First Financial Bankshares Annual Report 2006

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FY2006 Annual Report · First Financial Bankshares

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A N N U A L R E P O R T 2 0 0 6

Banks
&

Locations

Amarillo

First Financial Bank

ABILENE

CLYDE

MORAN

CLEBURNE

BURLESON

ALVARADO

MIDLOTHIAN

EASTLAND

RANGER

RISING STAR

Hereford State Bank

HEREFORD

City National Bank

MINERAL WELLS

San Angelo National Bank

SAN ANGELO

First Financial Bank

SOUTHLAKE

TROPHY CLUB

KELLER

BRIDGEPORT

BOYD

DECATUR

STEPHENVILLE

GRANBURY

GLEN ROSE

First National Bank

SWEETWATER

ROBY

TRENT

Weatherford National Bank

WEATHERFORD

ALEDO

WILLOW PARK

Major Cities

Lubbock

Fort Worth

Abilene

Dallas

Midland

Odessa

Profile

First Financial Bankshares is a financial holding company headquartered in Abilene, Texas,

with $2.9 billion in consolidated assets as of December 31, 2006. First Financial operates ten

separately chartered affiliate banks with 44 locations in the Central, West and High Plains

regions of Texas. The Company also operates a trust and asset management company with

five locations and a technology services company. Listed on The NASDAQ Global Select

Market under the trading symbol FFIN, its common stock is beneficially held by approximately

5,300 shareholders. Visit First Financial's Web site at http://www.ffin.com.

www.ffin.com

Because ... Community Matters.

Financial Highlights

In thousands (except per share data)

2006

2005

Changes

For the Year

Net Income

Basic Earnings per Share

Dividends Declared

Dividends per Share

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

Return on Average Assets

Return on Average Equity

Equity/Assets at Year-End

Efficiency

$46,029

2.22

24,460

1.18

$44,023

2.13

22,694

1.10

$2,738,314

$2,449,845

1,110,816

1,308,309

2,313,074

284,117

958,879

1,209,094

2,100,937

272,298

$2,850,165

$2,733,827

1,129,313

1,373,735

2,384,024

300,901

14.51

1,046,121

1,288,604

2,366,277

276,276

13.34

4.6%

4.2%

7.8%

7.3%

11.8%

15.8%

8.2%

10.1%

4.3%

8.0%

6.6%

0.7%

8.9%

8.8%

1,299,628

1,150,027

13.0%

1.68

16.20

10.56

53.57

1.80

16.17

10.11

52.48

Financial Strength

We best serve the needs of our communities, shareholders, customers and
employees by growing First Financial Bankshares and practicing sound financial
management. In 2006, First Financial experienced its 20th consecutive year of
increased earnings and was again named to the Honor Roll by Keefe, Bruyette
and Woods, Inc., which recognizes banks that have continually achieved
annual increases in earnings during the past decade. First Financial was one
of only 40 banks nationwide named to the KBW Honor Roll. The Company
outperformed its peer group of similar-sized banks in 2006 on many key
financial ratios.

The charts on this page and the Financial Highlights on the accompanying
page demonstrate the Company’s financial strength in 2006 on several key
measurements. We also invite you to review the more comprehensive 10-year
financial summary on page 20 of this annual report.

For more financial information, please visit the investor relations section of the
First Financial Web site at http://www.ffin.com, where you will find financial
highlights, the Company’s quarterly earnings news releases and documents filed
with the U.S. Securities and Exchange Commission, including the latest Form 10-K.

$3,000

$2,500

$2,000

$1,500

$1,000

$500

Asset Growth
(in millions)

0
5
8
,
2
$

4
3
7
,
2
$

5
1
3
,
2
$

3
9
0
,
2
$

3
9
9
,
1
$

Loan Growth
(in millions)

Net Income Growth
(in thousands)

Net Interest Margin

4
7
3
,
1
$

9
8
2
,
1
$

4
6
1
,
1
$

4
6
9
$

8
8
9
$

9
2
0
,
6
4
$

3
2
0
,
4
4
$

1
7
1
,
9
3
$

3
5
9
,
3
3
$

5
0
3
,
5
3
$

$54,000

$48,000

$42,000

$36,000

$30,000

$24,000

$18,000

$12,000

$6,000

%
8
7
.
4

%
4
4
.
4

%
9
4
.
4

%
6
4
.
4

Efficiency Ratio

Return on Average Assets

Return on Average Equity

%
6
9
1
5

%
2
5
2
5

%
8
7
1
5

%
8
4
2
5

%
7
5
3
5

%
8
7
1

%
5
7
1

%
2
8
1

%
0
8
1

%
8
6
1

2.00%

1.75%

1.50%

1.25%

1.00%

0.75%

0.50%

0.25%

%
7
1
6
1

%
0
2
6
1

%
7
9
4
1

%
0
4
4
1

%
9
0
5
1

18%

15%

12%

$1,500

$1,250

$1,000

$750

$250

60%

50%

40%

30%

20%

10%

Dear Fellow Shareholders:

During 2006, one of our priorities was to integrate our latest
acquisitions into our bank template and make our new branches
profitable. The success of these efforts helped to make 2006 our
20th consecutive year of increased earnings. Net income grew
4.6% to $46.0 million from $44.0 million in 2005. On a basic per
share basis, earnings grew 4.2% to $2.22 from $2.13. Net income
grew even more—10.9%—if we exclude the gain realized in 2005
from our sale of ownership rights in the PULSE EFT network (the
gain was $3.9 million pretax and $2.5 million after-tax).

Net interest income, the major source of our earnings, increased
11.2% to $105.9 million from $95.2 million the previous year.
Our net interest margin declined three basis points, to 4.46%
from 4.49% in 2005. We were pleased that we were able to
maintain our net interest margin as well as we did, since we again
faced an unfavorable interest rate environment marked by
upward pressure on deposit interest rates and a flat yield curve.

Noninterest income increased by 1.1% to $44.7 million from
$44.2 million; however, excluding the PULSE proceeds from
2005, noninterest income actually grew 10.9%. This increase
was primarily fueled by growth in service charges, trust fees, real
estate mortgage fees and debit card fees.

Noninterest expense increased 9.9% to $83.1 million from $75.6
million. The increase was due primarily to additional salaries and
employee benefits, facility expenses and amortization of
intangibles related to our acquisition of The First National Bank
of Bridgeport in December 2005.

Our return on average assets decreased to 1.68% from 1.80% for
2005, mainly because of an 11.8% increase in average assets;
however, the return continued to compare very favorably with
our peer group average of 1.13%. Return on average equity
increased to 16.20% from 16.17%, and also compared favorably
with our peer group average of 13.11%. The efficiency ratio (the
share of revenues consumed by operating expenses) increased to
53.57% from 52.48%, but was well below our peer group average
of 60.86%.

As of December 31, 2006, the Company’s consolidated assets
totaled $2.85 billion, a 4.3% increase from $2.73 billion at the
previous year-end. Loans increased 6.6% to $1.37 billion from
$1.29 billion. Total deposits were $2.38 billion compared with
$2.37 billion at the end of 2005. Demand deposits grew 10.0%,
while interest-bearing deposits decreased 2.5%, reflecting our
focus on managing our cost of funds.

The balance sheet at year-end was again marked by strong asset
quality and capital strength. Classified loans (those with some
degree of risk) increased to 3.93% of total loans from 3.84% a year
earlier. However, total nonperforming assets decreased to 0.30%
of total loans and foreclosed assets from 0.33% at the end of
2005. Our 0.30% compares very favorably with the 0.57% reported
by our peer group. At December 31, 2006, the allowance for loan
losses increased to 1.18% of total loans from 1.14% at the end of
2005. We increased the reserve throughout the year to reflect
overall loan growth, an increase in classified loans and recognition
of economic changes including a slowing real estate market.
Shareholders’ equity rose to $300.9 million at December 31, 2006,
from $276.3 million a year earlier.

On April 25, 2006, our Board of Directors declared a 7.1% increase
in the quarterly cash dividend, raising it to $0.30 from $0.28 per
share. This was our 20th consecutive year of cash dividend
increases reflecting our growth and financial strength during the
past two decades. The market share price of our common stock at
year-end was $41.86, up 19.4% from $35.06 at the end of 2005.
The combination of share price appreciation and dividends paid
produced a total return to shareholders of 22.8% for 2006.

F. SCOTT DUESER, President and Chief Executive Officer

In another development of note to shareholders, during 2006
NASDAQ included First Financial Bankshares in its new Global
Select Market, which strives to have the highest initial listing
standards of any stock exchange in the world based on financial
and liquidity requirements. In January 2007, NASDAQ also
announced that First Financial was one of 21 companies added to
its Dividend Achievers Index, which recognizes companies that have
increased their annual dividend payments for the last 10 or more
consecutive years. Only 99 companies nationwide are on this list.

OTHER HIGHLIGHTS

We have been pursuing growth to better serve our customers and
shareholders. Our December 2005 acquisition of The First
National Bank of Bridgeport has yielded more benefits than
expected and provided new growth opportunities. We combined
this bank, located northwest of Fort Worth in Wise County, with
our Southlake bank to create an organization with $296.2 million
in assets at the end of 2006. The combined bank is well
positioned to serve the needs of the rapidly growing communities
in Wise and northern Tarrant counties. The results of this
acquisition again demonstrate the success of our “one bank, ten
charters” concept, which keeps banking decisions in the local
community while making possible the greater efficiencies and
expanded services of a larger bank.

The new branches we opened in Willow Park, Granbury and
Midlothian during 2005 became profitable on a monthly basis in
less time than expected. Each of these communities is within our
prime target for expansion—the area within a 50-mile radius of
the Dallas-Fort Worth Metroplex. The populations of Midlothian,
Granbury and Willow Park are all growing at double-digit rates,
which is faster than the state and national averages, according to
the U.S. Census Bureau. With these new branches and two others
we added in 2005, we now total 44 banking locations and 60 ATMs.

As we expand the First Financial family, we remain focused on
providing superior customer service and attracting and retaining
high-quality employees. We now have approximately 1,000
employees. To underscore our commitment to their professional
development, in December 2006 we created the new position of
Vice President of Training and Education and named Eric
Thompson to the post.

Our “Customer Service First” initiative, launched in the spring of
2005, is built around the concepts that “everything speaks” and
that we need to examine what we do through the “lens of the
customer.” As part of this program, we recognize our employees
with WOW awards, which spotlight employees who go beyond
the call of duty to assist a customer. Their stories are inspiring,
and they are indicative of the customer service first culture we
promote at every level of the organization.

Dear Fellow Shareholders:

During 2006, one of our priorities was to integrate our latest acquisitions into our bank template and make all our new branches profitable. The success of these efforts helped to make 2006 our 20th consecutive year

of increased earnings. Net income grew 4.6% to $46.0 million from $44.0 million in 2005. On a per share basis, earnings grew 4.2% to $2.22 from $2.13. Net income grew even more—10.9%—if we exclude the gain

realized in 2005 from our sale of ownership rights in the PULSE EFT network (the gain was $3.9 million pretax and $2.5 million after-tax).

were pleased that we were able to maintain our net interest margin as well as we did, since we again faced an unfavorable interest rate environment marked by upward pressure on deposit interest rates and a flat yield

curve.

in service charges, trust fees, real estate mortgage fees and debit card fees.

acquisition of The First National Bank of Bridgeport in December 2005.

Noninterest income increased by 1.1% to $44.7 million from $44.2 million; however, excluding the PULSE proceeds from 2005, noninterest income actually grew 10.9%. This increase was primarily fueled by growth

Noninterest expense increased 9.9% to $83.1 million from $75.6 million. The increase was due primarily to additional salaries and employee benefits, facility expenses and amortization of intangibles related to our

1.13%. Return on average equity increased to 16.20% from 16.17%, and also compared favorably with our peer group average of 13.11%. The efficiency ratio (the share of revenues consumed by operating expenses)

increased to 53.57% from 52.48%, but was well below our peer group average of 60.86%.

were $2.38 billion compared with $2.37 billion at the end of 2005. Demand deposits grew 10.0%, while interest-bearing deposits decreased 2.5%, reflecting our focus on managing our cost of funds.

nonperforming assets decreased to 0.30% of total loans and foreclosed assets from 0.33% at the end of 2005. Our 0.30% compares very favorably with the 0.57% reported by our peer group. At December 31, 2006, the

allowance for loan losses increased to 1.18% of total loans from 1.14% at the end of 2005. We increased the reserve throughout the year to reflect overall loan growth, an increase in classified loans, and recognition of

economic changes including a slowing real estate market. Shareholders’ equity rose to $300.9 million at December 31, 2006, from $276.3 million a year earlier.

growth and financial strength during the past two decades. The market share price of our common stock at year-end was $41.86, up 19.4% from $35.06 at the end of 2005. The combination of share price appreciation

and dividends paid produced a total return to shareholders of 22.8% for 2006.

In another development of note to shareholders, during 2006 NASDAQ included First Financial Bankshares in its new Global Select Market, which has the highest listing standards of any stock exchange in the world

based on financial and liquidity requirements.

OTHER HIGHLIGHTS

growth opportunities. We combined this bank, located northwest of Fort Worth in Wise County, with our Southlake bank to create an organization with $296.2 million in assets at the end of 2006. The combined

bank is well positioned to serve the needs of the rapidly growing communities in Wise and northern Tarrant counties. The results of this acquisition again demonstrate the success of our “one bank, ten charters”

concept, which keeps banking decisions in the local community while making possible the greater efficiencies and expanded services of a larger bank.

expansion—the area within a 50-mile radius of the Dallas-Fort Worth Metroplex. The populations of Midlothian, Granbury and Willow Park are all growing at double-digit rates, which is faster than the state and

national averages, according to the U.S. Census Bureau. With these new branches and two others we added in 2005, we now total 44 banking locations and 60 ATMs.

our commitment to their professional development, in December 2006 we created the new position of Vice President of Training and Education, and named Eric Thompson to the post.

this program, we recognize our employees with WOW awards, which spotlight employees who go beyond the call of duty to assist a customer. Their stories are inspiring, and they are indicative of the customer

service–first culture we promote at every level of the organization.

includes a Multicultural Committee comprised of representatives from each bank. Last year, this program made great progress in expanding our financial products and services to meet the banking needs of the

growing Hispanic community. For example, we have recently launched two initiatives, Directo a Mexico and La Cuenta, which are designed to provide an easy, safe way to transfer funds internationally. We also made

our banking locations more welcoming with Spanish-language signs and printed materials.

First Financial family. Ron is a highly experienced banker and has been with our company since 1993. Meanwhile, First Financial Bank, Stephenville, named Ron Mullins as its new President and CEO. Ron brings 28

years of Texas banking experience; most recently, he was market President for Wells Fargo Bank in Midland.

First Financial Trust & Asset Management Company also announced a new President and CEO. Kirk W. Thaxton, who has had more than 20 years’ experience with our company, filled this important position. Kirk

replaced Robert S. Patterson, who retired after leading our trust operations for 12 years. Bob will remain on the First Financial Trust & Asset Management board and serve as a consultant to our company.

We are pleased to announce that Tucker S. Bridwell, President of Mansfeldt Investment Corporation and President of the Dian Graves Owen Foundation, has accepted nomination for election as a director of the

Company at our Annual Shareholders Meeting in April. Tucker, a CPA, has served on the board of First Financial Bank, Abilene, for 20 years and has a long history of business and civic involvement in Abilene and

Texas. He presently serves on the Board of Directors and Audit Committee of Petrohawk Energy Corporation, which is publicly traded on NASDAQ. He has served on the boards of several other prominent

organizations, including the Texas Department of Economic Development, the Development Corporation of Abilene, the Abilene Industrial Foundation, Hendrick Medical Center Foundation, the Community

Foundation of Abilene, the Abilene Chamber of Commerce and McMurry University. Tucker earned his BBA and MBA from Southern Methodist University.

LOOKING AHEAD

improving our loan-to-deposit ratio and improving our efficiency ratio. Equally important, we will strive to effectively manage our net interest margin to counter the effects of the unfavorable flat yield curve. And we

will continue to leverage our strengths in treasury management, mortgage lending, trust services and student loans, all of which are areas in which we see opportunities for further growth.

First Financial has successfully completed eight bank acquisitions during the past decade. We are interested in making further acquisitions, but we are a disciplined and patient buyer. We will continue to look for

banks (and also opportunities to open new branches) in growing communities with attractive infrastructure and amenities, preferably within 50 miles of the Dallas-Fort Worth Metroplex and along the Interstate 35

corridor in Texas. Many independent bank owners who are considering selling are attracted to our concept of allowing local banks to maintain their own boards of directors and keep decision making local. Our

approach also appeals to experienced bankers who want to remain actively involved in managing their community bank after its acquisition.

community. To run our banks, we turn to hometown people who know their communities best. We salute our employees, at every level of the organization, for their dedication to this company and their

All of us on the management team recognize that we work for you, our shareholders. We work daily to grow the Company and manage it well so that we can increase profitability and reward our shareholders. Thank

commitment to building the civic life of their communities.

you for your investment in and support of First Financial Bankshares.

F. Scott Dueser

President and Chief Executive Officer

First Financial Bankshares, Inc.

Tucker came by and read his paragraph this morning. Mansefeldt is misspelled in the letter. It is missing an e.

LOOKING AHEAD

First Financial Bankshares is well positioned to meet the financial
needs of its communities and to provide long-term growth to its
shareholders. Over the coming year, we will focus on growing
our loan portfolio, improving our loan-to-deposit ratio and
improving our efficiency ratio. Equally important, we will strive
to effectively manage our net interest margin to counter the
effects of the unfavorable flat yield curve. And we will continue
to leverage our strengths in treasury management, mortgage
lending, trust services and student loans, areas in which we see
opportunities for further growth.

First Financial has successfully completed ten bank acquisitions
during the past decade. We are interested in making further
acquisitions, but we are a disciplined and patient buyer. We will
continue to look for banks (and also opportunities to open new
branches) in growing communities with attractive infrastructure
and amenities, preferably within 50 miles of the Dallas-Fort
Worth Metroplex and along the Interstate 35 and 20 corridors in
Texas. Many independent bank owners who are considering
selling are attracted to our concept of allowing local banks to
maintain their own boards of directors and keep decision making
local. Our approach also appeals to experienced bankers who
want to remain actively involved in managing their community
bank after its acquisition.

“Because Community Matters” is the theme of this year’s annual
report. At First Financial, we are committed to being the bank of
choice in each community we serve and to being actively
involved in the life of that community. To run our banks, we
turn to hometown people who know their communities best.
We salute our employees, at every level of the organization, for
their dedication to this company and their commitment to
building the civic life of their communities.

All of us on the management team recognize that we work for
you, our shareholders. We work daily to grow the Company and
manage it well so that we can increase profitability and reward
our shareholders. Thank you for your investment in and support
of First Financial Bankshares.

F. Scott Dueser
President and Chief Executive Officer
First Financial Bankshares, Inc.

The population of Texas is becoming more diverse, and First
Financial wants to be the bank of choice for all neighborhoods.
With that goal in mind, in late 2005 we created a Multicultural
Development program that includes a Multicultural Committee
comprised of representatives from each bank. Last year, this
program made great progress in expanding our financial products
and services to meet the banking needs of the growing Hispanic
community. For example, we have recently launched two
initiatives, Directo a Mexico and La Cuenta, which are designed
to provide an easy, safe way to transfer funds internationally.
We also made our banking locations more welcoming with
Spanish-language signs and printed materials.

Two of our banks and one of our subsidiaries named new leaders
in 2006. Ron Butler, formerly President and CEO of our
Stephenville bank, became President and CEO of our Abilene
bank, the largest member of the First Financial family. Ron is a
highly experienced banker and has been with our company since
1993. Meanwhile, First Financial Bank, Stephenville, named Ron
Mullins as its new President and CEO. Ron brings 28 years of
banking experience; most recently, he was market President for
Wells Fargo Bank in Midland.

First Financial Trust & Asset Management Company also
announced a new President and CEO. Kirk W. Thaxton, who has
more than 20 years’ experience with our company, filled this
important position. Kirk replaced Robert S. Patterson, who retired
after leading our trust operations for 12 years. Bob will remain on
the First Financial Trust & Asset Management board and will serve
as a consultant to our company.

We are pleased to announce that Tucker S. Bridwell, President of
Mansefeldt Investment Corporation and President of the Dian
Graves Owen Foundation, has accepted nomination for election
as a director of the Company at our Annual Shareholders Meeting
in April. Tucker, a CPA, has served on the board of First Financial
Bank, Abilene, for 20 years and has a long history of business and
civic involvement in Abilene and Texas. He presently serves on
the Board of Directors and Audit Committee of Petrohawk
Energy Corporation, which is publicly traded on NASDAQ. He
has served on the boards of several other prominent organizations,
including the Texas Department of Economic Development, the
Development Corporation of Abilene, the Abilene Industrial
Foundation, Hendrick Medical Center Foundation, the
Community Foundation of Abilene, the Abilene Chamber of
Commerce and McMurry University. Tucker earned his BBA and
MBA degrees from Southern Methodist University.

Because ... Community Matters.

Scott Dueser, a member of the Texas Tech Board of Regents
and the Abilene Community Partners, helped raise $15.5
million to establish a branch of the Texas Tech School of
Pharmacy in Abilene. The school, which will be located
in the North Abilene medical district, will host 160
students and 40 professors and staff members adding to
the economic development of Abilene, enhancing local
educational resources with its doctorate program and
providing improved health care to the area.

Back Row L-R: Sharon McDonald, Greathouse Foundation; Ron Butler,
First Financial Bank, Abilene; Tucker Bridwell, Dian Graves Owen
Foundation; Larry Gill, Dodge Jones Foundation; Laura Moore, Hendrick
Medical Center

Front Row L-R: Scott Dueser, Texas Tech Regent and President/CEO of First
Financial Bankshares; School of Pharmacy Dean Arthur A. Nelson Jr., Ph.D.

Board of Directors

Seated L -R: Steve Stephens, Dian Stai, Bynum Miers, Kenneth Murphy
Standing L -R: Kade Matthews, Scott Dueser, Derrell Johnson, Johnny Trotter, David Copeland, Mac Coalson, Joseph Canon, Murray Edwards

BOARD MEMBER

YEAR ELECTED

COMMITTEE
APPOINTMENT*

BOARD MEMBER

YEAR ELECTED

COMMITTEE
APPOINTMENT*

1971

1996

1, 3, 4

1998

1, 2, 4

1991

2006

2000

Kenneth T. Murphy
Chairman of the Board

Joseph E. Canon, J.D.
Executive Director
Dodge Jones Foundation

Mac A. Coalson
Mac A. Coalson Real Estate

David Copeland
President, SIPCO, Inc. and
Shelton Family Foundation

F. Scott Dueser
President and
Chief Executive Officer

Murray Edwards
Principal, The Edwards Group

Derrell E. Johnson
Former President and CEO
Rady and Associates
Consulting Engineers

*COMMITTEES

Kade Matthews
Ranching and Investments

1998

Bynum Miers
Ranching

Dian Graves Stai
Chair, Mansefeldt
Investment Corporation
Director, Dian Graves
Owen Foundation

F.L. (Steve) Stephens
Retired Chairman
and CEO, Town &
Country Food Stores, Inc.

Johnny E. Trotter
President and CEO
Livestock Investors, Ltd.

1992

1, 2, 4

1993

1998

1, 3, 4

2003

1, 2, 4

For more information on First Financial Bankshares’
Board of Directors, please visit our Web site at www.ffin.com

1 Executive Committee – F. Scott Dueser, Chairman
2 Audit Committee – David Copeland, Chairman
3 Compensation Committee – F.L. (Steve) Stephens, Chairman
4 Nominating/Corporate Governance Committee – Mac A. Coalson, Chairman

First Financial Trust & Asset Management Company, N.A.

LOCATIONS

Abilene Office
400 Pine St.
(325) 627-7100

San Angelo Office
301 W. Beauregard
(325) 659-5987

Stephenville Office
2201 W. South Loop
(254) 918-6262

Sweetwater Office
201 Elm
(325) 235-6640

Metroplex Office
550 Bailey Ave.
Suite 510
Fort Worth
(817) 410-2920

Seated L -R: Joe Ayres (Stephenville) and Robert Patterson (DFW Metroplex) Standing L -R: David Byrd (San Angelo),
Konrad Halbert (DFW Metroplex), Kirk Thaxton (Abilene) and Michael Sheehan (Sweetwater)

OFFICERS

Kirk W. Thaxton
President & CEO

Richard Young
Executive Vice President
Manager, Abilene Office

David Byrd
Executive Vice President
Manager, San Angelo Office

Joe R. Ayres
Senior Vice President
Manager, Stephenville Office

Michael D. Sheehan
Senior Vice President
Manager, Sweetwater Office

Konrad S. Halbert
Senior Vice President
Manager, Metroplex Office

Ralph Gibson
Senior Vice President
Manager, Investments

Larry Cleveland
Senior Vice President
Manager, Operations

Randy Spiva
Senior Vice President
Manager, Oil & Gas

David B. Pitzer
Senior Vice President
Manager, Real Property

HIGHLIGHTS FOR 2006:

• Increased assets 13 percent or $150 million during 2006
to finish the year with a book value of $1.3 billion.

• Experienced net income growth of 105 percent in our
Sweetwater office.

• Experienced asset growth for the year of $103 million in
our Abilene office.

• Hired Ralph Gibson as our new Investment Manager
following the retirement of Jerry Nelson.

• Elected Kirk W. Thaxton as President and CEO following
the retirement of Robert Patterson.

Trust Assets
(in millions)

Trust Fees
(in millions)

Trust Net Income
(in millions)

0
0
3
1
$

0
5
1
1
$

8
6
0
1
$

6
8
9
$

2
9
9
$

$1,300

$1,000

$800

$600

$400

$200

6
6
7
$

7
0
7
$

7
3
6
$

4
8
5
$

2
0
6
$

6
7
0
2
$

9
0
9
1
$

$2.0

$1.8

$1.6

$1.4

$1.2

6
9
5
.
1
$

7
8
5
.
1
$

4
2
3
.
1
$

Because Community Matters

WHAT MAKES FIRST FINANCIAL BANKSHARES
DIFFERENT FROM OTHER BANKS?

We’re a community-focused company. Even though we
operate in a growing number of Texas markets, First Financial
Bankshares continues to believe that decisions are best made
at the local level. That’s why we operate ten separately
chartered banks, with local boards of directors, local bank
presidents and local decision-making.

Our customers don’t have to wait for someone in Abilene – or Dallas or Atlanta or New York – to decide on their loans. Decisions
can be made quickly and efficiently on the local level. Another distinguishing feature of our company is our passion for superior
customer service. That’s why we introduced our “Customer Service First” initiative in 2005. We put customers first, looking at
what we do through the eyes of the customers, and we keep banking decisions at the local community level – that sums up what
makes First Financial Bankshares different.

KEEPING DECISION-MAKING AT THE LOCAL COMMUNITY LEVEL SOUNDS GREAT, BUT ISN’T IT MORE DIFFICULT
TO OPERATE TEN SEPARATELY CHARTERED BANKS? WHY NOT CONSOLIDATE ALL OF THESE LOCAL BANK
SUBSIDIARIES INTO ONE BANK FOR GREATER EFFICIENCY?

Banking has always been a local business. No one better knows the needs of the local community than the bank officers, employees
and board members who live and work there. That’s why we believe operating separately chartered banks makes sense – for us and
for our customers. Behind the teller line, however, our ten banks operate as one bank, so we can operate with greater efficiency.
We call this our “one bank, ten charters” concept. We’ve consolidated many of the backroom operations, such as investment
securities, accounting, check processing, technology and employee benefits, which improves the local bank’s efficiency and frees
the local bank management to concentrate on what they do best – serving the banking needs of the local community. As a result,
our efficiency ratio is far better than the average bank, ending the year at 53.57 percent. The “one bank, ten charters” concept
works well for us, our customers and our employees.

MANY BANKS ARE EXPANDING ACROSS STATE LINES. WHY DOES FIRST FINANCIAL OPERATE ONLY WITHIN TEXAS?

Two answers: First, we’re blessed to be located in one of the nation’s largest, fastest-growing and most economically diverse states.
With nearly 23 million residents, Texas has more people than any other state except California. The population of Texas grew
9.6 percent from 2000-2005, nearly double the national rate, according to the U.S. Census Bureau. Many of the communities
in which we operate are growing faster than the statewide average, as shown below:

POPULATION GROWTH 2000-2005*

BRIDGEPORT AND WISE COUNTY

FORT WORTH/TARRANT COUNTY

16.2%

12.1%

WEATHERFORD, WILLOW PARK, ALEDO

GRANBURY AND HOOD COUNTY

16.2%

16.6%

CLEBURNE, MIDLOTHIAN, JOHNSON COUNTY 15.4%

*Source: U.S. Census Bureau

The economic diversity of our Texas markets is another plus. These economies include dynamic centers of higher education,
agriculture, energy and natural resources, health care, tourism, retirement living, manufacturing and distribution. We have plenty
of growth opportunities right here in Texas, so we believe there’s no need to look elsewhere. Second, we stick to what we know.
We understand the people and economies in the Central, West and High Plains regions of Texas, so that’s where we keep our focus.
We believe companies get into trouble when they venture too far away from their core business or markets.

THE OUT-OF-STATE BANKS COMING INTO TEXAS ALL SEEM FOCUSED ON OPENING BRANCHES IN THE
LARGEST METROPOLITAN MARKETS -- DALLAS, FORT WORTH, HOUSTON, AUSTIN AND SAN ANTONIO.
WHY DOESN’T FIRST FINANCIAL OPERATE BANKS IN THESE CITIES?

Our “community matters” way of doing business works best for us in small and mid-size markets, where people want to live and
we can play a prominent role in the economic, civic and cultural life of the community. Our goal is to serve these communities
well and to experience growth as these markets continue to expand. In many instances, banking competition is also less fierce in
smaller markets, making it easier for us to operate rationally and attract and retain high-caliber employees who prefer not only
our community-banker concept but also the high quality of life in smaller cities.

FIRST FINANCIAL HAS BEEN PROMOTING ITS “CUSTOMER SERVICE FIRST” INITIATIVE. WHAT’S BEHIND THIS
PROGRAM AND HOW DEEP IS THE COMPANY’S COMMITMENT TO CUSTOMER SERVICE?

The “Customer Service First” initiative was launched in the spring of 2005, but putting customers first has been integral to the way
we do business since we first opened our doors in 1890. We strive to view everything we do through the lens of the customer,
to ensure that we provide the best customer service experience at every step of the way. Among other things, the Customer Service
First initiative recognizes our employees for exceptional service to our customers. Since the program was launched, we’ve honored
more than 70 employees with “WOW” awards for going above and beyond the call of duty to serve our customers.

WHAT OTHER NEW STRATEGIC INITIATIVES HAVE BEEN INTRODUCED RECENTLY AT FIRST FINANCIAL?

Keeping community focused and putting customers first requires committed, motivated and well-trained employees. We’re proud
of our dedicated employees at First Financial. In December 2006, we named Eric Thompson as our company’s Vice President of
Training and Education. Eric is leading a new initiative to provide expanded training to employees at all of our banks, which we
believe will pay big dividends in the future. At the same time, we recognize that the population of Texas is changing and
becoming more diverse. In late 2005, we created a multicultural development program and named Daniel Ortiz as Vice President.
Thanks to Daniel’s leadership, we have launched new services such as Directo a Mexico, which offers customers the opportunity
to send money to Mexico using the Automated Clearing House (ACH) system, the same method used domestically for direct deposit
of checks, and La Cuenta, which allows bank customers to provide access to funds to friends or family in another country using
La Cuenta ATM cards.

CAN YOU GIVE US SOME INSIGHTS INTO FIRST FINANCIAL’S GROWTH STRATEGY?

Over the years, we’ve grown First Financial three ways: by growing our banks internally, through opening new branch locations
and by acquisition of other banks. During the past decade, since the beginning of 1996, we’ve completed ten bank acquisitions
and more than doubled total assets from $1.26 billion to $2.85 billion. We’ve also established a trust and asset management company

and a technology services company, both of which operate as
subsidiaries of First Financial Bankshares. Looking ahead, we
will continue to grow locally by better serving the needs of
our customers and putting them first in all of our decisions.
We continually look for new branch locations, so we can serve
our customers more conveniently, and we’re always cultivating
relationships with other Texas bankers who may have an interest
in being acquired by us at some point in the future.

WHEN TARGETING BANKS FOR ACQUISITIONS,
WHAT DO YOU LOOK FOR?

Most importantly, the bank needs to be in the type of community
that fits our profile. We like growing communities with good
amenities – schools, infrastructure, commerce and lifestyle.
We prefer non-metropolitan markets, either within a 50-mile

radius of the Dallas/Fort Worth metroplex or along the Interstate 35 and 20 corridors in Texas. Banks in the $100 million
to $250 million asset size fit our “sweet spot” for acquisition, but we’ll consider banks that are larger or smaller, or that are in other
areas of Texas if we believe they would be a good fit to our existing company.

HOW CAN I LEARN MORE ABOUT FIRST FINANCIAL BANKSHARES AND KEEP UP WITH NEW DEVELOPMENTS?

Our corporate Web site is the most complete and up-to-date source for news about First Financial Bankshares. You can visit it at
http://www.ffin.com. Under the “investor relations” tab, you’ll find the full text of the company’s news releases, copies of previous
years’ annual reports, biographical profiles of the company’s executive management team, information about our stock, and access
to documents filed with the U.S. Securities and Exchange Commission, such as Form 10-K, 10-Q and 8-K filings. We also encourage all
shareholders, employees and other interested parties to sign up
for our free e-mail service. You can choose to receive daily e-mails
with the closing stock price, or e-mail messages when the
company issues a news release, files a new document with the
SEC or posts a new investor slide presentation on its Web site.
You can sign up online at http://www.ffin.com/email. Finally,
shareholders are invited to attend our Annual Meeting of
Shareholders, which is scheduled for April 24, 2007, in Abilene.
More details about the Annual Meeting may be found on the
back inside cover of this report and in the proxy statement that
is mailed to all shareholders.

First Financial Bank, N.A.

CHARTERED 1890

ABILENE, CLYDE, MORAN

RON BUTLER, President and CEO, at The Grace,
an Abilene landmark since 1909.

MAIN OFFICE .......................................... (325) 627-7200

400 Pine

.................................................

Abilene, Texas 79601

LOCATIONS

4400 Buffalo Gap Road
4350 Southwest Drive
920 N. Willis
3300 S. 14th Street
1010 N. Judge Ely Blvd.
701 Pine
1345 Barrow
2617 Antilley Road
1650 State Highway 351
718 Elm
400 Ground

...............................
................................
.............................................
.....................................
..............................
....................................................
...............................................
.....................................
..............................
.....................................................
...............................................

Abilene, Texas 79606
Abilene, Texas 79606
Abilene, Texas 79603
Abilene, Texas 79605
Abilene, Texas 79601
Abilene, Texas 79601
Abilene, Texas 79605
Abilene, Texas 79606
Abilene, Texas 79601
Clyde, Texas 79510
Moran, Texas 76464

SENIOR OFFICERS

F. Scott Dueser
Chairman of the Board

Ron Butler
President and
Chief Executive Officer

Tom Boecking
Executive Vice President
South Branch

Ben McAnally
Executive Vice President
Treasury Management

DIRECTORS

J. Michael Alexander
President
James M. Alexander & Co.

Tucker S. Bridwell,
President and
Chief Executive Officer
Mansefeldt Investment Corp.

Ron Butler
President and
Chief Executive Officer

Joseph E. Canon
Executive Director
Dodge Jones Foundation

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.

Murray Edwards
Principal, The Edwards Group

Allan D. Frizzell
Executive Vice President
Enrich Oil Corporation

Tom O’Neil
Executive Vice President
River Oaks Branch

John Prince
Executive Vice President
Personal Loans

Marelyn Shedd
Executive Vice President
Commercial Loans

Charles E. Tennesson
Executive Vice President, Chief
Financial Officer and Cashier

Tim Lancaster
Chairman, CEO and President
Hendrick Health System

Bynum Miers
Rancher

Stanley Morris, Jr.
Investments

Kenneth T. Murphy
First Financial Bankshares, Inc.

Dian Graves Stai
Chair
Mansefeldt Investment Corp.
Director
Dian Graves Owen Foundation

Leigh Taliaferro, M.D.
Physician

DIRECTOR EMERITUS

Raymond A. McDaniel, Jr.
Investments

ADVISORY

Bob J. Surovik
McMahon Surovik Suttle, P.C.

Steve Suttle
McMahon Surovik Suttle, P.C.

Because ...

community matters, First Financial Bank and

its employees are leaders in many community organizations
including United Way of Abilene and Big Brothers Big Sisters.
The bank won the Pinnacle Award in 2006 from the United Way
of Abilene for exceeding its contribution goal. In addition, First
Financial has been voted the Abilene Reporter-News Readers’
Choice Award for Best Bank for more than 10 consecutive years.

★★

41%

Taylor, Callahan & Shackelford Counties
Deposit Market Share

IN THOUSANDS

DEC. 31, 2006

DEC. 31, 2005

Assets

Loans

Deposits

Equity

Net Income

Return on
Average Assets

Efficiency Ratio

$926,227

$898,412

392,334

762,285

69,789

13,898

388,944

788,043

68,393

13,992

1.60%

50.37%

1.63%

51.65%

CLEBURNE, BURLESON, ALVARADO, MIDLOTHIAN

First Financial Bank, N.A.

CHARTERED 1927

MAIN OFFICE ........................... (817) 556-5000 or (800) 226-2940

403 N. Main

........................................

Cleburne, Texas 76033

MATT REYNOLDS, President and CEO. Johnson County benefits
from the Barnett Shale, one of the largest gas fields in the nation.

LOCATIONS

200 N. Ridgeway
1900 S.W. Wilshire
201 E. Highway 67
1490 E. Main

.................................
.............................
..............................
......................................

Cleburne, Texas 76033
Burleson, Texas 76028
Alvarado, Texas 76009
Midlothian, Texas 76065

SENIOR OFFICERS

Matt Reynolds
President and
Chief Executive Officer

Craig Beskow
Executive Vice President
and Cashier

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

Because ...

Brad Evans
Executive Vice President

Derek Schmidt
Executive Vice President

F. Scott Dueser
First Financial Bankshares, Inc.

★★

Jim Easdon
Investments

Hollis E. (Gene) Joslin
Investments

Brent D. Magers
Investments

George Marti
Marti Enterprises

Cleburne’s Cinco de Mayo celebration had not been held for two
years, but it was revived in 2006 thanks to the leadership of
First Financial Bank’s Multicultural Committee, led by Cynthia
Allen, Dora Vasquez and Alfred Vega (from L-R). They worked
with the Cleburne Chamber of Commerce to bring back this
popular day of games, dances, food and fellowship. First
Financial Bank is active in many civic causes in Johnson and
Ellis counties, including the American Cancer Society’s annual
Relay for Life.

20%

Johnson County
Deposit Market Share

IN THOUSANDS

DEC. 31, 2006

DEC. 31, 2005

Assets

Loans

Deposits

Equity

Net Income

Return on
Average Assets

Efficiency Ratio

$234,613

$238,114

115,550

214,417

18,584

3,761

110,711

217,663

18,269

3,379

1.62%

57.77%

1.48%

56.92%

First Financial Bank, N.A.

CHARTERED 1934

EASTLAND, RANGER, RISING STAR

TOMMY J. BARROW, Chairman, President and CEO,
at Old Rip, an Eastland County legend.

MAIN OFFICE .......................................... (254) 629-6100

201 E. Main

..............................................

Eastland, Texas 76448

LOCATIONS

106 Main
206 West College

.................................................
......................................

Ranger, Texas 76470
Rising Star, Texas 76471

SENIOR OFFICERS

Tommy J. Barrow
Chairman of the Board, President
and Chief Executive Officer

Jim Davidson
Senior Vice President and
Cashier

Clint S. Ferguson
Executive Vice President

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.

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

★★

48%

Eastland County Deposit Market Share

IN THOUSANDS

DEC. 31, 2006

DEC. 31, 2005

Assets

Loans

Deposits

Equity

Net Income

Return on
Average Assets

Efficiency Ratio

$136,681

$148,599

46,377

117,333

15,280

2,312

49,626

128,436

14,104

1,644

1.70%

49.74%

1.48%

55.40%

Because ...

First Financial Bank
in Eastland County
is a major supporter

of the annual Eastland County Junior
Livestock Auction. Pictured here, from left,
are Kayla Vestal, Livestock Show winner,
along with bank officers Clint Ferguson,
Jonathan Newton and Sharon Jordan.

The bank also provides financial and
volunteer support for the local Chambers
of Commerce, including Eastland’s annual
Rip Fest, and for school district youth
activities in Eastland, Ranger and Rising Star.

HEREFORD

Hereford State Bank

CHARTERED 1947

MAIN OFFICE .......................................... (806) 363-8200

212 E. Third

.............................................

Hereford, Texas 79045

MIKE MAULDIN, Chairman, President and CEO.
Hereford is known as the “Beef Capital of the World.”

SENIOR OFFICERS

Mike Mauldin
Chairman of the Board, President
and Chief Executive Officer

Kent Jackson
Executive Vice President
and Chief Credit Officer

Steve Gilbert
Executive Vice President
and Cashier

Jeff Brown
Senior Vice President
and Security Officer

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
Rancher and
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

Because ...

Hereford State Bank employees actively
support the annual American Cancer
Society Relay for Life. HSB board
member Johnny Trotter donated a gym
and the bank employees organized a
“Win a Gym” raffle. They also sold
barbecue lunches to be named top relay
fundraiser. The bank’s community
involvement runs deep. United Way
honored Hereford State Bank this year
with its prestigious “Champion of the
High Plains Award.” Bank officer
Charlene Sanders won the “Honorary
Bull Chip Award” from the Hereford
Chamber of Commerce and was named
“Fan of the Year” at the Hereford High
School Sports Award Program.

★★

45%

Deaf Smith County
Deposit Market Share

IN THOUSANDS

DEC. 31, 2006

DEC. 31, 2005

Assets

Loans

Deposits

Equity

Net Income

Return on
Average Assets

Efficiency Ratio

$118,398

$104,821

76,431

103,587

8,268

1,796

67,637

87,621

8,346

1,736

1.73%

50.18%

1.72%

50.53%

City National Bank

CHARTERED 1925

MINERAL WELLS

KEN WILLIAMSON, Chairman, President and CEO,
at Possum Kingdom Lake in Palo Pinto County.

MAIN OFFICE .............................................. (940) 327-5400

1900 E. Hubbard

................................

Mineral Wells, Texas 76067

SENIOR OFFICERS

Kenneth A. Williamson
Chairman of the Board, President
and Chief Executive Officer

Eddie Gregory
Senior Vice President
and Cashier

Brad Seay
Executive Vice President
Lending

Mike Mearse
Senior Vice President
Lending

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.

Don O’Neal
O’Neal Distributing
Company, Inc.,
O’Neal Enterprises, Inc.

David Ramsey, M.D.
Family Practice Center

Walter Joe Thomas, D.D.S.
Dentist

Because ...

City National Bank is a proud corporate sponsor of the Brazos
Foundation which has given more than $100,000 in donations
to local organizations. The bank is also active in many other
civic groups including the United Way and Mineral Wells
Chamber of Commerce. Pictured below is Joe Ruelas, CNB officer
and a member of the Navy Reserves, standing above the Brazos
River, a symbol of life in Palo Pinto County.

★★

29%

Palo Pinto County Deposit Market Share

IN THOUSANDS

DEC. 31, 2006

DEC. 31, 2005

Assets

Loans

Deposits

Equity

Net Income

Return on
Average Assets

Efficiency Ratio

$130,803

$129,535

77,756

111,320

17,405

2,385

69,486

112,318

16,830

2,177

1.81%

44.87%

1.81%

45.01%

SAN ANGELO

San Angelo National Bank

CHARTERED 1975

MAIN OFFICE .......................................... (325) 659-5900

301 W. Beauregard

................................

San Angelo, Texas 76903

MIKE BOYD, Chairman, President and CEO,
pictured at the San Angelo Visitors Center on the Concho River.

LOCATIONS

3471 Knickerbocker

................................

San Angelo, Texas 76904

SENIOR OFFICERS

Michael L. Boyd
Chairman of the Board, President
and Chief Executive Officer

Katherine Reeves
Executive Vice President
and Cashier

Robert Pate
Executive Vice President

DIRECTORS

Michael L. Boyd
Chairman of the Board, President
and Chief Executive Officer

Robert D. Housley
President and Owner
Housley Communications

David F. Lupton
President
Angelo Glass & Mirror
Company, Inc.

Bill Pfluger
Rancher

Barbara Riley
Retired 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.

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.

Because ...

The Spring Chicken Affair, the annual fundraiser for the
West Texas Rehabilitation Center, has raised more than half
a million dollars since its inception 24 years ago, and San
Angelo National Bank has been an active sponsor since the
beginning. West Texas Rehabilitation Center serves 20,000
children and adults each year. The bank rallied community
support in 2006 for Alexa Nichols, pictured right, who was
paralyzed in a diving accident. Pictured with Alexa are her
dad, Craig Nichols, therapist Jimmy Villers, and bank officers
Lori Davis and Robert Pate. San Angelo National Bank
supports many other community causes, including Meals
for the Elderly.

★★

22%

Tom Green County
Deposit Market Share

IN THOUSANDS

DEC. 31, 2006

DEC. 31, 2005

Assets

Loans

Deposits

Equity

Net Income

Return on
Average Assets

Efficiency Ratio

$322,142

$310,673

124,634

259,372

42,868

5,525

116,438

264,318

42,759

5,814

1.82%

44.73%

1.95%

42.93%

First Financial Bank, N.A.

CHARTERED 1907

SOUTHLAKE, TROPHY CLUB, KELLER,
BRIDGEPORT, BOYD, DECATUR

MARK JONES, President and CEO, at the Southlake Town Square.

MAIN OFFICE .......................................... (817) 410-2915

3205 E. Highway 114

..................................

Southlake, Texas 76092

LOCATIONS

95 Trophy Club Drive
891 E. Keller Parkway, Suite 100
909 Stevens
609 Rock Island Avenue
1415 S. FM 51

..............................
........................
..............................................
...................................
...............................................

Trophy Club, Texas 76262
Keller, Texas 76248
Bridgeport, Texas 76426
Boyd, Texas 76023
Decatur, Texas 76234

SENIOR OFFICERS

Mark L. Jones
President and
Chief Executive Officer

F. Mills Shallene
Wise County Market President

DIRECTORS

Perry D. Elliott
Chairman of the Board

James E. Burger
Burger Construction

William Ray Cook, Jr., CPA
Cook McDonald & Co.

Jack Dortch
Jack Dortch Insurance Agency

F. Scott Dueser
First Financial Bankshares, Inc.

Barry Green
Attorney and Partner
Smith & Green, P.C., Law Firm

J. Bruce Hildebrand
First Financial Bankshares, Inc.

Derrell E. Johnson
Former President and CEO
Rady Associates
Consulting Engineers

J. Sean Shope
Senior Vice President

Homer Pittman, Jr.
Senior Vice President and
Chief Financial Officer

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

★★

Cities of Southlake,
Keller and Trophy Club
Deposit Market Share: 9%
Cities of Bridgeport,
Boyd and Decatur
Deposit Market Share: 27%

IN THOUSANDS

DEC. 31, 2006

DEC. 31, 2005

Assets

Loans

Deposits

Equity

Net Income

Return on
Average Assets

Efficiency Ratio

$296,210

$272,927

158,951

247,351

33,910

3,602

141,794

233,139

32,672

1,184

1.29%

60.02%

1.02%

68.00%

Because ...

Bank officer Beverly Lindsey, pictured here
in front of the Wise County Courthouse,
was named “Citizen of the Year” by the
Decatur Chamber of Commerce for her active
community involvement, including the Wise
County Spirit of Christmas event, the Decatur
Main Street Committee, the Northwest
Independent School District Education
Foundation and the Wise County Regional
Health System Foundation. In Bridgeport, the
bank is active in the Bridgeport Educational
Foundation which raises money for college
scholarships and funds classroom grants for
teachers to purchase additional supplies and
teaching materials.

STEPHENVILLE, GRANBURY, GLEN ROSE

First Financial Bank, N.A.

CHARTERED 1997

MAIN OFFICE

........................................... (254) 965-5036

2201 W. South Loop

................................

Stephenville, Texas 76401

RON MULLINS, President and CEO, observes a practice
session for the Tarleton State University basketball team.

LOCATIONS

1875 Lingleville Road
199 N. Columbia
400 Big Bend Trail
2007 East Highway 377
1600 S. Morgan
5310 E. Hwy. 377, Suite 300
(mortgage production office)

Stephenville, Texas 76401
Stephenville, Texas 76401
Glen Rose, Texas 76043
Granbury, Texas 76049
Granbury, Texas 76048
Granbury, Texas 76049

SENIOR OFFICERS

Ron N. Mullins
President and
Chief Executive Officer

John Power
Glen Rose Market President

Bart Rodgers
Granbury Market President

DIRECTORS

Perry D. Elliott
Chairman of the Board

Ron N. Mullins
President and
Chief Executive Officer

William L. Corbin
Investments

Dereece Howell
Executive Vice President
and Cashier

Robert Lemons
Executive Vice President

Ken Luker
Executive Vice President

Bill Hooks
Owner
Hooks Lakeside Motors

Bill Parham
Parham & Parham, CPAs

Jerry Parham
Investments

F. Scott Dueser
First Financial Bankshares, Inc.

Royce Swaim
Owner, Swaim Farm & Ranch

J. Bruce Hildebrand
First Financial Bankshares, Inc.

Frank Terrell, M.D.
Ophthalmologist

Ron Butler
First Financial Bank, NA Abilene

John Terrill
District Attorney

★★

23%

Erath, Hood, Somervell Counties
Deposit Market Share

IN THOUSANDS

DEC. 31, 2006

DEC. 31, 2005

Assets

Loans

Deposits

Equity

Net Income

Return on
Average Assets

Efficiency Ratio

$302,258

$295,567

183,998

260,415

38,482

5,245

164,739

255,448

34,321

4,502

1.74%

51.97%

1.67%

52.47%

Because ...

Tarleton State University plays a
prominent role in the life of Stephenville,
where First Financial Bank supports the
university in many ways, including the TSU
Texan Club, Tarleton Alumni Association,
Tarleton Rodeo Team and TSU Foundation.
Bank officer Mindy Wooley is pictured here with TSU
cheerleaders at First Financial’s custom-designed ATM
located across the street from the university. The bank is
also active in many other civic organizations including
the United Way and the
American Cancer Society
Relay for Life.

First National Bank

CHARTERED 1948

SWEETWATER, ROBY, TRENT

J.V. MARTIN, Chairman, President and CEO.
Nolan County is the wind energy capital of Texas.

MAIN OFFICE

.......................................... (325) 235-6600

201 Elm

................................................

Sweetwater, Texas 79556

LOCATIONS

123 N. Concho
117 N. Main

...............................................
...................................................

Roby, Texas 79543
Trent, Texas 79561

SENIOR OFFICERS

J.V. Martin
Chairman of the Board, President
and Chief Executive Officer

Melody Collins
Senior Vice President
Loan Operations

Rodney Foster
Senior Vice President
Lending

Kirby Andrews
Executive Vice President
Lending

Donnie Ruppert
Executive Vice President
and Cashier/Controller

DIRECTORS

J.V. Martin
Chairman of the Board, President
and Chief Executive Officer

J. Bruce Hildebrand
First Financial Bankshares, Inc.

Louis Brooks, Jr.
Rancher

Bill W. Burns
President
Bill Burns Oil Co., Inc.

Ronnie Cox
Owner
Cox Jewelry

Jay Lawrence
President
MAL Enterprises, Inc.

Thomas L. Rees, Sr.
Rees and Rees, Attorneys

DIRECTOR EMERITUS

Glenn D. Bennett
Bennett & Associates

Because ...

First National Bank's Kirby Andrews, past
president of the Sweetwater Chamber of Commerce (second
from right), heads a planning meeting for the community's
famous annual Rattlesnake Round-up. Like other First Financial
family banks, the Sweetwater bank is also a strong supporter of
the United Way and Relay for Life.

L -R: Mickey Hayes, John Spaulding, Russ Petty, Kirby Andrews, Chris Maxwell

★★

41%

Nolan and Fisher Counties
Deposit Market Share

IN THOUSANDS

DEC. 31, 2006

DEC. 31, 2005

Assets

Loans

Deposits

Equity

Net Income

Return on
Average Assets

Efficiency Ratio

$122,463

$119,391

59,421

110,009

10,285

2,004

53,785

108,912

10,222

2,001

1.63%

51.59%

1.69%

50.13%

WEATHERFORD, ALEDO, WILLOW PARK

Weatherford National Bank

CHARTERED 1984

MAIN OFFICE ................ (817) 598-2500 or (817) 596-0307 Metro

101 N. Main

.........................................

Weatherford, Texas 76086

JAY GIBBS, President, and DOYLE LEE, Chairman and CEO,
survey Parker County’s growing homebuilding industry.

LOCATIONS

101 College Park Drive
1214 N. Main
201 N. Main
505 Farm Road 1187
4100 E. I-20 South Service Road

..........................
.........................................
.........................................
...............................
..............

Weatherford, Texas 76086
Weatherford, Texas 76086
Weatherford, Texas 76086
Aledo, Texas 76008
Willow Park, Texas 76087

SENIOR OFFICERS

Doyle Lee
Chairman of the Board and
Chief Executive Officer

Jay Gibbs
President

Kent Hudson
Senior Vice President

Larry Mangrem
Executive Vice President
and Cashier

Bob Bradberry
Executive Vice President

Louis Sneed
Senior Vice President

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

★★

26%

Parker County Deposit Market Share

IN THOUSANDS

DEC. 31, 2006

DEC. 31, 2005

Assets

Loans

Deposits

Equity

Net Income

Return on
Average Assets

Efficiency Ratio

$308,265

$272,493

138,283

276,459

22,730

5,036

125,446

247,134

21,862

4,512

1.76%

51.65%

1.79%

51.97%

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
Mac A. Coalson Real Estate

Because ...

Education matters in booming
Parker County. Weatherford
National Bank is a major
supporter of local schools,
with bank officers active in the
Weatherford ISD’s Education
Foundation, PTA and Junior
Achievement. Vice President
Dave Cowley (center) is a
member of the Weatherford
ISD Board of Trustees.
Assistant Vice President
Elizabeth McGee (left) serves
on several WISD committees
and works with the English As
A Second Language program.
Justin Hooper (right), VP and
manager of the bank’s Willow
Park office,volunteers in high
school business classes.
Weatherford National was
named “Large Business of
the Year” in 2006 by the
Weatherford Chamber of
Commerce and was recently
voted “Best Bank” and “Best
Customer Service” in the
Weatherford Telegram’s
Readers’ Choice Awards.

Selected Financial Data

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)

$2,850,165

$300,901

$46,029

$2.22

$1.18

–

$14.51

$41.86

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

2,733,827

2,315,224

2,092,571

1,993,183

1,929,694

1,753,814

1,723,369

1,686,647

1,573,509

276,276

265,545

251,487

238,768

213,654

196,121

178,663

169,449

148,226

44,023

39,171

35,305

33,953

29,355

28,316

25,690

23,254

20,063

2.13

1.90

1.71

1.65

1.43

1.37

1.24

1.13

1.02

1.10

1.00

0.91

0.81

0.70

0.62

0.54

0.48

0.42

4/3 split

–

5/4 split

–

5/4 split

–

10% dividend

5/4 split

1,262,041

1996
Ten-Year
Compound
Growth Rate 8.49% 8.66% 9.77% 8.86% 12.00% –

131,161

18,122

0.38

0.95

5/4 split

13.34

12.84

12.19

11.59

10.40

9.56

8.60

8.18

7.48

6.82

35.06

33.61

30.84

22.80

18.06

15.09

14.76

16.80

18.71

13.97

7.84%

11.60%

(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.

2006 Common Stock Market Value
and Dividend Data

2005 Common Stock Market Value
and Dividend Data

Quarter

High

Low Close Dividends

Quarter

High

Low Close Dividends

Fourth

$43.47

$37.83

$41.86

$0.30

Fourth

$38.88

$33.31

$35.06

$0.28

Third

Second

First

39.98

39.48

38.75

35.62

34.05

34.56

38.15

36.54

38.30

0.30

0.28

Third

Second

First

36.22

34.46

34.99

32.20

29.06

32.14

34.83

33.84

33.47

0.28

0.26

Chairman’s Award: Michele Stevens

Senior Vice President of Advertising and Marketing

Michele Stevens’ official role with First Financial Bankshares may be as Senior Vice President of Advertising
and Marketing, but ask anyone at the Company and they will tell you that her positive impact on First
Financial goes well beyond marketing and advertising. Michele has a contagious enthusiasm, a commitment
to excellence and a caring concern for each of the Company‘s associates and customers. She has been an
inspiration to everyone at First Financial during the past two years as she’s battled cancer while still
maintaining a high energy level, a positive attitude and a great sense of humor.

“Michele has an unwavering commitment to First Financial and an exceptional drive for success,” said F. Scott
Dueser, President and CEO. “In her decade with First Financial, Michele has contributed significantly to the
Company’s success and has endeared herself to all of us. We are pleased to honor her with this year’s
Chairman’s Award.”

First Technology Services Inc.

Executive Team (L-R)
Michelle McDonald, Senior Vice President
Gary Tucker, President and CEO
Dennis Steckly, Senior Vice President (standing)
Kay Berry, Senior Vice President
Larry Williams, Senior Vice President

Corporate
Information

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,
Advertising and Marketing

Eric Thompson
Vice President, Training and Education

Daniel A. Ortiz
Vice President, Multicultural Development

William A. Rowe
Vice President, Investment Services

Gaila Kilpatrick
Assistant Secretary

Bob Goodner
Compliance Officer

Barbara Wright
Compliance Officer

William Mills
Loan Review Officer

First Financial Bankshares Executive Officers L -R: J. Bruce Hildebrand,
Robert S. Patterson, Gary S. Gragg, F. Scott Dueser, Michele P. Stevens and Gary L. Webb

Annual Meeting

Tuesday, April 24, 2007
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 Global Select Market
Symbol: FFIN

Independent Public Auditors

Ernst & Young LLP

For Financial and Investor Information,
Contact:

J. Bruce Hildebrand
Executive Vice President & 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 Web site:

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.

Because ... Community Matters.

400 Pine • Abilene, Texas 79601 • www.ffin.com