First Financial Bankshares (FFIN) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01We are subject to interest rate risk
2. 02In our business, we must effectively manage our credit risk
3. 03We are subject to environmental liability risk associated with lending activities
4. 04The value of real estate collateral may fluctuate significantly resulting in an under-collateralized loan portfolio
5. 05We are subject to liquidity risk

Operational Risk

1. 06Our accounting estimates and risk management processes rely on analytical and forecasting models
2. 07The value of our goodwill and other intangible assets may decline in the future
3. 08Breakdowns in our internal controls and procedures could have an adverse effect on us
4. 09New lines of business or new products and services may subject the Company to additional risks
5. 10First Financial Bankshares, Inc. relies on dividends from its subsidiaries for most of its revenue
6. 11Hurricanes, extended drought conditions, severe weather and natural disasters could significantly impact the Company's business
7. 12We rely heavily on our management team, and the unexpected loss of key management or inability to recruit qualified personnel in the future may adversely impact our operations
8. 13World events such as the Russia-Ukraine conflict, the Israel-Palestine conflict and other world events, including health related events, may adversely impact our business and our financial results, and the ultimate impact will depend on future developments, which are highly uncertain and cannot be predicted
9. 14System failure or cybersecurity breaches of our network security could subject us to increased operating costs as well as litigation and other potential losses
10. 15We are subject to claims and litigation pertaining to intellectual property
11. 16in the future as the financial services sector becomes more reliant on information technology vendors. The plaintiffs in these actions frequently seek injunctions and substantial damages
12. 17We depend on the accuracy and completeness of information about customers and counterparties
13. 18We do business with other financial institutions that could experience financial difficulty
14. 19We are subject to possible claims and litigation pertaining to fiduciary responsibility
15. 20Our operations rely on certain external vendors
16. 21Certain of our investment advisory and wealth management contracts are subject to termination on short notice, and termination of a significant number of investment advisory contracts could have a material adverse impact on our revenue
17. 22The trust wealth management fees we receive may decrease as a result of poor investment performance, in either relative or absolute terms, which could decrease our revenues and net earnings
18. 23our wealth managers and investment advisors may depart to join a competitor or otherwise
19. 24Our reputation and business could be damaged by negative publicity
20. 25Our business faces unpredictable economic conditions, which could have an adverse effect on us
21. 26federal, state and local laws affecting these matters
22. 27Our business is concentrated in Texas and a downturn in the economy of Texas may adversely affect our business
23. 28Our Company lends primarily to small to medium-sized businesses that may have fewer resources to weather a downturn in the economy, which could adversely impact the Company’s operating results
24. 29If we are unable to continue to originate residential real estate loans and sell them into the secondary market for a profit, our earnings could decrease
25. 30We compete in an industry that continually experiences technological change, and we may have fewer resources than many of our competitors to continue to invest in technological improvements
26. 31Difficult or changes in market conditions could adversely affect the financial services industry
27. 32Inflationary pressures and rising prices may affect our results of operations and financial conditions
28. 33Our financial instruments expose us to certain market risks and may increase the volatility of earnings and AOCI
29. 34We may need to raise additional capital and such funds may not be available when needed
30. 35Climate change, and related legislative and regulatory initiatives, have the potential to disrupt our business and adversely impact the operations and creditworthiness of our customers
31. 36regional and local economic activity that may have an adverse effect on our customers, which could limit our ability to raise and invest capital in these areas and communities, each of which could have a material effect on our financial conditions and results of operations
32. 37Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks
33. 38We compete with many larger financial institutions which have substantially greater financial resources than we have
34. 39We may be subject to more stringent capital requirements which would adversely affect our net income and future growth
35. 40OFAC, the BSA and related FinCEN and FFIEC Guidelines and regulations could result in material implications
36. 41Our business is subject to significant government regulation
37. 42We are subject to heightened regulatory requirements as our total assets exceed $10 billion
38. 43Federal income tax reform could have unforeseen effects on our financial condition and results of operations
39. 44Our FDIC deposit insurance assessments could increase substantially resulting in higher operating costs

Risks Related to Acquisition Activities

1. 45To continue our growth, we are affected by our ability to identify and acquire other financial institutions
2. 46We may not be able to complete future acquisitions, may not be successful in realizing the benefits of any acquisitions that are completed, or may choose not to pursue acquisition opportunities we might find beneficial
3. 47Use of our common stock for future acquisitions or to raise capital may be dilutive to existing stockholders
4. 48The trading volume in our common stock is less than other larger financial institutions
5. 49Our stock ownership has shifted to larger institutional shareholders
6. 50Certain banking laws may have an anti-takeover effect
7. 51We may not continue to pay dividends on our common stock in the future
8. 52The Company’s stock price can be volatile
9. 53changes in government regulations, including tax laws
10. 54An investment in our common stock is not an insured deposit
11. 55If we are unable to continue our historical levels of growth, we may not be able to maintain our historical earnings trends