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<SEC-DOCUMENT>0001047469-08-004856.txt : 20080418
<SEC-HEADER>0001047469-08-004856.hdr.sgml : 20080418
<ACCEPTANCE-DATETIME>20080418130206
ACCESSION NUMBER:		0001047469-08-004856
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20080519
FILED AS OF DATE:		20080418
DATE AS OF CHANGE:		20080418
EFFECTIVENESS DATE:		20080418

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			INTERNATIONAL BANCSHARES CORP
		CENTRAL INDEX KEY:			0000315709
		STANDARD INDUSTRIAL CLASSIFICATION:	STATE COMMERCIAL BANKS [6022]
		IRS NUMBER:				742157138
		STATE OF INCORPORATION:			TX
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		DEF 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-09439
		FILM NUMBER:		08764016

	BUSINESS ADDRESS:	
		STREET 1:		12OO SAN BERNARDO AVE
		STREET 2:		PO BOX 1359
		CITY:			LAREDO
		STATE:			TX
		ZIP:			78040-1359
		BUSINESS PHONE:		9567227611

	MAIL ADDRESS:	
		STREET 1:		P O BOX 1359
		STREET 2:		1200 SAN BERNARDO
		CITY:			LAREDO
		STATE:			TX
		ZIP:			78040
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>a2184297zdef14a.htm
<DESCRIPTION>DEF 14A
<TEXT>
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 </FONT> <FONT SIZE=2><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C. 20549  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=4><B> SCHEDULE 14A</B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Proxy
Statement Pursuant to Section 14(a) of<BR>
the Securities Exchange Act of 1934 (Amendment No.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;) </FONT></P>

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<TABLE WIDTH="73%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2>Filed by the Registrant <FONT FACE="WINGDINGS">&#253;</FONT></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3 style="font-family:times;"><BR><FONT SIZE=2>Filed by a Party other than the Registrant <FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
Check the appropriate box:</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%" style="font-family:times;"><FONT SIZE=2><BR>
Preliminary Proxy Statement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%" style="font-family:times;"><BR><FONT SIZE=2><B>Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#253;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%" style="font-family:times;"><FONT SIZE=2><BR>
Definitive Proxy Statement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%" style="font-family:times;"><FONT SIZE=2><BR>
Definitive Additional Materials</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%" style="font-family:times;"><FONT SIZE=2><BR>
Soliciting Material Pursuant to &sect;240.14a-12<BR></FONT>
</TD>
</TR>
</TABLE>
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<TABLE WIDTH="77%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
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<TD COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2><B>INTERNATIONAL BANCSHARES CORPORATION</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><HR NOSHADE><FONT SIZE=2> (Name of Registrant as Specified In Its Charter)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><HR NOSHADE><FONT SIZE=2> (Name of Person(s) Filing Proxy Statement, if other than the Registrant)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5 style="font-family:times;"><FONT SIZE=2>Payment of Filing Fee (Check the appropriate box):</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#253;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
No fee required.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and&nbsp;0-11.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(1)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>Title of each class of securities to which transaction applies:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(2)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>Aggregate number of securities to which transaction applies:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(3)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>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 state how it was determined):<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(4)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>Proposed maximum aggregate value of transaction:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(5)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>Total fee paid:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
Fee paid previously with preliminary materials.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
Check box if any part of the fee is offset as provided by Exchange Act Rule&nbsp;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.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2><BR>
(1)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2><BR>
Amount Previously Paid:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(2)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>Form, Schedule or Registration Statement No.:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(3)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>Filing Party:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(4)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>Date Filed:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
</TABLE>
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<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=1,EFW="2184297",CP="INTERNATIONAL BANCSHARES CORP.",DN="1",CHK=646616,FOLIO='blank',FILE='DISK125:[08ZBC1.08ZBC12901]BA12901A.;4',USER='GLOPEZA',CD=';8-APR-2008;17:57' -->
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 </FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="bc12901_international_bancshares_corpo__int02649"> </A>
<A NAME="toc_bc12901_1"> </A>
<BR></FONT><FONT SIZE=2><B>INTERNATIONAL BANCSHARES CORPORATION<BR>  Post Office Drawer 1359<BR>  Laredo, Texas 78042-1359    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="bc12901_notice_of_annual_meeting_of_sh__not02260"> </A>
<A NAME="toc_bc12901_2"> </A>
<BR></FONT><FONT SIZE=2><B>NOTICE OF ANNUAL MEETING OF SHAREHOLDERS<BR>  TO BE HELD ON MAY 19, 2008    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual Meeting") of International Bancshares Corporation (the "Company") will be held at the </FONT> <FONT
SIZE=2><B>LAREDO COUNTRY CLUB, at 1415 Country Club Drive, Laredo, Texas 78041 on Monday, May&nbsp;19, 2008 at 7:00 p.m</B></FONT><FONT SIZE=2>. for the following purposes:
 </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>To
elect ten (10)&nbsp;directors of the Company to serve until the next Annual Meeting of Shareholders and until their successors shall have been duly elected and qualified;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>To
ratify the appointment of McGladrey&nbsp;&amp; Pullen,&nbsp;LLP as independent auditors for the fiscal year ending December&nbsp;31, 2008;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>To
approve an amendment to add 300,000 additional shares to the 2005 International Bancshares Corporation Stock Option Plan.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>To
transact such other business as may lawfully come before the meeting or any adjournment thereof. </FONT></DD></DL>
</UL>
<BR>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholders
of record at the close of business on April&nbsp;1, 2008, are entitled to notice of and to vote at the Annual Meeting and any postponements or adjournments thereof. The
Company's 2007 Annual Report is being furnished with this Proxy Statement to shareholders of record as of the close of business on April&nbsp;1, 2008. The Annual Report does not constitute a part of
this Proxy Statement or proxy solicitation material. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to new rules promulgated by the Securities and Exchange Commission, we have elected to provide access to our proxy materials both by sending you this full set of proxy
materials, including a proxy card, and by notifying you of the availability of our proxy materials on the Internet. The enclosed proxy statement and the Annual Report are available on our website at </FONT> <FONT SIZE=2><I>www.ibc.com</I></FONT><FONT
SIZE=2>, under the heading "Investors" in the section for "SEC Filings." Additionally, and in accordance with SEC rules, you may access our Proxy
Statement and Form&nbsp;10-K at http://ww3.ics.adp.com/streetlink/IBOC, which does not have "cookies" that identify visitors to the site. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
order to ensure the representation of a quorum at the Annual Meeting, shareholders who do not expect to attend the Annual 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. </FONT></P>

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<TD WIDTH="40%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="58%" style="font-family:times;"><FONT SIZE=2>INTERNATIONAL BANCSHARES CORPORATION</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="40%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="58%" style="font-family:times;"><BR><FONT SIZE=2><B>
<IMG SRC="g715033.jpg" ALT="GRAPHIC" WIDTH="85" HEIGHT="76">
 </B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="40%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="58%" style="font-family:times;"><FONT SIZE=2>Dennis E. Nixon<BR>
President</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="40%" style="font-family:times;"><FONT SIZE=2><BR>
Dated: April&nbsp;18, 2008</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="58%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
</TABLE>
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<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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NAME="page_da12901_1_1"> </A>


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 </FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="da12901_international_bancshares_corpo__int02729"> </A>
<A NAME="toc_da12901_1"> </A>
<BR></FONT><FONT SIZE=2><B>INTERNATIONAL BANCSHARES CORPORATION<BR>  1200 San Bernardo Avenue<BR>  Laredo, Texas 78040    <BR>    </B></FONT></P>

<HR NOSHADE ALIGN="CENTER" WIDTH="120">
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=3><B>PROXY STATEMENT  </B></FONT></P>

<HR NOSHADE ALIGN="CENTER" WIDTH="120">
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=3><B> <A NAME="da12901_solicitation_and_revocation_of__sol04234"> </A>
<A NAME="toc_da12901_2"> </A>
<BR>    </B></FONT><FONT SIZE=2><B>SOLICITATION AND REVOCATION OF PROXIES, AVAILABILITY OF PROXY MATERIALS AND VOTING OF PROXIES AND SHARES    <BR>    </B></FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Solicitation and Revocation of Proxies  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors of International Bancshares Corporation, a Texas corporation (the "Company") is soliciting proxies to be used at the Annual Meeting of
Shareholders (the "Annual Meeting") to be held on Monday, May&nbsp;19, 2008 at 7:00&nbsp;p.m., local time, at the </FONT><FONT SIZE=2><B>Laredo Country Club, at 1415 Country
Club Drive, Laredo, Texas 78041.</B></FONT><FONT SIZE=2> The Company will pay for the cost of the proxy preparation and solicitation, including the reasonable charges and expenses of brokerage firms,
banks or other nominees for forwarding proxy materials to street name holders. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It
is expected that the solicitation of proxies will be primarily by mail. Proxies may also be solicited personally by regular employees of the Company. No additional compensation will
be paid to employees for such services. 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 at 1200 San Bernardo Avenue, Laredo, Texas 78040 or by appearing at the Annual Meeting, giving notice of revocation of the proxy 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&nbsp;18, 2008. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>Important Notice Regarding Availability of Proxy Materials For Annual Meeting To Be Held On May&nbsp;19, 2008  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to new rules promulgated by the Securities and Exchange Commission, we have elected to provide access to our proxy materials both by sending you this
full set of proxy materials, including a proxy card, and by notifying you of the availability of our proxy materials on the Internet. This proxy statement and our Annual Report are available on our
website at </FONT><FONT SIZE=2><I>www.ibc.com</I></FONT><FONT SIZE=2>, under the heading "Investors" in the section for "SEC Filings." Additionally, and in accordance with new SEC rules, you may
access our Proxy Statement and Form&nbsp;10-K at http://ww3.ics.adp.com/streetlink/IBOC, which does not have "cookies" that identify visitors to the site, and thus protects your privacy. </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Voting of Proxies and Shares  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&nbsp;1, 2008 (the "Record
Date"), shall be entitled to vote at the Annual Meeting. There were 68,555,605 shares of Common Stock issued and outstanding on the Record Date held of record by approximately 2,589 shareholders. Each
owner of record on the Record Date is entitled to one vote for each share of Common Stock held. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
shares entitled to vote represented by a properly executed and unrevoked proxy received in time for the Annual Meeting will be voted at the Annual 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 or postponement thereof. Each of the Proxies will have the power to appoint his substitute. Any of the Proxies, or their
respective substitutes, who shall be present and </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>1</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_da12901_1_2"> </A>
<BR>

<P style="font-family:times;"><FONT SIZE=2>acting
at the Annual Meeting, shall have and may exercise all the powers granted to the Proxies. If any nominee for director 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. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 Annual Meeting. A quorum with respect to any specific proposal 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 proposal. Abstentions will be treated as present and entitled to vote with respect to any proposal submitted to the shareholders for a vote
for purposes of determining both the presence of a quorum with respect to such proposal and the approval of such proposal. 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 proposal other than the election of directors, such proposal 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 Annual Meeting and entitled to vote thereon. Thus, abstentions
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 Annual Meeting and entitled to vote thereon. </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Annual Meeting Admission  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you wish to attend the Annual Meeting in person, you must present a form of personal identification. If you are a beneficial owner of Company Common Stock that
is held of record by a bank, broker or other nominee, you will also need proof of ownership to be admitted to the meeting. A recent brokerage statement or a letter from your bank or broker are
examples of proof of ownership. No cameras, recording equipment, or electronic devices will be permitted in the meeting. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>2</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_da12901_1_3"> </A>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="da12901_proposal_#151;1_election_of_directors"> </A>
<A NAME="toc_da12901_3"> </A>
<BR></FONT><FONT SIZE=2><B>PROPOSAL&#151;1<BR>  <BR>    ELECTION OF DIRECTORS    <BR>    </B></FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Nominees for Election as Director  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 or her successor is elected and qualified. The Proxies named in the accompanying proxy card, who have been designated by the Board of Directors of the Company, intend to vote for the
following nominees, unless otherwise instructed in such proxy card. Certain information concerning each nominee as of April&nbsp;1, 2008 is set forth below, including information regarding each
nominee's positions, if any, with International Bank of Commerce, the Company's lead bank subsidiary ("IBC"): </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="39%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Nominee for Director<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Served as<BR>
Director<BR>
Since(1)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Age</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="39%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Principal Occupation (2)</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="39%" style="font-family:times;"><FONT SIZE=2>Irving Greenblum</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1981</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>78</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="39%" style="font-family:times;"><FONT SIZE=2>International Investments&nbsp;&amp; Real Estate and Director of IBC</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="39%" style="font-family:times;"><FONT SIZE=2><BR>
R. David Guerra</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
1993</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
55</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="39%" style="font-family:times;"><FONT SIZE=2><BR>
Vice President of the Company since 1986 and President of the IBC Branch in McAllen, Texas and Director of IBC</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="39%" style="font-family:times;"><FONT SIZE=2><BR>
Daniel B. Hastings Jr.&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
2000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
60</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="39%" style="font-family:times;"><FONT SIZE=2><BR>
Licensed U.S. Custom Broker and Director of IBC since 2000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="39%" style="font-family:times;"><FONT SIZE=2><BR>
Richard E. Haynes</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
1977</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
65</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="39%" style="font-family:times;"><FONT SIZE=2><BR>
Attorney at Law; Real Estate Investments; and Director of IBC</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="39%" style="font-family:times;"><FONT SIZE=2><BR>
Imelda Navarro</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
2002</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
50</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="39%" style="font-family:times;"><FONT SIZE=2><BR>
Treasurer of the Company since 1982 and Senior Executive Vice President of IBC and Director of IBC since 2002</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="39%" style="font-family:times;"><FONT SIZE=2><BR>
Sioma Neiman</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
1981</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
80</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="39%" style="font-family:times;"><FONT SIZE=2><BR>
International Entrepreneur</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="39%" style="font-family:times;"><FONT SIZE=2><BR>
Peggy J. Newman</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
1997</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
76</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="39%" style="font-family:times;"><FONT SIZE=2><BR>
Real Estate Investments; President of Newman Poultry&nbsp;Co. and Director of IBC</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="39%" style="font-family:times;"><FONT SIZE=2><BR>
Dennis E. Nixon</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
1975</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
65</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="39%" style="font-family:times;"><FONT SIZE=2><BR>
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</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="39%" style="font-family:times;"><FONT SIZE=2><BR>
Leonardo Salinas (3)</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
1976</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
74</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="39%" style="font-family:times;"><FONT SIZE=2><BR>
Real Estate Investments and Director of IBC</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="39%" style="font-family:times;"><FONT SIZE=2><BR>
Antonio R. Sanchez, Jr.&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
1995</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
65</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="39%" style="font-family:times;"><FONT SIZE=2><BR>
Chairman of the Board of Sanchez Oil&nbsp;&amp; Gas Corporation; Investments; and Director of IBC</FONT></TD>
</TR>
</TABLE>
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<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
time served as director of IBC prior to July&nbsp;28, 1980 when the Company became the successor issuer to IBC.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Except
as otherwise noted, each nominee has held the office indicated or other offices in the same company for the last five years.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Leonardo
Salinas, who had served as Vice President of the Company and Senior Executive Vice President of IBC, retired as of June&nbsp;30, 2000. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>3</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_da12901_1_4"> </A>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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,
as amended (the "Exchange Act") or of any company registered under the Investment Company Act of 1940, as amended. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="da12901_the_board_of_directors_recomme__the02529"> </A>
<A NAME="toc_da12901_4"> </A>
<BR></FONT><FONT SIZE=2><B>The Board of Directors recommends a vote "FOR" each named nominee.    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>4</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_da12901_1_5"> </A>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="da12901_corporate_governance"> </A>
<A NAME="toc_da12901_5"> </A>
<BR></FONT><FONT SIZE=2><B>CORPORATE GOVERNANCE    <BR>    </B></FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> General  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This section includes information about the qualifications, compensation and meetings of the Board of Directors and the qualification, composition, purpose and
meetings of the committees of the Board of Directors. This section also discusses the Code of Ethics of the Company. </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Attendance at Board Meetings  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2007, the Board of Directors held eight meetings. All of the directors attended at least 75% of the aggregate of the total number of meetings of the
Company's Board of Directors and the total number of meetings held by all committees of the Board on which such director served, except for Richard E. Haynes and Sioma Neiman who attended fewer than
75% of such meetings. </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Executive Sessions of Board of Directors  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to Board meetings, non-employee directors meet periodically in executive session without members of management present. The
non-employee directors met in executive session four times during 2007. </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Board Nominations  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's Board of Directors does not have a standing nominating committee or any other committee performing similar functions. The Company's Board of
Directors has adopted a resolution setting forth certain Guidelines Regarding Nomination of Directors (the "Guidelines"). The Company has not established a separate nominating committee because it
desires active participation of all Board members in the analysis and process of making nominations. In addition, nominees for selection are recommended to the whole Board of Directors by a majority
of the Company's directors who are "independent" as defined in Rule&nbsp;4200 (a)&nbsp;(15)&nbsp;of the National Association of Securities Dealers ("NASD")listing standards. The Board believes
that these measures maintain the integrity of the nomination process in the same manner as if it had established a nominating committee. The Guidelines are available on the Company's website at </FONT> <FONT SIZE=2><I>www.ibc.com</I></FONT><FONT
SIZE=2>. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the Guidelines, the independent directors seek to recommend individuals as director nominees who have the highest personal and professional integrity, who have demonstrated
exceptional ability and judgment and who will be most effective, in conjunction with the other nominees to the Board, in collectively serving the long-term interests of shareholders. The
independent directors utilize a variety of methods for identifying and evaluating director nominees. The independent directors will consider director candidates recommended by shareholders if provided
with the following: (i)&nbsp;evidence, in accordance with Rule&nbsp;14a-8 under the Exchange Act, of compliance with shareholder eligibility requirements; (ii)&nbsp;the written
consent of the candidate(s) for nomination as a director and verification as to the accuracy of the biographical and other information submitted in support of the candidate; (iii)&nbsp;a resume or
other written statement of the qualifications of the candidate(s) for nomination as a director; and, (iv)&nbsp;all information regarding the candidate(s) and the submitting shareholder that would be
required to be disclosed in a proxy statement filed with the SEC if the candidate(s) were nominated for election to the Board of Directors. Any recommendations received from shareholders will be
evaluated in the same manner that other potential nominees are evaluated. Any shareholder that wishes to present a director candidate for consideration should submit the information identified above
pursuant to the procedures set forth below under "Shareholder Communication with the Board of Directors." </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>5</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_da12901_1_6"> </A>
<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Annual Meeting Attendance  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company encourages all members of its Board of Directors to attend the annual meetings of shareholders, but it has not adopted a formal policy requiring
attendance. All of the members of the Board of Directors of the Company who were directors at the time of the 2007 annual meeting of shareholders were in attendance at such meeting. </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Director Independence  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's Board of Directors has determined that a majority of its members are "independent" as defined in Rule&nbsp;4200 (a)&nbsp;(15)&nbsp;of the NASD
listing standards. As of April&nbsp;1, 2008, the following members of the Board of Directors are not independent: Imelda Navarro, Dennis E. Nixon, R. David Guerra, and Antonio R. Sanchez, Jr. </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Director Compensation  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The table below summarizes the compensation paid by the Company to directors, other than the named executives officers, for the year ended December&nbsp;31,
2007. </FONT></P>

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<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=7 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="34%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Name<BR> </B></FONT><BR></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="24%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Fees Earned or Paid<BR>
in Cash ($)<BR> </B></FONT><BR></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="24%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>All Other<BR>
Compensation<BR>
($)(1)<BR> </B></FONT><BR></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Total ($)<BR> </B></FONT><BR></TH>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="34%" style="font-family:times;"><FONT SIZE=2>Lester Avigael(2)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>$2,400</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>$32,800</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>$35,200</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="34%" style="font-family:times;"><FONT SIZE=2>Irving Greenblum</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;2,400</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;17,600</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;20,000</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="34%" style="font-family:times;"><FONT SIZE=2>Daniel B. Hastings, Jr.</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;3,000</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;18,500</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;21,500</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="34%" style="font-family:times;"><FONT SIZE=2>Richard E. Haynes</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;1,800</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;17,000</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;18,800</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="34%" style="font-family:times;"><FONT SIZE=2>Sioma Neiman</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;900</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;8,600</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;9,500</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="34%" style="font-family:times;"><FONT SIZE=2>Peggy J. Newman</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;900</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;17,300</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;18,200</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="34%" style="font-family:times;"><FONT SIZE=2>Leonardo Salinas</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;1,800</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;19,700</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;21,500</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="34%" style="font-family:times;"><FONT SIZE=2>Antonio R. Sanchez, Jr.</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;1,800</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;9,800</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;11,600</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>All
directors received certain perquisites from the Company during 2007, but the incremental cost of providing those perquisites was significantly less than the $10,000 disclosure
threshold per director. Certain directors of the Company serve as directors of subsidiary banks of the Company, and each such director receives compensation for his or her services as a director of
the subsidiary bank in the amount of $900 for each board meeting and $300 for each meeting of a board committee of the subsidiary bank that he or she attends. The amounts paid to directors of the
Company for their services as a director of a subsidiary bank are set forth in the "All Other Compensation" column above.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Avigael
passed away on January&nbsp;10, 2008. </FONT></DD></DL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
director of the Company receives compensation for his or her services as a director of the Company in the amount of $900 for each board meeting of the Company and $300 for each
meeting of a board committee he or she attends. These director fees are set forth in the "Fees Earned or Paid in Cash" column in the foregoing table. Some of the board meetings of the Company were by
telephone conference and the directors are not paid for meetings held by telephone conference. Salaried officers of the Company who are directors are not compensated for committee meetings. No stock
options or other equity-based awards are granted to non-employee board members. The director fees paid to the named executive officers are included in the "All Other Compensation" column
set forth in the "Summary Compensation Table" below. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>6</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=6,SEQ=8,EFW="2184297",CP="INTERNATIONAL BANCSHARES CORP.",DN="1",CHK=326332,FOLIO='6',FILE='DISK125:[08ZBC1.08ZBC12901]DA12901A.;15',USER='LCOUTU',CD=';9-APR-2008;21:36' -->
<A NAME="page_da12901_1_7"> </A>
<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Shareholder Communications With The Board of Directors  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholders may communicate directly with the Board of Directors. All communications should be in writing and directed to the Company's Corporate Secretary at
the address below and should prominently indicate on the outside of the envelope that it is intended for the Board of Directors. The Company's Corporate Secretary has the authority to disregard any
inappropriate communications or to take other appropriate actions with respect to any such inappropriate communications. If deemed
appropriate, the Company's Corporate Secretary will forward correspondence to the Chairman of the Board or any specific director to whom the correspondence is directed. In general, communications
relating to corporate governance and long-term corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs, personal grievances and matters
as to which the Company tends to receive repetitive or duplicative communications. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Marisa
V. Santos<BR>
Corporate Secretary<BR>
International Bancshares Corporation<BR>
P. O. Drawer 1359<BR>
Laredo, Texas 78042 </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Code of Ethics  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has adopted a code of business conduct and ethics for executive officers (including the Company's Chief Executive Officer and Chief Financial
Officer), known as the International Bancshares Code of Ethics for Financial Professionals. The Company also maintains a code of ethics for all employees and directors, known as the International
Bancshares Code of Ethics. The International Bancshares Code of Ethics for Financial Professionals and the International Bancshares Code of Ethics are available on the Company's website at </FONT> <FONT SIZE=2><I>www.ibc.com</I></FONT><FONT SIZE=2>.
Any amendment to, or waiver of, the International Bancshares Code of Ethics for Financial Professionals will be disclosed on such Company
website. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>7</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=7,SEQ=9,EFW="2184297",CP="INTERNATIONAL BANCSHARES CORP.",DN="1",CHK=427530,FOLIO='7',FILE='DISK125:[08ZBC1.08ZBC12901]DA12901A.;15',USER='LCOUTU',CD=';9-APR-2008;21:36' -->
<A NAME="page_da12901_1_8"> </A>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="da12901_meetings_and_committees_of_the_board_of_directors"> </A>
<A NAME="toc_da12901_6"> </A>
<BR></FONT><FONT SIZE=2><B>MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS    <BR>    </B></FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Audit Committee  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee of the Board of Directors during 2007 consisted of Lester Avigael, Irving Greenblum, Richard E. Haynes and Daniel B. Hastings, Jr. The
Committee met four times during the 2007 fiscal year. Mr.&nbsp;Haynes missed two meetings and Mr.&nbsp;Hastings missed one meeting. The primary functions of the Audit Committee are to recommend
the appointment of the independent auditors; to review annual and quarterly financial reports and to review the results of audits by the internal auditor and the independent auditors. Under applicable
law, the Audit Committee is required to review with management and the independent auditors the basis for all financial reports. The Board of Directors has adopted a separate Audit Committee Charter.
The charter for the Audit Committee is available on the Company's website at </FONT><FONT SIZE=2><I>www.ibc.com</I></FONT><FONT SIZE=2>. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company's Board of Directors has determined that none of the Audit Committee members meets the audit committee financial expert criteria as defined by Item&nbsp;407(d) of
Regulation&nbsp;S-K of the Exchange Act. While it might be possible to recruit a person who qualifies solely as a financial expert, the Board does not believe such a candidate would meet
the other criteria that the Board has established for Board and Audit Committee members. The Board has determined that in order to fulfill all of the functions of the Board and Audit Committee, each
member of the Board and the Audit Committee should meet all the criteria that have been established by the Board, and it is not in the best interests of the Company to nominate as a director someone
who does not have all the experience, attributes and qualifications that the Board seeks to further the interests of the Company. The Audit Committee during 2007 consisted of Lester Avigael, Irving
Greenblum, Richard E. Haynes and Daniel B. Hastings, Jr. The 2008 Audit Committee consists of the same individuals, except Leonardo Salinas who was added after Mr.&nbsp;Avigael passed away on
January&nbsp;10, 2008. The 2007 Audit Committee consisted of and the 2008 Audit Committee consists of four directors, all of whom are "independent" within Rule&nbsp;4200(a)(15) of the NASD listing
standards and Rule&nbsp;10A-3(b)(1) under the Exchange Act and each of whom has been selected for the Audit Committee by the Board based on the Board's determination that they are fully
qualified to (i)&nbsp;review and understand the Company's financial statements, (ii)&nbsp;monitor the performance of management, (iii)&nbsp;monitor the Company's internal accounting operations,
(iv)&nbsp;monitor the independent auditors, and (v)&nbsp;monitor the disclosures of the Company to the end that they fairly present the Company's financial condition and results of operations. In
addition, the Audit Committee has the ability, on its own, to retain independent accountants or other consultants whenever it deems appropriate. The Board of Directors believes that this is fully
equivalent to having a </FONT><FONT SIZE=2><I>financial expert</I></FONT><FONT SIZE=2> on the Audit Committee. </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Stock Option Plan Committee  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Stock Option Plan Committee of the Board of Directors during 2007 consisted of Lester Avigael, Irving Greenblum and Richard E. Haynes. The Stock Option Plan
Committee for 2008 consists of Daniel B. Hastings, Jr., Richard E. Haynes, Irving Greenblum and Peggy J. Newman. The Committee met seven times during the 2007 fiscal year, and each member of the
Committee attended all seven meetings. The Stock Option Plan Committee's primary function is the administration of the 2005
International Bancshares Corporation Stock Option Plan, which includes taking all final action on the amount, timing, price and other terms of all options granted under the Plan. The Stock Option Plan
Committee has the authority to retain outside consultants or separate legal counsel, which authority the Stock Option Plan Committee did not exercise during 2007. Each member of the Stock Option Plan
Committee that served during 2007 and who is serving in 2008 is "independent" within Rule&nbsp;4200(a)(15) of the NASD listing standards. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>8</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_da12901_1_9"> </A>
<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Report of the Stock Option Plan Committee  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. The
Company did not award any options to the executive officers of the Company during the 2007 fiscal year. The Stock Option Plan Committee met seven times during the 2007 fiscal year. The primary purpose
of the 2005 International Bancshares Corporation Stock Option Plan is to increase the interest of the executives and key salaried employees of the Company, the subsidiary banks and
non-bank subsidiaries in the Company's 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 are 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. The Stock Option Plan Committee believes its decision not to grant stock options during 2007 to the executive officers
of the Company is consistent with the compensation objectives of the Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
report is submitted on behalf of the Stock Option Plan Committee. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Peggy
J. Newman&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Irving Greenblum&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Richard E. Haynes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Daniel B. Hastings, Jr. </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Salary and Steering Committee of IBC  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's Board of Directors does not have a compensation committee or a committee performing similar functions and does not exert authority over the approval
of any cash compensation
program for the executive officers of the Company. Since all cash compensation paid to executive officers of the Company is paid by the Company's lead bank subsidiary, IBC, the Salary and Steering
Committee of IBC's Board of Directors is responsible for making recommendations to the IBC Board of Directors regarding each executive officer's cash compensation. The Committee has the authority to
retain outside consultants or separate legal counsel, which authority the Committee did not exercise during 2007. The Salary and Steering Committee of IBC's Board of Directors during 2007 consisted of
Lester Avigael, Daniel B. Hastings, Jr. and Richard E. Haynes, all of whom serve on the Company's Board of Directors. The Salary and Steering Committee met once during the 2007 fiscal year. Each
member of the Committee attended the meeting. The Salary and Steering Committee for 2008 consists of Irving Greenblum, Daniel B. Hastings, Jr., Richard E. Haynes and Peggy J. Newman, all of whom serve
on the Company's Board of Directors. Each member of the Salary and Steering Committee of IBC that served during 2007 and who is serving during 2008 is independent within Rule&nbsp;4200(a)(15) of the
NASD listing standards. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>Salary and Steering Committee and Stock Option Plan Committee Interlocks and Insider Participation</B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None
of the members of the Salary and Steering Committee or the Stock Option Plan Committee was an officer or employee of the Company or any of its subsidiaries in 2007 nor was any
member formerly an officer or employee of the Company or any of its subsidiaries. Some of the members of the Salary and Steering Committee, and some of these persons' associates, are current or past
customers of one or more of the Company's subsidiary banks. Since January&nbsp;1, 2007, transactions between these persons and such subsidiaries have occurred, including borrowings. In the opinion
of management, all of the transactions have been in the ordinary course of business, have had substantially the same terms, including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and did not involve more than the normal risk of collectibility. Additional transactions may take place in the future. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>9</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="page_dc12901_1_10"> </A>


<!-- COMMAND=ADD_BASECOLOR,"Black" -->




<!-- COMMAND=ADD_DEFAULTFONT,"font-family:times;" -->


 </FONT></P>

<!-- TOC_END -->
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dc12901_executive_compensation"> </A>
<A NAME="toc_dc12901_1"> </A>
<BR></FONT><FONT SIZE=2><B>EXECUTIVE COMPENSATION    <BR>    </B></FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Executive Officers  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board elects executive officers annually following the Annual Meeting of Shareholders to serve until the meeting of the Board following the next Annual
meeting. The following table sets forth the name of each executive officer of the Company as of December&nbsp;31, 2007 and the principal positions held by each officer. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain
information as of April&nbsp;1, 2008 is set forth in the following table concerning the Company's executive officers, each of whom has been elected to serve until the 2008
Annual Meeting of Shareholders and until his or her successor is duly elected and qualified. </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="23%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Name<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Age</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="54%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Position of Office</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Officer of the Company Since</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="23%" style="font-family:times;"><FONT SIZE=2>Dennis E. Nixon</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>65</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="54%" style="font-family:times;"><FONT SIZE=2>Chairman of the Board of the Company since 1992 and President of the Company since 1979; President, Chief Executive Officer and Director of IBC</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>1979</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="23%" style="font-family:times;"><FONT SIZE=2><BR>
R. David Guerra</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>
55</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="54%" style="font-family:times;"><FONT SIZE=2><BR>
Vice President of the Company since 1986 and President of the IBC Branch in McAllen, Texas and Director of IBC</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>
1986</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="23%" style="font-family:times;"><FONT SIZE=2><BR>
Imelda Navarro</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>
50</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="54%" style="font-family:times;"><FONT SIZE=2><BR>
Treasurer of the Company since 1982 and Senior Executive Vice President of IBC and Director of IBC since 2002</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>
1982</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
are no family relationships among any of the persons named above. Each executive officer has held the same position or another executive position with the Company during the past
five years. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dc12901_compensation_discussion_and_analysis"> </A>
<A NAME="toc_dc12901_2"> </A>
<BR></FONT><FONT SIZE=2><B>Compensation Discussion and Analysis    <BR>    </B></FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Overview  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In this section, we discuss certain aspects of our compensation program as it pertains to the principal executive officer, the principal financial officer, and
the one other most highly-compensated executive officer in 2007. We refer to these three persons throughout as the "executive officers." The discussion focuses on compensation and practices relating
to our most recently completed fiscal year. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
management believes that the performance of each of the executive officers has the potential to impact the Company's short-term and long-term profitability.
Therefore, our management places considerable importance on the design and administration of the executive compensation program. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
compensation package for each of the executive officers consists of base salary, annual discretionary bonus and a discretionary incentive stock option grant. Also, the executive
officers participate in the Employee's Profit Sharing Plan and receive certain perquisites. Certain executive officer(s) may receive compensation pursuant to the Company's Executive Incentive
Compensation Plan. Stock option grants are determined by the Company's Stock Option Plan Committee and are discussed under the Stock Option Plan Committee's separate report below. All cash
compensation paid to executive officers of the Company is paid by IBC. Base salary levels and annual discretionary bonuses are recommended by the Salary and Steering Committee of IBC (the
"Committee"). The Committee assists the Board of Directors in discharging its responsibilities relating to executive compensation. The Committee receives recommendations from the Company's President
regarding the compensation of executive officers (other than the President). The Committee during 2007 consisted of Lester Avigael, Daniel B. Hastings, Jr. and Richard E. Haynes. The 2008 Committee
consists of Peggy J. Newman, Irving </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>10</FONT></P>

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<BR>

<P style="font-family:times;"><FONT SIZE=2>Greenblum,
Daniel B. Hastings, Jr. and Richard E. Haynes. Each member of the Committee serves as a director of both IBC and the Company and is independent under applicable NASD and SEC standards. The
Committee does not have a charter. </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Compensation Philosophy  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Company's compensation philosophy is to maximize long-term return to shareholders consistent with the Company's commitments to maintain the safety
and soundness of the institution and provide the highest possible level of service to the customers and communities that it serves. To do this, the Committee believes the Company must provide
competitive salaries and appropriate incentives to achieve long-term shareholder return. </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Objectives of Executive Compensation  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Company's executive compensation policies are designed to achieve four primary objectives: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>attract
and retain well-qualified executive leadership;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>provide
incentives for achievement of corporate goals and individual performance;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>provide
incentives for achievement of long-term shareholder return; and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>align
the interests of management with those of the shareholders to encourage continuing growth in shareholder value. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Committee's goal is to effectively balance salaries with other performance-based compensation commensurate with an officer's individual management responsibilities and contribution
to corporate objectives. Each of the three named executive officers has served the Company for over twenty years. The salary and bonus decisions of the Committee are subjective and focused on whether
there is any compelling reason to deviate from the historical compensation pattern for each executive officer. If not, it will be expected that the individual will receive a salary and bonus that is
consistent with the historical compensation pattern for that individual. The determination of whether there is a compelling reason to deviate from the historical compensation pattern for an executive
officer is based on whether there is a significant change in the trend of financial performance for the Company and whether there is an overall perception that the individual satisfactorily performed
his or her duties at the Company. The historical compensation decisions of the Committee with respect to compensation of the executive officers also reflect the Committee's subjective assessment of
the competitive nature of the markets where the Company does business and the difficulty in retaining qualified executive officers in such markets. The Committee takes these competitive salary factors
into consideration when making its subjective salary and bonus compensation decisions for the executive officers. </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Decisions Regarding Executive Compensation  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Committee's recommendations regarding each executive officer's compensation are subjective with regard to both the base salary and discretionary bonus. At the
end of each year, a base salary recommendation for the next year and a discretionary bonus recommendation for the previous year are made for each executive officer by the Committee. When proposing
compensation levels the Committee reviews, discusses and analyzes the historical compensation for each executive officer of the Company and whether there is any compelling reason to deviate from such
historical compensation pattern for each executive officer. Only in the event that the Committee perceives that there will be a long-term trend of negative overall performance of the
Company, or in the event that an executive officer is perceived as not having satisfactorily performed their duties at the Company, will the cash compensation of an executive officer be expected to be
negatively impacted. The Committee receives recommendations respecting such analysis from the Company's President (other than as it pertains to the President). Before a vote is taken, members have an
opportunity to ask for additional information, to raise and discuss further questions and </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>11</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>to
consult outside consultants and/or separate legal counsel. During 2007, the Committee did not consult outside consultants or separate legal counsel. All base salary and bonus recommendations of the
Committee are subject to final approval of the Board of Directors of IBC. </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Elements of Compensation  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Company's executive compensation program consists primarily of the following elements: (i)&nbsp;base salary and benefits; (ii)&nbsp;annual cash bonus
incentives; (iii)&nbsp;longer-term equity-based incentives in the form of stock options; (iv)&nbsp;participation in the Employees' Profit Sharing Plan and (v)&nbsp;certain
perquisites. Each component of compensation is intended to accomplish one or more of the compensation objectives discussed above. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Base Salary and Benefits.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Annual base salaries are set to attract and retain executive officers with exceptional abilities
and talent. The Committee considers each executive officer's performance, historical compensation and responsibilities within the Company. As stated above, the salary decisions of the Committee are
subjective and focused on whether there is any compelling reason to deviate from the historical compensation pattern for each executive officer. If not, it will be expected that the individual will
receive a base salary that is consistent with the historical compensation pattern for that individual. The Committee also periodically collects salary information from other publicly-traded bank
holding companies in Texas. The Committee does not have targeted parameters with respect to the review of the salary information collected from such comparator companies, rather, the Committee
collects the salary information for comparison as a means to identify major changes in the overall compensation levels of executive officers of publicly-traded bank holding companies in Texas. Any
such
major change would be considered by the Committee in its determination of whether there is a compelling reason to deviate from the historical compensation pattern for any of the executive officers.
The Committee believes that the usefulness of the salary data of comparative companies is limited because the duties of officers with the same title may greatly differ from one company to another. In
2007, the Committee collected salary information from Cullen/Frost Bankers,&nbsp;Inc., Sterling Bancshares,&nbsp;Inc., Prosperity Bancshares,&nbsp;Inc., Texas Capital Bancshares,&nbsp;Inc.,
and Comerica,&nbsp;Incorporated. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Annual Cash Bonus Incentives.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Annual cash bonus incentives are used to reward executive officers for the Company's overall
financial performance, taking into consideration individual performance. The discretionary bonus program is intended to compensate each executive officer for the officer's contribution to IBC's
(i)&nbsp;financial performance and (ii)&nbsp;other non-financial goals during the previous year. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
previously discussed, the bonus decisions of the Committee are subjective and focused on whether there is any compelling reason to deviate from the historical compensation pattern for
each executive officer. If not, it will be expected that the individual will receive a bonus that is consistent with the historical compensation pattern for that individual. For each executive officer
other than the President, the President conducts a subjective analysis of each officer's individual performance and makes recommendations to the Committee as to the appropriate discretionary bonus
amount, taking into account each officer's historical compensation pattern. With respect to the analysis of individual performance, the President and Committee only determine whether there is a
perception that the executive officer satisfactorily performed their duties at the Company. The Committee considers the recommendations of the President in determining the amount of the discretionary
bonus for each executive officer, other than the President. All decisions of the Committee with respect to executive compensation are subject to the final approval of the Board of Directors of IBC. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition to considering an executive officer's historical compensation pattern and individual performance, the Committee also considers four measures of corporate performance in
determining annual cash discretionary bonus amounts to be paid to the Company's executive officers. These measures of performance are: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>earnings
per share and earnings per share growth; </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>12</FONT></P>

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<UL>
<UL>
</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>return
on average assets;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>return
on average equity; and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>non-financial
objectives. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company does not have specific performance targets, thresholds or goals for any of the foregoing measures. Each measure is analyzed by the Committee to determine how it compares to
the historical performance of the Company. Even if the performance in a category is not as favorable as the historical performance of the Company in such category, the Committee will subjectively
analyze the reason for the difference and whether the Company believes it will cause a long-term trend of negative overall performance of the Company. The Committee is focused on the
long-term results of the Company and recognizes that there may be periods when certain non-financial objectives may out-weigh near term financial performance. The
Committee believes that the salary and discretionary bonus paid to each of the executive officers in 2007 was appropriate in light of the compensation objectives of the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
order for payment of certain incentive awards to be deductible to the Company under the current Internal Revenue Code, as amended (the "Code"), the award must be paid under a plan
like the Company's 2006 Executive Incentive Compensation Plan ("EICP"). Section&nbsp;162(m) of the Code provides that publicly-held companies may not deduct compensation paid to certain
executive officers in excess of one million dollars annually, with certain exemptions for qualified "performance-based" compensation, such as compensation under the EICP. The EICP is administered by
the Committee. The EICP provides for designated executive officer(s) of the Company to be granted annual incentive cash awards consistent with the objectives and limitations of the EICP. Any executive
officer of the Company may at the discretion of the Committee be granted an annual incentive award under the EICP. The payment of any annual incentive award under the EICP is conditioned upon the
achievement by the Company of either one of the specified (i)&nbsp;return on average total assets or (ii)&nbsp;return on average total shareholders' equity targets which have been established by
the Committee. The numerical amount of these targets constitutes confidential commercial information of the Company. With respect to the likelihood of the Company meeting at least one of the
performance targets, the Company has had an executive incentive compensation plan since 1997 and the Company has met at least one of the two performance targets under the executive incentive plan
every year since 1997. The current EICP will expire on December&nbsp;31, 2016. The performance goals that have been established for the EICP may not be changed without the prior approval of the
shareholders of the Company. To date, the President of the Company is the only executive officer of the Company that has been granted an annual incentive award under the EICP. The amount of an award
under the EICP is determined in the discretion of the Committee. The amount of the award is completely discretionary, except a participant may not receive more than a maximum of 2.5% of the total
income before income taxes of the Company for the year under the EICP. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
services rendered to the Company in 2007, Mr.&nbsp;Nixon, the President of the Company, received a salary of $519,941.00, a cash bonus under the discretionary cash bonus program of
$300,000.00. During 2007, the Company met one of the performance targets, which include the return on average total assets and the return on average total shareholders' equity targets, established
pursuant to the EICP by
the Committee. Accordingly, the Committee determined in its discretion to pay an incentive award to Mr.&nbsp;Nixon under the EICP of $1,000,000.00 for services rendered to the Company during 2007.
The amounts of Mr.&nbsp;Nixon's salary and the cash bonus were consistent with the historical compensation pattern for Mr.&nbsp;Nixon, who has served as President of the Company and its
predecessor, IBC, since 1979 and whose duties are more extensive than those of the other named executive officers. Mr.&nbsp;Nixon's discretionary bonus and EICP award were also affected by the
strong financial results of the Company during 2007, which included (i)&nbsp;net income of $121&nbsp;million, or $1.76 per share-basic, (ii)&nbsp;the Company's return on average total assets of
1.12% and (iii)&nbsp;the Company's return on average total shareholders' equity of 13.73%. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>13</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Longer-Term Equity-Based Incentives-Stock Options.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;A portion of executive compensation is also linked to
corporate performance through equity-based compensation awards in the form of stock options. Awards under the Company's shareholder-approved Stock Option Plan are designed to: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>align
executive officer and shareholder interests;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>reward
officers for building shareholder value; and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>encourage
long-term investment in the Company by executive officers. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although
our Company has no specific stock ownership guidelines, the Committee believes that stock ownership by management is beneficial to shareholders and stock options have been
granted by the Company to executive officers and key salaried employees pursuant to various shareholder-approved stock option plans for many years. The size of the option grants is determined by the
Stock Option Plan Committee based upon a subjective assessment of the respective employee's performance, compensation level and other subjective factors determined by the Stock Option Plan Committee. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
stock option grants to executive officers have been made pursuant to shareholder-approved stock option plans. The Stock Option Plan Committee administers all aspects of the 2005
International Bancshares Corporation Stock Option Plan (the "Stock Option Plan") and also has authority to determine the individuals to whom and the terms upon which options are granted, the number of
shares subject to each option and the form of consideration payable upon the exercise of an option.
The President makes recommendations of stock option grants (other than for himself), which the Stock Option Plan Committee then considers. The Stock Option Plan Committee takes final action on the
amount, timing, price and other terms of all options granted to executive officers and key salaried employees of the Company. The exercise price of each option granted under the Stock Option Plan
equaled the fair market value of the Common Stock as of the date of grant. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Stock Option Plan Committee did not grant awards of stock options to the executive officers in 2007. The Stock Option Plan Committee has no formal policy as to timing of awards of
stock options other than as set forth below with respect to the release of material non-public information. The Committee's decision not to grant stock options to any of the executive
officers in 2007 was consistent with the historic compensation practices for such executive officers, which compensation practices span a range of at least twenty years for each executive officer and
include a number of years when the executive officers were granted stock options. Historically, the Company has not granted stock options to the executive officers every year. Prior to 2008, stock
option awards had been granted to at least one of the executive officers in five of the ten years ended 2005, although the President has not received any stock option awards since 1997. All stock
option awards under the Stock Option Plan have been made at the market value of the Company's common stock on the date of grant. Stock options granted under the Stock Option Plan are generally granted
for a term of eight years and have a six year vesting schedule. The Stock Option Plan permits the exercise price to be paid by delivery of cash or by surrendering shares of the Company's common stock.
Vesting of stock options may be accelerated upon certain events, including a change in control of the Company. Approximately eighty percent of all stock options outstanding and held by executive
officers at December&nbsp;31, 2007 were vested. The Stock Option Plan is a tandem plan that provides for the granting of nonstatutory stock options and incentive stock options. The most recent stock
options granted to executive officers in 2005 were all incentive stock options. The Stock Option Plan Committee believes its decision not to grant stock options to the executive officers in 2007 is
consistent with the Company's compensation objectives. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Profit Sharing Plan.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Company has a 401(k) deferred profit sharing plan for full-time employees with a minimum
of one year of continuous employment with the Company in order to provide a tax-advantaged savings vehicle to employees. It is a tax-qualified, defined contribution plan. The
Company's annual contribution to the profit sharing plan is based on a percentage, as determined by the Board of Directors, of total compensation paid during the year to participants of the profit
sharing plan. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>14</FONT></P>

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<BR>

<P style="font-family:times;"><FONT SIZE=2>Allocation
of the contribution among officers and employees' accounts is based on length of service and amount of salary earned. Profit sharing costs of $4,628,401 were charged to income for the year
ended December&nbsp;31, 2007. This profit sharing plan and the Company's contribution to the plan enhance the range of benefits the Company offers to executives and employees and enhances the
Company's ability to attract and retain employees. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Perquisites and Other Personal Benefits.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Company provides the executive officers with perquisites and other personal
benefits that the Company and the Committee believe are reasonable and consistent with the Company's overall compensation program to better enable the Company to attract and retain superior employees
for key positions and provide a way for the employees of the Company to attract or
retain customers of the Company. The perquisites and other benefits represent a small part of the Company's overall executive compensation package. The Committee periodically reviews the levels of
perquisites and other personal benefits provided to executive officers. The primary perquisites are club memberships and the use of Company aircraft. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
efficiencies afforded by corporate aircraft are a key factor in the Company's business plan in view of the Company being headquartered in Laredo, Texas. The Company's Board has
engaged an outside security consultant to assess security risks to the executive management of the Company. In view of the location of the Company's headquarters in Laredo on the Texas/Mexico border,
the security consultant recommended that the Principal Executive Officer of the Company, Mr.&nbsp;Nixon, and his family use a Company plane for all business and personal travel. Although
Mr.&nbsp;Nixon and his family's personal use of the Company plane is required by the Company for security reasons, the Company still reports for Securities and Exchange Commission disclosure
purposes the personal use of the Company plane as a perquisite of Mr.&nbsp;Nixon. The Company reports use of corporate aircraft by executive officers as a perquisite or other personal benefit unless
it is integrally and directly related to the performance of the executive's duties. The personal use of the aircraft is reported at the Company's incremental cost. The Company estimates the
incremental cost to be equal to the Company's average incremental operating cost, which includes items such as fuel, maintenance, landing fees, trip-related permits,
trip-related hangar costs, trip-related catering, meals and supplies, crew expenses during layovers, and any other expenses incurred or accrued based on the number of hours
flown. This method fairly approximates the Company's incremental cost; however, it may overstate the Company's actual incremental cost in situations where the Company's aircraft would have flown on
such trip for business purposes anyway and space would have been available at little or no additional incremental cost to transport the executive or his or her guest(s) who were not traveling for
business purposes. </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Tax and Regulatory Considerations  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Committee has considered the limitations on deductibility of compensation of the executive officers under Section&nbsp;162(m) of the Code. The Committee's
current policy is to seek to ensure that substantially all such compensation is deductible under Section&nbsp;162(m) when paid. Nevertheless, there can be no assurance that all compensation will be
deductible under Section&nbsp;162(m). Section&nbsp;162(m) of the Code provides that publicly-held companies may not deduct compensation paid to certain executive officers in excess of
one million dollars annually, with certain exemptions for qualified, shareholder-approved "performance-based" compensation, such as compensation under the EICP that was approved by the shareholders of
the Company at the 2006 Annual Shareholders Meeting. In addition, the Committee reserves the right to use its judgment to authorize compensation payments that may not be deductible under
Section&nbsp;162(m) when the Committee believes such payments are appropriate and in the best interests of the Company and its shareholders. At this time, essentially all compensation the Company
paid to the executive officers is deductible under Section&nbsp;162(m) of the Code. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company and the Committee also take into consideration various other tax and regulatory matters when determining the amount and type of compensation awarded to executives. These
areas include Section&nbsp;409 of the Code relating to deferred compensation and the expensing of equity grants </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>15</FONT></P>

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<BR>

<P style="font-family:times;"><FONT SIZE=2>under
SFAS&nbsp;123R. In making compensation structure and award decisions, the Committee does take into account the impact of these regulatory areas. </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Other Guidelines Affecting Executive Compensation  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-Based Compensation-Timing of Grants.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Stock Option Plan Committee sets the exercise price of stock options at the
closing stock price on the date of grant. The Stock Option Plan Committee tries to make stock option grants at times when the exercise price will not be influenced by releases of material,
non-public Company information. The Company does not time or plan the release of material, non-public information for the purpose of affecting the value of executive
compensation. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjustments to Incentive Compensation as a Result of Financial Statement Restatements.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Company does not have a policy or
guideline regarding the adjustment or recovery of awards or payments to executive officers if the relevant Company's performance measures upon which they are based are restated or otherwise adjusted
in a manner that would reduce the size of an award or payment. </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Summary  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In summary, our Board believes the executive compensation program's mix of salary, annual cash bonus incentives, and longer-term equity-based
incentives in the form of stock options motivates the Company's management team to produce strong results for shareholders. Our Board believes this compensation program strikes an appropriate balance
between the interests and needs of the Company and appropriate employee rewards based on shareholder value creation. </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Compensation Committee Report&#151;Report of the Salary and Steering Committee  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Salary and Steering Committee reviewed and discussed the Compensation Discussion and Analysis included in this Proxy Statement with management. Based on such
review and discussion, the Salary and Steering Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement for filing with the
Securities and Exchange Commission. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Submitted
by the Salary and Steering Committee. </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>Peggy
J. Newman<BR>
Daniel B. Hastings, Jr.<BR>
Richard E. Haynes<BR>
Irving Greenblum </FONT></P>

</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>16</FONT></P>

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<P style='font-family:times;page-break-before:always'></p>
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 </FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="de12901_executive_compensation_tables"> </A>
<A NAME="toc_de12901_1"> </A>
<BR></FONT><FONT SIZE=2><B>Executive Compensation Tables    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following information is furnished for the fiscal year ended December&nbsp;31, 2007 with respect to the Principal Executive Officer, the Principal Financial
Officer and the one other executive officer of the Company receiving at least $100,000 in compensation. All cash compensation is paid by IBC, as the Company does not directly pay any cash compensation
to the executive officers of the Company. Each of the three named executive officers of the Company is also an executive officer of IBC. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>Summary Compensation  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information regarding compensation earned by the Principal Executive Officer, the Principal Financial Officer and the one other
executive officer of the Company who received compensation of at least $100,000 for each of the Company's last two completed fiscal years. </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=21 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="24%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Name and Principal<BR>
Position</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Year</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Salary<BR>
($)(1)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Bonus<BR>
($)(2)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Option Awards<BR>
($)(3)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Non-Equity Incentive Plan Compensation<BR>
($)(4)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>All Other Compensation<BR>
($)(5)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Total<BR>
($)</B></FONT><BR></TH>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="24%" style="font-family:times;"><FONT SIZE=2>Dennis E. Nixon<BR>
Chairman of the Board, President and Director of the Company; President, CEO and<BR>
Director of IBC</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>2006<BR>
2007</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR></FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>504,177<BR>
519,941</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR></FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>250,000<BR>
300,000</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR></FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR></FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,000,000<BR>
1,000,000</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR></FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>100,940<BR>
101,380</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR></FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,855,117<BR>
1,921,321</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="24%" style="font-family:times;"><FONT SIZE=2>R. David Guerra<BR>
Vice President and Director of the Company; President of IBC branch in McAllen, Texas and<BR>
Director of IBC</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>2006<BR>
2007</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>249,968<BR>
253,907</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>62,705<BR>
16,615</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3,900<BR>
573</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>22,417<BR>
21,008</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>338,990<BR>
292,103</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="24%" style="font-family:times;"><FONT SIZE=2>Imelda Navarro<BR>
Principal Financial Officer, Treasurer and Director of the Company, Senior Executive<BR>
Vice President and<BR>
Director of IBC</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>2006<BR>
2007</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>178,214<BR>
188,099</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>68,334<BR>
79,454</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5,107<BR>
401</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>19,836<BR>
18,340</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>271,491<BR>
286,294</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
amounts shown in this column only include the salary paid to the executive officer. All cash compensation paid to the named officers was paid by IBC.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
amounts shown in this column are discretionary cash bonuses paid by IBC.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
amounts shown in this column represent the amount of stock-based compensation expense related to stock options recognized for financial statement reporting purposes for the fiscal
year ended December&nbsp;31, 2007, in accordance with SFAS&nbsp;123R and thus include amounts from options granted prior to 2008. Assumptions used in the calculation of this amount are included in
footnote 16 to the Company's audited financial statements for the fiscal year ended December&nbsp;31, 2007, included in the Company's Annual Report on Form&nbsp;10-K filed with the
Securities and Exchange Commission.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
amount shown in this column includes the cash bonus paid to Mr.&nbsp;Nixon set forth in the "Grants of Plan-Based Awards Table" below.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
amounts shown in the "All Other Compensation" column include the perquisites and personal benefits set forth in the "All Other Compensation Table" below. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>17</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=19,EFW="2184297",CP="INTERNATIONAL BANCSHARES CORP.",DN="1",CHK=710131,FOLIO='17',FILE='DISK125:[08ZBC1.08ZBC12901]DE12901A.;23',USER='GLOPEZA',CD=';8-APR-2008;17:57' -->
<A NAME="page_de12901_1_18"> </A>

<P style="font-family:times;"><FONT SIZE=2><B>All Other Compensation  </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=18 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="29%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Name</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Year</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Club Memberships</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Company Contribution to Profit Sharing Plans<BR>
(1)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Director Fees<BR>
(2)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Airplane<BR>
(3)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Total</B></FONT><BR></TH>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="29%" style="font-family:times;"><FONT SIZE=2>Dennis E. Nixon</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>2006<BR>
2007</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR></FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4,780<BR>
5,779</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR></FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>17,243<BR>
16,906</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR></FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3,600<BR>
1,800</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR></FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>75,317<BR>
76,895</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR></FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>100,940<BR>
101,380</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="29%" style="font-family:times;"><FONT SIZE=2>R. David Guerra</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>2006<BR>
2007</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,857<BR>
3,466</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>15,960<BR>
15,742</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3,600<BR>
1,800</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>22,417<BR>
21,008</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="29%" style="font-family:times;"><FONT SIZE=2>Imelda Navarro</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>2006<BR>
2007</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3,578<BR>
3,831</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>12,658<BR>
12,709</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3,600<BR>
1,800</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>19,836<BR>
18,340</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=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, a deferred profit sharing plan for
employees with one year of continual employment.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Salaried
officers who are directors receive $900 for each board meeting of the Company or any subsidiary bank board on which they serve, but the salaried officers are not compensated
for committee meetings.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Although
Mr.&nbsp;Nixon's and his family's personal use of the Company plane is required by the Company for security reasons, the Company still reports for Securities and Exchange
Commission disclosure purposes the personal use of the Company plane as a perquisite to Mr.&nbsp;Nixon. The Company reports use of corporate aircraft by executive officers as a perquisite or other
personal benefit unless it is integrally and directly related to the performance of the executive's duties. The personal use of the aircraft is reported at the Company's incremental cost. The Company
estimates the incremental cost to be equal to the Company's average incremental operating cost, which includes items such as fuel, maintenance, landing fees, trip-related permits,
trip-related hangar costs, trip-related catering, meals and supplies, crew expenses during layovers, and any other expenses incurred or accrued based on the number of hours
flown. The Company believes this method fairly approximates the Company's incremental cost; however, it may overstate the Company's actual incremental cost in situations where the Company's aircraft
would have flown on such trip for business purposes anyway and space would have been available at little or no additional incremental cost to transport the executive or his or her guest(s) who were
not traveling for business purposes. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>18</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=20,EFW="2184297",CP="INTERNATIONAL BANCSHARES CORP.",DN="1",CHK=259000,FOLIO='18',FILE='DISK125:[08ZBC1.08ZBC12901]DE12901A.;23',USER='GLOPEZA',CD=';8-APR-2008;17:57' -->
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->

<P style="font-family:times;"><FONT SIZE=2><A
NAME="page_dg12901_1_19"> </A>


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<!-- COMMAND=ADD_DEFAULTFONT,"font-family:times;" -->


 </FONT></P>

<!-- TOC_END -->

<P style="font-family:times;"><FONT SIZE=2><B>Grants of Plan-Based Awards  </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="77%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)(2)<BR> </B></FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Name<BR> </B></FONT><BR></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B><BR>
Threshold (#)<BR> </B></FONT><BR></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B><BR>
Target (#)<BR> </B></FONT><BR></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B><BR>
Maximum (#)<BR> </B></FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(a)<BR> </B></FONT><BR></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(c)<BR> </B></FONT><BR></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(d)<BR> </B></FONT><BR></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(e)<BR> </B></FONT><BR></TH>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2 style="font-family:times;"><FONT SIZE=2>Dennis E. Nixon</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="36%" style="font-family:times;"><FONT SIZE=2>Annual Incentive Reward</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,000,000</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4,348,250</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Other
than outstanding stock options there were no equity awards granted or outstanding in 2007.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Annual
Incentive Rewards are made pursuant to the 2006 Executive Incentive Compensation Plan (the "EICP"). The award provides for only a single estimated payout, which amount is
determined in the discretion of the EICP Administrator, based upon whether the Company has met either of two targets related to the Company's return on average total assets and return on average total
shareholders' equity for the previous fiscal year. The amount shown in column (c)&nbsp;reflects that 0% is the minimum payout level of the annual incentive reward. Because there is no "target
payout" and the amount of the payout is completely discretionary and not determinable, the Company has shown in column (d)&nbsp;the amount actually paid in 2007, as determined based upon the
Company's performance in 2006. 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 EICP. Column (e)&nbsp;reflects
2.5% of the Company's total income before income taxes for the year 2006. </FONT></DD></DL>

<P style="font-family:times;"><FONT SIZE=2><B>Outstanding Equity Awards at Year End  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth 2007&nbsp;year end information regarding outstanding equity awards held by the individuals named in the Summary Compensation
Table above. During 2007, the Company did not grant any options to the named executive officers of the Company. </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="83%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=9 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="19%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=7 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Option Awards<BR>
<BR> </B></FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="19%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Name<BR> </B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="23%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Number of Securities Underlying<BR>
Unexercised Options (#)<BR>
Exercisable</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="23%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Number of Securities Underlying<BR>
Unexercised Options (#)<BR>
Unexercisable</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Option<BR>
Exercise<BR>
Price ($)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="16%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Option<BR>
Expiration<BR>
date</B></FONT><BR></TH>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="19%" style="font-family:times;"><FONT SIZE=2>R. David Guerra</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9,687<BR>
288</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0<BR>
1,637</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>12.66<BR>
26.82</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9/13/2009(1)<BR>
10/14/2013(2)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="19%" style="font-family:times;"><FONT SIZE=2>Imelda Navarro</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>6,713<BR>
412</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0<BR>
2,338</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>12.66<BR>
26.82</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9/13/2009(1)<BR>
10/14/2013(2)</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>These
options were granted on September&nbsp;13, 2001 and have a five year vesting schedule, vesting 20% each year. All of the options will expire eight years from the date of
grant.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>These
options were granted on October&nbsp;14, 2005 and have a six year vesting schedule, vesting 5%, 10%, 15%, 20%, 25% and 25%. All of the options will expire eight years from the
date of grant. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>19</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=21,EFW="2184297",CP="INTERNATIONAL BANCSHARES CORP.",DN="1",CHK=445670,FOLIO='19',FILE='DISK125:[08ZBC1.08ZBC12901]DG12901A.;44',USER='GLOPEZA',CD=';8-APR-2008;17:57' -->
<A NAME="page_dg12901_1_20"> </A>

<P style="font-family:times;"><FONT SIZE=2><B>Option Exercises and Stock Vested  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table reflects certain information regarding individual exercise of stock options with respect to the Common Stock during 2007 by each of the named
executive officers. </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="84%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=6 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="54%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=4 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Option Awards<BR>
<BR> </B></FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="54%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Name<BR> </B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="18%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Number of Shares<BR>
Acquired on Exercise (#)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Value<BR>
Realized on Exercise<BR>
($)(1)</B></FONT><BR></TH>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="54%" style="font-family:times;"><FONT SIZE=2>Dennis E. Nixon</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>106,357</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="21%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,445,270</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="54%" style="font-family:times;"><FONT SIZE=2>R. David Guerra</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="21%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="54%" style="font-family:times;"><FONT SIZE=2>Imelda Navarro</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>6,675</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="21%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>138,556</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
"value realized" represents the difference between the exercise price of the option shares and market price of the option shares on the date the option was exercised. </FONT></DD></DL>
<BR>

<P style="font-family:times;"><FONT SIZE=2><B>Equity Compensation Plan Information  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information as of December&nbsp;31, 2007, with respect to the Company's compensation plans under which equity securities are
authorized for issuance: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="83%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Plan Category<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="15%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Number of securities<BR>
to be issued upon<BR>
exercise of outstanding<BR>
options, warrants<BR>
and rights</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Weighted average<BR>
exercise price of<BR>
outstanding<BR>
options, warrants<BR>
and rights</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="19%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Number of securities<BR>
remaining available for<BR>
future issuance under<BR>
equity compensation plans<BR>
(excluding<BR>
securities reflected in<BR>
column A)</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="15%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>A</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>B</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="19%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>C</B></FONT><BR></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><FONT SIZE=2>Equity Compensation plans approved by security holders</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>924,483</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>21.00</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>41,772</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><FONT SIZE=2>Equity Compensation plans not approved by security holders</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2 style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="37%" style="font-family:times;"><FONT SIZE=2>Total</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>924,483</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>21.00</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>41,772</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2 style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>20</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=22,EFW="2184297",CP="INTERNATIONAL BANCSHARES CORP.",DN="1",CHK=874708,FOLIO='20',FILE='DISK125:[08ZBC1.08ZBC12901]DG12901A.;44',USER='GLOPEZA',CD=';8-APR-2008;17:57' -->
<A NAME="page_dg12901_1_21"> </A>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dg12901_security_ownership_of_management"> </A>
<A NAME="toc_dg12901_1"> </A>
<BR></FONT><FONT SIZE=2><B>SECURITY OWNERSHIP OF MANAGEMENT    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&nbsp;1, 2008, the number and percentage of outstanding shares of Common Stock of the Company indicated in the following
table: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="79%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="66%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Name of Beneficial Owner<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="19%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Amount and Nature of<BR>
Beneficial Ownership<BR>
of Common Stock</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Percent<BR>
of Class</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="66%" style="font-family:times;"><FONT SIZE=2>Irving Greenblum(1)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>634,484</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="66%" style="font-family:times;"><FONT SIZE=2>R. David Guerra(2)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>340,206</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>+</FONT></TD>
<TD WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="66%" style="font-family:times;"><FONT SIZE=2>Daniel B. Hastings, Jr.&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>159,018</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="66%" style="font-family:times;"><FONT SIZE=2>Richard E. Haynes</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>45,760</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="66%" style="font-family:times;"><FONT SIZE=2>Imelda Navarro(3)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>293,504</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>+</FONT></TD>
<TD WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="66%" style="font-family:times;"><FONT SIZE=2>Sioma Neiman(4)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>618,736</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;.90%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="66%" style="font-family:times;"><FONT SIZE=2>Peggy J. Newman</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>17,016</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="66%" style="font-family:times;"><FONT SIZE=2>Dennis E. Nixon(5)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,304,272</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;3.36%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="66%" style="font-family:times;"><FONT SIZE=2>Leonardo Salinas(6)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>141,936</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="66%" style="font-family:times;"><FONT SIZE=2>A. R. Sanchez Jr.(7)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>12,991,496</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>18.95%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="66%" style="font-family:times;"><FONT SIZE=2>All Directors and Executive Officers<BR>
as a group(10)&nbsp;persons)(8)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>17,546,428</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>25.58%</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">

<P style="font-family:times;"><FONT SIZE=2>*
Ownership of less than one percent<BR></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>+
Includes shares which are issuable upon the exercise of options exercisable on or prior to June&nbsp;1, 2007 ("currently exercisable options"). </FONT></P>

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
holdings shown for Mr.&nbsp;Greenblum include 88,331 shares held in a family limited partnership, which he has the power to dispose of and to vote. The holdings for
Mr.&nbsp;Greenblum include 77,457 shares held in his wife's name.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
holdings shown for Mr.&nbsp;Guerra include 9,975 shares issuable upon the exercise of currently exercisable options. The holdings shown for Mr.&nbsp;Guerra include 308,231
shares held jointly with his wife and 22,000 shares held in a family limited partnership, which he has the power to dispose of and to vote.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
holdings shown for Ms.&nbsp;Navarro include 7,125 shares issuable upon the exercise of currently exercisable options.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
holdings shown for Mr.&nbsp;Neiman are in the name of Inar Investments, Corp., of which he is the Managing Director.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
holdings shown for Mr.&nbsp;Nixon include 17,381 shares held in his wife's name.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(6)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
holdings shown for Mr.&nbsp;Salinas include 51,562 shares held in a family limited partnership, which he has the power to dispose of and to vote.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(7)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Sanchez
owns directly and has the sole power to vote and to dispose of 2,949,556 shares. The shares shown for Mr.&nbsp;Sanchez include 2,848,835 shares owned by the
Alicia M. Sanchez Charitable Lead Annuity Trust. Mr.&nbsp;Sanchez serves as a trustee of this trust and has the sole power to vote and dispose of such shares. The shares shown for Mr.&nbsp;Sanchez
also include 4,062,115 additional shares held by trusts in which various family members, including his children, have a vested interest in the income and corpus and for which Mr.&nbsp;Sanchez serves
as trustee or co-trustee. Of such amount, Mr.&nbsp;Sanchez has shared power to vote and to dispose of 950,398 shares and has sole power to vote and to dispose of 3,111,717 shares. The
shares shown for Mr.&nbsp;Sanchez also include (i)&nbsp;475,723 shares held </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>21</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=3,SEQ=23,EFW="2184297",CP="INTERNATIONAL BANCSHARES CORP.",DN="1",CHK=203410,FOLIO='21',FILE='DISK125:[08ZBC1.08ZBC12901]DG12901A.;44',USER='GLOPEZA',CD=';8-APR-2008;17:57' -->
<A NAME="page_dg12901_1_22"> </A>
<UL>

<P style="font-family:times;"><FONT SIZE=2>indirectly
by a limited partnership, the general partner of which is a limited liability company for which Mr.&nbsp;Sanchez serves as a manager; (ii)&nbsp;2,216,486 shares held by a limited
partnership, the managing general partner of which is a corporation of which Mr.&nbsp;Sanchez is the president and sole shareholder; and (iii)&nbsp;438,781 shares held by the A. R. "Tony" and
Maria J. Sanchez Family Foundation, of which Mr.&nbsp;Sanchez is a director. </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(8)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
holdings shown for all directors and executive officers as a group include 17,100 shares issuable upon the exercise of currently exercisable options. </FONT></DD></DL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dg12901_principal_shareholders"> </A>
<A NAME="toc_dg12901_2"> </A>
<BR></FONT><FONT SIZE=2><B>PRINCIPAL SHAREHOLDERS    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insofar as is known to the Company, no person beneficially owned, as of April&nbsp;1, 2008, more than five percent of the outstanding Common Stock of the
Company, except as follows: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="78%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="59%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Name and Address of Beneficial Owner<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="24%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Amount and Nature of<BR>
Beneficial Ownership<BR>
of Common Stock</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Percent<BR>
of Class</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="59%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>A. R. Sanchez Jr.(1)<BR>
P.O.&nbsp;Box&nbsp;2986<BR>
Laredo, Texas 78040</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>12,991,496</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>18.95</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="59%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Wellington Management Company,&nbsp;LLP(2)<BR>
75 State Street<BR>
Boston, Massachusetts 02109</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
3,498,053</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
5.10</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Sanchez
owns directly and has the sole power to vote and to dispose of 2,949,556 shares. The shares shown for Mr.&nbsp;Sanchez include 2,848,835 shares owned by the
Alicia M. Sanchez Charitable Lead Annuity Trust. Mr.&nbsp;Sanchez serves as a trustee of this trust and has the sole power to vote and dispose of such shares. The shares shown for Mr.&nbsp;Sanchez
also include 4,062,115 additional shares held by trusts in which various family members, including his children, have a vested interest in the income and corpus and for which Mr.&nbsp;Sanchez serves
as trustee or co-trustee. Of such amount, Mr.&nbsp;Sanchez has shared power to vote and to dispose of 950,398 shares and has sole power to vote and to dispose of 3,111,717 shares. The
shares shown for Mr.&nbsp;Sanchez also include (i)&nbsp;475,723 shares held indirectly by a limited partnership, the general partner of which is a limited liability company for which
Mr.&nbsp;Sanchez serves as a manager; (ii)&nbsp;2,216,486 shares held by a limited partnership, the managing general partner of which is a corporation of which Mr.&nbsp;Sanchez is the president
and sole shareholder; and (iii)&nbsp;438,781 shares held by the A. R. "Tony" and Maria J. Sanchez Family Foundation, of which Mr.&nbsp;Sanchez is a director.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Wellington
Management Company,&nbsp;LLP ("Wellington"), in its capacity as investment adviser, may be deemed to beneficially owned 3,498,053 shares which are held of record by
clients of Wellington. Wellington has shared voting power over 2,360,717 shares and shared dispositive power over 3,459,833 shares. Information relating to this shareholder is based on the
shareholder's Schedule&nbsp;13G, filed with the Securities and Exchange Commission on February&nbsp;14, 2008. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>22</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=4,SEQ=24,EFW="2184297",CP="INTERNATIONAL BANCSHARES CORP.",DN="1",CHK=799356,FOLIO='22',FILE='DISK125:[08ZBC1.08ZBC12901]DG12901A.;44',USER='GLOPEZA',CD=';8-APR-2008;17:57' -->
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="page_di12901_1_23"> </A>


<!-- COMMAND=ADD_BASECOLOR,"Black" -->




<!-- COMMAND=ADD_DEFAULTFONT,"font-family:times;" -->


 </FONT></P>

<!-- TOC_END -->
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="di12901_interest_of_management_in_certain_transactions"> </A>
<A NAME="toc_di12901_1"> </A>
<BR></FONT><FONT SIZE=2><B>INTEREST OF MANAGEMENT IN<BR>  CERTAIN TRANSACTIONS    <BR>    </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Some of the directors, executive officers and nominees for directors of the Company 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 2007, 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 at the time for comparable transactions with persons not related to the Company, which
indebtedness is fully performing and complies with Federal lending restrictions included in section&nbsp;22(h) of the Federal Reserve Act (12 U.S.C. 375b). The indebtedness, in the opinion of
management of the Company, did not involve more than a normal risk of collectibility or present other unfavorable features. All credit transactions or other transactions with the subsidiary banks of
the Company involving executive officers or directors of the Company are reviewed and approved by at least a majority of the disinterested directors of the respective subsidiary bank. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IBC
and Sanchez Oil&nbsp;&amp; Gas Corporation, a related interest of Antonio R. Sanchez, Jr., who is a director and principal shareholder of the Company, previously jointly owned, in
varying percentages, certain aircraft used for business purposes by IBC, the other bank subsidiaries and Sanchez Oil and Gas Corporation. IBC and Sanchez Oil&nbsp;&amp; Gas Corporation, or its
affiliates, no longer jointly own any aircraft. In June 2007, IBC and Sanchez Management Corp. ("SMC") entered into transactions whereby IBC acquired SMC's interest in one aircraft for $6,475,000 and
IBC sold its interest in another aircraft to AMS Aircraft, Incorporated ("AMS"), a related interest of Mr.&nbsp;Sanchez, for $850,000. The values paid were consistent with the book value of the
aircraft. Mr.&nbsp;Sanchez is the controlling shareholder of SMC and AMS and, accordingly, the approximate net value of Mr.&nbsp;Sanchez's interest in the two aircraft transactions was
approximately $5,625,000. These aircraft transactions were approved in accordance with the Company's policies and procedures for related party transactions. </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Policies and Procedures for Related Person Transactions  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company monitors its business dealings and those of its Directors and executive officers to determine whether any existing or proposed transactions would
constitute a related-party transaction requiring approval under the Company's related person transactions policy. The Company's related person transactions policy is embodied in the International
Bancshares Corporation and Subsidiary Banks and Affiliated Companies Code of Ethics. All business transactions between the Company and any Company director, principal shareholder, officer or employee
or his or her immediate family (or entity in which he or she has a substantial interest) must be fully disclosed to the Company. In the event the value of the transaction exceeds $50,000, written
disclosure to and approval from the Chief Executive Officer of the Company shall be required and such transactions shall be for full and fair value. No officer or employee of the Company shall be a
regular supplier or purchaser of goods or services to or from the Company. The Company's Code of Ethics also requires Directors and executive officers to notify the Company of any relationships or
transactions that may present a conflict of interest. Our Directors and executive officers are also required to complete a questionnaire on an annual basis designed to elicit information regarding any
such related-party transactions. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;When
the Company becomes aware of a proposed or existing transaction with a related party, the Company's chief executive officer, in consultation with management determines whether the
transaction would constitute a related-party transaction requiring approval under this policy. If such a determination is made, the chief executive officer and management determine whether, in their
view, the transaction should be permitted, whether it should be modified to avoid any potential conflict of interest, whether it should be terminated, or whether some other action should be taken. Any
violation of the Company's Code of Ethics will result in disciplinary action up to and including termination from the Board and/or employment. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>23</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=25,EFW="2184297",CP="INTERNATIONAL BANCSHARES CORP.",DN="1",CHK=555146,FOLIO='23',FILE='DISK125:[08ZBC1.08ZBC12901]DI12901A.;10',USER='LCOUTU',CD=';9-APR-2008;21:28' -->
<A NAME="page_di12901_1_24"> </A>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="di12901_section_16(a)_benefici__di102025"> </A>
<A NAME="toc_di12901_2"> </A>
<BR></FONT><FONT SIZE=2><B>SECTION&nbsp;16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 2007. 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 ten percent
shareholders and copies of the reports that they have filed with the Commission. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="di12901_stock_repurchases"> </A>
<A NAME="toc_di12901_3"> </A>
<BR></FONT><FONT SIZE=2><B>STOCK REPURCHASES    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Share repurchases are only conducted under a publicly announced repurchase program approved by the Board of Directors or in connection with the cashless exercise
of stock options of the Company. The following table includes information about share repurchases for the quarter ended December&nbsp;31, 2007. </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="41%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Total<BR>
Number of<BR>
Shares<BR>
Purchased</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Average<BR>
Price Paid<BR>
Per Share</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="12%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Shares<BR>
Purchased as<BR>
Part of a<BR>
Publicly-<BR>
Announced<BR>
Program</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Approximate<BR>
Dollar Value<BR>
of Shares<BR>
Available for<BR>
Repurchase (1)</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>October&nbsp;1&#151;October&nbsp;31, 2007</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>22.10</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>14,304,000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>November&nbsp;1&#151;November&nbsp;30, 2007</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>58,694</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>20.79</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>58,694</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>13,084,000</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>December&nbsp;1&#151;December&nbsp;31, 2007</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4,564</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>21.14</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3,269</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>12,987,000</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>63,261</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>20.82</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>61,966</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
formal stock repurchase program was initiated in 1999 and has been expanded periodically with the most recent expansion occurring in May 2007. The current program allows for the
repurchase of up to $225,000,000 of stock through December 2008 of which $12,987,000 remains. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>24</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=26,EFW="2184297",CP="INTERNATIONAL BANCSHARES CORP.",DN="1",CHK=114611,FOLIO='24',FILE='DISK125:[08ZBC1.08ZBC12901]DI12901A.;10',USER='LCOUTU',CD=';9-APR-2008;21:28' -->
<A NAME="page_di12901_1_25"> </A>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="di12901_proposal_#151;2"> </A>
<A NAME="toc_di12901_4"> </A>
<BR></FONT><FONT SIZE=2><B>PROPOSAL&#151;2    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="di12901_ratification_of_appointment_of_independent_auditor"> </A>
<A NAME="toc_di12901_5"> </A>
<BR></FONT><FONT SIZE=2><B>RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors of the Company has appointed the firm of McGladrey&nbsp;&amp; Pullen,&nbsp;LLP to audit the accounts of the Company and its subsidiaries
for the 2008 fiscal year. The firm audited the books of the Company and its subsidiaries for the 2007 fiscal year. The firm was retained on August&nbsp;24, 2007. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Audit
services rendered by McGladrey&nbsp;&amp; Pullen,&nbsp;LLP for the fiscal year ended December&nbsp;31, 2007 included the annual audit of the Company's consolidated financial
statements, which are included in 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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Representatives
of McGladrey&nbsp;&amp; Pullen,&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ratification
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 ratify the appointment. If shareholder ratification is not obtained, 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 ratify the appointment of McGladrey&nbsp;&amp; Pullen,&nbsp;LLP as the independent auditors. The affirmative vote of
a majority of the shares present and entitled to vote thereon will constitute approval. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="di12901_change_in_accountants"> </A>
<A NAME="toc_di12901_6"> </A>
<BR></FONT><FONT SIZE=2><B>CHANGE IN ACCOUNTANTS    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As noted in the form&nbsp;8-K filed on August&nbsp;30, 2007, with the Securities and Exchange Commission the Board of Directors of International
Bancshares Corporation issued a press release stating that on August&nbsp;24, 2007, the Audit Committee, with the approval of the Board of Directors, dismissed KPMG&nbsp;LLP ("KPMG") as the
principal accountants for the Company and engaged the accounting firm of McGladrey&nbsp;&amp; Pullen,&nbsp;LLP as the Company's independent registered accounting firm. The reports of KPMG on the
Company's financial statements as of and for the years ended December&nbsp;31, 2006 and 2005 did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principles, except as follows: </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>KPMG's
report on the consolidated financial statements of the Company as of and for the year ended December&nbsp;31, 2006, contained a separate paragraph stating that "As discussed in Note&nbsp;1
to the Consolidated Financial Statements, effective January&nbsp;1, 2006, the Company adopted Statement of Financial Accounting Standards No.&nbsp;123R, </FONT><FONT SIZE=2><I>Share-based
Payment,</I></FONT><FONT SIZE=2> to account for stock-based compensation." </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>KPMG's
report on the consolidated financial statements of the Company as of and for the year ended December&nbsp;31, 2005, contained a separate paragraph stating that "As discussed in Note&nbsp;1
to the consolidated financial statements, effective December&nbsp;31, 2003, the Company changed the method of accounting for its investment in its statutory business trusts." </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
audit reports of KPMG on management's assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting
as of December&nbsp;31, 2006 and 2005 did not contain any adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the fiscal years ended December&nbsp;31, 2006 and 2005, and the subsequent interim period through August&nbsp;24, 2007, there were no: (1)&nbsp;disagreements with KPMG on
any matter of accounting principles, financial statement disclosure, or auditing scope or procedure, which disagreements, if not </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>25</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=3,SEQ=27,EFW="2184297",CP="INTERNATIONAL BANCSHARES CORP.",DN="1",CHK=286753,FOLIO='25',FILE='DISK125:[08ZBC1.08ZBC12901]DI12901A.;10',USER='LCOUTU',CD=';9-APR-2008;21:28' -->
<A NAME="page_di12901_1_26"> </A>
<BR>

<P style="font-family:times;"><FONT SIZE=2>resolved
to the satisfaction of KPMG, would have caused KPMG to make reference in connection with their opinion to the subject matter of the disagreement, or (2)&nbsp;reportable events (as defined
in paragraphs&nbsp;(A) through (D)&nbsp;of Regulation&nbsp;S-K Item&nbsp;304(a)(1)(v). </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
our fiscal years ended December&nbsp;31, 2006 and December&nbsp;31, 2005, and during the subsequent interim period preceding August&nbsp;24, 2007, neither we nor anyone
acting on our behalf consulted McGladrey&nbsp;&amp; Pullen,&nbsp;LLP regarding either: (i)&nbsp;the application of accounting principles to a specific transaction, either completed or proposed, or
the type of audit opinion that might be rendered on our financial statements; or (ii)&nbsp;any matter that was the subject of a disagreement with KPMG&nbsp;LLP or that was a "reportable event" (as
such term is defined in Item&nbsp;304(a)(1)(v) of Regulation&nbsp;S-K promulgated by the Securities and Exchange Commission. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="di12901_principal_accountant_fees_and_services"> </A>
<A NAME="toc_di12901_7"> </A>
<BR></FONT><FONT SIZE=2><B>PRINCIPAL ACCOUNTANT FEES AND SERVICES    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the aggregate fees billed to the Company for (i)&nbsp;the year ended December&nbsp;31, 2007 by the Company's principal
accountant firm, McGladrey&nbsp;&amp; Pullen,&nbsp;LLP and KPMG&nbsp;LLP and (ii)&nbsp;the year ended December&nbsp;31, 2006 by the Company's then-principal accountant firm,
KPMG&nbsp;LLP. </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="78%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>December&nbsp;31,</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>2007</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>2006</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2>Audit Fees (1)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,388,370</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,235,572</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2>Audit-Related Fees (2)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><FONT SIZE=2>Audit and Audit Related Fees</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,388,370</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,235,572</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2>Tax Fees (3)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>304,325</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>157,093</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2>All Other Fees</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="60%" style="font-family:times;"><FONT SIZE=2>Total Fees</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,692,695</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,392,665</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Audit
fees consist of fees billed for professional services rendered in connection with the audit of the annual consolidated financial statements of the Company, quarterly financial
statements included in Forms&nbsp;10Q, and services that are normally provided in connection with statutory or regulatory filings or engagements.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Audit-related
fees consisted principally of fees for due diligence services.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Tax
Fees consisted of fees for tax consultation and tax compliance services. </FONT></DD></DL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None
of the audit-related fees or tax fees billed in 2007 or 2006 were provided under the de minimis exception to the Audit Committee pre-approval requirements. </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><B> Policy on Audit Committee Pre-Approval of Audit Services  </B></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee has considered whether the provision of services covered in billings included under the "All Other Fees" category listed above is compatible
with maintaining the principal auditors' independence. The Audit Committee has concluded that the provisions of such services would not jeopardize the independence of McGladrey&nbsp;&amp;
Pullen,&nbsp;LLP as the Company's principal auditors. The Audit Committee's Charter requires that the Audit Committee pre-approve all audit and non-audit services to be
provided to the Company by the independent accountants; provided, however, that the Audit Committee may specifically authorize its Chairman to pre-approve the provision of any
non-audit service to the Company. Pre-approval is sought for each particular service and is subject to specific engagement authorization from the Audit Committee. These
services may include audit services, audit-related services, tax services and other services. The procedures for pre-approving all audit and non-audit services to be provided
to the Company by the independent accountants include the Audit Committee's review of a </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>26</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=4,SEQ=28,EFW="2184297",CP="INTERNATIONAL BANCSHARES CORP.",DN="1",CHK=196818,FOLIO='26',FILE='DISK125:[08ZBC1.08ZBC12901]DI12901A.;10',USER='LCOUTU',CD=';9-APR-2008;21:28' -->
<A NAME="page_di12901_1_27"> </A>

<P style="font-family:times;"><FONT SIZE=2>categorized
budget for all audit services, audit-related services, tax services and other services. Audit Committee approval would be required to exceed the budgeted amount for a particular category
or to engage the independent accountants for any services not set forth in the budget. The Audit Committee periodically monitors the services rendered by and actual fees paid to the outside
accountants to ensure that the services and amounts are within the parameters approved by the Audit Committee or the Chairman of the Audit Committee. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="di12901_audit_committee_report"> </A>
<A NAME="toc_di12901_8"> </A>
<BR></FONT><FONT SIZE=2><B>AUDIT COMMITTEE REPORT    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's Audit Committee is responsible for providing objective and independent oversight of the Company's accounting functions and internal controls. Such
oversight responsibility includes, but is not limited to, making recommendations concerning the engagement of independent auditors, reviewing the consolidated financial statements and the scope of the
independent annual audit, reviewing and reassessing the adequacy of the Audit Committee's charter, reviewing with the independent auditors the results of their audit, considering the range of audit
and non-audit fees, monitoring internal financial and accounting controls and performing such other oversight functions as may be requested from time to time by the Board of Directors. The
Audit Committee reviewed internal controls independently of management and corporate staff and reviewed the audited consolidated financial statements of the Company as of and for the fiscal year ended
December&nbsp;31, 2007, with management and the independent auditors. Management has the responsibility for the preparation, presentation and integrity of the Company's consolidated financial
statements and the independent auditors have the responsibility for auditing the Company's consolidated financial statements and expressing an opinion as to their conformity with generally accepted
U.S. accounting principles. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>REPORT:  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee has: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>reviewed
and discussed the audited consolidated financial statements with management;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>discussed
with the independent auditors the matters required to be discussed by SAS 61; and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>received
the required information and communications from the independent auditors required by Independence Standards Board Standard No.&nbsp;1 and discussed with the
auditors the auditors' independence. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based
on the review and discussions with management and the Company's independent auditors referenced above, the Audit Committee has recommended to the Board of Directors that the
audited consolidated financial statements be included in the Company's Annual Report on Form&nbsp;10-K for the year ended December&nbsp;31, 2007 filed with the Securities and Exchange
Commission. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors has determined that the members of the Audit Committee are "independent" as defined in Rule&nbsp;4200(a)(15) of the NASD listing standards and
Rule&nbsp;10A-3(b)(1) under the Exchange Act. The Audit Committee has adopted a written charter. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
report is submitted on behalf of the Audit Committee. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Irving
Greenblum&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Richard E. Haynes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Daniel B. Hastings, Jr.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Leonardo Salinas </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
report by the Audit Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the
Securities Act of
1933 or the Exchange Act except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such acts. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>27</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=5,SEQ=29,EFW="2184297",CP="INTERNATIONAL BANCSHARES CORP.",DN="1",CHK=678344,FOLIO='27',FILE='DISK125:[08ZBC1.08ZBC12901]DI12901A.;10',USER='LCOUTU',CD=';9-APR-2008;21:28' -->
<A NAME="page_di12901_1_28"> </A>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="di12901_proposal_#151;3"> </A>
<A NAME="toc_di12901_9"> </A>
<BR></FONT><FONT SIZE=2><B>PROPOSAL&#151;3    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="di12901_amendment_of_the_2005_internat__ame02891"> </A>
<A NAME="toc_di12901_10"> </A>
<BR></FONT><FONT SIZE=2><B>AMENDMENT OF THE 2005 INTERNATIONAL BANCSHARES CORPORATION<BR>  STOCK OPTION PLAN    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING RESOLUTION:  </B></FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>"RESOLVED:
That the 2005 International Bancshares Corporation's Stock Option Plan be amended to add 300,000 additional shares." </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
February&nbsp;20, 2008, the Board of Directors approved for submission to the shareholders an amendment (the "Amendment") to the 2005 International Bancshares Corporation Stock
Option Plan (the "Plan"). A copy of the form of the Amendment is attached hereto as Appendix&nbsp;A. The Amendment provides for the addition of 300,000 new shares of Common Stock of the Company to
the 522,500 shares of Common Stock already available under the Plan, for a total of 822,500 shares of the Company's Common stock to be available under the Plan. Originally, the Plan document provided
for 380,000 shares. On May&nbsp;2, 2005 the Board of Directors issued a stock dividend of 25%, increasing the number of shares under the Plan to 475,000. On May&nbsp;21, 2007 the Board of
Directors issued a stock dividend of 10%, increasing the number of shares under the Plan to 522,500. Currently, there remains approximately 41,772 shares of Common Stock available for issuance under
the Plan. Therefore, the
Company seeks to increase the number of authorized shares by 300,000 so that it may continue to reward outstanding employee performance in accordance with the Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company's shareholders approved the Plan. The primary purpose of the Plan is to advance the interests of the Company and its shareholders by affording officers, employees,
consultants and advisors of the Company and its Subsidiaries (the "Eligible Persons") an opportunity to increase their proprietary equity interest in the Company's future growth and success through
the added incentive created by stock ownership under the Plan. The Company, through the Plan, seeks to motivate and retain officers, employees, consultants and advisors and to attract highly competent
individuals whose judgment, initiative and continued effort will contribute to the success of the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Plan provides that it will be administered by the Stock Option Plan Committee. The Stock Option Plan Committee has full and final authority to determine the terms and conditions
under which options ("Options") to purchase shares of Common Stock may be awarded and to select those Eligible Persons who will be granted Options. The Committee grants all Options under the Plan. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Stock Option Plan Committee will consist of at least two members of the Board of Directors each of whom is both a "Non-Employee Director" (as that term is defined in the
rules and regulations under Section&nbsp;16 of the Exchange Act) and an "Outside Director" (as that term is defined in the regulations promulgated under Section&nbsp;162(m) of the Internal Revenue
Code (the "Code")), as may be modified or amended). Within the limits of the Plan, the Stock Option Plan Committee determines the timing, form, terms and conditions of grants under the Plan.
Participation in the Plan is determined by the Stock Option Plan Committee and may include any Eligible Persons selected by the Stock Option Plan Committee. There are approximately 2,965
full-time employees of the Company and its Subsidiaries and currently 351 of said employees participate in the 2005 Plan. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Options
granted under the Plan may be Incentive Stock Options ("ISO"), as defined in Section&nbsp;422 of the Code, or options not qualifying for treatment as ISOs ("Nonstatutory Stock
Options"). Subject to applicable provisions of the Code, the Committee determines the recipients of Options and the terms of the Options, including the type of Option, the number of shares for which
an Option is granted, the term of the Option and the time(s) when the Option can be exercised. Restrictions on the exercise of an Option may, at the discretion of the Committee, be contained in the
agreement with the participant or in the Committee's procedures. Each ISO must comply with all the requirements of Section&nbsp;422 of the Code. The </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>28</FONT></P>

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<BR>

<P style="font-family:times;"><FONT SIZE=2>Committee
may in its discretion waive any condition or restriction on the exercise of an Option and may accelerate the time at which any Option is exercisable. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
price per share of Common Stock subject to an Option (the "Option Price") is set by the Stock Option Plan Committee at the time of grant. In the case of ISOs and Nonstatutory Stock
Option, the Option Price may not be less than the Fair Market Value on the date of grant of Common Stock (as
determined in accordance with the Plan); provided, however, the Option Price of an ISO granted to an Eligible Person that owns 10% or more of the Common Stock may not be less than 110% of the fair
market value of the Common Stock on the date of grant of the ISO. The Stock Option Plan Committee also determines the manner in which the Option Price of an Option may be paid, which may include the
tender of cash or Company securities, the withholding of Common Stock, or any other arrangement satisfactory to the Stock Option Plan Committee. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Options
granted under the Plan may be exercisable for a period of up to 10&nbsp;years from the date of grant, excluding ISOs granted to 10% shareholders which may be exercisable for a
period of up to only 5&nbsp;years. Within these limitation periods, the Stock Option Plan Committee will determine the expiration dates of Options. Options may be exercised at any time or from time
to time, within their terms, in whole or in part, or otherwise as shall be determined by the Stock Option Plan Committee. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the event the number of outstanding shares of Common Stock of the Company are changed by a reorganization, merger, consolidation, recapitalization, reclassification, stock
split-up, combination of shares, or dividends payable in capital stock, an appropriate adjustment shall be made (i)&nbsp;in the number and kind of shares as to which Options may be
granted under the Plan, (ii)&nbsp;the number and kind of shares which may be granted to an Eligible Person in any one taxable year of the Company, (iii)&nbsp;the number and kind of shares as to
which outstanding Options or portions thereof then unexercised shall be exercisable, to the end that securities issuable upon exercise of any Option after such event shall be equivalent to the
securities which would have been issuable upon exercise of such Option had such exercise been completed prior to such event, and (iv)&nbsp;a corresponding adjustment in the Option Price shall be
made to each outstanding Option. Such adjustment shall be made by the Stock Option Plan Committee, whose determination in that respect shall be final, binding and conclusive on all persons. Except as
expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number, type or price of Stock subject to an Option. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
the Code, a participant receiving a Nonstatutory Stock Option generally does not recognize taxable income upon the grant of the Option. A participant does, however, recognize
ordinary income upon the exercise of a Nonstatutory Stock Option to the extent that the fair market value of Common Stock on the date of exercise exceeds the Option Price. The grant of an ISO does not
result in taxable income to a participant. The exercise of an ISO also does not result in taxable income, provided that the employment requirements specified in the Code are satisfied, although such
exercise may give rise to alternative minimum taxable income for the participant. In addition, if the participant does not dispose of Common Stock acquired upon exercise of an ISO during the statutory
holding period, then any gain or loss upon the subsequent sale of Common Stock will be long-term capital gain or loss, assuming the shares represents a capital asset in the participant's
hands. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company may deduct for Federal income tax purposes (with certain exceptions) an amount equal to the ordinary income so realized by the participant with regard to a Nonstatutory Stock
Option. No deduction is allowed to the Company in connection with the grant or exercise of an ISO. However, the Company will be entitled to a deduction in the year that a disqualifying disposition of
the ISO occurs equal to the amount of ordinary income recognized by the participant. The value of an amount received under the Plan includable in a Participant's gross income is subject to withholding
or the
Participant shall pay to the Company or make arrangements satisfactory to the Stock Option Plan Committee regarding payment of any Federal, state, or local taxes of any kind required by law. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>29</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the 2007 fiscal year, the Board of Directors approved the granting of several incentive stock options to Eligible Persons of the Company. The optionees have the right to purchase
156,025 shares of Common Stock of the Company at prices of $20.99 or $26.47 per share. On April&nbsp;1, 2008 the closing sales price of the Company's Common Stock was $23.72. The Common Stock trades
under the NASDAQ market under the ticker symbol "IBOC." The benefits that will be received under the Plan by particular individuals or groups are not determinable at this time. There were no grants
issued to the named executive officers during the 2007 fiscal year. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors may at any time terminate and amend the Plan; however, no such action of the Board may increase the total number of shares subject to the Plan or change the
employees eligible to receive options under the Plan without approval of the shareholders. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 Amendment of the Plan.
The Board of Directors recommends that the shareholders vote FOR the Amendment of the Plan. The accompanying proxy will be voted in favor of approval of the Amendment unless contrary instructions are
noted on the proxy. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="di12901_shareholder_proposals_for_2009_annual_meeting"> </A>
<A NAME="toc_di12901_11"> </A>
<BR></FONT><FONT SIZE=2><B>SHAREHOLDER PROPOSALS FOR 2009 ANNUAL MEETING    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The 2009 Annual Meeting of Shareholders will be held on May&nbsp;18, 2009. In connection with the Company's next annual meeting, shareholder proposals which are
not submitted for inclusion in the Company's proxy materials pursuant to Rule&nbsp;14a-8 under the Exchange Act may be brought before an annual meeting pursuant to Article&nbsp;II,
Section&nbsp;12 of the Company's Bylaws, which provides that business at an annual meeting of shareholders must be (a)&nbsp;pursuant to the Company's notice of meeting, (b)&nbsp;by or at the
direction of the Board of Directors or (c)&nbsp;by any shareholder of the Company who was a shareholder of record at the time of giving of notice provided for in Section&nbsp;12 of the Bylaws, who
is entitled to vote at the meeting and who complies with the notice procedures set forth in Section&nbsp;12 of the Bylaws. For business to be properly brought before an annual meeting by a
shareholder, the shareholder must have given timely notice thereof in writing to the Corporate Secretary. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
be timely, a shareholder's notice shall be delivered to the Secretary of the Company at 1200 San Bernardo Avenue, Laredo, Texas 78042 not later than the close of business on the
60<SUP>th</SUP>&nbsp;day nor earlier than the close of business on the 90<SUP>th</SUP>&nbsp;day prior to the first anniversary of the preceding year's annual meeting; provided, however, that
in the event that the date of the annual meeting is more than 30&nbsp;days before or more than 60&nbsp;days after such anniversary date, notice by the shareholder to be timely must be so delivered
not earlier than the close of business on the 90<SUP>th</SUP>&nbsp;day prior to such annual meeting and not later than the close of business on the later of the 60<SUP>th</SUP>&nbsp;day
prior to such annual meeting or the 10<SUP>th</SUP>&nbsp;day following the day on which public announcement of the date of such meeting is first made by the Company. The Company's 2009 Annual
Meeting is scheduled for May&nbsp;18, 2009. Thus, a shareholder notice must be received by the Company no later than March&nbsp;21, 2009 and no earlier than February&nbsp;19, 2009. If the date
of the 2009 Annual Meeting is changed, these dates may change. Such shareholder's notice is required to set forth, as to each matter the shareholder proposes to bring before an annual meeting, certain
information specified in the Bylaws. A copy of the Bylaws of the Company may be obtained from the Secretary of the Company at the address set forth above. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proposals
from shareholders which are intended to be included in the proxy statement relating to the Company's 2009 Annual Meeting of Shareholders must comply with
Rule&nbsp;14a-8 under the Exchange Act and must be received in writing by the Company at its principal executive offices at the address set forth above no later than December&nbsp;20,
2008. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>30</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dk12901_other_matters"> </A>
<A NAME="toc_dk12901_1"> </A>
<BR></FONT><FONT SIZE=2><B>OTHER MATTERS    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

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<TD WIDTH="40%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="58%" style="font-family:times;"><FONT SIZE=2><BR>
INTERNATIONAL BANCSHARES CORPORATION</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="40%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="58%" style="font-family:times;"><BR><FONT SIZE=2><B>
<IMG SRC="g715033.jpg" ALT="GRAPHIC" WIDTH="85" HEIGHT="76">
 </B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="40%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="58%" style="font-family:times;"><FONT SIZE=2>Dennis E. Nixon<BR>
President</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="40%" style="font-family:times;"><FONT SIZE=2><BR>
Dated: April&nbsp;18, 2008<BR></FONT>
</TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="58%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
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<P style="font-family:times;"><FONT SIZE=2><B>THE COMPANY'S 2007 ANNUAL REPORT IS BEING FURNISHED WITH THIS PROXY STATEMENT TO SHAREHOLDERS OF RECORD AS OF THE RECORD DATE. THE ANNUAL REPORT DOES
NOT CONSTITUTE A PART OF THIS PROXY STATEMENT OR PROXY SOLICITATION MATERIAL. THE COMPANY WILL PROVIDE SHAREHOLDERS WITH A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, FOR THE PERIOD
ENDED DECEMBER 31, 2007, WITHOUT CHARGE, UPON WRITTEN REQUEST ADDRESSED TO THE TREASURER OF THE COMPANY, MS. IMELDA NAVARRO AT THE ADDRESS LISTED BELOW. THE COMPANY'S ANNUAL REPORT AND THE EXHIBITS
FILED WITH IT ARE ALSO AVAILABLE ON OUR WEBSITE AT </B></FONT><FONT SIZE=2><B><I>WWW.IBC.COM</I></B></FONT><FONT SIZE=2><B> UNDER THE HEADING "INVESTORS" IN THE SECTION FOR "SEC FILINGS." ADDITIONALLY, THE
ENCLOSED PROXY STATEMENT AND THE ANNUAL REPORT ARE AVAILABLE ON OUR WEBSITE AT </B></FONT><FONT SIZE=2><B><I>WWW.IBC.COM</I></B></FONT><FONT SIZE=2><B> UNDER THE HEADING "INVESTORS" IN THE SECTION FOR "SEC
FILINGS." ADDITIONALLY, AND IN ACCORDANCE WITH SEC RULES, YOU MAY ACCESS OUR PROXY STATEMENT AND FORM 10-K AT  </B></FONT><FONT SIZE=2><B><I>http://ww3.ics.adp.com/streetlink/IBOC</I></B></FONT><FONT SIZE=2><B>, WHICH DOES NOT HAVE "COOKIES" THAT
IDENTIFY VISITORS TO THE SITE.</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>INTERNATIONAL BANCSHARES CORPORATION  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> P. O. Drawer 1359  </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Laredo, Texas 78042-1359  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> (956)&nbsp;722-7611 Extension 6222  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>31</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dm12901_appendix_a"> </A>
<A NAME="toc_dm12901_1"> </A>
<BR></FONT><FONT SIZE=2><B>Appendix&nbsp;A    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dm12901_amendment_one_2005_internation__ame02779"> </A>
<A NAME="toc_dm12901_2"> </A></FONT> <FONT SIZE=2><B>AMENDMENT ONE<BR>  2005 INTERNATIONAL BANCSHARES CORPORATION<BR>  STOCK OPTION PLAN    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
INTERNATIONAL BANCSHARES CORPORATION (the "Company") adopted the 2005 INTERNATIONAL BANCSHARES CORPORATION STOCK OPTION PLAN (the "Plan"), on April&nbsp;1, 2005; </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
on February&nbsp;20, 2008, the Company's Board of Directors determined that it is in the best interests of the Company to amend the Plan to increase the number of shares of
Company common stock available under the Plan by 300,000 shares and the Board recommended shareholder approval of an amendment to the Plan reflecting this change (this "Amendment One"); </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
the Company issued stock dividends on May&nbsp;2, 2005 and May&nbsp;21, 2007, and pursuant to the anti-dilution provisions of Section&nbsp;3.03 of the Plan the
380,000 shares originally available under the Plan were adjusted to 522,500 shares, which amount when added to the 300,000 additional shares will result in 822,500 shares of Company common stock being
available under the Plan; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
on May&nbsp;19, 2008, the shareholders of the Company approved this Amendment One; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW,
THEREFORE, BE IT RESOLVED that the Plan is hereby amended by replacing the existing Section&nbsp;3.01 in its entirety as follows, effective May&nbsp;19, 2008, and all other
provisions of the Plan not directly affected by this Amendment One shall remain in full force and effect: </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.01</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Limitations</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Subject to Section&nbsp;3.02 and the adjustments pursuant to the provisions of
Section&nbsp;3.03 hereof, the number of shares of Stock covered by Options which may be granted hereunder to Participants under all Options shall not exceed Eight Hundred Twenty-two
Thousand Five Hundred (822,500) shares. The shares of Stock which may be issued by the Company upon exercise of an option may be issued out of the Company's authorized and unissued shares of Stock or
reaquired shares of Stock (treasury stock). </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, this Amendment One is executed on the&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;day of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2008. </FONT></P>

<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>INTERNATIONAL
BANCSHARES CORPORATION </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>By:&nbsp;<U>
</U> </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>Name:&nbsp;<U>
</U> </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>Title:&nbsp;<U>
</U> </FONT></P>

</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-1</FONT></P>

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 </FONT> <FONT SIZE=1><B>INTERNATIONAL BANCSHARES CORPORATION<BR>
For the Annual Meeting of Shareholders Called for May&nbsp;19, 2008  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned shareholder(s) of International Bancshares Corporation, a Texas corporation (the "Company"), hereby revoking all proxies previously granted
appoint(s) Irving Greenblum, Daniel&nbsp;B. Hastings,&nbsp;Jr. and Richard&nbsp;E. Haynes, and each of them, as Proxies, each with power to appoint his substitute, and hereby authorize(s) them
to vote, as designated below, all the shares of the Company's Common Stock which the undersigned may be entitled to vote at the Annual Meeting of Shareholders of the Company, to be held on Monday,
May&nbsp;19, 2008 at 7:00&nbsp;P.M., local time, and at any adjournment of such meeting, with all powers which the undersigned would possess if personally present: </FONT></P>

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<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>1.</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="96%" style="font-family:times;"><FONT SIZE=1>ELECTION OF DIRECTORS. Nominees: I.&nbsp;Greenblum, R.D.&nbsp;Guerra, D.&nbsp;B.&nbsp;Hastings,&nbsp;Jr., R.E.&nbsp;Haynes, I.&nbsp;Navarro, S.&nbsp;Neiman, P.&nbsp;J.&nbsp;Newman, D.E.&nbsp;Nixon, L.&nbsp;Salinas,
A.&nbsp;R.&nbsp;Sanchez,&nbsp;Jr.</FONT></TD>
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<TD WIDTH="40%" style="font-family:times;"><FONT SIZE=1><B>FOR</B></FONT><FONT SIZE=1>, all nominees listed above&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="60%" style="font-family:times;"><FONT SIZE=1><B>FOR</B></FONT><FONT SIZE=1>, all nominees listed above, except for the nominee(s) set forth on the line below&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2 style="font-family:times;"><BR><FONT SIZE=1><B>WITHHOLD AUTHORITY</B></FONT><FONT SIZE=1>, to vote for all nominees listed above&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write that nominee's name on the line provided below.)</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE>

<P style="font-family:times;"><FONT SIZE=1>The
Board of Directors recommends a vote </FONT><FONT SIZE=1><B>FOR</B></FONT><FONT SIZE=1> all nominees. </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="81%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>2.</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="96%" style="font-family:times;"><FONT SIZE=1>PROPOSAL TO RATIFY THE APPOINTMENT OF McGladrey&nbsp;&amp; Pullen,&nbsp;LLP as the independent auditors of the Company for the fiscal year ending December&nbsp;31, 2008.</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="37%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="15%" style="font-family:times;"><FONT SIZE=1><B>FOR&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT><FONT SIZE=1><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="20%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="22%" style="font-family:times;"><FONT SIZE=1><B>AGAINST&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT><FONT SIZE=1><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="20%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="22%" style="font-family:times;"><FONT SIZE=1><B>ABSTAIN&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT><FONT SIZE=1><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>The
Board of Directors recommends a vote </FONT><FONT SIZE=1><B>FOR</B></FONT><FONT SIZE=1> the above ratification. </FONT></P>

<P ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><I>(Continued on reverse side)</I></FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=35,EFW="2184297",CP="INTERNATIONAL BANCSHARES CORP.",DN="1",CHK=453110,FOLIO='blank',FILE='DISK126:[08ZBC2.08ZBC12902]MA12902A.;31',USER='KBLACKW',CD='28-MAR-2008;16:33' -->

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="81%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>3.</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="96%" style="font-family:times;"><FONT SIZE=1>PROPOSAL TO APPROVE AN AMENDMENT to add 300,000 additional shares to the 2005 International Bancshares Corporation Stock Option Plan.<BR></FONT>
</TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="37%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="15%" style="font-family:times;"><FONT SIZE=1><B>FOR&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT><FONT SIZE=1><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="20%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="22%" style="font-family:times;"><FONT SIZE=1><B>AGAINST&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT><FONT SIZE=1><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="20%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="22%" style="font-family:times;"><FONT SIZE=1><B>ABSTAIN&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT><FONT SIZE=1><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>The
Board of Directors recommends a vote </FONT><FONT SIZE=1><B>FOR</B></FONT><FONT SIZE=1> the above proposal. </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="81%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>4.</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="96%" style="font-family:times;"><FONT SIZE=1>In their discretion, the Proxies are authorized to vote upon such other matters as may properly come before the meeting or any adjournment thereof. Any of the Proxies, or their respective substitutes, who shall be present
and acting at the Annual Meeting shall have and may exercise all of the powers hereby granted.</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P style="font-family:times;"><FONT SIZE=1><B>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. THE DESIGNATED PROXIES WILL USE THEIR DISCRETION WITH RESPECT TO ANY MATTERS REFERRED TO IN SECTION&nbsp;4.  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned acknowledges receipt of the Notice of Annual Meeting of Shareholders and Proxy Statement of the Company dated April&nbsp;18, 2008. </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="87%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="6%" style="font-family:times;"><FONT SIZE=1>Dated:</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=1>2008</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="26%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="36%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="6%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" style="font-family:times;"><HR NOSHADE></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="26%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="36%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="6%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="26%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="6%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="26%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=1>Signature(s)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="6%" style="font-family:times;"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="26%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="36%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="6%" style="font-family:times;"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" style="font-family:times;"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="26%" style="font-family:times;"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><BR><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="6%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="26%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=1>(Signature should agree with name of Stock Certificate as stenciled thereon. Executors, Administrators, Trustees, etc. should so indicate when signing).</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="6%" style="font-family:times;"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" style="font-family:times;"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="26%" style="font-family:times;"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><BR>
THIS PROXY IS SOLICITED ON BEHALF<BR>
OF THE BOARD OF DIRECTORS<BR></FONT>
</TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO ITS EXERCISE<BR>
RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE<BR>
I do <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> do not <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> plan to attend the Annual Meeting of Shareholders.  </B></FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=36,EFW="2184297",CP="INTERNATIONAL BANCSHARES CORP.",DN="1",CHK=588732,FOLIO='blank',FILE='DISK126:[08ZBC2.08ZBC12902]MA12902A.;31',USER='KBLACKW',CD='28-MAR-2008;16:33' -->
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->
<BR>
<P><br><A NAME="08ZBC12901_1">QuickLinks</A><br></P><!-- TOC_BEGIN -->
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_bc12901_1">INTERNATIONAL BANCSHARES CORPORATION Post Office Drawer 1359 Laredo, Texas 78042-1359</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_bc12901_2">NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 19, 2008</A></FONT><BR>

<!-- TOC_BEGIN -->
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_da12901_1">INTERNATIONAL BANCSHARES CORPORATION 1200 San Bernardo Avenue Laredo, Texas 78040</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_da12901_2">SOLICITATION AND REVOCATION OF PROXIES, AVAILABILITY OF PROXY MATERIALS AND VOTING OF PROXIES AND SHARES</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_da12901_3">PROPOSAL&#151;1 ELECTION OF DIRECTORS</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_da12901_4">The Board of Directors recommends a vote "FOR" each named nominee.</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_da12901_5">CORPORATE GOVERNANCE</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_da12901_6">MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_dc12901_1">EXECUTIVE COMPENSATION</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_dc12901_2">Compensation Discussion and Analysis</A></FONT><BR>

<!-- TOC_BEGIN -->
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_de12901_1">Executive Compensation Tables</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_dg12901_1">SECURITY OWNERSHIP OF MANAGEMENT</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_dg12901_2">PRINCIPAL SHAREHOLDERS</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_di12901_1">INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_di12901_2">SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_di12901_3">STOCK REPURCHASES</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_di12901_4">PROPOSAL&#151;2</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_di12901_5">RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_di12901_6">CHANGE IN ACCOUNTANTS</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_di12901_7">PRINCIPAL ACCOUNTANT FEES AND SERVICES</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_di12901_8">AUDIT COMMITTEE REPORT</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_di12901_9">PROPOSAL&#151;3</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_di12901_10">AMENDMENT OF THE 2005 INTERNATIONAL BANCSHARES CORPORATION STOCK OPTION PLAN</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_di12901_11">SHAREHOLDER PROPOSALS FOR 2009 ANNUAL MEETING</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_dk12901_1">OTHER MATTERS</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_dm12901_1">Appendix A</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_dm12901_2">AMENDMENT ONE 2005 INTERNATIONAL BANCSHARES CORPORATION STOCK OPTION PLAN</A></FONT><BR>

<!-- SEQ=,FILE='QUICKLINK',USER=MWEINST,SEQ=,EFW="2184297",CP="INTERNATIONAL BANCSHARES CORP.",DN="1" -->
<!-- TOCEXISTFLAG -->
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`
end
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</DOCUMENT>
</SEC-DOCUMENT>
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