first financial bankshares presentation 1st qtr 2013
DESCRIPTION
TRANSCRIPT
1st Quarter 2013
Forward Looking Statement
The numbers, as of and for the quarter ended March 31, 2013, 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
$4.5 billion financial holding company headquartered in Abilene, Texas
Group of 11 separate regions
122-year history
Growth markets include 50 mile radius of
the larger cities of Texas
4
Recognitions
KBW Honor Roll – One of Forty-seven banks named – April 2013
SNL Financial #11 Best Performing Community Bank ($500M - $5B) – March 2013
Nifty 50: Bank Director Magazine - #5 – Based on Return on Equity / Average Tangible Equity – January 2013
American Banker - #19 – Based on three year average Return on Equity – August 2012
ABA Banking Journal - #13 – Top Performing mid-sized banks ($1B - $10B) – May 2012
5
6
What Makes Us Different
One Bank, Eleven Regions Concept
One Bank Consolidation of backroom operations 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
7
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
8
Orange Acquisition
Definitive Agreement Signed - February 2013
Orange, Jefferson and Newton Counties Approximately 350,000 Residents Strategically located on Interstate 10 – 100 miles east of Houston Three Major Shipping Ports for Energy and Petrochemical industries Large refineries, natural gas terminals and recent investment from large
Fortune 500 Companies, such as Exxon Mobil, DuPont and Goodyear
$443.8 million in Assets* $381.1 million in deposits $295.9 million in loans
Approximately 1.3x book; 13x last twelve months earnings (tax effected) Orange acquisition is consistent with our acquisition model of high growth areas
and along the Interstates Provides Diversification #1 Market Share in Orange County – 40%, more than twice the nearest competitor
*As of Dec. 31, 2012
98
10
Texas: Large and Growing
Five most populous states:* Growth (2000 – 2011)
California 37.7 million 11.3%
Texas 25.7 million 23.7%
New York 19.5 million 2.6%
Florida 19.1 million 19.2%
Illinois 12.9 million 3.6%
* U.S. Census Bureau
11
Target Markets – Population Growth
Population growth (2000-2011) in FFIN expansion markets:*
Texas 23.1%
Bridgeport & Wise County 22.6%
Fort Worth & Tarrant County 27.9%
Cleburne, Midlothian & Johnson County 20.5%
Weatherford, Willow Park, Aledo & Parker County 33.7%
Granbury & Hood County 25.7%
Stephenville & Erath County 15.9%
* 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
Core Markets: West Central Texas
Markets served benefiting from well-established, long- time customers
REGIONASSET
SIZE*LOCATIONS
DEPOSIT
MARKET SHARE**
MARKET
SHARE RANK**
First Financial Bank(Abilene, Clyde, Moran, Albany, Odessa)
$1,531 M 15 43% 1
First Financial Bank(Hereford)
$166 M 1 43% 1
First Financial Bank(Eastland, Ranger, Rising Star, Cisco)
$228M 4 58% 1
First Financial Bank(Sweetwater, Roby, Trent, Merkel)
$188 M 4 34% 1
First Financial Bank(San Angelo)
$462M 3 19% 2
TOTALS $2,575M 27* Data as of 03-31-13** Data as of 06-30-12
Expansion Markets REGION ASSET SIZE* LOCATIONS
DEPOSIT MARKET
SHARE**
MARKET SHARE
RANK**
First Financial Bank
(Cleburne, Burleson, Alvarado, Midlothian,
Waxahachie)
$344 M 6 22% 1
First Financial Bank
(Southlake, Trophy Club, Keller, Grapevine
Bridgeport, Decatur, Boyd)
$355 M 4
3
7%
16%
5
3
First Financial Bank
(Stephenville, Granbury, Glen Rose, Acton)
$392 M 6 22% 2
First Financial Bank
(Weatherford, Aledo, Willow Park, Brock, Ft. Worth)
$424 M 7 24% 1
First Financial Bank
(Mineral Wells)
$215 M 1 34% 1
First Financial Bank
(Huntsville)
$177 M 1 20% 2
TOTALS $1,907 28 * Data as of 03-31-13** Data as of 06-30-12
Recent De Novo Growth Weatherford – I-20 Branch – Expected to Open 2nd Qtr. 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
Lamesa: Office of Trust Company – April 2011
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
Years with Company Years in Industry
Scott Dueser Chairman of the Board, President & Chief Executive Officer
37 42
J. Bruce Hildebrand, CPA Executive Vice President Chief Financial Officer
10 34
Gary L. Webb Executive Vice President Operations
10 24
Gary S. Gragg Executive Vice President Credit Administration
22 34
Marna Yerigan Executive Vice President Credit Administration
2 29
Ron Butler Executive Vice President Chief Administrative Officer
19 31
Senior Management at First Financial
Years with Company Years in Industry
Michele Stevens Senior Vice President Advertising and Marketing
37 42
Courtney Jordan Senior Vice President Training
10 34
Bob Goodner Senior Vice President & Compliance Officer Compliance
12 35
Luke Longhofer Senior Vice President & Loan Review Officer Credit Administration
3 10
Brandon Harris Senior Vice President Appraisal Services
1 15
Kirk Thaxton, CTFA President, First Financial Trust & Asset Management
26 30
Senior Management at First Financial
Experienced Regional CEOs & PresidentsYears with Company Years in Industry
Marelyn Shedd, Abilene 22 30
Mike Mauldin, Hereford 10 35
Kirby Andrews, Sweetwater 22 25
Trent Swearengin, Eastland 13 15
Mike Boyd, San Angelo 37 41
Tom O’Neil, Cleburne 15 33
Matt Reynolds, Cleburne 8 31
Ron Mullins, Stephenville 7 35
Jay Gibbs, Weatherford 11 39
Mark Jones, Southlake 12 35
Ken Williamson, Mineral Wells 11 42
Robert Pate, Huntsville 16 32
Fred Wren, Huntsville 1 34
Gary Tucker, First Technology Services 22 38
18
19
2008 2009 2010 2011 2012 2013
$3,212 $3,279
$3,776
$4,121
$4,500 $4,456*Chart Title
Growth in Total Assets
Asset Performance
(in millions)
*As of March 31, 2013
20
2008 2009 2010 2011 2012 2013
$797 $836 $959 $1,102 $1,312 $1,238
$1,786 $1,849$2,154
$2,233$2,321 $2,312
Non Interest Bearing Interest Bearing
Deposit Growth
Growth in FFIN Total Deposits (in millions)
$3,550*
$2,583 $2,685
$3,113$3,335
$3,633
*As of March 31, 2013
21
Deposit Products
Time17.5%
Deman
d34.9%
Money
Market37.4%
Sav-ings10.2%
*As of March 31, 2013
Account Growth
Net Growth in 2011 – 4,036 Accounts
Net Growth in 2012 – 1,219 Accounts
New Growth in 2013 – 1,139 Accounts
December 31, 2010
December 31, 2011
December 31, 2012
March 31, 2013
Total Number of Accounts
200,027 204,063 205,282 206,421
2007 2008 2009 2010 2011 2012 2013$84 $77 $73 $81 $66 $68 $55
$182 $191 $175 $191 $218 $273 $284 $32 $52 $0
$394 $391 $406 $429 $427
$510 $512
$836 $855 $860 $990 $1,076
$1,238 $1,287
Real Estate
Commercial
Student
Consumer
Agricultural
Loan Performance
Growth in FFIN Total Loans (in millions)
$1,566$1,514
$1,690$1,787
$1,528
$2,138*
23
*As of March 31, 2013
$2,089
24
Overview of Loan Portfolio
Commercial 23.9%
Agricul-ture2.6%
Consumer13.3%
Real Es-tate
60.2%
*As of March 31, 2013
Residential Development & Construction 5.7%
1-4 Family 43.6%
Commercial Devel-opment and Construc-
tion3.9%
Commercial R/E 28.2%
Other R/E 18.6%
Chart Title
25
Breakdown of R/E Loan Portfolio
*As of March 31, 2013
26
2007 2008 2009 2010 2011 2012 2013*
End of Period 60.0 60.6 56.4 54.3 53.6 57.5 60.2
Average
Balances59.8 61.1 59.5 56.0 54.6 56.4 59.9
Loan to Deposit Ratio
*As of March 31, 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
34.3% 9.1% 14.5% 20.7% 9.1% 8.5% 3.8%
Variable and Fixed Rate Loans
Loan Portfolio Interest Rate Risk Analysis
Variable
RateFixed Rate
*As of March 31, 2013
2008 2009 2010 2011 2012 2013*
FirstFinancial 0.80% 1.46% 1.53% 1.64% 1.22% 1.20%
Peer Group 2.63% 5.41% 5.37% 4.64% 3.70% -
Sound Lending Practices
Nonperforming assets as a percentage of loans + foreclosed assets (FFIN vs. Peers)
28
*As of March 31, 2013
29
2007 2008 2009 2010 2011 2012 2013
$17,462
$21,529
$27,612
$31,106
$34,315 $34,839 $34,672
$2,331
$7,957
$11,419$8,962
$6,626
$3,484$401
ALLL Provision
Allowance for Loan Losses and Provision for Loan Losses
(in thousands)
*As of March 31, 2013
Summary of Bond Portfolio
Agencies 10.33% Corporates 5.58%
Muni 46.15%
MBSs 10.37%
CMOs 27.23%
Trea-suries 0.34%
30
*As of March 31, 2013
Municipal Allocation by State State Percentage
Texas 65.94%
Michigan 3.71%
Wisconsin 3.06%
Illinois 2.18%
Washington 2.13%
Massachusetts 1.84%
New Jersey 1.77%
Florida 1.69%
Ohio 1.68%
Louisiana 1.27%
Utah 1.25%
Kentucky 1.04%
Other 38 states 12.44%
31
*As of March 31, 2013
32
2008 2009 2010 2011 2012 2013
$1,631 $1,664$1,784
$1,912$2,031
$2,274*Chart Title
Growth in Trust Assets
Total Trust Assets – Book Value (in millions)
*As of March 31, 2013
33
2008 2009 2010 2011 2012 2013
$9,441 $9,083
$10,808
$12,617
$14,464
$2,369 $2,117 $2,526 $3,044 $3,454 $3,793
thru March 31st
Total Trust Fees
Growth in FFTAM Fees (Full year and 1st 3 months) (in thousands)
2008 2009 2010 2011 2012 2013
$53.1 $53.8$59.7
$68.4$74.2
$13.2 $13.7 $13.7$16.3 $17.8 $18.6
26th Consecutive Year of Increased Earnings
FFIN Earnings (Full year and 1st 3 months) (in millions)
34
thru March 31st
35
2008 2009 2010 2011 2012 2013
$1.71 $1.72$1.91
$2.17
$2.36
$0.42 $0.44 $0.44 $0.52 $0.56 $0.59
Strong Shareholder Earnings
Basic Earnings Per Share (Full year and 1st 3 months)
thru March 31st
2006 2007 2008 2009 2010 2011 2012
1.68% 1.72% 1.74% 1.72% 1.75% 1.78% 1.75%
1.10%
0.87%
-0.03%
-0.18%
0.24%
0.79%
0.98%
FFIN Outperforms Peers
Percentage Return on Average Assets
Pe
er
Gro
up
Fir
st
Fin
an
cia
l
2006 2007 2008 2009 2010 2011 2012
16.20%15.87%
15.27%
13.63% 13.74% 14.44% 13.85%12.61%
9.45%
-1.83%-2.57%
0.88%
7.27%8.72%
Strong Return on Capital
Percentage Return on Average EquityP
ee
r G
rou
p
Fir
st
Fin
an
cia
l
38
2009 2010 2011 2012 2013
Shareholders’Equity 415,702 441,688 508,537 556,963 564,252
As a Percent of Total
Assets12.68 11.70 12.34 12.37 12.66
Tangible
Capital352,550 369,164 436,415 484,990 492,289
Tier 1
Leverage Ratio10.69 10.28 10.33 10.60 10.69
Tier 1 Risk
Based Capital Ratio17.73 17.01 17.49 17.43 17.54
Risk Based
Capital Ratio19.10 18.26 18.74 18.68 18.80
Capital & Capital Ratios
(dollars in thousands)
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
3rd Qtr. '12
4th Qtr. '12
1st Qtr. '13
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
2007 2008 2009 2010 2011 2012 2013
FirstFinancial 52.83% 50.76% 50.11% 49.49% 48.37% 48.14% 48.68%
Peer Group 63.12% 68.12% 69.53% 67.33% 65.57% 65.75%* -
Working Harder and Smarter
Efficiency Ratio (FFIN vs. Peers)
40
**As of Dec. 31, 2012
Stock cost in January 2012 $33,430
Dividend declared ($0.99 x 1,000 shares) $ 990
Increase in stock price during 2012($39.01 from $33.43 X 1,000 shares) $2210,720
2012 return on investment 19.65%
2011 return on investment 0.61%
2010 return on investment -2.99%
2009 return on investment 0.69%
2008 return on investment 50.20%
5 year compound average return 9.55%
Total Return on Investment
$5,580
Assume you owned 1,000 shares of FFIN stock on January 1, 2012…
41
Dividends Per Share
2006 2007 2008 2009 2010 2011 2012
$0.79$0.84
$0.89 $0.91 $0.91$0.95
$0.99Chart Title
Annual Dividends Declared Per Share
42
Strong Stock Performance
-60.00%
-40.00%
-20.00%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
FFIN S&P 500 NASDAQ Dow JonesJan . ‘07 Mar. ’13Dec . ‘09Dec ‘07 Dec ‘08 Dec. ‘10 Dec. ’11 Dec. ’12
43
Challenges
Regulatory reform from Washington
Stagnant national economy
Inept federal government
Low interest rate environment
Maintaining net interest margin
Keep nonperforming assets to a minimum
Opportunities
Loan Growth
Mortgage Lending
Trust Services
Treasury Management
Mobile Banking
Lower Efficiency Ratio
Potential Acquisitions
www.ffin.com