-----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, L3BT3YfXt7Z7bnosWZRr1ghwlEVwwWlQ7bcf/8XMB34AvPfcIK3Gb9UvMUM5J9zX p3Hftj5vA69LWpoMRgGtQg== 0000036029-97-000005.txt : 19970804 0000036029-97-000005.hdr.sgml : 19970804 ACCESSION NUMBER: 0000036029-97-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970801 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: 97649795 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 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 June 30, 1997 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 . Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. 8,418,371 shares 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 PART I FINANCIAL INFORMATION Item 1. Financial Statements. The consolidated balance sheets of First Financial Bankshares, Inc. at June 30, 1997, December 31, 1996, and June 30, 1996, and the consolidated statements of income, the consolidated statements of changes in stockholders' equity, the consolidated statements of cash flows and the notes to consolidated financial statements for the six months ended June 30, 1997 and 1996, follow on pages 4 through 9. FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
June 30, December 31, 1997 1996 1996 (1) ASSETS Cash and due from banks $ 69,564,821 $ 58,303,934 $ 71,677,154 Interest-bearing deposits in banks 398,570 884,412 888,494 Federal funds sold 36,126,275 24,492,191 54,306,156 Investment securities: Securities held-to-maturity (approximate market value of $463,158,083 and $488,933,563 at June 30, 1997 and 1996, and $466,805,918 at December 31, 1996) 463,158,083 493,496,869 466,623,769 Securities available-for-sale, at approximate market value 66,281,332 16,181,869 45,164,802 --------------- --------------- --------------- Total investment securities 529,439,415 509,678,738 511,788,571 Loans 589,518,242 550,401,489 580,163,598 Less: Allowance for loan losses 9,249,262 10,498,119 9,441,466 Unearned discount 7,806,024 8,576,702 7,263,392 --------------- --------------- --------------- Net loans 572,462,956 531,326,668 563,458,740 Bank premises and equipment-net 35,371,197 34,585,382 34,454,587 Goodwill 5,385,296 5,786,549 5,585,922 Other assets 20,271,045 20,915,770 19,881,425 --------------- --------------- --------------- TOTAL ASSETS $ 1,269,019,575 $ 1,185,973,644 $ 1,262,041,049 =============== =============== =============== LIABILITIES Noninterest-bearing deposits $ 226,576,246 $ 214,993,884 $ 246,571,720 Interest-bearing demand deposits 309,089,643 283,969,523 316,524,085 Interest-bearing time deposits 586,374,707 552,348,789 558,785,647 --------------- --------------- --------------- Total deposits 1,122,040,596 1,051,312,196 1,121,881,452 Dividends payable 2,103,784 1,873,948 1,881,288 Other liabilities 7,707,995 7,645,595 7,117,463 --------------- --------------- --------------- Total liabilities 1,131,852,375 1,060,831,739 1,130,880,203 --------------- --------------- --------------- SHAREHOLDERS' EQUITY Capital stock-$10 par value; 10,000,000 shares authorized 84,151,360 66,926,710 67,188,860 Capital surplus 36,851,752 36,872,386 36,874,707 Retained earnings 16,214,735 21,892,108 27,363,902 Unrealized (loss) on investment securities available-for-sale (50,647) (549,299) (266,623) --------------- --------------- --------------- Total Shareholders' Equity 137,167,200 125,141,905 131,160,846 --------------- --------------- --------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,269,019,575 $ 1,185,973,644 $ 1,262,041,049 =============== =============== =============== (1) Restated to reflect pooling-of-interests.
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended Six Months Ended June 30, June 30, ---------------------------- --------------------------- 1997 1996 1997 1996 ---------------------------- --------------------------- INTEREST INCOME Loans, including fees $ 13,665,220 $ 12,813,457 $ 26,905,677 $ 25,825,262 Investment income-taxable 7,727,493 7,177,170 15,158,841 14,337,955 Investment income-tax exempt 322,816 226,485 636,978 454,924 Interest on interest-bearing deposits 10,534 17,326 23,370 46,699 Interest on federal funds sold and other 499,351 452,556 1,163,540 1,002,167 ------------- ------------ ------------ ----------- Total interest income 22,225,414 20,686,994 43,888,406 41,667,007 INTEREST EXPENSE Interest-bearing deposits 9,041,150 8,272,730 17,793,603 16,668,717 Short-term borrowings 3,817 1,123 4,905 29,084 Interest on mortgage notes payable 748 1,495 1,488 2,992 ------------- ------------ ------------ ----------- Total interest expense 9,045,715 8,275,348 17,799,996 16,700,793 ------------- ------------ ------------ ----------- NET INTEREST INCOME 13,179,699 12,411,646 26,088,410 24,966,214 Provision for loan losses 172,500 365,000 397,500 883,000 ------------- ------------ ------------ ----------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 13,007,199 12,046,646 25,690,910 24,083,214 NONINTEREST INCOME Trust fees 986,803 868,159 1,952,873 1,727,760 Service fees on deposit accounts 2,436,001 1,963,402 4,625,954 3,774,871 Other 987,148 1,207,499 2,121,966 2,241,030 ------------- ------------ ------------ ----------- Total noninterest income 4,409,952 4,039,060 8,700,793 7,743,661 NONINTEREST EXPENSE Salaries and employee benefits 5,264,125 4,935,901 10,376,224 9,789,235 Net occupancy and equipment expenses 842,358 798,865 1,678,842 1,536,459 Equipment expense 787,116 701,093 1,515,179 1,362,000 Printing and supplies 251,988 270,881 477,891 511,220 Other 2,885,566 2,620,208 5,724,954 5,115,162 ------------- ------------ ------------ ----------- Total noninterest expense 10,031,153 9,326,948 19,773,090 18,314,076 ------------- ------------ ------------ ----------- EARNINGS BEFORE INCOME TAXES 7,385,998 6,758,758 14,618,613 13,512,799 Provision for income tax 2,504,209 2,310,856 4,947,190 4,620,579 ------------- ------------ ------------ ----------- NET EARNINGS $ 4,881,789 $ 4,447,902 $ 9,671,423 $ 8,892,220 ============= ============ ============ =========== EARNINGS PER SHARE (1) $ 0.58 $ 0.53 $ 1.15 $ 1.06 ============= ============ ============ ============ DIVIDENDS PER SHARE (2) $ 0.25 $ 0.22 $ 0.47 $ 0.42 ============= ============ ============ ============ (1) Earnings per share are calculated using weighted average shares outstanding for each period presented with the prior period adjusted for 25% stock dividend issued June 2, 1997. (2) Dividends per share are calculated using actual number of shares outstanding at end of each period presented with the prior period adjusted for 25% stock dividend issued June 2, 1997.
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Unrealized (Loss) On Investment Securities Total Capital Stock Capital Retained Available- Shareholders' Shares Amount Surplus Earnings for-Sale Equity Balances at December 31, 1995 5,339,193 $ 53,391,930 $ 36,870,604 $ 29,917,438 $(152,161) $ 120,027,811 Net earnings 18,122,251 18,122,251 Stock issuances 42,791 427,910 4,103 432,013 Cash dividends declared (7,306,767) (7,306,767) Stock split effected in the form of a dividend 1,336,902 13,369,020 (13,369,020) Change in unrealized (loss) (114,462) (114,462) --------- ----------- ---------- ----------- ------- ------------ Balances at December 31, 1996 6,718,886 67,188,860 36,874,707 27,363,902 (266,623) 131,160,846 Net earnings 9,671,423 9,671,423 Stock issuances 14,856 148,560 (22,955) 125,605 Cash dividends declared (4,006,650) (4,006,650) Stock split effected in the form of a dividend 1,681,394 16,813,940 (16,813,940) Change in unrealized gain 215,976 215,976 --------- ----------- ----------- ----------- ------- ------------ Balances at June 30, 1997 8,415,136 $ 84,151,360 $ 36,851,752 $ 16,214,735 $ (50,647) $ 137,167,200 ========= =========== =========== =========== ======= ============
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1997 1996 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 9,671,423 $ 8,892,220 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 1,915,033 1,719,137 Provision for loan losses 397,500 883,000 Premium amortization, net of discount accretion 601,427 1,327,396 (Gain) loss on sale of foreclosed assets 27,379 (2,498) Deferred federal income tax benefit (95,456) (568,492) (Increase) decrease in other assets (432,968) 962,598 Increase in other liabilities 590,532 457,640 ------------- ------------- Total adjustments 3,003,447 4,778,781 ------------- ------------- Net cash provided by operating activities 12,674,870 13,671,001 ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES: Net decrease in interest-bearing deposits in banks 489,924 1,187,613 Cash payment for stock, net of cash and cash equivalents acquired through acquisition - (4,554,417) Proceeds from sale of securities available for sale 820,528 997,968 Proceeds from maturity of securities available for sale 978,691 1,082,594 Proceeds from sale of securities held to maturity 3,000,781 - Proceeds from maturity of securities held to maturity 90,987,415 93,809,453 Purchase of securities available for sale (21,788,526) (2,966,531) Purchase of securities held to maturity (91,921,174) (78,742,979) Net (increase) decrease in loans (9,439,301) 1,513,203 Capital expenditures (2,662,482) (2,055,034) Proceeds from sale of assets 66,465 302,272 ------------- ------------- Net cash provided by (used in) investing activities (29,467,679) 10,574,142 ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net decrease in noninterest-bearing deposits (19,995,474) (17,948,401) Net increase (decrease) in interest-bearing deposits 20,154,618 (12,512,574) Net decrease in other short-term borrowings - (470,438) Proceeds from stock issuances 16,939,545 167,542 Dividends paid (20,598.094) (3,229,106) ------------- ------------- Net cash used in financing activities (3,499,405) (33,992,977) ------------- ------------- Net decrease in cash and cash equivalents (20,292,214) (9,747,834) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 125,983,310 92,543,959 ------------- ------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 105,691,096 $ 82,796,125 ============= ============= SUPPLEMENTAL INFORMATION ON CASH FLOWS AND NONCASH TRANSACTIONS Interest paid $ 17,606,416 $ 16,627,188 Federal income tax paid 5,185,573 4,888,040 Assets acquired through foreclosure 40,585 29,581 Change in unrealized (loss) on investment securities available for sale 332,271 (241,920) The Company purchased substantially all of the outstanding stock of Citizens Equity Corporation, Inc. ("Citizens") and its subsidiary, Citizens National Bank of Weatherford, for approximately $7,500,000 in cash, along with assumption of Citizen's debt of approximately $5,600,000 Fair value of assets acquired - 98,200,000 Liabilities assumed - 90,700,000 Cash paid for stock - 7,500,000
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Pro Forma Effect of Adoption of Accounting Standard in Fourth Quarter of 1997 The Company will adopt Statement of Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS 128) effective December 15, 1997. This statement requires a change in the computation and presentation of earnings per share. As a result, earnings per share for the year ended December 31, 1997 will be computed under the new standard and prior periods will be restated to reflect the adoption of SFAS 128. The following represents pro forma restatement of earnings per share, as if the statement was effective in the six months ending June 30, 1997 and 1996. Pro Forma Earnings Per Share Basic earnings per share were computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share for the three months and six months ending June 30, 1997 and 1996 were determined upon assumption that options to purchase common shares outstanding were exercised at the beginning of each period (or time of issuance, if later). In calculating earnings per share, the Company has used the treasury stock method, whereby the assumed proceeds were used to purchase common stock at the average market price during the period.
Net Per Share Earnings Shares Amount For the three months ended June 30, 1997 and 1996 1997 - Basic Earnings per Share $ 4,881,783 8,411,003 $ .58 =========== Options issued - 71,332 ----------- ---------- Earnings per Share, assuming dilution $ 4,881,783 $ 8,482,335 $ .58 =========== ========== =========== 1996 - Basic Earnings per Share $ 4,447,906 8,323,106 $ .53 =========== Options issued - 72,846 ----------- ---------- Earnings per Share, assuming dilution $ 4,447,906 8,395,952 $ .53 =========== ========== =========== For the six months ended June 30, 1997 and 1996 1997 - Basic Earnings per Share $ 9,671,410 8,406,769 $ 1.15 ========== Options issued - 73,081 ----------- ---------- Earnings per Share, assuming dilution $ 9,671,410 8,479,850 $ 1.14 =========== ========== ========== 1996 - Basic Earnings per Share $ 8,892,218 8,275,899 $ 1.07 ========== Options issued - 66,657 ----------- ---------- Earnings per Share, assuming dilution $ 8,892,218 8,342,556 $ 1.07 =========== ========== ==========
Note 1 - Pro Forma Effect of Adoption of Accounting Standard in Fourth Quarter of 1997 - continued Options to purchase 4,375 shares of common stock at approximately $31 per share were outstanding during the six months ended June 30, 1997 but were not included in the computation of diluted earnings per share because the options' exercise price was greater than the average market price of the common shares. Those options expire in 2007. The effect of this accounting change on previously reported earnings per share data was as follows:
Three months ended Six months ended June 30 June 30 1997 1996 1997 1996 -------- -------- -------- -------- Primary earnings per share $ .58 $ .53 $ 1.15 $ 1.06 Effect of SFAS No. 128 - - - .01 -------- -------- -------- -------- Basic earnings per share as restated $ .58 $ .53 $ 1.15 $ 1.07 ======== ======== ======== ========
Fully diluted earnings per share were not reported by the Company in prior periods. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Operating Results For the six months ended June 30, 1997, the Company's net income amounted to $9.67 million, or $1.15 per share, compared to $8.89 million, or $1.06 per share, earned in the first half of 1996. Net income for the second quarter 1997 totaled $4.88 million, or $ .58 per share. In the second quarter 1996, the Company reported net income of $4.44 million, or $ .53 per share. Earnings for the second quarter and first six months of 1997 represent increases of 9.75 percent and 8.76 percent, respectively. Return on average assets and return on average equity for the six months ended June 30, 1997, amounted to 1.56 percent and 14.68 percent, respectively. The Company's return on average assets and return on average equity for the same period last year amounted to 1.50 percent and 14.88 percent, respectively. Net interest income for the first six months of 1997 was $1.12 million above the 1996 amount and resulted primarily from loan growth. The net interest margin for the six months ended June 30, 1997, was 4.66 percent, up slightly from the 4.63 percent for 1996. The provision for loan losses for the first half of 1997 totaled $398 thousand as compared to $883 thousand during the same period in 1996. Total noninterest income for the six months ended June 30, 1997, amounted to $8.70 million as compared to the prior year total of $7.74 million. For the first six months of 1997, trust fees and service fees on deposits are up $225 thousand and $851 thousand, respectively. Other noninterest income which includes merchant credit card fees, real estate mortgage fees, ATM transaction fees, and various other miscellaneous service-related fees and income totaled $2.12 million, slightly below the 1996 amount. Noninterest expense for the six months ended June 30, 1997, totaled $19.77 million as compared to $18.31 million during the same period in 1996. The increase is attributable primarily to higher employee costs, advertising and state franchise taxes. The Company's key indicator of operating efficiency, noninterest expense as a percent of net interest income and noninterest income, was 56.45 percent for the first half of 1997 as compared to 55.73 percent for the same period last year. Balance Sheet Review Consolidated assets at June 30, 1997, totaled $1.27 billion as compared to $1.26 billion at year-end 1996 and $1.19 billion at June 30, 1996. Since year-end 1996, investment securities and loans are up $17.6 million and $8.8 million, respectively, and have been funded by a reduction in Federal funds sold and internally-generated capital. The balance sheets presented reflect normal recurring adjustments and accruals. Loans at June 30, 1997, amounted to $583 million as compared to $573 million at December 31, 1996, and $542 million at June 30, 1996. Since year-end 1996, real estate loans and consumer loans have increased $24 million and $5 million, respectively, and commercial loans have decreased $20 million. The net unrealized gain in the investment portfolio at June 30, 1997, totaled $24 thousand. At June 30, 1997, the Company did not hold any CMOs that entail higher risks than standard mortgage-backed securities. Amortized cost of structured notes at June 30, 1997, totaled $13.5 million as compared to an approximate market value of $13.2 million. Total deposits at June 30, 1997, amounted to $1.12 billion, virtually unchanged from December 31, 1996, but up $70.7 million from the June 30, 1996, amount. Balance Sheet Review - continued Nonperforming assets at June 30, 1997, totaled $2.8 million, or .49 percent of loans and foreclosed assets, and were down $674 thousand from the December 31, 1996, amount. Foreclosed asset expense remains immaterial. At June 30, 1997, the allowance for loan losses amounted to 324.9 percent of nonperforming assets. Management is not aware of any material classified credits 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 June 30, 1997, 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 $137.2 million at June 30, 1997, which was up from $131.1 million at year-end 1996 and $125.1 million at June 30, 1996. The Company's risk-based capital and leverage ratios at June 30, 1997, were 20.76 percent and 10.57 percent, respectively. The second quarter cash dividend of $ .25 per share totaled $2.1 million and represented 43.1 percent of earnings. 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 EX-27 2 FDS --
9 1,000 6-MOS JUN-30-1997 JUN-30-1997 69,565 399 36,126 0 66,281 463,260 463,158 581,712 9,249 1,269,020 1,122,041 378 9,434 0 0 0 84,151 53,016 1,269,020 26,906 15,796 1,187 43,889 17,794 17,800 26,089 398 0 19,773 14,619 9,671 0 0 9,671 1.15 1.15 4.65 2,011 104 0 620 9,441 1,301 712 9,249 9,249 0 0
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