FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2002, 2001 and 2000
F-12
Stock Based Compensation
The Company grants stock options for a fixed number of shares to employees with an exercise price equal to the fair
value of the shares at the date of grant.  The Company accounts for stock option grants using the intrinsic value
method prescribed by APB Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”).  Under APB
25, because the exercise price of the Company’s employee stock options equals the market price of the underlying
stock on the date of grant, no compensation expense is recognized.  Had compensation cost for the plan been
determined consistent with Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based
Compensation,” the Company’s net earnings and earnings per share would have been reduced by insignificant
amounts on a pro forma basis for the years ended December 31, 2002, 2001 and 2000.  Note 15 provides additional
information on the Company’s stock option plan.
Stock Repurchase
On July 25, 2000, the Company approved a stock repurchase plan, authorizing the repurchase of up to 740,690
shares of the Company’s common stock.  During the years ended December 31, 2001 and 2000, the Company
repurchased 9,900 and 126,100 shares, respectively.  The treasury shares were purchased for $4,240,119, which
represented an average purchase price of $31.18 per share.  The treasury shares were retired in 2001.
Per Share Data
Net earnings per share (“EPS”) are computed by dividing net earnings by the weighted average number of shares of
common stock outstanding during the period.  The Company calculates dilutive EPS assuming all outstanding
options to purchase common stock have been exercised at the beginning of the year (or the time of issuance, if later.)
The dilutive effect of the outstanding options is reflected by application of the treasury stock method, whereby the
proceeds from the exercised options are assumed to be used to purchase common stock at the average market price
during the period.  The following table reconciles the computation of basic EPS to dilutive EPS:
Weighted
Net Average Per Share
   Earnings      Shares      Amount   
For the year ended December 31, 2002:
Net earnings per share, basic $33,952,550 12,359,966 $    2.75
Effect of stock options              -             47,523
Net earnings per share, assuming dilution $33,952,550 12, 409,489 $    2.74
For the year ended December 31, 2001:
Net earnings per share, basic $29,354,505 12,318,346 $    2.38
Effect of stock options              -             45,323
Net earnings per share, assuming dilution $29,354,505 12,363,669 $    2.37
For the year ended December 31, 2000:
Net earnings per share, basic $28,316,047 12,426,344 $    2.28
Effect of stock options              -          28,355
Net earnings per share, assuming dilution $28,316,047 12,454,699 $    2.27
Reclassifications
Certain 2001 and 2000 amounts have been reclassified to conform to the 2002 presentation.