2013 ffin annual meeting presentation
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TRANSCRIPT
2013 Annual Shareholder Meeting
Years with Company Years in Industry
Scott Dueser Chairman of the Board, President & Chief Executive Officer
37 42
J. Bruce Hildebrand, CPA Executive Vice President Chief Financial Officer
10 34
Gary L. Webb Executive Vice President Operations
10 24
Gary S. Gragg Executive Vice President Credit Administration
22 34
Marna Yerigan Executive Vice President Credit Administration
2 29
Ron Butler Executive Vice President Chief Administrative Officer
19 31
Senior Management at First Financial
Years with Company Years in Industry
Michele Stevens Senior Vice President Advertising and Marketing
37 42
Courtney Jordan Senior Vice President Training
10 34
Bob Goodner Senior Vice President & Compliance Officer Compliance
12 35
Luke Longhofer Senior Vice President & Loan Review Officer Credit Administration
3 10
Brandon Harris Senior Vice President Appraisal Services
1 15
Kirk Thaxton, CTFA President, First Financial Trust & Asset Management
26 30
Senior Management at First Financial
Experienced Regional CEOs & Presidents
Years with Company Years in Industry
Marelyn Shedd, Abilene 22 30
Mike Mauldin, Hereford 10 35
Kirby Andrews, Sweetwater 22 25
Trent Swearengin, Eastland 13 15
Mike Boyd, San Angelo 37 41
Tom O’Neil, Cleburne 15 33
Matt Reynolds, Cleburne 8 31
Ron Mullins, Stephenville 7 35
Jay Gibbs, Weatherford 11 39
Mark Jones, Southlake 12 35
Ken Williamson, Mineral Wells 11 42
Robert Pate, Huntsville 16 32
Fred Wren, Huntsville 1 34
Gary Tucker, First Technology Services 22 38
Board of DirectorsYears as Board
MemberCommittee
Appointment
Steven L. Beal Director and Former President and COO of Concho Resources Inc.
3
Executive / Audit
Compensation
Nominating/Corporate Governance
Tucker S. Bridwell President, Mansefeldt Investment Corporation 6
Lead Director / Executive
Audit / Nominating/
Corporate Governance
Joseph E. Canon Executive Director, Dodge Jones Foundation 17
Compensation
Asset and Liability
David Copeland President, SIPCO, Inc. and Shelton Family Foundation
15Executive / Audit
Nominating/Corporate Governance
Asset and Liability
F. Scott Dueser Chairman of the Board, President and CEO 22 Executive
Murray Edwards Principal, The Edwards Group 7
Executive / Audit
Nominating /Corporate Governance
Board of Directors
Years as Board Member
Committee Appointment
Ron Giddiens G&G Investments
3Audit
Asset and Liability
Tim LancasterPresident & CEO Hedrick Health System - Proposed - Audit
Kade L. Matthews Ranching and Investments 14 Compensation
Johnny E. Trotter President and CEO Livestock Investors, Ltd. 9
Executive
Compensation
Nominating/Corporate Governance
Independent Public Auditors
Forward Looking Statement
The numbers, as of and for the three months ended March 31, 2013, contained within this presentation
are unaudited. 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. The Company does not undertake any obligation to update publicly or revise any
forward-looking statements herein because of new information, future events or otherwise.
2012 Financial Review
Earnings
2007 2008 2009 2010 2011 2012
$49.5$53.1 $53.8
$59.7
$68.4
$74.2Chart Title
26th Consecutive Year of Increased Earnings
FFIN Earnings (in millions)
2007 2008 2009 2010 2011 2012
$1.59$1.71 $1.72
$1.91
$2.17
$2.36Chart Title
Strong Shareholder Earnings
Basic Earnings Per Share
2006 2007 2008 2009 2010 2011 2012
FirstFinancial 53.57% 52.83% 50.76% 50.11% 49.49% 48.37% 48.14%
Peer Group 61.29% 63.12% 68.12% 69.53% 67.33% 65.57% 65.75%
Working Harder and Smarter
Efficiency Ratio (FFIN vs. Peers)
3rd Qtr. '09
4th Qtr. '09
1st Qtr. '10
2nd Qtr. '10
3rd Qtr. '10
4th Qtr. '10
1st Qtr. '11
2nd Qtr. '11
3rd Qtr. '11
4th Qtr. '11
1st Qtr. '12
2nd Qtr. '12
3rd Qtr. '12
4th Qtr. '12
3.00%
3.25%
3.50%
3.75%
4.00%
4.25%
4.50%
4.75%
5.00%
First Financial Peer Group
Net Interest Margin
Quarterly Interest Margin
2006 2007 2008 2009 2010 2011 2012
1.68% 1.72% 1.74% 1.72% 1.75% 1.78% 1.75%
1.10%
0.87%
-0.03%
-0.18%
0.24%
0.79%
0.98%
FFIN Outperforms Peers
Percentage Return on Average Assets
Pe
er
Gro
up
Fir
st
Fin
an
cia
l
2006 2007 2008 2009 2010 2011 2012
16.20%15.87%
15.27%
13.63% 13.74% 14.44% 13.85%12.61%
9.45%
-1.83%-2.57%
0.88%
7.27%8.72%
Strong Return on Capital
Percentage Return on Average EquityP
ee
r G
rou
p
Fir
st
Fin
an
cia
l
12-31-12 03-31-13To be considered
well Capitalized
Tier 1
Leverage Ratio10.60 10.69 > 5.00
Tier 1 Risk
Based Capital Ratio17.43 17.54 > 6.00
Risk Based
Capital Ratio18.68 18.80 > 10.00
Capital Ratios
2007 2008 2009 2010 2011 2012
$3,070$3,212 $3,279
$3,776
$4,121
$4,500Chart Title
Growth in Total Assets
Asset Performance
(in millions)
2006 2007 2008 2009 2010 2011 2012$73 $84 $77 $73 $81 $66 $68
$165 $182 $191 $175 $191 $218 $273 $31 $32 $52
$344 $394 $391 $406 $429 $427
$510
$760 $836 $855 $860
$990 $1,076
$1,238
Real Estate
Commercial
Student
Consumer
Agricultural
Loan Performance
Growth in FFIN Total Loans (in millions)
$1,373
$1,566 $1,514
$1,690$1,787
$1,528
$2,089
2007 2008 2009 2010 2011 2012
FirstFinancial 0.31% 0.80% 1.46% 1.53% 1.64% 1.22%
Peer Group 0.98% 2.63% 5.41% 5.37% 4.64% 3.70%
Sound Lending Practices
Nonperforming assets as a percentage of loans + foreclosed assets (FFIN vs. Peers)
2007 2008 2009 2010 2011 2012
$739 $797 $836 $959 $1,102$1,312
$1,807 $1,786 $1,849$2,154
$2,233$2,321
Non Interest Bearing Interest Bearing
Deposit Growth
Growth in FFIN Total Deposits (in millions)
$3,633
$2,546 $2,583 $2,685
$3,113$3,335
1st Quarter 2013 Summary
2008 2009 2010 2011 2012 2013
$13.2 $13.7 $13.7
$16.3$17.8 $18.6
1st Quarter Earnings
(in millions)FFIN Earnings
Account Growth
Net Growth in 2011 – 4,036 Accounts
Net Growth in 2012 – 1,219 Accounts
New Growth in 2013 – 1,139 Accounts
December 31, 2010
December 31, 2011
December 31, 2012
March 31, 2013
Total Number of Accounts
200,027 204,063 205,282 206,421
2008 2009 2010 2011 2012 2013
$0.42 $0.44 $0.44
$0.52$0.56
$0.59
Shareholder Earnings – 1st Quarter
Basic Earnings Per Share
2007 2008 2009 2010 2011 2012
$1,428
$1,631 $1,664$1,783
$1,912
$2,233Chart Title
Growth in Trust Assets
Total Trust Assets – Book Value (in millions)
2007 2008 2009 2010 2011 2011
$8,746$9,441 $9,083
$10,809
$12,671
$14,464Chart Title
Total Trust Fees
Growth in FFTAM Fees (in thousands)
2009 2010 2011 2012
$745
$1,159
$1,835
$2,167
Chart Title
Growth in Mineral Management
Revenue from Mineral Management
(in thousands)
2007 2008 2009 2010 2011 2012
$2,549$2,810 $2,631
$3,254
$4,176
$5,183Chart Title
Growth in FFTAM Income
Net Trust Income
(in thousands)
Managed Equity Styles
Equity Income
Core Domestic
Core Diversified
Core World
Strategic Growth
36
2008 2009 2010 2011 2012 2013
$737
$606
$739
$1,015
$1,225
$1,422Chart Title
Growth in FFTAM Income
Net Trust Income – 1st Quarter
(in thousands)
Joe E. Canon, J.D. Executive Director, Dodge Jones Foundation
David Copeland President, Shelton Family Foundation
John L. BeckhamBeckham Rector & Eargle, LLP
F. Scott Dueser President, First Financial Bankshares, Inc.
David F. Lupton President, Angelo Glass & Mirror Company, Inc.
Bill Parham Boucher Morgan & Young CPAs
Ronnie CoxInvestments
Sarah CampbellPortfolio Manager
Kirk W. Thaxton Chairman of the Board, President & CEO, First Financial Trust & Asset Management
Board of Directors – First Financial Trust & Asset Management
The More Things Change,
The More We Stay The Same
Customer Service First
Mobile Banking
43
Challenges
Overwhelming number of unreasonable regulations
from Washington
Stagnant national economy
Inept federal government
Low interest rate environment
Maintaining net interest margin
Keep nonperforming assets to a minimum
Consolidation of Charters
Regulatory compliance
Technology complexities
Cost Savings
Opportunities
Loan Growth
Mortgage Lending
Trust Services
Treasury Management
Mobile Banking / Picture Pay
Lower Efficiency Ratio
Potential Acquisitions
Recent De Novo Growth Weatherford – I-20 Branch – Expected to Open 2nd Qtr. 2013
San Angelo: HEB Branch – March 2013
Waxahachie: Branch of Cleburne – December 2012
Abilene: Antilley Road Branch – September 2012
Grapevine: Branch of Southlake – March 2012
Cisco: Branch of Eastland – September 2011
Lamesa: Office of Trust Company – April 2011
Odessa: Branch of Abilene – February 2010
Fort Worth: Branch of Weatherford – February 2010
Odessa: Office of Trust Company – April 2009
Merkel: Branch of Sweetwater – July 2008
Brock: Branch of Weatherford – March 2008
Acton: Branch of Stephenville – March 2008
Albany: Branch of Abilene – May 2007
Fort Worth: Office of Trust Company – April 2007
Grapevine
48
Antilley Road - Abilene
49
Waxahachie
50
HEB – San Angelo
I-20 - Weatherford
52
Core Markets: West Central Texas
Markets served benefiting from well-established, long- time customers
REGIONASSET
SIZE*LOCATIONS
DEPOSIT
MARKET SHARE**
MARKET
SHARE RANK**
First Financial Bank(Abilene, Clyde, Moran, Albany, Odessa)
$1,531 M 15 43% 1
First Financial Bank(Hereford)
$166 M 1 43% 1
First Financial Bank(Eastland, Ranger, Rising Star, Cisco)
$228M 4 58% 1
First Financial Bank(Sweetwater, Roby, Trent, Merkel)
$188 M 4 34% 1
First Financial Bank(San Angelo)
$462M 3 19% 2
TOTALS $2,575M 27* Data as of 03-31-13** Data as of 06-30-12
Expansion Markets REGION ASSET SIZE* LOCATIONS
DEPOSIT MARKET
SHARE**
MARKET SHARE
RANK**
First Financial Bank
(Cleburne, Burleson, Alvarado, Midlothian,
Waxahachie)
$344 M 6 22% 1
First Financial Bank
(Southlake, Trophy Club, Keller, Grapevine
Bridgeport, Decatur, Boyd)
$355 M 4
3
7%
16%
5
3
First Financial Bank
(Stephenville, Granbury, Glen Rose, Acton)
$392 M 6 22% 2
First Financial Bank
(Weatherford, Aledo, Willow Park, Brock, Ft. Worth)
$424 M 7 24% 1
First Financial Bank
(Mineral Wells)
$215 M 1 34% 1
First Financial Bank
(Huntsville)
$177 M 1 20% 2
TOTALS $1,907 28 * Data as of 03-31-13** Data as of 06-30-12
55
Orange Acquisition
Definitive Agreement Signed - February 2013
Orange, Jefferson and Newton Counties Approximately 350,000 Residents Strategically located on Interstate 10 – 100 miles east of Houston Three Major Shipping Ports for Energy and Petrochemical industries Large refineries, natural gas terminals and recent investment from large
Fortune 500 Companies, such as Exxon Mobil, DuPont and Goodyear
$443.8 million in Assets* $381.1 million in deposits $295.9 million in loans
Approximately 1.3x book; 13x last twelve months earnings (tax effected) Orange acquisition is consistent with our acquisition model of high growth areas
and along the Interstates Provides Diversification #1 Market Share in Orange County – 40%, more than twice the nearest competitor
*As of Dec. 31, 2012
Stephen Lee – President Orange Savings Bank
57
Tommy GunnCity Attorney
Paul PevetoCFO, Cloeren, Inc.
Walter Riedel Executive Director, H.J. Lutcher Stark Foundation
Ross Smith President & CEO, Akrotex
Board of Directors – Orange Savings Bank
Orange
59
Mauriceville
60
Newton
61
Vidor
62
Port Arthur
63
2007 2008 2009 2010 2011 2012
$49.5$53.1 $53.8
$59.7
$68.4
$74.2Chart Title
26th Consecutive Year of Increased Earnings
FFIN Earnings (in millions)
Recognitions
KBW Honor Roll – One of Forty-seven banks named – April 2013
SNL Financial #11 Best Performing Community Bank ($500M - $5B) – March 2013
Nifty 50: Bank Director Magazine - #5 – Based on Return on Equity / Average Tangible Equity – January 2013
American Banker - #19 – Based on three year average Return on Equity – August 2012
ABA Banking Journal - #13 – Top Performing mid-sized banks ($1B - $10B) – May 2012
Stock cost in January 2012 $33,430
Dividend declared ($0.99 x 1,000 shares) $ 990
Increase in stock price during 2012($39.01 from $33.43 X 1,000 shares) $2210,720
2012 return on investment 19.65%
2011 return on investment 0.61%
2010 return on investment -2.99%
2009 return on investment 0.69%
2008 return on investment 50.20%
5 year compound average return 9.55%
Total Return on Investment
$5,580
Assume you owned 1,000 shares of FFIN stock on January 1, 2012…
Strong Stock Performance
-60.00%
-40.00%
-20.00%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
FFIN S&P 500 NASDAQ Dow JonesJan . ‘07 Mar. ’13Dec . ‘09Dec ‘07 Dec ‘08 Dec. ‘10 Dec. ’11 Dec. ’12
Dividends Per Share
2006 2007 2008 2009 2010 2011 2012
$0.79$0.84
$0.89 $0.91 $0.91$0.95
$0.99Chart Title
Annual Dividends Declared Per Share
Increase Cash Dividend
Today $0.25 per share quarterly
Increase cash divided to $0.26 per quarter – 4.0% increase
Shareholders of record as of June 14, 2013
Dividend payable July 1, 2013
www.ffin.com