Basel III Regulation

week, IBAT received numerous phone calls and emails from Texas community
bankers in response to the announcement of the Federal Reserve Board's proposed
rule: Regulatory Capital Rules: Regulatory Capital,
Implementation of Basel III, Minimum Regulatory Capital Ratios, Capital
Adequacy, Transition Provisions, and Prompt Corrective Action
members have expressed concern primarily over the treatment of trust preferred
securities and other non-qualifying capital instruments which would be phased
out of capital regardless of the asset size of the issuer.

is in the process of researching this provision, in addition to the proposal to
recognize unrealized gains and losses on all available-for-sale securities in
Tier 1 Capital.  Further, we will be meeting with senior regulatory
officials in mid-July to discuss the community bank concerns relative to the
proposed rule, continuing our history of involvement on this developing issue.

official comment letter is in the works and will be available to you well in
advance of the September 7, 2012 deadline assigned by the Federal Reserve. We
will obviously strongly encourage you to comment on what we believe to be yet
another example of unnecessary regulatory burden on the community banking