-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CDkmidC6Tq6eZ9yIlyjtwz9oy4lEuGC/RqHJ+4If5Nq2D63GSt/+1HzvjOOe3NtN LTYDMcWgzttRELewVcCTUQ== 0000036029-96-000004.txt : 19960515 0000036029-96-000004.hdr.sgml : 19960515 ACCESSION NUMBER: 0000036029-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST FINANCIAL BANKSHARES INC CENTRAL INDEX KEY: 0000036029 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 750944023 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-07674 FILM NUMBER: 96563081 BUSINESS ADDRESS: STREET 1: 400 PINE STREET THIRD FL STREET 2: P O BOX 701 CITY: ABILENE STATE: TX ZIP: 79601-0701 BUSINESS PHONE: 9156757155 10-Q 1 FORM 10Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended Commission File Number March 31, 1996 0-7674 FIRST FINANCIAL BANKSHARES, INC. (Exact Name of Registrant as Specified in its Charter) Texas 75-0944023 (State of Incorporation) (I.R.S. Employer Identification No.) 400 Pine Street, Abilene, Texas 79601 (Address of Executive Offices) (Zip Code) Registrant's Telephone Number (915) 675-7155 Securities Registered Pursuant to Section 12(b) of the Act: None Securities Registered Pursuant to Section 12(g) of the Act: Common Stock, Par Value $10.00 Per Share (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . There were 5,348,697 shares of common stock outstanding as of May 1, 1996. TABLE OF CONTENTS PART I FINANCIAL INFORMATION Item Page 1. Financial Statements 4 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Signatures 12 2 PART I FINANCIAL INFORMATION Item 1. Financial Statements. The consolidated balance sheets of First Financial Bankshares, Inc. at March 31, 1996, December 31, 1995, and March 31, 1995, and the consolidated statements of earnings, the consolidated statements of changes in stockholders'equity, and the consolidated statements of cash flows for the three months ended March 31, 1996 and 1995, follow on pages 4 through 9. 3 FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
March 31, December 31, ------------------------------------- 1996 1995 (1) 1995 (1) ---------------- -------------- ---------------- ASSETS Cash and due from banks $ 60,427,063 $ 61,743,144 $ 60,858,959 Interest-bearing deposits in banks 1,380,383 198,508 1,477,025 Federal funds sold 27,021,551 15,165,000 31,685,000 Investment securities: Securities held to maturity (approximate market value of $483,505,037 and $445,788,184 at March 31, 1996 and 1995, and $454,033,240 at December 31, 1995) 484,770,202 456,619,598 451,553,429 Securities available for sale, at approximate market value 30,108,591 15,483,432 29,563,133 ---------------- -------------- ---------------- Total investment securities 514,878,793 472,103,030 481,116,562 Loans 543,192,148 459,337,057 514,695,730 Less: Allowance for loan losses 10,222,116 9,169,184 9,598,024 Unearned discount 9,201,624 7,585,923 7,362,115 ---------------- -------------- ---------------- Net loans 523,768,408 442,581,950 497,735,591 Bank premises and equipment-net 34,431,908 30,882,346 31,776,992 Goodwill 5,702,786 1,162,937 1,106,052 Other assets 21,131,701 19,800,756 20,130,839 ---------------- -------------- ---------------- TOTAL ASSETS $ 1,188,742,593 $1,043,637,671 $ 1,125,887,020 ================ ============== ================ LIABILITIES Noninterest-bearing deposits $ 209,821,076 $ 190,694,443 $ 218,784,465 Interest-bearing demand deposits 303,888,769 288,366,036 312,163,265 Interest-bearing time deposits 540,827,560 443,569,639 466,630,618 ---------------- -------------- ---------------- Total deposits 1,054,537,405 922,630,118 997,578,348 Short-term borrowings 120,000 65,000 85,000 Dividends payable 1,656,968 1,401,702 1,554,717 Other liabilities 9,756,756 8,297,188 6,641,308 ---------------- -------------- ---------------- Total liabilities 1,066,071,129 932,394,008 1,005,859,373 SHAREHOLDERS' EQUITY Capital stock-$10 par value; 10,000,000 shares authorized 53,462,970 53,300,540 53,391,930 Capital surplus 36,879,772 36,865,955 36,870,604 Retained earnings 32,704,620 21,568,675 29,917,274 Unrealized (loss) on investment securities available for sale (375,898) (491,507) (152,161) ---------------- -------------- ---------------- Total shareholders'equity 122,671,464 111,243,663 120,027,647 ---------------- -------------- ---------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,188,742,593 $1,043,637,671 $ 1,125,887,020 ================ ============== ================ (1) Restated to reflect pooling-of-interests.
4 FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS
Three Months Ended March 31, ------------------------------------ 1996 1995 (1) -------------- -------------- INTEREST INCOME Loans, including fees $ 13,011,804 $ 10,653,248 Investment income-taxable 7,160,785 6,385,734 Investment income-tax exempt 228,439 214,244 Interest on interest bearing deposits 29,372 2,553 Interest on federal funds sold and other 549,614 358,721 -------------- -------------- Total interest income 20,980,014 17,614,500 INTEREST EXPENSE Interest-bearing deposits 8,395,987 6,543,849 Short-term borrowings 29,458 13,050 -------------- -------------- Total interest expense 8,425,445 6,556,899 -------------- -------------- NET INTEREST INCOME 12,554,569 11,057,601 Provision for loan losses 518,000 20,000 -------------- -------------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 12,036,569 11,037,601 NONINTEREST INCOME Trust fees 859,602 769,437 Service fees on deposit accounts 1,811,467 1,518,370 Net gain on sale of foreclosed assets 95,691 6,266 Other 937,837 874,630 -------------- -------------- Total noninterest income 3,704,597 3,168,703 NONINTEREST EXPENSE Salaries and employee benefits 4,853,335 4,261,608 Net occupancy and equipment expenses 737,595 616,494 Equipment expense 660,905 530,234 FDIC assessments 4,752 516,976 Correspondent bank service charges 224,730 217,268 Other 2,505,813 2,364,637 -------------- -------------- Total noninterest expense 8,987,130 8,507,217 -------------- -------------- EARNINGS BEFORE INCOME TAXES 6,754,036 5,699,087 Provision for income tax 2,309,722 1,908,924 --------------- -------------- NET EARNINGS $ 4,444,314 $ 3,790,163 ============== ============== EARNINGS PER SHARE (2) $ 0.83 $ 0.71 ============== ============== DIVIDENDS PER SHARE (3) $ 0.31 $ 0.28 ============== ============== (1) Restated to reflect pooling-of-interests. (2) Earnings per share are calculated using weighted average shares outstanding for each period presented with the prior period restated to reflect acquisition of Weatherford National Bancshares, Inc. through a pooling of interests on January 17, 1996. (3) Dividends per share are calculated using actual number of shares outstanding at the end of each period presented.
5 FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Unrealized Gain (Loss) On Investment Total Securities Share- Capital Stock Capital Retained Available holders' Shares Amount Surplus Earnings for Sale Equity Balances at December 31, 1994 (1) 5,321,191 $ 53,211,910 $ 36,863,701 $ 18,964,236 $ (681,018) $ 108,358,829 Net earnings - year to date (1) 17,015,613 17,015,613 Cash dividends (6,062,575) (6,062,575) Exercise of stock options 18,002 180,020 6,903 186,923 Change in unrealized gain (loss) 528,857 528,857 --------- ------------ ------------ ------------ ------------- ------------- Balances at December 31, 1995 5,339,193 53,391,930 36,870,604 29,917,274 (152,161) 120,027,647 Net earnings - year to date 4,444,314 4,444,314 Cash dividends (1,656,968) (1,656,968) Exercise of stock options 7,104 71,040 9,168 80,208 Change in unrealized gain (loss) (223,737) (223,737) --------- ------------ ------------ ------------ ------------- ------------- Balances at March 31, 1996 5,346,297 $ 53,462,970 $ 36,879,772 $ 32,704,620 $ (375,898) $ 122,671,464 ========= =========== =========== =========== ============ ============ (1) Restated to reflect pooling-of-interests.
6 FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, -------------------------------------- 1996 1995 (1) ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 4,444,314 $ 3,790,163 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 1,018,854 693,438 Provision for loan losses 518,000 20,000 Premium amortization, net of discount accretion 695,175 830,055 Gain on sale of foreclosed assets (95,691) 6,266 Deferred federal income tax expense (benefit) (351,376) 2,934 (Increase) decrease in other assets 532,127 (678,530) Increase in other liabilities 2,658,831 2,613,011 ------------- ------------- Total adjustments 4,975,920 3,487,174 ------------- ------------- Net cash provided by operating activities 9,420,234 7,277,337 ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES Net (increase) decrease in interest-bearing deposits in banks 691,642 (508) Cash payment for stock, net of cash and cash equivalents acquired through acquisition (4,554,417) - Proceeds from sale of securities available for sale - 4,119,844 Proceeds from maturity of securities available for sale 667,328 1,020,086 Proceeds from maturity of securities held to maturity 56,288,372 40,677,049 Purchase of securities available for sale (2,966,531) (1,938,082) Purchase of securities held to maturity (44,107,826) (25,602,552) Net increase in loans 9,436,459 (5,087,706) Capital expenditures (1,117,513) (593,790) Proceeds from sale of assets 297,620 72,546 ------------- ------------- Net cash used in investing activities 14,635,134 12,666,887 ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES Net decrease in noninterest-bearing deposits (23,121,209) (18,717,510) Net decrease in interest-bearing deposits (4,114,557) (8,902,560) Net decrease in short-term borrowings (440,438) (1,079,131) Proceeds from stock issuances 80,208 90,884 Dividends paid (1,554,717) (1,399,220) ------------- ------------- Net cash used in financing activities (29,150,713) (30,007,537) ------------- ------------- Net decrease in cash and cash equivalents (5,095,345) (10,063,313) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 92,543,959 86,971,457 ------------- ------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 87,448,614 $ 76,908,144 ============= ============= (1) Restated to reflect pooling-of-interests.
7 FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, ------------------------------------ 1996 1995 (1) ----------- ------------ SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES Assets acquired through foreclosure $ 29,581 $ 200,632 Loans to finance sales of other real estate - 27,450 Change in unrealized (loss) on investment securities available for sale (215,947) 192,331 The Company acquired all of the capital stock of Weatherford National Bancshares, Inc. in exchange for capital stock of the Company, as follows: Capital stock 3,239,770 - Retained earnings (including unrealized gain on securities available for sale) 1,871,228 - ----------- ------------ 5,110,998 - The Company purchased all of the capital stock of The Citizens Equity Corporation for $6,394,800. In conjunction with the acquisition, liabilities were assumed, as follows: Fair value of assets acquired 98,061,501 - Cash paid for the capital stock (6,394,800) - ----------- ------------ Liabilities assumed 91,666,701 - OTHER DISCLOSURES Interest paid 8,022,978 7,474,953 Federal income tax paid - 420,078 (1) Restated to reflect pooling-of-interests.
8 FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES NOTE TO CONSOLIDATED FINANCIAL STATEMENTS 1. Business Combinations In January 1996, the Company acquired Citizens Equity Corporation and its subsidiary bank, Citizens National Bank of Weatherford, in a cash transaction accounted for as a purchase. The operations of Citizens National Bank are included only in the first quarter of 1996. Also in January 1996, the Company acquired Weatherford National Bancshares, Inc. and its subsidiary bank, Weatherford National Bank, through an exchange of stock. The transaction was accounted for as a pooling-of-interests; therefore, prior period financial statements have been restated to include Weatherford National Bancshares, Inc. The following table shows the effect of Weatherford National Bancshares, Inc.'s operations for the period prior to combination:
First Weatherford ($ thousands) Financial National Combined - -------------------------------------------------- --------- ------------- -------- Three Months Ended March 31, 1995: Net Interest Income $ 10,510 $ 548 $ 11,058 Net Income 3,586 204 3,790
9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Operating Results Net income for the first quarter 1996 totaled $4.4 million, an increase of approximately 17% over the $3.8 million earned in the first quarter last year. The improved earnings resulted primarily from increased net interest income. On a per share basis, earnings amounted to $ .83 per share as compared to $ .71 per share in 1995. Return on average assets and return on average equity amounted to 1.49% and 14.77%, respectively. For the same period in 1995, the Company reported return on average assets of 1.48% and return on average equity of 13.95%. Net interest income for the first quarter 1996 was $1.5 million above the same period last year and resulted primarily from loan growth. The net interest margin for the first quarter was 4.68%, down slightly from 4.77% for the first quarter 1995. The provision for loan losses in the first quarter amounted to $518 thousand as compared to $20 thousand for the same period in 1995. The increase is attributed to provisions at subsidiary banks located in markets where lack of rainfall has adversely affected agriculture. Total noninterest income for the first quarter amounted to $3.7 million, up from the $3.2 million total for the first quarter 1995. The addition of Citizens National Bank of Weatherford in 1996 accounted for approximately $200 thousand of the increase in total noninterest income. Trust fees and service fees on deposit accounts increased $90 thousand and $293 thousand, respectively. Net gain from the sale of foreclosed assets in the first quarter 1996 was $89 thousand above the first quarter last year. Higher merchant credit card fees and real estate mortgage fees contributed to the 1996 increase in other noninterest income. Noninterest expense for the first quarter 1996 amounted to $8.9 million, an increase of $480 thousand, or 5.6% over the same period last year. Salaries and employee benefits were $592 thousand, or 13.9% above the first quarter 1995 amount. Excluding employee related expense at Citizens National Bank of Weatherford, total salaries and benefits were 5.1% above the first quarter 1995 which did not include the Citizens National Bank expense. Lower FDIC assessment rates implemented in mid-year 1995 resulted in a $512 thousand decrease in FDIC insurance expense. The Company's key indicator of operating efficiency, noninterest expense as a percent of net interest income and noninterest income, was 57.69% for the first quarter as compared to 59.30% for the first quarter in 1995. Balance Sheet Review Total assets of $1.19 billion at March 31, 1996, represent a $63 million increase from December 31, 1995, and a $145 million increase from March 31, 1995. The balance sheets presented reflect normal recurring adjustments and accruals; and as previously stated, prior periods have been restated to reflect the acquisition of Weatherford National Bancshares, which was accounted for as a pooling-of-interests. Compared to year end 1995, balance sheet growth in the first quarter of 1996 is attributed to the addition of Citizens National Bank of Weatherford, which at March 31, 1996, had total assets, loans and deposits of $90 million, $34 million, and $80 million, respectively. Loans at March 31, 1996, amounted to $534 million as compared to $507 million at December 31, 1995, and $452 million at March 31, 1995. Investment securities at March 31, 1996, amounted to $515 million as compared to $481 million at December 31, 1995, and $472 million at March 31, 1995. The net unrealized loss in the investment portfolio at March 31, 1996, totaled $1.6 million as compared to $2.7 million at December 31, 1995. At March 31, 1995, the Company did not hold any CMOs that entail higher risks than standard mortgage-backed securities. Total investment securities at March 31, 1996, included structured notes with an amortized cost of $17.1 million and an approximate market value of $16.5 million. Total deposits at March 31, 1996, amounted to $1.05 billion as compared to $998 million at December 31, 1995, and $923 million at March 31, 1995. 10 Balance Sheet Review - continued Nonperforming assets at March 31, 1996, totaled $4.4 million, or .82% of loans and foreclosed assets, and were up $2.3 million from the December 31, 1995, amount. The increase resulted from the addition of certain agricultural-related credits and the acquisition of Citizens National Bank of Weatherford, which had nonperforming assets of $902 thousand at March 31, 1996. At March 31, 1996, the allowance for loan losses amounted to 232.7% of nonperforming assets. Management is not aware of any material classified credit not properly disclosed as nonperforming and considers the allowance for loan losses to be adequate. Liquidity and Capital The Company's consolidated statements of cash flows are presented on page 7 of this report. At March 31, 1996, the balance sheet reflects adequate liquidity, and the parent company has no funded debt under its $10 million line of credit. Total equity capital amounted to $122.7 million at March 31, 1996, which was up from $120.0 million at year end 1995 and $111.2 million at March 31, 1995. The Company's risk-based capital and leverage ratios at March 31, 1996, were 20.10% and 9.75%, respectively. The first quarter cash dividend of $ .31 per share totaled $1.6 million and represented 37.3% of earnings. On April 23, 1996, the Company announced a 25% stock dividend and declared a $ .28 per share cash dividend. The stock dividend will be issued June 3, 1996, and the cash dividend is payable July 1, 1996. 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FIRST FINANCIAL BANKSHARES, INC. Date By: Curtis R. Harvey Executive Vice President and Chief Financial Officer Date By: Sandy Lester Secretary-Treasurer 12 EX-27 2 FDS --
9 1,000 3-MOS DEC-31-1996 MAR-31-1996 60,427 1,380 27,022 0 30,109 484,770 513,614 533,991 10,222 1,188,743 1,054,537 120 11,414 0 0 0 53,463 69,209 1,188,743 13,012 7,389 579 20,980 8,396 29 12,555 518 0 8,987 6,754 6,754 0 0 4,444 0.83 0.83 4.68 3,180 82 0 789 9,194 459 169 10,222 10,222 0 0
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