First Financial Bankshares Inc.
) declined marginally after it reported fourth-quarter 2013
earnings per share of 66 cents, missing the Zacks Consensus
Estimate by 4 cents. However, it compared favorably with the
year-ago earnings of 58 cents.
FIRST FIN BK-TX (FFIN): Free Stock Analysis
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PROSPERITY BCSH (PB): Free Stock Analysis
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For full-year 2013, First Financial's earnings per share of $2.47
missed the Zacks Consensus Estimate by 2.5% while it surpassed
the prior-year figure by 4.7%.
Results were adversely affected by an increase in operating
expenses and higher provision for credit losses. However,
increase in net interest and non-interest income, along with rise
in loans and deposits were the positives for the quarter.
The company's net income of $21.2 million in the reported quarter
reflects an increase of 16.0% from the year-ago quarter. Also,
for 2013, it climbed 6.3% year over year to $78.9 million.
Performance in Detail
The company's total revenue came in at $63.5 million, up 16.1%
from the prior-year quarter figure. However, revenues lagged the
Zacks Consensus Estimate of $66.0 million.
For 2013, total revenue stood at $238.4 million, up 9.9% year
over year, while it missed the Zacks Consensus Estimate by 1.5%.
Net interest income rose 20.5% year over year to $46.7 million.
Further, on a taxable equivalent basis, net interest margin rose
10 basis points (bps) year over year to 4.27%.
Non-interest income came in at $15.8 million, up 5.7% year over
year. The increase was primarily attributable to a rise in trust
fees and ATM, interchange and credit card fees.
Non-interest expense increased 15.6% from the prior-year quarter
to $33.1 million. The rise was primarily driven by higher
personnel expenses, profit sharing expenses and costs related to
advertising and public relations.
The efficiency ratio declined to 49.42% from 49.86% in the
prior-year quarter. A fall in efficiency ratio indicates improved
As of Dec 31, 2013, total loans were $2.7 billion, up 29.3% year
over year, while total deposits increased 13.8% to $5.2 billion.
Asset quality was a mixed bag in the quarter. The allowance for
loan losses declined 2.7% year over year to $33.9 million. The
ratio of allowance for loan losses to period end loans dipped 41
bps to 1.26%.
Net charge-offs were 0.15% of average loans on an annualized
basis, up 1 bps from the prior-year quarter. Total nonperforming
assets increased 22.3% to $31.1 million. Further, provision for
credit losses surged 82.4% year over year to $1.2 million.
Profitability and Capital Ratios
First Financial's capital ratios remained strong while
profitability ratios improved partially in the quarter. As of Dec
31, 2013, Tier-1 risk-based capital ratio was 15.82%, compared
with 17.43% as of Dec 31, 2012. Moreover, total risk-based
capital ratio came in at 16.92% against 18.68% at the end of the
Return on average assets declined 3 bps year over year to 1.65%,
while return on average equity increased 138 bps to 14.47%.
Though First Financial's results do not reflect an impressive
year, we remain optimistic on the company's performance going
forward owing to its strategic acquisitions, organic growth and a
strong balance sheet.
However, the prevailing low interest-rate environment, sluggish
economic growth, non-diverse footprint and a stringent regulatory
landscape may continue to pressurize the company's financials in
the near term.
First Financial carries a Zacks Rank #3 (Hold).
Performance of Other Regional Banks
Prosperity Bancshares Inc.
) beat the Zacks Consensus Estimate in its latest release. While
) surpassed the Zacks Consensus Estimate driven by growth in top
line and lower provision,
) outpaced the Zacks Consensus Estimate due to prudent expense