10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

☐ 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	74-2157138
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

1200 San Bernardo Avenue, Laredo, Texas 78042-1359

(Address of principal executive offices)

(Zip Code)

(956) 722-7611

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class:	Trading Symbol	Name of each exchange on which registered:
Common Stock, $1.00 par value	IBOC	NASDAQ

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 ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark if the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company, in Rule 12b-2 of the Exchange Act.

Large accelerated filer ⌧	Accelerated filer ◻
Non-accelerated filer ◻	Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date

Class	Shares Issued and Outstanding
Common Stock, $1.00 par value	63,367,206 shares outstanding at November 1, 2021

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Condition (Unaudited)

(Dollars in Thousands)

	September 30,		December 31,
	2021		2020
Assets
Cash and cash equivalents	$	2,287,318	$	1,997,238
Investment securities:
Held to maturity debt securities (Market value of $3,400 on September 30, 2021 and $3,400 on December 31, 2020)		3,400		3,400
Available for sale debt securities (Amortized cost of $4,540,752 on September 30, 2021 and $3,054,289 on December 31, 2020)		4,554,314		3,080,768
Equity securities with readily determinable fair values		6,132		6,202
Total investment securities		4,563,846		3,090,370
Loans		7,404,158		7,541,754
Less allowance for credit losses		(109,325)		(109,059)
Net loans		7,294,833		7,432,695
Bank premises and equipment, net		459,291		479,878
Accrued interest receivable		31,394		37,881
Other investments		298,664		254,413
Cash surrender value of life insurance policies		295,513		292,381
Goodwill		282,532		282,532
Other assets		164,105		162,079
Total assets	$	15,677,496	$	14,029,467

1

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Condition, continued (Unaudited)

(Dollars in Thousands)

	September 30,		December 31,
	2021		2020
Liabilities and Shareholders’ Equity
Liabilities:
Deposits:
Demand—non-interest bearing	$	5,596,765	$	4,715,814
Savings and interest bearing demand		4,460,557		3,852,505
Time		2,186,651		2,153,541
Total deposits		12,243,973		10,721,860
Securities sold under repurchase agreements		424,397		428,148
Other borrowed funds		436,186		436,327
Junior subordinated deferrable interest debentures		134,642		134,642
Other liabilities		143,926		130,492
Total liabilities		13,383,124		11,851,469
Shareholders’ equity:
Common shares of $1.00 par value. Authorized 275,000,000 shares; issued 96,343,252 shares on September 30, 2021 and 96,240,977 shares on December 31, 2020		96,343		96,241
Surplus		151,855		149,334
Retained earnings		2,414,183		2,289,626
Accumulated other comprehensive income		10,723		20,825
		2,673,104		2,556,026
Less cost of shares in treasury, 32,979,001 shares on September 30, 2021 and 32,961,289 on December 31, 2020		(378,732)		(378,028)
Total shareholders’ equity		2,294,372		2,177,998
Total liabilities and shareholders’ equity	$	15,677,496	$	14,029,467

See accompanying notes to consolidated financial statements.

2

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income (Unaudited)

(Dollars in Thousands, except per share data)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Interest income:
Loans, including fees	$	88,280	$	90,614	$	272,210	$	287,608
Investment securities:
Taxable		11,669		8,469		21,558		40,049
Tax-exempt		360		605		1,132		2,024
Other interest income		883		295		2,145		564
Total interest income		101,192		99,983		297,045		330,245
Interest expense:
Savings deposits		1,082		1,028		3,001		5,424
Time deposits		2,814		4,292		8,941		15,581
Securities sold under repurchase agreements		165		164		448		777
Other borrowings		1,929		1,930		5,726		6,844
Junior subordinated deferrable interest debentures		692		756		2,102		3,109
Total interest expense		6,682		8,170		20,218		31,735
Net interest income		94,510		91,813		276,827		298,510
Provision for credit losses		2,801		8,770		5,137		36,595
Net interest income after provision for credit losses		91,709		83,043		271,690		261,915
Non-interest income:
Service charges on deposit accounts		17,294		15,037		47,971		45,554
Other service charges, commissions and fees
Banking		15,750		14,471		41,166		36,866
Non-banking		2,046		1,800		5,831		5,584
Investment securities transactions, net		(12)		—		(16)		(5)
Other investments, net		5,490		3,235		68,495		3,621
Other income		6,641		5,574		17,905		17,223
Total non-interest income	$	47,209	$	40,117	$	181,352	$	108,843

3

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income, continued (Unaudited)

(Dollars in Thousands, except per share data)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Non-interest expense:
Employee compensation and benefits	$	30,552	$	31,718	$	91,262	$	100,367
Occupancy		6,491		6,677		18,638		19,346
Depreciation of bank premises and equipment		6,028		7,049		19,263		21,348
Professional fees		2,558		4,121		7,675		12,004
Deposit insurance assessments		1,026		810		2,840		1,012
Net expense, other real estate owned		438		1,341		5,351		7,178
Advertising		1,470		1,413		4,349		5,289
Software and software maintenance		4,115		4,964		13,081		14,712
Other		17,049		11,960		39,407		39,686
Total non-interest expense		69,727		70,053		201,866		220,942
Income before income taxes		69,191		53,107		251,176		149,816
Provision for income taxes		14,592		10,365		53,780		30,726
Net income	$	54,599	$	42,742	$	197,396	$	119,090
Basic earnings per common share:
Weighted average number of shares outstanding		63,372,777		63,269,966		63,347,922		63,876,496
Net income	$	0.86	$	0.68	$	3.12	$	1.86
Fully diluted earnings per common share:
Weighted average number of shares outstanding		63,498,542		63,386,292		63,479,174		64,001,883
Net income	$	0.86	$	0.67	$	3.11	$	1.86

See accompanying notes to consolidated financial statements

4

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Unaudited)

(Dollars in Thousands)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Net income	$	54,599	$	42,742	$	197,396	$	119,090
Other comprehensive income, net of tax:
Net unrealized holding (losses) gains on securities available for sale arising during period (net of tax effects of $(2,015), $(2,366), $(2,689) and $7,993)		(7,578)		(8,901)		(10,115)		30,069
Reclassification adjustment for losses on securities available for sale included in net income (net of tax effects of $3, $0, $3 and $1)		9		—		13		4
		(7,569)		(8,901)		(10,102)		30,073
Comprehensive income	$	47,030	$	33,841	$	187,294	$	149,163

See accompanying notes to consolidated financial statements.

5

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Shareholders’ Equity

Three and Nine Months ended September 30, 2021 and 2020

(in Thousands, except per share amounts)

	Number							Other
	of	Common				Retained		Comprehensive		Treasury
	Shares	Stock		Surplus		Earnings		Income (Loss)		Stock		Total
Balance at June 30, 2021	96,332	$	96,332	$	151,512	$	2,397,610	$	18,292	$	(378,076)	$	2,285,670
Net income	—		—		—		54,599		—		—		54,599
Dividends:
Payable ($.60 per share)	—		—		—		(38,026)		—		—		(38,026)
Purchase of treasury stock (16,713 shares)	—		—		—		—		—		(656)		(656)
Exercise of stock options	11		11		225		—		—		—		236
Stock compensation expense recognized in earnings	—		—		118		—		—		—		118
Other comprehensive income, net of tax:
Net change in unrealized gains and losses on available for sale securities, net of reclassification adjustments	—		—		—		—		(7,569)		—		(7,569)
Balance at September 30, 2021	96,343	$	96,343	$	151,855	$	2,414,183	$	10,723	$	(378,732)	$	2,294,372

		Number							Other
		of	Common				Retained		Comprehensive		Treasury
		Shares	Stock		Surplus		Earnings		Income (Loss)		Stock		Total
Balance at June 30, 2020		96,229	$	96,229	$	148,744	$	2,233,455	$	41,319	$	(377,887)	$	2,141,860
Net income		—		—		—		42,742		—		—		42,742
Dividends:
Payable ($.55 per share)		—		—		—		(34,800)		—		—		(34,800)
Purchase of treasury (5,016 shares)	—	—		—	—	—	—	—	—	—		(141)		(141)
Exercise of stock options		5		5		114		—		—		—		119
Stock compensation expense recognized in earnings		—		—		176		—		—		—		176
Other comprehensive income, net of tax:
Net change in unrealized gains and losses on available for sale securities, net of reclassification adjustments		—		—		—		—		(8,901)		—		(8,901)
Balance at September 30, 2020		96,234	$	96,234	$	149,034	$	2,241,397	$	32,418	$	(378,028)	$	2,141,055

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	Number							Other
	of	Common				Retained		Comprehensive		Treasury
	Shares	Stock		Surplus		Earnings		Income (Loss)		Stock		Total
Balance at December 31, 2020	96,241	$	96,241	$	149,334	$	2,289,626	$	20,825	$	(378,028)	$	2,177,998
Net income	—		—		—		197,396		—		—		197,396
Dividends:
Cash ($1.15 per share)	—		—		—		(72,839)		—		—		(72,839)
Purchase of treasury stock (17,712 shares)	—		—		—		—		—		(704)		(704)
Exercise of stock options	102		102		2,130		—		—		—		2,232
Stock compensation expense recognized in earnings	—		—		391		—		—		—		391
Other comprehensive income, net of tax:
Net change in unrealized gains and losses on available for sale securities, net of reclassification adjustments	—		—		—		—		(10,102)		—		(10,102)
Balance at September 30, 2021	96,343	$	96,343	$	151,855	$	2,414,183	$	10,723	$	(378,732)	$	2,294,372

	Number							Other
	of	Common				Retained		Comprehensive		Treasury
	Shares	Stock		Surplus		Earnings		Income (Loss)		Stock		Total
Balance at December 31, 2019	96,215	$	96,215	$	148,075	$	2,200,568	$	2,345	$	(329,150)	$	2,118,053
Net income	—		—		—		119,090		—		—		119,090
Dividends:
Cash ($1.10 per share)	—		—		—		(69,928)		—		—		(69,928)
Purchase of treasury stock (1,946,228 shares)	—		—		—		—		—		(48,878)		(48,878)
Exercise of stock options	19		19		388		—		—		—		407
Stock compensation expense recognized in earnings	—		—		571		—		—		—		571
Cumulative adjustment for adoption of new accounting standards, net of tax	—		—		—		(8,333)		—		—		(8,333)
Other comprehensive income, net of tax:
Net change in unrealized gains and losses on available for sale securities, net of reclassification adjustments	—		—		—		—		30,073		—		30,073
Balance at September 30, 2020	96,234	$	96,234	$	149,034	$	2,241,397	$	32,418	$	(378,028)	$	2,141,055

See accompanying notes to consolidated financial statements.

7

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

(Dollars in Thousands)

	Nine Months Ended
	September 30,
	2021		2020
Operating activities:
Net income	$	197,396	$	119,090
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit loss		5,137		36,595
Specific reserve, other real estate owned		2,065		702
Depreciation of bank premises and equipment		19,263		21,348
Loss (gain) on sale of bank premises and equipment		5		(248)
Loss (gain) on sale of other real estate owned		160		(361)
Accretion of investment securities discounts		(440)		(367)
Amortization of investment securities premiums		29,749		26,673
Investment securities transactions, net		16		5
Unrealized loss (gain) on equity securities with readily determinable fair values		70		(87)
Proceeds from settlements of claims		2,870		—
Stock based compensation expense		391		571
(Earnings) losses from affiliates and other investments		(66,746)		1,270
Deferred income taxes		(792)		(17,443)
Decrease in accrued interest receivable		6,487		576
Decrease in other assets		7,436		10,724
Increase in other liabilities		21,381		15,799
Net cash provided by operating activities		224,448		214,847
Investing activities:
Proceeds from maturities of securities		1,200		1,075
Proceeds from sales and calls of available for sale securities		5,890		28,795
Purchases of available for sale securities		(2,856,135)		(1,336,445)
Principal collected on mortgage backed securities		1,333,256		1,397,733
Net decrease (increase) in loans		116,355		(684,471)
Purchases of other investments		(45,184)		(38,985)
Distributions from other investments		60,207		64,870
Purchases of bank premises and equipment		(6,070)		(6,245)
Proceeds from sales of bank premises and equipment		1,278		879
Proceeds from sales of other real estate owned		7,925		4,248
Net cash used in investing activities	$	(1,381,278)	$	(568,546)

8

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows, continued (Unaudited)

(Dollars in Thousands)

	Nine Months Ended
	September 30,
	2021		2020
Financing activities:
Net increase in non-interest bearing demand deposits	$	880,951	$	976,195
Net increase in savings and interest bearing demand deposits		608,052		423,075
Net increase in time deposits		33,110		81,429
Net (decrease) increase in securities sold under repurchase agreements		(3,751)		139,313
Net decrease in other borrowed funds		(141)		(190,138)
Purchase of treasury stock		(704)		(48,878)
Proceeds from stock transactions		2,232		407
Payments of cash dividends		(72,839)		(35,128)
Net cash provided by financing activities		1,446,910		1,346,275
Increase in cash and cash equivalents		290,080		992,576
Cash and cash equivalents at beginning of period		1,997,238		256,820
Cash and cash equivalents at end of period	$	2,287,318	$	1,249,396
Supplemental cash flow information:
Interest paid	$	21,127	$	33,880
Income taxes paid		47,392		34,826
Non-cash investing and financing activities:
Net transfers from loans to other real estate owned	$	16,370	$	4,526
Dividends declared, not yet paid on common stock		—		34,800
Net transfers from bank premises and equipment to other assets		—		4,260

See accompanying notes to consolidated financial statements.

9

INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

As used in this report, the words “Company,” “we,” “us” and “our” refer to International Bancshares Corporation, a Texas corporation, its five wholly-owned subsidiary banks, and other subsidiaries. The information that follows may contain forward-looking statements, which are qualified as indicated under “Cautionary Notice Regarding Forward-Looking Statements” in Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) of this report. Our website address is www.ibc.com.

Note 1 — Basis of Presentation

Our accounting and reporting policies conform to accounting principles generally accepted in the United States of America and to general practices within the banking industry. Our consolidated financial statements include the accounts of International Bancshares Corporation, and our wholly-owned bank subsidiaries, International Bank of Commerce, Laredo (“IBC”), Commerce Bank, International Bank of Commerce, Zapata, International Bank of Commerce, Brownsville, International Bank of Commerce, Oklahoma (the “Subsidiary Banks”) and our wholly-owned non-bank subsidiaries, IBC Trading Company, Premier Tierra Holdings, Inc., IBC Charitable and Community Development Corporation, Emerald Galveston Holdings, LLC and IBC Capital Corporation. Our consolidated financial statements are unaudited, but include all adjustments, which, in the opinion of management, are necessary for a fair presentation of the results of the periods presented. All such adjustments were of a normal and recurring nature. These financial statements should be read in conjunction with the financial statements and the notes thereto in our latest Annual Report on Form 10-K. Our consolidated statement of condition at December 31, 2020 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“US GAAP”) for complete financial statements. Certain reclassifications have been made to make prior periods comparable. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results for the year ending December 31, 2021 or any future period.

We operate as one segment. The operating information used by our chief executive officer for purposes of assessing performance and making operating decisions is the consolidated statements presented in this report. We have five active operating subsidiaries, the Subsidiary Banks. We apply the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), FASB ASC 280, “Segment Reporting,” in determining our reportable segments and related disclosures.

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

In June 2016, the FASB issued Accounting Standards Update No. 2016-13 to ASC 326, “Financial Instruments – Credit Losses.” The update amends existing standards for accounting for credit losses for financial assets. The update requires that the expected credit losses on the financial instruments held as of the end of the period being reported be measured based on historical experience, current conditions, and reasonable and supportable forecasts. The update also expands the required disclosures related to significant estimates and judgements used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s financial assets. The update also amended the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The impact of the adoption of the standard is to be recorded as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The accounting standard was effective for us on January 1, 2020. The task force formed last year, which includes key members of the teams that work with the current calculation of the allowance for probable loan losses plus members representing the corporate accounting and risk management areas, has worked with the implementation of the update and validation to complete our model/tool. Based on the composition of the portfolio at December 31, 2019 and after finalizing the methodology, the adoption of the update increased our allowance for probable loan losses (referred to as the allowance for credit losses under ASU

10

2016-13), by approximately 17.2%, resulting in a cumulative-effect adjustment to retained earnings of approximately $8.3 million, net of tax. Please refer to Note 4 – Allowance for Credit Losses and the Critical Accounting Policies discussion in Management’s Discussion and Analysis.

Note 2 — Fair Value Measurements

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 inputs, 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 assets and liabilities reported on the consolidated balance sheets at their fair value on a recurring basis as of September 30, 2021 by level within the fair value measurement hierarchy:

			Fair Value Measurements at
			Reporting Date Using
			(in Thousands)
			Quoted
			Prices in
			Active		Significant
	Assets/Liabilities		Markets for		Other		Significant
	Measured at		Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
	September 30, 2021		(Level 1)		(Level 2)		(Level 3)
Measured on a recurring basis:
Assets:
Available for sale debt securities
Residential mortgage-backed securities	$	4,509,643	$	—	$	4,509,643	$	—
States and political subdivisions		44,671		—		44,671		—
Equity Securities		6,132		6,132		—		—
	$	4,560,446	$	6,132	$	4,554,314	$	—

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The following table represents assets and liabilities reported on the consolidated balance sheets at their fair value on a recurring basis as of December 31, 2020 by level within the fair value measurement hierarchy:

			Fair Value Measurements at
			Reporting Date Using
			(in Thousands)
			Quoted
			Prices in
			Active		Significant
	Assets/Liabilities		Markets for		Other		Significant
	Measured at		Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
	December 31, 2020		(Level 1)		(Level 2)		(Level 3)
Measured on a recurring basis:
Assets:
Available for sale securities
Residential mortgage - backed securities	$	3,029,954	$	—	$	3,029,954	$	—
States and political subdivisions		50,814		—		50,814		—
Equity Securities		6,202		6,202		—		—
	$	3,086,970	$	6,202	$	3,080,768	$	—

Available-for-sale debt securities are classified within Level 1 or 2 of the valuation hierarchy. Equity securities with readily determinable fair values are classified within Level 1. For debt investments classified as Level 2 in the fair value hierarchy, we obtain fair value measurements 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.

Certain financial assets and financial liabilities are measured at fair value on a non-recurring basis. The instruments 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 September 30, 2021 by level within the fair value measurement hierarchy:

			Fair Value Measurements at Reporting
			Date Using
			(in thousands)
			Quoted
	Assets/Liabilities		Prices in
	Measured at		Active		Significant
	Fair Value		Markets for		Other		Significant		Net Provision
	Period ended		Identical		Observable		Unobservable		(Credit)
	September 30,		Assets		Inputs		Inputs		During
	2021		(Level 1)		(Level 2)		(Level 3)		Period
Measured on a non-recurring basis:
Assets:
Watch-List doubtful loans	$	57	$	—	$	—	$	57	$	209
Other real estate owned	$	1,685	$	—	$	—	$	1,685	$	2,065

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The following table represents financial instruments measured at fair value on a non-recurring basis as of and for the period ended December 31, 2020 by level within the fair value measurement hierarchy:

			Fair Value Measurements at Reporting
			Date Using
			(in thousands)
			Quoted
	Assets/Liabilities		Prices in
	Measured at		Active		Significant
	Fair Value		Markets		Other		Significant		Net (Credit)
	Year ended		for Identical		Observable		Unobservable		Provision
	December 31,		Assets		Inputs		Inputs		During
	2020		(Level 1)		(Level 2)		(Level 3)		Period
Measured on a non-recurring basis:
Assets:
Watch-List doubtful loans	$	393	$	—	$	—	$	393	$	(86)
Other real estate owned		6,241		—		—		6,241		1,539

Our assets measured at fair value on a non-recurring basis are limited to loans classified as Watch List – Doubtful and other real estate owned. The fair value of Watch List-Doubtful loans is derived in accordance with FASB ASC 310, “Receivables”. They are primarily comprised of collateral-dependent commercial loans. As the primary sources of loan repayments decline, the secondary repayment source, the collateral, takes on greater significance. Correctly evaluating the fair value becomes even more important. Re-measurement of the loan to fair value is done through a specific valuation allowance included in the allowance for credit losses. The fair value of the loan is based on the fair value of the collateral, as determined through either an appraisal or evaluation process. The basis for our 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 September 30, 2021, we had $815,000 of doubtful commercial collateral dependent loans, of which $0 had an appraisal performed within the immediately preceding twelve months, and of which $815,000 had an evaluation performed within the immediately preceding twelve months. As of December 31, 2020, we had approximately $18,361,000 of doubtful commercial collateral dependent loans, of which $16,587,000 had an appraisal performed within the immediately preceding twelve months and of which $1,283,000 had an evaluation performed within the immediately preceding twelve months.

Our 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 doubtful loans and where obsolete appraisals are identified. In order to determine whether we 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, we 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 analysis of the doubtful loan. 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 credit losses (“ACL”), 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 three and nine months ended September 30, 2021 and the twelve months

13

ended December 31, 2020, we recorded $2, $2 and $22,000, respectively, in charges to the ACL in connection with loans transferred to other real estate owned. For the three and nine months ended September 30, 2021 and the twelve months ended December 31, 2020, we recorded $0, $2,065,000 and $1,539,000, respectively, in adjustments to fair value in connection with other real estate owned.

The fair value estimates, methods, and assumptions for our financial instruments at September 30, 2021 and December 31, 2020 are outlined below.

Cash and Cash Equivalents

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

Time Deposits with Banks

The carrying amounts of time deposits with banks approximate 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 6.

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 September 30, 2021 and December 31, 2020, the carrying amount of fixed rate performing loans was $1,497,535,000 and $1,812,413,000, respectively, and the estimated fair value was $1,451,592,000 and $1,747,257,000, 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 September 30, 2021 and December 31, 2020. The fair value of time deposits is based on the discounted value of contractual cashflows. The discount rate is based on currently offered rates. Time deposits are within Level 3 of the fair

14

value hierarchy. At September 30, 2021 and December 31, 2020, the carrying amount of time deposits was $2,186,651,000 and $2,153,541,000, respectively, and the estimated fair value was $2,184,386,000 and $2,148,976,000, respectively.

Securities Sold Under Repurchase Agreements

Securities sold under repurchase agreements are short-term maturities. Due to the contractual terms of the instruments, the carrying amounts approximated fair value at September 30, 2021 and December 31, 2020.

Junior Subordinated Deferrable Interest Debentures

We currently have 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 September 30, 2021 and December 31, 2020.

Other Borrowed Funds

We currently have long-term borrowings issued from the Federal Home Loan Bank (“FHLB”). The long-term borrowings outstanding at September 30, 2021 and December 31, 2020 are fixed-rate borrowings and the fair value is based on established market spreads for similar types of borrowings. The fixed rate long-term borrowings are included in Level 2 of the fair value hierarchy. At September 30, 2021 and December 31, 2020, the carrying amount of the fixed rate long-term FHLB borrowings was $436,186,000 and $436,372,000, respectively, and the estimated fair value was $466,315,000 and $480,475,000, 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 our entire holdings of a particular financial instrument. Because no market exists for a significant portion of our 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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Note 3 — Loans

A summary of loans, by loan type at September 30, 2021 and December 31, 2020 is as follows:

	September 30,		December 31,
	2021		2020
	(Dollars in Thousands)
Commercial, financial and agricultural	$	4,680,091	$	4,516,288
Real estate - mortgage		876,313		999,144
Real estate - construction		1,671,212		1,846,757
Consumer		40,699		40,595
Foreign		135,843		138,970
Total loans	$	7,404,158	$	7,541,754

Note 4 — Allowance for Credit Losses

The estimation of the ACL is based on a loss-rate methodology that measures lifetime losses on loan pools that have similar risk characteristics. Loans that do not have similar risk characteristics are evaluated on an individual basis. The segmentation of the loan portfolio into pools requires a balancing process between capturing similar risk characteristics and containing sufficient loss history to provide meaningful results. Our segmentation starts at the general loan category with further sub-segmentation based on collateral types that may be of meaningful size and/or may contain sufficient differences in risk characteristics based on management’s judgement that would warrant further segmentation. The general loan categories along with primary risk characteristics used in our calculation are as follows:

Commercial and industrial loans. This category includes loans extended to a diverse array of businesses for working capital or equipment purchases. These loans are mostly secured by the collateral pledged by the borrower that is directly related to the business activities of the company such as equipment, accounts receivable and inventory. The borrower’s abilities to generate revenues from equipment purchases, collect accounts receivable, and to turn inventory into sales are risk factors in the repayment of the loan. A small portion of this loan category is related to loans secured by oil & gas production and loans secured by aircraft.

Construction and land development loans. This category includes the development of land from unimproved land to lot development for both residential and commercial use and vertical construction across residential and commercial real estate classes. These loans carry risk of repayment when projects incur cost overruns, have an increase in the price of construction materials, encounter zoning, entitlement 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 mortgage rate risk and the practice by the mortgage industry of more restrictive underwriting standards, which inhibits the buyer from obtaining long term financing creating excessive housing and lot inventory in the market.

Commercial real estate loans. This category includes loans secured by farmland, multifamily properties, owner occupied commercial properties, and non-owner occupied commercial properties. Owner occupied commercial properties include warehouses often along the border for import/export operations, office space where the borrower is the primary tenant, restaurants and other single-tenant retail. Non-owner occupied commercial properties include hotels, retail centers, office and professional buildings, and leased warehouses. These loans carry 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 type that is significant to the local economy, such as a manufacturing plant.

1-4 family mortgages. This category includes both first and second lien mortgages for the purpose of home purchases or refinancing of existing mortgage loans. A small portion of this loan category is related to home equity

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lines of credits, lots purchases, and home construction. Loan repayments may be affected by unemployment or underemployment and deteriorating market values of real estate.

Consumer loans. This category includes deposit secured, vehicle secured, and unsecured loans, including overdrafts, made to individuals. Repayment is primarily affected by unemployment or underemployment.

The loan pools are further broken down using a risk-based segmentation based on internal classifications for commercial loans and past due status for consumer mortgage loans. Non-mortgage consumer loans are evaluated as one segment. On a weekly basis, commercial 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 our internal Watch List report. Additionally, our credit department reviews the majority of our 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, we will determine if a loan should be placed on an internal Watch List report because of issues related to the analysis of the credit, credit documents, collateral and/or payment history.

Our internal Watch List report is segregated into the following categories: (i) Pass, (ii) Economic Monitoring, (iii) Special Review, (iv) Watch List—Pass, (v) Watch List—Substandard, and (vi) Watch List—Doubtful. The loans placed in the Special Review category and lower rated credits reflect our opinion that the loans reflect potential weakness which require monitoring on a more frequent basis. Credits in those categories are reviewed and discussed on a regular basis, no less frequently than quarterly, 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 category and lower rated credits reflect our opinion that the credit contains weaknesses which represent a greater degree of risk, which warrant “extra attention.” Credits in this category 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 category 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 we may sustain some future loss if such weaknesses are not corrected. The loans placed in the Watch List—Doubtful category have shown defined weaknesses and it is likely, based on current information and events, that we will be unable to collect all principal and/or interest amounts contractually due. Watch List—Doubtful loans are placed on non-accrual when they are moved to that category.

For the purposes of the ACL, in order to maintain segments with sufficient history for meaningful results, the credits in the Pass and Economic Monitoring categories are aggregated, the credits in the Special Review and Watch List—Pass credits are aggregated, and the credits in the Watch List—Substandard category remain in their own segment. For loans that are classified as Watch List—Doubtful, management evaluates these credits in accordance with ASC 310-10, “Receivables,” and, if deemed necessary, a specific reserve is allocated to the loan. 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) net realizable value of the fair value of the collateral if the loan is collateral dependent. Substantially all of our loans evaluated as Watch List—Doubtful under ASC 310-10 are measured using the fair value of collateral method. In rare cases, we may use other methods to determine the specific reserve of a loan under ASC 310-10 if such loan is not collateral dependent.

Within each collectively evaluated pool, the robustness of the lifetime historical loss-rate is evaluated and, if needed, is supplemented with peer loss rates through a model risk adjustment. Certain qualitative loss factors are then evaluated to incorporate management’s two-year reasonable and supportable forecast period followed by a reversion to the pool’s average lifetime loss-rate. Those qualitative loss factors are: (i) trends in portfolio volume and composition, (ii) volume and trends in classified loans, delinquencies, non-accruals and TDR’s, (iii) concentration risk, (iv) trends in underlying collateral value, (v) changes in policies, procedures, and strategies, and (vi) economic conditions. Qualitative factors also include potential losses stemming from operational risk factors arising from fraud, natural disasters,

17

pandemics and geopolitical events. Should any of the factors considered by management in evaluating the adequacy of the ACL change, our estimate could also change, which could affect the level of future credit loss expense.

We have elected to not measure an ACL for accrued interest receivable given our timely approach in identifying and writing off uncollectible accrued interest. An ACL for off-balance sheet exposure is derived from a projected usage rate of any unfunded commitment multiplied by the historical loss rate, plus model risk adjustment, if any, of the on-balance sheet loan pools.

Our management continually reviews the ACL of the Subsidiary Banks using the amounts determined from the estimates established on specific doubtful loans, the estimate established on quantitative historical loss percentages, and the estimate based on qualitative current conditions and reasonable and supportable two-year forecasted data. Our methodology reverts to the average lifetime loss-rate beyond the forecast period when we can no longer develop reasonable and supportable forecasts. Should any of the factors considered by management in evaluating the adequacy of the estimate for current expected credit losses change, our estimate of current expected credit losses could also change, which could affect the level of future credit loss expense. While the calculation of our ACL utilizes management’s best judgment and all information reasonably available, the adequacy of the ACL is dependent on a variety of factors beyond our control, including, among other things, the performance of the entire loan portfolio, the economy, government actions, changes in interest rates and the view of regulatory authorities towards loan classifications.

A summary of the transactions in the allowance for credit loan losses by loan class is as follows:

	Three Months Ended September 30, 2021
	Domestic														Foreign
			Commercial
			Real Estate:
			Other		Commercial
			Construction &		Real Estate:		Commercial
			Land		Farmland &		Real Estate:		Residential:		Residential:
	Commercial		Development		Commercial		Multifamily		First Lien		Junior Lien		Consumer		Foreign		Total
	(Dollars in Thousands)
Balance at June 30, 2021	$	23,063	$	33,603	$	34,238	$	4,206	$	3,916	$	8,196	$	268	$	791	$	108,281
Losses charged to allowance		(2,287)		(2)		—		—		(73)		(4)		(64)		—		(2,430)
Recoveries credited to allowance		473		—		141		—		12		28		19		—		673
Net (losses) recoveries charged to allowance		(1,814)		(2)		141		—		(61)		24		(45)		—		(1,757)
Credit loss expense		1,955		503		871		9		(110)		(496)		47		22		2,801
Balance at September 30, 2021	$	23,204	$	34,104	$	35,250	$	4,215	$	3,745	$	7,724	$	270	$	813	$	109,325

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	Three Months Ended September 30, 2020
	Domestic														Foreign
			Commercial
			Real Estate:
			Other		Commercial
			Construction &		Real Estate:		Commercial
			Land		Farmland &		Real Estate:		Residential:		Residential:
	Commercial		Development		Commercial		Multifamily		First Lien		Junior Lien		Consumer		Foreign		Total
	(Dollars in Thousands)
Balance at June 30, 2020	$	20,079	$	40,924	$	18,711	$	1,864	$	3,208	$	8,964	$	288	$	516	$	94,554
Losses charged to allowance		(1,735)		—		—		—		(87)		(3)		(62)		—		(1,887)
Recoveries credited to allowance		523		14		86		—		8		51		46		—		728
Net (losses) recoveries charged to allowance		(1,212)		14		86		—		(79)		48		(16)		—		(1,159)
Credit loss expense		3,277		(2,855)		4,892		2,639		400		293		2		122		8,770
Balance at September 30, 2020	$	22,144	$	38,083	$	23,689	$	4,503	$	3,529	$	9,305	$	274	$	638	$	102,165

	Nine Months Ended September 30, 2021
	Domestic														Foreign
			Commercial
			Real Estate:
			Other		Commercial
			Construction &		Real Estate:		Commercial
			Land		Farmland &		Real Estate:		Residential:		Residential:
	Commercial		Development		Commercial		Multifamily		First Lien		Junior Lien		Consumer		Foreign		Total
	(Dollars in Thousands)
Balance at December 31, 2020	$	21,908	$	37,612	$	30,000	$	5,051	$	3,874	$	9,570	$	291	$	753	$	109,059
Losses charged to allowance		(5,835)		(2)		(356)		—		(262)		(25)		(151)		—		(6,631)
Recoveries credited to allowance		1,429		—		160		—		47		86		38		—		1,760
Net (losses) recoveries charged to allowance		(4,406)		(2)		(196)		—		(215)		61		(113)		—		(4,871)
Credit loss expense		5,702		(3,506)		5,446		(836)		86		(1,907)		92		60		5,137
Balance at September 30, 2021	$	23,204	$	34,104	$	35,250	$	4,215	$	3,745	$	7,724	$	270	$	813	$	109,325

	Nine Months Ended September 30, 2020
	Domestic														Foreign
			Commercial
			Real Estate:
			Other		Commercial
			Construction &		Real Estate:		Commercial
			Land		Farmland &		Real Estate:		Residential:		Residential:
	Commercial		Development		Commercial		Multifamily		First Lien		Junior Lien		Consumer		Foreign		Total
	(Dollars in Thousands)
Balance at December 31, 2019	$	11,145	$	18,152	$	16,533	$	1,786	$	3,762	$	7,535	$	542	$	823	$	60,278
Adoption of ASU 2016-13		4,247		13,391		(4,292)		(355)		(1,580)		(429)		(225)		(410)		10,347
Losses charged to allowance		(6,696)		(19)		(55)		—		(123)		(124)		(192)		—		(7,209)
Recoveries credited to allowance		1,793		15		107		—		10		171		58		—		2,154
Net (losses) recoveries charged to allowance		(4,903)		(4)		52		—		(113)		47		(134)		—		(5,055)
Credit loss expense		11,655		6,544		11,396		3,072		1,460		2,152		91		225		36,595
Balance at September 30, 2020	$	22,144	$	38,083	$	23,689	$	4,503	$	3,529	$	9,305	$	274	$	638	$	102,165

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The credit loss expense charged to operations increased throughout 2020 as a result of increases in the ACL due to deteriorating economic conditions as a result of the novel Coronavirus Disease 2019 (“COVID-19”) and its variant strains the impact of those conditions on certain segments of our loan portfolio. Economic conditions during the first nine months of 2021 have stabilized and, in some segments, improved. The pool specific qualitative loss factors management deemed appropriate for the ACL calculation at December 31, 2020 remained constant in the September 30, 2021 ACL calculation, which positively impacted the calculation and resulted in a decrease in the credit loss expense charged to operations for the three and nine months ended September 30, 2021 compared to the same period of 2020.

The table below provides additional information on the balance of loans individually or collectively evaluated for impairment and their related allowance, by loan class as of September 30, 2021 and December 31, 2020:

	September 30, 2021
	Loans Individually				Loans Collectively
	Evaluated For				Evaluated For
	Impairment				Impairment
	Recorded				Recorded
	Investment		Allowance		Investment		Allowance
	(Dollars in Thousands)
Domestic
Commercial	$	331	$	29	$	1,596,518	$	23,175
Commercial real estate: other construction & land development		646		70		1,670,566		34,034
Commercial real estate: farmland & commercial		414		—		2,715,663		35,250
Commercial real estate: multifamily		137		—		367,028		4,215
Residential: first lien		89		—		385,544		3,745
Residential: junior lien		33		—		490,647		7,724
Consumer		—		—		40,699		270
Foreign		—		—		135,843		813
Total	$	1,650	$	99	$	7,402,508	$	109,226

	December 31, 2020
	Loans Individually				Loans Collectively
	Evaluated For				Evaluated For
	Impairment				Impairment
	Recorded				Recorded
	Investment		Allowance		Investment		Allowance
	(Dollars in Thousands)
Domestic
Commercial	$	1,189	$	209	$	1,784,747	$	21,699
Commercial real estate: other construction & land development		17,496		70		1,829,261		37,542
Commercial real estate: farmland & commercial		439		—		2,288,869		30,000
Commercial real estate: multifamily		134		—		440,910		5,051
Residential: first lien		151		—		404,968		3,874
Residential: junior lien		38		—		593,987		9,570
Consumer		—		—		40,595		291
Foreign		—		—		138,970		753
Total	$	19,447	$	279	$	7,522,307	$	108,780

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The table below provides additional information on loans accounted for on a non-accrual basis by loan class at September 30, 2021 and December 31, 2020:

	September 30, 2021		December 31, 2020
	(Dollars in Thousands)
Domestic
Commercial	$	331	$	1,189
Commercial real estate: other construction & land development		646		17,496
Commercial real estate: farmland & commercial		414		439
Commercial real estate: multifamily		137		134
Residential: first lien		342		526
Residential: junior lien		33		38
Total non-accrual loans	$	1,903	$	19,822

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 Watch List—Doubtful loans.

	September 30, 2021		December 31, 2020
		(Dollars in Thousands)
Domestic
Residential: first lien	$	1,934	$	4,078
Residential: junior lien		106		521
Consumer		862		989
Foreign		17		233
Total troubled debt restructuring	$	2,919	$	5,821

We are actively working with our customers affected by the current economic crisis arising from COVID-19. We have been offering and are prepared to continue to offer assistance in accordance with current regulatory guidance. That includes continuously reaching out to our customers and, in some cases, offering short-term payment deferral plans. As of November 1, 2021, we had approximately $226,831,000 in loans with some degree of payment deferrals in our system. In accordance with interagency regulatory guidance, these short-term deferrals are not considered troubled debt restructurings. The $226,831,000 is comprised primarily of loans related to industries that have been significantly impacted by the COVID-19 pandemic, including the hospitality sector, special use facilities, including child care centers, and retail developments.

With the passage of the Paycheck Protection Program (“PPP”), administered by the Small Business Association (“SBA”), we assisted our customers with applications for loans through the PPP. PPP loans earn interest at 1% and PPP loans made prior to June 5, 2020 have a two-year term, while those made after June 5, 2020 have a five-year term; however, PPP loans also include forgiveness provisions that we expect most customers will utilize. Customers began submitting applications for the forgiveness program in the third quarter of 2020. PPP loans were intended to support up to 24 weeks of payroll and certain other costs to help those businesses remain viable and allow their employees to pay their bills. As of November 1, 2021, we had 2,634 PPP loans totaling approximately $169,511,000 outstanding. The PPP loans are fully guaranteed by the U.S. government through the SBA.

The Subsidiary Banks 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 our management believes 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-

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off as a loss is an exercise of judgment. Similarly, the determination of the adequacy of the ACL can be made only on a subjective basis. It is the judgment of our management that the ACL at September 30, 2021 was adequate to absorb probable losses from loans in the portfolio at that date.

The following tables present information regarding the aging of past due loans by loan class at September 30, 2021 and December 31, 2020:

	September 30, 2021
							90 Days or		Total
	30 - 59		60 - 89		90 Days or		greater &		Past				Total
	Days		Days		Greater		still accruing		Due		Current		Portfolio
	(Dollars in Thousands)
Domestic
Commercial	$	5,123	$	221	$	89	$	89	$	5,433	$	1,591,416	$	1,596,849
Commercial real estate: other construction & land development		21,433		188		—		—		21,621		1,649,591		1,671,212
Commercial real estate: farmland & commercial		6,535		2,104		185		—		8,824		2,707,253		2,716,077
Commercial real estate: multifamily		—		—		—		—		—		367,165		367,165
Residential: first lien		2,266		655		4,930		4,735		7,851		377,782		385,633
Residential: junior lien		515		104		1,842		1,842		2,461		488,219		490,680
Consumer		240		70		46		46		356		40,343		40,699
Foreign		1,231		1,482		360		360		3,073		132,770		135,843
Total past due loans	$	37,343	$	4,824	$	7,452	$	7,072	$	49,619	$	7,354,539	$	7,404,158

	December 31, 2020
							90 Days or		Total
	30 - 59		60 - 89		90 Days or		greater &		Past				Total
	Days		Days		Greater		still accruing		Due		Current		Portfolio
		(Dollars in Thousands)
Domestic
Commercial	$	1,931	$	1,109	$	563	$	318	$	3,603	$	1,782,333	$	1,785,936
Commercial real estate: other construction & land development		1,059		854		16,587		—		18,500		1,828,257		1,846,757
Commercial real estate: farmland & commercial		2,435		219		186		186		2,840		2,286,468		2,289,308
Commercial real estate: multifamily		126		—		—		—		126		440,918		441,044
Residential: first lien		2,399		926		6,165		5,890		9,490		395,629		405,119
Residential: junior lien		561		247		1,197		1,197		2,005		592,020		594,025
Consumer		318		71		79		79		468		40,127		40,595
Foreign		478		180		568		568		1,226		137,744		138,970
Total past due loans	$	9,307	$	3,606	$	25,345	$	8,238	$	38,258	$	7,503,496	$	7,541,754

The decrease in Commercial Real Estate – Other Construction and Land Development Loans 90 days or greater past due at September 30, 2021 can be primarily attributed to a relationship secured by commercial property that was placed on non-accrual in the fourth quarter of 2020 and foreclosed upon in the first quarter of 2021.

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A summary of the loan portfolio by credit quality indicator by loan class and by year of origination at September 30, 2021 and December 31, 2020 is presented below:

		2021	2020		2019		2018		2017		Prior		Total
	(Dollars in Thousands)
Balance at September 30, 2021
Domestic
Commercial
Pass	$	775,702	$	398,790	$	126,858	$	104,736	$	67,433	$	8,398	$	1,481,917
Special Review		1,517		74,691		139		81		—		—		76,428
Watch List - Pass		33,793		—		—		—		—		10		33,803
Watch List - Substandard		3,232		297		781		60		—		—		4,370
Watch List - Doubtful		106		134		—		—		91		—		331
Total Commercial	$	814,350	$	473,912	$	127,778	$	104,877	$	67,524	$	8,408	$	1,596,849
Commercial real estate: other construction & land development
Pass	$	657,381	$	441,333	$	413,856	$	83,925	$	15,826	$	3,406	$	1,615,727
Special Review		31,527		—		211		—		—		—		31,738
Watch List - Pass		—		23,101		—		—		—		—		23,101
Watch List - Doubtful		539		107		—		—		—		—		646
Total Commercial real estate: other construction & land development	$	689,447	$	464,541	$	414,067	$	83,925	$	15,826	$	3,406	$	1,671,212
Commercial real estate: farmland & commercial
Pass	$	771,884	$	699,685	$	326,176	$	455,899	$	197,313	$	131,756	$	2,582,713
Special Review		2,849		1,314		910		3,617		63		194		8,947
Watch List - Pass		17,503		44,143		—		—		94		1		61,741
Watch List - Substandard		1,304		54,124		4,178		—		2,195		461		62,262
Watch List - Doubtful		—		229		185		—		—		—		414
Total Commercial real estate: farmland & commercial	$	793,540	$	799,495	$	331,449	$	459,516	$	199,665	$	132,412	$	2,716,077
Commercial real estate: multifamily
Pass	$	40,569	$	81,107	$	98,720	$	76,109	$	63,220	$	7,303	$	367,028
Watch List - Doubtful		—		137		—		—		—		—		137
Total Commercial real estate: multifamily	$	40,569	$	81,244	$	98,720	$	76,109	$	63,220	$	7,303	$	367,165
Residential: first lien
Pass	$	85,763	$	56,687	$	65,531	$	51,959	$	31,709	$	93,611	$	385,260
Watch List - Substandard		57		—		103		—		123		1		284
Watch List - Doubtful		—		89		—		—		—		—		89
Total Residential: first lien	$	85,820	$	56,776	$	65,634	$	51,959	$	31,832	$	93,612	$	385,633
Residential: junior lien
Pass	$	103,570	$	141,368	$	71,211	$	35,364	$	46,503	$	92,631	$	490,647
Watch List- Doubtful		—		33		—		—		—		—		33
Total Residential: junior lien	$	103,570	$	141,401	$	71,211	$	35,364	$	46,503	$	92,631	$	490,680
Residential: junior lien
Consumer
Pass	$	26,613	$	10,196	$	1,910	$	332	$	67	$	1,581	$	40,699
Total Consumer	$	26,613	$	10,196	$	1,910	$	332	$	67	$	1,581	$	40,699
Foreign
Pass	$	69,895	$	37,503	$	9,082	$	9,347	$	5,238	$	4,778	$	135,843
Total Foreign	$	69,895	$	37,503	$	9,082	$	9,347	$	5,238	$	4,778	$	135,843
Total Loans	$	2,623,804	$	2,065,068	$	1,119,851	$	821,429	$	429,875	$	344,131	$	7,404,158

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		2020	2019		2018		2017		2016		Prior		Total
	(Dollars in Thousands)
Balance at December 31, 2020
Domestic
Commercial
Pass	$	1,168,671	$	240,869	$	145,670	$	85,434	$	13,901	$	10,000	$	1,664,545
Special Review		75,638		—		—		—		—		—		75,638
Watch List - Pass		39,886		11		—		3		—		17		39,917
Watch List - Substandard		3,360		683		289		—		315		—		4,647
Watch List - Doubtful		777		161		92		159		—		—		1,189
Total Commercial	$	1,288,332	$	241,724	$	146,051	$	85,596	$	14,216	$	10,017	$	1,785,936
Commercial
Commercial real estate: other construction & land development
Pass	$	773,165	$	576,707	$	320,308	$	78,174	$	10,534	$	3,343	$	1,762,231
Special Review		20,828		21,650		—		—		—		—		42,478
Watch List - Pass		23,101		1,451		—		—		—		—		24,552
Watch List - Doubtful		16,702		794		—		—		—		—		17,496
Total Commercial real estate: other construction & land development	$	833,796	$	600,602	$	320,308	$	78,174	$	10,534	$	3,343	$	1,846,757
Commercial real estate: farmland & commercial
Pass	$	884,070	$	373,993	$	386,268	$	189,639	$	202,500	$	116,729	$	2,153,199
Special Review		3,041		—		4,758		177		3,218		—		11,194
Watch List - Pass		61,637		942		277		80		—		—		62,936
Watch List - Substandard		53,809		4,986		—		2,269		475		1		61,540
Watch List - Doubtful		—		202		—		—		—		237		439
Total Commercial real estate: farmland & commercial	$	1,002,557	$	380,123	$	391,303	$	192,165	$	206,193	$	116,967	$	2,289,308
Commercial real estate: multifamily
Pass	$	74,577	$	208,356	$	82,818	$	64,110	$	6,801	$	4,248	$	440,910
Watch List - Doubtful		134		—		—		—		—		—		134
Total Commercial real estate: multifamily	$	74,711	$	208,356	$	82,818	$	64,110	$	6,801	$	4,248	$	441,044
Residential: first lien
Pass	$	81,004	$	62,165	$	72,299	$	54,593	$	29,250	$	105,463	$	404,774
Watch List - Pass		—		14		131		—		—		—		145
Watch List - Substandard		—		—		—		—		49		—		49
Watch List - Doubtful		86		—		—		—		—		65		151
Total Residential: first lien	$	81,090	$	62,179	$	72,430	$	54,593	$	29,299	$	105,528	$	405,119
Residential: junior lien
Pass	$	196,308	$	108,276	$	61,636	$	75,056	$	56,705	$	94,454	$	592,435
Special Review		740		—		—		812		—		—		1,552
Watch List- Doubtful		—		—		38		—		—		—		38
Total Residential: junior lien	$	197,048	$	108,276	$	61,674	$	75,868	$	56,705	$	94,454	$	594,025
Consumer
Pass	$	30,910	$	7,159	$	875	$	225	$	55	$	1,371	$	40,595
Total Consumer	$	30,910	$	7,159	$	875	$	225	$	55	$	1,371	$	40,595
Foreign
Pass	$	93,236	$	19,092	$	11,572	$	6,192	$	3,533	$	5,345	$	138,970
Total Foreign	$	93,236	$	19,092	$	11,572	$	6,192	$	3,533	$	5,345	$	138,970
Total Loans	$	3,601,680	$	1,627,511	$	1,087,031	$	556,923	$	327,336	$	341,273	$	7,541,754

The decrease in Special Review Commercial Real Estate – Other Construction and Land development loans at September 30, 2021 compared to December 31, 2020 can be primarily attributed to the payoff of a loan secured by commercial property in the first quarter of 2021. The decrease in Watch List-Doubtful loans in the same category for the same period can be primarily attributed to a relationship secured by commercial property that was placed on non-accrual status in the fourth quarter of 2020 and subsequently foreclosed upon in the first quarter of 2021.

Note 5 — 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 of common stock available for stock option grants under the 2012 Plan, which may be qualified incentive stock options (“ISOs”) or non-qualified stock options. Options granted may be

24

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 September 30, 2021, 21,478 shares were available for future grants under the 2012 Plan.

A summary of option activity under the stock option plan for the nine months ended September 30, 2021 is as follows:

				Weighted
		Weighted		average
		average		remaining	Aggregate
	Number of	exercise		contractual	intrinsic
	options	price		term (years)	value ($)
					(in Thousands)
Options outstanding at December 31, 2020	651,127	$	27.24
Plus: Options granted	18,000		37.76
Less:
Options exercised	102,275		21.83
Options expired	—		—
Options forfeited	29,376		33.31
Options outstanding at September 30, 2021	537,476		28.29	4.73	$	7,176
Options fully vested and exercisable at September 30, 2021	342,473	$	24.58	3.32	$	5,843

Stock-based compensation expense included in the consolidated statements of income for the three and nine months ended September 30, 2021 was $118,000 and $391,000, respectively. Stock-based compensation expense included in the consolidated statements of income for the three and nine months ended September 30, 2020 was $176,000 and $571,000, respectively. As of September 30, 2021, there was approximately $1,023,000 of total unrecognized stock-based compensation cost related to non-vested options granted under our plans that will be recognized over a weighted average period of 1.7 years.

Note 6 — Investment Securities, Equity Securities with Readily Determinable Fair Values and Other Investments

We classify debt securities into one of three categories: held-to-maturity, available-for-sale, or trading. Such debt securities are reassessed for appropriate classification at each reporting date. Securities classified as “held-to-maturity” are carried at amortized cost for financial statement reporting, while securities classified as “available-for-sale” and “trading” 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 (loss) and accumulated other comprehensive income (loss) until realized, or in the case of losses, when deemed other than temporary. In accordance with ASU 2016-13, which we adopted on January 1, 2020, available-for-sale and held-to-maturity debt securities in an unrealized loss position must be evaluated for the underlying cause of the loss. In the event that the deterioration in value is attributable to credit related reasons, then the amount of credit-related impairment would be recorded as a charge to our ACL with subsequent changes in the amount of impairment, up or down, also recorded through our ACL. The exception to this process will occur if we intend to sell an impaired available-for-sale debt security or if we will more likely than not be required to sell a credit impaired available-for-sale debt security prior to the value recovering to the security’s amortized cost. In those situations, the entire credit-related impairment amount would be required to be recognized in earnings. We have evaluated the debt securities classified as available-for-sale and held-to-maturity at September 30, 2021 and have determined that no debt securities in an unrealized loss position are arising from credit related reasons and have therefore not recorded any allowances for debt securities in our ACL for the period. Unrealized gains and losses related to equity securities with readily determinable fair values are included in net income.

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The amortized cost and estimated fair value by type of investment security at September 30, 2021 are as follows:

	Held to Maturity
			Gross		Gross
	Amortized		unrealized		unrealized		Estimated		Carrying
	cost		gains		losses		fair value		value
	(Dollars in Thousands)
Other securities	$	3,400	$	—	$	—	$	3,400	$	3,400
Total investment securities	$	3,400	$	—	$	—	$	3,400	$	3,400

	Available for Sale Debt Securities
			Gross		Gross
	Amortized		unrealized		unrealized		Estimated		Carrying
	cost		gains		losses		fair value		value(1)
	(Dollars in Thousands)
Residential mortgage-backed securities	$	4,499,169	$	21,717	$	(11,243)	$	4,509,643	$	4,509,643
Obligations of states and political subdivisions		41,583		3,088		—		44,671		44,671
Total investment securities	$	4,540,752	$	24,805	$	(11,243)	$	4,554,314	$	4,554,314

(1) Included in the carrying value of residential mortgage-backed securities are $873,753 of mortgage-backed securities issued by Ginnie Mae and $3,635,890 of mortgage-backed securities issued by Fannie Mae and Freddie Mac.

The amortized cost and estimated fair value by type of investment security at December 31, 2020 are as follows:

	Held to Maturity
			Gross		Gross
	Amortized		unrealized		unrealized		Estimated		Carrying
	cost		gains		losses		fair value		value
	(Dollars in Thousands)
Other securities	$	3,400	$	—	$	—	$	3,400	$	3,400
Total investment securities	$	3,400	$	—	$	—	$	3,400	$	3,400

	Available for Sale
			Gross		Gross		Estimated
	Amortized		unrealized		unrealized		fair		Carrying
	cost		gains		losses		value		value(1)
	(Dollars in Thousands)
Residential mortgage-backed securities	$	3,006,592	$	32,701	$	(9,339)	$	3,029,954	$	3,029,954
Obligations of states and political subdivisions		47,697		3,131		(14)		50,814		50,814
Total investment securities	$	3,054,289	$	35,832	$	(9,353)	$	3,080,768	$	3,080,768

(1) Included in the carrying value of residential mortgage-backed securities are $371,407 of mortgage-backed securities issued by Ginnie Mae and $2,658,547 of mortgage-backed securities issued by Fannie Mae and Freddie.

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The amortized cost and estimated fair value of investment securities at September 30, 2021, 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		Estimated		Amortized		Estimated
	Cost		fair value		Cost		fair value
	(Dollars in Thousands)
Due in one year or less	$	2,200	$	2,200	$	—	$	—
Due after one year through five years		1,200		1,200		—		—
Due after five years through ten years		—		—		—		—
Due after ten years		—		—		41,583		44,671
Residential mortgage-backed securities		—		—		4,499,169		4,509,643
Total investment securities	$	3,400	$	3,400	$	4,540,752	$	4,554,314

Residential mortgage-backed securities are securities primarily issued by the Federal Home Loan Mortgage Corporation (“Freddie Mac”), Federal National Mortgage Association (“Fannie Mae”), or the Government National Mortgage Association (“Ginnie Mae”). 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, we believe 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 or Freddie Mac are rated consistently as AAA rated securities.

The amortized cost and fair value of available-for-sale debt investment securities pledged to qualify for fiduciary powers, to secure public monies as required by law, repurchase agreements and short-term fixed borrowings was $1,442,729,000 and $1,442,487,000, respectively, at September 30, 2021.

Proceeds from the sale and calls of debt securities available-for-sale were $3,025,000 and $5,890,000 for the three and nine months ended September 30, 2021, respectively, which included $0 and $0 of mortgage-backed securities, respectively. Gross gains of $0 and $0 and gross losses of $12,000 and $16,000, respectively, were realized on the sales and calls for the three and nine months ended September 30, 2021. Proceeds from the sale and call of debt securities available-for-sale were $9,875,000 and $28,795,000 for the three and nine months ended September 30, 2020, which included $0 and $0 of mortgage-backed securities, respectively. Gross gains of $0 and $0 and gross losses of $0 and $5,000 were realized on the sales and calls for the three and nine months ended September 30, 2020, respectively.

Gross unrealized losses on debt investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual debt securities have been in a continuous unrealized loss position at September 30, 2021, were as follows:

	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
	(Dollars in Thousands)
Available for sale:
Residential mortgage-backed securities	$	2,448,908	$	(10,355)	$	276,364	$	(888)	$	2,725,272	$	(11,243)
	$	2,448,908	$	(10,355)	$	276,364	$	(888)	$	2,725,272	$	(11,243)

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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, 2020 were as follows:

	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
	(Dollars in Thousands)
Available for sale:
Residential mortgage-backed securities	$	1,462,232	$	(9,339)	$	—	$	—	$	1,462,232	$	(9,339)
Obligations of states and political subdivisions		—		—		757		(14)		757		(14)
	$	1,462,232	$	(9,339)	$	757	$	(14)	$	1,462,989	$	(9,353)

The unrealized losses on investments in residential mortgage-backed securities are primarily caused by changes in market interest rates. We have 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 our conclusion that the investments in residential mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae are not considered other-than-temporarily impaired.

Equity securities with readily determinable fair values consist primarily of Community Reinvestment Act funds. At September 30, 2021 and December 31, 2020, the balance in equity securities with readily determinable fair values recorded at fair value were $6,132,000 and $6,202,000, respectively. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and nine months ended September 30, 2021 and the three and nine months ended September 30, 2020:

	Three Months Ended
	September 30, 2021
	(Dollars in Thousands)
Net losses recognized during the period on equity securities	$	(5)
Less: Net gains and (losses) recognized during the period on equity securities sold during the period		—
Unrealized losses recognized during the reporting period on equity securities still held at the reporting date	$	(5)

	Nine Months Ended
	September 30, 2021
	(Dollars in Thousands)
Net losses recognized during the period on equity securities	$	(70)
Less: Net gains and (losses) recognized during the period on equity securities sold during the period		—
Unrealized losses recognized during the reporting period on equity securities still held at the reporting date	$	(70)

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	Three Months Ended
	September 30, 2020
	(Dollars in Thousands)
Net losses recognized during the period on equity securities	$	(12)
Less: Net gains and (losses) recognized during the period on equity securities sold during the period		—
Unrealized losses recognized during the reporting period on equity securities still held at the reporting date	$	(12)

	Nine Months Ended
	September 30, 2020
	(Dollars in Thousands)
Net gains recognized during the period on equity securities	$	87
Less: Net gains and (losses) recognized during the period on equity securities sold during the period		—
Unrealized losses recognized during the reporting period on equity securities still held at the reporting date	$	87

Other investments include equity and merchant banking investments held by our subsidiary banks and non-banking entities. During the second quarter of 2021, one of our non-bank subsidiaries sold an equity interest in a merchant banking investment resulting in a gain on sale included in other investment income on the consolidated statements of income.

Note 7 — Other Borrowed Funds

Other borrowed funds include FHLB borrowings, which are short-term and long-term borrowings issued by the FHLB of Dallas and the FHLB of Topeka at the market price offered at the time of funding. These borrowings are secured by residential mortgage-backed investment securities and a portion of our loan portfolio. At September 30, 2021, other borrowed funds totaled $436,186,000, a decrease of less than .1% from $436,327,000 at December 31, 2020.

Note 8 — Junior Subordinated Interest Deferrable Debentures

As of September 30, 2021, we have five statutory business trusts under the laws of the State of Delaware, for the purpose of issuing trust preferred securities. The five statutory business trusts we formed (the “Trusts”) have each issued Capital and Common Securities and invested the proceeds thereof in an equivalent amount of junior subordinated debentures (“Debentures”) that we issued. As of September 30, 2021 and December 31, 2020, the principal amount of Debentures outstanding totaled $134,642,000.

The Debentures are subordinated and junior in right of payment to all present and future senior indebtedness (as defined in the respective Indentures) 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. We have fully and unconditionally guaranteed the obligations of each of the Trusts with respect to the Capital and Common Securities. We have 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 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.

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For financial reporting purposes, the Trusts are treated as our investments and not consolidated in our consolidated financial statements. Although the Capital and Common Securities issued by each of the Trusts are not included as a component of shareholders’ equity on the consolidated statement of condition, the Capital and Common Securities are treated as capital for regulatory purposes. Specifically, under applicable regulatory guidelines, the Capital and Common 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 September 30, 2021 and December 31, 2020, the total $134,642,000 of the Capital and Common Securities outstanding qualified as Tier 1 capital.

The following table illustrates key information about each of the Capital and Common Securities and their interest rate at September 30, 2021:

	Junior
	Subordinated
	Deferrable
	Interest		Repricing	Interest		Interest				Optional
	Debentures		Frequency	Rate		Rate Index(1)			Maturity Date	Redemption Date(1)
	(Dollars in Thousands)
Trust VIII	$	25,774	Quarterly	3.18	%	LIBOR	+	3.05	October 2033	October 2008
Trust IX		41,238	Quarterly	1.76	%	LIBOR	+	1.62	October 2036	October 2011
Trust X		21,021	Quarterly	1.78	%	LIBOR	+	1.65	February 2037	February 2012
Trust XI		25,990	Quarterly	1.76	%	LIBOR	+	1.62	July 2037	July 2012
Trust XII		20,619	Quarterly	1.57	%	LIBOR	+	1.45	September 2037	September 2012
	$	134,642

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

Note 9 — Common Stock and Dividends

We paid cash dividends of $.60 and $0.55 per share on February 17 and September 3, 2021, respectively, to record holders of our common Stock on February 5 and August 20, 2021, respectively. We paid cash dividends of $.55 per share on April 3 and October 5, 2020, respectively, to record holders of our common stock on April 1 and September 21, 2020, respectively.

In April 2009, the Board of Directors re-established a formal stock repurchase program that authorized the repurchase of up to $40 million of common stock within the following 12 months. Annually since then, including on March 2, 2021, the Board of Directors extended the repurchase program to purchase up to $50 million of common stock during the 12-month period commencing on March 17, 2021. Shares of common stock may be purchased from time to time on the open market or through privately negotiated transactions. Shares purchased in this program will be held in treasury for reissue for various corporate purposes, including employee compensation plans. During the third quarter of 2021, the Board of Directors adopted a Rule 10b5-1 trading plan, and intends to adopt additional Rule 10b5-1 trading plans, that will allow us to purchase shares of our common stock during certain trading blackout periods when we ordinarily would not be in the market due to trading restrictions in our insider trading policy. During the term of a Rule 10b5-1 trading plan, purchases of common stock are automatic to the extent the conditions of the plan’s trading instructions are met. Shares purchased under the Rule 10b5-1 trading plan will be held in treasury for reissue for various corporate purposes, including employee stock compensation plans. As of November 1, 2021, a total of 12,285,114 shares had been repurchased under all programs at a cost of $357,759,000. We are not obligated to purchase shares under our stock repurchase program outside of its Rule 10b5-1 trading plan.

Note 10 — Commitments and Contingent Liabilities and Other Tax Matters

We are involved in various legal proceedings that are in various stages of litigation. We have determined, based on discussions with its counsel, that any material loss in such actions, individually or in the aggregate, is remote or the

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damages sought, even if fully recovered, would not be considered material to our consolidated financial position or results of operations. However, many of these matters are in various stages of proceedings and further developments could cause management to revise its assessment of these matters.

Note 11 — Capital Ratios

Banks and bank holding companies are subject to various regulatory capital requirements administered by state and federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amount and classifications are also subject to qualitative judgements by regulators about components, risk-weighting and other factors.

In July 2013, the Federal Deposit Insurance Corporation (“FDIC”) and other regulatory bodies established a new, comprehensive capital framework for U.S. banking organizations, 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 Wall Street Reform and Consumer Protection Act (“Dodd Frank”) related capital provisions. Consistent with the Basel international framework, the rules include a minimum ratio of Common Equity Tier 1 (“CET1”) to risk-weighted assets of 4.5% and a CET1 capital conservation buffer of 2.5% of risk-weighted assets. The capital conservation buffer began phasing-in on January 1, 2016 at .625% and increased each year until January 1, 2019, when we were required to have a 2.5% capital conservation buffer, effectively resulting in a minimum ratio of CET1 capital to risk-weighted assets of at least 7% upon full implementation. The rules also raised the minimum ratio of Tier 1 capital to risk-weighted assets from 4% to 6% and include a minimum leverage ratio of 4% for all banking organizations. Regarding the quality of capital, the rules emphasize CET1 capital and implements strict eligibility criteria for regulatory capital instruments. The rules also improve the methodology for calculating risk-weighted assets to enhance risk sensitivity. The rules were subject to a four-year phase in period for mandatory compliance and we were required to begin to phase in the rules beginning on January 1, 2015. We believe that as of September 30, 2021, we continue to meet all fully phased-in capital adequacy requirements.

On November 21, 2017, the OCC, the Federal Reserve and the FDIC finalized a proposed rule that extends the current treatment under the regulatory capital rules for certain regulatory capital deductions and risk weights and certain minority interest requirements, as they apply to banking organizations that are not subject to the advanced approaches capital rules. Effective January 1, 2018, the rule also pauses the full transition to the Basel III treatment of mortgage servicing assets, certain deferred tax assets, investments in the capital of unconsolidated financial institutions and minority interests. The agencies are also considering whether to make adjustments to the capital rules in response to CECL (the FASB Standard relating to current expected credit loss) and its potential impact on regulatory capital.

On December 7, 2017, the Basel Committee on Banking Supervision unveiled the latest round of its regulatory capital framework, commonly called “Basel IV.” The framework makes changes to the capital framework first introduced as “Basel III” in 2010. The committee targeted 2022-2027 as the timeframe for implementation by regulators in individual countries, including the U.S. federal bank regulatory agencies (after notice and comment).

The aforementioned capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of CET1 capital 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.

As of September 30, 2021, our capital levels continue to exceed all capital adequacy requirements under the Basel III Capital Rules as currently applicable to us.

On May 24, 2018, the EGRRCPA was enacted and, among other things, it includes a simplified capital rule change which effectively exempts banks with assets of less than $10 billion that exceed the “community bank leverage ratio,” from all risk-based capital requirements, including Basel III and its predecessors. The federal banking agencies must establish the “community bank leverage ratio” (a ratio of tangible equity to average consolidated assets) between 8% and 10% before community banks can begin to take advantage of this regulatory relief provision. Some of the Subsidiary Banks, with assets of less than $10 billion, may qualify for this exemption. Additionally, under the

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EGRRCPA, qualified bank holding companies with assets of up to $3 billion (currently $1 billion) will be eligible for the Federal Reserve’s Small Bank Holding Company Policy Statement, which eases limitations on the issuance of debt by holding companies. On August 28, 2018, the Federal Reserve issued an interim final rule expanding the applicability of its Small Bank Holding Company Policy Statement. While holding companies that meet the conditions of the policy statement are excluded from consolidated capital requirements, their depository institutions continue to be subject to minimum capital requirements. Finally, for banks that continue to be subject to the risk-based capital rules of Basel III (e.g., 150%), certain commercial real estate loans that were formally classified as high volatility commercial real estate 31 (“HVCRE”) will not be subject to heightened risk weights if they meet certain criteria. Also, while acquisition, development, and construction (“ADC”) loans will generally be subject to heightened risk weights, certain exceptions will apply. On September 18, 2018, the federal banking agencies issued a proposed rule modifying the agencies’ capital rules for HVCRE.

We had a CET1 to risk-weighted assets ratio of 19.64% on September 30, 2021 and 19.05% on December 31, 2020. We had a Tier 1 capital-to-average-total-asset (leverage) ratio of 13.89% and 14.92%, risk-weighted Tier 1 capital ratio of 20.76% and 20.25% and risk-weighted total capital ratio of 21.86% and 21.40% at September 30, 2021 and December 31, 2020, respectively. Our CET1 capital consists of common stock and related surplus, net of treasury stock, and retained earnings. We and our Subsidiary Banks elected to opt-out of the requirement to include most components of accumulated other comprehensive income (loss) in the calculation of CET1 capital. CET1 is reduced by goodwill and other intangible assets, net of associated deferred tax liabilities and subject to transition provisions. Tier 1 capital includes CET1 capital and additional Tier 1 capital. Additional Tier 1 capital includes the Capital and Common Securities issued by the Trusts (see Note 8 above) up to a maximum of 25% of Tier 1 capital on an aggregate basis. Any amount that exceeds the 25% threshold qualifies as Tier 2 capital. As of September 30, 2021, the total of $134,642,000 of the Capital and Common Securities outstanding qualified as Tier 1 capital. We actively monitor the regulatory capital ratios to ensure that our Subsidiary Banks are well-capitalized under the regulatory framework.

The CET1, Tier 1 and Total capital ratios are calculated by dividing the respective capital amounts by risk-weighted assets. Risk-weighted assets are calculated based on regulatory requirements and include total assets, excluding goodwill and other intangible assets, allocated by risk-weight category, and certain off-balance-sheet items, among other things. The leverage ratio is calculated by dividing Tier 1 capital by adjusted quarterly average total assets, which exclude goodwill and other intangible assets, among other things.

We and our Subsidiary Banks are subject to the regulatory capital requirements administered by the Federal Reserve, and, for our Subsidiary Banks, the FDIC. Regulatory authorities can initiate certain mandatory actions if we or any of our Subsidiary Banks fail to meet the minimum capital requirements, which could have a direct material effect on our financial statements. Management believes, as of September 30, 2021, that we and each of our Subsidiary Banks meet all capital adequacy requirements to which we are subject.

As used in this report, the words “Company,” “we,” “us” and “our” refer to International Bancshares Corporation, a Texas corporation, its five wholly-owned subsidiary banks, and other subsidiaries. The information that follows may contain forward-looking statements, which are qualified as indicated under “Cautionary Notice Regarding Forward-Looking Statements” in Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) of this report. Our website address is www.ibc.com.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our consolidated financial statements, and notes thereto, for the year ended December 31, 2020, included in our 2020 Form 10-K. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results for the year ending December 31, 2021, or any future period.

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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 we believe 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 we project, forecast, estimate or budget 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 us, our customers, and such customers’ ability to transact profitable business with us, including the ability of our 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 unavailability of funding from the FHLB, Fed or other sources in the future could adversely impact our growth strategy, prospects and performance.

● Changes in consumer spending, borrowing and saving habits.

● Changes in interest rates and market prices, including, the repeal of federal prohibitions on the payment of interest on demand deposits.

● Changes in the capital markets we utilize, including changes in the interest rate environment that may reduce margins.

● Changes in state and/or federal laws and regulations, including the impact of the Consumer Financial Protection Bureau (“CFPB”) as a 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.

● Changes in U.S.—Mexico trade, including, reductions in border crossings and commerce, renegotiation and recent changes made to the North American Free Trade Agreement, set to be replaced by the 2018 United States-Mexico-Canada Agreement or the possible imposition of tariffs on imported goods.

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

● The loss of senior management or operating personnel.

● The timing, impact and other uncertainties of potential future acquisitions as well as our ability to maintain our current branch network and enter new markets to capitalize on growth opportunities.

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

● Additions to our allowance for credit loss as a result of changes in local, national or international conditions which adversely affect our customers.

● 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 we interact.

● Political instability in the United States or Mexico.

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● Technological changes or system failures or breaches of our network security, as well as other cyber security risks, could subject us to increased operating costs, 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 portfolios.

● The effect of changes in accounting policies and practices by the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standards setters.

● The costs and effects of regulatory developments or regulatory or other governmental inquiries and the results of regulatory examinations or reviews and obtaining required regulatory approvals.

● 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, as well as the effect of any other regulatory or legal developments that limit overdraft services.

● The reduction of income and possible increase in required capital levels related to the adoption of legislation and the implementing rules and regulations, including those that establish debit card interchange fee standards and prohibit network exclusivity arrangements and routing restrictions.

● The 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.

● Our failure or circumvention of our internal controls and risk management, policies and procedures.

● Potential direct and indirect impacts, risks, and uncertainties associated with the novel Coronavirus Disease 2019 (“COVID-19”) or similar global pandemics.

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. We make 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

We are headquartered in Laredo, Texas with 186 facilities and 280 ATMs, and provide banking services for commercial, consumer and international customers of North, South, Central and Southeast Texas and the State of Oklahoma. We are one of the largest independent commercial bank holding companies headquartered in Texas. We, through our Subsidiary Banks, are in the business of gathering funds from various sources and investing those funds in order to earn a return. We, either directly or through a Subsidiary Bank, own an insurance agency, a liquidating subsidiary, a fifty percent interest in an investment banking unit that owns a broker/dealer, a controlling interest in four merchant banking entities, and a majority ownership in a real-estate development partnership. Our primary earnings come from the spread between the interest earned on interest-bearing assets and the interest paid on interest-bearing liabilities. In addition, we generate income from fees on products offered to commercial, consumer and international customers. The sales team of each of our Subsidiary Banks aims to match the right mix of products and services to each customer to best serve the customer’s needs. That process entails spending time with customers to assess those needs and servicing the sales arising from those discussions on a long-term basis. The Subsidiary Banks have various compensation plans, including incentive based compensation, for fairly compensating employees. The Subsidiary Banks also have a robust process in place to review sales that support the incentive based compensation plan to monitor the quality of the sales and identify any significant irregularities, a process that has been in place for many years.

We are very active in facilitating trade along the United States border with Mexico. We do 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 our Subsidiary Banks. We also serve the growing Hispanic population through our facilities located throughout South, Central and Southeast Texas and the State of Oklahoma.

In March 2020, the World Health Organization recognized the outbreak of COVID-19 as a pandemic. The spread of COVID-19 and resulting global health crisis created extreme negative consequences and disruption in global

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financial markets and has curtailed activity in the governmental, commercial and consumer sectors in 2020 and has continued to impact 2021. Government responses at all levels included ordering non-essential businesses be closed, mandating that individuals not working in essential businesses restrict their movement, observing social distancing and shelter in place, and, in many communities, cancelling what remained of the school year. Although some of the governmental mandates have been lifted with the development of several vaccines for COVID-19, the long-term consequences of those actions, and the responses by individuals and businesses affected, remain to be seen. The rapid decreases in consumer and commercial activity, rapid increases in unemployment, disruption in global supply chains, market downturns and volatility, drastic changes in consumer behavior, new legislation in response to the emergency and decreases in interest rates seen throughout 2020 continue to impact 2021.

We have continued to work with our customers to assist them through these difficult times and we are continuing to capitalize on our strong capital position and strong liquidity to ensure that we are correctly positioned and have the financial strength to continue to navigate the crisis to protect our Company, our employees, our customers and our shareholders. In order to protect the health of our employees and customers, while still filling the needs in the communities we serve as an essential business, we continue to take steps to ensure proper safety protocols are in place, including enforcing local ordinances, discontinuing significant travel, ensuring social distancing, increasing disinfecting of our facilities, establishing a human resources hotline to address employee concerns, and establishing a task force to ensure we are making good decisions. For our customers, we are also working with them on a case-by-case basis on temporary deferrals of interest and/or principal payments on loans and responding to other individual needs of those customers that continue to experience financial distress.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was signed into law. It contains substantial tax and spending provisions intended to address the impact of the COVID-19 pandemic. The CARES Act includes the Paycheck Protection Program (“PPP”), a nearly $350 billion program designed to aid small businesses through federally guaranteed loans distributed through banks. These loans were originally intended to support eight weeks of payroll and certain other costs to help those businesses remain viable and allow their employees to pay their bills. Subsequently, on April 24, 2020, the Paycheck Protection Program and Health Care Enhancement Act (“CARES Part II”) was signed into law. CARES Part II provides an additional funding of $320 billion for the PPP program. Then, on June 5, 2020, the Paycheck Protection Program Flexibility Act (“PPPFA”) was signed into law. The PPPFA, among other things, extended the period of time that businesses could spend PPP loan proceeds on payroll and other eligible costs from eight weeks to the earlier of 24 weeks or December 31, 2020. On December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (the “Economic Aid Act”) was enacted, which among other things, reauthorized lending under the PPP to first-time borrowers and for second draws by certain borrowers who have previously received PPP loans. The Economic Aid Act made available an additional $147 billion for PPP loans requested by March 31, 2021. We have been active participants in helping our customers obtain PPP loans under all the PPP programs, and as of November 1, 2021, have approximately 2,634 loans with an approximate value of $169,511,000 outstanding.

Future economic conditions remain uncertain and the impact of those conditions on our business also remains uncertain. Our business depends on the willingness and ability of our customers to conduct banking and other financial transactions. Our revenue streams including service charges on deposits and banking and non-banking service charges and fees (ATM and Interchange Income) have been impacted and may continue to be impacted in the future if economic conditions do not improve. Expense control has been a long-time focus and essential element to our long-term profitability. We have kept that focus in mind as we continue to look at operations and create efficiencies and institute cost-control protocols at all levels. We will continue to monitor our efficiency ratio, a measure of non-interest expense to net interest income plus non-interest income and our overhead burden ratio, a ratio of our operating expenses against total assets, closely. We use these measures in determining if we are accomplishing our long-term goals of controlling our costs in order to provide superior returns to our shareholders.

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Results of Operations

Summary

Consolidated Statements of Condition Information

	September 30, 2021		December 31, 2020		Percent Increase (Decrease)
	(Dollars in Thousands)
Assets	$	15,677,496	$	14,029,467	11.7	%
Net loans		7,294,833		7,432,695	(1.9)
Deposits		12,243,973		10,721,860	14.2
Securities sold under repurchase agreements		424,397		428,148	(0.9)
Other borrowed funds		436,186		436,327	(0.0)
Junior subordinated deferrable interest debentures		134,642		134,642	—
Shareholders’ equity		2,294,372		2,177,998	5.3

Consolidated Statements of Income Information

	Three Months Ended						Nine Months Ended
	September 30,				Percent		September 30,				Percent
	(Dollars in Thousands)				Increase		(Dollars in Thousands)				Increase
	2021		2020		(Decrease)		2021		2020		(Decrease)
Interest income	$	101,192	$	99,983	1.2	%	$	297,045	$	330,245	(10.1)	%
Interest expense		6,682		8,170	(18.2)			20,218		31,735	(36.3)
Net interest income		94,510		91,813	2.9			276,827		298,510	(7.3)
Provision for probable loan losses		2,801		8,770	(68.1)			5,137		36,595	(86.0)
Non-interest income		47,209		40,117	17.7			181,352		108,843	66.6
Non-interest expense		69,727		70,053	(0.5)			201,866		220,942	(8.6)
Net income		54,599		42,742	27.7	%		197,396		119,090	65.8	%
Per common share:
Basic	$	.86	$	.68	26.5	%	$	3.12	$	1.86	67.7	%
Diluted		.86		.67	28.4			3.11		1.86	67.2

Net Income

Net income for the three and nine months ended September 30, 2021 increased by 27.7% and 65.8%, respectively, compared to the same periods of 2020. Net income for the nine months ended September 30, 2021 was significantly impacted by the sale of an equity interest in a merchant banking investment held by one of our non-bank subsidiaries totaling $42.8 million, net of tax. Net income for the three and nine months ended September 30, 2021 was also positively impacted by a decrease in the provision for credit losses compared to the same periods of 2020. We adopted the provisions of ASU 2016-13 on January 1, 2020, resulting in a transition from the long-standing incurred loss model to an expected credit loss model, which recognizes credit losses over the life of a financial asset. Expected credit losses capture historical information, current conditions, and reasonable and supportable forecasts of future conditions. The impact of the adoption resulted in a charge to capital of $8.3 million, net of tax. The credit loss expense charged to operations increased throughout 2020 as a result of increases in the allowance for credit losses (“ACL”) due to deteriorating economic conditions as a result of COVID-19 and the impact of those conditions on certain segments of our loan portfolio. Economic conditions during the first nine months of 2021 have stabilized or improved in certain segments. The pool specific qualitative loss factors management deemed appropriate for the ACL calculation at December 31, 2020 remained constant in the September 30, 2021 ACL calculation, which positively impacted the calculation and resulted in a decrease of $24.9 million, net of tax, in the credit loss expense charged to operations for the nine months ended September 30, 2021 compared to the same period of 2020. Net interest income continues to be negatively impacted by the Federal Reserve Board (“FRB”) action to keep interest rates low since March 2020.

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Net Interest Income

	Three Months Ended						Nine Months Ended
	September 30,				Percent		September 30,				Percent
	(Dollars in Thousands)				Increase		(Dollars in Thousands)				Increase
	2021		2020		(Decrease)		2021		2020		(Decrease)
Interest Income:
Loans, including fees	$	88,280	$	90,614	(2.6)	%	$	272,210	$	287,608	(5.4)	%
Investment securities:
Taxable		11,669		8,469	37.8			21,558		40,049	(46.2)
Tax-exempt		360		605	(40.5)			1,132		2,024	(44.1)
Other interest income		883		295	199.3			2,145		564	280.3
Total interest income		101,192		99,983	1.2			297,045		330,245	(10.1)
Interest expense:
Savings deposits		1,082		1,028	5.3			3,001		5,424	(44.7)
Time deposits		2,814		4,292	(34.4)			8,941		15,581	(42.6)
Securities sold under Repurchase agreements		165		164	0.6			448		777	(42.3)
Other borrowings		1,929		1,930	(0.1)			5,726		6,844	(16.3)
Junior subordinated interest deferrable debentures		692		756	(8.5)			2,102		3,109	(32.4)
Total interest expense		6,682		8,170	(18.2)			20,218		31,735	(36.3)
Net interest income	$	94,510	$	91,813	2.9	%	$	276,827	$	298,510	(7.3)	%

The decrease in net interest income for the nine months ended September 30, 2021 can be attributed to a decrease in interest income on loans and investment securities arising from the Federal Reserve Board actions to lower interest rates in early 2020, a decrease in the average size of the available-for-sale securities portfolio, and an acceleration in principal paydowns of residential mortgage-backed securities in the portfolio. Interest expense on other borrowings consists of interest expense on FHLB borrowings and has decreased as the level of borrowings outstanding has decreased. Interest expense on savings and time deposits for the nine months ended September 30, 2021 was positively impacted by internal rate decreases paid on such deposits in line with market interest rates. 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. As part of our strategy to manage interest rate risk, we strive 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. Our management can quickly change our 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 we employ to supplement gap analysis include simulation analysis to quantify interest rate risk exposure. The gap analysis prepared by management is reviewed by our Investment Committee twice a year (see table on page 45 for the September 30, 2021 gap analysis). Our management currently believes that we are properly positioned for interest rate changes; however if our management determines at any time that the we are not properly positioned, we 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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Non-Interest Income

	Three Months Ended						Nine Months Ended
	September 30,				Percent		September 30,				Percent
	(Dollars in Thousands)				Increase		(Dollars in Thousands)				Increase
	2021		2020		(Decrease)		2021		2020		(Decrease)
Service charges on deposit accounts	$	17,294	$	15,037	15.0	%	$	47,971	$	45,554	5.3	%
Other service charges, commissions and fees
Banking		15,750		14,471	8.8			41,166		36,866	11.7
Non-banking		2,046		1,800	13.7			5,831		5,584	4.4
Investment securities transactions, net		(12)		—	-			(16)		(5)	220.0
Other investments, net		5,490		3,235	69.7			68,495		3,621	1,791.6
Other income		6,641		5,574	19.1			17,905		17,223	4.0
Total non-interest income	$	47,209	$	40,117	17.7	%	$	181,352	$	108,843	66.6	%

Total non-interest income for the three and nine months ended September 30, 2021 increased by 17.7% and 66.6%, respectively, compared to the same periods of 2020. Income from service charges on deposits increased for the three and nine months ended September 30, 2021 compared to the same periods of 2020 due to an increase in customer activity as a result of the current economic environment and a decrease in the impact of the COVID-19 pandemic on day-to-day activities. Non-interest income from other investments for the nine months ended September 30, 2021 was positively impacted by the sale of an equity interest in a merchant banking investment held by one of our non-bank subsidiaries.

Non-Interest Expense

	Three Months Ended						Nine Months Ended
	September 30,				Percent		September 30,				Percent
	(Dollars in Thousands)				Increase		(Dollars in Thousands)				Increase
	2021		2020		(Decrease)		2021		2020		(Decrease)
Employee compensation and benefits	$	30,552	$	31,718	(3.7)	%	$	91,262	$	100,367	(9.1)	%
Occupancy		6,491		6,677	(2.8)			18,638		19,346	(3.7)
Depreciation of bank premises and equipment		6,028		7,049	(14.5)			19,263		21,348	(9.8)
Professional fees		2,558		4,121	(37.9)			7,675		12,004	(36.1)
Deposit insurance assessments		1,026		810	26.7			2,840		1,012	180.6
Net expense, other real estate owned		438		1,341	(67.3)			5,351		7,178	(25.5)
Advertising		1,470		1,413	4.0			4,349		5,289	(17.8)
Software and software maintenance		4,115		4,964	(17.1)			13,091		14,712	(11.0)
Other		17,049		11,960	42.6			39,407		39,686	(0.7)
Total non-interest expense	$	69,727	$	70,053	(0.5)	%	$	201,876	$	220,942	(8.6)	%

Non-interest expense for the three and nine months ended September 30, 2021 decreased by .5% and 8.6%, respectively, compared to the same periods of 2020. The decrease is primarily due to our continued employee compensation and benefits reductions, and is primarily being driven by efforts to right-size and closely manage our workforce commensurate with decreased activities in our branches arising from the COVID-19 pandemic while ensuring that we are able to continue to serve our customers. We continue to monitor and manage our controllable non-interest expenses through a variety of measures with the ultimate goal of ensuring we align non-interest expenses with our operations and revenue streams.

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Financial Condition

Allowance for Credit Losses

The allowance for credit losses increased .2% to $109,325,000 at September 30, 2021 from $109,059,000 at December 31, 2020. The provision for credit losses charged to expense decreased 68.1% and 86.0% for the three and nine months ended September 30, 2021 to $2,801,000 and $5,137,000, respectively, compared to $8,770,000 and $36,595,000 for the same periods of 2020. The credit loss expense charged to operations increased throughout 2020 as a result of increases in the ACL due to deteriorating economic conditions as a result of COVID-19 and the impact of those conditions on certain segments of our loan portfolio. Economic conditions during the first nine months of 2021 have stabilized, and in some segments, improved. The pool specific qualitative loss factors management deemed appropriate for the ACL calculation at December 31, 2020 remained constant in the September 30, 2021 ACL calculation, which positively impacted the calculation and resulted in a decrease in the credit loss expense charged to operations for the three and nine months ended September 30, 2021 compared to the same periods of 2020. We adopted the provisions of ASU 2016-13 on January 1, 2020, resulting in a transition from the long-standing incurred loss model to an expected credit loss model, which recognizes credit losses over the life of a financial asset. Expected credit losses capture historical information, current conditions, and reasonable and supportable forecasts of future conditions. Expected credit losses capture historical information, current conditions, and reasonable and supportable forecasts of future conditions. The allowance for credit losses was 1.48% of total loans at September 30, 2021 and 1.45% of total loans at December 31, 2020.

Investment Securities

Residential mortgage-backed debt securities are securities primarily issued by Freddie Mac, Fannie Mae, or Ginnie Mae. Investments in debt residential mortgage-backed securities issued by Ginnie Mae are fully guaranteed by the U.S. Government. Investments in debt residential mortgage-backed securities issued by Freddie Mac and Fannie Mae are not fully guaranteed by the U.S. Government, however, we believe 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 or Freddie Mac are rated consistently as AAA rated securities.

Loans

Total loans decreased by 1.8% to $7,404,158,000 at September 30, 2021, from $7,541,754,000 at December 31, 2020.

Deposits

Deposits increased by 14.2% to $12,243,973,000 at September 30, 2021, compared to $10,721,860,000 at December 31, 2020. Deposits have continued to increase as customers have received proceeds from CARES Act programs, such as stimulus payments and PPP loan proceeds, and presumably decided to save and preserve cash instead of spending during these uncertain times.

Foreign Operations

On September 30, 2021, we had $15,677,496,000 of consolidated assets, of which approximately $135,843,000, or .9%, was related to loans outstanding to borrowers domiciled in foreign countries, compared to $138,970,000, or 1.0%, at December 31, 2020. Of the $135,843,000, 85.8% is directly or indirectly secured by U.S. assets, certificates of deposits and real estate; 6.8% is secured by foreign real estate or other assets; and 7.4% is unsecured.

Critical Accounting Policies

We have established various accounting policies that govern the application of accounting principles in the preparation of our consolidated financial statements. The significant accounting policies are described in the notes to the

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consolidated financial statements. Certain accounting policies involve significant subjective judgments and assumptions by management that have a material impact on the carrying value of certain assets and liabilities; management considers such accounting policies to be critical accounting policies.

We consider our estimated ACL as a policy critical to the sound operations of our Subsidiary Banks. We adopted the provisions of Accounting Standards Update No. 2016-13 to ASC 326, “Financial Instruments – Credit Losses,” on January 1, 2020. ASU 2016-13 replaces the long-standing incurred loss model with an expected credit loss model that recognizes credit losses over the life of a financial asset. Expected credit losses capture historical information, current conditions, and reasonable and supportable forecasts of future conditions. The ACL is deducted from the amortized cost of an instrument to present the net amount expected to be collected on the financial asset. Our ACL primarily consists of the aggregate ACL estimates of our Subsidiary Banks. The estimates are established through charges to operations in the form of charges to provisions for credit loss expense. Loan losses or recoveries are charged or credited directly to the ACL. The ACL of each Subsidiary Bank is maintained at a level considered appropriate by management, based on estimated current expected credit losses in the current loan portfolio, including information about past events, current conditions and reasonable and supportable forecasts.

The estimation of the ACL is based on a loss-rate methodology that measures lifetime losses on loan pools that have similar risk characteristics. Loans that do not have similar risk characteristics are evaluated on an individual basis. The segmentation of the loan portfolio into pools requires a balancing process between capturing similar risk characteristics and containing sufficient loss history to provide meaningful results. Our segmentation starts at the general loan category with further sub-segmentation based on collateral types that may be of meaningful size and/or may contain sufficient differences in risk characteristics based on management’s judgement that would warrant further segmentation. The general loan categories along with primary risk characteristics used in our calculation are as follows:

Commercial and industrial loans. This category includes loans extended to a diverse array of businesses for working capital or equipment purchases. These loans are mostly secured by the collateral pledged by the borrower that is directly related to the business activities of the company such as equipment, accounts receivable and inventory. The borrower’s abilities to generate revenues from equipment purchases, collect accounts receivable, and to turn inventory into sales are risk factors in the repayment of the loan. A small portion of this loan category is related to loans secured by oil & gas production and loans secured by aircraft.

Construction and land development loans. This category includes the development of land from unimproved land to lot development for both residential and commercial use and vertical construction across residential and commercial real estate classes. These loans carry risk of repayment when projects incur cost overruns, have an increase in the price of construction materials, encounter zoning, entitlement 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 mortgage rate risk and the practice by the mortgage industry of more restrictive underwriting standards, which inhibits the buyer from obtaining long term financing creating excessive housing and lot inventory in the market.

Commercial real estate loans. This category includes loans secured by farmland, multifamily properties, owner occupied commercial properties, and non-owner occupied commercial properties. Owner occupied commercial properties include warehouses often along the border for import/export operations, office space where the borrower is the primary tenant, restaurants and other single-tenant retail. Non-owner occupied commercial properties include hotels, retail centers, office and professional buildings, and leased warehouses. These loans carry 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 type that is significant to the local economy, such as a manufacturing plant.

1-4 family mortgages. This category includes both first and second lien mortgages for the purpose of home purchases or refinancing of existing mortgage loans. A small portion of this loan category is related to home equity lines of credits, lots purchases, and home construction. Loan repayments may be affected by unemployment or underemployment and deteriorating market values of real estate.

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Consumer loans. This category includes deposit secured, vehicle secured, and unsecured loans, including overdrafts, made to individuals. Repayment is primarily affected by unemployment or underemployment.

The loan pools are further broken down using a risk-based segmentation based on internal classifications for commercial loans and past due status for consumer mortgage loans. Non-mortgage consumer loans are evaluated as one segment. On a weekly basis, commercial 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 our internal Watch List report. Additionally, our credit department reviews the majority of our 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, we will determine if a loan should be placed on an internal Watch List report because of issues related to the analysis of the credit, credit documents, collateral and/or payment history.

Our internal Watch List report is segregated into the following categories: (i) Pass, (ii) Economic Monitoring, (iii) Special Review, (iv) Watch List—Pass, (v) Watch List—Substandard, and (vi) Watch List—Doubtful. The loans placed in the Special Review category and lower rated credits reflect our opinion that the loans reflect potential weakness which require monitoring on a more frequent basis. Credits in those categories are reviewed and discussed on a regular basis, no less frequently than quarterly, 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 category and lower rated credits reflect our opinion that the credit contains weaknesses which represent a greater degree of risk, which warrant “extra attention.” Credits in this category 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 category 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 we may sustain some future loss if such weaknesses are not corrected. The loans placed in the Watch List—Doubtful category have shown defined weaknesses and it is likely, based on current information and events, that we will be unable to collect all principal and/or interest amounts contractually due. Watch List—Doubtful loans are placed on non-accrual when they are moved to that category.

For the purposes of the ACL, in order to maintain segments with sufficient history for meaningful results, the credits in the Pass and Economic Monitoring categories are aggregated, the credits in the Special Review and Watch List—Pass credits are aggregated, and the credits in the Watch List—Substandard category remain in their own segment. For loans that are classified as Watch List—Doubtful, management evaluates these credits in accordance with ASC 310-10, “Receivables,” and, if deemed necessary, a specific reserve is allocated to the loan. 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) net realizable value of the fair value of the collateral if the loan is collateral dependent. Substantially all of our loans evaluated as Watch List—Doubtful under ASC 310-10 are measured using the fair value of collateral method. In rare cases, we may use other methods to determine the specific reserve of a loan under ASC 310-10 if such loan is not collateral dependent.

Within each collectively evaluated pool, the robustness of the lifetime historical loss-rate is evaluated and, if needed, is supplemented with peer loss rates through a model risk adjustment. Certain qualitative loss factors are then evaluated to incorporate management’s two-year reasonable and supportable forecast period followed by a reversion to the pool’s average lifetime loss-rate. Those qualitative loss factors are: (i) trends in portfolio volume and composition, (ii) volume and trends in classified loans, delinquencies, non-accruals and TDR’s, (iii) concentration risk, (iv) trends in underlying collateral value, (v) changes in policies, procedures, and strategies, and (vi) economic conditions. Qualitative factors also include potential losses stemming from operational risk factors arising from fraud, natural disasters, pandemics and geopolitical events. Should any of the factors considered by management in evaluating the adequacy of the ACL change, our estimate could also change, which could affect the level of future credit loss expense.

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We have elected to not measure an ACL for accrued interest receivable given our timely approach in identifying and writing off uncollectible accrued interest. An ACL for off-balance sheet exposure is derived from a projected usage rate of any unfunded commitment multiplied by the historical loss rate, plus model risk adjustment, if any, of the on-balance sheet loan pools.

Our management continually reviews the ACL of the Subsidiary Banks using the amounts determined from the estimates established on specific doubtful loans, the estimate established on quantitative historical loss percentages, and the estimate based on qualitative current conditions and reasonable and supportable two-year forecasted data. Our methodology reverts to the average lifetime loss-rate beyond the forecast period when we can no longer develop reasonable and supportable forecasts. Should any of the factors considered by management in evaluating the adequacy of the estimate for current expected credit losses change, our estimate of current expected credit losses could also change, which could affect the level of future credit loss expense. While the calculation of our ACL utilizes management’s best judgment and all information reasonably available, the adequacy of the ACL is dependent on a variety of factors beyond our control, including, among other things, the performance of the entire loan portfolio, the economy, government actions, changes in interest rates and the view of regulatory authorities towards loan classifications.

Liquidity and Capital Resources

The maintenance of adequate liquidity provides our Subsidiary Banks 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. Our Subsidiary Banks 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 our Subsidiary Banks. Other important funding sources for our Subsidiary Banks during 2021 and 2020 were borrowings from the FHLB, securities sold under repurchase agreements and large certificates of deposit, requiring management to closely monitor our asset/liability mix in terms of both rate sensitivity and maturity distribution. Our Subsidiary Banks 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. We maintain 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. We 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.

We maintain an adequate level of capital as a margin of safety for our depositors and shareholders. At September 30, 2021, shareholders’ equity was $2,294,372,000 compared to $2,177,998,000 at December 31, 2020. The increase in shareholders’ equity can be primarily attributed to the retention of earnings offset by the payment of dividends to shareholders and a decrease in other comprehensive income.

Banks and bank holding companies are subject to various regulatory capital requirements administered by state and federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amount and classifications are also subject to qualitative judgements by regulators about components, risk-weighting and other factors.

In July 2013, the Federal Deposit Insurance Corporation (“FDIC”) and other regulatory bodies established a new, comprehensive capital framework for U.S. banking organizations, 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. Consistent with the Basel international framework, the rules include a minimum ratio of Common Equity Tier 1 (“CET1”) to risk-weighted assets of 4.5% and a CET1 capital conservation buffer of 2.5% of risk-weighted assets. The capital conservation buffer began phasing-in on January 1, 2016 at .625% and increased each year until January 1, 2019, when we were required to have a 2.5% capital conservation buffer, effectively resulting in a minimum ratio of CET1 capital to

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risk-weighted assets of at least 7% upon full implementation. The rules also raised the minimum ratio of Tier 1 capital to risk-weighted assets from 4% to 6% and include a minimum leverage ratio of 4% for all banking organizations. Regarding the quality of capital, the rules emphasize CET1 capital and implements strict eligibility criteria for regulatory capital instruments. The rules also improve the methodology for calculating risk-weighted assets to enhance risk sensitivity. The rules were subject to a four year phase in period for mandatory compliance and we were required to begin to phase in the rules beginning on January 1, 2015. Management believes, as of September 30, 2021, that we and each of our Subsidiary Banks continue to meet all fully phased-in capital adequacy requirements.

On November 21, 2017, the Office of the Comptroller of the Currency (“OCC”), the FRB and the FDIC finalized a proposed rule that extends the current treatment under the regulatory capital rules for certain regulatory capital deductions and risk weights and certain minority interest requirements, as they apply to banking organizations that are not subject to the advanced approaches capital rules. Effective January 1, 2018, the rule also pauses the full transition to the Basel III treatment of mortgage servicing assets, certain deferred tax assets, investments in the capital of unconsolidated financial institutions and minority interests. The agencies are also considering whether to make adjustments to the capital rules in response to CECL (the FASB Standard relating to current expected credit loss) and its potential impact on regulatory capital.

On December 7, 2017, the Basel Committee on Banking Supervision unveiled the latest round of its regulatory capital framework, commonly called “Basel IV.” The framework makes changes to the capital framework first introduced as “Basel III” in 2010. The committee targeted 2022-2027 as the timeframe for implementation by regulators in individual countries, including the U.S. federal bank regulatory agencies (after notice and comment).

In December 2018, the federal banking regulators issued a final rule that would provide an optional three-year phase-in period for the day-one regulatory capital effects of the adoption of Accounting Standards Update (“ASU”) 2016-13 to ASC 326, “Financial Instruments – Credit Losses,” as amended, on January 1, 2020.

On May 24, 2018, the EGRRCPA was enacted and, among other things, it includes a simplified capital rule change which effectively exempts banks with assets of less than $10 billion that exceed the “community bank leverage ratio,” from all risk-based capital requirements, including Basel III and its predecessors. The federal banking agencies must establish the “community bank leverage ratio” (a ratio of tangible equity to average consolidated assets) between 8% and 10% before community banks can begin to take advantage of this regulatory relief provision. Some of the Subsidiary Banks, with assets of less than $10 billion, may qualify for this exemption. Additionally, under the EGRRCPA, qualified bank holding companies with assets of up to $3 billion (currently $1 billion) will be eligible for the Federal Reserve’s Small Bank Holding Company Policy Statement, which eases limitations on the issuance of debt by holding companies. On August 28, 2018, the Federal Reserve issued an interim final rule expanding the applicability of its Small Bank Holding Company Policy Statement. While holding companies that meet the conditions of the policy statement are excluded from consolidated capital requirements, their depository institutions continue to be subject to minimum capital requirements. Finally, for banks that continue to be subject to the risk-based capital rules of Basel III (e.g., 150%), certain commercial real estate loans that were formally classified as high volatility commercial real estate 31 (“HVCRE”) will not be subject to heightened risk weights if they meet certain criteria. Also, while acquisition, development, and construction (“ADC”) loans will generally be subject to heightened risk weights, certain exceptions will apply. On September 18, 2018, the federal banking agencies issued a proposed rule modifying the agencies’ capital rules for HVCRE.

We had a CET1 to risk-weighted assets ratio of 19.64% on September 30, 2021 and 19.05% on December 31, 2020. We had a Tier 1 capital-to-average-total-asset (leverage) ratio of 13.89% and 14.92%, risk-weighted Tier 1 capital ratio of 20.76% and 20.25% and risk-weighted total capital ratio of 21.86% and 21.40% at September 30, 2021 and December 31, 2020, respectively. Our CET1 capital consists of common stock and related surplus, net of treasury stock, and retained earnings. We and our Subsidiary Banks elected to opt-out of the requirement to include most components of accumulated other comprehensive income (loss) in the calculation of CET1 capital. CET1 is reduced by goodwill and other intangible assets, net of associated deferred tax liabilities and subject to transition provisions. Tier 1 capital includes CET1 capital and additional Tier 1 capital. Additional Tier 1 capital includes the Capital and Common Securities issued by the Trusts (see Note 8 above) up to a maximum of 25% of Tier 1 capital on an aggregate basis. Any amount that exceeds the 25% threshold qualifies as Tier 2 capital. As of September 30, 2021, the total of $134,642,000

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of the Capital and Common Securities outstanding qualified as Tier 1 capital. We actively monitor the regulatory capital ratios to ensure that our Subsidiary Banks are well-capitalized under the regulatory framework.

The CET1, Tier 1 and Total capital ratios are calculated by dividing the respective capital amounts by risk-weighted assets. Risk-weighted assets are calculated based on regulatory requirements and include total assets, excluding goodwill and other intangible assets, allocated by risk-weight category, and certain off-balance-sheet items, among other things. The leverage ratio is calculated by dividing Tier 1 capital by adjusted quarterly average total assets, which exclude goodwill and other intangible assets, among other things.

We and our Subsidiary Banks are subject to the regulatory capital requirements administered by the Federal Reserve, and, for our Subsidiary Banks, the FDIC. Regulatory authorities can initiate certain mandatory actions if we or any of our Subsidiary Banks fail to meet the minimum capital requirements, which could have a direct material effect on our financial statements. Management believes, as of September 30, 2021, that we and each of our Subsidiary Banks continue to meet all capital adequacy requirements to which we are subject.

We 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 anticipate fluctuations in interest rates by adjusting the balance between sources and uses of funds as deemed appropriate. The net-interest rate sensitivity as of September 30, 2021 is illustrated in the table entitled “Interest Rate Sensitivity,” below. This information reflects the balances of assets and liabilities for which rates are subject to change. A mix of assets and liabilities that are roughly equal in volume and re-pricing characteristics represents a matched interest rate sensitivity position. Any excess of assets or liabilities results in an interest rate sensitivity gap.

We undertake an interest rate sensitivity analysis to monitor the potential risk on future earnings resulting from the impact of possible future changes in interest rates on currently existing net asset or net liability positions. However, this type of analysis is as of a point-in-time position, when in fact that position can quickly change as market conditions, customer needs, and management strategies change. Thus, interest rate changes do not affect all categories of assets and liabilities equally or at the same time. As indicated in the table, we are asset sensitive in both the short and long term scenarios. Our Asset and Liability Committee semi-annually reviews the consolidated position along with simulation and duration models, and makes adjustments as needed to control our interest rate risk position. We use modeling of future events as a primary tool for monitoring interest rate risk.

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Interest Rate Sensitivity

(Dollars in Thousands)

	Rate/Maturity
			Over 3		Over 1
	3 Months		Months to		Year to 5		Over 5
September 30, 2021	or Less		1 Year		Years		Years		Total
	(Dollars in Thousands)
Rate sensitive assets
Investment securities	$	631,587	$	1,731,010	$	2,156,578	$	44,671	$	4,563,846
Loans, net of non-accruals		5,951,674		202,983		350,451		897,147		7,402,255
Total earning assets	$	6,583,261	$	1,933,993	$	2,507,029	$	941,818	$	11,966,101
Cumulative earning assets	$	6,583,261	$	8,517,254	$	11,024,283	$	11,966,101
Rate sensitive liabilities
Time deposits	$	951,291	$	1,107,717	$	127,627	$	16	$	2,186,651
Other interest bearing deposits		4,460,557		—		—		—		4,460,557
Securities sold under repurchase agreements		424,397		—		—		—		424,397
Other borrowed funds		—		—		—		436,186		436,186
Junior subordinated deferrable interest debentures		134,642		—		—		—		134,642
Total interest bearing liabilities	$	5,970,887	$	1,107,717	$	127,627	$	436,202	$	7,642,433
Cumulative sensitive liabilities	$	5,970,887	$	7,078,604	$	7,206,231	$	7,642,433
Repricing gap	$	612,374	$	826,276	$	2,379,402	$	505,616	$	4,323,668
Cumulative repricing gap		612,374		1,438,650		3,818,052		4,323,668
Ratio of interest-sensitive assets to liabilities		1.10		1.75		19.64		2.16		1.57
Ratio of cumulative, interest-sensitive assets to liabilities		1.10		1.20		1.53		1.57

Item 3. Quantitative and Qualitative Disclosures about Market Risk

During the nine months ended September 30, 2021, there were no material changes in market risk exposures that affected the quantitative and qualitative disclosures regarding market risk presented under the caption “Liquidity and Capital Resources” located on pages 17 through 22 of our 2020 Annual Report as filed as Exhibit 13 to our Form 10-K for the year ended December 31, 2020.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within specified time periods. As of the end of the period covered by this Quarterly Report on Form 10-Q, our principal executive officer and principal financial officer evaluated, with the participation of our management, the effectiveness of our disclosure controls and procedures (as defined in Exchange Act rules 13a-15(e) and 15d-15(e)). Based on the

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evaluation, which disclosed no material weaknesses, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are involved in various legal proceedings that are in various stages of litigation. We have determined, based on discussions with our counsel that any material loss in any current legal proceedings, individually or in the aggregate, is remote or the damages sought, even if fully recovered, would not be considered material to our consolidated financial position or results of operations. However, many of these matters are in various stages of proceedings and further developments could cause management to revise its assessment of these matters.

1A. Risk Factors

There were no material changes in the risk factors as previously disclosed in Item 1A to Part I of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In April 2009, the Board of Directors re-established a formal stock repurchase program that authorized the repurchase of up to $40 million of common stock within the following 12 months. Annually since then, including on March 2, 2021, the Board of Directors extended the repurchase program to purchase up to $50 million of common stock during the 12-month period commencing on March 17, 2021. Shares of common stock may be purchased from time to time on the open market or through privately negotiated transactions. Shares purchased in this program will be held in treasury for reissue for various corporate purposes, including employee compensation plans. During the third quarter of 2021, the Board of Directors adopted a Rule 10b5-1 trading plan, and intends to adopt additional Rule 10b5-1 trading plans, that will allow us to purchase shares of our common stock during certain trading blackout periods when we ordinarily would not be in the market due to trading restrictions in our insider trading policy. During the term of a Rule 10b5-1 trading plan, purchases of common stock are automatic to the extent the conditions of the plan’s trading instructions are met. Shares purchased under the Rule 10b5-1 trading plan will be held in treasury for reissue for various corporate purposes, including employee stock compensation plans. As of November 1, 2021, a total of 12,285,114 shares had been repurchased under all programs at a cost of $357,759,000. We are not obligated to purchase shares under our stock repurchase program outside of its Rule 10b5-1 trading plan.

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

46

repurchase programs approved by the Board of Directors. The following table includes information about common stock share repurchases for the quarter ended September 30, 2021.

				Total Number of
				Shares
				Purchased as	Approximate
		Average		Part of a	Dollar Value of
	Total Number	Price Paid		Publicly-	Shares Available
	of Shares	Per		Announced	for
	Purchased	Share		Program	Repurchase(1)
July 1 – July 31, 2021	—	$	—	—	$	50,000,000
August 1 – August 31, 2021	—		—	—		50,000,000
September 1 – September 30, 2021	16,713		39.29	16,713		49,343,000
Total	16,713	$	39.29	16,713

(1) The repurchase program was extended and increased on March 2, 2021 and allows for the purchase of up to an additional $50,000,000 of common stock through March 17, 2022.

47

Item 6. Exhibits

The following exhibits are filed as a part of this Report:

31(a) —Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31(b) —Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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

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

101++ — Interactive Data File

104++ — Cover Page Interactive Data File (included in Exhibit 101)

++ Attached as Exhibit 101 to this report are the following documents formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Cover Page to this Form 10-Q; (ii) the Condensed Consolidated Statement of Earnings for the three and nine months ended September 30, 2021 and 2020; (iii) the Condensed Consolidated Balance Sheet as of September 30, 2021 and December 31, 2020; and (iv) the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2021 and September 30, 2020.

48

SIGNATURES

Pursuant to the requirements 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
Date:	November 4, 2021	/s/ Dennis E. Nixon
		Dennis E. Nixon
		President
Date:	November 4, 2021	/s/ Judith I. Wawroski
		Judith I. Wawroski
		Treasurer

49

EX-31.A

Exhibit 31(a)

Certification of Chief Executive Officer

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Dennis E. Nixon, certify that:

1.I have reviewed this report on form 10-Q 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 the 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: November 4, 2021

/s/ Dennis E. Nixon

Dennis E. Nixon

President (Chief Executive Officer)

EX-31.B

Exhibit 31(b)

Certification of Chief Financial Officer

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Judith I. Wawroski, certify that:

1. I have reviewed this report on form 10-Q 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: November 4, 2021

/s/ Judith I. Wawroski

Judith I. Wawroski

Treasurer (Principal Financial Officer)

EX-32.A

Exhibit 32(a)

CERTIFICATION PURSUANT TO

18 U.S.C. 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of International Bancshares Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dennis E. Nixon, Chief 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(a) 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:	November 4, 2021

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. 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, 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.

EX-32.B

Exhibit 32(b)

CERTIFICATION PURSUANT TO

18 U.S.C. 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of International Bancshares Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Judith I. Wawroski, 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:

(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(a) 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.

Ay 9
	By:	/s/ Judith I. Wawroski
		Judith I. Wawroski
		Treasurer
	Date:	November 4, 2021

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. 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, 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.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2021	Nov. 01, 2021
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2021
Document Transition Report	false
Entity File Number	000-09439
Entity Registrant Name	INTERNATIONAL BANCSHARES CORPORATION
Entity Incorporation, State or Country Code	TX
Entity Tax Identification Number	74-2157138
Entity Address, Address Line One	1200 San Bernardo Avenue
Entity Address, City or Town	Laredo
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	78042-1359
City Area Code	956
Local Phone Number	722-7611
Title of 12(b) Security	Common Stock, $1.00 par value
Trading Symbol	IBOC
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		63,367,206
Entity Central Index Key	0000315709
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Consolidated Statements of Condition - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Assets
Cash and cash equivalents	$ 2,287,318,000	$ 1,997,238,000
Investment securities:
Held to maturity debt securities (Market value of $3,400 on September 30, 2021 and $3,400 on December 31, 2020)	3,400,000	3,400,000
Available for sale debt securities (Amortized cost of $4,540,752 on September 30, 2021 and $3,054,289 on December 31, 2020)	4,554,314,000	3,080,768,000
Equity securities with readily determinable fair values	6,132,000	6,202,000
Total investment securities	4,563,846,000	3,090,370,000
Loans	7,404,158,000	7,541,754,000
Less allowance for credit losses	(109,325,000)	(109,059,000)
Net loans	7,294,833,000	7,432,695,000
Bank premises and equipment, net	459,291,000	479,878,000
Accrued interest receivable	31,394,000	37,881,000
Other investments	298,664,000	254,413,000
Cash surrender value of life insurance policies	295,513,000	292,381,000
Goodwill	282,532,000	282,532,000
Other assets	164,105,000	162,079,000
Total assets	15,677,496,000	14,029,467,000
Deposits:
Demand-non-interest bearing	5,596,765,000	4,715,814,000
Savings and interest bearing demand	4,460,557,000	3,852,505,000
Time	2,186,651,000	2,153,541,000
Total deposits	12,243,973,000	10,721,860,000
Securities sold under repurchase agreements	424,397,000	428,148,000
Other borrowed funds	436,186,000	436,327,000
Junior subordinated deferrable interest debentures	134,642,000	134,642,000
Other liabilities	143,926,000	130,492,000
Total liabilities	13,383,124,000	11,851,469,000
Shareholders' equity:
Common shares of $1.00 par value. Authorized 275,000,000 shares; issued 96,343,252 shares on September 30, 2021 and 96,240,977 shares on December 31, 2020	96,343,000	96,241,000
Surplus	151,855,000	149,334,000
Retained earnings	2,414,183,000	2,289,626,000
Accumulated other comprehensive income	10,723,000	20,825,000
Total shareholders' equity before treasury stock	2,673,104,000	2,556,026,000
Less cost of shares in treasury, 32,979,001 shares on September 30, 2021 and 32,961,289 on December 31, 2020	(378,732,000)	(378,028,000)
Total shareholders' equity	2,294,372,000	2,177,998,000
Total liabilities and shareholders' equity	$ 15,677,496,000	$ 14,029,467,000

XML

Consolidated Statements of Condition (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Consolidated Statements of Condition
Held to maturity, Market value (in dollars)	$ 3,400	$ 3,400
Available for sale, Amortized cost (in dollars)	$ 4,540,752	$ 3,054,289
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	96,343,252	96,240,977
Treasury, shares	32,979,001	32,961,289

XML

Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Interest income:
Loans, including fees	$ 88,280	$ 90,614	$ 272,210	$ 287,608
Investment securities:
Taxable	11,669	8,469	21,558	40,049
Tax-exempt	360	605	1,132	2,024
Other interest income	883	295	2,145	564
Total interest income	101,192	99,983	297,045	330,245
Interest expense:
Savings deposits	1,082	1,028	3,001	5,424
Time deposits	2,814	4,292	8,941	15,581
Securities sold under repurchase agreements	165	164	448	777
Other borrowings	1,929	1,930	5,726	6,844
Junior subordinated deferrable interest debentures	692	756	2,102	3,109
Total interest expense	6,682	8,170	20,218	31,735
Net interest income	94,510	91,813	276,827	298,510
Provision for credit losses	2,801	8,770	5,137	36,595
Net interest income after provision for credit losses	91,709	83,043	271,690	261,915
Non-interest income:
Investment securities transactions, net	(12)		(16)	(5)
Other investments, net	5,490	3,235	68,495	3,621
Other income	6,641	5,574	17,905	17,223
Total non-interest income	47,209	40,117	181,352	108,843
Non-interest expense:
Employee compensation and benefits	30,552	31,718	91,262	100,367
Occupancy	6,491	6,677	18,638	19,346
Depreciation of bank premises and equipment	6,028	7,049	19,263	21,348
Professional fees	2,558	4,121	7,675	12,004
Deposit insurance assessments	1,026	810	2,840	1,012
Net expense, other real estate owned	438	1,341	5,351	7,178
Advertising	1,470	1,413	4,349	5,289
Software and software maintenance	4,115	4,964	13,081	14,712
Other	17,049	11,960	39,407	39,686
Total non-interest expense	69,727	70,053	201,866	220,942
Income before income taxes	69,191	53,107	251,176	149,816
Provision for income taxes	14,592	10,365	53,780	30,726
Net income	$ 54,599	$ 42,742	$ 197,396	$ 119,090
Basic earnings per common share:
Weighted average number of shares outstanding (in shares)	63,372,777	63,269,966	63,347,922	63,876,496
Net income (in dollars per share)	$ 0.86	$ 0.68	$ 3.12	$ 1.86
Fully diluted earnings per common share:
Weighted average number of shares outstanding (in shares)	63,498,542	63,386,292	63,479,174	64,001,883
Net income (in dollars per share)	$ 0.86	$ 0.67	$ 3.11	$ 1.86
Services charges on deposit accounts
Non-interest income:
Service charges	$ 17,294	$ 15,037	$ 47,971	$ 45,554
Other service charges, commissions and fees, Banking
Non-interest income:
Service charges	15,750	14,471	41,166	36,866
Other service charges, commissions and fees, Non-banking
Non-interest income:
Service charges	$ 2,046	$ 1,800	$ 5,831	$ 5,584

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Consolidated Statements of Comprehensive Income
Net income	$ 54,599	$ 42,742	$ 197,396	$ 119,090
Other comprehensive income, net of tax:
Net unrealized holding (losses) gains on securities available for sale arising during period (net of tax effects of $(2,015), $(2,366), $(2,689) and $7,993)	(7,578)	(8,901)	(10,115)	30,069
Reclassification adjustment for losses on securities available for sale included in net income (net of tax effects of $3, $0, $3 and $1)	9		13	4
Other comprehensive income, net of tax	(7,569)	(8,901)	(10,102)	30,073
Comprehensive income	$ 47,030	$ 33,841	$ 187,294	$ 149,163

XML

Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Consolidated Statements of Comprehensive Income
Net unrealized holding gains (losses) on securities available for sale arising during period, tax effects	$ (2,015)	$ (2,366)	$ (2,689)	$ 7,993
Reclassification adjustment for losses on securities available for sale included in net income, tax effects	$ 3	$ 0	$ 3	$ 1

XML

Consolidated Statements of Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member] Adjustment	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Treasury Stock [Member]	Adjustment	Total
Balance at Dec. 31, 2019	$ 96,215	$ 148,075		$ 2,200,568	$ 2,345	$ (329,150)		$ 2,118,053
Balance (in shares) at Dec. 31, 2019	96,215
Increase (decrease) in shareholders' equity
Net Income				119,090				119,090
Dividends:
Payable/Cash				(69,928)				(69,928)
Purchase of treasury stock						(48,878)		(48,878)
Exercise of stock options	$ 19	388						407
Exercise of stock options (in shares)	19
Stock compensation expense recognized in earnings		571						571
Other comprehensive income, net of tax:
Net change in unrealized gains and losses on available for sale securities, net of reclassification adjustments					30,073			30,073
Balance at Sep. 30, 2020	$ 96,234	149,034	$ (8,333)	2,241,397	32,418	(378,028)	$ (8,333)	2,141,055
Balance (in shares) at Sep. 30, 2020	96,234
Balance at Jun. 30, 2020	$ 96,229	148,744		2,233,455	41,319	(377,887)		2,141,860
Balance (in shares) at Jun. 30, 2020	96,229
Increase (decrease) in shareholders' equity
Net Income				42,742				42,742
Dividends:
Payable/Cash				(34,800)				(34,800)
Purchase of treasury stock						(141)		(141)
Exercise of stock options	$ 5	114						119
Exercise of stock options (in shares)	5
Stock compensation expense recognized in earnings		176						176
Other comprehensive income, net of tax:
Net change in unrealized gains and losses on available for sale securities, net of reclassification adjustments					(8,901)			(8,901)
Balance at Sep. 30, 2020	$ 96,234	149,034	$ (8,333)	2,241,397	32,418	(378,028)	$ (8,333)	2,141,055
Balance (in shares) at Sep. 30, 2020	96,234
Balance at Dec. 31, 2020	$ 96,241	149,334		2,289,626	20,825	(378,028)		2,177,998
Balance (in shares) at Dec. 31, 2020	96,241
Increase (decrease) in shareholders' equity
Net Income				197,396				197,396
Dividends:
Payable/Cash				(72,839)				(72,839)
Purchase of treasury stock						(704)		(704)
Exercise of stock options	$ 102	2,130						2,232
Exercise of stock options (in shares)	102
Stock compensation expense recognized in earnings		391						391
Other comprehensive income, net of tax:
Net change in unrealized gains and losses on available for sale securities, net of reclassification adjustments					(10,102)			(10,102)
Balance at Sep. 30, 2021	$ 96,343	151,855		2,414,183	10,723	(378,732)		2,294,372
Balance (in shares) at Sep. 30, 2021	96,343
Balance at Jun. 30, 2021	$ 96,332	151,512		2,397,610	18,292	(378,076)		2,285,670
Balance (in shares) at Jun. 30, 2021	96,332
Increase (decrease) in shareholders' equity
Net Income				54,599				54,599
Dividends:
Payable/Cash				(38,026)				(38,026)
Purchase of treasury stock						(656)		(656)
Exercise of stock options	$ 11	225						236
Exercise of stock options (in shares)	11
Stock compensation expense recognized in earnings		118						118
Other comprehensive income, net of tax:
Net change in unrealized gains and losses on available for sale securities, net of reclassification adjustments					(7,569)			(7,569)
Balance at Sep. 30, 2021	$ 96,343	$ 151,855		$ 2,414,183	$ 10,723	$ (378,732)		$ 2,294,372
Balance (in shares) at Sep. 30, 2021	96,343

XML

Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Consolidated Statements of Shareholders' Equity
Payable/Cash Dividends (in dollars per share)	$ 0.60	$ 0.55	$ 1.15	$ 1.10
Purchase of treasury stock (in shares)	16,713	5,016	17,712	1,946,228

XML

Consolidated Statements of Cash Flows	9 Months Ended
	Sep. 30, 2021 USD ($)	Sep. 30, 2020 USD ($)
Operating activities:
Net income	$ 197,396,000	$ 119,090,000
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit loss	5,137,000	36,595,000
Specific reserve, other real estate owned	2,065,000	702,000
Depreciation of bank premises and equipment	19,263,000	21,348,000
Loss (gain) on sale of bank premises and equipment	5,000	(248,000)
Loss (gain) on sale of other real estate owned	160,000	(361,000)
Accretion of investment securities discounts	(440,000)	(367,000)
Amortization of investment securities premiums	29,749,000	26,673,000
Investment securities transactions, net	16,000	5,000
Unrealized loss (gain) on equity securities with readily determinable fair values	70,000	(87,000)
Proceeds from settlements of claims	2,870,000
Stock based compensation expense	391,000	571,000
(Earnings) losses from affiliates and other investments	(66,746,000)	1,270,000
Deferred income taxes	(792,000)	(17,443,000)
Decrease in accrued interest receivable	6,487,000	576,000
Decrease in other assets	7,436,000	10,724,000
Increase in other liabilities	21,381,000	15,799,000
Net cash provided by operating activities	224,448,000	214,847,000
Investing activities:
Proceeds from maturities of securities	1,200,000	1,075,000
Proceeds from sales and calls of available for sale securities	5,890,000	28,795,000
Purchases of available for sale securities	(2,856,135,000)	(1,336,445,000)
Principal collected on mortgage backed securities	1,333,256,000	1,397,733,000
Net decrease (increase) in loans	116,355,000	(684,471,000)
Purchases of other investments	(45,184,000)	(38,985,000)
Distributions from other investments	60,207,000	64,870,000
Purchases of bank premises and equipment	(6,070,000)	(6,245,000)
Proceeds from sales of bank premises and equipment	1,278,000	879,000
Proceeds from sales of other real estate owned	7,925,000	4,248,000
Net cash used in investing activities	(1,381,278,000)	(568,546,000)
Financing activities:
Net increase in non-interest bearing demand deposits	880,951,000	976,195,000
Net (decrease) increase in savings and interest bearing demand deposits	608,052,000	423,075,000
Net increase in time deposits	33,110,000	81,429,000
Net increase in securities sold under repurchase agreements	(3,751,000)	139,313,000
Net decrease in other borrowed funds	(141,000)	(190,138,000)
Purchase of treasury stock	(704,000)	(48,878,000)
Proceeds from stock transactions	2,232,000	407,000
Payments of cash dividends	(72,839,000)	(35,128,000)
Net cash provided by financing activities	1,446,910,000	1,346,275,000
Increase in cash and cash equivalents	290,080,000	992,576,000
Cash and cash equivalents at beginning of period	1,997,238,000	256,820,000
Cash and cash equivalents at end of period	2,287,318,000	1,249,396,000
Supplemental cash flow information:
Interest paid	21,127,000	33,880,000
Income taxes paid	47,392,000	34,826,000
Non-cash investing and financing activities:
Net transfers from loans to other real estate owned	$ 16,370,000	4,526,000
Dividends declared, not yet paid on common stock		34,800,000
Net transfers from bank premises and equipment to other assets		$ 4,260,000

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Basis of Presentation

9 Months Ended

Sep. 30, 2021

Basis of Presentation

Basis of Presentation

Note 1 — Basis of Presentation

Our accounting and reporting policies conform to accounting principles generally accepted in the United States of America and to general practices within the banking industry. Our consolidated financial statements include the accounts of International Bancshares Corporation, and our wholly-owned bank subsidiaries, International Bank of Commerce, Laredo (“IBC”), Commerce Bank, International Bank of Commerce, Zapata, International Bank of Commerce, Brownsville, International Bank of Commerce, Oklahoma (the “Subsidiary Banks”) and our wholly-owned non-bank subsidiaries, IBC Trading Company, Premier Tierra Holdings, Inc., IBC Charitable and Community Development Corporation, Emerald Galveston Holdings, LLC and IBC Capital Corporation. Our consolidated financial statements are unaudited, but include all adjustments, which, in the opinion of management, are necessary for a fair presentation of the results of the periods presented. All such adjustments were of a normal and recurring nature. These financial statements should be read in conjunction with the financial statements and the notes thereto in our latest Annual Report on Form 10-K. Our consolidated statement of condition at December 31, 2020 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“US GAAP”) for complete financial statements. Certain reclassifications have been made to make prior periods comparable. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results for the year ending December 31, 2021 or any future period.

We operate as one segment. The operating information used by our chief executive officer for purposes of assessing performance and making operating decisions is the consolidated statements presented in this report. We have five active operating subsidiaries, the Subsidiary Banks. We apply the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), FASB ASC 280, “Segment Reporting,” in determining our reportable segments and related disclosures.

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

In June 2016, the FASB issued Accounting Standards Update No. 2016-13 to ASC 326, “Financial Instruments – Credit Losses.” The update amends existing standards for accounting for credit losses for financial assets. The update requires that the expected credit losses on the financial instruments held as of the end of the period being reported be measured based on historical experience, current conditions, and reasonable and supportable forecasts. The update also expands the required disclosures related to significant estimates and judgements used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s financial assets. The update also amended the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The impact of the adoption of the standard is to be recorded as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The accounting standard was effective for us on January 1, 2020. The task force formed last year, which includes key members of the teams that work with the current calculation of the allowance for probable loan losses plus members representing the corporate accounting and risk management areas, has worked with the implementation of the update and validation to complete our model/tool. Based on the composition of the portfolio at December 31, 2019 and after finalizing the methodology, the adoption of the update increased our allowance for probable loan losses (referred to as the allowance for credit losses under ASU

2016-13), by approximately 17.2%, resulting in a cumulative-effect adjustment to retained earnings of approximately $8.3 million, net of tax. Please refer to Note 4 – Allowance for Credit Losses and the Critical Accounting Policies discussion in Management’s Discussion and Analysis.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2021

Fair Value Measurements

Fair Value Measurements

Note 2 — Fair Value Measurements

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 inputs, 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 assets and liabilities reported on the consolidated balance sheets at their fair value on a recurring basis as of September 30, 2021 by level within the fair value measurement hierarchy:

			Fair Value Measurements at
			Reporting Date Using
			(in Thousands)
			Quoted
			Prices in
			Active		Significant
	Assets/Liabilities		Markets for		Other		Significant
	Measured at		Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
	September 30, 2021		(Level 1)		(Level 2)		(Level 3)
Measured on a recurring basis:
Assets:
Available for sale debt securities
Residential mortgage-backed securities	$	4,509,643	$	—	$	4,509,643	$	—
States and political subdivisions		44,671		—		44,671		—
Equity Securities		6,132		6,132		—		—
	$	4,560,446	$	6,132	$	4,554,314	$	—

The following table represents assets and liabilities reported on the consolidated balance sheets at their fair value on a recurring basis as of December 31, 2020 by level within the fair value measurement hierarchy:

			Fair Value Measurements at
			Reporting Date Using
			(in Thousands)
			Quoted
			Prices in
			Active		Significant
	Assets/Liabilities		Markets for		Other		Significant
	Measured at		Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
	December 31, 2020		(Level 1)		(Level 2)		(Level 3)
Measured on a recurring basis:
Assets:
Available for sale securities
Residential mortgage - backed securities	$	3,029,954	$	—	$	3,029,954	$	—
States and political subdivisions		50,814		—		50,814		—
Equity Securities		6,202		6,202		—		—
	$	3,086,970	$	6,202	$	3,080,768	$	—

Available-for-sale debt securities are classified within Level 1 or 2 of the valuation hierarchy. Equity securities with readily determinable fair values are classified within Level 1. For debt investments classified as Level 2 in the fair value hierarchy, we obtain fair value measurements 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.

Certain financial assets and financial liabilities are measured at fair value on a non-recurring basis. The instruments 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 September 30, 2021 by level within the fair value measurement hierarchy:

			Fair Value Measurements at Reporting
			Date Using
			(in thousands)
			Quoted
	Assets/Liabilities		Prices in
	Measured at		Active		Significant
	Fair Value		Markets for		Other		Significant		Net Provision
	Period ended		Identical		Observable		Unobservable		(Credit)
	September 30,		Assets		Inputs		Inputs		During
	2021		(Level 1)		(Level 2)		(Level 3)		Period
Measured on a non-recurring basis:
Assets:
Watch-List doubtful loans	$	57	$	—	$	—	$	57	$	209
Other real estate owned	$	1,685	$	—	$	—	$	1,685	$	2,065

The following table represents financial instruments measured at fair value on a non-recurring basis as of and for the period ended December 31, 2020 by level within the fair value measurement hierarchy:

			Fair Value Measurements at Reporting
			Date Using
			(in thousands)
			Quoted
	Assets/Liabilities		Prices in
	Measured at		Active		Significant
	Fair Value		Markets		Other		Significant		Net (Credit)
	Year ended		for Identical		Observable		Unobservable		Provision
	December 31,		Assets		Inputs		Inputs		During
	2020		(Level 1)		(Level 2)		(Level 3)		Period
Measured on a non-recurring basis:
Assets:
Watch-List doubtful loans	$	393	$	—	$	—	$	393	$	(86)
Other real estate owned		6,241		—		—		6,241		1,539

Our assets measured at fair value on a non-recurring basis are limited to loans classified as Watch List – Doubtful and other real estate owned. The fair value of Watch List-Doubtful loans is derived in accordance with FASB ASC 310, “Receivables”. They are primarily comprised of collateral-dependent commercial loans. As the primary sources of loan repayments decline, the secondary repayment source, the collateral, takes on greater significance. Correctly evaluating the fair value becomes even more important. Re-measurement of the loan to fair value is done through a specific valuation allowance included in the allowance for credit losses. The fair value of the loan is based on the fair value of the collateral, as determined through either an appraisal or evaluation process. The basis for our 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 September 30, 2021, we had $815,000 of doubtful commercial collateral dependent loans, of which $0 had an appraisal performed within the immediately preceding twelve months, and of which $815,000 had an evaluation performed within the immediately preceding twelve months. As of December 31, 2020, we had approximately $18,361,000 of doubtful commercial collateral dependent loans, of which $16,587,000 had an appraisal performed within the immediately preceding twelve months and of which $1,283,000 had an evaluation performed within the immediately preceding twelve months.

Our 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 doubtful loans and where obsolete appraisals are identified. In order to determine whether we 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, we 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 analysis of the doubtful loan. 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 credit losses (“ACL”), 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 three and nine months ended September 30, 2021 and the twelve months

ended December 31, 2020, we recorded $2, $2 and $22,000, respectively, in charges to the ACL in connection with loans transferred to other real estate owned. For the three and nine months ended September 30, 2021 and the twelve months ended December 31, 2020, we recorded $0, $2,065,000 and $1,539,000, respectively, in adjustments to fair value in connection with other real estate owned.

The fair value estimates, methods, and assumptions for our financial instruments at September 30, 2021 and December 31, 2020 are outlined below.

Cash and Cash Equivalents

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

Time Deposits with Banks

The carrying amounts of time deposits with banks approximate 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 6.

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 September 30, 2021 and December 31, 2020, the carrying amount of fixed rate performing loans was $1,497,535,000 and $1,812,413,000, respectively, and the estimated fair value was $1,451,592,000 and $1,747,257,000, 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 September 30, 2021 and December 31, 2020. The fair value of time deposits is based on the discounted value of contractual cashflows. The discount rate is based on currently offered rates. Time deposits are within Level 3 of the fair

value hierarchy. At September 30, 2021 and December 31, 2020, the carrying amount of time deposits was $2,186,651,000 and $2,153,541,000, respectively, and the estimated fair value was $2,184,386,000 and $2,148,976,000, respectively.

Securities Sold Under Repurchase Agreements

Securities sold under repurchase agreements are short-term maturities. Due to the contractual terms of the instruments, the carrying amounts approximated fair value at September 30, 2021 and December 31, 2020.

Junior Subordinated Deferrable Interest Debentures

We currently have 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 September 30, 2021 and December 31, 2020.

Other Borrowed Funds

We currently have long-term borrowings issued from the Federal Home Loan Bank (“FHLB”). The long-term borrowings outstanding at September 30, 2021 and December 31, 2020 are fixed-rate borrowings and the fair value is based on established market spreads for similar types of borrowings. The fixed rate long-term borrowings are included in Level 2 of the fair value hierarchy. At September 30, 2021 and December 31, 2020, the carrying amount of the fixed rate long-term FHLB borrowings was $436,186,000 and $436,372,000, respectively, and the estimated fair value was $466,315,000 and $480,475,000, 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 our entire holdings of a particular financial instrument. Because no market exists for a significant portion of our 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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Loans

9 Months Ended

Sep. 30, 2021

Loans

Loans

Note 3 — Loans

A summary of loans, by loan type at September 30, 2021 and December 31, 2020 is as follows:

	September 30,		December 31,
	2021		2020
	(Dollars in Thousands)
Commercial, financial and agricultural	$	4,680,091	$	4,516,288
Real estate - mortgage		876,313		999,144
Real estate - construction		1,671,212		1,846,757
Consumer		40,699		40,595
Foreign		135,843		138,970
Total loans	$	7,404,158	$	7,541,754

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Allowance for Credit Losses

9 Months Ended

Sep. 30, 2021

Allowance for Credit Losses

Allowance for Credit Losses

Note 4 — Allowance for Credit Losses

The estimation of the ACL is based on a loss-rate methodology that measures lifetime losses on loan pools that have similar risk characteristics. Loans that do not have similar risk characteristics are evaluated on an individual basis. The segmentation of the loan portfolio into pools requires a balancing process between capturing similar risk characteristics and containing sufficient loss history to provide meaningful results. Our segmentation starts at the general loan category with further sub-segmentation based on collateral types that may be of meaningful size and/or may contain sufficient differences in risk characteristics based on management’s judgement that would warrant further segmentation. The general loan categories along with primary risk characteristics used in our calculation are as follows:

Commercial and industrial loans. This category includes loans extended to a diverse array of businesses for working capital or equipment purchases. These loans are mostly secured by the collateral pledged by the borrower that is directly related to the business activities of the company such as equipment, accounts receivable and inventory. The borrower’s abilities to generate revenues from equipment purchases, collect accounts receivable, and to turn inventory into sales are risk factors in the repayment of the loan. A small portion of this loan category is related to loans secured by oil & gas production and loans secured by aircraft.

Construction and land development loans. This category includes the development of land from unimproved land to lot development for both residential and commercial use and vertical construction across residential and commercial real estate classes. These loans carry risk of repayment when projects incur cost overruns, have an increase in the price of construction materials, encounter zoning, entitlement 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 mortgage rate risk and the practice by the mortgage industry of more restrictive underwriting standards, which inhibits the buyer from obtaining long term financing creating excessive housing and lot inventory in the market.

Commercial real estate loans. This category includes loans secured by farmland, multifamily properties, owner occupied commercial properties, and non-owner occupied commercial properties. Owner occupied commercial properties include warehouses often along the border for import/export operations, office space where the borrower is the primary tenant, restaurants and other single-tenant retail. Non-owner occupied commercial properties include hotels, retail centers, office and professional buildings, and leased warehouses. These loans carry 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 type that is significant to the local economy, such as a manufacturing plant.

1-4 family mortgages. This category includes both first and second lien mortgages for the purpose of home purchases or refinancing of existing mortgage loans. A small portion of this loan category is related to home equity

lines of credits, lots purchases, and home construction. Loan repayments may be affected by unemployment or underemployment and deteriorating market values of real estate.

Consumer loans. This category includes deposit secured, vehicle secured, and unsecured loans, including overdrafts, made to individuals. Repayment is primarily affected by unemployment or underemployment.

The loan pools are further broken down using a risk-based segmentation based on internal classifications for commercial loans and past due status for consumer mortgage loans. Non-mortgage consumer loans are evaluated as one segment. On a weekly basis, commercial 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 our internal Watch List report. Additionally, our credit department reviews the majority of our 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, we will determine if a loan should be placed on an internal Watch List report because of issues related to the analysis of the credit, credit documents, collateral and/or payment history.

Our internal Watch List report is segregated into the following categories: (i) Pass, (ii) Economic Monitoring, (iii) Special Review, (iv) Watch List—Pass, (v) Watch List—Substandard, and (vi) Watch List—Doubtful. The loans placed in the Special Review category and lower rated credits reflect our opinion that the loans reflect potential weakness which require monitoring on a more frequent basis. Credits in those categories are reviewed and discussed on a regular basis, no less frequently than quarterly, 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 category and lower rated credits reflect our opinion that the credit contains weaknesses which represent a greater degree of risk, which warrant “extra attention.” Credits in this category 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 category 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 we may sustain some future loss if such weaknesses are not corrected. The loans placed in the Watch List—Doubtful category have shown defined weaknesses and it is likely, based on current information and events, that we will be unable to collect all principal and/or interest amounts contractually due. Watch List—Doubtful loans are placed on non-accrual when they are moved to that category.

For the purposes of the ACL, in order to maintain segments with sufficient history for meaningful results, the credits in the Pass and Economic Monitoring categories are aggregated, the credits in the Special Review and Watch List—Pass credits are aggregated, and the credits in the Watch List—Substandard category remain in their own segment. For loans that are classified as Watch List—Doubtful, management evaluates these credits in accordance with ASC 310-10, “Receivables,” and, if deemed necessary, a specific reserve is allocated to the loan. 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) net realizable value of the fair value of the collateral if the loan is collateral dependent. Substantially all of our loans evaluated as Watch List—Doubtful under ASC 310-10 are measured using the fair value of collateral method. In rare cases, we may use other methods to determine the specific reserve of a loan under ASC 310-10 if such loan is not collateral dependent.

Within each collectively evaluated pool, the robustness of the lifetime historical loss-rate is evaluated and, if needed, is supplemented with peer loss rates through a model risk adjustment. Certain qualitative loss factors are then evaluated to incorporate management’s two-year reasonable and supportable forecast period followed by a reversion to the pool’s average lifetime loss-rate. Those qualitative loss factors are: (i) trends in portfolio volume and composition, (ii) volume and trends in classified loans, delinquencies, non-accruals and TDR’s, (iii) concentration risk, (iv) trends in underlying collateral value, (v) changes in policies, procedures, and strategies, and (vi) economic conditions. Qualitative factors also include potential losses stemming from operational risk factors arising from fraud, natural disasters,

pandemics and geopolitical events. Should any of the factors considered by management in evaluating the adequacy of the ACL change, our estimate could also change, which could affect the level of future credit loss expense.

We have elected to not measure an ACL for accrued interest receivable given our timely approach in identifying and writing off uncollectible accrued interest. An ACL for off-balance sheet exposure is derived from a projected usage rate of any unfunded commitment multiplied by the historical loss rate, plus model risk adjustment, if any, of the on-balance sheet loan pools.

Our management continually reviews the ACL of the Subsidiary Banks using the amounts determined from the estimates established on specific doubtful loans, the estimate established on quantitative historical loss percentages, and the estimate based on qualitative current conditions and reasonable and supportable two-year forecasted data. Our methodology reverts to the average lifetime loss-rate beyond the forecast period when we can no longer develop reasonable and supportable forecasts. Should any of the factors considered by management in evaluating the adequacy of the estimate for current expected credit losses change, our estimate of current expected credit losses could also change, which could affect the level of future credit loss expense. While the calculation of our ACL utilizes management’s best judgment and all information reasonably available, the adequacy of the ACL is dependent on a variety of factors beyond our control, including, among other things, the performance of the entire loan portfolio, the economy, government actions, changes in interest rates and the view of regulatory authorities towards loan classifications.

A summary of the transactions in the allowance for credit loan losses by loan class is as follows:

	Three Months Ended September 30, 2021
	Domestic														Foreign
			Commercial
			Real Estate:
			Other		Commercial
			Construction &		Real Estate:		Commercial
			Land		Farmland &		Real Estate:		Residential:		Residential:
	Commercial		Development		Commercial		Multifamily		First Lien		Junior Lien		Consumer		Foreign		Total
	(Dollars in Thousands)
Balance at June 30, 2021	$	23,063	$	33,603	$	34,238	$	4,206	$	3,916	$	8,196	$	268	$	791	$	108,281
Losses charged to allowance		(2,287)		(2)		—		—		(73)		(4)		(64)		—		(2,430)
Recoveries credited to allowance		473		—		141		—		12		28		19		—		673
Net (losses) recoveries charged to allowance		(1,814)		(2)		141		—		(61)		24		(45)		—		(1,757)
Credit loss expense		1,955		503		871		9		(110)		(496)		47		22		2,801
Balance at September 30, 2021	$	23,204	$	34,104	$	35,250	$	4,215	$	3,745	$	7,724	$	270	$	813	$	109,325

	Three Months Ended September 30, 2020
	Domestic														Foreign
			Commercial
			Real Estate:
			Other		Commercial
			Construction &		Real Estate:		Commercial
			Land		Farmland &		Real Estate:		Residential:		Residential:
	Commercial		Development		Commercial		Multifamily		First Lien		Junior Lien		Consumer		Foreign		Total
	(Dollars in Thousands)
Balance at June 30, 2020	$	20,079	$	40,924	$	18,711	$	1,864	$	3,208	$	8,964	$	288	$	516	$	94,554
Losses charged to allowance		(1,735)		—		—		—		(87)		(3)		(62)		—		(1,887)
Recoveries credited to allowance		523		14		86		—		8		51		46		—		728
Net (losses) recoveries charged to allowance		(1,212)		14		86		—		(79)		48		(16)		—		(1,159)
Credit loss expense		3,277		(2,855)		4,892		2,639		400		293		2		122		8,770
Balance at September 30, 2020	$	22,144	$	38,083	$	23,689	$	4,503	$	3,529	$	9,305	$	274	$	638	$	102,165

	Nine Months Ended September 30, 2021
	Domestic														Foreign
			Commercial
			Real Estate:
			Other		Commercial
			Construction &		Real Estate:		Commercial
			Land		Farmland &		Real Estate:		Residential:		Residential:
	Commercial		Development		Commercial		Multifamily		First Lien		Junior Lien		Consumer		Foreign		Total
	(Dollars in Thousands)
Balance at December 31, 2020	$	21,908	$	37,612	$	30,000	$	5,051	$	3,874	$	9,570	$	291	$	753	$	109,059
Losses charged to allowance		(5,835)		(2)		(356)		—		(262)		(25)		(151)		—		(6,631)
Recoveries credited to allowance		1,429		—		160		—		47		86		38		—		1,760
Net (losses) recoveries charged to allowance		(4,406)		(2)		(196)		—		(215)		61		(113)		—		(4,871)
Credit loss expense		5,702		(3,506)		5,446		(836)		86		(1,907)		92		60		5,137
Balance at September 30, 2021	$	23,204	$	34,104	$	35,250	$	4,215	$	3,745	$	7,724	$	270	$	813	$	109,325

	Nine Months Ended September 30, 2020
	Domestic														Foreign
			Commercial
			Real Estate:
			Other		Commercial
			Construction &		Real Estate:		Commercial
			Land		Farmland &		Real Estate:		Residential:		Residential:
	Commercial		Development		Commercial		Multifamily		First Lien		Junior Lien		Consumer		Foreign		Total
	(Dollars in Thousands)
Balance at December 31, 2019	$	11,145	$	18,152	$	16,533	$	1,786	$	3,762	$	7,535	$	542	$	823	$	60,278
Adoption of ASU 2016-13		4,247		13,391		(4,292)		(355)		(1,580)		(429)		(225)		(410)		10,347
Losses charged to allowance		(6,696)		(19)		(55)		—		(123)		(124)		(192)		—		(7,209)
Recoveries credited to allowance		1,793		15		107		—		10		171		58		—		2,154
Net (losses) recoveries charged to allowance		(4,903)		(4)		52		—		(113)		47		(134)		—		(5,055)
Credit loss expense		11,655		6,544		11,396		3,072		1,460		2,152		91		225		36,595
Balance at September 30, 2020	$	22,144	$	38,083	$	23,689	$	4,503	$	3,529	$	9,305	$	274	$	638	$	102,165

The credit loss expense charged to operations increased throughout 2020 as a result of increases in the ACL due to deteriorating economic conditions as a result of the novel Coronavirus Disease 2019 (“COVID-19”) and its variant strains the impact of those conditions on certain segments of our loan portfolio. Economic conditions during the first nine months of 2021 have stabilized and, in some segments, improved. The pool specific qualitative loss factors management deemed appropriate for the ACL calculation at December 31, 2020 remained constant in the September 30, 2021 ACL calculation, which positively impacted the calculation and resulted in a decrease in the credit loss expense charged to operations for the three and nine months ended September 30, 2021 compared to the same period of 2020.

The table below provides additional information on the balance of loans individually or collectively evaluated for impairment and their related allowance, by loan class as of September 30, 2021 and December 31, 2020:

	September 30, 2021
	Loans Individually				Loans Collectively
	Evaluated For				Evaluated For
	Impairment				Impairment
	Recorded				Recorded
	Investment		Allowance		Investment		Allowance
	(Dollars in Thousands)
Domestic
Commercial	$	331	$	29	$	1,596,518	$	23,175
Commercial real estate: other construction & land development		646		70		1,670,566		34,034
Commercial real estate: farmland & commercial		414		—		2,715,663		35,250
Commercial real estate: multifamily		137		—		367,028		4,215
Residential: first lien		89		—		385,544		3,745
Residential: junior lien		33		—		490,647		7,724
Consumer		—		—		40,699		270
Foreign		—		—		135,843		813
Total	$	1,650	$	99	$	7,402,508	$	109,226

	December 31, 2020
	Loans Individually				Loans Collectively
	Evaluated For				Evaluated For
	Impairment				Impairment
	Recorded				Recorded
	Investment		Allowance		Investment		Allowance
	(Dollars in Thousands)
Domestic
Commercial	$	1,189	$	209	$	1,784,747	$	21,699
Commercial real estate: other construction & land development		17,496		70		1,829,261		37,542
Commercial real estate: farmland & commercial		439		—		2,288,869		30,000
Commercial real estate: multifamily		134		—		440,910		5,051
Residential: first lien		151		—		404,968		3,874
Residential: junior lien		38		—		593,987		9,570
Consumer		—		—		40,595		291
Foreign		—		—		138,970		753
Total	$	19,447	$	279	$	7,522,307	$	108,780

The table below provides additional information on loans accounted for on a non-accrual basis by loan class at September 30, 2021 and December 31, 2020:

	September 30, 2021		December 31, 2020
	(Dollars in Thousands)
Domestic
Commercial	$	331	$	1,189
Commercial real estate: other construction & land development		646		17,496
Commercial real estate: farmland & commercial		414		439
Commercial real estate: multifamily		137		134
Residential: first lien		342		526
Residential: junior lien		33		38
Total non-accrual loans	$	1,903	$	19,822

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 Watch List—Doubtful loans.

	September 30, 2021		December 31, 2020
		(Dollars in Thousands)
Domestic
Residential: first lien	$	1,934	$	4,078
Residential: junior lien		106		521
Consumer		862		989
Foreign		17		233
Total troubled debt restructuring	$	2,919	$	5,821

We are actively working with our customers affected by the current economic crisis arising from COVID-19. We have been offering and are prepared to continue to offer assistance in accordance with current regulatory guidance. That includes continuously reaching out to our customers and, in some cases, offering short-term payment deferral plans. As of November 1, 2021, we had approximately $226,831,000 in loans with some degree of payment deferrals in our system. In accordance with interagency regulatory guidance, these short-term deferrals are not considered troubled debt restructurings. The $226,831,000 is comprised primarily of loans related to industries that have been significantly impacted by the COVID-19 pandemic, including the hospitality sector, special use facilities, including child care centers, and retail developments.

With the passage of the Paycheck Protection Program (“PPP”), administered by the Small Business Association (“SBA”), we assisted our customers with applications for loans through the PPP. PPP loans earn interest at 1% and PPP loans made prior to June 5, 2020 have a two-year term, while those made after June 5, 2020 have a five-year term; however, PPP loans also include forgiveness provisions that we expect most customers will utilize. Customers began submitting applications for the forgiveness program in the third quarter of 2020. PPP loans were intended to support up to 24 weeks of payroll and certain other costs to help those businesses remain viable and allow their employees to pay their bills. As of November 1, 2021, we had 2,634 PPP loans totaling approximately $169,511,000 outstanding. The PPP loans are fully guaranteed by the U.S. government through the SBA.

The Subsidiary Banks 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 our management believes 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 ACL can be made only on a subjective basis. It is the judgment of our management that the ACL at September 30, 2021 was adequate to absorb probable losses from loans in the portfolio at that date.

The following tables present information regarding the aging of past due loans by loan class at September 30, 2021 and December 31, 2020:

	September 30, 2021
							90 Days or		Total
	30 - 59		60 - 89		90 Days or		greater &		Past				Total
	Days		Days		Greater		still accruing		Due		Current		Portfolio
	(Dollars in Thousands)
Domestic
Commercial	$	5,123	$	221	$	89	$	89	$	5,433	$	1,591,416	$	1,596,849
Commercial real estate: other construction & land development		21,433		188		—		—		21,621		1,649,591		1,671,212
Commercial real estate: farmland & commercial		6,535		2,104		185		—		8,824		2,707,253		2,716,077
Commercial real estate: multifamily		—		—		—		—		—		367,165		367,165
Residential: first lien		2,266		655		4,930		4,735		7,851		377,782		385,633
Residential: junior lien		515		104		1,842		1,842		2,461		488,219		490,680
Consumer		240		70		46		46		356		40,343		40,699
Foreign		1,231		1,482		360		360		3,073		132,770		135,843
Total past due loans	$	37,343	$	4,824	$	7,452	$	7,072	$	49,619	$	7,354,539	$	7,404,158

	December 31, 2020
							90 Days or		Total
	30 - 59		60 - 89		90 Days or		greater &		Past				Total
	Days		Days		Greater		still accruing		Due		Current		Portfolio
		(Dollars in Thousands)
Domestic
Commercial	$	1,931	$	1,109	$	563	$	318	$	3,603	$	1,782,333	$	1,785,936
Commercial real estate: other construction & land development		1,059		854		16,587		—		18,500		1,828,257		1,846,757
Commercial real estate: farmland & commercial		2,435		219		186		186		2,840		2,286,468		2,289,308
Commercial real estate: multifamily		126		—		—		—		126		440,918		441,044
Residential: first lien		2,399		926		6,165		5,890		9,490		395,629		405,119
Residential: junior lien		561		247		1,197		1,197		2,005		592,020		594,025
Consumer		318		71		79		79		468		40,127		40,595
Foreign		478		180		568		568		1,226		137,744		138,970
Total past due loans	$	9,307	$	3,606	$	25,345	$	8,238	$	38,258	$	7,503,496	$	7,541,754

The decrease in Commercial Real Estate – Other Construction and Land Development Loans 90 days or greater past due at September 30, 2021 can be primarily attributed to a relationship secured by commercial property that was placed on non-accrual in the fourth quarter of 2020 and foreclosed upon in the first quarter of 2021.

A summary of the loan portfolio by credit quality indicator by loan class and by year of origination at September 30, 2021 and December 31, 2020 is presented below:

		2021	2020		2019		2018		2017		Prior		Total
	(Dollars in Thousands)
Balance at September 30, 2021
Domestic
Commercial
Pass	$	775,702	$	398,790	$	126,858	$	104,736	$	67,433	$	8,398	$	1,481,917
Special Review		1,517		74,691		139		81		—		—		76,428
Watch List - Pass		33,793		—		—		—		—		10		33,803
Watch List - Substandard		3,232		297		781		60		—		—		4,370
Watch List - Doubtful		106		134		—		—		91		—		331
Total Commercial	$	814,350	$	473,912	$	127,778	$	104,877	$	67,524	$	8,408	$	1,596,849
Commercial real estate: other construction & land development
Pass	$	657,381	$	441,333	$	413,856	$	83,925	$	15,826	$	3,406	$	1,615,727
Special Review		31,527		—		211		—		—		—		31,738
Watch List - Pass		—		23,101		—		—		—		—		23,101
Watch List - Doubtful		539		107		—		—		—		—		646
Total Commercial real estate: other construction & land development	$	689,447	$	464,541	$	414,067	$	83,925	$	15,826	$	3,406	$	1,671,212
Commercial real estate: farmland & commercial
Pass	$	771,884	$	699,685	$	326,176	$	455,899	$	197,313	$	131,756	$	2,582,713
Special Review		2,849		1,314		910		3,617		63		194		8,947
Watch List - Pass		17,503		44,143		—		—		94		1		61,741
Watch List - Substandard		1,304		54,124		4,178		—		2,195		461		62,262
Watch List - Doubtful		—		229		185		—		—		—		414
Total Commercial real estate: farmland & commercial	$	793,540	$	799,495	$	331,449	$	459,516	$	199,665	$	132,412	$	2,716,077
Commercial real estate: multifamily
Pass	$	40,569	$	81,107	$	98,720	$	76,109	$	63,220	$	7,303	$	367,028
Watch List - Doubtful		—		137		—		—		—		—		137
Total Commercial real estate: multifamily	$	40,569	$	81,244	$	98,720	$	76,109	$	63,220	$	7,303	$	367,165
Residential: first lien
Pass	$	85,763	$	56,687	$	65,531	$	51,959	$	31,709	$	93,611	$	385,260
Watch List - Substandard		57		—		103		—		123		1		284
Watch List - Doubtful		—		89		—		—		—		—		89
Total Residential: first lien	$	85,820	$	56,776	$	65,634	$	51,959	$	31,832	$	93,612	$	385,633
Residential: junior lien
Pass	$	103,570	$	141,368	$	71,211	$	35,364	$	46,503	$	92,631	$	490,647
Watch List- Doubtful		—		33		—		—		—		—		33
Total Residential: junior lien	$	103,570	$	141,401	$	71,211	$	35,364	$	46,503	$	92,631	$	490,680
Residential: junior lien
Consumer
Pass	$	26,613	$	10,196	$	1,910	$	332	$	67	$	1,581	$	40,699
Total Consumer	$	26,613	$	10,196	$	1,910	$	332	$	67	$	1,581	$	40,699
Foreign
Pass	$	69,895	$	37,503	$	9,082	$	9,347	$	5,238	$	4,778	$	135,843
Total Foreign	$	69,895	$	37,503	$	9,082	$	9,347	$	5,238	$	4,778	$	135,843
Total Loans	$	2,623,804	$	2,065,068	$	1,119,851	$	821,429	$	429,875	$	344,131	$	7,404,158

		2020	2019		2018		2017		2016		Prior		Total
	(Dollars in Thousands)
Balance at December 31, 2020
Domestic
Commercial
Pass	$	1,168,671	$	240,869	$	145,670	$	85,434	$	13,901	$	10,000	$	1,664,545
Special Review		75,638		—		—		—		—		—		75,638
Watch List - Pass		39,886		11		—		3		—		17		39,917
Watch List - Substandard		3,360		683		289		—		315		—		4,647
Watch List - Doubtful		777		161		92		159		—		—		1,189
Total Commercial	$	1,288,332	$	241,724	$	146,051	$	85,596	$	14,216	$	10,017	$	1,785,936
Commercial
Commercial real estate: other construction & land development
Pass	$	773,165	$	576,707	$	320,308	$	78,174	$	10,534	$	3,343	$	1,762,231
Special Review		20,828		21,650		—		—		—		—		42,478
Watch List - Pass		23,101		1,451		—		—		—		—		24,552
Watch List - Doubtful		16,702		794		—		—		—		—		17,496
Total Commercial real estate: other construction & land development	$	833,796	$	600,602	$	320,308	$	78,174	$	10,534	$	3,343	$	1,846,757
Commercial real estate: farmland & commercial
Pass	$	884,070	$	373,993	$	386,268	$	189,639	$	202,500	$	116,729	$	2,153,199
Special Review		3,041		—		4,758		177		3,218		—		11,194
Watch List - Pass		61,637		942		277		80		—		—		62,936
Watch List - Substandard		53,809		4,986		—		2,269		475		1		61,540
Watch List - Doubtful		—		202		—		—		—		237		439
Total Commercial real estate: farmland & commercial	$	1,002,557	$	380,123	$	391,303	$	192,165	$	206,193	$	116,967	$	2,289,308
Commercial real estate: multifamily
Pass	$	74,577	$	208,356	$	82,818	$	64,110	$	6,801	$	4,248	$	440,910
Watch List - Doubtful		134		—		—		—		—		—		134
Total Commercial real estate: multifamily	$	74,711	$	208,356	$	82,818	$	64,110	$	6,801	$	4,248	$	441,044
Residential: first lien
Pass	$	81,004	$	62,165	$	72,299	$	54,593	$	29,250	$	105,463	$	404,774
Watch List - Pass		—		14		131		—		—		—		145
Watch List - Substandard		—		—		—		—		49		—		49
Watch List - Doubtful		86		—		—		—		—		65		151
Total Residential: first lien	$	81,090	$	62,179	$	72,430	$	54,593	$	29,299	$	105,528	$	405,119
Residential: junior lien
Pass	$	196,308	$	108,276	$	61,636	$	75,056	$	56,705	$	94,454	$	592,435
Special Review		740		—		—		812		—		—		1,552
Watch List- Doubtful		—		—		38		—		—		—		38
Total Residential: junior lien	$	197,048	$	108,276	$	61,674	$	75,868	$	56,705	$	94,454	$	594,025
Consumer
Pass	$	30,910	$	7,159	$	875	$	225	$	55	$	1,371	$	40,595
Total Consumer	$	30,910	$	7,159	$	875	$	225	$	55	$	1,371	$	40,595
Foreign
Pass	$	93,236	$	19,092	$	11,572	$	6,192	$	3,533	$	5,345	$	138,970
Total Foreign	$	93,236	$	19,092	$	11,572	$	6,192	$	3,533	$	5,345	$	138,970
Total Loans	$	3,601,680	$	1,627,511	$	1,087,031	$	556,923	$	327,336	$	341,273	$	7,541,754

The decrease in Special Review Commercial Real Estate – Other Construction and Land development loans at September 30, 2021 compared to December 31, 2020 can be primarily attributed to the payoff of a loan secured by commercial property in the first quarter of 2021. The decrease in Watch List-Doubtful loans in the same category for the same period can be primarily attributed to a relationship secured by commercial property that was placed on non-accrual status in the fourth quarter of 2020 and subsequently foreclosed upon in the first quarter of 2021.

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Stock Options

9 Months Ended

Sep. 30, 2021

Stock Options

Stock Options

Note 5 — 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 of common stock available for stock option grants under the 2012 Plan, which may be qualified incentive stock options (“ISOs”) or non-qualified stock options. Options granted may be

exercisable for a period of up to 10 years from the date of grant, excluding ISOs granted to 10% shareholders, which may be exercisable for a period of up to only five years. As of September 30, 2021, 21,478 shares were available for future grants under the 2012 Plan.

A summary of option activity under the stock option plan for the nine months ended September 30, 2021 is as follows:

				Weighted
		Weighted		average
		average		remaining	Aggregate
	Number of	exercise		contractual	intrinsic
	options	price		term (years)	value ($)
					(in Thousands)
Options outstanding at December 31, 2020	651,127	$	27.24
Plus: Options granted	18,000		37.76
Less:
Options exercised	102,275		21.83
Options expired	—		—
Options forfeited	29,376		33.31
Options outstanding at September 30, 2021	537,476		28.29	4.73	$	7,176
Options fully vested and exercisable at September 30, 2021	342,473	$	24.58	3.32	$	5,843

Stock-based compensation expense included in the consolidated statements of income for the three and nine months ended September 30, 2021 was $118,000 and $391,000, respectively. Stock-based compensation expense included in the consolidated statements of income for the three and nine months ended September 30, 2020 was $176,000 and $571,000, respectively. As of September 30, 2021, there was approximately $1,023,000 of total unrecognized stock-based compensation cost related to non-vested options granted under our plans that will be recognized over a weighted average period of 1.7 years.

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Investment Securities, Equity Securities with Readily Determinable Fair Values and Other Investments

9 Months Ended

Sep. 30, 2021

Investment Securities, Equity Securities with Readily Determinable Fair Values and Other Investments

Investment Securities, Equity Securities with Readily Determinable Fair Values and Other Investments

Note 6 — Investment Securities, Equity Securities with Readily Determinable Fair Values and Other Investments

We classify debt securities into one of three categories: held-to-maturity, available-for-sale, or trading. Such debt securities are reassessed for appropriate classification at each reporting date. Securities classified as “held-to-maturity” are carried at amortized cost for financial statement reporting, while securities classified as “available-for-sale” and “trading” 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 (loss) and accumulated other comprehensive income (loss) until realized, or in the case of losses, when deemed other than temporary. In accordance with ASU 2016-13, which we adopted on January 1, 2020, available-for-sale and held-to-maturity debt securities in an unrealized loss position must be evaluated for the underlying cause of the loss. In the event that the deterioration in value is attributable to credit related reasons, then the amount of credit-related impairment would be recorded as a charge to our ACL with subsequent changes in the amount of impairment, up or down, also recorded through our ACL. The exception to this process will occur if we intend to sell an impaired available-for-sale debt security or if we will more likely than not be required to sell a credit impaired available-for-sale debt security prior to the value recovering to the security’s amortized cost. In those situations, the entire credit-related impairment amount would be required to be recognized in earnings. We have evaluated the debt securities classified as available-for-sale and held-to-maturity at September 30, 2021 and have determined that no debt securities in an unrealized loss position are arising from credit related reasons and have therefore not recorded any allowances for debt securities in our ACL for the period. Unrealized gains and losses related to equity securities with readily determinable fair values are included in net income.

The amortized cost and estimated fair value by type of investment security at September 30, 2021 are as follows:

	Held to Maturity
			Gross		Gross
	Amortized		unrealized		unrealized		Estimated		Carrying
	cost		gains		losses		fair value		value
	(Dollars in Thousands)
Other securities	$	3,400	$	—	$	—	$	3,400	$	3,400
Total investment securities	$	3,400	$	—	$	—	$	3,400	$	3,400

	Available for Sale Debt Securities
			Gross		Gross
	Amortized		unrealized		unrealized		Estimated		Carrying
	cost		gains		losses		fair value		value(1)
	(Dollars in Thousands)
Residential mortgage-backed securities	$	4,499,169	$	21,717	$	(11,243)	$	4,509,643	$	4,509,643
Obligations of states and political subdivisions		41,583		3,088		—		44,671		44,671
Total investment securities	$	4,540,752	$	24,805	$	(11,243)	$	4,554,314	$	4,554,314

(1) Included in the carrying value of residential mortgage-backed securities are $873,753 of mortgage-backed securities issued by Ginnie Mae and $3,635,890 of mortgage-backed securities issued by Fannie Mae and Freddie Mac.

The amortized cost and estimated fair value by type of investment security at December 31, 2020 are as follows:

	Held to Maturity
			Gross		Gross
	Amortized		unrealized		unrealized		Estimated		Carrying
	cost		gains		losses		fair value		value
	(Dollars in Thousands)
Other securities	$	3,400	$	—	$	—	$	3,400	$	3,400
Total investment securities	$	3,400	$	—	$	—	$	3,400	$	3,400

	Available for Sale
			Gross		Gross		Estimated
	Amortized		unrealized		unrealized		fair		Carrying
	cost		gains		losses		value		value(1)
	(Dollars in Thousands)
Residential mortgage-backed securities	$	3,006,592	$	32,701	$	(9,339)	$	3,029,954	$	3,029,954
Obligations of states and political subdivisions		47,697		3,131		(14)		50,814		50,814
Total investment securities	$	3,054,289	$	35,832	$	(9,353)	$	3,080,768	$	3,080,768

(1) Included in the carrying value of residential mortgage-backed securities are $371,407 of mortgage-backed securities issued by Ginnie Mae and $2,658,547 of mortgage-backed securities issued by Fannie Mae and Freddie.

The amortized cost and estimated fair value of investment securities at September 30, 2021, 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		Estimated		Amortized		Estimated
	Cost		fair value		Cost		fair value
	(Dollars in Thousands)
Due in one year or less	$	2,200	$	2,200	$	—	$	—
Due after one year through five years		1,200		1,200		—		—
Due after five years through ten years		—		—		—		—
Due after ten years		—		—		41,583		44,671
Residential mortgage-backed securities		—		—		4,499,169		4,509,643
Total investment securities	$	3,400	$	3,400	$	4,540,752	$	4,554,314

Residential mortgage-backed securities are securities primarily issued by the Federal Home Loan Mortgage Corporation (“Freddie Mac”), Federal National Mortgage Association (“Fannie Mae”), or the Government National Mortgage Association (“Ginnie Mae”). 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, we believe 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 or Freddie Mac are rated consistently as AAA rated securities.

The amortized cost and fair value of available-for-sale debt investment securities pledged to qualify for fiduciary powers, to secure public monies as required by law, repurchase agreements and short-term fixed borrowings was $1,442,729,000 and $1,442,487,000, respectively, at September 30, 2021.

Proceeds from the sale and calls of debt securities available-for-sale were $3,025,000 and $5,890,000 for the three and nine months ended September 30, 2021, respectively, which included $0 and $0 of mortgage-backed securities, respectively. Gross gains of $0 and $0 and gross losses of $12,000 and $16,000, respectively, were realized on the sales and calls for the three and nine months ended September 30, 2021. Proceeds from the sale and call of debt securities available-for-sale were $9,875,000 and $28,795,000 for the three and nine months ended September 30, 2020, which included $0 and $0 of mortgage-backed securities, respectively. Gross gains of $0 and $0 and gross losses of $0 and $5,000 were realized on the sales and calls for the three and nine months ended September 30, 2020, respectively.

Gross unrealized losses on debt investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual debt securities have been in a continuous unrealized loss position at September 30, 2021, were as follows:

	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
	(Dollars in Thousands)
Available for sale:
Residential mortgage-backed securities	$	2,448,908	$	(10,355)	$	276,364	$	(888)	$	2,725,272	$	(11,243)
	$	2,448,908	$	(10,355)	$	276,364	$	(888)	$	2,725,272	$	(11,243)

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, 2020 were as follows:

	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
	(Dollars in Thousands)
Available for sale:
Residential mortgage-backed securities	$	1,462,232	$	(9,339)	$	—	$	—	$	1,462,232	$	(9,339)
Obligations of states and political subdivisions		—		—		757		(14)		757		(14)
	$	1,462,232	$	(9,339)	$	757	$	(14)	$	1,462,989	$	(9,353)

The unrealized losses on investments in residential mortgage-backed securities are primarily caused by changes in market interest rates. We have 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 our conclusion that the investments in residential mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae are not considered other-than-temporarily impaired.

Equity securities with readily determinable fair values consist primarily of Community Reinvestment Act funds. At September 30, 2021 and December 31, 2020, the balance in equity securities with readily determinable fair values recorded at fair value were $6,132,000 and $6,202,000, respectively. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and nine months ended September 30, 2021 and the three and nine months ended September 30, 2020:

	Three Months Ended
	September 30, 2021
	(Dollars in Thousands)
Net losses recognized during the period on equity securities	$	(5)
Less: Net gains and (losses) recognized during the period on equity securities sold during the period		—
Unrealized losses recognized during the reporting period on equity securities still held at the reporting date	$	(5)

	Nine Months Ended
	September 30, 2021
	(Dollars in Thousands)
Net losses recognized during the period on equity securities	$	(70)
Less: Net gains and (losses) recognized during the period on equity securities sold during the period		—
Unrealized losses recognized during the reporting period on equity securities still held at the reporting date	$	(70)

	Three Months Ended
	September 30, 2020
	(Dollars in Thousands)
Net losses recognized during the period on equity securities	$	(12)
Less: Net gains and (losses) recognized during the period on equity securities sold during the period		—
Unrealized losses recognized during the reporting period on equity securities still held at the reporting date	$	(12)

	Nine Months Ended
	September 30, 2020
	(Dollars in Thousands)
Net gains recognized during the period on equity securities	$	87
Less: Net gains and (losses) recognized during the period on equity securities sold during the period		—
Unrealized losses recognized during the reporting period on equity securities still held at the reporting date	$	87

Other investments include equity and merchant banking investments held by our subsidiary banks and non-banking entities. During the second quarter of 2021, one of our non-bank subsidiaries sold an equity interest in a merchant banking investment resulting in a gain on sale included in other investment income on the consolidated statements of income.

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Other Borrowed Funds

9 Months Ended

Sep. 30, 2021

Other Borrowed Funds

Other Borrowed Funds

Note 7 — Other Borrowed Funds

Other borrowed funds include FHLB borrowings, which are short-term and long-term borrowings issued by the FHLB of Dallas and the FHLB of Topeka at the market price offered at the time of funding. These borrowings are secured by residential mortgage-backed investment securities and a portion of our loan portfolio. At September 30, 2021, other borrowed funds totaled $436,186,000, a decrease of less than .1% from $436,327,000 at December 31, 2020.

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Junior Subordinated Interest Deferrable Debentures

9 Months Ended

Sep. 30, 2021

Junior Subordinated Interest Deferrable Debentures

Junior Subordinated Interest Deferrable Debentures

Note 8 — Junior Subordinated Interest Deferrable Debentures

As of September 30, 2021, we have five statutory business trusts under the laws of the State of Delaware, for the purpose of issuing trust preferred securities. The five statutory business trusts we formed (the “Trusts”) have each issued Capital and Common Securities and invested the proceeds thereof in an equivalent amount of junior subordinated debentures (“Debentures”) that we issued. As of September 30, 2021 and December 31, 2020, the principal amount of Debentures outstanding totaled $134,642,000.

The Debentures are subordinated and junior in right of payment to all present and future senior indebtedness (as defined in the respective Indentures) 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. We have fully and unconditionally guaranteed the obligations of each of the Trusts with respect to the Capital and Common Securities. We have 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 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 our investments and not consolidated in our consolidated financial statements. Although the Capital and Common Securities issued by each of the Trusts are not included as a component of shareholders’ equity on the consolidated statement of condition, the Capital and Common Securities are treated as capital for regulatory purposes. Specifically, under applicable regulatory guidelines, the Capital and Common 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 September 30, 2021 and December 31, 2020, the total $134,642,000 of the Capital and Common Securities outstanding qualified as Tier 1 capital.

The following table illustrates key information about each of the Capital and Common Securities and their interest rate at September 30, 2021:

	Junior
	Subordinated
	Deferrable
	Interest		Repricing	Interest		Interest				Optional
	Debentures		Frequency	Rate		Rate Index(1)			Maturity Date	Redemption Date(1)
	(Dollars in Thousands)
Trust VIII	$	25,774	Quarterly	3.18	%	LIBOR	+	3.05	October 2033	October 2008
Trust IX		41,238	Quarterly	1.76	%	LIBOR	+	1.62	October 2036	October 2011
Trust X		21,021	Quarterly	1.78	%	LIBOR	+	1.65	February 2037	February 2012
Trust XI		25,990	Quarterly	1.76	%	LIBOR	+	1.62	July 2037	July 2012
Trust XII		20,619	Quarterly	1.57	%	LIBOR	+	1.45	September 2037	September 2012
	$	134,642

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

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Common Stock and Dividends

9 Months Ended

Sep. 30, 2021

Common Stock and Dividends

Common Stock and Dividends

Note 9 — Common Stock and Dividends

We paid cash dividends of $.60 and $0.55 per share on February 17 and September 3, 2021, respectively, to record holders of our common Stock on February 5 and August 20, 2021, respectively. We paid cash dividends of $.55 per share on April 3 and October 5, 2020, respectively, to record holders of our common stock on April 1 and September 21, 2020, respectively.

In April 2009, the Board of Directors re-established a formal stock repurchase program that authorized the repurchase of up to $40 million of common stock within the following 12 months. Annually since then, including on March 2, 2021, the Board of Directors extended the repurchase program to purchase up to $50 million of common stock during the 12-month period commencing on March 17, 2021. Shares of common stock may be purchased from time to time on the open market or through privately negotiated transactions. Shares purchased in this program will be held in treasury for reissue for various corporate purposes, including employee compensation plans. During the third quarter of 2021, the Board of Directors adopted a Rule 10b5-1 trading plan, and intends to adopt additional Rule 10b5-1 trading plans, that will allow us to purchase shares of our common stock during certain trading blackout periods when we ordinarily would not be in the market due to trading restrictions in our insider trading policy. During the term of a Rule 10b5-1 trading plan, purchases of common stock are automatic to the extent the conditions of the plan’s trading instructions are met. Shares purchased under the Rule 10b5-1 trading plan will be held in treasury for reissue for various corporate purposes, including employee stock compensation plans. As of November 1, 2021, a total of 12,285,114 shares had been repurchased under all programs at a cost of $357,759,000. We are not obligated to purchase shares under our stock repurchase program outside of its Rule 10b5-1 trading plan.

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Commitments and Contingent Liabilities and Other Tax Matters

9 Months Ended

Sep. 30, 2021

Commitments, Contingent Liabilities and Other Tax Matters

Commitments, Contingent Liabilities and Other Tax Matters

Note 10 — Commitments and Contingent Liabilities and Other Tax Matters

We are involved in various legal proceedings that are in various stages of litigation. We have 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 our consolidated financial position or results of operations. 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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Capital Ratios

9 Months Ended

Sep. 30, 2021

Capital Ratios

Capital Ratios

Note 11 — Capital Ratios

Banks and bank holding companies are subject to various regulatory capital requirements administered by state and federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amount and classifications are also subject to qualitative judgements by regulators about components, risk-weighting and other factors.

In July 2013, the Federal Deposit Insurance Corporation (“FDIC”) and other regulatory bodies established a new, comprehensive capital framework for U.S. banking organizations, 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 Wall Street Reform and Consumer Protection Act (“Dodd Frank”) related capital provisions. Consistent with the Basel international framework, the rules include a minimum ratio of Common Equity Tier 1 (“CET1”) to risk-weighted assets of 4.5% and a CET1 capital conservation buffer of 2.5% of risk-weighted assets. The capital conservation buffer began phasing-in on January 1, 2016 at .625% and increased each year until January 1, 2019, when we were required to have a 2.5% capital conservation buffer, effectively resulting in a minimum ratio of CET1 capital to risk-weighted assets of at least 7% upon full implementation. The rules also raised the minimum ratio of Tier 1 capital to risk-weighted assets from 4% to 6% and include a minimum leverage ratio of 4% for all banking organizations. Regarding the quality of capital, the rules emphasize CET1 capital and implements strict eligibility criteria for regulatory capital instruments. The rules also improve the methodology for calculating risk-weighted assets to enhance risk sensitivity. The rules were subject to a four-year phase in period for mandatory compliance and we were required to begin to phase in the rules beginning on January 1, 2015. We believe that as of September 30, 2021, we continue to meet all fully phased-in capital adequacy requirements.

On November 21, 2017, the OCC, the Federal Reserve and the FDIC finalized a proposed rule that extends the current treatment under the regulatory capital rules for certain regulatory capital deductions and risk weights and certain minority interest requirements, as they apply to banking organizations that are not subject to the advanced approaches capital rules. Effective January 1, 2018, the rule also pauses the full transition to the Basel III treatment of mortgage servicing assets, certain deferred tax assets, investments in the capital of unconsolidated financial institutions and minority interests. The agencies are also considering whether to make adjustments to the capital rules in response to CECL (the FASB Standard relating to current expected credit loss) and its potential impact on regulatory capital.

On December 7, 2017, the Basel Committee on Banking Supervision unveiled the latest round of its regulatory capital framework, commonly called “Basel IV.” The framework makes changes to the capital framework first introduced as “Basel III” in 2010. The committee targeted 2022-2027 as the timeframe for implementation by regulators in individual countries, including the U.S. federal bank regulatory agencies (after notice and comment).

The aforementioned capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of CET1 capital 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.

As of September 30, 2021, our capital levels continue to exceed all capital adequacy requirements under the Basel III Capital Rules as currently applicable to us.

On May 24, 2018, the EGRRCPA was enacted and, among other things, it includes a simplified capital rule change which effectively exempts banks with assets of less than $10 billion that exceed the “community bank leverage ratio,” from all risk-based capital requirements, including Basel III and its predecessors. The federal banking agencies must establish the “community bank leverage ratio” (a ratio of tangible equity to average consolidated assets) between 8% and 10% before community banks can begin to take advantage of this regulatory relief provision. Some of the Subsidiary Banks, with assets of less than $10 billion, may qualify for this exemption. Additionally, under the

EGRRCPA, qualified bank holding companies with assets of up to $3 billion (currently $1 billion) will be eligible for the Federal Reserve’s Small Bank Holding Company Policy Statement, which eases limitations on the issuance of debt by holding companies. On August 28, 2018, the Federal Reserve issued an interim final rule expanding the applicability of its Small Bank Holding Company Policy Statement. While holding companies that meet the conditions of the policy statement are excluded from consolidated capital requirements, their depository institutions continue to be subject to minimum capital requirements. Finally, for banks that continue to be subject to the risk-based capital rules of Basel III (e.g., 150%), certain commercial real estate loans that were formally classified as high volatility commercial real estate 31 (“HVCRE”) will not be subject to heightened risk weights if they meet certain criteria. Also, while acquisition, development, and construction (“ADC”) loans will generally be subject to heightened risk weights, certain exceptions will apply. On September 18, 2018, the federal banking agencies issued a proposed rule modifying the agencies’ capital rules for HVCRE.

We had a CET1 to risk-weighted assets ratio of 19.64% on September 30, 2021 and 19.05% on December 31, 2020. We had a Tier 1 capital-to-average-total-asset (leverage) ratio of 13.89% and 14.92%, risk-weighted Tier 1 capital ratio of 20.76% and 20.25% and risk-weighted total capital ratio of 21.86% and 21.40% at September 30, 2021 and December 31, 2020, respectively. Our CET1 capital consists of common stock and related surplus, net of treasury stock, and retained earnings. We and our Subsidiary Banks elected to opt-out of the requirement to include most components of accumulated other comprehensive income (loss) in the calculation of CET1 capital. CET1 is reduced by goodwill and other intangible assets, net of associated deferred tax liabilities and subject to transition provisions. Tier 1 capital includes CET1 capital and additional Tier 1 capital. Additional Tier 1 capital includes the Capital and Common Securities issued by the Trusts (see Note 8 above) up to a maximum of 25% of Tier 1 capital on an aggregate basis. Any amount that exceeds the 25% threshold qualifies as Tier 2 capital. As of September 30, 2021, the total of $134,642,000 of the Capital and Common Securities outstanding qualified as Tier 1 capital. We actively monitor the regulatory capital ratios to ensure that our Subsidiary Banks are well-capitalized under the regulatory framework.

The CET1, Tier 1 and Total capital ratios are calculated by dividing the respective capital amounts by risk-weighted assets. Risk-weighted assets are calculated based on regulatory requirements and include total assets, excluding goodwill and other intangible assets, allocated by risk-weight category, and certain off-balance-sheet items, among other things. The leverage ratio is calculated by dividing Tier 1 capital by adjusted quarterly average total assets, which exclude goodwill and other intangible assets, among other things.

We and our Subsidiary Banks are subject to the regulatory capital requirements administered by the Federal Reserve, and, for our Subsidiary Banks, the FDIC. Regulatory authorities can initiate certain mandatory actions if we or any of our Subsidiary Banks fail to meet the minimum capital requirements, which could have a direct material effect on our financial statements. Management believes, as of September 30, 2021, that we and each of our Subsidiary Banks meet all capital adequacy requirements to which we are subject.

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2021

Fair Value Measurements

Assets and liabilities measured at fair value on a recurring basis

The following table represents assets and liabilities reported on the consolidated balance sheets at their fair value on a recurring basis as of September 30, 2021 by level within the fair value measurement hierarchy:

			Fair Value Measurements at
			Reporting Date Using
			(in Thousands)
			Quoted
			Prices in
			Active		Significant
	Assets/Liabilities		Markets for		Other		Significant
	Measured at		Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
	September 30, 2021		(Level 1)		(Level 2)		(Level 3)
Measured on a recurring basis:
Assets:
Available for sale debt securities
Residential mortgage-backed securities	$	4,509,643	$	—	$	4,509,643	$	—
States and political subdivisions		44,671		—		44,671		—
Equity Securities		6,132		6,132		—		—
	$	4,560,446	$	6,132	$	4,554,314	$	—

The following table represents assets and liabilities reported on the consolidated balance sheets at their fair value on a recurring basis as of December 31, 2020 by level within the fair value measurement hierarchy:

			Fair Value Measurements at
			Reporting Date Using
			(in Thousands)
			Quoted
			Prices in
			Active		Significant
	Assets/Liabilities		Markets for		Other		Significant
	Measured at		Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
	December 31, 2020		(Level 1)		(Level 2)		(Level 3)
Measured on a recurring basis:
Assets:
Available for sale securities
Residential mortgage - backed securities	$	3,029,954	$	—	$	3,029,954	$	—
States and political subdivisions		50,814		—		50,814		—
Equity Securities		6,202		6,202		—		—
	$	3,086,970	$	6,202	$	3,080,768	$	—

Assets measured at fair value on a non-recurring basis

The following table represents financial instruments measured at fair value on a non-recurring basis as of and for the period ended September 30, 2021 by level within the fair value measurement hierarchy:

			Fair Value Measurements at Reporting
			Date Using
			(in thousands)
			Quoted
	Assets/Liabilities		Prices in
	Measured at		Active		Significant
	Fair Value		Markets for		Other		Significant		Net Provision
	Period ended		Identical		Observable		Unobservable		(Credit)
	September 30,		Assets		Inputs		Inputs		During
	2021		(Level 1)		(Level 2)		(Level 3)		Period
Measured on a non-recurring basis:
Assets:
Watch-List doubtful loans	$	57	$	—	$	—	$	57	$	209
Other real estate owned	$	1,685	$	—	$	—	$	1,685	$	2,065

The following table represents financial instruments measured at fair value on a non-recurring basis as of and for the period ended December 31, 2020 by level within the fair value measurement hierarchy:

			Fair Value Measurements at Reporting
			Date Using
			(in thousands)
			Quoted
	Assets/Liabilities		Prices in
	Measured at		Active		Significant
	Fair Value		Markets		Other		Significant		Net (Credit)
	Year ended		for Identical		Observable		Unobservable		Provision
	December 31,		Assets		Inputs		Inputs		During
	2020		(Level 1)		(Level 2)		(Level 3)		Period
Measured on a non-recurring basis:
Assets:
Watch-List doubtful loans	$	393	$	—	$	—	$	393	$	(86)
Other real estate owned		6,241		—		—		6,241		1,539

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Loans (Tables)

9 Months Ended

Sep. 30, 2021

Loans

Summary of loans, by loan type

	September 30,		December 31,
	2021		2020
	(Dollars in Thousands)
Commercial, financial and agricultural	$	4,680,091	$	4,516,288
Real estate - mortgage		876,313		999,144
Real estate - construction		1,671,212		1,846,757
Consumer		40,699		40,595
Foreign		135,843		138,970
Total loans	$	7,404,158	$	7,541,754

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Allowance for Credit Losses (Tables)

9 Months Ended

Sep. 30, 2021

Allowance for Credit Losses

Loans individually or collectively evaluated for their impairment and related allowance, by loan class

	Three Months Ended September 30, 2021
	Domestic														Foreign
			Commercial
			Real Estate:
			Other		Commercial
			Construction &		Real Estate:		Commercial
			Land		Farmland &		Real Estate:		Residential:		Residential:
	Commercial		Development		Commercial		Multifamily		First Lien		Junior Lien		Consumer		Foreign		Total
	(Dollars in Thousands)
Balance at June 30, 2021	$	23,063	$	33,603	$	34,238	$	4,206	$	3,916	$	8,196	$	268	$	791	$	108,281
Losses charged to allowance		(2,287)		(2)		—		—		(73)		(4)		(64)		—		(2,430)
Recoveries credited to allowance		473		—		141		—		12		28		19		—		673
Net (losses) recoveries charged to allowance		(1,814)		(2)		141		—		(61)		24		(45)		—		(1,757)
Credit loss expense		1,955		503		871		9		(110)		(496)		47		22		2,801
Balance at September 30, 2021	$	23,204	$	34,104	$	35,250	$	4,215	$	3,745	$	7,724	$	270	$	813	$	109,325

	Three Months Ended September 30, 2020
	Domestic														Foreign
			Commercial
			Real Estate:
			Other		Commercial
			Construction &		Real Estate:		Commercial
			Land		Farmland &		Real Estate:		Residential:		Residential:
	Commercial		Development		Commercial		Multifamily		First Lien		Junior Lien		Consumer		Foreign		Total
	(Dollars in Thousands)
Balance at June 30, 2020	$	20,079	$	40,924	$	18,711	$	1,864	$	3,208	$	8,964	$	288	$	516	$	94,554
Losses charged to allowance		(1,735)		—		—		—		(87)		(3)		(62)		—		(1,887)
Recoveries credited to allowance		523		14		86		—		8		51		46		—		728
Net (losses) recoveries charged to allowance		(1,212)		14		86		—		(79)		48		(16)		—		(1,159)
Credit loss expense		3,277		(2,855)		4,892		2,639		400		293		2		122		8,770
Balance at September 30, 2020	$	22,144	$	38,083	$	23,689	$	4,503	$	3,529	$	9,305	$	274	$	638	$	102,165

	Nine Months Ended September 30, 2021
	Domestic														Foreign
			Commercial
			Real Estate:
			Other		Commercial
			Construction &		Real Estate:		Commercial
			Land		Farmland &		Real Estate:		Residential:		Residential:
	Commercial		Development		Commercial		Multifamily		First Lien		Junior Lien		Consumer		Foreign		Total
	(Dollars in Thousands)
Balance at December 31, 2020	$	21,908	$	37,612	$	30,000	$	5,051	$	3,874	$	9,570	$	291	$	753	$	109,059
Losses charged to allowance		(5,835)		(2)		(356)		—		(262)		(25)		(151)		—		(6,631)
Recoveries credited to allowance		1,429		—		160		—		47		86		38		—		1,760
Net (losses) recoveries charged to allowance		(4,406)		(2)		(196)		—		(215)		61		(113)		—		(4,871)
Credit loss expense		5,702		(3,506)		5,446		(836)		86		(1,907)		92		60		5,137
Balance at September 30, 2021	$	23,204	$	34,104	$	35,250	$	4,215	$	3,745	$	7,724	$	270	$	813	$	109,325

	Nine Months Ended September 30, 2020
	Domestic														Foreign
			Commercial
			Real Estate:
			Other		Commercial
			Construction &		Real Estate:		Commercial
			Land		Farmland &		Real Estate:		Residential:		Residential:
	Commercial		Development		Commercial		Multifamily		First Lien		Junior Lien		Consumer		Foreign		Total
	(Dollars in Thousands)
Balance at December 31, 2019	$	11,145	$	18,152	$	16,533	$	1,786	$	3,762	$	7,535	$	542	$	823	$	60,278
Adoption of ASU 2016-13		4,247		13,391		(4,292)		(355)		(1,580)		(429)		(225)		(410)		10,347
Losses charged to allowance		(6,696)		(19)		(55)		—		(123)		(124)		(192)		—		(7,209)
Recoveries credited to allowance		1,793		15		107		—		10		171		58		—		2,154
Net (losses) recoveries charged to allowance		(4,903)		(4)		52		—		(113)		47		(134)		—		(5,055)
Credit loss expense		11,655		6,544		11,396		3,072		1,460		2,152		91		225		36,595
Balance at September 30, 2020	$	22,144	$	38,083	$	23,689	$	4,503	$	3,529	$	9,305	$	274	$	638	$	102,165

	September 30, 2021
	Loans Individually				Loans Collectively
	Evaluated For				Evaluated For
	Impairment				Impairment
	Recorded				Recorded
	Investment		Allowance		Investment		Allowance
	(Dollars in Thousands)
Domestic
Commercial	$	331	$	29	$	1,596,518	$	23,175
Commercial real estate: other construction & land development		646		70		1,670,566		34,034
Commercial real estate: farmland & commercial		414		—		2,715,663		35,250
Commercial real estate: multifamily		137		—		367,028		4,215
Residential: first lien		89		—		385,544		3,745
Residential: junior lien		33		—		490,647		7,724
Consumer		—		—		40,699		270
Foreign		—		—		135,843		813
Total	$	1,650	$	99	$	7,402,508	$	109,226

	December 31, 2020
	Loans Individually				Loans Collectively
	Evaluated For				Evaluated For
	Impairment				Impairment
	Recorded				Recorded
	Investment		Allowance		Investment		Allowance
	(Dollars in Thousands)
Domestic
Commercial	$	1,189	$	209	$	1,784,747	$	21,699
Commercial real estate: other construction & land development		17,496		70		1,829,261		37,542
Commercial real estate: farmland & commercial		439		—		2,288,869		30,000
Commercial real estate: multifamily		134		—		440,910		5,051
Residential: first lien		151		—		404,968		3,874
Residential: junior lien		38		—		593,987		9,570
Consumer		—		—		40,595		291
Foreign		—		—		138,970		753
Total	$	19,447	$	279	$	7,522,307	$	108,780

Loans accounted on non-accrual basis, by loan class

	September 30, 2021		December 31, 2020
	(Dollars in Thousands)
Domestic
Commercial	$	331	$	1,189
Commercial real estate: other construction & land development		646		17,496
Commercial real estate: farmland & commercial		414		439
Commercial real estate: multifamily		137		134
Residential: first lien		342		526
Residential: junior lien		33		38
Total non-accrual loans	$	1,903	$	19,822

Loans accounted for as trouble debt restructuring, by Watch List Doubtful loans

	September 30, 2021		December 31, 2020
		(Dollars in Thousands)
Domestic
Residential: first lien	$	1,934	$	4,078
Residential: junior lien		106		521
Consumer		862		989
Foreign		17		233
Total troubled debt restructuring	$	2,919	$	5,821

Information regarding the aging of past due loans, by loan class

	September 30, 2021
							90 Days or		Total
	30 - 59		60 - 89		90 Days or		greater &		Past				Total
	Days		Days		Greater		still accruing		Due		Current		Portfolio
	(Dollars in Thousands)
Domestic
Commercial	$	5,123	$	221	$	89	$	89	$	5,433	$	1,591,416	$	1,596,849
Commercial real estate: other construction & land development		21,433		188		—		—		21,621		1,649,591		1,671,212
Commercial real estate: farmland & commercial		6,535		2,104		185		—		8,824		2,707,253		2,716,077
Commercial real estate: multifamily		—		—		—		—		—		367,165		367,165
Residential: first lien		2,266		655		4,930		4,735		7,851		377,782		385,633
Residential: junior lien		515		104		1,842		1,842		2,461		488,219		490,680
Consumer		240		70		46		46		356		40,343		40,699
Foreign		1,231		1,482		360		360		3,073		132,770		135,843
Total past due loans	$	37,343	$	4,824	$	7,452	$	7,072	$	49,619	$	7,354,539	$	7,404,158

	December 31, 2020
							90 Days or		Total
	30 - 59		60 - 89		90 Days or		greater &		Past				Total
	Days		Days		Greater		still accruing		Due		Current		Portfolio
		(Dollars in Thousands)
Domestic
Commercial	$	1,931	$	1,109	$	563	$	318	$	3,603	$	1,782,333	$	1,785,936
Commercial real estate: other construction & land development		1,059		854		16,587		—		18,500		1,828,257		1,846,757
Commercial real estate: farmland & commercial		2,435		219		186		186		2,840		2,286,468		2,289,308
Commercial real estate: multifamily		126		—		—		—		126		440,918		441,044
Residential: first lien		2,399		926		6,165		5,890		9,490		395,629		405,119
Residential: junior lien		561		247		1,197		1,197		2,005		592,020		594,025
Consumer		318		71		79		79		468		40,127		40,595
Foreign		478		180		568		568		1,226		137,744		138,970
Total past due loans	$	9,307	$	3,606	$	25,345	$	8,238	$	38,258	$	7,503,496	$	7,541,754

Summary of the loan portfolio by credit quality indicator, by loan class

		2021	2020		2019		2018		2017		Prior		Total
	(Dollars in Thousands)
Balance at September 30, 2021
Domestic
Commercial
Pass	$	775,702	$	398,790	$	126,858	$	104,736	$	67,433	$	8,398	$	1,481,917
Special Review		1,517		74,691		139		81		—		—		76,428
Watch List - Pass		33,793		—		—		—		—		10		33,803
Watch List - Substandard		3,232		297		781		60		—		—		4,370
Watch List - Doubtful		106		134		—		—		91		—		331
Total Commercial	$	814,350	$	473,912	$	127,778	$	104,877	$	67,524	$	8,408	$	1,596,849
Commercial real estate: other construction & land development
Pass	$	657,381	$	441,333	$	413,856	$	83,925	$	15,826	$	3,406	$	1,615,727
Special Review		31,527		—		211		—		—		—		31,738
Watch List - Pass		—		23,101		—		—		—		—		23,101
Watch List - Doubtful		539		107		—		—		—		—		646
Total Commercial real estate: other construction & land development	$	689,447	$	464,541	$	414,067	$	83,925	$	15,826	$	3,406	$	1,671,212
Commercial real estate: farmland & commercial
Pass	$	771,884	$	699,685	$	326,176	$	455,899	$	197,313	$	131,756	$	2,582,713
Special Review		2,849		1,314		910		3,617		63		194		8,947
Watch List - Pass		17,503		44,143		—		—		94		1		61,741
Watch List - Substandard		1,304		54,124		4,178		—		2,195		461		62,262
Watch List - Doubtful		—		229		185		—		—		—		414
Total Commercial real estate: farmland & commercial	$	793,540	$	799,495	$	331,449	$	459,516	$	199,665	$	132,412	$	2,716,077
Commercial real estate: multifamily
Pass	$	40,569	$	81,107	$	98,720	$	76,109	$	63,220	$	7,303	$	367,028
Watch List - Doubtful		—		137		—		—		—		—		137
Total Commercial real estate: multifamily	$	40,569	$	81,244	$	98,720	$	76,109	$	63,220	$	7,303	$	367,165
Residential: first lien
Pass	$	85,763	$	56,687	$	65,531	$	51,959	$	31,709	$	93,611	$	385,260
Watch List - Substandard		57		—		103		—		123		1		284
Watch List - Doubtful		—		89		—		—		—		—		89
Total Residential: first lien	$	85,820	$	56,776	$	65,634	$	51,959	$	31,832	$	93,612	$	385,633
Residential: junior lien
Pass	$	103,570	$	141,368	$	71,211	$	35,364	$	46,503	$	92,631	$	490,647
Watch List- Doubtful		—		33		—		—		—		—		33
Total Residential: junior lien	$	103,570	$	141,401	$	71,211	$	35,364	$	46,503	$	92,631	$	490,680
Residential: junior lien
Consumer
Pass	$	26,613	$	10,196	$	1,910	$	332	$	67	$	1,581	$	40,699
Total Consumer	$	26,613	$	10,196	$	1,910	$	332	$	67	$	1,581	$	40,699
Foreign
Pass	$	69,895	$	37,503	$	9,082	$	9,347	$	5,238	$	4,778	$	135,843
Total Foreign	$	69,895	$	37,503	$	9,082	$	9,347	$	5,238	$	4,778	$	135,843
Total Loans	$	2,623,804	$	2,065,068	$	1,119,851	$	821,429	$	429,875	$	344,131	$	7,404,158

		2020	2019		2018		2017		2016		Prior		Total
	(Dollars in Thousands)
Balance at December 31, 2020
Domestic
Commercial
Pass	$	1,168,671	$	240,869	$	145,670	$	85,434	$	13,901	$	10,000	$	1,664,545
Special Review		75,638		—		—		—		—		—		75,638
Watch List - Pass		39,886		11		—		3		—		17		39,917
Watch List - Substandard		3,360		683		289		—		315		—		4,647
Watch List - Doubtful		777		161		92		159		—		—		1,189
Total Commercial	$	1,288,332	$	241,724	$	146,051	$	85,596	$	14,216	$	10,017	$	1,785,936
Commercial
Commercial real estate: other construction & land development
Pass	$	773,165	$	576,707	$	320,308	$	78,174	$	10,534	$	3,343	$	1,762,231
Special Review		20,828		21,650		—		—		—		—		42,478
Watch List - Pass		23,101		1,451		—		—		—		—		24,552
Watch List - Doubtful		16,702		794		—		—		—		—		17,496
Total Commercial real estate: other construction & land development	$	833,796	$	600,602	$	320,308	$	78,174	$	10,534	$	3,343	$	1,846,757
Commercial real estate: farmland & commercial
Pass	$	884,070	$	373,993	$	386,268	$	189,639	$	202,500	$	116,729	$	2,153,199
Special Review		3,041		—		4,758		177		3,218		—		11,194
Watch List - Pass		61,637		942		277		80		—		—		62,936
Watch List - Substandard		53,809		4,986		—		2,269		475		1		61,540
Watch List - Doubtful		—		202		—		—		—		237		439
Total Commercial real estate: farmland & commercial	$	1,002,557	$	380,123	$	391,303	$	192,165	$	206,193	$	116,967	$	2,289,308
Commercial real estate: multifamily
Pass	$	74,577	$	208,356	$	82,818	$	64,110	$	6,801	$	4,248	$	440,910
Watch List - Doubtful		134		—		—		—		—		—		134
Total Commercial real estate: multifamily	$	74,711	$	208,356	$	82,818	$	64,110	$	6,801	$	4,248	$	441,044
Residential: first lien
Pass	$	81,004	$	62,165	$	72,299	$	54,593	$	29,250	$	105,463	$	404,774
Watch List - Pass		—		14		131		—		—		—		145
Watch List - Substandard		—		—		—		—		49		—		49
Watch List - Doubtful		86		—		—		—		—		65		151
Total Residential: first lien	$	81,090	$	62,179	$	72,430	$	54,593	$	29,299	$	105,528	$	405,119
Residential: junior lien
Pass	$	196,308	$	108,276	$	61,636	$	75,056	$	56,705	$	94,454	$	592,435
Special Review		740		—		—		812		—		—		1,552
Watch List- Doubtful		—		—		38		—		—		—		38
Total Residential: junior lien	$	197,048	$	108,276	$	61,674	$	75,868	$	56,705	$	94,454	$	594,025
Consumer
Pass	$	30,910	$	7,159	$	875	$	225	$	55	$	1,371	$	40,595
Total Consumer	$	30,910	$	7,159	$	875	$	225	$	55	$	1,371	$	40,595
Foreign
Pass	$	93,236	$	19,092	$	11,572	$	6,192	$	3,533	$	5,345	$	138,970
Total Foreign	$	93,236	$	19,092	$	11,572	$	6,192	$	3,533	$	5,345	$	138,970
Total Loans	$	3,601,680	$	1,627,511	$	1,087,031	$	556,923	$	327,336	$	341,273	$	7,541,754

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Stock Options (Tables)

9 Months Ended

Sep. 30, 2021

Stock Options

Summary of option activity under stock option plans

				Weighted
		Weighted		average
		average		remaining	Aggregate
	Number of	exercise		contractual	intrinsic
	options	price		term (years)	value ($)
					(in Thousands)
Options outstanding at December 31, 2020	651,127	$	27.24
Plus: Options granted	18,000		37.76
Less:
Options exercised	102,275		21.83
Options expired	—		—
Options forfeited	29,376		33.31
Options outstanding at September 30, 2021	537,476		28.29	4.73	$	7,176
Options fully vested and exercisable at September 30, 2021	342,473	$	24.58	3.32	$	5,843

XML

Investment Securities, Equity Securities with Readily Determinable Fair Values and Other Investments (Tables)

9 Months Ended

Sep. 30, 2021

Investment Securities, Equity Securities with Readily Determinable Fair Values and Other Investments

Amortized cost and estimated fair value by type of investment security

The amortized cost and estimated fair value by type of investment security at September 30, 2021 are as follows:

	Held to Maturity
			Gross		Gross
	Amortized		unrealized		unrealized		Estimated		Carrying
	cost		gains		losses		fair value		value
	(Dollars in Thousands)
Other securities	$	3,400	$	—	$	—	$	3,400	$	3,400
Total investment securities	$	3,400	$	—	$	—	$	3,400	$	3,400

	Available for Sale Debt Securities
			Gross		Gross
	Amortized		unrealized		unrealized		Estimated		Carrying
	cost		gains		losses		fair value		value(1)
	(Dollars in Thousands)
Residential mortgage-backed securities	$	4,499,169	$	21,717	$	(11,243)	$	4,509,643	$	4,509,643
Obligations of states and political subdivisions		41,583		3,088		—		44,671		44,671
Total investment securities	$	4,540,752	$	24,805	$	(11,243)	$	4,554,314	$	4,554,314

(1) Included in the carrying value of residential mortgage-backed securities are $873,753 of mortgage-backed securities issued by Ginnie Mae and $3,635,890 of mortgage-backed securities issued by Fannie Mae and Freddie Mac.

The amortized cost and estimated fair value by type of investment security at December 31, 2020 are as follows:

	Held to Maturity
			Gross		Gross
	Amortized		unrealized		unrealized		Estimated		Carrying
	cost		gains		losses		fair value		value
	(Dollars in Thousands)
Other securities	$	3,400	$	—	$	—	$	3,400	$	3,400
Total investment securities	$	3,400	$	—	$	—	$	3,400	$	3,400

	Available for Sale
			Gross		Gross		Estimated
	Amortized		unrealized		unrealized		fair		Carrying
	cost		gains		losses		value		value(1)
	(Dollars in Thousands)
Residential mortgage-backed securities	$	3,006,592	$	32,701	$	(9,339)	$	3,029,954	$	3,029,954
Obligations of states and political subdivisions		47,697		3,131		(14)		50,814		50,814
Total investment securities	$	3,054,289	$	35,832	$	(9,353)	$	3,080,768	$	3,080,768

(1) Included in the carrying value of residential mortgage-backed securities are $371,407 of mortgage-backed securities issued by Ginnie Mae and $2,658,547 of mortgage-backed securities issued by Fannie Mae and Freddie.

Amortized cost and fair value of investment securities, by contractual maturity

	Held to Maturity				Available for Sale
	Amortized		Estimated		Amortized		Estimated
	Cost		fair value		Cost		fair value
	(Dollars in Thousands)
Due in one year or less	$	2,200	$	2,200	$	—	$	—
Due after one year through five years		1,200		1,200		—		—
Due after five years through ten years		—		—		—		—
Due after ten years		—		—		41,583		44,671
Residential mortgage-backed securities		—		—		4,499,169		4,509,643
Total investment securities	$	3,400	$	3,400	$	4,540,752	$	4,554,314

Gross unrealized losses on investment securities and the related fair value

Gross unrealized losses on debt investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual debt securities have been in a continuous unrealized loss position at September 30, 2021, were as follows:

	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
	(Dollars in Thousands)
Available for sale:
Residential mortgage-backed securities	$	2,448,908	$	(10,355)	$	276,364	$	(888)	$	2,725,272	$	(11,243)
	$	2,448,908	$	(10,355)	$	276,364	$	(888)	$	2,725,272	$	(11,243)

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, 2020 were as follows:

	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
	(Dollars in Thousands)
Available for sale:
Residential mortgage-backed securities	$	1,462,232	$	(9,339)	$	—	$	—	$	1,462,232	$	(9,339)
Obligations of states and political subdivisions		—		—		757		(14)		757		(14)
	$	1,462,232	$	(9,339)	$	757	$	(14)	$	1,462,989	$	(9,353)

Summary of unrealized and realized gains and losses recognized in net income on equity securities

	Three Months Ended
	September 30, 2021
	(Dollars in Thousands)
Net losses recognized during the period on equity securities	$	(5)
Less: Net gains and (losses) recognized during the period on equity securities sold during the period		—
Unrealized losses recognized during the reporting period on equity securities still held at the reporting date	$	(5)

	Nine Months Ended
	September 30, 2021
	(Dollars in Thousands)
Net losses recognized during the period on equity securities	$	(70)
Less: Net gains and (losses) recognized during the period on equity securities sold during the period		—
Unrealized losses recognized during the reporting period on equity securities still held at the reporting date	$	(70)

	Three Months Ended
	September 30, 2020
	(Dollars in Thousands)
Net losses recognized during the period on equity securities	$	(12)
Less: Net gains and (losses) recognized during the period on equity securities sold during the period		—
Unrealized losses recognized during the reporting period on equity securities still held at the reporting date	$	(12)

	Nine Months Ended
	September 30, 2020
	(Dollars in Thousands)
Net gains recognized during the period on equity securities	$	87
Less: Net gains and (losses) recognized during the period on equity securities sold during the period		—
Unrealized losses recognized during the reporting period on equity securities still held at the reporting date	$	87

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Junior Subordinated Interest Deferrable Debentures (Tables)

9 Months Ended

Sep. 30, 2021

Junior Subordinated Interest Deferrable Debentures

Junior subordinated interest deferrable debentures, major types of business trusts

	Junior
	Subordinated
	Deferrable
	Interest		Repricing	Interest		Interest				Optional
	Debentures		Frequency	Rate		Rate Index(1)			Maturity Date	Redemption Date(1)
	(Dollars in Thousands)
Trust VIII	$	25,774	Quarterly	3.18	%	LIBOR	+	3.05	October 2033	October 2008
Trust IX		41,238	Quarterly	1.76	%	LIBOR	+	1.62	October 2036	October 2011
Trust X		21,021	Quarterly	1.78	%	LIBOR	+	1.65	February 2037	February 2012
Trust XI		25,990	Quarterly	1.76	%	LIBOR	+	1.62	July 2037	July 2012
Trust XII		20,619	Quarterly	1.57	%	LIBOR	+	1.45	September 2037	September 2012
	$	134,642

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

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Basis of Presentation (Details) $ in Thousands		9 Months Ended
	Jan. 01, 2020 USD ($)	Sep. 30, 2021 USD ($) segment subsidiary	Dec. 31, 2020 USD ($)
Basis of presentation
Number of operating segments | segment		1
Number of active operating bank subsidiaries | subsidiary		5
Retained earnings		$ 2,414,183	$ 2,289,626
ASU 2016-13 | Adjustment
Basis of presentation
Percentage of allowance for loan losses	17.20%
Retained earnings	$ 8,300

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Fair Value (Fair Value By Level) (Details) - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Assets:
Available for sale debt securities	$ 4,554,314,000	$ 3,080,768,000
Equity Securities	6,132,000	6,202,000
Estimate of Fair Value Measurement [Member] | Collateralized Mortgage Backed Securities [Member]
Assets:
Available for sale debt securities	4,509,643,000	3,029,954,000
Estimate of Fair Value Measurement [Member] | US States and Political Subdivisions Debt Securities [Member]
Assets:
Available for sale debt securities	44,671,000	50,814,000
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
Assets:
Marketable Securities	4,560,446,000	3,086,970,000
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member] | Collateralized Mortgage Backed Securities [Member]
Assets:
Available for sale debt securities	4,509,643,000	3,029,954,000
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member] | US States and Political Subdivisions Debt Securities [Member]
Assets:
Available for sale debt securities	44,671,000	50,814,000
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member] | Equity Securities [Member]
Assets:
Equity Securities	6,132,000	6,202,000
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Assets:
Marketable Securities	6,132,000	6,202,000
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member] | Equity Securities [Member]
Assets:
Equity Securities	6,132,000	6,202,000
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]
Assets:
Marketable Securities	4,554,314,000	3,080,768,000
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member] | Collateralized Mortgage Backed Securities [Member]
Assets:
Available for sale debt securities	4,509,643,000	3,029,954,000
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member] | US States and Political Subdivisions Debt Securities [Member]
Assets:
Available for sale debt securities	$ 44,671,000	$ 50,814,000

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Fair Value Measurements (Fair Value Measurement and Assumptions) (Details) - USD ($)	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2021	Sep. 30, 2021	Dec. 31, 2020
Assets:
Impaired Loans	$ 815,000	$ 815,000	$ 18,361,000
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	2	2	22,000
Adjustment to fair value in connection with other real estate owned	0	2,065,000	1,539,000
Impaired commercial collateral dependent receivables appraisals to determine fair value within immediately preceding twelve months	0	0	16,587,000
Impaired collateral dependent commercial loans with internal evaluation completed within last twelve months	815,000	815,000	1,283,000
Fair Value, Measurements, Nonrecurring [Member]
Assumptions used in discounted cash flow model to determine fair value of investments classified within level 3
Change in net provision, impaired loans	209,000	209,000	(86,000)
Change in net provision, other real estate owned	2,065,000	2,065,000	1,539,000
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Assets:
Watch-List doubtful loans	57,000	57,000	393,000
Non-financial assets:
Other real estate owned	1,685,000	1,685,000	6,241,000
Fair Value, Measurements, Nonrecurring [Member] | Estimate of Fair Value Measurement [Member]
Assets:
Watch-List doubtful loans	57,000	57,000	393,000
Non-financial assets:
Other real estate owned	$ 1,685,000	$ 1,685,000	$ 6,241,000

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Fair Value Measurements (Other Assumptions) (Details) - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Deposits
Carrying amount of time deposits	$ 2,186,651,000	$ 2,153,541,000
Fair Value, Inputs, Level 3 [Member]
Loans
Carrying amount of fixed rate performing loans	1,497,535,000	1,812,413,000
Estimated fair value of fixed rate performing loans	1,451,592,000	1,747,257,000
Deposits
Carrying amount of time deposits	2,186,651,000	2,153,541,000
Estimated fair value of time deposits	2,184,386,000	2,148,976,000
Fair Value, Inputs, Level 2 [Member]
Other borrowed funds
Carrying amount of the long-term FHLB borrowings	436,186,000	436,372,000
Estimated fair value of long-term FHLB borrowings	$ 466,315,000	$ 480,475,000

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Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Summary of loans, by loan type
Total loans	$ 7,404,158	$ 7,541,754
Commercial, financial and agricultural
Summary of loans, by loan type
Total loans	4,680,091	4,516,288
Real estate - mortgage
Summary of loans, by loan type
Total loans	876,313	999,144
Commercial Real Estate Portfolio Segment [Member]
Summary of loans, by loan type
Total loans	1,671,212	1,846,757
Consumer
Summary of loans, by loan type
Total loans	40,699	40,595
Foreign.
Summary of loans, by loan type
Total loans	$ 135,843	$ 138,970

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Allowance for Credit Losses (By Loan Class) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Allowance for Credit Losses
Balance at the beginning of the period	$ 108,281	$ 94,554	$ 109,059	$ 60,278
Losses charged to allowance	(2,430)	(1,887)	(6,631)	(7,209)
Recoveries credited to allowance	673	728	1,760	2,154
Net (losses) recoveries charged to allowance	(1,757)	(1,159)	(4,871)	(5,055)
Credit loss expense	2,801	8,770	5,137	36,595
Balance at the end of the period	109,325	102,165	109,325	102,165
ASU 2016-13 | Adjustment
Allowance for Credit Losses
Balance at the end of the period		10,347		10,347
Commercial, financial and agricultural | Domestic | Commercial Loan [Member]
Allowance for Credit Losses
Balance at the beginning of the period	23,063	20,079	21,908	11,145
Losses charged to allowance	(2,287)	(1,735)	(5,835)	(6,696)
Recoveries credited to allowance	473	523	1,429	1,793
Net (losses) recoveries charged to allowance	(1,814)	(1,212)	(4,406)	(4,903)
Credit loss expense	1,955	3,277	5,702	11,655
Balance at the end of the period	23,204	22,144	23,204	22,144
Commercial, financial and agricultural | Domestic | Commercial Loan [Member] | ASU 2016-13 | Adjustment
Allowance for Credit Losses
Balance at the end of the period		4,247		4,247
Commercial, financial and agricultural | Domestic | Commercial Real Estate Farmland and Commercial Receivable [Member]
Allowance for Credit Losses
Balance at the beginning of the period	34,238	18,711	30,000	16,533
Losses charged to allowance			(356)	(55)
Recoveries credited to allowance	141	86	160	107
Net (losses) recoveries charged to allowance	141	86	(196)	52
Credit loss expense	871	4,892	5,446	11,396
Balance at the end of the period	35,250	23,689	35,250	23,689
Commercial, financial and agricultural | Domestic | Commercial Real Estate Farmland and Commercial Receivable [Member] | ASU 2016-13 | Adjustment
Allowance for Credit Losses
Balance at the end of the period		(4,292)		(4,292)
Commercial, financial and agricultural | Domestic | Commercial Real Estate Multifamily Receivable [Member]
Allowance for Credit Losses
Balance at the beginning of the period	4,206	1,864	5,051	1,786
Credit loss expense	9	2,639	(836)	3,072
Balance at the end of the period	4,215	4,503	4,215	4,503
Commercial, financial and agricultural | Domestic | Commercial Real Estate Multifamily Receivable [Member] | ASU 2016-13 | Adjustment
Allowance for Credit Losses
Balance at the end of the period		(355)		(355)
Commercial Real Estate Portfolio Segment [Member] | Domestic | Commercial Real Estate: other construction and land development
Allowance for Credit Losses
Balance at the beginning of the period	33,603	40,924	37,612	18,152
Losses charged to allowance	(2)		(2)	(19)
Recoveries credited to allowance		14		15
Net (losses) recoveries charged to allowance	(2)	14	(2)	(4)
Credit loss expense	503	(2,855)	(3,506)	6,544
Balance at the end of the period	34,104	38,083	34,104	38,083
Commercial Real Estate Portfolio Segment [Member] | Domestic | Commercial Real Estate: other construction and land development | ASU 2016-13 | Adjustment
Allowance for Credit Losses
Balance at the end of the period		13,391		13,391
Real estate - mortgage | Domestic | Residential First Mortgage Financing Receivable [Member]
Allowance for Credit Losses
Balance at the beginning of the period	3,916	3,208	3,874	3,762
Losses charged to allowance	(73)	(87)	(262)	(123)
Recoveries credited to allowance	12	8	47	10
Net (losses) recoveries charged to allowance	(61)	(79)	(215)	(113)
Credit loss expense	(110)	400	86	1,460
Balance at the end of the period	3,745	3,529	3,745	3,529
Real estate - mortgage | Domestic | Residential First Mortgage Financing Receivable [Member] | ASU 2016-13 | Adjustment
Allowance for Credit Losses
Balance at the end of the period		(1,580)		(1,580)
Real estate - mortgage | Domestic | Residential Junior Lien
Allowance for Credit Losses
Balance at the beginning of the period	8,196	8,964	9,570	7,535
Losses charged to allowance	(4)	(3)	(25)	(124)
Recoveries credited to allowance	28	51	86	171
Net (losses) recoveries charged to allowance	24	48	61	47
Credit loss expense	(496)	293	(1,907)	2,152
Balance at the end of the period	7,724	9,305	7,724	9,305
Real estate - mortgage | Domestic | Residential Junior Lien | ASU 2016-13 | Adjustment
Allowance for Credit Losses
Balance at the end of the period		(429)		(429)
Consumer | Domestic
Allowance for Credit Losses
Balance at the beginning of the period	268	288	291	542
Losses charged to allowance	(64)	(62)	(151)	(192)
Recoveries credited to allowance	19	46	38	58
Net (losses) recoveries charged to allowance	(45)	(16)	(113)	(134)
Credit loss expense	47	2	92	91
Balance at the end of the period	270	274	270	274
Consumer | Domestic | ASU 2016-13 | Adjustment
Allowance for Credit Losses
Balance at the end of the period		(225)		(225)
Foreign. | Foreign
Allowance for Credit Losses
Balance at the beginning of the period	791	516	753	823
Credit loss expense	22	122	60	225
Balance at the end of the period	$ 813	638	$ 813	638
Foreign. | Foreign | ASU 2016-13 | Adjustment
Allowance for Credit Losses
Balance at the end of the period		$ (410)		$ (410)

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Allowance for Credit Losses (Impairment By Loan Class) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Loan loss allowances, impaired financing receivable, evaluated individually or collectively
Loans Individually Evaluated for Impairment, Recorded Investment	$ 1,650	$ 19,447
Loans Individually Evaluated for Impairment, Allowance	99	279
Loans Collectively Evaluated for Impairment, Recorded Investment	7,402,508	7,522,307
Loans Collectively Evaluated for Impairment, Allowance	109,226	108,780
Commercial, financial and agricultural | Domestic | Commercial Loan [Member]
Loan loss allowances, impaired financing receivable, evaluated individually or collectively
Loans Individually Evaluated for Impairment, Recorded Investment	331	1,189
Loans Individually Evaluated for Impairment, Allowance	29	209
Loans Collectively Evaluated for Impairment, Recorded Investment	1,596,518	1,784,747
Loans Collectively Evaluated for Impairment, Allowance	23,175	21,699
Commercial, financial and agricultural | Domestic | Commercial Real Estate Farmland and Commercial Receivable [Member]
Loan loss allowances, impaired financing receivable, evaluated individually or collectively
Loans Individually Evaluated for Impairment, Recorded Investment	414	439
Loans Collectively Evaluated for Impairment, Recorded Investment	2,715,663	2,288,869
Loans Collectively Evaluated for Impairment, Allowance	35,250	30,000
Commercial, financial and agricultural | Domestic | Commercial Real Estate Multifamily Receivable [Member]
Loan loss allowances, impaired financing receivable, evaluated individually or collectively
Loans Individually Evaluated for Impairment, Recorded Investment	137	134
Loans Collectively Evaluated for Impairment, Recorded Investment	367,028	440,910
Loans Collectively Evaluated for Impairment, Allowance	4,215	5,051
Commercial Real Estate Portfolio Segment [Member] | Domestic | 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	646	17,496
Loans Individually Evaluated for Impairment, Allowance	70	70
Loans Collectively Evaluated for Impairment, Recorded Investment	1,670,566	1,829,261
Loans Collectively Evaluated for Impairment, Allowance	34,034	37,542
Real estate - mortgage | Domestic | Residential First Mortgage Financing Receivable [Member]
Loan loss allowances, impaired financing receivable, evaluated individually or collectively
Loans Individually Evaluated for Impairment, Recorded Investment	89	151
Loans Collectively Evaluated for Impairment, Recorded Investment	385,544	404,968
Loans Collectively Evaluated for Impairment, Allowance	3,745	3,874
Real estate - mortgage | Domestic | Residential Junior Lien
Loan loss allowances, impaired financing receivable, evaluated individually or collectively
Loans Individually Evaluated for Impairment, Recorded Investment	33	38
Loans Collectively Evaluated for Impairment, Recorded Investment	490,647	593,987
Loans Collectively Evaluated for Impairment, Allowance	7,724	9,570
Consumer | Domestic
Loan loss allowances, impaired financing receivable, evaluated individually or collectively
Loans Collectively Evaluated for Impairment, Recorded Investment	40,699	40,595
Loans Collectively Evaluated for Impairment, Allowance	270	291
Foreign. | Foreign
Loan loss allowances, impaired financing receivable, evaluated individually or collectively
Loans Collectively Evaluated for Impairment, Recorded Investment	135,843	138,970
Loans Collectively Evaluated for Impairment, Allowance	$ 813	$ 753

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Allowance for Credit Losses (Non-accrual Basis By Loan Class) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Loan loss allowances, financing receivable past due
Non-accrual loans, total	$ 1,903	$ 19,822
Commercial, financial and agricultural | Domestic | Commercial Loan [Member]
Loan loss allowances, financing receivable past due
Non-accrual loans, total	331	1,189
Commercial, financial and agricultural | Domestic | Commercial Real Estate Farmland and Commercial Receivable [Member]
Loan loss allowances, financing receivable past due
Non-accrual loans, total	414	439
Commercial, financial and agricultural | Domestic | Commercial Real Estate Multifamily Receivable [Member]
Loan loss allowances, financing receivable past due
Non-accrual loans, total	137	134
Commercial Real Estate Portfolio Segment [Member] | Domestic | Commercial Real Estate: other construction and land development
Loan loss allowances, financing receivable past due
Non-accrual loans, total	646	17,496
Real estate - mortgage | Domestic | Residential First Mortgage Financing Receivable [Member]
Loan loss allowances, financing receivable past due
Non-accrual loans, total	342	526
Real estate - mortgage | Domestic | Residential Junior Lien
Loan loss allowances, financing receivable past due
Non-accrual loans, total	$ 33	$ 38

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Allowance for Credit Losses (Impaired Loans) (Details)	9 Months Ended
	Sep. 30, 2021 USD ($)	Nov. 01, 2021 USD ($)	Aug. 01, 2021 USD ($) loan	Dec. 31, 2020 USD ($)
Loan loss allowances, impaired financing receivable
Total troubled debt restructuring	$ 2,919,000			$ 5,821,000
Amount of loans with some degree of payment deferral		$ 226,831,000
Period of charge off for past due unsecured commercial loans	90 days
Paycheck protection program loans (COVID-19 program)
Loan loss allowances, impaired financing receivable
Period of time PPP loans cover payroll and certain other costs	168 days
Interest rate on receivable	1.00%
Number of loans | loan			2,634
Amount of loans outstanding			$ 169,511,000
Paycheck protection program loans (COVID-19 program) | Loans made prior to June 5, 2020
Loan loss allowances, impaired financing receivable
Term of receivable (in years)	2 years
Paycheck protection program loans (COVID-19 program) | Loans made after June 5, 2020
Loan loss allowances, impaired financing receivable
Term of receivable (in years)	5 years
Real estate - mortgage | Domestic | Residential First Mortgage Financing Receivable [Member]
Loan loss allowances, impaired financing receivable
Total troubled debt restructuring	$ 1,934,000			4,078,000
Real estate - mortgage | Domestic | Residential Junior Lien
Loan loss allowances, impaired financing receivable
Total troubled debt restructuring	106,000			521,000
Consumer | Domestic
Loan loss allowances, impaired financing receivable
Total troubled debt restructuring	862,000			989,000
Foreign. | Foreign
Loan loss allowances, impaired financing receivable
Total troubled debt restructuring	$ 17,000			$ 233,000

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Allowance for Credit Losses (Aging By Loan Class) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Financing receivable recorded investment
Past due 90 days or Greater and Still Accruing	$ 7,072	$ 8,238
Loans	7,404,158	7,541,754
Current
Financing receivable recorded investment
Loans	7,354,539	7,503,496
Total Past Due
Financing receivable recorded investment
Loans	49,619	38,258
30 to 59 Days
Financing receivable recorded investment
Loans	37,343	9,307
60 to 89 Days
Financing receivable recorded investment
Loans	4,824	3,606
90 Days or Greater
Financing receivable recorded investment
Loans	7,452	25,345
Commercial, financial and agricultural
Financing receivable recorded investment
Loans	4,680,091	4,516,288
Commercial, financial and agricultural | Domestic | Commercial Loan [Member]
Financing receivable recorded investment
Past due 90 days or Greater and Still Accruing	89	318
Loans	1,596,849	1,785,936
Commercial, financial and agricultural | Domestic | Commercial Loan [Member] | Current
Financing receivable recorded investment
Loans	1,591,416	1,782,333
Commercial, financial and agricultural | Domestic | Commercial Loan [Member] | Total Past Due
Financing receivable recorded investment
Loans	5,433	3,603
Commercial, financial and agricultural | Domestic | Commercial Loan [Member] | 30 to 59 Days
Financing receivable recorded investment
Loans	5,123	1,931
Commercial, financial and agricultural | Domestic | Commercial Loan [Member] | 60 to 89 Days
Financing receivable recorded investment
Loans	221	1,109
Commercial, financial and agricultural | Domestic | Commercial Loan [Member] | 90 Days or Greater
Financing receivable recorded investment
Loans	89	563
Commercial, financial and agricultural | Domestic | Commercial Real Estate Farmland and Commercial Receivable [Member]
Financing receivable recorded investment
Past due 90 days or Greater and Still Accruing		186
Loans	2,716,077	2,289,308
Commercial, financial and agricultural | Domestic | Commercial Real Estate Farmland and Commercial Receivable [Member] | Current
Financing receivable recorded investment
Loans	2,707,253	2,286,468
Commercial, financial and agricultural | Domestic | Commercial Real Estate Farmland and Commercial Receivable [Member] | Total Past Due
Financing receivable recorded investment
Loans	8,824	2,840
Commercial, financial and agricultural | Domestic | Commercial Real Estate Farmland and Commercial Receivable [Member] | 30 to 59 Days
Financing receivable recorded investment
Loans	6,535	2,435
Commercial, financial and agricultural | Domestic | Commercial Real Estate Farmland and Commercial Receivable [Member] | 60 to 89 Days
Financing receivable recorded investment
Loans	2,104	219
Commercial, financial and agricultural | Domestic | Commercial Real Estate Farmland and Commercial Receivable [Member] | 90 Days or Greater
Financing receivable recorded investment
Loans	185	186
Commercial, financial and agricultural | Domestic | Commercial Real Estate Multifamily Receivable [Member]
Financing receivable recorded investment
Loans	367,165	441,044
Commercial, financial and agricultural | Domestic | Commercial Real Estate Multifamily Receivable [Member] | Current
Financing receivable recorded investment
Loans	367,165	440,918
Commercial, financial and agricultural | Domestic | Commercial Real Estate Multifamily Receivable [Member] | Total Past Due
Financing receivable recorded investment
Loans		126
Commercial, financial and agricultural | Domestic | Commercial Real Estate Multifamily Receivable [Member] | 30 to 59 Days
Financing receivable recorded investment
Loans		126
Commercial Real Estate Portfolio Segment [Member]
Financing receivable recorded investment
Loans	1,671,212	1,846,757
Commercial Real Estate Portfolio Segment [Member] | Domestic | Commercial Real Estate: other construction and land development
Financing receivable recorded investment
Loans	1,671,212	1,846,757
Commercial Real Estate Portfolio Segment [Member] | Domestic | Commercial Real Estate: other construction and land development | Current
Financing receivable recorded investment
Loans	1,649,591	1,828,257
Commercial Real Estate Portfolio Segment [Member] | Domestic | Commercial Real Estate: other construction and land development | Total Past Due
Financing receivable recorded investment
Loans	21,621	18,500
Commercial Real Estate Portfolio Segment [Member] | Domestic | Commercial Real Estate: other construction and land development | 30 to 59 Days
Financing receivable recorded investment
Loans	21,433	1,059
Commercial Real Estate Portfolio Segment [Member] | Domestic | Commercial Real Estate: other construction and land development | 60 to 89 Days
Financing receivable recorded investment
Loans	188	854
Commercial Real Estate Portfolio Segment [Member] | Domestic | Commercial Real Estate: other construction and land development | 90 Days or Greater
Financing receivable recorded investment
Loans		16,587
Real estate - mortgage
Financing receivable recorded investment
Loans	876,313	999,144
Real estate - mortgage | Domestic | Residential First Mortgage Financing Receivable [Member]
Financing receivable recorded investment
Past due 90 days or Greater and Still Accruing	4,735	5,890
Loans	385,633	405,119
Real estate - mortgage | Domestic | Residential First Mortgage Financing Receivable [Member] | Current
Financing receivable recorded investment
Loans	377,782	395,629
Real estate - mortgage | Domestic | Residential First Mortgage Financing Receivable [Member] | Total Past Due
Financing receivable recorded investment
Loans	7,851	9,490
Real estate - mortgage | Domestic | Residential First Mortgage Financing Receivable [Member] | 30 to 59 Days
Financing receivable recorded investment
Loans	2,266	2,399
Real estate - mortgage | Domestic | Residential First Mortgage Financing Receivable [Member] | 60 to 89 Days
Financing receivable recorded investment
Loans	655	926
Real estate - mortgage | Domestic | Residential First Mortgage Financing Receivable [Member] | 90 Days or Greater
Financing receivable recorded investment
Loans	4,930	6,165
Real estate - mortgage | Domestic | Residential Junior Lien
Financing receivable recorded investment
Past due 90 days or Greater and Still Accruing	1,842	1,197
Loans	490,680	594,025
Real estate - mortgage | Domestic | Residential Junior Lien | Current
Financing receivable recorded investment
Loans	488,219	592,020
Real estate - mortgage | Domestic | Residential Junior Lien | Total Past Due
Financing receivable recorded investment
Loans	2,461	2,005
Real estate - mortgage | Domestic | Residential Junior Lien | 30 to 59 Days
Financing receivable recorded investment
Loans	515	561
Real estate - mortgage | Domestic | Residential Junior Lien | 60 to 89 Days
Financing receivable recorded investment
Loans	104	247
Real estate - mortgage | Domestic | Residential Junior Lien | 90 Days or Greater
Financing receivable recorded investment
Loans	1,842	1,197
Consumer
Financing receivable recorded investment
Loans	40,699	40,595
Consumer | Domestic
Financing receivable recorded investment
Past due 90 days or Greater and Still Accruing	46	79
Loans	40,699	40,595
Consumer | Domestic | Current
Financing receivable recorded investment
Loans	40,343	40,127
Consumer | Domestic | Total Past Due
Financing receivable recorded investment
Loans	356	468
Consumer | Domestic | 30 to 59 Days
Financing receivable recorded investment
Loans	240	318
Consumer | Domestic | 60 to 89 Days
Financing receivable recorded investment
Loans	70	71
Consumer | Domestic | 90 Days or Greater
Financing receivable recorded investment
Loans	46	79
Foreign.
Financing receivable recorded investment
Loans	135,843	138,970
Foreign. | Foreign
Financing receivable recorded investment
Past due 90 days or Greater and Still Accruing	360	568
Loans	135,843	138,970
Foreign. | Foreign | Current
Financing receivable recorded investment
Loans	132,770	137,744
Foreign. | Foreign | Total Past Due
Financing receivable recorded investment
Loans	3,073	1,226
Foreign. | Foreign | 30 to 59 Days
Financing receivable recorded investment
Loans	1,231	478
Foreign. | Foreign | 60 to 89 Days
Financing receivable recorded investment
Loans	1,482	180
Foreign. | Foreign | 90 Days or Greater
Financing receivable recorded investment
Loans	$ 360	$ 568

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Allowance for Credit Losses (Portfolio Credit Quality) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Loan portfolio by credit quality indicator
2021	$ 2,623,804
2020	2,065,068	$ 3,601,680
2019	1,119,851	1,627,511
2018	821,429	1,087,031
2017	429,875	556,923
2016/Prior	344,131	327,336
Prior		341,273
Total loans	7,404,158	7,541,754
Commercial, financial and agricultural
Loan portfolio by credit quality indicator
Total loans	4,680,091	4,516,288
Commercial, financial and agricultural | Domestic | Commercial Loan [Member]
Loan portfolio by credit quality indicator
2021	814,350
2020	473,912	1,288,332
2019	127,778	241,724
2018	104,877	146,051
2017	67,524	85,596
2016/Prior	8,408	14,216
Prior		10,017
Total loans	1,596,849	1,785,936
Commercial, financial and agricultural | Domestic | Commercial Loan [Member] | Pass [Member]
Loan portfolio by credit quality indicator
2021	775,702
2020	398,790	1,168,671
2019	126,858	240,869
2018	104,736	145,670
2017	67,433	85,434
2016/Prior	8,398	13,901
Prior		10,000
Total loans	1,481,917	1,664,545
Commercial, financial and agricultural | Domestic | Commercial Loan [Member] | Special Mention [Member]
Loan portfolio by credit quality indicator
2021	1,517
2020	74,691	75,638
2019	139
2018	81
Total loans	76,428	75,638
Commercial, financial and agricultural | Domestic | Commercial Loan [Member] | Special Pass [Member]
Loan portfolio by credit quality indicator
2021	33,793
2020		39,886
2019		11
2017		3
2016/Prior	10
Prior		17
Total loans	33,803	39,917
Commercial, financial and agricultural | Domestic | Commercial Loan [Member] | Substandard [Member]
Loan portfolio by credit quality indicator
2021	3,232
2020	297	3,360
2019	781	683
2018	60	289
2016/Prior		315
Total loans	4,370	4,647
Commercial, financial and agricultural | Domestic | Commercial Loan [Member] | Watch List - Doubtful
Loan portfolio by credit quality indicator
2021	106
2020	134	777
2019		161
2018		92
2017	91	159
Total loans	331	1,189
Commercial, financial and agricultural | Domestic | Commercial Real Estate Farmland and Commercial Receivable [Member]
Loan portfolio by credit quality indicator
2021	793,540
2020	799,495	1,002,557
2019	331,449	380,123
2018	459,516	391,303
2017	199,665	192,165
2016/Prior	132,412	206,193
Prior		116,967
Total loans	2,716,077	2,289,308
Commercial, financial and agricultural | Domestic | Commercial Real Estate Farmland and Commercial Receivable [Member] | Pass [Member]
Loan portfolio by credit quality indicator
2021	771,884
2020	699,685	884,070
2019	326,176	373,993
2018	455,899	386,268
2017	197,313	189,639
2016/Prior	131,756	202,500
Prior		116,729
Total loans	2,582,713	2,153,199
Commercial, financial and agricultural | Domestic | Commercial Real Estate Farmland and Commercial Receivable [Member] | Special Mention [Member]
Loan portfolio by credit quality indicator
2021	2,849
2020	1,314	3,041
2019	910
2018	3,617	4,758
2017	63	177
2016/Prior	194	3,218
Total loans	8,947	11,194
Commercial, financial and agricultural | Domestic | Commercial Real Estate Farmland and Commercial Receivable [Member] | Special Pass [Member]
Loan portfolio by credit quality indicator
2021	17,503
2020	44,143	61,637
2019		942
2018		277
2017	94	80
2016/Prior	1
Total loans	61,741	62,936
Commercial, financial and agricultural | Domestic | Commercial Real Estate Farmland and Commercial Receivable [Member] | Substandard [Member]
Loan portfolio by credit quality indicator
2021	1,304
2020	54,124	53,809
2019	4,178	4,986
2017	2,195	2,269
2016/Prior	461	475
Prior		1
Total loans	62,262	61,540
Commercial, financial and agricultural | Domestic | Commercial Real Estate Farmland and Commercial Receivable [Member] | Watch List - Doubtful
Loan portfolio by credit quality indicator
2020	229
2019	185	202
Prior		237
Total loans	414	439
Commercial, financial and agricultural | Domestic | Commercial Real Estate Multifamily Receivable [Member]
Loan portfolio by credit quality indicator
2021	40,569
2020	81,244	74,711
2019	98,720	208,356
2018	76,109	82,818
2017	63,220	64,110
2016/Prior	7,303	6,801
Prior		4,248
Total loans	367,165	441,044
Commercial, financial and agricultural | Domestic | Commercial Real Estate Multifamily Receivable [Member] | Pass [Member]
Loan portfolio by credit quality indicator
2021	40,569
2020	81,107	74,577
2019	98,720	208,356
2018	76,109	82,818
2017	63,220	64,110
2016/Prior	7,303	6,801
Prior		4,248
Total loans	367,028	440,910
Commercial, financial and agricultural | Domestic | Commercial Real Estate Multifamily Receivable [Member] | Watch List - Doubtful
Loan portfolio by credit quality indicator
2020	137	134
Total loans	137	134
Commercial Real Estate Portfolio Segment [Member]
Loan portfolio by credit quality indicator
Total loans	1,671,212	1,846,757
Commercial Real Estate Portfolio Segment [Member] | Domestic | Commercial Real Estate: other construction and land development
Loan portfolio by credit quality indicator
2021	689,447
2020	464,541	833,796
2019	414,067	600,602
2018	83,925	320,308
2017	15,826	78,174
2016/Prior	3,406	10,534
Prior		3,343
Total loans	1,671,212	1,846,757
Commercial Real Estate Portfolio Segment [Member] | Domestic | Commercial Real Estate: other construction and land development | Pass [Member]
Loan portfolio by credit quality indicator
2021	657,381
2020	441,333	773,165
2019	413,856	576,707
2018	83,925	320,308
2017	15,826	78,174
2016/Prior	3,406	10,534
Prior		3,343
Total loans	1,615,727	1,762,231
Commercial Real Estate Portfolio Segment [Member] | Domestic | Commercial Real Estate: other construction and land development | Special Mention [Member]
Loan portfolio by credit quality indicator
2021	31,527
2020		20,828
2019	211	21,650
Total loans	31,738	42,478
Commercial Real Estate Portfolio Segment [Member] | Domestic | Commercial Real Estate: other construction and land development | Special Pass [Member]
Loan portfolio by credit quality indicator
2020	23,101	23,101
2019		1,451
Total loans	23,101	24,552
Commercial Real Estate Portfolio Segment [Member] | Domestic | Commercial Real Estate: other construction and land development | Watch List - Doubtful
Loan portfolio by credit quality indicator
2021	539
2020	107	16,702
2019		794
Total loans	646	17,496
Real estate - mortgage
Loan portfolio by credit quality indicator
Total loans	876,313	999,144
Real estate - mortgage | Domestic | Residential First Mortgage Financing Receivable [Member]
Loan portfolio by credit quality indicator
2021	85,820
2020	56,776	81,090
2019	65,634	62,179
2018	51,959	72,430
2017	31,832	54,593
2016/Prior	93,612	29,299
Prior		105,528
Total loans	385,633	405,119
Real estate - mortgage | Domestic | Residential First Mortgage Financing Receivable [Member] | Pass [Member]
Loan portfolio by credit quality indicator
2021	85,763
2020	56,687	81,004
2019	65,531	62,165
2018	51,959	72,299
2017	31,709	54,593
2016/Prior	93,611	29,250
Prior		105,463
Total loans	385,260	404,774
Real estate - mortgage | Domestic | Residential First Mortgage Financing Receivable [Member] | Special Pass [Member]
Loan portfolio by credit quality indicator
2019		14
2018		131
Total loans		145
Real estate - mortgage | Domestic | Residential First Mortgage Financing Receivable [Member] | Substandard [Member]
Loan portfolio by credit quality indicator
2021	57
2019	103
2017	123
2016/Prior	1	49
Total loans	284	49
Real estate - mortgage | Domestic | Residential First Mortgage Financing Receivable [Member] | Watch List - Doubtful
Loan portfolio by credit quality indicator
2020	89	86
Prior		65
Total loans	89	151
Real estate - mortgage | Domestic | Residential Junior Lien
Loan portfolio by credit quality indicator
2021	103,570
2020	141,401	197,048
2019	71,211	108,276
2018	35,364	61,674
2017	46,503	75,868
2016/Prior	92,631	56,705
Prior		94,454
Total loans	490,680	594,025
Real estate - mortgage | Domestic | Residential Junior Lien | Pass [Member]
Loan portfolio by credit quality indicator
2021	103,570
2020	141,368	196,308
2019	71,211	108,276
2018	35,364	61,636
2017	46,503	75,056
2016/Prior	92,631	56,705
Prior		94,454
Total loans	490,647	592,435
Real estate - mortgage | Domestic | Residential Junior Lien | Special Mention [Member]
Loan portfolio by credit quality indicator
2020		740
2017		812
Total loans		1,552
Real estate - mortgage | Domestic | Residential Junior Lien | Watch List - Doubtful
Loan portfolio by credit quality indicator
2020	33
2018		38
Total loans	33	38
Consumer
Loan portfolio by credit quality indicator
Total loans	40,699	40,595
Consumer | Domestic
Loan portfolio by credit quality indicator
2021	26,613
2020	10,196	30,910
2019	1,910	7,159
2018	332	875
2017	67	225
2016/Prior	1,581	55
Prior		1,371
Total loans	40,699	40,595
Consumer | Domestic | Pass [Member]
Loan portfolio by credit quality indicator
2021	26,613
2020	10,196	30,910
2019	1,910	7,159
2018	332	875
2017	67	225
2016/Prior	1,581	55
Prior		1,371
Total loans	40,699	40,595
Foreign.
Loan portfolio by credit quality indicator
Total loans	135,843	138,970
Foreign. | Foreign
Loan portfolio by credit quality indicator
2021	69,895
2020	37,503	93,236
2019	9,082	19,092
2018	9,347	11,572
2017	5,238	6,192
2016/Prior	4,778	3,533
Prior		5,345
Total loans	135,843	138,970
Foreign. | Foreign | Pass [Member]
Loan portfolio by credit quality indicator
2021	69,895
2020	37,503	93,236
2019	9,082	19,092
2018	9,347	11,572
2017	5,238	6,192
2016/Prior	4,778	3,533
Prior		5,345
Total loans	$ 135,843	$ 138,970

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Stock Options (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Apr. 05, 2012
Employee Stock Option [Member]
Stock option details
Shares available for future grants	21,478		21,478		800,000
Maximum exercisable period for options granted			10 years
Number of options granted (in shares)			18,000
Stock option activity
Options outstanding at the beginning of the period (in shares)			651,127
Plus: Options granted (in shares)			18,000
Less:
Exercise of stock options (in shares)			102,275
Options forfeited (in shares)			29,376
Options outstanding at the end of the period (in shares)	537,476		537,476
Options fully vested and exercisable at the end of the period (in shares)	342,473		342,473
Stock Options, Weighted average exercise price
Options outstanding at the beginning, weighted average exercise price (in dollars per share)			$ 27.24
Plus: Options granted, weighted average exercise price (in dollars per share)			37.76
Less:
Options exercised, weighted average exercise price (in dollars per share)			21.83
Options forfeited, weighted average exercise price (in dollars per share)			33.31
Options outstanding at the end, weighted average exercise price (in dollars per share)	$ 28.29		28.29
Options fully vested and exercisable at the end, weighted average exercise price (in dollars per share)	$ 24.58		$ 24.58
Stock Options, Weighted average remaining contractual term (years)
Options outstanding at the end, weighted average remaining contractual term (years)			4 years 8 months 23 days
Options fully vested and exercisable at the end, weighted average remaining contractual term (years)			3 years 3 months 25 days
Stock Options, Aggregate intrinsic value
Options outstanding at the end, aggregate intrinsic value	$ 7,176,000		$ 7,176,000
Options fully vested and exercisable at the end, aggregate intrinsic value	5,843,000		5,843,000
Stock-based compensation expense	118,000	$ 176,000	391,000	$ 571,000
Stock-based compensation cost, unrecognized, related to non-vested options	$ 1,023,000		$ 1,023,000
Stock-based compensation cost, unrecognized, related to non-vested options, weighted-average period of recognition			1 year 8 months 12 days
Incentive Stock Options to 10 Percent Shareholders [Member]
Stock option details
Maximum exercisable period for options granted			5 years

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Investment Securities, Equity Securities with Readily Determinable Fair Values and Other Investments (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Held-to-maturity securities
Amortized cost	$ 3,400	$ 3,400
Estimated fair value	3,400	3,400
Carrying Value	3,400	3,400
Available-for-sale securities
Amortized cost	4,540,752	3,054,289
Available for sale debt securities	4,554,314	3,080,768
Total Amortized cost	4,540,752	3,054,289
Total Gross unrealized gains	24,805	35,832
Total Gross unrealized losses	11,243	9,353
Estimate of Fair Value Measurement [Member]
Available-for-sale securities
Available for sale debt securities and equity securities	4,554,314	3,080,768
Reported Value Measurement [Member]
Available-for-sale securities
Available for sale debt securities and equity securities	4,554,314	3,080,768
Collateralized Mortgage Backed Securities [Member]
Available-for-sale securities
Amortized cost	4,499,169	3,006,592
Gross unrealized gains	21,717	32,701
Gross unrealized losses	(11,243)	(9,339)
Collateralized Mortgage Backed Securities [Member] | Estimate of Fair Value Measurement [Member]
Available-for-sale securities
Available for sale debt securities	4,509,643	3,029,954
Collateralized Mortgage Backed Securities [Member] | Reported Value Measurement [Member]
Available-for-sale securities
Available for sale debt securities	4,509,643	3,029,954
US Government Corporations and Agencies Securities [Member]
Available-for-sale securities
Available for sale debt securities	873,753	371,407
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available-for-sale securities
Available for sale debt securities	3,635,890	2,658,547
US States and Political Subdivisions Debt Securities [Member]
Available-for-sale securities
Amortized cost	41,583	47,697
Gross unrealized gains	3,088	3,131
Gross unrealized losses		(14)
US States and Political Subdivisions Debt Securities [Member] | Estimate of Fair Value Measurement [Member]
Available-for-sale securities
Available for sale debt securities	44,671	50,814
US States and Political Subdivisions Debt Securities [Member] | Reported Value Measurement [Member]
Available-for-sale securities
Available for sale debt securities	44,671	50,814
Other Debt Obligations [Member]
Held-to-maturity securities
Amortized cost	3,400	3,400
Estimated fair value	3,400	3,400
Carrying Value	$ 3,400	$ 3,400

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Investment Securities, Equity Securities with Readily Determinable Fair Values and Other Investments (Contractual Maturities and Estimated Fair Values) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Amortized Cost
Due in one year or less, held-to-maturity debt securities amortized cost	$ 2,200,000		$ 2,200,000
Due after one year through five years, held-to-maturity debt securities amortized cost	1,200,000		1,200,000
Amortized cost, held-to-maturity debt securities	3,400,000		3,400,000		$ 3,400,000
Fair Value
Due in one year or less, held-to-maturity debt securities, Estimated fair value	2,200,000		2,200,000
Due after one year through five years, held-to-maturity debt securities, Estimated fair value	1,200,000		1,200,000
Estimated fair value	3,400,000		3,400,000		3,400,000
Available-for-sale debt securities amortized cost disclosures
Due after ten years, available-for-sale debt securities amortized cost	41,583,000		41,583,000
Residential mortgage-backed securities, amortized cost	4,499,169,000		4,499,169,000
Amortized cost, Available-for-sale securities	4,540,752,000		4,540,752,000		3,054,289,000
Available for sale debt securities, Estimated Fair Value Disclosures
Due after ten years, available-for-sale debt securities, Estimated Fair Value	44,671,000		44,671,000
Residential mortgage-backed securities, Estimated Fair Value	4,509,643,000		4,509,643,000
Estimated fair value, Available for sale securities	4,554,314,000		4,554,314,000		$ 3,080,768,000
Available for sale debt securities, Estimated Fair Value Disclosures
Proceeds from sales and calls of available for sale securities	3,025,000	$ 9,875,000	5,890,000	$ 28,795,000
Proceeds from sales of mortgage-backed securities	0	0	0	0
Gross gains realized on sales	0	0	0	0
Gross losses realized on sales	(12,000)	$ 0	(16,000)	$ (5,000)
Collateral Pledged
Available-for-sale debt securities amortized cost disclosures
Amortized cost, Available-for-sale securities	1,442,729,000		1,442,729,000
Available for sale debt securities, Estimated Fair Value Disclosures
Fair value of available for sale investment securities pledged	$ 1,442,487,000		$ 1,442,487,000

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Investment Securities, Equity Securities with Readily Determinable Fair Values and Other Investments (Unrealized Losses) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Available for sale:
Fair value, less than 12 months	$ 2,448,908	$ 1,462,232
Unrealized losses, less than 12 Months	(10,355)	(9,339)
Fair value, 12 months or more	276,364	757
Unrealized losses, 12 Months or More	(888)	(14)
Fair value, Total	2,725,272	1,462,989
Unrealized losses, Total	(11,243)	(9,353)
Collateralized Mortgage Backed Securities [Member]
Available for sale:
Fair value, less than 12 months	2,448,908	1,462,232
Unrealized losses, less than 12 Months	(10,355)	(9,339)
Fair value, 12 months or more	276,364
Unrealized losses, 12 Months or More	(888)
Fair value, Total	2,725,272	1,462,232
Unrealized losses, Total	$ (11,243)	(9,339)
US States and Political Subdivisions Debt Securities [Member]
Available for sale:
Fair value, 12 months or more		757
Unrealized losses, 12 Months or More		(14)
Fair value, Total		757
Unrealized losses, Total		$ (14)

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Investment Securities, Equity Securities with Readily Determinable Fair Values and Other Investments (Unrealized and realized gains and losses recognized in net income on equity securities ) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Investment Securities, Equity Securities with Readily Determinable Fair Values and Other Investments
Equity Securities	$ 6,132,000		$ 6,132,000		$ 6,202,000
Summary of unrealized and realized gains and losses recognized in net income on equity securities
Net gains (losses) recognized during the period on equity securities	(5,000)	$ (12,000)	(70,000)	$ 87,000
Unrealized gain on equity securities with readily determinable fair values	$ (5,000)	$ (12,000)	$ (70,000)	$ 87,000

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Other Borrowed Funds (Details) - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Federal Home Loan Bank advances
Other borrowed funds	$ 436,186,000	$ 436,327,000
Maximum
Federal Home Loan Bank advances
Percentage of decrease in other borrowed funds	(0.10%)

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Junior Subordinated Interest Deferrable Debentures (Details)	9 Months Ended
	Sep. 30, 2021 USD ($) item	Dec. 31, 2020 USD ($)
Junior subordinated interest deferrable debentures, major types of business trusts
Number of statutory business trusts issuing trust preferred securities | item	5
Junior subordinated deferrable interest debentures	$ 134,642,000	$ 134,642,000
Maximum number of consecutive quarterly period available for deferral of interest payment on Trusts VIII, IX, X, XI and XII | item	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	$ 134,642,000	$ 134,642,000
Trust XI
Junior subordinated interest deferrable debentures, major types of business trusts
Junior subordinated deferrable interest debentures	25,990,000
Trust X
Junior subordinated interest deferrable debentures, major types of business trusts
Junior subordinated deferrable interest debentures	$ 21,021,000

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Junior Subordinated Interest Deferrable Debentures (Key Information) (Details) - USD ($)	9 Months Ended
	Sep. 30, 2021	Dec. 31, 2020
Junior subordinated interest deferrable debentures, major types of business trusts
Junior subordinated deferrable interest debentures	$ 134,642,000	$ 134,642,000
Trust VIII
Junior subordinated interest deferrable debentures, major types of business trusts
Junior subordinated deferrable interest debentures	$ 25,774,000
Interest rate (as a percent)	3.18%
Interest rate index	LIBOR
Spread on interest rate index (as a percent)	3.05%
Trust IX
Junior subordinated interest deferrable debentures, major types of business trusts
Junior subordinated deferrable interest debentures	$ 41,238,000
Interest rate (as a percent)	1.76%
Interest rate index	LIBOR
Spread on interest rate index (as a percent)	1.62%
Trust X
Junior subordinated interest deferrable debentures, major types of business trusts
Junior subordinated deferrable interest debentures	$ 21,021,000
Interest rate (as a percent)	1.78%
Interest rate index	LIBOR
Spread on interest rate index (as a percent)	1.65%
Trust XI
Junior subordinated interest deferrable debentures, major types of business trusts
Junior subordinated deferrable interest debentures	$ 25,990,000
Interest rate (as a percent)	1.76%
Interest rate index	LIBOR
Spread on interest rate index (as a percent)	1.62%
Trust XII
Junior subordinated interest deferrable debentures, major types of business trusts
Junior subordinated deferrable interest debentures	$ 20,619,000
Interest rate (as a percent)	1.57%
Interest rate index	LIBOR
Spread on interest rate index (as a percent)	1.45%

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Common Stock and Dividends (Details) - USD ($)						1 Months Ended	8 Months Ended
	Sep. 03, 2021	Mar. 02, 2021	Feb. 17, 2021	Oct. 05, 2020	Apr. 03, 2020	Apr. 30, 2009	Nov. 01, 2021
Common Stock and Dividends
Cash dividends paid to common shareholders (in dollars per share)	$ 0.55		$ 0.60	$ 0.55	$ 0.55
Repurchase of common stock, authorized amount		$ 50,000,000				$ 40,000,000
Period of repurchase of common stock		12 months				12 months
Cumulative number of shares repurchased under all stock repurchase programs							12,285,114
Cumulative cost of shares repurchased under all stock repurchase programs							$ 357,759,000

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Capital Ratios (Capital Amounts and Ratios) (Details)	9 Months Ended
	Sep. 30, 2021 USD ($)	Dec. 31, 2020 USD ($)
Capital Ratios
CET 1 ratio	19.64	19.05
Total Capital (to Risk Weighted Assets), Actual Ratio (as a percent)	21.86	21.40
Tier 1 capital (to Risk Weighted Assets), Actual Ratio (as a percent)	20.76	20.25
Tier 1 capital (to Average Assets), Actual Ratio (as a percent)	13.89	14.92
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%
Junior Subordinated Debenture Owed to Unconsolidated Subsidiary Trust	$ 134,642,000	$ 134,642,000