3/8/25
First Financial Bankshares, Inc. (FFIN) is a regional bank that has been serving Texas communities for over a century. With a focus on local banking, it has built a strong reputation for stability and consistent performance. Unlike some regional banks that chase aggressive growth, FFIN operates with a more conservative, long-term approach, which has helped it navigate economic cycles with resilience.
For dividend investors, this stock presents an interesting case. It doesn’t offer the highest yield in the banking sector, but it does provide a steady and reliable stream of income backed by solid financials. The big questions are whether the dividend is safe, how much room there is for future increases, and whether the stock is reasonably valued. Let’s dive into the details.
Key Dividend Metrics
📈 Dividend Yield: 1.98%
💰 Annual Dividend Per Share: $0.72
📅 Ex-Dividend Date: March 14, 2025
🏦 Payout Ratio: 46.15%
📊 5-Year Average Dividend Yield: 1.76%
🚀 Dividend Growth Rate (5-Year Avg.): Slow but steady
🔄 Dividend Payment Schedule: Quarterly (Next payout: April 1, 2025)
Dividend Overview
FFIN’s dividend yield of 1.98% is right in line with its historical range. While it may not be the highest-yielding bank stock, what stands out is its reliability. The company has a strong track record of paying dividends consistently, which is a good sign for long-term investors who value stable income.
A key factor supporting its dividend is the payout ratio of 46.15%. This means less than half of earnings go toward paying dividends, leaving plenty of room for future increases while also ensuring the company can reinvest in growth. A sustainable payout ratio is crucial for investors who want to avoid dividend cuts during economic downturns.
Dividend Growth and Safety
When it comes to dividend safety, FFIN is in a strong position. The company is highly profitable, with a 41.63% profit margin and a return on equity of 14.40%. These numbers indicate that the bank is generating solid returns on its assets, which bodes well for long-term dividend sustainability.
FFIN has taken a conservative approach to dividend increases, preferring steady, incremental growth rather than aggressive hikes. While some investors might prefer faster dividend growth, this measured strategy ensures stability and reduces the likelihood of an unsustainable payout.
Another point in its favor is its relatively low volatility. With a beta of 0.80, FFIN tends to be less volatile than the broader market. This is appealing for dividend investors who prioritize stability, especially in a sector that can be affected by interest rate fluctuations.
Chart Analysis
Price Action and Moving Averages
First Financial Bankshares (FFIN) has had an interesting ride over the past year, showing a clear uptrend that peaked in late 2024 before pulling back into a more sideways movement. The 50-day moving average (light blue line) acted as support during the rally, but the stock has since slipped below it, signaling a loss of short-term momentum.
The 200-day moving average (dark blue line) has been steadily rising, which is generally a sign of long-term strength. However, the recent dip below the 50-day moving average suggests that the stock is in a consolidation phase. Right now, FFIN is hovering around $36.33, slightly below the 50-day moving average but still above the longer-term 200-day level. This area could act as a key decision point—whether the stock rebounds or continues drifting lower.
Volume Trends
Looking at the volume, there were several spikes, especially during the rally in mid-2024. These surges in volume often indicate institutional buying or major shifts in investor sentiment. More recently, volume has been relatively stable, with no major buying or selling pressure standing out.
The lack of heavy selling volume is a positive sign, as it suggests investors aren’t rushing for the exits. However, the absence of strong buying volume also means there’s no immediate catalyst pushing the stock higher.
Relative Strength Index (RSI)
The RSI, sitting at around 61.7, is in neutral-to-bullish territory. This suggests that the stock isn’t overbought or oversold, meaning there’s no extreme momentum in either direction. It had been higher during the peak in 2024, indicating stronger bullish momentum at the time, but has since settled into a more balanced range.
A drop in RSI below 50 could indicate weakening momentum, while a move above 70 would suggest the stock is heating up again. For now, it’s in a wait-and-see zone.
Recent Candlestick Behavior
The past few daily candles show some hesitation. There’s a mix of small-bodied candles, which typically indicate indecision among traders. The latest candle has a small range with wicks on both ends, suggesting a tug-of-war between buyers and sellers.
If the price can reclaim the 50-day moving average, it could reignite some bullish momentum. On the other hand, a break below the 200-day moving average might signal a deeper correction. Right now, the stock is holding above key long-term support levels, but short-term weakness is present.
Analyst Ratings
In recent months, First Financial Bankshares (FFIN) has received a mix of analyst evaluations that reflect a balanced outlook. The consensus among analysts leans toward a “Hold” rating, with a consensus price target of $40.25. This suggests a moderate upside from the current trading levels.
📈 Upgrades
🔼 Hovde Group recently reaffirmed a “Market Perform” rating while raising its price target from $34.50 to $40.00. This adjustment highlights confidence in FFIN’s stable financials and consistent earnings growth. The firm noted that the bank’s strong capital position and conservative approach to lending make it a resilient player in the regional banking sector.
🔼 Stephens also raised its price target from $37.00 to $40.00 while maintaining an “Equal Weight” rating. Analysts cited steady revenue growth and a healthy balance sheet as key reasons for the upward revision. While acknowledging some economic headwinds, they believe FFIN is well-positioned to navigate market uncertainties.
📉 Downgrades
🔽 While there have been no major downgrades, some analysts have remained cautious and chosen to maintain their existing ratings rather than upgrade. Truist Financial, for example, reiterated its “Hold” rating but made a slight adjustment to its price target, increasing it from $39.00 to $40.00. This suggests that while the firm recognizes FFIN’s strengths, they remain mindful of interest rate risks and regional banking pressures that could impact future performance.
🎯 Consensus Price Target
The current consensus price target for FFIN stands at $40.25, reflecting a balanced view on the stock. Analysts generally see steady growth potential but are also cautious about market conditions that could limit upside movement. While the stock is not expected to surge dramatically, its financial stability and reliable dividend continue to make it an attractive long-term holding for conservative investors.
Earning Report Summary
First Financial Bankshares (FFIN) wrapped up 2024 on a strong note, posting solid earnings growth and steady financial performance. The bank showed resilience in a shifting economic environment, delivering higher profits and maintaining strong asset quality.
Fourth Quarter 2024 Highlights
The final quarter of the year saw a notable jump in net income, climbing to $62.32 million from $45.98 million in the same quarter of 2023. Earnings per share also moved higher, landing at $0.43 compared to $0.32 a year earlier.
Net interest income came in at $116.12 million, up from $97.51 million in Q4 of the previous year. The bank also saw an improvement in its net interest margin, rising to 3.67%, signaling better returns on its interest-earning assets.
Full Year 2024 Performance
For the full year, FFIN reported a net income of $223.51 million, an increase of over 12% from the prior year. Earnings per share followed suit, growing to $1.56 from $1.39.
Net interest income totaled $426.74 million, showing steady growth and reflecting a well-managed lending portfolio. Despite some economic uncertainty, the bank’s ability to expand its loan book contributed to this positive momentum.
Loan Growth and Asset Quality
FFIN ended the year with $7.91 billion in loans, marking a solid 10.69% increase from 2023. While this loan growth is a positive sign, nonperforming assets inched up slightly, rising to 0.80% from 0.49% a year ago. However, the bank maintained a strong allowance for credit losses at $98.33 million, ensuring it remains well-prepared for any potential defaults.
Noninterest Income and Expenses
The bank also saw a boost in noninterest income, which reached $30.98 million in Q4, up from $21.98 million in the prior year. Higher trust and mortgage fee income played a role in this growth.
On the expense side, noninterest expenses increased to $70.10 million from $63.47 million, mainly due to rising salaries and employee benefits. While costs are climbing, they remain in check relative to revenue growth.
Balance Sheet Strength
FFIN finished the year with total assets of $13.98 billion, reflecting balanced growth from $13.11 billion in 2023. Deposits grew by over 5.5% to $12.16 billion, a positive sign that customer confidence remains strong. Shareholders’ equity also increased to $1.61 billion, further strengthening the bank’s capital position.
Overall, First Financial Bankshares delivered another year of steady financial progress, reinforcing its position as a solid player in the regional banking space.
Financial Health and Stability
A company’s ability to maintain and grow its dividend depends on its financial strength, and FFIN checks a lot of the right boxes. The bank has a strong cash position, with $763.73 million in cash, and only $197.02 million in debt. Many banks rely heavily on leverage, but FFIN operates with a more conservative balance sheet, which reduces risk.
Revenue growth has been impressive, up 22.30% year-over-year, while earnings growth has been even stronger at 35.50%. These numbers suggest that the bank is not just surviving but thriving. The return on assets of 1.65% is also a positive sign, showing that the company is efficiently using its resources to generate profits.
All of this adds up to a strong financial foundation, which is essential for maintaining a stable dividend. Investors looking for a company with a reliable income stream will appreciate FFIN’s disciplined financial management.
Valuation and Stock Performance
At its current valuation, FFIN is trading at a trailing price-to-earnings (P/E) ratio of 23.29 and a forward P/E of 22.42. This is a bit on the higher side compared to some regional banks, but it reflects investor confidence in its stability and long-term prospects.
The stock has seen some ups and downs, with a 52-week high of $44.66 and a low of $27.62. Right now, it sits at $36.33, which is slightly below its 50-day moving average of $36.97 but above its 200-day average of $35.91. This suggests that the stock is in a relatively stable trading range, at least for now.
For dividend investors, valuation matters because it impacts the yield and potential future returns. While FFIN isn’t the cheapest bank stock, its strong financials and steady growth make it a reasonable choice for those prioritizing long-term reliability.
Risks and Considerations
Every investment carries risks, and FFIN is no exception. While the company is well-managed, there are a few factors that investors should keep in mind:
⚠️ Interest Rate Sensitivity: As a bank, FFIN’s profitability is closely tied to interest rates. If rates drop significantly, it could impact net interest margins.
⚠️ Geographic Concentration: The bank operates primarily in Texas, which means its performance is heavily influenced by the state’s economic conditions.
⚠️ Moderate Yield: While 1.98% is a stable yield, it may not be enough for income investors who prioritize high dividends.
⚠️ Premium Valuation: Compared to some peers, FFIN trades at a higher multiple, which may limit short-term upside.
That being said, the bank’s conservative approach helps mitigate some of these risks. It has successfully weathered various economic environments, and its strong balance sheet provides a buffer against potential downturns.
Final Thoughts
FFIN is not the kind of stock that will excite investors looking for high yields or rapid growth, but it is a solid choice for those who prioritize stability and reliability. The company’s consistent earnings, strong balance sheet, and measured approach to dividend payments make it a compelling option for long-term income investors.
While the stock is not cheap compared to some regional banks, it has earned a premium valuation due to its steady track record. The dividend appears well-supported, and there is room for future growth. For those who value quality and consistency, FFIN remains a stock worth considering.
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