International Bancshares (US:IBOC)2025-08-07 19:13Financial Position - As of June 30, 2025, the fair value of residential mortgage-backed securities was $4,869,078,000, while available-for-sale securities totaled $5,015,326,000[38]. - The fair value of doubtful loans classified as Watch List was $25,064,000 as of June 30, 2025, with a net provision during the period of $2,378,000[42]. - The company reported $158,263,000 of doubtful commercial collateral-dependent loans as of June 30, 2025, compared to approximately $168,621,000 as of December 31, 2024[45]. - The company’s available-for-sale securities included residential mortgage-backed securities valued at $4,835,176,000 as of December 31, 2024[38]. - Total loans increased to $9,138,620,000 as of June 30, 2025, up from $8,809,826,000 at December 31, 2024, representing a growth of 3.73%[63]. - The carrying amount of fixed-rate performing loans was $1,258,953,000 as of June 30, 2025, with an estimated fair value of $1,183,192,000[54]. - The carrying amount of time deposits was $3,015,589,000 as of June 30, 2025, with an estimated fair value of $3,014,207,000[56]. - The fair value of deposits with no stated maturity was equal to the amount payable on demand as of June 30, 2025[56]. - The fair value of fixed-rate long-term FHLB borrowings was estimated at $10,437,000 as of June 30, 2025, unchanged from December 31, 2024[59]. - The carrying amount of accrued interest approximated fair value as of June 30, 2025[55]. Risk Management - The company’s risk management practices include monitoring borrower relationships and loan performance regularly to identify potential repayment issues[67]. - The current economic environment has led to increased risks for borrowers, including rising capitalization rates and significant increases in interest rates, impacting large loans[74]. - The large loan operational risk factor was introduced in Q2 2023, acknowledging the heightened risk of default associated with larger loans[72]. - The analysis of specific reserves for doubtful loans considers various factors, including the borrower's ability to pay and economic conditions affecting their industry[71]. Allowance for Credit Losses - The allowance for credit losses (ACL) recorded charges of $2,228,000 for the twelve months ended December 31, 2024, related to loans transferred to other real estate owned[46]. - The allowance for credit losses (ACL) for the three months ended June 30, 2025, was $154,983,000, down from $158,707,000 at the end of the previous quarter[77]. - Losses charged to the allowance during this period totaled $9,978,000, while recoveries credited to the allowance were $1,856,000, resulting in a net loss recovery of $8,122,000[77]. - The credit loss expense for the three months ended June 30, 2025, was $4,398,000, reflecting the ongoing economic challenges faced by borrowers[77]. - The management's evaluation of the ACL incorporates qualitative factors such as trends in portfolio volume, classified loans, and economic conditions, which are critical in determining future credit loss expenses[76]. - The methodology for estimating the ACL includes a two-year reasonable and supportable forecast period, reverting to the average lifetime loss-rate thereafter[76]. - The balance of the ACL for domestic commercial loans as of June 30, 2025, was $28,414,000, while foreign commercial loans stood at $54,065,000[77]. - The company has opted not to measure an ACL for accrued interest receivable, relying on timely identification and write-off of uncollectible amounts[75]. - The total balance of loans evaluated for impairment was $158,832,000 for individually evaluated loans and $8,979,788,000 for collectively evaluated loans, with total allowances of $12,888,000 and $142,095,000 respectively[80]. - The credit loss expense for the six months ended June 30, 2025 was $7,727,000, compared to a credit loss expense of $21,749,000 for the same period in 2024, indicating a significant decrease[79]. - The total non-accrual loans as of June 30, 2025 amounted to $158,746,000, with $80,721,000 classified as having no credit allowance[81]. - The allowance for credit losses (ACL) at June 30, 2025 was deemed adequate to absorb probable losses from loans in the portfolio, reflecting management's judgment on loss exposure[83]. Loan Performance - The total past due loans as of June 30, 2025 amounted to $119,879,000, an increase from $138,946,000 on December 31, 2024, indicating a rise in loan delinquencies[85]. - The commercial real estate: multifamily loans past due 30-59 days increased due to a loan secured by a multifamily affordable housing community[85]. - The total portfolio for past due loans increased from $8,670,880,000 on December 31, 2024, to $9,018,741,000 on June 30, 2025[85]. - The total past due loans in the commercial sector rose from $56,226,000 in December 2024 to $55,730,000 in June 2025[85]. - The residential first lien loans past due increased to $11,792,000 as of June 30, 2025, compared to $9,731,000 on December 31, 2024[85]. - The commercial loans past due 90 days or more increased due to two loans secured by commercial properties placed on non-accrual in Q4 2024[85]. - The total past due loans in the foreign sector decreased slightly from $3,147,000 in December 2024 to $3,857,000 in June 2025[85]. - The commercial real estate: farmland & commercial loans past due 90 days or greater increased to $27,615,000 as of June 30, 2025, from $27,637,000 in December 2024[85]. - The consumer loans past due increased to $315,000 as of June 30, 2025, compared to $170,000 on December 31, 2024[85]. - The decrease in commercial real estate: multifamily loans past due 90 days or greater was attributed to two loans that were brought current during the non-accrual period[85]. Capital and Regulatory Compliance - As of June 30, 2025, the CET1 to risk-weighted assets ratio was 23.23%, compared to 22.42% on December 31, 2024[123]. - The Tier 1 capital-to-average-total-assets (leverage) ratio was 19.51% on June 30, 2025, up from 18.84% on December 31, 2024[123]. - The risk-weighted total capital ratio was 25.06% as of June 30, 2025, compared to 24.31% on December 31, 2024[123]. - The company opted out of including most components of accumulated other comprehensive income (loss) in the CET1 capital calculation[123]. - The company and its Subsidiary Banks are subject to regulatory capital requirements administered by the Federal Reserve and FDIC[125]. - As of June 30, 2025, the company believes it meets all capital adequacy requirements[125]. - The implementation of Basel IV is targeted to begin on July 1, 2025, with full compliance expected by July 1, 2028[120]. - The Economic Growth, Regulatory Relief and Consumer Protection Act of 2018 allows banks with assets under $10 billion to be exempt from risk-based capital requirements[122]. - The company recognized the capital impact of adopting CECL accounting standards on January 1, 2020, leading to an increase in the allowance for probable loan losses[119]. Stock and Dividends - Cash dividends paid per share were $0.70 on February 28, 2025, compared to $0.66 on February 28, 2024[113]. - The stock repurchase program was extended to allow for the purchase of up to $150 million of common stock during the 12-month period starting March 15, 2025[114]. - As of August 4, 2025, a total of 13,795,319 shares had been repurchased at a cost of $419,939,000[114]. Investment Securities - The total investment securities at June 30, 2025, included available-for-sale debt securities with an amortized cost of $5,397,669,000 and an estimated fair value of $5,009,843,000[95]. - Proceeds from the sales and calls of available-for-sale debt securities were $4,235,000 for the six months ended June 30, 2025, with no gross gains or losses realized[100]. - The company evaluated debt securities classified as available-for-sale and held-to-maturity and determined no unrealized losses were attributable to credit-related reasons[94]. - The amortized cost of available-for-sale debt investment securities pledged for fiduciary powers was $1,720,908,000 at June 30, 2025[99]. - As of June 30, 2025, gross unrealized losses on debt investment securities totaled $413,023,000, with $401,353,000 attributed to residential mortgage-backed securities[102]. - At December 31, 2024, gross unrealized losses on debt investment securities were $493,583,000, with $489,170,000 from residential mortgage-backed securities[102]. - Equity securities with readily determinable fair values were valued at $5,483,000 as of June 30, 2025, compared to $5,394,000 at December 31, 2024[102]. - For the six months ended June 30, 2025, net gains recognized on equity securities amounted to $89,000, while net losses for the same period in 2024 were $80,000[104]. - Investments in low-income housing tax credit (LIHTC) projects totaled $192,616,000 at June 30, 2025, with unfunded commitments of $32,504,000[105].