International Bancshares's Business Segments

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.

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 are principally 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 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.

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, safety deposit boxes, collections, 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.

International Bancshares Corporation (IBC) is a financial holding company based in Laredo, Texas, primarily engaged in the business of banking and financial services through its subsidiaries. The corporation operates numerous banking locations and has a significant presence in various regions of Texas and certain areas in Mexico. IBC offers a comprehensive range of products and services tailored to meet the needs of diverse customer segments, including individuals, small businesses, and larger corporations.

Banking Segments

1. Retail Banking:
- Personal Banking Services: IBC provides checking and savings accounts, certificates of deposit (CDs), money market accounts, and individual retirement accounts (IRAs). Personal loans, including auto loans, home equity loans, and personal lines of credit, are also available.
- Online and Mobile Banking: The bank offers robust digital banking solutions, including online account management, mobile banking apps, bill payment services, and e-statements, allowing customers to manage their finances conveniently.
- Credit and Debit Cards: A variety of credit and debit cards are available, including rewards cards, international travel options, and secured credit cards, aimed at helping customers build their credit history.

2. Commercial Banking:
- Business Accounts: IBC offers checking and savings accounts tailored for businesses, along with certificates of deposit designed for commercial customers to help manage cash flow effectively.
- Lending Solutions: The bank provides a wide range of commercial loans, including term loans, lines of credit, and equipment financing. It also offers real estate loans for commercial properties.
- Treasury Management Services: IBC offers services such as cash management solutions, fraud protection tools, merchant services, and payment processing options, designed to help businesses optimize their financial operations.

3. Wealth Management:
- Investment Services: IBC provides financial advisory services, asset management, and investment management to help individuals and businesses plan for their financial future.
- Insurance Products: The corporation also offers various insurance products, including life insurance, health insurance, and property insurance, providing customers with options to protect their assets.
- Retirement Planning: Personalized retirement planning services, including 401(k) management and other pension-related services, are available to help clients secure their financial future.

4. Mortgage Services:
- Residential Mortgages: IBC provides a range of mortgage products, including fixed-rate and adjustable-rate mortgages, as well as construction loans and refinancing options.
- Home Equity Lines of Credit (HELOC): Borrowers looking to leverage their property’s equity can access HELOCs with flexible withdrawal options and competitive interest rates.

5. International Banking:
- Cross-Border Services: IBC facilitates various banking services and solutions tailored for clients engaging in cross-border transactions, particularly between the United States and Mexico.
- Foreign Currency Exchange: The bank offers foreign currency services to assist customers with travel, international business, and investments.

Specialty Services

1. Community Development: IBC is actively involved in community development initiatives, offering special programs and lending options that target under-served communities, enhancing access to financial resources.

2. Educational Programs: The bank provides financial literacy programs aimed at educating customers about managing their finances, understanding credit, and planning for the future.

3. Commercial Real Estate Services: Specialized services for commercial real estate development, including financing options for different types of properties, are available to support local and regional growth.

Technology and Innovation

IBC places a strong emphasis on technological solutions to serve its customers better. The institution continuously seeks to innovate and offer enhanced services through digital platforms, ensuring that customers have access to the latest financial tools available in the industry.

Overall, International Bancshares Corporation is committed to delivering a diverse array of banking and financial services tailored to its customers’ needs, reinforcing its position as a key player in the financial services market in the regions it serves.