International Bancshares (US:IBOC)2025-11-06 18:40Financial Position - As of September 30, 2025, the fair value of residential mortgage-backed securities was $4,845,524,000, while available-for-sale debt securities totaled $4,985,888,000[40]. - The company had $4,993,310,000 in available-for-sale securities as of December 31, 2024, with residential mortgage-backed securities valued at $4,835,176,000[43]. - The total investment securities held by the company as of September 30, 2025, amounted to $4,980,342,000, with residential mortgage-backed securities valued at $4,845,524,000[99]. - The balance in equity securities with readily determinable fair values was $5,546,000 as of September 30, 2025, reflecting an increase from $5,394,000 at December 31, 2024[107]. - The company reported a total of $9.400969 billion in the loan portfolio as of September 30, 2025, compared to $8.809826 billion as of December 31, 2024[89]. Loan Performance - As of September 30, 2025, total loans amounted to $9,400,969,000, an increase from $8,809,826,000 as of December 31, 2024, representing a growth of approximately 6.67%[67]. - The total commercial real estate loans reached $6,261,871,000 as of September 30, 2025, up from $5,722,372,000 as of December 31, 2024, reflecting an increase of approximately 9.4%[71]. - The total balance of loans classified as Watch List—Doubtful is evaluated using the fair value of collateral method, with specific reserves allocated as necessary based on borrower conditions and economic factors[76]. - The total non-accrual loans as of September 30, 2025, amounted to $153,882,000, a decrease from $169,136,000 at December 31, 2024, representing a decline of about 9%[85]. - The total past due loans as of December 31, 2024, were $138.946 million, indicating a significant increase in past due loans year-over-year[89]. Credit Losses and Allowance - The allowance for credit losses (ACL) methodology measures lifetime losses on loan pools with similar risk characteristics, ensuring a conservative approach to risk management[68]. - The allowance for credit losses (ACL) increased from $154,983,000 on June 30, 2025, to $155,506,000 on September 30, 2025, reflecting a net increase of $523,000[81]. - The credit loss expense for the three months ended September 30, 2025, was $1,827,000, compared to $8,602,000 for the same period in 2024, indicating a significant decrease in credit loss expense year-over-year[81]. - The total balance of the allowance for credit losses for domestic loans was $28,656,000 as of September 30, 2025, showing a slight increase from $28,414,000 on June 30, 2025[81]. - The company reported a net recovery of $721,000 credited to the allowance for the three months ended September 30, 2025, compared to a net loss recovery of $1,304,000 for the same period in 2024[81]. Capital Adequacy - The company continues to exceed all capital adequacy requirements under the Basel III capital rules as of September 30, 2025[123]. - CET1 to risk-weighted assets ratio was 23.20% as of September 30, 2025, compared to 22.42% on December 31, 2024[125]. - Tier 1 capital-to-average-total-asset (leverage) ratio was 19.35% as of September 30, 2025, up from 18.84% on December 31, 2024[125]. - Risk-weighted Tier 1 capital ratio stood at 23.80% as of September 30, 2025, compared to 23.06% on December 31, 2024[125]. - Total capital ratio was 24.99% as of September 30, 2025, compared to 24.31% on December 31, 2024[125]. Stock-Based Compensation - Stock-based compensation expense for the three months ended September 30, 2025, was $20,000, compared to $47,000 for the same period in 2024[94]. - As of September 30, 2025, there were 170,835 options outstanding with a weighted average exercise price of $35.46[94]. - The total unrecognized stock-based compensation cost related to non-vested options was approximately $132,000, expected to be recognized over a weighted average period of 1.25 years[94]. - A total of 434,529 Stock Appreciation Rights (SARs) had been issued under the SAR Plan as of September 30, 2025[95]. - The total expense recorded in connection with all grants under the SAR Plan for the nine months ended September 30, 2025, was $2,020,000, a decrease from $2,271,000 for the same period in 2024[97]. Economic Environment - The economic environment has posed challenges for borrowers, with increasing capitalization rates and elevated office vacancies contributing to the risk in large loans[77]. - Management's evaluation of the ACL considers various qualitative factors, including trends in portfolio volume, classified loans, and economic conditions, which could impact future credit loss estimates[79]. - The company has implemented a large loan operational risk factor in its ACL calculation starting Q2 2023, acknowledging the heightened risk of default associated with large loans in the current economic environment[77]. - The company did not provide any modifications to borrowers experiencing financial difficulties for the nine months ended September 30, 2025[85]. - The past due loans in the commercial real estate sector increased due to two loans secured by commercial properties placed on non-accrual status in Q4 2024[89].