First Financial Bankshares, Inc.

What they do

The company is a financial holding company whose primary funding source is deposits held by its bank subsidiary, First Financial Bank. It earns interest on loans and investments and fee income from trust, mortgage banking and deposit accounts, with salaries and employee benefits its largest expense. As of the 10-K, subsidiaries owned 79 banking, trust and mortgage facilities, leased 11 banking facilities and 10 ATM locations, and were constructing new branches in Franklin and Beaumont, Texas and a replacement motor bank in Abilene.

Revenue drivers

• Net interest income — Generated from interest on loans and investments funded primarily by deposits; was $136.91 million in Q2 2026 versus $123.73 million a year earlier, with net interest margin of 3.90% versus 3.81%.
• Wealth Management — Trust and wealth fee income rose to $13.96 million in Q2 2026 from $12.75 million a year earlier, driven by growth in assets under management, which totaled $12.23 billion at June 30, 2026.
• Service charges on deposits — Deposit fee income was $6.26 million in Q2 2026 versus $6.13 million a year earlier, driven by increases in fees on deposit accounts partly offset by lower overdraft fees.
• Mortgage banking — Mortgage income rose to $4.68 million in Q2 2026 from $4.13 million a year earlier, which the company attributes to restructuring the secondary mortgage department, new mortgage lenders and centralized mortgage operations.

Recent performance

For Q2 2026, FFIN reported earnings of $71.89 million, or $0.50 per diluted share, versus $66.66 million and $0.47 a year earlier and $71.54 million in the linked quarter. Net interest income was $136.91 million and the tax-equivalent net interest margin was 3.90%, up from 3.81% a year earlier. Noninterest income was $35.84 million versus $32.87 million a year earlier. The company recorded a $4.18 million provision for credit losses, with the allowance at $112.43 million, or 1.35% of loans, at June 30, 2026. Nonperforming assets were 0.80% of loans and foreclosed assets at June 30, 2026.

Strategy

Management said it remains focused on disciplined growth, prudent risk management and long-term shareholder value. It is investing in expansion, including constructing new branches in Franklin and Beaumont, Texas and a replacement motor bank in Abilene, and is continuing to build mortgage operations after restructuring the secondary mortgage department. The board extended a share repurchase authorization for up to 5,000,000 common shares through July 31, 2026, but no repurchases were made in 2024 or 2025. The company also reported completing an acquisition or disposition in an April 2026 8-K filing.

Risks

• Credit quality — The provision for credit losses rose to $4.18 million in Q2 2026 from $3.13 million a year earlier, and classified loans increased to $283.10 million from $257.07 million a year earlier.
• Nonperforming assets — Nonperforming assets were 0.80% of loans and foreclosed assets at June 30, 2026, up from 0.66% at March 31, 2026.
• Interest rate and margin sensitivity — The company cites interest rate policies of the Federal Reserve Board and fluctuations in interest rates among factors that can affect results.
• Concentration in Texas and real estate — The 10-Q risk disclosure cites local, state and national real estate markets and general economic conditions, and the company operates branches across Texas.

Outlook

CEO David Bailey said second quarter results reflected solid year-over-year earnings growth, with expansion in the net interest margin and increases in fee income from wealth management and mortgage banking. He said the company remains focused on disciplined growth, prudent risk management and creating long-term shareholder value. No specific financial targets were given in the release.