FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2002, 2001 and 2000
F-21
extend credit and standby letters of credit.  Those instruments involve, to varying degrees, elements of credit and
interest rate risk in excess of the amount recognized in the consolidated balance sheets.
The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument
for unfunded lines of credit, commitments to extend credit and standby letters of credit is represented by the
contractual notional amount of these instruments.  The Company uses the same credit policies in making
commitments and conditional obligations as it does for on-balance-sheet instruments.
Contract or
Notional Amount at
December 31, 2002
Financial instruments whose contract amounts
represent credit risk:
Unfunded lines of credit $123,803,128
Commitments to extend credit 62,092,132
Standby letters of credit 6,067,787
Unfunded lines of credit and commitments to extend credit are agreements to lend to a customer as long as there is
no violation of any condition established in the contract.  These commitments generally have fixed expiration dates
or other termination clauses and may require payment of a fee.  Since many of the commitments are expected to
expire without being drawn upon, the total commitment amounts do not necessarily represent future cash
requirements.  The Company evaluates each customer’s creditworthiness on a case-by-case basis.  The amount of
collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit
evaluation of the counterparty.  Collateral held varies but may include accounts receivable, inventory, property,
plant, and equipment, and income-producing commercial properties.
Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a
customer to a third party.  The credit risk involved in issuing letters of credit is essentially the same as that involved
in extending loan facilities to customers.  The average collateral value held on letters of credit exceeds the contract
amount.
The Company has no other off-balance sheet arrangements or transactions that would expose the Company to
liability that is not reflected on the face of the financial statements.
11. CONCENTRATION OF CREDIT RISK:
The Company grants commercial, retail, agriculture, and residential loans to customers primarily in North Central
and West Texas.  Although the Company has a diversified loan portfolio, a substantial portion of its debtors’ ability
to honor their contracts is dependent upon this local economic sector.
12. PENSION AND PROFIT SHARING PLANS:
The Company has a defined benefit pension plan covering substantially all of its employees.  The benefits are based
on years of service and a percentage of the employee’s qualifying compensation during the final years of
employment.  The Company’s funding policy is to contribute annually the amount necessary to satisfy the Internal
Revenue Service’s funding standards.  Contributions are intended to provide not only for benefits attributed to
service to date but also for those expected to be earned in the future.