SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
[X] Filed by the Registrant
[ ] Confidential, for Use of the Commission Only
[ ] Filed by a Party other than the Registrant (as permitted by Rule
14a-(e)(2))
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-118 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 20, 1999
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 20, 1999 at
7:00 p.m. for the following purposes:
(1) To elect ten (10) 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 1999
fiscal year;
(3) 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, 1999. 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, 1999
<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 1999 Annual Meeting of Shareholders to be held on May 20, 1999
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, 1999.
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, 1999, shall be
entitled to vote at the meeting. There were 14,123,534 shares of Common Stock
issued and outstanding on the record date held of record by approximately 1,803
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 specific 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.
1
<PAGE>
PROPOSAL -- 1
ELECTION OF DIRECTORS
Ten 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/her 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, 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"):
<TABLE>
<CAPTION>
SERVED AS
DIRECTOR
NOMINEE FOR DIRECTOR SINCE(1)(3) AGE PRINCIPAL OCCUPATION(2)
- ------------------------------------- ----------- ---- -----------------------------------------
<S> <C> <C> <C>
Lester Avigael....................... 1966 72 Retail Merchant and Director of IBC
Irving Greenblum..................... 1981 69 Retail Merchant (Muebleria Mexico, S.A.)
R. David Guerra...................... 1993 46 Vice President of the Company since 1986
and President of the IBC branch in McAl-
len, Texas and Director of IBC
Richard E. Haynes.................... 1977 56 Attorney at Law; Real Estate Investments;
and Director of IBC
Roy Jennings, Jr..................... 1966 75 Investments; Vice Chairman of the Board
of the Company and Director of IBC
Sioma Neiman......................... 1981 71 International entrepreneur
Peggy J. Newman...................... 1997 67 Real Estate Investments; President of
Newman Poultry Co. and Director of IBC
since 1996
Dennis E. Nixon...................... 1975 56 Chairman of the Board of the Company
since May 1992 and President of the Com-
pany since 1979; President, Chief
Executive Officer and Director of IBC
Leonardo Salinas..................... 1976 65 Vice President of the Company since 1982;
Senior Executive Vice President and
Director of IBC
Antonio R. Sanchez, Jr............... 1995 56 Chairman of the Board of Sanchez Oil &
Gas Corporation; Investments; and
Director of IBC
</TABLE>
- ------------
(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.
(3) Alberto A. Santos who had served as a director since 1966 passed away on
October 16, 1998.
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.
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 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 Imelda Navarro, Treasurer, all of whom are nominees for director
except for Imelda Navarro. Imelda Navarro, age 41 is presently Treasurer
2
<PAGE>
of the Company and Senior Executive Vice President of IBC and has served IBC
since 1975 and the Company since 1982.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors during 1998 consisted of
Lester Avigael, Alberto A. Santos and Richard E. Haynes. The Committee met four
times during the 1998 fiscal year. Each member of the Committee attended all
four meetings except for Mr. Richard Haynes and Mr. Alberto Santos who missed
one meeting each. 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 Stock Option Plan Committee of the Board of Directors during 1998
consisted of Lester Avigael, Roy Jennings Jr., Richard E. Haynes and Alberto A.
Santos. The Committee met two times during the 1998 fiscal year. Each member of
the Committee attended the two meetings with the exception of Mr. Santos who
attended one of the meetings. The primary function of the Stock Option Plan
Committee is the administration of the 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 1998, the Board of Directors held five 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 Sioma Neiman, A. R.
Sanchez Jr. and Alberto Santos who each missed two meetings and R. David Guerra
and Richard E. Haynes who missed one meeting each.
PRINCIPAL SHAREHOLDERS
Insofar as is known to the Company, no person beneficially owned, as of
April 1, 1999, more than five percent of the outstanding Common Stock of the
Company, except as follows:
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
NAME AND ADDRESS BENEFICIALLY OWNED PERCENT
OF BENEFICIAL OWNER AS OF APRIL 1, 1999 OF CLASS
- ------------------------------------- -------------------------- --------
<S> <C> <C>
Alicia M. Sanchez (1)................ 2,530,153 17.92%
2119 Guerrero Street
Laredo, Texas 78040
A. R. Sanchez Jr. (2)................ 1,364,096 9.66%
P.O. Box 2986
Laredo, Texas 78040
</TABLE>
- ------------
(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 815,759 shares owned beneficially by him. Mr. Sanchez also
controls the disposition of 546,212 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 546,212 shares. Mr. Sanchez also has the power to vote and dispose
of 2,125 shares which were gifted to the A. R. Sanchez and Maria J. Sanchez
Foundation.
3
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
Based upon information received from the persons concerned, each of whom is
a director and nominee for director, the following individuals and all directors
and executive officers of the Company as a group owned beneficially as of April
1, 1999, the number and percentage of outstanding shares of Common Stock of the
Company indicated in the following table:
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL SHARES BENEFICIALLY OWNED PERCENT
OR IDENTITY OF GROUP AS OF APRIL 1, 1999 OF CLASS
- ------------------------------------- -------------------------- --------
<S> <C> <C>
Lester Avigael (1)................... 117,580 *
Irving Greenblum (2)................. 128,219 *
R. David Guerra (3).................. 114,339 *
Richard E. Haynes.................... 11,347 *
Roy Jennings Jr. (4)................. 119,585 *
Sioma Neiman (5)..................... 406,159 2.88%
Peggy J. Newman...................... 3,240 *
Dennis E. Nixon (6).................. 680,166+ 4.82%
Leonardo Salinas..................... 52,193 *
A. R. Sanchez Jr. (7)................ 1,364,096 9.66%
All Directors and Executive Officers
as a group (12 persons) (8)........ 3,102,300 21.96%
</TABLE>
- ------------
* Ownership of less than one percent
+ Include shares which are issuable upon the exercise of options exercisable
on or prior to June 1, 1999 ("currently exercisable options").
(1) The holdings shown for Mr. Avigael include 9,782 shares which he holds as
trustee for the benefit of his grandchildren.
(2) The holdings shown for Mr. Greenblum include 66,666 shares held in two
trusts for the benefit of himself and his wife.
(3) The holdings shown for Mr. Guerra include 109,057 shares which he and his
wife hold in their names jointly.
(4) The holdings shown for Mr. Jennings include 21,835 shares which he and his
wife hold in their names jointly, and 43,455 shares held in the name of his
wife.
(5) The holdings shown for Mr. Neiman include 406,159 shares in the name of Inar
Investments, Corp., of which he is the Managing Director.
(6) The holdings shown for Mr. Nixon include 18,684 shares which are issuable
upon the exercise of currently exercisable options. The holdings shown for
Mr. Nixon also include 2,193 shares held in the name of his wife.
(7) The holdings shown for Mr. A. R. Sanchez Jr. include 815,759 shares which he
owns directly and has the sole power to dispose of and to vote. Mr. Sanchez
also controls the disposition of 546,212 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 546,212 shares. Mr. Sanchez also has the power to vote and
dispose of 2,125 shares which were gifted to the A. R. Sanchez and Maria J.
Sanchez Foundation.
(8) The holdings shown for all directors and executive officers as a group
include 25,344 shares which are issuable upon the exercise of currently
exercisable options and includes the 60,283 shares owned by the Estate of
Alberto A. Santos.
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.
4
<PAGE>
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 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
NAME AND ------------------------------ SECURITIES ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) UNDERLYING OPTIONS COMPENSATION(3)
- ---------------------------------------- ----- --------- ---------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
Dennis E. Nixon......................... 1996 $ 313,722 700,000 -- $ 8,672
President and Director of 1997 320,005 800,000 14,275 10,416
the Company and of IBC 1998 341,482 1,000,000 -- 11,678
R. David Guerra......................... 1996 172,588 36,688 -- 8,375
Vice President and 1997 181,363 44,402 5,000 9,537
Director of the Company; 1998 189,023 45,520 -- 11,355
President of IBC branch in
McAllen, Texas and Director of IBC
Leonardo Salinas........................ 1996 108,670 13,975 -- 5,473
Vice President and 1997 109,770 13,975 -- 6,172
Director of the Company; 1998 111,270 13,815 -- 7,080
Director and Senior Executive Vice
President of IBC
Imelda Navarro.......................... 1996 78,900 20,866 -- 4,613
Treasurer of the Company 1997 80,300 22,552 2,850 5,254
Senior Executive Vice 1998 103,425 25,733 5,000 7,606
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 are discretionary cash bonuses except
$650,000 paid to Mr. Nixon for services rendered in 1998 pursuant to the
Executive Incentive Compensation Plan.
(3) 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.
Each director of the Company and each director of IBC receives compensation
for his services as a director in the amount of $800 for each meeting of the
Board he attends and $300 for each meeting of a committee of the Board he
attends. Salaried officers who are directors are not compensated for committee
meetings. The director fees paid to the named executive officers are included in
the salary totals set forth in the table.
5
<PAGE>
STOCK OPTIONS
During 1998, the Company granted certain options to the named executive
officers of the Company. The following table reflects certain information
concerning grants of options made by the Company during 1998 to the named
executive officers of the Company:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE OR FOR OPTION TERM
OPTIONS IN FISCAL BASE PRICE EXPIRATION -------------------------
GRANTED (1) YEAR ($/SH) DATE 5% ($) (2) 10% ($) (2)
----------- ----------- ------------ ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Imelda Navarro.......................... 5,000 33.9% 48.00 10/13/2006 114,576 274,416
</TABLE>
- ------------
(1) The options shown in the table are incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended each
of which were granted under the Company's 1996 International Bancshares
Corporation Stock Option Plan with an exercise price equal to the fair
market value on the date of grant. Twenty percent of these options become
exercisable on the anniversary date of the option grant during each of the
five years beginning October 13, 1999 and will expire eight years from the
date of grant, subject to earlier termination pursuant to the terms and
provisions of the Plan and the Stock Option Agreement.
(2) The dollar amounts shown are based on certain assumed rates of appreciation
and the assumption that the options will not be exercised until the end of
the expiration periods applicable to the options. Actual realizable values,
if any, on stock option exercises and common stock holdings are dependent on
the future performance of the Company's common stock and overall stock
market conditions. There can be no assurances that the amounts reflected
will be achieved.
The following table reflects certain information regarding individual
exercises of stock options with respect to the Common Stock during 1998 and
through April 1, 1999, by each of the named executive officers of the Company.
AGGREGATED OPTION EXERCISES IN 1998
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
UNDERLYING VALUE OF
SHARES OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES 12/31/98 12/31/98
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
NAME (#) ($)(1) (#) ($)(1)
- ------------------------------------- ------------ --------- -------------- --------------
<S> <C> <C> <C> <C>
Dennis E. Nixon...................... 0 0 11,783/ 217,790/
22,726 253,890
R. David Guerra...................... 2,782 56,100 2,782/ 49,145/
5,910 79,725
Imelda Navarro....................... 1,833 132,307 6,660/ 153,090/
3,894 60,075
</TABLE>
- ------------
(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. Also, certain executive officer(s) may receive
compensation pursuant to the Company's Executive Incentive Compensation Plan.
Stock option
6
<PAGE>
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.
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.
For services rendered to IBC in 1998, Mr Nixon received a cash bonus under IBC's
discretionary cash bonus program of $350,000. During 1998, the Company met both
the return on average total assets and the return on average total shareholders'
equity targets established pursuant to the 1998 Executive Incentive Compensation
Plan (the "EICP") by the Committee. Accordingly, Mr. Nixon received an
incentive award under the EICP of $650,000 for services rendered to the Company
during 1998. The amounts of the cash bonus and the incentive award were largely
affected by the strong financial results of the Company during 1998, which
included (i) net income of $53.7 million, or $4.12 per share-basic, an amount
which represents a 9.81% increase in earnings per share compared to the previous
year, (ii) the Company's excellent return on average total assets of 1.15% and
(iii) the Company's strong return on average total shareholders' equity of
15.48%.
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.
Lester Avigael Roy Jennings, Jr.
Richard E. Haynes Dennis E. Nixon
REPORT OF THE STOCK OPTION PLAN COMMITTEE
The Stock Option Plan Committee of the Board of Directors determines the
stock option grants to executive officers and key salaried employees of the
Company. During 1998, the Stock Option Plan Committee met and granted options to
purchase a total of 14,750 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 Stock Option Plan
Committee based upon a subjective assessment of the respective employee's
performance, compensation 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
7
<PAGE>
SALARY AND STEERING COMMITTEE AND STOCK OPTION PLAN COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The Salary and Steering Committee members during 1998 were Lester Avigael,
Richard E. Haynes, Roy Jennings, Jr. and Alberto A. Santos. 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 Stock Option Plan Committee whose members were Lester Avigael, Richard E.
Haynes, Roy Jennings Jr. and Alberto A. Santos. Messrs. Richard E. Haynes,
Dennis E. Nixon and the Estate of 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 9 and 10, under the caption "Interest of Management in Certain
Transactions".
FINANCIAL PERFORMANCE
The following graph illustrates the cumulative return experienced by the
Company's shareholders for the period commencing on December 31, 1993 and ending
at year end 1998 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: 12/31/93 TO 12/31/98
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
1993 1994 1995 1996 1997 1998
---- ------ ------ ------ ------ ------
Int. Bchs. Corp .. 100 120 91.43 112.86 159.92 168.92
S&P 500 .......... 100 101.32 139.4 171.4 228.59 293.91
S&P Regional Banks 100 94.65 149.03 203.63 306.2 338.3
8
<PAGE>
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 1998, 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, 1998, 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 $42,104,118.93.
At December 31, 1998, all of such loans were current with respect to principal
and interest.
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 the Company 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, 1998,
loans outstanding made by the Company to such persons or entities aggregated
$5,724,790 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, 1998, IBC Partners Investment Joint Venture and IBC
Partners Organizational Joint Venture were indebted to the Company in the amount
of $166,498 and $414,481, respectively. The two loans were extended as part of a
single credit facility in connection with the formation of IBC Partners, Ltd.
The two joint ventures are controlled by certain directors and executive
officers of the Company or its subsidiary banks. The joint ventures repaid
$48,938 and $212,273, respectively, on the credit facility during 1998. As of
December 31, 1998, Dennis E. Nixon and his related interests were indebted to
the Company in the amount of $4,838,811 in connection with three real estate and
two consumer related loans. Mr. Nixon and his related interests repaid $459,797
on the related loans during 1998. As of December 31, 1998, R. David Guerra and
his related interests were indebted to the Company in the amount of $305,000 in
connection with two consumer loans. At December 31, 1998, all of the loans
outstanding in the aggregate principal amount of $5,724,790 (as described in
this paragraph and the foregoing paragraph) were current with respect to
principal and interest.
IBC and Sanchez 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 Sanchez Oil and Gas Corporation. The net
book value of IBC's aggregate interest in all of the aircraft as of April 1,
1999 was approximately $4.5 million. Each bank subsidiary and Sanchez Oil and
Gas Corporation pay the pro rata expense related to their actual use of the
aircraft.
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
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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 1998. The
Company believes that all of these filing requirements were timely satisfied,
except for two late filings for Leonardo Salinas which related to three
purchases acquired through a broker of 500 shares each on August 6, 1998 and
August 21, 1998 and 1,000 shares on October 9, 1998. 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 LLP to
audit the accounts of the Company for the 1999 fiscal year. The firm has audited
the books of the Company and its predecessor, IBC, annually since 1979.
Audit services rendered by KPMG LLP for the fiscal year ended December 31,
1998 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 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 LLP as
the independent auditors. The affirmative vote of a majority of the shares
present and entitled to vote thereon will constitute approval.
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SHAREHOLDER PROPOSALS FOR YEAR 2000 ANNUAL MEETING
The 2000 annual meeting of shareholders will be held on May 18, 2000.
Proposals from shareholders intended to be presented at the 2000 Annual Meeting
must be received in writing by the Company at its principal executive offices
not later than December 27, 1999. 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, 1999
THE COMPANY WILL PROVIDE SHAREHOLDERS WITH A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K, FOR THE PERIOD ENDED DECEMBER 31, 1998, INCLUDING FINANCIAL
STATEMENTS AND SCHEDULES, WITHOUT CHARGE, UPON WRITTEN REQUEST ADDRESSED TO THE
TREASURER OF THE COMPANY, MS. IMELDA NAVARRO AT:
INTERNATIONAL BANCSHARES CORPORATION
P. O. DRAWER 1359
LAREDO, TEXAS 78042-1359
(956) 722-7611 EXTENSION 6222
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PROXY INTERNATIONAL BANCSHARES CORPORATION PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS
CALLED FOR MAY 20, 1999
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 20,
1999 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, P. J. Newman, D.E. Nixon,
L. Salinas, A. R. Sanchez, Jr.
FOR, all nominees listed FOR, all nominees listed WITHHOLD AUTHORITY, to
above [ ] above, except for the vote for all nominees
nominee(s) set forth on listed above [ ]
the line below [ ]
(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 LLP as the independent auditors
of the Company for the 1999 fiscal year.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
A vote FOR the above proposal is recommended by the Board of Directors.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
- --------------------------------------------------------------------------------
3. 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" PROPOSAL 2 ABOVE.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement of the Company dated April 15, 1999.
Dated: ____________________ , 1999 __________________________________________
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.
