8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): July 19, 2007

FIRST FINANCIAL BANKSHARES, INC.

(Exact Name of Registrant as Specified in its Charter)

Texas
(State or other Jurisdiction
of Incorporation) 0-7674
(Commission File No.) 75-0944023
(IRS Employer
Identification No.)

400 Pine Street, Abilene, Texas 79601
(Address of Principal Executive Offices and Zip Code)

Registrant’s Telephone Number (325) 627-7155

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 203.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2 (b))

o Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13 e-4 (c))

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

     Attached as an exhibit to this Form 8-K is the earnings release for the quarter ended June 30, 2007 of First Financial Bankshares, Inc.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99.1 Press Release dated July 19, 2007

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 hereunto duly authorized.

	FIRST FINANCIAL BANKSHARES, INC. (Registrant)
DATE: July 19, 2007	By:	/S/ F. Scott Dueser
		F. SCOTT DUESER
		President and Chief Executive Officer

EX-99.1

Exhibit 99.1

For immediate release	For More Information:
	J. Bruce Hildebrand, Executive Vice President
	325.627.7155

FIRST FINANCIAL BANKSHARES ANNOUNCES
SECOND QUARTER EARNINGS RESULTS

ABILENE, Texas, July 19, 2007 — First Financial Bankshares, Inc. (NASDAQ: FFIN) increased earnings 15.9 percent for the second quarter of 2007 to $13.27 million, compared with $11.45 million in the same quarter last year. Basic earnings per share were $0.64 compared with $0.55 in the same period last year. The increase in earnings was a result primarily from an increase in the pretax gain on sale of student loans that totaled $1.62 million in the second quarter of 2007 compared to $462,000 in the same quarter of 2006.

Net interest income for the second quarter increased 2.7 percent to $27.25 million compared with $26.54 million in the same quarter last year. The provision for loan losses was $238,000 in the second quarter of 2007, down from $389,000 in the same quarter last year. The net interest margin, on a taxable equivalent basis, was 4.38 percent for the second quarter of 2007 compared with 4.50 percent in the same period a year ago but unchanged from the first quarter of 2007.

Noninterest income in the second quarter was $12.97 million compared with $10.95 million in the same quarter last year. A large portion of this increase resulted from the sale of student loans discussed above. In 2006, the Company sold the majority of its student loans in the first quarter, recording a similar premium compared to the second quarter of 2007. The Company made a decision to delay the 2007 first quarter sale of student loans to May 2007 in order to earn additional interest income.

Trust fees increased 23.9 percent in the second quarter to $2.27 million compared with $1.83 million in the same quarter last year due to continued growth of trust assets. Service charges on deposit accounts decreased 1.9 percent in the second quarter of 2007 to $5.55 million compared with $5.66 million a year ago, reflecting declining use of overdraft privilege, offset in part by strong growth in new accounts. Real estate mortgage fees increased 54.3 percent to $864,000 from $560,000 in the same quarter last year. ATM and credit card fees increased 20.6 percent to $1.86 million versus $1.54 million a year ago, indicative of continued increased use of debit cards and the growth in net new accounts.

Noninterest expense increased 2.1 percent in the second quarter of 2007 to $21.25 million from $20.81 million in the same quarter last year. The Company’s efficiency ratio in the second quarter stood at 51.19 percent compared with 53.82 percent in the same quarter a year ago.

For the first half of 2007, net income was $24.73 million, up 7.9 percent compared with $22.92 million a year ago. Basic earnings per share for the first half of 2007 were $1.19 compared with $1.11 in the same period last year. Net interest income increased 3.1 percent in the first half of 2007 to $53.82 million from $52.19 million in the same period last year. Noninterest income was $23.89 million in the first half of 2007, up 6.5 percent from $22.43 million a year ago.

“We experienced solid growth in loans, new accounts, trust fees and real estate mortgage fees in the second quarter, while continuing to control expenses, all of which contributed to our Company’s favorable results for the second quarter and the first half of the year,” said F. Scott Dueser, President and Chief Executive Officer. “We are pleased with our results, given the cautious economic environment and continuing net interest margin pressure.”

As of June 30, 2007, consolidated assets for the Company totaled $2.85 billion compared with $2.72 billion a year ago. Loans totaled $1.39 billion at quarter end, compared with loans of $1.29 billion a year ago. Excluding the effect of the sale of student loans, quarter-end loans increased 7.8 percent over the same period a year ago and at an annualized growth rate of 10.3 percent over March 31, 2007.

Total deposits as of June 30, 2007, stood at $2.38 billion from $2.31 billion a year earlier. Non-interest-bearing deposits grew 6.7 percent compared with the same period a year ago, while interest-bearing deposits grew 1.7 percent as the Company focused on low costs of funds and its effect on the net interest margin. Shareholders’ equity rose to $306.5 million as of June 30, 2007, compared with $279.8 million the prior year.

Headquartered in Abilene, Texas, First Financial Bankshares is a financial holding company that operates ten separately chartered banks with 45 locations in Texas. The bank subsidiaries are First Financial Bank, N.A., Abilene, Clyde, Moran and Albany; First Financial Bank, N.A., Eastland, Ranger and Rising Star; First Financial Bank, N.A., Cleburne, Burleson, Alvarado and Midlothian; Hereford State Bank, Hereford; First Financial Bank, N.A., Mineral Wells; San Angelo National Bank, San Angelo; First Financial Bank, N.A., Southlake, Trophy Club, Keller, Bridgeport, Decatur and Boyd; First Financial Bank, N.A., Stephenville, Granbury and Glen Rose; First National Bank, Sweetwater, Roby and Trent; and Weatherford National Bank, Weatherford, Willow Park and Aledo. The Company also operates First Financial Trust & Asset Management Company, N.A., with five locations and First Technology Services, Inc., a technology operating company.

The Company is listed on The NASDAQ Global Select Market under the trading symbol FFIN. For more information about First Financial Bankshares, please visit our Web site at http://www.ffin.com.

*****

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. Except as otherwise stated in this news announcement, the Company does not undertake any obligation to update publicly or revise any forward-looking statements because of new information, future events or otherwise.

FIRST FINANCIAL BANKSHARES, INC.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
(In thousands, except share and per share data)

	June 30,
	2007			2006
ASSETS:
Cash and due from banks	$	113,794		$	125,796
Fed funds sold		54,760			30,950
Investment securities		1,135,133			1,112,112
Loans		1,391,984			1,293,111
Allowance for loan losses		(16,425	)		(15,473	)
Net loans		1,375,559			1,277,638
Premises and equipment		61,204			58,905
Goodwill		62,112			62,146
Other intangible assets		3,829			5,470
Other assets		44,061			42,406
Total assets	$	2,850,452		$	2,715,423
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Noninterest-bearing deposits	$	664,952		$	622,994
Interest-bearing deposits		1,711,799			1,683,629
Total deposits		2,376,751			2,306,623
Short-term borrowings		147,110			110,842
Other liabilities		20,075			18,186
Shareholders’ equity		306,516			279,772
Total liabilities and shareholders’ equity	$	2,850,452		$	2,715,423

	Three Months Ended						Six Months Ended
	June 30,						June 30,
INCOME STATEMENTS	2007			2006			2007			2006
Interest income	$	42,259		$	38,140		$	83,331		$	74,541
Interest expense		15,013			11,598			29,512			22,349
Net interest income		27,246			26,542			53,819			52,192
Provision for loan losses		238			389			479			722
Net interest income after provision for loan losses		27,008			26,153			53,340			51,470
Noninterest income		12,972			10,954			23,892			22,433
Noninterest expense		21,247			20,805			42,114			41,283
Net income before income taxes		18,733			16,302			35,118			32,620
Income tax expense		5,463			4,854			10,385			9,705
Net income	$	13,270		$	11,448		$	24,733		$	22,915
PER COMMON SHARE DATA
Net income — basic	$	0.64		$	0.55		$	1.19		$	1.11
Net income — diluted		0.64			0.55			1.18			1.10
Cash dividends		0.32			0.30			0.62			0.58
Book value								14.76			13.50
Market value								38.81			36.54
Shares outstanding — end of period		20,760,116			20,727,734			20,760,116			20,727,734
Average outstanding shares — basic		20,756,846			20,722,054			20,752,044			20,718,763
Average outstanding shares — diluted		20,888,879			20,775,448			20,872,613			20,775,648
PERFORMANCE RATIOS
Return on average assets		1.86	%		1.68	%		1.75	%		1.69	%
Return on average equity		17.25			16.48			16.35			16.59
Net interest margin (tax equivalent)		4.38			4.50			4.38			4.45
Efficiency ratio		51.19			53.82			52.50			53.64

FIRST FINANCIAL BANKSHARES, INC.
SELECTED FINANCIAL DATA (UNAUDITED)
(In thousands)

	Quarter Ended
	2007						2006
	June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,
ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period	$	16,458		$	16,201		$	16,498		$	15,473		$	15,116
Loans charged off		(505	)		(147	)		(788	)		(272	)		(379	)
Loan recoveries		234			162			244			206			347
Net (charge-offs) recoveries		(271	)		15			(544	)		(66	)		(32	)
Provision for loan losses		238			242			247			1,091			389
Balance at end of period	$	16,425		$	16,458		$	16,201		$	16,498		$	15,473
Allowance for loan losses / period-end loans		1.18	%		1.17	%		1.18	%		1.23	%		1.20	%
Allowance for loan losses / nonperforming loans		387.4			226.5			442.9			401.6			370.0
Net charge-offs (recoveries) / average loans (annualized)		0.08			0.00			0.16			0.02			0.01
NONPERFORMING ASSETS
Nonaccrual loans	$	4,179		$	6,338		$	3,529		$	3,907		$	4,088
Accruing loans 90 days past due		61			928			129			201			94
Total nonperforming loans		4,240			7,266			3,658			4,108			4,182
Foreclosed assets		2,174			434			453			543			545
Total nonperforming assets	$	6,414		$	7,700		$	4,111		$	4,651		$	4,727
As a % of loans and foreclosed assets		0.46	%		0.55	%		0.30	%		0.35	%		0.37	%
CAPITAL RATIOS
Tier 1 Risk-based		14.85	%		14.71	%		14.35	%		14.72	%		14.51	%
Total Risk-based		15.81			15.69			15.32			15.75			15.49
Tier 1 Leverage		9.05			8.89			8.87			8.91			8.39
Equity to assets		10.75			10.74			10.56			10.81			10.30

	Three Months Ended					Six Months Ended
	June 30,					June 30,
NONINTEREST INCOME	2007		2006			2007		2006
Gain on sale of student loans, net	$	1,616	$	462		$	1,780	$	1,872
Gain on securities transactions, net		—		—			85		—
Trust fees		2,272		1,834			4,372		3,681
Service charges on deposits		5,553		5,658			10,692		10,946
Real estate mortgage fees		864		560			1,602		1,009
Net gain (loss) on sale of foreclosed assets		22		(1	)		35		(13	)
ATM and credit card fees		1,859		1,542			3,578		2,982
Other noninterest income		786		899			1,748		1,956
Total Noninterest Income	$	12,972	$	10,954		$	23,892	$	22,433
NONINTEREST EXPENSE
Salaries and employee benefits	$	11,448	$	11,128		$	22,887	$	22,425
Net occupancy expense		1,445		1,514			2,854		2,990
Equipment expense		1,812		1,790			3,557		3,496
Printing, stationery and supplies		520		513			992		1,011
ATM and credit card expenses		964		864			1,893		1,675
Audit fees		256		231			505		480
Legal, tax and professional fees		631		617			1,303		1,161
Correspondent bank service charges		293		291			618		602
Advertising and public relations		603		615			1,162		1,182
Amortization of intangible assets		377		385			760		611
Other noninterest expense		2,898		2,857			5,583		5,650
Total Noninterest Expense	$	21,247	$	20,805		$	42,114	$	41,283
TAX EQUIVALENT YIELD ADJUSTMENT	$	1,286	$	1,161		$	2,512	$	2,340

FIRST FINANCIAL BANKSHARES, INC.
SELECTED FINANCIAL DATA (UNAUDITED)
(In thousands)

	Three Months Ended
	June 30, 2007
	Average		Tax Equivalent		Yield /
	Balance		Interest		Rate
Interest earning assets:
Fed funds sold	$	90,951	$	1,162		5.12	%
Interest bearing deposits in nonaffiliated banks		7,130		92		5.18	%
Taxable securities		830,248		9,651		4.65	%
Tax exempt securities		286,642		4,280		5.97	%
Loans		1,402,632		28,360		8.11	%
Total interest earning assets		2,617,603		43,545		6.68	%
Noninterest earning assets		251,563
Total assets	$	2,869,166
Interest bearing liabilities:
Deposits	$	1,749,306	$	13,389		3.07	%
Fed funds purchased and other short term borrowings		144,190		1,624		4.52	%
Total interest bearing liabilities		1,893,496		15,013		3.18	%
Noninterest bearing liabilities		667,054
Shareholders’ equity		308,616
Total liabilities and shareholders’ equity	$	2,869,166
Net interest income and margin (tax equivalent)			$	28,532		4.38	%

	Six Months Ended
	June 30, 2007
	Average		Tax Equivalent		Yield /
	Balance		Interest		Rate
Interest earning assets:
Fed funds sold	$	73,816	$	1,859		5.08	%
Interest bearing deposits in nonaffiliated banks		6,090		157		5.20	%
Taxable securities		840,052		19,412		4.62	%
Tax exempt securities		277,577		8,320		5.99	%
Loans		1,399,806		56,095		8.08	%
Total interest earning assets		2,597,341		85,843		6.67	%
Noninterest earning assets		256,619
Total assets	$	2,853,960
Interest bearing liabilities:
Deposits	$	1,746,246	$	26,297		3.04	%
Fed funds purchased and other short term borrowings		141,045		3,215		4.60	%
Total interest bearing liabilities		1,887,291		29,512		3.15	%
Noninterest bearing liabilities		661,624
Shareholders’ equity		305,045
Total liabilities and shareholders’ equity	$	2,853,960
Net interest income and margin (tax equivalent)			$	56,331		4.38	%