FIRST FINANCIAL BANKSHARES ANNOUNCES THIRD QUARTER 2023 EARNINGS

ABILENE, Texas, Oct. 19, 2023 /PRNewswire/ -- First Financial Bankshares, Inc. (the "Company," "we," "us" or "our") (NASDAQ: FFIN) today reported earnings of $49.56 million for the third quarter of 2023 compared to earnings of $50.87 million for the second quarter of 2023 and $59.34 million for the same quarter a year ago. Diluted earnings per share were $0.35 for the third quarter of 2023 compared with $0.36 for the second quarter of 2023 and $0.41 for the third quarter of 2022. During the third quarter of 2023, the Company repurchased 101,337 shares of its common stock at an average price of $26.99. Currently, the Company has 4.90 million shares remaining under the share repurchase authorization through July 31, 2024.

"Due to our strong liquidity, capital levels and some banks who don't have the liquidity to serve their loan customers, we have had the ability to add good loan and deposit customers at favorable terms in the current environment," said F. Scott Dueser, Chairman, CEO and President of First Financial Bankshares, Inc. "We are encouraged that deposit balances have remained fairly stable this year and we continue to have significant net new account growth. Moving forward, we will continue our disciplined approach of managing our balance sheet, reducing expenses and maximizing efficiencies. The monthly maturities off our bond and loan portfolios are providing us with the needed liquidity to grow loans which will improve our interest income as we go forward. As always, we appreciate the continued support of our customers, shareholders, and associates," Dueser added.

Net interest income for the third quarter of 2023 was $94.15 million compared to $95.87 million in the second quarter of 2023 and $103.16 million for the third quarter of 2022. The net interest margin, on a taxable equivalent basis, was 3.22 percent for the third quarter of 2023 compared to 3.29 percent for the second quarter of 2023 and 3.38 percent in the third quarter of 2022. Average interest-earning assets were $11.96 billion for the third quarter of 2023 compared to $12.54 billion for the same quarter a year ago.

The Company recorded a provision for credit losses of $2.28 million for the third quarter of 2023 compared to a provision for credit losses of $3.22 million for the third quarter of 2022. At September 30, 2023, the allowance for credit losses totaled $89.71 million, or 1.28 percent of loans held-for-investment ("loans" hereafter), compared to $74.11 million at September 30, 2022, or 1.18 percent of loans. Additionally, the reserve for unfunded commitments totaled $7.90 million at September 30, 2023 compared to $10.88 million at September 30, 2022.

For the third quarter of 2023, net charge-offs totaled $648 thousand compared to net recoveries of $1.12 million for the third quarter of 2022. Nonperforming assets as a percentage of loans and foreclosed assets totaled 0.57 percent at September 30, 2023, compared to 0.39 percent at September 30, 2022. Classified loans totaled $179.11 million at September 30, 2023, compared to $143.72 million at September 30, 2022.

Noninterest income for the third quarter of 2023 was $28.07 million compared to $30.94 million for the third quarter of 2022, largely due to the following:

• Debit card fees decreased by $546 thousand for the third quarter of 2023 compared to the same quarter a year ago. The decrease was due to the recognition of $988 thousand of volume incentive income in the third quarter of 2022 compared to $375 thousand in the third quarter of 2023.
• Mortgage income declined to $3.44 million for the third quarter of 2023 compared to $4.07 million for the third quarter of 2022 due to lower overall origination volume and margins primarily because of the continued increase in mortgage interest rates.
• Available-for-sale securities totaling $113.13 million with an average book yield of 3.53 percent were sold in the third quarter of 2023 resulting in a loss on sales of securities of $972 thousand compared to a gain on sales of securities of $334 thousand in the third quarter of 2022. The proceeds from the sales of these securities are being used to fund organic loan growth that is yielding around 8 percent, resulting in an anticipated earn back period of less than 6 months.
• Recoveries of interest on previously charged-off or nonaccrual loans totaled $698 thousand for the third quarter of 2023 compared to $664 thousand for the third quarter of 2022.
• Service charges on deposits increased to $6.51 million for the third quarter of 2023 compared with $6.40 million for the third quarter of 2022, driven by the growth in net new accounts.

Noninterest expense for the third quarter of 2023 totaled $59.54 million compared to $59.44 million for the third quarter of 2022, with the following variances:

• Salary, commissions, and employee benefit costs decreased to $32.94 million for the third quarter of 2023, compared to $33.89 million in the third quarter of 2022 primarily resulting from a decrease of $583 thousand in profit sharing expense and $121 thousand in mortgage incentives.
• Noninterest expenses, excluding salary related costs, increased $1.05 million for the third quarter of 2023 compared to the same period in 2022 largely due to an increase of $656 thousand in FDIC insurance fees and an increase of $403 thousand in legal and professional fees.

The Company's efficiency ratio was 47.62 percent for the third quarter of 2023 compared to 43.10 percent for the third quarter of 2022. The increase was driven by the decrease in net interest income from the prior year.

As of September 30, 2023, consolidated total assets were $12.78 billion compared to $13.11 billion at September 30, 2022. Loans totaled $6.99 billion at September 30, 2023, compared with loans of $6.26 billion at September 30, 2022. During the third quarter of 2023, loans grew $217.14 million, or 12.71 percent annualized, when compared to June 30, 2023 balances. Deposits totaled $10.72 billion at September 30, 2023, compared to $11.14 billion at September 30, 2022.

Shareholders' equity was $1.24 billion as of September 30, 2023, compared to $1.37 billion and $1.13 billion at June 30, 2023, and September 30, 2022, respectively, primarily as a result of changes in Other Comprehensive Income ("OCI") due to interest rate changes over the past year. The unrealized loss on the securities portfolio, net of applicable tax, totaled $639.93 million at September 30, 2023, compared to an unrealized loss of $490.28 million at June 30, 2023 and $632.42 million at September 30, 2022.

About First Financial Bankshares, Inc.

Headquartered in Abilene, Texas, First Financial Bankshares is a financial holding company that through its wholly-owned subsidiary, First Financial Bank, N.A., operates multiple banking regions with 80 locations in Texas, including Abilene, Acton, Albany, Aledo, Alvarado, Beaumont, Boyd, Bridgeport, Brock, Bryan, Burleson, College Station, Cisco, Cleburne, Clyde, Conroe, Cut and Shoot, Decatur, Eastland, El Campo, Fort Worth, Franklin, Fulshear, Glen Rose, Granbury, Grapevine, Hereford, Huntsville, Lumberton, Keller, Kingwood, Magnolia, Mauriceville, Merkel, Midlothian, Mineral Wells, Montgomery, Moran, New Waverly, Newton, Odessa, Orange, Palacios, Port Arthur, Ranger, Rising Star, Roby, San Angelo, Southlake, Spring, Stephenville, Sweetwater, Tomball, Trent, Trophy Club, Vidor, Waxahachie, Weatherford, Willis, and Willow Park. The Company also operates First Financial Trust and Asset Management Company, N.A., with nine 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, please visit our website at https://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," "project," 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; economic impact of oil and gas prices and the pandemic, 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 and Filings" on the Company's Website 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.