FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2002, 2001 and 2000
F-11
On January 1, 2002, goodwill amounting to $23,765,896 was not subject to further amortization as a result of SFAS
No. 142.  The Company conducted its initial impairment test in 2002, with no reduction of recorded goodwill
resulting from the test.  A reconciliation adjusting comparative net earnings and earnings per share for the years
ended December 31, 2001 and 2000, to show the effect of no longer amortizing the Company’s goodwill, follows:
     2001           2000      
Reported net earnings $ 29,354,505 $ 28,316,047
Add back: goodwill amortization
Goodwill amortization, before income tax     1,641,367 1,641,367
Income tax benefit       (420,000)       (420,000)
Adjusted net earnings  $ 30,575,872  $ 29,537,414
Basic earnings per share:
Reported net earnings $           2.38 $           2.28
Goodwill amortization, net of income tax benefit                .10                .10
Adjusted net earnings  $           2.48 $           2.38
Earnings per share, assuming dilution:
Reported net earnings $           2.37 $          2.27
Goodwill amortization, net of income tax benefit                .10               .10
Adjusted net earnings  $           2.47  $          2.37
Goodwill arising from acquisitions of assets and liabilities, rather than acquisitions of stock, amounting to
$13,000,000, is deductible for federal income tax purposes.
Other identifiable intangible assets recorded by the Company represent the future benefit associated with the
acquisition of the core deposits of City Bancshares, Inc. (Note 17) and is being amortized over seven years utilizing
a method that approximates the expected attrition of the deposits.
Securities Sold Under Agreements To Repurchase
Securities sold under agreements to repurchase, which are classified as secured borrowings, generally mature within
one to four days from the transaction date.  Securities sold under agreements to repurchase are reflected at the
amount of the cash received in connection with the transaction.  The Company may be required to provide additional
collateral based on the estimated fair value of the underlying securities.
Segment Reporting
The Company has determined that it operates one line of business (community banking) located in a single
geographic area (Texas).
Statements of Cash Flows
For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, and
federal funds sold.
Accounting for Income Taxes
The Company’s provision for income taxes is based on income before income taxes adjusted for permanent
differences between financial reporting and taxable income.  Deferred tax assets and liabilities are determined using
the liability (or balance sheet) method.  Under this method, the net deferred tax asset or liability is determined based
on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets
and liabilities and gives current recognition to changes in tax rates and laws.