-----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, PSSDNh7f18y4uswRINRvLqcYXBY0R1Y4n3ol9nuGqWyiCtN0HFe8FhOiC5dvF5kv N9Yx1B3uXHmzRq2InYJ3pA== 0000036029-00-000004.txt : 20000512 0000036029-00-000004.hdr.sgml : 20000512 ACCESSION NUMBER: 0000036029-00-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000511 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: SEC FILE NUMBER: 000-07674 FILM NUMBER: 626311 BUSINESS ADDRESS: STREET 1: 400 PINE STREET STREET 2: STE 600 CITY: ABILENE STATE: TX ZIP: 79601-0701 BUSINESS PHONE: 9156757155 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-7674 ------ FIRST FINANCIAL BANKSHARES, INC. -------------------------------- (Exact name of registrant as Specified in its charter) Texas 75-0944023 - --------------------------------------------- ----------------- (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 400 Pine Street, Abilene, Texas 79601 ------------------------------------- (Address of principal executive offices) (Zip Code) (915)627-7155 ------------- (Registrant's telephone number, including area code) NO CHANGE --------- (Former name, former address and former fiscal year, if changed since last report) 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 issuer's classes of common stock, as of May 1, 2000. Class Number of Shares Outstanding ----- ---------------------------- Common Stock, Par Value $10.00 Per Share 9,974,306 TABLE OF CONTENTS PART I FINANCIAL INFORMATION Item Page ---- ---- 1. Consolidated Financial Statements and Notes to Consolidated Financial Statements 3 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 3. Quantitative and Qualitative Disclosures About Market Risk 12 Signatures 13 -2- PART I FINANCIAL INFORMATION Item 1. Consolidated Financial Statements. The consolidated balance sheets of First Financial Bankshares, Inc. at March 31, 2000 and 1999, and December 31, 1999, and the consolidated statements of earnings, comprehensive earnings and cash flows for the three months ended March 31, 2000 and 1999, and the changes in shareholders' equity for the year ended December 31, 1999 and three months ended March 31, 2000, follow on pages 4 through 8. -3- FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
March 31, --------------------------------------- 2000 1999 December 31, (Unaudited) (Unaudited) 1999 ------------------ ------------------ ------------------ ASSETS Cash and due from banks $ 80,391,699 $ 78,390,448 $ 119,228,650 Federal funds sold 69,772,210 111,440,795 68,741,408 ------------------ ------------------ ------------------ Cash and cash equivalents 150,163,909 189,831,243 187,970,058 Interest-bearing deposits in banks 104,136 203,955 4,080 Investment in securities: Securities held-to-maturity (market value of $418,381,256 and $426,154,334 at March 31, 2000 and 1999, respectively, and $414,407,070 at December 31, 1999) 425,921,492 422,816,569 422,362,918 Securities available-for-sale, at market value 244,942,097 211,588,088 233,854,837 ------------------ ------------------ ------------------ Total investment securities 670,863,589 634,404,657 656,217,755 Loans 807,751,947 773,296,311 797,275,325 Less: Allowance for loan losses 9,286,278 8,994,091 8,937,542 ------------------ ------------------ ------------------ Net loans 798,465,669 764,302,220 788,337,783 Bank premises and equipment, net 41,017,056 41,653,243 41,536,094 Goodwill, net 19,746,330 21,531,458 20,156,671 Other assets 28,062,765 25,182,222 29,146,756 ------------------ ------------------ ------------------ TOTAL ASSETS $ 1,708,423,454 $ 1,677,108,998 $ 1,723,369,197 ================== ================== ================== LIABILITIES Noninterest-bearing deposits $ 328,121,854 $ 315,340,653 $ 340,513,737 Interest-bearing deposits 1,171,467,775 1,174,202,965 1,184,190,709 ------------------ ------------------ ------------------ Total deposits 1,499,589,629 1,489,543,618 1,524,704,446 Dividends payable 2,992,292 2,737,950 2,992,292 Securities sold under agreements to repurchase 13,109,015 219,629 9,637,734 Other liabilities 10,319,135 12,434,896 7,371,782 ------------------ ------------------ ------------------ Total liabilities 1,526,010,071 1,504,936,093 1,544,706,254 ------------------ ------------------ ------------------ COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Common stock - $10 par value; authorized 20,000,000 shares; issued and outstanding 9,974,306 and 9,956,183 shares at March 31, 2000 and 1999, respectively, and 9,974,306 at December 31, 1999 99,743,060 99,561,830 99,743,060 Capital surplus 60,517,351 60,395,373 60,517,351 Retained earnings 26,249,480 11,403,896 22,495,259 Unrealized (loss) gain on investment in securities available-for-sale, net (4,096,508) 811,806 (4,092,727) ------------------ ------------------ ------------------ Total shareholders' equity 182,413,383 172,172,905 178,662,943 ------------------ ------------------ ------------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,708,423,454 $ 1,677,108,998 $ 1,723,369,197 ================== ================== ================== See notes to consolidated financial statements.
-4- FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS - (UNAUDITED)
Three Months Ended March 31, -------------------------------------- 2000 1999 ----------------- ----------------- INTEREST INCOME Interest and fees on loans $ 17,648,788 $ 16,916,130 Interest on investment securities: Taxable 8,300,400 7,909,394 Exempt from federal income tax 1,409,955 1,107,038 Interest on federal funds sold and interest-bearing deposits in banks 899,720 1,096,724 ----------------- ----------------- Total interest income 28,258,863 27,029,286 INTEREST EXPENSE Interest-bearing deposits 11,129,124 10,741,005 Other 154,976 5,499 ----------------- ----------------- Total interest expense 11,284,100 10,746,504 ----------------- ----------------- NET INTEREST INCOME 16,974,763 16,282,782 Provision for loan losses 740,750 470,000 ----------------- ----------------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 16,234,013 15,812,782 NONINTEREST INCOME Trust department income 1,346,238 1,238,295 Service fees on deposit accounts 3,387,995 3,123,369 Real estate mortgage fees 232,026 365,057 Other 1,500,194 1,333,783 ----------------- ----------------- Total noninterest income 6,466,453 6,060,504 NONINTEREST EXPENSE Salaries and employee benefits 6,831,209 6,752,768 Net occupancy expense 874,280 987,911 Equipment expense 1,013,763 1,006,959 Goodwill amortization 410,342 412,376 Other expenses 3,810,185 3,807,853 ----------------- ----------------- Total noninterest expense 12,939,779 12,967,867 ----------------- ----------------- EARNINGS BEFORE INCOME TAXES 9,760,687 8,905,419 Income tax expense 3,014,174 2,778,875 ----------------- ----------------- NET EARNINGS $ 6,746,513 $ 6,126,544 ================= ================= EARNINGS PER SHARE, BASIC $ 0.68 $ 0.62 EARNINGS PER SHARE, ASSUMING DILUTION $ 0.68 $ 0.61 DIVIDENDS PER SHARE $ 0.30 $ 0.275 See notes to consolidated financial statements.
-5- FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS - (UNAUDITED)
Three Months Ended March 31, ----------------------------------- 2000 1999 --------------- --------------- NET EARNINGS $ 6,746,513 $ 6,126,544 OTHER ITEMS OF COMPREHENSIVE EARNINGS Change in unrealized gain (loss) on investment in securities available-for-sale, before income taxes (5,817) (1,107,609) --------------- --------------- Total other items of comprehensive earnings (5,817) (1,107,609) --------------- --------------- OTHER COMPREHENSIVE EARNINGS, BEFORE INCOME TAXES 6,740,696 5,018,935 Income tax benefit related to other items of comprehensive earnings (2,036) (387,663) --------------- --------------- COMPREHENSIVE EARNINGS $ 6,742,732 $ 5,406,598 =============== =============== See notes to consolidated financial statements.
-6- FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Unrealized Gain (Loss)on Investment Common Stock Securities Total --------------------------- Capital Retained Available Shareholders' Shares Amount Surplus Earnings For Sale, Net Equity --------- ------------ ------------ ------------ ------------ ------------- Balances at December 31, 1998 9,952,683 $ 99,526,830 $ 60,375,373 $ 8,015,303 $ 1,531,752 $ 169,449,258 Net earnings - - - 25,690,541 - 25,690,541 Stock issuances 21,623 216,230 141,978 - - 358,208 Cash dividends declared, $1.125 per share - - - (11,210,585) - (11,210,585) Change in unrealized gain (loss) on investment securities available-for-sale, net - - - - (5,624,479) (5,624,479) --------- ------------ ------------ ------------ ------------ ------------- Balances at December 31, 1999 9,974,306 99,743,060 60,517,351 22,495,259 (4,092,727) 178,662,943 Net earnings - - - 6,746,513 - 6,746,513 Cash dividends declared, $.30 per share - - - (2,992,292) - (2,992,292) Change in unrealized gain (loss) on investment securities available-for-sale, net - - - - (3,781) (3,781) --------- ------------ ------------ ------------ ------------ ------------- Balances at March 31, 2000 (unaudited) 9,974,306 $ 99,743,060 $ 60,517,351 $ 26,249,480 $ (4,096,508) $ 182,413,383 ========= ============ ============ ============ ============ ============= See notes to consolidated financial statements.
-7- FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED)
Three Months Ended March 31, -------------------------------- 2000 1999 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 6,746,513 $ 6,126,544 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 1,443,062 1,394,625 Provision for loan losses 740,750 470,000 Premium amortization, net of discount accretion 465,778 696,057 Gain on sale of assets (7,382) (155,269) Deferred federal income tax expense 1,203 170,465 Decrease in other assets 1,271,994 294,635 Increase in other liabilities 2,947,353 3,261,766 ------------- ------------- Total adjustments 6,862,758 6,132,279 ------------- ------------- Net cash provided by operating activities 13,609,271 12,258,823 CASH FLOWS FROM INVESTING ACTIVITIES Net increase in interest-bearing deposits in banks (100,056) (44) Activity in available-for-sale securities Sales - 3,485,999 Maturities 2,792,856 11,812,106 Purchases (14,103,351) (13,795,943) Activity in held-to-maturity securities Maturities 24,495,787 42,015,175 Purchases (28,302,721) (53,834,791) Net (increase) decrease in loans (11,109,990) 5,619,052 Capital expenditures (518,482) (688,887) Proceeds from sale of assets 66,365 837,000 ------------- ------------- Net cash used in investing activities (26,779,592) (4,550,333) CASH FLOWS FROM FINANCING ACTIVITIES Net decrease in noninterest-bearing deposits (12,391,883) (19,378,479) Net (decrease) increase in interest-bearing deposits (12,722,934) 4,066,257 Net increase in securities sold under agreements to repurchase 3,471,281 - Net decrease in other short-term borrowings - (212,329) Proceeds from stock issuances - 55,000 Dividends paid (2,992,292) (2,736,690) ------------- ------------- Net cash used in financing activities (24,635,828) (18,206,241) ------------- ------------- Net decrease in cash and cash equivalents (37,806,149) (10,497,751) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 187,970,058 200,328,994 ------------- ------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 150,163,909 $ 189,831,243 ============= ============= SUPPLEMENTAL INFORMATION AND NONCASH TRANSACTIONS Interest paid $ 11,554,123 $ 11,053,473 Federal income tax paid - 530,000 Assets acquired through foreclosure 241,353 192,815 See notes to consolidated financial statements.
-8- FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1 - Basis of Presentation In the opinion of management, the consolidated financial statements reflect all adjustments necessary for a fair presentation of the Company's financial position and results of operations. All adjustments were of a normal recurring nature. However, the results of operations for the three months ended March 31, 2000 are not necessarily indicative of the results to be expected for the year ended December 31, 2000. Note 2 - Earnings Per Share Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted average number of shares outstanding during the period. In computing diluted earnings per common share for the quarters ended March 31, 2000 and 1999, the Company assumes that all outstanding options to purchase common stock have been exercised at the beginning of the year (or time of issuance, if later). The dilutive effect of the outstanding options is reflected by application of the treasury stock method, whereby the proceeds from the exercised options are assumed to be used to purchase common stock at the average market price during the respective period. The weighted average common shares outstanding used in computing basic earnings per common share for the quarters ended March 31, 2000 and 1999, were 9,974,306 and 9,953,794 shares, respectively. The weighted average common shares outstanding used in computing diluted earnings per common share for the quarters ended March 31, 2000 and 1999, were 10,006,257 and 9,996,399 shares, respectively. -9- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Operating Results - ----------------- Net income for the first quarter 2000 totaled $6.7 million, an increase of $600 thousand, or 10.1% over earnings of $6.1 million for the same period last year. Higher net interest income and noninterest income were the primary factors contributing to the improved earnings. On a per share basis, earnings amounted to $ .68 per share as compared to $ .62 per share for first quarter 1999. Return on average assets and return on average equity for the first quarter 2000 amounted to 1.60% and 15.18%, respectively. For the same period in 1999, return on average assets and return on average equity amounted to 1.49% and 14.78%, respectively. Tax-equivalent net interest income for the first quarter 2000 amounted to $17.6 million as compared to $16.8 million for the same period last year. The increase for 2000 was attributable to a $27 million increase in average earning assets and an improved net interest yield which amounted to 4.64% as compared to 4.53% for the first quarter last year. The provision for loan losses for the first quarter 2000 totaled $741 thousand as compared to $470 thousand for the first quarter last year. Net charge offs for the first quarter totaled $392 thousand which, on an annualized basis, amounted to .20% of average loans as compared to .27% for the full year of 1999. At March 31, 2000, the allowance for loan losses amounted to 485.6% of nonperforming loans and 1.15% of total loans, which was considered by Management to be adequate. Total noninterest income for the first quarter was $6.5 million, an increase of $406 thousand, or 6.7%, over the same period last year. Service fees on deposit accounts were up $265 thousand, or 8.5%, and were the primary factor for the overall improvement in noninterest income. The increase in deposit service fees resulted primarily from increased transaction volume. Noninterest expense for the first quarter 2000 amounted to $12.9 million which was $29 thousand below the same period last year. Salaries and employee benefits expense were up $78 thousand, or 1.2%. Net occupancy expense decreased $114 thousand and resulted primarily from lower depreciation and repairs and maintenance expense. The Company's key indicator of operating efficiency, noninterest expense as a percent of net interest income on a tax-equivalent basis and noninterest income, was 53.61% for the first quarter as compared to 56.69% for the first quarter in 1999. Balance Sheet Review - -------------------- Total assets at March 31, 2000, amounted to $1.708 billion as compared to $1.723 billion at December 31, 1999, and $1.677 billion at March 31, 1999. The March 31, 2000, decline in total assets from the year-end 1999 balance reflects a seasonal decrease in total deposits. The balance sheets presented reflect normal recurring adjustments and accruals. Loans at March 31, 2000, net of unearned discount, totaled $808 million as compared to $797 million at year-end 1999 and $773 million at March 31, 1999. As compared to year-end 1999 amounts, loans at March 31, 2000, reflect (i) a $7 million decrease in commercial, financial and agricultural loans; (ii) a $13 million increase in real estate loans; and (iii) a $5 million increase in loans to individuals. Investment securities at March 31, 2000, totaled $671 million as compared to $656 million at year-end 1999 and $634 million at March 31, 1999. The net unrealized gain in the investment portfolio at March 31, 2000, amounted to $13.8 million. With an overall yield of 6.26%, the investment portfolio continues to provide a positive contribution to the Company's earnings. At March 31, 2000, the Company did not hold any CMOs that entail higher risks -10- than standard mortgage-backed securities. Total investment securities at March 31, 2000, included structured notes with an amortized cost of $2.0 million and an approximate market value of $1.9 million. Total deposits at March 31, 2000, amounted to $1.500 billion as compared to $1.525 billion at year-end 1999 and $1.490 billion at March 31, 1999. The decrease from December 31, 1999, is considered seasonal and not indicative of a downward trend in total deposits. Nonperforming assets at March 31, 2000, totaled $1.9 million as compared to $2.1 million at December 31, 1999. The decrease resulted primarily from a $288 thousand decrease in nonaccrual loans. At .24% of loans plus foreclosed assets, Management considers nonperforming assets to be at a manageable level and is unaware of any material classified credit not properly disclosed as nonperforming. Liquidity and Capital - --------------------- The Company's consolidated statements of cash flows are presented on page 8 of this report. At March 31, 2000, the parent company had no debt outstanding under its $25 million line of credit with an unaffiliated financial institution. Total equity capital amounted to $182.4 million at March 31, 2000, which was up from $178.7 million at year-end 1999 and $172.2 million at March 31, 1999. The Company's risk-based capital and leverage ratios at March 31, 2000, were 18.60% and 9.93%, respectively. The first quarter 2000 cash dividend of $0.30 per share totaled $3.0 million and represented 44.4% of first quarter earnings. On April 25, 2000, the Company declared a $0.33 per share cash dividend payable July 1, 2000. Interest Rate Risk - ------------------ Interest rate risk results when the maturity or repricing intervals of interest-earning assets and interest-bearing liabilities are different. The Company's exposure to interest rate risk is managed primarily through the Company's strategy of selecting the types and terms of interest-earning assets and interest-bearing liabilities which generate favorable earnings, while limiting the potential negative effects of changes in market interest rates. The Company uses no off-balance-sheet financial instruments to manage interest rate risk. Each subsidiary bank has an asset/liability committee which monitors interest rate risk and compliance with investment policies. Interest-sensitivity gap and simulation analyses are among the ways that the subsidiary banks track interest rate risk. Since year-end 1999, there has been no material change in the Company's interest rate risk. -11- Item 3. Quantitative and Qualitative Disclosures About Market Risk Management considers interest rate risk to be a significant market risk for the Company. See "Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations" for disclosure regarding this market risk. The Company has procedures to monitor market risk and has determined that no material changes in market risk have occurred since December 31, 1999. -12- 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: May 11, 2000 By: /S/CURTIS R. HARVEY ------------ ------------------- Curtis R. Harvey Executive Vice President and Chief Financial Officer Date: May 11, 2000 By: /S/SANDY LESTER ------------ --------------- Sandy Lester Secretary-Treasurer -13- EX-27 2 FDS --
9 1,000 3-MOS MAR-31-2000 MAR-31-2000 80,392 104 69,772 0 244,942 425,921 418,381 807,752 9,286 1,708,423 1,499,590 13,109 13,311 0 0 0 99,743 82,670 1,708,423 17,649 9,710 900 28,259 11,129 11,284 16,975 741 0 12,940 9,761 6,747 0 0 6,747 0.68 0.68 4.64 1,101 126 0 301 8,938 726 334 9,286 9,286 0 0
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