FFIN First Financial Bankshares Inc

PROPOSAL 1: APPROVAL OF THE MERGER PROPOSAL

The following information describes material aspects of the merger pursuant to the reorganization agreement. It is not intended to be a complete description of all information relating to the merger pursuant to the reorganization agreement and is qualified in its entirety by reference to more detailed information contained in the appendices to this document, including the reorganization agreement. A copy of the reorganization agreement is included as Appendix A and is incorporated herein by reference. You are urged to read the appendices in their entirety.

Terms of the Merger

Structure of Merger . The reorganization agreement provides for the acquisition of CBI and its wholly-owned subsidiary, Commercial State Bank, by First Financial. If (i) the shareholders of CBI approve the merger proposal at the special meeting, (ii) the required regulatory approvals are obtained, and (iii) the other conditions to the parties’ obligations to effect the transactions contemplated by the reorganization agreement are met or waived by the party entitled to do so, we anticipate that the transactions contemplated by the reorganization agreement will be completed in the first quarter of 2018, although delays could occur.

The first transaction contemplated by the reorganization agreements is the merger of Merger Sub, a wholly-owned subsidiary of First Financial, with and into CBI, with CBI surviving the merger as a wholly-owned subsidiary of First Financial. As a result of the merger, holders of CBI common stock as of the effective time of the merger, other than canceled shares and dissenting shares, will be entitled to receive whole shares of First Financial common stock and cash payable in lieu of any fractional share. Following the merger, certificates for CBI common stock will only represent the right to receive the merger consideration pursuant to the reorganization agreement, and otherwise will be null and void.

Following immediately after the merger, or at such later time as First Financial may determine in its sole discretion, First Financial will cause (i) CBI to merge with and into First Financial, with First Financial as the surviving entity and CBI ceasing its separate corporate existence and (ii) Commercial State Bank to merge with and into First Financial Bank, with First Financial Bank as the surviving bank and Commercial State Bank ceasing its separate corporate existence. As a result of the bank merger, the existing branches and main office of Commercial State Bank will become branches of First Financial Bank.

Merger Consideration . If the merger is completed, all outstanding shares of CBI common stock, other than cancelled shares and dissenting shares, will be converted, pursuant to the reorganization agreement, into the right to receive a total number of shares of First Financial common stock with an aggregate value of approximately $59.4 million. The number of shares of First Financial common stock deliverable for each share of CBI common stock will be determined based on a volume-weighted average price of First Financial common stock over a measuring period for the twenty (20) consecutive trading days ending on the fifth business day immediately preceding the closing date of the merger, rounded to the nearest cent, as reported by Bloomberg Finance L.P. For illustration purposes only, using First Financial’s closing stock price of $44.40 on November 7, 2017 as a substitute for the volume-weighted average price, CBI stockholders would have received approximately 0.39 shares of First Financial common stock for each share of CBI common stock, which would have provided CBI stockholders with aggregate ownership of approximately 2.0% of the issued and outstanding shares of First Financial common stock after completion of the merger (based on the number of shares of First Financial’s common stock outstanding as of November 7, 2017).

In addition, in connection with the closing of the merger, CBI expects to pay a special dividend to its shareholders of approximately $15.6 million in the aggregate, which may be increased or decreased for the amount by which CBI’s consolidated shareholders’ equity as of the closing date exceeds or is less than $42,402,486, after certain adjustments prescribed by the reorganization agreement for merger expenses. Pursuant to the terms of the reorganization agreement, CBI’s consolidated shareholders’ equity may be reduced for the

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following merger expenses, among others, (i) the legal, professional, investment banking, consulting and accounting fees and expenses of CBI associated with the merger, including any cost to obtain any opinion as to the financial fairness of the merger, (ii) all fees related to obtaining the tail insurance for CBI’s and Commercial State Bank’s officers and directors, (iii) the payments owed by CBI or Commercial State Bank for any stay-pay or retention bonus amounts (other than stay-pay or retention bonus amounts requested or directed by First Financial) or change in control payments, (iv) the cost of terminating any employment related agreements and obligations (including any non-competition agreements, option agreements or equity based plans) including, among others, the employment agreements and certain survivor income agreements, (v) if requested by First Financial, a mutually agreeable estimate of the cost of obtaining a determination letter from the Internal Revenue Service in connection with the termination of a retirement plan, (vi) any federal income tax obligations, franchise tax obligations or real property tax obligations incurred prior to the effective time of the merger, (vii) the accrual or payment of all of the costs, fees, expenses and penalties necessary to be paid by CBI or Commercial State Bank in connection with any contract termination required pursuant to the reorganization agreement, including, without limitation, all costs, fees, expenses and penalties associated with the termination of the data processing or technology contracts or other contracts contemplated by the reorganization agreement, and (viii) a reduction in the amount of the total consolidated shareholders’ equity of CBI equal to the amount of the gain recognized on the property located at 29818 FM 1093, Fulshear, Ft. Bend County, Texas.

As of September 30, 2017, CBI’s shareholders’ equity was approximately $47.0 million. From September 30, 2017 through the anticipated closing of the merger in the first quarter of 2018, CBI estimates that it will earn approximately $1.3 million and that the exercise of outstanding stock options to purchase shares of CBI common stock will contribute an estimated additional $2.5 million to CBI’s consolidated shareholders’ equity. As of October 31, 2017, CBI estimated that its merger expenses, which will reduce CBI’s consolidated shareholders’ equity, would be approximately $1.1 million. Based on the foregoing estimates, CBI expects that the CBI shareholders will receive a special dividend of $6.56 in cash per share of CBI common stock in connection with the closing of the merger. If CBI’s operations do not perform as expected or are negatively impacted by the merger, or if expenses associated with the merger are greater than expected, CBI may pay a special dividend less than $15.6 million.

The actual merger consideration is subject to adjustment and may be higher or lower than the consideration described in the examples above. Because the amount of the special dividend will be determined based upon the adjusted consolidated shareholders’ equity of CBI, the amount of consideration you will receive will not be known at the time you vote on the reorganization agreement. Accordingly, you should read this proxy statement/prospectus carefully to understand the value of the consideration you will receive in the merger.

Background of the Merger

The board of directors and management of CBI regularly review CBI’s future prospects for earnings and asset growth as well as the implementation and viability of CBI’s strategic initiatives. From time to time, the board of directors and management reviewed and discussed CBI’s long-term objectives and considered ways in which it could enhance shareholder value as well as its performance, and discussed and evaluated, among other things, the economic and regulatory environment in general and for South Texas in addition to financial institutions, specifically.

Over the past few years, representatives from Hovde Group, LLC have met with and assisted Harry J. “Johnny” Brooks, Chairman, President and Chief Executive Officer of CBI with evaluating strategic options available to CBI. As part of these discussions, Mr. Brooks and Hovde have evaluated both acquisitions for CBI as well as strategic merger partners for CBI, as well as other strategic options available to CBI such as capital raising options. Furthermore, and during these discussions, Mr. Brooks discussed with Hovde the desire for shareholder liquidity and the ability for CBI to merge with another institution that would both enhance shareholder value while also providing cash and or a marketable stock as form of consideration.

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During September 2016, Mr. Brooks was approached, on an unsolicited basis, by representatives of Bank A about the potential for Bank A to acquire CBI. During these discussions, the CEO of Bank A noted orally Bank A’s interest in acquiring CBI for $70 million in cash. After the meeting, Mr. Brooks made Hovde aware of this proposal and decided to schedule a follow-up meeting with Bank A to discuss what a transaction might look like. A follow-up meeting between Mr. Brooks and representatives of Bank A occurred on September 29, 2016. During this meeting executives from Bank A indicated that they would be prepared to increase their all-cash offer to between $72 million and $75 million. Mr. Brooks indicated that if Bank A would deliver this offer in writing he would call a special meeting to discuss the offer with CBI’s board of directors. Shortly after this meeting, Bank A indicated that, for various reasons regarding Bank A, it were no longer in a position to pursue a transaction with CBI and discussions terminated.

As part of these discussions, Mr. Brooks and Hovde discussed the timing of a transaction due to, among other things, a favorable market for pursuing a merger as well as favorable termination costs associated with CBI’s major service providers. On September 14, 2016, representatives from Hovde visited with Scott Dueser, Chairman, President and CEO of First Financial in Austin, Texas. During this visit, Mr. Dueser noted to Hovde First Financial’s interest in expanding around the Houston, Texas market. After the visit, Hovde relayed this interest to Mr. Brooks and Mr. Brooks indicated that he thought highly of First Financial as a company and would be interested in visiting with representatives of First Financial if the interest was mutual. Hovde then contacted Mr. Dueser to set up a meeting between First Financial and CBI. This meeting occurred on December 16, 2016 in Kingwood, Texas. After the visit, First Financial declined to pursue a deal at that time but indicated its interest in CBI and agreed to continue discussions.

Mr. Dueser contacted Mr. Brooks in early January 2017 and invited him to meet in Abilene, Texas on January 12, 2017. At that meeting, Mr. Dueser made an oral offer to acquire CBI for $60 million. Mr. Brooks responded that he knew that would not be acceptable to the CBI board of directors or shareholders. The discussions terminated at that point.

In April 2017, Mr. Brooks was contacted, on an unsolicited basis, by the Chairman of Bank B to indicate Bank B’s interest in pursuing a transaction with CBI. Mr. Brooks relayed this interest and conversation to Hovde, and, after conferring, decided that Bank B was a strong candidate and Mr. Brooks continued discussions. On April 13, 2017 Bank B invited Mr. Brooks to its headquarters to visit in person and discuss the details of a potential merger between CBI and Bank B. After this meeting, the Chairman of Bank B indicated Bank B’s interest in providing CBI with an indication of interest (“IOI”) to detail the terms for which Bank B would propose acquiring CBI.

On May 25, 2017, Bank B provided a non-binding IOI to Mr. Brooks outlining the proposed transaction between Bank B and CBI. The terms within the IOI detailed an offer for CBI based on $69 million all-cash offer. Mr. Brooks then met with members of CBI’s executive committee to discuss the terms outlined within the IOI. After visiting with the executive committee, it was determined that the proposed offer from Bank B was inadequate in order to relinquish independence and sell CBI. Mr. Brooks responded to Bank B that an offer of $75 million was needed based on CBI’s tangible common equity as of March 31, 2017. Bank B responded that it would need additional due diligence before responding to CBI.

During May 2017 and June 2017, Mr. Brooks worked with Hovde to provide Bank B additional due diligence and projections for CBI. On May 31, 2017, Hovde was formally engaged to represent CBI as its exclusive investment banker. On June 6, 2017, representatives from Bank B met with Mr. Brooks in Houston over dinner to further discuss the merits of a transaction between the two companies. On June 17, 2017, the Chairman of Bank B delivered a revised IOI proposing a cash purchase price of $70 million for CBI.

On June 21, 2017, Mr. Dueser called Mr. Brooks to indicate First Financial’s interest in pursuing a transaction with CBI. Mr. Dueser indicated that he would like to come to Kingwood and visit with Mr. Brooks. On June 22, 2017 Mr. Dueser met with Mr. Brooks in Kingwood. During a follow-up call between executives for

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First Financial and Mr. Brooks, Mr. Dueser asked at what price for CBI would Mr. Brooks think CBI’s board of directors would consider a transaction with First Financial. Mr. Brooks told Mr. Dueser that it would require a price of $75 million.

On June 29, 2017, Mr. Brooks met with members of the executive committee to deliver the terms of the revised IOI. After deliberation, the executive committee determined that the offer was inadequate and a purchase price in the mid-$70 million range would be needed in order for the executive committee to recommend a transaction to CBI’s board of directors. Mr. Brooks promptly delivered this information to Bank B. After further discussions, Bank B indicated that it would be able to deliver an IOI with a purchase price of $74 million, but would require that CBI deliver tangible common equity at closing of approximately $48.5 million. Mr. Brooks indicated that once this revised offer was provided in writing, he would promptly review with the executive committee.

First Financial delivered a non-binding IOI dated July 3, 2017 to Mr. Brooks proposing a purchase price of $75 million with a minimum equity requirement equal to CBI’s consolidated tangible common equity as of March 31, 2017. The IOI also indicated that the purchase consideration would consist of $59.4 million in First Financial common stock and a dividend of $15.6 million from CBI’s retained earnings. Mr. Brooks visited with Hovde and a few members of CBI’s executive committee to discuss the IOI also on July 3, 2017. It was concluded that a few items within the IOI required further clarification before delivering the IOI to CBI’s board of directors.

Over the next week, Mr. Brooks discussed key points in the IOI with executives from First Financial, as well as Hovde and members of CBI’s executive committee. It was determined that if CBI be allowed to dividend out any tangible common equity at closing in excess of its consolidated tangible common equity as of March 31, 2017 after paying or accruing transaction related expenses, CBI’s executive committee would recommend the IOI to the board of directors of CBI. On July 13, 2017, CBI’s board of directors convened to discuss the proposed terms of the IOI with Hovde. CBI’s board of directors concluded that if First Financial would fix the value of the stock portion of the purchase consideration at $59.4 million and the number of shares issued to CBI would vary, the board of directors would vote to authorize Mr. Brooks to execute the IOI on behalf of CBI and continue negotiations and due diligence with First Financial. After adjourning the meeting, Mr. Brooks contacted First Financial to deliver this request. Later that afternoon, First Financial delivered a revised IOI with the requested terms to Mr. Brooks who then executed and returned the IOI to First Financial. Upon the execution of the IOI, due diligence commenced between the two companies.

On August 25, 2017 CBI received the initial draft of the reorganization Agreement from First Financial and the parties continued to negotiate the terms of the reorganization agreement until the document was executed on October 12, 2017.

During CBI’s board of directors meeting on September 20, 2017, legal counsel, Larry Temple, reviewed for CBI directors the fiduciary duties of directors under law, as well as the legal standards applicable to their decisions and actions with respect to the proposed transaction. CBI’s legal counsel reviewed the terms and conditions of the Reorganization Agreement and ancillary legal documents with the board of directors, and discussed in detail the business points, contingencies and timing issues.

On September 26, 2017, the CBI board of directors met with its legal and financial advisors, to discuss the Reorganization Agreement which was in its substantially final form. During the meeting, the CBI directors heard a presentation from Hovde on the financial aspects of the transaction. At the conclusion of this discussion and after responding to questions from the directors, Hovde rendered to CBI’s board of directors its oral opinion that the aggregate merger consideration to be received from First Financial, which consisted of $59.4 million in shares of First Financial common stock and a $15.6 million dividend from CBI to its shareholders in cash, subject to adjustment as provided in the Reorganization Agreement, was fair to the shareholders of CBI, from a financial point of view. Hovde’s oral opinion was subsequently confirmed by delivery of its written opinion, dated September 26, 2017, to CBI’s board of directors.

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Based upon the board of directors’ review and discussion of the Reorganization Agreement, the opinion of Hovde and other relevant factors, CBI’s board unanimously authorized and approved the execution of the Reorganization Agreement with First Financial.

On September 26, 2017, First Financial’s board of directors held a special meeting to review and discuss the proposed mergers and the Reorganization Agreement. At this meeting, First Financial’s board of directors received presentations from its legal counsel, Norton Rose Fulbright US LLP. Following this discussion, First Financial’s board of directors unanimously voted to approve the Reorganization Agreement and the other transactions contemplated by the Reorganization Agreement, including the mergers, and authorized First Financial’s executives to execute the Reorganization Agreement.

On October 12, 2017, CBI and First Financial executed the reorganization agreement, and the directors of CBI delivered to First Financial their respective voting and support agreements. Later that day, First Financial announced the transaction after the close of trading on the NASDAQ Global Select Market.

Recommendation of CBI’s Board of Directors and its Reasons for the Merger

CBI’s board of directors has unanimously approved the Reorganization Agreement and unanimously recommends that the CBI shareholders vote “ FOR ” merger proposal.

The terms of the reorganization agreement, including the consideration to be paid to CBI shareholders, were the result of arms-length negotiations between the representatives of CBI and representatives of First Financial. CBI’s board of directors has determined that the merger is fair to, and in the best interests of, CBI’s shareholders. In approving the Reorganization Agreement, CBI’s board of directors consulted with (a) the Hovde Group with respect to financial aspects and fairness of the merger consideration, from a financial point of view, to the CBI shareholders and (b) its outside legal counsel on its legal duties and the terms of the Reorganization Agreement. In arriving at its determination, CBI’s board of directors also considered a number of factors, including:

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The reasons set out above for the merger are not intended to be exhaustive but do include all material factors considered by CBI’s board of directors in approving the Reorganization Agreement and the merger. In reaching its determination, the CBI board of directors did not assign any relative or specific weights to different factors, and individual directors may have given different weights to different factors. Based on the reasons stated, the CBI board believed that the merger was in the best interests of CBI’s shareholders, and therefore the board of directors of CBI unanimously approved the Reorganization Agreement and the merger. In addition, all members of the CBI board of directors have entered into voting agreements requiring them to vote the shares of CBI stock over which they have voting authority in favor of the Reorganization Agreement.

THE BOARD OF DIRECTORS OF CBI UNANIMOUSLY RECOMMENDS THAT YOU VOTE (I) “FOR” THE MERGER PROPOSAL AND (II) “FOR” THE ADJOURNMENT PROPOSAL.

Opinion of CBI’s Financial Advisor

The fairness opinion and a summary of the underlying financial analyses of CBI’s financial advisor, Hovde Group, LLC, is described below. The description contains projections, estimates and other forward-looking statements about the future earnings or other measures of the future performance of CBI. The projections were based on numerous variables and assumptions, which are inherently uncertain, including factors related to general economic and competitive conditions. Accordingly, actual results could vary significantly from those set forth in the projections. You should not rely on any of these statements as having been made or adopted by CBI or First Financial. You should review the copy of the fairness opinion, which is attached as  Appendix D .

Hovde has acted as CBI’s financial advisor in connection with the proposed merger. Hovde is a nationally recognized investment banking firm with substantial experience in transactions similar to the merger and is familiar with CBI and its operations. As part of its investment banking business, Hovde is continually engaged in the valuation of businesses and their securities in connection with, among other things, mergers and acquisitions.

Hovde reviewed the financial aspects of the proposed merger with CBI’s board of directors and, on September 26, 2017, delivered a written opinion to CBI’s board of directors that the merger consideration to be received by the shareholders of CBI in connection with the merger is fair to the shareholders of CBI.

The full text of Hovde’s written opinion is included in this proxy statement/prospectus as  Appendix D  and is incorporated herein by reference. You are urged to read the opinion in its entirety for a description of the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Hovde. The summary of Hovde’s opinion included in this proxy statement/prospectus is qualified

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in its entirety by reference to the full text of such opinion. Hovde’s opinion was directed to CBI’s board of directors and addresses only the fairness, from a financial point of view, of the aggregate merger consideration to be paid to CBI shareholders in connection with the merger. Hovde did not opine on any individual stock, cash, or other components of consideration payable in connection with the merger. Hovde’s opinion does not address the underlying business decision to proceed with the merger and does not constitute a recommendation to any of the shareholders as to how such shareholder should vote at the CBI special meeting on the merger proposal or any related matter.

During the course of its engagement and for the purpose of rendering its opinion, Hovde:

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Hovde also conducted meetings and had discussions with members of senior management of CBI and Commercial State Bank for purposes of reviewing the business, financial condition, results of operations and future prospects of CBI and Commercial State Bank; the history and past and current operations of CBI and Commercial State Bank; and CBI’s and Commercial State Bank’s historical financial performance. Hovde discussed with management of CBI and Commercial State Bank their assessment of the rationale for the merger. Hovde also performed such other analyses and considered such other factors as Hovde deemed appropriate, and took into account its experience in other similar transaction and securities valuations, as well as its knowledge of the banking and financial services industry.

Hovde assumed, without independent verification, that the representations as well as the financial and other information provided to Hovde by CBI or included in the reorganization agreement, which has formed a substantial basis for this opinion, are true and complete. Hovde relied upon the management of CBI and Commercial State Bank as to the reasonableness and achievability of the financial forecasts and projections (and the assumptions and bases therein) provided to Hovde by CBI and Commercial State Bank,, and Hovde assumed such forecasts and projections have been reasonably prepared by CBI and Commercial State Bank on a basis reflecting the best currently available information and CBI’s and Commercial State Bank’s judgments and estimates. Hovde assumed that such forecasts and projections would be realized in the amounts and at the times contemplated thereby, and Hovde does not in any respect assume any responsibility for the accuracy or reasonableness thereof. Hovde has been authorized by CBI to rely upon such forecasts and projections and other information and data, including without limitation the projections, and Hovde expresses no view as to any such forecasts, projections or other information or data, or the bases or assumptions on which they were prepared.

In performing its review, Hovde relied upon the accuracy and completeness of all of the financial and other information that was available to Hovde from public sources, that was provided to Hovde by CBI and Commercial State Bank or their respective representatives or that was otherwise reviewed by Hovde and assumed such accuracy and completeness for purposes of rendering its opinion. Hovde has further relied on the assurances of the respective managements of CBI and Commercial State Bank that they are not aware of any facts or circumstances that would make any of such information inaccurate or misleading. Hovde has not been asked to and has not undertaken an independent verification of any of such information and Hovde does not assume any responsibility or liability for the accuracy or completeness thereof. Hovde assumed that each party to the reorganization agreement would advise them promptly if any information previously provided to them became inaccurate or was required to be updated during the period of Hovde’s review. Hovde is not an expert in the evaluation of loan and lease portfolios for purposes of assessing the adequacy of the allowances for losses with respect thereto. Hovde assumed that such allowances for CBI, Commercial State Bank, First Financial and First Financial Bank are, in the aggregate, adequate to cover such losses, and will be adequate on a pro forma basis for the combined entity. Hovde was not requested to make, and did not make, an independent evaluation, physical inspection or appraisal of the assets, properties, facilities, or liabilities (contingent or otherwise) of CBI, Commercial State Bank, First Financial and First Financial Bank, the collateral securing any such assets or liabilities, or the collectability of any such assets and, Hovde was not furnished with any such evaluations or appraisals, nor did Hovde review any loan or credit files of CBI, Commercial State Bank, First Financial and First Financial Bank.

Hovde has assumed that the merger will be consummated substantially in accordance with the terms set forth in the reorganization agreement, without any waiver of material terms or conditions by CBI or any other party to the reorganization agreement and that the final reorganization agreement will not differ materially from the draft Hovde reviewed. Hovde has assumed that the merger will be consummated in compliance with all applicable laws and regulations. CBI has advised Hovde that CBI is not aware of any factors that would impede

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any necessary regulatory or governmental approval of the merger. Hovde has assumed that the necessary regulatory and governmental approvals as granted will not be subject to any conditions that would be unduly burdensome on CBI, Commercial State Bank, First Financial and First Financial Bank or would have a material adverse effect on the contemplated benefits of the merger.

CBI engaged Hovde on May 31, 2017, to serve as a financial advisor to CBI in connection with the proposed merger and to issue a fairness opinion to CBI’s board of directors in connection with such proposed transaction. Pursuant to the terms of the engagement, at the time the merger is completed, CBI will pay Hovde a completion fee of $750,000, which is contingent upon the completion of the merger. Hovde also received a $40,000 fee upon rendering its fairness opinion to the CBI board of directors, which fairness opinion fee will be credited towards the completion fee payable to Hovde upon the completion of the merger. Pursuant to the engagement agreement, in addition to its fees and regardless of whether the merger is consummated, CBI has agreed to reimburse Hovde for certain reasonable out-of-pocket expenses incurred in performing its services and to indemnify Hovde against certain claims, losses and expenses arising out of the merger or Hovde’s engagement.

In performing its analyses, Hovde made numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Hovde, CBI, Commercial State Bank, First Financial and First Financial Bank. Hovde’s opinion was necessarily based on financial, economic, market and other conditions and circumstances as they existed on, and on the information made available to Hovde as of, the dates used in its opinion. Any estimates contained in the analyses performed by Hovde are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by these analyses. Additionally, estimates of the value of businesses or securities do not purport to be appraisals or to reflect the prices at which such businesses or securities may be sold or the prices at which any securities may trade at any time in the future. Accordingly, these analyses and estimates are inherently subject to substantial uncertainty. Hovde’s opinion does not address the relative merits of the merger as compared to any other business combination in which CBI might engage. In addition, Hovde’s fairness opinion was among several factors taken into consideration by CBI’s board of directors in making its determination to approve the reorganization agreement and the merger. Consequently, the analyses described below should not be viewed as solely determinative of the decision of CBI’s board of directors or CBI’s management with respect to the fairness of the aggregate merger consideration to be received by CBI’s shareholders in connection with the merger.

The following is a summary of the material analyses prepared by Hovde and delivered to CBI’s board of directors on September 26, 2017, in connection with the delivery of its fairness opinion. This summary is not a complete description of the analyses underlying the fairness opinion or the presentation prepared by Hovde, but it summarizes the material analyses performed and presented in connection with such opinion. The preparation of a fairness opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. In arriving at its opinion, Hovde did not attribute any particular weight to any analysis or factor that it considered, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. The financial analyses summarized below include information presented in tabular format. The analyses and the summary of the analyses must be considered as a whole and selecting portions of the analyses and factors or focusing on the information presented below in tabular format, without considering all analyses and factors or the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the process underlying the analyses and opinion of Hovde. The tables alone are not a complete description of the financial analyses.

Market Approach – Comparable Transactions .  As part of its analysis, Hovde reviewed publicly available information related to two comparable groups (a “Regional Group” and a “ Nationwide Group ”) of select acquisition transactions of banks. The Regional Group consisted of acquisition transactions of banks in the

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Southwest Region of the United States (consisting of the states of Colorado, Louisiana, New Mexico, Oklahoma, Texas and Utah) announced since January 1, 2015, in which the sellers’ total assets were between $150 million and $900 million, last-twelve-months ( “LTM” ) return on average assets ( “ROAA” ) was more than 0.75%, and nonperforming assets were less than 2.0% of total assets. The Nationwide Group consisted of acquisition transactions of select banks in the United States announced since January 1, 2016, in which the sellers’ total assets were between $200 million and $600 million, last-twelve-months ( “LTM” ) return on average assets ( “ROAA” ) was more than 0.75%, nonperforming assets were less than 2.0% of total assets, and tangible equity was greater than 11.0% of tangible assets. In each case, for which financial information was available, no transaction that fit the selection criteria was excluded. Information for the target institutions was based on balance sheet data as of, and income statement data for the twelve months preceding the most recent quarter prior to announcement of the transactions. The resulting two groups consisted of the following transactions (8 transactions for the Regional Group and 8 transactions for the Nationwide Group):

For each precedent transaction, Hovde compared the implied ratio of deal value to certain financial characteristics of CBI as follows:

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The results of the analysis are set forth in the table below. Transaction multiples for the merger were derived from the estimated merger consideration of $75,000,000 for CBI and were based on June 30, 2017 financial results of CBI.

Using publicly available information, Hovde compared the financial performance of CBI with that of the median of the precedent transactions from both the Regional and Nationwide Groups. The performance highlights are based on June 30, 2017 financial results of CBI.

No company or transaction used as a comparison in the above transaction analyses is identical to CBI, and no transaction was consummated on terms identical to the terms of the reorganization agreement. Accordingly, an analysis of these results is not strictly mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies. The resulting median values of the Precedent Transactions Regional Group indicated an implied aggregate valuation ranging between $64.9 million and $78.9 million compared to the proposed merger consideration of $75.0 million. The resulting median values of the Precedent Transactions Nationwide Group indicated an implied aggregate valuation ranging between $68.4 million and $73.7 million compared to the proposed merger consideration of $75.0 million.

Income Approach  –  Discounted Cash Flow Analysis .  Taking into account various factors including, but not limited to, CBI’s recent performance, the current banking environment and the local economy in which CBI operates, Hovde determined, in consultation with and based on information provided by management of CBI, earnings estimates for CBI over a forward looking five year period, and CBI management developed the forward-looking projections and key assumptions, which formed the basis for the discounted cash flow analyses. The

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resulting projected net income numbers used for the analysis were $4.6 million for 2017, $4.8 million for 2018, $5.1 million for 2019, $5.3 million for 2020, and $5.6 million for 2021.

To determine present values of CBI based on these projections, Hovde utilized two discounted cash flow models, each of which capitalized terminal values using a different methodology: (1) Terminal Price/Earnings Multiple (“ DCF Terminal P/E Multiple ”); and, (2) Terminal Price/Tangible Book Value Multiple (“ DCF Terminal P/TBV Multiple ”).

In the DCF Terminal P/E Multiple analysis, an estimated value of CBI’s common stock was calculated based on the present value of CBI’s after-tax net income based on CBI management’s forward-looking projections. Hovde utilized a terminal value at the end of 2021 by applying a range of price-to-earnings multiples of 15.7x to 19.7x, with a midpoint of 17.7x, which is based around the median price-to-earnings multiple derived from transactions in the Regional Group. The present value of CBI’s the terminal value was then calculated assuming a range of discount rates between 12.00% and 14.00%, with a midpoint of 13.00%. This range of discount rates was chosen to reflect different assumptions regarding the required rates of return of holders or prospective buyers of CBI’s common stock. The resulting aggregate values of CBI’s common stock of the DCF Terminal P/E Multiple ranged between $50.5 million and $68.4 million, with a midpoint of $59.1 million.

In the DCF Terminal P/TBV Multiple model, the same earnings estimates and projected net income were used; however, in arriving at the terminal value at the end of 2021, Hovde applied a range of price-to-tangible book value multiples of 1.34x to 1.74x with the midpoint being 1.54x, which is based around the median price-to-tangible book value multiple derived from transactions in the Regional Group. The present value of the terminal value, was then calculated assuming a range of discount rates between 12.00% and 14.00%, with a midpoint of 13.00%. The resulting aggregate values of CBI’s common stock of the DCF Terminal P/TBV Multiple ranged between $52.6 million and $73.6 million, with a midpoint of $62.8 million.

These analyses and their underlying assumptions yielded a range of values for CBI, which are outlined in the table below:

Hovde noted that while the discounted cash flow present value analysis is a widely used valuation methodology, it relies on numerous assumptions, including asset and earnings growth rates, projected dividend payouts, terminal values and discount rates. Hovde’s analysis does not purport to be indicative of the actual values or expected values of CBI’s common stock.

First Financial Comparable Companies Analysis:  Hovde used publicly available information to compare selected financial and trading information for First Financial and a group of 9 publicly-traded financial institutions selected by Hovde which was based on publicly-traded banks in the Southwest United States with total assets between $2.0 billion and $15.0 billion and LTM ROAA greater than 0.75%:

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The analysis compared publicly available financial and market trading information for First Financial and the data for the 9 financial institutions identified above as of and for the most recent twelve-month period which was publicly available. The table below compares the data for First Financial and the median data for the 9 financial institutions identified above, with pricing data as of September 22, 2017.

No company used as a comparison in the above analyses is identical to First Financial. Accordingly, an analysis of these results is not strictly mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies.

Accretion / Dilution Analysis:  Hovde performed pro forma merger analyses that combined projected income statement and balance sheet information of CBI and First Financial. Assumptions regarding the accounting treatment, acquisition adjustments and cost savings were used to calculate the financial impact that the merger would have on certain projected financial results of First Financial. In the course of this analysis, Hovde used the median S&P CapIQ consensus estimates for earnings estimates for First Financial for the years ending December 31, 2017 and December 31, 2018, and December 31, 2019 and used earnings estimates provided by CBI’s management for CBI for the years ending December 31, 2017, December 31, 2018 and December 31, 2019. This analysis indicated that the merger is expected to be accretive by 1 cents per share to First Financial’s consensus estimated earnings per share of $1.85 in 2018 and accretive by 4 cents per share to First Financial’s estimated earnings per share of $1.94 in 2019. The analysis also indicated that the merger is expected to be accretive to tangible book value per share for First Financial by 15 cents per share in 2018 and by 20 cent per share in 2019 and that First Financial would maintain capital ratios in excess of those required for First Financial to be considered well-capitalized under existing regulations. For all of the above analyses, the actual results achieved by CBI and First Financial prior to and following the merger will vary from the projected results, and the variations may be material.

Other Factors and Analyses .  Hovde took into consideration various other factors and analyses, including but not limited to: current market environment; merger and acquisition environment; movements in the common stock valuations of selected publicly-traded banking companies; and movements in the S&P 500 Index.

Conclusion.  Based upon the foregoing analyses and other investigations and assumptions set forth in its opinion, without giving specific weightings to any one factor or comparison, Hovde determined that the aggregate merger consideration to be paid in connection with the merger is fair from a financial point of view to CBI’s shareholders.  Each shareholder is encouraged to read Hovde’s fairness opinion in its entirety. The full text of this fairness opinion is included as Appendix D to this proxy statement.

First Financial’s Reasons for the Merger

As a part of First Financial’s growth strategy, First Financial routinely evaluates opportunities to acquire financial institutions. The acquisition of CBI and its wholly-owned subsidiary Commercial State Bank is consistent with First Financial’s expansion strategy. First Financial’s board of directors, senior management and certain lenders reviewed the business, financial condition, results of operation and prospects for Commercial State Bank, the market condition of the market area in which Commercial State Bank conducts business, the compatibility of the management and the proposed financial terms of the transaction. In addition, management of First Financial believes that the transaction will expand First Financial’s footprint in the Kingwood and the markets surrounding Houston, Texas, provide opportunities for future growth and provide the potential to realize

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cost savings. First Financial’s board of directors also considered the financial condition and valuation for both CBI and First Financial as well as the financial and other effects the transaction would have on First Financial’s shareholders.

While management of First Financial believes that revenue opportunities will be achieved and costs savings will be obtained following the transaction, First Financial has not quantified the amount of enhancements or projected the areas of operation in which such enhancements will occur.

In view of the variety of factors considered in connection with its evaluation of the transaction, the First Financial board did not find it useful to and did not attempt to quantify, rank or otherwise assign relative weights to factors it considered. Further, individual directors may have given differing weights to different factors. In addition, the First Financial board did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to its ultimate determination. Rather, the board conducted an overall analysis of the factors it considered material, including thorough discussions with, and questioning of, First Financial’s management.

Effective Time of the Merger

The merger will become effective at the date and time specified in the certificate of merger to be filed with the Secretary of State of the State of Texas regarding the merger. If the shareholders of CBI approve the merger pursuant to the reorganization agreement at the special meeting, and if all required regulatory approvals are obtained and the other conditions to the parties’ obligations to effect the merger are met or waived by the party entitled to do so, we anticipate that the merger will be completed in the first quarter of 2018, although delays could occur. We cannot assure you that we can obtain the necessary shareholder and regulatory approvals or that the other conditions to completion of the merger set forth in the reorganization agreement can or will be satisfied.

Conversion; Exchange of CBI Stock Certificates

The conversion of CBI common stock into the right to receive the merger consideration will occur automatically at the effective time of the merger. After completion of the merger, the exchange agent will exchange certificates representing shares of CBI common stock for the merger consideration to be received pursuant to the terms of the reorganization agreement.

Letter of Transmittal; Dividends

Promptly after the effective time of the merger, First Financial will deposit with or make available to Continental Stock Transfer & Trust Company, as exchange and transfer agent, shares of First Financial common stock to be exchanged for shares of CBI common stock in accordance with the reorganization agreement and any cash payable in lieu of fractional shares (the “Exchange Fund”). With the intent to be within five days of the effective time of the merger, First Financial will cause the exchange agent to mail to each record holder of CBI common stock a letter of transmittal and instructions describing the procedures for surrendering stock certificates representing shares of CBI common stock in exchange for shares of First Financial common stock. The shares of First Financial common stock issuable in exchange for the shares of CBI common stock will be issued in uncertificated book-entry form. Please do not send the exchange agent any stock certificates until you receive these instructions. Stock certificates delivered to the exchange agent without a properly completed letter of transmittal will be rejected and returned for corrective action.

Until surrendered in accordance with the instructions of the exchange agent, other than shares of CBI common stock subject to the exercise of dissenters’ rights, each stock certificate representing shares of CBI common stock will represent after the effective time of the merger only the right to receive, without interest, the merger consideration and any cash in lieu of a fractional share of First Financial common stock to be issued or paid upon surrender of such stock certificate and any dividends or distributions to which such holder is entitled

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pursuant to the reorganization agreement. Subject to the terms of the reorganization agreement, each record holder of CBI common stock will generally be entitled to receive without interest, the amount of dividends or other distributions with a record date after the effective time of the merger that are payable with respect to whole shares of First Financial common stock.

Any portion of the Exchange Fund that remains unclaimed by the shareholders of CBI at the expiration of six months after the effective time of the merger will be paid to First Financial. In such event, any former shareholders of CBI who have not previously complied with exchange procedures set forth in the reorganization agreement and instructions from the exchange agent will look only to First Financial with respect to the merger consideration, any cash in lieu of any fractional shares and any unpaid dividends and distributions on the First Financial common stock as determined pursuant to the reorganization agreement, in each case, without any interest.

Lost Certificates

If any certificate representing shares of CBI common stock is lost, stolen or destroyed, upon the making of an affidavit of such fact by the person claiming the certificate to be lost, stolen or destroyed and, if required by First Financial or the exchange agent, the posting by such person of a bond in such amount as the exchange agent may determine is reasonably necessary as indemnity against any claim that may be made against it with respect to such certificate, the exchange agent will issue in exchange for the lost, stolen or destroyed certificate the merger consideration, cash in lieu of fractional shares and any dividends or other distributions that have been payable or become payable in respect of the shares of First Financial common stock represented by that certificate pursuant to the reorganization agreement.

Withholding

First Financial and the exchange agent, as the case may be, will be entitled to deduct and withhold, if necessary, from any consideration payable pursuant to the reorganization agreement to any holder of CBI common stock such amounts as First Financial or the exchange agent is required to deduct or withhold under applicable tax laws, and any such withheld amounts that are paid to the appropriate taxing authorities will be treated for purposes of the reorganization agreement as having been paid to the holder of CBI common stock from whom such amounts were deducted or withheld.

Fractional Shares

First Financial will not issue any fractional shares of First Financial common stock in the merger. CBI shareholders who would otherwise be entitled to a fraction of a share of First Financial common stock upon the completion of the merger will instead receive, for the fraction of a share, an amount in cash (rounded to the nearest cent), determined by multiplying the fractional share by volume-weighted average price of First Financial common stock over a measuring period for the twenty (20) consecutive trading days ending on the fifth business day immediately preceding the closing date of the merger, without interest.

Representations and Warranties of CBI and First Financial

The reorganization agreement and this summary of the representations and warranties in this section are included to provide you with information regarding the terms of the reorganization agreement. Factual disclosures about First Financial and CBI contained in this proxy statement/prospectus or in the public reports of First Financial filed with the SEC may supplement, update or modify the factual disclosures about First Financial and CBI contained in the reorganization agreement. The reorganization agreement contains representations and warranties of First Financial and CBI that may be subject to limitations, qualifications or exceptions agreed upon by the parties, including being qualified by confidential disclosures, and may be subject to a contractual standard of materiality that differs from the materiality standard that applies to reports and documents filed with the SEC.

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In particular, in your review of the representations and warranties contained in the reorganization agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purpose of establishing circumstances in which a party to the reorganization agreement may have the right not to consummate the merger if the representations and warranties of the other party prove to be untrue due to a change in circumstance or otherwise, and allocating risk between the parties to the reorganization agreement. The representations and warranties, other provisions of the reorganization agreement or any description of these provisions should not be read alone, but instead should be read only in conjunction with the information provided elsewhere in this proxy statement/prospectus, the documents incorporated by reference into this proxy statement/prospectus and the other reports, statements and filings that First Financial publicly files with the SEC. See “ Where You Can Find More Information .”

The reorganization agreement contains customary representations and warranties of each of First Financial and CBI relating to their respective businesses. The representations and warranties in the reorganization agreement do not survive the effective time.

The reorganization agreement contains representations and warranties made by CBI relating to a number of matters, including the following:

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The reorganization agreement contains representations and warranties made by First Financial relating to a more limited number of matters, including the following:

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Certain representations and warranties of First Financial and CBI are qualified as to “materiality” or “material adverse change.” For purposes of the reorganization agreement, a “material adverse change,” means, with respect to either First Financial or CBI, any event, occurrence, fact, condition, effect or change that is, or would reasonably expect to become, materially adverse to the business, results of operations, condition (financial or otherwise), assets, properties, liabilities (absolute, accrued, contingent or otherwise) or reserves, taken as a whole, or the ability of the parties to consummate the transactions contemplated by the reorganization agreement on a timely basis; provided, however, that none of the following shall constitute, or shall be considered in determining whether there has occurred, and no event, circumstance, change or effect resulting from or arising out of any of the following shall constitute a material adverse change: (i) any changes in laws or interpretations thereof that are generally applicable to the banking or savings industries; (ii) changes in generally accepted accounting principles of the United States, which we refer to as “GAAP”, or regulatory accounting principles, which we refer to as “RAP”, that are generally applicable to the banking or savings industries; (iii) expenses incurred in connection with the transactions contemplated by the reorganization agreement; (iv) changes in global, national or regional political conditions or general economic or market conditions in the United States or the State of Kansas or Oklahoma, including changes in prevailing interest rates, credit availability and liquidity, currency exchange rates, and price levels or trading volumes in the United States or foreign securities markets affecting other companies in the financial services industry; (v) general changes in the credit markets or general downgrades in the credit markets; (vi) actions or omissions of a party taken as required by the reorganization agreement or with the prior informed written consent of the other party or parties in contemplation of the transactions contemplated by the reorganization agreement; (vii) any outbreak or escalation of hostilities, declared or undeclared acts of war or terrorism; or (viii) any change resulting from the announcement or pendency of any of the transactions contemplated by the reorganization agreement; provided, however, that in the case of clauses (i) through (vii), such party is not affected to a greater extent than other persons, bank holding companies or insured depository institutions in the industry in which such party operates.

Covenants and Agreements

Conduct of Businesses Prior to the Completion of the Merger

From the date of the reorganization agreement to and including the closing date of the merger, unless otherwise permitted in writing by First Financial, CBI will, and will cause Commercial State Bank to:

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From the date of the reorganization agreement to closing, unless permitted by the reorganization agreement or First Financial consents in writing, CBI will not, and will not allow Commercial State Bank to:

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For a complete description of such restrictions on the conduct of the business of CBI, we refer you to the reorganization agreement, which is attached as Appendix A to this proxy statement/prospectus.

Regulatory Matters

First Financial and CBI have agreed to use their commercially reasonable efforts to promptly prepare and file or cause to be filed applications for all regulatory approvals required to be obtained by each of the parties in connection with the reorganization agreement and the transactions contemplated thereby.

Employee Matters

Subject to the right of subsequent amendment, modification, replacement or termination in the sole discretion of First Financial, each former Commercial State Bank employee that becomes employed by First Financial or its subsidiaries after the effective time of the merger shall be entitled, as an employee of First Financial or its subsidiaries, to participate in the employee benefit plans of First Financial in effect as of the date of the reorganization agreement; provided, that such continuing employee is eligible to participate and, if required, selected for participation therein under the terms thereof and makes any required contributions. All such participation shall be subject to such terms of such plans as may be in effect from time to time and the reorganization agreement is not intended to give any such employee any rights or privileges superior to those of other similarly situated employees of First Financial or its subsidiaries. The provisions of the reorganization agreement shall not be deemed or construed so as to provide duplication of similar benefits but, subject to that qualification, First Financial shall, for purposes of vesting and any age or period of service requirements for commencement of participation with respect to any employee benefit plans in which a continuing employee may participate (excluding any defined benefit pension plan), credit each continuing employee with his or her term of service with CBI or Commercial State Bank to the extent such service was recognized under the analogous employee benefit plan of CBI .

Director and Officer Indemnification and Insurance

The reorganization agreement provides that for a three year period after the effective time of the merger, and subject to the limitations contained in applicable Federal Reserve, OCC and FDIC regulations and to any limitations contained in the CBI governance documents, First Financial will indemnify, defend and hold harmless each director and officer of CBI or Commercial State Bank as of the effective time of the merger, against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of matters existing or occurring at or before the effective time of the merger, whether asserted or claimed before, at or after the effective time of the merger that arise in whole or in part out of or pertaining to the fact that he or she was acting in his or her capacity as a director or officer of the CBI or Commercial State Bank.

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Prior to closing, CBI will obtain, at its expense, an extended reporting period policy, with terms and coverage reasonable for such policies, covering directors and officers of CBI and the Commercial State Bank for a period of not less than three (3) years from the closing date, and the total premium for such policy shall be included as a merger expense and reduce the adjusted equity of CBI.

No Solicitation

CBI agreed that neither it, nor Commercial State Bank, nor any of their respective directors or officers will take any action to:

CBI or Commercial State Bank shall notify First Financial orally (within one (1) Business Day) and in writing (as promptly as practicable) of any such inquiries and proposals received by CBI or the Commercial State Bank or any of its respective directors or officers, relating to any of such matters

For purposes of the reorganization agreement, an acquisition proposal is any proposal involving: (a) a merger, consolidation, or any similar transaction of any entity with CBI or any subsidiary of CBI, (b) a purchase, lease or other acquisition of all or substantially all the assets of CBI or any subsidiary of CBI, (c) a purchase or other acquisition of “beneficial ownership” by any “person” or “group” (as such terms are defined in Section 13(d)(3) of Exchange Act) (including by way of merger, consolidation, share exchange, or otherwise) that would cause such person or group to become the beneficial owner of any securities of CBI or any subsidiary of CBI after October 12, 2017, (d) a tender or exchange offer to acquire any securities of CBI or any subsidiary of CBI, (e) a public proxy or consent solicitation made to the shareholders of CBI or any subsidiary of CBI seeking proxies in opposition to any proposal relating to any of the transactions contemplated by the reorganization agreement, or (f) the making of a bona fide offer or proposal to the board of directors or shareholders of CBI or any subsidiary of CBI to engage in one or more of the transactions referenced above.

CBI Option Vesting, Exercise and Cancellation

The reorganization agreement generally requires that in advance of the closing of the merger, the board of directors of CBI (or, if appropriate, a committee thereof) take all necessary actions to cause the vesting of any unvested options to purchase CBI common stock granted pursuant to the CBI equity incentive plan, and CBI shall use its commercially reasonable efforts to cause all holders of options to purchase common stock of CBI to exercise such options prior to the calculation date, or CBI shall pay cash to the holders of options to purchase common stock of CBI for the termination and cancellation of such options. The reorganization agreement also requires that CBI terminate and cancel all options to purchase common stock of CBI that are not cashed out or exercised in the time frame specified by the reorganization agreement.

Repayment of Certain Loans Secured by Stock of CBI

The reorganization agreement requires that prior to closing of the merger, CBI shall take all actions necessary to cause all loans made by CBI or Commercial State Bank that were used to acquire stock of CBI by directors or employees or to pay the exercise price for options to acquire stock of CBI to be repaid.

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Certain Additional Covenants

The reorganization agreement also contains additional covenants, including, among others, covenants relating efforts to perform and fulfill all conditions and obligations under the reorganization agreement, holding the special meeting, the recommendation of the board of directors of CBI, the filing and preparation of this joint proxy statement/prospectus, due diligence and access to the information, properties and personnel of CBI and Commercial State Bank, financial statements, breaches of representations, warranties and covenants, notices relating to litigation, notices relating to the occurrence of a material change, obtaining required consents and approvals, environmental due diligence and investigations, the termination of certain employee benefit plans, the termination of certain contracts, tax matters, supplemental disclosure schedules, assistance with planning the integration of the operations of CBI and First Financial, the absence of control over the other party’s business, voting agreements, director support agreements, director and officer releases, and the listing of the shares of First Financial common stock to be issued in the merger.

Conditions to Completion of the Merger

The reorganization agreement contains a number of conditions to the obligations of First Financial and CBI to complete the merger which must be satisfied as of the closing date of the merger.

CBI’s obligations to complete the merger are subject to the satisfaction or waiver of the following conditions:

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First Financial’s obligations to complete the merger are subject to the satisfaction or waiver of the following conditions:

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Any condition to the completion of the merger, except the required shareholder and regulatory approvals, and the absence of an order or ruling prohibiting the merger, may be waived in writing by the party to the reorganization agreement entitled to the benefit of such condition. We cannot be certain when or if the conditions to the merger will be satisfied or waived, or that the merger will be completed.

Interests of CBI’s Directors and Officers in the Merger

In considering the recommendation of the board of directors of CBI with respect to the merger proposal, you should be aware that some of CBI’s directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of the CBI shareholders generally. Interests of directors and executive officers that may be different from or in addition to the interests of the CBI shareholders include:

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The cost of the tail insurance is a transaction expense that will be borne by CBI shareholders.

CBI Director Support Agreements

In connection with entering into the reorganization agreement, each of the directors of CBI entered into a director support agreement with First Financial (which we refer to in this proxy statement/prospectus as the “CBI director support agreements”) pursuant to which they agreed to refrain from harming the goodwill of CBI and to certain post-closing restrictive covenants.

The foregoing description of the CBI director support agreement is subject to, and qualified in its entirety by reference to, the CBI director support agreement, a form of which is attached to this proxy statement/prospectus as Appendix C and is incorporated by reference into this proxy statement/prospectus.

NASDAQ Listing

First Financial agreed to file with NASDAQ Global Select Market all documents with respect to the listing of the shares of First Financial common stock to be issued in the merger.

Amendment or Waiver of the Reorganization Agreement

No termination, cancellation, modification, amendment, deletion, addition or other change to the reorganization agreement, or any provision thereof, or waiver of any right or remedy therein provided, is effective for any purpose unless specifically set forth in a writing executed by the party against which enforcement of the amendment, modification or supplement is sough. The waiver of any right or remedy in respect to any occurrence or event on one occasion is not deemed a waiver of such right or remedy in respect to such occurrence or event on any other occasion.

The reorganization agreement may be amended at any time prior to or after approval of the merger proposal by the shareholders of CBI but, after any submission of the reorganization agreement to such shareholders for approval, no amendment of the reorganization agreement will be made that reduces the consideration payable to CBI or that materially and adversely affects the rights of shareholders of CBI under the reorganization agreement without the requisite approval of such shareholders.

Termination of the Reorganization agreement

The reorganization agreement can be terminated at any time prior to completion of the merger in the following circumstances:

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Expenses

CBI and First Financial will each pay their respective expenses incurred in connection with the preparation and performance of their respective obligations under the reorganization agreement, whether or not the transactions provided for in the reorganization agreement are completed, including, but not limited to, fees and expenses of their own counsel, financial or other consultants, investment bankers and accountants, and filing, registration, application and printing fees. Similarly, each of CBI and First Financial agreed to indemnify the other party against any amounts owed to any agent, representative or broker of the other party.

Material U.S. Federal Income Tax Consequences of the Integrated Merger

The following discussion addresses the material U.S. federal income tax consequences of the integrated merger to U.S. holders (as defined below) of CBI common stock. This discussion is based on the Code, Treasury regulations, administrative rulings and judicial decisions, all as in effect as of the effective date of this proxy statement/prospectus and all of which are subject to change (possibly with retroactive effect) and to differing interpretations. Accordingly, the U.S. federal income tax consequences of the integrated merger to holders of CBI common stock could differ from those described below.

This discussion applies only to U.S. holders that hold their CBI common stock and will hold the FFIN common stock received in exchange for their CBI common stock, as a capital asset within the meaning of Section 1221 of the Code (generally assets held for investment). Further, this discussion does not address all aspects of U.S. federal taxation that may be relevant to a particular U.S. holder in light of such holder’s personal circumstances or to a U.S. holder that is subject to special treatment under U.S. federal income tax laws, including, without limitation:

In addition, this discussion does not address any state, local or foreign tax consequences of the integrated merger, or any tax consequences of the integrated merger under any U.S. federal tax laws other than those pertaining to income tax.

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For purposes of this discussion, a U.S. holder is a beneficial owner of CBI common stock who is, for U.S. federal income tax purposes: (i) an individual who is a citizen or resident of the United States; (ii) a corporation (or any other entity taxable as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States or any state thereof or the District of Columbia; (iii) an estate that is subject to U.S. federal income tax on its income regardless of its source; or (iv) a trust (A) if a U.S. court is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all substantial decisions of the trust or (B) that was in existence on August 20, 1996, and has made a valid election to be treated as a United States person for U.S. federal income tax purposes. Holders of CBI common stock who are not U.S. holders may have different tax consequences than those described below and are urged to consult their own tax advisors regarding the tax treatment of the integrated merger under United States and non-United States tax laws.

If a partnership (or an entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds shares of CBI common stock, the U.S. federal income tax treatment of a partner in such partnership generally will depend upon the status of the partner and the activities of the partnership. First Financial and CBI urge such partners and partnerships to consult their own tax advisors regarding the particular tax consequences of the integrated merger to them.

Determining the actual U.S. federal income tax consequences of the integrated merger to a U.S. holder may be complex and will depend, in part, on the holder’s particular circumstances. First Financial and CBI urge each U.S. holder of CBI common stock to consult his or her tax advisor with respect to the particular tax consequences of the integrated merger to such holder.

U.S. Federal Income Tax Consequences of the Integrated Merger Generally

The obligation of First Financial to complete the integrated merger is conditioned on, among other things, the receipt by First Financial of a tax opinion from Norton Rose Fulbright US LLP, dated as of the closing date of the integrated merger, to the effect that, on the basis of facts, representations and assumptions described in such opinion, the integrated merger will be treated as a transaction that qualifies as a “reorganization” within the meaning of Section 368(a) of the Code.

The opinion will be subject to customary qualifications and assumptions, including assumptions regarding the absence of changes in existing facts and the completion of the integrated merger strictly in accordance with the merger agreement and the registration statement. In rendering its opinion, Norton Rose Fulbright US LLP will rely upon representations and covenants, including those contained in certificates of officers of First Financial and CBI. If any of the assumptions, representations or covenants upon which the opinion is based are incorrect or inaccurate in any way, the opinion and the U.S. federal income tax consequences of the integrated merger could be adversely affected. In addition, the obligation of Norton Rose Fulbright US LLP to deliver such opinion is conditioned on the integrated merger satisfying the continuity of proprietary interest requirement. That requirement generally will be satisfied if the aggregate value of the First Financial stock constitutes at least 40% of the aggregate value of the merger consideration (including the special dividend) at the time the integrated merger becomes effective. The opinion represents Norton Rose Fulbright US LLP’s best legal judgment, but does not bind the courts and does not preclude the IRS from adopting a position contrary to the one expressed in the opinion. Additionally, the IRS has not issued (and is not expected to issue) any ruling as to the qualification of the integrated merger as a reorganization under Section 368(a) of the Code. Accordingly, there can be no assurance that the IRS will not assert, and a court will not sustain, a position contrary to the position addressed below or in the opinion of Norton Rose Fulbright US LLP. The following discussion regarding the U.S. federal income tax consequences of the integrated merger assumes that the integrated merger will be treated as a transaction that qualifies as a “reorganization” within the meaning of Section 368(a) of the Code.

Exchange for First Financial Common Stock and Cash . A U.S. holder who receives both First Financial common stock and cash (including cash from the special dividend) in the exchange for such holder’s CBI

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common stock will recognize gain (but not loss) equal to the lesser of: (1) the amount by which the sum of the fair market value of the First Financial common stock and cash received by such holder of CBI common stock exceeds such holder’s adjusted tax basis in its CBI common stock; and (2) the amount of cash received by such holder of CBI common stock (in each case excluding cash received in lieu of a fractional share of First Financial common stock, the U.S. federal income tax treatment of which is discussed below). Except to the extent any cash received is treated as a dividend as discussed below, any gain recognized by the U.S. holder generally will be long-term capital gain if, as of the effective date of the integrated merger, such holder’s holding period with respect to the CBI common stock surrendered exceeds one year.

In connection with the integrated merger and as more completely described above in “Summary—Terms of the Merger,” CBI will make a special dividend to its shareholders immediately prior to the integrated merger. Although the matter is not free from doubt, First Financial and CBI intend to treat the special dividend as additional consideration received by a U.S. holder in exchange for such holder’s CBI common stock with the U.S. federal income tax consequences described above under this heading “Proposal 1: Approval of the Merger—Material U.S. Federal Income Tax Consequences of the Integrated Merger—Exchange for First Financial Common Stock and Cash.”

If CBI common stock was acquired by a U.S. holder at different times or different prices, such holder should consult the holder’s tax advisor regarding the manner in which gain or loss should be determined for each identifiable block of CBI common stock surrendered in the exchange.

The aggregate tax basis of the shares of First Financial common stock received (including any fractional share of First Financial common stock deemed received and redeemed for cash as described below) by a U.S. holder will be equal to such holder’s aggregate tax basis in the shares of CBI common stock surrendered in exchange for the shares of First Financial common stock reduced by the amount of tax basis allocated to any fractional share deemed received and redeemed, and then increased by any taxable gain recognized in the integrated merger by such holder (excluding any gain recognized as a result of cash received in lieu of a fractional share of First Financial common stock) regardless of whether such gain is classified as capital gain or dividend income, and minus any cash received (other than cash received in lieu of a fractional share of First Financial common stock) by such holder in the integrated merger. The holding period for shares of First Financial common stock received in the integrated merger (including any fractional share of First Financial common stock deemed received and redeemed for cash as described below) by a U.S. holder will include such holder’s holding period for the CBI common stock surrendered in exchange for the First Financial common stock. If CBI common stock was purchased or acquired by a U.S. holder on different dates or at different prices, such holder should consult such holder’s tax advisor for purposes of determining the basis and holding period of the First Financial common stock received in the integrated merger.

Cash Received in Lieu of a Fractional Share . A U.S. holder who receives cash in lieu of a fractional share of First Financial common stock will be treated as having received the fractional share in the integrated merger and then as having exchanged the fractional share for cash in redemption by First Financial. As a result, the U.S. holder will generally recognize gain or loss equal to the difference between the amount of cash received and such holder’s tax basis allocable to the fractional share. The gain or loss will be capital gain or loss and will be long-term capital gain or loss if the U.S. holder has held the fractional share exchanged (including the holding period for the CBI common stock exchanged therefor) for more than one year as of the effective date of the integrated merger. The deductibility of capital losses is subject to limitations.

Potential Characterization of Gain as a Dividend . In general, the determination of whether gain recognized by a U.S. holder in the exchange will be treated as capital gain or as a dividend will depend on whether, and to what extent, the integrated merger reduces such holder’s deemed percentage ownership of First Financial common stock. For purposes of this determination, the U.S. holder will be treated as if such holder first exchanged such holder’s CBI common stock solely for First Financial common stock and then First Financial immediately redeemed a portion of such holder’s First Financial common stock in the exchange for cash, which

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for this purpose includes the special dividend, received in the integrated merger by such holder. The gain recognized by the U.S. holder in the exchange followed by a deemed redemption will be capital gain if, with respect to such holder, the deemed redemption is “substantially disproportionate” or “not essentially equivalent to a dividend.”

In general, the deemed redemption will be “substantially disproportionate” with respect to a U.S. holder if the percentage described in clause (2) below is less than 80% of the percentage described in clause (1) below. In general, such determination requires a comparison of (1) the percentage of outstanding voting stock of First Financial that the U.S. holder is deemed actually and constructively to have owned immediately before the deemed redemption by First Financial and (2) the percentage of outstanding voting stock of First Financial actually and constructively owned by such holder immediately after the deemed redemption by First Financial. In applying the foregoing test, the U.S. holder may, under constructive ownership rules, be deemed to own stock in addition to stock actually owned by such holder, including stock owned by certain other persons and stock subject to an option held by such holder or by certain other persons. Because the constructive ownership rules are complex, each U.S. holder should consult such holder’s tax advisor as to the applicability of these rules. Whether the deemed redemption is “not essentially equivalent to a dividend” with respect to a U.S. holder will depend on such holder’s particular circumstances. In order for the deemed redemption to be “not essentially equivalent to a dividend,” the reduction must result in a “meaningful reduction” in the U.S. holder’s deemed percentage ownership of First Financial common stock. The IRS has indicated that a minority shareholder in a publicly traded corporation whose relative stock interest is minimal and who exercises no control with respect to corporate affairs is considered to have a meaningful reduction if that shareholder has any reduction in his or her percentage stock ownership under the foregoing analysis.

These rules are complex and dependent upon the specific facts of a particular U.S. holder. Consequently, First Financial and CBI urge each U.S. holder that may be subject to these rules to consult such holder’s tax advisor as to the application of these rules to the particular facts relevant to such holder.

Dissenters . Upon the proper exercise of dissenters’ rights, a U.S. holder will exchange all of the shares of CBI common stock actually owned by such holder solely for cash and will recognize gain or loss equal to the difference between the amount of cash received, which for this purposes includes the special dividend, and such holder’s tax basis in the shares of CBI common stock surrendered. The gain or loss will be long-term capital gain or loss if the U.S. holder’s holding period with respect to the CBI common stock surrendered is more than one year. The deductibility of capital losses is subject to limitations. In some cases, if the U.S. holder owns shares of First Financial common stock actually or constructively after the integrated merger, the cash received could be treated as a dividend, in which case such holder may recognize dividend income up to the amount of cash received. Because the possibility of dividend treatment depends upon each U.S. holder’s particular circumstances, including the application of constructive ownership rules, U.S. holders of CBI common stock are urged to consult their tax advisors regarding the application of the foregoing rules to their particular circumstances

Medicare Tax . If a U.S. holder that is an individual has modified gross income for the taxable year over a certain threshold (between $125,000 and $250,000 depending upon the individual’s U.S. federal income tax filing status), such an individual is subject to a 3.8% tax (the “Medicare Tax”) on the lesser of: (i) his or her “net investment income” for the relevant taxable year; or (ii) the excess of his or her modified gross income for the taxable year over his or her applicable threshold (between $125,000 and $250,000 depending upon the individual’s U.S. federal income tax filing status). In the case of an estate or trust, the Medicare Tax will be imposed on the lesser of: (i) undistributed net investment income, or (ii) the excess of its adjusted gross income over the dollar amount at which the highest income tax bracket applicable to an estate or trust begins for the relevant taxable year. Net investment income generally would include any capital gain incurred in connection with the integrated merger (including gain treated as dividend income), as well as other items of interest, dividends, capital gains, and rental or royalty income.

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Information Reporting and Backup Withholding

Payments of cash to a U.S. holder pursuant to the integrated merger may under certain circumstances be subject to information reporting and backup withholding. Generally, backup withholding will not apply if a U.S. holder:

Any amounts withheld under the backup withholding rules are not an additional tax and will generally be allowed as a refund or credit against a U.S. holder’s U.S. federal income tax liability, provided such holder furnishes the required information to the IRS.

Reporting Requirements

A U.S. holder who receives shares of First Financial common stock upon completion of the integrated merger and who is considered a “significant holder” will be required to retain records pertaining to the integrated merger and to file with such holder’s U.S. federal income tax return for the year in which the integrated merger takes place a statement setting forth certain facts relating to the integrated merger. For this purpose, a U.S. holder is a significant holder if the person owns at least 1% by vote or value of CBI’s outstanding shares or has a tax basis of $1,000,000 or more in such holder’s CBI common stock and securities. Such statement must include the U.S. holder’s tax basis in and fair market value of such holder’s CBI common stock and securities surrendered in the integrated merger.

Tax Treatment of Entities

No gain or loss should be recognized by First Financial or CBI for U.S. federal income tax purposes as a result of the integrated merger.

Tax Legislation

The United States Congress is currently considering tax legislation. It is unclear whether any tax legislation will be enacted, and if enacted, what changes will be made to existing U.S. federal income tax laws and whether any such changes will affect the tax consequences of the integrated merger described above. First Financial and CBI urge holders of CBI common stock to consult their own tax advisors regarding the United States Congress’ current consideration of tax legislation.

This discussion of certain material U.S. federal income tax consequences is for general information only and is not tax advice. First Financial and CBI urge holders of CBI common stock to consult their tax advisors with respect to the application of U.S. federal income tax laws to their particular situations as well as any tax consequences arising under the U.S. federal estate or gift tax rules, and under the laws of any applicable state, local, foreign or other taxing jurisdiction or under any applicable tax treaty.

Accounting Treatment

The merger will be accounted for under the acquisition method of accounting under accounting principles generally accepted in the United States of America. Under this method, CBI’s assets and liabilities as of the date of the merger will be recorded at their respective fair values. Any difference between the purchase price for CBI and the fair value of the identifiable net assets acquired (including core deposit intangibles) will be recorded as

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goodwill. In accordance with ASC Topic 805, Business Combinations , issued in July 2001, the goodwill resulting from the merger will not be amortized to expense, but instead will be reviewed for impairment at least annually and to the extent goodwill is impaired, its carrying value will be written down to its implied fair value and a charge will be made to earnings. Core deposit and other intangibles with definite useful lives recorded by First Financial in connection with the merger will be amortized to expense in accordance with such rules. The consolidated financial statements of First Financial issued after the merger will reflect the results attributable to the acquired operations of CBI beginning on the date of completion of the merger.

Restrictions on Resales of First Financial Common Stock Received in the Merger

The shares of First Financial common stock issued in the merger will not be subject to any restrictions on transfer arising under the Securities Act of 1933, as amended, referred to in this proxy statement/prospectus as the “Securities Act,” except for shares of First Financial common stock issued to any CBI shareholder who may be deemed to be an “affiliate” of First Financial after completion of the merger. “Affiliates” generally are defined as persons or entities who control, are controlled by or are under common control with First Financial at or after the effective time of the merger and generally include executive officers, directors and beneficial owners of 10% or more of the common stock of First Financial. CBI shareholders who are not affiliates of First Financial after the completion of the merger may sell their shares of First Financial common stock at any time.

To the knowledge of CBI, no CBI shareholder who receives First Financial common stock will be deemed to be an affiliate of First Financial upon completion of the merger. In the event a CBI shareholder become an affiliates of First Financial after completion of the merger, any sales of First Financial common stock will be subject to the volume and sale limitations of Rule 144 under the Securities Act, until such former CBI Shareholder is no longer an affiliate of First Financial. This proxy statement/prospectus does not cover resales of First Financial common stock received by any person upon completion of the merger, and no person is authorized to make any use of this proxy statement/prospectus in connection with any resale.

Regulatory Approvals Required for the Merger

First Financial’s acquisition of CBI must be approved by the Federal Reserve. On October 20, 2017, First Financial filed the required application with the Federal Reserve Bank of Dallas to request the Federal Reserve’s approval under the BHC Act.

In addition, the bank merger of Commercial State Bank with and into First Financial Bank requires the approval of the OCC. On October 18, 2017, First Financial Bank and Commercial State Bank filed an application with the OCC to obtain approval of bank merger. The U.S. Department of Justice will have between 15 and 30 days following approval by the OCC to challenge the approval on antitrust grounds. While CBI and First Financial do not know of any reason that the Department of Justice would challenge regulatory approval by the OCC and believe that the likelihood of such action is remote, there can be no assurance that the Department of Justice will not initiate such a proceeding, or if such a proceeding is initiated, as to the result of any such challenge.

The merger cannot proceed in the absence of these required regulatory approvals. The approval of any notice or application merely implies satisfaction of regulatory criteria for approval, and does not include review of the merger from the standpoint of the adequacy of the consideration to be received by, or fairness to, shareholders. Regulatory approval does not constitute an endorsement or recommendation of the proposed transaction.

We cannot assure you as to whether or when the requisite regulatory approvals will be obtained, and, if obtained, we cannot assure you as to the date of receipt of any of these approvals, the terms thereof or the absence of any litigation challenging them. Likewise, we cannot assure you that the Department of Justice or a state attorney general will not attempt to challenge the merger on antitrust grounds, or, if such a challenge is made, as to the result of that challenge.

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First Financial and CBI are not aware of any material governmental approvals or actions that are required prior to the parties’ completion of the merger other than those described in this proxy statement/prospectus. If any additional governmental approvals or actions are required, the parties presently intend to seek those approvals or actions. However, the parties cannot assure you that any of these additional approvals or actions will be obtained.

Although the approval of the Texas Department of Banking is not required for the merger of Commercial State Bank with and into First Financial Bank, a copy of the application filed with the Federal Reserve was filed with the Texas Department of Banking on October 23, 2017.

Dissenters’ Rights of CBI Shareholders

General . If you hold one or more shares of CBI common stock, you are entitled to dissenters’ rights under Texas law and have the right to dissent from the merger and have the appraised fair value of your shares of CBI common stock paid to you in cash. The appraised fair value may be more or less than the value of the shares of First Financial common stock and, if applicable, cash, being paid in the merger in exchange for the common stock of CBI. If you are contemplating exercising your right to dissent, we urge you to read carefully the provisions of Chapter 10, Subchapter H of the TBOC, which are attached to this proxy statement/prospectus as Appendix E , and consult with your legal counsel before electing or attempting to exercise these rights. The following discussion describes the steps you must take if you want to exercise your right to dissent. You should read this summary and the full text of the law carefully.

How to Exercise and Perfect Your Right to Dissent . To be eligible to exercise your right to dissent to the merger:

If you intend to dissent from the merger, you should send the notice to:

Commercial Bancshares, Inc.

24080 Hwy 59 North, Suite 250

Kingwood, Texas 77339

Attention: President and Secretary

If you fail to (i) send the written objection to the merger in the proper form prior to the CBI special meeting, (ii) vote your shares of CBI common stock at the special meeting against the approval of the merger proposal or (iii) submit your demand for payment in the proper form on a timely basis, you will lose your right to dissent from the merger. If you fail to submit to First Financial on a timely basis the certificates representing the shares of CBI common stock that you hold after you have submitted the demand for payment as described above, First Financial will have the option to terminate your right of dissent as to your shares of CBI common stock. In any

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instance of a termination or loss of your right of dissent, you will instead receive the consideration authorized by the board of directors of CBI and calculated in accordance with the reorganization agreement following consummation of the merger. If you comply with items (i) and (ii) above and the merger is completed, First Financial will send you a written notice advising you that the merger has been completed. First Financial must deliver this notice to you within ten days after the merger is completed.

Your Demand for Payment . If the merger is completed, you have provided your written objection to the merger to CBI in a timely manner and in proper form and you have voted against the merger proposal at the special meeting as described above and you desire to receive the fair value of your shares of CBI common stock in cash, you must, within 20 days of the date on which First Financial sends to you the notice of the effectiveness of the merger, give First Financial a written demand for payment of the fair value of your shares of CBI common stock. The fair value of your shares of CBI common stock will be the value of the shares on the day immediately preceding the merger, excluding any appreciation or depreciation in anticipation of the merger. After the merger is completed, your written demand and any notice sent to First Financial must be addressed to:

First Financial Bankshares, Inc.

400 Pine Street

Abilene, Texas 79601

Attention: President and Secretary

Your written demand must include a demand for payment for your shares for which rights of dissent and appraisal are sought and must state the number of shares and class of CBI common stock you own and your estimate of the fair value of your shares of CBI common stock and an address to which a notice relating to the dissent and appraisal procedures may be sent. This written demand must be delivered to First Financial within 20 days of the date on which First Financial sends to you the notice of the effectiveness of the merger. If your written demand for payment in proper form is not received by First Financial within that 20 day period, you will be bound by the merger and you will not be entitled to receive a cash payment representing the fair value of your shares of CBI common stock. Instead, you will receive shares of First Financial common stock and, if applicable, cash as the merger consideration set forth in the reorganization agreement.

Delivery of Stock Certificates. If you have satisfied the requirements for the exercise of your right to dissent described above, including the delivery of the written demand for payment to First Financial as described above, you must, not later than the 20th day after you make your written demand for payment to First Financial, submit to First Financial your certificate or certificates representing the shares of CBI common stock that you own, as the case may be. You may submit those certificates with your demand for payment if you prefer. In accordance with the provisions of the TBOC, First Financial will note on each such certificate that you have demanded payment of the fair value of the shares of CBI common stock that were represented by such certificate under the provisions of the TBOC relating to the rights of dissenting owners. If you fail to submit all of the certificates representing the shares of CBI common stock for which you have exercised the right of dissent in a timely fashion, First Financial will have the right to terminate your rights of dissent and appraisal with respect to all of your shares of CBI common stock unless a court, for good cause shown, directs First Financial not to terminate those rights.

First Financial’s Actions Upon Receipt of Your Demand for Payment . Within 20 days after First Financial receives your demand for payment and your estimate of the fair value of your shares of CBI common stock, First Financial must send you written notice stating whether or not it accepts your estimate of the fair value of your shares.

If First Financial accepts your estimate, First Financial will notify you that it will pay the amount of your estimated fair value within 90 days of the merger being completed. First Financial will make this payment to you only if you have surrendered the share certificates representing your shares of CBI common stock, duly endorsed for transfer, to First Financial.

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If First Financial does not accept your estimate, First Financial will notify you of this fact and will make an offer of an alternative estimate of the fair value of your shares that it is willing to pay you within 120 days of the merger being completed, which you may accept within 90 days or decline.

Payment of the Fair Value of Your Shares of CBI Common Stock Upon Agreement of an Estimate . If you and First Financial have reached an agreement on the fair value of your shares of CBI common stock within 90 days after the merger is completed, First Financial must pay you the agreed amount within 120 days after the merger is completed, provided that you have surrendered the share certificates representing your shares of CBI common stock, duly endorsed for transfer, to First Financial.

Commencement of Legal Proceedings if a Demand for Payment Remains Unsettled . If you and First Financial have not reached an agreement as to the fair market value of your shares of CBI common stock within 90 days after the merger is completed, you or First Financial may, within 60 days after the expiration of such 90 day period, commence proceedings in Taylor County, Texas, asking the court to determine the fair value of your shares of CBI common stock. The court will determine if you have complied with provisions of the TBOC regarding their right of dissent and if you have become entitled to a valuation of and payment for your shares of CBI common stock. The court will appoint one or more qualified persons to act as appraisers to determine the fair value of your shares in the manner prescribed by the TBOC. The appraisers will determine the fair value of your shares and will report this value to the court. The court will consider the report, and both you and First Financial may address the court about the report. The court will determine the fair value of your shares and direct First Financial to pay that amount, plus interest, which will begin to accrue 91 days after the merger is completed. The court may require you to share in the court costs relating to the matter to the extent the court deems it fair and equitable that you do so.

Rights as a Shareholder . If you have made a written demand on First Financial for payment of the fair value of your shares of CBI common stock, you will not thereafter be entitled to vote or exercise any other rights as a shareholder except the right to receive payment for your shares as described herein and the right to maintain an appropriate action to obtain relief on the ground that the merger would be or was fraudulent. In the absence of fraud in the transaction, your right under the dissent provisions described herein is the exclusive remedy for the recovery of the value of your shares of CBI common stock or money damages with respect to the merger.

Withdrawal of Demand . If you have made a written demand on First Financial for payment of the fair value of your CBI common stock, you may withdraw such demand at any time before payment for your shares has been made or before a petition has been filed with a court for determination of the fair value of your shares. If you withdraw your demand or are otherwise unsuccessful in asserting your dissenters’ rights, you will be bound by the merger and your status as a shareholder will be restored without prejudice to any corporate proceedings, dividends or distributions which may have occurred during the interim.

Income Tax Consequences . See “Proposal 1: Approval of the Merger Proposal—Material U.S. Federal Income Tax Consequences of the Merger” on page 53 for a discussion on how the federal income tax consequences of your action will change if you elect to dissent from the merger.

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PROPOSAL 2: ADJOURNMENT OF THE SPECIAL MEETING

The special meeting may be adjourned or postponed to a later date or dates in order to permit further solicitation of proxies. In order to allow proxies that have been received at the time of the meeting to be voted for an adjournment, if necessary, the voting representatives and board of directors of CBI are submitting the question of adjournment/postponement to the CBI shareholders as a separate matter for their consideration. The voting representatives and the board of directors of CBI recommend that its shareholders vote “ FOR ” the adjournment proposal. If it is necessary to adjourn or postpone the special meeting, no notice of such adjourned or postponed meeting is required to be given to CBI’s shareholders. To adjourn or postpone the special meeting, the affirmative vote of a majority of the shares of CBI common stock present, in person or by proxy, at the meeting is required.

The board of directors of CBI recommends that you vote “FOR” the adjournment proposal.

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COMPARISON OF RIGHTS OF SHAREHOLDERS

OF CBI AND FIRST FINANCIAL

The rights of shareholders of CBI under the certificate of formation and bylaws of CBI will differ in some respects from the rights that shareholders of CBI will have as shareholders of First Financial under the certificate of formation and bylaws of First Financial. Copies of First Financial’s certificate of formation and bylaws have been previously filed by First Financial with the SEC. Copies of CBI’s certificate of formation and bylaws are available upon written request from CBI

Certain differences between the provisions contained in the certificate of formation and bylaws of CBI, and the certificate of formation and bylaws of First Financial, as such differences may affect the rights of shareholders, are summarized below. The summary set forth below is not intended to be complete and is qualified by reference to Texas law and, the certificate of formation and bylaws of CBI and the certificate of formation and bylaws of First Financial. If the merger is consummated, holders of CBI common stock (other than dissenting shareholders) will become holders of First Financial common stock, and their rights as holders of First Financial common stock will be governed by the TBOC and First Financial’s certificate of formation and bylaws.

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TEXAS ANTI-TAKEOVER STATUTES

First Financial is subject to the affiliated business combinations provisions of Chapter 21, Subchapter M of the TBOC (Sections 21.601 through 21.610), which provide that a Texas corporation may not engage in certain business combinations, including mergers, consolidations and asset sales, with a person, or an affiliate or associate of such person, who is an “Affiliated Shareholder” (generally defined as the holder of 20% or more of the corporation’s voting shares) for a period of three years from the date such person became an Affiliated Shareholder unless: (1) the business combination or purchase or acquisition of shares made by the Affiliated Shareholder was approved by the board of directors of the corporation before the Affiliated Shareholder became an Affiliated Shareholder or (2) the business combination was approved by the affirmative vote of the holders of at least two-thirds of the outstanding voting shares of the corporation not beneficially owned by the Affiliated Shareholder, at a meeting of shareholders called for that purpose (and not by written consent), not less than six months after the Affiliated Shareholder became an Affiliated Shareholder.

The affiliated business combinations provisions of the TBOC are not applicable to: