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): October 23, 2008

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 September 30, 2008 of First Financial Bankshares, Inc.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99.1 Press Release dated October 23, 2008

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: October 23, 2008	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
THIRD QUARTER EARNINGS RESULTS

ABILENE, Texas, October 23, 2008 — First Financial Bankshares, Inc. today reported earnings for the third quarter of 2008 of $13.36 million, up 9.1 percent from $12.25 million in the same quarter last year. Basic earnings per share were $0.64 per share for the third quarter, up 8.5 percent from $0.59 for the same quarter last year.

Net interest income for the third quarter of 2008 increased 13.2 percent to $31.40 million compared with $27.74 million in the same quarter last year. The net interest margin, on a taxable equivalent basis, was 4.73 percent for the third quarter of 2008 compared with 4.45 percent in the same period a year ago and 4.61 percent for the quarter ended June 30, 2008.

Noninterest income in the third quarter of 2008 was $12.29 million compared with $11.99 million in the same quarter a year earlier. Trust fees increased 15.90 percent to $2.50 million compared with $2.16 million in the third quarter last year as trust assets increased to $1.98 billion in market value. Service charges on deposit accounts decreased slightly to $5.81 million compared with $6.07 million a year ago. Real estate mortgage fees decreased 36.50 percent to $649,000 from $1.02 million in the same quarter last year. ATM and debit card fees increased 20.1 percent to $2.33 million from $1.94 million a year ago.

Noninterest expense increased 6.38 percent in the third quarter of 2008 to $23.38 million from $21.98 million in the same quarter last year, primarily due to increased salaries, healthcare costs, profit sharing, utility and ATM/debit card expenses. The Company’s efficiency ratio in the third quarter improved to 51.41 percent compared with 53.53 percent in the same quarter a year ago.

The provision for loan losses increased to $1.77 million in the third quarter of 2008, up from $475,000 in the same quarter last year and $1.44 million in the second quarter of 2008. This increase is reflective of the Company’s growth in loans and concern for a slowing economy. Nonperforming assets as a percentage of loans and foreclosed assets totaled 69 basis points at September 30, 2008, compared with 71 basis points at June 30, 2008, and 47 basis points at September 30, 2007.

“We are pleased to report another quarter of earnings growth and improved net interest margins, especially in light of the slowing economy,” said F. Scott Dueser, President and Chief Executive Officer. “The Texas economy remains relatively stable compared to the

rest of the United States, and our subsidiary bank presidents continue to do a good job managing their interest rate margins and banks.”

For the first nine months of 2008, net income increased 8.5 percent to $40.13 million from $36.98 million a year ago. Basic earnings per share rose 8.4 percent to $1.93 in the first nine months of 2008 from $1.78 in the same period last year. Net interest income increased 11.9 percent in the first nine months to $91.25 million compared with $81.56 million a year ago. Noninterest income was $38.06 million in the first nine months of 2008, up 6.1 percent from $35.88 million a year ago.

As of September 30, 2008, consolidated assets for the Company totaled $3.15 billion compared with $2.89 billion a year ago. Loans totaled $1.57 billion at quarter end, compared with loans of $1.46 billion a year ago. Total deposits were $2.56 billion as of September 30, 2008, compared with $2.38 billion a year earlier. Noninterest-bearing deposits grew $111.25 million from a year ago. Shareholders’ equity increased $28.41 million to $350.42 million as of September 30, 2008. The Company’s equity to assets ratio stood at 11.13 percent at September 30, 2008.

Headquartered in Abilene, Texas, First Financial Bankshares is a financial holding company that operates ten separately chartered banks with 48 locations in Texas. The bank subsidiaries are First Financial Bank, N.A., Abilene, Albany, Clyde and Moran; 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, Bridgeport, Boyd, Decatur, Keller and Trophy Club; First Financial Bank, N.A., Stephenville, Granbury, Glen Rose and Acton; First Financial Bank, N.A., Sweetwater, Roby, Trent and Merkel; and Weatherford National Bank, Weatherford, Willow Park, Aledo and Brock. 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)

	September 30,
	2008			2007
ASSETS:
Cash and due from banks	$	116,989		$	107,597
Fed funds sold		55,675			49,955
Investment securities		1,253,945			1,123,225
Loans		1,567,727			1,457,137
Allowance for loan losses		(20,048	)		(16,728	)
Net loans		1,547,679			1,440,409
Premises and equipment		65,531			61,431
Goodwill		62,113			62,113
Other intangible assets		2,177			3,455
Other assets		44,479			46,306
Total assets	$	3,148,588		$	2,894,491
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Noninterest-bearing deposits	$	769,115		$	657,861
Interest-bearing deposits		1,794,437			1,724,740
Total deposits		2,563,552			2,382,601
Short-term borrowings		196,839			168,676
Other liabilities		37,780			21,212
Shareholders’ equity		350,417			322,002
Total liabilities and shareholders’ equity	$	3,148,588		$	2,894,491

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2008			2007			2008			2007
INCOME STATEMENTS
Interest income	$	39,218		$	42,555		$	119,915		$	125,887
Interest expense		7,819			14,816			28,666			44,328
Net interest income		31,399			27,739			91,249			81,559
Provision for loan losses		1,765			475			4,274			955
Net interest income after provision for loan losses		29,634			27,264			86,975			80,604
Noninterest income		12,291			11,991			38,058			35,883
Noninterest expense		23,385			21,982			69,055			64,097
Net income before income taxes		18,540			17,273			55,978			52,390
Income tax expense		5,179			5,022			15,853			15,407
Net income	$	13,361		$	12,251		$	40,125		$	36,983
PER COMMON SHARE DATA
Net income — basic	$	0.64		$	0.59		$	1.93		$	1.78
Net income — diluted		0.64			0.59			1.93			1.77
Cash dividends		0.34			0.32			1.00			0.94
Book value								16.85			15.51
Market value								51.88			40.18
Shares outstanding — end of period		20,793,647			20,764,492			20,793,647			20,764,492
Average outstanding shares — basic		20,793,197			20,761,799			20,784,711			20,755,331
Average outstanding shares — diluted		20,853,539			20,891,357			20,831,128			20,879,709
PERFORMANCE RATIOS
Return on average assets		1.74	%		1.70	%		1.77	%		1.73	%
Return on average equity		15.31			15.61			15.42			16.10
Net interest margin (tax equivalent)		4.73			4.45			4.64			4.40
Efficiency ratio		51.42			53.53			51.41			52.85

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

	Quarter Ended
	2008									2007
	Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,
ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period	$	18,677		$	18,377		$	17,462		$	16,728		$	16,425
Loans charged off		(647	)		(1,374	)		(288	)		(803	)		(342	)
Loan recoveries		253			233			135			160			170
Net (charge-offs) recoveries		(394	)		(1,141	)		(153	)		(643	)		(172	)
Provision for loan losses		1,765			1,441			1,068			1,377			475
Balance at end of period	$	20,048		$	18,677		$	18,377		$	17,462		$	16,728
Allowance for loan losses / period-end loans		1.28	%		1.23	%		1.20	%		1.14	%		1.15	%
Allowance for loan losses / nonperforming loans		245.7			208.4			465.0			541.5			395.6
Net charge-offs (recoveries) / average loans (annualized)		0.10			0.30			0.04			0.17			0.05
NONPERFORMING ASSETS
Nonaccrual loans	$	7,947		$	8,963		$	3,933		$	3,189		$	4,023
Accruing loans 90 days past due		213			0			19			36			206
Total nonperforming loans		8,160			8,963			3,952			3,225			4,229
Foreclosed assets		2,613			1,792			1,908			1,506			2,594
Total nonperforming assets	$	10,773		$	10,755		$	5,860		$	4,731		$	6,823
As a % of loans and foreclosed assets		0.69	%		0.71	%		0.38	%		0.31	%		0.47	%
CAPITAL RATIOS
Tier 1 Risk-based		15.41	%		15.25	%		15.08	%		14.65	%		14.81	%
Total Risk-based		16.49			16.27			16.09			15.62			15.76
Tier 1 Leverage		9.63			9.55			9.34			9.23			9.31
Equity to assets		11.13			11.15			11.49			10.93			11.12

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2008		2007			2008		2007
NONINTEREST INCOME
Gain on sale of student loans, net	$	3	$	36		$	1,717	$	1,816
Gain on securities transactions, net		146		(5	)		705		80
Trust fees		2,501		2,158			7,230		6,530
Service charges on deposits		5,809		6,074			17,005		16,766
Real estate mortgage operations		649		1,022			2,018		2,624
Net gain on sale of foreclosed assets		27		13			116		48
ATM and credit card fees		2,327		1,938			6,623		5,516
Other noninterest income		829		755			2,644		2,503
Total Noninterest Income	$	12,291	$	11,991		$	38,058	$	35,883
NONINTEREST EXPENSE
Salaries and employee benefits	$	12,452	$	11,723		$	37,545	$	34,610
Net occupancy expense		1,826		1,504			5,069		4,358
Equipment expense		1,891		1,848			5,603		5,406
Printing, stationery and supplies		482		552			1,433		1,544
ATM and credit card expenses		1,155		990			3,271		2,881
Audit fees		288		252			884		756
Legal, tax and professional fees		734		689			2,209		1,992
Correspondent bank service charges		303		269			868		888
Advertising and public relations		638		638			1,935		1,801
Amortization of intangible assets		302		375			917		1,135
Other noninterest expense		3,314		3,142			9,321		8,726
Total Noninterest Expense	$	23,385	$	21,982		$	69,055	$	64,097
TAX EQUIVALENT YIELD ADJUSTMENT	$	1,786	$	1,336		$	5,028	$	3,847

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

	Three Months Ended
	September 30, 2008
	Average		Tax Equivalent		Yield /
	Balance		Interest		Rate
Interest earning assets:
Fed funds sold	$	65,457	$	301		1.83	%
Interest-bearing deposits in nonaffiliated banks		4,142		33		3.12	%
Taxable securities		862,778		9,622		4.46	%
Tax exempt securities		329,840		5,108		6.19	%
Loans		1,529,811		25,940		6.75	%
Total interest earning assets		2,792,028		41,004		5.84	%
Noninterest earning assets		263,143
Total assets	$	3,055,171
Interest-bearing liabilities:
Deposits	$	1,758,371	$	7,313		1.65	%
Fed funds purchased and other short term borrowings		177,278		506		1.14	%
Total interest-bearing liabilities		1,935,649		7,819		1.61	%
Noninterest-bearing liabilities		772,350
Shareholders’ equity		347,172
Total liabilities and shareholders’ equity	$	3,055,171
Net interest income and margin (tax equivalent)			$	33,185		4.73	%

	Nine Months Ended
	September 30, 2008
	Average		Tax Equivalent		Yield /
	Balance		Interest		Rate
Interest earning assets:
Fed funds sold	$	90,019	$	1,621		2.41	%
Interest-bearing deposits in nonaffiliated banks		3,563		89		3.33	%
Taxable securities		825,104		28,115		4.54	%
Tax exempt securities		324,976		14,880		6.11	%
Loans		1,528,338		80,238		7.01	%
Total interest earning assets		2,772,000		124,943		6.02	%
Noninterest earning assets		259,668
Total assets	$	3,031,668
Interest-bearing liabilities:
Deposits	$	1,770,394	$	26,891		2.03	%
Fed funds purchased and other short term borrowings		166,173		1,775		1.43	%
Total interest-bearing liabilities		1,936,567		28,666		1.98	%
Noninterest-bearing liabilities		747,620
Shareholders’ equity		347,481
Total liabilities and shareholders’ equity	$	3,031,668
Net interest income and margin (tax equivalent)			$	96,277		4.64	%