International Bancshares (IBOC) - 2022 Q4 - Annual Report

Employment and Workforce - As of December 31, 2022, the company employed approximately 1,974 full-time and 195 part-time employees, with over 65% of the management team having more than 15 years of tenure[21] - The company has a strong commitment to diversity, with over 74% of its workforce self-identifying as Latino or Hispanic and over 66% as women as of December 31, 2022[26] - The company has a commitment to maintaining a safe and healthy work environment, free from discrimination and harassment[27] Operations and Facilities - The company operates 167 facilities and 257 ATMs across 75 communities in Texas and Oklahoma, focusing on both commercial and retail banking services[18] - The company has emphasized consumer and retail banking, including mortgage lending, and has strategically located branches in retail locations and shopping malls[18] - The company’s principal offices occupy approximately 147,000 square feet in Laredo, Texas, with facilities located in various regions including Austin, Dallas, and Houston[196] Financial Performance and Capitalization - The leverage ratio for the holding company at December 31, 2022, was 14.59%, well above the minimum requirement of 3% for the highest regulatory rating[83] - The company is classified as "well-capitalized" under applicable regulations, with total risk-based capital ratios exceeding the minimum thresholds of 10% for total capital, 6% for Tier 1 capital, and 5% for leverage ratio[85] - As of December 31, 2022, approximately $961,000,000 is available for dividend payments to the holding company, assuming all subsidiary banks remain "well-capitalized"[71] Regulatory Compliance - The company is subject to extensive regulation by the Federal Reserve Board and the Federal Deposit Insurance Corporation, impacting its operations and financial condition[34] - The company must comply with NASDAQ listing standards, which include disclosure requirements and standards related to board independence[63] - The company is subject to regulatory policies regarding dividend payments, which depend on cash derived from dividends declared by Subsidiary Banks[69] Risk Management and Legal Compliance - The company has implemented a program to monitor and enforce policies on money laundering, corruption, and bribery, which could have serious legal and reputational consequences if not maintained[48] - The Foreign Account Tax Compliance Act (FATCA) requires U.S. banks to withhold a 30% tax on U.S. sourced income payable to foreign financial institutions that do not comply with reporting requirements[50] - The company is subject to numerous consumer laws and regulations designed to protect consumers in transactions with banks[122] Economic and Market Conditions - The company’s financial performance is significantly affected by economic conditions in its primary market areas, including Texas and Oklahoma, which could lead to increased loan delinquencies if conditions worsen[186] - The company faces substantial competition from various financial institutions, including fintechs, which may affect revenue streams and customer deposits[160] - The trading price of the company’s common stock has been volatile, influenced by various factors including earnings variations and market conditions[194] Internal Controls and Reporting - As of December 31, 2022, management assessed the effectiveness of internal controls over financial reporting and determined they were effective[210] - RSM US LLP provided an unqualified opinion on the effectiveness of internal controls over financial reporting as of December 31, 2022[211] - There were no changes in internal control over financial reporting during the quarter ended December 31, 2022, that materially affected the controls[208] Capital and Loan Losses - The adoption of the FASB CECL accounting standard increased the allowance for probable loan losses by approximately 17.2%, resulting in a one-time cumulative-effect adjustment to retained earnings of approximately $8.3 million, net of tax[114] - The allowance for probable loan losses may be insufficient, requiring management to make significant estimates and assumptions regarding credit risks[157] - The company relies on analytical tools and forecasting models for estimating loan losses and measuring fair value, which may not be accurate during market stress[184] Strategic Initiatives and Future Outlook - The company has increased its market share in its primary market area through strategic acquisitions, competing with commercial banks, savings and loan associations, and credit unions[29] - The company may face additional risks from new lines of business or products, which could require significant investment and may not achieve profitability targets[183] - The company has established disaster recovery policies, but severe external events could materially affect its business operations[177]