Financial Performance - International Bancshares Corporation reported net income for the three and nine months ended September 30, 2024, with specific figures detailed in the attached news release[3]. - The financial results and operational conditions are expected to be further elaborated in the attached news release[3]. Regulatory Compliance - The news release is intended to comply with Regulation Fair Disclosure, ensuring transparency in financial reporting[4]. - The report was filed on November 7, 2024, indicating timely disclosure of financial performance[1]. Company Information - The company is listed on The Nasdaq Stock Market under the trading symbol IBOC[2]. - Dennis E. Nixon serves as the President and Chief Executive Officer of International Bancshares Corporation, signing the report[8]. - The report does not indicate any emerging growth company status for International Bancshares Corporation[2]. - The company has not elected to use the extended transition period for new financial accounting standards[2]. Financial Documentation - The financial statements and exhibits related to the earnings announcement are included in the report[5]. - The report includes an interactive data file embedded within the Inline XBRL document[7].

Financial Position - As of June 30, 2024, the fair value of residential mortgage-backed securities was $4,712,423,000, while available-for-sale securities totaled $4,874,364,000[27]. - The fair value of doubtful loans on the Watch List was $33,465,000 as of June 30, 2024, with a net provision during the period of $5,471,000[30]. - For the period ended December 31, 2023, the fair value of doubtful loans on the Watch List was $46,124,000, with a net provision during the period of $10,221,000[31]. - As of December 31, 2023, the fair value of residential mortgage-backed securities was $4,660,099,000, and total available-for-sale securities amounted to $4,827,758,000[28]. - The fair value of other real estate owned was recorded at $2,920,000 as of June 30, 2024, with a net provision of $16,000 during the period[30]. - The carrying amount of fixed-rate performing loans was $1,260,853,000, with an estimated fair value of $1,143,631,000, reflecting a decrease in fair value from $1,073,892,000 as of December 31, 2023[38]. - Total loans increased to $8,267,827,000 as of June 30, 2024, compared to $8,058,961,000 as of December 31, 2023, representing a growth of approximately 2.6%[43]. - The carrying amount of time deposits rose to $2,644,913,000 as of June 30, 2024, from $2,425,177,000 as of December 31, 2023, indicating an increase of about 9.0%[38]. - The carrying amount of fixed-rate long-term FHLB borrowings was $10,644,000 as of June 30, 2024, remaining stable compared to $10,745,000 as of December 31, 2023[39]. - The total portfolio of loans as of June 30, 2024, was $8,267,827,000[66]. Credit Losses and Provisions - The company recorded $2,228,000 in charges to the allowance for credit losses (ACL) related to loans transferred to other real estate owned for the three months ended June 30, 2024[34]. - The allowance for credit losses (ACL) methodology is based on a loss-rate approach that measures lifetime losses on loan pools with similar risk characteristics[44]. - As of June 30, 2024, the total allowance for credit loan losses is $148,609,000, an increase from $133,557,000 as of March 31, 2023, representing an increase of approximately 11.3%[55]. - The credit loss expense for the six months ended June 30, 2024, is $21,749,000, compared to $8,816,000 for the same period in 2023, indicating a significant increase of approximately 146.5%[58]. - Losses charged to the allowance for the six months ended June 30, 2024, total $32,084,000, compared to $2,982,000 for the same period in 2023, reflecting a substantial increase of approximately 975.5%[59]. - The net (losses) recoveries charged to the allowance for the six months ended June 30, 2024, is $(30,209,000), compared to $(1,870,000) for the same period in 2023, indicating a worsening trend[58]. - The total non-accrual loans increased to $102,139,000 as of June 30, 2024, compared to $47,170,000 on December 31, 2023[62]. - The total past due loans reached $103,469,000 as of June 30, 2024, with a total portfolio of $8,164,358,000[65]. - The allowance for credit losses (ACL) was deemed adequate to absorb probable losses from loans in the portfolio as of June 30, 2024[64]. Loan Portfolio Composition - The company’s loan portfolio includes commercial, financial, agricultural, real estate, consumer, and foreign loans, with commercial loans totaling $4,769,703,000 as of June 30, 2024[43]. - The balance of loans evaluated for impairment as of June 30, 2024, is $8,165,806,000, with a recorded investment of $102,021,000 for loans evaluated individually[60]. - The total balance at June 30, 2024, for commercial real estate: other construction & land development is $54,840,000, while the balance for commercial real estate: farmland & commercial is $44,888,000[55]. - Commercial real estate: farmland & commercial loans individually evaluated for impairment increased significantly due to one relationship secured by childcare centers[61]. - The aging of past due loans showed that 30-59 days past due loans totaled $57,623,000 as of June 30, 2024[65]. - The increase in past due loans in commercial real estate: other construction & land development was attributed to three loans secured by real estate[66]. Capital and Equity - The Common Equity Tier 1 (CET1) to risk-weighted assets ratio was 22.32% on June 30, 2024, up from 21.72% on December 31, 2023[97]. - The Tier 1 capital-to-average-total-asset (leverage) ratio was 18.08% as of June 30, 2024, compared to 17.46% at December 31, 2023[97]. - The risk-weighted total capital ratio was 24.26% on June 30, 2024, compared to 23.65% on December 31, 2023[97]. - The total of $108,868,000 of Capital and Common Securities outstanding qualified as Tier 1 capital as of June 30, 2024[97]. - As of June 30, 2024, the company and its subsidiary banks meet all capital adequacy requirements[99]. Stock-Based Compensation - Stock-based compensation expense for the six months ended June 30, 2024, was $122,000, down from $179,000 for the same period in 2023, a decrease of 31.8%[70]. - As of June 30, 2024, there were 249,526 options outstanding with a weighted average exercise price of $34.57[70]. - The aggregate intrinsic value of options outstanding at June 30, 2024, was $5,650 thousand[70]. - The total unrecognized stock-based compensation cost related to non-vested options was approximately $310,000, expected to be recognized over 1.4 years[70]. - As of June 30, 2024, a total of 461,750 stock appreciation rights (SARs) were outstanding, with a weighted average exercise price of $39.60 and an aggregate intrinsic value of $8,130,000[71]. - The fair value of the liability for payments due to SAR holders increased from approximately $1,464,000 at December 31, 2023, to approximately $2,888,000 at June 30, 2024[72]. - The expense recorded in connection with all grants under the SAR Plan totaled $344,000 for the three months ended June 30, 2024, compared to $264,000 for the same period in 2023[72]. Investment Securities - The total investment securities at June 30, 2024, amounted to $4,869,027,000, with residential mortgage-backed securities contributing $4,712,423,000[74]. - At June 30, 2024, the amortized cost and estimated fair value of available-for-sale debt investment securities pledged was $2,001,561,000 and $1,734,388,000, respectively[79]. - Proceeds from the sales and calls of available-for-sale debt securities for the six months ended June 30, 2024, were $1,720,000, with no gross gains or losses realized[79]. - The balance in equity securities with readily determinable fair values was $5,337,000 at June 30, 2024, down from $5,417,000 at December 31, 2023[80]. - Net losses recognized during the three months ended June 30, 2024, on equity securities amounted to $23,000[80]. - No debt securities in an unrealized loss position were attributed to credit-related reasons as of June 30, 2024[73]. - Investments in Low-Income Housing Tax Credit (LIHTC) projects totaled $193,135,000 as of June 30, 2024, down from $200,245,000 at December 31, 2023[81]. - Unfunded commitments to LIHTC projects were $21,251,000 at June 30, 2024, compared to $34,126,000 at December 31, 2023[81].

Fair Value and Securities - As of March 31, 2024, the fair value of residential mortgage-backed securities was $4,612,306,000, while available-for-sale securities totaled $4,774,990,000[36]. - The total available-for-sale securities as of December 31, 2023, amounted to $4,827,758,000[36]. - As of December 31, 2023, the fair value of residential mortgage-backed securities was $4,660,099,000[36]. - The amortized cost of available-for-sale debt securities was $5,306,234,000 with an estimated fair value of $4,769,630,000 as of March 31, 2024[89]. - Proceeds from the sales and calls of available-for-sale debt securities were $1,720,000 for the three months ended March 31, 2024, with no gross gains or losses realized[95]. Loans and Credit Losses - The fair value of doubtful loans classified as Watch List was $9,137,000 as of March 31, 2024, with a net provision during the period of $(6,471,000)[38]. - For the year ended December 31, 2023, the fair value of doubtful loans was $46,124,000, with a net provision of $10,221,000[38]. - The total doubtful commercial collateral dependent loans as of March 31, 2024, were $45,866,000[38]. - The company recorded $0 in charges to the allowance for credit losses (ACL) for loans transferred to other real estate owned for the three months ended March 31, 2024[41]. - As of March 31, 2024, the total allowance for credit loan losses was $142,798,000, a decrease from $157,069,000 at December 31, 2023[71]. - The credit loss expense for the three months ended March 31, 2024, was $12,978,000, compared to $8,587,000 for the same period in 2023, reflecting an increase of approximately 51.5%[73]. - The balance of loans individually evaluated for impairment decreased to $46,232,000 as of March 31, 2024, from $47,061,000 at December 31, 2023[75]. - The total non-accrual loans amounted to $46,322,000 as of March 31, 2024, slightly down from $47,170,000 at December 31, 2023[76]. - The allowance for credit loan losses for commercial loans collectively evaluated for impairment was $136,978,000 as of March 31, 2024, compared to $144,778,000 at December 31, 2023[75]. - The qualitative loss factors in certain pools of the portfolio were adjusted to reflect a slight improvement in economic uncertainty, resulting in a decrease in the required allowance for credit loan losses[73]. Loan Portfolio and Performance - Total loans increased to $8,112,481,000 as of March 31, 2024, compared to $8,058,961,000 at December 31, 2023, reflecting a growth of approximately 0.66%[58]. - The total portfolio value increased from $8,058,961,000 on December 31, 2023, to $8,112,481,000 on March 31, 2024, reflecting a growth of about 0.7%[81]. - As of March 31, 2024, total past due loans amounted to $69,545,000, representing an increase from $63,805,000 on December 31, 2023, indicating a rise of approximately 9.3%[81]. - The overall trend in past due loans suggests a mixed performance across different loan categories, with some experiencing increases while others show improvements in delinquency rates[81]. - The Watch List—Doubtful Commercial loans decreased primarily due to charge-downs, while Watch List—Doubtful Commercial Real Estate: Multifamily loans increased due to a loan downgrade[83]. Capital and Dividends - As of March 31, 2024, the total outstanding Capital and Common Securities qualified as Tier 1 capital amounted to $108,868,000[101]. - The Common Equity Tier 1 (CET1) to risk-weighted assets ratio was 22.00% on March 31, 2024, compared to 21.72% on December 31, 2023[114]. - The Tier 1 capital-to-average-total-assets (leverage) ratio was 17.85% as of March 31, 2024, up from 17.46% on December 31, 2023[114]. - Cash dividends paid were $0.66 per share on February 28, 2024, compared to $0.63 per share on February 28, 2023[103]. - The company authorized a stock repurchase program of up to $150 million for the 12-month period starting March 15, 2024[104]. Stock-Based Compensation - Stock-based compensation expense for the three months ended March 31, 2024, was $74,000, compared to $102,000 for the same period in 2023[85]. - The total unrecognized stock-based compensation cost related to non-vested options as of March 31, 2024, was approximately $357,000, to be recognized over a weighted average period of 1.5 years[85]. - The expense recorded in connection with all grants under the SAR Plan totaled $1,080,000 for the three months ended March 31, 2024, up from $166,000 for the same period in 2023[87]. Legal Proceedings - The company is involved in various legal proceedings, but any material loss is considered remote[106].

Financial Performance - International Bancshares Corporation reported net income for the three months ended March 31, 2024, with specific figures detailed in the attached news release[5]. - The financial results are intended to be included under "Item 7.01 – Regulation Fair Disclosure" for transparency purposes[6]. - The news release is incorporated by reference as Exhibit 99, providing detailed financial performance metrics[10]. Compliance and Reporting - The report was filed on May 2, 2024, indicating timely compliance with SEC regulations[2]. - The company is listed on The Nasdaq Stock Market under the trading symbol IBOC[4]. - The report includes a cover page interactive data file, enhancing the accessibility of financial data[10]. Company Status and Leadership - The company has not indicated any changes in its status as an emerging growth company[4]. - Dennis E. Nixon serves as the President and Chief Executive Officer, signing off on the report[14]. Business Developments - The report does not specify any new product developments or market expansion strategies[5]. - No mergers or acquisitions were mentioned in the current report[5].

Workforce and Diversity - As of December 31, 2023, the company employed approximately 2,062 full-time and 230 part-time employees, with 68% of the management team having over 15 years of tenure[21]. - Approximately 74% of the workforce self-identified as Latino or Hispanic, and over 66% self-identified as women, reflecting the company's commitment to diversity and inclusion[27]. Banking Operations and Services - The company operates 166 facilities and 256 ATMs across 75 communities in Texas and Oklahoma, focusing on both commercial and retail banking services[18]. - The company has a diverse range of banking services, including international trade facilitation, mortgage lending, and online banking products[19]. - The company has increased its market share in its primary market area through strategic acquisitions, competing with other banks and non-bank entities[30]. Financial Performance and Capital Management - Deposits from customers domiciled in Mexico accounted for approximately 29% of total deposits for the year ended December 31, 2023, indicating a stable deposit base[32]. - As of December 31, 2023, approximately $1,229,500,000 is available for dividend payments to the holding company from Subsidiary Banks, assuming they remain classified as "well capitalized"[69]. - The holding company's leverage ratio was reported at 17.46% as of December 31, 2023, significantly exceeding the minimum requirement of 3% for well-capitalized institutions[80]. - All Subsidiary Banks maintained a leverage ratio in excess of 5% as of December 31, 2023, complying with FDIC capital requirements[81]. - The company is classified as "well capitalized" under applicable regulations, with total risk-based capital ratios exceeding the required benchmarks[82]. Regulatory Environment - The company is subject to extensive regulation by federal and state laws, which could materially affect its business and financial condition[36]. - The company is required to undergo financial stress tests if it has consolidated assets exceeding $10 billion, which currently does not apply to its Subsidiary Banks[41]. - The company must obtain FRB approval prior to merging or consolidating with other bank holding companies or acquiring significant ownership in banks[43]. - The Dodd-Frank Act has introduced significant regulatory changes that may impact the company's capital requirements and operational costs in the future[40]. - The company is required to report beneficial ownership information under the Corporate Transparency Act, effective January 1, 2024[46]. Cybersecurity and Risk Management - The company has implemented robust, multi-layer security procedures to mitigate cyber risks and protect sensitive customer data[193]. - The Information Systems Security Program (ISSP) includes layers of administrative and technical safeguards to protect sensitive information[194]. - The company conducts annual self-assessments using the Cyber Risk Institute to evaluate its cybersecurity strategy and compliance[200]. - Multi-factor authentication (MFA) is required for all retail and commercial customers to enhance online banking security[200]. - The risk of a data breach or cyber-attack is pervasive and severe, despite robust defensive measures[211]. Economic and Market Conditions - The company may face adverse impacts from declining crude oil prices, which could affect the economies of primary markets like Texas and Oklahoma[181]. - Economic conditions in primary market areas, including Texas and Oklahoma, significantly influence the company's performance, with potential increases in loan delinquencies if conditions worsen[182]. - The company faces substantial competition from various financial institutions, including fintechs, which may affect its revenue streams and deposit base[162]. Compliance and Legal Risks - The CFPB's authority to enforce consumer protection laws may increase compliance costs for the company and its Subsidiary Banks[121]. - The Dodd-Frank Act mandates that financial institutions with assets of $1 billion or more disclose their incentive-based compensation structures to regulators[149]. - The Dodd-Frank Act expands limitations on affiliate transactions, affecting the company's financial operations[135]. - Negative publicity and diminished depositor confidence due to recent bank failures could adversely affect the company's liquidity and results of operations[188]. Future Outlook and Strategic Considerations - Future acquisitions and branch expansions are subject to regulatory approvals, which depend on examination results and CRA ratings[166]. - The loss of the CEO, who has been pivotal in the company's growth since 1979, could materially affect the company's business and prospects[167]. - Recent volatility in the banking industry may lead to new regulations that could impose additional costs and operational changes for the company[189].

Financial Performance - International Bancshares Corporation reported a 37.2% increase in net income for 2023, totaling $411.8 million compared to $300.2 million in 2022[2] - Diluted earnings per share increased by 38.5% to $6.62 in 2023 from $4.78 in 2022[2] - Non-interest income for 2023 was $169.9 million, a decrease from $187.1 million in 2022[4] Income and Assets - Net interest income rose to $663.5 million in 2023, up from $487.6 million in 2022, driven by an increase in the investment portfolio and loan interest income[4] - Total assets decreased to $15.1 billion at December 31, 2023, down from $15.5 billion at the end of 2022[7] - Total net loans increased to $7.9 billion at December 31, 2023, compared to $7.3 billion at the end of 2022[7] - Deposits decreased to $11.8 billion at December 31, 2023, down from $12.7 billion at the end of 2022[7] Strategic Focus - The company emphasized its focus on managing interest income and expense in the current economic environment[3] - The return on assets (ROA) positions International Bancshares Corporation among the top publicly traded bank holding companies in the nation[5] - The company expressed confidence in its strong capital position and management strategies for continued success in 2024 and beyond[6]

Fair Value and Securities - As of September 30, 2023, the fair value of residential mortgage-backed securities is $4,545,600,000, while states and political subdivisions amount to $146,338,000[38]. - The total fair value of available-for-sale debt securities as of September 30, 2023, is $4,697,096,000, with equity securities valued at $5,158,000[38]. - The fair value of available-for-sale securities as of December 31, 2022, totaled $4,423,154,000, with residential mortgage-backed securities at $4,209,212,000[38]. - The fair value hierarchy includes Level 1 inputs for unadjusted quoted prices in active markets and Level 2 inputs for observable inputs other than Level 1[36]. - The company applies fair value measurements in accordance with ASC Topic 820, which establishes a framework for measuring fair value[35]. - As of September 30, 2023, the total investment securities amounted to $4,691,938,000, with a gross unrealized loss of $696,319,000[94]. - Residential mortgage-backed securities had an amortized cost of $5,227,139,000 and an estimated fair value of $4,545,600,000, reflecting a gross unrealized loss of $681,539,000[94]. - The company reported equity securities with readily determinable fair values of $5,158,000 as of September 30, 2023, down from $5,358,000 at December 31, 2022[102]. - No debt securities in an unrealized loss position were attributed to credit-related reasons, resulting in no allowances recorded for the period[93]. - The total investment in loans individually evaluated for impairment as of September 30, 2023, was $42,177,000, with an allowance of $7,651,000[76]. Loans and Credit Quality - The company reported $29,763,000 in watch-list doubtful loans as of September 30, 2023, with a net provision during the period of $5,581,000[39]. - Other real estate owned as of September 30, 2023, is valued at $546,000, with a net provision during the period of $2,510,000[39]. - The company had approximately $51,326,000 of doubtful commercial collateral-dependent loans as of December 31, 2022[39]. - As of September 30, 2023, total loans increased to $7,896,899,000 from $7,430,603,000 as of December 31, 2022, representing a growth of approximately 6.3%[58]. - The carrying amount of fixed-rate performing loans was $1,166,647,000 as of September 30, 2023, down from $1,203,381,000 as of December 31, 2022, indicating a decrease of about 3.0%[48]. - The estimated fair value of fixed-rate performing loans decreased to $1,014,777,000 as of September 30, 2023, from $1,100,848,000 as of December 31, 2022, reflecting a decline of approximately 7.8%[48]. - The total balance of credit loan losses increased to $149,006 thousand as of September 30, 2023, up from $140,503 thousand at June 30, 2023, reflecting a growth of approximately 6%[72]. - Credit loss expense for the three months ended September 30, 2023, was $10,476 thousand, compared to $8,525 thousand for the same period in 2022, representing an increase of about 23%[74]. - The balance of credit loan losses at September 30, 2023, included $33,853 thousand in domestic commercial loans, which is an increase from $27,645 thousand at June 30, 2023[72]. - The total balance of credit loan losses for foreign loans was $1,216 thousand as of September 30, 2023, which is an increase from $1,180 thousand at June 30, 2023[72]. - As of September 30, 2023, the total allowance for credit losses (ACL) increased to $141,355,000 from $123,527,000 as of December 31, 2022, reflecting a rise in credit loss expense due to economic uncertainty[76][77]. - The company has categorized loans into various segments, including commercial, real estate, and consumer loans, to better assess risk and manage credit quality[58]. - The company’s internal Watch List report categorizes loans into six categories, including Pass, Economic Monitoring, and Watch List—Doubtful, to monitor potential credit weaknesses[66]. - The total loan portfolio as of September 30, 2023, was $7,896,899,000, up from $7,430,603,000 at the end of 2022, indicating growth in the overall lending activity[86]. - Total loans evaluated for impairment as of September 30, 2023, amounted to $7,854,722,000, with a total allowance of $141,355,000[76]. - Non-accrual loans decreased to $41,997,000 as of September 30, 2023, down from $51,648,000 at December 31, 2022[77]. - The total amount of commercial real estate loans past due 90 days or greater was $19,493,000 as of September 30, 2023, compared to $1,130,000 on December 31, 2022[84]. - The total amount of residential first lien loans past due was $6,298,000 as of September 30, 2023, compared to $7,280,000 at the end of 2022[86]. - The total amount of foreign loans past due was $1,287,000 as of September 30, 2023, an increase from $1,028,000 on December 31, 2022[86]. - The total amount of consumer loans past due was $493,000 as of September 30, 2023, reflecting a slight increase from $302,000 at the end of 2022[86]. - The total amount of loans on the watch list classified as "Substandard" was $1,430,000 for 2023, compared to $1,861,000 in 2022[86]. Capital and Dividends - As of September 30, 2023, the company had a CET1 to risk-weighted assets ratio of 20.97%, up from 20.21% on December 31, 2022[120]. - The company reported a Tier 1 capital-to-average-total-assets (leverage) ratio of 16.75% as of September 30, 2023, compared to 14.59% on December 31, 2022[120]. - The total of $108,868,000 of Capital and Common Securities outstanding qualified as Tier 1 capital as of September 30, 2023[120]. - The company paid cash dividends of $0.63 per share on February 28 and August 25, 2023, compared to $0.60 per share in the same periods of 2022[109]. - A total of 13,694,792 shares had been repurchased under all programs at a cost of $414,306,000 as of October 30, 2023[110]. - The company has extended its stock repurchase program to purchase up to $124 million of common stock during the 12-month period commencing on March 15, 2023[110]. - The company continues to meet all fully phased-in capital adequacy requirements as of September 30, 2023[114]. Stock-Based Compensation - Stock-based compensation expense for the three months ended September 30, 2023, was $76,000, compared to $118,000 for the same period in 2022[89]. - As of September 30, 2023, there were 432,223 stock options outstanding with a weighted average exercise price of $29.71[89]. - The total unrecognized stock-based compensation cost related to non-vested options was approximately $507,000, expected to be recognized over a weighted average period of 1.5 years[89]. - The fair value of the liability for payments due to stock appreciation rights holders was approximately $976,000 as of September 30, 2023[91]. - Stock appreciation rights outstanding at September 30, 2023, totaled 473,250 with a weighted average exercise price of $39.35[91]. - The expense recorded in connection with all grants under the SAR Plan was $219,000 for the three months ended September 30, 2023[91]. Legal and Regulatory Matters - The company is involved in various legal proceedings, but any material loss is considered remote[111]. - The interest rate index on the Capital and Common Securities transitioned to the Three-Month CME Term Secured Overnight Financing Rate ("SOFR") with a 26 basis point spread adjustment as of July 1, 2023[108]. - The company actively monitors regulatory capital ratios to ensure that its Subsidiary Banks are well-capitalized under the regulatory framework[120].

Dividends and Stock Repurchase - The company declared a semi-annual cash dividend of $0.63 per share, payable on August 25, 2023, for recordholders as of August 11, 2023[34] - The company paid cash dividends of $0.63 per share on February 28, 2023, compared to $0.60 per share on February 28, 2022[108] - The stock repurchase program was extended to authorize the repurchase of up to $124 million of common stock during the 12-month period commencing on March 15, 2023[109] - As of July 31, 2023, a total of 13,692,792 shares had been repurchased at a cost of $414,222,000[109] Financial Performance and Position - The company operates as one segment, with performance assessed through consolidated financial statements[33] - The company’s financial statements are prepared in accordance with U.S. GAAP and include necessary adjustments for fair presentation[32] - Total loans increased to $7,573,077,000 as of June 30, 2023, compared to $7,430,603,000 at December 31, 2022, reflecting a growth of approximately 1.9%[57] - The carrying amount of fixed-rate performing loans was $1,179,615,000 as of June 30, 2023, down from $1,203,381,000 at December 31, 2022, indicating a decrease of about 2.0%[48] - The estimated fair value of fixed-rate performing loans decreased to $1,077,069,000 as of June 30, 2023, from $1,100,848,000 at December 31, 2022, representing a decline of approximately 2.1%[48] - The total amount of commercial, financial, and agricultural loans was $4,280,036,000 as of June 30, 2023, down from $4,373,373,000 at December 31, 2022, showing a decrease of approximately 2.1%[57] Allowance for Credit Losses - The allowance for credit losses (ACL) recorded charges of $0 for the three months ended June 30, 2023, and $2,000 for the twelve months ended December 31, 2022[58] - The allowance for credit loan losses (ACL) at June 30, 2023, is $140,503,000, an increase from $133,557,000 at March 31, 2023[72] - The methodology for estimating ACL includes quantitative historical loss percentages and qualitative current conditions[70] - The adequacy of the ACL is influenced by factors such as loan portfolio performance and economic conditions[70] - The allowance for credit losses (ACL) at June 30, 2023, was deemed adequate to absorb probable losses from the loan portfolio[81] Loan Performance and Quality - The total non-accrual loans as of June 30, 2023, amounted to $42,083,000, a decrease from $51,648,000 as of December 31, 2022[76] - The total past due loans amounted to $68,474,000, representing an increase from $18,018,000 on December 31, 2022[83] - Commercial loans past due 90 days or greater increased significantly, primarily due to a loan secured by equipment in the oil and gas industry[83] - The largest category of past due loans was in Commercial Real Estate: Other Construction & Land Development, with $10,812,000 past due as of June 30, 2023[83] - The increase in past due loans is attributed to loans on non-accrual status, particularly in the oil and gas sector[83] Securities and Investments - As of June 30, 2023, the total investment securities amounted to $4,669,847,000, with a carrying value of $5,285,989,000[94] - Residential mortgage-backed securities had an amortized cost of $5,123,159,000 and an estimated fair value of $4,508,112,000, reflecting unrealized losses of $616,284,000[94] - The fair value of the liability for payments due to SAR holders was approximately $976,000 as of June 30, 2023[90] - The amortized cost of available-for-sale debt investment securities pledged for fiduciary powers was $1,642,812,000, with an estimated fair value of $1,394,906,000 at June 30, 2023[97] Capital Adequacy - As of June 30, 2023, the Common Equity Tier 1 (CET1) to risk-weighted assets ratio was 21.32%, up from 20.21% on December 31, 2022[119] - The Tier 1 capital-to-average-total-assets (leverage) ratio was 16.29% as of June 30, 2023, compared to 14.59% at the end of 2022[119] - The risk-weighted total capital ratio stood at 23.28% on June 30, 2023, an increase from 22.22% on December 31, 2022[119] - A total of $108,868,000 of Capital and Common Securities was outstanding as of June 30, 2023, qualifying as Tier 1 capital[119] Regulatory and Legal Matters - The company continues to meet all fully phased-in capital adequacy requirements as of June 30, 2023[116] - The company is involved in various legal proceedings, but any material loss is considered remote based on current assessments[110]

Fair Value and Securities - As of March 31, 2023, the fair value of available-for-sale debt securities was $4,865,210,000, with residential mortgage-backed securities contributing $4,647,229,000[34]. - The fair value of Watch-List doubtful loans as of March 31, 2023, was $29,894,000, with a net provision during the period of $1,000,000[37]. - The total fair value of other real estate owned as of March 31, 2023, was $752,000, with a net provision during the period of $250,000[37]. - As of December 31, 2022, the fair value of available-for-sale securities was $4,423,154,000, with residential mortgage-backed securities at $4,209,212,000[36]. - The fair value hierarchy includes Level 1 inputs, which are unadjusted quoted prices in active markets, and Level 2 inputs, which are observable inputs other than Level 1[35]. - The estimated fair value of fixed-rate performing loans was $1,094,152,000 as of March 31, 2023, compared to $1,100,848,000 as of December 31, 2022, reflecting a decline of approximately 0.6%[47]. - The estimated fair value of time deposits was $2,154,962,000 as of March 31, 2023, compared to $2,076,231,000 as of December 31, 2022, indicating an increase of approximately 3.8%[50]. - The total investment securities amounted to $5,397,131,000 with an estimated fair value of $4,859,818,000, reflecting unrealized losses of $544,087,000[92]. - The gross unrealized losses on investment securities at March 31, 2023, totaled $544,087,000, primarily due to changes in market interest rates[99]. - The residential mortgage-backed securities held a carrying value of $4,647,229,000, which includes $810,907,000 from Ginnie Mae and $3,836,322,000 from Fannie Mae and Freddie Mac[92]. Loans and Credit Quality - As of March 31, 2023, total loans amounted to $7,531,773,000, an increase from $7,430,603,000 as of December 31, 2022, representing a growth of approximately 1.4%[58]. - The carrying amount of fixed-rate performing loans was $1,196,549,000 as of March 31, 2023, down from $1,203,381,000 as of December 31, 2022, indicating a decrease of about 0.6%[47]. - The company had approximately $51,306,000 of doubtful commercial collateral-dependent loans as of March 31, 2023, with no appraisals performed in the preceding twelve months[38]. - The allowance for credit loan losses increased from $125,972 thousand on December 31, 2022, to $133,557 thousand on March 31, 2023, reflecting a rise of approximately 6.4%[71]. - Credit loss expense for the three months ended March 31, 2023, was $8,587 thousand, compared to $1,481 thousand for the same period in 2022, indicating a significant increase in provisions due to economic uncertainty[72]. - The total recorded investment for loans evaluated for impairment as of March 31, 2023, was $7,479,964 thousand, with a corresponding allowance of $130,112 thousand[73]. - Non-accrual loans totaled $51,632 thousand as of March 31, 2023, slightly decreasing from $51,648 thousand on December 31, 2022[74]. - The total past due loans amounted to $83,029,000, representing an increase from $18,018,000 as of December 31, 2022[81]. - The total past due loans increased by approximately 46% from December 31, 2022, to March 31, 2023, highlighting potential credit quality concerns[81]. - The total balance of commercial loans classified as "Pass" was $1,435,291,000 as of March 31, 2023, down from $1,498,102,000[83]. Capital and Stockholder Equity - The CET1 to risk-weighted assets ratio was 20.43% on March 31, 2023, compared to 20.21% on December 31, 2022[117]. - The Tier 1 capital-to-average-total-asset (leverage) ratio was 15.61% as of March 31, 2023, up from 14.59% at the end of 2022[117]. - The risk-weighted Tier 1 capital ratio was 21.37% on March 31, 2023, compared to 21.04% on December 31, 2022[117]. - Cash dividends of $0.63 per share were paid on February 28, 2023, compared to $0.60 per share on February 28, 2022[107]. - The company authorized a stock repurchase program of up to $124 million for the 12-month period starting March 15, 2023[108]. - A total of 13,615,730 shares had been repurchased at a cost of $411,099,000 as of May 1, 2023[108]. - The total outstanding Capital and Common Securities qualified as Tier 1 capital amounted to $134,642,000[106]. - The company continues to meet all fully phased-in capital adequacy requirements as of March 31, 2023[114]. Accounting and Reporting - The consolidated financial statements are unaudited but include all necessary adjustments for fair presentation[30]. - The company did not have any material recognizable or non-recognizable subsequent events through the date of issuing the financial statements[32]. - The company applies the provisions of FASB ASC 280 for segment reporting, operating as one segment with five active subsidiary banks[31]. - The company adopted ASU 2022-02 on January 1, 2023, which enhances disclosure requirements for troubled debt restructurings but did not significantly impact consolidated financial statements[74]. - The allowance for credit losses (ACL) at March 31, 2023, was deemed adequate by management to absorb probable losses from the loan portfolio[79]. - The company has not recorded any allowances for debt securities in the Allowance for Credit Losses (ACL) for the period[91].

Employment and Workforce - As of December 31, 2022, the company employed approximately 1,974 full-time and 195 part-time employees, with over 65% of the management team having more than 15 years of tenure[21] - The company has a strong commitment to diversity, with over 74% of its workforce self-identifying as Latino or Hispanic and over 66% as women as of December 31, 2022[26] - The company has a commitment to maintaining a safe and healthy work environment, free from discrimination and harassment[27] Operations and Facilities - The company operates 167 facilities and 257 ATMs across 75 communities in Texas and Oklahoma, focusing on both commercial and retail banking services[18] - The company has emphasized consumer and retail banking, including mortgage lending, and has strategically located branches in retail locations and shopping malls[18] - The company’s principal offices occupy approximately 147,000 square feet in Laredo, Texas, with facilities located in various regions including Austin, Dallas, and Houston[196] Financial Performance and Capitalization - The leverage ratio for the holding company at December 31, 2022, was 14.59%, well above the minimum requirement of 3% for the highest regulatory rating[83] - The company is classified as "well-capitalized" under applicable regulations, with total risk-based capital ratios exceeding the minimum thresholds of 10% for total capital, 6% for Tier 1 capital, and 5% for leverage ratio[85] - As of December 31, 2022, approximately $961,000,000 is available for dividend payments to the holding company, assuming all subsidiary banks remain "well-capitalized"[71] Regulatory Compliance - The company is subject to extensive regulation by the Federal Reserve Board and the Federal Deposit Insurance Corporation, impacting its operations and financial condition[34] - The company must comply with NASDAQ listing standards, which include disclosure requirements and standards related to board independence[63] - The company is subject to regulatory policies regarding dividend payments, which depend on cash derived from dividends declared by Subsidiary Banks[69] Risk Management and Legal Compliance - The company has implemented a program to monitor and enforce policies on money laundering, corruption, and bribery, which could have serious legal and reputational consequences if not maintained[48] - The Foreign Account Tax Compliance Act (FATCA) requires U.S. banks to withhold a 30% tax on U.S. sourced income payable to foreign financial institutions that do not comply with reporting requirements[50] - The company is subject to numerous consumer laws and regulations designed to protect consumers in transactions with banks[122] Economic and Market Conditions - The company’s financial performance is significantly affected by economic conditions in its primary market areas, including Texas and Oklahoma, which could lead to increased loan delinquencies if conditions worsen[186] - The company faces substantial competition from various financial institutions, including fintechs, which may affect revenue streams and customer deposits[160] - The trading price of the company’s common stock has been volatile, influenced by various factors including earnings variations and market conditions[194] Internal Controls and Reporting - As of December 31, 2022, management assessed the effectiveness of internal controls over financial reporting and determined they were effective[210] - RSM US LLP provided an unqualified opinion on the effectiveness of internal controls over financial reporting as of December 31, 2022[211] - There were no changes in internal control over financial reporting during the quarter ended December 31, 2022, that materially affected the controls[208] Capital and Loan Losses - The adoption of the FASB CECL accounting standard increased the allowance for probable loan losses by approximately 17.2%, resulting in a one-time cumulative-effect adjustment to retained earnings of approximately $8.3 million, net of tax[114] - The allowance for probable loan losses may be insufficient, requiring management to make significant estimates and assumptions regarding credit risks[157] - The company relies on analytical tools and forecasting models for estimating loan losses and measuring fair value, which may not be accurate during market stress[184] Strategic Initiatives and Future Outlook - The company has increased its market share in its primary market area through strategic acquisitions, competing with commercial banks, savings and loan associations, and credit unions[29] - The company may face additional risks from new lines of business or products, which could require significant investment and may not achieve profitability targets[183] - The company has established disaster recovery policies, but severe external events could materially affect its business operations[177]