Friday - Stephens has increased the price target for First Financial Bankshares (NASDAQ:FFIN) to $36 from $31, maintaining an Equal Weight rating on the stock. This adjustment comes in the wake of the company's second-quarter financial performance, which showcased notable net interest income (NII) trends, attributed to higher loan yields and diminishing funding cost pressures.
The bank's loan growth saw a significant uptick in the second quarter, with a 16% increase compared to the last quarter on an annualized basis. This growth was fueled by a rise in originations, setting the stage for First Financial to potentially meet its high single-digit growth goal for 2024. The positive momentum led to an upward revision of earnings per share (EPS) forecasts to reflect the robust second-quarter results and favorable future outlook.
However, the bank did experience a 9% rise in classified loans from the last quarter, now constituting 2.1% of the total loan portfolio. This increase was largely due to a single loan in the Dallas-Fort Worth market. Despite this uptick in classified loans, First Financial is considered to be in a strong position for mergers and acquisitions (M&A), supported by its substantial capital reserves, with a Common Equity Tier 1 (CET1) ratio of 18.4%, and a premium stock valuation.
The bank's M&A prospects look promising, particularly for 2025, as Stephens has taken note of several deals in the region that could indicate a fruitful strategy for First Financial. The new price target of $36 reflects 22 times the firm's forecasted EPS for 2025 and 3.7 times the projected twelve-month tangible book value per share (TBVPS). The Equal Weight rating suggests that the analysts view the stock as fairly valued at the current level.
In other recent news, First Financial Bankshares, Inc. has welcomed Sally Pope Davis to its Board of Directors, following her retirement from Goldman Sachs (NYSE:GS). Davis, with over thirty years of financial sector experience, was a co-leader of a major U.S. small cap value fund at Goldman Sachs Asset Management. CEO F. Scott Dueser expressed the company's honor in welcoming Davis, recognizing her extensive knowledge and experience as a significant financial investor.
In another development, Truist Securities has revised its price target for First Financial Bankshares, moving it down to $32 from $34, while maintaining its Hold rating. The revision is based on reevaluated earnings per share forecasts for 2024 and 2025, set at $1.48 and $1.58 respectively. Truist Securities anticipates a rise in net interest income through 2025, supported by expected loan growth funded by securities cash flows.
The firm also highlighted the company's strong capital position, with a Common Equity Tier 1 ratio well above its peers. These developments are part of recent news concerning First Financial Bankshares, offering investors insights into the company's board appointments and financial adjustments.
InvestingPro Insights
As First Financial Bankshares (NASDAQ:FFIN) continues to display a strong financial footing, recent data from InvestingPro has shed light on key metrics that investors may consider. The company's market capitalization stands at a robust $5.09 billion, and it boasts a Price/Earnings (P/E) ratio of 24.81, reflecting investor confidence in its earnings capacity. The P/E ratio has shown consistency, with a slight decrease to 24.72 over the last twelve months as of Q1 2024. Additionally, First Financial has demonstrated a notable dividend yield of 2.07%, which is particularly attractive to income-focused investors.
Two InvestingPro Tips that stand out for First Financial Bankshares include its impressive track record of raising dividends for 13 consecutive years and maintaining dividend payments for 32 consecutive years, underscoring a strong commitment to shareholder returns. Furthermore, analysts have revised their earnings upwards for the upcoming period, signaling optimism about the company's financial prospects. With the stock trading near its 52-week high and the recent significant return over the last week, month, and three months, the momentum behind First Financial appears robust.
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