“We promise that our dedication
to you will not waver as we 
continue to focus on the
importance of value and values. ”
Dear Shareholders: The theme of this year’s annual report
is Value and Values. We ﬁrmly believe that values do drive
value. We want to provide value to our shareholders through
ownership of our stock, and value to our customers through
banking products and services. We do this by adhering to
the principles that have guided this organization since the
establishment of First National Bank of Abilene in 1890. In
particular, we are committed to doing business profes-
sionally and ethically and to making sure our financial
information is presented fairly.
Last year, shareholders saw the value of their stock rise as
we achieved higher earnings for the 16th year in a row. Net
income reached $34.0 million, a gain of 15.7% from 2001’s
$29.4 million. Basic earnings per share totaled $2.75, up
from $2.38 in 2001. Over the past 10 years, earnings have
grown at a compounded annual rate of 11.9%. The primary
factors contributing to 2002’s higher earnings were an
increase in average earning assets and an improved net
interest margin (the percentage difference between inter-
est earned and interest paid). Also contributing was the
elimination of goodwill amortization under a change in
generally accepted accounting principles; this change
produced an increase of $.10 in basic earnings per share.
Key proﬁtability ratios also improved in 2002. Our return on
average assets increased to 1.78% from 1.62% in 2001.
This result was well above the average of 1.19% achieved
by our peer group (bank holding companies of similar
size). Return on average equity improved to 15.13% from
14.35% in 2001. Our operating efﬁciency ratio (the share
of revenues consumed by operating expenses) improved
to 51.96% in 2002 from 53.82% in 2001. Again, our ratio
compared favorably to our peer group’s average of 59.17%.
Consolidated assets at year-end 2002 totaled $1.993 bil-
lion, up 3.3% from $1.930 billion in 2001. Loans increased
modestly, by 2.5%, to $964.0 million. The book value of
our trust assets increased by 2.8%, reaching $986.2 mil-
lion at December 31, 2002. Deposits grew by 1.6%, to
$1.712 billion.
First Financial’s balance sheet at year-end was again
marked by strong asset quality and capital strength.
Classiﬁed loans (those at risk to some degree) increased
to 3.7% of total loans from 2.7% a year earlier. However,
total nonperforming assets decreased to .44% of total
loans from .51% at the end of 2001; by comparison, the
peer group average was .75%. Shareholders’ equity grew
to $238.8 million at the end of 2002, yielding an equity-to-
assets ratio of 11.98%.
Based on our earnings performance and strong capital posi-
tion, in April 2002 the Board of Directors approved a 16.7%
increase in the quarterly cash dividend, to $.35 per share
from $.30 per share. The total cash dividend for 2002 was
$1.35 per share. The market price of our common stock at
year-end was $38.00 per share, up 26.2% from $30.10 at
the end of 2001. The combination of share price appreci-
ation and dividend paid produced a total return to
shareholders of 31% for 2002.
On January 2, 2002, First Financial Bank, N. A., Southlake,
opened a new branch in Keller. We are encouraged by the
growth of this branch, and are looking for additional oppor-
tunities in the same northeast Tarrant County area. On
October 15, 2002, First National Bank, Sweetwater,
acquired the Trent branch of State National Bank of West
Texas. This branch, with total assets of $6.5 million, is a
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