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Stock Options
 12 Months Ended
Dec. 31, 2011
Stock Options  
Stock Options

(15) Stock Options

        On April 1, 2005, the Board of Directors adopted the 2005 International Bancshares Corporation Stock Option Plan (the "2005 Plan"). Effective May 19, 2008, the 2005 Plan was amended to increase the number of shares available for stock option grants under the 2005 Plan by 300,000 shares. The 2005 Plan replaced the 1996 International Bancshares Corporation Key Contributor Stock Option Plan (the "1996 Plan"). Under the 2005 Plan, both qualified incentive stock options ("ISOs") and non-qualified stock options ("NQSOs") may be granted. Options granted may be exercisable for a period of up to 10 years from the date of grant, excluding ISOs granted to 10% shareholders, which may be exercisable for a period of up to only five years. As of December 31, 2011, 14,161 shares were available for future grants under the 2005 Plan.

        The fair value of each option award granted under the plan is estimated on the date of grant using a Black-Scholes-Merton option valuation model that uses the assumptions noted in the following table. Expected volatility is based on the historical volatility of the price of the Company's stock. The Company uses historical data to estimate the expected dividend yield and employee termination rates within the valuation model. The expected term of options is derived from historical exercise behavior. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. No options were granted for the year ended December 31, 2010.

 
   2011   2009  

Expected Life (Years)

     6.13     6.13  

Dividend yield

     2.58 %   2.99 %

Interest rate

     1.39 %   2.12 %

Volatility

     49.21 %   41.81 %

        A summary of option activity under the stock option plans for the twelve months ended December 31, 2011 is as follows:

 
   Number of
options 		  Weighted
average
exercise
price 		  Weighted
average
remaining
contractual
term (years) 		  Aggregate
intrinsic
value ($) 		 

Options outstanding at December 31, 2010

     764,982   $ 20.65              

Plus: Options granted

     228,750     14.75              

Less:

                          

Options exercised

     7,185     17.86              

Options expired

     81,218     19.93              

Options forfeited

     60,608     21.80              
                         

Options outstanding at December 31, 2011

     844,721   $ 19.08     4.54   $ 2,445,000  
                         

Options fully vested and exercisable at December 31, 2011

     374,352   $ 24.87     2.33   $ 244,000  

        Stock-based compensation expense included in the consolidated statements of income for the twelve months ended December 31, 2011, 2010 and 2009 was approximately $387,000, $534,000 and $655,000, respectively. As of December 31, 2011, there was approximately $1,313,000 of total unrecognized stock-based compensation cost related to non-vested options granted under the Company plans that will be recognized over a weighted average period of 1.95 years.

        A summary of the status of the Company's non-vested options as of December 31, 2011, and changes during the twelve months ended December 31, 2011, is presented below:

Non-vested Options
  Options   Weighted average
grant-date
fair value ($) 		 

Non-vested options at December 31, 2010

     377,544   $ 4.48  

Granted

     228,750     5.51  

Vested

     (113,582 )   5.82  

Forfeited

     (22,343 )   4.06  
             

Non-vested options at December 31, 2011

     470,369   $ 4.68  
             

        Other information pertaining to option activity during the twelve month period ending December 31, 2011, 2010 and 2009 is as follows:

 
   Twelve Months Ended
December 31, 		 
 
   2011   2010   2009  

Weighted average grant date fair value of stock options granted

   $ 5.51   $ —   $ 3.31  

Total fair value of stock options vested

   $ 661,000   $ 551,000   $ 522,000  

Total intrinsic value of stock options exercised

   $ 27,000   $ 2,000   $ 581,000