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INTERNATIONAL BANCSHARES CORPORATION
ALL BANKS MEMBER FDIC
MEMBER BANKS:
International Bank Of Commerce
1200 San Bernardo Avenue
Laredo, Texas 78040
(956) 722-7611
Laredo
7002 San Bernardo Ave.
(956) 728-0060
1002 Matamoros
(956) 726-6622
1300 Guadalupe
(956) 726-6601
2418 Jacaman Rd.
(956) 764-6161
5300 San Dario Ste. 440D
(956) 728-0063
5300 San Dario Ste. 202
(956) 790-6500
9710 Mines Road
(956) 728-0092
4501 San Bernardo
(956) 722-0485
7909 McPherson Ave.
(956) 728-0064
2442 San Isidro Pkwy
(956) 726-6611
2415 S. Zapata Hwy.
(956) 728-0061
5610 San Bernardo
(956) 726-6688
2320 Bob Bullock Loop 20
(956) 728-0062
4401 Highway 83 South
(956) 794-8140
1600 Water Street, Suite
B520
(956) 794-8180
Administration Center
2418 Jacaman Rd. (Rear)
(956) 722-7611
Service Center
2416 Cee Gee
(210) 821-4700
8770 Tesoro
(210) 821-4700
San Antonio
130 East Travis
(210) 518-2520
5029 Broadway
(210) 518-2523
6630 Callaghan
(210) 639-2960
2201 NW Military Dr.
(210) 366-0617
12400 Hwy. 281 North
(210) 369-2900
16339 Huebner Rd.
(210) 369-2974
8650 Fredericksburg
(210) 930-9811
1500 NE Lp. 410
(210) 281-2400
18750 Stone Oak Pkwy
(210) 496-6111
5300 Walzem Road
(210) 564-2300
11831 Bandera Road
(210) 369-2980
3119 SE Military Drive
(210) 354-6980
327 SW Loop 410
(210) 930-9825
938 SE Military Drive
(210) 930-9815
11002 Culebra
(210) 930-9850
Marble Falls
2401 Hwy. 281 North
(830) 693-4301
San Marcos
1081 Wonder World Dr.
(512) 353-1011
8203 S. Kirkwood
(713) 285-2162
1001 McKinney Ste. 150
(713) 285-2140
3200 Woodridge, Ste. 1350
(713) 285-2255
3939 Montrose, Ste. W
(713) 285-2166
1545 Eldridge Parkway
(713) 285-2042
Sugarland
10570 State Hwy 6
(713) 285-2199
Katy
544 West Grand Parkway
(713) 285-2037
Eagle Pass
2395 E. Main Street
(830) 773-2313
2538 E. Main Street
(830) 773-2313
439 E. Main Street
(830) 773-2313
2305 Del Rio Blvd.
(830) 773-2313
455 S. Bibb Ave. Ste. 502
(830) 773-2313
2135 East Main Street
(830) 773-4826
Del Rio
2410 Dodson St.
(830) 775-4265
1507 Veterans Blvd
(830) 775-4265
2205 Veterans Blvd, Suite E9
(830) 775-4265
Luling
200 S. Pecan St.
(830) 875-2445
Corpus Christi
221 S. Shoreline
(361) 888-4000
6130 S. Staples
(361) 991-4000
4622 Everhart
(361) 903-7265
14066 Northwest Blvd.
(361) 903-7285
Flour Bluff
1317 Waldron Road
(361) 886-9950
Sinton
301 West Sinton
(361) 364-1230
Rockport
2701 Hwy. 35 North
(361) 729-0500
Aransas Pass
2501 W. Wheeler Ave.
(361) 729-0500
Portland
1800 US Hwy 181
(361) 886-9910
Port Lavaca
311 N. Virginia St.
(361) 552-9771
Bay City
1916 7th Street
(979) 245-5781
Victoria
6411 N. Navarro
(361) 575-8394
Houston
5615 Kirby Dr.
(713) 526-1211
Commerce Bank
5800 San Dario
Laredo, Texas 78041
(956) 724-1616
200 Veterans Blvd
(830) 775-4265
Austin
500 West 5th St.
(512) 397-4506
11400 Burnet Road Bldg. 46
(512) 397-4595
2817 E. Cesar Chavez
(512) 320-9650
12625 North IH 35 Bldg. D
(512) 397-4570
9900 South IH 35 Bldg. Y
(512) 397-4530
4025 S. FM 620
(512) 320-9575
Round Rock
1850 Gattis School Rd.
(512) 397-4521
First Equity
9606 N. Mopac Expressway Ste 100
(512) 346-8892
Cedar Park
301 W. Whitestone Blvd
(512) 397-4552
2120 Saunders
(956) 724-1616
1200 Welby Court
(956) 724-1616
International Bank of Commerce, Zapata
908 N. US Highway 83
Zapata, TX 78076
(956) 765-8361
Roma
1702 E. Grant St.
(956) 849-1047
Alice
2001 E. Main St.
(361) 661-1211
Rio Grande City
4015 E. Hwy. 83
(956) 487-5531
4534 E. Hwy. 83
(956) 487-5531
4031 E. Hwy 83
(956) 487-5535
Hebbronville
401 N. Smith Ave.
(361) 527-2645
Kingsville
1320 General Cavazos Blvd
(361) 516-1040
Beeville
802 E. Houston St.
(361) 358-8700
International Bank of Commerce, Brownsville
1600 Ruben Torres Blvd
Brownsville, TX 78526-1831
(956) 547-1000
Brownsville
1623 Central Blvd.
(956) 547-1000
4520A E. 14th St.
(956) 547-1300
79 E. Alton Gloor Blvd
(956) 547-1361
2370 N. Expressway
(956) 547-1380
630 E. Elizabeth St.
(956) 547-1353
3600 W. Alton Gloor Blvd.
(956) 547-1390
McAllen
One S. Broadway
(956) 686-0263
7124 N. 23rd.
(956) 630-9310
301 S. 10th St.
(956) 688-3610
3600 N.10th. St.
(956) 688-3690
2200 S. 10th St. (La Plaza East)
(956) 688-3670
820 S. Jackson Road
(956) 630-9360
2200 S. 10th St. (La Plaza West)
(956) 688-3660
2225 Nolana
(956) 688-3600
1200 E. Jackson
(956) 688-3685
2800 Nolana
(956) 688-3620
2900 West Expressway 83
(956) 630-9350
South Padre Island
911 Padre Blvd.
(956) 761-6156
Port Isabel
1401 W. Hwy. 100
(956) 943-2108
Alamo
1421 West Frontage Rd.
(956) 688-3645
Alton
215 West Main Ave.
(956) 630-9319
Edinburg
400 S. Closner
(956) 688-3640
4101 S. McColl
(956) 630-9337
1724 W. University Dr. Ste. B
(956) 688-3680
2205 W. University Dr.
(956) 630-9340
Penitas
1705 Expressway 83
(956) 630-9347
Harlingen
501 S. Dixieland Rd.
(956) 428-6902
321 S. 77th Sunshine Strip
(956) 428-6454
1801 W. Lincoln
(956) 547-1432
Mission
900 N. Bryan Rd.
(956) 688-3630
200 E. Griffin Pkwy
(956) 632-3512
2410 E. Expressway 83
(956) 688-3625
121 S. Shary Rd.
(956) 630-9365
International Bank of Commerce, Oklahoma
3817 NW Expressway, Suite 100
Oklahoma City, Ok
(405) 775-8001
Ardmore
2302 12th Ave.
(580) 223-0345
Broken Arrow
6412 S. Elm Pl.
(918) 497-2492
8112 Garnett Rd.
(918) 497-2840
Chickasha
628 W. Grand Ave.
(405) 775-8052
Claremore
1050 N. Lynn Riggs Blvd.
(918) 497-2456
Edmond
1812 E 15th St.
(405) 775-8061
421 S. Santa Fe Ave.
(405) 775-8055
Duncan
3903 N. Hwy 81
(580) 255-9055
Tulsa
1951 S. Yale Ave.
(918) 497-2452
4202 S. Garnett
(918) 497-2883
2250 E. 73rd St
(918) 497-2400
1 E. 5th St.
(918) 497-2499
8202 E. 71st St
(918) 497-2454
5302 E. Skelly Dr.
(918) 497-2453
Chandler
3108 E. 1st St.
(405) 258-2351
Oklahoma City
100 W. Park Ave.
(405) 775-8093
10500 S. Pennsylvania Ave
(405) 775-8058
2301 N. Portland Ave.
(405) 841-2116
12241 N. May Ave.
(405) 775-8059
4902 N. Western Ave.
(405) 775-8054
14001 N. McArthur Blvd
(405) 775-1710
Lawton
2101 W. Gore
(580) 355-0253
6425 NW Cache Rd.
(580) 250-4311
Miami
2520 N. Main
(918) 542-4411
Midwest City
2200 S. Douglas Blvd.
(405) 775-8057
Sapulpa
911 E. Taft St.
(918) 497-2458
Shawnee
2513 N. Harrison Ave.
(405) 775-8067
Sulphur
2009 W. Broadway Ave.
(580) 622-3118
Bethany
7723 NW 23rd St.
(405) 775-8063
Guthrie
120 N. Division St.
(405) 775-8064
Moore
901 SW 19th
(405) 775-1720
Pauls Valley
700 W. Grant Ave.
(405) 238-7318
Purcell
430 W. Lincoln St.
(405) 775-8094
Dallas, TX
3800 Maple Ave. Ste. 100
(469) 357-3805
Pharr
401 South Cage
(956) 688-3635
1007 North I Rd.
(956) 688-3655
Weslaco
606 S. Texas Blvd.
(956) 688-3605
1310 N. Texas
(956) 968-5551
Hidalgo
1023 S. Bridge
(956) 688-3665
San Juan
108 E. FM 495
(956) 630-9320
Palmhurst
215 E. Mile 3 Rd.
(956) 688-3675
Sand Springs
3402 State Hwy. 97
(918) 497-2459
Stillwater
1900 N. Perkins Rd.
(405) 372-0889
Owasso
9350 N. Garnett
(918) 497-2835
Norman
1461 24th Ave.
(405) 775-8069
Lindsay
209 E. Cherokee
(405) 756-4494
Bixby
11886 S. Memorial
(918) 497-2855
As used in this report, the words “Company,” “we,” “us,” and “our” refer to International Bancshares
Corporation, a Texas corporation, its five wholly owned subsidiary banks (“Subsidiary Banks”), and its other subsidiaries.
The information that follows may contain forward-looking statements, which involve various risks and uncertainties,
including those identified in Item 1A (Risk Factors) of our Annual Report on Form 10-K for the year ended December 31,
2023, and are qualified as indicated under “Cautionary Notice Regarding Forward-Looking Information” in Item 7
(Management’s Discussion and Analysis of Financial Condition and Results of Operations) of this report. Our website
address is www.ibc.com.
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
(Consolidated)
The following consolidated selected financial data is derived from our audited financial statements as of and for
the five years ended December 31, 2023. The following consolidated financial data should be read in conjunction with
Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial
Statements and related notes in this report.
SELECTED FINANCIAL DATA
STATEMENT OF CONDITION
Assets . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,066,189
Investment securities available-
2023
AS OF OR FOR THE YEARS ENDED DECEMBER 31,
2021
(Dollars in Thousands, Except Per Share Data)
2020
2022
2019
$ 15,501,476
$ 16,046,236
$ 14,029,467 $ 12,112,894
for-sale . . . . . . . . . . . . . . . . . . . . . . .
Net loans . . . . . . . . . . . . . . . . . . . . . . .
Deposits . . . . . . . . . . . . . . . . . . . . . . . .
Other borrowed funds . . . . . . . . . . . .
Junior subordinated deferrable
interest debentures . . . . . . . . . . . . . .
Shareholders’ equity. . . . . . . . . . . . . .
INCOME STATEMENT
4,822,341
7,901,892
11,824,554
10,745
4,417,796
7,304,631
12,660,007
10,944
4,213,920
7,098,777
12,617,877
436,138
3,080,768
7,432,695
10,721,860
436,327
3,378,923
6,834,668
8,826,034
626,511
108,868
2,447,774
134,642
2,044,759
134,642
2,308,481
134,642
2,177,998
134,642
2,118,053
Interest income . . . . . . . . . . . . . . . . . . $
Interest expense . . . . . . . . . . . . . . . . .
Net interest income . . . . . . . . . . . . . .
Provision for probable loan losses . .
Non-interest income . . . . . . . . . . . . . .
Non-interest expense . . . . . . . . . . . . .
Income before income taxes . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . .
Net income available to common
800,162
136,661
663,501
34,576
169,941
275,354
523,512
111,744
411,768
shareholders . . . . . . . . . . . . . . . . . . . $
411,768
Per common share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . . . . $
6.63
6.62
$
$
$
$
525,781
38,156
487,625
21,651
187,134
270,469
382,639
82,407
300,232
300,232
4.79
4.78
$
$
$
$
398,103
26,831
371,272
7,955
222,326
263,316
322,327
68,405
253,922
$
427,008 $
39,119
387,889
45,379
150,579
281,331
211,758
44,439
167,319
492,401
58,629
433,772
18,843
154,826
309,801
259,954
54,850
205,104
253,922
$
167,319 $
205,104
4.01
4.00
$
$
2.63 $
2.62 $
3.13
3.12
1
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management’s Discussion and Analysis of Financial Condition and Results of Operations represents an
explanation of significant changes in our financial position and results of our operations on a consolidated basis for the
three-year period ended December 31, 2023. The following discussion should be read in conjunction with our Annual
Report on Form 10-K for the year ended December 31, 2023, and the Selected Financial Data and Consolidated Financial
Statements included elsewhere herein.
Special Cautionary Notice Regarding Forward-Looking Information
Certain matters discussed in this report, excluding historical information, include forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, and are subject to the safe harbor created by those sections. Although we believe such
forward-looking statements are based on reasonable assumptions, no assurance can be given that every objective will be
reached. The words “estimate,” “expect,” “intend,” “believe” and “project,” as well as other words or expressions of a
similar meaning, are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance
on forward-looking statements, which speak only as of the date of this report. Such statements are based on current
expectations, are inherently uncertain, are subject to risks and should be viewed with caution. Actual results and experience
may differ materially from the forward-looking statements as a result of many factors.
Risk factors that could cause actual results to differ materially from any results that we project, forecast, estimate,
or budget in forward-looking statements include, among others, the following possibilities:
• Local, regional, national, and international economic business conditions and the impact they may have on
us, our customers, and such customers’ ability to transact profitable business with us, including the ability of
our borrowers to repay their loans according to their terms or a change in the value of the related collateral.
• Volatility and disruption in national and international financial markets.
• Government intervention in the U.S. financial system.
• The unavailability of funding from the FHLB, the Fed or other sources in the future could adversely impact
our growth strategy, prospects, and performance.
• Changes in consumer spending, borrowing, and saving habits.
• Changes in interest rates and market prices, including changes in federal regulations on the payment of
interest on demand deposits.
• Changes in our ability to retain or access deposits due to changes in public confidence in the banking system
and the potential threat of bank-run contagion fueled by, among other factors, economic instability,
inflationary pressures, the public’s increased exposure to social media, and the rapid speed at which
communication and coordination via social media can occur.
• Changes in the capital markets we utilize, including changes in the interest rate environment that may reduce
margins.
• Changes in state and/or federal laws and regulations, including, the impact of the Consumer Financial
Protection Bureau (“CFPB”) as a regulator of financial institutions, changes in the accounting, tax, and
regulatory treatment of trust-preferred securities, as well as changes in banking, tax, securities, insurance,
employment, environmental, and immigration laws and regulations and the risk of litigation that may follow.
• Changes in U.S.—Mexico trade, including reductions in border crossings and commerce, integration, and
implementation of the United States-Mexico-Canada Agreement and the possible imposition of tariffs on
imported goods.
• Political instability in the United States or Mexico.
• General instability of economic and political conditions in the United States, including inflationary pressures,
increased interest rates, economic slowdown or recession, and escalating geopolitical tensions.
2
• The reduction of deposits from nonresident alien individuals due to the Internal Revenue Service rules
requiring U.S. financial institutions to report deposit interest payments made to such individuals.
• The loss of senior management or operating personnel.
• The timing, impact, and other uncertainties of the potential future acquisitions, as well as our ability to
maintain our current branch network and enter new markets to capitalize on growth opportunities.
• Changes in estimates of future reserve requirements based upon periodic review thereof under relevant
regulatory and accounting requirements.
• Additions to our allowance for credit loss as a result of changes in local, national, or international conditions
which adversely affect our customers.
• Greater than expected costs or difficulties related to the development and integration of new products and
•
lines of business.
Increased labor costs and effects related to health care reform and other laws, regulations, and legal
developments impacting labor costs.
Impairment of carrying value of goodwill could negatively impact our earnings and capital.
•
• Changes in the soundness of other financial institutions with which we interact.
• Political instability in the United States or Mexico.
• Technological changes or system failures or breaches of our network security, as well as other cybersecurity
risks, could subject us to increased operating costs, litigation, and other liabilities.
• Acts of war or terrorism.
• Natural disasters or other adverse external events such as pandemics or epidemics.
• Reduced earnings resulting from the write-down of the carrying value of securities held in our securities
available-for-sale portfolios.
• The effect of changes in accounting policies and practices by the Public Company Accounting Oversight
Board (“PCAOB”), the Financial Accounting Standards Board (“FASB”) and other accounting standards
setters.
• The costs and effects of regulatory developments or regulatory or other governmental inquiries and the results
of regulatory examinations or reviews and obtaining regulatory approvals.
• The effect of any supervisory and enforcement efforts by the CFPB related to its unfair, deceptive, or abusive
acts or practices (“UDAAP”) authority concerning fees charged by financial institutions and Regulation E,
which prohibits financial institutions from charging consumer fees for paying overdrafts on ATM and one-
time debit card transactions, as well as the effect of any other regulatory or legal developments that limit
overdraft services.
• Monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal
Reserve Board (“FRB”).
• The reduction of income and possible increase in required capital levels related to the adoption of legislation
and the implementing rules and regulations, including those that establish debit card interchange fee
standards and prohibit network exclusivity arrangements and routing restrictions.
• The increase in required capital levels related to the implementation of capital and liquidity rules of the
federal banking agencies that address or are impacted by the Basel III capital and liquidity standards.
• The enhanced due diligence burden imposed on banks related to the banks’ inability to rely on credit ratings
under the Dodd-Frank Act.
• Our failure or circumvention of our internal controls and risk management, policies, and procedures.
Forward-looking statements speak only as of the date on which such statements are made. It is not possible to
foresee or identify all such factors. We make no commitment to update any forward-looking statement, or to disclose any
facts, events, or circumstances after the date hereof that may affect the accuracy of any forward-looking statement, unless
required by law.
3
Overview
We are headquartered in Laredo, Texas, with 166 facilities and 256 ATMs, providing banking services for
commercial, consumer, and international customers of north, south, central and southeast Texas and the State of Oklahoma.
We are one of the largest independent commercial bank holding companies headquartered in Texas. We, through our
Subsidiary Banks, are in the business of gathering funds from various sources and investing those funds in order to earn a
return. We, either directly or through a Subsidiary Bank, own one insurance agency, a liquidating subsidiary; a fifty-
percent interest in an investment banking unit that owns a broker/dealer; a controlling interest in four merchant banking
entities; and a majority ownership interest in a real-estate development partnership. Our primary earnings come from the
spread between the interest earned on interest-bearing assets and the interest paid on interest-bearing liabilities. In addition,
we generate income from fees on products offered to commercial, consumer, and international customers. The sales team
of each of our Subsidiary Banks aims to match the right mix of products and services to each customer to best serve the
customer’s needs. That process entails spending time with customers to assess their needs and servicing the sales arising
from those discussions on a long-term basis. Our Subsidiary Banks have various compensation plans, including incentive-
based compensation, for fairly compensating employees. Our Subsidiary Banks also have a robust process in place to
review sales that support the incentive-based compensation plan to monitor the quality of the sales and identify any
significant irregularities, a process that has been in place for many years.
One of our primary goals is to grow net interest income and non-interest income while adequately managing
credit risk, interest rate risk and expenses. Effective management of capital is one of our critical objectives. A key measure
of the performance of a banking institution is the return on average common equity (“ROE”). Our ROE for the year ended
December 31, 2023 was 15.41% as compared to 12.52% for the year ended December 31, 2022.
We are highly active in facilitating trade along the United States border with Mexico. We do a significant amount
of business with customers domiciled in Mexico and deposits from persons and entities domiciled in Mexico comprise a
large and stable portion of the deposit base of our Subsidiary Banks. We also serve the growing Hispanic population
through our facilities located throughout north, south, central, and southeast Texas and the State of Oklahoma.
Expense control is an essential element of our long-term profitability. It has been a constant focus of ours for
many years and is especially critical during periods of economic uncertainty. As a result, we have achieved a decrease of
approximately 11.1% or $34.4 million, before tax, in non-interest expense over the four-year period ended December 31,
2023, primarily driven by decreases in our employee compensation and benefit plan expenses, professional fees, and other
general operating expenses with the ultimate goal of ensuring that we align our workforce and operating expenses with
our revenue streams.
Future economic conditions remain uncertain and the impact of those conditions on our business also remains
uncertain. Our business depends on the willingness and ability of our customers to conduct banking and other financial
transactions. Our revenue streams, including service charges on deposits and banking and non-banking service charges
and fees (ATM and interchange income), have been impacted and may continue to be impacted in the future if economic
conditions do not improve. Expense control has been a long-time focus and essential element to our long-term profitability.
We have kept that focus in mind as we continue to look at operations, create efficiencies, and institute cost-control
protocols at all levels. We will continue to closely monitor our efficiency ratio, a measure of non-interest expense to net
interest income plus non-interest income and our overhead burden ratio, a ratio of our operating expenses against total
assets. We use these measures in determining if we are accomplishing our long-term goals of controlling our costs in order
to provide superior returns to our shareholders.
4
Results of Operations
Summary
Consolidated Statements of Condition Information
December 31, 2023
December 31, 2022
Percent Increase (Decrease)
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net loans . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities sold under repurchase
agreements . . . . . . . . . . . . . . . . . . . . . .
Other borrowed funds . . . . . . . . . . . . . . .
Junior subordinated deferrable interest
debentures . . . . . . . . . . . . . . . . . . . . . . .
Shareholders’ equity . . . . . . . . . . . . . . . .
$
15,066,189
7,901,892
11,824,554
(Dollars in Thousands)
15,501,476
7,304,631
12,660,007
530,416
10,745
108,868
2,447,774
431,191
10,944
134,642
2,044,759
Consolidated Statements of Income Information
Year Ended
December 31,
2023
Percent
Increase
(Decrease)
Year Ended
December 31,
2022
Year Ended
December 31,
2021
(Dollars in Thousands, Except Per Share Data)
2023 vs. 2022
(2.8)%
8.2
(6.6)
23.0
(1.8)
(19.1)
19.7
Percent
Increase
(Decrease)
2022 vs. 2021
Interest income . . . . . . . . . . . . . . . . $
Interest expense . . . . . . . . . . . . . . . .
Net interest income . . . . . . . . . . . . .
Provision for probable loan losses . .
Non-interest income . . . . . . . . . . . .
Non-interest expense . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . .
Per common share:
Basic . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . .
Net Income
$
800,162
136,661
663,501
34,576
169,941
275,354
411,768
525,781
38,156
487,625
21,651
187,134
270,469
300,232
52.2 % $
258.2
36.1
59.7
(9.2)
1.8
37.1
398,103
26,831
371,272
7,955
222,326
263,316
253,922
$
6.63
6.62
4.79
4.78
38.4 % $
38.5
4.01
4.00
32.1 %
42.2
31.3
172.2
(15.8)
2.7
18.2
19.5 %
19.5
Net income for the year ended December 31, 2023 increased by 37.1% compared to the same period of 2022. Net
income for the year ended December 31, 2023 was positively impacted by an increase in net interest income, which is
primarily attributable to an increase in the size of our investment portfolio, the interest earned on funds held at the Federal
Reserve Bank, and an increase in loan interest income, of which the latter two have increased consistently with FRB
actions to raise interest rates in 2022 and 2023. Net income for the period has also been impacted by increases in interest
expense, primarily driven by an increase in interest paid on deposits. We closely monitor rates paid on deposits to remain
competitive in the current economic environment and retain deposits. The increase in those revenue streams coupled with
the cost control initiatives to streamline operations and increase efficiency in recent years have been the primary drivers
in achieving these results. Net income for the year ended December 31, 2022 compared to the same period of 2021 was
also positively impacted by the same factors that impacted the twelve months ended December 31, 2023. Non-interest
income for the year ended December 31, 2022 was also positively impacted by gains on the sale of some properties from
our branch network as we continue to monitor and evaluate our retail branch footprint and align with customer activity.
5
Net Interest Income
Net interest income is the spread between income on interest-earning assets, such as loans and securities, and the
interest expense on liabilities used to fund those assets, such as deposits, repurchase agreements and funds borrowed. Net
interest income is our largest source of revenue. Net interest income is affected by both changes in the level of interest
rates and changes in the amount and composition of interest-earning assets and interest-bearing liabilities. Tax-exempt
yields have not been adjusted to a tax-equivalent basis.
For the years ended December 31,
2022
Average
Rate/Cost
2023
Average
Rate/Cost
2021
Average
Rate/Cost
Assets
Interest earning assets:
Loan, net of unearned discounts:
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.13 %
5.57
5.69 %
3.49
Investment securities:
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax-exempt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total interest-earning assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.56
3.86
4.80
5.77 %
1.66
3.60
1.63
3.62 %
4.85 %
3.31
0.95
3.38
0.13
2.94 %
Liabilities
Interest bearing liabilities:
Savings and interest bearing demand deposits . . . . . . . . . . . . . . . . . . . .
Time deposits:
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities sold under repurchase agreements . . . . . . . . . . . . . . . . . . . . .
Other borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Junior subordinated deferrable interest debentures . . . . . . . . . . . . . . . .
Total interest bearing liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.34 %
0.27 %
0.10 %
2.35
2.37
3.15
2.61
7.01
1.86 %
0.64
0.40
0.52
1.75
3.74
0.49 %
0.71
0.37
0.15
1.75
2.07
0.36 %
The level of interest rates and the volume and mix of earning assets and interest-bearing liabilities impact net
income and net interest margin. The yield on average interest-earning assets increased 59.4% from 3.62% in 2022 to 5.77%
in 2023, and the rates paid on average interest-bearing liabilities increased 279.6% from 0.49% in 2022 to 1.86% in 2023.
The yield on average interest-earning assets increased 23.1% from 2.94% in 2021 to 3.62% in 2022, and the rates paid on
average interest-bearing liabilities increased 36.1% from 0.36% in 2021 to 0.49% in 2022.
6
The following table analyzes the changes in net interest income during 2023, 2022, and 2021 and the relative
effect of changes in interest rates and volumes for each major classification of interest-earning assets and interest-bearing
liabilities. Non-accrual loans have been included in assets for the purpose of this analysis, which reduces the resulting
yields:
Volume(1)
2023 compared to 2022
Net increase (decrease) due to
Rate(1)
(Dollars in Thousands)
Total
2022 compared to 2021
Net increase (decrease) due to
Rate(1)
(Dollars in Thousands)
Total
Volume(1)
Interest earned on:
Loans, net of unearned discounts:
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 31,220
321
183,260 $ 214,480 $ (16,540) $ 58,771 $ 42,231
731
3,391
3,070
243
488
Investment securities:
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax-exempt . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total interest income . . . . . . . . . . . . . . . . . .
Interest incurred on:
Savings and interest bearing demand
10,926
3,297
(31,924)
40,657
1,058
43,001
$ 13,840 $ 260,541 $ 274,381 $ (6,285) $ 133,963 $ 127,678
57,163
3,718
(4,371)
32,272
155
42,522
46,237
421
27,553
8,385
903
479
deposits . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
(489)
48,140 $ 47,651 $
353 $
8,223 $
8,576
Time deposits:
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities sold under repurchase
agreements . . . . . . . . . . . . . . . . . . . . . . . . .
Other borrowings . . . . . . . . . . . . . . . . . . . . .
Junior subordinated deferrable interest
debentures . . . . . . . . . . . . . . . . . . . . . . . . .
Total interest expense . . . . . . . . . . . . . . . . . .
Net interest income . . . . . . . . . . . . . . . . . . . . . .
(226)
499
(40)
(6,591)
16,860
24,868
12,305
93
16,634
25,367
12,265
(6,498)
(404)
205
(677)
378
(1,081)
583
98
(865)
1,776
(8)
1,874
(873)
(703)
2,246
2,246
3,789
$ (7,550) $ 106,055 $ 98,505 $
(613) $ 11,938 $ 11,325
$ 21,390 $ 154,486 $ 175,876 $ (5,672) $ 122,025 $ 116,353
3,086
—
(1) The change in interest due to both rate and volume has been allocated to volume and rate changes in proportion to the
relationship of the absolute dollar amounts of the change in each.
The increase in net interest income for the years ended December 31, 2023 and December 31, 2022 is primarily
attributable to an increase in the size of our investment portfolio, the interest earned on funds held at the Federal Reserve
Bank, and an increase in loan interest income, of which the latter two have increased in line with FRB actions to raise
interest rates in 2022 and 2023. As part of our strategy to manage interest rate risk, we strive to manage both assets and
liabilities so that interest sensitivities match. One method of calculating interest rate sensitivity is through gap analysis. A
gap is the difference between the amount of interest rate sensitive assets and interest rate sensitive liabilities that re-price
or mature in a given time period. Positive gaps occur when interest rate sensitive assets exceed interest rate sensitive
liabilities, and negative gaps occur when interest rate sensitive liabilities exceed interest rate sensitive assets. A positive
gap position in a period of rising interest rates should have a positive effect on net interest income as assets will re-price
faster than liabilities. Conversely, net interest income should contract somewhat in a period of falling interest rates. Our
management can quickly change our interest rate position at any given point in time as market conditions dictate.
Additionally, interest rate changes do not affect all categories of assets and liabilities equally or at the same time. Analytical
techniques we employ to supplement gap analysis include simulation analysis to quantify interest rate risk exposure. The
gap analysis prepared by management is reviewed by our Investment Committee at least twice a year. The Investment
Committee is comprised of certain members of the board of directors and senior managers of the various Subsidiary Banks.
Management currently believes that we are properly positioned for interest rate changes; however, if management
determines at any time that we are not properly positioned, we will strive to adjust the interest rate sensitive assets and
liabilities in order to manage the effect of interest rate changes.
7
Allowance for Credit Losses
The ACL increased 24.7% to $157,069,000 at December 31, 2023 from $125,972,000 at December 31, 2022.
The provision for credit losses charged to expense increased $12,925,000 to $34,576,000 for the year ended December 31,
2023 from $21,651,000 for the same period in 2022.
The following table summarizes loan balances at the end of each year and average loans outstanding during the
year and the following ratios: nonaccrual loans to total loans, nonaccrual loans to the ACL, charge-offs to average loans,
by loan type, and total charge-off to average total loans:
Allowance for credit losses to total loans outstanding . . . . . . . . . . . . . .
Allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans, net of unearned discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonaccrual loans to total loans outstanding . . . . . . . . . . . . . . . . . . . . . .
Nonaccrual loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans, net of unearned discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for credit losses to nonaccrual loans . . . . . . . . . . . . . . . . . . .
Allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonaccrual loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net charge-offs during the period to average loans outstanding:
Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net charge-offs during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average amount outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial real estate: other construction and land development . . .
Net charge-offs during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average amount outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial real estate: farmland and commercial . . . . . . . . . . . . . . . .
Net charge-offs during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average amount outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial real estate: multifamily . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net charge-offs during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average amount outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential: first lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .
Net charge-offs during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average amount outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential: junior lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net charge-offs during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average amount outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net charge-offs during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average amount outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net charge-offs during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average amount outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net charge-offs during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average amount outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
2021
2022
(Dollars in Thousands)
1.70 %
110,374
$
$ 7,209,151
$ 125,972
$ 7,430,603
1.53 %
1.95 %
157,069
$
$ 8,058,961
0.59 %
$
47,170
$ 8,058,961
0.70 %
$
1,921
$ 7,209,151
$
51,648
$ 7,430,603
0.03 %
332.98 %
157,069
47,170
243.90 %
$
$
$ 125,972
51,648
$
5,745.65 %
110,374
1,921
$
$
0.64 %
$
9,664
$ 1,498,990
0.61 %
$
8,083
$ 1,669,233
$
9,050
$ 1,472,338
0.48 %
$
$ 2,143,245
$
$ 2,604,677
— %
— $
— %
— $
— %
— $
318,307
0.01 %
43
492,305
0.07 %
298
423,690
0.42 %
179
42,917
— %
— $
149,478
0.13 %
$
10,184
$ 7,673,609
— %
— %
2
$
2
$ 1,700,220
$ 1,802,210
0.01 %
— %
$
364
16
$ 2,573,151
$ 2,541,380
— %
—
401,551
0.09 %
373
433,262
— %
25
501,451
— %
$
—
$
$ 252,685
0.04 %
$
160
$
$
$ 448,816
0.01 %
$
$
28
$
$ 420,062
0.55 %
$
223
$
40,399
— %
$
—
$
$ 138,262
0.13 %
$
9,024
$ 7,442,282
$
9,479
$ 7,116,152
$
$
— %
1
123,524
0.44 %
176
39,890
0.12 %
$
$
$
$
$
$
$
$
$
$
(1) The average balances for purposes of the above table are calculated on the basis of daily balances.
8
The ACL has been allocated based on the amount management has deemed to be reasonably necessary to provide
for the credit losses incurred within the following categories of loans at the dates indicated and the percentage of loans to
total loans in each category:
2023
Allowance
Percent
of total
2021
Allowance
Percent
of total
35,550
20.2 % $
20.2 % $
23,178
20.8 %
At December 31,
2022
Allowance
Percent
of total
(Dollars in Thousands)
26,728
Commercial . . . . . . . . . . . . . . . . . $
Commercial real estate: other
construction and land
development . . . . . . . . . . . . . . .
Commercial real estate:
55,291
farmland & commercial . . . . . .
42,703
Commercial real estate:
multifamily . . . . . . . . . . . . . . . .
Residential : first lien . . . . . . . . .
Residential: junior lien . . . . . . . .
Consumer . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . .
5,088
5,812
11,024
318
1,283
$ 157,069
26.0
34.7
44,684
36,474
26.7
34.6
35,390
35,654
4.7
5.9
5.7
0.6
2.2
3,794
4,759
8,284
281
968
100.0 % $ 125,972
4.1
5.7
5.9
0.6
2.2
3,291
4,073
7,754
272
762
100.0 % $ 110,374
23.1
37.6
4.0
5.6
6.4
0.6
1.9
100.0 %
The ACL primarily consists of the aggregate ACL’s of the Subsidiary Banks. The ACL’s are established through
charges to operations in the form of provisions for credit losses.
The Subsidiary Banks charge-off that portion of any loan which management considers to represent a loss as well
as that portion of any other loan which is classified as a “loss” by bank examiners. Commercial, financial, and agricultural
or real estate loans are generally considered by management to represent a loss, in whole or part, (i) when an exposure
beyond any collateral coverage is apparent, (ii) when no further collection of the portion of the loan so exposed is
anticipated based on actual results, (iii) when the credit enhancements, if any, are not adequate, and (iv) when the
borrower’s financial condition would so indicate. Generally, unsecured consumer loans are charged-off when 90 days past
due.
The ACL is a reserve established through a provision for credit losses charged to expense, which represents
management’s best estimate of credit losses within the existing portfolio of loans based on our internal ACL calculation.
While our management considers that it is generally able to identify borrowers with financial problems reasonably early
and to monitor credit extended to such borrowers carefully, there is no precise method of predicting credit losses. The
determination that a loan is likely to be uncollectible and that it should be wholly or partially charged-off as a loss is an
exercise of judgment. Similarly, the determination of the adequacy of the ACL can be made only on a subjective basis.
Our management believes that the ACL at December 31, 2023 was adequate to absorb expected losses from loans and
other financial instruments in the portfolio at that date. See Critical Accounting Policies on page 19.
9
Non-Interest Income
Year Ended
December 31,
2023
Year Ended
December 31,
2022
Percent
Increase
(Decrease)
2023 vs. 2022
(Dollars in Thousands)
Year Ended
December 31,
2021
Percent
Increase
(Decrease)
2022 vs. 2021
Service charges on deposit
accounts . . . . . . . . . . . . . . . . . . . $
73,933 $
72,781
1.6 % $
66,205
9.9 %
Other service charges,
commissions and fees
Banking . . . . . . . . . . . . . . . . . .
Non-banking . . . . . . . . . . . . . .
Investment securities
transactions, net . . . . . . . . . . . .
Other investments, net. . . . . . . . .
Other income . . . . . . . . . . . . . . . .
Total non-interest income . . . $
57,923
9,546
(3)
9,601
18,941
169,941
$
55,253
8,568
—
17,538
32,994
187,134
4.8
11.4
(100.0)
(45.3)
(42.6)
(9.2)% $
54,280
8,007
(16)
68,807
25,043
222,326
1.8
7.0
(100.0)
(74.5)
31.7
(15.8)%
Total non-interest income for the year ended December 31, 2023 decreased by 9.2% compared to the same period
of 2022. The decrease is primarily attributed to losses recorded on merchant banking investments. Total non-interest
income for the year ended December 31, 2022 decreased by 15.8% compared to 2021. Non-interest income was positively
impacted due to an increase in service charges on deposit accounts as customer activity continues to increase from
previously depressed levels resulting from the COVID-19 pandemic. Other income was positively impacted by gains on
the sale of some properties from our branch network as we continue to monitor and evaluate our retail branch footprint
and align with customer activity. The decrease in other investment income for the year ended December 31, 2022
compared to the same period of 2021 was primarily attributable to the sale of an equity interest in a merchant banking
investment held by one of our non-bank subsidiaries in the second quarter of 2021.
Non-Interest Expense
Year Ended
December 31,
2023
Year Ended
December 31,
2022
Percent
Increase
(Decrease)
2023 vs. 2022
(Dollars in Thousands)
Year Ended
December 31,
2021
Percent
Increase
(Decrease)
2022 vs. 2021
127,722
25,654
5.3 % $
0.7
123,480
26,176
3.4 %
(2.0)
Employee compensation and
benefits . . . . . . . . . . . . . . . . . . . $
134,441 $
Occupancy . . . . . . . . . . . . . . . . . .
Depreciation of bank premises
and equipment . . . . . . . . . . . . .
Professional fees . . . . . . . . . . . . .
Deposit insurance assessments . .
Net expense, other real estate
owned . . . . . . . . . . . . . . . . . . . .
Advertising . . . . . . . . . . . . . . . . .
Software and software
maintenance . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . .
Total non-interest expense . . . $
25,832
21,944
14,000
6,285
(3,983)
5,010
21,821
11,292
6,987
122
4,588
0.6
24.0
(10.0)
(3,364.8)
9.2
25,028
7,890
4,389
5,073
4,037
20,046
51,779
275,354
$
15,271
57,012
270,469
31.3
(9.2)
1.8 % $
17,794
49,449
263,316
(12.8)
43.1
59.2
(97.6)
13.6
(14.2)
15.3
2.7 %
Non-interest expense for the year ended December 31, 2023 increased by 1.8% compared to the same period of
2022. The increase in non-interest expense is primarily attributed to an increase in our employee compensation and
10
benefits cost as we continue to review and adjust our compensation and benefits programs to recognize performance and
retain our workforce and an increase in software and software maintenance costs. Non-interest expense was positively
impacted by a net gain recognized on the operations and sales of certain of our other real estate owned. Non-interest
expense for the year ended December 31, 2022 increased by 2.7% compared to the same period of 2021. The increase is
primarily attributable to an increase in our employee compensation and benefits costs. We continue to monitor and manage
our controllable non-interest expenses through a variety of measures with the ultimate goal of ensuring we align non-
interest expenses with our operations and revenue streams.
Effects of Inflation
The principal component of earnings is net interest income, which is affected by changes in the level of interest
rates. Changes in rates of inflation affect interest rates. It is difficult to precisely measure the impact of inflation on net
interest income because it is not possible to accurately differentiate between increases in net interest income resulting from
inflation and increases resulting from increased business activity. Inflation also raises costs of operations, primarily those
of employment and services.
Financial Condition
Investment Securities
The following tables set forth the average yield, by contractual maturities of debt investment securities, at
December 31, 2023, except for the totals, which reflect the weighted average yields. Actual maturities will differ from
contractual maturities because borrowers may have the right to prepay obligations with or without prepayment penalties.
Available for Sale Maturing
Within one
year
Adjusted
Yield
After one but
within five years
Adjusted
Yield
After five but
within ten years
Adjusted
Yield
After ten years
Adjusted
Yield
(Dollars in Thousands)
Residential mortgage-backed securities . .
Obligations of states and political
subdivisions . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.85 %
—
3.85 %
2.65 %
—
2.65 %
2.41 %
4.13
2.43 %
2.88 %
4.14
2.92 %
Held to Maturity Maturing
Within one
year
Adjusted
Yield
After one but
within five years
Adjusted
Yield
After five but
within ten years
Adjusted
Yield
(Dollars in Thousands)
After ten years
Adjusted
Yield
Other securities . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.07 %
2.07 %
4.49 %
4.49 %
— %
— %
— %
— %
Residential mortgage-backed securities are securities primarily issued by the Federal Home Loan Mortgage
Corporation (“Freddie Mac”), Federal National Mortgage Association (“Fannie Mae”), and the Government National
Mortgage Association (“Ginnie Mae”). Investments in residential mortgage-backed securities issued by Ginnie Mae are
fully guaranteed by the U.S. government. Investments in residential mortgage-backed securities issued by Freddie Mac
and Fannie Mae are not fully guaranteed by the U.S. government; however, we believe that the quality of the bonds is
similar to other AAA rated bonds with limited credit risk, particularly given the placement of Fannie Mae and Freddie
Mac into conservatorship by the federal government in 2008 and because securities issued by others that are collateralized
by residential mortgage-backed securities issued by Fannie Mae or Freddie Mac are rated consistently as AAA rated
securities.
11
Loans
The following table shows the amounts of loans outstanding as of December 31, 2023, which based on remaining
scheduled repayments of principal are due in the years indicated. Also, the amounts due after one year are classified
according to the sensitivity to changes in interest rates:
Within one
year
After one but
within five
years
Maturing
After five but
within fifteen
years
(Dollars in Thousands)
$
201,776
After fifteen
years
Total
— $ 1,628,230
Commercial . . . . . . . . . . . . . . . . . . . . . . . $ 669,593 $
Commercial real estate: other
756,861 $
construction & land development . . . .
906,367
1,021,585
163,245
425
2,091,622
Commercial real estate: farmland &
commercial . . . . . . . . . . . . . . . . . . . . . .
Commercial real estate: multifamily . . .
Residential: first lien . . . . . . . . . . . . . . .
Residential: junior lien . . . . . . . . . . . . . .
Consumer . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . .
527,255
194,845
18,878
22,433
27,392
92,272
Total . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,459,035
2,118,232
177,797
114,678
14,146
17,482
43,619
$ 4,264,400
$
147,958
7,230
55,759
327,348
212
6,228
909,756
$
108
967
288,717
96,942
35
38,576
425,770
2,793,553
380,839
478,032
460,869
45,121
180,695
$ 8,058,961
Amount due after one year:
Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial real estate: other construction & land development . . . . . . . . . . . .
Commercial real estate: farmland & commercial . . . . . . . . . . . . . . . . . . . . . . . .
Commercial real estate: multifamily . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential: first lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential: junior lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
International Operations
Interest sensitivity
Fixed Rate
Variable Rate
(Dollars in Thousands)
204,909 $
4,803
164,031
1,929
193,411
431,323
17,723
14,632
1,032,761 $
753,728
1,180,452
2,102,267
184,065
265,743
7,113
6
73,791
4,567,165
On December 31, 2023, we had $180,695,000 (1.2% of total assets) in loans outstanding to borrowers domiciled
in foreign countries, which included primarily borrowers domiciled in Mexico. The loan policies of our Subsidiary Banks
generally require that loans to borrowers domiciled in foreign countries be primarily secured by assets located in the United
12
States or have credit enhancements in the form of guarantees from significant United States corporations. The composition
of such loans as of December 31, 2023 and 2022 is presented below.
Secured by certificates of deposit in United States banks . . . . . . . . . . . . . . . . . .
Secured by United States real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Secured by other United States collateral (securities, gold, silver, etc.) . . . . . . .
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (principally Mexico real estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
For the year ended December 31,
2023
Amount of
Loans
2022
Amount of
Loans
(Dollars in Thousands)
95,570 $
51,215
7,806
17,185
8,919
180,695
$
90,887
36,048
6,125
21,108
5,807
159,975
$
$
Deposits
The following table illustrates the average amounts of deposits for the twelve months ended December 31, 2023
and December 31, 2022. Included in the table is our estimate of the amount of total uninsured deposits as of December 31,
2023 and December 31, 2022.
Deposits:
Demand—non-interest bearing
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total demand non-interest bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Savings and interest bearing demand
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total savings and interest bearing demand . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Time certificates of deposit
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total time, certificates of deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .
Uninsured Deposits: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
2022
Average Balance
Average Balance
(Dollars in Thousands)
$
$
$
$
4,316,548
983,317
5,299,865
3,269,907
1,217,285
4,487,192
4,831,516
1,141,946
5,973,462
3,510,099
1,156,949
4,667,048
985,189
1,262,762
2,247,951
12,035,008
$
1,020,388
1,139,209
2,159,597
12,800,107
3,998,626
$
4,718,606
13
Scheduled maturities of time deposits in amounts of $250,000 or more at December 31, 2023 and an estimate of
uninsured time deposits, were as follows:
Due within 3 months or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Due after 3 months and within 6 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due after 6 months and within 12 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due after 12 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
576,507
345,608
238,869
41,186
1,202,170
Portion of time deposits that are uninsured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
749,169
We offer a variety of deposit accounts having a wide range of interest rates and terms. We rely primarily on our
high-quality customer service, sales programs, customer referrals, and advertising to attract and retain these deposits.
Deposits provide the primary source of funding for our lending and investment activities, and the interest paid for deposits
must be managed carefully to control the level of interest expense. Deposits at December 31, 2023 were $11,824,554,000,
a decrease of 6.6% from $12,660,007,000 at December 31, 2022. Deposits decreased as a result of increased general
activities by customers, increased competition for deposits by the federal government, and aggressive competitors’ pricing.
We have closely monitored the rates paid on deposits by competitors and have made changes to our pricing accordingly
in order to remain competitive in an effort to retain deposits. Because of our significant levels of liquidity, we actively
monitor deposit accounts, and in some cases determine that it is our best interest to allow some deposits to runoff because
the rates being offered by our competitors are beyond levels we are willing to pay at this point in time. Those actions are
carefully considered by our executive leadership team in order to manage our deposit base and the cost of our deposits.
Our five separately chartered Subsidiary Banks within our holding company structure also allows us to work with
customers to maximize their FDIC deposit insurance levels.
Other Borrowed Funds
Other borrowed funds include FHLB borrowings which are long-term borrowings issued by the FHLB of Dallas
or the FHLB of Topeka at the market price offered at the time of funding. These borrowings are secured by residential
mortgage-backed investment securities and a portion of our loan portfolio. At December 31, 2023, other borrowed funds
totaled $10,745,000, a decrease of 1.8% from $10,944,000 at December 31, 2022.
Return on Equity and Assets
Certain key ratios for the years ended December 31, 2023, 2022, and 2021 follow (1):
Years ended
December 31,
2022
2021
2023
Percentage of net income to:
Average shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Percentage of average shareholders’ equity to average total assets. . . . . . .
Percentage of cash dividends per share to net income per share . . . . . . . . .
15.41 %
2.64
17.13
19.00
12.52 %
1.83
14.63
24.84
11.28 %
1.68
14.88
28.70
(1) The average balances for purposes of the above table are calculated on the basis of daily balances.
14
Liquidity and Capital Resources
Liquidity
The maintenance of adequate liquidity provides our Subsidiary Banks with the ability to meet potential depositor
withdrawals, provide for customer credit needs, maintain adequate statutory reserve levels and take full advantage of
high-yield investment opportunities as they arise. Liquidity is afforded by access to financial markets and by holding
appropriate amounts of liquid assets. Our Subsidiary Banks derive their liquidity largely from deposits of individuals and
business entities. Other important funding sources for our Subsidiary Banks during 2023 and 2022 were securities sold
under repurchase agreements and large certificates of deposit, requiring management to closely monitor its asset/liability
mix in terms of both rate sensitivity and maturity distribution. Our Subsidiary Banks have had a long-standing relationship
with the FHLB and keep open, unused, lines of credit in order to fund liquidity needs. In the event that the FHLB
indebtedness is not renewed, the repayment of the outstanding indebtedness would more than likely be repaid through
proceeds generated from the sales of unpledged available-for-sale securities. Our Subsidiary Banks also have an active
account and significant collateral pledged to the Federal Reserve Bank’s Discount Window, which can also be relied upon
to fund liquidity needs. We maintain a sizable, high quality investment portfolio to provide significant liquidity. These
securities can be sold or sold under agreements to repurchase, to provide immediate liquidity. As in the past, we will
continue to monitor the volatility and cost of funds in an attempt to match maturities of rate-sensitive assets and liabilities
and respond accordingly to anticipated fluctuations in interest rates over reasonable periods of time.
Asset/Liability Management
Our funds management policy has as its primary focus the measurement and management of the Subsidiary
Banks’ earnings at risk in the face of rising or falling interest rate forecasts. The earliest and most simplistic concept of
earnings at risk measurement is the gap report, which is used to generate a rough estimate of the vulnerability of net interest
income to changes in market rates as implied by the relative re-pricings of assets and liabilities. The gap report calculates
the difference between the amounts of assets and liabilities re-pricing across a series of intervals in time, with emphasis
typically placed on the one-year period. This difference, or gap, is usually expressed as a percentage of total assets.
If an excess of liabilities over assets matures or re-prices within the one-year period, the statement of condition
is said to be negatively gapped. This condition is sometimes interpreted to suggest that an institution is liability-sensitive,
indicating that earnings would suffer from rising rates and benefit from falling rates. If a surplus of assets over liabilities
occurs in the one-year time frame, the statement of condition is said to be positively gapped, suggesting a condition of
asset sensitivity in which earnings would benefit from rising rates and suffer from falling rates.
The gap report thus consists of an inventory of dollar amounts of assets and liabilities that have the potential to
mature or re-price within a particular period. The flaw in drawing conclusions about interest rate risk from the gap report
is that it takes no account of the probability that potential maturities or re-pricings of interest-rate-sensitive accounts will
occur, or at what relative magnitudes. Because simplicity, rather than utility, is the only virtue of gap analysis, financial
institutions increasingly have either abandoned gap analysis or accorded it a distinctly secondary role in managing their
interest-rate risk exposure.
The net interest rate sensitivity at December 31, 2023, is illustrated in the following table. This information
reflects the balances of assets and liabilities whose rates are subject to change. As indicated in the table below, we are
asset sensitive through all of the time periods illustrated. The table shows the sensitivity of the statement of condition at
one point in time and is not necessarily indicative of the position at future dates.
15
INTEREST RATE SENSITIVITY
(Dollars in Thousands)
December 31, 2023
3 Months
or Less
Over 3
Months to
1 Year
Rate/Maturity
Over 1
Year to 5
Years
(Dollars in Thousands)
Over 5
Years
Total
Rate sensitive assets
Investment securities . . . . . . . . . . . . . . . . . . . $ 217,326
6,678,670
Loans, net of non-accruals . . . . . . . . . . . . . .
$ 545,965
195,740
$ 3,905,625
383,329
$
162,242 $ 4,831,158
8,011,791
754,052
Total earning assets . . . . . . . . . . . . . . . . . . . . $ 6,895,996
$ 741,705
$ 4,288,954
$
916,294 $ 12,842,949
Cumulative earning assets . . . . . . . . . . . . . . $ 6,895,996
$ 7,637,701
$ 11,926,655
$ 12,842,949
Rate sensitive liabilities
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,120,951
Other interest bearing deposits . . . . . . . . . . .
4,368,532
Securities sold under repurchase
agreements . . . . . . . . . . . . . . . . . . . . . . . . .
Other borrowed funds . . . . . . . . . . . . . . . . . .
Junior subordinated deferrable interest
529,346
—
debentures . . . . . . . . . . . . . . . . . . . . . . . . . .
108,868
$ 1,180,964
—
$
123,259
$
—
3 $ 2,425,177
4,368,532
—
1,070
—
—
—
—
—
—
10,745
530,416
10,745
—
108,868
Total interest bearing liabilities . . . . . . . . . . $ 6,127,697
$ 1,182,034
$
123,259
$
10,748 $ 7,443,738
Cumulative sensitive liabilities. . . . . . . . . . . $ 6,127,697
$ 7,309,731
$ 7,432,990
$ 7,443,738
Repricing gap . . . . . . . . . . . . . . . . . . . . . . . . . $ 768,299
768,299
Cumulative repricing gap . . . . . . . . . . . . . . .
Ratio of interest-sensitive assets to
liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ratio of cumulative, interest-sensitive
assets to liabilities . . . . . . . . . . . . . . . . . . . .
1.13
1.13
$ (440,329) $ 4,165,695
4,493,665
327,970
905,546 $ 5,399,211
$
5,399,211
0.63
1.04
34.80
1.60
85.25
1.73
1.73
The detailed inventory of statement of condition items contained in gap reports is the starting point of income
simulation analysis. Income simulation analysis also focuses on the variability of net interest income and net income, but
without the limitations of gap analysis. In particular, the fundamental, but often unstated, assumption of the gap approach
that every statement of condition item that can re-price will do so to the full extent of any movement in market interest
rates is taken into consideration in income simulation analysis.
Accordingly, income simulation analysis captures not only the potential of assets and liabilities to mature or
re-price, but also the probability that they will do so. Moreover, income simulation analysis focuses on the relative
sensitivities of these balance sheet items and projects their behavior over an extended period of time in a motion picture
rather than snapshot fashion. Finally, income simulation analysis permits management to assess the probable effects on
balance sheet items not only of changes in market interest rates, but also of proposed strategies for responding to such
changes. We and many other institutions rely primarily upon income simulation analysis in measuring and managing
exposure to interest rate risk.
We have established guidelines for acceptable volatility of projected net interest income on the income simulation
analysis and the guidelines are reviewed at least annually. As of December 31, 2023, in decreasing rate scenarios of -100,
16
-200, -300 and -400 basis points and in rising rate scenarios of +100, +200, +300 and +400 basis points, the guidelines
established by management require that the net interest income not vary by more than minus 30%, 30%, 30%, and 40%,
respectively, for the first 12-month period projected. At December 31, 2023, the most recent income simulations show that
a rate shift of -100, -200, -300, -400, +100, +200, +300 and +400 basis points in interest rates up will vary projected net
interest income for the coming 12-month period by -7.78%, -14.54%, -20.92%, -26.70% +6.48%, +13.14%, +19.80% and
+26.51%, respectively. The basis point shift in interest rates is a hypothetical rate scenario used to calibrate risk and does
not necessarily represent management’s current view of future market developments. We believe that we are properly
positioned for a potential interest rate increase or decrease.
All the measurements of risk described above are made based upon our business mix and interest rate exposures
at the particular point in time. The exposure changes continuously as a result of our ongoing business and our risk
management initiatives. While management believes these measures provide a meaningful representation of our interest
rate sensitivity, they do not necessarily take into account all business developments that have an effect on net income, such
as changes in credit quality or the size and composition of the statement of condition.
Our principal sources of liquidity and funding dividends from subsidiaries and borrowed funds, with such funds
being used to finance our cash flow requirements. We closely monitor the dividend restrictions and availability from our
Subsidiary Banks as disclosed in Note 20 of the Notes to Consolidated Financial Statements. At December 31, 2023, the
aggregate amount legally available to be distributed to us from our Subsidiary Banks as dividends was approximately
$1,229,500,000, assuming that each Subsidiary Bank continues to be classified as “well capitalized” under the applicable
regulations in effect at December 31, 2023. The restricted capital (capital and surplus) of our Subsidiary Banks was
approximately $1,377,321,000 as of December 31, 2023. The undivided profits of our Subsidiary Banks were
approximately $1,710,438,000 as of December 31, 2023.
At December 31, 2023, we had outstanding $10,745,000 in other borrowed funds and $108,868,000 in junior
subordinated deferrable interest debentures. In addition to borrowed funds and dividends, we have a number of other
available alternatives to finance the growth of our Subsidiary Banks as well as future growth and expansion.
Capital
We maintain an adequate level of capital as a margin of safety for our depositors and shareholders. At
December 31, 2023, shareholders’ equity was $2,447,774,000 compared to $2,044,759,000 at December 31, 2022, an
increase of $403,015,000, or 19.7%. Shareholders’ equity increased primarily due to an increase in retained earnings and
a decrease in accumulated other comprehensive loss as a result of market interest conditions and the impact of those
conditions on the value of our investment portfolio. The accumulated other comprehensive loss is not included in the
calculation of regulatory capital ratios.
Banks and bank holding companies are subject to various regulatory capital requirements administered by state
and federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action
regulations, involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under
regulatory accounting practices. Capital amount and classifications are also subject to qualitative judgements by regulators
about components, risk-weighting and other factors.
The FRB has adopted risk-based capital guidelines which assign risk weightings to assets and off-balance sheet
items. The guidelines also define and set minimum capital requirements (risk-based capital ratios). All banks are required
to have Tier 1 capital of at least 4 % of risk-weighted assets and total capital of 8% of risk-weighted assets. Tier 1 capital
consists principally of shareholders’ equity plus trust preferred securities issued and outstanding less goodwill and certain
other intangibles, while total capital consists of Tier 1 capital, certain debt instruments and a portion of the reserve for loan
losses. In order to be deemed well capitalized pursuant to the regulations, an institution must have a total risk-weighted
capital ratio of 10%, a Tier 1 risk-weighted ratio of 8% and a Tier 1 leverage ratio of 5%. We had risk-weighted Tier 1
capital ratios of 22.39% and 21.04% and risk-weighted total capital ratios of 23.65% and 22.22% as of December 31, 2023
and 2022, respectively, which are well above the minimum regulatory requirements and exceed the well-capitalized ratios
(see Note 19 of our Notes to Consolidated Financial Statements).
17
In July 2013, the FDIC and other regulatory bodies established a new, comprehensive capital framework for U.S.
banking organizations, consisting of minimum requirements that increase both the quantity and quality of capital held by
banking organizations. The final rules are a result of the implementation of the Basel III capital reforms and various related
capital provisions of the Dodd-Frank Act. Consistent with the Basel international framework, the rules include a minimum
ratio of Common Equity Tier 1 (“CET1”) capital to risk-weighted assets of 4.5% and a CET1 capital conservation buffer
of 2.5% of risk-weighted assets, effectively resulting in a minimum ratio of CET1 capital to risk-weighted assets of at least
7% upon full implementation. The capital conservation buffer is designed to absorb losses during periods of economic
stress. Banking institutions with a ratio of CET1 capital to risk-weighted assets above the minimum but below the
conservation buffer will face constraints on dividends, equity repurchases and compensation based on the amount of the
shortfall. The rules also raised the minimum ratio of Tier 1 capital to risk-weighted assets from 4% to 6% and include a
minimum leverage ratio of 4% for all banking organizations. Regarding the quality of capital, the rules emphasize CET1
capital and implements strict eligibility criteria for regulatory capital instruments. The rules also improve the methodology
for calculating risk-weighted assets to enhance risk sensitivity. We believe that as of December 31, 2023, we meet all fully
phased-in capital adequacy requirements.
In November 2017, the OCC, the FRB and the FDIC finalized a proposed rule that extends the current treatment
under the regulatory capital rules for certain regulatory capital deductions and risk weights and certain minority-interest
requirements, as they apply to banking organizations that are not subject to the advanced approaches capital rules. Effective
January 1, 2018, the rule also pauses the full transition to the Basel III treatment of mortgage servicing assets, certain
deferred tax assets, investments in the capital of unconsolidated financial institutions and minority interests. The agencies
are also considering whether to make adjustments to the capital rules in response to CECL (the FASB Standard relating to
current expected credit loss) and its potential impact on regulatory capital. Pursuant to rules issued by the federal bank
regulatory agencies in February 2019 and March 2020, banking organizations were given options to phase in the adoption
of CECL over a three-year transition period through December 31, 2022 or over a five-year transition period through
December 31, 2024. Rather than electing to make one of the phase-in options, we immediately recognized the capital
impact upon adopting the CECL accounting standards on January 1, 2020, which resulted in an increase in our allowance
for probable loan losses and a one-time cumulative-effect adjustment to retained earnings upon adoption.
In December 2017, the Basel Committee on Banking Supervision unveiled its final set of standards and reforms
to the Basel III regulatory capital framework, commonly called “Basel III Endgame” or “Basel IV.” The Basel IV
standards make changes to the capital framework first introduced as “Basel III” in 2010 and aim to reduce excessive
variability in banks’ calculations of risk-weighted assets and risk-weighted capital ratios. Implementation of Basel IV
began on January 1, 2023 and will continue over a five-year transition period by regulators in individual countries,
including the U.S. federal bank regulatory agencies (after notice and comment).
Junior Subordinated Deferrable Interest Debentures
We currently have four statutory business trusts under the laws of the State of Delaware, for the purpose of issuing
trust preferred securities. These statutory business trusts (the “Trusts”) each issued capital and common securities (Capital
and Common Securities”) and invested the proceeds thereof in an equivalent amount of junior subordinated debentures
(the “Debentures”) that we issued. As of December 31, 2023 and December 31, 2022, the principal amount of debentures
outstanding totaled $108,868,000 and $134,642,000, respectively.
The Debentures are subordinated and junior in right of payment to all of our present and future senior indebtedness
(as defined in the respective indentures) and are pari passu with one another. The interest rate payable on, and the payment
terms of the Debentures are the same as the distribution rate and payment terms of the respective issues of Capital and
Common Securities issued by the Trusts. We have fully and unconditionally guaranteed the obligations of each of the
Trusts with respect to the Capital and Common Securities. We have the right, unless an Event of Default (as defined in the
Indentures) has occurred and is continuing, to defer payment of interest on the Debentures for up to twenty consecutive
quarterly periods on Trusts IX, X, XI and XII. If interest payments on any of the Debentures are deferred, distributions on
both the Capital and Common Securities related to that Debenture would also be deferred. The redemption prior to maturity
of any of the Debentures may require the prior approval of the Federal Reserve and/or other regulatory bodies.
18
For financial reporting purposes, the Trusts are treated as investments and not consolidated in the consolidated
financial statements. Although the Capital Securities issued by each of the Trusts are not included as a component of
shareholders’ equity on the consolidated statement of condition, the Capital Securities are treated as capital for regulatory
purposes. Specifically, under applicable regulatory guidelines, the Capital Securities issued by the Trusts qualify as Tier 1
capital up to a maximum of 25% of Tier 1 capital on an aggregate basis. Any amount that exceeds the 25% threshold
would qualify as Tier 2 capital. At December 31, 2023 and December 31, 2022, the total $108,868,000 and $134,642,000,
respectively, of the Capital Securities outstanding qualified as Tier 1 capital.
The following table illustrates key information about each of the Debentures and their interest rates at
December 31, 2023:
Junior
Subordinated
Deferrable
Interest
Debentures
(in thousands)
Repricing
Frequency
Interest Rate
Interest Rate
Index(1)
Maturity Date
Redemption Date(2)
Optional
Trust IX . . . . . . . .
Trust X . . . . . . . . .
Trust XI . . . . . . . .
Trust XII . . . . . . .
$
41,238 Quarterly
21,021 Quarterly
25,990 Quarterly
20,619 Quarterly
108,868
7.28 % SOFR + 1.62
October 2036
7.29 % SOFR + 1.65
February 2037
July 2037
7.28 % SOFR + 1.62
7.09 % SOFR + 1.45 September 2037
October 2011
February 2012
July 2012
September 2012
(1) On July 1, 2023, the interest rate index on the Capital and Common Securities transitioned from U.S.-dollar London Interbank Offered Rate
(“LIBOR”) to the Three-Month CME Term Secured Overnight Financing Rate (“SOFR”) with a 26 basis point spread adjustment
(2) The Capital Securities may be redeemed in whole or in part on any interest payment date after the Optional Redemption Date.
Critical Accounting Policies
We have established various accounting policies which govern the application of accounting principles in the
preparation of our consolidated financial statements. The significant accounting policies are described in the Notes to the
Consolidated Financial Statements. Certain accounting policies involve significant subjective judgments and assumptions
by management which have a material impact on the carrying value of certain assets and liabilities; management considers
such accounting policies to be critical accounting policies.
We consider our estimated ACL as a policy critical to the sound operations of our Subsidiary Banks. The ACL is
deducted from the amortized cost of an instrument to present the net amount expected to be collected on the financial asset.
Our ACL primarily consists of the aggregate ACL estimates of our Subsidiary Banks. The estimates are established
through charges to operations in the form of charges to provisions for credit loss expense. Loan losses or recoveries are
charged or credited directly to the ACL. The ACL of each Subsidiary Bank is maintained at a level considered appropriate
by management, based on estimated current expected credit losses in the current loan portfolio, including information
about past events, current conditions, and reasonable and supportable forecasts.
The estimation of the ACL is based on a loss-rate methodology that measures lifetime losses on loan pools that
have similar risk characteristics. Loans that do not have similar risk characteristics are evaluated on an individual basis.
The segmentation of the loan portfolio into pools requires a balancing process between capturing similar risk
characteristics and containing sufficient loss history to provide meaningful results. Our segmentation starts at the general
loan category with further sub-segmentation based on collateral types that may be of meaningful size and/or may contain
sufficient differences in risk characteristics based on management’s judgement that would warrant further segmentation.
The general loan categories along with primary risk characteristics used in our calculation are as follows:
19
Commercial and industrial loans. This category includes loans extended to a diverse array of businesses for working
capital or equipment purchases. These loans are mostly secured by the collateral pledged by the borrower that is
directly related to the business activities of the company such as equipment, accounts receivable and inventory. The
borrower’s abilities to generate revenues from equipment purchases, collect accounts receivable, and to turn inventory
into sales are risk factors in the repayment of the loan. A small portion of this loan category is related to loans secured
by oil and gas production and loans secured by aircraft.
Construction and land development loans. This category includes the development of land from unimproved land to
lot development for both residential and commercial use and vertical construction across residential and commercial
real estate classes. These loans carry risk of repayment when projects incur cost overruns, have an increase in the
price of construction materials, encounter zoning, entitlement, and environmental issues, or encounter other factors
that may affect the completion of a project on time and on budget. Additionally, repayment risk may be negatively
impacted when the market experiences a deterioration in the value of real estate. Risks specifically related to 1-4
family development loans also include mortgage rate risk and the practice by the mortgage industry of more restrictive
underwriting standards, which inhibits the buyer from obtaining long term financing creating excessive housing and
lot inventory in the market.
Commercial real estate loans. This category includes loans secured by farmland, multifamily properties, owner-
occupied commercial properties, and non-owner-occupied commercial properties. Owner-occupied commercial
properties include warehouses often along the border for import/export operations, office space where the borrower
is the primary tenant, restaurants and other single-tenant retail spaces. Non-owner-occupied commercial properties
include hotels, retail centers, office and professional buildings, and leased warehouses. These loans carry risk of
repayment when market values deteriorate, the business experiences turnover in key management, the business has
an inability to attract or keep occupancy levels stable, or the market experiences an exit of a specific business type
that is significant to the local economy, such as a manufacturing plant.
1-4 family mortgages. This category includes both first and second lien mortgages for the purpose of home purchases
or refinancing of existing mortgage loans. A small portion of this loan category is related to home equity lines of
credits, lots purchases, and home construction. Loan repayments may be affected by unemployment or
underemployment and deteriorating market values of real estate.
Consumer loans. This category includes deposit secured, vehicle secured, and unsecured loans, including overdrafts,
made to individuals. Repayment is primarily affected by unemployment or underemployment.
The loan pools are further broken down using a risk-based segmentation based on internal classifications for
commercial loans and past due status for consumer mortgage loans. Non-mortgage consumer loans are evaluated as one
segment. On a weekly basis, commercial loan past due reports are reviewed by the credit quality committee to determine
if a loan has any potential problems and if a loan should be placed on our internal Watch List report. Additionally, our
credit department reviews the majority of our loans for proper internal classification purposes regardless of whether they
are past due and segregates any loans with potential problems for further review. The credit department will discuss the
potential problem loans with the servicing loan officers to determine any relevant issues that were not discovered in the
evaluation. Also, an analysis of loans that is provided through examinations by regulatory authorities is considered in the
review process. After the above analysis is completed, we will determine if a loan should be placed on an internal Watch
List report because of issues related to the analysis of the credit, credit documents, collateral, and/or payment history.
Our internal Watch List report is segregated into the following categories: (i) Pass, (ii) Economic Monitoring,
(iii) Special Review, (iv) Watch List—Pass, or (v) Watch List—Substandard, and (vi) Watch List—Doubtful. The loans
placed in the Special Review category and lower rated credits reflect our opinion that the loans reflect potential weakness
which require monitoring on a more frequent basis. Credits in those categories are reviewed and discussed on a regular
basis, no less frequently than quarterly, with the credit department and the lending staff to determine if a change in category
is warranted. The loans placed in the Watch List—Pass category and lower rated credits reflect our opinion that the credit
contains weaknesses which represent a greater degree of risk, which warrant “extra attention.” Credits in this category are
reviewed and discussed on a regular basis with the credit department and the lending staff to determine if a change in
category is warranted. The loans placed in the Watch List—Substandard category are considered to be potentially
20
inadequately protected by the current sound worth and debt service capacity of the borrower or of any pledged collateral.
These credit obligations, even if apparently protected by collateral value, have shown defined weaknesses related to
adverse financial, managerial, economic, market, or political conditions which may jeopardize repayment of principal and
interest. Furthermore, there is the possibility that we may sustain some future loss if such weaknesses are not corrected.
The loans placed in the Watch List—Doubtful category have shown defined weaknesses and it is likely, based on current
information and events, that we will be unable to collect all principal and/or interest amounts contractually due. Watch
List—Doubtful loans are placed on non-accrual when they are moved to that category.
For the purposes of the ACL, in order to maintain segments with sufficient history for meaningful results, the
credits in the Pass and Economic Monitoring categories are aggregated, the credits in the Special Review and Watch List—
Pass credits are aggregated, and the credits in the Watch List—Substandard category remain in their own segment. For
loans that are classified as Watch List—Doubtful, management evaluates these credits in accordance with ASC 310-10,
“Receivables,” and, if deemed necessary, a specific reserve is allocated to the loan. The specific reserve allocated under
ASC 310-10, is based on (i) the present value of expected future cash flows discounted at the loan’s effective interest rate;
(ii) the loan’s observable market price; or (iii) the net realizable value of the fair value of the collateral if the loan is
collateral dependent. Substantially all of our loans evaluated as Watch List—Doubtful under ASC 310-10 are measured
using the fair value of collateral method. In rare cases, we may use other methods to determine the specific reserve of a
loan under ASC 310-10 if such loan is not collateral dependent.
Within each collectively evaluated pool, the robustness of the lifetime historical loss-rate is evaluated and, if
needed, is supplemented with peer loss rates through a model risk adjustment. Certain qualitative loss factors are then
evaluated to incorporate management’s two-year reasonable and supportable forecast period followed by a reversion to
the pool’s average lifetime loss-rate. Those qualitative loss factors are: (i) trends in portfolio volume and composition,
(ii) volume and trends in classified loans, delinquencies, non-accruals and troubled loan modifications, (iii) concentration
risk, (iv) trends in underlying collateral value, (v) changes in policies, procedures, and strategies, and (vi) economic
conditions. Qualitative factors also include potential losses stemming from operational risk factors arising from fraud,
natural disasters, pandemics, geopolitical events and large loans. The large loan operational risk factor was added
beginning in the second quarter of 2023. Because of the magnitude of large loans, they pose a higher risk of default.
Recognizing this risk and establishing an operational risk factor to capture that risk, is prudent action in the current
economic environment. Large loans are usually part of a larger relationship with collateral that is pledged across the
relationship. Defaulting on a larger loan may therefore jeopardize an entire collateral relationship. The current economic
environment has created challenges for borrowers to service their debt. Increasing cap rates, elevated office vacancies, an
upward trend in apartment vacancies and significant increases in interest rates are all contributing to the elevated risk in
large loans. Should any of the factors considered by management in evaluating the adequacy of the ACL change, our
estimate could also change, which could affect the level of future credit loss expense.
We have elected to not measure an ACL for accrued interest receivable given our timely approach in identifying
and writing off uncollectible accrued interest. An ACL for off-balance sheet exposure is derived from a projected usage
rate of any unfunded commitment multiplied by the historical loss rate, plus model risk adjustment, if any, of the on-
balance sheet loan pools.
Our management continually reviews the ACL of the Subsidiary Banks using the amounts determined from the
estimates established on specific doubtful loans, the estimate established on quantitative historical loss percentages, and
the estimate based on qualitative current conditions and reasonable and supportable two-year forecasted data. Our
methodology reverts to the average lifetime loss-rate beyond the forecast period when we can no longer develop reasonable
and supportable forecasts. Should any of the factors considered by management in evaluating the adequacy of the estimate
for current expected credit losses change, our estimate of current expected credit losses could also change, which could
affect the level of future credit loss expense. While the calculation of our ACL utilizes management’s best judgment and
all information reasonably available, the adequacy of the ACL is dependent on a variety of factors beyond our control,
including, among other things, the performance of the entire loan portfolio, the economy, government actions, changes in
interest rates and the view of regulatory authorities towards loan classifications.
21
Recent Accounting Standards Issued
See Note 1—Summary of Significant Accounting Policies in our accompanying Notes to Consolidated Financial
Statements for details of recently issued and recently adopted accounting standards and their impact on our consolidated
financial statements.
Common Stock and Dividends
We have issued and outstanding 62,168,232 shares of $1.00 par value common stock held by approximately 1,763
holders of record at February 20, 2024. The book value of the common stock at December 31, 2023 was $41.96 per share
compared with $34.93 per share at December 31, 2022.
Our common stock is traded on the NASDAQ National Market under the symbol “IBOC.” The following table
sets forth the approximate high and low bid prices in our common stock during 2023 and 2022, as quoted on the NASDAQ
National Market for each of the quarters in the two-year period ended December 31, 2023. Some of the quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual
transactions. The closing sales price of our common stock was $51.24 per share at February 20, 2024.
2023: . . . . . . . . . . . . . . . . . . First quarter
Second quarter
Third quarter
Fourth quarter
2022: . . . . . . . . . . . . . . . . . . First quarter
Second quarter
Third quarter
Fourth quarter
$
$
High
Low
$
$
49.50
48.94
50.00
54.72
High
45.99
44.02
46.03
53.71
40.80
39.10
41.96
42.25
Low
38.92
38.00
38.58
42.58
We paid cash dividends of $.63 per share on February 28, and August 23, 2023, respectively, to record holders
of our common stock on February 15, and August 11, 2023, respectively. We paid cash dividends of $.60 per share on
February 28, and August 29, 2022, respectively, to record holders of our common stock on February 15, and August 16,
2022, respectively.
Our principal source of funds to pay cash dividends on our common stock is cash dividends from our Subsidiary
Banks. For a discussion of the limitations, please see Note 19 of our Notes to Consolidated Financial Statements.
Stock Repurchase Program
In April 2009, the Board of Directors re-established a formal stock repurchase program that authorized the
repurchase of up to $40 million of common stock within the following 12 months. Annually since then, including on
February 21, 2023, the Board of Directors extended and increased the repurchase program to purchase up to $124 million
of common stock during the 12-month period commencing on March 15, 2023. On February 20, 2024, our Board of
Directors authorized the renewal and increase of the repurchase program to purchase up to $150 million of common stock
during the 12-month period commencing on March 15, 2024 upon the expiration of our current repurchase program on
that date. Shares of common stock may be purchased from time to time on the open market or through privately negotiated
transactions. Shares purchased in this program will be held in treasury for reissue for various corporate purposes, including
employee compensation plans. During the fourth quarter of 2023, the Board of Directors adopted a Rule 10b-18 trading
plan and a Rule 10b5-1 trading plan and intends to adopt additional Rule 10b-18 and Rule 10b5-1 trading plans, which
will allow us to purchase shares of our common stock during certain open and blackout periods when we ordinarily would
not be in the market due to trading restrictions in our insider trading policy. During the terms of both a Rule 10b-18 and a
Rule 10b5-1 trading plan, purchases of common stock are automatic to the extent the conditions of the plan’s trading
instructions are met. Shares purchased under these trading plans will be held in treasury for reissue for various corporate
22
purposes, including employee stock compensation plans. As of February 20, 2024, a total of 13,706,581 shares had been
repurchased under all programs at a cost of $414,926,000. We are not obligated to purchase shares under our stock
repurchase program outside of the Rule 10b-18 and Rule 10b5-1 trading plans.
Except for repurchases in connection with the administration of an employee benefit plan in the ordinary course
of business and consistent with past practices, common stock repurchases are only conducted under publicly announced
repurchase programs approved by the Board of Directors. The following table includes information about common stock
share repurchases for the quarter ended December 31, 2023.
Total Number
of Shares
Purchased
Average
Price Paid
Per
Share
Total Number of
Shares
Purchased as
Part of a
Publicly-
Announced
Program
October 1 – October 31, 2023 . . . . . . . . . .
November 1 – November 30, 2023 . . . . . .
December 1 – December 31, 2023 . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— $
518
1,987
2,505
$
—
45.03
50.81
49.62
—
—
—
—
Approximate
Dollar Value of
Shares Available
for
Repurchase(1)
$
119,558,000
119,535,000
119,434,000
(1) The repurchase program was increased and extended on February 21, 2023 and allows for the repurchase of up to an
additional $124,000,000 of treasury stock through March 15, 2024.
Equity Compensation Plan Information
The following table sets forth information as of December 31, 2023, with respect to our equity compensation
plans:
(A)
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
(B)
Weighted average
exercise price of
outstanding options,
warrants and rights
(C)
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column A)
383,865
383,865
$
$
30.65
30.65
—
—
Plan Category
Equity Compensation plans approved
by security holders . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
23
COMPARISON OF CUMULATIVE FIVE-YEAR TOTAL RETURN
Stock Performance
COMPARISON OF CUMULATIVE FIVE YEAR TOTAL RETURN
$200
$150
$100
$50
2018
2019
2020
2021
2022
2023
International Bancshares Corporation
S&P MidCap 400 Index
S&P 400 Regional Banks
Total Return To Shareholders
(Includes reinvestment of dividends)
Base
Period
2018
2019
2020
INDEXED RETURNS
December 31,
2021
2022
2023
Company / Index
International Bancshares
Corporation . . . . . . . . . . . . . . . . . . . . .
S&P 400 Index . . . . . . . . . . . . . . . . . . . .
S&P 400 Banks . . . . . . . . . . . . . . . . . . .
100
100
100
128.67
126.20
124.61
116.44
143.44
113.89
135.66
178.95
161.36
150.50
155.58
154.69
183.56
181.15
153.23
24
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of International Bancshares Corporation and its
subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of condition of International Bancshares
Corporation and its subsidiaries (the Company) as of December 31, 2023 and 2022, the related
consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each
of the three years in the period ended December 31, 2023, and the related notes to the consolidated
financial statements (collectively, the financial statements). In our opinion, the financial statements
present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and
2022, and the results of its operations and its cash flows for each of the three years in the period ended
December 31, 2023, in conformity with accounting principles generally accepted in the United States of
America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States) (PCAOB), the Company’s internal control over financial reporting as of
December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated
February 26, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal
control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on the Company’s financial statements based on our audits. We are a public
accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement, whether due to error or fraud. Our audits included performing procedures
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the
consolidated financial statements that was communicated or required to be communicated to the audit
committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial
statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing
a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
25
Allowance for Credit Losses
As described in Note 4 of the consolidated financial statements, the Company established an allowance
for credit losses totaling $157,069,000 as of December 31, 2023. The allowance for credit losses is
derived from 1) a loss-rate methodology that measures lifetime losses on loan pools that have similar risk
characteristics; and 2) estimated losses on individually evaluated loans that do not have similar risk
characteristics. The segmentation of the loan portfolio into pools requires a balancing process between
capturing similar risk characteristics and sufficient loss history to provide relevant results. Loan pools are
further broken down using a risk-based segmentation based on internal classifications of credit quality.
Within each loan pool, the lifetime historical loss-rate is evaluated and, if needed, is supplemented with
peer loss rates through a model risk adjustment. Certain qualitative factors are applied at the loan pool
level to incorporate management’s two-year forecast period followed by a reversion to the pool’s average
lifetime loss-rate. Those qualitative factors include: (i) trends in portfolio volume and composition, (ii)
volume and trends in classified loans, delinquencies, non-accruals and troubled loan modifications
(TLM’s), (iii) concentration risk, (iv) trends in underlying collateral value, (v) changes in policies,
procedures, and strategies, (vi) economic conditions, and (vii) operational and other risk factors to
capture potential losses arising from fraud, natural disasters, pandemics, geopolitical events and large
loans.
We identified the qualitative factor component of the allowance for credit losses as a critical audit matter.
Auditing management’s estimate of the qualitative factors required a high degree of auditor judgment due
to the nature of the adjustments and the subjectivity in judgments applied by management in forming
them.
Our audit procedures related to the Company’s qualitative factors included, the following, among others:
· We obtained an understanding of the relevant controls related to the allowance for credit losses,
including the qualitative factors, and tested such controls for design and operating effectiveness,
including controls related to management’s review of the qualitative factors and approval of the
allowance for credit losses calculation.
· We evaluated the appropriateness and consistency of management’s methods and assumptions
used to determine qualitative factors by (1) evaluating management’s identification and quantification
of qualitative factors; (2) testing the completeness and accuracy of data and information used in
calculating the components of the qualitative factors; (3) evaluating the reasonableness, directional
consistency, and magnitude of the quantification of the qualitative factors; and (4) reviewing
subsequent events and considering their impact on judgments applied in forming the qualitative factor
component of the allowance for credit losses as of the consolidated balance sheet date.
We have served as the Company’s auditor since 2007.
Austin, Texas
February 26, 2024
26
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Condition
December 31, 2023 and 2022
(Dollars in Thousands, Except Per Share Amounts)
Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment securities:
Held to maturity debt securities (Market value of $3,400 on December 31, 2023
December 31, December 31,
2023
2022
$
651,058 $ 2,087,724
and $3,400 on December 31, 2022) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,400
3,400
Available for sale debt securities (Amortized cost of $5,330,814 on December 31,
2023 and $5,018,996 on December 31, 2022). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity securities with readily determinable fair values. . . . . . . . . . . . . . . . . . . . . . . . . .
Total investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bank premises and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued interest receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash surrender value of life insurance policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,822,341
5,417
4,831,158
8,058,961
(157,069)
7,901,892
437,094
65,302
343,452
303,486
282,532
250,215
4,417,796
5,358
4,426,554
7,430,603
(125,972)
7,304,631
431,612
45,787
358,910
300,589
282,532
263,137
$ 15,066,189 $ 15,501,476
See accompanying notes to consolidated financial statements.
27
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Condition Continued
December 31, 2023 and 2022
(Dollars in Thousands, Except Per Share Amounts)
December 31, December 31,
2023
2022
Liabilities and Shareholders’ Equity
Liabilities:
Deposits:
Demand—non-interest bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Savings and interest bearing demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities sold under repurchase agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other borrowed funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Junior subordinated deferrable interest debentures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 5,030,845 $ 5,846,055
4,745,768
4,368,532
2,068,184
2,425,177
12,660,007
11,824,554
431,191
530,416
10,944
10,745
134,642
108,868
143,832
219,933
13,456,717
12,618,415
Shareholders’ equity:
Common shares of $1.00 par value. Authorized 275,000,000 shares; issued
96,466,900 shares on December 31, 2023 and 96,420,456 shares on December 31,
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
96,467
155,511
3,029,088
(397,889)
2,883,177
96,420
154,061
2,695,567
(470,497)
2,475,551
Less cost of shares in treasury, 34,391,184 shares on December 31, 2023 and
34,278,617 on December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(430,792)
(435,403)
2,447,774
2,044,759
$ 15,066,189 $ 15,501,476
See accompanying notes to consolidated financial statements.
28
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
Years ended December 31, 2023, 2022 and 2021
(Dollars in Thousands, Except Per Share Amounts)
Interest income:
Loans, including fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment securities:
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax-exempt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense:
Savings deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities sold under repurchase agreements . . . . . . . . . . . . . . . . . . . . .
Other borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Junior subordinated deferrable interest debentures . . . . . . . . . . . . . . . .
2023
2022
2021
$
620,048
$
402,177 $
359,215
132,151
6,259
41,704
800,162
60,337
53,158
14,760
283
8,123
74,988
2,541
46,075
525,781
12,686
11,157
2,495
6,781
5,037
34,331
1,483
3,074
398,103
4,110
11,655
621
7,654
2,791
Total interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
136,661
38,156
26,831
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
663,501
487,625
371,272
Credit loss expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34,576
21,651
7,955
Net interest income after provision for credit losses . . . . . . . . . . . . . .
628,925
465,974
363,317
Non-interest income:
Service charges on deposit accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . .
73,933
72,781
66,205
Other service charges, commissions and fees
Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment securities transactions, net . . . . . . . . . . . . . . . . . . . . . . . . . .
Other investments income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57,923
9,546
(3)
9,601
18,941
55,253
8,568
—
17,538
32,994
54,280
8,007
(16)
68,807
25,043
Total non-interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
169,941
$
187,134 $
222,326
See accompanying notes to consolidated financial statements.
29
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income, continued
Years ended December 31, 2023, 2022 and 2021
(Dollars in Thousands, Except Per Share Amounts)
2023
2022
2021
Non-interest expense:
Employee compensation and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . .
Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation of bank premises and equipment . . . . . . . . . . . . . . . . . . .
Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposit insurance assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net operations, other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . .
Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Software and software maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
134,441
25,832
21,944
14,000
6,285
(3,983)
5,010
20,046
51,779
127,722 $
25,654
21,821
11,292
6,987
122
4,588
15,271
57,012
123,480
26,176
25,028
7,890
4,389
5,073
4,037
17,794
49,449
Total non-interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
275,354
270,469
263,316
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
523,512
382,639
322,327
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .
111,744
82,407
68,405
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
411,768
$
300,232 $
253,922
Basic earnings per common share:
Weighted average number of shares outstanding. . . . . . . . . . . . . . . . . .
Net income per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
62,082,827
6.63
$
62,658,414
$
4.79 $
63,352,737
4.01
Fully diluted earnings per common share:
Weighted average number of shares outstanding. . . . . . . . . . . . . . . . . .
Net income per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
62,221,601
6.62
$
62,810,234
$
4.78 $
63,486,366
4.00
See accompanying notes to consolidated financial statements.
30
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
Years ended December 31, 2023, 2022 and 2021
(Dollars in Thousands)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss, net of tax:
Net change in unrealized holding losses on securities available for
sale arising during period (net of tax effects of $19,300, $(116,568),
and $(14,040)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification adjustment for losses on securities available for
sale included in net income (net of tax effects of $1, $0, and $3) . . . . . .
2023
2022
2021
$ 411,768 $ 300,232 $ 253,922
72,606
(438,517)
(52,818)
2
72,608
—
(438,517)
13
(52,805)
Comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .
$ 484,376 $ (138,285) $ 201,117
See accompanying notes to consolidated financial statements.
31
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Shareholders’ Equity
Years ended December 31, 2023, 2022 and 2021
(in Thousands, except per share amounts)
Balance at December 31, 2020 . . . . . . . . . $
Net Income . . . . . . . . . . . . . . . . . . . .
Dividends:
Cash ($1.15 per share) . . . . . . . . . .
Purchase of treasury (17,984 shares) .
Exercise of stock options . . . . . . . . . . . . .
Stock compensation expense
recognized in earnings . . . . . . . . . . . . .
Other comprehensive loss, net of tax:
Net change in unrealized gains
and losses on available for sale
securities, net of reclassification
adjustment . . . . . . . . . . . . . . . . .
Balance at December 31, 2021 . . . . . . . . .
Net Income . . . . . . . . . . . . . . . . . . . .
Dividends:
Cash ($1.20 per share) . . . . . . . . . .
Purchase of treasury (1,299,344
shares) . . . . . . . . . . . . . . . . . . . . . .
Exercise of stock options . . . . . . . . . . . . .
Stock compensation expense recognized in
earnings . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss, net of tax:
Net change in unrealized gains
and losses on available for sale
securities, net of reclassification
adjustments . . . . . . . . . . . . . . . . .
Balance at December 31, 2022 . . . . . . . . .
Net Income . . . . . . . . . . . . . . . . . . . .
Dividends:
Cash ($1.26 per share) . . . . . . . . . .
Purchase of treasury (112,567 shares)
Exercise of stock options . . . . . . . . . . . . .
Stock compensation expense recognized in
earnings . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss, net of tax:
Net change in unrealized gains and
losses on available for sale
securities,
net of reclassification adjustments
Balance at December 31, 2023 . . . . . . . . .
Preferred
Stock
Shares Stock
$ 96,241
—
— 96,241
—
—
Number
of
Common
Other
Retained Comprehensive Treasury
Surplus Earnings Income (Loss)
$ 149,334
—
$ 2,289,626
253,922
$
Stock
20,825 $ (378,028) $2,177,998
253,922
Total
—
—
—
—
—
—
—
—
110
—
—
—
110
—
—
—
2,304
506
(72,838)
—
—
—
—
—
—
—
—
(716)
—
(72,838)
(716)
2,414
—
506
—
—
— 96,351
—
—
—
$ 96,351
—
—
$ 152,144
—
—
$ 2,470,710
300,232
$
—
—
—
—
—
—
69
—
—
—
69
—
—
(75,375)
—
1,468
449
—
—
—
—
—
— 96,420
—
—
—
$ 96,420
—
—
$ 154,061
—
—
$ 2,695,567
411,768
$
(52,805)
(52,805)
(31,980) $ (378,744) $2,308,481
300,232
—
—
—
—
—
—
—
—
(75,375)
(52,048)
—
(52,048)
1,537
—
449
(438,517)
(438,517)
(470,497) $ (430,792) $2,044,759
411,768
—
—
—
—
—
—
—
—
—
47
—
—
—
47
—
—
—
1,120
330
(78,247)
—
—
—
—
—
—
—
—
(4,611)
—
(78,247)
(4,611)
1,167
—
330
—
—
— 96,467
—
$ 96,467
—
$ 155,511
—
$ 3,029,088
$
72,608
72,608
(397,889) $ (435,403) $2,447,774
—
See accompanying notes to consolidated financial statements.
32
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 2023, 2022 and 2021
(Dollars in Thousands)
Operating activities:
2023
2022
2021
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
411,768
$
300,232 $
253,922
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for credit loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Specific reserve, other real estate owned . . . . . . . . . . . . . . . . . . . . . . .
Depreciation of bank premises and equipment . . . . . . . . . . . . . . . . . .
Gain on sale of bank premises and equipment. . . . . . . . . . . . . . . . . . .
Gain on sale of other real estate owned . . . . . . . . . . . . . . . . . . . . . . . .
Accretion of investment securities discounts. . . . . . . . . . . . . . . . . . . .
Amortization of investment securities premiums . . . . . . . . . . . . . . . .
Investment securities transactions, net . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized (gain) loss on equity securities with readily
determinable fair values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from settlements of claims . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings from affiliates and other investments . . . . . . . . . . . . . . . . . .
Deferred tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Increase) decrease in accrued interest receivable. . . . . . . . . . . . . . . .
(Increase) decrease in other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in other liabilities . . . . . . . . . . . . . . . . . . . . . . . . .
34,576
2,538
21,944
(198)
(7,370)
(1,913)
6,901
3
(59)
—
330
(983)
22,950
(19,515)
(7,297)
10,757
21,651
1,627
21,821
(3,110)
(2,096)
(1,785)
13,907
—
721
—
449
(15,894)
10,619
(15,194)
12,975
42,018
7,955
2,655
25,028
601
(170)
(702)
36,380
16
123
2,870
506
(68,034)
3,542
7,288
25,220
(5,519)
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . .
474,432
387,941
291,681
Investing activities:
Proceeds from maturities of securities . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales and calls of available for sale securities. . . . . . .
Purchases of available for sale securities . . . . . . . . . . . . . . . . . . . . . . .
Principal collected on mortgage backed securities . . . . . . . . . . . . . . .
Net (increase) decrease in loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions from other investments . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of bank premises and equipment. . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of bank premises and equipment . . . . . . . . . . . .
Proceeds from sales of other real estate owned . . . . . . . . . . . . . . . . . .
51,167
2,045
(1,079,215)
629,194
(632,976)
(31,256)
12,175
(27,497)
269
8,888
2,200
800
(1,455,249)
756,092
(228,340)
(79,669)
8,886
(19,213)
13,496
8,969
1,200
5,890
(2,856,135)
1,612,679
309,575
(61,783)
63,356
(10,390)
11,446
8,273
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . .
(1,067,206)
(992,028)
(915,889)
See accompanying notes to consolidated financial statements.
33
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
Years ended December 31, 2023, 2022 and 2021
(Dollars in Thousands)
2023
2022
2021
Financing activities:
Net (decrease) increase in non-interest bearing demand deposits. . . . . . . .
Net (decrease) increase in savings and interest bearing demand deposits . .
Net increase (decrease) in time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net increase (decrease) in securities sold under repurchase agreements . .
Net decrease in other borrowed funds . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .
Redemption of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from stock transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments of cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (815,210) $
155,220
(377,236)
356,993 (120,619)
(8,481)
99,225
(199) (425,194)
—
(52,048)
1,537
(75,375)
7,529 $ 1,122,712
738,043
35,262
11,524
(189)
—
(716)
2,414
(72,838)
(25,774)
(4,611)
1,167
(78,247)
Net cash (used in) provided by financing activities. . . . . . . . . . . . . . . . . .
(843,892) (517,431)
1,836,212
(Decrease) increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . .
(1,436,666) (1,121,518)
1,212,004
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . . . . . .
2,087,724 3,209,242
1,997,238
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
651,058 $ 2,087,724 $ 3,209,242
Supplemental cash flow information:
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..
Non-cash investing and financing activities:
Purchases of available-for-sale securities not yet settled. . . . . . . . . . . . . . .
Net transfers from loans to other real estate owned. . . . . . . . . . . . . . . . . . .
Net transfers from bank premises and equipment to other assets . . . . . . . .
$
$
117,936 $
69,799
36,355 $
22,118
29,007
47,394
— $
600
—
80,000 $
835
2,476
—
16,388
—
See accompanying notes to consolidated financial statements.
34
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies
Our accounting and reporting policies conform to U.S. generally accepted accounting principles (“GAAP”) and
to general practices within the banking industry. The following is a description of the more significant of those policies.
Consolidation and Basis of Presentation
Our consolidated financial statements include the accounts of the International Bancshares Corporation, its
wholly owned Subsidiary Banks and its wholly owned non-bank subsidiaries, IBC Trading Company, Premier Tierra
Holdings, Inc., IBC Charitable and Community Development Corporation, IBC Capital Corporation and Diamond Beach
Holdings, LLC. All significant inter-company balances and transactions have been eliminated in consolidation.
We, through our Subsidiary Banks, are primarily engaged in the business of banking, including the acceptance of
checking and savings deposits and the making of commercial, real estate, personal, home improvement, automobile, and
other installment and term loans. Our primary markets are north, south, central, and southeast Texas and the state of
Oklahoma. Each of our Subsidiary Banks is highly active in facilitating international trade along the United States border
with Mexico and elsewhere. Although our loan portfolio is diversified, the ability of our debtors to honor their contracts
is primarily dependent upon the economic conditions in our trade area. In addition, the investment portfolio is directly
impacted by fluctuations in market interest rates. We are subject to the regulations of certain federal agencies as well as
the Texas Department of Banking and the Oklahoma Department of Banking and undergo periodic examinations by those
regulatory authorities. Such agencies may require certain standards or impose certain limitations based on their judgments
or changes in law and regulations.
We own one insurance-related subsidiary, IBC Insurance Agency, Inc., a wholly owned subsidiary of our
Subsidiary Bank, International Bank of Commerce, Laredo. The insurance-related subsidiary does not conduct
underwriting activities.
The preparation of the consolidated financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities as of the dates of the statement of condition and income and expenses for the periods.
Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to
significant changes in the near-term relate to the determination of the allowance for credit losses (“ACL”).
Subsequent Events
We have evaluated all events or transactions that occurred through the date we issued these financial statements.
During this period, we did not have any material recognizable or non-recognizable subsequent events.
Investment Securities
We classify debt securities into one of these categories: held-to-maturity, available-for-sale, or trading. Such
classifications are reassessed for appropriate classification at each reporting date. Securities that are intended and expected
to be held until maturity are classified as “held-to-maturity” and are carried at amortized cost for financial statement
reporting. Securities that are not positively expected to be held until maturity but are intended to be held for an indefinite
period of time are classified as “available-for-sale” or “trading” and are carried at their fair value. Unrealized holding gains
and losses are included in net income for those securities classified as “trading,” while unrealized holding gains and losses
related to those securities classified as “available-for-sale” are excluded from net income and reported net of tax as other
comprehensive income (loss) and in shareholders’ equity as accumulated other comprehensive income (loss) until realized.
Unrealized gains and losses related to equity securities with readily determinable fair values are included in net income.
Available-for-sale and held-to-maturity debt securities in an unrealized loss position are evaluated for the underlying cause
of the loss. In the event that the deterioration in value is attributable to credit related reasons, then the amount of credit-
related impairment would be recorded as a charge to our ACL with subsequent changes in the amount of impairment, up
or down, also recorded through our ACL. The exception to this process will occur if we intend to sell an impaired available-
35
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
for-sale debt security or if we will more likely than not be required to sell a credit impaired available-for-sale debt security
prior to the value recovering to the security’s amortized cost. In those situations, the entire credit-related impairment
amount would be required to be recognized in earnings. We have evaluated the debt securities classified as available-for-
sale and held-to-maturity at December 31, 2023 and have determined that no debt securities in an unrealized loss position
are arising from credit related reasons and have therefore not recorded any allowances for debt securities in our ACL for
the periods. We did not maintain any trading securities during the three-year period ended December 31, 2023.
Mortgage-backed securities held at December 31, 2023 and 2022 represent participating interests in pools of
long-term first mortgage loans originated and serviced by the issuers of the securities. Mortgage-backed securities are
either issued or guaranteed by the U.S. government or its agencies including Freddie Mac, Fannie Mae, Ginnie Mae or
other non-government entities. Investments in residential mortgage-backed securities issued by Ginnie Mae are fully
guaranteed by the U. S. government. Investments in residential mortgage-backed securities issued by Freddie Mac and
Fannie Mae are not fully guaranteed by the U.S. government; however, we believe that the quality of the bonds is similar
to other AAA rated bonds with limited credit risk, particularly given the placement of Fannie Mae and Freddie Mac into
conservatorship by the federal government in 2008 and because securities issued by others that are collateralized by
residential mortgage-backed securities issued by Fannie Mae or Freddie Mac are rated consistently as AAA rated
securities. Market interest rate fluctuations can affect the prepayment speed of principal and the yield on the security.
Premiums and discounts are amortized using the level yield or “interest method” over the terms of the securities.
Declines in the fair value of held-to-maturity and available-for sale-securities below their cost that are deemed to be other
than temporary are reflected in earnings as realized losses. In determining whether other-than-temporary impairment
exists, management considers many factors, including (i) the length of time and the extent to which the fair value has been
less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) our intent to hold and our
determination of whether we will more likely than not be required to sell the security prior to a recovery in fair value. If
we determine that (i) we intend to sell the security or (ii) it is more likely than not that we will be required to sell the
security before it’s anticipated recovery, the other-than-temporary impairment that is recognized in earnings is equal to
the difference between the fair value of the security and our amortized cost of the security. If we determine that we (i) do
not intend to sell the security and (ii) we will not be more likely than not required to sell the security before it’s anticipated
recovery, the other-than-temporary impairment is segregated into its two components (i) the amount of impairment related
to credit loss and (ii) the amount of impairment related to other factors. The difference between the present value of the
cash flows expected to be collected and the amortized cost is the credit loss recognized through earnings and an adjustment
to the cost basis of the security. The amount of impairment related to other factors is included in other comprehensive
income (loss). Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific
identification method.
Equity Securities
Equity securities with readily determinable fair values at December 31, 2023 and December 31, 2022 consist
primarily of Community Reinvestment Act funds. Unrealized gains and losses on the equity securities are recognized in
net income.
Provision and Allowance for Credit Losses
Our ACL is based on an expected credit loss model that recognizes credit losses over the life of a financial asset.
Expected credit losses capture historical information, current conditions, and reasonable and supportable forecasts of future
conditions. The ACL is deducted from the amortized cost of an instrument to present the net amount expected to be
collected on the financial asset. Our ACL primarily consists of the aggregate ACL estimates of our Subsidiary Banks. The
estimates are established through charges to operations in the form of charges to provisions for credit loss expense. Loan
losses or recoveries are charged or credited directly to the ACL. The ACL of each Subsidiary Bank is maintained at a level
considered appropriate by management, based on estimated current expected credit losses in the current loan portfolio,
including information about past events, current conditions, and reasonable and supportable forecasts.
Our management continually reviews the ACL of the Subsidiary Banks using the amounts determined from the
estimates established on specific doubtful loans, the estimate established on quantitative historical loss percentages, and
36
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
the estimate based on qualitative current conditions and reasonable and supportable two-year forecasted data. Our
methodology reverts to the average lifetime loss-rate beyond the forecast period when we can no longer develop reasonable
and supportable forecasts. Should any of the factors considered by management in evaluating the adequacy of the estimate
for current expected credit losses change, our estimate of current expected credit losses could also change, which could
affect the level of future credit loss expense. While the calculation of our ACL utilizes management’s best judgment and
all information reasonably available, the adequacy of the ACL is dependent on a variety of factors beyond our control,
including, among other things, the performance of the entire loan portfolio, the economy, government actions, changes in
interest rates, and the view of regulatory authorities towards loan classifications. We believe that the allowance for
probable loan losses is adequate.
The Subsidiary Banks charge-off that portion of any loan which management considers to represent a loss as well
as that portion of any other loan which is classified as a “loss” by bank examiners. Commercial, financial, and agricultural
or real estate loans are generally considered by management to represent a loss, in whole or part, (i) when an exposure
beyond any collateral coverage is apparent, (ii) when no further collection of the portion of the loan so exposed is
anticipated based on actual results, (iii) when the credit enhancements, if any, are not adequate, and (iv) when the
borrower’s financial condition would indicate so. Generally, unsecured consumer loans are charged-off when 90 days past
due.
Loans
Loans are reported at the principal balance outstanding, net of unearned discounts. Interest income on loans is
reported on an accrual basis. Loan fees and costs associated with originating the loans are accreted or amortized over the
life of the loan using the interest method. We originate mortgage loans that may subsequently be sold to an unaffiliated
third party. The loans are not securitized and if sold, are sold without recourse. Loans held for sale are carried at cost and
the principal amount outstanding is not significant to the consolidated financial statements.
Doubtful Loans
Doubtful loans are those loans where it is probable that all amounts due according to contractual terms of the loan
agreement will not be collected. Doubtful loans are measured based on (i) the present value of expected future cash flows
discounted at the loan’s effective interest rate; (ii) the loan’s observable market price; or (iii) the fair value of the collateral
if the loan is collateral dependent. Substantially all our doubtful loans are measured at the fair value of the collateral. In
limited cases, we may use other methods to determine the level of impairment of a loan if such loan is not collateral
dependent.
37
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Troubled Loan Modifications
We adopted the provisions of Accounting Standards Update No. 2022-02, Financial Instruments – Credit Losses
(Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”) on January 1, 2023. ASU 2022-02
eliminates the accounting guidance for troubled debt restructurings (“TDR”) in existing guidance and enhances disclosure
requirements for certain loan refinancings and restructurings when a borrower is experiencing financial difficulty. We
occasionally provide modifications to borrowers experiencing financial difficulties. Modifications may include certain
concessions that we evaluate under ASU 2022-02 to determine the need for disclosure. Concessions to borrowers
experiencing financial difficulties that would require disclosure include principal forgiveness, term extension, an other-
than-insignificant payment delay, an interest rate reduction or a combination of these concessions, collectively referred to
as troubled loan modifications. In accordance with the provisions of ASU 2022-02, we ceased recognition of TDR loans
after adopting ASU 2022-02 on January 1, 2023. Prior to the adoption of ASU 2022-02, TDR loans were those loans
where, for reasons related to a borrower’s difficulty to repay a loan, we granted a concession to the borrower that we would
not have normally considered in the normal course of business. Short term-deferrals were not considered a TDR. The
terms that may have been modified included a reduction in the original stated interest rate, an extension of the original
maturity of the loan, a renewal of the loan at an interest rate below current market rates, a reduction in the principal amount
of debt outstanding, a reduction in accrued interest or deferral of interest payments. A loan classified as a TDR is classified
as a doubtful loan and included in the doubtful loan totals. A TDR loan may be returned to accrual status when the loan is
brought current, has performed in accordance with the restructured terms for a reasonable period of time, is at the current
market rate, and the ultimate collectability of the outstanding principal and interest is no longer questionable. However,
although those loans may be placed back on accrual status, they will continue to be classified as doubtful. Consistent with
regulatory guidance, a TDR loan that is subsequently modified, but has shown sustained performance and classification
as a TDR, will be removed from TDR status provided that the modified terms were market-based at the time of
modification.
Non-Accrual Loans
The non-accrual loan policy of our Subsidiary Banks is to discontinue the accrual of interest on loans when
management determines that it is probable that future interest accruals will be un-collectible. As it relates to consumer
loans, management charges-off those loans when the loan is contractually 90 days past due. Under special circumstances,
a consumer or non-consumer loan may be more than 90 days delinquent as to interest or principal and not be placed on
non-accrual status. This situation generally results when a Subsidiary Bank has a borrower who is experiencing financial
difficulties, but not to the extent that requires a restructuring of indebtedness. The majority of this category is composed
of loans that are considered to be adequately secured and/or for which there are expected future payments. When a loan is
placed on non-accrual status, any interest accrued, not paid is reversed and charged to operations against interest income.
As it relates to non-consumer loans that are not 90 days past due, management will evaluate each of these loans to
determine if placing the loan on non-accrual status is warranted. Interest income on non-accrual loans is recognized only
to the extent payments are received or when, in management’s opinion, the debtor’s financial condition warrants
reestablishment of interest accruals.
Other Real Estate Owned and Repossessed Assets
Other real estate owned is comprised of real estate acquired by foreclosure and deeds in lieu of foreclosure. Other
real estate is carried at the lower of the recorded investment in the property or its fair value less estimated costs to sell such
property (as determined by independent appraisal). Prior to foreclosure, the value of the underlying loan is written down
to the fair value of the real estate to be acquired by a charge to the ACL, if necessary. Any subsequent write-downs are
charged against other non-interest expense through a valuation allowance. Other real estate owned totaled approximately
$26,728,000 and $30,144,000 at December 31, 2023 and 2022, respectively. Other real estate owned is included in other
assets. Repossessed assets consist primarily of non-real estate assets acquired by foreclosure. Prior to foreclosure, the value
of the underlying loan is written down to the fair value of the asset to be repossessed by a charge to the ACL, if necessary.
Repossessed assets are included in other assets on the consolidated financial statements and totaled approximately
$236,000 and $4,637,000 at December 31, 2023 and 2022, respectively.
38
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Bank Premises and Equipment
Bank premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed on
straight-line and accelerated methods over the estimated useful lives of the assets. Repairs and maintenance are charged
to operations as incurred and expenditures for renewals and betterments are capitalized. We primarily own all the property
we occupy, with the exception of certain branches operating in grocery store or retail shopping centers and certain ATM
locations, which are all under operating leases as classified under guidance prior to the issuance of ASU 2016-02, “Leases
(Topic 842).”
Other Investments
Other investments include equity investments in non-financial companies, as well as equity securities with no
readily determinable fair market value. Equity investments are accounted for using the equity method of accounting. Equity
securities with no readily determinable fair value are accounted for using the cost method.
Revenue Recognition
Our revenue is primarily comprised of net interest income on financial assets and liabilities, which are excluded
from the scope of ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” The remaining non-interest
revenue streams were identified and then analyzed under the provisions of the update, to: (i) identify the contract,
(ii) identify the performance obligation, (iii) determine the transaction price, (iv) allocate the transaction price to the
performance obligations, and (v) recognize revenue when the performance obligation was satisfied. Our non-interest
revenue contracts with customers are primarily short term and our performance obligation is satisfied at a single point in
time, typically within a single period. No changes to our existing methods for recognizing revenue were made as a result
of the accounting standards update.
Income Taxes
Deferred income tax assets and liabilities are determined using the asset and liability method. Under this method,
the net deferred tax asset or liability is determined based on the tax effects of the differences between the book and tax
basis of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws. We
file a consolidated federal income tax return with our subsidiaries.
Recognition of deferred tax assets is based on management’s assessment that the benefit related to certain
temporary differences, tax operating loss carry forwards, and tax credits are more likely than not to be realized. A valuation
allowance is recorded for the amount of the deferred tax items for which it is more likely than not that the tax benefits will
not be realized.
We evaluate uncertain tax positions at the end of each reporting period. We may recognize the tax benefit from
an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the
taxing authorities, based on the technical merits of the position. The tax benefit recognized in the financial statements from
any such a position is measured based on the largest benefit that has a greater than fifty percent likelihood of being realized
upon ultimate settlement. As of December 31, 2023 and 2022, respectively, after evaluating all uncertain tax positions, we
have recorded no liability for unrecognized tax benefits at the end of the reporting period. We would recognize any interest
accrued on unrecognized tax benefits as other interest expense and penalties as other non-interest expense. During the
years ended December 31, 2023, 2022, and 2021, we recognized no interest expense or penalties related to uncertain tax
positions.
We file consolidated tax returns in the U.S. federal jurisdiction and various state jurisdictions. We are no longer
subject to U.S. federal or state income tax examinations by tax authorities for years before 2020.
39
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Stock Options and Stock Appreciation Rights
Compensation expense for stock-based awards is based on the market price of the stock on the measurement date,
which is generally the date of grant, and is recognized ratably over the service period of the award. The fair value of stock
options and stock appreciation rights granted was estimated using a Black-Scholes-Merton pricing model. These models
were developed for use in estimating the fair value of publicly traded options and stock appreciation rights that have no
vesting restrictions and are fully transferable. Additionally, these models require the input of highly subjective
assumptions. Because our employee stock options and stock appreciation rights have characteristics significantly different
from those of publicly traded options and appreciation rights, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management’s opinion, the Black-Scholes-Merton pricing models do not
necessarily provide a reliable single measure of the fair value of our stock options and stock appreciation rights.
Net Income Per Share
Basic Earnings Per Share (“EPS”) is calculated by dividing net income by the weighted average number of
common shares outstanding. The computation of diluted EPS assumes the issuance of common shares for all dilutive
potential common shares outstanding during the reporting period. The dilutive effect of stock options is considered in
earnings per share calculations, if dilutive, using the treasury stock method.
Goodwill and Identified Intangible Assets
Goodwill represents the excess of costs over fair value of assets of businesses acquired. Goodwill is tested for
impairment at least annually or on an interim basis if an event triggering impairment may have occurred. As of October 1,
2023, after completing goodwill testing, we have determined that no goodwill impairment exists.
Identified intangible assets are acquired assets that lack physical substance but can be distinguished from goodwill
because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or
in combination with a related contract, asset, or liability. Our identified intangible assets relate to core deposits and contract
rights. As of December 31, 2023, we have determined that no impairment of identified intangibles exists. Identified
intangible assets with definite useful lives are amortized on an accelerated basis over their estimated life. See Note 6—
Goodwill and Other Intangible Assets.
Impairment of Long-Lived Assets
Long-lived assets, such as property, plant, and equipment, and purchased intangibles subject to amortization, are
reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying value of the asset
to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying value of an asset
exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying value of
the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the statement of
condition and reported at the lower of the carrying value or fair value less costs to sell and are no longer depreciated. The
assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset
and liability sections of the statement of condition.
Consolidated Statements of Cash Flows
For purposes of the consolidated statements of cash flows, we consider all short-term investments with a maturity
at date of purchase of three months or less to be cash equivalents. Also, we report transactions related to deposits and loans
to customers on a net basis.
40
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Accounting for Transfers and Servicing of Financial Assets
We account for transfers and servicing of financial assets and extinguishments of liabilities based on the
application of a financial-components approach that focuses on control. After a transfer of financial assets, we recognize
the financial and servicing assets we control and liabilities we have incurred, derecognize financial assets when control
has been surrendered and derecognize liabilities when extinguished. We have retained mortgage servicing rights in
connection with the sale of mortgage loans. Because we may not initially identify loans as originated for resale, all loans
are initially treated as held for investment. The value of the mortgage servicing rights are reviewed periodically for
impairment and are amortized in proportion to, and over the period of estimated net servicing income or net servicing
losses. The value of the mortgage servicing rights is not significant to the consolidated statements of condition.
Segments of an Enterprise and Related Information
We operate as one segment. The operating information used by our chief executive officer for purposes of
assessing performance and making operating decisions is the consolidated financial statements presented in this report.
We have five active operating subsidiaries, namely, the Subsidiary Banks. We apply the provisions of ASC Topic 280,
“Segment Reporting,” in determining our reportable segments and related disclosures.
Comprehensive Income (Loss)
Comprehensive income (loss) consists of net income and other comprehensive income (loss). Other
comprehensive income (loss) includes unrealized gains and losses on securities available for sale.
Advertising
Advertising costs are expensed as incurred.
Reclassifications
Certain amounts in the prior year’s presentations have been reclassified to conform to the current presentation.
These reclassifications had no effect on previously reported net income or shareholders’ equity.
New Accounting Standards
In December 2019, the FASB issued Accounting Standards Update No. 2019-12, to ASC 740, “Income Taxes.”
The update amends existing guidance with the intention of simplifying the accounting for income taxes. Specifically, the
update removes some exceptions in existing guidance around intraperiod tax allocations, recognition of deferred tax
liabilities for certain changes in investments in foreign subsidiaries and to the general methodology for calculating taxes
on interim periods when year to date losses exceed the anticipated loss for the year. Additionally, the update clarifies and
provides more guidance with respect to the classification of franchise or similar taxes, requirements to evaluate when a
step up in the tax basis of goodwill should be considered, eliminates the requirement that a consolidated entity allocate a
portion of current and deferred tax expense to a legal entity that is not subject to tax, requires that an entity reflect the
effect of changes in tax laws and tax rates in the effective tax rate computed in the interim period that includes the
enactment date and makes minor changes for taxes related to employee stock ownership plans and investments in qualified
affordable housing projects accounted for using the equity method. The update is effective for fiscal years beginning after
December 15, 2020. The adoption of the update did not have a significant impact on our consolidated financial statements.
In March 2022, the FASB issued Accounting Standards Update No. 2022-02, Financial Instruments – Credit
Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”). ASU 2022-02 eliminates
the accounting guidance for troubled debt restructurings in existing guidance and enhances disclosure requirements for
certain loan refinancings and restructurings when a borrower is experiencing financial difficulty. Additionally, ASU
2022-02 requires entities to disclose current period gross write-offs by year of origination for financing receivables and net
41
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
investments in leases. We adopted the provisions of ASU 2022-02 on January 1, 2023 and it did not have a significant
impact on our consolidated financial statements.
In March 2023, the FASB issued Accounting Standards Update No. 2023-02, Investments in Equity Method and
Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization
Method. ASU 2023-02 modifies existing guidance to allow for use of the proportional amortization method for all tax
equity investments, regardless of the tax credit program from which the income tax credits are received if certain conditions
are met. ASU 2023-02 also requires specific disclosures of all investments that generate income tax credits and other
income tax benefits from a tax credit program for which an entity has elected to apply the proportional amortization method
in annual and interim periods. The provisions of ASU 2023-02 are effective for fiscal years beginning after December 15,
2023 and we do not anticipate that the adoption of ASU 2023-02 will have a significant impact on our consolidated
financial statements.
In October 2023, the FASB issued Accounting Standards Update No. 2023-06, Disclosure Improvements:
Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. ASU 2023-06
modifies the disclosure and presentation requirements of various topics to align disclosures with SEC Release
No. 33-10532, Disclosure Update and Simplification, which was issued in August 2018. ASU 2023-06 also provides
clarifications or technical corrections of certain current disclosure requirements. The provisions of ASU 2023-06 are
effective on the date in which the SEC removal of the related disclosure from Regulation S-X or Regulation S-K, with
early adoption prohibited. The adoption of ASU 2023-06 is not expected to have a significant impact on our consolidated
financial statements.
In November 2023, the FASB issued Accounting Standards Update No. 2023-07, Segment Reporting (Topic
280): Improvements to Reportable Segment Disclosures. ASU 2023-07 expands segment disclosure requirements for
public entities, primarily through enhanced disclosures about significant segment expenses and other segment items on an
annual and interim basis. ASU 2023-07 also requires full segment disclosures, currently only required in annual periods,
to be included in interim periods as well. ASU 2023-078 is effective for fiscal years beginning after December 15, 2024.
The adoption of ASU 2023-07 is not expected to have a significant impact on our consolidated financial statements.
In December 2023, the FASB issued Accounting Standards Update No. 2023-09, Income Taxes (Topic 740):
Improvements to Income Tax Disclosures, an Amendment. ASU 2023-09 is intended to enhance transparency and
decisions usefulness of income tax disclosures. ASU 2023-09 requires that public entities disclose specific categories in
the annual rate reconciliation and provides additional guidance for reconciling items that meet a quantitative threshold.
Explanation of individual reconciling items is also required. ASU 2023-09 also requires certain disclosures regarding
income taxes paid, including disaggregation of taxes paid (net of refunds) by federal, state and foreign taxes, including
disaggregation by individual jurisdictions in which taxes paid (net of refunds), exceed a quantitative threshold. The
provisions of ASU 2023-09 are effective for annual periods beginning after December 15, 2024. The adoption of ASU
2023-09 is not expected to have a significant impact on our consolidated financial statements.
(2) Investment Securities, Equity Securities with Readily Determinable Fair Values and Other Investments
Available-for-sale and held-to-maturity debt securities in an unrealized loss position are evaluated for the
underlying cause of the loss. In the event that the deterioration in value is attributable to credit related reasons, then the
amount of credit-related impairment would be recorded as a charge to our ACL with subsequent changes in the amount of
impairment, up or down, also recorded through our ACL. The exception to this process will occur if we intend to sell an
impaired available-for-sale debt security or if we will more likely than not be required to sell a credit impaired available-
for-sale debt security prior to the value recovering to the security’s amortized cost. In those situations, the entire credit-
related impairment amount would be required to be recognized in earnings. We have evaluated the debt securities classified
as available-for-sale and held-to-maturity at December 31, 2023 and December 31, 2022, and have determined that no
debt securities in an unrealized loss position are arising from credit related reasons, and have therefore not recorded any
42
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
allowances for debt securities in our ACL for the period. Unrealized gains and losses related to equity securities with
readily determinable fair values are included in net income.
The amortized cost and estimated fair value by type of investment security at December 31, 2023 are as follows:
Other securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Total investment securities . . . . . . . . . . . . . . . . . . . . $
3,400 $
3,400 $
Amortized
cost
Amortized
cost
Residential mortgage-backed securities . . . . . . . . . . $ 5,169,813 $
Obligations of states and political subdivisions . . .
Total investment securities . . . . . . . . . . . . . . . . . . . . $ 5,330,814 $
161,001
Gross
unrealized
gains
Held to Maturity
Gross
unrealized
losses
(Dollars in Thousands)
— $
— $
— $
— $
Estimated
fair value
Carrying
value
3,400 $
3,400 $
3,400
3,400
Gross
unrealized
gains
Available for Sale Debt Securities
Gross
unrealized
losses
(Dollars in Thousands)
Estimated
fair value
Carrying
value(1)
9,541 $ (519,255) $ 4,660,099 $ 4,660,099
1,602
162,242
11,143 $ (519,616) $ 4,822,341 $ 4,822,341
162,242
(361)
(1)
Included in the carrying value of residential mortgage- backed securities are $959,421 of mortgage-backed securities issued by Ginnie Mae and
$3,700,678 of mortgage-backed securities issued by Fannie Mae and Freddie Mac
The amortized cost and estimated fair value of investment securities at December 31, 2023, by contractual
maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the
right to prepay obligations with or without prepayment penalties.
Held to Maturity
Available for Sale
Amortized
Cost
Estimated Amortized
fair value
Cost
Estimated
fair value
(Dollars in Thousands)
Due in one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due after one year through five years . . . . . . . . . . . . . . . . . . . . . . . .
Due after five years through ten years . . . . . . . . . . . . . . . . . . . . . . . .
Due after ten years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential mortgage-backed securities . . . . . . . . . . . . . . . . . . . . . . .
Total investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 2,075 $ 2,075 $
1,325
—
—
—
$ 3,400
1,325
— $
—
440
—
—
160,561
— 5,169,813
—
—
440
161,802
4,660,099
$ 5,330,814 $ 4,822,341
$ 3,400
The amortized cost and estimated fair value by type of investment security at December 31, 2022 are as follows:
Amortized
cost
Gross
unrealized
gains
Held to Maturity
Gross
unrealized
losses
(Dollars in Thousands)
Estimated
fair value
Carrying
value
Other securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total investment securities . . . . . . . . . . . . . . . . . . .
$
$
3,400
3,400
$
$
— $
— $
— $
— $
3,400 $
3,400 $
3,400
3,400
43
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Amortized
cost
U.S. Treasury securities . . . . . . . . . . . . . . . . . . . . .
Residential mortgage-backed securities . . . . . . . . .
Obligations of states and political subdivisions . .
Total investment securities . . . . . . . . . . . . . . . . . . .
$
49,752
4,805,735
163,509
$ 5,018,996
$
$
Gross
unrealized
gains
Available for Sale
Gross
unrealized
losses
(Dollars in Thousands)
Estimated
fair
value
Carrying
value(1)
— $
(359) $
49,393 $
49,393
4,209,212
159,191
$ (605,272) $ 4,417,796 $ 4,417,796
(599,668) 4,209,212
159,191
(5,245)
3,145
927
4,072
(1)
Included in the carrying value of residential mortgage- backed securities are $681,121 of mortgage-backed securities issued by Ginnie Mae,
$3,528,091 of mortgage-backed securities issued by Fannie Mae and Freddie Mac
Residential mortgage-backed securities are securities issued by Freddie Mac, Fannie Mae, Ginnie Mae or
non-government entities. Investments in residential mortgage-backed securities issued by Ginnie Mae are fully guaranteed
by the U.S. government. Investments in mortgage-backed securities issued by Freddie Mac and Fannie Mae are not fully
guaranteed by the U.S. government; however, we believe that the quality of the bonds is similar to other AAA rated bonds
with limited credit risk, particularly given the placement of Fannie Mae and Freddie Mac into conservatorship by the
federal government in early September 2008 and because securities issued by others that are collateralized by residential
mortgage-backed securities issued by Fannie Mae and Freddie Mac are rated consistently as AAA rated securities.
The amortized cost and fair value of available for sale investment securities pledged to qualify for fiduciary
powers, to secure public monies as required by law, repurchase agreements and short-term fixed borrowings was
$1,836,634,000 and $1,598,853,000, respectively, at December 31, 2023.
Proceeds from the sale and call of securities available-for-sale were $2,045,000, $800,000, and $5,890,000 during
2023, 2022 and 2021, respectively, which amounts included $0, $0 and $0 of mortgage-backed securities. Gross gains of
$0, $0 and $0, and gross losses of $3,000, $0 and $16,000 were realized on the sales and calls in 2023, 2022 and 2021,
respectively.
Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by
investment category and length of time that individual securities have been in a continuous unrealized loss position, at
December 31, 2023 were as follows:
Available for sale:
Residential mortgage-backed securities . . . . . . . . . . . .
Obligations of states and political subdivisions . . . . . . .
Less than 12 months
12 months or more
Total
Fair Value
Unrealized
Losses
Unrealized
Fair Value
Losses
(Dollars in Thousands)
Fair Value
Unrealized
Losses
$
$
577,448
651
578,099
$
$
(8,267) $ 3,456,349
64,373
(8,268) $ 3,520,722
(1)
$ (510,988) $ 4,033,797
65,024
$ (511,348) $ 4,098,821
(360)
$ (519,255)
(361)
$ (519,616)
44
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by
investment category and length of time that individual securities have been in a continuous loss position, at December 31,
2022 were as follows:
Less than 12 months
12 months or more
Total
Fair Value
Unrealized
Losses
Unrealized
Fair Value
Losses
(Dollars in Thousands)
Fair Value
Unrealized
Losses
Available for sale:
U.S. Treasury securities . . . . . . . . . . . . . . . . . . . . . . . .
Residential mortgage-backed securities . . . . . . . . . . . .
Obligations of states and political subdivisions . . . . . . .
$
49,394
1,357,905
118,772
$ 1,526,071
$
(359) $
— $
(87,815)
(5,245)
2,566,975
—
$ (93,419) $ 2,566,975
— $
49,394
3,924,880
118,772
$ (511,853) $ 4,093,046
(511,853)
—
$
(359)
(599,668)
(5,245)
$ (605,272)
The unrealized losses on investments in residential mortgage-backed securities are primarily caused by changes
in market interest rates. We have no intent to sell and more likely than not be required to sell before a market price recovery
or maturity of the securities; therefore, it is our conclusion that the investments in residential mortgage-backed securities
issued by Freddie Mac, Fannie Mae, and Ginnie Mae are not considered other-than-temporarily impaired.
Equity securities with readily determinable fair values consist primarily of Community Reinvestment Act funds.
At December 31, 2023 and December 31, 2022, the balance in equity securities with readily determinable fair values
recorded at fair value were $5,417,000 and $5,358,000, respectively. The following is a summary of unrealized and
realized gains and losses recognized in net income on equity securities for the twelve months ended December 31, 2023,
2022, and 2021:
Net gains recognized during the period on equity securities . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Net gains and (losses) recognized during the period on equity securities sold
$
during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gains recognized during the reporting period on equity securities still held at
the reporting date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
59
—
59
Year Ended
December 31, 2023
(Dollars in Thousands)
Net losses recognized during the period on equity securities. . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Net gains and (losses) recognized during the period on equity securities sold
$
during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized losses recognized during the reporting period on equity securities still held at
the reporting date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
(721)
—
(721)
Year Ended
December 31, 2022
(Dollars in Thousands)
45
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Year Ended
December 31, 2021
(Dollars in Thousands)
Net losses recognized during the period on equity securities. . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Net gains and (losses) recognized during the period on equity securities sold
$
during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized losses recognized during the reporting period on equity securities still held at
the reporting date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
(123)
—
(123)
Other investments include equity and merchant banking investments held by our subsidiary banks and non-
banking entities. We hold ownership interests in limited partnerships for the purpose of investing in low-income housing
tax credit (“LIHTC”) projects. The partnerships may acquire, construct, or rehabilitate housing for low- and moderate-
income individuals. We realize a return primarily from federal tax credits and other federal tax deductions associated with
the underlying projects. We are a limited partner in the partnerships, and not required to consolidate the entities in our
consolidated financial statements. Investments in LIHTC projects totaled $200,245,000 at December 31, 2023 and
$214,549,000 at December 31, 2022 and are included in other investments on the consolidated financial statements.
Unfunded commitments to LIHTC projects totaled $34,126,000 at December 31, 2023 and $41,191,000 at December 31,
2022 and are included in other liabilities on the consolidated financial statements.
(3) Loans
A summary of loans, by loan type at December 31, 2023 and 2022 is as follows:
December 31, December 31,
2023
2022
(Dollars in Thousands)
Commercial, financial and agricultural . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate - mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate - construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 4,802,622 $ 4,373,373
865,994
1,989,669
41,592
159,975
$ 8,058,961 $ 7,430,603
938,901
2,091,622
45,121
180,695
(4) Allowance for Credit Losses
We adopted the provisions of ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement
of Credit Losses on Financial Instruments on January 1, 2020 on a modified retrospective basis. Results and information
regarding our ACL included in this Note are calculated and presented in accordance with that accounting standards update.
Results and information prior to January 1, 2020 were calculated and presented in accordance with previously applicable
U.S. GAAP.
ASU 2016-13 replaces the long-standing incurred-loss model with a current expected credit loss model (“CECL”)
that recognizes credit losses over the life of a financial asset. Using the CECL methodology, expected credit losses capture
historical information, current conditions, and reasonable and supportable forecasts of future conditions. The ACL is
deducted from the amortized cost of an instrument to present the net amount expected to be collected on the financial asset.
Our ACL primarily consists of the aggregate ACL estimates of our Subsidiary Banks. The estimates are established
through charges to operations in the form of charges to provisions for credit loss expense. Loan losses or recoveries are
charged or credited directly to the ACL. The ACL of each Subsidiary Bank is maintained at a level considered appropriate
by management, based on estimated current expected credit losses in the current loan portfolio, including information
about past events, current conditions, and reasonable and supportable forecasts.
46
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
The estimation of the ACL is based on a loss-rate methodology that measures lifetime losses on loan pools that
have similar risk characteristics. Loans that do not have similar risk characteristics are evaluated on an individual basis.
The segmentation of the loan portfolio into pools requires a balancing process between capturing similar risk
characteristics and containing sufficient loss history to provide meaningful results. Our segmentation starts at the general
loan category with further sub-segmentation based on collateral types that may be of meaningful size and/or may contain
sufficient differences in risk characteristics based on management’s judgement that would warrant further segmentation.
The general loan categories along with primary risk characteristics used in our calculation are as follows:
Commercial and industrial loans. This category includes loans extended to a diverse array of businesses for working
capital or equipment purchases. These loans are mostly secured by the collateral pledged by the borrower that is
directly related to the business activities of the company such as equipment, accounts receivable, and inventory. The
borrower’s abilities to generate revenues from equipment purchases, collect accounts receivable, and to turn inventory
into sales are risk factors in the repayment of the loan. A small portion of this loan category is related to loans secured
by oil and gas production and loans secured by aircraft.
Construction and land development loans. This category includes the development of land from unimproved land to
lot development for both residential and commercial use and vertical construction across residential and commercial
real estate classes. These loans carry risk of repayment when projects incur cost overruns, have an increase in the
price of construction materials, encounter zoning, entitlement and environmental issues, or encounter other factors
that may affect the completion of a project on time and on budget. Additionally, repayment risk may be negatively
impacted when the market experiences a deterioration in the value of real estate. Risks specifically related to 1-4
family development loans also include mortgage rate risk and the practice by the mortgage industry of more restrictive
underwriting standards, which inhibits the buyer from obtaining long term financing creating excessive housing and
lot inventory in the market.
Commercial real estate loans. This category includes loans secured by farmland, multifamily properties, owner-
occupied commercial properties, and non-owner-occupied commercial properties. Owner-occupied commercial
properties include warehouses often along the border for import/export operations, office space where the borrower
is the primary tenant, restaurants and other single-tenant retail spaces. Non-owner-occupied commercial properties
include hotels, retail centers, office and professional buildings, and leased warehouses. These loans carry risk of
repayment when market values deteriorate, the business experiences turnover in key management, the business has
an inability to attract or keep occupancy levels stable, or the market experiences an exit of a specific business type
that is significant to the local economy, such as a manufacturing plant.
1-4 family mortgages. This category includes both first and second lien mortgages for the purpose of home purchases
or refinancing of existing mortgage loans. A small portion of this loan category is related to home equity lines of
credits, lots purchases, and home construction. Loan repayments may be affected by unemployment or
underemployment and deteriorating market values of real estate.
Consumer loans. This category includes deposit secured, vehicle secured, and unsecured loans, including overdrafts,
made to individuals. Repayment is primarily affected by unemployment or underemployment.
The loan pools are further broken down using a risk-based segmentation based on internal classifications for
commercial loans and past due status for consumer mortgage loans. Non-mortgage consumer loans are evaluated as one
segment. On a weekly basis, commercial loan past due reports are reviewed by the credit quality committee to determine
if a loan has any potential problems and if a loan should be placed on our internal Watch List report. Additionally, our
credit department reviews the majority of our loans for proper internal classification purposes regardless of whether they
are past due and segregates any loans with potential problems for further review. The credit department will discuss the
potential problem loans with the servicing loan officers to determine any relevant issues that were not discovered in the
evaluation. Also, an analysis of loans that is provided through examinations by regulatory authorities is considered in the
review process. After the above analysis is completed, we will determine if a loan should be placed on an internal Watch
List report because of issues related to the analysis of the credit, credit documents, collateral, and/or payment history.
47
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Our internal Watch List report is segregated into the following categories: (i) Pass, (ii) Economic Monitoring,
(iii) Special Review, (iv) Watch List—Pass, or (v) Watch List—Substandard, and (vi) Watch List—Doubtful. The loans
placed in the Special Review category and lower rated credits reflect our opinion that the loans reflect potential weakness
which require monitoring on a more frequent basis. Credits in those categories are reviewed and discussed on a regular
basis, no less frequently than quarterly, with the credit department and the lending staff to determine if a change in category
is warranted. The loans placed in the Watch List—Pass category and lower rated credits reflect our opinion that the credit
contains weaknesses which represent a greater degree of risk, which warrant “extra attention.” Credits in this category are
reviewed and discussed on a regular basis with the credit department and the lending staff to determine if a change in
category is warranted. The loans placed in the Watch List—Substandard category are considered to be potentially
inadequately protected by the current sound worth and debt service capacity of the borrower or of any pledged collateral.
These credit obligations, even if apparently protected by collateral value, have shown defined weaknesses related to
adverse financial, managerial, economic, market, or political conditions which may jeopardize repayment of principal and
interest. Furthermore, there is the possibility that we may sustain some future loss if such weaknesses are not corrected.
The loans placed in the Watch List—Doubtful category have shown defined weaknesses and it is likely, based on current
information and events, that we will be unable to collect all principal and/or interest amounts contractually due. Watch
List—Doubtful loans are placed on non-accrual when they are moved to that category.
For the purposes of the ACL, in order to maintain segments with sufficient history for meaningful results, the
credits in the Pass and Economic Monitoring categories are aggregated, the credits in the Special Review and Watch List—
Pass credits are aggregated, and the credits in the Watch List—Substandard category remain in their own segment. For
loans that are classified as Watch List—Doubtful, management evaluates these credits in accordance with ASC 310-10,
“Receivables,” and, if deemed necessary, a specific reserve is allocated to the loan. The specific reserve allocated under
ASC 310-10 is based on (i) the present value of expected future cash flows discounted at the loan’s effective interest rate;
(ii) the loan’s observable market price; or (iii) the net realizable value of the fair value of the collateral if the loan is
collateral dependent. Substantially all of our loans evaluated as Watch List—Doubtful under ASC 310-10 are measured
using the fair value of collateral method. In rare cases, we may use other methods to determine the specific reserve of a
loan under ASC 310-10 if such loan is not collateral dependent.
Within each collectively evaluated pool, the robustness of the lifetime historical loss-rate is evaluated and, if
needed, is supplemented with peer loss rates through a model risk adjustment. Certain qualitative loss factors are then
evaluated to incorporate management’s two-year reasonable and supportable forecast period followed by a reversion to
the pool’s average lifetime loss-rate. Those qualitative loss factors are: (i) trends in portfolio volume and composition,
(ii) volume and trends in classified loans, delinquencies, non-accruals and troubled loan modifications, (iii) concentration
risk, (iv) trends in underlying collateral value, (v) changes in policies, procedures, and strategies, and (vi) economic
conditions. Qualitative factors also include potential losses stemming from operational risk factors arising from fraud,
natural disasters, pandemics, geopolitical events and large loans. The large loan operational risk factor was added
beginning in the second quarter of 2023. Because of the magnitude of large loans, they pose a higher risk of default.
Recognizing this risk and establishing an operational risk factor to capture that risk, is prudent action in the current
economic environment. Large loans are usually part of a larger relationship with collateral that is pledged across the
relationship. Defaulting on a larger loan may therefore jeopardize an entire collateral relationship. The current economic
environment has created challenges for borrowers to service their debt. Increasing cap rates, elevated office vacancies, an
upward trend in apartment vacancies and significant increases in interest rates are all contributing to the elevated risk in
large loans. Should any of the factors considered by management in evaluating the adequacy of the ACL change, our
estimate could also change, which could affect the level of future credit loss expense.
We have elected to not measure an ACL for accrued interest receivable given our timely approach in identifying
and writing off uncollectible accrued interest. An ACL for off-balance sheet exposure is derived from a projected usage
rate of any unfunded commitment multiplied by the historical loss rate, plus model risk adjustment, if any, of the on-
balance sheet loan pools.
Our management continually reviews the ACL of the Subsidiary Banks using the amounts determined from the
estimates established on specific doubtful loans, the estimate established on quantitative historical loss percentages, and
the estimate based on qualitative current conditions and reasonable and supportable two-year forecasted data. Our
methodology reverts to the average lifetime loss-rate beyond the forecast period when we can no longer develop reasonable
48
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
and supportable forecasts. Should any of the factors considered by management in evaluating the adequacy of the estimate
for current expected credit losses change, our estimate of current expected credit losses could also change, which could
affect the level of future credit loss expense. While the calculation of our ACL utilizes management’s best judgment and
all information reasonably available, the adequacy of the ACL is dependent on a variety of factors beyond our control,
including, among other things, the performance of the entire loan portfolio, the economy, government actions, changes in
interest rates, and the view of regulatory authorities towards loan classifications.
A summary of the changes in the allowance for probable loan losses by loan class is as follows:
December 31, 2023
Domestic
Foreign
Commercial
real estate:
other
Commercial
construction & real estate: Commercial
Commercial development
land
farmland & real estate: Residential: Residential:
commercial multifamily
first lien
junior lien Consumer Foreign
Total
Balance at December 31, 2022 . . . . . $
Losses charged to allowance . . . .
Recoveries credited to
26,728 $
(9,664)
44,684 $
—
36,474 $
—
(Dollars in Thousands)
3,794 $
—
4,759 $
(43)
8,284 $
(298)
281 $
(179)
968 $ 125,972
(10,184)
—
allowance . . . . . . . . . . . . . . .
Net losses charged to allowance . .
5,433
(4,231)
837
837
143
143
—
—
16
(27)
260
(38)
16
(163)
—
—
6,705
(3,479)
Provision (credit) charged to
operations . . . . . . . . . . . . . . . . . .
Balance at December 31, 2023 . . . . . $
13,053
35,550 $
9,770
55,291 $
6,086
42,703 $
1,294
5,088 $
1,080
5,812 $
2,778
11,024 $
200
318 $
315
34,576
1,283 $ 157,069
December 31, 2022
Domestic
Foreign
Commercial
real estate:
other
Commercial
construction & real estate: Commercial
Commercial development
land
farmland & real estate: Residential: Residential:
commercial multifamily
first lien
junior lien Consumer Foreign
Total
Balance at December 31, 2021 . . . . . $
Losses charged to allowance . . . .
Recoveries credited to allowance .
Net losses charged to allowance .
23,178 $
(9,050)
2,894
(6,156)
35,390 $
(2)
123
121
35,654 $
(16)
27
11
Provision (credit) charged to
(Dollars in Thousands)
3,291 $
—
—
—
4,073 $
(160)
240
80
7,754 $
(28)
104
76
272 $
(223)
38
(185)
762 $ 110,374
(9,479)
3,426
(6,053)
—
—
—
operations . . . . . . . . . . . . . . . . . .
Balance at December 31, 2022 . . . . . $
9,706
26,728 $
9,173
44,684 $
809
36,474 $
503
3,794 $
606
4,759 $
454
8,284 $
194
281 $
206
21,651
968 $ 125,972
December 31, 2021
Domestic
Foreign
Commercial
real estate:
other
Commercial
construction & real estate: Commercial
Commercial development
land
farmland & real estate: Residential: Residential:
commercial multifamily
junior lien
first lien
Consumer Foreign
Total
Balance at December 31, 2020 . . . . . $
Losses charged to allowance . . . .
Recoveries credited to allowance .
Net losses charged to allowance .
21,908 $
(8,083)
1,943
(6,140)
37,612 $
(2)
—
(2)
30,000 $
(364)
171
(193)
Provision (credit) charged to
(Dollars in Thousands)
3,874 $
(373)
60
(313)
5,051 $
—
—
—
9,570 $
(25)
164
139
291 $
(176)
46
(130)
753 $ 109,059
(9,024)
2,384
(6,640)
(1)
—
(1)
operations . . . . . . . . . . . . . . . . . .
Balance at December 31, 2021 . . . . . $
7,410
23,178 $
(2,220)
35,390 $
5,847
35,654 $
(1,760)
3,291 $
512
4,073 $
(1,955)
7,754 $
111
272 $
10
7,955
762 $ 110,374
The allowance for credit losses is a reserve established through a provision for credit losses charged to expense,
which represents management’s best estimate of probable loan losses when evaluating loans (i) individually or
(ii) collectively. The credit loss charged to expense has increased for the twelve months ended December 31, 2023 compared
to the same periods of 2022 and 2021 in order to provide some protection from potential losses in our loan portfolio given
49
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
the high level of uncertainty in the economy and a potential economic recession on the horizon. We have increased the
severity of some of the qualitative loss factors in certain pools of the portfolio to encompass the economic uncertainty,
resulting in an increase in the required ACL. The pool specific qualitative loss factors management deemed appropriate
for the ACL calculation at December 31, 2022 remained constant in the December 31, 2023 calculation, with the exception
of the large loan factor that was added to the ACL calculation in the second quarter of 2023.
The table below provides additional information on the balance of loans individually or collectively evaluated for
impairment and their related allowance, by loan class:
December 31, 2023
Loans Individually
Evaluated For
Impairment
Loans Collectively
Evaluated For
Impairment
Recorded
Investment Allowance
Recorded
Investment
(Dollars in Thousands)
Allowance
Domestic
Commercial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial real estate: other construction & land development . . .
Commercial real estate: farmland & commercial . . . . . . . . . . . . . . .
Commercial real estate: multifamily . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential: first lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential: junior lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 30,872 $ 7,971 $ 1,597,358 $ 27,579
50,971
42,703
5,088
5,812
11,024
318
1,283
2,075,921
2,793,254
380,743
477,940
460,868
45,121
180,695
4,320
—
—
—
—
—
—
15,701
299
96
93
—
—
—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 47,061 $ 12,291 $ 8,011,900 $ 144,778
December 31, 2022
Loans Individually
Evaluated For
Impairment
Loans Collectively
Evaluated For
Impairment
Recorded
Investment Allowance
Recorded
Investment
(Dollars in Thousands)
Allowance
Domestic
Commercial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial real estate: other construction & land development . . .
Commercial real estate: farmland & commercial . . . . . . . . . . . . . . .
Commercial real estate: multifamily . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential: first lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential: junior lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 30,747 $ 2,375 $ 1,468,006 $ 24,353
44,614
36,474
3,794
4,759
8,284
281
968
1,969,186
2,568,025
306,384
425,647
439,958
41,592
159,975
20,483
94
117
77
312
—
—
70
—
—
—
—
—
—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 51,830 $ 2,445 $ 7,378,773 $ 123,527
Loans accounted for on a non-accrual basis at December 31, 2023, 2022 and 2021 amounted to $47,170,000,
$51,648,000, and $1,921,000, respectively. The increase in non-accrual loans at December 31, 2022 is primarily
attributable to two loans that were placed on non-accrual at the end of the fourth quarter of 2022. One relationship is
secured by equipment used in the oil and gas industry and one is secured by real estate. The effect of such non-accrual
loans reduced interest income by approximately $6,614,000, $116,000, and $169,000 for the years ended December 31,
2023, 2022, and 2021, respectively. Amounts received on non-accruals are applied, for financial accounting purposes, first
to principal and then to interest after all principal has been collected. Accruing loans contractually past due 90 days or
more as to principal or interest payments at December 31, 2023, 2022, and 2021 amounted to approximately $5,597,000,
$6,132,000, and $8,642,000, respectively.
50
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
The table below provides additional information on loans accounted for on a non-accrual basis by loan class:
Domestic
Commercial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .
Commercial real estate: other construction & land development . . . . . . . . . . . . .
Commercial real estate: farmland & commercial . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial real estate: multifamily . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential: first lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total non-accrual loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . .
$
$
30,872 $
15,701
299
96
202
47,170 $
30,747
20,483
94
117
207
51,648
December 31, 2023 December 31, 2022
(Dollars in Thousands)
Doubtful loans are those loans where it is probable that all amounts due according to contractual terms of the loan
agreement will not be collected. We have identified these loans through our normal loan review procedures. Doubtful
loans are measured based on (i) the present value of expected future cash flows discounted at the loan’s effective interest
rate; (ii) the loan’s observable market price; or (iii) the fair value of the collateral if the loan is collateral dependent.
Substantially all of our doubtful loans are measured at the fair value of the collateral. In limited cases, we may use other
methods to determine the level of impairment of a loan if such loan is not collateral dependent.
We adopted the provisions of Accounting Standards Update 2022-02, Financial Instruments – Credit Losses
(Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”) on January 1, 2023. ASU 2022-02
eliminates the accounting guidance for troubled debt restructurings in existing guidance and enhances disclosure
requirements for certain loan refinancings and restructurings when a borrower is experiencing financial difficulty.
Additionally, ASU 2022-02 requires entities to disclose current period gross write-offs by year of origination for financing
receivables and net investments in leases. The adoption of ASU 2022-02 did not have a significant impact on our
consolidated financial statements.
We occasionally provide modifications to borrowers experiencing financial difficulties. Modifications may
include certain concessions that we must evaluate under ASU 2022-02 to determine the need for disclosure. Concessions
to borrowers experiencing financial difficulties that would require disclosure include principal forgiveness, term extension,
an other-than-insignificant payment delay, an interest rate reduction or a combination of these concessions. For the twelve
months ended December 31, 2023, we did not provide any material modifications under these circumstances to any
borrower experiencing financial difficulty that would require disclosure.
Under guidance in effect prior to January 1, 2023, the following table details loans accounted for as “troubled
debt restructuring,” segregated by loan class. Loans accounted for as troubled debt restructuring are included in impaired
loans.
December 31, 2022
(Dollars in Thousands)
Domestic
Residential: first lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Residential: junior lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total troubled debt restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,642
714
802
55
3,213
The Subsidiary Banks charge-off that portion of any loan which management considers to represent a loss as well
as that portion of any other loan which is classified as a “loss” by bank examiners. Commercial and industrial or real estate
loans are generally considered by management to represent a loss, in whole or part, when an exposure beyond any collateral
coverage is apparent and when no further collection of the loss portion is anticipated based on the borrower’s financial
condition and general economic conditions in the borrower’s industry. Generally, unsecured consumer loans are charged-
off when 90 days past due.
51
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
While management considers that it is generally able to identify borrowers with financial problems reasonably
early and to monitor credit extended to such borrowers carefully, there is no precise method of predicting loan losses. The
determination that a loan is likely to be uncollectible and that it should be wholly or partially charged-off as a loss is an
exercise of judgment. Similarly, the determination of the adequacy of the ACL (formerly allowance for probable loan
losses) can be made only on a subjective basis. It is the judgment of our management that the ACL at December 31, 2023
and December 31, 2022, was adequate to absorb expected losses from loans in the portfolio at that date.
The following table presents information regarding the aging of past due loans by loan class:
30 - 59
Days
60 - 89
Days
90 Days or
Greater
December 31, 2023
90 Days or
greater &
still accruing
Total
Past
Due
(Dollars in Thousands)
Current
Total
Portfolio
Domestic
Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,387
Commercial real estate: other construction &
land development . . . . . . . . . . . . . . . . . . . . . . .
Commercial real estate: farmland & commercial . .
Commercial real estate: multifamily . . . . . . . . . . .
Residential: first lien . . . . . . . . . . . . . . . . . . . . . .
Residential: junior lien . . . . . . . . . . . . . . . . . . . . .
Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,460
1,424
369
1,812
1,273
263
1,884
Total past due loans . . . . . . . . . . . . . . . . . . . . . $ 12,872
$ 1,583
$
30,238
$
539
$ 34,208 $ 1,594,022
$ 1,628,230
—
371
330
1,439
613
11
848
$ 5,195
$
10,245
93
—
2,545
1,701
27
889
45,738
$
—
4
—
2,437
1,701
27
889
5,597
13,705
1,888
699
5,796
3,587
301
3,621
2,077,917
2,791,665
380,140
472,236
457,282
44,820
177,074
$ 63,805 $ 7,995,156
2,091,622
2,793,553
380,839
478,032
460,869
45,121
180,695
$ 8,058,961
30 - 59
Days
60 - 89
Days
90 Days or
Greater
December 31, 2022
Total
90 Days or
Past
greater &
still accruing
Due
(Dollars in Thousands)
Current
Total
Portfolio
Domestic
Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,732
Commercial real estate: other construction &
land development . . . . . . . . . . . . . . . . . . . . . . .
Commercial real estate: farmland & commercial . .
Commercial real estate: multifamily . . . . . . . . . . .
Residential: first lien . . . . . . . . . . . . . . . . . . . . . .
Residential: junior lien . . . . . . . . . . . . . . . . . . . . .
Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,130
1,744
—
2,023
925
281
717
Total past due loans . . . . . . . . . . . . . . . . . . . . . $ 8,552
$
258
$
1,014
$
59
$
3,004 $ 1,495,750
$ 1,498,754
—
117
—
1,068
771
14
23
$ 2,251
$
—
—
—
4,189
1,717
7
288
7,215
$
—
—
—
4,061
1,717
7
288
6,132
1,130
1,861
—
7,280
3,413
302
1,028
1,988,539
2,566,257
306,501
418,444
436,857
41,290
158,947
$ 18,018 $ 7,412,585
1,989,669
2,568,118
306,501
425,724
440,270
41,592
159,975
$ 7,430,603
The increase in Commercial loans past due 90 days or greater at December 31, 2023 can be primarily attributed
to a loan secured by equipment and other assets used in the oil and gas industry and oil and gas production that is on
non-accrual. The increase in Commercial Real Estate: Other Construction & Land Development loans past due 90 days
or greater can be primarily attributed to a loan secured by commercial property that is on non-accrual. Our internal
classified report is segregated into the following categories: (i) “Special Review Credits,” (ii) “Watch List—Pass Credits,”
or (iii) “Watch List—Substandard Credits.” The loans placed in the “Special Review Credits” category reflect our opinion
that the loans reflect potential weakness which require monitoring on a more frequent basis. The “Special Review Credits”
are reviewed and discussed on a regular basis with the credit department and the lending staff to determine if a change in
category is warranted. The loans placed in the “Watch List—Pass Credits” category reflect our opinion that the credit
contains weaknesses which represent a greater degree of risk, which warrant “extra attention.” The “Watch List—Pass
Credits” are reviewed and discussed on a regular basis with the credit department and the lending staff to determine if a
change in category is warranted. The loans placed in the “Watch List—Substandard Credits” classification are considered
to be potentially inadequately protected by the current sound worth and debt service capacity of the borrower or of any
52
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
pledged collateral. These credit obligations, even if apparently protected by collateral value, have shown defined
weaknesses related to adverse financial, managerial, economic, market, or political conditions which may jeopardize
repayment of principal and interest. Furthermore, there is the possibility that we could sustain some future loss if such
weaknesses are not corrected.
A summary of the loan portfolio by credit quality indicator by loan class is as follows:
2023
2022
2021
2020
2019
Prior
Total
(Dollars in Thousands)
Balance at December 31, 2023
Domestic
Commercial
Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 791,233
7,613
Special Review . . . . . . . . . . . . . . . . . . . . . . . . . .
Watch List - Pass . . . . . . . . . . . . . . . . . . . . . . . . .
11,865
Watch List - Substandard . . . . . . . . . . . . . . . . . . .
1,180
27
Watch List - Doubtful . . . . . . . . . . . . . . . . . . . . .
Total Commercial. . . . . . . . . . . . . . . . . . . . . . . . . . $ 811,918
Commercial
Current-period gross writeoffs . . . . . . . . . . . . . . . . $
Commercial real estate: other construction & land
7,053
development
Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 938,739
Watch List - Substandard . . . . . . . . . . . . . . . . . . .
25,230
Watch List - Doubtful . . . . . . . . . . . . . . . . . . . . .
2,726
Total Commercial real estate: other construction &
$
$
$
$
$
$
$
$
272,919
1,800
—
92
30,810
305,621
2,187
674,037
—
12,975
364,271
164
—
28
35
364,498
$ 50,602
—
—
—
—
$ 50,602
$ 21,468 $ 74,119
—
—
4
—
$ 21,468 $ 74,123
—
—
—
—
$ 1,574,612
9,577
11,865
1,304
30,872
$ 1,628,230
155
$
264
$
2 $
3
$
9,664
324,238
—
—
$ 96,400
—
—
$ 14,058 $
—
—
3,219
—
—
$ 2,050,691
25,230
15,701
land development . . . . . . . . . . . . . . . . . . . . . . . . $ 966,695
$
687,012
$
324,238
$ 96,400
$ 14,058 $
3,219
$ 2,091,622
Commercial real estate: other construction & land
development
Commercial real estate: farmland & commercial
Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 888,878
5,205
Special Review . . . . . . . . . . . . . . . . . . . . . . . . . .
Watch List - Pass . . . . . . . . . . . . . . . . . . . . . . . . .
16,654
129,644
Watch List - Substandard . . . . . . . . . . . . . . . . . . .
Watch List - Doubtful . . . . . . . . . . . . . . . . . . . . .
211
$
628,653
—
87
2,201
88
$
415,458
3,357
233
—
—
$ 267,705
—
—
2,304
—
$ 184,164 $ 248,626
—
—
1
—
—
—
84
—
$ 2,633,484
8,562
16,974
134,234
299
Total Commercial real estate: farmland &
commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,040,592
$
631,029
$
419,048
$ 270,009
$ 184,248 $ 248,627
$ 2,793,553
Commercial real estate: farmland & commercial
Commercial real estate: multifamily
Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 123,523
Watch List - Doubtful . . . . . . . . . . . . . . . . . . . . .
—
Total Commercial real estate: multifamily . . . . . . . . $ 123,523
Commercial real estate: multifamily
Residential: first lien
Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 180,127
Watch List - Substandard . . . . . . . . . . . . . . . . . . .
—
Watch List - Doubtful . . . . . . . . . . . . . . . . . . . . .
—
Total Residential: first lien . . . . . . . . . . . . . . . . . . . $ 180,127
Residential: first lien
Current-period gross writeoffs . . . . . . . . . . . . . . . . $
Residential: junior lien
Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Total Residential: junior lien . . . . . . . . . . . . . . . . . . $
Residential: junior lien
Current-period gross writeoffs . . . . . . . . . . . . . . . . $
Consumer
Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Total Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Consumer
Current-period gross writeoffs . . . . . . . . . . . . . . . . $
Foreign
$
$
$
$
94,551
96
94,647
83,568
—
93
83,661
$
$
$
$
42,081
—
42,081
$ 73,652
—
$ 73,652
$ 10,743 $ 36,193
—
$ 10,743 $ 36,193
—
68,082
327
—
68,409
$ 39,935
—
—
$ 39,935
$ 27,499 $ 78,306
95
—
$ 27,499 $ 78,401
—
—
— $
— $
— $
— $
— $
43
88,628
88,628
$
$
76,845
76,845
$
$
96,411
96,411
$ 76,490
$ 76,490
$ 34,870 $ 87,625
$ 34,870 $ 87,625
— $
— $
— $
— $
— $
298
$
$
$
$
$
$
$
$
$
$
380,743
96
380,839
477,517
422
93
478,032
43
460,869
460,869
298
45,121
45,121
36,639
36,639
54
$
$
$
5,366
5,366
115
$
$
$
1,043
1,043
9
$
$
$
237
237
$
$
157 $
157 $
1,679
1,679
— $
1 $
— $
179
Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 116,104
Total Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 116,104
Total Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,364,226
43,842
$
$
43,842
$ 1,928,023
12,317
$
$
12,317
$ 1,328,045
2,016
$
$
2,016
$ 609,341
2,797 $
2,797 $
3,619
$
$
3,619
$ 295,840 $ 533,486
180,695
$
$
180,695
$ 8,058,961
53
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
2022
2021
2020
2019
(Dollars in Thousands)
2018
Prior
Total
Balance at December 31, 2022
Domestic
Commercial
Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 736,462
377
Special Review . . . . . . . . . . . . . . . . . . . . . . . . . . .
Watch List - Substandard . . . . . . . . . . . . . . . . . . . .
161
Watch List - Doubtful . . . . . . . . . . . . . . . . . . . . . .
29,789
Total Commercial. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 766,789
Commercial
Commercial real estate: other construction &
land development
Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 913,675
Special Review . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Watch List - Doubtful . . . . . . . . . . . . . . . . . . . . . .
19,982
Total Commercial real estate: other construction &
land development . . . . . . . . . . . . . . . . . . . . . . . . . $ 933,657
Commercial real estate: farmland & commercial
Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 811,117
2,855
Special Review . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,060
Watch List - Pass . . . . . . . . . . . . . . . . . . . . . . . . . .
Watch List - Substandard . . . . . . . . . . . . . . . . . . . .
2,275
Watch List - Doubtful . . . . . . . . . . . . . . . . . . . . . .
94
Total Commercial real estate: farmland &
commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 833,401
Commercial real estate: multifamily
Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 127,680
117
Watch List - Doubtful . . . . . . . . . . . . . . . . . . . . . .
127,797
Total Commercial real estate: multifamily . . . . . . . . . $
Residential: first lien
Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 138,771
—
Watch List - Substandard . . . . . . . . . . . . . . . . . . . .
Watch List - Doubtful . . . . . . . . . . . . . . . . . . . . . .
77
Total Residential: first lien . . . . . . . . . . . . . . . . . . . . $ 138,848
Residential: junior lien
$
$
$
$
$
$
$
$
$
$
524,879
213
149
—
525,241
$ 96,401
—
143
954
$ 97,498
$ 35,917
—
—
—
$ 35,917
$ 43,792 $ 29,464
—
—
4
$ 43,841 $ 29,468
—
49
—
$ 1,466,915
590
502
30,747
$ 1,498,754
666,347
—
407
$ 173,824
—
94
$ 174,897
209
—
$ 35,069 $
—
—
5,165
—
—
$ 1,968,977
209
20,483
666,754
$ 173,918
$ 175,106
$ 35,069 $
5,165
$ 1,989,669
584,134
—
247
—
—
$ 456,200
842
—
54,152
—
$ 232,537
—
—
96
—
$ 325,214 $ 81,295
—
—
—
—
—
—
—
—
$ 2,490,497
3,697
17,307
56,523
94
584,381
$ 511,194
$ 232,633
$ 325,214 $ 81,295
$ 2,568,118
87,469
—
87,469
$ 59,035
—
$ 59,035
$ 12,026
—
$ 12,026
$
$
5,490 $ 14,684
—
5,490 $ 14,684
—
82,466
360
—
82,826
$ 49,591
—
—
$ 49,591
$ 40,985
—
—
$ 40,985
$ 33,814 $ 79,660
—
—
$ 33,814 $ 79,660
—
—
$
$
$
$
$
$
$
$
306,384
117
306,501
425,287
360
77
425,724
439,958
312
440,270
41,592
41,592
Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Watch List- Doubtful . . . . . . . . . . . . . . . . . . . . . . .
Total Residential: junior lien . . . . . . . . . . . . . . . . . . . $
Consumer
92,256
—
92,256
$ 108,815
312
$ 109,127
$ 91,130
—
$ 91,130
$ 41,273
—
$ 41,273
$ 21,975 $ 84,509
—
$ 21,975 $ 84,509
—
Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Total Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
31,962
31,962
$
$
6,603
6,603
$
$
897
897
$
$
489
489
$
$
28 $
28 $
1,613
1,613
Foreign
Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 124,265
Total Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 124,265
Total Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,048,975
19,082
$
$
19,082
$ 2,081,483
5,362
$
$
5,362
$ 988,625
4,848
$
$
4,848
$ 543,277
3,417 $
3,417 $
3,001
$
$
3,001
$ 468,848 $ 299,395
159,975
$
$
159,975
$ 7,430,603
The increase in Watch-List Pass Commercial loans at December 31, 2023 compared to December 31, 2022 can
be primarily attributable to a relationship secured by commercial vehicles, which was downgraded from Pass. The increase
in Commercial Real Estate: Construction and Development loans at December 31, 2023 compared to December 31, 2022
can be primarily attributable to the downgrade of two relationships secured by land for future development and land for
hotel development from Pass. The increase in Commercial Real Estate: Farmland and Commercial loans at December 31,
2023 can be attributed to the downgrade of two relationships. One relationship is secured by a retail shopping center and
one is secured by a hotel.
54
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(5) Bank Premises and Equipment
A summary of bank premises and equipment, by asset classification, at December 31, 2023 and 2022 were as
follows:
Bank buildings and improvements . . . . . . . . . . . . . . . . . . . . .
Furniture, equipment and vehicles . . . . . . . . . . . . . . . . . . . . .
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . .
Bank premises and equipment, net . . . . . . . . . . . . . . . . .
(6) Goodwill and Other Intangible Assets
Estimated
useful lives
5 -
1 -
39 years
20 years
$
$
2023
2022
(Dollars in Thousands)
582,075 $
325,855
108,551
(579,387)
437,094
$
571,665
307,990
108,622
(556,665)
431,612
The majority of our identified intangibles are in the form of amortizable core deposit premium. A small portion
of the fully amortized identified intangibles represent identified intangibles in the acquisition of the rights to the insurance
agency contracts of InsCorp, Inc., acquired in 2008. Information on our identified intangible assets follows:
December 31, 2023:
Core deposit premium . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Identified intangible (contract rights) . . . . . . . . . . . . . . . .
Total identified intangibles . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2022:
Core deposit premium . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Identified intangible (contract rights) . . . . . . . . . . . . . . . .
Total identified intangibles . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
Carrying
Amount
Accumulated
Amortization
(Dollars in Thousands)
Net
58,675
2,022
60,697
58,675
2,022
60,697
$
$
$
$
58,675
2,022
60,697
58,675
2,022
60,697
$
$
$
$
—
—
—
—
—
—
Amortization expense of intangible assets was $0, $0 and $0 for the years ended December 31, 2023, 2022, and
2021.
There were no changes in the carrying amount of goodwill for the years ended December 31, 2023 and 2022.
55
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(7) Deposits
Deposits as of December 31, 2023 and 2022 and related interest expense for the years ended December 31, 2023,
2022, and 2021 were as follows:
2023
2022
(Dollars in Thousands)
Deposits:
Demand - non-interest bearing
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total demand non-interest bearing . . . . . . . . . . . . . . . . . . . .
Savings and interest bearing demand
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total savings and interest bearing demand . . . . . . . . . . . . .
Time, certificates of deposit $100,000 or more
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less than $100,000
$
4,126,635 $ 4,744,299
1,101,756
5,846,055
904,210
5,030,845
3,161,411
1,207,121
4,368,532
3,448,717
1,297,051
4,745,768
763,419
1,103,710
652,073
892,619
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total time, certificates of deposit . . . . . . . . . . . . . . . . . . . . .
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
289,565
268,483
2,425,177
276,660
246,832
2,068,184
$ 11,824,554 $ 12,660,007
Interest expense:
Savings and interest bearing demand
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total savings and interest bearing demand . .
Time, certificates of deposit $100,000 or
more
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less than $100,000
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total time, certificates of deposit . . . . . . . . .
Total interest expense on deposits . . . . . . . . . . .
$
$
2023
2022
(Dollars in Thousands)
2021
$
42,148
18,189
60,337
9,196 $
3,490
12,686
3,268
842
4,110
18,597
25,471
4,592
4,498
53,158
113,495
$
5,528
3,867
1,027
735
11,157
23,843 $
6,652
3,452
984
567
11,655
15,765
56
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Scheduled maturities of time deposits as of December 31, 2023 were as follows:
(in thousands)
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,301,914
85,385
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23,102
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,200
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
573
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,425,177
Total
Scheduled maturities of time deposits in amounts of $100,000 or more at December 31, 2023, were as follows:
Due within 3 months or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Due after 3 months and within 6 months. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due after 6 months and within 12 months. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due after 12 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
(in thousands)
859,734
517,994
409,193
80,208
$ 1,867,129
Time deposits that meet or exceed the FDIC insurance limit of $250,000 at December 31, 2023 and December 31,
2022 were $749,169,000 and $585,456,000, respectively.
(8) Securities Sold Under Repurchase Agreements
Our Subsidiary Banks have entered into repurchase agreements with individual customers of the Subsidiary
Banks. The purchasers have agreed to resell to the Subsidiary Banks identical securities upon the maturities of the
agreements. Securities sold under repurchase agreements were mortgage-backed securities and averaged $469,152,000
and $476,877,000 during 2023 and 2022, respectively, and the maximum amount outstanding at any month end during
2023 and 2022 was $544,418,000 and $513,368,000, respectively.
57
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Further information related to repurchase agreements at December 31, 2023 and 2022 is set forth in the following
table:
Collateral Securities
Repurchase Borrowing
Book Value of
Securities Sold
Fair Value of
Securities Sold
Balance of
Liability
(Dollars in Thousands)
Weighted Average
Interest Rate
December 31, 2023 term:
Overnight agreements . . . . . . . . . . . . . . . . . . . . . . .
1 to 29 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30 to 90 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Over 90 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2022 term:
Overnight agreements . . . . . . . . . . . . . . . . . . . . . . .
1 to 29 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30 to 90 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Over 90 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
667,647
24,842
—
1,623
694,112
664,491
—
—
20,852
685,343
$
$
$
$
587,673
20,454
—
1,574
609,701
559,637
—
—
16,968
576,605
$ 518,650
10,696
—
1,070
$ 530,416
$ 419,703
—
—
11,488
$ 431,191
3.76 %
4.50
—
4.00
3.78 %
1.61 %
—
—
1.32
1.60 %
The book value and fair value of securities sold includes the entire book value and fair value of securities partially
or fully pledged under repurchase agreements.
(9) Other Borrowed Funds
Other borrowed funds include Federal Home Loan Bank borrowings, which may be short, and long-term fixed
borrowings issued by the Federal Home Loan Bank of Dallas and the Federal Home Loan Bank of Topeka at the market
price offered at the time of funding. These borrowings are secured by mortgage-backed investment securities and a portion
of our loan portfolio.
Further information regarding our other borrowed funds at December 31, 2023 and 2022 is set forth in the
following table:
December 31,
2023
2022
(Dollars in Thousands)
Federal Home Loan Bank advances—long-term(1)
Balance at year end . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate on balance outstanding at year end . . . . . . . . .
Average daily balance . . . . . . . . . . . . . . . . . . . . . . . .
Average rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maximum amount outstanding at any month end . .
$
$
$
10,745
$
2.61 %
$
2.61 %
$
10,928
10,837
10,944
2.61 %
386,924
1.75 %
436,122
(1) Long-term advances at December 31, 2023 and December 31, 2022 consisted of amortizing and non-amortizing advances. The non-amortizing
advances totaling $425,000,000 were called by the Federal Home Loan bank in the fourth quarter of 2022. Two amortizing advances are
outstanding at December 31, 2023 in the amounts of $2,914,000 and $7,831,000 and mature in December 2033 and November 2033, respectively.
The amortization on the amortizing long-term advances totals approximately $204,000, $210,000, $215,000, $221,000 and $227,000 for the years
ending December 31, 2024, 2025, 2026, 2027 and December 31, 2028, respectively.
(10) Junior Subordinated Deferrable Interest Debentures
We currently have four statutory business trusts under the laws of the State of Delaware for the purpose of issuing
trust preferred securities. These statutory business trusts (the “Trusts”) each issued capital and common securities (“Capital
58
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
and Common Securities”) and invested the proceeds thereof in an equivalent amount of junior subordinated debentures
(the “Debentures”) we issued. As of December 31, 2023 and December 31, 2022, the principal amount of debentures
outstanding totaled $108,868,000 and $134,642,000, respectively.
The Debentures are subordinated and junior in right of payment to all our present and future senior indebtedness
(as defined in the respective indentures) and are pari passu with one another. The interest rate payable on, and the payment
terms of the Debentures are the same as the distribution rate and payment terms of the respective issues of Capital and
Common Securities issued by the Trusts. We have fully and unconditionally guaranteed the obligations of each of the
Trusts with respect to the Capital and Common Securities. We have the right, unless an Event of Default (as defined in the
Indentures) has occurred and is continuing, to defer payment of interest on the Debentures for up to twenty consecutive
quarterly periods on Trusts IX, X, XI, and XII. If interest payments on any of the Debentures are deferred, distributions
on both the Capital and Common Securities related to that Debenture would also be deferred. The redemption prior to
maturity of any of the Debentures may require the prior approval of the Federal Reserve and/or other regulatory bodies.
For financial reporting purposes, the Trusts are treated as investments and not consolidated in the consolidated
financial statements. Although the Capital Securities issued by each of the Trusts are not included as a component of
shareholders’ equity on the consolidated statement of condition, the Capital Securities are treated as capital for regulatory
purposes. Specifically, under applicable regulatory guidelines, the Capital Securities issued by the Trusts qualify as Tier 1
capital up to a maximum of 25% of Tier 1 capital on an aggregate basis. Any amount that exceeds the 25% threshold
would qualify as Tier 2 capital. At December 31, 2023 and December 31, 2022, the total $108,868,000 and $134,642,000,
respectively, of the Capital Securities outstanding qualified as Tier 1 capital.
The following table illustrates key information about each of the Debentures and their interest rates at
December 31, 2023:
Junior
Subordinated
Deferrable
Interest
Debentures
(Dollars in Thousands)
Repricing
Frequency
Interest
Rate
Interest
Rate Index(1)
Maturity Date
Optional
Redemption Date(2)
Trust IX . . . . . . . . . . . $
Trust X . . . . . . . . . . . .
Trust XI . . . . . . . . . . .
Trust XII . . . . . . . . . .
$
41,238 Quarterly
21,021 Quarterly
25,990 Quarterly
20,619 Quarterly
108,868
7.28 % SOFR+ 1.62
7.29 % SOFR+ 1.65
7.28 % SOFR+ 1.62
7.09 % SOFR+ 1.45
October 2036 October 2011
February 2037 February 2012
July 2012
September 2037 September 2012
July 2037
(1) On July 1, 2023, the interest rate index on the Capital and Common Securities transitioned from U.S.-dollar London Interbank Offered Rate
(“LIBOR”) to the Three-Month CME Term Secured Overnight Financing rate (“SOFR”) with a 26-basis point spread adjustment.
(2) The Capital Securities may be redeemed in whole or in part on any interest payment date after the Optional Redemption Date.
(11) Earnings per Share (“EPS”)
Basic EPS is calculated by dividing net income by the weighted average number of common shares outstanding.
The computation of diluted EPS assumes the issuance of common shares for all dilutive potential common shares
59
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
outstanding during the reporting period. The calculation of the basic EPS and the diluted EPS for the years ended
December 31, 2023, 2022, and 2021 is set forth in the following table:
Net Income
(Numerator)
Shares
(Denominator)
(Dollars in Thousands,
Except Per Share Amounts)
Per Share
Amount
December 31, 2023:
Basic EPS
Net income available to common
shareholders . . . . . . . . . . . . . . . . . . . . . . . . .
Potential dilutive common shares . . . . . . . . .
Diluted EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2022:
Basic EPS
Net income available to common
shareholders . . . . . . . . . . . . . . . . . . . . . . . . .
Potential dilutive common shares . . . . . . . . .
Diluted EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2021:
Basic EPS
Net income available to common
shareholders . . . . . . . . . . . . . . . . . . . . . . . . .
Potential dilutive common shares . . . . . . . . .
Diluted EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
$
$
411,768
—
411,768
62,082,827 $
138,774
62,221,601 $
300,232
—
300,232
62,658,414 $
151,820
62,810,234 $
253,922
—
253,922
63,352,737 $
133,629
63,486,366 $
6.63
6.62
4.79
4.78
4.01
4.00
(12) Employees’ Profit-Sharing Plan
We have a deferred profit-sharing plan for full-time employees with a minimum of one year of continuous
employment. Our annual contribution to the plan is based on a percentage, as determined by our Board of Directors, of
income before income taxes, as defined, for the year. Allocation of the contribution among officers and employees’
accounts is based on length of service and amount of salary earned. Profit sharing costs of $4,011,000, $4,300,000, and
$3,550,000 were charged to income for the years ended December 31, 2023, 2022, and 2021, respectively.
(13) International Operations
We provide international banking services for our customers through our Subsidiary Banks. Neither we nor our
Subsidiary Banks have facilities located outside the United States. International operations are distinguished from domestic
operations based upon the domicile of the customer.
Because the resources we employ are common to both international and domestic operations, it is not practical to
determine net income generated exclusively from international activities.
60
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
A summary of assets attributable to international operations at December 31, 2023 and 2022 are as follows:
Loans:
Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less allowance for probable loan losses. . . . . . . . . . . . . . . . . .
Net loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued interest receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
2022
(Dollars in Thousands)
$
$
$
106,241 $
74,454
180,695
(1,283)
179,412 $
876 $
103,748
56,227
159,975
(968)
159,007
515
At December 31, 2023 and December 31, 2022, we had $147,551,000 and $131,254,000, respectively, in
outstanding standby and commercial letters of credit to facilitate trade activities.
Revenues directly attributable to international operations were approximately $8,212,000, $4,821,000, and
$4,090,000 for the years ended December 31, 2023, 2022 and 2021, respectively.
(14) Income Taxes
We file a consolidated U.S. Federal and State income tax return. The current and deferred portions of net income
tax expense included in the consolidated statements of income are presented below for the years ended December 31:
Current
U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current taxes . . . . . . . . . . . . . . . . . . . . .
Deferred
U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred taxes . . . . . . . . . . . . . . . . . . . .
Total income taxes . . . . . . . . . . . . . . . . . . . . .
2023
2022
(Dollars in Thousands)
2021
$
$
82,657
6,137
88,794
23,001
(51)
22,950
111,744
$
$
66,670 $
5,118
71,788
59,591
5,272
64,863
10,555
64
10,619
82,407 $
3,794
(252)
3,542
68,405
Total income tax expense differs from the amount computed by applying the U.S. Federal income tax rate of 21%
for 2023, 2022, and 2021 to income before income taxes. The reasons for the differences for the years ended December 31
are as follows:
Computed expected tax expense . . . . . . . . . . . . .
Change in taxes resulting from:
Tax-exempt interest income . . . . . . . . . . . . . .
State tax, net of federal income taxes, tax
credit and refunds . . . . . . . . . . . . . . . . . . . . .
Other investment income . . . . . . . . . . . . . . . . .
Net investment in low income housing
investments . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actual tax expense . . . . . . . . . . . . . . . . . . . . .
2023
$
110,065
2022
(Dollars in Thousands)
80,893 $
$
2021
68,011
(3,663)
(2,433)
(2,970)
4,808
(2,761)
4,094
(1,391)
3,966
(1,753)
1,974
1,321
111,744
$
$
1,906
(662)
82,407 $
203
948
68,405
61
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred
tax liabilities at December 31, 2023 and 2022 are reflected below:
Deferred tax assets:
Loans receivable, principally due to the allowance for probable loan losses. . . . .
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized losses on available for sale investment securities. . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities:
Bank premises and equipment, principally due to differences on depreciation. . .
Impairment charges on available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . .
Identified intangible assets and goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Partnership investment pass through . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
2022
(Dollars in Thousands)
$
$
32,136 $
1,649
581
110,584
1,352
146,302
(14,879)
(19)
(14,151)
(58,376)
(3,321)
(90,746)
55,556 $
25,982
1,194
186
130,586
2,308
160,256
(13,615)
(19)
(14,125)
(30,319)
(3,555)
(61,633)
98,623
The net deferred tax asset of $55,556,000 and $98,623,000 at December 31, 2023 and December 31, 2022,
respectively, is included in other assets in the consolidated statements of condition.
(15) Stock Options and Stock Appreciation Rights
On April 5, 2012, the Board of Directors adopted the 2012 International Bancshares Corporation Stock Option
Plan (the “2012 Plan”). There were 800,000 shares of common stock available for stock option grants under the 2012 Plan,
which were qualified incentive stock options (“ISOs”) or non-qualified stock options. Options granted may be exercisable
for a period of up to 10 years from the date of grant, excluding ISOs granted to 10% shareholders, which may be exercisable
for a period of up to only five years. On April 4, 2022, the 2012 Plan expired and was not renewed.
The fair value of each option award granted under the plan was estimated on the date of grant using a
Black-Scholes-Merton option valuation model that uses the assumptions noted in the following table. Expected volatility
was based on the historical volatility of the price of our stock. We used historical data to estimate the expected dividend
yield and employee termination rates within the valuation model. The expected term of options was derived from historical
exercise behavior. The risk-free rate for periods within the contractual life of the option was based on the U.S. Treasury
yield curve in effect at the time of grant.
Expected Life (Years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022
7.00
3.08 %
1.94 %
37.78 %
62
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
A summary of option activity under the stock option plans for the twelve months ended December 31, 2023 is as
follows:
Weighted
average
exercise
price
Number of
options
Weighted
average
remaining
contractual
term (years)
Aggregate
intrinsic
value ($)
(in Thousands)
Options outstanding at December 31, 2022 . . . . . . . . . . . . . . . . . . . . .
Plus: Options granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less:
Options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options outstanding at December 31, 2023 . . . . . . . . . . . . . . . . . . . . .
461,822
—
$
29.67
—
(46,444)
—
(31,513)
383,865
25.12
—
24.52
30.65
3.42 $
9,088
Options fully vested and exercisable at December 31, 2023 . . . . . . .
232,143
$
27.80
1.96 $
6,157
Stock-based compensation expense included in the consolidated statements of income for the years ended
December 31, 2023, 2022, and 2021 was approximately $330,000, $449,000, and $506,000, respectively. As of
December 31, 2023, there was approximately $507,000 of total unrecognized stock-based compensation cost related to
non-vested options granted under our plans that will be recognized over a weighted average period of 1.3 years.
Other information pertaining to option activity during the twelve months ended December 31, 2023, 2022, and
2021 is as follows:
Twelve Months Ended December 31,
2022
2021
2023
$
$
514,000
$ 1,060,000
11.24 $
10.20
— $
$
514,000 $ 1,308,000
$ 1,670,000 $ 2,536,000
Weighted average grant date fair value of stock
options granted . . . . . . . . . . . . . . . . . . . . . . . . . .
Total fair value of stock options vested. . . . . . . .
Total intrinsic value of stock options exercised . .
63
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
On April 18, 2022, the Board of Directors adopted the 2022 International Bancshares Stock Appreciation Rights
Plan (the “SAR Plan”). There are 750,000 shares of underlying common stock that may be used for stock appreciation
right (“SAR”) grants under the plan, however, no actual shares will be granted. Upon exercise, the SAR will be settled in
cash. SARs granted may be exercisable for a period of up to 10 years from the date of grant and may vest over an eight-
year period. As of December 31, 2023, a total of 465,250 SARS had been issued under the SAR Plan.
A summary of activity under the SAR Plan for the twelve months ended December 31, 2023 is as follows:
Weighted
average
stock appreciation exercise
Number of
rights
price
Weighted
average
remaining
contractual
term (years)
Aggregate
intrinsic
value ($)
(in Thousands)
Stock appreciation rights outstanding at December 31, 2022 . . . .
Plus: Stock appreciation rights granted
Less:
Stock appreciation rights exercised . . . . . . . . . . . . . . . . . . . . . . .
Stock appreciation rights expired . . . . . . . . . . . . . . . . . . . . . . . .
Stock appreciation rights forfeited . . . . . . . . . . . . . . . . . . . . . . .
Stock appreciation rights outstanding at December 31, 2023 . . . .
489,250
$ 39.35
—
—
(24,000)
465,250
—
—
39.33
39.35
Stock appreciation rights fully vested and exercisable at
December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— $ —
8.50
6,964
The fair value of the liability for payments due to stock appreciation rights holders at December 31, 2023 and
December 31, 2022 is approximately $1,464,000 and $546,000, respectively, as calculated using a Black-Scholes-Merton
model, and is included in other liabilities on the consolidated statements of condition. The expense recorded in connection
with all grants under the SAR Plan totaled $918,000 and $546,000, respectively, for the twelve months ended
December 31, 2023 and December 31, 2022. As of December 31, 2023, there was approximately $5,090,000 in
unrecognized liability related to non-vested SARs granted under the plan that will be recognized over a weighted average
period of 8.5 years.
(16) Commitments, Contingent Liabilities and Other Matters
On March 15, 2020, the FRB announced that it had reduced regulatory reserve requirements to zero percent
effective on March 26, 2020; therefore no cash is required to be maintained to satisfy regulatory reserve requirements.
We are involved in various legal proceedings that are in various stages of litigation. We have determined, based
on discussions with our counsel that any material loss in such actions, individually or in the aggregate, is remote or the
damages sought, even if fully recovered, would not be considered material to our consolidated statements of condition and
related statements of income, comprehensive income, shareholders’ equity, and cash flows. However, many of these
matters are in various stages of proceedings and further developments could cause management to revise its assessment of
these matters.
(17) Transactions with Related Parties
In the ordinary course of business, the Subsidiary Banks make loans to our directors and executive officers,
including their affiliates, families, and companies in which they are principal owners. In the opinion of management, these
loans are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and do not involve more than normal risk of collectability or present other
unfavorable features. The aggregate amounts receivable from such related parties amounted to approximately $13,335,000
and $28,708,000 at December 31, 2023 and 2022, respectively.
64
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(18) Financial Instruments with Off-Statement of Condition Risk and Concentrations of Credit Risk
In the normal course of business, the Subsidiary Banks are party to financial instruments with off-statement of
condition risk to meet the financing needs of their customers. These financial instruments include commitments to their
customers. These financial instruments involve, to varying degrees, elements of credit risk in excess of the amounts
recognized in the consolidated statement of condition. The contract amounts of these instruments reflect the extent of
involvement the Subsidiary Banks have in particular classes of financial instruments. At December 31, 2023, the following
financial amounts of instruments, whose contract amounts represent credit risks, were outstanding (in thousands):
Commitments to extend credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,340,280
14,181
Credit card lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
147,190
Standby letters of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
361
Commercial letters of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
We enter into a standby letter of credit to guarantee performance of a customer to a third party. These guarantees
are primarily issued to support public and private borrowing arrangements. The credit risk involved is represented by the
contractual amounts of those instruments. Under the standby letters of credit, we are required to make payments to the
beneficiary of the letters of credit upon request by the beneficiary so long as all performance criteria have been met. At
December 31, 2023, the maximum potential amount of future payments is approximately $147,190,000. At December 31,
2023, the fair value of these guarantees is not significant. Unsecured letters of credit totaled approximately $23,677,000
and $40,249,000 at December 31, 2023 and 2022, respectively.
We enter into commercial letters of credit on behalf of our customers which authorize a third party to draw drafts
upon us up to a stipulated amount and with specific terms and conditions. A commercial letter of credit is a conditional
commitment on our part to provide payment on drafts drawn in accordance with the terms of the commercial letter of
credit.
The Subsidiary Banks’ exposure to credit loss in the event of nonperformance by the other party to the above
financial instruments is represented by the contractual amounts of the instruments. The Subsidiary Banks use the same
credit policies in making commitments and conditional obligations as they do for on-statement of condition instruments.
The Subsidiary Banks control the credit risk of these transactions through credit approvals, limits, and monitoring
procedures. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any
condition established in the contract. Commitments generally have fixed expiration dates normally less than one year or
other termination clauses and may require the payment of a fee. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The
Subsidiary Banks evaluate each customer’s credit-worthiness on a case-by-case basis. The amount of collateral obtained,
if deemed necessary by the Subsidiary Banks upon extension of credit, is based on management’s credit evaluation of the
customer. Collateral held varies, but may include residential and commercial real estate, bank certificates of deposit,
accounts receivable, and inventory.
The Subsidiary Banks make commercial, real estate and consumer loans to customers principally located in south,
central and southeast Texas and the State of Oklahoma. Although the loan portfolio is diversified, a substantial portion of
its debtors’ ability to honor their contracts is dependent upon the economic conditions in these areas, especially in the real
estate and commercial business sectors.
(19) Capital Requirements
Bank regulatory agencies limit the amount of dividends, which the Subsidiary Banks can pay, without obtaining
prior approval from such agencies. At December 31, 2023, the Subsidiary Banks could pay dividends of up to
$1,229,500,000 without prior regulatory approval and without adversely affecting their “well-capitalized” status under
regulatory capital rules in effect at December 31, 2023. In addition to legal requirements, regulatory authorities also
consider the adequacy of the Subsidiary Banks’ total capital in relation to their deposits and other factors. These capital
65
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
adequacy considerations also limit amounts available for payment of dividends. We historically have not allowed any
Subsidiary Bank to pay dividends in such a manner as to impair its capital adequacy.
We and the Subsidiary Banks are subject to various regulatory capital requirements administered by the federal
banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct material effect on our consolidated financial
statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet
specific capital guidelines that involve quantitative measures of our assets, liabilities, and certain off-statement of condition
items as calculated under regulatory accounting practices. Our capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk weightings, and other factors.
Current quantitative measures established by regulation to ensure capital adequacy require us to maintain
minimum amounts and ratios (set forth in the table on the following page) of Total and Tier 1 capital to risk-weighted
assets and of Tier 1 capital to average assets. Management believes, as of December 31, 2023, that we met all capital
adequacy requirements to which we are subject.
In July 2013, the FDIC and other regulatory bodies established a new, comprehensive capital framework for U.S.
banking organizations, consisting of minimum requirements that increase both the quantity and quality of capital held by
banking organizations. The final rules are a result of the implementation of the BASEL III capital reforms and various
related capital provisions of the Dodd-Frank Act. Consistent with the Basel international framework, the rules include a
new minimum ratio of Common Equity Tier 1 (“CET1”) capital to risk-weighted assets of 4.5% and a CET1 capital
conservation buffer of 2.5% of risk-weighted assets, effectively resulting in a minimum ratio of CET1 capital to risk-
weighted assets of at least 7% upon full implementation. The capital conservation buffer is designed to absorb losses
during periods of economic stress. Banking institutions with a ratio of CET1 capital to risk-weighted assets above the
minimum but below the conservation buffer will face constraints on dividends, equity repurchases and compensation based
on the amount of the shortfall. The rules also raised the minimum ratio of Tier 1 capital to risk-weighted assets from 4%
to 6% and include a minimum leverage ratio of 4% for all banking organizations. Regarding the quality of capital, the
rules emphasize CET1 capital and implements strict eligibility criteria for regulatory capital instruments. The rules also
improve the methodology for calculating risk-weighted assets to enhance risk sensitivity. The rules were subject to a four-
year phase-in period for mandatory compliance, and we were required to begin to phase-in the new rules beginning on
January 1, 2015. We believe that as of December 31, 2023, we meet all fully phased-in capital adequacy requirements.
In November 2017, the OCC, the FRB and the FDIC finalized a proposed rule that extends the current treatment
under the regulatory capital rules for certain regulatory capital deductions and risk weights and certain minority interest
requirements, as they apply to banking organizations that are not subject to the advanced approaches capital rules. Effective
January 1, 2018, the rule also paused the full transition to the Basel III treatment of mortgage servicing assets, certain
deferred tax assets, investments in the capital of unconsolidated financial institutions and minority interests. The agencies
are also considering whether to make adjustments to the capital rules in response to CECL (the FASB Standard relating to
current expected credit loss) and its potential impact on regulatory capital. Pursuant to rules issued by the federal bank
regulatory agencies in February 2019 and March 2020, banking organizations were given options to phase in the adoption
of CECL over a three-year transition period through December 31, 2022 or over a five-year transition period through
December 31, 2024. Rather than electing to make one of the phase-in options, we immediately recognized the capital
impact upon adopting CECL accounting standards on January 1, 2020, which resulted in an increase in our allowance for
probable loan losses and a one-time cumulative-effect adjustment to retained earnings upon adoption.
In December 2017, the Basel Committee on Banking Supervision unveiled its final set of standards and reforms
to its Basel III regulatory capital framework, commonly called “Basel III Endgame” or “Basel IV.” The Basel IV
framework makes changes to the capital framework first introduced as “Basel III” in 2010 and aim to reduce excessive
variability in banks’ calculations of risk-weighted capital ratios. Implementation of Basel IV began on January 1, 2023
and will continue over a five-year transition period by regulators in individual countries, including the U.S. federal bank
regulatory agencies (after notice and comment).
As of December 31, 2023, our capital levels continue to exceed all capital adequacy requirements under the Basel
III Capital Rules as currently applicable to us.
66
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
On May 24, 2018, the Economic Growth, Regulatory Relief and Consumer Protection Act of 2018
(“EGRRCPA”) was enacted, and, among other things, it includes a simplified capital rule change which effectively
exempts banks with assets of less than $10 billion that exceed the “community bank leverage ratio,” from all risk-based
capital requirements, including Basel III and its predecessors. The federal banking agencies must establish the “community
bank leverage ratio” (a ratio of tangible equity to average consolidated assets) between 8% and 10% before community
banks can begin to take advantage of this regulatory relief provision. Some of the Subsidiary Banks, with assets of less
than $10 billion, may qualify for this exemption. Additionally, under the EGRRCPA, qualified bank holding companies
with assets of up to $3 billion (currently $1 billion) will be eligible for the Federal Reserve’s Small Bank Holding Company
Policy Statement, which eases limitations on the issuance of debt by holding companies. On August 28, 2018, the Federal
Reserve issued an interim final rule expanding the applicability of its Small Bank Holding Company Policy Statement.
While holding companies that meet the conditions of the policy statement are excluded from consolidated capital
requirements, their depository institutions continue to be subject to minimum capital requirements. Finally, for banks that
continue to be subject to the risk-based capital rules of Basel III (e.g., 150%), certain commercial real estate loans that
were formally classified as high volatility commercial real estate 31 (“HVCRE”) will not be subject to heightened risk
weights if they meet certain criteria. Also, while acquisition, development, and construction loans will generally be subject
to heightened risk weights, certain exceptions will apply. On September 18, 2018, the federal banking agencies issued a
proposed rule modifying the agencies’ capital rules for HVCRE.
As of December 31, 2023, the most recent notification from the FDIC categorized all the Subsidiary Banks as
well-capitalized under the regulatory framework for prompt corrective action. To be categorized as “well capitalized,” we
must maintain minimum Total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table. There are
no conditions or events since that notification that management believes have changed our categorization as
well-capitalized.
67
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Our actual capital amounts and ratios for 2023 under current guidelines are presented in the following table:
Actual
For Capital Adequacy
Purposes
Phase In Schedule
To Be Well-Capitalized
Under Prompt Corrective
Action Provisions
Amount
Ratio
Amount
Ratio
Amount
Ratio
(greater than (greater than (greater than (greater than
or equal to) or equal to) or equal to)
or equal to)
(Dollars in Thousands)
As of December 31, 2023:
Common Equity Tier 1 (to Risk Weighted Assets):
Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,563,130
1,444,775
International Bank of Commerce, Laredo . . . . . . . .
477,390
International Bank of Commerce, Brownsville . . . .
232,965
International Bank of Commerce, Oklahoma . . . . .
97,334
Commerce Bank . . . . . . . . . . . . . . . . . . . . . . . . . .
64,110
International Bank of Commerce, Zapata . . . . . . . .
21.72 % $
18.54
24.41
20.72
36.57
31.18
825,968
545,611
136,883
78,718
18,628
14,394
Total Capital (to Risk Weighted Assets):
Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,790,171
1,542,462
International Bank of Commerce, Laredo . . . . . . . .
500,268
International Bank of Commerce, Brownsville . . . .
247,031
International Bank of Commerce, Oklahoma . . . . .
100,660
Commerce Bank . . . . . . . . . . . . . . . . . . . . . . . . . .
66,680
International Bank of Commerce, Zapata . . . . . . . .
23.65 % $ 1,238,952
818,416
19.79
205,325
25.58
118,076
21.97
27,943
37.82
21,591
32.43
Tier 1 Capital (to Risk Weighted Assets):
Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,642,492
1,444,775
International Bank of Commerce, Laredo . . . . . . . .
477,390
International Bank of Commerce, Brownsville . . . .
232,965
International Bank of Commerce, Oklahoma . . . . .
97,334
Commerce Bank . . . . . . . . . . . . . . . . . . . . . . . . . .
64,110
International Bank of Commerce, Zapata . . . . . . . .
22.39 % $ 1,002,961
662,527
18.54
166,215
24.41
95,586
20.72
22,620
36.57
17,478
31.18
Tier 1 Capital (to Average Assets):
Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,642,492
1,444,775
International Bank of Commerce, Laredo . . . . . . . .
477,390
International Bank of Commerce, Brownsville . . . .
232,965
International Bank of Commerce, Oklahoma . . . . .
97,334
Commerce Bank . . . . . . . . . . . . . . . . . . . . . . . . . .
64,110
International Bank of Commerce, Zapata . . . . . . . .
17.46 % $
16.40
11.79
14.72
14.50
13.26
605,262
352,412
161,919
63,294
26,858
19,338
$
7.000 %
7.000
7.000
7.000
7.000
7.000
$
10.500 %
10.500
10.500
10.500
10.500
10.500
$
8.500 %
8.500
8.500
8.500
8.500
8.500
4.00 % $
4.00
4.00
4.00
4.00
4.00
N/A
506,639
127,106
73,095
17,298
13,366
N/A
779,444
195,547
112,454
26,612
20,563
N/A
623,555
156,438
89,963
21,290
16,450
N/A
440,515
202,398
79,117
33,572
24,172
N/A
6.50 %
6.50
6.50
6.50
6.50
N/A
10.00 %
10.00
10.00
10.00
10.00
N/A
8.00 %
8.00
8.00
8.00
8.00
N/A
5.00 %
5.00
5.00
5.00
5.00
68
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Our actual capital amounts and ratios for 2022 are also presented in the following table:
Actual
For Capital Adequacy
Purposes
Amount
Ratio
Amount
Ratio
To Be Well-Capitalized
Under Prompt Corrective
Action Provisions
Ratio
Amount
(greater than (greater than (greater than (greater than
or equal to)
or equal to)
or equal to)
or equal to)
(Dollars in Thousands)
As of December 31, 2022:
Common Equity Tier 1 (to Risk Weighted Assets):
Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,232,723
1,310,616
International Bank of Commerce, Laredo . . . . . . . .
363,093
International Bank of Commerce, Oklahoma . . . . .
232,689
International Bank of Commerce, Brownsville . . . .
98,087
International Bank of Commerce, Zapata . . . . . . . .
71,418
Commerce Bank . . . . . . . . . . . . . . . . . . . . . . . . . .
20.21 % $
18.07
20.86
21.17
42.26
37.70
773,398
507,625
121,855
76,941
16,248
13,261
Total Capital (to Risk Weighted Assets):
Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,455,468
1,401,298
International Bank of Commerce, Laredo . . . . . . . .
383,804
International Bank of Commerce, Oklahoma . . . . .
243,739
International Bank of Commerce, Brownsville . . . .
100,798
International Bank of Commerce, Zapata . . . . . . . .
Commerce Bank . . . . . . . . . . . . . . . . . . . . . . . . . .
73,420
Tier 1 Capital (to Risk Weighted Assets): . . . . . . . . . .
Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,324,903
1,310,616
International Bank of Commerce, Laredo . . . . . . . .
363,093
International Bank of Commerce, Oklahoma . . . . .
232,689
International Bank of Commerce, Brownsville . . . .
98,087
International Bank of Commerce, Zapata . . . . . . . .
71,418
Commerce Bank . . . . . . . . . . . . . . . . . . . . . . . . . .
Tier 1 Capital (to Average Assets):
Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,324,903
1,310,616
International Bank of Commerce, Laredo . . . . . . . .
363,093
International Bank of Commerce, Oklahoma . . . . .
232,689
International Bank of Commerce, Brownsville . . . .
98,087
International Bank of Commerce, Zapata . . . . . . . .
71,418
Commerce Bank . . . . . . . . . . . . . . . . . . . . . . . . . .
22.22 % $ 1,160,096
761,438
19.32
182,782
22.05
115,412
22.18
24,372
43.43
19,892
38.76
21.04 % $
18.07
20.86
21.17
42.26
37.70
14.59 % $
13.09
8.95
13.48
14.39
15.00
939,126
616,402
147,966
93,429
19,730
16,103
637,578
400,489
162,246
69,028
27,270
19,048
(20) Fair Value
$
7.000 %
7.000
7.000
7.000
7.000
7.000
$
10.500 %
10.500
10.500
10.500
10.500
10.500
$
8.500 %
8.500
8.500
8.500
8.500
8.500
4.00 % $
4.00
4.00
4.00
4.00
4.00
N/A
471,366
113,151
71,445
15,088
12,314
N/A
725,179
174,078
109,916
23,212
18,945
N/A
580,143
139,262
87,933
18,569
15,156
N/A
500,611
202,808
86,286
34,088
23,811
N/A
6.50 %
6.50
6.50
6.50
6.50
N/A %
10.00
10.00
10.00
10.00
10.00
%
N/A
8.00
8.00
8.00
8.00
8.00 %
N/A
5.00
5.00
5.00
5.00
5.00
ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”) defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value
measurements. ASC 820 applies to all financial instruments that are being measured and reported on a fair value basis.
ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date; it also establishes a fair value hierarchy that prioritizes
the inputs used in valuation methodologies into the following three levels:
• Level 1 Inputs—Unadjusted quoted prices in active markets for identical assets or liabilities.
• Level 2 Inputs—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or
liabilities, quoted prices in markets that are not active; or other inputs that are observable or can be
corroborated by observable market data for substantially the full term of the assets or liabilities.
• Level 3 Inputs—Unobservable inputs that are supported by little or no market activity and that are significant
to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose
value is determined using pricing models, discounted cash flow methodologies, or other valuation techniques,
69
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
as well as instruments for which the determination of fair value requires significant management judgment
or estimation.
A description of the valuation methodologies used for instruments measured at fair value, as well as the general
classification of such instruments pursuant to the valuation hierarchy is set forth below.
The following table represents financial instruments reported on the consolidated statements of condition at their
fair value as of December 31, 2023 by level within the fair value measurement hierarchy.
Fair Value Measurements at
Reporting Date Using
(in Thousands)
Quoted
Prices in
Active
Assets/Liabilities Markets for
Identical
Assets
(Level 1)
Measured at
Fair Value
December 31, 2023
Significant
Other
Significant
Observable Unobservable
Inputs
(Level 2)
Inputs
(Level 3)
Measured on a recurring basis:
Assets:
Available for sale debt securities
Residential mortgage-backed securities . . . . . . . . . . . . . .
States and political subdivisions . . . . . . . . . . . . . . . . . . . .
Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
4,660,099
162,242
5,417
4,827,758
$
$
— $ 4,660,099 $
—
5,417
5,417 $ 4,822,341 $
162,242
—
—
—
—
—
The following table represents financial instruments reported on the consolidated balance sheets at their fair value
as of December 31, 2022 by level within the fair value measurement hierarchy.
Fair Value Measurements at
Reporting Date Using
(in Thousands)
Quoted
Prices in
Active
Assets/Liabilities Markets for
Significant
Other
Measured at
Fair Value
December 31, 2022
Identical
Assets
(Level 1)
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Measured on a recurring basis:
Assets:
Available for sale securities
U.S. Treasury securities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential mortgage-backed securities . . . . . . . . . . . . . .
States and political subdivisions . . . . . . . . . . . . . . . . . . . .
Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
49,393
4,209,212
159,191
5,358
4,423,154
$
$
49,393 $
— $
—
—
5,358
5,358 $ 4,417,796 $
4,209,212
159,191
—
—
—
—
—
—
For the years ended December 31, 2023 and December 31, 2022, debt investment securities available-for-sale are
classified within Level 2 of the valuation hierarchy. Equity securities with readily determinable fair values are classified
within Level 1. For debt securities classified as Level 2 in the fair value hierarchy, we obtain fair value measurements
from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes,
market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus
prepayment speeds, credit information, and the bond’s terms and conditions, among other things.
70
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Certain financial instruments are measured at fair value on a nonrecurring basis. They are not measured at fair
value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is
evidence of impairment).
The following table represents financial instruments measured at fair value on a non-recurring basis as of and for
the period ended December 31, 2023 by level within the fair value measurement hierarchy:
Fair Value Measurements at Reporting
Date Using
(in thousands)
Assets/Liabilities
Measured at
Fair Value
Period ended
December 31,
2023
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Net
Provision
During
Period
Measured on a non-recurring basis:
Assets:
Watch-List doubtful loans . . . . . . . . . . . . . . .
Other real estate owned . . . . . . . . . . . . . . . . . .
$
46,124
307
$
— $
—
— $
—
46,124 $
307
10,221
2,538
The following table represents financial instruments measured at fair value on a non-recurring basis as of and for
the year ended December 31, 2022 by level within the fair value measurement hierarchy:
Fair Value Measurements at Reporting
Date Using
(in thousands)
Assets/Liabilities
Measured at
Fair Value
Year ended
December 31,
2022
Quoted
Prices in
Active
Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Net
Provision
During
Period
Measured on a non-recurring basis:
Assets:
Watch-List doubtful loans . . . . . . . . . . . . . . . $
Other real estate owned . . . . . . . . . . . . . . . . . .
30,743
5,653
$
— $
—
— $
—
30,743 $
5,653
2,346
1,627
Our assets measured at fair value on a non-recurring basis are limited to loans classified as Watch List – Doubtful
and other real estate owned. The fair value of Watch-List Doubtful loans is derived in accordance with FASB ASC 310,
“Receivables”. They are primarily comprised of collateral-dependent commercial loans. As the primary sources of loan
repayments decline, the secondary repayment source, the collateral, takes on greater significance. Correctly evaluating the
fair value becomes even more important. Re-measurement of the loan to fair value is done through a specific valuation
allowance included in the ACL. The fair value of the loan is based on the fair value of the collateral, as determined through
either an appraisal or evaluation process. The basis for our appraisal and appraisal review process is based on regulatory
guidelines and strives to comply with all regulatory appraisal laws, regulations, and the Uniform Standards of Professional
Appraisal Practice. All appraisals and evaluations are “as is” (the property’s highest and best use) valuations based on the
current conditions of the property/project at that point in time. The determination of the fair value of the collateral is based
on the net realizable value, which is the appraised value less any closing costs, when applicable. As of December 31, 2023,
we had approximately $46,491,000 of doubtful commercial collateral dependent loans, of which approximately $1,272,000
had an appraisal performed within the immediately preceding twelve months and of which approximately $35,061,000
had an evaluation performed within the immediately preceding twelve months. As of December 31, 2022, we had
approximately $51,326,000 of doubtful commercial collateral dependent loans, of which approximately $0 had an
71
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
appraisal performed within the immediately preceding twelve months and of which approximately $51,326,000 had an
evaluation performed within the immediately preceding twelve months.
The determination to either seek an appraisal or to perform an evaluation begins in weekly credit quality meetings,
where the committee analyzes the existing collateral values of the doubtful loans and where obsolete appraisals are
identified. In order to determine whether we would obtain a new appraisal or perform an internal evaluation to determine
the fair value of the collateral, the credit committee reviews the existing appraisal to determine if the collateral value is
reasonable in view of the current use of the collateral and the economic environment related to the collateral. If the analysis
of the existing appraisal does not find that the collateral value is reasonable under the current circumstances, we would
obtain a new appraisal on the collateral or perform an internal evaluation of the collateral. The ultimate decision to get a
new appraisal rests with the independent credit administration group. A new appraisal is not required if an internal
evaluation, as performed by in-house experts, is able to appropriately update the original appraisal assumptions to reflect
current market conditions and provide an estimate of the collateral’s market value for impairment analysis. The internal
evaluations must be in writing and contain sufficient information detailing the analysis, assumptions, and conclusions and
they must support performing an evaluation in lieu of ordering a new appraisal.
Other real estate owned is comprised of real estate acquired by foreclosure and deeds in lieu of foreclosure. Other
real estate owned is carried at the lower of the recorded investment in the property or its fair value less estimated costs to
sell such property (as determined by independent appraisal) within Level 3 of the fair value hierarchy. Prior to foreclosure,
the value of the underlying loan is written down to the fair value of the real estate to be acquired by a charge to the ACL
(formerly allowance for probable loan losses), if necessary. The fair value is reviewed periodically, and subsequent write
downs are made accordingly through a charge to operations. Other real estate owned is included in other assets on the
consolidated financial statements. For the twelve months ended December 31, 2023, 2022, and 2021, we recorded
approximately $0, $2,000, and $2,000, respectively, in charges to the ACL in connection with loans transferred to other
real estate owned. For the twelve months ended December 31, 2023, 2022, and 2021, we recorded approximately
$2,538,000, $1,627,000, and $2,655,000, respectively, in adjustments to fair value in connection with other real estate
owned.
The fair value estimates, methods, and assumptions for our financial instruments at December 31, 2023 and
December 31, 2022 are outlined below.
Cash and Cash Equivalents
For these short-term instruments, the carrying amount is a reasonable estimate of fair value.
Investment securities held-to-maturity
The carrying amounts of investments held-to-maturity approximate fair value.
Investment Securities
For debt investment securities, which may include U.S. Treasury securities, obligations of other U.S. government
agencies, obligations of states and political subdivisions and mortgage pass through and related securities, fair values are
from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes,
market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus
prepayment speeds, credit information and the bond’s terms and conditions, among other things. See disclosures of fair
value of investment securities in Note 2 – Investment Securities, Equity Securities with Readily Determinable Fair Values
and Other Investments.
72
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Loans
Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by
type such as commercial, real estate and consumer loans as outlined by regulatory reporting guidelines. Each category is
segmented into fixed and variable interest rate terms and by performing and non-performing categories.
For variable rate performing loans, the carrying amount approximates the fair value. For fixed rate performing
loans, except residential mortgage loans, the fair value is calculated by discounting scheduled cash flows through the
estimated maturity using estimated market discount rates that reflect the credit and interest rate risk inherent in the loan.
For performing residential mortgage loans, fair value is estimated by discounting contractual cash flows adjusted for
prepayment estimates using discount rates based on secondary market sources or the primary origination market. Fixed
rate performing loans are within Level 3 of the fair value hierarchy. At December 31, 2023 and December 31, 2022, the
carrying amount of fixed rate performing loans was $1,199,347,000 and $1,203,381,000, respectively, and the estimated
fair value was $1,073,892,000 and $1,100,848,000, respectively.
Accrued Interest
The carrying amounts of accrued interest approximate fair value.
Deposits
The fair value of deposits with no stated maturity, such as non-interest bearing demand deposit accounts, savings
accounts and interest-bearing demand deposit accounts, was equal to the amount payable on demand as of December 31,
2023 and December 31, 2022. The fair value of time deposits is based on the discounted value of contractual cash flows.
The discount rate is based on currently offered rates. Time deposits are within Level 3 of the fair value hierarchy. At
December 31, 2023 and December 31, 2022, the carrying amount of time deposits was $2,425,177,000 and
$2,068,184,000, respectively, and the estimated fair value was $2,428,681,000 and $2,076,231,000, respectively.
Securities Sold Under Repurchase Agreements
Securities sold under repurchase agreements are short-term maturities. Due to the contractual terms of the
instruments, the carrying amounts approximated fair value at December 31, 2023 and December 31, 2022.
Junior Subordinated Deferrable Interest Debentures
We currently have floating rate junior subordinated deferrable interest debentures outstanding. Due to the
contractual terms of the floating rate junior subordinated deferrable interest debentures, the carrying amounts approximated
fair value at December 31, 2023 and December 31, 2022.
Other Borrowed Funds
We currently have long-term borrowings issued from the Federal Home Loan Bank (“FHLB”). The long-term
borrowings outstanding at December 31, 2023 and December 31, 2022 are fixed-rate borrowings and the fair value is
based on established market spreads for similar types of borrowings. The fixed-rate long-term borrowings are included in
Level 2 of the fair value hierarchy. At December 31, 2023 and December 31, 2022 the carrying amount of the fixed-rate
long-term FHLB borrowings was $10,745,000 and $10,944,000, respectively, and the estimated fair value was
$10,745,000 and $10,944,000, respectively.
Commitments to Extend Credit and Letters of Credit
Commitments to extend credit and fund letters of credit are principally at current interest rates and therefore the
carrying amount approximates fair value.
73
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Limitations
Fair value estimates are made at a point in time, based on relevant market information and information about the
financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one
time of our entire holdings of a particular financial instrument. Because no market exists for a significant portion of our
financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current
economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective
in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on-and off-statement of condition financial instruments without
attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered
financial instruments. Other significant assets and liabilities that are not considered financial assets or liabilities include
the bank premises and equipment and core deposit value. In addition, the tax ramifications related to the effect of fair value
estimates have not been considered in the above estimates.
74
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(21) International Bancshares Corporation (Parent Company Only) Financial Information
Statements of Condition
(Parent Company Only)
December 31, 2023 and 2022
(Dollars in Thousands)
2023
2022
ASSETS
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
$
105,184 $
111,382
62,150
2,281,952
3,365
8,617
89,263
114,901
42,519
1,933,269
3,365
7,181
$ 2,572,650 $ 2,190,498
Junior subordinated deferrable interest debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due to IBC Trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
108,868 $
21
15,987
124,876
134,642
21
11,076
145,739
Shareholders’ equity:
Common shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less cost of shares in treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
96,420
96,467
154,061
155,511
2,695,567
3,029,088
(470,497)
(397,889)
2,475,551
2,883,177
(430,792)
(435,403)
2,447,774
2,044,759
$ 2,572,650 $ 2,190,498
75
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(22) International Bancshares Corporation (Parent Company Only) Financial Information
Statements of Income
(Parent Company Only)
Years ended December 31, 2023, 2022 and 2021
(Dollars in Thousands)
Income:
Dividends from subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income on notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Loss) income on other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses:
Interest expense (Debentures) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for credit loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before federal income taxes and equity in undistributed
net income of subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax (benefit) expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .
Income before equity in undistributed net income of subsidiaries . . .
Equity in undistributed net income of subsidiaries . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
2022
2021
$
179,000
5,769
(6,150)
4
178,623
222,175 $
2,394
8,662
857
234,088
8,122
500
252
8,874
5,037
437
2,291
7,765
80,882
1,139
9,662
58
91,741
2,792
—
2,272
5,064
169,749
(1,365)
171,114
240,654
411,768
226,323
504
225,819
74,413
300,232 $
86,677
1,358
85,319
168,603
253,922
$
$
$
76
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(23) International Bancshares Corporation (Parent Company Only) Financial Information
Statements of Cash Flows
(Parent Company Only)
Years ended December 31, 2023, 2022 and 2021
(Dollars in Thousands)
2023
2022
2021
$
411,768
$
300,232 $
253,922
500
437
—
(14)
330
4,911
(240,654)
176,841
(20,170)
(33,285)
(53,455)
(25,774)
1,167
(78,247)
(4,611)
(107,465)
15,921
89,263
105,184
36
449
1,743
(74,413)
228,484
(32,556)
(43,343)
(75,899)
—
1,537
(75,375)
(52,048)
(125,886)
26,699
62,564
89,263 $
$
(51)
506
(8,084)
(168,603)
77,690
1,549
(11,787)
(10,238)
—
2,414
(72,838)
(716)
(71,140)
(3,688)
66,252
62,564
Operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for credit loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized (gain) loss on equity securities with readily
determinable fair values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in other liabilities . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in undistributed net income of subsidiaries . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . .
Investing activities:
Net (increase) decrease in notes receivable . . . . . . . . . . . . . . . . . . . . . .
Increase in other assets and other investments . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financing activities:
Redemption of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from stock transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments of cash dividends - common . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
77
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Condensed Quarterly Income Statements
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)
2023
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for probable loan losses . . . . . . . . . . . . . . . . . . . .
Non-interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 209,714
45,181
164,533
6,697
46,492
68,591
204,175
36,847
167,328
10,476
45,385
71,200
198,124
31,669
166,455
8,816
37,702
67,534
188,149
22,964
165,185
8,587
40,362
68,029
Income before income taxes. . . . . . . . . . . . . . . . . . . . . . . . .
135,737
131,037
127,807
128,931
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29,361
27,773
27,322
27,288
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 106,376
$ 103,264
$
100,485 $ 101,643
Per common share:
Basic
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1.71
$
1.66
$
1.62 $
1.64
Diluted
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1.71
$
1.66
$
1.62 $
1.63
78
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Condensed Quarterly Income Statements
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)
2022
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for probable loan losses . . . . . . . . . . . . . . . . . . . .
Non-interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
174,678
15,217
159,461
7,910
45,778
62,422
145,087
9,870
135,217
8,525
54,602
75,173
109,584
6,683
102,901
3,735
43,242
68,756
96,432
6,386
90,046
1,481
43,512
64,118
Income before income taxes. . . . . . . . . . . . . . . . . . . . . . . . .
134,907
106,121
73,652
67,959
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29,495
22,765
15,681
14,466
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
105,412
$
83,356 $
57,971 $
53,493
Per common share:
Basic
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1.69
$
1.34 $
0.92 $
0.84
Diluted
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1.68
$
1.34 $
0.92 $
0.84
79
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Condensed Average Statements of Condition
(Dollars in Thousands)
(Unaudited)
Distribution of Assets, Liabilities and Shareholders’ Equity
The following table sets forth a comparative summary of average interest earning assets and average interest-
bearing liabilities and related interest yields for the years ended December 31, 2023, 2022, and 2021. Tax-exempt income
has not been adjusted to a tax-equivalent basis:
Average
Balance
2023
Interest
Average
Rate/Cost
Average
Balance
2022
Interest
Average
Rate/Cost
Average
Balance
2021
Interest
Average
Rate/Cost
(Dollars in Thousands)
Assets
Interest earning assets:
Loan, net of unearned discounts:
Domestic . . . . . . . . . . . . . . . . . . $
Foreign . . . . . . . . . . . . . . . . . . .
7,526,132
147,477
611,836
8,212
8.13 % $
5.57
6,977,890
138,262
Investment securities:
Taxable . . . . . . . . . . . . . . . . . . .
Tax-exempt . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . .
Total interest-earning assets . . . . .
5,167,485
162,300
869,497
13,872,891
132,151
6,259
41,704
800,162
2.56
3.86
4.80
5.77 %
4,510,293
70,636
2,831,040
14,528,121
397,356
4,821
74,988
2,541
46,075
525,781
5.69 % $
3.49
7,318,756
123,524
355,125
4,090
1.66
3.60
1.63
3.62 %
3,624,903
43,906
2,449,193
13,560,282
34,331
1,483
3,074
398,103
4.85 %
3.31
0.95
3.38
0.13
2.94 %
Non-interest earning assets:
Cash and cash equivalents . . . . . . . . .
Bank premises and equipment, net . . . .
Other assets . . . . . . . . . . . . . . . . . .
Less allowance for probable loan losses .
Total . . . . . . . . . . . . . . . . . . . $
141,365
412,678
1,350,722
(141,016)
15,636,640
Liabilities and Shareholders’ Equity
Interest bearing liabilities:
Savings and interest bearing demand
365,194
415,883
1,203,790
(116,188)
$ 16,396,800
204,747
442,281
1,021,644
(111,791)
15,117,163
$
deposits . . . . . . . . . . . . . . . . . . $
4,487,192
60,337
1.34 % $
4,667,048
12,686
0.27 % $
4,297,561
4,110
0.10 %
Time deposits:
Domestic . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . .
985,189
1,262,762
Securities sold under repurchase
agreements . . . . . . . . . . . . . . . .
Other borrowings . . . . . . . . . . . . . .
Junior subordinated interest deferrable
debentures . . . . . . . . . . . . . . . . .
Total interest bearing liabilities . . . .
23,189
29,969
14,760
283
2.35
2.37
3.15
2.61
1,020,388
1,139,209
476,877
386,924
469,152
10,839
115,859
7,330,993
8,123
136,661
7.01
1.86 %
134,642
7,825,088
6,555
4,602
2,495
6,781
5,037
38,156
0.64
0.40
0.52
1.75
1,077,371
1,083,866
411,661
436,226
7,636
4,019
621
7,654
0.71
0.37
0.15
1.75
3.74
0.49 %
134,642
7,441,327
2,791
26,831
2.07
0.36 %
Non-interest bearing liabilities:
Demand Deposits . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . .
Shareholders’ equity . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . $
5,299,865
333,309
2,672,483
15,636,650
5,973,462
200,013
2,398,237
$ 16,396,800
5,355,105
70,601
2,250,130
15,117,163
$
Net interest income . . . . .
Net yield on interest earning
assets . . . . . . . . . . . . . .
$ 663,501
$ 487,625
$ 371,272
4.78 %
3.36 %
2.74 %
80
INTERNATIONAL BANCSHARES CORPORATION
OFFICERS AND DIRECTORS
OFFICERS
DIRECTORS
DENNIS E. NIXON
Chairman of the Board and President
JUDITH I. WAWROSKI
Chief Accounting Officer and Treasurer
DALIA F. MARTINEZ
Vice President
MIRTA SALCEDO
Auditor
MARISA V. SANTOS
Secretary
HILDA V. TORRES
Assistant Secretary
DENNIS E. NIXON
Chairman of the Board
International Bank of Commerce
JAVIER DE ANDA
Senior Vice President
B.P. Newman Investment Company
DOUG HOWLAND
Investments
RUDOLPH M. MILES
Investments
LARRY NORTON
Investments
ROBERTO R. RESENDEZ
Investments
ANTONIO R. SANCHEZ, JR.
Chairman of the Board
Sanchez Oil & Gas Corporation
Investments
DIANA G. ZUNIGA
President and Owner
Investors Alliance, Inc.
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