International Bancshares (US:IBOC)2025-05-05 19:22Fair Value and Securities - As of March 31, 2025, the fair value of residential mortgage-backed securities was $4,874,583,000, while the total available-for-sale securities amounted to $5,025,486,000[34]. - The fair value of doubtful commercial collateral-dependent loans was $164,472,000 as of March 31, 2025, compared to $168,621,000 as of December 31, 2024[39]. - The total fair value of available-for-sale securities as of December 31, 2024, was $4,993,310,000, with residential mortgage-backed securities valued at $4,835,176,000[34]. - The company had no transfers between levels of the fair value hierarchy during the three months ended March 31, 2025[36]. - The company’s fair value measurements are classified within Level 1 or 2 of the valuation hierarchy, with equity securities having readily determinable fair values classified within Level 1[34]. - The total fair value of doubtful loans on the watch list was $167,987,000 as of March 31, 2025[36]. - The fair value of fixed-rate long-term FHLB borrowings remained stable at $10,489,000 as of March 31, 2025, unchanged from December 31, 2024[52]. - The fair value of accrued interest approximates the carrying amounts, indicating stability in interest income recognition[48]. - The fair value of variable rate performing loans approximates their carrying amount, reflecting market alignment[47]. - The fair value of securities sold under repurchase agreements approximated their carrying amounts, indicating short-term stability[50]. - As of March 31, 2025, the total investment securities amounted to $5,020,025,000, with available-for-sale debt securities showing unrealized losses of $447,029,000[87]. - Residential mortgage-backed securities held as available-for-sale totaled $5,294,142,000, with an estimated fair value of $4,874,583,000, reflecting a significant unrealized loss of $439,216,000[87]. - The fair value of available-for-sale debt investment securities pledged for fiduciary powers was $1,630,062,000 as of March 31, 2025[93]. - The company evaluated its debt securities and determined that no unrealized losses were due to credit-related reasons, maintaining a strong position in its investment portfolio[86]. Allowance for Credit Losses (ACL) - For the three months ended March 31, 2025, the company recorded $46,000 in charges to the allowance for credit losses (ACL) related to loans transferred to other real estate owned[40]. - The allowance for credit losses (ACL) methodology is based on lifetime loss estimates for loan pools with similar risk characteristics, ensuring conservative risk management practices[58]. - The allowance for credit losses (ACL) at March 31, 2025, is $158.707 million, a decrease from $156.537 million at December 31, 2024[70]. - Losses charged to the ACL for the three months ended March 31, 2024, included a charge-down of approximately $25.6 million due to a loan in the oil and gas sector[71]. - The total recorded investment for loans individually evaluated for impairment as of March 31, 2025, is $165.078 million, while the allowance for these loans is $18.632 million[72]. - The total recorded investment for loans collectively evaluated for impairment as of March 31, 2025, is $8.915 billion, with an allowance of $140.075 million[72]. - The company has added an operational risk factor for large loans to the ACL calculation starting in Q2 2023 due to increased default risk in the current economic environment[67]. - The current economic environment has led to challenges for borrowers, including rising capitalization rates and significant increases in interest rates, contributing to elevated risks in large loans[67]. - The methodology for estimating the ACL includes both quantitative historical loss percentages and qualitative current conditions, reverting to average lifetime loss rates beyond a two-year forecast period[69]. - The company has not measured an ACL for accrued interest receivable, relying on timely identification and write-off of uncollectible interest[68]. - The total credit loss expense for the three months ended March 31, 2025, is $3.329 million[70]. - The company expects to recover a portion of the $25.6 million charge-down through repayment from the guarantor via arbitration[71]. - As of March 31, 2025, total non-accrual loans amounted to $165,022,000, with a non-accrual credit allowance of $77,951,000[73]. - The total past due loans as of March 31, 2025, reached $110,103,000, with $8,970,117,000 in current loans, resulting in a total portfolio of $9,080,220,000[77]. - The commercial loans past due 90 days or more increased to $47,039,000, attributed to two loans secured by commercial properties placed on non-accrual in Q4 2024[77]. - The allowance for credit losses (ACL) as of March 31, 2025, was deemed adequate by management to absorb probable losses from the loan portfolio[75]. - No modifications were provided to borrowers experiencing financial difficulties for the three months ended March 31, 2025[73]. - The total past due loans as of December 31, 2024, were $138,946,000, with a current loan portfolio of $8,670,880,000[77]. - The commercial real estate: multifamily loans past due 90 days or greater decreased, primarily due to two loans being brought current during the non-accrual period[77]. - The total non-accrual loans as of December 31, 2024, were $169,136,000, with a non-accrual credit allowance of $76,313,000[73]. - The company considers commercial and industrial or real estate loans as a loss when exposure beyond collateral coverage is apparent[74]. - Unsecured consumer loans are charged-off when they are 90 days past due[74]. Loan Portfolio and Performance - As of March 31, 2025, the total loans amounted to $9,080,220,000, an increase of 3.1% from $8,809,826,000 on December 31, 2024[57]. - The carrying amount of fixed-rate performing loans was $1,257,044,000 as of March 31, 2025, compared to $1,216,156,000 as of December 31, 2024, reflecting a growth of 3.4%[47]. - The estimated fair value of time deposits was $2,943,387,000 on March 31, 2025, slightly up from $2,895,245,000 on December 31, 2024, indicating an increase of 1.7%[49]. - The total commercial real estate loans reached $5,963,802,000 as of March 31, 2025, up from $5,722,372,000 on December 31, 2024, representing a growth of 4.2%[61]. - As of March 31, 2025, the total loan balance is $9,080,220,000, showing an increase from $8,842,073,000 in the prior year[79]. - The commercial loan segment has a total balance of $1,874,670,000, down from $1,812,481,000 in 2024, indicating a decrease of approximately 1.2%[79]. - The commercial real estate loans, specifically in farmland and commercial, have a total balance of $3,077,306,000, a decrease from $3,077,306,000 in 2024[79]. - The residential first lien loans show a total balance of $543,053,000, slightly increasing from $542,376,000 in the previous year[79]. - The consumer loan segment has a total balance of $52,111,000, which remains unchanged from the previous year[79]. - Current-period gross write-offs for commercial loans amount to $1,788,000, while residential first lien write-offs are $46,000[79]. - The foreign loan segment has a total balance of $187,160,000, reflecting a decrease from $187,160,000 in the prior year[79]. - The watch list for commercial loans includes $11,113,000 classified as pass, indicating no change from the previous year[79]. - The total balance for residential junior lien loans is $478,543,000, which is consistent with the previous year's figure[79]. - The overall loan portfolio reflects a diverse range of credit quality indicators across various loan classes[79]. - Total commercial loans increased to $1,851,803,000 in 2024, up from $1,786,716,000 in 2023, representing a growth of approximately 3.6%[80]. - The total balance for commercial real estate: farmland & commercial reached $2,927,803,000 in 2024, compared to $2,755,715,000 in 2023, indicating an increase of about 6.2%[80]. Stock and Capital Management - The company reported a stock-based compensation expense of $45,000 for the three months ended March 31, 2025, down from $74,000 in the same period of 2024, reflecting a decrease of approximately 39.2%[82]. - As of March 31, 2025, there were 201,824 stock options outstanding with a weighted average exercise price of $35.11[82]. - The total number of stock appreciation rights (SARs) outstanding as of March 31, 2025, was 452,127, with an average exercise price of $39.61[84]. - The fair value of the liability for payments due to SAR holders was approximately $4,924,000 as of March 31, 2025, compared to $4,540,000 at December 31, 2024[85]. - The company experienced a decrease in Watch List – Substandard Commercial real estate: farmland & commercial loans due to the upgrade of two loans to Special Review[80]. - The total unrecognized stock-based compensation cost related to non-vested options was approximately $173,000 as of March 31, 2025[82]. - The expense recorded in connection with all grants under the SAR Plan totaled $388,000 for the three months ended March 31, 2025, compared to $1,080,000 for the same period in 2024[85]. - The company has the right to defer interest payments on Debentures for up to 20 consecutive quarterly periods[99]. - The interest rates on Capital and Common Securities transitioned to the Three-Month CME Term SOFR with a spread adjustment of 26 basis points as of July 1, 2023[101]. - The company believes it meets all fully phased-in capital adequacy requirements as of March 31, 2025[107]. - The company paid cash dividends of $0.70 per share on February 28, 2025, up from $0.66 per share on February 28, 2024[102]. - The Board authorized a stock repurchase program of up to $150 million for the 12-month period starting March 15, 2025[103]. - A total of 13,793,396 shares had been repurchased at a cost of $419,819,000 as of May 1, 2025[103]. - As of March 31, 2025, the total of $108,868,000 of Capital and Common Securities outstanding qualified as Tier 1 capital[100]. - The CET1 to risk-weighted assets ratio was 22.41% on March 31, 2025, compared to 22.42% on December 31, 2024[113]. - The Tier 1 capital-to-average-total-asset (leverage) ratio was 18.91% as of March 31, 2025[113]. - The risk-weighted Tier 1 capital ratio was 23.03% on March 31, 2025, slightly down from 23.06% on December 31, 2024[113]. Borrowing and Debt Management - Other borrowed funds increased to $30,489,000 as of March 31, 2025, compared to $10,541,000 at December 31, 2024, indicating a substantial rise in borrowing[97]. - The company reported no allowances for debt securities in the allowance for credit losses (ACL) for the period, as no unrealized losses were attributed to credit-related reasons[86]. - The amortized cost of investments in low-income housing tax credit (LIHTC) projects was $187,040,000 as of March 31, 2025, with unfunded commitments totaling $23,772,000[96]. - The principal amount of junior subordinated debentures outstanding remained stable at $108,868,000 as of March 31, 2025, consistent with the previous reporting period[98]. - The company recognized net gains of $67,000 on equity securities during the three months ended March 31, 2025, compared to net losses of $57,000 in the same period of the previous year[96]. - Proceeds from the sales and calls of available-for-sale debt securities were $3,505,000 for the three months ended March 31, 2025, with no gross gains or losses realized[94].