First Financial Bankshares Annual Report 2009

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FY2009 Annual Report · First Financial Bankshares

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N U M B E R O N E I N T H E N A T I O N

in the $3 billion-plus publicly traded category.*

Bank Director

magazine, in its

first-quarter 2010 issue,

ranked First Financial Bankshares

We’re proud of our company’s 120-year

histor y of financial strength and service to

our customers and communities in Texas.

But First Financial Bankshares isn’t looking

back or resting on our past success. Our

focus is on the future. Today, we are taking

steps we believe are necessary to ensure that

our company remains in the forefront of

providing the best banking, trust, wealth

management and other financial services,

while continuing

to build deep and

enduring relationships with our valued

customers. Relationships built on trust,

integrity and exceptional customer service

have made our company what it is today.

For our shareholders, we remain committed

to managing First Financial Bankshares in a

safe, sound and profitable manner, with a goal

of strategically and prudently growing the

Company and expanding into new markets.

The Letter to Shareholders on pages 2 and 3

of this annual report gives you more

insights into how our company performed

in 2009 and our plans for 2010. The photo

spread and text on pages 4-7 demonstrate

how we are working

secure

the

Company’s future for the benefit of our

customers, employees and shareholders –

and the Texas communities we serve. For

more information, visit our Web site at

http://www.ffin.com.

* Based on measurement criteria and analysis compiled by Sandler O’Neill + Partners, L.P., a New York-based

investment banking firm that specializes in the financial services industry. Published in Bank Director magazine, 1st quarter 2010.

First Financial Bank

325-627-7200

First Financial Bank

817-556-5000

First Financial Bank

254-629-6100

First Financial Bank

806-363-8200

ABILENE

CLYDE

MORAN

ALBANY

ODESSA

CLEBURNE

BURLESON

ALVARADO

MIDLOTHIAN

EASTLAND

RANGER

RISING STAR

HEREFORD

A Family of Community Banks

First Financial Bank

STEPHENVILLE

First Financial Bank

940-327-5400

First Financial Bank

325-659-5900

First Financial Bank

817-410-2915

940-683-8700

254-965-5036

817-573-6900

First Financial Bank

325-235-6600

First Financial Bank

817-596-0307

MINERAL WELLS

SAN ANGELO

SOUTHLAKE

TROPHY CLUB

KELLER

BRIDGEPORT

BOYD

DECATUR

GRANBURY

GLEN ROSE

ACTON

SWEET WATER

ROBY

TRENT

MERKEL

WEATHERFORD

ALEDO

WILLOW PARK

BROCK

FORT WORTH

BANKS

TRUST OFFICE LOCATIONS

D E A R

S H A R E H O L D E R S

In light of the recession and higher FDIC insurance premiums in 2009, I am very

pleased that our company was able to deliver increased earnings for the 23rd

consecutive year.

While the national recession at first seemed to bypass Texas, it began moving into

the state in the second part of 2008, bringing a decline in home sales and general

economic activity and an increase in unemployment. These trends continued in

2009. On the plus side, our state continued to fare better than most of the rest of

the country, and our geographic footprint—especially in our West Texas

markets—remained stable.

The stock market fluctuated greatly during the past two years. The NASDAQ

Composite Index declined 41 percent in 2008 and then went back up 44 percent in

2009. Our stock went up 47 percent in 2008 and down 2 percent in 2009, closing at

$54.23. We are pleased that our stock performed well for our stockholders during

these years of economic turmoil. We continue to suspect that a “flight to

safety”—favoring companies with strong balance sheets and a long record of

conservative lending—may have played a role in our stock’s favorable performance.

We are also pleased that in 2009, our company again received high rankings from leading banking publications such as the ABA Banking Journal

and U.S. Banker. Additionally, in January of 2010, Bank Director magazine rated us No. 1 in the nation among publicly traded banks with $3 billion

or more of assets. Being named No. 1 is like winning an Academy Award. Without question, this accomplishment is due to the direction of our

Board, the dedication of our employees and the loyalty of our customers, who have kept us strong for 120 years. We accept this honor with great

humility because we know that every day, we face a new set of challenges in the banking industry and must prove ourselves again and again.

RESULTS FOR 2009

Net income grew 1.2 percent to $53.8 million from $53.2 million in 2008. Net interest income, the major source of our earnings, rose 4.3 percent to

$129.2 million from $123.9 million. Our net interest margin (on a tax-equivalent basis) also increased, to 4.80 percent from 4.67 percent in 2008.

The provision for loan losses for 2009 totaled $11.4 million, a 43.5 percent increase from $8.0 million in 2008. The larger provision was due to a

higher level of net charge-offs and an increase in the allowance for loan losses.

Noninterest income declined 1.7 percent to $48.6 million from $49.5 million. The decline was primarily due to a $692,000 drop in income from

student loan sales as the Company exited the student loan program. Lower usage of overdraft privileges also contributed to the decrease in

noninterest income. Noninterest expense was $94.0 million in 2009, up 2.6 percent from $91.6 million a year earlier. The largest increase in

noninterest expense was in FDIC insurance premiums, which grew by $4.2 million, or 650.4 percent, after the FDIC raised premium rates as of

January 1, 2009, and implemented a special assessment in June of that year. Nevertheless, we were able to improve our efficiency ratio, which

expresses the share of revenues consumed by operating expenses, to 50.11 percent from 50.76 percent in 2008.

Our bank presidents worked hard to maintain their net interest margins and reduce expenses. I could not be more pleased with their

accomplishments, especially in light of the significant increase in FDIC insurance premiums.

We again outperformed our peer group on several key financial metrics. Our return on average assets was 1.72 percent compared with a negative

0.21 percent for our peer group. Return on average equity was 13.63 percent versus a negative 2.59 percent for our peers. Our net interest margin

of 4.80 percent on a tax-equivalent basis compared very favorably to our peer group’s margin of 3.48 percent. We also beat the peer group on the

efficiency ratio—ours was 50.11 percent, while theirs was 69.53 percent.

We ended the year with a strong balance sheet. Consolidated assets increased 2.1 percent to $3.28 billion from $3.21 billion at the end of 2008.

Loans decreased 3.3 percent to $1.51 billion from $1.57 billion, primarily due to our exiting the student loan program. Total deposits grew 3.9

percent to $2.68 billion from $2.58 billion. Shareholders’ equity rose 12.7 percent to $415.7 million from $368.8 million. As the economy softened

in Texas, our nonperforming assets increased to 1.46 percent of total loans and foreclosed assets from 0.80 percent at the end of 2008. Even with

this increase, our nonperforming percentage was well below our peer group’s 5.07 percent. Net loan charge-offs for the year totaled $5.3 million at

year-end 2009 versus $3.9 million at year-end 2008. The 2009 allowance for loan losses amounted to 1.82 percent of total loans.

First Financial Trust & Asset Management Company also experienced growth last year. Total assets at year-end had a book value of $1.67 billion, a

2.1 percent increase from 2008, and a market value of $2.10 billion, an 11.7 percent increase. The Trust Company’s fee income, however, declined

3.8 percent to $9.1 million from $9.4 million. This subsidiary manages a large oil and gas portfolio, and the drop in its income was primarily due to

a decline in oil and gas prices and in related fees on oil and gas income. The Trust Company opened its sixth office last year, in Odessa, Texas. We

are encouraged by the number of clients who have opened trust accounts with us in Odessa and the potential for growth in the Permian Basin market.

GROWTH STRATEGIES

We actively looked for acquisition opportunities during 2009, but the banks that we considered were overpriced in light of the economy or did not

fit our company’s profile. Our plan is to continue pursuing acquisitions diligently. With our capitalization, stock price, cash position and experienced

management team, we have what we need to take advantage of acquisition opportunities. In November, we announced plans to open bank branches

in our two existing Trust Company offices in Fort Worth and Odessa, to complement trust services and serve customers in those markets. We have

had frequent requests from customers for branches in these markets and are interested to see how this private bank branch concept will work.

During the year, we achieved a long-term objective of bringing all of our banks under a common name to improve brand identity and marketing

efficiencies. Hereford State Bank, San Angelo National Bank and Weatherford National Bank are now called First Financial Bank. All of our banks

benefit from sharing the Company’s growing brand identity, and our customers benefit from being able to use our facilities throughout our market

areas. However, in no way does the use of a common name change our practice of operating through ten community-based banks that are separately

chartered, have their own local boards and management teams, and make decisions locally. We continue to be the “hometown bank” in our markets,

with a tradition of playing a vital role in community life.

WHAT’S AHEAD

Besides looking for acquisitions, we plan to continue growing our mortgage market, trust services and treasury management services. We are

encouraged by our recent growth that there will be good opportunities in these areas. Minimizing nonperforming assets will certainly be an

objective, as it has been for the last several years. We do know that FDIC insurance premiums will continue to be high and that increased regulation

proposed by Congress and various federal agencies will make our jobs more challenging and costly. Our hope is that the banking industry can

mitigate much of the pending regulatory legislation by educating Washington that community banks have not caused today’s economic problems

and are already over-regulated. We are committed to providing outstanding service to our customers, our communities and our nation by making

every good loan we can to help our economy grow and prosper.

PERSONNEL CHANGES

J. V. Martin retired at the end of the year as CEO of First Financial Bank, Sweetwater. Kirby Andrews, President, assumed the additional role of CEO

there. J. V. will continue to serve as the Sweetwater bank’s Chairman of the Board. He will also provide consulting services to the holding company.

Additionally, Senior Chairman Kenneth T. Murphy will retire from the First Financial Bankshares Board in conjunction with our Annual

Shareholders’ Meeting in April. He has served our company with distinction for 39 years, holding the positions of President, First Financial Bank,

Abilene; and Executive Vice President, President, Chief Executive Officer, Chairman and Senior Chairman of First Financial Bankshares, Inc.

Through those years, he has also made many civic and professional contributions, including serving on the Board of the Federal Reserve Bank of

Dallas and serving as Chairman of the Board of the Texas Bankers Association. When Ken joined the bank in 1971, the Company had total assets

of $87.7 million and net income of $806,000. By the end of 2009, we had total assets of $3.28 billion and net earnings of $53.8 million. During Ken’s

tenure with the Company, we have experienced great success. Customers, stockholders and communities have certainly benefited from Ken’s

leadership and counsel, and we thank him for his fine service. We are pleased that he will continue to maintain an office in the First Financial Bank

(Abilene) building and will be available to management for consultation.

It is our pleasure to announce that Steven L. Beal, retired President and Chief Operating Officer of Concho Resources Inc., has accepted nomination

for election as a Director of the Company at our Annual Shareholders’ Meeting in April. Steve was one of the founders of Concho, an independent

oil and natural gas company, and continues to be a Director on its Board. Prior to being at Concho, he was Senior Vice President and Chief Financial

Officer of Parker & Parsley Petroleum Company, which is now Pioneer National Resources. Before that, he was an audit professional with the

accounting firm of Price Waterhouse Coopers. He is a 1981 graduate of The University of Texas with a degree in accounting. Steve has been involved

civically and professionally with the United Way of Midland, Permian Basin Oil & Gas Association, Independent Petroleum Association of America

and the New Mexico Oil & Gas Association. He has been on the Board of Directors of Midland Christian School and the Midland/Odessa

Symphony. Most recently, he was a partner with the Early School District to build an indoor practice facility for use by the students and teams of

Early High School. Steve and his wife, Teresa, live on their ranch in Brownwood, Texas.

These are challenging times for the national economy and for the banking business. First Financial has the benefit of a long-term perspective. In

our 120-year history, we’ve endured numerous recessions, the Great Depression, the Texas oil bust of the 1980s and other obstacles. We cannot

predict the duration of the current economic malaise, but we remain optimistic about the long-term future of our state and nation, and especially

our Texas markets. Financially and operationally, we believe our company has never been stronger, and our best days are still ahead of us.

With our eyes on the future, we are making a strong investment in the training of all our employees, including our next generation of leaders, to

ensure that we continue to provide excellence in banking, trust services, wealth management and customer service. We encourage you to read more

about our training and customer service programs in the pages that follow.

Banking is our business, but all of us on the management team never lose sight of the fact that we work for you, our shareholders. We will continue

to manage the Company for profitability and growth in 2010 and beyond.

F. Scott Dueser

Chairman, President and CEO

W H A T M A K E S U S F I R S T ?

Friendly. Knowledgeable. Helpful. These are words our

customers use to describe First Financial Bank’s employees.

Well-informed and well-motivated employees are essential to

keeping First Financial Bank prepared for the future. Training

our employees to provide the finest banking, financial solutions

and exceptional customer service begins the day new employees

are hired. Every new employee at First Financial Bank goes

through a classroom training program. This orientation is

designed not only to teach new employees about the bank’s

outstanding portfolio of banking products and services, but also

introduces them to the Company’s unique culture, which

emphasizes putting customers’ needs first and going the extra

mile to provide exceptional service and support. New employees

learn skills from how to open a new account to the essentials of

good business etiquette.

New employee orientation is just the start. Our commitment to

training and professional development for our employees is

ongoing. All employees participate in compliance training,

most taking 12 to 24 courses per year in all aspects of banking,

customer service and financial services. We offer our employees

both online, “desktop” training modules and more traditional

classroom training. Regardless of the format, the goal is always

the same – to help our employees continue the Company’s proud

tradition of being a leading bank in our markets and exceeding

our customers’ expectations for the finest in banking products

and service.

Merrie Spaeth, president of Spaeth Communications, Inc. and a nationally known consultant on

organizational communications, leads a management training class for First Financial Bankshares.

Christina Randle, author, productivity expert and CEO of The

Effective Edge, trains managers at First Financial Bankshares.

F F I NF F I N

UNIVERSITY

Developing

future leaders is

key to our company’s

continued success in the years

ahead. One way we prepare our future

leaders is through FFIN University,

which takes a select group of bank

officers through a year-long inten-

sive training program.

First

launched

in 2008, FFIN

University clearly underscores the

Company’s commitment to main-

taining its tradition of excellence

in banking, trust services and

customer service. Participants in

FFIN University learn from both

senior

leaders and outstanding

guest speakers on topics that range

from time management to com-

munication skills. Graduates of

FFIN University are ready

assume key senior management

positions in our company. They

will help maintain the Company’s

long tradition as a successful,

profitable, community-

based bank.

BACK ROW (L-R): KATHY BUSHNELL (First Technology Services), ISABEL MONTOYA (First Technology Services), IRMA ZIPP (Stephenville),

MARY JO SORGE (Abilene), MELANIE BEARD (Granbury), ESTHER BILBY (Bridgeport), SANDRA HOLT (Abilene)

FRONT ROW (L - R ): TRISHA HILDEBRAND (San Angelo), MARCELLA JIMENEZ (Mineral Wells), JANET FLYNT ( Weatherford), MELISSA JACQUES

(Sweetwater), LEANN BAUGH ( Trust - Stephenville), STEVE GILBERT (Hereford), STEPHANIE LOPEZ (Eastland), LISA ROYE (Cleburne)

Banking is all about relationships and working with customers

one-on-one. That’s why, at First Financial Bankshares, our

Customer Service First program is one of our highest priorities.

Our goal is simple – to provide customer service that is second to

none. Achieving that goal involves all employees and requires a

sharp focus. It begins with our new employee orientation program

and continues through our FFIN University for senior leaders.

Instilling a culture of exceptional customer service is no accident.

We encourage employees through a variety of initiatives, including

recognizing employees who go beyond the norm for customers

with “WOW” awards and giving Star Cards to employees who are

nominated by fellow employees for exceptional customer service.

Our top recognition program for employees is the Shining Star

Award. Twice each year, managers select employees who have

consistently demonstrated superior customer service. Shining

Star Award winners and their spouses are hosted at the Company’s

headquarters in Abilene for a special recognition ceremony,

highlighted by a dinner with our presidents and management.

ISABEL MONTOYA, First Technology Services, Abilene,

is recognized as a Shining Star by SCOT T DUESER,

President & CEO, First Financial Bankshares.

First

Financial

has the technology

infrastructure and tools in place to

provide first-rate modern banking services

today and to meet future customer needs

as we continue to grow. The Company’s

technology

supports our goal of

providing exceptional customer service.

Our system of customer call centers

provides the same level of prompt and

courteous service on the phone that

customers are accustomed to receiving

in our branches. Calls are answered by

a person - not by voice mail - and

customers

immediately get helpful

answers

to questions about

their

checking and savings accounts, debit

card transactions, business transactions

and online banking.

We created excitement among our

customers in late 2009 by introducing

a new custom-designed debit card

program. Customers may choose from

more than 130 card designs, many of

which include logos and colors for

local high schools or universities. To

date, more than 33,000 custom cards

have been printed. In 2010, we plan to

go a step further and let customers

create personalized debit

cards using their

own photos.

Selected Financial Data

IN THOUSANDS (EXCEPT PER SHARE DATA)

YEAR-END

TOTAL ASSETS

EQUITY

INCOME

PER SHARE

AND SPLITS

PER SHARE

SHAREHOLDERS’

NET

EARNINGS

DIVIDENDS

BOOK VALUE

MARKET VALUE

BASIC

CASH

STOCK

YEAR-END

2009 $3,279,456 $ 415,702 $ 53,797 $2.58 $1.36 – $ 19.96 $ 54.23

2008 3,212,385 368,782 53,164 2.56 1.34 – 17.73 55.21

2007 3,070,309

335,495 49,490

2.38 1.26

– 16.16 37.65

2006 2,850,165

300,901 46,029

2.22

1.18

–

14.51

41.86

2005 2,733,827 276,276 44,023 2.13

1.10

4/3 split 13.34

35.06

2004 2,315,224 265,545 39,171

1.90

1.00

–

12.84

33.61

2003 2,092,571 251,487 35,305

1.71

0.91

5/4 split 12.19

30.84

2002 1,993,183 238,768 33,953

1.65

0.81

– 11.59

22.80

2001 1,929,694 213,654 29,355

1.43

0.70

5/4 split 10.40

18.06

2000 1,753,814 196,121 28,316

1.37

0.62

–

9.56

15.09

GROWTH RATE 6.65% 8.81% 7.67% 7.60% 9.68%

– 8.78% 13.90%

TEN-YEAR

COMPOUND

Adjusted for stock dividends and splits.

2009 COMMON STOCK MARKET VALUE

2008 COMMON STOCK MARKET VALUE

AND DIVIDEND DATA

QUARTER HIGH LOW CLOSE DIVIDENDS

FOURTH $ 55.94 $ 47.86 $ 54.23 $ 0.34

FOURTH $ 56.32 $ 41.30 $ 55.21 $ 0.34

THIRD 54.50 47.95 49.46 0.34

THIRD 67.00 43.01 51.88 0.34

SECOND 51.62 46.51 50.36 0.34

SECOND 47.12 40.43 45.81 0.34

FIRST 55.70 36.49 48.17 0.34

FIRST 42.16 35.49 40.98 0.32

NET INCOME GROWTH

(IN THOUSANDS)

$3,125,552

$3,064,029

2.01%

RETURN ON AVERAGE EQUITY

$ 6M 12M 18M 24M 30M 36M 42M 48M 54M

$3,279,456

$3,212,385

0% 3% 6% 9% 12% 15% 18%

EFFICIENCY RATIO

Financial Highlights

IN THOUSANDS (EXCEPT PER SHARE DATA)

FOR THE YEAR

2009

2008

CHANGES

Net Income

Basic Earnings per Share

Dividends Declared

Dividends per Share

$53,797

2.58

28,311

1.36

$53,164

2.56

27,861

1.34

1.19%

0.78%

1.62%

1.49%

Averages for the Year

Shareholders’ Equity

Assets

Securities

Loans

Deposits

At Year-End

Assets

Securities

Loans

Deposits

Shareholders’ Equity

Book Value per Share

1,308,110

1,494,876

2,513,387

394,812

1,285,377

1,514,369

2,684,757

415,702

19.96

1,185,303

10.36%

1,537,027

2,516,576

(2.74%)

(0.13%)

348,271

13.36%

1,318,406

1,566,143

2,582,753

368,782

17.73

2.09%

(2.51%)

(3.31%)

3.95%

12.72%

12.58%

2.06%

Trust Assets

1,664,174

1,630,560

Key Ratios

Return on Average Assets

Return on Average Equity

Equity/Assets at Year-End

Efficiency

1.72

13.63

12.68

50.11

1.74

15.27

11.48

50.76

1.72%

1.74%

1.72%

1.68%

1.80%

$53,797

$53,164

$49,490

$46,029

$44,023

13.63%

15.27%

15.87%

16.20%

16.17%

50.11%

50.76%

52.83%

53.49%

52.48%

4.80%

4.67%

4.43%

4.46%

4.49%

RETURN ON AVERAGE ASSETS

NET INTEREST MARGIN

0% 10% 20% 30% 40% 50% 60%

0% .25% . 50% .75% 1.00% 1.25% 1.50% 1.75% 2.00%

0% 1% 2% 3% 4% 5%

TAYLO R , C A L L A H A N &

S H AC K E L F O R D CO U N T I E S

D E P O S I T M A R K E T S H A R E

2651 JBS Parkway, Bldg. 4, Suite E

Odessa, Texas 79762

ABILENE CLYDE MORAN ALBANY ODESSA

M A I N O F F I C E

400 Pine

LO C AT I O N S

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

132 Hill Street

D I R E C TO R S

F. Scott Dueser

Chairman of the Board

Ron Butler

President and

Chief Executive Officer

Tucker S. Bridwell

President

Mansefeldt Investment Corp.

Joe E. Canon, J.D.

Executive Director

Dodge Jones Foundation

David Copeland

President

Joe Crawford

President

Abilene Aero, Inc.

Mike Denny

President

( 3 2 5 ) 6 2 7 - 7 2 0 0

Abilene, Texas 79601

Abilene, Texas 79606

Abilene, Texas 79603

Abilene, Texas 79605

Abilene, Texas 79601

Abilene, Texas 79605

Abilene, Texas 79606

Abilene, Texas 79601

Clyde, Texas 79510

Moran, Texas 76464

Albany, Texas 76430

Murray Edwards

Principal, The Edwards Group

Allan D. Frizzell

Executive Vice President

Enrich Oil Corporation

Stanley Morris, Jr.

Investments

Kenneth T. Murphy

First Financial Bankshares, Inc.

Dian Graves Stai

Chair

Mansefeldt Investment Corp.

Director

Leigh Taliaferro, M.D.

Physician

ADVISORY

Steve Suttle

J. Michael Alexander

President

James M. Alexander & Co.

Tim Lancaster

Chairman, CEO and President

Hendrick Health System

Shelton Family Foundation

Dian Graves Owen Foundation

R O N B U T L E R

Pre s i d e n t a n d C E O

S E N I O R O F F I C E R S

Ron Butler

President and

Chief Executive Officer

Tom Boecking

Executive Vice President

South Branch

Ben McAnally

Executive Vice President

Treasury Management

John Prince

Executive Vice President

Personal Loans

James Robinson

Executive Vice President

Retail Marketing and

Business Development

Marelyn Shedd

Executive Vice President

Commercial Loans

Charles E. Tennesson

Executive Vice President, Chief

Financial Officer and Cashier

Batjer and Associates

McMahon Surovik Suttle, P.C.

IN THOUSANDS

Assets Loans Deposits Equity Net Income Return on Ef f iciency

Average Assets

Ratio

DEC. 31, 2009

$1,087,452 419,928 879,258 99,941 19,587 1.88%

45.99%

DEC. 31, 2008

$1,105,537 458,797 843,375 82,778 17,652 1.76%

46.72%

CLEBURNE BURLESON ALVARADO MIDLOTHIAN

M A I N O F F I C E

( 8 1 7 ) 5 5 6 - 5 0 0 0

o r ( 8 0 0 ) 2 2 6 - 2 9 4 0

403 N. Main

Cleburne, Texas 76033

LO C AT I O N S

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

J O H N S O N CO U N T Y &

C I T Y O F M I D LOT H I A N

D E P O S I T M A R K E T S H A R E

M AT T R E YN O L D S

Pre s i d e n t a n d C E O

S E N I O R O F F I C E R S

Matt Reynolds

Chairman of the Board, President

and Chief Executive Officer

Craig Beskow

Executive Vice President

and Cashier

Steve Davis

Executive Vice President

Brad Evans

Executive Vice President

Derek Schmidt

Executive Vice President

Cynthia Allen

Senior Vice President

Kathy Armstrong

Senior Vice President

Lisa Roye

Senior Vice President

Darlene Walker

Senior Vice President

D I R E C TO R S

Matt Reynolds

Chairman of the Board, President

and Chief Executive Officer

Albert A. Archer

Vice Chairman

Walls Industries, Inc.

Ray Beavers

General Manager & CEO

United Cooperative Services

Byron Black

Investments

F. Scott Dueser

First Financial Bankshares, Inc.

Tim Lyness

Lyness Construction, LP

George Marti

Marti Enterprises

Dr. Joe Martin

Cleburne Eye Clinic

IN THOUSANDS

Assets Loans Deposits Equity Net Income Return on Ef f iciency

Average Assets

Ratio

DEC. 31, 2009

$ 273,598 137,043 247,992 23,697 3,886 1.57% 53.68%

DEC. 31, 2008

$ 244,647 138,127 221,629 21,126 4,199 1.74% 53.95%

EASTLAND RANGER RISING STAR

M A I N O F F I C E

201 E. Main

LO C AT I O N S

106 Main

206 West College

( 2 5 4 ) 6 2 9 - 6 1 0 0

Eastland, Texas 76448

Ranger, Texas 76470

Rising Star, Texas 76471

T H O M A S M . O ’ N E I L

Pre s i d e n t a n d C E O

E A S T L A N D CO U N T Y

D E P O S I T M A R K E T S H A R E

D I R E C TO R S

Thomas M. O’Neil

Chairman of the Board, President

and Chief Executive Officer

Doug Crawley

Rancher

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

M.D. White, Jr.

President and Owner

Ace Hardware Store,

Eastland/Cisco

S E N I O R O F F I C E R S

Thomas M. O’Neil

Chairman of the Board, President

and Chief Executive Officer

L.V. Coffee

Lending

Terry Trout

Cashier

Senior Vice President and

Executive Vice President

Attorneys

IN THOUSANDS

Assets Loans Deposits Equity Net Income Return on Ef f iciency

Average Assets

Ratio

DEC. 31, 2009

$ 167,092 63,758 143,956 18,712 2,511 1.79% 49.74%

DEC. 31, 2008

$ 153,029 58,201 127,132 17,146 2,412 1.66% 49.59%

STAFF EDUCATIONMANAGEMENTDEVELOPMENTCUSTOMER SERVICETECHNOLOGY 39% 15% 48%

Bank Director
magazine, in its
first-quarter 2010 issue,
ranked First Financial Bankshares

N U M B E R O N E I N T H E N A T I O N

in the $3 billion-plus publicly traded category.*

We’re proud of our company’s 120-year
histor y of financial strength and service to
our customers and communities in Texas.
But First Financial Bankshares isn’t looking
back or resting on our past success. Our
focus is on the future. Today, we are taking
steps we believe are necessary to ensure that
our company remains in the forefront of
providing the best banking, trust, wealth
management and other financial services,
to build deep and
while continuing
enduring relationships with our valued
customers. Relationships built on trust,
integrity and exceptional customer service
have made our company what it is today.
For our shareholders, we remain committed
to managing First Financial Bankshares in a
safe, sound and profitable manner, with a goal
of strategically and prudently growing the
Company and expanding into new markets.

The Letter to Shareholders on pages 2 and 3
of this annual report gives you more
insights into how our company performed
in 2009 and our plans for 2010. The photo
spread and text on pages 4-7 demonstrate
the
how we are working
Company’s future for the benefit of our
customers, employees and shareholders –
and the Texas communities we serve. For
more information, visit our Web site at
http://www.ffin.com.