8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 8-K

Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): May 3, 2007

FIRST BANCORP.

(Exact Name of Registrant as Specified in its Charter)

001-14793
(Commission File Number)

Puerto Rico
(State or Other Jurisdiction
of Incorporation) 66-0561882
(I.R.S. Employer
Identification No.)

1519 Ponce de Leon
San Juan, Puerto Rico 00908-0146
(Address of Principal Executive Offices) (Zip Code)

(787) 729 8200
(Registrant’s Telephone Number, including Area Code)

Not applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On May 3, 2007, First BanCorp (the “Company”) issued a press release announcing, among other things, certain financial information relating to its first quarter of 2006 and 2007. A copy of the press release is attached hereto as Exhibit 99.1.

The Company announced in its May 3, 2007 press release that it elected early adoption of Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (SFAS 157), and Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (SFAS 159), effective on January 1, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles (“GAAP”) and expands disclosures about fair value measurement. SFAS 159 allows companies to measure at fair value most financial assets and liabilities that are currently required to be measured in a different manner, such as based on their carrying amount. Following the initial fair value measurement date, ongoing gains and losses on items for which fair value reporting has been elected are reported in earnings at each subsequent financial reporting date. Under SFAS 159, fair value reporting may be elected on an instrument-by-instrument basis, and for all or only some financial assets or liabilities within a portfolio.

After a detailed analysis of SFAS 157 and SFAS 159 by First BanCorp’s Board of Directors and Management Investments and Asset-Liability Committee, the Company decided to early adopt SFAS 159 for certain of the Company’s callable brokered certificates of deposit (“BCDs”) and medium-term notes. Upon adoption of SFAS 159 and SFAS 157, First BanCorp selected the fair value measurement for approximately $4.4 billion, or 63%, of its portfolio of BCDs and $29 million, or 16%, of its medium-term notes portfolio. Interest rate risk on the BCDs and medium term notes chosen for the fair value measurement option will continue to be economically hedged through callable interest rate swaps with the same terms and conditions. The cumulative after-tax effect on the opening balance of retained earnings from adopting these standards is an approximate increase of $92.2 million. Under SFAS 159, this one-time credit is not recognized in current earnings. Regulatory capital (Tier I and Tier II) increases by approximately 125 basis points and the leverage ratio increases by approximately 85 basis points, thus strengthening the Company’s current regulatory capital ratios.

The $92.2 million increase in retained earnings results mainly from the significant mismatch between the fair market value of the callable interest rate swaps as compared to the hedged items, the callable BCDs and medium term notes. As a result of adopting the long-haul method of accounting during the life of the callable BCDs and medium term notes, as opposed to at inception, the changes in the fair market value of the callable BCDs and medium term notes have been recognized through earnings since April 3, 2006 (the implementation date of the long-haul method of accounting). In contrast, upon determining that the short-cut method of accounting was not available for the interest rate swaps that hedged the

risk related to the BCDs and medium-term notes, the Company restated its historical financial statements to reflect the fair market value of the interest rate swaps through earnings since inception of the swaps. As of December 31, 2005, the net cumulative effect of reflecting the fair value of the interest rate swaps related to BCDs, medium term notes and loans that did not qualify as hedges under the short-cut method was an after-tax loss of approximately $93 million. During the first quarter of 2006, First BanCorp recorded an additional after-tax non-cash unrealized loss of $42 million to reflect the change in the fair value of the interest rate swaps resulting mainly from rising interest rates.

With the elimination of the use of the long-haul method in connection with the adoption of SFAS 159 as of January 1, 2007, the Corporation will no longer amortize the basis adjustment. The basis adjustment amortization is the reversal of the change in value of the BCDs and medium term notes recognized since the implementation of the long-haul method. Since the time the Company implemented the long-haul method, it has recognized the basis adjustment and the changes in the value of the BCDs and medium term notes based on the expected call date of the instruments. The adoption of SFAS 159 also requires the recognition as part of the adoption adjustment of all of the unamortized placement fees that were paid to broker counterparties upon the issuance of the BCDs and medium term notes. The Company previously amortized those fees through earnings based on the expected call date of the instruments. The impact of the de-recognition of the basis adjustment and the unamortized placement fees as of January 1, 2007 results in a cumulative after-tax reduction to retained earnings of approximately $23.8 million. This negative charge is already included in the total cumulative after-tax increase to retained earnings of $92.2 million that results with the adoption of SFAS 157 and SFAS 159.

As previously reported, First BanCorp expected to reverse over the remaining lives of the interest rate swaps the unrealized cumulative loss that it recognized on April 3, 2006 when it implemented the long-haul method of accounting for the BCDs and medium-term notes. With the implementation of SFAS 157 and SFAS 159, instead of reversing the previously recorded non-cash losses through earnings over the life of the swaps, the remaining portion of the previously recognized non-cash losses is recognized as a one-time increase to retained earnings of $92.2 million that results mainly from the recording of the unrecognized fair market value of the callable BCDs and medium-term notes prior to adoption of the long-haul method. The Company intends to hold the swaps until they mature because, economically, these transactions have satisfied and continue to satisfy their intended results.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1	Press Release dated May 3, 2007

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: May 3, 2007	FIRST BANCORP
	By:	/s/ Fernando Scherrer
	Name:	Fernando Scherrer
	Title:	Executive Vice President and Chief
		Financial Officer

Exhibit Index

Exhibit No.	Description
99.1	Press Release dated May 3, 2007

EX-99.1

Exhibit 99.1

Alan Cohen
Senior Vice President, Marketing and Public Relations
Office (787) 729-8256
alan.cohen@firstbankpr.com

First BanCorp Announces Early Adoption of SFAS No. 157 and SFAS No. 159

• Increases Retained Earnings as of January 1, 2007 by $92.2 million

• Regulatory Total Capital Will Increase by Approximately 125 Basis Points

San Juan, Puerto Rico, May 3, 2007 — First BanCorp (the “Corporation”) (NYSE:FBP) today announced it elected early adoption of Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (SFAS 157), and Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (SFAS 159), effective beginning January 1, 2007. The cumulative after-tax effect on the opening balance of retained earnings from adopting these accounting standards was an increase of approximately $92.2 million. Under SFAS 159, this one-time credit will not be recognized in current earnings.

“The enhanced capital position will provide greater flexibility to improve future profitability through various management actions currently under consideration,” said Luis M. Beauchamp, the Corporation’s President and Chief Executive Officer. He added, “our capital position, which exceeds the regulatory minimum for banks at a ‘well capitalized’ level under the meaning established by the FDIC by approximately 38%, is, based on published information, now one of the strongest among Puerto Rico financial institutions and approximately 16% above the average of all commercial banks in the U.S. with more than $10 billion in assets.”

SFAS 157 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles (“GAAP”) and expands disclosures about fair value measurement. SFAS 159 allows companies to measure at fair value, on an instrument by instrument basis, most

financial assets and liabilities that are currently required to be measured in a different manner, such as based on their carrying amount. Following the initial fair value measurement date, ongoing gains and losses on items for which fair value reporting has been elected are reported in earnings at each subsequent financial reporting date.

Upon adoption of SFAS 159 and SFAS 157, First BanCorp selected the fair value measurement for approximately $4.4 billion, or 63%, of its portfolio of brokered certificate of deposits (BCDs) and approximately $29 million, or 16%, of its medium-term notes portfolio. Interest rate risk on the BCDs and notes chosen for the fair value measurement option continues to be economically hedged through callable interest rate swaps with the same terms and conditions.

“Regulatory capital (Tier I and Tier II) will increase by approximately 125 basis points and the leverage ratio will increase by approximately 85 basis points, thus strengthening the Corporation’s current regulatory capital,” said Fernando Scherrer, the Corporation’s Chief Financial Officer. He further stated that “another benefit of the implementation of SFAS 157 and SFAS 159 is the elimination of the use of the complex and rigorous long-haul method of accounting. Also, the elimination of the long-haul method of accounting will decrease some earnings volatility.”

As previously reported, First BanCorp expected to reverse over the remaining lives of the interest rate swaps the unrealized non-cash cumulative loss that it had recognized on April 3, 2006 when it implemented the long-haul method of accounting for the BCDs and medium-term notes. With the implementation of SFAS 157 and SFAS 159, instead of reversing the previously recorded non-cash losses through earnings over the life of the swaps, the remaining portion of the previously recognized non-cash losses is recorded as a one-time increase to retained earnings of $92.2 million. The Corporation intends to hold the swaps until they mature because, economically, these transactions have satisfied and continue to satisfy their intended results.

Additional technical information about the adoption of these two standards and its effect in the Corporation’s financial condition and results of operations is provided in a Form 8-K to be filed today with the Securities and Exchange Commission (“SEC”).

About First BanCorp
First BanCorp is the parent corporation of FirstBank Puerto Rico, a state chartered commercial bank with operations in Puerto Rico, the Virgin Islands and Florida; of FirstBank Insurance Agency; and of Ponce General Corporation. First BanCorp, FirstBank Puerto Rico and FirstBank Florida, formerly UniBank, the thrift subsidiary of Ponce General, all operate within U.S. banking laws and regulations. The Corporation operates a total of 151 financial services facilities throughout Puerto Rico, the U.S. and British Virgin Islands, and Florida. Among the subsidiaries of FirstBank Puerto Rico are Money Express, a finance company; First Leasing and Car Rental, a car and truck rental leasing company; and FirstMortgage, a mortgage origination company. In the U.S. Virgin Islands, FirstBank operates First Insurance VI, an insurance agency; First Trade, Inc., a foreign corporation management company; and First Express, a small loan company. First BanCorp’s common and preferred shares trade on the New York Stock Exchange, under the symbols FBP, FBPPrA, FBPPrB, FBPPrC, FBPPrD and FBPPrE.

Safe Harbor
The Corporation wishes to caution readers not to place undue reliance on any such “forward-looking statements,” which speak only as of the date made, and to advise readers that various factors, including the Corporation’s ability to file the 2006 10-K during the summer of 2007 and, thereafter, the required quarterly information so that the Corporation can return to compliance with the reporting requirements under the Securities Exchange Act of 1934, the completion of the sale of shares of common stock to Scotiabank, which is conditioned on, among other things, regulatory approvals, the ability to finalize the settlement of the shareholder litigation and to settle the SEC inquiry relating to First BanCorp’s recent restatement of its financial statements, the impact of Doral’s financial condition on its repayment of its outstanding secured loan to FirstBank, interest rate risk relating to the secured loans to Doral and R&G Financial, the continued repayment by R&G Financial of its outstanding loan, First BanCorp’s execution of the agreement with R&G Financial contemplated by its recent agreement with R&G Financial involving its outstanding loan, the impact on net income of the reduction in net interest income resulting from the repayment of a significant amount of the commercial loans to Doral, the impact of the consent orders on the Corporation’s future operations and results, the Corporation’s ability to continue to implement the terms of the consent orders, FirstBank’s ability to issue brokered certificates of deposit, its liquidity, the impact of the Corporation’s restated and more current financial statements on customers and lenders, the ability to fund operations, changes in the interest rate environment, the Corporation’s ability to effectively implement SFAS 157 and 159, regional and national economic conditions, competitive and regulatory factors and legislative changes, could affect the Corporation’s financial performance and could cause the Corporation’s actual results for future periods to differ materially from those anticipated or projected. The Corporation does not undertake, and specifically disclaims any obligation, to update any “forward- looking statements” to reflect occurrences or unanticipated events or circumstances after the date of such statements.

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