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range of services to individuals, associations, and corporations.  These services include administering estates,
testamentary trusts, various types of living trusts, and agency accounts. In addition, First National Bank of Abilene,
First Financial Bank, Cleburne, San Angelo National Bank and First Financial Bank, National Association,
Southlake, Texas provide securities brokerage services through arrangements with various third parties.
We have filed an application with the office of the Comptroller of the Currency to form a limited purpose
national bank under which we will consolidate the management of our current trust departments.  The new entity
will operate as a subsidiary of our subsidiary holding company, First Financial Bankshares of Delaware, Inc.  We
believe that with this structure we can more effectively manage our current trust operations and provide trust
services to customers of our banks that do not currently have trust departments.  We anticipate that the new trust
company will begin operations in the latter part of 2003.
Competition
Commercial banking in Texas is highly competitive, and because we hold less than 1% of the state’s deposits,
we represent only a minor segment of the industry. To succeed in this industry, our management believes that our
banks must have the capability to compete in the areas of (1) interest rates paid or charged; (2) scope of services
offered; and (3) prices charged for such services. Our subsidiary banks compete in their respective service areas
against highly competitive banks, thrifts, savings and loan associations, small loan companies, credit unions,
mortgage companies, and brokerage firms, all of which are engaged in providing financial products and services and
some of which are larger than our subsidiary banks in terms of capital, resources and personnel.
Our business does not depend on any single customer or any few customers, the loss of any one of which would
have a materially adverse effect upon our business.  Although we have a broad base of customers that are not related
to us, our customers also occasionally include our officers and directors, as well as other entities with which we are
affiliated.  With our subsidiary banks we may make loans to officers and directors, and entities with which we are
affiliated, in the ordinary course of business.  We make these loans on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable transactions with other persons. Loans to
directors, officers and their affiliates are also subject to numerous restrictions under federal and state banking laws
which we describe in greater detail below.
Employees
With our subsidiary banks we employed approximately 750 full-time equivalent employees at February 1, 2003.
Our management believes that our employee relations have been and will continue to be good.
Supervision and Regulation
Both federal and state laws extensively regulate bank holding companies, financial holding companies and
banks.  These laws (and the regulations promulgated thereunder) are primarily intended to protect depositors and the
deposit insurance fund of the Federal Deposit Insurance Corporation, or FDIC, although shareholders may also
benefit. The following information describes particular laws and regulatory provisions relating to financial holding
companies and banks. This discussion is qualified in its entirety by reference to the particular laws and regulatory
provisions.  A change in any of these laws or regulations may have a material effect on our business and the
business of our subsidiary banks.
Bank Holding Companies and Financial Holding Companies
Traditionally, the activities of bank holding companies were limited to the business of banking and activities
closely related or incidental to banking.  Bank holding companies were generally prohibited from acquiring control