10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2014
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                                to

Commission file number: 000-09439

INTERNATIONAL BANCSHARES CORPORATION
(Exact Name of Registrant as Specified in its Charter)

Texas (State or other jurisdiction of incorporation or organization)	74-2157138 (I.R.S. Employer Identification No.)
1200 San Bernardo Avenue Laredo, Texas 78042 - 1359 (Address of principal executive office and Zip Code)	(956) 722-7611 (Registrant's telephone number, including area code)

         Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
None	None

         Securities Registered Pursuant to Section 12(g) of the Act:

Common Stock ($1.00 par value)

(Title of Class)

         Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý    No o

         Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Act. Yes o    No ý

         Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

         Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No o

         Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K Section 229.405 of this chapter is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "small reporting company" in Rule 12b-2 of the Exchange Act.

Large Accelerated filer ý Accelerated filer o Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

         Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý

         The aggregate market value of the voting stock held by non-affiliates of the Registrant as of June 30, 2014 was $1,805,961,000.00 based on the closing sales price per share of the Registrant's common stock on such date as reported by NASDAQ.

         As of February 20, 2015, there were 66,405,410 shares of the Registrant's Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the following documents are incorporated by reference into the designated parts of this Form 10-K: (a) Annual Report to security holders for the fiscal year ended December 31, 2014 (in Parts I and II) and (b) Proxy Statement relating to the Company's 2015 Annual Meeting of Shareholders (in Part III).

CONTENTS

		Page
PART I
Item 1.	Business		4
Item 1A.	Risk Factors		27
Item 1B.	Unresolved Staff Comments		36
Item 2.	Properties		36
Item 3.	Legal Proceedings		37
Item 4.	Mine Safety Disclosures		37
Item 4A.	Executive Officers of the Registrant		37
PART II
Item 5.	Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		38
Item 6.	Selected Financial Data		38
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations		38
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk		38
Item 8.	Financial Statements and Supplementary Data		38
Item 9.	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure		38
Item 9A.	Controls and Procedures		38
Item 9B.	Other Information		41
PART III
Item 10.	Directors, Executive Officers and Corporate Governance		41
Item 11.	Executive Compensation		41
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		41
Item 13.	Certain Relationships and Related Transactions, and Director Independence		41
Item 14.	Principal Accounting Fees and Services		41
PART IV
Item 15.	Exhibits, Financial Statement Schedules		42

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Special Cautionary Notice Regarding Forward Looking Information

        Certain matters discussed in this report, excluding historical information, include forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created by these sections. Although International Bancshares Corporation (the "Company") believes such forward-looking statements are based on reasonable assumptions, no assurance can be given that every objective will be reached. The words "estimate," "expect," "intend," "believe" and "project," as well as other words or expressions of a similar meaning are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. Such statements are based on current expectations, are inherently uncertain, are subject to risks and should be viewed with caution. Actual results and experience may differ materially from the forward-looking statements as a result of many factors.

        Risk factors that could cause actual results to differ materially from any results that are projected, forecasted, estimated or budgeted by the Company in forward-looking statements include, among others, the following possibilities:

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Local, regional, national and international economic business conditions and the impact they may have on the Company, the Company's customers, and such customers' ability to transact profitable business with the Company, including the ability of its borrowers to repay their loans according to their terms or a change in the value of the related collateral.

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Volatility and disruption in national and international financial markets.

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Government intervention in the U.S. financial system.

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The Company relies, in part, on external financing to fund the Company's operations from the FHLB, the Fed and other sources and the unavailability of such funding sources in the future could adversely impact the Company's growth strategy, prospects and performance.

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Changes in consumer spending, borrowings and savings habits.

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Changes in interest rates and market prices, which could reduce the Company's net interest margins, asset valuations and expense expectations, including, without limitation, the repeal of federal prohibitions on the payment of interest on demand deposits.

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Changes in the capital markets utilized by the Company and its subsidiaries, including changes in the interest rate environment that may reduce margins.

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Changes in state and/or federal laws and regulations to which the Company and its subsidiaries, as well as their customers, competitors and potential competitors, are subject, including, without limitation, the impact of the Consumer Financial Protection Bureau as a new regulator of financial institutions, changes in the accounting, tax and regulatory treatment of trust preferred securities, as well as changes in banking, tax, securities, insurance, employment, environmental and immigration laws and regulations and the risk of litigation that may follow.

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Changes in U.S.—Mexico trade, including, without limitation, reductions in border crossings and commerce resulting from the Homeland Security Programs called "US-VISIT," which is derived from Section 110 of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996.

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The reduction of deposits from nonresident alien individuals due to the new IRS rules requiring U.S. financial institutions to report to the IRS deposit interest payments made to nonresident alien individuals.

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The loss of senior management or operating personnel.

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Increased competition from both within and outside the banking industry.

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The timing, impact and other uncertainties of the Company's potential future acquisitions including the Company's ability to identify suitable potential future acquisition candidates, the success or failure in the integration of their operations and the Company's ability to maintain its current branch network and to enter new markets successfully and capitalize on growth opportunities.

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Changes in the Company's ability to pay dividends on its Common Stock.

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Changes in estimates of future reserve requirements based upon periodic review thereof under relevant regulatory and accounting requirements.

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Additions to the Company's loan loss allowance as a result of changes in local, national or international conditions which adversely affect the Company's customers, including, without limitation, lower real estate values, lower oil prices or environmental liability risks associated with foreclosed properties.

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Greater than expected costs or difficulties related to the development and integration of new products and lines of business.

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Increased labor costs and effects related to health care reform and other laws, regulations and legal developments impacting labor costs.

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Impairment of carrying value of goodwill could negatively impact our earnings and capital.

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Changes in the soundness of other financial institutions with which the Company interacts.

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Political instability in the United States or Mexico.

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Technological changes or system failure or breaches of our network security as well as other cyber security risks could subject us to increased operating costs as well as litigation and other liabilities.

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Acts of war or terrorism.

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Natural disasters.

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Reduced earnings resulting from the write down of the carrying value of securities held in our securities available-for-sale portfolio following a determination that the securities are other-than-temporarily impaired.

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The effect of changes in accounting policies and practices as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standards setters.

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The costs and effects of regulatory developments, including the resolution of regulatory or other governmental inquiries and the results of regulatory examinations or reviews.

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The effect of final rules amending Regulation E that prohibit financial institutions from charging consumer fees for paying overdrafts on ATM and one-time debit card transactions, unless the consumer consents or opts-in to the overdraft service for those types of transactions, as well as the effect of any other regulatory or legal developments that limit overdraft services.

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The reduction of income and possible increase in required capital levels related to the adoption of new legislation, including, without limitation, the Dodd-Frank Regulatory Reform Act (the "Dodd-Frank Act") and the implementing rules and regulations, including the Federal Reserve's rule that establishes debit card interchange fee standards and prohibits network exclusivity arrangements and routing restrictions that is negatively affecting interchange revenue from debit card transactions as well as revenue from consumer services.

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The possible increase in required capital levels related to the implementation of capital and liquidity rules of the federal banking agencies that address or are impacted by the Basel III capital and liquidity standards.

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The enhanced due diligence burden imposed on banks related to the banks' inability to rely on credit ratings under Dodd-Frank which may result in a limitation on the types of securities certain banks will be able to purchase as a result of the due diligence burden.

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The Company's success at managing the risks involved in the foregoing items, or a failure or circumvention of the Company's internal controls and risk management, policies and procedures.

        Forward-looking statements speak only as of the date on which such statements are made. It is not possible to foresee or identify all such factors. The Company makes no commitment to update any forward-looking statement, or to disclose any facts, events or circumstances after the date hereof that may affect the accuracy of any forward-looking statement, unless required by law.

Item 1.    Business

General

        The Company is a financial holding company with its principal corporate offices in Laredo, Texas. Four bank subsidiaries provide commercial and retail banking services through main banking and branch facilities located in communities in South, Central and Southeast Texas and the State of Oklahoma. The Company was originally incorporated under the General Corporation Law of the State of Delaware in 1979. Effective June 7, 1995, the Company's state of incorporation was changed from Delaware to Texas. The Company was organized for the purpose of operating as a bank holding company within the meaning of the Bank Holding Company Act of 1956, as amended (the "BHCA"), and as such, is subject to supervision and regulation by the Board of Governors of the Federal Reserve System (the "FRB"). As a registered bank holding company, the Company may own one or more banks and may engage directly, or through subsidiary corporations, in those activities closely related to banking which are specifically permitted under the BHCA and by the FRB. Effective March 13, 2000, the Company became certified as a financial holding company. As a financial holding company, the Company may engage in a broad list of financial and non-financial activities. The Company's principal assets at December 31, 2014 consisted of all the outstanding capital stock of four Texas state banking associations (the "Banks" or "bank subsidiaries"). All of the Company's bank subsidiaries are members of the Federal Deposit Insurance Corporation (the "FDIC").

        The bank subsidiaries are in the business of gathering funds from various sources and investing these funds in order to earn a return. Funds gathering primarily takes the form of accepting demand and time deposits from individuals, partnerships, corporations and public entities. Investments principally are made in loans to various individuals and entities as well as in debt securities of the U.S. Government and various other entities whose payments are guaranteed by the U.S. Government. Historically, the bank subsidiaries have primarily focused on providing commercial banking services to small and medium sized businesses located in their trade areas and international banking services. In recent years, the bank subsidiaries have also emphasized consumer and retail banking, including mortgage lending, as well as branches situated in retail locations and shopping malls; however, during the fourth quarter of 2011 the Company closed fifty-five in-store branches as a result of reduced levels of revenue resulting from regulatory changes limiting interchange fee income. The branches were closed in order to align the Company's expenses with the reduced levels of revenue.

        The Company's philosophy focuses on customer service as represented by its motto, "We Do More." The Banks maintain a strong commitment to their local communities by, among other things, appointing selected members of the communities in which the Banks' branches are located to local advisory boards (the "local boards"). The local boards direct the operations of the branches, with the supervision of the lead Bank's board of directors, and assist in introducing prospective customers to the Banks as well as developing or modifying products and services to meet customer needs. The Banks function largely on a decentralized basis and the Company believes that such decentralized structure enhances the commitment of the Banks to the communities in which their branches are located. In contrast to many of their principal

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competitors, the credit decisions of the Banks are made locally and promptly. The Company believes that the knowledge and expertise afforded by the local boards are key components to sound credit decisions. Expense control is an essential element in the Company's profitability. The Company has centralized virtually all of the Banks' back office support and investment functions in order to achieve consistency and cost efficiencies in the delivery of products and services.

        On July 28, 1980, the Company acquired all of the outstanding shares of its predecessor, International Bank of Commerce ("IBC"), which is today the flagship bank of the Company, representing the majority of the Company's banking assets. IBC was chartered under the banking laws of Texas in 1966 and has its principal place of business at 1200 San Bernardo Avenue, Laredo, Webb County, Texas. It is a wholly-owned subsidiary of the Company. Since the acquisition of the flagship bank in 1980, the Company has formed three banks: (i) Commerce Bank, a Texas state banking association which commenced operations in 1982, located in Laredo, Texas ("Commerce Bank"); (ii) International Bank of Commerce, Brownsville, a Texas state banking association which commenced operations in 1984, located in Brownsville, Texas ("IBC-Brownsville"); and (iii) International Bank of Commerce, Zapata, a Texas state banking association which commenced operations in 1984, located in Zapata, Texas ("IBC-Zapata").

        Historically, the Company has acquired various financial institutions and banking assets in its trade area. The community-focus of the subsidiary banks and the involvement of the local boards resulted in the Company becoming aware of acquisition possibilities in the ordinary course of its business. The Company's decision to pursue an acquisition is based on a multitude of factors, including the ability to efficiently assimilate the operations and assets of the acquired entity, the cost efficiencies to be attained and the growth potential of the market. While the Company has not acquired a financial institution in a number of years, the Company will continue to consider potential acquisition transactions based on the analysis of such factors.

        The Company also has six direct non-banking subsidiaries. They are (i) IBC Life Insurance Company, a Texas chartered subsidiary which reinsures a small percentage of credit life and accident and health risks related to loans made by bank subsidiaries, (ii) IBC Trading Company, an export trading company which is currently inactive, (iii) IBC Subsidiary Corporation, a second-tier bank holding company incorporated in the State of Delaware, (iv) IBC Charitable and Community Development Corporation, a Texas non-profit corporation formed to conduct charitable and community development activities, (v) IBC Capital Corporation, a company incorporated in the State of Delaware for the purpose of holding certain investments of the Company and (vi) Premier Tierra Holdings, Inc., a liquidating subsidiary formed under the laws of the State of Texas. The Company owns a fifty percent interest in Gulfstar Group I and II, Ltd. and related entities, which are involved in investment banking activities. The Company also owns a controlling interest in four merchant banking entities.

Website Access to Reports

        The Company makes its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, filed or furnished pursuant to section 13(a) or 15(d) of the Securities Exchange Act of 1934 available free of charge on or through the Company's internet website, www.ibc.com, as soon as reasonably practicable after such materials are electronically filed with, or furnished to, the Securities and Exchange Commission ("SEC"). Additionally, the Company has posted on its website a code of ethics that applies to its directors and executive officers (including the Company's chief executive officer and financial officer). The Company's website also includes the charter for its Audit Committee, Risk Committee and Compensation Committee, and the Company's Guidelines for Nomination of Directors. The Company's website will also include the Proxy Statement relating to the Company's 2015 Annual Meeting of Shareholders upon filing of the definitive Proxy Statement with the SEC.

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Services and Employees

        The Company, through its bank subsidiaries, IBC, Commerce Bank, IBC-Zapata and IBC-Brownsville, is 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. Certain of the bank subsidiaries are very active in facilitating international trade along the United States border with Mexico and elsewhere. The international banking business of the Company includes providing letters of credit, making commercial and industrial loans, and providing a nominal amount of currency exchange. Each bank subsidiary also offers other related services, such as credit cards, travelers' checks, safety deposit, collection, notary public, escrow, drive-up and walk-up facilities and other customary banking services. Additionally, each bank subsidiary makes available certain securities products through third party providers. The bank subsidiaries also make banking services available during traditional and nontraditional banking hours through their network of automated teller machines, and through their facilities situated in retail locations, shopping malls and other convenient locations. Additionally, IBC introduced IBC Bank Online, an Internet banking product, in order to provide customers online access to banking information and services 24 hours a day.

        The Company owns U.S. service mark registrations for "INTERNATIONAL BANK OF COMMERCE," "INTERNATIONAL BANK OF COMMERCE CENTRE," "OVERDRAFT COURTESY," "IBC," "IBC CONNECTION," "IBC ELITE," "IBC ELITE ADVANTAGE," "IBC BANK," "BIZ RITE CHECKING," "GOT YOU COVERED," "FREE BEE," "IT'S A BRIGHTER CHRISTMAS," "MINITROPOLIS," "WE DO MORE RX," "WE'VE GOT IT," a design mark depicting a bee character, a design mark depicting the United States and Mexico, and a design mark depicting "IBC" with the United States and Mexico. In addition, the Company owns Texas service mark registrations for "RITE CHECKING," "THE CLUB," "WALL STREET INTERNATIONAL," "INTERNATIONAL BANK OF COMMERCE," "WE DO MORE," a composite mark depicting "CHECK'N SAVE" with a design, a composite mark depicting "WALL STREET INTERNATIONAL," with a design and a design mark depicting the United States and Mexico. The Company also owns Oklahoma service mark registrations for "CHECK 'N SAVE," "RITE CHECKING," "THE CLUB," and "WE DO MORE." The Company regularly investigates the availability of service mark registrations related to certain proprietary products.

        No material portion of the business of the Company may be deemed seasonal and the deposit and loan base of the Company's bank subsidiaries is diverse in nature. There has been no material effect upon the Company's capital expenditures, earnings or competitive position as a result of Federal, State or local environmental regulation.

        As of December 31, 2014, the Company and its subsidiaries employed approximately 2,799 persons full-time and 457 persons part-time.

Competition

        The Company is one of the largest independent Texas bank holding companies. The primary market area of the Company is South, Central and Southeast Texas, an area bordered on the east by the Galveston area, to the northwest by Round Rock, to the southwest by Del Rio and to the southeast by Brownsville, as well as the State of Oklahoma. The Company has increased its market share in its primary market area over the last several years through strategic acquisitions. The Company, through its bank subsidiaries, competes for deposits and loans with other commercial banks, savings and loan associations, credit unions and non-bank entities, which non-bank entities serve as an alternative to traditional financial institutions and are considered to be formidable competitors. The percentage of bank-related services being provided by non-bank entities has increased dramatically during the last several years.

        The Company and its bank subsidiaries do a large amount of business for customers domiciled in Mexico, with an emphasis in Northern Mexico. Deposits from persons and entities domiciled in Mexico

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comprise a large and stable portion of the deposit base of the Company's bank subsidiaries. Such deposits comprised approximately 27%, 28% and 28% of the bank subsidiaries' total deposits for the three years ended December 31, 2014, 2013 and 2012, respectively.

        Under the Gramm-Leach-Bliley Act of 1999 ("GLBA"), effective March 11, 2000, banks, securities firms and insurance companies may affiliate under an entity known as a financial holding company which may then serve its customers' varied financial needs through a single corporate structure. GLBA has significantly changed the competitive environment in which the Company and its subsidiaries conduct business. The financial services industry is also likely to become even more competitive as further technological advances enable more companies to provide financial services. These technological advances may diminish the importance of depository institutions and other financial intermediaries in the transfer of funds between parties.

Supervision and Regulation

GENERAL-THE COMPANY.    In addition to the generally applicable state and Federal laws governing businesses and employers, the Company and its bank subsidiaries are further extensively regulated by special Federal and state laws governing financial institutions. These laws comprehensively regulate the operations of the Company's bank subsidiaries and include, among other matters, requirements to maintain reserves against deposits; restrictions on the nature and amount of loans that may be made and the interest that may be charged thereon; restrictions on the amounts, terms and conditions of loans to directors, officers, large shareholders and their affiliates; restrictions related to investments in activities other than banking; and minimum capital requirements. The descriptions are qualified in their entirety by reference to the full text of the applicable statutes, regulations and policies. With few exceptions, state and Federal banking laws have as their principal objective either the maintenance of the safety and soundness of the Federal deposit insurance system or the protection of consumers, rather than the specific protection of shareholders of the Company. Further, the earnings of the Company are affected by the fiscal and monetary policies of the FRB, which regulates the national money supply in order to mitigate recessionary and inflationary pressures. These monetary policies influence to a significant extent the overall growth of bank loans, investments and deposits and the interest rates charged on loans or paid on time and savings deposits. The nature of future monetary policies and the effect of such policies on the future earnings and business of the Company cannot be predicted.

The Dodd-Frank Act

        On July 21, 2010, sweeping financial regulatory reform legislation entitled the "Dodd-Frank Wall Street Reform and Consumer Protection Act" (the "Dodd-Frank Act") was signed into law. The Dodd-Frank Act implements far-reaching changes across the financial regulatory landscape, including provisions that, among other things, has or will:

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Centralize responsibility for consumer financial protection by creating a new agency, the Bureau of Consumer Financial Protection (the "CFPB"), responsible for implementing, examining and enforcing compliance with federal consumer financial laws.

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Restrict the preemption of state law by federal law and disallow subsidiaries and affiliates of banks from availing themselves of such preemption.

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Apply the same leverage and risk-based capital requirements that apply to insured depository institutions to most bank holding companies.

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Require each federal bank regulatory agency to seek to make its capital requirement for banks countercyclical so that capital requirements increase in times of economic expansion and decrease in times of economic contraction.

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Require financial holding companies, such as the Company, to be well-capitalized and well-managed. Bank holding companies and banks must also be well-capitalized and well-managed in order to acquire banks located outside their home state.

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Change the assessment base for federal deposit insurance from the amount of insured deposits to consolidated assets less tangible capital, eliminate the ceiling on the size of the Deposit Insurance Fund ("DIF") and increase the floor of the size of the DIF.

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Impose comprehensive regulation of over-the-counter derivatives market, which would include certain provisions that would effectively prohibit insured depository institutions from conducting certain derivatives businesses in the institution itself.

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Require publicly-traded bank holding companies with $10 billion in assets or more, like the Company, to create a risk committee responsible for the oversight of risk management of the enterprise. On December 20, 2011, the FRB proposed a rule requiring each publicly-traded bank holding company with total consolidated assets of $10 billion or more to establish a risk committee of its board of directors, to be chaired by an independent director, with at least one member with risk management expertise. The FRB issued a final rule on February 18, 2014, which will be applicable to the Company (effective July 1, 2015). Under the final rule, the risk committee must: (i) include at least one member having experience in identifying, assessing, and managing risk exposures of large, complex firms, and (ii) be chaired by an independent director. The risk committee must also have a written charter and it must meet at least quarterly.

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Require stress testing of certain financial institutions. On June 15, 2011, the FRB published for comment proposed guidance ("Stress Testing Guidance Proposal") that would require bank holding companies with over $10 billion in total consolidated assets to conduct stress testing as a part of overall institution risk management. The Stress Testing Guidance Proposal includes stress testing capital and non-capital related aspects of financial condition, provides an overview of how a banking organization should develop a structure for stress testing, outlines general principles for a satisfactory stress testing framework, and describes how stress testing should be used at various levels within a banking organization. The Stress Testing Guidance Proposal also discusses the importance of stress testing in liquidity planning and the importance of strong internal governance and controls in an effective stress-testing framework. On October 9, 2012, the FRB issued its final stress testing rule for bank holding companies with over $10 billion in total consolidated assets. The FRB's rule was effective on November 15, 2012; however, the rule delayed implementation for bank holding companies with total consolidated assets between $10 billion and $50 billion, such as the Company, until October 2013. The Company was required to commence conducting the stress testing described in the Stress Testing Guidance Proposal in late 2013. On October 27, 2014, the Federal Reserve issued a final rule, effective November 26, 2014, amending the stress test rules applicable to bank holding companies with more than $10 billion but less than $50 billion in total consolidated assets, like the Company. This final rule will modify, following a transition period, the start date of the stress test cycles from October 1 of a calendar year to January 1 of the following calendar year. On January 17, 2012, the FDIC issued a similar proposal that would require state nonmember banks with over $10 billion in assets to conduct annual stress tests, report the results to the FDIC, and make the results available to the public. At this time, none of the subsidiary banks of the Company would meet the $10 billion asset threshold required to conduct the bank stress tests under the FDIC's final rule.

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Implement corporate governance revisions, including executive compensation and proxy access by shareholders that apply to all public companies, not just financial institutions.

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Make permanent the $250,000 limit for federal deposit insurance and increase the cash limit of Securities Investor Protection Corporation protection from $100,000 to $250,000.

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Repeal the federal prohibitions on the payment of interest on demand deposits, thereby permitting depository institutions to pay interest on business transaction and other accounts. In July 2011, the FRB issued a final rule, effective July 21, 2011, repealing Regulation Q, which had prohibited the payment of interest on demand deposits.

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Amend the Electronic Fund Transfer Act ("EFTA") to, among other things, give the FRB the authority to establish rules regarding interchange fees charged for electronic debit transactions by payment card issuers having assets over $10 billion and to enforce a new statutory requirement that such fees be reasonable and proportional to the actual cost of a transaction to the issuer. In June 2011, the FRB issued a final rule, effective October 1, 2011, which established the maximum permissible interchange fee that an issuer may receive for an electronic debit transaction at 21 cents per transaction and 5 basis points multiplied by the value of the transaction. The FRB also approved an interim final rule that allows for an upward adjustment of no more than 1 cent to an issuer's debit card interchange fee if the issuer develops and implements appropriate fraud-prevention policies and procedures.

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Increase the authority of the FRB to examine the Company and its non-bank subsidiaries.

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Permit interstate de novo branching without the need to acquire an existing bank.

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Require extensive new restrictions and requirements relating to residential mortgage transactions. The CFPB has already issued final mortgage lending rules relating to mortgage loan origination standards, borrower ability to repay, mandatory escrow accounts for higher priced mortgage loans, qualified mortgages, integrated disclosures, mortgage loan appraisals, force-placement of hazard insurance and expanded Home Mortgage Disclosure Act ("HMDA") collection and reporting requirements.

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Eliminate the use of credit ratings in bank regulations, including capital regulations. On November 18, 2011, the OCC proposed guidance on due diligence requirements in determining whether investment securities are eligible for investment and on January 11, 2012, the FDIC and the other Federal bank agencies proposed a rule to modify the agencies' market risk capital rules by incorporating into the rules various alternatives and complex methodologies for calculating specific risk capital requirements for debt and securitization positions that do not rely on credit ratings. On June 4, 2012, the OCC adopted a final rule (effective January 1, 2013), that removes credit rating references in OCC regulations relating to investment securities and imposing certain new due diligence requirements. On November 15, 2012, the FDIC adopted the OCC final rule through release of FDIC FIL-48-2012. The Interagency Uniform Agreement on the Classification and Appraisal of Securities Held by Depository Institutions, issued in 2013 as FIL-51-2013, applies these changes to examiner classifications of securities.

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Establish a Whistleblower Incentives and Protection Program for public company employees. On May 25, 2011, the SEC approved final rules whereby whistleblowers may receive 10% to 30% of the SEC-levied sanctions when a whistleblower voluntarily provides original information to the SEC and the sanctions levied against the culpable party exceed $1 million in an enforcement proceeding.

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On October 23, 2013, the federal bank agencies and the SEC proposed joint standards for assessing the diversity policies and practices of each agency's respective regulated entities, implementing Section 342 of the Dodd-Frank Act, which requires each agency to establish an Office of Minority and Women Inclusion and to develop diversity assessment standards for all the entities regulated by the agencies. The agencies propose uniform standards in the following four areas: (1) organizational commitment to diversity and inclusion, (2) workforce profile and employment practices, (3) procurement and business practices (supplier diversity), and (4) practices to promote transparency of organizational diversity and inclusion. The proposal stresses that assessments should take into consideration an entity's size and other characteristics such as total assets, number

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of employees, revenues, governance structures, and the number of members and/or customers, contract volume, geographic location, and community characteristics. The agencies are expected to issue a final rule sometime in 2015. Once the final rule is issued, it is likely that regulated entities will need to adjust their existing policies and practices to conform.

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Requires the federal financial regulatory agencies to adopt rules that prohibit banks and their affiliates from engaging in proprietary trading and investing in and sponsoring certain unregistered investment companies (defined as hedge funds and private equity funds). The statutory provision is commonly called the "Volcker Rule." In October 2011, federal regulators proposed rules to implement the Volcker Rule that included an extensive request for comments on the proposal, which were due by February 13, 2012. On December 10, 2013, the federal financial regulatory agencies issued final rules which prohibit insured depository institutions and companies affiliated with insured depository institutions from engaging in short-term proprietary trading of certain securities, derivatives, commodity futures and options on these instruments, for their own account. The final rules also impose limits on banking entities' investments in, and other relationships with, hedge funds or private equity funds. Like Section 619 of the Dodd-Frank Act, the final rules provide exemptions for certain activities, including market making, underwriting, hedging, trading in government obligations, insurance company activities, and organizing and offering hedge funds or private equity funds. The final rules also clarify that certain activities are not prohibited, including acting as agent, broker or custodian. The compliance requirements under the final rules vary based on the size of the banking entity and the scope of activities conducted. On December 18, 2014, the Federal Reserve delayed implementation until July 2017 of the requirement for banks to unwind investments in private equity funds, hedge funds and specialty security projects. Additionally, Congress has taken steps to pass legislation granting a two (2) year delay to the Volker Rule's swaps push-out rule that eliminates federal subsidies for trading in certain derivatives, including collateralized loan obligations or securitized bundles of business loans. The Company does not currently anticipate that the Volcker Rule will have a material effect on the operations of the Company and its subsidiaries, as the Company does not engage in the businesses prohibited by the Volcker Rule.

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Authorizes the Federal Reserve Board to adopt enhanced supervision and prudential standards generally for bank holding companies with total consolidated assets of $50 billion or more (often referred to as "systemically important financial institutions" or "SIFI"), and authorizes the FRB to establish such standards either on its own or upon the recommendations of the Financial Stability Oversight Council ("FSOC"), a new systemic risk oversight body created by Dodd-Frank. The FSOC has the authority to veto a financial rule of the CFPB if the rule would threaten the safety and soundness of the entire U.S. banking system. In December 2011, the FRB issued for public comment a notice of proposed rulemaking establishing such enhanced supervision and prudential standards. Most of the proposed SIFI rules will not apply to the Company because the Company has total consolidated assets in an amount less than $50 billion. Two aspects of the proposed SIFI rules—requirements for annual stress testing of capital and certain corporate governance provisions requiring, among other things, that each bank holding company establish a risk committee of its board of directors, apply to bank holding companies with total consolidated assets of $10 billion or more, including the Company.

        Many aspects of the Dodd-Frank Act are subject to rulemaking and will take effect over several years making it difficult to anticipate the overall financial impact on the Company, its customers or the financial industry more generally. Provisions in the legislation that affect deposit insurance assessments, payment of interest on demand deposits and interchange fees are likely to increase the costs associated with deposits as well as place limitations on certain revenues those deposits may generate. Provisions in the legislation that require revisions to the capital requirements of the Company could require the Company to seek

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other sources of capital in the future. Some of the rules that have been adopted or proposed to comply with the Dodd-Frank Act are discussed further below.

EMERGENCY ECONOMIC STABILIZATION ACT.    On October 3, 2008, the President signed into law the Emergency Economic Stabilization Act of 2008 or ("EESA"), which, among other measures, authorized the Secretary of the Treasury to establish the Troubled Asset Relief Program ("TARP"). Under TARP, the Treasury created a capital purchase program ("CPP"), pursuant to which it provided access to capital that serves as Tier 1 capital to financial institutions through a standardized program to acquire preferred stock (accompanied by warrants) from eligible financial institutions. On December 23, 2008, the Company sold $216 million of Series A Preferred Stock to the Treasury under the CPP (the "Series A Preferred Stock") and a warrant to purchase 1,326,238 shares of Company Common Stock at a price per share of $24.43 and with a term of ten years (the "Warrant" or "Warrants"). As of November 28, 2012, the Company had repurchased all of the Series A Preferred Stock and exited the TARP Program. On June 12, 2013, the U.S. Treasury sold the Warrant to a third party. As of December 31, 2014, none of the Warrant had been exercised. The Warrant expires on December 23, 2018. Adjustments to the Exercise Price of the Warrant will be made if the Company pays cash dividends in excess of 33 cents per semi-annual period or makes certain other shareholder distributions before the Warrant expires on December 23, 2018.

        On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (the "ARRA"). ARRA was intended to provide a stimulus to the U.S. economy in the wake of the economic downturn brought about by the subprime mortgage crisis and the resulting credit crunch. ARRA includes federal tax cuts, expansion of unemployment benefits and other social welfare provisions, and domestic spending in education, healthcare, and infrastructure, including the energy structure. ARRA also includes numerous non-economic recovery related items, including a limitation on executive compensation of certain of the most highly-compensated employees and executive officers of financial institutions, such as the Company, during the period that they participated in the TARP Capital Purchase Program.

FRB APPROVALS.    The Company is a registered bank holding company within the meaning of the BHCA, and is subject to supervision by the FRB and to a certain extent the Texas Department of Banking (the "DOB"). The Company is required to file with the FRB annual reports and other information regarding the business operations of itself and its subsidiaries. It is also subject to examination by the FRB. Under the BHCA, a bank holding company is, with limited exceptions, prohibited from acquiring direct or indirect ownership or control of any voting stock of any company which is not a bank or bank holding company, and must engage only in the business of banking, managing, controlling banks, and furnishing services to or performing services for its subsidiary banks. One of the exceptions to this prohibition is the ownership of shares of any company provided such shares do not constitute more than 5% of the outstanding voting shares of the company and so long as the FRB does not disapprove such ownership. Another exception to this prohibition is the ownership of shares of a company the activities of which the FRB has specifically determined to be so closely related to banking, managing or controlling banks as to be a proper incident thereto.

        The BHCA and the Change in Bank Control Act of 1978 require that, depending on the circumstances, either FRB approval must be obtained or notice must be furnished to the FRB and not disapproved prior to any person or company acquiring "control" of a bank holding company, such as the Company, subject to certain exceptions for certain transactions. Control is conclusively presumed to exist if an individual or company acquires 25% or more of any class of voting securities of the bank holding company. Control is rebuttably presumed to exist if a person acquires 10% or more but less than 25% of any class of voting securities where the bank holding company, such as the Company, has registered Securities under Section 12 of the Securities Exchange Act of 1934 (the "Exchange Act").

        As a bank holding company, the Company is required to obtain approval prior to merging or consolidating with any other bank holding company, acquiring all or substantially all of the assets of any

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bank or acquiring ownership or control of shares of a bank or bank holding company if, after the acquisition, the Company would directly or indirectly own or control 5% or more of the voting shares of such bank or bank holding company.

THE USA PATRIOT ACT.    Combating money laundering and terrorist financing is a major focus of financial institution regulatory policy. The USA PATRIOT Act of 2001 substantially expanded the responsibilities of U.S. financial institutions with respect to countering money laundering and terrorist activities. The implementing regulations impose obligations on financial institutions to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering and terrorist financing and to verify the identity of their customers. Also, the USA PATRIOT Act requires the bank regulatory agencies to consider the record of a bank or bank holding company in combating money laundering activities in their evaluation of bank and bank holding company merger or acquisition transactions. The Company has a program in place to monitor and enforce its policies on money laundering, corruption and bribery as well as its policies on prohibiting the use of Company assets to finance or otherwise aid alleged terrorist groups. Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with all the relevant laws or regulations, could have serious legal and reputational consequences for the institution.

NONRESIDENT ALIEN DEPOSITS.    In January 2011, the IRS published a notice of proposed rulemaking to provide guidance on the reporting requirements for interest on deposits paid to nonresident alien individuals. Rules currently in effect require reporting of U.S. bank deposit interest only if the interest is paid to a U.S. person or nonresident alien individual who is a resident of Canada. The proposed rule, however, would extend the reporting requirements to include bank deposit interest paid to nonresident alien individuals who are residents of any foreign country. On May 14, 2012, the IRS issued its final rule which became effective on January 1, 2013. Under the final rule, U.S. banks are required to report on the interest they pay to nonresident alien individuals, and the IRS will share the information with tax authorities in other countries with whom the United States has an agreement regarding the exchange of tax information. Implementation of the final rule could lead to deposit withdrawals by individuals who were not previously subject to the reporting requirement.

FATCA.    On July 1, 2014, the Foreign Account Tax Compliance Act ("FATCA") became effective. FATCA, enacted in 2010, is aimed at curbing offshore tax evasion by foreign financial institutions ("FFIs") by requiring FFIs to identify U.S. account holders and report information directly to the U.S. FATCA requires U.S. withholding agents, including U.S. banks, to withhold tax (30%) on certain U.S. sourced income payable to FFIs that do not agree to report certain information to the IRS regarding their U.S. accounts, and on certain payments to certain nonfinancial foreign entities ("NFFEs") that do not provide information on their substantial U.S. owners to withholding agents.

OFFICE OF FOREIGN ASSETS CONTROL REGULATION.    The United States has imposed economic sanctions that affect transactions with designated foreign countries, nationals and others. OFAC publishes lists of specially designated targets and countries. These are typically known as the "OFAC" rules based on their administration by the U.S. Treasury Department Office of Foreign Assets Control ("OFAC"). The OFAC administered sanctions take many forms, including without limitation, restrictions on trade or investment and the blocking of certain assets related to the designated foreign countries and nationals. Blocked assets, which may include bank deposits, cannot be paid out, withdrawn, set off or transferred in any manner without a license from OFAC. The Company is also responsible for reporting blocked transactions after their occurrence. Failure to comply with the OFAC sanctions could have serious legal and reputational consequences.

GRAMM-LEACH-BLILEY.    The Gramm-Leach-Bliley Act of 1999 ("GLBA") eliminates the barriers to affiliations among banks, securities firms, insurance companies and other financial service providers. GLBA provides for a new type of financial holding company structure under which affiliations among these entities may occur. Under GLBA, a financial holding company may engage in a broad list of

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financial activities and any non-financial activity that the FRB determines is complementary to a financial activity and poses no substantial risk to the safety and soundness of depository institutions or the financial system. In addition, GLBA permitted certain non-banking financial and financially related activities to be conducted by financial subsidiaries of banks.

        Under GLBA, a bank holding company may become certified as a financial holding company by filing a declaration with the FRB, together with a certification that each of its subsidiary banks is well capitalized, is well managed, and has at least a satisfactory rating under the Community Reinvestment Act of 1977 ("CRA"). The Company has elected to become a financial holding company under GLBA and the election was made effective by the FRB as of March 13, 2000. During the second quarter of 2000, IBC established an insurance agency subsidiary which acquired two insurance agencies. As part of the Local Financial Corporation ("LFIN") acquisition in 2004, the Company acquired a securities firm registered under the Exchange Act, IBC Investments, Inc. A financial holding company that has a securities affiliate registered under the Act or a qualified insurance affiliate may make permissible merchant banking investments. As of December 31, 2014, the Company has made 37 merchant banking investments.

        The FRB and the Secretary of the Treasury have regulations governing the scope of permissible merchant banking investments. The investments that may be made under this authority are substantially broader in scope than the investment activities otherwise permissible for bank holding companies, and are referred to as "merchant banking investments" in "portfolio companies." Before making a merchant banking investment, a financial holding company must either be or have a securities affiliate registered under the Exchange Act or a qualified insurance affiliate. The merchant banking investments may be made by the financial holding company or any of its subsidiaries, other than a depository institution or subsidiary of a depository institution. The regulations place restrictions on the ability of a financial holding company to become involved in the routine management or operation of any of its portfolio companies. The regulation also generally limits the ownership period of merchant banking investments to no more than ten years.

        The FRB, the Office of the Comptroller of the Currency (the "OCC"), and the FDIC have rules governing the regulatory capital treatment of equity investments in non-financial companies held by banks, bank holding companies and financial holding companies. The rule applies a graduated capital charge on covered equity investments which would increase as the proportion of such investments to Tier 1 Capital increases.

PREEMPTION.    At the beginning of 2004, the OCC issued final rules clarifying when federal law overrides state law for national banks and their operating subsidiaries and confirming that only the OCC has the right to examine and take enforcement action against those institutions. However, the Dodd-Frank Act limits the applicability of the preemption doctrine so that state laws affecting national banks are preempted only in certain circumstances. In May 2011, the OCC first proposed new regulations to implement the Dodd-Frank Act's preemption provision. On July 20, 2011, the OCC issued its final preemption rule wherein it concluded that the Dodd-Frank Act does not create a new, stand-alone preemption standard, but rather, incorporates the conflict preemption legal standard and the reasoning that supports it in the Supreme Court's Barnett decision. The OCC confirmed that precedent consistent with the standard set forth in Barnett Bank v. Nelson, 417 U.S. 25 (1996), including existing OCC regulations, are "preserved," including federal preemption over state consumer protection laws. The OCC also confirmed its belief that the procedural requirement applicable to an OCC determination that a state consumer financial law is preempted, apply prospectively and do not invalidate prior precedent. The OCC determined that its existing preemption rules conformed with Barnett Bank. The OCC did make modifications to its rules to clarify that Barnett Bank is controlling. Finally, the OCC clarified that a state attorney general or chief law enforcement officer may enforce any applicable law against a national bank (as opposed to a non-preempted state law) and to seek relief if, and as, authorized by that law. Since Texas state chartered banks have parity with national banks as to their powers (discussed further herein), the preemption rule has significance for the Company's bank subsidiaries.

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FINANCIAL PRIVACY.    In accordance with GLBA, the federal banking regulators adopted rules that limit the ability of banks and other financial institutions to disclose non-public information about consumers to non-affiliated third parties. Pursuant to the rules, financial institutions must provide disclosure of privacy policies to consumers and in some instances allow consumers to prevent disclosure of certain personal information to a nonaffiliated third party. Additional regulations were adopted to implement the provisions of the Fair Access to Credit Transactions Act ("FACTA"), which requires certain disclosures and consents to share certain information among bank affiliates. These privacy provisions affect how customer information is transmitted through diversified financial companies and conveyed to outside vendors. These privacy provisions also have the effect of increasing the length of the waiting period, after privacy disclosures are provided to new customers, before information can be shared among different affiliated companies for the purpose of cross-selling products and services between those affiliated companies.

NASDAQ LISTING STANDARDS.    The Company is traded on the NASDAQ Stock Market. The Company must comply with the listing standards of the NASDAQ Stock Market. In addition to other matters, the listing standards address disclosure requirements and standards relating to board independence and other corporate governance matters.

INTERSTATE BANKING.    The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 ("Interstate Banking Act"), rewrote federal law governing the interstate expansion of banks in the United States. Under the Interstate Banking Act, adequately capitalized, well managed bank holding companies with FRB approval may acquire banks located in any State in the United States, provided that the target bank meets the minimum age (up to a maximum of five years, which is the maximum Texas has adopted) established by the host State. Under the Interstate Banking Act, an anti-concentration limit will bar interstate acquisitions that would give a bank holding company control of more than ten percent (10%) of all deposits nationwide or thirty percent (30%) of any one State's deposits, or such higher or lower percentage established by the host State. The anti-concentration limit in Texas has been set at twenty percent (20%) of all federally insured deposits in Texas. As allowed by the Interstate Banking Act, the Company acquired LFIN, including its Oklahoma financial institution, during 2004. The Dodd-Frank Act changes the requirements for interstate branching by permitting de novo interstate branching if, under the laws of the state where the new branch is to be established, a state bank chartered in that state would be permitted to establish a branch.

FRB ENFORCEMENT POWERS.    The FRB has certain cease-and-desist and divestiture powers over bank holding companies and non-banking subsidiaries where their actions would constitute a serious threat to the safety, soundness or stability of a subsidiary bank. These powers may be exercised through the issuance of cease-and-desist orders or other actions. In the event a bank subsidiary experiences either a significant loan loss or rapid growth of loans or deposits, the Company may be compelled by the FRB to invest additional capital in the bank subsidiary. Further, the Company would be required to guaranty performance of the capital restoration plan of any undercapitalized bank subsidiary. The FRB is also empowered to assess civil money penalties against companies or individuals who violate the BHCA in amounts up to $1,000,000 per day, to order termination of non-banking activities of non-banking subsidiaries of bank holding companies and to order termination of ownership and control of a non-banking subsidiary. Under certain circumstances the Texas Banking Commissioner may bring enforcement proceedings against a bank holding company in Texas.

COMPANY DIVIDENDS.    The Company is subject to regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums. The FRB is authorized to determine under certain circumstances relating to the financial condition of a bank holding company, that the payment of dividends would be an unsafe or unsound practice and to prohibit payment thereof. In addition, in the current financial and economic environment, the FRB has indicated that bank holding companies should carefully review their dividend policy and has

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discouraged payment ratios that are at maximum allowable levels unless both asset quality and capital are very strong.

CROSS-GUARANTEE PROVISIONS.    The Financial Institutions Reform Recovery and Enforcement Act of 1989 ("FIRREA") contains a "cross-guarantee" provision which generally makes commonly controlled insured depository institutions liable to the FDIC for any losses incurred in connection with the failure of a commonly controlled depository institution.

SOURCE OF STRENGTH DOCTRINE.    FRB policy has historically required bank holding companies to act as a source of financial and managerial strength to their subsidiary banks. The Dodd-Frank Act codifies this policy as a statutory requirement and the federal financial regulatory agencies are expected to issue a joint notice of proposed rulemaking implementing this statutory requirement in the near future. Under this requirement, the Company is expected to commit resources to support its subsidiary banks, including at times when the Company may not be in a financial position to provide such resources. Any capital loans by a bank holding company to any of its subsidiary banks are subordinate in right of payment to deposits and to certain other indebtedness of such subsidiary banks. In the event of a bank holding Company's bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment.

GENERAL—BANK SUBSIDIARIES.    All of the bank subsidiaries of the Company are state banks subject to regulation by, and supervision of, the Texas DOB and the FDIC.

DEPOSIT INSURANCE.    All of the bank subsidiaries of the Company are examined by the FDIC, which currently insures the deposits of each member bank up to applicable limits. Deposits of each of the bank subsidiaries are insured by the FDIC through the DIF to the extent provided by law. The FDIC uses a risk-based assessment system that imposes premiums based upon a matrix that takes into account a bank's capital level and supervisory rating.

        In December 2008, the FDIC issued a final rule that raised the then current assessment rates uniformly by 7 basis points for the first quarter of 2009 assessment, which resulted in annualized assessment rates for institutions, such as the subsidiary banks in Risk Category 1 ("Risk Category 1 institutions"), ranging from 12 to 14 basis points (basis points representing cents per $100 of assessable deposits). In February 2009, the FDIC issued final rules to amend the DIF restoration plan, change the risk-based assessment system and set assessment rates for Risk Category 1 institutions beginning in the second quarter of 2009. The initial base assessment rates for Risk Category 1 institutions range from 12 to 16 basis points, on an annualized basis. After the effect of potential base-rate adjustments, total base assessment rates rate from 7 to 24 basis points.

        In November 2009, the FDIC issued a rule that required all deposit institutions, with limited exceptions, to prepay their estimated quarterly risk-based assessments for the fourth quarter of 2009, and for all of 2010, 2011, and 2012.

        In October 2010, the FDIC adopted a new DIF restoration plan to ensure that the fund reserve ratio reaches 1.35% by September 30, 2020, as required by the Dodd-Frank Act. Under the new restoration plan, the FDIC will forego the uniform three-basis point increase in initial assessment rates scheduled to take place on January 1, 2011, and maintain the current schedule of assessment rates for all depository institutions. At least semi-annually, the FDIC will update its loss and income projections for the fund and, if needed, will increase or decrease assessment rates, following notice-and-comment rulemaking if required.

        In February 2011, the FDIC issued a final rule effective April 1, 2011 that set a target size for the insurance fund and changed the deposit insurance assessment base from total domestic deposits to average total assets minus average tangible equity, as required by the Dodd-Frank Act. The rule finalizes a target

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size for the DIF at 2 percent of insured deposits. It also implements a lower assessment rate schedule when the fund reaches 1.15 percent and, in lieu of dividends, provides for a lower rate schedule when the reserve ratio reaches 2 percent and 2.5 percent. The final rule creates a risk-based scorecard assessment system for banks with more than $10 billion in assets. The scorecards include financial measures that the FDIC believes are predictive of long-term performance. In September 2011, the FDIC issued new guidelines that reflect the methodology it now uses to determine assessment rates for large and highly complex institutions. A "large institution" is defined as an insured depository institution with assets of $10 billion or more, and a "highly complex institution" is defined as an insured depository institution with assets of $50 billion or more. Total scores are determined according to the April 1, 2011 final rule. While none of the Company's subsidiary banks currently meet the definition of a large institution under the new guidelines, the Company cannot provide any assurance as to the effect of any further change in its deposit insurance premium rate, should such a change occur, as such changes are dependent upon a variety of factors, some of which are beyond the Company's control.

        FDIC deposit insurance expense for the Company totaled $6,082,000, $6,737,000 and $7,709,000 in 2014, 2013 and 2012, respectively.

        Under the FDIA, the FDIC may terminate deposit insurance upon a finding that the institution has engaged in unsafe and unsound practices, is in an unsafe or uninsured condition to continue operations, or has violated any applicable law, regulation, rule or order of condition imposed by the FDIC.

CAPITAL ADEQUACY.    The Company and its bank subsidiaries are currently required to meet certain minimum regulatory capital guidelines. The federal authorities' risk-based capital guidelines in effect as of December 31, 2014 were based upon the 1988 capital accord (defined below as "BIS"). The capital guidelines effective as of December 31, 2014 utilized total capital-to-risk-weighted assets and Tier 1 Capital elements. The guidelines made regulatory capital requirements more sensitive to differences in risk profiles among banking organizations, consider off-balance sheet exposure in assessing capital adequacy, and encourage the holding of liquid, low-risk assets. At least one-half of the minimum total capital was required to be comprised of Core Capital or Tier 1 Capital elements. Tier 1 Capital of the Company is comprised of common shareholders' equity and permissible amounts related to the trust preferred securities. The deductible core deposit intangibles and goodwill booked in connection with all the financial institution acquisitions of the Company after February 1992 are deducted from the sum of core capital elements when determining the capital ratios of the Company.

        In addition, the FRB has established minimum leverage ratio guidelines for bank holding companies. These guidelines provide for a minimum leverage ratio of Tier 1 capital to adjusted average quarterly assets ("leverage ratio") equal to three percent for bank holding companies that meet certain specified criteria, including having the highest regulatory rating. All other bank holding companies will generally be required to maintain a leverage ratio of at least four to five percent. The Company's leverage ratio at December 31, 2014 was 12.33%. The guidelines also provide that bank holding companies experiencing internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels without significant reliance on intangible assets. Each of the Company's bank subsidiaries is subject to similar capital requirements adopted by the FDIC. Each of the Company's bank subsidiaries had a leverage ratio in excess of five percent as of December 31, 2014.

        In March 2005, the FRB issued a final rule that would continue to allow the inclusion of trust preferred securities in Tier 1 capital, but with stricter quantitative limits. Under the final rule, after a five-year transition period ending March 31, 2009, the aggregate amount of trust preferred securities and certain other capital elements would be limited to 25% of Tier 1 capital elements, net of goodwill, less any associated deferred tax liability. The amount of trust preferred securities and certain other elements in excess of the limit could be included in Supplementary Capital or Tier 2 capital, subject to restrictions. Tier 2 capital includes among other things, perpetual preferred stock, qualifying mandatory convertible debt securities, qualifying subordinated debt, and allowances for probable loan and lease losses, subject to

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limitations. Bank holding companies with significant international operations will be expected to limit trust preferred securities to 15% of Tier 1 capital elements, net of goodwill; however, they may include qualifying mandatory convertible preferred securities up to the 25% limit. On March 16, 2009, the FRB extended for two years the transition period. Substantially all of the trust preferred securities issued by the Company qualified as Tier 1 capital after the transition period ended on March 31, 2011. The Collins Amendment to the Dodd-Frank Act further restricts the use of trust preferred securities by excluding them from the regulatory capital of banking holding companies more broadly. However, for institutions with consolidated assets of less than $15 billion on December 31, 2009, such as the Company, the Collins Amendment will not apply to securities issued before May 19, 2010 and all the Company's trust preferred securities were issued before such date.

        Effective December 19, 1992, the federal bank regulatory agencies adopted regulations which mandate a five-tier scheme of capital requirements and corresponding supervisory actions to implement the prompt corrective action provisions of FDICIA. The regulations include requirements for the capital categories that will serve as benchmarks for mandatory supervisory actions. Under the regulations, the highest of the five categories would be a well capitalized institution with a total risk-based capital ratio of 10%, a Tier 1 risk-based capital ratio of 6% and a Tier 1 leverage ratio of 5%. An institution would be prohibited from declaring any dividends, making any other capital distribution or paying a management fee if the capital ratios drop below the levels for an adequately capitalized institution, which are 8%, 4% and 4%, respectively. The corresponding provisions of FDICIA mandate corrective actions are taken if a bank is undercapitalized. Based on the Company's and each of the bank subsidiaries' capital ratios as of December 31, 2014, the Company and each of the bank subsidiaries were classified as "well capitalized" under the applicable regulations. The new Basel III capital rules also revise the "prompt corrective action" regulations as discussed below under "Basel III Prompt Corrective Action."

        The risk-based standards that apply to bank holding companies and banks incorporate market and interest rate risk components. Applicable banking institutions are required to adjust their risk-based capital ratio to reflect market risk. Under the market risk capital guidelines, capital is allocated to support the amount of market risk related to a financial institution's ongoing trading activities. Financial institutions are allowed to issue qualifying unsecured subordinated debt (Tier 3 capital) to meet a part of their market risks. The Company does not have any Tier 3 capital and did not need Tier 3 capital to offset market risks. In January 2010, the federal bank regulators issued a final risk-based capital rule related to new accounting standards that make substantive changes in how banking organizations account for more items, including securitized assets that previously had been taken off banks' balance sheets. Dodd-Frank directs the banking agencies to issue capital requirements for banking institutions that are countercyclical. These will require a higher level of capital to be maintained in times of economic expansion and a lower level of capital during times of economic contraction.

        The federal regulatory authorities' risk-based capital guidelines are based upon the 1988 capital accord of the Basel Committee on Banking Supervision (the "BIS"). The BIS is a committee of central banks and bank supervisors/regulators from the major industrialized countries that develops broad policy guidelines for use by each country's supervisors in determining the supervisory policies they apply. In June 2004, the BIS released a new capital accord to replace the 1988 capital accord with an update in November 2005 ("BIS II"). BIS II would set capital requirements for operational risk, and refine the existing capital requirements for credit risk and market risk exposures. The United States federal banking agencies are developing proposed revisions to their existing capital adequacy regulations and standards based on BIS II. A definitive final rule for implementing BIS II in the United States that would apply only to internationally active banking organizations, or "core banks"—defined as those with consolidated total assets of $250 billion or more or consolidated on-balance sheet foreign exposures of $10 billion or more became effective as of April 1, 2008. Other U.S. banking organizations may elect to adopt the requirements of this rule (if they meet applicable qualification requirements), but they will not be required to apply them. The rule also allows a banking organization's primary federal supervisor to determine that the application of

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the rule would not be appropriate in light of the bank's asset size, level of complexity, risk profile, or scope of operations. The Company is not required to comply with BIS II at this time.

        In July 2008, the banking agencies issued a proposed rule that would give banking organizations that are not required to comply with Basel II the option to implement a new risk-based capital framework. This framework would adopt the standardized approach of Basel II for credit risk, the basic indicator approach of Basel II for operational risk, and related disclosure requirements. While this proposed rule generally parallels the relevant approaches under Basel II, it diverges where United States markets have unique characteristics and risk profiles, most notably with respect to risk weighting residential mortgage exposures. Comments on the proposed rule were due to the agencies by October 27, 2008, but a definitive final rule has not been issued.

        The Dodd-Frank Act requires the FRB, the OCC and the FDIC to adopt regulations imposing a continuing "floor" of the BIS risk-based capital requirements in cases where the BIS risk-based capital requirements and any changes in capital regulations resulting from Basel-III (see below) otherwise would permit lower requirements. In December 2010, the FRB, the OCC and the FDIC issued a joint notice of proposed rulemaking that would implement this requirement. On June 24, 2011, the agencies approved this rule in final form and it became effective on July 28, 2011.

        In December 2010, the Basel Committee released its final framework for strengthening international capital and liquidity regulation, now officially identified by the Basel Committee as "Basel III." Basel III, when implemented by the U.S. banking agencies and fully phased-in, will require bank holding companies and their bank subsidiaries to maintain substantially more capital, with a greater emphasis on common equity.

        The Basel III final capital framework, among other things, (i) introduces as a new capital measure "Common Equity Tier 1" ("CET1"), (ii) specifies that Tier 1 capital consists of CET1 and "Additional Tier 1 capital" instruments meeting specified requirements, (iii) defines CET1 narrowly by requiring that most adjustments to regulatory capital measures be made to CET1 and not to the other components of capital and (iv) expands the scope of the adjustments as compared to existing regulations.

        Basel III also provides for a "countercyclical capital buffer," generally to be imposed when national regulators determine that excess aggregate credit growth becomes associated with a buildup of systemic risk. The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of CET1 to risk-weighted assets above the minimum but below the conservation buffer will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall.

        The Basel III capital rules include a new definition of Common Equity Tier 1 ("CET1") and includes the new components of "Accumulated Other Comprehensive Income (Loss)" that factors into the calculation of CET1 all net unrealized gains (losses) on available-for-sale securities. The definition also establishes the expectation that the majority of Common Equity Tier 1 should be voting shares. The proposal creates a category referred to as "High Volatility CRE" which would have a risk weight of 150% and generally include nonresidential acquisition development or construction financing. The proposal would require the phase-out from Tier 1 Capital of trust preferred securities and cumulative preferred stock over a ten-year time period.

        The Basel III capital rules establish calculations for risk-weighted assets using alternatives to credit ratings that would be based on either the weighted average of the underlying collateral or a formula based on subordination position and delinquencies or the use of a 1,250% risk-rating, which would be the default rating if requisite standards of a comprehensive understanding and levels of the due diligence are not met. Securitized structures such as private label mortgage-backed securities may be risk weighted based on a gross-up approach considering underlying assets otherwise they default to the 1,250% risk weight.

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        On the quality of capital side, the final Basel III capital rule emphasized common equity tier 1 capital, the most loss-absorbing form of capital, and implements strict eligibility criteria for regulatory capital instruments. The final rule also improved the methodology for calculating risk-weighted assets to enhance risk sensitivity. The agencies made a number of changes in the final rule, in particular, to address concerns about regulatory burden on community banks. For example, the final rule is significantly different from the proposal in terms of risk weighting for residential mortgages and the regulatory capital treatment of certain unrealized gains and losses on trust preferred securities for common banking organizations.

        The phase-in period for mandatory compliance with the final rule was January 1, 2014 for most advanced approach banking organizations, and January 1, 2015 for all other covered banking organizations, including the Company. A key provision of the new Basel III rules permits all non-advanced approaches institutions, like the Company, to make a one-time irrevocable election to determine how most items reported in Accumulated Other Comprehensive Income ("AOCI") will be handled for regulatory capital purposes. The irrevocable election is made with the filing of the March 31, 2015 Call Report and consists of an institution choosing to either opt-out or not opt-out of the requirement to include most components of AOCI in common equity tier 1 capital. For institutions that opt-out, most AOCI items will not be included in the calculation of common equity tier 1 capital. For institutions that do not opt-out, most AOCI items will be included in the calculation of common equity tier 1 capital, which affects the institution's legal lending limit calculation. If a top-tier banking organization makes the AOCI opt-out election, all consolidated banking subsidiary organizations under it must make the same election. The Company will be making the AOCI opt-out election.

        Under Basel III capital rules, the initial minimum capital ratios that become effective on January 1, 2015 are as follows:

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4.5% CET1 to risk-weighted assets.

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6.0% Tier 1 capital to risk-weighted assets.

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8.0% Total capital to risk-weighted assets.

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4.0% Tier 1 capital to average quarterly assets.

        Implementation of the deductions and other adjustments to CET1 began on January 1, 2015 and will be phased-in over a four-year period (beginning at 40% on January 1, 2015 and an additional 20% per year thereafter). The implementation of the capital conservation buffer will begin on January 1, 2016 at the 0.625% level and be phased in over a four-year period (increasing by that amount on each subsequent January 1, until it reaches 2.5% on January 1, 2019).

        The Basel III capital rules prescribe a standardized approach for risk weightings that expand the risk-weighting categories from the four BIS-derived categories (0%, 20%, 50% and 100%) to a much larger and more risk-sensitive number of categories, depending on the nature of the assets, generally ranging from 0% for U.S. government and agency securities to 600% for certain equity exposures, and resulting in higher risk weights for a variety of asset categories. Specific changes to the rules impacting the Company's determination of risk-weighted assets include, among other things:

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Applying a 150% risk weight instead of a 100% risk weight for certain high volatility commercial real estate acquisition, development and construction loans.

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Assigning a 150% risk weight to exposures (other than residential mortgage exposures) that are 90 days past due.

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Providing for a 20% credit conversion factor for the unused portion of a commitment with an original maturity of one year or less that is not unconditionally cancellable (currently set at 0%).

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Providing for a risk weight, generally not less than 20% with certain exceptions, for securities lending transactions based on the risk weight category of the underlying collateral securing the transaction.

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Providing for a 100% risk weight for claims on securities firms.

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Eliminating the current 50% cap on the risk weight for OTC derivatives.

        In addition, the Basel III capital rules provide more advantageous risk weights for derivatives and repurchase-style transactions cleared through a qualifying central counterparty and increase the scope of eligible guarantors and eligible collateral for purposes of credit risk mitigation.

        Management believes that as of December 31, 2014, the Company and each of its subsidiary banks would meet all capital adequacy requirements under the Basel III capital rules as applicable on January 1, 2015.

Basel III Prompt Corrective Action

        The Federal Deposit Insurance Act, as amended ("FDIA"), requires among other things, the federal banking agencies to take "prompt corrective action" in respect of depository institutions that do not meet minimum capital requirements. The FDIA includes the following five capital tiers: (i) "well capitalized," (ii) "adequately capitalized," (iii) "undercapitalized," (iv) "significantly undercapitalized," and (v) "critically undercapitalized." A depository institution's capital tier will depend upon how its capital levels compare with various relevant capital measures and certain other factors, as established by regulation. The relevant capital measures which reflect changes under the Basel III capital rules that became effective on January 1, 2015, are the total capital ratio, the CET1 capital ratio (a new ratio requirement under the Basel III capital rules), the Tier 1 capital ratio and the leverage ratio.

        A bank will be (i) "well capitalized" if the institution has a total risk-based capital ratio of 10.0% or greater, a CET1 capital ratio of 6.5% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater (6.0% prior to January 1, 2015), and a leverage ratio of 5.0% or greater, and is not subject to any order or written directive by an such regulatory authority to meet and maintain a specific capital level for any capital measure; (ii) "adequately capitalized" if the institution has a total risk-based capital ratio of 8.0% or greater, a CET1 capital ratio of 4.5% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater (4.0% prior to January 1, 2015), and a leverage ratio of 4.0% or greater and is not "well capitalized", (iii) "undercapitalized" if the institution has a total risk-based capital ratio that is less than 8.0%, a CET1 capital ratio less than 4.5%, a Tier 1 risk-based capital ratio of less than 6.0% (4.0% prior to January 1, 2015) or a leverage ratio of less than 4.0%; (iv) "significantly undercapitalized" if the institution has a total risk-based capital ratio of less than 6.0%, a CET1 capital ratio less than 3%, a Tier 1 risk-based capital ratio of less than 4.0% (3.0% prior to January 1, 2015) or a leverage ratio of less than 3.0%; and (v) "critically undercapitalized" if the institution's tangible equity is equal to or less than 2.0% of average quarterly tangible assets. An institution may be downgraded to, or deemed to be in, a capital category that is lower than indicated by its capital ratios if it is determined to be in an unsafe or unsound condition or if it receives an unsatisfactory examination rating with respect to certain matters. A bank's capital category is determined solely for the purpose of applying prompt corrective action regulations, and the capital category may not constitute an accurate representation of the bank's overall financial condition or prospects for other purposes.

        The FDIA generally prohibits a depository institution from making any capital distributions (including payment of a dividend) or paying any management fee to its parent holding company if the depository institution would thereafter be "undercapitalized." "Undercapitalized" institutions are subject to growth limitations and are required to submit a capital restoration plan. The agencies may not accept such a plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the depository institution's capital. In addition, for a capital restoration plan to be

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acceptable, the depository institution's parent holding company must guarantee that the institution will comply with such capital restoration plan. The bank holding company must also provide appropriate assurances of performance. The aggregate liability of the parent holding company is limited to the lesser of (i) an amount equal to 5.0% of the depository institution's total assets at the time it became undercapitalized and (ii) the amount which is necessary (or would have been necessary) to bring the institution into compliance with all capital standards applicable with respect to such institution as of the time it fails to comply with the plan. If a depository institution fails to submit an acceptable plan, it is treated as if it is "significantly undercapitalized."

        The appropriate federal banking agency may, under certain circumstances, reclassify a well capitalized insured depository institution as adequately capitalized. The FDIA provides that an institution may be reclassified if the appropriate federal banking agency determines (after notice and opportunity for hearing) that the institution is in an unsafe or unsound condition or deems the institution to be engaging in an unsafe or unsound practice.

        The Company believes that, as of December 31, 2014, each of its bank subsidiaries was "well capitalized" based on the aforementioned ratios pursuant to the Basel III capital rules.

LIQUIDITY REQUIREMENTS.    Historically, regulation and monitoring of bank and bank holding company liquidity has been addressed as a supervisory matter, without required formulaic measures. The Basel III final framework requires banks and bank holding companies to measure their liquidity against specific liquidity tests that, although similar in some respects to liquidity measures historically applied by banks and regulators for management and supervisory purposes, going forward will be required by regulation. On January 7, 2013, Basel III liquidity coverage ratio was published and it uses international liquidity standards that serves to reconcile the differences of the liquidity standards of countries. The Basel Committee will address the net stable funding ratio in the future. These new standards are subject to further rulemaking and their terms may well change before implementation. On October 30, 2013, the federal bank regulatory agencies issued a proposed rule that would implement qualitative liquidity requirements, including a liquidity coverage ratio ("LCR"), consistent with liquidity standards adopted by the Basel Committee in January 2013, for certain banking organizations with more than $250 billion in total assets or subsidiary depository institutions of internationally active banking organizations with $10 billion or more in total consolidated assets. Also on October 30, 2013, a separate proposed rule was issued by the Federal Reserve to apply a modified version of the LCR to certain depository institution holding companies with assets greater than $50 billion. On September 3, 2014, the bank regulators issued the final version of the LCR. The final rule defines banks with between $50 billion and $250 billion in assets as "modified LCR companies" and they will be subjected to less rigorous requirements regarding the high-quality liquid assets calculations.

FASB CECL PROPOSAL.    In an exposure draft issued in the fourth quarter of 2012, the Financial Accounting Standards Board ("FASB"), proposed changes to the accounting standards related to the impairment of financial assets and the recognition of credit losses. The FASB proposal would require financial institutions to reserve for losses for the duration of the credit exposure as opposed to reserving for "probable losses." The new methodology would be the Current Expected Credit Losses ("CECL") methodology. It is anticipated that the final version of the accounting changes will be adopted in 2015 and the implementation of the new standards could occur as early as 2017. The change in accounting standards could result in an increase in the Company's reserve for probable loan losses and require the Company to book loan losses more quickly.

STATE ENFORCEMENT POWERS.    The Banking Commissioner of Texas may determine to close a Texas state bank when he finds that the interests of depositors and creditors of a state bank are jeopardized through its insolvency or imminent insolvency and that it is in the best interest of such depositors and creditors that the bank be closed. The Texas Department of Banking also has broad

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enforcement powers over the bank subsidiaries, including the power to impose orders, remove officers and directors, impose fines and appoint supervisors and conservators.

DEPOSITOR PREFERENCE.    Because the Company is a legal entity separate and distinct from its bank subsidiaries, its right to participate in the distribution of assets of any subsidiary upon the subsidiary's liquidation or reorganization will be subject to the prior claims of the subsidiary's creditors. In the event of a liquidation or other resolution of a subsidiary bank, the claims of depositors and other general or subordinated creditors of the bank are entitled to a priority of payment over the claims of holders of any obligation of the institution to its shareholders, including any depository institution holding company (such as the Company) or any shareholder or creditor thereof.

COMMUNITY REINVESTMENT ACT ("CRA").    Under the CRA, the FDIC is required to assess the record of each bank subsidiary to determine if the bank meets the credit needs of its entire community, including low and moderate-income neighborhoods served by the institution, and to take that record into account in its evaluation of any application made by the bank for, among other things, approval of the acquisition or establishment of a branch or other deposit facility, an office relocation, a merger, or the acquisition of shares of capital stock of another financial institution. The FDIC prepares a written evaluation of an institution's record of meeting the credit needs of its entire community and assigns a rating. The FIRREA requires federal banking agencies to make public a rating of a bank's performance under the CRA. The Company's bank subsidiaries conduct an award-winning financial literacy program in their communities as part of their community outreach. Further, there are fair lending laws, including the Equal Credit Opportunity Act and the Fair Housing Act, which prohibit discrimination in connection with lending decisions. The bank regulators periodically conduct fair lending evaluations of banks. Each of the subsidiary banks of the Company received a "Satisfactory" CRA rating in its most recently completed examination. Financial institutions are evaluated under different CRA examinations procedures based upon their asset-size classification, which asset thresholds are updated annually and were updated as of January 1, 2015. "Large institution" now means a bank with total assets of at least $1.221 billion for December 31 of both of the prior two calendar years and "intermediate small institution" means an institution with assets of at least $305 million and less than $1.221 billion as of December 31 of both of the prior two calendar years. Three of the Company's subsidiary banks are "intermediate small institutions" and the flagship bank is a "large institution" under the new asset thresholds.

CONSUMER LAWS.    In addition to the laws and regulations discussed herein, the Bank is also subject to numerous consumer laws and regulations that are designed to protect consumers in transactions with banks. These laws and regulations mandate certain disclosure requirements and regulate the manner in which financial institutions must deal with customers when taking deposits or making loans to such customers. The Bank must comply with the applicable provisions of these consumer protection laws and regulations as part of their ongoing customer relations. The Dodd-Frank Act provides for comprehensive new rules regulating mortgage activities and creates the new CFPB with direct supervisory authority over banks with assets of $10 billion or more and certain nonbank entities. Authority to implement almost all federal consumer financial protection laws and regulations was transferred to the CFPB on July 21, 2011. The CFPB has broad authority, among other matters, to declare acts or practices to be "unfair, deceptive, or abusive," to develop and require new consumer disclosures, and to restrict the use of certain arbitration clauses. While the CFPB does not currently have direct supervisory authority over any of the Company's subsidiary banks because they each fall below the $10 billion assets threshold, the CFPB's broad authority to issue, interpret, and enforce almost all federal consumer protection laws and its issuance of applicable disclosure forms, will significantly impact each of the Company's subsidiary bank's consumer compliance programs. On January 20, 2012, the CFPB issued a final rule that imposes new disclosure requirements for foreign remittance transfer transactions, including disclosures giving the consumer thirty minutes after payment is made to cancel the transaction, and providing new consumer protections, including error resolution rights. The 2012 final rule's February 7, 2013 effective date was delayed as the CFPB proposed modifying the rule. On May 22, 2013, the CFPB issued final rule amendments which addressed three

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specific issues and the amendments were effective in October 2013. First, the 2013 final rule modified the 2012 final rule to make optional, in certain circumstances, the requirement to disclose fees imposed by a designated recipient's institution. Second, the 2013 final rule also made optional the requirement to disclose taxes collected by a person other than the remittance transfer provider. In place of these two former requirements, the 2013 final rule required disclaimers to be added to the rule's disclosures indicating that the recipient may receive less than the disclosed total due to the fees and taxes for which disclosure is now optional. Finally, the 2013 final rule revised the error resolution provisions that apply when a remittance transfer is not delivered to a designated recipient because the sender provided incorrect or insufficient information, and, in particular, when a sender provides an incorrect account number or recipient institution identifier that results in the transferred funds being deposited in the wrong account. Banking regulators take into account compliance with consumer protection laws when considering approval of a proposed transaction.

ELECTRONIC BANKING AND CYBER SECURITY.    In 2005, the Federal Financial Institutions Examination Council (the "FFIEC") issued guidance entitled "Authentication in an Internet Banking Environment" (the "2005 Guidance"), which provided a risk management framework for financial institutions offering Internet-based products and services to their customers. It required that institutions use effective methods to authenticate the identity of customers and that the techniques employed be commensurate with the risks associated with the products and services offered and the protection of sensitive customer information. On June 29, 2011, the FDIC and the other FFIEC agencies supplemented the 2005 Guidance by specifying the FDIC's supervisory expectations regarding customer authentication, layered security, and other controls in an increasingly hostile online environment. The FDIC indicates that layered security controls should include processes to detect and respond to suspicious or anomalous activity and, for business accounts, administrative controls. In September 2011, the Texas Bankers Electronic Crimes Task Force, formed by the Texas Banking Commissioner and the U.S. Secret Service, issued guidance entitled "Best Practices: Reducing the Risks of Corporate Account Takeovers." In accordance with FDIC FIL-2011, this guidance sets forth nineteen best practices to reduce the risk of corporate account takeover thefts. The Company's subsidiary banks are required to comply with these guidelines and best practices. In 2014, in adherence to a presidential executive order, the National Institute of Standards and Technology ("NIST") released a preliminary Framework for Approving Critical Infrastructure Cybersecurity. Banks will be expected to incorporation the NIST Cybersecurity Framework into their security frameworks which are also governed by FFIEC guidelines.

AFFILIATE TRANSACTIONS.    The Company, IBC and the other bank subsidiaries of the Company are "affiliates" within the meaning of Section 23A of the Federal Reserve Act which sets forth certain restrictions on loans and extensions of credit between a bank subsidiary and affiliates, on investments in an affiliate's stock or other securities, and on acceptance of such stock or other securities as collateral for loans. Such restrictions prevent a bank holding company from borrowing from any of its bank subsidiaries unless the loans are secured by specific obligations. Further, such secured loans and investments by a bank subsidiary are limited in amount, as to a bank holding company or any other affiliate, to 10% of such bank subsidiary's capital and surplus and, as to the bank holding company and its affiliates, to an aggregate of 20% of such bank subsidiary's capital and surplus. Certain restrictions do not apply to 80% or more owned sister banks of bank holding companies. Each bank subsidiary of the Company is wholly-owned by the Company. Section 23B of the Federal Reserve Act requires that the terms of affiliate transactions be comparable to terms of similar non-affiliate transactions. Among other things, the Dodd-Frank Act expands the limitations on affiliate transactions by expanding the definitions of "affiliate" and "covered transactions," including debt obligations of an affiliate utilized as collateral, and it will require that the 10% of capital limit on covered transactions begin to apply to non-bank financial subsidiaries. "Covered transactions" are defined by statute to include a loan or extension of credit, as well as a purchase of securities issued by an affiliate, a purchase of assets (unless otherwise exempted by the Federal Reserve Board) from the affiliate, the acceptance of securities issued by the affiliate as collateral for a loan, and the issuance of a guarantee, acceptance or letter of credit on behalf of an affiliate.

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Dodd-Franch Act Changes became effective on July 21, 2012. However, to date, the FRB has not issued any guidance nor has it amended Regulation W, although it is expected to do so in the near future.

INSIDER LOANS.    The restrictions on loans to directors, executive officers, principal shareholders and their related interests (collectively referred to herein as "insiders") contained in the Federal Reserve Act and Regulation O apply to all insured institutions and their subsidiaries and holding companies. These restrictions include limits on loans to one borrower, prohibition on preferential terms, and other conditions that must be met before such a loan can be made. There is also an aggregate limitation on all loans to insiders and their related interests. These loans cannot exceed the institution's total unimpaired capital and surplus, and the FDIC may determine that a lesser amount is appropriate. Insiders are subject to enforcement actions for knowingly accepting loans in violation of applicable restrictions.

LENDING RESTRICTIONS.    The operations of the Banks are also subject to lending limit restrictions pertaining to the extension of credit and making of loans to one borrower. Further, under the BHCA and the regulations of the FRB thereunder, the Company and its subsidiaries are prohibited from engaging in certain tie-in arrangements with respect to any extension of credit or provision of property or services; however, the FRB adopted a rule relaxing tying restrictions by permitting a bank holding company to offer a discount on products or services if a customer obtains other products or services from such company. In February 2005, the banking agencies issued best practices guidelines on overdraft protection programs which state that overdraft protection programs are an extension of credit, but are not subject to Truth-in-Lending disclosure requirements. On November 12, 2009, the FRB issued final rules amending Regulation E that prohibit financial institutions from charging consumers fees for paying overdrafts on ATM and on-time debit card transactions, unless the consumer consents or opts-in to the overdraft service for those types of transactions. In November 2010, the FDIC issued final overdraft protection guidance, effective July 1, 2011, which focuses on automated overdraft programs and encourages banks to offer less costly alternatives. Additionally, the FDIC requires banks to monitor programs for excessive or chronic customer use and to undertake meaningful and effective follow-up action thereafter, institute appropriate daily limits on customer costs, consider eliminating overdraft fees for transactions that overdraw an account by a de minimis amount, ensure that transactions are not processed in a manner designed to maximize the costs to consumers, and ensure that boards of directors provide appropriate oversight of overdraft protection programs.

COMMERCIAL REAL ESTATE LENDING.    In 2006, the federal bank regulators issued interagency guidance titled "Concentration in Commercial Real Estate Lending: Sound Risk Management Practices." The guidance focuses on the risks of high levels of concentration in CRE lending and identified two supervisory concentration levels. The first was the concentration level where loans for construction, land and land development represent 100% or more of a bank institution's total risk-based capital. The second was the CRE concentration where total non-owner occupied CRE loans represent 300 percent or more of the institution's total risk-based capital and growth in total CRE lending has increased by 50 percent or more during the previous 36 months. The guidance states that the banking institutions exceeding the concentration levels should have in place enhanced credit risk controls, including stress-testing of CRE portfolios and that the concentration levels may result in further supervisory analysis.

MORTGAGE LENDING.    On January 10, 2013, the CFPB issued its final rule on ability to repay and qualified mortgage standards to implement various requirements of the Dodd-Frank Act amending the Truth in Lending Act. The final rule requires mortgage lenders to make a reasonable and good faith determination based on verified and documented information that a consumer will have the ability to repay a mortgage loan according to its terms before making the loan. The final rule also includes a definition of a qualified mortgage, which provides the lender with the presumption that the ability to repay requirements have been met. This presumption is rebuttable if the loan is a "sub-prime" loan or conclusive if the loan is a "prime" loan. However, whether a prime or sub-prime loan, the borrower can challenge the loan's status as a mortgage in a direct cause of action for three years from the origination date and as a defense in a foreclosure action at any time.

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        The final rules were effective on January 10, 2014. The final rules contain specific and substantive requirements and limitations on mortgage banking that have required creditors to revise loan products and origination and underwriting policies and procedures, practices and systems. Substantial penalties may apply if a lender fails to meet ability to repay standards for a loan, including actual damages (which could include the borrower's down payment), statutory damages up to $4,000, all fees paid by the borrower, up to three years of finance charges paid by the borrower, and court costs and reasonable attorney's fees. Additionally, during 2013, the CFPB finalized a number of rules regarding mortgage lending, including appraisal and escrow requirements for higher-priced mortgages, new integrated RESPA/Regulation Z disclosures, mortgage servicing, and loan originator compensation requirements.

        On November 3, 2014, the CFPB issued a final rule amending the 2013 mortgage rules by adopting an alternative definition of "small servicer" and amending the ability-to-repay rule exemption as applied to certain nonprofits, and also provides a limited, post-consummation cure mechanism for the points and fees limit for qualified mortgages. On December 15, 2014, the CFPB proposed amendments to certain mortgage rules issued in 2013 relating to force-placed insurance notices, policies and procedures, early intervention, and loss mitigation requirements under Regulation X's servicing provisions; and periodic statement requirements under Regulation Z's servicing provisions. The proposed rule also addresses compliance when a consumer is in bankruptcy and makes technical corrections to several other provisions. Finally, on January 20, 2015, the CFPB issued a new final rule amending the 2013 TILA-RESPA final rule extending the timing requirements for revised disclosures when consumers lock a rate or extend a rate lock after the Loan Estimate is provided and permitting certain language related to construction loans for transactions involving new construction.

DIVIDENDS.    The ability of the Company to pay dividends is largely dependent on the amount of cash derived from dividends declared by its bank subsidiaries. The payment of dividends by any bank or bank holding company is affected by the requirement to maintain adequate capital as discussed above. The ability of the Banks, as Texas banking associations, to pay dividends is restricted under Texas law. A Texas bank generally may not pay a dividend reducing its capital and surplus without the prior approval of the Texas Banking Commissioner. The FDIC has the right to prohibit the payment of dividends by a bank where the payment is deemed to be an unsafe and unsound banking practice. Additionally, as a result of the Company's participation in the CPP, the Company was restricted in the payment of dividends and was not allowed without the Treasury Department's consent to declare or pay any dividend on the Company Common Stock other than a regular semi-annual cash dividend of not more than $.33 per share, as adjusted for any stock dividend or stock split. The restriction ceased to exist on December 23, 2011 and the Company exited the TARP program when it finalized the repayment of all of the TARP funds on November 28, 2012. At December 31, 2014, there was an aggregate of approximately $702,750,000 available for the payment of dividends to the Company by IBC, Commerce Bank, IBC-Zapata and IBC-Brownsville under the capital rules applicable as of December 31, 2014, assuming that each of such banks continues to be classified as "well capitalized." Further, the Company could expend the entire $702,750,000 and continue to be classified as "well capitalized" under the capital rules applicable as of December 31, 2014. Note 20 of Notes to Consolidated Financial Statements of the Company in the 2014 Annual Report is incorporated herein by reference.

POWERS.    As a result of FDICIA, the authority of the FDIC over state-chartered banks was expanded. FDICIA limits state-chartered banks to only those principal activities permissible for national banks, except for other activities specifically approved by the FDIC. The Texas Banking Act includes a parity provision which establishes procedures for state banks to notify the Banking Commissioner if the bank intends to conduct any activity permitted for a national bank that is otherwise denied to a state bank. The Banking Commissioner has thirty (30) days to prohibit the activity. Also, the Texas Finance Code includes a super parity provision with procedures for state banks to notify the Banking Commissioner if the bank intends to conduct any activity permitted for any depository institution in the United States. The Banking Commissioner has thirty (30) days to prohibit the activity.

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INCENTIVE COMPENSATION.    In June 2010, the Federal Reserve, OCC and FDIC issued the Interagency Guidance on Sound Incentive Compensation Policies, a comprehensive final guidance on incentive compensation policies intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive risk-taking. The guidance, which covers all employees that have the ability to materially affect the risk profile of an organization, either individually or as part of a group, is based upon the key principles that a banking organization's incentive compensation arrangements should (i) provide incentives that do not encourage risk-taking beyond the organization's ability to effectively identify and manage risks, (ii) be compatible with effective internal controls and risk management, and (iii) be supported by strong corporate governance, including active and effective oversight by the organization's board of directors.

        The Federal Reserve will review, as part of the regular, risk-focused examination process, the incentive compensation arrangements of banking organizations, such as the Company. These reviews will be tailored to each organization based on the scope and complexity of the organization's activities and the prevalence of incentive compensation arrangements. The findings of the supervisory initiatives will be included in reports of examination. Deficiencies will be incorporated into the organization's supervisory ratings, which can affect the organization's ability to make acquisitions and take other actions. Enforcement actions may be taken against a banking organization if its incentive compensation arrangements, or related risk-management control or governance processes, pose a risk to the organization's safety and soundness and the organization is not taking prompt and effective measures to correct the deficiencies.

        The Dodd-Frank Act requires the federal banking agencies and the Securities and Exchange Commission to jointly prescribe regulations or guidelines that require financial institutions with $1 billion or more in assets to disclose to the appropriate federal regulator, the structure of all incentive-based compensation arrangements sufficient to determine whether the compensation structure provides an executive officer, employee, director, or principal shareholder with excessive compensation, fees, or benefits, or could lead to material financial loss to the financial institutions. On February 7, 2011, the FDIC issued a notice of proposed rulemaking that would prohibit bank incentive-based compensation arrangements that encourage inappropriate risk taking, are deemed excessive, or may lead to material losses. The proposal would apply to financial institutions with more than $1 billion in assets, like the Company. The rule also includes heightened standards for financial institutions with $50 billion or more in total consolidated assets that requires at least 50 percent of incentive-based payments for designated executives to be deferred for a minimum of three years. The interagency rule must be approved by all of the five federal members of the FFIEC, the SEC and the Federal Housing Finance Agency before comments on the rule are sought. Comments on the proposed interagency rule were due to the agencies by May 31, 2011. A definitive final rule has not been issued.

        Effective April 1, 2011, Regulation Z was amended to restrict incentive compensation programs with regard to residential mortgage programs. Such limitations affect mortgage brokers as well as loan officers in the subsidiary banks. Compensation may be tied to volume but not to terms or conditions of the transaction other than the amount of credit extended. Further amendments to Regulation Z relating to mortgage loan originator compensation were adopted on January 20, 2013 by the CFPB in accordance with the Dodd-Frank Act.

        The scope and content of the U.S. banking regulators' policies on executive compensation are continuing to develop and are likely to continue evolving in the near future. It cannot be determined at this time whether compliance with such policies will adversely affect the Company's ability to hire, retain and motivate its key employees.

LEGISLATIVE AND REGULATORY INITIATIVES.    From time to time, various legislative and regulatory initiatives are introduced in Congress and state legislatures, as well as by regulatory agencies. Such initiatives may include proposals to expand or contract the powers of bank holding companies and

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depository institutions or proposals to substantially change the financial institution regulatory system. Such legislation could change banking statutes and the operating environment of the Company in substantial and unpredictable ways. Such changes could have a material effect on the business of the Company, including increasing the Company's cost of doing business, affecting the Company's compensation structure, or limiting or expanding permissible activities. The Company cannot predict whether any such changes will be adopted and the Company cannot determine the ultimate effect that potential legislation, if enacted, or implementing regulations with respect thereto, would have upon the financial condition or results of operations of the Company or its subsidiaries. The same uncertainty exists with respect to regulations authorized or required under the Dodd-Frank Act but that have not yet been proposed or finalized. There is also the possibility that the Dodd-Frank Act may be revised by Congress in the future because certain bills have been introduced into Congress that would amend certain provisions of Dodd-Frank.

Item 1A.    Risk Factors

Risk Factors

        An investment in the Company's common stock is subject to risks inherent to the Company's business. Described below are the material risks and uncertainties that management believes may affect the Company. You should carefully consider the risks and uncertainties the Company describes below and the other information in this Annual Report or incorporated by reference before deciding to invest in, or retain, shares of the Company's common stock. These are not the only risks and uncertainties that the Company faces. Additional risks and uncertainties that the Company does not know about or that the Company currently believes are immaterial, or that the Company has not predicted, may also harm the Company's business operations or adversely affect the Company. If any of these risks or uncertainties actually occurs, the Company's business, financial condition, operating results or liquidity could be materially harmed. This report is qualified in its entirety by these risk factors.

Risks Related to the Company's Business

Losses from loan defaults may exceed the allowance the Company establishes for that purpose, which could have an adverse effect on the Company's business.

        There are inherent risks associated with the Company's lending activities. Losses from loan defaults may exceed the allowance the Company establishes for that purpose. Like all financial institutions, the Company maintains an allowance for probable loan losses to provide for losses inherent in the loan portfolio. The allowance for probable loan losses reflects management's best estimate of loan losses in the loan portfolio at the relevant balance sheet date. The level of the allowance reflects management's continuing evaluation of the specific credit risks, the Company's historical loan loss experience, current loan portfolio quality, composition and growth of the loan portfolio, and economic, political and regulatory conditions and unidentified losses inherent in the current loan portfolio. The determination of an appropriate level of loan loss allowance is an inherently difficult process and is based on numerous assumptions. In addition, bank regulatory agencies periodically review the Company's allowance for loan losses and may require an increase in the provision for probable loan losses or the recognition of further loan charge-offs, based on judgments different than those of management. As a result, the Company's allowance for loan losses may not be adequate to cover actual losses, and future provisions for loan losses may adversely affect the Company's earnings. The Company believes its allowance for probable loan losses is adequate at December 31, 2014.

If real estate values in the Company's target markets decline, the loan portfolio would be impaired.

        A significant portion of the Company's loan portfolio consists of loans secured by real estate located in the markets served by the Company. Real estate values and real estate markets are generally affected by,

27

among other things, changes in national, regional, or local economic conditions; fluctuations in interest rates and the availability of loans to potential purchases, changes in the tax laws and other governmental statutes, regulations, and policies; and acts of nature. If real estate prices decline significantly in any of these markets, the value of the real estate collateral securing the Company's loans would be reduced. Such a reduction in the value of the Company's collateral could increase the number of impaired loans and adversely affect the Company's financial performance.

The Company's subsidiary banks face strong competition in their market areas, which may limit their asset growth and profitability.

        The Company's primary market areas are South, Central and Southeast Texas, including Austin and Houston, and the State of Oklahoma. The banking business in these areas is extremely competitive, and the level of competition facing the Company may increase further, which may limit the growth and profitability of the Company. Each of the Company's subsidiary banks experience competition in both lending and attracting funds from other banks, savings institutions, credit unions and non-bank financial institutions located within its market area, many of which are significantly larger institutions. Non-bank competitors competing for deposits and deposit type accounts include mortgage bankers and brokers, finance companies, credit unions, securities firms, money market funds, life insurance companies, and mutual funds. For loans, the Company encounters competition from other banks, savings associations, finance companies, mortgage bankers and brokers, insurance companies, small loan and credit card companies, credit unions, pension trusts, and securities firms. Many of the Company's competitors have fewer regulatory constraints and may have lower cost structures. Additionally, due to their size, many competitors may be able to achieve economies of scale and, as a result, may offer a broader range of products and services as well as better pricing for those products and services than the Company offers. Also, technology and other changes are allowing parties to complete financial transactions that historically have involved banks through alternative methods. The process of eliminating banks as intermediaries could result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits. The loss of revenue streams and the reduction of lower cost deposits as a source of funds could have a material adverse effect on the Company's financial condition and results of operations.

The Company relies, in part, on external financing to fund the Company's operations and the unavailability of such funds in the future could adversely impact the Company's growth strategy and prospects.

        The Company relies on deposits, repurchase agreements, advances from the Federal Home Loan Bank ("FHLB") of Dallas and other borrowings to fund its operations. The unavailability of such funds in the future could adversely impact the Company's growth strategy, prospects and performance. The Federal Housing Finance Agency issued a proposal in September 2014 that would for the first time institute ongoing membership requirements that would require banks with over $1 billion in assets to hold at least 10% of their assets in mortgages to retain membership. The proposed rule has not been adopted. The subsidiary banks have also historically relied on certificates of deposit. While the Company has reduced its reliance on certificates of deposit and has been successful in promoting its transaction and non-transaction deposit products (demand deposit accounts, money market, savings and checking), jumbo deposits nevertheless constituted a large portion of total deposits at December 31, 2014. Jumbo deposits tend to be a more volatile source of funding. Although management has historically been able to replace such deposits on maturity if desired, no assurance can be given that the Company would be able to replace such funds at any given point in time. The new rule of the IRS that extends the reporting requirements for interest on deposits to nonresident alien individuals that applies to interest payments made on or after January 1, 2013, may result in deposit withdrawals by nonresident alien individuals who were not previously subject to the reporting requirements, including residents of Mexico.

28

The Company's business is subject to interest rate risk and variations in interest rates may negatively affect the Company's financial performance.

        The Company is unable to predict fluctuations of market interest rates, which are affected by many factors, including:

•

Inflation;

•

Recession;

•

Changes in consumer spending, borrowing and saving habits;

•

A rise in unemployment;

•

Tightening of the money supply; and

•

Domestic and international disorder and instability in domestic and foreign financial markets.

        Changes in the interest rate environment may reduce the Company's profits. The Company expects that the bank subsidiaries will continue to realize income from the differential or "spread" between the interest earned on loans, securities and other interest-earning assets, and the interest paid on deposits, borrowings and other interest-bearing liabilities. Net interest spreads are affected by the difference between the maturities and repricing characteristics of interest-earning assets and interest-bearing liabilities. Earnings could be adversely affected if the net interest spreads are reduced. Changes in interest rates and other factors could result in write downs of carrying values of securities held in our securities available-for-sale portfolio and such changes could reduce earnings of the Company.

The Company is subject to extensive regulation which could adversely affect the Company including, without limitation, changes in U.S.—Mexico trade and travel along the Texas border, increased costs related to healthcare reform and other labor developments and possible enforcement and other legal actions.

        The Company's operations are subject to extensive regulation by federal, state and local governmental authorities and are subject to various laws and judicial and administrative decisions imposing requirements and restrictions on part or all of the Company's operations. Because the Company's business is highly regulated, the laws, rules and regulations applicable to the Company are subject to regular modification and change. There can be no assurance that there will be no laws, rules or regulations adopted in the future, or changes in accounting policies and practices, such as the FASB CECL Proposal, which could make compliance more difficult or expensive, or otherwise adversely affect the Company's business, financial condition or prospects. The Dodd-Frank Act, enacted in July 2010, instituted major changes to the banking and financial institutions regulatory regimes. Healthcare reform and other labor developments are expected to increase labor costs of the Company. These changes and other changes to statutes and regulations, including changes in the interpretation or implementation of statutes, regulations or policies, could affect the Company in substantial and unpredictable ways. Such changes could subject the Company to additional costs, limit the types of financial services and products the Company may offer and/or increase the ability of non-banks to offer competing financial services and products, among other things. Failure to comply with laws, regulations or policies could result in sanctions by regulatory agencies, civil money penalties and/or reputation damage, which could have a material adverse effect on the Company's business, financial condition and results of operations. Additionally, any reductions in border crossings and commerce resulting from the Homeland Security Programs called "US-VISIT," which is derived from Section 110 of the Illegal Immigration Reform and Immigration Responsibility Act of 1996 could affect the Company negatively, and any possible negative consequences from an adverse immigration law could also have a negative effect on the Company's operations.

        Failure to comply with laws, regulations, policies or supervisory guidance could result in enforcement and other legal actions by Federal or state authorities, including criminal and civil penalties, the loss of FDIC insurance, the revocation of a banking charter, other sanctions by regulatory agencies, civil money

29

penalties and/or reputational damage. In this regard, government authorities, including the bank regulatory agencies, are pursuing aggressive enforcement actions with respect to compliance and other legal matters involving financial activities, which heightens the risks associated with actual and perceived compliance failures. Any of the foregoing could have a material adverse effect on the Company's business, financial condition and results of operations.

The Company's potential future acquisitions and branch expansion could be adversely affected by a number of factors.

        Acquisitions of other financial institutions and branch expansion have been a key element of the Company's growth. There are a number of factors that may impact the ability of the Company to continue to grow through acquisition transactions, including strong competition from other financial institutions who are active or potential acquirers of financial institutions in the existing or future markets of the Company. Acquisitions of other financial institutions and new branches must be approved by bank regulators and such approvals are dependent on many factors, including the results of regulatory examinations and CRA ratings.

The Company relies heavily on its chief executive officer.

        The Company has experienced substantial growth in assets and deposits during the past, particularly since Dennis E. Nixon became President of the Company in 1979. Although Mr. Nixon is the chief executive officer and one of the Company's substantial shareholders, the Company does not have an employment agreement with Mr. Nixon and the loss of his services could have a material adverse effect on the Company's business and prospects.

System failure or breaches of our network security, including as a result of a cyber-attack, could subject us to increased operating costs as well as litigation and other liabilities.

        The computer systems and network infrastructure our Company uses could be vulnerable to unforeseen problems, including cybersecurity risks. Our products and services involve the gathering, storage and transition of sensitive information regarding our customers and their accounts. Our operations are dependent upon our ability to protect our computer equipment against damage from fire, power loss, telecommunications failure or a similar catastrophic event. Any damage or failure that causes an interruption in our operations could have an adverse effect on our customers. In addition, we must be able to protect the computer systems and network infrastructure utilized by us against physical damage, security breaches and service disruption caused by the Internet or other users. Cyber-security attacks, computer break-ins and other disruptions would jeopardize the security of information stored in and transmitted through our computer systems and network infrastructure, which may result in significant liability to us. While the Company conducts its own data processing, it is reliant on certain external vendors to provide products and services necessary to maintain day-to-day operations of the Company. As a financial institution we are also subject to and examined for compliance with an array of data protection laws, regulations and guidance, as well as our own internal privacy and information security policies and programs. If our information systems or infrastructure experience a significant disruption or breach, it could lead to unauthorized access to personal or confidential information of our customers in our possession and unauthorized access to our proprietary information, methodologies and business secrets. In addition, if our partners, vendors or other market participants experience a disruption or breach, it could lead to unauthorized transactions on Company or Company customer accounts or unauthorized access to personal or confidential information maintained by those entities. A disruption or breach such as these could result in significant legal, financial and non-financial exposure, regulatory intervention, remediation costs, damage to our reputation and loss of confidence in the security of our systems, products and services that could adversely affect our business.

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The Company may desire or need to raise additional capital or increase liquidity levels in the future, and such capital may not be available when needed or at all and the ability of the Company to increase liquidity levels may be limited.

        The Company may desire or need to raise additional capital or increase liquidity levels in the future to provide it with sufficient capital resources and liquidity to meet its commitments and business needs, particularly if its asset quality or earnings were to deteriorate significantly. The Company's ability to raise additional capital, if needed, will depend on, among other things, conditions in the capital markets at that time, which are outside of its control, and the Company's financial performance. The Company cannot assure that such capital will be available on acceptable terms or at all. If the Company needs to raise capital in the future, it may have to do so when many other financial institutions are also seeking to raise capital and would have to compete with those institutions for investor. The impact of the regulatory liquidity proposal may result in a shortfall of high-quality liquid assets. An inability to raise additional capital on acceptable terms when needed or the unavailability of high-quality liquid assets could have a materially adverse effect on the Company's business.

Severe weather, natural disasters, acts of war or terrorism and other external events could significantly impact the Company's business.

        Severe weather, natural disasters, acts of war or terrorism and other adverse external events could have a significant impact on the Company's ability to conduct business. In addition, such events could affect the stability of the Company's deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue and cause the Company to incur additional expenses. Although management has established disaster recovery policies and procedures, the occurrence of any such event in the future could have a material adverse effect on the Company's business.

An impairment in the carrying value of our goodwill could negatively impact our earnings and capital.

        Goodwill is initially recorded at fair value and is not amortized, but is reviewed for impairment at least annually or more frequently if events or changes in circumstances indicate that the carrying value may not be recoverable. Given the current economic environment and conditions in the financial markets, we could be required to evaluate the recoverability of goodwill prior to our normal annual assessment if we experience disruption in our business, unexpected significant declines in our operating results, or sustained market capitalization declines. These types of events and the resulting analyses could result in goodwill impairment charges in the future, which would be recorded as charges against earnings. The decrease in earnings resulting from impairment charges could also negatively impact other performance measures; however, for regulatory purposes, goodwill is eliminated in calculating the Company's regulatory ratios such as its regulatory capital ratios. We performed an annual goodwill impairment assessment as of October 1, 2014. Based on our analyses, we concluded that the fair value of our reporting units exceeded the carrying value of our assets and liabilities and, therefore, goodwill was not considered impaired. Depending on the response of the financial industry to the legal, regulatory and competitive changes related to interchange fees, overdraft services and interest on demand deposit accounts, financial institutions may need to change their policies, procedures and operating plans in the future to compete more effectively and such changes may require certain financial institutions to take a goodwill impairment charge to account for anticipated reduction in revenue related to such changes.

The Company Is Subject To Environmental Liability Risk Associate With Lending Activities.

        A significant portion of the Company's loan portfolio is secured by real property. During the ordinary course of business, the Company may foreclose on and take title to properties securing certain loans. In doing so, there is a risk that hazardous or toxic substances could be found on these properties. If hazardous or toxic substances are found, the Company may be liable for remediation costs, as well as for personal

31

injury and property damage. Environmental laws may require the Company to incur substantial expenses and may materially reduce the affected property's value or limit the Company's ability to use or sell the affected property. In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase the Company's exposure to environmental liability. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on the Company's financial condition and results of operations.

The Company's Controls and Procedures May Fail or be Circumvented

        Management regularly reviews and updates the Company's internal controls, disclosure controls and procedures and corporate governance policies and procedures. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of the Company's controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on the Company's business, results of operations and financial condition.

New Lines of Business or New Products and Services May be Subject the Company to Additional Risks

        From time to time, the Company may implement new lines of business or offer new products and services within existing lines of business. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed. In developing and marketing new lines of business and/or new products and services, the Company may invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new products may not be achieved and price and profitability targets may not prove feasible. Compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service. Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on the Company's business, results of operations and financial condition.

The downgrade of the U.S. credit rating and Europe's ongoing debt crisis could negatively impact our business, financial condition and liquidity.

        Standard and Poor's lowered the U.S. long term sovereign credit rating from AAA to AA+ on August 5, 2011. The downgrade and a further downgrade or a downgrade by other ratings agencies of the U.S. government's sovereign credit rating, or its perceived creditworthiness, could adversely affect the financial markets and economic conditions in the United States and worldwide. Many of our investment securities are issued by U.S. government agencies and U.S. government sponsored entities ("GSEs"). The rating downgrade could affect the stability of residential mortgage-backed securities issued or guaranteed by GSEs. These factors could affect the liquidity or valuation of our current portfolio of residential mortgage-backed securities issued or guaranteed by GSEs, and could result in our counterparties requiring additional collateral for our borrowings and could increase our borrowing costs. Because of the unprecedented nature of any negative credit rating actions with respect to U.S. government obligations, the ultimate impact on global markets and our business, financial condition and liquidity are unpredictable and may not be immediately apparent; however, any adverse impact related to the downgrade of the U.S. sovereign credit rating could have a material adverse effect on the Company's liquidity, financial condition and results of operations. Additionally, concerns about the European Union's sovereign debt crisis have also caused uncertainty for financial markets globally. Such risks could indirectly affect the Company by affecting the Company's customers with European businesses or assets denominated in the euro or companies in the Company's market with European businesses or affiliates.

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The Company's Accounting Estimates and Risk Management Processes Rely On Analytical and Forecasting Tools and Models

        The processes the Company uses to estimate its probable loan losses and to measure the fair value of financial instruments, as well as the processes used to estimate the effects of changing interest rates and other market measures on the Company's financial condition and results of operations, depends upon the use of analytical tools and forecasting models. These tools and models reflect assumptions that may not be accurate, particularly in times of market stress or other unforeseen circumstances. Even if these assumptions are adequate, the tools or models may prove to be inadequate or inaccurate because of other flaws in their design or their implementation. Any such failure in the Company's analytical or forecasting tools or models could have a material adverse effect on the Company's business, financial condition and results of operations.

The Company May be Adversely Affected by Declining Crude Oil Prices

        The recent decisions by certain members of the Organization of Petroleum Exporting Countries ("OPEC") to maintain higher crude oil production levels have led to increased global oil supplies which has resulted in significant declines in market oil prices. Decreased market oil prices have compressed margins for many U.S. and Texas-based oil producers, particularly those that utilize higher-cost production technologies such as hydraulic fracking and horizontal drilling, as well as oilfield service providers, energy equipment manufacturers and transportation suppliers, among others. Energy production and related industries represent a large part of the economies in some of the Company's primary markets. Furthermore, a prolonged period of low oil prices could also have a negative impact on the U.S. economy and, in particular, the economies of energy-dominant states such as Texas and Oklahoma. Accordingly, a prolonged period of low oil prices could have a material adverse effect on the Company's business, financial condition and results of operation.

Risks Related to the Company's Industry

Changes in economic and political conditions could adversely affect the Company's earnings, as our borrowers' ability to repay loans and the value of the collateral securing our loans decline.

        The Company's success depends, to a certain extent, upon economic and political conditions, local, national and international with respect to Mexico, as well as governmental monetary policies. Conditions such as inflation, recession, unemployment, changes in interest rates, changes in capital markets, money supply, political issues, legislative and regulatory changes, a decline in oil prices, and other factors beyond the Company's control may adversely affect the Company's asset quality, deposit levels and loan demand and, therefore, the Company's earnings. The Company is particularly affected by conditions in its primary market areas of South, Central and Southeast Texas, including Austin and Houston, and the State of Oklahoma. While economic conditions in the Company's primary markets have been improving in recent years, there is no assurance that the improvement will continue. If the weakened economic conditions in the Company's primary market areas worsen due to the recent decline in oil prices or other factors or fail to improve or to continue to improve, the Company could experience an increase in loan delinquencies and non-performing assets, decreases in loan collateral values and a decrease in demand for the Company's products and services, any of which could have a material adverse impact on the Company's financial condition and results of operations.

The Company depends on the accuracy and completeness of information about customers and counterparties as well as the soundness of other financial institutions with which the Company interacts.

        In deciding whether to extend credit or enter into other transactions, the Company may rely on information furnished by or on behalf of customers and counterparties, including financial statements, credit reports and other financial information. The Company may also rely on representations of those

33

customers, counterparties, financial institutions or other third parties, such as independent auditors, as to the accuracy and completeness of that information. Reliance on inaccurate or misleading financial statements, credit reports or other financial information or problems with the soundness of other financial institutions with which the Company interacts could have a material adverse impact on the Company's business and, in turn, the Company's financial condition and results of operations.

If the Company does not adjust to rapid changes in the financial services industry, its financial performance may suffer.

        The Company's ability to deliver strong financial performance and returns on investment to shareholders will depend in part on its ability to expand the scope of available financial services to meet the needs and demands of its customers and its ability to stay abreast of technological innovations and evaluate those technologies that will enable it to compete on a cost-effective basis.

        In addition to the challenge of competing against other banks in attracting and retaining customers for traditional banking services, the Company's competitors also include securities dealers, brokers, mortgage bankers, investment advisors, specialty finance and insurance companies who seek to offer one-stop financial services that may include services that banks have not been able or allowed to offer to their customers in the past. The increasingly competitive environment is primarily a result of changes in regulation, changes in technology and product delivery systems and the accelerating pace of consolidation among financial service providers. Such changes in the financial industry may result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits. The loss of these revenue streams and the lower cost deposits as a source of funds could have a material adverse effect on the Company's financial condition and results of operations.

        Further, the costs of new technology, including personnel, can be high in both absolute and relative terms. There can be no assurance, given the fast pace of change and innovation, that the Company's technology, either purchased or developed internally, will meet or continue to meet the needs of the Company and the needs of our customers.

The Recent Repeal of Federal Prohibitions on Payment of Interest on Demand Deposits Could Increase the Company's Interest Expense.

        All federal prohibitions on the ability of financial institutions to pay interest on demand deposit accounts were repealed as part of the Dodd-Frank Act. As a result, beginning on July 21, 2011, financial institutions were allowed to commence offering interest on demand deposits to compete for clients and the Company does have such a program. The Company's interest expense may increase and its net interest margin may decrease if it begins paying interest on a significant amount of demand deposits in order to attract additional customers or maintain current customers, which could have an adverse effect on the Company's business, financial condition and results of operations.

The Dodd-Frank Regulatory Reform Act and other regulatory developments could negatively impact the revenue streams of the Company related to interchange fees and consumer services and result in a contraction of retail banking of the Company.

        The Dodd-Frank Reform Act authorizes the Federal Reserve to regulate interchange fees paid to banks on debit card transactions to ensure that they are reasonable and proportional to the cost of processing individual transactions, and prohibits debit card networks and issuers from requiring transactions to be processed on a single payment network. The impact of the FDIC Overdraft Payment Supervisory Guidance could jeopardize the profitability of a number of retail sites of the Company and could result in a reduction of revenue from the Company's overdraft courtesy services. The Reform Act created the CFPB. While banks with less than $10 billion in assets, such as each of the subsidiary banks of the Company, are exempt from the primary examination, and enforcement powers of the CFPB, the new

34

agency's rulemaking will affect all banks. The impact of the CFPB is uncertain at this time, but the initiatives of the CFPB could negatively impact revenue streams of the Company related to consumer services. The reduction of revenue from retail banking services coupled with the repeal of the federal prohibition on the payment of interest on demand deposits, could result in a contraction of retail banking of the Company. The Company closed fifty-five in-store branches during the fourth quarter of 2011 due to reduced levels of revenue resulting from regulatory changes limiting interchange fees in order to align the Company's expenses with the reduced levels of revenue.

The Company Is Subject to Claims and Litigation Pertaining to Intellectual Property

        Banking and other financial services companies, such as the Company, rely on technology companies to provide information technology products and services necessary to support the Company's day-to-day operations. Technology companies frequently enter into litigation based on allegations of patent infringement or other violations of intellectual property rights. Such claims may increase in the future as the financial services sector becomes more reliant on information technology vendors. The plaintiffs in these actions frequently seek injunctions and substantial damages.

        Regardless of the scope or validity of such patents or other intellectual property rights, or the merits of any claims by potential or actual litigants, the Company may have to engage in protracted litigation. Such litigation is often expensive, time-consuming, disruptive to the Company's operations, and distracting to management. If legal matters related to intellectual property claims were resolved against the Company, the Company could be required to make payments in amounts that could have a material adverse effect on its business, financial condition and results of operations.

The limitation of preemption in the Dodd-Frank Reform Act, the powers of the new Consumer Financial Protection Bureau, and the FDIC Overdraft Payment Supervisory Guidance may increase the likelihood of lawsuits against financial institutions, and increased costs related to such lawsuits if the CFPB restricts the use of arbitration and/or class action waivers in consumer banking contracts.

        The Dodd-Frank Reform Act provides that courts must make preemption determinations on a case-by-case basis with the respect to particular state laws and can no longer rely on blanket preemption determinations. The new CFPB is specifically authorized to protect consumers from "unfair," "deceptive," and "abusive" acts and practices. Depending on the future actions of the CFPB, the likelihood of lawsuits against financial institutions related to allegedly "unfair," "deceptive" and "abusive" acts and practices could increase. The Company's costs related to such lawsuits would be significantly increased if the CFPB restricts the use of arbitration and/or class action waivers in consumer banking contracts based on the results of the CFPB's study of such matters that were published during the fourth quarter of 2013.

Risks Related to the Company's Stock

The Company's stock price may be volatile.

        Several factors could cause the Company's stock price to fluctuate substantially in the future. These factors include among other things:

•

Actual or anticipated variations in earnings;

•

Recommendations by securities analysts;

•

The Company's announcements of developments related to its businesses;

•

Operating and stock performance of other companies deemed to be peers;

•

New technology used or services offered by traditional and non-traditional competitors;

•

Continued low trading volume in the Company's stock;

35

•

The volatile impact of short selling activity in the Company's stock;

•

News reports of trends, concerns and other issues related to the financial services industry; and

•

Changes in the Company's ability to pay dividends;

•

Changes in government regulations, policies and guidance.

        The Company's stock price may fluctuate significantly in the future, and these fluctuations may be unrelated to the Company's performance. General market price declines or market volatility in the future could adversely affect the price of its common stock, and the current market price may not be indicative of future market prices.

The holders of our junior subordinated debentures have rights that are senior to those of our shareholders.

        As of December 31, 2014, we had approximately $175 million in junior subordinated debentures outstanding that were issued to our statutory trusts. The trusts purchased the junior subordinated debentures from us using the proceeds from the sale of trust preferred securities to third party investors. Payments of the principal and interest on the trust preferred securities are conditionally guaranteed by us to the extent not paid or made by each trust, provided the trust has funds available for such obligations.

        The junior subordinated debentures are senior to our shares of common stock and the Senior Preferred Stock. As a result, we must make payments on the junior subordinated debentures (and the related trust preferred securities) before any dividends can be paid on our common stock or preferred stock and, in the event of our bankruptcy, dissolution or liquidation, the holders of the debentures must be satisfied before any distributions can be made to our shareholders. If certain conditions are met, we have the right to defer interest payments on the junior subordinated debentures (and the related trust preferred securities) at any time or from time to time for a period not to exceed up to 20 consecutive quarters in a deferral period, during which time no dividends may be paid to holders of our common stock or preferred stock.

Risks Related to Participation in the CPP

We may be adversely affected by our participation in the CPP.

        In connection with our sale of Senior Preferred Stock to the Treasury Department under the Capital Purchase Program, the Company also issued to the Treasury Department a warrant to purchase 1,326,238 shares of our common stock (the "Warrants"). While the Company exited the TARP program when it repurchased all of the remaining Senior Preferred Stock on November 28, 2012, the Warrants remain outstanding and were sold by the U.S. Treasury to a third party on June 12, 2013. The dilutive impact of the Warrants may have a negative effect on the market price of our common stock. The Warrant expires on December 23, 2018.

Item 1B.    Unresolved Staff Comments

        N/A

Item 2.    Properties

        The principal offices of the Company and IBC are located at 1200 San Bernardo Avenue, Laredo, Texas and 2418 Jacaman Road, Laredo, Texas in buildings owned and completely occupied by the Company and IBC and containing approximately 147,000 square feet. The bank subsidiaries of IBC have main banking and branch facilities. All the facilities are customary to the banking industry. The bank subsidiaries own most of their banking facilities and the remainder are leased. The facilities are located in the regions of Laredo, San Antonio, Houston, Zapata, Eagle Pass, the Rio Grande Valley of Texas, the Coastal Bend area of Texas, and throughout the State of Oklahoma.

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        As Texas state-chartered banks, no bank subsidiary of the Company may, without the prior written consent of the Banking Commissioner, invest an amount in excess of its Tier 1 capital in bank facilities, furniture, fixtures and equipment. None of the Company's bank subsidiaries exceeds such limitation.

Item 3.    Legal Proceedings

        The Company and its bank subsidiaries are involved in various legal proceedings that are in various stages of litigation. Some of these actions allege "lender liability" claims on a variety of theories and claim substantial actual and punitive damages. The Company and its subsidiaries have determined, based on discussions with their 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 the consolidated financial position or results of operations of the Company and its subsidiaries. However, many of these matters are in various stages of proceedings and further developments could cause management to revise its assessment of these matters. Further information regarding legal proceedings has been provided in Note 17 of the Notes to consolidated financial statements located on page 74 of the 2014 Annual Report to Shareholders which is incorporated herein by reference.

Item 4.    Mine Safety Disclosures

        None

Item 4A.    Executive Officers of the Registrant

        Certain information is set forth in the following table concerning the executive officers of the Company, each of whom has been elected to serve until the 2015 Annual Meeting of Shareholders and until his successor is duly elected and qualified.

Name	Age		Position of Office	Officer of the Company Since
Dennis E. Nixon		72	Chairman of the Board of the Company since 1992 and President of the Company since 1979, Chief Executive Officer and Director of IBC		1979
R. David Guerra		62	Vice President of the Company since 1986 and President of IBC McAllen Branch and Director of IBC		1986
Imelda Navarro		57	Treasurer of the Company since 1982 and Senior Executive Vice President of IBC and Director of IBC since 2002		1982

        There are no family relationships among any of the named persons. Each executive officer has held the same position or another executive position with the Company during the past five years.

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PART II

Item 5.    Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

        The information set forth under the caption "Preferred Stock, Common Stock and Dividends," "Stock Repurchase Program," and "Equity Compensation Plan Information" located on pages 27 through 28 of Registrant's 2014 Annual Report is incorporated herein by reference.

Item 6.    Selected Financial Data

        The information set forth under the caption "Selected Financial Data" located on page 1 of Registrant's 2014 Annual Report is incorporated herein by reference.

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

        The information set forth under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" located on pages 2 through 29 of Registrant's 2014 Annual Report is incorporated herein by reference.

Item 7A.    Quantitative and Qualitative Disclosures about Market Risk

        The information set forth under the caption "Liquidity and Capital Resources" located on pages 19 through 25 of Registrant's 2014 Annual Report is incorporated herein by reference.

Item 8.    Financial Statements and Supplementary Data

        The consolidated financial statements located on pages 30 through 89 of Registrant's 2014 Annual Report are incorporated herein by reference.

        The condensed quarterly income statements located on pages 90 and 91 of Registrant's 2014 Annual Report are incorporated herein by reference.

Item 9.    Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

        None.

Item 9A.    Controls and Procedures

        As of the end of the period covered by this Annual Report on Form 10-K, an evaluation was carried out by the management of International Bancshares Corporation, (the "Company") with the participation of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report. Additionally, there were no changes in the Company's internal control over financial reporting that occurred during the quarter ended December 31, 2014 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Management's Report on Internal Control Over Financial Reporting

        The management of the Company is responsible for establishing and maintaining adequate internal controls over financial reporting, as defined under Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934. The Company's internal control over financial reporting is a process designed under the supervision of the Company's Chief Executive Officer and Chief Financial Officer to provide

38

reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external purposes in accordance with generally accepted accounting principles.

        As of December 31, 2014, management assessed the effectiveness of the design and operation of the Company's internal controls over financial reporting based on the criteria for effective internal control over financial reporting established in "Internal Control—Integrated Framework," issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission in 1992. Based on the assessment, management determined that the Company maintained effective internal control over financial reporting as of December 31, 2014, based on those criteria.

        McGladrey LLP, the independent registered public accounting firm that audited the 2014 consolidated financial statements of the Company included in this Annual Report on Form 10-K, has audited the effectiveness of the Company's internal control over financial reporting as of December 31, 2014. Their report, which expresses an unqualified opinion, on the effectiveness of the Company's internal control over financial reporting as of December 31, 2014 is included in this Item under the heading "Report of Independent Registered Public Accounting Firm."

39

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders
International Bancshares Corporation:

        We have audited International Bancshares Corporation and subsidiaries' (the "Company") internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. International Bancshares Corporation and subsidiaries' management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control, based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

        A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorization of management and directors of the company; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        In our opinion, International Bancshares Corporation and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 1992.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statements of condition as of December 31, 2014 and 2013, and the related consolidated statements of income, comprehensive income, shareholders' equity, and cash flows of International Bancshares Corporation and subsidiaries and our report dated February 27, 2015 expressed an unqualified opinion.

/s/ McGladrey LLP

Dallas, TX
February 27, 2015

40

Item 9B.    Other Information

        None.

PART III

Item 10.    Directors, Executive Officers and Corporate Governance

        There is incorporated in this Item 10 by reference (i) that portion of the Company's definitive proxy statement relating to the Company's 2015 Annual Meeting of Shareholders entitled "ELECTION OF DIRECTORS," (ii) the portion of the Company's definitive proxy statement entitled "Audit Committee" in the portion entitled "MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS," (iii) the portion of the Company's definitive proxy statement entitled "Code of Ethics," in the portion entitled "CORPORATE GOVERNANCE," (iv) that portion of the Company's definitive proxy statement entitled "SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE," and (v) Item 4A of this report entitled "Executive Officers of the Registrant."

Item 11.    Executive Compensation

        There is incorporated in this Item 11 by reference (i) that portion of the Company's definitive proxy statement relating to the Company's 2015 Annual Meeting of Shareholders entitled "EXECUTIVE COMPENSATION," and (ii) that portion entitled "Salary and Steering Committee and Stock Option Plan Committee Interlocks and Insider Participation" in the portion entitled "MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS."

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

        There are incorporated in this Item 12 by reference those portions of the Company's definitive proxy statement relating to the Company's 2015 Annual Meeting of Shareholders entitled "PRINCIPAL SHAREHOLDERS," "SECURITY OWNERSHIP OF MANAGEMENT," and "Equity Compensation Plan Information" in the portion entitled "EXECUTIVE COMPENSATION."

Item 13.    Certain Relationships and Related Transactions, and Director Independence

        There is incorporated in this Item 13 by reference (i) that portion of the Company's definitive proxy statement relating to the Company's 2015 Annual Meeting of Shareholders entitled "INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS" and (ii) that portion entitled "Director Independence" in the portion entitled "CORPORATE GOVERNANCE."

Item 14.    Principal Accounting Fees and Services

        There is incorporated in this Item 14 by reference that portion of the Company's definitive proxy statement relating to the Company's 2015 Annual Meeting of Shareholders entitled "PRINCIPAL ACCOUNTANT FEES AND SERVICES."

41

PART IV

Item 15.    Exhibits, Financial Statement Schedules

(a)

Documents

1.

The consolidated financial statements of the Company and subsidiaries are incorporated into Item 8 of this report by reference from the 2014 Annual Report to Shareholders filed as an exhibit hereto and they include:

Reports of Independent Registered Public Accounting Firm

Consolidated:
Statements of Condition as of December 31, 2014 and 2013
Statements of Income for the years ended December 31, 2014, 2013 and 2012
Statements of Comprehensive Income for the years ended December 31, 2014, 2013 and 2012
Statements of Shareholders' Equity for the years ended December 31, 2014, 2013 and 2012
Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012
Notes to Consolidated Financial Statements

2.

All Financial Statement Schedules are omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes.



3.

The following exhibits have previously been filed by the Registrant or are included in this report following the Index to Exhibits:

(3)(a)*	—Articles of Incorporation of International Bancshares Corporation incorporated herein as an exhibit by reference to the Current Report, Exhibit 3.1 therein, under the Securities Exchange Act of 1934, filed by Registrant on Form 8-K with the Securities and Exchange Commission on June 20, 1995, SEC File No. 09439.
(3)(b)*	—Articles of Amendment to the Articles of Incorporation of International Bancshares Corporation dated May 22, 1998 incorporated herein by reference to Exhibit 3(c) of the Registrant's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 1999, SEC file No. 09439.
(3)(c)*	—Articles of Amendment to the Articles of Incorporation of International Bancshares Corporation dated May 21, 2002 incorporated herein by reference to Exhibit 3(d) of the Registrant's Annual Report on form 10-K filed with the Securities and Exchange Commission on March 12, 2004, SEC File No. 09439.
(3)(d)*	—Articles of Amendment to the Articles of Incorporation of International Bancshares Corporation filed with the Secretary of State of the State of Texas on May 17, 2005, incorporated herein as an exhibit by reference to the Current Report, Exhibit 3.1 therein, under the Securities Exchange Act of 1934, filed by Registrant on Form 8-K with the Securities and Exchange Commission on May 20, 2005, SEC File No. 09439.
(3)(e)*	Articles of Amendment to the Articles of Incorporation of International Bancshares Corporation filed with the Secretary of State of the State of Texas on December 22, 2008, incorporated herein as an exhibit by reference to the Current Report, Exhibit 3.1 therein, filed by registrant on Form 8-K with the Commission on December 23, 2008, Commission File No. 09439.

42

(3)(f)*	Certificate of Designations for 216,000 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A, of International Bancshares Corporation, filed with the Secretary of State of the State of Texas on December 22, 2008, incorporated herein as an exhibit by reference to the Current Report, Exhibit 3.2 therein, filed by registrant on Form 8-K with the Commission on December 23, 2008, Commission File No. 09439.
(3)(g)*	Amended and Restated By-Laws of International Bancshares Corporation, incorporated herein as an exhibit by reference to the Current Report, Exhibit 3.1 therein, filed by registrant on Form 8-K with the Commission on December 18, 2009, Commission File No. 09439.
(3)(h)*	Certificate of Amendment to Articles of Incorporation of International Bancshares Corporation filed with the Secretary of State of Texas on May 21, 2013, incorporated herein as an exhibit by reference to the Current Report, Exhibit 3.1 therein, under the Securities Exchange Act of 1934, filed by the Registrant on Form 8-K with the Securities and Exchange Commission on May 22, 2013, SEC File Number 09439.
(4)(a)*	Warrant, dated December 23, 2008, to purchase shares of common stock of International Bancshares Corporation, incorporated herein as an exhibit by reference to the Current Report, Exhibit 4.1 therein, filed by registrant on Form 8-K with the Commission on December 23, 2008, Commission File No. 09439.
(4)(b)*	Form of Certificate for the Fixed Rate Cumulative Perpetual Preferred Stock, Series A, par value $0.01 per share incorporated herein as an exhibit by reference to the Current Report, Exhibit 4.2 therein, filed by registrant on Form 8-K with the Commission on December 23, 2008, Commission File No. 09439.
(10a)*+	—Letter Agreement, dated as of December 23, 2008, and the Securities Purchase Agreement—Standard Terms, which the Letter Agreement incorporates by reference, between International Bancshares Corporation and the United States Department of the Treasury, incorporated herein as an exhibit by reference to the Current Report, Exhibit 10.1 therein, filed by registrant on Form 8-K with the Commission on December 23, 2008, Commission File No. 09439.
(10b)*+	—The 1996 International Bancshares Corporation Stock Option Plan incorporated herein by reference to Exhibit 99.1 to the Post Effective Amendment No. 1 to Form S-8 filed with the Securities and Exchange Commission on March 21, 1997, SEC File No. 333-11689.
(10c)*+	—2005 International Bancshares Corporation Stock Option Plan incorporated herein as an exhibit by reference to the Current Report, Exhibit 10.1 therein, under the Securities Exchange Act of 1934, filed by the Company on Form 8-K with the Securities and Exchange Commission on April 1, 2005, SEC File No. 09439.
(10d)*	—Agreement and Plan of Merger dated as of January 22, 2004, among International Bancshares Corporation, LFC Acquisitions Corp. and Local Financial Corporation incorporated herein as an exhibit by reference to the Current Report, under the Securities Exchange Act of 1934, filed by Registrant on Form 8-K with the Securities and Exchange Commission on January 22, 2004, SEC File No. 09439.

43

(10e)*+	—International Bancshares Corporation 2006 Executive Incentive Compensation Plan, filed by Registrant on Form DEF 14A with the Securities and Exchange Commission on April 17, 2008, SEC File No. 09439.
(10f)*+	—International Bancshares Corporation Long-Term Restricted Stock Unit Plan, filed by Registrant on Form 8-K with the Securities and Exchange Commission on December 12, 2009, SEC File No. 09439.
(10g)*+	—2012 International Bancshares Corporation Stock Option Plan incorporated herein by reference to Exhibit A of the Registrant's Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on April 20, 2012.
(10h)*+	—International Bancshares Corporation 2013 Management Incentive Plan incorporated herein by reference to Exhibit A of the Registrant's Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on April 19, 2013.
(13)**	—International Bancshares Corporation 2014 Annual Report
(21)	—List of Subsidiaries of International Bancshares Corporation as of February 20, 2015
(23)	—Consent of Independent Registered Public Accounting Firm
(31a)	—Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(31b)	—Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(32a)	—Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(32b)	—Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101++	—Interactive Data File

*

Previously filed

+

Executive Compensation Plans and Arrangements

**

Deemed filed only with respect to those portions thereof incorporated herein by reference

++

Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statement of Earnings for the years ended December 31, 2014, 2013 and 2012 (ii) the Condensed Consolidated Balance Sheet as of December 31, 2014 and 2013, and (iii) the Condensed Consolidated Statement of Cash Flows for the years ended December 31, 2014, 2013 and 2012.

44

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

INTERNATIONAL BANCSHARES CORPORATION (Registrant)
By:	/s/ DENNIS E. NIXON Dennis E. Nixon President
Date: February 27, 2015

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the date indicated.

Signatures	Title	Date
/s/ DENNIS E. NIXON Dennis E. Nixon	President and Director (Principal Executive Officer)	February 27, 2015
/s/ IMELDA NAVARRO Imelda Navarro	Treasurer (Principal Financial Officer and Principal Accounting Officer)	February 27, 2015
/s/ IRVING GREENBLUM Irving Greenblum	Director	February 27, 2015
/s/ R. DAVID GUERRA R. David Guerra	Director	February 27, 2015
/s/ DOUG HOWLAND Doug Howland	Director	February 27, 2015
/s/ PEGGY J. NEWMAN Peggy J. Newman	Director	February 27, 2015
/s/ LARRY NORTON Larry Norton	Director	February 27, 2015
/s/ LEONARDO SALINAS Leonardo Salinas	Director	February 27, 2015
/s/ ANTONIO R. SANCHEZ, JR. Antonio R. Sanchez, Jr.	Director	February 27, 2015

45

Exhibit Index

Exhibit 13—	International Bancshares Corporation 2014 Annual Report, Exhibit 13, page 1
Exhibit 21—	List of Subsidiaries of International Bancshares Corporation as of February 20, 2015
Exhibit 23—	Consent of Independent Registered Public Accounting Firm
Exhibit 31(a)—	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31(b)—	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32(a)—	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32(b)—	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

46

EX-13

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Exhibit 13

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
(Consolidated)

        The following consolidated selected financial data is derived from the Corporation's audited financial statements as of and for the five years ended December 31, 2014. The following consolidated financial data should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and related notes in this report.

SELECTED FINANCIAL DATA

	AS OF OR FOR THE YEARS ENDED DECEMBER 31,
	2014		2013		2012		2011		2010
	(Dollars in Thousands, Except Per Share Data)
STATEMENT OF CONDITION
Assets	$	12,196,520	$	12,079,477	$	11,882,673	$	11,739,649	$	11,943,469
Investment securities available-for-sale		4,931,963		5,304,579		5,525,015		5,213,915		5,086,457
Net loans		5,614,417		5,129,074		4,716,811		4,969,283		5,325,521
Deposits		8,438,625		8,243,425		8,287,213		7,946,092		7,599,558
Other borrowed funds		1,073,944		1,223,950		749,027		494,161		1,026,780
Junior subordinated deferrable interest debentures		175,416		190,726		190,726		190,726		201,117
Shareholders' equity		1,580,658		1,424,408		1,435,708		1,600,165		1,459,217
INCOME STATEMENT
Interest income	$	393,599	$	363,217	$	375,639	$	418,124	$	458,769
Interest expense		46,543		54,632		74,499		94,298		114,036
Net interest income		347,056		308,585		301,140		323,826		344,733
Provision for probable loan losses		14,423		22,968		27,959		17,318		22,812
Non-interest income		178,348		189,605		200,591		201,493		218,784
Non-interest expense		281,043		292,632		315,372		316,774		339,725
Income before income taxes		229,938		182,590		158,400		191,227		200,980
Income taxes		76,787		56,239		50,565		64,078		70,957
Net income		153,151		126,351		107,835		127,149		130,023
Preferred stock dividends and discount accretion		—		—		14,362		13,280		13,126
Net income available to common shareholders	$	153,151	$	126,351	$	93,473	$	113,869	$	116,897
Per common share:
Basic	$	2.29	$	1.88	$	1.39	$	1.69	$	1.72
Diluted	$	2.28	$	1.88	$	1.39	$	1.69	$	1.72

1

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        Management's discussion and analysis represents an explanation of significant changes in the financial position and results of operations of International Bancshares Corporation and its subsidiaries (the "Company" or the "Corporation") on a consolidated basis for the three-year period ended December 31, 2014. The following discussion should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2014, and the Selected Financial Data and Consolidated Financial Statements included elsewhere herein.

Special Cautionary Notice Regarding Forward Looking Information

        Certain matters discussed in this report, excluding historical information, include forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created by these sections. Although the Company believes such forward-looking statements are based on reasonable assumptions, no assurance can be given that every objective will be reached. The words "estimate," "expect," "intend," "believe" and "project," as well as other words or expressions of a similar meaning are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. Such statements are based on current expectations, are inherently uncertain, are subject to risks and should be viewed with caution. Actual results and experience may differ materially from the forward-looking statements as a result of many factors.

        Risk factors that could cause actual results to differ materially from any results that are projected, forecasted, estimated or budgeted by the Company in forward-looking statements include, among others, the following possibilities:

•

Local, regional, national and international economic business conditions and the impact they may have on the Company, the Company's customers, and such customers' ability to transact profitable business with the Company, including the ability of its borrowers to repay their loans according to their terms or a change in the value of the related collateral.

•

Volatility and disruption in national and international financial markets.

•

Government intervention in the U.S. financial system.

•

The Company relies, in part, on external financing to fund the Company's operations from the FHLB, the Fed and other sources and the unavailability of such funding sources in the future could adversely impact the Company's growth strategy, prospects and performance.

•

Changes in consumer spending, borrowings and savings habits.

•

Changes in interest rates and market prices, which could reduce the Company's net interest margins, asset valuations and expense expectations, including, without limitation, the repeal of federal prohibitions on the payment of interest on demand deposits.

•

Changes in the capital markets utilized by the Company and its subsidiaries, including changes in the interest rate environment that may reduce margins.

•

Changes in state and/or federal laws and regulations to which the Company and its subsidiaries, as well as their customers, competitors and potential competitors, are subject, including, without limitation, the impact of the Consumer Financial Protection Bureau as a new regulator of financial institutions, changes in the accounting, tax and regulatory treatment of trust preferred securities, as well as changes in banking, tax, securities, insurance, employment, environmental and immigration laws and regulations and the risk of litigation that may follow.

2

•

Changes in U.S.—Mexico trade, including, without limitation, reductions in border crossings and commerce resulting from the Homeland Security Programs called "US-VISIT," which is derived from Section 110 of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996.

•

The reduction of deposits from nonresident alien individuals due to the new IRS rules requiring U.S. financial institutions to report to the IRS deposit interest payments made to nonresident alien individuals.

•

The loss of senior management or operating personnel.

•

Increased competition from both within and outside the banking industry.

•

The timing, impact and other uncertainties of the Company's potential future acquisitions including the Company's ability to identify suitable potential future acquisition candidates, the success or failure in the integration of their operations and the Company's ability to maintain its current branch network and to enter new markets successfully and capitalize on growth opportunities.

•

Changes in the Company's ability to pay dividends on its Common Stock.

•

Changes in estimates of future reserve requirements based upon periodic review thereof under relevant regulatory and accounting requirements.

•

Additions to the Company's loan loss allowance as a result of changes in local, national or international conditions which adversely affect the Company's customers, including, without limitation, lower real estate values, lower oil prices or environmental liability risks associated with foreclosed properties.

•

Greater than expected costs or difficulties related to the development and integration of new products and lines of business.

•

Increased labor costs and effects related to health care reform and other laws, regulations and legal developments impacting labor costs.

•

Impairment of carrying value of goodwill could negatively impact our earnings and capital.

•

Changes in the soundness of other financial institutions with which the Company interacts.

•

Political instability in the United States or Mexico.

•

Technological changes or system failure or breaches of our network security as well as other cyber security risks could subject us to increased operating costs as well as litigation and other liabilities.

•

Acts of war or terrorism.

•

Natural disasters.

•

Reduced earnings resulting from the write down of the carrying value of securities held in our securities available-for-sale portfolio following a determination that the securities are other-than-temporarily impaired.

•

The effect of changes in accounting policies and practices as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standards setters.

•

The costs and effects of regulatory developments, including the resolution of regulatory or other governmental inquiries and the results of regulatory examinations or reviews.

•

The effect of final rules amending Regulation E that prohibit financial institutions from charging consumer fees for paying overdrafts on ATM and one-time debit card transactions, unless the consumer consents or opts-in to the overdraft service for those types of transactions, as well as the effect of any other regulatory or legal developments that limit overdraft services.

3

•

The reduction of income and possible increase in required capital levels related to the adoption of new legislation, including, without limitation, the Dodd-Frank Regulatory Reform Act (the "Dodd-Frank Act") and the implementing rules and regulations, including the Federal Reserve's rule that establishes debit card interchange fee standards and prohibits network exclusivity arrangements and routing restrictions that is negatively affecting interchange revenue from debit card transactions as well as revenue from consumer services.

•

The possible increase in required capital levels related to the implementation of capital and liquidity rules of the federal banking agencies that address or are impacted by the Basel III capital and liquidity standards.

•

The enhanced due diligence burden imposed on banks related to the banks' inability to rely on credit ratings under Dodd-Frank which may result in a limitation on the types of securities certain banks will be able to purchase as a result of the due diligence burden.

•

The Company's success at managing the risks involved in the foregoing items, or a failure or circumvention of the Company's internal controls and risk management, policies and procedures.

        Forward-looking statements speak only as of the date on which such statements are made. It is not possible to foresee or identify all such factors. The Company makes no commitment to update any forward-looking statement, or to disclose any facts, events or circumstances after the date hereof that may affect the accuracy of any forward-looking statement, unless required by law.

Overview

        The Company, which is headquartered in Laredo, Texas, with 211 facilities and 324 ATMs, provides banking services for commercial, consumer and international customers of South, Central and Southeast Texas and the State of Oklahoma. The Company is one of the largest independent commercial bank holding companies headquartered in Texas. The Company, through its bank subsidiaries, is in the business of gathering funds from various sources and investing those funds in order to earn a return. The Company either directly or through a bank subsidiary owns two insurance agencies, a liquidating subsidiary, and a fifty percent interest in an investment banking unit that owns a broker/dealer. The Company's primary earnings come from the spread between the interest earned on interest-bearing assets and the interest paid on interest-bearing liabilities. In addition, the Company generates income from fees on products offered to commercial, consumer and international customers.

        A primary goal of the Company is to grow net interest income and non-interest income while adequately managing credit risk, interest rate risk and expenses. Effective management of capital is a critical objective of the Company. A key measure of the performance of a banking institution is the return on average common equity ("ROE"). The Company's ROE for the year ended December 31, 2014 was 10.24% as compared to 8.95% for the year ended December 31, 2013.

        The Company is very active in facilitating trade along the United States border with Mexico. The Company does a large amount of business with customers domiciled in Mexico. Deposits from persons and entities domiciled in Mexico comprise a large and stable portion of the deposit base of the Company's bank subsidiaries. The loan policies of the Company's bank subsidiaries generally require that loans to borrowers domiciled in foreign countries be primarily secured by assets located in the United States or have credit enhancements, in the form of guarantees, from significant United States corporations. The Company also serves the growing Hispanic population through the Company's facilities located throughout South, Central and Southeast Texas and the State of Oklahoma.

        Expense control is an essential element in the Company's long-term profitability. As a result, the Company monitors the efficiency ratio, which is a measure of non-interest expense to net interest income plus non-interest income closely. As the Company adjusts to regulatory changes related to the Dodd-Frank Act, the Company's efficiency ratio may suffer because the additional regulatory compliance costs are

4

expected to increase non-interest expense. The Company monitors this ratio over time to assess the Company's efficiency relative to its peers. The Company uses this measure as one factor in determining if the Company is accomplishing its long-term goals of providing superior returns to the Company's shareholders.

Results of Operations

Summary

Consolidated Statements of Condition Information

	December 31, 2014		December 31, 2013		Percent Increase (Decrease)
	(Dollars in Thousands)
Assets	$	12,196,520	$	12,079,477		1.0	%
Net loans		5,614,417		5,129,074		9.5
Deposits		8,438,625		8,243,425		2.4
Other borrowed funds		1,073,944		1,223,950		(12.3	)
Junior subordinated deferrable interest debentures		175,416		190,726		(8.0	)
Shareholders' equity		1,580,658		1,424,408		11.0

Consolidated Statements of Income Information

	Year Ended December 31, 2014		Year Ended December 31, 2013		Percent Increase (Decrease) 2014 vs. 2013			Year Ended December 31, 2012		Percent Increase (Decrease) 2013 vs. 2012
	(Dollars in Thousands)
Interest income	$	393,599	$	363,217		8.4	%	$	375,639		(3.3	)%
Interest expense		46,543		54,632		(14.8	)		74,499		(26.7	)
Net interest income		347,056		308,585		12.5			301,140		2.5
Provision for probable loan losses		14,423		22,968		(37.2	)		27,959		(17.9	)
Non-interest income		178,348		189,605		(5.9	)		200,591		(5.5	)
Non-interest expense		281,043		292,632		(4.0	)		315,372		(7.2	)
Net income		153,151		126,351		21.2			107,835		17.2
Net income available to common shareholders		153,151		126,351		21.2			93,473		35.2
Per common share:
Basic	$	2.29	$	1.88		21.8	%	$	1.39		35.3	%
Diluted		2.28		1.88		21.8			1.39		35.3

Net Income

        Net income for the year ended December 31, 2014 increased by 21.2% as compared to the same period in 2013. Net income for the year ended December 31, 2014 was positively impacted by an increase in the Company's net interest margin, as well as a 37.2% decrease in the provision for probable loan losses for the twelve months ended December 31, 2014. The increase in the net interest margin can be primarily attributed to increased levels of interest income arising from the repositioning of the investment portfolio the Company undertook in 2013, an increase in loans outstanding and a decrease in interest expense on time deposits and securities sold under repurchase agreements. The decrease in interest expense on securities sold under repurchase agreements arises from the early termination of some of the long-term repurchase agreements by the lead bank subsidiary. The decrease in the provision for probable loan losses is primarily driven by the addition of a specific reserve of approximately $10.0 million during the nine-months ended September 30, 2013 on a loan relationship collateralized by multiple pieces of

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transportation equipment. Net income available to common shareholders for the year ended December 31, 2013 increased by 35.2% as compared to the same period in 2012. Net income available to common shareholders for the year ended December 31, 2013 was positively affected by the repayment of the TARP funds in the fourth quarter of 2012, which eliminated the continued payment of dividends on the Senior Preferred Stock that had been held by the U.S. Treasury, as well as the sale of available for sale securities totaling $6.2 million, net of tax. The securities sales were a result of the Company re-positioning a portion of the investment portfolio. Net income for the same period was negatively impacted by a charge of $8.0 million, net of tax, as a result of the Company's lead bank subsidiary's early termination of a portion of its long-term repurchase agreements in order to help manage its long-term funding costs. Net income for the year ended December 31, 2013 was positively impacted by improving net interest margins as a result of lower rates paid on securities sold under repurchase agreements and time deposits. Net income for the years ended December 31, 2013 and 2012 was negatively impacted by slow loan demand, although it is improving and yields in the bond markets. Net income also continues to be negatively affected by the burden of increasing compliance costs arising from the Dodd-Frank Act and heightened regulatory oversight. Net income for the year ended December 31, 2012 was negatively impacted by lower levels of revenue on interchange fee income and overdraft programs due to regulatory changes, as well as the burden of increasing compliance costs arising from the Dodd-Frank Act and heightened regulatory oversight. Net income for the year ended December 31, 2012 was positively impacted by the sale of available-for-sale investments securities totaling $25 million, net of tax. The securities sales were a result of the Company re-positioning a portion of the investment portfolio. Net income for the year ended December 31, 2012 was negatively impacted by a one-time charge of $20.5 million, net of tax, recorded in the third quarter as a result of the Company's lead bank subsidiary's early termination of a portion of its long-term repurchase agreements in order to help manage its long-term funding costs.

Net Interest Income

        Net interest income is the spread between income on interest-earning assets, such as loans and securities, and the interest expense on liabilities used to fund those assets, such as deposits, repurchase agreements and funds borrowed. Net interest income is the Company's largest source of revenue. Net

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interest income is affected by both changes in the level of interest rates and changes in the amount and composition of interest-earning assets and interest-bearing liabilities.

	For the years ended December 31,
	2014 Average Rate/Cost			2013 Average Rate/Cost			2012 Average Rate/Cost
Assets
Interest earning assets:
Loan, net of unearned discounts:
Domestic		5.19	%		5.35	%		5.51	%
Foreign		3.36			3.44			3.82
Investment securities:
Taxable		2.08			1.73			1.95
Tax-exempt		4.57			5.54			5.55
Other		.29			.25			.25
Total interest-earning assets		3.70	%		3.52	%		3.68	%
Liabilities
Interest bearing liabilities:
Savings and interest bearing demand deposits		.12	%		.13	%		.19	%
Time deposits:
Domestic		.49			.60			.79
Foreign		.44			.51			.67
Securities sold under repurchase agreements		2.75			2.80			2.95
Other borrowings		.19			.19			.24
Junior subordinated deferrable interest debentures		2.35			2.45			3.46
Total interest bearing liabilities		.60	%		.71	%		.93	%

        The level of interest rates and the volume and mix of earning assets and interest-bearing liabilities impact net income and net interest margin. The yield on average interest-earning assets increased 5.1% from 3.52% in 2013 to 3.70% in 2014, and the rates paid on average interest-bearing liabilities decreased 15.5% from .71% in 2013 to .60% in 2014. The yield on average interest-earning assets decreased 4.3% from 3.68% in 2012 to 3.52% in 2013, and the rates paid on average interest-bearing liabilities decreased 23.7% from .93% in 2012 to .71% in 2013. The majority of the Company's taxable investment securities are invested in mortgage backed securities and during rapid increases or reduction in interest rates, the yield on these securities do not re-price as quickly as the loans.

        The following table analyzes the changes in net interest income during 2014, 2013 and 2012 and the relative effect of changes in interest rates and volumes for each major classification of interest-earning

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assets and interest-bearing liabilities. Non-accrual loans have been included in assets for the purpose of this analysis, which reduces the resulting yields:

	2014 compared to 2013 Net increase (decrease) due to									2013 compared to 2012 Net increase (decrease) due to
	Volume(1)			Rate(1)			Total			Volume(1)			Rate(1)			Total
	(Dollars in Thousands)									(Dollars in Thousands)
Interest earned on:
Loans, net of unearned discounts:
Domestic	$	27,291		$	(8,721	)	$	18,570		$	3,927		$	(7,859	)	$	(3,932	)
Foreign		102			(153	)		(51	)		(960	)		(669	)		(1,629	)
Investment securities:
Taxable		(4,171	)		17,068			12,897			3,395			(11,082	)		(7,687	)
Tax-exempt		1,402			(2,512	)		(1,110	)		1,217			(3	)		1,214
Other		51			25			76			(387	)		(1	)		(388	)
Total interest income	$	24,675		$	5,707		$	30,382		$	7,192		$	(19,614	)	$	(12,422	)
Interest incurred on:
Savings and interest bearing demand deposits	$	136		$	(301	)	$	(165	)	$	137		$	(1,663	)	$	(1,526	)
Time deposits:
Domestic		(645	)		(1,491	)		(2,136	)		(1,644	)		(2,737	)		(4,381	)
Foreign		(428	)		(847	)		(1,275	)		(2,019	)		(2,129	)		(4,148	)
Securities sold under repurchase agreements		(4,128	)		(427	)		(4,555	)		(6,948	)		(1,526	)		(8,474	)
Other borrowings		462			(19	)		443			1,003			(411	)		592
Junior subordinated deferrable interest debentures		(224	)		(177	)		(401	)		—			(1,930	)		(1,930	)
Total interest expense	$	(4,827	)	$	(3,262	)	$	(8,089	)	$	(9,471	)	$	(10,396	)	$	(19,867	)
Net interest income	$	29,502		$	8,969		$	38,471		$	16,663		$	(9,218	)	$	7,445

(Note 1)    The change in interest due to both rate and volume has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.

        As part of the strategy to manage interest rate risk, the Company strives to manage both assets and liabilities so that interest sensitivities match. One method of calculating interest rate sensitivity is through gap analysis. A gap is the difference between the amount of interest rate sensitive assets and interest rate sensitive liabilities that re-price or mature in a given time period. Positive gaps occur when interest rate sensitive assets exceed interest rate sensitive liabilities, and negative gaps occur when interest rate sensitive liabilities exceed interest rate sensitive assets. A positive gap position in a period of rising interest rates should have a positive effect on net interest income as assets will re-price faster than liabilities. Conversely, net interest income should contract somewhat in a period of falling interest rates. Management can quickly change the Company's interest rate position at any given point in time as market conditions dictate. Additionally, interest rate changes do not affect all categories of assets and liabilities equally or at the same time. Analytical techniques employed by the Company to supplement gap analysis include simulation analysis to quantify interest rate risk exposure. The gap analysis prepared by management is reviewed by the Investment Committee of the Company twice a year. The Investment Committee is comprised of certain senior managers of the various Company bank subsidiaries along with consultants. Management currently believes that the Company is properly positioned for interest rate changes; however, if management determines at any time that the Company is not properly positioned, it will strive to adjust the interest rate sensitive assets and liabilities in order to manage the effect of interest rate changes.

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        The Company has established guidelines for acceptable volatility of projected net interest income on the income simulation analysis and the guidelines are reviewed at least annually. As of December 31, 2014, in rising rate scenarios of 150, 300 and 400 basis points, the guidelines established by management require that the net interest income not vary by more than plus or minus 15%, 15% and 20%, respectively. At December 31, 2014, the income simulations show that a rate shift of 150, 300 and 400 basis points in interest rates up will vary projected net interest income for the coming 12 month period by (2.90)%, (2.56)% and (1.90)%, respectively. The basis point shift in interest rates is a hypothetical rate scenario used to calibrate risk, and does not necessarily represent management's current view of future market developments. The Company believes that it is properly positioned for a potential interest rate increase or decrease.

Allowance for Probable Loan Loss

        The following table presents information concerning the aggregate amount of non-accrual, past due and restructured domestic loans; certain loans may be classified in one or more categories:

	December 31,
	2014		2013		2012		2011		2010
	(Dollars in Thousands)
Loans accounted for on a non-accrual basis	$	63,559	$	62,823	$	71,768	$	118,505	$	108,023
Accruing loans contractually past due ninety days or more as to interest or principal payments		9,988		7,197		14,769		14,268		19,347

        The allowance for probable loan losses decreased 7.6% to $64,828,000 at December 31, 2014 from $70,161,000 at December 31, 2013. The allowance was 1.1% of total loans, net of unearned income at December 31, 2014 and 1.3% at December 31, 2013. The decrease in the allowance at December 31, 2014 compared to the same period in 2013 is due to a charge down in an impaired commercial relationship that is mainly secured by multiple pieces of transportation equipment, the value of which fluctuates due to the market factors and the amount of use of the equipment. The provision for probable loan losses charged to expense decreased $8,545,000 to $14,423,000 for the year ended December 31, 2014 from $22,968,000 for the same period in 2013 partially due to a specific reserve added in 2013 for the relationship that is mainly secured by multiple pieces of transportation equipment. The impaired commercial relationship further deteriorated during 2013. The Company's provision for probable loan losses decreased for the year ended December 31, 2013 compared to the year ended December 31, 2012, mainly due to four commercial real estate relationships charged off in 2012 when the Company determined that further collection of the loan was not anticipated based on the borrowers' financial condition.

        The following table details loans accounted for as "troubled debt restructuring," segregated by loan class. Loans accounted for as troubled debt restructuring are included in impaired loans. See Note 1 to the Consolidated Financial Statements.

	December 31, 2014		December 31, 2013
	(Dollars in Thousands)
Domestic
Commercial	$	2,500	$	150
Commercial real estate: other construction & land development		2,254		8,860
Commercial real estate: farmland & commercial		2,861		2,863
Residential: first lien		5,313		4,887
Residential: junior lien		1,371		1,631
Consumer		1,354		1,531
Foreign		—		436
Total troubled debt restructuring	$	15,653	$	20,358

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        The following table presents information concerning the aggregate amount of non-accrual and past due foreign loans extended to persons or entities in foreign countries. Certain loans may be classified in one or more category:

	December 31,
	2014		2013		2012		2011		2010
	(Dollars in Thousands)
Loans accounted for on a non-accrual basis	$	—	$	—	$	—	$	—	$	7
Accruing loans contractually past due ninety days or more as to interest or principal payments		—		—		264		20		501

        The gross income that would have been recorded during 2014, 2013 and 2012 on non-accrual loans in accordance with their original contract terms was $4,013,000, $4,088,000 and $2,549,000 on domestic loans and $0, $0, and $0 on foreign loans, respectively. The amount of interest income on such loans that was recognized in 2014, 2013 and 2012 was $29,000, $0, and $0 on domestic loans and $0, $0, and $0 for foreign loans, respectively.

        Generally, loans are placed on non-accrual status if principal or interest payments become 90 days past due and/or management deem the collectability of the principal and/or interest to be in question, as well as when required by applicable regulatory guidelines. Interest income on non-accrual loans is recognized only to the extent payments are received or when, in management's opinion, the creditor's financial condition warrants reestablishment of interest accruals. Under special circumstances, a loan may be more than 90 days delinquent as to interest or principal and not be placed on non-accrual status. This situation generally results when a bank subsidiary has a borrower who is experiencing financial difficulties, but not to the extent that requires a restructuring of indebtedness. The majority of this category is composed of loans that are considered to be adequately secured and/or for which there has been a recent history of payments. When a loan is placed on non-accrual status, any interest accrued, not paid is reversed and charged to operations against interest income.

        Loan commitments, consisting of unused commitments to lend, letters of credit, credit card lines and other approved loans, that have not been funded, were $1,793,875,000 and $1,906,602,000 at December 31, 2014 and 2013, respectively. See Note 19 to the Consolidated Financial Statements.

        The following table summarizes loan balances at the end of each year and average loans outstanding during the year; changes in the allowance for probable loan losses arising from loans charged-off and

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recoveries on loans previously charged-off by loan category; and additions to the allowance which have been charged to expense:

	2014			2013			2012			2011			2010
	(Dollars in Thousands)
Loans, net of unearned discounts, outstanding at December 31	$	5,679,245		$	5,199,235		$	4,775,004		$	5,053,475		$	5,410,003
Average loans outstanding during the year (Note 1)	$	5,491,841		$	4,978,833		$	4,932,728		$	5,261,601		$	5,542,230
Balance of allowance at January 1	$	70,161		$	58,193		$	84,192		$	84,482		$	95,393
Provision charged to expense		14,423			22,968			27,959			17,318			22,812
Loans charged off:
Domestic:
Commercial, financial and agricultural		(21,003	)		(12,342	)		(48,445	)		(18,085	)		(7,702	)
Real estate—mortgage		(1,012	)		(1,252	)		(1,417	)		(2,109	)		(2,973	)
Real estate—construction		(680	)		(278	)		(7,617	)		(1,467	)		(22,186	)
Consumer		(719	)		(561	)		(756	)		(1,067	)		(2,152	)
Foreign		(51	)		(22	)		(111	)		(171	)		(227	)
Total loans charged off:		(23,465	)		(14,455	)		(58,346	)		(22,899	)		(35,240	)
Recoveries credited to allowance:
Domestic:
Commercial, financial and agricultural		3,086			2,842			3,767			4,422			626
Real estate—mortgage		291			359			208			328			517
Real estate—construction		72			87			229			171			16
Consumer		210			162			184			211			256
Foreign		50			5			—			159			102
Total recoveries		3,709			3,455			4,388			5,291			1,517
Net loans charged off		(19,756	)		(11,000	)		(53,958	)		(17,608	)		(33,723	)
Balance of allowance at December 31	$	64,828		$	70,161		$	58,193		$	84,192		$	84,482
Ratio of net loans charged-off during the year to average loans outstanding during the year (Note 1)		.36	%		.22	%		1.09	%		.33	%		.61	%
Ratio of allowance to loans, net of unearned discounts, outstanding at December 31		1.14	%		1.35	%		1.22	%		1.67	%		1.56	%

(Note 1)    The average balances for purposes of the above table are calculated on the basis of daily balances.

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        The allowance for probable loan losses has been allocated based on the amount management has deemed to be reasonably necessary to provide for the probable losses incurred within the following categories of loans at the dates indicated and the percentage of loans to total loans in each category:

	At December 31,
	2014					2013					2012					2011					2010
	Allowance		Percent of total			Allowance		Percent of total			Allowance		Percent of total			Allowance		Percent of total			Allowance		Percent of total
	(Dollars in Thousands)
Commercial, Financial and Agricultural	$	41,881		54.7	%	$	47,676		55.7	%	$	34,206		52.8	%	$	51,847		50.6	%	$	38,439		48.5	%
Real estate—Mortgage		8,272		16.0			8,061		16.3			8,838		17.6			9,322		17.7			12,670		17.5
Real estate—Construction		12,955		24.9			12,541		23.2			12,720		24.0			19,940		25.2			26,695		27.2
Consumer		660		1.1			750		1.3			1,289		1.6			1,724		1.9			6,241		2.3
Foreign		1,060		3.3			1,133		3.5			1,140		4.0			1,359		4.6			437		4.5
	$	64,828		100.0	%	$	70,161		100.0	%	$	58,193		100.0	%	$	84,192		100.0	%	$	84,482		100.0	%

        The allowance for probable loan losses primarily consists of the aggregate loan loss allowances of the bank subsidiaries. The allowances are established through charges to operations in the form of provisions for probable loan losses.

        The bank subsidiaries charge off that portion of any loan which management considers to represent a loss as well as that portion of any other loan which is classified as a "loss" by bank examiners. Commercial, financial and agricultural or real estate loans are generally considered by management to represent a loss, in whole or part, (i) when an exposure beyond any collateral coverage is apparent, (ii) when no further collection of the portion of the loan so exposed is anticipated based on actual results, (iii) when the credit enhancements, if any, are not adequate, and (iv) when the borrower's financial condition would indicate so. Generally, unsecured consumer loans are charged off when 90 days past due. The increase in charge-offs for the year ended December 31, 2014 is due to the charge down of a relationship that is primarily secured by multiple pieces of transportation equipment. The increase in charge-offs for the year ended December 31, 2012 compared to the year ended December 31, 2011 was largely due to the charge-off of a $22 million deficiency note on a large credit, which deficiency note was secured with a pool of assets of family trusts of the original creditors. Due to the complexities and delays in liquidating the pool of assets securing the note, the Company made the decision to charge off the loan.

        The allowance for probable loan losses is a reserve established through a provision for probable loan losses charged to expense, which represents management's best estimate of probable loan losses within the existing portfolio of loans. The Company's allowance for probable loan loss methodology is based on guidance provided in Securities and Exchange Commission Staff Accounting Bulletin No. 102, "Selected Loan Loss Allowance Methodology and Documentation Issues" and includes allowance allocations calculated in accordance with ASC 310, "Receivables" and ASC 450, "Contingencies." The reserve allocated by categories shows an overall decrease of $5.3 million from December 31, 2013 to December 31, 2014 and a $12.0 million increase from December 31, 2012 to December 31, 2013. The decrease for the year ended December 31, 2014 compared to the year ended December 31, 2013 is partially due to a charge down in a relationship that is mainly secured by multiple pieces of transportation equipment, the value of which fluctuates due to market factors and the amount of use of the equipment. A specific reserve on the relationship of $12.0 million was recognized in 2013 and created the increase in the reserve for probable loan losses for December 31, 2013 compared to December 31, 2012. The reserve allocated to all categories of loans decreased approximately $26.0 million from 2011 to 2012. The decrease in the reserve is mainly due to the continued workout of the impaired loans previously identified by the Company. Please refer to Note 4—Allowance for Probable Loan Losses in the accompanying Notes to the consolidated Financial Statements.

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        While management of the Company considers that it is generally able to identify borrowers with financial problems reasonably early and to monitor credit extended to such borrowers carefully, there is no precise method of predicting loan losses. The determination that a loan is likely to be uncollectible and that it should be wholly or partially charged off as a loss is an exercise of judgment. Similarly, the determination of the adequacy of the allowance for probable loan losses can be made only on a subjective basis. It is the judgment of the Company's management that the allowance for probable loan losses at December 31, 2014 was adequate to absorb probable losses from loans in the portfolio at that date. See Critical Accounting Policies on page 25. Should any of the factors considered by management in evaluating the adequacy of the allowance for probable loan losses change, the Company's estimate of probable loan losses could also change, which could affect the level of future provisions for probable loan losses.

Non-Interest Income

	Year Ended December 31, 2014		Year Ended December 31, 2013		Percent Increase (Decrease) 2014 vs. 2013			Year Ended December 31, 2012		Percent Increase (Decrease) 2013 vs. 2012
	(Dollars in Thousands)
Service charges on deposit accounts	$	88,586	$	97,087		(8.8	)%	$	93,128		4.3	%
Other service charges, commissions and fees
Banking		44,435		41,075		8.2			38,523		6.6
Non-banking		7,463		7,116		4.9			6,998		1.7
Investment securities transactions, net		1,283		9,601		(86.6	)		38,446		(75.0	)
Other investments, net		22,023		22,383		(1.6	)		13,339		67.8
Other income		14,558		12,343		17.9			10,157		21.5
Total non-interest income	$	178,348	$	189,605		5.9	%	$	200,591		(5.5	)%

        Total non-interest income increased 5.9% for the year ended December 31, 2014 compared to the same period of 2013. Total non-interest income decreased 5.5% for the year ended December 31, 2013 when compared to the same period of 2012. The increase in other income for the year ended December 31, 2014, can be primarily attributed to the sale of property originally held by a bank subsidiary resulting in a net gain of $2.9 million, and the discount recorded in connection with the buyback of the $15.3 million of outstanding capital securities issued by statutory business trusts formed by the Company in the amount of $1.8 million. Investment securities transactions for the year ended December 31, 2014 decreased by $8.3 million compared to same period of 2013. The decrease can be primarily attributed a net loss on securities sold during the third quarter of 2014. The securities were sold to re-position the Company's balance sheet. Investment securities transactions decreased for the year ended December 31, 2013 compared to the same period of 2012 due to securities sales that occurred in 2012 as a result of the Company re-positioning a portion of the investment portfolio. Other investments income for the year ended December 31, 2013 was positively impacted by the sale of assets in a partnership where the holding company held an equity position, resulting in income of $5.5 million. Service charges on deposit accounts for the year ended December 31, 2014 were negatively impacted by a decrease in volume of overdraft charges on deposit accounts.

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Non-Interest Expense

	Year Ended December 31, 2014		Year Ended December 31, 2013		Percent Increase (Decrease) 2014 vs. 2013			Year Ended December 31, 2012		Percent Increase (Decrease) 2013 vs. 2012
	(Dollars in Thousands)
Employee compensation and benefits	$	121,511	$	119,845		1.4	%	$	118,041		1.5	%
Occupancy		32,530		31,766		2.4			34,608		(8.2	)
Depreciation of bank premises and equipment		24,013		26,017		(7.7	)		26,756		(2.8	)
Professional fees		10,925		13,146		(16.9	)		14,369		(8.5	)
Deposit insurance assessments		6,082		6,737		(9.7	)		7,709		(12.6	)
Net expense, other real estate owned		2,358		6,896		(65.8	)		8,929		(22.8	)
Amortization of identified intangible assets		2,389		4,633		(48.4	)		4,651		(.4	)
Advertising		7,742		7,034		10.1			7,017		.2
Early termination fee—securities sold under repurchase agreements		11,000		12,303		(10.6	)		31,550		(61.0	)
Impairment charges (Total other-than-temporary impairment charges, $(366) less loss of $1,183, $(431) less loss of $1,805, and $(916) less gain of $(123), included in other comprehensive loss)		817		1,374		(40.5	)		1,039		32.2
Other		61,676		62,881		(1.9	)		60,703		3.6
Total non-interest expense	$	281,043	$	292,632		(4.0	)%	$	315,372		(7.2	)%

        Non-interest expense for the year ended December 31, 2014 decreased by 4.0% compared to the same period of 2013. Non-interest expense for the year ended December 31, 2013 decreased by 7.2% compared to the same period 2012. Non-interest expense for the twelve months ended December 31, 2014, 2013 and 2012 was negatively impacted by charges of $11.0 million, $12.3 million and $31.6 million, respectively, recorded by the Company's lead bank subsidiary related to the termination of a portion of its long-term repurchase agreements outstanding in order to help manage its long-term funding costs. Net expense, other real estate owned decreased by 65.8% for the twelve months ended December 31, 2014 compared to the same period of 2013. The decrease can be attributed to decreased carrying costs as properties have been liquidated through sales.

Effects of Inflation

        The principal component of earnings is net interest income, which is affected by changes in the level of interest rates. Changes in rates of inflation affect interest rates. It is difficult to precisely measure the impact of inflation on net interest income because it is not possible to accurately differentiate between increases in net interest income resulting from inflation and increases resulting from increased business activity. Inflation also raises costs of operations, primarily those of employment and services.

14

Financial Condition

Investment Securities

        The following table sets forth the carrying value of investment securities as of December 31, 2014, 2013 and 2012:

	December 31,
	2014		2013		2012
	(Dollars in Thousands)
Residential mortgage-backed securities
Available for sale	$	4,600,372	$	5,027,701	$	5,265,204
Obligations of states and political subdivisions
Available for sale		282,276		248,410		238,675
Equity securities
Available for sale		29,315		28,468		21,136
Other securities
Available for sale		20,000		—		—
Held to maturity		2,400		2,400		2,400
Total	$	4,934,363	$	5,306,979	$	5,527,415

        The following tables set forth the contractual maturities of investment securities, based on amortized cost, at December 31, 2014 and the average yields of such securities, except for the totals, which reflect the weighted average yields. Actual maturities will differ from contractual maturities because borrowers may have the right to prepay obligations with or without prepayment penalties.

	Available for Sale Maturing
	Within one year					After one but within five years					After five but within ten years					After ten years
	Adjusted					Adjusted					Adjusted					Adjusted
	Cost		Yield			Cost		Yield			Cost		Yield			Cost		Yield
	(Dollars in Thousands)
Residential mortgage-backed securities	$	96		5.50	%	$	23,717		4.89	%		578,285		2.52	%	$	3,995,492		2.67	%
Obligations of states and political subdivisions		—		—			—		—			734		5.99	%		268,028		5.32	%
Equity securities		325		—			—		—			—		—			27,750		2.34	%
Other securities		—		—			—		—			—		—			20,000		5.00	%
Total	$	96		5.50	%	$	23,717		4.89	%	$	579,019		2.52	%	$	4,311,270		2.84	%

	Held to Maturity Maturing
	Within one year					After one but within five years					After five but within ten years					After ten years
	Adjusted					Adjusted					Adjusted					Adjusted
	Cost		Yield			Cost		Yield			Cost		Yield			Cost		Yield
	(Dollars in Thousands)
Other securities	$	825		1.66	%	$	1,575		1.16	%	$	—		—	%	$	—		—	%
Total	$	825		1.66	%	$	1,575		1.16	%	$	—		—	%	$	—		—	%

        Mortgage-backed securities are securities primarily issued by the Federal Home Loan Mortgage Corporation ("Freddie Mac"), Federal National Mortgage Association ("Fannie Mae"), and the

15

Government National Mortgage Association ("Ginnie Mae"). Investments in mortgage-backed securities issued by Ginnie Mae are fully guaranteed by the U.S. Government. Investments in mortgage-backed securities issued by Freddie Mac and Fannie Mae are not fully guaranteed by the U.S. Government, however, the Company believes that the quality of the bonds is similar to other AAA rated bonds with limited credit risk, particularly given the placement of Fannie Mae and Freddie Mac into conservatorship by the federal government in 2008 and because securities issued by others that are collateralized by residential mortgage-backed securities issued by Fannie Mae or Freddie Mac are rated consistently as AAA rated securities.

Loans

        The amounts of loans outstanding, by classification, at December 31, 2014, 2013, 2012, 2011 and 2010 are shown in the following table:

	December 31,
	2014		2013		2012		2011		2010
	(Dollars in Thousands)
Commercial, financial and agricultural	$	3,107,584	$	2,894,779	$	2,525,380	$	2,560,102	$	2,615,878
Real estate—mortgage		910,326		847,692		838,467		895,870		948,982
Real estate—construction		1,414,977		1,208,508		1,147,669		1,273,389		1,473,471
Consumer		61,137		66,414		74,514		94,109		126,047
Foreign		185,221		181,842		188,974		230,005		245,625
Loans, net of unearned discount	$	5,679,245	$	5,199,235	$	4,775,004	$	5,053,475	$	5,410,003

        The following table shows the amounts of loans (excluding real estate mortgages and consumer loans) outstanding as of December 31, 2014, which based on remaining scheduled repayments of principal are due in the years indicated. Also, the amounts due after one year are classified according to the sensitivity to changes in interest rates:

	Maturing
	Within one year		After one but within five years		After five years		Total
	(Dollars in Thousands)
Commercial, financial and agricultural	$	823,299	$	1,875,870	$	408,415	$	3,107,584
Real estate—construction		676,020		677,149		61,808		1,414,977
Foreign		123,364		45,752		16,105		185,221
Total	$	1,622,683	$	2,598,771	$	486,328	$	4,707,782

	Interest sensitivity
	Fixed Rate		Variable Rate
	(Dollars in Thousands)
Due after one but within five years	$	228,637	$	2,370,134
Due after five years		62,464		423,864
Total	$	291,101	$	2,793,998

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International Operations

        On December 31, 2014, the Company had $185,221,000 (1.52% of total assets) in loans outstanding to borrowers domiciled in foreign countries, which included primarily borrowers domiciled in Mexico. The loan policies of the Company's bank subsidiaries generally require that loans to borrowers domiciled in foreign countries be primarily secured by assets located in the United States or have credit enhancements, in the form of guarantees, from significant United States corporations. The composition of such loans and the related amounts of allocated allowance for probable loan losses as of December 31, 2014 and 2013 is presented below.

	For the year ended December 31,
	2014				2013
	Amount of Loans		Related Allowance for Probable Losses		Amount of Loans		Related Allowance for Probable Losses
	(Dollars in Thousands)
Secured by certificates of deposit in United States banks	$	123,950	$	502	$	122,314	$	506
Secured by United States real estate		27,643		276		27,817		319
Secured by other United States collateral (securities, gold, silver, etc.)		17,045		127		1,003		12
Unsecured		5,710		52		1,163		6
Other (principally Mexico real estate)		10,873		103		29,545		290
	$	185,221	$	1,060	$	181,842	$	1,133

        The transactions for the years ended December 31, 2014, 2013 and 2012, in that portion of the allowance for probable loan losses related to foreign debt were as follows:

	2014			2013			2012
	(Dollars in Thousands)
Balance at January 1,	$	1,133		$	1,140		$	1,359
Charge-offs		(51	)		(22	)		(111	)
Recoveries		50			5			—
Net charge-offs		(1	)		(17	)		(111	)
(Credit) charge to expense		(72	)		10			(108	)
Balance at December 31	$	1,060		$	1,133		$	1,140

17

Deposits

	2014 Average Balance		2013 Average Balance
	(Dollars in Thousands)
Deposits:
Demand—non-interest bearing
Domestic	$	2,332,435	$	2,097,318
Foreign		520,752		497,409
Total demand non-interest bearing		2,853,187		2,594,727
Savings and interest bearing demand
Domestic		2,444,765		2,358,990
Foreign		538,263		520,125
Total savings and interest bearing demand		2,983,028		2,879,115
Time certificates of deposit
$100,000 or more:
Domestic		850,538		899,847
Foreign		909,271		968,962
Less than $100,000:
Domestic		507,581		565,403
Foreign		312,710		337,610
Total time, certificates of deposit		2,580,100		2,771,822
Total deposits	$	8,416,315	$	8,245,664

	2014		2013		2012
	(Dollars in Thousands)
Interest expense:
Savings and interest bearing demand
Domestic	$	2,998	$	3,182	$	4,487
Foreign		599		580		801
Total savings and interest bearing demand		3,597		3,762		5,288
Time, certificates of deposit
$100,000 or more
Domestic		4,615		5,761		8,263
Foreign		4,529		5,590		9,148
Less than $100,000
Domestic		2,074		3,065		4,945
Foreign		815		1,028		1,617
Total time, certificates of deposit		12,033		15,444		23,973
Total interest expense on deposits	$	15,630	$	19,206	$	29,261

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        Scheduled maturities of time deposits in amounts of $100,000 or more at December 31, 2014, were as follows:

Due within 3 months or less	$	631,083
Due after 3 months and within 6 months		409,400
Due after 6 months and within 12 months		443,860
Due after 12 months		215,795
	$	1,700,138

        The Company offers a variety of deposit accounts having a wide range of interest rates and terms. The Company relies primarily on its high quality customer service, sales programs, customer referrals and advertising to attract and retain these deposits. Deposits provide the primary source of funding for the Company's lending and investment activities, and the interest paid for deposits must be managed carefully to control the level of interest expense. Deposits at December 31, 2014 were $8,438,625,000, an increase of 2.4% from $8,243,425,000 at December 31, 2013. The increase in deposits is the result of the increased availability of deposits in the banking market. Even though the Company increased its deposits, the Company is still experiencing a substantial amount of competition for deposits at higher than market rates. As a result, the Company has attempted to maintain certain deposit relationships but has allowed certain deposits to leave as the result of aggressive pricing.

Return on Equity and Assets

        Certain key ratios for the Company for the years ended December 31, 2014, 2013 and 2012 follows (Note 1):

	Years ended December 31,
	2014			2013			2012
Percentage of net income to:
Average shareholders' equity		10.24	%		8.95	%		7.17	%
Average total assets		1.26			1.07			.91
Percentage of average shareholders' equity to average total assets		12.32			11.93			12.68
Percentage of cash dividends per share to net income per share		22.57			22.87			28.78

(Note 1)    The average balances for purposes of the above table are calculated on the basis of daily balances.

Liquidity and Capital Resources

Liquidity

        The maintenance of adequate liquidity provides the Company's bank subsidiaries with the ability to meet potential depositor withdrawals, provide for customer credit needs, maintain adequate statutory reserve levels and take full advantage of high-yield investment opportunities as they arise. Liquidity is afforded by access to financial markets and by holding appropriate amounts of liquid assets. The Company's bank subsidiaries derive their liquidity largely from deposits of individuals and business entities. Deposits from persons and entities domiciled in Mexico comprise a stable portion of the deposit base of the Company's bank subsidiaries. Deposits from persons and entities domiciled in Mexico comprise a stable portion of the deposit base of the Company's bank subsidiaries. Historically, the Mexico based deposits of the Company's bank subsidiaries have been a stable source of funding. Such deposits comprised approximately 27%, 28%, and 28% of the Company's bank subsidiaries' total deposits at each of the years ended December 31, 2014, 2013 and 2012, respectively. Other important funding sources for the

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Company's bank subsidiaries during 2014 and 2013 were borrowings from the FHLB, securities sold under repurchase agreements and large certificates of deposit, requiring management to closely monitor its asset/liability mix in terms of both rate sensitivity and maturity distribution. The borrowings from FHLB are primarily short term in nature and are renewed at maturity. The Company's bank subsidiaries have had a long-standing relationship with the FHLB and keep open unused lines of credit in order to fund liquidity needs. In the event that the FHLB bank indebtedness is not renewed, the repayment of the outstanding indebtedness would more than likely be repaid through proceeds generated from the sales of unpledged available for sale securities. The Company maintains a sizable, high quality investment portfolio to provide significant liquidity. These securities can be sold or sold under agreements to repurchase, to provide immediate liquidity. As in the past, the Company will continue to monitor the volatility and cost of funds in an attempt to match maturities of rate-sensitive assets and liabilities and respond accordingly to anticipated fluctuations in interest rates over reasonable periods of time.

Asset/Liability Management

        The Company's fund management policy has as its primary focus the measurement and management of the banks' earnings at risk in the face of rising or falling interest rate forecasts. The earliest and most simplistic concept of earnings at risk measurement is the gap report, which is used to generate a rough estimate of the vulnerability of net interest income to changes in market rates as implied by the relative re-pricings of assets and liabilities. The gap report calculates the difference between the amounts of assets and liabilities re-pricing across a series of intervals in time, with emphasis typically placed on the one-year period. This difference, or gap, is usually expressed as a percentage of total assets.

        If an excess of liabilities over assets matures or re-prices within the one-year period, the statement of condition is said to be negatively gapped. This condition is sometimes interpreted to suggest that an institution is liability-sensitive, indicating that earnings would suffer from rising rates and benefit from falling rates. If a surplus of assets over liabilities occurs in the one-year time frame, the statement of condition is said to be positively gapped, suggesting a condition of asset sensitivity in which earnings would benefit from rising rates and suffer from falling rates.

        The gap report thus consists of an inventory of dollar amounts of assets and liabilities that have the potential to mature or re-price within a particular period. The flaw in drawing conclusions about interest rate risk from the gap report is that it takes no account of the probability that potential maturities or re-pricings of interest-rate-sensitive accounts will occur, or at what relative magnitudes. Because simplicity, rather than utility, is the only virtue of gap analysis, financial institutions increasingly have either abandoned gap analysis or accorded it a distinctly secondary role in managing their interest-rate risk exposure.

        The net interest rate sensitivity at December 31, 2014, is illustrated in the following table. This information reflects the balances of assets and liabilities whose rates are subject to change. As indicated in the table on the following page, the Company is liability-sensitive during the early time periods and is asset-sensitive in the longer periods. The table shows the sensitivity of the statement of condition at one point in time and is not necessarily indicative of the position at future dates.

20

INTEREST RATE SENSITIVITY
(Dollars in Thousands)

	Rate/Maturity
December 31, 2014	3 Months or Less			Over 3 Months to 1 Year			Over 1 Year to 5 Years		Over 5 Years		Total
	(Dollars in Thousands)
Rate sensitive assets
Investment securities	$	428,319		$	666,905		$	3,556,863	$	282,276	$	4,934,363
Loans, net of non-accruals		4,234,208			258,970			354,315		768,193		5,615,686
Total earning assets	$	4,662,527		$	925,875		$	3,911,178	$	1,050,469	$	10,550,049
Cumulative earning assets	$	4,662,527		$	5,588,402		$	9,499,580	$	10,550, 049
Rate sensitive liabilities
Time deposits	$	1,002,375		$	1,174,891		$	305,366	$	60	$	2,482,692
Other interest bearing deposits		3,025,680			—			—		—		3,025,680
Securities sold under repurchase agreements		343,799			3,518			511,033		—		858,350
Other borrowed funds		1,067,700			—			—		6,244		1,073,944
Junior subordinated deferrable interest debentures		175,416			—			—		—		175,416
Total interest bearing liabilities	$	5,614,970		$	1,178,409		$	816,399	$	6,304	$	7,616,082
Cumulative sensitive liabilities	$	5,614,970		$	6,793,379		$	7,609,778	$	7,616,082
Repricing gap	$	(952,443	)	$	(252,534	)	$	3,094,779	$	1,044,165	$	2,933,967
Cumulative repricing gap		(952,443	)		(1,204,977	)		1,889,802		2,933,967
Ratio of interest-sensitive assets to liabilities		.83			.79			4.79		166.18		1.38
Ratio of cumulative, interest-sensitive assets to liabilities		.83			.82			1.25		1.38

        The detailed inventory of statement of condition items contained in gap reports is the starting point of income simulation analysis. Income simulation analysis also focuses on the variability of net interest income and net income, but without the limitations of gap analysis. In particular, the fundamental, but often unstated, assumption of the gap approach that every statement of condition item that can re-price will do so to the full extent of any movement in market interest rates is taken into consideration in income simulation analysis.

        Accordingly, income simulation analysis captures not only the potential of assets and liabilities to mature or re-price, but also the probability that they will do so. Moreover, income simulation analysis focuses on the relative sensitivities of these balance sheet items and projects their behavior over an extended period of time in a motion picture rather than snapshot fashion. Finally, income simulation analysis permits management to assess the probable effects on balance sheet items not only of changes in market interest rates, but also of proposed strategies for responding to such changes. The Company and many other institutions rely primarily upon income simulation analysis in measuring and managing exposure to interest rate risk.

        The Company has established guidelines for acceptable volatility of projected net interest income on the income simulation analysis and the guidelines are reviewed at least annually. As of December 31, 2014, in rising rate scenarios of 150, 300 and 400 basis points, the guidelines established by management require that the net interest income not vary by more than plus or minus 15%, 15% and 20%, respectively. At

21

December 31, 2014, the income simulations show that a rate shift of 150, 300 and 400 basis points in interest rates up will vary projected net interest income for the coming 12 month period by (2.90)%, (2.56)% and (1.90)%, respectively. The basis point shift in interest rates is a hypothetical rate scenario used to calibrate risk, and does not necessarily represent management's current view of future market developments. The Company believes that it is properly positioned for a potential interest rate increase or decrease.

        All the measurements of risk described above are made based upon the Company's business mix and interest rate exposures at the particular point in time. The exposure changes continuously as a result of the Company's ongoing business and its risk management initiatives. While management believes these measures provide a meaningful representation of the Company's interest rate sensitivity, they do not necessarily take into account all business developments that have an effect on net income, such as changes in credit quality or the size and composition of the statement of condition.

        Principal sources of liquidity and funding for the Company are dividends from subsidiaries and borrowed funds, with such funds being used to finance the Company's cash flow requirements. The Company closely monitors the dividend restrictions and availability from the bank subsidiaries as disclosed in Note 20 to the Consolidated Financial Statements. At December 31, 2014, the aggregate amount legally available to be distributed to the Company from bank subsidiaries as dividends was approximately $702,750,000, assuming that each bank subsidiary continues to be classified as "well-capitalized" under the applicable regulations in effect at December 31, 2014. The restricted capital (capital and surplus) of the bank subsidiaries was approximately $921,541,000 as of December 31, 2014. The undivided profits of the bank subsidiaries were approximately $1,033,318,000 as of December 31, 2014. Additionally, as a result of the Company's participation in the TARP Capital Purchase Program, the Company was restricted in the payment of dividends and was not allowed, without the Treasury Department's consent, to declare or pay any dividend on the Company Common Stock other than a regular semi-annual cash dividend of not more than $.33 per share, as adjusted for any stock dividend or stock split. The restriction ceased to exist on December 23, 2011 and the Company exited the TARP program when it finalized the repayment of all the TARP funds on November 28, 2012.

        At December 31, 2014, the Company has outstanding $1,073,944,000 in other borrowed funds and $175,416,000 in junior subordinated deferrable interest debentures. In addition to borrowed funds and dividends, the Company has a number of other available alternatives to finance the growth of its existing banks as well as future growth and expansion.

Capital

        The Company maintains an adequate level of capital as a margin of safety for its depositors and shareholders. At December 31, 2014, shareholders' equity was $1,580,658,000 compared to $1,424,408,000 at December 31, 2013, an increase of $156,250,000, or 11.0%. Shareholders' equity increased primarily due to other comprehensive income and the retention of earnings, offset by the payment of cash dividends to shareholders and repurchases of the Company's common stock in the form of treasury stock. The accumulated other comprehensive income is not included in the calculation of regulatory capital ratios.

        During 1990, the Federal Reserve Board ("FRB") adopted a minimum leverage ratio of 3% for the most highly rated bank holding companies and at least 4% to 5% for all other bank holding companies. The Company's leverage ratio (defined as shareholders' equity plus eligible trust preferred securities issued and outstanding less goodwill and certain other intangibles divided by average quarterly assets) was 12.33% at December 31, 2014 and 11.61% at December 31, 2013. The core deposit intangibles and goodwill of $283,329,000 as of December 31, 2014, are deducted from the sum of core capital elements when determining the capital ratios of the Company.

        The FRB has adopted risk-based capital guidelines which assign risk weightings to assets and off-balance sheet items. The guidelines also define and set minimum capital requirements (risk-based

22

capital ratios). Under the final 1992 rules, all banks are required to have Tier 1 capital of at least 4.0% of risk-weighted assets and total capital of 8.0% of risk-weighted assets. Tier 1 capital consists principally of shareholders' equity plus trust preferred securities issued and outstanding less goodwill and certain other intangibles, while total capital consists of Tier 1 capital, certain debt instruments and a portion of the reserve for loan losses. In order to be deemed well-capitalized pursuant to the regulations, an institution must have a total risk-weighted capital ratio of 10%, a Tier 1 risk-weighted ratio of 6% and a Tier 1 leverage ratio of 5%. The Company had risk-weighted Tier 1 capital ratios of 19.34% and 19.33% and risk weighted total capital ratios of 20.24% and 20.36% as of December 31, 2014 and 2013, respectively, which are well above the minimum regulatory requirements and exceed the well-capitalized ratios (see Note 20 to Notes to Consolidated Financial Statements).

        In July 2013, the FDIC and other regulatory bodies issued final rules consisting of minimum requirements that increase both the quantity and quality of capital held by banking organizations. The final rules are a result of the implementation of the BASEL III capital reforms and various Dodd-Frank Act related capital provisions and impact all U.S. banking organizations with more than $500 million in assets. Consistent with the Basel international framework, the new rule includes a new minimum ratio of common equity tier 1 to risk-weighted assets of 4.5 percent and a common equity tier 1 capital conservation buffer of 2.5 percent of risk-weighted assets. The rule also raised the minimum ratio of tier 1 capital to risk-weighted assets from 4 percent to 6 percent and includes a minimum leverage ratio of 4 percent for all banking organizations. Regarding the quality of capital, the new rule emphasizes common equity tier 1 capital and implements strict eligibility criteria for regulatory capital instruments. The new rule also improves the methodology for calculating risk-weighted assets to enhance risk sensitivity. The new rule is subject to a four year phase in period for mandatory compliance and the Company is required to begin to phase in the new rules beginning on January 1, 2015. Management believes that after the phase in of the new capital standards, the Company and its bank subsidiaries will remain classified as "well-capitalized."

Junior Subordinated Deferrable Interest Debentures

        The Company has formed eight statutory business trusts under the laws of the State of Delaware, for the purpose of issuing trust preferred securities. The eight statutory business trusts formed by the Company (the "Trusts") have each issued Capital and Common Securities and invested the proceeds thereof in an equivalent amount of junior subordinated debentures (the "Debentures") issued by the Company. As of December 31, 2014 and December 31, 2013, the principal amount of debentures outstanding totaled $175,416,000 and $190,726,000, respectively. On February 11, 2014, the Company bought back all of the Capital and Common Securities of IB Capital Trust VII from the holder of the securities for a price that reflected an approximate six percent discount from the redemption price of the securities and thereby retired the $10,310,000 of related Junior Subordinated Deferrable Interest Debentures related to IB Capital Trust VII. On December 24, 2014, the Company bought back a portion of the capital securities of IB Capital Trust XI from the holder of the securities for a price that reflected an approximate 23.6% discount from the redemption price of the securities and thereby retired $5,000,000 of the total $32,990,000 of related Capital Senior Subordinated Deferrable Interest Debentures related to IB Capital Trust XI, resulting in Senior Subordinated Deferrable Interest Debentures on IB Capital Trust XI of $27,990,000 as of December 31, 2014.

        The Debentures are subordinated and junior in right of payment to all present and future senior indebtedness (as defined in the respective indentures) of the Company, and are pari passu with one another. The interest rate payable on, and the payment terms of the Debentures are the same as the distribution rate and payment terms of the respective issues of Capital and Common Securities issued by the Trusts. The Company has fully and unconditionally guaranteed the obligations of each of the Trusts with respect to the Capital and Common Securities. The Company has the right, unless an Event of Default (as defined in the Indentures) has occurred and is continuing, to defer payment of interest on the Debentures for up to twenty consecutive quarterly periods on Trusts VI, VIII, IX, X, XI and XII. If interest payments on any of the Debentures are deferred, distributions on both the Capital and Common Securities related to that Debenture would also be deferred. The redemption prior to maturity of any of the Debentures may require the prior approval of the Federal Reserve and/or other regulatory bodies.

23

        For financial reporting purposes, the Trusts are treated as investments of the Company and not consolidated in the consolidated financial statements. Although the Capital Securities issued by each of the Trusts are not included as a component of shareholders' equity on the consolidated statement of condition, the Capital Securities are treated as capital for regulatory purposes. Specifically, under applicable regulatory guidelines, the Capital Securities issued by the Trusts qualify as Tier 1 capital up to a maximum of 25% of Tier 1 capital on an aggregate basis. Any amount that exceeds the 25% threshold would qualify as Tier 2 capital. At December 31, 2014 and December 31, 2013, the total $175,416,000 and $190,726,000, respectively of the Capital Securities outstanding qualified as Tier 1 capital.

        The following table illustrates key information about each of the Debentures and their interest rates at December 31, 2014:

	Junior Subordinated Deferrable Interest Debentures		Repricing Frequency	Interest Rate			Interest Rate Index	Maturity Date	Optional Redemption Date(1)
	(in thousands)
Trust VI	$	25,774	Quarterly		3.68	%	LIBOR + 3.45	November 2032	February 2008
Trust VIII		25,774	Quarterly		3.28	%	LIBOR + 3.05	October 2033	October 2008
Trust IX		41,238	Quarterly		1.86	%	LIBOR + 1.62	October 2036	October 2011
Trust X		34,021	Quarterly		1.88	%	LIBOR + 1.65	February 2037	February 2012
Trust XI		27,990	Quarterly		1.86	%	LIBOR + 1.62	July 2037	July 2012
Trust XII		20,619	Quarterly		1.69	%	LIBOR + 1.45	September 2037	September 2012
	$	175,416

(1)

The Capital Securities may be redeemed in whole or in part on any interest payment date after the Optional Redemption Date.

Contractual Obligations and Commercial Commitments

        The following table presents contractual cash obligations of the Company (other than deposit liabilities) as of December 31, 2014:

	Payments due by Period
	(Dollars in Thousands)
Contractual Cash Obligations	Total		Less than One Year		One to Three Years		Three to Five Years		After Five Years
Securities sold under repurchase agreements	$	858,350	$	247,317	$	311,033	$	300,000	$	—
Federal Home Loan Bank borrowings		1,073,944		1,067,849		314		337		5,444
Junior subordinated deferrable interest debentures		175,416		—		—		—		175,416
Operating leases		8,037		3,504		3,622		789		122
Total Contractual Cash Obligations	$	2,115,747	$	1,318,670	$	314,969	$	301,126	$	180,982

24

        The following table presents contractual commercial commitments of the Company (other than deposit liabilities) as of December 31, 2014:

	Amount of Commitment Expiration Per Period
	(Dollars in Thousands)
Commercial Commitments	Total		Less than One Year		One to Three Years		Three to Five Years		After Five Years
Financial and Performance Standby Letters of Credit	$	103,793	$	98,847	$	4,941	$	5	$	—
Commercial Letters of Credit		10,879		10,879		—		—		—
Credit Card Lines		16,687		16,687		—		—		—
Other Commercial Commitments		1,662,516		902,346		510,800		162,723		86,647
Total Commercial Commitments	$	1,793,875	$	1,028,759	$	515,741	$	162,728	$	86,647

        Due to the nature of the Company's commercial commitments, including unfunded loan commitments and lines of credit, the amounts presented above do not necessarily reflect the amounts the Company anticipates funding in the periods presented above.

Critical Accounting Policies

        The Company has established various accounting policies which govern the application of accounting principles in the preparation of the Company's consolidated financial statements. The significant accounting policies are described in the Notes to the Consolidated Financial Statements. Certain accounting policies involve significant subjective judgments and assumptions by management which have a material impact on the carrying value of certain assets and liabilities; management considers such accounting policies to be critical accounting policies.

        The Company considers its Allowance for Probable Loan Losses as a policy critical to the sound operations of the bank subsidiaries. The allowance for probable loan losses primarily consists of the aggregate loan loss allowances of the bank subsidiaries. The allowances are established through charges to operations in the form of provisions for probable loan losses. Loan losses or recoveries are charged or credited directly to the allowances. The allowance for probable loan losses of each bank subsidiary is maintained at a level considered appropriate by management, based on estimated probable losses in the loan portfolio. The allowance is derived from the following elements: (i) allowances established on specific impaired loans, which are based on a review of the individual characteristics of each loan, including the customer's ability to repay the loan, the underlying collateral values, and the industry in which the customer operates, (ii) allowances based on actual historical loss experience for similar types of loans in the Company's loan portfolio, and (iii) allowances based on general economic conditions, changes in the mix of loans, company resources, border risk and credit quality indicators, among other things. See also discussion regarding the allowance for probable loan losses and provision for probable loan losses included in the results of operations and "Provision and Allowance for Probable Loan Losses" included in Notes 1 and 4 of the Notes to Consolidated Financial Statements.

        The loan loss provision is determined using the following methods. On a weekly basis, loan past due reports are reviewed by the credit quality committee to determine if a loan has any potential problems and if a loan should be placed on the Company's internal classified report. Additionally, the Company's credit department reviews the majority of the Company's loans for proper internal classification purposes regardless of whether they are past due and segregates any loans with potential problems for further review. The credit department will discuss the potential problem loans with the servicing loan officers to determine any relevant issues that were not discovered in the evaluation. Also, an analysis of loans that is provided through examinations by regulatory authorities is considered in the review process. After the above analysis is completed, the Company will determine if a loan should be placed on an internal

25

classified report because of issues related to the analysis of the credit, credit documents, collateral and/or payment history.

        The Company's internal classified report is segregated into the following categories: (i) "Special Review Credits," (ii) "Watch List—Pass Credits," or (iii) "Watch List—Substandard Credits." The loans placed in the "Special Review Credits" category reflect the Company's opinion that the loans reflect potential weakness which require monitoring on a more frequent basis. The "Special Review Credits" are reviewed and discussed on a regular basis with the credit department and the lending staff to determine if a change in category is warranted. The loans placed in the "Watch List—Pass Credits" category reflect the Company's opinion that the credit contains weaknesses which represent a greater degree of risk, which warrant "extra attention." The "Watch List—Pass Credits" are reviewed and discussed on a regular basis with the credit department and the lending staff to determine if a change in category is warranted. The loans placed in the "Watch List—Substandard Credits" classification are considered to be potentially inadequately protected by the current sound worth and debt service capacity of the borrower or of any pledged collateral. These credit obligations, even if apparently protected by collateral value, have shown defined weaknesses related to adverse financial, managerial, economic, market or political conditions which may jeopardize repayment of principal and interest. Furthermore, there is the possibility that some future loss could be sustained by the Company if such weaknesses are not corrected. For loans that are classified as impaired, management evaluates these credits ASC 310-10, "Receivables," and, if deemed necessary, a specific reserve is allocated to the credit. The specific reserve allocated under ASC 310-10, is based on (i) the present value of expected future cash flows discounted at the loan's effective interest rate; (ii) the loan's observable market price; or (iii) the fair value of the collateral if the loan is collateral dependent. Substantially all of the Company's loans evaluated as impaired under ASC 310-10 are measured using the fair value of collateral method. In limited cases, the Company may use other methods to determine the specific reserve of a loan under ASC 310-10 if such loan is not collateral dependent.

        The allowance based on historical loss experience on the Company's remaining loan portfolio, which includes the "Special Review Credits," "Watch List—Pass Credits," and "Watch List—Substandard Credits" is determined by segregating the remaining loan portfolio into certain categories such as commercial loans, installment loans, international loans, loan concentrations and overdrafts. A historical loss percentage, adjusted for (i) management's evaluation of changes in lending policies and procedures, (ii) current economic conditions in the market area served by the Company, (iii) other risk factors, (iv) the effectiveness of the internal loan review function, (v) changes in loan portfolios, and (vi) the composition and concentration of credit volume is applied to each category. Each category is then added together to determine the allowance allocated under ASC 450-20.

        The Company's management continually reviews the allowance for loan losses of the bank subsidiaries using the amounts determined from the allowances established on specific loans, the allowance established on quantitative historical loss percentages, and the allowance based on qualitative data, to establish an appropriate amount to maintain in the Company's allowance for loan loss. Should any of the factors considered by management in evaluating the adequacy of the allowance for probable loan losses change, the Company's estimate of probable loan losses could also change, which could affect the level of future provisions for probable loan losses.

Recent Accounting Standards Issued

        See Note 1—Summary of Significant Accounting Policies in the accompanying Notes to the Consolidated Financial Statements for details of recently issued and recently adopted accounting standards and their impact on the Company's consolidated financial statements.

26

Preferred Stock, Common Stock and Dividends

        The Company had issued and outstanding 66,405,410 shares of $1.00 par value Common Stock held by approximately 2,191 holders of record at February 20, 2015. The book value of the Common Stock at December 31, 2014 was $24.76 per share compared with $22.24 per share at December 31, 2013. Since December 23, 2008, the Company had outstanding 216,000 shares of Series A cumulative perpetual preferred stock (the "Senior Preferred Stock"), issued to the US Treasury under the Company's participation in the Troubled Asset Relief Program Capital Purchase Program (the "TARP Capital Purchase Program"). The Company redeemed all of the Senior Preferred Stock in 2012. In conjunction with the purchase of the Senior Preferred Stock, the US Treasury received a warrant (the "Warrant") to purchase 1,326,238 shares of the Company's common stock (the "Warrant Shares") at $24.43 per share, which would represent an aggregate common stock investment in the Company on exercise of the warrant in full equal to 15% of the Senior Preferred Stock investment. The term of the Warrant is ten years and was immediately exercisable. The Warrant is included as a component of Tier 1 capital. On June 12, 2013, the U. S. Treasury sold the Warrant to a third party. As of February 20, 2015, the Warrant is still outstanding, but expires on December 23, 2018 with no value if not exercised before that date. Adjustments to the $24.43 per share Exercise Price of the Warrant will be made if the Company pays cash dividends in excess of 33 cents per semi-annual period or makes certain other shareholder distributions before the Warrant expires on December 23, 2018.

        The Common Stock is traded on the NASDAQ National Market under the symbol "IBOC." The following table sets forth the approximate high and low bid prices in the Company's Common Stock during 2014 and 2013, as quoted on the NASDAQ National Market for each of the quarters in the two year period ended December 31, 2014. Some of the quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. The closing sales price of the Company's Common Stock was $24.65 per share at February 20, 2015.

		High		Low
2014:	First quarter	$	26.56	$	21.16
	Second quarter		27.04		22.24
	Third quarter		28.00		23.63
	Fourth quarter		28.49		23.20

		High		Low
2013:	First quarter	$	21.00	$	18.26
	Second quarter		22.93		17.95
	Third quarter		25.85		20.85
	Fourth quarter		27.20		21.34

        The Company paid cash dividends to the common shareholders of $.25 per share on April 18, 2014 to all holders of record on April 1, 2014 and $.27 per share on October 15, 2014 to all shareholders of record on September 30, 2014. The Company paid cash dividends to the common shareholders of $.20 per share on April 20, 2013 to all holders of record on April 1, 2013 and $.23 per share on October 15, 2013 to all holders of record on September 30, 2013, respectively.

        The Company's principal source of funds to pay cash dividends on its Common Stock is cash dividends from its bank subsidiaries. For a discussion of the limitations, please see Note 20 of Notes to Consolidated Financial Statements.

Stock Repurchase Program

        In April 2009, following receipt of the Treasury Department's consent, the Board of Directors re-established a formal stock repurchase program that authorized the repurchase of up to $40 million of

27

common stock within the following twelve months and on March 7, 2014, the Board of Directors extended the repurchase program and again authorized the repurchase of up to $40 million of common stock during the twelve month period commencing on April 9, 2014, which repurchase cap the Board is inclined to increase over time. Stock repurchases may be made from time to time, on the open market or through private transactions. Shares repurchased in this program will be held in treasury for reissue for various corporate purposes, including employee stock option plans. During the fourth quarter of 2014, the Company's Board of Directors adopted a Rule 10b5-1 plan and intends to adopt additional Rule 10b5-1 trading plans that will allow the Company to purchase its shares of common stock during certain trading blackout periods when the Company ordinarily would not be in the market due to trading restrictions in its internal trading policy. During the term of a 10b5-1 Plan, purchases of common stock are automatic to the extent the conditions of the 10b5-1 Plan's trading instructions are met. Shares repurchased in this program will be held in treasury for reissue for various corporate purposes, including employee stock option plans. As of February 20, 2015, a total of 8,684,680 shares had been repurchased under all programs at a cost of $257,704,000. The Company is not obligated to repurchase shares under its stock repurchase program or to enter into additional Rule 10b5-1 plans. The timing, actual number and value of shares purchased will depend on many factors, including the Company's cash flow and the liquidity and price performance of its shares of common stock.

        Except for repurchases in connection with the administration of an employee benefit plan in the ordinary course of business and consistent with past practices, common stock repurchases are only conducted under publicly announced repurchase programs approved by the Board of Directors. The following table includes information about common stock share repurchases for the quarter ended December 31, 2014.

	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of a Publicly- Announced Program		Approximate Dollar Value of Shares Available for Repurchase(1)
October 1—October 31, 2014		153,359	$	24.36		153,359	$	30,302,000
November 1—November 30, 2014		4,000		26.05		4,000		30,198,000
December 1—December 31, 2014		137,400		24.50		137,400		26,832,000
Total		294,759	$	24.45		294,759

(1)

The repurchase program was extended on March 7, 2014 and allows for the repurchase of up to an additional $40,000,000 of treasury stock through April 9, 2015.

Equity Compensation Plan Information

        The following table sets forth information as of December 31, 2014, with respect to the Company's equity compensation plans:

Plan Category	(A) Number of securities to be issued upon exercise of outstanding options, warrants and rights		(B) Weighted average exercise price of outstanding options, warrants and rights		(C) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column A)
Equity Compensation plans approved by security holders		993,889	$	18.94		204,750
Total		993,889	$	18.94		204,750

28

Stock Performance

COMPARISON OF CUMULATIVE FIVE YEAR TOTAL RETURN

Total Return To Shareholders
(Includes reinvestment of dividends)

			INDEXED RETURNS December 31,
	Base Period 2009
Company / Index			2010		2011		2012		2013		2014
International Bancshares Corporation		100		107.91		101.24		101.89		151.49		155.73
S&P 500 Index		100		115.06		117.49		136.30		180.44		205.14
S&P 500 Banks		100		119.84		106.99		132.92		180.40		208.39

29

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders
International Bancshares Corporation:

        We have audited the accompanying consolidated statements of condition of International Bancshares Corporation and subsidiaries as of December 31, 2014 and 2013, and the related consolidated statements of income, comprehensive income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2014. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of International Bancshares Corporation and subsidiaries as of December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles.

        We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), International Bancshares Corporation and subsidiaries' internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 1992, and our report dated February 27, 2015 expressed an unqualified opinion on the effectiveness of International Bancshares Corporation and subsidiaries' internal control over financial reporting.

/s/ McGladrey LLP

Dallas, Texas
February 27, 2015

30

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Condition

December 31, 2014 and 2013

(Dollars in Thousands, Except Per Share Amounts)

	2014			2013
Assets
Cash and cash equivalents	$	255,146		$	274,785
Investment securities:
Held to maturity (Market value of $2,400 on December 31, 2014 and $2,400 on December 31, 2013)		2,400			2,400
Available for sale (Amortized cost of $4,914,428 on December 31, 2014 and $5,372,594 on December 31, 2013)		4,931,963			5,304,579
Total investment securities		4,934,363			5,306,979
Loans		5,679,245			5,199,235
Less allowance for probable loan losses		(64,828	)		(70,161	)
Net loans		5,614,417			5,129,074
Bank premises and equipment, net		526,423			504,842
Accrued interest receivable		31,461			30,654
Other investments		420,670			388,563
Identified intangible assets, net		797			3,186
Goodwill		282,532			282,532
Other assets		130,711			158,862
Total assets	$	12,196,520		$	12,079,477

See accompanying notes to consolidated financial statements.

31

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Condition (Continued)

December 31, 2014 and 2013

(Dollars in Thousands, Except Per Share Amounts)

	2014			2013
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Demand—non-interest bearing	$	2,930,253		$	2,666,510
Savings and interest bearing demand		3,025,680			2,925,612
Time		2,482,692			2,651,303
Total deposits		8,438,625			8,243,425
Securities sold under repurchase agreements		858,350			957,381
Other borrowed funds		1,073,944			1,223,950
Junior subordinated deferrable interest debentures		175,416			190,726
Other liabilities		69,527			39,587
Total liabilities		10,615,862			10,655,069
Shareholders' equity:
Common shares of $1.00 par value. Authorized 275,000,000 shares; issued 95,783,977 shares on December 31, 2014 and 95,743,592 shares on December 31, 2013		95,784			95,744
Surplus		165,520			163,947
Retained earnings		1,585,389			1,467,000
Accumulated other comprehensive income (loss) (including $(4,881) on December 31, 2014 and $(5,646) on December 31, 2013 of comprehensive loss related to other-than-temporary impairment for non-credit related issues)		11,397			(43,774	)
		1,858,090			1,682,917
Less cost of shares in treasury, 29,324,567 shares on December 31, 2014 and 28,537,180 on December 31, 2013		(277,432	)		(258,509	)
Total shareholders' equity		1,580,658			1,424,408
Total liabilities and shareholders' equity	$	12,196,520		$	12,079,477

See accompanying notes to consolidated financial statements.

32

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income

Years ended December 31, 2014, 2013 and 2012

(Dollars in Thousands, Except Per Share Amounts)

	2014		2013		2012
Interest income:
Loans, including fees	$	281,546	$	263,027	$	268,588
Investment securities:
Taxable		100,095		87,198		94,885
Tax-exempt		11,767		12,877		11,663
Other interest income		191		115		503
Total interest income		393,599		363,217		375,639
Interest expense:
Savings and interest bearing demand deposits		3,597		3,762		5,288
Time deposits		12,033		15,444		23,973
Securities sold under repurchase agreements		24,616		29,171		37,645
Other borrowings		2,033		1,590		998
Junior subordinated deferrable interest debentures		4,264		4,665		6,595
Total interest expense		46,543		54,632		74,499
Net interest income		347,056		308,585		301,140
Provision for probable loan losses		14,423		22,968		27,959
Net interest income after provision for probable loan losses		332,633		285,617		273,181
Non-interest income:
Service charges on deposit accounts		88,586		97,087		93,128
Other service charges, commissions and fees
Banking		44,435		41,075		38,523
Non-banking		7,463		7,116		6,998
Investment securities transactions, net		1,283		9,601		38,446
Other investments, net		22,023		22,383		13,339
Other income		14,558		12,343		10,157
Total non-interest income		178,348		189,605		200,591

See accompanying notes to consolidated financial statements.

33

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income (Continued)

Years ended December 31, 2014, 2013 and 2012

(Dollars in Thousands, Except Per Share Amounts)

	2014		2013		2012
Non-interest expense:
Employee compensation and benefits	$	121,511	$	119,845	$	118,041
Occupancy		32,530		31,766		34,608
Depreciation of bank premises and equipment		24,013		26,017		26,756
Professional fees		10,925		13,146		14,369
Deposit insurance assessments		6,082		6,737		7,709
Net expense, other real estate owned		2,358		6,896		8,929
Amortization of identified intangible assets		2,389		4,633		4,651
Advertising		7,742		7,034		7,017
Early termination fee—securities sold under repurchase agreements		11,000		12,303		31,550
Impairment charges (Total other-than-temporary impairment charges, $(366) less loss of $1,183, $(431) less loss of $1,805, and $(916) less gain of $(123), included in other comprehensive loss)		817		1,374		1,039
Other		61,676		62,881		60,703
Total non-interest expense		281,043		292,632		315,372
Income before income taxes		229,938		182,590		158,400
Provision for income taxes		76,787		56,239		50,565
Net income	$	153,151	$	126,351	$	107,835
Preferred stock dividends and discount accretion		—		—		14,362
Net income available to common shareholders	$	153,151	$	126,351	$	93,473
Basic earnings per common share:
Weighted average number of shares outstanding		66,872,500		67,195,180		67,236,681
Net income	$	2.29	$	1.88	$	1.39
Fully diluted earnings per common share:
Weighted average number of shares outstanding		67,056,456		67,314,859		67,313,963
Net income	$	2.28	$	1.88	$	1.39

See accompanying notes to consolidated financial statements.

34

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

Years ended December 31, 2014, 2013, and 2012

(Dollars in Thousands)

	2014			2013			2012
Net income	$	153,151		$	126,351		$	107,835
Other comprehensive income (loss), net of tax:
Net unrealized holding gains (losses) on securities available for sale arising during period (net of tax effects of $29,870, $(56,048), and $2,701)		55,474			(104,088	)		5,018
Reclassification adjustment for gains on securities available for sale included in net income (net of tax effects of $(449), $(3,360), and $(13,456))		(834	)		(6,241	)		(24,990	)
Reclassification adjustment for impairment charges on available for sale securities included in net income (net of tax effects of $286, $481, and $364)		531			893			675
		55,171			(109,436	)		(19,297	)
Comprehensive income	$	208,322		$	16,915		$	88,538

See accompanying notes to consolidated financial statements.

35

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Shareholders' Equity

Years ended December 31, 2014, 2013 and 2012

(in Thousands, except share and per share amounts)

	Preferred Stock			Number of Shares		Common Stock		Surplus		Retained Earnings			Other Comprehensive Income (Loss)			Treasury Stock			Total
Balance at December 31, 2011	$	210,548			95,720	$	95,720	$	162,767	$	1,302,964		$	84,959		$	(256,793	)	$	1,600,165
Net Income		—			—		—		—		107,835			—			—			107,835
Dividends:
Cash ($.40 per share)		—			—		—		—		(26,894	)		—			—			(26,894	)
Preferred stock (5%) including discount accretion		5,452			—		—		—		(14,362	)		—			—			(8,910	)
Redemption of Series A Preferred Shares (216,000 shares)		(216,000	)		—		—		—		—			—			—			(216,000	)
Purchase of treasury (95,466 shares)		—			—		—		—		—			—			(1,716	)		(1,716	)
Exercise of stock options		—			5		5		46		—			—			—			51
Stock compensation expense recognized in earnings		—			—		—		474		—			—			—			474
Other comprehensive (loss), net of tax:
Net change in unrealized gains and losses on available for sale securities, net of reclassification adjustment		—			—		—		—		—			(19,297	)		—			(19,297	)
Balance at December 31, 2012		—			95,725		95,725		163,287		1,369,543			65,662			(258,509	)		1,435,708
Net Income		—			—		—		—		126,351			—			—			126,351
Dividends:
Cash ($.43 per share)		—			—		—		—		(28,894	)		—			—			(28,894	)
Exercise of stock options		—			19		19		246		—			—			—			265
Stock compensation expense recognized in earnings		—			—		—		414		—			—			—			414
Other comprehensive (loss), net of tax:
Net change in unrealized gains and losses on available for sale securities, net of reclassification adjustment		—			—		—		—		—			(109,436	)		—			(109,436	)
Balance at December 31, 2013		—			95,744		95,744		163,947		1,467,000			(43,774	)		(258,509	)		1,424,408
Net Income		—			—		—		—		153,151			—			—			153,151
Dividends:
Cash ($.52 per share)		—			—		—		—		(34,762	)		—			—			(34,762	)
Purchase of treasury (787,387 shares)		—			—		—		—		—			—			(18,923	)		(18,923	)
Exercise of stock options		—			40		40		515		—			—			—			555
Stock compensation expense recognized in earnings		—			—		—		1,058		—			—			—			1,058
Other comprehensive income, net of tax:
Net change in unrealized gains and losses on available for sale securities, net of reclassification adjustments		—			—		—		—		—			55,171			—			55,171
Balance at December 31, 2014		—			95,784	$	95,784	$	165,520	$	1,585,389		$	11,397		$	(277,432	)	$	1,580,658

See accompanying notes to consolidated financial statements.

36

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years ended December 31, 2014, 2013 and 2012

(Dollars in Thousands)

	2014			2013			2012
Operating activities:
Net income	$	153,151		$	126,351		$	107,835
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for probable loan losses		14,423			22,968			27,959
Specific reserve, other real estate owned		779			1,204			1,776
Depreciation of bank premises and equipment		24,013			26,017			26,756
Gain on sale of bank premises and equipment		(3,658	)		(2,089	)		(538	)
(Gain) loss on sale of other real estate owned		(933	)		(460	)		488
Accretion of investment securities discounts		(2,608	)		(4,025	)		(3,195	)
Amortization of investment securities premiums		26,729			44,245			30,501
Investment securities transactions, net		(1,283	)		(9,601	)		(38,446	)
Impairment charges on available for sale securities		817			1,374			1,039
Amortization of identified intangible assets		2,389			4,633			4,651
Stock based compensation expense		1,058			414			474
Earnings from affiliates and other investments		(10,903	)		(18,806	)		(9,892	)
Deferred tax (benefit) expense		(1,027	)		(1,817	)		7,923
(Increase) decrease in accrued interest receivable		(807	)		380			968
(Increase) decrease in other assets		(1,621	)		20,612			(5,392	)
(Decrease) increase in other liabilities		(7,482	)		(2,274	)		7,106
Net cash provided by operating activities		193,037			209,126			160,013
Investing activities:
Proceeds from maturities of securities		—			1,200			1,125
Proceeds from sales and calls of available for sale securities		621,588			178,123			1,382,231
Purchases of available for sale securities		(971,358	)		(1,384,254	)		(3,081,034	)
Principal collected on mortgage backed securities		787,361			1,223,532			1,294,197
Net (increase) decrease in loans		(502,129	)		(444,919	)		170,072
Purchases of other investments		(20,602	)		(2,475	)		(4,228	)
Distributions from (contributions) to other investments		18,152			5,457			(7,410	)
Purchases of bank premises and equipment		(50,360	)		(50,016	)		(62,030	)
Proceeds from sales of bank premises and equipment		8,424			2,533			7,575
Proceeds from sales of other real estate owned		18,525			23,170			38,766
Purchase of identified intangible asset		—			—			(280	)
Net cash used in investing activities		(90,399	)		(447,649	)		(261,016	)

See accompanying notes to consolidated financial statements.

37

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Continued)

Years ended December 31, 2014, 2013 and 2012

(Dollars in Thousands)

	2014			2013			2012
Financing activities:
Net increase in non-interest bearing demand deposits	$	263,743		$	200,760		$	538,732
Net increase in savings and interest bearing demand deposits		100,068			58,461			159,458
Net decrease in time deposits		(168,611	)		(303,009	)		(357,069	)
Net decrease in securities sold under repurchase agreements		(99,031	)		(172,298	)		(218,950	)
Other borrowed funds, net		(150,006	)		474,923			254,866
Repayment of long-term debt		(15,310	)		—			—
Purchase of treasury stock		(18,923	)		—			(1,716	)
Redemption of Series A preferred shares		—			—			(216,000	)
Proceeds from stock transactions		555			265			51
Payments of cash dividends—common		(34,762	)		(28,894	)		(26,894	)
Payments of cash dividends—preferred		—			—			(10,260	)
Net cash (used in) provided by financing activities		(122,277	)		230,208			122,218
(Decrease) increase in cash and cash equivalents		(19,639	)		(8,315	)		21,215
Cash and cash equivalents at beginning of year		274,785			283,100			261,885
Cash and cash equivalents at end of year	$	255,146		$	274,785		$	283,100
Supplemental cash flow information:
Interest paid	$	47,273		$	56,818		$	77,431
Income taxes paid		80,374			60,532			36,303
Non-cash investing and financing activities:
Net transfers from loans to other real estate owned		2,363			9,688			54,441

See accompanying notes to consolidated financial statements.

38

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(1) Summary of Significant Accounting Policies

        The accounting and reporting policies of International Bancshares Corporation ("Corporation") and Subsidiaries (the Corporation and Subsidiaries collectively referred to herein as the "Company") conform to accounting principles generally accepted in the United States of America 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

        The consolidated financial statements include the accounts of the Corporation and its wholly-owned bank subsidiaries, International Bank of Commerce, Laredo ("IBC"), Commerce Bank, International Bank of Commerce, Zapata, International Bank of Commerce, Brownsville, and the Corporation's wholly-owned non-bank subsidiaries, IBC Subsidiary Corporation, IBC Life Insurance Company, IBC Trading Company, Premier Tierra Holdings, Inc., IBC Charitable and Community Development Corporation, and IBC Capital Corporation. All significant inter-company balances and transactions have been eliminated in consolidation.

        The Company, through its subsidiaries, is 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. The primary markets of the Company are South, Central, and Southeast Texas and the state of Oklahoma. Each bank subsidiary is very active in facilitating international trade along the United States border with Mexico and elsewhere. Although the Company's loan portfolio is diversified, the ability of the Company's debtors to honor their contracts is primarily dependent upon the economic conditions in the Company's trade area. In addition, the investment portfolio is directly impacted by fluctuations in market interest rates. The Company and its bank subsidiaries are subject to the regulations of certain Federal agencies as well as the Texas Department of Banking and undergo periodic examinations by those regulatory authorities. Such agencies may require certain standards or impose certain limitations based on their judgments or changes in law and regulations.

        The Company owns two insurance-related subsidiaries, IBC Life Insurance Company and IBC Insurance Agency, Inc., a wholly owned subsidiary of IBC, the bank subsidiary. Neither of the insurance-related subsidiaries conducts underwriting activities. The IBC Life Insurance Company is in the business of reinsuring credit life and credit accident and health insurance. The business is assumed from an unaffiliated insurer and the only business written is generated by the bank subsidiaries of the Company. The risk assumed on each of the policies is not significant to the consolidated financial statements.

        The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the statement of condition and income and expenses for the periods. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant changes in the near-term relate to the determination of the allowance for probable loan losses.

Subsequent Events

        The Company has evaluated all events or transactions that occurred through the date the Company issued these financial statements. During this period, the Company did not have any material recognizable or non-recognizable subsequent events.

39

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(1) Summary of Significant Accounting Policies (Continued)

Investment Securities

        The Company classifies debt and equity securities into one of these categories: held-to-maturity, available-for-sale, or trading. Such classifications are reassessed for appropriate classification at each reporting date. Securities that are intended and expected to be held until maturity are classified as "held-to-maturity" and are carried at amortized cost for financial statement reporting. Securities that are not positively expected to be held until maturity, but are intended to be held for an indefinite period of time are classified as "available-for-sale" or "trading" and are carried at their fair value. Unrealized holding gains and losses are included in net income for those securities classified as "trading", while unrealized holding gains and losses related to those securities classified as "available-for-sale" are excluded from net income and reported net of tax as other comprehensive income and in shareholders' equity as accumulated other comprehensive income until realized. The Company did not maintain any trading securities during the three year period ended December 31, 2014.

        Mortgage-backed securities held at December 31, 2014 and 2013 represent participating interests in pools of long-term first mortgage loans originated and serviced by the issuers of the securities. Mortgage-backed securities are either issued or guaranteed by the U.S. Government or its agencies including the Federal Home Loan Mortgage Corporation ("Freddie Mac"), the Federal National Mortgage Association ("Fannie Mae"), the Government National Mortgage Association ("Ginnie Mae") or other non-government entities. Investments in residential mortgage-backed securities issued by Ginnie Mae are fully guaranteed by the U. S. Government. Investments in residential mortgage-backed securities issued by Freddie Mac and Fannie Mae are not fully guaranteed by the U.S. Government, however, the Company believes that the quality of the bonds is similar to other AAA rated bonds with limited credit risk, particularly given the placement of Fannie Mae and Freddie Mac into conservatorship by the federal government in 2008 and because securities issued by others that are collateralized by residential mortgage-backed securities issued by Fannie Mae or Freddie Mac are rated consistently as AAA rated securities. Market interest rate fluctuations can affect the prepayment speed of principal and the yield on the security.

        Premiums and discounts are amortized using the level yield or "interest method" over the terms of the securities. Declines in the fair value of held-to-maturity and available-for sale-securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In determining whether other-than-temporary impairment exists, management considers many factors, including (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent of the Company to hold and the determination of whether the Company will more likely than not be required to sell the security prior to a recovery in fair value. If the Company determines that (1) it intends to sell the security or (2) it is more likely than not that it will be required to sell the security before it's anticipated recovery, the other-than-temporary impairment that is recognized in earnings is equal to the difference between the fair value of the security and the Company's amortized cost in the security. If the Company determines that it (1) does not intend to sell the security and (2) it will not be more likely than not required to sell the security before it's anticipated recovery, the other-than-temporary impairment is segregated into its two components (1) the amount of impairment related to credit loss and (2) the amount of impairment related to other factors. The difference between the present value of the cash flows expected to be collected and the amortized cost is the credit loss recognized through earnings and an adjustment to the cost basis of the security. The amount of impairment related to other factors is included in other comprehensive income (loss). Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

40

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(1) Summary of Significant Accounting Policies (Continued)

Provision and Allowance for Probable Loan Losses

        The allowance for probable loan losses is maintained at a level considered adequate by management to provide for probable loan losses. The allowance is increased by provisions charged to operating expense and reduced by net charge-offs. The provision for probable loan losses is the amount, which, in the judgment of management, is necessary to establish the allowance for probable loan losses at a level that is adequate to absorb known and inherent risks in the loan portfolio.

        Management believes that the allowance for probable loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company's bank subsidiaries' allowances for probable loan losses. Such agencies may require the Company's bank subsidiaries to make additions or reductions to their U.S. generally accepted accounting principles ("GAAP") allowances based on their judgments of information available to them at the time of their examination.

        The bank subsidiaries charge off that portion of any loan which management considers to represent a loss as well as that portion of any other loan which is classified as a "loss" by bank examiners. Commercial, financial and agricultural or real estate loans are generally considered by management to represent a loss, in whole or part, (i) when an exposure beyond any collateral coverage is apparent, (ii) when no further collection of the portion of the loan so exposed is anticipated based on actual results, (iii) when the credit enhancements, if any, are not adequate, and (iv) when the borrower's financial condition would indicate so. Generally, unsecured consumer loans are charged off when 90 days past due.

Loans

        Loans are reported at the principal balance outstanding, net of unearned discounts. Interest income on loans is reported on an accrual basis. Loan fees and costs associated with originating the loans are amortized over the life of the loan using the interest method. The Company originates mortgage loans that may subsequently be sold to an unaffiliated third party. The loans are not securitized and if sold, are sold without recourse. Loans held for sale are carried at cost and the principal amount outstanding is not significant to the consolidated financial statements.

Impaired Loans

        Impaired loans are those loans where it is probable that all amounts due according to contractual terms of the loan agreement will not be collected. Impaired loans are measured based on (1) the present value of expected future cash flows discounted at the loan's effective interest rate; (2) the loan's observable market price; or (3) the fair value of the collateral if the loan is collateral dependent. Substantially all of the Company's impaired loans are measured at the fair value of the collateral. In limited cases the Company may use other methods to determine the level of impairment of a loan if such loan is not collateral dependent.

Troubled Debt Restructured Loans

        Troubled debt restructured loans ("TDR") are those loans where, for reasons related to a borrower's difficulty to repay a loan, the Company grants a concession to the borrower that the Company would not normally consider in the normal course of business. The original terms of the loan are modified or

41

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(1) Summary of Significant Accounting Policies (Continued)

restructured. The terms that may be modified include a reduction in the original stated interest rate, an extension of the original maturity of the loan, a renewal of the loan at an interest rate below current market rates, a reduction in the principal amount of debt outstanding, a reduction in accrued interest or deferral of interest payments. A loan classified as a TDR is classified as an impaired loan and included in the impaired loan totals. A TDR loan may be returned to accrual status when the loan is brought current, has performed in accordance with the restructured terms for a reasonable period of time and the ultimate collectability of the outstanding principal and interest is no longer questionable, however, although those loans may be placed back on accrual status, they will continue to be classified as impaired. Consistent with regulatory guidance, a TDR loan that is subsequently modified, but has shown sustained performance and classification as a TDR, will be removed from TDR status provided that the modified terms were market-based at the time of modification.

Non-Accrual Loans

        The non-accrual loan policy of the Company's bank subsidiaries is to discontinue the accrual of interest on loans when management determines that it is probable that future interest accruals will be un-collectible. As it relates to consumer loans, management charges off those loans when the loan is contractually 90 days past due. Under special circumstances, a consumer or non-consumer loan may be more than 90 days delinquent as to interest or principal and not be placed on non-accrual status. This situation generally results when a bank subsidiary has a borrower who is experiencing financial difficulties, but not to the extent that requires a restructuring of indebtedness. The majority of this category is composed of loans that are considered to be adequately secured and/or for which there are expected future payments. When a loan is placed on non-accrual status, any interest accrued, not paid is reversed and charged to operations against interest income. As it relates to non-consumer loans that are not 90 days past due, management will evaluate each of these loans to determine if placing the loan on non-accrual status is warranted. Interest income on non-accrual loans is recognized only to the extent payments are received or when, in management's opinion, the debtor's financial condition warrants reestablishment of interest accruals.

Other Real Estate Owned

        Other real estate owned is comprised of real estate acquired by foreclosure and deeds in lieu of foreclosure. Other real estate is carried at the lower of the recorded investment in the property or its fair value less estimated costs to sell such property (as determined by independent appraisal). Prior to foreclosure, the value of the underlying loan is written down to the fair value of the real estate to be acquired by a charge to the allowance for probable loan losses, if necessary. Any subsequent write-downs are charged against other non-interest expense. Other real estate owned totaled $69,872,000 and $85,879,000 at December 31, 2014 and 2013, respectively. Other real estate owned is included in other assets.

Bank Premises and Equipment

        Bank premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed on straight-line and accelerated methods over the estimated useful lives of the assets. Repairs and maintenance are charged to operations as incurred and expenditures for renewals and betterments are capitalized.

42

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(1) Summary of Significant Accounting Policies (Continued)

Other Investments

        Other investments include equity investments in non-financial companies, bank owned life insurance, as well as equity securities with no readily determinable fair market value. Equity investments are accounted for using the equity method of accounting. Equity securities with no readily determinable fair value are accounted for using the cost method.

Income Taxes

        Deferred income tax assets and liabilities are determined using the asset and liability method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the differences between the book and tax basis of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws. The Company files a consolidated federal income tax return with its subsidiaries.

        Recognition of deferred tax assets is based on management's assessment that the benefit related to certain temporary differences, tax operating loss carry forwards, and tax credits are more likely than not to be realized. A valuation allowance is recorded for the amount of the deferred tax items for which it is more likely than not that the tax benefits will not be realized.

        The Company evaluates uncertain tax positions at the end of each reporting period. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefit recognized in the financial statements from any such a position is measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. As of December 31, 2014 and 2013, respectively, after evaluating all uncertain tax positions, the Company has recorded no liability for unrecognized tax benefits at the end of the reporting period. The Company would recognize any interest accrued on unrecognized tax benefits as other interest expense and penalties as other non-interest expense. During the years ended December 31, 2014, 2013 and 2012, the Company recognized no interest expense or penalties related to uncertain tax positions.

        The Company files consolidated tax returns in the U.S. Federal jurisdiction and various state jurisdictions. The Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years before 2011.

Stock Options

        Compensation expense for stock awards is based on the market price of the stock on the measurement date, which is generally the date of grant, and is recognized ratably over the service period of the award. The fair value of stock options granted was estimated, using the Black-Sholes-Merton option-pricing model. This model was developed for use in estimating the fair value of publicly traded options that have no vesting restrictions and are fully transferable. Additionally, the model requires the input of highly subjective assumptions. Because the Company's employee stock options have characteristics significantly different from those of publicly traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the Black-Scholes-Merton option-pricing model does not necessarily provide a reliable single measure of the fair value of the Company's stock options.

43

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(1) Summary of Significant Accounting Policies (Continued)

Net Income Per Share

        Basic Earnings Per Share ("EPS") is calculated by dividing net income by the weighted average number of common shares outstanding. The computation of diluted EPS assumes the issuance of common shares for all dilutive potential common shares outstanding during the reporting period. The dilutive effect of stock options is considered in earnings per share calculations, if dilutive, using the treasury stock method.

Goodwill and Identified Intangible Assets

        Goodwill represents the excess of costs over fair value of assets of businesses acquired. Goodwill is tested for impairment at least annually or on an interim basis if an event triggering impairment may have occurred. As of October 1, 2014, after completing goodwill testing, the Company has determined that no goodwill impairment exists.

        Identified intangible assets are acquired assets that lack physical substance but can be distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in combination with a related contract, asset, or liability. The Company's identified intangible assets relate to core deposits and contract rights. As of December 31, 2014, the Company has determined that no impairment of identified intangibles exists. Identified intangible assets with definite useful lives are amortized on an accelerated basis over their estimated life. See Note 6—Goodwill and Other Intangible Assets.

Impairment of Long-Lived Assets

        Long-lived assets, such as property, plant and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying value of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying value of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying value of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the statement of condition and reported at the lower of the carrying value or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the statement of condition.

Consolidated Statements of Cash Flows

        For purposes of the consolidated statements of cash flows, the Company considers all short-term investments with a maturity at date of purchase of three months or less to be cash equivalents. Also, the Company reports transactions related to deposits and loans to customers on a net basis.

Accounting for Transfers and Servicing of Financial Assets

        The Company accounts for transfers and servicing of financial assets and extinguishments of liabilities based on the application of a financial-components approach that focuses on control. After a transfer of financial assets, the Company recognizes the financial and servicing assets it controls and liabilities it has incurred, derecognizes financial assets when control has been surrendered and derecognizes liabilities

44

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(1) Summary of Significant Accounting Policies (Continued)

when extinguished. The Company has retained mortgage servicing rights in connection with the sale of mortgage loans. Because the Company may not initially identify loans as originated for resale, all loans are initially treated as held for investment. The value of the mortgage servicing rights are reviewed periodically for impairment and are amortized in proportion to, and over the period of estimated net servicing income or net servicing losses. The value of the mortgage servicing rights is not significant to the consolidated statements of condition.

Segments of an Enterprise and Related Information

        The Company operates as one segment. The operating information used by the Company's chief executive officer for purposes of assessing performance and making operating decisions about the Company is the consolidated financial statements presented in this report. The Company has four active operating subsidiaries, namely, the bank subsidiaries, otherwise known as International Bank of Commerce, Laredo, Commerce Bank, International Bank of Commerce, Zapata and International Bank of Commerce, Brownsville. The Company applies the provisions of ASC Topic 280, "Segment Reporting," in determining its reportable segments and related disclosures.

Comprehensive Income (Loss)

        Comprehensive income (loss) consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on securities available for sale.

Advertising

        Advertising costs are expensed as incurred.

Reclassifications

        Certain amounts in the prior year's presentations have been reclassified to conform to the current presentation. These reclassifications had no effect on previously reported net income or shareholders' equity.

New Accounting Standards

        In February 2013, the Financial Accounting Standards Board issued Accounting Standards Update No. 2013-02 to ASC 220, "Comprehensive Income." The update amends existing literature to require an entity to provide information about the amounts reclassified out of other comprehensive income by component, and it also requires enhanced disclosure and cross reference on items reclassified out of accumulated other comprehensive income during the reporting period. The update is effective for reporting periods beginning after December 15, 2012. The adoption of the update to existing standards did not have a significant impact to the Company's consolidated financial statements.

        In July 2013, the Financial Accounting Standards Board issued Accounting Standards Update No. 2013-11 to ASC 740, "Income Taxes." The update amends existing literature to eliminate diversity in practice in the presentation of unrecognized tax benefits in instances where a net operating loss carryforward, a similar tax loss or a tax credit carryforward also exist. The update clarifies how the unrecognized tax benefit should be presented in those situations where other tax losses or tax credit carryforwards exist. The update does not change the currently required disclosures for unrecognized tax

45

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(1) Summary of Significant Accounting Policies (Continued)

benefits under current ASC 740 guidance. The update is effective for fiscal years and interim periods within those years beginning after December 15, 2013. The adoption of the update to existing standards did not have a significant impact to the Company's consolidated financial statements.

        In January 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-01 to ASC 323-70, "Investments—Equity Method and Joint Ventures—Accounting for Investments in Qualified Affordable Housing Project." The update issues new guidance for investments in qualified affordable housing projects which permits entities to elect to apply the proportional amortization method to account for the investment when certain conditions are met. The update is effective for public entities for annual and interim periods beginning after December 15, 2014 and is able to be applied retrospectively. The adoption of the update is not expected to have a significant impact to the Company's consolidated financial statements.

        In January 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-04 to ASC 310-40, "Receivables—Troubled Debt Restructurings by Creditors." The update amends existing literature to eliminate diversity in practice by clarifying and defining when an in substance repossession or foreclosure occurs. The terms "in substance repossession or foreclosure" and "physical possession" are not currently defined in the accounting literature, resulting in diversity in practice when a creditor derecognizes a loan receivable and recognizes the real estate property collateralizing the loan receivable as an asset. Additionally, the update requires interim and annual disclosures of both the amount of foreclosed residential real estate property and the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure. The update is effective for annual periods and the interim periods within those annual periods beginning after December 15, 2014. The adoption of the update to existing standards is not expected to have a significant impact to the Company's consolidated financial statements.

        In April 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-08 to ASC 205, "Presentation of Financial Statements," and ASC 360, "Property, Plant and Equipment." The update to existing standards change the requirements for reporting discontinued operations, primarily by clarifying that the disposal of a component or group of components of an entity could constitute discontinued operations under certain circumstances. The update also defines required information in disclosures about discontinued operations, including a discussion of the entity's continued involvement in the discontinued operation, if any. The update is applicable to all disposals of components of an entity that occurred within interim and annual periods beginning after December 15, 2014 and for acquisitions that are classified as held for sale for interim and annual periods beginning after December 15, 2014. The adoption of the update is not expected to have a significant impact to the Company's consolidated financial statements.

        In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09 to ASC 606, "Revenue from Contracts with Customers." The update sets a common standard that defines revenue and the principles for recognizing revenue. The update outlines when an entity should recognize revenue, among other matters. At its core, the update states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The update also outlines the steps that entities should take to determine and record the correct revenue number. The update is effective for annual periods beginning after December 15, 2016 and the interim periods within

46

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(1) Summary of Significant Accounting Policies (Continued)

that reporting period. The Company is evaluating the potential impact to the Company's consolidated financial statements.

        In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-11 to ASC 860, "Transfers and Servicing." The update amends existing standards to require that repurchase-to-maturity transactions be accounted for as secured borrowings, in line with accounting standards for other similar instruments. Additionally, the update requires various disclosures including information regarding transfers accounted for as sales in transactions that are economically similar as repurchase agreements, in addition to disclosures related to collateral, remaining contractual tenor and a discussion of the potential risks associated with repurchase agreements, securities lending transactions and repurchase-to-maturity transactions. The update is effective for interim and annual periods beginning after December 15, 2014. The adoption of the update to existing standards is not expected to have a significant impact to the Company's consolidated financial statements.

        In August 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-14 to ASC 310-40, "Receivables—Troubled Debt Restructurings by Creditors." The update is new guidance regarding classification and measurement of foreclosed mortgage loans that are government guaranteed. The update specifies that government secured mortgage loans foreclosed upon should be classified as other assets and measured based on the amount of the loan balance that is expected to be recovered from the guarantor. The new guidance is effective for interim and annual periods after December 15, 2014. The adoption of the update is not expected to have a significant impact to the Company's consolidated financial statements.

        In January 2015, the Financial Accounting Standards Board issued Accounting Standards Update No. 2015-01 to ASC 225-20, "Income Statement- Extraordinary and Unusual Items." The update amends existing standards and is being issued as part of the FASB's initiative to reduce complexity in accounting standards. The update eliminates the concept of extraordinary items. The update is effective for interim and annual periods after December 15, 2015. The adoption of the update to existing standards is not expected to have a significant impact to the Company's consolidated financial statements.

        In February 2015, the Financial Accounting Standards Board issued Accounting Standards Update No. 2015-02 to ASC 810, "Consolidation." The update amends existing standards regarding the evaluation of certain legal entities and their consolidation in the financial statements. The amendments modify the evaluation process to assess whether limited partnerships and similar legal entities are variable interest entities or voting interest entities, eliminate the presumption that a general partner should consolidate a limited partnership, affect the consolidation analysis of entities that are involved in variable interest entities, particularly those that have fee arrangements and related party relationships and provides a scope exception for reporting entities with legal interests that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. The update is effective for interim and annual periods after December 15, 2015. The Company is evaluating the impact of the adoption of the update.

47

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(2) Investment Securities

        The amortized cost and estimated fair value by type of investment security at December 31, 2014 are as follows:

	Held to Maturity
	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value		Carrying value
	(Dollars in Thousands)
Other securities	$	2,400	$	—	$	—	$	2,400	$	2,400
Total investment securities	$	2,400	$	—	$	—	$	2,400	$	2,400

	Available for Sale
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value		Carrying value(1)
	(Dollars in Thousands)
Residential mortgage-backed securities	$	4,597,590	$	47,960	$	(45,178	)	$	4,600,372	$	4,600,372
Obligations of states and political subdivisions		268,763		19,131		(5,618	)		282,276		282,276
Other debt securities		20,000		—		—			20,000		20,000
Equity securities		28,075		1,425		(185	)		29,315		29,315
Total investment securities	$	4,914,428	$	68,516	$	(50,981	)	$	4,931,963	$	4,931,963

(1)

Included in the carrying value of residential mortgage-backed securities are $1,503,774 of mortgage-backed securities issued by Ginnie Mae, $3,072,535 of mortgage-backed securities issued by Fannie Mae and Freddie Mac and $24,063 issued by non-government entities

        The amortized cost and estimated fair value of investment securities at December 31, 2014, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay obligations with or without prepayment penalties.

	Held to Maturity				Available for Sale
	Amortized Cost		Estimated fair value		Amortized Cost		Estimated fair value
	(Dollars in Thousands)
Due in one year or less	$	1,075	$	1,075	$	—	$	—
Due after one year through five years		1,325		1,325		—		—
Due after five years through ten years		—		—		735		812
Due after ten years		—		—		288,028		301,464
Residential mortgage-backed securities		—		—		4,597,590		4,600,372
Equity securities		—		—		28,075		29,315
Total investment securities	$	2,400	$	2,400	$	4,914,428	$	4,931,963

48

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(2) Investment Securities (Continued)

        The amortized cost and estimated fair value by type of investment security at December 31, 2013 are as follows:

	Held to Maturity
	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value		Carrying value
	(Dollars in Thousands)
Other securities	$	2,400	$	—	$	—	$	2,400	$	2,400
Total investment securities	$	2,400	$	—	$	—	$	2,400	$	2,400

	Available for Sale
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value		Carrying value(1)
	(Dollars in Thousands)
Residential mortgage-backed securities	$	5,096,165	$	56,110	$	(124,574	)	$	5,027,701	$	5,027,701
Obligations of states and political subdivisions		248,354		8,063		(8,007	)		248,410		248,410
Equity securities		28,075		931		(538	)		28,468		28,468
Total investment securities	$	5,372,594	$	65,104	$	(133,119	)	$	5,304,579	$	5,304,579

(1)

Included in the carrying value of residential mortgage-backed securities are $1,799,807 of mortgage-backed securities issued by Ginnie Mae, $3,200,042 of mortgage-backed securities issued by Fannie Mae and Freddie Mac and $27,852 issued by non-government entities

        Residential mortgage-backed securities are securities issued by Freddie Mac, Fannie Mae, Ginnie Mae or non-government entities. Investments in residential mortgage-backed securities issued by Ginnie Mae are fully guaranteed by the U.S. Government. Investments in mortgage-backed securities issued by Freddie Mac and Fannie Mae are not fully guaranteed by the U.S. Government, however, the Company believes that the quality of the bonds is similar to other AAA rated bonds with limited credit risk, particularly given the placement of Fannie Mae and Freddie Mac into conservatorship by the federal government in early September 2008 and because securities issued by others that are collateralized by residential mortgage-backed securities issued by Fannie Mae and Freddie Mac are rated consistently as AAA rated securities.

        The amortized cost and fair value of available for sale investment securities pledged to qualify for fiduciary powers, to secure public monies as required by law, repurchase agreements and short-term fixed borrowings was $2,182,579,000 and $2,196,169,000, respectively, at December 31, 2014.

        Proceeds from the sale and call of securities available-for-sale were $621,588,000, $178,123,000 and $1,382,231,000 during 2014, 2013 and 2012, respectively, which amounts included $620,933,000, $177,623,000 and $1,338,723,000 of mortgage-backed securities. Gross gains of $9,479,000, $9,601,000 and $38,447,000 and gross losses of $8,196,000, $0 and $1,000 were realized on the sales in 2014, 2013 and 2012, respectively.

49

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(2) Investment Securities (Continued)

        Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2014 were as follows:

	Less than 12 months					12 months or more					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Available for sale:
Residential mortgage-backed securities	$	808,072	$	(4,910	)	$	1,836,218	$	(40,268	)	$	2,644,290	$	(45,178	)
Obligations of states and political subdivisions		8,833		(97	)		27,793		(5,521	)		36,626		(5,618	)
Equity securities		74		(1	)		8,066		(184	)		8,140		(185	)
	$	816,979	$	(5,008	)	$	1,872,077	$	(45,973	)	$	2,689,056	$	(50,981	)

        Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous loss position, at December 31, 2013 were as follows:

	Less than 12 months					12 months or more					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Available for sale:
Residential mortgage-backed securities	$	2,459,565	$	(98,022	)	$	420,262	$	(26,552	)	$	2,879,827	$	(124,574	)
Obligations of states and political subdivisions		55,327		(3,025	)		14,292		(4,982	)		69,619		(8,007	)
Equity securities		19,462		(538	)		—		—			19,462		(538	)
	$	2,534,354	$	(101,585	)	$	434,554	$	(31,534	)	$	2,968,908	$	(133,119	)

        The unrealized losses on investments in residential mortgage-backed securities are primarily caused by changes in market interest rates. Residential mortgage-backed securities are primarily securities issued by Freddie Mac, Fannie Mae and Ginnie Mae. The contractual cash obligations of the securities issued by Ginnie Mae are fully guaranteed by the U.S. Government. The contractual cash obligations of the securities issued by Freddie Mac and Fannie Mae are not fully guaranteed by the U.S. Government; however, the Company believes that the quality of the bonds is similar to other AAA rated bonds with limited credit risk, particularly given the placement of Fannie Mae and Freddie Mac into conservatorship by the federal government in early September 2008 and because securities issued by others that are collateralized by residential mortgage-backed securities issued by Fannie Mae and Freddie Mac are rated consistently as AAA rated securities. The decrease in fair value on residential mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae is due to market interest rates. The Company has no intent to sell and will more than likely not be required to sell before a market price recovery or maturity of the securities; therefore, it is the conclusion of the Company that the investments in residential mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae are not considered

50

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(2) Investment Securities (Continued)

other-than-temporarily impaired. In addition, the Company has a small investment in non-agency residential mortgage-backed securities that have strong credit backgrounds and include additional credit enhancements to protect the Company from losses arising from high foreclosure rates. These securities have additional market volatility beyond economically induced interest rate events. It is the conclusion of the Company that the investments in non-agency residential mortgage-backed securities are other-than-temporarily impaired due to both credit and other than credit issues. An impairment charge of $817,000 ($531,050, after tax), was recorded in 2014 on the non-agency residential mortgage backed securities. Impairment charges of $1,374,000 ($893,100, after tax) and $1,039,000 ($675,000, after tax) were recorded in 2013 and 2012, respectively on the non-agency residential mortgage backed securities. The impairment charges represent the credit related impairment on the securities.

        The unrealized losses on investments in other securities are caused by fluctuations in market interest rates. The underlying cash obligations of the securities are guaranteed by the entity underwriting the debt instrument. It is the belief of the Company that the entity issuing the debt will honor its interest payment schedule, as well as the full debt at maturity. The securities are purchased by the Company for their economic value. The decrease in fair value is primarily due to market interest rates and not other factors, and because the Company has no intent to sell and will more than likely not be required to sell before a market price recovery or maturity of the securities, it is the conclusion of the Company that the investments are not considered other-than-temporarily impaired.

        The following table presents a reconciliation of credit-related impairment charges on available-for-sale investments recognized in earnings for the twelve months ended December 31, 2014 (in Thousands):

Balance at December 31, 2013	$	11,806
Impairment charges recognized during period		817
Balance at December 31, 2014	$	12,623

        The following table presents a reconciliation of credit-related impairment charges on available-for-sale investments recognized in earnings for the twelve months ended December 31, 2013 (in Thousands):

Balance at December 31, 2012	$	10,432
Impairment charges recognized during period		1,374
Balance at December 31, 2013	$	11,806

        The following table presents a reconciliation of credit-related impairment charges on available-for-sale investments recognized in earnings for the twelve months ended December 31, 2012 (in Thousands):

Balance at December 31, 2011	$	9,393
Impairment charges recognized during period		1,039
Balance at December 31, 2012	$	10,432

51

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(3) Loans

        A summary of loans, by loan type at December 31, 2014 and 2013 is as follows:

	December 31, 2014		December 31, 2013
	(Dollars in Thousands)
Commercial, financial and agricultural	$	3,107,584	$	2,894,779
Real estate—mortgage		910,326		847,692
Real estate—construction		1,414,977		1,208,508
Consumer		61,137		66,414
Foreign		185,221		181,842
Total loans	$	5,679,245	$	5,199,235

(4) Allowance for Probable Loan Losses

        The allowance for probable loan losses primarily consists of the aggregate loan loss allowances of the bank subsidiaries. The allowances are established through charges to operations in the form of provisions for probable loan losses. Loan losses or recoveries are charged or credited directly to the allowances. The allowance for probable loan losses of each bank subsidiary is maintained at a level considered appropriate by management, based on estimated probable losses in the loan portfolio. The allowance for probable loan losses is derived from the following elements: (i) allowances established on specific impaired loans, which are based on a review of the individual characteristics of each loan, including the customer's ability to repay the loan, the underlying collateral values, and the industry in which the customer operates, (ii) allowances based on actual historical loss experience for similar types of loans in the Company's loan portfolio, and (iii) allowances based on general economic conditions, changes in the mix of loans, company resources, border risk and credit quality indicators, among other things. All segments of the loan portfolio continue to be impacted by the prolonged economic downturn. Loans secured by real estate could be impacted negatively by the continued economic environment and resulting decrease in collateral values. Consumer loans may be impacted by continued and prolonged unemployment rates.

        The Company's management continually reviews the allowance for loan losses of the bank subsidiaries using the amounts determined from the allowances established on specific impaired loans, the allowance established on quantitative historical loss percentages, and the allowance based on qualitative data to establish an appropriate amount to maintain in the Company's allowance for loan losses. Should any of the factors considered by management in evaluating the adequacy of the allowance for probable loan losses change, the Company's estimate of probable loan losses could also change, which could affect the level of future provisions for probable loan losses. While the calculation of the allowance for probable loan losses utilizes management's best judgment and all information available, the adequacy of the allowance is dependent on a variety of factors beyond the Company's control, including, among other things, the performance of the entire loan portfolio, the economy, changes in interest rates and the view of regulatory authorities towards loan classifications.

        The loan loss provision is determined using the following methods. On a weekly basis, loan past due reports are reviewed by the credit quality committee to determine if a loan has any potential problems and if a loan should be placed on the Company's internal classified report. Additionally, the Company's credit department reviews the majority of the Company's loans for proper internal classification purposes regardless of whether they are past due and segregates any loans with potential problems for further

52

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(4) Allowance for Probable Loan Losses (Continued)

review. The credit department will discuss the potential problem loans with the servicing loan officers to determine any relevant issues that were not discovered in the evaluation. Also, an analysis of loans that is provided through examinations by regulatory authorities is considered in the review process. After the above analysis is completed, the Company will determine if a loan should be placed on an internal classified report because of issues related to the analysis of the credit, credit documents, collateral and/or payment history.

        While the Texas and Oklahoma economies are performing better than other parts of the country, Texas and Oklahoma are not completely immune to the problems associated with the U.S. economy. The increase in income and capital gains taxes on certain individuals, the increase in payroll taxes, the recent substantial decrease in oil prices, and the unprecedented debt and large deficit of the United States not yet resolved, add uncertainty to the possibility of robust economic growth and may create an adverse effect on the economies of Texas and Oklahoma. Thus, the risk of loss associated with all segments of the loan portfolio in these markets continues to be impacted by prolonged economic uncertainty. Economic risk factors are minimized by the underwriting standards of the bank subsidiaries. The general underwriting standards encompass the following principles: (i) the financial strength of the borrower including strong earnings, a high net worth, significant liquidity and an acceptable debt to worth ratio, (ii) managerial and business competence, (iii) the ability to repay, (iv) for a new business, projected cash flows, (v) loan to value, (vi) in the case of a secondary guarantor, a guarantor financial statement, and (vii) financial and/or other character references. Although the underwriting standards reduce the risk of loss, unique risk factors exist in each type of loan in which the bank subsidiaries invest.

        Commercial and industrial loans are mostly secured by the collateral pledged by the borrower that are directly related to the business activities of the company such as accounts receivable and inventory. The ability of the borrower to collect accounts receivable, and to turn inventory into sales are risk factors in the repayment of the loan.

        Construction and land development loans can carry risk of repayment when projects incur cost overruns, have an increase in the price of building materials, encounter zoning and environmental issues, or encounter other factors that may affect the completion of a project on time and on budget. Additionally, repayment risk may be negatively impacted when the market experiences a deterioration in the value of real estate. Risks specifically related to 1-4 family development loans also include the practice by the mortgage industry of more restrictive underwriting standards, which inhibits the buyer from obtaining long term financing and excessive housing and lot inventory in the market.

        Commercial real estate loans demonstrate a risk of repayment when market values deteriorate, the business experiences turnover in key management, the business has an inability to attract or keep occupancy levels stable, or when the market experiences an exit of a specific business industry that is significant to the local economy, such as a manufacturing plant.

        First and second lien residential 1-4 family mortgage and consumer loan repayments may be affected by unemployment or underemployment and deteriorating market values of real estate.

53

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(4) Allowance for Probable Loan Losses (Continued)

        A summary of the changes in the allowance for probable loan losses by loan class is as follows:

	December 31, 2014
	Domestic																				Foreign
	Commercial			Commercial real estate: other construction & land development			Commercial real estate: farmland & commercial			Commercial real estate: multifamily		Residential: first lien			Residential: junior lien			Consumer			Foreign			Total
	(Dollars in Thousands)
Balance at December 31,	$	22,433		$	12,541		$	24,467		$	776	$	3,812		$	4,249		$	750		$	1,133		$	70,161
Losses charge to allowance		(19,110	)		(680	)		(1,893	)		—		(351	)		(661	)		(719	)		(51	)		(23,465	)
Recoveries credited to allowance		2,979			72			107			—		49			242			210			50			3,709
Net losses charged to allowance		(16,131	)		(608	)		(1,786	)		—		(302	)		(419	)		(509	)		(1	)		(19,756	)
Provision (credit) charged to operations		16,050			1,022			(3,998	)		70		79			853			419			(72	)		14,423
Balance at December 31,	$	22,352		$	12,955		$	18,683		$	846	$	3,589		$	4,683		$	660		$	1,060		$	64,828

	December 31, 2013
	Domestic																					Foreign
	Commercial			Commercial real estate: other construction & land development			Commercial real estate: farmland & commercial			Commercial real estate: multifamily			Residential: first lien			Residential: junior lien			Consumer			Foreign			Total
	(Dollars in Thousands)
Balance at December 31,	$	11,632		$	12,720		$	21,880		$	694		$	4,390		$	4,448		$	1,289		$	1,140		$	58,193
Losses charge to allowance		(11,737	)		(278	)		(600	)		(5	)		(632	)		(620	)		(561	)		(22	)		(14,455	)
Recoveries credited to allowance		2,690			87			152			—			61			298			162			5			3,455
Net losses charged to allowance		(9,047	)		(191	)		(448	)		(5	)		(571	)		(322	)		(399	)		(17	)		(11,000	)
Provision (credit) charged to operations		19,848			12			3,035			87			(7	)		123			(140	)		10			22,968
Balance at December 31,	$	22,433		$	12,541		$	24,467		$	776		$	3,812		$	4,249		$	750		$	1,133		$	70,161

54

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(4) Allowance for Probable Loan Losses (Continued)

	December 31, 2012
	Domestic																					Foreign
	Commercial			Commercial real estate: other construction & land development			Commercial real estate: farmland & commercial			Commercial real estate: multifamily			Residential: first lien			Residential: junior lien			Consumer			Foreign			Total
	(Dollars in Thousands)
Balance at December 31,	$	26,617		$	19,940		$	24,227		$	1,003		$	4,562		$	4,760		$	1,724		$	1,359		$	84,192
Losses charge to allowance		(34,721	)		(7,617	)		(13,724	)		—			(227	)		(1,190	)		(756	)		(111	)		(58,346	)
Recoveries credited to allowance		3,547			229			220			—			13			195			184			—			4,388
Net losses charged to allowance		(31,174	)		(7,388	)		(13,504	)		—			(214	)		(995	)		(572	)		(111	)		(53,958	)
Provision (credit) charged to operations		16,189			168			11,157			(309	)		42			683			137			(108	)		27,959
Balance at December 31,	$	11,632		$	12,720		$	21,880		$	694		$	4,390		$	4,448		$	1,289		$	1,140		$	58,193

        The allowance for probable loan losses is a reserve established through a provision for probable loan losses charged to expense, which represents management's best estimate of probable loan losses when evaluating loans (i) individually or (ii) collectively. The Company's allowance for probable loan losses decreased for the year ended December 31, 2014 primarily due to a charge down of a relationship that is mainly secured by multiple pieces of transportation equipment. The relationship also contributed to a change in net losses charged against the allowance for probable loan losses for the same period.

        The table below provides additional information on the balance of loans individually or collectively evaluated for impairment and their related allowance, by loan class:

	December 31, 2014
	Loans individually evaluated for impairment				Loans collectively evaluated for impairment
	Recorded Investment		Allowance		Recorded Investment		Allowance
	(Dollars in Thousands)
Domestic
Commercial	$	40,175	$	9,112	$	1,049,311	$	13,240
Commercial real estate: other construction & land development		10,876		1,890		1,404,101		11,065
Commercial real estate: farmland & commercial		14,166		1,219		1,887,233		17,464
Commercial real estate: multifamily		835		—		115,864		846
Residential: first lien		5,840		—		416,186		3,589
Residential: junior lien		2,895		—		485,405		4,683
Consumer		1,384		—		59,753		660
Foreign		—		—		185,221		1,060
Total	$	76,171	$	12,221	$	5,603,074	$	52,607

55

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(4) Allowance for Probable Loan Losses (Continued)

	December 31, 2013
	Loans individually evaluated for impairment				Loans collectively evaluated for impairment
	Recorded Investment		Allowance		Recorded Investment		Allowance
	(Dollars in Thousands)
Domestic
Commercial	$	34,183	$	12,234	$	1,008,459	$	10,199
Commercial real estate: other construction & land development		13,976		852		1,194,532		11,689
Commercial real estate: farmland & commercial		16,038		2,916		1,734,001		21,551
Commercial real estate: multifamily		295		—		101,803		776
Residential: first lien		6,153		—		432,309		3,812
Residential: junior lien		3,206		—		406,024		4,249
Consumer		1,606		—		64,808		750
Foreign		436		—		181,406		1,133
Total	$	75,893	$	16,002	$	5,123,342	$	54,159

        Loans accounted for on a non-accrual basis at December 31, 2014, 2013 and 2012 amounted to $63,559,000, $62,823,000 and $71,768,000, respectively. The effect of such non-accrual loans reduced interest income by $4,013,000, $4,088,000 and $2,549,000 for the years ended December 31, 2014, 2013 and 2012, respectively. Amounts received on non-accruals are applied, for financial accounting purposes, first to principal and then to interest after all principal has been collected. Accruing loans contractually past due 90 days or more as to principal or interest payments at December 31, 2014, 2013 and 2012 amounted to $9,988,000, $7,197,000 and $15,033,000, respectively.

        The table below provides additional information on loans accounted for on a non-accrual basis by loan class:

	December 31,
	2014		2013
	(Dollars in Thousands)
Domestic
Commercial	$	40,121	$	34,110
Commercial real estate: other construction & land development		8,621		11,726
Commercial real estate: farmland & commercial		11,903		13,775
Commercial real estate: multifamily		835		295
Residential: first lien		527		1,266
Residential: junior lien		1,523		1,576
Consumer		29		75
Foreign		—		—
Total non-accrual loans	$	63,559	$	62,823

56

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(4) Allowance for Probable Loan Losses (Continued)

        Impaired loans are those loans where it is probable that all amounts due according to contractual terms of the loan agreement will not be collected. The Company has identified these loans through its normal loan review procedures. Impaired loans are measured based on (1) the present value of expected future cash flows discounted at the loan's effective interest rate; (2) the loan's observable market price; or (3) the fair value of the collateral if the loan is collateral dependent. Substantially all of the Company's impaired loans are measured at the fair value of the collateral. In limited cases the Company may use other methods to determine the level of impairment of a loan if such loan is not collateral dependent. The increase in commercial non-accrual loans at December 31, 2014 compared to December 31, 2013 is mainly due to the addition of a relationship secured by accounts receivables.

        The following tables detail key information regarding the Company's impaired loans by loan class for the year ended December 31, 2014:

	December 31, 2014
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Recognized
	(Dollars in Thousands)
Loans with Related Allowance
Domestic
Commercial	$	19,944	$	20,026	$	9,112	$	19,313	$	—
Commercial real estate: other construction & land development		6,714		6,949		1,890		7,183		—
Commercial real estate: farmland & commercial		5,107		5,257		1,219		6,790		92
Total impaired loans with related allowance	$	31,765	$	32,232	$	12,221	$	33,286	$	92

	December 31, 2014
	Recorded Investment		Unpaid Principal Balance		Average Recorded Investment		Interest Recognized
	(Dollars in Thousands)
Loans with No Related Allowance
Domestic
Commercial	$	20,231	$	20,260	$	18,563	$	4
Commercial real estate: other construction & land development		4,162		4,270		4,882		74
Commercial real estate: farmland & commercial		9,059		10,562		8,664		—
Commercial real estate: multifamily		835		835		363		—
Residential: first lien		5,840		6,034		6,293		273
Residential: junior lien		2,895		2,915		3,035		90
Consumer		1,384		1,386		1,402		3
Foreign		—		—		—		—
Total impaired loans with no related allowance	$	44,406	$	46,262	$	43,202	$	444

57

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(4) Allowance for Probable Loan Losses (Continued)

        The following tables detail key information regarding the Company's impaired loans by loan class for the year ended December 31, 2013:

	December 31, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Recognized
	(Dollars in Thousands)
Loans with Related Allowance
Domestic
Commercial	$	17,178	$	17,177	$	12,234	$	18,019	$	38
Commercial real estate: other construction & land development		6,818		6,825		852		6,058		—
Commercial real estate: farmland & commercial		7,259		10,697		2,916		7,167		92
Total impaired loans with related allowance	$	31,255	$	34,699	$	16,002	$	31,244	$	130

	December 31, 2013
	Recorded Investment		Unpaid Principal Balance		Average Recorded Investment		Interest Recognized
	(Dollars in Thousands)
Loans with No Related Allowance
Domestic
Commercial	$	17,005	$	17,023	$	16,778	$	2
Commercial real estate: other construction & land development		7,158		7,187		18,164		74
Commercial real estate: farmland & commercial		8,779		9,949		7,313		—
Commercial real estate: multifamily		295		295		322		—
Residential: first lien		6,153		6,258		4,860		179
Residential: junior lien		3,206		3,226		2,347		99
Consumer		1,606		1,612		1,380		1
Foreign		436		436		452		19
Total impaired loans with no related allowance	$	44,638	$	45,986	$	51,616	$	374

        A portion of the impaired loans have adequate collateral and credit enhancements not requiring a related allowance for loan loss. The level of impaired loans is reflective of the economic weakness that has been created by the financial crisis and the subsequent economic downturn. Management is confident the Company's loss exposure regarding these credits will be significantly reduced due to the Company's long-standing practices that emphasize secured lending with strong collateral positions and guarantor support. Management is likewise confident the reserve for probable loan losses is adequate. The Company has no direct exposure to sub-prime loans in its loan portfolio, but the sub-prime crisis has affected the credit markets on a national level, and as a result, the Company has experienced an increasing amount of impaired loans; however, management's decision to place loans in this category does not necessarily mean that the Company will experience significant losses from these loans or significant increases in impaired loans from these levels.

58

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(4) Allowance for Probable Loan Losses (Continued)

        Management of the Company recognizes the risks associated with these impaired loans. However, management's decision to place loans in this category does not necessarily mean that losses will occur. In the current environment, troubled loan management can be protracted because of the legal and process problems that delay the collection of an otherwise collectable loan. Additionally, management believes that the collateral related to these impaired loans and/or the secondary support from guarantors mitigates the potential for losses from impaired loans.

        The following table details loans accounted for as "troubled debt restructuring," segregated by loan class. Loans accounted for as troubled debt restructuring are included in impaired loans.

	December 31, 2014		December 31, 2013
	(Dollars in Thousands)
Domestic
Commercial	$	2,500	$	150
Commercial real estate: other construction & land development		2,254		8,860
Commercial real estate: farmland & commercial		2,861		2,863
Residential: first lien		5,313		4,887
Residential: junior lien		1,371		1,631
Consumer		1,354		1,531
Foreign		—		436
Total troubled debt restructuring	$	15,653	$	20,358

        The bank subsidiaries charge off that portion of any loan which management considers to represent a loss as well as that portion of any other loan which is classified as a "loss" by bank examiners. Commercial and industrial or real estate loans are generally considered by management to represent a loss, in whole or part, when an exposure beyond any collateral coverage is apparent and when no further collection of the loss portion is anticipated based on the borrower's financial condition and general economic conditions in the borrower's industry. Generally, unsecured consumer loans are charged-off when 90 days past due.

        While management of the Company considers that it is generally able to identify borrowers with financial problems reasonably early and to monitor credit extended to such borrowers carefully, there is no precise method of predicting loan losses. The determination that a loan is likely to be uncollectible and that it should be wholly or partially charged-off as a loss is an exercise of judgment. Similarly, the determination of the adequacy of the allowance for probable loan losses can be made only on a subjective basis. It is the judgment of the Company's management that the allowance for probable loan losses at December 31, 2014 was adequate to absorb probable losses from loans in the portfolio at that date.

59

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(4) Allowance for Probable Loan Losses (Continued)

        The following table presents information regarding the aging of past due loans by loan class:

	December 31, 2014
	30 - 59 Days		60 - 89 Days		90 Days or Greater		90 Days or greater & still accruing		Total Past due		Current		Total Portfolio
	(Dollars in Thousands)
Domestic
Commercial	$	4,103	$	2,665	$	40,665	$	2,890	$	47,433	$	1,042,053	$	1,089,486
Commercial real estate: other construction & land development		596		10		8,707		439		9,313		1,405,664		1,414,977
Commercial real estate: farmland & commercial		2,905		7,131		10,724		1,711		20,760		1,880,639		1,901,399
Commercial real estate: multifamily		351		—		856		21		1,207		115,492		116,699
Residential: first lien		5,895		1,864		4,267		3,901		12,026		410,000		422,026
Residential: junior lien		899		231		1,931		431		3,061		485,239		488,300
Consumer		896		216		507		482		1,619		59,518		61,137
Foreign		1,616		98		113		113		1,827		183,394		185,221
Total past due loans	$	17,261	$	12,215	$	67,770	$	9,988	$	97,246	$	5,581,999	$	5,679,245

        The increase in loans past due 60 - 89 days at December 31, 2014 compared to December 31, 2013 is primarily due to one loan secured by farmland that was delinquent at year end.

	December 31, 2013
	30 - 59 Days		60 - 89 Days		90 Days or Greater		90 Days or greater & still accruing		Total Past due		Current		Total Portfolio
	(Dollars in Thousands)
Domestic
Commercial	$	4,240	$	538	$	36,066	$	2,051	$	40,844	$	1,001,798	$	1,042,642
Commercial real estate: other construction & land development		1,042		—		9,942		62		10,984		1,197,524		1,208,508
Commercial real estate: farmland & commercial		6,216		520		6,990		417		13,726		1,736,313		1,750,039
Commercial real estate: multifamily		39		142		295		—		476		101,622		102,098
Residential: first lien		4,758		3,046		4,541		3,518		12,345		426,117		438,462
Residential: junior lien		606		198		1,900		368		2,704		406,526		409,230
Consumer		1,523		469		803		781		2,795		63,619		66,414
Foreign		1,467		417		—		—		1,884		179,958		181,842
Total past due loans	$	19,891	$	5,330	$	60,537	$	7,197	$	85,758	$	5,113,477	$	5,199,235

60

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(4) Allowance for Probable Loan Losses (Continued)

        The Company's internal classified report is segregated into the following categories: (i) "Special Review Credits," (ii) "Watch List—Pass Credits," or (iii) "Watch List—Substandard Credits." The loans placed in the "Special Review Credits" category reflect the Company's opinion that the loans reflect potential weakness which require monitoring on a more frequent basis. The "Special Review Credits" are reviewed and discussed on a regular basis with the credit department and the lending staff to determine if a change in category is warranted. The loans placed in the "Watch List—Pass Credits" category reflect the Company's opinion that the credit contains weaknesses which represent a greater degree of risk, which warrant "extra attention." The "Watch List—Pass Credits" are reviewed and discussed on a regular basis with the credit department and the lending staff to determine if a change in category is warranted. The loans placed in the "Watch List—Substandard Credits" classification are considered to be potentially inadequately protected by the current sound worth and debt service capacity of the borrower or of any pledged collateral. These credit obligations, even if apparently protected by collateral value, have shown defined weaknesses related to adverse financial, managerial, economic, market or political conditions which may jeopardize repayment of principal and interest. Furthermore, there is the possibility that some future loss could be sustained by the Company if such weaknesses are not corrected. For loans that are classified as impaired, management evaluates these credits in accordance with the provisions of ASC 310-10, "Receivables," and, if deemed necessary, a specific reserve is allocated to the credit. The specific reserve allocated under ASC 310-10, is based on (i) the present value of expected future cash flows discounted at the loan's effective interest rate; (ii) the loan's observable market price; or (iii) the fair value of the collateral if the loan is collateral dependent. Substantially all of the Company's loans evaluated as impaired under ASC 310-10 are measured using the fair value of collateral method. In limited cases, the Company may use other methods to determine the specific reserve of a loan under ASC 310-10 if such loan is not collateral dependent.

        The allowance based on historical loss experience on the Company's remaining loan portfolio, which includes the "Special Review Credits," "Watch List—Pass Credits," and "Watch List—Substandard Credits" is determined by segregating the remaining loan portfolio into certain categories such as commercial loans, installment loans, international loans, loan concentrations and overdrafts. Installment loans are then further segregated by number of days past due. A historical loss percentage, adjusted for (i) management's evaluation of changes in lending policies and procedures, (ii) current economic conditions in the market area served by the Company, (iii) other risk factors, (iv) the effectiveness of the internal loan review function, (v) changes in loan portfolios, and (vi) the composition and concentration of credit volume is applied to each category. Each category is then added together to determine the allowance allocated under ASC 450-20.

        As discussed above and in line with its customary loan review process, the Company identified and re-classified a loan relationship in the commercial category to Special Review, causing an increase in that category at December 31, 2014 compared to December 31, 2013. Additionally, there was a decrease in the commercial real estate farmland and commercial Special Review category at December 31, 2014 compared to December 31, 2013 due to a relationship being reclassified to the Watch List-Substandard category during 2014. A construction and land development loan within the relationship was classified as Watch List-Substandard from pass during the same period. The decrease in commercial construction and land development Special Review credits at December 31, 2014 compared to December 31, 2013 can be attributed to a relationship that was paid off in 2014.

61

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(4) Allowance for Probable Loan Losses (Continued)

        A summary of the loan portfolio by credit quality indicator by loan class is as follows:

			December 31, 2014
	Pass		Special Review		Watch List—Pass		Watch List— Substandard		Watch List— Impaired
			(Dollars in Thousands)
Domestic
Commercial	$	961,490	$	38,382	$	3,793	$	45,646	$	40,175
Commercial real estate: other construction & land development		1,353,971		1,005		10,428		38,697		10,876
Commercial real estate: farmland & commercial		1,754,741		11,674		23,453		97,365		14,166
Commercial real estate: multifamily		115,729		—		—		135		835
Residential: first lien		412,668		3,500		—		18		5,840
Residential: junior lien		484,968		—		—		437		2,895
Consumer		59,622		—		—		131		1,384
Foreign		185,221		—		—		—		—
Total	$	5,328,410	$	54,561	$	37,674	$	182,429	$	76,171

			December 31, 2013
	Pass		Special Review		Watch List—Pass		Watch List— Substandard		Watch List— Impaired
			(Dollars in Thousands)
Domestic
Commercial	$	955,522	$	2,270	$	4,389	$	46,278	$	34,183
Commercial real estate: other construction & land development		1,167,295		14,247		9,318		3,672		13,976
Commercial real estate: farmland & commercial		1,635,179		56,438		21,912		20,472		16,038
Commercial real estate: multifamily		100,948		—		—		855		295
Residential: first lien		432,067		122		—		120		6,153
Residential: junior lien		405,731		—		—		293		3,206
Consumer		64,808		—		—		—		1,606
Foreign		180,837		—		—		569		436
Total	$	4,942,387	$	73,077	$	35,619	$	72,259	$	75,893

62

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(5) Bank Premises and Equipment

        A summary of bank premises and equipment, by asset classification, at December 31, 2014 and 2013 were as follows:

	Estimated useful lives	2014			2013
		(Dollars in Thousands)
Bank buildings and improvements	5 - 40 years	$	509,830		$	470,386
Furniture, equipment and vehicles	1 - 20 years		269,861			260,932
Land			125,414			128,805
Real estate held for future expansion:
Land, building, furniture, fixture and equipment	7 - 27 years		—			511
Less: accumulated depreciation			(378,682	)		(355,792	)
Bank premises and equipment, net		$	526,423		$	504,842

(6) Goodwill and Other Intangible Assets

        The majority of the Company's identified intangibles are in the form of amortizable core deposit premium, with the exception of $501,000, which represents identified intangibles in the acquisition of the rights to the insurance agency contracts of InsCorp, Inc., acquired in 2008. Information on the Company's identified intangible assets follows:

	Carrying Amount		Accumulated Amortization		Net
	(Dollars in Thousands)
December 31, 2014:
Core deposit premium	$	58,675	$	58,379	$	296
Identified intangible (contract rights)		2,022		1,521		501
Total identified intangibles	$	60,697	$	59,900	$	797
December 31, 2013:
Core deposit premium	$	58,675	$	56,298	$	2,377
Identified intangible (contract rights)		2,022		1,213		809
Total identified intangibles	$	60,697	$	57,511	$	3,186

63

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(6) Goodwill and Other Intangible Assets (Continued)

        Amortization expense of intangible assets for the years ended December 31, 2014, 2013 and 2012, was $2,389,000, $4,633,000 and $4,651,000, respectively. Estimated amortization expense for each of the five succeeding fiscal years, and thereafter, is as follows:

        Fiscal year ending December 31:

	Total
	(in thousands)
2015	$	452
2016		295
2017		25
2018		25
2019		—
Thereafter		—
Total	$	797

        There were no changes in the carrying amount of goodwill for the years ended December 31, 2014 and 2013.

(7) Deposits

        Deposits as of December 31, 2014 and 2013 and related interest expense for the years ended December 31, 2014, 2013 and 2012 were as follows:

	2014		2013
	(Dollars in Thousands)
Deposits:
Demand—non-interest bearing
Domestic	$	2,382,935	$	2,175,694
Foreign		547,318		490,816
Total demand non-interest bearing		2,930,253		2,666,510
Savings and interest bearing demand
Domestic		2,488,458		2,364,905
Foreign		537,222		560,707
Total savings and interest bearing demand		3,025,680		2,925,612
Time, certificates of deposit $100,000 or more
Domestic		835,792		856,700
Foreign		864,346		938,940
Less than $100,000
Domestic		482,089		531,503
Foreign		300,465		324,160
Total time, certificates of deposit		2,482,692		2,651,303
Total deposits	$	8,438,625	$	8,243,425

64

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(7) Deposits (Continued)

	2014		2013		2012
	(Dollars in Thousands)
Interest expense:
Savings and interest bearing demand
Domestic	$	2,998	$	3,182	$	4,487
Foreign		599		580		801
Total savings and interest bearing demand		3,597		3,762		5,288
Time, certificates of deposit $100,000 or more
Domestic		4,615		5,761		8,263
Foreign		4,529		5,590		9,148
Less than $100,000
Domestic		2,074		3,065		4,945
Foreign		815		1,028		1,617
Total time, certificates of deposit		12,033		15,444		23,973
Total interest expense on deposits	$	15,630	$	19,206	$	29,261

        Scheduled maturities of time deposits as of December 31, 2014 were as follows:

	Total
	(in thousands)
2015	$	2,177,266
2016		203,928
2017		76,206
2018		23,481
2019		1,751
Thereafter		60
Total	$	2,482,692

        Scheduled maturities of time deposits in amounts of $100,000 or more at December 31, 2014, were as follows:

Due within 3 months or less	$	631,083
Due after 3 months and within 6 months		409,400
Due after 6 months and within 12 months		443,860
Due after 12 months		215,795
	$	1,700,138

        Time deposits that meet or exceed the FDIC insurance limit of $250,000 at December 31, 2014 and December 31, 2013 were $1,027,000 and $1,076,000, respectively.

65

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(8) Securities Sold Under Repurchase Agreements

        The Company's bank subsidiaries have entered into repurchase agreements with an investment banking firm and individual customers of the bank subsidiaries. The purchasers have agreed to resell to the bank subsidiaries identical securities upon the maturities of the agreements. Securities sold under repurchase agreements were mortgage-backed book entry securities and averaged $893,830,000 and $1,041,186,000 during 2014 and 2013, respectively, and the maximum amount outstanding at any month end during 2014 and 2013 was $892,341,000 and $1,119,531,000, respectively.

        Further information related to repurchase agreements at December 31, 2014 and 2013 is set forth in the following table:

	Collateral Securities				Repurchase Borrowing
	Book Value of Securities Sold		Fair Value of Securities Sold		Balance of Liability		Weighted Average Interest Rate
	(Dollars in Thousands)
December 31, 2014 term:
Overnight agreements	$	366,731	$	370,704	$	236,077		.16	%
1 to 29 days		3,717		3,781		1,016		.45
30 to 90 days		13,399		13,628		6,705		.38
Over 90 days		743,323		746,305		614,552		3.83
Total	$	1,127,170	$	1,134,418	$	858,350		2.79	%
December 31, 2013 term:
Overnight agreements	$	332,042	$	341,238	$	209,899		.17	%
1 to 29 days		27,954		28,288		18,666		.40
30 to 90 days		8,106		8,263		3,295		.43
Over 90 days		945,535		940,209		725,521		3.78
Total	$	1,313,637	$	1,317,998	$	957,381		2.91	%

        The book value and fair value of securities sold includes the entire book value and fair value of securities partially or fully pledged under repurchase agreements.

(9) Other Borrowed Funds

        Other borrowed funds include Federal Home Loan Bank borrowings, which are short and long-term fixed borrowings issued by the Federal Home Loan Bank of Dallas at the market price offered at the time of funding. These borrowings are secured by mortgage-backed investment securities and a portion of the Company's loan portfolio.

66

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(9) Other Borrowed Funds (Continued)

        Further information regarding the Company's other borrowed funds at December 31, 2014 and 2013 is set forth in the following table:

	December 31,
	2014			2013
	(Dollars in Thousands)
Federal Home Loan Bank advances—short-term
Balance at year end	$	1,067,700		$	1,215,000
Rate on balance outstanding at year end		.15	%		.17	%
Average daily balance	$	1,077,973		$	833,868
Average rate		.16	%		.16	%
Maximum amount outstanding at any month end	$	1,352,500		$	1,280,500
Federal Home Loan Bank advances—long-term(1)
Balance at year end	$	6,244		$	8,950
Rate on balance outstanding at year end		3.51	%		3.53	%
Average daily balance	$	7,338		$	7,289
Average rate		3.51	%		3.53	%
Maximum amount outstanding at any month end	$	8,934		$	8,993

(1)

The amortization of the long-term advances is approximately $160,000 per year for each of the next five years and the final maturity date is January 3, 2028.

(10) Junior Subordinated Deferrable Interest Debentures

        The Company has formed seven statutory business trusts under the laws of the State of Delaware, for the purpose of issuing trust preferred securities. The seven statutory business trusts formed by the Company (the "Trusts") have each issued Capital and Common Securities and invested the proceeds thereof in an equivalent amount of junior subordinated debentures (the "Debentures") issued by the Company. As of December 31, 2014 and December 31, 2013, the principal amount of debentures outstanding totaled $175,416,000 and $190,726,000, respectively. On February 11, 2014, the Company bought back all of the Capital and Common Securities of IB Capital Trust VII from the holder of the securities for a price that reflected an approximate six percent discount from the redemption price of the securities and thereby retired the $10,310,000 of related Junior Subordinated Deferrable Interest Debentures related to IB Capital Trust VII. On December 24, 2014, the Company bought back a portion of the Capital Securities of IB Capital Trust XI from the holder of the securities for a price that reflected an approximate 23.6% discount from the redemption price of the securities and thereby retired $5,000,000 of the total $32,900,000 of related Junior Subordinated Deferrable Interest Debentures related to IB Capital Trust XI resulting in Junior Subordinated Deferrable Interest Debentures on Trust XI of $27,990,000 as of December 31, 2014.

        The Debentures are subordinated and junior in right of payment to all present and future senior indebtedness (as defined in the respective indentures) of the Company, and are pari passu with one another. The interest rate payable on, and the payment terms of the Debentures are the same as the distribution rate and payment terms of the respective issues of Capital and Common Securities issued by the Trusts. The Company has fully and unconditionally guaranteed the obligations of each of the Trusts with respect to the Capital and Common Securities. The Company has the right, unless an Event of

67

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(10) Junior Subordinated Deferrable Interest Debentures (Continued)

Default (as defined in the Indentures) has occurred and is continuing, to defer payment of interest on the Debentures for up to twenty consecutive quarterly periods on Trusts VI, VIII, IX, X, XI and XII. If interest payments on any of the Debentures are deferred, distributions on both the Capital and Common Securities related to that Debenture would also be deferred. The redemption prior to maturity of any of the Debentures may require the prior approval of the Federal Reserve and/or other regulatory bodies.

        For financial reporting purposes, the Trusts are treated as investments of the Company and not consolidated in the consolidated financial statements. Although the Capital Securities issued by each of the Trusts are not included as a component of shareholders' equity on the consolidated statement of condition, the Capital Securities are treated as capital for regulatory purposes. Specifically, under applicable regulatory guidelines, the Capital Securities issued by the Trusts qualify as Tier 1 capital up to a maximum of 25% of Tier 1 capital on an aggregate basis. Any amount that exceeds the 25% threshold would qualify as Tier 2 capital. At December 31, 2014 and December 31, 2013, the total $175,416,000 and $190,726,000, respectively, of the Capital Securities outstanding qualified as Tier 1 capital.

        The following table illustrates key information about each of the Debentures and their interest rates at December 31, 2014:

	Junior Subordinated Deferrable Interest Debentures		Repricing Frequency	Interest Rate			Interest Rate Index(1)		Maturity Date	Optional Redemption Date(1)
	(in thousands)
Trust VI	$	25,774	Quarterly		3.68	%		LIBOR + 3.45	November 2032	February 2008
Trust VIII		25,774	Quarterly		3.28	%		LIBOR + 3.05	October 2033	October 2008
Trust IX		41,238	Quarterly		1.86	%		LIBOR + 1.62	October 2036	October 2011
Trust X		34,021	Quarterly		1.88	%		LIBOR + 1.65	February 2037	February 2012
Trust XI		27,990	Quarterly		1.86	%		LIBOR + 1.62	July 2037	July 2012
Trust XII		20,619	Quarterly		1.69	%		LIBOR + 1.45	September 2037	September 2012
	$	175,416

(1)

The Capital Securities may be redeemed in whole or in part on any interest payment date after the Optional Redemption Date.

68

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(11) Earnings per Share ("EPS")

        Basic EPS is calculated by dividing net income by the weighted average number of common shares outstanding. The computation of diluted EPS assumes the issuance of common shares for all dilutive potential common shares outstanding during the reporting period. The calculation of the basic EPS and the diluted EPS for the years ended December 31, 2014, 2013, and 2012 is set forth in the following table:

	Net Income (Numerator)		Shares (Denominator)		Per Share Amount
	(Dollars in Thousands, Except Per Share Amounts)
December 31, 2014:
Basic EPS
Net income available to common shareholders	$	153,151		66,872,500	$	2.29
Potential dilutive common shares and warrants		—		183,956
Diluted EPS	$	153,151		67,056,456	$	2.28
December 31, 2013:
Basic EPS
Net income available to common shareholders	$	126,351		67,195,180	$	1.88
Potential dilutive common shares		—		119,679
Diluted EPS	$	126,351		67,314,859	$	1.88
December 31, 2012:
Basic EPS
Net income available to common shareholders	$	93,473		67,236,681	$	1.39
Potential dilutive common shares		—		77,282
Diluted EPS	$	93,473		67,313,963	$	1.39

(12) Employees' Profit Sharing Plan

        The Company has a deferred profit sharing plan for full-time employees with a minimum of one year of continuous employment. The Company's annual contribution to the plan is based on a percentage, as determined by the Board of Directors, of income before income taxes, as defined, for the year. Allocation of the contribution among officers and employees' accounts is based on length of service and amount of salary earned. Profit sharing costs of $3,510,000, $3,500,000 and $3,400,000 were charged to income for the years ended December 31, 2014, 2013, and 2012, respectively.

(13) International Operations

        The Company provides international banking services for its customers through its bank subsidiaries. Neither the Company nor its bank subsidiaries have facilities located outside the United States. International operations are distinguished from domestic operations based upon the domicile of the customer.

        Because the resources employed by the Company are common to both international and domestic operations, it is not practical to determine net income generated exclusively from international activities.

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INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(13) International Operations (Continued)

        A summary of assets attributable to international operations at December 31, 2014 and 2013 are as follows:

	2014			2013
	(Dollars in Thousands)
Loans:
Commercial	$	150,078		$	142,145
Others		35,143			39,697
		185,221			181,842
Less allowance for probable loan losses		(1,060	)		(1,133	)
Net loans	$	184,161		$	180,709
Accrued interest receivable	$	702		$	617

        At December 31, 2014, the Company had $114,672,000 in outstanding standby and commercial letters of credit to facilitate trade activities.

        Revenues directly attributable to international operations were $6,034,000, $6,085,000 and $7,714,000 for the years ended December 31, 2014, 2013 and 2012, respectively.

(14) Income Taxes

        The Company files 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:

	2014			2013			2012
	(Dollars in Thousands)
Current
U.S.	$	72,561		$	59,583		$	40,375
State		5,252			(1,530	)		2,234
Foreign		1			3			33
Total current taxes		77,814			58,056			42,642
Deferred
U.S.		(969	)		(1,692	)		7,928
State		(58	)		(125	)		(5	)
Total deferred taxes		(1,027	)		(1,817	)		7,923
Total income taxes	$	76,787		$	56,239		$	50,565

70

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(14) Income Taxes (Continued)

        Total income tax expense differs from the amount computed by applying the U.S. Federal income tax rate of 35% for 2014, 2013 and 2012 to income before income taxes. The reasons for the differences for the years ended December 31 are as follows:

	2014			2013			2012
	(Dollars in Thousands)
Computed expected tax expense	$	80,560		$	64,183		$	55,634
Change in taxes resulting from:
Tax-exempt interest income		(4,554	)		(4,828	)		(4,381	)
State tax, net of federal income taxes and tax credit		3,377			(110	)		1,446
Tax refunds		—			(966	)		—
Other investment income		(3,615	)		(2,656	)		(2,691	)
Other		1,019			616			557
Actual tax expense	$	76,787		$	56,239		$	50,565

        The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2014 and 2013 are reflected below:

	2014			2013
	(Dollars in Thousands)
Deferred tax assets:
Loans receivable, principally due to the allowance for probable loan losses	$	24,849		$	25,365
Other real estate owned		3,453			3,878
Impairment charges on available-for-sale securities		5,618			5,327
Accrued expenses		268			399
Net unrealized gains on available for sale investment securities		—			24,235
Other		5,809			4,816
Total deferred tax assets		39,997			64,020
Deferred tax liabilities:
Bank premises and equipment, principally due to differences on depreciation		(18,314	)		(20,729	)
Net unrealized gains on available for sale investment securities		(6,182	)		—
Identified intangible assets and goodwill		(18,787	)		(18,051	)
Other		(12,303	)		(11,476	)
Total deferred tax liabilities		(55,586	)		(50,256	)
Net deferred tax asset (liability)	$	(15,589	)	$	13,764

        The net deferred tax (liability) asset of ($15,589,000) at December 31, 2014 and $13,764,000 at December 31, 2013 is included in other assets or liabilities, respectively in the consolidated statements of condition.

71

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(15) Stock Options

        On April 5, 2012, the Board of Directors adopted the 2012 International Bancshares Corporation Stock Option Plan (the "2012 Plan"). There are 800,000 shares available for stock option grants under the 2012 Plan. Under the 2012 Plan, both qualified incentive stock options ("ISOs") and non-qualified stock options ("NQSOs") may be granted. 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. As of December 31, 2014, 204,750 shares were available for future grants under the 2012 Plan.

        The fair value of each option award granted under the plan is 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 is based on the historical volatility of the price of the Company's stock. The Company uses historical data to estimate the expected dividend yield and employee termination rates within the valuation model. The expected term of options is derived from historical exercise behavior. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

	2014			2013
Expected Life (Years)		7.63			7.63
Dividend yield		2.01	%		2.33	%
Interest rate		2.28	%		2.86	%
Volatility		47.36	%		47.28	%

        A summary of option activity under the stock option plans for the twelve months ended December 31, 2014 is as follows:

	Number of options		Weighted average exercise price		Weighted average remaining contractual term (years)		Aggregate intrinsic value ($)
							(in Thousands)
Options outstanding at December 31, 2013		515,143	$	15.98
Plus: Options granted		564,750		21.48
Less:
Options exercised		40,385		13.75
Options expired		15,125		27.02
Options forfeited		30,494		18.84
Options outstanding at December 31, 2014		993,889		18.94		6.62	$	7,567
Options fully vested and exercisable at December 31, 2014		250,487	$	16.76		2.28	$	2,461

        Stock-based compensation expense included in the consolidated statements of income for the years ended December 31, 2014, 2013 and 2012 was approximately $1,058,000, $414,000 and $474,000, respectively. As of December 31, 2014, there was approximately $3,934,000 of total unrecognized stock-based compensation cost related to non-vested options granted under the Company plans that will be recognized over a weighted average period of 2.3 years.

72

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(15) Stock Options (Continued)

        Other information pertaining to option activity during the twelve month period ending December 31, 2014, 2013 and 2012 is as follows:

	Twelve Months Ended December 31,
	2014		2013		2012
Weighted average grant date fair value of stock options granted	$	9.07	$	9.05	$	8.71
Total fair value of stock options vested	$	376,000	$	480,000	$	524,000
Total intrinsic value of stock options exercised	$	468,000	$	171,000	$	41,000

(16) Long Term Restricted Stock Units

        As a participant in the Troubled Asset Relief Program Capital Purchase Program (the "CPP") until November 28, 2012, the Company was subject to certain compensation restrictions, which included a prohibition on the payment or accrual of any bonuses (including equity-based incentive compensation) to certain officers and employees except for awards of CPP-compliant long-term restricted stock and stock units.

        On December 18, 2009, the Company's board of directors (the "Board") adopted the 2009 International Bancshares Corporation Long-Term Restricted Stock Unit Plan (the "Plan") to give the Company additional flexibility in the compensation of its officers, employees, consultants and advisors in compliance with all applicable laws and restrictions.

        The Plan authorizes the Company to issue Restricted Stock Units ("RSUs") to officers, employees, consultants and advisors of the Company and its subsidiaries. The Plan provides that RSUs shall be issued by a committee of the Board appointed by the Board from time to time consisting of at least two (2) members of the Board, each of whom is both a non-employee director and an outside director. On December 18, 2009, the Board adopted resolutions creating the Long-Term Restricted Stock Unit Plan Committee to administer the Plan. RSUs issued under the Plan are not equity and are payable only in cash. The Plan provides for both the issuance of CPP-compliant long-term RSUs as well as RSUs that are not CPP-compliant.

        Dennis E. Nixon, the Company's President, Chairman of the Board and a director of the Company, was awarded CPP-compliant RSU's granted as of December 19, 2012, December 16, 2011, December 15, 2010 and December 18, 2009 of $425,000, $400,000, $400,000 and $250,000 for his performance in 2012, 2011, 2010 and 2009, respectively. In order to meet the requirements of a CPP-compliant RSU, Mr. Nixon's RSUs do not exceed one-third of his total annual compensation in the respective year. Mr. Nixon's 2009 and 2010 RSU's vested and were paid in December 2012 in the respective cash amounts of $262,842 and $358,782. The 2011 RSU vested and was paid in December 2013 in the cash amount of $591,344. The 2012 RSU vested and was paid in December 2014 in the cash amount of $572,746.

73

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(17) Commitments, Contingent Liabilities and Other Matters

        The Company leases portions of its banking premises and equipment under operating leases. Total rental expense for the years ended December 31, 2014, 2013 and 2012 were $7,200,000, $7,300,000 and $8,300,000, respectively. Future minimum lease payments due under non-cancellable operating leases at December 31, 2014 were as follows:

        Fiscal year ending:

	Total
	(in thousands)
2015	$	3,505
2016		2,454
2017		1,168
2018		631
2019		157
Thereafter		122
Total	$	8,037

        It is expected that certain leases will be renewed, as these leases expire. Aggregate future minimum rentals to be received under non-cancellable sub-leases greater than one year at December 31, 2014 were $85,875,000.

        Cash of approximately $106,841,000 and $96,087,000 at December 31, 2014 and 2013, respectively, was maintained to satisfy regulatory reserve requirements.

        The Company is involved in various legal proceedings that are in various stages of litigation. Some of these actions allege "lender liability" claims on a variety of theories and claim substantial actual and punitive damages. The Company has determined, based on discussions with its 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 the consolidated statements of condition and related statements of income, comprehensive income, shareholders' equity and cash flows of the Company. However, many of these matters are in various stages of proceedings and further developments could cause management to revise its assessment of these matters.

(18) Transactions with Related Parties

        In the ordinary course of business, the subsidiaries of the Company make loans to directors and executive officers of the Corporation, 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 $26,382,000 and $51,554,000 at December 31, 2014 and 2013, respectively.

(19) Financial Instruments with Off-Statement of Condition Risk and Concentrations of Credit Risk

        In the normal course of business, the bank subsidiaries are party to financial instruments with off-statement of condition risk to meet the financing needs of their customers. These financial instruments

74

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(19) Financial Instruments with Off-Statement of Condition Risk and Concentrations of Credit Risk (Continued)

include commitments to their customers. These financial instruments involve, to varying degrees, elements of credit risk in excess of the amounts recognized in the consolidated statement of condition. The contract amounts of these instruments reflect the extent of involvement the bank subsidiaries have in particular classes of financial instruments. At December 31, 2014, the following financial amounts of instruments, whose contract amounts represent credit risks, were outstanding:

Commitments to extend credit	$	1,662,516,000
Credit card lines		16,687,000
Standby letters of credit		103,793,000
Commercial letters of credit		10,879,000

        The Company enters into a standby letter of credit to guarantee performance of a customer to a third party. These guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved is represented by the contractual amounts of those instruments. Under the standby letters of credit, the Company is required to make payments to the beneficiary of the letters of credit upon request by the beneficiary so long as all performance criteria have been met. At December 31, 2014, the maximum potential amount of future payments is $103,793,000. At December 31, 2014, the fair value of these guarantees is not significant. Unsecured letters of credit totaled $40,875,000 and $42,503,000 at December 31, 2014 and 2013, respectively.

        The Company enters into commercial letters of credit on behalf of its customers which authorize a third party to draw drafts on the Company up to a stipulated amount and with specific terms and conditions. A commercial letter of credit is a conditional commitment on the part of the Company to provide payment on drafts drawn in accordance with the terms of the commercial letter of credit.

        The bank subsidiaries' exposure to credit loss in the event of nonperformance by the other party to the above financial instruments is represented by the contractual amounts of the instruments. The bank subsidiaries use the same credit policies in making commitments and conditional obligations as they do for on-statement of condition instruments. The bank subsidiaries control the credit risk of these transactions through credit approvals, limits and monitoring procedures. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates normally less than one year or other termination clauses and may require the payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The bank subsidiaries evaluate each customer's credit-worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the subsidiary banks upon extension of credit, is based on management's credit evaluation of the customer. Collateral held varies, but may include residential and commercial real estate, bank certificates of deposit, accounts receivable and inventory.

        The bank subsidiaries make commercial, real estate and consumer loans to customers principally located in South, Central and Southeast Texas and the State of Oklahoma. Although the loan portfolio is diversified, a substantial portion of its debtors' ability to honor their contracts is dependent upon the economic conditions in these areas, especially in the real estate and commercial business sectors.

75

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(20) Capital Requirements

        On December 23, 3008, as part of the Troubled Asset Relief Program Capital Purchase Program (the "TARP Capital Purchase Program") of the United States Department of the Treasury ("Treasury"), the Company issued to the Treasury, in exchange for aggregate consideration of $216 million, (i) 216,000 shares of the Company's fixed-rate cumulative perpetual preferred stock, Series A, par value $.01 per share (the "Senior Preferred Stock"), having a liquidation preference of $1,000 per share and (ii) a warrant to purchase 1,326,238 shares of the Company's common stock at a price per share of $24.43 and with a term of ten years (the "Warrant"). The Senior Preferred Stock paid a coupon rate of 5% of the first five years and 9% per year thereafter.

        On November 28, 2012, the Company completed the repurchase of all of the 216,000 shares of the Senior Preferred Stock held by Treasury. The Company commenced the $216 million repayment during the third quarter of 2012 and completed the final payment in the fourth quarter of 2012. The Company paid a total of $41,520,139 in preferred stock dividends to the U.S. Treasury from December of 2008 to November 28, 2012. On June 12, 2013, the U.S. Treasury sold the Warrant to a third party. As of the date of this report the Warrant is still outstanding. Adjustments to the $24.43 per share Exercise Price of the Warrant will be made if the Company pays cash dividends in excess of 33 cents per semi-annual period or makes certain other shareholder distributions before the Warrants expires on December 23, 2018.

        Bank regulatory agencies limit the amount of dividends, which the bank subsidiaries can pay the Corporation, through IBC Subsidiary Corporation, without obtaining prior approval from such agencies. At December 31, 2014, the subsidiary banks could pay dividends of up to $702,750,000 to the Corporation without prior regulatory approval and without adversely affecting their "well-capitalized" status under regulatory capital rules in effect at December 31, 2014. In addition to legal requirements, regulatory authorities also consider the adequacy of the bank subsidiaries' total capital in relation to their deposits and other factors. These capital adequacy considerations also limit amounts available for payment of dividends. The Company historically has not allowed any subsidiary bank to pay dividends in such a manner as to impair its capital adequacy.

        The Company and the bank subsidiaries are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company's assets, liabilities, and certain off-statement of condition items as calculated under regulatory accounting practices. The Company's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

        Current quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios (set forth in the table on the following page) of Total and Tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets. Management believes, as of December 31, 2014, that the Company and each of the bank subsidiaries met all capital adequacy requirements to which they are subject.

        In July 2013, the FDIC and other regulatory bodies issued final rules consisting of minimum requirements that increase both the quantity and quality of capital held by banking organizations. The final rules are a result of the implementation of the BASEL III capital reforms and various Dodd-Frank Act related capital provisions and impact all U.S. banking organizations with more than $500 million in assets.

76

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(20) Capital Requirements (Continued)

Consistent with the Basel international framework, the new rule includes a new minimum ratio of common equity tier 1 to risk-weighted assets of 4.5 percent and a common equity tier 1 capital conservation buffer of 2.5 percent of risk-weighted assets. The rule also raised the minimum ratio of tier 1 capital to risk-weighted assets from 4 percent to 6 percent and includes a minimum leverage ratio of 4 percent for all banking organizations. Regarding the quality of capital, the new rule emphasizes common equity tier 1 capital and implements strict eligibility criteria for regulatory capital instruments. The new rule also improves the methodology for calculating risk-weighted assets to enhance risk sensitivity. The new rule is subject to a four year phase in period for mandatory compliance and the Company is required to begin to phase in the new rules beginning on January 1, 2015. Management believes that after the phase in of the new capital standards, the Company and its bank subsidiaries will remain classified as "well-capitalized."

        As of December 31, 2014, the most recent notification from the Federal Deposit Insurance Corporation categorized all the bank subsidiaries as well-capitalized under the regulatory framework for prompt corrective action. To be categorized as "well-capitalized," the Company and the bank subsidiaries must maintain minimum Total risk-based, Tier 1 risk based, and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the categorization of the Company or any of the bank subsidiaries as well-capitalized.

77

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(20) Capital Requirements (Continued)

        The Company's and the bank subsidiaries' actual capital amounts and ratios for 2014 under current guidelines are presented in the following table:

	Actual					For Capital Adequacy Purposes					To Be Well-Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
						(greater than or equal to)		(greater than or equal to)			(greater than or equal to)		(greater than or equal to)
	(Dollars in Thousands)
As of December 31, 2014:
Total Capital (to Risk Weighted Assets):
Consolidated	$	1,524,998		20.24	%	$	602,847		8.00	%		N/A		N/A
International Bank of Commerce, Laredo		1,131,528		17.31			523,006		8.00		$	653,757		10.00	%
International Bank of Commerce, Brownsville		151,489		28.60			42,381		8.00			52,976		10.00
International Bank of Commerce, Zapata		60,946		33.83			14,412		8.00			18,041		10.00
Commerce Bank		68,291		37.42			14,600		8.00			18,251		10.00
Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	1,457,068		19.34	%	$	301,424		4.00	%		N/A		N/A
International Bank of Commerce, Laredo		1,071,360		16.39			261,503		4.00		$	392,254		6.00	%
International Bank of Commerce, Brownsville		145,584		27.48			21,190		4.00			31,785		6.00
International Bank of Commerce, Zapata		60,035		33.33			7,206		4.00			10,809		6.00
Commerce Bank		67,347		36.90			7,300		4.00			10,950		6.00
Tier 1 Capital (to Average Assets):
Consolidated	$	1,457,068		12.33	%	$	472,864		4.00	%	$	N/A		N/A
International Bank of Commerce, Laredo		1,071,360		11.22			381,804		4.00			477,255		5.00	%
International Bank of Commerce, Brownsville		145,584		13.96			41,717		4.00			52,146		5.00
International Bank of Commerce, Zapata		60,035		10.88			22,081		4.00			27,602		5.00
Commerce Bank		67,347		12.04			22,373		4.00			27,966		5.00

78

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(20) Capital Requirements (Continued)

        The Company's and the bank subsidiaries' actual capital amounts and ratios for 2013 are also presented in the following table:

	Actual					For Capital Adequacy Purposes					To Be Well-Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
						(greater than or equal to)		(greater than or equal to)			(greater than or equal to)		(greater than or equal to)
	(Dollars in Thousands)
As of December 31, 2013:
Total Capital (to Risk Weighted Assets):
Consolidated	$	1,442,837		20.36	%	$	566,870		8.00	%		N/A		N/A
International Bank of Commerce, Laredo		1,035,189		16.96			488,303		8.00		$	610,378		10.00	%
International Bank of Commerce, Brownsville		143,879		27.63			41,652		8.00			52,065		10.00
International Bank of Commerce, Zapata		57,675		32.65			14,130		8.00			17,663		10.00
Commerce Bank		64,585		36.45			14,175		8.00			17,719		10.00
Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	1,369,657		19.33	%	$	283,435		4.00	%		N/A		N/A
International Bank of Commerce, Laredo		969,731		15.89			244,151		4.00		$	366,227		6.00	%
International Bank of Commerce, Brownsville		138,467		26.60			20,826		4.00			31,239		6.00
International Bank of Commerce, Zapata		56,459		31.96			7,065		4.00			10,598		6.00
Commerce Bank		63,491		35.83			7,087		4.00			10,631		6.00
Tier 1 Capital (to Average Assets):
Consolidated	$	1,369,657		11.61	%	$	472,044		4.00	%	$	N/A		N/A
International Bank of Commerce, Laredo		969,731		10.09			384,497		4.00			480,622		5.00	%
International Bank of Commerce, Brownsville		138,467		13.33			41,553		4.00			51,942		5.00
International Bank of Commerce, Zapata		56,459		10.64			21,219		4.00			26,523		5.00
Commerce Bank		63,491		11.88			21,372		4.00			26,715		5.00

79

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(21) 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 Inputs—Unadjusted quoted prices in active markets for identical assets or liabilities.

•

Level 2 Inputs—Observable 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 Inputs—Unobservable 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 significant management judgment or estimation.

        A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy is set forth below.

        The following table represents financial instruments reported on the consolidated statements of condition at their fair value as of December 31, 2014 by level within the fair value measurement hierarchy.

			Fair Value Measurements at Reporting Date Using
			(in thousands)
	Assets/Liabilities Measured at Fair Value December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Measured on a recurring basis:
Assets:
Available for sale securities
Residential mortgage-backed securities	$	4,600,372	$	—	$	4,576,309	$	24,063
States and political subdivisions		282,276		—		282,276		—
Other		49,315		29,315		20,000		—
	$	4,931,963	$	29,315	$	4,878,585	$	24,063

80

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(21) Fair Value (Continued)

        The following table represents financial instruments reported on the consolidated balance sheets at their fair value as of December 31, 2013 by level within the fair value measurement hierarchy.

			Fair Value Measurements at Reporting Date Using
			(in thousands)
	Assets/Liabilities Measured at Fair Value December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Measured on a recurring basis:
Assets:
Available for sale securities
Residential mortgage-backed securities	$	5,027,701	$	—	$	4,999,849	$	27,852
States and political subdivisions		248,410		—		248,410		—
Other		28,468		28,468		—		—
	$	5,304,579	$	28,468	$	5,248,259	$	27,852

        Investment securities available-for-sale are classified within level 2 and level 3 of the valuation hierarchy, with the exception of certain equity investments that are classified within level 1. For investments classified as level 2 in the fair value hierarchy, the Company obtains fair value measurements for investment securities from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond's terms and conditions, among other things. Investment securities classified as level 3 are non-agency mortgage-backed securities. The non-agency mortgage-backed securities held by the Company are traded in inactive markets and markets that have experienced significant decreases in volume and level of activity, as evidenced by few recent transactions, a significant decline or absence of new issuances, price quotations that are not based on comparable securities transactions and wide bid-ask spreads among other factors. As a result of the inability to use quoted market prices to determine fair value for these securities, the Company determined that fair value, as determined by level 3 inputs in the fair value hierarchy, is more appropriate for financial reporting and more consistent with the expected performance of the investments. For the investments classified within level 3 of the fair value hierarchy, the Company used a discounted cash flow model to determine fair value. Inputs in the model included both historical performance and expected future performance based on information currently available.

        Assumptions used in the discounted cash flow model as of December 31, 2014 and December 31, 2013 were applied separately to those portions of the bond where the underlying residential mortgage loans had been performing under original contract terms for at least the prior 24 months and those where the underlying residential mortgages had not been meeting the original contractual obligation for the same period. Unobservable inputs included in the model are estimates on future principal prepayment rates, and default and loss severity rates. For that portion of the bond where the underlying residential mortgage had been meeting the original contract terms for at least 24 months, the Company used the following estimates in the model: (i) a voluntary prepayment rate of 7%, (ii) a 1% default rate, (iii) a loss severity rate of 25%, and (iv) a discount rate of 13%. The assumptions used in the model for the rest of the bond included the

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INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(21) Fair Value (Continued)

following estimates: (i) a voluntary prepayment rate of 2%, (ii) a default rate of 4.5%, (iii) a loss severity rate that started at 60% for the first year (2012) then declines by 5% for the following five years (2013, 2014, 2015, 2016 and 2017) and remains at 25% thereafter (2018 and beyond), and (iv) a discount rate of 13%. The estimates used in the model to determine fair value are based on observable historical data of the underlying collateral. The model anticipates that the housing market will gradually improve and that the underlying collateral will eventually all perform in accordance with the original contract terms on the bond. Should the number of loans in the underlying collateral that default and go into foreclosure or the severity of the losses in the underlying collateral significantly change, the results of the model would be impacted. The Company will continue to evaluate the actual historical performance of the underlying collateral and will modify the assumptions used in the model as necessary.

        The following table presents a reconciliation of activity for such mortgage-backed securities on a net basis (Dollars in thousands):

Balance at December 31, 2013	$	27,852
Principal paydowns		(4,154	)
Total unrealized gains (losses) included in:
Other comprehensive income		1,182
Impairment realized in earnings		(817	)
Balance at December 31, 2014	$	24,063

        Certain financial instruments are measured at fair value on a nonrecurring basis. They are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

        The following table represents financial instruments measured at fair value on a non-recurring basis as of and for the period ended December 31, 2014 by level within the fair value measurement hierarchy:

			Fair Value Measurements at Reporting Date Using
			(in thousands)
	Assets/Liabilities Measured at Fair Value Year ended December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Net (Credit) Provision During Period
Measured on a non-recurring basis:
Assets:
Impaired loans	$	29,501	$	—	$	—	$	29,501	$	(1,557	)
Other real estate owned		6,112		—		—		6,112		597

82

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(21) Fair Value (Continued)

        The following table represents financial instruments measured at fair value on a non-recurring basis as of and for the year ended December 31, 2013 by level within the fair value measurement hierarchy:

			Fair Value Measurements at Reporting Date Using
			(in thousands)
	Assets/Liabilities Measured at Fair Value Year ended December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Net Provision During Period
Measured on a non-recurring basis:
Assets:
Impaired loans	$	28,391	$	—	$	—	$	28,391	$	13,229
Other real estate owned		16,329		—		—		16,329		1,204

        The Company's assets measured at fair value on a non-recurring basis are limited to impaired loans and other real estate owned. Impaired loans are classified within level 3 of the valuation hierarchy. The fair value of impaired loans is derived in accordance with FASB ASC 310, "Receivables". Impaired loans are primarily comprised of collateral-dependent commercial loans. Understanding that as the primary sources of loan repayments decline, the secondary repayment source comes into play and correctly evaluating the fair value of that secondary source, the collateral, becomes even more important. Re-measurement of the impaired loan to fair value is done through a specific valuation allowance included in the allowance for probable loan losses. The fair value of impaired loans is based on the fair value of the collateral, as determined through either an appraisal or evaluation process. The basis for the Company's appraisal and appraisal review process is based on regulatory guidelines and strives to comply with all regulatory appraisal laws, regulations and the Uniform Standards of Professional Appraisal Practice. All appraisals and evaluations are "as is" (the property's highest and best use) valuations based on the current conditions of the property/project at that point in time. The determination of the fair value of the collateral is based on the net realizable value, which is the appraised value less any closing costs, when applicable. As of December 31, 2014, the Company had $65,551,000 of impaired commercial collateral dependent loans, of which $52,092,000 had an appraisal performed within the immediately preceding twelve months and of which $5,307,000 had an evaluation performed within the immediately preceding twelve months. As of December 31, 2013, the Company had $64,585,000 of impaired commercial collateral dependent loans, of which $50,346,000 had an appraisal performed within the immediately preceding twelve months and of which $0 had an evaluation performed within the immediately preceding twelve months.

        The determination to either seek an appraisal or to perform an evaluation begins in weekly credit quality meetings, where the committee analyzes the existing collateral values of the impaired loans and where obsolete appraisals are identified. In order to determine whether the Company would obtain a new appraisal or perform an internal evaluation to determine the fair value of the collateral, the credit committee reviews the existing appraisal to determine if the collateral value is reasonable in view of the current use of the collateral and the economic environment related to the collateral. If the analysis of the existing appraisal does not find that the collateral value is reasonable under the current circumstances, the Company would obtain a new appraisal on the collateral or perform an internal evaluation of the collateral. The ultimate decision to get a new appraisal rests with the independent credit administration group. A new appraisal is not required if an internal evaluation, as performed by in-house experts, is able

83

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(21) Fair Value (Continued)

to appropriately update the original appraisal assumptions to reflect current market conditions and provide an estimate of the collateral's market value for impairment analysis. The internal evaluations must be in writing and contain sufficient information detailing the analysis, assumptions and conclusions and they must support performing an evaluation in lieu of ordering a new appraisal.

        Other real estate owned is comprised of real estate acquired by foreclosure and deeds in lieu of foreclosure. Other real estate owned is carried at the lower of the recorded investment in the property or its fair value less estimated costs to sell such property (as determined by independent appraisal) within level 3 of the fair value hierarchy. Prior to foreclosure, the value of the underlying loan is written down to the fair value of the real estate to be acquired by a charge to the allowance for probable loan losses, if necessary. The fair value is reviewed periodically and subsequent write downs are made accordingly through a charge to operations. Other real estate owned is included in other assets on the consolidated financial statements. For the twelve months ended December 31, 2014 and December 31, 2013, respectively the Company recorded $367,000 and $402,000 in charges to the allowance for probable loan losses in connection with loans transferred to other real estate owned. For the twelve months ended December 31, 2014 and December 31, 2013, respectively, the Company recorded $597,000 and $1,204,000 in adjustments to fair value in connection with other real estate owned.

        The fair value estimates, methods, and assumptions for the Company's financial instruments at December 31, 2014 and December 31, 2013 are outlined below.

Cash and Cash Equivalents

        For these short-term instruments, the carrying amount is a reasonable estimate of fair value.

Investment securities held-to-maturity

        The carrying amounts of investments held-to-maturity approximate fair value.

Investment Securities

        For investment securities, which include U. S. Treasury securities, obligations of other U. S. government agencies, obligations of states and political subdivisions and mortgage pass through and related securities, fair values are from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond's terms and conditions, among other things. See disclosures of fair value of investment securities in Note 2.

Loans

        Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial, real estate and consumer loans as outlined by regulatory reporting guidelines. Each category is segmented into fixed and variable interest rate terms and by performing and non-performing categories.

        For variable rate performing loans, the carrying amount approximates the fair value. For fixed rate performing loans, except residential mortgage loans, the fair value is calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and

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INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(21) Fair Value (Continued)

interest rate risk inherent in the loan. For performing residential mortgage loans, fair value is estimated by discounting contractual cash flows adjusted for prepayment estimates using discount rates based on secondary market sources or the primary origination market. Fixed rate performing loans are within Level 3 of the fair value hierarchy. At December 31, 2014, and December 31, 2013, the carrying amount of fixed rate performing loans was $1,352,147,000 and $1,243,252,000 respectively, and the estimated fair value was $1,285,648,000 and $1,196,916,000, respectively.

Accrued Interest

        The carrying amounts of accrued interest approximate fair value.

Deposits

        The fair value of deposits with no stated maturity, such as non-interest bearing demand deposit accounts, savings accounts and interest bearing demand deposit accounts, was equal to the amount payable on demand as of December 31, 2014 and December 31, 2013. The fair value of time deposits is based on the discounted value of contractual cash flows. The discount rate is based on currently offered rates. Time deposits are within Level 3 of the fair value hierarchy. At December 31, 2014 and December 31, 2013, the carrying amount of time deposits was $2,482,692,000 and $2,651,303,000, respectively, and the estimated fair value was $2,480,390,000 and $2,649,452,000, respectively.

Securities Sold Under Repurchase Agreements

        Securities sold under repurchase agreements include both short and long-term maturities. Due to the contractual terms of the short-term instruments, the carrying amounts approximated fair value at December 31, 2014 and December 31, 2013. The fair value of the long-term instruments is based on established market spreads using option adjusted spread methodology. Long-term repurchase agreements are within level 3 of the fair value hierarchy. At December 31, 2014 and December 31, 2013, respectively, the carrying amount of long-term repurchase agreements was $610,000,000 and $710,000,000 and the estimated fair value was $558,097,100 and $792,215,500, respectively.

Junior Subordinated Deferrable Interest Debentures

        The Company currently has floating rate junior subordinated deferrable interest debentures outstanding. Due to the contractual terms of the floating rate junior subordinated deferrable interest debentures, the carrying amounts approximated fair value at December 31, 2014 and December 31, 2013.

Other Borrowed Funds

        The Company currently has short and long-term borrowings issued from the Federal Home Loan Bank ("FHLB"). Due to the contractual terms of the short-term borrowings, the carrying amounts approximated fair value at December 31, 2014 and December 31, 2013. The fair value of the long-term borrowings is based on established market spreads for similar types of borrowings. The long-term borrowings are included in Level 2 of the fair value hierarchy. At December 31, 2014 and December 31, 2013, the carrying amount of the long-term FHLB borrowings was $6,244,000 and $8,950,000 respectively, and the estimated fair value was $6,645,000 and $8,950,000, respectively.

85

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(21) Fair Value (Continued)

Commitments to Extend Credit and Letters of Credit

        Commitments to extend credit and fund letters of credit are principally at current interest rates and therefore the carrying amount approximates fair value.

Limitations

        Fair value estimates are made at a point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company's financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

        Fair value estimates are based on existing on-and off-statement of condition financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Other significant assets and liabilities that are not considered financial assets or liabilities include the bank premises and equipment and core deposit value. In addition, the tax ramifications related to the effect of fair value estimates have not been considered in the above estimates.

86

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(22) International Bancshares Corporation (Parent Company Only) Financial Information

Statements of Condition
(Parent Company Only)

December 31, 2014 and 2013
(Dollars in Thousands)

	2014			2013
ASSETS
Cash	$	9,252		$	8,106
Other investments		69,042			62,381
Notes receivable		204			313
Investment in subsidiaries		1,691,553			1,556,932
Other assets		50			197
Total assets	$	1,770,101		$	1,627,929
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Junior subordinated deferrable interest debentures	$	175,416		$	190,726
Due to IBC Trading		21			21
Other liabilities		14,006			12,774
Total liabilities		189,443			203,521
Shareholders' equity:
Common shares		95,784			95,744
Surplus		165,520			163,947
Retained earnings		1,585,389			1,467,000
Accumulated other comprehensive income (loss)		11,397			(43,774	)
		1,858,090			1,682,917
Less cost of shares in treasury		(277,432	)		(258,509	)
Total shareholders' equity		1,580,658			1,424,408
Total liabilities and shareholders' equity	$	1,770,101		$	1,627,929

87

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(23) International Bancshares Corporation (Parent Company Only) Financial Information

Statements of Income
(Parent Company Only)

Years ended December 31, 2014, 2013 and 2012
(Dollars in Thousands)

	2014		2013		2012
Income:
Dividends from subsidiaries	$	71,389	$	30,000	$	229,250
Interest income on notes receivable		15		18		27
Interest income on other investments		6,862		12,301		6,759
Other interest income		—		—		18
Other		1,923		26		686
Total income		80,189		42,345		236,740
Expenses:
Interest expense (Debentures)		4,264		4,665		6,595
Other		1,099		1,889		3,867
Total expenses		5,363		6,554		10,462
Income before federal income taxes and equity in undistributed net income of subsidiaries		74,826		35,791		226,278
Income tax expense (benefit)		1,370		2,529		(738	)
Income before equity in undistributed net income of subsidiaries		73,456		33,262		227,016
Equity in undistributed (distributed) net income of subsidiaries		79,695		93,089		(119,181	)
Net income		153,151		126,351		107,835
Preferred stock dividends and discount accretion		—		—		14,362
Net income available to common shareholders	$	153,151	$	126,351	$	93,473

88

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(24) International Bancshares Corporation (Parent Company Only) Financial Information

Statements of Cash Flows
(Parent Company Only)

Years ended December 31, 2014, 2013 and 2012
(Dollars in Thousands)

	2014			2013			2012
Operating activities:
Net income	$	153,151		$	126,351		$	107,835
Adjustments to reconcile net income to net cash provided by operating activities:
Impairment charges on available for sale securities		254			754			—
Stock compensation expense		1,058			414			474
Increase (decrease) in other liabilities		416			(969	)		6,711
Equity in (undistributed) distributed net income of subsidiaries		(79,695	)		(93,089	)		119,181
Net cash provided by operating activities		75,184			33,461			234,201
Investing activities:
Principal collected on mortgage-backed securities		1,301			1,207			1,985
Net decrease in notes receivable		109			96			86
(Increase) decrease in other assets and other investments		(7,008	)		432			6,418
Net cash (used in) provided by investing activities		(5,598	)		1,735			8,489
Financing activities:
Repayment of trust preferred securities		(15,310	)		—			—
Redemption of preferred shares		—			—			(216,000	)
Proceeds from stock transactions		555			265			51
Payments of cash dividends—common		(34,762	)		(28,894	)		(26,894	)
Payments of cash dividends—preferred		—			—			(10,260	)
Purchase of treasury stock		(18,923	)		—			(1,716	)
Net cash used in financing activities		(68,440	)		(28,629	)		(254,819	)
Increase (decrease) in cash		1,146			6,567			(12,129	)
Cash at beginning of year		8,106			1,539			13,668
Cash at end of year	$	9,252		$	8,106		$	1,539

89

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Condensed Quarterly Income Statements
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)

	Fourth Quarter		Third Quarter		Second Quarter		First Quarter
2014
Interest income	$	98,664	$	97,958	$	99,340	$	97,637
Interest expense		11,461		11,575		11,634		11,873
Net interest income		87,203		86,383		87,706		85,764
Provision for probable loan losses		5,884		2,816		3,645		2,078
Non-interest income		42,226		36,483		41,453		58,186
Non-interest expense		64,560		70,157		68,630		77,696
Income before income taxes		58,985		49,893		56,884		64,176
Income taxes		20,432		16,660		19,165		20,530
Net income available to common shareholders	$	38,553	$	33,233	$	37,719	$	43,646
Per common share:
Basic
Net income	$	..58	$	..50	$	..56	$	..65
Diluted
Net income	$	..57	$	..50	$	..56	$	..65

90

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Condensed Quarterly Income Statements
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)

	Fourth Quarter		Third Quarter		Second Quarter		First Quarter
2013
Interest income	$	98,133	$	91,650	$	86,324	$	87,110
Interest expense		13,447		13,007		13,700		14,478
Net interest income		84,686		78,643		72,624		72,632
Provision for probable loan losses		5,407		5,800		4,342		7,419
Non-interest income		45,167		44,481		46,705		53,252
Non-interest expense		67,830		70,227		73,714		80,861
Income before income taxes		56,616		47,097		41,273		37,604
Income taxes		17,673		15,271		13,760		9,535
Net income available to common shareholders	$	38,943	$	31,826	$	27,513	$	28,069
Per common share:
Basic
Net income	$	..58	$	..47	$	..41	$	..42
Diluted
Net income	$	..58	$	..47	$	..41	$	..42

91

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
Condensed Average Statements of Condition
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)

Distribution of Assets, Liabilities and Shareholders' Equity

        The following table sets forth a comparative summary of average interest earning assets and average interest bearing liabilities and related interest yields for the years ended December 31, 2014, 2013, and 2012:

	2014								2013								2012
	Average Balance			Interest		Average Rate/Cost			Average Balance			Interest		Average Rate/Cost			Average Balance			Interest		Average Rate/Cost
	(Dollars in Thousands)
Assets
Interest earning assets:
Loan, net of unearned discounts:
Domestic	$	5,312,177		$	275,512		5.19	%	$	4,802,120		$	256,942		5.35	%	$	4,730,903		$	260,874		5.51	%
Foreign		179,664			6,034		3.36			176,713			6,085		3.44			201,825			7,714		3.82
Investment securities:
Taxable		4,810,068			100,095		2.08			5,051,736			87,198		1.73			4,877,210			94,885		1.95
Tax-exempt		257,557			11,767		4.57			232,266			12,877		5.54			210,320			11,663		5.55
Other		66,199			191		.29			45,578			115		.25			200,109			503		.25
Total interest-earning assets		10,625,665			393,599		3.70	%		10,308,413			363,217		3.52	%		10,220,367			375,639		3.68	%
Non-interest earning assets:
Cash and cash equivalents		226,817								270,619								410,726
Bank premises and equipment, net		497,927								470,183								441,981
Other assets		866,691								844,360								861,145
Less allowance for probable loan losses		(73,544	)							(66,001	)							(77,103	)
Total	$	12,143,556							$	11,827,574							$	11,857,116
Liabilities and Shareholders' Equity
Interest bearing liabilities:
Savings and interest bearing demand deposits	$	2,983,028		$	3,597		.12	%	$	2,879,115		$	3,762		.13	%	$	2,806,657			5,288		.19	%
Time deposits:
Domestic		1,358,119			6,689		.49			1,465,250			8,826		.60			1,673,590			13,208		.79
Foreign		1,221,981			5,344		.44			1,306,572			6,618		.51			1,608,219			10,765		.67
Securities sold under repurchase agreements		893,836			24,616		2.75			1,041,192			29,171		2.80			1,276,841			37,645		2.95
Other borrowings		1,085,311			2,033		.19			841,158			1,590		.19			419,509			998		.24
Junior subordinated interest deferrable debentures		181,574			46,543		.60			190,726			4,665		2.45			190,726			6,595		3.46
Total interest bearing liabilities		7,723,849			46,543		.60	%		7,724,013			54,632		.71	%		7,975,542			74,499		.93	%
Non-interest bearing liabilities:
Demand Deposits		2,853,187								2,594,727								2,072,539
Other liabilities		70,500								97,237								305,214
Shareholders' equity		1,496,020								1,411,597								1,503,821
Total	$	12,143,556							$	11,827,574							$	11,857,116
Net interest income				$	347,056							$	308,585							$	301,140
Net yield on interest earning assets							3.27	%							2.99	%							2.95	%

92

INTERNATIONAL BANCSHARES CORPORATION
OFFICERS AND DIRECTORS

OFFICERS	DIRECTORS
DENNIS E. NIXON	DENNIS E. NIXON
Chairman of the Board and President	President, International Bank of Commerce
R. DAVID GUERRA	IRVING GREENBLUM
Vice President	International Investments/Real Estate
EDWARD J. FARIAS	R. DAVID GUERRA
Vice President	President
	International Bank of Commerce
IMELDA NAVARRO	Branch in McAllen, TX
Treasurer
	DOUG HOWLAND
WILLIAM J. CUELLAR	Owner
Auditor	Construction & Construction Materials Company
	Investments
MARISA V. SANTOS
Secretary	IMELDA NAVARRO
	Senior Executive Vice President
HILDA V. TORRES	International Bank of Commerce
Assistant Secretary
	PEGGY NEWMAN
	Investments
	LARRY NORTON
	President
	Norton Stores, Inc.
	LEONARDO SALINAS
	Investments
	ANTONIO R. SANCHEZ, JR.
	Chairman of the Board
	Sanchez Oil & Gas Corporation
	Investments

93

QuickLinks

Exhibit 13

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES (Consolidated)
SELECTED FINANCIAL DATA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTEREST RATE SENSITIVITY (Dollars in Thousands)
COMPARISON OF CUMULATIVE FIVE YEAR TOTAL RETURN
Total Return To Shareholders (Includes reinvestment of dividends)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Condition December 31, 2014 and 2013 (Dollars in Thousands, Except Per Share Amounts)
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Income Years ended December 31, 2014, 2013 and 2012 (Dollars in Thousands, Except Per Share Amounts)
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Income (Continued) Years ended December 31, 2014, 2013 and 2012 (Dollars in Thousands, Except Per Share Amounts)
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Comprehensive Income Years ended December 31, 2014, 2013, and 2012 (Dollars in Thousands)
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Shareholders' Equity Years ended December 31, 2014, 2013 and 2012 (in Thousands, except share and per share amounts)
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows Years ended December 31, 2014, 2013 and 2012 (Dollars in Thousands)
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements
Statements of Condition (Parent Company Only)
December 31, 2014 and 2013 (Dollars in Thousands)
Statements of Income (Parent Company Only)
Years ended December 31, 2014, 2013 and 2012 (Dollars in Thousands)
Statements of Cash Flows (Parent Company Only)
Years ended December 31, 2014, 2013 and 2012 (Dollars in Thousands)
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES Condensed Quarterly Income Statements (Dollars in Thousands, Except Per Share Amounts) (Unaudited)
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES Condensed Quarterly Income Statements (Dollars in Thousands, Except Per Share Amounts) (Unaudited)
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES Condensed Average Statements of Condition (Dollars in Thousands, Except Per Share Amounts) (Unaudited)
INTERNATIONAL BANCSHARES CORPORATION OFFICERS AND DIRECTORS

EX-21

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Exhibit 21

List of Subsidiaries

Subsidiaries of International Bancshares Corporation

Name	State of Incorporation or Organization	Business	% of Ownership
IBC Subsidiary Corporation	Delaware	Bank Holding Company		100	%
IBC Life Insurance Company	Texas	Credit Life Insurance		100	%
IBC Trading Company	Texas	Export Trading		100	%
IBC Capital Corporation	Texas	Investments		100	%
IBC Charitable and Community Development Corporation	Texas	Community Development		100	%
Premier Tierra Holdings, Inc.	Texas	Liquidating Subsidiary		100	%

Subsidiaries of IBC Subsidiary Corporation

Name	State of Incorporation or Organization	Business	% of Ownership
International Bank of Commerce	Texas	State Bank		100	%
Commerce Bank	Texas	State Bank		100	%
International Bank of Commerce, Zapata	Texas	State Bank		100	%
International Bank of Commerce, Brownsville	Texas	State Bank		100	%
Gulfstar Merchant Banking I, Ltd.	Texas	Investment and Merchant Banking		70	%
Gulfstar Merchant Banking II, Ltd.	Texas	Merchant Banking		70	%
Gulfstar Merchant Banking III, Ltd.	Texas	Merchant Banking		50	%
Gulfstar Merchant Banking IV, Ltd.	Texas	Merchant Banking		50	%

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Exhibit 21

List of Subsidiaries
Subsidiaries of International Bancshares Corporation
Subsidiaries of IBC Subsidiary Corporation

EX-23

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EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        We consent to the incorporation by reference in Registration Statement (No. 333-183958) on Form S-8 filed on September 18, 2012 of International Bancshares Corporation of our reports dated February 27, 2015, relating to our audits of the consolidated financial statements and internal control over financial reporting, included in and incorporated by reference in the Annual Report on Form 10-K of International Bancshares Corporation for the year ended December 31, 2014.

/s/ McGladrey LLP

Dallas, Texas
February 27, 2015

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EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

EX-31.A

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Exhibit 31a

Certification

I, Dennis E. Nixon, certify that:

1.

I have reviewed this Annual Report on Form 10-K of International Bancshares Corporation;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 27, 2015
By:	/s/ DENNIS E. NIXON Dennis E. Nixon President (Chief Executive Officer)

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Exhibit 31a

Certification

EX-31.B

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Exhibit 31b

Certification

I, Imelda Navarro, certify that:

1.

I have reviewed this Annual Report on Form 10-K of International Bancshares Corporation;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 27, 2015
By:	/s/ IMELDA NAVARRO Imelda Navarro Treasurer (Chief Financial Officer)

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Exhibit 31b

Certification

EX-32.A

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Exhibit 32a

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Annual Report of International Bancshares Corporation (the "Company") on Form 10-K for the year ended December 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Dennis E. Nixon, President and Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)), as applicable; and



(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ DENNIS E. NIXON Dennis E. Nixon President
Date: February 27, 2015

        The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, and not being filed for purposes of Section 18 of the Securities Exchange Act, as amended, and is not to be incorporated by reference into any filing of the Company, whether on and before or after the date hereof, regardless of any general incorporation language in such filing.

        A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Exhibit 32a

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

EX-32.B

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Exhibit 32b

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Annual Report of International Bancshares Corporation (the "Company") on Form 10-K for the year ended December 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Imelda Navarro, Treasurer and Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(3)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)), as applicable; and



(4)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ IMELDA NAVARRO Imelda Navarro Treasurer
Date: February 27, 2015

        The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, and not being filed for purposes of Section 18 of the Securities Exchange Act, as amended, and is not to be incorporated by reference into any filing of the Company, whether on and before or after the date hereof, regardless of any general incorporation language in such filing.

        A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Exhibit 32b

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

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Bank Premises and Equipment (Tables)

12 Months Ended

Dec. 31, 2014

Bank Premises and Equipment

Summary of bank premises and equipment, by asset classification

	Estimated useful lives	2014			2013
		(Dollars in Thousands)
Bank buildings and improvements	5 - 40 years	$	509,830		$	470,386
Furniture, equipment and vehicles	1 - 20 years		269,861			260,932
Land			125,414			128,805
Real estate held for future expansion:
Land, building, furniture, fixture and equipment	7 - 27 years		—			511
Less: accumulated depreciation			(378,682	)		(355,792	)
Bank premises and equipment, net		$	526,423		$	504,842

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International Bancshares Corporation (Parent Company Only) Financial Information Statements of Income (Tables)

12 Months Ended

Dec. 31, 2014

International Bancshares Corporation (Parent Company Only) Financial Information Statements of Income

Schedule of condensed statements of income of Parent Company

(Dollars in Thousands)

	2014		2013		2012
Income:
Dividends from subsidiaries	$	71,389	$	30,000	$	229,250
Interest income on notes receivable		15		18		27
Interest income on other investments		6,862		12,301		6,759
Other interest income		—		—		18
Other		1,923		26		686
Total income		80,189		42,345		236,740
Expenses:
Interest expense (Debentures)		4,264		4,665		6,595
Other		1,099		1,889		3,867
Total expenses		5,363		6,554		10,462
Income before federal income taxes and equity in undistributed net income of subsidiaries		74,826		35,791		226,278
Income tax expense (benefit)		1,370		2,529		(738	)
Income before equity in undistributed net income of subsidiaries		73,456		33,262		227,016
Equity in undistributed (distributed) net income of subsidiaries		79,695		93,089		(119,181	)
Net income		153,151		126,351		107,835
Preferred stock dividends and discount accretion		—		—		14,362
Net income available to common shareholders	$	153,151	$	126,351	$	93,473

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Stock Options (Tables)

12 Months Ended

Dec. 31, 2014

Stock Options

Schedule of Black-Scholes-Merton option valuation model assumptions

	2014			2013
Expected Life (Years)		7.63			7.63
Dividend yield		2.01	%		2.33	%
Interest rate		2.28	%		2.86	%
Volatility		47.36	%		47.28	%

Summary of option activity under stock option plans

	Number of options		Weighted average exercise price		Weighted average remaining contractual term (years)		Aggregate intrinsic value ($)
							(in Thousands)
Options outstanding at December 31, 2013		515,143	$	15.98
Plus: Options granted		564,750		21.48
Less:
Options exercised		40,385		13.75
Options expired		15,125		27.02
Options forfeited		30,494		18.84
Options outstanding at December 31, 2014		993,889		18.94		6.62	$	7,567
Options fully vested and exercisable at December 31, 2014		250,487	$	16.76		2.28	$	2,461

Schedule of other information pertaining to option activity

	Twelve Months Ended December 31,
	2014		2013		2012
Weighted average grant date fair value of stock options granted	$	9.07	$	9.05	$	8.71
Total fair value of stock options vested	$	376,000	$	480,000	$	524,000
Total intrinsic value of stock options exercised	$	468,000	$	171,000	$	41,000

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Deposits (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Demand non-interest bearing
Domestic	$ 2,382,935	$ 2,175,694
Foreign	547,318	490,816
Total demand non-interest bearing	2,930,253	2,666,510
Savings and interest bearing demand
Domestic	2,488,458	2,364,905
Foreign	537,222	560,707
Total savings and interest bearing demand	3,025,680	2,925,612
$100,000 or more
Domestic	835,792	856,700
Foreign	864,346	938,940
Less than $100,000
Domestic	482,089	531,503
Foreign	300,465	324,160
Total time, certificates of deposit	2,482,692	2,651,303
Total deposits	8,438,625	8,243,425
Savings and interest bearing demand
Domestic	2,998	3,182	4,487
Foreign	599	580	801
Total savings and interest bearing demand	3,597	3,762	5,288
$100,000 or more
Domestic	4,615	5,761	8,263
Foreign	4,529	5,590	9,148
Less than $100,000
Domestic	2,074	3,065	4,945
Foreign	815	1,028	1,617
Total time, certificates of deposit	12,033	15,444	23,973
Total interest expense on deposits	$ 15,630	$ 19,206	$ 29,261

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International Bancshares Corporation (Parent Company Only) Financial Information Statements of Cash Flows (Tables)

12 Months Ended

Dec. 31, 2014

International Bancshares Corporation (Parent Company Only) Financial Information Statements of Cash Flows

Schedule of condensed statements of cash flows of Parent Company

(Dollars in Thousands)

	2014			2013			2012
Operating activities:
Net income	$	153,151		$	126,351		$	107,835
Adjustments to reconcile net income to net cash provided by operating activities:
Impairment charges on available for sale securities		254			754			—
Stock compensation expense		1,058			414			474
Increase (decrease) in other liabilities		416			(969	)		6,711
Equity in (undistributed) distributed net income of subsidiaries		(79,695	)		(93,089	)		119,181
Net cash provided by operating activities		75,184			33,461			234,201
Investing activities:
Principal collected on mortgage-backed securities		1,301			1,207			1,985
Net decrease in notes receivable		109			96			86
(Increase) decrease in other assets and other investments		(7,008	)		432			6,418
Net cash (used in) provided by investing activities		(5,598	)		1,735			8,489
Financing activities:
Repayment of trust preferred securities		(15,310	)		—			—
Redemption of preferred shares		—			—			(216,000	)
Proceeds from stock transactions		555			265			51
Payments of cash dividends—common		(34,762	)		(28,894	)		(26,894	)
Payments of cash dividends—preferred		—			—			(10,260	)
Purchase of treasury stock		(18,923	)		—			(1,716	)
Net cash used in financing activities		(68,440	)		(28,629	)		(254,819	)
Increase (decrease) in cash		1,146			6,567			(12,129	)
Cash at beginning of year		8,106			1,539			13,668
Cash at end of year	$	9,252		$	8,106		$	1,539

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International Operations (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Loans:
Accrued interest receivable	$ 31,461,000	$ 30,654,000
International banking services
Loans:
Commercial	150,078,000	142,145,000
Others	35,143,000	39,697,000
Total loans	185,221,000	181,842,000
Less allowance for probable loan losses	(1,060,000)	(1,133,000)
Net loans	184,161,000	180,709,000
Accrued interest receivable	702,000	617,000
Outstanding standby and commercial letters of credit	114,672,000
Revenues	$ 6,034,000	$ 6,085,000	$ 7,714,000

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International Operations (Tables)

12 Months Ended

Dec. 31, 2014

International Operations

Summary of assets attributable to international operations

	2014			2013
	(Dollars in Thousands)
Loans:
Commercial	$	150,078		$	142,145
Others		35,143			39,697
		185,221			181,842
Less allowance for probable loan losses		(1,060	)		(1,133	)
Net loans	$	184,161		$	180,709
Accrued interest receivable	$	702		$	617

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International Bancshares Corporation (Parent Company Only) Financial Information Statements of Income

12 Months Ended

Dec. 31, 2014

International Bancshares Corporation (Parent Company Only) Financial Information Statements of Income

International Bancshares Corporation (Parent Company Only) Financial Information Statements of Income

(23) International Bancshares Corporation (Parent Company Only) Financial Information

Statements of Income

(Parent Company Only)

Years ended December 31, 2014, 2013 and 2012

(Dollars in Thousands)

	2014		2013		2012
Income:
Dividends from subsidiaries	$	71,389	$	30,000	$	229,250
Interest income on notes receivable		15		18		27
Interest income on other investments		6,862		12,301		6,759
Other interest income		—		—		18
Other		1,923		26		686
Total income		80,189		42,345		236,740
Expenses:
Interest expense (Debentures)		4,264		4,665		6,595
Other		1,099		1,889		3,867
Total expenses		5,363		6,554		10,462
Income before federal income taxes and equity in undistributed net income of subsidiaries		74,826		35,791		226,278
Income tax expense (benefit)		1,370		2,529		(738	)
Income before equity in undistributed net income of subsidiaries		73,456		33,262		227,016
Equity in undistributed (distributed) net income of subsidiaries		79,695		93,089		(119,181	)
Net income		153,151		126,351		107,835
Preferred stock dividends and discount accretion		—		—		14,362
Net income available to common shareholders	$	153,151	$	126,351	$	93,473

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Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Current
U.S.	$ 72,561	$ 59,583	$ 40,375
State	5,252	(1,530)	2,234
Foreign	1	3	33
Total current taxes	77,814	58,056	42,642
Deferred
U.S.	(969)	(1,692)	7,928
State	(58)	(125)	(5)
Total deferred taxes	(1,027)	(1,817)	7,923
Total income taxes	$ 76,787	$ 56,239	$ 50,565

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Other Borrowed Funds (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Federal Home Loan Bank advances
Balance at year end	$ 1,073,944,000	$ 1,223,950,000
Federal Home Loan Bank advances short-term
Federal Home Loan Bank advances
Balance at year end	1,067,700,000	1,215,000,000
Rate on balance outstanding at year end (as a percent)	0.15%	0.17%
Average daily balance	1,077,973,000	833,868,000
Average rate (as a percent)	0.16%	0.16%
Maximum amount outstanding at any month end	1,352,500,000	1,280,500,000
Federal Home Loan Bank advances long-term
Federal Home Loan Bank advances
Balance at year end	6,244,000	8,950,000
Rate on balance outstanding at year end (as a percent)	3.51%	3.53%
Average daily balance	7,338,000	7,289,000
Average rate (as a percent)	3.51%	3.53%
Maximum amount outstanding at any month end	8,934,000	8,993,000
Amortization of long-term advances for the next five years	$ 160,000
Period of amortization of long-term advances	5 years

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Fair Value (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Assets:
Available for sale securities	$ 4,931,963	$ 5,304,579
Measured on a recurring basis: | Assets/Liabilities Measured at Fair Value
Assets:
Available for sale securities	4,931,963	5,304,579
Measured on a recurring basis: | Assets/Liabilities Measured at Fair Value | Residential mortgage-backed securities
Assets:
Available for sale securities	4,600,372	5,027,701
Measured on a recurring basis: | Assets/Liabilities Measured at Fair Value | States and political subdivisions
Assets:
Available for sale securities	282,276	248,410
Measured on a recurring basis: | Assets/Liabilities Measured at Fair Value | Other
Assets:
Available for sale securities	49,315	28,468
Measured on a recurring basis: | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Available for sale securities	29,315	28,468
Measured on a recurring basis: | Quoted Prices in Active Markets for Identical Assets (Level 1) | Other
Assets:
Available for sale securities	29,315	28,468
Measured on a recurring basis: | Significant Other Observable Inputs (Level 2)
Assets:
Available for sale securities	4,878,585	5,248,259
Measured on a recurring basis: | Significant Other Observable Inputs (Level 2) | Residential mortgage-backed securities
Assets:
Available for sale securities	4,576,309	4,999,849
Measured on a recurring basis: | Significant Other Observable Inputs (Level 2) | States and political subdivisions
Assets:
Available for sale securities	282,276	248,410
Measured on a recurring basis: | Significant Other Observable Inputs (Level 2) | Other
Assets:
Available for sale securities	20,000
Measured on a recurring basis: | Significant Unobservable Inputs (Level 3)
Assets:
Available for sale securities	24,063	27,852
Measured on a recurring basis: | Significant Unobservable Inputs (Level 3) | Residential mortgage-backed securities
Assets:
Available for sale securities	$ 24,063	$ 27,852

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Investment Securities (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Held-to-maturity securities
Amortized cost	$ 2,400	$ 2,400
Estimated fair value	2,400	2,400
Carrying value	2,400	2,400
Available-for-sale securities
Amortized cost	4,914,428	5,372,594
Gross unrealized gains	68,516	65,104
Gross unrealized losses	(50,981)	(133,119)
Total investment securities	4,931,963	5,304,579
Assets/Liabilities Measured at Fair Value
Available-for-sale securities
Total investment securities	4,931,963	5,304,579
Carrying value
Available-for-sale securities
Total investment securities	4,931,963	5,304,579
Other securities
Held-to-maturity securities
Amortized cost	2,400	2,400
Estimated fair value	2,400	2,400
Carrying value	2,400	2,400
Available-for-sale securities
Amortized cost	20,000
Other securities | Assets/Liabilities Measured at Fair Value
Available-for-sale securities
Total investment securities	20,000
Other securities | Carrying value
Available-for-sale securities
Total investment securities	20,000
Residential mortgage-backed securities
Available-for-sale securities
Amortized cost	4,597,590	5,096,165
Gross unrealized gains	47,960	56,110
Gross unrealized losses	(45,178)	(124,574)
Residential mortgage-backed securities | Assets/Liabilities Measured at Fair Value
Available-for-sale securities
Total investment securities	4,600,372	5,027,701
Residential mortgage-backed securities | Carrying value
Available-for-sale securities
Total investment securities	4,600,372	5,027,701
Mortgage-backed securities by Ginnie Mae
Available-for-sale securities
Total investment securities	1,503,774	1,799,807
Mortgage-backed securities by Fannie Mae and Freddie Mac
Available-for-sale securities
Total investment securities	3,072,535	3,200,042
Mortgage-backed securities by non-government entities
Available-for-sale securities
Total investment securities	24,063	27,852
States and political subdivisions
Available-for-sale securities
Amortized cost	268,763	248,354
Gross unrealized gains	19,131	8,063
Gross unrealized losses	(5,618)	(8,007)
States and political subdivisions | Assets/Liabilities Measured at Fair Value
Available-for-sale securities
Total investment securities	282,276	248,410
States and political subdivisions | Carrying value
Available-for-sale securities
Total investment securities	282,276	248,410
Other
Available-for-sale securities
Amortized cost	28,075	28,075
Gross unrealized gains	1,425	931
Gross unrealized losses	(185)	(538)
Other | Assets/Liabilities Measured at Fair Value
Available-for-sale securities
Total investment securities	29,315	28,468
Other | Carrying value
Available-for-sale securities
Total investment securities	$ 29,315	$ 28,468

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Earnings per Share ("EPS") (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Basic EPS
Net Income (Numerator)	$ 153,151	$ 126,351	$ 93,473
Shares (Denominator)	66,872,500	67,195,180	67,236,681
Per Share Amount	$ 2.29	$ 1.88	$ 1.39
Diluted EPS
Net Income (Numerator)	$ 153,151	$ 126,351	$ 93,473
Potential dilutive common shares and warrants	183,956	119,679	77,282
Shares (Denominator)	67,056,456	67,314,859	67,313,963
Per Share Amount (in dollars per share)	$ 2.28	$ 1.88	$ 1.39

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Financial Instruments with Off-Statement of Condition Risk and Concentrations of Credit Risk (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Maximum
Financial amounts of instruments, whose contract amounts represent credit risks
Credit risk commitment, maximum expiration date	1 year
Commitments to extend credit
Financial amounts of instruments, whose contract amounts represent credit risks
Outstanding amount of financial instruments whose, contract amounts represent credit risks	1,662,516,000
Credit card lines
Financial amounts of instruments, whose contract amounts represent credit risks
Outstanding amount of financial instruments whose, contract amounts represent credit risks	16,687,000
Standby letters of credit
Financial amounts of instruments, whose contract amounts represent credit risks
Outstanding amount of financial instruments whose, contract amounts represent credit risks	103,793,000
Commercial letters of credit
Financial amounts of instruments, whose contract amounts represent credit risks
Outstanding amount of financial instruments whose, contract amounts represent credit risks	10,879,000
Unsecured letters of credit
Financial amounts of instruments, whose contract amounts represent credit risks
Guarantee obligations, maximum exposure	103,793,000
Unsecured letters of credit	40,875,000	$ 42,503,000

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Income Taxes (Details 3) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Deferred tax assets:
Loans receivable, principally due to the allowance for probable loan losses	$ 24,849	$ 25,365
Other real estate owned	3,453	3,878
Impairment charges on available-for-sale securities	5,618	5,327
Accrued expenses	268	399
Net unrealized gains on available for sale investment securities		24,235
Other	5,809	4,816
Total deferred tax assets	39,997	64,020
Deferred tax liabilities:
Bank premises and equipment, principally due to differences on depreciation	(18,314)	(20,729)
Net unrealized gains on available for sale investment securities	(6,182)
Identified intangible assets and goodwill	(18,787)	(18,051)
Other	(12,303)	(11,476)
Total deferred tax liabilities	(55,586)	(50,256)
Net deferred tax asset (liability)	$ (15,589)	$ 13,764

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Capital Requirements (Details) (USD $)	0 Months Ended	12 Months Ended		48 Months Ended	0 Months Ended
	Nov. 28, 2012	Dec. 31, 2014	Dec. 31, 2012	Nov. 28, 2012	Feb. 20, 2015
Series A cumulative perpetual preferred shares, aggregate liquidation value		$ 216,000,000
Series A cumulative perpetual preferred shares, issued		216,000
Series A cumulative perpetual preferred shares, par value (in dollars per share)		$ 0.01
Series A cumulative perpetual preferred shares, per share liquidation value (in dollars per share)		$ 1,000
Warrants to purchase entity's common stock (in shares)		1,326,238
Warrants, exercise price (in dollars per share)		$ 24.43
Warrants, term		10 years
Senior preferred stock, dividend rate for first five years (as a percent)		5.00%
Senior preferred stock, dividend rate thereafter (as a percent)		9.00%
Senior Preferred Stock held by Treasury repurchased (in shares)	216,000
Redemption of senior preferred shares			216,000,000
Preferred stock dividends to the U.S. Treasury			10,260,000	41,520,139
Dividend payable by subsidiaries, maximum		$ 702,750,000
Subsequent Event
Warrants, exercise price (in dollars per share)					$ 24.43
Cash dividends (as a percent)					33.00%

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Employees' Profit Sharing Plan (Details) (Deferred profit sharing plan, USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Deferred profit sharing plan
Employees' profit sharing plan
Minimum period of continuous employment to be fully vested	1 year
Profit sharing costs	$ 3,510,000	$ 3,500,000	$ 3,400,000

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Deposits (Details 2) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Scheduled maturities of time deposits
2015	$ 2,177,266,000
2016	203,928,000
2017	76,206,000
2018	23,481,000
2019	1,751,000
Thereafter	60,000
Total time, certificates of deposit	2,482,692,000	2,651,303,000
Time Deposits 250,000 or exceed	1,027,000	1,076,000
Scheduled maturities of time deposits in amounts of $100,000 or more
Due within 3 months or less	631,083,000
Due after 3 months and within 6 months	409,400,000
Due after 6 months and within 12 months	443,860,000
Due after 12 months	215,795,000
Total	$ 1,700,138,000

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Stock Options

12 Months Ended

Dec. 31, 2014

Stock Options

Stock Options

(15) Stock Options

        On April 5, 2012, the Board of Directors adopted the 2012 International Bancshares Corporation Stock Option Plan (the "2012 Plan"). There are 800,000 shares available for stock option grants under the 2012 Plan. Under the 2012 Plan, both qualified incentive stock options ("ISOs") and non-qualified stock options ("NQSOs") may be granted. 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. As of December 31, 2014, 204,750 shares were available for future grants under the 2012 Plan.

        The fair value of each option award granted under the plan is 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 is based on the historical volatility of the price of the Company's stock. The Company uses historical data to estimate the expected dividend yield and employee termination rates within the valuation model. The expected term of options is derived from historical exercise behavior. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

	2014			2013
Expected Life (Years)		7.63			7.63
Dividend yield		2.01	%		2.33	%
Interest rate		2.28	%		2.86	%
Volatility		47.36	%		47.28	%

        A summary of option activity under the stock option plans for the twelve months ended December 31, 2014 is as follows:

	Number of options		Weighted average exercise price		Weighted average remaining contractual term (years)		Aggregate intrinsic value ($)
							(in Thousands)
Options outstanding at December 31, 2013		515,143	$	15.98
Plus: Options granted		564,750		21.48
Less:
Options exercised		40,385		13.75
Options expired		15,125		27.02
Options forfeited		30,494		18.84
Options outstanding at December 31, 2014		993,889		18.94		6.62	$	7,567
Options fully vested and exercisable at December 31, 2014		250,487	$	16.76		2.28	$	2,461

        Stock-based compensation expense included in the consolidated statements of income for the years ended December 31, 2014, 2013 and 2012 was approximately $1,058,000, $414,000 and $474,000, respectively. As of December 31, 2014, there was approximately $3,934,000 of total unrecognized stock-based compensation cost related to non-vested options granted under the Company plans that will be recognized over a weighted average period of 2.3 years.

        Other information pertaining to option activity during the twelve month period ending December 31, 2014, 2013 and 2012 is as follows:

	Twelve Months Ended December 31,
	2014		2013		2012
Weighted average grant date fair value of stock options granted	$	9.07	$	9.05	$	8.71
Total fair value of stock options vested	$	376,000	$	480,000	$	524,000
Total intrinsic value of stock options exercised	$	468,000	$	171,000	$	41,000

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Financial Instruments with Off-Statement of Condition Risk and Concentrations of Credit Risk (Tables)

12 Months Ended

Dec. 31, 2014

Financial Instruments with Off-Statement of Condition Risk and Concentrations of Credit Risk

Schedule of financial amounts of instruments, whose contract amounts represent credit risks

At December 31, 2014, the following financial amounts of instruments, whose contract amounts represent credit risks, were outstanding:

Commitments to extend credit	$	1,662,516,000
Credit card lines		16,687,000
Standby letters of credit		103,793,000
Commercial letters of credit		10,879,000

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Securities Sold Under Repurchase Agreements (Tables)

12 Months Ended

Dec. 31, 2014

Securities Sold Under Repurchase Agreements

Schedule of repurchase agreements

	Collateral Securities				Repurchase Borrowing
	Book Value of Securities Sold		Fair Value of Securities Sold		Balance of Liability		Weighted Average Interest Rate
	(Dollars in Thousands)
December 31, 2014 term:
Overnight agreements	$	366,731	$	370,704	$	236,077		.16	%
1 to 29 days		3,717		3,781		1,016		.45
30 to 90 days		13,399		13,628		6,705		.38
Over 90 days		743,323		746,305		614,552		3.83
Total	$	1,127,170	$	1,134,418	$	858,350		2.79	%
December 31, 2013 term:
Overnight agreements	$	332,042	$	341,238	$	209,899		.17	%
1 to 29 days		27,954		28,288		18,666		.40
30 to 90 days		8,106		8,263		3,295		.43
Over 90 days		945,535		940,209		725,521		3.78
Total	$	1,313,637	$	1,317,998	$	957,381		2.91	%

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Junior Subordinated Deferrable Interest Debentures (Details 2) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Junior subordinated deferrable interest debentures, major types of business trusts
Junior subordinated deferrable interest debentures	$ 175,416	$ 190,726
Trust VI
Junior subordinated deferrable interest debentures, major types of business trusts
Junior subordinated deferrable interest debentures	25,774
Interest rate (as a percent)	3.68%
Interest rate index	LIBOR
Spread on interest rate index (as a percent)	3.45%
Trust VIII
Junior subordinated deferrable interest debentures, major types of business trusts
Junior subordinated deferrable interest debentures	25,774
Interest rate (as a percent)	3.28%
Interest rate index	LIBOR
Spread on interest rate index (as a percent)	3.05%
Trust IX
Junior subordinated deferrable interest debentures, major types of business trusts
Junior subordinated deferrable interest debentures	41,238
Interest rate (as a percent)	1.86%
Interest rate index	LIBOR
Spread on interest rate index (as a percent)	1.62%
Trust X
Junior subordinated deferrable interest debentures, major types of business trusts
Junior subordinated deferrable interest debentures	34,021
Interest rate (as a percent)	1.88%
Interest rate index	LIBOR
Spread on interest rate index (as a percent)	1.65%
Trust XI
Junior subordinated deferrable interest debentures, major types of business trusts
Junior subordinated deferrable interest debentures	27,990
Interest rate (as a percent)	1.86%
Interest rate index	LIBOR
Spread on interest rate index (as a percent)	1.62%
Trust XII
Junior subordinated deferrable interest debentures, major types of business trusts
Junior subordinated deferrable interest debentures	$ 20,619
Interest rate (as a percent)	1.69%
Interest rate index	LIBOR
Spread on interest rate index (as a percent)	1.45%

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Loans (Tables)

12 Months Ended

Dec. 31, 2014

Loans

Summary of loans, by loan type

	December 31, 2014		December 31, 2013
	(Dollars in Thousands)
Commercial, financial and agricultural	$	3,107,584	$	2,894,779
Real estate—mortgage		910,326		847,692
Real estate—construction		1,414,977		1,208,508
Consumer		61,137		66,414
Foreign		185,221		181,842
Total loans	$	5,679,245	$	5,199,235

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Fair Value (Tables)

12 Months Ended

Dec. 31, 2014

Fair Value

Assets and liabilities measured at fair value on a recurring basis

			Fair Value Measurements at Reporting Date Using
			(in thousands)
	Assets/Liabilities Measured at Fair Value December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Measured on a recurring basis:
Assets:
Available for sale securities
Residential mortgage-backed securities	$	4,600,372	$	—	$	4,576,309	$	24,063
States and political subdivisions		282,276		—		282,276		—
Other		49,315		29,315		20,000		—
	$	4,931,963	$	29,315	$	4,878,585	$	24,063

			Fair Value Measurements at Reporting Date Using
			(in thousands)
	Assets/Liabilities Measured at Fair Value December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Measured on a recurring basis:
Assets:
Available for sale securities
Residential mortgage-backed securities	$	5,027,701	$	—	$	4,999,849	$	27,852
States and political subdivisions		248,410		—		248,410		—
Other		28,468		28,468		—		—
	$	5,304,579	$	28,468	$	5,248,259	$	27,852

Reconciliation of activity for mortgage-backed securities on a net basis

        The following table presents a reconciliation of activity for such mortgage-backed securities on a net basis (Dollars in thousands):

Balance at December 31, 2013	$	27,852
Principal paydowns		(4,154	)
Total unrealized gains (losses) included in:
Other comprehensive income		1,182
Impairment realized in earnings		(817	)
Balance at December 31, 2014	$	24,063

Assets measured at fair value on a non-recurring basis

			Fair Value Measurements at Reporting Date Using
			(in thousands)
	Assets/Liabilities Measured at Fair Value Year ended December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Net (Credit) Provision During Period
Measured on a non-recurring basis:
Assets:
Impaired loans	$	29,501	$	—	$	—	$	29,501	$	(1,557	)
Other real estate owned		6,112		—		—		6,112		597

			Fair Value Measurements at Reporting Date Using
			(in thousands)
	Assets/Liabilities Measured at Fair Value Year ended December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Net Provision During Period
Measured on a non-recurring basis:
Assets:
Impaired loans	$	28,391	$	—	$	—	$	28,391	$	13,229
Other real estate owned		16,329		—		—		16,329		1,204

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Allowance for Probable Loan Losses (Details 6) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Loan portfolio by credit quality indicator
Portfolio, total	$ 5,679,245	$ 5,199,235
Pass
Loan portfolio by credit quality indicator
Portfolio, total	5,328,410	4,942,387
Special Review
Loan portfolio by credit quality indicator
Portfolio, total	54,561	73,077
Watch List - Pass
Loan portfolio by credit quality indicator
Portfolio, total	37,674	35,619
Watch List - Substandard
Loan portfolio by credit quality indicator
Portfolio, total	182,429	72,259
Watch List - Impaired
Loan portfolio by credit quality indicator
Portfolio, total	76,171	75,893
Commercial
Loan portfolio by credit quality indicator
Portfolio, total	1,089,486	1,042,642
Commercial | Pass
Loan portfolio by credit quality indicator
Portfolio, total	961,490	955,522
Commercial | Special Review
Loan portfolio by credit quality indicator
Portfolio, total	38,382	2,270
Commercial | Watch List - Pass
Loan portfolio by credit quality indicator
Portfolio, total	3,793	4,389
Commercial | Watch List - Substandard
Loan portfolio by credit quality indicator
Portfolio, total	45,646	46,278
Commercial | Watch List - Impaired
Loan portfolio by credit quality indicator
Portfolio, total	40,175	34,183
Commercial real estate: other construction and land development
Loan portfolio by credit quality indicator
Portfolio, total	1,414,977	1,208,508
Commercial real estate: other construction and land development | Pass
Loan portfolio by credit quality indicator
Portfolio, total	1,353,971	1,167,295
Commercial real estate: other construction and land development | Special Review
Loan portfolio by credit quality indicator
Portfolio, total	1,005	14,247
Commercial real estate: other construction and land development | Watch List - Pass
Loan portfolio by credit quality indicator
Portfolio, total	10,428	9,318
Commercial real estate: other construction and land development | Watch List - Substandard
Loan portfolio by credit quality indicator
Portfolio, total	38,697	3,672
Commercial real estate: other construction and land development | Watch List - Impaired
Loan portfolio by credit quality indicator
Portfolio, total	10,876	13,976
Commercial real estate: farmland and commercial
Loan portfolio by credit quality indicator
Portfolio, total	1,901,399	1,750,039
Commercial real estate: farmland and commercial | Pass
Loan portfolio by credit quality indicator
Portfolio, total	1,754,741	1,635,179
Commercial real estate: farmland and commercial | Special Review
Loan portfolio by credit quality indicator
Portfolio, total	11,674	56,438
Commercial real estate: farmland and commercial | Watch List - Pass
Loan portfolio by credit quality indicator
Portfolio, total	23,453	21,912
Commercial real estate: farmland and commercial | Watch List - Substandard
Loan portfolio by credit quality indicator
Portfolio, total	97,365	20,472
Commercial real estate: farmland and commercial | Watch List - Impaired
Loan portfolio by credit quality indicator
Portfolio, total	14,166	16,038
Commercial real estate: multifamily
Loan portfolio by credit quality indicator
Portfolio, total	116,699	102,098
Commercial real estate: multifamily | Pass
Loan portfolio by credit quality indicator
Portfolio, total	115,729	100,948
Commercial real estate: multifamily | Watch List - Substandard
Loan portfolio by credit quality indicator
Portfolio, total	135	855
Commercial real estate: multifamily | Watch List - Impaired
Loan portfolio by credit quality indicator
Portfolio, total	835	295
Residential: first lien
Loan portfolio by credit quality indicator
Portfolio, total	422,026	438,462
Residential: first lien | Pass
Loan portfolio by credit quality indicator
Portfolio, total	412,668	432,067
Residential: first lien | Special Review
Loan portfolio by credit quality indicator
Portfolio, total	3,500	122
Residential: first lien | Watch List - Substandard
Loan portfolio by credit quality indicator
Portfolio, total	18	120
Residential: first lien | Watch List - Impaired
Loan portfolio by credit quality indicator
Portfolio, total	5,840	6,153
Residential: junior lien
Loan portfolio by credit quality indicator
Portfolio, total	488,300	409,230
Residential: junior lien | Pass
Loan portfolio by credit quality indicator
Portfolio, total	484,968	405,731
Residential: junior lien | Watch List - Substandard
Loan portfolio by credit quality indicator
Portfolio, total	437	293
Residential: junior lien | Watch List - Impaired
Loan portfolio by credit quality indicator
Portfolio, total	2,895	3,206
Consumer Loan
Loan portfolio by credit quality indicator
Portfolio, total	61,137	66,414
Consumer Loan | Pass
Loan portfolio by credit quality indicator
Portfolio, total	59,622	64,808
Consumer Loan | Watch List - Substandard
Loan portfolio by credit quality indicator
Portfolio, total	131
Consumer Loan | Watch List - Impaired
Loan portfolio by credit quality indicator
Portfolio, total	1,384	1,606
Foreign
Loan portfolio by credit quality indicator
Portfolio, total	185,221	181,842
Foreign | Pass
Loan portfolio by credit quality indicator
Portfolio, total	185,221	180,837
Foreign | Watch List - Substandard
Loan portfolio by credit quality indicator
Portfolio, total		569
Foreign | Watch List - Impaired
Loan portfolio by credit quality indicator
Portfolio, total		$ 436

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Loans (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Summary of loans, by loan type
Total loans	$ 5,679,245	$ 5,199,235
Commercial, financial and agricultural
Summary of loans, by loan type
Total loans	3,107,584	2,894,779
Real estate - mortgage
Summary of loans, by loan type
Total loans	910,326	847,692
Commercial real estate: other construction and land development
Summary of loans, by loan type
Total loans	1,414,977	1,208,508
Consumer Loan
Summary of loans, by loan type
Total loans	61,137	66,414
Foreign
Summary of loans, by loan type
Total loans	$ 185,221	$ 181,842

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Income Taxes

Schedule of current and deferred portions of net income tax expense

	2014			2013			2012
	(Dollars in Thousands)
Current
U.S.	$	72,561		$	59,583		$	40,375
State		5,252			(1,530	)		2,234
Foreign		1			3			33
Total current taxes		77,814			58,056			42,642
Deferred
U.S.		(969	)		(1,692	)		7,928
State		(58	)		(125	)		(5	)
Total deferred taxes		(1,027	)		(1,817	)		7,923
Total income taxes	$	76,787		$	56,239		$	50,565

Schedule of income tax expense differences from the amount computed by applying the U.S. Federal income tax rate to income before income taxes

	2014			2013			2012
	(Dollars in Thousands)
Computed expected tax expense	$	80,560		$	64,183		$	55,634
Change in taxes resulting from:
Tax-exempt interest income		(4,554	)		(4,828	)		(4,381	)
State tax, net of federal income taxes and tax credit		3,377			(110	)		1,446
Tax refunds		—			(966	)		—
Other investment income		(3,615	)		(2,656	)		(2,691	)
Other		1,019			616			557
Actual tax expense	$	76,787		$	56,239		$	50,565

Schedule of tax effects of temporary difference that give rise to significant portions of the deferred tax assets and deferred tax liabilities

	2014			2013
	(Dollars in Thousands)
Deferred tax assets:
Loans receivable, principally due to the allowance for probable loan losses	$	24,849		$	25,365
Other real estate owned		3,453			3,878
Impairment charges on available-for-sale securities		5,618			5,327
Accrued expenses		268			399
Net unrealized gains on available for sale investment securities		—			24,235
Other		5,809			4,816
Total deferred tax assets		39,997			64,020
Deferred tax liabilities:
Bank premises and equipment, principally due to differences on depreciation		(18,314	)		(20,729	)
Net unrealized gains on available for sale investment securities		(6,182	)		—
Identified intangible assets and goodwill		(18,787	)		(18,051	)
Other		(12,303	)		(11,476	)
Total deferred tax liabilities		(55,586	)		(50,256	)
Net deferred tax asset (liability)	$	(15,589	)	$	13,764

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Consolidated Statements of Shareholders' Equity (Parenthetical) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Consolidated Statements of Shareholders' Equity
Cash Dividends (in dollars per share)	$ 0.52	$ 0.43	$ 0.4
Preferred stock, Rate (as a percent)			5.00%
Redemption of Series A Preferred Shares			216,000
Purchase of treasury stock (in shares)	787,387		95,466

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Allowance for Probable Loan Losses (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Allowance for probable loan losses
Balance at the beginning of the period	$ 70,161	$ 58,193	$ 84,192
Losses charged to allowance	(23,465)	(14,455)	(58,346)
Recoveries credited to allowance	3,709	3,455	4,388
Net losses charged to allowance	(19,756)	(11,000)	(53,958)
Provision (credit) charged to operations	14,423	22,968	27,959
Balance at the end of the period	64,828	70,161	58,193
Commercial
Allowance for probable loan losses
Balance at the beginning of the period	22,433	11,632	26,617
Losses charged to allowance	(19,110)	(11,737)	(34,721)
Recoveries credited to allowance	2,979	2,690	3,547
Net losses charged to allowance	(16,131)	(9,047)	(31,174)
Provision (credit) charged to operations	16,050	19,848	16,189
Balance at the end of the period	22,352	22,433	11,632
Commercial real estate: other construction and land development
Allowance for probable loan losses
Balance at the beginning of the period	12,541	12,720	19,940
Losses charged to allowance	(680)	(278)	(7,617)
Recoveries credited to allowance	72	87	229
Net losses charged to allowance	(608)	(191)	(7,388)
Provision (credit) charged to operations	1,022	12	168
Balance at the end of the period	12,955	12,541	12,720
Risks related to family development loans
Minimum number of family development loans	1
Maximum number of family development loans	4
Commercial real estate: farmland and commercial
Allowance for probable loan losses
Balance at the beginning of the period	24,467	21,880	24,227
Losses charged to allowance	(1,893)	(600)	(13,724)
Recoveries credited to allowance	107	152	220
Net losses charged to allowance	(1,786)	(448)	(13,504)
Provision (credit) charged to operations	(3,998)	3,035	11,157
Balance at the end of the period	18,683	24,467	21,880
Commercial real estate: multifamily
Allowance for probable loan losses
Balance at the beginning of the period	776	694	1,003
Losses charged to allowance		(5)
Net losses charged to allowance		(5)
Provision (credit) charged to operations	70	87	(309)
Balance at the end of the period	846	776	694
Residential: first lien
Allowance for probable loan losses
Balance at the beginning of the period	3,812	4,390	4,562
Losses charged to allowance	(351)	(632)	(227)
Recoveries credited to allowance	49	61	13
Net losses charged to allowance	(302)	(571)	(214)
Provision (credit) charged to operations	79	(7)	42
Balance at the end of the period	3,589	3,812	4,390
Residential: junior lien
Allowance for probable loan losses
Balance at the beginning of the period	4,249	4,448	4,760
Losses charged to allowance	(661)	(620)	(1,190)
Recoveries credited to allowance	242	298	195
Net losses charged to allowance	(419)	(322)	(995)
Provision (credit) charged to operations	853	123	683
Balance at the end of the period	4,683	4,249	4,448
Consumer Loan
Allowance for probable loan losses
Balance at the beginning of the period	750	1,289	1,724
Losses charged to allowance	(719)	(561)	(756)
Recoveries credited to allowance	210	162	184
Net losses charged to allowance	(509)	(399)	(572)
Provision (credit) charged to operations	419	(140)	137
Balance at the end of the period	660	750	1,289
Foreign
Allowance for probable loan losses
Balance at the beginning of the period	1,133	1,140	1,359
Losses charged to allowance	(51)	(22)	(111)
Recoveries credited to allowance	50	5
Net losses charged to allowance	(1)	(17)	(111)
Provision (credit) charged to operations	(72)	10	(108)
Balance at the end of the period	$ 1,060	$ 1,133	$ 1,140

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Other Borrowed Funds (Tables)

12 Months Ended

Dec. 31, 2014

Other Borrowed Funds

Schedule of other borrowed funds

	December 31,
	2014			2013
	(Dollars in Thousands)
Federal Home Loan Bank advances—short-term
Balance at year end	$	1,067,700		$	1,215,000
Rate on balance outstanding at year end		.15	%		.17	%
Average daily balance	$	1,077,973		$	833,868
Average rate		.16	%		.16	%
Maximum amount outstanding at any month end	$	1,352,500		$	1,280,500
Federal Home Loan Bank advances—long-term(1)
Balance at year end	$	6,244		$	8,950
Rate on balance outstanding at year end		3.51	%		3.53	%
Average daily balance	$	7,338		$	7,289
Average rate		3.51	%		3.53	%
Maximum amount outstanding at any month end	$	8,934		$	8,993

(1) The amortization of the long-term advances is approximately $160,000 per year for each of the next five years and the final maturity date is January 3, 2028.

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Financial Instruments with Off-Statement of Condition Risk and Concentrations of Credit Risk

12 Months Ended

Dec. 31, 2014

Financial Instruments with Off-Statement of Condition Risk and Concentrations of Credit Risk

Financial Instruments with Off-Statement of Condition Risk and Concentrations of Credit Risk

(19) Financial Instruments with Off-Statement of Condition Risk and Concentrations of Credit Risk

        In the normal course of business, the bank subsidiaries are party to financial instruments with off-statement of condition risk to meet the financing needs of their customers. These financial instruments include commitments to their customers. These financial instruments involve, to varying degrees, elements of credit risk in excess of the amounts recognized in the consolidated statement of condition. The contract amounts of these instruments reflect the extent of involvement the bank subsidiaries have in particular classes of financial instruments. At December 31, 2014, the following financial amounts of instruments, whose contract amounts represent credit risks, were outstanding:

Commitments to extend credit	$	1,662,516,000
Credit card lines		16,687,000
Standby letters of credit		103,793,000
Commercial letters of credit		10,879,000

        The Company enters into a standby letter of credit to guarantee performance of a customer to a third party. These guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved is represented by the contractual amounts of those instruments. Under the standby letters of credit, the Company is required to make payments to the beneficiary of the letters of credit upon request by the beneficiary so long as all performance criteria have been met. At December 31, 2014, the maximum potential amount of future payments is $103,793,000. At December 31, 2014, the fair value of these guarantees is not significant. Unsecured letters of credit totaled $40,875,000 and $42,503,000 at December 31, 2014 and 2013, respectively.

        The Company enters into commercial letters of credit on behalf of its customers which authorize a third party to draw drafts on the Company up to a stipulated amount and with specific terms and conditions. A commercial letter of credit is a conditional commitment on the part of the Company to provide payment on drafts drawn in accordance with the terms of the commercial letter of credit.

        The bank subsidiaries' exposure to credit loss in the event of nonperformance by the other party to the above financial instruments is represented by the contractual amounts of the instruments. The bank subsidiaries use the same credit policies in making commitments and conditional obligations as they do for on-statement of condition instruments. The bank subsidiaries control the credit risk of these transactions through credit approvals, limits and monitoring procedures. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates normally less than one year or other termination clauses and may require the payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The bank subsidiaries evaluate each customer's credit-worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the subsidiary banks upon extension of credit, is based on management's credit evaluation of the customer. Collateral held varies, but may include residential and commercial real estate, bank certificates of deposit, accounts receivable and inventory.

        The bank subsidiaries make commercial, real estate and consumer loans to customers principally located in South, Central and Southeast Texas and the State of Oklahoma. Although the loan portfolio is diversified, a substantial portion of its debtors' ability to honor their contracts is dependent upon the economic conditions in these areas, especially in the real estate and commercial business sectors.

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Transactions with Related Parties

12 Months Ended

Dec. 31, 2014

Transactions with Related Parties

Transactions with Related Parties

(18) Transactions with Related Parties

        In the ordinary course of business, the subsidiaries of the Company make loans to directors and executive officers of the Corporation, 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 $26,382,000 and $51,554,000 at December 31, 2014 and 2013, respectively.

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Summary of Significant Accounting Policies (Details) (USD $)	0 Months Ended	12 Months Ended
	Oct. 01, 2014	Dec. 31, 2014 item	Dec. 31, 2013	Dec. 31, 2012
Summary of Significant Accounting Policies
Number of insurance-related subsidiaries		2
Investment Securities
Number of components in which other-than-temporary impairment is segregated		2
Non-Accrual Loans
Period of charge off for past due unsecured consumer loans		90 days
Minimum period that past due unsecured loans outstanding may not be placed on nonaccrual status under special circumstances		90 days
Maximum period of non-consumer loans outstanding that is used to evaluate whether loans should be placed on non-accrual status		90 days
Other Real Estate Owned
Other real estate owned		$ 69,872,000	$ 85,879,000
Income Taxes
Percentage of likelihood of realization of recognized tax benefit		50.00%
Liability for unrecognized tax benefits		0	0
Interest expense related to uncertain tax positions		0	0	0
Penalties related to uncertain tax positions		0	0	0
Goodwill and Identified Intangible Assets
Goodwill impairment loss	0
Impairment of identified intangible assets		$ 0
Segments of an Enterprise and Related Information
Number of operating segments		1
Number of active operating bank subsidiaries		4

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Junior Subordinated Deferrable Interest Debentures (Tables)

12 Months Ended

Dec. 31, 2014

Junior Subordinated Deferrable Interest Debentures

Junior subordinated deferrable interest debentures, major types of business trusts

        The following table illustrates key information about each of the Debentures and their interest rates at December 31, 2014:

	Junior Subordinated Deferrable Interest Debentures		Repricing Frequency	Interest Rate			Interest Rate Index(1)		Maturity Date	Optional Redemption Date(1)
	(in thousands)
Trust VI	$	25,774	Quarterly		3.68	%		LIBOR + 3.45	November 2032	February 2008
Trust VIII		25,774	Quarterly		3.28	%		LIBOR + 3.05	October 2033	October 2008
Trust IX		41,238	Quarterly		1.86	%		LIBOR + 1.62	October 2036	October 2011
Trust X		34,021	Quarterly		1.88	%		LIBOR + 1.65	February 2037	February 2012
Trust XI		27,990	Quarterly		1.86	%		LIBOR + 1.62	July 2037	July 2012
Trust XII		20,619	Quarterly		1.69	%		LIBOR + 1.45	September 2037	September 2012
	$	175,416

(1) The Capital Securities may be redeemed in whole or in part on any interest payment date after the Optional Redemption Date.

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Capital Requirements

12 Months Ended

Dec. 31, 2014

Capital Requirements

Capital Requirements

(20) Capital Requirements

        On December 23, 3008, as part of the Troubled Asset Relief Program Capital Purchase Program (the "TARP Capital Purchase Program") of the United States Department of the Treasury ("Treasury"), the Company issued to the Treasury, in exchange for aggregate consideration of $216 million, (i) 216,000 shares of the Company's fixed-rate cumulative perpetual preferred stock, Series A, par value $.01 per share (the "Senior Preferred Stock"), having a liquidation preference of $1,000 per share and (ii) a warrant to purchase 1,326,238 shares of the Company's common stock at a price per share of $24.43 and with a term of ten years (the "Warrant"). The Senior Preferred Stock paid a coupon rate of 5% of the first five years and 9% per year thereafter.

        On November 28, 2012, the Company completed the repurchase of all of the 216,000 shares of the Senior Preferred Stock held by Treasury. The Company commenced the $216 million repayment during the third quarter of 2012 and completed the final payment in the fourth quarter of 2012. The Company paid a total of $41,520,139 in preferred stock dividends to the U.S. Treasury from December of 2008 to November 28, 2012. On June 12, 2013, the U.S. Treasury sold the Warrant to a third party. As of the date of this report the Warrant is still outstanding. Adjustments to the $24.43 per share Exercise Price of the Warrant will be made if the Company pays cash dividends in excess of 33 cents per semi-annual period or makes certain other shareholder distributions before the Warrants expires on December 23, 2018.

        Bank regulatory agencies limit the amount of dividends, which the bank subsidiaries can pay the Corporation, through IBC Subsidiary Corporation, without obtaining prior approval from such agencies. At December 31, 2014, the subsidiary banks could pay dividends of up to $702,750,000 to the Corporation without prior regulatory approval and without adversely affecting their "well-capitalized" status under regulatory capital rules in effect at December 31, 2014. In addition to legal requirements, regulatory authorities also consider the adequacy of the bank subsidiaries' total capital in relation to their deposits and other factors. These capital adequacy considerations also limit amounts available for payment of dividends. The Company historically has not allowed any subsidiary bank to pay dividends in such a manner as to impair its capital adequacy.

        The Company and the bank subsidiaries are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company's assets, liabilities, and certain off-statement of condition items as calculated under regulatory accounting practices. The Company's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

        Current quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios (set forth in the table on the following page) of Total and Tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets. Management believes, as of December 31, 2014, that the Company and each of the bank subsidiaries met all capital adequacy requirements to which they are subject.

        In July 2013, the FDIC and other regulatory bodies issued final rules consisting of minimum requirements that increase both the quantity and quality of capital held by banking organizations. The final rules are a result of the implementation of the BASEL III capital reforms and various Dodd-Frank Act related capital provisions and impact all U.S. banking organizations with more than $500 million in assets. Consistent with the Basel international framework, the new rule includes a new minimum ratio of common equity tier 1 to risk-weighted assets of 4.5 percent and a common equity tier 1 capital conservation buffer of 2.5 percent of risk-weighted assets. The rule also raised the minimum ratio of tier 1 capital to risk-weighted assets from 4 percent to 6 percent and includes a minimum leverage ratio of 4 percent for all banking organizations. Regarding the quality of capital, the new rule emphasizes common equity tier 1 capital and implements strict eligibility criteria for regulatory capital instruments. The new rule also improves the methodology for calculating risk-weighted assets to enhance risk sensitivity. The new rule is subject to a four year phase in period for mandatory compliance and the Company is required to begin to phase in the new rules beginning on January 1, 2015. Management believes that after the phase in of the new capital standards, the Company and its bank subsidiaries will remain classified as "well-capitalized."

        As of December 31, 2014, the most recent notification from the Federal Deposit Insurance Corporation categorized all the bank subsidiaries as well-capitalized under the regulatory framework for prompt corrective action. To be categorized as "well-capitalized," the Company and the bank subsidiaries must maintain minimum Total risk-based, Tier 1 risk based, and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the categorization of the Company or any of the bank subsidiaries as well-capitalized.

        The Company's and the bank subsidiaries' actual capital amounts and ratios for 2014 under current guidelines are presented in the following table:

	Actual					For Capital Adequacy Purposes					To Be Well-Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
						(greater than or equal to)		(greater than or equal to)			(greater than or equal to)		(greater than or equal to)
	(Dollars in Thousands)
As of December 31, 2014:
Total Capital (to Risk Weighted Assets):
Consolidated	$	1,524,998		20.24	%	$	602,847		8.00	%		N/A		N/A
International Bank of Commerce, Laredo		1,131,528		17.31			523,006		8.00		$	653,757		10.00	%
International Bank of Commerce, Brownsville		151,489		28.60			42,381		8.00			52,976		10.00
International Bank of Commerce, Zapata		60,946		33.83			14,412		8.00			18,041		10.00
Commerce Bank		68,291		37.42			14,600		8.00			18,251		10.00
Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	1,457,068		19.34	%	$	301,424		4.00	%		N/A		N/A
International Bank of Commerce, Laredo		1,071,360		16.39			261,503		4.00		$	392,254		6.00	%
International Bank of Commerce, Brownsville		145,584		27.48			21,190		4.00			31,785		6.00
International Bank of Commerce, Zapata		60,035		33.33			7,206		4.00			10,809		6.00
Commerce Bank		67,347		36.90			7,300		4.00			10,950		6.00
Tier 1 Capital (to Average Assets):
Consolidated	$	1,457,068		12.33	%	$	472,864		4.00	%	$	N/A		N/A
International Bank of Commerce, Laredo		1,071,360		11.22			381,804		4.00			477,255		5.00	%
International Bank of Commerce, Brownsville		145,584		13.96			41,717		4.00			52,146		5.00
International Bank of Commerce, Zapata		60,035		10.88			22,081		4.00			27,602		5.00
Commerce Bank		67,347		12.04			22,373		4.00			27,966		5.00

        The Company's and the bank subsidiaries' actual capital amounts and ratios for 2013 are also presented in the following table:

	Actual					For Capital Adequacy Purposes					To Be Well-Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
						(greater than or equal to)		(greater than or equal to)			(greater than or equal to)		(greater than or equal to)
	(Dollars in Thousands)
As of December 31, 2013:
Total Capital (to Risk Weighted Assets):
Consolidated	$	1,442,837		20.36	%	$	566,870		8.00	%		N/A		N/A
International Bank of Commerce, Laredo		1,035,189		16.96			488,303		8.00		$	610,378		10.00	%
International Bank of Commerce, Brownsville		143,879		27.63			41,652		8.00			52,065		10.00
International Bank of Commerce, Zapata		57,675		32.65			14,130		8.00			17,663		10.00
Commerce Bank		64,585		36.45			14,175		8.00			17,719		10.00
Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	1,369,657		19.33	%	$	283,435		4.00	%		N/A		N/A
International Bank of Commerce, Laredo		969,731		15.89			244,151		4.00		$	366,227		6.00	%
International Bank of Commerce, Brownsville		138,467		26.60			20,826		4.00			31,239		6.00
International Bank of Commerce, Zapata		56,459		31.96			7,065		4.00			10,598		6.00
Commerce Bank		63,491		35.83			7,087		4.00			10,631		6.00
Tier 1 Capital (to Average Assets):
Consolidated	$	1,369,657		11.61	%	$	472,044		4.00	%	$	N/A		N/A
International Bank of Commerce, Laredo		969,731		10.09			384,497		4.00			480,622		5.00	%
International Bank of Commerce, Brownsville		138,467		13.33			41,553		4.00			51,942		5.00
International Bank of Commerce, Zapata		56,459		10.64			21,219		4.00			26,523		5.00
Commerce Bank		63,491		11.88			21,372		4.00			26,715		5.00

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Fair Value

12 Months Ended

Dec. 31, 2014

Fair Value

Fair Value

(21) 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 Inputs—Unadjusted quoted prices in active markets for identical assets or liabilities.

• Level 2 Inputs—Observable 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 Inputs—Unobservable 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 significant management judgment or estimation.

        A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy is set forth below.

        The following table represents financial instruments reported on the consolidated statements of condition at their fair value as of December 31, 2014 by level within the fair value measurement hierarchy.

			Fair Value Measurements at Reporting Date Using
			(in thousands)
	Assets/Liabilities Measured at Fair Value December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Measured on a recurring basis:
Assets:
Available for sale securities
Residential mortgage-backed securities	$	4,600,372	$	—	$	4,576,309	$	24,063
States and political subdivisions		282,276		—		282,276		—
Other		49,315		29,315		20,000		—
	$	4,931,963	$	29,315	$	4,878,585	$	24,063

        The following table represents financial instruments reported on the consolidated balance sheets at their fair value as of December 31, 2013 by level within the fair value measurement hierarchy.

			Fair Value Measurements at Reporting Date Using
			(in thousands)
	Assets/Liabilities Measured at Fair Value December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Measured on a recurring basis:
Assets:
Available for sale securities
Residential mortgage-backed securities	$	5,027,701	$	—	$	4,999,849	$	27,852
States and political subdivisions		248,410		—		248,410		—
Other		28,468		28,468		—		—
	$	5,304,579	$	28,468	$	5,248,259	$	27,852

        Investment securities available-for-sale are classified within level 2 and level 3 of the valuation hierarchy, with the exception of certain equity investments that are classified within level 1. For investments classified as level 2 in the fair value hierarchy, the Company obtains fair value measurements for investment securities from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond's terms and conditions, among other things. Investment securities classified as level 3 are non-agency mortgage-backed securities. The non-agency mortgage-backed securities held by the Company are traded in inactive markets and markets that have experienced significant decreases in volume and level of activity, as evidenced by few recent transactions, a significant decline or absence of new issuances, price quotations that are not based on comparable securities transactions and wide bid-ask spreads among other factors. As a result of the inability to use quoted market prices to determine fair value for these securities, the Company determined that fair value, as determined by level 3 inputs in the fair value hierarchy, is more appropriate for financial reporting and more consistent with the expected performance of the investments. For the investments classified within level 3 of the fair value hierarchy, the Company used a discounted cash flow model to determine fair value. Inputs in the model included both historical performance and expected future performance based on information currently available.

        Assumptions used in the discounted cash flow model as of December 31, 2014 and December 31, 2013 were applied separately to those portions of the bond where the underlying residential mortgage loans had been performing under original contract terms for at least the prior 24 months and those where the underlying residential mortgages had not been meeting the original contractual obligation for the same period. Unobservable inputs included in the model are estimates on future principal prepayment rates, and default and loss severity rates. For that portion of the bond where the underlying residential mortgage had been meeting the original contract terms for at least 24 months, the Company used the following estimates in the model: (i) a voluntary prepayment rate of 7%, (ii) a 1% default rate, (iii) a loss severity rate of 25%, and (iv) a discount rate of 13%. The assumptions used in the model for the rest of the bond included the following estimates: (i) a voluntary prepayment rate of 2%, (ii) a default rate of 4.5%, (iii) a loss severity rate that started at 60% for the first year (2012) then declines by 5% for the following five years (2013, 2014, 2015, 2016 and 2017) and remains at 25% thereafter (2018 and beyond), and (iv) a discount rate of 13%. The estimates used in the model to determine fair value are based on observable historical data of the underlying collateral. The model anticipates that the housing market will gradually improve and that the underlying collateral will eventually all perform in accordance with the original contract terms on the bond. Should the number of loans in the underlying collateral that default and go into foreclosure or the severity of the losses in the underlying collateral significantly change, the results of the model would be impacted. The Company will continue to evaluate the actual historical performance of the underlying collateral and will modify the assumptions used in the model as necessary.

        The following table presents a reconciliation of activity for such mortgage-backed securities on a net basis (Dollars in thousands):

Balance at December 31, 2013	$	27,852
Principal paydowns		(4,154	)
Total unrealized gains (losses) included in:
Other comprehensive income		1,182
Impairment realized in earnings		(817	)
Balance at December 31, 2014	$	24,063

        Certain financial instruments are measured at fair value on a nonrecurring basis. They are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

        The following table represents financial instruments measured at fair value on a non-recurring basis as of and for the period ended December 31, 2014 by level within the fair value measurement hierarchy:

			Fair Value Measurements at Reporting Date Using
			(in thousands)
	Assets/Liabilities Measured at Fair Value Year ended December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Net (Credit) Provision During Period
Measured on a non-recurring basis:
Assets:
Impaired loans	$	29,501	$	—	$	—	$	29,501	$	(1,557	)
Other real estate owned		6,112		—		—		6,112		597

        The following table represents financial instruments measured at fair value on a non-recurring basis as of and for the year ended December 31, 2013 by level within the fair value measurement hierarchy:

			Fair Value Measurements at Reporting Date Using
			(in thousands)
	Assets/Liabilities Measured at Fair Value Year ended December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Net Provision During Period
Measured on a non-recurring basis:
Assets:
Impaired loans	$	28,391	$	—	$	—	$	28,391	$	13,229
Other real estate owned		16,329		—		—		16,329		1,204

        The Company's assets measured at fair value on a non-recurring basis are limited to impaired loans and other real estate owned. Impaired loans are classified within level 3 of the valuation hierarchy. The fair value of impaired loans is derived in accordance with FASB ASC 310, "Receivables". Impaired loans are primarily comprised of collateral-dependent commercial loans. Understanding that as the primary sources of loan repayments decline, the secondary repayment source comes into play and correctly evaluating the fair value of that secondary source, the collateral, becomes even more important. Re-measurement of the impaired loan to fair value is done through a specific valuation allowance included in the allowance for probable loan losses. The fair value of impaired loans is based on the fair value of the collateral, as determined through either an appraisal or evaluation process. The basis for the Company's appraisal and appraisal review process is based on regulatory guidelines and strives to comply with all regulatory appraisal laws, regulations and the Uniform Standards of Professional Appraisal Practice. All appraisals and evaluations are "as is" (the property's highest and best use) valuations based on the current conditions of the property/project at that point in time. The determination of the fair value of the collateral is based on the net realizable value, which is the appraised value less any closing costs, when applicable. As of December 31, 2014, the Company had $65,551,000 of impaired commercial collateral dependent loans, of which $52,092,000 had an appraisal performed within the immediately preceding twelve months and of which $5,307,000 had an evaluation performed within the immediately preceding twelve months. As of December 31, 2013, the Company had $64,585,000 of impaired commercial collateral dependent loans, of which $50,346,000 had an appraisal performed within the immediately preceding twelve months and of which $0 had an evaluation performed within the immediately preceding twelve months.

        The determination to either seek an appraisal or to perform an evaluation begins in weekly credit quality meetings, where the committee analyzes the existing collateral values of the impaired loans and where obsolete appraisals are identified. In order to determine whether the Company would obtain a new appraisal or perform an internal evaluation to determine the fair value of the collateral, the credit committee reviews the existing appraisal to determine if the collateral value is reasonable in view of the current use of the collateral and the economic environment related to the collateral. If the analysis of the existing appraisal does not find that the collateral value is reasonable under the current circumstances, the Company would obtain a new appraisal on the collateral or perform an internal evaluation of the collateral. The ultimate decision to get a new appraisal rests with the independent credit administration group. A new appraisal is not required if an internal evaluation, as performed by in-house experts, is able to appropriately update the original appraisal assumptions to reflect current market conditions and provide an estimate of the collateral's market value for impairment analysis. The internal evaluations must be in writing and contain sufficient information detailing the analysis, assumptions and conclusions and they must support performing an evaluation in lieu of ordering a new appraisal.

        Other real estate owned is comprised of real estate acquired by foreclosure and deeds in lieu of foreclosure. Other real estate owned is carried at the lower of the recorded investment in the property or its fair value less estimated costs to sell such property (as determined by independent appraisal) within level 3 of the fair value hierarchy. Prior to foreclosure, the value of the underlying loan is written down to the fair value of the real estate to be acquired by a charge to the allowance for probable loan losses, if necessary. The fair value is reviewed periodically and subsequent write downs are made accordingly through a charge to operations. Other real estate owned is included in other assets on the consolidated financial statements. For the twelve months ended December 31, 2014 and December 31, 2013, respectively the Company recorded $367,000 and $402,000 in charges to the allowance for probable loan losses in connection with loans transferred to other real estate owned. For the twelve months ended December 31, 2014 and December 31, 2013, respectively, the Company recorded $597,000 and $1,204,000 in adjustments to fair value in connection with other real estate owned.

        The fair value estimates, methods, and assumptions for the Company's financial instruments at December 31, 2014 and December 31, 2013 are outlined below.

Cash and Cash Equivalents

        For these short-term instruments, the carrying amount is a reasonable estimate of fair value.

Investment securities held-to-maturity

        The carrying amounts of investments held-to-maturity approximate fair value.

Investment Securities

        For investment securities, which include U. S. Treasury securities, obligations of other U. S. government agencies, obligations of states and political subdivisions and mortgage pass through and related securities, fair values are from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond's terms and conditions, among other things. See disclosures of fair value of investment securities in Note 2.

Loans

        Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial, real estate and consumer loans as outlined by regulatory reporting guidelines. Each category is segmented into fixed and variable interest rate terms and by performing and non-performing categories.

        For variable rate performing loans, the carrying amount approximates the fair value. For fixed rate performing loans, except residential mortgage loans, the fair value is calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk inherent in the loan. For performing residential mortgage loans, fair value is estimated by discounting contractual cash flows adjusted for prepayment estimates using discount rates based on secondary market sources or the primary origination market. Fixed rate performing loans are within Level 3 of the fair value hierarchy. At December 31, 2014, and December 31, 2013, the carrying amount of fixed rate performing loans was $1,352,147,000 and $1,243,252,000 respectively, and the estimated fair value was $1,285,648,000 and $1,196,916,000, respectively.

Accrued Interest

        The carrying amounts of accrued interest approximate fair value.

Deposits

        The fair value of deposits with no stated maturity, such as non-interest bearing demand deposit accounts, savings accounts and interest bearing demand deposit accounts, was equal to the amount payable on demand as of December 31, 2014 and December 31, 2013. The fair value of time deposits is based on the discounted value of contractual cash flows. The discount rate is based on currently offered rates. Time deposits are within Level 3 of the fair value hierarchy. At December 31, 2014 and December 31, 2013, the carrying amount of time deposits was $2,482,692,000 and $2,651,303,000, respectively, and the estimated fair value was $2,480,390,000 and $2,649,452,000, respectively.

Securities Sold Under Repurchase Agreements

        Securities sold under repurchase agreements include both short and long-term maturities. Due to the contractual terms of the short-term instruments, the carrying amounts approximated fair value at December 31, 2014 and December 31, 2013. The fair value of the long-term instruments is based on established market spreads using option adjusted spread methodology. Long-term repurchase agreements are within level 3 of the fair value hierarchy. At December 31, 2014 and December 31, 2013, respectively, the carrying amount of long-term repurchase agreements was $610,000,000 and $710,000,000 and the estimated fair value was $558,097,100 and $792,215,500, respectively.

Junior Subordinated Deferrable Interest Debentures

        The Company currently has floating rate junior subordinated deferrable interest debentures outstanding. Due to the contractual terms of the floating rate junior subordinated deferrable interest debentures, the carrying amounts approximated fair value at December 31, 2014 and December 31, 2013.

Other Borrowed Funds

        The Company currently has short and long-term borrowings issued from the Federal Home Loan Bank ("FHLB"). Due to the contractual terms of the short-term borrowings, the carrying amounts approximated fair value at December 31, 2014 and December 31, 2013. The fair value of the long-term borrowings is based on established market spreads for similar types of borrowings. The long-term borrowings are included in Level 2 of the fair value hierarchy. At December 31, 2014 and December 31, 2013, the carrying amount of the long-term FHLB borrowings was $6,244,000 and $8,950,000 respectively, and the estimated fair value was $6,645,000 and $8,950,000, respectively.

Commitments to Extend Credit and Letters of Credit

        Commitments to extend credit and fund letters of credit are principally at current interest rates and therefore the carrying amount approximates fair value.

Limitations

        Fair value estimates are made at a point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company's financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

        Fair value estimates are based on existing on-and off-statement of condition financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Other significant assets and liabilities that are not considered financial assets or liabilities include the bank premises and equipment and core deposit value. In addition, the tax ramifications related to the effect of fair value estimates have not been considered in the above estimates.

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Consolidated Statements of Shareholders' Equity (USD $) In Thousands, except Share data, unless otherwise specified	Preferred Stock	Common Stock	Surplus	Retained Earnings	Other Comprehensive Income (Loss)	Treasury Stock	Total
Balance at Dec. 31, 2011	$ 210,548	$ 95,720	$ 162,767	$ 1,302,964	$ 84,959	$ (256,793)	$ 1,600,165
Balance (in shares) at Dec. 31, 2011	95,720
Increase (decrease) in shareholders' equity
Net Income				107,835			107,835
Dividends:
Cash ($.52, $.43 and $.40 per share for the year ended December 31, 2014, 2013 and 2012, respectively)				(26,894)			(26,894)
Preferred stock (5%) including discount accretion	5,452			(14,362)			(8,910)
Redemption of Series A Preferred Shares (216,000 shares for the year ended December 31, 2012)	(216,000)						(216,000)
Purchase of treasury stock (95,466 and 787,387 shares for the year ended December 31, 2012 and 2014, respectively)						(1,716)	(1,716)
Exercise of stock options		5	46				51
Exercise of stock options (in shares)	5
Stock compensation expense recognized in earnings			474				474
Other comprehensive income (loss), net of tax:
Net change in unrealized gains and losses on available for sale securities, net of reclassification adjustments					(19,297)		(19,297)
Balance at Dec. 31, 2012		95,725	163,287	1,369,543	65,662	(258,509)	1,435,708
Balance (in shares) at Dec. 31, 2012	95,725
Increase (decrease) in shareholders' equity
Net Income				126,351			126,351
Dividends:
Cash ($.52, $.43 and $.40 per share for the year ended December 31, 2014, 2013 and 2012, respectively)				(28,894)			(28,894)
Exercise of stock options		19	246				265
Exercise of stock options (in shares)	19
Stock compensation expense recognized in earnings			414				414
Other comprehensive income (loss), net of tax:
Net change in unrealized gains and losses on available for sale securities, net of reclassification adjustments					(109,436)		(109,436)
Balance at Dec. 31, 2013		95,744	163,947	1,467,000	(43,774)	(258,509)	1,424,408
Balance (in shares) at Dec. 31, 2013	95,744
Increase (decrease) in shareholders' equity
Net Income				153,151			153,151
Dividends:
Cash ($.52, $.43 and $.40 per share for the year ended December 31, 2014, 2013 and 2012, respectively)				(34,762)			(34,762)
Purchase of treasury stock (95,466 and 787,387 shares for the year ended December 31, 2012 and 2014, respectively)						(18,923)	(18,923)
Exercise of stock options		40	515				555
Exercise of stock options (in shares)	40
Stock compensation expense recognized in earnings			1,058				1,058
Other comprehensive income (loss), net of tax:
Net change in unrealized gains and losses on available for sale securities, net of reclassification adjustments					55,171		55,171
Balance at Dec. 31, 2014		$ 95,784	$ 165,520	$ 1,585,389	$ 11,397	$ (277,432)	$ 1,580,658
Balance (in shares) at Dec. 31, 2014	95,784

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International Bancshares Corporation (Parent Company Only) Financial Information Statements of Condition

12 Months Ended

Dec. 31, 2014

International Bancshares Corporation (Parent Company Only) Financial Information Statements of Condition

International Bancshares Corporation (Parent Company Only) Financial Information Statements of Condition

(22) International Bancshares Corporation (Parent Company Only) Financial Information

Statements of Condition

(Parent Company Only)

December 31, 2014 and 2013

(Dollars in Thousands)

	2014			2013
ASSETS
Cash	$	9,252		$	8,106
Other investments		69,042			62,381
Notes receivable		204			313
Investment in subsidiaries		1,691,553			1,556,932
Other assets		50			197
Total assets	$	1,770,101		$	1,627,929
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Junior subordinated deferrable interest debentures	$	175,416		$	190,726
Due to IBC Trading		21			21
Other liabilities		14,006			12,774
Total liabilities		189,443			203,521
Shareholders' equity:
Common shares		95,784			95,744
Surplus		165,520			163,947
Retained earnings		1,585,389			1,467,000
Accumulated other comprehensive income (loss)		11,397			(43,774	)
		1,858,090			1,682,917
Less cost of shares in treasury		(277,432	)		(258,509	)
Total shareholders' equity		1,580,658			1,424,408
Total liabilities and shareholders' equity	$	1,770,101		$	1,627,929

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Long Term Restricted Stock Units (Details) (2009 International Bancshares Corporation Long-Term Restricted Stock Unit Plan, USD $)	12 Months Ended						1 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2014	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2009 item
CPP-compliant long-term RSUs
Long-Term Restricted Stock Units
Restricted stock compensation limit as a percentage to the total annual compensation of the President	33.00%
CPP-compliant long-term RSUs granted for performance in 2012
Long-Term Restricted Stock Units
Compensation cost		$ 425,000
CPP-compliant long-term RSUs granted for performance in 2011
Long-Term Restricted Stock Units
Compensation cost				400,000
Cash amounts paid on vesting of awards			572,746
CPP-compliant long-term RSUs granted for performance in 2010
Long-Term Restricted Stock Units
Compensation cost					400,000
Cash amounts paid on vesting of awards		358,782
CPP-compliant long-term RSUs granted for performance in 2009
Long-Term Restricted Stock Units
Compensation cost						250,000
Cash amounts paid on vesting of awards	591,344	$ 262,842
Restricted Stock Units (RSUs)
Long-Term Restricted Stock Units
Minimum number of non-employee members of the Board needed to authorize restricted stock units							2

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Goodwill and Other Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2014

Goodwill and Other Intangible Assets

Schedule of the entity's identified intangible assets

	Carrying Amount		Accumulated Amortization		Net
	(Dollars in Thousands)
December 31, 2014:
Core deposit premium	$	58,675	$	58,379	$	296
Identified intangible (contract rights)		2,022		1,521		501
Total identified intangibles	$	60,697	$	59,900	$	797
December 31, 2013:
Core deposit premium	$	58,675	$	56,298	$	2,377
Identified intangible (contract rights)		2,022		1,213		809
Total identified intangibles	$	60,697	$	57,511	$	3,186

Schedule of estimated amortization expense for each of the five succeeding fiscal years and thereafter

	Total
	(in thousands)
2015	$	452
2016		295
2017		25
2018		25
2019		—
Thereafter		—
Total	$	797

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International Bancshares Corporation (Parent Company Only) Financial Information Statements of Condition (Tables)

12 Months Ended

Dec. 31, 2014

International Bancshares Corporation (Parent Company Only) Financial Information Statements of Condition

Schedule of condensed statements of condition of Parent Company

(Dollars in Thousands)

	2014			2013
ASSETS
Cash	$	9,252		$	8,106
Other investments		69,042			62,381
Notes receivable		204			313
Investment in subsidiaries		1,691,553			1,556,932
Other assets		50			197
Total assets	$	1,770,101		$	1,627,929
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Junior subordinated deferrable interest debentures	$	175,416		$	190,726
Due to IBC Trading		21			21
Other liabilities		14,006			12,774
Total liabilities		189,443			203,521
Shareholders' equity:
Common shares		95,784			95,744
Surplus		165,520			163,947
Retained earnings		1,585,389			1,467,000
Accumulated other comprehensive income (loss)		11,397			(43,774	)
		1,858,090			1,682,917
Less cost of shares in treasury		(277,432	)		(258,509	)
Total shareholders' equity		1,580,658			1,424,408
Total liabilities and shareholders' equity	$	1,770,101		$	1,627,929

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Securities Sold Under Repurchase Agreements (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Securities Sold Under Repurchase Agreements
Average outstanding amount	$ 893,830,000	$ 1,041,186,000
Maximum amount outstanding at any month end	892,341,000	1,119,531,000
Collateral Securities and Repurchase Borrowing agreements
Collateralized Securities, Book Value of Securities Sold	1,127,170,000	1,313,637,000
Collateralized securities, Fair Value of Securities Sold	1,134,418,000	1,317,998,000
Repurchase Borrowing, Balance of Liability	858,350,000	957,381,000
Repurchase Borrowing, Weighted Average Interest Rate (as a percent)	2.79%	2.91%
Overnight agreements
Collateral Securities and Repurchase Borrowing agreements
Collateralized Securities, Book Value of Securities Sold	366,731,000	332,042,000
Collateralized securities, Fair Value of Securities Sold	370,704,000	341,238,000
Repurchase Borrowing, Balance of Liability	236,077,000	209,899,000
Repurchase Borrowing, Weighted Average Interest Rate (as a percent)	0.16%	0.17%
1 to 29 days
Collateral Securities and Repurchase Borrowing agreements
Collateralized Securities, Book Value of Securities Sold	3,717,000	27,954,000
Collateralized securities, Fair Value of Securities Sold	3,781,000	28,288,000
Repurchase Borrowing, Balance of Liability	1,016,000	18,666,000
Repurchase Borrowing, Weighted Average Interest Rate (as a percent)	0.45%	0.40%
30 to 90 days
Collateral Securities and Repurchase Borrowing agreements
Collateralized Securities, Book Value of Securities Sold	13,399,000	8,106,000
Collateralized securities, Fair Value of Securities Sold	13,628,000	8,263,000
Repurchase Borrowing, Balance of Liability	6,705,000	3,295,000
Repurchase Borrowing, Weighted Average Interest Rate (as a percent)	0.38%	0.43%
Over 90 days
Collateral Securities and Repurchase Borrowing agreements
Collateralized Securities, Book Value of Securities Sold	743,323,000	945,535,000
Collateralized securities, Fair Value of Securities Sold	746,305,000	940,209,000
Repurchase Borrowing, Balance of Liability	$ 614,552,000	$ 725,521,000
Repurchase Borrowing, Weighted Average Interest Rate (as a percent)	3.83%	3.78%

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Consolidated Statements of Condition (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Assets
Cash and cash equivalents	$ 255,146	$ 274,785
Investment securities:
Held to maturity (Market value of $2,400 on December 31, 2014 and $2,400 on December 31, 2013)	2,400	2,400
Available for sale (Amortized cost of $4,914,428 on December 31, 2014 and $5,372,594 on December 31, 2013)	4,931,963	5,304,579
Total investment securities	4,934,363	5,306,979
Loans	5,679,245	5,199,235
Less allowance for probable loan losses	(64,828)	(70,161)
Net loans	5,614,417	5,129,074
Bank premises and equipment, net	526,423	504,842
Accrued interest receivable	31,461	30,654
Other investments	420,670	388,563
Identified intangible assets, net	797	3,186
Goodwill	282,532	282,532
Other assets	130,711	158,862
Total assets	12,196,520	12,079,477
Deposits:
Demand - non-interest bearing	2,930,253	2,666,510
Savings and interest bearing demand	3,025,680	2,925,612
Time	2,482,692	2,651,303
Total deposits	8,438,625	8,243,425
Securities sold under repurchase agreements	858,350	957,381
Other borrowed funds	1,073,944	1,223,950
Junior subordinated deferrable interest debentures	175,416	190,726
Other liabilities	69,527	39,587
Total liabilities	10,615,862	10,655,069
Shareholders' equity:
Common shares of $1.00 par value. Authorized 275,000,000 shares; issued 95,783,977 shares on December 31, 2014 and 95,743,592 shares on December 31, 2013	95,784	95,744
Surplus	165,520	163,947
Retained earnings	1,585,389	1,467,000
Accumulated other comprehensive income (loss) (including $(4,881) on December 31, 2014 and $(5,646) on December 31, 2013 of comprehensive loss related to other-than-temporary impairment for non-credit related issues)	11,397	(43,774)
Total shareholders' equity before treasury stock	1,858,090	1,682,917
Less cost of shares in treasury, 29,324,567 shares on December 31,2014 and December 31, 2013	(277,432)	(258,509)
Total shareholders' equity	1,580,658	1,424,408
Total liabilities and shareholders' equity	$ 12,196,520	$ 12,079,477

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Earnings per Share ("EPS") (Tables)

12 Months Ended

Dec. 31, 2014

Earnings per Share ("EPS")

Schedule of calculation of the basic EPS and the diluted EPS

	Net Income (Numerator)		Shares (Denominator)		Per Share Amount
	(Dollars in Thousands, Except Per Share Amounts)
December 31, 2014:
Basic EPS
Net income available to common shareholders	$	153,151		66,872,500	$	2.29
Potential dilutive common shares and warrants		—		183,956
Diluted EPS	$	153,151		67,056,456	$	2.28
December 31, 2013:
Basic EPS
Net income available to common shareholders	$	126,351		67,195,180	$	1.88
Potential dilutive common shares		—		119,679
Diluted EPS	$	126,351		67,314,859	$	1.88
December 31, 2012:
Basic EPS
Net income available to common shareholders	$	93,473		67,236,681	$	1.39
Potential dilutive common shares		—		77,282
Diluted EPS	$	93,473		67,313,963	$	1.39

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Consolidated Statements of Comprehensive Income
Net income	$ 153,151	$ 126,351	$ 107,835
Other comprehensive income (loss), net of tax:
Net unrealized holding gains (losses) on securities available for sale arising during period (net of tax effects of $29870, $(56,048), and $2,701)	55,474	(104,088)	5,018
Reclassification adjustment for gains on securities available for sale included in net income (net of tax effects of $(449), $(3,360), and $(13,456)),	(834)	(6,241)	(24,990)
Reclassification adjustment for impairment charges on available for sale securities included in net income (net of tax effects of $286, $481, and $364, )	531	893	675
Other comprehensive income (loss), net of tax	55,171	(109,436)	(19,297)
Comprehensive income	$ 208,322	$ 16,915	$ 88,538

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International Bancshares Corporation (Parent Company Only) Financial Information Statements of Income (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income:
Other interest income	$ 191	$ 115	$ 503
Expenses:
Interest expense (Debentures)	4,264	4,665	6,595
Income before federal income taxes and equity in undistributed net income of subsidiaries	229,938	182,590	158,400
Income tax expense (benefit)	76,787	56,239	50,565
Net income	153,151	126,351	107,835
Preferred stock dividends and discount accretion			14,362
Net income available to common shareholders	153,151	126,351	93,473
Parent Company
Income:
Dividends from subsidiaries	71,389	30,000	229,250
Interest income on notes receivable	15	18	27
Interest income on other investments	6,862	12,301	6,759
Other interest income			18
Other	1,923	26	686
Total income	80,189	42,345	236,740
Expenses:
Interest expense (Debentures)	4,264	4,665	6,595
Other	1,099	1,889	3,867
Total expenses	5,363	6,554	10,462
Income before federal income taxes and equity in undistributed net income of subsidiaries	74,826	35,791	226,278
Income tax expense (benefit)	1,370	2,529	(738)
Income before equity in undistributed net income of subsidiaries	73,456	33,262	227,016
Equity in undistributed (distributed) net income of subsidiaries	79,695	93,089	(119,181)
Net income	153,151	126,351	107,835
Preferred stock dividends and discount accretion			14,362
Net income available to common shareholders	$ 153,151	$ 126,351	$ 93,473

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Investment Securities (Details 3) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Available for sale:
Fair value, less than 12 months	$ 816,979	$ 2,534,354
Unrealized losses, less than 12 months	(5,008)	(101,585)
Fair value, 12 months or more	1,872,077	434,554
Unrealized losses, 12 months or more	(45,973)	(31,534)
Fair value, total	2,689,056	2,968,908
Unrealized losses, total	(50,981)	(133,119)
Residential mortgage-backed securities
Available for sale:
Fair value, less than 12 months	808,072	2,459,565
Unrealized losses, less than 12 months	(4,910)	(98,022)
Fair value, 12 months or more	1,836,218	420,262
Unrealized losses, 12 months or more	(40,268)	(26,552)
Fair value, total	2,644,290	2,879,827
Unrealized losses, total	(45,178)	(124,574)
States and political subdivisions
Available for sale:
Fair value, less than 12 months	8,833	55,327
Unrealized losses, less than 12 months	(97)	(3,025)
Fair value, 12 months or more	27,793	14,292
Unrealized losses, 12 months or more	(5,521)	(4,982)
Fair value, total	36,626	69,619
Unrealized losses, total	(5,618)	(8,007)
Other
Available for sale:
Fair value, less than 12 months	74	19,462
Unrealized losses, less than 12 months	(1)	(538)
Fair value, 12 months or more	8,066
Unrealized losses, 12 months or more	(184)
Fair value, total	8,140	19,462
Unrealized losses, total	$ (185)	$ (538)

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2014

Summary of Significant Accounting Policies

Consolidation and Basis of Presentation

Consolidation and Basis of Presentation

        The consolidated financial statements include the accounts of the Corporation and its wholly-owned bank subsidiaries, International Bank of Commerce, Laredo ("IBC"), Commerce Bank, International Bank of Commerce, Zapata, International Bank of Commerce, Brownsville, and the Corporation's wholly-owned non-bank subsidiaries, IBC Subsidiary Corporation, IBC Life Insurance Company, IBC Trading Company, Premier Tierra Holdings, Inc., IBC Charitable and Community Development Corporation, and IBC Capital Corporation. All significant inter-company balances and transactions have been eliminated in consolidation.

        The Company, through its subsidiaries, is 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. The primary markets of the Company are South, Central, and Southeast Texas and the state of Oklahoma. Each bank subsidiary is very active in facilitating international trade along the United States border with Mexico and elsewhere. Although the Company's loan portfolio is diversified, the ability of the Company's debtors to honor their contracts is primarily dependent upon the economic conditions in the Company's trade area. In addition, the investment portfolio is directly impacted by fluctuations in market interest rates. The Company and its bank subsidiaries are subject to the regulations of certain Federal agencies as well as the Texas Department of Banking and undergo periodic examinations by those regulatory authorities. Such agencies may require certain standards or impose certain limitations based on their judgments or changes in law and regulations.

        The Company owns two insurance-related subsidiaries, IBC Life Insurance Company and IBC Insurance Agency, Inc., a wholly owned subsidiary of IBC, the bank subsidiary. Neither of the insurance-related subsidiaries conducts underwriting activities. The IBC Life Insurance Company is in the business of reinsuring credit life and credit accident and health insurance. The business is assumed from an unaffiliated insurer and the only business written is generated by the bank subsidiaries of the Company. The risk assumed on each of the policies is not significant to the consolidated financial statements.

        The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the statement of condition and income and expenses for the periods. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant changes in the near-term relate to the determination of the allowance for probable loan losses.

Subsequent Events

Subsequent Events

        The Company has evaluated all events or transactions that occurred through the date the Company issued these financial statements. During this period, the Company did not have any material recognizable or non-recognizable subsequent events.

Investment Securities

Investment Securities

        The Company classifies debt and equity securities into one of these categories: held-to-maturity, available-for-sale, or trading. Such classifications are reassessed for appropriate classification at each reporting date. Securities that are intended and expected to be held until maturity are classified as "held-to-maturity" and are carried at amortized cost for financial statement reporting. Securities that are not positively expected to be held until maturity, but are intended to be held for an indefinite period of time are classified as "available-for-sale" or "trading" and are carried at their fair value. Unrealized holding gains and losses are included in net income for those securities classified as "trading", while unrealized holding gains and losses related to those securities classified as "available-for-sale" are excluded from net income and reported net of tax as other comprehensive income and in shareholders' equity as accumulated other comprehensive income until realized. The Company did not maintain any trading securities during the three year period ended December 31, 2014.

        Mortgage-backed securities held at December 31, 2014 and 2013 represent participating interests in pools of long-term first mortgage loans originated and serviced by the issuers of the securities. Mortgage-backed securities are either issued or guaranteed by the U.S. Government or its agencies including the Federal Home Loan Mortgage Corporation ("Freddie Mac"), the Federal National Mortgage Association ("Fannie Mae"), the Government National Mortgage Association ("Ginnie Mae") or other non-government entities. Investments in residential mortgage-backed securities issued by Ginnie Mae are fully guaranteed by the U. S. Government. Investments in residential mortgage-backed securities issued by Freddie Mac and Fannie Mae are not fully guaranteed by the U.S. Government, however, the Company believes that the quality of the bonds is similar to other AAA rated bonds with limited credit risk, particularly given the placement of Fannie Mae and Freddie Mac into conservatorship by the federal government in 2008 and because securities issued by others that are collateralized by residential mortgage-backed securities issued by Fannie Mae or Freddie Mac are rated consistently as AAA rated securities. Market interest rate fluctuations can affect the prepayment speed of principal and the yield on the security.

        Premiums and discounts are amortized using the level yield or "interest method" over the terms of the securities. Declines in the fair value of held-to-maturity and available-for sale-securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In determining whether other-than-temporary impairment exists, management considers many factors, including (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent of the Company to hold and the determination of whether the Company will more likely than not be required to sell the security prior to a recovery in fair value. If the Company determines that (1) it intends to sell the security or (2) it is more likely than not that it will be required to sell the security before it's anticipated recovery, the other-than-temporary impairment that is recognized in earnings is equal to the difference between the fair value of the security and the Company's amortized cost in the security. If the Company determines that it (1) does not intend to sell the security and (2) it will not be more likely than not required to sell the security before it's anticipated recovery, the other-than-temporary impairment is segregated into its two components (1) the amount of impairment related to credit loss and (2) the amount of impairment related to other factors. The difference between the present value of the cash flows expected to be collected and the amortized cost is the credit loss recognized through earnings and an adjustment to the cost basis of the security. The amount of impairment related to other factors is included in other comprehensive income (loss). Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

Provision and Allowance for Probable Loan Losses

Provision and Allowance for Probable Loan Losses

        The allowance for probable loan losses is maintained at a level considered adequate by management to provide for probable loan losses. The allowance is increased by provisions charged to operating expense and reduced by net charge-offs. The provision for probable loan losses is the amount, which, in the judgment of management, is necessary to establish the allowance for probable loan losses at a level that is adequate to absorb known and inherent risks in the loan portfolio.

        Management believes that the allowance for probable loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company's bank subsidiaries' allowances for probable loan losses. Such agencies may require the Company's bank subsidiaries to make additions or reductions to their U.S. generally accepted accounting principles ("GAAP") allowances based on their judgments of information available to them at the time of their examination.

        The bank subsidiaries charge off that portion of any loan which management considers to represent a loss as well as that portion of any other loan which is classified as a "loss" by bank examiners. Commercial, financial and agricultural or real estate loans are generally considered by management to represent a loss, in whole or part, (i) when an exposure beyond any collateral coverage is apparent, (ii) when no further collection of the portion of the loan so exposed is anticipated based on actual results, (iii) when the credit enhancements, if any, are not adequate, and (iv) when the borrower's financial condition would indicate so. Generally, unsecured consumer loans are charged off when 90 days past due.

Loans

Loans

        Loans are reported at the principal balance outstanding, net of unearned discounts. Interest income on loans is reported on an accrual basis. Loan fees and costs associated with originating the loans are amortized over the life of the loan using the interest method. The Company originates mortgage loans that may subsequently be sold to an unaffiliated third party. The loans are not securitized and if sold, are sold without recourse. Loans held for sale are carried at cost and the principal amount outstanding is not significant to the consolidated financial statements.

Impaired Loans

Impaired Loans

        Impaired loans are those loans where it is probable that all amounts due according to contractual terms of the loan agreement will not be collected. Impaired loans are measured based on (1) the present value of expected future cash flows discounted at the loan's effective interest rate; (2) the loan's observable market price; or (3) the fair value of the collateral if the loan is collateral dependent. Substantially all of the Company's impaired loans are measured at the fair value of the collateral. In limited cases the Company may use other methods to determine the level of impairment of a loan if such loan is not collateral dependent.

Troubled Debt Restructured Loans

Troubled Debt Restructured Loans

        Troubled debt restructured loans ("TDR") are those loans where, for reasons related to a borrower's difficulty to repay a loan, the Company grants a concession to the borrower that the Company would not normally consider in the normal course of business. The original terms of the loan are modified or restructured. The terms that may be modified include a reduction in the original stated interest rate, an extension of the original maturity of the loan, a renewal of the loan at an interest rate below current market rates, a reduction in the principal amount of debt outstanding, a reduction in accrued interest or deferral of interest payments. A loan classified as a TDR is classified as an impaired loan and included in the impaired loan totals. A TDR loan may be returned to accrual status when the loan is brought current, has performed in accordance with the restructured terms for a reasonable period of time and the ultimate collectability of the outstanding principal and interest is no longer questionable, however, although those loans may be placed back on accrual status, they will continue to be classified as impaired. Consistent with regulatory guidance, a TDR loan that is subsequently modified, but has shown sustained performance and classification as a TDR, will be removed from TDR status provided that the modified terms were market-based at the time of modification.

Non-Accrual Loans

Non-Accrual Loans

        The non-accrual loan policy of the Company's bank subsidiaries is to discontinue the accrual of interest on loans when management determines that it is probable that future interest accruals will be un-collectible. As it relates to consumer loans, management charges off those loans when the loan is contractually 90 days past due. Under special circumstances, a consumer or non-consumer loan may be more than 90 days delinquent as to interest or principal and not be placed on non-accrual status. This situation generally results when a bank subsidiary has a borrower who is experiencing financial difficulties, but not to the extent that requires a restructuring of indebtedness. The majority of this category is composed of loans that are considered to be adequately secured and/or for which there are expected future payments. When a loan is placed on non-accrual status, any interest accrued, not paid is reversed and charged to operations against interest income. As it relates to non-consumer loans that are not 90 days past due, management will evaluate each of these loans to determine if placing the loan on non-accrual status is warranted. Interest income on non-accrual loans is recognized only to the extent payments are received or when, in management's opinion, the debtor's financial condition warrants reestablishment of interest accruals.

Other Real Estate Owned

Other Real Estate Owned

        Other real estate owned is comprised of real estate acquired by foreclosure and deeds in lieu of foreclosure. Other real estate is carried at the lower of the recorded investment in the property or its fair value less estimated costs to sell such property (as determined by independent appraisal). Prior to foreclosure, the value of the underlying loan is written down to the fair value of the real estate to be acquired by a charge to the allowance for probable loan losses, if necessary. Any subsequent write-downs are charged against other non-interest expense. Other real estate owned totaled $69,872,000 and $85,879,000 at December 31, 2014 and 2013, respectively. Other real estate owned is included in other assets.

Bank Premises and Equipment

Bank Premises and Equipment

        Bank premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed on straight-line and accelerated methods over the estimated useful lives of the assets. Repairs and maintenance are charged to operations as incurred and expenditures for renewals and betterments are capitalized.

Other Investments

Other Investments

        Other investments include equity investments in non-financial companies, bank owned life insurance, as well as equity securities with no readily determinable fair market value. Equity investments are accounted for using the equity method of accounting. Equity securities with no readily determinable fair value are accounted for using the cost method.

Income Taxes

Income Taxes

        Deferred income tax assets and liabilities are determined using the asset and liability method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the differences between the book and tax basis of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws. The Company files a consolidated federal income tax return with its subsidiaries.

        Recognition of deferred tax assets is based on management's assessment that the benefit related to certain temporary differences, tax operating loss carry forwards, and tax credits are more likely than not to be realized. A valuation allowance is recorded for the amount of the deferred tax items for which it is more likely than not that the tax benefits will not be realized.

        The Company evaluates uncertain tax positions at the end of each reporting period. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefit recognized in the financial statements from any such a position is measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. As of December 31, 2014 and 2013, respectively, after evaluating all uncertain tax positions, the Company has recorded no liability for unrecognized tax benefits at the end of the reporting period. The Company would recognize any interest accrued on unrecognized tax benefits as other interest expense and penalties as other non-interest expense. During the years ended December 31, 2014, 2013 and 2012, the Company recognized no interest expense or penalties related to uncertain tax positions.

        The Company files consolidated tax returns in the U.S. Federal jurisdiction and various state jurisdictions. The Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years before 2011.

Stock Options

Stock Options

        Compensation expense for stock awards is based on the market price of the stock on the measurement date, which is generally the date of grant, and is recognized ratably over the service period of the award. The fair value of stock options granted was estimated, using the Black-Sholes-Merton option-pricing model. This model was developed for use in estimating the fair value of publicly traded options that have no vesting restrictions and are fully transferable. Additionally, the model requires the input of highly subjective assumptions. Because the Company's employee stock options have characteristics significantly different from those of publicly traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the Black-Scholes-Merton option-pricing model does not necessarily provide a reliable single measure of the fair value of the Company's stock options.

Net Income Per Share

Net Income Per Share

        Basic Earnings Per Share ("EPS") is calculated by dividing net income by the weighted average number of common shares outstanding. The computation of diluted EPS assumes the issuance of common shares for all dilutive potential common shares outstanding during the reporting period. The dilutive effect of stock options is considered in earnings per share calculations, if dilutive, using the treasury stock method.

Goodwill and Identified Intangible Assets

Goodwill and Identified Intangible Assets

        Goodwill represents the excess of costs over fair value of assets of businesses acquired. Goodwill is tested for impairment at least annually or on an interim basis if an event triggering impairment may have occurred. As of October 1, 2014, after completing goodwill testing, the Company has determined that no goodwill impairment exists.

        Identified intangible assets are acquired assets that lack physical substance but can be distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in combination with a related contract, asset, or liability. The Company's identified intangible assets relate to core deposits and contract rights. As of December 31, 2014, the Company has determined that no impairment of identified intangibles exists. Identified intangible assets with definite useful lives are amortized on an accelerated basis over their estimated life. See Note 6—Goodwill and Other Intangible Assets.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

        Long-lived assets, such as property, plant and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying value of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying value of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying value of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the statement of condition and reported at the lower of the carrying value or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the statement of condition.

Consolidated Statements of Cash Flows

Consolidated Statements of Cash Flows

        For purposes of the consolidated statements of cash flows, the Company considers all short-term investments with a maturity at date of purchase of three months or less to be cash equivalents. Also, the Company reports transactions related to deposits and loans to customers on a net basis.

Accounting for Transfers and Servicing of Financial Assets

Accounting for Transfers and Servicing of Financial Assets

        The Company accounts for transfers and servicing of financial assets and extinguishments of liabilities based on the application of a financial-components approach that focuses on control. After a transfer of financial assets, the Company recognizes the financial and servicing assets it controls and liabilities it has incurred, derecognizes financial assets when control has been surrendered and derecognizes liabilities when extinguished. The Company has retained mortgage servicing rights in connection with the sale of mortgage loans. Because the Company may not initially identify loans as originated for resale, all loans are initially treated as held for investment. The value of the mortgage servicing rights are reviewed periodically for impairment and are amortized in proportion to, and over the period of estimated net servicing income or net servicing losses. The value of the mortgage servicing rights is not significant to the consolidated statements of condition.

Segments of an Enterprise and Related Information

Segments of an Enterprise and Related Information

        The Company operates as one segment. The operating information used by the Company's chief executive officer for purposes of assessing performance and making operating decisions about the Company is the consolidated financial statements presented in this report. The Company has four active operating subsidiaries, namely, the bank subsidiaries, otherwise known as International Bank of Commerce, Laredo, Commerce Bank, International Bank of Commerce, Zapata and International Bank of Commerce, Brownsville. The Company applies the provisions of ASC Topic 280, "Segment Reporting," in determining its reportable segments and related disclosures.

Comprehensive Income (Loss)

Comprehensive Income (Loss)

        Comprehensive income (loss) consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on securities available for sale.

Advertising

Advertising

        Advertising costs are expensed as incurred.

Reclassifications

Reclassifications

        Certain amounts in the prior year's presentations have been reclassified to conform to the current presentation. These reclassifications had no effect on previously reported net income or shareholders' equity.

New Accounting Standards

New Accounting Standards

        In February 2013, the Financial Accounting Standards Board issued Accounting Standards Update No. 2013-02 to ASC 220, "Comprehensive Income." The update amends existing literature to require an entity to provide information about the amounts reclassified out of other comprehensive income by component, and it also requires enhanced disclosure and cross reference on items reclassified out of accumulated other comprehensive income during the reporting period. The update is effective for reporting periods beginning after December 15, 2012. The adoption of the update to existing standards did not have a significant impact to the Company's consolidated financial statements.

        In July 2013, the Financial Accounting Standards Board issued Accounting Standards Update No. 2013-11 to ASC 740, "Income Taxes." The update amends existing literature to eliminate diversity in practice in the presentation of unrecognized tax benefits in instances where a net operating loss carryforward, a similar tax loss or a tax credit carryforward also exist. The update clarifies how the unrecognized tax benefit should be presented in those situations where other tax losses or tax credit carryforwards exist. The update does not change the currently required disclosures for unrecognized tax benefits under current ASC 740 guidance. The update is effective for fiscal years and interim periods within those years beginning after December 15, 2013. The adoption of the update to existing standards did not have a significant impact to the Company's consolidated financial statements.

        In January 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-01 to ASC 323-70, "Investments—Equity Method and Joint Ventures—Accounting for Investments in Qualified Affordable Housing Project." The update issues new guidance for investments in qualified affordable housing projects which permits entities to elect to apply the proportional amortization method to account for the investment when certain conditions are met. The update is effective for public entities for annual and interim periods beginning after December 15, 2014 and is able to be applied retrospectively. The adoption of the update is not expected to have a significant impact to the Company's consolidated financial statements.

        In January 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-04 to ASC 310-40, "Receivables—Troubled Debt Restructurings by Creditors." The update amends existing literature to eliminate diversity in practice by clarifying and defining when an in substance repossession or foreclosure occurs. The terms "in substance repossession or foreclosure" and "physical possession" are not currently defined in the accounting literature, resulting in diversity in practice when a creditor derecognizes a loan receivable and recognizes the real estate property collateralizing the loan receivable as an asset. Additionally, the update requires interim and annual disclosures of both the amount of foreclosed residential real estate property and the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure. The update is effective for annual periods and the interim periods within those annual periods beginning after December 15, 2014. The adoption of the update to existing standards is not expected to have a significant impact to the Company's consolidated financial statements.

        In April 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-08 to ASC 205, "Presentation of Financial Statements," and ASC 360, "Property, Plant and Equipment." The update to existing standards change the requirements for reporting discontinued operations, primarily by clarifying that the disposal of a component or group of components of an entity could constitute discontinued operations under certain circumstances. The update also defines required information in disclosures about discontinued operations, including a discussion of the entity's continued involvement in the discontinued operation, if any. The update is applicable to all disposals of components of an entity that occurred within interim and annual periods beginning after December 15, 2014 and for acquisitions that are classified as held for sale for interim and annual periods beginning after December 15, 2014. The adoption of the update is not expected to have a significant impact to the Company's consolidated financial statements.

        In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09 to ASC 606, "Revenue from Contracts with Customers." The update sets a common standard that defines revenue and the principles for recognizing revenue. The update outlines when an entity should recognize revenue, among other matters. At its core, the update states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The update also outlines the steps that entities should take to determine and record the correct revenue number. The update is effective for annual periods beginning after December 15, 2016 and the interim periods within that reporting period. The Company is evaluating the potential impact to the Company's consolidated financial statements.

        In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-11 to ASC 860, "Transfers and Servicing." The update amends existing standards to require that repurchase-to-maturity transactions be accounted for as secured borrowings, in line with accounting standards for other similar instruments. Additionally, the update requires various disclosures including information regarding transfers accounted for as sales in transactions that are economically similar as repurchase agreements, in addition to disclosures related to collateral, remaining contractual tenor and a discussion of the potential risks associated with repurchase agreements, securities lending transactions and repurchase-to-maturity transactions. The update is effective for interim and annual periods beginning after December 15, 2014. The adoption of the update to existing standards is not expected to have a significant impact to the Company's consolidated financial statements.

        In August 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-14 to ASC 310-40, "Receivables—Troubled Debt Restructurings by Creditors." The update is new guidance regarding classification and measurement of foreclosed mortgage loans that are government guaranteed. The update specifies that government secured mortgage loans foreclosed upon should be classified as other assets and measured based on the amount of the loan balance that is expected to be recovered from the guarantor. The new guidance is effective for interim and annual periods after December 15, 2014. The adoption of the update is not expected to have a significant impact to the Company's consolidated financial statements.

        In January 2015, the Financial Accounting Standards Board issued Accounting Standards Update No. 2015-01 to ASC 225-20, "Income Statement- Extraordinary and Unusual Items." The update amends existing standards and is being issued as part of the FASB's initiative to reduce complexity in accounting standards. The update eliminates the concept of extraordinary items. The update is effective for interim and annual periods after December 15, 2015. The adoption of the update to existing standards is not expected to have a significant impact to the Company's consolidated financial statements.

        In February 2015, the Financial Accounting Standards Board issued Accounting Standards Update No. 2015-02 to ASC 810, "Consolidation." The update amends existing standards regarding the evaluation of certain legal entities and their consolidation in the financial statements. The amendments modify the evaluation process to assess whether limited partnerships and similar legal entities are variable interest entities or voting interest entities, eliminate the presumption that a general partner should consolidate a limited partnership, affect the consolidation analysis of entities that are involved in variable interest entities, particularly those that have fee arrangements and related party relationships and provides a scope exception for reporting entities with legal interests that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. The update is effective for interim and annual periods after December 15, 2015. The Company is evaluating the impact of the adoption of the update.

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Allowance for Probable Loan Losses (Details 4) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Interest Recognized
Loans accounted for as troubled debt restructuring	$ 15,653	$ 20,358
Period of charge off for past due unsecured commercial loans	90 days
Total troubled debt restructuring	15,653	20,358
Class of financing receivable
Recorded investment:
Total impaired loans with related allowance	31,765	31,255
Total impaired loans with no related allowance	44,406	44,638
Unpaid principal balance:
Total impaired loans with an allowance recorded	32,232	34,699
Total impaired loans with no related allowance recorded	46,262	45,986
Related Allowance	12,221	16,002
Average recorded investment:
Total impaired loans with an allowance recorded	33,286	31,244
Total impaired loans with no related allowance recorded	43,202	51,616
Interest Recognized
Total impaired loans with an allowance recorded	92	130
Total impaired loans with no related allowance recorded	444	374
Commercial
Interest Recognized
Loans accounted for as troubled debt restructuring	2,500	150
Total troubled debt restructuring	2,500	150
Commercial | Class of financing receivable
Recorded investment:
Total impaired loans with related allowance	19,944	17,178
Total impaired loans with no related allowance	20,231	17,005
Unpaid principal balance:
Total impaired loans with an allowance recorded	20,026	17,177
Total impaired loans with no related allowance recorded	20,260	17,023
Related Allowance	9,112	12,234
Average recorded investment:
Total impaired loans with an allowance recorded	19,313	18,019
Total impaired loans with no related allowance recorded	18,563	16,778
Interest Recognized
Total impaired loans with an allowance recorded		38
Total impaired loans with no related allowance recorded	4	2
Commercial real estate: other construction and land development
Interest Recognized
Loans accounted for as troubled debt restructuring	2,254	8,860
Total troubled debt restructuring	2,254	8,860
Commercial real estate: other construction and land development | Class of financing receivable
Recorded investment:
Total impaired loans with related allowance	6,714	6,818
Total impaired loans with no related allowance	4,162	7,158
Unpaid principal balance:
Total impaired loans with an allowance recorded	6,949	6,825
Total impaired loans with no related allowance recorded	4,270	7,187
Related Allowance	1,890	852
Average recorded investment:
Total impaired loans with an allowance recorded	7,183	6,058
Total impaired loans with no related allowance recorded	4,882	18,164
Interest Recognized
Total impaired loans with no related allowance recorded	74	74
Commercial real estate: farmland and commercial
Interest Recognized
Loans accounted for as troubled debt restructuring	2,861	2,863
Total troubled debt restructuring	2,861	2,863
Commercial real estate: farmland and commercial | Class of financing receivable
Recorded investment:
Total impaired loans with related allowance	5,107	7,259
Total impaired loans with no related allowance	9,059	8,779
Unpaid principal balance:
Total impaired loans with an allowance recorded	5,257	10,697
Total impaired loans with no related allowance recorded	10,562	9,949
Related Allowance	1,219	2,916
Average recorded investment:
Total impaired loans with an allowance recorded	6,790	7,167
Total impaired loans with no related allowance recorded	8,664	7,313
Interest Recognized
Total impaired loans with an allowance recorded	92	92
Commercial real estate: multifamily | Class of financing receivable
Recorded investment:
Total impaired loans with no related allowance	835	295
Unpaid principal balance:
Total impaired loans with no related allowance recorded	835	295
Average recorded investment:
Total impaired loans with no related allowance recorded	363	322
Residential: first lien
Interest Recognized
Loans accounted for as troubled debt restructuring	5,313	4,887
Total troubled debt restructuring	5,313	4,887
Residential: first lien | Class of financing receivable
Recorded investment:
Total impaired loans with no related allowance	5,840	6,153
Unpaid principal balance:
Total impaired loans with no related allowance recorded	6,034	6,258
Average recorded investment:
Total impaired loans with no related allowance recorded	6,293	4,860
Interest Recognized
Total impaired loans with no related allowance recorded	273	179
Residential: junior lien
Interest Recognized
Loans accounted for as troubled debt restructuring	1,371	1,631
Total troubled debt restructuring	1,371	1,631
Residential: junior lien | Class of financing receivable
Recorded investment:
Total impaired loans with no related allowance	2,895	3,206
Unpaid principal balance:
Total impaired loans with no related allowance recorded	2,915	3,226
Average recorded investment:
Total impaired loans with no related allowance recorded	3,035	2,347
Interest Recognized
Total impaired loans with no related allowance recorded	90	99
Consumer Loan
Interest Recognized
Loans accounted for as troubled debt restructuring	1,354	1,531
Total troubled debt restructuring	1,354	1,531
Consumer Loan | Class of financing receivable
Recorded investment:
Total impaired loans with no related allowance	1,384	1,606
Unpaid principal balance:
Total impaired loans with no related allowance recorded	1,386	1,612
Average recorded investment:
Total impaired loans with no related allowance recorded	1,402	1,380
Interest Recognized
Total impaired loans with no related allowance recorded	3	1
Foreign
Interest Recognized
Loans accounted for as troubled debt restructuring		436
Total troubled debt restructuring		436
Foreign | Class of financing receivable
Recorded investment:
Total impaired loans with no related allowance		436
Unpaid principal balance:
Total impaired loans with no related allowance recorded		436
Average recorded investment:
Total impaired loans with no related allowance recorded		452
Interest Recognized
Total impaired loans with no related allowance recorded		$ 19

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Employees' Profit Sharing Plan

12 Months Ended

Dec. 31, 2014

Employees' Profit Sharing Plan

Employees' Profit Sharing Plan

(12) Employees' Profit Sharing Plan

        The Company has a deferred profit sharing plan for full-time employees with a minimum of one year of continuous employment. The Company's annual contribution to the plan is based on a percentage, as determined by the Board of Directors, of income before income taxes, as defined, for the year. Allocation of the contribution among officers and employees' accounts is based on length of service and amount of salary earned. Profit sharing costs of $3,510,000, $3,500,000 and $3,400,000 were charged to income for the years ended December 31, 2014, 2013, and 2012, respectively.

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Investment Securities (Tables)

12 Months Ended

Dec. 31, 2014

Investment Securities

Amortized cost and estimated fair value by type of investment security

        The amortized cost and estimated fair value by type of investment security at December 31, 2014 are as follows:

	Held to Maturity
	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value		Carrying value
	(Dollars in Thousands)
Other securities	$	2,400	$	—	$	—	$	2,400	$	2,400
Total investment securities	$	2,400	$	—	$	—	$	2,400	$	2,400

	Available for Sale
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value		Carrying value(1)
	(Dollars in Thousands)
Residential mortgage-backed securities	$	4,597,590	$	47,960	$	(45,178	)	$	4,600,372	$	4,600,372
Obligations of states and political subdivisions		268,763		19,131		(5,618	)		282,276		282,276
Other debt securities		20,000		—		—			20,000		20,000
Equity securities		28,075		1,425		(185	)		29,315		29,315
Total investment securities	$	4,914,428	$	68,516	$	(50,981	)	$	4,931,963	$	4,931,963

(1) Included in the carrying value of residential mortgage-backed securities are $1,503,774 of mortgage-backed securities issued by Ginnie Mae, $3,072,535 of mortgage-backed securities issued by Fannie Mae and Freddie Mac and $24,063 issued by non-government entities

        The amortized cost and estimated fair value by type of investment security at December 31, 2013 are as follows:

	Held to Maturity
	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value		Carrying value
	(Dollars in Thousands)
Other securities	$	2,400	$	—	$	—	$	2,400	$	2,400
Total investment securities	$	2,400	$	—	$	—	$	2,400	$	2,400

	Available for Sale
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value		Carrying value(1)
	(Dollars in Thousands)
Residential mortgage-backed securities	$	5,096,165	$	56,110	$	(124,574	)	$	5,027,701	$	5,027,701
Obligations of states and political subdivisions		248,354		8,063		(8,007	)		248,410		248,410
Equity securities		28,075		931		(538	)		28,468		28,468
Total investment securities	$	5,372,594	$	65,104	$	(133,119	)	$	5,304,579	$	5,304,579

(1) Included in the carrying value of residential mortgage-backed securities are $1,799,807 of mortgage-backed securities issued by Ginnie Mae, $3,200,042 of mortgage-backed securities issued by Fannie Mae and Freddie Mac and $27,852 issued by non-government entities

Amortized cost and fair value of investment securities, by contractual maturity

        The amortized cost and estimated fair value of investment securities at December 31, 2014, by contractual maturity, are shown below.

	Held to Maturity				Available for Sale
	Amortized Cost		Estimated fair value		Amortized Cost		Estimated fair value
	(Dollars in Thousands)
Due in one year or less	$	1,075	$	1,075	$	—	$	—
Due after one year through five years		1,325		1,325		—		—
Due after five years through ten years		—		—		735		812
Due after ten years		—		—		288,028		301,464
Residential mortgage-backed securities		—		—		4,597,590		4,600,372
Equity securities		—		—		28,075		29,315
Total investment securities	$	2,400	$	2,400	$	4,914,428	$	4,931,963

Gross unrealized losses on investment securities and the related fair value

        Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2014 were as follows:

	Less than 12 months					12 months or more					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Available for sale:
Residential mortgage-backed securities	$	808,072	$	(4,910	)	$	1,836,218	$	(40,268	)	$	2,644,290	$	(45,178	)
Obligations of states and political subdivisions		8,833		(97	)		27,793		(5,521	)		36,626		(5,618	)
Equity securities		74		(1	)		8,066		(184	)		8,140		(185	)
	$	816,979	$	(5,008	)	$	1,872,077	$	(45,973	)	$	2,689,056	$	(50,981	)

        Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous loss position, at December 31, 2013 were as follows:

	Less than 12 months					12 months or more					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Available for sale:
Residential mortgage-backed securities	$	2,459,565	$	(98,022	)	$	420,262	$	(26,552	)	$	2,879,827	$	(124,574	)
Obligations of states and political subdivisions		55,327		(3,025	)		14,292		(4,982	)		69,619		(8,007	)
Equity securities		19,462		(538	)		—		—			19,462		(538	)
	$	2,534,354	$	(101,585	)	$	434,554	$	(31,534	)	$	2,968,908	$	(133,119	)

Reconciliation of credit-related impairment charges on available-for-sale investment

        The following table presents a reconciliation of credit-related impairment charges on available-for-sale investments recognized in earnings for the twelve months ended December 31, 2014 (in Thousands):

Balance at December 31, 2013	$	11,806
Impairment charges recognized during period		817
Balance at December 31, 2014	$	12,623

        The following table presents a reconciliation of credit-related impairment charges on available-for-sale investments recognized in earnings for the twelve months ended December 31, 2013 (in Thousands):

Balance at December 31, 2012	$	10,432
Impairment charges recognized during period		1,374
Balance at December 31, 2013	$	11,806

        The following table presents a reconciliation of credit-related impairment charges on available-for-sale investments recognized in earnings for the twelve months ended December 31, 2012 (in Thousands):

Balance at December 31, 2011	$	9,393
Impairment charges recognized during period		1,039
Balance at December 31, 2012	$	10,432

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Income Taxes

12 Months Ended

Dec. 31, 2014

Income Taxes

Income Taxes

(14) Income Taxes

        The Company files 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:

	2014			2013			2012
	(Dollars in Thousands)
Current
U.S.	$	72,561		$	59,583		$	40,375
State		5,252			(1,530	)		2,234
Foreign		1			3			33
Total current taxes		77,814			58,056			42,642
Deferred
U.S.		(969	)		(1,692	)		7,928
State		(58	)		(125	)		(5	)
Total deferred taxes		(1,027	)		(1,817	)		7,923
Total income taxes	$	76,787		$	56,239		$	50,565

        Total income tax expense differs from the amount computed by applying the U.S. Federal income tax rate of 35% for 2014, 2013 and 2012 to income before income taxes. The reasons for the differences for the years ended December 31 are as follows:

	2014			2013			2012
	(Dollars in Thousands)
Computed expected tax expense	$	80,560		$	64,183		$	55,634
Change in taxes resulting from:
Tax-exempt interest income		(4,554	)		(4,828	)		(4,381	)
State tax, net of federal income taxes and tax credit		3,377			(110	)		1,446
Tax refunds		—			(966	)		—
Other investment income		(3,615	)		(2,656	)		(2,691	)
Other		1,019			616			557
Actual tax expense	$	76,787		$	56,239		$	50,565

        The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2014 and 2013 are reflected below:

	2014			2013
	(Dollars in Thousands)
Deferred tax assets:
Loans receivable, principally due to the allowance for probable loan losses	$	24,849		$	25,365
Other real estate owned		3,453			3,878
Impairment charges on available-for-sale securities		5,618			5,327
Accrued expenses		268			399
Net unrealized gains on available for sale investment securities		—			24,235
Other		5,809			4,816
Total deferred tax assets		39,997			64,020
Deferred tax liabilities:
Bank premises and equipment, principally due to differences on depreciation		(18,314	)		(20,729	)
Net unrealized gains on available for sale investment securities		(6,182	)		—
Identified intangible assets and goodwill		(18,787	)		(18,051	)
Other		(12,303	)		(11,476	)
Total deferred tax liabilities		(55,586	)		(50,256	)
Net deferred tax asset (liability)	$	(15,589	)	$	13,764

        The net deferred tax (liability) asset of ($15,589,000) at December 31, 2014 and $13,764,000 at December 31, 2013 is included in other assets or liabilities, respectively in the consolidated statements of condition.

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Bank Premises and Equipment (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Bank premises and equipment
Less: accumulated depreciation	(378,682)	$ (355,792)
Bank premises and equipment, net	526,423	504,842
Bank buildings and improvements
Bank premises and equipment
Bank premises and equipment, gross	509,830	470,386
Bank buildings and improvements | Minimum
Bank premises and equipment
Estimated useful lives	5 years
Bank buildings and improvements | Maximum
Bank premises and equipment
Estimated useful lives	40 years
Furniture, equipment and vehicles
Bank premises and equipment
Bank premises and equipment, gross	269,861	260,932
Furniture, equipment and vehicles | Minimum
Bank premises and equipment
Estimated useful lives	1 year
Furniture, equipment and vehicles | Maximum
Bank premises and equipment
Estimated useful lives	20 years
Land
Bank premises and equipment
Bank premises and equipment, gross	125,414	128,805
Land, building, furniture, fixture and equipment
Bank premises and equipment
Bank premises and equipment, gross		$ 511
Land, building, furniture, fixture and equipment | Minimum
Bank premises and equipment
Estimated useful lives	7 years
Land, building, furniture, fixture and equipment | Maximum
Bank premises and equipment
Estimated useful lives	27 years

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Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Consolidated Statements of Comprehensive Income
Net unrealized holding gains (losses) on securities available for sale arising during period, tax effects	$ 29,870	$ (56,048)	$ 2,701
Reclassification adjustment for gains on securities available for sale included in net income, tax effects	(449)	(3,360)	(13,456)
Reclassification adjustment for impairment charges on available for sale securities included in net income, tax effects	$ 286	$ 481	$ 364

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Consolidated Statements of Condition (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Consolidated Statements of Condition
Held to maturity, Market value (in dollars)	$ 2,400	$ 2,400
Available for sale, Amortized cost (in dollars)	4,914,428	5,372,594
Common shares, par value (in dollars per share)	$ 1.00	$ 1.00
Common shares, Authorized shares	275,000,000	275,000,000
Common shares, issued shares	95,783,977	95,743,592
Accumulated other comprehensive income, comprehensive loss related to other-than-temporary impairment for non-credit related issues (in dollars)	$ (4,881)	$ (5,646)
Treasury, shares	29,324,567	28,537,180

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Deposits

12 Months Ended

Dec. 31, 2014

Deposits.

Deposits

(7) Deposits

        Deposits as of December 31, 2014 and 2013 and related interest expense for the years ended December 31, 2014, 2013 and 2012 were as follows:

	2014		2013
	(Dollars in Thousands)
Deposits:
Demand—non-interest bearing
Domestic	$	2,382,935	$	2,175,694
Foreign		547,318		490,816
Total demand non-interest bearing		2,930,253		2,666,510
Savings and interest bearing demand
Domestic		2,488,458		2,364,905
Foreign		537,222		560,707
Total savings and interest bearing demand		3,025,680		2,925,612
Time, certificates of deposit $100,000 or more
Domestic		835,792		856,700
Foreign		864,346		938,940
Less than $100,000
Domestic		482,089		531,503
Foreign		300,465		324,160
Total time, certificates of deposit		2,482,692		2,651,303
Total deposits	$	8,438,625	$	8,243,425

	2014		2013		2012
	(Dollars in Thousands)
Interest expense:
Savings and interest bearing demand
Domestic	$	2,998	$	3,182	$	4,487
Foreign		599		580		801
Total savings and interest bearing demand		3,597		3,762		5,288
Time, certificates of deposit $100,000 or more
Domestic		4,615		5,761		8,263
Foreign		4,529		5,590		9,148
Less than $100,000
Domestic		2,074		3,065		4,945
Foreign		815		1,028		1,617
Total time, certificates of deposit		12,033		15,444		23,973
Total interest expense on deposits	$	15,630	$	19,206	$	29,261

        Scheduled maturities of time deposits as of December 31, 2014 were as follows:

	Total
	(in thousands)
2015	$	2,177,266
2016		203,928
2017		76,206
2018		23,481
2019		1,751
Thereafter		60
Total	$	2,482,692

        Scheduled maturities of time deposits in amounts of $100,000 or more at December 31, 2014, were as follows:

Due within 3 months or less	$	631,083
Due after 3 months and within 6 months		409,400
Due after 6 months and within 12 months		443,860
Due after 12 months		215,795
	$	1,700,138

        Time deposits that meet or exceed the FDIC insurance limit of $250,000 at December 31, 2014 and December 31, 2013 were $1,027,000 and $1,076,000, respectively.

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International Bancshares Corporation (Parent Company Only) Financial Information Statements of Condition (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
ASSETS
Other investments	$ 420,670	$ 388,563
Other assets	130,711	158,862
Total assets	12,196,520	12,079,477
Liabilities:
Junior subordinated deferrable interest debentures	175,416	190,726
Other liabilities	69,527	39,587
Total liabilities	10,615,862	10,655,069
Shareholders' equity:
Common shares	95,784	95,744
Surplus	165,520	163,947
Retained earnings	1,585,389	1,467,000
Accumulated other comprehensive income (loss)	11,397	(43,774)
Total shareholders' equity before treasury stock	1,858,090	1,682,917
Less cost of shares in treasury	(277,432)	(258,509)
Total shareholders' equity	1,580,658	1,424,408	1,435,708	1,600,165
Total liabilities and shareholders' equity	12,196,520	12,079,477
Parent Company
ASSETS
Cash	9,252	8,106
Other investments	69,042	62,381
Notes receivable	204	313
Investment in subsidiaries	1,691,553	1,556,932
Other assets	50	197
Total assets	1,770,101	1,627,929
Liabilities:
Junior subordinated deferrable interest debentures	175,416	190,726
Due to IBC Trading	21	21
Other liabilities	14,006	12,774
Total liabilities	189,443	203,521
Shareholders' equity:
Common shares	95,784	95,744
Surplus	165,520	163,947
Retained earnings	1,585,389	1,467,000
Accumulated other comprehensive income (loss)	11,397	(43,774)
Total shareholders' equity before treasury stock	1,858,090	1,682,917
Less cost of shares in treasury	(277,432)	(258,509)
Total shareholders' equity	1,580,658	1,424,408
Total liabilities and shareholders' equity	$ 1,770,101	$ 1,627,929

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Fair Value (Details 3) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Assets:
Impaired Loans	$ 65,551,000	$ 64,585,000
Non-financial assets:
Other real estate owned	69,872,000	85,879,000
Assumptions used in discounted cash flow model to determine fair value of investments classified within level 3
Charges to allowance for probable loan losses in connection with other real estate owned	367,000	402,000
Adjustment to fair value in connection with other real estate owned	597,000	1,204,000
Impaired commercial collateral dependent loans	65,551,000	64,585,000
Impaired commercial collateral dependent receivables appraisals to determine fair value within immediately preceding twelve months	52,092,000	50,346,000
Impaired collateral dependent commercial loans with an internal evaluation completed in the last twelve months	5,307,000	0
Significant Unobservable Inputs (Level 3) | Bond meeting the original contract terms
Assumptions used in discounted cash flow model to determine fair value of investments classified within level 3
Minimum period of residential mortgage loan performance under original contract terms	24 months	24 months
Estimated future principal prepayment rate assumption, low end of range (as a percent)	7.00%	7.00%
Default rate assumptions (as a percent)	1.00%	1.00%
Loss severity rate assumptions, first year (as a percent)	25.00%	25.00%
Estimated future principal prepayment rate assumption, discount rate (as a percent)	13.00%	13.00%
Significant Unobservable Inputs (Level 3) | Bond not meeting the original contract terms
Assumptions used in discounted cash flow model to determine fair value of investments classified within level 3
Estimated future principal prepayment rate assumption, low end of range (as a percent)	2.00%	2.00%
Default rate assumptions (as a percent)	4.50%	4.50%
Loss severity rate assumptions, first year (as a percent)	60.00%	60.00%
Decrease in loss severity rates, following five years (as a percent)	5.00%	5.00%
Loss severity rate, thereafter (as a percent)	25.00%	25.00%
Estimated future principal prepayment rate assumption, discount rate (as a percent)	13.00%	13.00%
Measured on a non-recurring basis:
Assumptions used in discounted cash flow model to determine fair value of investments classified within level 3
Change in net provision, impaired loans	(1,557,000)	13,229,000
Change in net provision, other real estate owned	597,000	1,204,000
Measured on a non-recurring basis: | Assets/Liabilities Measured at Fair Value
Assets:
Impaired Loans	29,501,000	28,391,000
Non-financial assets:
Other real estate owned	6,112,000	16,329,000
Assumptions used in discounted cash flow model to determine fair value of investments classified within level 3
Impaired commercial collateral dependent loans	29,501,000	28,391,000
Measured on a non-recurring basis: | Significant Unobservable Inputs (Level 3)
Assets:
Impaired Loans	29,501,000	28,391,000
Non-financial assets:
Other real estate owned	6,112,000	16,329,000
Assumptions used in discounted cash flow model to determine fair value of investments classified within level 3
Impaired commercial collateral dependent loans	$ 29,501,000	$ 28,391,000

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2014	Feb. 20, 2015	Jun. 30, 2014
Document and Entity Information
Entity Registrant Name	INTERNATIONAL BANCSHARES CORP
Entity Central Index Key	0000315709
Document Type	10-K
Document Period End Date	Dec. 31, 2014
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 1,805,961,000
Entity Common Stock, Shares Outstanding		66,405,410
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY

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Securities Sold Under Repurchase Agreements

12 Months Ended

Dec. 31, 2014

Securities Sold Under Repurchase Agreements

Securities Sold Under Repurchase Agreements

(8) Securities Sold Under Repurchase Agreements

        The Company's bank subsidiaries have entered into repurchase agreements with an investment banking firm and individual customers of the bank subsidiaries. The purchasers have agreed to resell to the bank subsidiaries identical securities upon the maturities of the agreements. Securities sold under repurchase agreements were mortgage-backed book entry securities and averaged $893,830,000 and $1,041,186,000 during 2014 and 2013, respectively, and the maximum amount outstanding at any month end during 2014 and 2013 was $892,341,000 and $1,119,531,000, respectively.

        Further information related to repurchase agreements at December 31, 2014 and 2013 is set forth in the following table:

	Collateral Securities				Repurchase Borrowing
	Book Value of Securities Sold		Fair Value of Securities Sold		Balance of Liability		Weighted Average Interest Rate
	(Dollars in Thousands)
December 31, 2014 term:
Overnight agreements	$	366,731	$	370,704	$	236,077		.16	%
1 to 29 days		3,717		3,781		1,016		.45
30 to 90 days		13,399		13,628		6,705		.38
Over 90 days		743,323		746,305		614,552		3.83
Total	$	1,127,170	$	1,134,418	$	858,350		2.79	%
December 31, 2013 term:
Overnight agreements	$	332,042	$	341,238	$	209,899		.17	%
1 to 29 days		27,954		28,288		18,666		.40
30 to 90 days		8,106		8,263		3,295		.43
Over 90 days		945,535		940,209		725,521		3.78
Total	$	1,313,637	$	1,317,998	$	957,381		2.91	%

        The book value and fair value of securities sold includes the entire book value and fair value of securities partially or fully pledged under repurchase agreements.

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Income Taxes (Details 2) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Taxes
Income tax expense differences from the amount computed by applying the U.S. Federal income tax rate to income before income taxes (as a percent)	35.00%	35.00%	35.00%
Reasons for the difference of income tax expense
Computed expected tax expense	$ 80,560	$ 64,183	$ 55,634
Change in taxes resulting from:
Tax-exempt interest income	(4,554)	(4,828)	(4,381)
State tax, net of federal income taxes and tax credit	3,377	(110)	1,446
Tax refunds		(966)
Other investment income	(3,615)	(2,656)	(2,691)
Other	1,019	616	557
Total income taxes	$ 76,787	$ 56,239	$ 50,565

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Fair Value (Details 2) (Residential mortgage-backed securities, USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014
Residential mortgage-backed securities
Reconciliation of activity for mortgage-backed securities on a net basis
Balance at the beginning of the period	$ 27,852
Principal paydowns	(4,154)
Total unrealized gains (losses) included in:
Other comprehensive income	1,182
Impairment realized in earnings	(817)
Balance at the end of the period	$ 24,063

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Consolidated Statements of Income (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Interest income:
Loans, including fees	$ 281,546	$ 263,027	$ 268,588
Investment securities:
Taxable	100,095	87,198	94,885
Tax-exempt	11,767	12,877	11,663
Other interest income	191	115	503
Total interest income	393,599	363,217	375,639
Interest expense:
Savings and interest bearing demand deposits	3,597	3,762	5,288
Time deposits	12,033	15,444	23,973
Securities sold under repurchase agreements	24,616	29,171	37,645
Other borrowings	2,033	1,590	998
Junior subordinated deferrable interest debentures	4,264	4,665	6,595
Total interest expense	46,543	54,632	74,499
Net interest income	347,056	308,585	301,140
Provision for probable loan losses	14,423	22,968	27,959
Net interest income after provision for probable loan losses	332,633	285,617	273,181
Non-interest income:
Service charges on deposit accounts	88,586	97,087	93,128
Other service charges, commissions and fees
Banking	44,435	41,075	38,523
Non-banking	7,463	7,116	6,998
Investment securities transactions, net	1,283	9,601	38,446
Other investments, net	22,023	22,383	13,339
Other income	14,558	12,343	10,157
Total non-interest income	178,348	189,605	200,591
Non-interest expense:
Employee compensation and benefits	121,511	119,845	118,041
Occupancy	32,530	31,766	34,608
Depreciation of bank premises and equipment	24,013	26,017	26,756
Professional fees	10,925	13,146	14,369
Deposit insurance assessments	6,082	6,737	7,709
Net expense, other real estate owned	2,358	6,896	8,929
Amortization of identified intangible assets	2,389	4,633	4,651
Advertising	7,742	7,034	7,017
Early termination fee - securities sold under repurchase agreements	11,000	12,303	31,550
Impairment charges (Total other-than-temporary impairment charges, $(366) less loss of $1,183, $(431) less loss of $1,805, and $(916) less gain of $(123), included in other comprehensive loss)	817	1,374	1,039
Other	61,676	62,881	60,703
Total non-interest expense	281,043	292,632	315,372
Income before income taxes	229,938	182,590	158,400
Provision for income taxes	76,787	56,239	50,565
Net income	153,151	126,351	107,835
Preferred stock dividends and discount accretion			14,362
Net income available to common shareholders	$ 153,151	$ 126,351	$ 93,473
Basic earnings per common share:
Weighted average number of shares outstanding: (in shares)	66,872,500	67,195,180	67,236,681
Net income (in dollars per share)	$ 2.29	$ 1.88	$ 1.39
Fully diluted earnings per common share:
Weighted average number of shares outstanding: (in shares)	67,056,456	67,314,859	67,313,963
Net income (in dollars per share)	$ 2.28	$ 1.88	$ 1.39

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Investment Securities

12 Months Ended

Dec. 31, 2014

Investment Securities

Investment Securities

(2) Investment Securities

        The amortized cost and estimated fair value by type of investment security at December 31, 2014 are as follows:

	Held to Maturity
	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value		Carrying value
	(Dollars in Thousands)
Other securities	$	2,400	$	—	$	—	$	2,400	$	2,400
Total investment securities	$	2,400	$	—	$	—	$	2,400	$	2,400

	Available for Sale
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value		Carrying value(1)
	(Dollars in Thousands)
Residential mortgage-backed securities	$	4,597,590	$	47,960	$	(45,178	)	$	4,600,372	$	4,600,372
Obligations of states and political subdivisions		268,763		19,131		(5,618	)		282,276		282,276
Other debt securities		20,000		—		—			20,000		20,000
Equity securities		28,075		1,425		(185	)		29,315		29,315
Total investment securities	$	4,914,428	$	68,516	$	(50,981	)	$	4,931,963	$	4,931,963

(1) Included in the carrying value of residential mortgage-backed securities are $1,503,774 of mortgage-backed securities issued by Ginnie Mae, $3,072,535 of mortgage-backed securities issued by Fannie Mae and Freddie Mac and $24,063 issued by non-government entities

        The amortized cost and estimated fair value of investment securities at December 31, 2014, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay obligations with or without prepayment penalties.

	Held to Maturity				Available for Sale
	Amortized Cost		Estimated fair value		Amortized Cost		Estimated fair value
	(Dollars in Thousands)
Due in one year or less	$	1,075	$	1,075	$	—	$	—
Due after one year through five years		1,325		1,325		—		—
Due after five years through ten years		—		—		735		812
Due after ten years		—		—		288,028		301,464
Residential mortgage-backed securities		—		—		4,597,590		4,600,372
Equity securities		—		—		28,075		29,315
Total investment securities	$	2,400	$	2,400	$	4,914,428	$	4,931,963

        The amortized cost and estimated fair value by type of investment security at December 31, 2013 are as follows:

	Held to Maturity
	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value		Carrying value
	(Dollars in Thousands)
Other securities	$	2,400	$	—	$	—	$	2,400	$	2,400
Total investment securities	$	2,400	$	—	$	—	$	2,400	$	2,400

	Available for Sale
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value		Carrying value(1)
	(Dollars in Thousands)
Residential mortgage-backed securities	$	5,096,165	$	56,110	$	(124,574	)	$	5,027,701	$	5,027,701
Obligations of states and political subdivisions		248,354		8,063		(8,007	)		248,410		248,410
Equity securities		28,075		931		(538	)		28,468		28,468
Total investment securities	$	5,372,594	$	65,104	$	(133,119	)	$	5,304,579	$	5,304,579

(1) Included in the carrying value of residential mortgage-backed securities are $1,799,807 of mortgage-backed securities issued by Ginnie Mae, $3,200,042 of mortgage-backed securities issued by Fannie Mae and Freddie Mac and $27,852 issued by non-government entities

        Residential mortgage-backed securities are securities issued by Freddie Mac, Fannie Mae, Ginnie Mae or non-government entities. Investments in residential mortgage-backed securities issued by Ginnie Mae are fully guaranteed by the U.S. Government. Investments in mortgage-backed securities issued by Freddie Mac and Fannie Mae are not fully guaranteed by the U.S. Government, however, the Company believes that the quality of the bonds is similar to other AAA rated bonds with limited credit risk, particularly given the placement of Fannie Mae and Freddie Mac into conservatorship by the federal government in early September 2008 and because securities issued by others that are collateralized by residential mortgage-backed securities issued by Fannie Mae and Freddie Mac are rated consistently as AAA rated securities.

        The amortized cost and fair value of available for sale investment securities pledged to qualify for fiduciary powers, to secure public monies as required by law, repurchase agreements and short-term fixed borrowings was $2,182,579,000 and $2,196,169,000, respectively, at December 31, 2014.

        Proceeds from the sale and call of securities available-for-sale were $621,588,000, $178,123,000 and $1,382,231,000 during 2014, 2013 and 2012, respectively, which amounts included $620,933,000, $177,623,000 and $1,338,723,000 of mortgage-backed securities. Gross gains of $9,479,000, $9,601,000 and $38,447,000 and gross losses of $8,196,000, $0 and $1,000 were realized on the sales in 2014, 2013 and 2012, respectively.

        Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2014 were as follows:

	Less than 12 months					12 months or more					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Available for sale:
Residential mortgage-backed securities	$	808,072	$	(4,910	)	$	1,836,218	$	(40,268	)	$	2,644,290	$	(45,178	)
Obligations of states and political subdivisions		8,833		(97	)		27,793		(5,521	)		36,626		(5,618	)
Equity securities		74		(1	)		8,066		(184	)		8,140		(185	)
	$	816,979	$	(5,008	)	$	1,872,077	$	(45,973	)	$	2,689,056	$	(50,981	)

        Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous loss position, at December 31, 2013 were as follows:

	Less than 12 months					12 months or more					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Available for sale:
Residential mortgage-backed securities	$	2,459,565	$	(98,022	)	$	420,262	$	(26,552	)	$	2,879,827	$	(124,574	)
Obligations of states and political subdivisions		55,327		(3,025	)		14,292		(4,982	)		69,619		(8,007	)
Equity securities		19,462		(538	)		—		—			19,462		(538	)
	$	2,534,354	$	(101,585	)	$	434,554	$	(31,534	)	$	2,968,908	$	(133,119	)

        The unrealized losses on investments in residential mortgage-backed securities are primarily caused by changes in market interest rates. Residential mortgage-backed securities are primarily securities issued by Freddie Mac, Fannie Mae and Ginnie Mae. The contractual cash obligations of the securities issued by Ginnie Mae are fully guaranteed by the U.S. Government. The contractual cash obligations of the securities issued by Freddie Mac and Fannie Mae are not fully guaranteed by the U.S. Government; however, the Company believes that the quality of the bonds is similar to other AAA rated bonds with limited credit risk, particularly given the placement of Fannie Mae and Freddie Mac into conservatorship by the federal government in early September 2008 and because securities issued by others that are collateralized by residential mortgage-backed securities issued by Fannie Mae and Freddie Mac are rated consistently as AAA rated securities. The decrease in fair value on residential mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae is due to market interest rates. The Company has no intent to sell and will more than likely not be required to sell before a market price recovery or maturity of the securities; therefore, it is the conclusion of the Company that the investments in residential mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae are not considered other-than-temporarily impaired. In addition, the Company has a small investment in non-agency residential mortgage-backed securities that have strong credit backgrounds and include additional credit enhancements to protect the Company from losses arising from high foreclosure rates. These securities have additional market volatility beyond economically induced interest rate events. It is the conclusion of the Company that the investments in non-agency residential mortgage-backed securities are other-than-temporarily impaired due to both credit and other than credit issues. An impairment charge of $817,000 ($531,050, after tax), was recorded in 2014 on the non-agency residential mortgage backed securities. Impairment charges of $1,374,000 ($893,100, after tax) and $1,039,000 ($675,000, after tax) were recorded in 2013 and 2012, respectively on the non-agency residential mortgage backed securities. The impairment charges represent the credit related impairment on the securities.

        The unrealized losses on investments in other securities are caused by fluctuations in market interest rates. The underlying cash obligations of the securities are guaranteed by the entity underwriting the debt instrument. It is the belief of the Company that the entity issuing the debt will honor its interest payment schedule, as well as the full debt at maturity. The securities are purchased by the Company for their economic value. The decrease in fair value is primarily due to market interest rates and not other factors, and because the Company has no intent to sell and will more than likely not be required to sell before a market price recovery or maturity of the securities, it is the conclusion of the Company that the investments are not considered other-than-temporarily impaired.

        The following table presents a reconciliation of credit-related impairment charges on available-for-sale investments recognized in earnings for the twelve months ended December 31, 2014 (in Thousands):

Balance at December 31, 2013	$	11,806
Impairment charges recognized during period		817
Balance at December 31, 2014	$	12,623

        The following table presents a reconciliation of credit-related impairment charges on available-for-sale investments recognized in earnings for the twelve months ended December 31, 2013 (in Thousands):

Balance at December 31, 2012	$	10,432
Impairment charges recognized during period		1,374
Balance at December 31, 2013	$	11,806

        The following table presents a reconciliation of credit-related impairment charges on available-for-sale investments recognized in earnings for the twelve months ended December 31, 2012 (in Thousands):

Balance at December 31, 2011	$	9,393
Impairment charges recognized during period		1,039
Balance at December 31, 2012	$	10,432

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2014

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

(1) Summary of Significant Accounting Policies

        The accounting and reporting policies of International Bancshares Corporation ("Corporation") and Subsidiaries (the Corporation and Subsidiaries collectively referred to herein as the "Company") conform to accounting principles generally accepted in the United States of America 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

        The consolidated financial statements include the accounts of the Corporation and its wholly-owned bank subsidiaries, International Bank of Commerce, Laredo ("IBC"), Commerce Bank, International Bank of Commerce, Zapata, International Bank of Commerce, Brownsville, and the Corporation's wholly-owned non-bank subsidiaries, IBC Subsidiary Corporation, IBC Life Insurance Company, IBC Trading Company, Premier Tierra Holdings, Inc., IBC Charitable and Community Development Corporation, and IBC Capital Corporation. All significant inter-company balances and transactions have been eliminated in consolidation.

        The Company, through its subsidiaries, is 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. The primary markets of the Company are South, Central, and Southeast Texas and the state of Oklahoma. Each bank subsidiary is very active in facilitating international trade along the United States border with Mexico and elsewhere. Although the Company's loan portfolio is diversified, the ability of the Company's debtors to honor their contracts is primarily dependent upon the economic conditions in the Company's trade area. In addition, the investment portfolio is directly impacted by fluctuations in market interest rates. The Company and its bank subsidiaries are subject to the regulations of certain Federal agencies as well as the Texas Department of Banking and undergo periodic examinations by those regulatory authorities. Such agencies may require certain standards or impose certain limitations based on their judgments or changes in law and regulations.

        The Company owns two insurance-related subsidiaries, IBC Life Insurance Company and IBC Insurance Agency, Inc., a wholly owned subsidiary of IBC, the bank subsidiary. Neither of the insurance-related subsidiaries conducts underwriting activities. The IBC Life Insurance Company is in the business of reinsuring credit life and credit accident and health insurance. The business is assumed from an unaffiliated insurer and the only business written is generated by the bank subsidiaries of the Company. The risk assumed on each of the policies is not significant to the consolidated financial statements.

        The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the statement of condition and income and expenses for the periods. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant changes in the near-term relate to the determination of the allowance for probable loan losses.

Subsequent Events

        The Company has evaluated all events or transactions that occurred through the date the Company issued these financial statements. During this period, the Company did not have any material recognizable or non-recognizable subsequent events.

Investment Securities

        The Company classifies debt and equity securities into one of these categories: held-to-maturity, available-for-sale, or trading. Such classifications are reassessed for appropriate classification at each reporting date. Securities that are intended and expected to be held until maturity are classified as "held-to-maturity" and are carried at amortized cost for financial statement reporting. Securities that are not positively expected to be held until maturity, but are intended to be held for an indefinite period of time are classified as "available-for-sale" or "trading" and are carried at their fair value. Unrealized holding gains and losses are included in net income for those securities classified as "trading", while unrealized holding gains and losses related to those securities classified as "available-for-sale" are excluded from net income and reported net of tax as other comprehensive income and in shareholders' equity as accumulated other comprehensive income until realized. The Company did not maintain any trading securities during the three year period ended December 31, 2014.

        Mortgage-backed securities held at December 31, 2014 and 2013 represent participating interests in pools of long-term first mortgage loans originated and serviced by the issuers of the securities. Mortgage-backed securities are either issued or guaranteed by the U.S. Government or its agencies including the Federal Home Loan Mortgage Corporation ("Freddie Mac"), the Federal National Mortgage Association ("Fannie Mae"), the Government National Mortgage Association ("Ginnie Mae") or other non-government entities. Investments in residential mortgage-backed securities issued by Ginnie Mae are fully guaranteed by the U. S. Government. Investments in residential mortgage-backed securities issued by Freddie Mac and Fannie Mae are not fully guaranteed by the U.S. Government, however, the Company believes that the quality of the bonds is similar to other AAA rated bonds with limited credit risk, particularly given the placement of Fannie Mae and Freddie Mac into conservatorship by the federal government in 2008 and because securities issued by others that are collateralized by residential mortgage-backed securities issued by Fannie Mae or Freddie Mac are rated consistently as AAA rated securities. Market interest rate fluctuations can affect the prepayment speed of principal and the yield on the security.

        Premiums and discounts are amortized using the level yield or "interest method" over the terms of the securities. Declines in the fair value of held-to-maturity and available-for sale-securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In determining whether other-than-temporary impairment exists, management considers many factors, including (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent of the Company to hold and the determination of whether the Company will more likely than not be required to sell the security prior to a recovery in fair value. If the Company determines that (1) it intends to sell the security or (2) it is more likely than not that it will be required to sell the security before it's anticipated recovery, the other-than-temporary impairment that is recognized in earnings is equal to the difference between the fair value of the security and the Company's amortized cost in the security. If the Company determines that it (1) does not intend to sell the security and (2) it will not be more likely than not required to sell the security before it's anticipated recovery, the other-than-temporary impairment is segregated into its two components (1) the amount of impairment related to credit loss and (2) the amount of impairment related to other factors. The difference between the present value of the cash flows expected to be collected and the amortized cost is the credit loss recognized through earnings and an adjustment to the cost basis of the security. The amount of impairment related to other factors is included in other comprehensive income (loss). Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

Provision and Allowance for Probable Loan Losses

        The allowance for probable loan losses is maintained at a level considered adequate by management to provide for probable loan losses. The allowance is increased by provisions charged to operating expense and reduced by net charge-offs. The provision for probable loan losses is the amount, which, in the judgment of management, is necessary to establish the allowance for probable loan losses at a level that is adequate to absorb known and inherent risks in the loan portfolio.

        Management believes that the allowance for probable loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company's bank subsidiaries' allowances for probable loan losses. Such agencies may require the Company's bank subsidiaries to make additions or reductions to their U.S. generally accepted accounting principles ("GAAP") allowances based on their judgments of information available to them at the time of their examination.

        The bank subsidiaries charge off that portion of any loan which management considers to represent a loss as well as that portion of any other loan which is classified as a "loss" by bank examiners. Commercial, financial and agricultural or real estate loans are generally considered by management to represent a loss, in whole or part, (i) when an exposure beyond any collateral coverage is apparent, (ii) when no further collection of the portion of the loan so exposed is anticipated based on actual results, (iii) when the credit enhancements, if any, are not adequate, and (iv) when the borrower's financial condition would indicate so. Generally, unsecured consumer loans are charged off when 90 days past due.

Loans

        Loans are reported at the principal balance outstanding, net of unearned discounts. Interest income on loans is reported on an accrual basis. Loan fees and costs associated with originating the loans are amortized over the life of the loan using the interest method. The Company originates mortgage loans that may subsequently be sold to an unaffiliated third party. The loans are not securitized and if sold, are sold without recourse. Loans held for sale are carried at cost and the principal amount outstanding is not significant to the consolidated financial statements.

Impaired Loans

        Impaired loans are those loans where it is probable that all amounts due according to contractual terms of the loan agreement will not be collected. Impaired loans are measured based on (1) the present value of expected future cash flows discounted at the loan's effective interest rate; (2) the loan's observable market price; or (3) the fair value of the collateral if the loan is collateral dependent. Substantially all of the Company's impaired loans are measured at the fair value of the collateral. In limited cases the Company may use other methods to determine the level of impairment of a loan if such loan is not collateral dependent.

Troubled Debt Restructured Loans

        Troubled debt restructured loans ("TDR") are those loans where, for reasons related to a borrower's difficulty to repay a loan, the Company grants a concession to the borrower that the Company would not normally consider in the normal course of business. The original terms of the loan are modified or restructured. The terms that may be modified include a reduction in the original stated interest rate, an extension of the original maturity of the loan, a renewal of the loan at an interest rate below current market rates, a reduction in the principal amount of debt outstanding, a reduction in accrued interest or deferral of interest payments. A loan classified as a TDR is classified as an impaired loan and included in the impaired loan totals. A TDR loan may be returned to accrual status when the loan is brought current, has performed in accordance with the restructured terms for a reasonable period of time and the ultimate collectability of the outstanding principal and interest is no longer questionable, however, although those loans may be placed back on accrual status, they will continue to be classified as impaired. Consistent with regulatory guidance, a TDR loan that is subsequently modified, but has shown sustained performance and classification as a TDR, will be removed from TDR status provided that the modified terms were market-based at the time of modification.

Non-Accrual Loans

        The non-accrual loan policy of the Company's bank subsidiaries is to discontinue the accrual of interest on loans when management determines that it is probable that future interest accruals will be un-collectible. As it relates to consumer loans, management charges off those loans when the loan is contractually 90 days past due. Under special circumstances, a consumer or non-consumer loan may be more than 90 days delinquent as to interest or principal and not be placed on non-accrual status. This situation generally results when a bank subsidiary has a borrower who is experiencing financial difficulties, but not to the extent that requires a restructuring of indebtedness. The majority of this category is composed of loans that are considered to be adequately secured and/or for which there are expected future payments. When a loan is placed on non-accrual status, any interest accrued, not paid is reversed and charged to operations against interest income. As it relates to non-consumer loans that are not 90 days past due, management will evaluate each of these loans to determine if placing the loan on non-accrual status is warranted. Interest income on non-accrual loans is recognized only to the extent payments are received or when, in management's opinion, the debtor's financial condition warrants reestablishment of interest accruals.

Other Real Estate Owned

        Other real estate owned is comprised of real estate acquired by foreclosure and deeds in lieu of foreclosure. Other real estate is carried at the lower of the recorded investment in the property or its fair value less estimated costs to sell such property (as determined by independent appraisal). Prior to foreclosure, the value of the underlying loan is written down to the fair value of the real estate to be acquired by a charge to the allowance for probable loan losses, if necessary. Any subsequent write-downs are charged against other non-interest expense. Other real estate owned totaled $69,872,000 and $85,879,000 at December 31, 2014 and 2013, respectively. Other real estate owned is included in other assets.

Bank Premises and Equipment

        Bank premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed on straight-line and accelerated methods over the estimated useful lives of the assets. Repairs and maintenance are charged to operations as incurred and expenditures for renewals and betterments are capitalized.

Other Investments

        Other investments include equity investments in non-financial companies, bank owned life insurance, as well as equity securities with no readily determinable fair market value. Equity investments are accounted for using the equity method of accounting. Equity securities with no readily determinable fair value are accounted for using the cost method.

Income Taxes

        Deferred income tax assets and liabilities are determined using the asset and liability method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the differences between the book and tax basis of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws. The Company files a consolidated federal income tax return with its subsidiaries.

        Recognition of deferred tax assets is based on management's assessment that the benefit related to certain temporary differences, tax operating loss carry forwards, and tax credits are more likely than not to be realized. A valuation allowance is recorded for the amount of the deferred tax items for which it is more likely than not that the tax benefits will not be realized.

        The Company evaluates uncertain tax positions at the end of each reporting period. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefit recognized in the financial statements from any such a position is measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. As of December 31, 2014 and 2013, respectively, after evaluating all uncertain tax positions, the Company has recorded no liability for unrecognized tax benefits at the end of the reporting period. The Company would recognize any interest accrued on unrecognized tax benefits as other interest expense and penalties as other non-interest expense. During the years ended December 31, 2014, 2013 and 2012, the Company recognized no interest expense or penalties related to uncertain tax positions.

        The Company files consolidated tax returns in the U.S. Federal jurisdiction and various state jurisdictions. The Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years before 2011.

Stock Options

        Compensation expense for stock awards is based on the market price of the stock on the measurement date, which is generally the date of grant, and is recognized ratably over the service period of the award. The fair value of stock options granted was estimated, using the Black-Sholes-Merton option-pricing model. This model was developed for use in estimating the fair value of publicly traded options that have no vesting restrictions and are fully transferable. Additionally, the model requires the input of highly subjective assumptions. Because the Company's employee stock options have characteristics significantly different from those of publicly traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the Black-Scholes-Merton option-pricing model does not necessarily provide a reliable single measure of the fair value of the Company's stock options.

Net Income Per Share

        Basic Earnings Per Share ("EPS") is calculated by dividing net income by the weighted average number of common shares outstanding. The computation of diluted EPS assumes the issuance of common shares for all dilutive potential common shares outstanding during the reporting period. The dilutive effect of stock options is considered in earnings per share calculations, if dilutive, using the treasury stock method.

Goodwill and Identified Intangible Assets

        Goodwill represents the excess of costs over fair value of assets of businesses acquired. Goodwill is tested for impairment at least annually or on an interim basis if an event triggering impairment may have occurred. As of October 1, 2014, after completing goodwill testing, the Company has determined that no goodwill impairment exists.

        Identified intangible assets are acquired assets that lack physical substance but can be distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in combination with a related contract, asset, or liability. The Company's identified intangible assets relate to core deposits and contract rights. As of December 31, 2014, the Company has determined that no impairment of identified intangibles exists. Identified intangible assets with definite useful lives are amortized on an accelerated basis over their estimated life. See Note 6—Goodwill and Other Intangible Assets.

Impairment of Long-Lived Assets

        Long-lived assets, such as property, plant and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying value of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying value of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying value of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the statement of condition and reported at the lower of the carrying value or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the statement of condition.

Consolidated Statements of Cash Flows

        For purposes of the consolidated statements of cash flows, the Company considers all short-term investments with a maturity at date of purchase of three months or less to be cash equivalents. Also, the Company reports transactions related to deposits and loans to customers on a net basis.

Accounting for Transfers and Servicing of Financial Assets

        The Company accounts for transfers and servicing of financial assets and extinguishments of liabilities based on the application of a financial-components approach that focuses on control. After a transfer of financial assets, the Company recognizes the financial and servicing assets it controls and liabilities it has incurred, derecognizes financial assets when control has been surrendered and derecognizes liabilities when extinguished. The Company has retained mortgage servicing rights in connection with the sale of mortgage loans. Because the Company may not initially identify loans as originated for resale, all loans are initially treated as held for investment. The value of the mortgage servicing rights are reviewed periodically for impairment and are amortized in proportion to, and over the period of estimated net servicing income or net servicing losses. The value of the mortgage servicing rights is not significant to the consolidated statements of condition.

Segments of an Enterprise and Related Information

        The Company operates as one segment. The operating information used by the Company's chief executive officer for purposes of assessing performance and making operating decisions about the Company is the consolidated financial statements presented in this report. The Company has four active operating subsidiaries, namely, the bank subsidiaries, otherwise known as International Bank of Commerce, Laredo, Commerce Bank, International Bank of Commerce, Zapata and International Bank of Commerce, Brownsville. The Company applies the provisions of ASC Topic 280, "Segment Reporting," in determining its reportable segments and related disclosures.

Comprehensive Income (Loss)

        Comprehensive income (loss) consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on securities available for sale.

Advertising

        Advertising costs are expensed as incurred.

Reclassifications

        Certain amounts in the prior year's presentations have been reclassified to conform to the current presentation. These reclassifications had no effect on previously reported net income or shareholders' equity.

New Accounting Standards

        In February 2013, the Financial Accounting Standards Board issued Accounting Standards Update No. 2013-02 to ASC 220, "Comprehensive Income." The update amends existing literature to require an entity to provide information about the amounts reclassified out of other comprehensive income by component, and it also requires enhanced disclosure and cross reference on items reclassified out of accumulated other comprehensive income during the reporting period. The update is effective for reporting periods beginning after December 15, 2012. The adoption of the update to existing standards did not have a significant impact to the Company's consolidated financial statements.

        In July 2013, the Financial Accounting Standards Board issued Accounting Standards Update No. 2013-11 to ASC 740, "Income Taxes." The update amends existing literature to eliminate diversity in practice in the presentation of unrecognized tax benefits in instances where a net operating loss carryforward, a similar tax loss or a tax credit carryforward also exist. The update clarifies how the unrecognized tax benefit should be presented in those situations where other tax losses or tax credit carryforwards exist. The update does not change the currently required disclosures for unrecognized tax benefits under current ASC 740 guidance. The update is effective for fiscal years and interim periods within those years beginning after December 15, 2013. The adoption of the update to existing standards did not have a significant impact to the Company's consolidated financial statements.

        In January 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-01 to ASC 323-70, "Investments—Equity Method and Joint Ventures—Accounting for Investments in Qualified Affordable Housing Project." The update issues new guidance for investments in qualified affordable housing projects which permits entities to elect to apply the proportional amortization method to account for the investment when certain conditions are met. The update is effective for public entities for annual and interim periods beginning after December 15, 2014 and is able to be applied retrospectively. The adoption of the update is not expected to have a significant impact to the Company's consolidated financial statements.

        In January 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-04 to ASC 310-40, "Receivables—Troubled Debt Restructurings by Creditors." The update amends existing literature to eliminate diversity in practice by clarifying and defining when an in substance repossession or foreclosure occurs. The terms "in substance repossession or foreclosure" and "physical possession" are not currently defined in the accounting literature, resulting in diversity in practice when a creditor derecognizes a loan receivable and recognizes the real estate property collateralizing the loan receivable as an asset. Additionally, the update requires interim and annual disclosures of both the amount of foreclosed residential real estate property and the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure. The update is effective for annual periods and the interim periods within those annual periods beginning after December 15, 2014. The adoption of the update to existing standards is not expected to have a significant impact to the Company's consolidated financial statements.

        In April 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-08 to ASC 205, "Presentation of Financial Statements," and ASC 360, "Property, Plant and Equipment." The update to existing standards change the requirements for reporting discontinued operations, primarily by clarifying that the disposal of a component or group of components of an entity could constitute discontinued operations under certain circumstances. The update also defines required information in disclosures about discontinued operations, including a discussion of the entity's continued involvement in the discontinued operation, if any. The update is applicable to all disposals of components of an entity that occurred within interim and annual periods beginning after December 15, 2014 and for acquisitions that are classified as held for sale for interim and annual periods beginning after December 15, 2014. The adoption of the update is not expected to have a significant impact to the Company's consolidated financial statements.

        In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09 to ASC 606, "Revenue from Contracts with Customers." The update sets a common standard that defines revenue and the principles for recognizing revenue. The update outlines when an entity should recognize revenue, among other matters. At its core, the update states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The update also outlines the steps that entities should take to determine and record the correct revenue number. The update is effective for annual periods beginning after December 15, 2016 and the interim periods within that reporting period. The Company is evaluating the potential impact to the Company's consolidated financial statements.

        In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-11 to ASC 860, "Transfers and Servicing." The update amends existing standards to require that repurchase-to-maturity transactions be accounted for as secured borrowings, in line with accounting standards for other similar instruments. Additionally, the update requires various disclosures including information regarding transfers accounted for as sales in transactions that are economically similar as repurchase agreements, in addition to disclosures related to collateral, remaining contractual tenor and a discussion of the potential risks associated with repurchase agreements, securities lending transactions and repurchase-to-maturity transactions. The update is effective for interim and annual periods beginning after December 15, 2014. The adoption of the update to existing standards is not expected to have a significant impact to the Company's consolidated financial statements.

        In August 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-14 to ASC 310-40, "Receivables—Troubled Debt Restructurings by Creditors." The update is new guidance regarding classification and measurement of foreclosed mortgage loans that are government guaranteed. The update specifies that government secured mortgage loans foreclosed upon should be classified as other assets and measured based on the amount of the loan balance that is expected to be recovered from the guarantor. The new guidance is effective for interim and annual periods after December 15, 2014. The adoption of the update is not expected to have a significant impact to the Company's consolidated financial statements.

        In January 2015, the Financial Accounting Standards Board issued Accounting Standards Update No. 2015-01 to ASC 225-20, "Income Statement- Extraordinary and Unusual Items." The update amends existing standards and is being issued as part of the FASB's initiative to reduce complexity in accounting standards. The update eliminates the concept of extraordinary items. The update is effective for interim and annual periods after December 15, 2015. The adoption of the update to existing standards is not expected to have a significant impact to the Company's consolidated financial statements.

        In February 2015, the Financial Accounting Standards Board issued Accounting Standards Update No. 2015-02 to ASC 810, "Consolidation." The update amends existing standards regarding the evaluation of certain legal entities and their consolidation in the financial statements. The amendments modify the evaluation process to assess whether limited partnerships and similar legal entities are variable interest entities or voting interest entities, eliminate the presumption that a general partner should consolidate a limited partnership, affect the consolidation analysis of entities that are involved in variable interest entities, particularly those that have fee arrangements and related party relationships and provides a scope exception for reporting entities with legal interests that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. The update is effective for interim and annual periods after December 15, 2015. The Company is evaluating the impact of the adoption of the update.

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International Operations

12 Months Ended

Dec. 31, 2014

International Operations

International Operations

(13) International Operations

        The Company provides international banking services for its customers through its bank subsidiaries. Neither the Company nor its bank subsidiaries have facilities located outside the United States. International operations are distinguished from domestic operations based upon the domicile of the customer.

        Because the resources employed by the Company are common to both international and domestic operations, it is not practical to determine net income generated exclusively from international activities.

        A summary of assets attributable to international operations at December 31, 2014 and 2013 are as follows:

	2014			2013
	(Dollars in Thousands)
Loans:
Commercial	$	150,078		$	142,145
Others		35,143			39,697
		185,221			181,842
Less allowance for probable loan losses		(1,060	)		(1,133	)
Net loans	$	184,161		$	180,709
Accrued interest receivable	$	702		$	617

        At December 31, 2014, the Company had $114,672,000 in outstanding standby and commercial letters of credit to facilitate trade activities.

        Revenues directly attributable to international operations were $6,034,000, $6,085,000 and $7,714,000 for the years ended December 31, 2014, 2013 and 2012, respectively.

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Other Borrowed Funds

12 Months Ended

Dec. 31, 2014

Other Borrowed Funds

Other Borrowed Funds

(9) Other Borrowed Funds

        Other borrowed funds include Federal Home Loan Bank borrowings, which are short and long-term fixed borrowings issued by the Federal Home Loan Bank of Dallas at the market price offered at the time of funding. These borrowings are secured by mortgage-backed investment securities and a portion of the Company's loan portfolio.

        Further information regarding the Company's other borrowed funds at December 31, 2014 and 2013 is set forth in the following table:

	December 31,
	2014			2013
	(Dollars in Thousands)
Federal Home Loan Bank advances—short-term
Balance at year end	$	1,067,700		$	1,215,000
Rate on balance outstanding at year end		.15	%		.17	%
Average daily balance	$	1,077,973		$	833,868
Average rate		.16	%		.16	%
Maximum amount outstanding at any month end	$	1,352,500		$	1,280,500
Federal Home Loan Bank advances—long-term(1)
Balance at year end	$	6,244		$	8,950
Rate on balance outstanding at year end		3.51	%		3.53	%
Average daily balance	$	7,338		$	7,289
Average rate		3.51	%		3.53	%
Maximum amount outstanding at any month end	$	8,934		$	8,993

(1) The amortization of the long-term advances is approximately $160,000 per year for each of the next five years and the final maturity date is January 3, 2028.

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Commitments, Contingent Liabilities and Other Matters (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Commitments, Contingent Liabilities and Other Matters
Total rental expense	$ 7,200,000	$ 7,300,000	$ 8,300,000
Future minimum lease payments due under non-cancellable operating leases
2014	3,505,000
2015	2,454,000
2016	1,168,000
2017	631,000
2018	157,000
Thereafter	122,000
Total	8,037,000
Minimum period for non-cancellable sub-leases	1 year
Aggregate future minimum rentals to be received under non-cancellable sub-leases	85,875,000
Approximate cash maintained to satisfy regulatory reserve requirements	$ 106,841,000	$ 96,087,000

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Bank Premises and Equipment

12 Months Ended

Dec. 31, 2014

Bank Premises and Equipment

Bank Premises and Equipment

(5) Bank Premises and Equipment

        A summary of bank premises and equipment, by asset classification, at December 31, 2014 and 2013 were as follows:

	Estimated useful lives	2014			2013
		(Dollars in Thousands)
Bank buildings and improvements	5 - 40 years	$	509,830		$	470,386
Furniture, equipment and vehicles	1 - 20 years		269,861			260,932
Land			125,414			128,805
Real estate held for future expansion:
Land, building, furniture, fixture and equipment	7 - 27 years		—			511
Less: accumulated depreciation			(378,682	)		(355,792	)
Bank premises and equipment, net		$	526,423		$	504,842

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Investment Securities (Details 4) (Available for sale investments, USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Available for sale investments
Reconciliation of credit-related impairment charges on investments recognized in earnings
Balance at the beginning	$ 11,806	$ 10,432	$ 9,393
Impairment charges recognized during period	817	1,374	1,039
Balance at the end	$ 12,623	$ 11,806	$ 10,432

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Loans

12 Months Ended

Dec. 31, 2014

Loans

Loans

(3) Loans

        A summary of loans, by loan type at December 31, 2014 and 2013 is as follows:

	December 31, 2014		December 31, 2013
	(Dollars in Thousands)
Commercial, financial and agricultural	$	3,107,584	$	2,894,779
Real estate—mortgage		910,326		847,692
Real estate—construction		1,414,977		1,208,508
Consumer		61,137		66,414
Foreign		185,221		181,842
Total loans	$	5,679,245	$	5,199,235

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Allowance for Probable Loan Losses

12 Months Ended

Dec. 31, 2014

Allowance for Probable Loan Losses

Allowance for Probable Loan Losses

(4) Allowance for Probable Loan Losses

        The allowance for probable loan losses primarily consists of the aggregate loan loss allowances of the bank subsidiaries. The allowances are established through charges to operations in the form of provisions for probable loan losses. Loan losses or recoveries are charged or credited directly to the allowances. The allowance for probable loan losses of each bank subsidiary is maintained at a level considered appropriate by management, based on estimated probable losses in the loan portfolio. The allowance for probable loan losses is derived from the following elements: (i) allowances established on specific impaired loans, which are based on a review of the individual characteristics of each loan, including the customer's ability to repay the loan, the underlying collateral values, and the industry in which the customer operates, (ii) allowances based on actual historical loss experience for similar types of loans in the Company's loan portfolio, and (iii) allowances based on general economic conditions, changes in the mix of loans, company resources, border risk and credit quality indicators, among other things. All segments of the loan portfolio continue to be impacted by the prolonged economic downturn. Loans secured by real estate could be impacted negatively by the continued economic environment and resulting decrease in collateral values. Consumer loans may be impacted by continued and prolonged unemployment rates.

        The Company's management continually reviews the allowance for loan losses of the bank subsidiaries using the amounts determined from the allowances established on specific impaired loans, the allowance established on quantitative historical loss percentages, and the allowance based on qualitative data to establish an appropriate amount to maintain in the Company's allowance for loan losses. Should any of the factors considered by management in evaluating the adequacy of the allowance for probable loan losses change, the Company's estimate of probable loan losses could also change, which could affect the level of future provisions for probable loan losses. While the calculation of the allowance for probable loan losses utilizes management's best judgment and all information available, the adequacy of the allowance is dependent on a variety of factors beyond the Company's control, including, among other things, the performance of the entire loan portfolio, the economy, changes in interest rates and the view of regulatory authorities towards loan classifications.

        The loan loss provision is determined using the following methods. On a weekly basis, loan past due reports are reviewed by the credit quality committee to determine if a loan has any potential problems and if a loan should be placed on the Company's internal classified report. Additionally, the Company's credit department reviews the majority of the Company's loans for proper internal classification purposes regardless of whether they are past due and segregates any loans with potential problems for further review. The credit department will discuss the potential problem loans with the servicing loan officers to determine any relevant issues that were not discovered in the evaluation. Also, an analysis of loans that is provided through examinations by regulatory authorities is considered in the review process. After the above analysis is completed, the Company will determine if a loan should be placed on an internal classified report because of issues related to the analysis of the credit, credit documents, collateral and/or payment history.

        While the Texas and Oklahoma economies are performing better than other parts of the country, Texas and Oklahoma are not completely immune to the problems associated with the U.S. economy. The increase in income and capital gains taxes on certain individuals, the increase in payroll taxes, the recent substantial decrease in oil prices, and the unprecedented debt and large deficit of the United States not yet resolved, add uncertainty to the possibility of robust economic growth and may create an adverse effect on the economies of Texas and Oklahoma. Thus, the risk of loss associated with all segments of the loan portfolio in these markets continues to be impacted by prolonged economic uncertainty. Economic risk factors are minimized by the underwriting standards of the bank subsidiaries. The general underwriting standards encompass the following principles: (i) the financial strength of the borrower including strong earnings, a high net worth, significant liquidity and an acceptable debt to worth ratio, (ii) managerial and business competence, (iii) the ability to repay, (iv) for a new business, projected cash flows, (v) loan to value, (vi) in the case of a secondary guarantor, a guarantor financial statement, and (vii) financial and/or other character references. Although the underwriting standards reduce the risk of loss, unique risk factors exist in each type of loan in which the bank subsidiaries invest.

        Commercial and industrial loans are mostly secured by the collateral pledged by the borrower that are directly related to the business activities of the company such as accounts receivable and inventory. The ability of the borrower to collect accounts receivable, and to turn inventory into sales are risk factors in the repayment of the loan.

        Construction and land development loans can carry risk of repayment when projects incur cost overruns, have an increase in the price of building materials, encounter zoning and environmental issues, or encounter other factors that may affect the completion of a project on time and on budget. Additionally, repayment risk may be negatively impacted when the market experiences a deterioration in the value of real estate. Risks specifically related to 1-4 family development loans also include the practice by the mortgage industry of more restrictive underwriting standards, which inhibits the buyer from obtaining long term financing and excessive housing and lot inventory in the market.

        Commercial real estate loans demonstrate a risk of repayment when market values deteriorate, the business experiences turnover in key management, the business has an inability to attract or keep occupancy levels stable, or when the market experiences an exit of a specific business industry that is significant to the local economy, such as a manufacturing plant.

        First and second lien residential 1-4 family mortgage and consumer loan repayments may be affected by unemployment or underemployment and deteriorating market values of real estate.

        A summary of the changes in the allowance for probable loan losses by loan class is as follows:

	December 31, 2014
	Domestic																				Foreign
	Commercial			Commercial real estate: other construction & land development			Commercial real estate: farmland & commercial			Commercial real estate: multifamily		Residential: first lien			Residential: junior lien			Consumer			Foreign			Total
	(Dollars in Thousands)
Balance at December 31,	$	22,433		$	12,541		$	24,467		$	776	$	3,812		$	4,249		$	750		$	1,133		$	70,161
Losses charge to allowance		(19,110	)		(680	)		(1,893	)		—		(351	)		(661	)		(719	)		(51	)		(23,465	)
Recoveries credited to allowance		2,979			72			107			—		49			242			210			50			3,709
Net losses charged to allowance		(16,131	)		(608	)		(1,786	)		—		(302	)		(419	)		(509	)		(1	)		(19,756	)
Provision (credit) charged to operations		16,050			1,022			(3,998	)		70		79			853			419			(72	)		14,423
Balance at December 31,	$	22,352		$	12,955		$	18,683		$	846	$	3,589		$	4,683		$	660		$	1,060		$	64,828

	December 31, 2013
	Domestic																					Foreign
	Commercial			Commercial real estate: other construction & land development			Commercial real estate: farmland & commercial			Commercial real estate: multifamily			Residential: first lien			Residential: junior lien			Consumer			Foreign			Total
	(Dollars in Thousands)
Balance at December 31,	$	11,632		$	12,720		$	21,880		$	694		$	4,390		$	4,448		$	1,289		$	1,140		$	58,193
Losses charge to allowance		(11,737	)		(278	)		(600	)		(5	)		(632	)		(620	)		(561	)		(22	)		(14,455	)
Recoveries credited to allowance		2,690			87			152			—			61			298			162			5			3,455
Net losses charged to allowance		(9,047	)		(191	)		(448	)		(5	)		(571	)		(322	)		(399	)		(17	)		(11,000	)
Provision (credit) charged to operations		19,848			12			3,035			87			(7	)		123			(140	)		10			22,968
Balance at December 31,	$	22,433		$	12,541		$	24,467		$	776		$	3,812		$	4,249		$	750		$	1,133		$	70,161

	December 31, 2012
	Domestic																					Foreign
	Commercial			Commercial real estate: other construction & land development			Commercial real estate: farmland & commercial			Commercial real estate: multifamily			Residential: first lien			Residential: junior lien			Consumer			Foreign			Total
	(Dollars in Thousands)
Balance at December 31,	$	26,617		$	19,940		$	24,227		$	1,003		$	4,562		$	4,760		$	1,724		$	1,359		$	84,192
Losses charge to allowance		(34,721	)		(7,617	)		(13,724	)		—			(227	)		(1,190	)		(756	)		(111	)		(58,346	)
Recoveries credited to allowance		3,547			229			220			—			13			195			184			—			4,388
Net losses charged to allowance		(31,174	)		(7,388	)		(13,504	)		—			(214	)		(995	)		(572	)		(111	)		(53,958	)
Provision (credit) charged to operations		16,189			168			11,157			(309	)		42			683			137			(108	)		27,959
Balance at December 31,	$	11,632		$	12,720		$	21,880		$	694		$	4,390		$	4,448		$	1,289		$	1,140		$	58,193

        The allowance for probable loan losses is a reserve established through a provision for probable loan losses charged to expense, which represents management's best estimate of probable loan losses when evaluating loans (i) individually or (ii) collectively. The Company's allowance for probable loan losses decreased for the year ended December 31, 2014 primarily due to a charge down of a relationship that is mainly secured by multiple pieces of transportation equipment. The relationship also contributed to a change in net losses charged against the allowance for probable loan losses for the same period.

        The table below provides additional information on the balance of loans individually or collectively evaluated for impairment and their related allowance, by loan class:

	December 31, 2014
	Loans individually evaluated for impairment				Loans collectively evaluated for impairment
	Recorded Investment		Allowance		Recorded Investment		Allowance
	(Dollars in Thousands)
Domestic
Commercial	$	40,175	$	9,112	$	1,049,311	$	13,240
Commercial real estate: other construction & land development		10,876		1,890		1,404,101		11,065
Commercial real estate: farmland & commercial		14,166		1,219		1,887,233		17,464
Commercial real estate: multifamily		835		—		115,864		846
Residential: first lien		5,840		—		416,186		3,589
Residential: junior lien		2,895		—		485,405		4,683
Consumer		1,384		—		59,753		660
Foreign		—		—		185,221		1,060
Total	$	76,171	$	12,221	$	5,603,074	$	52,607

	December 31, 2013
	Loans individually evaluated for impairment				Loans collectively evaluated for impairment
	Recorded Investment		Allowance		Recorded Investment		Allowance
	(Dollars in Thousands)
Domestic
Commercial	$	34,183	$	12,234	$	1,008,459	$	10,199
Commercial real estate: other construction & land development		13,976		852		1,194,532		11,689
Commercial real estate: farmland & commercial		16,038		2,916		1,734,001		21,551
Commercial real estate: multifamily		295		—		101,803		776
Residential: first lien		6,153		—		432,309		3,812
Residential: junior lien		3,206		—		406,024		4,249
Consumer		1,606		—		64,808		750
Foreign		436		—		181,406		1,133
Total	$	75,893	$	16,002	$	5,123,342	$	54,159

        Loans accounted for on a non-accrual basis at December 31, 2014, 2013 and 2012 amounted to $63,559,000, $62,823,000 and $71,768,000, respectively. The effect of such non-accrual loans reduced interest income by $4,013,000, $4,088,000 and $2,549,000 for the years ended December 31, 2014, 2013 and 2012, respectively. Amounts received on non-accruals are applied, for financial accounting purposes, first to principal and then to interest after all principal has been collected. Accruing loans contractually past due 90 days or more as to principal or interest payments at December 31, 2014, 2013 and 2012 amounted to $9,988,000, $7,197,000 and $15,033,000, respectively.

        The table below provides additional information on loans accounted for on a non-accrual basis by loan class:

	December 31,
	2014		2013
	(Dollars in Thousands)
Domestic
Commercial	$	40,121	$	34,110
Commercial real estate: other construction & land development		8,621		11,726
Commercial real estate: farmland & commercial		11,903		13,775
Commercial real estate: multifamily		835		295
Residential: first lien		527		1,266
Residential: junior lien		1,523		1,576
Consumer		29		75
Foreign		—		—
Total non-accrual loans	$	63,559	$	62,823

        Impaired loans are those loans where it is probable that all amounts due according to contractual terms of the loan agreement will not be collected. The Company has identified these loans through its normal loan review procedures. Impaired loans are measured based on (1) the present value of expected future cash flows discounted at the loan's effective interest rate; (2) the loan's observable market price; or (3) the fair value of the collateral if the loan is collateral dependent. Substantially all of the Company's impaired loans are measured at the fair value of the collateral. In limited cases the Company may use other methods to determine the level of impairment of a loan if such loan is not collateral dependent. The increase in commercial non-accrual loans at December 31, 2014 compared to December 31, 2013 is mainly due to the addition of a relationship secured by accounts receivables.

        The following tables detail key information regarding the Company's impaired loans by loan class for the year ended December 31, 2014:

	December 31, 2014
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Recognized
	(Dollars in Thousands)
Loans with Related Allowance
Domestic
Commercial	$	19,944	$	20,026	$	9,112	$	19,313	$	—
Commercial real estate: other construction & land development		6,714		6,949		1,890		7,183		—
Commercial real estate: farmland & commercial		5,107		5,257		1,219		6,790		92
Total impaired loans with related allowance	$	31,765	$	32,232	$	12,221	$	33,286	$	92

	December 31, 2014
	Recorded Investment		Unpaid Principal Balance		Average Recorded Investment		Interest Recognized
	(Dollars in Thousands)
Loans with No Related Allowance
Domestic
Commercial	$	20,231	$	20,260	$	18,563	$	4
Commercial real estate: other construction & land development		4,162		4,270		4,882		74
Commercial real estate: farmland & commercial		9,059		10,562		8,664		—
Commercial real estate: multifamily		835		835		363		—
Residential: first lien		5,840		6,034		6,293		273
Residential: junior lien		2,895		2,915		3,035		90
Consumer		1,384		1,386		1,402		3
Foreign		—		—		—		—
Total impaired loans with no related allowance	$	44,406	$	46,262	$	43,202	$	444

        The following tables detail key information regarding the Company's impaired loans by loan class for the year ended December 31, 2013:

	December 31, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Recognized
	(Dollars in Thousands)
Loans with Related Allowance
Domestic
Commercial	$	17,178	$	17,177	$	12,234	$	18,019	$	38
Commercial real estate: other construction & land development		6,818		6,825		852		6,058		—
Commercial real estate: farmland & commercial		7,259		10,697		2,916		7,167		92
Total impaired loans with related allowance	$	31,255	$	34,699	$	16,002	$	31,244	$	130

	December 31, 2013
	Recorded Investment		Unpaid Principal Balance		Average Recorded Investment		Interest Recognized
	(Dollars in Thousands)
Loans with No Related Allowance
Domestic
Commercial	$	17,005	$	17,023	$	16,778	$	2
Commercial real estate: other construction & land development		7,158		7,187		18,164		74
Commercial real estate: farmland & commercial		8,779		9,949		7,313		—
Commercial real estate: multifamily		295		295		322		—
Residential: first lien		6,153		6,258		4,860		179
Residential: junior lien		3,206		3,226		2,347		99
Consumer		1,606		1,612		1,380		1
Foreign		436		436		452		19
Total impaired loans with no related allowance	$	44,638	$	45,986	$	51,616	$	374

        A portion of the impaired loans have adequate collateral and credit enhancements not requiring a related allowance for loan loss. The level of impaired loans is reflective of the economic weakness that has been created by the financial crisis and the subsequent economic downturn. Management is confident the Company's loss exposure regarding these credits will be significantly reduced due to the Company's long-standing practices that emphasize secured lending with strong collateral positions and guarantor support. Management is likewise confident the reserve for probable loan losses is adequate. The Company has no direct exposure to sub-prime loans in its loan portfolio, but the sub-prime crisis has affected the credit markets on a national level, and as a result, the Company has experienced an increasing amount of impaired loans; however, management's decision to place loans in this category does not necessarily mean that the Company will experience significant losses from these loans or significant increases in impaired loans from these levels.

        Management of the Company recognizes the risks associated with these impaired loans. However, management's decision to place loans in this category does not necessarily mean that losses will occur. In the current environment, troubled loan management can be protracted because of the legal and process problems that delay the collection of an otherwise collectable loan. Additionally, management believes that the collateral related to these impaired loans and/or the secondary support from guarantors mitigates the potential for losses from impaired loans.

        The following table details loans accounted for as "troubled debt restructuring," segregated by loan class. Loans accounted for as troubled debt restructuring are included in impaired loans.

	December 31, 2014		December 31, 2013
	(Dollars in Thousands)
Domestic
Commercial	$	2,500	$	150
Commercial real estate: other construction & land development		2,254		8,860
Commercial real estate: farmland & commercial		2,861		2,863
Residential: first lien		5,313		4,887
Residential: junior lien		1,371		1,631
Consumer		1,354		1,531
Foreign		—		436
Total troubled debt restructuring	$	15,653	$	20,358

        The bank subsidiaries charge off that portion of any loan which management considers to represent a loss as well as that portion of any other loan which is classified as a "loss" by bank examiners. Commercial and industrial or real estate loans are generally considered by management to represent a loss, in whole or part, when an exposure beyond any collateral coverage is apparent and when no further collection of the loss portion is anticipated based on the borrower's financial condition and general economic conditions in the borrower's industry. Generally, unsecured consumer loans are charged-off when 90 days past due.

        While management of the Company considers that it is generally able to identify borrowers with financial problems reasonably early and to monitor credit extended to such borrowers carefully, there is no precise method of predicting loan losses. The determination that a loan is likely to be uncollectible and that it should be wholly or partially charged-off as a loss is an exercise of judgment. Similarly, the determination of the adequacy of the allowance for probable loan losses can be made only on a subjective basis. It is the judgment of the Company's management that the allowance for probable loan losses at December 31, 2014 was adequate to absorb probable losses from loans in the portfolio at that date.

        The following table presents information regarding the aging of past due loans by loan class:

	December 31, 2014
	30 - 59 Days		60 - 89 Days		90 Days or Greater		90 Days or greater & still accruing		Total Past due		Current		Total Portfolio
	(Dollars in Thousands)
Domestic
Commercial	$	4,103	$	2,665	$	40,665	$	2,890	$	47,433	$	1,042,053	$	1,089,486
Commercial real estate: other construction & land development		596		10		8,707		439		9,313		1,405,664		1,414,977
Commercial real estate: farmland & commercial		2,905		7,131		10,724		1,711		20,760		1,880,639		1,901,399
Commercial real estate: multifamily		351		—		856		21		1,207		115,492		116,699
Residential: first lien		5,895		1,864		4,267		3,901		12,026		410,000		422,026
Residential: junior lien		899		231		1,931		431		3,061		485,239		488,300
Consumer		896		216		507		482		1,619		59,518		61,137
Foreign		1,616		98		113		113		1,827		183,394		185,221
Total past due loans	$	17,261	$	12,215	$	67,770	$	9,988	$	97,246	$	5,581,999	$	5,679,245

        The increase in loans past due 60 - 89 days at December 31, 2014 compared to December 31, 2013 is primarily due to one loan secured by farmland that was delinquent at year end.

	December 31, 2013
	30 - 59 Days		60 - 89 Days		90 Days or Greater		90 Days or greater & still accruing		Total Past due		Current		Total Portfolio
	(Dollars in Thousands)
Domestic
Commercial	$	4,240	$	538	$	36,066	$	2,051	$	40,844	$	1,001,798	$	1,042,642
Commercial real estate: other construction & land development		1,042		—		9,942		62		10,984		1,197,524		1,208,508
Commercial real estate: farmland & commercial		6,216		520		6,990		417		13,726		1,736,313		1,750,039
Commercial real estate: multifamily		39		142		295		—		476		101,622		102,098
Residential: first lien		4,758		3,046		4,541		3,518		12,345		426,117		438,462
Residential: junior lien		606		198		1,900		368		2,704		406,526		409,230
Consumer		1,523		469		803		781		2,795		63,619		66,414
Foreign		1,467		417		—		—		1,884		179,958		181,842
Total past due loans	$	19,891	$	5,330	$	60,537	$	7,197	$	85,758	$	5,113,477	$	5,199,235

        The Company's internal classified report is segregated into the following categories: (i) "Special Review Credits," (ii) "Watch List—Pass Credits," or (iii) "Watch List—Substandard Credits." The loans placed in the "Special Review Credits" category reflect the Company's opinion that the loans reflect potential weakness which require monitoring on a more frequent basis. The "Special Review Credits" are reviewed and discussed on a regular basis with the credit department and the lending staff to determine if a change in category is warranted. The loans placed in the "Watch List—Pass Credits" category reflect the Company's opinion that the credit contains weaknesses which represent a greater degree of risk, which warrant "extra attention." The "Watch List—Pass Credits" are reviewed and discussed on a regular basis with the credit department and the lending staff to determine if a change in category is warranted. The loans placed in the "Watch List—Substandard Credits" classification are considered to be potentially inadequately protected by the current sound worth and debt service capacity of the borrower or of any pledged collateral. These credit obligations, even if apparently protected by collateral value, have shown defined weaknesses related to adverse financial, managerial, economic, market or political conditions which may jeopardize repayment of principal and interest. Furthermore, there is the possibility that some future loss could be sustained by the Company if such weaknesses are not corrected. For loans that are classified as impaired, management evaluates these credits in accordance with the provisions of ASC 310-10, "Receivables," and, if deemed necessary, a specific reserve is allocated to the credit. The specific reserve allocated under ASC 310-10, is based on (i) the present value of expected future cash flows discounted at the loan's effective interest rate; (ii) the loan's observable market price; or (iii) the fair value of the collateral if the loan is collateral dependent. Substantially all of the Company's loans evaluated as impaired under ASC 310-10 are measured using the fair value of collateral method. In limited cases, the Company may use other methods to determine the specific reserve of a loan under ASC 310-10 if such loan is not collateral dependent.

        The allowance based on historical loss experience on the Company's remaining loan portfolio, which includes the "Special Review Credits," "Watch List—Pass Credits," and "Watch List—Substandard Credits" is determined by segregating the remaining loan portfolio into certain categories such as commercial loans, installment loans, international loans, loan concentrations and overdrafts. Installment loans are then further segregated by number of days past due. A historical loss percentage, adjusted for (i) management's evaluation of changes in lending policies and procedures, (ii) current economic conditions in the market area served by the Company, (iii) other risk factors, (iv) the effectiveness of the internal loan review function, (v) changes in loan portfolios, and (vi) the composition and concentration of credit volume is applied to each category. Each category is then added together to determine the allowance allocated under ASC 450-20.

        As discussed above and in line with its customary loan review process, the Company identified and re-classified a loan relationship in the commercial category to Special Review, causing an increase in that category at December 31, 2014 compared to December 31, 2013. Additionally, there was a decrease in the commercial real estate farmland and commercial Special Review category at December 31, 2014 compared to December 31, 2013 due to a relationship being reclassified to the Watch List-Substandard category during 2014. A construction and land development loan within the relationship was classified as Watch List-Substandard from pass during the same period. The decrease in commercial construction and land development Special Review credits at December 31, 2014 compared to December 31, 2013 can be attributed to a relationship that was paid off in 2014.

        A summary of the loan portfolio by credit quality indicator by loan class is as follows:

			December 31, 2014
	Pass		Special Review		Watch List—Pass		Watch List— Substandard		Watch List— Impaired
			(Dollars in Thousands)
Domestic
Commercial	$	961,490	$	38,382	$	3,793	$	45,646	$	40,175
Commercial real estate: other construction & land development		1,353,971		1,005		10,428		38,697		10,876
Commercial real estate: farmland & commercial		1,754,741		11,674		23,453		97,365		14,166
Commercial real estate: multifamily		115,729		—		—		135		835
Residential: first lien		412,668		3,500		—		18		5,840
Residential: junior lien		484,968		—		—		437		2,895
Consumer		59,622		—		—		131		1,384
Foreign		185,221		—		—		—		—
Total	$	5,328,410	$	54,561	$	37,674	$	182,429	$	76,171

			December 31, 2013
	Pass		Special Review		Watch List—Pass		Watch List— Substandard		Watch List— Impaired
			(Dollars in Thousands)
Domestic
Commercial	$	955,522	$	2,270	$	4,389	$	46,278	$	34,183
Commercial real estate: other construction & land development		1,167,295		14,247		9,318		3,672		13,976
Commercial real estate: farmland & commercial		1,635,179		56,438		21,912		20,472		16,038
Commercial real estate: multifamily		100,948		—		—		855		295
Residential: first lien		432,067		122		—		120		6,153
Residential: junior lien		405,731		—		—		293		3,206
Consumer		64,808		—		—		—		1,606
Foreign		180,837		—		—		569		436
Total	$	4,942,387	$	73,077	$	35,619	$	72,259	$	75,893

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Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2014

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

(6) Goodwill and Other Intangible Assets

        The majority of the Company's identified intangibles are in the form of amortizable core deposit premium, with the exception of $501,000, which represents identified intangibles in the acquisition of the rights to the insurance agency contracts of InsCorp, Inc., acquired in 2008. Information on the Company's identified intangible assets follows:

	Carrying Amount		Accumulated Amortization		Net
	(Dollars in Thousands)
December 31, 2014:
Core deposit premium	$	58,675	$	58,379	$	296
Identified intangible (contract rights)		2,022		1,521		501
Total identified intangibles	$	60,697	$	59,900	$	797
December 31, 2013:
Core deposit premium	$	58,675	$	56,298	$	2,377
Identified intangible (contract rights)		2,022		1,213		809
Total identified intangibles	$	60,697	$	57,511	$	3,186

        Amortization expense of intangible assets for the years ended December 31, 2014, 2013 and 2012, was $2,389,000, $4,633,000 and $4,651,000, respectively. Estimated amortization expense for each of the five succeeding fiscal years, and thereafter, is as follows:

        Fiscal year ending December 31:

	Total
	(in thousands)
2015	$	452
2016		295
2017		25
2018		25
2019		—
Thereafter		—
Total	$	797

        There were no changes in the carrying amount of goodwill for the years ended December 31, 2014 and 2013.

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Allowance for Probable Loan Losses (Details 3) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Loan loss allowances, financing receivable past due
Non-accrual loans, total	$ 63,559,000	$ 62,823,000	$ 71,768,000
Reduced interest income on non-accrual loans	4,013,000	4,088,000	2,549,000
Accruing loans contractually past due 90 days or more as to principal or interest payments	9,988,000	7,197,000	15,033,000
Commercial
Loan loss allowances, financing receivable past due
Non-accrual loans, total	40,121,000	34,110,000
Accruing loans contractually past due 90 days or more as to principal or interest payments	2,890,000	2,051,000
Commercial real estate: other construction and land development
Loan loss allowances, financing receivable past due
Non-accrual loans, total	8,621,000	11,726,000
Accruing loans contractually past due 90 days or more as to principal or interest payments	439,000	62,000
Commercial real estate: farmland and commercial
Loan loss allowances, financing receivable past due
Non-accrual loans, total	11,903,000	13,775,000
Accruing loans contractually past due 90 days or more as to principal or interest payments	1,711,000	417,000
Commercial real estate: multifamily
Loan loss allowances, financing receivable past due
Non-accrual loans, total	835,000	295,000
Accruing loans contractually past due 90 days or more as to principal or interest payments	21,000
Residential: first lien
Loan loss allowances, financing receivable past due
Non-accrual loans, total	527,000	1,266,000
Accruing loans contractually past due 90 days or more as to principal or interest payments	3,901,000	3,518,000
Residential: junior lien
Loan loss allowances, financing receivable past due
Non-accrual loans, total	1,523,000	1,576,000
Accruing loans contractually past due 90 days or more as to principal or interest payments	431,000	368,000
Consumer Loan
Loan loss allowances, financing receivable past due
Non-accrual loans, total	29,000	75,000
Accruing loans contractually past due 90 days or more as to principal or interest payments	$ 482,000	$ 781,000

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Transactions with Related Parties (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Transactions with Related Parties
Aggregate amount receivable from related parties	$ 26,382,000	$ 51,554,000

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Allowance for Probable Loan Losses (Details 5) (USD $)	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Financing receivable recorded investment
Past due 30-59 days	$ 17,261,000	$ 19,891,000
Past due 60-89 days	12,215,000	5,330,000
Past due 90 days or greater	67,770,000	60,537,000
Past due 90 days or greater and still accruing	9,988,000	7,197,000	15,033,000
Past due, total	97,246,000	85,758,000
Loans, current	5,581,999,000	5,113,477,000
Total loans	5,679,245,000	5,199,235,000
Commercial
Financing receivable recorded investment
Past due 30-59 days	4,103,000	4,240,000
Past due 60-89 days	2,665,000	538,000
Past due 90 days or greater	40,665,000	36,066,000
Past due 90 days or greater and still accruing	2,890,000	2,051,000
Past due, total	47,433,000	40,844,000
Loans, current	1,042,053,000	1,001,798,000
Total loans	1,089,486,000	1,042,642,000
Commercial real estate: other construction and land development
Financing receivable recorded investment
Past due 30-59 days	596,000	1,042,000
Past due 60-89 days	10,000
Past due 90 days or greater	8,707,000	9,942,000
Past due 90 days or greater and still accruing	439,000	62,000
Past due, total	9,313,000	10,984,000
Loans, current	1,405,664,000	1,197,524,000
Total loans	1,414,977,000	1,208,508,000
Commercial real estate: farmland and commercial
Financing receivable recorded investment
Past due 30-59 days	2,905,000	6,216,000
Past due 60-89 days	7,131,000	520,000
Past due 90 days or greater	10,724,000	6,990,000
Past due 90 days or greater and still accruing	1,711,000	417,000
Past due, total	20,760,000	13,726,000
Loans, current	1,880,639,000	1,736,313,000
Total loans	1,901,399,000	1,750,039,000
Commercial real estate: multifamily
Financing receivable recorded investment
Past due 30-59 days	351,000	39,000
Past due 60-89 days		142,000
Past due 90 days or greater	856,000	295,000
Past due 90 days or greater and still accruing	21,000
Past due, total	1,207,000	476,000
Loans, current	115,492,000	101,622,000
Total loans	116,699,000	102,098,000
Residential: first lien
Financing receivable recorded investment
Past due 30-59 days	5,895,000	4,758,000
Past due 60-89 days	1,864,000	3,046,000
Past due 90 days or greater	4,267,000	4,541,000
Past due 90 days or greater and still accruing	3,901,000	3,518,000
Past due, total	12,026,000	12,345,000
Loans, current	410,000,000	426,117,000
Total loans	422,026,000	438,462,000
Residential: junior lien
Financing receivable recorded investment
Past due 30-59 days	899,000	606,000
Past due 60-89 days	231,000	198,000
Past due 90 days or greater	1,931,000	1,900,000
Past due 90 days or greater and still accruing	431,000	368,000
Past due, total	3,061,000	2,704,000
Loans, current	485,239,000	406,526,000
Total loans	488,300,000	409,230,000
Consumer Loan
Financing receivable recorded investment
Past due 30-59 days	896,000	1,523,000
Past due 60-89 days	216,000	469,000
Past due 90 days or greater	507,000	803,000
Past due 90 days or greater and still accruing	482,000	781,000
Past due, total	1,619,000	2,795,000
Loans, current	59,518,000	63,619,000
Total loans	61,137,000	66,414,000
Foreign
Financing receivable recorded investment
Past due 30-59 days	1,616,000	1,467,000
Past due 60-89 days	98,000	417,000
Past due 90 days or greater	113,000
Past due 90 days or greater and still accruing	113,000
Past due, total	1,827,000	1,884,000
Loans, current	183,394,000	179,958,000
Total loans	$ 185,221,000	$ 181,842,000

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Allowance for Probable Loan Losses (Details 2) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Loan loss allowances, impaired financing receivable, evaluated individually or collectively
Loans individually evaluated for impairment, Recorded Investment	$ 76,171	$ 75,893
Loans individually evaluated for impairment, Allowance	12,221	16,002
Loans collectively evaluated for impairment, Recorded Investment	5,603,074	5,123,342
Loans collectively evaluated for impairment, Allowance	52,607	54,159
Commercial
Loan loss allowances, impaired financing receivable, evaluated individually or collectively
Loans individually evaluated for impairment, Recorded Investment	40,175	34,183
Loans individually evaluated for impairment, Allowance	9,112	12,234
Loans collectively evaluated for impairment, Recorded Investment	1,049,311	1,008,459
Loans collectively evaluated for impairment, Allowance	13,240	10,199
Commercial real estate: other construction and land development
Loan loss allowances, impaired financing receivable, evaluated individually or collectively
Loans individually evaluated for impairment, Recorded Investment	10,876	13,976
Loans individually evaluated for impairment, Allowance	1,890	852
Loans collectively evaluated for impairment, Recorded Investment	1,404,101	1,194,532
Loans collectively evaluated for impairment, Allowance	11,065	11,689
Commercial real estate: farmland and commercial
Loan loss allowances, impaired financing receivable, evaluated individually or collectively
Loans individually evaluated for impairment, Recorded Investment	14,166	16,038
Loans individually evaluated for impairment, Allowance	1,219	2,916
Loans collectively evaluated for impairment, Recorded Investment	1,887,233	1,734,001
Loans collectively evaluated for impairment, Allowance	17,464	21,551
Commercial real estate: multifamily
Loan loss allowances, impaired financing receivable, evaluated individually or collectively
Loans individually evaluated for impairment, Recorded Investment	835	295
Loans collectively evaluated for impairment, Recorded Investment	115,864	101,803
Loans collectively evaluated for impairment, Allowance	846	776
Residential: first lien
Loan loss allowances, impaired financing receivable, evaluated individually or collectively
Loans individually evaluated for impairment, Recorded Investment	5,840	6,153
Loans collectively evaluated for impairment, Recorded Investment	416,186	432,309
Loans collectively evaluated for impairment, Allowance	3,589	3,812
Residential: junior lien
Loan loss allowances, impaired financing receivable, evaluated individually or collectively
Loans individually evaluated for impairment, Recorded Investment	2,895	3,206
Loans collectively evaluated for impairment, Recorded Investment	485,405	406,024
Loans collectively evaluated for impairment, Allowance	4,683	4,249
Consumer Loan
Loan loss allowances, impaired financing receivable, evaluated individually or collectively
Loans individually evaluated for impairment, Recorded Investment	1,384	1,606
Loans collectively evaluated for impairment, Recorded Investment	59,753	64,808
Loans collectively evaluated for impairment, Allowance	660	750
Foreign
Loan loss allowances, impaired financing receivable, evaluated individually or collectively
Loans individually evaluated for impairment, Recorded Investment		436
Loans collectively evaluated for impairment, Recorded Investment	185,221	181,406
Loans collectively evaluated for impairment, Allowance	$ 1,060	$ 1,133

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Fair Value (Details 4) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Deposits
Carrying amount of time deposits	$ 2,482,692,000	$ 2,651,303,000
Significant Other Observable Inputs (Level 2)
Other borrowed funds
Carrying amount of the long-term FHLB borrowings	6,244,000	8,950,000
Estimated fair value of long-term FHLB borrowings	6,645,000	8,950,000
Significant Unobservable Inputs (Level 3)
Loans
Carrying amount of fixed rate performing loans	1,352,147,000	1,243,252,000
Estimated fair value of fixed rate performing loans	1,285,648,000	1,196,916,000
Deposits
Carrying amount of time deposits	2,482,692,000	2,651,303,000
Estimated fair value of time deposits	2,480,390,000	2,649,452,000
Securities Sold Under Repurchase Agreements
Carrying amount of long-term repurchase agreements	610,000,000	710,000,000
Estimated fair value of long-term repurchase agreements	$ 558,097,100	$ 792,215,500

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International Bancshares Corporation (Parent Company Only) Financial Information Statements of Cash Flows

12 Months Ended

Dec. 31, 2014

International Bancshares Corporation (Parent Company Only) Financial Information Statements of Cash Flows

International Bancshares Corporation (Parent Company Only) Financial Information Statements of Cash Flows

(24) International Bancshares Corporation (Parent Company Only) Financial Information

Statements of Cash Flows
(Parent Company Only)

Years ended December 31, 2014, 2013 and 2012
(Dollars in Thousands)

	2014			2013			2012
Operating activities:
Net income	$	153,151		$	126,351		$	107,835
Adjustments to reconcile net income to net cash provided by operating activities:
Impairment charges on available for sale securities		254			754			—
Stock compensation expense		1,058			414			474
Increase (decrease) in other liabilities		416			(969	)		6,711
Equity in (undistributed) distributed net income of subsidiaries		(79,695	)		(93,089	)		119,181
Net cash provided by operating activities		75,184			33,461			234,201
Investing activities:
Principal collected on mortgage-backed securities		1,301			1,207			1,985
Net decrease in notes receivable		109			96			86
(Increase) decrease in other assets and other investments		(7,008	)		432			6,418
Net cash (used in) provided by investing activities		(5,598	)		1,735			8,489
Financing activities:
Repayment of trust preferred securities		(15,310	)		—			—
Redemption of preferred shares		—			—			(216,000	)
Proceeds from stock transactions		555			265			51
Payments of cash dividends—common		(34,762	)		(28,894	)		(26,894	)
Payments of cash dividends—preferred		—			—			(10,260	)
Purchase of treasury stock		(18,923	)		—			(1,716	)
Net cash used in financing activities		(68,440	)		(28,629	)		(254,819	)
Increase (decrease) in cash		1,146			6,567			(12,129	)
Cash at beginning of year		8,106			1,539			13,668
Cash at end of year	$	9,252		$	8,106		$	1,539

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Capital Requirements (Tables)

12 Months Ended

Dec. 31, 2014

Capital Requirements

Schedule of the Company's and the bank subsidiaries' actual capital amounts and ratios

	Actual					For Capital Adequacy Purposes					To Be Well-Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
						(greater than or equal to)		(greater than or equal to)			(greater than or equal to)		(greater than or equal to)
	(Dollars in Thousands)
As of December 31, 2014:
Total Capital (to Risk Weighted Assets):
Consolidated	$	1,524,998		20.24	%	$	602,847		8.00	%		N/A		N/A
International Bank of Commerce, Laredo		1,131,528		17.31			523,006		8.00		$	653,757		10.00	%
International Bank of Commerce, Brownsville		151,489		28.60			42,381		8.00			52,976		10.00
International Bank of Commerce, Zapata		60,946		33.83			14,412		8.00			18,041		10.00
Commerce Bank		68,291		37.42			14,600		8.00			18,251		10.00
Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	1,457,068		19.34	%	$	301,424		4.00	%		N/A		N/A
International Bank of Commerce, Laredo		1,071,360		16.39			261,503		4.00		$	392,254		6.00	%
International Bank of Commerce, Brownsville		145,584		27.48			21,190		4.00			31,785		6.00
International Bank of Commerce, Zapata		60,035		33.33			7,206		4.00			10,809		6.00
Commerce Bank		67,347		36.90			7,300		4.00			10,950		6.00
Tier 1 Capital (to Average Assets):
Consolidated	$	1,457,068		12.33	%	$	472,864		4.00	%	$	N/A		N/A
International Bank of Commerce, Laredo		1,071,360		11.22			381,804		4.00			477,255		5.00	%
International Bank of Commerce, Brownsville		145,584		13.96			41,717		4.00			52,146		5.00
International Bank of Commerce, Zapata		60,035		10.88			22,081		4.00			27,602		5.00
Commerce Bank		67,347		12.04			22,373		4.00			27,966		5.00

	Actual					For Capital Adequacy Purposes					To Be Well-Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
						(greater than or equal to)		(greater than or equal to)			(greater than or equal to)		(greater than or equal to)
	(Dollars in Thousands)
As of December 31, 2013:
Total Capital (to Risk Weighted Assets):
Consolidated	$	1,442,837		20.36	%	$	566,870		8.00	%		N/A		N/A
International Bank of Commerce, Laredo		1,035,189		16.96			488,303		8.00		$	610,378		10.00	%
International Bank of Commerce, Brownsville		143,879		27.63			41,652		8.00			52,065		10.00
International Bank of Commerce, Zapata		57,675		32.65			14,130		8.00			17,663		10.00
Commerce Bank		64,585		36.45			14,175		8.00			17,719		10.00
Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	1,369,657		19.33	%	$	283,435		4.00	%		N/A		N/A
International Bank of Commerce, Laredo		969,731		15.89			244,151		4.00		$	366,227		6.00	%
International Bank of Commerce, Brownsville		138,467		26.60			20,826		4.00			31,239		6.00
International Bank of Commerce, Zapata		56,459		31.96			7,065		4.00			10,598		6.00
Commerce Bank		63,491		35.83			7,087		4.00			10,631		6.00
Tier 1 Capital (to Average Assets):
Consolidated	$	1,369,657		11.61	%	$	472,044		4.00	%	$	N/A		N/A
International Bank of Commerce, Laredo		969,731		10.09			384,497		4.00			480,622		5.00	%
International Bank of Commerce, Brownsville		138,467		13.33			41,553		4.00			51,942		5.00
International Bank of Commerce, Zapata		56,459		10.64			21,219		4.00			26,523		5.00
Commerce Bank		63,491		11.88			21,372		4.00			26,715		5.00

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Earnings per Share ("EPS")

12 Months Ended

Dec. 31, 2014

Earnings per Share ("EPS")

Earnings per Share ("EPS")

(11) Earnings per Share ("EPS")

        Basic EPS is calculated by dividing net income by the weighted average number of common shares outstanding. The computation of diluted EPS assumes the issuance of common shares for all dilutive potential common shares outstanding during the reporting period. The calculation of the basic EPS and the diluted EPS for the years ended December 31, 2014, 2013, and 2012 is set forth in the following table:

	Net Income (Numerator)		Shares (Denominator)		Per Share Amount
	(Dollars in Thousands, Except Per Share Amounts)
December 31, 2014:
Basic EPS
Net income available to common shareholders	$	153,151		66,872,500	$	2.29
Potential dilutive common shares and warrants		—		183,956
Diluted EPS	$	153,151		67,056,456	$	2.28
December 31, 2013:
Basic EPS
Net income available to common shareholders	$	126,351		67,195,180	$	1.88
Potential dilutive common shares		—		119,679
Diluted EPS	$	126,351		67,314,859	$	1.88
December 31, 2012:
Basic EPS
Net income available to common shareholders	$	93,473		67,236,681	$	1.39
Potential dilutive common shares		—		77,282
Diluted EPS	$	93,473		67,313,963	$	1.39

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Long Term Restricted Stock Units

12 Months Ended

Dec. 31, 2014

Long Term Restricted Stock Units

Long Term Restricted Stock Units

(16) Long Term Restricted Stock Units

        As a participant in the Troubled Asset Relief Program Capital Purchase Program (the "CPP") until November 28, 2012, the Company was subject to certain compensation restrictions, which included a prohibition on the payment or accrual of any bonuses (including equity-based incentive compensation) to certain officers and employees except for awards of CPP-compliant long-term restricted stock and stock units.

        On December 18, 2009, the Company's board of directors (the "Board") adopted the 2009 International Bancshares Corporation Long-Term Restricted Stock Unit Plan (the "Plan") to give the Company additional flexibility in the compensation of its officers, employees, consultants and advisors in compliance with all applicable laws and restrictions.

        The Plan authorizes the Company to issue Restricted Stock Units ("RSUs") to officers, employees, consultants and advisors of the Company and its subsidiaries. The Plan provides that RSUs shall be issued by a committee of the Board appointed by the Board from time to time consisting of at least two (2) members of the Board, each of whom is both a non-employee director and an outside director. On December 18, 2009, the Board adopted resolutions creating the Long-Term Restricted Stock Unit Plan Committee to administer the Plan. RSUs issued under the Plan are not equity and are payable only in cash. The Plan provides for both the issuance of CPP-compliant long-term RSUs as well as RSUs that are not CPP-compliant.

        Dennis E. Nixon, the Company's President, Chairman of the Board and a director of the Company, was awarded CPP-compliant RSU's granted as of December 19, 2012, December 16, 2011, December 15, 2010 and December 18, 2009 of $425,000, $400,000, $400,000 and $250,000 for his performance in 2012, 2011, 2010 and 2009, respectively. In order to meet the requirements of a CPP-compliant RSU, Mr. Nixon's RSUs do not exceed one-third of his total annual compensation in the respective year. Mr. Nixon's 2009 and 2010 RSU's vested and were paid in December 2012 in the respective cash amounts of $262,842 and $358,782. The 2011 RSU vested and was paid in December 2013 in the cash amount of $591,344. The 2012 RSU vested and was paid in December 2014 in the cash amount of $572,746.

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International Bancshares Corporation (Parent Company Only) Financial Information Statements of Cash Flows (Details) (USD $)	12 Months Ended			48 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Nov. 28, 2012
Operating activities:
Net income	$ 153,151,000	$ 126,351,000	$ 107,835,000
Adjustments to reconcile net income to net cash provided by operating activities:
Impairment charges on available for sale securities	817,000	1,374,000	1,039,000
Stock compensation expense	1,058,000	414,000	474,000
Increase (decrease) in other liabilities	(7,482,000)	(2,274,000)	7,106,000
Net cash provided by operating activities	193,037,000	209,126,000	160,013,000
Investing activities:
Principal collected on mortgage-backed securities	787,361,000	1,223,532,000	1,294,197,000
Net cash used in investing activities	(90,399,000)	(447,649,000)	(261,016,000)
Financing activities:
Redemption of preferred shares			(216,000,000)
Proceeds from stock transactions	555,000	265,000	51,000
Payments of cash dividends - common	(34,762,000)	(28,894,000)	(26,894,000)
Payments of cash dividends - preferred			(10,260,000)	(41,520,139)
Purchase of treasury stock	(18,923,000)		(1,716,000)
Net cash (used in) provided by financing activities	(122,277,000)	230,208,000	122,218,000
(Decrease) increase in cash and cash equivalents	(19,639,000)	(8,315,000)	21,215,000
Cash and cash equivalents at beginning of year	274,785,000	283,100,000	261,885,000
Cash and cash equivalents at end of year	255,146,000	274,785,000	283,100,000
Parent Company
Operating activities:
Net income	153,151,000	126,351,000	107,835,000
Adjustments to reconcile net income to net cash provided by operating activities:
Impairment charges on available for sale securities	254,000	754,000
Stock compensation expense	1,058,000	414,000	474,000
Increase (decrease) in other liabilities	416,000	(969,000)	6,711,000
Equity in (undistributed) distributed net income of subsidiaries	(79,695,000)	(93,089,000)	119,181,000
Net cash provided by operating activities	75,184,000	33,461,000	234,201,000
Investing activities:
Principal collected on mortgage-backed securities	1,301,000	1,207,000	1,985,000
Net decrease in notes receivable	109,000	96,000	86,000
(Increase) decrease in other assets and other investments	(7,008,000)	432,000	6,418,000
Net cash used in investing activities	(5,598,000)	1,735,000	8,489,000
Financing activities:
Repayment of trust preferred securities	(15,310,000)
Redemption of preferred shares			(216,000,000)
Proceeds from stock transactions	555,000	265,000	51,000
Payments of cash dividends - common	(34,762,000)	(28,894,000)	(26,894,000)
Payments of cash dividends - preferred			(10,260,000)
Purchase of treasury stock	(18,923,000)		(1,716,000)
Net cash (used in) provided by financing activities	(68,440,000)	(28,629,000)	(254,819,000)
(Decrease) increase in cash and cash equivalents	1,146,000	6,567,000	(12,129,000)
Cash and cash equivalents at beginning of year	8,106,000	1,539,000	13,668,000
Cash and cash equivalents at end of year	$ 9,252,000	$ 8,106,000	$ 1,539,000

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Commitments, Contingent Liabilities and Other Matters (Tables)

12 Months Ended

Dec. 31, 2014

Commitments, Contingent Liabilities and Other Matters

Schedule of future minimum lease payments due under non-cancellable operating leases

	Total
	(in thousands)
2015	$	3,505
2016		2,454
2017		1,168
2018		631
2019		157
Thereafter		122
Total	$	8,037

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Deposits (Tables)

12 Months Ended

Dec. 31, 2014

Deposits.

Schedule of deposits and related interest expense

	2014		2013
	(Dollars in Thousands)
Deposits:
Demand—non-interest bearing
Domestic	$	2,382,935	$	2,175,694
Foreign		547,318		490,816
Total demand non-interest bearing		2,930,253		2,666,510
Savings and interest bearing demand
Domestic		2,488,458		2,364,905
Foreign		537,222		560,707
Total savings and interest bearing demand		3,025,680		2,925,612
Time, certificates of deposit $100,000 or more
Domestic		835,792		856,700
Foreign		864,346		938,940
Less than $100,000
Domestic		482,089		531,503
Foreign		300,465		324,160
Total time, certificates of deposit		2,482,692		2,651,303
Total deposits	$	8,438,625	$	8,243,425

	2014		2013		2012
	(Dollars in Thousands)
Interest expense:
Savings and interest bearing demand
Domestic	$	2,998	$	3,182	$	4,487
Foreign		599		580		801
Total savings and interest bearing demand		3,597		3,762		5,288
Time, certificates of deposit $100,000 or more
Domestic		4,615		5,761		8,263
Foreign		4,529		5,590		9,148
Less than $100,000
Domestic		2,074		3,065		4,945
Foreign		815		1,028		1,617
Total time, certificates of deposit		12,033		15,444		23,973
Total interest expense on deposits	$	15,630	$	19,206	$	29,261

Scheduled maturities of time deposits

	Total
	(in thousands)
2015	$	2,177,266
2016		203,928
2017		76,206
2018		23,481
2019		1,751
Thereafter		60
Total	$	2,482,692

Scheduled maturities of time deposits in amounts of $100,000 or more

        Scheduled maturities of time deposits in amounts of $100,000 or more at December 31, 2014, were as follows:

Due within 3 months or less	$	631,083
Due after 3 months and within 6 months		409,400
Due after 6 months and within 12 months		443,860
Due after 12 months		215,795
	$	1,700,138

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Consolidated Statements of Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Consolidated Statements of Income
Impairment charges, other-than-temporary impairment charges	$ (366)	$ (431)	$ (916)
Impairment charges, other comprehensive (loss) income	$ 1,183	$ 1,805	$ (123)

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Capital Requirements (Details 2) (USD $) In Thousands, unless otherwise specified	0 Months Ended
	Jan. 01, 2015	Dec. 31, 2014	Dec. 31, 2013
Capital Requirements
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent)		4.00%
Forecast
Capital Requirements
Total Capital (to Risk Weighted Assets), Actual Amount	$ 500,000
Total Capital (to Risk Weighted Assets), Actual Ratio (as a percent)	4.50%
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent)	2.50%
Term of mandatory compliance	4 years
Parent Company
Capital Requirements
Total Capital (to Risk Weighted Assets), Actual Amount		1,524,998	1,442,837
Tier 1 Capital (to Risk Weighted Assets), Actual Amount		1,457,068	1,369,657
Tier 1 Capital (to Average Assets), Actual Amount		1,457,068	1,369,657
Total Capital (to Risk Weighted Assets), Actual Ratio (as a percent)		20.24%	20.36%
Tier 1 Capital (to Risk Weighted Assets), Actual Ratio (as a percent)		19.34%	19.33%
Tier 1 Capital (to Average Assets), Actual Ratio (as a percent)		12.33%	11.61%
Parent Company | Minimum
Capital Requirements
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount		602,847	566,870
Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount		301,424	283,435
Tier 1 Capital (to Average Assets), For Capital Adequacy Purposes Amount		472,864	472,044
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent)		8.00%	8.00%
Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent)		4.00%	4.00%
Tier 1 Capital (to Average Assets), For Capital Adequacy Purposes Ratio (as a percent)		4.00%	4.00%
International Bank of Commerce, Laredo
Capital Requirements
Total Capital (to Risk Weighted Assets), Actual Amount		1,131,528	1,035,189
Tier 1 Capital (to Risk Weighted Assets), Actual Amount		1,071,360	969,731
Tier 1 Capital (to Average Assets), Actual Amount		1,071,360	969,731
Total Capital (to Risk Weighted Assets), Actual Ratio (as a percent)		17.31%	16.96%
Tier 1 Capital (to Risk Weighted Assets), Actual Ratio (as a percent)		16.39%	15.89%
Tier 1 Capital (to Average Assets), Actual Ratio (as a percent)		11.22%	10.09%
International Bank of Commerce, Laredo | Minimum
Capital Requirements
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount		523,006	488,303
Total Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount		653,757	610,378
Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount		261,503	244,151
Tier 1 Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount		392,254	366,227
Tier 1 Capital (to Average Assets), For Capital Adequacy Purposes Amount		381,804	384,497
Tier 1 Capital (to Average Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount		477,255	480,622
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent)		8.00%	8.00%
Total Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent)		10.00%	10.00%
Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent)		4.00%	4.00%
Tier 1 Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent)		6.00%	6.00%
Tier 1 Capital (to Average Assets), For Capital Adequacy Purposes Ratio (as a percent)		4.00%	4.00%
Tier 1 Capital (to Average Assets), To Be well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent)		5.00%	5.00%
International Bank of Commerce, Brownsville
Capital Requirements
Total Capital (to Risk Weighted Assets), Actual Amount		151,489	143,879
Tier 1 Capital (to Risk Weighted Assets), Actual Amount		145,584	138,467
Tier 1 Capital (to Average Assets), Actual Amount		145,584	138,467
Total Capital (to Risk Weighted Assets), Actual Ratio (as a percent)		28.60%	27.63%
Tier 1 Capital (to Risk Weighted Assets), Actual Ratio (as a percent)		27.48%	26.60%
Tier 1 Capital (to Average Assets), Actual Ratio (as a percent)		13.96%	13.33%
International Bank of Commerce, Brownsville | Minimum
Capital Requirements
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount		42,381	41,652
Total Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount		52,976	52,065
Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount		21,190	20,826
Tier 1 Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount		31,785	31,239
Tier 1 Capital (to Average Assets), For Capital Adequacy Purposes Amount		41,717	41,553
Tier 1 Capital (to Average Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount		52,146	51,942
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent)		8.00%	8.00%
Total Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent)		10.00%	10.00%
Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent)		4.00%	4.00%
Tier 1 Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent)		6.00%	6.00%
Tier 1 Capital (to Average Assets), For Capital Adequacy Purposes Ratio (as a percent)		4.00%	4.00%
Tier 1 Capital (to Average Assets), To Be well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent)		5.00%	5.00%
International Bank of Commerce, Zapata
Capital Requirements
Total Capital (to Risk Weighted Assets), Actual Amount		60,946	57,675
Tier 1 Capital (to Risk Weighted Assets), Actual Amount		60,035	56,459
Tier 1 Capital (to Average Assets), Actual Amount		60,035	56,459
Total Capital (to Risk Weighted Assets), Actual Ratio (as a percent)		33.83%	32.65%
Tier 1 Capital (to Risk Weighted Assets), Actual Ratio (as a percent)		33.33%	31.96%
Tier 1 Capital (to Average Assets), Actual Ratio (as a percent)		10.88%	10.64%
International Bank of Commerce, Zapata | Minimum
Capital Requirements
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount		14,412	14,130
Total Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount		18,041	17,663
Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount		7,206	7,065
Tier 1 Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount		10,809	10,598
Tier 1 Capital (to Average Assets), For Capital Adequacy Purposes Amount		22,081	21,219
Tier 1 Capital (to Average Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount		27,602	26,523
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent)		8.00%	8.00%
Total Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent)		10.00%	10.00%
Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent)		4.00%	4.00%
Tier 1 Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent)		6.00%	6.00%
Tier 1 Capital (to Average Assets), For Capital Adequacy Purposes Ratio (as a percent)		4.00%	4.00%
Tier 1 Capital (to Average Assets), To Be well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent)		5.00%	5.00%
Commerce Bank
Capital Requirements
Total Capital (to Risk Weighted Assets), Actual Amount		68,291	64,585
Tier 1 Capital (to Risk Weighted Assets), Actual Amount		67,347	63,491
Tier 1 Capital (to Average Assets), Actual Amount		67,347	63,491
Total Capital (to Risk Weighted Assets), Actual Ratio (as a percent)		37.42%	36.45%
Tier 1 Capital (to Risk Weighted Assets), Actual Ratio (as a percent)		36.90%	35.83%
Tier 1 Capital (to Average Assets), Actual Ratio (as a percent)		12.04%	11.88%
Commerce Bank | Minimum
Capital Requirements
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount		14,600	14,175
Total Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount		18,251	17,719
Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount		7,300	7,087
Tier 1 Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount		10,950	10,631
Tier 1 Capital (to Average Assets), For Capital Adequacy Purposes Amount		22,373	21,372
Tier 1 Capital (to Average Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount		27,966	$ 26,715
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent)		8.00%	8.00%
Total Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent)		10.00%	10.00%
Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent)		4.00%	4.00%
Tier 1 Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent)		6.00%	6.00%
Tier 1 Capital (to Average Assets), For Capital Adequacy Purposes Ratio (as a percent)		4.00%	4.00%
Tier 1 Capital (to Average Assets), To Be well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent)		5.00%	5.00%

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Consolidated Statements of Cash Flows (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Operating activities:
Net income	$ 153,151,000	$ 126,351,000	$ 107,835,000
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for probable loan losses	14,423,000	22,968,000	27,959,000
Specific reserve, other real estate owned	779,000	1,204,000	1,776,000
Depreciation of bank premises and equipment	24,013,000	26,017,000	26,756,000
Gain on sale of bank premises and equipment	(3,658,000)	(2,089,000)	(538,000)
(Gain) loss on sale of other real estate owned	(933,000)	(460,000)	488,000
Accretion of investment securities discounts	(2,608,000)	(4,025,000)	(3,195,000)
Amortization of investment securities premiums	26,729,000	44,245,000	30,501,000
Investment securities transactions, net	(1,283,000)	(9,601,000)	(38,446,000)
Impairment charges on available for sale securities	817,000	1,374,000	1,039,000
Amortization of identified intangible assets	2,389,000	4,633,000	4,651,000
Stock based compensation expense	1,058,000	414,000	474,000
Earnings from affiliates and other investments	(10,903,000)	(18,806,000)	(9,892,000)
Deferred tax (benefit) expense	(1,027,000)	(1,817,000)	7,923,000
(Increase) decrease in accrued interest receivable	(807,000)	380,000	968,000
(Increase) decrease in other assets	(1,621,000)	20,612,000	(5,392,000)
Increase (decrease) in other liabilities	(7,482,000)	(2,274,000)	7,106,000
Net cash provided by operating activities	193,037,000	209,126,000	160,013,000
Investing activities:
Proceeds from maturities of securities		1,200,000	1,125,000
Proceeds from sales and calls of available for sale securities	621,588,000	178,123,000	1,382,231,000
Purchases of available for sale securities	(971,358,000)	(1,384,254,000)	(3,081,034,000)
Principal collected on mortgage backed securities	787,361,000	1,223,532,000	1,294,197,000
Net (increase) decrease in loans	(502,129,000)	(444,919,000)	170,072,000
Purchases of other investments	(20,602,000)	(2,475,000)	(4,228,000)
Distributions from (contributions) to other investments	18,152,000	5,457,000	(7,410,000)
Purchases of bank premises and equipment	(50,360,000)	(50,016,000)	(62,030,000)
Proceeds from sales of bank premises and equipment	8,424,000	2,533,000	7,575,000
Proceeds from sales of other real estate owned	18,525,000	23,170,000	38,766,000
Purchase of identified intangible asset			(280,000)
Net cash used in investing activities	(90,399,000)	(447,649,000)	(261,016,000)
Financing activities:
Net increase in non-interest bearing demand deposits	263,743,000	200,760,000	538,732,000
Net increase in savings and interest bearing demand deposits	100,068,000	58,461,000	159,458,000
Net decrease in time deposits	(168,611,000)	(303,009,000)	(357,069,000)
Net decrease in securities sold under repurchase agreements	(99,031,000)	(172,298,000)	(218,950,000)
Other borrowed funds, net	(150,006,000)	474,923,000	254,866,000
Repayment of long-term debt	(15,310,000)
Purchase of treasury stock	(18,923,000)		(1,716,000)
Redemption of Series A preferred shares			(216,000,000)
Proceeds from stock transactions	555,000	265,000	51,000
Payments of cash dividends - common	(34,762,000)	(28,894,000)	(26,894,000)
Payments of cash dividends - preferred			(10,260,000)
Net cash (used in) provided by financing activities	(122,277,000)	230,208,000	122,218,000
(Decrease) increase in cash and cash equivalents	(19,639,000)	(8,315,000)	21,215,000
Cash and cash equivalents at beginning of year	274,785,000	283,100,000	261,885,000
Cash and cash equivalents at end of year	255,146,000	274,785,000	283,100,000
Supplemental cash flow information:
Interest paid	47,273,000	56,818,000	77,431,000
Income taxes paid	80,374,000	60,532,000	36,303,000
Non-cash investing and financing activities:
Net transfers from loans to other real estate owned	$ 2,363,000	$ 9,688,000	$ 54,441,000

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Investment Securities (Details 2) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Held-to-maturity debt securities amortized cost disclosures
Due in one year or less, held-to-maturity debt securities amortized cost	$ 1,075,000
Due after one year through five years, held-to-maturity debt securities amortized cost	1,325,000
Amortized cost, held-to-maturity debt securities	2,400,000	2,400,000
Held-to-maturity debt securities, Estimated fair value disclosures
Due in one year or less, held-to-maturity debt securities, Estimated fair value	1,075,000
Due after one year through five years, held-to-maturity debt securities, Estimated fair value	1,325,000
Estimated fair value	2,400,000	2,400,000
Available-for-sale debt securities amortized cost disclosures
Due after five years through ten years, available-for-sale debt securities amortized cost	735,000
Due after ten years, available-for-sale debt securities amortized cost	288,028,000
Residential mortgage-backed securities, amortized cost	4,597,590,000
Equity securities, amortized cost	28,075,000
Amortized cost, Available for sale securities	4,914,428,000	5,372,594,000
Available for sale debt securities, Estimated Fair Value Disclosures
Due after five years through ten years, available-for-sale debt securities, Estimated Fair Value	812,000
Due after ten years, available-for-sale debt securities, Estimated Fair Value	301,464,000
Residential mortgage-backed securities, Estimated Fair Value	4,600,372,000
Equity securities, Estimated Fair Value	29,315,000
Estimated fair value, Available for sale securities	4,931,963,000	5,304,579,000
Amortized cost of available for sale investment securities pledged	2,182,579,000
Fair value of available for sale investment securities pledged	2,196,169,000
Proceeds from sales and calls of available for sale securities	621,588,000	178,123,000	1,382,231,000
Proceeds from sales of mortgage-backed securities	620,933,000	177,623,000	1,338,723,000
Gross gains realized on sales	9,479,000	9,601,000	38,447,000
Gross losses realized on sales	8,196,000	0	1,000
Impairment charges on available for sale securities	817,000	1,374,000	1,039,000
Impairment charges on available-for-sale investment securities, after tax	$ 531,050	$ 893,100	$ 675,000

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Stock Options (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Apr. 05, 2012
Stock options under 2012 Plan
Stock option details
Shares available for future grants		204,750		800,000
Maximum exercisable period for options granted	10 years
Black-Scholes-Merton option valuation model assumptions
Expected Life	7 years 7 months 17 days	7 years 7 months 17 days
Dividend yield (as a percent)	2.01%	2.33%
Interest rate (as a percent)	2.28%	2.86%
Volatility (as a percent)	47.36%	47.28%
Stock option activity
Options outstanding at the beginning of the period (in shares)	515,143
Plus: Options granted (in shares)	564,750
Less:
Options exercised (in shares)	40,385
Options expired (in shares)	15,125
Options forfeited (in shares)	30,494
Options outstanding at the end of the period (in shares)	993,889	515,143
Options fully vested and exercisable at the end of the period (in shares)	250,487
Stock options, weighted average exercise price
Options outstanding at the beginning, weighted average exercise price (in dollars per share)	$ 15.98
Plus: Options granted, weighted average exercise price (in dollars per share)	$ 21.48
Less:
Options exercised, weighted average exercise price (in dollars per share)	$ 13.75
Options expired, weighted average exercise price (in dollars per share)	$ 27.02
Options forfeited, weighted average exercise price (in dollars per share)	$ 18.84
Options outstanding at the end, weighted average exercise price (in dollars per share)	$ 18.94	$ 15.98
Options fully vested and exercisable at the end, weighted average exercise price (in dollars per share)	$ 16.76
Stock options, weighted average remaining contractual term
Options outstanding at the end, weighted average remaining contractual term	6 years 7 months 13 days
Options fully vested and exercisable at the end, weighted average remaining contractual term	2 years 3 months 11 days
Stock options, aggregate intrinsic value
Options outstanding at the end, aggregate intrinsic value	$ 7,567,000
Options fully vested and exercisable at the end, aggregate intrinsic value	2,461,000
Stock-based compensation expense	1,058,000	414,000	474,000
Stock-based compensation cost, unrecognized, related to non-vested options	3,934,000
Stock-based compensation cost, unrecognized, related to non-vested options, weighted-average period of recognition	2 years 3 months 18 days
Other information pertaining to option activity
Weighted average grant date fair value of stock options granted (in dollars per share)	$ 9.07	$ 9.05	$ 8.71
Total fair value of stock options vested	376,000	480,000	524,000
Total intrinsic value of stock options exercised	$ 468,000	$ 171,000	$ 41,000
Incentive stock options granted to 10% shareholders
Stock option details
Maximum exercisable period for options granted	5 years

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Goodwill and Other Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Identified intangible assets
Carrying Amount	$ 60,697	$ 60,697
Accumulated Amortization	59,900	57,511
Total identified intangibles, Net	797	3,186
Amortization expense	2,389	4,633	4,651
Estimated amortization expense for each of the five succeeding fiscal years and thereafter
2015	452
2016	295
2017	25
2018	25
Total	797
Changes in carrying amount of goodwill	0	0
Core deposit premium
Identified intangible assets
Carrying Amount	58,675	58,675
Accumulated Amortization	58,379	56,298
Total identified intangibles, Net	296	2,377
Identified intangible (contract rights)
Identified intangible assets
Carrying Amount	2,022	2,022
Accumulated Amortization	1,521	1,213
Total identified intangibles, Net	$ 501	$ 809

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Commitments, Contingent Liabilities and Other Matters

12 Months Ended

Dec. 31, 2014

Commitments, Contingent Liabilities and Other Matters

Commitments, Contingent Liabilities and Other Matters

(17) Commitments, Contingent Liabilities and Other Matters

        The Company leases portions of its banking premises and equipment under operating leases. Total rental expense for the years ended December 31, 2014, 2013 and 2012 were $7,200,000, $7,300,000 and $8,300,000, respectively. Future minimum lease payments due under non-cancellable operating leases at December 31, 2014 were as follows:

        Fiscal year ending:

	Total
	(in thousands)
2015	$	3,505
2016		2,454
2017		1,168
2018		631
2019		157
Thereafter		122
Total	$	8,037

        It is expected that certain leases will be renewed, as these leases expire. Aggregate future minimum rentals to be received under non-cancellable sub-leases greater than one year at December 31, 2014 were $85,875,000.

        Cash of approximately $106,841,000 and $96,087,000 at December 31, 2014 and 2013, respectively, was maintained to satisfy regulatory reserve requirements.

        The Company is involved in various legal proceedings that are in various stages of litigation. Some of these actions allege "lender liability" claims on a variety of theories and claim substantial actual and punitive damages. The Company has determined, based on discussions with its 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 the consolidated statements of condition and related statements of income, comprehensive income, shareholders' equity and cash flows of the Company. However, many of these matters are in various stages of proceedings and further developments could cause management to revise its assessment of these matters.

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Junior Subordinated Deferrable Interest Debentures (Details) (USD $)	12 Months Ended	0 Months Ended
	Dec. 31, 2014 item	Feb. 11, 2014	Dec. 31, 2013
Junior subordinated deferrable interest debentures, major types of business trusts
Number of statutory business trusts issuing trust preferred securities	7
Junior subordinated deferrable interest debentures	$ 175,416,000		$ 190,726,000
Maximum number of consecutive quarterly period available for deferral of interest payment on Trusts VI, VII, VIII, IX, X, XI and XII	20
Percentage of capital securities issued by trust qualifying as Tier I capital, maximum	25.00%
Percentage of capital securities issued by trust qualifying as Tier II capital, minimum	25.00%
Capital securities issued by the trust, qualifying as Tier I capital	175,416,000		190,726,000
Trust VII
Junior subordinated deferrable interest debentures, major types of business trusts
Redemption price discount (as a percent)		6.00%
Retirement of capital securities		10,310,000
Trust XI
Junior subordinated deferrable interest debentures, major types of business trusts
Redemption price discount (as a percent)	23.60%
Retirement of capital securities	5,000,000
Junior subordinated deferrable interest debentures	$ 27,990,000

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Allowance for Probable Loan Losses (Tables)

12 Months Ended

Dec. 31, 2014

Allowance for Probable Loan Losses

Summary of the changes in the allowance for probable loan losses, by loan class

	December 31, 2014
	Domestic																				Foreign
	Commercial			Commercial real estate: other construction & land development			Commercial real estate: farmland & commercial			Commercial real estate: multifamily		Residential: first lien			Residential: junior lien			Consumer			Foreign			Total
	(Dollars in Thousands)
Balance at December 31,	$	22,433		$	12,541		$	24,467		$	776	$	3,812		$	4,249		$	750		$	1,133		$	70,161
Losses charge to allowance		(19,110	)		(680	)		(1,893	)		—		(351	)		(661	)		(719	)		(51	)		(23,465	)
Recoveries credited to allowance		2,979			72			107			—		49			242			210			50			3,709
Net losses charged to allowance		(16,131	)		(608	)		(1,786	)		—		(302	)		(419	)		(509	)		(1	)		(19,756	)
Provision (credit) charged to operations		16,050			1,022			(3,998	)		70		79			853			419			(72	)		14,423
Balance at December 31,	$	22,352		$	12,955		$	18,683		$	846	$	3,589		$	4,683		$	660		$	1,060		$	64,828

	December 31, 2013
	Domestic																					Foreign
	Commercial			Commercial real estate: other construction & land development			Commercial real estate: farmland & commercial			Commercial real estate: multifamily			Residential: first lien			Residential: junior lien			Consumer			Foreign			Total
	(Dollars in Thousands)
Balance at December 31,	$	11,632		$	12,720		$	21,880		$	694		$	4,390		$	4,448		$	1,289		$	1,140		$	58,193
Losses charge to allowance		(11,737	)		(278	)		(600	)		(5	)		(632	)		(620	)		(561	)		(22	)		(14,455	)
Recoveries credited to allowance		2,690			87			152			—			61			298			162			5			3,455
Net losses charged to allowance		(9,047	)		(191	)		(448	)		(5	)		(571	)		(322	)		(399	)		(17	)		(11,000	)
Provision (credit) charged to operations		19,848			12			3,035			87			(7	)		123			(140	)		10			22,968
Balance at December 31,	$	22,433		$	12,541		$	24,467		$	776		$	3,812		$	4,249		$	750		$	1,133		$	70,161

	December 31, 2012
	Domestic																					Foreign
	Commercial			Commercial real estate: other construction & land development			Commercial real estate: farmland & commercial			Commercial real estate: multifamily			Residential: first lien			Residential: junior lien			Consumer			Foreign			Total
	(Dollars in Thousands)
Balance at December 31,	$	26,617		$	19,940		$	24,227		$	1,003		$	4,562		$	4,760		$	1,724		$	1,359		$	84,192
Losses charge to allowance		(34,721	)		(7,617	)		(13,724	)		—			(227	)		(1,190	)		(756	)		(111	)		(58,346	)
Recoveries credited to allowance		3,547			229			220			—			13			195			184			—			4,388
Net losses charged to allowance		(31,174	)		(7,388	)		(13,504	)		—			(214	)		(995	)		(572	)		(111	)		(53,958	)
Provision (credit) charged to operations		16,189			168			11,157			(309	)		42			683			137			(108	)		27,959
Balance at December 31,	$	11,632		$	12,720		$	21,880		$	694		$	4,390		$	4,448		$	1,289		$	1,140		$	58,193

Loans individually or collectively evaluated for impairment and related allowance, by loan class

	December 31, 2014
	Loans individually evaluated for impairment				Loans collectively evaluated for impairment
	Recorded Investment		Allowance		Recorded Investment		Allowance
	(Dollars in Thousands)
Domestic
Commercial	$	40,175	$	9,112	$	1,049,311	$	13,240
Commercial real estate: other construction & land development		10,876		1,890		1,404,101		11,065
Commercial real estate: farmland & commercial		14,166		1,219		1,887,233		17,464
Commercial real estate: multifamily		835		—		115,864		846
Residential: first lien		5,840		—		416,186		3,589
Residential: junior lien		2,895		—		485,405		4,683
Consumer		1,384		—		59,753		660
Foreign		—		—		185,221		1,060
Total	$	76,171	$	12,221	$	5,603,074	$	52,607

	December 31, 2013
	Loans individually evaluated for impairment				Loans collectively evaluated for impairment
	Recorded Investment		Allowance		Recorded Investment		Allowance
	(Dollars in Thousands)
Domestic
Commercial	$	34,183	$	12,234	$	1,008,459	$	10,199
Commercial real estate: other construction & land development		13,976		852		1,194,532		11,689
Commercial real estate: farmland & commercial		16,038		2,916		1,734,001		21,551
Commercial real estate: multifamily		295		—		101,803		776
Residential: first lien		6,153		—		432,309		3,812
Residential: junior lien		3,206		—		406,024		4,249
Consumer		1,606		—		64,808		750
Foreign		436		—		181,406		1,133
Total	$	75,893	$	16,002	$	5,123,342	$	54,159

Loans accounted on non-accrual basis, by loan class

	December 31,
	2014		2013
	(Dollars in Thousands)
Domestic
Commercial	$	40,121	$	34,110
Commercial real estate: other construction & land development		8,621		11,726
Commercial real estate: farmland & commercial		11,903		13,775
Commercial real estate: multifamily		835		295
Residential: first lien		527		1,266
Residential: junior lien		1,523		1,576
Consumer		29		75
Foreign		—		—
Total non-accrual loans	$	63,559	$	62,823

Impaired loans, by loan class

	December 31, 2014
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Recognized
	(Dollars in Thousands)
Loans with Related Allowance
Domestic
Commercial	$	19,944	$	20,026	$	9,112	$	19,313	$	—
Commercial real estate: other construction & land development		6,714		6,949		1,890		7,183		—
Commercial real estate: farmland & commercial		5,107		5,257		1,219		6,790		92
Total impaired loans with related allowance	$	31,765	$	32,232	$	12,221	$	33,286	$	92

	December 31, 2014
	Recorded Investment		Unpaid Principal Balance		Average Recorded Investment		Interest Recognized
	(Dollars in Thousands)
Loans with No Related Allowance
Domestic
Commercial	$	20,231	$	20,260	$	18,563	$	4
Commercial real estate: other construction & land development		4,162		4,270		4,882		74
Commercial real estate: farmland & commercial		9,059		10,562		8,664		—
Commercial real estate: multifamily		835		835		363		—
Residential: first lien		5,840		6,034		6,293		273
Residential: junior lien		2,895		2,915		3,035		90
Consumer		1,384		1,386		1,402		3
Foreign		—		—		—		—
Total impaired loans with no related allowance	$	44,406	$	46,262	$	43,202	$	444

	December 31, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Recognized
	(Dollars in Thousands)
Loans with Related Allowance
Domestic
Commercial	$	17,178	$	17,177	$	12,234	$	18,019	$	38
Commercial real estate: other construction & land development		6,818		6,825		852		6,058		—
Commercial real estate: farmland & commercial		7,259		10,697		2,916		7,167		92
Total impaired loans with related allowance	$	31,255	$	34,699	$	16,002	$	31,244	$	130

	December 31, 2013
	Recorded Investment		Unpaid Principal Balance		Average Recorded Investment		Interest Recognized
	(Dollars in Thousands)
Loans with No Related Allowance
Domestic
Commercial	$	17,005	$	17,023	$	16,778	$	2
Commercial real estate: other construction & land development		7,158		7,187		18,164		74
Commercial real estate: farmland & commercial		8,779		9,949		7,313		—
Commercial real estate: multifamily		295		295		322		—
Residential: first lien		6,153		6,258		4,860		179
Residential: junior lien		3,206		3,226		2,347		99
Consumer		1,606		1,612		1,380		1
Foreign		436		436		452		19
Total impaired loans with no related allowance	$	44,638	$	45,986	$	51,616	$	374

Loans accounted for as trouble debt restructuring, by loan class

	December 31, 2014		December 31, 2013
	(Dollars in Thousands)
Domestic
Commercial	$	2,500	$	150
Commercial real estate: other construction & land development		2,254		8,860
Commercial real estate: farmland & commercial		2,861		2,863
Residential: first lien		5,313		4,887
Residential: junior lien		1,371		1,631
Consumer		1,354		1,531
Foreign		—		436
Total troubled debt restructuring	$	15,653	$	20,358

Information regarding the aging of past due loans, by loan class

	December 31, 2014
	30 - 59 Days		60 - 89 Days		90 Days or Greater		90 Days or greater & still accruing		Total Past due		Current		Total Portfolio
	(Dollars in Thousands)
Domestic
Commercial	$	4,103	$	2,665	$	40,665	$	2,890	$	47,433	$	1,042,053	$	1,089,486
Commercial real estate: other construction & land development		596		10		8,707		439		9,313		1,405,664		1,414,977
Commercial real estate: farmland & commercial		2,905		7,131		10,724		1,711		20,760		1,880,639		1,901,399
Commercial real estate: multifamily		351		—		856		21		1,207		115,492		116,699
Residential: first lien		5,895		1,864		4,267		3,901		12,026		410,000		422,026
Residential: junior lien		899		231		1,931		431		3,061		485,239		488,300
Consumer		896		216		507		482		1,619		59,518		61,137
Foreign		1,616		98		113		113		1,827		183,394		185,221
Total past due loans	$	17,261	$	12,215	$	67,770	$	9,988	$	97,246	$	5,581,999	$	5,679,245

	December 31, 2013
	30 - 59 Days		60 - 89 Days		90 Days or Greater		90 Days or greater & still accruing		Total Past due		Current		Total Portfolio
	(Dollars in Thousands)
Domestic
Commercial	$	4,240	$	538	$	36,066	$	2,051	$	40,844	$	1,001,798	$	1,042,642
Commercial real estate: other construction & land development		1,042		—		9,942		62		10,984		1,197,524		1,208,508
Commercial real estate: farmland & commercial		6,216		520		6,990		417		13,726		1,736,313		1,750,039
Commercial real estate: multifamily		39		142		295		—		476		101,622		102,098
Residential: first lien		4,758		3,046		4,541		3,518		12,345		426,117		438,462
Residential: junior lien		606		198		1,900		368		2,704		406,526		409,230
Consumer		1,523		469		803		781		2,795		63,619		66,414
Foreign		1,467		417		—		—		1,884		179,958		181,842
Total past due loans	$	19,891	$	5,330	$	60,537	$	7,197	$	85,758	$	5,113,477	$	5,199,235

Summary of the loan portfolio by credit quality indicator, by loan class

			December 31, 2014
	Pass		Special Review		Watch List—Pass		Watch List— Substandard		Watch List— Impaired
			(Dollars in Thousands)
Domestic
Commercial	$	961,490	$	38,382	$	3,793	$	45,646	$	40,175
Commercial real estate: other construction & land development		1,353,971		1,005		10,428		38,697		10,876
Commercial real estate: farmland & commercial		1,754,741		11,674		23,453		97,365		14,166
Commercial real estate: multifamily		115,729		—		—		135		835
Residential: first lien		412,668		3,500		—		18		5,840
Residential: junior lien		484,968		—		—		437		2,895
Consumer		59,622		—		—		131		1,384
Foreign		185,221		—		—		—		—
Total	$	5,328,410	$	54,561	$	37,674	$	182,429	$	76,171

			December 31, 2013
	Pass		Special Review		Watch List—Pass		Watch List— Substandard		Watch List— Impaired
			(Dollars in Thousands)
Domestic
Commercial	$	955,522	$	2,270	$	4,389	$	46,278	$	34,183
Commercial real estate: other construction & land development		1,167,295		14,247		9,318		3,672		13,976
Commercial real estate: farmland & commercial		1,635,179		56,438		21,912		20,472		16,038
Commercial real estate: multifamily		100,948		—		—		855		295
Residential: first lien		432,067		122		—		120		6,153
Residential: junior lien		405,731		—		—		293		3,206
Consumer		64,808		—		—		—		1,606
Foreign		180,837		—		—		569		436
Total	$	4,942,387	$	73,077	$	35,619	$	72,259	$	75,893

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Junior Subordinated Deferrable Interest Debentures

12 Months Ended

Dec. 31, 2014

Junior Subordinated Deferrable Interest Debentures

Junior Subordinated Deferrable Interest Debentures

(10) Junior Subordinated Deferrable Interest Debentures

        The Company has formed seven statutory business trusts under the laws of the State of Delaware, for the purpose of issuing trust preferred securities. The seven statutory business trusts formed by the Company (the "Trusts") have each issued Capital and Common Securities and invested the proceeds thereof in an equivalent amount of junior subordinated debentures (the "Debentures") issued by the Company. As of December 31, 2014 and December 31, 2013, the principal amount of debentures outstanding totaled $175,416,000 and $190,726,000, respectively. On February 11, 2014, the Company bought back all of the Capital and Common Securities of IB Capital Trust VII from the holder of the securities for a price that reflected an approximate six percent discount from the redemption price of the securities and thereby retired the $10,310,000 of related Junior Subordinated Deferrable Interest Debentures related to IB Capital Trust VII. On December 24, 2014, the Company bought back a portion of the Capital Securities of IB Capital Trust XI from the holder of the securities for a price that reflected an approximate 23.6% discount from the redemption price of the securities and thereby retired $5,000,000 of the total $32,900,000 of related Junior Subordinated Deferrable Interest Debentures related to IB Capital Trust XI resulting in Junior Subordinated Deferrable Interest Debentures on Trust XI of $27,990,000 as of December 31, 2014.

        The Debentures are subordinated and junior in right of payment to all present and future senior indebtedness (as defined in the respective indentures) of the Company, and are pari passu with one another. The interest rate payable on, and the payment terms of the Debentures are the same as the distribution rate and payment terms of the respective issues of Capital and Common Securities issued by the Trusts. The Company has fully and unconditionally guaranteed the obligations of each of the Trusts with respect to the Capital and Common Securities. The Company has the right, unless an Event of Default (as defined in the Indentures) has occurred and is continuing, to defer payment of interest on the Debentures for up to twenty consecutive quarterly periods on Trusts VI, VIII, IX, X, XI and XII. If interest payments on any of the Debentures are deferred, distributions on both the Capital and Common Securities related to that Debenture would also be deferred. The redemption prior to maturity of any of the Debentures may require the prior approval of the Federal Reserve and/or other regulatory bodies.

        For financial reporting purposes, the Trusts are treated as investments of the Company and not consolidated in the consolidated financial statements. Although the Capital Securities issued by each of the Trusts are not included as a component of shareholders' equity on the consolidated statement of condition, the Capital Securities are treated as capital for regulatory purposes. Specifically, under applicable regulatory guidelines, the Capital Securities issued by the Trusts qualify as Tier 1 capital up to a maximum of 25% of Tier 1 capital on an aggregate basis. Any amount that exceeds the 25% threshold would qualify as Tier 2 capital. At December 31, 2014 and December 31, 2013, the total $175,416,000 and $190,726,000, respectively, of the Capital Securities outstanding qualified as Tier 1 capital.

        The following table illustrates key information about each of the Debentures and their interest rates at December 31, 2014:

	Junior Subordinated Deferrable Interest Debentures		Repricing Frequency	Interest Rate			Interest Rate Index(1)		Maturity Date	Optional Redemption Date(1)
	(in thousands)
Trust VI	$	25,774	Quarterly		3.68	%		LIBOR + 3.45	November 2032	February 2008
Trust VIII		25,774	Quarterly		3.28	%		LIBOR + 3.05	October 2033	October 2008
Trust IX		41,238	Quarterly		1.86	%		LIBOR + 1.62	October 2036	October 2011
Trust X		34,021	Quarterly		1.88	%		LIBOR + 1.65	February 2037	February 2012
Trust XI		27,990	Quarterly		1.86	%		LIBOR + 1.62	July 2037	July 2012
Trust XII		20,619	Quarterly		1.69	%		LIBOR + 1.45	September 2037	September 2012
	$	175,416

(1) The Capital Securities may be redeemed in whole or in part on any interest payment date after the Optional Redemption Date.