International Bancshares (US:IBOC)2023-11-02 18:52Fair Value and Securities - As of September 30, 2023, the fair value of residential mortgage-backed securities is $4,545,600,000, while states and political subdivisions amount to $146,338,000[38]. - The total fair value of available-for-sale debt securities as of September 30, 2023, is $4,697,096,000, with equity securities valued at $5,158,000[38]. - The fair value of available-for-sale securities as of December 31, 2022, totaled $4,423,154,000, with residential mortgage-backed securities at $4,209,212,000[38]. - The fair value hierarchy includes Level 1 inputs for unadjusted quoted prices in active markets and Level 2 inputs for observable inputs other than Level 1[36]. - The company applies fair value measurements in accordance with ASC Topic 820, which establishes a framework for measuring fair value[35]. - As of September 30, 2023, the total investment securities amounted to $4,691,938,000, with a gross unrealized loss of $696,319,000[94]. - Residential mortgage-backed securities had an amortized cost of $5,227,139,000 and an estimated fair value of $4,545,600,000, reflecting a gross unrealized loss of $681,539,000[94]. - The company reported equity securities with readily determinable fair values of $5,158,000 as of September 30, 2023, down from $5,358,000 at December 31, 2022[102]. - No debt securities in an unrealized loss position were attributed to credit-related reasons, resulting in no allowances recorded for the period[93]. - The total investment in loans individually evaluated for impairment as of September 30, 2023, was $42,177,000, with an allowance of $7,651,000[76]. Loans and Credit Quality - The company reported $29,763,000 in watch-list doubtful loans as of September 30, 2023, with a net provision during the period of $5,581,000[39]. - Other real estate owned as of September 30, 2023, is valued at $546,000, with a net provision during the period of $2,510,000[39]. - The company had approximately $51,326,000 of doubtful commercial collateral-dependent loans as of December 31, 2022[39]. - As of September 30, 2023, total loans increased to $7,896,899,000 from $7,430,603,000 as of December 31, 2022, representing a growth of approximately 6.3%[58]. - The carrying amount of fixed-rate performing loans was $1,166,647,000 as of September 30, 2023, down from $1,203,381,000 as of December 31, 2022, indicating a decrease of about 3.0%[48]. - The estimated fair value of fixed-rate performing loans decreased to $1,014,777,000 as of September 30, 2023, from $1,100,848,000 as of December 31, 2022, reflecting a decline of approximately 7.8%[48]. - The total balance of credit loan losses increased to $149,006 thousand as of September 30, 2023, up from $140,503 thousand at June 30, 2023, reflecting a growth of approximately 6%[72]. - Credit loss expense for the three months ended September 30, 2023, was $10,476 thousand, compared to $8,525 thousand for the same period in 2022, representing an increase of about 23%[74]. - The balance of credit loan losses at September 30, 2023, included $33,853 thousand in domestic commercial loans, which is an increase from $27,645 thousand at June 30, 2023[72]. - The total balance of credit loan losses for foreign loans was $1,216 thousand as of September 30, 2023, which is an increase from $1,180 thousand at June 30, 2023[72]. - As of September 30, 2023, the total allowance for credit losses (ACL) increased to $141,355,000 from $123,527,000 as of December 31, 2022, reflecting a rise in credit loss expense due to economic uncertainty[76][77]. - The company has categorized loans into various segments, including commercial, real estate, and consumer loans, to better assess risk and manage credit quality[58]. - The company’s internal Watch List report categorizes loans into six categories, including Pass, Economic Monitoring, and Watch List—Doubtful, to monitor potential credit weaknesses[66]. - The total loan portfolio as of September 30, 2023, was $7,896,899,000, up from $7,430,603,000 at the end of 2022, indicating growth in the overall lending activity[86]. - Total loans evaluated for impairment as of September 30, 2023, amounted to $7,854,722,000, with a total allowance of $141,355,000[76]. - Non-accrual loans decreased to $41,997,000 as of September 30, 2023, down from $51,648,000 at December 31, 2022[77]. - The total amount of commercial real estate loans past due 90 days or greater was $19,493,000 as of September 30, 2023, compared to $1,130,000 on December 31, 2022[84]. - The total amount of residential first lien loans past due was $6,298,000 as of September 30, 2023, compared to $7,280,000 at the end of 2022[86]. - The total amount of foreign loans past due was $1,287,000 as of September 30, 2023, an increase from $1,028,000 on December 31, 2022[86]. - The total amount of consumer loans past due was $493,000 as of September 30, 2023, reflecting a slight increase from $302,000 at the end of 2022[86]. - The total amount of loans on the watch list classified as "Substandard" was $1,430,000 for 2023, compared to $1,861,000 in 2022[86]. Capital and Dividends - As of September 30, 2023, the company had a CET1 to risk-weighted assets ratio of 20.97%, up from 20.21% on December 31, 2022[120]. - The company reported a Tier 1 capital-to-average-total-assets (leverage) ratio of 16.75% as of September 30, 2023, compared to 14.59% on December 31, 2022[120]. - The total of $108,868,000 of Capital and Common Securities outstanding qualified as Tier 1 capital as of September 30, 2023[120]. - The company paid cash dividends of $0.63 per share on February 28 and August 25, 2023, compared to $0.60 per share in the same periods of 2022[109]. - A total of 13,694,792 shares had been repurchased under all programs at a cost of $414,306,000 as of October 30, 2023[110]. - The company has extended its stock repurchase program to purchase up to $124 million of common stock during the 12-month period commencing on March 15, 2023[110]. - The company continues to meet all fully phased-in capital adequacy requirements as of September 30, 2023[114]. Stock-Based Compensation - Stock-based compensation expense for the three months ended September 30, 2023, was $76,000, compared to $118,000 for the same period in 2022[89]. - As of September 30, 2023, there were 432,223 stock options outstanding with a weighted average exercise price of $29.71[89]. - The total unrecognized stock-based compensation cost related to non-vested options was approximately $507,000, expected to be recognized over a weighted average period of 1.5 years[89]. - The fair value of the liability for payments due to stock appreciation rights holders was approximately $976,000 as of September 30, 2023[91]. - Stock appreciation rights outstanding at September 30, 2023, totaled 473,250 with a weighted average exercise price of $39.35[91]. - The expense recorded in connection with all grants under the SAR Plan was $219,000 for the three months ended September 30, 2023[91]. Legal and Regulatory Matters - The company is involved in various legal proceedings, but any material loss is considered remote[111]. - The interest rate index on the Capital and Common Securities transitioned to the Three-Month CME Term Secured Overnight Financing Rate ("SOFR") with a 26 basis point spread adjustment as of July 1, 2023[108]. - The company actively monitors regulatory capital ratios to ensure that its Subsidiary Banks are well-capitalized under the regulatory framework[120].