10-Q

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

____________

FORM 10-Q

(Mark One)

[X]         QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

[   ]         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to ___________________

COMMISSION FILE NUMBER 1-14793

First BanCorp.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Puerto Rico		66-0561882
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)
1519 Ponce de León Avenue, Stop 23 Santurce, Puerto Rico (Address of principal executive offices)		00908 (Zip Code)
	(787) 729-8200
(Registrant’s telephone number, including area code)
Not applicable (Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes☑    No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 

Yes ☑    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

                             Large accelerated filer ☐                                                                                              Accelerated filer ☑

                             Non-accelerated filer ☐ (Do not check if a smaller reporting company)   Smaller reporting company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 Yes  ☐    No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common stock: 217,419,933 shares outstanding as of October 31, 2016.

FIRST BANCORP.

INDEX PAGE

PART I FINANCIAL INFORMATION	PAGE
Item 1. Financial Statements:
Consolidated Statements of Financial Condition (Unaudited) as of September 30, 2016 and December 31, 2015	5
Consolidated Statements of Income (Unaudited) – Quarters ended September 30, 2016 and 2015 and nine-month periods ended September 30, 2016 and 2015	6
Consolidated Statements of Comprehensive Income (Unaudited) – Quarters ended September 30, 2016 and 2015 and nine-month periods ended September 30, 2016 and 2015	7
Consolidated Statements of Cash Flows (Unaudited) – Nine-month periods ended September 30, 2016 and 2015	8
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) – Nine-month periods ended September 30, 2016 and 2015	9
Notes to Consolidated Financial Statements (Unaudited)	10
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	76
Item 3. Quantitative and Qualitative Disclosures About Market Risk	136
Item 4. Controls and Procedures	136
PART II. OTHER INFORMATION
Item 1.    Legal Proceedings	137
Item 1A. Risk Factors	137
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds	140
Item 3.    Defaults Upon Senior Securities	141
Item 4.    Mine Safety Disclosures	141
Item 5.    Other Information	141
Item 6.    Exhibits	141
SIGNATURES

2

Forward Looking Statements

This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the safe harbors created by such sections.  When used in this Form 10-Q or future filings by First BanCorp. (the “Corporation”) with the U.S. Securities and Exchange Commission (“SEC”), in the Corporation’s press releases or in other public or stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “would,” “intends,” “will likely result,” “expect to,” “should,” “anticipate,” “look forward,” “believes,” and other terms of similar meaning or import in connection with any discussion of future operating, financial or other performance are meant to identify “forward-looking statements.”

FirstBanCorp. 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 these forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties, estimates and assumptions by us that are difficult to predict.  Various factors, some of which are beyond our control, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements.  Factors that might cause such a difference include, but are not limited to, the risks described or referenced below in Item 1A. “Risk Factors,” and the following:

·the ability of the Puerto Rico government or any of its public corporations or other instrumentalities to repay its respective debt obligations, including the effect of recent payment defaults on the Puerto Rico government general obligations, bonds of the Government Development Bank for Puerto Rico (the “GDB”) and certain bonds of government public corporations, and recent and any future downgrades of the long-term and short-term debt ratings of the Puerto Rico government, which could exacerbate Puerto Rico’s adverse economic conditions and, in turn, further adversely impact the Corporation;

·uncertainty as to the ultimate outcomes of actions resulting from the enactment by the U.S. government of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) to address Puerto Rico’s financial problems;

·uncertainty about whether the Corporation will be able to continue to fully comply with the written agreement dated June 3, 2010 (the “Written Agreement”) that the Corporation entered into with the Federal Reserve Bank of New York (the “New York FED” or “Federal Reserve”) that, among other things, requires the Corporation to serve as a source of strength to FirstBank Puerto Rico (“FirstBank” or the “Bank”) and that, except with the consent generally of the New York FED and the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), prohibits the Corporation from paying dividends to stockholders or receiving dividends from FirstBank, making payments on trust preferred securities or subordinated debt and incurring, increasing or guaranteeing debt or repurchasing any capital securities and uncertainty whether such consent will be provided for future interest payments on the subordinated debt despite the consent that enabled the Corporation to pay all the accrued but deferred interest payments plus the interest for the second and third quarters of 2016 on the Corporation’s subordinated debentures associated with its trust preferred securities;

·a decrease in demand for the Corporation’s products and services and lower revenues and earnings because of the continued recession in Puerto Rico;

·uncertainty as to the availability of certain funding sources, such as retail brokered certificates of deposit (“brokered CDs”);

·the Corporation’s reliance on brokered CDs to fund operations and provide liquidity;

·the risk of not being able to fulfill the Corporation’s cash obligations or resume paying dividends to the Corporation’s stockholders in the future due to the Corporation’s need to receive approval from the New York FED and the Federal Reserve Board to declare or pay any dividends and to take dividends or any other form of payment representing a reduction in capital from FirstBank or FirstBank’s failure to generate sufficient cash flow to make a dividend payment to the Corporation;

·the weakness of the real estate markets and of the consumer and commercial sectors and their impact on the credit quality of the Corporation’s loans and other assets, which have contributed and may continue to contribute to, among other things, high levels of non-performing assets, charge-offs and provisions for loan and lease losses and may subject the Corporation to further risk from loan defaults and foreclosures;

·the ability of FirstBank to realize the benefits of its deferred tax assets subject to the remaining valuation allowance;

·adverse changes in general economic conditions in Puerto Rico, the U.S., and the U.S. Virgin Islands (“USVI”) and British Virgin Islands (“BVI”), including the interest rate environment, market liquidity, housing absorption rates, real estate prices, and disruptions in the U.S. capital markets, which reduced interest margins and affected funding sources, and has affected

3

demand for all of the Corporation’s products and services and reduced the Corporation’s revenues and earnings, and the value of the Corporation’s assets, and may continue to have these effects;

·an adverse change in the Corporation’s ability to attract new clients and retain existing ones;

·the risk that additional portions of the unrealized losses in the Corporation’s investment portfolio are determined to be other-than-temporary, including additional impairments on the Puerto Rico government’s obligations;   

·uncertainty about regulatory and legislative changes for financial services companies in Puerto Rico, the U.S., the USVI and the BVI, which could affect the Corporation’s financial condition or performance and could cause the Corporation’s actual results for future periods to differ materially from prior results and anticipated or projected results;

·changes in the fiscal and monetary policies and regulations of the U.S. federal government and the Puerto Rico and other governments, including those determined by the Federal Reserve Board, the New York FED, the Federal Deposit Insurance Corporation (“FDIC”), government-sponsored housing agencies, and regulators in Puerto Rico, the USVI and the BVI;

·the risk of possible failure or circumvention of controls and procedures and the risk that the Corporation’s risk management policies may not be adequate;

·the risk that the FDIC may increase the deposit insurance premium and/or require special assessments to replenish its insurance fund, causing an additional increase in the Corporation’s non-interest expenses;

·the impact on the Corporation’s results of operations and financial condition of acquisitions and dispositions;

·a need to recognize impairments on the Corporation’s financial instruments, goodwill or other intangible assets relating to acquisitions;

·the risk that downgrades in the credit ratings of the Corporation’s long-term senior debt will adversely affect the Corporation’s ability to access necessary external funds;

·the impact on the Corporation’s businesses, business practices and results of operations of a potential higher interest rate environment; and

·general competitive factors and industry consolidation.

The Corporation does not undertake, and specifically disclaims any obligation, to update or revise any of the “forward-looking statements” to reflect occurrences or unanticipated events or circumstances after the date of such statements, except as required by the federal securities laws.

Investors should refer to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2015, as well as “Part II, Item 1A, Risk Factors” in this quarterly report on Form 10-Q, for a discussion of such factors and certain risks and uncertainties to which the Corporation is subject.

4

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

	September 30, 2016		December 31, 2015
(In thousands, except for share information)
ASSETS
Cash and due from banks	$	518,835	$	532,985
Money market investments:
Time deposits with other financial institutions		2,800		3,000
Other short-term investments		7,308		216,473
Total money market investments		10,108		219,473
Investment securities available for sale, at fair value:
Securities pledged that can be repledged		661,554		793,562
Other investment securities		1,182,299		1,092,833
Total investment securities available for sale		1,843,853		1,886,395
Investment securities held to maturity, at amortized cost:
Securities pledged that can be repledged		-		-
Other investment securities		156,190		161,483
Total investment securities held to maturity, fair value of $132,241 (2015- $131,544)		156,190		161,483
Other equity securities		28,717		32,169
Loans, net of allowance for loan and lease losses of $214,070
(2015 - $240,710)		8,649,584		8,871,672
Loans held for sale, at lower of cost or market		56,779		35,869
Total loans, net		8,706,363		8,907,541
Premises and equipment, net		154,208		161,016
Other real estate owned		139,446		146,801
Accrued interest receivable on loans and investments		41,439		48,697
Other assets		476,094		476,459
Total assets	$	12,075,253	$	12,573,019
LIABILITIES
Non-interest-bearing deposits	$	1,473,528	$	1,336,559
Interest-bearing deposits		7,507,785		8,001,565
Total deposits		8,981,313		9,338,124
Securities sold under agreements to repurchase		600,000		700,000
Advances from the Federal Home Loan Bank (FHLB)		355,000		455,000
Other borrowings		216,187		226,492
Accounts payable and other liabilities		122,867		159,269
Total liabilities		10,275,367		10,878,885
STOCKHOLDERS' EQUITY
Preferred stock, authorized, 50,000,000 shares:
Non-cumulative Perpetual Monthly Income Preferred Stock: issued 22,004,000
shares, outstanding 1,444,146 shares, aggregate liquidation value of $36,104		36,104		36,104
Common stock, $0.10 par value, authorized, 2,000,000,000 shares;
issued, 218,605,179 shares (2015 - 216,051,128 shares issued)		21,861		21,605
Less: Treasury stock (at par value)		(122)		(96)
Common stock outstanding, 217,387,647 shares outstanding (2015 - 215,088,698
shares outstanding)		21,739		21,509
Additional paid-in capital		930,390		926,348
Retained earnings, includes legal surplus reserve of $42,798		807,293		737,922
Accumulated other comprehensive income (loss), net of tax of $7,752		4,360		(27,749)
Total stockholders' equity		1,799,886		1,694,134
Total liabilities and stockholders' equity	$	12,075,253	$	12,573,019
The accompanying notes are an integral part of these statements.

5

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Quarter Ended				Nine-Month Period Ended
	September 30,				September 30,
	2016		2015		2016		2015
(In thousands, except per share information)
Interest and dividend income:
Loans	$	131,017	$	136,597	$	398,267	$	412,094
Investment securities		11,894		12,805		40,065		40,378
Money market investments		662		410		3,006		1,457
Total interest income		143,573		149,812		441,338		453,929
Interest expense:
Deposits		16,742		16,851		51,223		51,525
Securities sold under agreements to repurchase		5,363		5,216		16,868		16,997
Advances from FHLB		1,474		955		4,416		2,833
Other borrowings		1,816		1,861		5,777		5,521
Total interest expense	25,395		24,883		78,284		76,876
Net interest income		118,178		124,929		363,054		377,053
Provision for loan and lease losses		21,503		31,176		63,542		138,412
Net interest income after provision for loan and lease losses	96,675		93,753		299,512		238,641
Non-interest income:
Service charges and fees on deposit accounts		5,788		5,082		17,206		14,856
Mortgage banking activities		5,485		4,270		15,131		12,651
Net gain on sale of investments		6,096		-		6,104		-
Other-than-temporary impairment (OTTI) losses on available-for-sale debt securities:
Total other-than-temporary impairment losses		-		-		(1,845)		(29,521)
Portion of other-than-temporary impairment
recognized in other comprehensive income (OCI)		-		(231)		(4,842)		16,037
Net impairment losses on available-for-sale debt securities		-		(231)		(6,687)		(13,484)
Gain on early extinguishment of debt		-		-		4,217		-
Insurance commission income		1,363		1,265		6,174		5,809
Bargain purchase gain		-		-		-		13,443
Other non-interest income		7,414		8,372		22,248		24,882
Total non-interest income	26,146		18,758		64,393		58,157
Non-interest expenses:
Employees' compensation and benefits		38,005		37,284		113,841		110,883
Occupancy and equipment		13,888		15,248		41,114		44,656
Business promotion		3,169		4,097		11,220		10,899
Professional fees		10,672		10,709		32,775		44,932
Taxes, other than income taxes		3,927		3,065		11,475		9,197
Insurance and supervisory fees		5,604		6,590		20,013		20,246
Net loss on other real estate owned (OREO) and OREO operations		2,603		4,345		9,134		11,847
Credit and debit card processing expenses		3,546		4,283		10,102		12,185
Communications		1,711		2,189		5,244		5,842
Other non-interest expenses		5,178		5,467		15,926		17,117
Total non-interest expenses	88,303		93,277		270,844		287,804
Income before income taxes		34,518		19,234		93,061		8,994
Income tax expense		(10,444)		(4,476)		(23,690)		(2,664)
Net income	$	24,074	$	14,758	$	69,371	$	6,330
Net income attributable to common stockholders	$	24,074	$	14,758	$	69,371	$	6,330
Net income per common share:
Basic	$	0.11	$	0.07	$	0.33	$	0.03
Diluted	$	0.11	$	0.07	$	0.32	$	0.03
Dividends declared per common share	$	-	$	-	$	-	$	-
The accompanying notes are an integral part of these statements.

6

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Quarter Ended				Nine-Month Period Ended
	September 30,				September 30,
		2016		2015	2016			2015
(In thousands)
Net income	$	24,074	$	14,758	$	69,371	$	6,330
Available-for-sale debt securities on which an other-than-temporary
impairment has been recognized:
Unrealized (loss) gain on debt securities on which an
other-than-temporary impairment has been recognized		(2,228)		(457)		(773)		915
Reclassification adjustment for other-than-temporary impairment
on debt securities included in net income		-		231		6,687		13,484
All other unrealized gains and losses on available-for-sale securities:
Reclassification adjustments for net gain included in net income		(6,096)		-		(6,104)		-
All other unrealized holding (losses) gains on
available-for-sale securities arising during the period		(3,833)		16,935		32,299		(718)
Other comprehensive (loss) income for the period		(12,157)		16,709		32,109		13,681
Total comprehensive income	$	11,917	$	31,467	$	101,480	$	20,011
The accompanying notes are an integral part of these statements.

7

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Unaudited) 

	Nine-Month Period Ended
	September 30,		September 30,
	2016		2015
(In thousands)
Cash flows from operating activities:
Net income	$	69,371	$	6,330
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		13,359		15,923
Amortization of intangible assets		3,669		3,817
Provision for loan and lease losses		63,542		138,412
Deferred income tax expense (benefit)		19,153		(102)
Stock-based compensation		5,132		4,535
Gain on sales of investments		(6,104)		-
Bargain purchase gain		-		(13,443)
Gain on early extinguishment of debt		(4,217)		-
Other-than-temporary impairments on debt securities		6,687		13,484
Unrealized loss (gain) on derivative instruments		19		(47)
Net gain on disposition of premises and equipment and other assets		(686)		(137)
Net gain on sales of loans		(7,794)		(5,312)
Net amortization/accretion of premiums, discounts and deferred loan fees and costs		(6,629)		(4,244)
Originations and purchases of loans held for sale		(354,006)		(323,565)
Sales and repayments of loans held for sale		355,636		329,635
Amortization of broker placement fees		2,300		3,564
Net amortization/accretion of premium and discounts on investment securities		4,503		6,431
Decrease in accrued interest receivable		7,258		3,894
(Decrease) increase in accrued interest payable		(27,865)		3,297
(Increase) decrease  in other assets		(10,275)		8,478
(Decrease) increase in other liabilities		(13,944)		8,175
Net cash provided by operating activities		119,109		199,125
Cash flows from investing activities:
Principal collected on loans		2,174,933		2,223,880
Loans originated and purchased		(2,085,444)		(2,180,333)
Proceeds from sales of loans held for investment		20,186		107,702
Proceeds from sales of repossessed assets		43,093		48,195
Proceeds from sales of available-for-sale securities		219,780		-
Purchases of available-for-sale securities		(420,513)		(161,366)
Purchases of securities held to maturity		-		(4,530)
Proceeds from principal repayments and maturities of available-for-sale securities		270,345		212,972
Proceeds from principal repayments and maturities of held-to-maturity securities		5,293		5,068
Additions to premises and equipment		(8,239)		(9,594)
Net redemptions (purchases) of other equity securities		3,452		(567)
Proceeds from sale of premises and equipment and other assets		2,265		2,511
Net cash received from acquisition		-		217,659
Net cash outflows from purchase/sale of insurance contracts		(960)		-
Net cash provided by investing activities		224,191		461,597
Cash flows from financing activities:
Net decrease in deposits		(358,930)		(294,126)
Change in securities sold under agreements to repurchase		(100,000)		(200,000)
Repayment of FHLB advances		(100,000)		-
Repurchase of outstanding common stock		(860)		(967)
Repayment of junior subordinated debentures		(7,025)		-
Net cash used in financing activities		(566,815)		(495,093)
Net (decrease) increase  in cash and cash equivalents		(223,515)		165,629
Cash and cash equivalents at beginning of period		752,458		796,108
Cash and cash equivalents at end of period	$	528,943	$	961,737
Cash and cash equivalents include:
Cash and due from banks	$	518,835	$	742,251
Money market instruments		10,108		219,486
	$	528,943	$	961,737
The accompanying notes are an integral part of these statements.

8

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)

	Nine-Month Period Ended
	September 30,		September 30,
	2016		2015
(In thousands)
Preferred Stock	$	36,104	$	36,104
Common Stock outstanding:
Balance at beginning of period		21,509		21,298
Common stock issued as compensation		63		33
Common stock withheld for taxes		(26)		(18)
Common stock issued in exchange for trust preferred securities		-		85
Restricted stock grants		193		102
Restricted stock forfeited		-		(2)
Balance at end of period		21,739		21,498
Additional Paid-In-Capital:
Balance at beginning of period		926,348		916,067
Stock-based compensation		5,132		4,535
Common stock withheld for taxes		(834)		(949)
Common stock issued in exchange for trust preferred securities		-		5,543
Restricted stock grants		(193)		(102)
Common stock issued as compensation		(63)		(33)
Restricted stock forfeited		-		2
Balance at end of period		930,390		925,063
Retained Earnings:
Balance at beginning of period		737,922		716,625
Net income		69,371		6,330
Balance at end of period		807,293		722,955
Accumulated Other Comprehensive Income (Loss), net of tax:
Balance at beginning of period		(27,749)		(18,351)
Other comprehensive income, net of tax		32,109		13,681
Balance at end of period		4,360		(4,670)
Total stockholders' equity	$	1,799,886	$	1,700,950
The accompanying notes are an integral part of these statements.

9

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The Consolidated Financial Statements (unaudited) of First BanCorp. (the “Corporation”) have been prepared in conformity with the accounting policies stated in the Corporation’s Audited Consolidated Financial Statements included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2015. Certain information and note disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) have been condensed or omitted from these statements pursuant to the rules and regulations of the SEC and, accordingly, these financial statements should be read  in conjunction with the Audited Consolidated Financial Statements of the Corporation for the year ended December 31, 2015, which are included in the Corporation’s 2015 Annual Report on Form 10-K. All adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the statement of financial position, results of operations and cash flows for the interim periods have been reflected. All intercompany accounts and transactions have been eliminated in consolidation.

During the second quarter of 2016, the Corporation reviewed its historical accounting treatment as loans of its $156.2 million of financing arrangements with Puerto Rico municipalities issued in bond form, but underwritten as loans with features that are typically found in commercial loan transactions. This review came as a result of the determination of the Federal Reserve Board that the transactions must be treated for regulatory reporting purposes as investment securities.  The Puerto Rico Municipal Finance Act (the “Act”) requires the designation of financing arrangements obtained by municipalities with maturities greater than 8 years as “special obligation bonds” subject to specific provisions under the Act.  The Corporation concluded that the impact of accounting for the transactions as investment securities rather than loans does not have a material effect on previously reported results of operations, financial condition, or cash flows and, accordingly, these financing arrangements have been accounted for and reported as held-to-maturity investment securities and not as loans since the second quarter of 2016.

The results of operations for the quarter and nine-month period ended September 30, 2016 are not necessarily indicative of the results to be expected for the entire year. 

Adoption of new accounting requirements and recently issued but not yet effective accounting requirements

The Financial Accounting Standards Board (“FASB”) has issued the following accounting pronouncements and guidance relevant to the Corporation’s operations:

  In March 2016, the FASB updated the Accounting Standards Codification (the “Codification” or the “ASC”) to simplify certain aspects of the accounting for share-based payment transactions. The main provisions in this Update include: (i) recognition of all tax benefits and tax deficiencies (including tax benefits of dividends on share-base payment awards) as income tax expense or benefit in the income statement, (ii) classification of the excess tax benefit along with other income tax cash flows as an operating activity, (iii) an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur, (iv) a threshold to qualify for equity classification which permits withholding up to the maximum statutory tax rates in the applicable jurisdictions, and (v) classification of cash paid by an employer as a financing activity when the payment results from the withholding of shares for tax withholding purposes. In addition to those simplifications, the amendments eliminate the guidance in ASC 718 that was indefinitely deferred shortly after the issuance of FASB Statement No. 123 (revised 2004), Share-Based Payment. This should not result in a change in practice because the guidance that is being superseded was never effective. For public business entities, the amendments in this Update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Corporation is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements.

In March 2016, the FASB updated the Codification to require an equity method investor to add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. Also, this Update requires that an entity that has an available-for sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method. Earlier application is permitted. The Corporation is currently evaluating the impact of the adoption of this guidance, if any, on its consolidated financial statements.

In June 2016, the FASB updated the Codification and issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which introduces new guidance for the accounting for credit losses on instruments within its scope. The new guidance introduces an

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approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination.

The new model, referred to as the current expected credit losses (CECL) model, will apply to: (1) financial assets subject to credit losses and measured at amortized cost and (2) certain off-balance sheet credit exposures. This includes loans, held-to-maturity debt securities, loan commitments, financial guarantees, and net investments in leases, as well as reinsurance and trade receivables. Upon initial recognition of the exposure, the CECL model requires an entity to estimate the credit losses expected over the life of an exposure (or pool of exposures). The estimate of expected credit losses (ECL) should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments. Financial instruments with similar risk characteristics should be grouped together when estimating ECL. The ASU does not prescribe a specific method to make the estimate so its application will require significant judgment.

Generally, upon initial recognition of a financial asset the estimate of the ECL will be recorded through an allowance for loan and lease losses with an offset to current earnings. Subsequently, the ECL will need to be reassessed each period, and both negative and positive changes to the estimate will be recognized through an adjustment to the allowance for loan and lease losses and earnings.

The ASU amends the current other-than-temporary impairment (OTTI) model for available-for-sale debt securities. The new available-for-sale debt security model will require an estimate of ECL only when the fair value is below the amortized cost of the asset. The length of time the fair value of an available-for-sale debt security has been below the amortized cost will no longer impact the determination of whether a credit loss exists. As such, the new available-for-sale debt security model is not an OTTI model. In addition, credit losses on available-for-sale debt securities will now be limited to the difference between the security’s amortized cost basis and its fair value. The available-for-sale debt security model will also require the use of an allowance to record estimated credit losses (and subsequent recoveries).

The purchased financial assets with credit deterioration (PCD) model applies to purchased financial assets (measured at amortized cost or available-for-sale) that have experienced more than insignificant credit deterioration since origination. This represents a change from the scope of what are considered purchased credit-impaired assets under today’s model. In contrast to the accounting for originated or purchased assets that do not qualify as PCD, the initial estimate of expected credit losses for a PCD would be recognized through an allowance for loan and lease losses with an offset to the cost basis of the related financial asset at acquisition (i.e., there is no impact to net income at initial recognition). Subsequently, the accounting will follow the applicable CECL or available-for-sale debt security impairment model with all adjustments of the allowance for loan and lease losses recognized through earnings. Beneficial interests classified as held-to-maturity or available-for-sale will need to apply the PCD model if the beneficial interest meets the definition of PCD or if there is a significant difference between contractual and expected cash flows at initial recognition.

In general, the new guidance will require modified retrospective application to all outstanding instruments, with a cumulative effect adjustment recorded to opening retained earnings as of the beginning of the first period in which the guidance becomes effective. However, prospective application is required for PCD assets previously accounted for under ASC 310-30 and for debt securities for which an other-than-temporary impairment was recognized prior to the date of adoption.

ASU 2016-13 also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan and lease losses. In addition, public business entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination (i.e., by vintage year).

     The ASU will be effective for public business entities that are SEC filers in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early application of the guidance will be permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.  The Corporation is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements.

   In August 2016, the FASB updated the Codification to provide specific guidance on the classification and presentation of certain cash payments and cash receipts in the statement of cash flows. This guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The amendments in this Update provide guidance on the following eight specific cash flow issues: (1) Debt Prepayment or Debt Extinguishment Costs: Cash payments for debt prepayment or debt extinguishment costs should be classified as cash outflows for financing activities; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing: At the settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, the issuer should classify the portion of the cash payment attributable to the accreted interest related to the debt discount as cash outflows for operating activities, and the portion of the cash payment attributable to the principal as cash outflows for financing activities; (3) Contingent Consideration Payments Made after a Business Combination: Cash payments not made soon after the acquisition date of a business combination by an acquirer to settle a contingent consideration

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liability should be separated and classified as cash outflows for financing activities and operating activities. Cash payments up to the amount of the contingent consideration liability recognized at the acquisition date (including measurement-period adjustments) should be classified as financing activities; any excess should be classified as operating activities. Cash payments made soon after the acquisition date of a business combination by an acquirer to settle a contingent consideration liability should be classified as cash outflows for investing activities; (4) Proceeds from the Settlement of Insurance Claims: Cash proceeds received from the settlement of insurance claims should be classified on the basis of the related insurance coverage (that is, the nature of the loss). For insurance proceeds that are received in a lump-sum settlement, an entity should determine the classification on the basis of the nature of each loss included in the settlement; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned Life Insurance Policies: Cash proceeds received from the settlement of corporate-owned life insurance policies should be classified as cash inflows from investing activities. The cash payments for premiums on corporate-owned policies may be classified as cash outflows for investing activities, operating activities, or a combination of investing and operating activities; (6) Distributions Received from Equity Method Investees: When a reporting entity applies the equity method, it should make an accounting policy election to classify distributions received from equity method investees using either of the following approaches: a. Cumulative earnings approach: Distributions received are considered returns on investment and classified as cash inflows from operating activities, unless the investor’s cumulative distributions received less distributions received in prior periods that were determined to be returns of investment exceed cumulative equity in earnings recognized by the investor. When such an excess occurs, the current-period distribution up to this excess should be considered a return of investment and classified as cash inflows from investing activities. b. Nature of the distribution approach: Distributions received should be classified on the basis of the nature of the activity or activities of the investee that generated the distribution as either a return on investment (classified as cash inflows from operating activities) or a return of investment (classified as cash inflows from investing activities) when such information is available to the investor. If an entity elects to apply the nature of the distribution approach and the information to apply that approach to distributions received from an individual equity method investee is not available to the investor, the entity should report a change in accounting principle on a retrospective basis by applying the cumulative earnings approach in (a) for that investee. In such situations, an entity should disclose that a change in accounting principle has occurred with respect to the affected investee(s) due to the lack of available information and should provide the disclosures required in paragraphs 250-10-50-1(b) and 250-10-50-2, as applicable. This amendment does not address equity method investments measured using the fair value option; (7) Beneficial Interests in Securitization Transactions: A transferor’s beneficial interest obtained in a securitization of financial assets should be disclosed as a non cash activity, and cash receipts from payments on a transferor’s beneficial interests in securitized trade receivables should be classified as cash inflows from investing activities; (8) Separately Identifiable Cash Flows and Application of the Predominance Principle: The classification of cash receipts and payments that have aspects of more than one class of cash flows should be determined first by applying specific guidance in generally accepted accounting principles (GAAP). In the absence of specific guidance, an entity should determine each separately identifiable source or use within the cash receipts and cash payments on the basis of the nature of the underlying cash flows. An entity should then classify each separately identifiable source or use within the cash receipts and payments on the basis of their nature in financing, investing, or operating activities. In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannot be separated by source or use, the appropriate classification should depend on the activity that is likely to be the predominant source or use of cash flows for the item. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The amendments in this Update should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Corporation is currently evaluating the impact of the adoption of this guidance, if any, on its consolidated financial statements.

     In October 2016, the FASB updated the Codification to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. With this Update, entities are required to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory, when the transfer occurs. Under current GAAP, the recognition of current and deferred income taxes for an intra-entity assets transfer is prohibited until the assets are sold to an outside party. This Update does not include new disclosure requirements; however, existing disclosure requirements might be applicable when accounting for the current and deferred income taxes for an intra-entity transfer of an asset other than inventory. For example, GAAP requires an entity to disclose a comparison of income tax expense (benefit) with statutory expectations (a rate reconciliation for public entities or a description of the nature of each significant reconciling item for nonpublic entities) and also requires an entity to disclose the types of temporary differences and carryforwards that give rise to a significant portion of deferred income taxes. For public business entities, the amendments in this Update are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance. The Corporation is currently evaluating the impact of the adoption of this guidance, if any, on its consolidated financial statements.

   In October 2016, the FASB updated the Codification to modify the criteria used by a reporting entity when determining if it is the primary beneficiary of a variable interest entity (“VIE”) when the entities are under common control and the reporting entity has indirect interests in the VIE through related parties. If the reporting entity meets the first criteria in that it has the power to direct the activities of the VIE that are most significant to its economic performance, it is required to consider all interests held indirectly through related entities in determining if it meets the second criterion, the obligation to absorb losses of the VIE, or the right to receive

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benefits from it that are potentially significant to the VIE. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Corporation is currently evaluating the impact of the adoption of this guidance, if any, on its consolidated financial statements.

NOTE 2 – EARNINGS PER COMMON SHARE

	The calculations of earnings per common share for the quarters and nine-month periods ended September 30, 2016 and 2015 are as follows:
		Quarter Ended				Nine-Month Period Ended
		September 30,				September 30,
		2016		2015		2016		2015
(In thousands, except per share information)
Net income		$	24,074	$	14,758	$	69,371	$	6,330
Net income attributable to common stockholders		$	24,074	$	14,758	$	69,371	$	6,330
Weighted-Average Shares:
Average common shares outstanding			212,927		211,820		212,682		211,255
Average potential dilutive common shares			3,651		1,963		2,577		1,341
Average common shares outstanding- assuming dilution			216,578		213,783		215,259		212,596
Earnings per common share:
Basic		$	0.11	$	0.07	$	0.33	$	0.03
Diluted		$	0.11	$	0.07	$	0.32	$	0.03

Earnings per common share is computed by dividing net income attributable to common stockholders by the weighted average number of common shares issued and outstanding. Net income attributable to common stockholders represents net income adjusted for any preferred stock dividends, including any dividends declared and any cumulative dividends related to the current dividend period that have not been declared as of the end of the period.

    Potential common shares consist of common stock issuable under the assumed exercise of stock options, unvested shares of restricted stock, and outstanding warrants using the treasury stock method. This method assumes that the potential common shares are issued and the proceeds from the exercise, in addition to the amount of compensation cost attributable to future services, are used to purchase common stock at the exercise date. The difference between the number of potential shares issued and the shares purchased is added as incremental shares to the actual number of shares outstanding to compute diluted earnings per share. Stock options, unvested shares of restricted stock, and outstanding warrants that result in lower potential shares issued than shares purchased under the treasury stock method are not included in the computation of dilutive earnings per share since their inclusion would have an antidilutive effect on earnings per share. Stock options not included in the computation of outstanding shares because they were antidilutive amounted to 34,989 and 69,848 as of September 30, 2016 and 2015, respectively.

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NOTE 3 – STOCK-BASED COMPENSATION

As of January 21, 2007, the Corporation’s 1997 stock option plan expired and no additional awards could be granted under that plan. All outstanding awards granted under this plan have continued in full force and effect since then, subject to their original terms. No awards of shares could be granted under the 1997 stock option plan as of its expiration.

The activity of stock options granted under the 1997 stock option plan for the nine-month period ended September 30, 2016 is set forth below:
				Weighted-Average
				Remaining		Aggregate
	Number of		Weighted-Average	Contractual Term		Intrinsic Value
	Options	Exercise Price		(Years)	(In thousands)
Beginning of period outstanding and
exercisable	69,848	$	160.30
Options expired	(34,326)		183.37
Options cancelled	(533)		138.00
End of period outstanding and exercisable	34,989	$	138.00	0.3	$	-

On May 24, 2016, the Corporation’s stockholders approved the amendment and restatement of the First BanCorp  Omnibus Incentive Plan, as amended (the “Omnibus Plan”), to, among other things, increase the number of shares of Common Stock reserved for issuance under the Omnibus Plan, to extend the term of the Omnibus Plan to May 24, 2026 and to re-approve the material terms of the performance goals under the Omnibus Plan for purposes of Section 162(m) of the U.S. Internal Revenue Code of 1986, as amended. The Omnibus Plan provides for equity-based compensation incentives (the “awards”) through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, cash-based awards and other stock-based awards. The Omnibus Plan authorizes the issuance of up to14,169,807shares of common stock, subject to adjustments for stock splits, reorganizations, and other similar events. As of September 30, 2016, 6,924,391 shares of common stock were available for issuance under the Omnibus Plan. The Corporation’s Board of Directors, upon receiving the relevant recommendation of the Compensation Committee, has the power and authority to determine those eligible to receive awards and to establish the terms and conditions of any awards, subject to various limits and vesting restrictions that apply to individual and aggregate awards.

  Under the Omnibus Plan, during the first nine months of 2016, 130,873 shares of restricted stock were awarded to the Corporation’s independent directors subject to a one-year vesting period. Also during the first nine months of 2016, the Corporation issued 1,794,702 shares of restricted stock to employees subject to vesting periods that range from 2 to 3 years. Included in those 1,794,702 shares of restricted stock are 1,546,137 shares granted to certain senior officers consistent with the requirements of the Troubled Asset Relief Program (“TARP”) Interim Final Rule, which permit TARP recipients to grant “long-term restricted stock” without violating the prohibition on paying or accruing a bonus payment provided that: (i) the value of the grant may not exceed one-third of the amount of the employee’s annual compensation, (ii) no portion of the grant may vest before two years after the grant date, and (iii) the grant must be subject to a further restriction on transfer or payment as described below. Specifically, the stock that has otherwise vested may not become transferable at any time earlier than as permitted under the schedule set forth by TARP, which is based on the repayment in 25% increments of the aggregate financial assistance received from the U.S. Treasury. Hence, notwithstanding the vesting period mentioned above, the senior officers covered by TARP are restricted from transferring the shares. The U.S. Treasury confirmed that, effective March 2014, it has recovered more than 25% of its investment in First BanCorp. Therefore, the restrictions on transfer relating to 25% of certain shares granted under TARP requirements have been released.

    The fair value of the shares of restricted stock granted in the first nine months of 2016 was based on the market price of the Corporation’s outstanding common stock on the date of the grant. For the 1,546,137 shares of restricted stock granted under the TARP requirements, the market price was discounted due to TARP transferability restrictions. For purposes of determining the awards’ fair value, the Corporation estimated an appreciation of 14% in the value of the common stock using the Capital Asset Pricing Model as a basis of what would be a market participant’s expected return on the Corporation’s stock and assumed that the U.S. Treasury would hold the common stock of the Corporation that it currently owns for a period not to exceed two years, resulting in a fair value of $1.43 for each share of restricted stock granted under the TARP requirements. Also, the Corporation used empirical data to estimate employee terminations; separate groups of employees that have similar historical exercise behavior were considered separately for valuation purposes.

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The following table summarizes the restricted stock activity in the first nine months of 2016 under the Omnibus Plan for both executive officers covered by the TARP requirements and other employees as well as for the independent directors:
	Nine-Month Period Ended
	September 30, 2016
	Number of shares		Weighted-Average
	of restricted		Grant Date
	stock		Fair Value
Non-vested shares at beginning of year	2,968,461	$	3.34
Granted	1,925,575		1.87
Forfeited	(1,000)		6.03
Vested	(683,713)		3.80
Non-vested shares at September 30, 2016	4,209,323	$	2.59

   For the quarter and nine-month period ended September 30, 2016, the Corporation recognized $1.0 million and $2.9 million, respectively, of stock-based compensation expense related to restricted stock awards, compared to $0.9 million and $2.9 million for the same periods in 2015. As of September 30, 2016, there was $4.6 million of total unrecognized compensation cost related to nonvested shares of restricted stock. The weighted average period over which the Corporation expects to recognize such cost is 1.4 years.

   During the first nine months of 2015, 219,531 shares of restricted stock were awarded to the Corporation’s independent directors subject to vesting periods that range from 1 to 5 years. In addition, during the first nine months of 2015, the Corporation issued 793,964 shares of restricted stock to employees subject to vesting periods that range from 3 months to 3 years. Included in those 793,964 shares of restricted stock are 615,464 shares granted to certain senior officers consistent with the requirements of TARP. The employees covered by TARP are restricted from transferring the shares, subject to certain conditions as explained above.

   The fair value of the shares of restricted stock granted in the first nine months of 2015 was based on the market price of the Corporation’s outstanding common stock on the date of the grant. For the 615,464 shares of restricted stock granted under the TARP requirements, the market price was discounted due to the post-vesting restrictions. For purposes of computing the discount, the Corporation estimated an appreciation of 14% in the value of the common stock using the Capital Asset Pricing Model as a basis of what would be a market participant’s expected return on the Corporation’s stock and assumed that the U.S. Treasury would hold the common stock of the Corporation that it owned as of the date of the grants for a period not to exceed one year, resulting in a fair value of $3.18 for restricted shares granted under the TARP requirements.

Stock-based compensation accounting guidance requires the Corporation to reverse compensation expense for any awards that were forfeited due to employee or director turnover. Approximately $5 thousand and $36 thousand of compensation expense was reversed during the first nine months of 2016 and 2015, respectively, related to forfeited awards.

Also, under the Omnibus Plan, effective April 1, 2013, the Corporation’s Board of Directors determined to increase the salary amounts paid to certain executive officers primarily by paying the increased salary amounts in the form of shares of the Corporation’s common stock, instead of cash. During the first nine months of 2016, the Corporation issued 629,476 shares of common stock (first nine months of 2015 – 330,254 shares) with a weighted average market value of $3.60 (first nine months of 2015 – $5.14) as salary stock compensation. This resulted in a compensation expense of $2.2 million recorded in the first nine months of 2016 (first nine months of 2015 – $1.7 million). 

For the first nine months of 2016, the Corporation withheld 189,604 shares (first nine months of 2015 – 108,731 shares) from the common stock paid to certain senior officers as additional compensation and 65,498 shares of restricted stock that vested during the first nine months of 2016 (first nine months of 2015 – 72,918) to cover employees’ payroll and income tax withholding liabilities; these shares are held as treasury shares. The Corporation paid any fractional share of salary stock that the officer was entitled to in cash. In the consolidated financial statements, the Corporation treats shares withheld for tax purposes as common stock repurchases.

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NOTE 4 – INVESTMENT SECURITIES

Investment Securities Available for Sale

The amortized cost, non-credit loss component of other-than-temporary impairment (“OTTI”) recorded in other comprehensive income (“OCI”), gross unrealized gains and losses recorded in OCI, approximate fair value, and weighted average yield of investment securities available for sale by contractual maturities as of September 30, 2016 and December 31, 2015 were as follows:

		September 30, 2016
		Amortized cost		Noncredit Loss Component of OTTI Recorded in OCI						Fair value		Weighted average yield%
						Gross Unrealized
						gains		losses
		(Dollars in thousands)
U.S. Treasury securities:
	Due within one year	$	7,513	$	-	$	1	$	-	$	7,514	0.57
Obligations of U.S.
government-sponsored
agencies:
Due within one year			9,629		-		4		-		9,633	0.70
After 1 to 5 years			496,782		-		3,215		53		499,944	1.32
After  10 years			44,724		-		7		133		44,598	0.87
Puerto Rico government
obligations:
After 1 to 5 years			21,423		12,023		-		-		9,400	4.38
After 5 to 10 years			845		-		6		-		851	5.20
After 10 years			21,205		3,196		116		1,556		16,569	5.39
United States and Puerto Rico
government obligations			602,121		15,219		3,349		1,742		588,509	1.53
Mortgage-backed securities:
FHLMC certificates:
After 5 to 10 years			6,314		-		145		-		6,459	2.31
After 10 years			251,516		-		3,504		62		254,958	2.10
			257,830		-		3,649		62		261,417	2.10
GNMA certificates:
Due within one year			1		-		-		-		1	1.69
After 1 to 5 years			93		-		3		-		96	3.85
After 5 to 10 years			98,314		-		2,557		-		100,871	3.05
After 10 years			131,216		-		12,532		-		143,748	4.37
			229,624		-		15,092		-		244,716	3.81
FNMA certificates:
After 1 to 5 years			22,594		-		452		-		23,046	1.99
After 5 to 10 years			26,448		-		577		19		27,006	2.06
After 10 years			602,540		-		14,534		20		617,054	2.31
			651,582		-		15,563		39		667,106	2.29
Collateralized mortgage
obligations issued or guaranteed by
the FHLMC and GNMA:
After 5 to 10 years			19,853		-		7		33		19,827	1.18
After 10 years			39,530		-		25		7		39,548	1.21
			59,383		-		32		40		59,375	1.20
Other mortgage pass-through
trust certificates:
After 5 to 10 years			81		-		-		-		81	7.20
After 10 years			30,606		8,476		-		-		22,130	2.37
			30,687		8,476		-		-		22,211	2.37
Total mortgage-backed
securities			1,229,106		8,476		34,336		141		1,254,825	2.48
Other
After 1 to 5 years			100		-		-		-		100	1.50
Equity Securities (1)			413		-		6		-		419	2.15
Total investment securities
available for sale		$	1,831,740	$	23,695	$	37,691	$	1,883	$	1,843,853	2.17
(1)	Equity securities consisted of investment in a Community Reinvestment Act Qualified Investment Fund.

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		December 31, 2015
		Amortized cost		Noncredit Loss Component of OTTI Recorded in OCI						Fair value		Weighted average yield%
						Gross Unrealized
						gains		losses
(Dollars in thousands)
U.S. Treasury securities:
	After 1 to 5 years	$	7,530	$	-	$	-	$	33	$	7,497	0.57
Obligations of U.S.
government-sponsored
agencies:
	Due within one year		14,624		-		4		10		14,618	0.68
	After 1 to 5 years		384,323		-		174		4,305		380,192	1.32
	After 5 to 10 years		58,150		-		343		242		58,251	2.34
Puerto Rico Government
obligations:
	After 1 to 5 years		25,663		14,662		-		-		11,001	4.38
	After 5 to 10 years		855		-		-		-		855	5.20
	After 10 years		23,162		5,255		134		1,680		16,361	5.40
United States and Puerto Rico
Government obligations			514,307		19,917		655		6,270		488,775	1.75
Mortgage-backed securities:
FHLMC certificates:
	After 5 to 10 years		336		-		31		-		367	4.95
	After 10 years		287,711		-		1,073		1,706		287,078	2.14
			288,047		-		1,104		1,706		287,445	2.15
GNMA certificates:
	Due within one year		2		-		-		-		2	1.70
	After 1 to 5 years		109		-		5		-		114	4.26
	After 5 to 10 years		120,298		-		3,182		-		123,480	3.07
	After 10 years		165,175		-		12,822		20		177,977	4.38
			285,584		-		16,009		20		301,573	3.83
FNMA certificates:
	After 1 to 5 years		2,552		-		74		-		2,626	3.32
	After 5 to 10 years		21,557		-		433		233		21,757	2.73
	After 10 years		759,247		-		5,628		6,063		758,812	2.34
			783,356		-		6,135		6,296		783,195	2.35
Other mortgage pass-through
trust certificates:
	After 5 to 10 years		92		-		1		-		93	7.26
	After 10 years		34,905		9,691		-		-		25,214	2.26
			34,997		9,691		1		-		25,307	2.26
Total mortgage-backed
	securities		1,391,984		9,691		23,249		8,022		1,397,520	2.61
Other
	After 1 to 5 years		100		-		-		-		100	1.50
Total investment securities
	available for sale	$	1,906,391	$	29,608	$	23,904	$	14,292	$	1,886,395	2.38

Maturities of mortgage-backed securities are based on contractual terms assuming no prepayments. Expected maturities of investments might differ from contractual maturities because they may be subject to prepayments and/or call options. The weighted average yield on investment securities available for sale is based on amortized cost and, therefore, does not give effect to changes in fair value. The net unrealized gain or loss on securities available for sale and the non-credit loss component of OTTI are presented as part of OCI.

17

The following tables show the Corporation’s available-for-sale investments’ fair value and gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of September 30, 2016 and December 31, 2015. The tables also include debt securities for which an OTTI was recognized and only the amount related to a credit loss was recognized in earnings. For unrealized losses for which OTTI was recognized, the related credit loss was charged against the amortized cost basis of the debt security.

	As of September 30, 2016
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
		(In thousands)
Debt securities:
Puerto Rico Government obligations	$	-	$	-	$	21,688	$	16,775	$	21,688	$	16,775
U.S. Treasury and U.S. government
agencies obligations		60,970		186		-		-		60,970		186
Mortgage-backed securities:
FNMA		18,245		39		-		-		18,245		39
FHLMC		54,269		62		-		-		54,269		62
Collateralized mortgage obligations
issued or guaranteed by FHLMC and GNMA		31,896		40		-		-		31,896		40
Other mortgage pass-through trust
certificates		-		-		22,130		8,476		22,130		8,476
Equity securities		2		-		-		-		2		-
	$	165,382	$	327	$	43,818	$	25,251	$	209,200	$	25,578
	As of December 31, 2015
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
		(In thousands)
Debt securities:
Puerto Rico Government obligations	$	-	$	-	$	23,008	$	21,597	$	23,008	$	21,597
U.S. Treasury and U.S. government
agencies obligations		198,243		929		210,504		3,661		408,747		4,590
Mortgage-backed securities:
FNMA		437,305		4,516		88,013		1,780		525,318		6,296
FHLMC		141,890		1,338		19,306		368		161,196		1,706
GNMA		1,047		20		-		-		1,047		20
Other mortgage pass-through trust
certificates		-		-		25,214		9,691		25,214		9,691
	$	778,485	$	6,803	$	366,045	$	37,097	$	1,144,530	$	43,900

18

Assessment for OTTI on Available-For-Sale Securities

     Debt securities issued by U.S. government agencies, U.S. government-sponsored entities and the U.S. Treasury accounted for approximately 97% of the total available-for-sale portfolio as of September 30, 2016 and no credit losses are expected, given the explicit and implicit guarantees provided by the U.S. federal government. The Corporation’s OTTI assessment was concentrated mainly on available-for-sale Puerto Rico Government debt securities, with an amortized cost of $43.5million, and on private label mortgage-backed securities (“MBS”) with an amortized cost of $30.6 million, and for which credit losses are evaluated on a quarterly basis. The Corporation considered the following factors in determining whether a credit loss exists and the period over which the debt security is expected to recover:

·The length of time and the extent to which the fair value has been less than the amortized cost basis;

·Any adverse change to the credit conditions and liquidity of the issuer, taking into consideration the latest information available about the financial condition of the issuer, credit ratings, the failure of the issuer to make scheduled principal or interest payments, recent legislation and government actions affecting the issuer’s industry and actions taken by the issuer to deal with the present economic climate;

·Changes in the near term prospects of the underlying collateral of a security, if any, such as changes in default rates, loss severity given default, and significant changes in prepayment assumptions; and

·The level of cash flows generated from the underlying collateral, if any, supporting the principal and interest payments of the debt securities.

The Corporation recorded OTTI losses on available-for-sale debt securities as follows:

		Quarter Ended				Nine-Month Period Ended
		September 30,				September 30,
		2016		2015		2016		2015
(In thousands)
Total other-than-temporary impairment losses		$	-	$	-	$	(1,845)	$	(29,521)
Portion of other-than-temporary impairment recognized in OCI			-		(231)		(4,842)		16,037
Net impairment losses recognized in earnings (1)		$	-	$	(231)	$	(6,687)	$	(13,484)
(1)	For the nine-month periods ended September 30, 2016 and 2015, approximately $6.3 million and $12.9 million, respectively, of the credit impairment recognized in earnings consisted of credit losses on Puerto Rico Government debt securities and $0.4 million and $0.6 million, respectively, was associated with credit losses on private label MBS.

19

The following tables summarize the roll-forward of credit losses on debt securities held by the Corporation for which a portion of an OTTI is recognized in OCI:
	Cumulative OTTI credit losses recognized in earnings on securities still held
			Credit impairments		Credit impairments
	June 30,		recognized in earnings		recognized in earnings on		September 30,
	2016		on securities not		securities that have been		2016
	Balance		previously impaired		previously impaired		Balance
(In thousands)
Available-for-sale securities
Puerto Rico Government obligations	$	22,189	$	-	$	-	$	22,189
Private label MBS		6,792		-		-		6,792
Total OTTI credit losses for available-for-sale
debt securities	$	28,981	$	-	$	-	$	28,981

	Cumulative OTTI credit losses recognized in earnings on securities still held
			Credit impairments		Credit impairments
	December 31,		recognized in earnings		recognized in earnings on		September 30,
	2015		on securities not		securities that have been		2016
	Balance		previously impaired		previously impaired		Balance
(In thousands)
Available-for-sale securities
Puerto Rico Government obligations	$	15,889	$	-	$	6,300	$	22,189
Private label MBS		6,405		-		387		6,792
Total OTTI credit losses for available-for-sale
debt securities	$	22,294	$	-	$	6,687	$	28,981

	Cumulative OTTI credit losses recognized in earnings on securities still held
			Credit impairments		Credit impairments
	June 30,		recognized in earnings		recognized in earnings on		September 30,
	2015		on securities not		securities that have been		2015
	Balance		previously impaired		previously impaired		Balance
(In thousands)
Available-for-sale securities
Puerto Rico Government obligations	$	12,856	$	-	$	-	$	12,856
Private label MBS		6,174		-		231		6,405
Total OTTI credit losses for available-for-sale
debt securities	$	19,030	$	-	$	231	$	19,261

	Cumulative OTTI credit losses recognized in earnings on securities still held
			Credit impairments		Credit impairments
	December 31,		recognized in earnings		recognized in earnings on		September 30,
	2014		on securities not		securities that have been		2015
	Balance		previously impaired		previously impaired		Balance
(In thousands)
Available-for-sale securities
Puerto Rico Government obligations	$	-	$	12,856	$	-	$	12,856
Private label MBS		5,777		-		628		6,405
Total OTTI credit losses for available-for-sale
debt securities	$	5,777	$	12,856	$	628	$	19,261

20

   In the first quarter of 2016, the Corporation recorded a $6.3million OTTI charge on three Puerto Rico Government debt securities held by the Corporation as part of its available-for-sale securities portfolio, specifically bonds of the GDB maturing on February 1, 2019 and the Puerto Rico Public Buildings Authority maturing on July 1, 2028. This was the third OTTI charge on these securities recorded since June 30, 2015, as OTTI charges of $12.9 million and $3.0 million were booked in the second and fourth quarters of 2015, respectively, and reduced the amortized cost basis of these three Puerto Rico Government debt securities to $35.6million as of September 30, 2016, including accrued interest of $0.9 million.

    During the first nine months of 2016, in consideration of the latest available information about the Puerto Rico Government’s financial condition, including the enactment of a debt moratorium law and the declaration of a state of emergency at the GDB, the issuance of the GDB and the Commonwealth’s audited financial statements for the fiscal year ended June 30, 2014, as well as the issuance of exchange proposals with the Commonwealth’s creditors related to its outstanding bond obligations, the Corporation applied a discounted cash flow analysis to its Puerto Rico Government debt securities in order to calculate the cash flows expected to be collected and to determine if any portion of the decline in market value of these securities was considered a credit-related other-than-temporary impairment. The analysis derives an estimate of value based on the present value of risk-adjusted cash flows of the underlying securities and included the following components:

·The contractual future cash flows of the bonds are projected based on the key terms as set forth in the official statements for each security. Such key terms include, among others, the interest rate, amortization schedule, if any, and maturity date.

·The risk-adjusted cash flows are calculated based on a probability of default analysis and recovery rate assumptions, including the weighting of different scenarios of ultimate recovery, considering the credit rating of each security. Constant monthly default rates are assumed throughout the life of the bonds, which considers the respective security's credit rating as of the date of the analysis.

·The adjusted future cash flows are then discounted at the original effective yield of each investment based on the purchase price and expected risk-adjusted future cash flows as of the purchase date of each investment.

      The discounted risk-adjusted cash flow analysis for the three Puerto Rico Government bonds mentioned above assumed a default probability of 100%, thus reflecting that it is more likely than not that these three bonds will default during their remaining terms. Based on this analysis, the Corporation determined that it is unlikely to receive all of the remaining contractual interest and principal amounts when due on these bonds and recorded, in the first quarter of  2016, other-than-temporary credit-related impairment charges amounting to $6.3 million, assuming recovery rates ranging from 35% to 80% (with a weighted average of 61%). On August 1, 2016, the GDB defaulted on a $28 million payment of interest due to its creditors, including interest due on bonds held by the Corporation. Similarly, the Puerto Rico Public Building Authority made only a partial payment on its interest payment due on October 1, 2016. In the third quarter of 2016, as a result of the recent defaults, the Corporation discontinued income recognition related to, and placed in non-performing status, the bonds of the GDB and the Puerto Rico Public Building Authority. As of September 30, 2016, the amortized cost of these bonds, including accrued interest of $0.9 million, was $35.6 million ($22.3 million of GDB bonds and $13.3 million of Puerto Rico Public Buildings Authority bonds), recorded at their aggregate fair value of $19.5 million ($9.4 million of GDB bonds and $10.1 million of Puerto Rico Public Buildings Authority bonds).

   The Corporation does not have the intention to sell these securities and has sufficient capital and liquidity to hold these securities until a recovery of the fair value occurs; as such, only the credit loss component was reflected in earnings. Given the significant and prolonged uncertainty of a debt restructuring process, the Corporation cannot be certain that future impairment charges will not be required against these securities.

    In addition, during the first nine months of 2016, the Corporation recorded a $0.4 million credit-related impairment loss associated with private label MBS, which are collateralized by fixed-rate mortgages on single-family residential properties in the United States. The interest rates on these private-label MBS is variable, tied to 3-month LIBOR and limited to the weighted-average coupon of the underlying collateral. The underlying mortgages are fixed-rate, single-family loans with original high FICO scores (over 700) and moderate original loan-to-value ratios (under 80%), as well as moderate delinquency levels.

  Based on the expected cash flows, and since the Corporation does not have the intention to sell the securities and has sufficient capital and liquidity to hold these securities until a recovery of the fair value occurs, only the credit loss component was reflected in earnings.  Significant assumptions in the valuation of the private label MBS were as follows:

	September 30, 2016		December 31, 2015
	Weighted		Weighted
	Average	Range	Average	Range
Discount rate	13.3%	12.03% - 13.58%	14.5%	14.5%
Prepayment rate	13.7%	6.5% - 22.5%	25%	15.92% - 31.25%
Projected Cumulative Loss Rate	4%	0.2% - 9.1%	4%	0.18% - 6.66%

21

Investments Held to Maturity

The amortized cost, gross unrealized gains and losses, approximate fair value, weighted-average yield and contractual maturities of investment securities held to maturity as of September 30, 2016 and December 31, 2015 were as follows:

		September 30, 2016
		Amortized cost						Fair value		Weighted average yield%
				Gross Unrealized
				gains		losses
Puerto Rico Municipal Bonds:
	After 1 to 5 years	$	1,136	$	-	$	27	$	1,109	5.38
	After 5 to 10 years		10,741		-		782		9,959	4.41
	After 10 years		144,313		-		23,140		121,173	4.66
Total investment securities
	held to maturity	$	156,190	$	-	$	23,949	$	132,241	4.65

		December 31, 2015
		Amortized cost						Fair value		Weighted average yield%
				Gross Unrealized
				gains		losses
Puerto Rico Municipal Bonds:
	After 1 to 5 years	$	1,371	$	-	$	37	$	1,334	5.38
	After 5 to 10 years		11,523		-		1,041		10,482	4.25
	After 10 years		148,589		-		28,861		119,728	4.64
Total investment securities
	held to maturity	$	161,483	$	-	$	29,939	$	131,544	4.62

22

The following tables show the Corporation’s held-to-maturity investments’ fair value and gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of September 30, 2016 and December 31, 2015:

	As of September 30, 2016
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
		(In thousands)
Debt securities:
Puerto Rico Municipal Bonds	$	-	$	-	$	132,241	$	23,949	$	132,241	$	23,949
	As of December 31, 2015
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
		(In thousands)
Debt securities:
Puerto Rico Municipal Bonds	$	4,163	$	140	$	127,381	$	29,799	$	131,544	$	29,939

     Approximately 87% of the held-to-maturity municipal bonds were issued by five of the largest municipalities in Puerto Rico (San Juan, Carolina, Bayamon, Mayaguez and Guaynabo). These obligations typically are not issued in bearer form, nor are they registered with the SEC and are not rated by external credit agencies. In most cases, these bonds have priority over the payment of operating costs and expenses of the municipality, which are required by law to levy special property taxes in such amounts as are required for the payment of all of their respective general obligation bonds and loans.

     The Corporation determines the fair market value of Puerto Rico Municipal Bonds based on a discounted cash flow analysis using risk-adjusted discount rates. A security with similar characteristics traded in the open market is used as a proxy for each municipal bond. Then the cash flow is discounted at the average spread over the discount curve exhibited by the proxy security at the end of each quarter.

     When evaluating if the decrease in fair value could be classified as other-than-temporary, management considered aspects such as the fact that all municipalities are current on their payments and the fact that the bonds are subject to periodic credit reviews and are supported by assigned property tax revenues.

     Based on the quarterly analysis performed and the circumstances discussed above, management concluded that the unrealized loss is attributable to the time value of money and liquidity assumptions and no individual municipal bond was other-than-temporarily impaired as of September 30, 2016.

23

NOTE 5 – OTHER EQUITY SECURITIES

Institutions that are members of the FHLB system are required to maintain a minimum investment in FHLB stock. Such minimum investment is calculated as a percentage of aggregate outstanding mortgages, and an additional investment is required that is calculated as a percentage of total FHLB advances, letters of credit, and the collateralized portion of interest-rate swaps outstanding. The stock is capital stock issued at $100 par value. Both stock and cash dividends may be received on FHLB stock.

As of September 30, 2016 and December 31, 2015, the Corporation had investments in FHLB stock with a book value of $26.6 million and $31.3 million, respectively. The net realizable value is a reasonable proxy for the fair value of these instruments. Dividend income from FHLB stock for the quarters ended September 30, 2016 and 2015 was $0.4 million and $0.3 million, respectively, and for the nine-month periods ended September 30, 2016 and 2015 was $1.1 million and $0.8 million, respectively.

The shares of FHLB stock owned by the Corporation were issued by the FHLB of New York. The FHLB of New York is part of the Federal Home Loan Bank System, a national wholesale banking network of 11 regional, stockholder-owned congressionally chartered banks. The Federal Home Loan Banks are all privately capitalized and operated by their member stockholders. The system is supervised by the Federal Housing Finance Agency, which ensures that the Federal Home Loan Banks operate in a financially safe and sound manner, remain adequately capitalized and able to raise funds in the capital markets, and carry out their housing finance mission.

    The Corporation has other equity securities that do not have a readily available fair value. The carrying value of such securities as of September 30, 2016 and December 31, 2015 was $2.1 million and $0.9 million, respectively.

NOTE 6 – LOANS HELD FOR INVESTMENT

 The following table provides information about the loan portfolio held for investment:

		As of September 30,		As of December 31,
		2016		2015
(In thousands)
Residential mortgage loans, mainly secured by first mortgages		$	3,299,942	$	3,344,719
Commercial loans:
Construction loans			124,298		156,195
Commercial mortgage loans			1,545,014		1,537,806
Commercial and Industrial loans (1)			2,167,011		2,246,513
Total commercial loans			3,836,323		3,940,514
Finance leases			229,577		229,165
Consumer loans			1,497,812		1,597,984
Loans held for investment			8,863,654		9,112,382
Allowance for loan and lease losses			(214,070)		(240,710)
Loans held for investment, net		$	8,649,584	$	8,871,672
(1)	As of September 30, 2016 and December 31, 2015, includes $949.9 million and $1.0 billion, respectively, of commercial loans that are secured by real estate but are not dependent upon the real estate for repayment.

24

Loans held for investment on which accrual of interest income had been discontinued as of the indicated dates were as follows:
(In thousands)		September 30,		December 31,
		2016		2015
Non-performing loans:
Residential mortgage		$	162,201	$	169,001
Commercial mortgage			191,449		51,333
Commercial and Industrial			137,016		137,051
Construction:
Land			11,761		12,174
Construction-commercial			36,953		39,466
Construction-residential			2,053		2,996
Consumer:
Auto loans			14,615		17,435
Finance leases			1,969		2,459
Other consumer loans			8,695		10,858
Total non-performing loans held for investment   (1) (2)(3)		$	566,712	$	442,773
(1)	As of September 30, 2016 and December 31, 2015, excludes $8.1 million of non-performing loans held for sale.
(2)	Amount excludes purchased-credit impaired ("PCI") loans with a carrying value of approximately $168.1 million and $173.9 million as of September 30, 2016 and December 31, 2015, respectively, primarily mortgage loans acquired from Doral Bank in the first quarter of 2015 and from Doral Financial in the second quarter of 2014, as further discussed below.  These loans are not considered non-performing due to the application of the accretion method, under which these loans will accrete interest income over the remaining life of the loans using an estimated cash flow analysis.
(3)	Non-performing loans exclude $415.9 million and $414.9 million of Troubled Debt Restructuring ("TDR") loans that are in compliance with modified terms and in accrual status as of September 30, 2016 and December 31, 2015, respectively.

Loans in Process of Foreclosure

    As of September 30, 2016, the recorded investment of residential mortgage loans collateralized by residential real estate property that are in the process of foreclosure amounted to $135.0 million. The Corporation commences the foreclosure process on residential real estate loans when a borrower becomes 120 days delinquent in accordance with the guidelines of the Consumer Financial Protection Bureau (CFPB). Foreclosure procedures and timelines vary depending on whether the property is located in a judicial or non-judicial state. Judicial states (Puerto Rico) require the foreclosure to be processed through the state’s court while foreclosures in non-judicial states are processed without court intervention. Foreclosure timelines vary according to state law and Investor Guidelines. Occasionally, foreclosures may be delayed due to mandatory mediations, bankruptcy proceedings, court delays and title issues, among other reasons.

25

The Corporation’s aging of the loans held for investment portfolio is as follows:
										Purchased Credit-Impaired Loans				Total loans held for investment		90 days past due and still accruing (2)
		30-59 Days Past Due		60-89 Days Past Due			90 days or more Past Due (1)	Total Past Due
As of September 30, 2016
(In thousands)												Current
Residential mortgage:
FHA/VA and other government-guaranteed loans (2) (3) (4)		$	-	$	5,310	$	81,677	$	86,987	$	-	$	44,949	$	131,936	$	81,677
Other residential mortgage loans (4)			-		87,425		179,648		267,073		165,014		2,735,919		3,168,006		17,447
Commercial:
Commercial and Industrial loans			44,967		500		138,484		183,951		-		1,983,060		2,167,011		1,468
Commercial mortgage loans (4)			-		3,436		196,240		199,676		3,127		1,342,211		1,545,014		4,791
Construction:
Land (4)			-		765		12,137		12,902		-		20,495		33,397		376
Construction-commercial (4)			-		-		36,953		36,953		-		38,460		75,413		-
Construction-residential (4)			-		-		2,721		2,721		-		12,767		15,488		668
Consumer:
Auto loans			63,470		13,743		14,615		91,828		-		766,969		858,797		-
Finance leases			8,199		2,312		1,969		12,480		-		217,097		229,577		-
Other consumer loans			8,192		4,824		12,806		25,822		-		613,193		639,015		4,111
Total loans held for investment		$	124,828	$	118,315	$	677,250	$	920,393	$	168,141	$	7,775,120	$	8,863,654	$	110,538
_____________
(1)	Includes non-performing loans and accruing loans that are contractually delinquent 90 days or more (i.e., FHA/VA guaranteed loans and credit cards). Credit card loans continue to accrue finance charges and fees until charged-off at 180 days.
(2)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past-due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $29.6 million of residential mortgage loans insured by the FHA or guaranteed by the VA, which are over 15 months delinquent and are no longer accruing interest as of September 30, 2016.
(3)	As of September 30, 2016, includes $45.6 million of defaulted loans collateralizing Government National Mortgage Association ("GNMA") securities for which the Corporation has an unconditional option (but not an obligation) to repurchase the defaulted loans.
(4)	According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the  Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears two or more monthly payments. FHA/VA government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans and construction-residential loans past due 30-59 days as of September 30, 2016 amounted to $8.7 million, $144.3 million, $7.6 million, $0.7 million and $0.3 million, respectively.

As of December 31, 2015		30-59 Days Past Due		60-89 Days Past Due		90 days or more Past Due  (1)								Total loans held for investment		90 days past due and still accruing (2)
(In thousands)									Total Past Due		Purchased Credit- Impaired Loans		Current
Residential mortgage:
FHA/VA and other government-guaranteed loans (2) (3) (4)		$	-	$	6,048	$	90,168	$	96,216	$	-	$	46,925	$	143,141	$	90,168
Other residential mortgage loans (4)			-		90,406		185,018		275,424		170,766		2,755,388		3,201,578		16,017
Commercial:
Commercial and Industrial loans			5,577		6,412		150,893		162,882		-		2,083,631		2,246,513		13,842
Commercial mortgage loans (4)			-		24,729		63,805		88,534		3,147		1,446,125		1,537,806		12,472
Construction:
Land (4)			-		161		12,350		12,511		-		39,363		51,874		176
Construction-commercial			-		11,722		39,466		51,188		-		32,142		83,330		-
Construction-residential (4)			-		-		6,042		6,042		-		14,949		20,991		3,046
Consumer:
Auto loans			70,836		16,787		17,435		105,058		-		829,922		934,980		-
Finance leases			7,664		3,100		2,459		13,223		-		215,942		229,165		-
Other consumer loans			9,462		5,524		15,124		30,110		-		632,894		663,004		4,266
Total loans held for investment		$	93,539	$	164,889	$	582,760	$	841,188	$	173,913	$	8,097,281	$	9,112,382	$	139,987
____________
(1)	Includes non-performing loans and accruing loans that are contractually delinquent 90 days or more (i.e. FHA/VA guaranteed loans and credit cards). Credit card loans continue to accrue finance charges and fees until charged-off at 180 days.
(2)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past-due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $37.3 million of residential mortgage loans insured by the FHA or guaranteed by the VA, which are over 15 months delinquent and are no longer accruing interest as of December 31, 2015.
(3)	As of December 31, 2015, includes $38.5 million of defaulted loans collateralizing GNMA securities for which the Corporation has an unconditional option (but not an obligation) to repurchase the defaulted loans.
(4)	According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the  Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears two or more monthly payments.  FHA/VA government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans and construction-residential loans past due 30-59 days as of December 31, 2015 amounted to $11.0 million, $162.9 million, $38.6 million, $5.7 million and $0.8 million, respectively.

26

The Corporation’s credit quality indicators by loan type as of September 30, 2016 and December 31, 2015 are summarized below:
		Commercial Credit Exposure-Credit Risk Profile Based on Creditworthiness Category:
		Substandard		Doubtful		Loss		Total Adversely Classified (1)		Total Portfolio
September 30, 2016
(In thousands)
Commercial mortgage		$	218,523	$	36,211	$	-	$	254,734	$	1,545,014
Construction:
Land			20,175		-		-		20,175		33,397
Construction-commercial			36,953		-		-		36,953		75,413
Construction-residential			2,053		-		-		2,053		15,488
Commercial and Industrial			159,498		72,806		445		232,749		2,167,011
		Commercial Credit Exposure-Credit Risk Profile Based on Creditworthiness Category:
		Substandard		Doubtful		Loss		Total Adversely Classified (1)		Total Portfolio
December 31, 2015
(In thousands)
Commercial mortgage		$	252,941	$	140	$	-	$	253,081	$	1,537,806
Construction:
Land			14,035		1		-		14,036		51,874
Construction-commercial			39,466		-		-		39,466		83,330
Construction-residential			2,996		-		-		2,996		20,991
Commercial and Industrial			140,827		71,341		354		212,522		2,246,513
_________
(1)	Excludes $8.1 million as of September 30, 2016 and December 31, 2015, of construction-land non-performing loans held for sale.

The Corporation considers a loan as adversely classified if its risk rating is Substandard, Doubtful or Loss. These categories are defined as follows:

Substandard- A Substandard asset is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful- Doubtful classifications have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable. A Doubtful classification may be appropriate in cases where significant risk exposures are perceived, but loss cannot be determined because of specific reasonable pending factors which may strengthen the credit in the near term.

Loss- Assets classified Loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future. There is little or no prospect for near term improvement and no realistic strengthening action of significance pending.

27

		Consumer Credit Exposure-Credit Risk Profile based on Payment activity
		Residential Real Estate				Consumer
September 30, 2016		FHA/VA/ Guaranteed(1)		Other residential loans		Auto		Finance Leases		Other Consumer
(In thousands)
Performing		$	131,936	$	2,840,791	$	844,182	$	227,608	$	630,320
Purchased Credit-Impaired (2)			-		165,014		-		-		-
Non-performing			-		162,201		14,615		1,969		8,695
Total		$	131,936	$	3,168,006	$	858,797	$	229,577	$	639,015
(1)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $29.6 million of residential mortgage loans insured by the FHA or guaranteed by the VA, which are over 15 months delinquent and are no longer accruing interest as of September 30, 2016.
(2)	PCI loans are excluded from non-performing statistics due to the application of the accretion method, under which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.
		Consumer Credit Exposure-Credit Risk Profile based on Payment activity
			Residential Real Estate			Consumer
December 31, 2015		FHA/VA/ Guaranteed  (1)		Other residential loans		Auto		Finance Leases		Other Consumer
(In thousands)
Performing		$	143,141	$	2,861,811	$	917,545	$	226,706	$	652,146
Purchased Credit-Impaired (2)			-		170,766		-		-		-
Non-performing			-		169,001		17,435		2,459		10,858
Total		$	143,141	$	3,201,578	$	934,980	$	229,165	$	663,004
(1)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $37.3 million of residential mortgage loans insured by the FHA or guaranteed by the VA, which are over 15 months delinquent and are no longer accruing interest as of December 31, 2015.
(2)	PCI loans are excluded from non-performing statistics due to the application of the accretion method, under which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.

28

      The following tables present information about impaired loans, excluding PCI loans, which are reported separately, as discussed below:

Impaired Loans
(In thousands)
									Quarter Ended				Nine-Month Period Ended
										September 30, 2016
	Recorded Investment		Unpaid Principal Balance		Related Specific Allowance		Year-To-Date Average Recorded Investment		Interest Income Recognized on Accrual Basis		Interest Income Recognized on Cash Basis		Interest Income Recognized on Accrual Basis		Interest Income Recognized on Cash Basis
As of September 30, 2016
With no related allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		64,198		78,361		-		67,024		139		103		376		496
Commercial:
Commercial mortgage loans		51,974		63,759		-		56,826		206		119		599		609
Commercial and Industrial Loans		17,069		26,672		-		20,407		13		-		13		-
Construction:
Land		60		89		-		60		-		-		-		-
Construction-commercial		-		-		-		-		-		-		-		-
Construction-residential		956		1,531		-		956		-		-		-		-
Consumer:
Auto loans		888		888		-		901		6		-		10		-
Finance leases		168		168		-		168		1		-		1		-
Other consumer loans		3,770		5,045		-		3,892		11		25		59		80
	$	139,083	$	176,513	$	-	$	150,234	$	376	$	247	$	1,058	$	1,185
With an allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		379,841		428,395		9,667		385,052		4,396		375		13,160		1,192
Commercial:
Commercial mortgage loans		146,526		166,066		25,907		152,753		136		57		339		179
Commercial and Industrial Loans		161,105		189,683		28,668		171,575		618		49		1,708		203
Construction:
Land		9,346		13,534		903		9,395		21		18		52		35
Construction-commercial		36,953		38,781		1,977		38,516		-		-		-		-
Construction-residential		392		551		124		392		-		-		-		-
Consumer:
Auto loans		24,135		24,135		3,674		25,913		476		-		1,379		-
Finance leases		2,408		2,408		62		2,493		48		-		150		-
Other consumer loans		13,065		13,448		1,700		13,868		356		15		1,005		32
	$	773,771	$	877,001	$	72,682	$	799,957	$	6,051	$	514	$	17,793	$	1,641
Total:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		444,039		506,756		9,667		452,076		4,535		478		13,536		1,688
Commercial:
Commercial mortgage loans		198,500		229,825		25,907		209,579		342		176		938		788
Commercial and Industrial Loans		178,174		216,355		28,668		191,982		631		49		1,721		203
Construction:
Land		9,406		13,623		903		9,455		21		18		52		35
Construction-commercial		36,953		38,781		1,977		38,516		-		-		-		-
Construction-residential		1,348		2,082		124		1,348		-		-		-		-
Consumer:
Auto loans		25,023		25,023		3,674		26,814		482		-		1,389		-
Finance leases		2,576		2,576		62		2,661		49		-		151		-
Other consumer loans		16,835		18,493		1,700		17,760		367		40		1,064		112
	$	912,854	$	1,053,514	$	72,682	$	950,191	$	6,427	$	761	$	18,851	$	2,826

29

(In thousands)
	Recorded Investment		Unpaid Principal Balance		Related Specific Allowance		Average Recorded Investment
As of December 31, 2015
With no related allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		65,495		74,146		-		67,282
Commercial:
Commercial mortgage loans		54,048		66,448		-		54,967
Commercial and Industrial Loans		27,492		29,957		-		28,326
Construction:
Land		-		-		-		-
Construction-commercial		39,466		40,000		-		39,736
Construction-residential		3,046		3,046		-		3,098
Consumer:
Auto loans		-		-		-		-
Finance leases		-		-		-		-
Other consumer loans		2,618		4,300		-		2,766
	$	192,165	$	217,897	$	-	$	196,175
With an allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		395,173		440,947		21,787		398,790
Commercial:
Commercial mortgage loans		27,479		40,634		3,073		30,518
Commercial and Industrial Loans		143,214		164,050		18,096		148,547
Construction:
Land		9,578		13,758		1,060		9,727
Construction-commercial		-		-		-		-
Construction-residential		1,426		2,180		142		1,476
Consumer:
Auto loans		21,581		21,581		6,653		23,531
Finance leases		2,077		2,077		86		2,484
Other consumer loans		13,816		14,043		1,684		14,782
	$	614,344	$	699,270	$	52,581	$	629,855
Total:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		460,668		515,093		21,787		466,072
Commercial:
Commercial mortgage loans		81,527		107,082		3,073		85,485
Commercial and Industrial Loans		170,706		194,007		18,096		176,873
Construction:
Land		9,578		13,758		1,060		9,727
Construction-commercial		39,466		40,000		-		39,736
Construction-residential		4,472		5,226		142		4,574
Consumer:
Auto loans		21,581		21,581		6,653		23,531
Finance leases		2,077		2,077		86		2,484
Other consumer loans		16,434		18,343		1,684		17,548
	$	806,509	$	917,167	$	52,581	$	826,030
Interest income of approximately $7.8 million ($6.9 million accrual basis and $0.9 million cash basis) and $24.8 million ($19.8 million accrual basis and $5.0 million cash basis) was recognized on impaired loans for the third quarter and nine-month period ended September 30, 2015, respectively.

30

The following tables show the activity for impaired loans and the related specific reserve for the quarters and nine-month periods ended September 30, 2016 and 2015:
		Quarter Ended				Nine-Month Period Ended
		September 30,				September 30,
(In thousands)			2016		2015		2016		2015
Impaired Loans:
Balance at beginning of period		$	953,774	$	824,816	$	806,509	$	945,407
Loans determined impaired during the period			26,613		37,528		261,544		135,350
Charge-offs (1)			(30,426)		(7,498)		(50,027)		(90,026)
Loans sold, net of charge-offs			-		-		-		(67,836)
Increases to impaired loans-additional disbursements			1,091		408		2,852		2,524
Reclassification from loans held for sale (2)			-		40,005		-		40,005
Foreclosures			(11,856)		(12,858)		(28,466)		(33,044)
Loans no longer considered impaired			(2,674)		(25,877)		(27,560)		(39,062)
Paid in full or partial payments			(23,668)		(13,811)		(51,998)		(50,605)
Balance at end of period		$	912,854	$	842,713	$	912,854	$	842,713
(1)	For the nine-month period ended September 30, 2015, includes $63.9 million of charge-offs related to a bulk sale of assets completed in the second quarter of 2015, mostly comprised of non-performing and adversely classified commercial loans, as further discussed below.
(2)	During the third quarter of 2015, upon the signing of a new agreement with the borrower, the Corporation changed its intent to sell a $40.0 million construction loan in the Virgin Islands. Accordingly, the loan was transferred back from held for sale to held for investment.

	Quarter Ended				Nine-Month Period Ended
	September 30,				September 30,
(In thousands)	2016		2015		2016		2015
Specific Reserve:
Balance at beginning of period	$	86,372	$	49,918	$	52,581		55,205
Provision for loan losses		16,619		9,439		70,011		81,796
Net charge-offs		(30,309)		(7,498)		(49,910)		(85,142)
Balance at end of period	$	72,682	$	51,859	$	72,682	$	51,859

31

PCI Loans

    The Corporation acquired PCI loans accounted for under ASC 310-30 as part of the transaction closed on February 27, 2015 in which FirstBank acquired 10 Puerto Rico branches of Doral Bank, and acquired certain assets, including PCI loans, and assumed deposits, through an alliance with Banco Popular of Puerto Rico, which was the successful lead bidder with the FDIC on the failed Doral Bank, as well as other co-bidders. The Corporation also acquired PCI loans in previously completed asset acquisitions that are accounted for under ASC 310-30. These previous transactions include the acquisition from Doral Financial in the second quarter of 2014 of all its rights, title and interest in first and second residential mortgages loans in full satisfaction of secured borrowings owed by such entity to FirstBank.

   Under ASC 310-30, the acquired PCI loans were aggregated into pools based on similar characteristics (i.e. delinquency status, loan terms). Each loan pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. Since the loans are accounted for by the Corporation under ASC 310-30, they are not considered non-performing and will continue to have an accretable yield as long as there is a reasonable expectation about the timing and amount of cash flows expected to be collected. The Corporation recognizes additional losses on this portfolio when it is probable that the Corporation will be unable to collect all cash flows expected as of the acquisition date plus additional cash flows expected to be collected arising from changes in estimates after the acquisition date.

The carrying amount of PCI loans follows:
	September 30,		December 31,
	2016		2015
(In thousands)
Residential mortgage loans	$	165,014	$	170,766
Commercial mortgage loans		3,127		3,147
Total PCI loans	$	168,141	$	173,913
Allowance for loan losses		(6,857)		(3,962)
Total PCI loans, net of allowance for loan losses	$	161,284	$	169,951

The following tables present PCI loans by past due status as of September 30, 2016 and December 31, 2015:
As of September 30, 2016		30-59 Days		60-89 Days		90 days or more		Total Past Due				Total PCI loans
(In thousands)										Current
Residential mortgage loans (1)		$	-	$	12,048	$	26,621	$	38,669	$	126,345	$	165,014
Commercial mortgage loans (1)			-		-		1,283		1,283		1,844		3,127
		$	-	$	12,048	$	27,904	$	39,952	$	128,189	$	168,141
_____________
(1)	According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the  Federal Reserve Board, residential mortgage and commercial mortgage loans are considered past due when the borrower is in arrears two or more monthly payments. PCI residential mortgage loans and commercial mortgage loans past due 30-59 days as of September 30, 2016 amounted to $22.3 million and $0.4 million, respectively.
As of December 31, 2015		30-59 Days		60-89 Days		90 days or more		Total Past Due				Total PCI loans
(In thousands)										Current
Residential mortgage loans (1)		$	-	$	16,094	$	22,218	$	38,312	$	132,454	$	170,766
Commercial mortgage loans (1)			-		-		992		992		2,155		3,147
		$	-	$	16,094	$	23,210	$	39,304	$	134,609	$	173,913
(1)	According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the  Federal Reserve Board, residential mortgage and commercial mortgage loans are considered past due when the borrower is in arrears two or more monthly payments. PCI residential mortgage loans past due 30-59 days as of December 31, 2015 amounted to $23.6 million.

Initial Fair Value and Accretable Yield of PCI Loans

At acquisition, the Corporation estimated the cash flows the Corporation expected to collect on PCI loans. Under the accounting guidance for PCI loans, the difference between the contractually required payments and the cash flows expected to be collected at acquisition is referred to as the non-accretable difference. This difference is neither accreted into income nor recorded on the Corporation’s consolidated statement of financial condition. The excess of cash flows expected to be collected over the estimated fair value is referred to as the accretable yield and is recognized in interest income over the remaining life of the loans, using the effective-yield method.

32

Changes in accretable yield of acquired loans

Subsequent to an acquisition of loans, the Corporation is required to periodically evaluate its estimate of cash flows expected to be collected. These evaluations, performed quarterly, require the continued use of key assumptions and estimates, similar to the initial estimate of fair value. Subsequent changes in the estimated cash flows expected to be collected may result in changes in the accretable yield and non-accretable difference or reclassifications from nonaccretable yield to accretable yield. Increases in the cash flows expected to be collected will generally result in an increase in interest income over the remaining life of the loan or pool of loans. Decreases in expected cash flows due to further credit deterioration will generally result in an impairment charge recognized in the Corporation’s provision for loan and lease losses, resulting in an increase to the allowance for loan losses. During the first nine months of 2016, the Corporation increased by $2.9 million to $6.9 million the reserve related to PCI loans acquired from Doral Financial in 2014. The reserve is driven by the revisions to the expected cash flows of the portfolio for the remaining term of the loan pool based on expected performance and market conditions.

Changes in the accretable yield of PCI loans for the quarters and nine-month periods ended September 30, 2016 and 2015 were as follows:
	Quarter Ended				Nine-Month Period Ended
	September 30,		September 30,		September 30,		September 30,
	2016		2015		2016		2015
(In thousands)
Balance at beginning of period	$	122,179	$	124,288	$	118,385	$	82,460
Additions (accretable yield at acquisition
of loans from Doral)		-		-		-		38,319
Accretion recognized in earnings		(2,875)		(3,411)		(8,691)		(8,695)
Reclassification from non-accretable		-		1,348		9,610		10,141
Balance at end of period	$	119,304	$	122,225	$	119,304	$	122,225

Changes in the carrying amount of loans accounted for pursuant to ASC 310-30 are as follows:
		Quarter Ended				Nine-Month Period Ended
		September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
(In thousands)
Balance at beginning of period		$	169,690	$	178,494	$	173,913	$	102,604
Additions (1)			-		-		-		79,889
Accretion			2,875		3,411		8,691		8,695
Collections			(4,184)		(5,663)		(13,136)		(14,946)
Foreclosures			(240)		(157)		(1,327)		(157)
Ending balance		$	168,141	$	176,085	$	168,141	$	176,085
Allowance for loan losses			(6,857)		(3,163)		(6,857)		(3,163)
Ending balance, net of allowance for loan losses		$	161,284	$	172,922	$	161,284	$	172,922
(1)	For the nine-month period ended September 30, 2015, additions represents the estimated fair value of PCI loans acquired from Doral Bank at the date of acquisition.

Changes in the allowance for loan losses related to PCI loans follows:
	Quarter Ended				Nine-Month Period Ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
	(In thousands)
Balance at beginning of period	$	6,857	$	3,163	$	3,962	$	-
Provision for loan losses		-		-		2,895		3,163
Balance at end of period	$	6,857	$	3,163	$	6,857	$	3,163

33

 The outstanding principal balance of PCI loans, including amounts charged off by the Corporation, amounted to $210.6 million as of September 30, 2016 (December 2015 - $218.1 million).

Purchases and Sales of Loans

During the first nine months of 2016, the Corporation purchased $65.2 million of residential mortgage loans consistent with a seasoned strategic program to purchase ongoing residential mortgage loan production from mortgage bankers in Puerto Rico. Generally, the loans purchased from mortgage bankers were conforming residential mortgage loans. Purchases of conforming residential mortgage loans provide the Corporation the flexibility to retain or sell the loans, including through securitization transactions, depending upon the Corporation’s interest rate risk management strategies. When the Corporation sells such loans, it generally keeps the servicing of the loans.

     In the ordinary course of business, the Corporation sells residential mortgage loans (originated or purchased) to GNMA and government-sponsored entities (“GSEs”) such as Fannie Mae (“FNMA”) and Freddie Mac (“FHLMC”), which generally securitize the transferred loans into mortgage-backed securities for sale into the secondary market. The Corporation sold approximately $108.5 million of performing residential mortgage loans to FNMA and FHLMC during the first nine months of 2016.  Also, during the first nine months of 2016, the Corporation sold $238.6 million of FHA/VA mortgage loans to GNMA, which packages them into mortgage-backed securities. The Corporation’s continuing involvement in these sold loans consists primarily of servicing the loans. In addition, the Corporation agreed to repurchase loans when it breaches any of the representations and warranties included in the sale agreement. These representations and warranties are consistent with the GSEs’ selling and servicing guidelines (i.e., ensuring that the mortgage was properly underwritten according to established guidelines).

For loans sold to GNMA, the Corporation holds an option to repurchase individual delinquent loans issued on or after January 1, 2003 when the borrower fails to make any payment for three consecutive months. This option gives the Corporation the ability, but not the obligation, to repurchase the delinquent loans at par without prior authorization from GNMA.

Under ASC Topic 860, Transfer and Servicing, once the Corporation has the unilateral ability to repurchase the delinquent loan, it is considered to have regained effective control over the loan and is required to recognize the loan and a corresponding repurchase liability on the balance sheet regardless of the Corporation’s intent to repurchase the loan.

   During the first nine months of 2016 and 2015, the Corporation repurchased pursuant to its repurchase option with GNMA $20.9 million and $10.6 million, respectively, of loans previously sold to GNMA.  The principal balance of these loans is fully guaranteed and the risk of loss related to the repurchased loans is generally limited to the difference between the delinquent interest payment advanced to GNMA computed at the loan’s interest rate and the interest payments reimbursed by FHA, which are computed at a pre-determined debenture rate. Repurchases of GNMA loans allow the Corporation, among other things, to maintain acceptable delinquency rates on outstanding GNMA pools and remain as a seller and servicer in good standing with GNMA. The Corporation generally remediates any breach of representations and warranties related to the underwriting of such loans according to established GNMA guidelines without incurring losses. The Corporation does not maintain a liability for estimated losses as a result of breaches in representations and warranties.

Loan sales to FNMA and FHLMC are without recourse in relation to the future performance of the loans.  The Corporation repurchased at par loans previously sold to FNMA and FHLMC in the amount of $0.7 million and $1.3 million during the first nine months of 2016 and 2015, respectively. The Corporation’s risk of loss with respect to these loans is also minimal as these repurchased loans are generally performing loans with documentation deficiencies. No losses related to breaches of representations and warranties were incurred in the first nine months of 2016. Historically, losses experienced on these loans have been immaterial. As a consequence, as of September 30, 2016, the Corporation does not maintain a liability for estimated losses on loans expected to be repurchased as a result of breaches in loan and servicer representations and warranties.

In addition, the Corporation sold $20.2 million and $20.0 million in commercial mortgage loan participations during the first nine months of 2016 and 2015, respectively.

Bulk Sale of Assets

During the second quarter of 2015, the Corporation completed the sale of commercial and construction loans with a book value of $147.5 million ($90.7 million of commercial mortgage loans, $45.8 million of commercial and industrial loans, and $11.0 million of construction loans), comprised mostly of non-performing and adversely classified loans, as well as other real estate owned (“OREO”) with a book value of $2.9 million, in a cash transaction. The sales price of this bulk sale was $87.3 million. Approximately $15.3 million of reserves had been allocated to the loans. This transaction resulted in total charge-offs of $61.4 million and an incremental pre-tax loss of $48.7 million, including $0.9 million in professional service fees directly attributable to the bulk sale.

34

Loan Portfolio Concentration

The Corporation’s primary lending area is Puerto Rico.  The Corporation’s banking subsidiary, First Bank, also lends in the USVI and BVI markets and in the United States (principally in the state of Florida).  Of the total gross loans held for investment of $8.9 billion as of September 30, 2016, approximately 78% have credit risk concentration in Puerto Rico, 15% in the United States, and 7% in the USVI and BVI.

    As of September 30, 2016, the Corporation had $134.0 million outstanding (book value of $126.2 million) in credit facilities extended to the Puerto Rico government, its municipalities, and public corporations, compared to $153.2 million outstanding as of December 31, 2015. In addition, the outstanding balance of credit facilities granted to the government of the Virgin Islands amounted to $65.6 million as of September 30, 2016, compared to $126.2 million as of December 31, 2015.Approximately $91.4 million of the granted credit facilities outstanding ($83.7 million book value) consisted of loans to public corporations, including a direct exposure to the Puerto Rico Electric Power Authority (“PREPA”) with an outstanding balance of $74.6 million ($66.9 million book value) as of September 30, 2016, and approximately $6.9 million consisted of loans to units of the Puerto Rico central government.  The PREPA credit facility was placed in non-accrual status in the first quarter of 2015, and interest payments are recorded on a cost-recovery basis.  In addition, the Corporation had $35.7 million of loans extended to municipalities in Puerto Rico, which in most cases are supported by assigned property tax revenues.  Municipalities’ revenues are independent of the Puerto Rico central government. These municipalities are required by law to levy special property taxes in such amounts as are required for the payment of all of their respective general obligation bonds and loans. Late in 2015, the GDB and the Municipal Revenue Collection Center (CRIM) signed a deed of trust. Through this deed, the GDB, as fiduciary, is bound to keep the CRIM funds separate from any other deposits and must distribute the funds pursuant to applicable law. The CRIM funds are deposited at another depository financial institution in Puerto Rico.

  Furthermore, as of September 30, 2016, the Corporation had $128.0 million outstanding (book value of $112.8 million) in financings to the hotel industry in Puerto Rico under which the borrower and the operations of the underlying collateral are the primary sources of repayment and the Puerto Rico Tourism Development Fund (“TDF”) provides a secondary guarantee for payment performance, compared to $129.4 million outstanding as of December 31, 2015. These facilities were placed in non-accrual status and classified as impaired in the first quarter of 2016, and interest payments are now applied against principal. Approximately $1.6 million of interest payments received on loans guaranteed by the TDF since late March 2016 have been applied against principal. As of the date of filing of this Form 10-Q, the largest of these three facilities is current on contractual payments as its operations are generating the cash flows to cover payments. The Corporation has been receiving partial payments from the other two facilities since their operations are insufficient to cover the entire contractual payments and the Corporation is not receiving collections from the TDF guarantee. As such, these two facilities are collateral dependent loans and charge-offs amounting to $13.7 million were recorded in the third quarter of 2016, of which $12.8 million was charged against specific reserves established in prior periods. These loans have been adversely classified since the third quarter of 2015.   The Corporation’s collections of principal and interest from the TDF in the first half of 2016 amounted to $0.6 million compared to $5.3 million in the entire 2015 year.

  The TDF is a subsidiary of the GDB that facilitates private sector financings to Puerto Rico’s hotel industry. Adverse developments related to the Puerto Rico government’s fiscal situation introduced additional uncertainty regarding the TDF’s ability to honor its guarantee, including the enactment of the Puerto Rico Emergency Moratorium and Financial Rehabilitation Act (“Act 21”), which gives Puerto Rico’s governor emergency powers to deal with Puerto Rico’s challenging fiscal situation, including the ability to declare a moratorium on all bonds and other payments. On June 30, 2016, pursuant to Act 21, the Puerto Rico governor ordered a moratorium on the payment of $780 million of the Puerto Rico Government’s general obligations and the debt of certain other instrumentalities due on July 1, 2016.  This followed a default on the principal payment of $367 million of GDB notes due on May 1, 2016.  Puerto Rico’s governor also issued an executive order intended to protect the GDB’s liquidity by allowing withdrawals only to fund necessary costs for essential services such as health, public safety and education services. Recently, the GDB defaulted on a $28 million payment of interest due to its creditors on August 1, 2016, including interest due on GDB bonds held by the Corporation.

As of September 30, 2016, the total reserve to book value coverage ratio related to commercial loans extended to or guaranteed by the Puerto Rico Government (excluding municipalities) was 16% and the loans are being carried at 76% of unpaid principal balance, net of reserves and accumulated charge offs.

     In addition, the Corporation had $121.4 million in indirect exposure to residential mortgage loans that are guaranteed by the Puerto Rico Housing Finance Authority. Residential mortgage loans guaranteed by the Puerto Rico Housing Finance Authority are secured by the underlying properties and the guarantees serve to cover shortfalls in collateral in the event of a borrower default. The Puerto Rico government guarantees up to $75 million of the principal guaranteed under the mortgage loans insurance program. According to the most recently released audited financial statements of the Puerto Rico Housing Financing Authority, as of June 30, 2015, the Puerto Rico Housing Finance Authority’s mortgage loans insurance program covered loans aggregating approximately $552 million. The regulations adopted by the Puerto Rico Housing Finance Authority require the establishment of adequate reserves to guarantee the solvency of the mortgage loans insurance fund. As of June 30, 2015, the most recent date as to which information is available, the Puerto Rico Housing Finance Authority had a restricted net position for such purposes of approximately $77.4 million.

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   The Corporation cannot predict at this time the impact that the current fiscal situation of the Commonwealth of Puerto Rico, including the payment defaults on certain bonds, the uncertainty about the debt restructuring process, and the various legislative and other measures that have been and could be adopted by the Puerto Rico government in response to such fiscal situation, will have on the Puerto Rico economy and on the Corporation’s financial condition and results of operations.

Troubled Debt Restructurings

The Corporation provides homeownership preservation assistance to its customers through a loss mitigation program in Puerto Rico that is similar to the U.S. government’s Home Affordable Modification Program guidelines. Depending upon the nature of borrowers’ financial condition, restructurings or loan modifications through this program as well as other restructurings of individual commercial, commercial mortgage, construction, and residential mortgage loans fit the definition of a TDR. A restructuring of a debt constitutes a TDR if the creditor for economic or legal reasons related to the debtor’s financial difficulties grants a concession to the debtor that it would not otherwise consider. Modifications involve changes in one or more of the loan terms that bring a defaulted loan current and provide sustainable affordability. Changes may include the refinancing of any past-due amounts, including interest and escrow, the extension of the maturity of the loan and modifications of the loan rate. As of September 30, 2016, the Corporation’s total TDR loans held for investment of $656.3 million consisted of $378.7 million of residential mortgage loans, $150.9 million of commercial and industrial loans, $44.0 million of commercial mortgage loans, $40.2 million of construction loans, and $42.5 million of consumer loans. Outstanding unfunded commitments on TDR loans amounted to $5.7 million as of September 30, 2016.

The Corporation’s loss mitigation programs for residential mortgage and consumer loans can provide for one or a combination of the following: movement of interest past due to the end of the loan, extension of the loan term, deferral of principal payments and reduction of interest rates either permanently or for a period of up to four years (increasing back in step-up rates). Additionally, in certain cases, the restructuring may provide for the forgiveness of contractually due principal or interest. Uncollected interest is added to the end of the loan term at the time of the restructuring and not recognized as income until collected or when the loan is paid off. These programs are available only to those borrowers who have defaulted, or are likely to default, permanently on their loan and would lose their homes in a foreclosure action absent some lender concession. Nevertheless, if the Corporation is not reasonably assured that the borrower will comply with its contractual commitment, properties are foreclosed.

   Prior to permanently modifying a loan, the Corporation may enter into trial modifications with certain borrowers. Trial modifications generally represent a six-month period during which the borrower makes monthly payments under the anticipated modified payment terms prior to a formal modification. Upon successful completion of a trial modification, the Corporation and the borrower enter into a permanent modification. TDR loans that are participating in or that have been offered a binding trial modification are classified as TDRs when the trial offer is made and continue to be classified as TDRs regardless of whether the borrower enters into a permanent modification. As of September 30, 2016, we classified an additional $5.6 million of residential mortgage loans as TDRs that were participating in or had been offered a trial modification.

For the commercial real estate, commercial and industrial, and construction loan portfolios, at the time of a restructuring, the Corporation determines, on a loan-by-loan basis, whether a concession was granted for economic or legal reasons related to the borrower’s financial difficulty. Concessions granted for commercial loans could include: reductions in interest rates to rates that are considered below market; extension of repayment schedules and maturity dates beyond original contractual terms; waivers of borrower covenants; forgiveness of principal or interest; or other contractual changes that would be considered a concession. The Corporation mitigates loan defaults for its commercial loan portfolios through its collection function. The function’s objective is to minimize both early stage delinquencies and losses upon default of commercial loans. In the case of the commercial and industrial,  commercial mortgage, and construction loan portfolios, the Corporation’s Special Asset Group (“SAG”) focuses on strategies for the accelerated reduction of non-performing assets through note sales, short sales, loss mitigation programs, and sales of OREO. 

In addition, the Corporation extends, renews, and restructures loans with satisfactory credit profiles. Many commercial loan facilities are structured as lines of credit, which are mainly one year in term and, therefore, are required to be renewed annually. Other facilities may be restructured or extended from time to time based upon changes in the borrower’s business needs, use of funds, timing of completion of projects, and other factors. If the borrower is not deemed to have financial difficulties, extensions, renewals, and restructurings are done in the normal course of business and are not considered to be concessions, and the loans continue to be recorded as performing.

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Selected information on TDRs that includes the recorded investment by loan class and modification type is summarized in the following tables. This information reflects all TDRs:
		September 30, 2016
(In thousands)		Interest rate below market		Maturity or term extension		Combination of reduction in interest rate and extension of maturity		Forgiveness of principal and/or interest		Other (1)		Total
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans		$	29,934	$	8,172	$	283,550	$	-	$	57,065	$	378,721
Commercial Mortgage Loans			6,092		1,219		26,053		-		10,608		43,972
Commercial and Industrial Loans			2,153		69,244		25,263		2,637		51,593		150,890
Construction Loans:
Land			-		285		2,193		-		402		2,880
Construction-commercial			-		-		-		36,953		-		36,953
Construction-residential			-		-		-		-		357		357
Consumer Loans - Auto			-		1,921		14,680		-		8,422		25,023
Finance Leases			-		424		2,152		-		-		2,576
Consumer Loans - Other			229		2,185		10,120		300		2,112		14,946
Total Troubled Debt Restructurings		$	38,408	$	83,450	$	364,011	$	39,890	$	130,559	$	656,318
(1)	Other concessions granted by the Corporation include deferral of principal and/or interest payments for a period longer than what would be considered insignificant, payment plans under judicial stipulation or a combination of the concessions listed in the table.

		December 31, 2015
(In thousands)		Interest rate below market		Maturity or term extension		Combination of reduction in interest rate and extension of maturity		Forgiveness of principal and/or interest		Other (1)		Total
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans		$	29,066	$	6,027	$	297,310	$	-	$	50,269	$	382,672
Commercial Mortgage Loans			4,379		1,244		26,109		-		12,766		44,498
Commercial and Industrial Loans			2,163		75,104		27,214		3,027		42,746		150,254
Construction Loans:
Land			-		229		2,165		-		372		2,766
Construction-commercial			-		-		-		39,466		-		39,466
Construction-residential			-		-		3,046		-		436		3,482
Consumer Loans - Auto			-		2,330		12,388		-		6,864		21,582
Finance Leases			-		621		1,456		-		-		2,077
Consumer Loans - Other			89		1,604		11,026		327		1,748		14,794
Total Troubled Debt Restructurings		$	35,697	$	87,159	$	380,714	$	42,820	$	115,201	$	661,591
(1)	Other concessions granted by the Corporation include deferral of principal and/or interest payments for a period longer than what would be considered insignificant, payment plans under judicial stipulation or a combination of the concessions listed in the table.

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	The following table presents the Corporation's TDR loans activity:
		Quarter Ended				Nine-Month Period Ended
(In thousands)		September 30,				September 30,
		2016		2015		2016		2015
Beginning balance of TDRs		$	670,991	$	634,761	$	661,591	$	694,453
New TDRs			15,596		30,044		66,075		95,840
Increases to existing TDRs - additional
disbursements			517		309		1,573		644
Charge-offs post modification (1)			(5,445)		(5,327)		(15,899)		(58,707)
Sales, net of charge-offs			-		-		-		(44,048)
Foreclosures			(5,567)		(6,139)		(12,967)		(16,391)
Removed from the TDR classification			-		-		(3,031)		-
Reclassification from loans held for sale (2)			-		40,005		-		40,005
Paid-off and partial payments			(19,774)		(11,690)		(41,024)		(29,833)
Ending balance of TDRs		$	656,318	$	681,963	$	656,318	$	681,963
(1)	For the nine-month period ended September 30, 2015, includes $45.3 million of charge offs related to TDRs included in the bulk sale of assets completed in the second quarter of 2015.
(2)	During the third quarter of 2015, upon the signing of a new agreement with the borrower, the Corporation changed its intent to sell a $40.0 million construction loan in the Virgin Islands. Accordingly, the loan was transferred back from held for sale to held for investment and continues to be classified as a TDR and a nonperforming loan.

TDR loans are classified as either accrual or nonaccrual loans. Loans in accrual status may remain in accrual status when their contractual terms have been modified in a TDR if the loan had demonstrated performance prior to the restructuring and payment in full under the restructured terms is expected. Otherwise, loans on non-accrual and restructured as a TDR will remain on nonaccrual status until the borrower has proven the ability to perform under the modified structure, generally for a minimum of six months, and there is evidence that such payments can and are likely to continue as agreed. Performance prior to the restructuring, or significant events that coincide with the restructuring, are included in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual status at the time of the restructuring or after a shorter performance period. If the borrower’s ability to meet the revised payment schedule is uncertain, the loan remains classified as a non-accrual loan. Loan modifications increase the Corporation’s interest income by returning a non-performing loan to performing status, if applicable, increase cash flows by providing for payments to be made by the borrower, and limit increases in foreclosure and OREO costs. The Corporation continues to consider a modified loan as an impaired loan for purposes of estimating the allowance for loan and lease losses. A TDR loan that specifies an interest rate that at the time of the restructuring is greater than or equal to the rate the Corporation is willing to accept for a new loan with comparable risk may not be reported as a TDR, or an impaired loan in the calendar years subsequent to the restructuring, if it is in compliance with its modified terms. During the first nine months of 2016, the Corporation removed a $3.0 million loan from the TDR classification as the borrower is no longer experiencing financial difficulties, and the loan was refinanced at market terms and does not contain any concession to the borrower.

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The following table provides a breakdown between accrual and nonaccrual status of TDR loans:
(In thousands)		As of September 30, 2016
		Accrual		Nonaccrual (1)		Total TDRs
Non-FHA/VA Residential Mortgage loans		$	296,840	$	81,881	$	378,721
Commercial Mortgage Loans			28,699		15,273		43,972
Commercial and Industrial Loans			58,004		92,886		150,890
Construction Loans:
Land			1,205		1,675		2,880
Construction-commercial			-		36,953		36,953
Construction-residential			-		357		357
Consumer Loans - Auto			16,561		8,462		25,023
Finance Leases			2,437		139		2,576
Consumer Loans - Other			12,173		2,773		14,946
Total Troubled Debt Restructurings		$	415,919	$	240,399	$	656,318
(1)	Included in non-accrual loans are $121.3 million in loans that are performing under the terms of the restructuring agreement but are reported in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and are deemed fully collectible.

(In thousands)		As of December 31, 2015
		Accrual		Nonaccrual (1)		Total TDRs
Non- FHA/VA Residential Mortgage loans		$	303,885	$	78,787	$	382,672
Commercial Mortgage Loans			29,121		15,377		44,498
Commercial and Industrial Loans			48,392		101,862		150,254
Construction Loans:
Land			924		1,842		2,766
Construction-commercial			-		39,466		39,466
Construction-residential			3,046		436		3,482
Consumer Loans - Auto			14,823		6,759		21,582
Finance Leases			1,980		97		2,077
Consumer Loans - Other			12,737		2,057		14,794
Total Troubled Debt Restructurings		$	414,908	$	246,683	$	661,591
(1)	Included in non-accrual loans are $118.2 million in loans that are performing under the terms of the restructuring agreement but are reported in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and there is no doubt about full collectability.

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TDR loans exclude restructured residential mortgage loans that are guaranteed by the U.S. federal government (i.e., FHA/VA loans) totaling $67.9 million as of September 30, 2016 (December 31, 2015 - $77.6 million). The Corporation excludes FHA/VA guaranteed loans from TDR loans statistics given that, in the event that the borrower defaults on the loan, the principal and interest (at the specified debenture rate) are guaranteed by the U.S. government; therefore, the risk of loss on these types of loans is very low. The Corporation does not consider loans with U.S. federal government guarantees to be impaired loans for the purpose of calculating the allowance for loan and lease losses.

Loan modifications that are considered TDRs completed during the quarter and nine-month period ended September 30, 2016 and 2015 were as follows:

(Dollars in thousands)	Quarter Ended September 30, 2016
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	55	$	8,631	$	8,449
Commercial Mortgage Loans	5		679		712
Commercial and Industrial Loans	2		1,432		1,432
Construction Loans:
Land	4		158		155
Consumer Loans - Auto	189		3,262		3,262
Finance Leases	11		295		295
Consumer Loans - Other	257		1,269		1,291
Total Troubled Debt Restructurings	523	$	15,726	$	15,596
(Dollars in thousands)	Nine-Month Period Ended September 30, 2016
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	167	$	25,040	$	24,040
Commercial Mortgage Loans	8		3,351		3,380
Commercial and Industrial Loans	21		21,693		21,693
Construction Loans:
Land	4		158		155
Consumer Loans - Auto	612		10,961		10,961
Finance Leases	59		1,477		1,477
Consumer Loans - Other	862		4,312		4,369
Total Troubled Debt Restructurings	1,733	$	66,992	$	66,075

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(Dollars in thousands)	Quarter Ended September 30, 2015
	Number of contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	98	$	19,901	$	19,481
Commercial Mortgage Loans	4		7,380		5,719
Construction Loans:
Land	1		109		109
Consumer Loans - Auto	203		3,352		3,297
Finance Leases	19		521		418
Consumer Loans - Other	197		1,026		1,020
Total Troubled Debt Restructurings	522	$	32,289	$	30,044
(Dollars in thousands)	Nine-Month Period Ended September 30, 2015
	Number of contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	350	$	60,043	$	57,882
Commercial Mortgage Loans	13		20,332		18,781
Commercial and Industrial Loans	3		2,997		2,579
Construction Loans:
Land	7		603		600
Consumer Loans - Auto	547		8,739		8,564
Finance Leases	43		1,215		1,056
Consumer Loans - Other	929		6,432		6,378
Total Troubled Debt Restructurings	1,892	$	100,361	$	95,840

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Recidivism, or the borrower defaulting on its obligation pursuant to a modified loan, results in the loan once again becoming a non-performing loan. Recidivism on modified loans occurs at a notably higher rate than do defaults on new origination loans, so modified loans present a higher risk of loss than do new origination loans. The Corporation considers a loan to have defaulted if the borrower has failed to make payments of either principal, interest, or both for a period of 90 days or more.

   Loan modifications considered TDR loans that defaulted during the quarters and nine-month periods ended September 30, 2016 and September 30, 2015 and had become TDR during the 12-months preceding the default date were as follows:

	Quarter Ended September 30,
(Dollars in thousands)	2016			2015
	Number of contracts	Recorded Investment		Number of contracts	Recorded Investment
Non-FHA/VA Residential Mortgage loans	14	$	1,707	23	$	3,744
Consumer Loans - Auto	5		68	1		10
Consumer Loans - Other	22		93	51		219
Finance Leases	1		30	3		145
Total	42	$	1,898	78	$	4,118

	Nine-Month Period Ended September 30,
(Dollars in thousands)	2016			2015
	Number of contracts	Recorded Investment		Number of contracts	Recorded Investment
Non-FHA/VA Residential Mortgage loans	35	$	4,863	50	$	7,646
Commercial and Industrial Loans	-		-	4		5,745
Consumer Loans - Auto	45		702	8		50
Consumer Loans - Other	89		339	141		589
Finance Leases	2		43	6		185
Total	171	$	5,947	209	$	14,215

For certain TDR loans, the Corporation splits the loans into two new notes, A and B notes. The A note is restructured to comply with the Corporation’s lending standards at current market rates, and is tailored to suit the customer’s ability to make timely interest and principal payments. The B note includes the granting of the concession to the borrower and varies by situation. The B note is charged off but the obligation is not forgiven to the borrower, and any payments collected are accounted for as recoveries. At the time of the restructuring, the A note is identified and classified as a TDR loan. If the loan performs for at least six months according to the modified terms, the A note may be returned to accrual status. The borrower’s payment performance prior to the restructuring is included in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual status at the time of the restructuring. In the periods following the calendar year in which a loan was restructured, the A note may no longer be reported as a TDR loan  if it is in accrual status, is in compliance with its modified terms, and yields a market rate (as determined and documented at the time of the restructuring).

The recorded investment in loans held for investment restructured using the A/B note restructure workout strategy was approximately $38.0 million as of September 30, 2016. The following table provides additional information about the volume of this type of loan restructuring and the effect on the allowance for loan and lease losses in the first nine months of 2016 and 2015:

(In thousands)	September 30, 2016			September 30, 2015
Principal balance deemed collectible at end of period	$	38,004	$	40,632
Amount charged off	$	-	$	-
Charges to the provision for loan losses	$	2,660	$	185
Allowance for loan losses at end of period	$	3,521	$	916

Of the loans comprising the $38.0 million that have been deemed collectible, approximately $37.9 million were placed in accrual status as the borrowers have exhibited a period of sustained performance. These loans continue to be individually evaluated for impairment purposes.

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NOTE 7 – ALLOWANCE FOR LOAN AND LEASE LOSSES

The changes in the allowance for loan and lease losses were as follows:
(In thousands)		Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Quarter ended September 30, 2016
Allowance for loan and lease losses:
Beginning balance		$	38,955	$	69,799	$	69,789	$	2,747	$	53,164	$	234,454
Charge-offs			(8,514)		(13,730)		(10,587)		(19)		(13,716)		(46,566)
Recoveries			972		335		929		140		2,303		4,679
Provision (release)			4,553		(152)		5,597		2,480		9,025		21,503
Ending balance		$	35,966	$	56,252	$	65,728	$	5,348	$	50,776	$	214,070
Ending balance: specific reserve for impaired loans		$	9,667	$	25,907	$	28,668	$	3,004	$	5,436	$	72,682
Ending balance: purchased credit-impaired loans (1)		$	6,638	$	219	$	-	$	-	$	-	$	6,857
Ending balance: general allowance		$	19,661	$	30,126	$	37,060	$	2,344	$	45,340	$	134,531
Loans held for investment:
Ending balance		$	3,299,942	$	1,545,014	$	2,167,011	$	124,298	$	1,727,389	$	8,863,654
Ending balance: impaired loans		$	444,039	$	198,500	$	178,174	$	47,707	$	44,434	$	912,854
Ending balance: purchased credit-impaired loans		$	165,014	$	3,127	$	-	$	-	$	-	$	168,141
Ending balance: loans with general allowance		$	2,690,889	$	1,343,387	$	1,988,837	$	76,591	$	1,682,955	$	7,782,659
(In thousands)		Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Nine-Month Period Ended September 30, 2016
Allowance for loan and lease losses:
Beginning balance		$	39,570	$	68,211	$	68,768	$	3,519	$	60,642	$	240,710
Charge-offs			(27,352)		(15,742)		(16,260)		(623)		(41,490)		(101,467)
Recoveries			2,159		414		1,885		301		6,526		11,285
Provision			21,589		3,369		11,335		2,151		25,098		63,542
Ending balance		$	35,966	$	56,252	$	65,728	$	5,348	$	50,776	$	214,070
Ending balance: specific reserve for impaired loans		$	9,667	$	25,907	$	28,668	$	3,004	$	5,436	$	72,682
Ending balance: purchased credit-impaired loans (1)		$	6,638	$	219	$	-	$	-	$	-	$	6,857
Ending balance: general allowance		$	19,661	$	30,126	$	37,060	$	2,344	$	45,340	$	134,531
Loans held for investment:
Ending balance		$	3,299,942	$	1,545,014	$	2,167,011	$	124,298	$	1,727,389	$	8,863,654
Ending balance: impaired loans		$	444,039	$	198,500	$	178,174	$	47,707	$	44,434	$	912,854
Ending balance: purchased credit-impaired loans		$	165,014	$	3,127	$	-	$	-	$	-	$	168,141
Ending balance: loans with general allowance		$	2,690,889	$	1,343,387	$	1,988,837	$	76,591	$	1,682,955	$	7,782,659
(1)	Refer to Note 6 - Loans Held for Investment -PCI loans for a detail of changes in the allowance for loan losses related to PCI loans.

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(In thousands)	Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Quarter ended September 30, 2015
Allowance for loan and lease losses:
Beginning balance	$	33,783	$	49,092	$	63,900	$	11,865	$	62,878	$	221,518
Charge-offs		(5,094)		(3,677)		(1,267)		(103)		(15,926)		(26,067)
Recoveries		214		20		327		176		1,602		2,339
Provision (release)		6,958		6,668		3,807		(139)		13,882		31,176
Ending balance	$	35,861	$	52,103	$	66,767	$	11,799	$	62,436	$	228,966
Ending balance: specific reserve for impaired loans	$	18,705	$	4,886	$	17,540	$	2,128	$	8,600	$	51,859
Ending balance: purchased credit-impaired loans	$	3,061	$	102	$	-	$	-	$	-	$	3,163
Ending balance: general allowance	$	14,095	$	47,115	$	49,227	$	9,671	$	53,836	$	173,944
Loans held for investment:
Ending balance	$	3,330,089	$	1,562,538	$	2,222,324	$	163,956	$	1,861,555	$	9,140,462
Ending balance: impaired loans	$	459,311	$	104,046	$	174,983	$	66,123	$	38,250	$	842,713
Ending balance: purchased credit-impaired loans	$	172,927	$	3,158	$	-	$	-	$	-	$	176,085
Ending balance: loans with general allowance	$	2,697,851	$	1,455,334	$	2,047,341	$	97,833	$	1,823,305	$	8,121,664
(In thousands)	Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Nine-Month Period Ended September 30, 2015
Allowance for loan and lease losses:
Beginning balance	$	27,301	$	50,894	$	63,721	$	12,822	$	67,657	$	222,395
Charge-offs		(13,815)		(54,115)		(30,090)		(4,787)		(48,221)		(151,028)
Recoveries		584		6,515		3,386		2,379		6,323		19,187
Provision		21,791		48,809		29,750		1,385		36,677		138,412
Ending balance	$	35,861	$	52,103	$	66,767	$	11,799	$	62,436	$	228,966
Ending balance: specific reserve for impaired loans	$	18,705	$	4,886	$	17,540	$	2,128	$	8,600	$	51,859
Ending balance: purchased credit-impaired loans	$	3,061	$	102	$	-	$	-	$	-	$	3,163
Ending balance: general allowance	$	14,095	$	47,115	$	49,227	$	9,671	$	53,836	$	173,944
Loans held for investment:
Ending balance	$	3,330,089	$	1,562,538	$	2,222,324	$	163,956	$	1,861,555	$	9,140,462
Ending balance: impaired loans	$	459,311	$	104,046	$	174,983	$	66,123	$	38,250	$	842,713
Ending balance: purchased credit-impaired loans	$	172,927	$	3,158	$	-	$	-	$	-	$	176,085
Ending balance: loans with general allowance	$	2,697,851	$	1,455,334	$	2,047,341	$	97,833	$	1,823,305	$	8,121,664

As discussed in Note 6, under the heading “Bulk Sale of Assets,” during the second quarter of 2015, the Corporation completed the sale of commercial and construction loans with a book value of $147.5 million, mostly comprised of non-performing and adversely classified loans. This transaction resulted in charge-offs of approximately $61.4 million.

The Corporation incorporated the charge-offs information from the second quarter 2015 bulk sale in its measurement of credit impairment for loans collectively measured. In the second quarter of 2015, the total bulk sale charge offs were included in the determination of historical loss rates with no reduction for the additional market discount related to the bulk sale resolution. In the past, the Corporation had separated the market component of the loss. The decision to include total charge-offs, with no qualitative adjustment for the steep discount on this bulk sale, considered the potential use of similar credit resolution strategies in the future in light of the current economic conditions in Puerto Rico.  The effect of this position resulted in an increase of $15.5 million in the related allowance in the second quarter of 2015. During the third quarter of 2015, the Corporation further refined its methodology by allocating the second quarter 2015 bulk sale losses over an estimated realization period of eight quarters, which would reflect a more typical loss resolution pattern. Management believes that this loss estimation process is more indicative of the current experience related to the average period for a loan to migrate to asset classification categories and the eventual charge-off.

As of September 30, 2016, the Corporation maintained a $2.1 million reserve for unfunded loan commitments ($0.5 million as of September 30, 2015) mainly related to an outstanding adversely classified floor plan relationship. The reserve for unfunded loan commitments is an estimate of the losses inherent in off-balance sheet loan commitments to borrowers that are experiencing financial difficulties at the balance sheet date. It is calculated by multiplying an estimated loss factor by an estimated probability of funding, and then by the period-end amounts for unfunded commitments. The reserve for unfunded loan commitments is included as part of accounts payable and other liabilities in the consolidated statement of financial condition.

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NOTE 8 – LOANS HELD FOR SALE

The Corporation’s loans held-for-sale portfolio was composed of:

(In thousands)	September 30, 2016		December 31, 2015
Residential mortgage loans	$	48,700	$	27,734
Construction loans		8,079		8,135
Total	$	56,779	$	35,869

Non-performing loans held for sale totaled $8.1 million as of September 30, 2016 and December 31, 2015.

NOTE 9 –OTHER REAL ESTATE OWNED

The following table presents OREO inventory as of the dates indicated:
		September 30,			December 31,
(In thousands)		2016		2015
OREO
OREO balances, carrying value:
Residential (1)		$	45,887	$	43,563
Commercial			81,038		87,849
Construction			12,521		15,389
Total		$	139,446	$	146,801
(1)	Excludes $15.1 million and $8.9 million as of September 30, 2016 and December 31, 2015, respectively, of foreclosures that meet the conditions of ASC 310-40 and are presented as a receivable (other assets) in the statement of financial condition.

NOTE 10 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

One of the market risks facing the Corporation is interest rate risk, which includes the risk that changes in interest rates will result in changes in the value of the Corporation’s assets or liabilities and the risk that net interest income from its loan and investment portfolios will be adversely affected by changes in interest rates.  The overall objective of the Corporation’s interest rate risk management activities is to reduce the variability of earnings caused by changes in interest rates.

The Corporation designates a derivative as a fair value hedge, cash flow hedge or economic undesignated hedge when it enters into the derivative contract.  As of September 30, 2016 and December 31, 2015, all derivatives held by the Corporation were considered economic undesignated hedges.  These undesignated hedges are recorded at fair value with the resulting gain or loss recognized in current earnings.

The following summarizes the principal derivative activities used by the Corporation in managing interest rate risk:

Interest rate cap agreements - Interest rate cap agreements provide the right to receive cash if a reference interest rate rises above a contractual rate. The value increases as the reference interest rate rises. The Corporation enters into interest rate cap agreements for protection from rising interest rates.

Forward Contracts - Forward contracts are sales of to-be-announced (“TBA”) mortgage-backed securities that will settle over the standard delivery date and do not qualify as “regular way” security trades. Regular-way security trades are contracts that have no net settlement provision and no market mechanism to facilitate net settlement and that provide for delivery of a security within the time frame generally established by regulations or conventions in the market place or exchange in which the transaction is being executed. The forward sales are considered derivative instruments that need to be marked to market. These securities are used to economically hedge the FHA/VA residential mortgage loan securitizations of the mortgage-banking operations. Unrealized gains (losses) are recognized as part of mortgage banking activities in the consolidated statement of income.

To satisfy the needs of its customers, the Corporation may enter into non-hedging transactions. On these transactions, the Corporation generally participates as a buyer in one of the agreements and as a seller in the other agreement under the same terms and conditions.

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In addition, the Corporation enters into certain contracts with embedded derivatives that do not require separate accounting as these are clearly and closely related to the economic characteristics of the host contract. When the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract, it is bifurcated, carried at fair value, and designated as a trading or non-hedging derivative instrument.

The following table summarizes the notional amounts of all derivative instruments:
	Notional Amounts (1)
	As of		As of
	September 30,		December 31,
	2016		2015
	(In thousands)
Undesignated economic hedges:
Interest rate contracts:
Written interest rate cap agreements	$	91,510	$	120,816
Purchased interest rate cap agreements		91,510		120,816
Forward Contracts:
Sale of TBA GNMA MBS pools		45,000		30,000
	$	228,020	$	271,632
(1) Notional amounts are presented on a gross basis with no netting of offsetting exposure positions.

The following table summarizes the fair value of derivative instruments and the location in the statement of financial condition as of the indicated dates:
	Asset Derivatives					Liability Derivatives
	Statement of	September 30,		December 31,			September 30,		December 31,
	Financial	2016		2015			2016		2015
	Condition Location	Fair Value		Fair Value		Statement of Financial Condition Location	Fair Value		Fair Value
(In thousands)
Undesignated economic hedges:
Interest rate contracts:
Written interest rate cap agreements	Other assets	$	-	$	-	Accounts payable and other liabilities	$	191	$	798
Purchased interest rate cap agreements	Other assets		191		806	Accounts payable and other liabilities		-		-
Forward Contracts:
Sales of TBA GNMA MBS pools	Other assets		4		-	Accounts payable and other liabilities		144		123
		$	195	$	806		$	335	$	921

The following table summarizes the effect of derivative instruments on the statement of income:
		Gain (or Loss)				Gain (or Loss)
	Location of  Gain or (loss)	Quarter Ended				Nine-Month Period Ended
	Recognized in Income on	September 30,				September 30,
(In thousands)	Derivatives	2016		2015		2016		2015
Undesignated economic hedges:
Interest rate contracts:
Written and purchased interest rate cap agreements	Interest income - Loans	$	5	$	144	$	(2)	$	144
Forward contracts:
Sales of TBA GNMA MBS pools	Mortgage banking activities		219		(279)		(17)		(97)
Total gain (loss) on derivatives		$	224	$	(135)	$	(19)	$	47

Derivative instruments are subject to market risk.  As is the case with investment securities, the market value of derivative instruments is largely a function of the financial market’s expectations regarding the future direction of interest rates.  Accordingly, current market values are not necessarily indicative of the future impact of derivative instruments on earnings.  This will depend, for the most part, on the shape of the yield curve and the level of interest rates, as well as the expectations for rates in the future.

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NOTE 11 – OFFSETTING OF ASSETS AND LIABILITIES

The Corporation enters into master agreements with counterparties, primarily related to derivatives and repurchase agreements, that may allow for netting of exposures in the event of default. In an event of default, each party has a right of set-off against the other party for amounts owed under the related agreement and any other amount or obligation owed in respect of any other agreement or transaction between them. The following table presents information about the offsetting of financial assets and liabilities as well as derivative assets and liabilities:

Offsetting of Financial Assets and Derivative Assets
							Gross Amounts Not Offset in the Statement of Financial Position
					Net Amounts of Assets Presented in the Statement of Financial Position
	Gross Amounts of Recognized  Assets		Gross Amounts Offset in the Statement of Financial Position
							Financial Instruments		Cash Collateral
As of September 30, 2016											Net Amount
(In thousands)
Description
Derivatives	$	191	$	-	$	191	$	(191)	$	-	$	-
Securities purchased under agreements to resell		200,000		(200,000)		-		-		-		-
Total	$	200,191	$	(200,000)	$	191	$	(191)	$	-	$	-
							Gross Amounts Not Offset in the Statement of Financial Position
					Net Amounts of Assets Presented in the Statement of Financial Position
	Gross Amounts of Recognized  Assets		Gross Amounts Offset in the Statement of Financial Position
							Financial Instruments		Cash Collateral
As of December 31, 2015											Net Amount
(In thousands)
Description
Derivatives	$	806	$	-	$	806	$	(806)	$	-	$	-
Securities purchased under agreements to resell		200,000		(200,000)		-		-		-		-
Total	$	200,806	$	(200,000)	$	806	$	(806)	$	-	$	-

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Offsetting of Financial Liabilities and Derivative Liabilities
							Gross Amounts Not Offset in the Statement of Financial Position
					Net Amounts of Liabilities Presented in the Statement of Financial Position
	Gross Amounts of Recognized  Liabilities		Gross Amounts Offset in the Statement of Financial Position
							Financial Instruments		Cash Collateral
As of September 30, 2016											Net Amount
(In thousands)
Description
Securities sold under agreements to repurchase	$	500,000	$	(200,000)	$	300,000	$	(300,000)	$	-	$	-
							Gross Amounts Not Offset in the Statement of Financial Position
					Net Amounts of Liabilities Presented in the Statement of Financial Position
	Gross Amounts of Recognized  Liabilities		Gross Amounts Offset in the Statement of Financial Position
							Financial Instruments		Cash Collateral
As of December 31, 2015											Net Amount
(In thousands)
Description
Securities sold under agreements to repurchase	$	600,000	$	(200,000)	$	400,000	$	(400,000)	$	-	$	-

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NOTE 12 – GOODWILL AND OTHER INTANGIBLES

Goodwill as of September 30, 2016 and December 31, 2015 amounted to $28.1 million, recognized as part of “Other Assets” in the consolidated statement of financial condition. The Corporation conducted its annual evaluation of goodwill and intangibles during the fourth quarter of 2015. The Corporation’s goodwill is related to the acquisition of FirstBank Florida in 2005.

There have been no events related to the Florida reporting unit that could indicate potential goodwill impairment since the date of the last evaluation; therefore, no goodwill impairment evaluation was performed during the first nine months of 2016. Goodwill and other indefinite life intangibles are reviewed at least annually for impairment.

In connection with the acquisition of the FirstBank-branded credit card loan portfolio in the second quarter of 2012, the Corporation recognized a purchased credit card relationship intangible of $24.5 million, which is being amortized over the remaining estimated life of 5.2 years on an accelerated basis based on the estimated attrition rate of the purchased credit card accounts, which reflects the pattern in which the economic benefits of the intangible asset are consumed. These benefits are consumed as the revenue stream generated by the cardholder relationship is realized.

    The core deposit intangible acquired in the February 2015 Doral Bank transaction amounted to $5.8 million ($4.6 million as of September 30, 2016).

    In the first quarter of 2016, FirstBank Insurance Agency acquired certain insurance customer accounts and related customer records and recognized an insurance customer relationship intangible of $1.1 million ($1.0 million as of September 30, 2016), which is being amortized over the next 6.3 years on a straight-line basis. The list of accounts acquired has a direct relationship to the previous mortgage loan portfolio acquisitions from Doral Bank and Doral Financial in 2015 and 2014.

The following table shows the gross amount and accumulated amortization of the Corporation’s intangible assets recognized as part of Other Assets in the consolidated statement of financial condition:
	As of		As of
	September 30,		December 31,
	2016		2015
(Dollars in thousands)
Core deposit intangible:
Gross amount, beginning of period	$	51,664	$	45,844
Addition as a result of acquisition		-		5,820
Accumulated amortization		(43,974)		(42,498)
Net carrying amount	$	7,690	$	9,166
Remaining amortization period		8.3		9.0 years
Purchased credit card relationship intangible:
Gross amount	$	24,465	$	24,465
Accumulated amortization		(13,237)		(11,146)
Net carrying amount	$	11,228	$	13,319
Remaining amortization period		5.2		5.8 years
Insurance Customer relationship intangible:
Gross amount	$	1,067	$	-
Accumulated amortization		(102)		-
Net carrying amount	$	965	$	-
Remaining amortization period		6.3		-

For the quarter and nine-month period ended September 30, 2016, the amortization expense of core deposit intangibles amounted to $0.5 million and $1.5 million, respectively, (2015 - $0.6 million and $1.5 million, respectively). For the quarter and nine-month period ended September 30, 2016, the amortization expense of the purchased credit card relationship intangible amounted to $0.7 million and $2.1 million, respectively, (2015 - $0.8 million and $2.3 million, respectively). For the quarter and nine-month period ended September 30, 2016, the amortization expense of insurance customer relationship intangible amounted to $38 thousand and $0.1 million, respectively.

The estimated aggregate amortization expense related to these intangible assets for future periods is as follows:
			Amount
			(In thousands)
	2016	$	1,226
	2017		4,495
	2018		3,519
	2019		3,067
	2020		2,851
	2021 and after		4,725

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NOTE 13 – NON CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS

The Corporation transfers residential mortgage loans in sale or securitization transactions in which it has continuing involvement, including servicing responsibilities and guarantee arrangements. All such transfers have been accounted for as sales as required by applicable accounting guidance.

    When evaluating the need to consolidate counterparties to which the Corporation has transferred assets or with which the Corporation has entered into other transactions, the Corporation first determines if the counterparty is an entity for which a variable interest exists. If no scope exception is applicable and a variable interest exists, the Corporation then evaluates if it is the primary beneficiary of the VIE and whether the entity should be consolidated or not.

Below is a summary of transfers of financial assets to VIEs for which the Corporation has retained some level of continuing involvement:

GNMA

The Corporation typically transfers first lien residential mortgage loans in conjunction with GNMA securitization transactions in which the loans are exchanged for cash or securities that are readily redeemed for cash proceeds and servicing rights. The securities issued through these transactions are guaranteed by the issuer and, as such, under seller/servicer agreements, the Corporation is required to service the loans in accordance with the issuers’ servicing guidelines and standards. As of September 30, 2016, the Corporation serviced loans securitized through GNMA with a principal balance of $1.4 billion.

Trust-Preferred Securities

In 2004, FBP Statutory Trust I, a financing trust that is wholly owned by the Corporation, sold to institutional investors $100 million of its variable rate trust-preferred securities. The proceeds of the issuance, together with the proceeds of the purchase by the Corporation of $3.1 million of FBP Statutory Trust I variable rate common securities, were used by FBP Statutory Trust I to purchase $103.1 million aggregate principal amount of the Corporation’s Junior Subordinated Deferrable Debentures. Also in 2004, FBP Statutory Trust II, a financing trust that is wholly owned by the Corporation, sold to institutional investors $125 million of its variable rate trust-preferred securities. The proceeds of the issuance, together with the proceeds of the purchase by the Corporation of $3.9 million of FBP Statutory Trust II variable rate common securities, were used by FBP Statutory Trust II to purchase $128.9 million aggregate principal amount of the Corporation’s Junior Subordinated Deferrable Debentures. The debentures are presented in the Corporation’s consolidated statement of financial condition as Other Borrowings, net of related issuance costs. The variable rate trust-preferred securities are fully and unconditionally guaranteed by the Corporation. The Junior Subordinated Deferrable Debentures issued by the Corporation in April 2004 and in September 2004 mature on June 17, 2034 and September 20, 2034, respectively; however, under certain circumstances, the maturity of Junior Subordinated Deferrable Debentures may be shortened (such shortening would result in a mandatory redemption of the variable rate trust-preferred securities). During the first quarter of 2016, the Corporation completed the repurchase of $10 million of trust-preferred securities of the FBP Statutory Trust II that were auctioned in a public sale at which the Corporation was invited to participate. The Corporation repurchased and cancelled the repurchased trust preferred securities, resulting in a commensurate reduction in the related Floating Rate Junior Subordinated Debentures. The Corporation’s winning bid equated to 70% of the $10 million par value. The 30% discount, plus accrued interest, resulted in a gain of approximately $4.2 million, which is reflected in the statement of income as a “Gain on early extinguishment of debt.” During the second quarter of 2015, the Corporation issued 852,831 shares of the Corporation’s common stock in exchange for $5.3 million of trust preferred securities (FBP Statutory Trust I), which enabled the Corporation to cancel $5.5 million of the carrying value of the debentures underlying the purchased trust preferred securities. The Collins Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act eliminates certain trust-preferred securities from Tier 1 Capital; however, these instruments may remain in Tier 2 capital until the instruments are redeemed or mature. Under the indentures, the Corporation has the right, from time to time, and without causing an event of default, to defer payments of interest on the Junior Subordinated Debentures by extending the interest payment period at any time and from time to time during the term of the subordinated debentures for up to twenty consecutive quarterly periods. During the second quarter of 2016, the Corporation received approval from the Federal Reserve and paid $31.2 million for all the accrued but deferred interest payments plus the interest for the second quarter on the Corporation’s subordinated

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debentures associated with its trust preferred securities. Subsequently, the Corporation received approval and paid the interest for the third quarter of 2016 amounting to $1.8 million. As of September 30, 2016, the Corporation is current on all interest payments due related to its subordinated debt. Future interest payments are subject to Federal Reserve approval. It is the intent of the Corporation to request approvals in future periods to continue regularly scheduled quarterly interest payments.

Grantor Trusts

    During 2004 and 2005, a third party to the Corporation, referred to in this subsection as the seller, established a series of statutory trusts to effect the securitization of mortgage loans and the sale of trust certificates. The seller initially provided the servicing for a fee, which is senior to the obligations to pay trust certificate holders. The seller then entered into a sales agreement through which it sold and issued the trust certificates in favor of the Corporation’s banking subsidiary. Currently, the Bank is the sole owner of the trust certificates; the servicing of the underlying residential mortgages that generate the principal and interest cash flows is performed by another third party, which receives a servicing fee. The securities are variable rate securities indexed to 90-day LIBOR plus a spread. The principal payments from the underlying loans are remitted to a paying agent (servicer), who then remits interest to the Bank; interest income is shared to a certain extent with the FDIC, which has an interest only strip (“IO”) tied to the cash flows of the underlying loans and is entitled to receive the excess of the interest income less a servicing fee over the variable rate income that the Bank earns on the securities. This IO is limited to the weighted-average coupon on the securities. The FDIC became the owner of the IO upon its intervention of the seller, a failed financial institution. No recourse agreement exists and the risks from losses on non-accruing loans and repossessed collateral are absorbed by the Bank as the sole holder of the certificates.  As of September 30, 2016, the amortized cost and fair value of Grantor Trusts amounted to $30.6 million and $22.1 million, respectively, with a weighted average yield of 2.37%.

Investment in unconsolidated entity

   On February 16, 2011, FirstBank sold an asset portfolio consisting of performing and non-performing construction, commercial mortgage and commercial and industrial loans with an aggregate book value of $269.3 million to CPG/GS, an entity organized under the laws of the Commonwealth of Puerto Rico and majority owned by PRLP Ventures LLC ("PRLP"), a company created by Goldman, Sachs & Co. and Caribbean Property Group.  In connection with the sale, the Corporation received $88.5 million in cash and a 35% interest in CPG/GS, and made a loan in the amount of $136.1 million representing seller financing provided by FirstBank. The loan has a seven-year maturity and bears variable interest at 30-day LIBOR plus 300 basis points and is secured by a pledge of all of the acquiring entity's assets as well as the PRLP's 65% ownership interest in CPG/GS. As of September 30, 2016, the carrying amount of the loan was $6.8 million, which was included in the Corporation's Commercial and Industrial loans held for investment portfolio. FirstBank’s equity interest in CPG/GS is accounted for under the equity method. When applying the equity method, the Bank follows the Hypothetical Liquidation Book Value method (“HLBV”) to determine its share of CPG/GS’s earnings or loss. The loss recorded in 2014 reduced to zero the carrying amount of the Bank’s investment in CPG/GS. No negative investment needs to be reported as the Bank has no legal obligation or commitment to provide further financial support to this entity; thus, no further losses have been or will be recorded on this investment. Any potential increase in the carrying value of the investment in CPG/GS, under the HLBV method, would depend upon how better off the Bank is at the end of the period than it was at the beginning of the period after the waterfall calculation performed to determine the amount of gain allocated to the investors.

    FirstBank also provided an $80 million advance facility to CPG/GS to fund unfunded commitments and costs to complete projects under construction, which was fully disbursed in 2011, and a $20 million working capital line of credit to fund certain expenses of CPG/GS. The working capital line expired in September 2016 and no amount is outstanding. During 2012, CPG/GS repaid the outstanding balance of the advance facility to fund unfunded commitments, and the funds became available for rewithdrawal under a one-time revolver agreement. This facility bears variable interest at 30-day LIBOR plus 300 basis points. As of September 30, 2016, the carrying value of the revolver agreement was $11.4 million, which was included in the Corporation's commercial and industrial loans held for investment portfolio.

Cash proceeds received by CPG/GS have been first used to cover operating expenses and debt service payments, including those related to the note receivable, the advance facility, and the working capital line, described above, which must be substantially repaid before proceeds can be used for other purposes, including the return of capital to both PRLP and FirstBank. FirstBank will not receive any return on its equity interest until PRLP receives an aggregate amount equivalent to its initial investment and a priority return of at least 12%, resulting in FirstBank’s interest in CPG/GS being subordinate to PRLP’s interest. CPG/GS will then begin to make payments pro rata to PRLP and FirstBank, 35% and 65%, respectively, until FirstBank has achieved a 12% return on its invested capital and the aggregate amount of distributions is equal to FirstBank’s capital contributions to CPG/GS.

   The Bank has determined that CPG/GS is a VIE in which the Bank is not the primary beneficiary. In determining the primary beneficiary of CPG/GS, the Bank considered applicable guidance that requires the Bank to qualitatively assess the determination of the primary beneficiary (or consolidator) of CPG/GS based on whether it has both the power to direct the activities of CPG/GS that most significantly impact the entity's economic performance and the obligation to absorb losses of CPG/GS that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE.

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    The Bank determined that it does not have the power to direct the activities that most significantly impact the economic performance of CPG/GS as it does not have the right to manage the loan portfolio, impact foreclosure proceedings, or manage the construction and sale of the property; therefore, the Bank concluded that it is not the primary beneficiary of CPG/GS. As a creditor to CPG/GS, the Bank has certain rights related to CPG/GS; however, these are intended to be protective in nature and do not provide the Bank with the ability to manage the operations of CPG/GS. Since CPG/GS is not a consolidated subsidiary of the Bank and the transaction met the criteria for sale accounting under authoritative guidance, the Bank accounted for this transaction as a true sale, recognizing the cash received, the notes receivable, and the interest in CPG/GS, and derecognizing the loan portfolio sold.

Servicing Assets

   The Corporation sells residential mortgage loans to GNMA, which generally securitizes the transferred loans into mortgage-backed securities. Also, certain conventional conforming loans are sold to FNMA or FHLMC, with servicing retained. The Corporation recognizes as separate assets the rights to service loans for others, whether those servicing assets are originated or purchased.

The changes in servicing assets are shown below:
		Quarter Ended				Nine-Month Period Ended
		September 30,				September 30,
(In thousands)		2016		2015		2016		2015
Balance at beginning of period		$	25,044	$	23,519	$	24,282	$	22,838
Capitalization of servicing assets			1,420		1,242		3,878		3,789
Amortization			(817)		(758)		(2,424)		(2,409)
Adjustment to fair value			(263)		(23)		(387)		(170)
Other (1)			91		(20)		126		(88)
Balance at end of period		$	25,475	$	23,960	$	25,475	$	23,960
(1)	Amount represents the adjustment to fair value related to the repurchase of loans serviced for others.

   Impairment charges are recognized through a valuation allowance for each individual stratum of servicing assets. The valuation allowance is adjusted to reflect the amount, if any, by which the cost basis of the servicing asset for a given stratum of loans being serviced exceeds its fair value. Any fair value in excess of the cost basis of the servicing asset for a given stratum is not recognized.

Changes in the impairment allowance were as follows:
	Quarter Ended				Nine-Month Period Ended
	September 30,				September 30,
(In thousands)	2016		2015		2016		2015
Balance at beginning of period	$	260	$	202	$	136	$	55
Temporary impairment charges		266		41		460		227
Recoveries		(3)		(18)		(73)		(57)
Balance at end of period	$	523	$	225	$	523	$	225

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	The components of net servicing income are shown below:
		Quarter Ended				Nine-Month Period Ended
		September 30,				September 30,
(In thousands)		2016		2015		2016		2015
Servicing fees		$	1,930	$	1,796	$	5,657	$	5,340
Late charges and prepayment penalties			200		179		505		546
Adjustment for loans repurchased			91		(20)		126		(88)
Other (1)			-		(22)		(1)		(125)
Servicing income, gross			2,221		1,933		6,287		5,673
Amortization and impairment of servicing assets			(1,080)		(781)		(2,811)		(2,579)
Servicing income, net		$	1,141	$	1,152	$	3,476	$	3,094
(1)	Mainly consisted of compensatory fees imposed by GSEs.

The Corporation’s servicing assets are subject to prepayment and interest rate risks. Key economic assumptions used in determining the fair value at the time of sale of the related mortgages ranged as follows:
	Maximum		Minimum
Nine-Month Period Ended September 30, 2016:
Constant prepayment rate:
Government-guaranteed mortgage loans	7.6	%	6.1	%
Conventional conforming mortgage loans	8.0	%	6.5	%
Conventional non-conforming mortgage loans	14.1	%	10.6	%
Discount rate:
Government-guaranteed mortgage loans	12.0	%	11.5	%
Conventional conforming mortgage loans	10.0	%	9.5	%
Conventional non-conforming mortgage loans	14.3	%	13.8	%
Nine-Month Period Ended September 30, 2015:
Constant prepayment rate:
Government-guaranteed mortgage loans	9.2	%	7.9	%
Conventional conforming mortgage loans	9.0	%	7.9	%
Conventional non-conforming mortgage loans	14.4	%	12.9	%
Discount rate:
Government-guaranteed mortgage loans	11.5	%	11.5	%
Conventional conforming mortgage loans	9.5	%	9.5	%
Conventional non-conforming mortgage loans	13.8	%	13.8	%

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     As of September 30, 2016, fair values of the Corporation’s servicing assets were based on a valuation model that incorporates market driven assumptions regarding discount rates and mortgage prepayment rates, adjusted by the particular characteristics of the Corporation’s servicing portfolio. The weighted-averages of the key economic assumptions used by the Corporation in its valuation model and the sensitivity of the current aggregate fair value to immediate 10% and 20% adverse changes in those assumptions for mortgage loans as of September 30, 2016 were as follows:

	(Dollars in thousands)
Carrying amount of servicing assets	$	25,475
Fair value	$	27,937
Weighted-average expected life (in years)		8.42
Constant prepayment rate (weighted-average annual rate)		6.34%
Decrease in fair value due to 10% adverse change	$	734
Decrease in fair value due to 20% adverse change	$	1,435
Discount rate (weighted-average annual rate)		11.18%
Decrease in fair value due to 10% adverse change	$	1,311
Decrease in fair value due to 20% adverse change	$	2,515

These sensitivities are hypothetical and should be used with caution. As the figures indicate, changes in fair value based on a 10% variation in assumptions generally cannot be extrapolated because the relationship between the change in assumption and the change in fair value may not be linear. Also, in this table, the effect of a variation in a particular assumption on the fair value of the servicing asset is calculated without changing any other assumption; in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the sensitivities.

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NOTE 14 – DEPOSITS

The following table summarizes deposit balances:
	September 30,			December 31,
	2016		2015
(In thousands)
Type of account:
Non-interest bearing checking accounts	$	1,473,528	$	1,336,559
Savings accounts		2,458,634		2,459,186
Interest-bearing checking accounts		1,153,096		1,088,651
Certificates of deposit		2,337,547		2,356,245
Brokered CDs		1,558,508		2,097,483
	$	8,981,313	$	9,338,124

Brokered CDs mature as follows:
	September 30,
	2016
(In thousands)
Three months or less	$	343,396
Over three months to six months		255,574
Over six months to one year		350,362
One to three years		524,386
Three to five years		84,605
Over five years		185
Total	$	1,558,508

The following are the components of interest expense on deposits:
	Quarter Ended				Nine-Month Period Ended
	September 30,				September 30,
	2016			2015	2016			2015
(In thousands)
Interest expense on deposits	$	16,130	$	15,947	$	49,104	$	48,402
Accretion of premium from acquisition		(43)		(156)		(181)		(441)
Amortization of broker placement fees		655		1,060		2,300		3,564
Interest expense on deposits	$	16,742	$	16,851	$	51,223	$	51,525

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NOTE 15 – SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase (repurchase agreements) consist of the following:
(Dollars in thousands)		September 30, 2016		December 31, 2015
Repurchase agreements, interest ranging from 1.96% to 3.84%
(December 31, 2015- 1.96% to 3.41%) (1)(2)		$	600,000	$	700,000
(1)	Reported net of securities purchased under agreements to repurchase (reverse repurchase agreements) by counterparty, when applicable, pursuant to ASC 210-20-45-11.
(2)	As of September 30, 2016, includes $500 million with an average rate of 3.56% that lenders have the right to call before their contractual maturities at various dates beginning on October 11, 2016.  In addition, $400 million is tied to variable rates.

Repurchase agreements mature as follows:
		September 30, 2016
		(In thousands)
	One month to three months	$	300,000
	One year to three years		100,000
	Over five years		200,000
	Total	$	600,000

As of September 30, 2016 and December 31, 2015, the securities underlying such agreements were delivered to the dealers with which the repurchase agreements were transacted.

Repurchase agreements as of September 30, 2016, grouped by counterparty, were as follows:
	(Dollars in thousands)			Weighted-Average
	Counterparty	Amount		Maturity (In Months)
	Citigroup Global Markets	$	300,000	1
	Dean Witter / Morgan Stanley		100,000	13
	JP Morgan Chase		200,000	64
		$	600,000

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NOTE 16 – ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB)

The following is a summary of the advances from the FHLB:
		September 30,		December 31,
	(Dollars in thousands)	2016		2015
	Fixed-rate advances from FHLB, with a weighted-
	average interest rate of 1.40% (December 31, 2015 - 1.30%)	$	355,000	$	455,000

Advances from FHLB mature as follows:
	(In thousands)	September 30, 2016
	Over six months to one year	$	200,000
	Over one year to three years		25,000
	Over three to four years		130,000
	Total	$	355,000

As of September 30, 2016, the Corporation had additional capacity of approximately $1.1 billion on this credit facility based on collateral pledged at the FHLB, including a haircut reflecting the perceived risk associated with holding the collateral.

NOTE 17 – OTHER BORROWINGS

 Other borrowings consist of:

		September 30,		December 31,
	(In thousands)	2016		2015
Junior subordinated debentures due in 2034,
interest-bearing at a floating rate of 2.75%
over 3-month LIBOR (3.61% as of September 30, 2016
and 3.28% as of December 31, 2015)		$	97,630	$	97,626
Junior subordinated debentures due in 2034,
interest-bearing at a floating rate of 2.50%
over 3-month LIBOR (3.36% as of September 30, 2016
and 3.07% as of December 31, 2015) (1)			118,557		128,866
		$	216,187	$	226,492
(1)	Refer to Note 13 - Non-Consolidated Variable Interest Entities and Servicing Assets - Trust Preferred Securities for additional information about the Corporation's repurchase and cancellation of $10 million of trust preferred securities associated with these junior subordinated debentures.

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NOTE 18 – STOCKHOLDERS’ EQUITY

Common Stock

As of September 30, 2016 and December 31, 2015, the Corporation had 2,000,000,000 authorized shares of common stock with a par value of $0.10 per share. As of September 30, 2016 and December 31, 2015, there were 218,605,179 and 216,051,128 shares issued, respectively, and 217,387,647 and 215,088,698 shares outstanding, respectively. On July 30, 2009, the Corporation announced the suspension of common and preferred stock dividends effective with the preferred dividend for the month of August 2009.  Refer to Note 3 for information about transactions related to common stock under the Omnibus Plan.

Preferred Stock

The Corporation has 50,000,000 authorized shares of preferred stock with a par value of $1.00, redeemable at the Corporation’s option subject to certain terms. This stock may be issued in series and the shares of each series will have such rights and preferences as are fixed by the Board of Directors when authorizing the issuance of that particular series. As of September 30, 2016, the Corporation has five outstanding series of non-convertible, non-cumulative preferred stock: 7.125% non-cumulative perpetual monthly income preferred stock, Series A; 8.35% non-cumulative perpetual monthly income preferred stock, Series B; 7.40% non-cumulative perpetual monthly income preferred stock, Series C; 7.25% non-cumulative perpetual monthly income preferred stock, Series D; and 7.00% non-cumulative perpetual monthly income preferred stock, Series E.  The liquidation value per share is $25.

Effective January 17, 2012, the Corporation delisted all of its outstanding series of non-convertible, non-cumulative preferred stock from the New York Stock Exchange. The Corporation has not arranged for listing and/or registration on another national securities exchange or for quotation of the Series A through E Preferred Stock in a quotation medium.

Treasury stock

   During the first nine months of 2016 and 2015, the Corporation withheld an aggregate of 255,102 shares and 181,649 shares, respectively, of the common stock paid to certain senior officers as additional compensation and vested restricted stock to cover employees’ payroll and income tax withholding liabilities; these shares are held as treasury shares. As of September 30, 2016 and December 31, 2015, the Corporation had 1,217,532 and 962,430 shares held as treasury stock, respectively.

FirstBank Statutory Reserve (Legal Surplus)

   The Banking Law of the Commonwealth of Puerto Rico requires that a minimum of 10% of FirstBank’s net income for the year be transferred to legal surplus until such surplus equals the total of paid-in-capital on common and preferred stock. Amounts transferred to the legal surplus account from the retained earnings account are not available for distribution to the Corporation, including for payment as dividends to the stockholders, without the prior consent of the Puerto Rico Commissioner of Financial Institutions. The Puerto Rico Banking Law provides that, when the expenditures of a Puerto Rico commercial bank are greater than receipts, the excess of the expenditures over receipts shall be charged against the undistributed profits of the bank, and the balance, if any, shall be charged against the reserve fund, as a reduction thereof. If there is no reserve fund sufficient to cover such balance in whole or in part, the outstanding amount shall be charged against the capital account and the Bank cannot pay dividends until it can replenish the reserve fund to an amount of at least 20% of the original capital contributed. During the fourth quarter of 2015, $2.8 million was transferred to the legal surplus reserve. FirstBank’s legal surplus reserve, included as part of retained earnings in the Corporation’s statement of financial condition, amounted to $42.8 million as of September 30, 2016. There were no transfers to the legal surplus reserve during the first nine months of 2016. 

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NOTE 19 - INCOME TAXES

Income tax expense includes Puerto Rico and USVI income taxes as well as applicable U.S. federal and state taxes. The Corporation is subject to Puerto Rico income tax on its income from all sources. As a Puerto Rico corporation, First BanCorp. is treated as a foreign corporation for U.S. and USVI income tax purposes and is generally subject to U.S. and USVI income tax only on its income from sources within the U.S. and USVI or income effectively connected with the conduct of a trade or business in those regions. Any such tax paid in the U.S. and USVI is also creditable against the Corporation’s Puerto Rico tax liability, subject to certain conditions and limitations.

    Under the Puerto Rico Internal Revenue Code of 2011, as amended (the “2011 PR Code”), the Corporation and its subsidiaries are treated as separate taxable entities and are not entitled to file consolidated tax returns and, thus, the Corporation is not able to utilize losses from one subsidiary to offset gains in another subsidiary. Accordingly, in order to obtain a tax benefit from a net operating loss (“NOL”), a particular subsidiary must be able to demonstrate sufficient taxable income within the applicable NOL carry forward period. The 2011 PR Code provides a dividend received deduction of 100% on dividends received from “controlled” subsidiaries subject to taxation in Puerto Rico and 85% on dividends received from other taxable domestic corporations.

    The Corporation has maintained an effective tax rate lower than the maximum statutory rate in Puerto Rico mainly by investing in government obligations and mortgage-backed securities exempt from U.S. and Puerto Rico income taxes and by doing business through an International Banking Entity (“IBE”) unit of the Bank, and through the Bank’s subsidiary, FirstBank Overseas Corporation, whose interest income and gain on sales is exempt from Puerto Rico income taxation. The IBE and FirstBank Overseas Corporation were created under the International Banking Entity Act of Puerto Rico, which provides for total Puerto Rico tax exemption on net income derived by IBEs operating in Puerto Rico on the specific activities identified in the IBE Act.  An IBE that operates as a unit of a bank pays income taxes at the corporate standard rates to the extent that the IBE’s net income exceeds 20% of the bank’s total net taxable income.

     As of September 30, 2016, the Corporation’s deferred tax assets, net of a valuation allowance of $201.7 million, amounted to $290.9 million and management concluded, based upon the assessment of all positive and negative evidence, that it is more likely than not that the Corporation will generate sufficient taxable income within the applicable NOL carry-forward periods to realize such amount.

   The Corporation recorded an income tax expense of $10.4 million and $23.7 million in the third quarter and the first nine months of 2016, respectively, compared to an income tax expense of $4.5 million and $2.7 million for the same periods in 2015. The change in income tax expense in the third quarter of 2016, when compared to the third quarter of 2015, is mainly driven by higher taxable income. For the nine-month period ended September 30, 2016, the Corporation calculated the provision for income taxes by applying the estimated annual effective tax rate for the full fiscal year to ordinary income or loss. In the computation of the consolidated worldwide estimated annual effective tax rate, ASC 740-270 requires the exclusion of legal entities with pre-tax losses from which a tax benefit cannot be recognized. The consolidated worldwide estimated annual effective tax rate, excluding entities with pre-tax losses from which a tax benefit cannot be recognized, was 24% for the nine-month period ended September 30, 2016, compared to 17% for the same period in 2015. The increase in the estimated effective tax rate for the nine month period ended September 30, 2016, when compared to the same period in 2015, reflects the impact in 2015 of a release in the valuation allowance resulting from the bargain purchase gain, which generated a deferred tax liability. As required by ASC 740-270, changes in the valuation allowance related to the current year are included in the computation of the estimated effective tax rate for the year. The effective tax rate including all entities for the first nine months of 2016 was 25%, compared to 30% for the same period in 2015.

As of September 30, 2016, the Corporation did not have Unrecognized Tax Benefits (“UTBs”) recorded on its books. Audit periods remain open for review until the statute of limitations has passed. The statute of limitations under the 2011 PR code is 4 years; the statute of limitations for income taxes purposes for each of the Virgin Islands and U.S. is three years after a tax return is due or filed, whichever is later. The completion of an audit by the taxing authorities or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Corporation’s liability for income taxes. Any such adjustment could be material to the results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. For Virgin Islands and U.S. income tax purposes, all tax years subsequent to 2011 remain open to examination. The 2012 U.S. federal tax return is currently under examination by the IRS. For Puerto Rico tax purposes, all tax years subsequent to 2011 remain open to examination.

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 NOTE 20 – FAIR VALUE

Fair Value Measurement

The FASB authoritative guidance for fair value measurement defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  This guidance also establishes a fair value hierarchy for classifying financial instruments.  The hierarchy is based on whether the inputs to the valuation techniques used to measure fair value are observable or unobservable.  Three levels of inputs may be used to measure fair value: 

Level 1	Valuations of Level 1 assets and liabilities are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. Level 1 assets and liabilities include equity securities that trade in an active exchange market, as well as certain U.S. Treasury and other U.S. government and agency securities and corporate debt securities that are traded by dealers or brokers in active markets.
Level 2	Valuations of Level 2 assets and liabilities are based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include (i) mortgage-backed securities for which the fair value is estimated based on the value of identical or comparable assets, (ii) debt securities with quoted prices that are traded less frequently than exchange-traded instruments, and (iii) derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.
Level 3	Valuations of Level 3 assets and liabilities are based on unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined by using pricing models for which the determination of fair value required significant management judgments estimation.

For 2016, there were no transfers into or out of Level 1, Level 2 or Level 3 of the fair value hierarchy.

Financial Instruments Recorded at Fair Value on a Recurring Basis

Investment securities available for sale

The fair value of investment securities was the market value based on quoted market prices (as is the case with equity securities, Treasury notes, and non-callable U.S. Agency debt securities), when available (Level 1), or, when available, market prices for identical or comparable assets (as is the case with MBS and callable U.S. agency debt) that are based on observable market parameters, including benchmark yields, reported trades, quotes from brokers or dealers, issuer spreads, bids, offers and reference data including market research operations (Level 2). Observable prices in the market already consider the risk of nonperformance. During the first nine months of 2016, the Corporation recorded OTTI charges of $6.3 million on certain Puerto Rico Government debt securities, specifically bonds of the GDB and the Puerto Rico Public Buildings Authority. The credit impairment loss was based on the probability of default and loss severity in the event of default in consideration of the latest information available about the Puerto Rico Government’s financial condition. Refer to Note 4 - Investment Securities, for significant assumptions used to determine the credit impairment portion, including default rates and recovery rates, which are unobservable inputs. If listed prices or quotes are not available, fair value is based upon models that use unobservable inputs due to the limited market activity of the instrument, as is the case with certain private label mortgage-backed securities held by the Corporation (Level 3).

Private label MBS are collateralized by fixed-rate mortgages on single-family residential properties in the United States; the interest rate on the securities is variable, tied to 3-month LIBOR and limited to the weighted-average coupon of the underlying collateral. The market valuation represents the estimated net cash flows over the projected life of the pool of underlying assets applying a discount rate that reflects market observed floating spreads over LIBOR, with a widening spread based on a nonrated security. The market valuation is derived from a model that utilizes relevant assumptions such as the prepayment rate, default rate, and loss severity on a loan level basis. The Corporation modeled the cash flow from the fixed-rate mortgage collateral using a static cash flow analysis according to collateral attributes of the underlying mortgage pool (i.e., loan term, current balance, note rate, rate adjustment type, rate adjustment frequency, rate caps, and others) in combination with prepayment forecasts obtained from a commercially available prepayment model (ADCO). The variable cash flow of the security is modeled using the 3-month LIBOR forward curve. Loss assumptions were driven by the combination of default and loss severity estimates, taking into account loan credit characteristics

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(loan-to-value, state, origination date, property type, occupancy loan purpose, documentation type, debt-to-income ratio, and other) to provide an estimate of default and loss severity.

Refer to the table below for further information regarding qualitative information for all assets and liabilities measured at fair value using significant unobservable inputs (Level 3).

Derivative instruments

The fair value of most of the Corporation’s derivative instruments is based on observable market parameters and takes into consideration the credit risk component of paying counterparties, when appropriate, except when collateral is pledged. On interest caps, only the seller's credit risk is considered.  The caps were valued using a discounted cash flow approach using the related LIBOR and swap rate for each cash flow.

Although most of the derivative instruments are fully collateralized, a credit spread is considered for those that are not secured in full. The cumulative mark-to-market effect of credit risk in the valuation of derivative instruments for the quarter and nine-month periods ended September 30, 2016 and 2015 was immaterial.   

Assets and liabilities measured at fair value on a recurring basis are summarized below:
	As of September 30, 2016								As of December 31, 2015
	Fair Value Measurements Using								Fair Value Measurements Using
(In thousands)	Level 1		Level 2		Level 3		Assets/Liabilities at Fair Value		Level 1		Level 2		Level 3		Assets/Liabilities at Fair Value
Assets:
Securities available for sale :
Equity securities	$	419	$	-	$	-	$	419	$	-	$	-	$	-	$	-
U.S. Treasury Securities		7,514		-		-		7,514		7,497		-		-		7,497
Noncallable U.S. agency debt		-		366,838		-		366,838		-		315,467		-		315,467
Callable U.S. agency debt and MBS		-		1,419,951		-		1,419,951		-		1,509,807		-		1,509,807
Puerto Rico government obligations		-		24,653		2,167		26,820		-		26,327		1,890		28,217
Private label MBS		-		-		22,211		22,211		-		-		25,307		25,307
Other investments		-		-		100		100		-		-		100		100
Derivatives, included in assets:
Purchased interest rate cap agreements		-		191		-		191		-		806		-		806
Forward contracts		-		4		-		4		-		-		-		-
Liabilities:
Derivatives, included in liabilities:
Written interest rate cap agreement		-		191		-		191		-		798		-		798
Forward contracts		-		144		-		144		-		123		-		123

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The table below presents a reconciliation of the beginning and ending balances of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the quarters and nine-month periods ended September 30, 2016 and 2015:

		Quarter Ended September 30,
		2016		2015
Level 3 Instruments Only		Securities		Securities
(In thousands)		Available For Sale(1)		Available For Sale(1)
Beginning balance		$	26,020	$	31,640
Total gains or (losses) (realized/unrealized):
Included in earnings			-		(231)
Included in other comprehensive income			(477)		345
Principal repayments and amortization			(1,065)		(2,046)
Ending balance		$	24,478	$	29,708
(1)	Amounts mostly related to private label mortgage-backed securities.

		Nine-Month Period Ended September 30,
		2016		2015
Level 3 Instruments Only		Securities		Securities
(In thousands)		Available For Sale(1)		Available For Sale(1)
Beginning balance		$	27,297	$	36,212
Total gains or (losses) (realized/unrealized):
Included in earnings			(387)		(628)
Included in other comprehensive income			1,339		1,489
Purchases			-		100
Principal repayments and amortization			(3,771)		(7,465)
Ending balance		$	24,478	$	29,708
(1)	Amounts mostly related to private label mortgage-backed securities.

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The table below presents qualitative information for significant assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at September 30, 2016:
	September 30, 2016
(In thousands)	Fair Value		Valuation Technique	Unobservable Input	Range
Investment securities available-for-sale:
Private label MBS	$	22,130	Discounted cash flow	Discount rate	13.3%
				Prepayment rate	6.5% -22.5% (Weighted Average 13.7%)
				Projected cumulative loss rate	0.2% -9.1% (Weighted Average 4.0%)
Puerto Rico Government Obligations		2,167	Discounted cash flow	Prepayment rate	3.00%

Information about Sensitivity to Changes in Significant Unobservable Inputs

Private label MBS: The significant unobservable inputs in the valuation include probability of default, the loss severity assumption, and prepayment rates. Shifts in those inputs would result in different fair value measurements. Increases in the probability of default, loss severity assumptions, and prepayment rates in isolation would generally result in an adverse effect on the fair value of the instruments. Meaningful and possible shifts of each input were modeled to assess the effect on the fair value estimation.

Puerto Rico Government Obligations: The significant unobservable input used in the fair value measurement is the assumed prepayment rate of the underlying residential mortgage loans collateral on these obligations that are guaranteed by the Puerto Rico Housing Finance Authority (“PRHFA”). A significant increase (decrease) in the assumed rate would lead to a higher (lower) fair value estimate. Loss severity and probability of default are not included as significant unobservable variables due to the guarantee of the PRHFA. The PRHFA credit risk is modeled by discounting the cash flows using a curve appropriate to the PRHFA credit rating.

The tables below summarize changes in unrealized gains and losses recorded in earnings for the quarters and nine-month periods ended September 30, 2016 and 2015 for Level 3 assets and liabilities that are still held at the end of each period:
	Changes in Unrealized Losses		Changes in Unrealized Losses
	(Quarter ended September 30, 2016)		(Quarter ended September 30, 2015)
Level 3 Instruments Only	Securities		Securities
(In thousands)	Available For Sale		Available For Sale
Changes in unrealized losses relating to assets still held at reporting date:
Net impairment losses on available-for-sale investment securities (credit component)	$	-	$	(231)

	Changes in Unrealized Losses		Changes in Unrealized Losses
	(Nine-Month Period Ended September 30, 2016)		(Nine-Month Period Ended September 30, 2015)
Level 3 Instruments Only	Securities		Securities
(In thousands)	Available For Sale		Available For Sale
Changes in unrealized losses relating to assets still held at reporting date:
Net impairment losses on available-for-sale investment securities (credit component)	$	(387)	$	(628)

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Additionally, fair value is used on a nonrecurring basis to evaluate certain assets in accordance with GAAP. Adjustments to fair value usually result from the application of lower-of-cost or market accounting (e.g., loans held for sale carried at the lower-of-cost or fair value and repossessed assets) or write downs of individual assets (e.g., goodwill, loans).

As of September 30, 2016, impairment or valuation adjustments were recorded for assets recognized at fair value on a non-recurring basis as shown in the following table:
		Carrying value as of September 30, 2016						(Losses) recorded for the Quarter Ended                 September 30, 2016		(Losses) recorded for the Nine-Month Period Ended September 30, 2016
		Level 1		Level 2		Level 3
			(In thousands)
Loans receivable (1)		$	-	$	-	$	426,444	$	(13,912)	$	(41,621)
OREO (2)			-		-		139,446		(1,702)		(6,580)
Mortgage servicing rights (3)			-		-		25,475		(263)		(387)
(1)	Consist mainly of impaired commercial and construction loans.  The impairment was generally measured based on the fair value of the collateral. The fair value was derived from external appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the collateral (e.g. absorption rates), which are not market observable.
(2)	The fair value was derived from appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the properties (e.g. absorption rates and net operating income of income producing properties), which are not market observable.  Losses were related to market valuation adjustments after the transfer of the loans to the OREO portfolio.
(3)	Fair value adjustments to mortgage servicing rights were mainly due to assumptions associated with mortgage prepayment rates. The Corporation carries its mortgage servicing rights at the lower of cost or market, measured at fair value on a non-recurring basis.  Assumptions for the value of mortgage servicing rights include:  Prepayment rate of 6.34%, Discount Rate of 11.18%.

As of September 30, 2015, impairment or valuation adjustments were recorded for assets recognized at fair value on a non-recurring basis as shown in the following table:
		Carrying value as of September 30, 2015						(Losses) recorded for the Quarter Ended September 30, 2015		(Losses) recorded for the Nine-Month Period Ended September 30, 2015
		Level 1		Level 2		Level 3
		(In thousands)
Loans receivable (1)		$	-	$	-	$	332,688	$	(7,864)	$	(22,431)
OREO (2)			-		-		124,442		(4,025)		(8,790)
Mortgage servicing rights (3)			-		-		23,960		(23)		(170)
Loans Held For Sale (4)			-		-		8,027		-		-
(1)	Consist mainly of impaired commercial and construction loans.  The impairment was generally measured based on the fair value of the collateral. The fair value was derived from external appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the collateral (e.g. absorption rates), which are not market observable.
(2)	The fair value was derived from appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the properties (e.g. absorption rates and net operating income of income producing properties), which are not market observable.  Losses were related to market valuation adjustments after the transfer of the loans to the OREO portfolio.
(3)	Fair value adjustments to the mortgage servicing rights were mainly due to assumptions associated with mortgage prepayments rates. The Corporation carries its mortgage servicing rights at the lower of cost or market, measured at fair value on a non-recurring basis. Assumptions for the value of mortgage servicing rights include: Prepayment Rate of 9.32%, Discount Rate of 10.64%.
(4)	The value of these loans was derived from external appraisals, adjusted for specific characteristics of the loans.

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Qualitative information regarding the fair value measurements for Level 3 financial instruments is as follows:
	September 30, 2016
	Method	Inputs
Loans	Income, Market, Comparable Sales, Discounted Cash Flows	External appraised values; probability weighting of broker price opinions; management assumptions regarding market trends or other relevant factors
OREO	Income, Market, Comparable Sales, Discounted Cash Flows	External appraised values; probability weighting of broker price opinions; management assumptions regarding market trends or other relevant factors
Mortgage servicing rights	Discounted Cash Flow	Weighted average prepayment rate of 6.34%; weighted average discount rate of 11.18%

The following is a description of the valuation methodologies used for instruments that are not measured or reported at fair value on a recurring basis or that are reported at fair value on a non-recurring basis. The estimated fair value was calculated using certain facts and assumptions, which vary depending on the specific financial instrument.

 Cash and due from banks and money market investments

The carrying amounts of cash and due from banks and money market investments are reasonable estimates of their fair value. Money market investments include held-to-maturity securities, which have a contractual maturity of three months or less. The fair value of these securities is based on quoted market prices in active markets that incorporate the risk of nonperformance.

Investment securities held to maturity

    Investment securities held to maturity consist of financing arrangements with Puerto Rico municipalities issued in bond form, but underwritten as loans with features that are typically found in commercial loan transactions. These obligations typically are not issued in bearer form, nor are they registered with the SEC and are not rated by external credit agencies. The fair value of these financing arrangements was based on a discounted cash flow analysis using risk-adjusted discount rates (Level 3). A security with similar characteristics traded in the open market is used as a proxy for each municipal bond. Then the cash flow is discounted at the average spread over the discount curve exhibited by the proxy security at the end of each quarter.

Other equity securities

Equity or other securities that do not have a readily available fair value are stated at their net realizable value, which management believes is a reasonable proxy for their fair value. This category is principally composed of stock that is owned by the Corporation to comply with FHLB regulatory requirements. The realizable value of the FHLB stock equals its cost as this stock can be freely redeemed at par.

Loans receivable, including loans held for sale

The fair value of loans held for investment and of mortgage loans held for sale was estimated using discounted cash flow analyses, based on interest rates currently being offered for loans with similar terms and credit quality and with adjustments that the Corporation’s management believes a market participant would consider in determining fair value. Loans were classified by type, such as commercial, residential mortgage, and automobile. These asset categories were further segmented into fixed- and adjustable-rate categories. Valuations are carried out based on categories and not on a loan-by-loan basis.  The fair values of performing fixed-rate and adjustable-rate loans were calculated by discounting expected cash flows through the estimated maturity date. This fair value is not currently an indication of an exit price as that type of assumption could result in a different fair value estimate. The fair value of credit card loans was estimated using a discounted cash flow method and excludes any value related to a customer account relationship. Other loans with no stated maturity, like credit lines, were valued at book value. Prepayment assumptions were considered for non-residential loans. For residential mortgage loans, prepayment estimates were based on a prepayment model that combined both a historical calibration and current market prepayment expectations. Discount rates were based on the U.S. Treasury and LIBOR/Swap Yield Curves at the date of the analysis, and included appropriate adjustments for expected credit losses and liquidity. For impaired collateral dependent loans, the impairment was primarily measured based on the fair value of the collateral, which is derived from appraisals that take into consideration prices in observable transactions involving similar assets in similar locations.

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Deposits

The estimated fair value of demand deposits and savings accounts, which are deposits with no defined maturities, equals the amount payable on demand at the reporting date. The fair values of retail fixed-rate time deposits, with stated maturities, are based on the present value of the future cash flows expected to be paid on the deposits. The cash flows were based on contractual maturities; no early repayments were assumed. Discount rates were based on the LIBOR yield curve.

    The estimated fair value of total deposits excludes the fair value of core deposit intangibles, which represent the value of the customer relationship. The fair value of total deposits is measured by the value of demand deposits and savings deposits that bear a low or zero rate of interest and do not fluctuate in response to changes in interest rates.

    The fair value of brokered CDs, which are included within deposits, is determined using discounted cash flow analyses over the full term of the CDs. The fair value of the CDs is computed using the outstanding principal amount. The discount rates used were based on brokered CD market rates as of September 30, 2016.  The fair value does not incorporate the risk of nonperformance, since interests in brokered CDs are generally sold by brokers in amounts of less than $250,000 and, therefore, are insured by the FDIC.

Securities sold under agreements to repurchase

Some repurchase agreements reprice at least quarterly, and their outstanding balances are estimated to be their fair value. Where longer commitments are involved, fair value is estimated using exit price indications of the cost of unwinding the transactions as of the end of the reporting period. The brokers who are the counterparties provide these indications, which the Corporation evaluates. Securities sold under agreements to repurchase are fully collateralized by investment securities.

Advances from FHLB

The fair value of advances from the FHLB with fixed maturities is determined using discounted cash flow analyses over the full term of the borrowings, using indications of the fair value of similar transactions. The cash flows assume no early repayment of the borrowings. Discount rates are based on the LIBOR yield curve.   Advances from the FHLB are fully collateralized by mortgage loans and, to a lesser extent, investment securities.

Other borrowings

Other borrowings consist of junior subordinated debentures. Projected cash flows from the debentures were discounted using the Bloomberg BB Finance curve plus a credit spread. This credit spread was estimated using the difference in yield curves between swap rates and a yield curve that considers the industry and credit rating of the Corporation as issuer of the debentures at a tenor comparable to the time to maturity of the debentures.

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The following tables present the carrying value and the estimated fair value of financial instruments as of September 30, 2016 and December 31, 2015:
	Total Carrying Amount in Statement of Financial Condition September 30, 2016		Fair Value Estimate September 30, 2016		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Cash and due from banks and money
market investments	$	528,943	$	528,943	$	528,943	$	-	$	-
Investment securities available
for sale		1,843,853		1,843,853		7,933		1,811,442		24,478
Investment securities held to maturity		156,190		132,241		-		-		132,241
Other equity securities		28,717		28,717		-		28,717		-
Loans held for sale		56,779		60,283		-		50,497		9,786
Loans held for investment		8,863,654
Less: allowance for loan and lease losses		(214,070)
Loans held for investment, net of allowance	$	8,649,584		8,462,434		-		-		8,462,434
Derivatives, included in assets		195		195		-		195		-
Liabilities:
Deposits		8,981,313		9,003,706		-		9,003,706		-
Securities sold under agreements to repurchase		600,000		646,505		-		646,505		-
Advances from FHLB		355,000		356,925		-		356,925		-
Other borrowings		216,187		174,997		-		-		174,997
Derivatives, included in liabilities		335		335		-		335		-

	Total Carrying Amount in Statement of Financial Condition December 31, 2015		Fair Value Estimate December 31, 2015		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Cash and due from banks and money
market investments	$	752,458	$	752,458	$	752,458	$	-	$	-
Investment securities available
for sale		1,886,395		1,886,395		7,497		1,851,601		27,297
Investment securities held to maturity		161,483		131,544		-		-		131,544
Other equity securities		32,169		32,169		-		32,169		-
Loans held for sale		35,869		36,844		-		28,709		8,135
Loans held for investment		9,112,382
Less: allowance for loan and lease losses		(240,710)
Loans held for investment, net of allowance	$	8,871,672		8,768,152		-		-		8,768,152
Derivatives, included in assets		806		806		-		806		-
Liabilities:
Deposits		9,338,124		9,334,073		-		9,334,073		-
Securities sold under agreements to repurchase		700,000		752,048		-		752,048		-
Advances from FHLB		455,000		453,182		-		453,182		-
Other borrowings		226,492		142,846		-		-		142,846
Derivatives, included in liabilities		921		921		-		921		-

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NOTE 21 – SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information is as follows:

	Nine-Month Period Ended  September 30, 2016
	2016		2015
	(In thousands)
Cash paid for:
Interest on borrowings	$	104,031	$	70,016
Income tax		1,878		3,404
Non-cash investing and financing activities:
Additions to other real estate owned		37,606		44,415
Additions to auto and other repossessed assets		42,934		57,901
Capitalization of servicing assets		3,878		3,789
Loan securitizations		238,599		213,391
Loans held for investment transferred to held for sale		10,332		-
Loans held for sale transferred to held for investment		1,321		-
Trust preferred securities exchanged for new common stock issued:
Trust preferred securities exchanged		-		5,303
New common stock issued		-		5,628
Fair value of assets acquired (liabilities assumed) in the Doral Bank transaction:
Loans		-		311,410
Premises and equipment, net		-		5,450
Core Deposit intangible		-		5,820
Deposits		-		(523,517)

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NOTE 22 – SEGMENT INFORMATION

Based upon the Corporation’s organizational structure and the information provided to the Chief Executive Officer of the Corporation and, to a lesser extent, the Board of Directors, the operating segments are driven primarily by the Corporation’s lines of business for its operations in Puerto Rico, the Corporation’s principal market, and by geographic areas for its operations outside of Puerto Rico.  As of September 30, 2016, the Corporation had six reportable segments: Commercial and Corporate Banking; Mortgage Banking; Consumer (Retail) Banking; Treasury and Investments; United States Operations; and Virgin Islands Operations.  Management determined the reportable segments based on the internal reporting used to evaluate performance and to assess where to allocate resources. Other factors such as the Corporation’s organizational chart, nature of the products, distribution channels, and the economic characteristics of the products were also considered in the determination of the reportable segments.

The Commercial and Corporate Banking segment consists of the Corporation’s lending and other services for large customers represented by specialized and middle-market clients and the public sector. The Commercial and Corporate Banking segment offers commercial loans, including commercial real estate and construction loans, and floor plan financings, as well as other products, such as cash management and business management services. The Mortgage Banking segment consists of the origination, sale, and servicing of a variety of residential mortgage loans. The Mortgage Banking segment also acquires and sells mortgages in the secondary markets.  In addition, the Mortgage Banking segment includes mortgage loans purchased from other local banks and mortgage bankers.  The Consumer (Retail) Banking segment consists of the Corporation’s consumer lending and deposit-taking activities conducted mainly through its branch network and loan centers. The Treasury and Investments segment is responsible for the Corporation’s investment portfolio and treasury functions executed to manage and enhance liquidity.  This segment lends funds to the Commercial and Corporate Banking, Mortgage Banking and Consumer (Retail) Banking segments to finance their lending activities and borrows from those segments and from the United States Operations segment.  The Consumer (Retail) Banking and the United States Operations segments also lend funds to other segments. The interest rates charged or credited by Treasury and Investments, the Consumer (Retail) Banking and the United States Operations segments are allocated based on market rates. The difference between the allocated interest income or expense and the Corporation’s actual net interest income from centralized management of funding costs is reported in the Treasury and Investments segment. The United States Operations segment consists of all banking activities conducted by FirstBank in the United States mainland, including commercial and retail banking services.  The Virgin Islands Operations segment consists of all banking activities conducted by the Corporation in the USVI and BVI, including commercial and retail banking services. 

The accounting policies of the segments are the same as those referred to in Note 1, “Basis of Presentation and Significant Accounting Policies,” in the audited consolidated financial statements of the Corporation for the year ended December 31, 2015, which are included in the Corporation’s 2015 Annual Report on Form 10-K.

The Corporation evaluates the performance of the segments based on net interest income, the provision for loan and lease losses, non-interest income and direct non-interest expenses. The segments are also evaluated based on the average volume of their interest-earning assets less the allowance for loan and lease losses.

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The following table presents information about the reportable segments:
(In thousands)	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
For the quarter ended September 30, 2016:
Interest income	$	34,605	$	44,455	$	28,981	$	12,529	$	13,944	$	9,059	$	143,573
Net (charge) credit for transfer of funds		(12,074)		2,810		(6,700)		15,839		125		-		-
Interest expense		-		(6,323)		-		(14,487)		(3,811)		(774)		(25,395)
Net interest income		22,531		40,942		22,281		13,881		10,258		8,285		118,178
(Provision) release for loan and lease losses		(3,860)		(8,655)		(8,162)		-		2,024		(2,850)		(21,503)
Non-interest income		5,222		11,292		985		6,154		884		1,609		26,146
Direct non-interest expenses		(8,864)		(27,100)		(11,871)		(914)		(7,556)		(7,097)		(63,402)
Segment income (loss)	$	15,029	$	16,479	$	3,233	$	19,121	$	5,610	$	(53)	$	59,419
Average earning assets	$	2,549,358	$	1,973,424	$	2,410,037	$	2,565,019	$	1,252,271	$	604,150	$	11,354,259
(In thousands)	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
For the quarter ended September 30, 2015:
Interest income	$	36,180	$	48,528	$	32,636	$	11,500	$	11,229	$	9,739	$	149,812
Net (charge) credit for transfer of funds		(12,629)		4,335		(4,058)		8,563		3,789		-		-
Interest expense		-		(5,869)		-		(14,305)		(3,931)		(778)		(24,883)
Net interest income		23,551		46,994		28,578		5,758		11,087		8,961		124,929
(Provision) release for loan and lease losses		(6,750)		(13,946)		(11,355)		-		1,307		(432)		(31,176)
Non-interest income		3,982		11,759		647		(174)		778		1,766		18,758
Direct non-interest expenses		(8,977)		(32,669)		(10,896)		(1,103)		(6,914)		(7,441)		(68,000)
Segment income	$	11,806	$	12,138	$	6,974	$	4,481	$	6,258	$	2,854	$	44,511
Average earning assets	$	2,642,388	$	1,959,951	$	2,760,788	$	2,531,084	$	1,048,451	$	644,769	$	11,587,431

(In thousands)	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
Nine-Month Period Ended September 30, 2016
Interest income	$	104,865	$	135,655	$	93,915	$	39,206	$	40,091	$	27,606	$	441,338
Net (charge) credit for transfer of funds		(37,673)		10,546		(18,212)		44,226		1,113		-		-
Interest expense		-		(18,765)		-		(45,828)		(11,214)		(2,477)		(78,284)
Net interest income		67,192		127,436		75,703		37,604		29,990		25,129		363,054
(Provision) release for loan and lease losses		(21,608)		(24,451)		(17,730)		-		1,563		(1,316)		(63,542)
Non-interest income		14,381		35,318		2,459		3,815		2,799		5,621		64,393
Direct non-interest expenses		(29,828)		(87,218)		(33,194)		(3,462)		(23,070)		(20,757)		(197,529)
Segment income	$	30,137	$	51,085	$	27,238	$	37,957	$	11,282	$	8,677	$	166,376
Average earning assets	$	2,576,194	$	1,989,426	$	2,489,268	$	2,774,118	$	1,188,463	$	613,666	$	11,631,135
(In thousands)	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
Nine-Month Period Ended September 30, 2015
Interest income	$	106,352	$	147,395	$	100,192	$	36,276	$	34,477	$	29,237	$	453,929
Net (charge) credit for transfer of funds		(36,212)		12,816		(11,746)		23,936		11,206		-		-
Interest expense		-		(17,379)		-		(44,834)		(12,326)		(2,337)		(76,876)
Net interest income		70,140		142,832		88,446		15,378		33,357		26,900		377,053
(Provision) release for loan and lease losses		(21,657)		(36,588)		(84,170)		-		6,715		(2,712)		(138,412)
Non-interest income (loss)		11,866		35,504		2,350		(13,046)		2,032		6,008		44,714
Direct non-interest expenses		(26,270)		(96,690)		(30,013)		(3,487)		(21,293)		(24,892)		(202,645)
Segment income (loss)	$	34,079	$	45,058	$	(23,387)	$	(1,155)	$	20,811	$	5,304	$	80,710
Average earning assets	$	2,601,892	$	1,956,352	$	2,947,562	$	2,683,313	$	1,001,860	$	640,027	$	11,831,006

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The following table presents a reconciliation of the reportable segment financial information to the consolidated totals:
		Quarter Ended				Nine-Month Period Ended
		September 30,				September 30,
		2016		2015		2016		2015
Net income :
Total segment income		$	59,419	$	44,511	$	166,376	$	80,710
Other non-interest income  (1)			-		-		-		13,443
Other operating expenses (2)			(24,901)		(25,277)		(73,315)		(85,159)
Income before income taxes			34,518		19,234		93,061		8,994
Income tax expense			(10,444)		(4,476)		(23,690)		(2,664)
Total consolidated net income		$	24,074	$	14,758	$	69,371	$	6,330
Average assets:
Total average earning assets for segments		$	11,354,259	$	11,587,431	$	11,631,135	$	11,831,006
Average non-earning assets			926,043		925,723		927,732		916,817
Total consolidated average assets		$	12,280,302	$	12,513,154	$	12,558,867	$	12,747,823
(1)	The bargain purchase gain on the acquisition of assets and assumption of deposits from Doral Bank in 2015 is presented as Other non-interest income in the table above.
(2)	Expenses pertaining to corporate administrative functions that support the operating segments but are not specifically attributable to or managed by any segment are not included in the reported financial results of the operating segments. The unallocated corporate expenses include certain general and administrative expenses and related depreciation and amortization expenses.

NOTE 23 – REGULATORY MATTERS, COMMITMENTS AND CONTINGENCIES

The Corporation is subject to various regulatory capital requirements imposed by the federal banking agencies. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material adverse effect on the Corporation’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation must meet specific capital guidelines that involve quantitative measures of the Corporation’s assets and liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Corporation’s capital amounts and classification are also subject to qualitative judgments and adjustment by the regulators with respect to minimum capital requirements, components, risk weightings, and other factors.

First BanCorp. is subject to the Written Agreement that the Corporation entered into with the New York FED on June 3, 2010. The Written Agreement provides, among other things, that the holding company must serve as a source of strength to FirstBank, and that, except with the consent generally of the New York FED and the Federal Reserve Board, (1) the holding company may not pay dividends to stockholders or receive dividends from FirstBank, (2) the holding company and its nonbank subsidiaries may not make payments on trust-preferred securities or subordinated debt, and (3) the holding company cannot incur, increase, or guarantee debt or repurchase any capital securities. The Written Agreement also required that the holding company submit a capital plan acceptable to the New York FED that reflected sufficient capital at First BanCorp. on a consolidated basis and follow certain guidelines with respect to the appointment or change in responsibilities of senior officers. The foregoing summary is not complete and is qualified in all respects by reference to the actual language of the Written Agreement, which the Corporation filed with the SEC.

The Corporation submitted its Capital Plan setting forth its plans for how to improve its capital positions to comply with the Written Agreement over time. In addition to the Capital Plan, the Corporation submitted to its regulators a liquidity and brokered CD plan, including a contingency funding plan, a non-performing asset reduction plan, a budget and profit plan, a strategic plan, and a plan for the reduction of classified and special mention assets. As of September 30, 2016, the Corporation had completed all of the items included in the Capital Plan and is continuing to work on reducing non-performing loans. The Written Agreement also requires the submission to the regulators of quarterly progress reports.

Although the Corporation and FirstBank became subject to the U.S. Basel III capital rules (“Basel III rules”) beginning on January 1, 2015, certain requirements of the Basel III rules will be phased in over several years. The phase-in period for certain deductions and adjustments to regulatory capital (such as certain intangible assets and deferred tax assets that arise from net operating losses and tax credit carryforwards) will be completed on January 1, 2018. The Corporation and FirstBank compute risk-weighted assets using the Standardized Approach required by the Basel III rules.

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The Basel III rules require the Corporation to maintain an additional capital conservation buffer of 2.5% to avoid limitations on both (i) capital distributions (e.g. repurchases of capital instruments or dividend or interest payments on capital instruments) and (ii) discretionary bonus payments to executive officers and heads of major business lines. The phase-in of the capital conservation buffer began on January 1, 2016 with a first year requirement of 0.625% of additional Common Equity Tier 1 Capital (“CET1”), which will be progressively increased over a four-year period, increasing by that same percentage amount on each subsequent January 1 until it reaches the fully phased-in 2.5% CET1 requirement on January 1, 2019.

    Under the fully phased-in Basel III rules, in order to be considered adequately capitalized, the Corporation will be required to maintain: (i) a minimum CET1 capital to risk-weighted assets ratio of at least  4.5%, plus the 2.5% “capital conservation buffer,” resulting in a required minimum CET1 ratio of at least 7%, (ii) a minimum ratio of total Tier 1 capital to risk-weighted assets of at least 6.0%, plus the 2.5% capital conservation buffer, resulting in a required minimum Tier 1 capital ratio of 8.5%, (iii) a minimum ratio of total Tier 1 plus Tier 2 capital to risk-weighted assets of at least 8.0%, plus the 2.5% capital conservation buffer, resulting in a required minimum total capital ratio of 10.5%, and (iv) a required minimum leverage ratio of 4%, calculated as the ratio of Tier 1 capital to average on-balance sheet (non-risk adjusted) assets.

    In addition, as required under the Basel III rules, the Corporation’s trust preferred securities (“TRuPs”) were fully phased out from Tier 1 capital on January 1, 2016. However, the Corporation’s TRuPs may continue to be included in Tier 2 capital until the instruments are redeemed or mature.

    In March 2016, the FDIC adopted a final rule (“Final Rule”) imposing a quarterly deposit insurance assessment surcharge on banks with at least $10 billion in assets of 4.5 cents per $100 of their assessment base, after making certain adjustments once the Deposit Insurance Fund Reserve Ratio reaches or exceeds 1.15 percent. For purposes of this surcharge, the first $10 billion of assets are subtracted from the regular insurance assessment base to determine the surcharge base. The assessment surcharge became effective on July 1, 2016, is assessed as of the third quarter of 2016, and applies to FirstBank. The Bank’s current surcharge base is slightly higher than the $10 billion threshold. The surcharge assessments will continue through December 31, 2018 or until the Deposit Insurance Fund Reserve Ratio reaches or exceeds 1.35 percent. In addition, under existing regulations, the FDIC reduced the initial base assessment rate, which reduces the standard risk-based assessment rate. This resulted in a decrease in the total FDIC insurance premium expense (standard risk-based assessment plus assessment surcharge expense) of approximately $0.8 million in the third quarter of 2016, as the benefit of the reduction in the initial base assessment rate exceeded the surcharge amount. In addition, under the Final Rule, if the Deposit Insurance Fund Reserve Ratio does not reach 1.35 percent by December 31, 2018, a shortfall assessment may be assessed on large banks in the first quarter of 2019 and collected by the FDIC on June 30, 2019.

Other Recent Regulatory Developments

    In May 2016, the federal banking agencies proposed regulations governing incentive-based compensation practices at covered banking institutions. These proposed rules are intended to better align the financial rewards for covered employees with an institution’s long-term safety and soundness. Portions of these proposed rules would apply to the Corporation and FirstBank. Those applicable provisions would generally (i) prohibit types and features of incentive-based compensation arrangements that encourage inappropriate risk because they are “excessive” or “could lead to material financial loss” at the banking institution; (ii) require incentive-based compensation arrangements to adhere to three basic principles: (1) a balance between risk and reward; (2) effective risk management and controls; and (3) effective governance; and (iii) require appropriate board of directors (or committee) oversight and recordkeeping and disclosures to the banking institution’s primary regulatory agency. The nature and substance of any final action to adopt these proposed rules, and the timing of any such action, are not known at this time.

    Please refer to the discussion in “Part I – Item 7 – Business – Supervision and Regulation” in the Corporation’s 2015 Form 10-K for a more complete discussion of supervision and regulatory matters and activities that affect the Corporation and its subsidiaries.

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The Corporation's and its banking subsidiary's regulatory capital positions as of September 30, 2016 and December 31, 2015 were as follows:
	Regulatory Requirements
	Actual			For Capital Adequacy Purposes			To be Well-Capitalized-Regular Thresholds
	Amount		Ratio	Amount		Ratio	Amount		Ratio
	(Dollars in thousands)
As of September 30, 2016
Total Capital (to
Risk-Weighted Assets)
First BanCorp.	$	1,892,493	21.27%	$	711,754	8.0%		N/A	N/A
FirstBank	$	1,843,533	20.73%	$	711,460	8.0%	$	889,325	10.0%
Common Equity Tier 1 Capital
(to Risk-Weighted Assets)
First BanCorp.	$	1,569,482	17.64%	$	400,362	4.5%		N/A	N/A
FirstBank	$	1,496,670	16.83%	$	400,196	4.5%	$	578,061	6.5%
Tier I Capital (to
Risk-Weighted Assets)
First BanCorp.	$	1,569,482	17.64%	$	533,816	6.0%		N/A	N/A
FirstBank	$	1,730,264	19.46%	$	533,595	6.0%	$	711,460	8.0%
Leverage ratio
First BanCorp.	$	1,569,482	13.04%	$	481,357	4.0%		N/A	N/A
FirstBank	$	1,730,264	14.40%	$	480,751	4.0%	$	600,939	5.0%
As of December 31, 2015
Total Capital (to
Risk-Weighted Assets)
First BanCorp.	$	1,828,559	20.01%	$	731,164	8.0%		N/A	N/A
FirstBank	$	1,802,711	19.73%	$	730,824	8.0%	$	913,530	10.0%
Common Equity Tier 1 Capital
(to Risk-Weighted Assets)
First BanCorp.	$	1,546,678	16.92%	$	411,280	4.5%		N/A	N/A
FirstBank	$	1,493,478	16.35%	$	411,088	4.5%	$	593,794	6.5%
Tier I Capital (to
Risk-Weighted Assets)
First BanCorp.	$	1,546,678	16.92%	$	548,373	6.0%		N/A	N/A
FirstBank	$	1,685,656	18.45%	$	548,118	6.0%	$	730,824	8.0%
Leverage ratio
First BanCorp.	$	1,546,678	12.22%	$	506,322	4.0%		N/A	N/A
FirstBank	$	1,685,656	13.33%	$	505,648	4.0%	$	632,060	5.0%

The Corporation enters into financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments may include commitments to extend credit and commitments to sell mortgage loans at fair value. As of September 30, 2016, commitments to extend credit amounted to approximately $1.1 billion, of which $631.5 million relates to credit card loans. Commercial and Financial standby letters of credit amounted to approximately $46.7 million. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any conditions established in the contract. Commitments generally have fixed expiration dates or other termination clauses. Since certain commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. For most of the commercial lines of credit, the Corporation has the option to reevaluate the agreement prior to additional disbursements. In the case of credit cards and personal lines of credit, the Corporation can cancel the unused credit facility at any time and without cause. Generally, the Corporation does not enter into interest rate lock agreements with prospective borrowers in connection with its mortgage banking activities.

As of September 30, 2016, First BanCorp. and its subsidiaries were defendants in various legal proceedings arising in the ordinary course of business. Management believes that the final disposition of these matters, to the extent not previously provided for, will not have a material adverse effect, individually or in the aggregate, on the Corporation’s financial position, results of operations or cash flows.

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NOTE 24 – FIRST BANCORP. (HOLDING COMPANY ONLY) FINANCIAL INFORMATION

The following condensed financial information presents the financial position of the Holding Company only as of September 30, 2016 and December 31, 2015 and the results of its operations for the quarters and nine-month periods ended September 30, 2016 and 2015.

Statements of Financial Condition
	As of September 30,			As of December 31,
	2016		2015
	(In thousands)
Assets
Cash and due from banks	$	29,074	$	29,103
Money market investments		6,111		6,111
Other investment securities		285		285
Loans held for investment, net		236		266
Investment in First Bank Puerto Rico, at equity		1,960,090		1,888,036
Investment in First Bank Insurance Agency, at equity		9,991		14,382
Investment in FBP Statutory Trust I		2,929		2,929
Investment in FBP Statutory Trust II		3,561		3,866
Other assets		4,354		4,632
Total assets	$	2,016,631	$	1,949,610
Liabilities and Stockholders' Equity
Liabilities:
Other borrowings	$	216,187	$	226,492
Accounts payable and other liabilities		558		28,984
Total liabilities		216,745		255,476
Stockholders' equity		1,799,886		1,694,134
Total liabilities and stockholders' equity	$	2,016,631	$	1,949,610

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Statements of Income
	Quarter Ended				Nine-Month Period Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(In thousands)				(In thousands)
Income:
Interest income on money market investments	$	5	$	5	$	15	$	15
Dividend income from subsidiaries		1,822		-		39,980		-
Other income		58		58		181		439
		1,885		63		40,176		454
Expense:
Other borrowings		1,817		1,861		5,777		5,521
Other operating expenses		685		643		2,313		2,000
		2,502		2,504		8,090		7,521
Gain on early extinguishment of debt		-		-		4,217		-
(Loss) income before income taxes and equity
in undistributed earnings of subsidiaries		(617)		(2,441)		36,303		(7,067)
Equity in undistributed earnings of subsidiaries		24,691		17,199		33,068		13,397
Net income	$	24,074	$	14,758	$	69,371	$	6,330
Other Comprehensive (loss) income, net of tax		(12,157)		16,709		32,109		13,681
Comprehensive income	$	11,917	$	31,467	$	101,480	$	20,011

NOTE 25 – SUBSEQUENT EVENTS

  The Corporation has performed an evaluation of events occurringsubsequent to September 30, 2016; management has determined that there are no events occurring in this period that require disclosure in or adjustment to the accompanying financial statements.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)

SELECTED FINANCIAL DATA
		Quarter ended					Nine-Month Period Ended
(In thousands, except for per share and financial ratios)		September 30,				September 30,
		2016		2015		2016		2015
Condensed Income Statements:
	Total interest income	$	143,573	$	149,812	$	441,338	$	453,929
	Total interest expense		25,395		24,883		78,284		76,876
	Net interest income		118,178		124,929		363,054		377,053
	Provision for loan and lease losses		21,503		31,176		63,542		138,412
	Non-interest income		26,146		18,758		64,393		58,157
	Non-interest expenses		88,303		93,277		270,844		287,804
	Income before income taxes		34,518		19,234		93,061		8,994
	Income tax expense		(10,444)		(4,476)		(23,690)		(2,664)
	Net income		24,074		14,758		69,371		6,330
	Net income attributable to common stockholders		24,074		14,758		69,371		6,330
Per Common Share Results:
	Net earnings per share-basic	$	0.11	$	0.07	$	0.33	$	0.03
	Net earnings per share-diluted	$	0.11	$	0.07	$	0.32	$	0.03
	Cash dividends declared	$	-	$	-	$	-	$	-
	Average shares outstanding		212,927		211,820		212,682		211,255
	Average shares outstanding diluted		216,578		213,783		215,259		212,596
	Book value per common share	$	8.11	$	7.74	$	8.11	$	7.74
	Tangible book value per common share (1)	$	7.89	$	7.50	$	7.89	$	7.50
Selected Financial Ratios (In Percent):
Profitability:
	Return on Average Assets		0.78		0.47		0.74		0.07
	Interest Rate Spread		3.81		3.98		3.84		3.97
	Net Interest Margin		4.06		4.19		4.09		4.18
	Interest Rate Spread - tax equivalent basis (2)		3.89		4.12		3.96		4.12
	Net Interest Margin - tax equivalent basis (2)		4.15		4.33		4.21		4.32
	Return on Average Total Equity		5.35		3.49		5.28		0.50
	Return on Average Common Equity		5.46		3.57		5.39		0.51
	Average Total Equity to Average Total Assets		14.58		13.39		13.98		13.24
	Tangible common equity ratio (1)		14.27		12.63		14.27		12.63
	Dividend payout ratio		-		-		-		-
	Efficiency ratio (3)		61.18		64.92		63.36		66.13
Asset Quality:
	Allowance for loan and lease losses to total loans held for investment		2.42		2.50		2.42		2.50
	Net charge-offs (annualized) to average loans (4) (5)		1.90		1.04		1.35		1.91
	Provision for loan and lease losses to net charge-offs (6)		51.34		131.39		70.46		104.98
	Non-performing assets to total assets (4)		6.16		4.81		6.16		4.81
	Non-performing loans held for investment to total loans held for investment (4)		6.39		5.17		6.39		5.17
	Allowance to total non-performing loans held for investment (4)		37.77		48.44		37.77		48.44
	Allowance to total non-performing loans held for investment,
	excluding residential real estate loans (4)		52.92		76.81		52.92		76.81
Other Information:
	Common Stock Price: End of period	$	5.20	$	3.56	$	5.20	$	3.56
		As of September 30, 2016		As of December 31, 2015
Balance Sheet Data:
	Loans, including loans held for sale	$	8,920,433	$	9,148,251
	Allowance for loan and lease losses		214,070		240,710
	Money market and investment securities		2,038,868		2,299,520
	Intangible assets		47,981		50,583
	Deferred tax asset, net		290,877		311,263
	Total assets		12,075,253		12,573,019
	Deposits		8,981,313		9,338,124
	Borrowings		1,171,187		1,381,492
	Total preferred equity		36,104		36,104
	Total common equity		1,759,422		1,685,779
	Accumulated other comprehensive income (loss), net of tax		4,360		(27,749)
	Total equity		1,799,886		1,694,134
______________
(1)	Non-GAAP financial measures. Refer to "Capital" below for additional information about the components and a reconciliation of these measures.
(2)	On a tax-equivalent basis and excluding the changes in fair value of derivative instruments (see "Net Interest Income" below for a reconciliation of these non-GAAP financial measures).
(3)	Non-interest expense to the sum of net interest income and non-interest income.
(4)	Loans used in the denominator in calculating each of these ratios include purchased credit-impaired ("PCI") loans. However, the Corporation separately tracks and reports PCI loans and excludes these from non-performing loan and non-performing asset amounts.
(5)	The ratio of net charge-offs to average loans, excluding charge-offs associated with a bulk sale of assets, was 1.03% for the nine-month period ended September 30, 2015.
(6)	The ratio of the provision for loan and lease losses to net charge-offs, excluding the impact of a bulk sale of assets, was 129.91% for the nine-month period ended September 30, 2015.

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The following Management’s Discussion and Analysis of Financial Condition and Results of Operations relates to the accompanying unaudited consolidated financial statements of First BanCorp. (the “Corporation” or “First BanCorp.”) and should be read in conjunction with such financial statements and the notes thereto.  This section also presents certain non-GAAP financial measures.  Refer to “Basis of Presentation” below for additional information about why the non-GAAP financial measures are being presented.

EXECUTIVE SUMMARY

First BanCorp. is a diversified financial holding company headquartered in San Juan, Puerto Rico offering a full range of financial products to consumers and commercial customers through various subsidiaries. First BanCorp. is the holding company of FirstBank Puerto Rico (“FirstBank” or the “Bank”) and FirstBank Insurance Agency. Through its wholly owned subsidiaries, the Corporation operates offices in Puerto Rico, the United States Virgin Islands and British Virgin Islands, and the State of Florida (USA), concentrating on commercial banking, residential mortgage loan originations, finance leases, credit cards, personal loans, small loans, auto loans, and insurance agency and broker-dealer activities.

OVERVIEW OF RESULTS OF OPERATIONS

First BanCorp.'s results of operations depend primarily on its net interest income, which is the difference between the interest income earned on its interest-earning assets, including investment securities and loans, and the interest expense incurred on its interest-bearing liabilities, including deposits and borrowings. Net interest income is affected by various factors, including: the interest rate scenario; the volumes, mix and composition of interest-earning assets and interest-bearing liabilities; and the re-pricing characteristics of these assets and liabilities. The Corporation's results of operations also depend on the provision for loan and lease losses, non-interest expenses (such as personnel, occupancy, deposit insurance premium and other costs), non-interest income (mainly service charges and fees on deposits, insurance income and revenues from broker-dealer operations), gains (losses) on sales of investments, gains (losses) on mortgage banking activities, and income taxes.

The Corporation had net income of $24.1 million, or $0.11 per diluted common share, for the quarter ended September 30, 2016, compared to $14.8 million, or $0.07 per diluted common share, for the same period in 2015.  The Corporation’s financial results for the third quarters of 2016 and 2015 were impacted by several items that management believes are not reflective of core operating performance, are not expected to reoccur with any regularity or may reoccur at uncertain times and amounts, including: (i) a gain of $6.1 million ($5.9 million after-tax) on sales of $198.7 million of U.S. agency mortgage-backed securities (“MBS”) recorded in the third quarter of 2016, (ii) severance payments of $0.3 million ($0.2 million after-tax) related to permanent job discontinuance in the third quarter of 2016, and (iii) other-than-temporary impairment (“OTTI”) losses on private label MBS of $0.2 million recorded in the third quarter of 2015 (no tax benefit was recognized for the OTTI charge).

 On a non-GAAP basis, excluding the gain on sales of U.S. agency MBS and severance payments in the third quarter of 2016, the adjusted net income of $18.3 million for the third quarter of 2016 increased $3.3 million compared to adjusted net income of $15.0 million for the third quarter of 2015, excluding the OTTI losses on private label MBS. 

The following table reconciles for the third quarter of 2016 and 2015, the reported net income to adjusted net income, a non-GAAP financial measure that excludes items that management believes are not reflective of core operating performance or that are not expected to reoccur with any regularity or reoccur at uncertain times and amounts:

	Quarter Ended September 30,
	2016		2015
(In thousands)
Net income, as reported	$	24,074	$	14,758
Adjustments:
Other-than-temporary impairment on debt securities		-		231
Gain on sale of investment securities		(6,096)		-
Severance payments		281		-
Income tax impact of adjustments		76		-
Adjusted net income	$	18,335	$	14,989

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The key drivers of the Corporation’s financial results for the quarter ended September 30, 2016, compared to the same period in 2015, include the following:

·Net interest income decreased $6.8 million to $118.2 million for the quarter ended September 30, 2016 compared to $124.9 million for the same period in 2015. The decrease in net interest income was primarily driven by a $5.6 million reduction in interest income on loans, including: (i) a $4.0 million decrease in interest income on consumer loans mainly attributable to a decrease of $144.2 million in the average balance of this portfolio, primarily auto loans, (ii) a $0.5 million decrease in interest income on commercial and construction loans reflecting a decline of $100.4 million in the average balance of these portfolios that resulted in a decrease of approximately $1.0 million in interest income, partially offset by higher commercial loan yields that largely reflected the upward repricing of variable rate commercial loans tied to higher short-term interest rates, and (iii) a $1.0 million decrease in interest income on residential mortgage loans attributable to several factors including lower cash collections on residential non-performing loans, lower accretion income on PCI loans and a decrease of $18.0 million in the average balance of this portfolio. 

In addition, net interest income was adversely impacted by a $0.9 million decrease in interest income on investment securities, primarily reflecting the gradual reinvestment of MBS prepayments in lower yielding securities given the current interest rate environment, and a $0.5 million increase in interest expense driven by a higher average balance of Federal Home Loan Bank (“FHLB”) advances, the upward repricing of repurchase agreements, and a higher average cost on variable rate money market deposit accounts. 

The net interest margin, excluding fair value adjustments, decreased 13 basis points to 4.06% for the third quarter of 2016 compared to the same period in 2015. The decline was primarily driven by lower yields on investment securities and higher funding costs as noted above.  Higher rates on new brokered CDs than the rates of matured brokered CDs also contributed to the increase in the average cost of funds, primarily reflecting the current interest rate environment and, to some extent, extended maturities for purposes of interest rate risk management. In addition, the net interest margin was impacted by changes in the mix of earning assets, reflecting higher balances in investment securities and lower loan balances. For a definition and reconciliation of this non-GAAP financial measure, refer to “Net Interest Income” discussion below.

·The provision for loan and lease losses decreased $9.7 million to $21.5 million for the third quarter of 2016 compared to $31.2 million for the same period in 2015.  The decrease reflects a reduction of $4.9 million in the provision for consumer loans, primarily auto loans, driven by lower charge-offs and loss severity rates and the overall decrease in the size of this portfolio. In addition, the provision for residential mortgage loans decreased by $2.4 million, reflecting lower delinquency levels and the decrease in the size of the portfolio, and the provision for commercial and construction loans decreased by $2.4 million, primarily related to a lower migration of loans to adverse classification categories.    

Net charge-offs totaled $41.9 million for the third quarter of 2016, or 1.90% of average loans on an annualized basis, compared to $23.7 million, or 1.04% of average loans, for the same period in 2015.  The increase reflects the impact of four large commercial loan charge-offs recorded in the third quarter of 2016 totaling $22.9 million, of which $18.3 million was charged against specific reserves established in prior periods.  Refer to the discussions under “Provision for loan and lease losses” and “Risk Management” below for an analysis of the allowance for loan and lease losses and non-performing assets and related ratios.

·The Corporation recorded non-interest income of $26.1 million for the third quarter of 2016, compared to $18.8 million for the same period in 2015.  The increase was primarily related to the $6.1 million gain on the sales of U.S. agency MBS recorded in the third quarter of 2016 and increases of $1.2 million and $0.7 million in revenues from the mortgage banking business and income from service charges on deposit accounts, respectively.   

·Non-interest expenses decreased by $5.0 million to $88.3 million for the third quarter of 2016 compared to the same period in 2015.  The decrease was primarily related to: (i) a $1.7 million decrease in losses on other real estate owned (“OREO”) operations primarily due to lower required write downs to the value of OREO properties, (ii) a $1.4 million decrease in occupancy and equipment costs reflecting reductions in depreciation and repairs expenses, (iii) a $1.0 million decrease in the Federal Deposit Insurance Corporation (“FDIC”) insurance premium expense primarily due to the reduction in the initial base assessment rate, which became effective on July 1, 2016, as well as reductions in brokered deposits and average assets, and (iv) a $0.9 million decrease in business promotion expenses, primarily related to reduced advertising and marketing activities. Refer to “Non-Interest Expenses” below for additional information.

·For the third quarter of 2016, the Corporation recorded an income tax expense of $10.4 million, compared to $4.5 million for the same period in 2015.  The Corporation’s effective tax rate for the first nine months of 2016 was 25% (24% excluding entities from which a tax benefit cannot be recognized), which approximates the expected effective tax rate for the year, compared to 30% (17% excluding entities from which a tax benefit cannot be recognized) for the first nine months of 2015. 

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As of September 30, 2016, the Corporation had a net deferred tax asset of $290.9 million (net of a valuation allowance of $201.7 million).  Refer to “Income Taxes” below for additional information.

·As of September 30, 2016, total assets were $12.1 billion, a decrease of $497.8 million from December 31, 2015.  The decrease primarily reflects a $223.5 million reduction in cash and cash equivalents, associated with liquidity used to repay maturing brokered CDs, repurchase agreements and FHLB advances, and a $227.8 million decrease in total loans, including a $104.2 million reduction in commercial and construction loans and a $99.8 million decrease in consumer loans. The decrease in commercial and construction loans was mainly driven by the repayment of several large commercial loans in the first nine months of 2016, including repayments totaling $145.3 million associated with six commercial relationships, the sale of a $20.2 million commercial loan participation, and the four large charge-offs totaling $22.9 million noted above, partially offset by new loan originations. In addition, total investment securities decreased by $51.3 million, driven by the aforementioned sales of $198.7 million of U.S. agency MBS, the maturity or call prior to scheduled maturities of $87.4 million of U.S. agency debt securities and prepayments of $177.4 million of U.S. agency MBS, partially offset by purchases of approximately $405 million of debt securities and MBS issued or guaranteed by U.S. agencies.  Refer to “Financial Condition and Operating Data” below for additional information.

·As of September 30, 2016, total liabilities were $10.3 billion, a decrease of $603.5 million, from December 31, 2015.  The decrease was mainly due to a $539.0 million decrease in brokered CDs, repayments at maturity of a $100 million repurchase agreement and a $100 million FHLB advance, a $10 million decrease in junior subordinated debentures associated with the repurchase and cancellation of certain trust preferred securities, and the payment of interest on trust preferred securities deferred and accrued since March 2012.  As of September 30, 2016, the Corporation is current on all interest payments due related to its subordinated debt.  These reductions were partially offset by a $135.0 million increase in deposits, excluding government deposits and brokered CDs, primarily reflected in the Puerto Rico region.  Refer to “Risk Management – Liquidity and Capital Adequacy” below for additional information about the Corporation’s funding sources. 

·As of September 30, 2016, the Corporation’s stockholders’ equity was $1.8 billion, an increase of $105.8 million from December 31, 2015.  The increase was mainly driven by the net income of $69.4 million for the first nine months of 2016 and an increase of approximately $31.5 million in the fair value of available-for-sale securities recorded as part of other comprehensive income.   

·The Corporation’s Total Capital, Common Equity Tier 1 Capital, Tier 1 Capital and Leverage ratios calculated under the Basel III rules were 21.27%, 17.64%, 17.64%, and 13.04%, respectively, as of September  30, 2016, compared to Total Capital, Common Equity Tier 1 Capital, Tier 1 Capital and Leverage ratios of 20.01%, 16.92%, 16.92%, and 12.22%, respectively, as of December 31, 2015.  The Corporation’s tangible common equity ratio increased to 14.27% as of September  30, 2016, from 12.84% as of December 31, 2015.  Refer to “Risk Management – Capital” below for additional information.   

·Total loan production, including purchases, refinancings, renewals and draws from existing revolving and non-revolving commitments, was $803.6 million for the quarter ended September  30, 2016, excluding the utilization activity on outstanding credit cards, compared to $759.9 million for the same period in 2015.  The increase was primarily related to a higher volume of commercial loan originations in Florida and an increase in residential mortgage loan originations in Puerto Rico.     

·Total non-performing assets were $744.0 million as of September  30, 2016, an increase of $134.1 million from December 31, 2015.  The increase was primarily attributable to the inflow in the first quarter of 2016 of the Corporation’s exposure to commercial mortgage loans guaranteed by the Puerto Rico Tourism Development Fund (“TDF”) with a book value of $112.8 million as of September  30, 2016, the inflow in the second quarter of 2016 of a $35.0 million commercial relationship in Puerto Rico, and the placement of bonds of the Government Development Bank for Puerto Rico (the “GDB”) and the Puerto Rico Public Buildings Authority in non-performing status in the third quarter of 2016 as these entities had recently defaulted on interest due on bonds held by the Corporation as part of its available-for-sale securities portfolio.  As of September 30, 2016, the amortized cost of these bonds, including accrued interest of $0.9 million, was $35.6 million (net of $22.2 million in cumulative other-than-temporary impairment charges) and are recorded on the Corporation’s books at their aggregate fair value of $19.5 million. The increase resulting from the inflow of large commercial loans and investment securities was partially offset by reductions in non-performing residential, consumer and OREO balances.  Refer to “Risk Management - Non-accruing and Non-performing Assets” below for additional information.

·Adversely classified commercial and construction loans held for investment increased by $24.6 million to $546.7 million as of September  30, 2016 from $522.1 million as of December 31, 2015, including the migration to adverse classification categories of the aforementioned $35.0 million non-performing commercial relationship in Puerto Rico. 

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Critical Accounting Policies and Practices

The accounting principles of the Corporation and the methods of applying these principles conform to GAAP.  The Corporation’s critical accounting policies relate to: 1) the allowance for loan and lease losses; 2) other-than-temporary impairments; 3) income taxes; 4) the classification and values of financial instruments; 5) income recognition on loans; 6) loans acquired; and 7) loans held for sale.  These critical accounting policies involve judgments, estimates and assumptions made by management that affect the amounts recorded for assets, liabilities and contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from estimates, if different assumptions or conditions prevail. Certain determinations inherently require greater reliance on the use of estimates, assumptions, and judgments and, as such, have a greater possibility of producing results that could be materially different than those originally reported.

The Corporation’s critical accounting policies are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in First BanCorp.’s 2015 Annual Report on Form 10-K. There have not been any material changes in the Corporation’s critical accounting policies since December 31, 2015.

During the second quarter of 2016, the Corporation reviewed its historical accounting treatment as loans of its $156.2 million of financing arrangements with Puerto Rico municipalities issued in bond form, but underwritten as loans with features that are typically found in commercial loan transactions. This review came as a result of the determination of the Federal Reserve Board that the transactions must be treated for regulatory reporting purposes as investment securities.  The Puerto Rico Municipal Finance Act (the “Act”) requires the designation of financing arrangements obtained by municipalities with maturities greater than 8 years as “special obligation bonds” subject to specific provisions under the Act.  The Corporation concluded that the impact of accounting for the transactions as investment securities rather than loans does not have a material effect on previously reported results of operations, financial condition, or cash flows and, accordingly, these financing arrangements have been accounted for and reported as held-to-maturity investment securities and not as loans since the second quarter of 2016.

RESULTS OF OPERATIONS

Net Interest Income

Net interest income is the excess of interest earned by First BanCorp. on its interest-earning assets over the interest incurred on its interest-bearing liabilities. First BanCorp.’s net interest income is subject to interest rate risk due to the repricing and maturity mismatch of the Corporation’s assets and liabilities. Net interest income for the quarter and nine-month period ended September 30, 2016 was $118.2 million and $363.1 million, respectively, compared to $124.9 million and $377.1 million for the comparable periods in 2015, respectively. On a tax-equivalent basis, and excluding the changes in the fair value of derivative instruments, net interest income for the quarter and nine-month period ended September 30, 2016 was $120.7 million and $373.8 million, respectively, compared to $129.1 million and $389.9 million for the comparable periods in 2015, respectively.

The following tables include a detailed analysis of net interest income. Part I presents average volumes and rates on an adjusted tax-equivalent basis and Part II presents, also on an adjusted tax-equivalent basis, the extent to which changes in interest rates and changes in the volume of interest-related assets and liabilities have affected the Corporation’s net interest income. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume (changes in volume multiplied by prior period rates), and (ii) changes in rate (changes in rate multiplied by prior period volumes). Rate-volume variances (changes in rate multiplied by changes in volume) have been allocated to the changes in volume and rate based upon their respective percentage of the combined totals.

The net interest income is computed on an adjusted tax-equivalent basis and excluding the change in the fair value of derivative instruments. For a definition and reconciliation of this non-GAAP financial measure, refer to the discussions below.

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Part I
		Average Volume				Interest income (1) / expense				Average Rate (1)
	Quarter ended September 30,	2016		2015		2016		2015		2016		2015
	(Dollars in thousands)
	Interest-earning assets:
	Money market & other short-term investments	$	525,172	$	574,162	$	662	$	410	0.50	%	0.28	%
	Government obligations (2)		785,670		651,184		5,189		5,415	2.63	%	3.30	%
	Mortgage-backed securities		1,395,189		1,477,223		8,017		9,995	2.29	%	2.68	%
	FHLB stock		30,939		25,434		368		260	4.73	%	4.06	%
	Other investments		2,047		938		2		-	0.39	%	-
	Total investments (3)		2,739,017		2,728,941		14,238		16,080	2.07	%	2.34	%
	Residential mortgage loans		3,298,546		3,316,518		44,888		45,989	5.41	%	5.50	%
	Construction loans		132,658		169,957		1,069		1,645	3.21	%	3.84	%
	C&I and commercial mortgage loans		3,667,955		3,731,083		38,957		39,400	4.23	%	4.19	%
	Finance leases		228,578		227,912		4,301		4,582	7.49	%	7.98	%
	Consumer loans		1,507,101		1,651,970		42,598		46,335	11.24	%	11.13	%
	Total loans (4) (5)		8,834,838		9,097,440		131,813		137,951	5.94	%	6.02	%
	Total interest-earning assets	$	11,573,855	$	11,826,381	$	146,051	$	154,031	5.02	%	5.17	%
	Interest-bearing liabilities:
	Brokered CDs	$	1,670,324	$	2,280,309	$	5,177	$	5,943	1.23	%	1.03	%
	Other interest-bearing deposits		5,959,320		5,882,383		11,565		10,908	0.77	%	0.74	%
	Other borrowed funds		835,752		926,492		7,179		7,077	3.42	%	3.03	%
	FHLB advances		449,565		325,000		1,474		955	1.30	%	1.17	%
	Total interest-bearing liabilities	$	8,914,961	$	9,414,184	$	25,395	$	24,883	1.13	%	1.05	%
	Net interest income					$	120,656	$	129,148
	Interest rate spread									3.89	%	4.12	%
	Net interest margin									4.15	%	4.33	%

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	Average Volume				Interest income (1) / expense				Average Rate (1)
Nine-Month Period Ended September 30,	2016		2015		2016		2015		2016		2015
(Dollars in thousands)
Interest-earning assets:
Money market & other short-term investments	$	794,132	$	707,174	$	3,006	$	1,457	0.51	%	0.28	%
Government obligations (2)		744,540		623,053		16,673		15,026	2.99	%	3.22	%
Mortgage-backed securities		1,388,372		1,512,345		30,192		32,793	2.90	%	2.90	%
FHLB stock		31,120		25,445		1,066		812	4.58	%	4.27	%
Other investments		1,750		707		5		-	0.38	%	-
Total investments (3)		2,959,914		2,868,724		50,942		50,088	2.30	%	2.33	%
Residential mortgage loans		3,309,266		3,253,529		135,537		135,781	5.47	%	5.58	%
Construction loans		145,881		170,626		3,985		4,743	3.65	%	3.72	%
C&I and commercial mortgage loans		3,684,450		3,844,012		118,753		121,721	4.31	%	4.23	%
Finance leases		229,561		228,978		13,045		13,700	7.59	%	8.00	%
Consumer loans		1,539,844		1,689,270		129,853		140,733	11.26	%	11.14	%
Total loans (4) (5)		8,909,002		9,186,415		401,173		416,678	6.01	%	6.06	%
Total interest-earning assets	$	11,868,916	$	12,055,139	$	452,115	$	466,766	5.09	%	5.18	%
Interest-bearing liabilities:
Brokered CDs	$	1,907,199	$	2,483,295	$	17,041	$	18,592	1.19	%	1.00	%
Other interest-bearing deposits		5,964,129		5,894,230		34,182		32,933	0.77	%	0.75	%
Other borrowed funds		914,205		1,009,129		22,645		22,518	3.31	%	2.98	%
FHLB advances		453,175		325,000		4,416		2,833	1.30	%	1.17	%
Total interest-bearing liabilities	$	9,238,708	$	9,711,654	$	78,284	$	76,876	1.13	%	1.06	%
Net interest income					$	373,831	$	389,890
Interest rate spread									3.96	%	4.12	%
Net interest margin									4.21	%	4.32	%

(1)	On an adjusted tax-equivalent basis.  The adjusted tax-equivalent yield was estimated by dividing the interest rate spread on exempt assets by 1 less the Puerto Rico statutory tax rate of 39.0% and adding to it the cost of interest-bearing liabilities.  The tax-equivalent adjustment recognizes the income tax savings when comparing taxable and tax-exempt assets.  Management believes that it is a standard practice in the banking industry to present net interest income, interest rate spread and net interest margin on a fully tax-equivalent basis. Therefore, management believes these measures provide useful information to investors by allowing them to make peer comparisons. Changes in the fair value of derivatives are excluded from interest income and interest expense because the changes in valuation do not affect interest paid or received.
(2)	Government obligations include debt issued by government-sponsored agencies.
(3)	Unrealized gains and losses on available-for-sale securities are excluded from the average volumes.
(4)	Average loan balances include the average of non-performing loans.
(5)	Interest income on loans includes $2.4 million and $2.6 million for the quarters ended September 30, 2016 and 2015, respectively, and $7.6 million and $7.8 million for the nine-month periods ended September 30, 2016 and 2015, respectively, of income from prepayment penalties and late fees related to the Corporation’s loan portfolio.

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Part II
		Quarter ended September 30,						Nine-Month Period Ended September 30,
		2016 compared to 2015						2016 compared to 2015
		Increase (decrease)						Increase (decrease)
		Due to:						Due to:
	(In thousands)	Volume		Rate		Total		Volume		Rate		Total
	Interest income on interest-earning assets:
	Money market & other short-term investments	$	(48)	$	300	$	252	$	199	$	1,350	$	1,549
	Government obligations		988		(1,214)		(226)		2,837		(1,190)		1,647
	Mortgage-backed securities		(539)		(1,439)		(1,978)		(2,681)		80		(2,601)
	FHLB stock		61		47		108		192		62		254
	Other investments		-		2		2		-		5		5
	Total investments		462		(2,304)		(1,842)		547		307		854
	Residential mortgage loans		(279)		(822)		(1,101)		2,373		(2,617)		(244)
	Construction loans		(329)		(247)		(576)		(673)		(85)		(758)
	C&I and commercial mortgage loans		(719)		276		(443)		(5,050)		2,082		(2,968)
	Finance leases		6		(287)		(281)		41		(696)		(655)
	Consumer loans		(4,124)		387		(3,737)		(12,479)		1,599		(10,880)
	Total loans		(5,445)		(693)		(6,138)		(15,788)		283		(15,505)
	Total interest income		(4,983)		(2,997)		(7,980)		(15,241)		590		(14,651)
	Interest expense on interest-bearing liabilities:
	Brokered CDs		(1,739)		973		(766)		(4,731)		3,180		(1,551)
	Other interest-bearing deposits		138		519		657		404		845		1,249
	Other borrowed funds		(741)		843		102		(2,230)		2,357		127
	FHLB advances		396		123		519		1,221		362		1,583
	Total interest expense		(1,946)		2,458		512		(5,336)		6,744		1,408
	Change in net interest income	$	(3,037)	$	(5,455)	$	(8,492)	$	(9,905)	$	(6,154)	$	(16,059)

Portions of the Corporation’s interest-earning assets, mostly investments in obligations of some U.S. government agencies and sponsored entities, generate interest which is exempt from income tax, principally in Puerto Rico. Also, interest and gain on sales of investments held by the Corporation’s international banking entities (“IBEs”) are tax-exempt under the Puerto Rico tax law (refer to “Income Taxes” below for additional information). To facilitate the comparison of all interest data related to these assets, the interest income has been converted to an adjusted taxable equivalent basis. The tax equivalent yield was estimated by dividing the interest rate spread on exempt assets by 1 less the Puerto Rico statutory tax rate as adjusted for changes to enacted tax rates (39.0%) and adding to it the average cost of interest-bearing liabilities. The computation considers the interest expense disallowance required by Puerto Rico tax law.

   The presentation of net interest income excluding the effects of the changes in the fair value of the derivative instruments (“valuations”) provides additional information about the Corporation’s net interest income and facilitates comparability and analysis. The changes in the fair value of the derivative instruments have no effect on interest due or interest earned on interest-bearing liabilities or interest-earning assets, respectively, or on interest payments exchanged with interest rate swap counterparties.

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The following table reconciles net interest income in accordance with GAAP to net interest income, excluding valuations, and net interest income on an adjusted tax-equivalent basis.  The table also reconciles net interest spread and net interest margin on a GAAP basis to these items excluding valuations and on an adjusted tax-equivalent basis:
(Dollars in thousands)
	Quarter Ended						Nine-Month Period Ended
	September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015
Interest Income - GAAP	$	143,573		$	149,812		$	441,338		$	453,929
Unrealized (gain) loss on derivative instruments		(5)			(144)			1			(144)
Interest income excluding valuations		143,568			149,668			441,339			453,785
Tax-equivalent adjustment		2,483			4,363			10,776			12,981
Interest income on a tax-equivalent basis excluding valuations		146,051			154,031			452,115			466,766
Interest Expense - GAAP		25,395			24,883			78,284			76,876
Net interest income - GAAP	$	118,178		$	124,929		$	363,054		$	377,053
Net interest income excluding valuations	$	118,173		$	124,785		$	363,055		$	376,909
Net interest income on a tax-equivalent basis excluding valuations	$	120,656		$	129,148		$	373,831		$	389,890
Average Balances
Loans and leases	$	8,834,838		$	9,097,440		$	8,909,002		$	9,186,415
Total securities, other short-term investments and interest-bearing cash balances		2,739,017			2,728,941			2,959,914			2,868,724
Average Interest-Earning Assets	$	11,573,855		$	11,826,381		$	11,868,916		$	12,055,139
Average Interest-Bearing Liabilities	$	8,914,961		$	9,414,184		$	9,238,708		$	9,711,654
Average Yield/Rate
Average yield on interest-earning assets - GAAP		4.94	%		5.03	%		4.97	%		5.03	%
Average rate on interest-bearing liabilities - GAAP		1.13	%		1.05	%		1.13	%		1.06	%
Net interest spread - GAAP		3.81	%		3.98	%		3.84	%		3.97	%
Net interest margin - GAAP		4.06	%		4.19	%		4.09	%		4.18	%
Average yield on interest-earning assets excluding valuations		4.93	%		5.02	%		4.97	%		5.03	%
Average rate on interest-bearing liabilities excluding valuations		1.13	%		1.05	%		1.13	%		1.06	%
Net interest spread excluding valuations		3.80	%		3.97	%		3.84	%		3.97	%
Net interest margin excluding valuations		4.06	%		4.19	%		4.09	%		4.18	%
Average yield on interest-earning assets on a tax-equivalent basis
and excluding valuations		5.02	%		5.17	%		5.09	%		5.18	%
Average rate on interest-bearing liabilities excluding valuations		1.13	%		1.05	%		1.13	%		1.06	%
Net interest spread on a tax-equivalent basis and excluding valuations		3.89	%		4.12	%		3.96	%		4.12	%
Net interest margin on a tax-equivalent basis and excluding valuations		4.15	%		4.33	%		4.21	%		4.32	%

Interest income on interest-earning assets primarily represents interest earned on loans held for investment and investment securities.

Interest expense on interest-bearing liabilities primarily represents interest paid on brokered CDs, branch-based deposits, repurchase agreements, advances from the FHLB and junior subordinated debentures.

Unrealized gains or losses on derivatives represent changes in the fair value of derivatives, primarily interest rate caps used for protection against rising interest rates.

For the quarter and nine-month period ended September 30, 2016, net interest income decreased $6.8 million to $118.2 million, and $14.0 million to $363.1 million, respectively, compared to the same periods in 2015. The $6.8 million decrease in net interest income for the third quarter of 2016, compared to the same period in 2015 was primarily due to:

·A $4.0 million decrease in interest income on consumer loans and finance leases mainly attributable to the decrease of $144.2 million in the average balance of this portfolio, primarily auto loans.

·A $1.0 million decrease in interest income on residential mortgage loans attributable to lower cash collections on residential non-performing loans, lower accretion income on PCI loans and the decrease of $18.0 million in the average balance of this portfolio.

·A $0.5 million decrease in interest income on commercial and construction loans, reflecting the decline of $100.4 million in the average balance of these portfolios that resulted in a decrease of approximately $1.0 million in interest income, partially

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offset by higher yields on variable rate commercial loans that largely reflected the upward repricing of loans tied to short-term interest rates.

·A $0.9 million decrease in interest income on investment securities, primarily reflecting the gradual reinvestment of MBS prepayments in lower yielding securities given the current interest rate environment.

·A $0.5 million increase in interest expense driven by: (i) a $0.5 million increase in interest expense on FHLB advances primarily attributable to $130.0 million of advances obtained during the fourth quarter of 2015 with maturities of four years and at an average cost of 1.64%, (ii) a $0.7 million increase in interest expense on non-brokered deposits reflecting higher costs on variable money market deposit accounts and the growth and pricing of new and renewed retail CDs in the current interest rate environment, and (iii) a $0.1 million increase in interest expense on repurchase agreements reflecting the upward repricing of the agreements, almost entirely offset by the effect of the $100 million repurchase agreement that matured in mid-July 2016 that carried a cost of 2.50%.  These increases were partially offset by a $0.8 million decrease in the interest expense on brokered CDs mainly related to the effect of the $610.0 million decrease in the average balance, which more than offset higher costs due to both higher market interest rates, and, to a lesser extent, longer terms on new issuances compared to maturing CDs. 

The $14.0 million decrease in net interest income for the first nine months of 2016, compared to the same period in 2015 was primarily due to:

·An $11.5 million decrease in interest income on consumer loans and finance leases mainly attributable to the decrease of $148.8 million in the average balance of this portfolio, primarily auto loans.

·A $2.2 million decrease in interest income on commercial and construction loans, primarily reflecting a decline of $184.3 million in the average balance of these portfolios that resulted in a decrease of approximately $3.0 million in interest income and the adverse impact of large commercial relationships classified as non-performing in 2016. Partially offsetting these variances were higher prepayments in 2016 that resulted in an increase of $1.5 million in prepayment penalties and deferred fees amortization and the upward repricing of variable commercial loans tied to short-term interest rates.

·A $1.4 million increase in interest expense, primarily reflecting: (i) a $1.6 million increase in interest expense on FHLB advances primarily attributable to the aforementioned $130.0 million of advances obtained during the fourth quarter of 2015, and (ii) a $1.2 million increase in interest expense on non-brokered deposits attributable to a $69.9 million increase in the average balance, the higher pricing of new and renewed retail CDs at current market interest rates, and higher costs on variable rate money market deposit accounts.  These increases were partially offset by a $1.5 million decrease in the interest expense on brokered CDs mainly related to the effect of the $576.1 million decrease in the average balance that offset higher costs on new issuances.  Over the past 12 months, the Corporation repaid $1.5 billion of maturing brokered CDs with an all-in cost of 0.93% and new issuances amounted to $753.4 million with an all-in cost of 1.16%. 

·A $0.3 million decrease in interest income on investment securities, primarily reflecting the gradual reinvestment of MBS prepayments in lower yielding securities given the current interest rate environment.     

Partially offset by:

·A $1.5 million increase in interest income on interest-bearing cash balances, due to the increase in fed fund rates in December 2015 and the $87.0 million increase in the average balance.

    The net interest margin, excluding fair value adjustments, decreased by 13 basis points to 4.06% for the third quarter of 2016 compared to the same period in 2015, and decreased by 9 basis points to 4.09% for the first nine months of 2016 compared to the same period in 2015. The decrease in net interest margin for both periods was primarily driven by lower yields on investment securities and higher funding costs as noted above as well as changes in the mix of earnings assets reflecting higher balances in investment securities and lower loan balances.   

On an adjusted tax-equivalent basis, net interest income for the quarter ended September 30, 2016 decreased by $8.5 million to $120.7 million when compared to the same period in 2015 and by $16.1 million to $373.8 million for the first nine months of 2016 compared to the same period in 2015. In addition to the facts discussed above, the decrease also includes reductions of $1.9 million for the quarter and $2.2 million for the nine-month period in the tax-equivalent adjustment attributable to a lower volume of tax-exempt assets. 

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Provision for Loan and Lease Losses

The provision for loan and lease losses is charged to earnings to maintain the allowance for loan and lease losses at a level that the Corporation considers adequate to absorb probable losses inherent in the portfolio. The adequacy of the allowance for loan and lease losses is also based upon a number of additional factors, including trends in charge-offs and delinquencies, current economic conditions, the fair value of the underlying collateral and the financial condition of the borrowers, and, as such, includes amounts based on judgments and estimates made by the Corporation. Although the Corporation believes that the allowance for loan and lease losses is adequate, factors beyond the Corporation’s control, including factors affecting the economies of Puerto Rico, especially given the current economic climate in Puerto Rico, the United States, the U.S. Virgin Islands and the British Virgin Islands, may contribute to delinquencies and defaults, thus necessitating additional reserves.

For the third quarter ended September 30, 2016, the Corporation recorded a provision for loan and lease losses of $21.5 million compared to $31.2 million for the same period in 2015. The $9.7 million decrease in the provision was driven by:  

·A $4.9 million decrease in the provision for consumer loans, primarily auto loans, driven by lower charge-offs and loss severity rates and the overall decrease in the size of this portfolio.

·A $2.4 million decrease in the provision for residential mortgage loans, reflecting lower delinquency and non-performing loan levels and the decrease in the size of the portfolio.

·A $2.4 million decrease in the provision for commercial and construction loans, primarily reflecting a lower migration of loans to adverse classification categories.  During the third quarter of 2015, the Corporation classified as impaired its exposure to commercial mortgage loans guaranteed by the TDF and increased the associated specific reserves. As noted below, the Corporation recorded in the third quarter of 2016 charge-offs of $13.7 million associated with two of the three facilities guaranteed by the TDF, of which $12.8 million was charged against specific reserves established in prior periods.

For the nine-month period ended September 30, 2016, the Corporation recorded a provision for loan and lease losses of $­­63.5 million compared to $138.4 million for the same period in 2015. The provision for the first nine months of 2015 included a charge of $46.9 million associated with a bulk sale of assets. 

On June 5, 2015, the Corporation completed the bulk sale of commercial and construction loans with a book value of $147.5 million (principal balance of $196.5 million), comprised mostly of non-performing and adversely classified loans, as well as OREO with a book value of $2.9 million in a cash transaction.  The sale price of this bulk sale was $87.3 million. Approximately $15.3 million of reserves had been allocated to the loans.  This transaction resulted in total charge-offs of $61.4 million and an incremental pre-tax loss of $48.7 million, including $0.9 million in professional service fees directly attributable to this bulk sale. 

Excluding the impact of the bulk sale of assets in 2015, the provision of $63.5 million for the first nine months of 2016 decreased by $28.0 million compared to the provision of $91.5 million for the same period in 2015.  The $28.0 million decrease in the provision, as compared to the 2015 adjusted provision, was driven by:   

·A $16.2 million decrease in the provision for commercial and construction loans primarily due to the impact in 2015 of a $15.5 million charge to the adjusted provision as a result of the incorporation of the $61.4 million of net charge-offs from the bulk sale in the historical loss rates used to estimate the general reserve for commercial loans collectively evaluated for impairment and lower migration of loans to adversely classified categories as noted above, partially offset by a $1.6 million decrease in loan loss recoveries in Florida.

·An $11.6 million decrease in the provision for consumer loans, primarily reflecting lower levels of charge-offs, declining loss severity rates on auto loans and the overall decrease in the size of these portfolios.  Consumer loans net charge-offs decreased by $6.9 million for the first nine months of 2016 compared to the same period in 2015.

Refer to “Credit Risk Management” below for an analysis of the allowance for loan and lease losses, non-performing assets, impaired loans and related information, and refer to “Financial Condition and Operating Analysis – Loan Portfolio” and “Risk Management — Credit Risk Management” below for additional information concerning the Corporation’s loan portfolio exposure in the geographic areas where the Corporation does business.

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Non-Interest Income
		Quarter Ended September 30,				Nine-Month Period Ended September 30,
		2016		2015		2016		2015
			(In thousands)
	Service charges on deposit accounts	$	5,788	$	5,082	$	17,206	$	14,856
	Mortgage banking activities		5,485		4,270		15,131		12,651
	Insurance income		1,363		1,265		6,175		5,809
	Other operating income		7,414		8,372		22,247		24,882
	Non-interest income before net gain (loss) on investments,
	gain on early extinguishment of debt, and bargain
	purchase gain		20,050		18,989		60,759		58,198
	Net gain on sale of investments		6,096		-		6,104		-
	OTTI on debt securities		-		(231)		(6,687)		(13,484)
	Net gain (loss) on investments		6,096		(231)		(583)		(13,484)
	Bargain purchase gain		-		-		-		13,443
	Gain on early extinguishment of debt		-		-		4,217		-
	Total	$	26,146	$	18,758	$	64,393	$	58,157

Non-interest income primarily consists of income from service charges on deposit accounts; commissions derived from various banking, securities and insurance activities; gains and losses on mortgage banking activities; interchange and other fees related to debit and credit cards; and net gains and losses on investments and impairments.

Service charges on deposit accounts include monthly fees, overdraft fees and other fees on deposit accounts as well as corporate cash management fees.

Income from mortgage banking activities includes gain on sales and securitization of loans, revenues earned for administering residential mortgage loans originated by the Corporation and subsequently sold with servicing retained, and unrealized gains and losses on forward contracts used to hedge the Corporation’s securitization pipeline. In addition, lower-of-cost-or-market valuation adjustments to the Corporation’s residential mortgage loans held for sale portfolio and servicing rights portfolio, if any, are recorded as part of mortgage banking activities.

Insurance income consists of insurance commissions earned by the Corporation’s subsidiary, FirstBank Insurance Agency, Inc.

The other operating income category is composed of miscellaneous fees such as debit, credit card and point of sale (POS) interchange fees, as well as contractual shared revenues from merchant contracts sold in the fourth quarter of 2015. 

The net gain (loss) on investment securities reflects gains or losses as a result of sales that are consistent with the Corporation’s investment policies as well as OTTI charges on the Corporation’s investment portfolio.

The gain on early extinguishment of debt is related to the repurchase and cancellation in the first quarter of 2016 of $10 million in trust preferred securities of the FBP Statutory Trust II that were auctioned in a public sale at which the Corporation was invited to participate. The Corporation repurchased and cancelled the repurchased trust preferred securities, resulting in a commensurate reduction in the related Floating Rate Junior Subordinated Debentures.  The Corporation’s winning bid equated to 70% of the $10 million par value.  The 30% discount, plus accrued interest, resulted in a gain of $4.2 million, which is reflected in the statement of income as a “Gain on early extinguishment of debt.”  As of September 30, 2016, the Corporation still has Floating Rate Junior Subordinated Debentures (“subordinated debt”) outstanding in the aggregate amount of $216.2 million.

    The bargain purchase gain is related to assets acquired and deposits assumed from Doral Bank in the first quarter of 2015.  On February 27, 2015, FirstBank acquired 10 Puerto Rico branches of Doral Bank, assumed $522.7 million in deposits related to such branches, acquired approximately $324.8 million in principal balance of loans, primarily residential mortgage loans, acquired $5.5 million of property, plant and equipment and received $217.7 million of cash, through an alliance with Banco Popular of Puerto Rico (“Popular”), who was the successful lead bidder with the FDIC on the failed Doral Bank, as well as other co-bidders.  Under the FDIC’s bidding format, Popular was the lead bidder and party to the purchase and assumption agreement with the FDIC covering all assets and deposits to be acquired by Popular and its alliance co-bidders. Popular entered into back to back purchase assumption agreements with the alliance co-bidders, including FirstBank, for the transferred assets and deposits. There is no loss-share arrangement with the FDIC related to the acquired assets, meaning that FirstBank assumed all losses with respect to such assets, with no financial assistance from the FDIC. The gain of $13.4 million represents the excess of the estimated fair value of the assets acquired (including cash payments of $217.7 million received from the FDIC) over the estimated fair value of the liabilities assumed. 

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Non-interest income for the third quarter of 2016 amounted to $26.1 million, compared to $18.8 million for the third quarter of 2015.  The increase in non-interest income of $7.4 million was primarily due to the following:

·A $6.1 million gain on sales of U.S. agency MBS totaling $198.7 million that carried an average yield of 2.36%.

·A $1.2 million increase in revenues from the mortgage banking business, driven by a $0.9 million increase in gain on sales of residential mortgage loans in the secondary market, mainly associated with a higher volume of sales and a $0.3 million increase related to lower losses on to-be-announced (“TBAs”) MBS forward contracts.  Loans sold in the secondary market to U.S. government-sponsored entities amounted to $127.9 million with a related gain of $4.6 million in the third quarter of 2016, compared to $117.0 million with a related gain of $3.7 million in the comparable period of 2015.

·A $0.7 million increase in income from service charges on deposit accounts primarily reflecting the implementation in November 2015 of new service and transactional fees on certain products and higher corporate cash management fees.

·The impact in the third quarter of 2015 of a $0.2 million OTTI charge on private label MBS. 

Partially offset by:

·A $1.0 million decrease in “other operating income” in the table above, reflecting a $1.5 million decrease in fees from merchant transactions due to the sale of merchant contracts completed in the fourth quarter of 2015 (a reduction of approximately $1.1 million in processing costs, depreciation and other expenses related to the sale of merchant contracts was reflected in non-interest expenses), partially offset by increases in debit card and ATM fees.   

Non-interest income for the nine-month period ended September 30, 2016 amounted to $64.4 million, compared to $58.2 million for the same period in 2015.  The $6.2 million increase in non-interest income was primarily due to:

·A $6.8 million decrease in OTTI charges on debt securities.  During the first half of 2016, the Corporation recorded OTTI charges of $6.3 million on three Puerto Rico Government debt securities held by the Corporation as part of its available-for-sale securities portfolio, specifically bonds of GDB and the Puerto Rico Public Buildings Authority.  This was the third OTTI charge on these securities recorded since June 30, 2015, as OTTI charges of $12.9 million and $3.0 million were booked in the second and fourth quarters of 2015, respectively. Refer to Note 4 of the Corporation’s unaudited consolidated financial statements for the quarter ended September 30, 2016 for additional information about the determination of this charge. As noted above, these bonds were placed in non-performing status in the third quarter of 2016 as these entities had recently defaulted on interest due on bonds held by the Corporation.

·The $6.1 million gain on sales of U.S. agency MBS completed in the third quarter of 2016.

·The $4.2 million gain recorded in the first quarter of 2016 on the repurchase and cancellation of $10 million in trust preferred securities.

·A $2.4 million increase in service charges on deposits, primarily associated with the full period impact of deposits assumed from Doral Bank late in February 2015, as well as the aforementioned implementation of new service and transactional fees on certain products in November 2015.

·A $2.5 million increase in revenues from the mortgage banking business, driven by a $3.1 million increase in gain on sales of residential mortgage loans in the secondary market associated with both a higher volume of sales and market expectations of lower long-term interest rates that resulted in higher gain margins, partially offset by a $1.0 million increase in losses on TBAs MBS forward contracts.  Loans sold in the secondary market to U.S. government-sponsored entities amounted to $347.1 million with a related gain of $13.2 million in the first nine months of 2016, compared to $323.5 million with a related gain of $10.1 million in the comparable period of 2015. In addition, loan servicing fees increased by $0.3 million commensurate with the increase in the servicing portfolio.

·A $0.4 million increase in insurance commission income.

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Partially offset by:

·The impact in 2015 of the $13.4 million bargain purchase gain on assets acquired and deposits assumed from Doral.

·A $2.6 million decrease in “other operating income” in the table above, reflecting a $5.3 million decrease in fees from merchant transactions due to the sale of merchant contracts completed in the fourth quarter of 2015 (a reduction of approximately $3.3 million in processing costs, depreciation and other expenses related to the sale of merchant contracts was reflected in non-interest expenses).  The decrease in fees from merchant contracts was partially offset by the impact in 2015 of a $0.6 million loss on the sale of a commercial mortgage loan held for sale included in the bulk sale of assets, a $0.6 million gain on the sale of fixed assets recorded in the second quarter of 2016, a $0.4 million fee income recorded in the first quarter of 2016 related to a terminated credit agreement in which the Bank was committed to purchase a loan participation and higher debit cards and ATM fee income.

·

Non-Interest Expenses
The following table presents the detail of non-interest expenses for the periods indicated:
		Quarter Ended September 30,				Nine-Month Period Ended September 30,
		2016		2015		2016		2015
		(In thousands)
	Employees' compensation and benefits	$	38,005	$	37,284	$	113,841	$	110,883
	Occupancy and equipment		13,888		15,248		41,114		44,656
	Insurance and supervisory fees		5,604		6,590		20,013		20,246
	Taxes, other than income taxes		3,927		3,065		11,475		9,197
	Professional service fees:
	Collections, appraisals and other credit-related fees		2,267		2,269		7,546		9,493
	Outsourcing technology services		5,124		4,549		14,829		14,042
	Other professional fees		3,281		3,891		10,400		21,397
	Credit and debit card processing expenses		3,546		4,283		10,102		12,185
	Business promotion		3,169		4,097		11,220		10,899
	Communications		1,711		2,189		5,244		5,842
	Net loss on OREO and OREO operations		2,603		4,345		9,134		11,847
	Other		5,178		5,467		15,926		17,117
	Total	$	88,303	$	93,277	$	270,844	$	287,804

Non-interest expenses decreased by $5.0 million to $88.3 million for the third quarter of 2016 compared to $93.3 million for the third quarter of 2015. The decrease of $5.0 million in non-interest expenses was principally attributable to:

·A $1.7 million decrease in losses on OREO operations, primarily reflecting a $2.2 million decrease in write downs to the value of OREO properties, partially offset by a $0.5 million increase in OREO-related expenses such as repairs and property taxes.

·A $1.4 million decrease in occupancy and equipment costs reflecting reductions in depreciation and repairs expenses, including a reduction of approximately $0.4 million related to the depreciation of POS terminals sold as part of the sale of merchant contracts in the fourth quarter of 2015.

·A $1.0 million decrease in the FDIC insurance premium expense, included as part of “Insurance and supervisory fees” in the table above, primarily due to the reduction in the initial base assessment rate as well as reductions in brokered deposits and average assets. In March 2016, the FDIC adopted a final rule (“Final Rule”) imposing a quarterly deposit insurance assessment surcharge on banks with at least $10 billion in assets of 4.5 cents per $100 of their assessment base, after making certain adjustments once the Deposit Insurance Fund Reserve Ratio reaches or exceeds 1.15 percent. For purposes of this surcharge, the first $10 billion of assets are subtracted from the regular insurance assessment base to determine the surcharge base. The assessment surcharge became effective on July 1, 2016, is assessed as of the third quarter of 2016, and applies to FirstBank. The Bank’s current surcharge base is slightly higher than the $10 billion threshold. The surcharge assessments will continue through December 31, 2018 or until the Deposit Insurance Fund Reserve Ratio reaches or exceeds 1.35 percent. In addition, under existing regulations, the FDIC reduced the initial base assessment rate, which reduces the standard risk-based assessment rate. This resulted in a decrease in the total FDIC insurance premium expense (standard risk-based assessment plus assessment surcharge expense) of approximately $0.8 million in the third quarter of 2016, as the benefit of

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the reduction in the initial base assessment rate exceeded the surcharge amount. In addition, under the Final Rule, if the Deposit Insurance Fund Reserve Ratio does not reach 1.35 percent by December 31, 2018, a shortfall assessment may be assessed on large banks in the first quarter of 2019 and collected by the FDIC on June 30, 2019.

·A $0.9 million decrease in business promotion expenses, primarily related to reduced advertising and marketing activities.

·A $0.7 million decrease in processing expenses, mainly due to the sale of merchant contracts in the fourth quarter of 2015.

·A $0.5 million decrease in communication expenses, including reductions in postage and telephone expenses.

·A $0.3 million decrease in other operating expenses, including reductions of $0.7 million in supplies and printing costs, $0.3 million in losses and expenses related to non-real estate repossessed assets, and $0.1 million in the amortization of intangible assets. These variances were partially offset by a $0.9 million increase in charges to the provision for unfunded loan commitments and letters of credit, primarily related to a higher unused balance on an adversely classified floor plan revolving credit facility.

Partially offset by:

·A $0.9 million increase in taxes, other than income taxes, primarily due to the 4% sales tax on designated professional services effective in Puerto Rico since October 1, 2015.

·A $0.7 million increase in employees’ compensation, including $0.3 million related to severance payments on job discontinuance recorded in the third quarter of 2016 and a $0.3 million increase in stock-based compensation.     

Non-interest expenses decreased by $17.0 million to $270.8 million for the first nine months of 2016 compared to $287.8 million for the same period in 2015. Non-interest expenses include for the first nine months of 2016 the aforementioned severance payments on job discontinuance of $0.3 million and for the first nine months of 2015 costs of $4.6 million related to the conversion of loan and deposit accounts acquired from Doral to the FirstBank systems, which was completed in the second quarter of 2015, and $1.2 million of expenses and losses associated with the bulk sale of assets.  Excluding the aforementioned items, adjusted non-interest expenses of $270.6 million for the first nine months of 2016 decreased by $11.4 million compared to adjusted non-interest expenses of $282.0 million for the same period in 2015.  The decrease of $11.4 million in adjusted non-interest expenses was principally attributable to:

·A $7.5 million decrease in professional service fees, as compared to the 2015 adjusted professional service fees, primarily reflecting the impact in 2015 of interim servicing costs of $3.6 million related to loans and deposits acquired from Doral Bank and $1.3 million of professional service fees incurred with respect to special projects and strategic, stress testing and capital planning matters. In addition, collections, appraisals and other credit-related professional service fees related to troubled loan resolution efforts decreased by $1.9 million.

·A $3.4 million decrease in occupancy and equipment costs, reflecting reductions in depreciation, electricity and repairs expenses, including a reduction of approximately $1.2 million related to the depreciation of POS terminals sold as part of the sale of merchant contracts in the fourth quarter of 2015.

·A $2.1 million decrease in processing expenses, mainly due to the sale of merchant contracts in the fourth quarter of 2015.

·A $2.5 million decrease in losses on OREO operations, as compared to the 2015 adjusted losses on OREO operations, primarily reflecting a $2.0 million decrease in write downs to the value of OREO properties and a $0.7 million decrease in OREO-operating expenses, including lower property taxes, and a $0.7 million increase in rental income associated with both a higher inventory of income-producing properties and increased activity.  These decreases were partially offset by the impact in the first half of 2015 of a $1.2 million gain realized at the time of sale of certain commercial OREO properties.

·A $0.9 million decrease in other operating expenses, as compared to the 2015 adjusted other operating expenses, including reductions of $1.8 million in supplies and printing costs, $0.2 million in losses and expenses related to non-real estate repossessed assets, and $0.1 million in the amortization of intangible assets. These variances were partially offset by a $1.3 million increase in charges to the provision for unfunded loan commitments and letters of credit, primarily related to a higher unused balance on an adversely classified floor plan revolving credit facility.

Partially offset by:

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·A $2.8 million increase in adjusted employees’ compensation, mainly due to merit salary increases, the full period impact of personnel costs associated with branches acquired from Doral Bank in February 2015, and higher stock-based compensation, partially offset by decreases in incentive-based compensation.

·A $2.3 million increase in taxes, other than income taxes, mainly related to the increase in the sales tax rate from 7% to 11.5% effective since July 1, 2015 and the 4% sales tax on designated professional services effective since October 1, 2015.

Income Taxes

Income tax expense includes Puerto Rico and USVI income taxes as well as applicable U.S. federal and state taxes. The Corporation is subject to Puerto Rico income tax on its income from all sources. As a Puerto Rico corporation, First BanCorp. is treated as a foreign corporation for U.S. and USVI income tax purposes and is generally subject to U.S. and USVI income tax only on its income from sources within the U.S. and USVI or income effectively connected with the conduct of a trade or business in those regions. Any such tax paid in the U.S. and USVI is also creditable against the Corporation’s Puerto Rico tax liability, subject to certain conditions and limitations.

    Under the Puerto Rico Internal Revenue Code of 2011, as amended (the “2011 PR Code”), the Corporation and its subsidiaries are treated as separate taxable entities and are not entitled to file consolidated tax returns and, thus, the Corporation is not able to utilize losses from one subsidiary to offset gains in another subsidiary. Accordingly, in order to obtain a tax benefit from a net operating loss (“NOL”), a particular subsidiary must be able to demonstrate sufficient taxable income within the applicable NOL carry forward period. The 2011 PR Code provides a dividend received deduction of 100% on dividends received from “controlled” subsidiaries subject to taxation in Puerto Rico and 85% on dividends received from other taxable domestic corporations.

    The Corporation has maintained an effective tax rate lower than the maximum statutory rate in Puerto Rico mainly by investing in government obligations and mortgage-backed securities exempt from U.S. and Puerto Rico income taxes and by doing business through an International Banking Entity (“IBE”) unit of the Bank, and through the Bank’s subsidiary, FirstBank Overseas Corporation, whose interest income and gain on sales is exempt from Puerto Rico income taxation. The IBE and FirstBank Overseas Corporation were created under the International Banking Entity Act of Puerto Rico, which provides for total Puerto Rico tax exemption on net income derived by IBEs operating in Puerto Rico on the specific activities identified in the IBE Act.  An IBE that operates as a unit of a bank pays income taxes at the corporate standard rates to the extent that the IBE’s net income exceeds 20% of the bank’s total net taxable income.

    As of September 30, 2016, the Corporation’s deferred tax assets, net of a valuation allowance of $201.7 million, amounted to $290.9 million and management concluded, based upon the assessment of all positive and negative evidence, that it is more likely than not that the Corporation will generate sufficient taxable income within the applicable NOL carry-forward periods to realize such amount.

   The Corporation recorded an income tax expense of $10.4 million and $23.7 million in the third quarter and the first nine months of 2016, respectively, compared to an income tax expense of $4.5 million and $2.7 million, for the same periods in 2015. The change in income tax expense in the third quarter of 2016, when compared to the third quarter of 2015, is mainly driven by higher taxable income. For the nine-month period ended September 30, 2016, the Corporation calculated the provision for income taxes by applying the estimated annual effective tax rate for the full fiscal year to ordinary income or loss.  In the computation of the consolidated worldwide estimated annual effective tax rate, ASC 740-270 requires the exclusion of legal entities with pre-tax losses from which a tax benefit cannot be recognized. The consolidated worldwide estimated annual effective tax rate, excluding entities with pre-tax losses from which a tax benefit cannot be recognized, was 24% for the nine-month period ended September 30, 2016, compared to 17% for the same period in 2015. The increase in the estimated effective tax rate for the nine month period ended September 30, 2016, when compared to the same period in 2015, reflects the impact in 2015 of a release in the valuation allowance resulting from the bargain purchase gain, which generated a deferred tax liability. As required by ASC 740-270, changes in the valuation allowance related to the current year are included in the computation of the estimated effective tax rate for the year. The effective tax rate including all entities for the first nine months of 2016 was 25%, compared to 30% for the same period in 2015.

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FINANCIAL CONDITION AND OPERATING DATA ANALYSIS

Assets

   The Corporation’s total assets were $12.1 billion as of September 30, 2016, a decrease of $497.8 million when compared to $12.6 million as of December 31, 2015. The decrease was mainly due to (i) a $223.5 million reduction in cash and cash equivalents, associated with liquidity used to repay maturing brokered CDs, repurchase agreements and FHLB advances, (ii) a $227.8 million decrease in total loans before allowance, including a $104.2 million reduction in commercial and construction loans and a $99.8 million decrease in consumer loans, and (iii) a $51.3 million decrease in investment securities, mainly driven by sales and prepayments of U.S. agencies MBS as further discussed below.

Loan Portfolio
The following table presents the composition of the Corporation’s loan portfolio, including loans held for sale, as of the dates indicated:
	September 30,		December 31,
(In thousands)	2016		2015
Residential mortgage loans	$	3,299,942	$	3,344,719
Commercial loans:
Commercial mortgage loans		1,545,014		1,537,806
Construction loans		124,298		156,195
Commercial and Industrial loans		2,167,011		2,246,513
Total commercial loans		3,836,323		3,940,514
Finance leases		229,577		229,165
Consumer loans		1,497,812		1,597,984
Total loans held for investment		8,863,654		9,112,382
Less:
Allowance for loan and lease losses		(214,070)		(240,710)
Total loans held for investment, net	$	8,649,584	$	8,871,672
Loans held for sale		56,779		35,869
Total loans, net	$	8,706,363	$	8,907,541

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As of September 30, 2016, the Corporation’s total loans held for investment, before allowance, amounted to $8.9 billion, down $227.8 million when compared to December 31, 2015. The decline primarily reflects a $104.2 million decrease in the commercial and construction loan portfolio, a $99.8 million decrease in consumer and finance leases, and a $23.8 million decrease in the residential mortgage loans portfolio. The decrease in the commercial and construction loan portfolio was mainly driven by the repayment of large commercial loans during the first nine months of 2016, including repayments totaling $145.3 million associated with six commercial relationships, the sale of a $20.2 million commercial loan participation, and the four large charge-offs totaling $22.9 million noted above, partially offset by new loan originations.  Most of the decrease was in the Puerto Rico and Virgin Islands regions, partially offset by the growth of all portfolios in the Florida region.

As shown in the table above, as of September 30, 2016, the loans held for investment portfolio was comprised of commercial loans (43%), residential real estate loans (37%), and consumer and finance leases (20%). Of the total gross loan portfolio held for investment of $8.9 billion as of September 30, 2016, approximately 78% has credit risk concentration in Puerto Rico, 15% in the United States (mainly in the state of Florida) and 7% in the Virgin Islands, as shown in the following table:

As of September 30, 2016	Puerto Rico		Virgin  Islands		United  States		Total
		(In thousands)
Residential mortgage loans	$	2,505,623	$	319,855	$	474,464	$	3,299,942
Commercial mortgage loans		1,181,682		76,462		286,870		1,545,014
Construction loans		43,917		45,736		34,645		124,298
Commercial and Industrial loans		1,596,242		119,931		450,838		2,167,011
Total commercial loans		2,821,841		242,129		772,353		3,836,323
Finance leases		229,577		-		-		229,577
Consumer loans		1,401,750		48,918		47,144		1,497,812
Total loans held for investment, gross	$	6,958,791	$	610,902	$	1,293,961	$	8,863,654
Loans held for sale		43,262		461		13,056		56,779
Total loans	$	7,002,053	$	611,363	$	1,307,017	$	8,920,433
As of December 31, 2015	Puerto Rico		Virgin  Islands		United  States		Total
		(In thousands)
Residential mortgage loans	$	2,575,888	$	327,976	$	440,855	$	3,344,719
Commercial mortgage loans		1,208,347		69,773		259,686		1,537,806
Construction loans		63,654		69,874		22,667		156,195
Commercial and Industrial loans		1,714,660		173,916		357,937		2,246,513
Total commercial loans		2,986,661		313,563		640,290		3,940,514
Finance leases		229,165		-		-		229,165
Consumer loans		1,506,773		48,430		42,781		1,597,984
Total loans held for investment, gross	$	7,298,487	$	689,969	$	1,123,926	$	9,112,382
Loans held for sale		33,787		507		1,575		35,869
Total loans	$	7,332,274	$	690,476	$	1,125,501	$	9,148,251

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Residential Real Estate Loans

As of September 30, 2016, the Corporation’s residential real estate loan portfolio held for investment decreased by $44.8 million as compared to the balance as of December 31, 2015, mainly resulting from activities in Puerto Rico as principal repayments and charge-offs exceeded the volume of new loans originated and held for investment purposes. The residential mortgage loan portfolio held for investment in the Puerto Rico and Virgin Islands regions decreased during the first nine months of 2016 by $70.3 million and $8.1 million, respectively, partially offset by an increase of $33.6 million in Florida.

    The majority of the Corporation’s outstanding balance of residential mortgage loans consists of fixed-rate, fully amortizing, full documentation loans. In accordance with the Corporation’s underwriting guidelines, residential real estate loans are mostly fully documented loans, and the Corporation does not generally originate negative amortization loans.  Refer to “Contractual Obligations and Commitments” below for additional information about outstanding commitments to sell mortgage loans.

Commercial and Construction Loans

As of September 30, 2016, the Corporation’s commercial and construction loan portfolio held for investment decreased by $104.2 million to $3.8 billion, as compared to the balance as of December 31, 2015. The reduction primarily reflects the aforementioned repayments of six large commercial relationships totaling $145.3 million comprised of a $34.3 million commercial credit facility in Puerto Rico, a $60.0 million credit facility of a government-related entity in the Virgin Islands, and four commercial relationships in Florida totaling $51.0 million. Furthermore, the decrease also reflects the sale of a $20.2 million commercial loan participation in the Puerto Rico region and the aforementioned four large charge-offs totaling $22.9 million recorded in the third quarter of 2016.

    As of September 30, 2016, the Corporation had $134.0 million outstanding (book value of $126.2 million) in credit facilities, excluding investment securities, extended to the Puerto Rico Government, its municipalities and public corporations, compared to $153.2 million outstanding as of December 31, 2015. Approximately $91.4 million of the granted credit facilities outstanding ($83.7 million book value) consisted of loans to public corporations, including a direct exposure to the Puerto Rico Electric Power Authority (“PREPA”) with an outstanding balance of $74.6 million ($66.8 million book value) as of September 30, 2016, and approximately $6.9 million consisted of loans to units of the Puerto Rico central government.  The PREPA credit facility was placed in non-accrual status in the first quarter of 2015, and interest payments are recorded on a cost-recovery basis. In addition, the Corporation had $35.7 million of credit facilities extended to municipalities in Puerto Rico, excluding investment securities, which in most cases are supported by assigned property tax revenues.  Municipalities’ revenues are independent of the Puerto Rico central government. These municipalities are required by law to levy special property taxes in such amounts as are required for the payment of all of their respective general obligation bonds and loans. Late in 2015, the GDB and the Municipal Revenue Collection Center (CRIM) signed a deed of trust. Through this deed, the GDB, as fiduciary, is bound to keep the CRIM funds separate from any other deposits and must distribute the funds pursuant to applicable law. The CRIM funds are deposited at another depository financial institution in Puerto Rico. Refer to “Exposure to Puerto Rico Government” discussion below for information and details about the Corporation’s total direct exposure to the Puerto Rico Government.

Furthermore, as of September 30, 2016, the Corporation had $128.0 million outstanding (book value of $112.8 million) in financings to the hotel industry in Puerto Rico under which the borrower and the operations of the underlying collateral are the primary sources of repayment and the TDF provides a secondary guarantee for payment performance, compared to $129.4 million outstanding as of December 31, 2015. These facilities were placed in non-accrual status and classified as impaired in the first quarter of 2016, and interest payments are now applied against principal. Approximately $1.6 million of interest payments received on loans guaranteed by the TDF since late March 2016 have been applied against principal. As of the date of filing of this Form 10-Q, the largest of these three facilities is current on contractual payments as its operations are generating the cash flows to cover payments. The Corporation has been receiving partial payments from the other two facilities since their operations are insufficient to cover the entire contractual payments and the Corporation is not receiving collections from the TDF guarantee.  As such, these two facilities are collateral dependent loans and charge-offs amounting to $13.7 million were recorded in the third quarter of 2016, of which $12.8 million was charged against specific reserves established in prior periods. These loans have been adversely classified since the third quarter of 2015. The Corporation’s collections of principal and interest from the TDF in the first half of 2016 amounted to $0.6 million compared to $5.3 million in the entire 2015 year.

The TDF is a subsidiary of the GDB that facilitates private sector financings to Puerto Rico’s hotel industry. Adverse developments related to the Puerto Rico government’s fiscal situation introduced additional uncertainty regarding the TDF’s ability to honor its guarantee, including the enactment of the Puerto Rico Emergency Moratorium and Financial Rehabilitation Act (“Act 21”), which gives Puerto Rico’s governor emergency powers to deal with Puerto Rico’s challenging fiscal situation, including the ability to declare a moratorium on all bonds and other payments.  On June 30, 2016, pursuant to Act 21, the Puerto Rico governor ordered a moratorium on the payment of $780 million of the Puerto Rico Government’s general obligations and the debt of certain other instrumentalities due on July 1, 2016.  This followed a default on the principal payment of $367 million of GDB notes due on May 1, 2016.  Puerto Rico’s governor also issued an executive order intended to protect the GDB’s liquidity by allowing withdrawals only to fund necessary costs for essential services such as health, public safety and education services. Recently, the GDB defaulted on a $28

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million payment of interest due to its creditors on August 1, 2016, including interest due on GDB bonds held by the Corporation, as further discussed below. 

   As of September 30, 2016, the total reserve to book value coverage ratio related to commercial loans extended to or guaranteed by the Puerto Rico Government (excluding municipalities) was 16% and the loans are being carried at 76% of unpaid principal balance, net of reserves and accumulated charge-offs.

As of September 30, 2016, the Corporation’s total exposure to shared national credit (“SNC”) loans amounted to $803.2 million, compared to $603.1 million as of December 31, 2015. As of September 30, 2016, approximately $525.2 million of the SNC exposure is in Puerto Rico, including the $66.8 million book value of the PREPA credit facility and $72.7 million of the loans guaranteed by the TDF. The increase is primarily related to participated loans originated in 2016 in both, Puerto Rico and Florida regions.

The Corporation has significantly reduced its exposure to construction loans and current originations are mainly draws from existing commitments.

The composition of the Corporation's construction loan portfolio held for investment as of September 30, 2016 by category and geographic location is as follows:
As of September 30, 2016
		Puerto Rico		Virgin Islands		United  States		Total
			(In thousands)
Loans for residential housing projects:
Mid-rise (1)		$	1,568	$	956	$	-	$	2,524
Single-family, detached			3,509		-		7,295		10,804
Total for residential housing projects			5,077		956		7,295		13,328
Construction loans to individuals secured by residential properties			823		1,355		-		2,178
Loans for commercial projects			7,865		40,353		27,202		75,420
Land loans - residential			17,723		3,080		148		20,951
Land loans - commercial			12,468		-		-		12,468
Total before net deferred fees and allowance for loan losses		$	43,956	$	45,744	$	34,645	$	124,345
Net deferred fees			(39)		(8)		-		(47)
Total construction loan portfolio, gross			43,917		45,736		34,645		124,298
Allowance for loan losses			(2,884)		(2,463)		(1)		(5,348)
Total construction loan portfolio, net		$	41,033	$	43,273	$	34,644	$	118,950
____________________
(1)	Mid-rise relates to buildings of up to 7 stories.

The following table presents further information on the Corporation’s construction portfolio as of and for the nine-month period ended September 30, 2016:
	(In thousands)
	Total undisbursed funds under existing commitments	$	50,437
	Construction loans held for investment in non-accrual status	$	50,767
	Construction loans held for sale in non-accrual status	$	8,079
	Net charge offs - Construction loans	$	322
	Allowance for loan losses - Construction loans	$	5,348
	Non-performing construction loans to total construction loans, including held for sale		44.45%
	Allowance for loan losses - construction loans to total construction loans held for investment		4.30%
	Net charge-offs (annualized) to total average construction loans		0.29%

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The following summarizes the construction loans for residential housing projects in Puerto Rico segregated by the  estimated selling price of the units:
		(In thousands)
	Under $300k	$	2,956
	Over $600k (1)		2,121
		$	5,077
_____________
(1)	One residential housing project in Puerto Rico.

Consumer Loans and Finance Leases

As of September 30, 2016, the Corporation’s consumer loan and finance lease portfolio decreased by $99.8 million to $1.7 billion, as compared to the portfolio balance as of December 31, 2015. The decrease was mainly the result of charge-offs and repayments that exceeded the volume of new originations.  The auto loan and finance lease portfolio decreased by $75.8 million during the first nine months of 2016 reflecting repayments, charge-offs and a reduced activity in new loan originations. The auto loan and finance lease portfolios in Puerto Rico amounted to $1.0 billion as of September 30, 2016, compared to $1.1 billion as of December 31, 2015. The remaining decrease in the consumer loan portfolio was primarily related to a $13.0 million reduction in the credit card loan portfolio balance, and a $7.4 million decrease in boat loans.

Loan Production

First BanCorp. relies primarily on its retail network of branches to originate residential and consumer loans. The Corporation supplements its residential mortgage originations with wholesale servicing released mortgage loan purchases from mortgage bankers.  The Corporation manages its construction and commercial loan originations through centralized units and most of its originations come from existing customers as well as through referrals and direct solicitations.

The following table provides a breakdown on First BanCorp.'s loan production, including purchases, refinancings, renewals and draws from existing revolving and non-revolving commitments for the periods indicated:

	Quarter Ended September 30,				Nine-Month Period Ended September 30,
	2016		2015		2016		2015
	(In thousands)
Residential real estate	$	199,125	$	179,173	$	556,181	$	529,307
C&I and commercial mortgage		456,625		436,424		1,184,928		1,245,487
Construction		9,006		3,960		16,975		27,731
Finance leases		20,827		22,485		62,963		62,838
Consumer		199,632		200,037		577,216		591,625
Total loan production	$	885,215	$	842,079	$	2,398,263	$	2,456,988

The Corporation is experiencing continued loan demand and has continued its targeted origination strategy. During the third quarter and nine-month period ended September 30, 2016, total loan originations, including purchases, refinancings, and draws from existing revolving and non-revolving commitments, amounted to approximately $885.2 million and $2.4 billion, respectively, compared to $842.1 million and $2.5 billion, respectively, for the comparable periods in 2015.  These statistics exclude the $324.8 million of loans acquired from Doral Bank in February 2015.

Residential mortgage loan originations and purchases for the quarter and nine-month period ended September 30, 2016 amounted to $199.1 million and $556.2 million, respectively, compared to $179.2 million and $529.3 million, respectively, for the comparable periods in 2015. These statistics include purchases of $23.2 million and $65.2 million for the quarter and nine-month period ended September 30, 2016 compared to $22.2 million and $68.2 million for the comparable periods in 2015. The increase of $19.9 million in the third quarter of 2016, as compared to the same period of 2015, reflects an increase of approximately $23.5 million in the Puerto Rico region, partially offset by decreases of $3.1 million in Florida and $0.5 million in the Virgin Islands.

Commercial and construction loan originations (excluding government loans) for the third quarter of 2016 and 2015 amounted to $458.8 million and $394.2 million, respectively, while the originations for the nine-month periods ended September 30, 2016 and 2015 remained flat at $1.2 billion. The increase in the third quarter of 2016, compared to the same period in 2015, includes increases of $31.5 million and $26.2 million in Florida and Puerto Rico, respectively.  

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Government loan originations for the third quarter of 2016 and 2015 amounted to $6.8 million and $46.2 million, respectively, while the originations for the nine-month period ended on September 30, 2016 and 2015 amounted to $32.5 million and $71.9 million, respectively. The originations in the third quarter of 2016 were related to draws from an existing facility of a central government agency in Puerto Rico. The decrease reflects the origination in 2015 of two large facilities in the Virgin Islands totaling $43.2 million. 

Originations of auto loans (including finance leases) for the quarter and nine-month period ended September 30, 2016 amounted to $94.2 million and $262.2 million, respectively, compared to $90.0 million and $268.6 million, respectively, for the comparable periods in 2015. The prolonged economic recession in Puerto Rico continues to put pressure on new auto sales, reflecting lower consumer confidence as a result of the prolonged economic recession in Puerto Rico. 

Personal loan originations, other than credit cards, for the quarter and nine-month period ended September 30, 2016 amounted to $44.7 million and $141.6 million, respectively, compared to $50.3 million and $140.2 million, respectively, for the comparable periods in 2015.  The utilization activity on the outstanding credit card portfolio for the quarter and nine-month period ended September 30, 2016 amounted to approximately $81.6 million and $236.4 million, respectively, compared to $82.2 million and $245.6 million, respectively, for the comparable periods in 2015. 

Investment Activities

As part of its liquidity, revenue diversification and interest rate risk strategies, First BanCorp. maintains an investment portfolio that is classified as available for sale or held to maturity. The Corporation’s total available-for-sale investment securities portfolio as of September 30, 2016 amounted to $1.8 billion, a $42.5 million decrease from December 31, 2015. The decrease was mainly driven by: (i) sales of approximately $198.7 million of U.S. agency MBS that carried an average yield of 2.36%, (ii) U.S. agencies MBS prepayments of approximately $177.4 million, and (iii) U.S. agency debt securities matured or called prior to maturity of $87.4 million.

These decreases were partially offset by purchases of approximately $405.1 million of securities issued or guaranteed by U.S. agencies during the first nine months of 2016, including: (i)  $130.8 million of U.S. agencies callable debentures, (ii) $45.8 million of SBA Guarantee Pool certificates, (iii) $19.9 million of FHLMC guaranteed commercial mortgage-backed securities, (iv) $39.9 million of collateralized mortgage obligations issued by GNMA, (v) $163.7 million of U.S. agencies MBS, and (vi) a $5.0 million bond issued by Farmer Mac. In addition, the fair value of available-for-sale U.S. agency MBS and debt securities increased by approximately $32.2 million during the nine-month period ended September 30, 2016.

Approximately 97% of the Corporation’s available-for-sale securities portfolio is invested in U.S. Government and Agency debentures and U.S. government-sponsored agencies MBS (mainly GNMA, FNMA and FHLMC fixed-rate securities).

During the first quarter of 2016, the Corporation recorded a $6.3 million credit-related OTTI charge on three Puerto Rico Government debt securities held by the Corporation as part of its available-for-sale securities portfolio, specifically bonds of the GDB and the Puerto Rico Public Buildings Authority. This was the third OTTI charge on these securities recorded since June 30, 2015, as OTTI charges of $12.9 million and $3.0 million were booked in the second and fourth quarters of 2015, respectively. The GDB and the Puerto Rico Public Buildings Authority bonds held by the Corporation are scheduled to mature on February 1, 2019 and on July 1, 2028, respectively. Pursuant to the Puerto Rico Emergency Moratorium and Financial Rehabilitation Act enacted on April 6, 2016, the Puerto Rico governor issued an executive order imposing a moratorium on the debt service payment required to be paid by the GDB on May 1, 2016. The GDB paid the scheduled interest payment of $22 million but defaulted on the principal payment of $367 million of its notes due to other creditors on May 1, 2016 and, on August 1, 2016, the GDB defaulted on a $28 million payment of interest due to its creditors, including interest due on GDB bonds held by the Corporation. Similarly, the Puerto Rico Public Buildings Authority made only a partial payment on its interest payment due on October 1, 2016. 

In the third quarter of 2016, as a result of the recent defaults, the Corporation discontinued income recognition related to, and placed in non-performing status, the bonds of the GDB and the Puerto Rico Public Buildings Authority held as part of the available-for-sale investment securities portfolio. As of September 30, 2016, the amortized cost of these bonds, including accrued interest of $0.9 million, was $35.6 million, recorded on the Corporation’s books at their aggregate fair value of $19.5 million.

In addition to bonds of the GDB and the Puerto Rico Public Buildings Authority, the Corporation owns bonds of the Puerto Rico Housing Finance Authority in the aggregate amount of $8.7 million carried on the Corporation’s books at their aggregate fair value of $7.3 million which are current as to contractual payments as of September 30, 2016.

As of September 30, 2016, the Corporation’s held-to-maturity investment securities portfolio amounted to $156.2 million, down $5.3 million from December 31, 2015. This decrease was driven by principal repayments received during the year. Held-to-maturity investment securities consist of financing arrangements with Puerto Rico municipalities issued in bond form, accounted for as securities, but underwritten as loans with features that are typically found in commercial loans.  These obligations typically are not

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issued in bearer form, are not registered with the SEC and are not rated by external credit agencies. These bonds have seniority to the payment of operating costs and expenses of the municipality and are supported by assigned property tax revenues.  Approximately 87% consist of obligations issued by five of the largest municipalities in Puerto Rico (San Juan, Carolina, Bayamon, Mayaguez and Guaynabo).  These municipalities are required by law to levy special property taxes in such amounts as are required for the payment of all of their respective general obligation bonds and loans.

    Refer to “Exposure to Puerto Rico Government” discussion below for information and details about the Corporation’s total direct exposure to the Puerto Rico Government.

The following table presents the carrying value of investment securities as of the indicated dates:
	As of		As of
	September 30,		December 31,
	2016		2015
		(In thousands)
Money market investments	$	10,108	$	219,473
Investment securities available for sale, at fair value:
U.S. Government and agencies obligations		561,689		460,558
Puerto Rico government obligations		26,820		28,217
Mortgage-backed securities		1,254,825		1,397,520
Other		519		100
		1,843,853		1,886,395
Investment securities held to maturity:
Puerto Rico Municipal Bonds		156,190		161,483
		156,190		161,483
Other equity securities, including $26.6 million and $31.3 million
of FHLB stock as of  September 30, 2016 and December 31, 2015, respectively		28,717		32,169
Total money market investments and investment securities	$	2,038,868	$	2,299,520

Mortgage-backed securities as of the indicated dates consist of:
	As of		As of
	September 30,		December 31,
(In thousands)	2016		2015
Available for sale:
FHLMC certificates	$	261,417	$	287,445
GNMA certificates		244,716		301,573
FNMA certificates		667,106		783,195
Collateralized Mortgage Obligations issued or
guaranteed by FHLMC or GNMA		59,375		-
Other mortgage pass-through certificates		22,211		25,307
Total mortgage-backed securities	$	1,254,825	$	1,397,520

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The carrying values of investment securities classified as available for sale and held to maturity as of September 30, 2016 by contractual maturity (excluding mortgage-backed securities and equity securities) are shown below:
	Carrying		Weighted
(Dollars in thousands)	Amount		Average Yield %
U.S. Government and agencies obligations
Due within one year	$	17,147	0.64
Due after one year through five years		499,944	1.32
Due after ten years		44,598	0.87
		561,689	1.26
Puerto Rico Government and Municipalities obligations
Due after one year through five years		10,536	4.43
Due after five years through ten years		11,592	4.47
Due after ten years		160,882	4.75
		183,010	4.70
Other Investment Securities
Due after one year through five years		100	1.50
Total		744,799	2.17
Equity securities		419	2.15
Mortgage-backed securities		1,254,825	2.48
Total investment securities available for sale and held to maturity	$	2,000,043	2.36

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Net interest income of future periods could be affected by prepayments of mortgage-backed securities. Acceleration in the prepayments of mortgage-backed securities would lower yields on these securities, as the amortization of premiums paid upon acquisition of these securities would accelerate. Conversely, acceleration of the prepayments of mortgage-backed securities would increase yields on securities purchased at a discount, as the amortization of the discount would accelerate. These risks are directly linked to future period market interest rate fluctuations. Also, net interest income in future periods might be affected by the Corporation’s investment in callable securities. As of September 30, 2016, the Corporation had approximately $192.5 million in debt securities (U.S. Agencies and Puerto Rico government securities) with embedded calls and with an average yield of 1.35%.  Unamortized discounts on these securities amounted to approximately $0.2 million.  Refer to “Risk Management” below for further analysis of the effects of changing interest rates on the Corporation’s net interest income and of the interest rate risk management strategies followed by the Corporation. Also refer to Note 4 to the accompanying unaudited consolidated financial statements for additional information regarding the Corporation’s investment portfolio.

RISK MANAGEMENT

     Risks are inherent in virtually all aspects of the Corporation’s business activities and operations. Consequently, effective risk management is fundamental to the success of the Corporation. The primary goals of risk management are to ensure that the Corporation’s risk-taking activities are consistent with the Corporation’s objectives and risk tolerance, and that there is an appropriate balance between risk and reward in order to maximize stockholder value.

The Corporation has in place a risk management framework to monitor, evaluate and manage the principal risks assumed in conducting its activities. First BanCorp.’s business is subject to eleven broad categories of risks: (1) liquidity risk; (2) interest rate risk; (3) market risk; (4) credit risk; (5) operational risk; (6) legal and compliance risk; (7) reputational risk; (8) model risk; (9) capital risk; (10) strategic risk; and (11) information technology risk. First BanCorp. has adopted policies and procedures designed to identify and manage the risks to which the Corporation is exposed.

The Corporation’s risk management policies are described below as well as in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of First BanCorp.’s 2015 Annual Report on Form 10-K.

Liquidity Risk and Capital Adequacy

Liquidity is the ongoing ability to accommodate liability maturities and deposit withdrawals, fund asset growth and business operations, and meet contractual obligations through unconstrained access to funding at reasonable market rates. Liquidity management involves forecasting funding requirements and maintaining sufficient capacity to meet the needs for liquidity and accommodate fluctuations in asset and liability levels due to changes in the Corporation’s business operations or unanticipated events.

The Corporation manages liquidity at two levels. The first is the liquidity of the parent company, which is the holding company that owns the banking and non-banking subsidiaries. The second is the liquidity of the banking subsidiary. As of September 30, 2016, FirstBank could not pay any dividends to the parent company except upon receipt of prior approval by the Federal Reserve Bank of New York (the “New York FED”) and the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) because of the written agreement dated June 3, 2010 (the “Written Agreement’) that the Corporation entered into with the New York FED and the Federal Reserve Board.  In the second and third quarters of 2016, after receiving regulatory approvals, FirstBank paid dividends of $31.2 million and $1.8 million, respectively, to the Corporation sufficient to allow it to pay all accrued but deferred interest on the junior subordinated debentures associated with its trust preferred securities.  It is the intent of the Corporation to request approvals in future periods to continue regularly scheduled quarterly interest payments.    

The Asset and Liability Committee of the Board of Directors is responsible for establishing the Corporation’s liquidity policy as well as approving operating and contingency procedures, and monitoring liquidity on an ongoing basis. The Management Investment and Asset Liability Committee (“MIALCO”), using measures of liquidity developed by management, which involve the use of several assumptions, reviews the Corporation’s liquidity position on a monthly basis. The MIALCO oversees liquidity management, interest rate risk and other related matters.

The MIALCO, which reports to the Board of Directors’ Asset and Liability Committee, is composed of senior management officers, including the Chief Executive Officer, the Chief Financial Officer, the Chief Risk Officer, the Retail Financial Services Director, the Risk Manager of the Treasury and Investments Division, the Financial Analysis and Asset/Liability Director and the Treasurer. The Treasury and Investments Division is responsible for planning and executing the Corporation’s funding activities and strategy, monitoring liquidity availability on a daily basis and reviewing liquidity measures on a weekly basis. The Treasury and Investments Accounting and Operations area of the Comptroller’s Department is responsible for calculating the liquidity measurements used by the Treasury and Investment Division to review the Corporation’s liquidity position on a monthly basis; the Financial Analysis and Asset/Liability Director estimates the liquidity gap for longer periods.

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In order to ensure adequate liquidity through the full range of potential operating environments and market conditions, the Corporation conducts its liquidity management and business activities in a manner that will preserve and enhance funding stability, flexibility and diversity. Key components of this operating strategy include a strong focus on the continued development of customer-based funding, the maintenance of direct relationships with wholesale market funding providers, and the maintenance of the ability to liquidate certain assets when, and if, requirements warrant.

The Corporation develops and maintains contingency funding plans. These plans evaluate the Corporation’s liquidity position under various operating circumstances and are designed to help ensure that the Corporation will be able to operate through periods of stress when access to normal sources of funds is constrained. The plans project funding requirements during a potential period of stress, specify and quantify sources of liquidity, outline actions and procedures for effectively managing through a difficult period, and define roles and responsibilities. Under the contingency funding plan, the Corporation stresses the balance sheet and the liquidity position to critical levels that imply difficulties in getting new funds or even maintaining the current funding position of the Corporation and the Bank and are designed to help ensure the ability of the Corporation and the Bank to honor their respective commitments, and establish liquidity triggers monitored by the MIALCO in order to maintain the ordinary funding of the banking business. Four different scenarios are defined in the contingency funding plan: local market event, credit rating downgrade, an economic cycle downturn event, and a concentration event. They are reviewed and approved annually by the Board of Directors’ Asset and Liability Committee.

    The Corporation manages its liquidity in a proactive manner, and maintains a sound liquidity position. Multiple measures are utilized to monitor the Corporation’s liquidity position, including core liquidity, basic liquidity, and time-based reserve measures. As of September 30, 2016, the estimated core liquidity reserve (which consists of cash and free liquid assets) was $1.5 billion or 12.1% of total assets, compared to $1.5 billion or 12.3% of total assets as of December 31, 2015. The basic liquidity ratio (which adds available secured lines of credit to the core liquidity) was approximately 20.8% of total assets, compared to 17.4% of total assets as of December 31, 2015. As of September 30, 2016, the Corporation had $1.1 billion available for additional credit from the FHLB of New York. Unpledged liquid securities as of September 30, 2016, mainly fixed-rate MBS and U.S. agency debentures, amounted to approximately $774.0 million. The Corporation does not rely on uncommitted inter-bank lines of credit (federal funds lines) to fund its operations and does not include them in the basic liquidity measure. As of September 30, 2016, the holding company had $35.2 million of cash and cash equivalents. Cash and cash equivalents at the Bank level as of September 30, 2016 were approximately $522.1 million. The Bank has $1.6 billion in brokered CDs as of September 30, 2016, of which approximately $949.3 million mature over the next twelve months. Liquidity at the Bank level is highly dependent on bank deposits, which fund 75% of the Bank’s assets (or 62%, excluding brokered CDs).

Sources of Funding

The Corporation utilizes different sources of funding to help ensure that adequate levels of liquidity are available when needed. Diversification of funding sources is of great importance to protect the Corporation’s liquidity from market disruptions. The principal sources of short-term funds are deposits, including brokered CDs, securities sold under agreements to repurchase, and lines of credit with the FHLB.

The Asset Liability Committee of the Board of Directors reviews credit availability on a regular basis. The Corporation has also sold mortgage loans as a supplementary source of funding. Long-term funding has also been obtained in the past through the issuance of notes and long-term brokered CDs. The cost of these different alternatives, among other things, is taken into consideration.

The Corporation has continued reducing the amounts of brokered CDs. As of September 30, 2016, the amount of brokered CDs had decreased $539.0 million to $1.6 billion from brokered CDs of $2.1 billion as of December 31, 2015. At the same time as the Corporation focuses on reducing its reliance on brokered CDs, it is seeking to add core deposits. During the first nine months of 2016, the Corporation increased non-brokered deposits, excluding government deposits, by $135.0 million to $6.8 billion, primarily reflecting increases in demand deposits and savings in Puerto Rico.

The Corporation continues to have the support of creditors, including counterparties to repurchase agreements, the FHLB, and other agents such as wholesale funding brokers. While liquidity is an ongoing challenge for all financial institutions, management believes that the Corporation’s available borrowing capacity and efforts to grow retail deposits will be adequate to provide the necessary funding for the Corporation’s business plans in the foreseeable future.

The Corporation’s principal sources of funding are:

Brokered CDs – A large portion of the Corporation’s funding has been brokered CDs issued by FirstBank. Total brokered CDs decreased during the first nine months of 2016 by $539.0 million to $1.6 billion as of September 30, 2016.

   The average remaining term to maturity of the retail brokered CD outstanding as of September 30, 2016 is approximately 1 year.

    The use of brokered CDs has been particularly important for the growth of the Corporation. The Corporation encounters intense competition in attracting and retaining regular retail deposits in Puerto Rico. The brokered CD market is very competitive and liquid,

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and has enabled the Corporation to obtain substantial amounts of funding in short periods of time. This strategy has enhanced the Corporation’s liquidity position, since brokered CDs are insured by the FDIC up to regulatory limits and can be obtained faster than regular retail deposits. During the first nine months of 2016, the Corporation issued $402.5 million in brokered CDs with an average cost of 1.16% (average life of 2 years).

The following table presents a summary of brokered CDs as of September 30, 2016:
			Total
			(In thousands)
	Three months or less	$	343,396
	Over three months to six months		255,574
	Over six months to one year		350,362
	One to three years		524,386
	Three to five years		84,605
	Over five years		185
	Total	$	1,558,508

Certificates of deposit in denominations of $100,000 or higher include brokered CDs of $1.6 billion issued to deposit brokers in the form of large ($100,000 or more) certificates of deposit that are generally participated out by brokers in shares of less than $100,000 and are therefore insured by the FDIC.

Government deposits – As of September 30, 2016, the Corporation had $463.5 million of Puerto Rico public sector deposits ($391.4 million in transactional accounts and $72.1 million in time deposits) compared to $390.4 million as of December 31, 2015. Approximately 32% is from municipalities and 68% is from public corporations and the central government and agencies.

   In addition, as of September 30, 2016, the Corporation had $161.1 million of government deposits in the Virgin Islands, compared to $186.9 million as of December 31, 2015.

Retail deposits – The Corporation’s deposit products also include regular savings accounts, demand deposit accounts, money market accounts and retail CDs.Total deposits, excluding brokered CDs and government deposits, increased by $135.0 million to $6.8 billion from the balance of $6.7 billion as of December 31, 2015. The higher balance reflects increases of $212.9 million and $6.4 million in Puerto Rico and the Virgin Islands regions, respectively, primarily increases in demand deposits and savings. These increases were partially offset by an $84.3 million decrease in the Florida region. Refer to Note 14 in the accompanying unaudited consolidated financial statements for further details.

Refer to “Net Interest Income” above for information about average balances of interest-bearing deposits, and the average interest rate paid on deposits for the quarters and nine-month periods ended September 30, 2016 and 2015.

Securities sold under agreements to repurchase - The Corporation’s investment portfolio is funded in part with repurchase agreements. The Corporation’s outstanding securities sold under repurchase agreements amounted to $800 million and $900 million as of September 30, 2016 and December 31, 2015, respectively. During the third quarter of 2016, the Corporation repaid at maturity a $100 million repurchase agreement that carried a cost of 2.50%.  One of the Corporation’s strategies has been the use of structured repurchase agreements and long-term repurchase agreements to reduce liquidity risk and manage exposure to interest rate risk by lengthening the final maturities of its liabilities while keeping funding costs at reasonable levels. In addition to these repurchase agreements, the Corporation has been able to maintain access to credit by using cost-effective sources such as FHLB advances. Refer to Note 15 in the Corporation’s unaudited consolidated financial statements for the quarter and nine-month period ended September 30, 2016 for further details about repurchase agreements outstanding by counterparty and maturities.

As of September 30, 2016, the Corporation had $200 million of reverse repurchase agreements with a counterparty under a master netting arrangement that provides for a right of setoff that meets the conditions of ASC 210-20-45-11 for a net presentation. These repurchase agreements and reverse repurchase agreements are presented net on the consolidated statement of financial condition.

In the fourth quarter of 2016, the Corporation used cash proceeds of $204.8 million from the aforementioned sales of U.S. agency MBS that carried an average yield at 2.36% to repay at maturity $300 million of repurchase agreements that carried an average cost of 3.63%.

Under the Corporation’s repurchase agreements, as is the case with derivative contracts, the Corporation is required to pledge cash or qualifying securities to meet margin requirements. To the extent that the value of securities previously pledged as collateral declines

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due to changes in interest rates, a liquidity crisis or any other factor, the Corporation is required to deposit additional cash or securities to meet its margin requirements, thereby adversely affecting its liquidity. 

   Given the quality of the collateral pledged, the Corporation has not experienced margin calls from counterparties arising from credit-quality-related write-downs in valuations.

Advances from the FHLB – The Bank is a member of the FHLB system and obtains advances to fund its operations under a collateral agreement with the FHLB that requires the Bank to maintain qualifying mortgages and/or investments as collateral for advances taken. As of September 30, 2016 and December 31, 2015, the outstanding balance of FHLB advances was $355.0 and $455.0 million, respectively. During the third quarter of 2016, the Corporation repaid at maturity a $100 million FHLB advance that carried a cost of 0.93%.   As of September 30, 2016, the Corporation had $1.1 billion available for additional credit on FHLB lines of credit.

Trust-Preferred Securities – In 2004, FBP Statutory Trust I, a statutory trust that is wholly owned by the Corporation and not consolidated in the Corporation’s financial statements, sold to institutional investors $100 million of its variable rate trust-preferred securities. The proceeds of the issuance, together with the proceeds of the purchase by the Corporation of $3.1 million of FBP Statutory Trust I variable rate common securities, were used by FBP Statutory Trust I to purchase $103.1 million aggregate principal amount of the Corporation’s Junior Subordinated Deferrable Debentures.

Also in 2004, FBP Statutory Trust II, a statutory trust that is wholly owned by the Corporation and not consolidated in the Corporation’s financial statements, sold to institutional investors $125 million of its variable rate trust-preferred securities. The proceeds of the issuance, together with the proceeds of the purchase by the Corporation of $3.9 million of FBP Statutory Trust II variable rate common securities, were used by FBP Statutory Trust II to purchase $128.9 million aggregate principal amount of the Corporation’s Junior Subordinated Deferrable Debentures.

The subordinated debentures are presented in the Corporation’s consolidated statement of financial condition as Other Borrowings. The variable rate trust-preferred securities are fully and unconditionally guaranteed by the Corporation. The $100 million Junior Subordinated Deferrable Debentures issued by the Corporation in April 2004 and the $125 million issued in September 2004 mature on June 17, 2034 and September 20, 2034, respectively; however, under certain circumstances, the maturity of the subordinated debentures may be shortened (such shortening would result in a mandatory redemption of the variable rate trust-preferred securities). The Collins Amendment of the Dodd-Frank Act eliminated certain trust-preferred securities from Tier 1 Capital. Bank holding companies such as the Corporation were required to fully phase out these instruments from Tier I capital in January 1, 2016; however, they may remain in Tier 2 capital until the instruments are redeemed or mature.

As mentioned above, during the first quarter of 2016, the Corporation completed the repurchase of trust preferred securities that were being auctioned in a public sale at which the Corporation was invited to participate. The Corporation repurchased and cancelled $10 million of trust-preferred securities of FBP Statutory Trust II, resulting in a commensurate reduction in the related subordinated debenture. The Corporation’s winning bid equated to 70% of the $10 million par value. The 30% discount, plus accrued interest, resulted in a pre-tax gain of approximately $4.2 million. As of September 30, 2016, the Corporation still has subordinated debentures outstanding in the aggregate amount of $216.2 million.

In 2016, after receiving regulatory approvals, the Corporation has paid $33.0 million for all the accrued but deferred interest payments plus the interest for the second quarter and third quarter of 2016 on the Corporation’s subordinated debentures associated with its trust-preferred securities. As of September 30, 2016, the Corporation is current on all interest payments due related to its subordinated debt. Under the indentures, we have the right, from time to time, and without causing an event of default, to defer payments of interest on the subordinated debentures by extending the interest payment period at any time and from time to time during the term of the subordinated debentures for up to twenty consecutive quarterly periods. Future interest payments are subject to Federal Reserve approval. It is the intent of the Corporation to request approvals in future periods to continue regularly scheduled quarterly interest payments.

The Corporation’s principal uses of funds are for the origination of loans and the repayment of maturing deposits and borrowings. The ratio of residential real estate loans to total loans has increased over time. Commensurate with the increase in its mortgage banking activities, the Corporation has also invested in technology and personnel to enhance the Corporation’s secondary mortgage market capabilities.

The enhanced capabilities improve the Corporation’s liquidity profile as they allow the Corporation to derive liquidity, if needed, from the sale of mortgage loans in the secondary market. The U.S. (including Puerto Rico) secondary mortgage market is still highly liquid, in large part because of the sale of mortgages through guarantee programs of the FHA, VA, HUD, FNMA and FHLMC. During the first nine months of 2016, the Corporation sold approximately $238.6 million of FHA/VA mortgage loans to GNMA, which packages them into mortgage-backed securities. Any regulatory actions affecting GNMA, FNMA or FHLMC could adversely affect the secondary mortgage market.

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Though currently not in use, other potential sources of short-term funding for the Corporation include commercial paper and federal funds purchased. Furthermore, in previous years, the Corporation entered into several financing transactions to diversify its funding sources, including the issuance of notes payable and, as noted above, junior subordinated debentures as part of its longer-term liquidity and capital management activities. No assurance can be given that these sources of liquidity will be available in the future and, if available, will be on comparable terms.

Impact of Credit Ratings on Access to Liquidity

The Corporation’s liquidity is contingent upon its ability to obtain external sources of funding to finance its operations. The Corporation’s current credit ratings and any downgrade in credit ratings can hinder the Corporation’s access to new forms of external funding and/or cause external funding to be more expensive, which could in turn adversely affect results of operations. Also, changes in credit ratings may further affect the fair value of unsecured derivatives that consider the Corporation’s own credit risk as part of the valuation.

The Corporation does not have any outstanding debt or derivative agreements that would be affected by credit downgrades. Furthermore, given our non-reliance on corporate debt or other instruments directly linked in terms of pricing or volume to credit ratings, the liquidity of the Corporation so far has not been affected in any material way by downgrades. The Corporation’s ability to access new non-deposit sources of funding, however, could be adversely affected by credit downgrades.

The Corporation’s credit as a long-term issuer is currently rated B+ by S&P and B- by Fitch. At the FirstBank subsidiary level, long-term issuer ratings are currently B1 by Moody’s, six notches below their definition of investment grade, B+ by S&P, four notches below their definition of investment grade, and B- by Fitch, six notches below their definition of investment grade. The Corporation’s credit ratings are dependent on a number of factors, both quantitative and qualitative, and are subject to change at any time. The disclosure of credit ratings is not a recommendation to buy, sell or hold the Corporation’s securities. Each rating should be evaluated independently of any other rating.

Cash Flows

Cash and cash equivalents were $528.9 million as of September 30, 2016, a decrease of $223.5 million when compared to the balance as of December 31, 2015. The following discussion highlights the major activities and transactions that affected the Corporation’s cash flows during the first nine months of 2016 and 2015. 

Cash Flows from Operating Activities

First BanCorp.’s operating assets and liabilities vary significantly in the normal course of business due to the amount and timing of cash flows. Management believes cash flows from operations, available cash balances and the Corporation’s ability to generate cash through short- and long-term borrowings will be sufficient to fund the Corporation’s operating liquidity needs.

For the first nine months of 2016 and 2015, net cash provided by operating activities was $119.1 million and $199.1 million, respectively.  Net cash generated from operating activities was higher than reported net income largely as a result of adjustments for operating items such as the provision for loan and lease losses, depreciation and amortization, and impairments as well as the cash generated from sales of loans held for sale.

Cash Flows from Investing Activities

The Corporation’s investing activities primarily relate to originating loans to be held for investment and the purchasing, selling and repaying available-for-sale and held-to-maturity investment securities. For the nine-month period ended September 30, 2016, net cash provided by investing activities was $224.2 million, primarily reflecting principal repayments on loans held for investment and proceeds for the sale of available-for-sale securities and  mortgage-backed securities prepayments.

For the first nine months of 2015, net cash provided by investing activities was $461.6 million, primarily reflecting the net cash received in the Doral Bank transaction, proceeds from the bulk sale of assets and repayments of commercial and consumer loans.

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Cash Flows from Financing Activities

The Corporation’s financing activities primarily include the receipt of deposits and the issuance of brokered CDs, the issuance and payments of long-term debt, the issuance of equity instruments and activities related to its short-term funding. During the nine-month period ended September 30, 2016, net cash used in financing activities was $566.8 million, mainly due to repayments of maturing brokered CDS, repurchase agreements, FHLB advances and the cash used for the repurchase and cancellation of trust preferred securities, partially offset by the increase in non-brokered deposits. 

In the first nine months of 2015, net cash used in financing activities was $495.1 million, mainly due to the repayments of maturing brokered CDs and funds used in connection with $200 million of reverse repurchase agreements entered into in April 2015.

Capital 

As of September 30, 2016, the Corporation’s stockholders’ equity was $1.8 billion, an increase of $105.8 million from December 31, 2015.  The increase was mainly driven by the net income of $69.4 million for the first nine months of 2016 and an increase of approximately $31.5 million in the fair value of available-for-sale securities recorded as part of other comprehensive income.  As a result of the Written Agreement with the New York FED, currently neither First BanCorp. nor FirstBank is permitted to pay dividends on capital securities without prior approval.

	Set forth below are First BanCorp.'s and FirstBank's regulatory capital ratios as of September 30, 2016 and December 31, 2015:
				Banking Subsidiary
		First BanCorp.		FirstBank		To be well capitalized
			Fully		Fully
As of September 30, 2016		Actual	Phased-in (1)	Actual	Phased-in (1)
Total capital ratio (Total capital to risk-weighted assets)		21.27%	20.76%	20.73%	20.23%	10.00%
Common Equity Tier 1 capital ratio
(Common Equity Tier 1 capital to risk-weighted assets)		17.64%	16.79%	16.83%	15.58%	6.50%
Tier 1 capital ratio (Tier 1 capital to risk-weighted assets)		17.64%	17.19%	19.46%	18.97%	8.00%
Leverage ratio		13.04%	12.98%	14.40%	14.34%	5.00%
				Banking Subsidiary
		First BanCorp.		FirstBank		To be well capitalized
			Fully		Fully
As of December 31, 2015		Actual	Phased-in (1)	Actual	Phased-in (1)
Total capital ratio (Total capital to risk-weighted assets)		20.01%	19.44%	19.73%	19.18%	10.00%
Common Equity Tier 1 capital ratio
(Common Equity Tier 1 capital to risk-weighted assets)		16.92%	15.44%	16.35%	14.61%	6.50%
Tier 1 capital ratio (Tier 1 capital to risk-weighted assets)		16.92%	15.83%	18.45%	17.91%	8.00%
Leverage ratio		12.22%	11.69%	13.33%	13.24%	5.00%
(1)	Certain adjustments required under Basel III rules will be phased in through the end of 2018. The ratios shown in this column are calculated assuming that the adjustments were fully phased-in and effective as of September 30, 2016 and December 31, 2015.

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Although the Corporation and FirstBank became subject to the Basel III rules beginning on January 1, 2015, certain requirements of the Basel III rules will be phased in over several years.  The phase-in period for certain deductions and adjustments to regulatory capital (such as certain intangible assets and deferred tax assets that arise from net operating losses and tax credit carryforwards) will be completed on January 1, 2018.  The Corporation and FirstBank compute risk-weighted assets using the Standardized Approach required by the Basel III rules.

The Basel III rules require the Corporation to maintain an additional capital conservation buffer of 2.5% to avoid limitations on both (i) capital distributions (e.g., repurchases of capital instruments or dividend or interest payments on capital instruments) and (ii) discretionary bonus payments to executive officers and heads of major business lines. The phase-in of the capital conservation buffer began on January 1, 2016 with a first year requirement of 0.625% of additional Common Equity Tier 1 capital (“CET1”), which will be progressively increased over a four-year period, increasing by that same percentage amount on each subsequent January 1 until it reaches the fully phased-in 2.5% CET1 requirement on January 1, 2019.

Under the fully phased-in Basel III rules, in order to be considered adequately capitalized, the Corporation will be required to maintain: (i) a minimum CET1 capital to risk-weighted assets ratio of at least 4.5%, plus the 2.5% “capital conservation buffer,” resulting in a required minimum CET1 ratio of at least 7%, (ii) a minimum ratio of total Tier 1 capital to risk-weighted assets of at least 6.0%, plus the 2.5% capital conservation buffer, resulting in a required minimum Tier 1 capital ratio of 8.5%, (iii) a minimum ratio of total Tier 1 plus Tier 2 capital to risk-weighted assets of at least 8.0%, plus the 2.5% capital conservation buffer, resulting in a required minimum total capital ratio of 10.5%, and (iv) a required minimum leverage ratio of 4%, calculated as the ratio of Tier 1 capital to average on-balance sheet (non-risk adjusted) assets.

In addition, as required under Basel III rules, the Corporation’s trust-preferred securities (“TRuPs”) were fully phased out from Tier 1 capital on January 1, 2016.  However, the Corporation’s TRuPs may continue to be included in Tier 2 capital until the instruments are redeemed or mature.

The Corporation, as an institution with more than $10 billion but less than $50 billion of total consolidated assets, is subject to certain requirements established by the Dodd-Frank Act, including those related to capital stress testing. The Dodd-Frank Act stress testing requirements are implemented for the Corporation through the Dodd-Frank Act stress testing requirements that apply to banking organizations with consolidated assets of more than $10 billion and less than $50 billion. Consistent with these requirements, the Corporation submitted its second annual company-run stress test to regulators in July 2016, which were published in October 2016. The results show that even in a severely adverse economic environment, which we are not currently in nor do we anticipate being in during the near future, the Corporation’s and the Bank’s capital ratios significantly exceed the well-capitalized thresholds throughout the nine-quarter horizon.

The tangible common equity ratio and tangible book value per common share are non-GAAP financial measures generally used by the financial community to evaluate capital adequacy. Tangible common equity is total equity less preferred equity, goodwill, core deposit intangibles, purchased credit card relationship asset and insurance customer relationship intangible asset. Tangible assets are total assets less goodwill, core deposit intangibles, purchased credit card relationship and insurance customer relationship intangible assets.  Refer to “Basis of Presentation” below for additional information.

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The following table is a reconciliation of the Corporation’s tangible common equity and tangible assets as of September 30, 2016 and December 31, 2015, respectively:
		September 30,		December 31,
	(In thousands, except ratios and per share information)	2016		2015
	Total equity - GAAP	$	1,799,886	$	1,694,134
	Preferred equity		(36,104)		(36,104)
	Goodwill		(28,098)		(28,098)
	Purchased credit card relationship intangible		(11,228)		(13,319)
	Core deposit intangible		(7,690)		(9,166)
	Insurance customer relationship intangible		(965)		-
	Tangible common equity	$	1,715,801	$	1,607,447
	Total assets - GAAP	$	12,075,253	$	12,573,019
	Goodwill		(28,098)		(28,098)
	Purchased credit card relationship intangible		(11,228)		(13,319)
	Core deposit intangible		(7,690)		(9,166)
	Insurance customer relationship intangible		(965)		-
	Tangible assets	$	12,027,272	$	12,522,436
	Common shares outstanding		217,388		215,089
	Tangible common equity ratio		14.27%		12.84%
	Tangible book value per common share	$	7.89	$	7.47

Off -Balance Sheet Arrangements

In the ordinary course of business, the Corporation engages in financial transactions that are not recorded on the balance sheet, or may be recorded on the balance sheet in amounts that are different from the full contract or notional amount of the transaction. These transactions are designed to (1) meet the financial needs of customers, (2) manage the Corporation’s credit, market or liquidity risks, (3) diversify the Corporation’s funding sources and (4) optimize capital.

   As a provider of financial services, the Corporation routinely enters into commitments with off-balance sheet risk to meet the financial needs of its customers. These financial instruments may include loan commitments and standby letters of credit. These commitments are subject to the same credit policies and approval process used for on-balance sheet instruments. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the statement of financial position. As of September 30, 2016, commitments to extend credit and commercial and financial standby letters of credit amounted to approximately $1.1 billion (including $631.5 million pertaining to credit card loans) and $46.7 million, respectively. Commitments to extend credit are agreements to lend to customers as long as the conditions established in the contract are met. Generally, the Corporation does not enter into interest rate lock agreements with prospective borrowers in connection with mortgage banking activities.

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Contractual Obligations, Commitments and Contingencies
The following table presents the Corporation’s contractual obligations and commitments, which consist of CDs, long-term contractual debt obligations, commitments to sell mortgage loans and commitments to extend credit:
		Contractual Obligations and Commitments
		As of September 30, 2016
		Total		Less than 1 year		1-3 years		3-5 years		After 5 years
		(In thousands)
Contractual obligations:
Certificates of deposit		$	3,896,055	$	2,184,263	$	1,426,001	$	281,357	$	4,434
Securities sold under agreements to repurchase (1)			600,000		300,000		100,000		-		200,000
Advances from FHLB			355,000		200,000		25,000		130,000		-
Other borrowings			216,187		-		-		-		216,187
Total contractual obligations		$	5,067,242	$	2,684,263	$	1,551,001	$	411,357	$	420,621
Commitments to sell mortgage loans		$	66,617
Standby letters of credit		$	2,475
Commitments to extend credit:
Lines of credit		$	1,041,692
Letters of credit			44,214
Construction undisbursed funds			50,437
Total commercial commitments		$	1,136,343
(1)	Reported net of reverse repurchase agreement by counterparty, when applicable, pursuant to ASC 210-20-45-11.

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The Corporation has obligations and commitments to make future payments under contracts, such as debt and lease agreements, and under other commitments to sell mortgage loans at fair value and to extend credit. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Other contractual obligations result mainly from contracts for the rental and maintenance of equipment. Since certain commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. For most of the commercial lines of credit, the Corporation has the option to reevaluate the agreement prior to additional disbursements. There have been no significant or unexpected draws on existing commitments.  In the case of credit cards and personal lines of credit, the Corporation can cancel the unused credit facility at any time and without cause.

Interest Rate Risk Management

First BanCorp. manages its asset/liability position in order to limit the effects of changes in interest rates on net interest income and to maintain stability of profitability under varying interest rate scenarios. The MIALCO oversees interest rate risk, and the MIALCO meetings focus on, among other things, current and expected conditions in world financial markets, competition and prevailing rates in the local deposit market, liquidity, the loan originations pipeline, securities market values, recent or proposed changes to the investment portfolio, alternative funding sources and related costs, hedging and the possible purchase of derivatives such as swaps and caps, and any tax or regulatory issues that may be pertinent to these areas. The MIALCO approves funding decisions in light of the Corporation’s overall strategies and objectives.

On a quarterly basis, the Corporation performs a consolidated net interest income simulation analysis to estimate the potential change in future earnings from projected changes in interest rates. These simulations are carried out over a one-to-five-year time horizon, assuming upward and downward yield curve shifts. The rate scenarios considered in these simulations reflect gradual upward and downward interest rate movements of 200 basis points, during a twelve-month period. Simulations are carried out in two ways:

(1) Using a static balance sheet, as the Corporation had on the simulation date, and

(2) Using a dynamic balance sheet based on recent patterns and current strategies.

The balance sheet is divided into groups of assets and liabilities detailed by maturity or re-pricing structure and their corresponding interest yields and costs. As interest rates rise or fall, these simulations incorporate expected future lending rates, current and expected future funding sources and costs, the possible exercise of options, changes in prepayment rates, deposit decay and other factors that may be important in projecting net interest income.

The Corporation uses a simulation model to project future movements in the Corporation’s balance sheet and income statement. The starting point of the projections generally corresponds to the actual values on the balance sheet on the date of the simulations.

These simulations are highly complex, and are based on many assumptions that are intended to reflect the general behavior of the balance sheet components over the period in question. It is unlikely that actual events will match these assumptions in most cases. For this reason, the results of these forward-looking computations are only approximations of the true sensitivity of net interest income to changes in market interest rates. Several benchmark and market rate curves were used in the modeling process, primarily the LIBOR/SWAP curve, Prime, U.S. Treasury, FHLB rates, brokered CD rates, repurchase agreements rates and the mortgage commitment rate of 30 years. 

The 12-month net interest income is forecasted assuming the September 30, 2016 interest rate curves remain constant. Then, net interest income is estimated under rising and falling rate scenarios.  For rising rate scenarios, a gradual (ramp) parallel upward shift of the yield curve is assumed during the first twelve months (the “+200 ramp” scenario). Conversely, for the falling rate scenarios, a gradual (ramp) parallel downward shift of the yield curve is assumed during the first twelve months (the “-200 ramp” scenario). However, given the current low levels of interest rates, a full downward shift of 200 basis points would represent an unrealistic scenario. Therefore, under the falling rate scenario, rates move downward up to 200 basis points, but without reaching zero. The resulting scenario shows interest rates close to zero in most cases, reflecting a flattening yield curve instead of a parallel downward scenario. 

The Libor/Swap curve for September 2016, as compared to December 2015, reflected a 30 basis points increase in the short-term horizon, between one to twelve months, while market rates decreased by 38 basis points in the medium-term, that is, between 2 to 5 years. In the long-term, that is, over a 5-year time horizon, market rates decreased by 72 basis points. The U.S. Treasury curve in the short-term increased by 2 basis points and in the medium-term horizon increased by 53 basis points as compared to December 2015 end of month levels. The long-term horizon decreased by 68 basis points as compared to December 2015 end of month levels.

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The following table presents the results of the simulations as of September 30, 2016 and December 31, 2015.  Consistent with prior years, these exclude non-cash changes in the fair value of derivatives:
	September 30, 2016								December 31, 2015
	Net Interest Income Risk								Net Interest Income Risk
	(Projected for the next 12 months)								(Projected for the next 12 months)
	Static Simulation				Growing Balance Sheet				Static Simulation				Growing Balance Sheet
(Dollars in millions)	Change		% Change		Change		% Change		Change		% Change		Change		% Change
+ 200 bps ramp	$	13.7	2.85	%	$	13.9	2.81	%	$	12.6	2.51	%	$	14.2	2.81	%
- 200 bps ramp	$	(5.8)	(1.20)	%	$	(9.4)	(1.91)	%	$	(7.8)	(1.55)	%	$	(8.7)	(1.72)	%

The Corporation continues to manage its balance sheet structure to control the overall interest rate risk. As part of the strategy to limit the interest rate risk, the Corporation has executed certain transactions that affected the simulation results.  The composition of the loan portfolio has changed as compared to December 2015 end of month levels, primarily reflecting lower commercial and consumer loan balances, including repayments on six large relationships totaling $145.3 million.  However, non-performing assets increased in the first nine months of 2016 by $134.1 million, primarily attributable to the inflow in the first quarter of 2016 of the Corporation’s exposure to commercial mortgage loans guaranteed by the TDF with a book value of $112.8 million as of September 30, 2016, the inflow in the second quarter of 2016 of a $35.0 million commercial relationship in Puerto Rico, and the inflow in the third quarter of 2016 of the GDB and Puerto Rico Public Buildings Authority bonds held by the Corporation as part of its available-for-sale securities portfolio recorded at their aggregate fair value of $19.5 million.  The Corporation has continued reducing its holdings of brokered CDs, with a reduction of $539.0 million during the first nine months of 2016, and repaid at maturity a $100 million repurchase agreement and a $100 million FHLB advance.  Total deposits, excluding brokered CDs and government deposits, increased in the first nine months of 2016 by $135.0 million, primarily reflecting increases in demand deposits and savings in Puerto Rico.   

Taking into consideration the above-mentioned facts for modeling purposes, the net interest income for the next twelve months under a non-static balance sheet scenario is estimated to increase by $13.9 million in the rising rate scenario when compared against the Corporation’s flat or unchanged interest rate forecast scenario. Under the falling rate, non-static scenario the net interest income is estimated to decrease by $9.4 million.

Derivatives

First BanCorp. uses derivative instruments and other strategies to manage its exposure to interest rate risk caused by changes in interest rates beyond management’s control.

The following summarizes major strategies, including derivative activities, used by the Corporation in managing interest rate risk:

Interest rate cap agreements - Interest rate cap agreements provide the right to receive cash if a reference interest rate rises above a contractual rate. The value increases as the reference interest rate rises. The Corporation enters into interest rate cap agreements for protection from rising interest rates. 

Forward Contracts - Forward contracts are sales of TBAs mortgage-backed securities that will settle over the standard delivery date and do not qualify as “regular way” security trades. Regular-way security trades are contracts that have no net settlement provision and no market mechanism to facilitate net settlement and provide for delivery of a security within the timeframe generally established by regulations or conventions in the market-place or exchange in which the transaction is being executed.The forward sales are considered derivative instruments that need to be marked-to-market. These securities are used to hedge the FHA/VA residential mortgage loan securitizations of the mortgage-banking operations. Unrealized gains (losses) are recognized as part of mortgage banking activities in the consolidated statement of income.

For detailed information regarding the volume of derivative activities (e.g. notional amounts), location and fair values of derivative instruments in the Statement of Financial Condition and the amount of gains and losses reported in the Statement of Income, refer to Note 10 in the accompanying unaudited consolidated financial statements.

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The following tables summarize the fair value changes in the Corporation’s derivatives as well as the sources of the fair values:
	Asset Derivatives		Liability Derivatives
	Nine-Month Period Ended		Nine-Month Period Ended
(In thousands)	September 30, 2016		September 30, 2016
Fair value of contracts outstanding at the beginning of the period	$	806	$	(921)
Fair value of new contracts entered into during the period		19		(25)
Changes in fair value during the period		(630)		611
Fair value of contracts outstanding as of  September 30, 2016	$	195	$	(335)

Sources of Fair Value
	Payment Due by Period
	Maturity of Less Than One Year			Maturity of 1-3 Years		Maturity of 3-5 Years		Maturity      in Excess      of 5 Years		Total Fair Value
(In thousands)
As of September 30, 2016
Pricing from observable market inputs - Asset Derivatives		$	4	$	-	$	191	$	-	$	195
Pricing from observable market inputs - Liability Derivatives			(144)		-		(191)		-		(335)
		$	(140)	$	-	$	-	$	-	$	(140)

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Derivative instruments, such as interest rate caps, are subject to market risk.  As is the case with investment securities, the market value of derivative instruments is largely a function of the financial market’s expectations regarding the future direction of interest rates.  Accordingly, current market values are not necessarily indicative of the future impact of derivative instruments on earnings.  This will depend, for the most part, on the level of interest rates, as well as the expectations for rates in the future.

As of September 30, 2016 and December 31, 2015, all of the derivative instruments held by the Corporation were considered economic undesignated hedges.

The use of derivatives involves market and credit risk. The market risk of derivatives stems principally from the potential for changes in the value of derivative contracts based on changes in interest rates. The credit risk of derivatives arises from the potential for default of the counterparty.  To manage this credit risk, the Corporation deals with counterparties of good credit standing, enters into master netting agreements whenever possible and, when appropriate, obtains collateral.Master netting agreements incorporate rights of set-off that provide for the net settlement of contracts with the same counterparty in the event of default. 

Refer to Note 20 of the accompanying unaudited consolidated financial statements for additional information regarding the fair value determination of derivative instruments.

Credit Risk Management

First BanCorp. is subject to credit risk mainly with respect to its portfolio of loans receivable and off-balance sheet instruments, mainly derivatives and loan commitments. Loans receivable represents loans that First BanCorp. holds for investment and, therefore, First BanCorp. is at risk for the term of the loan. Loan commitments represent commitments to extend credit, subject to specific conditions, for specific amounts and maturities. These commitments may expose the Corporation to credit risk and are subject to the same review and approval process as for loans. Refer to “Contractual Obligations and Commitments” above for further details. The credit risk of derivatives arises from the potential of the counterparty’s default on its contractual obligations. To manage this credit risk, the Corporation deals with counterparties of good credit standing, enters into master netting agreements whenever possible and, when appropriate, obtains collateral. For further details and information on the Corporation’s derivative credit risk exposure, refer to “Interest Rate Risk Management” above.The Corporation manages its credit risk through its credit policy, underwriting, independent loan review and quality control procedures, statistical analysis, comprehensive financial analysis, and established management committees.  The Corporation also employs proactive collection and loss mitigation efforts.Furthermore, personnel performing structured loan workout functions are responsible for mitigating defaults and minimizing losses upon default within each region and for each business segment.In the case of the C&I, commercial mortgage and construction loan portfolios, the Special Asset Group (“SAG”) focuses on strategies for the accelerated reduction of non-performing assets through note sales, short sales, loss mitigation programs, and sales of OREO.  In addition to the management of the resolution process for problem loans, the SAG oversees collection efforts for all loans to prevent migration to the non-performing and/or adversely classified status.  The SAG utilizes relationship officers, collection specialists and attorneys. In the case of residential construction projects, the workout function monitors project specifics, such as project management and marketing, as deemed necessary.

The Corporation may also have risk of default in the securities portfolio. The securities held by the Corporation are principally fixed-rate U.S. agency mortgage-backed securities and U.S. Treasury and agency securities. Thus, a substantial portion of these instruments is backed by mortgages, a guarantee of a U.S. government-sponsored entity or the full faith and credit of the U.S. government.

Management, consisting of the Corporation’s Commercial Credit Risk Officer, Retail Credit Risk Officer, Chief Lending Officer and other senior executives, has the primary responsibility for setting strategies to achieve the Corporation’s credit risk goals and objectives. These goals and objectives are documented in the Corporation’s Credit Policy.

Allowance for Loan and Lease Losses and Non-performing Assets

Allowance for Loan and Lease Losses

The allowance for loan and lease losses represents the estimate of the level of reserves appropriate to absorb inherent credit losses. The amount of the allowance was determined by empirical analysis and judgments regarding the quality of each individual loan portfolio. All known relevant internal and external factors that affected loan collectability were considered, including analyses of historical charge-off experience, migration patterns, changes in economic conditions, and changes in loan collateral values. For example, factors affecting the economies of Puerto Rico, Florida (USA), the United States Virgin Islands and the British Virgin Islands may contribute to delinquencies and defaults above the Corporation’s historical loan and lease losses. Such factors are subject to regular review and may change to reflect updated performance trends and expectations, particularly in times of severe stress. The process includes judgments and quantitative elements that may be subject to significant change. There is no certainty that the allowance will be adequate over time to cover credit losses in the portfolio because of continued adverse changes in the economy, market conditions, or events adversely affecting specific customers, industries or markets.To the extent actual outcomes differ from our estimates, the credit quality of our customer base materially decreases, the risk profile of a market, industry, or group of customers

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changes materially, or the allowance is determined to not be adequate, additional provisions for credit losses could be required, which could adversely affect our business, financial condition, liquidity, capital, and results of operations in future periods.

The allowance for loan and lease losses provides for probable losses that have been identified with specific valuation allowances for individually evaluated impaired loans and probable losses believed to be inherent in the loan portfolio that have not been specifically identified. An internal risk rating is assigned to each business loan at the time of approval and is subject to subsequent periodic reviews by the Corporation’s senior management. The allowance for loan and lease losses is reviewed on a quarterly basis as part of the Corporation’s continued evaluation of its asset quality.

The ratio of the allowance for loan losses to total loans held for investment decreased to 2.42% as of September 30, 2016 compared to 2.64% as of December 31, 2015, primarily due to the four large commercial loan charge-offs totaling $22.9 million recorded in the third quarter of 2016.  The allowance to total loans for each of the Corporation’s categories of loans changed as follows: the allowance to total loans for the C&I portfolio decreased from 3.06% as of December 31, 2015 to 3.03% as of September 30, 2016; the allowance to total loans for the commercial mortgage portfolio decreased from 4.44% as of December 31, 2015 to 3.64% as of September 30, 2016 impacted by the recognition in the third quarter of 2016 of charge-offs on loans guaranteed by the TDF against specific reserves established in prior periods as discussed below; the allowance to total loans for the construction loan portfolio increased from 2.25% as of December 31, 2015 to 4.30% as of September 30, 2016; the allowance to total loans for the residential mortgage portfolio decreased from 1.18% as of December 31, 2015 to 1.09% as of September 30, 2016 primarily driven by adjustments recorded early in 2016 based on the experience observed over a 12-month look-back period that showed lower than projected liquidations, loss severity rates and delinquency levels; and the allowance to total consumer and finance leases portfolio decreased from 3.32% as of December 31, 2015 to 2.94% as of September 30, 2016 driven by an improved charge-off rates trend and lower loss severity rates.

The ratio of the total allowance to non-performing loans held for investment was 37.77% as of September 30, 2016 compared to 54.36% as of December 31, 2015, primarily reflecting the migration to non-performing status in the first quarter of 2016 of the Corporation’s exposure to commercial mortgage loans guaranteed by the TDF with a book value of $112.8 million as of September 30, 2016. These loans have been adversely classified since the third quarter of 2015, and the migration of the loans to non-performing status in 2016 did not result in a significant increase to the total allowance for loan losses. During the third quarter of 2016, the Corporation recorded charge-offs of $13.7 million on these loans, of which $12.8 million was charged against specific reserves established in prior periods. As of September 30, 2016, the total reserve to book value coverage ratio related to commercial loans extended to or guaranteed by the Puerto Rico Government (excluding municipalities) was 16% and the loans are being carried at 76% of unpaid principal balance, net of reserves and accumulated charge-offs. 

Substantially all of the Corporation’s loan portfolio is located within the boundaries of the U.S. economy. Whether the collateral is located in Puerto Rico, the U.S. or British Virgin Islands or the U.S. mainland (mainly in the state of Florida), the performance of the Corporation’s loan portfolio and the value of the collateral supporting the transactions are dependent upon the performance of and conditions within each specific area’s real estate market.  The real estate market in Puerto Rico experienced readjustments in value over the last few years driven by the loss of income due to higher unemployment, reduced demand and general adverse economic conditions.  The Corporation sets adequate loan-to-value ratios upon original approval following its regulatory and credit policy standards.

As shown in the following table, the allowance for loan and lease losses amounted to $214.1 million as of September 30, 2016, or 2.42% of total loans, compared with $240.7 million, or 2.64% of total loans, as of December 31, 2015. Refer to the “Provision for Loan and Lease Losses” above for additional information.

113

		Quarter Ended						Nine-Month Period Ended
		September 30,						September 30,
(Dollars in thousands)		2016			2015			2016			2015
Allowance for loan and lease losses, beginning of period		$	234,454		$	221,518		$	240,710		$	222,395
Provision (release) for loan and lease losses:
Residential Mortgage			4,553			6,958			21,589			21,791
Commercial Mortgage (1)			(152)			6,668			3,369			48,809
Commercial and Industrial (2)			5,597			3,807			11,335			29,750
Construction (3)			2,480			(139)			2,151			1,385
Consumer and Finance Leases			9,025			13,882			25,098			36,677
Provision for loan and lease losses (4)			21,503			31,176			63,542			138,412
Charge-offs
Residential Mortgage			(8,514)			(5,094)			(27,352)			(13,815)
Commercial Mortgage (5)			(13,730)			(3,677)			(15,742)			(54,115)
Commercial and Industrial (6)			(10,587)			(1,267)			(16,260)			(30,090)
Construction (7)			(19)			(103)			(623)			(4,787)
Consumer and Finance Leases			(13,716)			(15,926)			(41,490)			(48,221)
Total charge offs (8)			(46,566)			(26,067)			(101,467)			(151,028)
Recoveries:
Residential Mortgage			972			214			2,159			584
Commercial Mortgage (9)			335			20			414			6,515
Commercial and Industrial (10)			929			327			1,885			3,386
Construction (11)			140			176			301			2,379
Consumer and Finance Leases			2,303			1,602			6,526			6,323
Total recoveries (12)			4,679			2,339			11,285			19,187
Net Charge-Offs			(41,887)			(23,728)			(90,182)			(131,841)
Allowance for loan and lease losses, end of period		$	214,070		$	228,966		$	214,070		$	228,966
Allowance for loan and lease losses to period end total loans held for
investment			2.42	%		2.50	%		2.42	%		2.50	%
Net charge-offs (annualized) to average loans outstanding during the
period			1.90	%		1.04	%		1.35	%		1.91	%
Net charge-offs (annualized), excluding net charge-offs of $61.4 million related to
the bulk sale of assets in 2015, to average loans outstanding during the period			1.90	%		1.04	%		1.35	%		1.03	%
Provision for loan and lease losses to net charge-offs during the
period			0.51x			1.31x			0.70x			1.05x
Provision for loan and lease losses to net charge-offs during the
period, excluding the impact of the bulk sale of assets in 2015			0.51x			1.31x			0.70x			1.30x
___________
(1)	For the nine-month period ended September 30, 2015, includes a provision of $33.8 million associated with the bulk sale of assets.
(2)	For the nine-month period ended September 30, 2015, includes a provision of $10.8 million associated with the bulk sale of assets.
(3)	For the nine-month period ended September 30, 2015, includes a provision of $2.4 million associated with the bulk sale of assets.
(4)	For the nine-month period ended September 30, 2015, includes a provision of $46.9 million associated with the bulk sale of assets.
(5)	For the nine-month period ended September 30, 2015, includes charge-offs of $43.2 million associated with the bulk sale of assets.
(6)	For the nine-month period ended September 30, 2015, includes charge-offs of $22.6 million associated with the bulk sale of assets.
(7)	For the nine-month period ended September 30, 2015, includes charge-offs of $4.1 million associated with the bulk sales of assets.
(8)	For the nine-month period ended September 30, 2015, includes charge-offs of $69.8 million associated with the bulk sale of assets.
(9)	For the nine-month period ended September 30, 2015, includes recoveries of $5.6 million associated with the bulk sale of assets.
(10)	For the nine-month period ended September 30, 2015, includes recoveries of $2.0 million associated with the bulk sale of assets.
(11)	For the nine-month period ended September 30, 2015, includes recoveries of $0.8 million associated with the bulk sale of assets.
(12)	For the nine-month period ended September 30, 2015, includes recoveries of $8.4 million associated with the bulk sale of assets.

114

The following table sets forth information concerning the allocation of the allowance for loan and lease losses by loan category
and the percentage of loan balances in each category to the total of such loans as of the dates indicated:
	As of					As of
	September 30, 2016					December 31, 2015
(In thousands)	Amount		Percent of loans in each category to total loans			Amount		Percent of loans in each category to total loans
Residential mortgage	$	35,966		37	%	$	39,570		36	%
Commercial mortgage loans		56,252		17	%		68,211		16	%
Construction loans		5,348		1	%		3,519		2	%
Commercial and Industrial loans		65,728		25	%		68,768		26	%
Consumer loans and finance leases		50,776		20	%		60,642		20	%
	$	214,070		100	%	$	240,710		100	%

The following table sets forth information concerning the composition of the Corporation's allowance for loan and lease losses as of September 30, 2016 and December 31, 2015 by loan category and by whether the allowance and related provisions were calculated individually or through a general valuation allowance.
As of September 30, 2016	Residential Mortgage Loans			Commercial Mortgage Loans									Consumer and Finance Leases
										Construction Loans
(Dollars in thousands)							C&I Loans									Total
Impaired loans without specific reserves:
Principal balance of loans, net of charge-offs	$	64,198		$	51,974		$	17,069		$	1,016		$	4,826		$	139,083
Impaired loans with specific reserves:
Principal balance of loans, net of charge-offs		379,841			146,526			161,105			46,691			39,608			773,771
Allowance for loan and lease losses		9,667			25,907			28,668			3,004			5,436			72,682
Allowance for loan and lease losses to principal
balance		2.55	%		17.68	%		17.79	%		6.43	%		13.72	%		9.39	%
PCI loans:
Carrying value of PCI loans		165,014			3,127			-			-			-			168,141
Allowance for PCI loans		6,638			219			-			-			-			6,857
Allowance for PCI loans to carrying value		4.02	%		7.00	%		-			-			-			4.08	%
Loans with general allowance:
Principal balance of loans		2,690,889			1,343,387			1,988,837			76,591			1,682,955			7,782,659
Allowance for loan and lease losses		19,661			30,126			37,060			2,344			45,340			134,531
Allowance for loan and lease losses to principal
balance		0.73	%		2.24	%		1.86	%		3.06	%		2.69	%		1.73	%
Total loans held for investment:
Principal balance of loans	$	3,299,942		$	1,545,014		$	2,167,011		$	124,298		$	1,727,389		$	8,863,654
Allowance for loan and lease losses		35,966			56,252			65,728			5,348			50,776			214,070
Allowance for loan and lease losses to principal
balance (1)		1.09	%		3.64	%		3.03	%		4.30	%		2.94	%		2.42	%

115

		Residential Mortgage Loans			Commercial Mortgage Loans									Consumer and Finance Leases
											Construction Loans
(Dollars in thousands)								C&I Loans									Total
As of December 31, 2015
Impaired loans without specific reserves:
Principal balance of loans, net of charge-offs		$	65,495		$	54,048		$	27,492		$	42,512		$	2,618		$	192,165
Impaired loans with specific reserves:
Principal balance of loans, net of charge-offs			395,173			27,479			143,214			11,004			37,474			614,344
Allowance for loan and lease losses			21,787			3,073			18,096			1,202			8,423			52,581
Allowance for loan and lease losses to principal
balance			5.51	%		11.18	%		12.64	%		10.92	%		22.48	%		8.56	%
PCI loans:
Carrying value of PCI loans			170,766			3,147			-			-			-			173,913
Allowance for PCI loans			3,837			125			-			-			-			3,962
Allowance for PCI loans to carrying value			2.25%			3.97%			-			-			-			2.28%
Loans with general allowance:
Principal balance of loans			2,713,285			1,453,132			2,075,807			102,679			1,787,057			8,131,960
Allowance for loan and lease losses			13,946			65,013			50,672			2,317			52,219			184,167
Allowance for loan and lease losses to principal
balance			0.51	%		4.47	%		2.44	%		2.26	%		2.92	%		2.26	%
Total loans held for investment:
Principal balance of loans		$	3,344,719		$	1,537,806		$	2,246,513		$	156,195		$	1,827,149		$	9,112,382
Allowance for loan and lease losses			39,570			68,211			68,768			3,519			60,642			240,710
Allowance for loan and lease losses to principal
balance (1)			1.18	%		4.44	%		3.06	%		2.25	%		3.32	%		2.64	%
__________
(1)	Loans used in the denominator include PCI loans of $168.1 million and $173.9 million as of September 30, 2016 and December 31, 2015, respectively. However, the Corporation separately tracks and reports PCI loans and excludes these loans from the amounts of non-performing loans, impaired loans, Troubled Debt Restructurings ("TDRs") and non-performing assets.

The following tables show the activity for impaired loans held for investment and the related specific reserve during the quarter and nine-month period ended September 30, 2016 and 2015:
		Quarter Ended September 30,				Nine-Month Period Ended September 30, 2016
			2016		2015		2016		2015
		(In thousands)				(In thousands)
	Impaired Loans:
	Balance at beginning of period	$	953,774	$	824,816	$	806,509	$	945,407
	Loans determined impaired during the period		26,613		37,528		261,544		135,350
	Charge-offs (1)		(30,426)		(7,498)		(50,027)		(90,026)
	Loans sold, net of charge-offs		-		-		-		(67,836)
	Increase to impaired loans - additional disbursements		1,091		408		2,852		2,524
	Reclassification from loans held for sale		-		40,005		-		40,005
	Foreclosures		(11,856)		(12,858)		(28,466)		(33,044)
	Loans no longer considered impaired		(2,674)		(25,877)		(27,560)		(39,062)
	Paid in full or partial payments		(23,668)		(13,811)		(51,998)		(50,605)
	Balance at end of period	$	912,854	$	842,713	$	912,854	$	842,713
(1)	Includes $63.9 million of charge-offs related to a bulk sale of assets completed in the second quarter of 2015, mostly comprised of non-performing and adversely classified commercial loans.
		Quarter Ended September 30,				Nine-Month Period Ended September 30,
			2016		2015		2016		2015
		(In thousands)				(In thousands)
	Specific Reserve:
	Balance at beginning of period	$	86,372	$	49,918	$	52,581	$	55,205
	Provision for loan losses		16,619		9,439		70,011		81,796
	Net charge-offs		(30,309)		(7,498)		(49,910)		(85,142)
	Balance at end of period	$	72,682	$	51,859	$	72,682	$	51,859

116

As of September 30, 2016, the Corporation maintained a $2.1 million reserve for unfunded loan commitments mainly related to an outstanding adversely classified floor plan relationship. The reserve for unfunded loan commitments is an estimate of the losses inherent in off-balance sheet loan commitments to borrowers that are experiencing financial difficulties at the balance sheet date. It is calculated by multiplying an estimated loss factor by an estimated probability of funding, and then by the period-end amounts for unfunded commitments. The reserve for unfunded loan commitments is included as part of accounts payable and other liabilities in the consolidated statement of financial condition.

Non-performing Loans and Non-performing Asset

Total non-performing assets consist of non-performing loans (generally loans held for investment or loans held for sale on which the recognition of interest income has been discontinued when the loan became 90 days past due or earlier if the full and timely collection of interest or principal is uncertain), foreclosed real estate, other repossessed properties, and non-performing investment securities.  When a loan is placed in non-performing status, any interest previously recognized and not collected is reversed and charged against interest income.

Non-performing Loans Policy

Residential Real Estate Loans — The Corporation classifies real estate loans in non-performing status when interest and principal have not been received for a period of 90 days or more.

Commercial and Construction Loans — The Corporation places commercial loans (including commercial real estate and construction loans) in non-performing status when interest and principal have not been received for a period of 90 days or more or when collection of all of the principal or interest is not expected due to deterioration in the financial condition of the borrower.     

Finance Leases — Finance leases are classified in non-performing status when interest and principal have not been received for a period of 90 days or more.

Consumer Loans — Consumer loans are classified in non-performing status when interest and principal have not been received for a period of 90 days or more. Credit card loans continue to accrue finance charges and fees until charged-off at 180 days delinquent.

Purchased Credit Impaired Loans — PCI loans were recorded at fair value at acquisition. Since the initial fair value of these loans included an estimate of credit losses expected to be realized over the remaining lives of the loans, the subsequent accounting for PCI loans differs from the accounting for non-PCI loans. The Corporation, therefore, separately tracks and reports PCI loans and excludes these from the amounts of non-performing loans, impaired loans, TDRs, and non-performing assets.

Cash payments received on certain loans that are impaired and collateral dependent are recognized when collected in accordance with the contractual terms of the loans.  The principal portion of the payment is used to reduce the principal balance of the loan, whereas the interest portion is recognized on a cash basis (when collected). However, when management believes that the ultimate collectability of principal is in doubt, the interest portion is applied to the outstanding principal.  The risk exposure of this portfolio is diversified as to individual borrowers and industries, among other factors. In addition, a large portion is secured with real estate collateral.

Other Real Estate Owned

OREO acquired in settlement of loans is carried at the lower of cost (carrying value of the loan) or fair value less estimated costs to sell off the real estate. Appraisals are obtained periodically, generally, on an annual basis.

Other Repossessed Property

The other repossessed property category generally includes repossessed boats and autos acquired in settlement of loans. Repossessed boats and autos are recorded at the lower of cost or estimated fair value.

Other Non-Performing Assets

This category consists of bonds of the GDB and the Puerto Rico Public Buildings Authority placed in non-performing status in the third quarter of 2016 as these entities had recently defaulted on interest due on bonds held by the Corporation as part of its available-for-sale investment securities portfolio. 

Past Due Loans 90 days and still accruing

117

These are accruing loans that are contractually delinquent 90 days or more. These past due loans are either current as to interest but delinquent as to the payment of principal or are insured or guaranteed under applicable FHA and VA programs.  Past Due Loans 90 days and still accruing also include PCI loans with individual delinquencies over 90 days, primarily related to mortgage loans acquired from Doral Bank in 2015 and from Doral Financial in 2014.

TDRs are classified as either accrual or nonaccrual loans. A loan on nonaccrual and restructured as a TDR will remain on nonaccrual status until the borrower has proven the ability to perform under the modified structure, generally for a minimum of six months, and there is evidence that such payments can and are likely to continue as agreed. Performance prior to the restructuring, or significant events that coincide with the restructuring, are included in assessing whether the borrower can meet the new terms and may result in the loans being returned to accrual at the time of the restructuring or after a shorter performance period. If the borrower’s ability to meet the revised payment schedule is uncertain, the loan remains classified as a nonaccrual loan.

The following table presents non-performing assets as of the dates indicated:
		September 30,			December 31,
(Dollars in thousands)		2016			2015
Non-performing loans held for investment:
Residential mortgage		$	162,201		$	169,001
Commercial mortgage			191,449			51,333
Commercial and Industrial			137,016			137,051
Construction			50,767			54,636
Finance leases			1,969			2,459
Consumer			23,310			28,293
Total non-performing loans held for investment		$	566,712		$	442,773
OREO			139,446			146,801
Other repossessed property			9,416			12,223
Other assets (1)			20,393			-
Total non-performing assets, excluding loans held for sale		$	735,967		$	601,797
Non-performing loans held for sale			8,079			8,135
Total non-performing assets, including loans held for sale (2) (3)		$	744,046		$	609,932
Past due loans 90 days and still accruing (4) (5)		$	138,442		$	163,197
Non-performing assets to total assets			6.16	%		4.85	%
Non-performing loans held for investment to total loans held for investment			6.39	%		4.86	%
Allowance for loan and lease losses		$	214,070		$	240,710
Allowance to total non-performing loans held for investment			37.77	%		54.36	%
Allowance to total non-performing loans held for investment,
excluding residential real estate loans			52.92	%		87.92	%
___________
(1)	Bonds of the GDB and the Puerto Rico Public Buildings Authority held as part of the available-for-sale investment securities portfolio with an amortized cost of $35.6 million (including accrued interest of $0.9 million), recorded on the Corporation's books at their aggregate fair value of $19.5 million.
(2)	PCI loans accounted for under ASC 310-30 of $168.1 million and $173.9 million as of September 30, 2016 and December 31, 2015, respectively, are excluded and not considered non-performing due to the application of the accretion method, under which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.
(3)	Non-performing assets exclude $415.9 million and $414.9 million of TDR loans that are in compliance with the modified terms and in accrual status as of September 30, 2016 and December 31, 2015, respectively.
(4)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past-due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $29.6 million of residential mortgage loans insured by the FHA or guaranteed by the VA that are over 15 months delinquent and are no longer accruing interest as of September 30, 2016.
(5)	Amount includes PCI loans with individual delinquencies over 90 days and still accruing with a carrying value as of September 30, 2016 and December 31, 2015 of approximately $27.9 million and $23.2 million, respectively, primarily related to loans acquired from Doral Bank in the first quarter of 2015 and from Doral Financial in the second quarter of 2014.

118

The following table shows non-performing assets by geographic segment:
		September 30,		December 31,
(Dollars in thousands)		2016		2015
Puerto Rico:
Non-performing loans held for investment:
Residential mortgage		$	138,147	$	147,975
Commercial mortgage			176,474		34,917
Commercial and Industrial			132,180		131,450
Construction			11,124		11,894
Finance leases			1,969		2,459
Consumer			22,213		26,329
Total non-performing loans held for investment			482,107		355,024
OREO			129,365		133,121
Other repossessed property			9,369		12,115
Other assets (1)			20,393		-
Total non-performing assets, excluding loans held for sale		$	641,234	$	500,260
Non-performing loans held for sale			8,079		8,135
Total non-performing assets, including loans held for sale (2)		$	649,313	$	508,395
Past due loans 90 days and still accruing (3)		$	134,611	$	154,915
Virgin Islands:
Non-performing loans held for investment:
Residential mortgage		$	18,250	$	14,228
Commercial mortgage			9,459		10,073
Commercial and Industrial			4,836		5,601
Construction			39,643		42,590
Consumer			398		471
Total non-performing loans held for investment			72,586		72,963
OREO			6,793		5,458
Other repossessed property			-		32
Total non-performing assets		$	79,379	$	78,453
Past due loans 90 days and still accruing		$	1,910	$	8,173
United States:
Non-performing loans held for investment:
Residential mortgage		$	5,804	$	6,798
Commercial mortgage			5,516		6,343
Construction			-		152
Consumer			699		1,493
Total non-performing loans held for investment			12,019		14,786
OREO			3,288		8,222
Other repossessed property			47		76
Total non-performing assets		$	15,354	$	23,084
Past due loans 90 days and still accruing		$	1,921	$	109
____________
(1)	Bonds of the GDB and the Puerto Rico Public Buildings Authority held as part of the available-for-sale investment securities portfolio with an amortized cost of $35.6 million (including accrued interest of $0.9 million), recorded on the Corporation's books at their aggregate fair value of $19.5 million.
(2)	PCI loans accounted for under ASC 310-30 of $168.1 million and $173.9 million as of September 30, 2016 and December 31, 2015, respectively, are excluded and not considered non-performing due to the application of the accretion method, under which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.
(3)	Amount includes PCI loans with individual delinquencies over 90 days and still accruing with a carrying value as of September 30, 2016 and December 31, 2015 of approximately $27.9 million and $23.2 million, respectively, primarily related to loans acquired from Doral Bank in the first quarter of 2015 and from Doral Financial in the second quarter of 2014.

119

Total non-performing loans, including non-performing loans held for sale, were $574.8 million as of September 30, 2016.  This represents an increase of $123.9 million from $450.9 million as of December 31, 2015.  The increase was primarily attributable to the inflow in the first quarter of 2016 of the $112.8 million exposure to commercial mortgage loans guaranteed by the TDF and the inflow in the second quarter of 2016 of a $35.0 million commercial relationship in Puerto Rico. The increase resulting from the inflow of large commercial loans was partially offset by reductions in non-performing residential and consumer loan balances.

Non-performing commercial mortgage loans increased by $140.1 million to $191.4 million as of September 30, 2016 from $51.3 million as of December 31, 2015. The increase was primarily driven by the aforementioned inflow of the $112.8 million exposure to loans guaranteed by the TDF in the first quarter of 2016 and the inflow of a $20.7 million loan that is part of the aforementioned $35.0 million commercial relationship in Puerto Rico placed in non-performing status in the second quarter of 2016. Total inflows of non-performing commercial mortgage loans of $166.0 million during the first nine months of 2016 increased by $151.8 million compared to inflows of $14.2 million for the same period in 2015. 

Non-performing C&I loans remained relatively flat at $137.0 million as of September 30, 2016 compared to $137.1 million as of December 31, 2015.  The slight decrease was driven by charge-offs and collections that were almost entirely offset by new inflows, including a $14.3 million loan which is also part of the aforementioned $35.0 million commercial relationship in Puerto Rico placed in non-performing status in the second quarter of 2016.  Total inflows of non-performing C&I loans were $35.2 million during the first nine months of 2016, a decrease of $52.6 million compared to inflows of $87.8 million for the same period in 2015.

Non-performing construction loans, including non-performing construction loans held for sale, decreased by $3.9 million to $58.8 million from $62.8 million as of December 31, 2015, primarily from a combination of cash collections, charge-offs and foreclosures. The inflows of non-performing construction loans during the first nine months of 2016 amounted to $1.0 million compared to inflows of $0.5 million for the same period in 2015.

The following tables present the activity of commercial and construction non-performing loans held for investment:

		Commercial Mortgage		Commercial & Industrial		Construction			Total
(In thousands)
Quarter ended September 30, 2016
Beginning balance		$	200,376	$	154,405	$	52,549	$	407,330
Plus:
	Additions to non-performing		9,040		3,603		353		12,996
Less:
	Loans returned to accrual status		(646)		(828)		(255)		(1,729)
	Non-performing loans transferred to OREO		(1,064)		(514)		(25)		(1,603)
	Non-performing loans charge-offs		(13,840)		(10,587)		(19)		(24,446)
	Loan collections		(3,797)		(7,683)		(1,836)		(13,316)
	Reclassification		1,380		(1,380)		-		-
Ending balance		$	191,449	$	137,016	$	50,767	$	379,232

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		Commercial Mortgage		Commercial & Industrial		Construction			Total
(In thousands)
Nine-Month Period Ended September 30, 2016
Beginning balance		$	51,333	$	137,051	$	54,636		243,020
Plus:
	Additions to non-performing		165,999		35,211		959		202,169
Less:
	Loans returned to accrual status		(1,265)		(1,570)		(255)		(3,090)
	Non-performing loans transferred to OREO		(2,808)		(2,051)		(821)		(5,680)
	Non-performing loans charge-offs		(15,468)		(16,180)		(599)		(32,247)
	Loan collections		(7,316)		(14,549)		(3,075)		(24,940)
	Reclassification		974		(896)		(78)		-
Ending balance		$	191,449	$	137,016	$	50,767	$	379,232

		Commercial Mortgage		Commercial & Industrial		Construction			Total
(In thousands)
Quarter ended September 30, 2015
Beginning balance		$	95,088	$	143,935	$	16,118	$	255,141
Plus:
	Additions to non-performing		4,530		5,756		57		10,343
Less:
	Loans returned to accrual status		(24,998)		(251)		(30)		(25,279)
	Non-performing loans transferred to OREO		(866)		(2,531)		(102)		(3,499)
	Non-performing loans charge-offs		(3,522)		(805)		(70)		(4,397)
	Loan collections		(1,253)		(4,249)		(7)		(5,509)
	Reclassification from loans held for sale		-		-		40,005		40,005
Ending balance		$	68,979	$	141,855	$	55,971	$	266,805

		Commercial Mortgage		Commercial & Industrial		Construction			Total
(In thousands)
Nine-Month Period Ended September 30, 2015
Beginning balance		$	148,473	$	122,547	$	29,354	$	300,374
Plus:
	Additions to non-performing		14,234		87,835		465		102,534
Less:
	Loans returned to accrual status		(31,625)		(1,126)		(52)		(32,803)
	Non-performing loans transferred to OREO		(7,692)		(7,910)		(487)		(16,089)
	Non-performing loans charge-offs		(26,850)		(25,220)		(4,754)		(56,824)
	Loan collections		(9,799)		(11,584)		(1,336)		(22,719)
	Reclassification from loans held for sale		-		-		40,005		40,005
	Other Reclassification		-		-		(249)		(249)
	Non-performing loans sold, net of charge-offs		(17,762)		(22,687)		(6,975)		(47,424)
Ending balance		$	68,979	$	141,855	$	55,971	$	266,805

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Total non-performing commercial and construction loans, including non-performing loans held for sale, with a book value of $387.3 million as of September 30, 2016, are being carried at 58.2% of unpaid principal balance, net of reserves and accumulated charge-offs.

Non-performing residential mortgage loans decreased by $6.8 million to $162.2 million as of September 30, 2016 from $169.0 million as of December 31, 2015.  The decrease was mainly driven by loans brought current, modifications through TDRs after a sustained performance period, foreclosures, and charge-offs during the first nine months of 2016, partially offset by inflows of $71.0 million.  The inflows of non-performing residential mortgage loans during the first nine months of 2016 amounted to $71.0 million compared to inflows of $71.7 million for the same period in 2015.  Approximately $53.1 million, or 33% of total non-performing residential mortgage loans, have been written down to their net realizable value and no specific reserve was allocated.

The following table presents the activity of residential non-performing loans held for investment:
			Quarter Ended		Nine-Month Period Ended
			September 30, 2016
			(In thousands)
Beginning balance		$	164,399	$	169,001
Plus:
	Additions to non-performing		26,142		71,005
Less:
	Loans returned to accrual status		(10,028)		(28,283)
	Non-performing loans transferred to OREO		(11,574)		(26,120)
	Non-performing loans charge-offs		(6,259)		(18,914)
	Loan collections		(479)		(4,488)
Ending balance		$	162,201	$	162,201

			Quarter Ended		Nine-Month Period Ended
			September 30, 2015
			(In thousands)
Beginning balance		$	175,035	$	180,707
Plus:
	Additions to non-performing		27,392		71,663
Less:
	Loans returned to accrual status		(12,452)		(40,360)
	Non-performing loans transferred to OREO		(10,833)		(21,511)
	Non-performing loans charge-offs		(2,790)		(10,251)
	Loan collections		(1,797)		(5,942)
	Reclassification		-		249
Ending balance		$	174,555	$	174,555

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The amount of non-performing consumer loans, including finance leases, showed a $5.5 million decrease during the first nine months of 2016 to $25.3 million compared to $30.8 million as of December 31, 2015.  The decrease was mainly related to charge-offs and cash collections, primarily auto loans.  The inflows of non-performing consumer loans of $32.6 million for the first nine months of 2016 decreased by $7.6 million compared to inflows of $40.2 million for the same period in 2015.

As of September 30, 2016, approximately $218.3 million of the loans placed in non-accrual status, mainly commercial loans, were current, or had delinquencies of less than 90 days in their interest payments, including $121.3 million of TDRs maintained in nonaccrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and there is no doubt about full collectability. Collections on these loans are being recorded on a cash basis through earnings, or on a cost-recovery basis, as conditions warrant.

     During the nine-month period ended September 30, 2016, interest income of approximately $10.1 million related to non-performing loans with a carrying value of $379.8 million as of September 30, 2016, mainly non-performing construction and commercial loans, was applied against the related principal balances under the cost-recovery method.

As of September 30, 2016, approximately $101.7 million, or 18%, of total non-performing loans held for investment have been charged-off to their net realizable value and no specific reserve was allocated, as shown in the following table:
(Dollars in thousands)	Residential Mortgage Loans			Commercial Mortgage Loans			C&I Loans			Construction Loans			Consumer and Finance Leases			Total
As of September 30, 2016
Non-performing loans held for investment
charged-off to realizable value	$	53,139		$	31,402		$	14,872		$	1,016		$	1,304		$	101,733
Other non-performing loans held
for investment		109,062			160,047			122,144			49,751			23,975			464,979
Total non-performing loans held
for investment	$	162,201		$	191,449		$	137,016		$	50,767		$	25,279		$	566,712
Allowance to non-performing loans held for
investment		22.17	%		29.38	%		47.97	%		10.53	%		200.86	%		37.77	%
Allowance to non-performing loans held for
investment, excluding non-performing loans
charged-off to realizable value		32.98	%		35.15	%		53.81	%		10.75	%		211.79	%		46.04	%
As of December 31, 2015
Non-performing loans held for investment
charged-off to realizable value	$	53,612		$	15,190		$	27,492		$	39,466		$	1,282		$	137,042
Other non-performing loans held
for investment		115,389			36,143			109,559			15,170			29,470			305,731
Total non-performing loans held
for investment	$	169,001		$	51,333		$	137,051		$	54,636		$	30,752		$	442,773
Allowance to non-performing loans held for
investment		23.41	%		132.88	%		50.18	%		6.44	%		197.20	%		54.36	%
Allowance to non-performing loans held for
investment, excluding non-performing loans
charged-off to realizable value		34.29	%		188.73	%		62.77	%		23.20	%		205.78	%		78.73	%

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The Corporation provides homeownership preservation assistance to its customers through a loss mitigation program in Puerto Rico that is similar to the U.S. government’s Home Affordable Modification Program guidelines.Depending upon the nature of borrowers’ financial condition, restructurings or loan modifications through this program as well as other restructurings of individual commercial, commercial mortgage, construction, and residential mortgage loans fit the definition of a TDR.A restructuring of a debt constitutes a TDR if the creditor for economic or legal reasons related to the debtor’s financial difficulties grants a concession to the debtor that it would not otherwise consider.Modifications involve changes in one or more of the loan terms that bring a defaulted loan current and provide sustainable affordability. Changes may include the refinancing of any past-due amounts, including interest and escrow, the extension of the maturity of the loan and modifications of the loan rate. As of September 30, 2016, the Corporation’s total TDR loans held for investment of $656.3 million consisted of $378.7 million of residential mortgage loans, $150.9 million of commercial and industrial loans, $44.0 million of commercial mortgage loans, $40.2 million of construction loans, and $42.5 million of consumer loans.

The Corporation’s loss mitigation programs for residential mortgage and consumer loans can provide for one or a combination of the following: movement of interest past due to the end of the loan, extension of the loan term, deferral of principal payments, and reduction of interest rates either permanently or for a period of up to four years (increasing back in step-up rates).  Additionally, in certain cases, the restructuring may provide for the forgiveness of contractually due principal or interest. Uncollected interest is added to the end of the loan term at the time of the restructuring and not recognized as income until collected or when the loan is paid off.These programs are available only to those borrowers who have defaulted, or are likely to default, permanently on their loan and would lose their homes in a foreclosure action absent some lender concession. Nevertheless, if the Corporation is not reasonably assured that the borrower will comply with its contractual commitment, properties are foreclosed.

Prior to permanently modifying a loan, the Corporation may enter into trial modifications with certain borrowers. Trial modifications generally represent a six-month period during which the borrower makes monthly payments under the anticipated modified payment terms prior to a formal modification. Upon successful completion of a trial modification, the Corporation and the borrower enter into a permanent modification. TDR loans that are participating in, or that have been offered a binding trial modification are classified as TDRs when the trial offer is made and continue to be classified as TDRs regardless of whether the borrower enters into a permanent modification. As of September 30, 2016, the Corporation classified an additional $5.6 million of residential mortgage loans as TDRs that were participating in or had been offered a trial modification.

For the commercial real estate, commercial and industrial, and construction portfolios, at the time of a restructuring, the Corporation determines, on a loan-by-loan basis, whether a concession was granted for economic or legal reasons related to the borrower’s financial difficulty. Concessions granted for commercial loans could include: reductions in interest rates to rates that are considered below market; extension of repayment schedules and maturity dates beyond original contractual terms; waivers of borrower covenants; forgiveness of principal or interest; or other contractual changes that would be considered a concession. The Corporation mitigates loan defaults for its commercial loan portfolios through its collection function. The function’s objective is to minimize both early stage delinquencies and losses upon default of commercial loans. In the case of the commercial and industrial,  commercial mortgage, and construction loan portfolios, the SAG focuses on strategies for the accelerated reduction of non-performing assets through note sales, short sales, loss mitigation programs, and sales of OREO.  In addition to the management of the resolution process for problem loans, the SAG oversees collection efforts for all loans to prevent migration to the non-performing and/or adversely classified status.  The SAG utilizes relationship officers, collection specialists, and attorneys. In the case of residential construction projects, the workout function monitors project specifics, such as project management and marketing, as deemed necessary.  The SAG utilizes its collections infrastructure of workout collection officers, credit work-out specialists, in-house legal counsel, and third-party consultants. In the case of residential construction projects and large commercial loans, the SAG function also utilizes third-party specialized consultants to monitor the residential and commercial construction projects in terms of construction, marketing and sales, and to assist with the restructuring of large commercial loans.

In addition, the Corporation extends, renews, and restructures loans with satisfactory credit profiles. Many commercial loan facilities are structured as lines of credit, which are mainly one year in term and, therefore, are required to be renewed annually. Other facilities may be restructured or extended from time to time based upon changes in the borrower’s business needs, use of funds, the timing of completion of projects, and other factors. If the borrower is not deemed to have financial difficulties, extensions, renewals, and restructurings are done in the normal course of business and are not considered to be concessions, and the loans continue to be recorded as performing.

TDR loans are classified as either accrual or nonaccrual loans. Loans in accrual status may remain in accrual status when their contractual terms have been modified in a TDR if the loan had demonstrated performance prior to the restructuring and payment in full under the restructured terms is expected. Otherwise, loans on non-accrual and restructured as a TDR will remain on nonaccrual status until the borrower has proven the ability to perform under the modified structure,generally for a minimum of six months, and there is evidence that such payments can and are likely to continue as agreed. Performance prior to the restructuring, or significant events that coincide with the restructuring, are included in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual status at the time of the restructuring or after a shorter performance period. If the borrower’s ability to meet the revised payment schedule is uncertain, the loan remains classified as a nonaccrual loan. Loan modifications increase the

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Corporation’s interest income by returning a non-performing loan to performing status, if applicable, increase cash flows by providing for payments to be made by the borrower, and limit increases in foreclosure and OREO costs. The Corporation continues to consider a modified loan as an impaired loan for purposes of estimating the allowance for loan and lease losses.

The following table provides a breakdown between accrual and nonaccrual status of TDRs:
(In thousands)		September 30, 2016
		Accrual		Nonaccrual (1)		Total TDRs
Non-FHA/VA Residential Mortgage loans		$	296,840	$	81,881	$	378,721
Commercial Mortgage Loans			28,699		15,273		43,972
Commercial and Industrial Loans			58,004		92,886		150,890
	Construction Loans		1,205		38,985		40,190
Consumer Loans - Auto			16,561		8,462		25,023
Finance Leases			2,437		139		2,576
Consumer Loans - Other			12,173		2,773		14,946
Total Troubled Debt Restructurings		$	415,919	$	240,399	$	656,318
(1)	Included in non-accrual loans are $121.3 million in loans that are performing under the terms of the restructuring agreements but are reported in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and are deemed fully collectible.

  The OREO portfolio, which is part of non-performing assets, decreased by $7.4 million. The following tables show the composition of the OREO portfolio as of September 30, 2016 and December 31, 2015 as well as the activity during the nine-month period ended September 30, 2016 of the OREO portfolio by geographic region:

OREO Composition by Region
(In thousands)	As of September 30, 2016
	Puerto Rico		Virgin Islands		Florida			Consolidated
Residential	$	42,457	$	509	$	2,921	$	45,887
Commercial		75,450		5,221		367		81,038
Construction		11,475		1,046		-		12,521
	$	129,382	$	6,776	$	3,288	$	139,446
(In thousands)	As of December 31, 2015
	Puerto Rico		Virgin Islands		Florida			Consolidated
Residential	$	37,501	$	838	$	5,224	$	43,563
Commercial		86,423		111		1,315		87,849
Construction		9,197		4,509		1,683		15,389
	$	133,121	$	5,458	$	8,222	$	146,801
OREO Activity by Region
(In thousands)	As of September 30, 2016
	Puerto Rico		Virgin Islands		Florida			Consolidated
Beginning Balance	$	133,121	$	5,458	$	8,222	$	146,801
Additions		34,127		2,248		1,237		37,612
Sales		(24,389)		(889)		(6,109)		(31,387)
Fair value adjustments		(13,477)		(41)		(62)		(13,580)
Ending Balance	$	129,382	$	6,776	$	3,288	$	139,446

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 In the third quarter of 2016, the Corporation discontinued the income recognition related to, and placed in non-performing status, the bonds of GDB and the Puerto Rico Public Buildings Authority as these entities had recently defaulted on interest due on bonds held by the Corporation as part of its available-for-sale investment securities portfolio.  As of September 30, 2016, the amortized cost of these bonds, including accrued interest of $0.9 million, was $35.6 million (net of $22.2 million in cumulative other-than temporary credit impairment charges). These bonds are recorded on the Corporation’s books at their aggregate fair value of $19.5 million.

 Net Charge-offs and Total Credit Losses

Total net charge-offs for the first nine months of 2016 were $90.2 million, or 1.35% of average loans on an annualized basis, compared to $131.8 million, or an annualized 1.91%, for the same period in 2015. The bulk sale of assets in the second quarter of 2015 added $61.4 million in net charge-offs for the first nine months of 2015. Excluding the impact of net charge-offs related to the bulk sale of assets in 2015, the $90.2 million of net charge-offs for the first nine months of 2016 increased by $19.8 million compared to adjusted net charge-offs of $70.4 million for the first nine months of 2015, driven by higher losses on residential mortgage loans as well as the impact of four large commercial loan charge-offs recorded in the third quarter of 2016, including charge-offs of $13.7 million recorded on loans guaranteed by the TDF.

C&I loans net charge-offs in the first nine months of 2016 totaled $14.4 million, or an annualized 0.89% of related average loans, compared to $26.7 million, or an annualized 1.59%, for the first nine months of 2015. C&I loans net charge-offs in the first nine months of 2015 included $20.6 million associated with the bulk sale of assets. Excluding the impact of net charge-offs related to the bulk sale of assets in 2015, the $14.4 million of C&I loans net charge-offs for the first nine months of 2016 increased by $8.3 million compared to adjusted C&I loans net charge-offs of $6.1 million for the first nine months of 2015. Substantially all of the charge-offs recorded in the first nine months of 2016 are related to loans in Puerto Rico, including charge-offs totaling $11.9 million on three commercial relationships.

Commercial mortgage loans net charge-offs in the first nine months of 2016 were $15.3 million, or an annualized 1.34% of related average loans, compared to $47.6 million, or an annualized 3.96%, for the first nine months of 2015. Commercial mortgage loans net charge-offs in the first nine months of 2015 included $37.6 million associated with the bulk sale of assets. Excluding the impact of net charge-offs related to the bulk sale of assets in 2015, the $15.3 million of commercial mortgage loans net charge-offs for the first nine months of 2016 increased by $5.3 million compared to adjusted commercial mortgage loans net charge-offs of $10.0 million for the first nine months of 2015. Most of the charge-offs recorded in the first nine months of 2016 are related to loans in Puerto Rico, including the $13.7 million charge-offs recorded on loans guaranteed by the TDF in the third quarter.  As noted above, these charge-offs are associated with two of the three credit facilities guaranteed by the TDF as the payments received on these facilities are insufficient to cover the contractual payments and the Corporation is not receiving collections from the TDF guarantee.  As such, these two facilities are collateral dependent loans; thus, the portion of the recorded investment in excess of the fair value of the collateral identified as uncollectible was charged off against the allowance for loan losses.  Approximately $12.8 million of the $13.7 million charge-offs recorded in the third quarter of 2016 on loans guaranteed by the TDF was charged against specific reserves established in prior periods.      

Construction loans net charge-offs in the first nine months of 2016 were $0.3 million, or an annualized 0.29% of related average loans, compared to $2.4 million, or an annualized 1.88%, for the first nine months of 2015. Construction loans net-charge offs in the first nine months of 2015 included $3.3 million of net charge-offs related to the bulk sale of assets. Excluding the impact of net charge-offs related to the bulk sale of assets in 2015, the $0.3 million of construction loans net charge-offs for the first nine months of 2016 increased by $1.2 million compared to adjusted construction loans net recoveries of $0.9 million for the first nine months of 2015. More than half of the net construction loans net charge-offs in 2016 was related to an individual land loan in Puerto Rico fully charged-off in the second quarter.

Residential mortgage loans net charge-offs in the first nine months of 2016 were $25.2 million, or an annualized 1.02% of related average loans, compared to $13.2 million, or an annualized 0.54%, for the first nine months of 2015. The increase in the residential mortgage loans net charge-offs is mainly due to updated appraisals. Approximately $18.3 million in charge-offs for the first nine months of 2016 resulted from valuations for impairment purposes of residential mortgage loans considered homogeneous given high delinquency and loan-to-value levels compared to $8.2 million for the first nine months of 2015. Net charge-offs for residential mortgage loans also included $5.6 million related to foreclosures in the first nine months of 2016, compared to $4.7 million for the first nine months of 2015.

   Consumer and finance leases net charge-offs in the first nine months of 2016 were $35.0 million, or an annualized 2.63% of related average loans, compared to $41.9 million, or an annualized 2.91% of average loans, in the first nine months of 2015.  The decrease is mainly attributable to the auto loan portfolio.

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The following table presents annualized net charge-offs to average loans held-in-portfolio:
		Quarter Ended				Nine-Month Period Ended
		September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
Residential mortgage loans		0.91	%	0.59	%	1.02	%	0.54	%
Commercial mortgage  (1)		3.49	%	0.95	%	1.34	%	3.96	%
Commercial and industrial (2)		1.81	%	0.17	%	0.89	%	1.59	%
Construction loans (3)		(0.36)	%	(0.17)	%	0.29	%	1.88	%
Consumer loans (4)		2.63	%	3.05	%	2.63	%	2.91	%
Total loans (5)		1.90	%	1.04	%	1.35	%	1.91	%
_______________
(1)	For the nine-month period ended September 30, 2015, includes net charge-offs totaling $37.6 million associated with the bulk sale of assets.  The ratio of commercial mortgage net charge-offs to average loans, excluding net charge-offs associated with the bulk sale of assets, was 0.86%.
(2)	For the nine-month period ended September 30, 2015, includes net charge-offs totaling $20.6 million associated with the bulk sale of assets. The ratio of commercial and industrial net charge-offs to average loans, excluding net charge-offs associated with the bulk sale of assets, was 0.36%.
(3)	For the nine-month period ended September 30, 2015, includes net charge-offs totaling $3.3 million associated with the bulk sale of assets. The ratio of construction net charge-offs to average loans, excluding net charge-offs associated with the bulk sale of assets, was (0.70)%.
(4)	Includes lease financing.
(5)	For the nine-month period ended September 30, 2015, includes net charge-offs totaling $61.4 million associated with the bulk sale of assets. The ratio of total net charge-offs to average loans, excluding charge-offs associated with the bulk sale of assets, was 1.03%.

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The following table presents annualized net charge-offs (recoveries) to average loans held-in-portfolio by geographic segment:
		Quarter Ended				Nine-Month Period Ended
		September 30,		September 30,		September 30,		September 30,
		2016		2015		2016		2015
PUERTO RICO:
Residential mortgage		1.16	%	0.73	%	1.30	%	0.68	%
Commercial mortgage (1)		4.59	%	1.20	%	1.73	%	4.94	%
Commercial and Industrial (2)		2.43	%	0.21	%	1.17	%	1.94	%
Construction (3)		0.01	%	0.28	%	1.08	%	6.80	%
Consumer and finance leases (4)		2.71	%	3.16	%	2.74	%	3.02	%
Total loans (5)		2.39	%	1.27	%	1.68	%	2.33	%
VIRGIN ISLANDS:
Residential mortgage		0.31	%	0.02	%	0.17	%	0.06	%
Commercial mortgage (6)		(0.44)	%	0.00	%	(0.16)	%	0.00	%
Commercial and Industrial (7)		0.01	%	0.03	%	(0.01)	%	0.34	%
Construction		0.13	%	0.12	%	0.31	%	0.20	%
Consumer and finance leases		0.95	%	0.75	%	0.89	%	0.26	%
Total loans		0.20	%	0.08	%	0.17	%	0.14	%
FLORIDA:
Residential mortgage		0.02	%	0.11	%	0.04	%	0.03	%
Commercial mortgage (8)		(0.20)	%	0.04	%	(0.05)	%	0.35	%
Commercial and Industrial (9)		0.00	%	0.00	%	(0.01)	%	0.00	%
Construction (10)		(1.58)	%	(1.90)	%	(1.41)	%	(6.98)	%
Consumer and finance leases		1.40	%	0.81	%	0.65	%	0.90	%
Total loans (11)		(0.03)	%	0.03	%	(0.01)	%	(0.05)	%
(1)	For the nine-month period ended September 30, 2015, includes net charge-offs totaling $37.6 million associated with the bulk sale of assets. The ratio of commercial mortgage net charge-offs to average loans in Puerto Rico, excluding net charge-offs associated with the bulk sale of assets, was 1.02%.
(2)	For the nine-month period ended September 30, 2015, includes net charge-offs totaling $20.6 million associated with the bulk sale of assets. The ratio of commercial and industrial net charge-offs to average loans in Puerto Rico, excluding net charge-offs associated with the bulk sale of assets, was 0.42%.
(3)	For the nine-month period ended September 30, 2015, includes net charge-offs totaling $3.3 million associated with the bulk sale of assets. The ratio of construction net charge-offs to average loans in Puerto Rico, excluding net charge-offs associated with the bulk sale of assets, was 0.93%.
(4)	Includes lease financing.
(5)	For the nine-month period ended September 30, 2015, includes net charge-offs totaling $61.4 million associated with the bulk sale of assets. The ratio of total net charge-offs to average loans in Puerto Rico, excluding net charge-offs associated with the bulk sale of assets, was 1.26%.
(6)	For the third quarter and nine-month period ended September 30, 2016, recoveries in commercial mortgage loans in the Virgin Islands exceeded charge-offs.
(7)	For the nine-month period ended September 30, 2016, recoveries in commercial and industrial loans in the Virgin Islands exceeded charge-offs.
(8)	For the third quarter and nine-month period ended September 30, 2016, recoveries in commercial mortgage loans in Florida exceeded charge-offs.
(9)	For the nine-month period ended September 30, 2016, recoveries in commercial and industrial loans in Florida exceeded charge-offs.
(10)	For the third quarter and nine-month period ended September 30, 2015, and the nine-month period ended September 30, 2016, recoveries in construction loans in Florida exceeded charge-offs.
(11)	For the third quarter and nine-month period ended September 30, 2016, and the nine-month period ended September 30, 2015, recoveries in total loans in  Florida exceeded charge-offs.

The above ratios are based on annualized charge-offs and are not necessarily indicative of the results expected for the entire year or in subsequent periods.  

   Total credit losses (equal to net charge-offs plus losses on OREO operations) for the first nine months of 2016 amounted to $99.3 million, or 1.59% on an annualized basis to average loans and repossessed assets, in contrast to credit losses of $143.7 million, or 2.06% on an annual basis to average loans and repossessed assets, for the same period in 2015.

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The following table presents a detail of the OREO inventory and credit losses for the periods indicated:
	Quarter Ended						Nine-Month Period Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Dollars in thousands)
OREO
OREO balances, carrying value:
Residential	$	45,887		$	37,996		$	45,887		$	37,996
Commercial		81,038			71,124			81,038			71,124
Construction		12,521			15,322			12,521			15,322
Total	$	139,446		$	124,442		$	139,446		$	124,442
OREO activity (number of properties):
Beginning property inventory		566			472			549			458
Properties acquired		123			108			309			252
Properties disposed		(94)			(63)			(263)			(193)
Ending property inventory		595			517			595			517
Average holding period (in days)
Residential		309			370			309			370
Commercial		730			523			730			523
Construction		920			1,173			920			1,173
		609			559			609			559
OREO operations (loss) gain:
Market adjustments and (losses) gain on sale:
Residential	$	(473)		$	(475)		$	(1,608)		$	(2,347)
Commercial		(1,772)			(3,466)			(7,190)			(6,630)
Construction		374			(192)			245			(902)
		(1,871)			(4,133)			(8,553)			(9,879)
Other OREO operations expenses		(732)			(212)			(581)			(1,968)
Net Loss on OREO operations	$	(2,603)		$	(4,345)		$	(9,134)		$	(11,847)
CHARGE-OFFS
Residential charge-offs, net		(7,542)			(4,880)			(25,193)			(13,231)
Commercial charge-offs, net		(23,053)			(4,597)			(29,703)			(74,304)
Construction recoveries (charge-offs), net		121			73			(322)			(2,408)
Consumer and finance leases charge-offs, net		(11,413)			(14,324)			(34,964)			(41,898)
Total charge-offs, net		(41,887)			(23,728)			(90,182)			(131,841)
TOTAL CREDIT LOSSES (1)	$	(44,490)		$	(28,073)		$	(99,316)		$	(143,688)
LOSS RATIO PER CATEGORY (2)
Residential		0.96	%		0.64	%		1.07	%		0.63	%
Commercial		2.65	%		0.85	%		1.30	%		2.77	%
Construction		(1.35)	%		0.26	%		0.06	%		2.35	%
Consumer		2.61	%		3.03	%		2.62	%		2.89	%
TOTAL CREDIT LOSS RATIO (3)		2.06	%		1.22	%		1.59	%		2.06	%
(1) Equal to OREO operations (losses) gains plus charge-offs, net.
(2) Calculated as net charge-offs plus market adjustments and gains (losses) on sale of OREO divided by average loans and repossessed assets.
(3) Calculated as net charge-offs plus net losses on OREO operations divided by average loans and repossessed assets.

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Operational Risk

   The Corporation faces ongoing and emerging risk and regulatory pressure related to the activities that surround the delivery of banking and financial products. Coupled with external influences such as market conditions, security risks, and legal risks, the potential for operational and reputational loss has increased. In order to mitigate and control operational risk, the Corporation has developed, and continues to enhance, specific internal controls, policies and procedures that are designed to identify and manage operational risk at appropriate levels throughout the organization. The purpose of these mechanisms is to provide reasonable assurance that the Corporation’s business operations are functioning within the policies and limits established by management.

   The Corporation classifies operational risk into two major categories: business specific and corporate-wide affecting all business lines. For business specific risks, a risk assessment group works with the various business units to ensure consistency in policies, processes and assessments. With respect to corporate-wide risks, such as information security, business recovery, and legal and compliance, the Corporation has specialized groups, such as the Legal Department, Information Security, Corporate Compliance, and Operations. These groups assist the lines of business in the development and implementation of risk management practices specific to the needs of the business groups.

Legal and Compliance Risk

  Legal and compliance risk includes the risk of noncompliance with applicable legal and regulatory requirements, the risk of adverse legal judgments against the Corporation, and the risk that a counterparty’s performance obligations will be unenforceable. The Corporation is subject to extensive regulation in the different jurisdictions in which it conducts its business, and this regulatory scrutiny has been significantly increasing over the last several years. The Corporation has established and continues to enhance procedures based on legal and regulatory requirements that are designed to ensure compliance with all applicable statutory and regulatory requirements. The Corporation has a Compliance Director who reports to the Chief Risk Officer and is responsible for the oversight of regulatory compliance and implementation of an enterprise-wide compliance risk assessment process. The Compliance division has officer roles in each major business area with direct reporting relationships to the Corporate Compliance Group.

Concentration Risk

The Corporation conducts its operations in a geographically concentrated area, as its main market is Puerto Rico. However, the Corporation has diversified its geographical risk as evidenced by its operations in the Virgin Islands and in Florida. Of the total gross loans held for investment of $8.9 billion as of September 30, 2016, approximately 78% have credit risk concentration in Puerto Rico, 15% in the United States, and 7% in the Virgin Islands.

Exposure to Puerto Rico Government

   As of September 30, 2016, the Corporation had $325.9 million of direct exposure to the Puerto Rico Government, its municipalities and public corporations, compared to $360.7 million as of December 31, 2015.  Approximately $191.9 million of the exposure consisted of loans and obligations of municipalities in Puerto Rico that are supported by assigned property tax revenues and for which, in most cases, the good faith, credit and unlimited taxing power of the applicable municipality have been pledged to their repayment. Approximately 89% of the Corporation’s municipality exposure consists primarily of senior priority obligations concentrated in five of the largest municipalities in Puerto Rico (San Juan, Carolina, Bayamon, Mayaguez and Guaynabo). These municipalities are required by law to levy special property taxes in such amounts as shall be required for the payment of all of their respective general obligation bonds and loans. In addition to municipalities, the total exposure to the Puerto Rico Government included $6.9 million of loans to units of the Puerto Rico central government, and approximately $83.7 million consisted of loans to public corporations, including a direct exposure to PREPA with a book value of $66.9 million as of September 30, 2016. The PREPA credit facility was placed in non-accrual status in the first quarter of 2015, and interest payments are recorded on a cost-recovery basis.  The Corporation’s total direct exposure also includes obligations of the Puerto Rico Government with an amortized cost of $43.5 million as part of its available-for-sale investment securities portfolio, net of $22.2 million in cumulative OTTI charges, and recorded at a fair value of $26.8 million as of September 30, 2016.

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	The following table details the Corporation’s total direct exposure to the Puerto Rico Government according to their maturities:
		As of September 30, 2016
			Investment
			Portfolio				Total
			(Amortized cost)		Loans		Exposure
		(Dollars in thousands)
Central Government:
After 1 to 5 years		$	-	$	6,886	$	6,886
Total Central Government			-		6,886		6,886
Government Development Bank:
After 1 to 5 years			21,423		-		21,423
Total Government Development Bank			21,423		-		21,423
Puerto Rico Housing Finance Authority:
After 5 to 10 years			845		-		845
After  10 years			7,890		-		7,890
Total Puerto Rico Housing Finance Authority			8,735		-		8,735
Puerto Rico Public Buildings Authority:
After 10 years			13,315		-		13,315
Total Puerto Rico Public Buildings Authority			13,315		-		13,315
Public Corporations:
Puerto Rico Electric Power Authority and affiliates:
Due within one year			-		66,853		66,853
After 5 to 10 years			-		16,851		16,851
Total Public Corporations			-		83,704		83,704
Municipalities:
Matured (30 days past due)			-		6,160		6,160
After 1 to 5 years			1,136		29,495		30,631
After 5 to 10 years			10,741		-		10,741
After 10 years			144,313		-		144,313
Total Municipalities			156,190		35,655		191,845
Total Direct Government Exposure		$	199,663	$	126,245	$	325,908

Furthermore, as of September 30, 2016, the Corporation had $128.0 million outstanding (book value of $112.8 million) in financings to the hotel industry in Puerto Rico under which the borrower and the operations of the underlying collateral are the primary sources of repayment and the TDF provides a secondary guarantee for payment performance, compared to $129.4 million outstanding as of December 31, 2015.  These facilities were placed in non-accrual status and classified as impaired in the first quarter of 2016, and interest payments are now applied against principal. Approximately $1.6 million of interest payments received on loans guaranteed by the TDF since late March 2016 have been applied against principal. As of the date of filing of this Form 10-Q, the largest of these three facilities is current on contractual payments as its operations are generating the cash flows to cover payments. The Corporation has been receiving partial payments from the other two facilities since their operations are insufficient to cover the entire contractual payments and the Corporation is not receiving collections from the TDF guarantee.  As such, these two facilities are collateral dependent loans and charge-offs amounting to $13.7 million were recorded in the third quarter of 2016, of which $12.8 million was charged against specific reserves established in prior periods. These loans have been adversely classified since the third quarter of 2015.   The Corporation’s collections of principal and interest from the TDF in the first half of 2016 amounted to $0.6 million compared to $5.3 million in the entire 2015 year. 

The TDF is a subsidiary of the GDB that facilitates private sector financings to Puerto Rico’s hotel industry. Adverse developments related to the Puerto Rico government’s fiscal situation introduced additional uncertainty regarding the TDF’s ability to honor its guarantee, including the enactment of the Puerto Rico Emergency Moratorium and Financial Rehabilitation Act (“Act 21”), which gives Puerto Rico’s governor emergency powers to deal with Puerto Rico’s challenging fiscal situation, including the ability to declare a moratorium on all bonds and other payments.  On June 30, 2016, pursuant to Act 21, the Puerto Rico governor ordered a moratorium on the payment of $780 million of the Puerto Rico Government’s general obligations and the debt of certain other instrumentalities due on July 1, 2016.  This followed a default on the principal payment of $367 million of GDB notes due on May 1, 2016.  Puerto Rico’s governor also issued an executive order intended to protect the GDB’s liquidity by allowing withdrawals only to fund necessary costs for essential services such as health, public safety and education services. Recently, the GDB defaulted on a $28 million payment of interest due to its creditors on August 1, 2016, including interest due on GDB bonds held by the Corporation.

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As of September 30, 2016, the total reserve to book value coverage ratio related to commercial loans extended to or guaranteed by the Puerto Rico Government (excluding municipalities) was 16% and the loans are being carried at 76% of unpaid principal balance, net of reserves and accumulated charge-offs.

   In addition, the Corporation had $121.4 million in indirect exposure to residential mortgage loans that are guaranteed by the Puerto Rico Housing Finance Authority. Residential mortgage loans guaranteed by the Puerto Rico Housing Finance Authority are secured by the underlying properties and the guarantees serve to cover shortfalls in collateral in the event of a borrower default. The Puerto Rico Government guarantees up to $75 million of the principal guaranteed under the mortgage loans insurance program. According to the most recently released audited financial statements of the Puerto Rico Housing Finance Authority, as of June 30, 2015, the Puerto Rico Housing Finance Authority’s mortgage loans insurance program covered loans aggregating to approximately $552 million. The regulations adopted by the Puerto Rico Housing Finance Authority require the establishment of adequate reserves to guarantee the solvency of the mortgage loans insurance fund. As of June 30, 2015, the most recent date as of which information is available, the Puerto Rico Housing Finance Authority had a restricted net position for such purposes of approximately $77.4 million.

   Furthermore, as of September 30, 2016, the Corporation had $463.5 million of public sector deposits in Puerto Rico. Approximately 32% is from municipalities and municipal agencies in Puerto Rico and 68% is from public corporations and the central government and agencies in Puerto Rico.

Impact of Inflation and Changing Prices

   The financial statements and related data presented herein have been prepared in conformity with GAAP, which requires the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation.

   Unlike most industrial companies, substantially all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates have a greater impact on a financial institution’s performance than the effects of general levels of inflation. Interest rate movements are not necessarily correlated with changes in the prices of goods and services.

Basis of Presentation

The Corporation has included in this Form 10-Q the following financial measures that are not recognized under U.S. generally accepted accounting principles, which are referred to as non-GAAP financial measures: (i) the calculation of net interest income, interest rate spread and net interest margin rate on a tax-equivalent basis and excluding changes in the fair value of derivative instruments; (ii) the calculation of the tangible common equity ratio and the tangible book value per common share; and (iii) certain other financial measures, including net income, provision for loan and lease losses, non-interest income,  non-interest expenses and net charge-offs adjusted to exclude the effect of gain on sales of U.S. agency MBS recorded in the third quarter of 2016, severance payments on job discontinuance recorded in the third quarter of 2016, other-than-temporary impairment charges on debt securities recorded during the third quarter of 2015 and nine-month periods ended September 30, 2016 and 2015, the effect of the gain on the repurchase and cancellation of $10 million in trust-preferred securities recorded in the first nine months of 2016, the effect of the bulk sale of assets in the first nine months of 2015, and the bargain purchase gain and acquisition and conversion costs related to the acquisition of assets and assumption of deposits from Doral Bank recorded in the first nine months of 2015. Investors should be aware that non-GAAP financial measures have inherent limitations and should be read only in conjunction with the Corporation’s consolidated financial data prepared in accordance with GAAP.

     Net interest income, interest rate spread and net interest margin are reported excluding changes in the fair value of derivative instruments and on a tax-equivalent basis in order to provide to investors additional information about the Corporation’s net interest income that management uses and believes should facilitate comparability and analysis. The changes in the fair value of derivative instruments have no effect on interest due or interest earned on interest-bearing liabilities or interest-earning assets, respectively. The tax-equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a marginal income tax rate. Income from tax-exempt earning assets is increased by an amount equivalent to the taxes that would have been paid if this income had been taxable at statutory rates. Management believes that it is a standard practice in the banking industry to present net interest income, interest rate spread, and net interest margin on a fully tax-equivalent basis. This adjustment puts all earning assets, most notably tax-exempt securities and certain loans, on a common basis that facilitates comparison of results to results of peers. Refer to “Net Interest Income” above for the table that reconciles the non-GAAP financial measure “net interest income excluding fair value changes and on a tax-equivalent basis” with net interest income calculated and presented in accordance with GAAP. The table also reconciles the non-GAAP financial measures “net interest spread and margin excluding fair value changes and on a tax-equivalent basis” with net interest spread and margin calculated and presented in accordance with GAAP.

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  The tangible common equity ratio and tangible book value per common share are non-GAAP financial measures generally used by the financial community to evaluate capital adequacy. Tangible common equity is total equity less preferred equity, goodwill, core deposit intangibles, and other intangibles, such as the purchased credit card relationship intangible and the insurance customer relationship intangible. Tangible assets are total assets less goodwill, core deposit intangibles, and other intangibles, such as the purchased credit card relationship intangible and the insurance customer relationship intangible. Management and many stock analysts use the tangible common equity ratio and tangible book value per common share in conjunction with more traditional bank capital ratios to compare the capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, typically stemming from the use of the purchase method of accounting for mergers and acquisitions. Accordingly, the Corporation believes that disclosures of these financial measures may be useful also to investors. Neither tangible common equity nor tangible assets, or the related measures should be considered in isolation or as a substitute for stockholders’ equity, total assets, or any other measure calculated in accordance with GAAP. Moreover, the manner in which the Corporation calculates its tangible common equity, tangible assets, and any other related measures may differ from that of other companies reporting measures with similar names. Refer to “Risk Management-Capital” above for a reconciliation of the Corporation’s tangible common equity and tangible assets.

    To supplement the Corporation’s financial statements presented in accordance with GAAP, the Corporation uses, and believes that investors benefit from disclosure of adjustments to the provision for loan and lease losses, non-interest income, non-interest expenses, and net income to exclude items that management believes are not reflective of core operating performance, are not expected to reoccur with any regularity, or may reoccur at uncertain times and amounts.  During the third quarter and first nine months of 2016 and 2015, the following adjustments were made for one of those reasons: 

·Adjusted provision for loan and lease losses excludes a $46.9 million charge related to the bulk sale of assets completed in the first nine months of 2015.

·Adjusted non-interest income excludes: (i) gain on sales of U.S. agency MBS of $6.1 million for the quarter and nine month period ended September 30, 2016, (ii) OTTI charges on debt securities of $6.7 million for the nine-month period ended September 30, 2016, $0.2 million for the third quarter of 2015 and $13.3 million for the nine-month period ended September 30, 2015, (iii) a $4.2 million gain on the repurchase and cancellation of trust-preferred securities recorded for the nine-month period ended September 30, 2016, (iv) a $13.4 million bargain purchase gain on assets acquired and deposits assumed from Doral Bank recorded in the nine-month period ended September 30, 2015, and (v) a $0.6 million loss related to a commercial mortgage loan held for sale sold as part of the bulk sale of assets recorded for the nine-month period ended September 30, 2015. 

·Adjusted non-interest expenses excludes: (i) severance payments on job discontinuance of $0.3 million for the quarter and nine-month period ended September 30, 2016, (ii) acquisition and conversion costs of $4.6 million for the nine-month period ended September 30, 2015 associated with the assets acquired and liabilities assumed from Doral Bank in 2015, and (iii) expenses and losses of $1.2 million directly attributable to the bulk sale of assets recorded for the nine-month period ended September 30, 2015.

·Adjusted net income excludes the effect of all the items mentioned in the above captions and their related tax effects.  A $0.2 million tax expense related to the taxable portion of the gain on sale of U.S. agency MBS (calculated based on the applicable capital gain tax rate of 20%) was recorded for the quarter and nine-month period ended September 30, 2016.  An income tax benefit of $0.1 million related to the severance payments on job discontinuance (calculated based on the statutory tax rate of 30%) was recorded for the quarter and nine-month period ended September 30, 2016. A $19.0 million tax benefit related to the bulk sale of assets and transaction costs (calculated based on the statutory tax rate of 39%) was recorded for the nine-month period ended September 30, 2015. A $5.2 million tax expense related to the bargain purchase gain on assets acquired and liabilities assumed from Doral Bank (calculated based on the statutory tax rate of 39%) was recorded in the nine-month period ended September 30, 2016. A tax benefit of $1.8 million (calculated based on the statutory tax rate of 39%) was recorded for the nine-month period ended September 30, 2015, related to acquisition and conversion costs associated with assets acquired and liabilities assumed from Doral Bank.  No tax benefit or expense was recognized for OTTI charges on debt securities and the gain on the repurchase and cancellation of trust-preferred securities.

Adjusted net charge-offs exclude net charge-offs of $61.4 million recorded for the nine-month period ended September 30, 2015 related to the bulk sale of assets.

    Management believes that disclosure of the adjusted provision for loan and lease losses, adjusted non-interest income, adjusted non-interest expenses, adjusted net income, and adjusted net charge-offs enhances the ability of analysts and investors to analyze trends in the Corporation’s business and understand the performance of the Corporation.  In addition, the Corporation may utilize these non-GAAP financial measures as a guide in its budgeting and long-term planning process.

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2016 Third Quarter		As reported                 (GAAP)		OTTI on Debt Securities		Gain on Sale of Investment Securities		Severance payments		Tax effect		Adjusted                 (Non-GAAP)
(In thousands)
Non-interest income	$	26,146	$	-	$	(6,096)	$	-	$	-	$	20,050
Gain on sale of investment securities	$	6,096	$	-	$	(6,096)	$	-	$	-	$	-
Non-interest expenses	$	88,303	$	-	$	-	$	(281)	$	-	$	88,022
Employees' compensation and benefits	$	38,005	$	-	$	-	$	(281)	$	-	$	37,724
Net income	$	24,074	$	-	$	(6,096)	$	281	$	76	$	18,335
2015 Third Quarter		As reported                 (GAAP)		OTTI on Debt Securities		Gain on Sale of Investment Securities		Severance payments		Tax effect		Adjusted                 (Non-GAAP)
(In thousands)
Non-interest income	$	18,758	$	231	$	-	$	-	$	-	$	18,989
Net impairment losses on available-for-sale  debt securities	$	(231)	$	231	$	-	$	-	$	-	$	-
Net income	$	14,758	$	231	$	-	$	-	$	-	$	14,989

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2016 First Nine-Months		As reported                 (GAAP)		OTTI on Debt Securities		Gain on Sale of Investment Securities		Gain on Repurchase and Cancellation of Trust Preferred Securities		Severance Payments		Tax Effect		Adjusted                 (Non-GAAP)
(In thousands)
Non-interest income	$	64,393	$	6,687	$	(6,096)	$	(4,217)	$	-	$	-	$	60,767
Gain on Sale of Investment Securities	$	6,096	$	-	$	(6,096)	$	-	$	-	$	-	$	-
Net impairment losses on available-for-sale debt securities	$	(6,687)	$	6,687	$	-	$	-	$	-	$	-	$	-
Gain on early extinguishment of debt	$	4,217	$	-	$	-	$	(4,217)	$	-	$	-	$	-
Non-interest expenses	$	270,844	$	-	$	-	$	-	$	(281)	$	-	$	270,563
Employees' compensation and benefits	$	113,841	$	-	$	-	$	-	$	(281)	$	-	$	113,560
Net income	$	69,371	$	6,687	$	(6,096)	$	(4,217)	$	281	$	76	$	66,102

		As Reported (GAAP)		Bargain Purchase Gain		OTTI on Debt Securities		Bulk Sale Transaction Impact		Acquisition and conversion costs		Tax effect		Adjusted (Non-GAAP)
2015 First-Nine Months
(In thousands)
Total net charge-offs (1)	$	131,841	$	-	$	-	$	(61,435)	$	-	$	-	$	70,406
Total net charge-offs to average loans		1.91%								-		-		1.03%
Commercial mortgage	$	47,600	$	-	$	-	$	(37,590)	$	-	$	-	$	10,010
Commercial mortgage loans net charge-offs to average loans		3.96%								-		-		0.86%
Commercial and Industrial	$	26,704	$	-	$	-	$	(20,570)	$	-	$	-	$	6,134
Commercial and Industrial loans net charge-offs to average loans		1.59%								-		-		0.36%
Construction	$	2,408	$	-	$	-	$	(3,275)	$	-	$	-	$	(867)
Construction loans net charge-offs to average loans		1.88%								-		-		-0.70%
Provision for loan and lease losses	$	138,412	$	-	$	-	$	(46,947)	$	-	$	-	$	91,465
Non-interest income	$	58,157	$	(13,443)	$	13,484	$	552	$	-	$	-	$	58,750
Bargain purchase gain		13,443		(13,443)		-		-		-		-		-
Net impairment losses on available-for-sale debt securities		(13,484)		-		13,484		-		-		-		-
Other net interest income		30,691		-		-		552		-		-		31,243
Non-interest expenses	$	287,804	$	-	$	-	$	(1,168)	$	(4,646)	$	-	$	281,990
Employees' compensation and benefits		110,883		-		-		-		(104)		-		110,779
Occupancy and equipment		44,656		-		-		-		(118)		-		44,538
Professional fees		44,932		-		-		(918)		(3,709)		-		40,305
Business promotion		10,899		-		-		-		(437)		-		10,462
Net loss on OREO operations		11,847		-		-		(250)		-		-		11,597
Other expenses		17,117		-		-		-		(278)		-		16,839
______________
Net income	$	6,330	$	(13,443)	$	13,484	$	48,667	$	4,646	$	(15,549)	$	44,135
1 - Charge-off percentages annualized

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

       For information regarding market risk to which the Corporation is exposed, see the information contained in “Part I – Item 2 -“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management.”

ITEM 4.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

       First BanCorp.’s management, including its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of First BanCorp.’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2016. Based on this evaluation, as of the end of the period covered by this Form 10-Q, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective.

Internal Control over Financial Reporting

      There have been no changes to the Corporation’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

Not applicable.

ITEM 1A.  RISK FACTORS

The Corporation’s business, operating results and/or the market price of our common and preferred stock may be significantly affected by a number of factors.  For a detailed discussion of certain risk factors that could affect the Corporation’s future operations, financial condition or results for future periods, see the risk factors below and in Item 1A, “Risk Factors,” in the Corporation’s 2015 Annual Report on Form 10-K.  These factors could also cause actual results to differ materially from historical results or the results contemplated by the forward-looking statements contained in this report.  Also refer to the discussion in “Part I – Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report for additional information that may supplement or update the discussion of  risk factors in the Corporation’s 2015 Form 10-K.

Additional risks and uncertainties that are not currently known to the Corporation or are currently deemed by the Corporation to be immaterial also may materially adversely affect the Corporation’s business, financial condition or results of operations.

The Corporation’s financial results may be adversely affected by Puerto Rico’s current economic condition.

A significant portion of the Corporation’s financial activities and credit exposure is concentrated in the Commonwealth of Puerto Rico, which has been in an economic recession since 2006. Based on the most recent information available, the main economic indicators suggest that the Puerto Rico economy remains weak.  For fiscal years 2015, 2016 and 2017, the Puerto Rico Planning Board projects a continued economic contraction in the Commonwealth’s real gross national product (“GNP”) of 0.6%, 1.2% and 2.0%, respectively, while the Government Development Bank of Puerto Rico’s (the “GDB”) economic activity index (the “GDB-EAI”) in August 2016 decreased 1.0% on a year-over-year basis.  The GDB-EAI is a coincident index of economic activity for Puerto Rico made up of four indicators (payroll employment, electric power generation, cement sales and gasoline consumption).  The seasonally adjusted unemployment rate in Puerto Rico was 11.9% in September 2016.

Based on information published by the Puerto Rico Government, General Fund net revenues for fiscal year 2015-2016 totaled approximately $9.175 billion, a year-over-year increase of $214.4 million.  Fiscal year revenues were $116.7 million below revised estimates. Preliminary General Fund net revenues for the first three months of fiscal year 2016-2017 were $1.938 billion, an increase of $1.8 million when compared to the same quarter of fiscal year 2015-2016 and $14.7 million lower than the original estimate for the first quarter of fiscal year 2017.

On April 6, 2016, the Puerto Rico governor signed the Puerto Rico Emergency Moratorium and Financial Rehabilitation Act, which gives Puerto Rico’s governor emergency powers to deal with the challenging fiscal situation, including the ability to declare a moratorium on any debt payment.  Puerto Rico’s governor also issued an executive order intended to protect the GDB’s liquidity by allowing withdrawals only to fund necessary costs for essential services such as health, public safety and education services. 

On May, 1 2016, pursuant to the debt moratorium law, the Puerto Rico governor issued an executive order for the moratorium on the debt service payment due by the GDB on May 1, 2016. The GDB paid the scheduled interest payment of $22 million but defaulted on the principal payment of $367 million on its notes due on May 1, 2016. In addition, on April 29, 2016, the GDB announced that it reached an agreement with various state-chartered credit unions in Puerto Rico to implement a limited private exchange of approximately $33 million of notes issued by the GDB and maturing on May 1, 2016 for newly issued GDB notes with substantially the same terms, but maturing on May 1, 2017. The exchange was structured to be completed in advance of the May 1, 2016 principal payment date and settled on April 29, 2016.

On May 1, 2016, the GDB announced that it had negotiated a framework of indicative terms for a restructuring of GDB bonds with a group of bondholders (the “Ad Hoc Group”) holding approximately $900 million of the $3.8 billion of the GDB’s outstanding notes (the “Old Notes”). As part of the understanding, the Ad Hoc Group and the GDB intend to negotiate the terms and forbear from pursuing legal action related to the May 1st debt service payment during such negotiations.

The agreed key terms contemplate a two-step restructuring of the GDB’s obligations, in which all holders of the Old Notes, including the Ad Hoc Group, would first exchange (the “Interim Exchange”) their current holdings for new notes of the GDB, to be followed by an exchange of such new notes as part of a future global restructuring of Puerto Rico’s debt that includes the GDB’s debt. As part of the agreed key economic terms, creditors would agree to a haircut of 43.75% of the face amount of the Old Notes in the Interim Exchange. In addition, as part of the transaction, bondholders would agree to the proposed treatment of their notes, in a second step exchange as part of a Global Restructuring, that would result in an agreed haircut of 53% of the face amount of their Old Notes. The proposed terms of the Interim

137

Exchange require 100% participation by all bondholders, including, in addition to the Ad Hoc Group, the state-chartered credit unions in Puerto Rico and other large institutional groups in Puerto Rico.  

On June 14, 2016, the Puerto Rico Government presented a revised proposal to creditors for restructuring general obligation debt, which amounted to an 81% recovery rate, up from an initial offer of 78%.  As for the two classes of COFINA debt (the debt backed by sales tax receipts), the Puerto Rico Government offered a revised recovery rate of 80% on the senior COFINA bonds, up from an initial 66% recovery rate.  On the subordinated COFINA bonds, the revised proposal was for a 60% recovery rate versus an initial proposal of a 47% recovery rate.  Under the revised proposal, the amount of money set aside for debt servicing increased by $17 billion to $106.5 billion through the year 2071. Debt service costs would not exceed 18% of fiscal year 2016 adjusted revenues or 15% in any year thereafter, assuming a nominal 2% economic growth.  On June 21, 2016, the Puerto Rico Government announced that negotiations with creditors ended without an agreement to restructure.

On June 30, 2016, President Obama signed HR 5278 Bill, the “Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), which aims to establish an oversight board, a process for restructuring debt, and expedited procedures for approving critical infrastructure projects in order to address the Puerto Rican government fiscal situation. Among the main components of the bill are:

-The creation of an Oversight Board consisting of seven voting members, along with the Puerto Rico governor (or designee) who would serve as an ex-officio non-voting member. The Oversight Board is responsible, among other things, for approving fiscal plans and budgets as well as ensuring compliance with both. The Oversight Board also has the ability to facilitate debt restructuring negotiations. 

-Provides a mechanism for debt restructuring.  Before court supervised restructuring is permitted, the Oversight Board must certify that 1) any entity has made good faith efforts to reach a voluntary restructuring, 2) the entity has adopted procedures to deliver timely audited financial statements and has delivered drafts to any interested person to make an informed decision, 3) the entity has a fiscal plan in place, and 4) no restructuring for that entity's debt is already in place. The Oversight Board then has the exclusive authority as a last resort to initiate a proceeding in court.

-All litigation against Puerto Rico and its instrumentalities will be on hold until at least February 15, 2017 to give time for the government and debt holders to reach voluntary agreements. This does not give the government the right to skip payments.

-The Oversight Board will also be able to approve expedited permitting and regulatory processes for specific infrastructure revitalization projects. The projects must provide economic support, have access to private capital, and address a need in Puerto Rico’s current infrastructure.

On August 31, 2016, the president of the United States named the seven voting members of the Oversight Board that will manage Puerto Rico’s finances for at least five years as established by PROMESA. Also, on September 1, 2016, the Puerto Rico governor named the non-voting member who will serve as his representative on PROMESA’s fiscal control board. In addition, on September 30, 2016, the Board members listed the public entities to be placed under the Board’s immediate oversight. The entities placed under immediate control consist of: Puerto Rico’s central government, three retirement systems (teachers, judicial and employees), the University of Puerto Rico and all public corporations, including the Aqueduct and Sewer Authority, PREPA, the Puerto Rico Buildings Authority and the GDB.

As part of PROMESA, a Congressional Task Force on Economic Growth in Puerto Rico was created.  This Task Force, consisting of eight members, provided a status report to Congress on September 15, 2016 and no later than December 31, 2016, must provide a status update that includes:

-   Impediments in current Federal law and programs to economic growth in Puerto Rico, including equitable access to Federal health care programs;

-  Recommended changes to Federal law and programs that, if adopted, would serve to spur sustainable long-term economic growth and job creation, reduce child poverty, and attract investment in Puerto Rico;

- The economic effect of Administrative Order No. 346 of the Department of Health of the Commonwealth of Puerto Rico (relating to natural products, natural supplements, and dietary supplements) or any successor or substantially similar order, rule, or guidance of the Commonwealth of Puerto Rico; and

- Additional information the Task Force deems appropriate.

138

  On June 30, 2016, pursuant to the debt moratorium law and, after the enactment of PROMESA, the Puerto Rico governor issued two executive orders that declare a moratorium on the payment obligations of the Commonwealth under its general obligation and guaranteed debt, along with the payment obligations of certain other issuers, until January 31, 2017, implement various cash and liquidity preservation measures and protect the Commonwealth and its instrumentalities from the exercise of creditor remedies as the Commonwealth addresses its fiscal and economically challenging situation.  On July 1, 2016, the Puerto Rico Government defaulted on a $780 million payment of general obligation bonds (principal and interest, excluding general obligation notes held by the GDB). Along with the general obligations, the Puerto Rico Infrastructure Financing Authority defaulted on a $77.1 million payment on rum-tax bonds, the Puerto Rico Highways and Transportation Authority defaulted on a $4.4 million payment and the Puerto Rico Public Finance Corp. defaulted on a $1.4 million payment. The GDB and Puerto Rico Public Buildings Authority bonds held by the Corporation are scheduled to mature on February 1, 2019 and on July 1, 2028, respectively.

      On August 1, 2016, the GDB defaulted on a $28 million payment of interest due to its creditors, including interest due on GDB bonds held by the Corporation.  In addition, on August 1, 2016, approximately $11 million corresponding to Puerto Rico Infrastructure Financing Authority bond anticipation notes were missed, as well as a $1.5 million interest payment on general obligation bonds.   Moreover, an additional approximately $50 million was not paid on the Public Financing Corporation’s bonds that first defaulted a year ago, resulting in an aggregate of more than $140 million unpaid amounts . The GDB default marked the first time the GDB, or any other agency or instrumentality, failed to pay interest on Puerto Rico government bonds held by the Corporation. On October 1, 2016, the Puerto Rico Public Building authority failed to make a full payment of interest due on its obligation bonds, including bonds held by the Corporation. Generally, based on specific facts and circumstances of the issuer, a default event requires us to classify the defaulted bonds as a non-performing asset. Accordingly, during the third quarter of 2016, bonds of the GDB and the Puerto Buildings Authority with an aggregate fair value of $19.5 million ($35.6 million- amortized cost, including accrued interest of $0.9 million) were classified as non-performing and placed in non-accrual status by the Corporation. These bonds are held as part of the available-for-sale securities portfolio.

In a circular letter released on October 24, 2016, the Secretary of the Puerto Rico Department of Treasury asked Puerto Rico’s mayors and public corporation executive directors—and the public accountants assisting them in preparing their financial statements—to analyze their deposit accounts in the GDB and to make the necessary adjustments to reflect the scenario of insolvency that is facing the GDB. Funds of municipalities designated for the repayment of their general bonds are deposited at another financial institution in Puerto Rico protected by the deed of trust executed by GDB and CRIM in 2015.

With respect to PREPA, the Puerto Rico Energy Commission approved a new surcharge on customers to be used to pay debt service on new securitization bonds proposed to be issued as part of the PREPA’s debt restructuring. A key component of PREPA’s debt restructuring is the issuance of new securitization bonds that will be exchanged for existing PREPA bonds at a discount.

    PROMESA is an important step towards reducing the level of uncertainty in Puerto Rico and provides a groundwork for an orderly debt restructuring process, however, ultimate outcomes of actions to address the challenging Puerto Rico economic environment are uncertain at this time. 

    The decline in Puerto Rico’s economy since 2006 has resulted in, among other things, a decline in the Corporation’s loan originations, an increase in the level of non-performing assets, and higher loan loss provisions and charge-offs, all of which have adversely affected our profitability.  Any further potential deterioration of economic activity could result in further adverse effects on the Corporation’s profitability, credit quality and financial results.

139

ITEM 2.  Unregistered Sales of Equity Securities and Use of Proceeds

a)Not applicable.

b)Not applicable.

c)Purchase of equity securities by the issuer and affiliated purchasers. The following table provides information relating to the Corporation’s purchases of shares of its common stock in the three-month period ended September 30, 2016.

						Maximum
					Total Number of	Number of Shares
					Shares Purchased	That May Yet be
				Average	as Part of Publicly	Purchased Under
		Total number of		Price	Announced Plans	These Plans or
Period		shares purchased (1)		Paid	Or Programs	Programs
July, 2016		18,047	$	4.22	-	-
August, 2016		25,785		4.61	-	-
September, 2016		24,567		4.97	-	-
Total		68,399	$	4.64	-	-
(1)	Reflects shares of common stock withheld from the common stock paid to certain senior officers as additional compensation, which the Corporation calls salary stock, and upon the vesting of restricted stock to cover minimum tax withholding obligations. The Corporation intends to continue to satisfy statutory tax withholding obligations in connection with shares paid as salary stock to certain senior officers and the vesting of outstanding restricted stock through the withholding of shares.

140

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.  MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6.  EXHIBITS

See the Exhibit Index following the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed with this report, which Exhibit Index is incorporated herein by reference.

141

SIGNATURES

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

First BanCorp.

Registrant

Date: November 9, 2016	By:	/s/ Aurelio Alemán
		Aurelio Alemán
		President and Chief Executive Officer

Date: November 9, 2016	By:	/s/ Orlando Berges
		Orlando Berges
		Executive Vice President and Chief Financial Officer

142

Exhibit Index

12.1  – Ratio of Earnings to Fixed Charges.

12.2  – Ratio of Earnings to Fixed Charges and Preference Dividends.

31.1  – CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2  – CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1  –  CEO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2  –  CFO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.1 – Interactive Data File (Quarterly Report on Form 10-Q for the period ended September 30, 2016, furnished in XBRL

 (eXtensible Business Reporting Language).

143

EX-12

 

		Exhibit 12.1
First BanCorp
Computation of Ratio of Earnings to Fixed Charges
	Nine-Month Period Ended
	September 30, 2016
Including Interest on Deposits
Earnings:
Pre-tax income from continuing operations	$	93,061
Plus:
Fixed Charges (excluding capitalized interest)		81,084
Total earnings	$	174,145
Fixed Charges:
Interest expensed and capitalized	$	78,284
An estimate of the interest component within rental expense		2,800
Total Fixed Charges	$	81,084
Ratio of Earnings to Fixed Charges	2.15
Excluding Interest on Deposits
Earnings:
Pre-tax income from continuing operations	$	93,061
Plus:
Fixed Charges (excluding capitalized interest)		29,859
Total earnings	$	122,920
Fixed Charges:
Interest expensed and capitalized	$	27,061
An estimate of the interest component within rental expense		2,800
Total Fixed Charges	$	29,861
Ratio of Earnings to Fixed Charges	4.12

EX-12

 

		Exhibit 12.2
First BanCorp
Computation of Ratio of Earnings to Fixed Charges and Preference Dividends
	Nine-Month Period Ended
	September 30, 2016
Including Interest on Deposits
Earnings:
Pre-tax income from continuing operations	$	93,061
Plus:
Fixed Charges (excluding capitalized interest)		81,084
Total earnings	$	174,145
Fixed Charges:
Interest expensed and capitalized	$	78,284
An estimate of the interest component within rental expense		2,800
Total fixed charges before preferred dividends	$	81,084
Preferred dividends		-
Ratio of pre tax income to net income		1.34
Preferred dividend factor		-
Total fixed charges and preferred stock dividends	$	81,084
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends	2.15
Excluding Interest on Deposits
Earnings:
Pre-tax income from continuing operations	$	93,061
Plus:
Fixed Charges (excluding capitalized interest)		29,859
Total earnings	$	122,920
Fixed Charges:
Interest expensed and capitalized	$	27,061
An estimate of the interest component within rental expense		2,800
Total Fixed Charges before preferred dividends	$	29,861
Preferred dividends		-
Ratio of pre tax income to net income		1.34
Preferred dividend factor		-
Total fixed charges and preferred stock dividends	$	29,861
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends	4.12

EX-31

 

EXHIBIT 31.1

I, Aurelio Alemán, certify that:

1.I have reviewed this Form 10-Q of First BanCorp.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: November 9, 2016	By:	/s/ Aurelio Alemán
		Aurelio Alemán
		President and Chief Executive Officer

EX-31

 

EXHIBIT 31.2

I, Orlando Berges, certify that:

1.I have reviewed this Form 10-Q of First BanCorp.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: November 9, 2016	By:	/s/ Orlando Berges
		Orlando Berges
		Executive Vice President and Chief Financial Officer

EX-32

 

 EXHIBIT 32.1

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18,
United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of First BanCorp., a Puerto Rico corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

            The Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (the “Form l0-Q”) of the Company fully complies with the requirements of section l3(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 9, 2016	/s/ Aurelio Alemán
	Name: Aurelio Alemán
	Title: President and Chief Executive Officer

EX-32

 

EXHIBIT 32.2

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18,
United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of First BanCorp., a Puerto Rico corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

             The Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (the “Form l0-Q”) of the Company fully complies with the requirements of section l3(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  November 9, 2016	/s/ Orlando Berges
	Name: Orlando Berges
	Title: Executive Vice President and Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Oct. 31, 2016
Entity Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Trading Symbol	fbp
Entity Registrant Name	FIRST BANCORP /PR/
Entity Central Index Key	0001057706
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		217,419,933

XML

Consolidated Statements of Financial Condition - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
ASSETS
Cash and due from banks		$ 518,835	$ 532,985
Money market investments:
Time deposits with other financial institutions		2,800	3,000
Other short-term investments		7,308	216,473
Total money market investments		10,108	219,473
Investment securities available for sale, at fair value:
Securities pledged that can be repledged		661,554	793,562
Other investment securities		1,182,299	1,092,833
Total investment securities available for sale		1,843,853	1,886,395
Investment securities held to maturity, at amortized cost:
Securities pledged that can be repledged		0	0
Other investment securities		156,190	161,483
Total investment securities held to maturity, fair value of $132,241 (2015- $131,544)		156,190	161,483
Other equity securities		28,717	32,169
Loans, net of allowance for loan and lease losses of $214,070 (2015 - $240,710)		8,649,584	8,871,672
Loans held for sale, at lower of cost or market		56,779	35,869
Total loans, net		8,706,363	8,907,541
Premises and equipment, net		154,208	161,016
Other real estate owned		139,446	146,801
Accrued interest receivable on loans and investments		41,439	48,697
Other assets		476,094	476,459
Total assets		12,075,253	12,573,019
LIABILITIES
Non-interest-bearing deposits		1,473,528	1,336,559
Interest-bearing deposits		7,507,785	8,001,565
Total deposits		8,981,313	9,338,124
Securities sold under agreements to repurchase	[1],[2]	600,000	700,000
Advances from the Federal Home Loan Bank (FHLB)		355,000	455,000
Other borrowings		216,187	226,492
Accounts payable and other liabilities		122,867	159,269
Total liabilities		10,275,367	10,878,885
Preferred stock, authorized 50,000,000 shares:
Non-cumulative Perpetual Monthly Income Preferred Stock: issued - 22,004,000 shares, outstanding 1,444,146 shares, aggregate liquidation value of $36,104		36,104	36,104
Common stock, $0.10 par value, authorized, 2,000,000,000 shares; issued, 218,605,179 shares (2015 - 216,051,128 shares issued)		21,861	21,605
Less: Treasury stock (at par value)		(122)	(96)
Common stock outstanding, 217,387,647 shares outstanding (2015 - 215,088,698 shares outstanding)		21,739	21,509
Additional paid-in capital		930,390	926,348
Retained earnings, includes legal surplus reserve of $42,798		807,293	737,922
Accumulated other comprehensive income (loss) , net of tax of $7,752		4,360	(27,749)
Total stockholders' equity		1,799,886	1,694,134
Total liabilities and stockholders' equity		$ 12,075,253	$ 12,573,019

[1] As of September 30, 2016, includes $500 million with an average rate of 3.56% that lenders have the right to call before their contractual maturities at various dates beginning on October 11, 2016. In addition, $400 million is tied to variable rates.

[2] Reported net of securities purchased under agreements to repurchase (reverse repurchase agreements) by counterparty, when applicable, pursuant to ASC 210-20-45-11.

XML

Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Dec. 31, 2015
Allowance for loan and lease losses	$ 214,070	$ 214,070	$ 240,710
Preferred stock, shares authorized	50,000,000	50,000,000	50,000,000
Preferred stock, shares issued	22,004,000	22,004,000	22,004,000
Preferred stock, shares outstanding	1,444,146	1,444,146	1,444,146
Preferred stock, liquidation value	$ 36,104	$ 36,104	$ 36,104
Common stock, par value	$ 0.1	$ 0.1	$ 0.1
Common stock, shares authorized	2,000,000,000	2,000,000,000	2,000,000,000
Common stock, shares issued	218,605,179	218,605,179	216,051,128
Common stock, shares outstanding	217,387,647	217,387,647	215,088,698
Income tax expense	$ 10,444	$ 23,690
Legal Surplus Amount	42,798	42,798	$ 42,798
Held To Maturity Securities Fair Value	132,241	$ 132,241	131,544
Accumulated Other Comprehensive Income (Loss) [Member]
Income tax expense	$ 7,752		$ 7,752

XML

CONSOLIDATED STATEMENTS OF INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Interest and dividend income:
Loans	$ 131,017	$ 136,597	$ 398,267	$ 412,094
Investment securities	11,894	12,805	40,065	40,378
Money market investments	662	410	3,006	1,457
Total interest income	143,573	149,812	441,338	453,929
Interest expense:
Deposits	16,742	16,851	51,223	51,525
Securities sold under agreements to repurchase	5,363	5,216	16,868	16,997
Advances from FHLB	1,474	955	4,416	2,833
Other borrowings	1,816	1,861	5,777	5,521
Total interest expense	25,395	24,883	78,284	76,876
Net interest income	118,178	124,929	363,054	377,053
Provision for loan and lease losses	21,503	31,176	63,542	138,412
Net interest income after provision for loan and lease losses	96,675	93,753	299,512	238,641
Non-interest income:
Service charges and fees on deposit accounts	5,788	5,082	17,206	14,856
Mortgage banking activities	5,485	4,270	15,131	12,651
Net gain on sale of investments	6,096	0	6,104	0
Other-than-temporary impairment (OTTI) losses on available-for-sale debt securities:
Total other-than-temporary impairment losses	0	0	(1,845)	(29,521)
Portion of other-than-temporary impairment recognized in other comprehensive income (OCI)	0	(231)	(4,842)	16,037
Net impairment losses on available-for-sale debt securities	0	(231)	(6,687)	(13,484)
Gain on early extinguishment of debt	0	0	4,217	0
Insurance commission income	1,363	1,265	6,174	5,809
Bargain purchase gain	0	0	0	13,443
Other non-interest income	7,414	8,372	22,248	24,882
Total non-interest income	26,146	18,758	64,393	58,157
Non-interest expenses:
Employees' compensation and benefits	38,005	37,284	113,841	110,883
Occupancy and equipment	13,888	15,248	41,114	44,656
Business promotion	3,169	4,097	11,220	10,899
Professional fees	10,672	10,709	32,775	44,932
Taxes, other than income taxes	3,927	3,065	11,475	9,197
Insurance and supervisory fees	5,604	6,590	20,013	20,246
Net loss on real estate owned (REO) and REO operations	2,603	4,345	9,134	11,847
Credit and debit card processing expenses	3,546	4,283	10,102	12,185
Communications	1,711	2,189	5,244	5,842
Other non-interest expenses	5,178	5,467	15,926	17,117
Total non-interest expenses	88,303	93,277	270,844	287,804
Income before income taxes	34,518	19,234	93,061	8,994
Income tax expense	(10,444)	(4,476)	(23,690)	(2,664)
Net income	24,074	14,758	69,371	6,330
Net income attributable to common stockholders	$ 24,074	$ 14,758	$ 69,371	$ 6,330
Net income per common share:
Basic	$ 0.11	$ 0.07	$ 0.33	$ 0.03
Diluted	0.11	0.07	0.32	0.03
Dividends declared per common share	$ 0	$ 0	$ 0	$ 0

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CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
Net gain on sale of investments	$ (6,096)	$ 0	$ (6,104)	$ 0

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Net income		$ 24,074	$ 14,758	$ 69,371	$ 6,330
Available-for-sale debt securities on which an other-than-temporary impairment has been recognized:
Unrealized (loss) gain on debt securities on which an other-than-temporary impairment has been recognized		(2,228)	(457)	(773)	915
Reclassification adjustment for other-than-temporary impairment on debt securities included in net income	[1]	0	231	6,687	13,484
All other unrealized gains and losses on available-for-sale securities:
Reclassification Adjustment for net gain included in net income		(6,096)	0	(6,104)	0
All other unrealized holding (losses) gains on available-for-sale securities arising during the period		(3,833)	16,935	32,299	(718)
Other comprehensive (loss) income for the period		(12,157)	16,709	32,109	13,681
Total comprehensive income		$ 11,917	$ 31,467	$ 101,480	$ 20,011

[1] For the nine-month periods ended September 30, 2016 and 2015, approximately $6.3 million and $12.9 million, respectively, of the credit impairment recognized in earnings consisted of credit losses on Puerto Rico Government debt securities and $0.4 million and $0.6 million, respectively, was associated with credit losses on private label MBS.

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CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($)		9 Months Ended
		Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net income		$ 69,371,000	$ 6,330,000
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		13,359,000	15,923,000
Amortization and impairment of intangible assets		3,669,000	3,817,000
Provision for loan and lease losses		63,542,000	138,412,000
Deferred income tax expense (benefit)		19,153,000	(102,000)
Stock-based compensation		5,132,000	4,535,000
Gain on sales of investments		(6,104,000)	0
Gain on early extinguishment of debt		(4,217,000)	0
Other-than-temporary impairments on debt securities	[1]	6,687,000	13,484,000
Unrealized loss (gain) on derivative instruments		19,000	(47,000)
Net gain on disposition of premises and equipment and other assets		(686,000)	(137,000)
Net gain on sales of loans		(7,794,000)	(5,312,000)
Net amortization/accretion of premiums, discounts and deferred loan fees and costs		(6,629,000)	(4,244,000)
Originations and purchases of loans held for sale		(354,006,000)	(323,565,000)
Sales and repayments of loans held for sale		355,636,000	329,635,000
Amortization of broker placement fees		2,300,000	3,564,000
Net amortization/accretion of premium and discounts on investment securities		4,503,000	6,431,000
Decrease in accrued interest receivable		7,258,000	3,894,000
(Decrease) increase in accrued interest payable		(27,865,000)	3,297,000
(Increase) decrease in other assets		(10,275,000)	8,478,000
(Decrease) increase in other liabilities		(13,944,000)	8,175,000
Bargain purchase gain		0	(13,443,000)
Net cash provided by operating activities		119,109,000	199,125,000
Cash flows from investing activities:
Principal collected on loans		2,174,933,000	2,223,880,000
Loans originated and purchased		(2,085,444,000)	(2,180,333,000)
Proceeds from sale of loans held for investment		20,186,000	107,702,000
Proceeds from sale of repossessed assets		43,093,000	48,195,000
Proceeds from sale of available-for-sale securities		219,780,000	0
Purchases of available-for-sale securities		(420,513,000)	(161,366,000)
Purchases of securities held to maturity		0	4,530,000
Proceeds from principal repayments and maturities of available-for-sale securities		270,345,000	212,972,000
Proceeds from principal repayments and maturities of held-to-maturity securities		5,293,000	5,068,000
Additions to premises and equipment		(8,239,000)	(9,594,000)
Proceeds from sale of premises and equipment and other assets		2,265,000	2,511,000
Net cash received from acquisition		0	217,659,000
Net cash outflows from purchase/sale of insurance contracts		(960,000)	0
Net redemptions (purchases) of other equity securities		(3,452,000)	567,000
Net cash provided by investing activities		224,191,000	461,597,000
Cash flows from financing activities:
Net decrease in deposits		(358,930,000)	(294,126,000)
Repayment of FHLB advances		(100,000,000)	0
Repurchase of outstanding common stock		(860,000)	(967,000)
Change in securities sold under agreements to repurchase		(100,000,000)	(200,000,000)
Repayment of junior subordinated debentures		(7,025,000)	0
Net cash used in financing activities		(566,815,000)	(495,093,000)
Net (decrease) increase in cash and cash equivalents		(223,515,000)	165,629,000
Cash and cash equivalents at beginning of period		752,458,000	796,108,000
Cash and cash equivalents at end of period		528,943,000	961,737,000
Cash and cash equivalents include:
Cash and Cash Equivalents, at Carrying Value, Total		$ 752,458,000	$ 796,108,000

[1] For the nine-month periods ended September 30, 2016 and 2015, approximately $6.3 million and $12.9 million, respectively, of the credit impairment recognized in earnings consisted of credit losses on Puerto Rico Government debt securities and $0.4 million and $0.6 million, respectively, was associated with credit losses on private label MBS.

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CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Preferred Stock [Member]	Common Stock [Member]	Additional Paid In Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]
Total stockholders' equity			$ 21,298	$ 916,067	$ 716,625	$ (18,351)
Total stockholders' equity	$ 1,700,950	$ 36,104	21,298	916,067	716,625	(18,351)
Balance at beginning of period at Dec. 31, 2014			21,298	916,067	716,625	(18,351)
Common stock issued for compensation			33	(33)
Common stock withheld for taxes			(18)	(949)
Restricted stock grants			102	(102)
Restricted stock forfeited			(2)	2
Stock-based compensation				4,535
Net income	6,330				6,330
Other comprehensive income (loss), net of tax	13,681					13,681
Common stock issued in exchange for trust preferred securities			85	5,543
Balance at end of period at Sep. 30, 2015	1,700,950	36,104	21,498	925,063	722,955	(4,670)
Total stockholders' equity	1,700,950	36,104	21,498	925,063	722,955	(4,670)
Total stockholders' equity	1,694,134		21,509	926,348	737,922	(27,749)
Total stockholders' equity	1,799,886	36,104	21,509	926,348	737,922	(27,749)
Balance at beginning of period at Dec. 31, 2015	1,694,134		21,509	926,348	737,922	(27,749)
Common stock issued for compensation			63	(63)
Common stock withheld for taxes			(26)	(834)
Restricted stock grants			193	(193)
Restricted stock forfeited			0	0
Stock-based compensation				5,132
Net income	69,371				69,371
Other comprehensive income (loss), net of tax	32,109					32,109
Common stock issued in exchange for trust preferred securities			0	0
Balance at end of period at Sep. 30, 2016	1,799,886	36,104	21,739	930,390	807,293	4,360
Total stockholders' equity	$ 1,799,886	$ 36,104	$ 21,739	$ 930,390	$ 807,293	$ 4,360

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2016

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The Consolidated Financial Statements (unaudited) of First BanCorp. (the “Corporation”) have been prepared in conformity with the accounting policies stated in the Corporation’s Audited Consolidated Financial Statements included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2015. Certain information and note disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) have been condensed or omitted from these statements pursuant to the rules and regulations of the SEC and, accordingly, these financial statements should be read in conjunction with the Audited Consolidated Financial Statements of the Corporation for the year ended December 31, 2015, which are included in the Corporation’s 2015 Annual Report on Form 10-K. All adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the statement of financial position, results of operations and cash flows for the interim periods have been reflected. All intercompany accounts and transactions have been eliminated in consolidation.

During the second quarter of 2016, the Corporation reviewed its historical accounting treatment as loans of its $156.2 million of financing arrangements with Puerto Rico municipalities issued in bond form, but underwritten as loans with features that are typically found in commercial loan transactions. This review came as a result of the determination of the Federal Reserve Board that the transactions must be treated for regulatory reporting purposes as investment securities. The Puerto Rico Municipal Finance Act (the “Act”) requires the designation of financing arrangements obtained by municipalities with maturities greater than 8 years as “special obligation bonds” subject to specific provisions under the Act. The Corporation concluded that the impact of accounting for the transactions as investment securities rather than loans does not have a material effect on previously reported results of operations, financial condition, or cash flows and, accordingly, these financing arrangements have been accounted for and reported as held-to-maturity investment securities and not as loans since the second quarter of 2016.

The results of operations for the quarter and nine-month period ended September 30, 2016 are not necessarily indicative of the results to be expected for the entire year.

Adoption of new accounting requirements and recently issued but not yet effective accounting requirements

The Financial Accounting Standards Board (“FASB”) has issued the following accounting pronouncements and guidance relevant to the Corporation’s operations:

In March 2016, the FASB updated the Accounting StandardsCodification (the “Codification” or the “ASC”) to simplify certain aspects of the accounting for share-based payment transactions. The main provisions in this Update include: (i) recognition of all tax benefits and tax deficiencies (including tax benefits of dividends on share-base payment awards) as income tax expense or benefit in the income statement, (ii) classification of the excess tax benefit along with other income tax cash flows as an operating activity, (iii) an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur, (iv) a threshold to qualify for equity classification which permits withholding up to the maximum statutory tax rates in the applicable jurisdictions, and (v) classification of cash paid by an employer as a financing activity when the payment results from the withholding of shares for tax withholding purposes. In addition to those simplifications, the amendments eliminate the guidance in ASC 718 that was indefinitely deferred shortly after the issuance of FASB Statement No. 123 (revised 2004), Share-Based Payment. This should not result in a change in practice because the guidance that is being superseded was never effective. For public business entities, the amendments in this Update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Corporation is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements.

In March 2016, the FASB updated the Codification to require an equity method investor to add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. Also, this Update requires that an entity that has an available-for sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method. Earlier application is permitted. The Corporation is currently evaluating the impact of the adoption of this guidance, if any, on its consolidated financial statements.

In June 2016, the FASB updated the Codification and issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which introduces new guidance for the accounting for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination.

The new model, referred to as the current expected credit losses (CECL) model, will apply to: (1) financial assets subject to credit losses and measured at amortized cost and (2) certain off-balance sheet credit exposures. This includes loans, held-to-maturity debt securities, loan commitments, financial guarantees, and net investments in leases, as well as reinsurance and trade receivables. Upon initial recognition of the exposure, the CECL model requires an entity to estimate the credit losses expected over the life of an exposure (or pool of exposures). The estimate of expected credit losses (ECL) should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments. Financial instruments with similar risk characteristics should be grouped together when estimating ECL. The ASU does not prescribe a specific method to make the estimate so its application will require significant judgment.

Generally, upon initial recognition of a financial asset the estimate of the ECL will be recorded through an allowance for loan and lease losses with an offset to current earnings. Subsequently, the ECL will need to be reassessed each period, and both negative and positive changes to the estimate will be recognized through an adjustment to the allowance for loan and lease losses and earnings.

The ASU amends the current other-than-temporary impairment (OTTI) model for available-for-sale debt securities. The new available-for-sale debt security model will require an estimate of ECL only when the fair value is below the amortized cost of the asset. The length of time the fair value of an available-for-sale debt security has been below the amortized cost will no longer impact the determination of whether a credit loss exists. As such, the new available-for-sale debt security model is not an OTTI model. In addition, credit losses on available-for-sale debt securities will now be limited to the difference between the security’s amortized cost basis and its fair value. The available-for-sale debt security model will also require the use of an allowance to record estimated credit losses (and subsequent recoveries).

The purchased financial assets with credit deterioration (PCD) model applies to purchased financial assets (measured at amortized cost or available-for-sale) that have experienced more than insignificant credit deterioration since origination. This represents a change from the scope of what are considered purchased credit-impaired assets under today’s model. In contrast to the accounting for originated or purchased assets that do not qualify as PCD, the initial estimate of expected credit losses for a PCD would be recognized through an allowance for loan and lease losses with an offset to the cost basis of the related financial asset at acquisition (i.e., there is no impact to net income at initial recognition). Subsequently, the accounting will follow the applicable CECL or available-for-sale debt security impairment model with all adjustments of the allowance for loan and lease losses recognized through earnings. Beneficial interests classified as held-to-maturity or available-for-sale will need to apply the PCD model if the beneficial interest meets the definition of PCD or if there is a significant difference between contractual and expected cash flows at initial recognition.

In general, the new guidance will require modified retrospective application to all outstanding instruments, with a cumulative effect adjustment recorded to opening retained earnings as of the beginning of the first period in which the guidance becomes effective. However, prospective application is required for PCD assets previously accounted for under ASC 310-30 and for debt securities for which an other-than-temporary impairment was recognized prior to the date of adoption.

ASU 2016-13 also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan and lease losses. In addition, public business entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination (i.e., by vintage year).

The ASU will be effective for public business entities that are SEC filers in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early application of the guidance will be permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Corporation is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements.

In August 2016, the FASB updated the Codification to provide specific guidance on the classification and presentation of certain cash payments and cash receipts in the statement of cash flows. This guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The amendments in this Update provide guidance on the following eight specific cash flow issues: (1) Debt Prepayment or Debt Extinguishment Costs: Cash payments for debt prepayment or debt extinguishment costs should be classified as cash outflows for financing activities; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing: At the settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, the issuer should classify the portion of the cash payment attributable to the accreted interest related to the debt discount as cash outflows for operating activities, and the portion of the cash payment attributable to the principal as cash outflows for financing activities; (3) Contingent Consideration Payments Made after a Business Combination: Cash payments not made soon after the acquisition date of a business combination by an acquirer to settle a contingent consideration liability should be separated and classified as cash outflows for financing activities and operating activities. Cash payments up to the amount of the contingent consideration liability recognized at the acquisition date (including measurement-period adjustments) should be classified as financing activities; any excess should be classified as operating activities. Cash payments made soon after the acquisition date of a business combination by an acquirer to settle a contingent consideration liability should be classified as cash outflows for investing activities; (4) Proceeds from the Settlement of Insurance Claims: Cash proceeds received from the settlement of insurance claims should be classified on the basis of the related insurance coverage (that is, the nature of the loss). For insurance proceeds that are received in a lump-sum settlement, an entity should determine the classification on the basis of the nature of each loss included in the settlement; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned Life Insurance Policies: Cash proceeds received from the settlement of corporate-owned life insurance policies should be classified as cash inflows from investing activities. The cash payments for premiums on corporate-owned policies may be classified as cash outflows for investing activities, operating activities, or a combination of investing and operating activities; (6) Distributions Received from Equity Method Investees: When a reporting entity applies the equity method, it should make an accounting policy election to classify distributions received from equity method investees using either of the following approaches: a. Cumulative earnings approach: Distributions received are considered returns on investment and classified as cash inflows from operating activities, unless the investor’s cumulative distributions received less distributions received in prior periods that were determined to be returns of investment exceed cumulative equity in earnings recognized by the investor. When such an excess occurs, the current-period distribution up to this excess should be considered a return of investment and classified as cash inflows from investing activities. b. Nature of the distribution approach: Distributions received should be classified on the basis of the nature of the activity or activities of the investee that generated the distribution as either a return on investment (classified as cash inflows from operating activities) or a return of investment (classified as cash inflows from investing activities) when such information is available to the investor. If an entity elects to apply the nature of the distribution approach and the information to apply that approach to distributions received from an individual equity method investee is not available to the investor, the entity should report a change in accounting principle on a retrospective basis by applying the cumulative earnings approach in (a) for that investee. In such situations, an entity should disclose that a change in accounting principle has occurred with respect to the affected investee(s) due to the lack of available information and should provide the disclosures required in paragraphs 250-10-50-1(b) and 250-10-50-2, as applicable. This amendment does not address equity method investments measured using the fair value option; (7) Beneficial Interests in Securitization Transactions: A transferor’s beneficial interest obtained in a securitization of financial assets should be disclosed as a non cash activity, and cash receipts from payments on a transferor’s beneficial interests in securitized trade receivables should be classified as cash inflows from investing activities; (8) Separately Identifiable Cash Flows and Application of the Predominance Principle: The classification of cash receipts and payments that have aspects of more than one class of cash flows should be determined first by applying specific guidance in generally accepted accounting principles (GAAP). In the absence of specific guidance, an entity should determine each separately identifiable source or use within the cash receipts and cash payments on the basis of the nature of the underlying cash flows. An entity should then classify each separately identifiable source or use within the cash receipts and payments on the basis of their nature in financing, investing, or operating activities. In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannot be separated by source or use, the appropriate classification should depend on the activity that is likely to be the predominant source or use of cash flows for the item. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The amendments in this Update should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Corporation is currently evaluating the impact of the adoption of this guidance, if any, on its consolidated financial statements.

In October 2016, the FASB updated the Codification to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. With this Update, entities are required to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory, when the transfer occurs. Under current GAAP, the recognition of current and deferred income taxes for an intra-entity assets transfer is prohibited until the assets are sold to an outside party. This Update does not include new disclosure requirements; however, existing disclosure requirements might be applicable when accounting for the current and deferred income taxes for an intra-entity transfer of an asset other than inventory. For example, GAAP requires an entity to disclose a comparison of income tax expense (benefit) with statutory expectations (a rate reconciliation for public entities or a description of the nature of each significant reconciling item for nonpublic entities) and also requires an entity to disclose the types of temporary differences and carryforwards that give rise to a significant portion of deferred income taxes. For public business entities, the amendments in this Update are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance. The Corporation is currently evaluating the impact of the adoption of this guidance, if any, on its consolidated financial statements.

In October 2016, the FASB updated the Codification to modify the criteria used by a reporting entity when determining if it is the primary beneficiary of a variable interest entity (“VIE”) when the entities are under common control and the reporting entity has indirect interests in the VIE through related parties. If the reporting entity meets the first criteria in that it has the power to direct the activities of the VIE that are most significant to its economic performance, it is required to consider all interests held indirectly through related entities in determining if it meets the second criterion, the obligation to absorb losses of the VIE, or the right to receive benefits from it that are potentially significant to the VIE. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Corporation is currently evaluating the impact of the adoption of this guidance, if any, on its consolidated financial statements.

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EARNINGS PER COMMON SHARE

9 Months Ended

Sep. 30, 2016

EARNINGS PER COMMON SHARE

NOTE 2 – EARNINGS PER COMMON SHARE

	The calculations of earnings per common share for the quarters and nine-month periods ended September 30, 2016 and 2015 are as follows:
		Quarter Ended				Nine-Month Period Ended
		September 30,				September 30,
		2016		2015		2016		2015
(In thousands, except per share information)
Net income		$	24,074	$	14,758	$	69,371	$	6,330
Net income attributable to common stockholders		$	24,074	$	14,758	$	69,371	$	6,330
Weighted-Average Shares:
Average common shares outstanding			212,927		211,820		212,682		211,255
Average potential dilutive common shares			3,651		1,963		2,577		1,341
Average common shares outstanding- assuming dilution			216,578		213,783		215,259		212,596
Earnings per common share:
Basic		$	0.11	$	0.07	$	0.33	$	0.03
Diluted		$	0.11	$	0.07	$	0.32	$	0.03

Earnings per common share is computed by dividing net income attributable to common stockholders by the weighted average number of common shares issued and outstanding. Net income attributable to common stockholders represents net income adjusted for any preferred stock dividends, including any dividends declared and any cumulative dividends related to the current dividend period that have not been declared as of the end of the period.

Potential common shares consist of common stock issuable under the assumed exercise of stock options, unvested shares of restricted stock, and outstanding warrants using the treasury stock method. This method assumes that the potential common shares are issued and the proceeds from the exercise, in addition to the amount of compensation cost attributable to future services, are used to purchase common stock at the exercise date. The difference between the number of potential shares issued and the shares purchased is added as incremental shares to the actual number of shares outstanding to compute diluted earnings per share. Stock options, unvested shares of restricted stock, and outstanding warrants that result in lower potential shares issued than shares purchased under the treasury stock method are not included in the computation of dilutive earnings per share since their inclusion would have an antidilutive effect on earnings per share. Stock options not included in the computation of outstanding shares because they were antidilutive amounted to 34,989and 69,848 asof September 30, 2016 and 2015, respectively.

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STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2016

STOCK-BASED COMPENSATION

NOTE 3 – STOCK-BASED COMPENSATION

As of January 21, 2007, the Corporation’s 1997 stock option plan expired and no additional awards could be granted under that plan. All outstanding awards granted under this plan have continued in full force and effect since then, subject to their original terms. No awards of shares could be granted under the 1997 stock option plan as of its expiration.

The activity of stock options granted under the 1997 stock option plan for the nine-month period ended September 30, 2016 is set forth below:
				Weighted-Average
				Remaining		Aggregate
	Number of		Weighted-Average	Contractual Term		Intrinsic Value
	Options	Exercise Price		(Years)	(In thousands)
Beginning of period outstanding and
exercisable	69,848	$	160.30
Options expired	(34,326)		183.37
Options cancelled	(533)		138.00
End of period outstanding and exercisable	34,989	$	138.00	0.3	$	-

On May 24, 2016, the Corporation’s stockholders approved the amendment and restatement of the First BanCorp Omnibus Incentive Plan, as amended (the “Omnibus Plan”), to, among other things, increase the number of shares of Common Stock reserved for issuance under the Omnibus Plan, to extend the term of the Omnibus Plan to May 24, 2026 and to re-approve the material terms of the performance goals under the Omnibus Plan for purposes of Section 162(m) of the U.S. Internal Revenue Code of 1986, as amended. The Omnibus Plan provides for equity-based compensation incentives (the “awards”) through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, cash-based awards and other stock-based awards. The Omnibus Plan authorizes the issuance of up to14,169,807shares of common stock, subject to adjustments for stock splits, reorganizations, and other similar events. As of September 30, 2016, 6,924,391 shares of common stock were available for issuance under the Omnibus Plan. The Corporation’s Board of Directors, upon receiving the relevant recommendation of the Compensation Committee, has the power and authority to determine those eligible to receive awards and to establish the terms and conditions of any awards, subject to various limits and vesting restrictions that apply to individual and aggregate awards.

Under the Omnibus Plan, during the first nine monthsof 2016, 130,873 shares of restricted stock were awarded to the Corporation’s independent directors subject to a one-year vesting period. Also during the first nine months of 2016, the Corporation issued 1,794,702 shares of restricted stock to employees subject to vesting periods that range from 2 to 3 years.Included in those 1,794,702 shares of restricted stock are 1,546,137 shares granted to certain senior officers consistent with the requirements of the Troubled Asset Relief Program (“TARP”) Interim Final Rule, which permit TARP recipients to grant “long-term restricted stock” without violating the prohibition on paying or accruing a bonus payment provided that: (i) the value of the grant may not exceed one-third of the amount of the employee’s annual compensation, (ii) no portion of the grant may vest before two years after the grant date, and (iii) the grant must be subject to a further restriction on transfer or payment as described below. Specifically, the stock that has otherwise vested may not become transferable at any time earlier than as permitted under the schedule set forth by TARP, which is based on the repayment in25% increments of the aggregate financial assistance received from the U.S. Treasury. Hence, notwithstanding the vesting period mentioned above, the senior officers covered by TARP are restricted from transferring the shares. The U.S. Treasury confirmed that, effective March 2014, it has recovered more than25% of its investment in First BanCorp. Therefore, the restrictions on transfer relating to 25% of certain shares granted under TARP requirements have been released.

The fair value of the shares of restricted stock granted in the first nine months of2016 was based on the market price of the Corporation’s outstanding common stock on the date of the grant. For the 1,546,137shares of restricted stock granted under the TARP requirements, the market price was discounted dueto TARP transferability restrictions. For purposes of determining the awards’ fair value, the Corporation estimated an appreciation of 14% in the value of the common stock using the Capital Asset Pricing Model as a basis of what would be a market participant’s expected return on the Corporation’s stock and assumed that the U.S. Treasury would hold the common stock of the Corporation that it currently owns for a period not to exceed two years, resulting in a fair value of $1.43 for each share of restricted stock granted under the TARP requirements. Also, the Corporation used empirical data to estimate employee terminations; separate groups of employees that have similar historical exercise behavior were considered separately for valuation purposes.

The following table summarizes the restricted stock activity in the first nine months of 2016 under the Omnibus Plan for both executive officers covered by the TARP requirements and other employees as well as for the independent directors:
	Nine-Month Period Ended
	September 30, 2016
	Number of shares		Weighted-Average
	of restricted		Grant Date
	stock		Fair Value
Non-vested shares at beginning of year	2,968,461	$	3.34
Granted	1,925,575		1.87
Forfeited	(1,000)		6.03
Vested	(683,713)		3.80
Non-vested shares at September 30, 2016	4,209,323	$	2.59

For the quarter and nine-month period ended September 30, 2016, the Corporation recognized $1.0million and $2.9million, respectively, of stock-based compensation expense related to restricted stock awards, compared to $0.9 million and $2.9 million for the same periods in 2015. As of September 30, 2016, there was $4.6 million of total unrecognized compensation cost related to nonvested shares of restricted stock. The weighted average period over which the Corporation expects to recognize such cost is 1.4 years.

During the first nine months of 2015, 219,531 shares of restricted stock were awarded to the Corporation’s independent directors subject to vesting periods that range from 1 to 5 years. In addition, during the first nine months of 2015, the Corporation issued 793,964 shares of restricted stock to employees subject to vesting periods that range from 3 months to 3 years. Included in those 793,964 shares of restricted stock are 615,464 shares granted to certain senior officers consistent with the requirements of TARP. The employees covered by TARP are restricted from transferring the shares, subject to certain conditions as explained above.

The fair value of the shares of restricted stock granted in the first nine months of 2015 was based on the market price of the Corporation’s outstanding common stock on the date of the grant. For the 615,464 shares of restricted stock granted under the TARP requirements, the market price was discounted due to the post-vesting restrictions. For purposes of computing the discount, the Corporation estimated an appreciation of 14% in the value of the common stock using the Capital Asset Pricing Model as a basis of what would be a market participant’s expected return on the Corporation’s stock and assumed that the U.S. Treasury would hold the common stock of the Corporation that it owned as of the date of the grants for a period not to exceed one year, resulting in a fair value of $3.18 for restricted shares granted under the TARP requirements.

Stock-based compensation accounting guidance requires the Corporation to reverse compensation expense for any awards thatwere forfeited due to employee or director turnover.Approximately $5 thousand and $36 thousand of compensation expense was reversed during the first nine months of 2016 and 2015, respectively, related to forfeited awards.

Also, under the Omnibus Plan, effective April 1, 2013, the Corporation’s Board of Directors determined to increase the salary amounts paid to certain executive officers primarily by paying the increased salary amounts in the form of shares of the Corporation’s common stock, instead of cash. During the first nine months of 2016, the Corporation issued 629,476shares of common stock (first nine months of 2015 – 330,254 shares) with a weighted average market value of $3.60 (first nine months of 2015 – $5.14) as salary stock compensation. This resulted in a compensation expense of $2.2million recorded in the first nine months of 2016 (first nine months of 2015 – $1.7 million).

For the first nine months of 2016, the Corporation withheld 189,604shares (first nine months of 2015 – 108,731 shares) from the common stock paid to certain senior officers as additional compensation and 65,498shares of restricted stock that vested during the first nine months of 2016 (first nine months of 2015 – 72,918) to cover employees’ payroll and income tax withholding liabilities; these shares are held as treasury shares. The Corporation paid any fractional share of salary stock that the officer was entitled to in cash. In the consolidated financial statements, the Corporation treats shares withheld for tax purposes as common stock repurchases.

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INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 2016

INVESTMENT SECURITIES

NOTE 4 – INVESTMENT SECURITIES

Investment Securities Available for Sale

The amortized cost, non-credit loss component of other-than-temporary impairment (“OTTI”)recorded in other comprehensive income (“OCI”), gross unrealized gains and losses recorded in OCI, approximate fair value, and weightedaverage yield of investment securities available for sale by contractual maturities as of September 30, 2016 and December 31, 2015 were as follows:

		September 30, 2016
		Amortized cost		Noncredit Loss Component of OTTI Recorded in OCI						Fair value		Weighted average yield%
						Gross Unrealized
						gains		losses
		(Dollars in thousands)
U.S. Treasury securities:
	Due within one year	$	7,513	$	-	$	1	$	-	$	7,514	0.57
Obligations of U.S.
government-sponsored
agencies:
Due within one year			9,629		-		4		-		9,633	0.70
After 1 to 5 years			496,782		-		3,215		53		499,944	1.32
After 10 years			44,724		-		7		133		44,598	0.87
Puerto Rico government
obligations:
After 1 to 5 years			21,423		12,023		-		-		9,400	4.38
After 5 to 10 years			845		-		6		-		851	5.20
After 10 years			21,205		3,196		116		1,556		16,569	5.39
United States and Puerto Rico
government obligations			602,121		15,219		3,349		1,742		588,509	1.53
Mortgage-backed securities:
FHLMC certificates:
After 5 to 10 years			6,314		-		145		-		6,459	2.31
After 10 years			251,516		-		3,504		62		254,958	2.10
			257,830		-		3,649		62		261,417	2.10
GNMA certificates:
Due within one year			1		-		-		-		1	1.69
After 1 to 5 years			93		-		3		-		96	3.85
After 5 to 10 years			98,314		-		2,557		-		100,871	3.05
After 10 years			131,216		-		12,532		-		143,748	4.37
			229,624		-		15,092		-		244,716	3.81
FNMA certificates:
After 1 to 5 years			22,594		-		452		-		23,046	1.99
After 5 to 10 years			26,448		-		577		19		27,006	2.06
After 10 years			602,540		-		14,534		20		617,054	2.31
			651,582		-		15,563		39		667,106	2.29
Collateralized mortgage
obligations issued or guaranteed by
the FHLMC and GNMA:
After 5 to 10 years			19,853		-		7		33		19,827	1.18
After 10 years			39,530		-		25		7		39,548	1.21
			59,383		-		32		40		59,375	1.20
Other mortgage pass-through
trust certificates:
After 5 to 10 years			81		-		-		-		81	7.20
After 10 years			30,606		8,476		-		-		22,130	2.37
			30,687		8,476		-		-		22,211	2.37
Total mortgage-backed
securities			1,229,106		8,476		34,336		141		1,254,825	2.48
Other
After 1 to 5 years			100		-		-		-		100	1.50
Equity Securities (1)			413		-		6		-		419	2.15
Total investment securities
available for sale		$	1,831,740	$	23,695	$	37,691	$	1,883	$	1,843,853	2.17
(1)	Equity securities consisted of investment in a Community Reinvestment Act Qualified Investment Fund.

		December 31, 2015
		Amortized cost		Noncredit Loss Component of OTTI Recorded in OCI						Fair value		Weighted average yield%
						Gross Unrealized
						gains		losses
(Dollars in thousands)
U.S. Treasury securities:
	After 1 to 5 years	$	7,530	$	-	$	-	$	33	$	7,497	0.57
Obligations of U.S.
government-sponsored
agencies:
	Due within one year		14,624		-		4		10		14,618	0.68
	After 1 to 5 years		384,323		-		174		4,305		380,192	1.32
	After 5 to 10 years		58,150		-		343		242		58,251	2.34
Puerto Rico Government
obligations:
	After 1 to 5 years		25,663		14,662		-		-		11,001	4.38
	After 5 to 10 years		855		-		-		-		855	5.20
	After 10 years		23,162		5,255		134		1,680		16,361	5.40
United States and Puerto Rico
Government obligations			514,307		19,917		655		6,270		488,775	1.75
Mortgage-backed securities:
FHLMC certificates:
	After 5 to 10 years		336		-		31		-		367	4.95
	After 10 years		287,711		-		1,073		1,706		287,078	2.14
			288,047		-		1,104		1,706		287,445	2.15
GNMA certificates:
	Due within one year		2		-		-		-		2	1.70
	After 1 to 5 years		109		-		5		-		114	4.26
	After 5 to 10 years		120,298		-		3,182		-		123,480	3.07
	After 10 years		165,175		-		12,822		20		177,977	4.38
			285,584		-		16,009		20		301,573	3.83
FNMA certificates:
	After 1 to 5 years		2,552		-		74		-		2,626	3.32
	After 5 to 10 years		21,557		-		433		233		21,757	2.73
	After 10 years		759,247		-		5,628		6,063		758,812	2.34
			783,356		-		6,135		6,296		783,195	2.35
Other mortgage pass-through
trust certificates:
	After 5 to 10 years		92		-		1		-		93	7.26
	After 10 years		34,905		9,691		-		-		25,214	2.26
			34,997		9,691		1		-		25,307	2.26
Total mortgage-backed
	securities		1,391,984		9,691		23,249		8,022		1,397,520	2.61
Other
	After 1 to 5 years		100		-		-		-		100	1.50
Total investment securities
	available for sale	$	1,906,391	$	29,608	$	23,904	$	14,292	$	1,886,395	2.38

Maturities of mortgage-backed securities are based on contractual terms assuming no prepayments. Expected maturities of investments might differ from contractual maturities because they may be subject to prepayments and/or call options. The weighted average yield on investment securities available for sale is based on amortized cost and, therefore, does not give effect to changes in fair value. The net unrealized gain or loss on securities available for sale and the non-credit loss component of OTTI are presented as part of OCI.

The following tables show the Corporation’s available-for-sale investments’ fair value and gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as ofSeptember 30, 2016 and December 31, 2015. The tables also include debt securities for which an OTTI was recognized and only the amount related to a credit loss was recognized in earnings.For unrealized losses for which OTTI was recognized, the related credit loss was charged against the amortized cost basis of the debt security.

	As of September 30, 2016
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
		(In thousands)
Debt securities:
Puerto Rico Government obligations	$	-	$	-	$	21,688	$	16,775	$	21,688	$	16,775
U.S. Treasury and U.S. government
agencies obligations		60,970		186		-		-		60,970		186
Mortgage-backed securities:
FNMA		18,245		39		-		-		18,245		39
FHLMC		54,269		62		-		-		54,269		62
Collateralized mortgage obligations
issued or guaranteed by FHLMC and GNMA		31,896		40		-		-		31,896		40
Other mortgage pass-through trust
certificates		-		-		22,130		8,476		22,130		8,476
Equity securities		2		-		-		-		2		-
	$	165,382	$	327	$	43,818	$	25,251	$	209,200	$	25,578
	As of December 31, 2015
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
		(In thousands)
Debt securities:
Puerto Rico Government obligations	$	-	$	-	$	23,008	$	21,597	$	23,008	$	21,597
U.S. Treasury and U.S. government
agencies obligations		198,243		929		210,504		3,661		408,747		4,590
Mortgage-backed securities:
FNMA		437,305		4,516		88,013		1,780		525,318		6,296
FHLMC		141,890		1,338		19,306		368		161,196		1,706
GNMA		1,047		20		-		-		1,047		20
Other mortgage pass-through trust
certificates		-		-		25,214		9,691		25,214		9,691
	$	778,485	$	6,803	$	366,045	$	37,097	$	1,144,530	$	43,900

Assessment for OTTI on Available-For-Sale Securities

Debt securities issued by U.S. government agencies, U.S. government-sponsored entities and the U.S. Treasury accounted for approximately 97% of the total available-for-sale portfolio as of September 30, 2016 and no credit losses are expected, given the explicit and implicit guarantees provided by the U.S. federal government. The Corporation’s OTTI assessment was concentrated mainly on available-for-sale Puerto Rico Government debt securities, with an amortized cost of $43.5million, and on private label mortgage-backed securities (“MBS”) with an amortized cost of $30.6million, and for which credit losses are evaluated on a quarterly basis. The Corporation considered the following factors in determining whether a credit loss exists and the period over which the debt security is expected to recover:

• The length of time and the extent to which the fair value has been less than the amortized cost basis;
• Any adverse change to the credit conditions and liquidity of the issuer, taking into consideration the latest information available about the financial condition of the issuer, credit ratings, the failure of the issuer to make scheduled principal or interest payments, recent legislation and government actions affecting the issuer’s industry and actions taken by the issuer to deal with the present economic climate;
• Changes in the near term prospects of the underlying collateral of a security,if any, such as changes in default rates, loss severity given default, and significant changes in prepayment assumptions; and
• The level of cash flows generated from the underlying collateral, if any, supporting the principal and interest payments of the debt securities.

The Corporation recorded OTTI losses on available-for-sale debt securities as follows:

		Quarter Ended				Nine-Month Period Ended
		September 30,				September 30,
		2016		2015		2016		2015
(In thousands)
Total other-than-temporary impairment losses		$	-	$	-	$	(1,845)	$	(29,521)
Portion of other-than-temporary impairment recognized in OCI			-		(231)		(4,842)		16,037
Net impairment losses recognized in earnings (1)		$	-	$	(231)	$	(6,687)	$	(13,484)
(1)	For the nine-month periods ended September 30, 2016 and 2015, approximately $6.3 million and $12.9 million, respectively, of the credit impairment recognized in earnings consisted of credit losses on Puerto Rico Government debt securities and $0.4 million and $0.6 million, respectively, was associated with credit losses on private label MBS.

The following tables summarize the roll-forward of credit losses on debt securities held by the Corporation for which a portion of an OTTI is recognized in OCI:
	Cumulative OTTI credit losses recognized in earnings on securities still held
			Credit impairments		Credit impairments
	June 30,		recognized in earnings		recognized in earnings on		September 30,
	2016		on securities not		securities that have been		2016
	Balance		previously impaired		previously impaired		Balance
(In thousands)
Available-for-sale securities
Puerto Rico Government obligations	$	22,189	$	-	$	-	$	22,189
Private label MBS		6,792		-		-		6,792
Total OTTI credit losses for available-for-sale
debt securities	$	28,981	$	-	$	-	$	28,981

	Cumulative OTTI credit losses recognized in earnings on securities still held
			Credit impairments		Credit impairments
	December 31,		recognized in earnings		recognized in earnings on		September 30,
	2015		on securities not		securities that have been		2016
	Balance		previously impaired		previously impaired		Balance
(In thousands)
Available-for-sale securities
Puerto Rico Government obligations	$	15,889	$	-	$	6,300	$	22,189
Private label MBS		6,405		-		387		6,792
Total OTTI credit losses for available-for-sale
debt securities	$	22,294	$	-	$	6,687	$	28,981

	Cumulative OTTI credit losses recognized in earnings on securities still held
			Credit impairments		Credit impairments
	June 30,		recognized in earnings		recognized in earnings on		September 30,
	2015		on securities not		securities that have been		2015
	Balance		previously impaired		previously impaired		Balance
(In thousands)
Available-for-sale securities
Puerto Rico Government obligations	$	12,856	$	-	$	-	$	12,856
Private label MBS		6,174		-		231		6,405
Total OTTI credit losses for available-for-sale
debt securities	$	19,030	$	-	$	231	$	19,261

	Cumulative OTTI credit losses recognized in earnings on securities still held
			Credit impairments		Credit impairments
	December 31,		recognized in earnings		recognized in earnings on		September 30,
	2014		on securities not		securities that have been		2015
	Balance		previously impaired		previously impaired		Balance
(In thousands)
Available-for-sale securities
Puerto Rico Government obligations	$	-	$	12,856	$	-	$	12,856
Private label MBS		5,777		-		628		6,405
Total OTTI credit losses for available-for-sale
debt securities	$	5,777	$	12,856	$	628	$	19,261

In the first quarter of 2016, the Corporation recorded a $6.3million OTTI charge on three Puerto Rico Government debt securities held by the Corporation as part of its available-for-sale securities portfolio, specifically bonds of the GDB maturing on February 1, 2019 and the Puerto Rico Public Buildings Authority maturing on July 1, 2028. This was the third OTTI charge on these securities recorded since June 30, 2015, as OTTI charges of $12.9million and $3.0million were booked in the second and fourth quarters of 2015, respectively, and reduced the amortized cost basis of these three Puerto Rico Government debt securities to $35.6million as of September 30, 2016, including accrued interest of $0.9 million.

During the first nine months of 2016, in consideration of the latest available information about the Puerto Rico Government’s financial condition, including the enactment of a debt moratorium law and the declaration of a state of emergency at the GDB, the issuance of the GDB and the Commonwealth’s audited financial statements for the fiscal year ended June 30, 2014, as well as the issuance of exchange proposals with the Commonwealth’s creditors related to its outstanding bond obligations, the Corporation applied a discounted cash flow analysis to its Puerto Rico Government debt securities in order to calculate the cash flows expected to be collected and to determine if any portion of the decline in market value of these securities was considered a credit-related other-than-temporary impairment. The analysis derives an estimate of value based on the present value of risk-adjusted cash flows of the underlying securities and included the following components:

• The contractual future cash flows of the bonds are projected based on the key terms as set forth in the official statements for each security. Such key terms include, among others, the interest rate, amortization schedule, if any, and maturity date.

• The risk-adjusted cash flows are calculated based on a probability of default analysis and recovery rate assumptions, including the weighting of different scenarios of ultimate recovery, considering the credit rating of each security. Constant monthly default rates are assumed throughout the life of the bonds, which considers the respective security's credit rating as of the date of the analysis.

• The adjusted future cash flows are then discounted at the original effective yield of each investment based on the purchase price and expected risk-adjusted future cash flows as of the purchase date of each investment.

The discounted risk-adjusted cash flow analysis for the three Puerto Rico Government bonds mentioned above assumed a default probability of 100%, thus reflecting that it is more likely than not that these three bonds will default during their remaining terms. Based on this analysis, the Corporation determined that it is unlikely to receive all of the remaining contractual interest and principal amounts when due on these bonds and recorded, in the first quarter of 2016, other-than-temporary credit-related impairment charges amounting to $6.3 million, assuming recovery rates ranging from 35% to 80% (with a weighted average of 61%). On August 1, 2016,the GDB defaulted on a $28 million payment of interest due to its creditors, including interest due on bonds held by the Corporation. Similarly, the Puerto Rico Public Building Authority made only a partial payment on its interest payment due on October 1, 2016. In the third quarter of 2016, as a result of the recent defaults, the Corporation discontinued income recognition related to, and placed in non-performing status, the bonds of the GDB and the Puerto Rico Public Building Authority. As of September 30, 2016, the amortized cost of these bonds, including accrued interest of $0.9 million, was $35.6 million ($22.3 million of GDB bonds and $13.3 million of Puerto Rico Public Buildings Authority bonds), recorded at their aggregate fair value of $19.5 million ($9.4 million of GDB bonds and $10.1 million of Puerto Rico Public Buildings Authority bonds).

The Corporation does not have the intention to sell these securities and has sufficient capital and liquidity to hold these securities until a recovery of the fair value occurs; as such, only the credit loss component was reflected in earnings. Given the significant and prolonged uncertainty of a debt restructuring process, the Corporation cannot be certain that future impairment charges will not be required against these securities.

In addition, during the first nine months of 2016, the Corporation recorded a $0.4 million credit-related impairment loss associated with private label MBS, which are collateralized by fixed-rate mortgages on single-family residential properties in the United States. The interest rates on these private-label MBS is variable, tied to 3-month LIBOR and limited to the weighted-average coupon of the underlying collateral. The underlying mortgages are fixed-rate, single-family loans with original high FICO scores (over 700) and moderate original loan-to-value ratios (under 80%), as well as moderate delinquency levels.

Based on the expected cash flows, and since the Corporation does not have the intention to sell the securities and has sufficient capital and liquidity to hold these securities until a recovery of the fair value occurs, only the credit loss component was reflected in earnings. Significant assumptions in the valuation of the private label MBS were as follows:

	September 30, 2016		December 31, 2015
	Weighted		Weighted
	Average	Range	Average	Range
Discount rate	13.3%	12.03% - 13.58%	14.5%	14.5%
Prepayment rate	13.7%	6.5% - 22.5%	25%	15.92% - 31.25%
Projected Cumulative Loss Rate	4%	0.2% - 9.1%	4%	0.18% - 6.66%

InvestmentsHeld to Maturity

The amortized cost, gross unrealized gains and losses, approximate fair value, weighted-average yield and contractual maturities of investment securities held to maturity as of September 30, 2016 and December 31, 2015 were as follows:

		September 30, 2016
		Amortized cost						Fair value		Weighted average yield%
				Gross Unrealized
				gains		losses
Puerto Rico Municipal Bonds:
	After 1 to 5 years	$	1,136	$	-	$	27	$	1,109	5.38
	After 5 to 10 years		10,741		-		782		9,959	4.41
	After 10 years		144,313		-		23,140		121,173	4.66
Total investment securities
	held to maturity	$	156,190	$	-	$	23,949	$	132,241	4.65

		December 31, 2015
		Amortized cost						Fair value		Weighted average yield%
				Gross Unrealized
				gains		losses
Puerto Rico Municipal Bonds:
	After 1 to 5 years	$	1,371	$	-	$	37	$	1,334	5.38
	After 5 to 10 years		11,523		-		1,041		10,482	4.25
	After 10 years		148,589		-		28,861		119,728	4.64
Total investment securities
	held to maturity	$	161,483	$	-	$	29,939	$	131,544	4.62

The following tables show the Corporation’s held-to-maturity investments’ fair value and gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of September 30, 2016 and December 31, 2015:

	As of September 30, 2016
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
		(In thousands)
Debt securities:
Puerto Rico Municipal Bonds	$	-	$	-	$	132,241	$	23,949	$	132,241	$	23,949
	As of December 31, 2015
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
		(In thousands)
Debt securities:
Puerto Rico Municipal Bonds	$	4,163	$	140	$	127,381	$	29,799	$	131,544	$	29,939

Approximately 87% of the held-to-maturity municipal bonds were issued by five of the largest municipalities in Puerto Rico (San Juan, Carolina, Bayamon, Mayaguez and Guaynabo). These obligations typically are not issued in bearer form, nor are they registered with the SEC and are not rated by external credit agencies. In most cases, these bonds have priority overthe payment of operating costs and expenses of the municipality, which are required by law to levy special property taxes in such amounts as are required for the payment of all of their respective general obligation bonds and loans.

The Corporation determines the fair market value of Puerto Rico Municipal Bonds based on a discounted cash flow analysis using risk-adjusted discount rates. A security with similar characteristics traded in the open market is used as a proxy for each municipal bond. Then the cash flow is discounted at the average spread over the discount curve exhibited by the proxy security at the end of each quarter.

When evaluating if the decrease in fair value could be classified as other-than-temporary, management considered aspects such as the fact that all municipalities are current on their payments and the fact that the bonds are subject to periodic credit reviews and are supported by assigned property tax revenues.

Based on the quarterly analysis performed and the circumstances discussed above, management concluded that the unrealized loss is attributable to the time value of money and liquidity assumptions and no individual municipal bond was other-than-temporarily impaired as of September 30, 2016.

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OTHER EQUITY SECURITIES

9 Months Ended

Sep. 30, 2016

OTHER EQUITY SECURITIES

NOTE 5 – OTHER EQUITY SECURITIES

Institutions that are members of the FHLB system are required to maintain a minimum investment in FHLB stock. Such minimum investment is calculated as a percentage of aggregate outstanding mortgages, and an additional investment is required that is calculated as a percentage of total FHLB advances, letters of credit, and the collateralized portion of interest-rate swaps outstanding. The stock is capital stock issued at $100 par value. Both stock and cash dividends may be received on FHLB stock.

As of September 30, 2016 and December 31, 2015, the Corporation had investments in FHLB stock with a book value of $26.6million and $31.3 million, respectively. The net realizable value is a reasonable proxy for the fair value of these instruments. Dividend income from FHLB stock for the quarters ended September 30, 2016and 2015was $0.4 million and $0.3 million, respectively, and forthe nine-month periods ended September 30, 2016 and 2015 was $1.1million and $0.8million, respectively.

The shares of FHLB stock owned by the Corporation were issued by the FHLB of New York. The FHLB of New York is part of the Federal Home Loan Bank System, a national wholesale banking network of 11 regional, stockholder-owned congressionally chartered banks. The Federal Home Loan Banks are all privately capitalized and operated by their member stockholders. The system is supervised by the Federal Housing Finance Agency, which ensures that the Federal Home Loan Banks operate in a financially safe and sound manner, remain adequately capitalized and able to raise funds in the capital markets, and carry out their housing finance mission.

The Corporation has other equity securities that do not have a readily available fair value. The carrying value of such securities as of September 30, 2016 and December 31, 2015was $2.1million and $0.9 million, respectively.

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LOAN PORTFOLIO

9 Months Ended

Sep. 30, 2016

LOAN PORTFOLIO

NOTE 7 – LOANS HELD FOR INVESTMENT

The following table provides information about the loan portfolio held for investment:

		As of September 30,		As ofDecember 31,
		2016		2015
(In thousands)
Residential mortgage loans, mainly secured by first mortgages		$	3,299,942	$	3,344,719
Commercial loans:
Construction loans			124,298		156,195
Commercial mortgage loans			1,545,014		1,537,806
Commercial and Industrial loans (1)			2,167,011		2,246,513
Total commercial loans			3,836,323		3,940,514
Finance leases			229,577		229,165
Consumer loans			1,497,812		1,597,984
Loans held for investment			8,863,654		9,112,382
Allowance for loan and lease losses			(214,070)		(240,710)
Loans held for investment, net		$	8,649,584	$	8,871,672
(1)	As of September 30, 2016 and December 31, 2015, includes $949.9 million and $1.0 billion, respectively, of commercial loans that are secured by real estate but are not dependent upon the real estate for repayment.

Loans held for investment on which accrual of interest income had been discontinued as of the indicated dates were as follows:
(In thousands)		September 30,		December 31,
		2016		2015
Non-performing loans:
Residential mortgage		$	162,201	$	169,001
Commercial mortgage			191,449		51,333
Commercial and Industrial			137,016		137,051
Construction:
Land			11,761		12,174
Construction-commercial			36,953		39,466
Construction-residential			2,053		2,996
Consumer:
Auto loans			14,615		17,435
Finance leases			1,969		2,459
Other consumer loans			8,695		10,858
Total non-performing loans held for investment (1) (2)(3)		$	566,712	$	442,773
(1)	As of September 30, 2016 and December 31, 2015, excludes $8.1 million of non-performing loans held for sale.
(2)	Amount excludes purchased-credit impaired ("PCI") loans with a carrying value of approximately $168.1 million and $173.9 million as of September 30, 2016 and December 31, 2015, respectively, primarily mortgage loans acquired from Doral Bank in the first quarter of 2015 and from Doral Financial in the second quarter of 2014, as further discussed below. These loans are not considered non-performing due to the application of the accretion method, under which these loans will accrete interest income over the remaining life of the loans using an estimated cash flow analysis.
(3)	Non-performing loans exclude $415.9 million and $414.9 million of Troubled Debt Restructuring ("TDR") loans that are in compliance with modified terms and in accrual status as of September 30, 2016 and December 31, 2015, respectively.

Loans in Process of Foreclosure

As of September 30, 2016, the recorded investment of residential mortgage loans collateralized by residential real estate property that are in the process of foreclosure amounted to $135.0 million. The Corporation commences the foreclosure process on residential real estate loans when a borrower becomes 120 days delinquent in accordance with the guidelines of the Consumer Financial Protection Bureau (CFPB). Foreclosure procedures and timelines vary depending on whether the property is located in a judicial or non-judicial state. Judicial states (Puerto Rico) require the foreclosure to be processed through the state’s court while foreclosures in non-judicial states are processed without court intervention. Foreclosure timelines vary according to state law and Investor Guidelines. Occasionally, foreclosures may be delayed due to mandatory mediations, bankruptcy proceedings, court delays and title issues, among other reasons.

The Corporation’s aging of the loans held for investment portfolio is as follows:
										Purchased Credit-Impaired Loans				Total loans held for investment		90 days past due and still accruing (2)
		30-59 Days Past Due		60-89 Days Past Due			90 days or more Past Due (1)	Total Past Due
As of September 30, 2016
(In thousands)												Current
Residential mortgage:
FHA/VA and other government-guaranteed loans (2) (3) (4)		$	-	$	5,310	$	81,677	$	86,987	$	-	$	44,949	$	131,936	$	81,677
Other residential mortgage loans (4)			-		87,425		179,648		267,073		165,014		2,735,919		3,168,006		17,447
Commercial:
Commercial and Industrial loans			44,967		500		138,484		183,951		-		1,983,060		2,167,011		1,468
Commercial mortgage loans (4)			-		3,436		196,240		199,676		3,127		1,342,211		1,545,014		4,791
Construction:
Land (4)			-		765		12,137		12,902		-		20,495		33,397		376
Construction-commercial (4)			-		-		36,953		36,953		-		38,460		75,413		-
Construction-residential (4)			-		-		2,721		2,721		-		12,767		15,488		668
Consumer:
Auto loans			63,470		13,743		14,615		91,828		-		766,969		858,797		-
Finance leases			8,199		2,312		1,969		12,480		-		217,097		229,577		-
Other consumer loans			8,192		4,824		12,806		25,822		-		613,193		639,015		4,111
Total loans held for investment		$	124,828	$	118,315	$	677,250	$	920,393	$	168,141	$	7,775,120	$	8,863,654	$	110,538
_____________
(1)	Includes non-performing loans and accruing loans that are contractually delinquent 90 days or more (i.e., FHA/VA guaranteed loans and credit cards). Credit card loans continue to accrue finance charges and fees until charged-off at 180 days.
(2)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past-due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $29.6 million of residential mortgage loans insured by the FHA or guaranteed by the VA, which are over 15 months delinquent and are no longer accruing interest as of September 30, 2016.
(3)	As of September 30, 2016, includes $45.6 million of defaulted loans collateralizing Government National Mortgage Association ("GNMA") securities for which the Corporation has an unconditional option (but not an obligation) to repurchase the defaulted loans.
(4)	According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears two or more monthly payments. FHA/VA government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans and construction-residential loans past due 30-59 days as of September 30, 2016 amounted to $8.7 million, $144.3 million, $7.6 million, $0.7 million and $0.3 million, respectively.

As of December 31, 2015		30-59 Days Past Due		60-89 Days Past Due		90 days or more Past Due(1)								Total loans held for investment		90 days past due and still accruing (2)
(In thousands)									Total Past Due		Purchased Credit- Impaired Loans		Current
Residential mortgage:
FHA/VA and other government-guaranteed loans (2) (3) (4)		$	-	$	6,048	$	90,168	$	96,216	$	-	$	46,925	$	143,141	$	90,168
Other residential mortgage loans (4)			-		90,406		185,018		275,424		170,766		2,755,388		3,201,578		16,017
Commercial:
Commercial and Industrial loans			5,577		6,412		150,893		162,882		-		2,083,631		2,246,513		13,842
Commercial mortgage loans (4)			-		24,729		63,805		88,534		3,147		1,446,125		1,537,806		12,472
Construction:
Land (4)			-		161		12,350		12,511		-		39,363		51,874		176
Construction-commercial			-		11,722		39,466		51,188		-		32,142		83,330		-
Construction-residential (4)			-		-		6,042		6,042		-		14,949		20,991		3,046
Consumer:
Auto loans			70,836		16,787		17,435		105,058		-		829,922		934,980		-
Finance leases			7,664		3,100		2,459		13,223		-		215,942		229,165		-
Other consumer loans			9,462		5,524		15,124		30,110		-		632,894		663,004		4,266
Total loans held for investment		$	93,539	$	164,889	$	582,760	$	841,188	$	173,913	$	8,097,281	$	9,112,382	$	139,987
____________
(1)	Includes non-performing loans and accruing loans that are contractually delinquent 90 days or more (i.e. FHA/VA guaranteed loans and credit cards). Credit card loans continue to accrue finance charges and fees until charged-off at 180 days.
(2)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past-due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $37.3 million of residential mortgage loans insured by the FHA or guaranteed by the VA, which are over 15 months delinquent and are no longer accruing interest as of December 31, 2015.
(3)	As of December 31, 2015, includes $38.5 million of defaulted loans collateralizing GNMA securities for which the Corporation has an unconditional option (but not an obligation) to repurchase the defaulted loans.
(4)	According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears two or more monthly payments. FHA/VA government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans and construction-residential loans past due 30-59 days as of December 31, 2015 amounted to $11.0 million, $162.9 million, $38.6 million, $5.7 million and $0.8 million, respectively.

The Corporation’s credit quality indicators by loan type as of September 30, 2016 and December 31, 2015 are summarized below:
		Commercial Credit Exposure-Credit Risk Profile Based on Creditworthiness Category:
		Substandard		Doubtful		Loss		Total Adversely Classified (1)		Total Portfolio
September 30, 2016
(In thousands)
Commercial mortgage		$	218,523	$	36,211	$	-	$	254,734	$	1,545,014
Construction:
Land			20,175		-		-		20,175		33,397
Construction-commercial			36,953		-		-		36,953		75,413
Construction-residential			2,053		-		-		2,053		15,488
Commercial and Industrial			159,498		72,806		445		232,749		2,167,011
		Commercial Credit Exposure-Credit Risk Profile Based on Creditworthiness Category:
		Substandard		Doubtful		Loss		Total Adversely Classified (1)		Total Portfolio
December 31, 2015
(In thousands)
Commercial mortgage		$	252,941	$	140	$	-	$	253,081	$	1,537,806
Construction:
Land			14,035		1		-		14,036		51,874
Construction-commercial			39,466		-		-		39,466		83,330
Construction-residential			2,996		-		-		2,996		20,991
Commercial and Industrial			140,827		71,341		354		212,522		2,246,513
_________
(1)	Excludes $8.1 million as of September 30, 2016 and December 31, 2015, of construction-land non-performing loans held for sale.

The Corporation considers a loan as adversely classified if its risk rating is Substandard, Doubtful or Loss. These categories are defined as follows:

Substandard- A Substandard asset is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful- Doubtful classifications have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable. A Doubtful classification may be appropriate in cases where significant risk exposures are perceived, but loss cannot be determined because of specific reasonable pending factors which may strengthen the credit in the near term.

Loss- Assets classified Loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future.There is little or no prospect for near term improvement and no realistic strengthening action of significance pending.

		Consumer Credit Exposure-Credit Risk Profile based on Payment activity
		Residential Real Estate				Consumer
September 30, 2016		FHA/VA/ Guaranteed(1)		Other residential loans		Auto		Finance Leases		Other Consumer
(In thousands)
Performing		$	131,936	$	2,840,791	$	844,182	$	227,608	$	630,320
Purchased Credit-Impaired (2)			-		165,014		-		-		-
Non-performing			-		162,201		14,615		1,969		8,695
Total		$	131,936	$	3,168,006	$	858,797	$	229,577	$	639,015
(1)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $29.6 million of residential mortgage loans insured by the FHA or guaranteed by the VA, which are over 15 months delinquent and are no longer accruing interest as of September 30, 2016.
(2)	PCI loans are excluded from non-performing statistics due to the application of the accretion method, under which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.
		Consumer Credit Exposure-Credit Risk Profile based on Payment activity
			Residential Real Estate			Consumer
December 31, 2015		FHA/VA/ Guaranteed(1)		Other residential loans		Auto		Finance Leases		Other Consumer
(In thousands)
Performing		$	143,141	$	2,861,811	$	917,545	$	226,706	$	652,146
Purchased Credit-Impaired (2)			-		170,766		-		-		-
Non-performing			-		169,001		17,435		2,459		10,858
Total		$	143,141	$	3,201,578	$	934,980	$	229,165	$	663,004
(1)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $37.3 million of residential mortgage loans insured by the FHA or guaranteed by the VA, which are over 15 months delinquent and are no longer accruing interest as of December 31, 2015.
(2)	PCI loans are excluded from non-performing statistics due to the application of the accretion method, under which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.

The following tables present information about impaired loans, excluding PCI loans, which are reported separately, as discussed below:

Impaired Loans
(In thousands)
									Quarter Ended				Nine-Month Period Ended
										September 30, 2016
	Recorded Investment		Unpaid Principal Balance		Related Specific Allowance		Year-To-Date Average Recorded Investment		Interest Income Recognized on Accrual Basis		Interest Income Recognized on Cash Basis		Interest Income Recognized on Accrual Basis		Interest Income Recognized on Cash Basis
As of September 30, 2016
With no related allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		64,198		78,361		-		67,024		139		103		376		496
Commercial:
Commercial mortgage loans		51,974		63,759		-		56,826		206		119		599		609
Commercial and Industrial Loans		17,069		26,672		-		20,407		13		-		13		-
Construction:
Land		60		89		-		60		-		-		-		-
Construction-commercial		-		-		-		-		-		-		-		-
Construction-residential		956		1,531		-		956		-		-		-		-
Consumer:
Auto loans		888		888		-		901		6		-		10		-
Finance leases		168		168		-		168		1		-		1		-
Other consumer loans		3,770		5,045		-		3,892		11		25		59		80
	$	139,083	$	176,513	$	-	$	150,234	$	376	$	247	$	1,058	$	1,185
With an allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		379,841		428,395		9,667		385,052		4,396		375		13,160		1,192
Commercial:
Commercial mortgage loans		146,526		166,066		25,907		152,753		136		57		339		179
Commercial and Industrial Loans		161,105		189,683		28,668		171,575		618		49		1,708		203
Construction:
Land		9,346		13,534		903		9,395		21		18		52		35
Construction-commercial		36,953		38,781		1,977		38,516		-		-		-		-
Construction-residential		392		551		124		392		-		-		-		-
Consumer:
Auto loans		24,135		24,135		3,674		25,913		476		-		1,379		-
Finance leases		2,408		2,408		62		2,493		48		-		150		-
Other consumer loans		13,065		13,448		1,700		13,868		356		15		1,005		32
	$	773,771	$	877,001	$	72,682	$	799,957	$	6,051	$	514	$	17,793	$	1,641
Total:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		444,039		506,756		9,667		452,076		4,535		478		13,536		1,688
Commercial:
Commercial mortgage loans		198,500		229,825		25,907		209,579		342		176		938		788
Commercial and Industrial Loans		178,174		216,355		28,668		191,982		631		49		1,721		203
Construction:
Land		9,406		13,623		903		9,455		21		18		52		35
Construction-commercial		36,953		38,781		1,977		38,516		-		-		-		-
Construction-residential		1,348		2,082		124		1,348		-		-		-		-
Consumer:
Auto loans		25,023		25,023		3,674		26,814		482		-		1,389		-
Finance leases		2,576		2,576		62		2,661		49		-		151		-
Other consumer loans		16,835		18,493		1,700		17,760		367		40		1,064		112
	$	912,854	$	1,053,514	$	72,682	$	950,191	$	6,427	$	761	$	18,851	$	2,826

(In thousands)
	Recorded Investment		Unpaid Principal Balance		Related Specific Allowance		Average Recorded Investment
As of December 31, 2015
With no related allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		65,495		74,146		-		67,282
Commercial:
Commercial mortgage loans		54,048		66,448		-		54,967
Commercial and Industrial Loans		27,492		29,957		-		28,326
Construction:
Land		-		-		-		-
Construction-commercial		39,466		40,000		-		39,736
Construction-residential		3,046		3,046		-		3,098
Consumer:
Auto loans		-		-		-		-
Finance leases		-		-		-		-
Other consumer loans		2,618		4,300		-		2,766
	$	192,165	$	217,897	$	-	$	196,175
With an allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		395,173		440,947		21,787		398,790
Commercial:
Commercial mortgage loans		27,479		40,634		3,073		30,518
Commercial and Industrial Loans		143,214		164,050		18,096		148,547
Construction:
Land		9,578		13,758		1,060		9,727
Construction-commercial		-		-		-		-
Construction-residential		1,426		2,180		142		1,476
Consumer:
Auto loans		21,581		21,581		6,653		23,531
Finance leases		2,077		2,077		86		2,484
Other consumer loans		13,816		14,043		1,684		14,782
	$	614,344	$	699,270	$	52,581	$	629,855
Total:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		460,668		515,093		21,787		466,072
Commercial:
Commercial mortgage loans		81,527		107,082		3,073		85,485
Commercial and Industrial Loans		170,706		194,007		18,096		176,873
Construction:
Land		9,578		13,758		1,060		9,727
Construction-commercial		39,466		40,000		-		39,736
Construction-residential		4,472		5,226		142		4,574
Consumer:
Auto loans		21,581		21,581		6,653		23,531
Finance leases		2,077		2,077		86		2,484
Other consumer loans		16,434		18,343		1,684		17,548
	$	806,509	$	917,167	$	52,581	$	826,030
Interest income of approximately $7.8 million ($6.9 million accrual basis and $0.9 million cash basis) and $24.8 million ($19.8 million accrual basis and $5.0 million cash basis) was recognized on impaired loans for the third quarter and nine-month period ended September 30, 2015, respectively.

The following tables show the activity for impaired loans and the related specific reserve for the quarters and nine-month periods ended September 30, 2016 and 2015:
		Quarter Ended				Nine-Month Period Ended
		September 30,				September 30,
(In thousands)			2016		2015		2016		2015
Impaired Loans:
Balance at beginning of period		$	953,774	$	824,816	$	806,509	$	945,407
Loans determined impaired during the period			26,613		37,528		261,544		135,350
Charge-offs (1)			(30,426)		(7,498)		(50,027)		(90,026)
Loans sold, net of charge-offs			-		-		-		(67,836)
Increases to impaired loans-additional disbursements			1,091		408		2,852		2,524
Reclassification from loans held for sale (2)			-		40,005		-		40,005
Foreclosures			(11,856)		(12,858)		(28,466)		(33,044)
Loans no longer considered impaired			(2,674)		(25,877)		(27,560)		(39,062)
Paid in full or partial payments			(23,668)		(13,811)		(51,998)		(50,605)
Balance at end of period		$	912,854	$	842,713	$	912,854	$	842,713
(1)	For the nine-month period ended September 30, 2015, includes $63.9 million of charge-offs related to a bulk sale of assets completed in the second quarter of 2015, mostly comprised of non-performing and adversely classified commercial loans, as further discussed below.
(2)	During the third quarter of 2015, upon the signing of a new agreement with the borrower, the Corporation changed its intent to sell a $40.0 million construction loan in the Virgin Islands. Accordingly, the loan was transferred back from held for sale to held for investment.

	Quarter Ended				Nine-Month Period Ended
	September 30,				September 30,
(In thousands)	2016		2015		2016		2015
Specific Reserve:
Balance at beginning of period	$	86,372	$	49,918	$	52,581		55,205
Provision for loan losses		16,619		9,439		70,011		81,796
Net charge-offs		(30,309)		(7,498)		(49,910)		(85,142)
Balance at end of period	$	72,682	$	51,859	$	72,682	$	51,859

PCI Loans

The Corporation acquired PCI loans accounted for under ASC 310-30 as part of the transaction closed on February 27, 2015 in which FirstBank acquired 10 Puerto Rico branches of Doral Bank, and acquired certain assets, including PCI loans, and assumed deposits, through an alliance with Banco Popular of Puerto Rico, which was the successful lead bidder with the FDIC on the failed Doral Bank, as well as other co-bidders. The Corporation also acquired PCI loans in previously completed asset acquisitions that are accounted for under ASC 310-30. These previous transactions include the acquisition from Doral Financial in the second quarter of 2014 of all its rights, title and interest in first and second residential mortgages loans in full satisfaction of secured borrowings owed by such entity to FirstBank.

Under ASC 310-30, the acquired PCI loans were aggregated into pools based on similar characteristics (i.e. delinquency status, loan terms). Each loan pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. Since the loans are accounted for by the Corporation under ASC 310-30, they are not considered non-performing and will continue to have an accretable yield as long as there is a reasonable expectation about the timing and amount of cash flows expected to be collected. The Corporation recognizes additional losses on this portfolio when it is probable that the Corporation will be unable to collect all cash flows expected as of the acquisition date plus additional cash flows expected to be collected arising from changes in estimates after the acquisition date.

The carrying amount of PCI loans follows:
	September 30,		December 31,
	2016		2015
(In thousands)
Residential mortgage loans	$	165,014	$	170,766
Commercial mortgage loans		3,127		3,147
Total PCI loans	$	168,141	$	173,913
Allowance for loan losses		(6,857)		(3,962)
Total PCI loans, net of allowance for loan losses	$	161,284	$	169,951

The following tables present PCI loans by past due status as of September 30, 2016 and December 31, 2015:
As of September 30, 2016		30-59 Days		60-89 Days		90 days or more		Total Past Due				Total PCI loans
(In thousands)										Current
Residential mortgage loans (1)		$	-	$	12,048	$	26,621	$	38,669	$	126,345	$	165,014
Commercial mortgage loans (1)			-		-		1,283		1,283		1,844		3,127
		$	-	$	12,048	$	27,904	$	39,952	$	128,189	$	168,141
_____________
(1)	According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage and commercial mortgage loans are considered past due when the borrower is in arrears two or more monthly payments. PCI residential mortgage loans and commercial mortgage loans past due 30-59 days as of September 30, 2016 amounted to $22.3 million and $0.4 million, respectively.
As of December 31, 2015		30-59 Days		60-89 Days		90 days or more		Total Past Due				Total PCI loans
(In thousands)										Current
Residential mortgage loans (1)		$	-	$	16,094	$	22,218	$	38,312	$	132,454	$	170,766
Commercial mortgage loans (1)			-		-		992		992		2,155		3,147
		$	-	$	16,094	$	23,210	$	39,304	$	134,609	$	173,913
(1)	According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage and commercial mortgage loans are considered past due when the borrower is in arrears two or more monthly payments. PCI residential mortgage loans past due 30-59 days as of December 31, 2015 amounted to $23.6 million.

Initial Fair Value and Accretable Yield of PCI Loans

At acquisition, the Corporation estimated the cash flows the Corporation expected to collect on PCI loans. Under the accounting guidance for PCI loans, the difference between the contractually required payments and the cash flows expected to be collected at acquisition is referred to as the non-accretable difference. This difference is neither accreted into income nor recorded on the Corporation’s consolidated statement of financial condition. The excess of cash flows expected to be collected over the estimated fair value is referred to as the accretable yield and is recognized in interest income over the remaining life of the loans, using the effective-yieldmethod.

Changes in accretable yield of acquired loans

Subsequent to an acquisition of loans, the Corporation is required to periodically evaluate its estimate of cash flows expected to be collected. These evaluations, performed quarterly, require the continued use of key assumptions and estimates, similar to the initial estimate of fair value. Subsequent changes in the estimated cash flows expected to be collected may result in changes in the accretable yield and non-accretable difference or reclassifications from nonaccretable yield to accretable yield. Increases in the cash flows expected to be collected will generally result in an increase in interest income over the remaining life of the loan or pool of loans. Decreases in expected cash flows due to further credit deterioration will generally result in an impairment charge recognized in the Corporation’s provision for loan and lease losses, resulting in an increase to the allowance for loan losses. During the first nine months of 2016, the Corporation increased by $2.9 million to $6.9 million the reserve related to PCI loans acquired from Doral Financial in 2014. The reserve is driven by the revisions to the expected cash flows of the portfolio for the remaining term of the loan pool based on expected performance and market conditions.

Changes in the accretable yield of PCI loans for the quarters and nine-month periods ended September 30, 2016 and 2015 were as follows:
	Quarter Ended				Nine-Month Period Ended
	September 30,		September 30,		September 30,		September 30,
	2016		2015		2016		2015
(In thousands)
Balance at beginning of period	$	122,179	$	124,288	$	118,385	$	82,460
Additions (accretable yield at acquisition
of loans from Doral)		-		-		-		38,319
Accretion recognized in earnings		(2,875)		(3,411)		(8,691)		(8,695)
Reclassification from non-accretable		-		1,348		9,610		10,141
Balance at end of period	$	119,304	$	122,225	$	119,304	$	122,225

Changes in the carrying amount of loans accounted for pursuant to ASC 310-30 are as follows:
		Quarter Ended				Nine-Month Period Ended
		September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
(In thousands)
Balance at beginning of period		$	169,690	$	178,494	$	173,913	$	102,604
Additions (1)			-		-		-		79,889
Accretion			2,875		3,411		8,691		8,695
Collections			(4,184)		(5,663)		(13,136)		(14,946)
Foreclosures			(240)		(157)		(1,327)		(157)
Ending balance		$	168,141	$	176,085	$	168,141	$	176,085
Allowance for loan losses			(6,857)		(3,163)		(6,857)		(3,163)
Ending balance, net of allowance for loan losses		$	161,284	$	172,922	$	161,284	$	172,922
(1)	For the nine-month period ended September 30, 2015, additions represents the estimated fair value of PCI loans acquired from Doral Bank at the date of acquisition.

Changes in the allowance for loan losses related to PCI loans follows:
	Quarter Ended				Nine-Month Period Ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
	(In thousands)
Balance at beginning of period	$	6,857	$	3,163	$	3,962	$	-
Provision for loan losses		-		-		2,895		3,163
Balance at end of period	$	6,857	$	3,163	$	6,857	$	3,163

The outstanding principal balance of PCI loans, including amounts charged off by the Corporation, amounted to $210.6 million as of September 30, 2016 (December 2015 - $218.1 million).

Purchases and Sales of Loans

During the first nine months of 2016, the Corporation purchased $65.2 million of residential mortgage loans consistent with a seasoned strategic program to purchase ongoing residential mortgage loan production from mortgage bankers in Puerto Rico. Generally, the loans purchased from mortgage bankers were conforming residential mortgage loans. Purchases of conforming residential mortgage loans provide the Corporation the flexibility to retain or sell the loans, including through securitization transactions, depending upon the Corporation’s interest rate risk management strategies. When the Corporation sells such loans, it generally keeps the servicing of the loans.

In the ordinary course of business, the Corporation sells residential mortgage loans (originated or purchased) to GNMA and government-sponsored entities (“GSEs”) such as Fannie Mae (“FNMA”) and Freddie Mac (“FHLMC”), which generally securitize the transferred loans into mortgage-backed securities for sale into the secondary market. The Corporation sold approximately $108.5 million of performing residential mortgage loans to FNMA and FHLMC during the first nine months of 2016. Also, during the first nine months of 2016, the Corporation sold $238.6 million of FHA/VA mortgage loans to GNMA, which packages them into mortgage-backed securities. The Corporation’s continuing involvement in these sold loans consists primarily of servicing the loans. In addition, the Corporation agreed to repurchase loans when it breaches any of the representations and warranties included in the sale agreement. These representations and warranties are consistent with the GSEs’ selling and servicing guidelines (i.e., ensuring that the mortgage was properly underwritten according to established guidelines).

For loans sold to GNMA, the Corporation holds an option to repurchase individual delinquent loans issued on or after January 1, 2003 when the borrower fails to make any payment for three consecutive months. This option gives the Corporation the ability, but not the obligation, to repurchase the delinquent loans at par without prior authorization from GNMA.

Under ASC Topic 860, Transfer and Servicing, once the Corporation has the unilateral ability to repurchase the delinquent loan, it is considered to have regained effective control over the loan and is required to recognize the loan and a corresponding repurchase liability on the balance sheet regardless of the Corporation’s intent to repurchase the loan.

During the first nine months of 2016 and 2015, the Corporation repurchased pursuant to its repurchase option with GNMA $20.9 million and $10.6 million, respectively, of loans previously sold to GNMA. The principal balance of these loans is fully guaranteed and the risk of loss related to the repurchased loans is generally limited to the difference between the delinquent interest payment advanced to GNMA computed at the loan’s interest rate and the interest payments reimbursed by FHA, which are computed at a pre-determined debenture rate. Repurchases of GNMA loans allow the Corporation, among other things, to maintain acceptable delinquency rates on outstanding GNMA pools and remain as a seller and servicer in good standing with GNMA. The Corporation generally remediates any breach of representations and warranties related to the underwriting of such loans according to established GNMA guidelines without incurring losses. The Corporation does not maintain a liability for estimated losses as a result of breaches in representations and warranties.

Loan sales to FNMA and FHLMC are without recourse in relation to the future performance of the loans. The Corporation repurchased at par loans previously sold to FNMA and FHLMC in the amount of $0.7 million and $1.3 million during the first nine months of 2016 and 2015, respectively. The Corporation’s risk of loss with respect to these loans is also minimal as these repurchased loans are generally performing loans with documentation deficiencies. No losses related to breaches of representations and warranties were incurred in the first nine months of 2016. Historically, losses experienced on these loans have been immaterial. As a consequence, as of September 30, 2016, the Corporation does not maintain a liability for estimated losses on loans expected to be repurchased as a result of breaches in loan and servicer representations and warranties.

In addition, the Corporation sold $20.2 million and $20.0 million in commercial mortgage loan participations during the first nine months of 2016 and 2015, respectively.

Bulk Sale of Assets

During the second quarter of 2015, the Corporation completed the sale of commercial and construction loans with a book value of $147.5 million ($90.7 million of commercial mortgage loans, $45.8 million of commercial and industrial loans, and $11.0 million of construction loans), comprised mostly of non-performing and adversely classified loans, as well as other real estate owned (“OREO”) with a book value of $2.9 million, in a cash transaction. The sales price of this bulk sale was $87.3 million. Approximately $15.3 million of reserves had been allocated to the loans. This transaction resulted in total charge-offs of $61.4 million and an incremental pre-tax loss of $48.7 million, including $0.9 million in professional service fees directly attributable to the bulk sale.

Loan Portfolio Concentration

The Corporation’s primary lending area is Puerto Rico. The Corporation’s banking subsidiary, First Bank, also lends in the USVI and BVI markets and in the United States (principally in the state of Florida). Of the total gross loans held for investment of $8.9 billion as of September 30, 2016, approximately 78% have credit risk concentration in Puerto Rico, 15% in the United States, and 7% in the USVI and BVI.

As of September 30, 2016, the Corporation had $134.0 million outstanding (book value of $126.2 million)in credit facilities extended to the Puerto Rico government, its municipalities, and public corporations, compared to $153.2million outstanding as of December 31, 2015.In addition, the outstanding balance of credit facilities granted to the government of the Virgin Islands amounted to $65.6million as of September 30, 2016, compared to $126.2 million as of December 31, 2015.Approximately $91.4 million of the granted credit facilities outstanding ($83.7 million book value) consisted of loans to public corporations, including a direct exposure to the Puerto Rico Electric Power Authority (“PREPA”) with an outstanding balance of $74.6 million ($66.9 million book value) as of September 30, 2016, and approximately $6.9 million consisted of loans to units of the Puerto Rico central government. The PREPA credit facility was placed in non-accrual status in the first quarter of 2015, and interest payments are recorded on a cost-recovery basis. In addition, the Corporation had $35.7 million of loans extended to municipalities in Puerto Rico, which in most cases are supported by assigned property tax revenues. Municipalities’ revenues are independent of the Puerto Rico central government. These municipalities are required by law to levy special property taxes in such amounts as are required for the payment of all of their respective general obligation bonds and loans. Late in 2015, the GDB and the Municipal Revenue Collection Center (CRIM) signed a deed of trust. Through this deed, the GDB, as fiduciary, is bound to keep the CRIM funds separate from any other deposits and must distribute the funds pursuant to applicable law. The CRIM funds are deposited at another depository financial institution in Puerto Rico.

Furthermore, as of September 30, 2016, the Corporation had $128.0 million outstanding (book value of $112.8 million) in financings to the hotel industry in Puerto Rico under which the borrower and the operations of the underlying collateral are the primary sources of repayment and the Puerto Rico Tourism Development Fund (“TDF”) provides a secondary guarantee for payment performance, compared to $129.4 million outstanding as of December 31, 2015. These facilities were placed in non-accrual status and classified as impaired in the first quarter of 2016, and interest payments are now applied against principal. Approximately $1.6 million of interest payments received on loans guaranteed by the TDF since late March 2016 have been applied against principal. As of the date of filing of this Form 10-Q, the largest of these three facilities is current on contractual payments as its operations are generating the cash flows to cover payments. The Corporation has been receiving partial payments from the other two facilities since their operations are insufficient to cover the entire contractual payments and the Corporation is not receiving collections from the TDF guarantee. As such, these two facilities are collateral dependent loans and charge-offs amounting to $13.7 million were recorded in the third quarter of 2016, of which $12.8 million was charged against specific reserves established in prior periods. These loans have been adversely classified since the third quarter of 2015. The Corporation’s collections of principal and interest from the TDF in the first half of 2016 amounted to $0.6 million compared to $5.3 million in the entire 2015 year.

The TDF is a subsidiary of the GDB that facilitates private sector financings to Puerto Rico’s hotel industry. Adverse developments related to the Puerto Rico government’s fiscal situation introduced additional uncertainty regarding the TDF’s ability to honor its guarantee, including the enactment of the Puerto Rico Emergency Moratorium and Financial Rehabilitation Act (“Act 21”), which gives Puerto Rico’s governor emergency powers to deal with Puerto Rico’s challenging fiscal situation, including the ability to declare a moratorium on all bonds and other payments. On June 30, 2016, pursuant to Act 21, the Puerto Rico governor ordered a moratorium on the payment of $780 million of the Puerto Rico Government’s general obligations and the debt of certain other instrumentalities due on July 1, 2016. This followed a default on the principal payment of $367 million of GDB notes due on May 1, 2016. Puerto Rico’s governor also issued an executive order intended to protect the GDB’s liquidity by allowing withdrawals only to fund necessary costs for essential services such as health, public safety and education services. Recently, the GDB defaulted on a $28 million payment of interest due to its creditors on August 1, 2016, including interest due on GDB bonds held by the Corporation.

As of September 30, 2016, the total reserve to book value coverage ratio related to commercial loans extended to or guaranteed by the Puerto Rico Government (excluding municipalities) was 16% and the loans are being carried at 76% of unpaid principal balance, net of reserves and accumulated charge offs.

In addition, the Corporation had $121.4 million in indirect exposure to residential mortgage loans that are guaranteed by the Puerto Rico Housing Finance Authority. Residential mortgage loans guaranteed by the Puerto Rico Housing Finance Authority are secured by the underlying properties and the guarantees serve to cover shortfalls in collateral in the event of a borrower default. The Puerto Rico government guarantees up to $75 million of the principal guaranteed under the mortgage loans insurance program. According to the most recently released audited financial statements of the Puerto Rico Housing Financing Authority, as of June 30, 2015, the Puerto Rico Housing Finance Authority’s mortgage loans insurance program covered loans aggregating approximately $552 million. The regulations adopted by the Puerto Rico Housing Finance Authority require the establishment of adequate reserves to guarantee the solvency of the mortgage loans insurance fund. As of June 30, 2015, the most recent date as to which information is available, the Puerto Rico Housing Finance Authority had a restricted net position for such purposes of approximately $77.4 million.

The Corporation cannot predict at this time the impact that the current fiscal situation of the Commonwealth of Puerto Rico, including the payment defaults on certain bonds, the uncertainty about the debt restructuring process, and the various legislative and other measures that have been and could be adopted by the Puerto Rico government in response to such fiscal situation, will have on the Puerto Rico economy and on the Corporation’s financial condition and results of operations.

Troubled Debt Restructurings

The Corporation provides homeownership preservation assistance to its customers through a loss mitigation program in Puerto Rico that is similar to the U.S. government’s Home Affordable Modification Program guidelines. Depending upon the nature of borrowers’ financial condition, restructurings or loan modifications through this program as well as other restructurings of individual commercial, commercial mortgage, construction, and residential mortgage loans fit the definition of a TDR. A restructuring of a debt constitutes a TDR if the creditor for economic or legal reasons related to the debtor’s financial difficulties grants a concession to the debtor that it would not otherwise consider. Modifications involve changes in one or more of the loan terms that bring a defaulted loan current and provide sustainable affordability. Changes may include the refinancing of any past-due amounts, including interest and escrow, the extension of the maturity of the loan and modifications of the loan rate. As of September 30, 2016, the Corporation’s total TDR loans held for investment of $656.3 million consisted of $378.7 million of residential mortgage loans, $150.9 million of commercial and industrial loans, $44.0 million of commercial mortgage loans, $40.2 million of construction loans, and $42.5 million of consumer loans. Outstanding unfunded commitments on TDR loans amounted to $5.7 million as of September 30, 2016.

The Corporation’s loss mitigation programs for residential mortgage and consumer loans can provide for one or a combination of the following: movement of interest past due to the end of the loan, extension of the loan term, deferral of principal payments and reduction of interest rates either permanently or for a period of up to four years (increasing back in step-up rates). Additionally, in certain cases, the restructuring may provide for the forgiveness of contractually due principal or interest. Uncollected interest is added to the end of the loan term at the time of the restructuring and not recognized as income until collected or when the loan is paid off. These programs are available only to those borrowers who have defaulted, or are likely to default, permanently on their loan and would lose their homes in a foreclosure action absent some lender concession. Nevertheless, if the Corporation is not reasonably assured that the borrower will comply with its contractual commitment, properties are foreclosed.

Prior to permanently modifying a loan, the Corporation may enter into trial modifications with certain borrowers. Trial modifications generally represent a six-month period during which the borrower makes monthly payments under the anticipated modified payment terms prior to a formal modification. Upon successful completion of a trial modification, the Corporation and the borrower enter into a permanent modification. TDR loans that are participating in or that have been offered a binding trial modification are classified as TDRs when the trial offer is made and continue to be classified as TDRs regardless of whether the borrower enters into a permanent modification. As of September 30, 2016, we classified an additional $5.6 million of residential mortgage loans as TDRs that were participating in or had been offered a trial modification.

For the commercial real estate, commercial and industrial, and construction loan portfolios, at the time of a restructuring, the Corporation determines, on a loan-by-loan basis, whether a concession was granted for economic or legal reasons related to the borrower’s financial difficulty. Concessions granted for commercial loans could include: reductions in interest rates to rates that are considered below market; extension of repayment schedules and maturity dates beyond original contractual terms; waivers of borrower covenants; forgiveness of principal or interest; or other contractual changes that would be considered a concession. The Corporation mitigates loan defaults for its commercial loan portfolios through its collection function. The function’s objective is to minimize both early stage delinquencies and losses upon default of commercial loans. In the case of the commercial and industrial, commercial mortgage, and construction loan portfolios, the Corporation’s Special Asset Group (“SAG”) focuses on strategies for the accelerated reduction of non-performing assets through note sales, short sales, loss mitigation programs, and sales of OREO.

In addition, the Corporation extends, renews, and restructures loans with satisfactory credit profiles. Many commercial loan facilities are structured as lines of credit, which are mainly one year in term and, therefore, are required to be renewed annually. Other facilities may be restructured or extended from time to time based upon changes in the borrower’s business needs, use of funds, timing of completion of projects, and other factors. If the borrower is not deemed to have financial difficulties, extensions, renewals, and restructurings are done in the normal course of business and are not considered to be concessions, and the loans continue to be recorded as performing.

Selected information on TDRs that includes the recorded investment by loan class and modification type is summarized in the following tables. This information reflects all TDRs:
		September 30, 2016
(In thousands)		Interest rate below market		Maturity or term extension		Combination of reduction in interest rate and extension of maturity		Forgiveness of principal and/or interest		Other (1)		Total
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans		$	29,934	$	8,172	$	283,550	$	-	$	57,065	$	378,721
Commercial Mortgage Loans			6,092		1,219		26,053		-		10,608		43,972
Commercial and Industrial Loans			2,153		69,244		25,263		2,637		51,593		150,890
Construction Loans:
Land			-		285		2,193		-		402		2,880
Construction-commercial			-		-		-		36,953		-		36,953
Construction-residential			-		-		-		-		357		357
Consumer Loans - Auto			-		1,921		14,680		-		8,422		25,023
Finance Leases			-		424		2,152		-		-		2,576
Consumer Loans - Other			229		2,185		10,120		300		2,112		14,946
Total Troubled Debt Restructurings		$	38,408	$	83,450	$	364,011	$	39,890	$	130,559	$	656,318
(1)	Other concessions granted by the Corporation include deferral of principal and/or interest payments for a period longer than what would be considered insignificant, payment plans under judicial stipulation or a combination of the concessions listed in the table.

		December 31, 2015
(In thousands)		Interest rate below market		Maturity or term extension		Combination of reduction in interest rate and extension of maturity		Forgiveness of principal and/or interest		Other (1)		Total
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans		$	29,066	$	6,027	$	297,310	$	-	$	50,269	$	382,672
Commercial Mortgage Loans			4,379		1,244		26,109		-		12,766		44,498
Commercial and Industrial Loans			2,163		75,104		27,214		3,027		42,746		150,254
Construction Loans:
Land			-		229		2,165		-		372		2,766
Construction-commercial			-		-		-		39,466		-		39,466
Construction-residential			-		-		3,046		-		436		3,482
Consumer Loans - Auto			-		2,330		12,388		-		6,864		21,582
Finance Leases			-		621		1,456		-		-		2,077
Consumer Loans - Other			89		1,604		11,026		327		1,748		14,794
Total Troubled Debt Restructurings		$	35,697	$	87,159	$	380,714	$	42,820	$	115,201	$	661,591
(1)	Other concessions granted by the Corporation include deferral of principal and/or interest payments for a period longer than what would be considered insignificant, payment plans under judicial stipulation or a combination of the concessions listed in the table.

	The following table presents the Corporation's TDR loans activity:
		Quarter Ended				Nine-Month Period Ended
(In thousands)		September 30,				September 30,
		2016		2015		2016		2015
Beginning balance of TDRs		$	670,991	$	634,761	$	661,591	$	694,453
New TDRs			15,596		30,044		66,075		95,840
Increases to existing TDRs - additional
disbursements			517		309		1,573		644
Charge-offs post modification (1)			(5,445)		(5,327)		(15,899)		(58,707)
Sales, net of charge-offs			-		-		-		(44,048)
Foreclosures			(5,567)		(6,139)		(12,967)		(16,391)
Removed from the TDR classification			-		-		(3,031)		-
Reclassification from loans held for sale (2)			-		40,005		-		40,005
Paid-off and partial payments			(19,774)		(11,690)		(41,024)		(29,833)
Ending balance of TDRs		$	656,318	$	681,963	$	656,318	$	681,963
(1)	For the nine-month period ended September 30, 2015, includes $45.3 million of charge offs related to TDRs included in the bulk sale of assets completed in the second quarter of 2015.
(2)	During the third quarter of 2015, upon the signing of a new agreement with the borrower, the Corporation changed its intent to sell a $40.0 million construction loan in the Virgin Islands. Accordingly, the loan was transferred back from held for sale to held for investment and continues to be classified as a TDR and a nonperforming loan.

TDR loans are classified as either accrual or nonaccrual loans. Loans in accrual status may remain in accrual status when their contractual terms have been modified in a TDR if the loan had demonstrated performance prior to the restructuring and payment in full under the restructured terms is expected. Otherwise, loans on non-accrual and restructured as a TDR will remain on nonaccrual status until the borrower has proven the ability to perform under the modified structure, generally for a minimum of six months, and there is evidence that such payments can and are likely to continue as agreed. Performance prior to the restructuring, or significant events that coincide with the restructuring, are included in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual status at the time of the restructuring or after a shorter performance period. If the borrower’s ability to meet the revised payment schedule is uncertain, the loan remains classified as a non-accrual loan. Loan modifications increase the Corporation’s interest income by returning a non-performing loan to performing status, if applicable, increase cash flows by providing for payments to be made by the borrower, and limit increases in foreclosure and OREO costs. The Corporation continues to consider a modified loan as an impaired loan for purposes of estimating the allowance for loan and lease losses. A TDR loan that specifies an interest rate that at the time of the restructuring is greater than or equal to the rate the Corporation is willing to accept for a new loan with comparable risk may not be reported as a TDR, or an impaired loan in the calendar years subsequent to the restructuring, if it is in compliance with its modified terms. During the first nine months of 2016, the Corporation removed a $3.0 million loan from the TDR classification as the borrower is no longer experiencing financial difficulties, and the loan was refinanced at market terms and does not contain any concession to the borrower.

The following table provides a breakdown between accrual and nonaccrual status of TDR loans:
(In thousands)		As of September 30, 2016
		Accrual		Nonaccrual (1)		Total TDRs
Non-FHA/VA Residential Mortgage loans		$	296,840	$	81,881	$	378,721
Commercial Mortgage Loans			28,699		15,273		43,972
Commercial and Industrial Loans			58,004		92,886		150,890
Construction Loans:
Land			1,205		1,675		2,880
Construction-commercial			-		36,953		36,953
Construction-residential			-		357		357
Consumer Loans - Auto			16,561		8,462		25,023
Finance Leases			2,437		139		2,576
Consumer Loans - Other			12,173		2,773		14,946
Total Troubled Debt Restructurings		$	415,919	$	240,399	$	656,318
(1)	Included in non-accrual loans are $121.3 million in loans that are performing under the terms of the restructuring agreement but are reported in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and are deemed fully collectible.

(In thousands)		As of December 31, 2015
		Accrual		Nonaccrual (1)		Total TDRs
Non- FHA/VA Residential Mortgage loans		$	303,885	$	78,787	$	382,672
Commercial Mortgage Loans			29,121		15,377		44,498
Commercial and Industrial Loans			48,392		101,862		150,254
Construction Loans:
Land			924		1,842		2,766
Construction-commercial			-		39,466		39,466
Construction-residential			3,046		436		3,482
Consumer Loans - Auto			14,823		6,759		21,582
Finance Leases			1,980		97		2,077
Consumer Loans - Other			12,737		2,057		14,794
Total Troubled Debt Restructurings		$	414,908	$	246,683	$	661,591
(1)	Included in non-accrual loans are $118.2 million in loans that are performing under the terms of the restructuring agreement but are reported in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and there is no doubt about full collectability.

TDR loans exclude restructured residential mortgage loans that are guaranteed by the U.S. federal government (i.e., FHA/VA loans) totaling $67.9million as of September 30, 2016 (December 31, 2015 - $77.6 million). The Corporation excludes FHA/VA guaranteed loans from TDR loans statistics given that, in the event that the borrower defaults on the loan, the principal and interest (at the specified debenture rate) are guaranteed by the U.S. government; therefore, the risk of loss on these types of loans is very low. The Corporation does not consider loans with U.S. federal government guarantees to be impaired loans for the purpose of calculating the allowance for loan and lease losses.

Loan modifications that are considered TDRscompleted during the quarter and nine-month period endedSeptember 30, 2016 and 2015 were as follows:

(Dollars in thousands)	Quarter Ended September 30, 2016
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	55	$	8,631	$	8,449
Commercial Mortgage Loans	5		679		712
Commercial and Industrial Loans	2		1,432		1,432
Construction Loans:
Land	4		158		155
Consumer Loans - Auto	189		3,262		3,262
Finance Leases	11		295		295
Consumer Loans - Other	257		1,269		1,291
Total Troubled Debt Restructurings	523	$	15,726	$	15,596
(Dollars in thousands)	Nine-Month Period Ended September 30, 2016
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	167	$	25,040	$	24,040
Commercial Mortgage Loans	8		3,351		3,380
Commercial and Industrial Loans	21		21,693		21,693
Construction Loans:
Land	4		158		155
Consumer Loans - Auto	612		10,961		10,961
Finance Leases	59		1,477		1,477
Consumer Loans - Other	862		4,312		4,369
Total Troubled Debt Restructurings	1,733	$	66,992	$	66,075

(Dollars in thousands)	Quarter Ended September 30, 2015
	Number of contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	98	$	19,901	$	19,481
Commercial Mortgage Loans	4		7,380		5,719
Construction Loans:
Land	1		109		109
Consumer Loans - Auto	203		3,352		3,297
Finance Leases	19		521		418
Consumer Loans - Other	197		1,026		1,020
Total Troubled Debt Restructurings	522	$	32,289	$	30,044
(Dollars in thousands)	Nine-Month Period Ended September 30, 2015
	Number of contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	350	$	60,043	$	57,882
Commercial Mortgage Loans	13		20,332		18,781
Commercial and Industrial Loans	3		2,997		2,579
Construction Loans:
Land	7		603		600
Consumer Loans - Auto	547		8,739		8,564
Finance Leases	43		1,215		1,056
Consumer Loans - Other	929		6,432		6,378
Total Troubled Debt Restructurings	1,892	$	100,361	$	95,840

Recidivism, or the borrower defaulting on its obligation pursuant to a modified loan, results in the loan once again becoming a non-performing loan. Recidivism on modified loans occurs at a notably higher rate than do defaults on new origination loans, so modified loans present a higher risk of loss than do new origination loans. The Corporation considers a loan to have defaulted if the borrower has failed to make payments of either principal, interest, or both for a period of 90 days or more.

Loan modifications considered TDR loans that defaulted during the quarters and nine-month periods ended September 30, 2016 and September 30, 2015 and had become TDR during the 12-months preceding the default date were as follows:

	Quarter Ended September 30,
(Dollars in thousands)	2016			2015
	Number of contracts	Recorded Investment		Number of contracts	Recorded Investment
Non-FHA/VA Residential Mortgage loans	14	$	1,707	23	$	3,744
Consumer Loans - Auto	5		68	1		10
Consumer Loans - Other	22		93	51		219
Finance Leases	1		30	3		145
Total	42	$	1,898	78	$	4,118

	Nine-Month Period Ended September 30,
(Dollars in thousands)	2016			2015
	Number of contracts	Recorded Investment		Number of contracts	Recorded Investment
Non-FHA/VA Residential Mortgage loans	35	$	4,863	50	$	7,646
Commercial and Industrial Loans	-		-	4		5,745
Consumer Loans - Auto	45		702	8		50
Consumer Loans - Other	89		339	141		589
Finance Leases	2		43	6		185
Total	171	$	5,947	209	$	14,215

For certain TDR loans, the Corporation splits the loans into two new notes, A and B notes. The A note is restructured to comply with the Corporation’s lending standards at current market rates, and is tailored to suit the customer’s ability to make timely interest and principal payments. The B note includes the granting of the concession to the borrower and varies by situation. The B note is charged off but the obligation is not forgiven to the borrower, and any payments collected are accounted for as recoveries. At the time of the restructuring, the A note is identified and classified as a TDR loan. If the loan performs for at least six months according to the modified terms, the A note may be returned to accrual status. The borrower’s payment performance prior to the restructuring is included in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual status at the time of the restructuring. In the periods following the calendar year in which a loan was restructured, the A note may no longer be reported as a TDR loan if it is in accrual status, is in compliance with its modified terms, and yields a market rate (as determined and documented at the time of the restructuring).

The recorded investment in loans held for investment restructured using the A/B note restructure workout strategy was approximately $38.0 million as ofSeptember 30, 2016. The following table provides additional information about the volume of this type of loan restructuring and the effect on the allowance for loan and lease losses in the first nine months of 2016 and 2015:

(In thousands)	September 30, 2016			September 30, 2015
Principal balance deemed collectible at end of period	$	38,004	$	40,632
Amount charged off	$	-	$	-
Charges to the provision for loan losses	$	2,660	$	185
Allowance for loan losses at end of period	$	3,521	$	916

Of the loans comprising the $38.0 million that have been deemed collectible, approximately $37.9million were placed in accrual status as the borrowers have exhibited a period of sustained performance. These loans continue to be individually evaluated for impairment purposes.

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ALLOWANCE FOR LOAN AND LEASE LOSSES

9 Months Ended

Sep. 30, 2016

ALLOWANCE FOR LOAN AND LEASE LOSSES

NOTE 7 – ALLOWANCE FOR LOAN AND LEASE LOSSES

The changes in the allowance for loan and lease losses were as follows:
(In thousands)		Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Quarter ended September 30, 2016
Allowance for loan and lease losses:
Beginning balance		$	38,955	$	69,799	$	69,789	$	2,747	$	53,164	$	234,454
Charge-offs			(8,514)		(13,730)		(10,587)		(19)		(13,716)		(46,566)
Recoveries			972		335		929		140		2,303		4,679
Provision (release)			4,553		(152)		5,597		2,480		9,025		21,503
Ending balance		$	35,966	$	56,252	$	65,728	$	5,348	$	50,776	$	214,070
Ending balance: specific reserve for impaired loans		$	9,667	$	25,907	$	28,668	$	3,004	$	5,436	$	72,682
Ending balance: purchased credit-impaired loans (1)		$	6,638	$	219	$	-	$	-	$	-	$	6,857
Ending balance: general allowance		$	19,661	$	30,126	$	37,060	$	2,344	$	45,340	$	134,531
Loans held for investment:
Ending balance		$	3,299,942	$	1,545,014	$	2,167,011	$	124,298	$	1,727,389	$	8,863,654
Ending balance: impaired loans		$	444,039	$	198,500	$	178,174	$	47,707	$	44,434	$	912,854
Ending balance: purchased credit-impaired loans		$	165,014	$	3,127	$	-	$	-	$	-	$	168,141
Ending balance: loans with general allowance		$	2,690,889	$	1,343,387	$	1,988,837	$	76,591	$	1,682,955	$	7,782,659
(In thousands)		Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Nine-Month Period Ended September 30, 2016
Allowance for loan and lease losses:
Beginning balance		$	39,570	$	68,211	$	68,768	$	3,519	$	60,642	$	240,710
Charge-offs			(27,352)		(15,742)		(16,260)		(623)		(41,490)		(101,467)
Recoveries			2,159		414		1,885		301		6,526		11,285
Provision			21,589		3,369		11,335		2,151		25,098		63,542
Ending balance		$	35,966	$	56,252	$	65,728	$	5,348	$	50,776	$	214,070
Ending balance: specific reserve for impaired loans		$	9,667	$	25,907	$	28,668	$	3,004	$	5,436	$	72,682
Ending balance: purchased credit-impaired loans (1)		$	6,638	$	219	$	-	$	-	$	-	$	6,857
Ending balance: general allowance		$	19,661	$	30,126	$	37,060	$	2,344	$	45,340	$	134,531
Loans held for investment:
Ending balance		$	3,299,942	$	1,545,014	$	2,167,011	$	124,298	$	1,727,389	$	8,863,654
Ending balance: impaired loans		$	444,039	$	198,500	$	178,174	$	47,707	$	44,434	$	912,854
Ending balance: purchased credit-impaired loans		$	165,014	$	3,127	$	-	$	-	$	-	$	168,141
Ending balance: loans with general allowance		$	2,690,889	$	1,343,387	$	1,988,837	$	76,591	$	1,682,955	$	7,782,659
(1)	Refer to Note 6 - Loans Held for Investment -PCI loans for a detail of changes in the allowance for loan losses related to PCI loans.

(In thousands)	Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Quarter ended September 30, 2015
Allowance for loan and lease losses:
Beginning balance	$	33,783	$	49,092	$	63,900	$	11,865	$	62,878	$	221,518
Charge-offs		(5,094)		(3,677)		(1,267)		(103)		(15,926)		(26,067)
Recoveries		214		20		327		176		1,602		2,339
Provision (release)		6,958		6,668		3,807		(139)		13,882		31,176
Ending balance	$	35,861	$	52,103	$	66,767	$	11,799	$	62,436	$	228,966
Ending balance: specific reserve for impaired loans	$	18,705	$	4,886	$	17,540	$	2,128	$	8,600	$	51,859
Ending balance: purchased credit-impaired loans	$	3,061	$	102	$	-	$	-	$	-	$	3,163
Ending balance: general allowance	$	14,095	$	47,115	$	49,227	$	9,671	$	53,836	$	173,944
Loans held for investment:
Ending balance	$	3,330,089	$	1,562,538	$	2,222,324	$	163,956	$	1,861,555	$	9,140,462
Ending balance: impaired loans	$	459,311	$	104,046	$	174,983	$	66,123	$	38,250	$	842,713
Ending balance: purchased credit-impaired loans	$	172,927	$	3,158	$	-	$	-	$	-	$	176,085
Ending balance: loans with general allowance	$	2,697,851	$	1,455,334	$	2,047,341	$	97,833	$	1,823,305	$	8,121,664
(In thousands)	Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Nine-Month Period Ended September 30, 2015
Allowance for loan and lease losses:
Beginning balance	$	27,301	$	50,894	$	63,721	$	12,822	$	67,657	$	222,395
Charge-offs		(13,815)		(54,115)		(30,090)		(4,787)		(48,221)		(151,028)
Recoveries		584		6,515		3,386		2,379		6,323		19,187
Provision		21,791		48,809		29,750		1,385		36,677		138,412
Ending balance	$	35,861	$	52,103	$	66,767	$	11,799	$	62,436	$	228,966
Ending balance: specific reserve for impaired loans	$	18,705	$	4,886	$	17,540	$	2,128	$	8,600	$	51,859
Ending balance: purchased credit-impaired loans	$	3,061	$	102	$	-	$	-	$	-	$	3,163
Ending balance: general allowance	$	14,095	$	47,115	$	49,227	$	9,671	$	53,836	$	173,944
Loans held for investment:
Ending balance	$	3,330,089	$	1,562,538	$	2,222,324	$	163,956	$	1,861,555	$	9,140,462
Ending balance: impaired loans	$	459,311	$	104,046	$	174,983	$	66,123	$	38,250	$	842,713
Ending balance: purchased credit-impaired loans	$	172,927	$	3,158	$	-	$	-	$	-	$	176,085
Ending balance: loans with general allowance	$	2,697,851	$	1,455,334	$	2,047,341	$	97,833	$	1,823,305	$	8,121,664

As discussed in Note 6, under the heading “Bulk Sale of Assets,” during the second quarter of 2015, the Corporation completed the sale of commercial and construction loans with a book value of $147.5 million, mostly comprised of non-performing and adversely classified loans. This transaction resulted in charge-offs of approximately $61.4 million.

The Corporation incorporated the charge-offs information from the second quarter 2015 bulk sale in its measurement of credit impairment for loans collectively measured. In the second quarter of 2015, the total bulk sale charge offs were included in the determination of historical loss rates with no reduction for the additional market discount related to the bulk sale resolution. In the past, the Corporation had separated the market component of the loss. The decision to include total charge-offs, with no qualitative adjustment for the steep discount on this bulk sale, considered the potential use of similar credit resolution strategies in the future in light of the current economic conditions in Puerto Rico. The effect of this position resulted in an increase of $15.5 million in the related allowance in the second quarter of 2015. During the third quarter of 2015, the Corporation further refined its methodology by allocating the second quarter 2015 bulk sale losses over an estimated realization period of eight quarters, which would reflect a more typical loss resolution pattern. Management believes that this loss estimation process is more indicative of the current experience related to the average period for a loan to migrate to asset classification categories and the eventual charge-off.

As of September 30, 2016, the Corporation maintained a $2.1 million reserve for unfunded loan commitments ($0.5 million as of September 30, 2015) mainly related to an outstanding adversely classified floor plan relationship. The reserve for unfunded loan commitments is an estimate of the losses inherent in off-balance sheet loan commitments to borrowers that are experiencing financial difficulties at the balance sheet date. It is calculated by multiplying an estimated loss factor by an estimated probability of funding, and then by the period-end amounts for unfunded commitments. The reserve for unfunded loan commitments is included as part of accounts payable and other liabilities in the consolidated statement of financial condition.

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LOANS HELD FOR SALE

9 Months Ended

Sep. 30, 2016

LOANS HELD FOR SALE

NOTE 9–LOANS HELD FOR SALE

The Corporation’s loans held-for-sale portfolio was composed of:

(In thousands)	September 30, 2016		December 31, 2015
Residential mortgage loans	$	48,700	$	27,734
Construction loans		8,079		8,135
Total	$	56,779	$	35,869

Non-performing loans held for sale totaled $8.1 million as of September 30, 2016 and December 31, 2015.

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OTHER REAL ESTATE OWNED

9 Months Ended

Sep. 30, 2016

Text Block [Abstract]

Other Real Estate Owned Disclosure [Text Block]

NOTE10–OTHER REAL ESTATE OWNED

The following table presents OREO inventory as of the dates indicated:
		September 30,			December 31,
(In thousands)		2016		2015
OREO
OREO balances, carrying value:
Residential (1)		$	45,887	$	43,563
Commercial			81,038		87,849
Construction			12,521		15,389
Total		$	139,446	$	146,801
(1)	Excludes $15.1 million and $8.9 million as of September 30, 2016 and December 31, 2015, respectively, of foreclosures that meet the conditions of ASC 310-40 and are presented as a receivable (other assets) in the statement of financial condition.

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

9 Months Ended

Sep. 30, 2016

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

NOTE 10–DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

One of the market risks facing the Corporation is interest rate risk, which includes the risk that changes in interest rates will result in changes in the value of the Corporation’s assets or liabilities and the risk that net interest income from its loan and investment portfolios will be adversely affected by changes in interest rates. The overall objective of the Corporation’s interest rate risk management activities is to reduce the variability of earnings caused by changes in interest rates.

The Corporation designates a derivative as a fair value hedge,cash flow hedge or economic undesignated hedge when it enters into the derivative contract. As of September 30, 2016 and December 31,2015, all derivatives held by the Corporation were considered economic undesignated hedges. These undesignated hedges are recorded at fair value with the resulting gain or loss recognized in current earnings.

The following summarizes the principal derivative activities used by the Corporation in managing interest rate risk:

Interest rate cap agreements - Interest rate cap agreements provide the right to receive cash if a reference interest rate rises above a contractual rate. The value increases as the reference interest rate rises. The Corporation enters into interest rate cap agreements for protection from rising interest rates.

Forward Contracts- Forward contracts are sales of to-be-announced (“TBA”) mortgage-backed securities that will settle over the standard delivery date and do not qualify as “regular way” security trades. Regular-way security trades are contracts that have no net settlement provision and no market mechanism to facilitate net settlement and that provide for delivery of a security within the timeframe generally established by regulations or conventions in the marketplace or exchange in which the transaction is being executed. The forward sales are considered derivative instruments that need to be marked to market. These securities are used to economically hedge the FHA/VA residential mortgage loan securitizations of the mortgage-banking operations. Unrealized gains (losses) are recognized as part of mortgage banking activities in the consolidated statement of income.

To satisfy the needs of its customers, the Corporation may enter into non-hedging transactions. On these transactions, the Corporation generally participates as a buyer in one of the agreements and as a seller in the other agreement under the same terms and conditions.

In addition, the Corporation enters into certain contracts with embedded derivatives that do not require separate accounting as these are clearly and closely related to the economic characteristics of the host contract. When the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract, it is bifurcated, carried at fair value, and designated as a trading or non-hedging derivative instrument.

The following table summarizes the notional amounts of all derivative instruments:
	Notional Amounts (1)
	As of		As of
	September 30,		December 31,
	2016		2015
	(In thousands)
Undesignated economic hedges:
Interest rate contracts:
Written interest rate cap agreements	$	91,510	$	120,816
Purchased interest rate cap agreements		91,510		120,816
Forward Contracts:
Sale of TBA GNMA MBS pools		45,000		30,000
	$	228,020	$	271,632
(1) Notional amounts are presented on a gross basis with no netting of offsetting exposure positions.

The following table summarizes the fair value of derivative instruments and the location in the statement of financial condition as of the indicated dates:
	Asset Derivatives					Liability Derivatives
	Statement of	September 30,		December 31,			September 30,		December 31,
	Financial	2016		2015			2016		2015
	Condition Location	FairValue		FairValue		Statement of Financial Condition Location	FairValue		FairValue
(In thousands)
Undesignated economic hedges:
Interest rate contracts:
Written interest rate cap agreements	Other assets	$	-	$	-	Accounts payable and other liabilities	$	191	$	798
Purchased interest rate cap agreements	Other assets		191		806	Accounts payable and other liabilities		-		-
Forward Contracts:
Sales of TBA GNMA MBS pools	Other assets		4		-	Accounts payable and other liabilities		144		123
		$	195	$	806		$	335	$	921

The following table summarizes the effect of derivative instruments on the statement of income:
		Gain (or Loss)				Gain (or Loss)
	Location of Gain or (loss)	Quarter Ended				Nine-Month Period Ended
	Recognized in Income on	September 30,				September 30,
(In thousands)	Derivatives	2016		2015		2016		2015
Undesignated economic hedges:
Interest rate contracts:
Written and purchased interest rate cap agreements	Interest income - Loans	$	5	$	144	$	(2)	$	144
Forward contracts:
Sales of TBA GNMA MBS pools	Mortgage banking activities		219		(279)		(17)		(97)
Total gain (loss) on derivatives		$	224	$	(135)	$	(19)	$	47

Derivative instruments are subject to market risk. As is the case with investment securities, the market value of derivative instruments is largely a function of the financial market’s expectations regarding the future direction of interest rates. Accordingly, current market values are not necessarily indicative of the future impact of derivative instruments on earnings. This will depend, for the most part, on the shape of the yield curve and the level of interest rates, as well as the expectations for rates in the future.

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OFFSETTING OF ASSETS AND LIABILITIES

9 Months Ended

Sep. 30, 2016

Text Block [Abstract]

OFFSETTING OF ASSETS AND LIABILITIES

NOTE 11–OFFSETTING OF ASSETS AND LIABILITIES

The Corporation enters into master agreements with counterparties, primarily related to derivatives and repurchase agreements, that may allow for netting of exposures in the event of default. In an event of default, each party has a right of set-off against the other party foramounts owed under the related agreement and any other amount or obligation owed in respect of any other agreement or transaction between them. The following table presents information about the offsetting of financial assets and liabilities as well as derivative assets and liabilities:

Offsetting of Financial Assets and Derivative Assets
							Gross Amounts Not Offset in the Statement of Financial Position
					Net Amounts of Assets Presented in the Statement of Financial Position
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position
							Financial Instruments		Cash Collateral
As of September 30, 2016											Net Amount
(In thousands)
Description
Derivatives	$	191	$	-	$	191	$	(191)	$	-	$	-
Securities purchased under agreements to resell		200,000		(200,000)		-		-		-		-
Total	$	200,191	$	(200,000)	$	191	$	(191)	$	-	$	-
							Gross Amounts Not Offset in the Statement of Financial Position
					Net Amounts of Assets Presented in the Statement of Financial Position
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position
							Financial Instruments		Cash Collateral
As of December 31, 2015											Net Amount
(In thousands)
Description
Derivatives	$	806	$	-	$	806	$	(806)	$	-	$	-
Securities purchased under agreements to resell		200,000		(200,000)		-		-		-		-
Total	$	200,806	$	(200,000)	$	806	$	(806)	$	-	$	-

Offsetting of Financial Liabilities and Derivative Liabilities
							Gross Amounts Not Offset in the Statement of Financial Position
					Net Amounts of Liabilities Presented in the Statement of Financial Position
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position
							Financial Instruments		Cash Collateral
As of September 30, 2016											Net Amount
(In thousands)
Description
Securities sold under agreements to repurchase	$	500,000	$	(200,000)	$	300,000	$	(300,000)	$	-	$	-
							Gross Amounts Not Offset in the Statement of Financial Position
					Net Amounts of Liabilities Presented in the Statement of Financial Position
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position
							Financial Instruments		Cash Collateral
As of December 31, 2015											Net Amount
(In thousands)
Description
Securities sold under agreements to repurchase	$	600,000	$	(200,000)	$	400,000	$	(400,000)	$	-	$	-

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GOODWILL AND OTHER INTANGIBLES

9 Months Ended

Sep. 30, 2016

GOODWILL AND OTHER INTANGIBLES

NOTE 12 – GOODWILL AND OTHER INTANGIBLES

Goodwill as of September 30, 2016 and December 31, 2015 amounted to $28.1 million, recognized as part of “Other Assets” in the consolidated statement of financial condition. The Corporation conducted its annual evaluation of goodwill and intangibles during the fourth quarter of 2015. The Corporation’s goodwill is related to the acquisition of FirstBank Florida in 2005.

There have been no events related to the Florida reporting unit that could indicate potential goodwill impairment since the date of the last evaluation; therefore, no goodwill impairment evaluation was performed during the first nine months of 2016. Goodwill and other indefinite life intangibles are reviewed at least annually for impairment.

In connection with the acquisition of the FirstBank-branded credit card loan portfolio in the second quarter of 2012, the Corporation recognized a purchased credit card relationship intangible of $24.5 million, which is being amortized over the remaining estimated life of5.2 years on an accelerated basis based on the estimated attrition rate of the purchased credit card accounts, which reflects the pattern in which the economic benefits of the intangible asset are consumed. These benefits are consumed as the revenue stream generated by the cardholder relationship is realized.

The core deposit intangible acquired in the February 2015 Doral Bank transaction amounted to $5.8 million ($4.6million as of September 30, 2016).

In the first quarter of 2016, FirstBank Insurance Agency acquired certain insurance customer accounts and related customer records and recognized an insurance customer relationship intangible of $1.1 million ($1.0 million as of September 30, 2016), which is being amortized over the next 6.3 years on a straight-line basis. The list of accounts acquired has a direct relationship to the previous mortgage loan portfolio acquisitions from Doral Bank and Doral Financial in 2015 and 2014.

The following table shows the gross amount and accumulated amortization of the Corporation’s intangible assets recognized as part of Other Assets in the consolidated statement of financial condition:
	As of		As of
	September 30,		December 31,
	2016		2015
(Dollars in thousands)
Core deposit intangible:
Gross amount, beginning of period	$	51,664	$	45,844
Addition as a result of acquisition		-		5,820
Accumulated amortization		(43,974)		(42,498)
Net carrying amount	$	7,690	$	9,166
Remaining amortization period		8.3		9.0 years
Purchased credit card relationship intangible:
Gross amount	$	24,465	$	24,465
Accumulated amortization		(13,237)		(11,146)
Net carrying amount	$	11,228	$	13,319
Remaining amortization period		5.2		5.8 years
Insurance Customer relationship intangible:
Gross amount	$	1,067	$	-
Accumulated amortization		(102)		-
Net carrying amount	$	965	$	-
Remaining amortization period		6.3		-

For the quarter and nine-month period endedSeptember 30, 2016, the amortization expense of core deposit intangibles amounted to $0.5 million and $1.5 million, respectively, (2015 - $0.6 million and $1.5 million, respectively). For the quarter and nine-month period endedSeptember 30, 2016, the amortization expense of the purchased credit card relationship intangible amounted to $0.7 million and $2.1 million, respectively, (2015 - $0.8 million and $2.3 million, respectively). For thequarter and nine-month period endedSeptember 30, 2016, the amortization expense of insurance customer relationship intangible amounted to $38 thousand and $0.1 million, respectively.

The estimated aggregate amortization expense related to these intangible assets for future periods is as follows:
			Amount
			(In thousands)
	2016	$	1,226
	2017		4,495
	2018		3,519
	2019		3,067
	2020		2,851
	2021 and after		4,725

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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS

9 Months Ended

Sep. 30, 2016

NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS

NOTE 13 – NON CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS

The Corporation transfers residential mortgage loans in sale or securitization transactions in which it has continuing involvement, including servicing responsibilities and guarantee arrangements. All such transfers have been accounted for as sales as required by applicable accounting guidance.

When evaluating the need to consolidate counterparties to which the Corporation has transferred assets or with which the Corporation has entered into other transactions, the Corporation first determines if the counterparty is an entity for which a variable interest exists. If no scope exception is applicable and a variable interest exists, the Corporation then evaluates if it is the primary beneficiary of the VIE and whether the entity should be consolidated or not.

Below is a summary of transfers of financial assets to VIEs for which the Corporation has retained some level of continuing involvement:

GNMA

The Corporation typically transfers first lien residential mortgage loans in conjunction with GNMA securitization transactions in which the loans are exchanged for cash or securities that are readily redeemed for cash proceeds and servicing rights. The securities issued through these transactions are guaranteed by the issuer and, as such, under seller/servicer agreements, the Corporation is required to service the loans in accordance with the issuers’ servicing guidelines and standards. As of September 30, 2016, the Corporation serviced loans securitized through GNMA with a principal balance of $1.4 billion.

Trust-Preferred Securities

In 2004, FBP Statutory Trust I, a financing trust that is wholly owned by the Corporation, sold to institutional investors $100 million of its variable rate trust-preferred securities. The proceeds of the issuance, together with the proceeds of the purchase by the Corporation of $3.1 million of FBP Statutory Trust I variable rate common securities, were used by FBP Statutory Trust I to purchase $103.1 million aggregate principal amount of the Corporation’s Junior Subordinated Deferrable Debentures. Also in 2004, FBP Statutory Trust II, a financing trust that is wholly owned by the Corporation, sold to institutional investors $125 million of its variable rate trust-preferred securities. The proceeds of the issuance, together with the proceeds of the purchase by the Corporation of $3.9 million of FBP Statutory Trust II variable rate common securities, were used by FBP Statutory Trust II to purchase $128.9 million aggregate principal amount of the Corporation’s Junior Subordinated Deferrable Debentures. The debentures are presented in the Corporation’s consolidated statement of financial condition as Other Borrowings, net of related issuance costs. The variable rate trust-preferred securities are fully and unconditionally guaranteed by the Corporation. The Junior Subordinated Deferrable Debentures issued by the Corporation in April 2004 and in September 2004 mature on June 17, 2034 and September 20, 2034, respectively; however, under certain circumstances, the maturity of Junior Subordinated Deferrable Debentures may be shortened (such shortening would result in a mandatory redemption of the variable rate trust-preferred securities). During the first quarter of 2016, the Corporation completed the repurchase of $10 million of trust-preferred securities of the FBP Statutory Trust II that were auctioned in a public sale at which the Corporation was invited to participate. The Corporation repurchased and cancelled the repurchased trust preferred securities, resulting in a commensurate reduction in the related Floating Rate Junior Subordinated Debentures.The Corporation’s winning bid equated to 70% of the $10 million par value. The 30% discount, plus accrued interest, resulted in a gain of approximately $4.2 million, which is reflected in the statement of income as a “Gain on early extinguishment of debt.” During the second quarter of 2015, the Corporation issued 852,831 shares of the Corporation’s common stock in exchange for $5.3 million of trust preferred securities (FBP Statutory Trust I), which enabled the Corporation to cancel $5.5 million of the carrying value of the debentures underlying the purchased trust preferred securities. The Collins Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act eliminates certain trust-preferred securities from Tier 1 Capital; however, these instruments may remain in Tier 2 capital until the instruments are redeemed or mature. Under the indentures, the Corporation has the right, from time to time, and without causing an event of default, to defer payments of interest on the Junior Subordinated Debentures by extending the interest payment period at any time and from time to time during the term of the subordinated debentures for up to twenty consecutive quarterly periods. During the second quarter of 2016, the Corporation received approval from the Federal Reserve and paid $31.2 million for all the accrued but deferred interest payments plus the interest for the second quarter on the Corporation’s subordinated debentures associated with its trust preferred securities. Subsequently, the Corporation received approval and paid the interest for the third quarter of 2016 amounting to $1.8 million. As of September 30, 2016, the Corporation is current on all interest payments due related to its subordinated debt. Future interest payments are subject to Federal Reserve approval. It is the intent of the Corporation to request approvals in future periods to continue regularly scheduled quarterly interest payments.

Grantor Trusts

During 2004 and 2005, a third party to the Corporation, referred to in this subsection as the seller, established a series of statutory trusts to effect the securitization of mortgage loans and the sale of trust certificates. The seller initially provided the servicing for a fee, which is senior to the obligations to pay trust certificate holders. The seller then entered into a sales agreement through which it sold and issued the trust certificates in favor of the Corporation’s banking subsidiary. Currently, the Bank is the sole owner of the trust certificates; the servicing of the underlying residential mortgages that generate the principal and interest cash flows is performed by another third party, which receives a servicing fee. The securities are variable rate securities indexed to 90-day LIBOR plus a spread. The principal payments from the underlying loans are remitted to a paying agent (servicer), who then remits interest to the Bank; interest income is shared to a certain extent with the FDIC, which has an interest only strip (“IO”) tied to the cash flows of the underlying loans and is entitled to receive the excess of the interest income less a servicing fee over the variable rate income that the Bank earns on the securities. This IO is limited to the weighted-average coupon on the securities. The FDIC became the owner of the IO upon its intervention of the seller, a failed financial institution. No recourse agreement exists and the risks from losses on non-accruing loans and repossessed collateral are absorbed by the Bank as the sole holder of the certificates. As of September 30, 2016, the amortized cost and fair value of Grantor Trusts amounted to $30.6 million and $22.1 million, respectively, with a weighted average yield of 2.37%.

Investment in unconsolidated entity

On February 16, 2011, FirstBank sold an asset portfolio consisting of performing and non-performing construction, commercial mortgage and commercial and industrial loans with an aggregate book value of $269.3 million to CPG/GS, an entity organized under the laws of the Commonwealth of Puerto Rico and majority owned by PRLP Ventures LLC ("PRLP"), a company created by Goldman, Sachs & Co. and Caribbean Property Group. In connection with the sale, the Corporation received $88.5 million in cash and a 35% interest in CPG/GS, and made a loan in the amount of $136.1 million representing seller financing provided by FirstBank. The loan has a seven-year maturity and bears variable interest at 30-day LIBOR plus 300 basis points and is secured by a pledge of all of the acquiring entity's assets as well as the PRLP's 65% ownership interest in CPG/GS. As of September 30, 2016, the carrying amount of the loan was $6.8 million, which was included in the Corporation's Commercial and Industrial loans held for investment portfolio. FirstBank’s equity interest in CPG/GS is accounted for under the equity method. When applying the equity method, the Bank follows the Hypothetical Liquidation Book Value method (“HLBV”) to determine its share of CPG/GS’s earnings or loss. The loss recorded in 2014 reduced to zero the carrying amount of the Bank’s investment in CPG/GS. No negative investment needs to be reported as the Bank has no legal obligation or commitment to provide further financial support to this entity; thus, no further losses have been or will be recorded on this investment. Any potential increase in the carrying value of the investment in CPG/GS, under the HLBV method, would depend upon how better off the Bank is at the end of the period than it was at the beginning of the period after the waterfall calculation performed to determine the amount of gain allocated to the investors.

FirstBank also provided an $80 million advance facility to CPG/GS to fund unfunded commitments and costs to complete projects under construction, which was fully disbursed in 2011, and a $20 million working capital line of credit to fund certain expenses of CPG/GS. The working capital line expired in September 2016 and no amount is outstanding. During 2012, CPG/GS repaid the outstanding balance of the advance facility to fund unfunded commitments, and the funds became available for rewithdrawal under a one-time revolver agreement. This facility bears variable interest at 30-day LIBOR plus 300 basis points. As of September 30, 2016, the carrying value of the revolver agreement was $11.4 million, which was included in the Corporation's commercial and industrial loans held for investment portfolio.

Cash proceeds received by CPG/GS have been first used to cover operating expenses and debt service payments, including those related to the note receivable, the advance facility, and the working capital line, described above, which must be substantially repaid before proceeds can be used for other purposes, including the return of capital to both PRLP and FirstBank. FirstBank will not receive any return on its equity interest until PRLP receives an aggregate amount equivalent to its initial investment and a priority return of at least 12%, resulting in FirstBank’s interest in CPG/GS being subordinate to PRLP’s interest. CPG/GS will then begin to make payments pro rata to PRLP and FirstBank, 35% and 65%, respectively, until FirstBank has achieved a 12% return on its invested capital and the aggregate amount of distributions is equal to FirstBank’s capital contributions to CPG/GS.

The Bank has determined that CPG/GS is a VIE in which the Bank is not the primary beneficiary. In determining the primary beneficiary of CPG/GS, the Bank considered applicable guidance that requires the Bank to qualitatively assess the determination of the primary beneficiary (or consolidator) of CPG/GS based on whether it has both the power to direct the activities of CPG/GS that most significantly impact the entity's economic performance and the obligation to absorb losses of CPG/GS that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE.

The Bank determined that it does not have the power to direct the activities that most significantly impact the economic performance of CPG/GS as it does not have the right to manage the loan portfolio, impact foreclosure proceedings, or manage the construction and sale of the property; therefore, the Bank concluded that it is not the primary beneficiary of CPG/GS. As a creditor to CPG/GS, the Bank has certain rights related to CPG/GS; however, these are intended to be protective in nature and do not provide the Bank with the ability to manage the operations of CPG/GS. Since CPG/GS is not a consolidated subsidiary of the Bank and the transaction met the criteria for sale accounting under authoritative guidance, the Bank accounted for this transaction as a true sale, recognizing the cash received, the notes receivable, and the interest in CPG/GS, and derecognizing the loan portfolio sold.

Servicing Assets

The Corporation sells residential mortgage loans to GNMA, which generally securitizes the transferred loans into mortgage-backed securities. Also, certain conventional conforming loans are sold to FNMA or FHLMC, with servicing retained. The Corporation recognizes as separate assets the rights to service loans for others, whether those servicing assets are originated or purchased.

The changes in servicing assets are shown below:
		Quarter Ended				Nine-Month Period Ended
		September 30,				September 30,
(In thousands)		2016		2015		2016		2015
Balance at beginning of period		$	25,044	$	23,519	$	24,282	$	22,838
Capitalization of servicing assets			1,420		1,242		3,878		3,789
Amortization			(817)		(758)		(2,424)		(2,409)
Adjustment to fair value			(263)		(23)		(387)		(170)
Other (1)			91		(20)		126		(88)
Balance at end of period		$	25,475	$	23,960	$	25,475	$	23,960
(1)	Amount represents the adjustment to fair value related to the repurchase of loans serviced for others.

Impairment charges are recognized through a valuation allowance for each individual stratum of servicing assets. The valuation allowance is adjusted to reflect the amount, if any, by which the cost basis of the servicing asset for a given stratum of loans being serviced exceeds its fair value. Any fair value in excess of the cost basis of the servicing asset for a given stratum is not recognized.

Changes in the impairment allowance were as follows:
	Quarter Ended				Nine-Month Period Ended
	September 30,				September 30,
(In thousands)	2016		2015		2016		2015
Balance at beginning of period	$	260	$	202	$	136	$	55
Temporary impairment charges		266		41		460		227
Recoveries		(3)		(18)		(73)		(57)
Balance at end of period	$	523	$	225	$	523	$	225

	The components of net servicing income are shown below:
		Quarter Ended				Nine-Month Period Ended
		September 30,				September 30,
(In thousands)		2016		2015		2016		2015
Servicing fees		$	1,930	$	1,796	$	5,657	$	5,340
Late charges and prepayment penalties			200		179		505		546
Adjustment for loans repurchased			91		(20)		126		(88)
Other (1)			-		(22)		(1)		(125)
Servicing income, gross			2,221		1,933		6,287		5,673
Amortization and impairment of servicing assets			(1,080)		(781)		(2,811)		(2,579)
Servicing income, net		$	1,141	$	1,152	$	3,476	$	3,094
(1)	Mainly consisted of compensatory fees imposed by GSEs.

The Corporation’s servicing assets are subject to prepayment and interest rate risks. Key economic assumptions used in determining the fair value at the time of sale of the related mortgages ranged as follows:
	Maximum		Minimum
Nine-Month Period Ended September 30, 2016:
Constant prepayment rate:
Government-guaranteed mortgage loans	7.6	%	6.1	%
Conventional conforming mortgage loans	8.0	%	6.5	%
Conventional non-conforming mortgage loans	14.1	%	10.6	%
Discount rate:
Government-guaranteed mortgage loans	12.0	%	11.5	%
Conventional conforming mortgage loans	10.0	%	9.5	%
Conventional non-conforming mortgage loans	14.3	%	13.8	%
Nine-Month Period Ended September 30, 2015:
Constant prepayment rate:
Government-guaranteed mortgage loans	9.2	%	7.9	%
Conventional conforming mortgage loans	9.0	%	7.9	%
Conventional non-conforming mortgage loans	14.4	%	12.9	%
Discount rate:
Government-guaranteed mortgage loans	11.5	%	11.5	%
Conventional conforming mortgage loans	9.5	%	9.5	%
Conventional non-conforming mortgage loans	13.8	%	13.8	%

As ofSeptember 30, 2016, fair values of the Corporation’s servicing assets were based on a valuation model that incorporates market driven assumptionsregarding discount rates and mortgage prepayment rates, adjusted by the particular characteristics of the Corporation’s servicing portfolio. The weighted-averages of the key economic assumptions used by the Corporation in its valuation model and the sensitivity of the current aggregate fair value to immediate 10% and 20% adverse changes in those assumptions for mortgage loans as of September 30, 2016were as follows:

	(Dollars in thousands)
Carrying amount of servicing assets	$	25,475
Fair value	$	27,937
Weighted-average expected life (in years)		8.42
Constant prepayment rate (weighted-average annual rate)		6.34%
Decrease in fair value due to 10% adverse change	$	734
Decrease in fair value due to 20% adverse change	$	1,435
Discount rate (weighted-average annual rate)		11.18%
Decrease in fair value due to 10% adverse change	$	1,311
Decrease in fair value due to 20% adverse change	$	2,515

These sensitivities are hypothetical and should be used with caution. As the figures indicate, changes in fair value based on a 10% variation in assumptions generally cannot be extrapolated because the relationship between the change in assumption and the change in fair value may not be linear. Also, in this table, the effect of a variation in a particular assumption on the fair value of the servicing asset is calculated without changing any other assumption; in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the sensitivities.

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DEPOSITS

9 Months Ended

Sep. 30, 2016

DEPOSITS

NOTE15– DEPOSITS

The following table summarizes deposit balances:
	September 30,			December 31,
	2016		2015
(In thousands)
Type of account:
Non-interest bearing checking accounts	$	1,473,528	$	1,336,559
Savings accounts		2,458,634		2,459,186
Interest-bearing checking accounts		1,153,096		1,088,651
Certificates of deposit		2,337,547		2,356,245
Brokered CDs		1,558,508		2,097,483
	$	8,981,313	$	9,338,124

Brokered CDs mature as follows:
	September 30,
	2016
(In thousands)
Three months or less	$	343,396
Over three months to six months		255,574
Over six months to one year		350,362
One to three years		524,386
Three to five years		84,605
Over five years		185
Total	$	1,558,508

The following are the components of interest expense on deposits:
	Quarter Ended				Nine-Month Period Ended
	September 30,				September 30,
	2016			2015	2016			2015
(In thousands)
Interest expense on deposits	$	16,130	$	15,947	$	49,104	$	48,402
Accretion of premium from acquisition		(43)		(156)		(181)		(441)
Amortization of broker placement fees		655		1,060		2,300		3,564
Interest expense on deposits	$	16,742	$	16,851	$	51,223	$	51,525

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

9 Months Ended

Sep. 30, 2016

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

NOTE 16 – SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase (repurchase agreements) consist of the following:
(Dollars in thousands)		September 30, 2016		December 31, 2015
Repurchase agreements, interest ranging from 1.96% to 3.84%
(December 31, 2015- 1.96% to 3.41%) (1)(2)		$	600,000	$	700,000
(1)	Reported net of securities purchased under agreements to repurchase (reverse repurchase agreements) by counterparty, when applicable, pursuant to ASC 210-20-45-11.
(2)	As of September 30, 2016, includes $500 million with an average rate of 3.56% that lenders have the right to call before their contractual maturities at various dates beginning on October 11, 2016. In addition, $400 million is tied to variable rates.

Repurchase agreements mature as follows:
		September 30, 2016
		(In thousands)
	One month to three months	$	300,000
	One year to three years		100,000
	Over five years		200,000
	Total	$	600,000

As of September 30, 2016 and December 31, 2015, the securities underlying such agreements were delivered to the dealers with which the repurchase agreements were transacted.

Repurchase agreements as of September 30, 2016, grouped by counterparty, were as follows:
	(Dollars in thousands)			Weighted-Average
	Counterparty	Amount		Maturity (In Months)
	Citigroup Global Markets	$	300,000	1
	Dean Witter / Morgan Stanley		100,000	13
	JP Morgan Chase		200,000	64
		$	600,000

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ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB)

9 Months Ended

Sep. 30, 2016

ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB)

NOTE 17 – ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB)

The following is a summary of the advances from the FHLB:
		September 30,		December 31,
	(Dollars in thousands)	2016		2015
	Fixed-rate advances from FHLB, with a weighted-
	average interest rate of 1.40% (December 31, 2015 - 1.30%)	$	355,000	$	455,000

Advances from FHLB mature as follows:
	(In thousands)	September 30, 2016
	Over six months to one year	$	200,000
	Over one year to three years		25,000
	Over three to four years		130,000
	Total	$	355,000

As of September 30, 2016, the Corporation had additional capacity of approximately $1.1 billion on this credit facility based on collateral pledged at the FHLB, including a haircut reflecting the perceived risk associated with holding the collateral.

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OTHER BORROWINGS

9 Months Ended

Sep. 30, 2016

OTHER BORROWINGS

NOTE 18 – OTHER BORROWINGS

Other borrowings consist of:

		September 30,		December 31,
	(In thousands)	2016		2015
Junior subordinated debentures due in 2034,
interest-bearing at a floating rate of 2.75%
over 3-month LIBOR (3.61% as of September 30, 2016
and 3.28% as of December 31, 2015)		$	97,630	$	97,626
Junior subordinated debentures due in 2034,
interest-bearing at a floating rate of 2.50%
over 3-month LIBOR (3.36% as of September 30, 2016
and 3.07% as of December 31, 2015) (1)			118,557		128,866
		$	216,187	$	226,492
(1)	Refer to Note 13 - Non-Consolidated Variable Interest Entities and Servicing Assets - Trust Preferred Securities for additional information about the Corporation's repurchase and cancellation of $10 million of trust preferred securities associated with these junior subordinated debentures.

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STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2016

STOCKHOLDERS' EQUITY

NOTE 18 – STOCKHOLDERS’ EQUITY

Common Stock

As of September 30, 2016 and December 31, 2015, the Corporation had 2,000,000,000 authorized shares of common stock with a par value of $0.10 per share. As of September 30, 2016 and December 31, 2015, there were 218,605,179 and 216,051,128 shares issued, respectively, and 217,387,647 and 215,088,698 shares outstanding, respectively. On July 30, 2009, the Corporation announced the suspension of common and preferred stock dividends effective with the preferred dividend for the month of August 2009. Refer to Note 3 for information about transactions related to common stock under the Omnibus Plan.

Preferred Stock

The Corporation has 50,000,000 authorized shares of preferred stock with a par value of $1.00, redeemable at the Corporation’s option subject to certain terms. This stock may be issued in series and the shares of each series will have such rights and preferences as are fixed by the Board of Directors when authorizing the issuance of that particular series. As of September 30, 2016, the Corporation has five outstanding series of non-convertible, non-cumulative preferred stock: 7.125% non-cumulative perpetual monthly income preferred stock, Series A; 8.35% non-cumulative perpetual monthly income preferred stock, Series B; 7.40% non-cumulative perpetual monthly income preferred stock, Series C; 7.25% non-cumulative perpetual monthly income preferred stock, Series D; and 7.00% non-cumulative perpetual monthly income preferred stock, Series E. The liquidation value per share is $25.

Effective January 17, 2012, the Corporation delisted all of its outstanding series of non-convertible, non-cumulative preferred stock from the New York Stock Exchange. The Corporation has not arranged for listing and/or registration on another national securities exchange or for quotation of the Series A through E Preferred Stock in a quotation medium.

Treasury stock

During the first nine months of 2016 and 2015, the Corporation withheld an aggregate of 255,102shares and 181,649 shares, respectively, of the common stock paid to certain senior officers as additional compensation and vested restricted stock to cover employees’ payroll and income tax withholding liabilities; these shares are held as treasury shares. As of September 30, 2016 and December 31, 2015, the Corporation had 1,217,532 and 962,430shares held as treasury stock, respectively.

FirstBank Statutory Reserve (Legal Surplus)

The Banking Law of the Commonwealth of Puerto Rico requires that a minimum of 10% of FirstBank’s net income for the year be transferred to legal surplus until such surplus equals the total of paid-in-capital on common and preferred stock. Amounts transferred to the legal surplus account from the retained earnings account are not available for distribution to the Corporation, including for payment as dividends to the stockholders, without the prior consent of the Puerto Rico Commissioner of Financial Institutions. The Puerto Rico Banking Law provides that, when the expenditures of a Puerto Rico commercial bank are greater than receipts, the excess of the expenditures over receipts shall be charged against the undistributed profits of the bank, and the balance, if any, shall be charged against the reserve fund, as a reduction thereof. If there is noreserve fund sufficient to cover such balance in whole or in part, the outstanding amount shall be charged against the capital account and the Bank cannot pay dividends until it can replenish the reserve fund to an amount of at least 20% of the original capital contributed. During the fourth quarter of 2015, $2.8 million was transferred to the legal surplus reserve. FirstBank’s legal surplus reserve, included as part of retained earnings in the Corporation’s statement of financial condition, amounted to $42.8million as of September 30, 2016. There were no transfers to the legal surplus reserve during the first nine months of 2016.

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INCOME TAXES

9 Months Ended

Sep. 30, 2016

INCOME TAXES

NOTE 19 - INCOME TAXES

Income tax expense includes Puerto Rico and USVI income taxes as well as applicable U.S. federal and state taxes. The Corporation is subject to Puerto Rico income tax on its income from all sources. As a Puerto Rico corporation, First BanCorp. is treated as a foreign corporation for U.S. and USVI income tax purposes and is generally subject to U.S. and USVI income tax only on its income from sources within the U.S. and USVI or income effectively connected with the conduct of a trade or business in those regions. Any such tax paid in the U.S. and USVI is also creditable against the Corporation’s Puerto Rico tax liability, subject to certain conditions and limitations.

Under the Puerto Rico Internal Revenue Code of 2011, as amended (the “2011 PR Code”), the Corporation and its subsidiaries are treated as separate taxable entities and are not entitled to file consolidated tax returns and, thus, the Corporation is not able to utilize losses from one subsidiary to offset gains in another subsidiary. Accordingly, in order to obtain a tax benefit from a net operating loss (“NOL”), a particular subsidiary must be able to demonstrate sufficient taxable income within the applicable NOL carry forward period. The 2011 PR Code provides a dividend received deduction of 100% on dividends received from “controlled” subsidiaries subject to taxation in Puerto Rico and 85% on dividends received from other taxable domestic corporations.

The Corporation has maintained an effective tax rate lower than the maximum statutory rate in Puerto Rico mainly by investing in government obligations and mortgage-backed securities exempt from U.S. and Puerto Rico income taxes and by doing business through an International Banking Entity (“IBE”) unit of the Bank, and through the Bank’s subsidiary, FirstBank Overseas Corporation, whose interest income and gain on sales is exempt from Puerto Rico income taxation. The IBE and FirstBank Overseas Corporation were created under the International Banking Entity Act of Puerto Rico, which provides for total Puerto Rico tax exemption on net income derived by IBEs operating in Puerto Rico on the specific activities identified in the IBE Act. An IBE that operates as a unit of a bank pays income taxes at the corporate standard rates to the extent that the IBE’s net income exceeds 20% of the bank’s total net taxable income.

As of September 30, 2016, the Corporation’s deferred tax assets, net of a valuation allowance of $201.7 million, amounted to $290.9 million and management concluded, based upon the assessment of all positive and negative evidence, that it is more likely than not that the Corporation will generate sufficient taxable income within the applicable NOL carry-forward periods to realize such amount.

The Corporation recorded an income tax expense of $10.4 million and $23.7 million in the third quarter and the first nine months of 2016, respectively, compared to an income tax expense of $4.5 million and $2.7 million for the same periods in 2015. The change in income tax expense in the third quarter of 2016, when compared to the third quarter of 2015, is mainly driven by higher taxable income. For the nine-month period ended September 30, 2016, the Corporation calculated the provision for income taxes by applying the estimated annual effective tax rate for the full fiscal year to ordinary income or loss. In the computation of the consolidated worldwide estimated annual effective tax rate, ASC 740-270 requires the exclusion of legal entities with pre-tax losses from which a tax benefit cannot be recognized. The consolidated worldwide estimated annual effective tax rate, excluding entities with pre-tax losses from which a tax benefit cannot be recognized, was24% for the nine-month period ended September 30, 2016, compared to 17% for the same period in 2015. The increase in the estimated effective tax rate for the nine month period ended September 30, 2016, when compared to the same period in 2015, reflects the impact in 2015 of a release in the valuation allowance resulting from the bargain purchase gain, which generated a deferred tax liability. As required by ASC 740-270, changes in the valuation allowance related to the current year are included in the computation of the estimated effective tax rate for the year. The effective tax rate including all entities for the first nine months of 2016 was25%, compared to 30% for the same period in 2015.

As of September 30, 2016, the Corporation did not have Unrecognized Tax Benefits (“UTBs”) recorded on its books. Audit periods remain open for review until the statute of limitations has passed. The statute of limitations under the 2011 PR code is 4 years; the statute of limitations for income taxes purposes for each of the Virgin Islands and U.S. is three years after a tax return is due or filed, whichever is later. The completion of an audit by the taxing authorities or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Corporation’s liability for income taxes. Any such adjustment could be material to the results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. For Virgin Islands and U.S. income tax purposes, all tax years subsequent to 2011 remain open to examination. The 2012 U.S. federal tax return is currently under examination by the IRS. For Puerto Rico tax purposes, all tax years subsequent to 2011 remain open to examination.

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FAIR VALUE

9 Months Ended

Sep. 30, 2016

FAIR VALUE

NOTE 20 – FAIR VALUE

Fair Value Measurement

The FASB authoritative guidance for fair value measurement defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This guidance also establishes a fair value hierarchy for classifying financial instruments. The hierarchy is based on whether the inputs to the valuation techniques used to measure fair value are observable or unobservable. Three levels of inputs may be used to measure fair value:

Level 1	Valuations of Level 1 assets and liabilities are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. Level 1 assets and liabilities include equity securities that trade in an active exchange market, as well as certain U.S. Treasury and other U.S. government and agency securities and corporate debt securities that are traded by dealers or brokers in active markets.
Level 2	Valuations of Level 2 assets and liabilities are based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include (i) mortgage-backed securities for which the fair value is estimated based on the value of identical or comparable assets, (ii) debt securities with quoted prices that are traded less frequently than exchange-traded instruments, and (iii) derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.
Level 3	Valuations of Level 3 assets and liabilities are based on unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined by using pricing models for which the determination of fair value required significant management judgments estimation.

For 2016, there were no transfers into or out of Level 1, Level 2 or Level 3 of the fair value hierarchy.

Financial Instruments Recorded at Fair Value on a Recurring Basis

Investment securities available for sale

The fair value of investment securities was the market value based on quoted market prices (as is the case with equity securities, Treasury notes, and non-callable U.S. Agency debt securities), when available (Level 1), or, when available, market prices for identical or comparable assets (as is the case with MBS and callable U.S. agency debt) that are based on observable market parameters, including benchmark yields, reported trades, quotes from brokers or dealers, issuer spreads, bids, offers and reference data including market research operations (Level 2). Observable prices in the market already consider the risk of nonperformance. During the first nine months of 2016, the Corporation recorded OTTI charges of $6.3 million on certain Puerto Rico Government debt securities, specifically bonds of the GDB and the Puerto Rico Public Buildings Authority. The credit impairment loss was based on the probability of default and loss severity in the event of default in consideration of the latest information available about the Puerto Rico Government’s financial condition. Refer to Note 4 - Investment Securities, for significant assumptions used to determine the credit impairment portion, including default rates and recovery rates, which are unobservable inputs. If listed prices or quotes are not available, fair value is based upon models that use unobservable inputs due to the limited market activity of the instrument, as is the case with certain private label mortgage-backed securities held by the Corporation (Level 3).

Private label MBS are collateralized by fixed-rate mortgages on single-family residential properties in the United States; the interest rate on the securities is variable, tied to 3-month LIBOR and limited to the weighted-average coupon of the underlying collateral. The market valuation represents the estimated net cash flows over the projected life of the pool of underlying assets applying a discount rate that reflects market observed floating spreads over LIBOR, with a widening spread based on a nonrated security. The market valuation is derived from a model that utilizes relevant assumptions such as the prepayment rate, default rate, and loss severity on a loan level basis. The Corporation modeled the cash flow from the fixed-rate mortgage collateral using a static cash flow analysis according to collateral attributes of the underlying mortgage pool (i.e., loan term, current balance, note rate, rate adjustment type, rate adjustment frequency, rate caps, and others) in combination with prepayment forecasts obtained from a commercially available prepayment model (ADCO). The variable cash flow of the security is modeled using the 3-month LIBOR forward curve. Loss assumptions were driven by the combination of default and loss severity estimates, taking into account loan credit characteristics (loan-to-value, state, origination date, property type, occupancy loan purpose, documentation type, debt-to-income ratio, and other) to provide an estimate of default and loss severity.

Refer to the table below for further information regarding qualitative information for all assets and liabilities measured at fair value using significant unobservable inputs (Level 3).

Derivative instruments

The fair value of most of the Corporation’s derivative instruments is based on observable market parameters and takes into consideration the credit risk component of paying counterparties, when appropriate, except when collateral is pledged. On interest caps, only the seller's credit risk is considered. The caps were valued using a discounted cash flow approach using the related LIBOR and swap rate for each cash flow.

Although most of the derivative instruments are fully collateralized, a credit spread is considered for those that are not secured in full. The cumulative mark-to-market effect of credit risk in the valuation of derivative instruments for the quarter and nine-month periods ended September 30, 2016 and 2015 was immaterial.

Assets and liabilities measured at fair value on a recurring basis are summarized below:
	As of September 30, 2016								As of December 31, 2015
	Fair Value Measurements Using								Fair Value Measurements Using
(In thousands)	Level 1		Level 2		Level 3		Assets/Liabilities at Fair Value		Level 1		Level 2		Level 3		Assets/Liabilities at Fair Value
Assets:
Securities available for sale :
Equity securities	$	419	$	-	$	-	$	419	$	-	$	-	$	-	$	-
U.S. Treasury Securities		7,514		-		-		7,514		7,497		-		-		7,497
Noncallable U.S. agency debt		-		366,838		-		366,838		-		315,467		-		315,467
Callable U.S. agency debt and MBS		-		1,419,951		-		1,419,951		-		1,509,807		-		1,509,807
Puerto Rico government obligations		-		24,653		2,167		26,820		-		26,327		1,890		28,217
Private label MBS		-		-		22,211		22,211		-		-		25,307		25,307
Other investments		-		-		100		100		-		-		100		100
Derivatives, included in assets:
Purchased interest rate cap agreements		-		191		-		191		-		806		-		806
Forward contracts		-		4		-		4		-		-		-		-
Liabilities:
Derivatives, included in liabilities:
Written interest rate cap agreement		-		191		-		191		-		798		-		798
Forward contracts		-		144		-		144		-		123		-		123

The table below presents a reconciliation of the beginning and ending balances of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the quarters and nine-month periods ended September 30, 2016 and 2015:

		Quarter Ended September 30,
		2016		2015
Level 3 Instruments Only		Securities		Securities
(In thousands)		Available For Sale(1)		Available For Sale(1)
Beginning balance		$	26,020	$	31,640
Total gains or (losses) (realized/unrealized):
Included in earnings			-		(231)
Included in other comprehensive income			(477)		345
Principal repayments and amortization			(1,065)		(2,046)
Ending balance		$	24,478	$	29,708
(1)	Amounts mostly related to private label mortgage-backed securities.

		Nine-Month Period Ended September 30,
		2016		2015
Level 3 Instruments Only		Securities		Securities
(In thousands)		Available For Sale(1)		Available For Sale(1)
Beginning balance		$	27,297	$	36,212
Total gains or (losses) (realized/unrealized):
Included in earnings			(387)		(628)
Included in other comprehensive income			1,339		1,489
Purchases			-		100
Principal repayments and amortization			(3,771)		(7,465)
Ending balance		$	24,478	$	29,708
(1)	Amounts mostly related to private label mortgage-backed securities.

The table below presents qualitative information for significant assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at September 30, 2016:
	September 30, 2016
(In thousands)	Fair Value		Valuation Technique	Unobservable Input	Range
Investment securities available-for-sale:
Private label MBS	$	22,130	Discounted cash flow	Discount rate	13.3%
				Prepayment rate	6.5% -22.5% (Weighted Average 13.7%)
				Projected cumulative loss rate	0.2% -9.1% (Weighted Average 4.0%)
Puerto Rico Government Obligations		2,167	Discounted cash flow	Prepayment rate	3.00%

Information about Sensitivity to Changes in Significant Unobservable Inputs

Private label MBS: The significant unobservable inputs in the valuation include probability of default, the loss severity assumption, and prepayment rates. Shifts in those inputs would result in different fair value measurements. Increases in the probability of default, loss severity assumptions, and prepayment rates in isolation would generally result in an adverse effect on the fair value of the instruments. Meaningful and possible shifts of each input were modeled to assess the effect on the fair value estimation.

Puerto Rico Government Obligations: The significant unobservable input used in the fair value measurement is the assumed prepayment rate of the underlying residential mortgage loans collateral on these obligations that are guaranteed by the Puerto Rico Housing Finance Authority (“PRHFA”). A significant increase (decrease) in the assumed rate would lead to a higher (lower) fair value estimate. Loss severity and probability of default are not included as significant unobservable variables due to the guarantee of the PRHFA. The PRHFA credit risk is modeled by discounting the cash flows using a curve appropriate to the PRHFA credit rating.

The tables below summarize changes in unrealized gains and losses recorded in earnings for the quarters and nine-month periods ended September 30, 2016 and 2015 for Level 3 assets and liabilities that are still held at the end of each period:
	Changes in Unrealized Losses		Changes in Unrealized Losses
	(Quarter ended September 30, 2016)		(Quarter ended September 30, 2015)
Level 3 Instruments Only	Securities		Securities
(In thousands)	Available For Sale		Available For Sale
Changes in unrealized losses relating to assets still held at reporting date:
Net impairment losses on available-for-sale investment securities (credit component)	$	-	$	(231)

	Changes in Unrealized Losses		Changes in Unrealized Losses
	(Nine-Month Period Ended September 30, 2016)		(Nine-Month Period Ended September 30, 2015)
Level 3 Instruments Only	Securities		Securities
(In thousands)	Available For Sale		Available For Sale
Changes in unrealized losses relating to assets still held at reporting date:
Net impairment losses on available-for-sale investment securities (credit component)	$	(387)	$	(628)

Additionally, fair value is used on a nonrecurring basis to evaluate certain assets in accordance with GAAP. Adjustments to fair value usually result from the application of lower-of-cost or market accounting (e.g., loans held for sale carried at the lower-of-cost or fair value and repossessed assets) or write downs of individual assets (e.g., goodwill, loans).

As of September 30, 2016, impairment or valuation adjustments were recorded for assets recognized at fair value on a non-recurring basis as shown in the following table:
		Carrying value as of September 30, 2016						(Losses) recorded for the Quarter Ended September 30, 2016		(Losses) recorded for the Nine-Month Period Ended September 30, 2016
		Level 1		Level 2		Level 3
			(In thousands)
Loans receivable (1)		$	-	$	-	$	426,444	$	(13,912)	$	(41,621)
OREO (2)			-		-		139,446		(1,702)		(6,580)
Mortgage servicing rights (3)			-		-		25,475		(263)		(387)
(1)	Consist mainly of impaired commercial and construction loans. The impairment was generally measured based on the fair value of the collateral. The fair value was derived from external appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the collateral (e.g. absorption rates), which are not market observable.
(2)	The fair value was derived from appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the properties (e.g. absorption rates and net operating income of income producing properties), which are not market observable. Losses were related to market valuation adjustments after the transfer of the loans to the OREO portfolio.
(3)	Fair value adjustments to mortgage servicing rights were mainly due to assumptions associated with mortgage prepayment rates. The Corporation carries its mortgage servicing rights at the lower of cost or market, measured at fair value on a non-recurring basis. Assumptions for the value of mortgage servicing rights include: Prepayment rate of 6.34%, Discount Rate of 11.18%.

As of September 30, 2015, impairment or valuation adjustments were recorded for assets recognized at fair value on a non-recurring basis as shown in the following table:
		Carrying value as of September 30, 2015						(Losses) recorded for the Quarter Ended September 30, 2015		(Losses) recorded for the Nine-Month Period Ended September 30, 2015
		Level 1		Level 2		Level 3
		(In thousands)
Loans receivable (1)		$	-	$	-	$	332,688	$	(7,864)	$	(22,431)
OREO (2)			-		-		124,442		(4,025)		(8,790)
Mortgage servicing rights (3)			-		-		23,960		(23)		(170)
Loans Held For Sale (4)			-		-		8,027		-		-
(1)	Consist mainly of impaired commercial and construction loans. The impairment was generally measured based on the fair value of the collateral. The fair value was derived from external appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the collateral (e.g. absorption rates), which are not market observable.
(2)	The fair value was derived from appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the properties (e.g. absorption rates and net operating income of income producing properties), which are not market observable. Losses were related to market valuation adjustments after the transfer of the loans to the OREO portfolio.
(3)	Fair value adjustments to the mortgage servicing rights were mainly due to assumptions associated with mortgage prepayments rates. The Corporation carries its mortgage servicing rights at the lower of cost or market, measured at fair value on a non-recurring basis. Assumptions for the value of mortgage servicing rights include: Prepayment Rate of 9.32%, Discount Rate of 10.64%.
(4)	The value of these loans was derived from external appraisals, adjusted for specific characteristics of the loans.

Qualitative information regarding the fair value measurements for Level 3 financial instruments is as follows:
	September 30, 2016
	Method	Inputs
Loans	Income, Market, Comparable Sales, Discounted Cash Flows	External appraised values; probability weighting of broker price opinions; management assumptions regarding market trends or other relevant factors
OREO	Income, Market, Comparable Sales, Discounted Cash Flows	External appraised values; probability weighting of broker price opinions; management assumptions regarding market trends or other relevant factors
Mortgage servicing rights	Discounted Cash Flow	Weighted average prepayment rate of 6.34%; weighted average discount rate of 11.18%

The following is a description of the valuation methodologies used for instruments that are not measured or reported at fair value on a recurring basis or that are reported at fair value on a non-recurring basis. The estimated fair value was calculated using certain facts and assumptions, which vary depending on the specific financial instrument.

Cash and due from banks and money market investments

The carrying amounts of cash and due from banks and money market investments are reasonable estimates of their fair value. Money market investments include held-to-maturity securities, which have a contractual maturity of three months or less. The fair value of these securities is based on quoted market prices in active markets that incorporate the risk of nonperformance.

Investment securities held to maturity

Investment securities held to maturity consist of financing arrangements with Puerto Rico municipalities issued in bond form, but underwritten as loans with features that are typically found in commercial loan transactions. These obligations typically are not issued in bearer form, nor are they registered with the SEC and are not rated by external credit agencies. The fair value of these financing arrangements wasbased on a discounted cash flow analysis using risk-adjusted discount rates (Level 3). A security with similar characteristics traded in the open market is used as a proxy for each municipal bond. Then the cash flow is discounted at the average spread over the discount curve exhibited by the proxy security at the end of each quarter.

Other equity securities

Equity or other securities that do not have a readily available fair value are stated at their net realizable value, which management believes is a reasonable proxy for their fair value. This category is principally composed of stock that is owned by the Corporation to comply with FHLB regulatory requirements. The realizable value of the FHLB stock equals its cost as this stock can be freely redeemed at par.

Loans receivable, including loans held for sale

The fair value of loans held for investment and of mortgage loans held for sale was estimated using discounted cash flow analyses, based on interest rates currently being offered for loans with similar terms and credit quality and with adjustments that the Corporation’s management believes a market participant would consider in determining fair value. Loans were classified by type, such as commercial, residential mortgage, and automobile. These asset categories were further segmented into fixed- and adjustable-rate categories. Valuations are carried out based on categories and not on a loan-by-loan basis. The fair values of performing fixed-rate and adjustable-rate loans were calculated by discounting expected cash flows through the estimated maturity date. This fair value is not currently an indication of an exit price as that type of assumption could result in a different fair value estimate. The fair value of credit card loans was estimated using a discounted cash flow method and excludes any value related to a customer account relationship. Other loans with no stated maturity, like credit lines, were valued at book value. Prepayment assumptions were considered for non-residential loans. For residential mortgage loans, prepayment estimates were based on a prepaymentmodel that combined both a historical calibration and current market prepayment expectations. Discount rates were based on the U.S.Treasury and LIBOR/Swap Yield Curves at the date of the analysis, and included appropriate adjustments for expected credit losses and liquidity. For impaired collateral dependent loans, the impairment was primarily measured based on the fair value of the collateral, which is derived from appraisals that take into consideration prices in observable transactions involving similar assets in similar locations.

Deposits

The estimated fair value of demand deposits and savings accounts, which are deposits with no defined maturities, equals the amount payable on demand at the reporting date. The fair values of retail fixed-rate time deposits, with stated maturities, are based on the present value of the future cash flows expected to be paid on the deposits. The cash flows were based on contractual maturities; no early repayments were assumed. Discount rates were based on the LIBOR yield curve.

The estimated fair value of total deposits excludes the fair value of core deposit intangibles, which represent the value of the customer relationship.The fair value of total deposits is measured by the value of demand deposits and savings deposits that bear a low or zero rate of interest and do not fluctuate in response to changes in interest rates.

The fair value of brokered CDs, which are included within deposits, is determined using discounted cash flow analyses over the full term of the CDs. The fair value of the CDs is computed using the outstanding principal amount. The discount rates used were based on brokered CD market rates as of September 30, 2016. The fair value does not incorporate the risk of nonperformance, since interests in brokered CDs are generally sold by brokers in amounts of less than $250,000 and, therefore, are insured by the FDIC.

Securities sold under agreements to repurchase

Some repurchase agreements reprice at least quarterly, and their outstanding balances are estimated to be their fair value. Where longer commitments are involved, fair value is estimated using exit price indications of the cost of unwinding the transactions as of the end of the reporting period. The brokers who are the counterparties provide these indications, which the Corporation evaluates. Securities sold under agreements to repurchase are fully collateralized by investment securities.

Advances from FHLB

The fair value of advances from the FHLB with fixed maturities is determined using discounted cash flow analyses over the full term of the borrowings, using indications of the fair value of similar transactions. The cash flows assume no early repayment of the borrowings. Discount rates are based on the LIBOR yield curve. Advances from the FHLB are fully collateralized by mortgage loans and, to a lesser extent, investment securities.

Other borrowings

Other borrowings consist of junior subordinated debentures. Projected cash flows from the debentures were discounted using the Bloomberg BB Finance curve plus a credit spread. This credit spread was estimated using the difference in yield curves between swap rates and a yield curve that considers the industry and credit rating of the Corporation as issuer of the debentures at a tenor comparable to the time to maturity of the debentures.

The following tables present the carrying value and the estimated fair value of financial instruments as of September 30, 2016 and December 31, 2015:
	Total Carrying Amount in Statement of Financial Condition September 30, 2016		Fair Value Estimate September 30, 2016		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Cash and due from banks and money
market investments	$	528,943	$	528,943	$	528,943	$	-	$	-
Investment securities available
for sale		1,843,853		1,843,853		7,933		1,811,442		24,478
Investment securities held to maturity		156,190		132,241		-		-		132,241
Other equity securities		28,717		28,717		-		28,717		-
Loans held for sale		56,779		60,283		-		50,497		9,786
Loans held for investment		8,863,654
Less: allowance for loan and lease losses		(214,070)
Loans held for investment, net of allowance	$	8,649,584		8,462,434		-		-		8,462,434
Derivatives, included in assets		195		195		-		195		-
Liabilities:
Deposits		8,981,313		9,003,706		-		9,003,706		-
Securities sold under agreements to repurchase		600,000		646,505		-		646,505		-
Advances from FHLB		355,000		356,925		-		356,925		-
Other borrowings		216,187		174,997		-		-		174,997
Derivatives, included in liabilities		335		335		-		335		-

	Total Carrying Amount in Statement of Financial Condition December 31, 2015		Fair Value Estimate December 31, 2015		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Cash and due from banks and money
market investments	$	752,458	$	752,458	$	752,458	$	-	$	-
Investment securities available
for sale		1,886,395		1,886,395		7,497		1,851,601		27,297
Investment securities held to maturity		161,483		131,544		-		-		131,544
Other equity securities		32,169		32,169		-		32,169		-
Loans held for sale		35,869		36,844		-		28,709		8,135
Loans held for investment		9,112,382
Less: allowance for loan and lease losses		(240,710)
Loans held for investment, net of allowance	$	8,871,672		8,768,152		-		-		8,768,152
Derivatives, included in assets		806		806		-		806		-
Liabilities:
Deposits		9,338,124		9,334,073		-		9,334,073		-
Securities sold under agreements to repurchase		700,000		752,048		-		752,048		-
Advances from FHLB		455,000		453,182		-		453,182		-
Other borrowings		226,492		142,846		-		-		142,846
Derivatives, included in liabilities		921		921		-		921		-

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SUPPLEMENTAL CASH FLOW INFORMATION

9 Months Ended

Sep. 30, 2016

SUPPLEMENTAL CASH FLOW INFORMATION

NOTE 22 – SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information is as follows:

	Nine-Month Period Ended September 30, 2016
	2016		2015
	(In thousands)
Cash paid for:
Interest on borrowings	$	104,031	$	70,016
Income tax		1,878		3,404
Non-cash investing and financing activities:
Additions to other real estate owned		37,606		44,415
Additions to auto and other repossessed assets		42,934		57,901
Capitalization of servicing assets		3,878		3,789
Loan securitizations		238,599		213,391
Loans held for investment transferred to held for sale		10,332		-
Loans held for sale transferred to held for investment		1,321		-
Trust preferred securities exchanged for new common stock issued:
Trust preferred securities exchanged		-		5,303
New common stock issued		-		5,628
Fair value of assets acquired (liabilities assumed) in the Doral Bank transaction:
Loans		-		311,410
Premises and equipment, net		-		5,450
Core Deposit intangible		-		5,820
Deposits		-		(523,517)

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SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2016

SEGMENT INFORMATION

NOTE 22 – SEGMENT INFORMATION

Based upon the Corporation’s organizational structure and the information provided to the Chief Executive Officer of the Corporation and, to a lesser extent, the Board of Directors, the operating segments are driven primarily by the Corporation’s lines of business for its operations in Puerto Rico, the Corporation’s principal market, and by geographic areas for its operations outside of Puerto Rico. As of September 30, 2016, the Corporation had six reportable segments: Commercial and Corporate Banking; Mortgage Banking; Consumer (Retail) Banking; Treasury and Investments; United States Operations; and Virgin Islands Operations. Management determined the reportable segments based on the internal reporting used to evaluate performance and to assess where to allocate resources. Other factors such as the Corporation’s organizational chart, nature of the products, distribution channels, and the economic characteristics of the products were also considered in the determination of the reportable segments.

The Commercial and Corporate Banking segment consists of the Corporation’s lending and other services for large customers represented by specialized and middle-market clients and the public sector. The Commercial and Corporate Banking segment offers commercial loans, including commercial real estate and construction loans, and floor plan financings, as well as other products, such as cash management and business management services. The Mortgage Banking segment consists of the origination, sale, and servicing of a variety of residential mortgage loans. The Mortgage Banking segment also acquires and sells mortgages in the secondary markets. In addition, the Mortgage Banking segment includes mortgage loans purchased from other local banks and mortgage bankers. The Consumer (Retail) Banking segment consists of the Corporation’s consumer lending and deposit-taking activities conducted mainly through its branch network and loan centers. The Treasury and Investments segment is responsible for the Corporation’s investment portfolio and treasury functions executed to manage and enhance liquidity. This segment lends funds to the Commercial and Corporate Banking, Mortgage Banking and Consumer (Retail) Banking segments to finance their lending activities and borrows from those segments and from the United States Operations segment. The Consumer (Retail) Banking and the United States Operations segments also lend funds to other segments. The interest rates charged or credited by Treasury and Investments, the Consumer (Retail) Banking and the United States Operations segments are allocated based on market rates. The difference between the allocated interest income or expense and the Corporation’s actual net interest income from centralized management of funding costs is reported in the Treasury and Investments segment. The United States Operations segment consists of all banking activities conducted by FirstBank in the United States mainland, including commercial and retail banking services. The Virgin Islands Operations segment consists of all banking activities conducted by the Corporation in the USVI and BVI, including commercial and retail banking services.

The accounting policies of the segments are the same as those referred to in Note 1, “Basis of Presentation and Significant Accounting Policies,”in the audited consolidated financial statements of the Corporation for the year ended December 31, 2015, which are included in the Corporation’s 2015 Annual Report on Form 10-K.

The Corporation evaluates the performance of the segments based on net interest income, the provision for loan and lease losses, non-interest income and direct non-interest expenses. The segments are also evaluated based on the average volume of their interest-earning assets less the allowance for loan and lease losses.

The following table presents information about the reportable segments:
(In thousands)	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
For the quarter ended September 30, 2016:
Interest income	$	34,605	$	44,455	$	28,981	$	12,529	$	13,944	$	9,059	$	143,573
Net (charge) credit for transfer of funds		(12,074)		2,810		(6,700)		15,839		125		-		-
Interest expense		-		(6,323)		-		(14,487)		(3,811)		(774)		(25,395)
Net interest income		22,531		40,942		22,281		13,881		10,258		8,285		118,178
(Provision) release for loan and lease losses		(3,860)		(8,655)		(8,162)		-		2,024		(2,850)		(21,503)
Non-interest income		5,222		11,292		985		6,154		884		1,609		26,146
Direct non-interest expenses		(8,864)		(27,100)		(11,871)		(914)		(7,556)		(7,097)		(63,402)
Segment income (loss)	$	15,029	$	16,479	$	3,233	$	19,121	$	5,610	$	(53)	$	59,419
Average earning assets	$	2,549,358	$	1,973,424	$	2,410,037	$	2,565,019	$	1,252,271	$	604,150	$	11,354,259
(In thousands)	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
For the quarter ended September 30, 2015:
Interest income	$	36,180	$	48,528	$	32,636	$	11,500	$	11,229	$	9,739	$	149,812
Net (charge) credit for transfer of funds		(12,629)		4,335		(4,058)		8,563		3,789		-		-
Interest expense		-		(5,869)		-		(14,305)		(3,931)		(778)		(24,883)
Net interest income		23,551		46,994		28,578		5,758		11,087		8,961		124,929
(Provision) release for loan and lease losses		(6,750)		(13,946)		(11,355)		-		1,307		(432)		(31,176)
Non-interest income		3,982		11,759		647		(174)		778		1,766		18,758
Direct non-interest expenses		(8,977)		(32,669)		(10,896)		(1,103)		(6,914)		(7,441)		(68,000)
Segment income	$	11,806	$	12,138	$	6,974	$	4,481	$	6,258	$	2,854	$	44,511
Average earning assets	$	2,642,388	$	1,959,951	$	2,760,788	$	2,531,084	$	1,048,451	$	644,769	$	11,587,431

(In thousands)	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
Nine-Month Period Ended September 30, 2016
Interest income	$	104,865	$	135,655	$	93,915	$	39,206	$	40,091	$	27,606	$	441,338
Net (charge) credit for transfer of funds		(37,673)		10,546		(18,212)		44,226		1,113		-		-
Interest expense		-		(18,765)		-		(45,828)		(11,214)		(2,477)		(78,284)
Net interest income		67,192		127,436		75,703		37,604		29,990		25,129		363,054
(Provision) release for loan and lease losses		(21,608)		(24,451)		(17,730)		-		1,563		(1,316)		(63,542)
Non-interest income		14,381		35,318		2,459		3,815		2,799		5,621		64,393
Direct non-interest expenses		(29,828)		(87,218)		(33,194)		(3,462)		(23,070)		(20,757)		(197,529)
Segment income	$	30,137	$	51,085	$	27,238	$	37,957	$	11,282	$	8,677	$	166,376
Average earning assets	$	2,576,194	$	1,989,426	$	2,489,268	$	2,774,118	$	1,188,463	$	613,666	$	11,631,135
(In thousands)	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
Nine-Month Period Ended September 30, 2015
Interest income	$	106,352	$	147,395	$	100,192	$	36,276	$	34,477	$	29,237	$	453,929
Net (charge) credit for transfer of funds		(36,212)		12,816		(11,746)		23,936		11,206		-		-
Interest expense		-		(17,379)		-		(44,834)		(12,326)		(2,337)		(76,876)
Net interest income		70,140		142,832		88,446		15,378		33,357		26,900		377,053
(Provision) release for loan and lease losses		(21,657)		(36,588)		(84,170)		-		6,715		(2,712)		(138,412)
Non-interest income (loss)		11,866		35,504		2,350		(13,046)		2,032		6,008		44,714
Direct non-interest expenses		(26,270)		(96,690)		(30,013)		(3,487)		(21,293)		(24,892)		(202,645)
Segment income (loss)	$	34,079	$	45,058	$	(23,387)	$	(1,155)	$	20,811	$	5,304	$	80,710
Average earning assets	$	2,601,892	$	1,956,352	$	2,947,562	$	2,683,313	$	1,001,860	$	640,027	$	11,831,006

The following table presents a reconciliation of the reportable segment financial information to the consolidated totals:
		Quarter Ended				Nine-Month Period Ended
		September 30,				September 30,
		2016		2015		2016		2015
Net income :
Total segment income		$	59,419	$	44,511	$	166,376	$	80,710
Other non-interest income (1)			-		-		-		13,443
Other operating expenses (2)			(24,901)		(25,277)		(73,315)		(85,159)
Income before income taxes			34,518		19,234		93,061		8,994
Income tax expense			(10,444)		(4,476)		(23,690)		(2,664)
Total consolidated net income		$	24,074	$	14,758	$	69,371	$	6,330
Average assets:
Total average earning assets for segments		$	11,354,259	$	11,587,431	$	11,631,135	$	11,831,006
Average non-earning assets			926,043		925,723		927,732		916,817
Total consolidated average assets		$	12,280,302	$	12,513,154	$	12,558,867	$	12,747,823
(1)	The bargain purchase gain on the acquisition of assets and assumption of deposits from Doral Bank in 2015 is presented as Other non-interest income in the table above.
(2)	Expenses pertaining to corporate administrative functions that support the operating segments but are not specifically attributable to or managed by any segment are not included in the reported financial results of the operating segments. The unallocated corporate expenses include certain general and administrative expenses and related depreciation and amortization expenses.

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REGULATORY MATTERS, COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2016

REGULATORY MATTERS, COMMITMENTS AND CONTINGENCIES

NOTE 23 – REGULATORY MATTERS, COMMITMENTS AND CONTINGENCIES

The Corporation is subject to various regulatory capital requirements imposed by the federal banking agencies. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material adverse effect on the Corporation’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation must meet specific capital guidelines that involve quantitative measures of the Corporation’s assets and liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Corporation’s capital amounts and classification are also subject to qualitative judgments and adjustment by the regulators with respect to minimum capital requirements, components, risk weightings, and other factors.

First BanCorp. is subject to the Written Agreement that the Corporation entered into with the New York FED on June 3, 2010. The Written Agreement provides, among other things, that the holding company must serve as a source of strength to FirstBank, and that, except with the consent generally of the New York FED and the Federal Reserve Board, (1) the holding company may not pay dividends to stockholders or receive dividends from FirstBank, (2) the holding company and its nonbank subsidiaries may not make payments on trust-preferred securities or subordinated debt, and (3) the holding company cannot incur, increase, or guarantee debt or repurchase any capital securities. The Written Agreement also required that the holding company submit a capital plan acceptable to the New York FED that reflected sufficient capital at First BanCorp. on a consolidated basis and follow certain guidelines with respect to the appointment or change in responsibilities of senior officers. The foregoing summary is not complete and is qualified in all respects by reference to the actual language of the Written Agreement, which the Corporation filed with the SEC.

The Corporation submitted its Capital Plan setting forth its plans for how to improve its capital positions to comply with the Written Agreement over time. In addition to the Capital Plan, the Corporation submitted to its regulators a liquidity and brokered CD plan, including a contingency funding plan, a non-performing asset reduction plan, a budget and profit plan, a strategic plan, and a plan for the reduction of classified and special mention assets. As of September 30, 2016, the Corporation had completed all of the items included in the Capital Plan and is continuing to work on reducing non-performing loans. The Written Agreement also requires the submission to the regulators of quarterly progress reports.

Although the Corporation and FirstBank became subject to the U.S. Basel III capital rules (“Basel III rules”) beginning on January 1, 2015, certain requirements of the Basel III rules will be phased in over several years. The phase-in period for certain deductions and adjustments to regulatory capital (such as certain intangible assets and deferred tax assets that arise from net operating losses and tax credit carryforwards) will be completed on January 1, 2018. The Corporation and FirstBank compute risk-weighted assets using the Standardized Approach required by the Basel III rules.

The Basel III rules require the Corporation to maintain an additional capital conservation buffer of 2.5% to avoid limitations on both (i) capital distributions (e.g. repurchases of capital instruments or dividend or interest payments on capital instruments) and (ii) discretionary bonus payments to executive officers and heads of major business lines. The phase-in of the capital conservation buffer began on January 1, 2016 with a first year requirement of 0.625% of additional Common Equity Tier 1 Capital (“CET1”), which will be progressively increased over a four-year period, increasing by that same percentage amount on each subsequent January 1 until it reaches the fully phased-in 2.5% CET1 requirement on January 1, 2019.

Under the fully phased-in Basel III rules, in order to be considered adequately capitalized, the Corporation will be required to maintain: (i) a minimum CET1 capital to risk-weighted assets ratio of at least4.5%, plus the 2.5% “capital conservation buffer,” resulting in a required minimum CET1 ratio of at least 7%, (ii) a minimum ratio of total Tier 1 capital to risk-weighted assets of at least 6.0%, plus the 2.5% capital conservation buffer, resulting in a required minimum Tier 1 capital ratio of 8.5%, (iii) a minimum ratio of total Tier 1 plus Tier 2 capital to risk-weighted assets of at least 8.0%, plus the 2.5% capital conservation buffer, resulting in a required minimum total capital ratio of 10.5%, and (iv) a required minimum leverage ratio of 4%, calculated as the ratio of Tier 1 capital to average on-balance sheet (non-risk adjusted) assets.

In addition, as required under the Basel III rules, the Corporation’s trust preferred securities (“TRuPs”) were fully phased out from Tier 1 capital on January 1, 2016. However, the Corporation’s TRuPs may continue to be included in Tier 2 capital until the instruments are redeemed or mature.

In March 2016, the FDIC adopted a final rule (“Final Rule”) imposing a quarterly deposit insurance assessment surcharge on banks with at least $10 billion in assets of 4.5 cents per $100 of their assessment base, after making certain adjustments once the Deposit Insurance Fund Reserve Ratio reaches or exceeds 1.15 percent. For purposes of this surcharge, the first $10 billion of assets are subtracted from the regular insurance assessment base to determine the surcharge base. The assessment surcharge became effective on July 1, 2016, is assessed as of the third quarter of 2016, and applies to FirstBank. The Bank’s current surcharge base is slightly higher than the $10 billion threshold. The surcharge assessments will continue through December 31, 2018 or until the Deposit Insurance Fund Reserve Ratio reaches or exceeds 1.35 percent. In addition, under existing regulations, the FDIC reduced the initial base assessment rate, which reduces the standard risk-based assessment rate. This resulted in a decrease in the total FDIC insurance premium expense (standard risk-based assessment plus assessment surcharge expense) of approximately $0.8 million in the third quarter of 2016, as the benefit of the reduction in the initial base assessment rate exceeded the surcharge amount. In addition, under the Final Rule, if the Deposit Insurance Fund Reserve Ratio does not reach 1.35 percent by December 31, 2018, a shortfall assessment may be assessed on large banks in the first quarter of 2019 and collected by the FDIC on June 30, 2019.

Other Recent Regulatory Developments

In May 2016, the federal banking agencies proposed regulations governing incentive-based compensation practices at covered banking institutions. These proposed rules are intended to better align the financial rewards for covered employees with an institution’s long-term safety and soundness. Portions of these proposed rules would apply to the Corporation and FirstBank. Those applicable provisions would generally (i) prohibit types and features of incentive-based compensation arrangements that encourage inappropriate risk because they are “excessive” or “could lead to material financial loss” at the banking institution; (ii) require incentive-based compensation arrangements to adhere to three basic principles: (1) a balance between risk and reward; (2) effective risk management and controls; and (3) effective governance; and (iii) require appropriate board of directors (or committee) oversight and recordkeeping and disclosures to the banking institution’s primary regulatory agency. The nature and substance of any final action to adopt these proposed rules, and the timing of any such action, are not known at this time.

Please refer to the discussion in “Part I – Item 7 – Business – Supervision and Regulation” in the Corporation’s 2015 Form 10-K for a more complete discussion of supervision and regulatory matters and activities that affect the Corporation and its subsidiaries.

The Corporation's and its banking subsidiary's regulatory capital positions as of September 30, 2016 and December 31, 2015 were as follows:
	Regulatory Requirements
	Actual			For Capital Adequacy Purposes			To be Well-Capitalized-Regular Thresholds
	Amount		Ratio	Amount		Ratio	Amount		Ratio
	(Dollars in thousands)
As of September 30, 2016
Total Capital (to
Risk-Weighted Assets)
First BanCorp.	$	1,892,493	21.27%	$	711,754	8.0%		N/A	N/A
FirstBank	$	1,843,533	20.73%	$	711,460	8.0%	$	889,325	10.0%
Common Equity Tier 1 Capital
(to Risk-Weighted Assets)
First BanCorp.	$	1,569,482	17.64%	$	400,362	4.5%		N/A	N/A
FirstBank	$	1,496,670	16.83%	$	400,196	4.5%	$	578,061	6.5%
Tier I Capital (to
Risk-Weighted Assets)
First BanCorp.	$	1,569,482	17.64%	$	533,816	6.0%		N/A	N/A
FirstBank	$	1,730,264	19.46%	$	533,595	6.0%	$	711,460	8.0%
Leverage ratio
First BanCorp.	$	1,569,482	13.04%	$	481,357	4.0%		N/A	N/A
FirstBank	$	1,730,264	14.40%	$	480,751	4.0%	$	600,939	5.0%
As of December 31, 2015
Total Capital (to
Risk-Weighted Assets)
First BanCorp.	$	1,828,559	20.01%	$	731,164	8.0%		N/A	N/A
FirstBank	$	1,802,711	19.73%	$	730,824	8.0%	$	913,530	10.0%
Common Equity Tier 1 Capital
(to Risk-Weighted Assets)
First BanCorp.	$	1,546,678	16.92%	$	411,280	4.5%		N/A	N/A
FirstBank	$	1,493,478	16.35%	$	411,088	4.5%	$	593,794	6.5%
Tier I Capital (to
Risk-Weighted Assets)
First BanCorp.	$	1,546,678	16.92%	$	548,373	6.0%		N/A	N/A
FirstBank	$	1,685,656	18.45%	$	548,118	6.0%	$	730,824	8.0%
Leverage ratio
First BanCorp.	$	1,546,678	12.22%	$	506,322	4.0%		N/A	N/A
FirstBank	$	1,685,656	13.33%	$	505,648	4.0%	$	632,060	5.0%

The Corporation enters into financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments may include commitments to extend credit and commitments to sell mortgage loans at fair value. As of September 30, 2016, commitments to extend credit amounted to approximately $1.1billion, of which $631.5million relates to credit card loans. Commercial and Financial standby letters of credit amounted to approximately $46.7million. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any conditions established in the contract. Commitments generally have fixed expiration dates or other termination clauses. Since certain commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. For most of the commercial lines of credit, the Corporation has the option to reevaluate the agreement prior to additional disbursements. In the case of credit cards and personal lines of credit, the Corporation can cancel the unused credit facility at any time and without cause. Generally, the Corporation does not enter into interest rate lock agreements with prospective borrowers in connection with its mortgage banking activities.

As of September 30, 2016, First BanCorp. and its subsidiaries were defendants in various legal proceedings arising in the ordinarycourse of business. Management believes that the final disposition of these matters, to the extent not previously provided for, will not have a material adverse effect, individually or in the aggregate, on the Corporation’s financial position, results of operations or cash flows.

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FIRST BANCORP. (Holding Company Only) Financial Information

9 Months Ended

Sep. 30, 2016

FIRST BANCORP. (Holding Company Only) Financial Information

NOTE 24 – FIRST BANCORP. (HOLDING COMPANY ONLY) FINANCIAL INFORMATION

The following condensed financial information presents the financial position of the Holding Company only as of September 30, 2016 and December 31, 2015 and the results of its operations for the quarters and nine-month periods ended September 30, 2016 and 2015.

Statements of Financial Condition
	As of September 30,			As of December 31,
	2016		2015
	(In thousands)
Assets
Cash and due from banks	$	29,074	$	29,103
Money market investments		6,111		6,111
Other investment securities		285		285
Loans held for investment, net		236		266
Investment in First Bank Puerto Rico, at equity		1,960,090		1,888,036
Investment in First Bank Insurance Agency, at equity		9,991		14,382
Investment in FBP Statutory Trust I		2,929		2,929
Investment in FBP Statutory Trust II		3,561		3,866
Other assets		4,354		4,632
Total assets	$	2,016,631	$	1,949,610
Liabilities and Stockholders' Equity
Liabilities:
Other borrowings	$	216,187	$	226,492
Accounts payable and other liabilities		558		28,984
Total liabilities		216,745		255,476
Stockholders' equity		1,799,886		1,694,134
Total liabilities and stockholders' equity	$	2,016,631	$	1,949,610

Statements of Income
	Quarter Ended				Nine-Month Period Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(In thousands)				(In thousands)
Income:
Interest income on money market investments	$	5	$	5	$	15	$	15
Dividend income from subsidiaries		1,822		-		39,980		-
Other income		58		58		181		439
		1,885		63		40,176		454
Expense:
Other borrowings		1,817		1,861		5,777		5,521
Other operating expenses		685		643		2,313		2,000
		2,502		2,504		8,090		7,521
Gain on early extinguishment of debt		-		-		4,217		-
(Loss) income before income taxes and equity
in undistributed earnings of subsidiaries		(617)		(2,441)		36,303		(7,067)
Equity in undistributed earnings of subsidiaries		24,691		17,199		33,068		13,397
Net income	$	24,074	$	14,758	$	69,371	$	6,330
Other Comprehensive (loss) income, net of tax		(12,157)		16,709		32,109		13,681
Comprehensive income	$	11,917	$	31,467	$	101,480	$	20,011

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2016

SUBSEQUENT EVENTS

NOTE 26 – SUBSEQUENT EVENTS

The Corporation has performed an evaluation of events occurringsubsequent to September 30, 2016; management has determined that there are no events occurring in this period that require disclosure in or adjustment to the accompanying financial statements.

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EARNINGS PER COMMON SHARE (Tables)

9 Months Ended

Sep. 30, 2016

Schedule of Earning Per Share [Table Text Block]

	The calculations of earnings per common share for the quarters and nine-month periods ended September 30, 2016 and 2015 are as follows:
		Quarter Ended				Nine-Month Period Ended
		September 30,				September 30,
		2016		2015		2016		2015
(In thousands, except per share information)
Net income		$	24,074	$	14,758	$	69,371	$	6,330
Net income attributable to common stockholders		$	24,074	$	14,758	$	69,371	$	6,330
Weighted-Average Shares:
Average common shares outstanding			212,927		211,820		212,682		211,255
Average potential dilutive common shares			3,651		1,963		2,577		1,341
Average common shares outstanding- assuming dilution			216,578		213,783		215,259		212,596
Earnings per common share:
Basic		$	0.11	$	0.07	$	0.33	$	0.03
Diluted		$	0.11	$	0.07	$	0.32	$	0.03

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STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2016

Activity of Stock Options

The activity of stock options granted under the 1997 stock option plan for the nine-month period ended September 30, 2016 is set forth below:
				Weighted-Average
				Remaining		Aggregate
	Number of		Weighted-Average	Contractual Term		Intrinsic Value
	Options	Exercise Price		(Years)	(In thousands)
Beginning of period outstanding and
exercisable	69,848	$	160.30
Options expired	(34,326)		183.37
Options cancelled	(533)		138.00
End of period outstanding and exercisable	34,989	$	138.00	0.3	$	-

Restricted Stock Activity Under Omnibus Plan

The following table summarizes the restricted stock activity in the first nine months of 2016 under the Omnibus Plan for both executive officers covered by the TARP requirements and other employees as well as for the independent directors:
	Nine-Month Period Ended
	September 30, 2016
	Number of shares		Weighted-Average
	of restricted		Grant Date
	stock		Fair Value
Non-vested shares at beginning of year	2,968,461	$	3.34
Granted	1,925,575		1.87
Forfeited	(1,000)		6.03
Vested	(683,713)		3.80
Non-vested shares at September 30, 2016	4,209,323	$	2.59

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INVESTMENT SECURITIES (Tables)

9 Months Ended

Sep. 30, 2016

Investment Securities Available for Sale

		September 30, 2016
		Amortized cost		Noncredit Loss Component of OTTI Recorded in OCI						Fair value		Weighted average yield%
						Gross Unrealized
						gains		losses
		(Dollars in thousands)
U.S. Treasury securities:
	Due within one year	$	7,513	$	-	$	1	$	-	$	7,514	0.57
Obligations of U.S.
government-sponsored
agencies:
Due within one year			9,629		-		4		-		9,633	0.70
After 1 to 5 years			496,782		-		3,215		53		499,944	1.32
After 10 years			44,724		-		7		133		44,598	0.87
Puerto Rico government
obligations:
After 1 to 5 years			21,423		12,023		-		-		9,400	4.38
After 5 to 10 years			845		-		6		-		851	5.20
After 10 years			21,205		3,196		116		1,556		16,569	5.39
United States and Puerto Rico
government obligations			602,121		15,219		3,349		1,742		588,509	1.53
Mortgage-backed securities:
FHLMC certificates:
After 5 to 10 years			6,314		-		145		-		6,459	2.31
After 10 years			251,516		-		3,504		62		254,958	2.10
			257,830		-		3,649		62		261,417	2.10
GNMA certificates:
Due within one year			1		-		-		-		1	1.69
After 1 to 5 years			93		-		3		-		96	3.85
After 5 to 10 years			98,314		-		2,557		-		100,871	3.05
After 10 years			131,216		-		12,532		-		143,748	4.37
			229,624		-		15,092		-		244,716	3.81
FNMA certificates:
After 1 to 5 years			22,594		-		452		-		23,046	1.99
After 5 to 10 years			26,448		-		577		19		27,006	2.06
After 10 years			602,540		-		14,534		20		617,054	2.31
			651,582		-		15,563		39		667,106	2.29
Collateralized mortgage
obligations issued or guaranteed by
the FHLMC and GNMA:
After 5 to 10 years			19,853		-		7		33		19,827	1.18
After 10 years			39,530		-		25		7		39,548	1.21
			59,383		-		32		40		59,375	1.20
Other mortgage pass-through
trust certificates:
After 5 to 10 years			81		-		-		-		81	7.20
After 10 years			30,606		8,476		-		-		22,130	2.37
			30,687		8,476		-		-		22,211	2.37
Total mortgage-backed
securities			1,229,106		8,476		34,336		141		1,254,825	2.48
Other
After 1 to 5 years			100		-		-		-		100	1.50
Equity Securities (1)			413		-		6		-		419	2.15
Total investment securities
available for sale		$	1,831,740	$	23,695	$	37,691	$	1,883	$	1,843,853	2.17
(1)	Equity securities consisted of investment in a Community Reinvestment Act Qualified Investment Fund.

		December 31, 2015
		Amortized cost		Noncredit Loss Component of OTTI Recorded in OCI						Fair value		Weighted average yield%
						Gross Unrealized
						gains		losses
(Dollars in thousands)
U.S. Treasury securities:
	After 1 to 5 years	$	7,530	$	-	$	-	$	33	$	7,497	0.57
Obligations of U.S.
government-sponsored
agencies:
	Due within one year		14,624		-		4		10		14,618	0.68
	After 1 to 5 years		384,323		-		174		4,305		380,192	1.32
	After 5 to 10 years		58,150		-		343		242		58,251	2.34
Puerto Rico Government
obligations:
	After 1 to 5 years		25,663		14,662		-		-		11,001	4.38
	After 5 to 10 years		855		-		-		-		855	5.20
	After 10 years		23,162		5,255		134		1,680		16,361	5.40
United States and Puerto Rico
Government obligations			514,307		19,917		655		6,270		488,775	1.75
Mortgage-backed securities:
FHLMC certificates:
	After 5 to 10 years		336		-		31		-		367	4.95
	After 10 years		287,711		-		1,073		1,706		287,078	2.14
			288,047		-		1,104		1,706		287,445	2.15
GNMA certificates:
	Due within one year		2		-		-		-		2	1.70
	After 1 to 5 years		109		-		5		-		114	4.26
	After 5 to 10 years		120,298		-		3,182		-		123,480	3.07
	After 10 years		165,175		-		12,822		20		177,977	4.38
			285,584		-		16,009		20		301,573	3.83
FNMA certificates:
	After 1 to 5 years		2,552		-		74		-		2,626	3.32
	After 5 to 10 years		21,557		-		433		233		21,757	2.73
	After 10 years		759,247		-		5,628		6,063		758,812	2.34
			783,356		-		6,135		6,296		783,195	2.35
Other mortgage pass-through
trust certificates:
	After 5 to 10 years		92		-		1		-		93	7.26
	After 10 years		34,905		9,691		-		-		25,214	2.26
			34,997		9,691		1		-		25,307	2.26
Total mortgage-backed
	securities		1,391,984		9,691		23,249		8,022		1,397,520	2.61
Other
	After 1 to 5 years		100		-		-		-		100	1.50
Total investment securities
	available for sale	$	1,906,391	$	29,608	$	23,904	$	14,292	$	1,886,395	2.38

OTTI Losses on Available-for-Sale Debt Securities

		Quarter Ended				Nine-Month Period Ended
		September 30,				September 30,
		2016		2015		2016		2015
(In thousands)
Total other-than-temporary impairment losses		$	-	$	-	$	(1,845)	$	(29,521)
Portion of other-than-temporary impairment recognized in OCI			-		(231)		(4,842)		16,037
Net impairment losses recognized in earnings (1)		$	-	$	(231)	$	(6,687)	$	(13,484)
(1)	For the nine-month periods ended September 30, 2016 and 2015, approximately $6.3 million and $12.9 million, respectively, of the credit impairment recognized in earnings consisted of credit losses on Puerto Rico Government debt securities and $0.4 million and $0.6 million, respectively, was associated with credit losses on private label MBS.

Roll-Forward of Credit Losses on Debt Securities Held by Corporation

The following tables summarize the roll-forward of credit losses on debt securities held by the Corporation for which a portion of an OTTI is recognized in OCI:
	Cumulative OTTI credit losses recognized in earnings on securities still held
			Credit impairments		Credit impairments
	June 30,		recognized in earnings		recognized in earnings on		September 30,
	2016		on securities not		securities that have been		2016
	Balance		previously impaired		previously impaired		Balance
(In thousands)
Available-for-sale securities
Puerto Rico Government obligations	$	22,189	$	-	$	-	$	22,189
Private label MBS		6,792		-		-		6,792
Total OTTI credit losses for available-for-sale
debt securities	$	28,981	$	-	$	-	$	28,981

	Cumulative OTTI credit losses recognized in earnings on securities still held
			Credit impairments		Credit impairments
	December 31,		recognized in earnings		recognized in earnings on		September 30,
	2015		on securities not		securities that have been		2016
	Balance		previously impaired		previously impaired		Balance
(In thousands)
Available-for-sale securities
Puerto Rico Government obligations	$	15,889	$	-	$	6,300	$	22,189
Private label MBS		6,405		-		387		6,792
Total OTTI credit losses for available-for-sale
debt securities	$	22,294	$	-	$	6,687	$	28,981

	Cumulative OTTI credit losses recognized in earnings on securities still held
			Credit impairments		Credit impairments
	June 30,		recognized in earnings		recognized in earnings on		September 30,
	2015		on securities not		securities that have been		2015
	Balance		previously impaired		previously impaired		Balance
(In thousands)
Available-for-sale securities
Puerto Rico Government obligations	$	12,856	$	-	$	-	$	12,856
Private label MBS		6,174		-		231		6,405
Total OTTI credit losses for available-for-sale
debt securities	$	19,030	$	-	$	231	$	19,261

	Cumulative OTTI credit losses recognized in earnings on securities still held
			Credit impairments		Credit impairments
	December 31,		recognized in earnings		recognized in earnings on		September 30,
	2014		on securities not		securities that have been		2015
	Balance		previously impaired		previously impaired		Balance
(In thousands)
Available-for-sale securities
Puerto Rico Government obligations	$	-	$	12,856	$	-	$	12,856
Private label MBS		5,777		-		628		6,405
Total OTTI credit losses for available-for-sale
debt securities	$	5,777	$	12,856	$	628	$	19,261

Significant Assumptions in Valuation of Private Label MBS

	September 30, 2016		December 31, 2015
	Weighted		Weighted
	Average	Range	Average	Range
Discount rate	13.3%	12.03% - 13.58%	14.5%	14.5%
Prepayment rate	13.7%	6.5% - 22.5%	25%	15.92% - 31.25%
Projected Cumulative Loss Rate	4%	0.2% - 9.1%	4%	0.18% - 6.66%

Held To Maturity Securities [Text Block]

		September 30, 2016
		Amortized cost						Fair value		Weighted average yield%
				Gross Unrealized
				gains		losses
Puerto Rico Municipal Bonds:
	After 1 to 5 years	$	1,136	$	-	$	27	$	1,109	5.38
	After 5 to 10 years		10,741		-		782		9,959	4.41
	After 10 years		144,313		-		23,140		121,173	4.66
Total investment securities
	held to maturity	$	156,190	$	-	$	23,949	$	132,241	4.65

		December 31, 2015
		Amortized cost						Fair value		Weighted average yield%
				Gross Unrealized
				gains		losses
Puerto Rico Municipal Bonds:
	After 1 to 5 years	$	1,371	$	-	$	37	$	1,334	5.38
	After 5 to 10 years		11,523		-		1,041		10,482	4.25
	After 10 years		148,589		-		28,861		119,728	4.64
Total investment securities
	held to maturity	$	161,483	$	-	$	29,939	$	131,544	4.62

Held to maturity Securities [Member]

Available-for-Sale Investments' Fair Value and Gross Unrealized Losses

	As of September 30, 2016
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
		(In thousands)
Debt securities:
Puerto Rico Municipal Bonds	$	-	$	-	$	132,241	$	23,949	$	132,241	$	23,949
	As of December 31, 2015
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
		(In thousands)
Debt securities:
Puerto Rico Municipal Bonds	$	4,163	$	140	$	127,381	$	29,799	$	131,544	$	29,939

Available for sale Securities [Member]

Available-for-Sale Investments' Fair Value and Gross Unrealized Losses

	As of September 30, 2016
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
		(In thousands)
Debt securities:
Puerto Rico Government obligations	$	-	$	-	$	21,688	$	16,775	$	21,688	$	16,775
U.S. Treasury and U.S. government
agencies obligations		60,970		186		-		-		60,970		186
Mortgage-backed securities:
FNMA		18,245		39		-		-		18,245		39
FHLMC		54,269		62		-		-		54,269		62
Collateralized mortgage obligations
issued or guaranteed by FHLMC and GNMA		31,896		40		-		-		31,896		40
Other mortgage pass-through trust
certificates		-		-		22,130		8,476		22,130		8,476
Equity securities		2		-		-		-		2		-
	$	165,382	$	327	$	43,818	$	25,251	$	209,200	$	25,578
	As of December 31, 2015
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
		(In thousands)
Debt securities:
Puerto Rico Government obligations	$	-	$	-	$	23,008	$	21,597	$	23,008	$	21,597
U.S. Treasury and U.S. government
agencies obligations		198,243		929		210,504		3,661		408,747		4,590
Mortgage-backed securities:
FNMA		437,305		4,516		88,013		1,780		525,318		6,296
FHLMC		141,890		1,338		19,306		368		161,196		1,706
GNMA		1,047		20		-		-		1,047		20
Other mortgage pass-through trust
certificates		-		-		25,214		9,691		25,214		9,691
	$	778,485	$	6,803	$	366,045	$	37,097	$	1,144,530	$	43,900

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LOAN PORTFOLIO (Tables)

9 Months Ended

Sep. 30, 2016

Loan Portfolio Held for Investment

		As of September 30,		As ofDecember 31,
		2016		2015
(In thousands)
Residential mortgage loans, mainly secured by first mortgages		$	3,299,942	$	3,344,719
Commercial loans:
Construction loans			124,298		156,195
Commercial mortgage loans			1,545,014		1,537,806
Commercial and Industrial loans (1)			2,167,011		2,246,513
Total commercial loans			3,836,323		3,940,514
Finance leases			229,577		229,165
Consumer loans			1,497,812		1,597,984
Loans held for investment			8,863,654		9,112,382
Allowance for loan and lease losses			(214,070)		(240,710)
Loans held for investment, net		$	8,649,584	$	8,871,672
(1)	As of September 30, 2016 and December 31, 2015, includes $949.9 million and $1.0 billion, respectively, of commercial loans that are secured by real estate but are not dependent upon the real estate for repayment.

Loans Held for Investment on Which Accrual of Interest Income had been Discontinued

Loans held for investment on which accrual of interest income had been discontinued as of the indicated dates were as follows:
(In thousands)		September 30,		December 31,
		2016		2015
Non-performing loans:
Residential mortgage		$	162,201	$	169,001
Commercial mortgage			191,449		51,333
Commercial and Industrial			137,016		137,051
Construction:
Land			11,761		12,174
Construction-commercial			36,953		39,466
Construction-residential			2,053		2,996
Consumer:
Auto loans			14,615		17,435
Finance leases			1,969		2,459
Other consumer loans			8,695		10,858
Total non-performing loans held for investment (1) (2)(3)		$	566,712	$	442,773
(1)	As of September 30, 2016 and December 31, 2015, excludes $8.1 million of non-performing loans held for sale.
(2)	Amount excludes purchased-credit impaired ("PCI") loans with a carrying value of approximately $168.1 million and $173.9 million as of September 30, 2016 and December 31, 2015, respectively, primarily mortgage loans acquired from Doral Bank in the first quarter of 2015 and from Doral Financial in the second quarter of 2014, as further discussed below. These loans are not considered non-performing due to the application of the accretion method, under which these loans will accrete interest income over the remaining life of the loans using an estimated cash flow analysis.
(3)	Non-performing loans exclude $415.9 million and $414.9 million of Troubled Debt Restructuring ("TDR") loans that are in compliance with modified terms and in accrual status as of September 30, 2016 and December 31, 2015, respectively.

Corporation's Aging of Loans Held for Investment Portfolio

The Corporation’s aging of the loans held for investment portfolio is as follows:
										Purchased Credit-Impaired Loans				Total loans held for investment		90 days past due and still accruing (2)
		30-59 Days Past Due		60-89 Days Past Due			90 days or more Past Due (1)	Total Past Due
As of September 30, 2016
(In thousands)												Current
Residential mortgage:
FHA/VA and other government-guaranteed loans (2) (3) (4)		$	-	$	5,310	$	81,677	$	86,987	$	-	$	44,949	$	131,936	$	81,677
Other residential mortgage loans (4)			-		87,425		179,648		267,073		165,014		2,735,919		3,168,006		17,447
Commercial:
Commercial and Industrial loans			44,967		500		138,484		183,951		-		1,983,060		2,167,011		1,468
Commercial mortgage loans (4)			-		3,436		196,240		199,676		3,127		1,342,211		1,545,014		4,791
Construction:
Land (4)			-		765		12,137		12,902		-		20,495		33,397		376
Construction-commercial (4)			-		-		36,953		36,953		-		38,460		75,413		-
Construction-residential (4)			-		-		2,721		2,721		-		12,767		15,488		668
Consumer:
Auto loans			63,470		13,743		14,615		91,828		-		766,969		858,797		-
Finance leases			8,199		2,312		1,969		12,480		-		217,097		229,577		-
Other consumer loans			8,192		4,824		12,806		25,822		-		613,193		639,015		4,111
Total loans held for investment		$	124,828	$	118,315	$	677,250	$	920,393	$	168,141	$	7,775,120	$	8,863,654	$	110,538
_____________
(1)	Includes non-performing loans and accruing loans that are contractually delinquent 90 days or more (i.e., FHA/VA guaranteed loans and credit cards). Credit card loans continue to accrue finance charges and fees until charged-off at 180 days.
(2)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past-due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $29.6 million of residential mortgage loans insured by the FHA or guaranteed by the VA, which are over 15 months delinquent and are no longer accruing interest as of September 30, 2016.
(3)	As of September 30, 2016, includes $45.6 million of defaulted loans collateralizing Government National Mortgage Association ("GNMA") securities for which the Corporation has an unconditional option (but not an obligation) to repurchase the defaulted loans.
(4)	According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears two or more monthly payments. FHA/VA government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans and construction-residential loans past due 30-59 days as of September 30, 2016 amounted to $8.7 million, $144.3 million, $7.6 million, $0.7 million and $0.3 million, respectively.

As of December 31, 2015		30-59 Days Past Due		60-89 Days Past Due		90 days or more Past Due(1)								Total loans held for investment		90 days past due and still accruing (2)
(In thousands)									Total Past Due		Purchased Credit- Impaired Loans		Current
Residential mortgage:
FHA/VA and other government-guaranteed loans (2) (3) (4)		$	-	$	6,048	$	90,168	$	96,216	$	-	$	46,925	$	143,141	$	90,168
Other residential mortgage loans (4)			-		90,406		185,018		275,424		170,766		2,755,388		3,201,578		16,017
Commercial:
Commercial and Industrial loans			5,577		6,412		150,893		162,882		-		2,083,631		2,246,513		13,842
Commercial mortgage loans (4)			-		24,729		63,805		88,534		3,147		1,446,125		1,537,806		12,472
Construction:
Land (4)			-		161		12,350		12,511		-		39,363		51,874		176
Construction-commercial			-		11,722		39,466		51,188		-		32,142		83,330		-
Construction-residential (4)			-		-		6,042		6,042		-		14,949		20,991		3,046
Consumer:
Auto loans			70,836		16,787		17,435		105,058		-		829,922		934,980		-
Finance leases			7,664		3,100		2,459		13,223		-		215,942		229,165		-
Other consumer loans			9,462		5,524		15,124		30,110		-		632,894		663,004		4,266
Total loans held for investment		$	93,539	$	164,889	$	582,760	$	841,188	$	173,913	$	8,097,281	$	9,112,382	$	139,987
____________
(1)	Includes non-performing loans and accruing loans that are contractually delinquent 90 days or more (i.e. FHA/VA guaranteed loans and credit cards). Credit card loans continue to accrue finance charges and fees until charged-off at 180 days.
(2)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past-due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $37.3 million of residential mortgage loans insured by the FHA or guaranteed by the VA, which are over 15 months delinquent and are no longer accruing interest as of December 31, 2015.
(3)	As of December 31, 2015, includes $38.5 million of defaulted loans collateralizing GNMA securities for which the Corporation has an unconditional option (but not an obligation) to repurchase the defaulted loans.
(4)	According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears two or more monthly payments. FHA/VA government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans and construction-residential loans past due 30-59 days as of December 31, 2015 amounted to $11.0 million, $162.9 million, $38.6 million, $5.7 million and $0.8 million, respectively.

Corporation's Credit Quality Indicators by Loan

The Corporation’s credit quality indicators by loan type as of September 30, 2016 and December 31, 2015 are summarized below:
		Commercial Credit Exposure-Credit Risk Profile Based on Creditworthiness Category:
		Substandard		Doubtful		Loss		Total Adversely Classified (1)		Total Portfolio
September 30, 2016
(In thousands)
Commercial mortgage		$	218,523	$	36,211	$	-	$	254,734	$	1,545,014
Construction:
Land			20,175		-		-		20,175		33,397
Construction-commercial			36,953		-		-		36,953		75,413
Construction-residential			2,053		-		-		2,053		15,488
Commercial and Industrial			159,498		72,806		445		232,749		2,167,011
		Commercial Credit Exposure-Credit Risk Profile Based on Creditworthiness Category:
		Substandard		Doubtful		Loss		Total Adversely Classified (1)		Total Portfolio
December 31, 2015
(In thousands)
Commercial mortgage		$	252,941	$	140	$	-	$	253,081	$	1,537,806
Construction:
Land			14,035		1		-		14,036		51,874
Construction-commercial			39,466		-		-		39,466		83,330
Construction-residential			2,996		-		-		2,996		20,991
Commercial and Industrial			140,827		71,341		354		212,522		2,246,513
_________
(1)	Excludes $8.1 million as of September 30, 2016 and December 31, 2015, of construction-land non-performing loans held for sale.

		Consumer Credit Exposure-Credit Risk Profile based on Payment activity
		Residential Real Estate				Consumer
September 30, 2016		FHA/VA/ Guaranteed(1)		Other residential loans		Auto		Finance Leases		Other Consumer
(In thousands)
Performing		$	131,936	$	2,840,791	$	844,182	$	227,608	$	630,320
Purchased Credit-Impaired (2)			-		165,014		-		-		-
Non-performing			-		162,201		14,615		1,969		8,695
Total		$	131,936	$	3,168,006	$	858,797	$	229,577	$	639,015
(1)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $29.6 million of residential mortgage loans insured by the FHA or guaranteed by the VA, which are over 15 months delinquent and are no longer accruing interest as of September 30, 2016.
(2)	PCI loans are excluded from non-performing statistics due to the application of the accretion method, under which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.
		Consumer Credit Exposure-Credit Risk Profile based on Payment activity
			Residential Real Estate			Consumer
December 31, 2015		FHA/VA/ Guaranteed(1)		Other residential loans		Auto		Finance Leases		Other Consumer
(In thousands)
Performing		$	143,141	$	2,861,811	$	917,545	$	226,706	$	652,146
Purchased Credit-Impaired (2)			-		170,766		-		-		-
Non-performing			-		169,001		17,435		2,459		10,858
Total		$	143,141	$	3,201,578	$	934,980	$	229,165	$	663,004
(1)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $37.3 million of residential mortgage loans insured by the FHA or guaranteed by the VA, which are over 15 months delinquent and are no longer accruing interest as of December 31, 2015.
(2)	PCI loans are excluded from non-performing statistics due to the application of the accretion method, under which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.

Impaired Loans

Impaired Loans
(In thousands)
									Quarter Ended				Nine-Month Period Ended
										September 30, 2016
	Recorded Investment		Unpaid Principal Balance		Related Specific Allowance		Year-To-Date Average Recorded Investment		Interest Income Recognized on Accrual Basis		Interest Income Recognized on Cash Basis		Interest Income Recognized on Accrual Basis		Interest Income Recognized on Cash Basis
As of September 30, 2016
With no related allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		64,198		78,361		-		67,024		139		103		376		496
Commercial:
Commercial mortgage loans		51,974		63,759		-		56,826		206		119		599		609
Commercial and Industrial Loans		17,069		26,672		-		20,407		13		-		13		-
Construction:
Land		60		89		-		60		-		-		-		-
Construction-commercial		-		-		-		-		-		-		-		-
Construction-residential		956		1,531		-		956		-		-		-		-
Consumer:
Auto loans		888		888		-		901		6		-		10		-
Finance leases		168		168		-		168		1		-		1		-
Other consumer loans		3,770		5,045		-		3,892		11		25		59		80
	$	139,083	$	176,513	$	-	$	150,234	$	376	$	247	$	1,058	$	1,185
With an allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		379,841		428,395		9,667		385,052		4,396		375		13,160		1,192
Commercial:
Commercial mortgage loans		146,526		166,066		25,907		152,753		136		57		339		179
Commercial and Industrial Loans		161,105		189,683		28,668		171,575		618		49		1,708		203
Construction:
Land		9,346		13,534		903		9,395		21		18		52		35
Construction-commercial		36,953		38,781		1,977		38,516		-		-		-		-
Construction-residential		392		551		124		392		-		-		-		-
Consumer:
Auto loans		24,135		24,135		3,674		25,913		476		-		1,379		-
Finance leases		2,408		2,408		62		2,493		48		-		150		-
Other consumer loans		13,065		13,448		1,700		13,868		356		15		1,005		32
	$	773,771	$	877,001	$	72,682	$	799,957	$	6,051	$	514	$	17,793	$	1,641
Total:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		444,039		506,756		9,667		452,076		4,535		478		13,536		1,688
Commercial:
Commercial mortgage loans		198,500		229,825		25,907		209,579		342		176		938		788
Commercial and Industrial Loans		178,174		216,355		28,668		191,982		631		49		1,721		203
Construction:
Land		9,406		13,623		903		9,455		21		18		52		35
Construction-commercial		36,953		38,781		1,977		38,516		-		-		-		-
Construction-residential		1,348		2,082		124		1,348		-		-		-		-
Consumer:
Auto loans		25,023		25,023		3,674		26,814		482		-		1,389		-
Finance leases		2,576		2,576		62		2,661		49		-		151		-
Other consumer loans		16,835		18,493		1,700		17,760		367		40		1,064		112
	$	912,854	$	1,053,514	$	72,682	$	950,191	$	6,427	$	761	$	18,851	$	2,826

(In thousands)
	Recorded Investment		Unpaid Principal Balance		Related Specific Allowance		Average Recorded Investment
As of December 31, 2015
With no related allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		65,495		74,146		-		67,282
Commercial:
Commercial mortgage loans		54,048		66,448		-		54,967
Commercial and Industrial Loans		27,492		29,957		-		28,326
Construction:
Land		-		-		-		-
Construction-commercial		39,466		40,000		-		39,736
Construction-residential		3,046		3,046		-		3,098
Consumer:
Auto loans		-		-		-		-
Finance leases		-		-		-		-
Other consumer loans		2,618		4,300		-		2,766
	$	192,165	$	217,897	$	-	$	196,175
With an allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		395,173		440,947		21,787		398,790
Commercial:
Commercial mortgage loans		27,479		40,634		3,073		30,518
Commercial and Industrial Loans		143,214		164,050		18,096		148,547
Construction:
Land		9,578		13,758		1,060		9,727
Construction-commercial		-		-		-		-
Construction-residential		1,426		2,180		142		1,476
Consumer:
Auto loans		21,581		21,581		6,653		23,531
Finance leases		2,077		2,077		86		2,484
Other consumer loans		13,816		14,043		1,684		14,782
	$	614,344	$	699,270	$	52,581	$	629,855
Total:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		460,668		515,093		21,787		466,072
Commercial:
Commercial mortgage loans		81,527		107,082		3,073		85,485
Commercial and Industrial Loans		170,706		194,007		18,096		176,873
Construction:
Land		9,578		13,758		1,060		9,727
Construction-commercial		39,466		40,000		-		39,736
Construction-residential		4,472		5,226		142		4,574
Consumer:
Auto loans		21,581		21,581		6,653		23,531
Finance leases		2,077		2,077		86		2,484
Other consumer loans		16,434		18,343		1,684		17,548
	$	806,509	$	917,167	$	52,581	$	826,030
Interest income of approximately $7.8 million ($6.9 million accrual basis and $0.9 million cash basis) and $24.8 million ($19.8 million accrual basis and $5.0 million cash basis) was recognized on impaired loans for the third quarter and nine-month period ended September 30, 2015, respectively.

Activity for Impaired loans

The following tables show the activity for impaired loans and the related specific reserve for the quarters and nine-month periods ended September 30, 2016 and 2015:
		Quarter Ended				Nine-Month Period Ended
		September 30,				September 30,
(In thousands)			2016		2015		2016		2015
Impaired Loans:
Balance at beginning of period		$	953,774	$	824,816	$	806,509	$	945,407
Loans determined impaired during the period			26,613		37,528		261,544		135,350
Charge-offs (1)			(30,426)		(7,498)		(50,027)		(90,026)
Loans sold, net of charge-offs			-		-		-		(67,836)
Increases to impaired loans-additional disbursements			1,091		408		2,852		2,524
Reclassification from loans held for sale (2)			-		40,005		-		40,005
Foreclosures			(11,856)		(12,858)		(28,466)		(33,044)
Loans no longer considered impaired			(2,674)		(25,877)		(27,560)		(39,062)
Paid in full or partial payments			(23,668)		(13,811)		(51,998)		(50,605)
Balance at end of period		$	912,854	$	842,713	$	912,854	$	842,713
(1)	For the nine-month period ended September 30, 2015, includes $63.9 million of charge-offs related to a bulk sale of assets completed in the second quarter of 2015, mostly comprised of non-performing and adversely classified commercial loans, as further discussed below.
(2)	During the third quarter of 2015, upon the signing of a new agreement with the borrower, the Corporation changed its intent to sell a $40.0 million construction loan in the Virgin Islands. Accordingly, the loan was transferred back from held for sale to held for investment.

Activity for Specific Reserve

	Quarter Ended				Nine-Month Period Ended
	September 30,				September 30,
(In thousands)	2016		2015		2016		2015
Specific Reserve:
Balance at beginning of period	$	86,372	$	49,918	$	52,581		55,205
Provision for loan losses		16,619		9,439		70,011		81,796
Net charge-offs		(30,309)		(7,498)		(49,910)		(85,142)
Balance at end of period	$	72,682	$	51,859	$	72,682	$	51,859

Carrying Value of Acquired Loans

The carrying amount of PCI loans follows:
	September 30,		December 31,
	2016		2015
(In thousands)
Residential mortgage loans	$	165,014	$	170,766
Commercial mortgage loans		3,127		3,147
Total PCI loans	$	168,141	$	173,913
Allowance for loan losses		(6,857)		(3,962)
Total PCI loans, net of allowance for loan losses	$	161,284	$	169,951

Accretable Yield

Changes in the accretable yield of PCI loans for the quarters and nine-month periods ended September 30, 2016 and 2015 were as follows:
	Quarter Ended				Nine-Month Period Ended
	September 30,		September 30,		September 30,		September 30,
	2016		2015		2016		2015
(In thousands)
Balance at beginning of period	$	122,179	$	124,288	$	118,385	$	82,460
Additions (accretable yield at acquisition
of loans from Doral)		-		-		-		38,319
Accretion recognized in earnings		(2,875)		(3,411)		(8,691)		(8,695)
Reclassification from non-accretable		-		1,348		9,610		10,141
Balance at end of period	$	119,304	$	122,225	$	119,304	$	122,225

Selected Information on TDRs Includes Recorded Investment by Loan Class and Modification Type

Selected information on TDRs that includes the recorded investment by loan class and modification type is summarized in the following tables. This information reflects all TDRs:
		September 30, 2016
(In thousands)		Interest rate below market		Maturity or term extension		Combination of reduction in interest rate and extension of maturity		Forgiveness of principal and/or interest		Other (1)		Total
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans		$	29,934	$	8,172	$	283,550	$	-	$	57,065	$	378,721
Commercial Mortgage Loans			6,092		1,219		26,053		-		10,608		43,972
Commercial and Industrial Loans			2,153		69,244		25,263		2,637		51,593		150,890
Construction Loans:
Land			-		285		2,193		-		402		2,880
Construction-commercial			-		-		-		36,953		-		36,953
Construction-residential			-		-		-		-		357		357
Consumer Loans - Auto			-		1,921		14,680		-		8,422		25,023
Finance Leases			-		424		2,152		-		-		2,576
Consumer Loans - Other			229		2,185		10,120		300		2,112		14,946
Total Troubled Debt Restructurings		$	38,408	$	83,450	$	364,011	$	39,890	$	130,559	$	656,318
(1)	Other concessions granted by the Corporation include deferral of principal and/or interest payments for a period longer than what would be considered insignificant, payment plans under judicial stipulation or a combination of the concessions listed in the table.

		December 31, 2015
(In thousands)		Interest rate below market		Maturity or term extension		Combination of reduction in interest rate and extension of maturity		Forgiveness of principal and/or interest		Other (1)		Total
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans		$	29,066	$	6,027	$	297,310	$	-	$	50,269	$	382,672
Commercial Mortgage Loans			4,379		1,244		26,109		-		12,766		44,498
Commercial and Industrial Loans			2,163		75,104		27,214		3,027		42,746		150,254
Construction Loans:
Land			-		229		2,165		-		372		2,766
Construction-commercial			-		-		-		39,466		-		39,466
Construction-residential			-		-		3,046		-		436		3,482
Consumer Loans - Auto			-		2,330		12,388		-		6,864		21,582
Finance Leases			-		621		1,456		-		-		2,077
Consumer Loans - Other			89		1,604		11,026		327		1,748		14,794
Total Troubled Debt Restructurings		$	35,697	$	87,159	$	380,714	$	42,820	$	115,201	$	661,591
(1)	Other concessions granted by the Corporation include deferral of principal and/or interest payments for a period longer than what would be considered insignificant, payment plans under judicial stipulation or a combination of the concessions listed in the table.

Corporation's TDR Activity

	The following table presents the Corporation's TDR loans activity:
		Quarter Ended				Nine-Month Period Ended
(In thousands)		September 30,				September 30,
		2016		2015		2016		2015
Beginning balance of TDRs		$	670,991	$	634,761	$	661,591	$	694,453
New TDRs			15,596		30,044		66,075		95,840
Increases to existing TDRs - additional
disbursements			517		309		1,573		644
Charge-offs post modification (1)			(5,445)		(5,327)		(15,899)		(58,707)
Sales, net of charge-offs			-		-		-		(44,048)
Foreclosures			(5,567)		(6,139)		(12,967)		(16,391)
Removed from the TDR classification			-		-		(3,031)		-
Reclassification from loans held for sale (2)			-		40,005		-		40,005
Paid-off and partial payments			(19,774)		(11,690)		(41,024)		(29,833)
Ending balance of TDRs		$	656,318	$	681,963	$	656,318	$	681,963
(1)	For the nine-month period ended September 30, 2015, includes $45.3 million of charge offs related to TDRs included in the bulk sale of assets completed in the second quarter of 2015.
(2)	During the third quarter of 2015, upon the signing of a new agreement with the borrower, the Corporation changed its intent to sell a $40.0 million construction loan in the Virgin Islands. Accordingly, the loan was transferred back from held for sale to held for investment and continues to be classified as a TDR and a nonperforming loan.

Breakdown Between Accrual and Nonaccrual Status of TDRs

The following table provides a breakdown between accrual and nonaccrual status of TDR loans:
(In thousands)		As of September 30, 2016
		Accrual		Nonaccrual (1)		Total TDRs
Non-FHA/VA Residential Mortgage loans		$	296,840	$	81,881	$	378,721
Commercial Mortgage Loans			28,699		15,273		43,972
Commercial and Industrial Loans			58,004		92,886		150,890
Construction Loans:
Land			1,205		1,675		2,880
Construction-commercial			-		36,953		36,953
Construction-residential			-		357		357
Consumer Loans - Auto			16,561		8,462		25,023
Finance Leases			2,437		139		2,576
Consumer Loans - Other			12,173		2,773		14,946
Total Troubled Debt Restructurings		$	415,919	$	240,399	$	656,318
(1)	Included in non-accrual loans are $121.3 million in loans that are performing under the terms of the restructuring agreement but are reported in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and are deemed fully collectible.

(In thousands)		As of December 31, 2015
		Accrual		Nonaccrual (1)		Total TDRs
Non- FHA/VA Residential Mortgage loans		$	303,885	$	78,787	$	382,672
Commercial Mortgage Loans			29,121		15,377		44,498
Commercial and Industrial Loans			48,392		101,862		150,254
Construction Loans:
Land			924		1,842		2,766
Construction-commercial			-		39,466		39,466
Construction-residential			3,046		436		3,482
Consumer Loans - Auto			14,823		6,759		21,582
Finance Leases			1,980		97		2,077
Consumer Loans - Other			12,737		2,057		14,794
Total Troubled Debt Restructurings		$	414,908	$	246,683	$	661,591
(1)	Included in non-accrual loans are $118.2 million in loans that are performing under the terms of the restructuring agreement but are reported in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and there is no doubt about full collectability.

Schedule Of Troubled Debt Restructurings Table [Text Block]

(Dollars in thousands)	Quarter Ended September 30, 2016
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	55	$	8,631	$	8,449
Commercial Mortgage Loans	5		679		712
Commercial and Industrial Loans	2		1,432		1,432
Construction Loans:
Land	4		158		155
Consumer Loans - Auto	189		3,262		3,262
Finance Leases	11		295		295
Consumer Loans - Other	257		1,269		1,291
Total Troubled Debt Restructurings	523	$	15,726	$	15,596
(Dollars in thousands)	Nine-Month Period Ended September 30, 2016
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	167	$	25,040	$	24,040
Commercial Mortgage Loans	8		3,351		3,380
Commercial and Industrial Loans	21		21,693		21,693
Construction Loans:
Land	4		158		155
Consumer Loans - Auto	612		10,961		10,961
Finance Leases	59		1,477		1,477
Consumer Loans - Other	862		4,312		4,369
Total Troubled Debt Restructurings	1,733	$	66,992	$	66,075

(Dollars in thousands)	Quarter Ended September 30, 2015
	Number of contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	98	$	19,901	$	19,481
Commercial Mortgage Loans	4		7,380		5,719
Construction Loans:
Land	1		109		109
Consumer Loans - Auto	203		3,352		3,297
Finance Leases	19		521		418
Consumer Loans - Other	197		1,026		1,020
Total Troubled Debt Restructurings	522	$	32,289	$	30,044
(Dollars in thousands)	Nine-Month Period Ended September 30, 2015
	Number of contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	350	$	60,043	$	57,882
Commercial Mortgage Loans	13		20,332		18,781
Commercial and Industrial Loans	3		2,997		2,579
Construction Loans:
Land	7		603		600
Consumer Loans - Auto	547		8,739		8,564
Finance Leases	43		1,215		1,056
Consumer Loans - Other	929		6,432		6,378
Total Troubled Debt Restructurings	1,892	$	100,361	$	95,840

Loan Modifications Considered Troubled Debt Restructurings Defaulted

	Quarter Ended September 30,
(Dollars in thousands)	2016			2015
	Number of contracts	Recorded Investment		Number of contracts	Recorded Investment
Non-FHA/VA Residential Mortgage loans	14	$	1,707	23	$	3,744
Consumer Loans - Auto	5		68	1		10
Consumer Loans - Other	22		93	51		219
Finance Leases	1		30	3		145
Total	42	$	1,898	78	$	4,118

	Nine-Month Period Ended September 30,
(Dollars in thousands)	2016			2015
	Number of contracts	Recorded Investment		Number of contracts	Recorded Investment
Non-FHA/VA Residential Mortgage loans	35	$	4,863	50	$	7,646
Commercial and Industrial Loans	-		-	4		5,745
Consumer Loans - Auto	45		702	8		50
Consumer Loans - Other	89		339	141		589
Finance Leases	2		43	6		185
Total	171	$	5,947	209	$	14,215

Loan Restructuring and Effect on Allowance for Loan and Lease Losses

(In thousands)	September 30, 2016			September 30, 2015
Principal balance deemed collectible at end of period	$	38,004	$	40,632
Amount charged off	$	-	$	-
Charges to the provision for loan losses	$	2,660	$	185
Allowance for loan losses at end of period	$	3,521	$	916

Past Due Purchased Credit Impaired Table [Text Block]

The following tables present PCI loans by past due status as of September 30, 2016 and December 31, 2015:
As of September 30, 2016		30-59 Days		60-89 Days		90 days or more		Total Past Due				Total PCI loans
(In thousands)										Current
Residential mortgage loans (1)		$	-	$	12,048	$	26,621	$	38,669	$	126,345	$	165,014
Commercial mortgage loans (1)			-		-		1,283		1,283		1,844		3,127
		$	-	$	12,048	$	27,904	$	39,952	$	128,189	$	168,141
_____________
(1)	According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage and commercial mortgage loans are considered past due when the borrower is in arrears two or more monthly payments. PCI residential mortgage loans and commercial mortgage loans past due 30-59 days as of September 30, 2016 amounted to $22.3 million and $0.4 million, respectively.
As of December 31, 2015		30-59 Days		60-89 Days		90 days or more		Total Past Due				Total PCI loans
(In thousands)										Current
Residential mortgage loans (1)		$	-	$	16,094	$	22,218	$	38,312	$	132,454	$	170,766
Commercial mortgage loans (1)			-		-		992		992		2,155		3,147
		$	-	$	16,094	$	23,210	$	39,304	$	134,609	$	173,913
(1)	According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage and commercial mortgage loans are considered past due when the borrower is in arrears two or more monthly payments. PCI residential mortgage loans past due 30-59 days as of December 31, 2015 amounted to $23.6 million.

Changes In Carrying Amount Of Purchased Credit Impaired Loans Table [Text Block]

Changes in the carrying amount of loans accounted for pursuant to ASC 310-30 are as follows:
		Quarter Ended				Nine-Month Period Ended
		September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
(In thousands)
Balance at beginning of period		$	169,690	$	178,494	$	173,913	$	102,604
Additions (1)			-		-		-		79,889
Accretion			2,875		3,411		8,691		8,695
Collections			(4,184)		(5,663)		(13,136)		(14,946)
Foreclosures			(240)		(157)		(1,327)		(157)
Ending balance		$	168,141	$	176,085	$	168,141	$	176,085
Allowance for loan losses			(6,857)		(3,163)		(6,857)		(3,163)
Ending balance, net of allowance for loan losses		$	161,284	$	172,922	$	161,284	$	172,922
(1)	For the nine-month period ended September 30, 2015, additions represents the estimated fair value of PCI loans acquired from Doral Bank at the date of acquisition.

Allowance For Credit Losses On Purchased Credit Impaired Loans Table [Text Block]

Changes in the allowance for loan losses related to PCI loans follows:
	Quarter Ended				Nine-Month Period Ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
	(In thousands)
Balance at beginning of period	$	6,857	$	3,163	$	3,962	$	-
Provision for loan losses		-		-		2,895		3,163
Balance at end of period	$	6,857	$	3,163	$	6,857	$	3,163

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ALLOWANCE FOR LOAN AND LEASE LOSSES (Tables)

9 Months Ended

Sep. 30, 2016

Changes in Allowance for Loan and Lease Losses

The changes in the allowance for loan and lease losses were as follows:
(In thousands)		Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Quarter ended September 30, 2016
Allowance for loan and lease losses:
Beginning balance		$	38,955	$	69,799	$	69,789	$	2,747	$	53,164	$	234,454
Charge-offs			(8,514)		(13,730)		(10,587)		(19)		(13,716)		(46,566)
Recoveries			972		335		929		140		2,303		4,679
Provision (release)			4,553		(152)		5,597		2,480		9,025		21,503
Ending balance		$	35,966	$	56,252	$	65,728	$	5,348	$	50,776	$	214,070
Ending balance: specific reserve for impaired loans		$	9,667	$	25,907	$	28,668	$	3,004	$	5,436	$	72,682
Ending balance: purchased credit-impaired loans (1)		$	6,638	$	219	$	-	$	-	$	-	$	6,857
Ending balance: general allowance		$	19,661	$	30,126	$	37,060	$	2,344	$	45,340	$	134,531
Loans held for investment:
Ending balance		$	3,299,942	$	1,545,014	$	2,167,011	$	124,298	$	1,727,389	$	8,863,654
Ending balance: impaired loans		$	444,039	$	198,500	$	178,174	$	47,707	$	44,434	$	912,854
Ending balance: purchased credit-impaired loans		$	165,014	$	3,127	$	-	$	-	$	-	$	168,141
Ending balance: loans with general allowance		$	2,690,889	$	1,343,387	$	1,988,837	$	76,591	$	1,682,955	$	7,782,659
(In thousands)		Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Nine-Month Period Ended September 30, 2016
Allowance for loan and lease losses:
Beginning balance		$	39,570	$	68,211	$	68,768	$	3,519	$	60,642	$	240,710
Charge-offs			(27,352)		(15,742)		(16,260)		(623)		(41,490)		(101,467)
Recoveries			2,159		414		1,885		301		6,526		11,285
Provision			21,589		3,369		11,335		2,151		25,098		63,542
Ending balance		$	35,966	$	56,252	$	65,728	$	5,348	$	50,776	$	214,070
Ending balance: specific reserve for impaired loans		$	9,667	$	25,907	$	28,668	$	3,004	$	5,436	$	72,682
Ending balance: purchased credit-impaired loans (1)		$	6,638	$	219	$	-	$	-	$	-	$	6,857
Ending balance: general allowance		$	19,661	$	30,126	$	37,060	$	2,344	$	45,340	$	134,531
Loans held for investment:
Ending balance		$	3,299,942	$	1,545,014	$	2,167,011	$	124,298	$	1,727,389	$	8,863,654
Ending balance: impaired loans		$	444,039	$	198,500	$	178,174	$	47,707	$	44,434	$	912,854
Ending balance: purchased credit-impaired loans		$	165,014	$	3,127	$	-	$	-	$	-	$	168,141
Ending balance: loans with general allowance		$	2,690,889	$	1,343,387	$	1,988,837	$	76,591	$	1,682,955	$	7,782,659
(1)	Refer to Note 6 - Loans Held for Investment -PCI loans for a detail of changes in the allowance for loan losses related to PCI loans.

(In thousands)	Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Quarter ended September 30, 2015
Allowance for loan and lease losses:
Beginning balance	$	33,783	$	49,092	$	63,900	$	11,865	$	62,878	$	221,518
Charge-offs		(5,094)		(3,677)		(1,267)		(103)		(15,926)		(26,067)
Recoveries		214		20		327		176		1,602		2,339
Provision (release)		6,958		6,668		3,807		(139)		13,882		31,176
Ending balance	$	35,861	$	52,103	$	66,767	$	11,799	$	62,436	$	228,966
Ending balance: specific reserve for impaired loans	$	18,705	$	4,886	$	17,540	$	2,128	$	8,600	$	51,859
Ending balance: purchased credit-impaired loans	$	3,061	$	102	$	-	$	-	$	-	$	3,163
Ending balance: general allowance	$	14,095	$	47,115	$	49,227	$	9,671	$	53,836	$	173,944
Loans held for investment:
Ending balance	$	3,330,089	$	1,562,538	$	2,222,324	$	163,956	$	1,861,555	$	9,140,462
Ending balance: impaired loans	$	459,311	$	104,046	$	174,983	$	66,123	$	38,250	$	842,713
Ending balance: purchased credit-impaired loans	$	172,927	$	3,158	$	-	$	-	$	-	$	176,085
Ending balance: loans with general allowance	$	2,697,851	$	1,455,334	$	2,047,341	$	97,833	$	1,823,305	$	8,121,664
(In thousands)	Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Nine-Month Period Ended September 30, 2015
Allowance for loan and lease losses:
Beginning balance	$	27,301	$	50,894	$	63,721	$	12,822	$	67,657	$	222,395
Charge-offs		(13,815)		(54,115)		(30,090)		(4,787)		(48,221)		(151,028)
Recoveries		584		6,515		3,386		2,379		6,323		19,187
Provision		21,791		48,809		29,750		1,385		36,677		138,412
Ending balance	$	35,861	$	52,103	$	66,767	$	11,799	$	62,436	$	228,966
Ending balance: specific reserve for impaired loans	$	18,705	$	4,886	$	17,540	$	2,128	$	8,600	$	51,859
Ending balance: purchased credit-impaired loans	$	3,061	$	102	$	-	$	-	$	-	$	3,163
Ending balance: general allowance	$	14,095	$	47,115	$	49,227	$	9,671	$	53,836	$	173,944
Loans held for investment:
Ending balance	$	3,330,089	$	1,562,538	$	2,222,324	$	163,956	$	1,861,555	$	9,140,462
Ending balance: impaired loans	$	459,311	$	104,046	$	174,983	$	66,123	$	38,250	$	842,713
Ending balance: purchased credit-impaired loans	$	172,927	$	3,158	$	-	$	-	$	-	$	176,085
Ending balance: loans with general allowance	$	2,697,851	$	1,455,334	$	2,047,341	$	97,833	$	1,823,305	$	8,121,664

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LOANS HELD FOR SALE (Tables)

9 Months Ended

Sep. 30, 2016

Portfolio of Loans Held for Sale

(In thousands)	September 30, 2016		December 31, 2015
Residential mortgage loans	$	48,700	$	27,734
Construction loans		8,079		8,135
Total	$	56,779	$	35,869

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OTHER REAL ESTATE OWNED (Tables)

9 Months Ended

Sep. 30, 2016

Text Block [Abstract]

Schedule Of Other Real Estate Assets And Foreclosed Properties [Table Text Block]

The following table presents OREO inventory as of the dates indicated:
		September 30,			December 31,
(In thousands)		2016		2015
OREO
OREO balances, carrying value:
Residential (1)		$	45,887	$	43,563
Commercial			81,038		87,849
Construction			12,521		15,389
Total		$	139,446	$	146,801
(1)	Excludes $15.1 million and $8.9 million as of September 30, 2016 and December 31, 2015, respectively, of foreclosures that meet the conditions of ASC 310-40 and are presented as a receivable (other assets) in the statement of financial condition.

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables)

9 Months Ended

Sep. 30, 2016

Notional Amounts of All Derivative Instruments

The following table summarizes the notional amounts of all derivative instruments:
	Notional Amounts (1)
	As of		As of
	September 30,		December 31,
	2016		2015
	(In thousands)
Undesignated economic hedges:
Interest rate contracts:
Written interest rate cap agreements	$	91,510	$	120,816
Purchased interest rate cap agreements		91,510		120,816
Forward Contracts:
Sale of TBA GNMA MBS pools		45,000		30,000
	$	228,020	$	271,632
(1) Notional amounts are presented on a gross basis with no netting of offsetting exposure positions.

Summary of Fair Value of Derivative Instruments and Location in Statement of Financial Condition

The following table summarizes the fair value of derivative instruments and the location in the statement of financial condition as of the indicated dates:
	Asset Derivatives					Liability Derivatives
	Statement of	September 30,		December 31,			September 30,		December 31,
	Financial	2016		2015			2016		2015
	Condition Location	FairValue		FairValue		Statement of Financial Condition Location	FairValue		FairValue
(In thousands)
Undesignated economic hedges:
Interest rate contracts:
Written interest rate cap agreements	Other assets	$	-	$	-	Accounts payable and other liabilities	$	191	$	798
Purchased interest rate cap agreements	Other assets		191		806	Accounts payable and other liabilities		-		-
Forward Contracts:
Sales of TBA GNMA MBS pools	Other assets		4		-	Accounts payable and other liabilities		144		123
		$	195	$	806		$	335	$	921

Effect of Derivative Instruments on Statement of Income (Loss)

The following table summarizes the effect of derivative instruments on the statement of income:
		Gain (or Loss)				Gain (or Loss)
	Location of Gain or (loss)	Quarter Ended				Nine-Month Period Ended
	Recognized in Income on	September 30,				September 30,
(In thousands)	Derivatives	2016		2015		2016		2015
Undesignated economic hedges:
Interest rate contracts:
Written and purchased interest rate cap agreements	Interest income - Loans	$	5	$	144	$	(2)	$	144
Forward contracts:
Sales of TBA GNMA MBS pools	Mortgage banking activities		219		(279)		(17)		(97)
Total gain (loss) on derivatives		$	224	$	(135)	$	(19)	$	47

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OFFSETTING OF ASSETS AND LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2016

Text Block [Abstract]

Offsetting of assets and liabilties

Offsetting of Financial Assets and Derivative Assets
							Gross Amounts Not Offset in the Statement of Financial Position
					Net Amounts of Assets Presented in the Statement of Financial Position
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position
							Financial Instruments		Cash Collateral
As of September 30, 2016											Net Amount
(In thousands)
Description
Derivatives	$	191	$	-	$	191	$	(191)	$	-	$	-
Securities purchased under agreements to resell		200,000		(200,000)		-		-		-		-
Total	$	200,191	$	(200,000)	$	191	$	(191)	$	-	$	-
							Gross Amounts Not Offset in the Statement of Financial Position
					Net Amounts of Assets Presented in the Statement of Financial Position
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position
							Financial Instruments		Cash Collateral
As of December 31, 2015											Net Amount
(In thousands)
Description
Derivatives	$	806	$	-	$	806	$	(806)	$	-	$	-
Securities purchased under agreements to resell		200,000		(200,000)		-		-		-		-
Total	$	200,806	$	(200,000)	$	806	$	(806)	$	-	$	-

Offsetting of Financial Liabilities and Derivative Liabilities
							Gross Amounts Not Offset in the Statement of Financial Position
					Net Amounts of Liabilities Presented in the Statement of Financial Position
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position
							Financial Instruments		Cash Collateral
As of September 30, 2016											Net Amount
(In thousands)
Description
Securities sold under agreements to repurchase	$	500,000	$	(200,000)	$	300,000	$	(300,000)	$	-	$	-
							Gross Amounts Not Offset in the Statement of Financial Position
					Net Amounts of Liabilities Presented in the Statement of Financial Position
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position
							Financial Instruments		Cash Collateral
As of December 31, 2015											Net Amount
(In thousands)
Description
Securities sold under agreements to repurchase	$	600,000	$	(200,000)	$	400,000	$	(400,000)	$	-	$	-

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GOODWILL AND OTHER INTANGIBLES (Tables)

9 Months Ended

Sep. 30, 2016

Gross Amount and Accumulated Amortization of Other Intangible Assets

The following table shows the gross amount and accumulated amortization of the Corporation’s intangible assets recognized as part of Other Assets in the consolidated statement of financial condition:
	As of		As of
	September 30,		December 31,
	2016		2015
(Dollars in thousands)
Core deposit intangible:
Gross amount, beginning of period	$	51,664	$	45,844
Addition as a result of acquisition		-		5,820
Accumulated amortization		(43,974)		(42,498)
Net carrying amount	$	7,690	$	9,166
Remaining amortization period		8.3		9.0 years
Purchased credit card relationship intangible:
Gross amount	$	24,465	$	24,465
Accumulated amortization		(13,237)		(11,146)
Net carrying amount	$	11,228	$	13,319
Remaining amortization period		5.2		5.8 years
Insurance Customer relationship intangible:
Gross amount	$	1,067	$	-
Accumulated amortization		(102)		-
Net carrying amount	$	965	$	-
Remaining amortization period		6.3		-

The estimated aggregate amortization expense related to these intangible assets for future periods is as follows:
			Amount
			(In thousands)
	2016	$	1,226
	2017		4,495
	2018		3,519
	2019		3,067
	2020		2,851
	2021 and after		4,725

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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS (Tables)

9 Months Ended

Sep. 30, 2016

Changes in Servicing Assets

The changes in servicing assets are shown below:
		Quarter Ended				Nine-Month Period Ended
		September 30,				September 30,
(In thousands)		2016		2015		2016		2015
Balance at beginning of period		$	25,044	$	23,519	$	24,282	$	22,838
Capitalization of servicing assets			1,420		1,242		3,878		3,789
Amortization			(817)		(758)		(2,424)		(2,409)
Adjustment to fair value			(263)		(23)		(387)		(170)
Other (1)			91		(20)		126		(88)
Balance at end of period		$	25,475	$	23,960	$	25,475	$	23,960
(1)	Amount represents the adjustment to fair value related to the repurchase of loans serviced for others.

Changes in Impairment Allowance

Changes in the impairment allowance were as follows:
	Quarter Ended				Nine-Month Period Ended
	September 30,				September 30,
(In thousands)	2016		2015		2016		2015
Balance at beginning of period	$	260	$	202	$	136	$	55
Temporary impairment charges		266		41		460		227
Recoveries		(3)		(18)		(73)		(57)
Balance at end of period	$	523	$	225	$	523	$	225

Components of Net Servicing Income

	The components of net servicing income are shown below:
		Quarter Ended				Nine-Month Period Ended
		September 30,				September 30,
(In thousands)		2016		2015		2016		2015
Servicing fees		$	1,930	$	1,796	$	5,657	$	5,340
Late charges and prepayment penalties			200		179		505		546
Adjustment for loans repurchased			91		(20)		126		(88)
Other (1)			-		(22)		(1)		(125)
Servicing income, gross			2,221		1,933		6,287		5,673
Amortization and impairment of servicing assets			(1,080)		(781)		(2,811)		(2,579)
Servicing income, net		$	1,141	$	1,152	$	3,476	$	3,094
(1)	Mainly consisted of compensatory fees imposed by GSEs.

Key Economic Assumptions Used in Determining Fair Value at Time of Sale of Loans

The Corporation’s servicing assets are subject to prepayment and interest rate risks. Key economic assumptions used in determining the fair value at the time of sale of the related mortgages ranged as follows:
	Maximum		Minimum
Nine-Month Period Ended September 30, 2016:
Constant prepayment rate:
Government-guaranteed mortgage loans	7.6	%	6.1	%
Conventional conforming mortgage loans	8.0	%	6.5	%
Conventional non-conforming mortgage loans	14.1	%	10.6	%
Discount rate:
Government-guaranteed mortgage loans	12.0	%	11.5	%
Conventional conforming mortgage loans	10.0	%	9.5	%
Conventional non-conforming mortgage loans	14.3	%	13.8	%
Nine-Month Period Ended September 30, 2015:
Constant prepayment rate:
Government-guaranteed mortgage loans	9.2	%	7.9	%
Conventional conforming mortgage loans	9.0	%	7.9	%
Conventional non-conforming mortgage loans	14.4	%	12.9	%
Discount rate:
Government-guaranteed mortgage loans	11.5	%	11.5	%
Conventional conforming mortgage loans	9.5	%	9.5	%
Conventional non-conforming mortgage loans	13.8	%	13.8	%

Weighted-Averages of Key Economic Assumptions in Valuation Model

	(Dollars in thousands)
Carrying amount of servicing assets	$	25,475
Fair value	$	27,937
Weighted-average expected life (in years)		8.42
Constant prepayment rate (weighted-average annual rate)		6.34%
Decrease in fair value due to 10% adverse change	$	734
Decrease in fair value due to 20% adverse change	$	1,435
Discount rate (weighted-average annual rate)		11.18%
Decrease in fair value due to 10% adverse change	$	1,311
Decrease in fair value due to 20% adverse change	$	2,515

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DEPOSITS (Tables)

9 Months Ended

Sep. 30, 2016

Summary of Deposit Balances

The following table summarizes deposit balances:
	September 30,			December 31,
	2016		2015
(In thousands)
Type of account:
Non-interest bearing checking accounts	$	1,473,528	$	1,336,559
Savings accounts		2,458,634		2,459,186
Interest-bearing checking accounts		1,153,096		1,088,651
Certificates of deposit		2,337,547		2,356,245
Brokered CDs		1,558,508		2,097,483
	$	8,981,313	$	9,338,124

Brokered Certificates Of Deposit Mature

Brokered CDs mature as follows:
	September 30,
	2016
(In thousands)
Three months or less	$	343,396
Over three months to six months		255,574
Over six months to one year		350,362
One to three years		524,386
Three to five years		84,605
Over five years		185
Total	$	1,558,508

Components of Interest Expense on Deposits

The following are the components of interest expense on deposits:
	Quarter Ended				Nine-Month Period Ended
	September 30,				September 30,
	2016			2015	2016			2015
(In thousands)
Interest expense on deposits	$	16,130	$	15,947	$	49,104	$	48,402
Accretion of premium from acquisition		(43)		(156)		(181)		(441)
Amortization of broker placement fees		655		1,060		2,300		3,564
Interest expense on deposits	$	16,742	$	16,851	$	51,223	$	51,525

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Tables)

9 Months Ended

Sep. 30, 2016

Securities Sold Under Agreements to Repurchase

Securities sold under agreements to repurchase (repurchase agreements) consist of the following:
(Dollars in thousands)		September 30, 2016		December 31, 2015
Repurchase agreements, interest ranging from 1.96% to 3.84%
(December 31, 2015- 1.96% to 3.41%) (1)(2)		$	600,000	$	700,000
(1)	Reported net of securities purchased under agreements to repurchase (reverse repurchase agreements) by counterparty, when applicable, pursuant to ASC 210-20-45-11.
(2)	As of September 30, 2016, includes $500 million with an average rate of 3.56% that lenders have the right to call before their contractual maturities at various dates beginning on October 11, 2016. In addition, $400 million is tied to variable rates.

Schedule of Repurchase Agreement Maturity

Repurchase agreements mature as follows:
		September 30, 2016
		(In thousands)
	One month to three months	$	300,000
	One year to three years		100,000
	Over five years		200,000
	Total	$	600,000

Repurchase Agreements Grouped by Counterparty

Repurchase agreements as of September 30, 2016, grouped by counterparty, were as follows:
	(Dollars in thousands)			Weighted-Average
	Counterparty	Amount		Maturity (In Months)
	Citigroup Global Markets	$	300,000	1
	Dean Witter / Morgan Stanley		100,000	13
	JP Morgan Chase		200,000	64
		$	600,000

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ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB) (Tables)

9 Months Ended

Sep. 30, 2016

Summary of Advances from FHLB

The following is a summary of the advances from the FHLB:
		September 30,		December 31,
	(Dollars in thousands)	2016		2015
	Fixed-rate advances from FHLB, with a weighted-
	average interest rate of 1.40% (December 31, 2015 - 1.30%)	$	355,000	$	455,000

Advances from FHLB Mature

Advances from FHLB mature as follows:
	(In thousands)	September 30, 2016
	Over six months to one year	$	200,000
	Over one year to three years		25,000
	Over three to four years		130,000
	Total	$	355,000

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OTHER BORROWINGS (Tables)

9 Months Ended

Sep. 30, 2016

Components of Other Borrowings

		September 30,		December 31,
	(In thousands)	2016		2015
Junior subordinated debentures due in 2034,
interest-bearing at a floating rate of 2.75%
over 3-month LIBOR (3.61% as of September 30, 2016
and 3.28% as of December 31, 2015)		$	97,630	$	97,626
Junior subordinated debentures due in 2034,
interest-bearing at a floating rate of 2.50%
over 3-month LIBOR (3.36% as of September 30, 2016
and 3.07% as of December 31, 2015) (1)			118,557		128,866
		$	216,187	$	226,492
(1)	Refer to Note 13 - Non-Consolidated Variable Interest Entities and Servicing Assets - Trust Preferred Securities for additional information about the Corporation's repurchase and cancellation of $10 million of trust preferred securities associated with these junior subordinated debentures.

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FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2016

Assets and Liabilities Measured at Fair Value on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below:
	As of September 30, 2016								As of December 31, 2015
	Fair Value Measurements Using								Fair Value Measurements Using
(In thousands)	Level 1		Level 2		Level 3		Assets/Liabilities at Fair Value		Level 1		Level 2		Level 3		Assets/Liabilities at Fair Value
Assets:
Securities available for sale :
Equity securities	$	419	$	-	$	-	$	419	$	-	$	-	$	-	$	-
U.S. Treasury Securities		7,514		-		-		7,514		7,497		-		-		7,497
Noncallable U.S. agency debt		-		366,838		-		366,838		-		315,467		-		315,467
Callable U.S. agency debt and MBS		-		1,419,951		-		1,419,951		-		1,509,807		-		1,509,807
Puerto Rico government obligations		-		24,653		2,167		26,820		-		26,327		1,890		28,217
Private label MBS		-		-		22,211		22,211		-		-		25,307		25,307
Other investments		-		-		100		100		-		-		100		100
Derivatives, included in assets:
Purchased interest rate cap agreements		-		191		-		191		-		806		-		806
Forward contracts		-		4		-		4		-		-		-		-
Liabilities:
Derivatives, included in liabilities:
Written interest rate cap agreement		-		191		-		191		-		798		-		798
Forward contracts		-		144		-		144		-		123		-		123

Schedule of Changes in Fair Value

The tables below summarize changes in unrealized gains and losses recorded in earnings for the quarters and nine-month periods ended September 30, 2016 and 2015 for Level 3 assets and liabilities that are still held at the end of each period:
	Changes in Unrealized Losses		Changes in Unrealized Losses
	(Quarter ended September 30, 2016)		(Quarter ended September 30, 2015)
Level 3 Instruments Only	Securities		Securities
(In thousands)	Available For Sale		Available For Sale
Changes in unrealized losses relating to assets still held at reporting date:
Net impairment losses on available-for-sale investment securities (credit component)	$	-	$	(231)

	Changes in Unrealized Losses		Changes in Unrealized Losses
	(Nine-Month Period Ended September 30, 2016)		(Nine-Month Period Ended September 30, 2015)
Level 3 Instruments Only	Securities		Securities
(In thousands)	Available For Sale		Available For Sale
Changes in unrealized losses relating to assets still held at reporting date:
Net impairment losses on available-for-sale investment securities (credit component)	$	(387)	$	(628)

Fair Value of Assets and Liabilities Measured on Recurring Basis

		Quarter Ended September 30,
		2016		2015
Level 3 Instruments Only		Securities		Securities
(In thousands)		Available For Sale(1)		Available For Sale(1)
Beginning balance		$	26,020	$	31,640
Total gains or (losses) (realized/unrealized):
Included in earnings			-		(231)
Included in other comprehensive income			(477)		345
Principal repayments and amortization			(1,065)		(2,046)
Ending balance		$	24,478	$	29,708
(1)	Amounts mostly related to private label mortgage-backed securities.

		Nine-Month Period Ended September 30,
		2016		2015
Level 3 Instruments Only		Securities		Securities
(In thousands)		Available For Sale(1)		Available For Sale(1)
Beginning balance		$	27,297	$	36,212
Total gains or (losses) (realized/unrealized):
Included in earnings			(387)		(628)
Included in other comprehensive income			1,339		1,489
Purchases			-		100
Principal repayments and amortization			(3,771)		(7,465)
Ending balance		$	24,478	$	29,708
(1)	Amounts mostly related to private label mortgage-backed securities.

Impairment or Valuation Adjustments were Recorded for Assets Recognized at Fair Value

As of September 30, 2016, impairment or valuation adjustments were recorded for assets recognized at fair value on a non-recurring basis as shown in the following table:
		Carrying value as of September 30, 2016						(Losses) recorded for the Quarter Ended September 30, 2016		(Losses) recorded for the Nine-Month Period Ended September 30, 2016
		Level 1		Level 2		Level 3
			(In thousands)
Loans receivable (1)		$	-	$	-	$	426,444	$	(13,912)	$	(41,621)
OREO (2)			-		-		139,446		(1,702)		(6,580)
Mortgage servicing rights (3)			-		-		25,475		(263)		(387)
(1)	Consist mainly of impaired commercial and construction loans. The impairment was generally measured based on the fair value of the collateral. The fair value was derived from external appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the collateral (e.g. absorption rates), which are not market observable.
(2)	The fair value was derived from appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the properties (e.g. absorption rates and net operating income of income producing properties), which are not market observable. Losses were related to market valuation adjustments after the transfer of the loans to the OREO portfolio.
(3)	Fair value adjustments to mortgage servicing rights were mainly due to assumptions associated with mortgage prepayment rates. The Corporation carries its mortgage servicing rights at the lower of cost or market, measured at fair value on a non-recurring basis. Assumptions for the value of mortgage servicing rights include: Prepayment rate of 6.34%, Discount Rate of 11.18%.

As of September 30, 2015, impairment or valuation adjustments were recorded for assets recognized at fair value on a non-recurring basis as shown in the following table:
		Carrying value as of September 30, 2015						(Losses) recorded for the Quarter Ended September 30, 2015		(Losses) recorded for the Nine-Month Period Ended September 30, 2015
		Level 1		Level 2		Level 3
		(In thousands)
Loans receivable (1)		$	-	$	-	$	332,688	$	(7,864)	$	(22,431)
OREO (2)			-		-		124,442		(4,025)		(8,790)
Mortgage servicing rights (3)			-		-		23,960		(23)		(170)
Loans Held For Sale (4)			-		-		8,027		-		-
(1)	Consist mainly of impaired commercial and construction loans. The impairment was generally measured based on the fair value of the collateral. The fair value was derived from external appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the collateral (e.g. absorption rates), which are not market observable.
(2)	The fair value was derived from appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the properties (e.g. absorption rates and net operating income of income producing properties), which are not market observable. Losses were related to market valuation adjustments after the transfer of the loans to the OREO portfolio.
(3)	Fair value adjustments to the mortgage servicing rights were mainly due to assumptions associated with mortgage prepayments rates. The Corporation carries its mortgage servicing rights at the lower of cost or market, measured at fair value on a non-recurring basis. Assumptions for the value of mortgage servicing rights include: Prepayment Rate of 9.32%, Discount Rate of 10.64%.
(4)	The value of these loans was derived from external appraisals, adjusted for specific characteristics of the loans.

Estimated Fair Value and Carrying Value of Financial Instruments

The following tables present the carrying value and the estimated fair value of financial instruments as of September 30, 2016 and December 31, 2015:
	Total Carrying Amount in Statement of Financial Condition September 30, 2016		Fair Value Estimate September 30, 2016		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Cash and due from banks and money
market investments	$	528,943	$	528,943	$	528,943	$	-	$	-
Investment securities available
for sale		1,843,853		1,843,853		7,933		1,811,442		24,478
Investment securities held to maturity		156,190		132,241		-		-		132,241
Other equity securities		28,717		28,717		-		28,717		-
Loans held for sale		56,779		60,283		-		50,497		9,786
Loans held for investment		8,863,654
Less: allowance for loan and lease losses		(214,070)
Loans held for investment, net of allowance	$	8,649,584		8,462,434		-		-		8,462,434
Derivatives, included in assets		195		195		-		195		-
Liabilities:
Deposits		8,981,313		9,003,706		-		9,003,706		-
Securities sold under agreements to repurchase		600,000		646,505		-		646,505		-
Advances from FHLB		355,000		356,925		-		356,925		-
Other borrowings		216,187		174,997		-		-		174,997
Derivatives, included in liabilities		335		335		-		335		-

	Total Carrying Amount in Statement of Financial Condition December 31, 2015		Fair Value Estimate December 31, 2015		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Cash and due from banks and money
market investments	$	752,458	$	752,458	$	752,458	$	-	$	-
Investment securities available
for sale		1,886,395		1,886,395		7,497		1,851,601		27,297
Investment securities held to maturity		161,483		131,544		-		-		131,544
Other equity securities		32,169		32,169		-		32,169		-
Loans held for sale		35,869		36,844		-		28,709		8,135
Loans held for investment		9,112,382
Less: allowance for loan and lease losses		(240,710)
Loans held for investment, net of allowance	$	8,871,672		8,768,152		-		-		8,768,152
Derivatives, included in assets		806		806		-		806		-
Liabilities:
Deposits		9,338,124		9,334,073		-		9,334,073		-
Securities sold under agreements to repurchase		700,000		752,048		-		752,048		-
Advances from FHLB		455,000		453,182		-		453,182		-
Other borrowings		226,492		142,846		-		-		142,846
Derivatives, included in liabilities		921		921		-		921		-

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques [Table Text Block]

Qualitative information regarding the fair value measurements for Level 3 financial instruments is as follows:
	September 30, 2016
	Method	Inputs
Loans	Income, Market, Comparable Sales, Discounted Cash Flows	External appraised values; probability weighting of broker price opinions; management assumptions regarding market trends or other relevant factors
OREO	Income, Market, Comparable Sales, Discounted Cash Flows	External appraised values; probability weighting of broker price opinions; management assumptions regarding market trends or other relevant factors
Mortgage servicing rights	Discounted Cash Flow	Weighted average prepayment rate of 6.34%; weighted average discount rate of 11.18%

Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Table Text Block]

The table below presents qualitative information for significant assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at September 30, 2016:
	September 30, 2016
(In thousands)	Fair Value		Valuation Technique	Unobservable Input	Range
Investment securities available-for-sale:
Private label MBS	$	22,130	Discounted cash flow	Discount rate	13.3%
				Prepayment rate	6.5% -22.5% (Weighted Average 13.7%)
				Projected cumulative loss rate	0.2% -9.1% (Weighted Average 4.0%)
Puerto Rico Government Obligations		2,167	Discounted cash flow	Prepayment rate	3.00%

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SUPPLEMENTAL CASH FLOW INFORMATION (Tables)

9 Months Ended

Sep. 30, 2016

Supplemental Cash Flow Information

	Nine-Month Period Ended September 30, 2016
	2016		2015
	(In thousands)
Cash paid for:
Interest on borrowings	$	104,031	$	70,016
Income tax		1,878		3,404
Non-cash investing and financing activities:
Additions to other real estate owned		37,606		44,415
Additions to auto and other repossessed assets		42,934		57,901
Capitalization of servicing assets		3,878		3,789
Loan securitizations		238,599		213,391
Loans held for investment transferred to held for sale		10,332		-
Loans held for sale transferred to held for investment		1,321		-
Trust preferred securities exchanged for new common stock issued:
Trust preferred securities exchanged		-		5,303
New common stock issued		-		5,628
Fair value of assets acquired (liabilities assumed) in the Doral Bank transaction:
Loans		-		311,410
Premises and equipment, net		-		5,450
Core Deposit intangible		-		5,820
Deposits		-		(523,517)

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SEGMENT INFORMATION (Tables)

9 Months Ended

Sep. 30, 2016

Information about the Reportable Segments

The following table presents information about the reportable segments:
(In thousands)	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
For the quarter ended September 30, 2016:
Interest income	$	34,605	$	44,455	$	28,981	$	12,529	$	13,944	$	9,059	$	143,573
Net (charge) credit for transfer of funds		(12,074)		2,810		(6,700)		15,839		125		-		-
Interest expense		-		(6,323)		-		(14,487)		(3,811)		(774)		(25,395)
Net interest income		22,531		40,942		22,281		13,881		10,258		8,285		118,178
(Provision) release for loan and lease losses		(3,860)		(8,655)		(8,162)		-		2,024		(2,850)		(21,503)
Non-interest income		5,222		11,292		985		6,154		884		1,609		26,146
Direct non-interest expenses		(8,864)		(27,100)		(11,871)		(914)		(7,556)		(7,097)		(63,402)
Segment income (loss)	$	15,029	$	16,479	$	3,233	$	19,121	$	5,610	$	(53)	$	59,419
Average earning assets	$	2,549,358	$	1,973,424	$	2,410,037	$	2,565,019	$	1,252,271	$	604,150	$	11,354,259
(In thousands)	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
For the quarter ended September 30, 2015:
Interest income	$	36,180	$	48,528	$	32,636	$	11,500	$	11,229	$	9,739	$	149,812
Net (charge) credit for transfer of funds		(12,629)		4,335		(4,058)		8,563		3,789		-		-
Interest expense		-		(5,869)		-		(14,305)		(3,931)		(778)		(24,883)
Net interest income		23,551		46,994		28,578		5,758		11,087		8,961		124,929
(Provision) release for loan and lease losses		(6,750)		(13,946)		(11,355)		-		1,307		(432)		(31,176)
Non-interest income		3,982		11,759		647		(174)		778		1,766		18,758
Direct non-interest expenses		(8,977)		(32,669)		(10,896)		(1,103)		(6,914)		(7,441)		(68,000)
Segment income	$	11,806	$	12,138	$	6,974	$	4,481	$	6,258	$	2,854	$	44,511
Average earning assets	$	2,642,388	$	1,959,951	$	2,760,788	$	2,531,084	$	1,048,451	$	644,769	$	11,587,431

(In thousands)	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
Nine-Month Period Ended September 30, 2016
Interest income	$	104,865	$	135,655	$	93,915	$	39,206	$	40,091	$	27,606	$	441,338
Net (charge) credit for transfer of funds		(37,673)		10,546		(18,212)		44,226		1,113		-		-
Interest expense		-		(18,765)		-		(45,828)		(11,214)		(2,477)		(78,284)
Net interest income		67,192		127,436		75,703		37,604		29,990		25,129		363,054
(Provision) release for loan and lease losses		(21,608)		(24,451)		(17,730)		-		1,563		(1,316)		(63,542)
Non-interest income		14,381		35,318		2,459		3,815		2,799		5,621		64,393
Direct non-interest expenses		(29,828)		(87,218)		(33,194)		(3,462)		(23,070)		(20,757)		(197,529)
Segment income	$	30,137	$	51,085	$	27,238	$	37,957	$	11,282	$	8,677	$	166,376
Average earning assets	$	2,576,194	$	1,989,426	$	2,489,268	$	2,774,118	$	1,188,463	$	613,666	$	11,631,135
(In thousands)	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
Nine-Month Period Ended September 30, 2015
Interest income	$	106,352	$	147,395	$	100,192	$	36,276	$	34,477	$	29,237	$	453,929
Net (charge) credit for transfer of funds		(36,212)		12,816		(11,746)		23,936		11,206		-		-
Interest expense		-		(17,379)		-		(44,834)		(12,326)		(2,337)		(76,876)
Net interest income		70,140		142,832		88,446		15,378		33,357		26,900		377,053
(Provision) release for loan and lease losses		(21,657)		(36,588)		(84,170)		-		6,715		(2,712)		(138,412)
Non-interest income (loss)		11,866		35,504		2,350		(13,046)		2,032		6,008		44,714
Direct non-interest expenses		(26,270)		(96,690)		(30,013)		(3,487)		(21,293)		(24,892)		(202,645)
Segment income (loss)	$	34,079	$	45,058	$	(23,387)	$	(1,155)	$	20,811	$	5,304	$	80,710
Average earning assets	$	2,601,892	$	1,956,352	$	2,947,562	$	2,683,313	$	1,001,860	$	640,027	$	11,831,006

Reconciliation of the Reportable Segment Financial Information

The following table presents a reconciliation of the reportable segment financial information to the consolidated totals:
		Quarter Ended				Nine-Month Period Ended
		September 30,				September 30,
		2016		2015		2016		2015
Net income :
Total segment income		$	59,419	$	44,511	$	166,376	$	80,710
Other non-interest income (1)			-		-		-		13,443
Other operating expenses (2)			(24,901)		(25,277)		(73,315)		(85,159)
Income before income taxes			34,518		19,234		93,061		8,994
Income tax expense			(10,444)		(4,476)		(23,690)		(2,664)
Total consolidated net income		$	24,074	$	14,758	$	69,371	$	6,330
Average assets:
Total average earning assets for segments		$	11,354,259	$	11,587,431	$	11,631,135	$	11,831,006
Average non-earning assets			926,043		925,723		927,732		916,817
Total consolidated average assets		$	12,280,302	$	12,513,154	$	12,558,867	$	12,747,823
(1)	The bargain purchase gain on the acquisition of assets and assumption of deposits from Doral Bank in 2015 is presented as Other non-interest income in the table above.
(2)	Expenses pertaining to corporate administrative functions that support the operating segments but are not specifically attributable to or managed by any segment are not included in the reported financial results of the operating segments. The unallocated corporate expenses include certain general and administrative expenses and related depreciation and amortization expenses.

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REGULATORY MATTERS, COMMITMENTS AND CONTINGENCIES (Tables)

9 Months Ended

Sep. 30, 2016

Commitments And Contingencies Disclosure [Abstract]

Schedule Of Compliance With Regulatory Capital Requirements Under Banking Regulations [Text Block]

The Corporation's and its banking subsidiary's regulatory capital positions as of September 30, 2016 and December 31, 2015 were as follows:
	Regulatory Requirements
	Actual			For Capital Adequacy Purposes			To be Well-Capitalized-Regular Thresholds
	Amount		Ratio	Amount		Ratio	Amount		Ratio
	(Dollars in thousands)
As of September 30, 2016
Total Capital (to
Risk-Weighted Assets)
First BanCorp.	$	1,892,493	21.27%	$	711,754	8.0%		N/A	N/A
FirstBank	$	1,843,533	20.73%	$	711,460	8.0%	$	889,325	10.0%
Common Equity Tier 1 Capital
(to Risk-Weighted Assets)
First BanCorp.	$	1,569,482	17.64%	$	400,362	4.5%		N/A	N/A
FirstBank	$	1,496,670	16.83%	$	400,196	4.5%	$	578,061	6.5%
Tier I Capital (to
Risk-Weighted Assets)
First BanCorp.	$	1,569,482	17.64%	$	533,816	6.0%		N/A	N/A
FirstBank	$	1,730,264	19.46%	$	533,595	6.0%	$	711,460	8.0%
Leverage ratio
First BanCorp.	$	1,569,482	13.04%	$	481,357	4.0%		N/A	N/A
FirstBank	$	1,730,264	14.40%	$	480,751	4.0%	$	600,939	5.0%
As of December 31, 2015
Total Capital (to
Risk-Weighted Assets)
First BanCorp.	$	1,828,559	20.01%	$	731,164	8.0%		N/A	N/A
FirstBank	$	1,802,711	19.73%	$	730,824	8.0%	$	913,530	10.0%
Common Equity Tier 1 Capital
(to Risk-Weighted Assets)
First BanCorp.	$	1,546,678	16.92%	$	411,280	4.5%		N/A	N/A
FirstBank	$	1,493,478	16.35%	$	411,088	4.5%	$	593,794	6.5%
Tier I Capital (to
Risk-Weighted Assets)
First BanCorp.	$	1,546,678	16.92%	$	548,373	6.0%		N/A	N/A
FirstBank	$	1,685,656	18.45%	$	548,118	6.0%	$	730,824	8.0%
Leverage ratio
First BanCorp.	$	1,546,678	12.22%	$	506,322	4.0%		N/A	N/A
FirstBank	$	1,685,656	13.33%	$	505,648	4.0%	$	632,060	5.0%

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FIRST BANCORP. (Holding Company Only) Financial Information (Tables)

9 Months Ended

Sep. 30, 2016

Statements of Financial Condition

Statements of Financial Condition
	As of September 30,			As of December 31,
	2016		2015
	(In thousands)
Assets
Cash and due from banks	$	29,074	$	29,103
Money market investments		6,111		6,111
Other investment securities		285		285
Loans held for investment, net		236		266
Investment in First Bank Puerto Rico, at equity		1,960,090		1,888,036
Investment in First Bank Insurance Agency, at equity		9,991		14,382
Investment in FBP Statutory Trust I		2,929		2,929
Investment in FBP Statutory Trust II		3,561		3,866
Other assets		4,354		4,632
Total assets	$	2,016,631	$	1,949,610
Liabilities and Stockholders' Equity
Liabilities:
Other borrowings	$	216,187	$	226,492
Accounts payable and other liabilities		558		28,984
Total liabilities		216,745		255,476
Stockholders' equity		1,799,886		1,694,134
Total liabilities and stockholders' equity	$	2,016,631	$	1,949,610

Statements of Income (Loss)

Statements of Income
	Quarter Ended				Nine-Month Period Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(In thousands)				(In thousands)
Income:
Interest income on money market investments	$	5	$	5	$	15	$	15
Dividend income from subsidiaries		1,822		-		39,980		-
Other income		58		58		181		439
		1,885		63		40,176		454
Expense:
Other borrowings		1,817		1,861		5,777		5,521
Other operating expenses		685		643		2,313		2,000
		2,502		2,504		8,090		7,521
Gain on early extinguishment of debt		-		-		4,217		-
(Loss) income before income taxes and equity
in undistributed earnings of subsidiaries		(617)		(2,441)		36,303		(7,067)
Equity in undistributed earnings of subsidiaries		24,691		17,199		33,068		13,397
Net income	$	24,074	$	14,758	$	69,371	$	6,330
Other Comprehensive (loss) income, net of tax		(12,157)		16,709		32,109		13,681
Comprehensive income	$	11,917	$	31,467	$	101,480	$	20,011

XML

BUSINESS COMBINATION- Business Combination (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Liabilities [Abstract]
Business Combination Bargain Purchase Gain Recognized Amount	$ 0	$ 0	$ 0	$ 13,443
Deposits [Member]
Liabilities [Abstract]
Liabilities Assumed1			0	523,517
Core Deposits [Member]
Assets [Abstract]
Fair Value Of Assets Acquired			0	5,820
Property Plant And Equipment [Member]
Assets [Abstract]
Fair Value Of Assets Acquired			0	5,450
Loans [Member]
Assets [Abstract]
Fair Value Of Assets Acquired			$ 0	$ 311,410

XML

BUSINESS COMBINATION- Additional information (Detail) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2015	Sep. 30, 2016	Dec. 31, 2015
Business Acquisition [Line Items]
Branches Doral	10
Contractually outstanding principal and interest at acquisition		$ 210.6	$ 218.1

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EARNINGS PER COMMON SHARE - Calculations of Earnings Per Common Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Net Income (Loss):
Net income	$ 24,074	$ 14,758	$ 69,371	$ 6,330
Net income (loss) attributable to common stockholders	$ 24,074	$ 14,758	$ 69,371	$ 6,330
Weighted-Average Shares:
Basic weighted-average common shares outstanding	212,927	211,820	212,682	211,255
Average potential common shares	3,651	1,963	2,577	1,341
Diluted weighted-average number of common shares outstanding	216,578	213,783	215,259	212,596
Income (loss) per common share:
Basic	$ 0.11	$ 0.07	$ 0.33	$ 0.03
Diluted	$ 0.11	$ 0.07	$ 0.32	$ 0.03
Retained Earnings [Member]
Net Income (Loss):
Net income			$ 69,371	$ 6,330

XML

EARNINGS PER COMMON SHARE - Additional Information (Detail) - shares	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2016	Dec. 31, 2015
Earnings Per Share Diluted [Line Items]
Unvested shares of restricted stock		4,209,323	2,968,461
Stock Option [Member]
Earnings Per Share Diluted [Line Items]
Antidilutive effect on earnings per share	69,848

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STOCK-BASED COMPENSATION - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Mar. 31, 2014	Sep. 30, 2016	Sep. 30, 2015	May 24, 2016
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted shares of restricted stock				1,925,575
Restricted stock granted to Board of Directors				683,713
Stock based compensation expense unrecognized related to nonvested shares of restricted stock	$ 4,600			$ 4,600
Period for cost recognition not yet recognized				1 year 4 months 24 days
Weighted-Average Grant Date Fair Value of Stocks				$ 1.87
Holding Period By The Us Treasury Of Outstanding Common Stock				2 years	1 year
Repurchased of common stock				255,102	181,649
Stock Issued During Period Value Restricted Stock Award Forfeitures				$ 5	$ 36
Board Of Directors [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted shares of restricted stock				130,873	219,531
Senior Executives
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted shares				629,476	330,254
Weighted-Average Grant Date Fair Value of Stocks				$ 3.6	$ 5.14
Repurchased of common stock				189,604	108,731
Management [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted shares of restricted stock				1,794,702	793,964
Management [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock vesting period				3 years
Management [Member] | Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock vesting period				2 years
Omnibus Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Authorized granting up shares						14,169,807
Restricted stock available for issuance	6,924,391			6,924,391
Omnibus Plan [Member] | Maximum [Member] | Board Of Directors [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock vesting period					5 years
Omnibus Plan [Member] | Minimum [Member] | Board Of Directors [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock vesting period					1 year
Omnibus Plan [Member] | Senior Executives
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share based compensation cost				$ 2,200	$ 1,700
Omnibus Plan [Member] | Management [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock vesting period					3 years
Omnibus Plan [Member] | Management [Member] | Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock vesting period					3 months
Troubled Asset Relief Program [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage increments repayment under TARP				25.00%
Restricted Stock Vested Subject To Tarp Percentage			25.00%
Troubled Asset Relief Program [Member] | Management [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted shares of restricted stock				1,546,137	615,464
Fair Value Of Restricted Stock Granted					$ 3.18
Percentage of appreciation					14.00%
Restricted Stock [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share based compensation cost	$ 1,000	$ 900		$ 2,900	$ 2,900
Repurchased of common stock				65,498	72,918
Restricted Stock [Member] | Troubled Asset Relief Program [Member] | Management [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Fair Value Of Restricted Stock Granted				$ 1.43
Percentage of appreciation				14.00%

XML

STOCK-BASED COMPENSATION - Activity of Stock Options (Detail) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($) $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of options, Beginning of year | shares	69,848
Number of Options, expired | shares	(34,326)
Number of Options, cancelled | shares	(533)
Number of options, End of period outstanding and exercisable | shares	34,989
Weighted-Average Exercise Price, beginning of year | $ / shares	$ 160.3
Weighted-Average Exercise Price, Options expired | $ / shares	183.37
Weighted-Average Exercise Price, Options cancelled | $ / shares	138
Weighted-Average Exercise Price, End of period outstanding and exercisable | $ / shares	$ 138
Weighted- Average Remaining Contractual Term (Years),End of period outstanding and exercisable	3 months 18 days
Aggregate Intrinsic Value, End of period outstanding and exercisable | $	$ 0

XML

STOCK-BASED COMPENSATION - Restricted Stock Activity Under Omnibus Plan (Detail)	9 Months Ended
	Sep. 30, 2016 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of non-vested shares of restricted stock, beginning of period | shares	2,968,461
Granted shares of restricted stock | shares	1,925,575
Vested | shares	(683,713)
Forefeited | shares	(1,000)
Number of non-vested shares of restricted stock, end of period | shares	4,209,323
Weighted-Average Grant Date Fair Value, beginning of period | $ / shares	$ 3.34
Weighted-Average Grant Date Fair Value of Stocks | $ / shares	1.87
Weighted-Averages Grant Date Dair Value, Forefeitures | $ / shares	6.03
Weighted-Averages Grant Date Fair Value, Vested | $ / shares	3.8
Weighted-Average Grant Date Fair Value, end of period | $ / shares	$ 2.59

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INVESTMENT SECURITIES - Investment Securities Available for Sale (Detail) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 1,831,740	$ 1,906,391
Noncredit Loss Component of OTTI Recorded in OCI		23,695	29,608
Gross unrealized gain		37,691	23,904
Gross unrealized loss		1,883	14,292
Fair value		$ 1,843,853	$ 1,886,395
Weighted average yield		2.17%	2.38%
Puerto Rico Government obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 43,500
United States And Puerto Rico Government Obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		602,121	$ 514,307
Noncredit Loss Component of OTTI Recorded in OCI		15,219	19,917
Gross unrealized gain		3,349	655
Gross unrealized loss		1,742	6,270
Fair value		$ 588,509	$ 488,775
Weighted average yield		1.53%	1.75%
Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 1,229,106	$ 1,391,984
Noncredit Loss Component of OTTI Recorded in OCI		8,476	9,691
Gross unrealized gain		34,336	23,249
Gross unrealized loss		141	8,022
Fair value		$ 1,254,825	$ 1,397,520
Weighted average yield		2.48%	2.61%
Federal Home Loan Mortgage Corporation Certificates And Obligations F H L M C [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 257,830	$ 288,047
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		3,649	1,104
Gross unrealized loss		62	1,706
Fair value		$ 261,417	$ 287,445
Weighted average yield		2.10%	2.15%
Government National Mortgage Association Certificates And Obligations G N M A [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 229,624	$ 285,584
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		15,092	16,009
Gross unrealized loss		0	20
Fair value		$ 244,716	$ 301,573
Weighted average yield		3.81%	3.83%
Federal National Mortgage Association Certificates And Obligations F N M A [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 651,582	$ 783,356
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		15,563	6,135
Gross unrealized loss		39	6,296
Fair value		$ 667,106	$ 783,195
Weighted average yield		2.29%	2.35%
Collateralized Mortgage Obligations Issued And Guaranteed By Fhlmc Fnma And Gnma [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 59,383
Noncredit Loss Component of OTTI Recorded in OCI		0
Gross unrealized gain		32
Gross unrealized loss		40
Fair value		$ 59,375
Weighted average yield		1.20%
Mortgage Backed Securities Issued By Private Enterprises [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 30,687	$ 34,997
Noncredit Loss Component of OTTI Recorded in OCI		8,476	9,691
Gross unrealized gain		0	1
Gross unrealized loss		0	0
Fair value		$ 22,211	$ 25,307
Weighted average yield		2.37%	2.26%
Due Within One Year [Member] | U S Treasury Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 7,513
Noncredit Loss Component of OTTI Recorded in OCI		0
Gross unrealized gain		1
Gross unrealized loss		0
Fair value		$ 7,514
Weighted average yield		0.57%
Due Within One Year [Member] | US Government Sponsored Enterprises Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 9,629	$ 14,624
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		4	4
Gross unrealized loss		0	10
Fair value		$ 9,633	$ 14,618
Weighted average yield		0.70%	0.68%
Due Within One Year [Member] | Government National Mortgage Association Certificates And Obligations G N M A [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 1	$ 2
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		0	0
Gross unrealized loss		0	0
Fair value		$ 1	$ 2
Weighted average yield		1.69%	1.70%
After One To Five Years [Member] | U S Treasury Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost			$ 7,530
Noncredit Loss Component of OTTI Recorded in OCI			0
Gross unrealized gain			0
Gross unrealized loss			33
Fair value			$ 7,497
Weighted average yield			0.57%
After One To Five Years [Member] | US Government Sponsored Enterprises Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 496,782	$ 384,323
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		3,215	174
Gross unrealized loss		53	4,305
Fair value		$ 499,944	$ 380,192
Weighted average yield		1.32%	1.32%
After One To Five Years [Member] | Puerto Rico Government obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 21,423	$ 25,663
Noncredit Loss Component of OTTI Recorded in OCI		12,023	14,662
Gross unrealized gain		0	0
Gross unrealized loss		0	0
Fair value		$ 9,400	$ 11,001
Weighted average yield		4.38%	4.38%
After One To Five Years [Member] | Other Available For Sale Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 100	$ 100
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		0	0
Gross unrealized loss		0	0
Fair value		$ 100	$ 100
Weighted average yield		1.50%	1.50%
After One To Five Years [Member] | Government National Mortgage Association Certificates And Obligations G N M A [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 93	$ 109
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		3	5
Gross unrealized loss		0	0
Fair value		$ 96	$ 114
Weighted average yield		3.85%	4.26%
After One To Five Years [Member] | Federal National Mortgage Association Certificates And Obligations F N M A [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 22,594	$ 2,552
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		452	74
Gross unrealized loss		0	0
Fair value		$ 23,046	$ 2,626
Weighted average yield		1.99%	3.32%
After Five To Ten Years [Member] | US Government Sponsored Enterprises Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost			$ 58,150
Noncredit Loss Component of OTTI Recorded in OCI			0
Gross unrealized gain			343
Gross unrealized loss			242
Fair value			$ 58,251
Weighted average yield			2.34%
After Five To Ten Years [Member] | Puerto Rico Government obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 845	$ 855
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		6	0
Gross unrealized loss		0	0
Fair value		$ 851	$ 855
Weighted average yield		5.20%	5.20%
After Five To Ten Years [Member] | Federal Home Loan Mortgage Corporation Certificates And Obligations F H L M C [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 6,314	$ 336
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		145	31
Gross unrealized loss		0	0
Fair value		$ 6,459	$ 367
Weighted average yield		2.31%	4.95%
After Five To Ten Years [Member] | Government National Mortgage Association Certificates And Obligations G N M A [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 98,314	$ 120,298
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		2,557	3,182
Gross unrealized loss		0	0
Fair value		$ 100,871	$ 123,480
Weighted average yield		3.05%	3.07%
After Five To Ten Years [Member] | Federal National Mortgage Association Certificates And Obligations F N M A [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 26,448	$ 21,557
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		577	433
Gross unrealized loss		19	233
Fair value		$ 27,006	$ 21,757
Weighted average yield		2.06%	2.73%
After Five To Ten Years [Member] | Collateralized Mortgage Obligations Issued And Guaranteed By Fhlmc Fnma And Gnma [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 19,853
Noncredit Loss Component of OTTI Recorded in OCI		0
Gross unrealized gain		7
Gross unrealized loss		33
Fair value		$ 19,827
Weighted average yield		1.18%
After Five To Ten Years [Member] | Mortgage Backed Securities Issued By Private Enterprises [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 81	$ 92
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		0	1
Gross unrealized loss		0	0
Fair value		$ 81	$ 93
Weighted average yield		7.20%	7.26%
After Ten Years [Member] | US Government Sponsored Enterprises Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 44,724
Noncredit Loss Component of OTTI Recorded in OCI		0
Gross unrealized gain		7
Gross unrealized loss		133
Fair value		$ 44,598
Weighted average yield		0.87%
After Ten Years [Member] | Puerto Rico Government obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 21,205	$ 23,162
Noncredit Loss Component of OTTI Recorded in OCI		3,196	5,255
Gross unrealized gain		116	134
Gross unrealized loss		1,556	1,680
Fair value		$ 16,569	$ 16,361
Weighted average yield		5.39%	5.40%
After Ten Years [Member] | Federal Home Loan Mortgage Corporation Certificates And Obligations F H L M C [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 251,516	$ 287,711
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		3,504	1,073
Gross unrealized loss		62	1,706
Fair value		$ 254,958	$ 287,078
Weighted average yield		2.10%	2.14%
After Ten Years [Member] | Government National Mortgage Association Certificates And Obligations G N M A [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 131,216	$ 165,175
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		12,532	12,822
Gross unrealized loss		0	20
Fair value		$ 143,748	$ 177,977
Weighted average yield		4.37%	4.38%
After Ten Years [Member] | Federal National Mortgage Association Certificates And Obligations F N M A [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 602,540	$ 759,247
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		14,534	5,628
Gross unrealized loss		20	6,063
Fair value		$ 617,054	$ 758,812
Weighted average yield		2.31%	2.34%
After Ten Years [Member] | Collateralized Mortgage Obligations Issued And Guaranteed By Fhlmc Fnma And Gnma [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 39,530
Noncredit Loss Component of OTTI Recorded in OCI		0
Gross unrealized gain		25
Gross unrealized loss		7
Fair value		$ 39,548
Weighted average yield		1.21%
After Ten Years [Member] | Mortgage Backed Securities Issued By Private Enterprises [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 30,606	$ 34,905
Noncredit Loss Component of OTTI Recorded in OCI		8,476	9,691
Gross unrealized gain		0	0
Gross unrealized loss		0	0
Fair value		$ 22,130	$ 25,214
Weighted average yield		2.37%	2.26%
Equity Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	[1]	$ 413
Noncredit Loss Component of OTTI Recorded in OCI	[1]	0
Gross unrealized gain	[1]	6
Gross unrealized loss	[1]	0
Fair value	[1]	$ 419
Weighted average yield	[1]	2.15%

[1] Equity securities consisted of investment in a Community Reinvestment Act Qualified Investment Fund.

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INVESTMENT SECURITIES - Additional Information (Detail) - USD ($) $ in Thousands		3 Months Ended					9 Months Ended
		Sep. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Schedule Of Investments [Line Items]
Proceeds from sale of available-for-sale securities							$ 219,780	$ 0
Percentage Of Debt Securities Government And Government Sponsored Agencies		97.00%					97.00%
Maximum loan to value ratio							80.00%
Proceeds From Maturities Prepayments And Calls Of Available For Sale Securities							$ 270,345	212,972
Total investment securities available for sale		$ 1,843,853		$ 1,886,395			1,843,853
Impairement on equity securities		6,096			$ 0		6,104	0
Fair value		1,843,853		1,886,395			1,843,853
Amortized cost		$ 1,831,740		$ 1,906,391			$ 1,831,740
Weighted average yield		2.17%		2.38%			2.17%
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Portion Recognized in Earnings, Net, Qualitative Disclosures, Default Rate							100.00%
Other Than Temporary Impairment Losses Investments Portion Recognized In Earnings Net	[1]	$ 0			$ 231		$ 6,687	13,484
Percentage Of Held To Maturity Securities		87.00%
Interest Receivable		$ 41,439		$ 48,697			41,439
Puerto Rico Buildings Authority [Member]
Schedule Of Investments [Line Items]
Total investment securities available for sale		10,100					10,100
Fair value		10,100					10,100
Puerto Rico Government Development Bank [Member]
Schedule Of Investments [Line Items]
Total investment securities available for sale		9,400					9,400
Fair value		9,400					9,400
Interest Receivable		900					$ 900
Maximum [Member]
Schedule Of Investments [Line Items]
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Portion Recognized in Earnings, Net, Qualitative Disclosures, Recovery Rate							80.00%
Minimum [Member]
Schedule Of Investments [Line Items]
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Portion Recognized in Earnings, Net, Qualitative Disclosures, Recovery Rate							35.00%
Weighted Average [Member]
Schedule Of Investments [Line Items]
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Portion Recognized in Earnings, Net, Qualitative Disclosures, Recovery Rate							61.00%
Mortgage Backed Securities Issued By Private Enterprises [Member]
Schedule Of Investments [Line Items]
Amortized cost		30,600					$ 30,600
Other Than Temporary Impairment Losses Investments Portion Recognized In Earnings Net							400	600
Puerto Rico Government obligations [Member]
Schedule Of Investments [Line Items]
Amortized cost		43,500					43,500
Change in net unrealized gains		300					13,400
Other Than Temporary Impairment Losses Investments Portion Recognized In Earnings Net			$ 6,300	$ 3,000		$ 12,900	6,300	$ 12,900
Puerto Rico Government obligations [Member] | Puerto Rico Government Debt Securities Other Than Temporary Impairment [Member]
Schedule Of Investments [Line Items]
Total investment securities available for sale		19,500					19,500
Fair value		19,500					19,500
Amortized cost		35,600					35,600
Puerto Rico Government obligations [Member] | Puerto Rico Buildings Authority [Member]
Schedule Of Investments [Line Items]
Amortized cost		13,300					13,300
Puerto Rico Government obligations [Member] | Puerto Rico Government Development Bank [Member]
Schedule Of Investments [Line Items]
Amortized cost		$ 22,000					$ 22,000

[1] For the nine-month periods ended September 30, 2016 and 2015, approximately $6.3 million and $12.9 million, respectively, of the credit impairment recognized in earnings consisted of credit losses on Puerto Rico Government debt securities and $0.4 million and $0.6 million, respectively, was associated with credit losses on private label MBS.

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INVESTMENT SECURITIES - Narratives (Detail)	Sep. 30, 2016 minimumcreditscore
Disclosure Investment Securities Additional Information [Abstract]
Minimum Credit Score	700

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INVESTMENT SECURITIES - Available-For-Sale Investments' Fair Value And Gross Unrealized Losses (Detail) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Schedule Of Available For Sale Securities [Line Items]
Fair Value Less than 12 months	$ 165,382	$ 778,485
Unrealized Losses Less than 12 months	327	6,803
Fair Value 12 months or more	43,818	366,045
Unrealized Losses 12 months or more	25,251	37,097
Total Fair Value	209,200	1,144,530
Total Unrealized Losses	25,578	43,900
Equity Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Fair Value Less than 12 months	2
Unrealized Losses Less than 12 months	0
Fair Value 12 months or more	0
Unrealized Losses 12 months or more	0
Total Fair Value	2
Total Unrealized Losses	0
Debt Securities [Member] | Puerto Rico Government Obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Fair Value Less than 12 months	0	0
Unrealized Losses Less than 12 months	0	0
Fair Value 12 months or more	21,688	23,008
Unrealized Losses 12 months or more	16,775	21,597
Total Fair Value	21,688	23,008
Total Unrealized Losses	16,775	21,597
Debt Securities [Member] | US States And Political Subdivisions Member [Member]
Schedule Of Available For Sale Securities [Line Items]
Fair Value Less than 12 months	60,970	198,243
Unrealized Losses Less than 12 months	186	929
Fair Value 12 months or more	0	210,504
Unrealized Losses 12 months or more	0	3,661
Total Fair Value	60,970	408,747
Total Unrealized Losses	186	4,590
Mortgage Backed Securities [Member] | Collateralized Mortgage Obligations Member
Schedule Of Available For Sale Securities [Line Items]
Fair Value Less than 12 months	31,896
Unrealized Losses Less than 12 months	40
Fair Value 12 months or more	0
Unrealized Losses 12 months or more	0
Total Fair Value	31,896
Total Unrealized Losses	40
Mortgage Backed Securities [Member] | Other-mortgage pass-through trust certificates [Member]
Schedule Of Available For Sale Securities [Line Items]
Fair Value Less than 12 months	0	0
Unrealized Losses Less than 12 months	0	0
Fair Value 12 months or more	22,130	25,214
Unrealized Losses 12 months or more	8,476	9,691
Total Fair Value	22,130	25,214
Total Unrealized Losses	8,476	9,691
Mortgage Backed Securities [Member] | Government National Mortgage Association Certificates And Obligations G N M A [Member]
Schedule Of Available For Sale Securities [Line Items]
Fair Value Less than 12 months		1,047
Unrealized Losses Less than 12 months		20
Fair Value 12 months or more		0
Unrealized Losses 12 months or more		0
Total Fair Value		1,047
Total Unrealized Losses		20
Mortgage Backed Securities [Member] | Federal National Mortgage Association Certificates And Obligations F N M A [Member]
Schedule Of Available For Sale Securities [Line Items]
Fair Value Less than 12 months	18,245	437,305
Unrealized Losses Less than 12 months	39	4,516
Fair Value 12 months or more	0	88,013
Unrealized Losses 12 months or more	0	1,780
Total Fair Value	18,245	525,318
Total Unrealized Losses	39	6,296
Mortgage Backed Securities [Member] | Federal Home Loan Mortgage Corporation Certificates And Obligations F H L M C [Member]
Schedule Of Available For Sale Securities [Line Items]
Fair Value Less than 12 months	54,269	141,890
Unrealized Losses Less than 12 months	62	1,338
Fair Value 12 months or more	0	19,306
Unrealized Losses 12 months or more	0	368
Total Fair Value	54,269	161,196
Total Unrealized Losses	$ 62	$ 1,706

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INVESTMENT SECURITIES - OTTI Losses on Available-for-Sale Debt Securities (Detail) - USD ($) $ in Thousands		3 Months Ended					9 Months Ended
		Sep. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Schedule Of Available For Sale Securities [Line Items]
Total other-than-temporary impairment losses		$ 0			$ 0		$ (1,845)	$ (29,521)
Credit losses on debt securities for which an OTTI was no previously recognized		0			0		0	12,856
Portion of loss previously recognized in other comprehensive income		0			231		4,842	(16,037)
Net impairment losses recognized in earnings	[1]	0			(231)		(6,687)	(13,484)
Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Credit losses on debt securities for which an OTTI was no previously recognized		0
Mortgage Backed Securities Issued By Private Enterprises [Member]
Schedule Of Available For Sale Securities [Line Items]
Credit losses on debt securities for which an OTTI was no previously recognized					0		0	0
Net impairment losses recognized in earnings							(400)	(600)
US States And Political Subdivisions Member [Member]
Schedule Of Available For Sale Securities [Line Items]
Credit losses on debt securities for which an OTTI was no previously recognized		$ 0			$ 0		0	12,856
Net impairment losses recognized in earnings			$ (6,300)	$ (3,000)		$ (12,900)	$ (6,300)	$ (12,900)

[1] For the nine-month periods ended September 30, 2016 and 2015, approximately $6.3 million and $12.9 million, respectively, of the credit impairment recognized in earnings consisted of credit losses on Puerto Rico Government debt securities and $0.4 million and $0.6 million, respectively, was associated with credit losses on private label MBS.

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INVESTMENT SECURITIES - Roll-Forward of Credit Losses on Debt Securities Held by Corporation (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Other Than Temporary Impairment Credit Losses Recognized In Earnings [Line Items]
Beginning balance of credit losses on debt securities held for which a portion of an OTTI was recognized in OCI	$ 28,981	$ 19,030	$ 22,294	$ 5,777
Additions:
Credit losses on debt securities for which an OTTI was no previously recognized	0	0	0	12,856
Credit losses on debt securities for which an OTTI was previously recognized	0	231	6,687	628
Reductions:
Ending balance of credit losses on debt securities held for which a portion of an OTTI was recognized in OCI	28,981	19,261	28,981	19,261
Mortgage Backed Securities Issued By Private Enterprises [Member]
Other Than Temporary Impairment Credit Losses Recognized In Earnings [Line Items]
Beginning balance of credit losses on debt securities held for which a portion of an OTTI was recognized in OCI	6,792	6,174	6,405	5,777
Additions:
Credit losses on debt securities for which an OTTI was no previously recognized		0	0	0
Credit losses on debt securities for which an OTTI was previously recognized	0	231	387	628
Reductions:
Ending balance of credit losses on debt securities held for which a portion of an OTTI was recognized in OCI	6,792	6,405	6,792	6,405
US States And Political Subdivisions Member [Member]
Other Than Temporary Impairment Credit Losses Recognized In Earnings [Line Items]
Beginning balance of credit losses on debt securities held for which a portion of an OTTI was recognized in OCI	22,189	12,856	15,889	0
Additions:
Credit losses on debt securities for which an OTTI was no previously recognized	0	0	0	12,856
Credit losses on debt securities for which an OTTI was previously recognized	0	0	6,300	0
Reductions:
Ending balance of credit losses on debt securities held for which a portion of an OTTI was recognized in OCI	$ 22,189	$ 12,856	$ 22,189	$ 12,856

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INVESTMENT SECURITIES - Significant Assumptions in Valuation of Private Label MBS (Detail)	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Schedule Of Investments [Line Items]
Fair Value Inputs Discount Rate	13.28%	14.50%
Fair Value Inputs Prepayment Rate	13.70%	25.00%
Weighted Average, Projected Cumulative Loss Rate	4.00%	3.60%
Minimum [Member]
Schedule Of Investments [Line Items]
Fair Value Inputs Discount Rate	12.03%
Fair Value Inputs Prepayment Rate	6.50%	15.92%
Weighted Average, Projected Cumulative Loss Rate	0.20%	0.18%
Maximum [Member]
Schedule Of Investments [Line Items]
Fair Value Inputs Discount Rate	13.50%
Fair Value Inputs Prepayment Rate	22.50%	31.25%
Weighted Average, Projected Cumulative Loss Rate	9.10%	6.66%

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INVESTMENT SECURITIES - Investment Securities Held to Maturity (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Schedule Of Held To Maturity Securities [Line Items]
Held To Maturity Securities	$ 156,190	$ 161,483
Held To Maturity Securities Fair Value	132,241	131,544
US States And Political Subdivisions Member [Member] | P R
Schedule Of Held To Maturity Securities [Line Items]
Held To Maturity Securities	156,190	161,483
Held To Maturity Securities Accumulated Unrecognized Holding Gain	0	0
Held To Maturity Securities Accumulated Unrecognized Holding Loss	23,949	29,939
Held To Maturity Securities Fair Value	$ 132,241	$ 131,544
Held To Maturity Securities Debt Maturities Average Yield	4.65%	4.62%
US States And Political Subdivisions Member [Member] | After One To Five Years [Member] | P R
Schedule Of Held To Maturity Securities [Line Items]
Held To Maturity Securities	$ 1,136	$ 1,371
Held To Maturity Securities Accumulated Unrecognized Holding Gain	0	0
Held To Maturity Securities Accumulated Unrecognized Holding Loss	27	37
Held To Maturity Securities Fair Value	$ 1,109	$ 1,334
Held To Maturity Securities Debt Maturities Average Yield	5.38%	5.38%
US States And Political Subdivisions Member [Member] | After Five To Ten Years [Member] | P R
Schedule Of Held To Maturity Securities [Line Items]
Held To Maturity Securities	$ 10,741	$ 11,523
Held To Maturity Securities Accumulated Unrecognized Holding Gain	0	0
Held To Maturity Securities Accumulated Unrecognized Holding Loss	782	1,041
Held To Maturity Securities Fair Value	$ 9,959	$ 10,482
Held To Maturity Securities Debt Maturities Average Yield	4.41%	4.25%
US States And Political Subdivisions Member [Member] | After Ten Years [Member] | P R
Schedule Of Held To Maturity Securities [Line Items]
Held To Maturity Securities	$ 144,313	$ 148,589
Held To Maturity Securities Accumulated Unrecognized Holding Gain	0	0
Held To Maturity Securities Accumulated Unrecognized Holding Loss	23,140	28,861
Held To Maturity Securities Fair Value	$ 121,173	$ 119,728
Held To Maturity Securities Debt Maturities Average Yield	4.66%	4.64%

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INVESTMENT SECURITIES - Investment Securities Held to Maturity (Securities in continuous unrealized loss position) (Detail) - US States And Political Subdivisions Member [Member] - P R - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Schedule Of Held To Maturity Securities [Line Items]
Held to maturity less than twelve months fair value	$ 0	$ 4,163
Held to maturity less than twelve months unrealized losses	0	140
Held to maturity securities twelve months or longer fair value	132,241	127,381
Held to maturity securities twelve month or longer unrealized losses	23,949	29,799
Held to maturity unrealized loss position fair value	132,241	131,544
Held to maturity unrealized loss position aggregate losses	$ 23,949	$ 29,939

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OTHER EQUITY SECURITIES - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Schedule Of Other Assets [Line Items]
Capital stock par value	$ 100		$ 100
Book value of investment in FHLB stock	$ 26.6		$ 26.6		$ 31.3
Dividend income from FHLB stock	0.4	$ 0.3	1.1	$ 0.8
Carrying value of other equity security	$ 2.1		$ 2.1		$ 0.9

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LOAN PORTFOLIO - Loan Portfolio Held for Investment (Detail) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015
Financial Information [Line Items]
Loans held for investment		$ 8,863,654	$ 9,112,382	$ 9,140,462
Less: allowance for loan and lease losses		(214,070)	(240,710)
Loans held for investment, net		8,649,584	8,871,672
Construction Loans [Member]
Financial Information [Line Items]
Loans held for investment		124,298	156,195
Residential Mortgage [Member]
Financial Information [Line Items]
Loans held for investment		3,299,942	3,344,719
Commercial Real Estate Portfolio Segment [Member]
Financial Information [Line Items]
Loans held for investment		1,545,014	1,537,806
Commercial Portfolio Segment [Member]
Financial Information [Line Items]
Loans held for investment		3,836,323	3,940,514
Commercial And Industrial Sector [Member]
Financial Information [Line Items]
Loans held for investment	[1]	2,167,011	2,246,513
Other Consumer Loans [Member]
Financial Information [Line Items]
Loans held for investment		1,497,812	1,597,984
Finance Leases [Member]
Financial Information [Line Items]
Loans held for investment		$ 229,577	$ 229,165

[1] As of September 30, 2016 and December 31, 2015, includes $949.9 million and $1.0 billion, respectively, of commercial loans that are secured by real estate but are not dependent upon the real estate for repayment.

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LOAN PORTFOLIO - Loan Portfolio Held for Investment (Parenthetical) (Detail) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2015	Sep. 30, 2016	Dec. 31, 2015
Financial Information [Line Items]
Classified And Non Performing Loans Sold	$ 147.5
Commercian Loans Collaterized By Real Estate		$ 949.9	$ 1,000.0

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LOAN PORTFOLIO - Loans Held for Investment on Which Accrual of Interest Income had been Discontinued (Detail) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Non-performing loans:
Total non-performing loans held for investment	[1],[2],[3]	$ 566,712	$ 442,773
Residential Mortgage [Member]
Non-performing loans:
Total non-performing loans held for investment		162,201	169,001
Commercial Mortgage [Member]
Non-performing loans:
Total non-performing loans held for investment		191,449	51,333
Commercial And Industrial [Member]
Non-performing loans:
Total non-performing loans held for investment		137,016	137,051
Consumer Auto Loans [Member]
Non-performing loans:
Total non-performing loans held for investment		14,615	17,435
Finance Leases [Member]
Non-performing loans:
Total non-performing loans held for investment		1,969	2,459
Consumer Retail Banking [Member]
Non-performing loans:
Total non-performing loans held for investment		8,695	10,858
Residential Construction [Member]
Non-performing loans:
Total non-performing loans held for investment		2,053	2,996
Commercial Construction [Member]
Non-performing loans:
Total non-performing loans held for investment		36,953	39,466
Land Construction [Member]
Non-performing loans:
Total non-performing loans held for investment		$ 11,761	$ 12,174

[1] Amount excludes purchased-credit impaired ("PCI") loans with a carrying value of approximately $168.1 million and $173.9 million as of September 30, 2016 and December 31, 2015, respectively, primarily mortgage loans acquired from Doral Bank in the first quarter of 2015 and from Doral Financial in the second quarter of 2014, as further discussed below. These loans are not considered non-performing due to the application of the accretion method, under which these loans will accrete interest income over the remaining life of the loans using an estimated cash flow analysis.

[2] As of September 30, 2016 and December 31, 2015, excludes $8.1 million of non-performing loans held for sale.

[3] Non-performing loans exclude $415.9 million and $414.9 million of Troubled Debt Restructuring ("TDR") loans that are in compliance with modified terms and in accrual status as of September 30, 2016 and December 31, 2015, respectively.

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LOAN PORTFOLIO - Loans Held for Investment on Which Accrual of Interest Income had been Discontinued (Parenthetical) (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Accounts Notes And Loans Receivable [Line Items]
Loans held for sale	$ 56,779	$ 35,869
Non Accrual [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans held for sale	$ 8,100	$ 8,100

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LOAN PORTFOLIO - Corporation's Aging of Loans Held for Investment Portfolio (Detail) - USD ($) $ in Thousands	Sep. 30, 2016		Jun. 30, 2016	Dec. 31, 2015		Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	$ 920,393			$ 841,188
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	168,141		$ 169,690	173,913		$ 176,085	$ 178,494	$ 102,604
Financing Receivable, Current	7,775,120			8,097,281
Loans held for investment	8,863,654			9,112,382		$ 9,140,462
90 days past due and still accruing	110,538	[1]		139,987	[2]
Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	118,315			164,889
Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	124,828			93,539
Financing Receivables Equal To Greater Than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	677,250	[3]		582,760	[4]
Fha Va And Other Government Guaranteed Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	86,987	[1],[5],[6]		96,216	[2],[7],[8]
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	0	[1],[5],[6]		0	[2],[7],[8]
Financing Receivable, Current	44,949	[1],[5],[6]		46,925	[2],[7],[8]
Loans held for investment	131,936	[1],[5],[6]		143,141	[2],[7],[8]
90 days past due and still accruing	81,677	[1],[5],[6]		90,168	[2],[7],[8]
Fha Va And Other Government Guaranteed Loans [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	5,310	[1],[5],[6]		6,048	[2],[7],[8]
Fha Va And Other Government Guaranteed Loans [Member] | Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	0	[1],[5],[6]		0	[2],[7],[8]
Fha Va And Other Government Guaranteed Loans [Member] | Financing Receivables Equal To Greater Than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	81,677	[1],[3],[5],[6]		90,168	[2],[4],[7],[8]
Residential Mortgage [Member]
Accounts Notes And Loans Receivable [Line Items]
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	165,014	[5]		170,766	[7]
Loans held for investment	3,299,942			3,344,719
Commercial And Industrial [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	183,951			162,882
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	0			0
Financing Receivable, Current	1,983,060			2,083,631
Loans held for investment	2,167,011			2,246,513
90 days past due and still accruing	1,468	[1]		13,842	[2]
Commercial And Industrial [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	500			6,412
Commercial And Industrial [Member] | Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	44,967			5,577
Commercial And Industrial [Member] | Financing Receivables Equal To Greater Than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	138,484	[3]		150,893	[4]
Commercial Mortgage Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	199,676	[5]		88,534	[7]
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	3,127	[5]		3,147	[7]
Financing Receivable, Current	1,342,211	[5]		1,446,125	[7]
Loans held for investment	1,545,014	[5]		1,537,806	[7]
90 days past due and still accruing	4,791	[1],[5]		12,472	[2],[7]
Commercial Mortgage Loans [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	3,436	[5]		24,729	[7]
Commercial Mortgage Loans [Member] | Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	0	[5]		0	[7]
Commercial Mortgage Loans [Member] | Financing Receivables Equal To Greater Than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	196,240	[3],[5]		63,805	[4],[7]
Construction Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans held for investment	124,298			156,195
Auto loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	91,828			105,058
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	0			0
Financing Receivable, Current	766,969			829,922
Loans held for investment	858,797			934,980
90 days past due and still accruing	0	[1]		0	[2]
Auto loans [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	13,743			16,787
Auto loans [Member] | Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	63,470			70,836
Auto loans [Member] | Financing Receivables Equal To Greater Than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	14,615	[3]		17,435	[4]
Finance Leases [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	12,480			13,223
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	0			0
Financing Receivable, Current	217,097			215,942
Loans held for investment	229,577			229,165
90 days past due and still accruing	0	[1]		0	[2]
Finance Leases [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	2,312			3,100
Finance Leases [Member] | Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	8,199			7,664
Finance Leases [Member] | Financing Receivables Equal To Greater Than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	1,969	[3]		2,459	[4]
Consumer Loan [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	25,822			30,110
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	0			0
Financing Receivable, Current	613,193			632,894
Loans held for investment	639,015			663,004
90 days past due and still accruing	4,111	[1]		4,266	[2]
Consumer Loan [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	4,824			5,524
Consumer Loan [Member] | Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	8,192			9,462
Consumer Loan [Member] | Financing Receivables Equal To Greater Than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	12,806	[3]		15,124	[4]
Commercial Construction [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	36,953	[5]		51,188
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	0	[5]		0	[7]
Financing Receivable, Current	38,460	[5]		32,142
Loans held for investment	75,413	[5]		83,330
90 days past due and still accruing	0	[1],[5]		0	[2]
Commercial Construction [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	0	[5]		11,722
Commercial Construction [Member] | Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	0	[5]		0
Commercial Construction [Member] | Financing Receivables Equal To Greater Than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	36,953	[3],[5]		39,466	[4]
Residential Construction [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	2,721	[5]		6,042	[7]
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	0	[5]		0	[7]
Financing Receivable, Current	12,767	[5]		14,949	[7]
Loans held for investment	15,488	[5]		20,991	[7]
90 days past due and still accruing	668	[1],[5]		3,046	[2],[7]
Residential Construction [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	0	[5]		0	[7]
Residential Construction [Member] | Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	0	[5]		0	[7]
Residential Construction [Member] | Financing Receivables Equal To Greater Than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	2,721	[3],[5]		6,042	[4],[7]
Land Construction [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	12,902	[5]		12,511	[7]
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	0			0	[7]
Financing Receivable, Current	20,495	[5]		39,363	[7]
Loans held for investment	33,397	[5]		51,874	[7]
90 days past due and still accruing	376	[1],[5]		176	[2],[7]
Land Construction [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	765	[5]		161	[7]
Land Construction [Member] | Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	0	[5]		0	[7]
Land Construction [Member] | Financing Receivables Equal To Greater Than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	12,137	[3],[5]		12,350	[4],[7]
Other Residential Mortgage Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	267,073	[5]		275,424
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	165,014	[5]		170,766	[7]
Financing Receivable, Current	2,735,919	[5]		2,755,388
Loans held for investment	3,168,006	[5]		3,201,578
90 days past due and still accruing	17,447	[5]		16,017
Other Residential Mortgage Loans [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	87,425	[5]		90,406
Other Residential Mortgage Loans [Member] | Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	0	[5]		0
Other Residential Mortgage Loans [Member] | Financing Receivables Equal To Greater Than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	$ 179,648	[3],[5]		$ 185,018

[1] It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past-due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $29.6 million of residential mortgage loans insured by the FHA or guaranteed by the VA, which are over 15 months delinquent and are no longer accruing interest as of September 30, 2016.

[2] It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past-due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $37.3 million of residential mortgage loans insured by the FHA or guaranteed by the VA, which are over 15 months delinquent and are no longer accruing interest as of December 31, 2015.

[3] Includes non-performing loans and accruing loans that are contractually delinquent 90 days or more (i.e., FHA/VA guaranteed loans and credit cards). Credit card loans continue to accrue finance charges and fees until charged-off at 180 days.

[4] Includes non-performing loans and accruing loans that are contractually delinquent 90 days or more (i.e. FHA/VA guaranteed loans and credit cards). Credit card loans continue to accrue finance charges and fees until charged-off at 180 days.

[5] According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears two or more monthly payments. FHA/VA government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans and construction-residential loans past due 30-59 days as of September 30, 2016 amounted to $8.7 million, $144.3 million, $7.6 million, $0.7 million and $0.3 million, respectively.

[6] As of September 30, 2016, includes $45.6 million of defaulted loans collateralizing Government National Mortgage Association ("GNMA") securities for which the Corporation has an unconditional option (but not an obligation) to repurchase the defaulted loans.

[7] According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears two or more monthly payments. FHA/VA government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans and construction-residential loans past due 30-59 days as of December 31, 2015 amounted to $11.0 million, $162.9 million, $38.6 million, $5.7 million and $0.8 million, respectively.

[8] As of December 31, 2015, includes $38.5 million of defaulted loans collateralizing GNMA securities for which the Corporation has an unconditional option (but not an obligation) to repurchase the defaulted loans.

XML

LOAN PORTFOLIO - Corporation's Aging of Loans Held for Investment Portfolio (Parenthetical) (Detail) $ in Millions	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2016 USD ($) numberofpayments	Sep. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)
Accounts Notes And Loans Receivable [Line Items]
Loans considered to be defaulted if borrower has failed to make payment for a period or more than the period		2 months 29 days	2 months 29 days
Period during which credit card loans continue to accrue finance charges and fees		5 months 27 days	5 months 27 days
Defaulted loans collateralizing Ginnie Mae (GNMA) securities	$ 45.6	$ 45.6	$ 38.5
Minimum Number of Payments in Arrears to Consider Commercial Mortgage and Construction Loan as Past Due | numberofpayments	2
Residential mortgage loans insured by FHA or guaranteed by the VA	$ 29.6	$ 29.6	$ 37.3
Period of residential mortgage loan that are no longer accruing interest	1 year 3 months	1 year 3 months	1 year 3 months
Fha Va And Other Government Guaranteed Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days past due Mortgages	$ 8.7	$ 8.7	$ 11.0
Commercial Mortgage Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days past due Mortgages	7.6	7.6	38.6
Residential Construction [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days past due Mortgages	0.3	0.3	0.8
Land Construction [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days past due Mortgages	0.7	0.7	5.7
Other Residential Mortgage Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days past due Mortgages	$ 144.3	$ 144.3	$ 162.9

XML

LOAN PORTFOLIO - Corporation's Credit Quality Indicators by Loan (Detail) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Financing Receivable Recorded Investment [Line Items]
Commercial mortgage loans		$ 1,545,014	$ 1,537,806
Commercial and Industrial loans		2,167,011	2,246,513
Land		33,397	51,874
Residential Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans		15,488	20,991
Commercial Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans		75,413	83,330
Substandard [Member]
Financing Receivable Recorded Investment [Line Items]
Commercial mortgage loans		218,523	252,941
Commercial and Industrial loans		159,498	140,827
Land		20,175	14,035
Substandard [Member] | Residential Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans		2,053	2,996
Substandard [Member] | Commercial Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans		36,953	39,466
Doubtful [Member]
Financing Receivable Recorded Investment [Line Items]
Commercial mortgage loans		36,211	140
Commercial and Industrial loans		72,806	71,341
Land		0	1
Doubtful [Member] | Residential Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans		0	0
Doubtful [Member] | Commercial Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans		0	0
Unlikely To Be Collected Financing Receivable [Member]
Financing Receivable Recorded Investment [Line Items]
Commercial mortgage loans		0	0
Commercial and Industrial loans		445	354
Land		0	0
Unlikely To Be Collected Financing Receivable [Member] | Residential Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans		0	0
Unlikely To Be Collected Financing Receivable [Member] | Commercial Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans		0	0
Total Adversely Classified [Member]
Financing Receivable Recorded Investment [Line Items]
Commercial mortgage loans	[1]	254,734	253,081
Commercial and Industrial loans	[1]	232,749	212,522
Land	[1]	20,175	14,036
Total Adversely Classified [Member] | Residential Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans	[1]	2,053	2,996
Total Adversely Classified [Member] | Commercial Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans	[1]	$ 36,953	$ 39,466

[1] Excludes $8.1 million as of September 30, 2016 and December 31, 2015, of construction-land non-performing loans held for sale.

XML

LOAN PORTFOLIO - Credit Risk Payment Activity (Detail) - USD ($) $ in Thousands	Sep. 30, 2016		Dec. 31, 2015		Sep. 30, 2015
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	$ 8,863,654		$ 9,112,382		$ 9,140,462
Other Residential Mortgage Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	3,168,006	[1]	3,201,578
Auto loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	858,797		934,980
Finance Leases [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	229,577		229,165
Other Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	1,497,812		1,597,984
Residential Real Estate [Member] | Fhava Guaranteed Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	131,936	[2]	143,141	[3]
Residential Real Estate [Member] | Other Residential Mortgage Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	3,168,006		3,201,578
Residential Real Estate [Member] | Performing Financing Receivable [Member] | Fhava Guaranteed Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	131,936	[2]	143,141	[3]
Residential Real Estate [Member] | Performing Financing Receivable [Member] | Other Residential Mortgage Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	2,840,791		2,861,811
Residential Real Estate [Member] | Purchased Credit Impaired [Member] | Fhava Guaranteed Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	0	[2],[4]	0	[3],[5]
Residential Real Estate [Member] | Purchased Credit Impaired [Member] | Other Residential Mortgage Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	165,014	[4]	170,766	[5]
Residential Real Estate [Member] | Nonperforming Financing Receivable [Member] | Fhava Guaranteed Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	0	[2]	0	[3]
Residential Real Estate [Member] | Nonperforming Financing Receivable [Member] | Other Residential Mortgage Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	162,201		169,001
Consumer [Member] | Auto loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	858,797		934,980
Consumer [Member] | Finance Leases [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	229,577		229,165
Consumer [Member] | Other Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	639,015		663,004
Consumer [Member] | Performing Financing Receivable [Member] | Auto loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	844,182		917,545
Consumer [Member] | Performing Financing Receivable [Member] | Finance Leases [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	227,608		226,706
Consumer [Member] | Performing Financing Receivable [Member] | Other Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	630,320		652,146
Consumer [Member] | Purchased Credit Impaired [Member] | Auto loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	0	[4]	0	[5]
Consumer [Member] | Purchased Credit Impaired [Member] | Finance Leases [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	0	[4]	0	[5]
Consumer [Member] | Purchased Credit Impaired [Member] | Other Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	0	[4]	0	[5]
Consumer [Member] | Nonperforming Financing Receivable [Member] | Auto loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	14,615		17,435
Consumer [Member] | Nonperforming Financing Receivable [Member] | Finance Leases [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	1,969		2,459
Consumer [Member] | Nonperforming Financing Receivable [Member] | Other Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	$ 8,695		$ 10,858

[1] According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears two or more monthly payments. FHA/VA government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans and construction-residential loans past due 30-59 days as of September 30, 2016 amounted to $8.7 million, $144.3 million, $7.6 million, $0.7 million and $0.3 million, respectively.

[2] It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $29.6 million of residential mortgage loans insured by the FHA or guaranteed by the VA, which are over 15 months delinquent and are no longer accruing interest as of September 30, 2016.

[3] It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $37.3 million of residential mortgage loans insured by the FHA or guaranteed by the VA, which are over 15 months delinquent and are no longer accruing interest as of December 31, 2015.

[4] PCI loans are excluded from non-performing statistics due to the application of the accretion method, under which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.

[5] PCI loans are excluded from non-performing statistics due to the application of the accretion method, under which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.

XML

LOAN PORTFOLIO - Credit Risk Payment Activity (Parenthetical) (Detail) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Dec. 31, 2015
Financing Receivable Recorded Investment [Line Items]
Residential mortgage loans insured by FHA or guaranteed by the VA	$ 29,600	$ 29,600	$ 37,300
Period of residential mortgage loan that are no longer accruing interest	1 year 3 months	1 year 3 months	1 year 3 months
Loans considered to be defaulted if borrower has failed to make payment for a period or more than the period		2 months 29 days	2 months 29 days
Loans held for sale	$ 56,779	$ 56,779	$ 35,869
Non Accrual [Member]
Financing Receivable Recorded Investment [Line Items]
Loans held for sale	$ 8,100	$ 8,100	$ 8,100

XML

LOAN PORTFOLIO - Impaired loans (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	$ 139,083		$ 139,083		$ 192,165
Unpaid Principal Balance with no Related Allowance	176,513		176,513		217,897
Average Recorded Investment No Related Allowance			150,234		196,175
Interest Income with no Related Allowance Accrual Basis	376		1,058
Interest Income with No Related Allowance Cash Basis	247		1,185
Recorded Investment with Related Allowance	773,771		773,771		614,344
Unpaid Principal Balance with Related Allowance	877,001		877,001		699,270
Related Allowance	72,682	$ 51,859	72,682	$ 51,859	52,581	$ 86,372	$ 49,918	$ 55,205
Average Recorded Investment With Related Allowance			799,957		629,855
Interest Income with Related Allowance Accrual Basis	6,051		17,793
Interest Income with Realted Allowance Cash Basis	514		1,641
Recorded Investment	912,854	842,713	912,854	842,713	806,509	$ 953,774	$ 824,816	$ 945,407
Unpaid Principal Balance	1,053,514		1,053,514		917,167
Average Recorded Investments			950,191		826,030
Interest Income on Impaired Loans Accrual Basis	6,427	6,900	18,851	19,800
Interest Income on Impaired Loans Cash Basis	761	900	2,826	5,000
Fhava Guaranteed Loans [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	0		0		0
Unpaid Principal Balance with no Related Allowance	0		0		0
Average Recorded Investment No Related Allowance			0		0
Interest Income with no Related Allowance Accrual Basis	0		0
Interest Income with No Related Allowance Cash Basis	0		0
Recorded Investment with Related Allowance	0		0		0
Unpaid Principal Balance with Related Allowance	0		0		0
Related Allowance	0		0		0
Average Recorded Investment With Related Allowance			0		0
Interest Income with Related Allowance Accrual Basis	0		0
Interest Income with Realted Allowance Cash Basis	0		0
Recorded Investment	0		0		0
Unpaid Principal Balance	0		0		0
Average Recorded Investments			0		0
Interest Income on Impaired Loans Accrual Basis	0		0
Interest Income on Impaired Loans Cash Basis	0		0
Other Residential Mortgage Loans [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	64,198		64,198		65,495
Unpaid Principal Balance with no Related Allowance	78,361		78,361		74,146
Average Recorded Investment No Related Allowance			67,024		67,282
Interest Income with no Related Allowance Accrual Basis	139		376
Interest Income with No Related Allowance Cash Basis	103		496
Recorded Investment with Related Allowance	379,841		379,841		395,173
Unpaid Principal Balance with Related Allowance	428,395		428,395		440,947
Related Allowance	9,667		9,667		21,787
Average Recorded Investment With Related Allowance			385,052		398,790
Interest Income with Related Allowance Accrual Basis	4,396		13,160
Interest Income with Realted Allowance Cash Basis	375		1,192
Recorded Investment	444,039		444,039		460,668
Unpaid Principal Balance	506,756		506,756		515,093
Average Recorded Investments			452,076		466,072
Interest Income on Impaired Loans Accrual Basis	4,535		13,536
Interest Income on Impaired Loans Cash Basis	478		1,688
Commercial Mortgage Loans [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	51,974		51,974		54,048
Unpaid Principal Balance with no Related Allowance	63,759		63,759		66,448
Average Recorded Investment No Related Allowance			56,826		54,967
Interest Income with no Related Allowance Accrual Basis	206		599
Interest Income with No Related Allowance Cash Basis	119		609
Recorded Investment with Related Allowance	146,526		146,526		27,479
Unpaid Principal Balance with Related Allowance	166,066		166,066		40,634
Related Allowance	25,907		25,907		3,073
Average Recorded Investment With Related Allowance			152,753		30,518
Interest Income with Related Allowance Accrual Basis	136		339
Interest Income with Realted Allowance Cash Basis	57		179
Recorded Investment	198,500		198,500		81,527
Unpaid Principal Balance	229,825		229,825		107,082
Average Recorded Investments			209,579		85,485
Interest Income on Impaired Loans Accrual Basis	342		938
Interest Income on Impaired Loans Cash Basis	176		788
Commercial And Industrial Loan [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	17,069		17,069		27,492
Unpaid Principal Balance with no Related Allowance	26,672		26,672		29,957
Average Recorded Investment No Related Allowance			20,407		28,326
Interest Income with no Related Allowance Accrual Basis	13		13
Interest Income with No Related Allowance Cash Basis	0		0
Recorded Investment with Related Allowance	161,105		161,105		143,214
Unpaid Principal Balance with Related Allowance	189,683		189,683		164,050
Related Allowance	28,668		28,668		18,096
Average Recorded Investment With Related Allowance			171,575		148,547
Interest Income with Related Allowance Accrual Basis	618		1,708
Interest Income with Realted Allowance Cash Basis	49		203
Recorded Investment	178,174		178,174		170,706
Unpaid Principal Balance	216,355		216,355		194,007
Average Recorded Investments			191,982		176,873
Interest Income on Impaired Loans Accrual Basis	631		1,721
Interest Income on Impaired Loans Cash Basis	49		203
Construction Loans [Member]
Financing Receivable Impaired [Line Items]
Related Allowance	3,004	2,128	3,004	2,128
Recorded Investment	47,707	$ 66,123	47,707	$ 66,123
Consumer Auto Loans [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	888		888		0
Unpaid Principal Balance with no Related Allowance	888		888		0
Average Recorded Investment No Related Allowance			901		0
Interest Income with no Related Allowance Accrual Basis	6		10
Interest Income with No Related Allowance Cash Basis	0		0
Recorded Investment with Related Allowance	24,135		24,135		21,581
Unpaid Principal Balance with Related Allowance	24,135		24,135		21,581
Related Allowance	3,674		3,674		6,653
Average Recorded Investment With Related Allowance			25,913		23,531
Interest Income with Related Allowance Accrual Basis	476		1,379
Interest Income with Realted Allowance Cash Basis	0		0
Recorded Investment	25,023		25,023		21,581
Unpaid Principal Balance	25,023		25,023		21,581
Average Recorded Investments			26,814		23,531
Interest Income on Impaired Loans Accrual Basis	482		1,389
Interest Income on Impaired Loans Cash Basis	0		0
Finance Leases [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	168		168		0
Unpaid Principal Balance with no Related Allowance	168		168		0
Average Recorded Investment No Related Allowance			168		0
Interest Income with no Related Allowance Accrual Basis	1		1
Interest Income with No Related Allowance Cash Basis	0		0
Recorded Investment with Related Allowance	2,408		2,408		2,077
Unpaid Principal Balance with Related Allowance	2,408		2,408		2,077
Related Allowance	62		62		86
Average Recorded Investment With Related Allowance			2,493		2,484
Interest Income with Related Allowance Accrual Basis	48		150
Interest Income with Realted Allowance Cash Basis	0		0
Recorded Investment	2,576		2,576		2,077
Unpaid Principal Balance	2,576		2,576		2,077
Average Recorded Investments			2,661		2,484
Interest Income on Impaired Loans Accrual Basis	49		151
Interest Income on Impaired Loans Cash Basis	0		0
Other Consumer Loans [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	3,770		3,770		2,618
Unpaid Principal Balance with no Related Allowance	5,045		5,045		4,300
Average Recorded Investment No Related Allowance			3,892		2,766
Interest Income with no Related Allowance Accrual Basis	11		59
Interest Income with No Related Allowance Cash Basis	25		80
Recorded Investment with Related Allowance	13,065		13,065		13,816
Unpaid Principal Balance with Related Allowance	13,448		13,448		14,043
Related Allowance	1,700		1,700		1,684
Average Recorded Investment With Related Allowance			13,868		14,782
Interest Income with Related Allowance Accrual Basis	356		1,005
Interest Income with Realted Allowance Cash Basis	15		32
Recorded Investment	16,835		16,835		16,434
Unpaid Principal Balance	18,493		18,493		18,343
Average Recorded Investments			17,760		17,548
Interest Income on Impaired Loans Accrual Basis	367		1,064
Interest Income on Impaired Loans Cash Basis	40		112
Commercial Construction [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	0		0		39,466
Unpaid Principal Balance with no Related Allowance	0		0		40,000
Average Recorded Investment No Related Allowance			0		39,736
Interest Income with no Related Allowance Accrual Basis	0		0
Interest Income with No Related Allowance Cash Basis	0		0
Recorded Investment with Related Allowance	36,953		36,953		0
Unpaid Principal Balance with Related Allowance	38,781		38,781		0
Related Allowance	1,977		1,977		0
Average Recorded Investment With Related Allowance			38,516		0
Interest Income with Related Allowance Accrual Basis	0		0
Interest Income with Realted Allowance Cash Basis	0		0
Recorded Investment	36,953		36,953		39,466
Unpaid Principal Balance	38,781		38,781		40,000
Average Recorded Investments			38,516		39,736
Interest Income on Impaired Loans Accrual Basis	0		0
Interest Income on Impaired Loans Cash Basis	0		0
Residential Construction [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	956		956		3,046
Unpaid Principal Balance with no Related Allowance	1,531		1,531		3,046
Average Recorded Investment No Related Allowance			956		3,098
Interest Income with no Related Allowance Accrual Basis	0		0
Interest Income with No Related Allowance Cash Basis	0		0
Recorded Investment with Related Allowance	392		392		1,426
Unpaid Principal Balance with Related Allowance	551		551		2,180
Related Allowance	124		124		142
Average Recorded Investment With Related Allowance			392		1,476
Interest Income with Related Allowance Accrual Basis	0		0
Interest Income with Realted Allowance Cash Basis	0		0
Recorded Investment	1,348		1,348		4,472
Unpaid Principal Balance	2,082		2,082		5,226
Average Recorded Investments			1,348		4,574
Interest Income on Impaired Loans Accrual Basis	0		0
Interest Income on Impaired Loans Cash Basis	0		0
Land Construction [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	60		60		0
Unpaid Principal Balance with no Related Allowance	89		89		0
Average Recorded Investment No Related Allowance			60		0
Interest Income with no Related Allowance Accrual Basis	0		0
Interest Income with No Related Allowance Cash Basis	0		0
Recorded Investment with Related Allowance	9,346		9,346		9,578
Unpaid Principal Balance with Related Allowance	13,534		13,534		13,758
Related Allowance	903		903		1,060
Average Recorded Investment With Related Allowance			9,395		9,727
Interest Income with Related Allowance Accrual Basis	21		52
Interest Income with Realted Allowance Cash Basis	18		35
Recorded Investment	9,406		9,406		9,578
Unpaid Principal Balance	13,623		13,623		13,758
Average Recorded Investments			9,455		$ 9,727
Interest Income on Impaired Loans Accrual Basis	21		52
Interest Income on Impaired Loans Cash Basis	$ 18		$ 35

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LOAN PORTFOLIO - Additional Information (Detail) - USD ($) $ in Thousands		3 Months Ended					9 Months Ended			12 Months Ended
		Sep. 30, 2016		Jun. 30, 2016	Sep. 30, 2015	Jun. 30, 2015	Sep. 30, 2016		Sep. 30, 2015	Dec. 31, 2015		May 31, 2016	Dec. 31, 2014
Accounts Notes And Loans Receivable [Line Items]
Interest Income Impaired Loans					$ 7,800				$ 24,800
Interest Income on Impaired Loans Accrual Basis		$ 6,427			6,900		$ 18,851		19,800
Contractually outstanding principal and interest at acquisition		210,600					210,600			$ 218,100
Financing Receivable Significant Purchases							65,200
Securitization of mortgage loans into mortgage backed securities							238,600
Total gross loans held for investment portfolio		8,863,654			9,140,462		8,863,654		9,140,462	9,112,382
Total TDR loans		656,318		$ 670,991	681,963	$ 634,761	656,318		681,963	661,591			$ 694,453
Outstanding unfunded commitments on TDR loans		5,700					5,700
Provsion of PCI Loans		0			0		2,895		3,163
Classified and non-performing loans sold						147,500
Other real estate owned sold						2,900
Sale price of bulk sale						87,300
Reserves allocated to bulk sale						15,300
Total charge-offs bulk sale						61,400
Porfessional fees						900
Pre-tax loss						48,700
Loans held for sale		56,779					56,779			35,869
Proceeds From Sale Of Loans Held For Investment							20,186		107,702
Puerto Rico Housing Finance Authority Restricted Net Position						77,400
Puerto Rico Housing Finance Authority Covered Loans						552,000
Threshold Mortgage Loans Principal Amount Puerto Rico Housing Financing Authority		$ 75,000					75,000
Principal Payment Defaulted Government												$ 367,000
Reserve Coverage Ratio		16.00%
Puerto Rico Government General Obligations Moratorium On Payment				780,000
Puerto Rico Government Development Bank Interest Payment Default		$ 28,000
Interest Paid							104,031		70,016
Financing Receivable Allowance For Credit Losses Write Offs Impaired Loans	[1]	30,426			7,498		50,027		90,026
Impaired Financing Receivable Related Allowance		72,682		86,372	51,859	49,918	72,682		51,859	52,581			$ 55,205
Mortgage Loans In Process Of Foreclosure Amount		135,000					$ 135,000
Mortgage Loans Foreclosure Delinquency Threshold							3 months 28 days
Puerto Rico Tourism Development Fund [Member]
Accounts Notes And Loans Receivable [Line Items]
Outstanding of credit facilities granted		128,000					$ 128,000			129,400
Financing Receivable Commercial Governments Book Value		112,800					112,800
Financing Receivable Commercial Governments Collections							600			5,300
Proceeds From Interest Received							$ 1,600
Financing Receivable Allowance For Credit Losses Write Offs Impaired Loans		$ 13,700
Impaired Financing Receivable Related Allowance				$ 12,800
Unpaid Principal Balance Percentage		76.00%					76.00%
GNMA
Accounts Notes And Loans Receivable [Line Items]
Loans repurchased							$ 20,900		10,600
FNMA and FHLMC
Accounts Notes And Loans Receivable [Line Items]
Loans repurchased							700		1,300
Residential Mortgage [Member]
Accounts Notes And Loans Receivable [Line Items]
Total gross loans held for investment portfolio		$ 3,299,942			3,330,089		3,299,942		3,330,089
Impaired Financing Receivable Related Allowance		9,667			18,705		9,667		18,705
Government Guaranteed Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Financing Receivable Significant Sales							108,500
Total TDR loans		67,900					67,900			77,600
Government Guaranteed Residential Mortgage Loans Indirect Exposure		121,400					121,400
Loans in trial [Member]
Accounts Notes And Loans Receivable [Line Items]
Total TDR loans		5,600					5,600
Non Accrual [Member]
Accounts Notes And Loans Receivable [Line Items]
Total TDR loans		240,399	[2]				240,399	[2]		246,683	[3]
Troubled Debt Restructurings [Member]
Accounts Notes And Loans Receivable [Line Items]
Allowance For Loan And Lease Losses Write Offs Net Loans Sold					45,300
Loans Split [Member]
Accounts Notes And Loans Receivable [Line Items]
Total TDR loans		38,004			40,632		38,004		40,632
Financing receivable loans restructured recorded investment accruals		37,900
Non Fha Va Residential Mortgage Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Total TDR loans		378,721					378,721			382,672
Commercial And Industrial Loan [Member]
Accounts Notes And Loans Receivable [Line Items]
Interest Income on Impaired Loans Accrual Basis		631					1,721
Total TDR loans		150,890					150,890			150,254
Classified and non-performing loans sold						45,800
Impaired Financing Receivable Related Allowance		28,668					28,668			18,096
Commercial Mortgage Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Interest Income on Impaired Loans Accrual Basis		342					938
Total TDR loans		43,972					43,972			44,498
Classified and non-performing loans sold						90,700
Proceeds From Sale Of Loans Held For Investment							20,200		20,000
Impaired Financing Receivable Related Allowance		25,907					25,907			3,073
Construction Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Total gross loans held for investment portfolio		124,298			163,956		124,298		163,956
Total TDR loans		40,200					40,200
Classified and non-performing loans sold						$ 11,000
Impaired Financing Receivable Related Allowance		3,004			2,128		3,004		2,128
Consumer Loan [Member]
Accounts Notes And Loans Receivable [Line Items]
Total gross loans held for investment portfolio		1,727,389			1,861,555		1,727,389		1,861,555
Total TDR loans		42,500					42,500
Impaired Financing Receivable Related Allowance		5,436			$ 8,600		5,436		8,600
Commercial Construction [Member]
Accounts Notes And Loans Receivable [Line Items]
Interest Income on Impaired Loans Accrual Basis		0					0
Total TDR loans		36,953					36,953			39,466
Impaired Financing Receivable Related Allowance		1,977					1,977			0
Residential Construction [Member]
Accounts Notes And Loans Receivable [Line Items]
Interest Income on Impaired Loans Accrual Basis		0					0
Total TDR loans		357					357			3,482
Impaired Financing Receivable Related Allowance		124					124			142
Land Construction [Member]
Accounts Notes And Loans Receivable [Line Items]
Interest Income on Impaired Loans Accrual Basis		21					52
Total TDR loans		2,880					2,880			2,766
Impaired Financing Receivable Related Allowance		903					$ 903			1,060
P R
Accounts Notes And Loans Receivable [Line Items]
Credit risk concentration							78.00%
Outstanding of credit facilities granted		134,000					$ 134,000			153,200
Financing Receivable Commercial Governments Book Value		126,200					126,200
P R | Puerto Rico Government and Political Subdivisions [Member]
Accounts Notes And Loans Receivable [Line Items]
Outstanding of credit facilities granted		35,700					35,700
P R | Public Corporations [Member]
Accounts Notes And Loans Receivable [Line Items]
Outstanding of credit facilities granted		91,400					91,400
Financing Receivable Commercial Governments Book Value		83,700					83,700
P R | Government [Member]
Accounts Notes And Loans Receivable [Line Items]
Outstanding of credit facilities granted		6,900					6,900
P R | Puerto Rico Electric PowerAuthority [Member]
Accounts Notes And Loans Receivable [Line Items]
Outstanding of credit facilities granted		74,600					74,600
Financing Receivable Commercial Governments Book Value		66,900					$ 66,900
V I
Accounts Notes And Loans Receivable [Line Items]
Credit risk concentration							7.00%
Outstanding of credit facilities granted		$ 65,600					$ 65,600			$ 126,200
U S
Accounts Notes And Loans Receivable [Line Items]
Credit risk concentration							15.00%
Impaired Financing Receivable [Member]
Accounts Notes And Loans Receivable [Line Items]
Allowance For Loan And Lease Losses Write Offs Net Loans Sold									$ 63,900

[1] For the nine-month period ended September 30, 2015, includes $63.9 million of charge-offs related to a bulk sale of assets completed in the second quarter of 2015, mostly comprised of non-performing and adversely classified commercial loans, as further discussed below.

[2] Included in non-accrual loans are $121.3 million in loans that are performing under the terms of the restructuring agreement but are reported in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and are deemed fully collectible.

[3] Included in non-accrual loans are $118.2 million in loans that are performing under the terms of the restructuring agreement but are reported in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and there is no doubt about full collectability.

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LOAN PORTFOLIO - Activity for Impaired Loans (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Impaired Loans:
Balance at beginning of period		$ 953,774	$ 824,816	$ 806,509	$ 945,407
Loans determined impaired during the period		26,613	37,528	261,544	135,350
Charge-offs	[1]	(30,426)	(7,498)	(50,027)	(90,026)
Loans sold, net charge-offs		0	0	0	(67,836)
Increases to impaired loans (disbursements)		1,091	408	2,852	2,524
Foreclosures		(11,856)	(12,858)	(28,466)	(33,044)
Loans no longer considered impaired		(2,674)	(25,877)	(27,560)	(39,062)
Paid in full or partial payments		(23,668)	(13,811)	(51,998)	(50,605)
Transfer Of Impaired Loans Held For Sale To Portfolio Loans	[2]	0	40,005	0	40,005
Balance at end of period		$ 912,854	$ 842,713	$ 912,854	$ 842,713

[1] For the nine-month period ended September 30, 2015, includes $63.9 million of charge-offs related to a bulk sale of assets completed in the second quarter of 2015, mostly comprised of non-performing and adversely classified commercial loans, as further discussed below.

[2] During the third quarter of 2015, upon the signing of a new agreement with the borrower, the Corporation changed its intent to sell a $40.0 million construction loan in the Virgin Islands. Accordingly, the loan was transferred back from held for sale to held for investment.

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LOAN PORTFOLIO - Activity for Specific Reserve (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Specific Reserve:
Balance at beginning of period	$ 86,372	$ 49,918	$ 52,581	$ 55,205
Provision for loan losses	16,619	9,439	70,011	81,796
Financing Receivable Allowance For Credit Losses Net Write Offs Impaired Loans	(30,309)	(7,498)	(49,910)	(85,142)
Balance at end of period	$ 72,682	$ 51,859	$ 72,682	$ 51,859

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LOAN PORTFOLIO- Carrying Value of Purchased Credit Impaired Loans (Detail) - USD ($) $ in Thousands	Sep. 30, 2016		Jun. 30, 2016	Dec. 31, 2015		Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable Impaired [Line Items]
Purchased Credit Impaired Loans	$ 168,141		$ 169,690	$ 173,913		$ 176,085	$ 178,494	$ 102,604
Allowance for loan losses Purchased Credit Impaired	(6,857)		$ (6,857)	(3,962)		(3,163)	$ (3,163)	$ 0
Purchased Credit Impaired Loans, Net	161,284			169,951		$ 172,922
Residential Mortgage Loans [Member]
Financing Receivable Impaired [Line Items]
Purchased Credit Impaired Loans	165,014	[1]		170,766	[2]
Commercial Mortgage Loans [Member]
Financing Receivable Impaired [Line Items]
Purchased Credit Impaired Loans	$ 3,127	[1]		$ 3,147	[2]

[1] According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears two or more monthly payments. FHA/VA government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans and construction-residential loans past due 30-59 days as of September 30, 2016 amounted to $8.7 million, $144.3 million, $7.6 million, $0.7 million and $0.3 million, respectively.

[2] According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears two or more monthly payments. FHA/VA government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans and construction-residential loans past due 30-59 days as of December 31, 2015 amounted to $11.0 million, $162.9 million, $38.6 million, $5.7 million and $0.8 million, respectively.

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LOAN PORTFOLIO- Corporation's Aging of Purchased Credit Impaired Loans (Detail) - USD ($) $ in Thousands	Sep. 30, 2016		Dec. 31, 2015		Sep. 30, 2015
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	$ 920,393		$ 841,188
Financing Receivable, Current	7,775,120		8,097,281
Loans held for investment	8,863,654		9,112,382		$ 9,140,462
90 days past due and still accruing	110,538	[1]	139,987	[2]
Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	118,315		164,889
Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	124,828		93,539
Financing Receivables Equal To Greater Than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	677,250	[3]	582,760	[4]
Purchased Credit Impaired Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	39,952		39,304
Financing Receivable, Current	128,189		134,609
Loans held for investment	168,141		173,913
Purchased Credit Impaired Loans [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	12,048		16,094
Purchased Credit Impaired Loans [Member] | Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	0		0
Purchased Credit Impaired Loans [Member] | Financing Receivables Equal To Greater Than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	27,904		23,210
Residential Mortgage [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans held for investment	3,299,942		3,344,719
Residential Mortgage [Member] | Purchased Credit Impaired Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	38,669	[5]	38,312	[6]
Financing Receivable, Current	126,345	[5]	132,454	[6]
Loans held for investment	165,014	[5]	170,766	[6]
30-59 Days past due Mortgages	22,300		23,600
Residential Mortgage [Member] | Purchased Credit Impaired Loans [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	12,048	[5]	16,094	[6]
Residential Mortgage [Member] | Purchased Credit Impaired Loans [Member] | Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	0	[5]	0	[6]
Residential Mortgage [Member] | Purchased Credit Impaired Loans [Member] | Financing Receivables Equal To Greater Than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	26,621	[5]	22,218	[6]
Commercial Mortgage Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	199,676	[7]	88,534	[8]
Financing Receivable, Current	1,342,211	[7]	1,446,125	[8]
Loans held for investment	1,545,014	[7]	1,537,806	[8]
90 days past due and still accruing	4,791	[1],[7]	12,472	[2],[8]
30-59 Days past due Mortgages	7,600		38,600
Commercial Mortgage Loans [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	3,436	[7]	24,729	[8]
Commercial Mortgage Loans [Member] | Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	0	[7]	0	[8]
Commercial Mortgage Loans [Member] | Financing Receivables Equal To Greater Than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	196,240	[3],[7]	63,805	[4],[8]
Commercial Mortgage Loans [Member] | Purchased Credit Impaired Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	1,283	[5]	992	[6]
Financing Receivable, Current	1,844	[5]	2,155	[6]
Loans held for investment	3,127	[5]	3,147	[6]
30-59 Days past due Mortgages	400
Commercial Mortgage Loans [Member] | Purchased Credit Impaired Loans [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	0	[5]	0	[6]
Commercial Mortgage Loans [Member] | Purchased Credit Impaired Loans [Member] | Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	0	[5]	0	[6]
Commercial Mortgage Loans [Member] | Purchased Credit Impaired Loans [Member] | Financing Receivables Equal To Greater Than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	$ 1,283	[5]	$ 992	[6]

[1] It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past-due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $29.6 million of residential mortgage loans insured by the FHA or guaranteed by the VA, which are over 15 months delinquent and are no longer accruing interest as of September 30, 2016.

[2] It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past-due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $37.3 million of residential mortgage loans insured by the FHA or guaranteed by the VA, which are over 15 months delinquent and are no longer accruing interest as of December 31, 2015.

[3] Includes non-performing loans and accruing loans that are contractually delinquent 90 days or more (i.e., FHA/VA guaranteed loans and credit cards). Credit card loans continue to accrue finance charges and fees until charged-off at 180 days.

[4] Includes non-performing loans and accruing loans that are contractually delinquent 90 days or more (i.e. FHA/VA guaranteed loans and credit cards). Credit card loans continue to accrue finance charges and fees until charged-off at 180 days.

[5] According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage and commercial mortgage loans are considered past due when the borrower is in arrears two or more monthly payments. PCI residential mortgage loans and commercial mortgage loans past due 30-59 days as of September 30, 2016 amounted to $22.3 million and $0.4 million, respectively.

[6] According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage and commercial mortgage loans are considered past due when the borrower is in arrears two or more monthly payments. PCI residential mortgage loans past due 30-59 days as of December 31, 2015 amounted to $23.6 million.

[7] According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears two or more monthly payments. FHA/VA government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans and construction-residential loans past due 30-59 days as of September 30, 2016 amounted to $8.7 million, $144.3 million, $7.6 million, $0.7 million and $0.3 million, respectively.

[8] According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears two or more monthly payments. FHA/VA government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans and construction-residential loans past due 30-59 days as of December 31, 2015 amounted to $11.0 million, $162.9 million, $38.6 million, $5.7 million and $0.8 million, respectively.

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LOAN PORTFOLIO - Accretable Yield Related to Purchased Credit Impaired Loans (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Accretable Yield [Line Items]
Accretable yield at acquisition	$ 122,179	$ 124,288	$ 118,385	$ 82,460
Additions	0	0	0	38,319
Reclassification to nonaccretable	0	1,348	9,610	10,141
Accretion recognized in earnings	(2,875)	(3,411)	(8,691)	(8,695)
Accretable yield at the end of the period	$ 119,304	$ 122,225	$ 119,304	$ 122,225

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LOAN PORTFOLIO -Changes in Carrying Amount Of Purchased Credit Impaired Loans (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable Impaired [Line Items]
Beggining balance: purchased credit-impaired loans		$ 169,690	$ 178,494	$ 173,913	$ 102,604
Purchased Credit Impaired Loans Aquired	[1]		0	0
Accretion		2,875	3,411	8,691	8,695
Purchased Credit Impaired Loans Foreclosures		(240)	(157)	(1,327)	(157)
Sop Collections		(4,184)	(5,663)	(13,136)	(14,946)
Ending balance: purchased credit-impaired loans		168,141	176,085	168,141	176,085
Allowance for loan losses Purchased Credit Impaired		(6,857)	(3,163)	(6,857)	(3,163)	$ (6,857)	$ (3,962)	$ (3,163)	$ 0
Ending balance: purchased credit-impaired loans, net		161,284	$ 172,922	$ 161,284	172,922
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities [Member]
Financing Receivable Impaired [Line Items]
Purchased Credit Impaired Loans Aquired	[1]	$ 0			$ 79,889

[1] For the nine-month period ended September 30, 2015, additions represents the estimated fair value of PCI loans acquired from Doral Bank at the date of acquisition.

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LOAN PORTFOLIO -Changes in the allowance for loan losses related to purchased credit impaired doans (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities [Abstract]
Allowance for loan losses Purchased Credit Impaired	$ 6,857	$ 3,163	$ 3,962	$ 0
Provsion of PCI Loans	0	0	2,895	3,163
Allowance for loan losses Purchased Credit Impaired	$ 6,857	$ 3,163	$ 6,857	$ 3,163

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LOAN PORTFOLIO - Selected Information on TDRs Includes Recorded Investment by Loan Class and Modification Type (Detail) - USD ($) $ in Thousands	Sep. 30, 2016		Jun. 30, 2016	Dec. 31, 2015		Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 656,318		$ 670,991	$ 661,591		$ 681,963	$ 634,761	$ 694,453
Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	38,408			35,697
Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	83,450			87,159
Combination of reduction in interest rate and extension of maturity [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	364,011			380,714
Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	39,890			42,820
Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	130,559	[1]		115,201	[2]
Non Fha Va Residential Mortgage Loans [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	378,721			382,672
Non Fha Va Residential Mortgage Loans [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	29,934			29,066
Non Fha Va Residential Mortgage Loans [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	8,172			6,027
Non Fha Va Residential Mortgage Loans [Member] | Combination of reduction in interest rate and extension of maturity [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	283,550			297,310
Non Fha Va Residential Mortgage Loans [Member] | Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Non Fha Va Residential Mortgage Loans [Member] | Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	57,065	[1]		50,269	[2]
Commercial Mortgage Loans [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	43,972			44,498
Commercial Mortgage Loans [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	6,092			4,379
Commercial Mortgage Loans [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	1,219			1,244
Commercial Mortgage Loans [Member] | Combination of reduction in interest rate and extension of maturity [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	26,053			26,109
Commercial Mortgage Loans [Member] | Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Commercial Mortgage Loans [Member] | Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	10,608	[1]		12,766	[2]
Commercial And Industrial Loan [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	150,890			150,254
Commercial And Industrial Loan [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,153			2,163
Commercial And Industrial Loan [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	69,244			75,104
Commercial And Industrial Loan [Member] | Combination of reduction in interest rate and extension of maturity [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	25,263			27,214
Commercial And Industrial Loan [Member] | Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,637			3,027
Commercial And Industrial Loan [Member] | Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	51,593	[1]		42,746	[2]
Construction Loans [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	40,200
Consumer Auto Loans [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	25,023			21,582
Consumer Auto Loans [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Consumer Auto Loans [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	1,921			2,330
Consumer Auto Loans [Member] | Combination of reduction in interest rate and extension of maturity [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	14,680			12,388
Consumer Auto Loans [Member] | Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Consumer Auto Loans [Member] | Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	8,422	[1]		6,864	[2]
Finance Leases [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,576			2,077
Finance Leases [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Finance Leases [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	424			621
Finance Leases [Member] | Combination of reduction in interest rate and extension of maturity [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,152			1,456
Finance Leases [Member] | Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Finance Leases [Member] | Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0	[1]		0	[2]
Other Consumer Loans [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	14,946			14,794
Other Consumer Loans [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	229			89
Other Consumer Loans [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,185			1,604
Other Consumer Loans [Member] | Combination of reduction in interest rate and extension of maturity [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	10,120			11,026
Other Consumer Loans [Member] | Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	300			327
Other Consumer Loans [Member] | Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,112	[1]		1,748	[2]
Commercial Construction [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	36,953			39,466
Commercial Construction [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Commercial Construction [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Commercial Construction [Member] | Combination of reduction in interest rate and extension of maturity [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Commercial Construction [Member] | Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	36,953			39,466
Commercial Construction [Member] | Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0	[1]		0	[2]
Residential Construction [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	357			3,482
Residential Construction [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Residential Construction [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Residential Construction [Member] | Combination of reduction in interest rate and extension of maturity [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			3,046
Residential Construction [Member] | Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Residential Construction [Member] | Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	357	[1]		436	[2]
Land Construction [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,880			2,766
Land Construction [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Land Construction [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	285			229
Land Construction [Member] | Combination of reduction in interest rate and extension of maturity [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,193			2,165
Land Construction [Member] | Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Land Construction [Member] | Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 402	[1]		$ 372	[2]

[1] Other concessions granted by the Corporation include deferral of principal and/or interest payments for a period longer than what would be considered insignificant, payment plans under judicial stipulation or a combination of the concessions listed in the table.

[2] Other concessions granted by the Corporation include deferral of principal and/or interest payments for a period longer than what would be considered insignificant, payment plans under judicial stipulation or a combination of the concessions listed in the table.

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LOAN PORTFOLIO - Corporation's TDR Activity (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Schedule Of Financing Receivables [Line Items]
Beginning Balance of TDRs		$ 670,991	$ 634,761	$ 661,591	$ 694,453
New TDRs		15,596	30,044	66,075	95,840
Increases to existing TDRs (disbursements)		517	309	1,573	644
Charge-offs post modification	[1]	(5,445)	(5,327)	(15,899)	(58,707)
Sales		0	0	0	(44,048)
Foreclosures		(5,567)	(6,139)	(12,967)	(16,391)
Removed from TDR classification		0	0	3,031	0
Transfer Of Trouble Debt Restructuring Loans Held For Sale To Portfolio Loans	[2]	0	40,005	0	40,005
Paid-off and partial payments		(19,774)	(11,690)	(41,024)	(29,833)
Ending balance of TDRs		$ 656,318	$ 681,963	$ 656,318	$ 681,963

[1] For the nine-month period ended September 30, 2015, includes $45.3 million of charge offs related to TDRs included in the bulk sale of assets completed in the second quarter of 2015.

[2] During the third quarter of 2015, upon the signing of a new agreement with the borrower, the Corporation changed its intent to sell a $40.0 million construction loan in the Virgin Islands. Accordingly, the loan was transferred back from held for sale to held for investment and continues to be classified as a TDR and a nonperforming loan.

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LOAN PORTFOLIO - Breakdown Between Accrual and Nonaccrual Status of TDRs (Detail) - USD ($) $ in Thousands	Sep. 30, 2016		Jun. 30, 2016	Dec. 31, 2015		Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 656,318		$ 670,991	$ 661,591		$ 681,963	$ 634,761	$ 694,453
Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	240,399	[1]		246,683	[2]
Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	415,919			414,908
Non Fha Va Residential Mortgage Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	378,721			382,672
Non Fha Va Residential Mortgage Loans [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	81,881	[1]		78,787	[2]
Non Fha Va Residential Mortgage Loans [Member] | Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	296,840			303,885
Commercial Mortgage Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	43,972			44,498
Commercial Mortgage Loans [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	15,273	[1]		15,377	[2]
Commercial Mortgage Loans [Member] | Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	28,699			29,121
Commercial And Industrial Loan [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	150,890			150,254
Commercial And Industrial Loan [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	92,886	[1]		101,862	[2]
Commercial And Industrial Loan [Member] | Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	58,004			48,392
Consumer Auto Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	25,023			21,582
Consumer Auto Loans [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	8,462	[1]		6,759	[2]
Consumer Auto Loans [Member] | Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	16,561			14,823
Finance Leases [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,576			2,077
Finance Leases [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	139	[1]		97	[2]
Finance Leases [Member] | Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,437			1,980
Other Consumer Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	14,946			14,794
Other Consumer Loans [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,773	[1]		2,057	[2]
Other Consumer Loans [Member] | Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	12,173			12,737
Commercial Construction [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	36,953			39,466
Commercial Construction [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	36,953	[1]		39,466	[2]
Commercial Construction [Member] | Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Residential Construction [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	357			3,482
Residential Construction [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	357	[1]		436	[2]
Residential Construction [Member] | Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			3,046
Land Construction [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,880			2,766
Land Construction [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	1,675	[1]		1,842	[2]
Land Construction [Member] | Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 1,205			$ 924

[1] Included in non-accrual loans are $121.3 million in loans that are performing under the terms of the restructuring agreement but are reported in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and are deemed fully collectible.

[2] Included in non-accrual loans are $118.2 million in loans that are performing under the terms of the restructuring agreement but are reported in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and there is no doubt about full collectability.

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LOAN PORTFOLIO - Breakdown Between Accrual and Nonaccrual Status of TDRs (Parenthetical) (Detail) - USD ($) $ in Thousands	Sep. 30, 2016		Jun. 30, 2016	Dec. 31, 2015		Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable Modifications [Line Items]
Total TDR loans	$ 656,318		$ 670,991	$ 661,591		$ 681,963	$ 634,761	$ 694,453
Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Total TDR loans	240,399	[1]		246,683	[2]
Performing Financing Receivable [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Total TDR loans	$ 121,300			$ 118,200

[1] Included in non-accrual loans are $121.3 million in loans that are performing under the terms of the restructuring agreement but are reported in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and are deemed fully collectible.

[2] Included in non-accrual loans are $118.2 million in loans that are performing under the terms of the restructuring agreement but are reported in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and there is no doubt about full collectability.

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LOAN PORTFOLIO - Loan Modifications are Considered TDRs (Detail) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016 USD ($) numberofcontracts	Sep. 30, 2015 USD ($) numberofcontracts	Sep. 30, 2016 USD ($) numberofcontracts	Sep. 30, 2015 USD ($) numberofcontracts
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	523	522	1,733	1,892
Pre-Modification Outstanding Recorded Investment	$ 15,726	$ 32,289	$ 66,992	$ 100,361
Post-Modification Outstanding Recorded Investment	$ 15,596	$ 30,044	$ 66,075	$ 95,840
Non Fha Va Residential Mortgage Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	55	98	167	350
Pre-Modification Outstanding Recorded Investment	$ 8,631	$ 19,901	$ 25,040	$ 60,043
Post-Modification Outstanding Recorded Investment	$ 8,449	$ 19,481	$ 24,040	$ 57,882
Commercial Mortgage Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	5	4	8	13
Pre-Modification Outstanding Recorded Investment	$ 679	$ 7,380	$ 3,351	$ 20,332
Post-Modification Outstanding Recorded Investment	$ 712	$ 5,719	$ 3,380	$ 18,781
Commercial And Industrial Loan [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	2		21	3
Pre-Modification Outstanding Recorded Investment	$ 1,432		$ 21,693	$ 2,997
Post-Modification Outstanding Recorded Investment	$ 1,432		$ 21,693	$ 2,579
Consumer Auto Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	189	203	612	547
Pre-Modification Outstanding Recorded Investment	$ 3,262	$ 3,352	$ 10,961	$ 8,739
Post-Modification Outstanding Recorded Investment	$ 3,262	$ 3,297	$ 10,961	$ 8,564
Finance Leases [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	11	19	59	43
Pre-Modification Outstanding Recorded Investment	$ 295	$ 521	$ 1,477	$ 1,215
Post-Modification Outstanding Recorded Investment	$ 295	$ 418	$ 1,477	$ 1,056
Other Consumer Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	257	197	862	929
Pre-Modification Outstanding Recorded Investment	$ 1,269	$ 1,026	$ 4,312	$ 6,432
Post-Modification Outstanding Recorded Investment	$ 1,291	$ 1,020	$ 4,369	$ 6,378
Land Construction [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	4	1	4	7
Pre-Modification Outstanding Recorded Investment	$ 158	$ 109	$ 158	$ 603
Post-Modification Outstanding Recorded Investment	$ 155	$ 109	$ 155	$ 600

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LOAN PORTFOLIO - Loan Modifications Considered Troubled Debt Restructurings Defaulted (Detail) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016 USD ($) numberofcontracts	Sep. 30, 2015 USD ($) numberofcontracts	Sep. 30, 2016 USD ($) numberofcontracts	Sep. 30, 2015 USD ($) numberofcontracts
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	42	78	171	209
Recorded Investment | $	$ 1,898	$ 4,118	$ 5,947	$ 14,215
Non Fha Va Residential Mortgage Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	14	23	35	50
Recorded Investment | $	$ 1,707	$ 3,744	$ 4,863	$ 7,646
Commercial And Industrial Loan [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts			0	4
Recorded Investment | $			$ 0	$ 5,745
Consumer Auto Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	5	1	45	8
Recorded Investment | $	$ 68	$ 10	$ 702	$ 50
Other Consumer Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	22	51	89	141
Recorded Investment | $	$ 93	$ 219	$ 339	$ 589
Finance Leases [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	1	3	2	6
Recorded Investment | $	$ 30	$ 145	$ 43	$ 185

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LOAN PORTFOLIO - Loan Restructuring and Effect on Allowance for Loan and Lease Losses (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable Allowance For Credit Losses [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 656,318	$ 681,963	$ 656,318	$ 681,963	$ 670,991	$ 661,591	$ 634,761	$ 694,453
Charges to the provision for loan losses	21,503	31,176	63,542	138,412
Allowance for loan losses at the end of the period	214,070		214,070			240,710
Loans Split [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Financing Receivable, Modifications, Recorded Investment	38,004	40,632	38,004	40,632
Amount charged-off			0	0
Charges to the provision for loan losses			2,660	185
Allowance for loan losses at the end of the period	3,521	$ 916	3,521	$ 916
Accrual [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 415,919		$ 415,919			$ 414,908

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LOAN PORTFOLIO - Narratives (Detail)	3 Months Ended
	Mar. 31, 2015
Disclosure Loan Portfolio Additional Information [Abstract]
Branches Doral	10

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ALLOWANCE FOR LOAN AND LEASE LOSSES - Changes in Allowance for Loan and Lease Losses (Detail) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2016		Sep. 30, 2015	Sep. 30, 2016		Sep. 30, 2015	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable Allowance For Credit Losses [Line Items]
Beginning balance	$ 234,454		$ 221,518	$ 240,710		$ 222,395
Charge-offs	(46,566)		(26,067)	(101,467)		(151,028)
Recoveries	4,679		2,339	11,285		19,187
Provision For Loan Lease And Other Losses	21,503		31,176	63,542		138,412
Ending balance	214,070		228,966	214,070		228,966
Balance at end of period	72,682		51,859	72,682		51,859
Allowance for loan losses Purchased Credit Impaired	6,857		3,163	6,857		3,163
Ending balance: general allowance	134,531		173,944	134,531		173,944
Ending balance	8,863,654		9,140,462	8,863,654		9,140,462
Ending balance: impaired loans	912,854		842,713	912,854		842,713	$ 953,774	$ 806,509	$ 824,816	$ 945,407
Ending balance: purchased credit-impaired loans	168,141		176,085	168,141		176,085
Ending balance: loans with general allowance	7,782,659		8,121,664	7,782,659		8,121,664
Purchased Credit Impaired [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses Purchased Credit Impaired	6,857	[1]	3,163	6,857	[1]	3,163
Residential Mortgage [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Beginning balance	38,955		33,783	39,570		27,301
Charge-offs	(8,514)		(5,094)	(27,352)		(13,815)
Recoveries	972		214	2,159		584
Provision For Loan Lease And Other Losses	4,553		6,958	21,589		21,791
Ending balance	35,966		35,861	35,966		35,861
Balance at end of period	9,667		18,705	9,667		18,705
Ending balance: general allowance	19,661		14,095	19,661		14,095
Ending balance	3,299,942		3,330,089	3,299,942		3,330,089
Ending balance: impaired loans	444,039		459,311	444,039		459,311
Ending balance: purchased credit-impaired loans	165,014		172,927	165,014		172,927
Ending balance: loans with general allowance	2,690,889		2,697,851	2,690,889		2,697,851
Residential Mortgage [Member] | Purchased Credit Impaired [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses Purchased Credit Impaired	6,638	[1]	3,061	6,638	[1]	3,061
Commercial Mortgage [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Beginning balance	69,799		49,092	68,211		50,894
Charge-offs	(13,730)		(3,677)	(15,742)		(54,115)
Recoveries	335		20	414		6,515
Provision For Loan Lease And Other Losses	(152)		6,668	3,369		48,809
Ending balance	56,252		52,103	56,252		52,103
Balance at end of period	25,907		4,886	25,907		4,886
Ending balance: general allowance	30,126		47,115	30,126		47,115
Ending balance	1,545,014		1,562,538	1,545,014		1,562,538
Ending balance: impaired loans	198,500		104,046	198,500		104,046
Ending balance: purchased credit-impaired loans	3,127		3,158	3,127		3,158
Ending balance: loans with general allowance	1,343,387		1,455,334	1,343,387		1,455,334
Commercial Mortgage [Member] | Purchased Credit Impaired [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses Purchased Credit Impaired	219	[1]	102	219	[1]	102
Commercial And Industrial Loans [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Beginning balance	69,789		63,900	68,768		63,721
Charge-offs	(10,587)		(1,267)	(16,260)		(30,090)
Recoveries	929		327	1,885		3,386
Provision For Loan Lease And Other Losses	5,597		3,807	11,335		29,750
Ending balance	65,728		66,767	65,728		66,767
Balance at end of period	28,668		17,540	28,668		17,540
Ending balance: general allowance	37,060		49,227	37,060		49,227
Ending balance	2,167,011		2,222,324	2,167,011		2,222,324
Ending balance: impaired loans	178,174		174,983	178,174		174,983
Ending balance: purchased credit-impaired loans	0		0	0		0
Ending balance: loans with general allowance	1,988,837		2,047,341	1,988,837		2,047,341
Commercial And Industrial Loans [Member] | Purchased Credit Impaired [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses Purchased Credit Impaired	0	[1]	0	0	[1]	0
Construction Loans [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Beginning balance	2,747		11,865	3,519		12,822
Charge-offs	(19)		(103)	(623)		(4,787)
Recoveries	140		176	301		2,379
Provision For Loan Lease And Other Losses	2,480		(139)	2,151		1,385
Ending balance	5,348		11,799	5,348		11,799
Balance at end of period	3,004		2,128	3,004		2,128
Ending balance: general allowance	2,344		9,671	2,344		9,671
Ending balance	124,298		163,956	124,298		163,956
Ending balance: impaired loans	47,707		66,123	47,707		66,123
Ending balance: purchased credit-impaired loans	0		0	0		0
Ending balance: loans with general allowance	76,591		97,833	76,591		97,833
Construction Loans [Member] | Purchased Credit Impaired [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses Purchased Credit Impaired	0	[1]	0	0	[1]	0
Consumer Loan [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Beginning balance	53,164		62,878	60,642		67,657
Charge-offs	(13,716)		(15,926)	(41,490)		(48,221)
Recoveries	2,303		1,602	6,526		6,323
Provision For Loan Lease And Other Losses	9,025		13,882	25,098		36,677
Ending balance	50,776		62,436	50,776		62,436
Balance at end of period	5,436		8,600	5,436		8,600
Ending balance: general allowance	45,340		53,836	45,340		53,836
Ending balance	1,727,389		1,861,555	1,727,389		1,861,555
Ending balance: impaired loans	44,434		38,250	44,434		38,250
Ending balance: purchased credit-impaired loans	0		0	0		0
Ending balance: loans with general allowance	1,682,955		1,823,305	1,682,955		1,823,305
Consumer Loan [Member] | Purchased Credit Impaired [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses Purchased Credit Impaired	$ 0	[1]	$ 0	$ 0	[1]	$ 0

[1] Refer to Note 6 - Loans Held for Investment -PCI loans for a detail of changes in the allowance for loan losses related to PCI loans.

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ALLOWANCE FOR LOAN AND LEASE LOSSES - Additional Information (Detail) - USD ($)	3 Months Ended
	Jun. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Financing Receivable Allowance For Credit Losses [Line Items]
Reserve for unfunded loan commitments		$ 2,100,000	$ 500,000
General Allowance For Loan And Lease Losses Loans Sold	$ 15,500,000

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LOANS HELD FOR SALE - Portfolio of Loans Held for Sale (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Accounts Notes And Loans Receivable [Line Items]
Residential mortgage loans	$ 48,700	$ 27,734
Total	56,779	35,869
Construction Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Construction loans	$ 8,079	$ 8,135

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LOANS HELD FOR SALE - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Jun. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Accounts Notes And Loans Receivable [Line Items]
Loans held for sale		$ 56,779		$ 35,869
Non-performing loan sold previously reclassified to Loans Held For Sale	$ 147,500
Transfer Of Loans Held For Sale To Portfolio Loans 1		1,321	$ 0
Non Accrual [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans held for sale		$ 8,100		$ 8,100

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OTHER REAL ESTATE OWNED- Other real estate owned (Detail) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Other Real Estate And Foreclosed Assets [Line Items]
Other real estate owned		$ 139,446	$ 146,801
Residential Real Estate [Member]
Other Real Estate And Foreclosed Assets [Line Items]
Other real estate owned	[1]	45,887	43,563
Commercial Real Estate [Member]
Other Real Estate And Foreclosed Assets [Line Items]
Other real estate owned		81,038	87,849
Construction Real Estate [Member]
Other Real Estate And Foreclosed Assets [Line Items]
Other real estate owned		$ 12,521	$ 15,389

[1] Excludes $15.1 million and $8.9 million as of September 30, 2016 and December 31, 2015, respectively, of foreclosures that meet the conditions of ASC 310-40 and are presented as a receivable (other assets) in the statement of financial condition.

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OTHER REAL ESTATE OWNED- Additional information (Detail) - USD ($) $ in Millions	Sep. 30, 2016	Dec. 31, 2015
Other Real Estate And Foreclosed Assets [Abstract]
Transfers From Loans to Other Receivable	$ 15.1	$ 8.9

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Notional Amounts of All Derivative Instruments (Detail) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Economic undesignated hedges:
Notional amount of derivatives	[1]	$ 228,020	$ 271,632
Nondesignated [Member] | Interest Rate Swap [Member]
Economic undesignated hedges:
Notional amount of derivatives	[1]	0	0
Nondesignated [Member] | Interest Rate Cap [Member] | Purchase
Economic undesignated hedges:
Notional amount of derivatives	[1]	91,510	120,816
Nondesignated [Member] | Interest Rate Cap [Member] | Written
Economic undesignated hedges:
Notional amount of derivatives	[1]	91,510	120,816
Nondesignated [Member] | Forward Contracts [Member]
Economic undesignated hedges:
Notional amount of derivatives	[1]	$ 45,000	$ 30,000

[1] (1) Notional amounts are presented on a gross basis with no netting of offsetting exposure positions.

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Summary of Fair Value of Derivative Instruments and Location in Statement of Financial Condition (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Derivatives Fair Value [Line Items]
Derivatives, included in assets	$ 195	$ 806
Derivatives, included in liabilities	335	921
Other Assets [Member] | Interest Rate Cap [Member] | Purchase
Derivatives Fair Value [Line Items]
Derivatives, included in assets	191	806
Other Assets [Member] | Interest Rate Cap [Member] | Written
Derivatives Fair Value [Line Items]
Derivatives, included in assets	0	0
Other Assets [Member] | Forward Contracts [Member]
Derivatives Fair Value [Line Items]
Derivatives, included in assets	4	0
Other Liabilities [Member] | Interest Rate Cap [Member] | Purchase
Derivatives Fair Value [Line Items]
Derivatives, included in liabilities	0	0
Other Liabilities [Member] | Interest Rate Cap [Member] | Written
Derivatives Fair Value [Line Items]
Derivatives, included in liabilities	191	798
Other Liabilities [Member] | Forward Contracts [Member]
Derivatives Fair Value [Line Items]
Derivatives, included in liabilities	$ 144	$ 123

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Effect of Derivative Instruments on Statement of Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Economic undesignated hedges:
Total gain (loss) on derivatives	$ 224	$ (135)	$ (19)	$ 47
Interest Rate Cap [Member]
Economic undesignated hedges:
Total gain (loss) on derivatives	5	144	(2)	144
Mortgage Banking Activities [Member] | Forward Contracts [Member]
Economic undesignated hedges:
Total gain (loss) on derivatives	$ 219	$ (279)	$ (17)	$ (97)

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Summary of Interest Rate Swaps (Detail) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Pay fixed/receive floating :
Notional amount	[1]	$ 228,020	$ 271,632

[1] (1) Notional amounts are presented on a gross basis with no netting of offsetting exposure positions.

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OFFESTTING OF ASSETS AND LIABILITIES - Offsetting of financial assets and liabilities (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Offsetting [Abstract]
Gross amount recognized of derivative asset	$ 191	$ 806
Gross amount of derivatives assets offset	0	0
Net asset amount of assets presented in the Statement of Financial Condition	191	806
Obligation to return Financial instrument, derivatives assets	(191)	(806)
Obligation to return Cash Collateral, derivative assets	0	0
Net derivative asset amount not offset	0	0
Gross amount recognized of repurchase agreements	500,000	600,000
Gross amount of repurchase agreements offset	(200,000)	(200,000)
Net repurchase agreements amount offset presented	300,000	400,000
Right to claim Financial instrument, repurchase agreements	(300,000)	(400,000)
Right to claim Cash Collateral, repurchase agreements	0	0
Net repurchase agreements amount not offset	0	0
Securities Purchased Under Agreements To Resell Gross	200,000	200,000
Securities Purchased Under Agreements To Resell Liability	(200,000)	(200,000)
Securities Purchased Under Agreements To Resell Not Offset	0	0
Securities Purchased Under Agreements To Resell Collateral Obligation To Return Securities	0	0
Securities Purchased Under Agreements To Resell Collateral Obligation To Return Cash	0	0
Securities Purchased Under Agreements To Resell Amount Offset Against Collateral	0	0
Derivative Asset Securities Purchased Under Agreements To Resell Securities Borrowed Gross	200,191	200,806
Derivative Asset Securities Purchased Under Agreements To Resell Securities Borrowed Liability	(200,000)	(200,000)
Derivative Asset Securities Purchased Under Agreements To Resell Securities Borrowed Liability Not Offset	191	806
Derivative Asset Securities Purchased Under Agreements To Resell Securities Borrowed Collateral Obligation To Return Securities	(191)	(806)
Derivative Asset Securities Purchased Under Agreements To Resell Securities Borrowed Collateral Obligation To Return Cash	0	0
Derivative Asset Securities Purchased Under Agreements To Resell Securities Borrowed Amount Offset Against Collateral	$ 0	$ 0

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GOODWILL AND OTHER INTANGIBLES - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Jun. 30, 2012
Finite Lived Intangible Assets [Line Items]
Goodwill	$ 28,100		$ 28,100		$ 28,100
Purchase credit card relationship intangible amount						$ 24,500
Amortization expense			3,669	$ 3,817
Business Combination Finite Lived Intangible Assets Net	4,600		4,600
Purchased Credit Card Relationship Intangible [Member]
Finite Lived Intangible Assets [Line Items]
Purchase credit card relationship intangible amount	$ 24,465		24,465		$ 24,465
Amortization period of purchased credit card relationship intangible	5 years 2 months 12 days				5 years 9 months 18 days
Amortization expense	$ 700	$ 800	2,100	2,300
Core Deposits [Member]
Finite Lived Intangible Assets [Line Items]
Purchase credit card relationship intangible amount	$ 51,664		51,664		$ 45,844
Amortization period of purchased credit card relationship intangible	8 years 3 months 18 days				9 years
Amortization expense	$ 500	$ 600	1,500	$ 1,500
Customer Related Intangible Assets [Member]
Finite Lived Intangible Assets [Line Items]
Purchase credit card relationship intangible amount	$ 1,067		1,067		$ 0
Amortization period of purchased credit card relationship intangible	6 years 3 months 18 days
Amortization expense	$ 38		$ 100

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GOODWILL AND OTHER INTANGIBLES - Gross Amount and Accumulated Amortization of Other Intangible Assets (Detail) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015	Jun. 30, 2012
Finite Lived Intangible Assets [Line Items]
Gross amount			$ 24,500
Goodwill And Intangible Assets Disclosure [Abstract]
Finite Lived Intangible Assets Amortization Expense Year Two	$ 4,495
Finite Lived Intangible Assets Amortization Expense Year Three	3,519
Finite Lived Intangible Assets Amortization Expense Year Four	3,067
Finite Lived Intangible Assets Amortization Expense After Year Five	4,725
Finite Lived Intangible Assets Amortization Expense Remainder Of Fiscal Year	1,226
Finite Lived Intangible Assets Amortization Expense Year Five	2,851
Core Deposits [Member]
Finite Lived Intangible Assets [Line Items]
Gross amount	51,664	$ 45,844
Finite lived Intangible Assets Acquired 1		5,820
Accumulated amortization	(43,974)	(42,498)
Net carrying amount	$ 7,690	$ 9,166
Remaining amortization period	8 years 3 months 18 days	9 years
Purchased Credit Card Relationship Intangible [Member]
Finite Lived Intangible Assets [Line Items]
Gross amount	$ 24,465	$ 24,465
Accumulated amortization	(13,237)	(11,146)
Net carrying amount	$ 11,228	$ 13,319
Remaining amortization period	5 years 2 months 12 days	5 years 9 months 18 days
Customer Related Intangible Assets [Member]
Finite Lived Intangible Assets [Line Items]
Gross amount	$ 1,067	$ 0
Accumulated amortization	(102)	0
Net carrying amount	$ 965	$ 0
Remaining amortization period	6 years 3 months 18 days

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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS - additional Information (Detail) - USD ($) $ in Thousands	1 Months Ended			3 Months Ended			9 Months Ended
	Feb. 16, 2011	Sep. 30, 2004	Apr. 30, 2004	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Sep. 30, 2016	Sep. 30, 2015
Servicing Liabilities At Fair Value [Line Items]
Principal amount of corporation serviced loans securitized through GNMA				$ 1,400,000			$ 1,400,000
Balance of amortization with third party				30,600			30,600
Carrying value with third party				$ 22,100			22,100
Percentage of weighted average yield with third party				2.37%
Working capital line of credit to fund certain expenses	$ 20,000
Payment to be made on pro rata basis				65.00%
Debt Instrument Description Of Variable Rate Basis				90-day LIBOR
Interest Expense Accrued Trust Preferred Securities					$ 31,200
Conversion Of Stock Shares Issued1					852,831
Common Stock Issued In Exchange For Trust Preferred Securities Value							0	$ 5,628
Trust Preferred Securities Exchanged Liquidation Value					$ 5,300		0	$ 5,303
Trust Preferred Securities Repurchases						$ 10,000
Trust Preferred Securties Discount						30.00%
Trust Preferred Securities Winning Bid						70.00%
Common Stock Issued In Exchange For Trust Preferred Securities Additional Paid In Capital Value					$ 5,500
Maximum [Member]
Servicing Liabilities At Fair Value [Line Items]
Percentage of variation in assumptions				20.00%
Minimum [Member]
Servicing Liabilities At Fair Value [Line Items]
Percentage of variation in assumptions				10.00%
Fbp Statutory Trust One [Member]
Servicing Liabilities At Fair Value [Line Items]
Variable rate trust preferred securities			$ 100,000
Proceeds of the issuance, together with proceeds of the purchase			3,100
Principal amount of corporation's junior subordinated deferrable debentures			$ 103,100
Fbp Statutory Trust Two [Member]
Servicing Liabilities At Fair Value [Line Items]
Variable rate trust preferred securities		$ 125,000
Proceeds of the issuance, together with proceeds of the purchase		3,900
Principal amount of corporation's junior subordinated deferrable debentures		$ 128,900
Cpg Gs [Member]
Servicing Liabilities At Fair Value [Line Items]
Loans Sold to CPG	269,300
Cash realized on sale of loan	88,500
Loans acquired on exchange of loan held for sale	$ 136,100
Description of loan	30-day LIBOR plus 300 basis points
Carrying amount of loan provided				$ 6,800			6,800
Line of credit facility provided to fund unfunded commitments	$ 80,000
Revolver agreement of credit facility provided amount outstanding				$ 11,400			$ 11,400
Prlp [Member]
Servicing Liabilities At Fair Value [Line Items]
Percentage of ownership investment in unconsolidated entity	65.00%
Percentage of priority interest to be received on invested capital				12.00%
Payment to be made on pro rata basis				35.00%
FirstBank [Member]
Servicing Liabilities At Fair Value [Line Items]
Acquired Equity interest on disposal of loans held for sale	35.00%

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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS - Income Statement Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Variable Interest Entity [Line Items]
Net income	$ 24,074	$ 14,758	$ 69,371	$ 6,330

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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS - Changes in Servicing Assets (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Servicing Assets At Amortized Value [Line Items]
Balance at beginning of period		$ 25,044	$ 23,519	$ 24,282	$ 22,838
Capitalization of servicing assets		1,420	1,242	3,878	3,789
Amortization		(817)	(758)	(2,424)	(2,409)
Adjustment To Servicing Assets For Loans Repurchased	[1]	91	(20)	126	(88)
Adjustment to fair value		(263)	(23)	(387)	(170)
Balance at end of period		$ 25,475	$ 23,960	$ 25,475	$ 23,960

[1] Amount represents the adjustment to fair value related to the repurchase of loans serviced for others.

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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS - Changes in Impairment Allowance (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Valuation Allowance For Impairment Of Recognized Servicing Assets [Line Items]
Balance at beginning of period	$ 260	$ 202	$ 136	$ 55
Temporary impairment charges	266	41	460	227
OTTI of servicing assets	0	0	0	0
Recoveries	(3)	(18)	(73)	(57)
Balance at end of period	$ 523	$ 225	$ 523	$ 225

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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS - Components of Net Servicing Income (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Servicing fees		$ 1,930	$ 1,796	$ 5,657	$ 5,340
Late charges and prepayment penalties		200	179	505	546
Other	[1]	0	(22)	(1)	(125)
Adjustment To Servicing Assets For Loans Repurchased	[2]	91	(20)	126	(88)
Servicing income, gross		2,221	1,933	6,287	5,673
Amortization and impairment of servicing assets		(1,080)	(781)	(2,811)	(2,579)
Servicing income, net		$ 1,141	$ 1,152	$ 3,476	$ 3,094

[1] Mainly consisted of compensatory fees imposed by GSEs.

[2] Amount represents the adjustment to fair value related to the repurchase of loans serviced for others.

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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS - Key Economic Assumptions Used in Determining Fair Value at Time of Sale of Loans (Detail)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Government Guaranteed Mortgage Loans [Member] | Maximum [Member]
Assumption For Fair Value On Securitization Date Of Interests Continued To Be Held By Transferor Servicing Assets Or Liabilities [Line Items]
Constant prepayment rate	7.60%	9.20%
Discount rate	12.00%	11.50%
Government Guaranteed Mortgage Loans [Member] | Minimum [Member]
Assumption For Fair Value On Securitization Date Of Interests Continued To Be Held By Transferor Servicing Assets Or Liabilities [Line Items]
Constant prepayment rate	6.10%	7.90%
Discount rate	11.50%	11.50%
Conventional Loan [Member] | Maximum [Member]
Assumption For Fair Value On Securitization Date Of Interests Continued To Be Held By Transferor Servicing Assets Or Liabilities [Line Items]
Constant prepayment rate	8.00%	9.00%
Discount rate	10.00%	9.50%
Conventional Loan [Member] | Minimum [Member]
Assumption For Fair Value On Securitization Date Of Interests Continued To Be Held By Transferor Servicing Assets Or Liabilities [Line Items]
Constant prepayment rate	6.50%	7.90%
Discount rate	9.50%	9.50%
Conventional Non Conforming Mortgage Loans [Member] | Maximum [Member]
Assumption For Fair Value On Securitization Date Of Interests Continued To Be Held By Transferor Servicing Assets Or Liabilities [Line Items]
Constant prepayment rate	14.10%	14.40%
Discount rate	14.30%	13.80%
Conventional Non Conforming Mortgage Loans [Member] | Minimum [Member]
Assumption For Fair Value On Securitization Date Of Interests Continued To Be Held By Transferor Servicing Assets Or Liabilities [Line Items]
Constant prepayment rate	10.60%	12.90%
Discount rate	13.80%	13.80%

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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS - Weighted-Averages of Key Economic Assumptions in Valuation Model (Detail) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Carrying amount of servicing assets	$ 25,475	$ 25,044	$ 24,282	$ 23,960	$ 23,519	$ 22,838
Fair value	$ 27,937
Weighted-average expected life	8 years 5 months 1 day
Constant prepayment rate	6.34%
Decrease in fair value due to 10% adverse change	$ 734
Decrease in fair value due to 20% adverse change	$ 1,435
Discount rate	11.18%
Decrease in fair value due to 10% adverse change	$ 1,311
Decrease in fair value due to 20% adverse change	$ 2,515

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DEPOSITS - Summary of Deposit Balances (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Deposits [Line Items]
Non-interest bearing checking accounts	$ 1,473,528	$ 1,336,559
Savings accounts	2,458,634	2,459,186
Interest-bearing checking accounts	1,153,096	1,088,651
Certificates of deposit	2,337,547	2,356,245
Brokered certificates of deposit	1,558,508	2,097,483
Total deposits	$ 8,981,313	$ 9,338,124

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DEPOSITS - Brokered Certificates Of Deposit Mature (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Deposits [Line Items]
Interest Bearing Domestic Deposit Brokered	$ 1,558,508	$ 2,097,483
One to ninety days
Deposits [Line Items]
Interest Bearing Domestic Deposit Brokered	343,396
Over three month to six months
Deposits [Line Items]
Interest Bearing Domestic Deposit Brokered	255,574
Over six months to one year
Deposits [Line Items]
Interest Bearing Domestic Deposit Brokered	350,362
One to three year
Deposits [Line Items]
Interest Bearing Domestic Deposit Brokered	524,386
Three to five years
Deposits [Line Items]
Interest Bearing Domestic Deposit Brokered	84,605
Over five years
Deposits [Line Items]
Interest Bearing Domestic Deposit Brokered	$ 185

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DEPOSITS - Components of Interest Expense on Deposits (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Deposits [Line Items]
Interest expense on deposits	$ 16,130	$ 15,947	$ 49,104	$ 48,402
Accretion Of Premium From Acquisitions	(43)	(156)	(181)	(441)
Amortization of broker placement fees	655	1,060	2,300	3,564
Interest expense on deposits	$ 16,742	$ 16,851	$ 51,223	$ 51,525

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE - Securities Sold Under Agreements to Repurchase (Detail) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Line Items]
Repurchase agreements, interest ranging from 2.45% to 3.35%(December 31, 2012- 2.45% to 3.39%)	[1],[2]	$ 600,000	$ 700,000

[1] As of September 30, 2016, includes $500 million with an average rate of 3.56% that lenders have the right to call before their contractual maturities at various dates beginning on October 11, 2016. In addition, $400 million is tied to variable rates.

[2] Reported net of securities purchased under agreements to repurchase (reverse repurchase agreements) by counterparty, when applicable, pursuant to ASC 210-20-45-11.

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE - Securities Sold Under Agreements to Repurchase (Parenthetical) (Detail) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Line Items]
Securities sold under agreements to repurchase	[1],[2]	$ 600,000	$ 700,000
Callable Repurchase Agreements [Member]
Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Line Items]
Securities sold under agreements to repurchase		$ 500,000
Maximum [Member]
Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Line Items]
Assets sold under agreements to repurchase interest rate		3.84%	3.41%
Minimum [Member]
Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Line Items]
Assets sold under agreements to repurchase interest rate		1.96%	1.96%
Weighted Average [Member] | Callable Repurchase Agreements [Member]
Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Line Items]
Assets sold under agreements to repurchase interest rate		3.56%

[1] As of September 30, 2016, includes $500 million with an average rate of 3.56% that lenders have the right to call before their contractual maturities at various dates beginning on October 11, 2016. In addition, $400 million is tied to variable rates.

[2] Reported net of securities purchased under agreements to repurchase (reverse repurchase agreements) by counterparty, when applicable, pursuant to ASC 210-20-45-11.

XML

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE - Schedule of Repurchase Agreement Maturity (Detail) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Repurchase Agreement [Line Items]
Securities Sold Under Agreements To Repurchase	[1],[2]	$ 600,000	$ 700,000
Over five years
Repurchase Agreement [Line Items]
Securities Sold Under Agreements To Repurchase		200,000
Maturity 30 To 90 Days [Member]
Repurchase Agreement [Line Items]
Securities Sold Under Agreements To Repurchase		300,000
Maturity Over One Year To Three Years [Member]
Repurchase Agreement [Line Items]
Securities Sold Under Agreements To Repurchase		$ 100,000

[1] As of September 30, 2016, includes $500 million with an average rate of 3.56% that lenders have the right to call before their contractual maturities at various dates beginning on October 11, 2016. In addition, $400 million is tied to variable rates.

[2] Reported net of securities purchased under agreements to repurchase (reverse repurchase agreements) by counterparty, when applicable, pursuant to ASC 210-20-45-11.

XML

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE - Schedule of Repurchase Agreement Maturity (Parenthetical) (Detail) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Repurchase Agreement [Line Items]
Securities Sold Under Agreements To Repurchase	[1],[2]	$ 600,000	$ 700,000
Variable Rate [Member]
Repurchase Agreement [Line Items]
Securities Sold Under Agreements To Repurchase		$ 400,000

[1] As of September 30, 2016, includes $500 million with an average rate of 3.56% that lenders have the right to call before their contractual maturities at various dates beginning on October 11, 2016. In addition, $400 million is tied to variable rates.

[2] Reported net of securities purchased under agreements to repurchase (reverse repurchase agreements) by counterparty, when applicable, pursuant to ASC 210-20-45-11.

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE - Repurchase Agreements Grouped by Counterparty (Detail) - USD ($) $ in Thousands		3 Months Ended
		Sep. 30, 2016	Dec. 31, 2015
Repurchase Agreement Counterparty [Line Items]
Repurchase agreements, interest ranging from 2.45% to 3.39% (December 31, 2011 - 2.50% to 4.40%) (1)	[1],[2]	$ 600,000	$ 700,000
Citigroup Global Markets [Member]
Repurchase Agreement Counterparty [Line Items]
Repurchase agreements, interest ranging from 2.45% to 3.39% (December 31, 2011 - 2.50% to 4.40%) (1)		$ 300,000
Weighted-Average Maturity		1 month
Jp Morgan Chase [Member]
Repurchase Agreement Counterparty [Line Items]
Repurchase agreements, interest ranging from 2.45% to 3.39% (December 31, 2011 - 2.50% to 4.40%) (1)		$ 200,000
Weighted-Average Maturity		5 years 4 months
Dean Witter Morgan Stanley [Member]
Repurchase Agreement Counterparty [Line Items]
Repurchase agreements, interest ranging from 2.45% to 3.39% (December 31, 2011 - 2.50% to 4.40%) (1)		$ 100,000
Weighted-Average Maturity		1 year 1 month

[1] As of September 30, 2016, includes $500 million with an average rate of 3.56% that lenders have the right to call before their contractual maturities at various dates beginning on October 11, 2016. In addition, $400 million is tied to variable rates.

[2] Reported net of securities purchased under agreements to repurchase (reverse repurchase agreements) by counterparty, when applicable, pursuant to ASC 210-20-45-11.

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ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB) - Summary of Advances from FHLB (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Short Term Debt [Line Items]
Fixed-rate advances from FHLB, with a weighted-average interest rate of 1.69% (December 31, 2012 - 2.26%)	$ 355,000	$ 455,000

XML

ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB) - Summary of Advances from FHLB (Parenthetical) (Detail)	Sep. 30, 2016	Dec. 31, 2015
Weighted Average [Member]
Short Term Debt [Line Items]
FHLB advances interest rate	1.40%	1.30%

XML

ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB) - Advances from FHLB Mature (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Federal Home Loan Bank Advances Branch Of F H L B Bank [Line Items]
Federal Home Loan Bank Advances	$ 355,000	$ 455,000
Over six months to one year
Federal Home Loan Bank Advances Branch Of F H L B Bank [Line Items]
Federal Home Loan Bank Advances	200,000
Over one to three years
Federal Home Loan Bank Advances Branch Of F H L B Bank [Line Items]
Federal Home Loan Bank Advances	25,000
Over Three to four years [Member]
Federal Home Loan Bank Advances Branch Of F H L B Bank [Line Items]
Federal Home Loan Bank Advances	$ 130,000

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ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB) - Additional Information (Detail) $ in Billions	Sep. 30, 2016 USD ($)
Federal Home Loan Bank Advances Branch Of F H L B Bank [Line Items]
Credit facility based on collateral pledged	$ 1.1

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OTHER BORROWINGS - Components of Other Borrowings (Detail) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Junior subordinated debentures due in 2034		$ 216,187	$ 226,492
Junior Subordinated Debentures Bearing Interest At Floating Rate Of Two Point Seventy Five [Member]
Debt Instrument [Line Items]
Junior subordinated debentures due in 2034		97,630	97,626
Junior Subordinated Debentures Bearing Interest At Floating Rate Of Two Point Fifty Percent [Member]
Debt Instrument [Line Items]
Junior subordinated debentures due in 2034	[1]	$ 118,557	$ 128,866

[1] Refer to Note 13 - Non-Consolidated Variable Interest Entities and Servicing Assets - Trust Preferred Securities for additional information about the Corporation's repurchase and cancellation of $10 million of trust preferred securities associated with these junior subordinated debentures.

XML

OTHER BORROWINGS - Components of Other Borrowings (Parenthetical) (Detail)	3 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Junior Subordinated Debentures Bearing Interest At Floating Rate Of Two Point Seventy Five [Member]
Debt Instrument [Line Items]
Floating Interest rate on junior subordinated debentures	3.61%	3.28%
Subordinated Borrowing Due Date	Jun. 17, 2034
Callable step-rate notes rate	2.75%
Junior Subordinated Debentures Bearing Interest At Floating Rate Of Two Point Fifty Percent [Member]
Debt Instrument [Line Items]
Floating Interest rate on junior subordinated debentures	3.36%	3.07%
Subordinated Borrowing Due Date	Sep. 20, 2034
Callable step-rate notes rate	2.50%

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STOCKHOLDERS' EQUITY - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015	Sep. 30, 2016	Sep. 30, 2015
Class Of Stock [Line Items]
Common stock, shares authorized	2,000,000,000		2,000,000,000	2,000,000,000
Common stock, par value	$ 0.1		$ 0.1	$ 0.1
Common stock, shares issued	218,605,179		216,051,128	218,605,179
Common stock, shares outstanding	217,387,647		215,088,698	217,387,647
Granted shares of restricted stock				1,925,575
Corporation has authorized shares of preferred stock	50,000,000		50,000,000	50,000,000
Preferred stock, par value	$ 1			$ 1
Stock repurchase plan treasury stock	1,217,532		962,430	1,217,532
Legal surplus reserve rate	10.00%
Original amount contributed in percentage	20.00%
Repurchased of common stock				255,102	181,649
Liquidation value per share	$ 25			$ 25
Legal surplus reserve amount	$ 42,798		$ 42,798	$ 42,798
Conversion Of Stock Shares Issued1		852,831
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Nonvested Number	4,209,323		2,968,461	4,209,323
Trust Preferred Securities Exchanged Liquidation Value		$ 5,300		$ 0	$ 5,303
Legal Surplus Amount Additions			$ 2,800
Omnibus Plan [Member]
Class Of Stock [Line Items]
Restricted stock available for issuance	6,924,391			6,924,391
Restricted Stock [Member]
Class Of Stock [Line Items]
Repurchased of common stock				65,498	72,918
Series A Preferred Stock [Member]
Class Of Stock [Line Items]
Preferred stock dividend rate percentage				7.125%
Series B Preferred Stock [Member]
Class Of Stock [Line Items]
Preferred stock dividend rate percentage				8.35%
Series C Preferred Stock [Member]
Class Of Stock [Line Items]
Preferred stock dividend rate percentage				7.40%
Series D Preferred Stock [Member]
Class Of Stock [Line Items]
Preferred stock dividend rate percentage				7.25%
Series E Preferred Stock [Member]
Class Of Stock [Line Items]
Preferred stock dividend rate percentage				7.00%

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STOCKHOLDERS' EQUITY - Exchange offer with respect to Series A through E preferred stock (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	9 Months Ended
	Jun. 30, 2016	Sep. 30, 2016	Dec. 31, 2015
Class Of Stock [Line Items]
Liquidation value per share		$ 25
Preferred stock, shares outstanding		1,444,146	1,444,146
Preferred Stock Value		$ 36,104	$ 36,104
Conversion Of Stock Shares Issued1	852,831
Series A Preferred Stock [Member]
Class Of Stock [Line Items]
Preferred stock dividend rate percentage		7.125%
Series B Preferred Stock [Member]
Class Of Stock [Line Items]
Preferred stock dividend rate percentage		8.35%
Series C Preferred Stock [Member]
Class Of Stock [Line Items]
Preferred stock dividend rate percentage		7.40%
Series D Preferred Stock [Member]
Class Of Stock [Line Items]
Preferred stock dividend rate percentage		7.25%
Series E Preferred Stock [Member]
Class Of Stock [Line Items]
Preferred stock dividend rate percentage		7.00%

XML

INCOME TAXES - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Tax Contingency [Line Items]
Valuation allowance	$ 201,700		$ 201,700
Percentage of dividend received deduction from controlled subsidiaries			100.00%
Percentage of dividend received from other taxable domestic corporations			85.00%
Income tax expense	10,444	$ 4,476	$ 23,690	$ 2,664
Deferred Tax Assets Net	$ 290,900		$ 290,900
Minimum percentage of bank net taxable income for paying Income tax at normal rate			20.00%
Effective Tax Rate Pretax Losses			24.00%	17.00%
Effective Income Tax Rate Continuing Operations			25.00%	30.00%
Puerto Rico [Member]
Income Tax Contingency [Line Items]
Statute of limitations under income tax act			4 years
United States [Member]
Income Tax Contingency [Line Items]
Statute of limitations under income tax act			3 years
Virgin Islands [Member]
Income Tax Contingency [Line Items]
Statute of limitations under income tax act			3 years

XML

FAIR VALUE - Additional Information (Detail)	Sep. 30, 2016 USD ($)
Debt Instrument [Line Items]
Maximum amount of interest in brokered CD sold by broker	$ 250,000

XML

FAIR VALUE - Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Securities available for sale
Investment securities available for sale	$ 1,843,853	$ 1,886,395
Derivatives, included in assets:
Derivatives, included in assets	195	806
Derivatives, included in liabilities:
Derivatives, included in liabilities	335	921
Forward Contracts [Member]
Derivatives, included in liabilities:
Derivatives, included in liabilities	144	123
Equity Securities [Member]
Securities available for sale
Investment securities available for sale	419	0
U S Treasury Securities [Member]
Securities available for sale
Investment securities available for sale	7,514	7,497
Us Government Agencies Debt Securities Noncallable [Member]
Securities available for sale
Investment securities available for sale	366,838	315,467
Us Government Agencies Debt Securities Callable [Member]
Securities available for sale
Investment securities available for sale	1,419,951	1,509,807
US States And Political Subdivisions Member [Member]
Securities available for sale
Investment securities available for sale	26,820	28,217
Private Label Mbs [Member]
Securities available for sale
Investment securities available for sale	22,211	25,307
Interest Rate Cap [Member] | Purchase
Derivatives, included in assets:
Derivatives, included in assets	191	806
Interest Rate Cap [Member] | Written
Derivatives, included in liabilities:
Derivatives, included in liabilities	191	798
Forward And Future Contracts [Member] | Purchase
Derivatives, included in assets:
Derivatives, included in assets	4
Other Available For Sale Securities [Member]
Securities available for sale
Investment securities available for sale	100	100
Fair Value Inputs Level 1 [Member] | Forward Contracts [Member]
Derivatives, included in liabilities:
Derivatives, included in liabilities	0	0
Fair Value Inputs Level 1 [Member] | Equity Securities [Member]
Securities available for sale
Investment securities available for sale	419	0
Fair Value Inputs Level 1 [Member] | U S Treasury Securities [Member]
Securities available for sale
Investment securities available for sale	7,514	7,497
Fair Value Inputs Level 1 [Member] | Us Government Agencies Debt Securities Noncallable [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 1 [Member] | Us Government Agencies Debt Securities Callable [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 1 [Member] | US States And Political Subdivisions Member [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 1 [Member] | Private Label Mbs [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 1 [Member] | Interest Rate Cap [Member] | Purchase
Derivatives, included in assets:
Derivatives, included in assets	0	0
Fair Value Inputs Level 1 [Member] | Interest Rate Cap [Member] | Written
Derivatives, included in liabilities:
Derivatives, included in liabilities	0	0
Fair Value Inputs Level 1 [Member] | Forward And Future Contracts [Member] | Purchase
Derivatives, included in assets:
Derivatives, included in assets	0
Fair Value Inputs Level 1 [Member] | Other Available For Sale Securities [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 2 [Member] | Forward Contracts [Member]
Derivatives, included in liabilities:
Derivatives, included in liabilities	144	123
Fair Value Inputs Level 2 [Member] | Equity Securities [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 2 [Member] | U S Treasury Securities [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 2 [Member] | Us Government Agencies Debt Securities Noncallable [Member]
Securities available for sale
Investment securities available for sale	366,838	315,467
Fair Value Inputs Level 2 [Member] | Us Government Agencies Debt Securities Callable [Member]
Securities available for sale
Investment securities available for sale	1,419,951	1,509,807
Fair Value Inputs Level 2 [Member] | US States And Political Subdivisions Member [Member]
Securities available for sale
Investment securities available for sale	24,653	26,327
Fair Value Inputs Level 2 [Member] | Private Label Mbs [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 2 [Member] | Interest Rate Cap [Member] | Purchase
Derivatives, included in assets:
Derivatives, included in assets	191	806
Fair Value Inputs Level 2 [Member] | Interest Rate Cap [Member] | Written
Derivatives, included in liabilities:
Derivatives, included in liabilities	191	798
Fair Value Inputs Level 2 [Member] | Forward And Future Contracts [Member] | Purchase
Derivatives, included in assets:
Derivatives, included in assets	4
Fair Value Inputs Level 2 [Member] | Other Available For Sale Securities [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 3 [Member] | Forward Contracts [Member]
Derivatives, included in liabilities:
Derivatives, included in liabilities	0	0
Fair Value Inputs Level 3 [Member] | Equity Securities [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 3 [Member] | U S Treasury Securities [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 3 [Member] | Us Government Agencies Debt Securities Noncallable [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 3 [Member] | Us Government Agencies Debt Securities Callable [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 3 [Member] | US States And Political Subdivisions Member [Member]
Securities available for sale
Investment securities available for sale	2,167	1,890
Fair Value Inputs Level 3 [Member] | Private Label Mbs [Member]
Securities available for sale
Investment securities available for sale	22,211	25,307
Fair Value Inputs Level 3 [Member] | Interest Rate Cap [Member] | Purchase
Derivatives, included in assets:
Derivatives, included in assets	0	0
Fair Value Inputs Level 3 [Member] | Interest Rate Cap [Member] | Written
Derivatives, included in liabilities:
Derivatives, included in liabilities	0	0
Fair Value Inputs Level 3 [Member] | Forward And Future Contracts [Member] | Purchase
Derivatives, included in assets:
Derivatives, included in assets	0
Fair Value Inputs Level 3 [Member] | Other Available For Sale Securities [Member]
Securities available for sale
Investment securities available for sale	$ 100	$ 100

XML

FAIR VALUE - Fair Value of Assets and Liabilities Measured on Recurring Basis (Detail) - USD ($) $ in Thousands		3 Months Ended				9 Months Ended
		Sep. 30, 2016		Sep. 30, 2015		Sep. 30, 2016		Sep. 30, 2015
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Beginning balance		$ 26,020	[1]	$ 31,640	[1]	$ 27,297	[2]	$ 36,212	[2]
Total gains or (losses) (realized/unrealized):
Net impairement losses on investment securites (credit component)		0	[1]	(231)	[1]	(387)	[2]	(628)	[2]
Fair Value Measurement With Unobservable Inputs Reconciliation Recurring Basis Asset Gain Loss Included In Other Comprehensive Income Loss		(477)	[1]	345	[1]	1,339	[2]	1,489	[2]
Purchases	[2]					0		100
Principal Repayments		(1,065)	[1]	(2,046)	[1]	(3,771)	[2]	(7,465)	[2]
Ending balance	[1],[2]	24,478		29,708		24,478		29,708
Available for Sale Securities
Total gains or (losses) (realized/unrealized):
Net impairement losses on investment securites (credit component)		$ 0		$ (231)		$ (387)		$ (628)

[1] Amounts mostly related to private label mortgage-backed securities.

[2] Amounts mostly related to private label mortgage-backed securities.

XML

FAIR VALUE - Assets and Liabilities Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs (Level 3) (Detail) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Dec. 31, 2015
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Discount rate used for calculation of mortgage servicing rights value		13.28%	14.50%
Fair value input prepayment rate		13.70%	25.00%
Private Label Mbs [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	$ 22,130	$ 22,130
Discount rate used for calculation of mortgage servicing rights value	13.28%
Private Label Mbs [Member] | Discounted Cash Flow [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Valuation technique		Discounted cash flow
US States And Political Subdivisions Member [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	$ 2,167	$ 2,167
Unobservable input prepayment rate	3.00%	3.00%
US States And Political Subdivisions Member [Member] | Discounted Cash Flow [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Valuation technique		Discounted cash flow
Minimum [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Discount rate used for calculation of mortgage servicing rights value		12.03%
Fair value input prepayment rate		6.50%	15.92%
Minimum [Member] | Private Label Mbs [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Unobservable input prepayment rate	6.50%	6.50%
Fair value projected Cumulative Loss Rate	0.20%	0.20%
Maximum [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Discount rate used for calculation of mortgage servicing rights value		13.50%
Fair value input prepayment rate		22.50%	31.25%
Maximum [Member] | Private Label Mbs [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Unobservable input prepayment rate	22.50%	22.50%
Fair value projected Cumulative Loss Rate	9.10%	9.10%

XML

FAIR VALUE - Change in unrealized losses included in earnings (Detail) - USD ($) $ in Thousands	3 Months Ended				9 Months Ended
	Sep. 30, 2016		Sep. 30, 2015		Sep. 30, 2016		Sep. 30, 2015
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Net impairement losses on investment securites (credit component)	$ 0	[1]	$ (231)	[1]	$ (387)	[2]	$ (628)	[2]
Available for Sale Securities
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Net impairement losses on investment securites (credit component)	$ 0		$ (231)		$ (387)		$ (628)

[1] Amounts mostly related to private label mortgage-backed securities.

[2] Amounts mostly related to private label mortgage-backed securities.

XML

FAIR VALUE - Impairment of Valuation Adjustments were Recorded for Assets Recognized at Fair Value (Detail) - USD ($) $ in Thousands	3 Months Ended				9 Months Ended
	Sep. 30, 2016		Sep. 30, 2015		Sep. 30, 2016		Sep. 30, 2015		Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015	Dec. 31, 2014
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Mortgage servicing rights	$ 25,475		$ 23,960		$ 25,475		$ 23,960		$ 25,044	$ 24,282	$ 23,519	$ 22,838
Fair Value Measurements Nonrecurring [Member] | Loans Receivable [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets Fair Value Adjustment	(13,912)	[1]	(7,864)	[2]	(41,621)	[1]	(22,431)	[2]
Fair Value Measurements Nonrecurring [Member] | Other Real Estate Owned [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets Fair Value Adjustment	(1,702)	[3]	(4,025)	[4]	(6,580)	[3]	(8,790)	[4]
Fair Value Measurements Nonrecurring [Member] | Mortgage Servicing Rights [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets Fair Value Adjustment	(263)	[5]	(23)	[6]	(387)	[5]	(170)	[6]
Fair Value Measurements Nonrecurring [Member] | Loans Held For Sale [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets Fair Value Adjustment	0		0	[7]	0		0	[7]
Fair Value Inputs Level 1 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans receivable	0	[1]	0	[2]	0	[1]	0	[2]
Other Real Estate Owned	0	[3]	0	[4]	0	[3]	0	[4]
Mortgage servicing rights	0	[5]	0	[6]	0	[5]	0	[6]
Loans held for sale	0		0	[7]	0		0	[7]
Fair Value Inputs Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans receivable	0	[1]	0	[2]	0	[1]	0	[2]
Other Real Estate Owned	0	[3]	0	[4]	0	[3]	0	[4]
Mortgage servicing rights	0	[5]	0	[6]	0	[5]	0	[6]
Loans held for sale	0		0	[7]	0		0	[7]
Fair Value Inputs Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans receivable	426,444	[1]	332,688	[2]	426,444	[1]	332,688	[2]
Other Real Estate Owned	139,446	[3]	124,442	[4]	139,446	[3]	124,442	[4]
Mortgage servicing rights	25,475	[5]	23,960	[6]	25,475	[5]	23,960	[6]
Loans held for sale	$ 0		$ 8,027	[7]	$ 0		$ 8,027	[7]

[1] Consist mainly of impaired commercial and construction loans. The impairment was generally measured based on the fair value of the collateral. The fair value was derived from external appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the collateral (e.g. absorption rates), which are not market observable.

[2] Consist mainly of impaired commercial and construction loans. The impairment was generally measured based on the fair value of the collateral. The fair value was derived from external appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the collateral (e.g. absorption rates), which are not market observable.

[3] The fair value was derived from appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the properties (e.g. absorption rates and net operating income of income producing properties), which are not market observable. Losses were related to market valuation adjustments after the transfer of the loans to the OREO portfolio.

[4] The fair value was derived from appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the properties (e.g. absorption rates and net operating income of income producing properties), which are not market observable. Losses were related to market valuation adjustments after the transfer of the loans to the OREO portfolio.

[5] Fair value adjustments to mortgage servicing rights were mainly due to assumptions associated with mortgage prepayment rates. The Corporation carries its mortgage servicing rights at the lower of cost or market, measured at fair value on a non-recurring basis. Assumptions for the value of mortgage servicing rights include: Prepayment rate of 6.34%, Discount Rate of 11.18%.

[6] Fair value adjustments to the mortgage servicing rights were mainly due to assumptions associated with mortgage prepayments rates. The Corporation carries its mortgage servicing rights at the lower of cost or market, measured at fair value on a non-recurring basis. Assumptions for the value of mortgage servicing rights include: Prepayment Rate of 9.32%, Discount Rate of 10.64%.

[7] The value of these loans was derived from external appraisals, adjusted for specific characteristics of the loans.

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FAIR VALUE - Impairment of Valuation Adjustments were Recorded for Assets Recognized at Fair Value (Parenthetical) (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Dec. 31, 2015
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Repayment rate used for the calculation of mortgage servicing rights value			13.70%	25.00%
Discount rate used for calculation of mortgage servicing rights value			13.28%	14.50%
Loans held for sale	$ 56,779		$ 56,779	$ 35,869
Mortgage Servicing Rights [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Repayment rate used for the calculation of mortgage servicing rights value	6.34%	9.32%
Discount rate used for calculation of mortgage servicing rights value	11.18%	10.64%

XML

FAIR VALUE - Qualitative Information Regarding Fair Value Measurements for Level 3 Financial Instruments (Detail)	3 Months Ended
	Sep. 30, 2016
Loans [Member]
Fair Value Option Quantitative Disclosures [Line Items]
Method	Income, Market, Comparable Sales, Discounted Cash Flows
Valuation technique	External appraised values; probability weighting of broker price opinions; management assumptions regarding market trends or other relevant factors
Other Real Estate Owned [Member]
Fair Value Option Quantitative Disclosures [Line Items]
Method	Income, Market, Comparable Sales, Discounted Cash Flows
Valuation technique	External appraised values; probability weighting of broker price opinions; management assumptions regarding market trends or other relevant factors
Mortgage Servicing Rights [Member]
Fair Value Option Quantitative Disclosures [Line Items]
Method	Discounted Cash Flow
Valuation technique	Weighted average prepayment rate of 6.34%; weighted average discount rate of 11.18%

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FAIR VALUE - Fair Value (Detail) - USD ($) $ in Thousands	Sep. 30, 2016		Dec. 31, 2015	Sep. 30, 2015
Assets:
Investment securities available for sale	$ 1,843,853		$ 1,886,395
Held To Maturity Securities	156,190		161,483
Less: allowance for loan and lease losses	(214,070)		(240,710)
Derivatives, included in assets	195		806
Liabilities:
Other borrowings	216,187		226,492
Derivatives, included in liabilities	335		921
Fair Value Inputs Level 1 [Member]
Assets:
Loans held for sale	0			$ 0	[1]
Loans held for investment, net of allowance	0	[2]		0	[3]
Fair Value Inputs Level 2 [Member]
Assets:
Loans held for sale	0			0	[1]
Loans held for investment, net of allowance	0	[2]		0	[3]
Fair Value Inputs Level 3 [Member]
Assets:
Loans held for sale	0			8,027	[1]
Loans held for investment, net of allowance	426,444	[2]		$ 332,688	[3]
Carrying Reported Amount Fair Value Disclosure [Member]
Assets:
Cash and due from banks and money market investments	528,943		752,458
Investment securities available for sale	1,843,853		1,886,395
Held To Maturity Securities	156,190		161,483
Other equity securities	28,717		32,169
Loans held for sale	56,779		35,869
Loans, held for investment	8,863,654		9,112,382
Less: allowance for loan and lease losses	(214,070)		(240,710)
Loans held for investment, net of allowance	8,649,584		8,871,672
Derivatives, included in assets	195		806
Liabilities:
Deposits	8,981,313		9,338,124
Securities sold under agreements to repurchase	600,000		700,000
Advances from FHLB	355,000		455,000
Other borrowings	216,187		226,492
Derivatives, included in liabilities	335		921
Estimate Of Fair Value Fair Value Disclosure [Member]
Assets:
Cash and due from banks and money market investments	528,943		752,458
Investment securities available for sale	1,843,853		1,886,395
Held To Maturity Securities	132,241		131,544
Other equity securities	28,717		32,169
Loans held for sale	60,283		36,844
Loans held for investment, net of allowance	8,462,434		8,768,152
Derivatives, included in assets	195		806
Liabilities:
Deposits	9,003,706		9,334,073
Securities sold under agreements to repurchase	646,505		752,048
Advances from FHLB	356,925		453,182
Other borrowings	174,997		142,846
Derivatives, included in liabilities	335		921
Estimate Of Fair Value Fair Value Disclosure [Member] | Fair Value Inputs Level 1 [Member]
Assets:
Cash and due from banks and money market investments	528,943		752,458
Investment securities available for sale	7,933		7,497
Held To Maturity Securities	0		0
Other equity securities	0		0
Loans held for sale	0		0
Loans held for investment, net of allowance	0		0
Derivatives, included in assets	0		0
Liabilities:
Deposits	0		0
Securities sold under agreements to repurchase	0		0
Advances from FHLB	0		0
Other borrowings	0		0
Derivatives, included in liabilities	0		0
Estimate Of Fair Value Fair Value Disclosure [Member] | Fair Value Inputs Level 2 [Member]
Assets:
Cash and due from banks and money market investments	0		0
Investment securities available for sale	1,811,442		1,851,601
Held To Maturity Securities	0		0
Other equity securities	28,717		32,169
Loans held for sale	50,497		28,709
Loans held for investment, net of allowance	0		0
Derivatives, included in assets	195		806
Liabilities:
Deposits	9,003,706		9,334,073
Securities sold under agreements to repurchase	646,505		752,048
Advances from FHLB	356,925		453,182
Other borrowings	0		0
Derivatives, included in liabilities	335		921
Estimate Of Fair Value Fair Value Disclosure [Member] | Fair Value Inputs Level 3 [Member]
Assets:
Cash and due from banks and money market investments	0		0
Investment securities available for sale	24,478		27,297
Held To Maturity Securities	132,241		131,544
Other equity securities	0		0
Loans held for sale	9,786		8,135
Loans held for investment, net of allowance	8,462,434		8,768,152
Derivatives, included in assets	0		0
Liabilities:
Deposits	0		0
Securities sold under agreements to repurchase	0		0
Advances from FHLB	0		0
Other borrowings	174,997		142,846
Derivatives, included in liabilities	$ 0		$ 0

[1] The value of these loans was derived from external appraisals, adjusted for specific characteristics of the loans.

[2] Consist mainly of impaired commercial and construction loans. The impairment was generally measured based on the fair value of the collateral. The fair value was derived from external appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the collateral (e.g. absorption rates), which are not market observable.

[3] Consist mainly of impaired commercial and construction loans. The impairment was generally measured based on the fair value of the collateral. The fair value was derived from external appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the collateral (e.g. absorption rates), which are not market observable.

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SUPPLEMENTAL CASH FLOW INFORMATION - Supplemental Cash Flow Information (Detail) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2016	Jun. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Cash paid for:
Interest on borrowings				$ 104,031	$ 70,016
Income tax				1,878	3,404
Non-cash investing and financing activities:
Additions to other real estate owned				37,606	44,415
Additions to auto repossesions				42,934	57,901
Loan securitizations				238,599	213,391
Capitalization of servicing assets	$ 1,420		$ 1,242	3,878	3,789
Loans held for investment transferred to held for sale				10,332	0
Common Stock Issued In Exchange For Trust Preferred Securities Value				0	5,628
Trust Preferred Securities Exchanged Liquidation Value		$ 5,300		0	5,303
Transfer Of Loans Held For Sale To Portfolio Loans 1				1,321	0
Deposits [Member]
Non-cash investing and financing activities:
Liabilities Assumed1				0	(523,517)
Loans [Member]
Non-cash investing and financing activities:
Fair Value Of Assets Acquired				0	311,410
Property Plant And Equipment [Member]
Non-cash investing and financing activities:
Fair Value Of Assets Acquired				0	5,450
Core Deposits [Member]
Non-cash investing and financing activities:
Fair Value Of Assets Acquired				$ 0	$ 5,820

XML

SEGMENT INFORMATION - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2016 numberofreportableunits
Number of reportable segments	6

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SEGMENT INFORMATIO - Information about reportable segments (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Segment Reporting Information [Line Items]
Interest income	$ 143,573	$ 149,812	$ 441,338	$ 453,929
Net (charge) credit for transfer of funds	0	0	0	0
Interest expense	(25,395)	(24,883)	(78,284)	(76,876)
Net interest income	118,178	124,929	363,054	377,053
(Provision) release for loan and lease losses	(21,503)	(31,176)	(63,542)	(138,412)
Non-interest income (loss)	26,146	18,758	64,393	44,714
Direct non-interest expenses	(63,402)	(68,000)	(197,529)	(202,645)
Segment (loss) income	59,419	44,511	166,376	80,710
Average earnings assets	11,354,259	11,587,431	11,631,135	11,831,006
Mortgage Banking [Member]
Segment Reporting Information [Line Items]
Interest income	34,605	36,180	104,865	106,352
Net (charge) credit for transfer of funds	(12,074)	(12,629)	(37,673)	(36,212)
Interest expense	0	0	0	0
Net interest income	22,531	23,551	67,192	70,140
(Provision) release for loan and lease losses	(3,860)	(6,750)	(21,608)	(21,657)
Non-interest income (loss)	5,222	3,982	14,381	11,866
Direct non-interest expenses	(8,864)	(8,977)	(29,828)	(26,270)
Segment (loss) income	15,029	11,806	30,137	34,079
Average earnings assets	2,549,358	2,642,388	2,576,194	2,601,892
Consumer Retail Banking [Member]
Segment Reporting Information [Line Items]
Interest income	44,455	48,528	135,655	147,395
Net (charge) credit for transfer of funds	2,810	4,335	10,546	12,816
Interest expense	(6,323)	(5,869)	(18,765)	(17,379)
Net interest income	40,942	46,994	127,436	142,832
(Provision) release for loan and lease losses	(8,655)	(13,946)	(24,451)	(36,588)
Non-interest income (loss)	11,292	11,759	35,318	35,504
Direct non-interest expenses	(27,100)	(32,669)	(87,218)	(96,690)
Segment (loss) income	16,479	12,138	51,085	45,058
Average earnings assets	1,973,424	1,959,951	1,989,426	1,956,352
Commercial And Corporate [Member]
Segment Reporting Information [Line Items]
Interest income	28,981	32,636	93,915	100,192
Net (charge) credit for transfer of funds	(6,700)	(4,058)	(18,212)	(11,746)
Interest expense	0	0	0	0
Net interest income	22,281	28,578	75,703	88,446
(Provision) release for loan and lease losses	(8,162)	(11,355)	(17,730)	(84,170)
Non-interest income (loss)	985	647	2,459	2,350
Direct non-interest expenses	(11,871)	(10,896)	(33,194)	(30,013)
Segment (loss) income	3,233	6,974	27,238	(23,387)
Average earnings assets	2,410,037	2,760,788	2,489,268	2,947,562
Treasury And Investments [Member]
Segment Reporting Information [Line Items]
Interest income	12,529	11,500	39,206	36,276
Net (charge) credit for transfer of funds	15,839	8,563	44,226	23,936
Interest expense	(14,487)	(14,305)	(45,828)	(44,834)
Net interest income	13,881	5,758	37,604	15,378
(Provision) release for loan and lease losses	0	0	0	0
Non-interest income (loss)	6,154	(174)	3,815	(13,046)
Direct non-interest expenses	(914)	(1,103)	(3,462)	(3,487)
Segment (loss) income	19,121	4,481	37,957	(1,155)
Average earnings assets	2,565,019	2,531,084	2,774,118	2,683,313
United States Operations [Member]
Segment Reporting Information [Line Items]
Interest income	13,944	11,229	40,091	34,477
Net (charge) credit for transfer of funds	125	3,789	1,113	11,206
Interest expense	(3,811)	(3,931)	(11,214)	(12,326)
Net interest income	10,258	11,087	29,990	33,357
(Provision) release for loan and lease losses	2,024	1,307	1,563	6,715
Non-interest income (loss)	884	778	2,799	2,032
Direct non-interest expenses	(7,556)	(6,914)	(23,070)	(21,293)
Segment (loss) income	5,610	6,258	11,282	20,811
Average earnings assets	1,252,271	1,048,451	1,188,463	1,001,860
Virgin Islands Operations [Member]
Segment Reporting Information [Line Items]
Interest income	9,059	9,739	27,606	29,237
Net (charge) credit for transfer of funds	0	0	0	0
Interest expense	(774)	(778)	(2,477)	(2,337)
Net interest income	8,285	8,961	25,129	26,900
(Provision) release for loan and lease losses	(2,850)	(432)	(1,316)	(2,712)
Non-interest income (loss)	1,609	1,766	5,621	6,008
Direct non-interest expenses	(7,097)	(7,441)	(20,757)	(24,892)
Segment (loss) income	(53)	2,854	8,677	5,304
Average earnings assets	$ 604,150	$ 644,769	$ 613,666	$ 640,027

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SEGMENT INFORMATION - Reconciliation of Reportable Segment Financial Information (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Net Income (Loss):
Total income for segments and other		$ 59,419	$ 44,511	$ 166,376	$ 80,710
Other non-interest income (loss)	[1]	0	0	0	13,443
Other operating expenses	[2]	(24,901)	(25,277)	(73,315)	(85,159)
Income before income taxes		34,518	19,234	93,061	8,994
Income tax expense		(10,444)	(4,476)	(23,690)	(2,664)
Total consolidated net income (loss)		24,074	14,758	69,371	6,330
Average assets:
Total average earning assets for segments		11,354,259	11,587,431	11,631,135	11,831,006
Average non-earning assets		926,043	925,723	927,732	916,817
Total consolidated average assets		$ 12,280,302	$ 12,513,154	$ 12,558,867	$ 12,747,823

[1] The bargain purchase gain on the acquisition of assets and assumption of deposits from Doral Bank in 2015 is presented as Other non-interest income in the table above.

[2] Expenses pertaining to corporate administrative functions that support the operating segments but are not specifically attributable to or managed by any segment are not included in the reported financial results of the operating segments. The unallocated corporate expenses include certain general and administrative expenses and related depreciation and amortization expenses.

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REGULATORY MATTERS, COMMITMENTS AND CONTINGENCIES - Additional Information (Detail) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Mar. 31, 2016	Dec. 31, 2015
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Threshold For Deposits Insurance Assesment Surcharge			$ 10,000,000,000
FDIC Deposits Insurance Assesment Surcharge			0.045
Deposits Insurance Surcharge Assesment Base			$ 100
Commitments To Extent Credit	$ 1,100,000,000	$ 1,100,000,000
Decrease Increase Federal Deposit Insurance Corporation Premium Expense	800,000
Credit Cards [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Commitments To Extent Credit	631,500,000	631,500,000
Commercial And Financial Standby Letters Of Credit [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Commitments To Extent Credit	$ 46,700,000	$ 46,700,000
Basel III [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Common Equity Tier 1 Capital Conservation Buffer		2.50%
Basel III [Member] | Minimum [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Common Equity Tier1 Capital To Risk Weight Assets Ratio	4.50%	4.50%
Common Equity Tier 1 Capital To Risk Weight Assets Ratio Plus Common Equity Tier 1 Capital Conservation Buffer		7.00%
Total Tier 1 Capital To Risk Weight Assets Ratio		6.00%
Total Tier 1 Capital To Risk Weight Assets Ratio Plus Common Equity Tier 1 Capital Conservation Buffer		8.50%
Total Tier 1 Capital And Tier 2 Capital To Risk Weight Assets Ratio		8.00%
Total Tier 1 Capital And Tier 2 Capital To Risk Weight Assets Ratio Plus Common Equity Tier 1 Capital Conservation Buffer		10.50%
Leverage Ratio		4.00%
Common Equity Tier 1 Capital Conservation Buffer First Year		0.625%
FirstBank [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Leverage ratio	14.40%	14.40%		13.33%
Tier 1 risk based capital ratio	19.46%	19.46%		18.45%
Total Risk Based Capital Ratio	20.73%	20.73%		19.73%
Tier 1 risk based capital ratio to be considered well capitalzed under PCA	8.00%	8.00%		8.00%
Total risk based capital to be considered well capitalized under PCA	10.00%	10.00%		10.00%
Leverage ratio to be considered well capitalized under PCA	5.00%	5.00%		5.00%
Common Equity Tier1 Capital To Risk Weight Assets Ratio	16.83%	16.83%		16.35%

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REGULATORY MATTERS, COMMITMENTS AND CONTINGENCIES- Regulatory Capital Positions (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Holding Company [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Capital	$ 1,892,493	$ 1,828,559
Tier One Risk Based Capital	1,569,482	1,546,678
Tier One Leverage Capital	1,569,482	1,546,678
Capital Required For Capital Adequacy	711,754	731,164
Tier One Risk Based Capital Required For Capital Adequacy	533,816	548,373
Tier One Leverage Capital Required For Capital Adequacy	$ 481,357	$ 506,322
Capital To Risk Weighted Assets	21.27%	20.01%
Tier One Risk Based Capital To Risk Weighted Assets	17.64%	16.92%
Tier One Leverage Capital To Average Assets	13.04%	12.22%
Capital Required For Capital Adequacy To Risk Weighted Assets	8.00%	8.00%
Tier One Risk Based Capital Required For Capital Adequacy To Risk Weighted Assets	6.00%	6.00%
Tier One Leverage Capital Required For Capital Adequacy To Average Assets	4.00%	4.00%
Common Equity Tier1 Capital To Risk Weight Assets Ratio	17.64%	16.92%
Common Equity Tier 1 Capital To Risk Weight Assets	$ 1,569,482	$ 1,546,678
Common Equity Tier 1 Capital To Risk Weight Assets Ratio Capital Adequacy	4.50%	4.50%
Common Equity Tier 1 Capital To Risk Weight Assets Capital Adequacy	$ 400,362	$ 411,280
FirstBank [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Capital	1,843,533	1,802,711
Tier One Risk Based Capital	1,730,264	1,685,656
Tier One Leverage Capital	1,730,264	1,685,656
Capital Required For Capital Adequacy	711,460	730,824
Tier One Risk Based Capital Required For Capital Adequacy	533,595	548,118
Tier One Leverage Capital Required For Capital Adequacy	480,751	505,648
Capital Required To Be Well Capitalized	889,325	913,530
Tier One Risk Based Capital Required To Be Well Capitalized	$ 711,460	$ 730,824
Capital To Risk Weighted Assets	20.73%	19.73%
Tier One Risk Based Capital To Risk Weighted Assets	19.46%	18.45%
Tier One Leverage Capital To Average Assets	14.40%	13.33%
Capital Required For Capital Adequacy To Risk Weighted Assets	8.00%	8.00%
Tier One Risk Based Capital Required For Capital Adequacy To Risk Weighted Assets	6.00%	6.00%
Tier One Leverage Capital Required For Capital Adequacy To Average Assets	4.00%	4.00%
Capital Required To Be Well Capitalized To Risk Weighted Assets	10.00%	10.00%
Tier One Risk Based Capital Required To Be Well Capitalized To Risk Weighted Assets	8.00%	8.00%
Tier One Leverage Capital Required To Be Well Capitalized To Average Assets	5.00%	5.00%
Tier One Leverage Capital Required To Be Well Capitalized	$ 600,939	$ 632,060
Common Equity Tier1 Capital To Risk Weight Assets Ratio	16.83%	16.35%
Common Equity Tier 1 Capital To Risk Weight Assets	$ 1,496,670	$ 1,493,478
Common Equity Tier 1 Capital To Risk Weight Assets Ratio Capital Adequacy	4.50%	4.50%
Common Equity Tier 1 Capital To Risk Weight Assets Capital Adequacy	$ 400,196	$ 411,088
Common Equity Tier 1 Capital To Risk Weight Assets Well Capitalized	$ 578,061	$ 593,794
Common Equity Tier 1 Capital To Risk Weight Assets Ratio Well Capitalized	6.50%	6.50%

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FIRST BANCORP. (Holding Company Only) Financial Information - Statements of Financial Condition (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015
ASSETS
Cash and due from banks	$ 518,835	$ 532,985
Money market investments	10,108	219,473	$ 219,486
Investment securities available for sale, at market:
Other investment securities	1,182,299	1,092,833
Carrying Value Of Other Equity Security	2,100	900
Loans Receivable, net	8,706,363	8,907,541
Other assets	476,094	476,459
Total assets	12,075,253	12,573,019
Liabilities:
Other borrowings	216,187	226,492
Accounts payable and other liabilities	122,867	159,269
Total liabilities	10,275,367	10,878,885
Stockholders Equity	1,799,886	1,694,134	$ 1,700,950
Total liabilities and stockholders' equity	12,075,253	12,573,019
Holding Company [Member]
ASSETS
Cash and due from banks	29,074	29,103
Money market investments	6,111	6,111
Investment securities available for sale, at market:
Carrying Value Of Other Equity Security	285	285
Loans Receivable, net	236	266
Other assets	4,354	4,632
Total assets	2,016,631	1,949,610
Liabilities:
Other borrowings	216,187	226,492
Accounts payable and other liabilities	558	28,984
Total liabilities	216,745	255,476
Stockholders Equity	1,799,886	1,694,134
Total liabilities and stockholders' equity	2,016,631	1,949,610
Holding Company [Member] | Investment In Banking Subsidiary [Member]
Investment securities available for sale, at market:
Equity Method Investments	1,960,090	1,888,036
Holding Company [Member] | Non Banking Subsidiary [Member]
Investment securities available for sale, at market:
Equity Method Investments	9,991	14,382
Holding Company [Member] | Statutory Trust One [Member]
Investment securities available for sale, at market:
Equity Method Investments	2,929	2,929
Holding Company [Member] | Statutory Trust Two [Member]
Investment securities available for sale, at market:
Equity Method Investments	$ 3,561	$ 3,866

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FIRST BANCORP. (Holding Company Only) Financial Information - Statements of Loss (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income:
Interest income on investment securities	$ 11,894	$ 12,805	$ 40,065	$ 40,378
Other Interest And Dividend Income	662	410	3,006	1,457
Expense:
Impairement on equity securities	6,096	0	6,104	0
Gains Losses On Extinguishment Of Debt	0	0	4,217	0
Loss before income taxes and equity in undistributed earnings (losses) of subsidiaries	34,518	19,234	93,061	8,994
Income tax expense	(10,444)	(4,476)	(23,690)	(2,664)
Net income	24,074	14,758	69,371	6,330
Other comprehensive income (loss), net of tax	(12,157)	16,709	32,109	13,681
Comprehensive (loss) income	11,917	31,467	101,480	20,011
Holding Company [Member]
Income:
Other Interest And Dividend Income	5	5	15	15
Dividend Income From Subsidiaries	1,822	0	39,980	0
Other income	58	58	181	439
Total interest income	1,885	63	40,176	454
Expense:
Notes payable and other borrowings	1,817	1,861	5,777	5,521
Other operating expenses	685	643	2,313	2,000
Total operating expenses	2,502	2,504	8,090	7,521
Gains Losses On Extinguishment Of Debt	0	0	4,217	0
Loss before income taxes and equity in undistributed earnings (losses) of subsidiaries	(617)	(2,441)	36,303	(7,067)
Equity in undistributed earnings (losses) of subsidiaries	24,691	17,199	33,068	13,397
Net income	24,074	14,758	69,371	6,330
Other comprehensive income (loss), net of tax	(12,157)	16,709	32,109	13,681
Comprehensive (loss) income	$ 11,917	$ 31,467	$ 101,480	$ 20,011

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Label	Element	Value
Due From Banks	us-gaap_DueFromBanks	$ 518,835,000
Due From Banks	us-gaap_DueFromBanks	$ 742,251,000