First Financial Bankshares
Annual Report 2005

Plain-text annual report

0546_Witherspoon_PDF 3/22/06 3:50 PM Page 1 TM A family of community banks SM Annual Report 2005 0546_Witherspoon_PDF 3/22/06 3:50 PM Page 3 “This year’s annual report focuses on the people of First Financial Bankshares. We recognize it is our outstanding people – our directors, officers and employees – who make our company successful. I am honored to work with such a dedicated and experienced team of professionals.” Dear Fellow Shareholders, Last year was First Financial Bankshares’ 19th consecutive year of earnings growth. Assets and deposits also reached new highs, as did the number of our locations. We attained these milestones through acquisitions, the opening of de novo branches and organic (internally generated) growth. Net income advanced 12.4% to $44.0 million from $39.2 million in 2004. Excluding the $3.9 million of pre-tax proceeds we received from the sale of ownership rights in PULSE EFT (a nationwide ATM/debit card network), net income grew 5.9%, to $41.5 million. Basic earnings per share rose 12.1% to $2.13 from $1.90 in 2004. Excluding the PULSE gain, basic earnings per share for 2005 were $2.00, an increase of 5.3%. Contributing to the earnings gain was a 13.5% increase in net interest income, which grew to $95.2 million from $83.9 million. The significant growth in net interest income was primarily fueled by acquisitions. We were especially pleased with our ability to maintain our net interest margin at the same rate as in 2004 – 4.49% – given the interest rate environment in 2005 was marked by a flattening yield curve. Noninterest income grew by 13.8%, to $44.2 million from $38.8 million, primarily because of the PULSE proceeds and an increase in trust, ATM and service charge fees. Noninterest expense rose 14.4%, to $75.6 million from $66.1 million; the increase was due primarily to additional salary and employee benefits, facility expenses and conversion costs resulting from our acquisitions, and the opening of five de novo bank branches. The acquisitions and de novo branches also affected key performance ratios. Return on average assets decreased to 1.80% from 1.82%; however, our ROA continued to compare very favorably with our peer group average of 1.16%. Return on average equity increased to 16.17% from 15.09% as we better utilized our capital by acquiring additional banks. The efficiency ratio (the share of revenues consumed by operating expenses) increased to 52.48% from 51.78% but continued to be much better than our peer group average of 60.19%. We expect to lower our efficiency ratio as we bring our newly acquired banks into the Company template and as newly opened branches become profitable. At year-end, our consolidated assets totaled $2.7 billion, an increase of 18.1% from $2.3 billion at the close of 2004. Loans were up 10.7%, to $1.3 billion from $1.2 billion. Total deposits rose 18.7%, to $2.4 billion from $2.0 billion. The two banks we acquired during 2005 accounted for $122.9 million of the $124.4 million in loan growth and for $245.9 million of the $372.0 million in deposit growth. We did not experience the organic loan growth we had expected and have increased our marketing and calling efforts in that area. Our asset quality and shareholders’ equity remained strong during 2005. Classified loans (those at some degree of risk) increased to 3.83% of total loans from 3.51% a year earlier. However, total nonperforming assets decreased to 0.33% of total loans and foreclosed assets from 0.43% at the end of 2004. The 2005 percentage compares very favorably with our peer group average of 0.58%. At December 31, 2005, the allowance for loan losses amounted to 1.14% of total loans compared to 1.19% at the end of 2004. The 2005 percentage would have been similar to 2004’s if not for the new accounting rules on problem loans acquired in acquisitions. Shareholders’ equity at year-end was $276.3 million in 2005 compared to $265.5 million in 2004. Based upon our earnings performance and strong capital position, the Board of Directors in April 2005 increased cash dividends by 9.8% in the second quarter. The increase was accomplished through a 33% stock dividend and a change in the quarterly cash dividend to $0.28 per share. The market share price of our common stock at year-end was $35.06, up 4.3% from $33.61 at the end of 2004. The combination of share price appreciation and dividends paid produced a total return to shareholders of 7.6% for 2005. ACQUISITIONS, BRANCH EXPANSIONS AND OTHER INITIATIVES On February 1, 2005, First Financial Bankshares purchased The Peoples State Bank in Clyde for $25.4 million. Peoples, with assets of $126.7 million, provided locations in Moran, Ranger and Rising Star as well as in Clyde. The Clyde and Moran locations were merged with our Abilene bank, creating First Financial Bank, Abilene, Clyde, Moran. The Ranger and Rising Star locations were merged with our Eastland bank, creating First Financial Bank, Eastland, Ranger, Rising Star. As you can see from the illustration of our footprint on the inside cover, these locations were good additions to our Abilene and Eastland markets. On December 1, 2005, we also acquired The First National Bank of Bridgeport, with assets of $146.4 million and banking offices in Bridgeport, Boyd and Decatur. The transaction involved a cash purchase price of $20.1 million, plus the assumption of $5.5 million in debt and trust preferred securities. First Financial Bank, Southlake was combined with First National Bank of Bridgeport to form a $251.4 million bank serving Wise County and northern Tarrant County. The new locations, in attractive, rapidly growing markets, fit our acquisition profile and add to our growing footprint of community banks within a 50-mile radius of the Dallas-Fort Worth Metroplex. We are very pleased with the results we have already realized from this merger and look forward to achieving additional synergies in the near future. We also expanded our footprint through de novo branch openings. In this regard, 2005 was a banner year, with five new locations added to our network. Weatherford National Bank held the grand opening of the Willow Park location in January. Strategically placed between Fort Worth and Weatherford on I-20, this new location serves an excellent high-net-worth, high-income market. In Abilene, First Financial Bank opened a nontraditional location in the lobby of the Wesley Court Methodist Retirement Community in March, and in August it opened a fourth grocery store branch in Abilene’s newest Wal-Mart Supercenter. First Financial Bank, Cleburne moved into the Midlothian market in September with the grand opening of that location. Midlothian, a community of 7,500 people located 20 miles south of Dallas-Fort Worth, is expected to double in population in the next decade. In November, First Financial Bank, Stephenville opened its second location in Granbury to better serve the needs of the growing Granbury community and to position the bank to obtain additional market share. We are very pleased with the initial growth of each of these locations and anticipate they will continue to meet or exceed our expectations. With the branches added in 2005, we now have a total of 44 locations. In the spring of 2005, we launched “Customer Service First,” our companywide customer service improvement initiative. While we believe we have provided good service to our customers in the past, this new initiative will take us to the next level of excellent customer service. The initiative is built around the realization that “everything speaks” and that we need to examine what we do through the “lens of the customer.” The program and its customer service standards are being embraced at every level of our organization, and it is amazing to see how our people are making renewed efforts to provide excellent service to our customers. The program encourages and guides our associates to create WOWs for our customers. A WOW occurs when we go beyond the call of duty for a customer so that the customer thinks, “Wow, what great service.” Since the initiation of this program, we have produced hundreds of WOWs, and we have selected a few to highlight in this annual report so that you can see what a great job our people are doing. In October of 2005, the Company elected Daniel A. Ortiz to the newly created position of Vice President of Multicultural Development. We want to be the bank for all neighborhoods, and Daniel is responsible for developing additional financial products and services, which will meet the specific banking needs of the multicultural community. We are very pleased with the progress Daniel and our Multicultural Committee (individuals from each of our banks) have made and the goals they have established to help us grow our market share in this area. ON THE AGENDA We will be focusing on a number of areas as part of our strategic agenda for 2006. We will continue to integrate our new acquisitions into our corporate template and strive to make our new branch expansions profitable, which should lower our efficiency ratio and increase our earnings. We also will leverage our strengths in the areas of student loans, mortgage lending, treasury management and trust services. These are areas in which we possess considerable experience and have been successful, yet we believe great opportunities exist to capture additional market share. Through our marketing and calling efforts, we believe we can grow these areas along with loans and increase our loan-to-deposit ratio. As in the past, we will continue to look for additional acquisition and expansion opportunities in high-growth areas, in keeping with our Company’s strategic plan. James Parker, Raymond McDaniel, Jr. and Dr. Jack Ramsey will retire from the First Financial Bankshares Board in conjunction with our Annual Shareholders Meeting in April 2006. Each of these gentlemen has served our company with distinction in a number of capacities for many years. We thank them for their fine service. We have benefited greatly from their counsel and direction. We are honored that Murray Edwards, principal of the Edwards Group, has accepted nomination for election as a director of the Company at our Annual Shareholders Meeting in April. He is presently a director of First Financial Bank, Abilene. Murray holds a bachelor of science degree in agricultural economics from Texas A&M University, and a master’s degree in business administration from Harvard Business School. A prominent entrepreneur and agribusiness leader, Murray is presently involved in the livestock and pet food manufacturing industry, cotton seed and commodity trading, and special events management. This year’s annual report focuses on the people of First Financial Bankshares. We recognize it is our outstanding people — our directors, officers and employees — who make our company successful. I am honored to work with such a dedicated and experienced team of professionals. We value the continued interest that our shareholders have shown in First Financial Bankshares. Many of you have owned our stock in your families for several generations, while some of you we welcome as new investors. No matter which, we are committed to enhancing the value of your investment through consistent growth in earnings, financial strength and excellent customer service. Thank you for your investment in and support of First Financial Bankshares. F. Scott Dueser President and Chief Executive Officer, First Financial Bankshares, Inc. Source of peer group information is FFIEC Bank Holding Company Performance Report 1 0546_Witherspoon_PDF 3/22/06 3:51 PM Page 5 Hereford (1) 212 E. Third Bank Names and Location Markers First Financial Bank Abilene, Clyde, Moran First Financial Bank Eastland, Ranger, Rising Star First Financial Bank Stephenville, Glen Rose, Granbury First Financial Bank Cleburne, Burleson, Alvarado, Midlothian First Financial Bank Southlake, Trophy Club, Keller, Bridgeport, Boyd, Decatur First National Bank Sweetwater, Roby, Trent Hereford State Bank Hereford Weatherford National Bank Weatherford, Aledo, Willow Park City National Bank Mineral Wells San Angelo National Bank San Angelo I-20 Abilene (10) 400 Pine 701 Pine (Motorbank) 4400 Buffalo Gap Rd. 1010 N. Judge Ely Blvd. 2617 Antilley Rd. (Wesley Court) S. 14th & Barrow (HEB Grocery) S. 14th & Willis (River Oaks) I-20 at Hwy 351 (Wal-Mart) 4350 Southwest Dr. (Wal-Mart) N. 10th & Willis (United Grocery) Roby (1) 123 N. Concho Sweetwater (1) 201 Elm Profile First Financial Bankshares, Inc. is a financial holding company headquartered in Abilene, Texas, with consolidated assets of $2.7 billion as of December 31, 2005. The corporation has ten separately chartered affiliate banks, which provide services from 44 locations in the Central, West and High Plains regions of Texas. The Company also operates a trust and asset management company, and a technology services company. The common stock of First Financial Bankshares is beneficially held by 5,300 shareholders and is listed on the NASDAQ Stock Market under the symbol FFIN. The Company’s Web site is www.ffin.com. Weatherford (3) 101 N. Main, with Motorbank at 201 N. Main Aledo (1) 505 FM 1187 Willow Park (1) 4100 E. I-20 Moran (1) 400 Ground 1214 N. Main 101 College Park Mineral Wells (1) 1900 E. Hubbard Bridgeport (1) 909 Stevens Boyd (1) 609 Rock Island Ave. Decatur (1) 1415 S. FM 51 Trophy Club (1) 95 Trophy Club Dr. Keller (1) 891 E. Keller Pkwy FORT WORTH DALLAS Southlake (1) 3205 E. Highway 114 San Angelo (2) 301 W. Beauregard, with Motorbank at Concho Ave. & S. Bryant 3471 Knickerbocker Trent (1) 117 N. Main Clyde (1) 718 Elm Eastland (1) 201 E. Main Glen Rose (1) 400 Big Bend Trail Ranger (1) 106 Main Rising Star (1) 206 W. College Granbury (2) 2007 E. Hwy 377 1600 S. Morgan (Hwy 144) Stephenville (3) 2201 W. South Loop 199 N. Columbia (Motorbank) 1875 Lingleville Road I-20 Midlothian (1) 1490 E. Main Alvarado (1) 201 E. Hwy 67 Burleson (1) 1900 S.W. Wilshire Cleburne (2) 403 N. Main 200 N. Ridgeway First Financial Bankshares, Inc.™ A family of community banksSM Cover photo, from left: Jennifer Harper, Trent Swearengin, Oliva Velasco, Kathy Armstrong and Cody Wright 0546_Witherspoon_PDF 3/22/06 3:51 PM Page 7 Financial Highlights Board of Directors In thousands (except per share data) 2005 2004 Changes For the Year Net Income Basic Earnings per Share Dividends Declared Dividends per Share $44,023 2.13 22,694 1.10 $39,171 1.90 20,613 1.00 Averages for the Year Assets Securities Loans Deposits Shareholders’ Equity At Year-End Assets Securities Loans Deposits Shareholders’ Equity Book Value per Share Trust Assets Key Ratios $2,449,845 958,879 1,209,094 2,100,937 272,298 $2,148,341 906,651 1,044,010 1,816,461 259,502 $2,733,827 1,046,121 1,288,604 2,366,277 276,276 13.34 1,150,027 $2,315,224 854,334 1,164,223 1,994,312 265,545 12.84 1,067,730 Return on Average Assets Return on Average Equity Equity/Assets at Year-End Efficiency 1.80% 16.17 10.11 52.48 1.82% 15.09 11.47 51.78 12.4% 12.1% 10.1% 10.0% 14.0% 5.8% 15.8% 15.7% 4.9% 18.1% 22.4% 10.7% 18.7% 4.0% 3.9% 7.7% _ _ _ _ First Technology Services, Inc. From left: Larry Williams, Senior Vice President Gary Tucker, President & CEO Michelle McDonald, Senior Vice President Kay Berry, Senior Vice President Dennis Steckly, Senior Vice President 2 3 Committee Year Elected Appointment* 1971 1996 1 3 1996 1, 3, 4 1998 1, 2, 4 Kenneth T. Murphy Chairman of the Board Joseph E. Canon, J.D. Executive Director, Dodge Jones Foundation Mac A. Coalson Real Estate and Ranching David Copeland President, SIPCO, Inc. and Shelton Family Foundation F. Scott Dueser President and Chief Executive Officer 1991 Derrell E. Johnson President, American Council of Engineering Companies Life Health Trust 2000 1 2 Kade Matthews Ranching and Investments Raymond A. McDaniel, Jr. Investments Bynum Miers Ranching James M. Parker President, Parker Properties, Inc. Jack D. Ramsey, M.D. Physician Radiologist and former President, Radiology Associates of Abilene 1998 3 1992 1, 2, 4 1992 1972 2 1 1997 1, 3, 4 Dian Graves Stai Chair, Mansefeldt Investment Corporation Director, Dian Graves Owen Foundation 1993 3 F. L. (Steve) Stephens Retired Chairman and CEO, Town & Country Food Stores, Inc. 1998 1, 3, 4 Johnny E. Trotter President and CEO, Livestock Investors, Ltd. 2003 2 For more information on First Financial Bankshares’ Board of Directors, please visit our Web site at www.ffin.com. *Committee Appointments 1. Executive Committee – F. Scott Dueser, Chairman 2. Audit Committee – David Copeland, Chairman 3. Compensation Committee – F. L. (Steve) Stephens, Chairman 4. Nominating Committee – Jack D. Ramsey, M.D., Chairman 0546_Witherspoon_PDF 3/22/06 3:51 PM Page 9 First Financial Bankshares Because... We build loyal, life-long relationships by providing first-class service with personal attention. First Financial Bankshares is a growing family of community banks that hasn’t forgotten its roots. We serve thousands of bank customers but treat each one with personal attention and exceptional service. We operate ten separately chartered banks with 44 locations in 28 Texas communities and focus on each community as their community bank. We employ 975 dedicated professionals in Texas and regard each one as a valued member of our family. At First Financial, we understand that banking is still a local business. That’s why even as we have grown over the years we’ve stayed true to our model, which keeps each of our ten affiliate banks focused on meeting the needs of the communities they serve. We believe decisions should be made on the local level, by hometown people who know their communities best. Our bank presidents have authority to run their banks and make loan decisions to meet the needs of the communities they serve. Local boards of directors comprised of community leaders govern each bank, not advisory boards that lack power. In each market we serve, our goal is to be the bank of choice, and we do that by keeping our focus local. At the same time, customers today expect a wider range of financial services from their banks - services which are increasingly difficult for small-town banks to provide. First Financial’s “one bank, ten charters” concept allows us to offer the services of a big bank while maintaining the hometown feel and decision-making process of a small bank. Our combined strength means we can offer customers the modern services they expect, such as online banking, treasury management services, trust services, online bill pay and debit cards. Our larger size also allows us to operate more efficiently, with consolidated operations. First Financial Bankshares is proud to be a growing family, but we never forget that serving the needs of each customer and each community is our ultimate goal. Our commitment to excellent customer service and hometown banking is unwavering. As we continue to expand in the coming years, you can count on us to remain true to our values. President’s Award: Oliva Velasco Loyal. Dependable. Determined. Professional. Courageous. These are just some of the words co-workers use to describe Oliva Velasco, who is being honored with First Financial Bankshares’ President’s Award. This year marks Oliva’s 24th anniversary with the Company. She began with First Financial in 1982 as a proof operator and today manages Account Services and is a Vice President of First Technology Services, Inc., the Company’s technology subsidiary that serves all of its banks. Born in Juarez, Mexico, as the youngest of 13 children, Oliva has overcome more than her share of personal and family tragedies, but through it all has maintained her deep commitment to her faith, to her family and to First Financial. She’s distinguished herself for her dogged pursuit of fraud cases, either those involving First Financial or its customers. In one example, Oliva tracked down a fraud case that led into Mexico. While others may have felt the case was impossible to pursue, Oliva showed her industriousness by calling a former schoolmate in Mexico who is now an attorney. Together, they tracked down the person with the money and recovered it. “You don’t mess with Oliva when she’s on a mission,” said a co-worker. “Oliva was chosen for this award because she is a great example for all of us,” said F. Scott Dueser, President and CEO of First Financial Bankshares. “She exemplifies the American Dream, excellent customer service, good management and a dedication to our Company, no matter what her personal trials have been.” Our congratulations and thanks to Oliva for exemplifying all of the finest values and qualities that make First Financial a great place to bank and work. Growth. First Financial Bankshares is a Texas bank holding company on the move. During the past year, we added locations both through acquisitions and new branches. We entered promising new markets in booming Texas towns, including Bridgeport, Decatur, Boyd, Willow Park and Midlothian. We positioned the Company for continued growth in the years ahead. We operate exclusively in Texas, the nation’s second most populous state and one of the fastest-growing. While our 116-year base of operations is in West Texas, we have focused our growth on expanding communities with good infrastructure and amenities along the Interstate 20 corridor and the 50-mile radius around the Dallas-Fort Worth Metroplex. For the first time ever, our assets in the DFW-area growth markets exceeded $1 billion in 2005, or 44 percent of the Company’s total assets. The projected growth rate during this decade in many of our recently entered markets, including Bridgeport, Willow Park, Granbury and Midlothian, exceeds both state and national projected growth rates, boding well for our prospects in these communities in the years ahead. But we’re not growing just for the sake of growth. Becoming a larger bank helps us better serve our customers, shareholders and employees. Our customers today can enjoy the convenience of banking at any of our 44 locations and more than 60 ATMs. Shareholders appreciate the fact our growth has allowed us to operate more efficiently than the average bank, resulting in improved earnings and larger dividend checks. For employees, growth has meant more career opportunities and expanded benefits. First Financial is indeed a Texas bank holding company that is on the move. 4 5 0546_Witherspoon_PDF 3/22/06 3:51 PM Page 11 Financial Strength. Shareholders, customers and employees all value a financially strong institution. In 2005, First Financial recorded its 19th consecutive year of increased earnings. Keefe, Bruyette & Woods, an investment banking firm specializing in financial services companies, named First Financial to its “Honor Roll” for achieving consistently higher annual earnings per share during the past decade. Out of hundreds of publicly traded banks, only 32 companies made the KBW Honor Roll in 2005. By many key financial measures, First Financial exceeds its peer group in performance. Our return on assets (ROA) measured 1.80 percent for 2005, compared with a peer-group average ROA of 1.16 percent. The Company’s return on equity (ROE) was 16.17 percent in 2005, compared with 13.51 percent for the peer group. Net interest margin, a key performance measure for banks, stood at 4.49 percent at year-end 2005 for First Financial, compared with 4.06 percent average for the peer group. Meanwhile, total assets grew 18 percent in 2005, nearly double our average annual asset growth rate during the past decade, reflecting the impact of acquisitions completed during the year. Trust assets under management at First Financial Trust & Asset Management Company grew 7.7 percent to a year-end book value of $1.15 billion. We accomplished this while still carefully controlling expenses. First Financial’s efficiency ratio for 2005 was 52.48 percent, which compared favorably to the peer-group’s average of 60.19 percent. Asset Growth (in millions) $3,000 4 3 7 2 $ , 5 1 3 2 $ , 0 3 9 1 $ , 3 9 9 1 $ , 3 9 0 2 $ , Loan Growth (in millions) Net Income Growth (in thousands) $1,500 $1,250 $1,000 $750 $250 9 8 2 1 $ , 4 6 1 1 $ , 4 6 9 $ 8 8 9 $ 0 4 9 $ 3 2 0 4 4 $ , 1 7 1 9 3 $ , 5 0 3 5 3 $ , 3 5 9 3 3 $ , 5 5 3 9 2 $ , $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 01 02 03 04 05 01 02 03 04 05 01 02 03 04 05 Nonperforming Assets as a Percentage of Loans Plus Foreclosed Assets Net Interest Margin Efficiency Ratio % 8 7 4 . % 2 5 4 . % 4 4 4 . % 9 4 4 . % 9 4 4 . % 1 5 0 . % 4 4 0 . % 3 4 0 . % 3 3 0 . % 2 3 0 . .6% .5% .4% .3% .2% .1% 0% 5% 4% 3% 2% 1% 0% 60% 50% 40% 30% 20% 10% 0% % 2 8 3 5 . % 6 9 1 5 . % 2 5 2 5 . % 8 7 1 5 . % 8 4 2 5 . 01 02 03 04 05 01 02 03 04 05 01 02 03 04 05 Customer Service. Customer service is in our DNA at First Financial Bankshares. We’re Texas-friendly, hometown bankers, for whom greeting customers with a helpful smile is just the way we do business. In the spring of 2005, we renewed our deep commitment to customer service by launching the “Customer Service First” initiative. This ongoing program challenges us every day to examine everything we do through the “lens of the customer,” helping us to strive toward greater excellence in customer service standards. As part of that commitment, we introduced our “WOW!” campaign to honor employees who go beyond the ordinary course of business in showing superior customer service. In the pages that follow, we will highlight a few of the many employees who have received “WOW!” awards. Wow! Customer Service Award: Janet O’Dell Talk about “going the extra mile,” Janet O’Dell, a Senior Vice President at First Financial Bank, Abilene, literally drove customers to their mortgage closing when they couldn’t make their appointment due to car trouble. Alan and Loretta Day were ready to close a loan on their new home, but their car broke down. Rather than cancel the appointment, Janet offered to pick the Days up at their home, drive them to their closing and then drive them back home again. Janet’s actions demonstrate how lending a helping hand can provide great customer service. 6 7 0546_Witherspoon_PDF 3/22/06 3:51 PM Page 13 First Financial Bankshares Family of Community Banks Presenting the First Financial Bankshares family of community banks — where big-bank services come with small-town charm, Texas friendliness and a local identity. The First Financial family spans the Interstate 20 corridor, stretching from Sweetwater east all the way to Midlothian, a distance of more than 200 miles. Other locations, including San Angelo, Hereford, Southlake and Bridgeport complete the portfolio. No matter the name of the town, they all share the vibrant, vigorous spirit that makes them such great places to live, work and bank. Wow! Customer Service Award: Lynn Dunn and the mailroom team, First Technology Services, Inc. A broken postal processor during the New Year’s holiday weekend meant monthly bank statements might not get mailed to customers on time. But that wasn’t good enough for Lynn Dunn and his team in the First Financial mailroom in Abilene. Thinking outside the box and without being asked by management, Lynn and his crew processed the statements without the equipment and then took them to another postal meter to apply the postage. It meant working night and day throughout the holiday weekend and making personal sacrifices by the mailroom team, which in addition to Lynn included Paul Chacon, Humberto Chapa and David Rodriquez. David, in fact, interrupted his personal leave while taking care of a newborn baby at home to help his team complete the task. As a result of this extraordinary effort, the statements were ready on time and customers were not affected by the equipment failure. 8 Abilene, Clyde, Moran First Financial Bank, N.A. Taylor, Callahan and Shackelford Counties Deposit Market Share 44% In Thousands Assets Loans Deposits Equity Net Income Return on Average Assets Dec. 31, 2005 Dec. 31, 2004 $898,412 $762,941 388,944 362,096 788,043 680,773 68,393 13,992 66,218 13,905 1.63% 1.86% Efficiency Ratio 51.65 47.82 From left: John Prince, Ben McAnally, Scott Dueser, Mike Reaves and Ron Fogle Main Office 400 Pine Abilene, Texas 79601 Chartered 1890 Locations 4400 Buffalo Gap Road Abilene, Texas 79606 4350 Southwest Drive Abilene, Texas 79606 920 N. Willis Abilene, Texas 79603 3300 S. 14th Abilene, Texas 79605 1010 N. Judge Ely Blvd. Abilene, Texas 79601 701 Pine Abilene, Texas 79601 1345 Barrow Abilene, Texas 79605 2617 Antilley Road Abilene, Texas 79606 1650 State Hwy. 351 Abilene, Texas 79601 718 Elm Clyde, Texas 79510 400 Ground Moran, Texas 76464 Senior Officers F. Scott Dueser Chairman of the Board Ron Fogle Executive Vice President, Commercial Loans Ben McAnally Executive Vice President, Treasury Management John Prince Executive Vice President, Personal Loans Mike Reaves Executive Vice President, Chief Financial Officer and Cashier Directors J. Michael Alexander President, James M. Alexander & Co. Tucker S. Bridwell President and Chief Executive Officer, Mansefeldt Investment Corporation Murray Edwards Principal, The Edwards Group Allan D. Frizzell Executive Vice President, Enrich Oil Corporation Tim Lancaster Chairman, CEO, President, Hendrick Health System Raymond A. McDaniel, Jr. Investments Bynum Miers Rancher Stanley Morris, Jr. Investments Kenneth T. Murphy First Financial Bankshares, Inc. Dian Graves Stai Chair, Mansefeldt Investment Corporation Director, Dian Graves Owen Foundation Joseph E. Canon Executive Director, Dodge Jones Foundation Leigh Taliaferro, M.D. Physician David Copeland President, Shelton Family Foundation Joe Crawford President, Abilene Aero, Inc. Mike Denny President, Batjer and Associates F. Scott Dueser First Financial Bankshares, Inc. 9 Advisory Bob J. Surovik McMahon, Surovik, Suttle, Buhrmann, Hicks, Gill & Cannon, P.C. Steve Suttle McMahon, Surovik, Suttle, Buhrmann, Hicks, Gill & Cannon, P.C. 0546_Witherspoon_PDF 3/22/06 3:52 PM Page 15 Cleburne, Burleson, Alvarado, Midlothian Eastland, Ranger, Rising Star First Financial Bank, N.A. Johnson County Deposit Market Share 23% First Financial Bank, N.A. Eastland County Deposit Market Share 53% In Thousands Assets Loans Deposits Equity Dec. 31, 2005 Dec. 31, 2004 $238,114 $229,107 110,711 110,181 217,663 208,458 18,269 19,465 Net Income 3,379 3,739 Return on Average Assets 1.48% 1.73% Efficiency Ratio 56.92 53.18 In Thousands Assets Loans Deposits Equity Net Income Return on Average Assets Dec. 31, 2005 Dec. 31, 2004 $148,599 $61,798 49,626 128,436 14,104 1,644 34,507 55,782 5,859 1,151 1.48% 1.93% Efficiency Ratio 55.40 52.11 From left: Craig Beskow, Matt Reynolds, Derek Schmidt and Brad Evans From left: Clint S. Ferguson, Jim Davidson and Tommy J. Barrow Main Office 403 N. Main Cleburne, Texas 76033 Chartered 1927 Locations 200 N. Ridgeway Cleburne, Texas 76033 1900 S.W. Wilshire Burleson, Texas 76028 201 E. Highway 67 Alvarado, Texas 76009 1490 E. Main Midlothian, Texas 76065 Senior Officers Matt Reynolds President and Chief Executive Officer Craig Beskow Executive Vice President and Cashier Brad Evans Executive Vice President Derek Schmidt Executive Vice President Directors Perry Elliott Chairman of the Board Matt Reynolds President and Chief Executive Officer Albert A. Archer Chairman of the Board, Walls Industries, Inc. Gary Bennett Bennett Printing & Office Supply F. Scott Dueser First Financial Bankshares, Inc. Jim Easdon Investments J. Bruce Hildebrand First Financial Bankshares, Inc. Hollis E. (Gene) Joslin Investments Brent D. Magers Chief Executive Officer and Administrator, Walls Regional Hospital George Marti Marti Enterprises Wow! Customer Service Award: Julie Hasty and Robin Gonzalez Thanks to the quick thinking of two tellers at First Financial Bank in Cleburne, a crime was stopped and a customer’s account was protected against loss. A man pulled into the motor bank and presented teller Robin Gonzalez with a check, which was made payable to one of the bank’s customers. The man’s questions about the check caused Robin and fellow teller Julie Hasty to be suspicious. At the same time, Julie recognized the customer’s name on the check as one of her neighbors. She called him and he denied giving anyone a check to cash. At that point, Julie called the police, while Robin began asking for more identification. The man drove away, but not before Robin and Julie wrote down his license number. He was later apprehended by police. Main Office 201 E. Main Eastland, Texas 76448 Chartered 1934 Locations 106 Main Ranger, Texas 76470 206 West College Rising Star, Texas 76471 Senior Officers Tommy J. Barrow Chairman of the Board, President and Chief Executive Officer Clint S. Ferguson Executive Vice President Jim Davidson Senior Vice President and Cashier Jim Keffer President, EBAA Iron Sales, Inc. Mike T. Perry President, Kinnaird, Rossander & Perry Agency, Inc. Dale Squiers, R.Ph. Owner, Eastland Drug Company Tommy Warford Turner, Seaberry and Warford, Attorneys M.D. White, Jr. President and Owner, Ace Hardware Store, Eastland/Cisco Jonathan Newton Senior Vice President Directors Tommy J. Barrow Chairman of the Board, President and Chief Executive Officer Doug Crawley Rancher Clint S. Ferguson Executive Vice President Doug Ford Retired President and Chief Executive Officer Peoples State Bank, Clyde J. Bruce Hildebrand First Financial Bankshares, Inc. Wow! Customer Service Award: Jan Wise After devastating wildfires swept through Cross Plains, Texas, in December 2005, Jan Wise, Vice President and Branch Manager at the Rising Star office of First Financial Bank, stepped up to help. Jan recruited volunteers and organized a fund-raising barbecue dinner to support victims of the fires. Thanks to Jan’s leadership, the fund-raiser earned $8,000. First Financial employees such as Jan take pride in being an active part of their communities and giving back to the community generously when needs arise. 10 11 0546_Witherspoon_PDF 3/22/06 3:52 PM Page 17 Hereford Mineral Wells Hereford State Bank Deaf Smith County Deposit Market Share 48% City National Bank Palo Pinto County Deposit Market Share 28% In Thousands Assets Loans Deposits Equity Net Income Return on Average Assets Dec. 31, 2005 Dec. 31, 2004 $104,821 $107,056 67,637 87,621 8,346 1,736 65,615 90,003 8,446 1,674 1.72% 1.75% Efficiency Ratio 50.53 51.19 From left: Kent Jackson, Jeff Brown, Charlene Sanders, Mike Mauldin, Larry Alley and Steve Gilbert Main Office 212 E. Third Hereford, Texas 79045 Chartered 1947 Senior Officers Mike Mauldin Chairman of the Board, President and Chief Executive Officer Steve Gilbert Executive Vice President and Cashier Kent Jackson Executive Vice President Jeff Brown Senior Vice President Directors Mike Mauldin Chairman of the Board, President and Chief Executive Officer F. Scott Dueser First Financial Bankshares, Inc. Steve Lewis, D.V.M. Manager and Senior Partner, Hereford Veterinary Clinic Kade Matthews Ranching and Investments Garth Merrick President and Chief Executive Officer, Merrick Petfoods, Inc. Allen Parson Restaurateur and Investments Craig Smith Retired Chairman of the Board, President and Chief Executive Officer, Hereford State Bank Jerry Stevens Vice President and General Manager, Stevens 5-Star Car and Truck Center Johnny E. Trotter President and Chief Executive Officer, Livestock Investors, Ltd. Roger Williams Farmer From left: Mike Mearse, Eddie Gregory, Kenneth Williamson and Brad Seay Main Office 1900 E. Hubbard Mineral Wells, Texas 76067 Chartered 1925 Senior Officers Kenneth A. Williamson Chairman of the Board, President and Chief Executive Officer Brad Seay Executive Vice President, Lending Eddie Gregory Senior Vice President and Cashier Mike Mearse Senior Vice President Directors Kenneth A. Williamson Chairman of the Board, President and Chief Executive Officer F. Scott Dueser First Financial Bankshares, Inc. Doyle Lee Chairman and CEO, Weatherford National Bank Paul McGettes Chief Financial Officer, Upham Oil & Gas Company, L.P. Terry L. Murphy President and Chief Executive Officer, Murphy and Murphy, Inc. In Thousands Assets Loans Deposits Equity Net Income Return on Average Assets Dec. 31, 2005 Dec. 31, 2004 $129,535 $114,484 69,486 112,318 16,830 2,177 61,236 97,148 17,000 2,068 1.81% 2.15% Efficiency Ratio 45.01 43.18 Don O’Neal O’Neal Distributing Company, Inc., O’Neal Enterprises, Inc. David Ramsey, M.D. Family Practice Center Jimmy Seay Investments and Ranching Walter Joe Thomas, D.D.S. Dentist Wow! Customer Service Award: Debbie Gonzalez Debbie Gonzalez, a Loan Assistant and Banking Officer at Hereford State Bank, didn’t let “banking hours” keep her from providing exceptional customer service. One of Debbie’s customers told Debbie that her daughter would be in town over the weekend and needed some papers notarized. Debbie took the initiative and took her notary stamp home with her, called her customer on Saturday morning and went to her home to notarize the documents. With employees like Debbie, it’s no wonder Hereford State Bank is the city’s leading bank. Wow! Customer Service Award: Evelia Chavez Evelia Chavez, Teller Supervisor at City National Bank in Mineral Wells, went out of her way to assist a local merchant who was having trouble processing bank card transactions. The merchant pulled into Evelia’s lane at the drive-through one Saturday morning and explained his problem to her. Unable to resolve the problem right then, she promised to stop by his store after the motor bank closed at noon. Once at the store, Evelia walked through the steps, wrote down instructions to leave with the merchant and suggested a better place in the store for keeping the bank card machine. Problem solved! 12 13 0546_Witherspoon_PDF 3/22/06 3:52 PM Page 19 San Angelo Southlake, Trophy Club, Keller, Bridgeport, Boyd, Decatur San Angelo National Bank Tom Green County Deposit Market Share 22% First Financial Bank, N.A., Southlake Deposit market share for the cities of Southlake, Keller and Trophy Club: 11% Deposit market share for Wise County (Bridgeport, Boyd and Decatur): 23% In Thousands Assets Loans Deposits Equity Dec. 31, 2005 Dec. 31, 2004 $310,673 $311,189 116,438 122,649 264,318 261,826 42,759 43,783 Net Income 5,814 5,825 Return on Average Assets 1.95% 1.95% Efficiency Ratio 42.93 44.24 From left: Michael L. Boyd, Katherine M. Reeves, Robert Pate and David Byrd Main Office 301 W. Beauregard San Angelo, Texas 76903 Chartered 1975 Locations 3471 Knickerbocker San Angelo, Texas 76904 Senior Officers Michael L. Boyd Chairman of the Board, President and Chief Executive Officer Robert Pate Executive Vice President Katherine Reeves Executive Vice President and Cashier Directors Michael L. Boyd Chairman of the Board, President and Chief Executive Officer W. Dan Cravy, M.D. Physician Rick DeHoyos Attorney, Ratliff, Edwards & DeHoyos David B. Drake Investment Advisor, PrimeVest F. Scott Dueser First Financial Bankshares, Inc. Doug Eakman Owner, Pecos Street Pharmacy Ron Giddiens Investments/Business Consulting Joe Henderson President, Porter Henderson Implement Company, Inc. J. Bruce Hildebrand First Financial Bankshares, Inc. Robert D. Housley President and Owner, Housley Communications David F. Lupton President, Angelo Glass & Mirror Company, Inc. Bill Pfluger Rancher Barbara Riley President, Olio, Inc. Richard W. Salmon Investments John E. Schwartz, Sr. Farmer/Rancher Mary Jane Steadman Attorney, Real Estate Investment Management F.L. (Steve) Stephens Retired Chairman and CEO, Town & Country Food Stores, Inc. Wow! Customer Service Award: Karla Howell It’s the little details that can make all the difference in providing superior customer service. Just ask Karla Howell, an employee of San Angelo National Bank. When Karla was promoted this past year from Collection Teller to Personal Banker, she took the initiative to write personal notes to each of her customers, informing them of the change and thanking them for their business. Karla’s thoughtfulness made her customers feel appreciated and eased any concerns about the transition. 14 In Thousands Assets Loans Deposits Equity Net Income Return on Average Assets Dec. 31, 2005 Dec. 31, 2004 $272,927 $92,205 141,794 233,139 32,672 1,184 69,240 81,937 6,829 779 1.02% 0.98% Efficiency Ratio 68.00 71.42 Derrell E. Johnson President, American Council of Engineering Companies Life Health Trust Mark L. Jones President and Chief Executive Officer K. Wayne Lee President, DDFW Properties Ralph Manoushagian Land Manager Approach Resources, Inc. Oil & Gas Exploration Dr. David Ray Family Physician Jim Ridenour President, Sunbelt Station Service Directors Emeritus M. L. Manoushagian Oil & Gas Investments & Real Estate Billie C. Green Retired President, First National Bank of Bridgeport From left: Mark L. Jones, Homer Pittman, Jr., J. Sean Shope and F. Mills Shallene Main Office 3205 E. Highway 114 Southlake, Texas 76092 Chartered 1907 Locations 95 Trophy Club Drive Trophy Club, Texas 76262 891 E. Keller Parkway Suite 100 Keller, Texas 76248 909 Stevens Bridgeport, Texas 76426 609 Rock Island Avenue Boyd, Texas 76023 1415 S. FM 51 Decatur, Texas 76234 Senior Officers Mark L. Jones President and Chief Executive Officer F. Mills Shallene Bridgeport President J. Sean Shope Senior Vice President Homer Pittman, Jr. Chief Financial Officer Directors Perry D. Elliott Chairman of the Board James E. Burger Burger Construction Jack Dortch Jack Dortch Insurance Agency F. Scott Dueser First Financial Bankshares, Inc. Barry Green Attorney and Partner, Smith & Green, P.C., Law Firm Wow! Customer Service Award: Coy Stephens, Dwight Reeves, Beverly Lindsey and Margaret Hunt When the former First National Bank of Bridgeport joined First Financial Bank, Southlake this past year, bank employees in Bridgeport, Decatur and Boyd wanted their customers to know they would still be dealing with the same friendly hometown team. Four employees in our Wise County banks - Margaret Hunt, Dwight Reeves, Coy Stephens and Beverly Lindsey - prepared and delivered more than 40 homemade cakes and pies and numerous cheese and meat trays to their customers as their way of saying “we appreciate you.” Our thanks to these fine employees for a great example of exceptional customer service. 15 0546_Witherspoon_PDF 3/22/06 3:52 PM Page 21 Stephenville, Granbury, Glen Rose Sweetwater, Roby, Trent First Financial Bank, N.A. Erath, Hood and Somervell Counties Deposit Market Share 22% First National Bank Nolan and Fisher Counties Deposit Market Share 41% In Thousands Assets Loans Deposits Equity Dec. 31, 2005 Dec. 31, 2004 $295,567 $268,218 164,739 159,079 255,448 234,651 34,321 30,545 Net Income 4,502 3,075 Return on Average Assets 1.67% 1.75% Efficiency Ratio 52.47 50.95 In Thousands Assets Loans Deposits Equity Dec. 31, 2005 Dec. 31, 2004 $119,391 $120,986 53,785 55,282 108,912 104,031 10,222 10,730 Net Income 2,001 2,227 Return on Average Assets 1.69% 1.78% Efficiency Ratio 50.13 48.11 From left: Ron Butler, Dereece Howell, Robert Lemons, Ken Luker, John Power and Bart Rodgers From left: J.V. Martin, Kirby Andrews and Donnie Ruppert Main Office 2201 W. South Loop Stephenville, Texas 76401 Chartered 1997 Locations 1875 Lingleville Road Stephenville, Texas 76401 199 N. Columbia Stephenville, Texas 76401 400 Big Bend Trail Glen Rose, Texas 76043 2007 East Highway 377 Granbury, Texas 76049 1600 S. Morgan Granbury, Texas 76048 5310 E. Hwy. 377, Suite 300 Granbury, Texas 76049 (loan production office) Senior Officers Ron Butler President and Chief Executive Officer Perry D. Elliott Vice Chairman John Power Glen Rose President Bart Rodgers Granbury President Dereece Howell Executive Vice President and Cashier Robert Lemons Executive Vice President Ken Luker Executive Vice President Directors James C. Terrell, Jr., M.D. Chairman of the Board Perry D. Elliott Vice Chairman Ron Butler President and Chief Executive Officer William L. Corbin Investments F. Scott Dueser First Financial Bankshares, Inc. J. Bruce Hildebrand First Financial Bankshares, Inc. Bill Hooks President, Hooks Lakeside Motors Garry Z. Luker President, Sunchase Development Co. Bill Parham Parham & Parham, CPAs Jerry Parham Investments Royce Swaim Owner, Swaim Farm & Ranch Frank Terrell, M.D. Ophthalmologist John Terrill Attorney Wow! Customer Service Award: Irma Tiscareno Zipp When Eddie and Sue McDonald lost their Louisiana home to Hurricane Rita last fall, they temporarily moved to Stephenville. Needing to establish a local banking relationship, they met Irma Tiscareno Zipp, Assistant Vice President and Branch Manager at First Financial’s River North branch, who so impressed them with her friendly, sympathetic and caring attitude that they changed previous plans and decided to relocate permanently to Stephenville. Main Office 201 Elm Sweetwater, Texas 79556 Chartered 1948 Locations 123 N. Concho Roby, Texas 79543 117 N. Main Trent, Texas 79561 Senior Officers J.V. Martin Chairman of the Board, President and Chief Executive Officer Kirby Andrews Executive Vice President, Lending Donnie Ruppert Executive Vice President and Controller Melody Collins Senior Vice President, Loan Operations Rodney Foster Senior Vice President, Lending Directors J.V. Martin Chairman of the Board, President and Chief Executive Officer Glenn D. Bennett Bennett & Associates Louis Brooks, Jr. Rancher Bill W. Burns President, Bill Burns Oil Co., Inc. Ronnie Cox Owner, Cox Jewelry J. Bruce Hildebrand First Financial Bankshares, Inc. Cecil J. King Retired President, Citizens State Bank, Roby Jay Lawrence President, MAL Enterprises, Inc. Thomas L. Rees, Sr. Rees and Rees, Attorneys Wow! Customer Service Award: Nowana Cashiola Exceeding customers’ expectations is what First Financial’s “Customer Service First” initiative is all about. A recent example of this winning attitude involves Nowana Cashiola, an employee at First National Bank, Sweetwater. When a lost set of keys was found at the bank, Nowana didn’t just hold onto them until the customer claimed them. Rather, she noticed one of the keys on the ring was for a post office box, so she called the post office and identified the name of the owner of the mailbox. Nowana then called the customer, who was elated to know the keys were safe. That’s some great detective work, Nowana, and a prime example of putting customers first. 16 17 0546_Witherspoon_PDF 3/22/06 3:52 PM Page 23 Weatherford, Aledo, Willow Park First Financial Trust & Asset Management Company, N.A. Weatherford National Bank Parker County Deposit Market Share 27% From left: Jay Gibbs, Larry Mangrem, Doyle Lee and Bob Bradberry Main Office 101 N. Main Weatherford, Texas 76086 Chartered 1984 Locations 101 College Park Drive Weatherford, Texas 76086 1214 N. Main Weatherford, Texas 76086 505 Farm Road 1187 Aledo, Texas 76008 4100 E. I-20 South Service Road Willow Park, Texas 76087 Senior Officers Doyle Lee Chairman of the Board and Chief Executive Officer Jay Gibbs President Bob Bradberry Executive Vice President Kent Hudson Senior Vice President Larry Mangrem Senior Vice President and Cashier Louis Sneed Senior Vice President In Thousands Assets Loans Deposits Equity Dec. 31, 2005 Dec. 31, 2004 $272,493 $246,794 125,446 124,339 247,134 222,426 21,862 22,533 Net Income 4,512 4,320 Return on Average Assets 1.79% 1.94% Efficiency Ratio 51.97 48.40 Directors Doyle Lee Chairman of the Board and Chief Executive Officer Greg L. Barron President, G.L. Barron Company, Inc. Stephen G. Brogdon, D.D.S. General and Cosmetic Dentistry Mac A. Coalson Real Estate and Ranching F. Scott Dueser First Financial Bankshares, Inc. Jay Gibbs President Clay Hicks Oil and Gas Investments Nan Kingsley President, Bluestem Studios, Inc. Mike White, O.D. Therapeutic Optometrist Wow! Customer Service Award: Carol Hatfield When a 90-year-old customer came into Weatherford National Bank to request some changes in how her account was set up, employee Carol Hatfield went the extra mile to assist her. The change the customer requested required the filing of an assumed name certificate at the local government office. Carol took her lunch hour to drive the customer to the government office and secure the certificate. They were then able to go back to the bank and get the account changes processed just the way the customer wanted. That’s what we call exceptional customer service! First Financial Trust & Asset Management Company, N.A., produced outstanding results in its second full year as a separate trust and asset management company. With offices in Abilene, the Dallas/Fort Worth Metroplex, San Angelo, Stephenville and Sweetwater, the Company showed strong growth in both assets and income during 2005. Assets ended the year with a book value of $1.15 billion, a 7.7 percent growth for the year, with all offices showing an increase in assets. Trust fee revenue rose 11.0 percent from $6.37 million in 2004 to $7.07 million at the end of 2005. The contribution of after-tax income was up 19.6 percent at $1.9 million for 2005 versus $1.6 million in 2004. The investment markets were relatively flat for the year, with our investment group providing modest returns similar to our benchmark and the indices. We continue to outperform over the longer term, with an 11-year annualized total equity portfolio return of 10.15 percent. First Financial Trust & Asset Management Company officers, from left: David Byrd (San Angelo), Konrad Halbert (DFW Metroplex), Robert Patterson, Joe Ayres (Stephenville), Kirk Thaxton (Abilene) and Michael Sheehan (Sweetwater) Highlights for 2005 include: Experienced outstanding net income growth of 58.4 percent in Stephenville, 28.2 percent in San Angelo and 22.3 percent in Abilene. With the addition of Konrad Halbert’s expertise, we established a solid base in the DFW Metroplex with strong growth in assets. We are poised for expansion in the coming years in this important market. Renewal and expansion of our contract with our accounting software provider that will enable us to streamline the investment process through a new and improved trading platform, a strategic planning module and several additional internal product efficiencies. In 2006, our primary focus remains on providing premier service through a wide variety of financial products to include trust and estate administration, IRAs and a range of investment options. We look forward to serving you and your peers not only now, but for generations to come. Trust Assets (in millions) Trust Fees (in millions) Trust Net Income (in millions) 6 8 9 $ 2 9 9 $ 8 6 0 1 $ , 9 5 9 $ 0 5 1 1 $ , $1,200 $1,000 $800 $600 $400 $200 $0 . 7 0 7 $ . 9 8 5 $ 4 8 5 $ . . 7 3 6 $ 2 0 6 $ . $8 $7 $6 $5 $4 $3 $2 $1 $0 $2.0 $1.8 $1.6 $1.4 $1.2 $0 9 0 9 1 $ . 0 0 6 1 $ . 6 9 5 1 $ . 7 8 5 1 $ . 4 2 3 1 $ . 01 02 03 04 05 01 02 03 04 05 01 02 03 04 05 18 19 0546_Witherspoon_PDF 3/22/06 3:52 PM Page 25 Selected Financial Data Corporate Information In thousands (except per share data) Year-End Total Assets(1) Shareholders’ Equity(1) Net Income(1) Basic Earnings per Share(2) Cash Dividends per Share(2) Stock Dividends and Splits Year-End Book Value per Share(2) Year-End Market Value per Share(2) 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Ten-Year Compound Growth Rate $2,733,827 $276,276 $44,023 $2.13 $1.10 4/3 split $13.34 $35.06 2,315,224 265,545 39,171 2,092,571 251,487 35,305 1,993,183 238,768 33,953 1,929,694 213,654 29,355 1,753,814 196,121 28,316 1,723,369 178,663 25,690 1,686,647 169,449 23,254 1,573,509 148,226 20,063 1,262,041 131,161 18,122 1.90 1.71 1.65 1.43 1.37 1.24 1.13 1.02 0.95 1.00 0.91 0.81 0.70 0.62 0.54 0.48 0.42 0.38 – 5/4 split – 5/4 split – – 12.84 12.19 11.59 10.40 9.56 8.60 10% dividend 8.18 5/4 split 5/4 split 7.48 6.82 33.61 30.84 22.80 18.06 15.09 14.76 16.80 18.71 13.97 9.91% 9.17% 10.41% 8.80% 12.50% – 7.62% 14.13% (1) As originally reported at the close of each year and prior to restatements for pooling-of-interests. (2) Adjusted for stock dividends and splits. 2005 Common Stock Market Value and Dividend Data Quarter High Low Close Dividends Fourth Third Second First $38.88 $33.31 $35.06 $0.28 36.22 34.46 34.99 32.20 29.06 32.14 34.83 33.84 33.47 0.28 0.28 0.26 2004 Common Stock Market Value and Dividend Data Quarter High Low Close Dividends Fourth Third Second First $34.46 $30.00 $33.61 $0.26 32.28 31.97 32.93 28.51 28.53 28.31 30.12 31.45 30.14 0.26 0.26 0.23 20 First Financial Bankshares executive officers, from left: Robert S. Patterson, Gary S. Gragg, Gary L. Webb, Michele P. Stevens, F. Scott Dueser and J. Bruce Hildebrand Officers Kenneth T. Murphy Chairman of the Board F. Scott Dueser President and Chief Executive Officer J. Bruce Hildebrand Executive Vice President and Chief Financial Officer Gary L. Webb Executive Vice President, Operations Gary S. Gragg Executive Vice President, Lending Robert S. Patterson Executive Vice President, Trust Michele P. Stevens Senior Vice President, Marketing Daniel A. Ortiz Vice President, Multicultural Development William A. Rowe Vice President, Investment Securities Gaila Kilpatrick Assistant Secretary Bob Goodner Compliance Officer Barbara Wright Compliance Officer Annual Meeting Tuesday, April 25, 2006 Abilene Civic Center 1100 N. Sixth Abilene, Texas 79601 Corporate Offices 400 Pine Abilene, Texas 79601 325.627.7155 www.ffin.com Corporate Mailing Address P.O. Box 701 Abilene, Texas 79604 Common Stock Listing The NASDAQ Stock Market® Symbol: FFIN Independent Public Auditors Ernst & Young LLP For Financial and Investor Information, Contact: J. Bruce Hildebrand Executive Vice President and CFO 325.627.7167 David A. Hogan Director, Investor Relations 325.627.7114 investorrelations@ffin.com Transfer Agent The Bank of New York 866.828.8173 Address Shareholder Inquiries to: The Bank of New York Investor Services Department P.O. Box 11258 New York, NY 10286-1258 E-mail Address: shareowners@bankofny.com The Bank of New York Stock Transfer Website: www.stockbny.com Send Certificates for Transfer and Address Changes to: Receive and Deliver Dept. P.O. Box 11002 New York, NY 10286-1002 Certain statements contained in this annual report 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 annual report, the Company does not undertake any obligation to update publicly or revise any forward-looking statements because of new information, future events or otherwise. 0546_Witherspoon_PDF 3/22/06 3:52 PM Page 27 TM A family of community banks SM 400 Pine, Abilene, Texas 79601 • www.ffin.com 

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