First Financial Bankshares, Inc. (FFIN) Earnings Call Transcript & Summary

Good morning. Welcome to the First Financial Bankshares First Virtual Annual Meeting. These are times that we have to be flexible and innovative. We certainly are sorry that we couldn't have the regularly scheduled coffee, annual meeting and luncheon because we miss seeing and visiting with all of you. Our greatest concern is your health and well-being as well as our employees and communities we serve. We miss seeing each of you personally, and we pray that you will stay healthy through this time. I'm Scott Dueser, and as Chairman of the Board of Directors, it is my pleasure to preside at today's meeting. Today marks the 47th annual meeting of shareholders since the company was organized as a multibank holding company in 1973. We are honored to have so many of our shareholders on the virtual meeting. Your interest and dedication to our company is very gratifying to us. Your continued support is very much appreciated, especially at this time. As set out in the proxy statement dated March 2, 2020, our directors, Tucker Bridwell and David Copeland, are serving as proxies and are authorized to vote in accordance with your proxy card, which was completed and returned by mail or by phone. Otherwise, proxies received prior to the meeting will be voted in accordance with instructions contained in the proxy statement. If you have revoked your proxy prior to the meeting or if you're voting today during this meeting, please utilize the voting option on the virtual meeting webcast or e-mail [email protected] or call 1 (800) 588-4924 to complete your vote. The polls are open for voting at this time. For those of you who haven't voted, we'll close after we have presented the official business for today's meeting. Now it's my pleasure to introduce our senior management who are truly the ones who lead this company. I would ask each of you to pay particular attention to the experience level of each one of these professionals as we go through these names. Scott Dueser, Chairman of the Board, President and Chief Executive Officer; Ron Butler, Executive Vice President and Chief Administrative Officer, also, CEO of our Abilene region; Gary Gragg, Executive Vice President, Chief Lending Officer; Bruce Hildebrand, Executive Vice President and Chief Financial Officer of the Company; Luke Longhofer, Executive Vice President, Chief Credit Officer; Randy Roewe, Executive Vice President and Chief Risk Officer; John Ruzicka, Executive Vice President and Chief Information Officer; Kirk Thaxton, Chairman, President and CEO of First Financial Trust & Asset Management Company; Tim Collard, Executive Vice President, Lending; Brandon Harris, Senior Vice President, Appraisal Services; Larry Kentz, Senior Vice President and Compliance Officer; Kyle McVey, Senior Vice President, Chief Accounting Officer; Marna Yerigan, Executive Vice President, Lending. And now our line of business managers: Will Christoferson, Senior Vice President, Advertising and Marketing; Troy Fore, President, First Financial Bank -- sorry, First Financial Mortgage; Frank Gioia, Senior Vice President of Customer Care Center; Josh Brown, Vice President of Human Resources; Monica Houston, Executive Vice President, Retail Banking and Training; Gary Milliorn, Vice President, Property Management; Andrea Smiddy-Schlagel, Executive Vice President, Treasury Management; Mike Wolverton, Executive Vice President, Consumer Lending. And our presidents: Marelyn Shedd, President of our Abilene region; Joseph Crouch, President of our Sweetwater division; Robert de la Cruz, Chairman, President and CEO, Hereford; Chris Evatt, Chairman, President and CEO of our San Angelo region; Austin Elsner, Chairman, President and CEO, Cleburne; Trent Swearengin, Chairman, President and CEO, Stephenville; Justin Hooper, Chairman, President and CEO of Weatherford; Mark Jones, Chairman, President and CEO of our Southlake region; Stephen Lee, President and CEO of our Southeast Texas region; Sam Baker, Chairman, President and CEO of our Conroe region; Kirby Cason, President of our Huntsville division; Marcus Morris, President and CEO of our Fort Worth region; Johnny Brooks, Chairman and CEO of our Kingwood region; Shelley Dacus, President of our Kingwood region; and Ivan Wilson -- Ivan Olson, President and CEO of our Bryan/College Station region. Ladies and gentlemen, this is your management team who make up this bank -- who make this bank one of the top-performing banks in the country. Each of the bank regions as well as our trust and technology companies are guided by very capable Boards. Altogether, we have 114 business and professional leaders, other than bank presidents and company representatives who serve our 12 regions, our trust and technology companies. As we say, our Boards are made up of the movers and shakers of the communities that we serve. Their guidance and counsel is greatly appreciated, and their influence in the markets we serve is vital to the ongoing success of this organization. We thank them for their time, direction and dedication. For the past 17 fiscal years, the accounting firm of Ernst & Young LLP has performed the audit of our company. We appreciate their professionalism, and we are pleased to have representatives from the firm join us on the virtual meeting. Matt Whip and Jeff Koons, partner and senior management with the firm are live with us today. Now that I have had the opportunity to introduce our management team and auditors, we can move along with today's official business. In accordance with the annual meeting notice and proxy materials that were mailed on March 6, 2020, to all shareholders of record as of March 2, 2020, there are 3 items that require the official vote of shareholders. They were covered in detail in the proxy materials. However, as we present these items, if you should have any questions, please e-mail [email protected] or call 1 (800) 588-4924, and give us your questions, and we will try our best to get those answered during the meeting. Mr. Copeland, have you tabulated the votes?

Yes.

Mr. Copeland, will you please give us the number of shares that are presented by proxy and the number of shares presented via the virtual meeting?

Now those by proxy and in person total 124,819,000 shares, which represents 87.8% of the outstanding shares.

Thank you, Mr. Copeland, and I want to thank our stockholders. To get 87.8% of our stockholders that have voted says a lot about your support of our company. The number of shares represented constitutes a quorum, therefore this meeting is properly and duly convened. That being the case, it is our standard procedure not to read the minutes of the last meeting. Mr. Bruce Hildebrand has in hand the minutes of that meeting, which was held on April 23, 2019. That meeting had 4 official items of business, those being the election of directors, the ratification of appointment of independent auditors, the advisory vote on compensation of our named executives, and amendment to the amended and restated certificate of formation to increase the number of authorized shares. All 4 items were approved by the shareholders. As set out in the proxy statement dated March 2, 2020, we have 3 official items of business for this meeting. Our first item is the election of directors to serve on the corporate Board for the coming year. As stated in the meeting notice and the proxy statement, the Nominating/Corporate Governance Committee and the Board of Directors have recommended that 11 directors be elected, all of whom are currently serving as your Board members today. The nominees and their primary businesses are as follows: April Anthony of Dallas, CEO of the Encompass Home Health and Hospice and Homecare Homebase; Vianei Lopez Braun of Fort Worth, Attorney with Decker Jones, P.C.; Tucker Bridwell of Abilene, President of Mansfeldt Investment Corporation; David Copeland, CPA of Abilene, President of SIPCO, Inc. and the Shelton Family Foundation; Mike Denny of Abilene, Owner/President of Batjer & Associates, Inc.; Scott Dueser, Chairman of the Board, President and CEO of First Financial Bankshares, Inc.; Murray Edwards of Clyde, Principal, The Edwards Group; Tim Lancaster of Lubbock, retired President and CEO of Hendrick Health System; Kade Matthews of Amarillo, ranching and investments; Robert Nickles, Jr. of Kingwood, Executive Chairman of Alegacy Group, LLC; and Johnny Trotter of Hereford, President and CEO of Livestock Investors, Ltd. This is the recommended slate of directors for the coming year. The second item of business is to ratify the audit committee of the Board of Directors' appointment of Ernst & Young LLP as independent auditors for the fiscal year ending December 31, 2020. As noted in the meeting notice and the proxy statement, the Board of Directors has recommended the appointment of Ernst & Young LLP to be ratified. The third and last item of business is the advisory vote on compensation of our named executive officers. Pursuant to the Securities and Exchange Commission rules, we are again conducting a shareholder advisory vote referred as say-on-pay to give shareholders the opportunity to express their views on compensation of the named executive officers and the executive compensation philosophy, policies and programs described in the proxy statement. As noted in the meeting notice and the proxy statement, the Board of Directors recommends approval of the resolution approving the compensation of named executive directors and executive officers. The advisory vote on executive compensation is the last matter to be voted on as outlined in the notice of the annual meeting. Now that everyone has had an opportunity to vote, I hereby declare to close -- the polls closed for voting. While Mr. Copeland and Mr. Bridwell tabulate the votes, I want to take this time to thank Mr. Ron Giddiens and Mr. Ross Smith who are retiring from the Board. Ron Giddiens of San Angelo is a partner in D&G Consulting and has been on the Board for 11 years and has served on the Audit Committee, the Bank Directors Loan Committee, the First Financial Technology Company Board and the Asset Liability Management Committee. He has also served on the San Angelo Regional Board of Directors. Ross Smith from Orange is Chairman and President of Akrotex, Inc. and the owner of Sabine River Ford, Inc. He has served on the Board for 6 years. During that time, he's been on the Compensation Committee, the Bank Directors Loan Committee and he has also served on the Southeast Texas Regional Board of Directors. Both gentlemen have been very valuable members of our Board, committees and respective regional boards. We will miss their counsel and support, and we thank them for their outstanding service. We look forward to their continued support and loyalty. I also want to welcome Vianei Lopez Braun to our Board, who was elected in January 2020. Vianei is no newcomer to our bank since she has been the human resources attorney for over 20 years. She leads the labor and employee section of Decker Jones, P.C., a full-service law firm based in Fort Worth and serves as the Chief Development Officer for the firm. And an honors graduate of Princeton University and the University of Texas Law School, Vianei Braun has been practicing law for more than 25 years with previous tenures in Houston and Abilene. She's been recognized as Texas Monthly Super Lawyer in labor and employment law and has been selected as the top lawyer in the labor And employment field by Fort Worth and Houston magazines. She has also been honored as a Great Woman of Texas by the Fort Worth Business Press. Vianei, to say the least, we are delighted to have you as part of the First Financial Bankshares Board. I have received a preliminary vote tabulation from Mr. Copeland. Based on the tabulation, I'm pleased to report that all 11 director nominees were elected, the appointment of Ernst & Young has been ratified and the advisory vote on executive compensation was approved. The final voting results of today's meeting will be reported on a Form 8-K filed 4 business days from this meeting. This concludes the official business, and we appreciate the strong approval of the 3 proposals recommended by the Board of Directors this morning. There being no further official business to come before the meeting, the 2020 annual meeting of First Financial Bankshares is now adjourned. Bruce Hildebrand will now present the financial results, and Kirk Thaxton will discuss Trust highlights and activities. Then it will be my pleasure to present the 2019 and current activities of the company. Bruce?

Thank you, Scott. I'm pleased to present our financial results for 2019 and the first quarter of 2020. 2019 was another successful year for First Financial, our 33rd year of increased earnings. First, a look at our 2019 net income. Net income of $164.8 million compared to $150.6 million for 2018, representing a 9.4% increase. Contributing to this percentage increase was an increase of $27.5 million in interest income, primarily from our growth in loans of $241.3 million. Our growth in average assets was $32.7 million over 2018 or 4.6%, all internal. Our growth in real estate mortgage fees of $3.0 million and our increase in interest recoveries on previously nonaccrual loans of $1.2 million also contributed positively to our net income growth. Basic earnings per share was $1.22 for 2019 compared to $1.11 for 2018, reflecting a similar increase noted earlier. Efficiency ratio is the performance indicator that represents the ratio of noninterest expense to total revenue, less interest expense, and is viewed as a key measure in determining whether we are effectively managing our noninterest expense. In simple term, this ratio reflects how many cents of overhead it takes our company to make $1. The lower the ratio, the better. In 2019, our ratio was 48.61% compared to 49.72% in 2018 as we successfully integrated our operations from the Kingwood acquisition. Our efficiency ratio compares very favorably to our Federal Reserve Bank peer group of 59.91%. This Federal Reserve peer group consists of 146 bank holding companies throughout the United States with assets between $3 billion and $10 billion. Our ratio puts us in the top 87th percentile. In 2019, our net interest margin was again under strong pressure as interest rates have continued at very, very low levels since 2007. The Federal Reserve increased rates by 100 basis points in 2018 and then early 2019 indicated more increases were to come. Then they reverse coursed and lowered rates 3x in 2019, totaling 75 basis points, and then 50 basis points on March 3, 2020, and another 100 basis points on March 15. Our net interest margin was 3.98% for 2019, up 2 basis points over 2018, which put us in the 83rd percentile of our peer group for net interest margin. We work hard each day to maximize our investment on our liquid assets, grow loans, increase loan rates where we can and manage interest paid on deposits. Return on average assets is another key measure of financial performance for the banking industry. This is net income as a percentage of average assets, which was 2.08% for 2019. This compares extremely well to our peer group of 1.19% and place us in the 96th percentile of our peer group. Another important measure for shareholders is return on equity, which is net income as a percentage of average shareholders' equity. 14.37% for 2019 and 86th percentile for our peer group. Our return on tangible equity, which excludes goodwill and other tangible assets -- intangible assets, was 16.95% for 2019, also very strong. These ratios are especially strong when you consider our high levels of capital, as illustrated on the next slide. The 4 primary ratios followed by our regulators are shown here. And as you can see, our capital ratios are over double the required level to meet the requirements of Basel III. Our total shareholder capital at March 31, 2020, totaled $1.53 billion. From a balance sheet perspective, our total assets at the end of 2019 were $8.26 billion. Our growth was $530.4 million, all internal. The Abilene region at $179 million and the San Angelo region at $109 million were the largest contributors to this growth. Loans totaled $4.2 billion at the end of 2019 compared to $3.97 billion at the end of 2018, an increase of 6.2% over the prior year. We stood at a 64.0 loan-to-deposit ratio at December 31, 2019. While we're working hard to increase our loans, credit quality continues to be our primary focus, and we do not sacrifice credit quality for the sake of loan growth. Our nonperforming assets totaled $27.8 million and, as a percentage of loans and foreclosed assets, stood at 61 basis points at December 31, 2019. Our allowance for loan loss totaled $52.5 million or 1.24% of loans. Our total deposits increased to $6.6 billion, up $424 million or 6.9% over 2018. Our noninterest-bearing demand deposits remained strong at $2.1 billion, 31.3% of total deposits. Now let me briefly highlight our first quarter numbers that were released to the public in our earnings release last Thursday, April 23. Net earnings of $37.2 million for the first quarter of 2020 compared to $38.3 million for the first quarter of 2019. Some key points for that earnings release are as follows: our acquisition of The Bank & Trust and Bryan/College Station was effective on January 1, and their earnings and results are now in the first quarter financials. We added loans totaling $446 million and deposits totaling $567 million as a result of this acquisition. We're excited about this acquisition and the potential future benefit to our company. Related to this acquisition, we recorded $3.8 million in technology conversion and contract termination fees in the first quarter that negatively affected our bottom line. Net interest income increased $11.4 million or 16.4%, contributing greatly to our bottom line. The acquisition contributed significant to this increase. Our interest-earning assets grew $1.28 billion or 17.6%, both from internal growth and from the acquisition. Our net interest margin decreased to 3.91% from 4.00% a year ago due primarily to the interest rate decrease I discussed earlier. Real estate mortgage fees increased 10.88% due to significant increases in our origination volume, but was offset by mortgage valuation issues due to the significant volatility in the mortgage market. Our provision for loan loss was $9.9 million compared to $905,000 a year ago. The economic impact of the coronavirus, sharp decline in oil and gas prices and increased levels of nonperforming assets, classifieds and charge-offs contributed to this elevation in our provision expense. Earnings per share was $0.26 per share compared to $0.28 for 2019. And we ended first quarter at assets totaling $9.7 billion, up $1.8 billion over March of last year, primarily from our latest acquisition. Similarly, loans increased $678 million to $4.68 billion at March 31 over March 31, 2019, again, primarily from the Bryan/College Station acquisition. And deposits increased to $7.21 billion at March 31, $860 million over the balances at March 31, 2019. This concludes my review of 2019 and the first quarter of 2020. And I will turn over the meeting to Kirk Thaxton, who will review with you our Trust company. Thank you.

Good morning. First Financial Trust enjoyed another successful year in 2019. Our total assets increased $562 million to finish the year with a book value of $4.86 billion, an increase of 13.1%. The market value of our assets under management surpassed the $6 billion milestone, finishing the year at $6.75 billion, an increase of $1.15 billion or 20.5%. The Trust company experienced modest earnings growth in 2019. Trust fee revenue increased $220,000 or slightly less than 1% from $28.18 million in 2018 to $28.4 million in 2019. Our earnings growth in 2019 was significantly impacted by our oil and gas fee revenue, which dropped $1.1 million or 22% from $4.82 million in 2018 to $3.75 million in 2019. The decrease was due primarily to a decline in production. As you can see from this slide, our oil and gas revenue continues to be volatile. However, it remains an important line of business for us, representing approximately 13% of total revenue. Our after-tax net income contribution to First Financial Bankshares increased $360,000 or 2.7% from $13.53 million in 2018 to $13.89 million in 2019. Our Beaumont office led the way with net income growth of 51%, followed by our Fort Worth office, which had an increase of 27.6%. The equity markets had an epic year in 2019 with the S&P 500 returning 31.48%. Our investment team also produced outstanding results in 2019. Our best-performing portfolio for the year was our equity income portfolio, which finished the year with a return of 32.96%, followed closely by our large-cap core portfolio, which was up 32.47% for the year. As much as I'd love to relish in our equity performance for 2019, along came the first quarter of 2020. To say that volatility into the markets would be an understatement. The month of March experienced several historic events. First, March was the most volatile month in history with an average daily movement of 4.8%. Additionally, we experienced the biggest point drop in a day on Monday, March 16, with the Dow dropping 2,997 points or 12.93%. This followed Friday, March 13, when the Dow was up 1,985 points or 9.36%. The low point of the month was on March 23 when we were down year-to-date 30.43%. However, the last week of March experienced a sharp bounce with the S&P 500 ending the month down 19.6%. Our portfolios have held in extremely well with our strategic growth portfolio down 16.81% and our core portfolio down 19.46% for the same period. We have also seen further recovery in April with the S&P 500 now down 10.23% as of yesterday's close. Even with all of the recent volatility, our portfolios have impressive long-term results. Our large-cap core portfolio has a 10-year average return of 10.81%, while our equity income portfolio has a 10-year annualized return of 10.57%, which is 280 basis points per year higher than the Lipper equity income benchmark. Our portfolios, led by Chris Montoya, currently manage over $2 billion in equity assets, utilizing 5 different equity styles which allow us to provide the appropriate equity strategy to meet each customers' needs and risk tolerance. Bill Rowe continues to do an excellent job managing our bond portfolios and currently manages over $1.2 billion in fixed income assets. In 2019, Bill produced outstanding returns of over 6% for both our taxable and tax-free portfolios, outperforming both benchmarks. However, the fixed income markets were not immune to the effects of COVID-19 during the first quarter of 2020. Even though bonds substantially outperformed stocks, liquidity gaps emerged, making it necessary for the Federal Reserve to make -- to take unprecedented measures. The Fed, in historic fashion, cut the cash rate to 0% and instituted numerous buyback programs. These debts have not only brought liquidity back to the market but also strong price gains. 2019 was another successful year for our growth and expansion. In November, we hired Mike Sierra and opened our ninth Trust office located in San Antonio. Our plan is for Mike to cover the San Antonio, Austin and Hill Country markets. Mike comes to us with great experience, and we are confident that he will be able to grow these new markets for us. In spite of the turbulent markets, we are pleased to announce excellent first quarter results. The book value of our assets under management has increased over $176 million since year-end, surpassing the $5 billion milestone to reach $5.02 billion. Our net income for the first quarter of $3.76 million was an increase of $388,000 or 11.5% when compared to the first quarter of 2019. We will certainly incur headwinds during the rest of 2020 as we brace ourselves for lower oil prices in the volatile market. However, our experienced and dedicated team is up to this challenge. The foundation of our business has always been based upon relationships. We are fortunate to have worked with many families for generations. Whether it's our experience in investments, mineral management, property management or trust and estate administration, our highly talented team of professionals remain dedicated on providing unparalleled customer service to you and your families for generations to come. Thanks to each and every customer of First Financial Trust for allowing us to serve your trust and investment needs. For those of you who are not yet our customers, we look forward to the opportunity. Thank you for your attention this morning, and I'll turn the podium to Scott.

Thank you, Kirk and Bruce. As you can see, the Bank and the Trust company are doing very well. Bruce showed you this slide earlier, but I wanted to make a few comments about it. This is, of course, the 33rd consecutive year of increased earnings. Over the last 5 years, we have increased earnings from $89.6 million to $164.8 million, an increase of $75.2 million. Since we went public in 1973, we have increased earnings from $1 million to $164.8 million in 46 years. Over the past 5 years, our compounded average return has been 19.97% a year. Our annual return since 1973, if you owned 100 shares in 1973, today, you would have 34,376 shares because of stock splits. Those shares in 1973 would have been worth $4,900. And at the end of 2019, those shares would have been worth $1,206,598, a 12.72% average annual return without including dividends through all those years. At the same time, the average annual return of the S&P 500 would have been 7.29% for those years. Of course, this is a little different today with the COVID-19, lower oil and gas prices and an anticipated recession and what it's done to the stock market. Although our stock has dropped from $35 a share at year-end to $27.17 on March 31, 2020, and yesterday to $27.60, as you can see, we have fared well with the market. And we are pleased with the increase in number of shares that are being traded on a daily basis. Being one of the stronger banks in the country has certainly helped us. And since the end of March, we have opened a number of new depository accounts, which has increased our liquidity. I couldn't be prouder of our team across the company because of their proactive response to the SBA PPP loan program. The first day, we had over 3,000 loan applications, which we'll work that weekend so that we could start funding loans on Monday. Our team didn't start working through the -- didn't stop working through the days, nights and weekends to get these loans processed and funded until the SBA ran out of funds. By the time that happened, we have processed 4,850 loans totaling $646 million to help make payroll payments, keep people employed and keep Texas strong. Our quick response and efficient process has brought many new loan customers and deposit customers to our bank. Now we are right in the middle of the second phase, and we hope to process and fund 1,513 loans totaling $67 million. Unfortunately, the SBA ETRAN system has not been functioning very well, and we're having a hard time, along with every other bank in the company, getting loans booked. Safe, sound and secure, that is what First Financial has been for more than 130 years. Whether it's been the great depression, the oil and gas bust or through numerous economic recessions, we've come through them all with flying colors and plan to do the same through this time. On March 11, 2020, Suntrust Analyst, Jennifer Demba, ranked First Financial in the top 10 banks of the best relative credit loan history and the highest relative credit capital levels within their coverage. Our extremely high percentage of capital to total assets of 15.73% significantly outperforms our peers, along with the rest of the metrics, which you have already seen. We have excellent liquidity and have lines of credit available to draw on, from the Federal Reserve Bank of Dallas, the head Federal Home Loan Bank, correspondent banks and other sources. We're certainly prepared to make new loans and advances on existing lines of credit to take care of our customers, liquidity, working capital and expansion needs. For the past 11 years, we have been selected as 1 of the top 7 banks in the country from the $5 billion to $50 billion range by Bank Director magazine. Through those years, we were selected #1; and before those years, #4. The rating is based on First Financial's financial strength and safety coming from factors such as capital, asset quality, profitability, risk management and sound business practices. Now let's go to the accomplishments in 2019. On January 1, 2020, we completed the acquisition of The Bank & Trust of Bryan/College Station. This purchase price originally established was based on a $30.28 per share price for our common stock and totaled about $190 million on the day both parties agreed to the pricing. In accordance with the terms of the definitive agreement, we issued approximately 6.3 million shares of First Financial common stock with an approximate value of $220 million to the shareholders of TB&T Bancshares since our stock price increased between the time of the agreement and the closing. TB&T Bancshares paid a special dividend to its stockholders totaling approximately $2 million at the end of that transaction. As of December 31, 2019, The Bank & Trust had total assets of approximately 360 -- I'm sorry, $631 million, loans of approximately $455 million and total deposits of approximately $552 million. The bank has 5 branches, which expands our branch operation to 78 locations. We are very excited to welcome the TB&T team into the First Financial family. This well-managed and a high-performing bank in a high-growth area of Bryan/College Station is an excellent addition to our company. With new and expanded products and services, including state-of-the-art mobile banking, treasury management services, trust services and a larger lending capacity that First Financial is adding to TB&T operations, we expect this new 12th region to grow and contribute nicely to our bottom line. We're excited to be able to introduce you to the First Financial Bryan/College Station management team who are very -- who we are very impressed with. However, we are unable to do that in a virtual shareholder meeting. We look forward to presenting them to you at a later date. As you can see, First Financial Bank Bryan/College Station fits very well into our footprint, with our operations expand from an area of Hereford in the Panhandle to Orange in Southeast Texas. This reflects our philosophy of continuing to be the community bank that doesn't focus on big cities, but the smaller cities around the major metropolitan markets where we are not fighting the big banks, where we have the growth factor from larger cities. This philosophy has worked well for us, and being spread across the state has created diversity in the types of customers and economies that make up our bank. This diversity has been very important to help us consistently grow our earnings because if one area is down economically, another area is usually up. We have been delighted to have Horst Schulze, Co-Founder and former President of The Ritz-Carlton Hotel Company and one of the top customer service experts in the world, working with our company as a consultant for the second year in a row. Horst is teaching us his methods of making our customer service the best in the industry as well as teaching us how to be excellent in everything we do. I can't tell you how excited I am that Horst is sharing his knowledge with us. In February 2019, he spent 2 days working with our management team, regional presidents and line of business managers. This experience was the best 2 days in my professional career. What we learned from Horst was so vast and so powerful that it affected not only my professional career, but my personal life as well. With his input, we created 5- and 10-year vision statements, enhanced our mission statement and developed 21 nonnegotiables to ensure that our customers and our stockholders receive excellent service every time they interact with a First Financial employee. I'm excited about this program. I'm excited about what this program will do for our company and for our customers, shareholders, employees, communities and each of us personally. We're making a huge investment that will differentiate us from every other financial institution in the country, bear fruit in the future and demonstrate to everyone that we truly put you, our shareholders, customers, employees and communities first. New locations. In January 2019, we opened a new branch at 3563 Riley Fuzzel Road in Spring, Texas. This Spring branch is located on Grand Parkway at Birnham Woods, which our property expert says is one of the best locations in the entire footprint because of the demographics of this area. It is also a good connection between our Kingwood and Conroe locations and expands our market north of Houston. In March 2019, we moved into a beautiful, new, state-of-the-art building in Orange. This new home office of our Southeast Texas region is strategically placed one block away from our former location. It is a very nice addition to Orange, especially after the devastation of Hurricane Harvey. In January 2020, we began construction to expand the parking and drive-in facilities at our North Main location in Weatherford. This upgrade will allow much better access for customers and provide additional parking for this growing area of Weatherford. Environmental improvements. Over the last 5 years, we have built 7 new locations, remodeled 4 branches and retrofitted 37 locations with LED fixtures and a high-efficiency mechanical systems to reduce electrical costs and meet environmental standards. By the end of 2020, we will have completed 78 of our locations and completely retrofitted each of those locations. This reflects our -- how important our environment is to us. Management changes. In January 2019, Justin Hooper added the titles of Chairman and CEO to his existing title of President upon Jay Gibbs' retirement from the Weatherford region. Jay has been with the bank for 16 years and has led the region as Chairman and CEO for the past 6 years. Justin has been with the bank nearly 18 years and is 1 of the 6 regional presidents to have moved up through our internal management training programs. In April 2019, Marcus Morris was promoted to President and CEO of the Fort Worth region. Marcus started at First Financial in 2010 as a commercial loan analyst in Abilene and, in 2012, was promoted to commercial loan officer in Keller. He is also 1 of the 6 regional presidents to have moved up through our internal management training programs. Will Christoferson and Michele Stevens. Also in April, Will Christoferson was promoted to Senior Vice President of Advertising and Marketing upon the retirement of Michele Stevens, who had been with our company for 22 years. Before his promotion, Will had been Vice President of Advertising and Marketing. Will is an Abilene native and has had more than 10 years of banking experience. I'm very pleased with the fine job Will did on the annual report and what he is doing on our marketing and advertising. In 2019, Shelley Dacus was promoted to President of our Kingwood region. Shelley has more than 15 years of banking experience, most recently as Kingwood's Executive Vice President and Senior Lending Officer. Before joining our company, she has been part of the team at Commercial State Bank which was acquired by First Financial Bank in 2018. Shelley is the second woman to be promoted to a Regional President position at First Financial Bankshares. In October 2019, Robert de la Cruz was promoted to Chairman, President and CEO of the Hereford region upon the announcement that Mike Mauldin was retiring to become inaugural Director of the Excellence in Banking program at Texas Tech University's Rawls College of Business. Mike had been Chairman, President and CEO of the Hereford region for the past 17 years and was an excellent selection for the Excellence in Banking program. Robert is a first-generation college graduate, who started with the bank 18 years ago in our contact center. He is the sixth regional president to start with our bank directly after college and advanced through the numerous training programs for positions to the role of president. Robert is also our first Hispanic regional president, reflecting the importance of diversity in our company. Also in October 2019, Bruce Hildebrand, Executive Vice President and Chief Financial Officer, announced his intention to retire from the company in August 2020. I've had the pleasure of working side-by-side with Bruce for the past 17 years. He is one of the most professional, dedicated and knowledgeable CFOs that I know, and he has certainly shaped this company to be one of the top financial institutions in the country. To replace Bruce, we have selected Mr. James Gordon as our next Executive Vice President and Chief Financial Officer. James will join in the middle of May, so he and Bruce will have plenty of time together to make a smooth transition. James has been Chief Financial Officer of FB Financial Corporation, FirstBank, Nashville, Tennessee. He has vast banking, public accounting, SEC and acquisition experience and has worked for several large banks. And we are able -- we will be able to help -- and he will be able to help guide us through the $10 billion threshold. His banking experience includes Union Planters Corporation and the National Commerce Financial. His public accounting experience includes partner with PricewaterhouseCoopers, BDO Seidman and HORNE LLP, primarily servicing the financial industry. He's a graduate of the University of Mississippi, and we are certainly looking forward to James, Joy and their 5 children joining our bank family. I can tell you our company is getting younger, and we are -- and we had many more young professionals ready to move up the ladder. First Financial Bankshares embraces and promotes a culture of diversity and inclusion. Of the 1,434 -- or 1,435 employees, 72% are female and 29% minority. So you can see how diverse we are. We continue our efforts to attract, recruit, retain employees who bring our company diverse backgrounds, orientations, beliefs, cultures and interest. Having a diverse team strengthens our company by bringing together people with different ideas, skills and experiences; and by enabling our customers, regardless of their race or other characteristics, to feel at home when they visit our locations. We are pleased that through these programs, we have been able to promote our second woman regional president and our first Hispanic regional president as well as select our second woman director. We were honored in April 2019 by the Abilene branch of the American Association of University Women for empowering women within our company. We are proud to be recognized by this association, which we strongly support because of this program to recognize women of distinction and provide scholarships for women to complete their quest for higher education. We couldn't be more excited about the number of diverse young professionals that we have throughout our company who are being trained and mentored for higher-level positions. We're also very proud of the role that the bank plays to help Texas Tech University, Rawls College of Business establish the Excellence in Banking program, which has a twofold focus: one, graduating top-of-the-line students who have been educated and trained to be future management of banks; two, to select women, minorities and first-generation students into the banking program. I'm proud to say that with Mike Mauldin's leadership that 1/2 of the initial class is made up of women and minorities because there is a great need for them in the banking industry today. Okay. We've had one question. Have we had any more? Okay. We've had one question, and we appreciate the question.

And this question is, discuss how oil and gas prices and effect on oil and gas industry will impact the smaller communities. We wish we knew that answer, and we will learn that answer over the next several months. We do hope that we will see oil prices return to a better price, and we hope to see the demand come up as the economy comes back and the supply lower, which will certainly help oil prices and help our communities.

Okay. Let's talk about dividends per share. As you can see from this slide, over the past 5 years, our dividends have increased from $0.31 to $0.47 and increased 52%. Due to our strong capital position and our historical earnings increase, the Board has voted to increase our cash dividend by $0.01 or $0.13 a quarter, which is an 8.3% increase. For shareholders of record as of June 16, 2020, the dividend will be payable July 1, 2020, and we hope that you're happy with that decision. Looking ahead, we look ahead to the future of learning, how to live through a pandemic and excel through a pending recession. We look at this time as an opportunity, an opportunity to keep our employees, customers and communities safe by following the requirements of the CDC; an opportunity to keep our doors open to serve our customers, to take care of whatever financial needs they have as they go through these trying times; an opportunity to utilize our liquidity and strength of our capital, to excel through whatever the future brings; an opportunity to become a better bank by differentiating ourselves from our competitors and gaining new customers through our strength and excellent customer service; an opportunity to trim expenses and to become more efficient; an opportunity to support our communities by getting Texas back to work and making Texas strong. I couldn't be more proud of the very professional team that we -- I have the honor of working with. They have already proven that they are tireless, dedicated, hard-working, tenacious and smart. I would rather work with this group through any storm than any other bank group. I thank each of them, along with our customers, stockholders and communities, for making this company Texas strong. Thank you so much for your strong support and your loyalty all these years. You're certainly the wind beneath our wings, and you've put -- and are here to put -- and we are here to put you first as we have for the last 130 years. Thank you for tuning in today and being part of this annual meeting. We have certainly missed seeing you, and we will put an extra-special annual meeting next year on to celebrate our 130th anniversary. We pray that you will stay safe and healthy. This concludes our annual meeting. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.