International Bancshares Corporation

International Bancshares Corporation is a Laredo, Texas-based bank holding company serving businesses and individuals in Texas and Oklahoma. Its subsidiary banks earn interest on loans and securities, pay interest on deposits and other funding, and collect banking fees. It also holds merchant banking and low-income housing tax-credit investments. Its financial year ends December 31.

The shares trade as IBOC on the Texas Stock Exchange. The transfer from Nasdaq took effect on October 19, 2026, following an October 6 announcement.

Earnings record

Third-quarter other-investment income increased by $8.10 million, nearly matching the $8.14 million increase in total pretax profit. The bank attributes the investment improvement to merchant banking earnings. Net interest income grew 1.3%, helped by lower funding costs, while total interest income was slightly lower. Non-interest expenses increased to $82.6 million from $79.8 million.

The original August earnings release reported a 4.3% decline in second-quarter net income and identified higher expected credit-loss expense as a headwind. It gave no numerical earnings, loan or deposit target for the next quarter. Nine-month net income is now 2.3% higher than a year earlier.

Loans, deposits and capital

The rise in non-accrual loans began before the latest quarter. The June report identified several loans secured by interests in affordable-housing projects that moved to non-accrual status in the second quarter. September's balance was 13.4% higher than June's and represented about 3.45% of gross loans. Management says it continues to monitor collateral and will assign additional specific reserves if values decline.

At September 30, $202.1 million of non-accrual loans had no loan-specific credit allowance. The allowance calculation for collateral-dependent loans considers collateral value and expected recoveries. Actual net loan write-offs were $5.0 million in the first nine months, below $10.6 million a year earlier. Nine-month credit-loss expense, however, increased to $15.8 million from $9.6 million.

Unrealized after-tax marks of $104.8 million on available-for-sale securities reduced book equity in Q3. The bank elected to exclude most accumulated other comprehensive income or loss from regulatory Common Equity Tier 1 capital, so the book-equity movement differs from the regulatory capital measure.

Funding, investments and returns

Besides cash, the bank reported $8.10 billion of available funding and unpledged securities at September 30. This comprised $3.64 billion of unused Federal Home Loan Bank capacity, $502.4 million at the Federal Reserve discount window, $50 million of unsecured bank lines and $3.91 billion in unpledged securities at market value. These are sources of liquidity, rather than an additional cash balance.

Funding also included $656.2 million of securities sold under repurchase agreements, $40.2 million of other borrowed funds and $108.9 million of junior subordinated debentures. Customer deposits are shown separately above. Nine-month operating cash flow was $341.7 million, compared with $351.1 million a year earlier.

In Q3, the bank transferred a $72.5 million merchant banking partnership interest to an affiliate for a promissory note of the same amount. The noncash transaction reduced its ownership to comply with merchant banking holding-period requirements and produced no gain or loss. It is separate from the quarter's other-investment earnings.

International Bancshares paid its previously declared semiannual dividend of $0.73 a share on August 28. Q3 cash dividends totaled $45.4 million and share repurchases were $0.5 million. The $150 million annual repurchase authorization was approved in February, with the current program running through March 15, 2027. The bank adopted trading plans during Q3 to allow purchases in specified trading periods.

The next earnings reports will help show whether the non-accrual balance stabilizes, how much profit comes from ordinary interest income, and whether deposits and regulatory capital continue to support the loan portfolio.