Consolidated Statements of Cash Flows
      2002           2001           2000      
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $  33,952,550 $  29,354,505 $  28,316,047
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 4,125,655 5,679,082 5,502,224
Provision for loan losses 2,369,634 1,964,050 2,397,750
Premium amortization, net of discount accretion 2,077,358 1,662,108 1,359,124
Loss (gain) on sale of assets 42,890 (52,815) (540,304)
Deferred federal income tax expense (benefit) 350,415 (188,982) (304,240)
(Increase) decrease in other assets (1,508,089) 3,565,172 (2,567,832)
Increase (decrease) in other liabilities     2,695,533    (1,778,326)     1,026,945
Total adjustments   10,153,396    10,850,289      6,873,667
Net cash provided by operating activities   44,105,946    40,204,794    35,189,714
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in interest-bearing deposits in banks (950,140) (1,269,947) (100,258)
Payment for stock of City Bancshares, Inc., net of cash acquired -      (6,848,231) -
Activity in available-for-sale securities:
Sales 30,077,478 57,925,815 530,097
Maturities 814,880,024 660,484,725 21,660,247
Purchases (972,026,050) (854,748,980) (41,804,532)
Activity in held-to-maturity securities:
Maturities 90,203,464 176,972,321 87,167,939
Purchases (2,360,727) (76,102,656) (57,628,266)
Net increase in loans (26,012,420) (31,639,533) (63,728,244)
Purchases of bank premises and equipment (2,913,886) (5,151,260) (2,507,214)
Proceeds from sale of other assets         526,065         200,461         392,305
Net cash used in investing activities  (68,576,192) (80,177,285)    (56,017,926)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in noninterest-bearing deposits 36,066,687 41,179,967 (4,236,804)
Net (decrease) increase in interest-bearing deposits (9,667,069) 41,583,909 (593,942)
Net increase (decrease) in securities sold under agreements to repurchase 6,861,927 (6,317,292) 16,526,625
Common stock transactions:
Acquisition of treasury stock -      (315,050) (3,925,069)
Proceeds of stock issuances 573,116 356,670 161,919
Dividends paid   (16,052,983)  (13,921,211 )    (12,543,863)
Net cash provided by (used in) financing activities    17,781,678    62,566,993      (4,611,134)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (6,688,569) 22,594,502 (25,439,346)
CASH AND CASH EQUIVALENTS, beginning of year  185,125,214     162,530,712   187,970,058
CASH AND CASH EQUIVALENTS, end of year   $ 178,436,645 $ 185,125,214 $ 162,530,712
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
December 31, 2002, 2001 and 2000
The accompanying notes are an integral part of these consolidated financial statements.
F-8
       2002             2001