International Bancshares (IBOC) of Laredo, Texas, reported first-quarter income of $28.3 million, down more than 6% from a year earlier, as the company collected lower fees from interchange and overdraft protection.

The $11.8 billion-asset company said Monday that its noninterest income dropped almost 11%, to $43.2 million. Service charges on deposit accounts totaled $22.8 million, down roughly 8%, from a year earlier while other service charges, commissions and fees declined more than 22%, to $11.3 million.

Net income was also affected by a 29% increase in its loan-loss provision year over year, to $5.3 million.

The company has been compensating for the loss of fee income by trimming its overhead. It said in the fall that it would close 55 grocery store branches in direct response to legislation that capped interchange fees from debit card transactions. The cap went into effect Oct. 1. The bank expected to eliminate roughly 500 jobs as a result of the branch closures.

Employee compensation and benefits fell 8%, to $29.4 million, from a year earlier. Overall noninterest expense declined almost 10%, to $68.1 million, as deposit insurance assessments also decreased 36%.

IBC also reported sluggish loan demand during the quarter. Its portfolios for commercial, financial and agricultural, real estate mortgage and construction and consumer loans all declined from three months earlier and its total loans fell 2%, to $4.9 billion.

Earnings per share totaled 42 cents, beating analysts' estimates by a nickel, according to Thomson Reuters.

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