The document provides an overview of First Financial Bankshares for the first quarter of 2011, including financial highlights and performance metrics. It discusses the company's expansion into new markets in Texas through both acquisitions and de novo branches. The presentation also provides details on First Financial's asset quality, loan portfolio, and municipal bond investments.
2. Forward Looking Statement
The numbers, as of and for the three months ended March 31, 2011, contained within this presentation
are unaudited as well as amounts related to the Company’s stock trading volume. 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
$3.8 billion financial holding company
headquartered in Abilene, Texas
Group of 11 separately chartered banks
121 year history
Growth markets include 50 mile radius of
the larger cities of Texas
2
5. Recognitions
KBW Honor Roll – One of Forty banks named – March 2011
SNL Financial top publicly traded community bank and sixth
overall – March 2011
Ranked #2 in Texas and #7 in the United States by J.D. Power
and Associates 2011 Retail Banking Customer Satisfaction
Study – April 2011
4
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 52 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
5
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
$176 million in Assets*
$153 million in deposits
$91 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 March 31, 2011
6
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
Encore Bancshares Houston, Florida
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
Sterling (announced acquisition by Comerica) Houston, San Antonio, Dallas
Texas Capital DFW, Austin, San Antonio and Houston
ViewPoint Financial Dallas
Zion DFW and Houston
7
10. Texas: Large and Growing
Five most populous states:* Growth
(2000 – 2009)
California 37.0 million 9.1%
Texas 24.8 million 18.8%
New York 19.5 million 3.0%
Florida 18.5 million 16.0%
Illinois 12.9 million 4.0%
* U.S. Census Bureau
9
11. Target Markets – Population Growth
Population growth (2000-2009) in FFIN expansion markets:*
Texas 18.8%
Bridgeport & Wise County 21.8%
Fort Worth / Tarrant County 23.8%
Cleburne, Midlothian & Johnson County 23.8%
Weatherford, Willow Park, Aledo 29.9%
Granbury & Hood County 25.2%
Stephenville & Erath County 9.6%
* U.S. Census Bureau
10
13. Core Markets: West Central Texas
Markets served benefiting from well-established,
long- time customers
ASSET DEPOSIT MARKET
BANK LOCATIONS
SIZE* MARKET SHARE** SHARE RANK**
First Financial Bank $1,228 M 14 43% 1
(Abilene, Clyde, Moran, Albany, Odessa)
First Financial Bank $168 M 1 45% 1
(Hereford)
First Financial Bank $189 M 3 51% 1
(Eastland, Ranger, Rising Star)
First Financial Bank $160 M 4 36% 1
(Sweetwater, Roby, Trent, Merkel)
First Financial Bank $390 M 2 19% 2
(San Angelo)
* Data as of 03-31-11
TOTALS $2,135M 24 ** Data as of 06-30-10
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14. Expansion Markets
DEPOSIT MARKET MARKET SHARE
BANK ASSET SIZE* LOCATIONS
SHARE** RANK**
First Financial Bank $284 M 6 18% 2
(Cleburne, Burleson, Alvarado, Midlothian, Crowley)
First Financial Bank $303 M 3 7% 5
(Southlake, Trophy Club, Keller,
3 14% 3
Bridgeport, Decatur, Boyd)
First Financial Bank $337 M 7 22% 2
(Stephenville, Granbury, Glen Rose, Acton)
First Financial Bank $398 M 7 26% 1
(Weatherford, Aledo, Willow Park, Brock, Ft. Worth)
First Financial Bank $200 M 1 33% 1
(Mineral Wells)
First State Bank $176 M 1 21% 2
(Huntsville)
* Data as of 03-31-11
TOTALS $1,698 M 28 ** Data as of 06-30-10
13
15. Recent De Novo Growth
Cisco: Branch of Eastland – Expected to Open July 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
14
16. Senior Management at First Financial
Years with Company Years in Industry
Scott Dueser
Chairman of the Board, President & 35 40
Chief Executive Officer
J. Bruce Hildebrand, CPA
Executive Vice President 9 33
Chief Financial Officer
Gary L. Webb
Executive Vice President 9 23
Operations
Gary S. Gragg
Executive Vice President 20 32
Credit Administration
Marna Yerigan
Executive Vice President 1 25
Credit Administration
Michele Stevens
Senior Vice President 15 31
Advertising and Marketing
Courtney Jordan
Senior Vice President 3 18
Training & Education
Kirk Thaxton, CTFA
President, First Financial Trust & Asset 24 27
Management
15
17. Experienced Bank CEOs & Presidents
Years with Company Years in Industry
Ron Butler, FFB Abilene 18 29
Mike Mauldin, FFB Hereford 8 33
J.V. Martin, FFB Sweetwater 22 41
Kirby Andrews, FFB Sweetwater 20 23
Tom O’Neil, FFB Eastland 12 31
Mike Boyd, FFB San Angelo 35 38
Matt Reynolds, FFB Cleburne 6 29
Ron Mullins, FFB Stephenville 5 32
Doyle Lee, FFB Weatherford 15 39
Jay Gibbs, FFB Weatherford 9 37
Mark Jones, FFB Southlake 10 33
Ken Williamson, FFB Mineral Wells 9 39
Robert Pate, FFB Huntsville 14 30
Gaye Clements, FFB Huntsville 9 27
Gary Tucker, First Technology Services 20 36
16
18. Asset Performance
Growth in Total Assets (in millions)
$3,776 $3,828
$3,212 $3,279
$3,070
$2,850
2006 2007 2008 2009 2010 2011
*As of March 31, 2011
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19. Deposit Growth
Growth in FFIN Total Deposits (in millions)
$3,113 $3,132
$2,583 $2,685
$2,546
$2,384
$2,154 $2,163
$1,786 $1,849
$1,807
$1,699
$797 $836 $959 $969
$685 $739
2006 2007 2008 2009 2010 2011
Non Interest Bearing Interest Bearing *As of March 31, 2011
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20. Deposit Products
Savings Time
6.6% 25.6%
Demand
30.9%
Money
Market
36.9%
*As of March 31, 2011
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21. Loan Performance
Growth in FFIN Total Loans (in millions)
$1,690 $1,682
Real Estate $1,528 $1,566 $1,514
$1,373
$1,289
Commercial
$990 $1,012
$836 $855
$860
Student $760
$677
Consumer
$394 $391 $429
$330 $344 $406 $407
Agricultural
$37 $31 $32 $52
$0
$160 $165 $182 $191 $175 $191 $199
$85 $73 $84 $77 $73 $81 $64
2005 2006 2007 2008 2009 2010 2011
*As of March 31, 2011
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22. Overview of Loan Portfolio
Commercial
24.2%
Agriculture
3.8%
Consumer
11.8%
Real Estate
60.2%
*As of March 31, 2011
21
23. Breakdown of R/E Loan Portfolio
Residential
Development &
Construction
6.4%
1-4 Family
35.8%
Other R/E
22.8%
Commercial
Development and
Construction
3.7%
Commercial R/E
31.3%
*As of March 31, 2011
22
24. Loan to Deposit Ratio
2005 2006 2007 2008 2009 2010 2011
End of
Period 54.5 57.6 60.0 60.6 56.4 54.3 53.7
Average
57.6 56.6 59.8 61.1 59.5 56.0 54.2
Balances
*As of March 31, 2011
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25. Variable and Fixed Rate Loans
Loan Portfolio Interest Rate Risk Analysis
Variable
Fixed Rate
Rate
Less than 1 to 3 3 to 5 5 to 10 10 to 15 Over 15
1 year years years years years years
36.7% 12.2 15.7% 18.9% 7.3% 6.9% 2.3%
*As of March 31, 2011
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26. Sound Lending Practices
Nonperforming assets as a percentage of loans + foreclosed assets (FFIN vs. Peers)
2006 2007 2008 2009 2010 2011*
First
Financial 0.30% 0.31% 0.80% 1.46% 1.53% 1.44%
Peer Group 0.60% 0.98% 2.62% 5.38% 5.58% Not available
*As of March 31, 2011
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27. Allowance for Loan Losses and Provision for Loan Losses
(in thousands)
$32,501
$31,106
$27,612
$21,529
$17,462
$16,201
$14,719
$11,419
$7,957 $8,962
$1,320 $2,061 $2,331 $2,127
2005 2006 2007 2008 2009 2010 2011
ALLL Provision
*As of March 31, 2011
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28. Summary of Bond Portfolio
Treasuries
Corporates
0.95% Agencies 2.66%
18.13%
CMOs
27.93%
Muni
34.79%
MBSs
15.54%
*As of March 31, 2011
27
29. Municipal Allocation by State
State Percentage
Texas 55.42%
Michigan 6.41%
Wisconsin 5.64%
Washington 2.64%
Illinois 2.63%
Massachusetts 2.50%
New Jersey 2.36%
Kentucky 2.08%
Louisiana 1.82%
California 1.78%
Utah 1.60%
Minnesota 1.60%
*As of March 31, 2011
Other 38 states 13.52%
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30. Growth in Trust Assets
Total Trust Assets – Book Value (in millions)
$1,830
$1,784
$1,631 $1,664
$1,428
$1,300
2006 2007 2008 2009 2010 2011
29
31. Total Trust Fees
Growth in FFTAM Fees (Full year and 1st 3 months) (in thousands)
$10,808
$9,441
$9,083
$8,746
$7,665
thru
March 31st
$3,044
$2,369 $2,526
$1,847 $2,010 $2,117
2006 2007 2008 2009 2010 2011
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32. 24th Consecutive Year of Increased Earnings
FFIN Earnings (Full year and 1st 3 months) (in millions)
$59.7
$1.3
$53.1 $53.8
$49.5
$46.0
$16.3
$13.2 $13.7 $13.7
$11.5 $11.5
2006 2007 2008 2009 2010 2011
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34. FFIN Outperforms Peers
Percentage Return on Average Assets
1.82% 1.80% 1.72% 1.74% 1.75%
1.68% 1.72%
1.12% 1.15% 1.10%
0.87%
First Financial
Peer Group
0.29%*
-0.03% -0.18%
2004 2005 2006 2007 2008 2009 2010
*(thru Dec. 31st)
33
35. Strong Return on Capital
Percentage Return on Average Equity
16.15% 16.20% 15.87%
15.09% 15.27%
13.63% 13.74%
13.11% 13.33% 12.61%
9.45%
First Financial
Peer Group
1.59%*
-1.83% -2.51%
2004 2005 2006 2007 2008 2009 2010
*(thru Dec. 31st)
34
36. Capital & Capital Ratios
(dollars in thousands)
2007 2008 2009 2010 2011*
Shareholders’
Equity 335,495 368,782 415,702 441,688 456,215
As a Percent of Total
10.93 11.48 12.68 11.70 11.92
Assets
Tangible
270,288 304,779 352,550 369,164 383,803
Capital
Tier 1
9.23 9.68 10.69 10.28 10.03
Leverage Ratio
Tier 1 Risk
14.65 15.89 17.73 17.01 17.60
Based Capital Ratio
Risk Based
15.62 17.04 19.10 18.26 18.86
Capital Ratio
*As of March 31, 2011
35
38. Working Harder and Smarter
Efficiency Ratio (FFIN vs. Peers)
2005 2006 2007 2008 2009 2010 2011
First
Financial 52.48% 53.57% 52.83% 50.76% 50.11% 49.49% 49.07%
Peer Group 60.12% 61.29% 63.12% 68.12% 69.53% 66.79% not available
37
39. Total Return on Investment
Assume you owned 1,000 shares of FFIN stock on January 1, 2010…
Stock cost in January 2010 $54,230
Dividend received ($1.36 x 1,000 shares) $ 1,360
Decrease in stock price during 2010 ($2,980)
$2210,720
($54.23 to $51.25 X 1,000 shares)
2010 return on investment -2.99%
2009 return on investment 0.69%
2008 return on investment 50.20%
2007 return on investment -7.05%
2006 return on investment 22.76%
5 year average return 10.50%
38
40. Strong Stock Performance
40.00%
30.00%
20.00%
10.00%
0.00%
-10.00%
-20.00%
-30.00%
-40.00%
-50.00%
-60.00% Jan . ‘07 June ‘07 Dec ‘07 June ‘08 Dec ‘08 June ‘09 Dec . ‘09 June ‘10 Mar. ’11
FFIN S&P 500 NASDAQ Dow Jones
39
41. Challenges
Proposed Legislation from Washington
Keep nonperforming assets to a minimum
Maintain net interest margin
Lower efficiency ratio
40