Luke Longhofer
FIRST FINANCIAL BANKSHARESAbout Luke Longhofer
T. Luke Longhofer, age 43, is Executive Vice President and Chief Credit Officer of First Financial Bankshares, Inc. (FFIN) and First Financial Bank; he has served in this role since 2018 after leading Loan Review from 2010–2018 . Company performance context during his tenure: 2024 net income was $223.51 million, up 12.33% year-over-year, with ROAA of 1.68% and ROE of 14.51%; 2024 TSR was 21.58% and 10-year TSR was 188.47% . His short-term incentives are tied to controllable credit and profitability metrics (earnings growth, ROA, net charge-offs, nonperforming assets), directly linking compensation to credit execution .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| First Financial Bankshares, Inc. / First Financial Bank | Executive Vice President, Chief Credit Officer | 2018–present | Oversees enterprise credit risk; short-term bonus metrics include earnings growth, ROA, net charge-offs, NPAs to align pay with portfolio quality and profitability |
| First Financial Bankshares, Inc. / First Financial Bank | Loan Review Manager | Oct 2010–2018 | Led independent credit review function enhancing underwriting discipline and risk oversight |
External Roles
No external public company directorships or outside roles are disclosed for Longhofer in FFIN’s proxy statements .
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 (base set Mar 1, 2024) |
|---|---|---|---|
| Base Salary ($) | 375,833 | 401,667 | 430,000 |
| Target Bonus (% of Salary) | — | 50% | — |
| Target Bonus ($) | — | 202,500 | — |
| Actual Bonus (% of Salary) | — | 20% | — |
| Actual Bonus ($) | — | 81,000 | — |
Performance Compensation
Annual Incentive Plan – FY 2023
| Metric | Weight | Threshold | Target | Actual | Payout ($) | Vesting |
|---|---|---|---|---|---|---|
| Earnings Growth | 40% | 6.00% | 8.00% | (12.84%) | — | Cash (annual) |
| Return on Assets | 30% | 1.83% | 1.87% | 1.55% | — | Cash (annual) |
| Net Charge-offs (as % avg loans) | 20% | 0.08% | 0.06% | 0.03% | 56,700 | Cash (annual) |
| Nonperforming Assets (NPA %) | 10% | 0.85% | 0.65% | 0.49% | 24,300 | Cash (annual) |
| Total | 100% | — | — | — | 81,000 | — |
Long-term Incentives – Grants in 2023
| Award Type | Grant Date | Quantity | Vesting Schedule | Terms / Metric Design |
|---|---|---|---|---|
| Stock Options | 08-16-2023 | 7,541 | 33.3% per year over 3 years; 10-year term | Exercise price $29.53; change-in-control accelerates unvested; clawback applies |
| RSUs | 08-16-2023 | 2,144 | 1/3 each year over 3 years; dividend equivalents paid only on vested shares | Non-compete and non-solicit in award; clawback applies |
| PSUs (Target) | 08-16-2023 | 2,144 (Threshold 536; Max 4,288) | 3-year cliff vest ending 12/31/2025 | Performance versus peer banks ($10–$50B assets), 50% adj. EPS growth, 50% adj. ROAA; 25–100% vesting per metric with linear interpolation; up to 200% of target |
PSU settlement cycles: 2022–2024 PSUs settled at 150% of target (EPS ≈60th percentile; ROAA ≈90th percentile) across executives; RSU/PSU dividends accrue and pay only on units that vest .
Equity Ownership & Alignment
| Item | Amount / Detail |
|---|---|
| Beneficial Ownership (2/28/2024) | 49,707 shares |
| Ownership as % of Shares Outstanding | ~0.035% (49,707 / 142,751,867) |
| ESOP Shares (indirect, 2/28/2024) | 3,196 shares (sole voting by participant) |
| SERP Notional Shares (indirect, 2/28/2024) | 363 shares |
| Options – Exercisable (within 60 days of 2/28/2024) | 16,979 shares |
| Options – Unexercisable (12/31/2023 snapshot by latest grant) | 7,541 (08-16-2023 grant) |
| RSUs Outstanding (12/31/2023) | 2,144 (2023 grant); 725 (2022 grant); 262 (2021 grant) |
| PSUs Outstanding – Max units (12/31/2023) | 4,288 (2023 cycle max); 2,176 (2022 cycle max); 1,574 (2021 cycle max) |
| Stock Ownership Guidelines (Executives) | 3x base salary to be achieved within 5 years and maintained; future bonuses may be paid in equity until compliant; sales may be restricted until compliant |
| Pledging / Hedging | Hedging prohibited; pledging permitted only in limited cases, no margin accounts; no pledge disclosed for Longhofer (only Butler and Thaxton have pledges) |
Insider transactions signal: Longhofer exercised 3,100 options in 2023, realizing $35,867; 1,177 restricted stock units vested in 2023 with $31,517 value .
Employment Terms
| Provision | Details |
|---|---|
| Agreement Type | Executive Recognition Agreement (not an employment agreement) |
| Trigger | Double-trigger change-in-control (termination without cause or for good reason within 2 years of CoC) |
| Severance Multiple | 200% of base salary + prorated target bonus + unused PTO (CEO 300%) |
| Estimated CoC Cash Severance (12/31/2023) | $810,000 for Longhofer |
| Estimated Equity Acceleration Value (12/31/2023) | $224,852 (options + RSUs/PSUs at $30.30) |
| Agreement Term | Renewed July 1, 2022 to June 30, 2024; FFIN renewed executive agreements on July 1, 2024 through June 30, 2026 (Longhofer not listed among 2024 NEOs) |
| Section 280G Cutback | Best-net approach; reduce only if excise tax makes net worse |
| Non-Compete / Non-Solicit | Included in equity award agreements (RSU/PSU/options) |
| Clawback Policy | Compensation Recovery Policy (July 2023) covers incentive-based pay subject to restatement; clawbacks embedded in all awards since 2016–2017 |
| Deferred Compensation (SERP) | 2023 registrant contribution $8,655; aggregate SERP balance $83,958 as of 2023; elective deferrals allowed for salary, STI, RSUs/PSUs from 2022 |
Investment Implications
- Pay-for-performance alignment: Longhofer’s 2023 bonus paid only for credit-quality outperformance (NCOs, NPAs), while earnings and ROA shortfalls zeroed those components—indicating strict linkage of cash incentives to controllable risk outcomes . RSUs/PSUs/options mix balances retention and performance leverage, with PSUs entirely peer-relative on ROAA/EPS over 3 years .
- Retention risk: Solid unvested equity (RSUs/PSUs, 2023 options) and SERP balance support retention; double-trigger CoC severance (200%) is moderate versus industry, reducing flight risk but not excessive .
- Trading signals: 2023 option exercise of 3,100 shares is modest and not indicative of heavy selling pressure; no pledging disclosed for Longhofer, lowering alignment red flags .
- Governance and clawbacks: Robust clawback and hedging prohibitions, plus ownership guidelines (3x salary), strengthen alignment and mitigate adverse incentives; strong “say-on-pay” approvals (98.1% in 2023; 98.9% in 2024/2025) suggest shareholder support for the compensation framework that applied to the NEO set including Longhofer in 2023 .
Company performance context: 2024 net income $223.51 million; ROAA 1.68%, ROE 14.51%; net charge-offs 0.05% and NPAs 0.80%—credit metrics tightened year-over-year, reflecting a more challenging backdrop versus 2023. This raises the bar for credit execution embedded in incentive design going forward. **[36029_0000950170-25-042434_ffin-20250320.htm:39]** **[36029_0000950170-25-042434_ffin-20250320.htm:40]**