International Bancshares (IBOC) - 2024 Q4 - Annual Report

Part I Item 1. Business International Bancshares Corporation is a multibank financial holding company providing diverse commercial and retail banking services across Texas and Oklahoma, operating in a highly regulated and competitive environment - International Bancshares Corporation is a registered multibank financial holding company with five wholly-owned subsidiary banks, providing commercial and retail banking services across Texas and Oklahoma[12][13][14][15][16] - The company operates in north, south, central, and southeast Texas, and Oklahoma, with 166 facilities and 255 ATMs serving 75 communities[12][18] - As of December 31, 2024, the company employed approximately 2,103 full-time and 233 part-time persons, with 66% of its 300-person officer management team having over 15 years of tenure[21] - The workforce is diverse, with approximately 75% identifying as Latino or Hispanic and 65% as women as of December 31, 2024[27] Deposits from Persons and Entities Domiciled in Mexico (as % of total deposits) | Year | Percentage of Total Deposits (%) | | :--- | :------------------------------- | | 2024 | 31 | | 2023 | 29 | | 2022 | 28 | FDIC Deposit Insurance Expense | Year | Expense (in millions USD) | | :--- | :------------------------ | | 2024 | 6.865 | | 2023 | 6.285 | | 2022 | 6.987 | - As of December 31, 2024, the company's leverage ratio was 18.84%, and all Subsidiary Banks were classified as "well capitalized"[86][90] - As of December 31, 2024, approximately $1.44 billion was available for dividend payments to the holding company by its Subsidiary Banks, assuming they remain "well capitalized"[76] - All Subsidiary Banks received a "Satisfactory" CRA rating, with two classified as "intermediate small banks" and three as "large banks" as of January 1, 2025[124] - The company amended its Compensation Clawback Policy to meet Nasdaq Rule 5608 standards, effective October 2, 2023[154] Item 1A. Risk Factors The company faces material risks from loan losses, real estate values, competition, interest rate fluctuations, regulation, cybersecurity, and stock volatility - The company's allowance for probable loan losses is inherently subjective and may be insufficient, potentially decreasing net income and capital[160] - A significant portion of the loan portfolio is secured by real estate, making it vulnerable to declines in real estate values in its target markets[162] - The company operates in a highly competitive industry, facing national, regional, and community banks, as well as non-bank entities, fintechs, and alternative financial providers[163][166] - Failure to successfully invest in, adapt to, and integrate AI technologies could impair the company's competitive position and negatively impact revenue and profitability[170] - The company's earnings are subject to interest rate risk, with volatility potentially impacting net interest income and asset/liability valuations[176][178] - The company relies heavily on dividends from its Subsidiary Banks for most of its revenue, which are subject to federal and state regulatory limits[185] - Negative publicity, diminished depositor confidence, and increased bank-run contagion could negatively impact the company's financial condition, operations, and stock price[201] - New or increased international tariffs, particularly by the United States on Mexico, could weaken the Mexican economy and negatively impact the company's deposit base and loan demand[206] - As of December 31, 2024, the company had approximately $108 million in junior subordinated debentures outstanding, which are senior to common stock and can impact dividend payments[210][212] Item 1B. Unresolved Staff Comments The company reported no unresolved staff comments from the SEC Item 1C. Cybersecurity The company prioritizes cybersecurity through robust, multi-layer security procedures, an ISSP informed by industry frameworks, and governance involving a CISO and various committees - The company's Information Systems Security Program (ISSP) incorporates provisions from statutory, regulatory guidance, and leading industry frameworks such as the NIST Cybersecurity Framework[214] - Key cybersecurity policies include Enterprise Information Systems Security, Corporate Account Takeover, Vendor Management, Service Center Physical Security, and Security Incident Response[215][217] - The company conducts annual self-assessments using the Cyber Risk Institute, regular employee training, security-incident preparedness simulations, and disaster recovery tests[217] - Multi-factor authentication (MFA) protections are implemented for retail, commercial, and treasury customers to enhance online banking security[218][220] - Cybersecurity governance is overseen by a Security Council Committee (SCC) and a Chief Information Security Officer (CISO) who reports to senior management and the Board[221][224] - An Incident Response Team (IRT) is available 24/7 to address cybersecurity incidents, following a structured policy for reporting, analysis, mitigation, and escalation[225][230] Item 2. Properties The company's principal offices are in Laredo, Texas, with Subsidiary Banks operating mostly owned facilities across Texas and Oklahoma, all within regulatory investment limits - The company's principal offices are in Laredo, Texas, occupying approximately 147,000 square feet in owned buildings[233] - Subsidiary Banks operate facilities in regions including Laredo, San Antonio, Austin, Dallas, Houston, Zapata, Eagle Pass, Rio Grande Valley, Coastal Bend of Texas, and throughout Oklahoma[233] - Texas state-chartered Subsidiary Banks cannot invest more than their Tier 1 capital in facilities and equipment without prior approval, while Oklahoma state-chartered banks have a similar limit based on Tier 1 and Tier 2 capital; none exceed these limits[234] Item 3. Legal Proceedings The company and its subsidiaries are involved in various legal proceedings, but management believes any material loss is remote or not material to financial position or results of operations - The company and its subsidiaries are involved in various legal proceedings, but management assesses that any material loss is remote or not material to financial position or results of operations[235] Item 4. Mine Safety Disclosures The company has no disclosures related to mine safety Item 4A. Executive Officers of the Registrant The executive officers of International Bancshares Corporation, including Dennis E. Nixon, Dalia F. Martinez, and Judith I. Wawroski, serve until the 2025 Annual Meeting of Shareholders, with no family relationships and extensive tenure Executive Officers of the Registrant | Name | Age | Position of Office | Officer of the Company Since | | :--------------- | :-- | :------------------------------------------------------------------------------- | :--------------------------- | | Dennis E. Nixon | 82 | Chairman of the Board (since 1992), President (since 1979), CEO and Director of IBC | 1979 | | Dalia F. Martinez| 64 | Vice President (since 2021), Executive Vice President of IBC | 2021 | | Judith I. Wawroski | 50 | Treasurer (since 2017), Principal Financial Officer (since 2017), Executive Vice President of IBC | 2017 | Part II Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities This section incorporates by reference information regarding the market for the company's common equity, related stockholder matters, and issuer purchases of equity securities from the 2024 Annual Report to Shareholders - Information on common stock, dividends, stock repurchase programs, and equity compensation plans is incorporated by reference from pages 24 and 25 of the 2024 Annual Report to Shareholders[240] Item 6. Selected Financial Data This section incorporates by reference the selected financial data from the 2024 Annual Report to Shareholders - Selected financial data is incorporated by reference from page 1 of the 2024 Annual Report to Shareholders[241] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section incorporates by reference the Management's Discussion and Analysis of Financial Condition and Results of Operations from the 2024 Annual Report to Shareholders - Management's Discussion and Analysis of Financial Condition and Results of Operations is incorporated by reference from pages 2 through 24 of the 2024 Annual Report to Shareholders[242] Item 7A. Quantitative and Qualitative Disclosures about Market Risk This section incorporates by reference quantitative and qualitative disclosures about market risk from the 2024 Annual Report to Shareholders - Quantitative and Qualitative Disclosures about Market Risk are incorporated by reference from pages 15 through 20 of the 2024 Annual Report to Shareholders[243] Item 8. Financial Statements and Supplementary Data This section incorporates by reference the consolidated financial statements and supplementary data, including condensed quarterly income statements, from the 2024 Annual Report to Shareholders - Consolidated financial statements (pages 27-79) and condensed quarterly income statements (pages 80-81) from the 2024 Annual Report to Shareholders are incorporated by reference[244][245] Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure The company reported no changes in or disagreements with accountants on accounting and financial disclosure Item 9A. Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2024, with an unqualified opinion from RSM US LLP - Disclosure controls and procedures were evaluated and deemed effective as of December 31, 2024[247] - Management assessed and maintained effective internal control over financial reporting as of December 31, 2024, based on the 2013 COSO framework[249] - RSM US LLP, the independent registered public accounting firm, issued an unqualified opinion on the effectiveness of the company's internal controls over financial reporting as of December 31, 2024[250][252] Item 9B. Other Information No directors or officers adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fourth quarter of 2024 - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated by directors or officers during Q4 2024[259] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections The company has no disclosures regarding foreign jurisdictions that prevent inspections Part III Item 10. Directors, Executive Officers, and Corporate Governance This section incorporates information on directors, executive officers, and corporate governance from the 2025 proxy statement and Item 4A, including the company's policy on securities trades - Information on directors, executive officers, and corporate governance is incorporated by reference from the 2025 Annual Meeting of Shareholders proxy statement and Item 4A of this report[262] - The company has a Statement of Company Policy on Securities Trades by Directors, Officers and Employees to promote compliance with insider trading laws[262] Item 11. Executive Compensation This section incorporates by reference information on executive compensation and compensation committee interlocks and insider participation from the definitive proxy statement for the 2025 Annual Meeting of Shareholders - Information on executive compensation and compensation committee interlocks is incorporated by reference from the 2025 Annual Meeting of Shareholders proxy statement[263] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters This section incorporates by reference information on security ownership of certain beneficial owners and management, as well as equity compensation plan information, from the definitive proxy statement for the 2025 Annual Meeting of Shareholders - Information on principal shareholders, security ownership of management, and equity compensation plan information is incorporated by reference from the 2025 Annual Meeting of Shareholders proxy statement[263] Item 13. Certain Relationships and Related Transactions, and Director Independence This section incorporates by reference information on interests of management in certain transactions and director independence from the definitive proxy statement for the 2025 Annual Meeting of Shareholders - Information on management's interests in certain transactions and director independence is incorporated by reference from the 2025 Annual Meeting of Shareholders proxy statement[264] Item 14. Principal Accountant Fees and Services This section incorporates by reference information on principal accountant fees and services from the definitive proxy statement for the 2025 Annual Meeting of Shareholders - Information on principal accountant fees and services is incorporated by reference from the 2025 Annual Meeting of Shareholders proxy statement[264] Part IV Item 15. Exhibits, Financial Statement Schedules This section lists documents incorporated into the report, including consolidated financial statements from the 2024 Annual Report and various exhibits such as corporate documents, compensation plans, and certifications - Consolidated financial statements for the years ended December 31, 2024, 2023, and 2022, including Statements of Condition, Income, Comprehensive Income, Shareholders' Equity, and Cash Flows, are incorporated by reference from the 2024 Annual Report to Shareholders[266][267] - The report includes various exhibits such as Articles of Incorporation, By-Laws, stock option plans, incentive compensation plans, the 2024 Annual Report, Statement of Company Policy on Securities Trades, List of Subsidiaries, Consent of Independent Registered Public Accounting Firm, Sarbanes-Oxley Act certifications (Sections 302 and 906), and the Compensation Clawback Policy[268][271] Item 16. Form 10-K Summary The company did not provide a Form 10-K Summary in this report