EXHIBIT 10.5

FIRST AMENDMENT TO LOAN AGREEMENT

THIS FIRST AMENDMENT TO LOAN AGREEMENT (the “First Amendment”) dated as of the
31st day of December, 2005, to the Loan Agreement (the “Loan Agreement”), made
and entered into as of December 31, 2004, by and among FIRST FINANCIAL
BANKSHARES, INC., a Texas corporation, (the “Borrower”) and THE FROST NATIONAL
BANK (the “Lender”). All capitalized terms not otherwise defined herein shall
have the meaning ascribed to each of them in the Loan Agreement.

W I T N E S S E T H:

WHEREAS, Borrower executed the Loan Agreement to govern those certain promissory
notes from Lender, specifically, that certain $50,000,000.00 Note (the “Note”);

WHEREAS, the Borrower desires to renew and extend the unpaid principal balance
of the Note; and

WHEREAS, the Lender agrees to renew and extend the Note, all as hereinafter
provided.

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Borrower and Lender do hereby agree as follows:

ARTICLE I

Amendment to Loan Agreement

1.1 Amendment to Section 2.02(a) of the Loan Agreement. Borrower and Lender
agree to, and do hereby, amend the Loan Agreement by deleting Section 2.02(a) of
the Loan Agreement in its entirety and substituting therefore the following
paragraphs:

“2.02 The Note. The obligation of Borrower to pay the Loan shall be evidenced by
a promissory note (the “Note”) executed by Borrower and payable to the order of
Lender, in the principal amount of $50,000,000 bearing interest at the variable
rate set forth in the Note. The Borrower shall pay principal and interest in
accordance with the terms of the Note, with the maturity date being as set forth
in the Note.

(a) Advances. From Closing Date and continuing at all times through December 31,
2006 (the “Revolving Credit Period”) the Loan evidenced by the Note shall be a
revolving credit facility which will allow the Borrower to request such amounts
as Borrower may elect from time to time (each such amount being herein called an
“Advance”) so long as the aggregate amount of Advances outstanding at any time
under the Note does not exceed Fifty Million and No/100 Dollars ($50,000,000.00)
provided however, the minimum Advance must be at least $500,000.00. The Borrower
shall have the right to borrow, repay, and borrow again during the Revolving
Credit Period. Interest shall be due and payable quarterly and shall accrue at
LIBOR plus

 

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100 basis points. The outstanding principal balance of the Note on December 31,
2006 shall convert to a term facility and shall be payable quarterly in
accordance with the terms of the Note, with all unpaid principal plus all
accrued and unpaid interest being due and payable on December 31, 2011.

ARTICLE II

Conditions of Effectiveness

2.1 Effective Date. This First Amendment shall become effective as of
December 31, 2005, when, and only when, Lender shall have received counterparts
of this First Amendment executed and delivered by Borrower and Lender, and when
each of the following conditions shall have been met, all in form, substance,
and date satisfactory to Lender:

(a) Closing Documents. Borrower shall have executed and delivered to Lender
(I) a Renewal Promissory Note, payable to the order of Lender as set forth
therein, duly executed on behalf of the Borrower, dated effective December 31,
2005 in the principal amount of $50,000,000.00, (ii) Arbitration and Notice of
Final Agreement, (iii) Certificate of Corporate Resolutions, and (iv) this First
Amendment.

(b) Additional Loan Documents. Borrower shall have executed and delivered to
Lender such other documents as shall have been requested by Lender to renew, and
extend, the Loan Documents to secure payment of the Obligations of Borrower, all
in form satisfactory to Lender and its counsel.

ARTICLE III

Representations and Warranties

3.1 Representations and Warranties. In order to induce Lender to enter into this
First Amendment, Borrower represents and warrants the following:

(a) Borrower has the corporate power to execute and deliver this First
Amendment, the Renewal Promissory Note, and other Loan Documents and to perform
all of its obligations in connection herewith and therewith.

(b) The execution and delivery by Borrower of this First Amendment, the Renewal
Promissory Note, and other Loan Documents and the performance of its obligations
in connection herewith and therewith: (I) have been duly authorized or will be
duly ratified and affirmed by all requisite corporate action; (ii) will not
violate any provision of law, any order of any court or agency of government or
the Articles of Incorporation or Bylaws of such entity; (iii) will not be in
conflict with, result in a breach of or constitute (alone or with due notice or
lapse of time or both) a default under any indenture, agreement or other
instrument; and (iv) will not require any registration with, consent or approval
of or other action by any federal, state, provincial or other governmental
authority or regulatory body.

(c) There is no action, suit or proceeding at law or in equity or by or before
any governmental instrumentality or other agency or regulatory

 

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authority now pending or, to the knowledge of Borrower, threatened against or
affecting Borrower, or any properties or rights of Borrower, or involving this
First Amendment or the transactions contemplated hereby which, if adversely
determined, would materially impair the right of Borrower to carry on business
substantially as now conducted or materially and adversely affect the financial
condition of Borrower, or materially and adversely affect the ability of
Borrower to consummate the transactions contemplated by this First Amendment.

(d) The representations and warranties of Borrower contained in the Loan
Agreement, this First Amendment, the Renewal Promissory Note, and any other Loan
Document securing Borrower’s Obligations and indebtedness to Lender are correct
and accurate on and as of the date hereof as though made on and as of the date
hereof, except to the extent that the facts upon which such representations are
based have been changed by the transactions herein contemplated.

ARTICLE IV

Ratification of Obligations

4.1 Ratification of Obligation. The Borrower does hereby acknowledge, ratify and
confirm that it is obligated and indebted to Lender as evidenced by the Loan
Agreement (as amended by the First Amendment), the Renewal Promissory Note and
all other Loan Documents.

4.2 Ratification of Agreements. The Loan Agreement, this First Amendment, the
Renewal Promissory Note, and each other Loan Document, as hereby amended, are
acknowledged, ratified and confirmed in all respects as being valid, existing,
and of full force and effect. Any reference to the Loan Agreement in any Loan
Document shall be deemed to be a reference to the Loan Agreement as amended by
this First Amendment. The execution, delivery and effectiveness of this First
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of Lender under the Loan Agreement, nor constitute a
waiver of any provision of the Loan Agreement.

ARTICLE V

Miscellaneous

5.1 Survival of Agreements. All representations, warranties, covenants and
agreements of Borrower, herein or in any other Loan Document shall survive the
execution and delivery of this First Amendment, and the other Loan Documents and
the performance hereof and thereof, including without limitation the making or
granting of the Loan and the delivery of the Renewal Promissory Note and all
other Loan Documents, and shall further survive until all of Borrower’s
Obligations to Lender are paid in full. All statements and agreements contained
in any certificate or instrument delivered by Borrower hereunder or under the
Loan Documents to Lender shall be deemed to constitute the representations and
warranties by Borrower and/or agreements and covenants of Borrower under this
First Amendment and under the Loan Agreement.

5.2 Loan Document. This First Amendment, the Renewal Promissory Note, and

 

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each other Loan Document executed in connection herewith are each a Loan
Document and all provisions in the Loan Agreement, as amended, pertaining to
Loan Documents apply hereto and thereto.

5.3 Governing Law. This First Amendment shall be governed by and construed in
all respects in accordance with the laws of the State of Texas and any
applicable laws of the United States of America, including construction,
validity and performance.

5.4 Counterparts. This First Amendment may be separately executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to constitute one and the same First
Amendment.

5.5 Release of Claims. Borrower, by its execution of this First Amendment,
hereby declares that it has no set-offs, counterclaims, defenses or other causes
of action against Lender arising out of the Loan, the renewal, modification and
extension of the Loan, any documents mentioned herein or otherwise; and, to the
extent any such setoffs, counterclaims, defenses or other causes of action which
may exist, whether known or unknown, such items are hereby expressly waived and
released by Borrower.

5.6 ENTIRE AGREEMENT. THIS FIRST AMENDMENT, TOGETHER WITH ANY LOAN DOCUMENTS
EXECUTED IN CONNECTION HEREWITH, CONTAINS THE ENTIRE AGREEMENT BETWEEN THE
PARTIES HERETO RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND ALL PRIOR
AGREEMENTS RELATIVE THERETO WHICH ARE NOT CONTAINED HEREIN OR THEREIN ARE
TERMINATED. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. THIS
FIRST AMENDMENT, AND THE LOAN DOCUMENTS MAY BE AMENDED, REVISED, WAIVED,
DISCHARGED, RELEASED OR TERMINATED ONLY BY A WRITTEN INSTRUMENT OR INSTRUMENTS,
EXECUTED BY THE PARTY AGAINST WHICH ENFORCEMENT OF THE AMENDMENT, REVISION,
WAIVER, DISCHARGE, RELEASE OR TERMINATION IS ASSERTED. ANY ALLEGED AMENDMENT,
REVISION, WAIVER, DISCHARGE, RELEASE OR TERMINATION WHICH IS NOT SO DOCUMENTED
SHALL NOT BE EFFECTIVE AS TO ANY PARTY.

IN WITNESS WHEREOF, this First Amendment is executed effective as of the date
first written above.

 

BORROWER:       FIRST FINANCIAL BANKSHARES, INC.  

By:

    /S/ F. Scott Dueser                  

F. SCOTT DUESER

      President and Chief Executive Officer LENDER:       THE FROST NATIONAL
BANK  

By:

    /S/ Jerry L. Crutsinger                   Senior Vice President

The Guarantor is executing this First Amendment to acknowledge the terms and
conditions of the renewal.

 

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GUARANTOR:       FIRST FINANCIAL BANKSHARES OF DELAWARE, INC.  

By:

             

Its:

     

 

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