 2012
*As of June 30, 2012
Stock cost in January 2011 $34,170
Dividend received ($0.95 x 1,000 shares) $ 950
Decrease in stock price during 2011($34.17 to $33.43 X 1,000 shares) $2210,720
2011 return on investment 0.61%
2010 return on investment -2.99%
2009 return on investment 0.69%
2008 return on investment 50.20%
2007 return on investment -7.05%
5 year compound average return 6.32%
Total Return on Investment
($740)
Assume you owned 1,000 shares of FFIN stock on January 1, 2011…
41
Dividends Per Share
2005 2006 2007 2008 2009 2010 2011
$0.73$0.79
$0.84$0.89 $0.91 $0.91
$0.95Chart Title
Annual Dividends Per Share
42
Strong Stock Performance
-60.00%
-50.00%
-40.00%
-30.00%
-20.00%
-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
FFIN S&P 500 NASDAQ Dow JonesJan . ‘07 June ’12Dec . ‘09Dec ‘07 Dec ‘08 Dec. ‘10 Dec. ’11
43
Challenges
Regulatory reform from Washington
Keep nonperforming assets to a minimum
Maintain net interest margin
Lower efficiency ratio
44
Opportunities
Loan Growth
Mortgage Lending
Trust Services
Treasury Management
Potential Acquisitions
45
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