First Financial Bankshares Inc.
) second-quarter 2013 earnings of 61 cents per share were in line
with the Zacks Consensus Estimate. Moreover, results compared
favorably with 58 cents earned in the year-ago quarter.
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First Financial's performance came on the back of higher
revenues, aided by an increase in net interest and non-interest
income. This was partly offset by a rise in expenses and higher
provision for credit losses.
Net income in the quarter came in at $19.5 million, up 6% year
Performance in Detail
First Financial's total revenue in the reported quarter came in
at $57.6 million, up 8% from $53.4 million in the prior-year
quarter. However, revenues marginally missed the Zacks Consensus
Estimate of $58.0 million.
Net interest income surged 8% year over year to $41.5 million.
However, on a taxable equivalent basis, net interest margin
dipped 15 basis points (bps) from the prior-year quarter to
Non-interest income augmented 13% year over year to $15.2
million. The increase was primarily due to a rise in trust fees,
ATM, interchange and credit card fees as well as real estate
Non-interest expense came in at $29.9 million, up 12% from the
prior-year quarter. The amount included $0.23 million related to
the acquisition of Orange Savings Bank and $0.22 million
associated with database consolidation technology costs.
The efficiency ratio increased to 49.25% from 48.02% in the
prior-year quarter. A rise in efficiency ratio indicates
deterioration in profitability.
As of Jun 30, 2013, total loans were $2.6 billion, rising 34%
from $1.9 billion as of Jun 30, 2012. Total deposits increased
15% year over year to $3.9 billion.
Asset quality was mixed in the quarter. The allowance for loan
losses was $34.1 million, down 2% year over year. The ratio of
allowance for loan losses to total loans dipped to 1.32% from
1.62% in the prior quarter and 1.81% in the prior-year quarter.
Net charge-offs were 0.24% of average loans on an annualized
basis, up from 0.11% in the prior quarter and 0.12% in the
prior-year quarter. Moreover, total nonperforming assets were
$31.1 million, up 21% from the prior quarter but down 8% from the
year-ago period. Nonperforming assets were 0.62% of total assets,
up from 0.58% in the prior quarter but down from 0.79% in the
Likewise, provision for credit losses increased to $0.83 million
from $0.40 million in the prior quarter and $0.75 million in the
Profitability and Capital Ratios
First Financial's capital and profitability ratios depicted the
company's cautious approach in 2013. As of Jun 30, 2013, Tier-1
risk-based capital ratio was 15.20%, compared with 17.54% as of
Mar 31, 2013 and 17.23% as of Jun 30, 2012. Moreover, total
risk-based capital ratio came in at 16.31% against 18.80% in the
prior quarter-end and 18.48% at the year-ago quarter-end.
Tier 1 leverage ratio was 10.32% in the quarter, compared with
10.69% in the prior quarter and 10.36 in the year-ago quarter.
On May 31, 2013, First Financial completed the acquisition of
Orange Savings Bank, SSB in Orange, Texas, thereby expanding its
footprint in the state. The cash and stock deal was worth $39.2
million and 420,000 shares of First Financial common shares.
First Financial's strategic acquisitions and organic growth is
quite impressive. Moreover, the company's strong balance sheet is
expected to bode well for its overall expansion going forward.
However, the prevailing low interest-rate environment, sluggish
economic growth, non-diverse footprint and a stringent regulatory
landscape are expected to adversely affect the company's
financials in the subsequent quarters.
First Financial carries a Zacks Rank #3 (Hold). Among other
Prosperity Bancshares Inc.
) is scheduled to announce earnings on Jul 24,
Texas Capital BancShares Inc.
) on Jul 25 and
BOK Financial Corporation
) on Jul 31.