Financial Analysis

(15) Commitments, Contingent Liabilities and Other Matters On March 15, 2020, the FRB announced that it had reduced regulatory reserve requirements to zero percent effective on March 26, 2020; therefore, no cash is required to be maintained to satisfy regulatory reserve requirements. We are involved in various legal proceedings that are in various stages of litigation. We have determined, based on discussions with our counsel that any material loss in such actions, individually or in the aggregate, is remote or the damages sought, even if fully recovered, would not be considered material to our consolidated statements of condition and related statements of income, comprehensive income, shareholders equity, and cash flows. However, many of these matters are in various stages of proceedings and further developments could cause management to revise its assessment of these matters. …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

(14) Stock Options and Stock Appreciation Rights On April 5, 2012, the Board of Directors adopted the 2012 International Bancshares Corporation Stock Option Plan (the 2012 Plan). There were 800,000 shares of common stock available for stock option grants under the 2012 Plan, which were qualified incentive stock options (ISOs) or non-qualified stock options. Options granted may be exercisable for a period of up to 10 years from the date of grant, excluding ISOs granted to 10% shareholders, which may be exercisable for a period of up to only five years. On April 4, 2022, the 2012 Plan expired and was not renewed. The fair value of each option award granted under the plan was estimated on the date of grant using a Black-Scholes-Merton option valuation model that uses the assumptions noted in the following table. Expected volatility was based on the historical volatility of the price of our stock. We used historical data to estimate the expected dividend yield and employee termination rates within the valuation model. The expected term of options was derived from historical exercise behavior. The risk-free rate for periods within the contractual life of the option was based on the U.S. Treasury yield curve in effect at the time of grant. A summary of option activity under the stock option plans for the twelve months ended December 31, 2025 is as follows: Weighted Weighted average average remaining Aggregate Number of exercise contractual intrinsic options price term (years) value …

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(19) Fair Value ASC Topic 820, Fair Value Measurements and Disclosures (ASC 820) defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 applies to all financial instruments that are being measured and reported on a fair value basis. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; it also establishes a fair value hierarchy that prioritizes the inputs used in valuation methodologies into the following three levels: Level 1 InputsUnadjusted quoted prices in active markets for identical assets or liabilities. Level 2 InputsObservable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 InputsUnobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or other valuation techniques, as well as instruments for which the determination of fair value requires signifi …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

(13) Income Taxes We file a consolidated U.S. Federal and State income tax return. The current and deferred portions of net income tax expense included in the consolidated statements of income are presented below for the years ended December 31: 2025 2024 2023 (Dollars in Thousands) Current U.S. $ 88,333 $ 105,114 $ 82,657 State 5,670 5,905 6,137 Total current taxes 94,003 111,019 88,794 Deferred U.S. 13,421 (11,430) 23,001 State 645 (36) (51) Total deferred taxes 14,066 (11,466) 22,950 Total income taxes $ 108,069 $ 99,553 $ 111,744 The income tax expense differs from the amount computed by applying the U.S. Federal income tax rate of 21% for 2025, 2024, and 2023 to income before income taxes. There were no activities or transactions that had foreign income taxes or cross-border tax effects during 2025, 2024, or 2023. State income/franchise taxes are primarily related to the States of Texas and Oklahoma. Included in the table below is the net tax benefit related to investments in LIHTC projects. Additional information on LIHTC investments can be found in Note 2 Investment Securities, Equity Securities with Readily Determinable Fair Values and Other Investments. The reasons for the differences for the years ended December 31 are as follows (Dollars in Thousands): 2025 2024 2023 Dollars Percent Dollars Percent Dollars Percent U.S. federal income tax expense computed at the statutory rate $ 109,276 21.0 % $ 106,831 21.0 % $ 109,938 21.0 % State income/franchise taxes, net of U. …

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New Accounting Standards In December 2023, the FASB issued Accounting Standards Update No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, an Amendment. ASU 2023-09 is intended to enhance transparency and decisions usefulness of income tax disclosures. ASU 2023-09 requires that public entities disclose specific categories in the annual rate reconciliation and provides additional guidance for reconciling items that meet a quantitative threshold. Explanation of individual reconciling items is also required. ASU 2023-09 also requires certain disclosures regarding income taxes paid, including disaggregation of taxes paid (net of refunds) by federal, state and foreign taxes, including disaggregation by individual jurisdictions in which taxes paid (net of refunds), exceed a quantitative threshold. The provisions of ASU 2023-09 are effective for annual periods beginning after December 15, 2024. The adoption of ASU 2023-09 impacted the disclosures included in Note 13 Income Taxes and did not have an impact on the measurement of the amounts reported in the consolidated financial statements. We chose to apply the disclosure requirements of ASU 2023-09 retrospectively to all periods reported in the consolidated financial statements. In November 2024, the FASB issued Accounting Standards Update No. 2024-03, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosure (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-0 …

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(16) Transactions with Related Parties In the ordinary course of business, the Subsidiary Banks make loans to our directors and executive officers, including their affiliates, families, and companies in which they are principal owners. In the opinion of management, these loans are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and do not involve more than normal risk of collectability or present other unfavorable features. The aggregate amounts receivable from such related parties amounted to approximately $14,020,000 and $6,669,000 at December 31, 2025 and 2024, respectively. We are a financial holding company and under current regulatory authority, are allowed to make certain equity investments in non-financial companies. We hold interests in several non-financial companies in various industries including oil and gas operations, hotel development, and aviation. Our ownership interests range from less than approximately 5% to approximately 44%, and none of the investments are significant to our overall financial position. We account for ownership interests under either the cost or equity method of accounting, depending on our ownership level. For equity method investments, the net income (loss) is recorded as other investment income on our consolidated income statement, and the invested amount is included in other investments on our consolidated statement of conditi …

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(1) Summary of Significant Accounting Policies Our accounting and reporting policies conform to U.S. generally accepted accounting principles (GAAP) and to general practices within the banking industry. The following is a description of the more significant of those policies. Consolidation and Basis of Presentation Our consolidated financial statements include the accounts of the International Bancshares Corporation, its wholly owned Subsidiary Banks and its wholly owned non-bank subsidiaries, IBC Trading Company, Premier Tierra Holdings, Inc., IBC Charitable and Community Development Corporation, IBC Capital Corporation, WCMH, LLC, and Diamond Beach Holdings, LLC. All significant inter-company balances and transactions have been eliminated in consolidation. We, through our Subsidiary Banks, are primarily engaged in the business of banking, including the acceptance of checking and savings deposits and the making of commercial, real estate, personal, home improvement, automobile, and other installment and term loans. Our primary markets are north, south, central, and southeast Texas and the state of Oklahoma. Each of our Subsidiary Banks is highly active in facilitating international trade along the United States border with Mexico and elsewhere. Although our loan portfolio is diversified, the ability of our debtors to honor their contracts is primarily dependent upon the economic conditions in our trade area. In addition, the investment portfolio is directly impacted by fluct …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing