First Financial Bankshares (FFIN)

Texas-based regional bank First Financial Bankshares (NASDAQ:FFIN) met Wall Streets revenue expectations in Q4 CY2025, with sales up 11.6% year on year to $167.2 million. Its non-GAAP profit of $0.51 per share was 5.8% above analysts’ consensus estimates.

Company Overview

With roots dating back to 1890 and a network spanning over 70 locations across the Lone Star State, First Financial Bankshares (NASDAQ:FFIN) is a Texas-focused regional bank providing commercial banking, trust services, and wealth management across numerous communities throughout the state.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

First Financial Bankshares competes with other Texas-based regional banks like Prosperity Bancshares (NYSE:PB), Cullen/Frost Bankers (NYSE:CFR), and Texas Capital Bancshares (NASDAQ:TCBI), as well as larger national banks with Texas operations such as JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC).

From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions. Regrettably, First Financial Bankshares’s revenue grew at a sluggish 5.3% compounded annual growth rate over the last five years. This was below our standard for the banking sector and is a rough starting point for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. First Financial Bankshares’s annualized revenue growth of 12.2% over the last two years is above its five-year trend, suggesting its demand recently accelerated. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, First Financial Bankshares’s year-on-year revenue growth was 11.6%, and its $167.2 million of revenue was in line with Wall Street’s estimates.

Net interest income made up 74.6% of the company’s total revenue during the last five years, meaning lending operations are First Financial Bankshares’s largest source of revenue.

While banks generate revenue from multiple sources, investors view net interest income as the cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of non-interest income.

The underlying profitability of top-line growth determines the actual bottom-line impact. Banking institutions measure this dynamic using the efficiency ratio, which is calculated by dividing non-interest expenses like personnel, facilities, technology, and marketing by total revenue.

Markets emphasize efficiency ratio trends over static measurements, recognizing that revenue compositions drive different expense bases. Lower efficiency ratios signal superior performance by indicating that banks are controlling costs effectively relative to their income.

Over the last five years, First Financial Bankshares’s efficiency ratio couldn’t build momentum, hanging around 45.4%.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

First Financial Bankshares’s weak 4.7% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For First Financial Bankshares, its two-year annual EPS growth of 12.4% was higher than its five-year trend. Accelerating earnings growth is almost always an encouraging data point.

In Q4, First Financial Bankshares reported adjusted EPS of $0.51, up from $0.43 in the same quarter last year. This print beat analysts’ estimates by 5.8%. Over the next 12 months, Wall Street expects First Financial Bankshares’s full-year EPS of $1.77 to grow 10.7%.

The balance sheet drives banking profitability since earnings flow from the spread between borrowing and lending rates. As such, valuations for these companies concentrate on capital strength and sustainable equity accumulation potential.

Because of this, tangible book value per share (TBVPS) emerges as the critical performance benchmark. By excluding intangible assets with uncertain liquidation values, this metric captures real, liquid net worth per share. Other (and more commonly known) per-share metrics like EPS can sometimes be murky due to M&A or accounting rules allowing for loan losses to be spread out.

First Financial Bankshares’s TBVPS grew at a tepid 3.2% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 16.2% annually over the last two years from $8.35 to $11.27 per share.

Over the next 12 months, Consensus estimates call for First Financial Bankshares’s TBVPS to grow by 13.7% to $12.82, decent growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, First Financial Bankshares has averaged a Tier 1 capital ratio of 18.9%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity (ROE) measures how effectively banks generate profit from each dollar of shareholder equity - a critical funding source. High-ROE institutions typically compound shareholder wealth faster over time through retained earnings, share repurchases, and dividend payments.

Over the last five years, First Financial Bankshares has averaged an ROE of 14.9%, impressive for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This is a bright spot for First Financial Bankshares.

We enjoyed seeing First Financial Bankshares beat analysts’ tangible book value per share expectations this quarter. On the other hand, its net interest income slightly missed. Zooming out, we think this was a mixed quarter. The stock remained flat at $32.75 immediately following the results.

Updated: January 23, 2026 at 11:45 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own First Financial Bankshares, you should also grasp the company’s longer-term business quality and valuation.

First Financial Bankshares has some positive attributes, but it isn’t one of our picks. Although its revenue growth was uninspiring over the last five years, its growth over the next 12 months is expected to be higher. And while First Financial Bankshares’s weak EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders, its expanding net interest margin shows its loan book is becoming more profitable.

First Financial Bankshares’s P/B ratio based on the next 12 months is 2.2x. This valuation tells us a lot of optimism is priced in - you can find more timely opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $36.20 on the company (compared to the current share price of $32.75).