First Financial reports third quarter earnings of $59.34 million, up from one year ago

Brian Bethel, Abilene Reporter-News
·4 min read

First Financial Bankshares Inc. reported earnings of $59.34 million for the third quarter of 2022, compared to earnings of $58.93 million for the same quarter a year ago.

Diluted earnings per share were $0.41 for both the third quarter of 2022 and in 2021.

"Our saving grace is that we grew $4 billion during the pandemic, and we have those additional assets that are bringing in additional income," said Scott Dueser, chairman, president and CEO of First Financial.

F. Scott Dueser, chairman, president and CEO of First Financial Bankshares
F. Scott Dueser, chairman, president and CEO of First Financial Bankshares

As of Sept. 30, the company has 4.75 million shares remaining under the previously announced share repurchase authorization.

Through that date, the bank has repurchased 244,559 shares of its common stock at an average price of $38.61.

Changing markets

Results this quarter compared to the same quarter one year ago include an increase in net interest income of $7.37 million from continued balance sheet growth.

Included in the change in net interest income was a decline in Paycheck Protection Plan loan origination fees and interest of $8.2 million when compared to the same period a year ago.

Results when compared to the same quarter a year ago include an increase in provision for credit losses of $3.2 million, a decrease in interest on loan recoveries of $1.1 million, a decrease in debit card fees of $3.6 million and a decrease in mortgage revenues of $4.7 million.

"We have very few PPP loans left," Dueser said. "... Because of our loan growth, we've had to increase our provision (for credit losses). Our credit quality is better than it was a year ago, but we've having more loans and so we've had to add $3.22 million to provision."

The decrease in mortgage revenues is because of the slowdown of the market, he said.

"You don't have any refinance whatsoever, and then you've got people that because of increased rates are scared to buy a house, even though rates today are where they were, on average, for the last 30 or 40 years," he said. "When you go from 2%-3% on up to 6%, it's a big sticker shock for people. But people still need houses, and we're still doing mortgage loans, but not at the volume we were."

Mortgage income was $4.01 million for the third quarter of 2022 compared to $8.8 million for the third quarter of 2021.

Decreases in debit card fees are due to regulations imposed by the Federal Reserve that limits debit cardinterchange revenue, effective July 1.

Accounts increasing

Operating results for the quarter reflects overall loan growth, excluding PPP and held-for-sale loans, of $379million, or 25.6% annualized, and deposit growth of $19.1 million through the addition of more than 9,300 net accounts year to date, Dueser said.

"When you go back and look, historically we opened about 5,000 new accounts a year," he said. "The first year of the pandemic, we went to 12,000, the second year we went to 16,000. We still have that momentum and people are still moving their business to our bank."

Dueser said First Financial is hoping to hit around 12,000 new accounts in 2022.

Snapshot of earnings

  • Net interest income for the third quarter was $103.2 million, compared to $95.8 million. Net interest income for the third quarter was $103.2 million, compared to $95.8 million.

  • Net interest margin, on a taxable equivalent basis, was 3.3% for the third quarter, compared to 3.3% for the second quarter of 2022 and 3.4% in the third quarter of 2021.

  • Growth in net interest income was driven by higher average interest-earning assets, which increased to $12.5 billion compared to $11.6 billion a year ago.

  • PPP loan balances totaled $202,000 as of Sept. 30.

  • Allowance for credit losses totaled $74.1 million, or 1.18% of loans held-for-investment , compared to $63.4 million one year ago, or 1.2% of loans. Reserve for unfunded commitments totaled $10.9 million, compared to $6.6 million.

  • Net recoveries totaled $1.1 million compared to net recoveries of $1.2 million.

  • Nonperforming assets as a percentage of loans and foreclosed assets decreased to 0.39%, compared to 0.48%

  • Classified loans totaled $143.7 million, compared with $165.8 million.

  • Noninterest income for the third quarter was $31 million compared to $37.7 million. Noninterest expense for the third quarter totaled $59.4 million, compared to $63 million in the third quarter of 2021.

  • First Financial's efficiency ratio improved to 43.8% for the third quarter of 2022, compared to 45.9%.

  • As of Sept. 30, consolidated total assets were $13.1 billion, compared to $12.6 billion a year ago.

  • Loans totaled $6.3 billion as of Sept. 30, compared with $5.3 billion.

  • Loans, excluding PPP and held-for-sale loans, grew $379 million during the third quarter of 2022 and $919.1 million for the first nine months of 2022.

  • Deposits totaled $11.1 billion as of Sept. 30, compared to $9.9 billion.

  • Shareholders’ equity was $1.1 billion, compared to $1.3 billion in June and $1.7 billion in September 2021.

This article originally appeared on Abilene Reporter-News: First Financial reports third quarter earnings of $59.34 million