International Bancshares (US:IBOC)2024-11-07 20:29Fair Value Measurements - As of September 30, 2024, the fair value of residential mortgage-backed securities was $4,855,607,000, while states and political subdivisions amounted to $156,976,000[28]. - The total assets measured at fair value on a recurring basis as of December 31, 2023, were $4,827,758,000, with residential mortgage-backed securities at $4,660,099,000[29]. - The fair value of available-for-sale securities as of December 31, 2023, was $4,827,758,000, with equity securities valued at $5,417,000[29]. - The company’s fair value measurements for investment securities are based on independent pricing services, considering various observable data[38]. - The carrying amounts of cash and cash equivalents approximate fair value, reflecting the short-term nature of these instruments[37]. - The estimated fair value of fixed-rate long-term FHLB borrowings remained stable at $10,593,000 as of September 30, 2024, unchanged from December 31, 2023[44]. - The fair value of time deposits was estimated at $2,797,797,000 as of September 30, 2024, compared to $2,428,681,000 on December 31, 2023, indicating a fair value increase of approximately 15.2%[42]. - The fair value of fixed-rate performing loans was estimated at $1,112,046,000 as of September 30, 2024, compared to $1,073,892,000 on December 31, 2023, showing an increase of approximately 3.6%[40]. - The estimated fair value of equity securities with readily determinable fair values was $5,538,000 at September 30, 2024, compared to $5,417,000 at December 31, 2023[97]. Loan and Credit Losses - The company reported $55,479,000 in doubtful loans as of September 30, 2024, with a net provision during the period of $10,985,000[31]. - Other real estate owned was valued at $2,627,000 as of September 30, 2024, with a net provision of $371,000 during the same period[31]. - The company had approximately $99,835,000 in doubtful commercial collateral-dependent loans as of September 30, 2024[35]. - The allowance for credit losses (ACL) methodology incorporates qualitative factors such as trends in portfolio volume and economic conditions, which could affect future credit loss expenses[60]. - As of September 30, 2024, the total allowance for credit loan losses is $156,099, an increase from $148,609 at June 30, 2024, reflecting a rise in commercial loan losses[62]. - The credit loss expense for the nine months ended September 30, 2024, is $30,351, which is an increase of approximately $4.3 million compared to the same period in 2023[65]. - The charge-down on a loan secured by equipment in the oil and gas industry resulted in a loss of approximately $25.6 million, impacting the provision for credit loss expense[65]. - The total recorded investment for loans evaluated for impairment as of September 30, 2024, is $100,575, with an impairment of $11,385[67]. - The allowance for credit loan losses in the commercial category increased due to a charge-down on a specific loan classified as Watch List—Doubtful[65]. - The total allowance for credit loan losses at December 31, 2023, was $157,069, indicating a consistent upward trend in reserves[64]. - Recoveries credited to the allowance for the nine months ended September 30, 2024, amount to $3,134, showing efforts to mitigate losses[65]. - The total allowance for credit loan losses at June 30, 2023, was $140,503, highlighting a significant increase over the past year[63]. - Total non-accrual loans increased to $100,519 thousand as of September 30, 2024, compared to $47,170 thousand on December 31, 2023[70]. - The total past due loans reached $139,435 thousand as of September 30, 2024, with a significant increase in commercial real estate: farmland & commercial loans past due 90 days or greater attributed to specific relationships[75]. - The allowance for credit losses (ACL) at September 30, 2024, was deemed adequate by management to absorb probable losses from the loan portfolio[73]. - The company did not provide any modifications to borrowers experiencing financial difficulties for the nine months ended September 30, 2024[71]. - The increase in commercial real estate: farmland & commercial loans individually evaluated for impairment was due to one relationship secured by commercial buildings housing childcare centers[68]. - The total loans evaluated for impairment amounted to $8,011,900 thousand as of September 30, 2024[68]. Capital Adequacy - The company continues to meet all fully phased-in capital adequacy requirements as of September 30, 2024[110]. - Capital levels exceed all capital adequacy requirements under the Basel III capital rules as currently applicable[114]. - CET1 to risk-weighted assets ratio was 22.18% on September 30, 2024, compared to 21.72% on December 31, 2023[116]. - Tier 1 capital-to-average-total-asset (leverage) ratio was 18.33% on September 30, 2024, up from 17.46% on December 31, 2023[116]. - Risk-weighted Tier 1 capital ratio was 22.85% on September 30, 2024, compared to 22.39% on December 31, 2023[116]. - Risk-weighted total capital ratio increased to 24.10% on September 30, 2024, from 23.65% on December 31, 2023[116]. - Total of $108,868,000 of Capital and Common Securities outstanding qualified as Tier 1 capital as of September 30, 2024[116]. - Regulatory capital requirements are administered by the Federal Reserve and FDIC for the company and its Subsidiary Banks[119]. - Management believes that as of September 30, 2024, the company and its Subsidiary Banks meet all capital adequacy requirements[119]. Stock-Based Compensation - The stock-based compensation expense for the three months ended September 30, 2024, was $47,000, down from $76,000 in the same period of 2023, a decrease of approximately 38.2%[82]. - As of September 30, 2024, there were 227,029 options outstanding with a weighted average exercise price of $35.15[82]. - The total unrecognized stock-based compensation cost related to non-vested options was approximately $263,000, expected to be recognized over a weighted average period of 1.4 years[82]. - The total number of SARs issued under the 2022 SAR Plan as of September 30, 2024, was 459,639[83]. - The total number of stock appreciation rights (SARs) outstanding is 459,639, with a weighted average exercise price of $39.60[84]. - The fair value of the liability for payments due to SAR holders increased from approximately $1,464,000 at December 31, 2023, to $3,680,000 at September 30, 2024[85]. - The expense recorded in connection with all grants under the SAR Plan totaled $847,000 for the three months ended September 30, 2024, compared to $219,000 for the same period in 2023[85]. - The unrecognized liability related to non-vested SARs granted under the SAR Plan is approximately $8,813,000, to be recognized over a weighted average period of 7.8 years[85]. Investment Securities - The total investment securities at September 30, 2024, amount to $5,012,584, with residential mortgage-backed securities valued at $4,855,608[87]. - Proceeds from the sales and calls of available-for-sale debt securities for the three months ended September 30, 2024, were $2,030,000, with gross losses of $1[93]. - The gross unrealized losses on available-for-sale residential mortgage-backed securities at September 30, 2024, were $418,446[95]. - The amortized cost of available-for-sale debt investment securities pledged for fiduciary powers was $1,832,243,000, with an estimated fair value of $1,626,862,000 at September 30, 2024[92]. - Investments in low-income housing tax credit (LIHTC) projects totaled $186,916,000 at September 30, 2024, down from $200,245,000 at December 31, 2023[100]. - Unfunded commitments to LIHTC projects were $22,741,000 at September 30, 2024, compared to $34,126,000 at December 31, 2023[100]. Loan Growth and Performance - As of September 30, 2024, total loans increased to $8,587,025,000 from $8,058,961,000 on December 31, 2023, representing a growth of approximately 6.5%[48]. - The carrying amount of fixed-rate performing loans was $1,211,321,000 as of September 30, 2024, compared to $1,199,347,000 on December 31, 2023, indicating a slight increase of 1.0%[40]. - Time deposits rose to $2,801,761,000 as of September 30, 2024, up from $2,425,177,000 on December 31, 2023, reflecting an increase of approximately 15.5%[42]. - The carrying amount of commercial, financial, and agricultural loans increased to $4,922,980,000 as of September 30, 2024, from $4,802,622,000 on December 31, 2023, a growth of about 2.5%[48]. - The commercial loan portfolio's pass category reached $713,573,000, up from $453,452,000 in 2023, indicating a significant increase of 57.3%[77]. - The total commercial real estate loans stood at $762,741,000, a decrease from $1,008,961,000 in 2023, representing a decline of 24.4%[77]. - The total balance of commercial real estate loans in the farmland and commercial category was $688,375,000, down from $785,392,000 in 2023, a decrease of 12.4%[77]. - The total balance of residential first lien loans was $152,345,000, an increase from $109,558,000 in 2023, representing a growth of 39.0%[77]. - The total consumer loans remained at $32,306,000, up from $12,701,000 in 2023, reflecting a growth of 154.5%[77]. - The current-period gross write-offs for commercial loans were $3,874,000, compared to $2,476,000 in 2023, marking an increase of 56.5%[77]. - The current-period gross write-offs for consumer loans were $19,000, a decrease from $92,000 in 2023, indicating a decline of 79.3%[77]. - Total loans as of December 31, 2023, amounted to $3,364,226, an increase from $1,928,023 in 2022, representing a growth of approximately 74.5%[79]. - The total commercial loans reached $811,918 as of December 31, 2023, compared to $305,621 in 2022, indicating a significant increase of about 165.5%[79]. - The current-period gross write-offs for commercial real estate were $7,053, up from $2,187 in 2022, reflecting an increase of approximately 222.5%[79]. - The total commercial real estate loans for farmland and commercial reached $1,040,592, compared to $631,029 in 2022, marking an increase of about 65%[79]. Stock Repurchase and Dividends - Cash dividends paid were $0.66 per share on February 28 and August 28, 2024, compared to $0.63 per share on the same dates in 2023[106]. - The company has authorized a stock repurchase program of up to $150 million for the 12-month period commencing on March 15, 2024[107]. - As of November 4, 2024, a total of 13,711,689 shares had been repurchased at a cost of $415,258,000[107]. Market Risk - No material changes in market risk exposures were reported during the nine months ended September 30, 2024[175].