SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X] [ ] Confidential, for Use of
Filed by a Party other than the Registrant [ ] the Commission Only
Check the appropriate box: (as permitted by Rule
[ ] Preliminary Proxy Statement 14a-(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
INTERNATIONAL BANCSHARES CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and sate how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
INTERNATIONAL BANCSHARES CORPORATION
Post Office Drawer 1359
Laredo, Texas 78042-1359
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 15, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
International Bancshares Corporation (the "Company") will be held at the offices
of the Company, 1200 San Bernardo, Laredo, Texas, on May 15, 1997 at 7:00 p.m.
for the following purposes:
(1) To elect eleven (11) directors of the Company to serve until the next
Annual Meeting of Shareholders and until their successors shall have
been duly elected and qualified;
(2) To approve the appointment of independent auditors for the 1997
fiscal year;
(3) To consider and vote upon a proposal to approve the International
Bancshares Corporation 1997 Executive Incentive Compensation Plan; and
(4) To transact such other business as may lawfully come before the meeting
or any adjournment thereof.
The record date for the meeting has been fixed at April 1, 1997. Only
shareholders of record at the close of business on that date will be entitled to
vote at the meeting or any adjournment thereof.
In order to ensure the representation of a quorum at the meeting,
shareholders who do not expect to attend the meeting in person are urged to sign
the enclosed proxy and return it promptly to the Trust Division, International
Bank of Commerce, P. O. Drawer 1359, Laredo, Texas 78042-1359. A return envelope
is enclosed for that purpose.
INTERNATIONAL BANCSHARES CORPORATION
Dennis E. Nixon
President
Dated: April 15, 1997
<PAGE>
INTERNATIONAL BANCSHARES CORPORATION
1200 San Bernardo Avenue
Laredo, Texas 78040
PROXY STATEMENT
SOLICITATION AND REVOCATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of
International Bancshares Corporation, a Texas Corporation (the "Company") to be
voted at the 1997 Annual Meeting of Shareholders to be held on May 15, 1997 at
7:00 p.m. at the offices of the Company, 1200 San Bernardo, Laredo, Texas. The
Company will bear the cost of such solicitation. It is expected that the
solicitation of proxies will be primarily by mail. Proxies may be solicited
personally by regular employees of the Company at a nominal cost. Any
shareholder giving a proxy has the power to revoke it at any time prior to the
voting of the proxy by giving notice in person or in writing to the Secretary of
the Company or by appearing at the annual meeting and voting in person. The
approximate date on which this proxy statement and the accompanying form of
proxy are first sent or given to security holders is April 15, 1997.
VOTING AT MEETING
Only holders of record of common stock, par value $1.00 per share ("Common
Stock"), of the Company at the close of business on April 1, 1997, shall be
entitled to vote at the meeting. There were 8,799,076 shares of Common Stock
issued and outstanding on the record date held of record by approximately 1,485
shareholders. Each share of Common Stock is entitled to one vote.
All shares entitled to vote represented by a properly executed and
unrevoked proxy received in time for the meeting will be voted at the meeting in
accordance with the instructions given, but in the absence of instructions to
the contrary, such shares will be voted affirmatively. Persons empowered as
Proxies will also be empowered to vote in their discretion upon such other
matters as may properly come before the meeting or any adjournment thereof. If
any nominee shall be unable to serve, which is not now contemplated, the proxies
will be voted for such substitute nominee(s) as the Board of Directors
recommends.
A quorum for the transaction of business at the Annual Meeting requires
representation, in person or by proxy, of the holders of a majority of the
issued and outstanding shares of Common Stock. The judges of election will treat
abstentions and broker non-votes as shares that are present for purposes of
determining the presence of a quorum for the transaction of business at the
meeting. A quorum with respect to any matter to be voted on at the Annual
Meeting requires representation, in person or by proxy, of the holders of a
majority of the issued and outstanding shares of Common Stock entitled to vote
on the matter. Abstentions will be treated as present and entitled to vote with
respect to any matter submitted to the shareholders for a vote for purposes of
determining both the presence of a quorum with respect to such matter and the
approval of such matter. If a broker indicates on a proxy that it does not have
discretionary authority as to certain shares to vote on a particular matter, the
holder(s) of such shares will not be considered as present and entitled to vote
with respect to such matter for purposes of determining either the presence of a
quorum with respect to such matter or the approval of such matter. With respect
to any matter other than the election of directors, such matter shall be
determined by the affirmative vote of the holders of a majority of the shares of
Common Stock represented, in person or by proxy, at the meeting and entitled to
vote thereon. Thus, abstention with respect to any such matter will have the
same legal effect as a vote against such matter, while broker non-votes will not
affect the outcome of such matter. With respect to the election of directors,
the directors shall be elected by a plurality vote of the holders of shares of
Common Stock present at the meeting and entitled to vote thereon.
<PAGE>
PROPOSAL - 1
ELECTION OF DIRECTORS
Eleven directors, constituting the entire Board of Directors, are to be
elected at the Annual Meeting. Each director is to hold office until the next
Annual Meeting and until his successor is elected and qualified. The Proxies
named in the accompanying proxy, who have been designated by the Board of
Directors of the Company, intend to vote for the following nominees, all of whom
are currently directors, except for Mrs. Peggy J. Newman, unless otherwise
instructed in such proxy. Certain information concerning each nominee is set
forth below including information regarding each nominee's positions with
International Bank of Commerce, the Company's lead bank subsidiary ("IBC"):
Served as
Nominee for Director
DIRECTOR SINCE (1) AGE PRINCIPAL OCCUPATION (2)
----------- --------- --- ------------------------
Lester Avigael 1966 70 Retail Merchant and Director of
IBC
R. David Guerra 1993 44 Vice President of the Company
since 1986 and President of the
IBC branch in McAllen, Texas and
Director of IBC since 1990
Irving Greenblum 1981 67 Retail Merchant (Muebleria
Mexico, S.A.)
Richard E. Haynes 1977 54 Attorney at Law; Real Estate
Investments; and Director of IBC
Roy Jennings Jr. 1966 73 Investments; Vice Chairman of the
Board of the Company and Director
of IBC
Sioma Neiman 1981 69 International entrepreneur
Peggy J. Newman - 65 Real Estate Investments; and
Director of IBC since 1996
Dennis E. Nixon 1975 54 Chairman of the Board of the
Company since May 1992 and
President of the Company since
1979; President, Chief Executive
Officer and Director of IBC
Leonardo Salinas 1976 63 Vice President of the Company
since 1982; Senior Executive Vice
President and Director of IBC
Antonio R. Sanchez Jr. 1995 54 Chairman of the Board of Sanchez
O'Brien Oil & Gas Corporation;
Investments; and Director of IBC
Alberto A. Santos 1966 69 Investments; and Director of IBC
(1) Includes time served as director of IBC prior to July 28, 1980 when the
Company became the successor issuer to IBC.
(2) Except as otherwise noted, each nominee has held the office indicated or
other offices in the same company for the last five years.
None of the nominees for director and none of the executive officers of the
Company have a family relationship with any of the other nominees for director
or executive officers, except for Leonardo Salinas and Alberto A. Santos, who
are first cousins.
2
<PAGE>
None of the above nominees is a director of any other company which has a
class of securities registered under, or is required to file reports under, the
Securities Exchange Act of 1934 or of any company registered under the
Investment Company Act of 1940, except for Mr. Sanchez who is Chairman of the
Board of Sanchez O'Brien Oil & Gas Corporation.
EXECUTIVE OFFICERS
The executive officers of the Company are Dennis E. Nixon, President and
Chairman of the Board; Leonardo Salinas, Vice President; R. David Guerra, Vice
President; and Arnoldo Cisneros, Secretary-Treasurer, all of whom are nominees
for director except for Arnoldo Cisneros. Arnoldo Cisneros, age 45 is presently
Secretary-Treasurer of the Company and Executive Vice President of IBC and has
served both organizations since 1982.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors during 1996 consisted of
Lester Avigael, Alberto A. Santos and Richard E. Haynes. The Committee met six
times during the 1996 fiscal year. Each member of the Committee attended all six
meetings. The functions of the Audit Committee are to recommend the appointment
of the independent auditors; to review the annual plan of the internal and
independent auditors; to review annual and quarterly financial reports and to
review the results of examinations by the internal auditor and the independent
auditors, including recommendations regarding internal controls and operating
procedures, along with management's response and follow-up to ensure any
necessary corrective action has been implemented. Under applicable law, the
Audit Committee is required to review with management and the independent
auditors the basis for all financial reports.
The Compensation Committee of the Board of Directors during 1996 consisted
of Lester Avigael, Roy Jennings Jr., Richard E. Haynes and Alberto A. Santos.
The Committee met twice during the 1996 fiscal year. Each member of the
Committee attended both meetings. The primary function of the Compensation
Committee is the administration of the Company's 1996 International Bancshares
Corporation Stock Option Plan.
The Board of Directors of the Company does not have a standing nominating
committee or a committee which performs similar functions.
During 1996, the Board of Directors held six meetings. All of the directors
attended 100% of the aggregate of the total number of meetings of the board and
of committees on which they served, except for Irving Greenblum who missed two
meetings, A. R. Sanchez, Jr. who missed three meetings and Sioma Neiman who
attended fewer than 75% of such meetings.
PRINCIPAL SHAREHOLDERS
Insofar as is known to the Company, no person beneficially owned, as of
April 3, 1997, more than five percent of the outstanding Common Stock of the
Company, except as follows:
Shares of Common Stock Percent
Name and Address Beneficially Owned as of
OF BENEFICIAL OWNER OF APRIL 3, 1997 CLASS
------------------- ---------------------- ------
Alicia M. Sanchez (1) 1,619,301 18.45%
2119 Guerrero Street
Laredo, Texas 78040
A. R. Sanchez Jr. (2) 873,027 9.95%
P.O. Box 2986
Laredo, Texas 78041
3
<PAGE>
(1) All the shares shown for Mrs. Alicia M. Sanchez are held by certain trusts
and a family limited partnership for which Mrs. Sanchez serves as sole
trustee or general partner. Mrs. Sanchez has the sole power to vote and to
dispose of all of the shares held by such trusts and the family limited
partnership. Mrs. Sanchez is the mother of A. R. Sanchez Jr.
(2) A. R. Sanchez Jr. owns directly and has the sole power to vote and to
dispose of 523,447 shares owned beneficially by him. Mr. Sanchez also
controls the disposition of 349,580 shares as trustee for trusts in which
his children have a vested interest in the income and corpus of such
trusts, however, George M. Sanchez, the brother of Mr. Sanchez, has the
power to vote the 349,580 shares.
SECURITY OWNERSHIP OF MANAGEMENT
Based upon information received from the persons concerned, each of whom is
a director and nominee for director, except for Mrs. Newman who is a nominee for
director, the following individuals and all directors and executive officers of
the Company as a group owned beneficially as of April 1, 1997, the number and
percentage of outstanding shares of Common Stock of the Company indicated in the
following table:
Name of Individual Shares Beneficially Owned Percent
OR IDENTITY OF GROUP AS OF APRIL 1, 1997 OF CLASS
-------------------- ------------------------- --------
Lester Avigael (1) 78,012 *
Irving Greenblum (2) 84,446 *
R. David Guerra (3) 70,615 + *
Richard E. Haynes 8,465 *
Roy Jennings Jr. (4) 94,834 1.08%
Sioma Neiman (5) 347,550 3.96%
Peggy J. Newman 250 *
Dennis E. Nixon (6) 435,954 + 4.96%
Leonardo Salinas (7) 32,126 + *
A. R. Sanchez Jr (8) 873,027 9.95%
Alberto A. Santos 56,560 *
All Directors and Executive Officers
as a group (12 persons) (9) 2,106,033 23.99%
* Ownership of less than one percent
+ Include shares which are issuable upon the exercise of options exercisable
on or prior to June 1, 1997 ("currently exercisable options").
(1) The holdings shown for Mr. Avigael include 4,622 shares which he holds as
trustee for the benefit of his grandchildren.
(2) The holdings shown for Mr. Greenblum include 10,020 shares held in the name
of his wife.
(3) The holdings shown for Mr. Guerra include 67,490 shares which he and his
wife hold in their names jointly. Total holdings for Mr. Guerra include
3,125 shares which are issuable upon the exercise of currently exercisable
options.
(4) The holdings shown for Mr. Jennings include 17,132 shares which he and his
wife hold in their names jointly, and 29,577 shares held in the name of his
wife.
(5) The holdings shown for Mr. Neiman include 347,550 shares in the name of
Inar Investments, Corp., of which he is the Managing Director.
(6) The holdings shown for Mr. Nixon include 45,507 shares which are issuable
upon the exercise of currently exercisable options. The holdings shown for
Mr. Nixon also include 1,105 shares held in the name of his wife.
4
<PAGE>
(7) The holdings shown for Mr. Salinas include 2,343 shares which are issuable
upon the exercise of currently exercisable options.
(8) The holdings shown for Mr. A. R. Sanchez Jr. include 523,447 shares which
he owns directly and has the sole power to dispose of and to vote. Mr.
Sanchez also controls the disposition of 349,580 shares as trustee for
trusts in which his children have a vested interest in the income and
corpus of such trusts, however, George M. Sanchez, the brother of Mr.
Sanchez, has the power to vote the 349,580 shares.
(9) The holdings shown for all directors and executive officers as a group
include 54,078 shares which are issuable upon the exercise of currently
exercisable options.
Except as reflected in the notes to the preceding table, each of the
individuals listed in the table owns directly the number of shares indicated in
the table and has the sole power to vote and to dispose of such shares.
EXECUTIVE COMPENSATION
Summary
The following table contains information concerning the compensation
awarded during each of the last three years for the Chief Executive Officer of
the Company and the other most highly compensated executive officers of the
Company whose total annual salary and bonus exceeded $100,000 in 1996.
SUMMARY COMPENSATION
TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION ALL OTHER
NAME AND ANNUAL COMPENSATION SECURITIES COMPENSATION
PRINCIPAL POSITION YEAR SALARY (1) BONUS UNDERLYING OPTIONS (2)
- ------------------ ---- ---------- ----- ------------------ --------------
<S> <C> <C> <C> <C>
Dennis E. Nixon 1994 $ 298,580 $ 500,000 - $ 7,291
President and Director of 1995 295,601 600,000 5,000 9,144
the Company and of IBC 1996 313,722 700,000 - 8,672
R. David Guerra 1994 162,687 33,558 - 6,461
Vice President and 1995 161,587 33,317 2,500 8,392
Director of the Company; 1996 172,588 36,688 - 8,375
President of IBC branch
in McAllen, Texas and
Director of IBC
Leonardo Salinas 1994 144,099 19,581 - 6,302
Vice President and 1995 145,799 19,393 - 8,043
Director of the Company; 1996 108,670 13,975 - 5,473
Director and Senior
Executive Vice President
of IBC
</TABLE>
(1) These amounts do not include certain perquisites and other personal
benefits, securities or property received by the officers which did
not exceed the lesser of $50,000 or 10% of such executive officer's
total salary and bonus set forth in the table; however, such amounts
include directors fees as well as certain expense allowances. All
cash compensations paid to the named officers was paid by IBC. The
Company does not pay any cash compensation to any officer.
(2) All amounts shown in this column consist of funds contributed or
allocated by the Company pursuant to the Company's Employee Profit
Sharing Plan and Trust, a deferred profit sharing plan for employees
with one year of continual employment.
5
<PAGE>
Each director of the Company and each director of IBC receives compensation
for his services as a director in the amount of $700 for each meeting of the
Board he attends and $200 for each meeting of a committee of the Board he
attends. Salaried officers who are directors are not compensated for committee
meetings. The director fees paid to the named executive officers are included in
the salary totals set forth in the table.
Stock Options
During 1996, the Company did not grant options to any of the named
executive officers of the Company.
The following table sets forth certain information regarding individual
exercises of stock options with respect to the Common Stock during 1996 and
through April 1, 1997, by each of the named executive officers.
AGGREGATED OPTION EXERCISES IN 1996
AND FY-END OPTION VALUES
Number of
Underlying Value of
Shares of Unexercised
Unexercised In-the-Money
Options at Options at
Shares 12/31/96 12/31/96
Acquired on Value Exercisable/ Exercisable/
Exercise Realized Unexercisable Unexercisable
NAME (#) ($) (1) (#) ($) (1)
- --------------- ----------- --------- ------------- -------------
Dennis E. Nixon 20,214 723,744 36,718/ 1,524,618/
15,039 499,989
R. David Guerra 12,422 491,622 781/ 15,831/
5,468 162,919
Leonardo Salinas 3,455 126,365 1,172 49,722
(1) Based on market value of underlying shares minus aggregate exercise
price.
REPORT OF THE SALARY AND STEERING COMMITTEE
The Company's compensation package for each of its executive officers
consists of base salary, annual discretionary bonus and a discretionary
incentive stock option grant. Stock option grants are determined by the
Company's Compensation Committee and are discussed under the Committee's
separate report below. All cash compensation paid to executive officers of the
Company is paid by IBC. Base salary levels and annual bonuses are recommended by
the Salary and Steering Committee of IBC (the "Committee").
The Committee's recommendations regarding each executive officer's
compensation is subjective with regard to both the base salary and bonus. The
annual financial performance of IBC is the most important factor in the
subjective analysis. The bonus program is intended to compensate each executive
officer for the officer's contribution to IBC's financial performance during the
previous year. At the end of each year based on the financial performance of IBC
and the perceived contribution by each executive officer, a base salary
recommendation for the next year and a bonus recommendation for the previous
year is made for each executive officer by the Committee. The overall bonus pool
for executive officers is affected by the earnings performance of IBC for the
previous year. All base salary and bonus recommendations of the Committee are
subject to final approval of the Board of Directors of IBC.
6
<PAGE>
With respect to the compensation of Mr. Nixon, the CEO of the Company, the
Committee recommends to the Board of Directors the CEO's salary and bonus based
on its subjective determination. In determining the CEO compensation, the
Committee reviews the objectives of the Company for the previous year and the
attainment thereof, principally including the Company's financial performance.
Mr. Nixon received a bonus award of $700,000 for 1996, which determination was
largely affected by the financial results of the Company during 1996, which
included net income of $44.3 million, or $4.87 per share, an amount which
represents a 9.03% increase in earnings per share compared to the previous year.
Also, a key element in Mr. Nixon's performance compensation is the Company's
excellent return on average total assets of 1.50% and its very strong return on
average total shareholders' equity of 17.45%.
The Salary and Steering Committee has considered the limitations on
deductibility of compensation of the named executive officers under Section
162(m) of the Internal Revenue Code. The Steering Committee's current policy is
to ensure that substantially all such compensation is deductible under Section
162(m) when paid.
The Salary and Steering Committee recommends that the Company's
shareholders approve the 1997 Executive Incentive Compensation Plan (the "1997
EICP") as set forth in Proposal-3 herein. Subject to shareholder approval, it is
contemplated that an incentive award under the 1997 EICP would be paid to Mr.
Nixon in January 1998 for services performed during 1997, provided that the
Company achieves at least one of the specified return on average total assets or
return on average total shareholders' equity targets which have been established
by the Salary and Steering Committee.
Lester Avigael Roy Jennings, Jr.
Richard E. Haynes Dennis E. Nixon
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors determines the stock
option grants to executive officers and key salaried employees of the Company.
During 1996, the Compensation Committee met and granted options to purchase a
total of 2,000 shares of Common Stock to several of the key salaried employees
of the Company. The primary purpose of the Company's Stock Option Plan is to
increase the interest of the executive and key salaried employees of the Company
and the subsidiary banks in its future growth and success through the added
incentive created by the opportunity afforded for stock ownership under the
Plan. The size of the option grants was determined by the Compensation Committee
based upon a subjective assessment of the respective employee's performance,
compensation management level and other factors. The exercise price of each
option equaled the fair market value of the Common Stock as of the date of
grant.
Lester Avigael Roy Jennings Jr.
Richard E. Haynes Alberto A. Santos
SALARY AND STEERING AND COMPENSATION COMMITTEES INTERLOCKS
AND INSIDER PARTICIPATION
The Salary and Steering Committee members during 1996 were Lester Avigael,
Richard E. Haynes, Roy Jennings, Jr. and Dennis E. Nixon; however, during 1997,
Dennis E. Nixon no longer serves on the Salary and Steering Committee and
Alberto A. Santos serves on the Committee. Mr. Nixon, President and Chairman of
the Board of the Company and President and CEO of IBC, is consulted with respect
to compensation decisions for all executives and key salaried employees other
than for himself. Stock Option grants are determined by the Compensation
Committee whose members are Lester Avigael, Richard E. Haynes, Roy Jennings Jr.
and Alberto A. Santos. Messrs. Richard E. Haynes, Dennis E. Nixon and Alberto A.
Santos each have total indebtedness outstanding with the Company and/or the
subsidiary banks of the Company in an amount which exceeds $60,000, which
indebtedness is fully performing and is included in the disclosure regarding the
aggregate amount receivable to the banks and the Company from certain related
parties of the Company set forth on pages 8 and 9, under the caption "Interest
of Management in Certain Transactions".
7
<PAGE>
Financial Performance
The graph below illustrates the cumulative return experienced by the
Company's shareholders for the period commencing on December 31, 1991 and ending
at year end 1996 as compared with the cumulative total returns of the other
companies included within the Standard & Poor's 500 Stock Index and Standard &
Poors Regional Banks Index. The calculations were prepared on a
dividends-reinvestment basis.
TOTAL RETURN ANALYSIS
INTERNATIONAL BANCSHARES CORPORATION
VS. MARKET INDICES
YEAR END: 12/31/91 TO 12/31/96
INTEREST OF MANAGEMENT IN
CERTAIN TRANSACTIONS
Some of the directors, executive officers and nominees for directors of the
Company and IBC and principal shareholders of the Company and their immediate
families and the companies with which they are associated were customers of, and
had banking transactions with, the Company's subsidiary banks in the ordinary
course of the subsidiary banks' business during 1996, and the Company
anticipates that such banking transactions will continue in the future. All
loans and commitments to loan included in such banking transactions were made in
the ordinary course of business, on substantially the same terms, including
interest rates and collateral, as those prevailing in the industry at the time
for comparable transactions with non-insiders, and, in the opinion of management
of the Company, did not involve more than a normal risk of collectibility or
present other unfavorable features.
At December 31, 1996, loans outstanding made by the Company and all
subsidiary banks to directors, executive officers and nominees for directors of
the Company (not including those executive officers and directors who only serve
at the bank subsidiaries) and principal shareholders of the Company and to
persons or entities affiliated with such individuals aggregated $35,909,031.45.
At December 31, 1996, all of such loans were current with respect to principal
and interest.
8
<PAGE>
During 1994, IBC sold for an approximate appraised value of $4,700,000
approximately 44% of its other real estate portfolio to IBC Partners, Ltd., a
Texas real estate limited partnership (the "Partnership") owned by certain
shareholders of the Company. On May 26, 1996 IBC sold an approximately 417.68
acre tract of land located in Travis County, Texas to the Partnership, which
land was part of IBC's other real estate portfolio for an approximate aggregate
value of $400,000. As of December 31, 1996, except for the aforementioned
property, the Partnership had not acquired any additional properties from IBC's
other real estate portfolio. Roy Jennings Jr., Dennis E. Nixon and A. R.
Sanchez, Jr. serve as the managers of IBC Properties, L.C., the general partner
of IBC Partners Management, Ltd., which is the general partner of the
Partnership. Lester Avigael and Alberto Santos initially served as managers of
IBC Properties, L. C. but each resigned their position as manager effective June
21, 1995. During 1994 and 1995, the Partnership entered into banking
transactions with IBC. All loans and commitments to loan included in such
banking transactions were made in the ordinary course of business, in compliance
with applicable laws and on substantially the same terms, including interest
rates and collateral, as those prevailing in the industry at the time for
comparable transactions with non-insiders and, in the opinion of management of
the Company, did not involve more than a normal risk of collectibility or
present other unfavorable features.
During 1994, the Company obtained approval from the Federal Reserve Bank of
Dallas to engage in the activity of making loans to certain of its executive
officers, directors, affiliates, and principal shareholders, and to certain
executive officers and directors and their related interests of the subsidiary
banks. In connection with such approval, the Company committed that all loans
would be on terms and under circumstances, including credit standards, that are
substantially the same or at least as favorable to it, as those prevailing at
the time for comparable transactions with or involving other non-affiliated
borrowers, or in the absence of comparable transactions, on terms and under
circumstances, including credit standards, that in good faith would be offered
to or would apply to non-affiliated companies. As of December 31, 1996, loans
outstanding made by the Company to such persons or entities aggregated
$9,601,170 and all of said loans, which are described in the following
paragraph, were made on terms and under circumstances consistent with the
commitment made by the Company to the Federal Reserve Bank of Dallas.
As of December 31, 1996, the Partnership was indebted to the Company in the
amount of $2,755,676 in connection with three real estate related loans. During
1996, the Partnership repaid $1,406,004 of the related loans. As of December 31,
1996, IBC Partners Investment Joint Venture and IBC Partners Organizational
Joint Venture were indebted to the Company in the amount of $308,374 and
$818,570, respectively. The two loans were extended as part of a single credit
facility in connection with the formation of the Partnership. The two joint
ventures are controlled by certain directors and executive officers of the
Company or its subsidiary banks. The joint ventures repaid $68,938 and $179,213,
respectively, on the credit facility during 1996. As of December 31, 1996,
Dennis E. Nixon and his related interests were indebted to the Company in the
amount of $5,288,548 in connection with three real estate and two consumer
related loans. Mr. Nixon and his related interests repaid $971,845 on the
related loans during 1996. As of December 31, 1996, R. David Guerra and his
related interests were indebted to the Company in the amount of $430,000 in
connection with two consumer loans. At December 31, 1996, all of the loans
outstanding in the aggregate principal amount of $9,601,170 (as described in
this paragraph and the foregoing paragraph) were current with respect to
principal and interest.
IBC and Sanchez O'Brien Oil & Gas Corporation, a related interest of
Antonio R. Sanchez, Jr., who is a director and principal shareholder of the
Company, jointly own, in varying percentages certain aircraft used for business
purposes by IBC, the other bank subsidiaries and said company. The net book
value of IBC's aggregate interest in all of the aircraft as of April 1, 1997 was
approximately $5.6 million. Each bank subsidiary and said company pay the pro
rata expense related to their actual use of the aircraft.
9
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FILING OF BENEFICIAL OWNERSHIP REPORTS
Under the securities laws of the United States, the Company's directors,
its executive officers and any persons holding more than ten percent of the
Company's Common Stock are required to report their initial ownership of the
Company's Common Stock and any subsequent changes in that ownership to the
Securities and Exchange Commission. Specific due dates for these reports have
been established and the Company is required to disclose in this proxy statement
any failure to file such reports by the applicable dates during 1996. The
Company believes that all of these filing requirements were timely satisfied. In
making these disclosures, the Company has relied solely on written
representations of its directors, executive officers and its ten percent holders
and copies of the reports that they have filed with the Commission.
PROPOSAL - 2
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed the firm of KPMG Peat
Marwick LLP to audit the accounts of the Company for the 1997 fiscal year. The
firm has audited the books of the Company and its predecessor, IBC, annually
since 1979.
Audit services rendered by KPMG Peat Marwick LLP for the fiscal year ended
December 31, 1996 included the annual examination of the Company's financial
statements, including reports to shareholders and the Securities and Exchange
Commission; and consultation on accounting and related matters and services
performed in connection with other regulatory filings.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
annual meeting of shareholders with the opportunity to make a statement if they
desire to do so and are expected to be available to respond to appropriate
questions.
Approval of the appointment of independent auditors is not a matter which
is required to be submitted to a vote of shareholders, but the Board of
Directors considers it appropriate for the shareholders to express whether they
approve or withhold their approval of the appointment. If shareholder approval
should be withheld, the Board of Directors would consider an alternative
appointment for the succeeding fiscal year. The Board of Directors of the
Company recommends that the shareholders approve the appointment of KPMG Peat
Marwick LLP as the independent auditors. The affirmative vote of a majority of
the shares present and entitled to vote thereon will constitute approval.
PROPOSAL - 3
APPROVAL OF 1997 EXECUTIVE INCENTIVE COMPENSATION PLAN
In furtherance of its belief that the continued success of the Company
depends on its ability to attract, retain and motivate key employees, and in
view of tax legislation which imposes limits on the Company's ability to deduct
employee compensation, the Salary and Steering Committee of the Board of
Directors of IBC (the "Committee") has reviewed the Company's executive
incentive compensation program and recommends that the Company's shareholders
approve the 1997 Executive Incentive Compensation Plan (the "1997 EICP" or the
"Plan"). In order for payment of certain incentive awards to be deductible to
the Company under the current Internal Revenue Code, they must be paid under a
plan like the 1997 EICP. Shareholder approval of the 1997 EICP is necessary to
pay the incentive awards contemplated by the Plan.
THE APPROVAL OF THE COMPANY'S SHAREHOLDERS IS REQUIRED FOR ADOPTION OF THE
1997 EICP.
The principal features of the 1997 EICP and of the operating guidelines
which the Committee has adopted to implement the Plan are described below. The
full text of the 1997 EICP is annexed hereto as Exhibit A and should be referred
to for a complete description of the provisions.
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Generally. The 1997 EICP provides for certain officer(s) of the Company to
be granted annual incentive awards consistent with the objectives and
limitations of the Plan. If approved by the Company shareholders, it is
anticipated that the first award under the 1997 EICP will be made in January,
1998 to Mr. Nixon.
Administration. The 1997 EICP vests broad powers in the Committee to
administer and interpret the Plan. The Committee shall consist of two or more
members of IBC's Board of Directors who are also members of the Company's Board
of Directors and who are considered outside and disinterested for the purposes
of the Internal Revenue Code and the Securities Exchange Act of 1934.
The Committee's powers include authority, within the limitations set forth
in the Plan, to select the person(s) to be granted awards, to determine the time
when awards will be granted, to determine whether objectives and conditions for
earning awards have been met, to determine whether payment of an award will be
made at the end of an award period or deferred, and to determine whether an
award or payment of an award should be reduced or eliminated.
Eligibility to Receive Awards. Executive officers of the Company may at the
discretion of the Committee be granted annual incentive awards under the 1997
EICP. Because the selection of participants is discretionary, it is impossible
to determine the number of persons who will be eligible for awards under the
Plan during its term. However, it is anticipated that only the Company's
President will receive an award next year under the Plan.
Annual Incentive Awards. The amount of annual incentive awards paid to
eligible executives under the 1997 EICP will be based upon the achievement by
the Company of either one of the specified (i) return on average total assets or
(ii) return on average total shareholders' equity targets which have been
established in advance by the Committee. No payment under the Plan will be made
unless at least one of the minimum return targets is met. All payments under the
Plan will be made by International Bank of Commerce, Laredo, Texas.
In calculating the return for the purpose of certifying that a performance
target has been achieved, the Committee will exclude significant unusual charges
or income, including gains and losses resulting from changes in accounting,
which are distortive of results year over year. "Significant unusual" items are
items which are unusual as to their frequency or as to their size, as defined
under generally accepted accounting principles.
Negative Discretion. Notwithstanding attainment of a target established for
an award under the 1997 EICP, the Committee has the discretion to reduce some or
all of an award that would otherwise be paid.
Award Maximum. No participant may receive more than 2.5% of the total
income before income taxes of the Company for the year under the 1997 EICP in
any calendar year.
Amendment and Termination. The Committee may amend or terminate the 1997
EICP so long as such action does not adversely affect any rights or obligations
with respect to awards already outstanding under the Plan. Unless the
shareholders of the Company shall have first approved thereof, no amendment of
the Plan may increase the maximum amount per year which can be paid to any one
participant under the Plan, change the performance goals for the awards or
modify the requirements as to eligibility for participation in the Plan. The
Committee may amend the Plan operating guidelines from time to time, consistent
with the Plan.
No awards may be made under the 1997 EICP after December 31, 2007.
Federal Tax Consequences. Under the Internal Revenue Code as presently in
effect, a grant of an award under the 1997 EICP would have no federal income tax
consequence. The payment of the award is taxable to a participant as ordinary
income. Amounts taxable to employees under the Plan will be deductible by the
Company as compensation.
11
<PAGE>
Whether or not an executive officer of the Company participates in the 1997
EICP, each executive officer of the Company will continue to be eligible to
receive a cash bonus under IBC's existing, discretionary cash bonus program.
The Board of Directors recommends that shareholders vote FOR this proposal.
The affirmative vote of the holders of a majority of the shares entitled to vote
on this matter and represented in person or by proxy is required to approve the
Plan. The persons named in the accompanying proxy will vote in accordance with
the choice specified thereon, or, if no choice is properly indicated, in favor
of the adoption of the Plan.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
The 1998 annual meeting of shareholders will be held on May 21, 1998.
Proposals from shareholders intended to be presented at the 1997 Annual Meeting
must be received in writing by the Company at its principal executive offices
not later than December 19, 1997. The Company's principal executive offices are
located at 1200 San Bernardo Avenue, Laredo, Texas 78040.
OTHER MATTERS
No business other than the matters set forth in this proxy statement is
expected to come before the meeting, but should any other matters requiring a
vote of shareholders arise, including a question of adjourning the meeting, the
persons named in the accompanying proxy will vote thereon according to their
best judgment in the interest of the Company. In the event that any of the
nominees for director should withdraw or otherwise become unavailable for
reasons not presently known, the persons named as Proxies will vote for such
substitute nominee(s) as the Board of Directors recommends, or in the absence of
such recommendation, such other persons as they consider to be in the best
interests of the Company.
INTERNATIONAL BANCSHARES CORPORATION
Dennis E. Nixon
President
Dated: April 15, 1997
THE COMPANY WILL PROVIDE SHAREHOLDERS WITH A COPY OF THE COMPANY'S ANNUAL REPORT
ON FORM 10-K, FOR THE PERIOD ENDED DECEMBER 31, 1996, INCLUDING FINANCIAL
STATEMENTS AND SCHEDULES, WITHOUT CHARGE, UPON WRITTEN REQUEST ADDRESSED TO THE
SECRETARY OF THE COMPANY, MR. ARNOLDO CISNEROS AT:
INTERNATIONAL BANCSHARES CORPORATION
P. O. DRAWER 1359
LAREDO, TEXAS 78042-1359
(210) 722-7611 EXTENSION 6675
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EXHIBIT A
INTERNATIONAL BANCSHARES CORPORATION
1997 EXECUTIVE INCENTIVE COMPENSATION PLAN
1. Purpose.
The principal purposes of the International Bancshares Corporation 1997
Executive Incentive Compensation Plan (the "Plan") are to provide incentives and
rewards to executive officers of International Bancshares Corporation (the
"Company") who have significant responsibility for the success and growth of the
Company.
2. Administration of the Plan.
The Plan shall be administered by the Salary and Steering Committee (the
"Committee") of the Board of Directors of International Bank of Commerce,
Laredo, Texas ("IBC"). The Committee shall be appointed by the Board of
Directors of IBC and shall consist of two or more members of the Board of IBC
who are also outside, disinterested members of the Board of the Company.
The Committee shall have all the powers vested in it by the terms of this Plan,
such powers to include authority (within the limitations described herein) to
select the persons to be granted awards under the Plan, to determine the time
when awards will be granted, to determine whether objectives and conditions for
earning awards have been met, to determine whether awards will be paid at the
end of the award period or deferred, and to determine whether an award or
payment of an award should be reduced or eliminated.
The Committee shall have full power and authority to administer and interpret
the Plan and to adopt such rules, regulations, agreements, guidelines and
instruments for the administration of the Plan and for the conduct of its
business as the Committee deems necessary or advisable. The Committee's
interpretations of the Plan, and all actions taken and determinations made by
the Committee pursuant to the powers vested in it hereunder, shall be conclusive
and binding on all parties concerned, including the Company, its shareholders
and any person receiving an award under the Plan.
3. Eligibility.
Executive officers of the Company selected by the Committee, in is discretion,
will be granted awards under the Plan.
4. Awards.
(a) Types of Awards. Selected executive officers of the Company shall be
granted annual incentive awards under this Plan in January of each year.
(b) Performance Targets. The Committee has established return on average
total assets and return on average total shareholders' equity targets,
either one of which must be met in order for an award to be earned under
this Plan. These targets will not be amended without shareholder approval.
(c) Payment of Awards. Awards will be payable in cash each year upon
certification by the Committee that the Company achieved at least one of
the specified performance targets for the preceding year. No payment under
the Plan will be made unless at least one of the return targets is met. IBC
will pay all awards under the Plan.
(d) Negative Discretion. Notwithstanding the attainment by the Company of
at least one of the specified return targets, the Committee has the
discretion, by participant, to reduce some or all of an award that would be
otherwise paid.
(e) Maximum Awards. No participant may receive more than a maximum of 2.5%
of the total income before income taxes of the Company for the year under
the Plan in any calendar year.
<PAGE>
5. Miscellaneous Provisions.
(a) Guidelines. The Committee shall adopt from time to time written
policies for its implementation of the Plan.
(b) Withholding Taxes. The Company shall have the right to deduct from all
awards hereunder paid in cash any federal, state, local or foreign taxes
required by law to be withheld with respect to such awards.
(c) No Rights to Awards. Except as set forth herein, no employee or other
person shall have any claim or right to be granted an award under the Plan.
Neither the Plan nor any action taken hereunder shall be construed as
giving any employee any right to be retained in the employ of the Company
or any of its subsidiaries or affiliates.
(d) Costs and Expenses. The cost and expenses of administering the Plan
shall be borne by IBC and not charged to any award nor to any employee
receiving an award.
(e) Funding of Plan. The Plan shall be unfunded. Neither the Company nor
IBC shall be required to establish any special or separate fund or to make
any other segregation of assets to assure the payment of any award under
the Plan.
6. Effective Date, Amendments and Termination.
(a) Effective Date. The Plan shall become effective on the date it is
approved by the Company's shareholders.
(b) Amendments. The Committee may at any time terminate or from time to
time amend the Plan in whole or in part, but no such action shall adversely
affect any rights or obligations with respect to any awards theretofore
made under the Plan. Unless the shareholders of the Company shall have
first approved thereof, no amendment of the Plan shall be effective which
would increase the maximum amount which can be paid to any one participant
under the Plan, which would change the specified performance goal for
payment of awards or which would modify the requirements as to eligibility
for participation in the Plan.
(c) Termination. No awards shall be made under the Plan after December 31,
2007.
<PAGE>
INTERNATIONAL BANCSHARES CORPORATION
FOR THE ANNUAL MEETING OF SHAREHOLDERS
CALLED FOR MAY 15, 1997
The undersigned shareholder(s) of International Bancshares Corporation, a
Texas corporation (the "Company"), hereby appoints Lester Avigael, Roy Jennings
Jr., and Richard E. Haynes, and each of them, as Proxies, each with power to
appoint his substitute, and hereby authorizes them to vote, as designated below,
all the shares of Common Stock which the undersigned may be entitled to vote at
the Annual Meeting of Shareholders of the Company, to be held on Thursday, May
15, 1997 at 7:00 P.M., local time, and at any adjournment of such meeting, with
all powers which the undersigned would possess if personally present:
1. ELECTION OF DIRECTORS. Nominees: L. Avigael, I. Greenblum, R.D. Guerra,
R.E. Haynes, R. Jennings Jr., S. Neiman, Peggy J. Newman, D.E. Nixon, L.
Salinas, A. R. Sanchez, Jr., A.A. Santos.
[ ]FOR, all nominees listed above [ ]FOR, all nominees listed above, except for
the nominee(s) set forth on the line below
[ ]WITHHOLD AUTHORITY, to vote for all
nominees listed above
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
A vote FOR all nominees is recommended by the Board of Directors.
2. PROPOSAL TO APPROVE THE APPOINTMENT OF KPMG PEAT MARWICK LLP as the
independent auditors of the Company for the 1997 fiscal year.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
A vote FOR the above proposal is recommended by the Board of Directors.
3. PROPOSAL TO APPROVE THE INTERNATIONAL BANCSHARES CORPORATION 1997 Executive
Incentive Compensation Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
A vote FOR the above proposal is recommended by the Board of Directors.
4. In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting.
EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS
MADE THEREON. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" ALL THE
NOMINEES AND "FOR" PROPOSALS 2 AND 3 ABOVE.
<PAGE>
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement of the Company dated April 15, 1997.
Dated:_______, 1997
Signatures(s)
__________________________________________________________
(Signature should agree with name of stock Certificate as
stenciled thereon. Executors, Administrators, Trustees, etc.
should so indicate when signing).
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO ITS EXERCISE
I __do __do not Plan to Attend the Meeting.
